Manitoba Taxpayers hit with triple whammy

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The taxpayers in Manitoba will be paying dearly as a result of an agreement signed with the provinces nurses. Manitoba nurses to take 2-year pay 'pause'

The triple whammy comes as the provincial government gets its election campaign prepared for next year. An elections is scheduled for October 20100.

Public sector unions are always a huge threat to any government at election time and unions use this power to their advantage to negotiate new contracts. Finally, the pressures on heatlhcare spending costs in Canada are huge and increasing at an alarming rate. Workers in healthcare will be able to write their own tickets.

They three factors combined to give Manitoba nurses a pretty sweet deal. A government up for election, a powerful public sector union waiting one year for a contract settlement and third-party taxpayer's money to fund the party.

All this comes at the expense of taxpayers of course.

Gold Plated Pensions 

The nurses have what is  know as a gold-plated pensions. It is based on a formula of final salary. This means that they are ENTITLED to a pension worth 70% of their final salary, based on an average of past 5 working years. It is integrated with CPP so that combined with CPP the income replacement is 70%.

This year a nurse starts at $62,500 per year. A retiring nurse in Manitoba will earn in excess of $100,000 per year. What this means is a pension upwards of $70,000 per year. All guaranteed of course, guaranteed for life, for the life of a spouse, now guaranteed to increase every year (indexed) and best of all guaranteed by taxpayers.

Costly Pensions 

Gold-plated pensions of this nature are estimated to cost 34% of annual salary. Nurses pay about 25% of this cost on an annual basis, the taxpayers match that amount and future taxpayers pick up the shortfall. Because not even the annual costs are covered the HEPP, hospital workers pension plan in Manitoba, has a shortfall of $400 Million. HEPP annual Report - Page 17

So rather than wrestling this issue to the ground the Manitoba government like many before them has refused to deal gold-plated pensions. They have given into the pension demands of a powerful public sector union in hopes that it will bring them victory in the next election. Note: Someone had better check what other public sector contracts are due before October 2011.

Sadly, this process shows the dysfunctional nature of the system. Politicians using taxpayers money to favor a powerful voting block in contract negotiations.

My hope is that one day, somewhere one politician will stand up and say no more taxpayer abuse.

Bill Tufts
http://fairpensionsforall.blogspot.com/