Proceedings of the Standing Senate Committee on
National Finance
Issue 18 - Evidence
OTTAWA, Tuesday, April 19, 2005
The Standing Senate Committee on National Finance, to which was referred Bill C-30, to amend the Parliament of Canada Act and the Salaries Act and to make consequential amendments to other acts, met this day at 9:35 a.m. to give consideration to the bill.
Senator Donald H. Oliver (Chairman) in the chair.
[English]
The Chairman: Honourable senators, the minister has arrived. I should like to call this twenty-first meeting of the Standing Senate Committee on National Finance to order. I would remind you that this committee's field of interest is government spending, either directly through the estimates or indirectly through bills.
Today, we have a bill, Bill C-30. Our witness this morning is the Honourable Tony Valeri, Leader of the Government in the House of Commons. He is accompanied by an official from the Privy Council Office, Mr. Wayne McCutcheon.
Before entering federal politics Mr. Valeri was president of Canadian Financial Group Limited. He was also a member of numerous business organizations, including a term as director of the board of the Independent Brokers Life Assurance of Canada Association. He was first elected as a member before Parliament in 1993, and was re-elected in 1997 and 2000. He has also served as the Minister of Transport.
Minister, I welcome you to the committee. We look forward to hearing your views on this important bill. Following that, the usual practice is that honourable senators would like to put some questions to you.
The Honourable Tony Valeri, Leader of the Government in the House of Commons: Thank you for giving me the opportunity to attend here before you to speak about Bill C-30, which is the parliamentary compensation bill. As you indicated, Mr. Chair, I am accompanied by Mr. Wayne McCutcheon, who is the deputy secretary for the senior personnel secretariat at the Privy Council Office. There are also officials here from the Department of Human Resources and Skills Development and the Privy Council.
I do not have a long statement to make — however, I wish to flag a couple of things. I am interested in the questions you may have and the resulting exchanges. Essentially, the bill itself follows through on the Prime Minister's commitment to Canadians last September that any increases in our salaries and the salaries of parliamentarians should be delinked from judicial salaries and should be in line with those received by Canadians.
Certainly, in the House of Commons, as I know you are aware, there is support on both sides of the House for this piece of legislation. I am encouraged that senators on both sides of the Senate agreed at second reading on the approach that we are taking with respect to this particular piece of legislation.
Other than that, Mr. Chair, I would much prefer to deal with some questions that senators might have and have an opportunity for that type of exchange. It would be useful for all of us if that were to occur.
The Chairman: Mr. McCutcheon, do you wish to make some opening remarks?
Mr. Wayne McCutcheon, Deputy Secretary to the cabinet, Senior Personnel and Special Projects Secretariat, Privy Council Office: No, I do not.
The Chairman: Did you have a hand in the drafting of the bill? What is your position?
Mr. McCutcheon: My secretariat was involved in assisting with the drafting of the legislation, that is correct.
The Chairman: Honourable senators, the floor is open for questions.
Senator Ringuette: I will try to break the silence here.
Mr. Minister, could you tell us how this would compare to the average increase in the public service?
Mr. Valeri: It is a very good question in that there was some discussion, and I am sure Mr. McCutcheon might also want to speak to this, during the drafting of the bill on what index would be appropriate for parliamentarians. After a decision and a commitment was made to delink, how would you fashion a bill so that parliamentarians would no longer have to stand up in the House and approve their own salaries, which was something that Canadians flagged numerous times, both with me personally and with others?
The index that was ultimately decided upon does not include any public sector agreements. The reason for that is that, with respect to public sector agreements, governments essentially negotiated with the public service, and if we had an index that included the public sector, an element of that index would be made up of a negotiation to which you ultimately agreed. You can see where the conflict might be in that.
This is purely a private-sector index, made up of settlements of 500 employees or more. It is a very large index. The comparator in terms of the public service would probably not be dramatically different. The index for this year would be 2.2 per cent. Last year, it was 1.5 per cent. It falls into that range of public-service sector settlements as well, but it does not include public service settlements in the index itself.
Senator Ringuette: You are saying that there should not be that much of a difference in increases.
Mr. Valeri: Historically, there has not been, but Mr. McCutcheon can speak to the more technical aspects.
Mr. McCutcheon: The indexes vary from year to year, but our analysis indicated that, on average, it was comparable to the increases received in the public service over a number of years.
Senator Ringuette: With regard to comparing the purpose of Bill C-30 and the public service pay raise, if a raise is based solely on percentages, over the years there is increased discrepancy between lower-income earners and higher- income earners. Two per cent of $100,000 is more than 2 per cent of $30,000, and that is continually included in the base. Is there any intention to do a periodic review of the base?
Mr. McCutcheon: In order to ensure that there is not a growing gap among salaries, we have maintained the principle that was established a few years ago, which is for senators to be paid $25,000 less than a member of Parliament. Adjustments to senators' allowances would not be on a percentage basis but would be maintained at $25,000 less than a member of Parliament, so that gap would never change over time.
Senator Ringuette: That answers one part of my question. The other part is whether there is a similar process for the public service.
Mr. Valeri: I believe you are referring to a possible wage gap between increases in the public service and increases for parliamentarians.
Senator Ringuette: Yes.
Mr. Valeri: We have to step back and look at where parliamentarians are at this juncture. The Lumley report analyzed the base for parliamentarians. Through evolution from that report, we have arrived at where we are today, that is, delinking and going to a percentage, believing that the base that has been established for parliamentarians reflects the work they do. There is nothing that would prevent a reassessment of a base in the future. That would be dependent on governments.
I cannot give you an answer with respect to the public service. The President of the Treasury Board is responsible for that, so I cannot speak with any expertise on how wages are assessed for the public service, except to say that classification of public servants is established by using compartors in the private sector, and then percentage increases are negotiated through a collective bargaining arrangement.
There is nothing that prevents us from reassessing the base from the standpoint of parliamentarians, but certainly the President of the Treasury Board would be able to respond more precisely to your question about the public service.
Senator Ringuette: Within the public-sector collective agreements, there is a scale that takes into account years of experience that automatically increases the base.
