Manitoba is inching toward supporting an expanded Canada Pension Plan but wants further changes to the deal reached by Ottawa and most provinces.
The province's recently elected Progressive Conservative government is urging finance ministers to consider several further CPP changes, including phasing in the enhancement over two more years and technical changes that Manitoba says would help low-income widowed seniors.
In an interview with The Globe and Mail, Manitoba Premier Brian Pallister said that while there is consensus on the need for a bigger CPP, he is pushing for changes to ensure that it is also a better deal that benefits Canadians of all ages.
"I applaud the focused efforts of the province of Ontario in respect of advancing the plan for bigger benefits, higher percentages and greater attention to the reality of rising incomes. That will make the plan bigger and it will benefit people – millennials principally – 25 years from now," he said. "But I also think there's lots of room and a great opportunity to move to make the plan better for everyone."
Mr. Pallister declined to give a clear answer on whether Manitoba would implement the CPP enhancement announced last week if Ottawa and the other provinces rejected the suggested changes, explaining that "we're in a negotiation."
A federal government source said Ottawa will not be reopening or renegotiating the deal. Finance Minister Bill Morneau has said provincial cabinets must approve the deal by July 15.
Manitoba and Quebec were the only two provinces not to sign an agreement last week with Mr. Morneau that will gradually raise premiums over seven years beginning in 2019 to pay for more generous retirement benefits in the future. Changing the CPP requires the support of seven of 10 provinces representing two thirds of the population. That means the reform has enough support to move ahead regardless of whether Manitoba participates. Quebec already runs a separate but similar Quebec Pension Plan and has said it will adopt some but not all of the reforms that will be made to the CPP.
The new benefits agreed to last week will be proportional to the number of years a worker paid the new premiums, meaning the full impact of the more generous retirement payments is targeted at Canadians who are currently in their late teens or younger.
Meanwhile, Finance Canada is planning to release a detailed report this fall that will show how changes to the CPP and Old Age Security will affect Ottawa's long-term financial health.
Since forming government last year, the federal Liberals have made several social policy and taxation changes that will have long-term consequences for expenses and revenues, but it has not released an accounting of how those decisions will play out over time.
These changes include the planned CPP enhancement, as well as reversing plans to change the eligibility age for OAS to 67 from 65. The government has also introduced several tax changes in the 2016 budget that affect personal income tax rates and end some targeted tax cuts, including income splitting for families with children.
Parliamentary Budget Officer Jean-Denis Fréchette will provide his analysis of the situation Tuesday when the PBO releases its own fiscal sustainability report. The report will not include an assessment of last week's CPP announcement, but it will outline the long-term implications of budget decisions such as the OAS change.
Daniel Lauzon, a spokesperson for Mr. Morneau, said the government's package of decisions are affordable over the long run.
"We are confident that the CPP enhancement, as well as our broader plan to support the middle class, is fiscally sustainable," he said in an e-mail.
Finance Canada began publishing long-term fiscal sustainability reports in the fall of 2012, in response to calls for such reporting from the PBO and the Auditor-General. Follow-up reports were released in 2013 and 2014, but no report was released in 2015. The reports generally cover about a 40-year period and are meant to show how costs of key government programs, such as health care and Old Age Security, will respond to demographic changes. As more of Canada's baby boom generation enters retirement, the ratio of tax-paying workers to retirees is expected to shift dramatically.
Statistics Canada has reported that for every 100 working-age people, there were 15 seniors in 1971. By 2006, that had increased to 21. By 2056, Statscan projects there will be 50 seniors for every 100 workers.