NRGO Committee Meeting

STANDING COMMITTEE ON NATURAL RESOURCES AND GOVERNMENT OPERATIONS

COMITÉ PERMANENT DES RESSOURCES NATURELLES ET DES OPÉRATIONS GOUVERNEMENTALES

EVIDENCE

[Recorded by Electronic Apparatus]

Wednesday, April 28, 1999

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[English]

The Chairman (Mr. Brent St. Denis (Algoma—Manitoulin, Lib.)): Good afternoon, colleagues, friends in the gallery, and witnesses. I'd like to bring to order this Wednesday, April 28, 1999 meeting of the Standing Committee on Natural Resources and Government Operations.

We are following up the minister's presentation yesterday on Bill C-78, the Public Sector Pension Investment Board Act. We're pleased to have with us today representatives of the Federal Superannuates National Association. Their names are on your list and they're also shown at the front of the table.

I met Mr. Rex Guy yesterday. Are you speaking for the group, Mr. Guy?

Mr. Rex Guy (National President, Federal Superannuates National Association): That's right.

The Chairman: We have sufficient members to begin hearing testimony. So that we take full advantage of your time, I'd ask you to make your presentation and try to keep it to 10 or 12 minutes or so, and then we'll have time for questions. Thank you for being here, and I invite you to commence.

Mr. Rex Guy: Thank you, Mr. Chairman. Thank you also for the opportunity to speak with you this afternoon.

I should say we have copies of our presentation, which we have left with you, but the time available to us did not permit translation. So we will have the translated copies in the package we will deliver to the committee later.

I'm the national president of the Federal Superannuates National Association. FSNA represents more than 100,000 pensioners from the public service, the Canadian Forces, and the Royal Canadian Mounted Police. We are the only association representing pensioners from all three elements of the public service. With me today is Jean-Guy Soulière, the association's executive director; and Keith Patterson, deputy executive director, research. With your concurrence, they will assist me in replying to any questions the committee may put to us after my presentation.

Also with us are Claude Edwards, our immediate past president, who represents all public service superannuates on the public service superannuation advisory committee; and Allan McLellan, our second national vice-president, who represents retired military personnel on the Canadian Forces pension advisory committee. These two gentlemen have all the background information on the recommendations made by these two advisory committees to the responsible ministers.

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They will be pleased to share this background with you. Indeed, all committee members here should read the reports these two committees have submitted. Because of the very short notice of this hearing, we've asked the clerk of the committee for permission to table a more detailed description of our views within the next week. We expect the committee members will read these documents very carefully.

We are very disappointed that the government is pushing for quick passage of this bill. This is a matter that affects more than 300,000 pensioners and all the employees of the public service and members of the Canadian Forces and the RCMP who are contributors under the superannuation act.

It is clear that the government has made up its mind and that it will force passage of the legislation regardless of the negative impact on all present and past contributors. This is an action that must not be taken, especially the decision to dispose of the surplus.

My brief presentation will deal with two matters: the disposition of the surplus, and other shortcomings that we see in Bill C-78.

The government says the surplus belongs to the taxpayers. Now this is a motherhood statement designed to get public support for a decision that is unethical and inequitable. Does it really follow, Mr. Chairman, that anything dealing with taxpayers' money belongs to taxpayers? If one follows the logic of this argument, then the salaries and benefits of all public servants, including yours, belong to the taxpayer. Your annual leave belongs to the taxpayer. This is indeed a red herring.

The government is trying to gain political points to the detriment of all those who should share in the surplus: the pensioners, the employees, and the employer. In this matter, the government must be viewed as an employer and not as the government of the day. In this context, the employer is in a partnership with its employees and former employees. The pension plan is part of their total compensation package.

As a result of the contributions to the pension plans and the investment earnings on these contributions, a huge surplus resulted. That surplus must be considered an asset in this partnership, one that must be shared equitably.

The employer hides behind the fact that since the surplus is not mentioned in the superannuation act, it belongs to the employer. If this is one of the main arguments, it creates a very dangerous precedent. It implies that if something is not mentioned in an act, the government can unilaterally interpret anything it wants to satisfy its agenda. And to say the least, this can be very dangerous.

There are a number of other reasons the employer must ensure an equitable distribution of the surplus. The government, that is the employer, argues that since it was liable for deficits in the past, it now has a right to all of the surplus. It conveniently does not mention that under the accounting process at the time when there were actuarial deficiencies in the early 1980s, the associated amortization payments were almost completely paid out of the excess interest earnings of the plan. This is another red herring.

We hope the government is not trying to hide the facts. Our research demonstrates that at no time did the government face any substantial risk, and we challenge it to demonstrate the risks to which it refers. We will provide you with our research in our more detailed documents.

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The government, as a government, imposes certain rules on private pension plans related to the disposition of surpluses. The government as an employer does not practise what it preaches. The government should follow its own rules and apply the principles of the Pension Benefits Standards Act in the matter of the distribution of the surplus. By not following its own rules, there is real danger for other private pension plans. Why should employers be forced to follow the rules when the government as an employer does what it wants?

The average pension payment is below the poverty line. The average pension payment to a surviving spouse, most of whom are women, is less than $10,000 annually. Many are elderly Canadians who decided to stay at home to raise families and because of their husband's death their income is reduced by half. An equitable distribution of the pension surplus to enhance the pension benefits of pensioners would mean a better life for thousands of survivors, particularly widows.

In 1982 a grave injustice was made to pensioners when the government passed the Public Sector Compensation Restraint Act, which imposed ceilings on indexation increases on public service, Canadian Forces, and Royal Canadian Mounted Police pensions. Because of this unjust action, pensioners at that time suffered a 5% loss in 1983 and a 1.5% loss in 1984 from what was required under the Supplementary Retirement Benefit Act. This loss has been permanent, since all pension payments to these pensioners since that time have been 7% less than what they should have been. This grave injustice could be rectified by using a relatively small part of the surplus.

We're concerned about certain parts of Bill C-78. Firstly, Bill C-78 will permit the appropriate minister to institute a contribution holiday when there are surpluses. We are disturbed that pensioners who may have contributed to the surplus will not receive an equivalent improvement in benefit. We insist that the wording in the legislation permit the responsible minister to improve benefits equitably through regulation.

Secondly, we are satisfied that certain changes to the advisory committees are good. We support the fact that they are mandatory, but the legislation must go further. It must be made mandatory that there be consultation with the appropriate pension advisory committee before any changes or amendments are made to the act. It must also be made mandatory that these pension advisory committees meet quarterly, or more often if required. This is based on our experience of long periods of time between meetings, especially for the Canadian Forces pension advisory committee. Also, we feel that it must be mandatory that an annual report be submitted by each pension advisory committee to its appropriate minister and be tabled in Parliament.

Pensioner representation on each of the advisory committees must be augmented. Currently, Mr. McLellan represents 90,000 pensioners on the Canadian Forces pension advisory committee, and Claude Edwards represents more than 200,000 pensioners on the advisory committee on the Public Service Superannuation Act. Pensioners are seriously underrepresented on these committees.

