OTTAWA – Ontario says there is enough support among provinces to act now on enriching the Canada Pension Plan and is urging Ottawa to not wait for unanimity.
Ontario’s finance minister, Dwight Duncan, said Sunday night he believes Quebec may be prepared to support modest enhancements of the CPP, which would meet the two-thirds of provinces with two-thirds of the country’s population threshold.
When enriching the CPP was discussed two years ago, Quebec and Alberta balked and Ottawa settled on the creation of a voluntary program for workers without company plans called the Registered Pooled Pension Plan.
“Until now they said we didn’t meet the test, now I suspect we will depending on what Quebec does,” Duncan said on his way into a Sunday night dinner with his colleagues prior to the Monday meeting.
Duncan also took issue with Finance Minister Jim Flaherty’s contention that the economy was too weak to raise premiums on employers.
“It will create jobs. I would ask people to think about that for a minute. This is not a tax, it is a savings plan,” he said.
The Ontario minister said with baby boomers moving into retirement, many without sufficient funds, it is essential that policy-makers address the inadequacies of the public pension program.
Quebec Finance Minister Nicolas Marceau appeared sympathetic to Ontario’s position, saying he was “open to improvement,” adding he would try to work something out with other provinces.
Marceau added that while it would be ideal if all provinces were on side, “the rule is two-thirds and we’ll work with this.”
New Democrats and the Canadian Labour Congress have proposed doubling what CPP would pay out over a seven-year period to $1,868 a month. The initiative is generally opposed by business groups, however.
The issue is expected to dominate Monday’s talks even though Flaherty made clear he does not expect anything concrete to emerge. He said the time to increase CPP contributions is when there is “significant economic growth.”
Still Duncan insisted he will not move on the pooled pension system unless there are changes to CPP, “and I suspect there are a number of provinces will do the same,” he added.
The only province to come out publicly against enriching CPP is Alberta, whose minister, Doug Horner, told reporters he was open to discussion, “but right now is probably not a good time.”
Saskatchewan’s finance minister said he would consider modest changes, but not a “radical” overhaul.
“I think what will happen is we’ll have a discussion on the CPP issue and it will not be resolved because there is not a consensus,” said Flaherty.
While the pension issues is expected to create most of the heat Monday, federal and provincial finance ministers said the economy overall is the most serious risk facing the country.
The meeting begins with a briefing from Bank of Canada government Mark Carney on the state of the country’s economy and the risk posed by a U.S. budget crisis if Republicans and Democrats cannot reach a deal to extend tax cuts and spending programs that represent about four percentage points of the American economy.
Flaherty has warned Canada could be plunged into a recession if the cliff is not avoided, but Sunday said he is “relatively optimistic” of a deal, if only because both sides recognize the damage that could be done to what is still a fragile recovery.
The minister said he will discuss with provinces contingency plans if the crisis does occur, however.
“If we had to act to stimulate the economy again, we would,” he said, adding he believes provinces would pitch in.
“We co-operated very well in 2008, 2009, so I’m confident that if we were even in that spot again we could count on the provinces and territories.”
Monday’s meeting is the first for the ministers in a year, when Flaherty angered many by unilaterally imposing a new health funding regime for the future, whereby Ottawa ties transfers to the speed of economic growth.
This time Flaherty says he is making no substantive changes to any of the federal programs, although some disgruntled provinces are likely to ask for a better shake.
Last week, the Ontario Chamber of Commerce called on Duncan to get his “elbows out” and demand better treatment, arguing that in the last decade or so, Ontario contributed $20 billion more to the employment insurance program alone than its residents received in return.
“The bottom line is we pay $12.3 billion (annually) into the federation (more) than we take out of it, that’s the bottom line,” said Allan O’Dette, the chamber’s president
The Ontario government has complained in the past that it does not get its fair share of transfers, but Duncan did not mention the issue Sunday.