Public pay and pensions are much in the news. Unions representing BC teachers, municipal workers, and most provincial employees are out looking for more. The more that they want is from the pockets of taxpayers and from governments facing tight budgets.
Here in B.C. prudence is the key approach to the fiscal challenges – curtailing spending today to return to balanced budgets tomorrow – and avoid sinking back into a vicious debt cycle.
Greece and some other European countries are reaping the whirlwind of uncontrolled spending. They face depressed growth, loss of global competitiveness, and a reduced standard of living. They are paying today for what they overspent yesterday.
Think a similar crisis can’t happen here? The recently released Commission on the Reform of Ontario’s Public Services tells a different story. In the absence of wide-ranging changes, it projects provincial debt of more than $400 billion. That’s more than half the size of the entire provincial economy – the goods and services produced by every business in Ontario.
Here in British Columbia, our debt is much lower – around 18 per cent of the economy. But we still need to move our budget solidly into the black and we need to find ways to shrink, rather than hold the line, on government spending. If we fail, we could easily slide down the easy path to the hard reality of Greece.
Where can we save? Exactly where the BC’s labour leaders are looking for extra spending – wages and benefits at the provincial and municipal levels. The harsh reality for taxpayers is that public sector labour costs are far out of line with the private-sector. Taxpayers facing belt-tightening and economic uncertainty are being asked to make sure public sector pay gets richer.
Research shows that public servants in Canada get pay and benefits that are 30 per cent higher than people doing the same work in the private sector. Yet right now we’re witnessing demands from public sector unions for compensation increases that are disconnected from reality.
What can we do to rein in the public sector gravy train – and give overburdened taxpayers a break?
Simple. The time has come for a British Columbia Compensation Equity Act. Its intent would be to put BC’s provincial and municipal workers on a more equal footing with the rest of us, thus ending an odd situation where one segment of the population is compensated at a higher level thanks to the taxes paid by the people receiving less.
A Compensation Equity Act would accomplish this in two ways.
First, it would set up a market-based model to guide future wage rates and compensation packages in the public sector. Over time this would address the significant existing disparity, and bring compensation for the public sector in line with private sector workers in the same jobs.
Second, it would start phasing out the recklessly unaffordable defined-benefit pension entitlements in the public sector. Equity is certainly a consideration here as well, since private sector workers are assuming more and more responsibility for planning and financing their own retirements. Think group RRSPs instead of taxpayer guaranteed pensions for life.
Neither of these objectives is small or simple. The legislative framework to make this happen will take time. But it’s a worthwhile investment. A Compensation Equity Act is precisely the type of tough and potentially transformative measure our cities, our province, and our future needs at a time when our future prosperity is at risk.
- post by Philip Hochstein
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Like Laura Jones, before Hochstein can spew his BS on public sector pay, he must disclose how much he recieves in pay and compensation to have any credibility.
BTW, those ads on Dix…classy!
Piker why do you think we owe you a living better than we have ourselves and how do you think the present path we are on is sustainable.
No matter how much Hochstein and his ilk wine about public sector pay and benefits, they can’t show one study which shows comparable highly skilled positions in public service making more than the private sector. If you tell the same lie long enough….
I am glad you agree that BC and Canada, under “fiscal conservatives” Gordon Campbell, Christy Clark and Stephen Harper is on an unsustainable path. Cutting corporate taxes and stripping collective agreements has worked so well. How does stripping away even more provisions in collective agreements benefit you? How is it my fault that my union negotiated a define benefit program.
The better question is, how come you aren’t demanding the same from your employer?
@Piker:
Question: Which government services would you cut so that more $$ can go into the pockets or both you and your union buds?
After all, the money has to come from somewhere and there is only so much to go around.
The BCTF alone is asking for $2.06 billion between wages and benefits.
I see ads running for the HEU, and you can bet every other union in this province will be standing with their hands out.
So again I ask, where is the money coming from?
Raise personal income taxes? Put the squeeze on businesses that employ people? Tax that crap out of exports? Cut services and programs?
So bash away. The NDP is union driven and offers zip to the rest of us. The only thing these are good at is tax and spend.
Dix and the NDP are promising the world and so far, no mention of how it will be paid for.
The economy is recovering and thanks to the Liberals, this province fared out a heck of a lot better than the majority of other provinces. And Canada stood number 2 behind Australia on the international market.
I survived the 90′s and the NDP of that time and have zero desire to see the province hit that kind of devastation again.
