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March 20, 2014 - No. 30

April 7 Quebec Election

A New Direction for Quebec --
Stop Paying the Rich!
Increase Funding for Social Programs!

April 7 Quebec Election
Marxist-Leninist Party of Quebec Participates in Quebec Election

Whose Economy? Our Economy! Who Decides? We Decide!
Quebec Civic Workers' Defence of Their Interests Is Not the Cause of Retirement Fund Deficits - Claude Moreau
Persistent Problem in Agreement Between Alcoa and Quebec Government
Features of Hydroelectricity Agreement with Alcoa - Normand Fournier
Quebec Forestry Workers Reject Resolute Forest Products' "New Model" - Interview, Pierre Thériault, President, National Union of Pulp and Paper Workers, Kénogami

April 7 Quebec Election

Marxist-Leninist Party of Quebec Participates
in Quebec Election

The Marxist-Leninist Party of Quebec (PMLQ) is fielding 24 candidates in the general election called for April 7.

The program of the PMLQ is:

- for a sovereign and independent Quebec;

- for a modern constitution and democratic renewal;

- for a new direction for the economy so as to guarantee the well-being of the people and the social and natural environment.

"It is the people who should be sovereign and we encourage them to participate in democratic renewal of the political process and to define their own position on the present and the future," says PMLQ leader Pierre Chénier. "Wealth is created by those who work hard every day to meet their needs and those of society. They must be at the heart of decisions that affect them and decide for themselves the direction of the political, economic, cultural and social affairs of Quebec. Their role cannot be reduced, as is the case today, to that of a pool of votes for one political party or another. "

After nominations close on March 22, information on the candidates' names and ridings will be available on the PMLQ website (www.pmlq.qc.ca). Daily information on the views of candidates, workers and the youth can also be found on the PMLQ website in Chantier politque.

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Whose Economy? Our Economy! Who Decides? We Decide!

Quebec Civic Workers' Defence of Their Interests Is Not the Cause of Retirement Fund Deficits

There is much talk at present about pension deficits in the municipal sector in Quebec. The main cause of actuarial deficits of pension funds in the sector is the aggressive investment policy of municipal pension fund managers who delivered the retirement savings of employees to speculators and financial fraudsters.

Still carrying an actuarial deficit from before the municipal amalgamations in 2002, retirement savings were greatly affected by the financial crisis of 2008, and to a lesser extent by lower yields in 2011 that generated a negative return. In 2008 alone, more than 25 per cent of the assets of certain funds were lost. Participants lost the equivalent of nearly 10 of the 30 or more years during which they had contributed.

Quebec City civic workers and supporters demonstrate outside National Assembly, October 23, 2014.

"Deficient risk management," in the words of the Amours report,[1] was made possible or facilitated by the absence of legislative oversight or legal constraint, as the municipal sector is excluded from the provisions for other sectors such as insurance companies.

Why did municipal pension fund managers take unnecessary risks?

In the 1990s, stock returns and interest rates led municipal employers to increasingly expect high returns on contributions to fund the plans.

Municipal employers used the surplus generated to take contribution holidays and were very reluctant to reinvest the surplus in special "rainy day" funds. They preferred contribution holidays.

"A veritable investment performance culture gradually developed, to the detriment of managing risks on the basis of liabilities." (Amours report, page 55)

But in the early 2000s, dividend yields and interest rates fell. The Canadian bond yields also fell as they were increasingly in demand from pension funds. The results were less than what was projected, which led to actuarial deficits.

Employers may have been excited at the idea of contribution holidays, which were rarely the case for contributing employees, some of whom used any surplus to improve their benefits, however, the Supplemental Pension Plans Act provides for an equalization contribution borne entirely by employers if there is a difference between expected returns and results.

On December 31, 2011, there were 170 municipal pension plans for 122,000 participants. The deficit of these plans in terms of capitalization has reached $4 billion and must be repaid over a period of 15 years according to law.

Taking into account that the repayment of deficits from the early 2000s is stretched over 15 years, the impact of amortization is increasingly felt in municipal budgets. In addition, with the drastic drop of 2008, municipal pension fund managers can no longer rely on high dividend yields or high interest rates to "balance" the funds. It is therefore the taxpayers who must take up the slack.

Governments through their fiscal policies rescued the financial sector in 2008, but they did not support retirement savings to keep them from collapsing.

