The relentlessly hypocritical Gwyn Morgan
Another column by Gwyn Morgan in the Globe and Mail and another case of a 0.1 percenter telling the rest of us to “Do as I say, not as I do.”
This time, it’s Gwyn recycling trash from the CFIB and Fraser Institute to claim defined benefit pensions for public sector workers are too generous and are simply unaffordable, and that governments need to “defy union resistance to pension-plan changes by all available means, including back-to-work legislation and imposed contracts that reflect fiscal realities. And the strongest tool available is the reduction of union monopoly power through private-sector contracting of public services.”
Does this guy ever  look in the mirror to do anything more than admire his own magnificence –and perhaps maybe consider the contradictions in his columns or his own absolute hypocrisy?
Yet, this is the same Gwyn Morgan who retired as an executive of Encana Corp in 2006 with a defined benefit pension worth $26.5 million then, paying out $1.77 million a year (see page 23 of EnCana’s 2007 Annual Information Circular). Â EnCana can somehow continue to afford to pay defined benefit pensions for its executives while requiring its workers to assume all the risk with defined contribution schemes.
At that time, Morgan still held over $10 million worth of EnCana stock options for which he would only pay half the ordinary tax rate, saving him personallyanother $2 million in tax — but does he ever suggest governments should close the billion dollar stock option tax loophole, restore corporate tax rates, or increase resource royalties to deal with “fiscal realities”? Â No, never.
Morgan of course went on to greater things: a fail bid to become Harper’s patronage czar, on the board of the Fraser Institute, the “Manning Centre for Democracy”, HSBC and chair of the board of SNC-Lavalin.  During this time at SNC-Lavalin senior company executives and officials (allegedly) engaged in corruption and bribery around the globe, including in Algeria, Libya, and at the McGill University Health Centre Hospital P3 (together with Arthur Porter, who Harper appointed as chair of Canada’s Security Intelligence Review Committee). This was enough to get his former right-hand man CEO Pierre Duhaime arrested, SNC-Lavalin banned for ten years from contracts by the World Bank, and Canada to the top of the charts on the World Bank’s corrupt companies list.  But does Morgan ever assume personal responsibility for that?  Never.  Instead he takes a few more hundred thousand per year as well as tax-preferenced stock options and carries on.
I could go on and on, but if there were a Petulant (and hypocritical) Plutocrat of the Week award for Canada, Gwyn Morgan would surely drive, walk and run away with a lifetime achievement award.
Update: The Globe published a letter from CLC president Ken Georgetti using some of this information:
http://www.theglobeandmail.com/globe-debate/letters/jan-21-israels-best-friend-and-other-letters-to-the-editor/article16415840
Update 2: Gwyn Morgan received the Petulant Plutocrat of the Week from the US e–newsweekly Too Much, published by the Institute for Policy Studies in Washington, DC.
Since my embedded links don’t seem to work, here’s the link to Too Much, an excellent on-line weekly of excess and inequality and below is their commendation.
http://www.toomuchonline.org/tmweekly.html
“Nothing seems to upset Gwyn Morgan, the retired Canadian oil and gas CEO and fracking pioneer, more than public employees with pensions. Earlier this month, in his national newspaper column, Morgan fulminated against the expending of tax dollars “on extravagant public-sector benefits.†Privatizing public services, he went on to suggest, just might free taxpayers from the scourge of public employee pensions that pay out defined benefits. Morgan himself just happens to enjoy a defined-benefit pension from the natural gas giant Encana that pays him $1.77 million a year. Canadian public employee pensions currently average $24,000 annually. In his spare time, Morgan sits on the board of a major right-wing think tank that America’s Koch brothers help bankroll.”
Congratulations and well deserved, Gwyn: you are truly world-class!
Yes Gwyn Morgan is a hypocrite .However this unfunded pension liability is a real concern .Everyone realizes this but nobody to date is willing to have an adult conversation about finding a solution.The answer appears relatively simple to me.Firstly no one is allowed to retire until the age of 65 without a discount applied per year against their pension income .Secondly the formula again should reflect your contribution over your term of employment not based on your average of your best 5years of service.Thirdly the pension plan should be a Defined Contribution plan and therefore there would be no unfunded liabilites to burden canadians in the future. Last ,the contribution by employee and employer should be 50/50,NOT like some Government (Ontario Hydro 5 to 1) plans.All the cananadian puplic wants is fairness not abuse in either the public or the private forum. Government must take the lead on this issue.
It’s a real concern is it? What exactly is the real concern? Governments have been busy slashing revenues. Maybe if they were responsible they would have thought “Oh, there’s money we are contractually obliged to pay out, maybe we shouldn’t stop collecting that revenue.” Maybe if they were responsible they’d have thought “Say, there’s huge amounts of tax evasion by the wealthy. Maybe we should have the Canada Revenue Agency try to combat that instead of cutting their staff!”
