Nanos has started its nightly tracking, and the first batch of results is here. This is the third poll in a row where the Tories are third in the national vote share.
The updated projection shows:
CON - 123, -3 (29.3%, -0.8%)
NDP - 120, -2 (31.6%, -0.4%)
LIB - 94, +5 (29.0%, +1.1%)
GRN - 1 (5.2%, +0.1%)
BQ - 0 (3.9%)
This is another good poll for the Liberals in ON: a 6-point lead over the Tories, and a 13-point lead over the NDP.
Note that without the turnout adjustment, I would have:
NDP - 124 (32.3%)
CON - 112 (27.6%)
LIB - 101 (29.6%)
GRN - 1 (5.5%)
Methodological note: Nanos also produced numbers for the last week of its weekly tracking (which predates the nightly tracking), but only the national numbers are available through CTV. Thus, for now, those numbers are being ignored. If the breakdown becomes available, I will update this projection, but any change would be slight, as that poll would only have a weight of around 2%. Update: The breakdown became available, and unsurprisingly did not cause any change in the seat projection. The only change made to the above numbers is that the Conservative projected vote share went up by 0.1%.
Monday, September 7, 2015
Sunday, September 6, 2015
First Projection of 2015: The Situation Across the Country
BC: The vote shares here are very similar to the national vote shares, but with the Liberals a little lower and the Greens higher. The NDP's solid lead from early August has turned into a wafer thin lead. The Liberal vote is inefficiently distributed: it's looking very difficult for them outside the city of Vancouver and the North Shore. From the provincial numbers, the Greens look far from winning a second seat, but if the regional breakdown in the recent Insights West poll, which gave them 31% on Vancouver Island, is correct, Esquimalt--Saanich--Sooke could go Green.
AB: Still solid Conservative territory, but the NDP has a real shot at several Edmonton ridings (Griesbach is their best bet for a second seat) and Lethbridge, and the Liberals also have a shot in Edmonton Centre (a three-way race) and can fantasize about some Calgary ridings.
SK: The new map, which created urban ridings, will help the NDP: they will likely win Saskatoon West and Regina--Lewvan, and are in a tight race with the Tories in all other Saskatoon and Regina ridings (except, of course, Ralph Goodale's Wascana).
MB: Three of the five polls with specific Manitoba numbers have the Liberals in first place! The NDP is struggling badly, possibly due to the unpopularity of the provincial party. The Grits, after being nearly shut out in 2011 (Kevin Lamoureux won by just 36 votes), are likely to win multiple seats in the Winnipeg area.
Note on MB/SK: The current projection assumes that the swing is uniform across MB and SK. This is likely underestimating Liberal support in MB, and overestimating it in SK (with, of course, the reverse for the Tories and NDP). The former means that the Liberals could well be currently ahead in more than 4 MB seats, while the latter has little effect.
ON: As discussed in yesterday's post, if the Liberal vote share keeps increasing at the expense of the NDP's, we could end up with a three-way tie in the projected seat count rather soon. More GTA specific numbers would help - if the Liberals are up there more than elsewhere in Ontario (likely since the reverse was true in 2011), it could mean up to 5 more seats for them than with a uniform swing. Indeed, although I currently have the Liberals 2% ahead of the Tories, the latter still marginally lead the ON seat count due to an inefficient distribution of Liberal support.
QC: The NDP is projected to win every seat in Québec outside the Island of Montréal (where the Liberals should make small gains) and the area just south of Quebec City (where the Tories should hold on to a few ridings). The only two exceptions are Brossard--Saint-Lambert, a Liberal/NDP tossup, and Lac-Saint-Jean, a Conservative/NDP race. Apart from Louis Plamondon's seat, the Bloc's best shots at avoiding extinction are in Eastern Québec, but Forces et Démocratie is making their arduous task even more difficult.
ATL: This is the one area of the country where the Liberals are currently ahead in a majority of seats. The Tories are in danger of being wiped out outside of Southern and Western NB - except in that area, all of their current leads are tenuous. The NDP will keep their existing seats, but have few prospects for gains.
Overall, due to the situations in ON and MB, the situation is probably even tighter than in the projection: the Liberals might be closer to 95, while the NDP and Conservatives might be closer to 120. If the Liberal upswing continues, all three parties could soon be between 100 and 120 - setting us up for a potential constitutional crisis after the election... But that's a topic for another day.
AB: Still solid Conservative territory, but the NDP has a real shot at several Edmonton ridings (Griesbach is their best bet for a second seat) and Lethbridge, and the Liberals also have a shot in Edmonton Centre (a three-way race) and can fantasize about some Calgary ridings.
SK: The new map, which created urban ridings, will help the NDP: they will likely win Saskatoon West and Regina--Lewvan, and are in a tight race with the Tories in all other Saskatoon and Regina ridings (except, of course, Ralph Goodale's Wascana).
MB: Three of the five polls with specific Manitoba numbers have the Liberals in first place! The NDP is struggling badly, possibly due to the unpopularity of the provincial party. The Grits, after being nearly shut out in 2011 (Kevin Lamoureux won by just 36 votes), are likely to win multiple seats in the Winnipeg area.
Note on MB/SK: The current projection assumes that the swing is uniform across MB and SK. This is likely underestimating Liberal support in MB, and overestimating it in SK (with, of course, the reverse for the Tories and NDP). The former means that the Liberals could well be currently ahead in more than 4 MB seats, while the latter has little effect.
ON: As discussed in yesterday's post, if the Liberal vote share keeps increasing at the expense of the NDP's, we could end up with a three-way tie in the projected seat count rather soon. More GTA specific numbers would help - if the Liberals are up there more than elsewhere in Ontario (likely since the reverse was true in 2011), it could mean up to 5 more seats for them than with a uniform swing. Indeed, although I currently have the Liberals 2% ahead of the Tories, the latter still marginally lead the ON seat count due to an inefficient distribution of Liberal support.
QC: The NDP is projected to win every seat in Québec outside the Island of Montréal (where the Liberals should make small gains) and the area just south of Quebec City (where the Tories should hold on to a few ridings). The only two exceptions are Brossard--Saint-Lambert, a Liberal/NDP tossup, and Lac-Saint-Jean, a Conservative/NDP race. Apart from Louis Plamondon's seat, the Bloc's best shots at avoiding extinction are in Eastern Québec, but Forces et Démocratie is making their arduous task even more difficult.
ATL: This is the one area of the country where the Liberals are currently ahead in a majority of seats. The Tories are in danger of being wiped out outside of Southern and Western NB - except in that area, all of their current leads are tenuous. The NDP will keep their existing seats, but have few prospects for gains.
Overall, due to the situations in ON and MB, the situation is probably even tighter than in the projection: the Liberals might be closer to 95, while the NDP and Conservatives might be closer to 120. If the Liberal upswing continues, all three parties could soon be between 100 and 120 - setting us up for a potential constitutional crisis after the election... But that's a topic for another day.
Saturday, September 5, 2015
First Projection of 2015: Tories Still Lead, but...
Finally, it's time for the campaign's first projection! I have the Tories marginally ahead of the NDP in the projected seat count:
CON - 126 (30.1%)
NDP - 122 (32.0%)
LIB - 89 (27.9%)
GRN - 1 (5.1%)
BQ - 0 (3.9%)
The Conservative lead, however, is just about as fragile as it gets:
1. The 4-seat margin is extremely slim.
2. The NDP actually leads in the popular vote.
3. The Tories have the edge only because I am adjusting vote shares, as described below, in order to account for voter turnout. Without this adjustment, the NDP would have 126 seats, and the Conservatives would be on 119; the Liberals would tie the Tories for second place in the vote share.
4. Ontario, an almost perfect three-way tie during much of August, is showing movement toward the Liberals: all five polls from this week put the Liberals at least 7 points ahead of the NDP in Ontario. If Ontario's anti-Conservative vote coalesces, things would get really ugly really fast for the Tories. (Not Ignatieff-ugly, since the Tories have a solid base in the rural West, but potentially Dion-ugly.)
A few methodological notes about projections for this campaign.
