Optional Pension Plan is no plan at all

Jim Flaherty's surprise turnabout on pension reform is nothing less than a gift to the finance industry and corporate Canada.

The finance industry will no doubt be pleased, because the working public and smaller employers will be encouraged to shovel investment funds their way, rather than to a publicly controlled investment fund like the CPP. The scheme seems eerily like the watered down U.S. Health Care Reform, which rejected a "single payer" public system in favour of directing public funds and required health insurance purchases through the already massive health insurance industry. In both cases, the lower costs and fairer access of a public system have been less important than an idealogical belief in supporting private industry (and keeping it profitable).

We need to ask, how is this any different than the status quo? In fact, there are no shortage of banks and investment companies willing to manage anyone's retirement fund, even a very small one (though of course you need to invest serious coin to make "real money"). Most are no doubt quite reputable, and if you're careful they won't skim off too much into their own pockets. So, Flaherty's plan seems to be just a bit of fluff and official encouragement for what we already have.

RRSP participation is well below what it could be. This Vancouver Sun report found that only a third of eligible Canadians contributed to their RRSP, and only 6% of RRSP room has been made use of. We can speculate that many Canadians either can't afford to participate, or choose to spend their money elsewhere. It's hard to see how Flaherty's "reforms" are going to significantly change this dynamic. Since it will be optional for employers and employees both (just as it is today), people who choose not to contribute to their RRSP are not likely to contribute to the Pooled Retirement Pension Plan (PRPP) either.

This will be a major advantage to employers over a mandatory plan. If it's mandatory, like the existing CPP, then it has to be paid, and they have to pay employees more so that their take home pay still attracts employees. An optional plan is unlikely to have any effect at all on employee compensation. Employees who are just scraping by will still just be scraping by and so will just have to defer any ideas about saving a bit extra for their retirement. Others who make a bit more but are swayed by the consumer culture to spend it rather than save will still do so. There won't be any real inducement for employers to pay their employees more so that they can save, and so their employees won't be saving any more. The working Canadian will still be part of the rush to the bottom of the global economy.

The PRPP is a cop-out. It may provide a bit more structure and regulation than an RRSP, but it's still an optional plan and as such, will not do much to encourage Canadians to save. Those that don't, or can't afford to, will still be living on inadequate CPP income for their retirement and depending on food banks to make ends meet. Canadians need a mandatory pension plan such as the CPP which provides adequate benefits at retirement, so that employers have no option but to pay their employees a living wage as well as put something away for their retirement. Instead of providing pension options that aren't needed, Mr. Flaherty should ensure that CPP continues to provide an adequate income for Canadians who have contributed throughout their working years.

John Baird continues Canada's obstructionist stance at COP16 in Cancun

It's clear from Baird comes out swinging at China at Cancun talks (Globe and Mail, Dec 8 2010) that John Baird intends to continue obstructing any meaningful progress on climate change at the COP16 conference in Cancun. Technically it's true that China has recently surpassed the U.S.A. as the largest GHG emitter on earth. It's also the most populous country on earth. Per capita, its emissions are 44th according to rediff.com. Canada ranks third per capita, behind Australia and U.S.A, and we may move up as we're taking no effective action (at least at the federal level) to do anything about it.

Insisting that China address its emissions on an absolute basis, when per capita it's so much ahead of Canada, can only be construed as an attempt to block progress on climate change. Perhaps our government also holds out some hope that China will voluntarily choke off its economic development (which still lags far behind those of North America, the main reason its emissions per capita are so much lower than ours) if it accedes to this position.

It's clear that the present government either doesn't believe that Climate Change is real, or believes that the "elite" that they seem to represent will be able to keep them safe, even as much of the rest of the world drowns or starves as climate change makes our world less habitable. Granted, the Liberals (though they paid lip service to Kyoto) really weren't serious about climate change either. Their one somewhat "green" candidate for Prime Minister, Stéphane Dion, was ungraciously cast aside when he lost to Harper in 2008. You can be sure that after that, his successor Michael Ignatieff won't be pushing too hard for environmental action.

What is clear is that the Harper government doesn't seem to care what the House of Commons thinks (let alone ordinary Canadians) but rather is guided by Conservative "values". The house passed the Climate Change Accountability Bill earlier this year (though without Conservative support) but in a surprise vote the senate defeated it on second reading. While distancing himself from any suggestion that he "ordered" the senate to kill the NDP , Harper was clearly supportive, saying that the bill was "completely irresponsible".

Is there any doubt that the profits of the oil patch are more important to the Harper government than slowing the damage that we're doing to the planet?

Margaret Wente Reads the Tea Leaves of Copenhagen

In the lead-up to the Cancun climate change conference, Margaret Wente of the Globe and Mail has expressed what must seem to her to be the obvious interpretation of the failure of last year's Copenhagen conferences, in her opinion piece Can environmentalism be saved from itself. For those that believe in the infallibility of the market, the lack of concrete action can only mean that the science must be wrong or else the market would have taken action. The Europeans have demonstrated their complicity in the global warming "scheme" by daring to trade with the rest of the world even as they are increasing their carbon emissions, so that when you count the carbon cost of what they've imported, their overall carbon footprint has (surprise, surprise) gone up. Doesn't it mean anything to provide an example of what is possible? Surely, Europe has demonstrated that a major economy can reduce its carbon footprint, as it clearly has done (at least internally), without devastating its economy. Yet, Wente seems convinced that other parts of the world are incapable of doing the same without "untold cost and certain damage to their own interests".

Wente is optimistic that the "failure" of Copenhagen will mean that environmentalists will be able to focus once again on real environmental issues such as lions and tigers. She's quite confident that the polar bears will survive the thawing of the arctic ice cap, but the big cats are in trouble. I'm not so convinced that polar bears will survive. It also seems quite evident that our coral reefs, already a small fraction of their extent a century ago, will in all likelihood disappear as a result of warming oceans. Many other species, if not already extinct, are also threatened by global warming. Contrary to Wente's view, Global Warming is an environmental issue.

However, money has spoken. The fossil fuel industry, through its proxies in Canadian, American and other friendly governments, as well as a massive media campaign, has managed to block any effective action at Copenhagen. That doesn't mean global warming has suddenly stopped, only that we've allowed a small (though powerful) interest group to shorten yet again our rapidly closing window of opportunity to effectively slow down its impact. The other obvious interpretation is that democracy is badly broken in the western economies. I'm sure that the average Canadian was not lobbying our government to block U.S. clean oil rules, but they were quietly doing it anyway.

Let's all pray to the gods of Wall Street that Margaret Wente's analysis is correct. We need a miracle.