Long gone are the days when Alberta taxpayers could afford to pay a big premium for our top bureaucrats. With labour costs making up more than half of the government’s operating budget, it will be a key area for Premier Jason Kenney to address to balance the books. The first place to begin reining in these costs is top management positions within the bureaucracy, such as deputy and assistant deputy ministers.
A deputy minister is a senior bureaucrat responsible for a government department’s day-to-day operations. Alberta’s deputy ministers have a lot of responsibility, but with an average annual compensation of $327,000, it’s time for their paycheques to reflect the new realities facing taxpayers.
Kenney is expecting a $20-billion deficit this year and he won’t be able to balance the books or provide more tax relief unless he can bring Alberta’s government compensation in line with costs in other provinces.
But before Kenney can sell cuts to his entire government, he will need to make sure his department heads are willing to lead by example. That’s why the Canadian Taxpayers Federation is proposing a 20 per cent cut to Alberta’s deputy and assistant deputy ministers’ pay.
Alberta’s top bureaucrats currently receive a 30 per cent compensation premium compared to the average of British Columbia, Saskatchewan, Manitoba and Ontario, according to data in provincial compensation disclosure lists. That means a deputy minister in Alberta is receiving about $100,000 more every year than the same bureaucrat working the same job in Saskatchewan.
Alberta’s assistant deputy ministers also receive a 12 per cent compensation premium compared to the Ontario-West average, which translates into tens of thousands of dollars more every year than their counterparts in B.C. or Saskatchewan.
Even after a 20 per cent cut, Alberta’s deputy and assistant deputy ministers would still be raking in $261,838 and $187,268 respectively. Those would still be large, six figure salaries during a downturn and enough to compete with our neighbours for top talent.
The 20 per cent cut wouldn’t be unprecedented. New Zealand’s top bureaucrats agreed to a similar pay cut to show solidarity with their struggling taxpayers during the COVID-19 economic crisis.
“We acknowledge New Zealanders who are reliant on wage subsidies, taking pay cuts, and losing their jobs as a result of the Covid-19 global pandemic,” said New Zealand Prime Minister Jacinda Ardern. “I can confirm that myself and government ministers and public service chief executives will take a 20 per cent pay cut.”
Alberta taxpayers aren’t asking bureaucrats to do something we haven’t already done. For years, many Albertans have been walking away from their offices with cardboard boxes in hand. Pay cuts were inevitable for many working Albertans lucky enough to keep their jobs. Throughout the downturn, there were even reports of 50 per cent pay cuts to avoid further job losses.
Alberta’s business executives have already responded to the COVID-19 crisis by reducing their own pay.
“The reason our executives took the (20 per cent) rollback right away wasn’t because of investor pressure, it was because our employees are taking a hit,” said Dale Dusterhoft, Trican president and CEO. “We can’t ask our people to do something different than us.”
Executives at Cenovus Energy, Badger Daylighting, Parkland Fuel Corp. and WestJet Airlines have also announced cuts to their own compensation.
Alberta taxpayers have been struggling for years and we can no longer afford to pay the Alberta bureaucrat premium. Kenney will need to cut government compensation across the board to fix the province’s finances and provide further tax relief. But the first place to start reining in costs is at the top, with Alberta’s deputy and assistant deputy ministers.
Franco Terrazzano is the Alberta Director of the Canadian Taxpayers Federation.