The Peter Bjornson Principle, Part II

Everyone’s favourite Education Minister is at it again. From CJOB:

The Doer government has decided to borrow 1.5 billion dollars to pay down the liability of teacher's pensions.
The province is taking out the loan to cover off 75-percent of the outstanding amount of the teacher's retirement fund.
Education Minister Peter Bjornson tells CJOB, the move will have no impact on Manitoba's net summary debt because the fund has been a liability on the books.The province says it is also looking at a similar solution to deal with civil servants' pension liability.

No impact on net summary debt? Then no harm done, right? Our esteemed Minister conveniently ignores the interest payments that would now have to be made on these bonds. Let’s use a rate of 4.62% for the bond that Today’s NDP would have to issue to honour their promise. Annual interest payments would be 69.3 MILLION DOLLARS. How many schools a year would you be able to build for that money?

Remember dear reader that a pension liability is usually a commitment to pay someone IN THE FUTURE. It is NOT necessarily cash that must be fronted right away. As such, there is no pressing financial need to borrow money to pay into the pension plan, only a political one. If Mr. Bjornson were instead to give the $69.3 MILLION directly to the teachers instead of lining the pockets of bondholders and they were able to earn a 4.62% return on the money, this would translate into $4.315 BILLION DOLLARS for teachers at the end of 30 years.

But then again, that’s not so much of a pre-election goodie, right Peter? Today’s NDP continues to spend away the legacy we are trying to leave our children. Do you appreciate their willingness to pay $69.3 MILLION in interest PER YEAR in their efforts to curry political favour?