Ontario seeking to upstage federal government on pensions as provincial election looms
Ontario Liberal Premier Kathleen Wynne has taken another step towards her announced intent to upstage the federal government over the Canada Pension Plan. She announced on January 22 that former Liberal Prime Minister Paul Martin has accepted her appointment to help craft a supplementary pension plan for the province of Ontario.
He will work as an unpaid adviser to Ontario Finance Minister Charles Sousa. A blue ribbon corporate pension committee has been formed to work with Martin and Sousa on implementation.
The Ontario plan is a reaction to federal government intransigence against improvements to the CPP.
Public pension advocates hope that an Ontario plan would mirror the ‘defined benefits’ nature of the CPP. But evidence is mounting that what we’ll see is something less than that--a half-baked version akin to the ‘pooled registered pension plans’ scheme that the federal government floated in late 2010 as an alternative to CPP improvements.
The PRPP (Pooled Registered Pension Plan) scheme has sat dead in the water. And that’s no loss to future pensioners. It’s a private investment scheme whose many drawbacks include its voluntary nature and the multiplicity of private plans it would spawn, all very costly and inefficient to administer.
Although the unions have long argued to expand the CPP, no unionists were appointed to Premier Wynne’s implementation committee.
Writing in the Feb. 4 Toronto Star, columnist Martin Regg Cohn explained, “Government sources say the Liberals are still considering a way to mirror the CPP’s time-tested ‘Defined Benefit’ model, with fixed (or targeted) payouts for all. It has long been Ontario’s first choice.
“But the premier also seems enamoured of a ‘Defined Contribution’ plan based on the British ‘NEST’ model that would allow Ontarians to ‘opt out’.
“As outlined in Sunday’s column, this NEST option is analogous to the retirement accounts many risk-averse corporations are switching to. But these ‘defined contribution’ plans are widely seen as glorified savings accounts because they make no promises or targets for future payouts.”
Wynne’s move comes in the face of the years-long refusal of Stephen Harper’s federal Conservative government to heed popular demands for benefit increases to the CPP. The federal stand was reaffirmed at a December 2013 meeting of federal and provincial finance ministers. Federal Minister of Finance Jim Flaherty sabotaged what the provincial ministers assumed would be some formal discussion of the matter.
Some provincial governments have joined Ontario in giving a nod to the public pressure demanding pension improvements. Others, notably the Alberta and BC governments, share the federal government’s ideological opposition to livable public pensions.
Federal junior finance minister Kevin Sorenson responded to Wynne’s latest announcement on behalf of the Harper/Flaherty anti-pension regime. Singing from their one-note, ‘anti-tax’ playbook, Sorenson said, “Premier Wynne will disadvantage Ontario’s businesses with higher payroll taxes, killing jobs and deterring investment”.
The Harper government’s talking points on CPP refer to it as a tax burden, not a social benefit to society.
Coincidentally, as the finance ministers were meeting, Prime Minister Harper chimed in with his own ideological opposition to public pensions. Maclean’s writer John Geddes explained in a Dec. 19 article: