Alberta’s pension proposal is a Brexit-like disaster in the making

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In 2016, the people of Britain made one of the most consequential and costly decisions in the country’s history: they voted to leave the European Union.

By almost any measure, the decision has been a disastrous one. The country has been mired in a horrible economic slump ever since, doubtlessly amplified by the pandemic and appalling political leadership.

The Vote Leave campaign was buttressed by a persuasive slogan: if the U.K. left, the country would save €350-million a week that it was currently sending to the EU. This could be money, Leave organizers argued, that the country could pour into the national health care system. Subsequent research by the Vote Leave campaign “strongly suggests” that the referendum would likely have failed had it not been for this central campaign pitch.

There was only one problem: the statement wasn’t true.

The most compelling reason for leaving the EU was, in fact, a lie, a gross distortion of reality. But Nigel Farage and Boris Johnson and the other elites who conjured the idea of Brexit didn’t care.

Fast forward seven years, and there appears to be another Leave campaign taking root, this time in Alberta: to pull the province out of the Canada Pension Plan (CPP). And the elites organizing it, namely Premier Danielle Smith and the acolytes around her, seem equally hopeful they can bamboozle the province’s citizens with a central thesis that doesn’t hold up to scrutiny.

For years now, Ms. Smith has appeared to harbour a desire to have the province leave the CPP to start one of its own. The Alberta public, meantime, has never warmed to the idea. During the last provincial election, when the NDP suggested Ms. Smith was secretly planning to leave the CPP, the Premier angrily dismissed the allegation.

“No one is touching anybody’s pension,” Ms. Smith said emphatically during the campaign. “It’s just more misinformation that the NDP has been spreading.”

Maybe not so much, eh?

During Brexit, the Vote Leave folks had red buses travel the country emblazoned with the incendiary €350-million-a-week falsehood that was the foundation of its campaign. Perhaps Ms. Smith is already envisioning brightly coloured buses of her own outfitted with the preposterous notion that Alberta has been overpaying the CPP, and so would be due $334-billion if it left the plan to begin one of its own. That is 53 per cent of CPP assets, which would effectively destroy the fund.

The number is as fictional as the one the Vote Leave folks used seven years earlier.

There are so many problems with the analysis by the consultancy firm Lifeworks that it’s impossible to give its government-commissioned report any credibility whatsoever – not that that will prevent the Premier from citing it wherever she goes in the province. For one thing, the report fails to account for pension benefits paid to Albertans who retire to other provinces, or those who lived elsewhere but worked in Alberta for a period of time. Those oversights alone hugely affect the numbers Ms. Smith is touting.

Economist Trevor Tombe, who actually does know what he’s talking about, says the $334-billion is grossly out of line and based on many faulty assumptions. He pegs a more accurate estimate of what Alberta might be due at about $120-billion, or 20 per cent of the federal plan’s assets.

The CPP is recognized as one of the most well-governed pension plans in the world largely because it is insulated from political interference, something that wouldn’t be assured if the United Conservative Party gets its hands on a pension plan of its own. Ms. Smith has said as much.

“If we can reduce minimums for workers, increase benefits for seniors and also have a say in how the money is invested, that checks a lot of boxes for me,” she told Calgary columnist Rick Bell. The emphasis in that quote is mine. The Premier all but declares that the government will have a say in how funds in an Alberta Pension Plan will be allocated. And that should scare the living daylights out of anyone in the province who might be affected by the mad idea the government is floating.

The Premier’s plan is destined for the courts, which will ultimately decide who is right in this matter. Who knows how long it might be before that date arrives. Meantime, we know Ms. Smith will use this scheme as a threat against Liberal Ottawa – a cudgel with which to clobber Prime Minister Justin Trudeau as often as she can.

It all leaves you wondering if there isn’t another agenda here: that the end game for Ms. Smith is not just leaving the CPP, but Canada all together.