Kathleen Wynne is ready to fight an election on a new Ontario pension plan, putting her political future on the line over an ambitious bid to ramp up retirement benefits.
In her first comments since the federal government shot down an attempt to enhance the Canada Pension Plan earlier this week, Ms. Wynne vowed Wednesday to unveil a provincial program this spring. It would come around the same time as a budget that the opposition parties are expected to vote down, toppling the minority Liberal government and triggering an election.
“This is the time to move forward,” Ms. Wynne said. “This is not a bluff. This is a serious policy issue.”
Exactly how the plan will work is still being sorted out. Ms. Wynne and Finance Minister Charles Sousa are meeting with academics, organized labour and business groups to gather advice on constructing the pension fund.
Ms. Wynne said workers will be automatically enrolled in the plan, but it might contain an opt-out option for people who want to instead save their money privately. The plan would be targeted at middle-income earners, and would entail workers and companies paying a few per cent more on top of CPP premiums in exchange for higher payouts in retirement.
The Premier invited other provinces to join Ontario’s plan, and Mr. Sousa said he had already raised the possibility with fellow finance ministers.
Some provinces, including Prince Edward Island and Manitoba, pushed hard for a larger CPP. PEI’s Finance Minister earlier this week floated the idea of buying into Ontario’s plan. Alberta, meanwhile, is waiting to see the details of Ontario’s proposal before making any decision.
“If other provinces want to talk about a different system, we’re open to that. We’re not going to jump into it and lead it,” Alberta Premier Alison Redford said in an interview. “But if something evolves, we’d look at it. But there’s nothing on the table now that attracts us.”
Quebec and Saskatchewan already have provincial pension plans of their own.
Ms. Wynne’s move puts the squeeze on provincial New Democrats, whose left-wing support base the Liberals will try to woo in the next vote. The NDP proposed an Ontario-made pension plan three years ago. They seem concerned Ms. Wynne will steal their thunder.
“It seems to me this is a whole bunch of politics on the part of the Liberals, trying to find an issue that may be good for them politically,” NDP House Leader Gilles Bisson said.
The Progressive Conservatives are against an Ontario pension plan, arguing such a move would be too expensive for businesses.
“Our economy is so tenuous,” Tory finance critic Vic Fedeli told The Globe and Mail. “Every day, we hear about another company leaving Ontario.”
Mr. Fedeli’s concerns echoed those of the federal government, which said the country’s economy is too precarious to risk taking money out of it by asking workers and businesses to pay more.
“We all want a stronger retirement system but we are wary of the significant costs – including smaller paycheques and lost jobs – for Canadian families and the risk to our economic growth a CPP expansion would trigger,” minister of state for finance Kevin Sorenson said in a statement. He urged the province to instead implement voluntary Pooled Registered Pension Plans. Ontario has promised to create PRPPs, but has not yet passed a law to make them happen.
Ms. Wynne brushed off these concerns, arguing tax cuts for businesses in recent years would make up for the proposed hike in pension payments.
Bill Morneau, executive chairman of HR consulting company Morneau Shepell, who met with Ms. Wynne Wednesday, said PRPPs are not enough because many people do not choose to use them. For a pension plan to help everyone, it must be mandatory, he said.
“If it’s voluntary, a lot of people will not opt in in time to receive significant benefits,” he said.
With a report from Kelly Cryderman in Calgary