WCB Punishes Employers

The Workers Compensation Board leans left and does what the ideologically-driven NDP and its union bosses want. Recently, the WCB gutted its employer assessment model. This latest treat to the union bosses comes just before the next election. The NDP, fearing defeat, seek the help of the union bosses as the campaign revs up.

For decades the member unions of the Manitoba Federation of Labour (MFL) have viewed the WCB as an organization they should control, This to serve as a demonstration that they can ‘deliver’ benefits for the rank and file. With globalization of industrial manufacturing, distribution and private sector services, the power of unions outside of the public sector has severely diminished, making union influence over the WCB even more important.

Under sustained pressure from the NDP and the MFL, the WCB has weakened the relationship between accident experience and employers’ annual premiums. Prior to the latest change, there was a wider range of premium levels charged between firms with low accident experience and those with higher claims. The wide range benefitted firms with good safety practices and low accident frequencies. Firms with poorer safety practices and high accident experiences paid premiums considerably higher than firms with better experience.

Now, with the changes made, firms with better accident records will pay more and those with the worst experience will pay less. The WCB explains that “(the change) will result in a rate increase for those employers that are at the very bottom (of rates for their industry)”. This, so firms at the top of their industry’s rates will gain.

Will the change benefit employers that practice very good safety practices and have a record of lower levels of accidents? No! Will the change benefit workers? How could it? Employers with higher accident frequencies will have a reduced incentive to practice better safety. Lower accident frequency employers will pay more than before, and have less money to improve safety, hire new workers and provide raises.

The MFL and, in particular, its public sector unions sought the change for years, but to no avail until now. The system that helped drive down accident frequency was put in place in 1990; the pre-1990 system – which the recent changes heads back towards – resulted in much higher accident levels. Recently, the MFL and its members undertook a campaign accusing employers of suppressing WCB claims. Those unsubstantiated claims served as their argument to change the system back to what they sought.

Manitoba employers have suffered from the WCB giving in to the union bosses and the NDP. Employers had already experienced a series of WCB moves increasing their costs while weakening the originally intended apolitical nature of the WCB. More and more government-directed costs paid through WCB premiums: extended and looser definitions of occupational diseases; higher and higher maximum insured wages; excess WCB financial reserves rather than rebates to employers: and, more and more industries dragged into the out-dated program.

To reduce squawking by employers over this recent change, the WCB will cut the average premium in 2016. This will mask what they have done. Will the WCB report profits in 2015 sufficient to pay for the reduction? How? Investment income must be way down. Expect to find out after the election.

Hydro’s Dismal Financial Results

Do you enjoy paying more than necessary to cover the blunders of an incompetent government directing a mandatory monopoly? I don’t.

Without fanfare, not even a media release from the NDP, Manitoba Hydro recently posted its financial results for the first half of its current fiscal year. The poor results are likely the last picture of Hydro’s financial condition Manitobans will see before the upcoming provincial election.

For the year ended September 30, 2015, Hydro’s net equity fell by $441 million. A slim net operating profit of $53 million was more than destroyed by a massive increase in the Canadian dollar equivalent of Hydro’s American debts. As weak as it was, Hydro’s six-month ‘operating’ profit – reported before taking into account the gigantic negative financial hit from currency weakness – was made possible only by deferring (pushing out) incurred operating costs ($361 million) to future reporting periods.

Is it likely Hydro’s results will improve in the future? Hardly, with the costs to hit the Utility’s books once the uneconomic west-side Bipole III comes into service. The Utility willfully ignores the risk of future currency losses and the potential for a major write-down of existing and underway uneconomic projects, Hydro projects years of net operating losses until accumulating large rate increases to be imposed on Manitobans pull its results into the black.

The most favoured of the three financial beneficiaries of Hydro’s operations and projects remains the provincial government. It not only received $341 million (built into the Utility’s swollen rates) from Hydro over the last year, but stands to gain from every dollar Hydro spends on capital projects, every molecule of water that flows through its turbines, and every cent borrowed. I leave out income and payroll taxes and the PST that the government pulls in from Hydro’s operations. If Hydro builds every part of its plan, the annual take for government could hit $1 billion.

There are two other major beneficiaries of the NDP’s Hydro play – American utilities and their customers (receiving subsidized electricity from Manitoba) and northern First Nations (sharing the ownership of generating stations plus jobs, contracts and community development handouts). Like the NDP government, a few First Nations (which also enjoy the same rates and service as other Manitobans) will gain from revenue guarantees from the uneconomic infrastructure that all ratepayers are being forced to fund.

So, the lack of fanfare upon the release of Hydro’s recent results is no surprise.

Since 2004, Hydro’s electricity rates have soared by 41% above base 2003 rates, taking about $400 million a year more out of ratepayers’ pockets than in 2003. Hydro’s projections – based on outdated construction cost estimates (too low) and forecasts of customer demand and export revenue (too high) – suggest that, in a mere 16 years, rates will rise to 271% of the base level.

More likely even those dire projections will prove wrong, making it worse. Say goodbye to “Manitoba’s Advantage”, say hello to energy poverty for many and problems for industry.

Let us hope that April 2016 brings a new government and a halt to the ‘build’ madness. What is needed is a proper, independent and comprehensive review of Hydro’s plan. Never in Manitoba’s history have so few caused so much damage to so many.