For all the things that government gets criticized for not revealing, there is a good degree of transparency in its financial reporting, at least when it comes to certain things. It does take a bit of understanding to know where to look, and the types of things that are available versus what isn’t. The main source of this information is the Public Accounts, which is the annual financial statement for government as a whole, plus reports by Departments and agencies.
The detail of departmental spending is found in the Supplement to the Public Accounts, which is published annually as well. It is found HERE . Memory tells me that it used to be published sometime after the main Public Accounts were released, but recently they have all come out at once.
I remember when I first encountered the Supplement. I was working at Municipal Affairs when Vince Smith, one of the senior managers in the Finance group there with whom I worked, dropped a thick document on my desk. Back then in those days prior to the Internet and electronic document distribution, each Department received a few printed copies of the publications produced by Finance at year-end, and the Supplement was one of them being circulated this day. Vince explained to me what it was and suggested that I browse through it, since my name was in it along with most others in the Department. I was astounded to find that it contained the salaries of everyone in government making over $25,000 a year, plus anyone who claimed expenses over a certain amount. It also contained the names of any group or business to whom government paid money. I’ve tried to find the references to the statutory or regulatory requirements defining the thresholds for inclusion in the Supplement, surprisingly without success. The Public Accounts mention the Finance Act, but there are no thresholds I see in the legislation, and I have not found any associated regulations defining them either. Strange.
When I began browsing that document I did what I expect most other government employees did. I found the entries referring to me, then I looked at the rest of the listings for my Department. Since I only generally had a rough idea of what my co-workers earned, this was enlightening. Then I looked at listings for other Departments for people I dealt with. I had what I expect was a pretty common reaction, either incredulity with how much some people you dealt with and didn’t think much of were overpaid, or surprise at how little some good people made. You got used to the exposure after a while and began to accept it as part of went with the job. The fact that few people actually noticed most of what was in it helped in that regard.
Comparing the first available online supplement (1996) to the most recent, several things stand out. Of course, more people are listed, both because government has gotten larger, and because it now includes most people who work for government. The $25,000 annual salary threshold hasn’t changed over the years, and most people now make more than that. The other thing that jumps out at me is that relatively speaking, government now pays people a lot more than they did in 1996, even accounting for inflation. The Bank of Canada tells me that wage inflation between 1996 and 2013 was about 44%. Now, I can’t tell you exactly what the provincial government’s wage inflation was because that analysis would go way beyond what I have data for, and you would also need to normalize it for growth in the sheer numbers of people working for government. So I look at it a different way.
Let’s compare a Deputy Minister’s salary, not to pick on them but rather because they are some of the most easily-identified people to find in the document. In the 1996 Supplement, Deputies were making about $85,000 to the low $90,000 range. Today, Deputies make from $170,000 to just below $200,000, just a bit more than a 100% increase. The same holds true for judges in the Department of Justice. Other positions are a lot harder to identify, since titles are not included in the listings and job ratings can change. But looking at some names I know, it seemed that most Directors and senior management types were in the $60,000 to $70,000 range then, and today they would all be over $100K. Perhaps not quite 100% inflation, but not far off it. It seems that in general, government is paying at an overall much higher rate than used to be the case for the same level of skill.
The other interesting thing in comparing the 1996 document with today’s is how much higher the top end is now, comparatively speaking. The highest salary I found in the 1996 document was $113,000. There were a relative handful of people over $100,000, perhaps less than a dozen (I did not try to make an exact tally). In the current document, the highest salary I found was about $340,000, and there are many over $200,000. Interestingly, the highest-paid positions were not the Premier, or the Deputy to the Premier, but rather the Chief Medical Examiners (we apparently have 2 of them, each making the same amount) – admittedly a very specific and high-skill job, and not one I suspect many people would want anyway. I don’t know who held that job in 1996 so I can’t tell you what it paid back then. None of this includes the people outside the civil service in places like District Health Authorities or universities, who are listed in the separate disclosure statements now required to be filed by those bodies, and which often tend to pay much higher rates than government for a given position. They can be found HERE.
