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February 14, 2013 - No. 18

Hands Off Pensions and Benefits

Supreme Court Legalizes Government Expropriation Without Compensation of Federal Public Service Pension Funds

Hands Off Pensions and Benefits
Supreme Court Legalizes Government Expropriation Without Compensation of Federal Public Service Pension Funds
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 Post's Nation-Wrecking
Windsor Rally Opposes Closure of Local Post Office

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' Creditors Arrangement Act (CCAA) bankruptcy proceedings.

This is 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 expropriation."

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 pension 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!

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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 and retirement.

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 years.

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.

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Air Canada Found Guilty of Misconduct in Aveos Case

Quebec Superior Court Judge Rules
Air Canada Violates Law

TML is posting below an article from New Horizons, a 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 under CCAA.


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. While 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.

We Must Put an End to This. Our Well-being Depends on It.
Whose Economy? Our Economy! Who Decides? We Decide!

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Opposition to Canada Post's Nation-Wrecking

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 Windsor.

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