The Chairman: In response to Senator Ringuette, you referred to the difference between the scale for members of the House of Commons and members of the Senate, both of whom are members of Parliament. When Senator Austin spoke to this issue on April he said:
Honourable senators will recall that the parliamentary compensation changes we passed in 2001 abolished the tax-free allowance, which was then adjusted by an amount of salary on which income tax is paid. Historically, the salary of senators lagged behind the salary of members of the House of Commons. Notionally, the basis was that the House of Commons members had additional costs related to constituency work, costs that were not impressed on senators. In 2001, the salary difference was $25,000. We kept that $25,000 differential between salaries for senators and members of the House of Commons.
If we had simply applied a percentage change, there would have been a gradual widening of the differential between members of the two Houses. I want to reassure senators that the $25,000 salary difference remains unchanged in Bill C-30.
Can you tell me where the bill indicates that the gap will not increase?
Mr. Valeri: Mr. McCutcheon could point to the provision in the bill. You are quite right, Mr. Chair, that the intention of the bill is not to erode the differential that was established as a result of moving from non-taxable to taxable. Again, that would be coming out of the Lumley report that determined that $25,000 was that differential. That remains intact.
Mr. McCutcheon: That is found on page 2 of the bill, under clause 4, which affects section 56 of the Parliament of Canada Act. Proposed section 55.1(2)(a) reads as follows:
members of the Senate is the sessional allowance calculated in accordance with paragraph (b) minus $25,000;...
The Chairman: That indicates that it will remain constant over time and never be less than $25,000?
Mr. McCutcheon: That is correct.
Senator Phalen: How do you maintain the gap? You are saying $25,000. If a member of Parliament, whose salary is higher, gets a 3 per cent increase, would the senator get the same increase in order to maintain the gap?
Mr. Valeri: The senator would get the same 3 per cent increase.
Senator Phalen: It would actually be higher.
Mr. McCutcheon: That is not correct. In order to maintain the senator's position in the salary structure, the percentage increase in those circumstances for senators would be slightly more than 3 per cent, in order to maintain the $25,000 differential.
Mr. Valeri: The gap would remain at $25,000.
Senator Downe: I should like to follow up on questions asked by Senator Ringuette. On page 11 of the Lumley report of 2001, he and his commission note that the salaries of virtually all positions within the federal public service, of federal agencies, Crown corporations — all of whom members of Parliament interact with — are substantially higher than those of parliamentarians.
My concern here is with MPs. There is never a popular time for a member of Parliament who is trying to get re- elected to lobby for fair pay. In the Senate, we are here until the age of 75 or until we quit. We do not have the restraint that MPs are working under.
The government is concerned that their proposal does not correct the current disparity between the higher rates in senior public servants, Crown corporations and among judges and that this will simply sustain that disparity.
Mr. Valeri: What Mr. Lumley was actually flagging for people was that there was such a disparity. His recommendations went some way to try to close that gap. Therefore, we have established a base, which has come from the Lumley report, to essentially reflect the work parliamentarians do and how it fits in the overall scheme of the Canadian workplace.
The base is now more reflected than it was perhaps pre-2001, and the fact that we are attaching this base now to an index does solve the dilemma of having elected officials lobbying and then ultimately voting on their own salary increases. We have now taken parliamentarians — members of Parliament, in particular — out of that equation, with an index that is quite reflective of the Canadian economy. The increases to salaries for members of Parliament would happen based on the increase in that index and no longer would one be standing in the House and voting on one's own salary.
Mr. Lumley was flagging the discrepancy that existed. His recommendations went some way toward closing that gap. We have now gone to the next step, which is removing the member of Parliament from having to stand in the House of Commons and voting for his own salary increase, by attaching it to an index that is reflective of the Canadian economy.
Senator Downe: The minister is right. The current law met the same objective, in that members do not have to rise to vote because it was linked to what judges were getting. That had already been addressed.
My concern is that when the economy is in difficult shape, salaries are frozen. As you know, from 1991 to 2000, MPs' salaries increased by 6 per cent because it was difficult economic times. Now that there is tremendous prosperity in the country, with massive surpluses, it is still not a good time for MPs to receive an increase. Again, I am speaking about MPs, who cannot advocate for an increase and then try to get elected. The Senate is a place of sober second thought. Everyone appears sober this morning and thoughtful about this process. We can give this some further review.
I am concerned about when the opportunity would ever exist to increase salaries for members of Parliament. I am impressed with the quality of members of Parliament that I meet from all parties. Canadians are well served by the people they elect. Members of Parliament have skills that could be transferred quite easily to senior federal public service positions. If others accept that view, then the salaries for MPs are too low. Salaries for deputy ministers are in the range of $200,000-plus. They also have a two-for-one on their pension — two years' benefit for every year worked — the same as ministers. Heads of Crown corporations, such as the president of CBC, and other agencies are at $300,000-plus. I can think of many MPs who could easily walk into many of these jobs and do the work. If the head of the CRTC receives $200,000-plus and other benefits, why are MPs so lowly paid? Why are regular members of the public service entitled to receive a pension after two years of employment and MPs have to serve six years? My concern is that at the end of the day we will end up with a Parliament that does not reflect Canadians; it will reflect millionaires who do not need the money, or people who cannot find any other job and this is the best job they can find. The average successful middle-income Canadian will look at this and say, ``I cannot afford to take this risk for my family or for my business.'' In recent years, as the minister is well aware, many MPs have qualified for pensions, but it was not that long ago that over half of the MPs elected never qualified for a pension because they were not there that long.
This is a serious problem. The government should address it. It should justify the increases for members of Parliament. Again, I stress that I am not speaking about senators here. We are in a different situation. However, we should increase the salary for MPs. The government has two alternatives. It can reduce the salaries of judges, to whom this was originally linked. If the salary of judges is too high, why are they continuing to receive large increases and MPs are not? Reduce the size of the increase for the senior public servants, many of whom, incidentally, receive bonuses that count every year towards their pension, which MPs and even ministers do not receive.
The government has two choices. It can reduce the pay of senior public servants and judges to what MPs are getting, or it can increase that of MPs. If the minister has any comment, I would be interested in hearing.
