Dear Canada: Don't surrender on CPP reform: Finance ministers must stand up to pressure from Alberta, Ottawa
Finance ministers from across the country will gather in Kananaskis to discuss whether or not to expand the Canada Pension Plan (CPP) to address a looming crisis in retirement income.
If CPP is expanded to provide a more stable foundation for retirement security in Canada, it would represent one of our country's most important social policy changes since the introduction of Medicare.
It would also be a timely Christmas present for the millions of Canadians who worry about their retirement savings and who have been burned by RRSPs and mutual funds.
The big question is this: will the nine provincial finance ministers who support CPP expansion find the courage to make a deal in the public's best interest?
Or will they give in to pressure from Alberta Finance Minister Ted Morton -- who, for ideological reasons, has always opposed CPP expansion -- and his new ally in opposition, federal Finance Minister Jim Flaherty, who recently withdrew his support for CPP expansion as a result of pressure from Prime Minister Stephen Harper and the private investment industry?
Morton has been all over the media lately trying to downplay the need for change.
He has, for example, been trying to draw attention away from facts like these:
- -That even here in wealthy Alberta, half of current seniors have no individual savings at all (that's right ... zero),
- -That only 35 per cent of working Albertans are covered by a workplace pension (and the number is falling each year),
- -That only 38 per cent of Albertans made RRSP contribu-tions in 2008 and the average contribution was just $3,200 (hardly enough to build a retirement nest egg),
- -That the average fees charged by mutual funds are five times higher than the fees charged by CPP and can eat up between 40 and 60 per cent of an individual's investment earnings (no, that's not a typo), and
- -That CPP is financially sound and fully portable between jobs ... but only provides maximum annual benefits of about $11,000 per year (with the average annual payout being only $6,000),
In addition to ignoring the scope of the problem, Morton has also been sowing confusion about what CPP expansion really means.
In particular, he has been deliberately leaving the impression that CPP is a "social program" financed by taxpayers -- the implication being that an expanded CPP would be a reward to those who didn't have the foresight to save for themselves, paid for by those who did.
Nothing could be further from the truth. CPP is not a tax-funded program. It is financed by matched contributions from workers and employers.
An expanded CPP would simply mean that workers and employers would be required to put a little more into the system today so that the employees in question could get bigger retirement benefits in the future.
Helping Canadians save for themselves
In other words, an expanded CPP would provide better opportunities for Canadians to save for themselves (which, by the way, would have the effect of making them less reliant on tax-funded programs).
So, why are Ted Morton and, more recently, Jim Flaherty opposed to helping Canadians save for themselves?
Sadly, the answer to that question can be boiled down to ideology and self-interest.
Ideologically, Morton is a right-winger who prefers policy solutions that help businessmen put profits in their pockets.
Flaherty is not nearly as ideological -- but the federal Conservatives are close to Canada's banking and financial industry which has been waging an aggressive lobbying campaign against CPP expansion.
The industry fears that if Canadians are able to invest more of their money through CPP then they'll put less money into things like private mutual funds.
And reduced investment in mutual funds would mean fewer bonuses and fewer and BMWs for bankers and mutual fund managers (heaven forbid!)
The fact that Flaherty has allowed himself to be swayed by Morton and the banking community is more than a disappointment -- it's a betrayal.
Instead of supporting CPP expansion, Flaherty is now peddling a proposal for "pooled funds" which sounds suspiciously like a plan recently floated by the banking industry. These funds would (surprise, surprise) by run by banks, insurance companies and the mutual fund industry (for a reasonable fee, of course).
Unlike CPP, these new funds would not provide a guaranteed benefit, and employers would not be required to make matching contributions (meaning most of them wouldn't).
In other words, these funds would be nothing more than glorified RRSPs -- and we've seen how well that's worked for middle-class Canadians.
'Noble nine' face tough fight
So, as our finance ministers head into their pivotal meeting in Kananaskis, the battle lines have been clearly drawn.