Finally, there must be an appeal process included in the legislation. There is limited legal recourse currently available for individuals who have been wronged, and we can give you some examples. We feel that the appropriate pension advisory committee should be given the authority to resolve appeals.

Mr. Chairman, at the very least this committee should recommend that more time be given to review this highly complex bill. We would certainly like more time to analyse it and to make our usual constructive, well-researched, and balanced recommendations.

It appears that the government realizes that if it is explained properly to the Canadian taxpayers, who the government says it is protecting, and they get all the facts about the matter of the surplus, there will be public support for the equitable distribution of the surplus among the stakeholders.

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We've asked our 80 branches across the country to meet immediately with their local members of Parliament to explain our position. The opinions of the Canadian taxpayers should not be based on motherhood statements and red herrings, but on the facts.

Parts of Bill C-78, such as the clauses dealing with the disposal of the surplus, are unjust. There must be improvements to this bill.

The Federal Superannuates National Association has no negotiating power and can only exercise its influence by presenting well-researched and balanced positions, as it is now doing. We were given an example of that yesterday when the minister quoted from our website and actually read part of one of the positions we have advanced in this regard. We were quite pleased to hear him do that.

It does reflect the views of more than 100,000 members. These members are angry and feel let down. They feel that a partnership built on loyalty and trust has been breached unilaterally. They are frustrated that their position on the matter of the surplus, which has consistently been expressed to many presidents of the Treasury Board over the years, has been rejected without any valid reason, but simply on the basis of fiscal expedience.

Pensioners from across the country should be consulted before the legislation is passed. Pensioners and many seniors groups we have spoken to on this matter will long remember the decision. This committee has a real opportunity to make recommendations to the government to do what is just and right.

Thank you for your attention. My colleagues and I will be pleased to answer any questions you may have.

The Chairman: Thank you, Mr. Guy.

I'd like to take a moment to consult with my colleagues. There is a vote. We're in the middle of a half-hour bell, and I think the indication is that we should be there around four o'clock. Now, we have a couple of options: we can either agree to stay here and continue, or we can ask our witnesses if they would be so kind as to wait for us to go and vote and come back. Are there any feelings one way or the other on this?

Mr. John Williams (St. Albert, Ref.): I think we can go till about four, Mr. Chair. The bells started to ring at 3.40. It's a half-hour bell, so the vote would take place at about 4.10.

The Chairman: Okay. Tony.

Mr. Tony Ianno (Trinity—Spadina, Lib.): If we have the same number of people, it might be okay.

The Chairman: That's what I was thinking. As long as we have at least four and four, I don't think we'll be in trouble with our whips if we agree to stay.

Who feels they need to go and vote?

Mr. David Chatters (Athabasca, Ref.): What's the vote on?

The Chairman: It's a procedural vote. I don't think it's a declaration of war.

Scott, are you going to stay?

Mr. John Williams: No, Mr. Chairman. I think we should go and vote.

The Chairman: As long as enough people stay here and as long as we're balanced, we can keep going.

John, did you want to ask a question?

Mr. John Williams: I can ask a few questions.

I think we should stop in five minutes, Mr. Chair. I think we have an obligation to be in the House and vote.

The Chairman: We'll see how people feel at four o'clock.

Mr. John Williams: Anyway, first of all, I would like to thank—

Mr. Tony Ianno: Do you know what the vote is on, John?

The Chairman: The clerk will see if he can find out what the vote is on.

John, perhaps you could go ahead, and at four o'clock we'll see how things are shaping up then.

Mr. John Williams: Okay. Thank you, Mr. Chairman.

First, I would like to say welcome to the witnesses this afternoon and to thank you for dropping everything and running in here. I mean that, because I know some of you come from as far away as Nova Scotia.

The point Mr. Guy mentioned was the fact that they haven't had time to research the bill. They haven't had time to go through this complex document and the 200 pages of legal and technical language that is very difficult to understand, and they haven't had time to put together a proper brief and have it translated. I think that in itself speaks volumes for the way the government is rushing this bill through.

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First we have closure in the House announced just four hours after we entered debate. It was cut off on Monday night, into committee Tuesday, and here we are talking to witnesses on Wednesday. I can only register my great disappointment, Mr. Chairman, that the government has chosen to ride rough-shod over the pensioners and the employees we Canadians depend upon to run this country.

It's not the politicians who run this country, it's the bureaucracy and the civil service, the 150,000 people who work every day, sometimes under significant problems, where they went six years without a raise. Now they find the pension plan has been stomped on. Is it any wonder, Mr. Chairman, that we have a morale problem in the civil service? That's one of the questions I would like to see addressed.

Mr. Guy, do you think this is going to have a serious effect on the morale of the civil service, if the government continues down this way to push this thing through and have it law before the end of the month?

Mr. Rex Guy: We agree that there will be an effect on morale, yes.

Mr. Jean-Guy Soulière (Executive Director, Federal Superannuates National Association): Our role, of course, is to represent the views of pensioners and not of employees, but we do represent former employees of the public service, and they have daily contact with former colleagues in the public service, so we can give you the impression we get from our dealings with our members and with former employees. There is no question that this does not help, at all, the morale in the public service. And as I said, it certainly doesn't help the morale of the people we represent, and that is the pensioners.

Mr. John Williams: Last year the government put through a bill called Bill S-3, which dealt with supposed surpluses of pensions that are under federal regulation and required that if there was a significant surplus the employer had to seek the approval of two-thirds of the employees before they could just take the surplus. I'm wondering how you feel about the fact that the government has imposed significant conditions and involvement of the employees in disposing of surpluses on organizations under federal regulation, but at the same time we now find they're unilaterally acting, saying it's all theirs.

Mr. Rex Guy: Mr. Patterson will respond to that.

Mr. Keith Patterson (Deputy Executive Director, Research, Federal Superannuates National Association): Mr. Chairman, one of the positions we have put forward and made to the minister was that in fact the principles of the Pension Benefits Standards Act, to which you refer as Bill S-3, should be followed. That bill requires that where a pension plan is silent on how the surplus should be disposed of, the employer must negotiate with the employees and pensioners and must make a proposal, and requires 60% of the employees and 60% of employers to agree to that proposal. Should they not get that 60%, if it's between 50% and 60% on either, then they can go for a negotiated settlement. If they can't get that they have to make a new proposal.

We think it's only fair those conditions be imposed, because the superannuation acts meet exactly those conditions that, were this a plan in the private sector and subject to federal legislation, would be imposed.

Mr. John Williams: I think we should adjourn the meeting until after the vote, Mr. Chairman.

The Chairman: Okay. If I read the table correctly, we're going to take a little break. I've asked the witnesses if they would be willing to wait for us, and they will.

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We have no control over these delays sometimes. We're not going to adjourn, we'll just recess for the time it takes for us to go to vote. We're back here as soon as we can. Thank you.