- I am not taking regional numbers into account until later in the campaign. Regional numbers are important: in 2011, the observation that the GTA was moving more strongly away from the Liberals toward the Tories than the rest of Ontario helped me put the Tories closer to a majority than most other projection blogs. (Update: This means that there's a decent chance that the Liberals are up in the GTA more than elsewhere in Ontario this time. If so, they would win a few more seats than projected.)
- As mentioned above, I am adjusting poll numbers (except for polls explicitly applying a likely voter model) to account for the greater propensity of Conservative supporters to vote. Roughly speaking, I assume that these electors are 10% more likely than supporters of other parties to cast a ballot. (Update: I should note that this is roughly in line with the results of Angus Reid's Institute's likely voter model according to their most recent poll.) This boosts the Conservative vote share by about 1.5%, and depresses the Liberal and NDP vote shares by about 0.5% each. It is important to note that this adjustment may be a bad idea (Conservatives may be demoralized this time), or it may not be sufficient (an even greater adjustment would have been required in 2011).
- The way in which I'm weighing polls has changed slightly. The base weight of a poll is still the square root of its sample size. Any polling day within 4 days of the most recent polling day of any poll is given full weight, and the 9 previous polling days are given weights from 0.9 to 0.1. For example, since the current most recent day of polling is September 2, the most recent EKOS/iPolitics poll, conducted from August 26 to September 1, is discounted by a factor 6.4/7: the days from August 29 to September 1 have full weight, while the days from August 26 to 28 have weights 0.7, 0.8 and 0.9.
The formula above (which might be changed if the frequency of polling increases) implies that there is a two-week window during which polls count. If the same polling firm has multiple such polls, only the most recent one is given full weight; the second most recent one gets weight sqrt(2)-1, the third gets weight sqrt(3)-sqrt(2), etc.
- The change in the background colour is not a blog redesign! That colour was solid blue due to the Conservative majority, and was close to solid blue throughout the 2011 campaign because the Tories were on the cusp of a majority during the whole campaign. The colour is now white with a very slight tinge of blue because we're much closer to a tie than to a Conservative majority. I'm guessing the colour will stay close to white for a while, but it could be red, orange or blue (or still white) at the end of the campaign. When the background is almost white, as it is now, the title of the blog will be in the colour of the leading party; if the background gets dark enough, the title will return to being white.
Finally, a note on the frequency of updates: it looks like I'll still be quite busy during the rest of the campaign, so I may not post several updates a day as was the case in 2011, and I will typically not be commenting on individual polls. I might also not get around to doing a mapped projection until the end of the campaign. Nevertheless, I intend to post at least once (and probably 2-3 times) a week in September, and every two days or so in October.
CON - 126 (30.1%)
NDP - 122 (32.0%)
LIB - 89 (27.9%)
GRN - 1 (5.1%)
BQ - 0 (3.9%)
The Conservative lead, however, is just about as fragile as it gets:
1. The 4-seat margin is extremely slim.
2. The NDP actually leads in the popular vote.
3. The Tories have the edge only because I am adjusting vote shares, as described below, in order to account for voter turnout. Without this adjustment, the NDP would have 126 seats, and the Conservatives would be on 119; the Liberals would tie the Tories for second place in the vote share.
4. Ontario, an almost perfect three-way tie during much of August, is showing movement toward the Liberals: all five polls from this week put the Liberals at least 7 points ahead of the NDP in Ontario. If Ontario's anti-Conservative vote coalesces, things would get really ugly really fast for the Tories. (Not Ignatieff-ugly, since the Tories have a solid base in the rural West, but potentially Dion-ugly.)
A few methodological notes about projections for this campaign.
- I am not taking regional numbers into account until later in the campaign. Regional numbers are important: in 2011, the observation that the GTA was moving more strongly away from the Liberals toward the Tories than the rest of Ontario helped me put the Tories closer to a majority than most other projection blogs. (Update: This means that there's a decent chance that the Liberals are up in the GTA more than elsewhere in Ontario this time. If so, they would win a few more seats than projected.)
- As mentioned above, I am adjusting poll numbers (except for polls explicitly applying a likely voter model) to account for the greater propensity of Conservative supporters to vote. Roughly speaking, I assume that these electors are 10% more likely than supporters of other parties to cast a ballot. (Update: I should note that this is roughly in line with the results of Angus Reid's Institute's likely voter model according to their most recent poll.) This boosts the Conservative vote share by about 1.5%, and depresses the Liberal and NDP vote shares by about 0.5% each. It is important to note that this adjustment may be a bad idea (Conservatives may be demoralized this time), or it may not be sufficient (an even greater adjustment would have been required in 2011).
- The way in which I'm weighing polls has changed slightly. The base weight of a poll is still the square root of its sample size. Any polling day within 4 days of the most recent polling day of any poll is given full weight, and the 9 previous polling days are given weights from 0.9 to 0.1. For example, since the current most recent day of polling is September 2, the most recent EKOS/iPolitics poll, conducted from August 26 to September 1, is discounted by a factor 6.4/7: the days from August 29 to September 1 have full weight, while the days from August 26 to 28 have weights 0.7, 0.8 and 0.9.
The formula above (which might be changed if the frequency of polling increases) implies that there is a two-week window during which polls count. If the same polling firm has multiple such polls, only the most recent one is given full weight; the second most recent one gets weight sqrt(2)-1, the third gets weight sqrt(3)-sqrt(2), etc.
- The change in the background colour is not a blog redesign! That colour was solid blue due to the Conservative majority, and was close to solid blue throughout the 2011 campaign because the Tories were on the cusp of a majority during the whole campaign. The colour is now white with a very slight tinge of blue because we're much closer to a tie than to a Conservative majority. I'm guessing the colour will stay close to white for a while, but it could be red, orange or blue (or still white) at the end of the campaign. When the background is almost white, as it is now, the title of the blog will be in the colour of the leading party; if the background gets dark enough, the title will return to being white.
Finally, a note on the frequency of updates: it looks like I'll still be quite busy during the rest of the campaign, so I may not post several updates a day as was the case in 2011, and I will typically not be commenting on individual polls. I might also not get around to doing a mapped projection until the end of the campaign. Nevertheless, I intend to post at least once (and probably 2-3 times) a week in September, and every two days or so in October.
Tuesday, August 11, 2015
ORPP is a Better Deal than the CPP
Stephen Harper is "delighted" to make the implementation of the Ontario Retirement Pension Plan (ORPP) more difficult. At the same time, he is not proposing any changes to the CPP. However, the ORPP is a much better deal than the CPP:
- under the ORPP, workers contribute 3.8% of their earnings (1.9% themselves, 1.9% through their employer) in order to replace 14.24% of their income in retirement;
- under the CPP, workers contribute 9.9% of their earnings in order to replace 25% of their income in retirement.
In order words, for the ORPP to replace 25% of income, workers would only have to pay 3.8%*(25/14.24) = 6.67% of their income rather than 9.9%. Why?
- Part of the reason is that, while neither plans requires contributions on earnings up to $3,500/year and both still pay benefits on those earnings, the ORPP has a higher ceiling ($90,000) than the CPP (around $55,000 next year). But this difference is rather minor: with the same ceiling as the CPP, ORPP could still replace 25% of pensionable earnings with a contribution rate of 6.8-6.9%. There may be other minor design differences (I haven't done a full comparison), but it's pretty safe to say that ORPP could have the same design and pay the same benefits as the CPP with a contribution rate of around 7%.
- So why could ORPP offer the same benefit as the CPP with only 70% as much contributions? The answer is buried in the CPP actuarial report: even while (real) investment returns are assumed to be 4% going forward, the actual return for those born after 1970 is only 2%. This is because CPP contributions were too low for earlier cohorts as a result of inaccurate projections. Thus, younger workers are heavily subsidizing older workers and retirees: since contributions made to the CPP are withdrawn, on average, about 20 years after they are made, that 2% difference per year means that young workers have to pay 40-50% more than what they would pay if they didn't have to subsidize older workers. Lo and behold, that's roughly what you'd tack onto ORPP contribution rates to get to the CPP contribution rates.
In short, roughly 70% of the CPP contributions are actually retirement savings; the remaining 30% is a tax that makes up for insufficient contributions before 2000 - a tax of up to roughly $1,500 per worker each year. By contrast, because the ORPP isn't saddled with past mistakes, it is 100% retirement savings. Therefore, it is highly ironic that Stephen Harper is characterizing ORPP as a tax while doing nothing about the CPP.
