Why the Halifax Water talks broke down

By Robert Devet

11407073_359810847542176_8081492769439769123_nLast Thursday talks between Halifax Water and the Canadian Union of Public Employees (CUPE) broke down.

Pensions continue to be the most contentious issue. A union-proposed salary cap on pension contributions for employees earning more than $141,000 was rejected by management.

Yet a recent joint employer and union proposal to address Halifax City pension pressures contains the very measures that Halifax Water deems entirely unacceptable.

It seems that discussions were actually going fairly well.

An agreement should have been hammered out by now, says Kevin Skerrett, a CUPE pension researcher who was at the bargaining table. Over the last week the union made what Skerrett considers substantial and difficult concessions.

“We accepted sharing the total cost of the plan beyond anything we have shared in the past,” Skerrett says. It will actually save 1.8 million more over 15 years, something Skerrett says management acknowledged. As well, the union conceded to some reductions in retirement benefits.

“By offering more member dollars in order to realize their goal, I really felt very confident that we had done it. I could not imagine an employer rejecting an offer that was projected, at least in the medium term, to be cheaper than their own. I have never seen it,” says Skerrett.

But reject it they did. The contentious issue of salary caps remains unresolved.

Pension plans typically establish salary caps for pension contributions.  It reflects that portion of a salary that you pay pension premiums on, and so establishes the extent of your future pension benefits.

Revenue Canada establishes a framework for salary caps by defining the extent to which premiums can be deducted and investment earnings are not taxed. Within that framework individual pension plans can set their own thresholds.

That cap currently sits at $141,000. Halifax Water wants to continue to increase the cap on an annual basis, albeit at a slower rate than before.

But the union believes that the cap must remain frozen at its current level. The union believes a freeze will not only address some of the plan’s current woes, it will also begin to rectify some earlier substantial cap increases that have added greatly to the plan’s liabilities.

Halifax Water says it cannot allow what it calls a tow-tiered system.

“What they’re really trying to do is focus on senior management who rightly make a higher salary,” James Campbell, spokesperson for Halifax Water, told the CBC. “Are you bargaining for your membership, or are you bargaining against management?” he asked.

Maybe Campbell should direct that question to the joint labour and management Board of Trustees of the HRM pension plan, Skerrett suggests. That plan too faces some challenging times.

The so-called HRM Pension Committee, at its Annual General Meeting on Thursday afternoon, just hours before Halifax Water talks broke down, tabled a proposal that included a complete freeze on the maximum earnings cap for its members.

The same freeze that has Campbell brimming with righteous indignation.

“My jaws dropped when I heard this,” Skerrett remarks. “What I would suggest is that (Halifax CAO) Richard Butts and the Mayor and whoever are the real engineers behind both plans will be furious, because they will want to change the recommendation.

But meanwhile Halifax Water has some explaining to do.

This piece was first published on the Halifax Media Co-op 

You can follow Robert Devet on Twitter   @DevetRobert

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