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Julia's speech against the Ontario Retirement Pension Plan (ORPP; Bill 56)

Resuming the debate adjourned on February 17, 2015, on the motion for second reading of the following bill:

Bill 56, An Act to require the establishment of the Ontario Retirement Pension Plan / Projet de loi 56, Loi exigeant l’établissement du Régime de retraite de la province de l’Ontario.

The Acting Speaker (Mr. Paul Miller): When we last debated this, I believe the member from York–Simcoe had the floor. Member from York–Simcoe.

Mrs. Julia Munro: It’s a pleasure to be able to continue where I left off yesterday on Bill 56.

What we’re debating here is Bill 56, the government’s new Ontario Retirement Pension Plan scheme. I just want to quickly recap my speech from yesterday. The following outlines why this proposal should be abandoned.

First of all, the government is using the ORPP to distract from the real economic crisis in Ontario: the $300-billion provincial debt and $12-billion deficit. Government debt is increased by $1.4 million every hour—$33 million every day.

The government has not provided any economic analysis of the ORPP. Does the government have any interest in how many jobs will be lost?

The government has not identified exactly who will be forced to join the ORPP; they have not defined “comparable workplace pension plan,” and this is certainly something that many people have responded to.

The government has not divulged how much the ORPP will cost to administer.

The government has not identified what will happen with self-employed Ontarians.

The government has tried to convince the public that the ORPP will operate like the Canada Pension Plan when, in fact, it will be modelled on the Québec Pension Plan.

The government has not been clear with Ontarians that their $29-billion infrastructure plan cannot happen without the ORPP.

The government has eroded public trust so deeply by their decade of billion-dollar scandals in spending and mismanagement that people do not trust this government with another dime of their hard-earned income.

Finally, I have not received any indication from any Ontarians or Ontario businesses that they are in favour of this proposal. I have only received lengthy well-researched letters in opposition to the Ontario Registered Pension Plan.

During my time today, I will focus on three main problems with this proposal.

The government has not defined who will be forced into the ORPP by not defining what a “comparable workplace pension plan” is.

Two, the ORPP will not help the people who need it most, such as widowed seniors or those on minimum wage.

Three, the ORPP will force employers to cut employee hours and jobs in order to maintain a competitive edge in today’s highly competitive economy. The ORPP will increase our unemployment rate that has been above the national average for six years.

I referred a moment ago to the stakeholders who have contacted me. I want to take some time today to air their concerns, because these are the people who must consider the ramifications of any legislation, and they are the ones who are looking at it from the point of view: “How does this enhance our quality of life and the strength of our economy in Ontario?”

The first quote I am going to use—these come from the pre-budget hearings last month. This one comes from the president of the Canadian Life and Health Insurance Association. He said the following, regarding the impact of not including defined contribution plans in the ORPP: “A balanced approach will be needed to ensure that the ORPP doesn’t undermine existing plans and disadvantage Ontario workers. The very real risk is that Ontario workers will be worse off if employers with already attractive plans find themselves unable to continue those plans if they are required to offer the ORPP.”


The president of the Investment Funds Institute of Canada said, “If group RRSPs are not provided a comparability exemption, we expect that the introduction of the ORPP will cause many employers to rapidly discontinue their group RRSP programs, negatively impacting individuals savings habits.”

The senior vice-president of the Air Transport Association of Canada said, “Most flight schools are small, marginal operations which could ill afford a 4% increase in wage costs, which is usually the largest operational expense that a flight school will face.”

The vice-president of the Chemistry Industry Association of Canada said, “Is it yet another step that undermines the overall competitive position of manufacturing in the province? If manufacturing, generally, is undermined, that’s going to have significant impacts on us.”

One of the groups who had the most to say was the Ontario Chamber of Commerce: “Mainly, the chamber and our members have been worried about the potential negative impacts of the ORPP on the business climate. Chief among those concerns is the added cost of business that the ORPP presents, on top of ... other cost drivers that businesses in the province have been experiencing over the past few years, things like higher electricity prices and a higher minimum wage. All those things add to the cost of doing business and actually potentially negatively impact business competitiveness relative to other provinces and neighbouring states.

