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Should Alberta Get Out of the CPP?

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Should Alberta exit the Canadian Pension Plan (CPP) to create a pension plan of its own?

It is a hot topic that was recently brought to the national stage by an open letter sent by Prime Minister Justin Trudeau to Premier Danielle Smith. In the letter, Trudeau states that he is deeply concerned over the proposed plans and that he has instructed his cabinet to do everything possible to ensure the CPP remains intact.

We asked recurring guest Lori Williams, Associate Professor at Mount Royal University, to help bring some clarity to the situation.

According to Williams, the idea of an Alberta Pension Plan (APP) is nothing new. There have always been some who have felt that Alberta is getting the short end of the stick in the federation. However, the origin of the idea may be traced back to the “Firewall Letter” penned in 2001 by Stephen Harper, who later became Prime Minister, and a group of like-minded conservatives. Harper’s letter outlined a series of policy proposals that would increase Alberta’s autonomy and its ability to control its own affairs.

Authors of this letter include some of Danielle Smith’s former professors and current advisors. So it isn’t a mystery how she has come to advocate for greater sovereignty for Alberta.

Williams suggests that, aside from Smith actually believing in the APP, she could also be giving a nod to United Conservative Party members who would lean strongly towards Alberta’s independence. She has seen how effective this wing of the UCP can be and may wish to appease them to some degree.

Williams also brought up former Alberta Premier Jason Kenney’s equalization referendum that did not lead to change and ultimately called his leadership into question. Smith is in a similarly tough spot. An April poll found that only 21 per cent of Albertans were in favour of finding an alternative to the CPP, while 54 per cent were opposed to the idea. Smith’s government has launched a $7 million campaign to try and change the minds of enough Albertans to justify a referendum. 

To complicate matters further, Smith did not talk about this issue as part of her election campaign, possibly because it may have hurt her chances of winning. In fact, she explicitly said that no one would be touching Albertans’ pensions. It is possible that this campaign will be more damaging for Smith and the UCP in Alberta in the long run.

Across the floor, Trudeau’s public letter claims to represent all Canadians who may be concerned about the impact an APP might have on their retirement. According to Trudeau, Alberta’s withdrawal from the CPP would weaken the pensions of millions of hardworking people, not only from Alberta but across the country.

Williams speculates that part of Trudeau’s motivation for writing a letter was likely to push federal Conservative Leader Pierre Poilievre into making a statement, which he did, encouraging Albertans to stay in the CPP. His statement has made Smith’s job even harder.

The rosy promise of ‘paying less and getting more’ with the APP hinges on Alberta receiving a significant amount of assets from the CPP. The recent exchanges between politicians make it clear that the rest of the country is not willing to take a hit for the sake of Alberta.

When asked what she foresees as the endgame for the current campaign, Williams said it could go a couple of ways. If her campaign does not generate the support Smith is hoping for, it will be difficult to proceed. However, if she campaigns hard, a future referendum is possible, which would lead to negotiations with the rest of the country. One thing that is certain is that this matter will not be resolved within the current UCP mandate and may become an issue in the next election.

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