Hal-Nor MPP Barrett’s Private Members Bill (cap on public sector wage increases) moves to 2nd reading

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Haldimand-Norfolk MPP Toby Barrett introduces his private member bill at Queen's Park image: Mith Media

QUEEN’S PARK, Ontario — People getting paid by the taxpayers shouldn’t get a better deal than the taxpayers themselves. That according to Haldimand-Norfolk MPP Toby Barrett following introduction of his private members bill last week, Bill 94Addressing Ontario’s Debt Through Alternatives to Public Sector Layoffs and Program Cuts Act, 2012. http://www.ontla.on.ca/web/bills/bills_detail.do

“While private sector job growth has stagnated across Ontario, the public sector has grown by close to 245,000 jobs, with wages that outpace private sector salaries,” stated Barrett. “The discrepancy becomes even more worrisome when we consider that Ontario public sector workers earn 27 per cent more than their counterparts in the private sector according to the CFIB.”
Barrett’s Private Members Bill aims to limit any increases to public sector workers’ total compensation package to the rate of Ontario’s real GDP economic growth per capita.

 

The preamble to the Private Member’s Bill notes, “Since 2003, the annual deficit of the Province of Ontario has increased alarmingly and is projected to be $30.2 billion by 2017-2018. Accumulated debt of the Province is projected to be $411.4 billion by 2017-2018…It is vital that the Province get its finances in order, otherwise there will be no alternative but to cut government programs significantly which will inevitably lead to layoffs in the public sector and a lower level of Government service to the people of Ontario.”

“While private sector unemployment has reached half a million people, public sector salaries have increased 46 per cent,” Barrett noted. “As well, over the last 10 years the number of government workers in health and social services have gone up by 39 per cent, and in education – up by 34 per cent.”

Addressing Ontario’s Debt Through Alternatives to Public Sector Layoffs and Program Cuts Act, 2012, now moves to second reading debate slated for June 7th.

For more information, please contact MPP Toby Barrett at: (416) 325-8404, (519) 428-0446 or 1-800-903-8629

1 Comment to Hal-Nor MPP Barrett’s Private Members Bill (cap on public sector wage increases) moves to 2nd reading

  1. Rob Willett

    QUEEN’S PARK – Both Ontario’s Premier and the Finance Minister have
    waded into public sector compensation legislation introduced by
    Haldimand Norfolk’s Toby Barrett.

    During Question Period, both McGuinty and Duncan challenged the limiting
    of compensation to GDP economic growth described in Barrett’s Bill 94
    Addressing Ontario’s Debt Through Alternatives to Public Sector Layoffs
    and Program Cuts Act, 2012

    In response to questions on MPP Jeff Yurek’s Private Members Bill to
    freeze wages for two years, McGuinty cited, “the other private member’s
    bill put forward by one of his colleagues, the member from
    Haldimand-Norfolk, whose bill proposes that we limit compensation to the
    annual rate of economic growth.”

    As well, Dwight Duncan chimed in later, “your colleague over there
    introduced another bill that ties wage increases to GDP.”

    To help the Premier and Finance Minister better understand, MPP Barrett
    has forwarded them a Backgrounder (attached) indicating measures going
    forward in his proposed legislation are designed to accomplish
    longer-term sustainability of public sector compensation, beyond a two
    year wage freeze.

    “A projected debt of $411.4 billion requires Herculean efforts to avoid
    an economic precipice of Greek-like proportions,” Barrett exclaimed. “I
    ask that Mr. McGuinty and Mr. Duncan consider the public sector
    compensation options laid out in my Bill and the Backgrounder.”

    For more information, please contact MPP Toby Barrett at: (416)
    325-8404,
    (519) 428-0446 or 1-800-903-8629

    BACKGROUNDER
    Bill 94 – Addressing Ontario’s Debt Through Alternatives
    to Public Sector Layoffs and Program Cuts Act, 2012

    “one recommendation that crosses all sectors is the need for prolonged
    moderation of growth in public-sector total compensation” – Drummond
    While people are having trouble paying the bills, government continues
    to increase the tax burden to pay for wasteful spending. Ontario is
    facing credit downgrades and a projected $411.4 billion debt by 2017-18.
    Servicing this debt impairs the ability of Ontario to function and has
    led to levels of taxation that restrict the ability of businesses to
    compete, and of individuals to survive financially.

