Big Cash Grab Proposed for MLAs

May 11, 2007

Holman's Report on MLA Pay

Email:
Premier Campbell
Carole James
Other MLAs

"We worked right up to that deadline. It was a bit of work - 'cause we didn't all see eye to eye. But we negotiated out a set of recommendations and signed off on those, and, then, it was only after I was in Europe that they changed their minds and came up with a different set" of recommendations. "So, yeah, to be completely left out - to have no influence on the outcome - was certainly frustrating."
Commissioner Sandra Robinson, taped in an interview by Sean Holman.

Holman writes for 24 Hours and publishes the best political blog in BC, Public Eye on Line. I check it several times a day because stories are far more likely to break on Holman's website than they are in any of the "major media". Of course, the major media may not take kindly to being upstaged by Holman. Some take the view that if they don't report it, it isn't news, a condition sometimes called media envy. You can see one example of that with Holman's exposure of deep division within Campbell's "Independent Commission to Review MLA Compensation". The members of the Commission were handpicked by Campbell and the word "Independent" appears to have been tagged onto its name as part of the political spin. Holman's story broke in 24 Hours early in the morning of Thursday, May 10th. As of 6:00 PM on April 10th, you can't find any of the major media following the story. To the credit of Bill Good on CKNW, he happened to have Robinson on his show for an interview on another issue, but he first asked her about Holman's article. She responded by apparently hanging up on him on-air. Holman later contacted Commission Chair Sue Paish who criticized Robinson for her lack of experience. Keep in mind that this is the Commission that the Campbell government hopes to hide behind so it doesn't have to take political responsibility for grabbing the biggest pay and pension increase for MLAs in BC history. Notwithstanding websites, most of those who cover politics in the print media wouldn't have an opportunity to pick up on Holman's story until their papers come out on Friday morning. Reliable sources indicate that several will credit Holman and demonstrate that despite editorial endorsements of the pay grab, the working press understand the revulsion experienced by those who have to pay the bills.

On the morning May 2nd, the day after the Commission's report was tabled in the Legislature, NDP Leader Carole James announced that the NDP caucus would not support the recommendations, saying it is not acceptable to British Columbians. James was proved correct when an Ipsos Reid poll showed that 67% of those surveyed opposed the pay hike. Apart from dealing with the embarrassment of the NDP's Harry Lali saying that he supports a pay hike, there has been silence from the NDP. The party's website doesn't have a single word on the issue, and the caucus website is equally silent. There have been no news releases, no interviews, nothing from the NDP on an issue where, according to Ipsos Reid, 68% of those sampled said they would be willing to change their vote from Liberal to NDP if the Liberals went ahead with their money grab.

It is not often that Province Columnist Michael Smyth can be accused of spouting the NDP's spin, but his column of May 10th appears to be the party line. Referencing the BC Rail corruption trial, Smyth wrote: "Unfortunately for the Libs, the pay-raise brouhaha will blow over by the end of the current legislative session. The dirty laundry from the trial has only begun to be aired - and could go on for months." That appears to be the NDP line, i.e. don't speak out on the outrageous pay raise because it will blow over while the Basi-Virk trial could do serious damage to the Campbell government. Smyth also hosts CKNW's "Nightline BC", on which he interviewed Holman and thereby publicized what Holman reported with respect to Paish and Robinson. The public needs to hear from Commissioner (and former Justice) Josiah Wood on his views of this dispute.

Some people can chew gum and dribble a basket ball at the same time. It is not mutually exclusive to criticize the Campbell caucus for grabbing the money and benefits offered in the recommendations from Campbell's Commission on MLA Compensation while at the same time focusing public attention on issues raised as a result of the police raid on the Legislature. Failure to do so invites speculation that divisions within the NDP caucus go beyond Lali's foolish statements. The NDP appears willing to invite that speculation while trading an issue on which the public is solidly against the Campbell government with the hope that public opinion will solidify in an equal or greater manner on allegations of political dirty tricks. That may be like hoping that pigs would fly if they could grow wings, or (to mix metaphors) betting on filling an inside straight.

