The Governor in Council on the report and recommendation of the Attorney General and Minister of Justice dated December 19, 2016, and pursuant to Section 21K of Chapter 238 of the Revised Statutes of Nova Scotia, 1989, the Provincial Court Act (the Act), hereby confirms recommendations 2 to 5 and varies recommendation 1 of the Nova Scotia Provincial Judges’ Salaries and Benefits Tribunal (the Tribunal) set out in the Tribunal’s Report dated November 18, 2016, issued by Bruce P. Archibald, Q.C., Brian G. Johnston, Q.C. and Ronald A. Pink, Q.C. (the Report) for the following reasons:
1. The Tribunal did not adequately consider the public interest and the submission from the public and reflect such interests and views in the Report addressing “Recommendation 1- Salaries”. The Tribunal found that an approximately 9.5% increase in the salary for Provincial Court Judges over the next three years would be seen as a “fair and reasonable conclusion” from the perspective of ordinary Nova Scotians (as concluded at pp. 41 and 42). This conclusion would not accurately reflect the views of reasonable people undertaking a comparison of the increase proposed by the Tribunal to the lower salary and funding increases to be received by other Nova Scotians receiving remuneration out of public funds including, for example, physicians, Crown Attorneys and public sector workers, among others, and compared to trends in private sector wage growth in Nova Scotia, nor does the Report appropriately reflect the submission from a member of the public received by the Tribunal who expressly stated, “When very large increases in salaries and benefits are given to the upper echelon of society the general public feels helpless…” (see appendix D to Report);
2. The Tribunal made a demonstrable error in not considering the entire compensation package of Provincial Court Judges in Nova Scotia, including the value of the retirement bonus known as the Public Service Award. By regulation enacted in 1986, a Public Service Award must be granted to Provincial Court Judges in Nova Scotia upon retirement or earlier in certain circumstances: see Public Service Award Regulations, N.S. Reg. 282/86, passed pursuant to the Act. The Public Service Award for a judge who has served 26 years currently exceeds $118,000. The payment is to be made on retirement although judges may request a tax-free advance payment after 15 years of service. The Tribunal’s omission to consider this retirement payment leads to inconsistency when making comparisons between jurisdictions that pay no such retirement bonus; for example, New Brunswick Provincial Court Judges appointed after April 15, 1970, do not receive a comparable supplementary payment or bonus, yet the Tribunal established a recommended salary for 2017 specifically using base salaries of Provincial Court Judges in New Brunswick as the comparator salary;
3. The Tribunal did not properly apply clause 21E(3)(e) and (f) of the Act, and did not adequately consider the differences between jurisdictions as required by the Act. The Tribunal arrived at its decision in a results-oriented and formulaic manner to achieve an outcome which simply used New Brunswick as the only comparator jurisdiction, which was a significant departure from the same Tribunal’s reasoning in their 2014-2017 Report. For the 2014-17 period, New Brunswick was rejected as a comparator jurisdiction. At that time, New Brunswick salary levels were materially lower than Nova Scotia. Specifically, in their report of September 23, 2014, when the New Brunswick salary level for Provincial Court Judges was $204,700, the Tribunal (made up of the same members) ordered a 3.8% increase for Nova Scotia Provincial Court Judges to $231,500 for 2014-15 followed by Consumer Price Index increases for each following year. This put Provincial Court Judges in Nova Scotia $26,800 per year higher than the jurisdiction the Tribunal now finds is the only true comparator for Nova Scotia. The effect and the apparent intent of the Tribunal in the current Report was to accept the submission of the Judges’ Association that achieving proximity to the national average salary level is the single most important factor, despite the many other differences between jurisdictions, including total compensation, housing costs, cost of living, pre-appointment income levels and workload. To illustrate the Tribunal’s formulaic approach, adopted to move “in proximity to” the perceived national average salary, it is noted the Tribunal has on this occasion selected New Brunswick as the only appropriate comparator (despite the difference in total compensation noted in paragraph 2, above, and that New Brunswick was rejected as a comparator for 2014-17) and then decided to recommend a further increase in the salary level above the New Brunswick level by an additional 0.9% which they said, “… is the real GDP growth forecast for Nova Scotia for 2016. The Tribunal sees this latter figure as a proxy for the likely growth in the Province’s fiscal capacity for the year …” (p. 42). There is no rational basis for this conclusion; there are many circumstances where a government’s fiscal capacity can decline despite real GDP growth, for example where GDP growth is driven by increased government spending or where government has a material prior year adjustment. Hoped-for GDP growth is not a valid proxy for government fiscal capacity nor is it relevant to the analysis called for by clauses 21E(3)(e) and (f) of the Act. In fact, GDP growth should have very little relevance to the Tribunal’s work, particularly when the Tribunal overlooks in its analysis that GDP per capita in Nova Scotia is approximately $15,000 less than the national average GDP per capita;
