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PEI plans to buy time for CPP consensus as ministers meet Flaherty

Federal Finance Minister Jim Flaherty, centre, is shown with his provincial counterpart, PEI’s Wes Sheridan, in 2010.

Jeff McIntosh/The Canadian Press

Prince Edward Island is floating a plan to delay the launch of an expanded Canada Pension Plan to 2018 in a bid to forge a consensus among the provinces, and to push the federal government to act in reforming retirement benefits.

Federal Finance Minister Jim Flaherty played host to his provincial and territorial colleagues at a dinner Sunday night at the Governor-General's guest house in Ottawa.

The casual discussion will be followed by a day-long meeting Monday at Meech Lake, in Quebec's Gatineau Park, with CPP reform at the centre of the agenda.

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Ottawa and the provinces have been debating CPP reform at their annual meetings since at least 2009, usually concluding with promises to study the idea further.

Changing the CPP requires the support of Ottawa and two-thirds of the provinces representing two-thirds of the population. Over the past five years, the positions of Ottawa, Alberta and Quebec have shifted at times – making it unclear whether the required level of support exists.

After last year's finance ministers' meeting, PEI and Ontario put forward a plan to begin increasing both CPP benefits and contributions starting in 2016. Now, PEI Finance Minister Wes Sheridan plans on suggesting 2018 as a start date, part of a push by several provinces to pin down Mr. Flaherty as to when exactly the Canadian economy will be strong enough to support an increase to the Canada Pension Plan.

For his part, Mr. Flaherty is saying he is open to debating the question, but is remaining non-committal. "My view has always been that we need to make sure that the economy is stable and we have stable, solid economic growth before we impose more and more taxes on people because it's basically "a payroll tax," said Mr. Flaherty Sunday. "We have to be cautious about that, but I'm open to the discussion."

One factor that could change the dynamic of the meeting is that Quebec has adopted a new position that is clearly supportive of an expanded CPP. "We are in favour of moving forward for a gradual and fully capitalized improvement of our public regimes," said Quebec Finance Minister Nicolas Marceau.

When the country's finance ministers met last December, they agreed to look at specific triggers – such as a lower unemployment rate or a higher rate of economic growth – that would be used to show the economy was strong enough to absorb some of the negative economic effects of higher CPP premiums. In recent weeks, Ottawa's position on CPP has hardened considerably. Federal Conservatives say now is not the time for change because the economy isn't strong enough.

Ontario Finance Minister Charles Sousa points out that Mr. Flaherty's own forecasts expect the economy to be significantly stronger in the years ahead. "If we only start dealing with it then, then you're back into another economic cycle and another downturn and next thing you know we're just kicking the can down the road and hoping somebody else will deal with it," he said in an interview.

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Alberta Finance Minister Doug Horner told The Globe Sunday that he is open to that discussion and doesn't think Ottawa has completely shelved the idea. "I don't think it's died from where it was last year," he said.

Nova Scotia Finance Minister Diana Whalen, attending her first federal-provincial meeting of finance ministers, said she plans on listening to both sides of the debate over enhancing the CPP. "We're interested, but we're not on board yet," said Ms. Whalen. In the run up to Monday's meeting, those advocating both for and against a CPP increase have intensified their campaigns. Mr. Flaherty's former policy adviser, Sean Speer, co-authored a commentary for the Fraser Institute arguing there is not a broad savings problem when assets like home values are taken under consideration.

"As finance ministers prepare to meet to discuss a CPP expansion, they should consult the available evidence which does not support claims of a retirement crisis," wrote Charles Lammam and Mr. Speer.

Meanwhile, Canadian Labour Congress President Ken Georgetti said if ministers do nothing, younger Canadians will be forced down the road to subsidize those who aren't saving enough. "If we don't pay now, we'll pay far more later," he said. "Those without adequate pension retirement incomes will be dependent on the government's Old Age Security and the Guaranteed Income Supplement. … That's an intergenerational tax transfer to young people. They'll bear the brunt of our inaction."

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About the Author
Parliamentary reporter

A member of the Parliamentary Press Gallery since 1999, Bill Curry worked for The Hill Times and the National Post prior to joining The Globe in Feb. 2005. Originally from North Bay, Ont., Bill reports on a wide range of topics on Parliament Hill, with a focus on finance. More


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