Friday, May 18, 2007

There is a middle ground on MLA compensation

{A shorter, pithier version of this piece appeared in the Williams Lake Tribune on May 24, 2007---MC .}

The majority report of the Independent Commission to Review MLA Compensation, which recently came up with a new structure for paying provincial politicians in British Columbia, was perfectly competent within the terms of reference that it was given by the government, and it got the sort of result that the government was no doubt expecting. But, as Malcolm X once famously said, a chicken can't produce a duck egg. There is another perspective--one rooted in the theory of democratic and parliamentary government--which I think indicates a somewhat different outcome from the one recommended by two of the three commissioners and put into the legislation introduced last week by the B.C. Liberal government .

By "democratic" I do not mean simply the principle of majority rule. If everyone voted on what they thought everyone else deserved, the result would likely be a reduction in everyone else's pay check. (The fall in aggregate income would likely trigger a major recession.) It also helps little to refer to the mere fact that under a parliamentary form of government MLAs have both the right and the responsibility to vote on their own compensation. (For most of us, that would be highly inflationary.)

Instead, I refer to a sensibility that comes from an historical sense of how a parliamentary democracy is supposed to function, and of the spirit in which a candidate for elected office offers to be a representative of other citizens--i.e. sometimes as a delegate of constituents' wishes to the government; more often than not as representative of party/leader priorities to the constituents; and sometimes as a valued source of independent judgement concerning the public interest. It is difficult to place a market value on these services, since they are really duties of citizenship that we all share. There was no debate about rates of pay for the legislators of Ancient Athens; but today we concentrate the exercise of these duties in a few hands because it is impractical for all of us to engage in the practice of self government in a large and complex society. Hence a need to compensate those who do specialize as representatives, for the hard work and personal sacrifice that they acccept on our behalf.

The government's proposed base level salary of $98,000 per year is the first major increase since 1997, but at 29% is well above the approximately 10% increase in average hourly wages in the province since that time. The Commission was evidently making a different comparison --with legislators in other jurisdictions, and (particularly with respect to the premier and cabinet) senior managers and executives in both the public and private sector.

It is reasonable to ask whether our MLAs have been making enough. B.C.'s provincial MLAs in 2006 earned an annual basic salary of just $76,100 (in contrast, your federal MP earns a base salary of $150, 800), with the premier earning just 40% of what the federal prime minister earns and provincial cabinet ministers making about half of what their federal counterparts make. While the assumption of extra civic duties on our behalf ought not to be motivated principally by money, neither those who are beginning their careers and starting to raise families nor those who are already accomplished in other fields should have to make prohibitive sacrifices. At the very least, it is important that they be compensated for the work that they do in the public service.

So it is just possible that a one-time adjustment of 29% can be justified because an annual income in the $100,000 range reflects the value that we place, or ought to place, on the role of the elected representative in our system of government. The salaries earned by provincial MLAs in Alberta and Ontario are relevant to this determination, as is the old adage "you get what you pay for". To say that being a MLA ought to be like jury duty , composed of a cross section of ordinary British Columbians for low pay, is too extreme a view, unless we wish to discourage professionalism in political careers entirely. (Who wants to serve on a 8-or-12 year jury?) The notion that ordinary MLAs ought to be paid well is also buttressed by the traditional theory of parliamentary government, according to which premiers are merely "first among equals" and that cabinet ministers owe their authority to the legislature, and not the other way around.

On the other hand, the thinking of the "Independent Commission"--handpicked by premier Gordon Campbell, with the word "independent" apparently tagged on by the premier's office for the purposes of political spin--is dominated by standards of executive compensation and the growing gap that it sees between politicians and senior executives. Since this gap is perceived as being greatest at the level of the premier and cabinet, the Commission proposes even bigger raises for them-- to an additional 90% of basic salary and 50% respectively. But while the Commission is certainly right to recognize that "over the past six years, the salary gaps between legislators and other senior managers have widened", it totally omits saying that that is because the gap between senior managers and everyone else has widened. Nowhere does the Commission mention that there is a widespread debate about the justice and fairness of how much corporate executives are paid. Since politicians are not selling their expertise in the market, but rather representing everyone, this fact deserves more importance than the Commission gives it. From my point of view, it suggests that cabinet ministers may only be entitled to the same degree of increase that all members arguably merit. Unless, of course, you believe that Rich Coleman or David Zirnhelt are the public sector equivalents of bank vice-presidents or law firm partners, and that there is nothing wrong with recent trends in private sector executive compensation.

Rafe Mair and David Schreck both argue that since it is a myth that ordinary MLAs have power, they are not underpaid. But it is jarring to the democratic ear to suggest that premiers should be rewarded for concentrating power in their office or that MLAs should be punished for losing it. By that logic we would have to give premier Campbell a multi-million-dollar raise. I think that there are strong reasons for paying MLAs according to the theory of parliamentary democracy rather than according to its actual practice. To do so could help to bring the reality more in line with the theory, by encouraging more citizens to take pride in being an MLA instead of viewing it as a mere stepping stone to cabinet. To do otherwise would be to reinforce and entrench what is at best a regrettable and at worst a deplorable state of affairs.

The Commission does list a range of other factors that it considers relevant to the issue of compensation. These include: long hours, loss of family time and privacy (all of which MLAs surveyed indicated that they had failed to appreciate when they were first elected), loss of income and even job prospects, since "employment or contract work will be very difficult to find due to the stigma associated with having been in public office, this being particularly so if their return to private life follows a change in the governing party." Democratic principle suggests that we should compensate our elected representatives fairly for helping us govern ourselves, in full recognition of the frequently demanding nature of their work. However, that does not mean fully indemnifying politicians for the inherent uncertainty of elections, or for failing to do their homework before they decide to run for office, or for their own lack of prestige in the wider community. A balance must be struck.

