Cost cutting is only half the story, but a critical half
It has been 9 months since Brian Pallister and his Tories gathered up the reins of government and so far, so good.
Their first task has been a careful operational assessment as, inch-by-inch, the new government tries to find the path to sustainable management. They have begun dismantling the overload and overlap in government departments that were bloated by 17 years of New Democrat management. Boards of crown corporations are being replaced by purposeful and competent members who don’t park their brains at the door before each meeting and who are ready and able to rescind previous self-indulgent decisions.
However, while friends of the former government, including the daily press, are quick to scream in well-feigned pain every time the government makes a move toward efficiency, others are impatient about what they see as the slow pace of change, feeling that there needs to be a stronger more confrontational approach to the cleanup.
I agree with Mr. Pallister and his approach. Make a careful assessment, and then move forward with determination, undeterred by the loud laments.
One next step is to probe deeper into the lasagna layers of the hidden government, penetrating the organizations and agencies that have been created between the policy makers and the delivery of a service. These organizations often have lofty titles and large budgets which dollars are then parsed out among many other agencies and individuals. They often deliver little in the way of services themselves, but act as referral agencies, sending “clients” to other locally funded groups.
Although there were a number of reductions made to this external layer of government management back in 2012, there are still close to 60, and perhaps more, of these boards, agencies and commissions in operation. Often they are funded by more senior boards and for a group of organizations called ‘Special Operating Agencies”, the dollars may be funneled through the Manitoba Financing Authority. If you haven’t heard of this authority, its mandate is to provide operating capital to a number of “special operating agencies” of government.
The Manitoba Financing Authority
According to the 2011-2012 financial report, “The Financing Authority provides a mechanism for funding Special Operating Agencies (SOA) outside the Core government. SOAFA holds and acquires assets associated with SOA operations and finances SOAs through contributed equity, repayable loans, and working capital advances.”
These agencies are as diverse as Green Manitoba, the Food Development Centre, The Industrial Technology Centre and the Office of the Fire Commissioner as well as a number of internal government operations such as the Crown Lands and Property, Civil Legal Services and Organization Staff Development under the Civil Service Commission, among others.
The Manitoba Financing agency is headed up by one employee who reports directly to the minister. The funds are drawn from finance in a single envelope then reallocated as the authority sees fit.
How much can we save?
In Alberta, a 2016 clean-up of boards and commissions was expected to net $35 million over three years. In Manitoba, the Selinger government estimated that it would save $3 million a year simply through the merger of Liquor and Lotteries (although closer scrutiny of the budgets of the amalgamated organizations and a thorough questioning of their function and management would no doubt produce an even richer harvest. Case in point: a visit to a Manitoba Liquor retail location will turn up several redundant clerks hounding customers with offers of help, while others simply stand around looking lost).
The NDP initiative looked good but it may not have produced much in the way of actual cost reduction.
Many of the boards and commissions were simply reabsorbed back into government itself. This included agencies such as the Lake Manitoba Stewardship Board, the Active Transportation Board, and the Manitoba Association of Agricultural Societies Advisory Board. Other amalgamations simply removed a few board members from the payroll when the agency should simply have been totally dissolved.
Shrink or disappear the Regional Health Authorities
Still on the table is the possibility of reducing the current five Regional Health Authorities to one. The RHAs of which there were originally 11 and now are five, have not proven their value over the past 25 years and are being dismantled in other Canadian jurisdictions as the layers of added bureaucracy and inefficiencies they bring with them are being questioned. Currently KPMG is reviewing the activities of the RHAs in Manitoba.
There are many other areas of government deserving of a penetrating look.
How to grow the economy
While government must continue its search for efficiencies, it is also vitally important that it reinvigorate its quest for growth and development. Next month I will tell you how I think Manitoba’s image across Canada and throughout the investment world can be improved and invigorated.