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The lowdown on the PC plan for the public sector

Tim Hudak and Progressive Conservative attack on public sector

Is Tim Hudak a radical right winger, bent on fundamentally changing Ontario society? Below are excerpts from the Progressive Conservative policy paper, “A New Deal for the Public Sector”.  It contains some very radical ideas that go far beyond even what former PC premier Mike Harris implemented. 

 Cut public spending: “To balance the budget, government spending must be cut. Just slowing the rate at which spending increases will leave a balanced  budget as a distant hope, not a real goal. Ontario does not have the luxury of time to address the problem.”

Comment: Even the Mike Harris PC government increased public sector spending in its first term (by their account, 6.2%), and by much more in their second term (14%).  Ontario already has the lowest public sector spending per person of any province in Canada.

Hudak Progressive Conservatives plain wrong on 'bloated public sector"
Ontario Budget 2014
 A two year wage freeze: “Our first step to balance the budget will be a two year wage freeze for the entire public sector, no exceptions. That will save government $2 billion annually.... It is not business-as-usual in Ontario...”

Comment: Mike Harris bargained hard, but he did not unilaterally override all provincial collective agreements to impose his preordained conclusions, as the PCs now suggest.  

In  any case, provincial public sector workers have negotiated wage settlements that are lower than inflation and lower than private sector settlements in 2010, 2011, 2012, and 2013.

Inflation higher than public sector settlements
Inflation percentage outstrips wage settlements in provincial public sector 4 years running

Ontario public sector and private sector wage settlements 2010-2013
Private sector percentage wage settlements outstrip provincial public sector settlements

  •  In fact all public sector settlements (including provincial, federal and municipal) have fallen behind private sector settlements over the last two and a half decades. Here is the data from the Ontario Ministry of Labour:

  • Annual average  increase Public Sector Settlements
    Annual average increase Private Sector Settlements
    Average Annual Wage Settlement

  • Public sector wage increases averaged 0.3% less than the private sector settlements. While that does not sound like too much, over 24 years it adds up to a significant difference -- close to an 8% advantage in favour of private sector settlements.
Source: Conference Board of Canada.
  • The reported increases for the salaried class in Ontario are much higher than union settlements. The Conference Board of Canada says that planned average salary increases in Ontario for 2013 were 2.7% and 2.6% in 2014. Compare that with public sector union wage settlements in Ontario of 0.5% in 2013. This continues a long standing trend where the salaried class are simply given better increases than union members can bargain: the attached chart just above shows increases for the salaried class were consistently higher over twenty years.
Attack free collective bargaining in the public sector:  “Some have argued that a legislated wage freeze violates the constitutional right to collective bargaining. If so, that would mean that governments lack the ability to control their spending, even when their situation is as difficult as the one in Ontario. We don’t believe that is either reasonable or the intent of the Charter, and recent judicial decisions from the Supreme Court of Canada have delivered a clear ruling on the legitimacy of a public sector wage freeze when government is facing a fiscal crisis.”

Comment: Hudak might want to check with Steven Harper about trying to slip constitutionally dubious proposals past the Supreme Court.  In any case, this is a fundamental attack on free collective bargaining and trade unionism that many ‘small c’ Conservatives may not  wish to bear. Businesses also may not appreciate the instability and uncertainty that this may bring. And again, Mike Harris bargained hard, but did not unilaterally override collective agreements on mass. That is an attack on a basic, and very hard fought human right.

Attack interest arbitration: “A mandatory wage freeze for government employees is only the first step towards reining in ballooning public service salary costs. While a wage freeze is necessary, it provides only a temporary solution to a permanent problem.... No arbitrator should consider that the ability to tax gives government an infinite ability to pay. For all public sector cases, independent arbitrators should be required to issue written decisions within tight timelines that explain their reasoning. These decisions should be made public in a central online location.  To ensure arbitration decisions reflect local economic and budgetary conditions, independent arbitrators should be required to compare the pay and benefits of government workers with those in the private sector in the same geographical area, not to other government workers in other parts of the province. Factors like the local unemployment rate, changes in the employer’s tax base or the fiscal mandate of the province should also be taken into account.”

  • Comment: The previous PC government (under Mike Harris) brought in legislative changes to the interest arbitration system designed to tilt the arbitration process in favour of employers. But Hudak's PCs are not satisfied with those changes and so are now, in effect, attacking the Harris-era changes as biased in favour of workers. 
  •  CUPE hospital workers have freely negotiated five successive agreements without recourse to interest arbitration. These agreements were freely ratified by scores of hospitals and the tens of thousands of hospital workers. Changing arbitration will change that balance and create a situation where workers do not freely agree to their conditions of work, creating unpredictable results. 
  •  Finally, as noted above, public sector settlements have fallen behind private sector settlements over the last two decades. General wage increases for hospital service and administrative workers have followed the public sector pattern largely.  While the nominal value of the Ontario economy has increased 113.5% over the last twenty years (increasing from $335.8 billion in 1995-96 to a projected $716.9 billion in 2014-15) nominal hospital wage increases have increased less than half that -- 46.6%.  So there is no reason to suspect they have been a burden to the economy -- quite the reverse. 