Public opinion surveys could have been designed to guide the Commission's findings, but they are used in this Report principally to illustrate the public's "lack of understanding .... of both the duties and levels of MLA compensation." This, combined with the small number of submissions, caused the Commission to be "cautious in interpreting the opinions received when formulating [its] recommendations." Yet the experience of the five -member commission of ordinary citizens set up in 1996 by the Clark government to review MLA pay --to say nothing of the more recent Citizens' Assembly on Electoral Reform --illustrate perfectly how well ordinary citizens, when properly informed about the issues, can be trusted to give fair and valuable input.

It is probably significant that the lone academic member of the Commission, UBC Business professor Sandra Robinson, dissented from business lawyer Sue Paish and former judge Joseph Wood on the issue of pensions, with Prof. Robinson favouring a less generous package than did the other two. (Unfortunately, her specific reasons have not been published.) In place of the current "Group RRSP" scheme, to which the Government contributes 9% of basic salary (or $6,849) and to which MLAs may contribute up to a matching amount, the Commission recommended the "reinstatement of a defined pension benefit plan" based upon a benefit accrual rate of 3.5% of the highest 3-year average earnings, up to a maximum of 70% of the 3-year average earnings. The taxpayers' contribution would rise to 37% of the members' total current salary. There are also generous provisions for the "retroactive purchase of pensionable years" for MLAs back to May 2005, while "[d]etermination of buy-back provisions for service as an MLA for any years between the termination of the previous defined benefit pension plan [in 1997] and May 17, 2005 should remain within the jurisdiction of the Legislative Assembly Management Committee". According to the Commission, "[a]fter extensive consultation with various pension experts, we have concluded that this pension plan is fair both to members and to the public." According to several observers, this new plan is about twice as rich as the standard BC government pension for public servants working the same number of years.

One would think that the NDP Opposition would seize upon the Robinson dissent and show its solidarity with other public sector workers by explicitly vowing to bring in a standard pension plan for MLAs if it forms the next government. Instead, it has focused upon the least objectionable, but most visible, aspect of the compensation package, the basic MLA salary. Donating their salary increases to local charities may represent a pragmatic response to the "take it or leave it" corner that the Liberals have painted the NDP into, serves as a decent response to a law that probably shouldn't take effect until after the next election, and may help some New Democrats to get re-elected, but it hardly represents an adequate policy for the future. One must ask: if a large increase in deferred (pension)income is acceptable, why is a large increase in current salary income "obscene"?

I suggest that a good MLA salary of about $98,000--$100,000 (taking effect only after the next election), with an additional 30% for cabinet ministers and 60% for premiers, along with a standard public service pension plan appropriate to those levels of remuneration and a generous severance and transition package for politicians who lose their seats in elections, strikes the right balance. Such a package recognizes that we have been under-valuing the services that these citizens have provided, not because they have an expertise that could have been hired by a corporation or law firm at a higher rate of pay, but because they have been performing our duties of self-government for us. Any public-spirited citizen with political ambition--even those with young families-- should be able to accept these terms, whether they represent a financial sacrifice or not. Any public-spirited citizen who chooses not to run for office should see this as a reasonable price to pay for the representation which frees us for other pursuits.

Future revisions of MLA compensation should be linked to a number of factors, the most important being the average rise in incomes and real wages of British Columbians. (I suggest that the formula attach at least 50% of the weight to these variables.) They should also continue to be overseen by "independent commissions", though preferably not ones hand-picked by a premier who has swung wildly from the right-wing populism of his anti-pension days when he was Leader of the Opposition to a right-wing elitism that appears to be more sensitive to executive compensation and golden parachutes. They should be mindful of what the private sector pays and what federal MPs get, but not to the point that they de-link entirely from what is happening to average citizens or to the rest of the public sector. There is a middle ground here, and it also happens to be the one which is most congenial to a healthy democracy.


Budd Campbell said...

Thanks for an excellent commentary Mark. I usually find David Schreck's work to be very informative, but on this issue some of his material is a bit disoriented. I agree with Schreck that this overall package is not supportable on either political or policy grounds, but you're quite right in saying that the least objectionable element is the increase in basic MLA pay to $98,000 per year.

Most observers and pundits are simply not interested in the merits of this issue. In fact for them there is no issue, only political games and gamesmanship to consider. And the current game of choice among the pundits is skewering Carole James in a this way, that way, damned if she does, damned if she doesn't game that just never quits. An excellent example of this press gallery propaganda are the columns by Keith Baldrey.

I believe that what is required is a permanent pay panel that will make recommendations on all provincial salaries not set by collective bargaining. That would include all the top bureaucrats, the Deputies, Assistant Deputies and upper level Directors, members of boards and commissions including Crown Corps and Universities and colleges, exempt political staff, and last but not least, the Members of the Legislature.

In setting these pay levels, I believe the panel should be doing some very sophisticated research into the public's expectations around pay levels that are appropriate for MLAs and Cabinet Ministers. In practice this would mean identifying a cluster of other jobs in society which most voters believe represent a sensible comparison basis for their provincial legislators.

Some jobs that come to mind for me are high school principal, bank manager, airline pilot or railroad engineer, head nurse, senior police detective, and plant or construction superintendant. Each of these jobs involves a major level of responsibility and trust, yet none are in the same kind of elitist category as lawyer or dentist. In fact only the high school principal and head nurse example assume any university education.

Thanks again Mark for an informative article on a subject that has generated 95% heat and 5% light.

Mark Crawford said...

Thank you, Budd! You seem to agree that there is a sensible and principled middle ground between the two poles in this debate, and your own suggestion of a panel for salaries outside of collective bargaining is a helpful one.

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