Cap public CEO pay at $418,000, NDP proposes
Two times premier’s salary is enough: Horwath
TORONTO The salaries of CEOs at Ontario hospitals, electrical utilities and other public sector agencies are “out of control” and should be capped at $418,000 — twice the premier’s annual salary, New Democrat Leader Andrea Horwath said Wednesday.
“If the person charged with leading the government of this province can get by on $209,000 a year, then public sector executives should be able to get by with a paycheque twice as big,” said Horwath. “You’ve got to start at the top and rein in these compensation packages that just keep spiralling out of control.”
Ontario Power Generation CEO Tom Mitchell is paid $1.7 million a year while homeowners pay some of the highest electricity rates in Canada, Horwath noted.
Premier Kathleen Wynne said the Liberals agreed to address public sector compensation in exchange for the NDP’s support for last spring’s budget, and she promised the government would take action within months. It’s a complicated issue and there will have to be some exemptions to the salary cap, Wynne added.
“We have to have more than a blunt instrument as we deal with this issue because there are sectors where there’s expertise that’s needed,” Wynne told the legislature.
“So whether we’re talking about medical professionals or nuclear technicians who are vital to running the services that are needed in the province, we have an obligation to make sure that those systems are run well.”
Horwath agreed there would have to be some exemptions, but said the Liberals are too slow to deal with the issue and keep allowing public sector salaries to rise.
Other provinces pay hydro executives far less than Ontario does, and high hospital CEO salaries means scarce health-care dollars are not going to front-line care, she added.
Dr. Jack Kitts, president and CEO of The Ottawa Hospital, earned $701,281 last year, while Dr. Robert Roberts, Kitts’ counterpart at the University of Ottawa Heart Institute, was paid $565,882.
The NDP estimates a hard cap on public sector salaries would save the government about $18 million to $20 million a year, “a small step in the right direction,” said Horwath.
“It’s a simple way to ensure that public dollars are respected and spent wisely, and it shows some basic respect to people across Ontario who are paying the bills.”
Horwath’s private member’s bill is based on laws in France and the United States, where President Barack Obama put a $400,000 cap on executives whose companies receive public money.
It comes less than a week after voters in Switzerland rejected a proposal that would have limited executive pay to 12 times that of the lowest-paid employee.
According to Ontario’s 2012 Sunshine List, more than 180 executives earned a salary more than two times as high as the premier, and 25 made more than three times the premier’s salary, the NDP says.
The measures would not be applied retroactively to roll back salaries that currently exceed $418,000.
Carleton University business professor Ian Lee says capping wages paid by arm’s-length government agencies could set a dangerous precedent.
‘We have to have more than a blunt instrument as we deal with this issue because there are sectors where there’s expertise that’s needed.’
KATHLEEN WYNNE
Premier of Ontario
“They are autonomous, separate employers,” he said. “It would be a very dangerous precedent for the Government of Ontario to introduce a bill to regulate wages on employers that are not part of the Government of Ontario.”
He fears the next step might be attempting to implement salary caps on private sector executives.
Lee says there is already an implicit salary cap in the public sector because compensation at the executive level is simply not competitive with the private sector. Legislation such as this could prompt an exodus of executives from the public sectors, he added.
“If we think that losing top-notch talent is a good thing, then this is a great idea.”
The governing Liberals say they have frozen salaries for executives at hospitals, universities, colleges, school boards and provincially owned electricity companies.
The Progressive Conservatives say the Liberals’ “so-called” wage freeze allowed way too many public servants to get pay raises, and called Horwath’s bill “a red herring” that affects only about 100 people.
“It’s a small amount of money and it’s a deterrent to good people to consider careers,” said PC finance critic Vic Fedeli.
“If you really want to do something start here at Queen’s Park with an across-the-board wage freeze.”