Public Service Alliance of Canada BC

OTTAWA - The Chretien government had already secretly used up much of the $30-billion surplus in the pension plans of its employees by the time it sat down with unions to negotiate a new pension deal and refused to share the windfall.

• National website: Pension trial begins Feb 26th.

Lawyers for the 18 unions and pensioner groups that are fighting the government to get the surplus back told an Ontario Superior Court judge Monday the government had already ’scooped’ the surplus in the pension plans of Canada’s public servants, military and RCMP before Bill C-78 - the legislation that allowed the government to claim the surplus and book it against the debt - was passed in 1999.

“The irony here is that before 1999 they had no right to take any of the surplus, but when they finally took it, it had no effect on the books because they had already taken the benefit,” said lawyer James Cameron, who represents the Public Service Alliance of Canada.

The showdown between the government and its workers over who owns the surplus began with opening arguments from lawyers for the unions and retirees. Those arguments pointed to a trial that will be dominated by the complex and arcane testimony of actuaries and accountants over thorny issues such as how the plan was funded, managed, structured, and whether the surplus was ‘actual or actuarial.’

Much of the case will revolve around a batch of 128 internal and secret documents the judge previously allowed as evidence. Those documents show Treasury Board and the Finance Department were at loggerheads over the ownership and handling of the surplus in the 1990s when then-finance minister Paul Martin’s drive to wipe out the deficit dominated the national agenda.

Lawyer Dougald Brown told the court his evidence will show the government had no basis to take the funds from the three pension accounts, which were built by contributions and held for years, to provide pensions for federal workers.

He argued the government’s decision to claim ownership of the surplus also did not reflect the intention of Parliament when it passed Bill C-78.

The three plans affect about 680,000 workers and retirees.

Brown pointed to an internal Treasury Board memo circulated in September 1996 that showed the government had already “scooped” half of the $12-billion surplus that was mushrooming in the public service plan. The memo said the surplus was also “tapped to pay the freight” for the $800 million in early-retirement incentives the Liberals offered when they eliminated 50,000 jobs during.

“In other words, over the last four years, not only have the plans been entirely funded by employees’ premiums and the plans’ investment income, but they have resulted in a windfall for the federal treasury,” said the document.

Unions and pensioners have long argued they knew nothing about the move because the books for the pension plan showed the surplus was still there. The surplus, however, was written off against the debt in the public accounts.

At the trial, union members and pensioners wore buttons protesting the surplus ‘grab’ and ‘plunder,’ portraying their battle as ‘moral’ one.

Other than aboriginal land claims, the case will be the biggest the government has faced.

It’s also the largest legal battle with its own employees since the pay equity fight the government lost in 1999 and was forced to pay $3.6 billion to wipe out the wage gap between female- and male-dominated jobs.

source: canada.com