OTTAWA — The mandarins who run Canada’s public service may be next in line to see their pay and benefits come under scrutiny as the Conservative government moves to balance the federal budget.
Treasury Board President Tony Clement said a committee examining compensation for the 7,000 people in the upper ranks of the bureaucracy has made a number of recommendations to him and the Prime Minister.
“We haven’t made any decisions yet but I’m always looking ways to increase accountability throughout the whole system,” Mr. Clement said in an interview. “We have a highly motivated executive cadre but at the same time part of the way we get the system to modernize itself is that we all have to make some kind of sacrifice.’’
He was speaking after announcing that the government had reached a deal with 500,000 retired federal public servants that would double retirees’ contributions to their health plan.
The Conservatives had announced in the budget that they intended to increase the share of benefit costs paid by current and future retirees from 25% to 50%, saving the federal government around $7.4-billion over six years.
Mr. Clement said that to get the agreement, the government “put water in its wine” – granting concessions for low income retirees eligible for the Guaranteed Income Supplement, who will continue to pay 25% of benefits. This will reduce savings by around $700-million over the six year period.
For the average federal public service retiree, with a pension of $30,000, the new agreement will see health care contributions rise from $24 to $48 a month.
The agreement adds retirees to the ranks of those who have had their pay and benefits cut as part of the government’s deficit reduction program.
Mr. Clement is currently involved in negotiations with public sector unions about ending the practice of banking sick days and replacing the current system with a short-term disability plan. The Conservatives have already reduced the numbers in the public service by 20,000 and increased pension contributions for bureaucrats and MPs. The 2012 budget called for the elimination of 600 executive positions.
But the 7,000 executives in the upper echelons of the public service have been shielded from most of the cuts. In fact, the pay of most executives has increased markedly on the back of bonuses given to those who have managed to cut most.
‘We all have to make some kind of sacrifice’
The return for taxpayers may well have been worth the pact – the target for the government’s deficit reduction plan was 5% of the $88-billion in direct spending. In the event, a motivated executive identified savings equivalent to 6.9% of the program spending budget.
However, critics in the public service unions suggest that the government has allowed executives to rubber-stamp their own pay raises, while freezing salaries further down the scale.
One Conservative said there was a conscious decision not to take on the senior ranks of the public service during the deficit reduction process.
But with the budget on the verge of moving back into the black, Mr. Clement appears to have decided that getting more value for money from the public service requires taking a closer look at executive ranks that have swollen by more than 70% since the Liberal cuts of the 1990s.
Defenders of the Sir Humphreys at the top of the bureaucracy will point out that, while most rank and file public servants are paid more than they would be in the private sector, most at the executive level are paid less. Those at the most junior executive rank – the EX1s who account for more than half of the 7,000 – received a total compensation package of $166,000, around 6% less than the private sector. Pay packages at the deputy minister level rise to $418,000, but that is less than half what those people are deemed able to make in business.
Mr. Clement disbanded the “executive compensation and retention” committee that used to be chaired by Carol Stephenson, a former dean of the Ivey School of Business at Western University.
“It was a farce. There was no retention issue at the EX level – once they’re there, they’re there for life,” said one source.
Mr. Clement said he has now “reformulated” the committee under the leadership of Greater Toronto Airport Authority chair, Vijay Kanwar.
Mr. Clement would not comment on the recommendations made by Mr. Kanwar’s committee and the latter was not available for comment Wednesday.
People familiar with the system suggest the criteria for bonuses and “at risk” pay should be overhauled to more accurately align performance and pay.
At the end of each performance cycle, deputy minister complete a “self-evaluation assessment,” which theoretically drives up the chances of getting a generous bonus.
“The success ratio in achieving bonuses is a joke,” said one source. “One minister gave his deputy minister a failing grade and the deputy minister still got a maximum bonus.”