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The Chairman: Thanks to our witnesses for patiently waiting for us. We're going to start out where we left off. By my calculation—

Mr. Tony Ianno: I just want to mention to the people who were very patient that when I asked what was the vote, it was so that the Reform Party can—

The Chairman: Was this a point of order?

Mr. Tony Ianno: No, it was just a point of information.

Mr. John Williams: I think, Mr. Chairman, that he's trying to get something on the record. It has nothing to do with—

Mr. Tony Ianno: It's not a point of order; it's just a point.

Mr. John Williams: Well, I didn't think it was more important than this issue, so I thought—

The Chairman: Okay. Thank you.

Mr. John Williams: A vote is a vote, Mr. Chairman, and that's the important thing.

The Chairman: We're going to start where we left off. By my calculation, Mr. Williams, you have five minutes to go, and then we'll keep going from there.

Mr. John Williams: Okay.

The Chairman: Were you finishing answering a question?

Mr. Rex Guy: We have a point of clarification.

Mr. Keith Patterson: I misspoke when I talked about the Pension Benefits Standards Act. What is required for agreement is 60% of employees and 60% of pensioners. I misspoke when I said employers.

Mr. John Williams: Okay. Well, we'll note that correction, Mr. Chair.

One of the other big issues in the bill is privatization of the fund. Right now there's about $95 billion in the fund that is required to cover off the actuarial assessment of what it's going to cost to run the plan from here on in, plus the $30 billion that's the surplus, which is part of the debate.

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Over the next number of years we're going to put $100 billion into the private capital markets. The return on the plan will be subject to what the investment managers can earn in the private sector capital markets. Are you comfortable with that? Do you feel that because the return is now subject to the risk of the free markets, you will now be potentially carrying some of the risk, as retirees and employees?

Mr. Keith Patterson: The bill makes it quite clear, and the minister made it quite clear, there will be no reduction in benefits that are now in pay or anticipated in the future.

However, on the question of risk of investment, one ought to understand that putting the plan into the private market increases the risk of the fund, but there is also risk associated with the existing superannuation account. It's in 20-year bonds, and as far as a pension plan is concerned it could be fairly risky, because if inflation were to increase, the rates of return would not automatically increase.

So it's not a matter that we're going from a risk-free plan to a risky plan. There is a change in the risk profile, but we believe there is also an increase in the expected rate of return. Our association is comfortable with that.

Mr. John Williams: You mentioned in your opening statement, Mr. Guy, that you suffered a 5% loss in benefits in 1983, and I think you said there was a 1.5% loss in 1984. Can you explain what those losses were and how they came to be?

Mr. Keith Patterson: This was with the restraint act of 1982. The Supplementary Retirement Benefits Act required that indexation according to the consumer price index would be added to pensions each year.

Let me just give you an example. Suppose you had a pension of $10,000 at that time and inflation was 11%. The government only gave 5%, so that meant you lost 6%. The next year inflation was 6.5%, and they only gave you 5%. Those two together add up to about 7%.

Mr. John Williams: Did the government act unilaterally to impose that on you?

Mr. Keith Patterson: Yes, it did.

Mr. John Williams: So you're saying the cost of the plan was going through the roof. They imposed a lesser benefit upon you, therefore you assumed part of the risk. You ended up having to pay for something because the government said it was getting far too costly.

Mr. Keith Patterson: I'm not sure they felt the plan was getting far too costly. It was a question of imposing a restraint on as wide a base across the economy as they could.

Mr. John Williams: Including the pensioners.

Mr. Keith Patterson: Yes, and that has carried on each and every year—7% less.

Mr. John Williams: They've never made it up to you.

Mr. Keith Patterson: They've never made it up.

Mr. John Williams: Thank you, Mr. Chair.

The Chairman: Thank you, Mr. Williams.

I have Pierrette on my list next.

[Translation]

Ms. Pierrette Venne (Saint-Bruno—Saint-Hubert, BQ): Earlier on, you mentioned advisory committees that could deal with appeals. I would like you to clarify your thoughts, and give me some examples so that I can get a better grasp of what you are referring to.

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[English]

Mr. Allan McLellan (Member of the Board, Federal Superannuates National Association): I'm aware of an instance where several members of the Canadian Armed Forces, because of what I believe to have been poorly worded legislation, suffered considerable financial losses in their pensions. Because of the absence of any formal appeal process, they still remain in a position where they are being treated unjustly.

I don't believe that would have been the case had there been a formal appeal process. That is what this is all about. We want a formal appeal process, and we think the people who are best suited to make decisions on the appeals are in some organization that represents all the stakeholders in the pension plan; that is, currently serving contributors, the employer, and also retirees. That is why we said there should be provision in the act to empower the advisory committees to consider and resolve any appeals.

Mr. Claude Edwards (Member of the Board, Federal Superannuates National Association): I might add a comment to that, if I may, to help clarify it for the member.

At the present time, a situation can arise where a person considers himself or herself to have an entitlement to a survivor's pension, and there is no provision to appeal a decision that denies that survivor's benefit. The person, for instance, may not have any evidence of living together for x number of years in a conjugal relationship as man or wife, spouse, because this applies really in both cases.

That has to be proven to the satisfaction of the Treasury Board or the minister. The person may have difficulty providing that proof. In some situations, the other spouse has died and is not able to present factual information or sufficient factual information that would make it a clear-cut case.

The Treasury Board representatives do their best to gather the information and evidence submitted by the claimant. It goes to the Treasury Board ministers and they make a decision. The claimant has no means of appearing before that board, being represented before that board, or appealing the decision of the ministers who hear that case and present the president of the Treasury Board's decision to that claimant.

It's really a denial of a fundamental appeal process, where all the evidence can be heard and debated, and you can have somebody acting on behalf of that person. We can do our best to make sure the necessary information is put before the minister by the Treasury Board staff. I'm not denying they put it forward, but we don't know. We don't have an opportunity and the appellants themselves don't have an opportunity to consider that information and have someone act in a representative capacity in putting that view forward. There is no process of appealing a decision.

[Translation]

Ms. Pierrette Venne: You also mentioned provisions that would enable the government to decide to reduce employees' premiums. I would like you to further explain the impact of those provisions. I was under the impression that pensioners would be compensated since premiums would go down for members of the workforce. Do you have any specific recommendations on that?

Mr. Jean-Guy Soulière: We would like the Act to give the minister permission to grant premium relief to employees in certain circumstances, if there is a surplus. We are not saying that people who have contributed to the plan in the past would be entitled to some compensation or to premium relief. Pensioners are no longer paying premiums; they are receiving a pension.

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If the bill empowers the minister to grant benefits to employees who pay premiums, some of the provisions should require the minister to offer compensation or equal benefits to retired employees who contributed to creating the surplus. That is a safeguard for pensioners.

Ms. Pierrette Venne: Thank you, Mr. Chairman.

