Mr. Speaker, I am happy to speak to the motion and to the amendment to the motion. I firmly believe that the hoist motion was a very good idea because six months time may add some measure of reason to what is going on. I am confident that within six months the two parties may reach the outcome that there be a negotiated settlement on what to do with the pension surplus in question.
I believe that the President of the Treasury Board is in for the fight of his political life if he continues on the road of moving forward with Bill C-78. In the short time I have been here I have not seen the firing up of so much interest over an issue. The idea of taking, clawing back, or whatever we want to call the grab for the $30 billion surplus is such an emotional flashpoint with so many people across the country. I predict interest of the kind we have not really seen since Brian Mulroney tried to deindex the Canada pension plan.
When Brian Mulroney tried to deindex the Canada pension plan he started a grey hair revolution, a blue rinse uprising of senior citizens who demanded that it be stopped. Brian Mulroney and his government to their credit had the common sense to back off. They did not want to take on that group of people. They are the most powerful voting constituency in the country. Senior citizens, pensioners and retirees are well organized, well informed and they vote. They do not stay at home and grumble. They get on their feet, come out and vote at voting time. They are gearing up around this issue. As I said, I have not seen a level of interest like this on any issue since I have been here.
Today seniors organizations are on the hill. They are paying close attention to the first day of debate on Bill C-78. The Armed Forces Pensioners, the Association of Public Service Alliance Retirees, the Canadian Association of Retired Persons, the CLC, the Canadian Pensioners Concerned, the Congress of Union Retirees of Canada, the Federal Superannuates National Association are all here. I did a quick tally and they represent over 1.5 million retirees and pensioners. They are watching this debate in West Block in a room which I rented for them.
I really believe that the hoist motion is at least the first glimmer of hope that possibly we can add some voice of reason to this whole debate.
I did not finish the list. There are others, the Royal Canadian Mounted Police Veterans Association, the United Senior Citizens of Ontario Incorporated, the Ontario Coalition of Senior Citizens Organizations, the One Voice Seniors Network, and on and on. Do the President of the Treasury Board and the government really want to take on those people? They should think twice.
When the talks broke down it led to the introduction of this legislation. But the talks were not going that badly. Progress was being made. Virtually all of the clauses in Bill C-78, in the hundreds of pages of text, were agreed to by both parties. Some benefits were increased. Obviously the representatives of the pensioners were pleased about that.
Virtually everything else was agreed to, with the exception of this enormous, and I will avoid unparliamentary terms, grab of $30 billion from the pension fund. I suppose the representation of the pension investment board was another hot point. But these were not insurmountable.
The representatives of the pensioners were quite yielding in their arguments. It is a basic tenet of the trade union movement that all pension surpluses are the sole property of the employee. They are not the employers' money to use as they see fit. They are deferred wages. It is our money, speaking on behalf of working people.
The representatives of the employees at the table were willing to move on that. I have heard figures. I will not mention them here but they were willing to share that $30 billion, some going to improve benefits and some going back to the employer to use as they saw fit, but not all of it. That is where the impasse arose with the $30 billion. There was no hint of increasing benefits to the retirees.
The previous speaker did a good job of pointing out what these retirees are really making. There are more women in that beneficiary group than there are men. The average woman with 20 years of service makes a pension of $9,600 a year. Whoopee. It is a pension and I am sure they are glad to have a pension but it is not exactly a fat, lucrative pension.
This $30 billion divided among all the beneficiaries would be $30,000 a year for each of them spread out over the term of the period they collect. That could make a significant difference between living in poverty or living in some kind of financial security during their senior years.
It is ironic the theme the government chose for international women's day this year. Because it is the year of older persons the government chose “going strong, celebrating older women”. It should be “going wrong, robbing older women” because that is what the government is doing with this $30 billion grab of the pension surplus.
Bill C-78 is a history of failures. It is a failure to negotiate. It is a failure to reach a conclusion by negotiation which was within reach. It is a failure to manage the workforce adequately. It is a failure in developing satisfactory relationships with employees where the government could deal with an issue like this at the table as civilized people as should be done. It is a failure of epic proportions to live up to the promises of former Liberal governments.
Les Barnes, a former PIPS leader, wrote a letter to the editor. Mr. Barnes was present in 1967 when a firm guarantee was made by the Pearson government that the terms and conditions of the plan would never be amended by unilateral government action. Never. That was the trade-off to keep it off the bargaining table.
Pensions are usually part of the collective bargaining process but the government wanted it removed and separated. The government did not want it to be dealt with at the bargaining table. Okay, it was a deal. It was an arrangement, a pact, a contract. The government would not talk about pensions at the bargaining table and the terms and conditions of the plan would never, ever unilaterally be altered. It is being done today in Bill C-78 and done very dramatically.
