Last year it was a 30% pay increase for MLAs, this year it's as high as a 43% pay increase for senior bureaucrats. But stampeding salaries are only part of the story. The other part A serving of beefed-up pension liabilities. The bottom line: taxpayers are handed a hefty tab twice.
When B.C. politicians served themselves a 30% pay increase last summer -- putting their base salary at $98,000 per year -- it popped them into the top 3% of income earners. The Canadian Taxpayers Federation calculated at the time that the more robust salaries would grant some 79 eligible MLAs $63-million in pension benefits should they retire or be defeated before 2013. This is the same type of gold-plated pension scheme abolished for MLAs 12 years ago because -- according to the current premier while he was in opposition -- it was too rich.
Now we learn that pay increases for politicians were just a warm-up act. On a Friday in August, on the opening day of the Beijing Olympics no less, the government announced its senior-most mandarins would be earning, in some instances, triple what MLAs make. The maximum deputy minister's salary increased by 35%, from $221,760 to $299,215 and the premier's deputy minister's maximum salary skyrocketed 43%, from $243,936 to $348,600. Not bad, considering the average weekly salary of British Columbians in 2006 went up 3% to $38,888 annually in 2007.
According to the Public Accounts 2007/08, nine of the Campbell government's deputy ministers appear to have already surpassed the maximum salary level even before the increases were announced. The premier's deputy minister, Jessica McDonald, took home $261,017 last year. (Click here for a list of deputy minister salaries.)What might this mean for future taxpayers
Deputy minister's pensions are part of the public service pension plan, the same as any other bureaucrat. If Mrs. McDonald's best five-year average salary remained at $261,017 until 2013, her pension at age 65 after eight years of service could be about $42,000 per year. If she lives to age 80, she will collect a total of about $740,000. However, now that Mrs. McDonald's pay has jumped dramatically, her five-year average could be closer to $348,000 and her pension at age 65 could be about $53,000 per year. That means Mrs. McDonald could collect closer to $900,000 in total. This is how these pay increases boost the tax burden for taxpayers twice: once at the front end with bigger salaries and again at the back end with a bigger pension bill.
And what of the rest of us An average government employee, whose best five-year average salary might be $50,000, would have to work for 50 years to get $50,000 per year in pension benefits. Meanwhile, 70% of British Columbians outside of government have no employer pension plan. A person depending only on CPP and Old Age Security today earns about $14,000 per year. And for those lucky enough to have employer support, the majority are defined contribution plans, where benefits depend on what a person contributed to their plan, not their best salary topped up by taxpayers.
Gee - is it any wonder why the public is so cynical Politicians and bureaucrats, some making ten times the salary of the average taxpayer, could get pension benefits that most would equate with a lottery win. No wonder governments take half our incomes. They couldn't get by on anything less.
Is Canada Off Track?
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