A script for a better process to combat Ontario’s deficit would involve private sector, seek out inefficiencies and limit wage freezes to top earners
The drama of the Ontario public sector wage restraint is unfolding just as everyone expected. When Finance Minister Dwight Duncan rose in the legislature on March 25 to deliver the budget and the no-wage-increase edict, all the actors reached for their scripts.
It’s not like they needed to exert a special measure of creativity in composing a new storyline, developing characters or preparing for an audience-gasping twist. All the actors (public sector unions, public boards, employers and the government) slipped into their typecast roles and, in automaton fashion, have recited their well-worn lines on the public stage.
The story is simple and the roles simpler. The government points to the deficit and says wage restraint is the answer. The unions balk and say it’s not about public sector wages, it is about a recession that has hit us all. And by the way, why should only some of us bear the load of the deficit? To this, employers and public boards shrug and point the finger back at the government and say, “Blame them, they told us to.”
How will this story end? Most likely, it will end with a legislated wage freeze, a Liberal government out of favour with labour unions, public sector workers with low engagement and a public hungry for improved services at yesterday’s tax rates.
Is there a better way to address the challenge of beating down Ontario’s $19-billion deficit? Yes. Must we watch this tragedy unfold so predictably? We don’t think so and here is our script for a better process and, hopefully, a better result.
Some promising steps
No government is perfect and we shouldn’t expect it to be. The 2010 budget does offer Ontarians hope for a better economic future and here are a couple of reasons why:
Minimum wage: Ontario now has the highest minimum wage in Canada with a rate of $10.25 per hour. This will contribute, in part, to the alleviation of poverty in Canada. There are economic costs to raising the minimum wage but it is the right thing to do for the working poor.
Tax rates: The income tax rate in the lowest bracket has been reduced by one percentage point from 6.05 per cent to 5.05 per cent. Reducing the tax burden on our poorest citizens is noble and good.
Infrastructure investments: There are continuing investments in waste water treatment infrastructure and green energy technologies.
More enforcement: The hiring of more employment standard officers will promote fairness and accountability in the workplace.
Investment in health care: There is a commitment to increase health-care spending by $6 billion over three years.
Some tough questions
Taking a stance of curiosity instead of hostility may increase our chances of resolving the budget deficit with less acrimony. There are always assumptions and working hypotheses that guide the decisions of policy-makers. What questions can we ask that would uncover some of the assumptions underlying the zero compensation mandate?
Stimulus: During a period of austerity, why did the government decide to increase spending by 12 per cent between the 2008 and 2010 budgets? If this is due to economic stimulus dollars temporarily floating the budget, why not begin to make cuts now when it will hurt less?
Debt: What plans does this government have to deal with the large provincial debt ($212 billion) and the large annual interest payments ($10 billion) made each year on that debt?
Spreading the load: Does the government think it is fair public sector employees and not those of the private sector are being asked to shoulder a budget deficit that is the responsibility of every Ontarian? How can we make this responsibility more equitable?
Targeting the wage freeze: The wage freeze affects everyone from hospital CEOs to $16-per-hour personal support workers. Was there any consideration given to limiting the wage freeze to workers above a certain income level, such as those on the “Sunshine List” who make more than $100,000?
Fairly enforcing the wage freeze: How will the government ensure all public sector employees will serve a two-year wage freeze? Some collective agreements do not expire for two or more years from now and include wage increases during that time. Some collective agreements have expired and will have no funding for wage increases during the same period.
Impact on low-wage earners: Has the government considered the effect of a wage freeze on low-income earners at a time when prices and taxes are increasing? What happens when a wage freeze actually becomes a wage reduction due to rising costs? Do the rising costs of other government services result in fewer savings for the government?
What is the government willing to give up? The government has called the ongoing consultations with unions and employers a “negotiation.” The very use of the term negotiation assumes a give-and-take arrangement. What is the government willing to give to public sector employees in exchange for a two-year wage freeze?
Some practical suggestions
If ideas are potential solutions, we should be sharing our ideas. Here are a few we would like to discuss:
Saving, finding money: Find savings through a combination of budgetary cuts, service reductions and user fees so all citizens share the burden of eliminating the $19-billion deficit. Although this option is politically difficult, it is the right thing to do. It is also a decision that does not require the agreement of unions, municipalities and public boards.
Seek out waste and inefficiencies: Engage the assistance of Ontario’s auditor general to find waste and inefficiencies within the administration of the government. When the auditor general finds $2 of realized savings, public sector employees could match those savings with $1 of compensation freezes. This process would place the onus on the Ontario government to lead by example and limit the amount the public sector employees would be asked to contribute.
Trade-offs: Make trade-offs for other interests that are important to particular industries. For example, the nursing home sector unions, including the Christian Labour Association of Canada, have been lobbying for increased hands-on care of the elderly to 3.5 hours per day. The current level is around two hours per day. Making a commitment to increase personal care time to our grandmothers and grandfathers would serve everyone’s interests.
Shift the line for the ‘Sunshine List’: Temporarily move the limit for the Sunshine List to $80,000 from $100,000 and apply the wage freeze only to those who make more than $80,000 per year. Shifting the burden to workers who can most afford a wage freeze will protect low-income workers who find it more difficult to pay their bills.
Reinstate health reports: Sheila Fraser, the federal auditor general, has said in media reports she is dismayed regular reporting on health indicators to measure the performance of our health spending has been discontinued by the provinces and the federal government. These reports should be reinstated as one way to calculate the efficacy of taxpayer dollars and identify waste in the largest item of the government’s budget.
The list could continue but this is not the point. The point is to work on the problem together to find the best possible solution that does the least amount of harm to the most vulnerable among us. An across-the-board freeze on wages is one option but it is certainly not the only one. Entertaining other options requires all parties to shake off their typecast roles, roll up their sleeves and push the problem around. Otherwise, the alternative will be a government that will use the failure of full-party consultations as an excuse to legislate what it has always wanted. In that case, we will all lose.
Chris Bosch is the director of research and education at the Christian Labour Association of Canada in Mississauga, Ont. He can be reached at [email protected].
