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Trevor Tombe: The problem with Alberta’s pension plan campaign

Commentary

Last week, Fraser Institute analysts Jason Clemens and Tegan Hill wrote an important article in The Hub on the recent debate over a possible Alberta Pension Plan. They rightly note that “some prominent pundits and analysts prefer to obfuscate and muddy the water of discussion” and call for a thoughtful engagement based on the facts.

I couldn’t agree more.

Canadians should be proud of much of our public pension systems—especially compared to many other advanced economies—but we should also welcome debate over reforms. This includes the possibility of a provincial plan for Alberta, separate from the existing Canada Pension Plan.

Unfortunately, obfuscation is not found only among opponents of an Alberta plan. It’s baked right into the heart of the province’s public engagement on the issue.

Rather than providing a wide range of possible considerations, it offers only a single piece of analysis that, in my view, significantly overstates the potential benefits of a separate provincial plan. And its survey is little more than a push poll that asks Albertans to count their chickens before they hatch.

There are real uncertainties that we cannot simply brush aside. To count on $5 billion in annual savings without even a nod to alternative scenarios is to mislead the public on an incredibly serious matter.

Worse, it presents everything in the best possible light and ignores important tradeoffs and risks.

It’s not a genuine engagement. It’s a marketing campaign. And that’s a problem.

It doesn’t have to be like this. There are simple ways to illustrate tradeoffs and risks while being open about the potential benefits of an Alberta plan.

Of course, in politics, it is said that “if you’re explaining, you’re losing.” The benefit of an independent panel, however, is that it may not be trapped by the same incentives as sitting politicians. Explaining should be part of its job. Better yet, it should provide the tools to help Albertans draw their own conclusions based on all the facts.

Consider the new Finances of the Nation Alberta Pension Plan simulator.Any analysis of this kind makes certain simplifying assumptions, especially when evaluating a non-existent policy with imperfect publicly available data. The simulator’s output is largely consistent with the results of the analysis that the Alberta government commissioned.

It reveals several potential benefits.

In the simulator’s default scenario, contribution rates in a separate Alberta plan could be 1.3 percentage points lower than the CPP. That may sound small, but it is equivalent to up to $418 per year each for employees and employers. That’s less than the government is promoting, but it’s still meaningful savings. Indeed, the total value of this change is greater than the province’s upcoming personal income tax cut.

And if you think the government’s preferred scenario that an APP gets over $300 billion from the CPP is correct, then you can explore that too!

It also shows that retirement payments to seniors could be increased. I don’t think this is a particularly good idea, to be clear. I’m strongly in favour of increasing the retirement age and believe lowering the OAS age from 67 to 65 was a mistake. But that aside, there’s “room” to boost benefit spending in Alberta’s plan by roughly 15 percent, although contribution rates wouldn’t be able to fall in that case.

The simulator also reveals important risks.

If fertility and migration rates approach the Canadian average, then Alberta’s pension savings relative to the CPP would fall by more than one-third. And if migration rates look like Ontario’s, then the savings fall by roughly one-quarter. 

More importantly, investment risks can be large. If returns fall by half a point, perhaps due to a smaller pool of assets or due to political interference in the fund (something the CPP is better insulated from), then nearly half the savings disappear. And combined with lower in-migration, there might be no savings at all.

The simulator also goes through 10,000 possible futures with volatility assumptions that mirror what’s applied to the CPP. It shows there’s a very wide range of possible futures for an Alberta pension plan. In fact, under the government’s preferred scenario, there is a one-in-three chance the contribution rate cannot be reduced at all.

None of this implies an APP is either a good policy idea or a bad one. The simulator is entirely neutral and is useful for both opponents and proponents alike. But it’s information and tools like this that we need more of. It’s what the engagement panel should be doing.

This is a serious policy discussion with real consequences for millions of Albertans. It deserves full engagement based on all the facts, not public-funded obfuscation. Exploring benefits, costs, and tradeoffs is critical to making good decisions.

A separate provincial pension plan for Alberta is an entirely legitimate policy position, and reasonable people can disagree. But hanging our hats on a single set of optimistic assumptions is anything but prudent. A $7.5 million engagement can (and should!) do better.

