Cut the pub­lic pay­roll through re­tire­ments

Edmonton Sun - - COMMENT - colin CRAIG Guest Colum­nist @col­in­craig1 — Colin Craig is the In­terim Al­berta Di­rec­tor for the Cana­dian Tax­pay­ers Fed­er­a­tion.

The provin­cial gov­ern­ment is cur­rently spend­ing more than it is tak­ing in each year — a lot more.

De­spite the new car­bon tax, rais­ing busi­ness taxes by 20% and in­creas­ing some Al­ber­tans’ per­sonal in­come tax bills by as much as 50%, the gov­ern­ment is on track to more than triple the debt this term.

For per­spec­tive, the gov­ern­ment’s fi­nances this year would be like your house­hold hav­ing $45,000 in rev­enue but spend­ing $57,000 this year. Now add six zeros. Clearly, the sit­u­a­tion is not sus­tain­able and some­thing has to give. That some­thing is the num­ber of gov­ern­ment em­ploy­ees.

De­spite the gov­ern­ment boast­ing about Al­berta’s re­cent job growth, most of the new jobs are in gov­ern­ment.

Since Jan­uary 2015, ac­cord­ing to Statis­tics Canada, there are about 52,100 new gov­ern­ment jobs in Al­berta (many of these would be provin­cial­ly­funded) and about 74,500 fewer jobs in the pri­vate sec­tor.

Why does Al­berta need all these new gov­ern­ment em­ploy­ees?

We don’t.

In a “con­fi­den­tial” doc­u­ment the Cana­dian Tax­pay­ers Fed­er­a­tion re­cently ob­tained through a free­dom of in­for­ma­tion re­quest, are de­tails that help ex­plain how the Al­berta gov­ern­ment could get its fi­nances back on track in a rel­a­tively pain-free man­ner.

The doc­u­ment we ob­tained shows the gov­ern­ment can down­size and get its fi­nances un­der con­trol with­out caus­ing much in the way of lay­offs to gov­ern­ment em­ploy­ees.

The gov­ern­ment doc­u­ment in­di­cates that the av­er­age age of re­tire­ment in the civil ser­vice is 62 years of age and, “…based on a re­tire­ment age of 62, 12% of all em­ploy­ees may re­tire in the next one to two years.”

This sig­nif­i­cant wave of re­tire­ments is im­por­tant for two rea­sons.

First, the gov­ern­ment could down­size by sim­ply not re­plac­ing un­nec­es­sary po­si­tions.

When a pen­cil pusher in gov­ern­ment re­tires, and the role re­ally isn’t that cru­cial for the gov­ern­ment, the po­si­tion could be elim­i­nated, sav­ing a small for­tune in salary, pen­sion costs, ben­e­fits, of­fice equip­ment, of­fice space, etc.

Con­versely, when a nurse or doc­tor re­tires, those nec­es­sary roles would con­tinue to be re­filled. The other op­por­tu­nity that a wave of re­tire­ments cre­ates is the po­ten­tial for scal­ing back the com­pen­sa­tion for new hires.

Nu­mer­ous stud­ies over the years have shown that gov­ern­ment em­ploy­ees tend to earn more money, have richer pen­sions and take more sick time than every­one else.

This gap could be closed be­gin­ning with new hires.

In­stead of pay­ing an ad­min­is­tra­tive as­sis­tant, say $48,000 per year to start off, per­haps they could start off at $44,000 per year.

Saskatchewan’s NDP gov­ern­ment used a sim­i­lar tech­nique in the late 1970s when they started to put new hires in a far less costly pen­sion plan.

To be clear, scal­ing back the num­ber of gov­ern­ment em­ploy­ees won’t bal­ance the provin­cial bud­get on its own.

Bal­anc­ing the bud­get will re­quire a num­ber of de­ci­sions to re­strain spend­ing across gov­ern­ment.

But one thing should be clear; the gov­ern­ment has a re­port on its desk that shows one way to re­duce spend­ing in a pain-free man­ner. Now all the pre­mier has to do is show an in­ter­est in do­ing just that.

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