Attack union work rules: “Every Ontarian should have a right to apply and compete for a government job opening. Today, the vast majority of civil service positions are never posted publicly because of a closed-shop arrangement with unions. This practice prevents new people and new ideas from coming into the civil service... In our earlier paper on labour reforms we suggested an end to compulsory union membership and dues. We believe this is especially applicable to people like managers, program supervisors and senior policy advisors in the Ontario civil service. We need to give them the opportunity to bargain individually for their compensation, if they choose not to be represented by a union... Measure productivity and service quality, just like the private sector does, and reward people with outstanding performance accordingly. Once the pay freeze is over, we propose a tightly managed system of performance pay that encourages employees to exceed expectations.” (My emphasis.)

Comment: Again the PCs plan to experiment with fundamental changes to very long-standing work agreements that will create uncertainty for all. These changes are unlikely to be freely negotiated raising, again, the threat of a legislative override of free collective bargaining

Eliminate public sector jobs: “We will also need to make do with fewer government employees.”  In his introduction, Peter Shurman, PC MPP, writes there is “a bloated public sector”.   In fact, this very day the PCs tells us that they plan to cut 100,000 public sector jobs. That, Hudak claims will bring us back to 2009 levels.

  • Comment:  Over the last year 47,000 public sector jobs have been eliminated in Ontario, according to Statistics Canada. Public sector jobs as of the most recent data (April 2014) are up 60,000 over 2009, not 100,000. That is 4.8% higher -- but that is less than the population increase and much less than the 7.1% growth in private sector jobs over the same period. Indeed, to keep the same proportion with private sector jobs, Hudak would need to add another 28,000 public sector jobs.

    The PC choice of 2009 is artful.  With the onset of the recession there was a significant loss of public sector jobs, so the growth since then appears higher than if they had looked at 2008 when public sector employment averaged 33,000 higher. Public sector job growth since 2008 has only been 2.1% (or 27,000 jobs). In contrast, the population has increased almost three times more quickly since 2008-- 6.1%.

    With the ebb and flow of the class struggle over public services since the 1970s, the public sector has shrunk as a percentage of the Ontario workforce, declining from 22.21% in 1976 to 19.23% in 2009, to 18.95% in April 2014. In today's workforce, that amounts to a relative loss of 225,000 public sector jobs. Even if we go back just to 2009 (the year that the PCs cite), we would need another 19,200 public sector jobs to keep the same proportion of the public sector to the entire Ontario workforce.

    Despite having the national capital in Ontario, there are fewer public sector workers in Ontario than in other provinces. Indeed if we had the same ratio of public sector jobs to private sector jobs as in Canada as a whole, we would have an additional 112,000 public sector jobs in Ontario.

  • Don't discount Hudak's threat to public services. The Mike Harris PC government drove down public sector jobs by 94,600 in just two years.  After six years in power (2001), they had driven public sector employment down to only 16.8% of all classes of employment.  If we had that rate, today we would have 149,000 fewer public sector jobs. Notably, even the PCs backed off that hard line before they were eventually defeated. 

Playing private sector workers off against public sector workers: “We believe there is also an issue of fairness. While unions in the private sector struggled through the recession, government unions lived in a different universe. Private sector workers faced economic reality and saw stagnant wages and big job losses. Those in the government sector saw steady raises and a big expansion of jobs. In the last few years, Ontario’s economy lost 300,000 manufacturing jobs and added 300,000 government jobs.”

Comment: As noted above private sector wage settlements have exceeded provincial public sector settlements.  As also noted, Ontario has the lowest public sector spending in Canada and a small public sector workforce. 

Privatize: “Rather than seeking competitive bids that can offer taxpayers a better price, better service, or both, it (government) simply goes with its own workers....The issue is not just cost, it’s also service. It’s no coincidence that you find the best customer service in the most competitive sectors of the economy. Why should taxpayers accept lower service from government than they would expect at a fast food chain?....
We’re not talking about contracting out the jobs of police officers and hospital nurses, of course. Here’s our test: If you can find the service in the phone book, why automatically hire a unionized government worker to do it? We believe that things like building maintenance and IT support should be open to competition.... “Managed competition” is a term used to describe the opening up of public service delivery to market-based competition. Prime targets for the introduction of competitive bidding in Ontario include:
·         Maintenance of government auto fleets and buildings
·         Information Technology
·         Permit inspections
·         Public transportation
·         Food services....
Government should take advantage of areas where strong competition already exists to open more services to competitive bids that offer better service at a better price.”

Comment: Here they promise not to privatize hospital nursing jobs "of course" -- but in one of their health care papers they promise to do just that (see a forthcoming note on those papers).  

Almost all of the recent government scandals and problems have been driven by privatization: eHealth, Brampton P3, private physiotherapy clinics, private plasma clinics, P3 gas plants, and ORNGE. Do we really need more?

Notably, the PCs also criticize Infrastructure Ontario for grouping together many smaller projects into one big project, squeezing out smaller Ontario businesses that can’t compete with giant multinationals on such big projects.  Although they certainly do not say it, they are implicitly criticizing public private partnerships (P3s), which by their nature are designed as long term mega-deals.  Ironically, it was the last PC government that started the P3 craze in Ontario in 2001, with the development of the Brampton Civic Hospital and the Royal Ottawa Hospital.  Another failed experiment?

Deregulate: “Our plan to reduce Ontario’s 386,251 regulations by one-third over three years will help cut the cost of government by refocusing civil servants on things that really matter. It will mean fewer people doing useless things on the public tab.”

Comment: Remember Walkerton under the last PC government or Lac Megantic under the present Conservative government?  Deregulation didn't work out so well there, but these guys are hell bent for a whole lot more -- apparently 128,750 regulations would get chopped. 

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