February 14, 2013 - No. 18
Hands Off Pensions and Benefits
Supreme Court Legalizes Government
Expropriation Without Compensation of Federal Public Service Pension
Pensions and Benefits
• Supreme Court Legalizes Government
Expropriation Without Compensation of Federal Public Service Pension
• Ontario Government Unilaterally Freezes
Contributions to Teachers' Pension Plan
Air Canada Found
Guilty of Misconduct in Aveos Case
• Quebec Superior Court Judge Rules Air Canada
Violates Law - New Horizons
Opposition to Canada
• Windsor Rally Opposes Closure of Local Post
Hands Off Pensions and Benefits
Supreme Court Legalizes Government Expropriation
without Compensation of Federal Public Service Pension Funds
Workers across the country have denounced the Supreme
Court's February 1 decision sanctioning the theft of workers' pensions
in the Indalex Ltd. bankruptcy fraud. This decision confirms that
pensioners should be pushed to the back of the line of creditors in Companies'
Arrangement Act (CCAA) bankruptcy proceedings.
the second decision in just over a month in which the grandees of the
Supreme Court have given their legal blessing to the looting of
workers' pension plans in both the private and public sectors.
On December 19, 2012 the
Court made a decision upholding the theft of $28 billion from the
pension plans of federal public sector workers in 1999 by the
Chretien-Martin government. The unions and associations representing
most federal public sector workers and personnel in the RCMP and armed
forces have been fighting this case for 13 years. They presented
evidence that $28 billion had been improperly taken out of their
pension plans by way of fraudulent government accounting. The
government withdrew pension contributions deemed "surplus" and gave
itself contribution holidays amounting to $28 billion in losses for the
Federal Public Service Pension Funds.
Legislation passed in 1999 ended the payment of public
service pensions from the superannuation account and established
separate public service pension funds. During this "reform," billions
in employee and government contributions were declared surplus and
grabbed by the government. Looting the public service pension plans was
part of the anti-social offensive of the Chretien-Martin government
carried out in the name of deficit reduction. It included changing
Employment Insurance (EI) in a way that let the government steal $54
billion from EI funds.
In their decision, the Supreme Court justices declared
that the pension contributions were merely legislated records and do
not contain any real assets. Therefore, the Court says, "Plan members
have no equitable interest in the surpluses in the superannuation
accounts." The justices excused the crime of stealing the surplus,
which would have gone to retirees in pension benefits, because they
could not find criminal intent in the 1999 legislation. The decision
states, "Parliament did not intend any compensation to be given to the
Plan members for these debits, whether or not this constituted
This outrageous admission that in Canada theft of this
scale carried out by governments goes unpunished shows the workers and
all Canadians as clearly as clear can be what they are up against. The
full weight of the courts, Parliament and all of the instruments of
political power controlled by the rich minority are being brought to
bear in the attack on what belongs to workers by right. The pensions of
workers in both the public and private sector are theirs. To now
declare that laws do not confirm this merely shows that these laws are
not worthy of the name. Workers must step up the mobilization of the
strength of their numbers and organization to counter these attacks.
A very important inquiry into this and similar cases is
needed to find out where the money went from government looting of
funds and EI. Who made the big score at the workers' expense? Behind
talk of austerity and eliminating debts and deficits are criminal
pay-the-rich schemes that must be exposed and ended.
Stop Paying the Rich! Increase
Investments in Social Programs!
No to Rule by Thieves!
Ontario Government Unilaterally Freezes Contributions
to Teachers' Pension Plan
In its last budget, the McGuinty government announced a
five-year freeze in funding to the Ontario Teachers' Pension Plan. This
unilateral action tore up an agreement with the teachers and education
workers' unions. The freeze will lower government contributions into
the plan according to the level of inflation. The freeze is not part of
any negotiation and has been imposed without regard for the damage this
will do to the plan and its viability. The plan is no longer protected
against inflation unless other actions are taken to make up for the
lower government contributions.
With the unilateral
imposition of a new arrangement and a growing pension plan deficit, the
government has forced teachers, education workers and their unions into
a fraudulent choice to accept decreases in pension benefits, changes to
the plan's actuarial assumptions or both. Inflation protection
(indexing) for new hires has been eliminated, which lowers benefits for
that particular group. The plan's discount rate was raised on the
assumption that interest rates will go up. Both those measures reduce
the projected plan deficit. The government imposed two-year wage freeze
also has the effect of lowering pension benefits thus reducing the
deficit. Reducing deficits by transferring money away from the people
and social programs and giving it to finance capital seems to be a
favourite blood sport of the Ontario government.
Flaunting its austerity agenda to reduce the provincial
deficit, the government has imposed a deficit on the teachers' pension
plan and a reduction of pension benefits. Without the government paying
more into the pension plan according to inflation, which was the long
held arrangement with teachers, the plan becomes increasingly weakened.
