Economics professor Trevor Tombe at the University of Calgary campus in Calgary on Oct. 5.Todd Korol/The Globe and Mail
On a sunny morning a few weeks into the fall semester, Trevor Tombe shows me into the coffee shop on the ground floor of the University of Calgary’s main library. He quickly zeroes in on the one vacant table in the large room.
“We’re in luck,” he says. “There’s usually no space in here.”
The University of Calgary professor – one of Alberta’s best-known, if not always best-loved, economists – warns that as busy as the campus looks on this day, it’s destined to get a lot busier over the next few years.
In Alberta’s uniquely youthful demographic mix, 22 per cent of its population is 17 or younger – four percentage points higher than the rest of the country. Population projections imply that a decade from now, there will be roughly 80,000 more Albertans seeking spots in the province’s universities and colleges – a massive one-third increase over current enrolment.
“It’s an issue that wouldn’t be cheap to solve,” Dr. Tombe said.
Dr. Tombe’s cool analysis of data and trends has made him a go-to source for economic reality checks amid Alberta’s frequently emotion-driven politics. He’s a voice of reason on questions such as carbon taxes, oil and gas royalties, and federal equalization payments – often taking a stance that leans against the Alberta-first populism that lifted the United Conservative Party to two consecutive provincial election victories.
That hasn’t made him a particularly popular guy among certain factions in the province – and there are people who aren’t shy about letting him know it.
“Yeah, people send colourful e-mails and leave interesting voice-mails all the time,” he acknowledged.
“Often, providing information comes across as taking a position, one way or the other. I disagree strongly with that. Putting out as rigorous an analysis as you can around a pension plan, or a carbon tax – that’s not advocating for or against it, it’s just clarifying how we should think about it,” he said.
“Too often these days, policy conversations involve just extreme positions, and cheerleading. I think that detracts from high-quality decision-making.”
Figuring out the economic and policy implications of Alberta’s unique demographics is something that has been occupying a lot of Dr. Tombe’s energies lately. The average age in Alberta is nearly three years lower than the national average. Albertans’ average weekly wage is nine per cent higher. These demographic advantages may well be a bigger factor in the province’s economic future than its oil and gas wealth.
While the looming postsecondary education crunch is largely flying under the political radar, Dr. Tombe has dedicated much of his recent attention to a much hotter policy issue tied to the province’s unique demographics: the raging debate over Alberta’s future in the Canada Pension Plan.
Premier Danielle Smith and her UCP government are pushing a proposal to split from the national plan and launch an Alberta-only pension fund. The key argument is that Alberta’s younger and higher-income work force, relative to that of the rest of the country, has the capacity to generate higher pension payouts with lower contributions than the national plan.
Ms. Smith is armed with a government-commissioned study, released last month, that calculates that if the province left the CPP, it would be entitled to take more than half of the CPP’s $600-billion in assets – a very healthy nest egg to launch its own plan.
Dr. Tombe has been vocal in questioning that assertion, both in social and traditional media.
He doesn’t dispute the soundness of the basic argument: A younger and higher-earning work force does, indeed, mean that the same pensions could be funded with lower contributions. But he argues that the government is overpromising the benefits and underestimating the risks – and aggressively pitching this unrealistically sunny view to voters. (The government has launched a $7.5-million advertising campaign aimed at selling Albertans on the idea.)
He believes the assumption that forms the financial foundation for those rosy promises – that Alberta is entitled to more than half of the existing CPP – is deeply flawed. (He calculates that a realistic number is 20 to 25 per cent.) As a result, he says, the gains from a separate Alberta pension plan aren’t nearly as generous as the province is making them out to be.
Meanwhile, an Alberta-only pension plan carries more risk over the long term – by the very fact that it becomes dependent on the continued health of a single provincial economy, rather than being diversified across the larger and broader national base.
“In the CPP, you’re pooling that risk, nationally,” Dr. Tombe noted.
“There are reasonable ways to quantify these risks, and think about whether we want to expose ourselves to them. This is what’s missing in the government’s engagement,” he said.
“It’s not trying to flesh out people’s complicated preferences over short-term gains and long-term risks. It’s trying to convince them that an Alberta pension plan is the right move. And it’s doing it by putting forward analysis that is, in my view, quite beyond reasonable,” he said.
“It’s that I find troubling – not the broader conversation.”