Well, the Conservative government is proving once again that it is not much different from a corporate entity, complete with the questionable fiscal activities the corporate structure often brings.
As any worker knows, pensions are one of the most valuable assets their job provides. We rely on pensions to keep us out of poverty in our golden years. Without a decent pension, retirement can quickly become a daunting prospect, forcing us to continue working until our bodies simply quit on us. But the need for a decent pension hasn’t kept employers, whether corporate or government, from making unilateral changes to pensions in recent years. It almost goes without saying that these changes are hardly ever to the benefit of workers.
The federal public service is a case in point. The National Post reports1 that even as federal public service jobs are being cut and the Public Service Alliance of Canada (PSAC) is routinely drawn into battles to keep the government from making changes to pension plans, the Public Sector Pension Investment Board (PSIB) is making hay.
Last year, the top 5 executives with PSIB earned a combined $16.3 million in total compensation. This figure represents base salaries plus bonuses and other benefits. The government distances itself from PSIB compensation by asserting that PSIB is an arm’s length organization operating independent of the government, and that the government has no role in the compensation of the executives. PSIB, for its part, defends the outrageous executive compensation by claiming that they operate on a pay-for-performance model and the board’s investments have yielded above benchmark returns for the past several years.
But are these explanations satisfactory? The PSIB executives are appointed by Tony Clement and the federal government. Can the government now claim that PSIB is truly arm’s length? And what of the fact that in 2009 PSIB still paid out millions in incentives and bonuses to its executives despite billions of dollars in losses? What sort of pay-for-performance model really pays out such lucrative sums amid massive losses? Something isn’t right here.
Mathieu Ravignat, NDP treasury board critic, has noted this, stating that the compensation given to PSIB executives is a “troubling” trend whereby executives of federal agencies are receiving lucrative sums at the same time as workers are facing cuts and having their pensions scaled back. Deputy Ministers with the federal government have also received undeserved bonuses. Tens of thousands of dollars per minister has been awarded based on their identification of thousands of public sector jobs that could be eliminated.
We’ve seen this story played out before in the private sector. The Hostess executives received millions in bonuses even as they drove the company into the ground and demanded concessions from the unions. Closer to home, Coca-Cola workers at the bottling plant in Brampton, ON have until recently been on strike to protest, in part, changes to their pensions that the company sought to impose2. And Wall Street executives were awarded large bonuses at the same time as the government was forced to use taxpayer money to bail them out.
The duty of government is to serve the people. If nothing else, it should not function in ways that mirror corporate leaders who reward themselves while punishing the workers. If PSIB wants to maintain a pay-for-performance model, perhaps the workers who supplied the money PSIB invests in the first place should more fully share in the rewards of above-benchmark returns. After all, workers are certainly expected to share in the losses.