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The Globe and Mail

Who’s guarding Ontario’s public purse?

Few public-sector labour conflicts instill fear in the hearts of politicians like a strike by jail guards. The last time it happened in Ontario, in 2002, widespread prison riots raised concerns about public safety. As one union official explained then: "The inmates are really running the facility."

Premier Kathleen Wynne obviously did not relish the prospect of prison riots on her watch. On Saturday, her Liberal government struck an 11th-hour deal with the Ontario Public Service Employees Union that grants more than 6,000 jail guards, parole officers and probation workers almost everything they asked for – everything, that is, but the massive wage hike they sought.

That will not likely be long coming, however. By designating prison guards as essential workers without the right to strike, similar in status to police officers and firefighters, the government has sent the prickly issue of wages to arbitration. We all know how that will probably turn out.

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For years, Ontario police boards, municipalities and business groups have pleaded with the government to reform a deeply flawed arbitration process that has led to unaffordable wage and benefit increases for police officers, firefighters and paramedics due to a "leapfrog effect." Arbitrators, who have no mandate to consider employers' ability to pay, systematically award wage and benefit increases that meet or exceed those granted by other arbitrators to other police unions.

"Policing costs in Ontario have risen at twice the rate of inflation over the past decade and a half, with wages and benefits accounting for 80 per cent to 85 per cent of overall policing costs," the Ontario Association of Police Service Boards complained in a 2014 letter to Ms. Wynne.

It is easy to see why. Ontario Provincial Police have a clause in their contract that guarantees they are the highest-paid officers in the province. Other forces use that as a benchmark for their own wage demands. If police boards will not grant such increases, arbitrators inevitably will. The same process has led to ballooning salaries for firefighters despite evidence of declining workloads.

Now it is the prison guards' turn to exploit this flawed process. The government has insisted on negotiating so-called "net zero" labour contracts in which wage increases must be offset by cost reductions elsewhere. But Ms. Wynne conceded she cannot guarantee that with the prison guards. She added, "The arbitrator will know the net zero deals that have been reached across the government, so the arbitrator will be working within those parameters."

That, however, is not among the criteria arbitrators are instructed to use. As OPSEU explains in a note to its members: "The arbitrator will base his decision on wages, working conditions and staffing levels in 'work of a similar nature in other Canadian jurisdictions.'" The union says Ontario's prison guards earn much less than their federal and British Columbia counterparts.

This would all be troubling enough were it not for the already deeply conflicted relationship between the Ontario government and public sector unions. Unlike in the private sector, where labour and management have clearly defined and adversarial roles, collective bargaining in the public sector is always an inherently political exercise. The employer, in this case the government, is always faced with the prospect of union retribution at election time.

Ms. Wynne, like her predecessor Dalton McGuinty, has kowtowed to the public sector unions, reaping the payoff on election day. The unions spent millions to help the Liberals get re-elected in 2014. OPSEU chief Warren (Smokey) Thomas personally supported the New Democrats, but told his members to do what was needed to prevent a Progressive Conservative win, which only Ms. Wynne's Liberals could do. "Every OPSEU member will pay a high price if [then-PC leader] Tim Hudak is elected," he said in a message to union members. "We have to stop him."

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Is it any wonder that public-sector compensation, excluding doctors' salaries, rose at almost three times the rate of inflation in Ontario between 2005 and 2014? That the provincial debt has more than doubled to $300-billion and the debt-to-GDP ratio has surpassed 40 per cent?

According to a Fraser Institute study, merely holding compensation to 50 per cent of total program spending, rather than letting it rise to 52 per cent, would have saved Ontario taxpayers almost $15-billion in the five years to 2014. The 2013-14 provincial deficit would have been $6-billion lower than the $10.5-billion shortfall posted.

Some politicians refuse to let union intimidation interfere with their responsibility for soundly managing money that is not theirs. Others seem to have other priorities.

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