[English]

The Chairman: Pat Martin please.

Mr. Pat Martin (Winnipeg Centre, NDP): Thank you very much, Mr. Chair.

Thank you for the excellent briefing. I really feel, as much as you do, the minister must sense momentum is building up steam in opposition to this bill. I sense it right around the country. I sense it in groups like yours, doing all you can to mobilize and get your membership activated in opposition to this bill, for the reasons you outlined.

I'd like to focus my questions for you mostly on the pension and the division of the pension surplus. In your estimation, who owns the surplus? It seems like a simple question; it's actually a very complex point that we have to wrestle with here.

Mr. Keith Patterson: The question of ownership is really a difficult one, and I personally don't like to use the term “ownership”. I like to talk about who has the right to do certain things. Under the current superannuation act, nobody has the right to do anything with the surplus. Under Bill C-78, the government is given the exclusive right to deal with the surplus as it wishes. We believe that is wrong. We believe there is a partnership with employees that has been in place for a long time.

We also believe the reasons given by the government for their claim to the surplus is fundamentally wrong. The evidence I have seen would indicate that the government did not bear the risk it claims it did. Throughout the 1980s, for example, there was practically no risk borne by the government on the superannuation plans. In the presentation we will give to you, we will have more detail on that.

I say that because there are a number of things in the way contributions were calculated and the way actuarial evaluations were done that meant, in the 1980s and until 1982, the government actually calculated the total compensation rate, which was part of total compensation, but that total contribution rate was perhaps 2.5 percentage points too high. Consequently there was an unneeded build-up of funds, and that is a measure of the excess contributions. I would say, even in the public service superannuation plan, that has contributed to close to $10 billion of the surplus. We think a goodly amount of that should be returned to members.

Mr. Pat Martin: When you talk about the long-standing partnership or the agreement that existed, I don't know if you'll remember this far back, but I believe in 1964 the government wanted to take the pension out of the collective bargaining process. They didn't want pensions at the bargaining table. At that time, from my information, Walter Gordon and the government, including our current Prime Minister, promised they would never unilaterally alter the terms and conditions of the pension plan, if all the parties agreed to keep it separate. Do you have recollection of that, or do you know what form that agreement might have taken?

Mr. Claude Edwards: I can probably answer, at least in part, some of the concerns you have on that. I was very heavily involved in the development of the collective bargaining process in the public service at that stage. I was president of the Civil Service Federation when it first came in, and I was the first president of the Public Service Alliance. The bill really was what started up the alliance and started it into collective bargaining.

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Mr. Pat Martin: Certainly.

Mr. Claude Edwards: So I was heavily involved in the committee hearings long before that.

The difficulty in moving into collective bargaining of the pension plan was that for most of the public service, it was one pension plan covering people, whether they were organized employees represented in the bargaining process, or whether they were unorganized employees, or whether they were management. The pension plan was the same, and there was a recognition by the people concerned that to try to move into negotiation of anything as complex as the public service superannuation plan, even though the employees might organize and might be able to negotiate all other items or many other items, was an horrendous task.

The task we had at that stage was moving from as many as 1,200 different groups of people spread across the country, prevailing-rate employees, to 72 bargaining units. It was a mammoth task, and nobody wanted to take on the responsibility of dealing with the superannuation plan, because there was the recognition that it needed to be a uniform plan, covering at least the vast bulk of employees, and they didn't want to try to fracture it by getting in and leap-frogging or bombarding to try to obtain more, or something like that. That was the principal reason.

I can't vouch for the sanctity of any statements by government at that stage, although in my recollection there was certainly the implicit indication that they would not change the superannuation plan unilaterally, and that was really the quid pro quo for giving up the idea of bargaining.

Mr. Pat Martin: Yes. That's exactly what I was looking for. Thank you very much.

There's one last question I would ask, if I have one more minute, Mr. Chair.

The Chairman: Go ahead.

Mr. Pat Martin: What do you think a reasonable length of time would be to have these committee hearings, to allow the various groups across the country who have an interest in this issue an opportunity to at least come to this committee and have their voices heard, seeing as our voices have been shut off in the House of Commons due to closure? What would be your recommendation to this committee, if you were looking at a timeframe?

Mr. Rex Guy: Mr. Chairman, it's our consideration that it couldn't be done in under three months. Probably three to four months would be the period of time required.

Mr. Pat Martin: I agree, and we now have word that the Senate has reserved and booked or wants to get started on this on May 10. One week of committee hearings is all we're going to be allowed. I don't even know how groups from other provinces can mobilize to get here. Certainly our party is very critical of that, and I think this committee is going to be hearing that a great deal from the presenters.

How am I doing for time? I've never had such a luxury of time.

The Chairman: You have exactly two minutes, Pat. Go for it.

Mr. Pat Martin: It's remarkable. In all the other committees, the NDP gets only five minutes.

The Chairman: Next is Scott, Reg, and then Dave.

Mr. Pat Martin: Okay.

I come from the private sector. I was with the carpenters' union, which is a private sector pension plan. But even the people in the private sector community are very concerned at the possible precedent-setting implications of this bill, the broad, sweeping implications.

As pension experts, do you have any feelings about how this could spread into say even public sector or municipality pension plans, school divisions, cities, provinces? What do you see coming out of this?

Mr. Keith Patterson: The CLC had a representative at the seniors' summit by the name of Bob Baldwin, and he expressed to us his concern that in fact this set a very bad precedent. It would allow private sector employers to come to the government and lobby effectively for changes to pension legislation. Thinking people in private sector organizations such as the CLC will certainly be very concerned about this.

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For example, the moratorium regulation in Ontario, on the use by employers of the surplus unilaterally, is due to run out in another month or something like that. That is renewed year after year. A number of unions, and so on, in Ontario are quite concerned that the Ontario government is simply not going to renew that regulation. This is just another thing that's saying to the Government of Ontario, hey, yes, you're right if you don't renew that.

Mr. Pat Martin: And you can get away with it.

Mr. Keith Patterson: Yes.

The Chairman: Thank you, Pat.

Mr. Pat Martin: Thank you, Mr. Chair.

The Chairman: Scott. We'll have Reg and Dave after that.

Mr. Scott Brison (Kings—Hants, PC): Thank you, Mr. Chairman.

Thank you to the FSNA for your continued very effective and professional lobby on behalf of your members, the superannuates.

If we go back into the not-so-distant past, the FSNA was instrumental in effecting change in public policy and derailing the government's plans relative to the seniors benefit. It was the correct move of the government of the time to cease that initiative, and I would suggest that FSNA played a very important role as a lobby group in that decision.

I will also note that I have here not only the president of the FSNA, Rex Guy, but a constituent as well. So I am very pleased and honoured to have a constituent here, one of my bosses, who makes a hiring and firing decision every four years, which can certainly affect my pension.

