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Archived - Ensuring a Strong Retirement System, Support for Provinces and Territories While Moving Towards Budget Balance
Kananaskis, Alberta, December 20, 2010
The Honourable Jim Flaherty, Minister of Finance, today released the following statement at the close of his meeting with provincial and territorial Finance Ministers and ministers responsible for pensions:
“We had a very good meeting. I’d like to thank my provincial and territorial counterparts for their contribution to what was a candid, open and productive discussion.
“I’m particularly pleased to announce that we reached agreement on a framework for the introduction of a new kind of pension plan, called the Pooled Registered Pension Plan, or PRPP.
“This new private-sector retirement savings vehicle will improve the range of retirement savings options available to Canadians by providing a low-cost retirement savings opportunity for employees—with or without a participating employer—and the self-employed.
“PRPPs will be a major breakthrough for the Canadian pension market. They will make well-regulated, low-cost, private-sector pension plans accessible to millions of Canadians who have up to now not had access to such plans.
“In fact, many employees of small- and medium-sized businesses and self-employed workers will now have access to a private pension plan for the very first time.
“Over the coming months, federal-provincial-territorial officials will engage with key stakeholders to ensure the framework for these new plans will meet the needs of employees, employers and those financial institutions that may offer the arrangements.
“We also reviewed work done on a range of options for the Canada Pension Plan. We agreed that our officials should continue their work on CPP. We will come back at the June meeting to discuss options and concerns.
“Ministers also remain committed to fostering better financial literacy for Canadians. This includes helping people make more informed decisions as they save for retirement. Ministers agreed to review the report of the Task Force on Financial Literacy to be released in the new year and to work collaboratively to respond to the recommendations.
“In addition to retirement issues, we discussed the evolving economic situation at home and internationally, and the need for eliminating deficits and lowering debt as we transition towards sustained economic growth.
“As you know, there are encouraging signs of improvement across a range of indicators, particularly on the domestic front. Ministers agreed, however, that the situation remains fragile, with concern over mounting public debt in many countries and its implications for long-term growth.
“Working cooperatively allowed us to get Action Plan stimulus out on a timely basis and on target, so that it was effective in supporting Canada’s economic recovery.
“Now, as the recovery takes hold, Canada’s governments will need to maintain this momentum as we transition into the second phase of our Economic Action Plan.
“Our meeting here in Kananaskis offered an important opportunity for us to cooperatively build this momentum as governments begin preparing their budgets.
“In particular, we agreed on the need to move decisively to get back to sustainable budget balance.
“I provided Ministers with details on transfers for 2011–12 that illustrate this very clearly.
“These numbers show transfers reaching a new all-time high of $56 billion, which is $2.2 billion more than last year. Total amounts for each major transfer will see year-over-year growth again in 2011–12.
“This unsurpassed level of financing reflects the Government of Canada’s commitment to support the provinces and territories in their front-line delivery of health care and social programs for Canadians.
“Specifically, the Canada Health Transfer (CHT) will grow to $27 billion in 2011–12, an increase of $1.5 billion or 6 per cent from 2010–11. The Canada Social Transfer (CST) for 2011–12 will reach $11.5 billion, an increase of $335 million or 3 per cent over 2010–11. Equalization for 2011–12 will total $14.7 billion, an increase of $287 million. Territorial Formula Financing for the three territories will grow to $2.9 billion in 2011–12, up $212 million.
“Beyond these record transfers, I also confirmed the extension by one year of protection to provinces to ensure that none see their major transfers decline in 2011–12, which represents an additional $1.1 billion in support.
“Provinces as a whole can count on growing CHT and CST support as we continue to work towards balanced budgets. Equalization will grow in line with the economy, with provincial amounts reflecting their relative economic performance.
“It is important to remember that Canada’s economy is recovering well before other nations precisely because we had our fiscal fundamentals in order going into the recession.
“Returning to that position will give our recovery more traction and make us even stronger going forward—supporting jobs and growth and insulating us from these global shocks in the future.
“It will of course mean some tough decisions will have to be made by all governments, but I know that Canadians and their governments understand the importance of reaching this goal.
“I look forward to working with my provincial and territorial counterparts on this and other challenges at future meetings.”
For further information, media may contact:
Office of the Minister of Finance
Department of Finance
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