Max, I keep hearing people say things like ‘BC fared well’ or similar but with facts like child poverty being worst in BC for the 8th or 9th year in a row I don’t if I can believe the hype.
@boohoo: From the Conference Board of Canada re: Child Poverty in Canada;
Canada’s child poverty rate increased between the mid-1990s and the mid-2000s.
And according to the last child poverty report – Manitoba took the lead.
If you look at ‘Food Bank’ access and according to March 2011 stats, Alberta shows a higher % of children accessing food banks than BC, as does every other province with the exception of Nova Scotia.
Child poverty is tied to a number of factors including divorce (single income vs double), kids in welfare families, immigration, taxes.
All levels of government need to work on child poverty – it cannot be pinned onto any one political group.
Ok, great we’re number two. Let’s celebrate?
I never said it could be pinned to a political group. The fact that in Canada, a ‘first world’ country we have a systemic problem of child poverty, yet we go on and on about how well our economic situation is, well that’s disgusting.
My point wasn’t about child poverty anyway, that was just one example (there are several others) of a metric that is essentially ignored when we talk about how great BC/Canada is doing.
@boohoo:
Every country has child poverty regardless of where they stand in the international community.
Max,
Again, child poverty was just an example. Stop picking on that and address my point if you want to keep replying.
@boohoo:
How about rewording your initial question then. You brought up child poverty in your first reply to my post and then re-iterated it in your second.
I should not be surprised that when addressed you hit the 180 degree turn button and claim the answer is not what you are looking for. It seems to be a pattern with you. You seem to enjoy playing pithy.
You have a great night!
Max,
I actually brought it up in my first as an example of the kind of statistic I was talking about. In my second post I reiterated it was just an example. In my third post I again said it was just an example. You do know what an example is right?
Seriously, do you want to talk about my point or not? Who is playing games here?
My point (for the fourth time) is that all the good news about BC’s economy is very narrow minded. Some people are doing fantastic, many are not. If you honestly can’t see that I was using an example and if you honestly don’t get my point, then just forget it.
I don’t think most people want government to think as shrewdly as competitive businesses must when it comes to pay. People in my department at Telus are paid less than if they were doing a comparable job for the government mainly because Telus had scabs in Alberta doing our job while we were locked out and cut out the union’s bargaining power. I’m sure some people would love the government to be that calculating but I trust that most people want government to reflect public values. It’s very possible that the public tends to accept public workers making somewhat more money than in the private sector because they’re fine with people being paid a living wage rather than getting the lousier wages you can get on the private labour market. I would expect that people consider that the average market wage for non-managerial labour is lower than what is fair and so why should a government run by the public not correct the situation with it’s own pay?
@The Couve:
What I and many others find interesting is that unions tend to promote the idea that only ‘union’ labor is capable of doing certain jobs and doing them well.(I mean truly, how hard is it to push a broom, mop a floor, drive a truck etc, mow a lawn…)
And I disagree that the public ‘accepts’ that public sector workers make more. What choice do we have when our services are threatened if we don’t pay up? It is extortion at the best. (Law. the crime of obtaining money or some other thing of value by the abuse of one’s office or authority.)
why did the ICBA remove the members list from their website
i guess they’re not so proud of what they are
Greece and some other European countries are reaping the whirlwind of uncontrolled spending.
This is, by the numbers, false. Of the so-called “PIIGS” nations – Portugal, Ireland, Italy, Greece, and Spain – Spain and and Ireland were running budget surpluses in the years up to 2008.
Greece, the alleged bad one, did not have a “spending” problem. It’s government spending per capita was right in the middle of OECD countries. Greece does not have a large civil service. As a percentage of the population, less people work for all levels of Greek government is less that that of Canada.
The problem Greece has is on the revenue side, specifically a very serious tax evasion problem. It also spends double the NATO average on it’s military, despite not having a real security need to do so. I’ve calculated that collecting all taxes lost via tax evasion, and cutting the military budget in half would have closed most of the current deficit.
The Hochstein’s of this world never seem to mention Sweden.
Swedish Government expenditures and revenues make up more than 50% of GDP.
It spends more than 40% of it’s budget on social programs.
1 in 3 Swedish workers work for the government.
And yet it’s debt as percentage of GDP is almost half the OECD average. It’s much lower than Canada’s.
It’s economy is also forecast to have some of the strongest growth in Europe this year.
C’mon Spartikus, no fair bringing actual facts into this narrative. the government has to illegally undermine the collective bargaining process or…Greece!