On one side we have Morton, Harper and the banks. On the other side we have nine provinces, dozens of policy experts who endorse CPP expansion and the overwhelming weight of public opinion.
Clearly, the "noble nine" will have to fight hard to put the idea of CPP expansion back on the table as the preferred option.
If they don't, we could end up repeating the scenario that unfolded in 1979 when similar proposals for CPP expansion were scuttled by united opposition from conservative governments in Alberta and Ontario -- supported behind the scenes by the big banks and mutual-fund companies.
Will Canada's finance ministers stand up and do the right thing this weekend? For the sake of future generations of Canadians, let's hope they decide to make history.
Edmonton Journal, Sat Dec 18 2010
Byline: Gil McGowan
The federal government says the new program will benefit Canadians without an employer-sponsored plan, including the self-employed.
In a statement issued on Thursday, Morton said Alberta has been promoting and working on this type of private-sector pension innovation with B.C. for several years and the only stumbling block had been a lack of interest in Ottawa.
"This is the type of targeted solution Alberta has been advocating to address concerns that many middle-income Canadians are not saving enough for their retirement, and we are pleased the federal government is now on board," he said.
According to Morton, pooled pension plans provide a simple, low-cost, effective way of improving pension coverage for employees of small and medium business and the self-employed, many of whom cannot afford pension plans.
"Allowing private-sector providers to offer and manage pooled pension plans on behalf of multiple employers will significantly reduce costs to businesses as well as provide the financial expertise to better manage the investments and the investment risks," said Morton.
He said federal support is needed in order for the initiative to move forward because it will require changing current income tax laws and provincial pension standards.
With pooled pensions, a third party would manage the administrative aspects of the plan while employers would be responsible for determining employer and employee contribution levels, collecting and remitting contributions and keeping the administrator up to date regarding new members and employee termination.
The plan replaces a proposal put forward by Ontario and the federal government earlier this year to expand the Canada Pension Plan (CPP), something that had the support of every finance minister in Canada except Morton.
In an open letter to Canada's finance ministers last week, the Alberta Federation of Labour (AFL), a strong supporter of CPP expansion pointed to a recent Environics poll that found 66 per cent of all Albertans support an increase in CPP benefits while only 19 per cent are opposed.
Morton argued expanding the CPP may benefit those who are not saving enough for retirement but would also provide additional and unnecessary benefits to those who already have adequate income provisions.
"It would also hurt low-income workers, who would be required to make additional contributions during their working lives," Morton said in a June 11 press release.
The solution, he said then, was to find ways to encourage Canadians to save for their retirement over the course of their working careers, including pension innovation and supplementary pension plans.
"We should be looking for the right combination of private sector delivery with public oversight and monitoring," he said.
Changes welcomed at home
St. Albert resident Brian Endin, 66, said he is grateful for the government's about-turn on CPP expansion, a proposal he had many concerns with.
"I'm very grateful for it but the point is, an awful lot of finance ministers across this country already committed to expanding CPP," he told the Gazette on Friday.
Endin said, had the government expanded the CPP, it would have had a significant impact on many people, including those who prefer to invest, even temporarily, in building a business or in other forms of wealth building and those who want to cease pension contribution to save for a down payment on a home.
"I don't see any harm," Endin said of proposed pooled plan.
"The concerns that I had for the expanding CPP, I can't think of any of my concerns that apply to the new plan, number one because it's voluntary which means that if a person needed to stop submitting to the plan, they could ... I like that flexibility part of it," he said.
"The government needs to have oversight over pension plans so that people don't get fleeced because you've seen how absolutely and abjectly crooked the financiers and the financial market are around the world," he added.
"This would give the fed government an opportunity to have oversight which would protect everybody."
St. Albert Gazette, Sat Dec 18 2010
Byline: Lauren Den Hartog
Flaherty switches course on pension reform, much to Alberta's delight: Minister backs away from bolstering CPP
The initiative, to be called Pooled Registered Pension Plans, is revealed in a letter Flaherty sent to his provincial counterparts in advance of a meeting of finance ministers in Kana naskis on Monday.
