Ontario’s Sousa to press for gradual approach on CPP reform

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Ontario Finance Minister Charles Sousa will seek to unite the provinces behind a push for an enhanced Canada Pension Plan by pitching a gradual phase-in of the bigger benefits.

Mr. Sousa's plan for bolstering CPP is calculated to assuage the fears some provinces have expressed about a beefed-up pension system – namely, that the higher taxes to pay for it would hurt businesses' bottom lines and force them to shed jobs at a time of economic uncertainty.

When provincial treasurers gather in Toronto on Friday, Mr. Sousa will propose hiking CPP in stages.

"I support fully funding the program in a gradual manner, by gradual increases, recognizing that we are going through economic recovery," he told The Globe and Mail on Wednesday. "We do it through stages. I believe we need to have a more moderate impact on businesses, in order to be able to proceed."

Mr. Sousa has already been working behind the scenes to reach an agreement between the provinces, with some of his fellow finance ministers visiting his office over the past two weeks to discuss the issue. He also spoke with both federal Finance Minister Jim Flaherty and Kevin Sorenson, the Minister of State for Finance, in Ottawa three weeks ago to press for a richer CPP.

"They're kind of cool, they're kind of reluctant because they're citing that we're in an economic recovery, as we all are," Mr. Sousa said. "But they're also planning for budget balance a year ahead of us … this is going to take time to implement, this is the opportune time to start going."

As first reported by The Globe and Mail earlier this month, Ontario is considering launching its own pension plan if it cannot obtain reforms to CPP. Mr. Sousa said, however, that enhancing CPP is the province's first choice.

The federal government suggested it is open to listening to the provinces' ideas on CPP reform, but cautions that it is concerned about the hit higher taxes would entail for companies.

"We share the concerns of small business, employees, and some provinces of increasing costs during a fragile global recovery," Mr. Sorenson said in a statement. "We continue to discuss ways to improve the Canada Pension Plan with the provinces."

Ottawa previously tried to negotiate a CPP enhancement, but gave up three years ago when it could not reach an agreement with the provinces. Since then, it has instead pushed Pooled Registered Pension Plans, voluntary private-sector plans.

While Mr. Sousa has said he will put PRPPs in place, he contends they are not enough to make sure everyone has a comfortable retirement.

"It's the middle class that are really going to hit the system in a big way," he said. "Many of them are going to be looking for some support, and social services is going to take a hit if we don't do something now."

Mr. Sousa said he does not have an exact number for the amount he would like CPP to be increased by, but said he would gather input through the talks on Friday.

The meeting will also include discussion of inter-provincial fiscal arrangements and the co-operative securities regulator Ontario and British Columbia formed last month.