Spartikus, given the geographical size of Greece, it may be that the percentage of the population in civil service is lower than Canada. But at the federal level Greece enetered the 2008 recession with 750,000 civil servants and Canada with 263,000. Doesn’t that seem a little out of whack to you?
You’re comparing all Greek government workers to Canadian Federal government workers.
There were 8 civil servants out of every 100 Greek workers, compared to 16.5 at all levels of government for Canada. You service population, you don’t service square kilometres. Geography is irrelevant.
Why is “out of whack”? Why don’t Greeks deserve a modern government, to the standards required by membership in the European Union?
Why are you choosing to believe cutting an already modest civil service is more important that collecting unpaid taxes by the wealthy (and it is the wealthy who are the most guilty of tax evasion in Greece)?
Why are you choosing an inordinately large Greek military over the needs of ordinary citizens?
Austerity isn’t something that’s just started. It’s been 4 years already. The lab results are in – it’s a disaster.
The crisis didn’t originate in Greece. It originated in the New York and London financial markets.
Here’s the OECD stats on government expenditures per capita for 2006. That’s pre-crisis so, if your theory is correct, you’d expect the problem countries to be very high in this regard.
Explain to me how Greek *spending* – as opposed to revenue collection – was the problem?
Two sides on the same coin.
In theory, revenue is far less controllable than spending. In Greece in particular, there isn’t a way to increase the revenue enough to cover the spending – they lack the tax base. So their debt holders want them to control the other side of the equation. There were anecdotal examples of government rail workers earning 7 times the average wage.
However, your point is valid, had the Greek government spend the last 20 years focused on growing the top line, they may not have had the bottom line problem they do today.
It can only be assumed that Hockstein means the Canadian Federation of Independent Business study on public-private sector wages.
This study was found to be problematic by the Treasury Secretariat.
The simple fact, though, is that the wealth generated by our province has not been shared with the vast majority of British Columbians from both the public and private sectors. It’s gone to the very wealthiest in our society, as BC Stats acknowledged recently.
Phil Hochstein wants to turn public and private sector against each other to distract from the wealthiest continuing to collect the majority of the wealth.
Labour/union leaders placed the wedge between public and private sector workers long ago.
How quickly the public forgets about how the government rolled back of wages and tore up contracts. No wage increase nor a benefit improvement in 10 years. Not even a cost of living allowance. It is time for support staff in health care get some kind of wage increase to at least be able to keep up with the increase in gas and utility costs.
@ Broke – I think that is part of the problem – the amount of misinformation going on for both sides makes sorting out the issue difficult. However, I personally don’t want to talk wages – I would like to understand, as a tax payer, the total compensation and benefits package paid to public sector employees? Getting focused on just wages for example, risks us losing sight of the forest from the trees. The math is not complicated as private sector companies (in an effort to attach or retina talent) have been able to add defined values to all parts of a compensation and benefits package in order to compare apples to apples.
Compensation doesn't matter – it's government spending per capita that matters that counts.
Greece was average.
To respond to your question above, it's correct to point out Greece spent more than it was taking in, but the *framing* is always of the profligate "Euro Socialist" state…when in fact in Greece's case it was a failure of government to collect taxes owed.
And I remind everyone of Spain, Ireland and a whole bunch of others that were "good financial citizens" who nevertheless got caught in the trap we all found ourselves in.
The inability to devalue their currency – as Canada has been able too – hurt them greatly.
@Broke:
I have zero problem with workers getting a cost of living increase.
What I take issue with is all the other 'padding' that unions seem to think they are gleefully entitled to. ie: the BCTF demanding 10 days paid leave for the death of a 'friend'.
When stupid demands such as those are filtered in – it leaves a bad taste in the mouth of those that are footing the bill – the taxpayers.
I see that spartikus has hauled out Sweden, the poster state for socialists, oops, Progressives, to demonstrate that the welfare state works. (At one time Cuba was lauded for providing free education and health care for all but the propensity of its citizens to risk their lives to escape the island paradise took the lustre off that narrative.)
What spartikus failed to mention is that since 2006 Sweden has been moving to the right by reducing the government’s share of the economy through reduction in income taxes and reducing some welfare benefits. This was in response to the failling of Sweden’s welfare state evidenced by the fall in Sweden’s per capita income from 4th place in 1970 to 17th in 1997. The government intends to continue reducing the government’s share of the economy just like all the other developed economies.