Province proposes to limit salary increases for MPP’s until the budget is balanced – in 2019.

By Pepper Parr

March 21, 2014


The media release said the province was going to freeze MPP salaries until the provincial budget is balanced.  Sounded reasonable – but the news release didn’t say how much MPP’s are paid now nor did it make any mention of the allowances and perks they get.

The pay freeze, if it passes, would extend the current freeze on MPP salaries until the provincial budget is balanced in 2017-18. The MPP Salary Freeze Act would not allow pay increases to take effect until April 1, 2019, after the Public Accounts confirm a balanced budget.

Compensation costs account for over half of all Ontario government spending, either paid directly through the Ontario Public Service or as part of the government’s transfer payments to universities, hospitals and other public sector partners.

The government has identified the management of public sector compensation as an important part of its plan to control costs while also maintaining public services that families rely on like health care and education.  

In 2004, a salary freeze for MPPs was implemented from October 2003 until April 1, 2005.

The 2009 budget announced that MPP salaries would be frozen for one year beginning on April 1, 2009. That salary freeze was extended in the 2010 budget for two years and in the 2012 budget for an additional two years, bringing the total length of the current pay freeze to five years.

The media release makes no mention of any increase between April 2005 and 2009. It is the decision to be selective with the information that is given out that ticks off the public. The men and women who serve as MPP’s are entitled to a decent wage and a pension plan plus expenses that they incur when they do their jobs.

The Burlington MPP gets an allowance to pay for accommodation in Toronto for those evenings when the legislature runs late. It’s a 45 minute drive from Queen’s Park to Burlington – no need for the cost of an apartment to stay over. If a session runs really, really late – OK let the MPP get reimbursed for a hotel room – a moderately priced hotel room if you don’t mind.

We would love to know how often MPP Jane McKenna stays overnight in Toronto and how often members of her family use the apartment when they are in Toronto. Same goes for how often Ted Chudleigh, the Halton MPP stays in Toronto.

In 1996, the defined benefit pension plan for MPPs was wound up and members and beneficiaries were paid the value of the benefits earned to that date. MPPs now have a defined contribution pension plan.

Since 2009, Ontario has initiated compensation restraint measures for members of the Ontario public sector and broader public sector, and has indicated that compensation costs must be managed within Ontario’s existing fiscal framework.

Ontario public sector wage settlements continue to be below the average of private sector, municipal sector and federal public sector settlements.

Tax payers want a government that they see as people looking out for the interests of the public. We frequently hear people running for election say it is an honour to serve the pubic – that tends to stick in the throat when we read about the massive cost of WORD of shutting down the construction of two gas plants before the last election and then reading details of the amounts paid to consultants and law firms to handle the shut down and then learning that documents critical to an honest investigation of who did what when are no longer available – erased from hard drives on computers.

These politicians toss around the loss at more than $1 billion – a BILLION – most of us have to pause to figure out how many zeroes that is.

The current Premier seems like a decent hard-working woman; she is certainly out there working hard. But one could have, and many people said the same thing about former Premier Dalton McGuinty who resigned as Premier on really short notice.

We need government – and the people who do that work are entitled to good incomes. It is hard work and they are in the public eye almost every hour of every day.

We just want better value for the money we have to spend.

Burlington currently has its own little employee perk problem. City hall staff get free parking which comes in at about a quarter of a million a year. How many people get their parking paid for by their employer?

When ward 2 Councillor Marianne Meed Ward brought this up during the budget deliberations there wasn’t a line up of council members ready to support her position. The city manager said at the time that what Meed Ward had brought to council appeared to have merit. Jeff Fielding doesn’t use language like that lightly. Most of the Council members wanted to see a detailed report on what the city was required to do if in fact paid parking was a taxable benefit.  They all voted to have a report prepared – but there was not date set as to when that report would come back to council.

An opportunity to lead was missed – by ever one of the except for Councillor Meed Ward.  Councillors Craven, Taylor, Dennison, Sharma and Lancaster as well as the Mayor punted the ball back to staff – they very people who enjoy the benefit.  Anyone of the six could have said:  If this is a problem we need to fix it quickly.  Instead they put made sure the funds to pay for that free parking came out of the tax revenue account and into the parking revenue you account where it is then used to pay for the free parking.

The city finance department should have known if the benefit was taxable or not and brought a recommendation to council.

It’s exasperating.

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4 comments to Province proposes to limit salary increases for MPP’s until the budget is balanced – in 2019.

  • Gary Scobie

    I echo Tony’s praise of participants and warning for the future. Budgets are just short term plans. Small deficits or surpluses, or even balancing a budget, make little difference to the approaching train wreck that is the DEBT. They’re a little like small braking, small accelerating or coasting moves, respectively, while the train continues to move to that final station where the tracks have been torn up.

    We Ontarians can no longer joke about California (or Greece for that matter). We are the Greece of Canada. We once were the Germany. It’s not the budget, it’s the debt, stupid.

    That’s what I want the election to be about too.

