Dear Premiers:
On behalf of the 620,000 Canadian Union of Public Employees (CUPE) members who work hard to deliver public services to Canadians from coast to coast to coast, I wish you a productive meeting of the Council of the Federation in Halifax. These meetings provide you with an opportunity to work together with other provinces to strengthen the relationship between the provinces and the federal government that lies at the heart of our country.
I am concerned about the direction our current federal government is taking on a number of issues of national importance. Far too often, Prime Minister Stephen Harper’s government has chosen to divest itself of both financial and political responsibility for the needs of Canadians. Provinces are being forced to step in to fund programs, such as health services for refugees, if they disagree with the direction taken by the federal government. In the face of short-sighted policies from the federal government, CUPE hopes you will use your meetings to address issues that range from the infrastructure that holds our communities together to the supports that Canadians rely on while they are unemployed, and as they get older. These issues are of significance to premiers and Canadians in communities all across our country.
Employment Insurance
The most recent federal budget contained measures to further constrain Employment Insurance (EI) benefits. EI is not a government entitlement program but an insurance plan that is fully funded by workers and employers. EI benefits have been so restricted that 62.5 per cent of unemployed workers already do not receive benefits. CUPE represents 60,000 members who will be directly impacted by this legislation because of the nature of their work. School boards, for instance, employ thousands of workers for the school year for whom there is no comparable employment available during the eight to twelve weeks of the year when school is not in session. Likewise, municipalities hire thousands of workers on a seasonal basis in both summer and winter, to perform work that simply does not exist on a full year basis.
These are not workers who have trouble finding work; many are skilled workers with permanent jobs. They operate machinery; they maintain seasonal services such as parks and recreational facilities; and they play critical clerical and administrative, as well as educational roles in the school system during the school year. The ability of seasonal workers to access EI benefits is a long standing feature of labour force development. EI benefits assist with income maintenance, thereby allowing municipalities and school boards to retain their skilled workforce year after year. Not only does the new classification system that the federal government is proposing punish hard working skilled employees, it has the potential to create skill shortages in particular areas as it has the potential to lead to out-migration from many regions in Canada. Remote and rural communities in Canada may be especially affected by this.
Comprehensive Economic and Trade Agreement
Recently, we sent you a legal brief on the Comprehensive Economic and Trade Agreement (CETA) between Canada and the European Union (EU) produced for CUPE by international trade lawyer Steven Shrybman. The brief demonstrates that this federal government is presiding over an implicit shift away from provincial jurisdiction in a number of areas under CETA. The sweeping prohibitions of CETA on any measures that could be interpreted as restricting or impairing trade, and its dispute resolution mechanism that explicitly provides corporations and investors with broad powers to sue governments for compensation, seriously impacts upon your ability to regulate in the best interests of your province. Our previous experience with NAFTA suggests provincial governments that do regulate corporate behaviour can be successfully sued in trade tribunals.
We are in real danger of trading away our precious public services and natural resources with no guarantee of successfully competing in the EU’s own procurement market. Historically, we have had a negative balance of trade with the EU, and under CETA this balance will continue to grow because we will continue to export more of our raw resources to them while they broaden the range of high-value products they send us.
National green and public energy policy
We cannot build a sustainable economy only upon our exports of natural resources. CUPE understands that energy will be a matter for discussion in Halifax; we hope that this will include a robust discussion of our renewable energy sources. Our electricity production – both public and renewable – must be as central as oil and gas resources to any conversation about a national energy policy. A public system of production, transmission, and distribution of electricity has numerous advantages compared to privatized utility systems. Public energy utilities have proven themselves to be better for people: they’re more accountable, more reliable, less costly, and greener. It is imperative that we have leadership from both federal and provincial government to develop pan-Canadian strategies for public, sustainable electrical energy generation. We must ensure that Canadians have fair and affordable access to a secure and reliable energy supply.
The environment, energy, and the economy are not separate issues. We need to look at them together, and develop a long-term vision, prioritizing the needs of Canadians and of local and provincial economies, and not the needs of global markets. I encourage you to approach this as a way to create good jobs by using and processing our own power and resources in Canada. It makes good sense to link this approach to a national industrial and economic development strategy.
Federal leadership on this issue has been lacking for a long time: Prime Minister Harper wants to transform Canada into an energy superpower but is not addressing the critical question of energy security for all Canadians. By any measure, it is absurd that Canada both exports and imports vast amounts of energy to and from the United States. There is an opportunity here for provinces to agree on how to work with each other to supply energy to each other rather than to depend solely upon the fluctuations of the international energy market.
