By Alan Holman
The Guardian

It’s hard to know which got the most attention in Ontario and Alberta, the hiring of Russians for a fish plant in P.E.I. or the findings that because of equalization Atlantic provincial bureaucracies tend to be overpaid and over-staffed.

Bringing the Russians in to staff the Ocean Choice plant in Souris when there’s an 11 per cent unemployment rate in the province was a grabber. Then the Atlantic Institute for Market Studies (AIMS), the Halifax-based think tank, reported the equalization system has resulted in the have-not provinces hiring more civil servants and paying them more on a comparative basis than Ontario and Alberta, the have provinces.

Island civil servants will say dollar-for-dollar they don’t get paid anywhere near the salaries of their Ontario counterparts. But the AIMS analysis indicates that, if the comparison is made to what civil servants are paid relative to the wages in the provincial economy, Island civil servants are better off than any of their provincial counterparts.

In the period 2000-2004, Island provincial and local government employees made an average wage of $36,000, while Ontario averaged $45,000. But, that doesn’t take into effect the differences in the economy and the cost of living.

To make it more fair, AIMS compared the average salaries of provincial and local government employees during that period, with the average industrial wages in each province. Using the average industrial wage as the base wage, Island civil servants earned a 31 per cent premium, while the national average was 20 per cent above the industrial wage. The Island premium was the highest in the country. Ontario was 23 per cent over the industrial wage.

The AIMS study seems to confirm what a lot of Islanders already believe; having a government job is a pretty good deal.

Island businessmen have often said that provincial salaries are out of line compared to the rest of the Island economy. The government has argued that provincial salaries were in line with the other Maritime provinces. That may be, but the economies are different, and AIMS is suggesting these differences should be recognized. Nova Scotia and New Brunswick civil servants’ salaries were just a shade higher than the national average of 20 per cent above the industrial wage, which is about where the Island should be, not 31 per cent.

These higher wages is just one aspect of what many Ontarians and Albertans will see as a problem with the equalization system. Another is the comparative number of civil servants in each jurisdiction. Here the Island fared a little better, not as many as Manitoba and Saskatchewan, but well ahead of the rest of the pack.

In this instance AIMS compared how many provincial and local government employees there were for every 1,000 people in each province. Ontario had the fewest with just over 65 civil servants per 1,000. Alberta had just under 75, while the Island has 90. The worst offenders are Manitoba with 105 and Saskatchewan with nearly 110 per 1,000 people.

The study contends that because the money the have-not provinces receive through equalization is in essence money free of any political cost, unlike money they get when they levy or raise a tax, there’s a tendency to be less concerned about how it is spent.

The AIMS report indicates that a great deal of the money from equalization doesn’t go toward the actual provision of public services as was intended, but rather it goes toward wages higher than warranted in the local economy, or for more staff, rather than services.

Coming when the have-not provinces are trying to get more money from the equalization program to rectify what they call the ‘fiscal imbalance’, the report could have hardly come at a worse time for them.

There will be a tendency to blame the public sector unions for this situation, but they are behaving as expected — they see a pot of money and they want their share, and more, if they can get it.

But, it is the politicians who we elect to administer these funds that must bear the brunt of the blame. At the end of the day they are the ones in charge, and sometimes that means standing up to the unions.

However, the last person to do that was Catherine Callbeck. She got little thanks, and paid a big political price. A lesson not lost on the Binns government, and it’s a lesson they’ll pay more attention to, than anything Alberta, Ontario or AIMS has to say.

The AIMS Commentary Series has attracted the attention of media across the country. Click on the links below to read some of the stories written in response to the Commentaries.