Social Policy in Ontario

McGuinty puts unions first in debate over arbitration

Posted on August 26, 2011 in Policy Context

Source: National Post — Authors: Kelly McParland

NationalPost.com – Comment/FullComment
Aug 26, 2011.   Kelly McParland

Tucked away in the package of promises offered by Ontario Opposition leader Tim Hudak should he win the October election is a little gem that hasn’t attracted nearly enough attention. As he told a meeting of the Ottawa Citizen editorial board this week, he would reform the arbitration system that settles contract disputes with essential services such as police and firefighters.

“Dalton McGuinty will look the other way: he doesn’t have the courage to take it on. I do,” Hudak said. “I can and I will fix the broken arbitration system and give some relief to municipalities and to taxpayers.”

Politicians are prone to rhetoric, but in this case Hudak is right on target. Ontario’s arbitration system has been broken for some time, but the Premier has firmly resisted repeated calls to repair it. Although it appears rigorous and fair-minded on paper, in practice it works to feed a relentless spiral in public sector wages, while backing municipal governments into a corner. Local politicians find themselves in a trap: once an arbitrator anywhere in the province rules that one union group deserves a raise, every other union in the same job category demands an identical package. The local council can either resist and face labour disruption, or cave in and scramble to raise the money through higher taxes.

The effect is much the same as the spiral the sends player salaries in the NHL ever higher, so that even the most mediocre of players can hope for a contract bonanza in the right circumstances. All it takes is one ham-handed general manger in one NHL city to foolishly enrich a player who’s had an unusually good year, and a precedent is set for the rest of the league. Say a first-year GM in Nashville decides his third-line centre deserves recognition for having a “career year” in which he scored eight goals and managed to stay out of the penalty box. Every other manager in the league immediately slaps his forehead, knowing player agents will all demand similarly absurd enrichment for their own eight-goal scorers. (And a bonus should they score nine). Pretty soon third-liners take multi-million-dollar contracts for granted, while second and first-line players up their demands accordingly.

While not identical, the situation in Ontario bears distinct similarities. If the police force in one town wins an attractive contract,  other forces use that as a benchmark.  Arbitrators are supposed to take into account the impact on local taxpayers and the municipality’s ability to pay, but in practice rarely do. Local leaders across Ontario have complained that arbitrators invariably base their rulings on settlements in other jurisdictions, so if North Bay firefighters win a rich agreement, firefighters in Barrie and Windsor are expected to pony up the same amount.

Often, it’s the province that sets the trend, as highlighted by Alok Mukherjee, chairman of the Toronto Police Services Board, who wrote in a pointed letter to the Premier that a generous pact approved for the Ontario Provincial Police ensured that Toronto police would demand at least as good a deal, and that arbitration was a dead-end street.

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“It has long been established that arbitrators replicate negotiated agreements,” he wrote. “A municipality’s ability to pay as well as local and provincial economic conditions, which are among the criteria for arbitration set out in the Police Services Act, receive little, if any, consideration. The province has done nothing to change this. Repeated requests from municipalities, associations and police services across the province to fix this system have gone ignored.”

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Mr. McGuinty’s refusal to heed the complaints speaks volumes: challenging the system, he says, might upset labour groups.

“Tipping the balance in favour of employers,” he said, “would lead to service disruptions and threats to public safety in the long run. That may not stop my opposition from going there; they may even welcome the conflict. But we’re not going there.”

Oh dear. The unions might get upset.

The Premier’s attitude is a big reason public service wages have risen so relentlessly during his years in power. Mr. McGuinty abhors confrontation, and would always rather give in — at the expense of the public purse — than face a dispute. Knowing this, he has been held up by one union after another, in the certainty he will eventually cave. No wonder union leaders are among his biggest supporters.

Even while requesting a freeze in public service wages, Mr. McGuinty’s government quietly approved deals raising pay while using accounting tricks and secret side-agreements to disguise his work.

The system is broken. The Premier has made clear that, if re-elected, he will do nothing to change it. That in itself is an excellent reason to ensure he doesn’t get another mandate.

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Tags: budget, economy, ideology, rights

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