Aug 17, 2012
After a decade of privatizing government assets and organizations and treating Crown Corporations as if they are private entities, it is no surprise that the audit of the Insurance Corporation of BC (ICBC) led to “The B.C. government is ordering the Insurance Corporation of B.C. to slash its budget after an “unacceptable” spending spree on managers and perks…”
The timing of the report is pretty interesting. BC voters are increasingly disgusted by out-of-control executive salaries. The BC Liberals look like they are tanking and will likely face a massive electoral defeat. So, they need to appear to do something. Rhetoric around excessive executive pay might seem like a popular position.
The problem is that the BC Liberals have not changed and they created the mess in the first place. They continue with their ideologically driven presumption that the private sector does everything better than the public sector. Even though Crown Corporations are publicly owned entities, the warped thinking of the BC Liberal Government has essentially made them out-of-sight quasi-private fiefdoms.
Board members are Liberal appointees that get paid way more than the public would approve. The Board and corporate executives have expanded management ranks and pay scales with abandon. The shareholder, the people of BC has no control over the decisions that have left our public bodies behaving as if they are multi-national corporations. And the BC Liberals who are supposed to govern in our name have condoned and enabled the process.
Amongst the most outrageous findings of the audit of ICBC:
- the 32-per-cent increase in management positions over five years,
- the 50-per-cent increase in compensations costs for management,
- the number of people earning over $200,000 has increased by 315 per cent in just the last five years,
- the $365,000 that has been paid out in signing bonuses, and most egregious of all,
- the $25 million that has been paid in severance.
The findings are similar to the results from the reviews at BC Ferries and BC Hydro.
Things are truly out of control. The BC Liberals are incapable of change. Their regime will be book ended by the sale of BC Rail and the sale of the BC Liquor Distribution branch. In fact, one month before they go to the election, the transfer of Liquor Distribution to the private sector will be in the news. In all likelihood, like BC Rail, the liquor distribution will be awarded to a “friend” of the BC Liberals. In between these two bookends, the privatized and public assets they have sold to the private sector include health records; food and cleaning services in hospitals; records management at BC Hydro; many seniors facilities and hospitals; the Translink Board; BC Gas; our rivers and water licenses; and the Sea to Sky highway amongst others.
In 2010, the Green Party of BC passed policy to deal with remuneration of government executives. BC Greens would enact the Provincial Government Management Remuneration Act to cap salaries at an appropriate level, to tighten severance payout conditions and to reduce the severance payout amounts written into future contracts to be consistent with non-union provincial government employees and managers in provincial government operations, crown corporations and other provincial government funded organizations. Provincial management severance pay packages will be brought in line with the maximum requirement (8 weeks wages) of the BC Employment Standards Act.*
Further this act will require that the government first fill management and other non-union positions from within, through a program of mentoring and on-the-job training, before seeking candidates from further afield. This will reduce the perceived need to seek staff from outside the region and to “attract” them with overly generous remuneration schemes.
The reason BC Greens adopted this policy is straightforward. In all areas of the public sector as well as the private sector, management and executive severance conditions and payouts have been getting more and more generous over the last decade, far outstripping standards that apply to any other type of employee.
We risk having salaries and severance packages spiral upwards into the stratosphere like in the world of professional sports. The elites use the reasoning that you cannot attract good people without huge pay packages. However this same logic is not applied to the jobs held by those outside this elite group.
In addition, Greens would stop the practice of rewarding executives and managers with bonuses, even if those are theoretically held back for performance. Bonuses have become expected. Executives and managers by definition should do their job at a high professional level. Bonuses don’t fit in that context. Public service is just that. People work for government for many reasons. If they wish to be paid like the private sector, that’s where they should work.
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* Under the BC Employment Standards Act, Severance pay is one week’s wages for an employee with at least three months consecutive service; 1 week’s wages for each consecutive years service after that. In other words, for 5 years consecutive service, the severance pay would be 5 weeks’ wages, but up to a maximum of eight weeks’ wages.
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