The Chairman: Minister, we would welcome your comments on that. Senator Downe has asked some important public policy questions. His questions are normally good, and this is exceptionally good. We would love to hear from you on it.
Senator Downe: I got an A-plus today. Thank you.
Mr. Valeri: I will perhaps suggest that Senator Downe go out and advocate on behalf of members of Parliament for their salary increases.
I have several points to make. One would be with respect to the delinking, which is an important point. While the Lumley report did link the parliamentary salaries to those of judges, we were still left with the situation where members of Parliament would have to stand in the House and vote for an increase in judges' salaries. It is a vote to increase your own salary once removed. Essentially, in increasing judges' salaries, you know specifically that you are increasing your own salary. That was still a problem that we had to deal with. That is why we have gone to an index that works independently of what a member of Parliament would have to do.
In terms of the comparison to senior public sector positions and commissions, I would agree with the senator that there is an extremely talented group of members of Parliament in the House of Commons, as well as senators, and they should be compensated for the work that they do.
That can be dealt with by evaluating the base from time to time. Nothing is preventing future governments from establishing a commission or a task force to do such an analysis if there is a perception of a growing gap between what members of Parliament are earning and what the going rate is for that type of work in the private sector.
As I would suggest to you, the steps that we are taking here are steps in the right direction and meet a commitment. In fact, we have seen that the support that has been provided in the House of Commons by parliamentarians on both sides of the House for the approach that we have taken. If future governments want to reassess the base that members of Parliament are being paid, certainly future governments are free to do that, as I am sure there will be continued reassessment of what the public sector is making, what those senior positions would be getting in terms of remuneration and, frankly, what people might be getting who work in various boards in Crown corporations.
This is an approach that I believe has support, but by no means am I suggesting that this would be, going forward, the only approach by which to deal with what members of Parliament are receiving. Those task forces can be put in place and future governments are certainly free to do exactly that.
The Chairman: I did not think Senator Downe was asking you to comment on what future governments may or may not do. I believe he was asking you what you — you are the government — are prepared to do to try to attract even better and good people to come to Parliament to work because they would be getting a wage that was commensurate with their abilities, and I think he is talking about now, not future governments, and I did not hear you address that.
Mr. Valeri: I do not think parliamentarians come to Ottawa for the wages. I believe they come to Ottawa because they believe they can make a difference to the country, because they have a vision and a perspective they want to share, they want to debate issues. The salaries and the financial compensation need to be competitive, to use a particular phrase, but certainly it is not the main motivation. I do not think you will find a member of Parliament in the House of Commons today who says I am here because I like the pay.
The Chairman: I did not think that was what Senator Downe was getting at, but perhaps I should not be trying to put words in his mouth.
Senator Downe: You listened closely, chair. You seem to have it well summarized.
Mr. Valeri: My point is this: I understand what Senator Downe is saying in terms of the compensation side. What we are proposing is a compensation package that is fair. I do not think it is a compensation package that would be held out as an instrument to attract parliamentarians to come to Ottawa, but I do think it is fair, it meets a commitment and it does remove from parliamentarians the need to stand up in the House of Commons and vote for their own salary. I know a lot of parliamentarians had difficulty with that.
Senator Downe: Minister, I disagree. It is fair if people in similar positions with similar responsibility are making the same amount. As I said earlier, it is difficult for MPs to make this case because it is not popular, but in the Senate we have a responsibility to say what we think is right. We do not have to worry about popularity. If we did, we would not be in the Senate, because it is unpopular institution at the moment.
I have real concerns that, unless the salaries are reduced for judges and senior public servants, or increased for MPs, you will have MPs who are responsible for setting the policy framework — and you may be familiar with the British expression that the public servants are ``on tap,'' not on top, financially. At the end of the day, unless this government takes action and bites the bullet — and maybe there is another option, but it seems to me there are the two outlined — unless the government takes one of those courses of action, we will end up with members of the House of Commons who are millionaires who will be setting policy — they do not need the money since they have their own resources — or conversely people who will find that this is the best salary they could ever attain. In other words, the quality that we have now for members of Parliament will be reduced. The chair summed it up correctly. What future governments may do may be more of the same.
Are you at all concerned that you are shortchanging MPs in this process?
Mr. Valeri: I would respectfully disagree, senator. I am not a millionaire, and I decided to come to Ottawa not because of any salary but because I thought I had something to contribute. If we are going to attract people in the future, it will be because there is an environment and a forum to develop policies and, in fact, do something that they think is in the best interests of the country.
With respect to whether I think or whether others think this is a fair approach, the signal or the cue might come from the fact that the House of Commons has overwhelmingly supported this approach. I would not suggest, and I hope you are not suggesting, that members in the House of Commons are doing so because they are afraid to state their perspective on this particular issue. That is certainly not my interpretation, and I would suggest that it is not what has occurred in the House of Commons.
We would respectfully disagree, and the approach we have taken as a government is one that builds on the Lumley report and does put in place an index that is reflective of the type of work that Canadians do, and the salaries will be changed and increased based on that index.
Senator Murray: Mr. Chairman, the House of Commons voted overwhelmingly, and so did the Senate, a matter of a very few years ago to link the salaries of parliamentarians and judges. I conclude therefore that there is no principled reason why you want to delink. I conclude that the reason you want to delink is that the recommendation of the judicial compensation commission was a bit rich for your blood, or you thought it was more than the traffic could bear in a minority government situation. It was a political calculation on your part and that of other, including opposition, parliamentarians, which by the way leads me to the another question. You can comment on that point if you like, but it leads me to the question that was implied, I think, by Senator Downe. If this major wage index, if that is what it is called, is so appropriate for parliamentarians, why do not you apply it to judges?
Mr. Valeri: There is a component of the judges' salary that is made up of an index. It is called the industrial aggregate index, and the balance of their calculation is coming from a quadrennial commission which is part of the Judges Act and will be introduced in the House of Commons. I am not going to prejudge what in fact the House of Commons will or will do with respect to the Judges Act, which will be coming into the House. Perhaps the Senate will have other suggestions when they get the Judges Act in the Senate as to how to deal with judges' salaries. I will leave that to others.
