Canadian Manufacturing

CPP expansion on the table as finance ministers meet in Ottawa

by Andy Blatchford, The Canadian Press   

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Provincial budget chiefs will discuss economy, Liberal campaign promises with federal counterpart

OTTAWA—Provincial and territorial finance ministers are sitting down today with federal counterpart Bill Morneau in Ottawa to discuss some of the economic challenges facing Canada.

The ministers hope to learn more about federal Liberal government’s election promises, many of which touch on a broad range of issues likely to affect the provinces.

For some, their priorities at the meetings will revolve around Ottawa’s commitments to work with the federation on public-pension reform, infrastructure spending as a way to generate economic growth and a new federal-provincial health-care accord.

The ministers gathered Sunday for a dinner and were to hold more discussions today.


As he arrived for Sunday’s gathering, Morneau said he hoped boosting the economy would be the main theme of the talks.

“My goal working with the provinces is to have a discussion about how we can grow the overall size of the pie for Canadians,” Morneau told reporters.

“We know that Canada isn’t doing well in all parts of the country, in particular.”

The economy has struggled to rebound from the negative effects of low commodity prices, especially in resource-producing provinces like Alberta.

Morneau also said he hoped to get some consensus on enhancing the Canada Pension Plan, a goal outlined in the Liberal platform.

The party has not released specifics on what changes could be made to the plan.

Major adjustments to the CPP would require support from Ottawa as well as seven of the 10 provinces representing at least two-thirds of the country’s population.

But it remains unclear how much support Ottawa can attract when it comes to boosting the CPP.

Quebec Finance Minister Carlos Leitao said his province isn’t closing the door on CPP reform, but he noted that it already has its own pension plan.

“We think that in Quebec we already have a system that functions relatively well,” Leitao said as he arrived Sunday.

Saskatchewan’s Kevin Doherty has indicated in recent media interviews that it’s not a good time for CPP enhancement because of the weakened economy.

British Columbia Finance Minister Michael de Jong said more discussion is needed.

“Well, the economy is fragile,” de Jong said.

“I think you’ve got to be careful about when you pull the trigger on a change like this and that’s part of what we are going to be discussing.”

“When is the appropriate time to effect a change and what’s a logical change to make?”

While it may not appear on the official agenda, Morneau is expected to field questions from the other ministers about health care and the need to figure out how to grapple with its mounting costs.

When asked about the Liberals’ promises on health transfers, Morneau said the subject “will not be an area of my focus this time around.” He said federal Health Minister Jane Philpott would take the lead on discussing those issues with her provincial counterparts.

The provincial ministers, meanwhile, expect health transfers to be an important topic of discussion.

“When health spending represents, for most of the ministers gathering here today and tomorrow, almost half of their budgets, it’s difficult to divorce the health expenditure and the health budget from what finance ministers do,” de Jong said.

The Liberals have promised to negotiate a new health-care accord and provide a fresh commitment for long-term funding.

Their Conservative predecessors allowed the previous health accord to expire. It was a 10-year, $41-billion deal signed in 2004 under then-prime minister Paul Martin which guaranteed federal health transfer payments would increase annually by six per cent.

The Tories decided unilaterally in 2011 that the Canada Health Transfer would grow by six per cent a year until 2017-18. After that, health transfers will be tied to the rate of economic growth and inflation, but the annual rate of increase won’t fall below three per cent.

The federal government has also pledged to provide billions of dollars worth of funding for the provinces, territories and municipalities for infrastructure projects such as public transit. The party argues that such investments are crucial to firing up Canada’s weakened economy and to creating jobs.

Leitao, a former bank economist, said he believes infrastructure spending is the fastest way to increase economic growth.

“It just so happens that we also need to increase substantially what we spend on infrastructure,” he said.

“The federal government does have the fiscal capacity to stimulate the economy.”

Ottawa also informed the provinces Sunday how much money they were likely going to receive in federal transfers for the next fiscal year. It said it will be transferring a record high of nearly $71 billion to provinces and territories in 2016_17.

Bank of Canada governor Stephen Poloz is also scheduled to give a presentation to the group on the country’s monetary policy and the state of the world economy.

The ministers were scheduled to hold a news conference later today once the meetings wrap up.


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