Today’s Ottawa Citizen: Ontario makes us all pay for GM pensions.
Ontario taxpayers are funding the bailout of GM’s pension to the tune of $3.5 billion. A pension in which the beneficiaries contributed zero. Nadda. Squat.
This is the same Dalton McGuinty who went along with Jim Flaherty’s income trust tax, that was based on a total fabricated lie about tax leakage. He bails out GM pension beneficiaries who have contributed none of their own money, with taxpayers money, and sticks income trusts investors with a loss of $35 billion, 40% of whom reside in Ontario and whose savings were the result of years of working, scrimping and saving prudently for retirement. Where is the justice in any of that? Where is the logic in any of that?
This is the same Dalton McGuinty who drives with one foot on the gas pedal by praising Flaherty’s Home Renovation Tax Credit as a stimulus measure, as it gives a 15% rebate on up to $10,000 of home renovation expenditures over the next 12 months and then turns around and implements a permanent 13% tax on everything in the middle of a recession in the from of his (by definition) non-stimulative HST, in order to shift $2 billion of corporate tax burden per annum onto the backs of Ontario consumers who are already way too over taxes.
If Dalton McGuinty were a car, he would be a first generation Corvair.... Unsafe at any speed
Ontario makes us all pay for GM pensions
By Randall Denley,
The Ottawa Citizen
June 7, 2009
History will almost certainly show Canada's $10.6-billion bailout of a mediocre American auto maker to be disastrously wrong-headed, but it's Ontario's rescue of GM pensioners that is the most offensive part.
The province has reluctantly conceded that most of its $3.5-billion contribution to the bailout will be used to boost GM's undernourished pension fund. In doing that, Premier Dalton McGuinty is sustaining auto workers' platinum pensions at the expense of Ontarians who have no company pension at all. That's just wrong.
It's not like the premier doesn't know it, either. Back in April, he said: "We need to be fair to all Ontario seniors and if we look to those without pensions to restore vitality to pensions for those who benefit from those pensions, I don't think that's fair."
An awkward sentence, but you know what he meant.
GM management and employees agreed to rates of pay, pensions and benefits that the company has subsequently been unable to support. That shouldn't be the taxpayers' problem.
Some progress has been made in paring back the pay and benefits of current workers as part of the bailout deal, but not much has been done on the pension side. GM pensioners will see no cost-of-living increase until 2015.
Big deal. Most private-sector pensions have no cost-of-living increases and nearly two-thirds of Canadians don't even have a company pension. Retired GM workers will still get benefits better than those received by most people who are still working.
Even an underfunded GM plan would have given its members more than the nothing that two-thirds of Ontarians get. The GM pension plan is only funded to cover 39 per cent of its obligations, so retirees faced a 61-per-cent pension benefit reduction.
The problem goes back to 1992, when then-premier Bob Rae agreed to let GM underfund its pension plan to help the automaker in that recession. It was a bad move that has come back to bite Ontario taxpayers in spectacular fashion.
In theory, the taxpayers' liability should have been limited to the amount of money in a provincial pension benefit guarantee fund. Back when he was thinking straight, McGuinty refused to top up that fund. Instead, he has sent a cheque to GM directly.
To be fair, McGuinty is carrying the can on this, no doubt as part of the price of the federal largesse. Money from both governments will go into one leaky bucket, so it's a bit of a fiction to say that the federal government hasn't bailed out the pensioners.
The ridiculous bailout for GM pensioners highlights the mess our pension system is in.
We have three classes of citizens.
At the bottom are people who have no access to company pensions. At best, they will qualify for the lordly $10,905 the Canada Pension Plan provides.
Then there are those with private-sector company pension plans, but they must still hope that their employer doesn't go broke. If it does, decades of savings can be wiped out.
At the top of the heap are those with public-sector pensions that rise every year with the rate of inflation. Their payout is guaranteed by government.
Both the federal and provincial governments are busy studying and contemplating what to do about pensions. Last fall, Ontario received the report of an expert commission that had spent two years on the problem. The province has said it will act on one key recommendation, to create a self-sustaining fund to partly cover future pension shortfalls.
That's a start, but these other pensioners will never get the sweetheart deal the GM people got.
It's not as if Ontario can afford it, either. The $3.5-billion GM gift helped drive this year's provincial deficit to $18.5 billion and contributed to a downgrade in the province's credit rating.
You can bet that governments will take their own sweet time figuring out how to fix pensions, but it doesn't have to be complicated.
The underlying problem is that the CPP doesn't pay anything like enough to actually live on. Old Age Security and Guaranteed Income Supplement payments help, but the pension itself is pathetic.
Business, labour and academic leaders have all suggested that the CPP be changed to allow people to pay higher premiums and receive higher benefits. This wouldn't actually cost the government anything. What's the holdup?
GM and its employees have been living in a fantasy world for years, looking forward to rich pensions but not putting aside the money for them.
Now Ontarians are getting the bill. It's about time the rest of us suckers got an even break.
Contact Randall Denley at 613-596-3756 or by e-mail, email@example.com
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Sunday, June 7, 2009
Posted by Fillibluster at 9:28 AM