- under the ORPP, workers contribute 3.8% of their earnings (1.9% themselves, 1.9% through their employer) in order to replace 14.24% of their income in retirement;
- under the CPP, workers contribute 9.9% of their earnings in order to replace 25% of their income in retirement.
In order words, for the ORPP to replace 25% of income, workers would only have to pay 3.8%*(25/14.24) = 6.67% of their income rather than 9.9%. Why?
- Part of the reason is that, while neither plans requires contributions on earnings up to $3,500/year and both still pay benefits on those earnings, the ORPP has a higher ceiling ($90,000) than the CPP (around $55,000 next year). But this difference is rather minor: with the same ceiling as the CPP, ORPP could still replace 25% of pensionable earnings with a contribution rate of 6.8-6.9%. There may be other minor design differences (I haven't done a full comparison), but it's pretty safe to say that ORPP could have the same design and pay the same benefits as the CPP with a contribution rate of around 7%.
- So why could ORPP offer the same benefit as the CPP with only 70% as much contributions? The answer is buried in the CPP actuarial report: even while (real) investment returns are assumed to be 4% going forward, the actual return for those born after 1970 is only 2%. This is because CPP contributions were too low for earlier cohorts as a result of inaccurate projections. Thus, younger workers are heavily subsidizing older workers and retirees: since contributions made to the CPP are withdrawn, on average, about 20 years after they are made, that 2% difference per year means that young workers have to pay 40-50% more than what they would pay if they didn't have to subsidize older workers. Lo and behold, that's roughly what you'd tack onto ORPP contribution rates to get to the CPP contribution rates.
In short, roughly 70% of the CPP contributions are actually retirement savings; the remaining 30% is a tax that makes up for insufficient contributions before 2000 - a tax of up to roughly $1,500 per worker each year. By contrast, because the ORPP isn't saddled with past mistakes, it is 100% retirement savings. Therefore, it is highly ironic that Stephen Harper is characterizing ORPP as a tax while doing nothing about the CPP.
Sunday, August 9, 2015
Vote Efficiency, 2015 Edition
No projection until Labour Day weekend, but I've started playing around with the numbers a bit to get a feel for things.
What would the seat count look like if the Conservatives, NDP and Liberals all get 30% nationally? Obviously, it depends on how that vote is distributed. Under the assumption that the swings to get from the current vote support (polls from late July) to 30% are uniform nationally, I get about 125 seats for the Tories, 110 seats for the NDP, and 100 seats for the Liberals.
Under the same assumption, what levels of popular support would translate to a three-way tie? In my model, it looks like 32% Liberals, 31% NDP and 28% Conservatives.
Obviously, the above numbers imply that when the race is tight, the Tories' vote is the most efficient, and the Liberals' vote is the least efficient.
Now, what vote share does each party need in order to achieve a majority? To answer this question, one needs to make assumptions about where each party's extra support comes from. I will assume that for every 3% gained by the NDP/Liberals, 2% come from the Liberals/NDP and 1% from the Conservatives. And I will assume that Conservatives draw evenly from the Liberals and the NDP (counterintuitive perhaps, but "2nd choice" questions in polls do not suggest that Liberals are much more likely to defect to the CPC than New Democrats). Under these assumptions, the majority thresholds are around 38.5% for the Conservatives, 41.5% for the NDP, and 40% for the Liberals.
Once again, the Conservatives have the most efficient vote, but while the NDP's vote is more efficient than the Liberals' when support levels are similar, the Liberals would actually have an easier time than the NDP cobbling together a majority.
What would the seat count look like if the Conservatives, NDP and Liberals all get 30% nationally? Obviously, it depends on how that vote is distributed. Under the assumption that the swings to get from the current vote support (polls from late July) to 30% are uniform nationally, I get about 125 seats for the Tories, 110 seats for the NDP, and 100 seats for the Liberals.
Under the same assumption, what levels of popular support would translate to a three-way tie? In my model, it looks like 32% Liberals, 31% NDP and 28% Conservatives.
Obviously, the above numbers imply that when the race is tight, the Tories' vote is the most efficient, and the Liberals' vote is the least efficient.
Now, what vote share does each party need in order to achieve a majority? To answer this question, one needs to make assumptions about where each party's extra support comes from. I will assume that for every 3% gained by the NDP/Liberals, 2% come from the Liberals/NDP and 1% from the Conservatives. And I will assume that Conservatives draw evenly from the Liberals and the NDP (counterintuitive perhaps, but "2nd choice" questions in polls do not suggest that Liberals are much more likely to defect to the CPC than New Democrats). Under these assumptions, the majority thresholds are around 38.5% for the Conservatives, 41.5% for the NDP, and 40% for the Liberals.
Once again, the Conservatives have the most efficient vote, but while the NDP's vote is more efficient than the Liberals' when support levels are similar, the Liberals would actually have an easier time than the NDP cobbling together a majority.
Sunday, August 2, 2015
Campaign 2015: No Projections before Labour Day Weekend
The 2015 federal election campaign is underway! Due to professional obligations, I will not have the time to issue projections before Labour Day. My workload after that is not yet known: I may be able to provide daily updates after Labour Day, but I may also not be able to cover this campaign at all. In any case, I hope that you will check back then to see what's up on Canadian Election Watch.
I will say that, in my opinion, this year's Orange wave is increasing the chances that Stephen Harper would keep his job after all, though I still believe that they are low. Why?
- Orange wave or not, it was always going to be difficult for the Conservatives to secure a majority this year. But with the Orange wave, if the Liberals do not prove a viable option, disaffected Conservatives and Red Tories might conclude that Harper is still better than the NDP. That is, while the 2011 scenario is still not likely, it is likelier than it seemed before the Alberta election.
- Without the NDP surge, the Liberals would have been at least second, and the third-place NDP would almost certainly have opposed a Conservative throne speech and supported a Liberal one.
- With the NDP surge, if the Conservatives finish first with a minority, the NDP second and the Liberals third, it is unclear what the Liberals would do. On the one hand, most of their voters would be pretty unhappy if they let Harper govern. On the other hand, if they hand the government to Mulcair, they may be sending Canada straight to a two-party system and making themselves irrelevant.
I believe that the Tories' goal, if they can't win a majority, is to keep the NDP second and the Liberals third - this gives them the best chance to hold on to power. This also happens to be the scenario corresponding to the current poll numbers, so look for Conservatives striving to maintain this balance over the next few weeks.
The most important thing for the NDP isn't really to win, but rather to make sure the Liberals are third and to avoid a Conservative majority. This will either put them in power or at least position them as THE alternative to the Tories. And if the NDP wins, they would rather face a Conservative Official Opposition going through a leadership campaign than a Liberal Official Opposition that could coalesce the anti-left vote. The NDP seems to have decided that, given their current momentum, it is better to marginalize the Liberals rather than to attack them directly. But if Liberal support starts inching back up, don't be surprised if Mulcair becomes more aggressive toward Trudeau.
Conversely, the Liberals' main goal is to avoid third place. As explained above, if the Liberals are second with a Conservative minority, they will likely seize power. But even if the Conservatives win a majority, the Liberals wouldn't be too sad at being the Official Opposition: the party would avoid death, a real danger given the current situation. Therefore, it is in the Liberals' interest to go after the weaker of the two other parties, and it is too early to tell whether the Conservatives or the NDP is the better target.
So, in short, short of winning a majority, the parties' main goals are:
- Conservatives: maintain a Goldilocks scenario where the NDP is second and the Liberals, third
- NDP: make Liberals finish last
- Liberals: avoid finishing last
This will be an extremely difficult campaign for the Liberals because both their opponents want them last, and because they are already last. A second-place finish would have been disappointing from their perspective last year, but I'm pretty sure Trudeau would take it in a heartbeat today.
Still, 11 weeks is a long time, and my next analysis in 5 weeks may already look completely different, so stay tuned!
I will say that, in my opinion, this year's Orange wave is increasing the chances that Stephen Harper would keep his job after all, though I still believe that they are low. Why?
- Orange wave or not, it was always going to be difficult for the Conservatives to secure a majority this year. But with the Orange wave, if the Liberals do not prove a viable option, disaffected Conservatives and Red Tories might conclude that Harper is still better than the NDP. That is, while the 2011 scenario is still not likely, it is likelier than it seemed before the Alberta election.
