ONLY SASKATCHEWAN RIGHTLY CALLS THE EXPANDED CPP A LOUSY IDEA

  • 17 Jun 2016
  • National Post – (Latest Edition)
  • KEVIN LIBIN

Brad Wall vs. Big Ottawa 

ONLY SASKATCHEWAN RIGHTLY CALLS THE EXPANDED CPP A LOUSY IDEA.

If our new- and- improved federal voting system, whatever it ends up being, ever puts a non-Liberal government in Ottawa again, Canadians may find themselves thankful they had Saskatchewan Premier Brad Wall in the meantime to at least try standing up against the excesses of this one. Wall has quickly become not just the loudest, but arguably the only premier willing to speak truth to power as the Trudeau government schemes to centralize provincial priorities within the Langevin Block.

Most recently, Wall’s government is the most vocal in calling out the danger in the Liberals’ drive to force workers from coast to coast to coast into an expanded Canada Pension Plan. With growth lagging across the country, a proposal to dock more disposable income from everyone’s paycheques, all to maintain a small group of middle- class retirees in their current lifestyles, doesn’t exactly have Quebec and B. C. thrilled either. But both sound like they’re open to letting Ottawa persuade them to compromise on the matter. Ontario Premier Kathleen Wynne, peddling invented claims about a “retirement crisis,” threatens to implement her own, far more onerous Ontario provincial pension plan. She now says she’ ll back down if the Trudeau government agrees to enlarge the CPP to her liking. So unsavoury to both the business community and Ottawa is Wynne’s potential convoluted layer of pension headaches that she has enough leverage to hold the rest of the country hostage as she presents her demands to Finance Minister Bill Morneau.

Only Saskatchewan rightly calls the expanded CPP a lousy idea; that the glum economic picture, particularly out west, means “the last thing we need to do right now is impose an additional payroll tax on our business community,” as its finance minister, Kevin Doherty, has explained. Saskatchewan makes the same case against Trudeau’s plan to impose a countrywide carbon tax, adding that not only can the West ill-afford a new penalty on its beleaguered resources, but Ottawa has no constitutional power anyway to tax provincial Crown corporations, including the heavy emitters SaskPower and SaskEnergy. From the pension to carbon taxes, to pipelines and employment insurance, Wall’s Saskatchewan keeps providing real provincial opposition to the Liberals’ centralizing agenda. Somewhere inside the PMO, his face must be on a dartboard.

We can only hope Saskatchewan can get the other fencesitting provinces to show some spine as Morneau brings them together next week in Vancouver to talk CPP. He’s increasingly desperate to find “consensus,” having unleashed a “flurry of phone calls, face-to-face meetings and letter exchanges” with the provinces to narrow their differences, according to Thursday’s Globe and Mail.

But expanding the CPP started out as a bad idea when the Liberals promised during last year’s election campaign to bring the provinces on- board within 90 days of taking power, and it’s only looked worse in the months since they missed that deadline.

The latest snag came Thursday in a paper released by the C. D. Howe Institute revealing that seniors end up needing substantially less savings in retirement than current pension models assume. The report happens to be written by Fred Vettese, chief actuary at Morneau Shepell — yes, that Morneau Shepell, the human resources company belonging to none other than federal finance minister Bill Morneau. Vettese notes that while both workplace and public pension plans like the CPP are indexed to make sure retirement spending adjusts for inflation, they fail to account for “a decline in real spending” among retired Canadians ( at least those who aren’t just scraping by).

Without kids to pay for, and since they don’t get out as much anymore, especially after turning 70, grandma and grandpa don’t just spend less, they end up saving more than people who are still working, on average. Better to cut back on those pension contributions now, suggests Vettese, to “free up money to be spent today when families struggle to raise children and pay down mortgages on houses” — in other words, let people have the money when it can actually make their lives better.

Vettese is on the record elsewhere supporting a modest expansion to the CPP, but that’s because he’s concerned about lower- for- longer growth dragging down private saving returns. Still, he acknowledges ( as numerous economists note) that the alleged under- saving is only an issue among middle- class Canadians who lack a sufficient workplace pension. Even half of those, Vettese says, “will receive a sizable inheritance” — the Financial Post reported recently that three- quarters of a trillion dollars in inheritances will pass down over the next decade — and will be “bailed out,” leaving just a fraction of Canadians who may not retire with enough to keep up their lifestyle, although that lifestyle would evidently be more austere, regardless of savings ( poor retirees can expect social welfare plans to cover their current lifestyles; everyone else has sufficient pensions or is otherwise well prepared).

Yet, the Liberals — backed by a phalanx of Big Labour groups and labour- friendly premiers like Wynne and Rachel Notley — are pressing forward to force all of us, and our employers, to make bigger CPP contributions. If Vettese is right that we’re facing a long stretch of disappointing investment returns, the federal government certainly won’t help stimulate the economy by forcing 18 million Canadian workers and their employers to lock more spending money into long-term savings most retirees won’t even need.

 

About prosperitysaskatchewan

Consultant on Saskatchewan's natural resources.

Posted on June 17, 2016, in economic impact, miscellaneous, political. Bookmark the permalink. Leave a comment.

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