The Secret Handshake

In her column in today's Star (which does not yet appear to be available online), Linda McQuaig points out the remarkable similarities between the government of Justin Trudeau and that of Stephen Harper when it comes to facilitating the erosion of defined benefit pension plans. She observes that as a consequence, it is becoming easier for the rich to get richer while ordinary citizens become poorer.

An example of this is currently being played out in Ottawa as the Trudeau government — ostensibly a “progressive” government that champions the middle class — is moving forward with legislation aimed at stripping away pension benefits from potentially hundreds of thousands of Canadian workers.

The most immediate problem stems from Finance Minister Bill Morneau's Bill C-27, whose details MoneySense recently provided:

Bill C-27 is an Act to amend the long-standing Pension Benefits Standards Act. Those in favour of pure Defined Benefit (DB) pension plans have criticized Bill C-27, saying it would allow federally regulated employers to replace DB plans, which provide a guaranteed retirement income for life with no risk, with Target Benefit Plans (TBPs) which are also generous pensions but because they count on employees taking on some risk, final retirement guaranteed payments may not be as iron-glad.

Both private sector and government employees will be affected by this bill:

It would allow federally regulated private sector and Crown Corporation employers to offer a TBP to their employees, or to convert an existing DB pension plan into a TBP [Target Benefit Plans, also known as Defined Contribution Plans].

While Moneysense, with its own biases, sees this as a good change, Linda McQuaig offers a different interpretation:

... Certainly, Morneau’s legislation puts the Trudeau government fully on the side of corporate interests who, in recent decades, have been trying to take away hard-won workplace benefits that helped workers enter the ranks of the middle class in the early postwar years.

A key corporate goal has been to replace old-style workplace pensions, where workers are guaranteed specific benefits in retirement, with new-style pensions, where benefits aren’t guaranteed and can shrink if markets fall.

When this kind of change was first championed by Harper, Trudeau appeared to be on the side of the angels, as he

sided strongly with the outraged workers, denouncing Harper’s pension changes as “wrong in principle” and “unacceptable.”

But, after Trudeau became prime minister in 2015, workers were surprised when his new government quietly introduced a strikingly similar version of Harper’s pension changes.

Mr. Trudeau appears to want it both ways, his public image apparently never far from his mind:

The Trudeau government defends its proposed changes on the grounds that workers must “consent” to having their pensions converted to the new riskier format.

But this is like the “consent” given by women who get groped by a powerful boss; employers can get their unionized workers to “consent” by locking them out if they don’t agree to the pension change at the bargaining table.

To provide some penetrating perspective, McQuaig discusses banking, one of the federally-regulated industries that stands to benefit from Trudeau's 'change of heart.'

The corporate keenness to foist riskier pensions on their workers is not driven by necessity. Corporate profits have risen significantly in recent years, even as companies have switched to the stingier pensions that transfer all risk to employees.

Even fabulously rich corporations are adopting the new pensions — not because they can’t afford to pay workers fixed pension benefits like they used to, but because they’d rather not be obliged to do so.

Take the Royal Bank — with staggering profits of $10.5 billion last year. In 2011, RBC adopted the new-style pensions for all new employees.

Jesus said that the poor will always be with us. With the secret handshake that exists between government and private interests, that seems guaranteed.

Pension Reform

More of the white stuff has fallen, and I can ignore the importunate call of the snow shovel no longer, so I will make this brief with two reading recommendations for your Sunday morning discernment.

In today's Star, Martin Regg Cohn writes convincingly on the need for real pension reform, but he predicts that the provinces' finance ministers, who will be meeting today and tomorrow, will get nothing from federal Finance Minister Jim Flaherty. The latter will trot out the standard 'now is not the time- the economy is too fragile' line, but with more and more people destined to retire in relative poverty, the time for delay is over.

