Media statement: Mayor Nenshi on Council compensation and donating 10% of his salary
Today, your City Council decided to accept the recommendations of the Council Compensation Review Committee. This means that Council compensation adjustments will continue to be tied to the Alberta Average Weekly Earnings (AWE) as calculated by Statistics Canada.
First of all, I want to thank the volunteer citizen committee that prepared an excellent report on City Council compensation. Their work did much to inform the debate and decisions today.
It is best to keep compensation out of the hands of politicians because that approach is predictable and transparent. While there are a number of ways to calculate compensation increases, I believe that the Consumer Price Index appears to be the most easily understood and transparent way to do this. That’s why I voted in favour of this change, which was ultimately defeated by Council. That said, there is very little difference between CPI and AWE. Over the last 20 years, the average increase has been within one percentage point of one another.
I was surprised to learn the value of the mayor’s compensation compared to mayors in other cities. For that reason, I will donate 10% of my 2012 salary to either the City of Calgary or a charity that does work in Calgary, which is consistent with what I did last year, though at a higher percentage. This donation will be in addition to my regular charitable giving in a normal year.
The reason I am structuring this as a donation rather than a pay cut is because it does not appear to be possible to change the remuneration for only one member of Council rather than for everyone.
I strongly feel that aldermen in Calgary are appropriately compensated for all the work they do. There are, for example, twice as many MLAs in Calgary as there are aldermen. A report tabled in December showed that the poorest-paid MLA in 2010-2011 earned about 30% more than a Calgary alderman. The average MLA earned about 60% more. Again, this is cash compensation only, not including benefits or transition allowance.
Your Council representatives work extremely hard to serve many citizens (more citizens per alderman than most Canadian cities, in fact) to the best of their abilities. They, as am I, are honoured to serve Calgarians every day.
Over the weekend, I researched and prepared a brief memo for my Council colleagues. The following excerpt explains my thoughts on the difference between Alberta Average Weekly Earnings and the Consumer Price Index.
Excerpt from the Mayor’s Briefing Memorandum
First of all, I want to thank the volunteer citizen committee that prepared an excellent report on City Council compensation. Their work did much to inform the debate and decisions today.
It is best to keep compensation out of the hands of politicians because that approach is predictable and transparent. While there are a number of ways to calculate compensation increases, I believe that the Consumer Price Index appears to be the most easily understood and transparent way to do this. That’s why I voted in favour of this change, which was ultimately defeated by Council. That said, there is very little difference between CPI and AWE. Over the last 20 years, the average increase has been within one percentage point of one another.
I was surprised to learn the value of the mayor’s compensation compared to mayors in other cities. For that reason, I will donate 10% of my 2012 salary to either the City of Calgary or a charity that does work in Calgary, which is consistent with what I did last year, though at a higher percentage. This donation will be in addition to my regular charitable giving in a normal year.
The reason I am structuring this as a donation rather than a pay cut is because it does not appear to be possible to change the remuneration for only one member of Council rather than for everyone.
I strongly feel that aldermen in Calgary are appropriately compensated for all the work they do. There are, for example, twice as many MLAs in Calgary as there are aldermen. A report tabled in December showed that the poorest-paid MLA in 2010-2011 earned about 30% more than a Calgary alderman. The average MLA earned about 60% more. Again, this is cash compensation only, not including benefits or transition allowance.
Your Council representatives work extremely hard to serve many citizens (more citizens per alderman than most Canadian cities, in fact) to the best of their abilities. They, as am I, are honoured to serve Calgarians every day.
Over the weekend, I researched and prepared a brief memo for my Council colleagues. The following excerpt explains my thoughts on the difference between Alberta Average Weekly Earnings and the Consumer Price Index.
Excerpt from the Mayor’s Briefing Memorandum
The adjustment formula
I think we generally agree that we should use an objective formula to set annual wage adjustments. I maintain that we should also retain and use the right to reduce (but never increase) proposed changes in times when the objective formula seems out of whack with economic reality.
Ald. Chabot has suggested that we use price inflation, as measured by the Consumer Price Index (CPI), rather than wage inflation, as measured by Alberta Average Weekly Earnings (AWE), as our gauge. Others have suggested that we use the average wage change of city employees, though some suggest this would lead to a conflict of interest, since we also set the bargaining mandate for our labour negotiations.(I find this latter argument ludicrous on its face; I can’t imagine eight members of Council together voting to cost the City millions of dollars for a few hundred dollars of personal income, but the argument has been made.)
To inform our debate, I have plotted the CPI versus AWE annual change over the last 20 years.
As you can see, CPI has been below AWE for the last seven years, but AWE was equal to or below CPI for five years before that—they do tend to converge over time. The average over this time frame for CPI was 2.4% annually, and AWE was 3.2% annually. (These numbers are skewed a bit by the relatively large differences in the last two years. From 1992-2006, the averages were 2.4% CPI versus 2.8% AWE. The abnormality of the last two years is one of the reasons I argued that we should reduce the increase last year.)- Mayor Naheed Nenshi
While conceptually it makes some sense to tie our salaries to wage inflation, I have also found that many people find it more satisfying and easier to understand when it’s tied to price inflation, since that’s what all of us feel every day when we go to the grocery store or gas pump. I therefore support Ald. Chabot’s notion that CPI should be used rather than AWE this year and going forward.