Earlier this month, Conservative MP Kelly Block introduced a private member’s bill in the House of Commons, which, if passed, will require all First Nations chiefs and councillors to publish their salaries and expenses. The information will be posted on the Department of Indian Affairs website for all to see. The idea is touted as a measure introducing greater transparency and accountability to the management of aboriginal communities.
Most media commentary welcomes Block’s plan. Despite emotional charges of racism in some quarters, there is a consensus that such legislation will ensure transparency and accountability. It is assumed that transparency produces accountability. But transparency alone may not necessarily limit abuses nor curb upward trends in salaries. Block’s bill presents us an opportunity to examine those expectations.
A similar type of regulation has existed in jurisdictions like Alberta, British Columbia and Ontario since the mid to late 1990s. Ours is directed at top executive officers of provincial agencies and most institutions funded by the province such as the Alberta Treasury Branch, hospitals, and some universities. We call it the Alberta Provincial Treasury Board Salary and Benefits Disclosure Directive 12/98.
Some might say that comparing the transparency and limitations of salaries of deputy ministers and provincial government executives to those of Chiefs and directors in Indian reserves may be comparing apples and oranges. That’s likely true. The situation in Aboriginal reserves is more akin to that of universities: both are autonomous entities with peculiar cultures of their own, whose primary funder is the third party public purse.
While I am not suggesting strict equivalence, the comparison may not seem outlandish to those who remember University of Calgary president Harvey Weingarten receiving $4.75 million after leaving the job. The sweet deal was made on his arrival, but was not revealed for several years until Weingarten was about to leave. It would have been good to discover it at the start, but the fact remains that transparency was eventually served, even if it did nothing to stop the perceived abuse. Similarly, several years ago, at what was then Mount Royal College, a vice president and a dean of students, who lived as a couple, were sent off with significantly large sums that also prompted public outrage.
The $2.4 and $2.7 million salary and bonuses of Enmax President Gary Holden are the most recent source of public outrage in Alberta.
These apparently anomalous examples demonstrate that transparency alone does not curb abuses of the public purse for those inclined to do it, whether we were dealing with an unscrupulous university bureaucrat or one utility company executive. Without the existing transparency rules, however, we might not have known about them.
Alberta rules could stand some fine tuning in light of recent events and findings. A study by Rafael Gómez and Steven Wald from the University of Toronto, recently published in the March issue of Canadian Public Administration, evaluated Ontario’s equivalent legislation.
Policy makers in Ontario expected that disclosing salaries of top officials would cool a hot trend to increase them. It would therefore encourage responsibility and further the protection of the public interest. The study’s findings contradict that assumption.
The study found that salary disclosure may send executive salaries upward for several reasons. Disclosure changes bargain dynamics for incoming executives who demand to make more than their predecessor. At times, it induces demands for salary premiums for the inconvenience of seeing one’s salary published on a website. Disclosure may make some realise that they are being underpaid in relation to other institutions or jurisdictions, and it may also prompts junior executives to push for higher salaries.
While the Ontario experience calls into question one set of assumptions about salary disclosure by showing a deficiency in limiting salary hikes, it does increase transparency by making the hikes visible, and that’s a good thing.
Kelly Block’s bill gives us an opportunity to examine our own rules in Alberta and a chance to improve them, though it would take an Alberta study to see if the same holds for us. The 2008 Alberta Auditor General’s report already identified distortions produced by a lack of accounting standardization in salaries of university executives. Alberta rules should also include all institutions receiving provincial funding, and top executive salaries ought to be published in one spot on a government website.
Gary Holden’s salary also reminds us that other measures are necessary to limit salary abuse in public settings. Transparency makes information available. Accountability, however, is exercised in the good judgement of boards of directors, government representatives, and the voting public. No set of rules can replace that.