Click here to read the article “CPP expansion: Has Stephen Harper flip-flopped on the idea?” by Mark Gollom – CBC News, May 26, 2015
The announcement that the federal Conservatives are looking into the expansion of the Canadian Pension Plan may strike some political observers as a shocking flip-flop, given their strong opposition to the idea in the past.
The government, which voted against an NDP motion to expand the pension plan in 2013, has repeatedly said in recent years any mandatory expansion of the pension plan would kill jobs, hurt the economy and burden families with extra costs.
Instead, the party has put its resources and political fortunes into voluntary savings options, like a new pooled registered pension plan and tax-free savings accounts. (In the most recent budget, the federal government almost doubled the amount that Canadians can contribute annually to TFSAs.)
Tuesday’s announcement was short on specifics. Finance Minister Joe Oliver said only the government will spend the summer consulting experts and stakeholders on “options” for allowing voluntary contributions to the CPP.
But the key message was that any future plan to expand CPP contributions would be “voluntary'” — a position, the Conservatives would say, is entirely consistent with their belief that Canadians should not be forced to save, but rather take it upon themselves to save their own money for retirement.
As Oliver emphasized Tuesday, the government “will not reach into the pockets of middle class Canadians with a mandatory payroll tax hike like the Liberals and NDP would do.”
It’s the same message Prime Minister Stephen Harper has peddled on a number of occasions.
Nudging those who ‘just don’t save’
In an interview with Global News in 2013, Harper said there are lots of Canadians who are saving for their retirement through their employers’ plans or on their own.
“The more worrisome group is a group of people who have reasonably affluent lifestyles but just don’t save,” Harper said. “They have the opportunity to do so, so I don’t think the challenge is to raise CPP taxes on everybody. It’s to try and figure out how to get the people who actually need to save to do the saving they need to do.”
Harper repeated that message in April at a stop in Winnipeg following the release of the budget.
“What we will not suggest is raising taxes on workers that they don’t want to pay, and claiming it is ‘for their own good’ and then hitting small businesses with tax hikes that small business cannot afford to pay.
“Our government does not believe in forcing Canadians into a single, compulsory, one-size-fits-all approach,” he said according to a transcript of his speech on the prime minister’s website. “Nor reaching into the pockets of hard-working middle class Canadians and reducing their take-home pay.”
It’s a position that has put him at odds with the NDP and Liberals and some provincial leaders who have proposed some of their own mandatory supplemental pension plans.
Support for increased benefits
Ontario Premier Kathleen Wynne has been frustrated by Ottawa’s opposition to her plan, the Ontario Retirement Pension Plan, that would force workers to kick in 1.9 per cent on annual income of up to $90,000 a year, a contribution employers would match.
In an interview with the Toronto Star last year, Wynne said that during a meeting with Harper, the prime minister brushed off her proposal.
“He pretty much said that there were lots of tools, there were lots of ways that people could save and that people were just not saving. The people who should be saving were just not saving.” (The PMO would later say that Wynne had misrepresented the meeting.)
Canadians, however, have signalled support for expanding the CPP benefits they receive.
A recent poll conducted by Nanos for the Globe and Mail, found that 52 per cent support increasing CPP benefits. Another 36 per cent said they somewhat support the move. The poll was a hybrid telephone and online random survey, taken April 24 to 27. It is accurate to within 3.1 percentage points, 19 times out of 20.
Seniors, a reliable voting group, have also backed the idea. Susan Eng, vice-president of advocacy for the seniors group CARP, has said that her members, concerned about the financial well-being of their children and grandchildren, strongly support mandatory increases to the CPP.
“It’s not an either/or situation,” she told the Globe and Mail. “The bottom line is that voluntary has not worked, full stop.”
Although the Conservatives will now explore the option of voluntary CPP expansion, they didn’t seem particularly keen on the idea back in 2010.
Former Tory MP Ted Menzies, then parliamentary secretary to finance minister Jim Flaherty, said in the House of Commons the federal government and the provinces had “ruled out ideas we collectively determined cannot work.” That included a voluntary supplement to the government-run pension plan.
“The verdict was unanimous. This was not a good idea.”