    People are upset about program cuts to valued government services.

    People, especially the million-plus public servants whose compensation
    represents over half of Ontario program spending, don’t want to see mass
    layoffs. You lose your job, you lose your pension.

    To restore confidence and to bring our province’s fiscal house in order,
    a viable longer-term plan in cooperation with our public sector to help
    maintain necessary government jobs and government programs is vital.

    It is vital that the Province get its finances in order, otherwise
    government will see no alternative but to cut government programs
    significantly which will inevitably lead to layoffs in the public sector
    and a lower level of government service to the people of Ontario. As
    well, continued financial mismanagement will lead to increasing
    unemployment, increasing debt servicing costs and increasing taxation.

    To avoid such extreme and harsh solutions, Bill 94 – Addressing
    Ontario’s Debt Through Alternatives to Public Sector Layoffs and Program
    Cuts Act, 2012 proposes measures to address compensation paid to
    employees in the public sector, while recognizing government’s legal
    duty to consult fully with those employees and the bargaining agents
    representing them, and to negotiate with them constructively and in good
    faith.

    Bill 94 is comprised of seven initiatives:
    1. Indicate government’s responsibility and objectives to fully engage,
    consult and conduct genuine and constructive negotiations with public
    sector workers on legislative changes to collective bargaining and
    compensation

    * Government’s obligation to consultation and negotiation is key,
    given recent Supreme Court decisions that have reinforced the laws of
    the land when it comes to government-directed changes to public sector
    compensation.
    * Following a union challenge, a majority of the Supreme Court
    held that the Charter “protects the capacity of members of labour unions
    to engage, in association, in collective bargaining on fundamental
    workplace issues.”
    * Government employees, according to the Supreme Court, have the
    “right to unite, to present demands to . . . employers collectively” and
    to work together to pursue workplace goals. Government employers have a
    corresponding duty to listen to, and discuss, workplace concerns.
    * Don Drummond’s report indicates that, “negotiated
    settlements…between parties…with the right to strike/lockout are
    superior.” Adding that, “the parties are best positioned to understand
    the trade-offs that allow them to optimize in negotiations.”
    * Bill 94 addresses compensation and negotiation with the broader
    public-sector this includes hospital workers, teachers, municipal
    employees, provincial judges and MPP’s.

    2. Link/limit the total compensation package to the rate of Ontario’s
    real GDP economic growth per capita

    * 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. Pay per
    public sector employee is now over $10,000 more than GDP per capita in
    Ontario. A longer term plan is required.

    * 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. Over the past 10
    years, the number of government workers in health and social services
    have gone up by 39 per cent, and in education – up by 34 per cent.
    * Between 2008 and 2010, when Ontario residents were experiencing
    economic hardship, compensation for public sector employees continued to
    grow. Arbitration and negotiation must be linked and limited by fiscal
    realities to ensure future agreements reflect the economic situation
    faced by the province and the people of Ontario.
    * Over the next three years (2012, 2013 and 2014) 2,652 collective
    bargaining agreements are set to expire, affecting 672,510 public sector
    workers. The agreements include contracts for employees in universities,
    municipalities, and hospitals, along with teaching and non-teaching
    staff.
    * Going forward, the linking/limiting compensation to GDP provides
    incentive to over one million public servants to help boost jobs and the
    economic growth of the province as a whole.

    3. Allow for public sector furlough i.e. days off without pay.

    * Between 2007 and 2009, over half the U.S. States imposed
    mandatory furlough (vacation without pay) for its public sector
    employees.
    * Ontario previously used this approach, on a voluntary and
    mandatory basis, during the early 1990’s.
    * While not mandatory, Bill 94 would allow furlough as an option
    for consideration during compensation negotiation.

