Failed wage cap bill costs province $4B

Government continues to make catch-up payments to public sector workers

The price tag has topped $4 billion this fiscal year for Premier Doug Ford’s ill-fated Bill 124 public sector wage restraint legislation, which was twice struck down by the courts as unconstitutional.

That tab is expected to grow as the Ontario government prepares to make more catch-up payments to workers and bolsters its contingency fund to $5 billion to provide what Finance Minister Peter Bethlenfalvy called “flexibility.”

A report released Wednesday by the province’s independent Financial Accountability Office said additional payouts to teachers and other education workers have reached $2.6 billion with another $1.5 billion for health workers.

A further increase of $1 billion in spending for hospitals is “partially due” to catch-up payouts because of Bill 124, which the government repealed two weeks ago.

The legislation passed in 2019 to keep government costs in check capped wage increases for most public sector workers at one per cent annually.

But as many critics predicted, courts ruled it restricted collective bargaining rights under the Constitution’s Charter of Rights. Arbitrators have since been awarding increased wages to some workers whose unions had “reopener” clauses in their contracts with public sector employers, such as the civil service and school boards.

Bethlenfalvy said he has no regrets over the controversial legislation, which has been blamed for an exodus of nurses and other healthcare workers as their wages were constrained during the pandemic that brought a surge in inflation.

“I remind you inflation was around one and two per cent back then,” he said of 2019. “Back then it was different time.”

Bethlenfalvy said he does not have a tally on the government’s legal costs in fighting court challenges of the legislation by a host of public sector unions.

New Democratic Party Leader Marit Stiles said the actual cost of the legislation and its fallout is “much greater” than the figures from the Financial Accountability Office indicate.

“The price that Ontarians are paying is the loss of so many of those front-line health care workers and education workers,” Stiles told reporters, referring to shortages of teachers and nurses.

“So many people who’ve left those professions aren’t working in health care and education anymore because they felt so disrespected,” she said, “and that is going to be a really hard one to make up.”

Liberal MPP Adil Shamji (Don Valley East), an emergency room physician whose sister is a nurse, said Bethlenfalvy is insulting public-sector workers by attempting to downplay the impact of the legislation.

“Ask any health-care worker — Bill 124 is clearly not water under the bridge,” Shamji said.

Green Leader Mike Schreiner said several economists warned that wage restraint legislation typically “cost us more in the long run” because it leads to pent-up demand for higher wages later.

“That’s exactly what’s happening, and the government did significant damage to our health-care system,” he added, referring to long wait times.

“We know that a number of public service institutions — hospitals, universities, others — are worried about what the fiscal impact of this is going to be now on their budgets because of backpay there will be owed workers, and rightfully so.”