Pension blue skies ahead?


If the measure of a politician’s skill is how well she handles the hot potatoes of public policy, then Cathy Rogers must have acquired a good pair of oven mitts before she stepped into her new job as New Brunswick’s finance minister earlier this month.

Arguably, only a few issues are hotter in this country than pension reform. And she knows it, which is likely why she’s been at great pains to explain the reasoning behind her decision to endorse a scheme that increases premiums into the Canada Pension Plan.

The move, signed off by federal, provincial and territorial finance ministers last week, is already generating the predictable amount of sturm und drang within New Brunswick’s business community. “I’m not very happy about it,” Joel Richardson, vice-president of the New Brunswick branch of Canadian Manufacturers and Exporters, told the Telegraph-Journal last week, “and neither is anybody else in this province.”

He added: “No one has been consulted by either federal or provincial government. This is an absolute failure on behalf of this government and the federal government to work together with the business community to be able to develop and consult on a major, far-reaching policy that will have short and long-term economic impact on the province.”

Business’s basic beef with the CPP hike is that it boosts the payroll taxes that come off their bottom lines. That places undue pressure on their operating margins at a time, they argue, when the nation and few provinces can afford to hobble the private sector’s competitiveness.

Although, dig a little deeper, and it becomes clear that the criticism is not merely situational; few businesses like payroll taxes on principle, regardless of how well they and the broader economy happen to be performing. As Canadian Chamber of Commerce President Perrin Beatty effused last week, “We strongly support any program that will allow Canadians to save toward their retirement – as long as it is done on their own terms.” (That’s another way of saying, ‘get your hands out of my members’ pockets’).

Still, the hike, itself, is fairly minor, and, as Ms. Rogers pointed out in an interview with the T-J, it could have been much worse. “To be honest with you, when I first looked at the options on the table, I was very discouraged in the beginning,” she said. “I was thinking, ‘No, in New Brunswick, we’re not going to handle this.’ But we came a long way from some of the initial proposals. I wanted to make sure we could mitigate any negative impact on the economy, on business and on individuals.”

That suggests the New Brunswick’s new finance minister may have played a central role in delaying the CPP hike rollout till 2019 and its subsequent phase-in over seven years. What’s more, under the new framework, employer and employee contributions rise by one per cent. Said Ms. Rogers: “I never want to have this presented as an aggressive enhancement. It’s very modest.”

Modest or not, it won’t stop the complaints from pouring in. Neither will it address the fundamental, structural inequities in income and wealth distribution in Canada and much of the developed world. That statistics are as clear as they are compelling: The rich really are getting richer; the poor really are getting poorer. It’s doubtful that any enhancement to the CPP would effectively address that modern conundrum.

Still, on one of Ms. Rogers’ first times at bat since becoming this province’s finance minister, she’s proving that she can handle the fastballs and even the odd hot potato of public policy.

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