Alberta’s pension plan proposal has a BREXIT-like stink to it

Posted on October 12, 2023 by admin

Few things in this world are more tempting to a politician than $334 billion. And it seems that Alberta Premier Danielle Smith is going for gold with Alberta’s plan to withdraw from the Canada Pension Plan (CPP), which we’ll call ALBXIT. The plan is audacious, and, oddly enough, Smith’s messaging is disturbingly similar to BREXIT, Britain’s disastrous withdrawal from the European Union (EU).

For the Brits, the biggest lie was the famous £350 million per week fabrication. Those who favoured leaving the EU claimed that the UK sent £350 million per week to the European Union. The ‘we was robbed’ logic falsely implied that all this money could be saved and redirected to the National Health Service (NHS) if the UK left the EU.

ALBXIT’s logic is shockingly similar. According to the authors of the recently released report, “for decades … Alberta workers and businesses (have) contributed approximately $60 billion more into the CPP … than has been paid out to Albertans.”

You have to give Smith credit for gumption; the plan suggests this ‘found’ money could be “used to boost the annual pension benefits for Alberta seniors, or even a $5,000 – $10,000 bonus payment at retirement.” The proponents of an Alberta Pension Plan suggest that this would mean $5 billion more money in the pockets of Albertans. Nothing subtle about that particular bribe.

BREXIT also badly misled the UK public about the consequences of leaving the European Union, suggesting that “Absolutely nobody is talking about threatening our place in the single market” and the claim that “We can take back control over UK waters, set our own fishing policies, and support our fishermen.”

Meanwhile, just recently, Kier Starmer, the leader of the Labour Party, was in Brussels pleading with the EU to loosen restrictions on UK trade, promising that when he becomes Prime Minister, the UK will voluntarily abide by all EU rules in order to recover some of its former trading advantages.

ALBXIT is similarly complacent about the rest of Canada simply lying down, happily complying with Alberta’s outrageous financial demands. According to the report, an Alberta Pension Plan would be entitled to “an initial asset transfer from the CPP of approximately $334 billion,” more than half the CPP’s total assets.

Canadians in the rest of the country would then – presumably – willingly make up the difference. We are asked to believe they would either pay more for their pension contributions or reduce their monthly pension outtake. The truth is that ALBXIT would unleash a firestorm of resentment against Alberta. Canadians are unlikely to be any more compliant in the face of this attempted robbery than the stoic European officials who slammed the door on British trade after BREXIT.

Fatally, the Alberta Pension Plan is as woolly as Brexiters were on the ‘clear sailing ahead’ narrative. Brexiters were confident that the future would be rosy, saying reassuringly, “Believe me, we’ll have up to 40 (free trade agreements) ready for one second after midnight in March 2019” and “The UK Shared Prosperity Fund will … bind together the whole of the UK, tackling inequality and deprivation in each of our four nations.”

Alberta Pension Plan supporters blithely submit that “along with more money in your pocket, an Alberta Pension Plan would be more stable than the current Canada Pension Plan.” With BREXIT-like assurance, they add, “Moving to an Alberta Pension Plan would … free up those savings to benefit Alberta seniors and workers for generations.”

Nobody can predict the future, but ALBXIT would fatally wound Albertans, deal a shattering blow to Canadian unity and leave future generations of Albertans in a precarious position. The Alberta economy is presently enjoying an energy-related fiscal boost. However, it’s far from certain that it will continue.

And let’s face it: all pension plans face the obvious risk of market reversals or worse. The CPP is at least protected to some degree by the financial clout of the federal government and the monetary strength of its central bank, the Bank of Canada. In extremis, an oil-less Alberta government could find itself in a budgetary squeeze. Its provincial pension plan would be at the tender mercies of a desperate provincial government with no one backing it up.

Misinformation, disinformation and outright lies plagued BREXIT; they impeded the negotiations and poisoned any possibility of a future trade relationship. Regrettably, ALBXIT is similarly unattractive; its false or exaggerated claims should discredit it thoroughly. It deserves to fall at the first hurdle.

Robert McGarvey is an economic historian and former managing director of Merlin Consulting, a London, U.K.-based consulting firm. Robert’s most recent book is Futuromics: A Guide to Thriving in Capitalism’s Third Wave.

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