Manitoba Speech from the Throne 2017

As is typical of government speeches from the throne, the 2017 Manitoba speech contains a lot of platitudes and little more. It hits on topics of importance to many Manitobans including a promise of “better health care sooner” and building “a better place for all of us for generations to come”.  It gives a nod to mental health and addictions; childcare and early years education; services to women; “rebuilding” our economy; agriculture; “green plan”.

The Speech includes reference to the government’s commitment to develop a “Comprehensive Reconciliation Framework and Action Plan in the coming year. But then again, Manitoba’s “Path to Reconciliation Act” requires this.

The government promises to “introduce fundamental reforms to the legislation governing Manitoba’s child welfare system”.  Yet there is no mention of the recommendations outlined in the Phoenix Sinclair Inquiry and in particular those aligned with poverty reduction. Commissioner Hughes dedicated the third and final phase of the Inquiry to examining the broader social and economic context of children in care and their families.

There is little at all about poverty reduction, and no mention of how the government will proceed with requirements outlined in Manitoba’s Poverty Reduction Strategy Act.  This article by Winnipeg Free Press columnist Dan Lett and this CCPA Fast Facts by MPHM’s Josh Brandon note this glaring oversight in a province where poverty continues to be persistent and deep.

Predictably, the government wastes a lot of ink blaming the previous government for all that ails us. But fear not, it promises to steer us on a “new course”…to “right the ship” and provides us with a handful of clues on how it will do this.

Public Service Cuts

It is no surprise that the “new course” builds from a foundation of privatization.  It warns of “a new financial reality” that “requires a new public service reality”–“a modern public service”.  This CBC blog sheds some light on how that reality is unfolding, the campaign of mis-information that is being waged against the public sector and how cuts will affect the economy.

This “modern public service” is essentially a smaller public service — the Speech boasts of having reduced senior management by 15% with promises to continue with “the next step of reducing the spans and layers of senior management …”.

So how will services be delivered once these so called “spans and layers” of public servants are eliminated?

A reduced public service means that some services will be delivered more slowly, some will be lost entirely and others will be delivered through the private sector, including for-profit as well as non-profit.

The non-profit sector has long played an important role in the delivery of social services, and there are many examples where non-profits make best sense.  The problem is that in most cases, people working in the non-profit sector are poorly paid, have few if any employee benefits in jobs that are not secure from year to year (even month to month). And this is likely to get far worse with the Pallister governments emphasis on measuring narrowly defined outcomes using a “value for money” approach.

In response to the issues raised by non-profit organizations, the previous government established the Non-Profit Organization (NPO) Strategy.  It is not yet clear if the Pallister government will continue with this multi-year funding strategy; organizations are waiting to hear.  This article describes why the Pallister government would be well advised to continue the Strategy. 

As they do in the KPMG Manitoba Fiscal Performance Review, Social Impact Bonds (SIB) figure prominently in the 2017 throne speech.  MaRS Centre for Impact Investing, is identified as Canada’s “leading social impact bond proponent’ and the governments SIB partner.  While the Speech notes in particular the governments interest in moving forward with a SIB related to kids in care, it also states its plans to move forward with SIBS in other areas.  This, despite a lack of evidence to show that SIBS have been successful anywhere they have been implemented, as described in this article and this paper.

There are plenty other tidbits that suggest this ‘new course’ will follow the one recommended in the KPMG Report. In fact, if you haven’t already looked at the Throne Speech, you may want to skip it and delve into the 9 volumes prepared by KPMG.  That will give you a better idea of where the Pallister Government plans to steer us.

 

 

Housing the Homeless in Manitoba: What’s the Plan?

The National Conference on Ending Homelessness was held in Winnipeg October 25-27.

Minister Scott Fielding joined Mayor Bowman and Adam Vaughan, the federal government’s Parliamentary Secretary to the Minister of Social Development, to share with delegates what their governments are doing about homelessness.  While those in attendance were encouraged to hear that the federal government will soon release its housing strategy, there was less optimism about the role the Province of Manitoba will play.  Provincial governments have a central role in ensuring housing is available for low-income individuals and families.

Minister Fielding made no commitments.