    4. Allow change in public sector pensions to defined contribution
    from defined benefit.

    * Since 2010, close to 40 U.S. States have enacted significant
    changes to their public sector pension plans, either by way of
    increasing employee contributions, reducing benefits, or both.
    * 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.Under
    ‘defined contribution’, the income received at retirement is not
    pre-determined, but based on assets within individual retirement plan
    accounts built from agreed-upon contributions.
    * While not mandatory, Bill 94 proposes change in public sector
    pensions to defined contribution from defined benefit as an option for
    consideration during compensation negotiation. One approach could be to
    phase in the transition with a hybrid plan where existing contracts
    would be honoured, and new contributions from employees and taxpayers
    would go into the new system.

    5. Limit length of public sector collective agreements to one year,
    after which wages are frozen until a new contract is settled, until the
    budget is balanced

    * Multi-year, locked-in compensation increase agreements prevent
    government from reacting in a timely fashion to address urgent financial
    or economic concerns, thus furthering deficit and debt accumulation.
    * Government needs flexibility to react to changing economic
    realities – the provincial budget is set year by year, in part, to
    reflect this need. As budgets are crafted year by year, so too should
    government contracts with public sector employees.
    * This is proposed as an alternative to multi-year contracts that
    handcuff government, preventing action in economic and financial crises.

    6. Introduce a comprehensive and transparent benchmarking system
    for compensation, which would include a costing of the full compensation
    package, including benefits, pensions and moving through seniority grids

    * As Don Drummond has suggested, while we often concentrate public
    sector compensation spending concerns on wages alone, we ignore the
    millions spent on benefits, pensions, and grid creep.
    * Other components of total compensation can increase compensation
    growth beyond the growth in base wages. Premium payments such as
    overtime, shift premiums, merit pay and movement through grids can add
    significantly to total compensation.
    * Benefit levels in the public sector are often generous;
    public-sector employees often have access to jointly funded defined
    benefit pension plans; and many collective agreements include job
    security provisions Benefits, pensions and job security must be
    considered as part of the total compensation package that is negotiated
    or bargained with employees and employee groups.

    7. Mandate stricter criteria for compensation awards in researching
    private vs. public comparables – achieved through a provincial wage
    board.

    * People getting paid by the taxpayers shouldn’t get a better deal
    than the taxpayers themselves.
    * With over one million public sector employees in Ontario – 70
    per cent unionized compared to 15 per cent in the private sector –
    labour costs account for over half of all Ontario government program
    spending.
    * While private sector job growth has stagnated across Ontario,
    the public sector has grown by close to 245,000 jobs, with compensation
    that outpaces the private sector.
    * Further there are unacceptable pay inequities between union and
    non-union government employees and also between public and private
    sector workers. Driving up compensation of the unionized public sector
    can come at the expense of non-unionized and private sector comparable
    positions, whose workers accept reduced compensation or can become
    unemployed as a consequence of this biased allocation of financial
    resources.

    * Public sector workers receive higher compensation – wages,
    benefits, pensions… – than their private sector counterparts. The
    total amount paid to the public sector
    has jumped by 46 per cent since 2003. 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.
    * People entering the public sector do so because of better job
    security and generally fewer hours; their pay needs to reflect that. The
    private sector should earn more than the public sector because private
    sector employees need to be compensated for the extra risk associated
    with limited job security.
    * A wage board would work as an independent fair and transparent
    governmental body responsible for collecting and analyzing public sector
    compensation based on private sector equivalents.
    * The board would help de-politicize the negotiation process on
    matters related to public sector compensation comparables and better
    match public sector wages by comparing union, non-union and private
    sector positions.
    In conclusion, the present course offers no alternative but continued
    cuts to government programs and continued layoffs resulting in a lower
    level of service for all of us as Ontario continues to experience credit
    downgrades, flagging job numbers, and mounting debt. To limit the need
    for such extreme and harsh solutions, the Government of Ontario and its
    employees need to co-operate and consult on alternative measures with
    respect to compensation paid to employees in the public sector.
    Temporary wage moderation will meet short-term fiscal targets, but
    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.
    Rob Willett- Assistant to MPP Toby Barrett

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