The surprise move was welcomed by Alberta, which has long opposed an expansion of the CPP. But it drew conflicting reaction from other quarters -- including those who charge the federal minister has caved to the demands of business -- and set the stage for a vigorous debate among finance ministers next week.
"It's a multi-jurisdictional challenge to get a consensus on the CPP," Flaherty said at a news conference in Ottawa on Thursday. "There are no quick or easy solutions on CPP. Several provinces have concerns that remain unresolved."
It is a significant shift for Flaherty, who just six months ago was touting enhancement of the government-run CPP. Alberta Premier Ed Stelmach. praised his change of heart.
"The fact the federal government has backed off increasing CPP contributions is good news because at this critical stage -- given that we have a fragile economy, businesses are struggling -- it would have been another significant contribution in a tax on behalf of our private sector," Stelmach said, speaking in Calgary.
Alberta Finance Minister Ted Morton, who was unavailable for an interview, said in a news release that Ottawa's previously proposed solution of expanding CPP "was a shotgun approach that would have been ineffective and economically damaging."
He noted that Alberta has been promoting this type of private-sector pension with British Columbia for the past three years.
"The one stumbling block for broader implementation had been a lack of interest in Ottawa," Morton said, suggesting Ottawa's change of heart came from provincial prodding.
In Ottawa, the Liberal and NDP accused Flaherty of failing to show leadership and of buckling to pressure from the business community. Closer to home, Alberta Federation of Labour president Gil McGowan said he believes Ottawa has given in to a lobby effort from those companies that sell financial services to Canadians.
"It's hard to look at this flip-flop as anything other than a huge Christmas present for the banks and the private investment industry," he said.
CPP expansion would give Canadians a lower-cost vehicle for investing retirement savings, compared with private options, McGowan added.
Despite the criticism, Flaherty said his proposal is what's best for the country. Flaherty said it is critical to provide a private pension plan for those workers, and also to encourage people in their 20s, 30s and 40s to start preparing for retirement now.
It is estimated six in 10 Canadian workers in the private sector have no private pension plan. Furthermore, only one-third of Canadians make contributions to RRSPs.
The federal finance minister described his scheme as a major step forward that would spur pension plans to provide more retirement security for Canadians -- especially for those workers who are self-employed or who work for small firms that don't offer pension plans.
Under the proposal, a company could arrange for a regulated financial institution to operate a plan, thereby reducing the cost and complexity for small businesses to participate. Similarly, for self-employed workers, the PRPP would be "accessible" without having a connection to an employer. They would simply have the option to participate in a "large-scale, pooled-pension plan" that is administered by a private-sector financial institution.
Flaherty said he hopes it will be in place within one year. "It's clear that it will work."
At the finance ministers' last annual meeting in June, Flaherty and the provincial treasurers focused on ways to improve the pension system and they are expected to return to the topic next week. At that time, Flaherty said a solid majority of the provincial ministers had endorsed the idea of increasing CPP contributions from employers and employees to boost the value of the benefits when they retire. Flaherty acknowledged at the time that support for the direction was not unanimous. But he then indicated he was optimistic there would be enough provincial backing to make it happen.
But at the news conference Thursday, he signalled this option is on the back burner because of provincial opposition. Changes to the CPP require the support of two-thirds of the provinces and two-thirds of the population.
In recent months, the business community had also strongly complained that an increase in CPP contributions would amount to another tax burden.
Canadian Federation of Independent Business Alberta director Richard Truscott said the CPP proposal would have been acceptable if it simply meant a pension premium increase for employees, and had not included employers still struggling with the economic downturn. Employees should shoulder more of the burden, he said, as it boils down to deferred personal savings.
"For employers, it's simply a payroll tax. There's no net benefit," he said.
