Photo: flickr/ Sara Long

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Minister of Finance is widely acknowledged to be the second most important position in any Canadian government, and Justin Trudeau’s selection of Bill Morneau for that role should give progressive-minded citizens considerable pause.

Yes, he’s rich, having grown the business founded by his own father and married into the McCain Foods family. And yes, a stint as Chair of the CD Howe Institute can only have cemented his pro-business credentials. But we don’t have to stop there; there’s a very useful paper trail.

Let’s begin with The Real Retirement, a book he co-authored with Fred Vettese in 2013. Subtitled “Why you could be better off than you think, and how to make that happen,” the book aims to lessen the retirement anxiety of the already fairly comfortable.

One of the book’s first exercises is to split the Canadian public into five quintiles of equal population, based on income level. Morneau and Vettese quickly punt the uppermost quintile into a later chapter, so secure in its own opulence as to render much of the intervening nitty-gritty moot and likely quaint.

But here is virtually the entirety of the book’s treatment of the lowest-earning quintile, whose average total income is $29,000 per year:

“The average income in each quintile might seem high but remember that this is for households consisting of two or more persons.”

“We can also ignore Quintile 1 because the government takes care of them through various programs. They will have more after-tax income in retirement than they had while they were working.”

Thus do Morneau and Vettese dispense with entire families living on $29,000 per year. We can ignore them because existing government programs will preserve their lifestyle, should they ever choose or be forced to stop working.  They’ll still have the same $15k or so, apiece, to throw around.

Literary judgements aside, Morneau and his co-author do not appear to have met in a writing seminar. On the contrary, Fred Vettese is employed as Chief Actuary by Morneau Shepell, the self-described “consulting and outsourcing” firm where Morneau was Executive Chair prior to entering political life. You’d expect the two men to hold some common views.

So what are we to make of Fred Vettese’s November 2014 column in the Financial Post, with the charming headline “Even the rich can qualify for Guaranteed Income Supplement — here’s how”?

Vettese targets his shrewd but relatively simple strategy at imaginary couple Tom and Susan, who “will have a mortgage-free house worth over a million dollars, an RRSP balance that is closing in on another million dollars plus a TFSA,” and “will probably need no more than $80,000 of retirement income to match the lifestyle they enjoyed before retirement.”

Lucky Tom and Susan: “As a result of following this strategy, they get all of their OAS pension without claw-back and also receive about $63,000 in GIS payments.”

Taken at face value, this is a long-range tax planning mechanism, through which people already wealthy enough to accumulate massive Tax Free Savings accounts can look ahead to not having their Old Age Security clawed back in taxes, and even receiving the additional Income Supplement intended to keep our country’s very poorest seniors from utter destitution.

It’s no wonder Vettese then has a minor attack of conscience:

“Some people may question whether it is morally right, given that the purpose of the program is to help the financially disadvantaged. While that is probably a better question to ask a priest than an actuary, I personally wouldn’t feel right about collecting GIS. Still, we have to acknowledge the ethical question is more complicated than it seems.”

Complicated, really? Does anyone else think so?

Morneau Shepell posted a link to Vettese’s article on its company website: “TFSA loophole: How the rich can tap into GIS.”

“The key is to postpone income from employer pensions, CPP and RRSP income during that time period,” the blurb continues, referring to the ages of 67 to 70. “Instead, for those three years, you live on withdrawals from your TFSA.”

To my eyes, this reads as though Morneau’s firm has fully resolved any initial ethical qualms, and continued on to outright promotion of the scheme, for those few who can afford to try it.

Vettese’s reservations don’t last all that long, either. He goes on to compare use of the strategy to avoiding sales taxes by paying a contractor in cash, which he alleges has been done by “most of us at one point or another.” Apart from the faltering moral compass, it’s a remarkably blinkered view from within a single social stratum! Let’s just hope our new Finance Minister can see a little bit further.

I would expect Morneau to respond as follows, if at all: The plan was Vettese’s, not his; he would not have had daily oversight of company newsletter links; and in any case the original article should be seen as an altruistic alert to close a loophole, long before it could possibly affect the national treasury.

But it doesn’t really read that way. And I’m not the only one who thinks so. In ensuing online discussions and commentary, one reader wrote: “This is not right. This article borders on counselling [a] fraudulent way to get money from the Government. GIS is genuinely for low income people.” But another was clearly considering his own options. “I think it’s pretty reasonable,” he wrote. 

The point is not really whether our new Minister of Finance is on loan to us from a company which encourages abuse of government subsidy programs by the already rich. Nor is it whether Bill Morneau himself ever spares a charitable thought for those of us in lower “quintiles.”

It’s that, for all the heady rush of generational change and sunny, progressive ideals, it’s the same old corporate elite in charge of the financial decision-making for another four years.


Daniel James Wright is an occasional writer and oft-times bookkeeper from Toronto.

Photo: flickr/ Sara Long