An APP: Lies, Damned Lies and Satistics

To be a Canadian who lives in Alberta, to use a religious analogy, is a bit like being a non-sectarian believer trapped in a fundamentalist sectarian community. What unites us as Canadians is almost unmentionable, while the sectarian priests prevail, preaching dangerous myths for sectarian purposes.

As I read over the UCP’s flyer on its latest idiocy, a proposed Alberta Pension Plan (APP) to replace the Canada Pension Plan (CPP), Mark Twain’s adage jumped to mind, “There are three kinds of lies – lies, damned lies, and statistics.” The UCP flyer contains all three. It’s an insult to our intelligence, the facts, and our rights as Canadian citizens.

In another context, the flyer might be laughable, delightfully off the wall, but in an environment where the normalization of Danielle Smith’s conspiracy-drenched ship of fools is the overwhelming ethos, it must be taken seriously as the dangerous, misguided venture it is.

Lies

Much has been written about the government-commissioned report behind the Smith government’s assertion that Albertans would be better off with a provincial pension plan and I will only summarize the main devastating counter-arguments before talking about how I understand this truly foolish proposal.

For starters, the assumptions behind the report from Lifeworks (the signature of the author, or authors, is mysteriously redacted in the published version) defy common sense. One example will suffice – the suggestion that Alberta’s share of the CPP would amount to $334 billion, or almost 60% of the CPP’s total assets of $570 billion (fiscal 2022).  This absurd conclusion rests on a questionable interpretation of the original legislation behind the creation of the CPP. As Trevor Tombe of the University of Calgary states in his analysis of the Lifeworks assumption,

were both Alberta and Ontario to withdraw, I estimate this approach would result in more assets be paid than currently exists within the CPP” (Tombe, p4).

Given that Alberta’s share of contributions to the CPP since its inception in 1966 amounts to about 15%, the suggestion that the province is entitled to almost 60% of its assets will not fly with other Canadians. Of course, if the likely assets of a new APP are actually less than a third of the Lifeworks estimate, all other promises based on that number should be similarly discounted. The UCP’s assertion that Albertans would pay substantially less and receive substantially higher pensions under an APP is a lie.

Damned Lies and Statistics

The damned lies and statistics follow. Given its smaller size, an APP would be riskier for the individual contributor, and have proportionately higher administrative costs.

Perhaps more important still, is the terrible record of the provincial Conservatives, of various stripes, in managing the province’s resource income and its Heritage Trust Fund since the Lougheed era of the 1970s – early ‘80s. During that time, Norway’s Sovereign Wealth Fund has accumulated $1.4 trillion in assets. Alberta’s Trust Fund has barely budged, valued today at a mere $21.6 billion. It is fair to assume an APP would never come close to matching the performance of the CPP.

The Alberta Investment Management Corporation (AIMCO) would likely be the manager of the proposed APP. AIMCO already manages the pensions of the province’s teachers, public employees, universities, judges, and others, often, over their objections.

Last year, a banner year for oil industry profits, was a bad year for pension funds. AIMCO had negative earnings of -3.4%, losing between $4 and $5 billion. That alone should be a provincial scandal.

The CPP, on the other hand, earned 1.3%, outperforming AIMCO by almost 5%. CPP’s ten-year rate of return has been just over 10%, AIMCO’s is 7.2%. In fact, Global SWF, a data platform that tracks more than 400 Sovereign Wealth Funds (SWFs) and Public Pension Funds (PPFs) around the world, found that,

 “CPP Investments delivered the highest 10-year returns of any global pension fund. Between 2013-2022, the study found that on average, other public pension funds returned 7.4%, while the CPP Fund grew 10.9%” (CPP, 2023)

CPP beats the private sector pensions hands down

CPP far outperforms your average RRSP. In fact, its performance scares competing private sector pension managers, who actively lobby the federal government every time the subject of an enhanced CPP comes up in Ottawa. The truth is that all Canadians, and certainly Albertans being blitzed with dishonest UCP claims about the benefits of a provincial pension plan, would be better off with an enhanced CPP.

Independent actuarial assessments find the CPP is sustainable for at least the next 75 years. Has anyone made a similar claim for the Alberta Trust Fund? No. That’s because political squandering of the province’s resource revenues has been the historical rule.

When trying to make sense of this latest UCP farce, one is hard pressed not to conclude the real goal is access to the pension assets of Canadians resident in Alberta. Those funds would then be used for the purposes of a party that serves no interests more than those of the foreign-owned oil and gas industry. As everyone but the UCP knows, it’s a twilight industry. Future Canadian pensioners living in Alberta should be scared, very scared.

Triumph of parochialism over citizens’ national rights

In the end, Danielle Smith’s false characterization of the CPP as a federal plot to fleece Albertans is just one more attempt to undermine the rights and benefits of Canadian citizens who happen to live in Alberta. It is based on a small-minded, parochial conception of Confederation as a mere transaction among regional interests, rather than on a vision of a nation where social, economic, environmental and security risks are shared and minimized for all citizens, wherever they choose to live. Unfortunately, the party of Sir John A. and the National Dream, has now become the party of parochialists, often with the craven help of national politicians of other stripes speaking the language of “provincial rights” at the expense of the national rights of Canadian citizenship.

Legitimizing the illegitimate

On the back side of my flyer listing the UCP’s statistical lies in support of an APP, are the pictures of the members of the three person panel Smith has chosen ostensibly to hear feedback from residents. It is evident that the panel’s job is not to consult, but to sell the APP, to give it credibility. The UCP’s on-line survey seeking the opinions of Albertans doesn’t even ask whether they wish to keep the CPP!

It is hard to fathom why Jim Dinning, the panel chair, a Lougheed Conservative, former provincial Treasurer, and moderate, and Mary Ritchie, a former Audit Committee Chair for the CPP, chose to join the mendacious UCP game. Why have they associated themselves with the lies in the flyer? Surely, the generous emolument wasn’t the reason? Reputations will suffer. The third member of the panel, Moin Yahya, a professor in the U of A Faculty of Law, is more understandable, as a former member of Jason Kenney’s Fair Deal Panel, where ideas like the APP have already been treated seriously and favourably.

So what?

Well, the facts speak for themselves.

Those who truly have the retirement interests of Albertan Canadians at heart would be advocating further strengthening of the exemplary CPP, not seeking to undermine it for parochial purposes at the cost of the rights of national citizenship.

Edmonton, 28 October, 2023

By Peter Puxley

Hi, I'm Peter Puxley, an economist, geographer and urban planner by academic training, and a political organizer/activist, development educator, journalist, policy wonk, researcher and political staffer by practice. I have tried my hand at poetry, fiction and non-fiction writing, some of which has been published.

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