New report: Broken arbitration system causing unsustainable rise in municipal costs

Vancouver, October 25th, 2017– With one year to go until municipal elections in the fall of 2018, the Canadian Federation of Independent Business (CFIB) released its annual BC Municipal Spending Watch report today, showing that local government real operating spending outpaced population growth nearly four-fold between 2005 and 2015.

The report also reveals a large part of unsustainable rises in municipal operating spending is driven by a broken collective bargaining compensation system that, if left unaddressed, will cause large tax and fee increases for local residents and businesses.

 “Business owners, like other British Columbians, value and respect the dedicated people in municipal police, RCMP, and fire protection services. The current system for setting compensation is, however, clearly broken and causing unsustainable increases in municipal costs,” states Richard Truscott, Vice-President, BC and Alberta.

“Arbitrators often fail to consider a municipality’s economic conditions or the ability for local taxpayers and small businesses to pay for the increases when settling wage contracts. If the system isn’t fixed, it will surely cause huge hikes in taxes and fees down the road,” says Truscott.

Approximately 60 per cent of municipal operating spending typically goes towards public sector wages and benefits. For example, 57 per cent of Vancouver’s budget was spent on this operating expense . It is important to note, however, that public sector wages and benefits are not the only driver of spending. Municipal governments  have direct control over the other 40 per cent of operating spending, which is also growing.

CFIB’s 2017 Municipal Spending Report found that only 7 out of 152 municipal BC governments kept real operational spending at or below population growth over the 10 year period examined, which means BC cities are spending at a faster rate than they are growing.

“Spending control is a top issue for entrepreneurs in British Columbia. Small businesses are the backbone of our economy, yet they are the ones paying an unfair portion of the taxes to support ever-expanding municipal operating budgets. The reality is that current spending trends are not sustainable, and small businesses are feeling the brunt of it. Its time to understand and address the underlying causes” concludes Truscott.

For more information on arbitration, or to view a more detailed breakdown of municipal operating spending, please go to: BC Municipal Spending Watch 2017.

To arrange an interview with Richard Truscott, Vice-President, BC and Alberta, about the BC Municipal Spending Watch report, please call 604-684-5325 or email msbc@cfib.ca after 8:30 AM PST. For more information, visit cfib.ca.

CFIB is Canada’s largest association of small- and medium-sized businesses with 109,000 members across every sector and region, including 10,000 in B.C.

Source: CFIB Analysis of Vancouver Collective Agreements

 

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