So what exactly is his government doing to address homelessness?

As described in this article by Right to Housing Coalition Chair, Kirsten Bernas, the Province of Manitoba is on the path to reverse gains made in social housing in recent years.

And a recent KPMG Manitoba Fiscal Policy Review Report: Business Case Social Housing, lays out what we can expect from the Manitoba Government moving forward.  It makes a case for selling the supply of social housing, in spite of the evidence that shows privatization of social housing has led to increased homelessness.

Nonetheless, The Pallister government’s actions to date demonstrate a complete lack of regard for the evidence.  For example:

  • In May 2017 the Manitoba government declined funding for 10 emergency shelter beds for homeless women at Red Road Lodge.
  • In June 2017, the Manitoba government increased rental costs for some low-income earners living Manitoba Housing. This could see tenants paying an extra $720 a year.
    • Manitoba Housing has also eliminated choice of location from the application process.
  • In July 2017 Manitoba cut the Rent Assist benefit for over 7,000 families, reducing benefits by up to $1200 a year for some families.
  • In July 2017 the Manitoba government announces the sale of a multi-unit public housing complex at 185 Smith street. Privatization plans begin.
  • In August 2017 the Pallister government cancelled the Community Housing Improvement Initiative.  This $510,000 program distributed more that 200 grant in the last two years, contributing to the revitalization of low-income neighbourhoods.
  • On November 1st 2017, the Pallister government increased rents in public housing from 25% of household income to 28% of income. People living in public housing who already struggle to get by will need to make up the difference. That often means dipping into food budgets, greater reliance on charity, and fewer choices.

These actions give us an indication of the value the Pallister government places on ensuring that all Manitoban’s have a decent place to live.  And if the Manitoba government proceeds with recommendations put forward in the KPMG report on Social Housing, we anticipate that things are about to get far worse.

 

 

Beware of “Mixed-Model” Home Care in Manitoba

In September the Pallister Government announced its plans to implement a ‘mixed-model” home care system that smacks of privatization.

In the article The Politics of “Mixed-Model” Home Care, Mary Jean Handle and Christine Kelly, scholars in the Department of Community Services at the University of Manitoba warn that Manitoba’s home care services, described by Manitoba Health as “the oldest comprehensive, province-wide universal [home care] service in Canada” is not immune to the Pallister governments propensity to privatize.

Value Manitoba continues to track the Pallister governments policy moves and its impact on the lives of Manitobans. In doing so, we  link readers to a variety of resources including the analysis of experts like Handle and Kelly.

If you’ve come across analysis that we have missed, send it to Value Manitoba on Face Book.

 

 

Decoding KPMG’s Manitoba Fiscal Performance Review: Privatization

In a previous post we provided an overview of KPMG’s Manitoba Fiscal Performance Review (MFPR).  Here we focus on a theme that runs throughout the report –  privatization.

Department Input? 

But before we do that, we want to provide a bit of context to how the KPMG report was shaped.  KPMG was selected through a competitive bidding process and was awarded $740,000 for its work.  Its central task was to conduct a review and identify “potential areas of opportunity for efficiency and cost savings across core government departments (except Health, which will come as a separate report).

The KPMG report emphasizes the review and recommended actions were developed in  collaboration with government departments – namely the “Manitoba Team.”  While this would indicates broad involvement of government workers, this is not the case.  The report notes that it conducted 35 interviews, involving over 140 senior government officials, including central agency staff (Executive Council, Treasury Board Secretariat, and Priorities and Planning Secretariat), all Deputy Ministers of the 11 departments and departments’ Executive Financial Officers and Executive Management Teams.

While we don’t have specific information about who was interviewed, we do know that those involved will have been either politically appointed staffers and/or managers who are wise to know who butters their bread. And since a major objective is to control the growth of department expenditure (including “flattening of management”), those involved will have been keen to demonstrate they are onside with the Government’s mission.

Front line workers were NOT among those called upon for input. So make no mistake, the KPMG report is an ideologically driven document designed to justify the Pallister government’s austerity mission, including the elimination of at least 1200 positions..

And a big part of that plan is privatization.