Senator Murray: Excuse me. Obviously, you are not going to prejudge what the House of Commons is going to do, but I think it is fair to ask you whether the government supports the judicial commission recommendation with regard to judges' salaries.
Mr. Valeri: In fact, Minister Cotler did respond to the quadrennial report in November and did support the suggestion as to what judges should be compensated. Nonetheless, that needs to be approved by Parliament, and Parliament will have that bill in very short order.
With respect to the principle of why we have gone to a compensation that is linked to an index rather than to judges — frankly, you referred to a minority Parliament. This bill was drafted, and then we consulted with all of the opposition parties as to how they would want to proceed with the legislation. There was an agreement to proceed this way.
In some measure, I must say that when I spoke to some parliamentarians they never thought they would be in a situation where they would have to vote for their own salary increase going forward, because this had been done in legislation that had been passed previously. They thought it just happened automatically. Therefore, most parliamentarians were referring to the industrial aggregate index that forms part of the judges' salary, which happens automatically, but did not realize that when the quadrennial commission reported that commission's report would be reflected in a Judges Act, which would come to the house, which would then change salaries of judges and then members of Parliament would be voting on those salaries of judges, which, in turn, would be voting on their own salaries. They thought that that problem was resolved in a previous piece of legislation.
When that was explained and this proposal was put on the table, as you have seen, there was support in the House of Commons, and now it is in the Senate for review.
Senator Murray: I had the impression at the time that Prime Minister Martin came out of some meeting and immediately announced that this was something up with which they would not put, that it was really the amount that spooked them and, ballpark, the difference between the formula for judges and this new bill seems to be a 10 per cent upfront increase or 10 per cent over a four-year period in the other. That is the difference, is it not?
Mr. Valeri: I believe the commission has recommended 10.8 plus the index to provide a — what is the total?
Mr. McCutcheon: The total over the four years could run as high as 16 or 17 per cent, with the 10.8 plus the indexation.
Senator Murray: Something potentially worse is happening here, in fact has happened, even when we accepted the Lumley commission. That is that we are linking the salaries of parliamentarians to something — it will happen automatically — but what it seems we have done away with is the practice that was initiated during the Trudeau years of appointing a commission after every election to look at the whole, not just compensation and direct benefits for parliamentarians, but also at the other needs of parliamentarians. Those commissions recommended, and as a result of their recommendations, Parliament legislated.
Now the salaries will be linked, but all the other issues are going to be handled how? I presume it will be in the privacy of the internal economy committee, or whatever you call it over there.
Mr. Valeri: The Board of Internal Economy?
Senator Murray: Yes. What have you done since the last election as far as other issues are concerned? I saw something somewhere about caucus chairs getting a raise.
Mr. Valeri: That actually forms part of this particular legislation, which was an amendment that was supplied by the opposition to look at —
Senator Murray: That is transparent. What has the internal economy committee done in terms of allowances and expenses and that sort of thing in your House?
Mr. Valeri: I do not speak for the Board of Internal Economy. I am on it, but I am not a spokesperson for the Board of Internal Economy.
Senator Murray: I am talking about decisions that have been taken since the last election.
Mr. Valeri: I think the only decisions that have come out of the Board of Internal Economy are decisions with respect to the operating budgets for members of Parliament, which have to do with salary increases and benefits for assistance and for equipment in constituencies. I do not think there has been any change.
Senator Murray: Hospitality?
Mr. Valeri: There was certainly a hospitality provision. I cannot recall whether there has been an increase in the hospitality on a percentage basis, but I do not think there has been any change with respect to the health benefits for parliamentarians coming out of the Board of Internal Economy.
Senator Murray: Those things are negotiated in the privacy of the committee. I think we have lost something with the disappearance of those commissions that looked at not just the salaries, but the various other needs of parliamentarians.
Perhaps I should stop there. I have such a long memory for all this stuff. This index, 30 years ago or more, when Marcel Massé and I were advising the government of New Brunswick, we dreamed up something of the kind for the MLAs down there. It was called the industrial aggregate or something like that. It lasted for a brief time, but before long they were back at it having to consider what the base was, or reconsider what the base was, and to legislate.
Senator Downe is right. There are no votes to be made on this, but I think there are a lot fewer votes to be lost than is sometimes supposed. That has been my observation. My memory goes back as far as Diefenbaker and Pearson. Mr. Pearson, in a minority situation, after members benefits had not been touched for 10 years, took the initiative to raise MPs salaries to the princely sum of $18,000 a year. Mr. Diefenbaker's House leader, Mr. Churchill, had agreed privately to support it. Then Mr. Diefenbaker started huffing and puffing and sent the money back and all this foolishness. I do not think it got him a vote and I do not think it lost Mr. Pearson a vote. The moment passed.
Then we got into these commissions that started during the Trudeau years. I guess, in retrospect, they worked better than anything. The only disadvantage was that we had to legislate our own salaries and benefits.
Linking to judges has not worked, obviously. The government now does not feel, and MPs do not feel, that it is appropriate; so now we are going to link again to something else. Meanwhile, we are losing something with the disappearance of the commissions, because nobody is publicly looking at or trying to educate the public about other needs of parliamentarians.
The Chairman: Minister, did you want to respond to that question now?
Senator Murray: I do not know that there is a question; it is a comment.
Mr. Valeri: It may not be a question, but certainly I take the comment. Someone who has the experience of the senator and who has been here for such a long time has the ability to provide that kind of comment, and I appreciate the feedback.
The Chairman: You did not wish to comment on the merits of what he had to say?
Mr. Valeri: I think I understand what the senator is saying.
Senator Murray: It is politics. I think it is the amount of money that was involved that spooked the government and the others. I still do not see any principled reason why linkage to major wage settlement is any more appropriate than linkage between parliamentarians and judges. Sooner or later, you are going to have to face the judges' issue, and you know there is at least one party in the House of Commons that is making a lot of noise about not passing that. What will happen, by the way, if this bill does not go through, if it were defeated in the Senate or fell off the Order Paper at dissolution?
Mr. Valeri: The other legislation would remain intact. It would essentially be status quo.
Senator Murray: Obviously, the judges' bill would not go through, so we would simply continue as we were as of 2001, whenever it was we put that through?
