You can’t get blood from a turnip

Sharon Horan
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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.

Organizations: CBC, Board of Trade

Geographic location: Newfoundland and Labrador

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Recent comments

  • Kent
    March 03, 2014 - 09:09

    Hey Sharon, If you are really concerned about the province's debt, then why not write an piece about how the government just pumped $110 million into a dying paper mill?

  • Mary McKim
    Mary McKim
    March 03, 2014 - 07:42

    This column blithely ignores some important facts. So-called pension reform is yet another attempt to devalue any form of social safety net. The column glosses over why "markets went belly up". The 2008 meltdown was caused by the naked greed of financiers fuelled by government deregulation. It demonstrates that free-market economics works to enrich the rich and make the poor even poorer. Pension reform wants to make new hires invest their own pensions… in the same financial system that crashed in 2008. In fact, the 2008 debacle devalued those very pension funds and is one of the main reasons pension funds are falling short. The solution is not to take government pensions out of managed pension funds and make each individual responsible for investing their own little pension, making them even more vulnerable to the legal piracy of big finance. The answer is to make sure the financial industry can't rob the piggy bank again.. and get bailed out by tax payers. This column is a blatant attempt to divide and conquer - get people riled up about government workers who get benefits, including pensions. It's a philosophy that advances a race to the bottom. Instead, let's reform financial oversight and the unfair tax system so that the social safety net includes more people, not fewer people. To those who say we can't afford it, you are simply wrong. Millions of dollars evaporate ever year through corporate welfare and lower taxes for the richest people in the country. There is enough for everyone if those at the top stopped being greedy. The mystery here is how people let themselves be so propagandized that they continue to vote in governments that work against most peoples' best interest.

  • Delicious
    March 03, 2014 - 07:06

    It is not the people who need to pay the price for government negligence. If the government used our central bank for what it was created for we wouldn't be stuck paying down so much debt because we wouldn't be accumulating the compound interest privating banking charges. There is a reason Jesus threw out the bankers. This issue goes so much deeper and blaming each other does nothing to solve the impending problem we face. All we are doing is kicking the can down the road. Unless we deal with the underlying issues this will never be solved and I see no politicians and no media outlets trying to tackle this problem. Keep kicking the can if you want but we all know where that leads.

  • Mary McKim
    March 02, 2014 - 19:04

    ..."the markets went belly up" - yes, but the reason why is not a mystery. The markets went belly up because of the naked greed on the part of captains of finance fuelled by government deregulation. Then those "experts" took unprecedented government bail outs, gave themselves millions in their usual "bonuses" and for the most part, are still in charge of our money system. Yes indeed, we need a "better system" but not one that is based on forcing new hires to accept a lesser pension plan. There are other places to look - corporate welfare for one. A fairer income tax system that taxes those who can most afford to pay for another. And stop trying to blame it all on the lowly government worker drones. They sure as heck don't make half a million a year. Divide and conquer is an old trick to get people fighting each other instead of putting blame where it belongs. And don't get me started on government "borrowing" from workers' pension plans and not paying it back plus interest and then saying "Good heavens! There isn't enough money to pay pensions!" It would be funny if it wasn't something that is so important.

  • Jay
    March 02, 2014 - 18:33

    That has to be one of the most condescending articles I've ever read, and quite frankly I don't believe that a person working in a government cafeteria would refuse to serve you. You may think the "soup Nazi" reference is cute, but I find it insulting to a person who is probably not far from minimum wage, and would certainly not feel empowered enough to take on a snob like you. I've worked all over this country, in private enterprise and in the public service, and the least progressive employers in this country are in this province. Since Confederation, all governing parties have balanced their budgets on the backs of workers, and private business owners still have a fish merchant mentality and hire people on a part-time basis in order to avoid paying any benefits at all. The Board of Trade is simply an elitist little clique which every now and then feels it has to put workers in their place. You're one of their employees who probably got your job because you knew someone in that clique. Please go away, your opinions are simply irrelevant.

    • Michelle S
      March 03, 2014 - 14:25

      Well said, Jay. I felt the same way when I read the article.

