Heavy is the head that watches over the Crown corporation Tories heading into election campaign with political storm clouds gathering over MPI By: Dan Lett Posted: 7:00 PM CST Wednesday, Feb. 22, 2023 Last Modified: 7:37 AM CST Thursday, Feb. 23, 2023 Updates

Hey there, time traveller!
This article was published 22/02/2023 (974 days ago), so information in it may no longer be current.

The mess at Manitoba Public Insurance appears ready to become even messier.

Just a month after the Public Utilities Board approved a 1.54 per cent Autopac rate increase, the Consumer’s Association of Canada (Manitoba) has formally asked the regulator to revisit that decision because the financial conditions faced by MPI have changed significantly. Those changes in circumstance “call into question the accuracy” of last month’s rate decision.

MPI was, itself, challenging some of the aspects of the PUB decision. However, the CAC request raises the stakes considerably.

“CAC Manitoba asks the Board to request details about these changes from MPI and, if appropriate, to modify Order 4/23 accordingly to reflect potentially significant reductions in the corporation’s expense forecasts,” the letter to the PUB stated.

Being forced to go back to the PUB would be just the latest in a series of twists, turns and setbacks that have left MPI in a mess of its own making.

The Crown auto insurance company has been embroiled in controversy over skyrocketing costs of a technology upgrade, aggressive hiring plans, millions of dollars in untendered contracts and the eye-brow raising use of funds destined for rate cuts and rebates to cover escalating costs in driver and vehicle licensing.

The Crown auto insurance company has been embroiled in controversy over skyrocketing costs of a technology upgrade, aggressive hiring plans, millions of dollars in untendered contracts and the controversial use of funds destined for rate cuts and rebates to cover escalating costs in driver and vehicle licensing.

In January, the PUB approved a 1.54 per cent rate increase for the fiscal year starting April 1 while also allowing MPI to retain excess funds from its capital reserve fund to deal with Project Nova, the budget for which has grown from $106 million to $290 million in just two years. Although the regulator approved MPI’s rate plan for the upcoming year, it delivered a stern rebuke to MPI for its management of Nova and an unexplained hiring binge.

In the rate hearings, MPI confirmed a plan to hire nearly 300 additional full-time employees in the next year, a jump of more than 20 per cent from pre-pandemic levels. The hiring plan was controversial for interveners, given that claims costs have declined during the pandemic.

The PUB did not have the jurisdiction to stop MPI from hiring that many people, but the Progressive Conservative government did.

In late January, weeks after the PUB’s rate decision was announced, Justice Minister Kelvin Goertzen — who is also responsible for MPI — told the Free Press he asked the corporation to revise its hiring plan, a request that was accepted. And then, a few days after confirming he had asked MPI to draw up a new hiring plan, Goertzen also issued a ministerial directive prohibiting the public insurer from engaging in untendered contracts.

MPI was forced to admit at the PUB hearings it had issued $12 million in untendered contracts in a bid to get Nova back on track. A ministerial directive is the strongest intervention that a cabinet minister can make in the operations of a Crown corporation. However, if problems continue to arise at MPI, more questions will be raised about its management.

Many of those questions will involve the performance of MPI president and CEO Eric Herbelin.

Herbelin has been the point man on Project Nova and decisions to award the untendered contracts. However, as previously reported in the Free Press, he was also the key force in a plan to divert $113 million in excess Autopac revenue normally used for rebates and rate cuts to cover the costs of driver and vehicle licensing and Nova.

Once again, although it lacked the jurisdiction to stop MPI, the PUB noted that Herbelin’s decision was contrary to an agreement with the regulator and interveners that the revenue be used to cushion drivers from rate hikes. Interveners have also raised the possibility that the diversion of money may be at odds with some of the terms of MPI’s legislation.

Herbelin and MPI have put the government into a very difficult position.

Normally, cabinet is not supposed to meddle directly in the affairs of Crown corporations, which are to operate at arm’s length from government. However, in at least two recent instances — one involving a “recommendation” and another involving a formal ministerial directive — Goertzen has had to step in to address MPI controversies.

It does not help that the province has tried to diminish the role of the PUB in overseeing rate applications from MPI and from Manitoba Hydro. The details, included as part of a budget implementation bill last October, would significantly increase the amount of money MPI is allowed to retain before having to undertake rebates or Autopac rate cuts.

These legislative amendments echo similar attempts at Hydro, where legislation has been introduced to allow the Crown utility to retain hundreds of millions of dollars more in reserve accounts than is currently required.

The timing of the MPI mess could not be worse for the Tories. Manitobans are scheduled to vote in a general election that must be held by Oct. 3. Another round of PUB deliberations means potentially more headlines about mismanagement and political meddling.

And that is hardly the message you want voters to have in mind when they go to the polls.

dan.lett@winnipegfreepress.com

Dan Lett
Columnist

Dan Lett is a columnist for the Free Press, providing opinion and commentary on politics in Winnipeg and beyond. Born and raised in Toronto, Dan joined the Free Press in 1986.  Read more about Dan.

Dan’s columns are built on facts and reactions, but offer his personal views through arguments and analysis. The Free Press’ editing team reviews Dan’s columns before they are posted online or published in print — part of the our tradition, since 1872, of producing reliable independent journalism. Read more about Free Press’s history and mandate, and learn how our newsroom operates.