Praise for B.C. Pensive action on pension hike

Guest Commentary
By Dan Kelly

 

While it hasn’t received a medal for its efforts, the B.C. provincial government is doing the country proud by following through on an important step skipped by the federal and most provincial governments.

B.C. is the only province (outside of plans in Quebec) to open a channel for public feedback on the proposal to hike contributions to the Canada Pension Plan.

A surprise tentative agreement announced in June by federal Finance Minister Bill Morneau was to receive final approval by mid-July. But while B.C. gave initial support to the new deal, it decided to hold off signing off on the deal until it had consulted with the public. As any change to CPP requires the agreement of seven out of 10 provinces representing two-thirds of the country’s population, the federal government doesn’t have the numbers to proceed without B.C.

B.C. Premier Christy Clark and Finance Minister Mike de Jong deserve full credit for this deliberative pause. While the other provinces showed no such restraint and plowed ahead in the face of Ontario’s pressure tactics with its Ontario Retirement Pension Plan, B.C. thought it wise to bring the proposed CPP hike to the people to let them have a say on a policy that stands to have a significant, lasting socio-economic impact. It is this kind of thinking that has helped B.C. stay at or near the top on the level of small business optimism for a long while.

So why did B.C. elect to consult with its public before proceeding? In addition to smart politics (B.C. voters go to the provincial polls in the spring of 2017), it’s also how smart economic policy is made: reviewing the data and evidence; weighing all possible options that could achieve the policy goal; taking input from a wide spectrum of stakeholders; and, finally, proceeding based on a preponderance of reliable evidence. The federal government, which promised full public consultation on CPP expansion as recently as the 2016 budget, decided to skip the step entirely.

The Canadian Federation of Independent Business has presented a ton of important evidence to the B.C. government on this file: surveys of our 10,000-strong B.C. membership; economic impact projections; public poll results; and hundreds of insightful comments from concerned independent business owners in the province.

While many finance ministers have been touting the modesty of the seven straight years of CPP premium hikes needed to increase future benefits, small business owners have a different take. A full 70 per cent do not think the CPP hike is “modest,” while 90 per cent want an opportunity to be consulted and provide input on the proposal.

Small businesses explain why they are so concerned far better than I can. Here’s a sample of what business owners are saying:

In Burnaby, B.C.: “The living costs and increased commercial rent rates already make it extremely difficult to survive as a small business owner. This new increase will be just one more thing that will put a strain on the growth of our business. If anything, it may result in the layoffs of several of our team members.”

In Chilliwack, B.C.: “There have to be other creative ways developed to offset the need for the (CPP) increase. The required increases cannot be on the backs of the small businesses, as it is very difficult now to pay all of the required taxes, as well as operating costs, to keep businesses operating. Without existing and new businesses, where are the jobs? Wage increases will be enough to close many and the added taxes to go with higher wages (are) certainly enough to lose small businesses. The general public have no idea of the costs and see only one side.”

These views are in stark relief to the prevailing narrative on the supposed merits of CPP expansion. While polls show general support for increased CPP benefits, few Canadians are aware that the increase in what they may receive fully kicks in almost 50 years from now. The premium hikes come far sooner, and will take critical dollars out of the pockets of Canadian workers at a time when many need them.

For our part, we’re calling on all provinces and the federal government to step up to the podium like the B.C. government and consult the public before they move forward on a policy that has yet to be properly studied or understood.

Dan Kelly serves as President, Chief Executive Officer and Chair of the Board of Governors of the Canadian Federation of Independent Business (CFIB).

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