Crown corporations and blurred accountability
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THE recent announcement by minister Kelvin Goertzen that he had ordered a special organizational review of performance problems at the Manitoba Public Insurance corporation (MPI) brings me back to the issues related to the direction, control and accountability of Crown corporations(CCs).
CCs are meant to be freer from continuous political involvement than regular departments. The legal framework for them is the 2019 Crown Corporation Governance and Accountability Act (CCGA) which defines the roles of the Legislature, government at large, individual ministers, boards of directors, and corporate executives. The CCGA is premised on a dichotomy between broad policy directions set by government and operations conducted by corporate executives, with their planning and management efforts overseen by boards of directors.
Beyond the legalities, there is a hidden, dynamic, interactive political process which involves the premier, other ministers, central agencies serving cabinet, boards appointed by government, and the CEO and executives within the corporation. This process allows for informal pressures on CCs. It can lead to “discretionary accountability,” with governments taking credit for positive developments and shifting blame for problems.
Most members of the public do not understand or accept the distinctive status of CCs, which they see as just another part of government. As a shrewd NDP minister once told me: “policy and operations are two ends of the same stick with which I will be beaten if the board and the executive screw up.” Minister Goertzen probably had this political reality in mind when he ordered the independent review of MPI.
There is not space here to describe the recent issues at MPI which have been covered by several excellent reports in this newspaper. Suffice to say, the problems were serious and the government could not be seen to be doing nothing.
The government’s decision to order an independent review was perfectly legal under Section 13 of the CCGA. The minister said he was taking responsibility to address problems. In political terms, the review is a defensive tactic intended to blunt criticism during the pre-election period. Faced with questions the minister will insist he is waiting for a report.
Historically, PC governments have favoured, at least rhetorically, allowing CCs to operate in a business-like manner, free of political interference. The NDP have been more inclined to introduce broader public policy goals (such as Indigenous employment) into corporate decision-making. In this instance, there was a role reversal with the NDP charging the PCs with meddling in MPI’s internal affairs.
All governments appoint “political friends” to boards of CCs which is meant to promote a shared understanding of the expectations of the corporation and to prevent unwanted surprises. However, the two most recent PC governments have exhibited poor political management of their relations with the Crown sector.
In 2018 when then-Premier Brian Pallister refused to meet with the board chair and engaged in second guessing of board decisions, there was a mass resignation of all nine directors for Manitoba Hydro. Even though there were fundamental issues facing the corporation, Pallister insisted meeting with the board would compromise corporate independence and the arms-length regulatory process at the Public Utilities Board.
Pallister made use of published mandate letters to set directions and to create performance goals for CCs. Premier Heather Stefanson has not made use of such devices. In the case of MPI, there was an apparent communications breakdown between the government and the corporation. Both the board chair and the CEO seem to have been blindsided by the review announcement.
Reflecting its determination to manage the MPI controversies, the government appointed MLA Ron Schuler, chair of the party caucus, to the board, which is legally allowed. As a former minister responsible for MPI, Mr. Schuler will be a strong presence on the MPI board. Like other political appointees he will have to decide whether to act as a trustee of the long-term interests of the corporation or as an agent serving the short-term political interests of the PC government.
Minister Goertzen offered no details on the review beyond saying it would be conducted by an external organization and would be completed by Dec. 1. Based on its past record, the PC government could turn to management consultants for advice. The minister promised to release the report, but that would likely happen long after the next election.
The NDP called for immediate meetings of the Legislature’s Standing Committee on Crown Corporations to investigate the MPI situation. Because a government majority controls whether meetings are held, nothing is likely to happen on that front.
The MPI case illustrates how the distinctive legal status of CCs, in combination with the politics of their relationships with governments, can create swirling, blurred pictures of accountability.
Paul G. Thomas is Professor Emeritus of Political Studies at the University of Manitoba.