Stuck in Fat City
It seems that in Toronto, many voters are finally warming up to some small amount of government belt-tightening. According to a Forum Research poll earlier this month, 54 per cent of Torontonians support Mayor John Tory’s request that all city departments and agencies reduce their budgets by 2.6 per cent, while only 30 per cent are opposed. The Toronto Star reacted to the poll with this headline: “Poll finds support for Mayor Tory’s budget austerity.” But while 2.6 per cent in cuts might be a good first step, it is hardly austerity. Not when we could be slashing the size of the municipal government by 10, 15, or 35 per cent.
Take the issue of municipal employee compensation. Last year, the Canadian Federation of Independent Business (CFIB) published a report comparing public sector and private sector wages, salaries, and benefits. CFIB found that, on average, municipal government employees in Toronto were being compensated 25.9 per cent more than comparable private sector workers. With wages, salaries, and benefits accounting for just over half of the City of Toronto’s expenditures, the math suggests that the operating budget would be cut by 10.4 per cent if municipal employee compensation were brought in line with private sector standards.
Other municipalities similarly overspend. According to the CFIB, municipal government employees receive on average 22.3 per cent more compensation than comparable private sector workers. This overspending for labour occurs in Alberta too, where municipalities are currently seeking expanded tax powers. The CFIB estimated the municipal employee premium to be 18.7 per cent in Calgary and 12.7 per cent in Edmonton ( the CFIB report was based on data from the 2011 National Household Survey; it is hard to imagine that the gap between private and public sector pay has not since widened).
Bringing compensation spending in line with private sector standards is but one way that governments could save money (and federal and provincial governments are no less guilty in this area than are municipal governments). Another way is to stop providing services that would be better left to the private sector. According to the Macdonald-Laurier Institute, total government spending in Canada is 44 per cent of GDP. Add in tax expenditures and price regulations, and the true size of government is 64 per cent of GDP. Surely free markets are not so riddled with failures and inequity that politicians should control almost two-thirds of the economy.
As for things municipalities should be doing less of — or not doing at all — consider again the Forum Research poll of Torontonians. A plurality of Torontonians surveyed said that the Toronto Public Library cannot afford to cut even 2.6 per cent of its budget. Meanwhile, does anyone wonder why the Toronto Public Library exists at all — along with the public golf courses, public swimming pools, and public ice rinks? Do politicians believe books and golf to be such special items that they must force all residents to pay for such things?
Presumably they’re worried that underprivileged children would grow up without access to reading material and become illiterate in the absence of public libraries. Literacy is important ( although education is really a provincial responsibility), but surely there are cheaper and better ways for the city to combat illiteracy than by operating 100 book warehouses staffed by unionized employees. Meanwhile, there is no reason that public golf courses and swimming pools, which are used as much or more by financially comfortable Torontonians as by underprivileged ones, are any better for communities than facilities provided by the private sector. If a minority of poorer Torontonians cannot afford the admission fees, it can only be cheaper to offer those people direct subsidies.
So while Tory’s proposed 2.6- per- cent cut is a good start, if there is to be any serious curtailment of the excesses of government, there are two things that should be done. One is to reconsider whether it makes any sense to have the public provision of goods that would, and in fact already are, readily provided by the private sector. Secondly, government must stop overpaying for the services it does provide. But then, it is in the very nature of government to overpay for everything.