The Politics of Pensions

Don't get too caught up in the numbers

The Alberta government has published its case for abandoning the Canada Pension Plan (CPP).

For those who haven’t read the full report, the upshot is this: If Alberta wants to leave the CPP, it is entitled to receive half the Plan’s assets. Yes, half. It can use those funds as a foundation to lower Albertans’ contributions and increase benefits under a new provincial pension program.

Of course, without half the CPP assets, the advantage disappears.

Economists will debate the math. At this point, it’s not much of a debate given the dubious severance figures presented by the government. If we apply the Alberta government’s formula, the Plan’s assets would be wiped out entirely if Ontario decided to exit, as well.

Until we have a serious asset transfer figure on the table, there’s no use trying to figure out contribution and benefit levels. And without the contribution and benefit levels, it’s disingenuous to engage Albertans on the issue.

The government’s online survey is currently in the field. The entire questionnaire is based on the assumption that Alberta would receive half the CPP assets. If the looming provincial referendum is grounded in the same false premise, the results aren’t worth the bullhorn they’ll be announced from.

Legal experts will challenge the government’s notion that the law requires the rest of Canada to hand over half of all CPP assets to Alberta. The 1960s-era formula still stands in legislation, despite major changes in the nature of the fund. It is so arcane that it’s open to the types of wild interpretations provided by the Alberta government. Ultimately, this means we could end up in court over the issue. It strains logic to think a court would side with the government given the implications noted above.

(Sidenote: this isn’t the first time the Alberta government has used questionable legal logic to stir up angst in the federation, by the way. They used a similarly weak premise when launching their constitutional referendum on equalization.)

At the end of the day, the math and legal arguments matter less than the politics of this issue.

From the very beginning, the notion of establishing an Alberta Pension Plan has been packaged as a series of reforms designed to build a “firewall” around Alberta. For some in the conservative movement, these measures are about establishing more autonomy for the provincial government vis-a-vis Ottawa. For others, it’s about threatening the rest of Canada into conceding on Alberta’s bigger priorities, like environmental regulations or the fiscal stabilization fund. For still others, an Alberta Pension Plan is a means of getting even — or evening the score — when it comes to fiscal federalism. For a smaller number, this is the first, purposeful step toward outright independence.

All of these motives draw on what some feel is the “Quebec Playbook.” Whether rooted in envy or animosity toward la belle province, the measures give us reason for pause. Is the fight over pensions really about Albertans’ bottom line? Or is it about sparking a national unity crisis as an end unto itself?

Intentional or not, the Alberta government has raised fundamental questions about Alberta’s place in confederation and Albertans’ relationships with their counterparts in the rest of the country. They may not like the answers.

Survey after survey demonstrates:

• Albertans see themselves as both Canadians and Albertans. They don’t like to choose between the two and don’t like folks who try to force them to.

• Albertans want to build bridges with the rest of Canada, not build firewalls around the province.

• Albertans want their politicians to work together, across federal and provincial divides, to solve the major challenges facing them and their families.

The Alberta government knows this, which is why they want everyone to focus on the numbers and a 60 year-old clause instead of the moral thrust behind their pension gambit.

Their move has the added benefit of ginning up the UCP’s anti-Ottawa base — although, with a Poilievre government-in-waiting, it’s unlikely that sentiment will be as salient in the years ahead. How federal Conservatives react to the Smith government’s pension threats will determine the tenor and lifespan of the debate as it approaches its final phases.

The moral arguments in favour of abandoning the CPP are more challenging for the Alberta government to dodge. They can throw numbers and legal interpretations into the fray to muddy the waters. But it’s much tougher to avoid discussions about their animosity towards the rest of Canada — something that is not shared by the majority of Albertans.

From this perspective, either the Alberta government is gaslighting its own people about the prospects of taking half of the assets from the CPP. Or it's serious about killing a pension fund that sustains a social and economic union on which the province, its people, and its friends, family, and neighbours depend.

Albertans should enter this pension debate with more than dollars and cents in mind.