Nearly seven months after the Ford government backtracked on its controversial wage suppression legislation, Ontario taxpayers have shelled out almost $7 billion in retroactive payments to public sector employees.
The payouts come successive courts deemed that Bill 124, which capped public sector wages at one per cent per year over three years, interfered with the constitutional rights of unionized workers.
Almost immediately after losing a second successive court battle over the law, the Ford government was forced to repeal the legislation altogether, triggering arbitrated settlements that gave employees in education, health care and other sectors billions of dollars in back pay.
“For this year, $4.1 billion for Bill 124 retroactive payments,” Treasury Board President Caroline Mulroney said on Wednesday. “The total $6.7 is over two years.”
The legislation, first introduced in 2019 by now-finance minister Peter Bethlenfalvy, was sold as a cost-saving measure designed to “protect vital services and front-line jobs.”
Unionized workers in hospitals, long-term care homes, children’s aid societies, schools, colleges, universities and beyond had their salaries capped, something the government said at the time would keep the total wage increase to $720 million a year.
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The policy was challenged in court by unions, which argued that their Charter rights were infringed upon — an argument that two Ontario courts agreed with. They deemed the law unconstitutional.
During an unrelated news conference near Queen’s Park on Wednesday, Bethlenfalvy suggested that his government has few regrets despite the retroactive payments.
“Absolutely not,” Bethlenfalvy said when asked whether he felt the legislation was a bad idea.
“We are responsible for all aspects of building Ontario, which includes respecting taxpayers’ money and balancing the demands of our great workers in the province,” Bethlenfalvy added. “We ran again in 2022 and got a bigger majority, so I feel very good that the people of Ontario gave us a vote of confidence.”
Critics argue, however, that the legislation caused more damage than the government is willing to admit.
Union leaders have pointed to Bill 124 as being directly responsible for the exodus of nurses from Ontario’s hospital system after the height of the pandemic and say many felt demoralized, opting to go to private nursing agencies in search of higher wages.
“We all paid the price,” NDP finance critic Catherine Fife said. “I think everybody lost with Bill 124.”
Fife and others also believe the final cost of Bill 124 has yet to be calculated.
Ontario’s financial accountability officer has projected the overall cost could add up to $13 billion because the wage increases will now be baked into salaries in future years — a fact that Mulroney confirmed.
“Going forward compensation increases will be reflected in the base compensation within each ministry,” Mulroney said.
Fife said if the government added in the cost of legal fees, higher wages and money paid out to nursing agencies, the price tag would be much higher.
“I don’t think this government knows what the final tab is going to be,” Fife said.
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