Missing: Any discussion of what drove the Hancock Government’s Bill 10 attack on legally enforceable contracts

Posted on May 12, 2014, 12:31 am
11 mins

A system of contracts that can be enforced and adjudicated by an independent and disinterested court like this one is one of the key features of civilized society. This is a picture of the court used by a significant number Canadian law firms to illustrate their web pages. Actually, it’s the U.S. District Court for the Southern District of Manhattan. But, unlike all those coruscating Canadian legalists, I took this picture myself. Below: Premier pro tem Dave Hancock talking to the media about an entirely different controversial issue; historian Alvin Finkel.

Amid all the brouhaha in recent weeks over Bill 9, the Alberta Progressive Conservative government’s public service pension legislation, very little attention was paid to its private sector companion piece, Bill 10, the Employment Pension (Private Sector) Plans Amendment Act, 2014.

Yet, in some ways, Bill 10 is an even more troubling law, which on its face appears to undermine one of the foundations of modern commerce and orderly society: the legally enforceable contract.

It’s likely for the moment both contentious bills will fall off the radar, as the government of Premier pro tempore Dave Hancock clearly intended when it solved the crisis it had caused for itself by referring both bills on May 5 to an all-party committee for further study over the dog days of summer.

Whether the proposed laws return to bedevil Albertans again or become mere footnotes to legislative history really depends on whom the Progressive Conservatives pick as their leader in September, and as has been said here before, the chances are quite good both bills will be allowed to die.

Nevertheless, we should pay attention to what was conceived by the Redford Government and brought forth by Mr. Hancock, because there is no way the neoliberal elites in Canada and Alberta are about to give up on their assault on the retirement security rights of Canadians, and hence these ideas are bound to return like a proverbial bad penny.

Regardless of where we place ourselves in the political spectrum, we can all agree that a system of contracts that can be enforced and adjudicated by an independent and disinterested tribunal is one of the key features of civilized society.

So while Bill 9, the Public Sector Pension Plans Amendment Act, 2014, added up to a combination of terrible policy and egregiously broken promises, it did so by attacking consensus agreements that were for the most part never properly enshrined in contracts.

That is to say, the public-sector bill’s intended wholesale attack on the modest defined benefit pension plans of 300,000 Alberta civil servants and other government employees, mostly women, was aimed at retirement security arrangements that were never negotiated into those workers’ unions’ collective agreements.

Alberta governments of the day obviously thought it made sense to provide public employees with secure if modest retirement savings plans, and their employees foolishly trusted them to keep that promise without placing that arrangement inside an enforceable employment contract.

This gave the extremist Redford Government a lot of leeway to arbitrarily gut public employees’ retirement savings to achieve its ideological goals and, for all intents and purposes, to cut its employees’ pay.

Bill 9 was bad policy, as Calgary Mayor Naheed Nenshi pointed out in his letter to Finance Minister Doug Horner, because it would have deprived other public employers like Alberta’s cities of their sole remaining recruitment advantage over the better-paid private sector in Alberta’s tight labour market. In addition, of course, it was a broken promise because it would have smashed the retirement security commitment already made to tens of thousands of front-line health care workers, civil servants, education employees and municipal workers.

Bill 10 was arguably a much more radical piece of legislation than its companion public sector law because it was designed to give private-sector employers the ability to arbitrarily break pension agreements with employees and retirees, including collectively bargained contractual plans.

Indeed, how is letting employers break contractual deals with the stroke of a pen any different from, say, passing a law that gives bankers the right not to pay the interest they promised to investors simply because they feel like it, without a compelling reason such as bankruptcy?

As Athabasca University historian Alvin Finkel wrote in a thoughtful response to an earlier post on this blog about Bill 9, Bill 10 would even have allowed employers arbitrarily to retroactively convert pension entitlements to people who have already paid for them.

“This means that people in plans that are not administered by the government may experience the same rollbacks that the government wishes to impose on workers inside plans managed by the government,” wrote Dr. Finkel in a comment that is worth quoting at length.

“Until about two decades ago, virtually all pensions in Canada were defined benefit pensions that gave employers and pension managers the responsibility to insure that plans were managed in ways that would insure that promised benefits would be paid,” he said.

“The notion that employers should have the opportunity to take their workers’ pension contributions and play the stock markets with them, simply cutting the pension payouts if such investments go south, is immoral,” Dr. Finkel wrote. “It originated with General Pinochet, the butcher of Chile, who was able to use his dictatorship to destroy existing worker pensions in favour of these con-artist pensions.”

