The Canadian Federation of Independent Business says it is ready for a fight on the Liberals’ proposal for an Ontario pension plan.
The Ontario Retirement Pension Plan, which would be mandatory for those who don’t already have a workplace plan, is aimed at helping middle-class earners save more for retirement.
The CFIB has described the employer contributions that would be required under the plan as a payroll tax that would hurt small business in the province. The pension plan was first unveiled in the Liberals’ proposed budget on May 1.
“For us, the fight started before the election,” said Plamen Petkov, vice president, Ontario, for the CFIB.
“For us, the fight started before the election. Now it will continue and we’re hoping the government will take the time to actually listen to the concerns from small business.” - Plamen Petkov
“Now it will continue and we’re hoping the government will take the time to actually listen to the concerns from small business.”
In addition to the proposed pension plan, businesses focused on Friday on the province’s ballooning deficit, its rising borrowing costs, and the Liberals’ plan to balance the books.
It was the day after Premier Kathleen Wynne led her Liberal party to an unexpected election victory, capturing 59 out of 107 seats and grabbing 38.5 per cent of the popular vote.
CFIB, a non-partisan industry group, applauded the Liberals plans to cut red tape and reduce energy costs. But the ORPP, which the Liberals pledge to introduce in 2017, is the top concern for its Ontario members, Petkov said.
“There will be lots of small businesses that will struggle to pay up to an additional $1,600 per employee on their payroll. This is also going to be tough on a lot of Ontarians because that premium will also be deducted from their paycheques.”
The business group has called the pension plan proposal “misguided” and warned it would have dire implications for small business.
Workers and employers would each contribute 1.9 per cent of earnings up to $90,000 annually to the pension plan, according to the proposal.
“When CFIB was founded 43 years ago, it was designed to fight big govt, big unions & big biz. The ORPP will be a fight w[ith] all three,” CFIB president Dan Kelly tweeted on Friday.
Some observers posited that voters, tired of the scandals that piled up in the Liberals’ corner and worried about Ontario’s lagging economy, would turn to Tim Hudak’s Progressive Conservative party.
But Hudak’s much-touted “Million Jobs” platform, along with his pledge to cut 100,000 jobs from the ranks of public sector workers, failed to capture the vote.
“These results show that Ontario voters want leadership that will help build a prosperous Ontario — not Hudak-style leadership that would have destroyed jobs, public services and communities,” Unifor president Jerry Dias said in a release issued Thursday after the Liberal party was projected to be the winner.
Meanwhile, Ontario’s borrowing costs spiked the most in six months as investors wagered the province’s credit rating will be cut.
The extra yield investors demand to hold Ontario’s latest 10-year bond over a Canadian government benchmark note rose 2 basis points at 10:20 a.m. in Toronto, the biggest one day jump since January 10, according to data compiled by Bloomberg.
Standard & Poor’s has a negative outlook on the province’s AA- credit rating, a signal it expects a rating change will be lower. Moody’s Investors Service called Wynne’s fiscal plan a credit negative on May 2.
“We’re on high alert that S&P will downgrade Ontario,” Aubrey Basdeo head of Canadian fixed-income in Toronto at BlackRock Inc., the world’s biggest money manager, told Bloomberg.
“She’s front-loading the deficit or the total debt in anticipation future years will benefit from stronger growth. They’re just looking at the raw numbers and they’re seeing a deteriorating financial balance sheet.”
The province now has a projected deficit of $12.5 billion, up from the expected $11.3 billion.
The Liberals continue to pledge that a balanced budget will come in 2017 but, for the time being, it expects higher program spending and weaker-than-expected underlying revenues will more than offset planned tax increases.
“However, while all of the austerity talk during the election campaign was focused on the PCs, the Liberal budget itself carried a stiff dose of fiscal restraint, it was just buried deeper in the document and pushed further out on the forecast horizon,” BMO Capital Markets economist Robert Kavcic wrote in a research note issued on Friday.
While it remains to be seen whether the Liberals can hold the line on spending, a majority government “now makes pushing through necessary restraint a bit easier,” Kavcic wrote.
- With files from Star wire services