PBO to give his theory on the ‘black hole’

Study done at request of NDP MP Dewar

Frechette to report on what’s behind public servants’ rising salaries,

Canada’s new parliamentary budget watchdog is issuing a report Wednesday that will examine what’s behind the rising salaries of public servants over the last decade as the Conservatives gear up for the next election with promises to get tough on public service unions.

The report, released by Parliamentary Budget Officer Jean-Denis Frechette, was initiated by his predecessor, Kevin Page, who called the nearly $44 billion the government spends on employee compensation a “black hole” of federal spending.

The study examines the main factors driving up the federal wage bill over the past decade, which saw costs jump from $23 billion to nearly $44 billion. Compensation and personnel costs are one of the biggest single expenses for the government, accounting for nearly 20 per cent of operational spending.

Page released a compensation study last December that estimated the average public servant costs $114,100 with pensions and benefits rolled in, and there are 375,000 federal employees. That translates into the average Canadian paying $1,267 a year for the public service to deliver programs and services — an 85 per cent increase in a little more than a decade.

That report looked at four main categories of expenses — salaries and wages, pension contributions, health, dental and disability benefits and all other employer costs, such as employment insurance or workers’ compensation.

This study, however, zeros in on salaries and examines the impact of factors such as the growing size of the public service, inflation, wage settlements during collective bargaining and the professionalization or “white collarization” of the bureaucracy, which now relies on more highly educated and expensive talent. The study excludes the military.

A big driver of the cost increase is the run-up in the size of the public service and the wage bill that came under the Conservatives’ watch from 2006 to 2011.

Thousands were hired in priority areas such as security, defence, corrections, health protection, internal controls and oversight in departments. The numbers have decreased over the past two years.

The new PBO study was done at the request of NDP MP Paul Dewar, who said he wanted “the facts” on what’s behind rising salary costs that he says the Conservative government is exploiting as part of its election strategy to get tough on unions and highly paid bureaucrats.

He said the evidence will show whether the unions are driving up salaries in collective agreements or whether Treasury Board President Tony Clement is using “rhetoric” and stereotypes to demonize the public service as overpaid and enjoying pensions and benefits most Canadians would envy.

“This is about evidence decisionmaking, not rhetoric,” said Dewar. “Tony Clement makes all these comments about salaries costing too much, so let’s shine the light on the facts to see if they back his assertions, or are they hot air.”

Compensation is a big issue for the Conservatives, who have vowed to bring salaries and benefits in line with the private sector. The government has several studies under way to examine the comparability of federal compensation with those of other employers in the public and private sectors. The Public Service Labour Relations Board is doing one and Treasury Board has hired a team of consultants to do another. It is also re-examining how senior executives are paid.

The PBO study, however, doesn’t compare salaries to counterparts in other sectors.