Saturday, February 16, 2008

Investing in Our Community part II

An Alberta Pension Plan isn't really a taxation issue so I'm discussing it here. At the Founding Assembly of the Wildrose Party last October 27, we adopted a proposal that called for the creation of a APP and alluded to Alberta's "favourable demographics". I thought it to be a quite an informed proposal for something that just came off the floor. As you know, Alberta is a net contributor to the federal equalization program by billions. But you may not know that going forward Alberta will have also effectively subsidized the Canada Pension Plan by an enormous amount. This is because young Alberta workers will be paying for the pensions of retirees in other provinces for some time to come.

Now I have a less of a problem with that than with equalization, since equalization takes capital from where it could be profitably invested (Alberta) and sends it to places where can't be as profitably invested. As with many socialist schemes, however well-intentioned the program is, it is doubtful whether it actually helps the poor, since poor Alberta workers may be paying for what ends up being subsidies to wealthy Eastern industrialists. But I digress. At issue is whether Albertans would be better served by an Alberta Pension Plan. As noted above, the demographics say yes. That said, I've met with the CPP Investment Board as a Finance Canada official and they are very professional and sophisticated. I would be concerned about whether an Alberta investment management team would be as effective were it not for the fact that most of the AIMCo people are members of the Edmonton Financial Analysts Society and would do a very competent job, perhaps even better, since the provinces still have some control over the CPPIB whereas AIMCo is supposed to be almost entirely independent.

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