Natural Resources Committee on Nov. 18th, 2014

[Dr. Robert Walker]

This is an interesting and difficult question. I'm not a pension expert, but my understanding is that there are a variety of options, including bridging, that can get from the point of new employees coming in to an ultimate solution with a go-forward pension plan for all, but I'd be in speculation mode as to which option the contractor would choose to put in place.

[John McCallum, Liberal, Markham—Unionville, ON]

Okay, that comes to the main difference that I detected between you, which is whether or not the new employees should be under the old pension plan for the three-year transitional period.

Mr. Walker, I assume the company does not agree with that and would not do that, or else it would not be a disagreement. Would the reason for not doing that be a question of the additional cost?

[Dr. Robert Walker]

We've been very much following the lead of government as to what it has put forward as the solution.

Again, I'd come back to say that as we observe what is being considered as industry practice elsewhere in Canada and around the world, this notion of needing to meet the requirement for pension coverage for new employees and a go-forward pension does not mean that you're imposing the ultimate answer through what new employees have on day one. There may be some kind of bridging arrangement placed to get you to an ultimate solution. However, the government's view is that those are all the conditions that the incoming contractor must take leadership to establish.

[John McCallum, Liberal, Markham—Unionville, ON]

Okay. There's some debate about whether the new pension will be better or worse than the old one. I can't imagine it would be anything other than worse, in the sense that public sector employees—and I can use this term because the same thing applies to members of Parliament—have what some people call gold-plated pension plans, whereas the norm in the private sector is decidedly not as generous. I think that's a statement of fact. It's a pretty safe assumption that the new pension plan will be less generous than the old one.

Is that a fair statement?

[Dr. Robert Walker]

One can look around the world and see where the trends are going. I recall in the earlier comment that observation was made.

My observation is that the private sector approaches this issue of compensation as a whole. It is about salaries. It's about performance pay. It's about benefits. It's about pension. And as a collective, it needs to be competitive. So to come back and say that by taking the issue of pensions and neglecting the larger piece of competitive compensation...is probably not, I'd suggest, the way the contractor would approach this.

[John McCallum, Liberal, Markham—Unionville, ON]

Okay, I have one last question.

It's a bit late to do anything about it, but I wonder if there's an element of seller's remorse on the part of the government, because we heard recently that China is buying two reactors at a cost of $5 billion to $7 billion each, and the government sold AECL back in 2011 for $50 million.

Does this new development suggest the government may have made a mistake?

[Dr. Robert Walker]

I'll be a little careful and not speak on behalf of the government, but what I will highlight is that the new opportunities that Candu Energy, the company that took over the assets of our CANDU reactor division, has identified in China are good for Canada, and good for the supply chain.

I'll also highlight that the terms of the sale were that should it be successful commercially, royalties will be paid to the Government of Canada based on those sales. So if Candu Energy is successful, the Government of Canada will be successful.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. McCallum.

Ms. Crockatt, you have up to five minutes.

[Joan Crockatt, Conservative, Calgary Centre, AB]

Thank you very much, Mr. Chair.

Thank you to our witnesses for being here today.

Dr. Walker, I want to congratulate you on the birth of Canadian Nuclear Laboratories on November 3. As we've been talking about, AECL is going through a period of change. For many employees that represents excitement, because they know that there are opportunities and there are new opportunities coming. We just talked a little bit about those opportunities. They also want some certainty, whatever certainty might be able to be provided, for their futures. And that's reasonable.

Now, I've been through quite a few restructurings in the newspaper industry. It seems to me that the three-year transition period we've been talking so much about today is a very long and generous period of time as far as the private sector goes. I wonder if you could just comment on that and maybe talk about what the transition period was the first time, during stage one.

[Dr. Robert Walker]

I will confirm that the coverage provided to AECL employees who were transitioned to Candu Energy in the private sector was also three years. This is also about fairness and treating the employees in this part in the same manner in which employees were treated in the first phase of the transition.

