THE UNION PLAN: KILL BILL’S BILL.

After months of partisan uproar over Finance Minister Bill Morneau’s alleged conflict- of- interest issues, we may finally be getting to the heart of the matter. Turns out the campaign to bring down the minister really has nothing to do with whether he was in breach of federal conflict rules when he introduced legislation to reform federal pension legislation. The real issue is that Morneau introduced legislation to reform federal pension legislation.

That the conflict- of- interest allegations are a fabricated front for a union drive to kill the legislation became all too clear Monday when The Globe and Mail published a story outlining how the Canada Post Pension Advisory Council had delivered a letter back in September to Parliament’s ethics watchdog warning that Morneau could be in a conflict of interest because he was “spearheading” legislation that would “benefit his family firm.”

The family firm, as all of Canada must now know, is Morneau Shepell, a pension advisory public corporation worth $ 1 billion on the market and in which Bill Morneau at the time owned a million shares worth $ 20 million. The conflict allegation is that the pension legislation would generate a flood of business for Morneau Shepell, and make the finance minister even richer than he is already.

Morneau Shepell rejects that suggestion, saying there are many suppliers of pension services and that the added business, if any, would not be significant. The Globe story also regurgitated the bogus NDP claim that Morneau made a $1-million gain on his shares when Bill C-27 was introduced back in October of 2016. That’s a misrepresentation of the stock’s values. The stock was worth $ 19.45 on the day Bill C-27 was introduced, and dipped to $ 18.50 cents within a few weeks. By that measure, Morneau lost $1 million.

The advisory council’s letter was signed by Peter Whitaker, a union activist who sits on the council along with such veteran public- sector union troublemakers as Daryl Bean, the orchestrator of public-sector union mayhem back in the 1990s. Whitaker’s primary objective — and that of the Post Office pension council — is clear: Kill Bill’s bill.

Quoth Whitaker: “The legislation in our view is clearly tainted. They better get back to the drawing board and start from square one and really have proper consultations before they ever come back with a scheme that would have companies like Morneau Shepell get rich off our backs.”

The real motive is to get the federal government to bail out the Canada Post pension plan, a giant defined- benefit sinkhole with an insolvency gap of $6.5 billion at the end of 2016. The Crown corporation’s meagre profits of only $ 55 million in 2016 mean that Canada Post was in no position to make a dent in the deficit. Profits are improving this year, reportedly, but not nearly enough to fill the insolvency gap.

Even more important, as explained in a summary of the postal pension crisis posted at Canada’s Postal Transformation Project, an independent blog, Canada Post needs to keep cash to reposition its current business operations rather than fund its pension gap.

Pension- fund insolvency occurs when long- term projections based on investment assumptions imply that the fund will not have enough money to pay the defined benefits promised under the plan in coming years. Such projections are dicey and controversial, and may be misleadingly alarmist. As a result, hundreds of defined- benefit pension plans appear to be underwater across Canada.

Many say the insolvency calculation, required under federal law, distorts pension realities and drives plans to take drastic actions that may be unnecessary. Quebec has already watered down its insolvency test and Ontario is about to do the same. Until Ottawa moves to revamp the insolvency calculation ( the decision may well rest with OSFI, the federal government’s financial-risk regulator), the legal requirement to pour cash into cash- short pension funds will continue.

So what should be done about the defined- benefit pension funds operated by federally regulated private and Crown corporations?

One option, proposed under Morneau’s Bill C- 27, is to allow pension funds to convert their defined- benefit pension plans into target- benefit plans. Conversions would, in most cases, reduce benefits to pensioners, but would set new benefit targets and would allow changes in contribution payments so that firms can adjust contributions to help meet the benefit targets. Conversions would be negotiated in union settings or be voluntary for employees in nonunion settings.

The Canada Post pension standoff has been developing for several years. The Canadian Union of Postal Employees, which ( maybe) by coincidence served notice last week it was ready to negotiate a new contract, has opposed targetbenefit pension plans from the beginning.

It wants federal taxpayers to pick up the $ 6.5- billion insolvency tab.

The union argument is that Canada Post is an agent of the government, and a Crown corporation for which Ottawa is responsible. “Given the creditworthiness of the Government of Canada,” the union claims, “a solvency funding obligation is unnecessary for Canada Post.”

The government says otherwise, arguing it “expects Canada Post to operate on a financially self-sustaining basis including the funding of its pension plan, in accordance with current solvency requirements.”

While Canada Post management has disagreed with the government on the need to fund the pension deficit, in 2015 it said it would begin making payments in 2018 to fill the solvency gap. But it has no money to make such payments.

Would Bill’s Bill C-27 open an opportunity to solve the solvency problems at Canada Post? It might. But the union wants Ottawa to kill the bill and fill the $ 6.5- billion gap. That’s the plan.