Harper’s loss a Wynne win on pensions?
Just in time, Justin Trudeau and Kathleen Wynne say they see eye to eye on pension reform.
But if they have a shared outlook on retirement security, it is very much distance vision (and as economists point out, in the long term we are all dead). Near term, these two politicians have different pathways and timelines for public pensions.
When the incoming prime minister came to see Wynne at Queen’s Park this week, he publicly thanked the premier for her exuberant support in the federal election — feeding speculation about how, and how fast, he would repay his political debt.
In his first meeting with the leader of another government, he bestowed his first gift: Trudeau confirmed that he would overturn the churlish decision of his predecessor, Stephen Harper, to sabotage a provincial pension plan by refusing any federal co-operation. The promise to help with administrative streamlining and fair tax treatment is a victory for all Ontarians — not just workers, but small-business owners and corporations — who will no longer be forced to pay the higher administration and overhead costs that Harper was trying to impose on them by persisting with his pigheaded anti-pension obsession.
But while Trudeau is promising co-operation, the pension question is not quite the quid pro quo that people presume. Queen’s Park and Ottawa will continue to go their separate ways for the foreseeable future.
Ontario has lobbied long and hard for an enhanced Canada Pension Plan that would plug the gaps in retirement savings for today’s generation of precarious workers, who can’t count on the predictable employment that their parents enjoyed in their lifetimes. Harper’s Conservatives stonewalled, stalled and ultimately rejected any reform to the outdated CPP, which is capped at just over $12,000 a year in payouts — barely half of what Social Security pays in the U.S. (Ontarians average $6,900 a year in CPP payments).
When the federal Tories ruled out any reforms, Wynne sought and won a mandate in the 2014 provincial election for an Ontario plan to help the two-thirds of workers without a pension. But as she cobbled together a robust Ontario Retirement Pension Plan — bringing together experts from the most successful private plans — Harper refused her request for the same kind of co-operation that Quebec and Saskatchewan have long received for their own pension programs.
Unsurprisingly, Trudeau has now reversed Harper’s ploy, agreeing to provide back-office support in registering workers and collecting premiums, using existing federal structures cost-effectively. Ontario will pay its way without reinventing the wheel.
But talk of pension co-operation has led to confusion about the limits of any new federal-provincial alignment. Trudeau’s election platform includes a promise to enhance the CPP — Ontario’s first choice for years — but it may be too little, too late. Wynne’s embryonic ORPP is not about to be subsumed by a bigger CPP in the short term.
The truth is that Wynne is in no position to demand that Trudeau deliver an expanded CPP anytime soon, because he would need the support of other premiers (specifically, two-thirds of the provinces representing two-thirds of the population). Getting them into line would take time.
The pension devil is not just in the details, but in the premiums. How much would the other provinces be willing to enhance the CPP? In previous haggling, there was talk only of a “modest” enhancement, while the labour movement and the federal NDP sought a doubling of existing payouts.
In this election, the buttoneddown New Democrats quietly dropped their past pledge to double the CPP, and the Liberals never gave a number. Ontario is now too far along to turn back and wait for the rest of Canada to get its act together. There may also be conceptual differences. Various proposals for a “modest” CPP enhancement would make it universal for all pensioners; by contrast, the proposed ORPP offers a higher payout, while exempting those with existing workplace pension plans deemed “comparable.”
This being Canada, where the various federal and provincial governments are rarely in alignment, an already complicated pension equation is made more complex by its interconnected partners. The one consolation is that, by offering co-operation, Ottawa is leaving the door open for the CPP and ORPP to one day merge, without having to build duplicate structures that are later discarded. Can they make it work? Much depends on whether Trudeau and Wynne can see — through a progressive lens — how to focus their distance vision in the near term. Martin Regg Cohn’s Ontario politics column appears Tuesday, Thursday and Sunday. mcohn@thestar.ca Twitter: @reggcohn