Honourable senators, I want to first thank Senator Simons for this motion. This is a conversation that must be had, and I’m glad we’re having it. I have thought long and hard, and I’m still a little nervous about speaking on this particular subject. I hope I don’t regret it, and I hope more that you don’t regret it.

There’s been a lot of controversy around the Canada Pension Plan, or CPP, and the potential withdrawal of Alberta workers and businesses. I think it’s brought an uncomfortable reality to light, which is that while the Canada Pension Plan is indeed a pension plan of sorts, it has also become a wealth transfer program. We must acknowledge this. This is not an opinion; the numbers make it a fact. The largest overcontributors to the CPP are Alberta workers and their employers. How did we get here? Let’s talk a little bit about the numbers.

I’m not going to read the Canada Pension Plan Act for you, but I will give you the Coles Notes of what it says about instances where provinces wish to remove themselves from the Canada Pension Plan Act. Let’s not forget that, in 1965, the CPP was a jointly negotiated piece of legislation from the provinces and the federal government that created it. One province said, “No thanks. We’re going to start off on our own.” That was Quebec, and they’re on their own today. But it was embedded in the act that there would be a mechanism that would allow, in the future, for provinces to withdraw themselves and go off on their own, just as Quebec did at the outset. It’s in the act. It actually has some fairly simple principles and calculations around how to withdraw. Here is, essentially, what it says.

If a province wants to withdraw, they would take with them the assets, which would be calculated as follows: You would take all of the contributions over the history of the program by Alberta workers and businesses. You would add the pro rata investment income that was earned on the contributions that went in and was realized over time on a prorated basis. You would subtract the total amount of pension outflow to those particular workers that has been paid, and you would also subtract from the amount the pro rata operating expenses for the plan over the period of time before withdrawal. This creates a number that is fairly certain. There is a number that can be created. You need a lot of research, but all of the facts and figures are there, and they will and do create a number.

The other important aspect of a province withdrawing from the pension plan is its future liabilities and the future payments that will need to be made to all of the workers who have paid into the plan and who are now going to be that province’s responsibility. It doesn’t give us that math. It just says that all the future liabilities become yours, period, as of this date. So it falls to experts — actuaries — to determine what those liabilities are and produce an estimate. There are all kinds of standards for doing that, but you can produce a reasonable estimate. It’s quite a dynamic number and will change with circumstances over time. You’re always projecting way into the future and trying to bring back to today what that liability is, but that’s a practice with a lot of established rules, so you can reasonably estimate the liabilities that go with that.

What we’ve heard about in all of this heat has been the liabilities, because there is a calculation for those. However, there has not been a lot of talk about what the liabilities are. We’ve heard about the assets, but we haven’t heard — and I can’t find anywhere — a hard round number for what the liabilities would be. It doesn’t appear that anybody has come up with that number — although I think they have; I just don’t think it’s being talked about.

I think the reason for this is that neither side wants to acknowledge what the number is. It’s not politically palatable to do so. I don’t think the federal government wants to talk about it because it highlights what I’ve just said: There is a massive surplus that has been paid by Alberta workers and businesses in isolation. I don’t think the province wants to talk about it because there is a massive surplus there that it will get as a result of the formula in the Canada Pension Plan.

Nonetheless, that’s sort of where we are. A pension plan needs roughly the same amount of assets as it has in liabilities in order to be healthy. Sometimes a little bit of a surplus or deficit is okay. A massive surplus means that the workers aren’t getting what they were paying for. They’re being overcharged, and what they’re getting back in pensions isn’t sufficient. A deficit means that somebody got paid too much and didn’t put in the corresponding amount.

When you look at the numbers and see the calculation that has been made, which has generated this number that has been bandied about regarding what percentage of the CPP assets would accrue to Alberta if they decided to leave, it further highlights and proves the fact that a large surplus has been generated by Alberta workers and businesses in the CPP. It also means that the rest of Canada, minus Quebec, has had the opposite — there’s a deficit — and that workers in other parts of the country have got more out of the system than they put in. And that’s why it’s not a pension plan, in that sense.

If one area, one province in isolation, that from the beginning — from the outset, every province had the opportunity to withdraw under a calculation. It’s clear that the rest of Canada has not paid — that’s the math. That’s the reality.

It evokes two emotions. I think for people outside of Alberta, this is, again, a tiresome piece of Alberta complaining about having to share the wealth that their good luck from a bunch of dead dinosaurs passing away in Alberta and producing oil gave us. For Albertans, it’s about sharing the wealth but not receiving respect. In fact, receiving scorn. And in certain times, in certain eras, not receiving respect, receiving scorn and also suffering overreach that gets in the way and obstructs industry, entrepreneurship and innovation that has created the wealth.

The work ethic in Alberta, the industry ethic in Alberta and the good luck that we had the tools and the resources to develop also being obstructed is part of what makes Albertans annoyed such that they talk about things like this. “Well, what if we just pulled out?” Turns out — that was not something that was talked about very much. It was part of the “firewall” letter written by some economist some years ago, but it wasn’t seriously considered until when? This era of obstructionism, finger-wagging and, at every turn, in some Albertans’ minds, efforts by the rest of Canada to suppress and obstruct industry, innovation, work and wealth.

You know, when you take those two emotions, those two perspectives — I respect both of them — it kind of sounds like a family squabble. It sounds like the stories and the perspectives that you see in a family, lots of times, and like in a family, it needs careful consideration, respect, listening and searching for solutions. I think we in the Senate have a role. We’re perfectly placed to posit some potential solutions to this over time. I think we can take the heat out. Senator Simons’ motion will help bring some facts forward that might be helpful in the conversation and allow us all to acknowledge the reality and the truths.

The Canada Pension Plan, or CPP, was created in 1965 through negotiation with the provinces. It has an exit feature. It was actually anticipated that provinces may want to exit. There was a formula that was developed specifically for the reasons, actually, that exist today.

Alberta workers and businesses, in isolation, have overcontributed relative to their past and future pension benefits, and the rest of Canada has undercontributed relative to their benefits.

Those are some of the truths that are worth discussing and acknowledging. And I believe, just like in a family argument, the acknowledgment of those truths will take the heat out, and it will allow us — as the federal family — to find the way forward, and I believe we are all reasonable. All Canadians, I think we can find a way forward.

Thank you, colleagues.

I don’t think there’s any question it would be very serious. The fact is that the fund represents itself as being fully funded. It’s fully funded only if Alberta doesn’t pull out. If Alberta pulls out, then under the formula, they take the surplus — their overcontributions — with them, and that amount will have to be made up. It will have to be made up by all those other provinces, the federal government, the workers and the businesses in other parts in order to do it, and it may be to the point that it is such a big number as it creates other provinces to start looking at whether or not they’re on the plus side or the minus side and deciding, “Well, wait a minute, maybe we should pull out.” I think it is existential. I don’t know it for sure, but it’s certainly in the tens of billions of dollars, and it may be as high as $100 billion or more. That’s why I think having all of the facts around what this mismatch is important.

I’ll tell you what is not important. It’s not important to throw around language here that we’ve had so far about misrepresentation, absurdity of the numbers, et cetera. That is not what we should be talking about. I think we should all acknowledge — and Albertans, I believe, acknowledge — that this would be a catastrophic event for the Canada Pension Plan.