Mr. Valeri: If the Judges Act does not get passed, then it would be basically the basis of the previous quadrennial and the industrial aggregate index.
Senator Murray: What is the status of the amendment to the Judges Act, as we speak?
Mr. Valeri: It is coming into the House very shortly.
Senator Murray: Coming into the House?
Mr. Valeri: Yes.
Senator Murray: You know the answers to this. Has not it gone to committees?
Mr. Valeri: The Judges Act?
Senator Murray: The increased compensation for judges.
Mr. Valeri: The minister's response to the quadrennial report was tabled; the committee has studied that, but the actual legislation is coming into the House.
Senator Murray: So the committee stage is finished. They have a right to bring in a negative report, and they have not?
Mr. Valeri: They have not brought any report back.
Senator Murray: Has it been sent to one of our committees?
The Chairman: Not that I know of; but as the minister said, the telling document is a bill that is yet to be introduced for first reading in the House of Commons, and that is perhaps imminent.
Mr. Valeri: That is correct.
Senator Harb: In Bill C-30, on the first page, with respect to subsection 46(2) of the Parliament of Canada Act, I am quite curious about why is it you are deciding to limit the number of parliamentary secretaries to the number of ministers, given the fact that from previous experiences —
Mr. Valeri: Sorry, senator, I do not have the page. Can you give me that again?
Senator Harb: It reads that subsection 46(2) of the act is replaced by the following:
There shall not be appointed more Parliamentary Secretaries than the number of ministers who hold offices for which salaries are provided in section 4.1 of the Salaries Act.
I am somewhat puzzled by that, given that we have seen in past Parliaments one minister holding three or four portfolios for which there is an absolute need for a parliamentary secretary to assist with legislation in the House of Commons as well as with issues relevant to the department for which the minister might assume additional responsibility.
Also, if a prime minister decides to reduce the number of ministers in cabinet, parliamentary secretaries would have to stop their work immediately. What is the rationale for this? I would be very interested in having a closer look at this. In my opinion, this will impair the ability of the government and, in the end, Parliament, to deal with important issues.
Mr. Valeri: This provision is not a change. That is in the statute now. The only change is that it refers to section 4.1 of the Salaries Act. This is the way it operated when you were in the House of Commons. A minister with two portfolios would have two parliamentary secretaries.
Senator Harb: How did the previous section read?
Mr. McCutcheon: The previous section read:
There shall not be appointed more Parliamentary Secretaries than the number of ministers who hold offices for which salaries are provided...
The difference is that it said ``sections 4 and 5 of the Salaries Act.'' The change is that it is now a reference only to section 4.1 of the Salaries Act.
Senator Harb: Therefore, if Minister Graham, who holds the position of Minister of National Defence, assumes responsibilities for veteran affairs, he will not lose the parliamentary secretary for Veterans Affairs; correct?
Mr. McCutcheon: That is my understanding.
Senator Harb: This says that there shall not be appointed more parliamentary secretaries than the number of ministers who hold offices for which salaries are provided. Therefore, there can be only one parliamentary secretary for both portfolios, because the ministerial salary is provided for one.
Mr. McCutcheon: I could defer to one of my colleagues who has more experience in this; however, as I understand it, a minister may have two parliamentary secretaries but the total number of parliamentary secretaries cannot exceed the number of ministers.
Senator Harb: I would be interested in looking further into this. If we did this under the previous act, perhaps we were not doing it right. If that were the case, perhaps at some time we had more parliamentary secretaries than ministers.
My second question deals with the notion of linking the salaries of parliamentarians to the private sector index. I guess the rationale is that we do not want members of Parliament to vote, whether indirectly or directly, on their salaries. Let us take a scenario where the public servant bargaining units or unions proposed that the government use the exact same salaries as the industrial index. The government would either have to support that proposal because it is fair, or it would have to say that is not fair. Under such a scenario, would we not be in a conflict again, directly or indirectly, voting on our own salaries?
Mr. Valeri: I do not think so. The index that is being used to link salaries for parliamentarians purposely does not include any public sector negotiations. If the public sector were included in the index, they might be able to make that argument, but it is separate.
Senator Harb: If the public sector were to make a proposal that reflected the index that we are using for parliamentarians salaries and asked for salaries based on the average of the 500 that you propose for members of Parliament, would you not be in a conflict position, in that you would be voting indirectly on your own salaries?
Mr. Valeri: I am not privy to the collective bargaining that goes on between the public sector and the government, but I would assume the public sector comes with different indices or different types of information to make their argument. The reason you do not have an index before you that includes the public sector negotiations is that it would put you in a conflict. If you negotiate an outcome with the public sector and use an index that includes that negotiated settlement, you can find yourself in a situation where you are negotiating your own salary increases. That is why there is no public sector component in this index.
Senator Harb: I understand. However, if it were the flip side, if the public sector asked for the exact same increase that parliamentarians are getting, with no reference to benefits, what would that do to Parliament?
Mr. Valeri: The increases that you are referring to are not public sector increases; they are private sector increases. It is one thing to look at a public sector index, but you are asking for an increase that might not be reflective of the work you are doing.
Senator Harb: I am asking about if the public sector were to ask Parliament to link it to the private sector index. Would not that put parliamentarians indirectly in a conflict?
Mr. Valeri: I do not think it would put us in a conflict. That is part of negotiations. I think you are on solid ground to argue that indices with a public sector component would reflect the work public servants are doing better than the private sector index.
Mr. McCutcheon The public service unions and the government have no influence over the private sector index, so I do not think that linking public servants to it would bring any kind of conflict. If the employer agreed to attach them, I do not think it would create any difficulties or conflicts.
Senator Harb: Aside from delinking from judges' salaries, what is different in this proposal from what we had before?
Mr. McCutcheon: I do not think there are any other significant changes.
Senator Harb: Perhaps you can get back to us on that.
The Chairman: Yes. Minister, while they are looking for that, I had a question for you. Proposed section 62.1 of the act reads:
Despite section 60, for the fiscal year commencing on April 1, 2004 there shall be paid to the following members of the Senate and the House of Commons the following annual salaries:
The first one is the Speaker of the Senate, $49,600. Then in (c), it reads: ``the Speaker of the House of Commons, $67,800.''
