Uncle
Gnarley was in a reflective mood. He had
difficulty getting Jos Arnell out of his mind.
Mostly, he was distressed that she felt vulnerable, perhaps even
tormented, that her small pension might be in jeopardy. He knew she was one,
isolated case, among thousands!
Gnarley, “there is a larger issue at stake with this pension business”.
“Nav”, he
said, pausing, until he was sure he held his attention, “I have ‘Statement IV’
on page 5 of the Budget Details for the current fiscal year right in front of
me. Do you have any idea how large the ‘Unfunded
Pension and Retirement Benefits Liability’ will be at the end of this fiscal
year?” Nav feigned ignorance, knowing that he would soon be reminded anyway. “Would you believe me, if I said $5.6 billion?
Yep, $5.6 billion”, Gnarley repeated for emphasis.
else, Gnarley demanded? It did not even
get mentioned in the Minister’s address; you have to dig for it in the budget
details. When the Minister of Finance says the public debt is $8.7 billion, he knows
that figure is actually much higher…what’s the phrase we economists are fond
of, ‘lies, damn lies and statistics’.
Fits what this Minister is saying perfectly, growled Gnarley. This fiscal year, alone, he ranted, the unfunded
pension and the post-retirement benefits liabilities increased by a net figure
of $467 million. He was clearly
frustrated. And, the public sector
unions let him get away with it! There
must be a ‘turnip’ allegory here, suggested Gnarley, and I’m not the one who
fell off the turnip truck!”
“Funny
enough, the Minister was forced to note how much money was committed to Nalcor
for Muskrat Falls, but not the unfunded liability to public sector workers. Dammit, why would the Unions to be so silent,
given the level of risk associated with Muskrat Falls?” he wondered.
are two other parts to this story. One,
if I were a public servant, I would not feel too secure if my pension fund were
left entirely to the discretion of future Finance Ministers and their brand of politics. What would prevent a future Minister from doing
his “sorry” routine, as Corner Brook Paper still might. Oops, maybe I shouldn’t
even mention Corner Brook Paper; last time a critic of Muskrat Falls did that,
the Minister of Natural Resources pilloried him, suggesting he wanted the Mill to
close down so that the power could be used for another purpose. Well, Nav, the Minister don’t scare ‘ol
Gnarley!”
“Can you
just hear the Minister of Finance now: ‘oh, well, we planned to pay you, but since
the oil money is not rolling in, as it used to…we’re sorry, we have to spend
your pensions on health care’, or, ‘sorry folks, we overspent on that dog,
Muskrat Falls; forget those pension payments.
We’ll help you get a job at The Home Depot’”!
Gnarley continued, a promise to pay, not backed up with money that can be
called upon regardless of the fiscal position of the Government, is a fundamentally
dishonest promise”. That’s quite a statement, Uncle Gnarley, Nav
was forced to interject. Don’t you know there are only peaches and sunshine in
our economic forecast. If you aren’t careful, you are going to be labelled a
‘naysayer’ for sure, Nav jibed, “They can call me anything they wish, said
Gnarley. Certain things need to be said
in this Province and I am intent on saying them. If the only penalty I suffer
is to be called a ‘naysayer’ by Jerome Kennedy or the Finance Minister, I’ll
accept that is not a bad price for opening a few eyes, he growled. What’s more,
don’t think, for a minute, that the Unions are lily white in all of this, either”.
“If I were a
public servant, said Gnarley, I would be pissed at NAPE and CUPE. I think I would be saying to them: you are
not supposed to be politicians…deal with the real issues! Winning a salary increase of another couple
percentage points may look good now, but it will be a hollow victory, in the
end. It is my view, if the public
servants, most of whom are well educated, intelligent people, don’t say that to
their Unions, they will likely get more than what they have bargained for. You
can’t blame Jos Arnell, but many of the others ought to know better!”
there were two parts, said Nav. “Yes”,
Gnarley replied: “Next, if I were the tax payer, I think I would be concerned,
that over one-half billion dollars is added to the public debt, annually, for public
service pensions”. “Are you quite certain”,
Nav enquired, thinking that perhaps Gnarley had inadvertently let a drip from
his golden glass run onto a critical part of the Budget documents? His quick look at the ‘offending page’ produced
a reminder that Uncle Gnarley is seldom wrong. If this is going to continue,
there is trouble ahead!”
“Governments”,
Gnarley continued, “are likely the only employers left that still engage in ‘defined
benefit’ pensions…these are pensions, he explained, where the retiree
understands, from day one, how his/her retirement package will be calculated,
but the contributions made by that employee may be a mere fraction of the ‘benefits’
committed to him upon retirement. That
may have worked, suggested Gnarley, when interest rates were high. Now that they are close to zero, all the tables
prepared by the so-called experts, the ‘actuaries’, have been sent for
re-cycling. That, my friend, is
something the tax payer ought to know and the government has a responsibility to
tell them!”
surprisingly”, said Gnarley, “the private sector is well ahead of governments
in this arena. Interest rates have been low for several years. Now, virtually all private sector companies
have converted to ‘defined contribution’ based pensions. Why? Simply because they are unable to
guarantee the other kind; these companies tie benefits upon retirement to ‘returns’
which pension funds earn from the financial markets. That system might hold a
little more ‘certainty’ than ‘hope’, which is the basis of our provincial
government’s system. It may appear, at
first glance, to be less attractive, but is it?” argued Gnarly, rhetorically. Wouldn’t
you want to know what is in your retirement plan; would you really want your
plan to be based upon the ‘hope’ that government will pay you”? Growled
Gnarley, “I’d choose certainty, any day”.
Nav, said
Uncle Gnarley, grimly, “this is a ticking time bomb. One day it will blow”.