By MPP Toby Barrett
“One recommendation that crosses all sectors is the need for prolonged moderation of growth in public-sector total compensation” – Don Drummond
While people are having trouble paying the bills, government continues to increase the tax burden. At the same time, Ontario is facing credit downgrades and a projected $411.4 billion debt by 2017-18.
The fact is, we can’t rein in the cost of government without addressing the number one cost pressure – labour compensation. In the past, negotiated salary increases have often exceeded the rate of inflation and a longer term plan is required to address this.
To avoid extreme and harsh solutions, my Bill 94 – Addressing Ontario’s Debt Through Alternatives to Public Sector Layoffs and Program Cuts proposes to address compensation paid to employees in the public sector, while recognizing government’s legal duty to consult.
Consultation with employees and their organizations helps avoid possible pitfalls in the wake of Supreme Court decisions regarding government-directed changes to public sector compensation. To that end the Bill commits the “employer” to “consult fully…but also take into account the importance of ensuring the good fiscal health of the employer.”
Bill 94’s call to limit total compensation to Ontario’s economic growth is the lynchpin of my legislation. Since 2003, the public sector has grown by close to 245,000 jobs with taxpayers footing the bill. The total amount paid to public sector workers has increased by almost 46 per cent and now accounts for 55 cents of every dollar spent by the Ontario government. Going forward, linking compensation to GDP provides incentive to over one million public servants to help boost jobs and the economic growth.
Although not mandatory, my bill proposes vacation without pay to save money and jobs. While opinions vary on the Rae Days of a generation ago, the fact is between 2007 and 2009, over half the U.S. States imposed mandatory furlough.
Another option proposed is changing public sector pensions to defined contribution, from defined benefit. Given that MPPs are included in the bill’s compensation proposals, it is fair and equitable to take steps to bring pensions in line with the defined contribution model MPPs adopted 17 years ago.
Bill 94’s proposal for one-year public sector collective agreements provides flexibility to react to changing economic realities. As budgets are crafted year by year, so too could government contracts with employees.
We must consider the full compensation package, including benefits, pensions and moving through seniority grids in any negotiations. As Don Drummond has suggested, while we often concentrate on wages alone, we ignore the millions spent on benefits, pensions, and creep up the grid. Beyond the growth of base wages, overtime, shift premiums and merit pay have a significant cost.
People getting paid by taxpayers shouldn’t get a better deal than the taxpayers themselves. Ontario public sector workers earn 27 per cent more than their counterparts in the private sector according to the Canadian Federation of Independent Business. If this 27 per cent disparity – an overpayment of $16 billion a year – did not exist, it would eliminate the present deficit.
While temporary wage moderation will meet short-term fiscal targets, longer-term action is required with co-operative approaches that can drive institutional and system-level change. If not, moderation in total compensation will give way to excessive reduction in the size of the government workforce, and excessive cuts to government programs.
I look forward to debating Bill 94 on June 7th.