Wednesday, December 2, 2009

National Pensioners Federation letter to Canadian Government

Jean-François Pagé
Clerk of the Committee
House of Commons
Ottawa ON K1A 0A6

The National Pensioners and Senior Citizens Federation, with over a million members, is extremely concerned about the down loading of social costs onto the tax payer during strategic bankruptcies We were always aware of this, but were never able to get specific numbers such as Diane Urquhart provided in her report," Induced Bankruptcies Cost Canadian Taxpayers Billions of Dollars: Federal Government Not Stopping the Abuse."

Diane's report on bankruptcies says:

"I estimate that the Nortel liquidation will cost Federal and Provincial Governments at least $355 million in additional social security program expenditures and reduced income tax revenues, even though Nortel will have an estimated $6 billion plus of cash in its global bankruptcy estate"

Understand this is just one company down loading onto the taxpayers. The total cost with other companies downloading onto Canada's social security programs and the tax base is in the billions. Parliamentarians do not seem to understand the ramifications to Canadian society of permitting corporations to file for bankruptcy protection for the purpose of avoiding their employment obligations that are otherwise payable under Provincial laws. Our Federation is calling for emergency Finance Committee hearings to give our input for changes to Canada's bankruptcy laws. Bring out all the studies on cost and availability of credit that seem to be the basis for not amending the BIA law to put the Disabled, Severed and Pensioners ahead of the Junk Bond Holders. Diane's study on this shows the cost of credit for investment grade companies is minuscule. Only bankrupt companies are affected by the requested change and these companies are not seeking financing. The bond holders at this late stage are almost always junk bond owners, all of which had access to credit default insurance, many were insured and most bought at a deep discount to the bond's face amount once the corporation was known to be financial distress.

Where is the opposition to changing the BIA ? Are they only visible in the back rooms of power yet able to inflict so much cost to our Canadian social security programs. Let them show their faces in Ottawa via hearings in front of the Finance Committee. The National Pensioners and Senior Citizens Federation supports the retirees and former employees of Nortel , Abitibi Bowater, Fraser Papers, Canwest and many other companies already in bankruptcy proceedings. We wish to appear at the Finance Committee hearings to demonstrate the down loading onto our social security and tax base that is happening now with Nortel.

President - Art Kube

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