CFIB writes OPEN LETTER to Ontario Minister of Finance Re: Pension Bailouts



    TORONTO, April 24 /CNW/ -

    
    SENT BY FAX
    -----------

    April 24, 2009

    The Hon. Dwight Duncan
    Minister of Finance                                           OPEN LETTER
    Frost Building, 7th floor
    7 Queen's Park Cres.
    Toronto ON. M7A1Y7

    Dear Minister:
    

    On behalf of the 42,000 small and medium-sized business owners that the
Canadian Federation of Independent Business (CFIB) represents in the province
of Ontario, I write to you to express our members' grave concerns regarding
the looming pension crisis in the auto sector and its implications on Ontario
taxpayers.
    Our members overwhelmingly reject the notion that the government should
backstop private sector plans that run into financial trouble. Guaranteeing
pension plans exposes them to future financial risks and creates a
disincentive for the plans to be cost-effectively managed. CFIB strongly
opposes your government's inclination to use the taxpayer as the default go-to
mechanism for covering pension shortfalls. Independent business owners are
already being saddled with the funding of lavish defined-benefit public sector
pension plans at a time when they cannot afford anything remotely comparable
for their own retirement.
    The most recent illustration of the growing pension unfairness is the
Canadian Auto Workers (CAW) demands to have the Ontario government come up
with money through the Pension Benefits Guarantee Fund (PBGF) to protect the
pensions affected by the potential bankruptcy of General Motors Canada.
Premier Dalton McGuinty has indicated that CAW and GM retirees should not
harbour any expectations of having the province bail out GM pensions. The PBGF
does not have enough money to cover GM's full pension liability and the
province is under no obligation to automatically top up the PBGF. Yet, it is
disquieting that the Ontario government has included a provision in Bill 162
to give the Minister of Finance the authority to cut a cheque of any size to
the PBGF, in the form of a grant or a loan, which, in a sense, sets up
taxpayers to fork over more bailout billions.
    It is indeed unfortunate that retired GM workers would suffer from GM's
potential bankruptcy. It must be noted, however, that management and the union
should bear responsibility for the predicament they placed their
employees/members in. Over the years, collective bargaining has put more
pressure on employers to provide for more generous pension benefits. In this
case, CAW has heightened expectations among their members for having generous
and protected pensions, which become unrealistic during hard economic times.
    It is short-sighted to assume that GM's pension ailments will be cured by
pouring taxpayers money into a severely underfunded pension plan. It is also
exceedingly unfair to force taxpayers, who largely do not have pensions of
their own, to pick up the tab on pension bailouts. Think about the seniors who
never had the luxury of having a company pension, or the employees, whose
RRSPs lost considerable value after years of diligent contributing. Will they
be bailed out?
    Bailing out GM's pension plan will also set a dangerous precedent by
giving other troubled pension plans reason to ask for a similar lifeline. Such
an approach will certainly have a long term detrimental effect on public
finances, as the list of beleaguered companies, especially in the auto sector,
is growing.
    As we have indicated to you before, CFIB has been and will continue to be
a strong advocate for improvements to pension savings. The provincial
regulatory framework for defined-benefit pension plans is certainly due for
review and improvement. Instead of bailing out certain pension plans "on the
fly", your government should adopt an overarching principle of fairness for
all Ontarians to be able to afford a decent retirement.
    Your response to the concerns outlined above will be appreciated.

    
    Sincerely,

    ORIGINAL SIGNED BY

    Catherine Swift
    President & CEO

    CC:   Hon. Dalton McGuinty, Premier of Ontario
          Hon. Michael Bryant, Minister of Economic Development
    




For further information:

For further information: Canadian Federation of Independent Business,
(416) 222-8022, 4141 Yonge Street, Suite 401, Toronto, Ontario, M2P 2A6


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