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Rethink Manitoba’s Crown Corporations

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19Feb

By: Graham Lane
Posted 02/11/2016

Manitoba is dominated by government monopolies throughout all aspects of the economy. Beyond the massive health care and education monopolies, we have other monopolies structured as crown corporations. These corporations provide many services, including electricity, natural gas distribution, mandatory auto insurance, mandatory workers’ compensation, and even liquor retailing.

There were solid historical reasons for government ownership. For example, governments invested in capital-intensive industries like power and telephones in sparsely populated provinces like Manitoba because the private sector wouldn’t. Technology of the day was simple, leading to so-called economies of scale where it appeared to make sense to have only one monopoly provider. For example, why have duplicate sets of telephone and power lines?

But, circumstances have changed. For example, the Internet and mobile phone revolution enabled the rise of vigorous competing alternatives and ended the business case for government ownership of MTS. In 1996 the Filmon government wisely sold a rapidly depreciating asset for a substantial sum of money — exiting a fast-changing business where unpredictable and clumsy government ownership was clearly a liability. Ignore the NDP’s old-time privatization bogeyman hysterics — Manitobans today enjoy a much wider selection of modern inexpensive telecom, Internet and TV services from an unsubsidized MTS.

With similar forces operating in the power industry, Ontario is moving to privatize its Hydro One. Driven by a transformational move towards newer types of power generation, here we see “green” renewables (wind and solar) undermining the traditional centralized model of producing electricity from just a few large power plants. While a case remains for a transmission monopoly (operated separately as a co-op or community-owned company in many countries), power generation by multiple competing suppliers is clearly the wave of the future.

Ironically, the Selinger government is doing its best to discredit its own monopoly crown corporation in electricity. At its behest, and with mandate-directed compliant regulators, Hydro is pursuing a misadventure of colossal proportions. It is spending and borrowing billions for unneeded dams and transmission, which will probably double or triple your power bills while jeopardizing the province’s ability to borrow.

Unfortunately, Manitoba’s monopolies and regulatory bodies — all loaded with NDP appointees — have lost their independence and now just cover for government rather than protect the public. The mandates, missions and value for money of government-controlled monopolies and watchdog agencies need to be seriously reviewed, without delay.

If we keep the regulatory bodies and leave the crown corporations with their monopolies, they must be run efficiently and not be political playthings. Their operations should be subject to scrutiny, transparency and accountability. Board members of crowns and regulators should be appointed following open competitions, have the right expertise and be totally independent of government.

To begin, we need “score card” comparisons of crown operations against similar operations elsewhere. In the end, the monopolies should only remain if those monopolies truly do serve the public interest. Also, obvious candidates for privatization, like liquor retailing (Liberal policy), should just go ahead.

The huge hidden liabilities of the crowns, and their loss of innovation, low productivity and rampant cronyism involving the NDP, cry out for more transparency, more citizen-taxpayer friendly models and full accountability, as soon as possible.


Graham Lane chairs Manitoba Forward (www.manitobaforward.ca), focused on sound public policy. 
Republished from the Winnipeg Sun online edition February 11, 2016.

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