THE NEWS REVIEW - Thursday, May 1, 2014 - Page 5A
to the editor
LETTERS PAGE
Your letter of the Week
No retirement crisis here
Taking the lead
To the Editor:
With talks to expand the Canada Pension Plan having stalled, the Ontario government has pledged to roll out its own provincial version. The impulse for a ‘big CPP’ hinges on the assumption that Canadians are too ignorant or misguided to plan for retirement themselves and the meddling hand of government bureaucrats can help them. In a new study published by the Fraser Institute, I question many of the assumptions behind the drive for ‘big CPP’ in Ontario and elsewhere. To begin, Canada’s current cohort of retirees aren’t facing a retirement income crisis. People are living longer, healthier and wealthier lives in retirement. The few pockets of poverty among seniors, such as single elderly women who have never worked, are best addressed by better targeting government benefits, not a wholesale expansion of the CPP. The crisis publicized by the pension ‘industry’ resides in the future and relies on assumptions and projections in models which are questionable. The model results are based on the traditional three pillars of Canada’s pension system – social security payments from government, the mandatory CPP, and voluntary pensions like RRSPs. This downplays the role of assets people hold in a fourth pillar outside the pension system, which total $8.6 trillion including real estate and various saving and investments, compared with $2.6 trillion held inside the pension system. And it completely ignores a largely undocumented but vital fifth pillar of support to retirees from family and friends; for example, 10 per cent of seniors live with their families, with unknown amounts of money and in-kind support flowing back and forth across generations, including inheritances. There are many problems with model-based extrapolations of pension incomes years in the
future. For example, models assume that the replacement rate of working income with pension income is fixed over time, when it more likely declines as older age curtails spending on travel and entertainment. Banks routinely exhort retirees to replace 70 per cent or more of their working income, when some experts find 50 per cent would be adequate for most. But the fundamental prob-
“Canadians are anything but the robotic automatons portrayed in models, doomed to endlessly repeat past patterns of behaviour...” lem with targeting replacement rates is that they are an opinion, not an observable fact. A prospective retiree can rationally choose to retire early, accepting a lower standard of living to spend more time pursuing leisure activities or with family. Another challenge with modelbased projections results from a growing number of older Canadians staying in the labour force. Nearly half of Canadians over the age of 55 are still in the labour force, including one quarter aged 65 to 69 (a near doubling of the rate over a short period). Canadians are increasingly working past what used to be the traditional (and often mandatory) age of retirement and this shift is playing havoc with forecasts of the labour force. This should give pause to anyone basing policy prescriptions that increase payroll taxes for virtually all working Canadians today on model simulations of the distant future. Every extra year elderly Canadians spend working generates more income
and reduces the time savings are withdrawn for retirement. However, a major problem with using models to simulate the future of retirement is the underlying assumption that prospective retirees don’t understand their financial circumstances. In models, Canadians march towards retirement either blissfully unaware of the lower standard of living waiting for them or utterly incapable of altering their behaviour by saving more or working longer in response to that knowledge. In real life, there’s ample evidence that Canadians alter their behaviour in response to a keen awareness of their circumstances and act decisively and rationally to control them. Some accept lower incomes in order to retire early while others work longer when circumstances dictate; they save less voluntarily when government increases mandatory saving; they save more in their own pension accounts when employer-based pension plan benefits erode; they elect to receive C/QPP benefits earlier or later than the traditional 65 years as they see fit; they shift consumption between the early and later stages of retirement; they save more in their later years to leave an inheritance; and they understand government will provide support as their health deteriorates in their final years. Canadians are anything but the robotic automatons portrayed in models, doomed to endlessly repeat past patterns of behaviour, incapable of learning and adapting their lifestyle to the changing world around them. They are actively involved in making the myriad of decisions that affect their pensions and their retirement. If there is an expanded role for government to play in the future retirement system, it’s filling in the few cracks through which pensioners can fall into poverty. Philip Cross, Troy Media Corp.