“The government, to our thinking, has yet to show any ... evidence to the contrary, and until it really does so, we’re convinced that the ORPP shouldn’t go ahead. We really want to see the government come out with an economic impact analysis of how the ORPP will impact Ontario’s economy.”

The Trillium Automobile Dealers Association said that the government’s “payroll tax, as we call it, will make it more expensive to hire people, and that’s not a good thing. So we’re very concerned.

“Again, it takes money out of the auto sector.”

The Canadian Manufacturers and Exporters said that “it’s another burden and it’s another cost that employers and employees, those who can least afford to pay it, will now have to incur....

“We’re concerned that things like high electricity rates and the new costs associated with the new pension will take us further away from being able to leverage full opportunity and advantage for the province.”

Ontario’s Restaurant Hotel and Motel Association said, “A disaster—it will be a disaster. The industry is struggling right now....

“It will set back Ontario, going backwards, and at the end of the day, will contribute to the deficit. At the end of the day, instead of improving the deficit, it’s going to escalate it.”

The Retail Council of Canada said, “When I talk to small business, they say, ... ‘this is going to cost me $20,000 to $30,000 a year. How are you going to get that back for me?’ Because businesses are struggling today to survive, and so they’re looking for offsets.... They’re looking to minimize the hit because the alternative is that they have to reduce staffing costs, labour costs or a percentage of sales, and if the sales aren’t there to support, they’re going to reduce the number of people who are working in the retail environment.”

The CFIB also had considerable ideas to suggest. I’d like to highlight the voice of Canada’s small and medium-sized business community, the Canadian Federation of Independent Business. The CFIB presented its sound analysis of the ORPP at pre-budget hearings held by the Standing Committee on Finance and Economic Affairs less than a month ago. At the hearings, the CFIB vice-president, Mr. Plamen Petkov, commented on the lack of public understanding of the ORPP proposal: “I’m not quite sure, though, that the average Ontarian actually understands that this is going to be money coming from their paycheque. I think they are going to realize that after they see that deduction in 2017 onwards.

“I think there is a big education component here that is missing from the whole debate on things such as, it is not a free plan; it is not something that the government is giving to the people; and there’s also the fact that it’s going to take 40 years of contributions to actually get the benefit....

“So it is really a combination of different charges that, as a small business owner, you either have to take from your payroll, meaning reducing your labour force, or you have to pass it on to your consumer, meaning raising prices. If you keep raising prices you’re not going to be competitive and you’ll be out of business pretty soon.

“Over the last week or so, we saw reports of big companies, multinational chains, exiting Canada and Ontario because they are not competitive. They cannot stay competitive. The same is valid for a small business. If you start raising your prices to absorb some of these costs, you’re not going to make it too far.”

I admire the credibility of the CFIB as well as the frankness of its vice-president. In order to give more strength to the CFIB, they sent a letter to Ontario’s Associate Minister of Finance conveying a number of grave concerns with this proposal. This is the most important section for the record: The ORPP “represents a 40% increase in the pension premiums they”—Ontario’s businesses—“currently pay to the Canada Pension Plan (CPP). Regardless of whether you call these contributions a premium, a tax, savings, or an investment, one thing is clear—these will be a mandatory charge on employers’ payrolls and on their employees’ paycheques....

“The vast majority (86%)” of respondents—Ontario’s business owners—“oppose the implementation of the ORPP.”

The CFIB did a poll to see what employers would do if the plan was forced on them. “The respondents indicated that in order to cope with the added cost of ORPP contributions, 69% would be forced to freeze or cut salaries and 53% would have to eliminate jobs. At a time when the provincial economy continues to stagnate, this type of plan would certainly create significant financial hardship for small businesses and the people that they employ, especially for those who are already finding it tough to operate day to day....

“The analysis shows that this mandatory pension plan would cost Ontario 160,000 person-years of employment. As well, it would increase the province’s unemployment rate by 0.5% by 2020 and would permanently reduce wages in the longer-term.”

The peak annual employment loss amounts to 42,000 jobs lost in the year 2020.

CFIB continues:

“(1) If implemented, the ORPP will severely undermine the ability of Ontario’s job creators to grow their businesses and continue offering new jobs to Ontarians....

