Municipal Salary and Benefit Expense

Blog, Frontier Centre, Local Government, Role of Government, Taxation, Uncategorized

The Frontier Centre’s 2007 Local Government Performance Index produced a wealth of data describing the financial status of Canada’s 30 most-populous municipal jurisdictions. The index is unique because it is Canada-wide. This Frontier Charticle presents the percentage of expenditure that was declared as Salaries and Benefits in the Expenditure by Object sections of the municipalities’ 2005 financial statements. The data came from the 17 out of 30 LGPI municipalities that recorded Salary and Benefit Expenditure (SBE) in a table of overall operating expenditure. Twelve other municipalities recorded SBE for combined capital and operational activities, but these are excluded from this analysis for the purpose of consistency.

From the chart, we can make several striking observations:

• There is a wide variation in SBE: The lowest SBE municipalities spend less than half of what the highest spend on SBE.

• All the municipalities presented here have a very high SBE by international standards. In jurisdictions such as New Zealand and Australia, the sector average is below 30 per cent.

• There are two possible explanations for this international disparity. a) Canadian municipalities are responsible for additional labour-intensive activities such as policing and, particularly in Ontario, social services. b) The relatively lower use of external contractors and the performance-based staff payments mean higher labour costs.

Source: 2005 City Financial Statements via the 2007 Frontier Centre Local Government Performance Index

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