Alberta premier facing backlash over CPP withdrawal

Some experts have slammed proposals by Jason Kenney as risking people's financial security

Alberta premier facing backlash over CPP withdrawal
Steve Randall

Alberta premier Jason Kenney is facing a backlash for some of the proposals made in his recent speech calling for greater autonomy for the province.

Speaking at the Manning Centre, Kenney set out what he sees as a “fair deal” for Alberta which includes potentially establishing a provincial revenue agency to collect provincial taxes directly.

This would mean an end to the Canada-Alberta Tax Collection Agreement, with Alberta joining Quebec in seeking an agreement to collect federal taxes within the province.

Another key proposal that a newly-established fair deal panel will consider is the withdrawal of Alberta from the Canada Pension Plan in favour of a provincial plan administered by the Alberta Investment Management Corp. (AIMCo).

However, some experts have warned that this could mean returns would be weakened for Albertan’s retirement funds, at least in the short term.

Rotman School of Business finance professor Alexander Dyck is concerned about almost doubling the size of AIMCo, which would see $40 billion in CPP contributions plus additional provincial investment of $30 billion.

“If I give you twice as much money as you had yesterday, you’re not going to be able to deploy that money and mimic the returns that you had yesterday,” he told the Financial Post.

Professor Dyck said that it is not necessarily as easy to scale investment in assets such as private equity and real estate as it is to buy stocks.

Over-sized contribution
Jason Kenney’s position is that Albertans have contributed an over-sized share to the federal pot and is simply seeking a fair deal, not a special one.

“Alberta has been by far the biggest contributing province to Canada in recent decades, and a huge engine for jobs and growth. But governments that have profited from our resources, hard work, and generosity now seem determined to pin us down and block us in,” he said.

Research from the Fraser Institute adds weight to his argument.

"The last year that we have data for 2017, Alberta workers contributed $2.9 billion more than Alberta retirees received in benefits," Fraser Institute economist Jason Clemens told CTV News Edmonton.

But, while MacEwan University economist Rafat Alam acknowledged that Albertans would likely pay lower contributions and take less out under an AIMCo pension fund compared to CPP, he warns that if young Albertans leave the province due to a decline in oil industry jobs, the money would leave with them.

"The issue is once we pull back out of it, we can never go back. It will be hard to go back. It will be very costly to go back," he told CTV.

Public workers speak out
Several leaders of Albertan public workers bodies have also spoken out against exiting the CPP.

The presidents of organizations including the Alberta Federation of Labour, United Nurses of Alberta, and Alberta Teachers Association, have written in the Edmonton Journal that they do not support the idea.

“Experts agree that it would cost millions to withdraw from CPP and set up and run a separate plan. They also agree that an Alberta-only plan would be less portable and more vulnerable to economic downturns. And there is no guarantee that the UCP plan would actually provide similar benefits to pensioners,” they wrote.