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Pension reform hearings begin in Quebec

Pension reform hearings begin in QuebecUnion workers protest over a provincial proposal to overhaul pension plans at the legislature in Quebec City on Wednesday, August 20, 2014. THE CANADIAN PRESS/Clement Allard

QUEBEC - The great divide between municipalities and their workers over the government's proposed pension reforms were on display as hearings began at the legislature on Wednesday.

The mayors of the province's two largest cities reaffirmed their support for the government's proposed overhaul of the pension system while unions made clear their categorical rejection of a plan that would see them shoulder more of the financial burden of their pensions.

All this took place as worker demonstrations continued right across the province.

The mayors of Quebec City and Montreal spoke out in favour of the planned changes on Wednesday.

"Don't deviate from your route," Quebec City Mayor Regis Labeaume said on the first of five days worth of hearings, running until next Tuesday.

Labeaume said the pension plan as it stands is "immoral and unsustainable." He warned that if nothing changes, it'll be the taxpayers who will end up footing the bill.

For his part, Montreal Mayor Denis Coderre said restructuring the pension plans has become "inevitable," noting they will account for 12 per cent of the city's budget this year alone.

"It's urgent to act," Coderre said, confident that a deal can be reached and appealing to the "good faith" of unions he says he's ready to work with.

The pension deficits are largest in the province's two major cities, which account for much of the municipal workforce.

The draft of the controversial Bill 3 calls for a 50-50 equal sharing of future costs and deficits between municipalities and unionized employees. Negotiations would be fixed at 18 months after which an arbitrator would resolve the issue.

It also proposes freezing the automatic indexation of pensions for about 20,000 workers already retired.

The government claims the collective deficit of the plans fall between $4 billion and $5 billion and suggests the unions and pensioners should be on the hook for some of that amount.

Unions have said municipalities are trying to put them on the hook for deficits they allowed to spiral out of control.

Coderre says the 50-50 split, in line with private employer pension plans, is key. Also, abolishing automatic indexation would provide financial wiggle room for the city.

But two major labour groups that are firmly opposed to the reforms — the Quebec Federation of Labour and the Confederation of National Trade Unions — say they are being put on the hook for shortfalls that are not of their making.

The unions have suggested some municipalities are looking to save on labour costs by renegotiating retirement deals. Some 170 pension plans fall under the proposed deal, affecting 122,000 workers and retirees.

The QFL's Serge Cadieux said unions are willing to make some compromises, but wouldn't agree to paying down past debts and balked at the way the government has presented the bill with little room for negotiation.

Cadieux went as far as to describe Bill 3 as "likely unconstitutional" and denounced the "dogmatic stubborness" of the government that wants to impose one rule for all pension plans even though the majority are not in danger.

The CNTU echoed this view, calling on the government to refrain from imposing mandatory sharing of future deficits equally.

Earlier Wednesday, Alban D'Amours, the author of an expert report that helped the government craft Bill 3, testified that "the status quo is not an option."

"There is urgent need for action," D'Amours said, insisting that "the cost of doing nothing will be significant" in terms of tax increases and increasing deficits.

There were also calls from the Opposition for the government to lead by example: provincial politicians as it stands only contribute 21 per cent into their pension plans, a long way from the 50-50 split they're proposing for municipal employees.

Quebec's Coalition party says it intends to introduce a bill that will call for a 50-50 split for provincial politicians as well.

Premier Philippe Couillard told reporters Tuesday that appropriate security measures would be taken at the national assembly after Montreal's City Hall was invaded by demonstrators Monday night.

Protests were held all over the province, including a large one outside the premier's office in Montreal. All took place without incident.

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