There’s plenty of money to pay the pensions they agreed to pay, if they’re interested in doing so. But no, money you contracted to pay ordinary people who need it is just a “problem”, something making it harder to do important things like lard on another few subsidies for massively profitable corporations in the oil sector.
Well Purple Guy.Lousy rant.Quite off topic.Try again.
I am starting to wonder what the business model is of newspapers in Canada- is this guy paying the Globe to print his stuff- is that how it is working now- selective sell off of the media real estate? I can see it- truly I can.
Great points Toby- I have been thinking very much that the next step in this culture battle ( it is quite obvious reading Gwyn and a host of right wing material these days that facts and evidence do not matter- and I am not sure they ever did with this group, they just did a better job of letting on), is to time to start looking into the persons behind these companies. Who are these people, who do they connect with business and government wise, who is on the boards of directors, how are these boards of directors connected, who are the major shareholders of the companies, who is responsible for controversial decisions, how much are they compensated, where do they reside (I think the senate scandal exposes just the tip of the iceberg when it comes to where people declare they live and what taxes they pay- I can only imagine the private sector if we ever had a proper auditing of the books and expenses claimed.) Off shore accounts, tax havens, etc.
It is important for people to start asking questions about these individuals- they need to be exposed. Yes corporations are the legal entities that provide the legal interface between people and production processes and capital accumulation- but ultimately there are people sitting in the chairs at those boardroom tables- they make decisions- and they have been private for way too long away from public scrutiny. When the legal infrastructure and the regulatory becomes so broken and manipulated as it is under actually existing business practices- then it is indeed time for a new level of democracy to be considered- and that means more public scrutiny of board rooms and the people at those tables. They keep telling us those millions of dollars they receive in compensatory insanity are warranted- well lets see what they actually do to earn it- or at how about we ensure we give them something earn those pay packets.
I do think it is time- and I am hoping with a new government we might actually start getting new rules and regulations for corporate reporting and have it attached to the people behind the massive corporate layers of lawyers and legal defense, lobbying and subterfuge.
I am not implicating all corporate types- but I am also not buying the whole prevailing “few bad apples discourse” either.
Here is an example- did you know that Suncor- the tar sand giant has a corporate board member who is also a board member for the CBC? Her name is Maureen McCaw- hmmm.
Sadly, Gwyn Morgan and his ilk get all the airtime and column space in our major media, and the fine researchers that contribute to this site and others are basically sharing information with the converted.
I agree with Paul that lists need to be publicized; “Who’s on the take?” “Who’s not paying taxes?” “Who’s in severe conflict of interest?”
Seriously; being polite and using facts to bolster arguments doesn’t work in the class warfare that has been going on for 40 years. Progressives are losing the war. Time to play hardball.
Nice pointing out Gwyn Morgan’s hypocrisy – a layer of shame piled on top of the nonsense he manages to write month in month out.
Nonetheless there are a number of problems with pensions. Of course Morgan’s proposed solution of paying less and reneging on past promises, is bad if you believe working people should have a decent retirement. However it is spot on if you are a large investor and/or a very wealthy person, as is Morgan, since it would lower both labour costs and income taxes.
Considering only the issue of funding, it is quite bizarre that we accept as normal that individuals be obliged to speculate in financial assets for 40, 50, even 60 years to provide for their retirement through RRPSs and other vehicles. For participants in pension funds the speculation is handled by the fund on their behalf but it is still speculation, although presumably individual risk is less. Nonetheless many workers in these funds have discovered the retirement income they expected isn’t there due to poor investment results and/or an employer that is insolvent.
And then there are all the people, the vast majority, who have no interest at all in managing their financial assets. What a bore it is.
In fact there is no need for prefunding pensions at all. All the actuaries, investment managers, corporate mangers, and so forth, associated with these funds could be released to find work doing something more useful.
The point of pensions is to provide income in retirement to the elderly cohort – some percentage of GDP. This just requires a mix of the public plans we pretty much already have, an expanded OAS combined with a generous plan based on years of work and earnings – in effect an expanded CPP without the unnecessary investment board. An expanded public system would relieve employers of the bother and risks involved in these plans, and for workers provide complete portability and 100% security.
An increase in taxes would be needed to balance off the increased expenditures although the exact amount would depend on the level of aggregate demand in the economy. Prefunding by government serves no purpose. Buying the shares of a company and storing them in a fund amounts to acquiring a share of the future profit stream of the company through dividends or capital gain. Might as well just tax the profits directly. And what of stockpiling government of Canada bonds in a fund? What is the point of that? For a public plan that amounts to the federal government’s right pocket owing money to its left pocket.
In addition public plans are very cost effective. For managing the money it collects and pays out, CPP had operating expenses of $648M for 13.5M contributors, 4.6M retirees, 0.4M people on disability, more than 0.2M children, and a number of survivors – a cost of less than $35 per year per participant. All figures are for 2013, from the 26th actuarial report on the CPP (Nov. 2013). (Note:I couldn’t couldn’t find the figure for survivors who do not receive CPP benefits so I left them out due to double-counting. The total receiving survivor benefits is 1.2M. If only one half (0.6M) received only the survivor benefit then the figure would drop below $34 per participant.)
