Provincial pension plan would harm local economy, Newmarket, Aurora chambers say


Yorkregion.com
March 7, 2015
By Chris Simon

A provincial pension plan could have significant consequences for the local economy, says the president of Newmarket’s chamber of commerce.

The provincial government appears set to pass legislation that would create the Ontario Retirement Pension Plan and the Newmarket and Aurora chambers of commerce are among 50 similar organizations speaking out against the plan and noting the detrimental effects it could have on Ontario businesses.

“Our economy is still in recovery,” Newmarket chamber CEO and president Debra Scott said. “This isn’t the time to introduce a new cost to doing business.”

Scott’s comments follow the release of an Ontario Chamber of Commerce survey, which shows only 26 per cent of provincial businesses believe they can shoulder the financial burden associated with the ORPP. If faced with mandatory increased contributions under ORPP, 44 per cent of businesses surveyed indicate they would reduce their payroll or hire fewer workers, she said.

If the legislation passes, ORPP would be phased in to lessen the burden on businesses. That phase-in would likely begin in 2017, Newmarket-Aurora MPP Chris Ballard said.

“It’s a fragile economic recovery and we have to be careful of unintended consequences,” he said. “At the same time, there’s a crisis in the years ahead. Retirees will not be able to afford to exist in any semblance of dignity.

"Unless we, as a society, do something, their businesses are going to suffer in the decades ahead because too many seniors will be living below the poverty line and will not be able to buy their products or services.”

The chambers want the government to reconsider its proposed approach to boosting retirement savings, and study the economic impact in greater detail.

“We acknowledge that for those who do not have a workplace pension plan, there could be an under saving issue related to retirement,” Aurora chamber CEO Judy Marshall said. “We question whether the government’s solution is the correct or most effective one, most especially when there are so many small businesses struggling to survive as the cost of doing business in Ontario continues to rise.”

Marshall says the plan would reduce consumer spending and increase business operating costs.

“Businesses consistently tell us that they cannot afford this new, mandatory cost on top of rising electricity prices and other pressures,” Ontario chamber president and CEO Allan O’Dette said in a press release. “To provide clarity to the business community and the public around the potential impact on jobs, investment, and the broader economy, the government must conduct a comprehensive and publicly available economic analysis of the new pension plan before it moves forward with implementation."

Ballard said the province is simply stepping in to fill the funding gap created by the Canadian government. If the feds beef up the Canadian Pension Plan, the province would likely back off. However, many residents are simply unable to save enough money for retirement right now.

The CPP’s maximum monthly payout issued at age 65 is $1,065 this year, according to the financial planning website retirehappy.ca.

"If we don't make major enhancements I fear seniors are going to be in even more desperate straits 20 years from now," Ballard said. "People I meet on the street tell me they're concerned for the future. There really shouldn't be two pension plans. The (CPP) should pay out enough so seniors will have a reasonable existence. Ontario is left to go it alone; it has to be addressed now."

Consultation on the legislation is ongoing, Ballard said.