Truscott said groups advocating for a CPP premium increase "seriously underestimate the impact on the economy."
In Ontario, the provincial government said that while it also likes the proposed private pension plan, it shouldn't be used as an excuse to drop enhancements of the CPP. Dwight Duncan sent a letter to other provincial treasurers and Flaherty urging them not to give up on enhancing the CPP.
Liberal Leader Michael Ignatieff said Flaherty's move away from the CPP toward a "private option" displays a lack of leadership.
Calgary Herald, Fri Dec 17 2010
Byline: Mark Kennedy and Kelly Cryderman
Join Santa Claus and Canada’s finance ministers in Calgary this Sunday, send Harper and Flaherty a message: AFL Action at Delta Calgary Airport Hotel 2:00 pm Sunday, December 19th
Canada's finance ministers are meeting in Calgary this Sunday at the Delta Calgary Airport hotel before they head to Kananaskis for their Monday meeting on pension reform. Canadian finance minister Jim Flaherty has pulled a fast one by trying to take CPP expansion off the table at the last moment - a Christmas gift for the banks and insurance companies - but many provincial finance ministers are not happy. And neither is Santa Claus.
Santa Claus (aka Gil McGowan, AFL president) will be on hand at the airport to welcome them to Alberta. He will give presents to the provincial ministers who support CPP expansion, and a well deserved lump of coal to Flaherty and Morton. But what is Santa without his helpers? Please come out and help us greet the ministers in style! We will be meeting up in front of the Delta Calgary Airport Hotel at 2:00 pm Sunday, December 19th. We will have Santa hats for people to wear and Christmas cards for them to give out. Let's make sure the last message finance ministers get from the public before their meeting is in support of CPP expansion! If you can make it, please RSVP to Jerry Toews at firstname.lastname@example.org or phone 780-483-3021.
Send Flaherty and Harper one last message:
The Canadian Labour Congress has asked us to forward the following appeal:
"Finance Minister Jim Flaherty appears to be softening his support for an expanded CPP in the lead up to the finance ministers meeting this weekend in Kananaskis.
We need your help. Forty years of a private sector voluntary solution have not worked - Canadians don't need the banks and financial industry getting another opportunity to gouge them out of their hard earned savings. Canadians need leadership from their government. I urge you to send one final message to Prime Minister Stephen Harper and Finance Minister Jim Flaherty, reminding them that they publicly supported an improved CPP. Tell them that we want to see action at Kananaskis and our plan to gradually double future CPP benefits is the best plan to help the majority of Canadians save for their retirement."
Harper/Flaherty Pension Scheme a Holiday Gift to the Banks; a Lump of Coal for Canadians:Taking CPP expansion off the table would be a betrayal of what Canadians need and want
Edmonton - Federal Finance Minister Jim Flaherty has betrayed generations of Canadians by suggesting that expansion of the Canada Pension Plan should be taken off the table at the meeting of provincial finance ministers in Kananaskis next Monday, says Gil McGowan, President of the Alberta Federation of Labour.
This morning, Flaherty unveiled a supplementary, voluntary pension plan run by the big banks as an alternative to expanding the CPP, despite having taken the private sector option off the table just a few months ago.
"The federal government caved to ideological pressure from Alberta and the self-interest of the investment industry," says McGowan, who says the only ones who will benefit from Flaherty's plan are the banks, who will profit from the high fees charged by private sector plans, as opposed to the low management fees in the Canada Pension Plan.
"It is clear the investment industry had a hand in this decision. The Canadian Association of Bankers called the plan a 'wonderful holiday gift' within minutes of Flaherty's announcement. They had their press releases all queued up, and had clearly been consulted beforehand," continues McGowan.
McGowan says today's federal announcement betrays the 78 percent of Canadians who want CPP benefits increased, according to a recent Environics poll.
It is also unclear whether there is in fact a national consensus on the private sector option, as Flaherty claims. All provinces, except Alberta, support modest phased-in improvements to the CPP.
