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Ontario finance minister pushes for quick CPP reform deal; Quebec, not so much

Quebec Finance Minister Carlos Leitao
Quebec Finance Minister Carlos Leitao delivers a speech, March 21, 2016 in Montreal. THE CANADIAN PRESS/Paul Chiasson

OTTAWA – Finance ministers in Canada’s two most populous provinces are sending mixed signals about whether they expect to hammer out a deal with the federal government next week on how best to enhance the Canada Pension Plan.

Quebec Finance Minister Carlos Leitao said Wednesday that he expects Monday’s meeting in Vancouver to boil down to one or two options, but that a final deal is unlikely since they’ve already agreed to study those proposals until December.

However, Leitao’s Ontario counterpart, Charles Sousa, is sounding much more optimistic – as well as a little conciliatory.

READ MORE: Ontario to forge ahead with pension plan in the absence of CPP deal: Wynne

“I’m hoping that we can actually have a deal by next week,” Sousa said in an interview.

“I’m very encouraged and hopeful that we will have an agreement around the table about the degree of CPP enhancement, the timing of CPP and the ability to move forward with substantive benefit, as we’ve outlined here in our province.”

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Federal Finance Minister Bill Morneau has said he wants to see a deal to expand CPP completed by the end of the year, but talks are now in high gear in the hopes of a preliminary agreement much sooner.

The governing Liberals made CPP reform a marquee promise during last year’s election campaign, but since winning the October vote they have refused to provide specific details about their own vision for how it should happen.

READ MORE: Feds see Ontario stance on CPP as key challenge to expanding pension plan

Leitao said there is a willingness among provincial and territorial finance ministers to create a national program, but cited disagreement that he said still persists about how best to proceed.

He said the scenarios still on the table include one that would beef up the CPP program across the board and another that would target middle-income earners.

For example, Leitao said, contributions could be increased on income levels between $25,000 and $80,000 to strengthen retirement security for middle earners.

Quebec, however, has concerns that a broad-based increase to CPP contributions would have considerable impact on workers and employers because they would be called upon to fund the change through payroll taxes.

“We think that there is no crisis regarding public pensions in Canada,” Leitao said Wednesday in an interview.

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“But yes, we are willing to look at ways to improve the current system. But any such improvement … targeted to a certain income group should be relatively modest and put in place gradually.”

READ MORE: Finance Minister Bill Morneau turns focus to enhancing CPP

Quebec’s support for CPP enhancement is crucial for the federal government as it tries to get enough provinces to back a change to the system.

For the last six months, provincial and federal officials have reviewed and analyzed potential changes to the federal plan, to see what is palatable in terms of an increase in benefits, an increase in premiums and where to set the bar on the income cut-off for paying CPP premiums.

But reaching an agreement is not easy.

Making changes to CPP requires the consent of seven provinces representing at least two-thirds of the country’s population, a higher bar than the amending formula for the Constitution.

That math also makes Ontario’s consent a necessity for any changes to occur – and ensures it, Quebec and B.C. are central to the talks reaching any sort of consensus. Prime Minister Justin Trudeau and B.C. Premier Christy Clark were scheduled to meet Thursday in Burnaby.

“I want us to be more prescriptive,” Sousa said.

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“I’m hopeful of that and I’m working with Carlos as well to foster something more substantive by way of an agreement as to where we need to go. And the timing of that will be part of the agreement, frankly.”

Earlier Wednesday, Ontario Premier Kathleen Wynne said she is willing to agree to an expansion of the Canada Pension Plan if the value of benefits almost equals the amount of her proposed provincial pension plan.

Wynne said she wants to see CPP benefits increase to be about two-thirds of what has been promised under her government’s proposed pension scheme, the Ontario Retirement Pension Plan.

She didn’t put a firm dollar figure to her request, but signalled that Ontario wanted to see the maximum yearly CPP payouts almost double to about $21,000 from approximately $13,000.

“We’ve said if we can get to, sort of, two-thirds of the value of what we have – what we’ve worked up with the Ontario Retirement Pension Plan, that’s one of the metrics that we would look at for a CPP enhancement,” Wynne said in Windsor, Ont.

“That’s the order of discussion that we’re having with the federal government.”

Wynne has said her province is willing to go ahead with the ORPP in the absence of any agreement on CPP expansion.

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Sousa also suggested Wednesday that Ontario might be willing to back away from its earlier focus on provincial workers who lack a sufficient workplace pension plan.

“Ontario has put forward the ORPP and has put forward a targeted system with exemptions, but that doesn’t mean that we’re not prepared to find compromise,” he said.

“If we’re able to achieve a portable plan, a universal plan, a plan that’s cost-effective and covers many more people across the country – that’s important. So, it’s important to Ontario to have the country at its best.”