Money troubles

Tensions between federal and provincial governments are such an integral part of our federation that the latest disagreement on pensions and job training comes as no surprise. It is in our DNA.

We’ve had fights galore over language, equalization, regional aspirations, and the epic constitutional battles over Quebec’s place in the federation have driven us to distraction — and on occasion, brought us perilously close to fragmentation. The controversy over Senate reform and the Quebec charter of values could yet reopen old constitutional wounds and plunge us into dangerous waters again. However, job training and Canada Pension Plan reform are two of the most important socio-economic issues facing the country today, and our federal and provincial leaders should not allow politics or ideology to get in the way of a solution.

With about 60 per cent of Canadians without workplace pensions, and large numbers of them not saving enough to provide for a decent retirement income, this is a significant issue for the future.

And as several workers in the private sector are discovering to their dismay, the recession has eliminated any guarantee people thought they had that those workplace pensions would be there and fully paid for when they need them. Coupled with the rise in the aging population, there are fears that many Canadians will fall into poverty in retirement. As a long-term solution, several provinces want Canada Pension Plan premiums to be increased to provide the cushion many retirees would need. But not all of them agree on how best to reform CPP.

After first acknowledging the need for modest premium increases, Finance Minister Jim Flaherty changed his tune, siding with opponents such as Alberta and small businesses, who argue that such hikes, which amount to higher payroll taxes in a slow economy, would cripple many businesses. Ontario Premier Kathleen Wynne has threatened to establish her own pension plan if there is no national agreement, but her Alberta counterpart Alison Redford is firm in her opposition to premium increases. At their meeting last week, the premiers punted the issue, directing their finance ministers to come up options on CPP reform.

It is the same with job training, which is vital to a rebounding economy. About 40 per cent of adult Canadians have no college, university or trade certification, when a decent job today requires one of these. Skilled workers are needed to drive the economy, but the Ontario Chamber of Commerce notes for instance that 30 per cent of businesses in the province are having trouble filling jobs for lack of qualified people.

To help solve the problem, the federal government created a Canada Job Grant to get employers more involved in training workers. The trouble is, it did so unilaterally, without consulting the provinces who administer job training, and what’s more, the $300 million for the plan would be clawed back from existing provincial plans, that the federal government’s own figures show has an 86 per cent success rate. On this, the provinces are united against what they see as the unilateralist tendencies of the federal government. They also worry that the federal plan wouldn’t help vulnerable unemployed Canadians such as young people, the disabled, Aboriginals and new immigrants. If the provinces reject the federal plan, it will go nowhere, and for now, they are sticking to their guns, with compromise hard to find. That’s how Canada works. Often, ideology, regional differences and poor intergovernmental relations stand in the way of good policy, but they shouldn’t.

There is no doubt that Canada needs pension reform. Of course there are economists who say the pension crisis is a manufactured problem, arguing that most seniors are doing well, and if you count their savings and other assets such as their paid-for homes which is an investment they can cash, their retirement is secure. That may well be for some, but many will need help.

The federal government, backed by Alberta and the business community, favours pooled registered pension plans as a way to help people save for retirement. It is certainly is not a bad option but the problem is that it is voluntary. But others say people actually save for retirement if they are mandated to do so. There has to be a compromise, and whatever it is, it has to have an element of that for it to work. And maybe the federal government should leave job training where it belongs, in the hands of the provinces.