Now, I recall the days in the 1990s when we used to discuss over coffee why anyone would want to be a Deputy. The level of responsibility was way out of whack for what they made, and so some adjustment beyond the inflation rate was needed. It used to be that the conventional wisdom said government overpaid for jobs at the low end of the skill scale and underpaid at the professional/management levels. Many of those sort of positions had their compensation levels artificially depressed by the boffins within the Civil Service Commission over the years in the name of trying to save money. Getting a position approved for salary reclassification was often impossible, and only when you tried to refill it and got no takers would the salary be adjusted. So some change was needed.
Back in the 1990s the Province generally paid significantly less than the Federal government for similar positions, and usually less than the City of Halifax/HRM also. That made it tough to recruit people into jobs who were well-qualified, so you sometimes were forced to hire people who were willing to work at that salary level but weren’t as good as you had hoped to find. Other times you had turnover as people left for better pay elsewhere and you experienced the resulting gaps in productivity and service delivery. Eventually you get forced to pay for talent at market rates, and perhaps this is what happened provincially. And since there is pressure for internal equity to at least some extent, over time you get a jacksaw effect where eventually others doing similar work get the benefit of an increase when they get too far out of step with their provincial colleagues.
One could argue that the pretty-much ironclad job security the Province offers, along with what was then a guaranteed pension (not quite the case these days), and very good benefits, offset the basic salary number to an extent, and that is true. It used to be that you could explain away the relatively lower provincial government salary rates by pointing to the pension and benefit plans. But when people see a job posting, pretty much the only thing they notice is the salary range, and those other aspects were a tough sell, especially for younger candidates, so government is pretty much forced to pay salary rates close to any other employer these days. I do not mention working conditions, because for a large group of people, they go nuts trying to work in government. The pace and style just isn’t for them. So you need a certain kind of mindset to be happy working in government, especially long-term, or it makes you crazy.
In the interests of full disclosure, I benefited from this as much as anyone else did. I moved around a fair bit in my government career and usually went to a better-paying position with more responsibility when I did. I make no apologies for that, and I think government got decent value from my services. The high cost of mediocrity is what kills you, where someone who has been doing pretty much the same job for many years with no particular distinction gets reclassified in order to keep the peace in their Department or division. I can’t say how much of that exists, but it’s there. And government just seems to have more people in it doing more things these days, from my experience, so they all cost you.
So this explains in part why government costs so much. You have to advertise positions at salaries close to market rates to recruit people, you have to add the pensions and benefits, and then you have to eventually re-establish internal equity by adjusting everyone else’s pay rates to match. Expand the number of people working for government, especially at the top end, and the costs increase exponentially. There are a number of other reasons why we spend so much now as compared to then, including the loss of what was a rather frugal management philosophy back then, the adoption of the concept of “best practice” in many areas regardless of any demonstrated need, the lack of any meaningful controls on a variety of types of spending, and of course, a much greater scope of government services these days. Not only does the public demand more from government, but so does the bureaucracy, and it all costs money. It is a vicious cycle.
Speaking of spending, the other piece of the Supplement that is equally interesting is the listing of everything else government spent money on. Government spends a lot of money on all sorts of things. I’m not even going to try and convince you, dear reader, that it is all worthwhile. That obviously depends on your perspective. As Casey Stengel used to say, you could look it up. Do that, and decide for yourself. It’s not all wasteful, as some in the media or elsewhere would have you believe. But there is a lot of relatively little stuff – say, $250,000 or less these days – that just happens. Such is the nature of government. It flies under the radar most of the time. All the bureaucratic controls and sign-offs and oversight in the world won’t stop it if the right people are behind it. There are ways to move money around and spend on things that any good bureaucrat can do, and nobody will even be aware of it, much less stop it.
In a future entry, I’ll expand upon this with a focus, not surprisingly, on the costs behind Nova Scotia’s anti-alcohol crusade and how the money gets spent.
Second Thoughts 