Hey there, time traveller!
This article was published 19/2/2014 (1132 days ago), so information in it may no longer be current.
BRANDON -- Was this the best deal that could be made, or did the Selinger government dispose of an important and profitable Crown asset for more than $100 million less than it is worth?
Last week, Finance Minister Jennifer Howard announced her government had sold the province's property registry (which includes the land titles system) to Teranet Manitoba for $75 million. Under the terms of the deal, Teranet will invest in new technology and will pay the province an $11-million royalty annually.
Teranet is wholly owned by the Ontario Municipal Employees' union.
When the agreement in principle with Teranet was announced in December 2012, it was criticized by the Manitoba Government and General Employees Union as a privatization that would put profits ahead of public service and would jeopardize Manitoba jobs. The MGEU was correct to be concerned about the transaction, although not solely for the reasons stated.
Last September, when legislation related to the Teranet transaction was reviewed by a legislature committee of MLAs, then finance minister Stan Struthers was asked how the $75-million sale price was determined.
Struthers responded, "The -- we -- there was an evaluation done before we embarked upon this... and part of that evaluation was a look around at other provinces to see what they were doing, particularly Ontario, where Teranet had already been established for a number of years and performing there. But we looked at other provinces, as well."
If Struthers' advisers considered what was happening in other provinces, they apparently neglected to look next door to Saskatchewan.
In November 2012 -- a month before the Teranet deal was unveiled in Manitoba -- the Saskatchewan government announced it planned to sell 60 per cent of the Crown corporation that manages its property registry (Information Services Corp.) to the public.
The government would retain ownership of the remaining 40 per cent and de facto control of the company.
Five per cent of the ISC shares offered for sale were set aside for purchase by company employees, 45 per cent was allocated for Saskatchewan residents, and the remaining 50 per cent was available to outside investors.
The ISC share offering was completed eight months ago, raising proceeds of $147 million.
Unlike in Manitoba, where the $75 million paid by Teranet will be used to reduce this year's provincial deficit, the monies raised from the ISC transaction will fund infrastructure projects throughout Saskatchewan. It will also receive dividends of more than $11 million annually from its remaining 40 per cent ownership interest.
If 60 per cent of ISC was worth $147 million, Saskatchewan's property registry is worth almost $250 million.
Compare that to the $75-million sale price for Manitoba's property registry and several troubling questions immediately emerge.
Manitoba has rules for the disposal of surplus Crown assets. Why weren't those or similar rules followed in this case?
Why did the Selinger government negotiate in secret with just one prospective purchaser? Why wasn't the market opened up to other bidders, including Manitoba companies, in order to establish the true market value of the property registry and ensure Manitobans were getting the best price?
If the example set by Saskatchewan's government had been followed, it may have raised far more money, would have maintained Manitoba control over an important government activity, would have earned higher annual revenue for the government and would have provided a stable income stream for Manitoba investors.
Why was that example not followed? Was it because of partisan politics? Was it because the Saskatchewan transaction too closely resembled the sale of MTS by the Filmon government in the 1990s, and that the use of a similar model by the Selinger government would neutralize a political weapon the NDP has used against the Tories for more than 15 years?
Is this another case of financial ineptitude -- eclipsing the Crocus debacle -- or did our NDP government give a sweetheart deal to union friends in Ontario?
Manitobans deserve a full and frank explanation as to how an important, profitable Crown asset could be sold to an out-of-province corporation for far less than it may have been worth. That explanation must start with the immediate disclosure of the valuation Struthers claims the Selinger government relied upon.
Deveryn Ross is a political commentator living in Brandon.