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Op Ed – Toronto Sun – Feb 11, 2014

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While columnist Sue-Anne Levy describes the Fedora family’s sense of anger they should not direct it at public sector workers and pensions. According to Statistics Canada the reasons lie elsewhere.

Our collective success comes from hard-working families like the Fedora’s just as it does from health care, schools, roads, emergency services and social programs. It’s for those reasons that Ontario represents a phenomenal success story as seen through the eyes of many around the world.

Levy’s column needs to be tested against some facts:

Ontario spends less per capita on public services than any other province. Income tax has declined for the last 25 years allowing the rich to have saved thousands of dollars each year. Defined benefit pensions are a good way to assure income security at retirement.

How about those Ontarians with annual earnings above $150,000? They received big tax breaks. And Ontario enjoys one of the lowest corporate tax levels found anywhere in North America.

Corporate and personal tax cuts have reduced revenue for community programs and added to the provincial debt. Public sector wages have been static. In fact, public sector wages, once inflation is factored-in, have not changed in 25 years with the average worker earning not a single dollar more now than they did in the early 1990s. These tax breaks and reduced revenue streams led to a decline in Ontario Public Service front line staff from 60,000 jobs to 35,000 over this period.

Let’s take a closer look at defined benefit pensions, which drive conservative pundits like Levy to distraction. These plans, still in place in the public sector, come from matching contributions from workers and employers. When government is the employer, money comes at least in part from taxes.

That said, the bulk of pension money paid to retirees comes from elsewhere.

It comes from investments returns. As an example the teachers’ pension plan has 15-cents of each dollar paid to a retiree coming from the employer with another15-cents from the teacher. The remaining 70-cents derives from investment returns.

The returns result from smart investments. With a large fund, money is put to work at rates of return not available with RRSPs. Investment professionals can do better than working people in financial markets.

So yes, defined benefit plans make sense. They assure a secure retirement. Is there something sinister about that? Everyone, regardless of their employment history or occupation, should enjoy security in their senior years. Instead of expressing anger, individuals without a pension should demand one.

So how can we afford this? An improved Canada Pension Plan is one way. CPP is a well-funded plan where a set entitlement is assured at retirement. This defined benefit plan, which the Wynne government is considering, is a model being considered for the proposed Ontario Pension Plan.

With this sort of plan we can have a secure retirement for every working person, including the Fedora family.

We should all join in the campaign. Instead of investing money for in RRSPs and the vagaries of the stock market, Ontarians could put their funds into a pension. Their contributions would be invested to fuel economic growth, with returns adding to their wealth. When they retire, they would get their initial investment and a large added return on top.

Contrast this to a retirement in poverty that relies on a welfare program or other public support. Where will these welfare dollars come from? Instead of shelling out 15-cents per dollar (for a defined benefit plan) taxpayers will end up footing the full bill.

The austerity agenda of corporations and the rich is clear: low taxes, low wages and less (or privatized) public services. This agenda will not deliver security for Ontarians. The corporate campaign rests on half-truths.

We should all expect more from our political leaders. After all, most of us have little time left in our tough daily lives to research and analyze the options out there.

Sincerely,

Warren (Smokey) Thomas
President
Ontario Public Service Employees Union