Canadian municipalities don’t have a revenue problem, they spend too much on staff
CALGARY – Municipal government workers across Canada are making $6.43 more per hour on average in wages and benefits than their private sector counterparts – a gap of 22 per cent – according to the latest report from the Canadian Federation of Independent Business (CFIB).
These excess wages and benefits cost taxpayers $3.4 billion per year. If municipal workers, who earn over $60,000 per year plus benefits, were compensated in line with private sector norms, the savings to cities could be spent on much-needed infrastructure improvements, such as public transit expansion, or given back to Canadians as tax cuts.
“When the Federation of Canadian Municipalities (FCM) meets this week, they will, no doubt, point to a so called “revenue problem,” and ask other levels of government for more money,” said CFIB executive vice-president Laura Jones. “But Canadian cities don’t have a revenue problem. They have a spending problem. And a lot of it has to do with employee compensation that is well beyond what’s fair and reasonable – an extra six bucks an hour is a lot more than pocket change.”
The municipal compensation gap varies across the country. Municipalities in Quebec (23 per cent), Ontario (21 per cent) and New Brunswick (19 per cent) have the biggest imbalances but Alberta’s gap is still significant (16 per cent). Individually, Calgary (19 per cent) and Edmonton (13 per cent) have room to improve. Based chiefly on National Household Survey (NHS) returns from 2011, the findings reflect the representative census records of 132,790 municipal employees and 3.6 million private sector employees across Canada. Occupations that don’t exist in both the municipal and private sectors are excluded.
“Small businesses pay a disproportionate share of property taxes and entrepreneurs are urging municipalities big and small to spend within their means,” said CFIB senior policy analyst Amber Ruddy. “Big city mayors in Alberta have been clamouring for new tax powers through city charter agreements. Cities that are serious about solving their financial woes should start by addressing the unfair advantage in wages and benefits for city employees.”
Every year, Canada’s mayors meet and call for more money so that they can continue overspending. Unfair, inflated public sector wages and benefits hurt all Canadians, and translates into higher taxes and fees at all levels of government.
“There’s only one taxpayer. Instead of looking for more handouts, municipal leaders need to look in their own backyards, and put their energy into getting a fair deal for their constituents in labour negotiations,” added Jones. “It’s simple: limit employee raises until the compensation gap is eliminated. The six bucks stops here.”
Read CFIB’s open letter to Canada’s mayors.
CFIB is Canada’s largest association of small- and medium-sized businesses with 109,000 members across every sector and region.