Public health care
Canadians quite rightly expect the federal government to be a strong partner to the provinces in maintaining a quality public health care system on which everyone can rely. Our health care system is an expression of Canadians’ shared values – of equality and caring for one another – that underpin our public health care model.
Unfortunately, recent unilateral announcements would mean a gradual abandonment of the federal government’s responsibility to provide adequate funding to provinces to meet Canadians’ public health care needs into the future. When Canada’s national Medicare program was first established in 1966, the federal government agreed to pay 50 per cent of provincial health care costs. Following the steep cuts of the 1990s, despite increased funding, the Canada Health Transfer (CHT) still only provides an average of 20 per cent of provincial health care costs.
If CHT transfers are limited to GDP growth, the federal government’s share will inexorably decline to 11 per cent, as the Parliamentary Budget Officer recently warned. This cap alone could lead to a cumulative $100 billion plus loss in transfers to the provinces just in the twelve years from 2017/18 to 2028/29. It could amount to an annual loss of $20 billion in federal health transfers to the provinces – and growing – by that time.
Canadians want Medicare improved, not dismantled. The federal government must work with the provinces to ensure high quality and accessible services for all Canadians, and guarantee that services are there when people need them. This meeting is a chance for you and the other premiers to convince the federal government to negotiate with the provinces and territories a new ten-year Health Accord with stable and adequate funding, including at minimum the six per cent escalator. There is a real need for new resources and not to just shift current funding. There is also an immediate need to exempt health care from international trade agreements.
We can improve the health care system at the same time as we strengthen it. Hundreds of thousands of Canadians would benefit from a pan-Canadian continuing care program, with dedicated transfers financed from general revenue and Canada Health Act standards. One way of paying for part of this would be to establish a national pharmacare program. The cost savings from such a program are enormous, and could be re-directed to long-term and continuing care where the need is rapidly expanding.
The federal government’s retreat from providing adequate funding for health care is more disturbing given that federal finances are now considered to be sustainable over the longer-term, while many provinces are in a more tenuous situation. Shifting to an equal per capita CHT allocation while also imposing a cap on Equalization payments will further worsen regional fiscal disparities, moving our country further away from the core objectives of these national programs which are central to our national identity. The cap on equalization transfers to GDP growth has already reduced these payments by an average of 20 per cent, or almost $15 billion over the four years to 2012/13.
The federal government must enforce the Canada Health Act, end two-tier health care, and take a leadership role with funding and national standards that protect and expand public health care services now and into the future. In particular, the provinces need to put pressure on the federal government to enforce the ban on user fees and extra billing, and provinces need to protect the services we have and expand the programs we need – including primary health care, residential long-term care, home and community care, and pharmacare, and end hospital overcrowding and rushed care. Our system will be better – more accessible and more equal – if it is publicly funded and delivered. There are volumes of evidence showing that privatization costs more and delivers lower quality care for Canadians.
This is a chance for you to discuss implementing a national strategy to reduce health care associated infections with dedicated funding for microbiological cleaning standards, more in-house cleaning staff, lower hospital occupancy, and mandatory public reporting. I also want to note that one way of ensuring good conditions of work, which are also good conditions of care is to involve health care workers in finding solutions to make our public health care system even better.
We need strong leadership from federal and provincial governments to realize the potential of teamwork and full utilization of all team members. To advance nursing team innovation, provincial governments should work together to standardize care aide education programs; support continuing education for all team members; fund workers to meet new licensing requirements; promote full utilization, and ensure working conditions that enable all members of health care teams to work to the full scope of practice.
Infrastructure funding
As public sector workers, we are well aware of the fact our public infrastructure is in critical condition: our roads and bridges, public transit systems, public utilities, water treatment facilities, and community facilities are all in need of renewal and restoration, if not outright replacement. Much of the responsibility for the erosion of support is due to a decline in direct federal commitments and cuts in federal transfers to provinces and municipalities, which have led to a national infrastructure deficit estimated by the Federation of Canadian Municipalities (FCM) at over $123 billion.
We are concerned that all remaining Building Canada infrastructure funding through to the program expiry in 2014 has already been allocated. However, we are hopeful that the federal government will engage in a genuine dialogue and true partnership with provinces and municipalities in the establishment of a long-term infrastructure plan with sufficient and growing levels of funding, substantially more than the allocations now expiring.