Our financial industry largely runs the system we currently have – the banks, insurance companies and wealth management firms. It is a disguised subsidy to that industry. A public system covering workers earning, say, up to $105,000 (about double current average weekly earnings) would eliminate almost all of the private system and the savings could go toward retirement benefits rather than bank profits. The private system would continue to exist but would service only the most wealthy, those that can best afford it.
I’m just trying to figure out what pension plan Morgan (and by extension you-all) are talking about. Out here in BC, our public sector plans are operated by government, employers and unions in joint trust agreements, in which both employers and union members benefit, and in which government has for some fifteen years forsworn adding even one thin dime to the pot.
The defined benefit plan is actuarially sound, and when it loses money over more than three years (as it did 2008-2010) plans are made to cut benefits, transfer money around in various pots, and in general, take care of the pending deficit so that nobody gets seriously harmed – not current retirees, not workers and employers who are paying into the fund now for future benefits, and not employees yet to be hired.
It’s not that hard. I don’t know why so many think tanks (and even one or two provinces – I hear Saskatchewan hasn’t quite wrapped its head around the fine print yet) find this kind of math to be hard. Perhaps they’re populated by the descendants of Barbie and Ken?
Further to Keith Newman’s post, a letter in Nat’l Post:
Two ways to help the retired
Re: Bigger Isn’t Better For CPP, Andrew Coyne, Dec. 11.
There are two ways that society can organize a retirement income system. One way is to force workers to make their own investments and to take their chances with interest rates or rates of return. If returns are poor, or too much money goes into the stock market causing an asset bubble, and the bubble collapses when people retire, that’s their tough luck. This would seem to be Andrew Coyne’s preferred option.
Another possibility is for government to guarantee a defined benefit for a lifetime of work and contributions. Government would invest its resources into health, education and direct job creation to assure that we have a skilled and healthy workforce in a productive and fully deployed economy. Payouts could still be matched with contributions according to actuarial calculations, but even if temporarily deficient, government would step in as guarantor. After all, if banks and big corporations can be bailed out, why should workers not be occasionally accorded the same assistance?
In the final analysis, what kind of society do we want: one where work receives its certain reward come old age, or one where workers must invest in a casino, come what may?
Larry Kazdan, Vancouver.
http://fullcomment.nationalpost.com/2013/12/12/todays-letters-media-attention-should-not-just-focus-on-south-africa/
Larry Kazdan’s comment sums the issue up in a nutshell.
Zalm’s comment relates to what I referred to as people who have a pension plan that does the speculation in financial assets on their behalf. This is certainly preferable to doing it on your own via RRSPs or TFSAs and reduces individual risk. It locates speculation in the hands of people who are paying attention to financial markets even if the investment results are mediocre. It also spreads the costs across a large number of people. Both of these are preferable to leaving management to individuals who for the most part have little interest (or knowledge) in financial markets.
Anecdotally, I know people who have lost very large parts of their RRSP money to the vagaries of financial markets. Sad indeed for someone who hopes to retire at a reasonable age. As an aside, I also know a very clever young person who has been unable to further her education beyond high school because her RESP was wiped out and her parents have only modest means. Again a very sad result of individually based speculation.
Getting back to the original issue, zalm notes the major problem I was getting at: when returns are low benefits will be cut. Exactly my point: when speculation in financial markets yields poor returns benefits are cut. That is exactly the problem with private plans, even the ones run for public sector workers by competent investment boards. Granted, their employer won’t be swallowed up into bankruptcy but returns on plans will at times be low and pressure will emerge from the likes of Morgan to cut back on benefits.
We are currently in a very deflationary time with low economic growth and a federal government spending as little as it can get away with. Real interest rates are negative. Under these circumstances it is not realistic to believe that on average defined benefit plans will attain the yields they require to fulfill their promises. And of course defined contribution plan yields will be low as well. I am not aware of the details of the BC plan that zalm refers to, but any `defined benefit`plan that revises its benefits down (or up – you can always hope!) according to its yield is not a defined benefit plan in any normal meaning of the expression. It is a defined contribution plan regardless of what it calls itself.
My main point is that retirement benefits are a matter of distribution. As a society we should devote a certain guaranteed percentage of GDP to our elderly cohort on a per capita basis. As a matter of fairness there should be a important element that is unrelated to work history (for stay at home parents, people with disabilities, low wage workers, etc.) so a much increased OAS. As an incentive to work, a significant part of benefits should also be linked to past years of work and earnings. In any event there is no need for private pension arrangements for the vast majority of people. They are relatively costly, some more so than others. Do any of them beat the $35 per participant per year of the CPP? There is also no need for prefunding. The taxation required and benefit payouts could be done as part of federal government operations through the existing taxation and benefit payout systems.
Great ad hom work here.
That said, eliminating cap gains and div tax treatment on high income earners is a no-brainer.