Dr. Finkel noted that the murderous Chilean dictator Augusto Pinochet got the idea from market fundamentalist economist Milton Friedman, who in the days before the rule of British Prime Minister Margaret Thatcher and U.S. President Ronald Reagan “was regarded as a wingnut whom only military dictators could listen to seriously.”

“Wealthy corporations and their public relations armies then fanned out everywhere to con people into thinking that the successful defined benefit pensions of the post-war period were no longer feasible and workers should have to pay more into plans only to get less,” Dr. Finkel argued, concluding, “Scandinavia’s experience demonstrates that this is a lie.”

Why did the unprogressive Alberta Progressive Conservatives veer into the realm of private contracts in what was always principally a mean-spirited and largely pointless attack on its public employees and their unions – especially the union for jail guards whose illegal strike last June had embarrassed a then-powerful cabinet minister?

Possibly, as Dr. Finkel suggested, because it hoped to rally to its side those voters who resent anyone with a defined-benefit pension. Presumably Bill 10 also gave Mr. Horner a little flimsy intellectual cover for the idea that what he was doing to public employees was sound policy. And no doubt some private-sector employers are rubbing their hands with glee at the prospect of being able to arbitrarily break contracts with their employees.

This went too far for the Opposition Wildrose Party, despite its right wing views. Wildrose Finance Critic Rob Anderson argued last month that “contracts and agreements must be respected” and “that includes the pension arrangements promised to current public sector workers and pensioners who chose their careers in the public sector based, at least in part, on the promise of the current public pension arrangement.”

So while the Wildrose Party would presumably strip future public sector workers of fair retirement arrangements in exchange for “con-artist” pensions designed to benefit the so-called wealth management industry, at least they seem prepared to support the sanctity of contracts.

Departing NDP Leader Brian Mason urged the government to refer the bill to a standing committee and hold public hearings, which he suggested would be “the best face-saving direction that the government can take in order to back away from this.” The government took his advice and, while it is trying to avoid the appearance of flip-floppery, probably did so for the reason he suggested.

So far, though, it seems to have occurred to no one that the damage Bill 10 would to the role played in an orderly society by the requirement parties to an agreement must honour their contracts – but then, that should hardly surprise us from a 43-year-old government so long in the tooth it has concluded the rules are only for the rest of us.

This oversight has likely happened partly because unions, as effective advocates for their members, naturally focused on fighting an attack on their membership.

But Bill 10 deserves attention too, at least if you care about the ability of ordinary citizens to enforce contracts with powerful business elites, not to mention to retire in reasonable security.

This post also appears on Rabble.ca.

4 Comments to: Missing: Any discussion of what drove the Hancock Government’s Bill 10 attack on legally enforceable contracts

  1. BeenThere

    May 12th, 2014

    Some may recall Argus Corporation under not-yet Lord Black. It raked off the earnings of employee contributions to pension plans and earned itself a court battle. It lost. However most of the funds at issue went to law firms rather than to pensioners. I have watched the generation born in the 1930s and 1940s, hardworking men and women who believed in the value of a promise, receive shameful treatment from corporations. Why would my generation (so called late boomers or early gen-x) expect things to have improved under current regimes in Canada or Alberta? While it’s encouraging to see the Bill 10 battle seemingly won, the war will likely continue on other fronts. Meanwhile, many of us have to decide whether we can trust a provincial or corporate promise to faithfully manage our own forced savings to provide 30 or more years of our future income. I’m thinking . . .. Not.

    Reply
  2. Expat Albertan

    May 12th, 2014

    I think it was Warren Buffet who said something to the effect that class warfare does exist, and it is the ruling class that is waging war.

    Reply
    • Liam

      May 13th, 2014

      “There’s class warfare, all right,” Mr. Buffett said, “but it’s my class, the rich class, that’s making war, and we’re winning.”
      Quoted in a NY Times article in 2006. Just as true now!

      Reply
  3. Athabascan

    May 13th, 2014

    We should all be asking why a Conservative government that espouses the virtues of the free market, minimal interventions and regulations would be so keen to interfere in private pensions that don’t involve public-sector employees?

    I would think such deliberate interference in market forces would be inconsistent with the ideology of neo-conservative corporatists.

    What crisis or problem was this government responding to, or trying to fix by proposing Bill 10? While everyone has been focused on Bill 9, no one has bothered to ask this question in regards to Bill 10. Where is this government’s mandate to change private pensions? in other words, who lobbied or asked for this?

    Reply

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