I have significant concerns that I share with the FSNA in terms of the degree to which the government has failed to treat Parliament with the appropriate level of respect, both at the committee level and in the House, in terms of giving the parliamentarians an opportunity to really deal with this very important public policy issue with the level of detail and diligence that I think Canadians deserve. It was suggested by Mr. Guy that it would take three months to really delve into this appropriately. I think that's a reasonable estimate.

The other issue I have concerns about—and this was mentioned as well by Mr. Guy—is that the government is in a sense pitting the interests of one group against another. In this case, it is trying to pit the interests of the taxpayers in general, or at least publicly trying to create a perception that the superannuates are somehow benefiting undeservedly by these pensions.

I wasn't aware of the nature of the average of the pensions. In fact, these are not the stereotype that exists of the fat cat or the former bureaucrats collecting huge pensions; that's simply not accurate. Again, this contributes significantly to the obfuscation of the issue, and beyond that, the further degradation of the morale within the public service, which is at an all-time low.

I know the FSNA has been pushing for significant improvement or some improvements to survivor benefits. I'd be interested in knowing what the costs of those benefits would be.

For instance, the government is now preparing to take the $30 billion accumulated. It's theoretical, but it is still in a sense a surplus. Would that prevent in the future the improvements that are being sought by the FSNA? Is the removal of that $30 billion potentially going to eliminate an opportunity in the future for those benefits to be improved, as you are seeking?

Mr. Keith Patterson: Certainly we would like a number of improvements in benefits. Survivor benefits are one of those. In our document that we will be tabling with you in a few days, we will include those benefits and our estimates of what some of the costs are.

Certainly taking the surplus out of the superannuation plan makes it very difficult for the government to then go ahead and make any changes to benefits, because if it does make any changes to benefits and there is no surplus there, then it has to immediately kick more money into the fund to cover that. It could be $100 million; it could be $500 million. But once the money is gone, it's gone. And the next time you want to improve benefits, you have to have a budgeted expenditure item, whereas if you have the surplus in the funds, you don't have to do that.

• 1700

I think the important issue here is that most of the surpluses in private sector plans are used to increase benefits. That's one of the big issues in pension plans outside of the superannuation act, that when there are surpluses, it is an opportunity to increase benefits. It is an opportunity to say that the members have contributed this amount of money, more than they need; now we can make an improvement in benefits. There are plans all across the country that do that all the time, and we think this plan should be the same.

Mr. Scott Brison: That's part of the private sector initiatives that would improve pension benefits with the surplus, as opposed to removing the surplus. I think that's part of good human resource management and employee relations. That's the sort of thing the government should be seeking to improve—the abysmally low level of morale within the public service.

Were you aware of the changes in Bill C-78 to the requirement for parliamentary approval for any changes in the contribution rate? Currently, the government has to seek parliamentary approval for a change in the contribution rate. After this legislation, the President of the Treasury Board will be able to unilaterally change, within limits, the contribution rates.

I'd appreciate your feedback. I know you've expressed some concerns about the lack of parliamentary consultation in this process. I'd appreciate your concerns about the role of Parliament being further reduced in terms of the contribution rates.

Mr. Keith Patterson: Mr. Chairman, it's always a concern to us, as Canadian citizens, to see the role of Parliament being eroded. I think on this one, however, as a retirees' organization we would want to defer to our colleagues from the unions to really address that issue. Certainly if they feel comfortable with these proposals—and I'm sure they will address this in great length—then I think it would be somewhat presumptuous of us to come out and speak at any great length on that. So I think we will simply drop that one.

Mr. Scott Brison: With regard to the external investments, I'd appreciate your feedback in terms of the ability, post-Bill C-78, to invest the funds in the superannuation fund privately. I'd also like your feedback relative to the foreign content limit that the government—and I recognize that's through the Ministry of Finance... The foreign content limit, which forces 80% of the funds to be invested domestically, by some estimates ultimately reduces pension benefits by 3% to 4% because of forgone returns achievable through geographic diversification. I'd appreciate your feedback on those two issues.

Mr. Keith Patterson: Thank you. That is certainly an important issue. As an organization, we don't have a position on that. However, as an economist, what I can say is that it is certainly a concern to us that there is a restriction on all pension plans being able to invest outside of the country. Certainly we are now not in the same conditions we were in when it was first 10%. That was put in because the money would be required in Canada. However, with the internationalization of capital markets, that is no longer an issue. And certainly, as far as the pension plan itself is concerned—any pension plan, for that matter, whether it be RRSPs or whatever—I would personally say that restriction should be removed.

• 1705

Mr. Scott Brison: Mr. Chair, do I have one more question?

The Chairman: A very short one. Your time's up.

Mr. Scott Brison: Okay.

With the increased risk of external investment, do you feel that is yet another argument for maintaining the surplus within the pension plan—the fact that there will be not only higher rewards potentially, but commensurate with that higher risk? Do you feel it is maybe short-sighted for the government to be raiding the plan, given that increased risk?

Mr. Keith Patterson: There are two parts to the government use of the surplus. First of all, it's obligatory for the government to reduce the surplus if it is over 10%, as required under the Income Tax Act. It is permitted to be under 10%. And it would seem to me that to reduce the surplus below what is required by the Income Tax Act and not make improvements to the plan would certainly be increasing the riskiness of the plan and making it possible in the future for deficits to arise.

The Chairman: Thank you.

I have Reg Bélair, then Dave, then Joe.

Mr. Réginald Bélair (Timmins—James Bay, Lib.): Thank you, Mr. Chairman.

In the course of your presentation, as well as in answering questions, you've mentioned on many occasions that the bill per se is wrong. So for the benefit of the committee—and we need your advice—what would be right? It's always been negative... What are you proposing? Or maybe I should rephrase and ask the question, how should we dispose of the $30 billion surplus?

Mr. Jean-Guy Soulière: Well, in the technical papers that you're going to get... We didn't have a chance to produce all these things—we were called yesterday to appear today—so you will have to wait a few days until we provide you with answers.

But we have provided to the President of the Treasury Board a document that lists all of the benefit improvements that could be considered for pensioners, including what it would cost, and the utilization. This is a document we have that we will include in our...

I don't think our presentation was negative; it was very positive. All of these are recommendations to make it better. So that is a very constructive type of recommendation. It's nothing negative.

Of course we cannot be pleased and jump with joy and dance about the fact that $30 billion will be taken out of the pension or the surplus, but we gave four specific recommendations on how Bill C-78 could be improved. And that is not negative; that is very positive. I won't repeat them, but they're in the presentation, which you will get a copy of.

[Translation]

Mr. Réginald Bélair: Since my question is for Mr. Soulière, I will ask it in French.

You said that you hoped compensation would be offered, but you did not ever mention risk. It is all well and good to say that if you have contributed to an accumulated surplus, you should be offered compensation for your efforts, but if tomorrow morning the pension plan were to run a deficit, what would your association be prepared to do?