Education overhaul needed in Sask. To the Editor:
It has now been revealed in the Legislature the Premier’s wrong-headed Lean pet project isn’t just confined to health care. The education ministry is spending at least $1.2 million for Lean consultants, and that’s not even counting all the time and resources of teachers, staff and administration of school divisions. The government says its education plan is a kaizen Lean- plan. This is concerning for me as
well as many teachers, students and parents throughout the province because of the negative impact that lean has already had on our health system. As a part of this plan, the government is imposing a Lean clawback that will immediately rip funding out of our schools. The government is also putting Saskatchewan’s education system in a fiscal straitjacket by capping education funding after the next budget, locking in inadequacies. Today, classes are
complex, overcrowded and under-resourced – and there are far too few supports like educational assistants in those classrooms to ensure students have the one-on-one attention they deserve. Capping funding at an insufficient level will stick Saskatchewan kids with a status quo that is not good enough. The government is diverting education dollars away from our kids and into the pockets of Lean consultants. Meanwhile, the basics aren’t being met in
classrooms throughout the province and school divisions are being forced to make Lean cutbacks. Lean was invented in a car factory, and while years of those cars are being recalled, we only have one chance to get it right with Saskatchewan students. It’s past time this government start improving what really matters to students. Trent Wotherspoon, NDP Deputy Leader and Education critic.
Funding help is needed for vaccines
To the Editor:
Long thought by most people to belong to the bad old days of polio and smallpox, measles is making a resurgence in Canada due to complacency in the public about vaccinations. Almost daily we hear of new outbreaks. If the people of the world knew about this, I have no doubt they would slap us upside the head and ask us what our problem is. Because unlike us, many millions have no access to vaccines for themselves or their children,
and live in constant fear of diseases that could easily be prevented. Diseases we never have to think about. A few years ago at Muskoka, Prime Minister Harper pledged significant funding for Child and Maternal Health initiatives. The Global Alliance for Vaccines and Immunization (GAVI) is the premier global deliverer of vaccines throughout the world, and they are approaching funding renewal. As part of Muskoka Canada has been a key donor to GAVI,
and it’s critical that we renew or increase our funding share, especially as our aid levels are far below other OECD countries. In late may Mr. Harper will be hosting a Child and Maternal Health summit, and I hope he takes this opportunity to boost GAVI funding. For even if many of us turn our backs on vaccines, people around the world will gladly accept them. Nathaniel Poole, Victoria BC.
To the Editor: With an abundance of natural resources, and a bustling agriculture industry, trade is vital to the Saskatchewan economy. The province exports more products per capita than any other province, and recently overtook British Columbia to become the fourth largest exporting province in absolute terms. In 2013, the province posted a positive trade balance with not only China, India and Japan, but also the United States, which is all the more impressive considering Saskatchewan receives the vast majority of its imports from the U.S. But for this trade prosperity to continue, Saskatchewan needs a seat at the negotiating table, and to take a leading role in carving out new markets for itself. Luckily, much of the infrastructure that will be required is already in place. Within the province, the Saskatchewan Trade and Export Partnership (STEP) is a joint public-private institution with a mandate to promote exports from Saskatchewan and assist firms with taking their product internationally. STEP reached an agreement in 2010 with a Chinese organization called the China Council for the Promotion of International Trade (CCPIT), which gives firms in Saskatchewan greater access to markets in China. Alberta, British Columbia and Saskatchewan also established the Western Canada Trade and Investment Office in Shanghai in order to have a more direct presence in China. With the province taking such an active role in trade relations, exports to China have greatly increased, from $1.5 billion in 2010 to $2.6 billion in 2013. Saskatchewan’s top export to South Korea in 2011 was wheat - $195 million worth. But by 2013, wheat exports to South Korea had fallen 83 percent, to just $33 million. The good news is that Canada’s recently signed free trade agreement with South Korea will immediately lift many tariffs on agricultural products from Saskatchewan, which Premier Brad Wall has cited as one of the main contributors to the decrease in exports. But that’s not enough; there is still ground to be gained in many markets. Saskatchewan officials could wait for Canada to continue its aggressive push towards bilateral and regional trade agreements, but it’s ultimately in their interest to take a more active role. Alberta has offices in the U.S, China, Mexico, Germany, Taiwan, the United Kingdom, and more. The province has been able to successfully create new markets for itself and ensure its firms have every opportunity to grow their business globally. While Saskatchewan’s smaller size may not justify quite as large a program, India and Brazil are obvious choices for such a provincial initiative, given their large markets and recent willingness to trade. The potential gains to be made from improving relations with Bangladesh and Malaysia shouldn’t be discounted either. Leguminous vegetables and wheat, Saskatchewan’s top two exports to Bangladesh, are both on the rise. In 2012, exports of vegetables totalled $93 million. In 2013, that number jumped up to $224 million. With the potential for this number to rise even further, Bangladesh should be one of the top destinations for Saskatchewan’s new set of trade offices abroad. Trade is growing Saskatchewan’s economic and social profile not only across Canada, but throughout the world. The foundations, and the markets, are there. Now all that’s needed is the political will to execute such a plan. Trade is surging, and the markets are calling. Justin Bedi, Peter McCaffrey, Frontier Centre for Public Policy.
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