Kathryn May, Ottawa Citizen – ‘Bold’ reforms needed

May 31, 2013
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 ‘Bold’ reforms needed to bring Crown corporation costs down

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The Conservative government’s plans to control collective bargaining at Canada’s Crown corporations won’t bring employee compensation in line with the private sector unless it forces tough changes like caps on pensions, higher contribution rates and the phase-out of defined benefit plans, say pension reform advocates.

Bill Tufts, founder of Fair Pensions for All, said such “bold” reforms are the only way to wrestle with the mounting pension and employee benefit liabilities that are eating into the operational budgets and front-line services Crown corporations offer Canadians.

The organization’s latest report estimates eight of the 48 Crown corporations face nearly $9 billion in liabilities for pension and other “retiree benefits.” They include Via Rail, Canada Post, Canada Mortgage and Housing Corporation, Atomic Energy of Canada, Bank of Canada, Business Development Bank, CBC and Farm Credit Canada.

Tufts said taxpayers have pumped $2.4 billion into the eight corporations’ pension plans since 2008 but the shortfall continued to grow by $4.7 billion.

“So we’re making bigger bailouts and they are digging deeper holes,” said Tufts. “Most of the future benefits are completely unfunded and will come out of future operations. All the profits of Canada Post will be redirected into the pockets of public sector employees in health benefits for the next 75 years.”

His organization will be among the parade of witnesses at Finance committee Thursday to debate a highly controversial part of the budget bill that will give the federal cabinet the power to give Crown corporations marching orders when they are negotiating with wages and benefits with employees — including non-unionized employees. It includes the right to appoint a Treasury Board representative at all rounds of negotiations. Many argue the main target is pensions and benefits.

Giving the government more control on collective bargaining is a critical piece of the government’s sweeping plan to make the pay and benefits of all federal workers more affordable and in line with the private sector.

The proposal has infuriated federal unions and became a flashpoint for some Crown corporations, such as CBC, which is pressing for an amendment to protect its independence, arguing the proposal conflicts with the Broadcasting Act that gives its board of directors the right to determine salaries.

NDP MPs are fighting the proposal by tabling motions to examine the impact on CBC’s journalistic independence, as well as research and monetary policy at the Bank of Canada, and trading activities at the CPP Investment Board.

“This is a barefaced attempt by the Conservatives to control the Bank of Canada, the CBC and other Crown corporations by threatening wage and benefit cuts or termination for employees who don’t toe the government line,” said NDP finance critic Peggy Nash. “The Conservatives are putting the Bank of Canada’s independence at risk.”

The government has already taken steps to bring its employees — the core public service — in line with the private sector through wage controls, pension reforms, and the elimination of voluntary severance, and now is looking at an overhaul of sick leave and disability claims.

The government wants this same “alignment” extended to all federal workers, which means Crown employees will have to pay for half of the yearly contributions to their pension plans and new hires will have to work longer to collect full pensions.

The Public Service Alliance of Canada (PSAC), which represents over 4,600 employees at 19 different Crown corporations, has argued the Crowns and their employees know their workplaces best and shouldn’t have to deal with interference from the government.

The government gave itself similar power in the last budget to oversee negotiations with the Canada Revenue Agency, which unions argue has contributed to dragged-out contract talks and a souring of relations with the agency.

But some say Crown corporation management knows they have to rein in costs and would rather the government take the heat for any hard-line negotiating.

“If I was running a Crown, I would rather the government tell me what to do, let them come in and do it and get my salary costs down. It will be more effective and all the employees’ ill will is for the government,” said one longtime bureaucrat.