12 May 2015

When is a cut not a cut? #nlpoli

A couple of years ago, the province’s auditor general noted that a Crown agency responsible for developing an integrated health information system was paying salaries to its employees that were way outside provincial government guidelines.

The Telegram reported last fall that the problem was still unresolved 18 months after the auditor general issued his report. This was no small matter. Salaries grew 354% between 2007 and 2012, according to the Telegram. In one case, the salary for a senior executive member jumped by 119%.

Last week, and in the wake of an updated report by the province’s auditor general, Canadian Press reported that health minister Steve Kent had cut salaries at NLCHI. They’d save $50, 000 in one case and altogether the salary cuts would save $330,000.

Small problem.

Kent hadn’t actually cut anything.

As the CP story noted, the salary changes wouldn’t happen until September 2016. Until then, of course, they’d continue getting the same salary they’d had since 2013 when the AG report appeared.

The story also missed another little detail that was crucial to understanding what was actually happening. Between now and September 2016, the agency will disappear as a separate organization. Under plans announced in the recent provincial budget, it will become part of a new agency that will provide a range of technical and administrative support to the province’s regional health authorities.

In other words, those people with the high-paying jobs – especially high-paying in the most senior positions – won’t have to face an actual cut in pay. The people who wind up out of a job as a result of the merger would qualify for severance and other payments for being laid off from their jobs. They will go on collecting their full salary in the meantime.

Those who want to move along to other jobs have about 18 months to do so. They wouldn’t get any sort of severance when they quit, unless their contracts allow for a separation payment of some kind. Let’s assume they don’t. Not to worry:  they might find jobs in the new agency Kent is creating. In that case, they might just be able to work it out such that they don’t see any real cut in pay. They could move from their current job to a new one. If the pay scales are comparable, the payroll people would typically freeze their salary at the current level and leave it there until such time as the salary scales matched up.  If the people with the high-paying jobs finagle a promotion, they could actually get a raise.

There are situations where moving to a new job in the public service would involve a cut in pay.  But there are quite a few ways these people might never lose a penny.

A cut isn’t really a cut until it happens.  And you can’t really save any money until you make the cut.