Compensation for Ontario public servants has skyrocketed over the last 10 years of Liberal rule


Nationalpost.com
March 25, 2015
By Ashley Csanady


Compensation packages for Ontario public servants have risen so much during the last 10 years of Liberal rule it has outpaced inflation and new hires while adding billions to the debt and deficit, a new Fraser Institute report finds.

What the province spends on total compensation - not just wages but also benefits like pensions and extra-medical coverage - has grown 47% since the 2005/06 fiscal year, while the combined inflation rate is just 15%, according to the study set for release Wednesday.

Overall program spending (the amount Ontario spends every year after paying interest on debt and not including capital investments) rose 42% during that same period, from about $80 billion to over $115 billion, while spending on things other than compensation rose 39 per cent. And the number of government jobs increased by about 11%.

“It’s not entirely from new nurses, police officers, teachers or whatever ... our analysis suggests it’s not necessarily going to improve new or better quality services in the province,” said the study’s lead author Charles Lammam in an interview. “When governments spend more it doesn’t necessarily translate into more and better services.”

The study doesn’t just cover direct Ontario employees, but also those who work in what’s called the “broader public sector,” which includes schools and hospitals. And Lamman said just because we’re spending more on those bureaucrats doesn’t mean we’re getting more bang for the buck, especially because the increase is above the combined rate of inflation and growth in the sector.

“People get paid according to how productive they are in the private sector, that’s not necessarily the case in the public sector,” Lammam said. He pointed to another recent study from the Fraser Institute that found public servants are paid, on average, 11.5% more than comparable jobs in the private sector.

Prior to the 2008 recession, the Liberals doled out generous increases to teachers, doctors and other stakeholders, but since that time, compensation increases have slowed as the province seeks to balance a stubborn deficit, currently at $12.5 billion, that’s largely a result of declining revenues in the slow-growth economy of the post-recession age.

From 2005 to 2009, “there was a dramatic ramp up in compensation spending and that certainly added additional strain to the government’s current fiscal situation,” Lammam said.

Starting in the 2009/10 budget, the Liberals imposed a period of wage restraint and austerity that drastically bent the compensation curve, and they are hoping to continue that trend. Deputy Premier Deb Matthews was appointed treasury board president to help tackle the deficit with a focus on compensation and other program savings. She said in an interview Tuesday the government remains committed to balancing its books by 2017/18 and compensation restraint remains a big part of that plan.

“We’re in a net zero world these days and we’re living in a net zero world,” Matthews said, explaining that total compensation spending must remain flat, but small wage increases could be allowed so long as they are offset by other savings, hence the “net” zero.

But the Fraser report also finds that the Liberals have not done as a good job at holding the line on compensation as they have on saving in other areas of program spending.

“Unfortunately in recent years the restraint hasn’t gone far enough,” Lamman said. “Almost three quarters of new program spending the last five years go to compensation.”

It’s a problem Matthews is tasked with tackling in the upcoming 2015 budget, expected sometime this spring. And the report highlights an area of concern she shares from her past post as healthy minister: doctors. Currently, 10 cents of about every dollar Ontario spends each year goes to a doctor, or about 20% of compensation spending.

Tense negotiations with the Ontario Medical Association already broke down once; Ontario’s teachers - who make the most off the public purse following doctors - are also threatening to strike.

“We can’t go higher without taking it from somewhere else ... I do not believe there are very many physicians in this province who would say, ‘Cut from home care so I can be paid more,’” Matthews said.

Public sector unions have also repeatedly pointed out that those figures don’t tell the whole story.

“The real wages of Ontario public sector workers have declined in real terms (fallen below inflation) since 2009 by a cumulative -4%,” said Toby Sanger, senior economist with CUPE on Tuesday. “Yes, Ontario public sector workers gained some real wage increases in the eight years before then, but that came after nine years of real wage losses of a cumulative -6.5%. Since 1990 Ontario public sector workers have received had an overall real wage increase adding up to 2.5%.”

That works out to 0.1% a year, far less than more CEO or the rate of inflation, he said.

Last year, the Liberals offered targeted raises to key sectors: personal support workers, homecare workers and early childhood educators. All three are chronically underpaid and predominantly female posts in the public sector.