Why supporting pensions makes sense for Alberta
As I was reading Mark Milke’s special guest editorial in the March 5 edition of the Advocate, I found myself wondering how such an accomplished and intelligent academic could write such nonsense based on such limited information.
According to Milke, Alberta taxpayers must “suffer” because the Alberta government won’t reduce “generous” public service pensions.
After stating that “government unions” helped the Redford government win the last election, Milke claimed that Finance Minister Doug Horner’s decision to reform (read “cut”) government employee pensions demonstrated that, occasionally, politicians are prepared to offend their “core supporters.”
Are unions typically core supporters of conservative governments? No.
Milke describes Horner’s compromise on the revised retirement age for government employees (he wanted 10 additional years, but settled for five) as backing off on “more substantial improvements.” Improvements for whom?
He goes on to quote the minister as saying that public sector pension plans “are no longer sustainable in their current form,” and roundly agrees with him. No mention is made of the abolition, under Ralph Klein, of the “gold-plated” MLA pension plan. Of course not, since then he’d have to discuss its replacement, namely the gold-plated severance packages, which make some MLAs instant millionaires. Isn’t it interesting how modestly-paid government workers can have their pensions slashed, while their elected representatives can live like royalty?
As for Milke’s lament about the “$1.2 billion top-up in 2009-10 for what’s known as the ‘pre-1992’ Alberta Teachers’ Pension Plan (and the government’s assumption of the full unfunded liability in that plan),” why does he not explain why this was necessary?
Decades ago, when the government of Ernest Manning was strapped for cash, the teachers were offered a pension guarantee in exchange for forgoing government contributions toward full funding. That’s what caused the shortfall, and that’s why a cash infusion became necessary in 1992, when the number of retiring teachers began causing the government concern.
After 1992, the teachers’ contributions to their pension plan rose dramatically, to the extent that since the early part of the 21st century, fully-experienced teachers have paid almost as much for pensions as for taxes.
And speaking of taxes, let’s remember that civil servants, teachers, doctors, and nurses are taxpayers, too! Every dollar we pay them tends to circulate to about 30 other persons or organizations in their communities. These dollars provide a livelihood for countless individuals and families.
Most Albertans lacking a defined benefit pension plan “will do fine by saving for retirement through other pension plans,” says Milke, “as well as RRSPs, TFSAs and other savings vehicles.”
However, some won’t. That’s because not everyone has the time, talent or inclination to be an expert investor. The people in charge of the pension plans do have what it takes, so it makes sense to entrust them with workers’ retirement savings. Failing this, some of them will simply end up on welfare. Is this what Milke wants?
But it gets worse. Milke claims that “private sector workers fund the politically-promised guarantees for the government employee pension plans.” This is a half-truth. Government employees pay hefty sums into those plans, too. Moreover, resource revenues, which belong to all Albertans, are also used for this purpose.
Milke also points out that according to Statistics Canada the average public sector worker retires two years earlier than one in the private sector. So what? Public sector workers generally earn less, too. That’s why, at the end of their lives, they work less. Besides, the private sector workers I know are reluctant to give up their tax breaks, so they tend to work longer. Without those tax breaks for vehicles, offices, recreation vehicles, and even vacations (partly financed by the taxpayers in the form of forgone tax revenue) life would be far less comfortable.
Milke huffs and puffs about “taxpayers already pay(ing) excessively for government employee pension plans and for artificial guarantees they cannot magically create for themselves.”
It’s hardly magic, Mark. Publicly-funded workers simply parlay their education, skills and knowledge into certain rewards within the context of demand. It works exactly the same as it does for Fraser Institute employees. If they’re not needed, they won’t be hired. Next time the nurses or teachers are forced by injustice to withhold their services, you’ll be able to see just how strong the demand for those services is, and how much that demand is worth.
So if Milke thinks Alberta can attract people to public service by gutting their benefits, he has another think coming. The current dropout rate for teachers, for example, after five years is around 50 per cent. Teaching is demanding work that needs to be properly remunerated. Compare teachers’ compensation to that of second-year oilpatch workers without high school diplomas and you will see what I mean.
Instead of picking on modestly-paid public sector workers, why doesn’t Milke go after the recipients of corporate welfare in this province? Remember when Ed Stelmach tried to raise royalties? Space prevents me, but I could produce reams of statistics showing how the supposed owners of our natural resources (you and I) have been deprived of revenues that many would agree we were entitled to. In this case, the “punishment” comes from the private sector which Milke admires.
It’s unfortunate that some think tank commentators are so one-dimensional in their perspectives.
Jacob Van Vliet
Red Deer County