4. In considering if the current salary is sufficient to support recruitment of qualified members of the Nova Scotia Bar as Provincial Court Judges in Nova Scotia, the Tribunal did not identify and consider in the Report any evidence of the current actual income levels of the pool of candidates eligible for appointment as Provincial Court Judges in Nova Scotia. The Tribunal simply concluded, without evidence of actual income levels whether specific or aggregated, that many were in “elite company” (p.35) as part of the top 1% of income earners in Nova Scotia (p.35). Actual information about pre-appointment income levels and comparison to the current salary level for provincial court judges is a practical necessity when assessing whether the salary level of provincial court judges in Nova Scotia is sufficient “to attract excellent candidates for appointment as judges” as required by clause 21E(3)(c) of the Act. The Tribunal did not consider this factor. The Tribunal separately observed that both “parties” agreed that excellent and supremely qualified candidates are currently being attracted to the court (p.34).
The Tribunal made a further analytical error by concluding: “But quite frankly, many members of the pool of qualified candidates find themselves in that elite company as well. By national standards, the threshold to enter the top 1% of income earners in Nova Scotia is shockingly low. Thus, the top 1% of income earners as a negative benchmark for not raising Provincial Court judges salaries is not very helpful in relation to the question of whether current salaries will continue to attract excellent candidates as one looks forward to the next three years, which are the scope of this tribunal’s mandate” (p.35). Concluding the threshold to enter the top 1% of income earners in Nova Scotia is “shockingly low” and then disregarding it as a factor in their assessment is an analytical error. In fact, this supports the view that Provincial Court Judges should not be insulated from the economic realities faced by other Nova Scotians. The Supreme Court of Canada has noted that judicial independence exists “for the benefit of the judged, not the judges”. (see para. 4 in Provincial Court Judges Association v. New Brunswick Minister of Justice et al, 2005 SCC 44);
5. The Tribunal did not properly apply clause 21E(3)(f) of the Act which requires consideration of prevailing economic conditions which includes the current state of public finances in Nova Scotia. The modest surplus currently forecast in the Government’s statutorily mandated fiscal plan is dependent on all persons receiving remuneration out of public funds (whether executive, legislative or judicial) receiving salary increases that do not exceed the growth capacity in the fiscal plan. The fiscal plan does not contemplate making a special exception for the wages of Provincial Court Judges. In recommending to the Governor in Council that an exception be made for Provincial Court Judges and deciding the public sector wage mandate reflected in the fiscal plan created under the Finance Act, Chapter 2 of the Acts of 2010 (the Finance Act), and the legislation supporting the fiscal plan (including the yet to be proclaimed Public Services Sustainability Act, Chapter 34 of the Acts of 2015) is “not binding on the Tribunal in any sense” (p.41, emphasis added) the Tribunal gave no or inadequate consideration to the fiscal needs of Nova Scotians as set out in the fiscal plan. The independent constitutional roles of the legislature and executive with regard to budgeting, raising revenue through taxation and expenditure of public money compels the Governor in Council to vary the salary recommendation of the Tribunal.
The Tribunal has erred and/or exceeded its statutory mandate in recommending salary level increases over the next three years which will exceed amounts available in the fiscal plan as set by the executive and legislative branches of Government pursuant to Sections 5, 11 and 56 of the Finance Act. The proposed salary increase set out in Recommendation 1 is excessive in the current circumstances having regard to the prevailing economic conditions of the Province of Nova Scotia and the Tribunal did not give sufficient weight to nor properly analyze and consider the fiscal capacity of the Province.
