Federalism, Pensions and the limits of Partisanship in Canada

[a version of this post was published by the Globe and Mail on August 10, 2015] Can the Federal and Provincial governments work together on policy matters on which they disagree? The answer in Canada is simple – they can and they must. This issue has come to a head around the  Ontario’s Retirement Pension Plan (ORPP) proposal, which the Provincial Government has developed because it believes the Canada Pension Plan is inadequate, and which the Federal Government has stated it will not help administer through its existing Canada Revenue Agency (CRA) infrastructure . The Ontario Retirement Pension Plan will be phased in over two years and will be offered at companies without employee pension plans. Self-employed Ontarians also may be able to opt-in. Companies with sufficient retirement plans will be exempt, and the lowest-income earners will not be required to contribute. While the ORPP could be run entirely by Ontario, this would increase the cost and could decrease the effectiveness of the scheme.  The sniping of the Federal and Ontario Governments on this issue began shortly after its announcement, and will no doubt continue to intensify over the course of this unusually long Federal election campaign. 

For most of its history, Ontario has elected governments of different partisan stripes to federal and provincial office at the same time. As a result, both the Federal Tories and Provincial Grits both may be right to say they are following their democratic mandate in advocating either for or against the pension proposal. Governments of different partisan stripes ought to be free to disagree. Federalism depends, however, on there being limits to these disagreements. In some cases, these limits are mandated by the Constitution’s division of legislative powers – a Provincial government may oppose a Parliamentary amendment to Canada’s Criminal Code but its law enforcement officials must still enforce that law. Similarly, Federal airports sit on local land and need to ensure harmonious approaches to provincial and municipal land use schemes. Where conflicts arise, the doctrine of federal paramountcy provides a way of ensuring law and regulations are coherent and predictable.

In the case of the ORPP, there is no constitutional obligation for the Federal Government to assist in the Plan’s administration – that said, refusing to assist Ontario undermines key principles of federalism. One such principle is equity. The Federal Government already collaborates in Quebec on an analogous provincial pension scheme. Further, Ontario has identified at least 28 CRA administered programs and 88 data exchange agreements that exist between the federal and provincial governments. A second principle is cost effectiveness. Where federal-provincial cooperation can render programs more efficient, or harmonize administrative costs, governments of all partisan stripes across the country should be committed to providing value to taxpayers.

The Federal Government has not justified its action on any principles of federalism. Rather, the Government  has made clear that it simply disagrees with the policy, declaring that it will “kill jobs.” Ontario’s Government, for its part, rather than rising above the partisanship, returned fire, pointing out that the Finance Minister and Prime Minister personally receive “gold-plated” pensions out of reach for most Ontarians.  While the rhetoric is unfortunate, the dispute about pension policy is legitimate – the ORPP might better protect vulnerable seniors or it might undermine job creation  (the details of the scheme remain sufficiently sketchy that any observer could project her or his hopes and fears on the proposal)  – the point is that the wisdom of the ORPP and the politics around whether this is or is not a desirable policy should not interfere with both levels of government figuring out the optimal way to work together for the benefit of the public. The Government of Canada should assist Ontario not because it endorses Ontario’s approach, but to fulfill its necessary mandate to make federalism work. Federalism can only work where Governments exercise leadership in putting the best interests of the public ahead of petty partisanship. To drive up the cost of administering the ORPP simply because the Federal Government prefers a different approach to pensions, or wishes to attract more votes in Ontario, is not a responsible approach. For the Government of Ontario, in turn, to make this about particular individuals (the Prime Minister or Finance Minister, for example), demeans the seriousness of the issue and its democratic mandate to deliver better benefits to those who need them most.

If Federalism is to thrive in Canada, a better way forward needs to be found – one that gives ample room for partisanship, but that also sets out clear boundaries where partisanship has no place.