The freeze also harms the plan when other factors are considered such
as increased life expectancy. These result in a fund deficit and
greater pressure to reduce pension benefits beyond that of losing the
current level of inflation protection and lower benefits resulting from
lower real wages.
No matter what the return on investment a fund may
receive, the only sure way to guarantee pension benefits according to
an agreement is for new contributions to be made by the employer, which
in this case is the government. No fund can sustain retirees at a given
inflation protected benefit rate without enough added-value regularly
put into it from contributions in addition to any return on investment.
Pension benefits have to come from added-value in the present in the
form of contributions and return on investment. Higher returns into a
plan usually mean higher interest rates, which result in a higher
discount rate and lower projected plan deficit. However, higher
interest rates reflect greater inflation. If the pension benefits are
not fully protected against inflation, even with higher investment
returns the actual pension benefits will go down.
Pension benefits must come mainly from added-value in
the form of goods and services produced in the present. This means that
goods and services (represented as money) must come from the economy in
the present to sustain those who are receiving retirement benefits.
That is an important aspect of the agreement the working class makes
when it exchanges its capacity to work for wages, benefits and
pensions. The exchange means that workers have a claim on a certain
portion of goods and services at a Canadian standard during all three
main segments of the life cycle: childhood, maturity or working years
Through its unilateral
actions to impose a contract and make changes to the pension agreement,
the government is declaring that it no longer upholds a social contract
with teachers and other education workers. It is forcibly taking money
away from teachers and out of public education generally, and handing
it over to moneylenders and the monopolies under the anti-social hoax
of austerity and a provincial deficit. If the government is not held to
account, these attacks on the teachers' pension plan and degrading of
benefits through the elimination of indexing will be just the
beginning. Next will be a direct lowering of benefits (not just by
eliminating indexing), which is already suggested through the
fraudulent choices and to a certain extent was accomplished with the
two-year wage freeze. Also, the demand will arise that teachers
themselves must make the full contribution toward their pension fund
out of their wages, as the government gradually reduces its portion and
not just the indexed portion that it has unilaterally frozen for five
All these measures are a direct attack on the claim of
teachers and their Canadian standard of living, which they receive in
exchange for the important work and service they provide in adding
value to Canadians and society through education. The anti-social
austerity agenda means a transfer of wealth away from teachers to
finance capital. This transfer of wealth takes money away from
education generally and even out of the economy altogether. Teachers
and other education workers can defend their security and rights
through organized actions with analysis. They must discuss and think
about a new direction for the economy and Ontario politics.
Air Canada Found Guilty of Misconduct in
Quebec Superior Court Judge Rules
Air Canada Violates Law
TML is posting
below an article from New Horizons,
publication from and for airline workers, particularly in-flight
service workers. The article reports on a court ruling against Air
Canada related to Aveos' brutal termination last March of 2,600 workers
who performed heavy maintenance for Air Canada at centres in Montreal,
Winnipeg and Vancouver. Despite having spun off Aveos, Air Canada is
still subject to the Air Canada
Public Participation Act, passed in 1988 when Air Canada was
privatized and which requires Air Canada to retain its maintenance
operations in Montreal, Toronto and Winnipeg.
On March 20, 2012, the day
after the Quebec Superior Court granted Aveos protection under the Companies' Creditors Arrangement Act
(CCAA), Aveos announced it was ceasing all of its Canadian operations,
terminating all its employees and beginning the process of liquidating
its assets under CCAA. Aveos itself was created in 2004 during Air
Canada's phony bankruptcy protection proceedings, as an ostensibly
separate company 20 per cent owned by Air Canada, where workers
performed the same work as before.
The judge's ruling confirms that Aveos' termination of
its 2,600 employees is yet another example of a fraudulent bankruptcy
On February 4, 2013, the
Honourable Martin Castonguay, judge of the Quebec Superior Court
rendered his decision in the case brought by the Attorney General of
Quebec, with the Attorney General of Manitoba as an intervenor, against
Air Canada concerning the abandonment of Air Canada's legal
responsibilities to maintain heavy maintenance activities in Montreal
after the bankruptcy of Aveos.
Since the bankruptcy of Aveos, Air Canada has tried to
wipe its hands of any responsibility in the matter. This continued
throughout the hearings. Air Canada first challenged the right of the
Quebec and Manitoba Attorneys General to bring the matter to court.
Basing himself on Canadian jurisprudence, the judge decided that, in
fact, they were very well-suited to raise the issue before the courts.