Peter Menzies: The CRTC said it would leave podcasts alone. Turns out that was a myth

Commentary

The CRTCCanadian Radio-television and Telecommunications Commission has backtracked on its promise to leave podcasts alone.

On May 12, the federal regulator stated in its “Myths and Facts” release that concerns it would regulate content such as podcasts were a “myth” and the “fact” of the matter was that “a person who creates audio or video content or creates a podcast, is not a broadcaster under” the Online Streaming Act (Bill C-11).

That “fact” didn’t live long. It expired September 29 when, in its first decisions since being granted authority over the internet, the CRTC changed lanes.

While it was careful to state that podcasters themselves don’t have to register with the Commission, the web-based platforms that make podcasts available must do so. Indeed, podcasters may not be broadcasters, but very much as predicted by the legislation’s critics, the CRTC has found ways to bring them into scope anyway.

It decided that podcasts constitute “programs under the Broadcasting Act, given that they are comprised of sounds intended to inform, enlighten or entertain.”

The regulator’s decision further explains that while podcasters may not be broadcasters, the transmission of podcasts over the internet most definitely “constitutes broadcasting” which makes those entities that platform podcasts into cable companies.

So whike the CRTC concedes that while “the Broadcasting Act does not give the Commission a mandate to regulate creators of programs” it nevertheless makes clear that its powers do cover “those services that are involved in the broadcasting of programs, which are referred to as broadcasting undertakings.”

Is your head spinning yet?

The legal contortions continue throughout the decision, but the clear takeaway, the bottom line, is that, while it keeps insisting it doesn’t intend to regulate the content of podcasts, it is very concerned about the content of podcasts and if it can’t legally regulate them, it’ll make sure someone else does it for them.

Paragraph 223 of its decision makes it clear the CRTC is about to draw podcasts into its warm embrace.

Without information about online undertakings that transmit or retransmit podcasts, it would be more difficult for the Commission to ensure the achievement of the objectives of … the Broadcasting Act, which relate to, among other things, providing a reasonable opportunity for the public to be exposed to the expression of differing views on matters of public concern, and (that) the programming provided by the Canadian broadcasting system should be varied and comprehensive, providing a balance of information, enlightenment and entertainment for people of all ages, interests and tastes.

In other words, what the CRTC denounced as “myth” in the spring has become a “fact” in the fall. It has kicked open the door to the regulation of online content, if not directly then by proxy through the platforms that deliver the work of podcasters to their audiences.

It is a bureaucratic master stroke.

Here’s what will follow.

The list of intervenors presenting at the CRTC’s public hearing coming up in late November indicates the panel of commissioners will hear from a number of groups that will explain the extent to which they are under-represented and funded. So, a possible outcome of this will be that services that carry podcasts will have to fund podcasters who, on their own, haven’t been able to find an audience.

Just as likely is that platforms will be regulated to ensure podcasts designated by the CRTC are given priority visibility/discoverability online over undesignated podcasts through the manipulation of algorithms. These are likely to be podcasts by Indigenous, BIPOC and LGBTQ2S creators.

As erstwhile CRTC Chair Ian Scott told the Senate committee studying Bill C-11 in 2022:

Instead of saying, and the Act precludes this, we will make changes to your algorithms as many European countries are contemplating doing, instead, we will say this is the outcome we want. We want Canadians to find Canadian music. How best to do it? How will you do it? I don’t want to manipulate your algorithm. I want you to manipulate it to produce a particular outcome. And then we will have hearings to decide what are the best ways and explore it.

This was reinforced in an exchange Scott had with Senator Pamela Wallin, who suggested proponents of the bill were parsing their words and that:

You won’t manipulate the algorithms; you will make the platforms do it. That is regulation by another name. You’re regulating either directly and explicitly or indirectly, but you are regulating content.

To which Mr. Scott replied: “you’re right.”

The CRTC has now confirmed what it denied mere months ago when it was parroting then-Heritage Minister Pablo Rodriguez’s talking points.

It will make sure podcasts and any other internet content it can capture is regulated.