Taxpayers given tab for Ontario’s lofty public sector
What a triumph for the oppressed workers of the Ontario public sector. The PC government’s 2019 wage restraint bill was ruled unconstitutional this week by the Ontario Court of Appeal. After some token grumbling, Premier Doug Ford has begun to dismantle the legislation, deciding not to appeal the decision to the Supreme Court.
The story, as typically told, is one of plucky public sector unions standing up for their legal rights in the face of the heavy-handed Ford regime. Forgotten are the taxpayers who will ultimately pay the cost of righting this hideous injustice. This week, the Financial Accountability Office of Ontario estimated that bill at about $13.7 billion.
When passed in 2019, Ontario’s Bill 124 imposed three years of annual pay increases of one per cent for workers in the broader public sector, unionized or not. The Ford government was facing what proved to be an $8.7-billion deficit. Controlling public sector wages was one way to fight it. At the time, negotiated contracts in public sector were averaging 1.6 per cent annually, according to this week’s judgment.
There was reason to think Ontario public sector workers were well-placed to handle this modest constraint on future earnings. Union leaders would have you believe their members are terribly hard done by, but the comparison between public and private sector workers in Ontario is instructive.
A 2023 Fraser Institute report, based on Statistics Canada numbers, found government sector employees in Ontario were paid 34.4 per cent more than those in the private sector. Even after adjusting to compare only to those with similar education and type of work, there was still a 10.9 per cent pay gap. That’s not all. Nearly 84 per cent of public sector workers are covered by pension plans, compared to 25 per cent in the private sector. Ontario public sector workers retire 2½ years earlier on average and take more days of personal leave each year. Their job security is outstanding. In 2021, 5.5 per cent of private sector employees lost their jobs compared to 1.3 per cent of government workers.
These are the sort of factors that go into making a public policy decision, but two of the three judges on the Appeal Court panel ruled that Ontario’s situation was not the sort of “pressing and substantial” matter that would enable it to override the collective bargaining rights protected by the Charter of Rights and Freedoms. The problem was with the process. “Ontario has not been able to explain why wage restraint could not have been achieved through good faith bargaining,” they wrote.
Right. Of course. Why didn’t the provincial government think of that? Perhaps the same unions who found one per cent raises abominable would have agreed to them if the government had asked nicely.
In the dissenting opinion, Justice William Hourigan said: “Courts are public policy amateurs who lack the expertise, experience, and resources to understand where a policy fits in the bigger picture. Thus, it is not the role of judges to second guess the policy choices made by governments because this is a role they are wholly unqualified to undertake.”
Hourigan added that the PC government had campaigned on fiscal restraint and such decisions should be made by government because it is accountable to the public and courts are not. Hourigan further noted the Supreme Court has never found that temporary wage legislation violates the Charter.
The Ford government could have appealed its legislation to the Supreme Court, but controlling public expenses is just so 2019. Although it wanted to fight deficits back then, it has since become rather comfortable with them. It still vows to balance the books, in the fullness of time.
The government expects a $4.5-billion deficit this fiscal year, up from the $1.3 billion forecast in last spring’s budget. This week, Ford said the province’s finances are starting to balance out and his government has been “prudent fiscal managers.” In 2021-22, spending on base programs was $149.9 billion. This fiscal year, it is projected to be $193 billion.
So what does government do to control public sector wage costs in the future, should it be inclined to do so? The new approach is evident in the way the government is trying to manage negotiations with the teaching unions. Two major unions and the government have resolved everything they could at the bargaining table. Now they will leave the final contract decisions, including wages, up to arbitrators. That way, the government gets to avoid labour disruptions, but it also relinquishes any control over its wage bill.
That certainly makes life simpler for government. Too bad for the taxpayers.