Reform requires proper performance measurement

By: Graham Lane
Posted: Winnipeg Sun, August 26, 2016

One of the major misdeeds of the recently retired NDP government was its failure to create proper statistics allowing for measuring results. Higher-performing private sector firms and government administrations increasingly focus on measuring: Inputs and outputs.

In Manitoba, all levels of government together spend roughly 50% of the money in our economy. The money to do that spending ultimately is derived from the private sector, and it is there where the focus on measurement has been most valued.

The electorate voted for a change in government because in part they want to see significant improvements in the government’s performance. However, sadly, the purposeful obfuscation of meaningful measurement by the defeated NDP regime has made it harder even for managers in the public sector to do their jobs effectively and efficiently.

When the NDP took power in 1999, there had been ongoing efforts by the prior Filmon PC Government to improve government operations through the implementation of performance measurement. This was most notable in the two largest departments – health and education. But, shortly after the NDP took over, they stopped meetings of education committees tasked with measuring performance; did away with most standardized testing; and, over the years that followed, made it increasingly difficult to measure any meaningful output from our schools, colleges and universities. The same misguided approach was applied in health, where performance measurements were soon either hidden or massaged to hide the truth.

In their last years in power, the NDP went farther, removing large swaths of information from the Manitoba Bureau of Statistics’ website. This makes it difficult to understand, for example, population outmigration. Those interested in detailed subsets of the numbers (often critics of the government) had to visit the legislative library and wade through reams of paper to gain information, rather than access information from the Government’s website, as had been available before.

In the private sector, the price and quality of goods and services of a firm are continually assessed – externally and internally. In government, without civil servants undertaking the gathering of accurate and meaningful statistics, taxpayers and the electorate are left in the dark.

The NDP did their best to hide information or mislead the public. For instance, crown corporations were considered private corporations for statistical reporting purposes. That meant that investments in crown corporations were classified as private sector investments, with jobs created in the crowns counted as private sector jobs.

Anyone looking at government published statistics for private sector job growth in Manitoba had to be amazed at how well it was performing. But that was not surprising if crown corporations were positioned as private sector employers. When large numbers of NDPers migrated from government departments – reducing the civil servant count – to the crowns, it effectively grew the private sector job count.

This of course understates the true size of the government controlled portion of our economy. To start a much needed discussion with a more realistic baseline, the new PC government should develop statistics allowing for the measurement of government and crown performance. They should re-calculate distorted historical data and re-release those numbers. Without an accurate baseline and ongoing measurement, the PC’s new ministers and their civil service managers will lack the tools necessary to reform government.

Graham Lane leads Manitoba Forward (manitobaforward.ca).

Slow recovery a one-term policy

By: Graham Lane
Posted: Winnipeg Sun, August 19, 2016

Recently Standard & Poor’s cut Manitoba’s credit rating, citing the province’s high debt burden compared with
similar jurisdictions within Canada and internationally. Don’t attach blame for Manitoba’s stressed finances on
the recently-arrived Pallister Government, but by planning to balance the budget in 8 years risks his team
wearing it.

Some PC old-timers and insiders defend a go-slow attitude, blaming over-aggressive budget cutting for
Sterling Lyon government’s defeat way back 35 years ago. But the largest PC majority in history (a 20 seat
margin compared to Lyon’s 10 in 1977) signals public support for a more aggressive approach to an
undeniably complicated challenge. This is the opportunity for positive ‘root and branch’ public service reform,
not more painful and hopeless patching-up of an expensive and unsustainable big government model.

This case for real reform on Mr. Pallister’s wall should be flashing ever faster this week as it sinks in that a third
of provincial government spending is met by federal transfer payments. And they are going to decline. Falling
equalization payments, caused by Alberta’s and Ontario’s economic woes and the federal government’s choice
to expand its own deficits, makes serious reform or politically damaging cuts basically inevitable.

As one battle-tested statesman from another time observed, stretching out badly needed adjustments is a little
like amputating a gangrenous limb with a butter knife: you will likely die in the process. To whit, going ultra
slow on cleaning up the NDP mess might even be a recipe for a one-term Pallister Government.

Fortunately, Premier Pallister has positioned his government to pivot away from the traditional low-performing
public service model by referring broadly to the evident need to focus on improving results. Properly done, it is
a safe pathway to positive change since Manitoba delivers comparatively mediocre public service levels – most
notably in healthcare, education and municipal services – with about the country’s highest per capita costs.

But, how to get there is the billion dollar question.

