I was excited to present to retired professors from the University of Alberta last Thursday my views on the marketing campaign by the Alberta government to “engage” the public on the supposed benefits of an Alberta pension plan.
My focus was on the political messaging.
The Youtube video can be viewed here.
The political messaging created by the Government of Alberta is an expensive communications effort (close to $10-million of Albertans’ tax dollars). The friendly website “Alberta Pension Plan” begins with “What’s in it for you.” The web page design is classically an appeal to Albertans’ sense of place and community with pictures of the Rockies and foothills and wistful pictures of a handsome seniors’ couple.
The pitch focuses mainly on the benefits that would be supposedly available to Albertans of all ages. The communications program is based on the unrealistic prospects of Alberta claiming 53 per cent of the Canada Pension Plan’s assets. This yields a fictional annual savings of $5-billion a year. This $5-billion a year of “benefits” gives the government the capacity to act beneficently towards seniors, workers and employers. This bait and switch strategy includes “bonus’ payments to seniors and up to $1425 per year per worker and employers in reduced premiums.
Another important political message is “More Alberta, Less Ottawa”- always a good dog whistle in Alberta politics where Justin Trudeau and Trudeau Pere are popular villains.
The question-and-answer period touched on the social, economic, and other issues. One concern was the long-term future stability of the APP given the province’s economic base a volatile fossil fuel economy.
A key issue is how this Alberta Pension Plan (APP) fits with Smith’s overall sovereigntist positioning. My response looked at the significance of Alberta’s fossil fuel exports to Canada’s balance of payments. I characterized Alberta having an economic “knife at Canada’s throat” because absent export sales of fossil fuels, Canada’s dollar would likely fall like a stone.
Another crucial issue is the relative performance of the CPPIB versus the Alberta Investment Management Corporation (AIMCo). The CPPIB several months ago placed ads in Alberta and national newspapers which showed CPPIB at the top of 10-year performance measure. I am cautious about such claims as past performance does not mean future performance will be as good. Higher returns mean higher risks are typically embedded in the CPP investment portfolio.
It was also significant that in the government’s survey, when asking about who should be, the investment manager, AIMCo is not mentioned. Rather it is an “APP investment manager” leaving it open that it could be AIMCo or another body.
A key question posed is how safe and secure will beneficiaries’ pensions be under an APP. The CPP Act requires that a province’s exit must be based on the successor plan being comparable with the CPP. The issue becomes how insulated the investment manager is from political direction. This leads to questions of governance which could be changed by any successor legislature. Smith would be wise, in my opinion, to promise the investment function will be firmly insulated from political influence. However, that independence structure could be compromised by successor governments. This is turn could lead to a situation where the fund was politically directed to supporting fossil fuel industries experiencing difficulties accessing capital markets.
Another central question to the viability of the plan are the attitudes of the other provinces in the plan. Negotiations with the other provinces, if Alberta is to proceed, is a zero sum game, with moneys going to Alberta coming out of other provinces’ shares.
Related Posts
You can click on the following posts/video on APP with guests Trevor Tombe, Virendra Gupta and Ellen Nygaard, articles by Nygaard and Gupta, and recent analysis by Ascah.