Premier Wynne, you are freezing the wrong wages

You cannot manage the deficit without addressing the largest line item in the budget: government employee compensation.

(This column originally appeared in HuffPo)

By: Candice Malcolm

The Wynne government announced again this week that it wants to continue its wage freeze on MPPs until the budget is balanced. If passed, the MPP Salary Freeze Act would stop the scheduled pay increases set for this April and would put off any wage increases until the Public Accounts confirm the budget is balanced.

Not a bad idea. But why stop with just elected officials? Everyone knows the real driver of the deficit in Ontario is the broader public service and government employee compensation. Premier Wynne is freezing the wrong wages!

There is little concern about run-away compensation for MPPs at Queen’s Park, who are already capped at earning 75 per cent of their federal counterparts. MPPs have been under a wage freeze for eight of the past 11 years. And thanks to a compensation overhaul by former Premier Mike Harris, when MPPs leave office, they receive a defined-contribution pension instead of the overly-rich defined-benefit scheme received by most other government employees.

While it is good news that taxpayers will not be obliged to foot the bill for big pay increases for politicians, this wage freeze will save taxpayers approximately 0,550 in 2014. Heck, you could make every MPP work for free and it would only save taxpayers .5 million. These are drops in the bucket of the .9 billion provincial deficit.

The real problem for taxpayers in Ontario is covering the tab for compensation packages of over 1.35 million provincial government workers in Ontario, and the vast benefits that exist in the Ontario Public Service. Employee compensation accounts for half of the provincial budget, without including most pension costs.

On paper, the last two Ontario budgets have included a wage freeze for government workers. To quote the 2013 budget on government employees, “all aspects of compensation plans are frozen, and base salaries cannot be increased.”

Unfortunately, the Wynne government continued to negotiate with unions, and caved on a number of deals leading to higher compensation through loopholes, blurred lines and broken promises. The government has handed out signing bonuses, lump sum payments in return for deferred raises in 2015, and a flat out wage increase for the Elementary Teachers Federation.

The wage freeze in Ontario meant nothing.

If the Ontario government were to actually, honest to goodness, freeze all government employees wages for the next year, it would save taxpayers an estimated billion. That would start to take a real chunk out of this year’s deficit — a deficit that sees no end in sight.

New information on the state of Ontario’s finances came to light thanks to PC Finance critic Vic Fedeli. Among other revelations, we learned that not only is this government well short of its projections to balance the budget by 2017-18, but they are not being transparent with their books.

According to documents prepared for the Wynne government by officials in the Ministry of Finance, the “key actions to eliminate the deficit” include “reducing pensions expense through agreements and pension reforms” and “no funding for incremental compensation increases for new collective agreements. Salaries for designated groups frozen until 2017-18.”

These are their words. The Wynne government knows exactly what it needs to do to balance the budget. We just hope they eventually come to terms with their own advice.

You cannot manage the deficit without addressing the largest line item in the budget: government employee compensation.