We, along with thousands of municipalities, agree it is completely inappropriate for the federal government to require local governments to adopt or consider public-private partnerships (P3s) as a condition for receiving public infrastructure funds. Fiscal fiascos with P3s in the UK and around the world demonstrate how they are misguided. I strongly urge you to reject them as a solution for public infrastructure development, and to push the federal government to keep our public infrastructure public.
Retirement Security
I know that I have written to you numerous times to urge you to support the enhancement of the Canada Pension Plan (CPP). Given that the federal government has rammed through legislation increasing the age at which seniors qualify for their Old Age Security (OAS) payments, it is now more crucial than ever that we work together to ensure retirement security for all Canadians. As Premier, you know that the most vulnerable of seniors will now be even more dependent upon social assistance – costs that will essentially have to be borne by provincial and municipal coffers.
The changes to OAS eliminates basic OAS benefits worth just under $14,000 from individuals age 65 and 66, but the 35 per cent of OAS recipients who would otherwise be entitled to a Guaranteed Income Supplement (GIS) benefit because their total retirement income is so low – mostly women – would lose these benefits as well. For those seniors entitled to this maximum amount (projected as 320,000 in 2012, mostly women), the loss of two full years of benefits would represent over $30,000. The broader implications of such an increase are likely to be complex and various. Those workers most dependent on OAS and GIS income – women, workers with disabilities, individuals with lesser residency, the lowest income and long-term unemployed – will be hardest hit, as their dependence on this program is greatest. It will be up to provinces and municipalities to pick up the economic and social cost of more seniors living in poverty for two more years. This is another example of the downloading of costs by the federal government.
Nearly a quarter of a million Canadian seniors continue to live in poverty and over one and a half million live on very low incomes. CPP helps keep many more seniors from falling into the same trap. Doubling CPP so that the maximum benefit will rise from 25 per cent of the Yearly Maximum Pensionable Earnings (YMPE) to 50 per cent gradually will break the cycle of poverty for our seniors.
The federal government’s only solution to a crisis even they acknowledge exists is to offer up one more variation on Registered Retirement Savings Plans (RRSPs) – Pooled Registered Pension Plans (PRPPs). RRSPs have not been able to solve the problem of retirement insecurity in all the years that they have been in existence because Canadians do not have the money to invest in such vehicles and to absorb the risk that it inherent in them. According to the Finance Department, the RRSP program will cost the federal government over $12 billion this fiscal year in foregone tax revenues – even after collecting $2.6 billion in deferred taxes on RRSP withdrawals. The program costs provincial governments more than $5 billion, for a total bill of at least $17 billion per year. And according to Revenue Canada data, about half of all RRSP contributions are made by the top tenth of tax-filers. RRSPs and the new PRPP do not benefit those who are most likely to retire into poverty.
It is past time for a mandatory and matched contribution increase to CPP premiums so that middle and lower income Canadian seniors can also retire with dignity. We know that raising the rates of employer and employee mandatory contributions is the only way to achieve a sustainable enhancement of Canadians’ retirement funds. In this context, it is interesting that earlier this year, the Australian government passed into law a schedule of mandatory employer pension contributions that will see this rise in graduated steps from 9.25 per cent on July 1, 2013 to 12 per cent on July 1, 2019.
Once phased in, this rate will be more than double Canada’s mandatory employer contribution rate to the CPP of 5.95 per cent. Also, the maximum contributory earnings for Australia’s mandatory employer pension contribution are currently $175,280 per year, or about three and a half times Canada’s current YMPE of $50,100. Clearly, there is significant room for expansion of the CPP without the resulting employer contributions reaching the level already scheduled to apply in Australia. There is no reason Canada cannot legislate a similar but more modest increase of CPP contribution rates.
Conclusion
Canadians need you and the other premiers to collaborate on these important issues, and find national solutions that respect provincial and federal jurisdictions. The federal government must of course be part of these solutions, but they must also be held to account for their own responsibilities to all Canadians, especially our most vulnerable.
I hope your meeting in Halifax takes advantage of this opportunity to continue work on these vital issues, and that the Council sends a clear message to the federal government of their importance to your provinces and all Canadians.
Yours truly,
PAUL MOIST
National President
Canadian Union of Public Employees
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