"I am calling on the finance ministers of all provinces to stand up for what their citizens need and want, which is better retirement security via improvements to the CPP," says McGowan. "On December 19th and 20th, the rest of Canada's finance ministers must keep CPP expansion on the table."
The voluntary plan cooked up by Ottawa, Alberta, and the Big Banks will not in any way address Canada's looming retirement crisis.
"This plan exposes Canadians to unnecessary risk, and employers can opt out. Let's face it - they will, and it's a fantasy to think otherwise.
"The private investment industry has had 40 years to prove to Canadians that their products can deliver adequate retirement income. They've failed, because they are more interested in high fees and their own profits than Canadians' ability to retire in dignity."
"The CPP is the most efficient way to ensure Canadians don't live in poverty in old age. If the country's finance ministers don't stand up to the Harper Conservatives, the Alberta ideologues, and the Big Banks today, we lose the opportunity to secure a dignified retirement for generations of Canadians to come," concludes McGowan.
Gil McGowan, President, Alberta Federation of Labour @ cell 780-218-9888 or office 780-483-3021
Listen to Albertans, not gov't, on pension reform, labour group urges: AFL sends letter to finance ministers meeting in Kananaskis
Alberta is the only province opposed to the plan, and Finance Minister Ted Morton maintains that putting more money into CPP won't fix the pension problem.
In an open letter to federal and provincial finance ministers meeting in Kananaskis next week, the federation on Wednesday urged the ministers to disregard Alberta's objections and expand the CPP.
"Ted Morton and the Conservative government do not speak for Albertans," federation president Gil McGowan said. "It's clear that Albertans are at least as supportive of CPP expansion as other Canadians."
McGowan points as proof to a recent Environics poll that showed two in three Albertans support increasing Canada Pension Plan benefits through a gradual increase in contributions by both employees and employers. Across Canada, 78 per cent of respondents said they support increasing government pension benefits.
In addition, Edmonton's city council on Nov. 26 voted to send a letter to Premier Ed Stelmach and Finance Minister Ted Morton in support of expansion.
Morton said the federal government's own studies show the system is working for high- and low-income Canadians, because the wealthy fund their own retirements and low-income Canadians have access to CPP, Old Age Security pension and the Guaranteed Income Supplement.
"In the middle-income bracket there is a problem," he said. "Our position is that the solution should be tailored to fit the problem. The solution is not across-the-board CPP hikes. ... It doesn't address the problem."
Morton said increasing CPP contributions prevents working Albertans from investing their money elsewhere and that increasing employer CPP contributions is a "payroll tax" and prevents businesses from hiring new workers.
Further, he said the federal government's plan will not benefit those who are retired or over 50 years old.
The solution, he said, is to improve Albertans' access to pension plans through their employers, which Alberta has been working on for more than three years.
"Alberta will proceed with private-sector pension reform regardless of whether there's a change in CPP or not," he said. He said Albertans can expect to see changes in 18 to 36 months, depending on how fast the economy recovers.
McGowan said Alberta has the lowest pension coverage in Canada with only one in five private sector employees with access to a pension plan through their work, according to a federation study.
In addition, he said most Albertans are not saving enough for retirement: in 2008, 38 per cent of Albertans contributed to their RRSPs, and the average contribution was $3,200.
Edmonton Journal, Wed Dec 15 2010
Byline: Karen Kleiss
Earlier this year, every provincial finance minister except Morton endorsed a proposal to phase in CPP enhancements.
"Expanding the Canada Pension Plan is not the answer," sniffed Morton after the last federal-provincial finance ministers' meeting in June.
"Alberta believes the solution is not to rely on future taxpayers to fund public income support systems, but to instead find ways to encourage Canadians to save for their retirement."
The problem with that approach is it doesn't take human behaviour into account. Yes, people should sock away more for their post-working lives - but they don't. Even financial planning courses and projects designed to encourage people to save can have lacklustre results, according to a new report by the Institute for Research on Public Policy (IRPP).