“(2) The ORPP targets mostly small business owners and their employees.

“The current proposal exempts those with defined-benefit (DB) plans from contributing into the ORPP. This means federally regulated industries, big businesses and most public sector workers will not be impacted by this new mandatory premium. It is unfair and rather cynical that those that will be exempt from the plan are its loudest cheerleaders....

“(3) Forcing additional pension contributions reduces income available to cover essential goods and services for Ontario families.


“As we have discussed previously, the issue of insufficient retirement savings for segments of the Canadian society has resulted not from a lack of savings options or motivation to set more money aside for retirement, but from a lack of disposable income.... Ultimately, any new or additional taxes or fees would reduce Ontarians’ ability to pay for essential goods and services such as food, rent or mortgage payments.”

The ministry has a chart which shows how the payments would come for people. They’re based on a 40-year time.

Number (4) says, “This is a point which has not been broadly communicated by the government. Any increase in the future disposable income of the retired is offset by the decline in the disposable incomes of those contributing today. This is only made worse by the fact that the working poor would be asked to contribute even though this would lower their entitlements to existing social security supplements (i.e. clawing back OAS and GIS), which replace close to 100% of the income for that segment of society.

“(5) Ontarians don’t trust an entity at arm’s-length from government to manage their retirement savings. Opposition for the ORPP can be further explained by the questionable past performance of existing public pension funds, many of which already carry ... unfunded liabilities to the tune of billions, and have required the injection of public dollars in order to meet pension obligations.... The structure of the current proposal begs the following questions: What would happen to an underfunded ORPP? Who would be responsible for any shortfalls? Ultimately, taxpayers would be on the hook for shortfalls and would bear a significant portion of the risk, as has been demonstrated time and again.”

The Canadian Federation of Independent Business’s opposition is strongly echoed by the Ontario Chamber of Commerce, including 50 municipal chambers of commerce—the Fraser Institute and C.D. Howe have warned against the ORPP—the Ontario Restaurant Hotel and Motel Association, the certified professional accountants, Primerica financial, the Progressive Contractors Association, the Investment Funds Institute of Canada, the Air Transport Association of Canada, the Chemistry Industry Association of Canada, Trillium auto dealers, Canadian Manufacturers and Exporters, the Retail Council of Canada, the Ontario Home Builders’ Association, small and medium-sized businesses, citizen groups, municipalities, statisticians, and public policy and business academics.

One such public policy academic who has been sounding the alarm over the proposal is Jack Mintz, the University of Calgary director and Palmer Chair in Public Policy. Here is a quote from his article from last Friday:

“It is far from clear an expansion of CPP, QPP or the ORPP is at all needed for the broad population.

“In fact, a mandatory Ontario‎ pension plan could do more harm than good.

“First, once taking into account personal taxation and income-tested programs, the Ontario plan will discriminate against low-income seniors and some others in middle-class ranges.

“Low-income seniors will be taxed on Ontario pension income as well as lose GIS payments, 50 cents on each dollar. For a senior with $20,000 in income, barely above the measured poverty line, the Ontario pension plan will be reduced from $2,848 to $1,424 with the loss in GIS and a further $584 by federal and provincial tax payments, leaving only $740 to cover rent and food. While working, the person would pay the same payroll tax rate as others but would end up with a pretty [bad] after-tax return on the asset”—the ORPP.

“Second, any mandatory scheme has bad consequences for those who do not need it. Young families trying to save for home equity will need to pay into a plan that is a less important retirement asset at their stage of life.‎ Others who invest in businesses and other financial opportunities will have to face new taxes.”

The third issue: The ORPP “will be expensive to operate.... Ontario will need to track migrants in and out of the province. It will also need to administer the plan on its own. It will also lead to large unfunded liabilities, adding to provincial debt, if payroll taxes do not cover benefits.”

These stakeholder voices of reason need to be listened to by the government.

One of the issues that has been suggested is that the ORPP is modelled after the Quebec pension, not the CPP. To expose the problem with collecting pension funds with the—

The Acting Speaker (Mr. Paul Miller): Julia.

Mrs. Julia Munro: Oh, sorry.

