Social Policy in Ontario

How CPP reform could kill Ontario’s pension plan

Posted on June 4, 2016 in Social Security Debates

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TheStar.com – News/Queen’s Park – Ontario Liberals are under pressure to accept a grand (albeit minimal) national CPP compromise, lest they be burned.
June 4, 2016.   By MARTIN REGG COHN, Provincial Politics Columnist

Be careful what you wish for. And beware your political friends.

Retirement security is the great hope — and hype — of Canadian politics: Boosting the paltry Canada Pension Plan after 60 years of inadequacy remains the unfinished business of our modern social security system.

Now, after eight years of private manoeuvring and public electioneering, the battle to expand the CPP is building to a climax. But the campaign rests on a knife’s edge that could rip apart more recent reforms in Ontario.

If the campaign for a robust CPP expansion somehow succeeds this summer — lifting our national pension plan from among the lowest levels in the industrialized world — all Canadians will be better off. But if a behind-the-scenes effort by Ottawa and the provinces falters — or is diluted to the point of pointless symbolism — we will all be the poorer for it.

Ontario’s Liberal government is caught in the middle — under pressure to accept a grand (albeit minimal) national compromise, lest it be scapegoated for getting in the way of the federal Liberals.

Paradoxically, the battle for a rigorous and generous pension for working people has almost been achieved in Canada’s biggest province. Armed with her 2014 election mandate, Premier Kathleen Wynne secured passage just this week of her Ontario Retirement Pension Plan, which would effectively double the maximum pensions for workers who pay into it over a lifetime.

It ranks as one of the boldest social innovations in a generation — fully funded and carefully targeted, a testament to practicality in times of uncertainty.

But the ORPP is on life support at the moment of its birth. While starting up and scaling up — premium collection begins in a mere 18 months — the plan risks being wound down before ever getting off the ground.

That’s because a last-ditch effort to revive CPP expansion is muddying the reform waters. Ignored by most other provincial premiers for years, and finally killed off by former prime minister Stephen Harper, the reform campaign is now being revisited by his successor, Justin Trudeau, as promised in the 2015 election.

But Trudeau cannot do it alone. Updating the CPP, whose maximum payout is a mere $13,110 annually, requires seven provinces with two-thirds of the population.

Realistically, the only way to achieve reform is to stick with a “modest” CPP expansion that is minimalist, hewing to the lowest common denominator and taking the maximum amount of years to phase in. Federal Finance Minister Bill Morneau has been pushing hard to win over other provinces, and many believe he is making unexpected progress — provided Ontario gets out of the way with its own ambitious reform plan.

The question for Ontario Finance Minister, Charles Sousa: How low does he go? And how does he avoid being burned?

The question for Morneau, who ran his own pension consulting firm and served as a technical adviser to the ORPP before becoming an MP: Is he ready to burn Ontario’s carefully constructed plan?

After years of preparation, Sousa must move fast on the ORPP. New staff are being hired and contracts must be signed for its technical infrastructure in coming months.

Ontario’s nightmare scenario is more talking, dithering and deferring by Ottawa and the other provinces. Finance ministers meet in Vancouver on June 20 and again next December — and Ontario risks being left in the lurch, isolated and frustrated.

“I’m not prepared to put myself in a position where we have no specifics — where they’re saying nice things but not acting on them,” Sousa said in an interview.

While Ontario is willing to consider minor reductions in its pension payouts to accommodate other provinces, it prefers a different compromise: Rather than a one-size-fits-all approach, why not a flexible framework that allows each province to phase in its own program design at the right time, as happened with medicare and is in the offing for carbon pricing? That would allow Ontario to proceed quickly with its more generous program that is ready to go, while other provinces move at their own pace — and rate.

Canadian Labour Congress president Hassan Yussuff, who has long campaigned for a doubling of the CPP (a non-starter for most provinces), says the labour movement is willing to compromise — and so should Ontario. But he opposes a “patchwork” system that preserves the ORPP while allowing other provinces to do their own thing.

“I applaud the premier for what she has done — she took a lot of risk by putting this on the table,” Yussuff told me. But Wynne should “seriously consider joining with the rest of the country to enhance CPP rather than going it alone.”

Yussuff is a savvy labour leader who has his ear to the ground, and he sees common ground among the provinces. But building an enduring pension plan is not quite analogous to a labour negotiation.

If the ORPP is sacrificed for the greater good of a pan-Canadian expansion that provides real retirement security for workers, so be it. But if Ontario’s plan, years in the making, is scuttled for the sake of political grandstanding and horse-trading, it will prove to be a pyrrhic CPP victory.

< https://www.thestar.com/news/queenspark/2016/06/04/how-cpp-reform-could-kill-ontarios-pension-plan-cohn.html >

Tags: economy, ideology, participation, pensions, poverty, standard of living

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