Response of the Government of Canada to the Report of the 2003 Judicial Compensation and Benefits Commission

3.Salary Proposals

  1. The Commission’s Recommendation
  2. Economic Conditions and the Overall Economic and Financial Position of the Government
  3. The Need to Attract Outstanding Candidates to the Judiciary

3. Salary Proposals

(a) The Commission’s Recommendation

The Commission recommended a 10.8% salary increase effective April 1, 2004, inclusive of statutory indexing after considering submissions from the Government and the judiciary.12 The proposed salary of a puisne13 judge would rise from $216,600 to $240,000 as of April 1, 2004. There would be equivalent increases for Chief Justices and judges of the Supreme Court of Canada.14 Statutory indexing would continue effective April 1 in each of the following years.

(b) Economic Conditions and the Overall Economic and Financial Position of the Government

The Commission’s analysis of this criterion is found at pages 9 to 11 of its Report. The Commission’s overall approach to this factor is summarized as follows: “[w]e interpret this direction as obliging us to consider whether the state of economic affairs in Canada would or should inhibit or restrain us from making the recommendations we would otherwise consider appropriate”.15

We do not accept such a narrow characterization of this criterion. In particular, we do not agree that paragraph 26(1.1)(a) is simply directed at establishing whether the Government has sufficient funds to pay for whatever amount the Commission might otherwise think is appropriate. Rather, the Government’s economic and financial position is a key contextual element in the determination of the “adequacy” of judicial compensation. The Commission is required to undertake its analysis in light of the overall state of the Government’s finances and in view of the other economic and social priorities of the Government. In other words, all of the factors must be considered in an integrated fashion, rather than isolating the economic criterion and applying it only as a negative consideration after a proposed quantum has been otherwise determined.

In its 2006 Budget, the Government identified its key priorities, including measures to enhance accountability, create greater opportunity for Canadians, invest in our families and communities, protect Canadians’ security and restore fiscal balance.16 Among other measures, the Government has committed to reducing the Goods and Services Tax, lowering personal and corporate income taxes, introducing Canada’s Universal Child Care Plan, investing in Canada’s military, hiring more Royal Canadian Mounted Police officers and working to develop a Patient Wait Times Guarantee.17

At the same time, and as importantly, the Government is committed to ongoing fiscal responsibility in order to ensure our future economic health and prosperity. Accordingly, we have committed to reducing the national debt by $3 billion each year, starting in this fiscal year, as well as to reducing growth in federal spending to a more sustainable level. The President of the Treasury Board has been tasked with identifying $1 billion of savings in 2006-07 and 2007-08 in order to support new and on-going program expenses that are expected to grow by 5.4% in 2006-07 and 4.1% in 2007-08.18

This is not to deny that the particular nature of the judicial office and function imposes unique considerations in terms of claims on public resources. However the first statutory criterion itself recognizes that legitimate expectations in terms of judicial compensation are conditioned by the fact that judges are paid from the public purse – upon which there are many competing and legitimate demands. Canadians expect that any expenditure from the public purse should be reasonable and generally proportional to all of these other economic pressures and fiscal priorities. In sum, the Government does not believe that the Commission’s salary recommendation pays adequate heed to this reality, as embodied in the first statutory criterion.

(c) The Need to Attract Outstanding Candidates to the Judiciary

This Government recognizes that it is in the public interest to attract outstanding candidates to the judiciary and acknowledges that the pool of potential candidates from which the judiciary is drawn consists of a specialized group of professionals who typically enjoy a much higher income than the average Canadian. It is because of the unique nature of judicial office that judicial compensation commissions have always faced the challenge of finding appropriate “comparator” positions against which the judicial salary can be assessed. This Commission was no exception, receiving a broad array of information concerning remuneration of private-sector lawyers and senior officials appointed to the federal public service, including all levels of deputy ministers and other Governor-in-Council appointees.

It is noteworthy that this Commission appears to have placed less weight on what had become a more traditional comparator for judicial salaries, that of the mid-point of the Deputy Minister 3 level of senior public servants. And while the Commission was prepared to consider a broader spectrum of the Deputy Minister community (levels 1 through 4), it also took the step of considering the full average of “at-risk” pay in calculating DM salaries.19 We believe that step was misguided. According the full equivalent of at-risk pay for comparative purposes is in our view completely inconsistent with the unequalled security of tenure which is one of the undisputed benefits of judicial office, even though established for constitutional purposes.

In the Government’s view, the Deputy Minister comparator is one that should be accorded significant weight. It bears noting that the financial position of the Government is reflected in part in the salaries it is prepared to pay its most senior employees. The Commission heard evidence that annual salary increases, excluding at-risk pay, in the executive and deputy minister ranks of the public service were in the range of 2.5% to 3.1% in the three years prior to the Report.20 This trend has continued since the publication of the Report, with increases of 2.5%, effective April 1, 2004, and 3.0 per cent, effective April 1, 2005.21

The Commission placed greatest analytical weight and emphasis on lawyers in the private-sector – described by the Commission as “perhaps the most important” comparator.22 The Commission regarded private sector legal income as critical because most appointees to the bench are drawn from senior lawyers from the Bar.23 And in considering private sector candidates, the Commission observed:

The rationale, of course, is that it is in the public interest that senior members of the Bar should be attracted to the bench, and senior members of the Bar are, as a general rule, among the highest earners in private practice. While not all the “outstanding” candidates contemplated by s.26(1.1)(c) of the Judges Act will be senior lawyers in the higher earning brackets, many will, and they should not be discouraged from applying to the bench because of inadequate compensation.24

The Government agrees with the Commission that private practice lawyer incomes are an important comparator. However, judicial appointments are not made exclusively from the ranks of private-sector lawyers. Fully 27.2% of appointees between January 1, 1997 and March 30, 2004 came from non-private practice settings.25 The Government believes that due account should be given to the fact that a sizeable percentage of appointees are not private practice lawyers.

