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8 ways the AIMS report on public services missed the mark

In a recent report, the Atlantic Institute for Market Studies (AIMS) argues that public services in Atlantic Canada are more costly than their counterparts in the rest of Canada.

The authors of this study rely on the number of public servants per 1,000 residents, as a metric to compare the size of Atlantic provincial public services with the national average. In short, the study compares apples to oranges, and concludes that provincial governments can save millions of dollars by simply reducing the total numbers of provincial employees to the national average.

The authors found that three of the four Atlantic provinces employ more public servants per capita than the Canadian average. New Brunswick is the exception, where government austerity has significantly reduced public services in recent decades.

They also argued that provincially-employed public service professionals in Atlantic Canada are compensated at higher levels than their private sector counterparts. Public employees make, on average, $68,600 per year. The average private sector employee in Atlantic Canada makes $46,500, or 47.5% less.

We reviewed the AIMS report to see if its arguments have merit. Atlantic provincial governments provide services to a total population much different than the rest of Canada. Here are eight ways the report missed the mark:

1. Since other provinces have much higher populations than Atlantic provinces they benefit from economies of scale in ways that Atlantic provinces do not. As a result, comparisons based on the number of public servants per 1,000 residents are both inaccurate and inappropriate.

2. With between 41% and 53% of its population living in rural areas compared to between 14% and 33% in other provinces, Atlantic provinces require more public servants per 1,000 residents to provide government services to their residents. (Note: The number of public servants per 1,000 residents used in the AIMS report includes both municipal and provincial employees.)

3. Atlantic provinces have an unemployment rate between 7.6% and 14.9% compared to between 6.2% and 8.5% in other provinces. As a result, Atlantic provincial populations need access to more government services. Reducing the services offered would eventually increase the numbers of residents emigrating to other provinces.

4. With an aging population proportionally higher than other provinces, reducing the number of public servants will result in service reduction for vulnerable seniors.

5. The number of public servants per 1,000 residents metric fails to capture the various services offered by governments. Since government intervention is different in each province, reducing the services offered will most likely have a negative impact on the provincial population, given the many demographic differences that exist within the Atlantic context.

6. When comparing the average compensation between a private sector employee and a public servant, the Authors didn't provide a breakdown by industry classification. A comparison classification by classification would provide a more accurate picture. For instance, the starting salary for a lawyer, with less than 4 years of experience, hired at the Office of the Attorney General in New Brunswick is $48,802 in 2016. For a comparable position in a large firm, the Atlantic starting salary average is $50,000 to $80,000 (not including benefits and options that on average will increase the “all-in” package by between 30% and 50%).

7. Comparing the compensation of an Atlantic public servant to an average national public servant would also help identify existing gaps. For example, the salary of a Legal Aid Lawyer in New Brunswick starts at $46,904. If the same lawyer is hired by Legal Aid Ontario, their salary starts at $76,000.

8. Reducing the salaries of public servants will not help Atlantic residents increase theirs. The most significant challenge facing Atlantic residents is access to good jobs. Killing good public service employment will not help.

Further austerity and cuts to public services will only hamper economic growth in Atlantic provinces. Atlantic governments would be wise to avoid the recommendations of the AIMS report .


Publish Date: 09-DEC-2016 09:09 AM