Contrary to popular myth, most government employees work hard and yearn to do a good job. But they
operate in wildly dysfunctional and bureaucratic systems that reward paper-pushing, excess process and overspending.
Famously, managers get paid more if they can figure out how to have larger staffs. Services are
horrifically centralized so that front-line staff need layers of approvals, reaching up to Ministers’ offices, to do
anything. Flexibility is further compromised by archaic personnel systems. The last time I looked there were
about 1200 job classifications for provincial civil servants, about only 11 civil servants per position. A large
corporation might have 30 or 40 job classifications – far from one for every 11 employees.

This costly and massive dysfunction is congenitally replicated across all public sector operations – core
services plus hospitals, education, Crown corporations – producing expensive low-performing results. There
are too many layers of management and supervisors, too much emphasis on paper-pushing and following
over-prescribed rules and processes.

A serious plan to fundamentally reform this mess would include decentralizing control, pushing responsibility to
front-line staff, eliminating layers of overhead and downsizing through attrition. This is only part of the puzzle of
creating the smartest, fastest and most productive win-win way forward to balancing the budget while
improving services.

Graham Lane chairs Manitoba Forward (manitobaforward.ca).

Fiscal Restraint Needed for Manitoba

By: Graham Lane
Posted: Winnipeg Sun, August 12, 2016

Governments are expected to act in the broad public interest, too often they haven’t. Advantage may go to
those supporting and paid by government, disadvantaging the majority of taxpayers.
Governments have two ‘honey pots’ to draw on, taxation and borrowing. Raising taxes affect taxpayers
immediately and can bring about electoral defeat. Borrowing allows government to spend more than they take
in, delaying the time when taxpayers have to pay for the goods or services bought by borrowing.

While borrowing avoids the immediate need to increase taxes, it also reduces future governments’ flexibility.
Still, borrowing is not always bad. Borrowing is bad when done outside a recession to fund day-to-day
operations of regular ongoing public services. Only when used to fund new infrastructure providing bona fide
long-term public benefits can borrowing make sense.

Too often archaic policies waste taxpayer money with abandon. Wildly bureaucratic and dysfunctional
personnel policies had Winnipeg’s mayor paying half a million to split with an administrator and a quarter of a
million to a police constable for a year’s work with overtime. What should we think?

Former NDP Premier Selinger paid off his close political advisors, discarding them because they preferred a
different leader. He must have known that many would simply move on to Alberta’s NDP or their former union
employers after pocketing overly large severance payouts. What about the NDP using borrowed funds, higher
utility rates and creative accounting (masking future rate hikes) to ‘give away’ a share of two unneeded
multibillion dams to a select group of First Nations while subsidizing American utilities?

Too often governments act as if our money are theirs. Taxpayers are rarely asked if they want their hardearned
tax dollars spent on economically dubious items, like bus rapid transit.

Governments have also found it easier to give in to union contractual demands than stand up for unorganized
taxpayers. Why not dig in and say no? Because if they do the unions pressure and criticize them, using slick
advertising campaigns and threatening to withhold services. Standing firm is not usually praised in the media,
creating the risk of a loss in the next election. Much easier to give in than stand up for taxpayers.

In the past, efforts have, though rarely, been made by a government to control spending. The Filmon PC
government of 1987-1999 actually passed a balanced budget law with teeth. (The Doer-Selinger regime slowly
pulled the teeth, removing all restraints on its hand-over-fist spending.) Filmon actually took on the public
sector unions, holding down contract terms while avoiding uneconomic mega projects.

The Filmon government deserved special praise because it served in difficult times. With the federal Liberal
government slashing transfer payments Filmon had two choices: restrain and cut costs towards eliminating the
structural deficit left by NDP Premier Pawley, or continue running large deficits and raising taxes. By taking the
first route he saved Manitoba’s ability to borrow and paved the way for balanced budgets.

The new Pallister PC government has an enormous opportunity to end wasteful spending by modernizing
public sector services and implementing effective balanced budget legislation. The combination, done smartly,
could break the back of the NDP’s wasteful spending coalition to the applause of the silent majority of
taxpayers..

Graham Lane chairs Manitoba Forward (manitobaforward.ca).

Churchill’s port will never be profitable

By: Graham Lane
Posted: Winnipeg Sun, August 5, 2016

Much has recently been written about the Port of Churchill and the rail line leading up to it.
The port and rail line, now 75 years old, has never been a profitable venture. The old
Canadian Wheat Board used its government monopoly power to buck the market and direct a
bit of grain through the port each year. But this was always done for political reasons. Let’s
put Churchill in perspective, in some of its best years it handled only week’s worth of work at
Vancouver’s port.

Let’s acknowledge that shipping grain through Churchill has never been about economics. The
port has always existed because of government largess and interference in natural market
flows.

