The Alberta Federation of Labour is pleased to have this opportunity to provide its reaction to the Alberta Labour paper: Administering the Employment Pension Plan Act. A Blueprint for Change.

The Federation represents approximately 110,000 Albertans working in the industrial, service and public sectors. There are 43 unions affiliated to the AFL. Fifteen of those unions have pension plans governed by the Alberta Employment Pension Plans Act (EPPA).

The primary concern of our effected members is that administration of the EPPA be just (impartial and fair), thorough and economically efficient.

Given these parameters, there is no useful purpose served in the transfer of the responsibilities of the current Employment Pensions Branch of Alberta Labour to a Delegated Administrative Organization currently proposed in the form of a non-profit corporation called the Alberta Employment Pensions Association.

An examination of the five reasons for proceeding to a DAO provides no compelling argument for this course of action. These five are, in brief:

That a DAO will provide opportunities to:

1. improve relevancy and responsiveness 2. support innovation 3. open up opportunities for interjurisdictional collaboration 4. maintain the fairness, consistency and equity of pension safeguards, and 5. that a DAO will fulfil government policies of: a) reducing the size of government b) vacating areas of direct program administration (section 1).

The first thing to note is that nowhere is the claim made that objectives one through four couldn't be just as easily met under the current (status quo) conditions.

Surely if you want to be more "relevant" (although exactly what that would mean in administering pension plan regulations is hard to determine) or "responsive"; it simply takes an increased willingness by government to listen to stakeholders to achieve these ends. It certainly doesn't require a divestment of authority to a non-profit agency.

It is also important to note that there is just as much opportunity for a DAO to be less "relevant" and less "responsive". The structure of an organization does not predetermine its "attitude".

This holds true for point number two -- the support of innovation. Nothing prevents the current pensions branch from adopting new technologies or procedures or being innovative in any degree except the test of utility by the stakeholders (e.g. do the innovations work? are they beneficial?).

As for opening up opportunities for interjurisdictional collaboration, the suggestion is that other provinces would use the Alberta non-profit agency to administer their pension regulations, but wouldn't use the direct services of the Alberta government. Yet when the government considered delegating our pensions administration to another jurisdiction, it discarded the idea because of the difficulty in dealing with varying or divergent standards.

If Alberta won't delegate to out-of-province pension administrators, why should anyone believe that other jurisdictions will bring such work here?

Point number four doesn't even suggest an improvement in the basic service -- it simply says that the current high level can be maintained. That is hardly an endorsement of change.

There is no substance to points one through four - no evidence that a DAO can or will do anything "better" than the current Employment Pensions Branch. These simply obscure the real and only reason for this proposed change. That is the current government policy (ideology) to divest itself of governance.

So, a DAO will supposedly fulfil government policies of:

1. reducing the size of government 2. vacating areas of direct program administration (sometimes known as governance).

Certainly a government will do as it wishes -- and if the government of Alberta chooses to pass its responsibility to administer its own Act to a third party, no one can prevent it.

However, stakeholders have a right to question the effects of such a decision and to attempt to inject reason into the debate in an attempt to dissuade actions that are driven on ideological rather than practical grounds.

In this case, it will cost the government and stakeholders more to create a DAO.

Currently there are seven public employees at the Employment Pensions Branch: one superintendent of pensions, four pension analysts and two administrative staff.

Under the proposed DAO, the superintendent will remain with the Department of Labour; and the remaining staff will be bolstered with the addition of an administrator and a staff lawyer. So, after the DAO is created nine people will be doing the work that had previously been done by seven. This is hardly a textbook case of efficiency.

The DAO will have many new expenses: office rent, furniture and equipment; liability insurance; telephone costs; printing and supplies; human resource management costs; and legal expenses to defend DAO decisions which are currently provided at no charge from Alberta Justice.

As well, the new DAO will have to be audited by the government with the cost of the audit to be borne by the DAO.

Although the current pensions branch returns approximately $150,000 to the government's general revenue fund, the proposed DAO's "net income" is projected at $105,000.

Simply put, the government's own figures, which are intended to justify the transfer of authority to a DAO, actually predict a less efficient, more costly service.

Behind all the excess verbiage of the "Alberta Advantage" supposedly built by reducing the size of government and vacating areas of direct program management is the notion of economic efficiency. Government actions, even by its own terms, are predicated upon the need to reduce expenditures, and, ultimately, to reduce the provincial debt. Yet the creation of this DAO will actually reduce the government's net revenues while increasing the cost to stakeholders. Financially it is a lose-lose situation, created by policy governed by ideology (the need to visibly reduce government and to privatize) rather than practical matters of efficiency.

The critical area of liability is not dealt with particularly well in A Blueprint for Change. Simply saying that the risk of large liability claims is small in no way answers the question: will the DAO be legally liable should an administered plan fail? How can a small non-profit agency cope with any liability? What will be the government's liability in such a case?

These questions should be answered prior to proceeding with the proposed change.

Another matter of concern is the rights of the five employees of the current pensions branch who are members of the Alberta Union of Provincial Employees. Are they guaranteed jobs? Will their pay and benefits at least stay at the current level? Will their seniority be recognized? Will the union have successor rights?

Conclusion

The Alberta Federation of Labour rejects the premise and arguments put forward in A Blueprint for Change. They are a grab bag of wishful thinking and shallow logic.

In this case, the government's ideology has escaped its common sense. The administration of the Employment Pension Act is a core government responsibility. Transferring it to a more expensive, less efficient non-profit agency that muddies clear lines of legal liability is just plain wrong.

In fact, the whole plan is so purposeless, that it begs the question: is this really just a two-step process with a for-profit, privately-owned corporation as the government's ultimate goal? That 'option' received no stakeholder support of all.

It still isn't too late to simply shelve the whole indefensible scheme. The majority of stakeholders truly do endorse the status quo. The current system works well. It isn't broken, so don't "fix" it.

Respectfully submitted,

Alberta Federation of Labour
Executive Council