- Without the NDP surge, the Liberals would have been at least second, and the third-place NDP would almost certainly have opposed a Conservative throne speech and supported a Liberal one.
- With the NDP surge, if the Conservatives finish first with a minority, the NDP second and the Liberals third, it is unclear what the Liberals would do. On the one hand, most of their voters would be pretty unhappy if they let Harper govern. On the other hand, if they hand the government to Mulcair, they may be sending Canada straight to a two-party system and making themselves irrelevant.
I believe that the Tories' goal, if they can't win a majority, is to keep the NDP second and the Liberals third - this gives them the best chance to hold on to power. This also happens to be the scenario corresponding to the current poll numbers, so look for Conservatives striving to maintain this balance over the next few weeks.
The most important thing for the NDP isn't really to win, but rather to make sure the Liberals are third and to avoid a Conservative majority. This will either put them in power or at least position them as THE alternative to the Tories. And if the NDP wins, they would rather face a Conservative Official Opposition going through a leadership campaign than a Liberal Official Opposition that could coalesce the anti-left vote. The NDP seems to have decided that, given their current momentum, it is better to marginalize the Liberals rather than to attack them directly. But if Liberal support starts inching back up, don't be surprised if Mulcair becomes more aggressive toward Trudeau.
Conversely, the Liberals' main goal is to avoid third place. As explained above, if the Liberals are second with a Conservative minority, they will likely seize power. But even if the Conservatives win a majority, the Liberals wouldn't be too sad at being the Official Opposition: the party would avoid death, a real danger given the current situation. Therefore, it is in the Liberals' interest to go after the weaker of the two other parties, and it is too early to tell whether the Conservatives or the NDP is the better target.
So, in short, short of winning a majority, the parties' main goals are:
- Conservatives: maintain a Goldilocks scenario where the NDP is second and the Liberals, third
- NDP: make Liberals finish last
- Liberals: avoid finishing last
This will be an extremely difficult campaign for the Liberals because both their opponents want them last, and because they are already last. A second-place finish would have been disappointing from their perspective last year, but I'm pretty sure Trudeau would take it in a heartbeat today.
Still, 11 weeks is a long time, and my next analysis in 5 weeks may already look completely different, so stay tuned!
Wednesday, September 17, 2014
Big Win for BC Liberal Government
The full details of the tentative agreement between BCTF and the government have not been divulged, but based on what we know, my sense is that:
- the government got the upper hand on all major issues: salary, signing bonus/grievances, and class size and composition;
- the BCTF had a small advantage on minor issues: non-salary benefits, concessions demanded by the employer.
In the end, there are about $550-600 M in new money over 5 years for salary, benefits, bonus and grievances. This is close to the $600 M that I was suggesting at the end of my previous post, although since I did not include grievances in the $600 M in that post, this deal is more favourable to the government. As for class size and composition, there is very little additional money right away - much less than what I suggested in late August - but the BCTF can renegotiate the language if it wins the court case. However, I'm highly skeptical that the BCTF will gain a lot more at that point, unless the province's fiscal situation markedly improves.
Therefore, overall, this deal is more favourable to the government that what I was expecting. If you're a BCTF supporter, you could argue that this shows that the government was the inflexible party all along. If you're a government supporter, you could argue that this shows that BCTF's original demands were wildly unrealistic. However, one thing's certain: due to the "re-opener" clause on class size and composition, don't be surprised if the five years of promised labour peace fail to materialize.
Detailed analysis below. Note again that Year 1 was last school year (2013-2014).
Salary
Year 1: 0
Year 2: 2%, and additional 1.25% on January 1, 2015 = $71 M
Year 3: no increase = $84 M
Year 4: additional 1% = $111 M
Year 5: additional 0.5%, and further 1% eight months into the school year = $129 M
5-Year Total: $395 M + 50% economic stability dividend
- August government offer: $356 M* + 50% economic stability dividend
- August BCTF demand: $601 M + 100% economic stability dividend
(The agreement also contains a Year 6, with increases structured like in Year 5.)
This is clearly a clear win for the government: for every dollar that it moved, BCTF moved more than $5. In addition, the government got the term and the size of the economic stability dividend that it wanted. However, the immediate 2% increase allows BCTF to save face.
*A previous post estimated this at $350 M on the basis of July 1-June 30 contract years, but I have now switched to September 1-June 30 school years.
Signing Bonus, Grievances
- A one-time $105 M payment to BCTF.
- Immediate increase of elementary preparation time from 90 to 100 minutes, and further increase to 110 minutes on the last day of the contract. (Cost = $9.6 M/year)
- Preparation time for secondary school teachers and adult educators to be examined by a committee.
5-Year Total: $143 M
- August government offer: None (but potentially large grievance liability)
- August BCTF demand: A one-time $375 M payment ($150 M signing bonus plus $225 M grievance fund) and $270 M worth of preparation time (not counting interaction with salary increase) = $645 M
Again, this is a clear win for the government. In fact, one might argue that teachers might be better off with holding out for court-ordered grievances, but that could take years.
Class Size and Composition
- Fund for teacher hiring: $80 M per year (except $75 M in 2014-15, and $85 M in 2018-19). This fund replaces the LIF, which was used for both teacher hiring as well as other improvements.
- Some sources suggest that there's another $80 M (total, or an average of $16 M per year) for other improvements, such as teachers' aides.
- Court case: After it is resolved, either side can reopen class size and composition provisions. Confusingly, they're supposed to bargain from the restored language (if any), but the default until a new deal is reached is the current language.
Average per year: $80-96 M + "re-opener" clause
- August government offer: $75 M per year LIF, and any language restored by the court only applies to past contracts (i.e. would lead to a grievance payout, but no ongoing costs)
- August BCTF demand: $225 M annual fund in addition to LIF, and any language restored by the court takes effect immediately in current contract (costed at $1.6 billion per year by the government)
This is a likely win for the government. Until the court case is resolved (and thereafter if BCTF loses, as I don't think the government would re-open the contract in that case even though they could), it will spend $5-20 M per year more than its original offer, which is much less than the $225 M demanded by BCTF. After a BCTF victory in court, the government would likely be in a position of strength in bargaining: as long as it does not agree to new language, the default is the current language rather than the restored language. Therefore, the government is insured against losing control of its budget.
However, BCTF can rejoice about two things:
- a guarantee that most of the money goes to hiring teachers rather than other forms of improvements, which was not there with the LIF; and
- if it wins the court case, and the fiscal situation has improved by that time, the province would likely agree to put more money into class size and composition. Of course, it is basically impossible that the government will agree to the 1998-2001 language, but at least the door is open to mid-contract improvements.
Other Benefits and Teachers on Call
According to BCTF's letter to members, the ongoing cost of benefits will be $11.85 M per year at the end of the contract, but these benefits will be phased in rather than immediate. There is also an increase in pay for teachers on call somewhat less than $4.6 M per year (which was the August demand).
- August government offer: None
- August BCTF demand: $24.4 M per year (not counting interaction with salary increase)
Here, the two sides met near the midpoint of their original positions, though the final ongoing cost appears closer to the BCTF demand.
Concessions Demanded by Government (Union Leave, Evaluation, Calendar)
All withdrawn, so a win for BCTF, but these are relatively minor issues.
- the government got the upper hand on all major issues: salary, signing bonus/grievances, and class size and composition;
- the BCTF had a small advantage on minor issues: non-salary benefits, concessions demanded by the employer.
In the end, there are about $550-600 M in new money over 5 years for salary, benefits, bonus and grievances. This is close to the $600 M that I was suggesting at the end of my previous post, although since I did not include grievances in the $600 M in that post, this deal is more favourable to the government. As for class size and composition, there is very little additional money right away - much less than what I suggested in late August - but the BCTF can renegotiate the language if it wins the court case. However, I'm highly skeptical that the BCTF will gain a lot more at that point, unless the province's fiscal situation markedly improves.
Therefore, overall, this deal is more favourable to the government that what I was expecting. If you're a BCTF supporter, you could argue that this shows that the government was the inflexible party all along. If you're a government supporter, you could argue that this shows that BCTF's original demands were wildly unrealistic. However, one thing's certain: due to the "re-opener" clause on class size and composition, don't be surprised if the five years of promised labour peace fail to materialize.
