Evidence of meeting #14 for Finance in the 40th Parliament, 3rd session. (The original version is on Parliament’s site, as are the minutes.) The winning word was positions.
A recording is available from Parliament.
Bloc
Robert Carrier Bloc Alfred-Pellan, QC
That is assuming these positions would be filled. Is that a realistic assumption? Could these positions, even though 90% of them are presently vacant, be potentially filled or are these rather useless positions that you want to eliminate in the interest of efficiency?
Director, Appointments and Selection Processes, Senior Personnel, Privy Council Office
I am unable to comment. Obviously, these positions are filled by Governor in Council appointments. So this would be on the advice of the minister in charge of that portfolio. I could not say regarding any given position whether it could have been filled, but as a result of the assessment it was decided that they were no longer necessary.
Bloc
Robert Carrier Bloc Alfred-Pellan, QC
I read somewhere that you had assessed a number of these positions before deciding on these cuts. How many positions did you assess initially?
Director, Appointments and Selection Processes, Senior Personnel, Privy Council Office
We reviewed approximately 2,700 positions in roughly 200 organizations.
Bloc
Robert Carrier Bloc Alfred-Pellan, QC
Do these 2,700 positions represent the totality of Governor in Council appointments?
Director, Appointments and Selection Processes, Senior Personnel, Privy Council Office
No. Some positions we did not assess. We assessed agencies, commissions, governmental bodies, international organizations; we did not review judges, officers of Parliament, lieutenant-governors or deputy ministers. It is really in public agencies, administrative tribunals and so on that these 2,700 positions were cut.
Bloc
Robert Carrier Bloc Alfred-Pellan, QC
Since we are in a period of budgetary restraint, did you also have a mandate to review executive positions throughout the public service?
Director, Appointments and Selection Processes, Senior Personnel, Privy Council Office
It was not our mandate to review the public service.
Director, Appointments and Selection Processes, Senior Personnel, Privy Council Office
No. We were only looking at Governor in Council appointments. Public servants are not appointed by the Governor in Council, except for deputy ministers and assistant deputy ministers.
Robert Carrier Bloc Alfred-Pellan, QC
I am asking because the measure under consideration provides very minimal results; it is just a streamlining of governmental organizations. These are not real savings, they are fictitious. The real savings, in fact, will be a small percentage of the $1,000,000 that you mentioned earlier, am I right?
Director, Appointments and Selection Processes, Senior Personnel, Privy Council Office
I mentioned the savings aspect but the real benefit is that we will have organizations that might become more effective thanks to somewhat smaller governing boards.
Conservative
The Chair Conservative James Rajotte
Thank you.
No further questions? Thank you very much.
We'll now go to part 9, amendments to the Pension Benefits Standards Act. We'll ask the officials to come forward.
Welcome.
We'll start with Mr. McKay, please.
Liberal
John McKay Liberal Scarborough—Guildwood, ON
Thank you, witnesses.
The first paragraph in the briefing book I don't really have much dispute with. It's the second paragraph with respect to “a solvency deficit at termination must be fully funded, and permit employers to use letters of credit”.
Now we're in the middle of our discussions about and study of pensions, and letters of credit have been a matter of some subject of discussion here. It appears the government wishes to pre-judge the findings of the committee.
I'm skeptical with respect to letters of credit, because if a plan is close to bankruptcy or insolvency, it would seem to me counterintuitive to think that it or its employers, the funding element of the plan, could go out and get a letter of credit, which would effectively satisfy 15% of the outstanding obligations in the way this is set up.
I'm assuming you may well have had some extensive discussions with various plans and plan holders and things of that nature. What evidence do you have that letters of credit would be available to plans that are on the edge?
Leah Anderson Director, Financial Sector Division, Financial Sector Policy Branch, Department of Finance
I think the principle of availability is to increase cashflow for sponsors. In terms of providing security to the plan itself, they will be fully backed. They're fully guaranteed. So in terms of keeping the plan whole, it's just as good as cash because it's a fully secured line of credit.
Liberal
John McKay Liberal Scarborough—Guildwood, ON
But if I'm a bank and I'm being asked to supply a letter of credit, which as you rightly say is just as good as cash, how am I going to be able to get a letter of credit when my plan is on the edge of insolvency?
Jean-Claude Primeau Director, Acturial, Policy and Approvals, Office of the Superintendent of Financial Institutions
The letters of credit have been used already in two temporary regulations that were adopted by the government in 2006 and 2009. These were for temporary relief and they were used by a certain number of corporations. You could say it's based on the creditworthiness of the corporation--
Liberal
John McKay Liberal Scarborough—Guildwood, ON
Were they used at the point where plans were on the edge of insolvency or were not adequately funding their ratios?
Director, Acturial, Policy and Approvals, Office of the Superintendent of Financial Institutions
The purpose of the letters of credit in those regulations was to provide security to the plan instead of cash contributions that would otherwise have been required. It's not necessarily that the companies that avail themselves of this measure are on the verge of bankruptcy. It's really for corporations that would rather keep their cash resources for other purposes, to invest in the company and use the letter of credit as a security for the pension plan, so the pension plan is in effect in a neutral position, whether cash or the letter of credit is serving as security.
Liberal
John McKay Liberal Scarborough—Guildwood, ON
Presumably there's almost an inducement for it to use letters of credit rather than cash. If I'm an employer, a corporation, I'm always going to want to use credit over cash to fund any obligations I might have.
Director, Financial Sector Division, Financial Sector Policy Branch, Department of Finance
There is a limit of 15%.
Liberal
John McKay Liberal Scarborough—Guildwood, ON
I understand that, but if it's 15% of $1 million credit or $1 million cash, I know the choice I would make as an employer.
Director, Financial Sector Division, Financial Sector Policy Branch, Department of Finance
You asked if you can get it when you're on the brink of insolvency. I think the issue is this is one tool that can help with funding flexibility to avoid that situation. So a company in a cash crunch has another alternative if it's short of cash; the letter of credit can help them avoid going into a deeper trench.
Liberal
John McKay Liberal Scarborough—Guildwood, ON
If I am on the brink of insolvency, how is the government going to monitor the getting of a letter of credit to solve the insolvency ratios? Because it seems to me that instead of putting in cash, I'm putting in a letter of credit. That's a tip-off that my plan has a problem. How are you going to know? Who's going to decide?