Deputy Government House Leader Clarifies Information Surrounding MHA Salaries;
Comments on Pensioners

The Honourable Tom Marshall, Deputy Government House Leader, today clarified misinformation surrounding a recent pay increase for Members of the House of Assembly (MHAs). The House of Assembly Accountability, Integrity and Administration Act, commonly referred to as �The Green Act�, was passed by the House as presented in the Green report in June 2007. This legislation implemented the compensation system proposed by Chief Justice Derek Green in his review of the workings of the House of Assembly.

�Under this legislation, MHAs are to receive the same salary increase, decrease or freeze as that which was received by the executive of the public service in the previous fiscal year,� said Minister Marshall. �As per the legislation, on July 1, 2009, MHAs received this increase to coincide with the increase received by the executive branch of government in July 2008 and that given to all bargaining unit employees who received their eight per cent pay increase retroactive to April 1, 2008. This compensation is clearly laid out in the act which was widely debated and reported upon by the media at the time of its passing. There was nothing underhanded or unaccountable about this process.�

Additionally, Minister Marshall pointed out that the work currently being undertaken by the committee to review compensation for Members of the House of Assembly covers a much wider range of items than simply salaries. To review MHA compensation, Chief Justice Green recommended that once during each General Assembly, the House of Assembly should cause an independent committee to conduct a review and prepare a report respecting the salaries, allowances, severance payments and pensions to be paid to Members during the next General Assembly (Recommendation #63). This Members� Compensation Review Committee has recently concluded hearings and is scheduled to report October 31, 2009. Once changes are recommended and accepted, they will form the basis for salary adjustments on a go forward basis.

Chief Justice Green�s Report is available on the Provincial Government website at www.gov.nl.ca/publicat/greenreport/. For more information see backgrounder below.

The minister also commented on the concerns being raised by some public service pensioners. �I feel compelled to point out that public sector pensioners are receiving the benefits that their contributions, matched by the employer, were designed to pay for, including indexing of up to 1.2 per cent for most pensioners upon reaching age 65,� said Minister Marshall. �To fully index the Public Service Pension Plan and the Teachers� Pension Plan on a go forward basis would increase the plan obligations by almost $2 billion. Even an ad hoc increase of four per cent would increase plan liabilities by $160 million. Many, many seniors in this province do not have any pensions at all and the Provincial Government has a responsibility to all senior citizens. We have provided substantial assistance through specific measures such as enhancements to the seniors� benefit, general tax reductions, the home heating fuel rebate, elimination of insurance premiums tax, enhancements to the Newfoundland and Labrador Prescription Drug Program, and other significant investments. Additionally, our government stepped up to the plate and secured both the Public Service Pension Plan and the Teachers Pension Plan with an investment of almost $3 billion.�

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Media contact:
Larry Wells
Executive Assistant to Minister Marshall
709-637-2575

BACKGROUNDER

Prior to 2007, the compensation system for MHAs comprised two components, an indemnity and a non-taxable allowance. This system dated back to the Morgan Commission of 1989. The structure and history of increases made to MHA compensation between 1989 and 2006 is detailed in Chapter 9 of Rebuilding Confidence, Report of the Review Commission on Constituency Allowances and Related Matters (the Green Report).

In his report, Chief Justice Green recommended that the non-taxable allowance component be eliminated and the salary of MHAs should as of July 1, 2007, be adjusted to a taxable amount of $92,580, representing the amount of the existing indemnity plus a taxable amount equivalent to an after-tax value of the existing non-taxable allowance (Recommendation #56). He further recommended that adjustments to the basic level of remuneration of MHAs may, until the review of salary levels during the next General Assembly, continue to be made based on annual changes in the executive pay plan of government (Recommendation #61).

Acting on Chief Justice Green�s recommendations, government passed the House of Assembly Accountability, Integrity and Administration Act. Below is the relevant section of that legislation:

Adjustments to salaries, expenses and severance
15.
(1) An adjustment to salaries under subsections 11 (1) and 12 (1) shall not be made and an additional non-accountable allowance shall not be created or provided for except:

(a) in response to a recommendation of a members' compensation review committee constituted  under section 16 ; and
(b) by introduction of an amending Bill in the House of Assembly with votes on first, second and third readings being taken on separate days.

(2) Notwithstanding subsection (1), the salary of a member under subsection 11 (1) and the salaries for the positions referred to in subsection 12 (1) shall be adjusted annually on July 1 by a percentage equivalent to the annual increase given in the previous year in the executive pay plan of the government until the next members' compensation review committee appointed under section 16 reports, and amendments are made under subsection (1) in response to the recommendations of that committee.

(3) Subsection (2) shall cease to have effect following the submission of the next members' compensation review committee, and the appropriateness and manner of providing for periodic increases in a member's salary during the period between the appointments of subsequent committees shall be dealt with by those committees.

2009 09 23                                                 11:45 a.m.