"Surprisingly, financial education programs have not been shown to increase financial knowledge," the report points out. "The challenge is that financial decisions such as saving for retirement or buying a house have little relevance for elementary and secondary school students."
More unsettling is the report's finding that matched savings programs with financial training classes haven't been particularly successful in getting the poor to save.
The study points to the Learn$ave program, in which each dollar deposited into an account for adult education was matched by a $2 contribution from the federal government.
Several thousand volunteers participated in the Learn$ave experiment and were divided into three groups. The control group received no services. The second group was offered the matched savings program and was required to attend financial training sessions. The third group was offered the matched savings program but was not allowed to take the finance classes.
In the end, the amount saved by the group that attended the classes was the same as the amount saved by those who didn't sit in on the seminars. "The effect of financial education was negligible," says the IRPP report.
What this suggests is that expecting ordinary Canadians to make savvy financial decisions about money issues - never mind the complexities of retirement planning - is unrealistic.
Yet Morton seems to think Albertans will be just fine figuring out retirement planning on their own. Financial institutions will offer an array of services and citizens will graze at the buffet, selecting the appropriate ingredients for their retirement years.
This comes from a cabinet minister who will receive a whopping transition allowance when he leaves politics.
Next Monday, the federal and provincial finance ministers are scheduled to meet in Kananaskis to discuss pension reform, among other issues.
And the Alberta Federation of Labour has released an open letter to the ministers to expand CPP. It is not an unreasonable plea. Two-thirds of Canadian workers don't have a company pension plan.
But don't expect any substantial promises on pension reform out of the Kananaskis meeting, warns Jack Mintz, head of the school of public policy at the University of Calgary.
"If there's any change, it'll be just a modest change," he says. Politicians, of course, don't have to worry about their retirement.
Edmonton Sun, Tues Dec 14 2010
Byline: Mindelle Jacobs
An open letter to Canada's finance ministers: “Ted Morton does not speak for Albertans on CPP expansion!” Alberta Federation of Labour President urges fellow Canadians to move forward...
Edmonton - Alberta Federation of Labour President Gil McGowan released an open letter to Canada's provincial and federal finance ministers today, urging them to move ahead with reform to the Canada Pension Plan despite continued opposition from Alberta Finance Minister Ted Morton.
"Alberta Finance Minister Ted Morton does not speak for Albertans on the issue of retirement security," says McGowan, President of the AFL, which represents 140,000 Alberta workers.
Federal and provincial finance ministers will meet on December 20th in Kananaskis, Alberta. In recent months, a rare consensus in favour of CPP expansion has emerged among the provinces and the federal government, with the exception of Alberta.
"The rest of the country needs to know that two-thirds of Albertans disagree with Ted Morton, along with experts across the political spectrum, and ordinary Albertans from all walks of life," continues McGowan, adding that it appears some members of Morton's own Conservative caucus also disagree with his position.
The open letter to Canada's finance ministers argues that a recent Environics poll found that 66-per-cent of Albertans support an increase in CPP benefits and only 19-per-cent are opposed. On November 26th, Edmonton City Council passed a unanimous motion in favour of expanding CPP. The same week, the Calgary Herald editorial board endorsed CPP expansion without reservations.
McGowan adds that none of Alberta Finance Minister Ted Morton's claims about the negative effects of CPP expansion are supported by evidence. Rather, Albertans need CPP reform more than other Canadians - Albertans have lower workplace pension coverage than other Canadians and are able to save no more than other Canadians in RRSPs.
"Finance Minister Ted Morton has only suggested one alternative to CPP expansion - a voluntary scheme managed by the big banks and insurance companies. Polls show Albertans don't support those ideas, either," says McGowan, indicating that private, voluntary pension schemes come with extremely high fees and much more risk than the CPP.