Asset Management

One way that KPMG paves the way for privatization is through its prescriptions for Asset Management. The report identifies “Asset Management Planning and Rationalization” as one of its 12 “Areas of Opportunity.”   Phase 1 of the Report notes the “potential reduction in type/number of assets under Provincial Ownership.”  Not much more is said than this in Phase 1, however further reference to the selling-off of government assets can be found in MFPR Phase 2 report “Business Case-Social Housing” . We’ll have more on the implications of the KPMG report for social housing on a future post but suffice it to say that what we need is MORE not LESS social housing and KPMG report recommends the Government “transfer significant housing stock to private and community based providers where there will be no guarantee that it will remain affordable for low-income families.

Privatization ‘code’

Also look for language that is ‘code’ for privatization.  Sprinkled throughout the report you’ll find  strong hints of privatization. From more obvious statements like “transfer to the private sector” and “outsourcing of service delivery to the private sector”, to more subtle ideas such as “partnership opportunities” to reduce costs; “alternative” service delivery; and the less known private sector “solutions” such as “innovative approaches to funding” such as  “Social Impact Bonds” in  education, social service and justice  sectors.

Future State Opportunities?

If you are not up for reading the 270 page Phase 1 Report and the hundreds of pages in the 8 supplementary reports, you may want to check out the section titled “Future State Opportunities” (p. 100).  Here you will find the “Fiscal Performance Review Framework” that KPMG recommend for use across Government. They propose use of this framework to effectively change the “way all spending is looked at”.

You’ll also find a number of recommended practices that government departments are already doing, as well as an overview of “areas of opportunity” that may give you hints of what is to come (p 139) and how privatization may seep into service delivery.

But you’ll also find this useful tidbit that may come in handy when assessing the real “value” of the Pallister government’s policies and practices going forward. On page 113 of the report KPMG describes ‘value’ as including, “Financial, Social and Perceived” value.  We interpret KPMG’s definitions of ‘vale’ as the “math” the “heart” and the “spin”.

  • The Math
    • “Financial and economic value : the quantitative and tangible financial and economic value that is created as a direct result of programs/services based on revenue brought in, expenditures managed, or a return on an investment.”
  • The Heart
    • “Social value: the long-term value created by displacing costs that would normally be borne if social issues are not addressed, e.g the social costs of poverty, etc.”
  • The Spin
    • “Perceived value: the worth of programs/services in the minds of Manitobans, which is as important as the other dimensions of value. Since the recipients of programs/services are not generally aware of the cost, value to them may have more to do with how they perceive the results of the programs/services relative to others.”

The  KPMG report is clearly focused on the math – and in the short term. Selling assets and offloading services may help the Pallister balance the books in the short-term, but what about the long term implications of passing the keys and control to those motivated by profit?

We know that the Pallister government will also be focused on the ‘spin’.  It will need to find a way to convince Manitobans that massive spending cuts and privatization gives Manitobans the “most improved province” they were promised.

But what about the “heart” and how does this relates with the long term “math”? In further posts we’ll look at the social implications of the Governments obsession with cutting costs and raising revenue by selling  assets, privatizing services, and cuts to spending in areas, like education, that bring value to Manitoba.

 

 

 

KPMG’s Manitoba Fiscal Performance Review

For those of us who value a Manitoba built on a foundation of compassion and social and economic fairness, the recently released Manitoba Fiscal Performance Review is deeply troubling.  If implemented by the Pallister government, the $740,000 KPMG Report will have far reaching, and in some cases irreversible implications for Manitoba.  The report’s recommendations include job cuts, selling-off social housing, reducing access to services for disabled adults, including those with intellectual disabilities, cuts to post-secondary education tuitions hikes, elimination of interest free student loans, and references to a host of yet to be determined “cost savings”.

Manitoban’s should be very concerned with what is sure to be the Pallister Government’s playbook going forward.  There is a lot to unpack as we sift through the multi volume report. Here are a few highlights that give us an indication of what we are up against.

