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Taxpayers spent close to $20M on Ontario pension plan that never started and is now winding down

Nationalpost.com
June 22, 2016
By Ashley Csanady

Ontario’s soon-to-be-defunct standalone pension plan cost taxpayers at least $16 million over the past two years, according to government estimates and public accounts.

Based on the numbers available, it’s likely the figure was closer to $20 million. The money was spent on research and to start setting up the Ontario Retirement Pension Plan and the “administration corporation” that was supposed to run it.

Premier Kathleen Wynne says the program will be “wound down,” but could not estimate how much the ORPP has already cost taxpayers.

Instead, starting in 2019, all Canadian workers will pay about $7 more a month into the Canada Pension Plan. Had the ORPP gone ahead, Ontarians without a workplace pension plan would have paid at least double that on a sliding scale geared to their income.

That means the province will likely save millions, even billions, in the long run. In the short term, Ontario has already poured $14 million into the plan in fiscal 2015-16, booked $1.7 million in costs for this year and spent almost $2 million on ads promoting the plan.

At least 50 people are still working on the ORPP, a situation that won’t change immediately, says Indira Naidoo-Harri, the minister in charge. They include the head of the administration corporation, Saad Rafi, whose contract promised a $525,000 a year salary, plus a performance bonus of up to 25 per cent, or $131,250.

According to government estimates, these costs have been directly allocated to the ORPP or were part of a plan to implement it in the coming fiscal year:

Almost $1.7 million was spent to advertise the ORPP up until October, the Canadian Taxpayers Federation found through a freedom of information request. That brings the known cost of the plan to $17.2 million, without adding salaries or severance.

New ads have been created and kept running since then, so the total cost of advertising - which government officials refused to disclose Wednesday - is not yet known.

Wynne and her ministers have promised a full and transparent tally, but after the auditor general revealed hidden costs for the Pan Am Games (which were run by Rafi), Christine Van Geyn, Ontario director of the taxpayers federation, remains skeptical.

“I wouldn’t trust the government’s numbers,” she said. “I just don’t have a lot of faith that the numbers this government will produce … will be the actual costs.”

For example, will the final accounting include all costs associated with the many ministry bureaucrats who designed the ORPP before it was written into the 2014 budget? What about all public opinion polling and business studies commissioned?

The provincial public accounts and estimates do show spending on the pension file increased after Ontario started first pushing the feds to expand CPP and then to create its own pension plan. (Estimates are spending based on the budget; public accounts detail what was actually spent after accounting for unseen events and after the auditor general has reviewed the books.)

According to the government’s own figures, here’s what the Ministry of Finance spent on “pension and income security policy development and legislation, and quantitative analysis and research” since March 31, 2011:

Fiscal 2011-12: $6,689,676

Fiscal 2012-13: $7,280,128

Fiscal 2013-14: $7,501,792

Fiscal 2014-15: $6,169,964

Fiscal 2015-16: $4,308,000 (est.)

Fiscal 2016-17: $11,180,300 (est.)

The nearly $1-million increase in the two years before the plan was in the budget, then the steep drop after it was announced and the subsequent uptick for this year, which would carry most of the implementation, suggests that at least some of those costs were directly tied to the ORPP.

The final tally also can ignore the creation of a new associate minister of pensions, which added a minister and her staff to the public payroll. Whether any of them, or any of the ORPP administration corporation staff, will receive severance, remains unknown.

All that adds up to a hefty bill for the taxpayer, regardless of what final numbers the Ontario government crunches out in the coming weeks.