6. In carrying out its mandate the Tribunal has made procedural errors (further reasons set out below) which resulted in the Tribunal too closely adopting the procedures of adversarial interest arbitration arising in collective bargaining processes under labour law. The Tribunal should approach their task using the procedures of an independent commission (see for example Section 45A of the House of Assembly Act, Chapter 1 of the Acts of 1992). While the Tribunal mentioned the “primacy of the public interest and the inappropriateness of conceiving of the exercise as private litigation or mere interest arbitration” (p.3), objectively assessed it is difficult to distinguish the process used by the Tribunal from “mere interest arbitration”. In the specific facts and circumstances of this Tribunal, public confidence in the actual and apparent independence, objectivity and effectiveness of the Tribunal could be called into question by reasonable members of the public as a consequence. Procedural errors may have contributed to the Tribunal’s apparent substantive errors set out in paragraphs 1 to 5 above.
Additional Reasons
The Tribunal is recommending a salary increase for Provincial Court Judges of approximately 9.5% over three years including an increase of 5.45% in the first year, which far exceeds the fiscal capacity of the Province.
The Supreme Court of Canada has stated tribunals and commissions established to be the buffer institution between Governments and the Judiciary need to be objective, fair and independent to preserve judicial independence “not for the benefit of the judges but for the judged” (supra).
Although the Tribunal has authority to determine its own procedure (Section 21D of the Act), it must do so in a way that meets the Supreme Court of Canada’s direction. The process contemplated by the Act is not an interest arbitration in a labour law context but a sui generis constitutional safeguard which is intended to recognize the separateness and mutual independence of the judiciary from the executive and legislative branches of Government.
The Governor in Council has concluded the Tribunal has adopted all of the trappings and processes of interest arbitration in collective bargaining in labour law and did not in its processes, in its reasons or in its recommendations properly recognize or acknowledge the separate constitutional authority of the legislature and executive in relation to budgeting, raising revenue through taxation and the expenditure of public money. This is a procedural error which has impacted its effectiveness and, in the circumstances of this Tribunal, could be seen by a reasonable person as raising legitimate questions of independence and objectivity.
The provincial fiscal plan is a legislative requirement of the Finance Act and it is prepared under the authority of the Minister of Finance and Treasury Board as a member of the executive branch, in good faith, in accordance with the requirements and subject to the accountabilities established by the legislature. The legislature and the executive have constitutional accountability to the public for expenditure of public funds.
Salary increases of the magnitude recommended by the Tribunal for public sector wages of any branch of Government are not contemplated in the growth capacity of the provincial fiscal plan. Evidence of this was placed before the Tribunal. The opportunity for questioning of the Director of Policy and Fiscal Planning with the Nova Scotia Department of Finance and Treasury Board by the Tribunal and cross examination by the Association of Provincial Court Judges of Nova Scotia was provided by the Tribunal. The Tribunal made no findings in its Report that the evidence of the Government or the witness was inaccurate in any way. The Tribunal did not find or suggest there were any errors in the fiscal plan which has been subject to the checks and balances of the legislative process. Rather the Tribunal chose to, in effect, usurp the statutory authority of the Minister of Finance and Treasury Board, the Minister’s civil service staff and the legislature which approved the fiscal plan and reach its own view on economic conditions and its likely effect on Government finances based on an expressed preference for the forecasts of private sector economists. In doing so, the Tribunal has discarded the views of government economists. In recommending an approximately 9.5% salary increase over three years, the Tribunal concluded despite the evidence presented it did not accept “that economic conditions must exclude fair and reasonable augmentation of judicial compensation for Nova Scotia’s provincial court judges, particularly in light of the more optimistic private sector forecasts mentioned above.” (p. 39)
It is not inconsistent with the constitutional principle of independence of the judiciary to require the Tribunal to stay within the scope of the Finance Act, an Act of the Legislature which expressly prevails in the event of a conflict with any other Act of the Legislature (see Section 5 of the Finance Act) or to give constitutionally valid reasons why it does not intend to stay within the scope of the Finance Act and the fiscal plan in making recommendations.
Saying that it prefers the forecasts of various private sector economists over those of the permanent professional staff of the Nova Scotia Department of Finance and Treasury Board is not a constitutionally sufficient reason to disregard the Province’s fiscal plan, which was submitted to the legislature and in evidence before the Tribunal. Procedurally, this is particularly so when a civil service staff member, the Director of Policy and Fiscal Planning for the Nova Scotia Department of Finance and Treasury Board, has been called to appear before the Tribunal to be subject to cross examination and no findings of inaccuracy or error were found by the Tribunal (whereas the “more optimistic private sector forecasts” were accepted and relied upon by the Tribunal without any similar opportunity for cross examination).