The Review describes 6 areas of opportunity: Reduction of Select Tax Credits, Rationalization from Reorganization, Procurement Modernization, Real Estate Rationalization, Reducing Direct Support to Businesses, School and Post-Secondary Funding (initial phase focused on post-secondary funding).  The Report identifies 6 “transformational areas” with opportunity for “cost improvement” including:  School and Post-Secondary Funding, Families: Organizational and Process Transformation, Asset Management Planning and Rationalization, Justice System Reform, Capital Project Management and Delivery, and Review of Agencies, Boards and Commissions.

After laying out a vague series of cost cutting recommendations that lay the groundwork for privatization,  the report provides a “Summary of Advice for Consideration” that includes “Key Communication Points.” This advice makes clear the serious limitations of a review that focuses solely on finances with no regard for the public good. KPMG describes being tasked with conducting “a Fiscal Performance Review to identify potential areas of opportunity for efficiency and cost improvement in all departments with the exception of Health to “gain better control over the growth in core government spending, with better value for money and allocation of fiscal resources without adversely impacting front line services. It notes $7.3 billion of “in-scope” spending for the review.  The report describes a collaborative process including KPMG, Treasury Board Secretariat and central agencies, with input from departments.

It is notable that KPMG points to a short timeframe for its  assessment, leading to the immediate focus on identifying significant short-term cost improvement opportunities, as well as other material long term opportunities which should be considered going forward. This is a big red flag.  It tells us that KPMG is proposing significant short-term cost savings with no regard for long term impact.

In the report, KPMG describes a Fiscal Performance Review Framework intended to provide a consistent, systemic framework (principles, guidelines, criteria) for looking at spending and evaluating initiatives and programs across departments and branches. It speaks to the need for a results-based approach with a better focus on results and value for taxpayer dollars, yet it makes cost-cutting recommendations without indicating how results have or will be assessed.

The Report boasts of finding several areas of “opportunity” exceeding $50 million in potential cost “improvement” opportunities in 2017/18. It goes on to note a “second-wave”  of cuts in over $50 million.  KPMG, the governments appointed Steering Committee and Manitoba’s Treasury Board have targeted six key areas for immediate action.

Other than a brief mention of “social value” and a few buzzwords like “citizen centric”, “highest value to taxpayers” and a promise for “better care, better education, and a clean, green environment”, the aim of the Review is clearly aligned with Premier Pallister’s mission to dismantle and privatize Manitoba’s public services.

The Manitoba Fiscal Performance Review is narrowly and unabashedly focused on cuts at any cost.  There is no assessment of the long term social and economic impact of the transformational shifts in policy that it recklessly prescribes.

We’ll learn more as we delve deeper into the KPMG report, but this we know for certain. The Manitoba Fiscal Performance Review has little to do with improving Manitoba for Manitobans, and everything to do with Premier Pallister’s ideological mission.

Stay tuned for further posts as we continue to examine Manitoba’s Fiscal Performance Review

 

Manitoba Housing units left vacant while homelessness soars

CBC recently published two stories about two different vacant buildings owned by Manitoba Housing that once housed some of our province’s most vulnerable citizens. These vacant buildings could house around 400 people. But one building, located on downtown’s Smith Street, has been sitting vacant for almost a year now, and the other for two years. The Province has not confirmed if any other buildings are currently unoccupied.

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This news is alarming once you learn that 7,500 new rental housing units are needed just to house Winnipeg’s homeless population (see page 48 of The Plan to End Homelessness in Winnipeg). Further, the Pallister government has yet to make any commitment around building new social housing.

If the Province is not going to build any new housing, it should at least make use of its existing assets. The 373 bachelor units in the Smith property could be meeting the needs of one of the most under-served groups – single individuals tend to wait the longest for public housing as families are given first priority.

The Province says that both buildings require significant repairs. But one building was housing refugees as recently as nine months ago and the other property has already received $4.3M dollars in repairs. So it’s not clear what further work needs to be done to make the buildings habitable. Whatever it amounts to, the Province should take advantage of the current opportunity to leverage the federal dollars that are available for repairing and restoring social housing.

For now, the required investments are on hold. According to the CBC reports, the Pallister government says it is undergoing a provincial review of Manitoba Housing and that it is working on a ‘modernized provincial housing plan.’

