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Ottawa, provincial finance ministers set for showdown on CPP enrichment

OTTAWA - Finance ministers from across Canada are heading toward a showdown in the next two days on an issue they've kicked around for years — whether to boost the Canada Pension Plan to ensure seniors have adequate income for the rest of their lives.

The topic is on Monday's agenda for the concluding session of a federal-provincial meeting that starts Sunday in Ottawa, but it will be hard to keep the issue from spoiling someone's supper at the opening dinner.

There's been hardly any other topic mentioned leading into the sessions, with proponents and detractors issuing polling results that back their view. Ontario — along with Prince Edward Island, the main backer of CPP enhancement — is threatening to go it alone if federal Finance Minister Jim Flaherty does not come aboard.

Many believe the Ontario minister, Charles Sousa, is bluffing but he stuck to his guns in an interview with The Canadian Press.

"We have the critical mass in Ontario, there's folks interested in providing those made-in-Ontario opportunities as an offset to CPP if it doesn't come forward, so I'll look at them seriously," he said.

Most observers — including the idea's staunchest critic, Dan Kelly of the Canadian Federation of Independent Business — say momentum is with the advocates of enhancement. Most proposals call for roughly a doubling of maximum annual CPP benefit above the current $12,150, which of course would mean doubling premiums that are split equally between workers and employers.

Kelly has been arguing — and some governments have taken up the call — that any premium increase from the current 9.9 per cent of pensionable earnings is a job killer, for the simple reason that if it costs firms more to hire workers, some will choose not to.

By Kelly's count, the pro-enhancement provinces include Ontario, Manitoba, Newfoundland and Labrador, and P.E.I.

British Columbia, Alberta, Saskatchewan and Nova Scotia are "lukewarm," with New Brunswick undecided. Quebec, which has a vote even though the province operates its own pension plan, appeared to signal Friday it would join the Yes camp if only to keep premiums in the rest of Canada in line with its own.

The federal position has vacillated between "now is not a good time," to "CPP premiums are a job-discouraging payroll tax."

For approval, any enhancement would need seven provinces representing two-thirds of the population, so at present the Yes camp is likely at least two provinces short.

Still, Kelly acknowledges he's worried about Monday's outcome.

"The piece that's causing us to take this seriously is that the other provinces are not saying, 'No, not ever,' they're saying, 'No, not now.' The view of small business is that we don't believe this is a good measure ever," said Kelly.

Sousa, and P.E.I. Finance Minister Wes Sheridan, who has tabled a specific proposal that would begin in two years and be phased in over the following three, believe the time has come to move ahead.

The idea was shelved in 2010 because it was felt the economy, just one year removed from a deep recession, was too fragile to withstand even a modest increase in payroll taxes. But with the recovery well underway and with a long phase-in period, the excuse rings hollow, proponents say.

To make the medicine go down more smoothly, Sousa said the proponents are willing to agree to conditions that the economy must be performing at a specified level of strength before CPP enhancement can proceed. As well, he won't ask ministers to vote on a specific plan, only to agree in principle to go ahead when conditions are met.

"The question isn't how much of a CPP we need to do — we'll have to deliberate over that still," he said.

"The question before us is, 'Are the objectives of enhancement of CPP appropriate? And then do we put some thresholds to establish enhancement when times are good?' And then when times are good, they are ready to go."

Sousa said he believes that will be sufficient to carry the day Monday afternoon.

The Canadian Press

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