The fact that retirement savings have not been protected from financial fraud and reckless risk-taking has led to a weakened capacity and greater difficulty in managing other issues affecting pensions, such as people's increased lifespan.

There are programs for compulsive gamblers but obviously these programs do not exist for pension fund managers. The truth is that the fund that pays retirees' pensions, that must do the same for future retirees, was played away and it is the taxpayers (the very same ones who municipal authorities claim to defend) who must pay for the amortization.

In Quebec City, the additional tax contribution in 2013 is $2.3 million for property owners, taxpayers, who will pass on a portion of the bill to tenants. For the city of Old Quebec, this represents $12 to $250 for the "average residence."

Is the role of government to protect retirement savings to ensure the right to retire or to protect the invisible hand or be the invisible hand delivering these savings to speculators and fraudsters? To ask the question is to answer it.


1. Amours Report, Report of the Expert Committee on the Future of the Pension System in Quebec. The Committee of Experts was mandated by the Régie des rentes du Québec to produce the report, which was presented in April 2013. The report is entitled Innovating for a Sustainable Retirement System: A Social Contract to Strengthen the Financial Security of All Québec Workers. The full text is available here.

(Translated from original French by TML.)

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Persistent Problem in Agreement Between Alcoa and Quebec Government

The agreement reached recently between U.S.-based aluminum producer Alcoa and the Quebec government on hydro rates does not solve the question of building a resource sector and an economy whose development is decided by the people and serves their needs. The use of threats instead of negotiation remains a weapon in the hands of monopolies. The agreement signed between Alcoa and the government is said to have been negotiated because there was an agreement concluded but it is the result of threats and the threats and blackmail persist. The signed agreement is itself the termination, based on threats, of a signed agreement between Alcoa and the Charest government in 2008. If Alcoa can threaten to close its factories in Quebec if electricity prices accepted in the 2008 agreement now come into force, it may do so again with this new agreement under all sorts of pretexts. The workers and the people of Quebec do not want to live in perpetual anxiety about job losses and loss of manufacturing production that are important to their well-being and the economy.

Quebeckers have no control over the different aspects of the agreement signed. What is certain is that hydro rates well below the industrial rate were granted and now other monopolies are knocking at the door for lower hydro rates. The $250 million pledged investment, which cancels out the much larger investments that were to be made to the Baie-Comeau aluminum smelter -- investments promised to adapt production facilities for increased demand expected from the automotive industry and the electrification of transportation -- are promises that can be abandoned just as quickly as they were made if Alcoa declares an economic downturn as an excuse. Alcoa is currently using low aluminum prices on the world market to justify its threats, but it doesn't speak of the role it and other aluminum monopolies play in manipulating these prices or the role that monopolies play in creating anarchy and chaos in the global economy.

The problem persists because the workers and the people have no more control today than yesterday over the economic decisions and the levers that would enable them to play on the various factors at work and set a new direction for the economy to make it serve the people and not private monopoly interests. That is what the workers are addressing in their struggles for their rights because without this there can be no economic security.

(Translated from original French by TML.)

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Features of Hydroelectricity Agreement with Alcoa

On February 25, the Quebec government and Alcoa, an American multinational, announced that they had reached an agreement on electricity rates. The agreement with Hydro-Quebec for the Becancour and Deschambault plants is for 15 years and for the Baie-Comeau plant, 20 years.

The parties involved did not disclose the rate "negotiated" for the duration of this agreement. There is talk of a "renewed preferential rate" according to Radio-Canada, which would be below three cents per KWh.

Price to Pay to Reach an Agreement

Saving the Alcoa plant in Baie-Comeau comes at a price. For this plant alone Quebeckers will pay $150 million per year in the foreseeable future. The total loss in hydro electricity rates is $210 million per year for the three Alcoa plants in Quebec.

The modernization of the Baie-Comeau plant, valued at more than $1 billion under the agreement signed with the Jean Charest Liberal government in 2008, has been abandoned in the new agreement. Alcoa said that it will invest $250 million over five years in its three plants in Quebec: $150 million is planned to optimize the casting centre of the Baie-Comeau plant, $71 million will be allocated to the Becancour plant.

The government gave Alcoa a modulated rate program in relation to aluminum prices on international markets. This is what the company demanded at the Commission on the future of Quebec's energy sector, threatening to close the three aluminum smelters if the Quebec government refused.