During the proceedings, Air Canada tried to blur the
distinction between line maintenance and what is commonly known as
"heavy maintenance" so that its claim that it is continuing to
undertake maintenance in Winnipeg, Toronto and Montreal would be
accepted as fulfilment of its legal responsibilities. In his decision,
Judge Castonguay gave a lengthy outline of the history of Air Canada's
fleet maintenance to clarify the differences, subsequently drawing on
expert testimony in the matter.
Air Canada's witness was discredited as an "expert"
witness because of his lengthy ties as an employee of the Company and
because he neglected to include pertinent information in the voluminous
document he presented.
Again, drawing on Canadian jurisprudence and looking at
statements from the time Air Canada was privatized in 1988, Judge
Castonguay was able to conclude that, despite the leeway Air Canada had
been allowed in planning its future, it was not the intention to allow
it to embark on the kind of nation-wrecking that is represented by the
deliberate transfer of quality jobs outside the country. He further
concluded that the minimal amount of heavy maintenance that is still
being contracted within Canada does not constitute respect for its
responsibilities under the Air
Canada Public Participation Act.
Air Canada has insisted that the demise of Aveos was
unfortunate but that it was beyond blame in the matter. The judge
reminded us that "in the months prior to this collapse, A/C was
negotiating to put downward pressure regarding the monetary aspect of
future agreements with Aveos, significantly decreased the volume of
business that it confided to Aveos, as well as withholding important
sums of money". Testimony had been presented that Air Canada began
soliciting contract submissions before Aveos had shut its doors so it
became clear that Air Canada had been instrumental in the demise of
Aveos and subsequently contracted to a US company the work that it is
legally obliged to continue performing in Canada.
As François Shalom
stated in the Montreal Gazette
on February 5, 2013: "Castonguay was forceful in his opinion, writing
at one point that an Air Canada claim 'not only does not apply in this
instance, but that the facts do not carry any risk of any contradictory
judgment.' He squelched Air Canada's arguments over the definition of
'heavy maintenance,' concluding that Air Canada contravenes (its
privatization act) by not maintaining, on the territory of the former
Montreal Urban Community [MUC], repair centres where repair work on its
aircraft is conducted.' Air Canada 'must continue to perform, or have
performed, on the former MUC territory, maintenance and repair work on
components, engines and structure of its aircraft,' Castonguay added."
The full decision can be found here.
all workers welcomed this decision, which was called "a historic
decision for us and the union movement" by the spokesperson of the
IAMAW that represents the former Aveos workers, few hold any illusions
that the "crystal clear" decision will lead to speedy rectification of
the problem. Air Canada has stated that it will take the case to the
Quebec Court of Appeals, from where it could ultimately end up in the
Supreme Court of Canada.
The question we must answer is how we can change a
situation in which the workers who produce the wealth in this country
can be cast into the street by companies who are taking decisions
affecting their lives and over which they have no say. The greed of the
shareholders knows no bounds. They refuse to accept any social
responsibility for their decisions and are perfectly happy to abandon
our communities and destroy our economy if they can see a chance of
increasing their profit somewhere else.
Must Put an End to This. Our Well-being Depends on It.
Whose Economy? Our Economy! Who Decides? We Decide!
Opposition to Canada Post's
Windsor Rally Opposes Closure of Local Post Office
A spirited rally was held in Windsor on February 9 to
oppose the attacks on postal service being carried out by Canada Post
as part of their imposition of the so-called Modern Post. Speakers
included representatives of the Canadian Union of Postal Workers (CUPW)
and Windsor City Council, as well as Windsor West MP Brian Masse and
Windsor and District Labour Council President Dino Chiodo.
Michelle Johnson and Phil Lyons spoke on behalf of
CUPW. They denounced Canada Post's plans to reduce service in Windsor
by transferring processing to London as an attack on the high quality
service required by a modern post office. They opposed the
disinformation that mail volumes have shrunk by 15 per cent which
Canada Post is using to justify reducing service and closing the
Sandwich Post Office. They pointed out that what Canada Post does not
talk about is that they have reduced the number of workers by 15 per
cent as well.
MP Brian Masse explained that when his office asked
Canada Post to show why they were closing the Sandwich office they were
given financial documents in which a regional manager's $300,000 salary
was placed as an expense for the Windsor office. He demanded Canada
Post stop these attempts to cook the books to justify the closure.
Alan Halberstadt, speaking on behalf of City Council,
opposed the consolidation of services which he said was targeting
Windsor in particular. He cited examples such as recent closures of the
Canada Border Services offices and its transfer to the Niagara area. He
called on Canada Post and the Harper government more broadly to stop
targeting Windsor, a city with the highest unemployment in the country
and start consolidating things to Windsor instead of away from it.
Closing the rally, Dino Chiodo of the Labour Council
announced that he would be calling a meeting of local affiliates of the
council to see what can be done to stand against these attacks on
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