One can hope that the NDP caucus will eventually come to its senses and campaign against the recommendations of the Campbell Commission, once those recommendations are expressed in tentative legislation. In the meantime, it might be a good idea to write to Carole James as well as to Gordon Campbell and other MLAs, telling them what you think about the proposed 29% pay raise, a gold plated pension plan and generous termination and other benefits.

May 8, 2007

Precedent for Rejecting Commission Recommendations

Email:
Premier Campbell
Other MLAs

On October 31, 2002, then Attorney General Geoff Plant moved a motion to reject four of the recommendations set out by the Judicial Justice Compensation Committee, a Committee appointed in accordance with Section 3 of the Judicial Compensation Act, consisting of one person appointed by the minister, one appointed by the chief judge and one agreed to by the other two appointments. Part of Plant's motion read:

(1) The recommendation for a salary increase of 5.5%, which would have paid judicial justices a full-time salary of $77,935 for the 2003 calendar year, is rejected as unreasonable and unfair. The substitute provision for the salary for judicial justices will be $73,872 in 2003, a 0% increase over the salary for 2002.
(2) The recommendation for a salary increase of 9%, which would have paid judicial justices a full-time salary of $84,949 for the 2004 calendar year, is rejected as unreasonable and unfair. The substitute provision for the salary for judicial justices will be $73,872 in 2004, a 0% increase over the salary for 2003.
(3) The recommendation for a $1000 Professional Allowance is rejected as unreasonable.
(4) The recommendation that the term of office for judicial justices be raised from 65 to 70 years is rejected as unreasonable.

The overwhelming expression of public opinion is that a 29% pay increase for MLAs is unreasonable and unfair. Why can't Gordon Campbell see that?

In March 2005, then Labour Minister Graham Bruce introduced Bill 21 (Crown Counsel Agreement Continuation Act) in which the Campbell government rejected an arbitrator's report and imposed a contract on Crown Counsel.

The examples above show that when the Campbell government receives a report, whether it be from an independent panel established to set compensation provisions for justices or from an arbitrator chosen to resolve a dispute, it doesn't feel bound by the recommendations or the process. Of course, there are ample precedents of other governments rejecting or ignoring recommendations from Royal Commissions. With those precedents the Campbell government cannot now hide behind the process it established to receive recommendations on Compensation for MLAs. Just as it did with judicial justices and Crown Counsel, the recommendations of the Independent Commission to Review MLA Compensation can be rejected or significantly modified.

In his blog, Public Eye Online, Sean Holman compared the attitude of Campbell's hand-picked Commission toward the public with what two previous commissions said. He demonstrated that past commissions haven't shared the arrogant attitude that the public be damned.

Writing in The Tyee, Rafe Mair mocked the nonsense from Campbell's Commission that MLAs work so hard and have so much responsibility that they deserve an increase. Mair and I have been there and know that MLAs have less power than many community based advocates, and many people work long hours, sometimes in several jobs, without being rewarded with six figure incomes.

The 2007 Commission made a fundamental error in dismissing contributions from the public. Campbell and his caucus will make a bigger error if they impose the recommendations and ignore the public.

May 6, 2007

Ipsos Reid vs. Elitists on MLA Compensation

Email:
Premier Campbell
Other MLAs

An Ipsos Reid poll, conducted on behalf of Global TV, found that 67% of those sampled oppose the recommendations of the Report of the Independent Commission to Review MLA Compensation, and 68% would be much less likely to vote for any politician who supports a 29% pay increase. "The poll was fielded May 3-4, 2007 with a representative sample of 450 adult British Columbians. With a sample of this size, the results are considered accurate to within ±4.6 percentage points, 19 times out of 20, of what they would have been had the entire adult population of BC been polled."

It is not too late for people who are upset with the Campbell caucus' announcement that they will go for the cash grab. You can email Premier Campbell and other MLAs (MLA finder) and let them know what you think.