Detailed analysis below. Note again that Year 1 was last school year (2013-2014).
Salary
Year 1: 0
Year 2: 2%, and additional 1.25% on January 1, 2015 = $71 M
Year 3: no increase = $84 M
Year 4: additional 1% = $111 M
Year 5: additional 0.5%, and further 1% eight months into the school year = $129 M
5-Year Total: $395 M + 50% economic stability dividend
- August government offer: $356 M* + 50% economic stability dividend
- August BCTF demand: $601 M + 100% economic stability dividend
(The agreement also contains a Year 6, with increases structured like in Year 5.)
This is clearly a clear win for the government: for every dollar that it moved, BCTF moved more than $5. In addition, the government got the term and the size of the economic stability dividend that it wanted. However, the immediate 2% increase allows BCTF to save face.
*A previous post estimated this at $350 M on the basis of July 1-June 30 contract years, but I have now switched to September 1-June 30 school years.
Signing Bonus, Grievances
- A one-time $105 M payment to BCTF.
- Immediate increase of elementary preparation time from 90 to 100 minutes, and further increase to 110 minutes on the last day of the contract. (Cost = $9.6 M/year)
- Preparation time for secondary school teachers and adult educators to be examined by a committee.
5-Year Total: $143 M
- August government offer: None (but potentially large grievance liability)
- August BCTF demand: A one-time $375 M payment ($150 M signing bonus plus $225 M grievance fund) and $270 M worth of preparation time (not counting interaction with salary increase) = $645 M
Again, this is a clear win for the government. In fact, one might argue that teachers might be better off with holding out for court-ordered grievances, but that could take years.
Class Size and Composition
- Fund for teacher hiring: $80 M per year (except $75 M in 2014-15, and $85 M in 2018-19). This fund replaces the LIF, which was used for both teacher hiring as well as other improvements.
- Some sources suggest that there's another $80 M (total, or an average of $16 M per year) for other improvements, such as teachers' aides.
- Court case: After it is resolved, either side can reopen class size and composition provisions. Confusingly, they're supposed to bargain from the restored language (if any), but the default until a new deal is reached is the current language.
Average per year: $80-96 M + "re-opener" clause
- August government offer: $75 M per year LIF, and any language restored by the court only applies to past contracts (i.e. would lead to a grievance payout, but no ongoing costs)
- August BCTF demand: $225 M annual fund in addition to LIF, and any language restored by the court takes effect immediately in current contract (costed at $1.6 billion per year by the government)
This is a likely win for the government. Until the court case is resolved (and thereafter if BCTF loses, as I don't think the government would re-open the contract in that case even though they could), it will spend $5-20 M per year more than its original offer, which is much less than the $225 M demanded by BCTF. After a BCTF victory in court, the government would likely be in a position of strength in bargaining: as long as it does not agree to new language, the default is the current language rather than the restored language. Therefore, the government is insured against losing control of its budget.
However, BCTF can rejoice about two things:
- a guarantee that most of the money goes to hiring teachers rather than other forms of improvements, which was not there with the LIF; and
- if it wins the court case, and the fiscal situation has improved by that time, the province would likely agree to put more money into class size and composition. Of course, it is basically impossible that the government will agree to the 1998-2001 language, but at least the door is open to mid-contract improvements.
Other Benefits and Teachers on Call
According to BCTF's letter to members, the ongoing cost of benefits will be $11.85 M per year at the end of the contract, but these benefits will be phased in rather than immediate. There is also an increase in pay for teachers on call somewhat less than $4.6 M per year (which was the August demand).
- August government offer: None
- August BCTF demand: $24.4 M per year (not counting interaction with salary increase)
Here, the two sides met near the midpoint of their original positions, though the final ongoing cost appears closer to the BCTF demand.
Concessions Demanded by Government (Union Leave, Evaluation, Calendar)
All withdrawn, so a win for BCTF, but these are relatively minor issues.
Monday, September 15, 2014
BCTF vs. BC Liberals: Why Neither Side Has Been Reasonable So Far
The ongoing negotiating blitz is cause for optimism, but up until the parties got together for the current round, neither was being reasonable. (Of course, due to the media blackout, we don't know if either is currently being reasonable.) Here are the main problem areas:
Government
- The court ruled that the teachers have a right to bargain over class size and composition. The government's interpretation of "bargain"? "Accept our offer, which merely asserts the current illegally imposed language." It's not surprising that the BCTF views this as a slap in the face.
BCTF
- The court ruled that the teachers have a right to bargain over class size and composition. Because the 1998 language was the last negotiated language, it got retroactively inserted into past contracts. But the court never ruled that the teachers had the right to keep the 1998 language in future contracts, and in fact explicitly expressed an expectation that class size and composition would be subject to future bargaining. Despite that, BCTF's binding arbitration proposal seeks to avoid bargaining on these issues. Why? If it wins on appeal, the court might decide to insert the 1998 language not only into past contracts, but also into the 2013-2018/9 contract. BCTF is therefore attempting to circumvent the bargaining process and set education policy for the province without the input of BC's duly elected government.
- BCTF demands a $5,000 bonus after going on strike for a month. 'Nuff said.
I have to say that both sides' wage and benefits offers are reasonable. The government's sub-inflation 7% over 6 years offer is obviously stingy, but given the other settlements so far and the massive surplus of teachers (note that there's a surplus even in Ontario, where class sizes are quite small), this is a good-faith offer. Meanwhile, the teachers' demand of 8% over 5 years, which may not even outpace inflation, is obviously modest. It's true that their benefit demands (equivalent to a further 4% increase in compensation) are somewhat expensive, but as far as bargaining tactics go, these proposals are not outlandish and probably just there as bargaining chips.
Sidenote: While there's a surplus of teachers in BC, our teachers are indeed paid less than teachers west of Québec. How can this be? Simple: other provinces, like Ontario, are grossly overpaying their teachers, to the point that a 35-year-old teacher is likely to make as much as a 35-year-old professor. (Professors' wages have more room to grow after that, but they had to give up several years of pay to earn their Ph.D.)
It looks like the following need to occur for a settlement to happen (some of these are from my post from August 31):
1. BCTF needs to accept language on class size and composition that is not as good as what they were given by the NDP in 1998. They need to realize that a right to bargain is very different from a right to keep copy past clauses and paste them in future agreements. Imagine if the government wanted to roll their nominal wages back to 1998 levels!
2. The government needs to make concessions on class size and composition. Their E80 proposal can't be a mere statement of what they illegally legislated. This can come in the form of a meaningful increase to the LIF (not just the $15 million increase in the latest public proposal), or specific language on class size and composition. As I've explained in a previous post, research shows that class size reduction is best targeted at lower grade levels (K-3).
3. BCTF needs to drop their bonus demand. I certainly don't see the government giving more than the $1,200 on offer in June. In fact, the government may well feel that any bonus would send the wrong signal and encourage future strikes.
If they get past these obstacles, I think they can come together on wages and benefits. As detailed in my August 31 post, the government is offering $350M over 5 years, while BCTF is demanding $600M over 5 years in wages, $150M in signing bonus, and $125M per year in benefits. Perhaps the sides can agree on something around $600M over 5 years in total compensation, which equates to about 1.3% per year, or 0% in Year 1 and 2% in each of Years 2-5.
Or at least, once they settle on class size and composition, the government might be more receptive to binding arbitration - the risk to the budget from the court case would become much smaller (just grievances).
Government
- The court ruled that the teachers have a right to bargain over class size and composition. The government's interpretation of "bargain"? "Accept our offer, which merely asserts the current illegally imposed language." It's not surprising that the BCTF views this as a slap in the face.
BCTF
- The court ruled that the teachers have a right to bargain over class size and composition. Because the 1998 language was the last negotiated language, it got retroactively inserted into past contracts. But the court never ruled that the teachers had the right to keep the 1998 language in future contracts, and in fact explicitly expressed an expectation that class size and composition would be subject to future bargaining. Despite that, BCTF's binding arbitration proposal seeks to avoid bargaining on these issues. Why? If it wins on appeal, the court might decide to insert the 1998 language not only into past contracts, but also into the 2013-2018/9 contract. BCTF is therefore attempting to circumvent the bargaining process and set education policy for the province without the input of BC's duly elected government.
