Reforms needed at the Caisse

Mr. Scraire thinks the job he is leaving should be split in two. He's right. It's the role of the chairman, and the board, to monitor the CEO's performance. When one person fills both roles, there's a loss of transparency and accountability.

Mr. Scraire is also right to say the board of directors needs to be more independent of government. As it is, it's the government that determines the composition of the board. Mr. Scraire is proposing an arm's-length nominations committee that would make suggestions for board appointments. (The government would retain the final say.) He also thinks the board, not the government, should name the CEO.

These are all sensible ideas. It's too bad, though, that Mr. Scraire isn't pressing for a fundamental reform of the Caisse's dual mandate. Unlike other pension-fund managers, the Caisse's task isn't simply to try to get the best possible rate of return on a conservative investment portfolio. It is also obliged to participate actively in the economic development of Quebec.

This second mandate has clearly been a drag on performance; since 1995, for example, the Caisse's annual rates of return have been significantly lower than those of the big Ontario teachers' pension fund. The Caisse's ill-advised $2.2-billion participation in Quebecor Inc.'s expensive takeover of Vidéotron Ltd. in 2000 - just to keep Vidéotron out of the hands of Toronto-based Rogers Communications Inc. - was an irresponsible use of public pension funds. And we still don't know precisely what former premier Jacques Parizeau had planned in 1995 - something about spending billions of dollars in Caisse cash reserves to prop up the Canadian dollar in the event of a Yes victory.

A Caisse truly independent of government interference would deliver better rates of return, and prevent the retirement savings of Quebecers from being used as a political tool. Quebecers deserve - and should demand - a pension plan that puts themselves first, not the state.

Mr. Scraire rejects the idea that private pension managers should be allowed to compete with the Caisse to manage Quebec Pension Plan contributions, saying this would "serve different interests that don't conform with the interests of the Caisse." But the interests of the Caisse should be secondary. As Claude Castonguay, former provincial cabinet minister and father of Quebec medicare, said earlier this month, imposing competition on the Caisse would improve its investment discipline and force it to be more forthcoming about its administration costs. For too long, the Caisse has blocked efforts by Quebec's auditors-general to look into its bloated cost structure.

With Mr. Scraire leaving a reform agenda behind, this is as good a time as ever for full public hearings on these issues. The worst thing the government could do now would be quickly to appoint a single successor to Mr. Scraire, and sweep the Caisse's problems back under the rug.