  • Yes by
    March 02, 2014 - 18:12

    I hate how every time something comes up it's "let's go to a two tiered system" where my generation gets crap all, and the previous generation gets everything. As if it isn't Bad enough that we can't afford to purchase a house anymore because of the "golden age". We don't have much left to take away, except our dignity, and I'm sure that's coming

  • Ruth Brown
    March 01, 2014 - 21:50

    Sharon, I was once a Client of yours and due to demographics I actually had to go elsewhere. I just wanted you to know that I totally totally agree however with your approach on pensions. As a Registered Nurse for over 40 years & someone who has a husband who is a retired Guidance Counsellor, I have watched this present system fail us miserably. It appears today that nobody wants to hear the truth or face reality. They want to live in a bubble and pretend all is ok. These new structures you talk about may not affect my husband or I but I do worry about my children and grandchildren. We MUST move forward !! I often think about our Health Care system which is probably by far the biggest drain on our economy. We pay Ms. Komenski over $500,000 annually to make our system viable and it is just not working. Why?? As a frustrated Dr. Who said in a recent 'letter to the Editor" in our Evening Telegram, our health care is not working because it is being treated as as a corporation run by people who are solely out to protect themselves and their positions. Over the years, I have watched health care workers incessantly call in sick purely out of not only fatigue but sheer frustration. They are frustrated not only because of health care cuts and overwork and lack of time off but also the lack of Administration in health care facilities appreciating what their employees are contributing. As far fetched as this may sound, if someone in the Health Care had the foresight to say to the employees, " we not only appreciate you but we want to show you that gratitude in some way, everything could be and would be so different." If they could only have the fortitude to say to their employees," Beginning today, for every sick day NOT taken, at the end of the Fiscal Year, we will pay to you for each one of those days as part of our gratitude to you, you would see a major change in sick time taken by employees. Not only would you see a major decrease in sick time taken but a major decrease in overtime and double and triple overtime which is happening now at an alarming rate. I know this would not solve the problem entirely but it would be a start. Just sayin!!!!

    • T. Sleeveen
      March 03, 2014 - 11:38

      I had a good laugh at your response. A registered Nurse and retired aguidance councellor, both with great pensions, saying that the pension system should be reformed. Then you babble on about health care??? Geese, you even state your pension will not be affexcted??? are you for real???? promoting pension refome after you are retired on the pension is a joke.

  • JJT
    March 01, 2014 - 18:53

    Sounds like another of the traditional Newfoundland merchant class who wants to slash the compensation of the underlings in order to ensure their own high on the hog lifestyle.

  • Pierre Neary
    March 01, 2014 - 14:41

    Government salaries are as high as or higher than those offered in the private sector? Horan is living in a dreamworld. Talk about out of touch. The cafeteria worker was far to polite to you.

    • david
      March 01, 2014 - 17:07

      It is a statistical and easily verifiable fact. Sorry for your ignorance.

    • JJT
      March 01, 2014 - 18:55

      If it's so easy to verify, why didn't you provide some references for your statement "david"? Sorry for your weak argument.

    • Robb
      March 02, 2014 - 10:50

      Well Pierre, it would be "far too polite", but that is just a typo I am sure. So what dream world are taking about? When I look at the amount of income tax I pay, it is a nightmare and certainly not a dream. So you can be sure everyone who pays through the nose is not dreaming. I know if it were me, I would not have kind words for the cafeteria, and would complain to management. Talk about petty, and who the hell does this cafeteria worker think they are?

  • Ken Collis
    March 01, 2014 - 11:35

    Do you feel the same about the hundreds of millions of our tax dollars that are given to businesses every year or is there a double standard?

  • Just sayin
    March 01, 2014 - 11:25

    Sharon, you are right to worry about the 5.6 billion pension debt. But you say nothing of the 7.7 billion( before cost over runs and interest) Muskrat Fall project. In fact, the Board of Trade is one of the cheerleaders of this expense. And where is the business case for MF, apart from companies you represent. And this will be backloaded to our taxes and a risk for bankrupsy. WOuld you invest in MF as a shareholder?

  • Dolf
    March 01, 2014 - 09:08

    Hey lady, ever hear of Muskrat Falls, the expropriation of the Grand Falls paper mill site, or Kruger in Corner Brook.? If not I'd suggest you take a look at these sinkholes.

  • Joe
    March 01, 2014 - 07:51

    Couple of comments, first you don't know anything about the pension system, but because you are involved in business you think you "know " everything. It is the job of the government not Bill Toffs, who ever he is, your you to fix the problem. The population has the same problem which is elected politicians who do want to do their job, but like our out going Premier just take the pension. With reference to the new hires all I hear from the business community is oil, rising GDP and everything is great with economy so why do these new hires have to take coal while you run off with all the gold.