NDP accused of blurring financials

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This article was published 02/05/2015 (3840 days ago), so information in it may no longer be current.

Manitoba Hydro’s multibillion-dollar dam and transmission-line project is the most likely reason for the Selinger government’s sudden move to omit the financial performance of Crown corporations in future budgets, observers say.

And critics say the apparent shift away from legislated summary budget reporting, to focusing only on core operating services — such as hospitals, schools and jails — might be an attempt to shield Manitobans from bad financial news.

“We are very concerned about something that will take us into territory that is less transparent,” Opposition Leader Brian Pallister said Friday.

The change was first announced a week ago by rookie Finance Minister Greg Dewar and further explained on Thursday when he introduced his first budget — the province’s sixth consecutive deficit budget.

Dewar said the government has nothing to hide.

“We’re still reporting under summary, but our government’s focus is on core because it’s what we have control over,” he said. “There over 100 entities that are included in the summary budget. And we don’t think that bad weather, extreme weather, a snowstorm or drought should impact health care or education funding.”

Dewar was not specific, but it’s no secret the top three Crown corporations have recently faced challenges.

Top among them is Manitoba Hydro, which is building the $4.6-billion Bipole III transmission line and the $6.5-billion Keeyask generating station. It’s in the final approval stages to build an estimated $350-million transmission line to Minnesota. Manitoba Hydro will initially own 49 per cent of the U.S. side of the line, called the Great Northern Transmission Line, with Minnesota Power owning the rest. The U.S. portion of the cost is estimated at between US$560 million and US$710 million.

University of Manitoba economist John McCallum said the huge debt Hydro will incur for these projects will be guaranteed by the province and reflected on its bottom line.

“Changing the dial on the radio by switching the way things get measured may be of some benefit to you,” McCallum said. “But if you switch to the core approach, it doesn’t mean that you can now bury all the Crowns. The bond-market community are really, really good at financial analysis.”

SSLqWe are very concerned about something that will take us into territory that is less transparent’

— Brian Pallister

Manitoba Public Insurance recently faced tougher times with the high number of fender-benders during the 2013-14 winter, which resulted in a $30-million increase in claims costs. In its most recent quarterly report, it reported net income of $55.1 million for the nine months ending Nov. 30, 2014, compared with net income of $64.5 million for the same period the year before.

Until recently, Manitoba Liquor & Lotteries saw lower revenue due, in part, to underperforming older video-lottery terminals, which have since been replaced. It said in its most recent quarterly report its consolidated net income and comprehensive income for the nine months ending Dec. 31, 2014, was $475.8 million, an increase of $30.1 million from the same period the previous year.

The Crown corporation said positive change was due to a one-time gain on the settlement of pension liability of $26.1 million and an increase of $16.2 million in VLT revenue, but it was offset by decreases of $5.7 million in lottery ticket sales, $4.7 million in its casino operations and a $1.8-million drop in liquor sales.

McCallum said the government cannot frustrate the bond market by switching its focus on balancing its budget on core departments.

“If they leave the bond-market community unable to easily piece together what they are getting right now in the summary approach, the bond-market community would not find that pleasing,” he said.

“Personally, I don’t like government practice that alters the way they have presented things,” he added. “I think you should be straight up and make it real easy for people to understand your situation.”

A spokeswoman for Dewar said the government will still report on summary, but its focus will be more on spending in core services and government tax and fee revenue.

“We don’t think that the wide fluctuations in summary revenues should dictate how we are able to provide services to Manitoba families,” Jodee Mason said. “Core government revenues and expenditures are a more real reflection of what Manitobans’ budget priorities are.”

The province adopted four-year summary budgets in 2008, changing the way it presented its finances to the public. The change met a long-standing demand by the auditor general to include the income of all Crown corporations, whether or not that money goes into provincial revenue. Previously, budgets focused on the province’s operating fund and core services.

bruce.owen@freepress.mb.ca