Stepping back from the small potatoes and looking at the larger picture. I see this as a matter of "How much money do we spend on government services be it municipal/provincial or federal".
I would reccomend we start at the top at all LEVELS before we ask anybody to reduce pay or step down. Start with those governing, members of parliament, councilors, mayors, prime minister, premiers, etc, etc. They take the first hit.
Next, we need to remove a large chunk of beauracracy at ALL levels (and yeah, we in the CF/DND are guilty of it too). I think too many people are in jobs that could simply be eliminated, reduced or amalgamated with other jobs.
Then we start rating all government services from most essential to least. Then you have a viable hit list to go after. Obviously, least important government services take bigger hits.
After cuts/slashes/reductions/efficencies are made, then it becomes department heads responsibility to monitor their departments and ensure people are being reasonable and honest about what they are taking home beyond base pay level.
A couple of problems with this.
Everbody always justifies their own existence no matter how redundant they may be. For this too work, it will take some hard decisions to be made.
Next, Greed. One of the worst things to infect the human brain. When people get greedy and take more and more of what they don't need (especially money), things get ugly. Combine justification with greed and you get a nasty combination.
Canadian Tax payers have a valid complaint. I would not say its the police making too much, but as I said, the problem must be viewed holistically.