The Ipsos Reid poll provides an opportunity to compare its professional research with the unfortunate approach of the Commission.. The Commission has been criticized for being unrepresentative of the population; an elitist view seems to be displayed in the way the Commission's Report used a poll of 601 adults conducted on its behalf by BC Stats between April 13th and 16th, just two weeks before its Report was tabled in the Legislature. The Commission used the work done by BC Stats to argue that: "Taken as a whole, the survey results demonstrate a significant lack of understanding among the public in respect of what MLAs do and what they receive in total compensation." In other words, rather than conducting a poll that would guide the Commission with respect to public opinion, it used the poll to dismiss the public as ignorant. It then went on to criticize the small number of submissions (34 oral, 86 written) it received, a result that may be related to the dismal effort the Commission put into advising the public of the opportunity for making submissions. The Report said: "Taken as a whole, the submissions and the survey responses, as previously noted, demonstrated a lack of understanding among the public of both the duties and levels of MLA compensation. This, combined with the small number of submissions, has caused us to be cautious in interpreting the opinions received when formulating our recommendations."

With respect to the survey done on its behalf, the Commission's Report said:

"BC residents express a limited knowledge of the number of MLAs. On the question of "How many MLAs do you think are in the BC Legislature?" answers ranged from 1 to 500, with the average being 64 (median 55), but only 1.2% had the correct answer of 79."
"BC residents believe that MLAs work on average only 38 hours a week, and 196 days out of the year (equivalent to 5 days a week with 13 weeks off for holidays)."
"When it comes to compensation, 51.9% think MLA salary is about right, with 34.8% believing it's too high and 15.1% thinking it's too low. However, few of the respondents knew how much MLAs earn, with only 20% coming within 10% of the real salary. The mean perceived average salary was $195,824, with 39% overestimating the annual base salary."
"Regarding pensions, 90.8% of the respondents believe MLAs have a pension of some kind. Moreover, 83.6% believe the plan is better than those held by most BC employees, and 6.2% believe it's inadequate."
"Regarding mechanisms for deciding how compensation should be determined for MLAs, the vast majority of respondents (86.1%) believe it should be determined by an independent body. Other respondents indicated that compensation decisions should be left to the Premier and MLAs (8.5%), the electorate (3.4%) or unspecified other (2%)."

On the fourth point, notwithstanding inaccurate reporting in much of the media, 90.8% of the respondents were correct. MLAs have a pension plan; it is a defined contribution plan to which the employer (taxpayers) contributes 9% of base pay.

Compare the Commission's technique of denigrating the public's knowledge with the first question put in the Ipsos Reid poll:

"Q1. As you may know, an independent panel was established (January 2007) to conduct a fair and impartial review of compensation and pension arrangements for British Columbia MLAs (Members of the Legislative Assembly). There has been no significant increase in MLA compensation for a decade.
The main recommendations of the panel were as follows:

A 29% increase in each MLA's basic salary (from $76,100 to $98,000)

Higher salaries for those MLAs who perform additional duties (e.g. Cabinet Minister), including a 53% increase in the Premier's compensation (from $121,100 to $186,200).

Reinstatement of a defined benefit pension plan.

Future annual salary adjustments based on BC's rate of inflation.

Overall, do you support or oppose implementing the recommendations of the independent panel?" (emphasis in original)

Ipsos Reid provided people with information and then asked for their opinion with respect to that information. That is the way polling should be done, as opposed to conducting a high school social science examination on how many MLAs are in the BC Legislature. It is a safe bet that similar detailed questions could be put to the three Commissioners with results that could be used to show their lack of specific knowledge of how the Legislature works.

The difference in approach between the Ipsos Reid poll and the approach of the Commission can be compared to the difference between trial by judge alone or trial by jury. When a trial is conducted with a jury, the jurors are not expected to have the detailed knowledge of law that a judge requires. The role of the jurors is to hear the evidence and make a decision, coming at it from backgrounds that reflect a random selection of the general population. The Commission not only failed to hear the opinions of a representative cross section of British Columbians, it denigrated the general public.

