It seems as though after any given election, at every level of government, Canadians bring a rash of complaints about severance payments made to ousted officials. Here is an article about a plan to change that.
The Trudeau Liberals have introduced two new Bills with the proposed effect of eliminating such severance payments. Judging by the comments made following online coverage of these new Bills, the public does not like the new proposal either. Voters have a legitimate grievance in some instances, but not all severance packages are bad or unjustifiable. This article neither attacks nor defends the current public severance regime, but rather advocates for more targeted public backlash, if backlash is in fact warranted.
The first fact to bear in mind about these so-called “severance” payments is that they are often a contractual, or even a statutory right. If the government failed to make such payments, it would violate its obligations, a result voters would not tolerate in a number of other contexts.
Moreover, “severance” as a concept typically seeks to compensate individuals for the sudden loss of their employment. Elected officials are in a unique position in this regard. Not only do they often face the sudden and unpredictable news on election day regarding their future, but the nature of their jobs often means they must forego other – often more lucrative – opportunities throughout their tenure as public servants. In the face of this, and given the important nature of politicians in a democratic society, it is not categorically unfair that they should receive severance pay when voted out. Like anyone else, many elected officials have children to feed and mortgages to pay. Like many people they do not wish to have the loss of their job result in an inability to support their families.
Some of the outrage expressed stems from politicians voluntarily resigning and thereby invoking their severance rights. This practice is more difficult to support from the perspective of allowing officials an opportunity to arrange their affairs. Where a contract provides this, it seems more appropriate for the public to decry that contractual provision. Outside of the political realm, not many people have the option of invoking a large lump sum payment via voluntary resignation. Nonetheless, under the regime present in many different jurisdictions across Canada, this remains an elected official’s entitlement unless and until something changes.
For every perceived problem with the status quo, the time to attack it is at the time of signing the employment contract. The striking of such an agreement occurs upon electing our officials, but the public outcry comes at the other end of their careers, often years after their entitlement has crystallized. This is a typical device seen in politics, and is by no means limited to this context. It is easy to defer payments until a later time in order to make your own current budget look better, and with the added advantage of making your successor justify the cost of your own severance package to his/her constituents.
The above explains the status quo, as well as much of what voters find distasteful about it. It is desirable to find a system going forward which allows for our elected officials sufficient time to rearrange their lives, all while keeping taxes and spending in check.
The recently-elected Liberals seek to re-balance the equation in a much more forthright manner. This article will not address the quantum of this proposed re-balancing. Rather, it defends the concept.
As we understand the draft legislation, Members of Parliament would receive higher salaries up front, while eliminating severance on the back end. Critics of the proposal will no doubt point to the increased cost up front, though this argument is tempered by several considerations.
First is the perennial theory (imperfect though its practical application may be) that higher salaries attract better talent. Although this theory is not implemented perfectly, the new proposal would be a disincentive to persons who decide to quit for reasons of pure self-interest, including the severance package they know they will receive. Instead, it incentivizes job performance in the present.
Second, this so-called up front cost will be somewhat illusory as it will significantly reduce the back end cost associated with severance packages as they presently stand. In effect, it is a more forthright manner of paying salaries for current work out of the current budget (and for the politicians collecting those salaries to be the ones forced to defend them).
The comments under the article in the above hyperlink indicate (rather predictably) that public sentiment immediately took the 'overpaid-politicians' approach. Forgotten in this reaction is the fact that the proposal addresses a long-standing grievance which the public expresses when government entities honour their obligations.
The new proposal seeks to fix an old problem. It may not do so but it would be unfair to portray it as a simplistic, greedy political move.
The Trudeau Liberals have introduced two new Bills with the proposed effect of eliminating such severance payments. Judging by the comments made following online coverage of these new Bills, the public does not like the new proposal either. Voters have a legitimate grievance in some instances, but not all severance packages are bad or unjustifiable. This article neither attacks nor defends the current public severance regime, but rather advocates for more targeted public backlash, if backlash is in fact warranted.
The first fact to bear in mind about these so-called “severance” payments is that they are often a contractual, or even a statutory right. If the government failed to make such payments, it would violate its obligations, a result voters would not tolerate in a number of other contexts.
Moreover, “severance” as a concept typically seeks to compensate individuals for the sudden loss of their employment. Elected officials are in a unique position in this regard. Not only do they often face the sudden and unpredictable news on election day regarding their future, but the nature of their jobs often means they must forego other – often more lucrative – opportunities throughout their tenure as public servants. In the face of this, and given the important nature of politicians in a democratic society, it is not categorically unfair that they should receive severance pay when voted out. Like anyone else, many elected officials have children to feed and mortgages to pay. Like many people they do not wish to have the loss of their job result in an inability to support their families.
Some of the outrage expressed stems from politicians voluntarily resigning and thereby invoking their severance rights. This practice is more difficult to support from the perspective of allowing officials an opportunity to arrange their affairs. Where a contract provides this, it seems more appropriate for the public to decry that contractual provision. Outside of the political realm, not many people have the option of invoking a large lump sum payment via voluntary resignation. Nonetheless, under the regime present in many different jurisdictions across Canada, this remains an elected official’s entitlement unless and until something changes.
For every perceived problem with the status quo, the time to attack it is at the time of signing the employment contract. The striking of such an agreement occurs upon electing our officials, but the public outcry comes at the other end of their careers, often years after their entitlement has crystallized. This is a typical device seen in politics, and is by no means limited to this context. It is easy to defer payments until a later time in order to make your own current budget look better, and with the added advantage of making your successor justify the cost of your own severance package to his/her constituents.
The above explains the status quo, as well as much of what voters find distasteful about it. It is desirable to find a system going forward which allows for our elected officials sufficient time to rearrange their lives, all while keeping taxes and spending in check.
The recently-elected Liberals seek to re-balance the equation in a much more forthright manner. This article will not address the quantum of this proposed re-balancing. Rather, it defends the concept.
As we understand the draft legislation, Members of Parliament would receive higher salaries up front, while eliminating severance on the back end. Critics of the proposal will no doubt point to the increased cost up front, though this argument is tempered by several considerations.
First is the perennial theory (imperfect though its practical application may be) that higher salaries attract better talent. Although this theory is not implemented perfectly, the new proposal would be a disincentive to persons who decide to quit for reasons of pure self-interest, including the severance package they know they will receive. Instead, it incentivizes job performance in the present.
Second, this so-called up front cost will be somewhat illusory as it will significantly reduce the back end cost associated with severance packages as they presently stand. In effect, it is a more forthright manner of paying salaries for current work out of the current budget (and for the politicians collecting those salaries to be the ones forced to defend them).
The comments under the article in the above hyperlink indicate (rather predictably) that public sentiment immediately took the 'overpaid-politicians' approach. Forgotten in this reaction is the fact that the proposal addresses a long-standing grievance which the public expresses when government entities honour their obligations.
The new proposal seeks to fix an old problem. It may not do so but it would be unfair to portray it as a simplistic, greedy political move.
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