Archive for February, 2010

Paying volunteers is a bad idea

February 22nd, 2010
I sent the letter below to Imprint's board of directors. There is a proposal coming to the Annual General Meeting on 22 Feb 2010 (right after reading week) to increase honoraria given to volunteers to as much as $2,500/term (section editor) with lesser amounts for less senior volunteer roles. I think it will lead to worse rather than better performance and is a misallocation of capital.
Update at 11:50 pm: I hear that the proposal isn't going ahead.
Good evening directors,

I hope all is well in the office. To those of you I don't know, I was a volunteer back in the early 2000s. I spent a fair amount of time in the office.
I heard about the proposed change to the honoraria policy. I think it is a bad idea to raise honoraria to such high levels. It's slightly better, I suppose, than the awful proposal to grant honoraria to directors that was floated a few years ago, but not by much.
Before turning to the heart of the matter, let me admit that I proposed a few ill-conceived policies while I was a volunteer. I recall some about internal and external communications that were just silly.
In general, I think looking at honoraria as wages rather than a token of appreciation is at the root of the problem. Are section editors and so forth volunteers or paid staff? If they are volunteers, then I would think that the editor-in-chief is more than able to motivate them to do good work without any honoraria whatsoever. Granting honoraria was initially just a kind of gesture of goodwill -- I remember receiving my first one, for $50, I believe. I was so surprised and pleased to receive a small gift. Perhaps we erred in increasing the maximum amounts to $390. We should have just left them as token amounts. At the time, we had a big surplus of funds on hand. We didn't realize until later that the best way of dealing with the surplus was to reduce the student fee.
If you want paid part-time staff, and not volunteers, then call them such, hire them and pay them wages. Don't pretend that someone receiving $2500 a term, and possibly more than $6000 a year, is a volunteer. It's insulting to actual volunteers.
It is true that Imprint volunteers do a tremendous amount of work. They have for more than 30 years, through many different editors and boards. They also receive a substantial amount of recognition and perks -- food on production nights, term dinners, awards and honoraria. I don't believe for a second that relying on actual volunteers is a weakness, nor do I think that shifting to paid part-time staff is better. Several of the volunteers I worked with are professional journalists now and honoraria had nothing to do with the quality of their work or their willingness to devote so many hours to Imprint. I think you may be underestimating the enduring strength of Imprint's culture. In fact, I think you run a serious risk of undermining the volunteer ethos that has been at the heart of the organization for decades.
If you insist on advocating for honoraria to be raised to such high levels, I would suggest that you make the change effective four years from now, when few of the current volunteers would be eligible to receive the money. Otherwise, I expect you will have volunteers voting themselves more money, which is ridiculous.
Best,
Jesse
PS: The current class system for volunteers also seems overly hierarchical. Back in my day, there were only staff and non-staff, and the barrier to becoming staff was not very high -- four meetings and four contributions, I believe. Perhaps things are too competitive, rather than not competitive enough?

We need to restore the GST

February 2nd, 2010

The public finances of the federal government are in a sorry state of affairs. While the financial crisis originating in the United States is partly to blame, policy choices made by the government are also a major factor. Looking to the future, the federal government will have to confront the deficit and make some important decisions about how to deal with it.

The federal government is expected to run a $54.2 billion deficit in 2009-2010. The Parliamentary Budget Office projects near-term future deficits to be $43.1 (10-11), $27.9 (11-12), $23.2 (12-13), $19.0 (13-14), for a total accumulated deficit over the period of $167.2 billion. This represents a 36% increase on the $463.7 billion net federal debt outstanding at the end of 2008-2009.

Consider the demographic challenge facing Canada over the same period. At the end of the period (2014), the leading edge of the boomer cohort will be in its mid-to-late-sixties. Over the following two decades from 2014-2033, our increasingly aged population will provide the cruel combination of both a smaller income tax base and a higher demand for government services, especially health care.

Statistics Canada, 2007, Canadian Demographics at a Glance, Catalogue number 91-003-XWE.

Statistics Canada, 2007, Canadian Demographics at a Glance, Catalogue number 91-003-XWE.

I suppose it is good news that the PBO's projections take demographics into account. However, its projections only extend to 2014, and the picture doesn't get any brighter thereafter. Once we've cranked up the net debt to $631 billion in 2014, we will not only have to balance the budget but also run significant operating surpluses to pay back the debt to a reasonable level. We will have to do so with a smaller income tax base (see demographics, above), higher demand for many government services, and higher interest payments on the debt.

In light of this rosy scenario, we must consider what to do now to mitigate these looming budgetary problems. Clearly, some combination of revenue increases and expenditure reductions will be necessary to balance the budget and run operating surpluses to offset the debt incurred over the next few years.

The simplest and most effective change we can make immediately would be to restore the GST to its previous level of seven per cent. The Conservative government slashed this tax by 28.5% over two years. The PBO estimates that each percentage point decrease in the GST costs the government $5.4 billion in revenue. Restoring the GST to 7% would provide $10.8 billion in revenue annually, or $52.4 billion over five years. We would still have to deal with a projected $114 billion deficit over the period, but it would be a good start. Considering that the GST cut was poor tax policy to begin with, let's start putting our fiscal house in order -- again! -- by reversing the ill-advised and short-sighted tax cut that the Conservatives brought in.

Update: The GST credit system provides relief to low income Canadians who pay sales taxes.