Much reviled, Kathleen Wynne is making promises aplenty, spending money we don’t have, in a desperate bid to hang on to power. Gunning for the premier’s job and determined not to be outflanked on the left, Andrea Horwath is promising to spend, spend, spend. Even Doug Ford is singing from that hymn book, determined not to be painted as an ogre.
Each is only concerned with winning the election. That’s as far ahead as they plan, giving no thought to the public good today, let alone tomorrow. Deficit, schmeficit.
The critique is not about some ideological problem with government spending or even deficits. The former is absolutely essential, the latter needed on occasion to level out the economic dips (though there’s never any scaling back/savings during boom times, however).
Short-term thinking is the norm in politics, with a focus on today’s poll numbers and tomorrow’s election. Promise the world, borrow money to pay for some of it and hope nobody points out the lying involved in dropping other bits of the platform. Kick the mess down the road until it becomes someone else’s problem as you cash in your golden ticket.
The public bears much of the blame. Many of us believe the lies, to begin with. And we are willing to be bribed with our own money out of gullibility, stupidity, greed or what have you. We’re the little kid who whines incessantly for an ice cream cone, a shiny new toy and an iPhone now, now, NOW, wearing down his parents and their talk of a college fund and a nest egg later on. We’re buying a new television when the roof is leaking. Paying for living essentials on credit, making the minimum payments and covering the MasterCard bill with Visa.
Just as we should pass on the ice cream in favour of spinach, we should favour governments that think ahead years and decades instead of about today and only today (competent, not corrupt and paid off by corporate interests would also be nice qualities, if equally farfetched).
Imagine that instead of massive debt and bloated bureaucracies and payrolls, governments had a handle on program spending (the monthly bills) and infrastructure such as hydro, water and buildings (the mortgage). Imagine if living conditions were human-centric, i.e. non-corporatist and not a Ponzi scheme of growth. That’s beyond the pale, as we can’t even get it right in the one area where we are supposed to be thinking longer term: pensions.
That subject is one of my own benchmarks for the failures of government and the decline our economic system, which reached its peak in the decades after the Second World War – the Canada Pension Plan, for instance, emerged in 1966.
Today, however, most retirement schemes are tilted towards “scheme” rather than “retirement,” shaped like a pyramid.
Even the CPP, the most stable of all, relies on money from today’s workers to pay for yesterday’s retirees. That reality is part of the reason we need reform. That and the fact many of us simply won’t have enough money to live on if we ever do get to retire.
Another facet involves strengthening protections for private pension plans, the kind often plundered and/or underfunded by companies. The kind government has been forced to bail out on occasion, the product of a wave of deregulation that enforces the notion that we have socialism for the corporations, and capitalism for the rest of us.
On the whole, we’re not putting enough money away to secure the future of retirees.
There’s every reason for concern. About two-thirds of Canadian workers don’t have a company pension plan. In fact, about a third don’t have any retirement savings at all – about 30 per cent of eligible workers didn’t contribute to an RRSP last year, for instance.
For those who have no savings of their own, relying only on government sources, retirement will be a meagre affair. Or simply put off altogether.
The CPP provides 25 per cent of a worker’s average annual earnings – hardly enough for a comfortable retirement. That level has been consistent since the program was introduced in 50 years ago. Payments for current recipients come partly from invested reserves and partly from contributions from today’s workforce. In order to ensure a more stable system and to provide a decent retirement income, we’ll have to start boosting CPP contributions.
Ideally, that 25 per cent figure would become 70 per cent, the figure most often cited as the level of income needed to preserve our standard of living in retirement.
While the federal government has looked at hikes in CPP contributions, though at modest and gradual levels likely to prove less effective than they need to be, it soon backed away.
You can be sure that hesitation had much to do with opposition from the financial services industry. The best-case scenario for most Canadians would see a robust CPP doing away with the current RRSP system. Those who profit from the status quo – raking in some of the highest management fees in the process – want no part of such notions.
Turmoil in the economy has seen more workers in danger of losing company pensions – already seriously underfunded in most cases – due to bankruptcy. Like those plans, RRSPs managed by the financial industry have taken a beating, dropping in value such that many of us will have to put off retirement plans.
Of course, politicians also fear a backlash from workers who would see significant increases in CPP contributions as simply another tax grab.
That’s not the case. Unlike employment insurance, CPP is an arm’s length arrangement. Contributions go directly to the plan, and are never part of government’s general revenues. The plan is generally as secure, reliable, cost-effective, and well managed. Increasing the mandatory contributions would be a largely painless way to ensure a more comfortable retirement – in effect, forced savings. Because of the way the plan is administered, it would not be at risk of being squandered by government, unlike our tax payments.
That’s a big distinction. We would get back what we contribute. It would also relieve the Ponzi elements: we pay today for what we’ll receive tomorrow, rather than relying on subsequent generations of workers to pay for us.
That model permeates government. It’s what fuels deficit spending. A purely pay-as-you-go formula wouldn’t work, but we need to move in that direction. The same is true of the economy as a whole, itself a giant pyramid scheme which relies on growth – in effect, the next batch of suckers – to pay for what we spend today. At a time when more and more of us are worried about finances and what the future holds, the time is ripe for reforms that actually benefit the people – something governments talk about but often fail to deliver on.
For Ontarians, however, putting faith in this government to deliver seems like another bad investment. Nothing we’ve heard in the run-up to next month’s election says otherwise.