However, the fact that the Commission has given predominant, almost exclusive weight, to the income of self-employed lawyers is not the primary concern from our perspective. Rather it is apparent that the Commission not only focussed on the higher end of private sector legal incomes, it utilized an even narrower subset of those incomes, drawn from the eight largest urban centers in Canada (Calgary, Edmonton, Montreal, Ottawa, Québec, Toronto, Vancouver, and Winnipeg). The impact of concentrating on this subset of urban lawyers must be considered in light of the fact that it excludes almost half (48.1%) of private practitioners, many undoubtedly as experienced and capable as their urban counterparts. Lawyers from the eight largest urban centers comprised only 51.9% of appointees to the bench between January 1, 1997 and March 30, 2004.26

In explaining its reliance on the income data from urban centers, the Commission observed:

[T]he fact remains that most appointees do come from private practice. It is also fair to say that many appointees do come from the higher-income brackets, and come from those centres where the income for self-employed lawyers is the highest. There will always be lawyers who earn significantly more than the 75th percentile of lawyers’ professional income that we use for this comparator group and, while many in that group may choose not to seek judicial office, many highly qualified persons in that group do accept the financial sacrifice involved, because of the other attractions of judicial life. It is important, we believe, to establish a salary level that does not discourage members of that group from considering judicial office.27

The effect of what the Government considers to be undue weight having been given to legal incomes from the urban subset can be seen in the Commission’s representation of the resulting data.28 Examining Table 17 in the Commission’s Report, which illustrates average income by province, it is notable that the proposed salary of $240,000 exceeds, in some cases to a significant degree, the 75th percentile of self-employed income in every province with the exception of Alberta and Ontario.29

Moreover, when the value of the judicial annuity (22.5% of salary) is included in the $240,000, effective April 1, 2004, the real value would be $294,000, exceeding by a significant degree the 75th percentile for Canada overall and for every province except Alberta and Ontario. 30 And the value of the security that is provided by such an annuity entitlement should not be underestimated. A judge who becomes disabled at any time, even the day after appointment, is immediately entitled to an annuity of two thirds the judicial salary, for life. The partner of a judge who dies at any time, even the day after appointment, is entitled to half of that pension, for life.

The Government has other concerns about the validity of the methodology and assumptions on which the Commission has relied. In analyzing the income of lawyers in private practice, the Commission used data from the income-tax filings of those who identified themselves to the Canada Revenue Agency as self-employed lawyers, and adopted a compensation methodological approach of using the 75th percentile of overall income. However, contrary to the Government’s submission, the Commission also excluded from consideration lawyers who had incomes below $60,000, on the assumption that they would not be likely candidates for office, and lawyers who were outside the age range of 44-to-56, using the rationale that this is the age group from which the large majority of judicial appointments are made.31 The effect of doing so was to introduce a statistical bias into the data in favour of lawyers who earn higher incomes.

In the end, it remains difficult to identify with any degree of certainty the cumulative assumptions that led the Commission to make its salary recommendation. Indeed, while the former Government accepted the salary recommendation of the Commission, it is noteworthy that its November, 2004 Response included a very strong caveat that acceptance of the Commission salary recommendations should not to be taken as a complete acceptance of all of the assumptions made by the Commission with respect to the comparative analysis undertaken.32

Ultimately, the present Government accepts that the Commission was required to rely on data that was unsatisfactory from a variety of perspectives, and that it was therefore not unreasonable to rely on private sector income data for comparative purposes. However we are of the view that the Commission put excessive weight on the income of lawyers from the eight urban centers, resulting in an inflated income proposal that is well beyond what is reasonable across Canada.

In reviewing the Commission’s salary recommendation and in deciding to modify it, the Government has taken into account its overall economic and financial position and considered all of the various comparators set out by the Commission, including the income of lawyers in private practice and all levels of Deputy Minister. In terms of income from lawyers in private practice, a more reasonable approach in our judgement and one that better accords with all the statutory criteria, including current economic and fiscal considerations, is to consider incomes at the 75th percentile across all provincial centers, urban and rural, as illustrated in Table 17 (Annex 2).

It is also highly relevant that there is no indication that the current judicial salary is a deterrent to high-quality lawyers applying for judicial office. During the period from 1988 to March 2004, the number of recommended and highly recommended candidates for judicial office exceeded the number of candidates appointed by a factor of approximately 3.3:1.33 In Ontario, where eight positions are currently vacant, there are 36 highly recommended candidates, 114 recommended candidates, and 25 provincial court judges currently qualified for appointment.34 Similarly, in Alberta, where there are currently 2 vacancies, there are 5 highly recommended candidates, 22 recommended candidates, and 5 provincial court judges qualified for appointment. Provided that excellent candidates continue to seek judicial office and that the Canadian public is well served by committed and experienced individuals, the fact that some of the highest paid lawyers, who might be otherwise interested in applying, may not do so due to salary expectations remains entirely a matter of personal choice. It should also be emphasized that compensation is only one in a range of factors for those considering applying for judicial office.

In sum, the Government believes that the Commission’s salary recommendation places undue emphasis on the third statutory criterion and overshoots the mark in defining the level of salary increase necessary to ensure outstanding candidates for the judiciary. Instead, the Government is proposing a modified judicial salary proposal for puisne judges of $232,300, or 7.25%, as of April 1, 2004, with statutory indexing to continue effective April 1 in each of the following years.35 The Chief Justice of Canada, the Justices of the Supreme Court and the Chief Justices of the superior courts would receive a salary that maintains a proportionate relationship with puisne judges.36