- BCTF demands a $5,000 bonus after going on strike for a month. 'Nuff said.
I have to say that both sides' wage and benefits offers are reasonable. The government's sub-inflation 7% over 6 years offer is obviously stingy, but given the other settlements so far and the massive surplus of teachers (note that there's a surplus even in Ontario, where class sizes are quite small), this is a good-faith offer. Meanwhile, the teachers' demand of 8% over 5 years, which may not even outpace inflation, is obviously modest. It's true that their benefit demands (equivalent to a further 4% increase in compensation) are somewhat expensive, but as far as bargaining tactics go, these proposals are not outlandish and probably just there as bargaining chips.
Sidenote: While there's a surplus of teachers in BC, our teachers are indeed paid less than teachers west of Québec. How can this be? Simple: other provinces, like Ontario, are grossly overpaying their teachers, to the point that a 35-year-old teacher is likely to make as much as a 35-year-old professor. (Professors' wages have more room to grow after that, but they had to give up several years of pay to earn their Ph.D.)
It looks like the following need to occur for a settlement to happen (some of these are from my post from August 31):
1. BCTF needs to accept language on class size and composition that is not as good as what they were given by the NDP in 1998. They need to realize that a right to bargain is very different from a right to keep copy past clauses and paste them in future agreements. Imagine if the government wanted to roll their nominal wages back to 1998 levels!
2. The government needs to make concessions on class size and composition. Their E80 proposal can't be a mere statement of what they illegally legislated. This can come in the form of a meaningful increase to the LIF (not just the $15 million increase in the latest public proposal), or specific language on class size and composition. As I've explained in a previous post, research shows that class size reduction is best targeted at lower grade levels (K-3).
3. BCTF needs to drop their bonus demand. I certainly don't see the government giving more than the $1,200 on offer in June. In fact, the government may well feel that any bonus would send the wrong signal and encourage future strikes.
If they get past these obstacles, I think they can come together on wages and benefits. As detailed in my August 31 post, the government is offering $350M over 5 years, while BCTF is demanding $600M over 5 years in wages, $150M in signing bonus, and $125M per year in benefits. Perhaps the sides can agree on something around $600M over 5 years in total compensation, which equates to about 1.3% per year, or 0% in Year 1 and 2% in each of Years 2-5.
Or at least, once they settle on class size and composition, the government might be more receptive to binding arbitration - the risk to the budget from the court case would become much smaller (just grievances).
Sunday, August 31, 2014
BCTF vs. BC Liberals: How Far Apart Are They?
Sept 2 Update: As reported by the Vancouver Sun, Peter Fassbender is saying that the parties are more than $300 million apart on compensation (wage plus non-wage benefits). The analysis below shows that the gap between their publicly stated positions is about $770 million ($401 M on wages, and about $369 M on benefits assuming they start fully in 2015-2016). This implies that they were privately willing to make concessions to bridge about half of the compensation gap, and the remaining difference is small ($300 M/5 yrs = $60 M/yr = 2% of current compensation). The real issue remains class size, composition and specialists: the government is offering almost nothing, while BCTF's demand would cost about $1 billion total if it loses the court case, and $1.6 billion PER YEAR if it wins the court case.
Based the following documents by the BCTF and the government, the math works out as follows:
Current wages and wage-related benefits: The government states that BCTF's proposal, which includes a 3.5% increase and three 1.5% increases, will cost $211.1 million in Year 5. This means that the current base is 211.1M/(1.035*1.015^3-1) = $2.566 billion.
Current total compensation: The government states that an increase of $335.8 million would correspond to a 11.2% increase. This implies a current base of $2.998 billion.
BCTF Salary Demand (Total amount above current wage)
Year 1 (2013-2014): $5,000 signing bonus = $150 M
Year 2: 3.5% = $90 M
Year 3: additional 1.5% = $130 M
Year 4: additional 1.5% = $170 M
Year 5 (2017-2018): additional 1.5% = $211 M
Total: $751 million, or $150 million per year on average + 100% economic stability dividend
Government Salary Offer (Total amount above current wage)
Year 1: 0
Year 2: 1%, and additional 2% seven months into the year = $47 M
Year 3: no increase = $77 M
Year 4: additional 1% = $104 M
Year 5: additional 0.5%, and further 1% ten months into the year = $122 M
Total: $350 million, or $70 million per year on average + 50% economic stability dividend
Difference between BCTF Salary Demands and Government Salary Offer (ignoring economic stability dividend)
Total over 5 years: $401 million
Average per year: $80 million (3.1% of wage base)
Ongoing difference at June 30, 2018: $67 million (2.6% of wage base)
Non-wage compensation: BCTF demands an increase costed at $125 M in Year 5 by the government.
Grievance fund: BCTF demands a one-time $225 M fund
Class size, composition, and specialists: Government offers a $15 M increase to the Learning Improvement Fund (LIF), from $60 M to $75 M. BCTF says that this is old money, and demands:
- a further $225 M per year until the court case is resolved, to be continued if the government wins;
- the restoration of the original 2001 language if BCTF wins, costed by the government at $1.67 B in Year 5 (if this replaces the LIF and the $225 M fund, the net cost is $1.37 B).
Difference between Total BCTF Demands and Government Offer:
Total over 5 years: $1.67 billion
Average per year: $334 million (11.1% of compensation base)
Ongoing difference at June 30, 2018: $417 million (13.9% of compensation base)
These numbers assume that:
- BCTF's non-wage compensation and class size/composition/specialists demands are to be implemented in Year 3 (2015-2016). An earlier implementation, during the current school year, would increase the total and average per year cost (but would not affect the ongoing difference in 2018).
- BCTF loses its court case. If it wins, then the total ongoing difference ballons to $1.79 billion in Year 5, or almost 60% of the current compensation base.
- The economic stability dividend is nil (it is likely to be small anyway).
Given these numbers, it's no surprise that Vince Ready declared in impasse. At the end of Year 5:
- the government's proposal costs $159 million per year ($144 M in wages and $15 M for the LIF increase);
- BCTF's proposal costs $576 million per year ($211 M in wages, $125 M in other compensation, $15 M for the LIF increase, $225 M for class size/composition/specialists) if it loses in court;
- BCTF's proposal costs $1.95 B if it wins in court.
Another way to took at this is through the rate of increase of ongoing costs:
- government: 1.0% per year
- BCTF: 3.6% per year if lose court case, 10.5% per year if win court case.
The government's proposal is obviously stingy: it is likely to come in below inflation, which implies a real cut, following two years of wage freezes. On the other hand, other public sector unions have settled for similar increases.
BCTF's demand that if it wins the court case, the 2001 language be restored, is obviously unrealistic, and is probably a bargaining tactic to obtain the $225 million/year fund. A 3.6% annualized increase is normally not out-of-line, but in the context of agreements signed by other unions, it is quite high.
I believe that a reasonable settlement would be along the lines of:
- 1.5% increase per year in total compensation, with no signing bonus. The parties can decide how to divide this into wage and non-wage benefits. The price tag would be $688 M over 5 years, which is slightlyabove below the middle of the government salary offer worth $350 M and the BCTF compensation demand worth $876 M $1.12 B (assuming that the non-wage demands are enacted in Year 3). The total increase would be 7.7%, about zero after adjusting for inflation. This is more than what other public-sector unions got, but likely less than private-sector wage increases. The final ongoing cost would be $232 M per year.
- $200 million one-time grievance fund, but only if BCTF wins in the Supreme Court.
- Increase the LIF to $150 million. This is double the government's proposal of $75 million, and half BCTF's demand of $300 million ($75 M LIF plus $225 M fund).
- Replace the LIF with $225 million annual fund if BCTF wins in the Supreme Court.
