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Government: "collective bargaining is achieving results & protecting services"



Yesterday I noted that the Liberal Budget plainly states that they are planning many more years of austerity.  So how does it see collective bargaining with public employees? And, moreover, public sector pensions?  

Collective Bargaining: The government claims that provincial public sector agreements are much lower than other sectors –i.e. private sector settlements, municipal settlements, and federal public sector settlements:



Indeed, the government headlines the claim “Bargaining Is Achieving Results and Protecting Services”.
The government does not say it will try to dictate results in collective bargaining (as the previous McGuinty/Duncan government tried to do), but proposes that compensation settlements should fit "within Ontario's existing fiscal framework" and suggests that productivity improvements could be one way to achieve fiscal and service delivery goals:
Going forward, compensation costs must be addressed within Ontario's existing fiscal framework, which includes no funding for incremental compensation increases for new collective agreements. The government is confident that broader public sector partners can work together to achieve outcomes that remain within the fiscal plan while protecting services. In future rounds of bargaining, the government is willing to work with employers and bargaining agents to look at mechanisms such as productivity improvements as a way to achieve fiscal and service-delivery goals. (My emphasis.)
Pensions
Aside from wages, the government also claims to have achieved huge reductions in pension expenses for employees in the broader provincial public sector.

The government claims, extraordinarily, that their pension expenses will fall dramatically.

Projected Pension Expense

2012–13
2013–14
2014–15
2015–16
2016–17
2017–18
Current Forecast
3.0 
3.1 
2.6 
2.4 
2.4 
2.4 
2012 Budget Forecast
3.1
3.6




Difference in Forecast
-0.1
-0.5




Drummond Commission
3.1 
3.7 
3.6 
3.7 
4.0 
4.2 
Difference in Forecast
-0.1
-0.6
-1
-1.4
-1.6
-1.8
Note: Numbers may not add due to rounding. Source 2013 Budget Table 1.3 and 2012 Budget Table 4.5


That's $500 million savings in 2014-15 over this year’s pension expense and $700 million a year in the following years. At $700 million that is an incredible 22.6% reduction in their pension expense compared with 2013-14. Indeed, compared to the pension expense they forecast in last year’s Budget ($3.6 billion in 2013-14), the annual savings by 2015-16 would be $1.2 billion. That would be a 33% reduction on a $3.6 billion expense.

If the government’s figures are meaningful, even a $700 million savings would mean the government has saved about 1% in compensation costs -- before collective bargaining has even begun.

The Budget document also compares the current forecast with Don Drummond's even higher forecast of pension expense -- this is the same guy who suggested health care expenditures were headed to 70% of spending when it has actually been heading back down to less than 40% for some years. So -- big surprise -- Dummond's figures are way off here as well. 
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