Independence of the judiciary has three key components: security of tenure, administrative independence and financial security. The Governor in Council seeks to ensure these key principles are respected yet remain within the scope of the Province’s fiscal plan.
The Tribunal is a creature of statute. The Supreme Court of Canada has determined it must carry out its statutory mandate effectively, objectively and independently. It is a procedural error for the Tribunal to make its recommendations without regard to the accountabilities established by the Finance Act in light of Section 4 thereof which provides: “Where there is a conflict between this Act and any other Act of the Legislature, this Act [the Finance Act] prevails unless the other Act [the Provincial Court Act] provides that the other Act or a provision of it applies notwithstanding this Act”.
Put simply, the Minister of Finance and Treasury Board and Government have a statutory obligation to pursue policy objectives in accordance with the principles of responsible fiscal management. This obligation has been set by the legislature in the Finance Act. The Government is accountable to the legislature and to the public for responsible fiscal management. Approximately 52% of the annual provincial budget consists of public spending on wages and benefits (a portion of which is salary and benefits of Provincial Court Judges). The Minister of Finance and Treasury Board is required to regularly report to the legislature on the state of public accounts to create transparency and public accountability for public spending. It is the role of the legislature, through the budgeting and public accounts process, to test and challenge the fiscal plan. For this accountability to be meaningful, Government and not the Tribunal (whether acting as a Commission or, in a manner akin to an arbitration board as in this case) which must be the final decision maker on any public spending which is outside of the scope of the fiscal plan.
Arbitrators and judicial salary tribunals, as unelected bodies with accountability only conferred by their enabling legislation, should not set or recommend salaries that, based on the evidence before them, they know will be outside of the growth capacity of the fiscal plan which has been properly created by the executive and approved by the legislature, unless they have constitutionally valid reasons for departing from the strictures of the Finance Act. The Finance Act prevails in the event of a conflict with other provincial legislation, unless expressly stated otherwise.
The procedures adopted by the Tribunal should only be a shield from executive or legislative intrusion and improper influence which could threaten independence of the judiciary, not a sword which could have the appearance of giving judges “special status” (as concluded by the Tribunal at p. 33). In the unique circumstances of this particular case, by adopting an arbitration-like process and concluding the Government’s wage mandate “was not binding on the Tribunal in any sense” (at p.41, emphasis added) adoption of the Tribunal’s Recommendation 1 would have the effect, and be seen by members of the public, as placing judges outside the scope of the fiscal plan and the common risks of all citizens arising from the fiscal realities of their home province.
Public spending is a common burden which gives rise to common benefits and is an expression of the common, democratically determined will of all Nova Scotians. Except in extraordinary circumstances, which Government must decide upon and be accountable for, Governments should only spend what Nova Scotians can afford to spend. What Nova Scotians can afford to spend is set out in the fiscal plan and annual budget which is presented to and thoroughly tested by the legislature each year in accordance with our constitutional and democratic processes. The Tribunal’s recommendation on salary is not within the growth capacity of the fiscal plan. The Tribunal gave no reasons why the fiscal plan should not apply in this case other than preferring “private sector forecasts” of anticipated GDP growth, which is not in fact correlated with growth in fiscal capacity of the Province.
For all of the foregoing reasons, including the Tribunal’s failure to consider the comparative financial benefit of the retirement payment known as the Public Service Award in its salary analysis, the Governor in Council determines that the current salary level of Provincial Court Judges is sufficient in Nova Scotia to attract excellent candidates for appointment as judges and safeguard the independence of the Judiciary. In the circumstances, an appropriate increase is 1% for the 2019-20 fiscal year to approximate the salary adjustments already set for Crown Attorneys, the funding increase for physicians, and the proposed increases of other Nova Scotians receiving salaries out of public funds, including members of the Legislative Assembly, all of whom have had or will have a salary freeze for two years. The Governor in Council therefore varies recommendation 1 accordingly to provide for a 1% increase in salary level for the 2019-20 fiscal year and confirms recommendations 2 to 5 of the Report.