Total ongoing cost of my proposal at June 30, 2018:
- If BCTF loses: $322 million per year (compared to $159 M and $576 M)
- If BCTF wins: $397 million per year (compared to $159 M and an unrealistic $1.94 B)
The annualized increase in ongoing funding would be 2.1-2.5%, which I think is a fair outcome for our education system, and right in the middle of the 1.0-3.6% cost of current proposals. It slightly outpaces inflation, and along with a decrease in enrollment, should allow for a modest improvement in services. At the same time, it is less than provincial GDP growth, so this is definitely an affordable plan, even if BCTF wins the court case. The total risk of the court case to the taxpayer, $75 million per year plus a one-time payment of $200 million, is manageable considering that it concerns more than a decade of education funding - keep in mind that the BC government spends over $5 billion per year on K-12 education, and over $44 billion per year overall.
Based the following documents by the BCTF and the government, the math works out as follows:
Current wages and wage-related benefits: The government states that BCTF's proposal, which includes a 3.5% increase and three 1.5% increases, will cost $211.1 million in Year 5. This means that the current base is 211.1M/(1.035*1.015^3-1) = $2.566 billion.
Current total compensation: The government states that an increase of $335.8 million would correspond to a 11.2% increase. This implies a current base of $2.998 billion.
BCTF Salary Demand (Total amount above current wage)
Year 1 (2013-2014): $5,000 signing bonus = $150 M
Year 2: 3.5% = $90 M
Year 3: additional 1.5% = $130 M
Year 4: additional 1.5% = $170 M
Year 5 (2017-2018): additional 1.5% = $211 M
Total: $751 million, or $150 million per year on average + 100% economic stability dividend
Government Salary Offer (Total amount above current wage)
Year 1: 0
Year 2: 1%, and additional 2% seven months into the year = $47 M
Year 3: no increase = $77 M
Year 4: additional 1% = $104 M
Year 5: additional 0.5%, and further 1% ten months into the year = $122 M
Total: $350 million, or $70 million per year on average + 50% economic stability dividend
Difference between BCTF Salary Demands and Government Salary Offer (ignoring economic stability dividend)
Total over 5 years: $401 million
Average per year: $80 million (3.1% of wage base)
Ongoing difference at June 30, 2018: $67 million (2.6% of wage base)
Non-wage compensation: BCTF demands an increase costed at $125 M in Year 5 by the government.
Grievance fund: BCTF demands a one-time $225 M fund
Class size, composition, and specialists: Government offers a $15 M increase to the Learning Improvement Fund (LIF), from $60 M to $75 M. BCTF says that this is old money, and demands:
- a further $225 M per year until the court case is resolved, to be continued if the government wins;
- the restoration of the original 2001 language if BCTF wins, costed by the government at $1.67 B in Year 5 (if this replaces the LIF and the $225 M fund, the net cost is $1.37 B).
Difference between Total BCTF Demands and Government Offer:
Total over 5 years: $1.67 billion
Average per year: $334 million (11.1% of compensation base)
Ongoing difference at June 30, 2018: $417 million (13.9% of compensation base)
These numbers assume that:
- BCTF's non-wage compensation and class size/composition/specialists demands are to be implemented in Year 3 (2015-2016). An earlier implementation, during the current school year, would increase the total and average per year cost (but would not affect the ongoing difference in 2018).
- BCTF loses its court case. If it wins, then the total ongoing difference ballons to $1.79 billion in Year 5, or almost 60% of the current compensation base.
- The economic stability dividend is nil (it is likely to be small anyway).
Given these numbers, it's no surprise that Vince Ready declared in impasse. At the end of Year 5:
- the government's proposal costs $159 million per year ($144 M in wages and $15 M for the LIF increase);
- BCTF's proposal costs $576 million per year ($211 M in wages, $125 M in other compensation, $15 M for the LIF increase, $225 M for class size/composition/specialists) if it loses in court;
- BCTF's proposal costs $1.95 B if it wins in court.
Another way to took at this is through the rate of increase of ongoing costs:
- government: 1.0% per year
- BCTF: 3.6% per year if lose court case, 10.5% per year if win court case.
The government's proposal is obviously stingy: it is likely to come in below inflation, which implies a real cut, following two years of wage freezes. On the other hand, other public sector unions have settled for similar increases.
BCTF's demand that if it wins the court case, the 2001 language be restored, is obviously unrealistic, and is probably a bargaining tactic to obtain the $225 million/year fund. A 3.6% annualized increase is normally not out-of-line, but in the context of agreements signed by other unions, it is quite high.
I believe that a reasonable settlement would be along the lines of:
- 1.5% increase per year in total compensation, with no signing bonus. The parties can decide how to divide this into wage and non-wage benefits. The price tag would be $688 M over 5 years, which is slightly
- $200 million one-time grievance fund, but only if BCTF wins in the Supreme Court.
- Increase the LIF to $150 million. This is double the government's proposal of $75 million, and half BCTF's demand of $300 million ($75 M LIF plus $225 M fund).
- Replace the LIF with $225 million annual fund if BCTF wins in the Supreme Court.
Total ongoing cost of my proposal at June 30, 2018:
- If BCTF loses: $322 million per year (compared to $159 M and $576 M)
- If BCTF wins: $397 million per year (compared to $159 M and an unrealistic $1.94 B)
The annualized increase in ongoing funding would be 2.1-2.5%, which I think is a fair outcome for our education system, and right in the middle of the 1.0-3.6% cost of current proposals. It slightly outpaces inflation, and along with a decrease in enrollment, should allow for a modest improvement in services. At the same time, it is less than provincial GDP growth, so this is definitely an affordable plan, even if BCTF wins the court case. The total risk of the court case to the taxpayer, $75 million per year plus a one-time payment of $200 million, is manageable considering that it concerns more than a decade of education funding - keep in mind that the BC government spends over $5 billion per year on K-12 education, and over $44 billion per year overall.
Wednesday, August 27, 2014
BCTF vs. BC Liberals: Whose Proposal is Best for B.C.?
The school year is supposed to start next week in BC, but the labour dispute between teachers and the government has not yet been resolved. Here are my two cents on the issue.
The parties are not too far on salaries: the government offers 6.5% over six years, while the teachers demand 8% over five years. Given that, in its latest budget, the government is forecasting inflation of 9.4% over five years (9.8% compounded), and that wages generally increase faster than inflation due to productivity gains, the teachers' salary demand is very reasonable.
However, the real difference between the parties is on the issue of class size. The BCTF points out that the Liberals have unfairly increased class size in the past by illegally removing it from the bargaining procedure. It also points out that there is evidence that a class size reduction would improve student performance, and that BC has large class sizes compared to the rest of Canada. The Liberals reply that despite the class size increase, BC students' academic performance remain among the best in Canada. Moreover, the current fiscal situation is tight.
None of these arguments, from either side, get at the real issue: is reducing class size a good investment?
- Perhaps the class size increase was achieved illegally. But if it is the right policy, it should stand, and BCTF should be compensated for past wrongs through more direct and less costly means.
- Even if class size reduction does improve student outcome, if the improvement is small, it may be cost-ineffective.
- BC's classes being larger than other provinces' does not imply that they are too large: it could well be that other provinces are wasting money because smaller classes sound good to voters.
- Even if BC students' academic performance held up (and this is disputed), this is not proof that the class size increase did not have an adverse effect: perhaps if class sizes had remained low, our students would be doing even better.
- The surplus being small and revenues growing very slowly does not mean that we can't invest in education. If the return is high enough, then borrowing is the right thing to do for BC's long-run prosperity.
The following is a back-of-the-envelope analysis on whether class size reduction is desirable in BC, given its costs. The starting point is this review of the evidence on class size reduction, by the Brookings Institute, a highly esteemed non-partisan think tank (think, not Fraser Institute or CCPA) in the US.
- The largest effect of class size reduction found in a well-designed, credible study is as follows: reducing average class size from 22 to 15 for four years (K-3) resulted in an improvement of academic performance equivalent to 3 months of extra schooling. This "STAR" study was done in Tennessee, across schools in different socio-economic settings.
- Other studies have found smaller effects, or no effects at all. Generally, class size reduction is most effective when applied in early grades (like in STAR) and in low-income settings.
So let's assume that the real effect is as measured in STAR. What would be the costs and benefits of such a policy for BC? (Note: Obviously, the class size reduction contemplated in BC is different, but in principle, both the costs and the benefits would scale.)
