Stewardship. It’s a word that’s typically tied to the environment, such as recycling household waste or sustainable logging of forests.
The concept is, of course, much broader. Stewardship literally means “the careful and responsible management of something entrusted in one’s care.” It’s a fundamental principle that should apply to governments, as much as it does to businesses or institutions.
Yet, too often, stewardship takes a back seat to short-term gain, tossed aside for what seems more important in the moment. The reasons may be to boost quarterly profits or to gain an edge on political opponents. All the while, larger challenges get shunted down the road on issues such as pensions, infrastructure and emissions regulations for the oil and gas industry.
Consider Canada’s pension conundrum. Longer life expectancy, low-for-long interest rates, troubled private-sector pensions, and a retirement bulge are the ingredients of a mess.
Too many Canadians will suffer massive drops in their income in retirement. That’s a problem for individuals. It’s an even bigger problem for the economy (depressed output), and ultimately for government, which will have to pick up the pieces later on.
An obvious solution is at least a modest expansion of the Canada Pension Plan, which boasts solid returns and low-cost management. A majority of the provinces, including Ontario, have been pressing Ottawa to go that route. In 2014, Canadians max out at $12,500 a year under the plan.
That’s fine for people who have workplace pensions and adequate savings. But roughly two-thirds of Canadians don’t, and the share is rising as more people work in part-time and erratic service-sector jobs.
Finance Minister Jim Flaherty rejected the idea of expanding the CPP, saying the economy is too fragile now to hike premiums. Perhaps he fears the wrath of the small-business lobby, which equates contributions to employee pensions as a “payroll tax.”
Mr. Flaherty insists Canadians have plenty of other ways to save for retirement, including tax-free savings accounts and registered retirement savings plans.
But these are used much more by the wealthy – not the same people a CPP expansion would reach.
The reality is that most Canadians don’t save enough, and will never save enough, unless forced to. A third of adult tax filers had TFSAs in 2011 and roughly a quarter of Canadians have RRSPs.
The government is treating the Canada Post pension problem in similar fashion. Ottawa has granted the postal service a four-year reprieve from payments needed to make the plan solvent – a move that avoids massive losses now, but likely only postpones an eventual government bailout.
Infrastructure, particularly the replacement of aging infrastructure, is another area where stewardship is lacking. Governments love the shiny and the new – university buildings, hockey rinks and new highways. Repairing and maintaining the old has much less political appeal.
That may at least partly explain why Ottawa waited years to deal with the federally owned Champlain Bridge, a vital artery linking Montreal to the South Shore. A replacement for the crumbling bridge is now slated to be completed in 2018. The decision to go ahead is the right one, but it comes after years of unheeded warnings. That has forced Ottawa to cut corners to speed up construction, including the awarding of a sole-source engineering contract.
And what about emission rules for the rapidly expanding oil and gas industry? New regulations were first promised seven years ago, and repledged for this year.
In a year-end interview with Global News, Prime Minister Stephen Harper now says he’s “hoping” the regulations will get done over the next couple of years in a game of you-first with the United States.
The delay coincides with a massive expansion of the oil sands. The result is that many new operations are going into production under the old rules, and risk-averse companies aren’t installing cleaner technology because they don’t have to.
It also comes at a steep price: Canadians get a dirtier planet, while industry lives with chronic uncertainty.
It’s not entirely fair to pick just on government. Companies may be even worse at “careful and responsible” long-term management of their organizations. So-called short-termism makes for worse decisions and yet it’s rampant, according to a recent survey of investment stakeholders by Mercer, Stikeman Elliott LLP and the Generation Foundation. “A more robust relationship between companies and their long-term owners can support more sustainable capitalism,” their report concluded.
Note to decision-makers: Make stewardship your New Year’s resolution.