The fragility-of-the-economy-argument is given short shrift in another Star article by C. Scott Clark, a former Federal Deputy Minister of Finance, and Peter Devries, who was Director of Fiscal Policy when CPP was last reformed in 1998. The writers show how that tired argument has been used repeatedly to try to stop past measures:

The last significant structural changes to the CPP (and Quebec Pension Plan) were made in the late 1990s. At that time, CPP contribution rates were doubled, an independent investment board was established and the program was put on a sustainable basis. The arguments now being used by the government are not unlike those made by anti-reformers in 1997. Opponents argued that doubling the CPP premium rates would have a major negative impact on economic growth and job creation. This did not happen.

They go on to cite how the the economy was deemed too fragile when the government replaced the federal manufacturer's sales tax with the GST in 1991, and when the mid-90s saw the Liberals impose tough fiscal measures to deal with the deficit. In neither case did the economic sky fall in.

I'm convinced that we Canadians are far too passive, giving free reign to a government that makes its lack of responsiveness to the needs of Canadians a virtue. Until that changes, all we can likely expect is more of the same blather and inaction on the part of the Harper cabal.

The Taint of Ideology

Although I'm sure that I frequently fall victim to it, I am deeply offended by lazy thinking, our seemingly endless capacity to fall back on ideological bromides as a substitute for careful and reasoned consideration of an issue. Instances of such defective cogitation abound, and are especially noticeable in online commentary, where, for example, those of a left-wing or progressive perspective will regularly denounce their ideological opposites as 'fascists', while those on the right frequently take great delight in dismissing progressive notions as the work of 'leftards' or other such idiomatically imaginative labels.

The challenge in overcoming these reflexive reactions is considerable, but I sometimes wonder if part of the problem lies in how we phrase the issue or ask the question. All too often, the choices are presented as grim absolutes. For example, we are told by our political leaders that any measures to improve our society can be achieved only at a great cost to the economy. Never is there a middle ground, where a tradeoff between the two polarities is presented as a viable option. But perhaps we are not asking the right question.

The following video is a brilliant example of how to reframe the question. The library of Troy Michigan, fighting a well-funded Tea Party campaign opposing a 0.7% increase that would keep the facility from having to initiate severe cutbacks, came up with this strategy:

Stunningly effective in its simplicity, the campaign perhaps suggests that there may be many ways in which to frame a question, many ways to engage people so that they think about the implications of an issue rather than simply dismiss it reflexively on ideological grounds.

My reflections are prompted by Martin Regg Cohn's column in today's Star. Entitled Time to put Flaherty on the spot, his opening sentence says a great deal:

When Finance Minister Jim Flaherty debates pension reform with the provinces Monday, he’ll be counting on Canadians to tune it out so he can wait it out — yet again.

He goes on to discuss something many of us are well aware of, namely that far too many of our fellow citizens do not have sufficient savings to ensure a comfortable retirement, and that the average pension afforded by the Canada Pension Plan is hardly adequate to bridge the gap. Real reform that would ultimately lift many retirees out of poverty is very achievable at moderate cost, as attested to by a 30-page discussion paper prepared by federal officials. Unfortunately, Finance minister Jim Flaherty, doubtlessly prompted by ideology and the financial community to which he pays obesaisance, claims that this is not the right time to act, as additional payroll costs would hurt employment in Canada.

Cohn dismisses this fatuous defence of inaction effectively, and I hope you will take a few minutes to read his piece.

As a retired teacher who enjoys a pension that provides for a decent standard of living, I am acutely aware than many others struggle tremendously in life. However, unlike those commentators who disparage and debase people like me for my good fortune and would like to see me brought down to a more hardscrabble existence, I am very much interested in seeing the opportunity of comfortable retirement living extended to as many people as possible. And that can only be achieved by confronting and challenging the conventional 'wisdom' of our political 'leaders'.

We have become a nation of complacent people, content to use our cynicism about the political process as an excuse for our inactivity, our refusal to advocate for an improved society.

We can do and be so much better than this.