In exchange for a "renewed preferential rate" Alcoa is now a partner of the government's transportation electrification strategy. This agreement "has become a springboard to make Quebec a world leader in electric transportation," said Premier Pauline Marois.

Since 2002, 900 jobs were lost in Alcoa, 700 of them since 2008. The company employs approximately 2,000 people in Central Quebec and 900 in Baie-Comeau.

Let's review the events preceding this agreement. In October 2013, Alcoa threatened the Marois government that it would close its three smelters in Quebec if a new electricity rate that would keep the company in the first percentile of plants benefiting from the lowest international electricity rates was not granted. At that time, Alcoa, under special and favourable contracts, paid about 2.8 cents per KWh. In an agreement with the previous Quebec government, this rate should have increased to the preferential L rate (for large consumers), at 4.3 cents per kWh in 2014. Alcoa claimed that future increases would increase its electricity bill by $250 million per year to $570 million, and that its profitability and its ability to compete internationally were threatened because of the increase.

In February 2014, Alcoa had an agreement with the City of Baie-Comeau on the municipal valuation of the plant. Alcoa challenged Baie-Comeau's role in the assessment, which was $261.6 million. According to the agreement, the plant's valuation decreases by $19 million for 2013, $24 million in 2014 and $29 million in 2015. The justification for the lower tax bill that results from the reduced valuation is the closure of the old Soderberg aluminum smelter. The City of Baie-Comeau will receive $769,000 less in 2013, and $887,000 and $1.1 million less for the years 2014 and 2015, respectively.

Government's Justifications

Regarding the abandoned agreement for the modernization of the Baie-Comeau plant, "[W]e believe that aluminum prices will recover and at that time, in a few years, a modernization project could be foreseen for Baie-Comeau," said Minister of Natural Resources and Minister Responsible for Northern Development, Martine Ouellet. "What we have in place save[s] Baie-Comeau," she added.

"We needed to build quality jobs in the region," said Pauline Marois during the announcement in Baie-Comeau. "I am particularly proud of the conclusion of this agreement, which marks a new beginning in our relationship with Alcoa, in addition to ensuring the sustainability of its operations in Quebec and maintaining quality jobs in our region for a period of at least 15 years. [...] Our government is using its electric transport strategy to mobilize many players, such as Alcoa, around an ambitious and promising vision for the future," she said.

For her part, Minister Martine Ouellet cited the development of an air-aluminum battery with Alcoa and its partner Phinergy. In addition, she presents the automobile industry's use of 22 million alloy plates as an outlet to "use the electricity surplus for economic development [...] Many innovations are expected in the automotive sector over the next few years, and Quebec is relying on the capacity of its dynamic companies such as Alcoa to innovate, in order to distinguish itself."

Following this announcement, the National Union of Baie-Comeau Aluminum Employees said that "insecurity has been hovering over Baie-Comeau in recent months." The union president, Michel Desbiens, said he was reassured that 900 jobs will remain. "It was becoming hard for families," he said. "But, yes, we would have liked to have the modernization [of the plant] in the agreement," he added.

(Translated from original French by TML.)

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Quebec Forestry Workers Reject
Resolute Forest Products' "New Model"

Demonstration against closure of paper machine number 6, at Resolute Forest Products
Kenogami mill, November 26, 2011. (FTQ)

Last December the Quebec Confederation of National Trade Unions (CSN), representing workers (other than the paper machine employees and office workers) at the Resolute Forest Products' (RFP) Kénogami paper mill in the Saguenay-Lac-Saint-Jean region issued a press release announcing that workers refuse to accept another demand for concessions from RFP. This demand exposes both RFP's use of threats and its attempt to impose what it calls its "new model" of working conditions. Chantier politique recently spoke with Pierre Thériault, President of the National Union of Pulp and Paper Workers of Kénogami. TML Daily is reprinting this interview. RFP has a network of seven hydroelectric power plants in the Saguenay-Lac-Saint-Jean region (Hydro-Saguenay), including the Jim Gray facility on the Shipshaw River that feeds the Kénogami and Alma paper mills. Access to this energy resource, which is a great privilege for RFP, is subject to agreements with the Quebec government, including Bill 8, which provides the investment and maintenance obligations of the forestry monopoly for its plants. The lease of the Shipshaw River plant expired at the end of 2011 and the Liberal government at the time terminated the lease because RFP refused to commit to making investments for the next 10 years. More than two years later, RFP still owns and operates the plant.