Minister, you will be aware, of course, that in the order of precedence, the Speaker of the Senate is fourth, before the Speaker of the House of Commons. As you are also aware, the Speaker of the Senate has much international and diplomatic work to be done, other than just sitting in the chamber on the chair. It seems to me that this is discriminatory against the Speaker of the Senate.
Could you explain the possible rationale for why the person who sits fourth in the order of precedence would be treated in such a discriminatory way in terms of the pay?
Mr. Valeri: I have two points, Mr. Chair. First, we are not making a change in this proposed legislation. This is the way it was before this piece of legislation was drafted. Second, the differential is because the House of Commons sits five days a week, so the Speaker is there five days a week. The Senate sits three days a week. In establishing the differential in terms of workload, they came up with that type of differential in salary.
The Chairman: Are you suggesting that diplomatic work abroad is not part of the workload?
Mr. Valeri: I am not suggesting that at all. I am suggesting that there seems to be a historical basis for the differential. It is not something that we have changed in this piece of proposed legislation.
The Chairman: What about the order of precedence?
Mr. Valeri: Again, Mr. Chair, the only thing I can say to you is that we drafted the bill in such a way as to be reflective of what was previously done, with the one exception of the delinking. With respect to the Speaker of both Houses, that differential existed. We did not look into whether or not a change was required there.
You have certainly flagged it for me. It is something you might want to look at and understand fully why that is the case. My understanding is that it is because of the workload in the Commons, that differential being five versus three days. Certainly, both have diplomatic duties to perform. Certainly, the Senate does a very good job from that standpoint.
The Chairman: Did I hear you correctly, in response to a question from one of the senators today, that the additional changes of bonuses and salaries to members of both the House of Commons and the Senate were as a result of recommendations of the opposition parties? Did I hear that correctly?
Mr. Valeri: There was a question asked about payment to caucus chairs, I believe. My response was that, in working through this, there was a number of amendments proposed by opposition parties that house leaders agreed to. It was then included in the bill as government amendments.
The Chairman: Did all of the new increases come from the opposition and not from the government side?
Mr. Valeri: No, senator. What I said was that the amendments were being proposed by opposition and there was agreement by all house leaders, and they were put forward as government amendments.
The Chairman: Could you tell me which ones were proposed by the opposition?
Mr. Valeri: We have the list here. There would be the deputy house leader for official opposition; deputy house leaders for other opposition parties; deputy whips, other opposition parties; caucus chairs, government official opposition; caucus chairs, other opposition parties; Senate deputy whip, government; Senate deputy whip, opposition; Senate caucus chair, government; Senate caucus chair, opposition — for a total cost of new salaries of $85,300 per year.
The Chairman: Did those all come from the opposition?
Mr. Valeri: The suggestions came from the opposition. After discussion, there was agreement around the table to bring forward or to agree on the amendments and include them as part of the proposed legislation.
Senator Day: Mr. Chairman, there have been some very good suggestion here today. A number of points probably go beyond the bill we are dealing with. It is clear that this proposed legislation has received support in the House of Commons and is deserving of our support here. However, that does not mean that some of the issues that we have raised are not valid, including the one that we have heard for some time that you raised, Mr. Chairman, about our Speaker being paid less. The suggestion that when the Senate is not sitting the Speaker is not working is wrong. That should be looked at.
Honourable Senator Downe raised some very serious public policy issues that we should look it. Senator Murray's point that there used to be an automatic commission that looked into not only salaries but the broader picture is an interesting one. I was not aware of that. That is why we are pleased that Senator Murray is here to look into some of the background. Some good ideas get lost along the way.
Senator Murray: There is more.
Senator Day: I know that. I will suggest that we as a committee deal with this as a study and look at the issues and the inequities and the social problems when senior public servants are being paid more than parliamentarians and, in fact, when senior people in ministers' offices are being paid more than parliamentarians; it can become a serious problem in terms of who we are attracting to serve the people of Canada.
I will suggest that we do that kind of commission study. We could obviously take that on on our own. It is the kind of study that the Senate can do, with all due respect, better than a committee of the House of Commons because there you have a constituency that is looking at you more closely. It would be cheeky of us to look at your offices, what you get paid and what you have for allowances, but if you wanted to invite us to expand our study beyond the remuneration issue to look into other issues, like this commission did, we might look upon that with some degree of favour.
Having said that, Mr. Chairman, I believe that it would be in the best interests of this Parliament and the Senate to support this bill at this time.
The Chairman: Minister, did you want to respond to that statement?
Mr. Valeri: I have several points, Mr. Chairman. That is a suggestion that I would encourage the committee to discuss more fully and is certainly something that I would welcome, because I do think that is Senate is in a position to do that type of work very effectively.
The second point, Mr. Chairman, is that, unfortunately, I have an interview I am supposed to be at at 10:30.
The Chairman: I did not know that, minister.
Mr. Valeri: Would it be possible for the officials to remain to answer further questions of a technical nature, if there are further questions?
The Chairman: I have senators on the second round. We meet tomorrow night as well. If there were something they wanted to put to you, would you have a few minutes tomorrow night to come back to the committee if we needed?
Mr. Valeri: Certainly.
The Chairman: Minister, I did not know you had to leave or we would have done things quite differently. I understand you have another obligation. You certainly are free to go, provided Mr. McCutcheon can stay, as we have senators wanting to put questions on a second round. If we need you for tomorrow, I will have the clerk of the committee get in touch with your staff and let you know.
Mr. Valeri: I want to close by thanking the committee for its questions. The questions were very good and will serve to help us work through this piece of proposed legislation. I look forward to your report.
The Chairman: Thank you. Mr. McCutcheon, if you can stay, we have further questions.
Senator Downe: This is something that the minister's staff can simply pass on to the minister.
In respect to the concern I expressed earlier, Mr. McCutcheon, I want to be clear that everyone understood. No one runs for Parliament because of a salary. No one runs currently that I am aware of because they find the salary enticing.
However, when they arrive in Ottawa they realize the disparity between the responsibility they have and the salary they are receiving, while others who have similar responsibilities, in some cases fewer responsibilities, have salaries that are out of whack and need to be adjusted.
