SUMMERSIDE – The Island business community is not prepared to embrace a move by the P.E.I. government to team with the province of Ontario and Manitoba to develop a provincial pension plan to supplement retirement income plan.
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Jonathan Greenan, president Greater Summeraside Chamber of Commerce
P.E.I. Treasurer Wes Sheridan said it’s a Canadian Pension Plan commitment that government is keen on and will continue to push for down the road. Federal Finance Minister Jim Flaherty rejected that idea last year so the three provinces have banded together to move on their own.
“Why we have gone into this discussion with Ontario is that we want to be part of the conversation as it moves forward,” Sheridan said. “We want to make sure that we are part of this advisory group that is trying to find the best solution for the future.”
He said the solution that was and discussed at the federal table was a 1.5 per cent increase over a five-year period.
“I did not come across a business that wasn’t planning to give their employees a 1.5 per cent increase over the next five years and the 1.5 is half of what the increase that we have projected in our plan,” Sheridan said. “That would be a 1.5 per cent coming from the employee and 1.5 per cent coming from the employer. It would be a two-year phase in notice period then a three year phase in bringing the entire amount up to 1.5 per cent over five years.”
Sheridan said if business in Prince Edward Island was part of this plan each of their employees would receive that much more in building a pension.
“We’re looking out at over 30-year period and insuring that those that are part of this great nation have the opportunity to retire in a respectful way,” he said. “It’s probably the most important thing we can do socially is to insure that.”
But the president of the Greater Summerside Chamber of Commerce is convinced that this is the way to go.
“I say all of this with the caveat that we haven’t polled all of our members on it,” said Jonathan Greenan. “In light of Premier Ghiz’s announcement, it’s likely that we will be seeking member input. From a general employer perspective, particularly the small business employers, it is hard to characterize an increase in CPP premiums as anything other than a payroll tax. If a business is trying to meet the bottom line, any increase is going to have a potentially detrimental impact on their ability to employ people.”
Greenan said his view for the growth of business in the province is more jobs.
“My own view is that the long-term solution for some of the struggles that we’re having here in Prince Edward Island is to increase overall employment levels which requires us to increase private sector profits,” he said. “I’m not sure that this measure accomplishes that objective and in that sense, doesn’t get us to our long-term goal.”
“I can understand where the province is coming from in terms of a social planning perspective. With the aging population we’re facing it’s important that people have some additional financial security at retirement. But from the business perspective, it’s hard to see this as a very good thing unless we have more convincing arguments and additional details on this.”
Erin McGrath-Gaudet, director P.E.I. and Intergovernmental Policy for the Canadian Federation of Independent Business views the move in the same way.
“We’re certainly lacking detail at this point what that mandatory plan would look like,” she said. “But essentially this is adding a new layer of bureaucracy and a new payroll tax to local businesses. Anytime you make employing people more expensive it’s a hard pill to swallow for the economy. P.E.I. is a very high taxed jurisdiction and we are struggling with keeping workers here. People are going, particularly out West, looking for more money and more opportunity. We are already struggling to keep them here and by making it more expensive for businesses to employ people but also more expensive for Islanders to live here, that’s not going to help the situation.”
McGrath-Gaudet wants more discussion before any movement is made on the plan.
“We need to have a conversation both about the idea of any new types of mandatory payroll taxes or premiums but also about the concept of what tax burden Islanders can realistically bear,” she said.