  • Tony Pullin

    I appreciated the article and liked these comments by Susan and Greg. They speak to the big picture. To be considered “decent” and “hard-working” are fine attributes in a Premier, or any person for that matter. Responsibility and competence however, are the necessary functions of governments and those in Office.
    Consider the true comprehension of $1b, (the cost of the gas plant fiasco). Alot of money no doubt, but this is merely one tangible example. Unfortunately it is a drop in the bucket. A pittance compared to what we face. A few facts for perspective:

    -Ontario’s debt is nearly double that of California’s.
    -Ontario’s bonded debt=$267b – California’s bonded debt=$144b
    -Ontario’s pop. 13.5m – California’s pop. 38m (nearly 3 times).
    -10% of Ontario tax revenue goes to debt interest repayments vs. 2.8% for California.

    Much to be said about “balancing budgets” these days. Managing the debt is the real key here. Balanced budgets should not be the landmark by which governments negotiate wages. News media loves stories about expense accounts and expensive glasses of orange juice and hotel costs and anything else that invokes partisanship. Important yes, but mostly just fodder for selling newspapers or advancing a political agenda.

    Sooner or later, somebody (a Premier would be ideal) needs to identify this debt elephant and tell us what they are going to do about it.

  • Greg Fabian

    So, it is going to take 1,000 years to effectively pay back the amount spent on cancelled gas plants with the MPP salary freeze?

    How long before we pay back the Ornge and E-health debocles?

    An MPP base salary is $116,500. For a Parliamentary Assistant that increase to $133,217, a Cabinet Minister to $165,851 and the Premier to $208,974. I’m sure there are many other amounts they receive but let’s start by using the $116,500 for ease of calculation.

    By not implementing an increase, say a 3%, then that would save a total of $374,000 annually (107 MPP’s x $116,500 x 3%). But the savings per annum are actually more than this given that many make in excess of the $116.5K. Let’s biggie size it to account for all the additional amounts paid as noted above and say the total savings might be upwards of $700,000. Now that doesn’t include the compounding effect of not implementing a pay increases for the past/future year. This savings is modest at best. Symbolic? Perhaps. Pessimistically I view it as is just another ploy in their election toolkit. I would argue that given the performance of some MPP’s that even a wage freeze is too good for them – a wage reduction would be in order.

    Let’s see if this type of wage constraint can be applied to all government employees, federal, provincial and municipal whether they are politicians, teachers, firefighters or bureaucrats. Next time a public sector union contract is up for renewal let us see if the governement has gumption to cause restraint with out cowering to the very people that elect them.

    When the budget is balanced I wonder if whatever majority government of the day would have the audacity to implement a retroactive pay increase.

    As for the housing allowance, if an MPP lives more than 50km from Queen’s Park they are eligible for a $21,000 allowance. I am not sure how they settled on the 50km radius.

    A sitting MPP from Burlington or Halton would be eligible, but barely – depending on where distance measurement is taken. Burloak Dr/QEW (the closest point of those two ridings) to Queen’s Park is 48.2km according to Google maps. That same $21,000 would buy 140 nights in an average Toronto hotel room at $150 per night. Or it would buy a $1,750 per month apartment.
    Peter Shurman eventually got into a lot of trouble from Tim Hudak over his shenanigans with the allowance.

    Burlington apparently struggles with the concept free employee parking downtown. There are two questions to be asked.

    First. Is free parking considered to be part of the overall compensation paid to an employee who works at city hall? If so, then fine, let’s recognize that and ensure proper tax treatment. If not, then fine, take it away. An employer only has so many dollars to spend on compensation whether that comes in the form of salary, car allowance, free parking or any other benefit it is all an expense to the employer. Free parking to a city employee is a cost to the city in as much as those spots would otherwise attract revenue from citizen paid parking.

    Second. If it is to be paid by the employer then is it a taxable benefit? The CRA rules appear simple enough but the concept of scramble parking does complicate the matter somewhat. However, I am sure that anyone of the tax accounting experts in Burlington would be able to provide guidance on the matter. For a $5,000 fee the city could get expert advice to ensure compliance and thereby rule out any future tax liabilities. Past liability is another matter. That would have to be paid by the city if they were found to be offside with the tax law. Perhaps the city is sitting on their hands on this so as not to raise any red flags at the CRA. How far back can the CRA go to compute the missed tax deductions? What penatly and interest is at risk here?

    If it is a taxable benefit let’s not get too upset over the beleaguered employee who would still get a benefit from the deal. As an example, if $1,000 is the calculated benefit, then the employees would be required to pay $400 assuming a marginal tax rate of 40%. That means $600 is still beneficial to them.

  • Susan Lewis

    Not the point or this article but, a Billion is 1,000 Million. It has 9 zeros.

    That’s an unimaginable number so to put it into perspective, if you managed to save $1 million a year, it would take you 1,000 years to save a billion.

    A Trillion is so much worse. A Trillion is 1,000 Billion. It has 12 zeros.

    If you could manage to put aside $34 Million every day for 80 years, you would then have $1 Trillion. Or, 1 Trillion seconds ago, it was 30,000 B.C. give or take a decade.

    Just saying.