MPP Column – cost of proposalsApril 25, 2014
I want to thank everyone who responded to my recent newsletter to share their ideas and their concerns. One thing I heard repeatedly was that people want more information on how much government initiatives will cost before they are implemented.
Over the last few months the current government has announced a couple of proposals which have significant costs. While there are also benefits I wanted to take this opportunity to lay out the costs to help people make informed decisions on whether they support the proposals. Every action that government takes is funded by taxpayers – whether it is taxes, fees and charges you pay today or whether it is added to the deficit and you pay it later.
The first announcement is the creation of an Ontario Pension Plan, separate from the current Canadian Pension Plan we all pay into. This Ontario plan will not cancel out the CPP, instead both employees and employers will have to pay into both. As you may know MPPs no longer have pensions so I understand the desire for secure retirement income, but we also need to consider how much we will all need to pay personally to create the new program.
If the new plan is the same rate as CPP everyone will have to pay a maximum of roughly 10%from every pay cheque – up to about $5,000 a year – tofund these pension plans. That will be a big burden for people who are struggling to make ends meet and may make it more difficult for those who are already trying to save for their retirement.
As well the new pension plan is expected to cost the province $3.3 billion to match their own public sector employees. That’s $3.3 billion the province currently does not have, which means that cost will get passed on to taxpayers.
We also need to consider the impact on companies who are deciding whether to expand or invest in Ontario. Each employer will be expected to match their employees’ contributions to both pension plans. For instance, at the Woodstock Toyota plant the pensions could cost employees and the company around $15 million each, every year. If the new pension costs jobs people will use their savings during their working years or may even go into debt to pay regular living expenses. This would result in more people struggling to make ends meet during retirement instead of less.
The second item is the planned transit expansion. The government was initially looking at funding projects through an increase in the gas tax and/or an increase in the HST. I’m pleased that they heard the message from people, including many in Oxford, who said such increases would be unaffordable and they wouldn’t support it.
The government is still committed to spending an additional $2 billion a year on transit expansion and to new revenue tools in order to fund it. So far the government has not announced whether that will be through increased taxes, new fees, or new charges. I’m
concerned that once again the government may put forward a proposal which is unaffordable and will put a burden on people who are not receiving the benefit.
Personally, I believe that rather than asking taxpayers to pay more the government should first work to reduce waste and overspending. I’ve heard from a lot of people that are already struggling with the increasing cost of living and I’m concerned that major new spending initiatives are going to be tough on them. My hope is that understanding the costs will help people evaluate these proposals for themselves.