Tuesday, April 10, 2007

How Much is Good Government Worth?

The question of how much our elected representatives should be paid is always a political hot potato (no "e", Mr. Quayle). This recently came up in the MSM, and was also discussed at daveberta's blog.

There tend to be 2 schools of thought on this issue. The first is to pay well enough that you attract the "best and brightest": CEO's, Doctors, Lawyers, etc. That by paying in excess of $100,000 per year, you're a lot more likely to get people of high quality and character in the positions. Under normal circumstances, this might be true. However, this is politics. Once you start offering more and more to elected officials, you may make the position more appealing to honest people of good character who truly want to make a difference, and won't have to suffer a significant downgrade in their pay in order to do so. BUT, you may also begin to attract a less desirable element to your candidate nomination processes, in ALL parties. Case in point: Calgary West. If MP's were paid, say, $200,000 in base pay, you would have all manner of sneaky, slimy, scummy people taking every shortcut and stacking every Tory nomination meeting (IF they ever get around to having one!) trying to get named the Tory candidate - because, for all intents and purposes, it's a slam dunk. You win the nomination, you get elected (barring the Kirk Schmidt juggernaut). So, if you can find enough ways to cheat and steal the nomination, it's worth $200,000 to you.

Granted, this is an extreme example. But, it would certainly happen in a lot of ridings where one party is considered the "dominant" one. The federal Liberals are having trouble fielding candidates for the next election, but do you think they're having trouble in the ridings they are assured victory, or at least a good chance at it? No. They can't find people to run in many of these ridings, because the potential candidates know they'd be a sacrificial lamb to the slaughter of whatever party is dominant in that riding. Increasing MP pay won't make this any less frequent - it will just increase the number of people running for the dominant party's nomination in "barely contested" ridings.

Ken Chapman raises a good point - we shouldn't reward longevity with the gold-plated pensions that we do. Here's why: Because when someone is elected, their entire focus should be on serving the people of their constituency. BUT, if they know that "in 10 years, I'll be pension eligible", or "4 more years until I hit the next pension tier", their focus will NOT be on representing those who elected them - it will be on GETTING RE-ELECTED. Don't get me wrong, politicians should, as a general rule, want to keep their jobs. But by making it worth $120,000 per year for the rest of their lives, they will do or say ANYTHING to gain re-election, knowing full well that, so long as they win that seat for one more term, they never have to follow through on ANY of it, and their pension will be secure.

There has to be a better way... but I can't figure out what it should be.

Nation? Any ideas?

- ES (bitten by the Facebook bug)


Duncan said...

When considering the pay of elected representatives, it is also important to keep in mind why we began paying them in the first place - to ensure any could run for office, even those from lower socio-economic status groups. $300K a year certainly sounds like a lot, and it is, but I still think the vast majority of politicians are not in it for the money. It may earn some, but it is also a pretty expensive position to hold as well. Dinners, commitments and more all add up at the end of the day, hence the tip of the hat by making a portion of the remuneration tax-free.

Kirk Schmidt said...

ES, my thoughts on this could probably be summed up in a post I had written last April about a similar topic

For those who don't feel like reading it, here's probably the most important part:

"Here’s what I think you’ll find in the end. High salaries will attract upper-business people with lots of real world experience in industry. People who want to make a difference will come in no matter what the salary is, provided that they’re not going into huge debt by becoming an MP. The corrupt seek power and money, and so high salaries will attract those as well, but even the prospect of power may be enough drive. No matter what the salary, I think you’re going to see corruption and brilliance together in parliament…

So the question is not how much or how little we should pay to keep the corrupt out - but what is it worth to subject yourself, your family and friends, to complete and utter public scrutiny?"

Enlightened Savage said...

Kirk: To answer your question, "more than they currently pay, or I would have run by now". :)

Thanks for the input, fellas... anyone else?

Anonymous said...


As I am sure you know, MPs receive about 2x the compensation of their Alberta-based provincial counterparts. In addition, MPs receive a pretty nice pension.

I don't begrudge the pay package to MPs, even if the newest backbencher makes as much as the Premier of Alberta, which is currently the case. In addition to being in the public eye full-time, there is a significant travel and event nature to the role. Not to mention the cost of aspirin necessary to function ;-)

But I would be in favour of knocking out the pension, and upping the current compensation. Save your own way to retirement. I think in this way, elected leaders would themselves feel certain issues more closely to that of the public (e.g. Income Trusts), and would also, as some have said, be less focused on re-election as a means to long term retirement planning.

Kirk Schmidt said...

Anon - You make a very good point. Currently it's what - 6 years in parliament and then you collect your pension once you reach 65? And the pension is based on your best-paid years in parliament... Yeah, it's a road to complacency for some, methinks (obviously not all, but I'm sure some people fall into this category).

Here's what I wonder, and I pose this question to you all... Given the nature of politics and the evils we've seen with conflict-of-interest before, what would one suggest as the best way for an MP to save for retirement, given no pension? Obviously any mutuals, stocks, etc., lead to a potential conflict. Does one just *bank* the money until one is off of the Hill, and then invest?

I would wonder if something like a parliamentary pension where it was contribution based would be in order - where you still don't invest personally in any specific funds - but that you contribute to your own retirement still? Obviously this eliminates, once again, the 'man of the people' stance of being subject to the same issues as the public with investing, but would eliminate conflict.

This seems to me like an argument primarily consisting of: "We either let a politician invest money how they see fit, and hope (and control) the power they wield to become richer through those investments *cough*conflict-of-interest*cough*, or, do we limit what politicians can do with their investment money, but in turn they are less in tune with everyday peoples' investing issues."

something to think about.

Anonymous said...


Specific securities (specifically stocks) could lead to a conflict. Mutual funds... I don't think so, at least not in any measurable way. As an example: if you bought into an energy-oriented mutual fund, and then, as Energy Minister, you advocated zero taxes on energy companies you could drive the value of energy stocks up. But that would be taking one's imagination to quite a stretch, since (a) it would be doubtful that such a major macroeconomic shift could be successfully put forward as public policy and (b) in order for it to affect your own mutual fund, it would have to be something that would affect all energy companies. Kind of like moving mountains just to improve the view from your doorstep - a lot of work for little direct gain. So, no, I don't see a problem with an elected official holding a mutual fund.

It is my understanding that Ministers must forgo investing in common stocks, and place what they have in a blind trust or a mutual fund. So mutual funds would appear to be Ok.

Many companies have defined contribution pension plans (not defined benefit) which provide employees with a list of eligible mutual funds. Employees then contribute a portion of their salary, which is matched to some degree by their employer, and those funds are invested accordingly. This is the way to go, in my opinion.

Then Jack Layton and Olivia Chow could really be one of "Canada's working families". Sorry, could not resist the partisan shot, but having said public figures purport to represent me - a "working" Canadian - when they do not have to save for their own retirement is hypocritical in my view. Then again, maybe I am not considered a "working Canadian" because (a) I don't belong to a union, and (b) I don't vote NDP.

Kirk Schmidt said...

anon - I thank you for engaging in this conversation and for your responses. I think you're right - a plan that MPs have the choice to contribute their own money to is a better option than the status quo.