In 1984 former Prime Minister Brian Mulroney described the excesses of Liberal patronage of the day, saying, “There’s no whore like an old whore.”
Almost 40 years later, there is no better line to perfectly describe the infuriating and deplorable information that has come to light showing Bank of Canada (BOC) Governor Tiff Macklin and the Board of the Bank of Canada doled out $20 million in bonuses last year to BOC staff and executives, bringing the total in bonuses to the Bank of Canada staff to almost $72 million since 2020.
A press release issued by the Canadian Taxpayers Federation (CTF) says, “The Bank of Canada bureaucrats got twenty million in bonuses in 2022 despite a 40-year high inflation rate that in large part is due to the failed policies the bank initiated over the past three years.” The BOC has hiked interest rates seven times in the 14 months, and inflation is at a 40-year high.
In the release, Franco Terrazzano, Federal Director of the CTF, said that “Bonuses are for people who do a good job, not people who fail at their one and only job. Most organizations don’t shower employees with bonuses when they have their worst year in four decades.”
According to internal government records obtained by the CTF through a series of access-to-information requests, the average bonus among staff was $11,200, with 80 per cent of the workforce receiving one.
Terrazzano says The Bank of Canada has dished out $6.5 million in raises in 2022 and that since the onset of the COVID-19 pandemic, the Bank of Canada rubber-stamped nearly $72 million in bonuses and pay raises for staff. He noted that not a single Bank of Canada employee had their pay cut in 2020, 2021 or 2022.
The Bank of Canada’s mandate is to keep “an inflation target of two per cent inside a control range of one to three per cent.”
In November 2020, Bank of Canada Governor Tiff Macklem told the federal finance committee that “inflation is projected to remain less than two per cent into 2023.”
But inflation was 6.8 per cent in 2022, representing “a 40-year high, the largest increase since 1982,” according to Statistics Canada.
“The Bank of Canada also failed to meet its inflation target in 2021 when it handed out $23.6 million in bonuses and raises, said Tarrazzano. Only three industrialized countries had higher inflation rates than Canada in 2021, according to a January 2022 Fraser Institute report.
Macklem also told the committee the central bank expects to keep its interest rate at its “effective lower bound [of 0.25 per cent]” into 2023. However, it increased interest rates seven times in 2022. Its policy interest rate is currently five per cent.
In 2022, Macklem admitted “we got some things wrong”, and the deputy governor acknowledged “we haven’t managed to keep inflation at our target,” adding that Canada’s central bankers “should be held accountable.”
In May 2022, in her first speech with the Bank of Canada at a Women in Capital Markets meeting, Senior Deputy Governor Carolyn Rogers talked about how independence and accountability help the bank build and maintain trust. “We believe we earn the trust of Canadians by clearly explaining ourselves and by following through on our commitments. And we know that the better Canadians understand our goals, the more likely we are to achieve them. Public trust is fundamental to our ability to deliver on our mandate.”
Rogers added, “The Bank has a Board of Directors made up of the Governor, Senior Deputy Governor and twelve independent directors. The Board doesn’t get involved in monetary policy decisions—that’s the work of the Governing Council—but it does provide oversight of the Bank’s operations and finances. And the independent directors recommend the appointment of both the Governor and Senior Deputy Governor for approval by the Governor in Council. The Bank also has financial independence. Our expenditures are funded through our own operations rather than an appropriation from the government. And our budget is approved by our Board of Directors.”
In other words, the inside baseball team at the bank decides who gets bonuses without any public or government involvement.
“Handing out big bonus cheques is an odd way to hold your organization accountable,” Terrazzano said. “Central bankers shouldn’t get bonuses when Canadians can’t afford groceries, gasoline or homes.”
Terrazzano says the number of Bank of Canada bureaucrats receiving six-figure salaries has also doubled since Prime Minister Justin Trudeau came to power, according to records obtained by the CTF through a separate access-to-information request.
In December 2015, a total of 487 Bank of Canada staff took home more than $100,000 annually, representing 30 per cent of its workforce. In December 2022, 1,095 staff took home more than $100,000 annually, representing 49 per cent of the workforce.
There are now 309 more central bankers taking a six-figure salary than before the pandemic.
According to its annual reports, the Bank of Canada’s total labour costs increased by four per cent in 2022, 12 per cent in 2021, and 13 per cent in 2020.
In response to the bonuses, Official Opposition Leader Pierre Poilievre told the CTF podcast, “I would cancel bonuses for failing government authorities, and that would include, for example, the Bank of Canada,” adding. “I don’t think we should reward failure.”
Franco Terrazzano, Federal Director of the CTF, concurred with Poilievre saying, “At best, the Bank of Canada failed to keep a lid on rising inflation, and, at worst, it drove inflation higher by printing hundreds of billions of dollars out of thin air.” Terrazzano said, “Finance Minister Chrystia Freeland should find savings by ending bonuses at failing Crown corporations like the Bank of Canada.”
In May 2022, in a debate during the Conservative leadership race then Tory candidate Pierre Poilievre said that he “would replace him (Macklem) with a new governor who would reinstate our low-inflation mandate, protect the purchasing power of our dollar, and honour the working people who earned those dollars.” Later Poilievre doubled down on the statement saying he would fire Macklem.
At the time, Poilievre was widely criticized by mainstream Canadian media and the Liberal government for saying he would interfere with an independent body.
However, most media ignored warnings Poilievre had made as the Finance Critic in 2020 Poilievre when he criticized both the Trudeau government and the BOC and Macklem for quantitative easing policies that allowed the BOC to print billions of dollars in additional currency.
At the time, Poilievre warned in House of Commons committee meetings that the policy could be disastrous for Canadians if interest rates went up. Macklem, the BOC and the government summarily dismissed his concerns which all proved to be true.
The Bank of Canada’s response to this mass policy failure that has delivered the worst inflation in 40 years has been to give themselves a bonus. In the case of the BOC, Brian Mulroney’s adage that “There is no whore like an old whore” certainly is a truism for Mr. Macklem and his elitist colleagues who serve at their pleasure in the rarified air of the BOC on Sparks Street.
Poilievre got it right the first time. Macklem should be fired.
