PV editorial
Alberta’s hard right premier Danielle Smith and her United Conservative Party (UCP) government are playing a dangerous game when it comes to their proposal to pull the province out of the Canada Pension Plan (CPP).
Trouble is, it won’t be Smith’s corporate backers in the oil patch and the private business clubs who will get hurt when the plan inevitably fails. It will be working people in Alberta who suffer.
In fact, working people across Canada stand to lose mightily in the pension tug-of-war between Alberta and Ottawa.
Smith’s ploy is based on getting UCP hands on a huge pot of money that could make an absolute fortune for western resource capital, and capitalists in the rest of the country are eagerly watching. If Smith is successful – even partially – then you can bet there will be tremendous pressure from every other sector of corporate Canada to get the same deal.
But the UCP is cleverly pitching this version of corporate raiding as a way to remedy the systematic unfair treatment of Alberta workers. It’s true that the CPP needs reforming. And it’s true that politics in Canada skew heavily toward Ontario. And it’s also true that, like any capitalist country, the political deck here is stacked against working people. But none of those truths are reflected in what the UCP is saying about the CPP.
So, let’s debunk some of that they are saying.
First, Alberta is not being unfairly treated in the CPP. All workers in Canada pay into it and receive from it on an individual basis, no matter where they live. The “disproportionate share” that Smith and Co. say Alberta is contributing is a predictable function of the lower average age in the province. This temporary demographic situation could (and will) arise elsewhere in the country at different times.
Based on some wildly poor excuse for mathematics, the UCP has calculated the Alberta would exit the CPP with 53 percent of the plan’s assets. Less politically motivated heads (and people who know how to use a calculator) have said that a more realistic scenario is about 16 percent. A provincial plan based on that level of assets would not remotely be able to provide Smith’s supposed gains of either lower premiums or higher payouts.
Further to the above, seceding from the CPP means establishing an entire administrative infrastructure to support a provincial plan. Experts (the ones using calculators) estimate that the cost of replicating the record-keeping and accounting alone would be around $1 billion.
The fourth problem with the UCP plan is that it steers directly toward a key disadvantage: size. In pension plans, bigger plans do better – a lot better – and an Alberta plan that is only 16 percent of the size of the CPP will be on much thinner ice from the get-go. And, while the CPP is rated as one of the best-managed public pensions in the world, Alberta’s agency that manages provincial government pension funds (AIMCo) has a well-earned reputation for losing billions through reckless investment. In this case, size matters.
So, if the plan is all hogwash, why is the Alberta government so committed to it?
It’s all about the money. The CPP has over $570 billion, so even if the UCP only gets 16 percent that’s still over $90 billion for them to play with. Unlike the CPP, which can only be changed through agreement by two-thirds of the provinces representing two-thirds of the country’s population, an Alberta plan (or probably any provincial plan) is more vulnerable to arbitrary action by the provincial government.
Arbitrary action? Like pouring billions of public dollars into private, fossil fuel-based energy corporations that are starved for investment right now?
What’s missing in most of the debate, though, is discussion about what a pension plan is. It’s workers’ deferred incomes, put aside to pay for retirement. It certainly isn’t a huge slush fund for rich CEOs to use to pad the bottom line.
Working people in Alberta and across Canada don’t need a broken-up CPP, we need a stronger one. We need universality and maximum portability, which means it needs to cover all areas of the country. We need a non-contributory public pension plan that provides a livable retirement income to all workers.
We need to defeat Danielle Smith’s CPP plan.
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