Explore the idea of a new Alberta Pension Plan.
Make recommendations on a new Alberta Revenue Agency.
Come up with a strategy on how to allocate future budget surpluses and deal with debt reduction.
The list of new tasks facing Treasury Secretary Travis Toews is daunting, about as simple as mastering quantum computing with a Commodore 64 and a dial-up modem.
These complex issues are included in the ministerial mandate letter that Premier Danielle Smith handed over to her new finance minister – who is also the former finance minister, and the runner-up in the UCP leadership race – this week.
“Well, it’s true, there’s nothing simple about any of the three,” Toews said in an interview.
“None of them are again simple issues, and yet all are very unique . . . It is very feasible to have a debt retirement plan and present it to Albertans and get government support for it.
“Regarding an Alberta pension plan, an Alberta revenue agency, much more complex — and look, the fact that these issues are complex shouldn’t bypass the government in pursuing the concepts.”
This is one way to see it.
Here’s another one.
“These are incredibly unpopular ideas,” said political scientist Duane Bratt at Mount Royal University, noting that the idea of replacing the Canada Pension Plan (CPP) and developing a provincial revenue agency, through the Kenney government’s Fair Deal panel in 2020 was investigated.
“Mandate letters indicate . . . and it’s completely consistent with (Smith’s) view that we need more Alberta and less Ottawa.”
The new letter gives Toews several complicated tasks, including a call to work with the UCP caucus to develop a new fiscal framework and surplus strategy.
It’s something that has vexed Alberta governments since Ralph Klein was premier: What should Alberta do with future budget surpluses?
The province expects to post a $13.2 billion surplus this fiscal year. He has already committed to awarding more than $13 billion in debt repayment.
The letter calls on Toews to work with the cabinet and develop a plan to “balance sustainable debt reduction, savings and infrastructure investment while addressing inflationary and other affordability pressures.”
The other ideas are more combustible.
The mandate letter calls on the finance minister to “review an Alberta Pension Plan (APP) and make recommendations that will increase pension benefits for seniors and reduce premiums for workers.”
Similarly, it is seeking recommendations on creating a provincial revenue agency to collect all Alberta taxes, including personal income taxes.
Two years ago, the Fair Deal panel recommended that the province withdraw from the Canada Pension Plan (CPP) and create a replacement. It also advocated giving Albertans the opportunity to vote on the idea through a referendum.
With higher average income levels in the province, a younger population (compared to the rest of the country) and increased employment rates, Albertans “contribute disproportionately to the CPP,” the report said.
The panel said withdrawing from CPP could cause the provincial contribution rate to be reduced from current levels, while keeping pension benefits at a comparable amount.
However, it contained a note of caution.
“Many seniors told the panel unequivocally: make sure pensioners are protected!” it said.
A poll of Albertans last month for CBC by Trend Research, led by Janet Brown Opinion Research, highlights such concerns.
Found it three out of 10 respondents think the province should create a pension plan to replace CPP. Six out of 10 were opposed.
The poll also indicated that 57 percent of UCP supporters agreed with the establishment of an APP, while one third disagreed.
“We have this situation where (Smith) got elected by appealing to a certain segment of the population that thinks it’s a good idea,” Brown said in an interview.
“She is now trying to drive down the middle of the road, where she is trying to fulfill the promises she made in the leadership race, but preparing herself to win the next election.”
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Toews said the province will consider whether it should continue to be part of the CPP or put a provincial plan in place. Any Alberta plan would have to ensure comparable pension benefits and be portable across the country.
“This is a very complex subject. We have done the actuarial work, the econometric work, and we look forward to sharing the conclusions. . . in the weeks ahead,” he said on Tuesday.
“Personally, I think an Alberta Pension Plan holds great promise.”
The Fair Deal panel also explored the idea of changing tax collection in the province, but recommended against it “at this time.”
Alberta currently collects provincial corporate income tax, while Ottawa collects the federal and provincial portions of personal income tax from residents.
The report said if the province collected all taxes owed by Albertans, the government could “reduce the risk of federal intrusion into provincial jurisdiction.”
Still, it noted that many Albertans, including business operators, were concerned it would create extra costs, duplicate collection efforts and increase red tape.
Alberta would also need a “massive expansion of the bureaucracy” to set up such an agency and it would have no clear objective, while Albertans would have to file their taxes at both levels of government, said Shannon Phillips, MPW, MP , said.
As for withdrawing from CPP and creating an Alberta pension plan, Phillips blasted the idea as “stupid.”
“Putting our retirement security in Danielle Smith’s hands to gamble with is very unpopular for a reason,” she said. “It is completely unnecessary. Albertans don’t want that.”
Toews said more work needs to be done to identify the potential costs, risks and opportunities of establishing a new revenue agency.
It is clear that there is strong opposition to the idea of creating a provincial pension plan and a new tax collection agency. And getting the budget surplus strategy right will be no walk in the park.
Even with improving financial fortunes for Alberta, three formidable challenges now loom large for the returning finance minister.
Chris Varcoe is a Calgary Herald columnist.