Notwithstanding the view of the Commission that MLAs can be compared to senior managers, many who are familiar with democratic institutions believe the Legislature should be like a jury, composed of people from diverse backgrounds who represent a cross section of British Columbians. Expertise, whether in the form of a $250 an hour content consultant or in the form of skilled surgeons, can be purchased. One of the roles of MLAs is to reflect the values of their constituents when asked to decide between alternatives that are presented by professionals. Efforts to change that role and turn the Legislature into the domain of highly paid elitists should be resisted.

May 4, 2007

Push Back on the MLA Pay Grab

Update: Harry Lali has issued an apology. Thanks to all who contacted him. Perhaps Premier Campbell and his caucus will reconsider their positon if they hear from enough people.

See the Iposos-Reid poll on MLA Compensation.

Email:
Premier Campbell
Harry Lali, MLA
Your MLA

NDP Harry Lali was the first out of the gate to prove that the media were correct in predicting divisions within the NDP caucus. He told Global News that he will vote for the package that includes a 29% pay increase. Lali could gain an instant $50,000 a year pension out of the deal.

Lali is one of three NDP MLAs who could get pensions of over $50,000 a year as a result of the recommendations from the Gordon Campbell hand-picked "independent" Commission. A majority of the Commission (there is no minority report) recommended that the base pay for MLAs be increased by $21,900 (or 28.8%) to $98,000 per year and indexed annually to BC's Consumer Price Index. They also recommended that the 9% of base pay defined contribution pension plan be replaced with a defined benefit pension plan estimated to cost 37% of the current base pay. The recommended pension plan, to which MLAs would contribute 11% of their pay, would provide 3.5% per year of service of the average of the highest three-year average earnings, to a maximum of 70% of the three-year average earnings. It also recommended that MLAs be allowed to purchase back service to May 2005 at one half of the fair actuarial value of the benefits. Vesting would occur after 6 years (two elections), and early retirement could occur at age 60 with a penalty of 3% per year under age 65 (half the CPP penalty). The proposed pension plan is roughly twice as rich as public service pension plans.

The really big payoff, as if 29% on base pay plus a gold plated pension plan isn't big enough, is for MLAs with longer service. MLAs in that situation could be in a conflict of interest if they vote on any Bill that enriches them. The Commission recommended that: "Determination of buy-back provisions for service as an MLA for any years between the termination of the previous defined benefit pension plan and May 17, 2005 should remain within the jurisdiction of the Legislative Assembly Management Committee. An annual accounting of decisions relating to the retroactive purchase of pensionable years should be published on the Legislative Assembly website and identified in the public accounts." The government has a majority on the Legislative Assembly Management Committee (LAMC) and, if this recommendation is followed, can dispense enormous favours. Mike Farnworth, Corky Evans, Harry Lali, Dan Jarvis, Richard Neufeld and Linda Reid were first elected in 1991; on May 12, 2009, the date of the next election, they will have 14 or more years of service. That means those six MLAs, if allowed to buy full back service (at half the fair actuarial value), would be entitled to pensions worth over $50,000 per year. Thirteen other MLAs, including the Premier, have additional service which could translate into gold if they are allowed to buy back service for the new pension plan. The Conflict of Interest Commissioner needs to rule on whether those MLAs should be allowed to vote for their own retroactive pensions.

It is easy understand why Lali and a few others might be tempted to break ranks and vote to line their pockets. Of course, as a result, members of their constituency associations may decide that they would prefer to nominate someone else to represent the NDP in their ridings in the 2009 election.

The government side also appears to have some members feeling the heat over the cash grab. Randy Hawes, MLA for Maple Ridge-Mission, emailed me arguing: "On the base, on line 150 of my income tax return prior to the raise I report $82,949 (which includes the RRSP) and after the raise I report $98,000. On line 236 net income, I report $76,100 prior to the raise (after deducting the RRSP) and after the raise I report $87,820 (after deducting an 11% pension contribution). Surely you must agree (unless you like being inaccurate or choose to disregard facts) that a line to line comparison on an income tax form is the only fair way to judge the size of the raise. If you choose to use $76,100 as the base, then you are looking at line 236 and the corresponding line after the raise would indicate a raise of just under 15%."