Mr. Jean-Guy Soulière: We have challenged the government to show us that there are risks. All of these alleged risks are one of the main arguments used by the President of Treasury Board to justify his right to the surplus. As we stated in our presentation, our research clearly shows that the government has never run a major risk.

Mr. Réginald Bélair: Do you know why, Mr. Soulière?

Mr. Jean-Guy Soulière: No, I do not. Tell me.

Mr. Réginald Bélair: Because the government contributed 70% of the pension plan and the legislation stipulates that if there is ever a deficit, the government shall absorb it.

• 1710

Mr. Jean-Guy Soulière: Yes, but that is only one argument. You are mixing everything together. If you are saying that the government is running a risk, you must be in a position to prove it, which you have not to date.

Mr. Réginald Bélair: It can happen.

Mr. Jean-Guy Soulière: But you are making projections. Our research has shown that the risks were minimal and that the deficit really has never reached $30 billion.

Mr. Réginald Bélair: I have one last question, Mr. Chairman. Does the presentation that you are currently preparing make reference to the national debt? Wouldn't it be a good idea to recommend that the $30 billion surplus be applied to reducing the national debt? Since pensioners, as all other Canadians, contributed to that debt, shouldn't you make your contribution to reducing it?

Mr. Jean-Guy Soulière: Have you asked any other group to give you $30 billion?

Mr. Réginald Bélair: No, all of the cuts that have been made—

Mr. Jean-Guy Soulière: You would go as far as to ask pensioners who are receiving a pension that puts them below the poverty line and widowed pensioners who receive $9,000 a year to contribute to resolving the problem of the national debt? That doesn't make any sense.

[English]

The Chairman: Thank you, Reg.

I have Dave Chatters next, then Joe Jordan.

Mr. David Chatters: Thank you, Mr. Chairman.

There are a couple of things I find curious about this, not the least of which is the lack of government participation in questions. But that being as it may, I have to ask you if in your mind you have any understanding of why the urgency in passing this particular bill. Is there something you're aware of that causes great urgency to pass this bill before the end of June?

I'll give you all the questions and then whoever wants to can comment on them.

The other thing I find curious in these particular pension plans we're talking about in this bill is to restrict participation on the pension investment board, not allowing anybody who's participating in the plan to sit on that pension investment board. Yet the same thing doesn't apply to the Canada Pension Plan investment board, which covers other Canadians, or in particular the MP pension plan, which is the richest pension plan in the country.

Lastly, I'd like somebody to comment on how they could see this whole notion of extending survivor benefits based on a private sexual relationship. How in the world will the plan determine whether a relationship is conjugal or it isn't? How will you exclude other dependent relationships and simply allow those survivor benefits based on a sexual relationship?

Mr. Keith Patterson: Mr. Chairman, if I may, I will answer these three questions.

On the question of urgency, I'm afraid the honourable members on the other side here probably know more about that than I do. We have not been able to figure out why there is a great urgency ourselves, and it has been very puzzling to us. Indeed, if some member here does find out what the urgency is, we would like to know.

I might say that on the restriction of membership on the board, we do recognize that the restricting of membership to those people who might at some time be a pensioner or be on the government side or whatever is somewhat of a restriction. That restriction of course could not be imposed on the Canada Pension Plan or we'd have to have all our managers come from New York. There is a certain logic here, I suppose, on the part of the drafters of this plan. I don't entirely believe that it's necessary, however, to do that.

• 1715

On the question of same-sex relationships, certainly we don't have a position on that in our association. Certainly the cost of that is not very large. Again, as to how they're going to do that, we were going to have to look at the regulations when they came out, because those regulations will apply equally to heterosexual as well as homosexual relationships. We will have to see the regulations before we can make any comment on those.

Mr. David Chatters: Yes. Thank you.

The Chairman: Okay for now, Dave? Thank you.

We have Joe Jordan, then Tony Ianno.

Mr. Joe Jordan (Leeds—Grenville, Lib.): I have a couple of questions. It strikes me as strange that we have a... If you look at pension plans, there are generally two categories: you have a fixed benefit plan like this is, and then you have pensions that are based on how prudently the moneys are invested. So I get confused when I hear talk of investment strategies for the money, because at the end of the day the government has agreed, through consultation with the union, to meet the obligations of the terms and conditions of this pension plan. So I'm not sure I understand why we're going down that road.

The government has to be responsible for decisions it makes, but the system was never intended to be a plan where there's any risk assumed by the pensioners and therefore the rewards of investment strategies would then be spread out among the members. I'm wondering if there's been any research done in terms of the demographics. What is the long-term unfunded liability that this pension plan represents? I've heard terms up to $120 billion. I'm wondering if there have been any calculations. We know we have an aging population and every year we have fewer people working to support in terms of the retirement pool. What is the unfunded liability? Do you have any calculations on that?

Mr. Keith Patterson: Mr. Chairman, again, at this time there is no unfunded liability in this plan.

Mr. Joe Jordan: I'm talking over time. The whole idea of a pension is as soon as somebody becomes pensionable as a government employee, we're assuming there's a liability for that pension pay-out for the reasonable life expectancy. There must be some calculations on this.

Mr. Keith Patterson: Yes, and the chief actuary does that every three years.

Mr. Joe Jordan: Okay.

Mr. Keith Patterson: His conclusion is that there is, in the total pension plan, something like $30 billion surplus. So there's no unfunded liability. What this means is that given the employment credits to date, there is $30 billion more than necessary to pay for all of the credits today.

Mr. Joe Jordan: Today, but pensions are not a static thing. If we look 20 years down the road, are you telling me this pension plan right now has a $30 billion surplus and based on hiring patterns it's going to be sustainable to infinity?

Mr. Keith Patterson: Of course, and on contributions at the present time and on interest earnings. In fact if you leave the $30 billion in now and go 20 years down the road, you'll probably have a $300 billion surplus. It's just going to grow, and it does grow. The point is that what is in the plan now is there for the payment of benefits that have accrued from service to date. It's not in for the people who are going to be in the plan tomorrow or the next year. That money comes from the contributions they will pay into the plan—

Mr. Joe Jordan: Sure, but I don't think you can separate them. We're talking about an ongoing pension plan.

Mr. Keith Patterson: Of course.

Mr. Joe Jordan: When it's in deficit, the government historically... I have a number of $8.4 billion in the last 17 years that the government has had to contribute over and above the 70%. Maybe you take exception to these figures, and I certainly will give you that opportunity, but what I'm saying is that I don't think you can have your cake and eat it too, in the sense that you can share in the benefits but stick someone else with the risk. That's the perception I have. I think if the pay-ins and the pay-outs are determined jointly by labour and management, the government then underwrites those and guarantees those. I think that's where it stops, does it not? What have I missed here?

• 1720

Mr. Jean-Guy Soulière: You've missed what we said in our position. We're not suggesting that the $30 billion go to pensioners. Our position is quite clear that the $30 billion should be shared among the stakeholders. There has to be some discussion as to how much would go to pensioners' benefits, how much would remain for employees in the new plan, and how much the government would take. We're talking about sharing the surplus. I want to make it clear that this association is not suggesting by any means that the $30 billion surplus should go to pensioners.