Chantier politique: The union issued a press release in late 2013 that said the Kénogami paper mill workers have rejected new concessions demanded by Resolute Forest Products. Can you tell us more about this?

Pierre Thériault: This demand addresses workers that I represent who are unionized with the CSN, about 115 workers, including workers in pulp production, on the railroad, shipping wood chips, finishing and maintenance. The plant includes sixty workers who work on the paper machine itself, who are unionized with Unifor (formerly CEP), and a dozen clerks who are members of the Canadian Office and Professional Employees' Union (COPE/SEPB).

To give a little background, in early 2012, Resolute Forest Products closed machine No. 6. Our factory now operates with only one machine. When they closed the No. 6 machine, they made drastic job cuts to reduce their production costs to a minimum. Nearly 130 jobs were lost.

We thought after that we would have some peace. The bosses met with us in November 2013 and asked us to reopen our contract because they wanted to reduce our workforce by about thirty positions in order to give those jobs to subcontractors. They wanted us to give up railway workers, workers who ship the wood chips, finishing workers and some maintenance workers. They didn't make demands for machine workers as such this time.

They made this demand five months before the end of our collective agreement. Our agreement expires April 30, 2014. There is no urgency. At Kénogami, our cost of production is excellent, it is one of the lowest in the company. They don't want to reduce costs because we are not profitable; they want to establish a pattern. What Resolute Forest Products wants is to create a model.

CP: How would you describe this new model?

PT: They recently restarted the Dolbeau and Gatineau plants, factories that were closed in 2009. They reopened them but as a condition to reopening they sat with the workers there and asked them if they were willing to accept lower working conditions and the workers, understandably, said yes. This is the new model they are trying to implement in other plants in Quebec; maximum outsourcing, subcontracting wherever they can.

Resolute toured factories one after another. It is worth mentioning that Resolute employs threats everywhere, whether in Alma, the Laurentians, Baie-Comeau and elsewhere. Resolute started with the Laurentians two years ago and demanded concessions. The workers there said no and two days later Resolute announced their indefinite closure due to lack of orders. We know very well that it was not true. It was retaliation for the stand of the workers there because we started getting the orders at Kénogami from the Laurentians. We had evidence that the orders were there.

At Kénogami we decided to say no because otherwise there will be no end to it.

At the General Assembly, which took place in early December, we went over their demands. The members spoke. We held the vote; 99 per cent of the workers voted to reject the employer's demands and wait for negotiations. About 75 per cent of our members were present, which is a high number these days. I warned my members that we could expect retaliation.

I look forward to negotiations. With negotiations the company has the right to lock out workers. We'll see where the balance of power falls. We feel we still have a balance of power because of our hydroelectricity facilities.

CP: What role do you see the hydroelectric plants playing in your case?

PT: [When the lease expired,] the Liberal government at the time -- Mr. Clément Gignac was Minister of Natural Resources -- announced that it was taking possession of the plant because the company had not complied with Bill 8. Bill 8 is the law that covers the management of hydropower plants on the Shipshaw River. The law demands they invest about $400 million in their facilities in Saguenay-Lac-Saint-Jean between 2012 and 2022. When he saw this, Mr. Garneau, CEO of Resolute, said he would not invest in those facilities. He failed to negotiate with the government and the government took possession of the plant. However, the surrender was not real because since then RFP continues to maintain the plant and enjoy its benefits. The Parti Québécois government took the matter in hand and appointed a negotiator. Negotiations are going on between the government and RFP through the negotiator.

What the law says is that in addition to requiring investments for the right to use water from the Shipshaw River and these plants, the Alma and Kénogami plants must be in operation. It is perhaps here that we find our balance of power at the moment and which explains why Resolute has not retaliated for our decision to refuse to reopen our collective agreement as it did elsewhere.

We're demanding they respect the law. All we're asking is that they make the investments required by law.

CP:What do you want to say in conclusion?

PT: At Kénogami we're working to save our jobs; these are quality jobs. Outsourcing our jobs will mean not only that we lose jobs here in Kénogami, it also means we will lose quality jobs and this will also lead to the community's impoverishment. When there are only $13-$14 per hour jobs in our community, the whole economy will suffer. They are hiring non-unionized subcontractors. Often they will hire one qualified person at $20 an hour and the others at $14-$15 per hour, no pension, no benefits. We want to keep our quality jobs in our factories.

(Translated from original French by TML.)

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