British Columbia has asked for more time before ratifying alterations to the Canada Pension Plan. The changes were agreed in principle at a federal/provincial meeting on June 22.
Normally, it would take months for each legislature to make the required statutory amendments. But Ontario, about to introduce its own plan, pushed for an accelerated process as the price of abandoning its go-it-alone policy.
As a result, Ottawa encouraged the provinces to implement their regulatory changes by July 15 at latest. It is this deadline that B.C. has said it cannot meet.
Politically speaking, that seems the right decision. Our current finance minister, Mike de Jong, can scarcely have forgotten what happened to a predecessor of his, Colin Hansen, who rolled out the harmonized sales tax scheme with no prior warning.
Hansen committed the error of supposing that a change that made eminent sense would sail through unchallenged. The HST was defeated in a referendum just 12 months later.
So this time, de Jong is taking no chances. Consultations will be held across the province, likely wrapping up by summer’s end.
And there are other reasons to tread carefully. The deal, while simple in theory, is hellishly complex in detail.
Basically, maximum pensions for the typical earner will increase from $12,000 to $16,000, beginning in 2019 and phased in over seven years. To fund this change, monthly contributions from employers and workers will increase from 4.95 per cent of wages to 5.95 per cent.
That means employees making $55,000 a year will have to pay an extra $516 annually (reduced to $408 with a new tax credit). Employers — I believe — will pay the higher amount, though this isn’t clear.
Just explaining this will be a nightmare. There are also points of controversy. Small businesses will be hard hit, and yet they create the majority of new jobs. Can they afford this?
And low-income employees might struggle to pay the higher contribution. Yes, it’s for their future, but if they’re underwater at present, how much comfort is that?
There is, though, a more intriguing reason de Jong might want to take his time. The amending formula for the CPP program requires that seven provinces representing two-thirds of the population must agree.
But Quebec did not sign on to the new deal, to protect the independence of its own free-standing pension plan.
The result is that B.C. ends up a huge winner. How so? Because between us and Quebec, we have 36 per cent of Canada’s population.
Or put another way, the rest of the country has only 64 per cent, and that’s three points short of the minimum required to amend the CPP. Put yet another way, with Quebec out, B.C. has a veto.
Would we use it to kill the deal? In the end, likely no. But as a bargaining chip, it gives B.C. leverage we haven’t enjoyed in a while.
Perhaps de Jong might want to slow the implementation process a notch or two. Possibly he might ask Ottawa to give small businesses a better break. Or maybe he has something entirely different up his sleeve.
For de Jong played a key role in brokering the agreement, after Ontario Premier Kathleen Wynne tried to bully the smaller provinces. That gives him an additional lever to work with.
I imagine some might find power politics of this sort distasteful. So it is.
But that’s how things work. Ask Manitoba why, in 1986, Quebec was awarded a lucrative aerospace contract that a Winnipeg company had won fair and square.
Answer: Because Manitoba’s premier, Howard Pawley, had no cards to play.
When it comes time to ratify the CPP deal, de Jong does.
