Tuesday, May 10, 2011

Commission finds judges need cost of living adjustments after wage freeze

In a recent report by the BC Judges Compensation Commission, the Commission recommends that although judges should be bound by the "net zero" mandate with respect to wages, they should receive increases immediately afterwords that make up for the lost increases over the two year freeze.

Interestingly, the mandate is not considered with respect to other contract improvements including pension, health benefits, leaves and disability benefits.

The Commission considered input from the judges association as well as others. It has to consider the "current financial position of the government".

In the end, it recommended that in year three, the judges receive an increase equivalent to three years of the Cost Price Index increase. This would ensure that they do not fall behind as a result of the wage freeze for two years.

The report includes an interesting analysis of the government's rationale for the "net zero". In the end, "the Commission has concluded that it is reasonable to expect that the Government will be in a position to support increases in the 2013/14 fiscal year which will ensure fair and reasonable compensation for Provincial Court Judges....the Commission recommends that effective April 1, 2013,
puisne judges of the Provincial Court receive a salary increase equal to the accumulated increase in the B.C. Consumer Price Index over the preceding three fiscal years, compounded annually."

The Commission heard evidence brought by the judges Association by Mr. Ian McKinnon, an independent financial analyst, about the government's finances. For example:

"...the Government’s fiscal projections are historically conservative, and it can be reasonably expected that future deficits will be lower than presently forecast. This observation has been borne out by the Government’s recent $1 billion revision of the 2009/10 estimated deficit from -$2.775 billion to -$1.779 billion."

"...despite the economic downturn, recent provincial total debt-to-GDP ratios are among the lowest recorded over the past decade. ...
Currently, B.C. has the third-lowest debt-to-GDP ratio in Canada. That ratio is projected to rise by 3.9% to 25.9% by the 2012/13 fiscal year. Mr. McKinnon observes that even with this increase, provincial debt levels will remain below those seen over the past decade, and well below those of other advanced economies."

"Mr. McKinnon asserts that bond rating agencies provide an independent assessment
of a government’s ability to carry and service its debt load. In October 2006, Moody’s Investors Service raised British Columbia’s credit rating from “Aa1” to “Aaa”. The only other governments in Canada that enjoy “Aaa” credit ratings from Moody’s are the Government of Alberta and the federal government."

"Overall, Mr. McKinnon’s conclusion is that despite the recession, British Columbia’s financial position is “solid”."

The full report is available here.

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