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The Pallister government’s plan to cut jobs at Manitoba Hydro to "free up" money to help fight the COVID-19 pandemic makes no sense whatsoever.
Despite claims by the premier that he has no choice but to reduce costs in some parts of government to help pay for things such as personal protective equipment, testing and contact tracing, laying off workers at Hydro will do nothing of the kind.
Manitoba Hydro says it plans to lay off up to 700 workers as part of efforts to meet a provincial government directive to find $86 million in cost savings.
However, none of that money will go to the front lines of health care. Unlike a Crown corporation such as Manitoba Liquor and Lotteries (whose net revenues go directly into the province's general revenues), Hydro profits stay with the company.
Unless the Pallister government plans to increase the water power rental rate or the debt guarantee fee it charges Hydro every year (a dividend of sorts the province has been siphoning from Hydro for decades), any money saved by laying off staff won’t raise a dime to help fight the pandemic.
Like many entities the provincial government has deemed "non-essential" during the pandemic, Hydro has been forced to cut costs. Premier Brian Pallister has been sending out confusing messages for weeks to Crown corporations, post-secondary education institutions and others on his cost-cutting list. Initially, he said some areas of government would possibly have to reduce labour costs by 10 to 30 per cent, but last week, he claimed that would now be closer to 2.2 per cent (although he provided no details about how the cuts would apply, nor which areas of government would take the biggest hit).
Pallister’s position on the forced cuts has been erratic and nonsensical since the beginning of the pandemic. His austerity measures have been offside with the views of most economists who believe governments should stimulate the economy during severe downturns, not reduce public-sector spending.
While there is merit to temporarily reducing workforces in areas that may be completely shut down, such as government-run casinos, there is no basis whatsoever to reduce Hydro’s workforce.
Manitoba Hydro is an essential service. It has not scaled back its operations during the pandemic. The Crown corporation is delivering the same level of service today as it was pre-COVID. In fact, after four years of deep job cuts (perhaps some of them warranted), Hydro was already operating with a reduced workforce. There is no rational reason to cut jobs further as it relates to the pandemic.
Manitoba Hydro’s finances are part of the provincial government’s consolidated financial statements. Under summary accounting, Hydro’s bottom line affects the official deficit reported by the province each year. The same goes for all Crown corporations, school divisions, universities and colleges, regional health authorities and any entity that falls under the control of the provincial government. But those are accounting issues and are reported as such to comply with public-sector accounting rules. It does not mean net revenues from those entities are necessarily transferred to the province’s general revenues.
For Crowns such as Manitoba Hydro or Manitoba Public Insurance, net revenues remain with the corporation (unless profits are returned to ratepayers through rebate cheques or rate cuts).
The only impact Pallister’s job cuts will have on Hydro is reduced service for ratepayers. Not only is it misguided to cut government jobs unnecessarily during a severe economic downturn, these cuts will almost certainly affect the quality of service Manitobans receive from their hydroelectricity provider. It may take longer to get the lights back on during power outages; much-needed improvements to Hydro infrastructure (including throughout the city of Winnipeg) could be further delayed; staff may have to cut corners on jobs.
And all this for what? So Pallister can erroneously claim he’s repurposing scarce resources from non-essential services to essential ones to fight a pandemic? The level of deceit is staggering.
The further we get into this pandemic, the worse Pallister’s judgment gets on financial issues. Whether it’s universal COVID-19 cheques for seniors, untimely tax cuts, or workforce reductions that will cause far more harm than good, Pallister is showing that at a time of crisis, he’s having trouble keeping his head.
Tom has been covering Manitoba politics since the early 1990s and joined the Winnipeg Free Press news team in 2019.
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Updated on Monday, May 11, 2020 at 7:17 PM CDT: fixes typo