Mr. Joe Jordan: No, but I'm wondering what's the rationale for the government unilaterally deciding to exceed what we agreed to. That's what I'm asking.

Mr. Keith Patterson: Again, Mr. Chairman, I think the rationale for our argument is that we should be treated in the same way the government says other employers should treat their employees and their retirees. They have made that judgment. They made it in Bill S-3. They have made that very explicit. What we're saying is why don't you do the same thing for this plan?

The Chairman: Are you finished, Joe?

Mr. Joe Jordan: Yes.

The Chairman: Thank you.

Next is Tony and then I have Carmen. Tony, you're up.

Mr. Tony Ianno: Thank you very much for coming and presenting to us on such short notice. I know that you're well aware of all the issues. You've been dealing with them for many years.

I have several questions. There was a legislative plan, as we're aware. When there was a deficit, the government put in the matching funds and of course extra money to make sure it was covered. When a surplus began in 1992, the government wasn't able to take its money out from that process. Is that correct?

Mr. Keith Patterson: Yes.

Mr. Tony Ianno: The way the law is written, they had to continue matching, no matter what. Is that correct?

Mr. Keith Patterson: They didn't have to continue matching. They had to contribute to the plan what was required at that time to fund current benefits on a current period basis, yes.

Mr. Tony Ianno: Right. So regardless of how much surplus there was, they had to continue putting in what the current needs were.

Mr. Keith Patterson: Yes.

Mr. Tony Ianno: It didn't matter that there was a surplus. They just had to continue contributing what the current needs were, regardless of what the surplus was.

Mr. Keith Patterson: Yes.

Mr. Tony Ianno: Okay.

With regard to the pension plan government employees had and have in terms of age 55, is that normal practice in the private sector?

Mr. Keith Patterson: This is not normal practice in the private sector. I agree with that. However, I think that is not the issue. What I mean is—

Mr. Tony Ianno: No, I realize that.

Mr. Keith Patterson: Let me continue, please. The benefits under this plan were calculated in the cost of the plan, which were part of the total contributions. Part of those costs were the early retirement benefits that were available at age 55 and so on. So that's—

Mr. Tony Ianno: Is the 7.5% that is contributed by the employees standard in the private sector, or is that below or above—

Mr. Keith Patterson: Oh, indeed, sir, that is far, far above what it is in the private sector. In the private sector most pension plans involve hardly any contributions from the employees. That's all paid for by the employers.

Even in those plans, were they under federal legislation, the Pension Benefits Standards Act would require that were a surplus to develop, then the rules under that act would apply.

Mr. Tony Ianno: I see.

Since you brought up the Pension Benefits Standards Act—and I'd like to make sure we're comparing apples to apples—I gather that it doesn't apply to the Public Service Superannuation Act because it was established by an act of Parliament, and the Pension Benefits Standards Act is necessary as a means to govern the private pension plans because these plans are not otherwise protected by Parliament. Is that correct?

• 1725

Mr. Keith Patterson: They're not otherwise protected by Parliament in certain respects. They are protected by certain other acts, such as provincial trustee acts and so on. In fact, if you take a look at the fights over surpluses that go on in the courts, the big question normally is was a trust created, was there implicit trust, and so on. So there are other acts. But, yes, you are correct, they were instituted to... and provincial acts as well.

Mr. Tony Ianno: For the other one you're referring to, is it two-thirds they're able to take from—

Mr. Keith Patterson: It's 60%. I'd like to add that when there is no provision in a pension plan to say how the surplus is to be disposed of, then the act requires that the employer make a proposal, and it has to be accepted by 60% of employees and 60% of retirees.

Mr. Tony Ianno: If your membership believes the government is fundamentally wrong, using your words, and that it's not an ownership but a right, why would you state that you shouldn't take the government to court? It seems to me that if it involves $30 billion, your membership would consider that. I'm trying to figure that out.

Mr. Keith Patterson: We don't dispute the fact that Parliament has the right to amend that act at any time, as it has the right to amend any other act it passes. We don't dispute that whatsoever. In fact, because it is an act of Parliament and because the government can amend that act, providing the act is in accordance with the Constitution and certain other acts that generally apply, it's perfectly legal for the government to do whatever it wants. What we are saying is that this is not an issue of legal niceties. This is an issue of what is just, what is right, and what is fair.

The issue is that there was a partnership between the employees and the employer, and the trouble is that this act starts viewing the government as government. It is not viewing the government as employer. When discussing an act of this nature and the pension plan, we must always separate the function of government as government and the function of government as employer. The function of government as employer means that they should act in the same way as any other employer, and that is all we're asking.

Mr. Tony Ianno: So when it's legislated, as opposed to not legislated, should it be the same or not the same?

Mr. Keith Patterson: The fundamental principle should be the same, and the government has stated in the Pension Benefits Standards Act what those fundamental principles are.

Mr. Tony Ianno: If this bill passes and the investment fund is created, would you recommend to the unions that they share in the risk of the new plan? Would you recommend that?

Mr. Keith Patterson: I was never aware that the unions did not want to share the risk. They have never said that they didn't want to share risk.

Mr. Tony Ianno: So you would recommend that, because you think it's a good idea.

Mr. Keith Patterson: It would be presumptuous of us to make a recommendation as to what risks and costs they should bear. I think they are quite capable of doing that on their own. To my knowledge, they have never said that they are unwilling to share risk.

Mr. Tony Ianno: In answer to Mr. Brison you gave an opinion on something that wasn't within your purview, and you decided on the 20%. That had nothing to do with your pension, but you still had an opinion. So I'm just wondering if you're consistent in giving opinions when it's not within your purview. I'm asking you if you would give your opinion as to what you would recommend to the unions for the information of future members who might join your association.

Mr. Keith Patterson: Again, Mr. Chairman, if I may go on with this, the honourable member is trying to put me in a box.

The Chairman: Let Mr. Patterson finish.

Mr. Tony Ianno: I don't want to put you in a box.

Mr. Scott Brison: Mr. Chair, with respect, I asked Mr. Patterson an economics question, and he answered as an economist. This is not a question of economics.

The Chairman: Thank you, Scott.

Mr. Scott Brison: It's a question of legal negotiation.

The Chairman: Tony, let that be—

Mr. Keith Patterson: Again, Mr. Chairman—

The Chairman: We'll go back to you, Mr. Patterson, and then we're going to move on to Carmen for the last question.

Mr. Keith Patterson: I'll try to be brief, Mr. Chairman.

The issue we are talking about is first of all the contribution rates, which fall under the purview of unions. They have representatives, and they will be discussing that issue. The issue of the investment of the plan will involve our members in future years, and I think we have taken a very just and correct position on that.

• 1730

The Chairman: Carmen, last word to you.

