By Franco Terrazzano

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Opinion: Ottawa rewards failure with taxpayer-funded bonuses Back to video

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Bonuses are for people who excel at their job, not for people who fail at their job. Finance Minister Chrystia Freeland, who is ultimately the federal government’s paymaster, needs to be reminded of that.

The Bank of Canada handed out $20 million in bonuses in 2022 even as it hiked interest rates seven times and inflation reached a 40-year high. The central bank’s overarching objective is to keep inflation around “two per cent inside a control range of one to three per cent.” But though inflation climbed fully 4.8 percentage points above its target, the Bank of Canada gave 80 per cent of its workforce a bonus of $11,200 per person on average.

The Bank had also failed to meet its inflation target in 2021, when it handed out $18 million in bonuses — on the heels of $16 million in bonuses in 2020.

True, prices went up around the world, but Canada’s 2021 inflation rate was “among the very highest of any industrialized country,” according to the Fraser Institute. At 6.8 per cent, it was higher than in 74 other countries in 2022, according to the International Monetary Fund. Peers like Japan (2.5 per cent), Switzerland (2.8 per cent), Israel (4.4 per cent), Korea (5.1 per cent), Norway (5.8 per cent), France (5.9 per cent) and Singapore (6.1 per cent) all had lower inflation than Canada.

In many areas of life, accountability, or lack of it, is key. In 2022, Bank of Canada deputy governor Paul Beaudry acknowledged “we haven’t managed to keep inflation at our target,” adding that Canada’s central bank “should be held accountable.” Handing out bonus cheques is an odd way to hold your organization accountable.

Official Opposition Leader Pierre Poilievre is right to point out a growing cleavage in Canada: “If a working Canadian fails to do their job, they get fired,” but when government bureaucrats “fail to do their job, they are rewarded with huge tax-funded bonuses.” Poilievre told the Canadian Taxpayers Federation he would “cancel bonuses for failing government authorities and that would include, for example, the Bank of Canada.”

Rewarding failure with bonuses isn’t the exception in Ottawa, it’s the rule.

The Canada Mortgage and Housing Corporation “exists for a single reason: to make housing affordable for everyone in Canada,” according to its website. But polling from Ipsos and Global News shows 63 per cent of Canadians who don’t currently own a home have “given up” on ever owning one, while almost 70 per cent of respondents said home ownership is “only for the rich.” Yet the CMHC handed out $48 million in bonuses in 2020 and 2021, years in which housing prices increased by 13 per cent and 21 per cent, respectively.

“The Canada Infrastructure Bank last year paid bonuses to all six executives and every single manager at the equivalent of more than $85,000 apiece,” according to the investigative journalism service Blacklock’s Reporter. “Bonuses were paid even as a Commons committee recommended Parliament close the Bank as a costly failure.”

VIA Rail handed out bonuses, raises and lavish executive pay while it lost hundreds of millions of dollars and took a taxpayer bailout. Destination Canada, a Crown corporation dedicated to promoting Canadian tourism, gave employees bonuses and raises even while tourists were legally prohibited from entering the country during the pandemic.

Finance Minister Freeland doled out an extra “$42 million to help CBC/Radio-Canada recover from the pandemic,” according to the Post. The CBC has handed out $46 million in bonuses since the onset of the COVID-19 pandemic.

Bonuses are also raining down within government departments. The feds dished out $1.3 billion in bonuses since 2015, despite a report from the Parliamentary Budget Officer that found “less than 50 per cent of (performance) targets are consistently met.”

Don’t get me wrong. “Bonus” is not a four-letter word. Over the last few decades more and more private-sector compensation has become performance-based. At least in principle, there may be a taxpayer-case to use the private-sector model within government, including rewarding success with bonuses and punishing failure with pay cuts and pink slips. In theory, such methods could encourage efficiencies while holding leadership accountable for failures.

But here’s the current problem: the feds only use half the private-sector model. The government showers itself with bonuses. But no one ever gets fired, pay cuts are almost as rare as firings and the cost of the bureaucracy only balloons.

Is anyone at the Bank of Canada held accountable when Canadians can’t afford gasoline or groceries? Is the CMHC held accountable when Canadians can’t afford homes? There have been no pay cuts at the $20 million or the CMHC since the beginning of 2020.

The obvious way for the Trudeau government to start chipping away at its $1-trillion debt is to stop handing out bonuses as if they were participation ribbons.

Franco Terrazzano is federal director of the Canadian Taxpayers Federation.