01/05/2012 11:56 EST | Updated 03/06/2012 05:12 EST

N.S. won't bail out pension plan for workers at idle Cape Breton mill: premier

HALIFAX - Premier Darrell Dexter says the Nova Scotia government is in no position to assume the unfunded liability associated with the pension plan of those who used to work at the now idle NewPage paper mill in Cape Breton.

Dexter made the comment Thursday, a day after a court-appointed monitor announced the mill in Point Tupper, N.S., had been tentatively sold to a Vancouver company, Pacific West Commercial Corp., an affiliate of Stern Partners Inc.

The company is now negotiating a final deal with the province, the mill's unionized workforce and the province's electric utility, Nova Scotia Power Inc. NewPage is seeking an extension to the sale process to March 30.

Stern Partners president Ron Stern has said his company would not assume the pension's unfunded liability, which is about $140 million. He said picking up a bill that size would make it impossible for the mill to become a low-cost producer.

Dexter said the province has already pitched in $15 million to keep the mill ready for operation and woodlot contractors working. But he said there's nothing the province can do about the pension problem.

"It's very deeply concerning, and we understand that this is going to put an extraordinary amount of pressure on a lot of working families in the Strait (region)," he said after a cabinet meeting.

"Obviously, the province is not in a position to pick up the liability around pension plans. These things are very unfortunate, but they happen all too often."

Archie MacLachlan, a vice-president of the Communications, Energy and Paperworkers union, said preserving the pension plan is a top priority for the union.

He said he wasn't surprised to hear the province would not be investing in a private pension plan.

"It would be nice if we had legislation in place that would place pension funds as secure creditors in these type of situations," he said.

Ontario is one of the few provinces to set up a fund to protect pension benefits for plans that are wound up with insufficient funds to cover promised benefits. There is no federal equivalent.

As for Stern's assertion that he will not cover the unfunded liability, MacLachlan said the issue will be the subject of pending negotiations.

"I don't want to negotiate in the media," he said.

The money-losing mill in Point Tupper was shut down in September, throwing 600 employees out of work, and affecting another 400 forest contractors.

Dexter said the province is willing to spend more public money to make sure the mill reopens. He said the costs associated with letting the operation fold are too high.

"The cost to those families, those most directly affected by this, would ... be a pretty heavy price to ask that community to pay," he said.

The premier also said he understood there would be job losses because Stern has said he would shut down one of the mill's two papermaking machines if the sale is approved.

"I don't think that's a surprise," Dexter said. "I understand from the union that they certainly understood that the newsprint machine was the most vulnerable."

Ohio-based NewPage has said it was forced to shut down the mill because it was losing about $4 million a month as it struggled with soaring electricity and shipping costs, a strong Canadian dollar and declining demand, particularly for newsprint.