Cost of 4 years of class size reduction from 22 to 15 students
- Government expense: Reducing class size from 22 to 15 students requires 46.7% more teachers. According to a Statistics Canada report, the average spending per pupil in BC in 2010/2011 was $11,832, 40.5% of which was spent on educator remuneration. Assuming that this class size reduction increases educator remuneration by 46.7% (it might be a little less since educators include some non-teachers), and that no other costs change (obviously in reality, some other costs, like classrooms, would go up), the increased cost per student is $2,236. Over four years, this adds up to $8,945 per student.
- Of course, spending an extra $8,945 per student requires extra taxes (now or later), which would cause an economic loss. It is difficult to quantify such a loss, but fortunately, the Québec government has estimated it for various forms of taxation. In the long run, the most efficient way to raise taxes is via a value added tax, and the economic cost is estimated at $0.54 per dollar of revenue in Québec. The cost in BC could be lower because we start from a lower level of taxation, but it could be higher because we have an inefficient sales tax as opposed to a value added tax. Taking the $0.54 estimate as such, the additional economic cost would be $4,830 per student.
TOTAL COST: $13,775 per student
Benefit of 3 additional months of schooling
This is obviously difficult to measure, but one way to look at it is that this should equal the cost of 0.3 years of postsecondary education.
- Direct cost of education: It is not easy to disentangle teaching from research costs in our postsecondary institutions, so this can only be very approximate. A reasonable estimate is that a year of postsecondary education costs about $15,000 per student. 0.3 years = $4,500 per student.
- Opportunity cost of forgone work: Having to spend 3 extra months in school will result in foregone wages. Assuming that the average starting wage is $20/hour (it's less for high school grads, but more for university grads), this works out to 12 weeks*40 hours/week*$20/hour = $9,600 per student.
TOTAL BENEFIT: $14,100 per student
Obviously, these are very rough calculations, so the conclusion to draw is only that the costs and benefits of reducing class size in K-3 are comparable. There is no strong case for either side. Given that most studies show smaller benefits at high grade levels, it is likely that the costs of reducing class size exceed the benefits in secondary school.
Teachers may argue that reducing class size carries not only academic benefits, but also behavioural benefits. This argument certainly has merit, so the above benefits may be understated. On the other hand, these estimates of benefits are based on the most favourable credible study (at least according to Brookings). So on balance, it is not clear in which way the above numbers are biased.
Moreover, the Brookings summary referenced above mentions evidence that other forms of investment in education tend to yield higher returns than class size reductions.
Based on this evidence, my opinion is:
- I support a targeted class size reduction for elementary schools in disadvantaged areas.
- I am neutral toward a general class size reduction for K-3. Perhaps this should be given as a concession to make up for the government's past illegal actions.
- I mildly oppose a general class size reduction for grades 4-7.
- I oppose class size reductions for secondary schools.
On balance, if the choice is between BCTF's proposal and the government, I would choose the government's, as I believe that current class sizes are fine in most settings. But ideally, the two sides can come together and do the right thing, which is to focus resources on those that would benefit the most: the youngest and most disadvantaged students.
The parties are not too far on salaries: the government offers 6.5% over six years, while the teachers demand 8% over five years. Given that, in its latest budget, the government is forecasting inflation of 9.4% over five years (9.8% compounded), and that wages generally increase faster than inflation due to productivity gains, the teachers' salary demand is very reasonable.
However, the real difference between the parties is on the issue of class size. The BCTF points out that the Liberals have unfairly increased class size in the past by illegally removing it from the bargaining procedure. It also points out that there is evidence that a class size reduction would improve student performance, and that BC has large class sizes compared to the rest of Canada. The Liberals reply that despite the class size increase, BC students' academic performance remain among the best in Canada. Moreover, the current fiscal situation is tight.
None of these arguments, from either side, get at the real issue: is reducing class size a good investment?
- Perhaps the class size increase was achieved illegally. But if it is the right policy, it should stand, and BCTF should be compensated for past wrongs through more direct and less costly means.
- Even if class size reduction does improve student outcome, if the improvement is small, it may be cost-ineffective.
- BC's classes being larger than other provinces' does not imply that they are too large: it could well be that other provinces are wasting money because smaller classes sound good to voters.
- Even if BC students' academic performance held up (and this is disputed), this is not proof that the class size increase did not have an adverse effect: perhaps if class sizes had remained low, our students would be doing even better.
- The surplus being small and revenues growing very slowly does not mean that we can't invest in education. If the return is high enough, then borrowing is the right thing to do for BC's long-run prosperity.
The following is a back-of-the-envelope analysis on whether class size reduction is desirable in BC, given its costs. The starting point is this review of the evidence on class size reduction, by the Brookings Institute, a highly esteemed non-partisan think tank (think, not Fraser Institute or CCPA) in the US.
- The largest effect of class size reduction found in a well-designed, credible study is as follows: reducing average class size from 22 to 15 for four years (K-3) resulted in an improvement of academic performance equivalent to 3 months of extra schooling. This "STAR" study was done in Tennessee, across schools in different socio-economic settings.
- Other studies have found smaller effects, or no effects at all. Generally, class size reduction is most effective when applied in early grades (like in STAR) and in low-income settings.
So let's assume that the real effect is as measured in STAR. What would be the costs and benefits of such a policy for BC? (Note: Obviously, the class size reduction contemplated in BC is different, but in principle, both the costs and the benefits would scale.)
Cost of 4 years of class size reduction from 22 to 15 students
- Government expense: Reducing class size from 22 to 15 students requires 46.7% more teachers. According to a Statistics Canada report, the average spending per pupil in BC in 2010/2011 was $11,832, 40.5% of which was spent on educator remuneration. Assuming that this class size reduction increases educator remuneration by 46.7% (it might be a little less since educators include some non-teachers), and that no other costs change (obviously in reality, some other costs, like classrooms, would go up), the increased cost per student is $2,236. Over four years, this adds up to $8,945 per student.
- Of course, spending an extra $8,945 per student requires extra taxes (now or later), which would cause an economic loss. It is difficult to quantify such a loss, but fortunately, the Québec government has estimated it for various forms of taxation. In the long run, the most efficient way to raise taxes is via a value added tax, and the economic cost is estimated at $0.54 per dollar of revenue in Québec. The cost in BC could be lower because we start from a lower level of taxation, but it could be higher because we have an inefficient sales tax as opposed to a value added tax. Taking the $0.54 estimate as such, the additional economic cost would be $4,830 per student.
TOTAL COST: $13,775 per student
Benefit of 3 additional months of schooling
This is obviously difficult to measure, but one way to look at it is that this should equal the cost of 0.3 years of postsecondary education.
- Direct cost of education: It is not easy to disentangle teaching from research costs in our postsecondary institutions, so this can only be very approximate. A reasonable estimate is that a year of postsecondary education costs about $15,000 per student. 0.3 years = $4,500 per student.
- Opportunity cost of forgone work: Having to spend 3 extra months in school will result in foregone wages. Assuming that the average starting wage is $20/hour (it's less for high school grads, but more for university grads), this works out to 12 weeks*40 hours/week*$20/hour = $9,600 per student.
TOTAL BENEFIT: $14,100 per student
Obviously, these are very rough calculations, so the conclusion to draw is only that the costs and benefits of reducing class size in K-3 are comparable. There is no strong case for either side. Given that most studies show smaller benefits at high grade levels, it is likely that the costs of reducing class size exceed the benefits in secondary school.
Teachers may argue that reducing class size carries not only academic benefits, but also behavioural benefits. This argument certainly has merit, so the above benefits may be understated. On the other hand, these estimates of benefits are based on the most favourable credible study (at least according to Brookings). So on balance, it is not clear in which way the above numbers are biased.
Moreover, the Brookings summary referenced above mentions evidence that other forms of investment in education tend to yield higher returns than class size reductions.
Based on this evidence, my opinion is:
- I support a targeted class size reduction for elementary schools in disadvantaged areas.
- I am neutral toward a general class size reduction for K-3. Perhaps this should be given as a concession to make up for the government's past illegal actions.
- I mildly oppose a general class size reduction for grades 4-7.
- I oppose class size reductions for secondary schools.
On balance, if the choice is between BCTF's proposal and the government, I would choose the government's, as I believe that current class sizes are fine in most settings. But ideally, the two sides can come together and do the right thing, which is to focus resources on those that would benefit the most: the youngest and most disadvantaged students.
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