"We urge Canadian finance ministers to do the right thing - and expand the Canada Pension Plan - as a way to ensure retirement security for all of us," concludes McGowan.
Gil McGowan, President, Alberta Federation of Labour -cell 780-218-9888 or 780-483-3021 or email@example.com
There are few topics more entertaining to watch politicians squirm over than the distribution of seats in a legislature. Inequities that work against their perceived interests are a "shocking" departure from the concept of one person one vote, while ones that suit them are perfectly reasonable arrangements to guarantee that groups and regions with smaller populations are properly looked after.
A marvellous example of this can be found in a bill to redress the current under-representation of Ontario, British Columbia and Alberta by changing the formula for deciding how many MPs there are. The new scheme would effectively share 30 new seats among those three growing provinces.
Make no mistake, for constitutional and historical reasons too complicated to explain, the current arrangement is very unfair, and tends to bias the system in favour of Quebec and the Maritime provinces. The new plan would make things better.
But the new bill does nothing to change how seats are distributed within provinces, which means the current bias in favour of rural areas, and against urban suburbs - a bias even more vivid in Alberta's legislature, as it happens - remains a matter of no apparent concern.
Albertans, Ontarians and British Columbians are entitled to the extra representation. But what really needs to happen is a decision to embrace the notion that everyone needs to be equal when choosing a government.
Still under water, but not quite so deep
The good news for Premier Ed Stelmach is that his approval rating has climbed to 21 per cent. The bad news, of course, is that this is good news.
Alberta's premier is at the opposite end of the spectrum from outgoing Newfoundland and Labrador Premier Danny Williams, the colourful and scrappy politician who stepped down Friday.
Williams was the most popular provincial leader in the country with a 67-per-cent approval rating. By comparison, an Angus Reid poll found that 56 per cent of Albertans disapprove of Alberta's premier.
The positive for Stelmach is that he's up 50 per cent from November 2009, when he polled only 14 per cent. Imagine! An Alberta Conservative premier down in Jean Charest, Gordon Campbell and Dalton McGuinty territory!
Williams was guest speaker at the March 2006 Alberta Tory Convention when members gave Ralph Klein the push he couldn't ignore. After a vote that saw Klein garner a measly 55 per cent support from Conservative party members, Williams went up to his hotel room and rewrote his speech. He used his keynote address to chastise his audience for their despicable treatment of Klein, whom he called "the rock star of Canadian politics."
Williams saw what lies ahead for even the most popular premiers when they overstay their offices. Alas, Stelmach can only dream about going out on a Williams-style high.
Pension planning not very conservative
According to the Alberta Federation of Labour, 67 per cent of Albertans will not have enough money for retirement 20 years from now. It claims that 31 per cent of Alberta seniors currently live on less than $16,000 per year. That's not what most working Albertans picture for their own retirement.
The AFL says pension reforms are badly needed because Albertans have the lowest retirement savings in Canada and most do not have an employer pension plan. Most don't have Registered Retirement Savings Plans either; the AFL says only 38 per cent of Albertans contributed to an RRSP in 2008.
Nevertheless, Alberta's Finance Minister Ted Morton says the current pension system is good and reforms would do more harm than good. Morton is concerned that increasing Canada Pension Plan contributions would be harmful to employers and would slow down job creation.
He says some Albertans are saving enough to retire comfortably. We hope he is one of them, and assume he'll be willing to take in some former supporters who aren't. When do you serve breakfast, Ted? And can we have our eggs over easy?
Delegation to minister wisely parked
Kudos to the Alberta Conservatives for shelving controversial parks legislation that would have shifted arbitrary authority over development in parks from cabinet to the parks minister. Alberta conservation groups raised a ruckus and Parks Minister Cindy Ady listened. She withdrew Bill 29 and announced a public consultation on the proposed new legislation for the parks network.
The Sierra Club may have been overstating the point a bit when it proclaimed that the minister had pulled "our parks back from the brink of disaster," but its clear Albertans of all political stripes are passionate about their parks. It's now Ady's job to follow up with the promised dialogue, and then come up with something more satisfactory.
