Federal and provincial finance ministers have rallied around a mandatory, modest and gradual expansion of the Canada Pension Plan as the best route for fattening Canadians' retirement incomes.
Finance Minister Jim Flaherty said Monday a solid majority of the provincial ministers have endorsed the idea of increasing CPP contributions from employers and employees to boost the value of the benefits when they retire.
"We have a clear direction," Flaherty told a news conference following a meeting with his provincial and territorial counterparts in Prince Edward Island. "I think this is a significant step forward."
He acknowledged support for the direction was not unanimous, but indicated he is optimistic there would be enough provincial backing to make it happen. Changes to the CPP would require the support of two-thirds of the provinces and two-thirds of the population.
"We were not unanimous, but certainly the substantive majority view was that we should proceed," Flaherty said.
Senior officials were charged with working out the details and reporting their findings to a federal-provincial finance ministers' meeting in the late fall.
The next step will be to get an agreement on how much and how quickly to raise CPP contributions. The average CPP benefit is approximately $6,000 a year. The maximum is about $10,000.
Alberta Finance Minister Ted Morton has made no secret of his strong opposition to imposing what he calls a new "tax" on small business by upping the CPP contribution levels.
The Canadian Federation of Independent Business also has denounced the proposal as a job killer.
"It takes a solution that applies to all Canadian workers to solve a problem that only applies to a small cohort of workers," Morton said. "We're using a sledgehammer to kill a mosquito."
But others disagree. The Alberta Federation of Labour took out an ad in a P.E.I. newspaper urging Morton's counterparts to ignore his position.
"Don't allow Alberta's finance minister to derail pension reform for all Canadians," AFL President Gil McGowan said in the letter. "Please support reform that focuses on expansion of Canada s most efficient, economical and portable pension vehicle -- the CPP."
The AFL argues that fewer Albertans are covered by private pension plans than the national average.
Ken Georgetti, president of the Canadian Labour Congress, cheered the decision to embrace the CPP as the best vehicle to bolster retirement savings.
Noting that as many as six in 10 workers don't have workplace pensions, Georgetti said, the federal and provincial governments have no choice but to act "unless they want the next generation to pay for our mistakes."
Nova Scotia Finance Minister Graham Steele held back his support, saying he wanted to check with his cabinet colleagues.
Still, the political momentum has clearly shifted in favour of enriching the CPP, a plan that covers almost all Canadian workers. Quebec, which administers the parallel Quebec Pension Plan, signalled it would not put up any roadblocks.
Flaherty told reporters the ministers had decided to "take off the table" the idea of a voluntary, government-sponsored plan to complement the CPP, a proposal that had enjoyed significant provincial support as recently as last December. The federal Liberals also advocate a voluntary supplemental plan.
The decision to pursue an enhanced CPP -- a proposal consistently advocated by labour unions and the federal NDP -- was first floated last week by Flaherty and Ontario Finance Minister Dwight Duncan.
The CLC is among those pushing for a gradual doubling of contributions to ensure a doubling of the benefits upon retirement.
Although Flaherty and many provincial officials have already dismissed that formula as too costly for Canadians and their employers, Georgetti said he will use the coming months to persuade them they are wrong.Debate over the adequacy of Canadians' retirement income has picked up in the last year after the economic recession exposed fault lines in the country's pension system.
Edmonton Journal, Tues Jun 15 2010
Byline: Norma Greenaway