Democracy Gone Astray

Democracy, being a human construct, needs to be thought of as directionality rather than an object. As such, to understand it requires not so much a description of existing structures and/or other related phenomena but a declaration of intentionality.
This blog aims at creating labeled lists of published infringements of such intentionality, of points in time where democracy strays from its intended directionality. In addition to outright infringements, this blog also collects important contemporary information and/or discussions that impact our socio-political landscape.

All the posts here were published in the electronic media – main-stream as well as fringe, and maintain links to the original texts.

[NOTE: Due to changes I haven't caught on time in the blogging software, all of the 'Original Article' links were nullified between September 11, 2012 and December 11, 2012. My apologies.]

Wednesday, December 18, 2013

Tory delay on CPP reform will hurt workers

With the next federal election just 22 months away, the federal Conservatives are seeking lifelines, rather than anchors, to shore their foundering political base.

That is why federal Finance Minister Jim Flaherty spent much of Monday pouring cold water on provincial demands that a plan to “reform” the Canada Pension Plan, likely to lead to increased payroll taxes for workers and employers, be developed over the next fiscal year.

Flaherty, at Meech Lake meetings with his provincial counterparts, once again turned aside mounting provincial pressure to advance a CPP reform agenda. The federal Liberals have accused the Conservatives of advocating an anti-CPP position. The federal minister insists, however, that the country’s economy is still too fragile to increase payroll taxes through increased CPP payments, potentially hampering job growth and taking more after-tax payments from workers’ pockets.

The CPP is a joint federal-provincial plan that includes all provinces but Quebec, which has its own pension plan. CPP requires workforce participation by recipients and the premiums paid into the plan are based on salary levels, up to a current maximum of $51,000 in annual income. It is a mandatory plan that, unlike similar public plans in other countries, does not have an opt-out provision for individuals and businesses who may wish to rely on their own retirement savings plans.

The alternative argument pushes the mandatory element of the plan based on the belief that an opt-out clause would encourage higher-earning employees to withdraw from it, leaving more lower-income workers in the public plan, decreasing its strength over time.

Despite the fact that maximum benefits are now just over $12,000 a year, the secure nature of the plan ensures all working Canadians access to at least some pension benefits. As many employers move away from private pension plans, particularly defined-benefit plans, CPP is seen as most beneficial for middle-class taxpayers.

The Reform party, long ago merged with the Progressive Conservatives, were keen supporters of an opt-out provision during CPP reform discussions in the 1990s. The federal Liberal party, meanwhile, led the last government to make dramatic changes to the CPP, with the promise in 1997 that those reforms would fix the plan for good. The federal NDP favours significant plan enhancements.

The stalled meetings Monday, which broke up after Flaherty refused to budge on reviewing the existing plan, led Ontario to threaten to opt out of CPP to set up its own improved one. Prince Edward Island has threatened to join in. Nova Scotia, meanwhile, has yet to take a position on whether workers’ premiums — and eventual benefits — should be increased.

The plan announced by then-finance minister Paul Martin in 1997 bumped annual maximum premiums from $945 to $1,635 a year by 2003. While the fund increased, other issues — including efforts to make the plan more recession-proof, plus lagging income and demographic impacts — failed to achieve the desired reforms. Premiums have increased steadily over the past decade, with Canadian workers now paying nearly $2,400 annually into the plan.

Threats of provinces breaking off from it will do more harm than good to most middle-income earners in the long run, especially if some provinces decide to adopt their own opt-out provisions under individual provincial plans. Statistics for over a decade have shown many workers continue to struggle to save, while personal debt loads have increased steadily.

But a looming election campaign makes the timing for CPP renewal difficult for the federal Conservatives. They may wish to stall any CPP reform efforts until they are closer to a campaign. This could enable them to wave an encouraging flag to voters while taking political credit for a new CPP initiative.

Fuzzy details may not be finalized before Canadians actually get to have a say on the matter in a campaign — regardless of whether those details may include higher premiums, or an opt-out clause, or possibly both. Or the Conservatives could continue to turn away from the issue, citing disagreement among the provinces.

For the Conservatives, a delay works to their best political advantage, even if that is the worst scenario for many Canadian workers in the long run.

Original Article
Source: thechronicleherald.ca/
Author:  MARILLA STEPHENSON 

No comments:

Post a Comment