Mr. Barnes also talked about the Minister of Finance at the time, Walter Gordon, who wrote to the national joint council of the public service assuring its members that as a result of the integration of the plans, which is what they were trying to achieve then, there would be no increase in the rate of contributions.
Bill C-78 is jacking up the rate of contributions by 33%, from 30% of the total contributions to 40%, one-third of an increase. The government is jacking up the contributions and taking the surplus out in one fell swoop. It is no wonder the seniors movement is mobilizing and building up a good head of steam to come to Ottawa and tell this Liberal government what they really think of Bill C-78.
The minister made a very good and revealing speech. One of the first remarks he made was that Bill C-78 is part of an overall plan. You are darn right it is part of an overall plan. The government takes $25 billion out of the EI fund from unemployed workers and then it takes $30 billion from retired senior citizens, many of whom are living on an income of $9,600 a year. It is a plan all right.
The Liberal government is going to pay down the debt on the backs of the most vulnerable people in the country, unemployed workers and senior citizen women. My mom is one of those senior citizen women. She is 82 years old and is living on a public service pension plan. She is glad to have it but she is not exactly living well. Who is next? The government will be stealing pencils from blind men's cups. It is getting ridiculous when we think of the choices the government is making in terms of the grabbing it is doing.
I talked about the Pearson years and so on and the current Prime Minister was part of that cabinet. He was a part of the promise to not ever unilaterally alter the terms and conditions of the plan.
In 1991 and 1992 the dialogue really began to amend this plan to make the changes that everybody agreed were necessary. At that time the union agreed to the private investment board, the 12 person board that was talked about earlier. Had we reached agreement at that time and started investing privately, God knows where that plan would be now. Those were some very good high interest years. That $30 billion might be $100 billion and we could really make some changes to the benefits.
In 1996 the advisory committee made a report and it struck another committee, a consultation group to start fine tuning things. This is when the issue of the use of the surplus came to a head. In the last month of 1998 the consultative group broke down over the surplus and representation. Then in March 1999, rather than trying to pull the pieces back together, Bill C-78 was sprung on us. Really, it is an abrogation. It is an admission of failure or an admission of inability on the part of government to manage its concerns.
I could talk about all the nuances of the bill and a few of its good qualities. I will point out the things the retirees are glad to see in the bill.
There will be a dental plan for the first time ever, albeit a lousy dental plan because it has a $200 deductible. I have been dealing with employee benefit plans all my working life as a manager of these plans and as a negotiator of union agreements. I have never seen a $200 deductible in a dental plan in my life. I do not know what kind of deal has been made or who the carrier of that plan is.
The recognition of same sex couples we applaud fully. We are extremely critical that the government tried to sneak this in and wrap it up in a package of things that obviously no working person can support. It has been rolled in there to make it very difficult. It is a very cynical way of dealing with the good and the bad aspects of the bill.
The increase going from six years down to five years with two years vesting, all these things obviously we can support.
The big problem clearly is the use of the pension surplus and I will try to limit my remarks to that.
The problem lies in the attitude of senior officials and the minister himself. Here is a quote from Alain Jolicoeur, the chief human resources officer of the Treasury Board Secretariat in 1998. He said “Employees and retirees have no proprietary interest to the surplus in the superannuation plan”.
Plain and simple, we are that diametrically opposed. We argue that all pension surpluses are the sole property of the employees to be used only for the improvements of benefits. That is what the whole purpose of a pension plan is. The other camp is diametrically opposed 180 degrees and says there is no proprietary benefit.
This argument is arrived at through a very convoluted bit of logic that the minister used again today. I would like to explain how the government arrived at this position that it assumes part of the risk. It assumes all of the risk for a deficit in the plan, ergo if there is any profit in the plan it is the government's to keep.
I would like to quote from a letter from Bob White to the President of the Treasury Board which was written in March. He puts it very well in one simple paragraph:
Typically employers have tried to justify the removal of surpluses on the grounds that because they take the risks involved in providing defined benefits, therefore they should get the reward of the surplus in the form of surplus removal or lower employer contributions. This commonly articulated relationship between risks and rewards is far too simplistic for two reasons. First, the actuarial assumptions that are used to value pension liabilities are chosen with a deliberate view to making experience gains and surpluses far more likely events than the losses and unfunded liabilities. Thus, the risk for which a surplus is supposedly the reward is limited. Second, if experience losses occur and employers are stuck with unplanned amortization payments, it is impossible to prevent the employers from lowering either the pension benefits of other parts of employee compensation from the levels they would otherwise have achieved.
