Timing was everything. A federal-provincial deal to expand the Canada Pension Plan often looked elusive. In December, it seemed dead. When finance ministers met for supper at Vancouver's CinCin restaurant on Sunday night, they still had no consensus. But a deadline, and a delayed start date, made it come together.
On Monday night, Finance Minister Bill Morneau walked out of a meeting with provincial ministers with a feather in his cap, and Prime Minister Justin Trudeau's Liberals had closed a big deal.
This was the promised expansion of pensions, across the country, to provide more security for middle-class retirements. It was a rare, not-seen-for-years agreement with provinces to expand social programs. Some will complain about premiums and the impact on payrolls, but for Liberals, it is a major win.
It was more evidence of the power of the alliance between Mr. Trudeau's federal Liberals and the Ontario Liberal government of Kathleen Wynne – who had forced pension-plan expansion onto the political agenda by pledging to do it alone if other provinces did not join in. And the agreement was sealed with the talk-talk-talk deal-making Mr. Trudeau has touted as his new approach to the provinces.
But it is a deal that seemed a pipe dream when Mr. Morneau met provincial finance ministers in December. Only Ontario was gung-ho. Saskatchewan was dead set against it. Quebec already has its own pension plan, which is underfunded but levies higher premiums, and was never going to join a major expansion. B.C. Premier Christy Clark's Liberal government worried small businesses would object to sudden hikes of premiums, was cool.
But Mr. Morneau, the former CEO of a human resources firm, kept everyone talking. And Ontario set a deadline that pressed other provinces to close a deal.
Ms. Wynne's government had promised to create the Ontario Retirement Pension Plan, and although it was not due to start until 2018, it insisted it would not accept more delay in getting a CPP decision. The provincial Liberals told other provinces that if there was no deal on CPP by July, they would start issuing tenders for firms to help set up Ontario's plan.
The July deadline made other provinces nervous. If the biggest province went its own way, the CPP could grow less stable. Mr. Morneau could use that fear to nudge provinces to a national deal, but he also had to get Ontario to scale back its ambition. And it did: In recent weeks, one provincial official said, the feds persuaded Ontario to bring its demands "into the realm of the reasonable." Mr. Trudeau, meanwhile, lobbied premiers by phone right through the weekend, including the most recalcitrant, Saskatchewan's Brad Wall.
The stumbling block was the prospect of substantial increases in CPP premiums that would seem like sudden hikes, even if they were to be phased in over years. A few days before the Vancouver meeting, Ottawa provided one way to soften the impact for lower-income earners: increase the Working Income Tax Benefit to make up for the higher premiums.
But still, as finance ministers dined on Sunday night, there was no consensus. And at the official meeting on Monday morning, still no consensus. Quebec was not going to join any deal. Saskatchewan was still against.
But B.C. Finance Minister Mike de Jong made a pitch to start the CPP expansion in 2019, a year later than Ontario wanted – using charts to show that the one-year difference, combined with the reduction of employment-insurance premiums, would make the increase in payroll levies on middle-income earners and small businesses seem much more gradual.
Some other ministers agreed. Mr. Morneau adjourned temporarily so Ontario Finance Minister Charles Sousa could call Premier Wynne. She agreed to 2019 for a start date. The deal was sealed when the ministers returned to the room.
It was a win for Mr. Trudeau. Eight of 10 premiers signed on, including the most conservative, Mr. Wall – making it harder for federal Conservatives to assail it as a Liberal tax. Reluctant premiers can argue their province could not afford to be left out, but also say they obtained a less expensive deal than the one Ontario first proposed. Ms. Wynne can claim she spearheaded a national pension expansion, but deliver one that will cost less. And Mr. Trudeau can tell Canadians his government made the impossible deal to expand their pensions.