Mr. Carmen Provenzano (Sault Ste. Marie, Lib.): To Mr. Guy or to Mr. Patterson or any one of the witnesses here, I think this has been a fairly full discussion. I'm just trying to get my mind around some of the issues that have been raised.

The question of ownership, at least in terms of your association, is something I would like to understand. What I'd like to understand is your understanding of ownership. When we talk about ownership, is there any dispute or any real question in your mind that your association accepts that the government owns this surplus?

Mr. Keith Patterson: Again, discussing the surplus in terms of ownership, Mr. Chairman, I think deflects from the subject at hand, with all due respect to the honourable gentleman.

Mr. Carmen Provenzano: I'd like my question answered on ownership.

Mr. Keith Patterson: I'm trying to answer it, sir.

Mr. Carmen Provenzano: Well, you're trying, but you're not.

Mr. Keith Patterson: Let me try, please.

The question as I understand it, in terms of ownership, is that it is really an undefined issue. Nowhere in the Pension Benefits Standards Act, nowhere in the superannuation acts, nowhere in Bill C-78 does the word “ownership” arise. I think it is completely spurious to discuss matters of ownership, which is a legal concept. You know, I own my house, sure, and the government can come in any day they want to and say they're going to take it.

The question is not ownership. The question is who has rights, what is just and fair. If the government wants to write a bill and say they own the surplus, they have the right to do that. There's no question about that. But I think that whole question is not the issue. The issue is who has the right. If you look at legal decisions, if you look at other acts, the act is always in terms of who has the right, because once you get yourself into the box of ownership, you get yourself into a box and you can't get out.

Mr. Carmen Provenzano: Am I wrong to raise the question of ownership?

Mr. Keith Patterson: You're certainly not wrong at all. It's certainly something that in the minds of a lot of people is very strong. But I don't believe it contributes to the debate.

Mr. Carmen Provenzano: Are you saying, Mr. Patterson, that the question of ownership is so irrelevant to this debate that it should never even come on the table for discussion?

Mr. Keith Patterson: What I'm saying, sir, is that the question of ownership is not the issue.

Mr. Carmen Provenzano: It isn't the issue.

Mr. Keith Patterson: No, it's not the issue, sir.

Mr. Carmen Provenzano: Would you agree with me, Mr. Patterson, that your association has had ample legal advice that if it were to litigate this matter on the question of ownership it would lose? Isn't that a fact?

Mr. Keith Patterson: Our legal advice did not mention the term “ownership”. Our legal advice mentioned the question of who has the right to do what. The question of ownership was not addressed by our legal advice.

Mr. Carmen Provenzano: All right. Your website is HTTP://www.fsna.com/engdoc/2.htm?

Mr. Keith Patterson: I understand what you're going to ask me, sir. The question of ownership—

Mr. Carmen Provenzano: Mr. Chairman, a point of order.

The Chairman: Mr. Patterson, let Mr. Provenzano ask the question.

Mr. Keith Patterson: I'm sorry. I apologize.

Mr. Carmen Provenzano: I just want to get something clear in my mind. This is a news flash dated March 1999 put out by the Federal Superannuates National Association. Mr. Patterson, is that your association?

Mr. Keith Patterson: Yes, sir, it is.

Mr. Carmen Provenzano: And this news flash is signed by Rex G. Guy, national president. I believe that's you, Mr. Guy.

Mr. Rex Guy: That's correct.

Mr. Carmen Provenzano: There's a paragraph on the first page of this news flash that reads as follows:

FSNA believes that forcing a decision at the Supreme Court level on “ownership” of the surplus would inevitably lead the discussion away from the question of fairness and equity. FSNA has consulted independent professional and legal experts in the pension field and has been advised that, on the basis of current legal jurisprudence, the employer can decide how to dispose of the surplus. However, it should also be noted that, under the current legislation, the employer would be required to make up any shortfalls were the plan in a deficit position. Even in a deficit situation, the Government would not be able to reduce any of the benefits to pensioners.

• 1735

Mr. Patterson, you're telling me that my question and my focus on ownership is irrelevant, but in a news flash put out by your association on March 9, that very question of ownership was discussed. It's stated here that you don't want to talk about ownership because it leads away from the discussion on fairness and equity. So what are you telling me?

Mr. Keith Patterson: That's exactly my point, sir. We don't believe that the question of ownership... This is on our website. This is for our normal membership, who understand in terms of ownership. They don't understand the legal implications of all these terms. Consequently, on that website the term “ownership” was used. I believe on that statement, sir, the term “ownership” was put in quotation marks.

We have no question about the legality of what the government is doing at this point in time. What we are arguing, sir, is that this is a decision that should be made on questions of fairness, on questions of equity, on questions of what members have contributed and so on.

The Chairman: Carmen.

Mr. Carmen Provenzano: Do you want me to terminate my line of questioning?

The Chairman: No, go ahead.

Mr. Carmen Provenzano: Mr. Patterson, if I have $10 and I'm supposed to own it, what's unfair about me not sharing it with you? If I own it, doesn't ownership accord me the rights to do with that whatever I desire to do with it? Why should the question of fairness even enter the picture, once ownership has been determined?

Mr. Keith Patterson: If I may respond to that, sir, we have financial institutions across the country that own billions and billions of dollars of assets. Those financial institutions own those assets in the legal sense. They are not permitted to do anything they want to do with them. They have liabilities to their depositors and to others. The government continually makes rules and regulations and laws on what people can do with what they own.

Mr. Carmen Provenzano: All right. In terms of your kick at the cat as far as deciding what to do with this so-called surplus, the pension reform committee had representations from your group, didn't it?

Mr. Keith Patterson: Yes, it did, sir.

Mr. Carmen Provenzano: And it met for months.

Mr. Keith Patterson: Yes, sir.

Mr. Carmen Provenzano: And what was the result of those meetings?

Mr. Keith Patterson: The result of those meetings, sir, was that they could not come to an agreement.

The Chairman: Thank you, Carmen.

Mr. Carmen Provenzano: A last question.

The Chairman: Okay.

Mr. Carmen Provenzano: I'm referring to that same news flash. In the last paragraph it says:

Finally, it is very important to remember that your benefits as a pensioner, including full indexation, are not being threatened and regardless of the finally approved changes to the legislation, the Government has guaranteed that your benefits will not be negatively affected.

Is that statement true?

Mr. Keith Patterson: That is absolutely correct, sir.

Mr. Carmen Provenzano: Is it true today?

Mr. Keith Patterson: It is true today, sir.

Mr. Carmen Provenzano: Thank you.

Mr. Keith Patterson: We expect it to be true tomorrow.

The Chairman: Thank you.

On behalf of all members, we would like to extend our appreciation to the FSNA for their appearance today in helping us to begin our study of Bill C-78.

With that, I just want to remind members that we have hopefully a short business meeting when we adjourn. We're going to go in camera for a business meeting right after we adjourn.

Thank you all.

We're adjourned.

[Editor's Note: Proceedings continue in camera]