Lastly, we end our dispatch with a look at the latest weirdness in Alberta. This week, the government released its long awaited report examining the possibility of an Alberta Pension Plan (APP). And while we at The Lineadmit we weren’t sure quite what to expect, we have to admit that we definitely didn’t imagine this report would inspire us to start laughing. Laughing so hard that our sides hurt —because, good God, surely nobody is taking this thing seriously, are they?
Let’s step back a moment. The APP traces its origins all the way back to the Firewall letter of 2001 — the manifesto that sought to use Quebec as a model to create a more independent Alberta within Confederation. Given the province’s comparative wealth and youth, it is not outlandish to argue that Alberta gets short shrift in a national pension program, and might very well be better off with a parallel provincial program, akin to Quebec’s. Previous studies of the issue have questioned some of these assumptions: during Ralph Klein’s era, for example, the concept of a pension plan was eventually rubbished when somebody did the math on risks and administration costs. Plus, the CPP is actually one of the few Canadian institutions that is truckin’ along — it is well run and secures good returns on investment.
An APP would not only have a smaller pool of capital to work with, it would wind up duplicating administrative and investment costs. Plus, well, who would run it? Alberta’s previous experiments with investment arms (see: AIMCO) have not covered themselves with glory, historically. And there is always the risk that in a highly oligarchic one-party province, the temptation to channel pension funds to politically well-connected people and popular causes would be ever present. Imagine, if you will, an Alberta government that is willing to channel that cash to propping up oil-sands companies that find themselves bereft of capital from global financial markets that are taking environmental standards more seriously. This is the very opposite of what our financial advisers would call a “diversified investment portfolio.”
And then we get into the existential questions: what is the purpose of an APP? To provide Albertans with healthy retirement benefits? To triple down on oil and gas investment? Or is the purpose of this gambit punitive — an attempt to flex some financial muscle and punish the rest of Canada for equalization and pipelines and hurting Albertans’ feelings more generally?
These three goals are not mutually compatible.
So let’s just say that we had some concerns, but we were open to the idea of an APP. That is, until we saw this week’s report. Alberta and its government are very convinced that should it withdraw from the CPP, that they are entitled to roughly $334 billion of the CPP’s assets, as per the withdrawal method written into legislation. For those keeping track at home, that would account for, uh, 53 per cent of the CPP’s total. Alberta is straight-faced claiming that it — a province that comprises a bit over 10 per cent of the Canadian population, and a slightly larger share of the GNP — is entitled to more than half the country’s pension fund assets.
And it’s hard to know where to go from there.
Look, we could point out the many ways in which the government’s paid report-hacks have used motivated economic and legal reasoning to come to these figures. We could do that. But, let’s be honest, that’s not what you come to The Line for. You don’t come to us for detailed economic and legal analysis, you come to us to hear that this report is juvenile fart huffing, and we’re not going to disappoint you.
Can’t opt-out of either CPP nor QPP, so there should be no assumption that it’s suddenly going to be available to working Albertans.
theline.substack.com