Attending sitting not Premier priority
The fall sitting of the Alberta legislature is ended, and to mark the occasion the provincial Liberals have helpfully come up with some interesting statistics - from Hansard, the official record of the Alberta Legislative Assembly - about such things as the attendance of Alberta's apparently shy premier, Ed Stelmach.
Following are excerpts:
Number of days the Alberta Legislature could be bothered to meet on the public's business: 18
Total number of hours the house sat: 174
Approximate number of hours the premier was in the Legislature personally: 7
Number of minutes spent in emergency debate on health care: 75
Number of seconds the premier squeezed into his schedule to attend this emergency debate: 0
Edmonton Journal, Sun Dec 5 2010
There was a time when many Canadians resented being forced to participate in the Canada Pension Plan (CPP), believing they could do better on their own. Two stock market crashes later, that notion is as outdated as Freedom 55.
Since the financial meltdown began in 2007, an increasing number of seniors are living in poverty, underlining the urgency to expand the CPP. As Canadians watch their private savings dramatically fail, reforms to the CPP in the late '90s have proven to work. The plan is well funded at $125 billion, well invested, reliable and sustainable.
The only problem is the payout of 25 per cent for top earners -- up to a maximum of pensionable earnings of $47,200 per year -- is inadequate. That means the most anyone can make on CPP is a little less than $1,000 a month or about $11,800 a year. It's not a lot.
As the baby boomers retire, the stress on the system will only grow, and the discrepancy between those who have properly planned for retirement, and those who have not, will become more pronounced.
Increasing the CPP premiums and payouts is the fairest way of easing the burden on tax-funded subsidies for low-income retirees, such as the guaranteed income supplement. Make no mistake, the CPP is not a payroll tax. It is mandatory savings. You only get what you put into the plan. Any reforms to increase contributions and benefits would be phased in over 40 years, so that only those who have fully paid the increased premium would fully benefit from the payout.
Expanding the CPP is not a new idea, and was first recommended by a task force in 1979. It is now back on the table, after Federal Finance Minister Jim Flaherty and all provincial finance ministers except for Alberta's Ted Morton, agreed in June to a "modest, phased-in and fully funded enhancement to defined benefits under the Canada Pension Plan."
By contrast, a major increase in the benefit -- up to 50 per cent -- is being proposed by a number of people and organizations.
They include former CPP chief actuary Bernard Dussault, Simon Fraser public policy researcher Jon Kesselman, the author of Expanding Canada Pension Plan Retirement Benefits: Assessing Big CPP Proposals; and Gil McGowan, the president of the Alberta Federation of Labour.
The three met with the Herald editorial board recently and presented a compelling argument for doubling the CPP benefit, which we endorse. The CPP already covers almost all Canadian workers and thus spreads the risk and management fees. It is fully portable, offers guaranteed income to all retirees, and is the only risk-free investment broadly available to workers. Private RRSPs and employer pension plans have proven much riskier than initially billed. Those who are in company pension plans are likely in a defined contribution scheme, where the amount that goes in is predetermined, but the payout is based on how well the fund is invested and ultimately performs. Nortel workers know only too well how that worked.
Employers and employees would both be better served by paying more into CPP and less into a company plan. Employees could leave after a few years without losing their pension benefits, reflecting the more transient reality of today's workforce, where it's the exception instead of the norm that a career begins and ends at the same place.
Alberta's opposition is a throwback to outdated thinking, with regards to individual choice and financial flexibility. Those Canadians who want to retire in comfort will still need more to live on than the CPP.
But by raising the standard of living for all retirees, today's taxpayers are saved from shouldering the burden of tomorrow's seniors living in poverty. In the long run, it ensures people pay their own way; a truly Conservative value that should be embraced by the Alberta government.
Calgary Herald, Sat Nov 27 2010