The Acting Speaker (Mr. Paul Miller): There seem to be some lovely conversations going on, and one that’s really remarkable is someone from the other side holding court over there—really amazing. If you want to hold court, at least do it on your side.

I would appreciate a little quiet. I can’t even hear the poor member from York–Simcoe, because there are nine sidebars going on.

So keep it down, and if you want to talk, go outside. Thanks.

Go ahead.

Mrs. Julia Munro: In comparing the CPP and the Quebec pension—it’s found in their legislative mandates—their investment strategies flow from very different places, with very different exposure to risk and very different priorities.

The objectives of the Canada Pension Plan Investment Board are given in section 3 of the act. It says:

“(a) to assist the Canada Pension Plan in meeting its obligations to contributors and beneficiaries...;

“(b) to manage any amounts transferred to it ... in the best interests of the contributors and beneficiaries” of the plan; and

“(c) to invest its assets with a view to achieving a maximum rate of return, without undue risk of loss, having regard to the factors that may affect the funding of the Canada Pension Plan and the ability of the Canada Pension Plan to meet its financial obligations on any given business day.”

To carry out its objectives, it operates at arm’s length from the government and is armed with a strong set of governance safeguards against any real or perceived political interference in its operation.

On the other hand, the Quebec caisse is “to receive moneys on deposit as provided by law and manage them with a view to achieving optimal return on capital within the framework of depositors’ investment policies while at the same time contributing to Quebec’s economic development.”

As the National Post editorial board put it last month, pension plans are meant to benefit those who contributed to the plans, not the governments that created them.

It is clear the Ontario Retirement Pension Plan is the wrong idea at the wrong time. Many organizations and individuals have put forward thoughtful suggestions to help Ontarians retire with dignity, which the government refuses to embrace. Such ideas are to:

—control government spending and reduce taxes to allow Canadians to contribute more towards retirement savings;

—create new incentives for people to save, like a one-time match for RRSPs or TFSAs;

—allow individuals to voluntarily contribute more towards their retirement;

—increase RRSP and TFSA contribution limits.

Those are just a few of the things that could be done.

While a new mandatory pension plan is seen as extremely burdensome and unaffordable, there is clearly some support for voluntary options, such as the PRPP.

As the collected voices of people who have deep concerns, we strongly urge the government to carefully examine the impact that this proposal would have on Ontario’s job creators. If the government is determined to move forward with this ill-advised plan, despite the evidence that small business owners, their employees and other Ontarians alike cannot afford it, then the following amendments are suggested:

—exempt employers with defined contribution plans, RRSPs, group RRSPs, PRPPs;

—increase the minimum earnings threshold to $30,000; and

—exempt smaller firms with fewer than 20 employees from contributing.


As I complete my response to the second reading of Bill 56, I want to leave you with some final thoughts and concerns I have identified throughout the remarks. The data exists which challenges even the need for an ORPP. The threat of a 1.9% paycheque deduction and a matching employer payroll tax is a dangerous threat to jobs and a healthy economy, as is the absence of clarity regarding comparability of existing pensions and no answers to questions about timing, eligibility and financing.

Finally, as revealed in the 2014 budget, the real objective of Bill 56 is contained in the following quote: “... Ontarians to save through a proposed new Ontario Retirement Pension Plan, new pools of capital would be available for Ontario-based projects such as building roads, bridges....”

The government needs to re-examine Bill 56. People from all walks of life, from a wide background, have all joined in unison to demonstrate the unintended consequences for the province and its citizens. Premier, people see this scheme as a dire threat to the fragile stability of this province’s economy. The public needs more financial analysis and less conjecture. The public also needs to know the truth: that your $29-billion infrastructure spending plan cannot go ahead without the Ontario Retirement Pension Plan.

Related Documents / Files:
Bill 56: Ontario Retirement Pension Plan Act
Bill 57 - Pooled Registered Pension Plan Act
CFIB Analysis of ORPP
Stakeholder Opposition
ORPP is Unnecessary: Fraser Institute
Important Quotes to remember
Economic Impact of ORPP
Financial Advisors Opposition

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Julia's speech against the Ontario Retirement Pension Plan (ORPP; Bill 56)