Time for MPs to take a pay cut

Posted on May 7, 2020 by 40 Mile Commentator

As we struggle to contain COVID-19, virtually everyone is paying the price while the economy faces an unprecedented storm. Many members of Parliament are sharing in that sacrifice by donating their automatic pay raise to charity. The rest need to not only follow that example, but go one step further by taking a pay cut.

Nearly six million Canadians have already applied for either employment insurance or the temporary income replacement. The Trudeau government — with the consent of all the opposition parties — has already passed legislation authorizing more than $180 billion to help families and businesses cope during this unprecedented emergency.

With no clear sense of when we might be able to return to even semi-normal life, it’s difficult to accurately predict just how big the tab for emergency measures will get. And given that there are potentially thousands of lives at stake, it’s understandable that concrete deficit calculations will have to wait.

But as taboo as it might be to observe, there is still no ignoring the elephant in the room: this crisis is very, very expensive. That’s why it’s important for our MPs to get ahead of the inevitable fiscal challenges ahead and vote to cut their own paycheques. For both practical and symbolic reasons, Canadians need to know that the people in charge are willing to make sacrifices themselves, before asking the rest of us to endure even more pain.

Consider the enormity of the task. The Parliamentary Budget Officer projects next year’s federal deficit will be$184 billion, seven times larger than it was predicted to be just two months ago, and that analysis assumes that there will be no additional spending measures forthcoming.

Eventually, all of the measures will have to be paid for and that will require many painful choices. It won’t happen overnight, but over time, the public sector will be forced to endure salary cuts, reduced staffing levels or both. Pet spending projects and nice-to-have programs will take a backseat to core government services. Prospective tax measures designed to recoup government revenues that have been decimated by the dormant economy will have to be balanced against the risk of trampling on the recovery.

Many Canadians who have seen their paycheques shrink through no fault of their own fairly wonder why MPs should be immune from this predicament. Many MPs already understand this, which is why nearly half of them have voluntarily agreed to donate their annual pay increase this year. They know full well that taking a pay hike during this crisis looks bad, especially when they are already earning $178,900, which is triple the average Canadian household income of $59,800.

While it’s good to see MPs donating those pay raises to charity, they need to go further. Most Canadians aren’t merely forgoing raises. Most Canadians are struggling with sharp drops in their income and savings and millions are out of work. MPs need to take a pay cut.

The sooner they lead by example to show both the bureaucracy and taxpayers that our leaders are willing to share in the pain of this sobering new reality, the better placed they will be to make the case for necessary reductions elsewhere.

Around the world, many politicians seem to understand this. Hong Kong’s leader is taking a 10 per cent pay cut. New Zealand’s prime minister cut her own pay, along with her entire cabinet and top bureaucrats, by 20 per cent for the next six months. In Japan and India, politicians are cutting their salaries by 20 and 30 per cent, respectively, for at least the next year.

Canadian politicians would do well to follow suit.

Aaron Wudrick is federal director of the Canadian Taxpayers Federation