I would have thought that the Hawes email was a hoax except that I responded and received a further note back, thereby confirming the email address. Hawes' argument is similar to the position put forward by Lorene Mayencourt in 2005. Both confused gross pay with the combination of gross pay and pension. The Commission stated that the recommended pay increase is 28.8% because anyone can divide $98,000 by $76,100 and get that result. It gets more complicated when pension is included. MLAs currently receive a pension benefit equal to 9% of pay. That is included in taxable income on line 150 but it is deducted on line 207 or 208 of the tax return. Under the recommended pension plan the employer's contribution to the plan would not show on the MLAs tax return, but the MLAs contribution of 11% would be subtracted on line 207. Consequently, comparing lines on the tax return before and after the pension changes is comparing apples and oranges unless one imputes the benefit of the employer contribution to the new plan, at least $19,800 using figures from the Commission's report. Hawes can be excused because he obviously is neither an accountant nor an economist, but the Report is clear that the Campbell MLAs are about to give themselves a pay increase of 28.8% plus enormous benefits. Hawes answered that by saying: "… the Commission did not include accountants or economists. Clearly even a commission can make an error in depicting what the raise is."

It is not too late to let the Campbell government, and other MLAs know what you think. Email Premier Gordon Campbell at premier@gov.bc.ca; email Harry Lali at harry.lali.mla@leg.bc.ca, and email your MLA at the address you can find on the MLA finder.

May 3, 2007

Campbell's Hand on Pay and Pensions

If Gordon Campbell wants to give himself a pay raise, he has the power to crack the whip and see that his caucus votes it for him. He was willing to face the public after spending time in jail; he probably has what it takes to face the public after dictating his own paycheque. Along the way the Campbell caucus can vote big increases for cabinet ministers and even backbenchers. The NDP can't stop that, but they can hold the Campbell government accountable for what it does. With the possible exception of the BC Business Council, most people probably have a lot of trouble with the proposed 28.8% pay increase for base pay plus huge increases in benefits.

Carole James and her caucus distinguished themselves by quickly rejecting the recommendations for exorbitant hikes in pay and benefits. It wouldn't take most people more than a nanosecond to see that 28.8% is not on, and that a pension plan that is twice as rich as the defined benefit civil service plans is just too rich. Nevertheless, some folks in the media are spinning a line that James acted too quickly and for the sake of the families of her caucus she should have negotiated with Campbell, who now holds the cards. Who are they trying to kid? MLAs make $76,100 per year as base pay, many get extras on top of that, and they get an employer paid contribution of $6,849 per year to a registered retirement savings plan. They also get travel expenses, allowances for meals and living expenses while in Victoria, paid MSP premiums, an extended health plan and a dental plan. That's a better pay package than what is earned by 90% of British Columbians, yet some apologists argue that unless more is paid, BC won't attract the best and brightest to public life. Does that mean that Gordon Campbell and his cabinet are second rate because they were attracted by the current pay package? Everyone knew what the pay and working conditions were when they ran for election in May 2005. If the 79 who got elected don't like it, there were plenty more who wanted the job but didn't make the cut. What's relevant is how much they make relative to average British Columbians; they make more than 90% of the people they are elected to represent. If they wanted to make $250 an hour as content consultants, they could have stayed out of elected politics and hung out their shingles.

The pay for MLAs was increased to $69,900 in 1997, and it was indexed annually through a complicated formula. It rose to $76,100 in 2007. Relative to average hourly wages, the pay for MLAs has fallen 10% behind since 1997; however, most hourly wage earners make less than half what MLAs earn. Instead of dictating his own pay, Campbell would be well advised to make it clear that no change should take effect until after the next election and that any proposed changes should come from a panel of people who come from a representative cross-section of British Columbians. However, he might be tempted to play political games with Carole James and show that he is boss; by handing the NDP an issue that everyone understands, he may learn the hard way that the real bosses are the people whose taxes pay his salary.

Update: May 2, 2007 Carole James and the NDP caucus deserve credit for saying they will vote against the Commission's report, as it is not acceptable to British Columbians.

May 1, 2007

Big Cash Grab Proposed for MLAs