Since the line was sold to OmniTrax successive federal and provincial governments have
funnelled hundreds of millions of dollars to keep the line and port open. The annual subsidies
to Via Rail and OmniTrax have been between $30-$50 million. Despite all the money spent to
keep the line operational, the rail bed itself is so weak that grain cars can only be half-filled
due to weight restrictions. The trains have to move at about 10 km/h in many places. Fixing
the track to deal with full cars would cost additional hundreds of millions of dollars. When do
we stop throwing good money after already wasted tax dollars?

We are told that the port now employs about 50 people, being perhaps the largest employer
in Churchill outside government. The town, current population about 750, once had 6,000
people. The town then had a US military base, a rocket range, and the port. The military base
is long gone, decommissioned in the 1970s. Churchill has no strategic military importance and
Canada has chosen Baffin Island to build its Arctic Deep Water Naval Base. Without the port
and the rail to it, Churchill is a small town relying on tourism.

It is time to end the myth of Churchill being a strategic asset for either grain shipments or the
military. Perhaps it has a future in more tourism and as a modest supply route to the north.
Could we justify the outlay of so much money for a unique cruise stop? There must be many
better ways of spending major public dollars.

We do need to have a public discussion on the future of Churchill. But our discourse should be
based on the reality of today. Grain shipments through Churchill are over. Accepting the loss,
hard as it may be, particularly for laid-off workers and other residents, it is time to move on.

None of the alternatives for the future of Churchill should require the rehabilitation of the
rail line. While conversion to a gravel road could be considered, even considering the
possibility of fixing the rail would, as a good public policy option, be unconscionable.
Taxpayers have spent enough on a grain-port dream that cannot be realized if prudent policy
is to finally have its day.

OmniTrax shouldn’t get more than $1, and feel lucky not to have to pay to get the chronic
money-loser off their hands. Premier Pallister had it right, say “no more”.

Graham Lane, a retired chartered accountant and chair of PUB, leads Manitoba Forward
(manitobaforward.ca), a developer and advocate for sensible public policies.

Sacrifices on the Green Altar

By: Graham Lane
Posted: Winnipeg Sun, July 29, 2016

Governments across the country bend over backwards to wash themselves in green. Trudeau threatens a
carbon tax. Here in Manitoba our last government committed billions of ratepayer money to export heavily subsidized
‘green’ hydro power to America.

While everyone can support being sustainable, why sacrifice our children’s’ prosperity on the altar of green
activists? Consider what is happening in Ontario.

Ontario’s Liberal government bought into the new green religion with the fervour of a new religious convert.
It has wasted billions on uneconomic (but supposed green) power sources, resulting in exploding electricity
prices that are pushing manufacturers to relocate elsewhere. While over-the-top green-driven utility rates
drive up household living costs, non-science based regulations imposed on agriculture unnecessarily push up
farm production costs. And, don’t we need to increase investing in Canada? No one in the Ontario
Government has ever asked: when will the cost of our green sacrifices be too much for householders and
industry to bear?.

The Doer-Selinger NDP government started Manitoba down the same “shoot yourself in the foot” path.
Fortunately, the new Pallister administration has a chance to be sensible as well as sustainable, though
there is the risk the PCs might let that opportunity pass.

For example, our new provincial government has promised to put a price on carbon. How will increasing the
cost of heating our homes (the cost of heating electrically already soaring), getting to work, planting crops,
and transporting food to the North help Manitobans? How would a carbon tax help our economy grow or
stop the outmigration of our new graduates to greener economic pastures (pun intended)?

There is a smarter green way, Manitoba can be both sustainable and prosperous. This will require our
government having the courage to buck the ongoing demands from the activists and refuse to sacrifice our
economy on the green altar.

We need to avoid making energy prohibitively expensive, and not follow Ontario’s lead. And, let’s avoid
regulatory red tape making it more risky to invest in Manitoba while giving the appearance of being greener
than green. We need to avoid moving away from science–based regulations for our industries, particularly
agriculture.

There are many practical things Manitoba can do to protect our air land and water. For example, well
maintained roads and streets would significantly reduce gas consumption. How about synchronizing more
traffic lights? Doing so might not sound as “green” as a massive new wind farm planted someplace on the
prairies, but would have a more lasting impact on Manitoba’s greenhouse gas emissions (and help you get to
work on time as well).

Protecting Lake Winnipeg? Don’t ban farm practices that haven’t a measurable impact on the nutrients in
Lake Winnipeg. Instead, adopt a clear policy to ensure that neither village, town nor city ever again dumps
raw sewage into our river systems. This would skip a flashy news conference but would actually reduce the
nutrients flowing into the Lake. Why not convince North Dakota to adopt the same policy?

We all want to take care of our common environment. But we shouldn’t have to sacrifice our
grandchildren’s economic well-being to do that. We can be practical, sensible and sustainable, all at the
same time. Smarter green should be the Manitoba way.

Graham Lane chairs Manitoba Forward (manitobaforward.ca).