In other words, the downside risks may be shifted to the employees despite appearances to the contrary. Really, there is very little downside risk.
The way the actuarial experts deal with plans, especially in a privately invested fund, it is far more likely that a surplus will occur than a deficit in the plan. I would say 10:1 and I am pulling that number out of my hat. If the tradeoff is “I will keep all the surpluses, but if there is a deficit, I will assume the risk there too”, that is a very good bet, frankly. In a gambling hall that would be a very safe bet to undertake.
That is really the issue. That is what is going to fire up the country. It is only just beginning. This is day one of what will prove to be a very long debate. We are talking about a huge amount of money. We are talking about an amount of money that could make a huge difference in the lives of the beneficiaries of public service pension plans.
We should put some of the facts on the record. As of March 1998 the public service pension plan had a $14.9 billion surplus, the RCMP plan had a $2.4 billion surplus and the Canadian forces plan had a $12.9 billion surplus. We should think about how we arrived at such huge surpluses. Nobody should be so bad at his or her actuarial research to arrive at such sloppy work.
The government did some very obvious things which led to very predictable consequences. The government froze people's wages for seven years. Obviously, the pension people receive when they retire is going to be a heck of a lot lower if the wages are that much lower for that period of time. It is kind of a double whammy, and even more so for women. When the government refuses to pay up on pay equity, obviously the women's pension calculations will be a heck of a lot lower than they would have been had they been receiving fair wages the whole time. There has also been a lower than expected rate of inflation. We have an actuarial anomaly to wind up with this huge pension surplus.
I will talk about the net effect this whole thing is having on the morale of the public sector. This is a group of workers which has suffered indignity after indignity. Most people go into the public sector for a couple of reasons. They are willing to accept lower wages because they trade it off for job security. After all the cutting and hacking and slashing and butchering of the public sector there is not a whole lot of job security left. The sword of Damocles is hanging over their heads every minute. Job security is out the window. There is no longer any reason to work for the public security if job security is what you are after. Let us face it, everybody is afraid for their jobs.
Public servants are still plugging along. They can expect reasonable wage increases, but they have had six to seven years of no wage increases. They are falling way behind the private sector. Not only do they not have job security, what are they making? A carpenter makes eight bucks an hour less than an outside carpenter. I was a union carpenter making $25 an hour and the guys working for defence or wherever as carpenters were making $15 an hour. That is not bull. That was the difference.
At least people could take some comfort in the fact they had a pretty good pension plan. Pretty good? Nine thousand dollars a year for 20 years of service. That is not a pretty good pension plan.
Then, when there is an opportunity to sweeten the plan by taking that $30 billion and giving it to the people who paid for it, it gets taken away too. It is no wonder there is poor morale in the public sector. If people are concerned about productivity, or whatever the buzzwords are these days, that is certainly something they could look at because public servants are demoralized and browbeaten. The government is pushing people too far. That is all there is to it.
I raised the gender issue once before. This is very much a gender issue. There are more women beneficiaries than there are men, and for good reason. In the public sector there are a lot of clerical-type jobs.
We have to win the argument on the whole issue of why that money is ours. We think it is ours. Obviously the minister thinks the opposite. Let us look at why we would argue that it is ours.
If there is a surplus in a private sector pension plan, the law of the province of Ontario is that 90% of employees have to approve any employer use of the surplus. Clearly that contemplates that it is the employees' money. Why else would they be required to vote on giving it away?
The other evidence is that during public sector negotiations, at the bargaining table, the employer, time and time again, says, yes, they are getting lower wages and, yes, we will not provide much of a raise, but look at the great pension plan. It clearly uses the pension plan as part of the wage package. It uses it against the employees at the bargaining table and then reverses the argument when bargaining is over.
There is jurisprudence. Consider CUPE Local 1000 v Ontario Hydro. CUPE initiated a legal challenge in response to Ontario Hydro's attempt to take a contribution holiday and it won. It won fair and square because the employer did not have the right to use the contributions for anything other than the trust document dictated, which was to improve the benefits to the employees. It is there on the books and people should be looking at it.
Bill S-3, an act to amend the Pension Benefits Standards Act, received royal assent in parliament in June 1998. This legislation applies to private plans operating under federal jurisdiction. It requires a two-thirds vote of the employees before the employer is allowed to use a single penny of the plan for anything other than improving benefits.
That is some of the more obvious jurisprudence. I am sure there are many more who would argue that any pension surplus is the sole property of the employees who paid into the plan, whether the contributions are from the employer or the employee. It is part of the wage package. It is deferred wages for the employees' use and their use only.