For senior public servants there are, in some cases, recruitment bonuses paid, which MPs do not receive, there are yearly bonuses, as I mentioned earlier, that account for pension purposes. At the most senior ranks, there are cars and drivers, which are similar to the benefits for ministers, private club membership paid in some cases by the government for certain people that are negotiated, and so on. The salaries in many cases are much higher.
I am not aware of any MP in any Parliament who could not transfer and do most of those positions and do them well at the higher rate of pay. No one is suggesting they do that. As I mentioned earlier, the option is to increase the salaries for MPs — and I agree with Senator Murray's comment that this is not a big vote problem for people who are advocating this — but it does create some controversy. People who are trying to get elected normally do not want to have columns saying that they are being grossly overpaid, but if others receiving government salaries are receiving the high salaries then it must be adjusted.
I first became aware of this problem when this report of the Lumley commission came out in 2001. I realized, when it was being discussed, that the then clerk of the Privy Council and the then chief of staff of the Prime Minister's Office were making more money than the Prime Minister. That has since been corrected. However, I believe that is common, unfortunately, across government, and MPs, their families and their future benefits are paying the price for that.
To recruit the best people down the road, we may end up with others who do not have the best interests, and I am concerned about where we will be in five or 10 years and what type of people will be running the government. That is just a comment to be passed on.
The Chairman: I should like to hear from Mr. McCutcheon on Senator Downe's point.
Mr. McCutcheon: Senator Downe is making a valid point, that there is a disparity there. It is not as great, as he indicates, as it was prior to the Lumley commission. After the Lumley commission, there were significant adjustments in MPs' compensation and ministers' compensation.
If I may say, Mr. Chair, it is an issue of broad application to the public service. Deputy ministers earn significantly less than similar positions in the private sector. Executives in the public service, for example, an EX-1, which is the entry level of an executive — in terms of compensation structures in the public service, an entry level executive receives almost the same as his or her counterparts elsewhere in the country. However, every executive above that level earns less than his or her counterparts in the rest of the country. By the time an individual gets to the deputy minister level, the compensation is significantly less than their counterparts in the private sector. We are here to do public service, of course, as we all know.
The Chairman: Can we put a number on what an EX-1, EX-5 or an EX-6 might earn? Just put a round number on it. I know there is a sliding scale.
Mr. McCutcheon: An EX-1's starting salary is around $90,000, and the job rate as we call it, the maximum of the pay scale, is slightly over $100,000. A senior assistant deputy minister, an EX-5, would earn around $165,000 as a maximum salary.
The Chairman: What about a deputy minister?
Mr. McCutcheon: A deputy minister, at the DM-1 level, starts around the same as a senior ADM, but the DM-2 is our working level as a deputy minister. They would earn slightly more or slightly less than around $200,000.
Senator Downe: I wish to ask a supplementary on that. One of the best examples of this is the Chief Electoral Officer, whose salary is pegged to Federal Court judges, who is the person responsible for running elections under which MPs run, and he makes $260,000 or $280,000. It is public information.
Mr. McCutcheon: At the moment, it is pegged to a puisne judge of the Federal Court. I believe that salary at the moment is $219,000.
The Chairman: The senior deputy minister makes what? What is the range of a senior DM?
Mr. McCutcheon: There are very few at those levels.
The Chairman: What would the Deputy Ministers of Finance and Transport be making?
Mr. McCutcheon: A senior deputy minister could earn up into the range of $240,000 or $250,000.
The Chairman: Plus a bonus, correct?
Mr. McCutcheon: Plus a performance bonus, that is correct.
Senator Downe: The bonus pay can be, in some cases, above $40,000, correct? What do you call it?
Mr. McCutcheon: Performance pay. It could be in that neighbourhood, depending on the salary and the amount of the performance pay.
Senator Ringuette: I would like to voice my support to Senator Day's recommendation that we study this. I wish also to flag an additional issue and then to have a question relating to article 16 on page 10.
I want to flag, in regards to differences also, transferability of pension plans. Any provincial and federal public servant can transfer from one government to the other and carry with them their pension plan, whereas it is prohibited for a parliamentarian to do so. Provincial parliamentarians cannot carry forward, and I will give my own example. I was an elected MLA in the province of New Brunswick. When I resigned my provincial seat in 1993 to run federally, I could not carry forward my accumulated pension plan in New Brunswick to the federal pension plan.
There, again, is another comparable issue in regard to how we treat parliamentarians and how we treat public servants in this land.
Now for my question: On page 10, under the heading ``Coordinating Amendments,'' proposed section 16 of the Referendum Act, reads as follows:
If section 13 of this Act comes into force before, or on the same day as, section 25 of the Amendments and Corrections Act, 2003 (the ``other Act''), then, on the coming into force of that section 13, the portion of section 25 of the other Act before the heading ``disability allowance and other benefits for former lieutenant governors'' is replaced by the following:
Where is the pay scale for the lieutenant-governors, if we deem that this disability allowance and other benefits for former lieutenant-governors need to be corrected in this bill?
The other issue is that, in the last few months, in the media, we have been hearing much about the non-taxable salary of the Governor General. Where would that be? In which act would we find that? All of that should be included in our study, Senator Day.
Mr. McCutcheon: I should like to ask Ginette Bougie to respond to the senator's question.
The Chairman: Please.
Ms. Ginette Bougie, Director, Compensation Policy and Operations, Privy Council Office: In the Salaries Act, we renumbered the front end of it for the lieutenant-governors; it just changed the numbering of the different paragraphs. This is just a coordinating amendment to ensure they go together.
Senator Downe: Just a supplementary on that question — and this is really for Senator Day's suggestion if we do the study. As I understand it, and officials from Privy Council can correct me if I am wrong, the Governor General receives a non-taxable pension regardless of how long he or she serves in that position, whereas lieutenant-governors have to serve five years and can only collect their pension at age 65, unlike anyone else who is receiving a federal government pension. Is that correct or has that been corrected?
Ms. Bougie: They can start receiving a pension as of age 60. That was changed a couple of years ago.
Senator Downe: After five years' service?
