Hon. Mac Harb:

Honourable senators, we were all overjoyed when the federal government recently came to its senses and decided to come on board with pension reform. I understand that some of the proposed changes will be complex and will take negotiations and compromise.

However, I rise today to call on the government to act swiftly on one aspect of pension reform that will have a dramatic impact on health care in our country. There are two major issues involving physicians in Canada today. One is a well-documented shortage of doctors that is endangering the health care and well- being of Canadians. The second issue is the fact that many self- employed physicians cannot adequately prepare for retirement because of federal tax laws that prevent their access to registered pension plans. Both of these issues can be at least partially resolved by making changes to the tax laws to allow for voluntary participation in registered pension plan options for self-employed physicians.

Honourable senators, let us look at the facts. When it comes to the number of doctors per capita, Canada is ranked at a lowly 26 out of 30 OECD countries. Furthermore, 5 million Canadians do not have a family doctor. Doctor shortages are linked to premature mortality, infant and perinatal mortality. Although we have seen the actual number of physicians increase slightly, many of them are working fewer hours, splitting practices and opting for a better work-life balance, and rightly so.

While medical school enrolment in Canada is up, experts are predicting a shortfall of 200,000 doctors in the United States by 2020. It is pretty obvious that this will pull more and more of these Canadian-trained doctors across the border for higher pay and better opportunities. There are already over 10,000 Canadian physicians practicing in the United States. Part of the attraction of the United States and part of the reason that Canada is suffering from a doctor shortage is the fact that doctors in Canada must rely on inadequate individual registered retirement savings plans for their financial security after retirement.

The recent economic downturn highlighted the cracks in this outdated retirement option for self-employed physicians. When Canadian doctors' investments go south, so to speak, too often these Canadian-trained doctors end up going south as well to recoup their losses.

Here is the situation facing doctors. The vast majority of physicians are self-employed and, therefore, cannot participate in workplace registered pension plans, despite the fact that they are in a unique category of the self-employed, paid on a fee-for- service basis by a single client, the provincial government. Physicians must depend on registered retirement savings plans, RRSPs, which are vulnerable to the global markets. This vulnerability is even worse when RRSPs reach maturity when markets are low and holders must sell low as we have seen and experienced recently.

Maximum limits on RRSP contributions mean that retirement income for many doctors falls well below the accepted goal of 60 per cent of pre-retirement income. Doctors in all countries with national medical systems are allowed, through tax law variation, to contribute to a pension plan. For example, all doctors in the United Kingdom, the Netherlands and Germany are allowed to have their own pension plans. Canadian doctors are left high and dry.

A small change to the federal tax law deeming self-employed physicians eligible for pensions will remove the legal obstacle that prevents doctors from negotiating for pensions. Access to a pension plan will attract doctors and encourage Canadian-trained doctors to stay and work at home.

I have met with the Canadian Medical Association, which represents close to 72,000 physician members. The Canadian Medical Association has prepared and submitted to the Standing Senate Committee on Banking, Trade and Commerce a submission that fully supports measures that will allow organizations to sponsor registered plans and supplementary employee retirement plans on behalf of self-employed physicians.

I have also met and worked with Dr. Mary Fernando, who initially brought this issue to my attention. She is a long-time advocate for giving self-employed physicians the right to pensions if they so choose. She has worked hard to convince the government to make this change so that pensions can be used as a means to attract and retain physicians in Canada. As she has pointed out, there is a significant retention potential in pensions that RRSPs lack.

A 2007 poll by the Canadian publication The Medical Post found that 91 per cent of physicians wanted pensions, and we can see why. I recently received an email from a doctor in British Columbia who said this:

I am a family physician in British Columbia and . . . have found during my 20-plus years of practice that the earnings I expected never materialized and that one's practice which was once a physician's "nest egg" for retirement . . . can no longer be given away, much less sold . . ."

He goes on to say that:

We are neither fish nor fowl in terms of payment, being self-employed but unable to raise our rates or charge user fees . . ."

The writing is on the wall and it appears the federal government has finally taken notice.

A few months ago, I wrote to the Minister of Finance, urging him to amend a little section in the tax law that affects self- employed physicians. In the response he sent me on April 16, 2010, he systematically opposed my suggestion, claiming that there could not be other pension plans for self-employed workers in Canada, and that they should use RRSPs.

Honourable senators on the Standing Senate Committee on Banking, Trade and Commerce have heard the calls for reform. The Canadians who participated in the town hall and round table meetings organized by the federal government across the country were also quite vocal about their views.

As a result, the minister changed his mind and pension reform is now front and centre. This reform offers more possibilities for the growing number of self-employed Canadians. At least this was an about-face in the right direction, for once. But I still urge the minister to ensure that this minor change to federal tax laws, which would give self-employed physicians access to a pension plan, be made as quickly as possible.

Much is at stake for Canada's health care system. This amendment cannot afford to be delayed due to the complex changes required for other aspects of the government's pension reform package.

In the minister's statement last week, he also spoke in favour of expanding the Canada Pension Plan. According to our Constitution, the support of seven of ten provinces and two thirds of the country's population needs to agree, to increase benefits. I think we all realize that this level of agreement on such a complex issue can take time.

While that process unfolds, it is vital that the government move ahead with the changes over which it has jurisdiction. With a simple change in wording in the federal tax law, the doctors will have a green light to proceed with negotiations with their individual provinces and associations if they choose to do so.

Back in October 2008, Prime Minister Harper's party platform included a $20 million fund to repatriate Canadian-trained doctors. Such a plan may have great merit, and I look forward to seeing this program up and running. In the meantime, it is obvious that we should make a small change to the tax law today that, at no cost to the federal government, will attract and retain doctors, encourage the repatriation of those doctors currently practicing in the United States, increase provincial autonomy in health care and ultimately save lives. Delaying is simply not an option.

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