Biggest pension trial in Canadian history resumes in Ottawa

Deciding the fate of $30 billion in surpluses confiscated by Ottawa to put on federal deficit

Ottawa (27 Feb. 2007) - The biggest pension trial in Canadian history resumes this week to decide the fate of $30 billion in surplus public sector pension funds confiscated by the federal government to help pay down the national debt.

Between 1984 and 1993, the Conservatives single-handedly ran up nearly two thirds of the more than half-trillion-dollar national debt accumulated in Canada since Confederation. Total national debt rose from less than $200 billion to more than $500 billion during the red-ink reign of Brian Mulroney.

When the Liberals regained power and introduced Bill C-78, essentially confiscating the surpluses to put against the debt, the Conservatives were loud in their opposition.

Seven Tory MPs who condemned C-78 and voted against it are now in the Harper cabinet. One of them, Natural Resources Minister Gary Lunn, said at the time the legislation amounted to a "raid" that allowed the Liberals to "put their sticky fingers on $30 billion of private pension funds."

Flip-flop

The Tories promised to review the legislation if they were elected to power. But they have now flip-flopped on the issue, just as they have on other key issues, including trust funds, senate appointments and patronage jobs for party friends.

Letters to the prime minister's office urging the government to intervene in the court case, as federal lawyers did in other major legal challenges such as tainted blood and native land claims, have been met with silence.

Lawyers representing nearly 700,000 federal workers and pensioners will argue during the Ontario Superior Court trial that the federal government (whether Liberal or Conservative) has no right to the surpluses and that the money should be put back into the pension accounts of federal public employees, the military and the RCMP.

After all, the legal experts note, a good portion of the money creating the surpluses was contributed directly - in deferred earnings - from the pay cheques of the employees affected.

The 18 unions and retiree groups involved in the case say the employees deserve at least a share of the money. Their goal is to have all of it returned while the case is fought out in court.

The trial originally began more than a year ago when the case bogged down on arguments over 128 internal and secret government documents. The material has since been deemed admissible as evidence and the trial picks up from there.

The National Union of Public and General Employees (NUPGE) is following the case closely because of potential implications on public sector pension plans across the country. NUPGE