Ms. Bougie: After five years' service.
Senator Downe: Everyone else in the public service is entitled to a pension at age 60 if they have two years of consecutive service, is that correct?
Ms. Bougie: That is correct.
Senator Downe: There is a disparity there that should be corrected.
Senator Murray: These are rather small matters, but since the officials are here I will impose on them.
When was it that the Judicial Compensation and Benefits Commission? Was it last summer or last fall?
Mr. McCutcheon: The report was made public on May 31 of last year.
Senator Murray: I was concerned about whether the Senate was in compliance with the act. On any of the first 10 days on which the House is sitting, it is supposed to be tabled and then it has go to the committee — in our case, the Standing Senate Committee on Legal and Constitutional Affairs. I do not think that has been done. If it has not been done, we have a problem. The Senate has a problem, and maybe the government has a problem eventually with the bill.
The Chairman: Senator Murray, could you read the clause and the phrase?
Senator Murray: We are talking about the Judicial Compensation and Benefits Commission report, which was made public May 31. That would have been after dissolution, I think. I am sure you have an answer to this.
The provision in the Judges Act — and I am talking about section 26(6) — reads as follows:
(6) The Minister of Justice shall table a copy of the report in each House of Parliament on any of the first ten days on which that House is sitting after the Minister receives the report.
(6.1) A report that is tabled in each House of Parliament under subsection (6) shall, on the day it is tabled or, if the House is not sitting on that day, on the day that House next sits, be referred by that House to a committee of that House that is designated or established by that House for the purpose of considering matters relating to justice.
In our case, that will be the Standing Senate Committee on Legal and Constitutional Affairs. I am informed that that reference has not been made. Do you know differently?
Mr. McCutcheon: Yes, I have more clarification now. The quadrennial commission completed its work and its report by May 31, but the report was not actually tabled or made public until the fall.
Senator Murray: The new Parliament.
Mr. McCutcheon: In the new Parliament, that is correct. Whether it was tabled appropriately in the Senate, I must say I do not have an answer to that question.
Senator Murray: Even if it was, my information is that it has not been referred to the committee. There may be a problem there, I am not sure. There may even be a problem with the bill that is coming forward, because it is clear that part of the process involves committee study of the report.
I hope you do not consider this too picky, but did you put out this ``Parliamentarians' Compensation Bill Briefing Book?
Mr. McCutcheon: It was prepared by the Privy Council Office.
Senator Murray: Under tab B, there is a chart entitled, ``The Senate of Canada: Allowances and Salaries.'' My interest was perked by the reference to ``Leader of the Government'' (Member of Privy Council),'' then under that, ``Leader of the Government (Non Member of Privy Council).''
There was a time, I am well aware of it, when the Leader of the Government in the Senate was not necessarily a member of cabinet. I can recall way back in the sixties when that was the case. However, I think there is another act somewhere where ministers of the Crown are listed, and the Leader of the Government is listed. I wonder why that reference is in there, ``Leader of the Government (Non Member of Privy Council).'' You could not have a Leader of the Government in the Senate who was not a cabinet minister, a Privy Councillor, unless you amended some other piece of legislation.
Mr. McCutcheon: I have just been informed that this document was actually prepared by officials of the Senate.
Senator Murray: Perhaps we should ask them.
Mr. McCutcheon: If I understand, if the individual is a minister, then this is what applies; however, if the person is not part of the ministry, then the Salaries Act is what applies. The Parliament of Canada Act is what applies in those circumstances.
Senator Murray: Under the present situation, the individual must be a member of cabinet. You would have to amend some other act, I think. It has been a good 40 years since there was a government leader in the Senate who was not a minister — because he or she is listed.
Mr. McCutcheon: You are correct. What you are describing is correct, senator.
Senator Murray: I see also that the Speaker of the Senate has some sort of residence allowance, but the Speaker of the House of Commons has Kingsmere. I am wondering whether consideration has ever been given to opening a bedroom up there for the Speaker of the Senate, and have them co-habit.
The Chairman: Mr. McCutcheon, we have not heard your response to that.
Mr. McCutcheon: I do not think I am in a position to comment.
The Chairman: When the minister was here, he was asked questions by Senator Downe. As part of his response, the minister said that at later time another government could always set up a commission to do an evaluation or a re- evaluation of the base.
My question to you is this: As the author of this particular piece of legislation, what do you encompass as the procedure for evaluating the base of the salaries for member of Parliaments, which include members of the House of Commons and members of the Senate of Canada?
Mr. McCutcheon: The bill as drafted does not make specific provision for a commission or for a mechanism in that regard. Presumably, the House would have an opportunity to establish a group, a committee or a task force to look at and report on those matters.
The Chairman: Would it take another piece of legislation following such a report if there were to be changes?
Mr. McCutcheon: Yes, that is correct.
Senator Day: I have a very short question. In this briefing book, there are two indices. I am looking at tab A. There is the industrial aggregate wage index and the average base rate increase. I was looking for what was included in each of these indices. Do you have that information handy for us?
Mr. McCutcheon: Yes. The average base rate increase, as I understand it, actually refers to the major wage settlement index from HRSD. I am not sure why it is titled that at the beginning of that column; and there is a description in the briefing book of that one.
Senator Day: That is the groups of 500 or more?
Mr. McCutcheon: That is correct.
Senator Day: It is called a different name in the act than it is in this list here.
Mr. McCutcheon: Yes, that is correct. The industrial aggregate wage index is a much broader index. It encompasses virtually every Canadian that receives a wage. It is not just unionized individuals, as I understand it, and it includes public service and private sector employees.
Senator Day: Did I understand you to say that it is the industrial aggregate wage index that is the index used for judges in addition to the four-year review?
Mr. McCutcheon: That is correct. That is the index currently in place both for members of Parliament and for judges for the annual indexation. That is the one that is being used under the current statute.
Senator Day: With this proposed legislation, we are changing the indexes being used through the second one that we have just talked about, which is the one that HRSD comes up with, and it is based on 500 employees or more.
Mr. McCutcheon: That is correct.
The Chairman: I should like to thank you, Mr. McCutcheon, and your staff, for attending here today.
The committee adjourned.