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Protecting a Sustainable Public Sector for Future Generations Act, 2019

Backgrounder

Protecting a Sustainable Public Sector for Future Generations Act, 2019

Treasury Board Secretariat

Today, the legislature passed the Protecting a Sustainable Public Sector for Future Generations Act, 2019. The legislation protects services, front-line jobs and workers, now and in the future, by establishing a fair and reasonable approach to managing compensation.

Why is the government taking action now?

  • The Province's net debt will reach an estimated $353.7 billion by the end of 2019-20. Spending on interest to service the debt means this money is not available to provide critical programs to help the people of Ontario in their daily lives or to reduce taxes. A high level of debt is unfair to future generations and limits the Province's flexibility in responding to economic downturns.
  • Public sector compensation represents roughly half of all government expenditures, totaling over $72 billion annually. Every one per cent increase in compensation-related spending translates into $720 million in additional costs.

What is the government doing to manage compensation and to protect programs and services?

  • The legislature has passed the Protecting a Sustainable Public Sector for Future Generations Act, 2019. The legislation ensures public sector compensation reflects the province's current fiscal reality.
  • In Spring 2019, the government consulted with provincial public sector employers and bargaining agents on how compensation growth can be managed in a way that results in a fair and reasonable path forward that will protect vital services and front-line jobs and workers.
  • This is a fair, consistent and time-limited approach that applies across the provincial public sector.

Who does the Protecting a Sustainable Public Sector for Future Generations Act, 2019 apply to?

  • This legislation applies to bargaining and non-bargaining employees, managers and leaders, whose compensation is not otherwise moderated, across the provincial public sector, including:
    • Provincial authorities, boards, commissions, corporations, offices or organizations in which a majority of directors, members or officers are appointed or chosen by the province (including Ontario Power Generation and the Independent Electricity System Operator)
    • Ornge
    • School boards
    • Colleges and universities
    • Hospitals
    • Not-for-profit long-term care homes
    • Children's Aid societies
    • Transfer payment recipients who received more than $1 million in annual funding in 2018
    • The Ontario Public Service
  • The legislation does not apply to municipalities (including municipal authorities, corporations, boards or long-term care homes), Indigenous communities (and Indigenous community-run organizations), the Ontario Medical Association Physician Services Agreement, or for-profit organizations. It also does not apply to Broader Public Sector (BPS) executives covered by the Broader Public Executive Compensation Act, 2014.

How does the Act enable the government to manage compensation growth?

  • The legislation sets requirements that allow for up to one per cent increases to salary and overall compensation for unionized and non-unionized employees in the Ontario public sector.
  • The provisions apply for a period of three years upon the expiry of existing collective agreements. Non-bargaining employees would have a similar three-year moderation period.
  • The legislation does not impede collective bargaining or interfere with the right to strike and would not impact existing agreements.
  • The legislation does not impose wage freezes, wage rollbacks or public sector job losses. It also allows employees to negotiate terms and conditions, including compensation.
  • Additionally, Ontario's public sector employees will still be able to receive salary increases for seniority, performance, or increased qualifications as they do currently.
  • For example, under the legislation, a public sector employee making $64,000 could be eligible to receive salary increases of up to $1,900 over a three-year period - and would also be able to receive salary increases for seniority, performance, or increased qualifications, as they do currently.

Did the government consider any of the ideas that were proposed during the consultation period?

  • The government consulted with public sector employers and bargaining agents in Spring 2019 to explore how compensation growth can be managed in a way that results in public sector wages that are reasonable and sustainable. During these consultations the government heard from both Broader Public Sector employers and bargaining agents who expressed an interest in exploring a centralized benefits pooling model.
  • On October 9, 2019 the government announced its intention to consult on such a model. Consultations will explore stakeholders' needs, find common objectives, define participant parameters, and develop a viable governance framework and strategy for implementation.
  • The government will begin benefits pooling consultations this year. More information on the consultation process will be made available to benefits plan sponsors in the coming months.

Did the government consider any legislative amendments to the bill?

  • Following introduction of the legislation, the government invited members of the public and interested stakeholders to comment on the proposed legislation. In addition, the government wrote to all stakeholders that participated in the consultation, advised them to review the draft measures and to continue to provide feedback on this proposed approach throughout the summer.
  • For 15 additional weeks, these interested stakeholders and members of the public got the opportunity to comment on the proposed legislation.
  • From the feedback received from stakeholders, the government proposed amendments that will help ensure the legislation fulfills its original intent. These amendments were reflected in the final legislation that was passed by the house.

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