A couple of weekends ago I was told I couldn’t have pea soup.
Remember the old Seinfeld episode the soup Nazi? “No soup for you” was barked at those who insulted the chef. Well, I got the same treatment in a government-run cafeteria recently when I ordered my favourite pea soup.
The woman behind the counter said she saw me on the news talking about taking away government workers’ pensions and that’s why she was refusing to serve me something I so enjoy on a cold Saturday afternoon.
In reality, I spoke on CBC news about the need for the government to fix its broken pension system.
Fixing something broken and taking away something owed are two very different things, but explaining that in line for my lunch wasn’t easy.
In fact, explaining the pension problem, and even my own role in it, isn’t easy under any circumstances. It’s a complicated issue at the best of times, but one that’s in crisis right now and deserves immediate attention.
You see, I’m actually empathetic. I don’t want to take away a benefit the pensioners were promised because economic and demographic conditions changed. I want a new pension system, one that starts with the next new hire, and is fair to all of us here in Newfoundland and Labrador that are paying for it.
I want this system fixed because I’m worried about the impending crises that will occur if this system goes bankrupt. I want it fixed because it affects everyone in the province — not just the workers who were promised a pension.
Speaking of crises, did you know that the word crisis, when written in Chinese, is composed of two characters? The first character represents danger, but the second represents opportunity.
In terms of pensions, yeah, we have danger. The way I see it we also have opportunity.
Right now the people of this province owe a dangerous debt of more than $5.6 billion to pensioners. It’s nearly 70 per cent of all the debt we owe.
Every person who gets accepted into the pension plan increases that number exponentially.
The danger in having that pension debt is similar to the danger in not paying your mortgage or bank loans. You may lose your home, or have to declare bankruptcy.
The pension debt means the government has to put more and more of its money — our money — into the pension plans and that means less of our tax dollars are available for health care, education, roads and everything else. It means our credit rating could get lowered, and when we borrow money (which our government does) we have to pay even higher interest rates, which will further compound this problem.
The opportunity, though, is for the politicians to decide how to spend our money in the coming months and years. They have the opportunity to courageously and creatively come up with a solution that will be fair to all people of the province.
The Board of Trade has a speaker coming in March who wants fair pensions for all Canadians. Bill Tufts says pensions were created as a benefit of service to those who worked for low pay for governments.
This is really no longer the case. Now, government salaries are as high as or higher than those offered in the private sector. When these pensions were promised, they were based on the pension investment making a high rate of return and life expectancy of about 15 to 20 years of collecting a pension. Neither of these things are true today. The rate of return on the invested money has been much lower than expected, shrinking the pot of money, and people are living much longer, demanding more from the pension pot than was ever anticipated.
This cost is borne by all taxpayers of the province, not just the employees who contribute to it. That means some of our residents are actually paying for someone else’s pension before they can save a dollar towards their own. That’s not a fair system.
I know we hear that the only reason the pension is in trouble is because the government used the money for other things and it wasn’t kept in the plan.
What is true is the government has contributed $4.5 billion in extra payments since 1997 and the debt is larger now than it was in 2005. At this point it doesn’t matter as much about who is to blame. It matters most about how we are going to fix it.
So when I talk on CBC or to the province’s budget consultations about reducing our pension debt, I’m asking for the same things you are — good health care, the best education for our children and the government services promised to us by the government we elected. The Board is just looking at the bigger picture. We believe that if the province is doing well, it can afford dialysis machines and more hospital beds where they are needed. But you can’t spend on nice-to-haves or even necessities when, as taxpayers, we are facing a mountain of debt.
The fact is, the Board of Trade is not out to take anyone’s pensions. Nothing could be farther from the truth. In fact, we want pensioners to have disposable income; after all, as businesspeople we want pensioners to have buying power. The province made a promise to those who have worked for it, and that promise should be honoured.
But the province also made a promise to all of its people that it would use the tax collected from each of us to care for all of us and this place. That is why the pension system broke down. People are living longer, retiring earlier, and the markets went belly up. It is time to start a better system.
It’s not an easy problem with a simple solution, and it will take time to fix it. That means I’m off to the grocery store for a bag of split peas and ham, because I’m not going to stop talking about this problem until we’ve found a fair solution that is good for all of us.
Sharon Horan is the chairwoman of the St. John’s Board of Trade.