Friday August 01, 2014

Province ignoring public pension reform


The Brad Wall government has done some great things for Sask taxpayers.

Perhaps that’s why it’s so odd that they’ve completely ignored meaningful public sector pension reforms in their six years in office. It’s not like they don’t understand the importance of making major reforms to Saskatchewan’s fiscal picture.

For example, thanks to the Wall government, Saskatchewan taxpayers can earn $6,600 more in 2014 before paying provincial income taxes than they could in 2007 (when the Sask party was elected). At $15,378, Saskatchewan taxpayers have the second highest threshold in the country before they have to start paying provincial income taxes.

The Wall government also has a good track record when it comes to paying down debt, reducing the province’s small business tax and getting school taxes under control.

Yet, there is this big elephant in the room on the spending side that they just haven’t touched – government employee pension problems.

Government employee pensions are a dry, complicated issue, but what taxpayers need to know is that many government employee pension plans in Saskatchewan are requiring taxpayer-funded bailouts; they’re swimming in debt and getting worse.

However, instead of dealing with the problem, the Wall government seems to be content to just kick the can down the road.

Meanwhile, more tax dollars are being shoveled into the pension plan for judges and plans for health care workers and some post secondary employees to name a few.

The New Brunswick government as well as the Harper government have taken some minor steps to address their pension problems and private businesses in Saskatchewan have also taken steps to move away from the risky type of pension that is still offered to many provincial employees.

But if those two reasons don’t make the Wall government think twice about the status quo, perhaps the fact that former Saskatchewan NDP Premier Allan Blakeney did more to address the problem will.

As a result of reforms initiated by Blakeney’s government in the late 1970s, many new government employees were put in a less costly type of pension plan known as a defined-contribution plan. Such a plan shields taxpayers from pension debt and having to bailout the plan with higher contributions each year.

Blakeney’s changes meant all new crown employees, department staff and those that work for government agencies are put in the less costly type of pension plan. Later on, in 2002, provincial MLAs also started to be put into the less costly type of plan as well.

The Wall government needs to make that same change for health care workers, judges and all remaining employee groups still being put in the old type of plan.

As for current retirees, the Wall government should follow the steps of New Brunswick’s provincial government and look at tweaking the system to require the pension plans to only pay out what they can afford rather than promise more money from an account that is running a huge shortfall.

Finally, if the Wall government rolls up its sleeves to deal with its pension problems, it should put pressure on organizations it funds – like municipalities – to do the same.

While the Wall government’s inactivity on this issue has been puzzling, the solutions are not so complex. We just need the Premier to step up and solve the problem.

Colin Craig is the Prairie Director for the Canadian Taxpayers Federation



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