Corbella: Facts and fairness show public sector workers should have their pay cut

The Alberta Legislature dome is seen on a day where Minister of Finance and President of the Treasury Board Travis Toews delivered a first quarter fiscal update in Edmonton, on Thursday, Aug. 27, 2020.

“We must ensure we are delivering the most efficient government services possible.”

That statement by Alberta Finance Minister Travis Toews was delivered several times and in several ways during media briefings and in his speech in the legislature detailing the grim news of the province’s 2020-21 first quarter fiscal update.

Toews’ statement is not in code. It’s clear. Alberta’s public service will be expected to either cut their pay or cut their staffing levels and work more efficiently — just like the rest of Alberta’s workers have had to do recently and over the decades.

“That’s absolutely essential. Alberta can no longer afford to be an outlier in terms of the cost of delivering services to Albertans,” added Toews, referring to revelations made in the

MacKinnon report

, named for former NDP Saskatchewan finance minister Janice MacKinnon.

Her panel’s report compared Alberta’s spending with other provinces.

“The Panel found that Alberta’s spending per capita is the highest in Canada and has consistently been higher than the average of the 10 provinces over the last 25 years,” states the report.

“And this is the most startling number: Alberta’s annual expenditures would be $10.4 billion less if its per capita spending simply matched the average of spending in Canada’s three largest provinces: British Columbia, Ontario and Quebec — and we would not have a deficit.”

The panel also found that in some key areas, “in spite of the higher levels of funding, the results achieved are no better and, in some cases, worse than in other provinces.”

 Alberta Finance Minister Travis Toews – Alberta’s deficit is forecast to hit $24.2 billion in the wake of the COVID-19 pandemic’s economic fallout, coupled with a crash in oil prices, the UCP government announced Thursday in its 2020-21 first quarter fiscal update.

Thursday’s fiscal update shows Alberta’s taxpayer-supported debt is $99.6 billion. Imagine how good things would be now had we entered into this time of pandemic with a balanced budget?

If public servants and their union representatives think they’re going to get sympathy from the economically battered private-sector worker and taxpayer in this province as the government cuts their pay and benefits, they will be in for a surprise.

As for Alberta’s doctors, the highest paid in Canada, their legitimate beef with Health Minister Tyler Shandro is not that he wants to cut their pay — they have repeatedly offered a five per cent cut across the board as their opening offer. Doctors say their anger is a result of the disrespectful tone and poorly thought-out changes that would have threatened health outcomes and ultimately cost the system more in the long term.

The MacKinnon report states that many Alberta doctors make, on average, 35 per cent more, about $107,000, than the average in other provinces.

Thursday’s fiscal update was sobering. A deficit of $24.2 billion is forecast for this fiscal year — $16.8 billion higher than originally estimated

in February

— only weeks before the World Health Organization declared on March 11 that COVID-19 was a global pandemic.

Prior to COVID, things were looking good for Alberta. According to government figures, economic activity grew by two per cent from the previous year, rig activity was up 14 per cent, oil production was up six per cent, exports were up 19 per cent and there were increases in retail, vehicle and housing sales.

Then, Alberta was hit with a triple whammy.

“In March, an OPEC dispute hit oil prices very hard and, by April, with massive demand destruction due to the global pandemic and economic shutdown, we saw negative prices,” said Toews.

“This massive collapse in energy prices had no precedent. Bond markets were effectively inaccessible.”

 A trader checks stock prices at Boursa Kuwait in Kuwait City, as global oil markets plunged at the opening of markets on March 8.

The world has changed dramatically and all of our expectations have changed — everywhere, but in the public sector.

A new Canadian think-tank,

SecondStreet.org,

filed freedom-of-information requests asking governments across the country a simple question: “When was the last time you cut employee pay?”

The federal government — which is anticipating a $343-billion deficit this year — stated: “Our sector officials indicated that there is

no data or any information

that indicates that there has ever been a negotiated pay reduction.” SecondStreet.org confirmed with the feds that there have also never been any legislated pay reductions.

In the report, written by Gage Haubrich and SecondStreet president Colin Craig, there’s a list of just a few companies that have cut their pay.

• Fiat Chrysler asked employees to take a t

emporary pay cut of 20 per cent.

Postmedia (my employer and the company that owns this newspaper) temporarily reduced salaries

for many employees by five per cent and senior staff saw cuts of as much as 30 per cent.

• The Winnipeg Free Press

temporarily cut employee pay by 12 to 20 per cent,

while the publisher cut his own salary by 50 per cent.

• Cenovus Energy

cut salaries across the company

, including a 25 per cent cut for the firm’s CEO.

• Several CFL teams

reduced employee pay

.

Craig says while workers outside of government have faced significant financial difficulties, including the loss of small businesses, government employees have largely been insulated.

Economist Jack Mintz wrote recently in the

Financial Post

: “Almost all of the current job losses (96 per cent) are in the private sector . . . . Public-sector workers have been little affected with working hours down only 5.6 per cent since February, less than in any other sector.”

But just because public sector hours are down, doesn’t mean they have suffered. On the contrary.

“Perhaps the most noteworthy example we found occurred at the federal government where a reported 76,804 employees were allowed to take months off work — fully paid — during the pandemic,” states the report. Indeed, Canada’s Parliamentary Budget Officer,

Yves Giroux, revealed this is costing taxpayers $623 million!

Why weren’t those federal employees temporarily laid off to go on employment insurance or the Canada Emergency Response Benefit, like all other Canadians whose jobs disappeared as a result of the government-mandated COVID-19 shutdown of various workplaces?

Perhaps all of this job security that comes with a government job means these public-sector employees give up a bit of salary to balance things off? Not so.

A 2020 Fraser Institute report

found government employees earn about 9.4 per cent more than people doing similar work in the private sector. On top of that, “most government employees receive the most expensive type of pension (79.6 per cent receive a defined benefit pension)” while most private-sector employees (77.5 per cent), don’t have a workplace pension.

The Canadian Federation of Independent Business found government employees “enjoyed total compensation

that was 18 to 37 per cent

more than private-sector employees, who do similar work.”

In Alberta, the last pay cut public-sector workers took was 26 years ago in 1994 under Ralph Klein’s government — a five per cent cut across the board.

In Calgary, where it’s estimated almost 300,000 people have lost their jobs in the past couple of years before the pandemic — and many more before that — there have been no cuts in pay at the city.

“In short, the City of Calgary gave us data from 1974-2020 showing no pay cuts,” states the SecondStreet.org report.

Premier Jason Kenney warned Albertans on Tuesday that there is going to be a “fiscal reckoning.”

Let the reckoning begin.

Licia Corbella is a Postmedia columnist in Calgary.

[email protected]

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