On the notion of certainty, I would say that for our employees, the most visible sign of certainty is in fact the 100-foot crane on the site at Chalk River that is building our new $100-million science complex that the government is investing in. It's investing in labs that will be with us for 40 and 50 years. There are going to be well-paid jobs for a long, long time. The government's investing.

[Joan Crockatt, Conservative, Calgary Centre, AB]

Great.

Did I hear you say this morning that there's even more notice being given to employees this time around?

[Dr. Robert Walker]

I would confirm that in the first agreement, the notice of transitional coverage was only provided to employees literally a few weeks before the actual transaction occurred. We're receiving that notice approximately a year before it would occur. That is much earlier in the process for employees to have the certainty—provided this legislation's passed—that they will have transitional coverage.

[Joan Crockatt, Conservative, Calgary Centre, AB]

In phase one was there a loss of expertise, or did most of the staff continue to stay, going forward? Do you have information on that?

[Dr. Robert Walker]

Just for clarity, you're talking about the employees who moved in to Candu Energy?

[Joan Crockatt, Conservative, Calgary Centre, AB]

Yes.

[Dr. Robert Walker]

This was a large part of the negotiation. I was not part of that negotiation, so I'm observing it from a bit of a distance. My understanding is that all unionized employees went across, unless there were cases of people wanting to depart the company. Candu Energy is of course in the private sector and is looking at growing its business around the world, and that, of course, in an up-and-down business, has some challenges and opportunities. Going forward, we see sometimes fewer people and perhaps more people coming along—for example, as the China opportunity presents itself.

[Joan Crockatt, Conservative, Calgary Centre, AB]

Mr. Lundy, in general terms how is the transition going?

[Jonathan Lundy, Acting President, Chief Transition Officer, Corporate Head Office, Atomic Energy of Canada Limited]

I would say it's going well. My chief responsibility is to set up really the new AECL that will emerge. Right now we have maybe eight employees, and we are probably growing up to around 50 to prepare ourselves for managing the contract that will be put in place in November about a year from now.

[Joan Crockatt, Conservative, Calgary Centre, AB]

What's the mood of employees? How is morale? How are things?

[Jonathan Lundy]

Well, I would think that Bob could better answer that, but I think that with restructuring—you've said that you've gone through it yourself, as have I—there is apprehension. One of the things I like about the legislation here is that it takes away a big worry about the pension well in advance. It's a big issue for employees. It may not get all employees exactly what they want, but it goes a big step towards allowing the contractor to come in and for the first three years of a contract take that worry away and be able to negotiate something competitively for all of its employees, not just the union employees.

[Joan Crockatt, Conservative, Calgary Centre, AB]

Would you say that in many cases, or in some cases, employees have more of a certainty than in other areas of the public sector; that they know they're going to have this pension for another three years?

[Jonathan Lundy]

Yes.

[The Chair, Conservative, Leon Benoit]

I'll go to Mr. Leef, abbreviated again. I have a request for a short question from Mr. Ravignat. Could we do that as well?

Go ahead, for three minutes.

[Ryan Leef, Conservative, Yukon, YT]

Okay, I'll ask one question and then I'll turn my time over. It will be for Mr. Fitzpatrick and Dr. Walker of course.

Mr. Ravignat had asked a question about how you would look to amend this legislation if possible. Mr. Fitzpatrick, your recommendation was to move this pension to public service benefit for the new hires in the interim period. We had the officials just before you were in and we did ask that very question, if that was indeed possible. The response we got from the officials was that legislatively it's not allowed to have non-public service employees, in other words private sector employees, benefit from a public service pension plan, so legally it can't be done. Is that your understanding as well?

[Jonathan Fitzpatrick]

I believe I heard from the representative from Treasury Board that it was a conscious decision to exclude the new employees but I will defer to the record.

The alternative would be to have language regarding an equivalent benefit for pensions for the new hires during that three-year transitional period. It would also meet the intent of our position to include them under PSSA. Apparently there is no pension equivalent language in any of the collective agreements or in any of the other policies or procedures for Canadian nuclear labs.