So what can we expect to see in this new plan? Time will tell. Budget 2017 signaled that the Pallister government will have a much smaller capital program this year – meaning it is expected to invest fewer resources in building new and repairing existing Manitoba Housing units.

The Pallister government also reduced its transfer to Manitoba Housing by $20M. How will the corporation make up this difference? Will it sell its assets? Or raise rents for people who are in core housing need? Neither option is appealing.

The Province has already transferred its management responsibilities for 66 publicly-owned housing units in Winkler to a community-based non-profit, so we wouldn’t be surprised if the next step transferred ownership of the asset from Manitoba Housing to the non-profit. A recent audit of BC’s asset transfer program highlights how the program has put the long-term sustainability of affordable housing in BC at risk, and should act as a warning to the Pallister government.

So it sounds like the future of the two vacant Manitoba Housing units will remain unknown until the Province completes its review of Manitoba Housing. Meanwhile, thousands of Manitobans including women escaping domestic violence, youth exiting out of the care of Child and Family Services, and newly arrived refugees or asylum seekers will continue to be threatened with homelessness.

 

Door opened for P3s in Manitoba

Until very recently, Manitoba has been somewhat sheltered from the scourge of Public Private Partnerships (P3s) that have hit other parts of Canada. But Pallister’s government let that genie completely out of the bottle with the announcement that 4 new schools would be “P3d”. This link explains what’s going on in Manitoba and why it’s not anything to celebrate. It also explains that getting rid of the P3 legislation that the NDP brought in is a really bad idea.

Bad idea or not,  as this CBC blog explains, on May 2, 2017 Pallister endorsed the funding model  at a conference in Winnipeg on P3s:

Pallister said Manitoba was well behind the rest of the country on this funding model for public works, noting there have been 56 such projects in Canada since 2012, but only three here.

“We’re playing catch-up,” Pallister said. “We are not that innovative here.

“We have to go beyond typical taxpayer funding,” Pallister told the crowd.

Pallister says Manitoba will follow the Saskatchewan lead in using P3s to build schools. Our neighbouring province claims it will save $100 million using a P3 model.

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To say that’s a leap of faith is an understatement; the schools haven’t even been started yet (as of May, 2017). It’s hard to know exactly what evidence our Premier is relying on, especially since P3ing schools in Alberta and Nova Scotia was such a disaster (see first and last links in this article).

Why are P3s such a powerful force in Canada despite the lack of evidence that they work in the public interest? Just check out this advertisement for the May 2nd conference and see who’s behind them.

As this story demonstrates, lots of experts remain unconvinced.

So what is it exactly we’re catching up to, Mr. Pallister?

Manufacturing Crisis

There’s nothing like an old-fashioned crisis to rally the troops, especially if the crisis means that people are going to have to pay more for something. As we explained in our last post, Manitoba Hydro does not have a debt problem and, the fear of rate increases is a red herring. We saw how the projected increase in revenues could potentially be used to offset rate increases, especially for low-income Manitobans.

So if we’ve known about these investments for years, the equity to debt ratio is reasonable and we have rate increases covered, why are some suddenly waving red flags and calling wolf? We can answer that question with one word: privatization.

It might seem hard to believe given how adamant the Conservatives have been that they would not privatize Manitoba Hydro. But don’t be fooled; had they admitted they wanted to privatize, they wouldn’t have been elected. So they’re holding their cards very close to their chest. But we’ve seen this game strategy before – it’s one former Conservative Premier Filmon used with great skill when his government privatized MTS.

Here’s how the strategy works, in ten easy to follow steps.

  1. Swear you have no intention to privatize _______________ (fill in the blank).
  2. Start reporting on _______________ (fill in the blank) in a negative way and ignore any evidence to the contrary.
  3. Swear you have no intention to privatize _____________ (fill in the blank).
  4. Look for allies to support your case about how things are out of control. They will inevitably come from the business community. If you’re lucky you’ll have a compliant media that is so awestruck with your business acumen and/or so uninterested in the public good that it uncritically reports everything you say.
  5. Pack the board with business types and those positioned to provide a means to start privatizing by stealth. Board Chair Sanford Riley is also CEO and President of Richardson Financial Group, so should a need ever arise for private finance, we know where to go. He’s also on more corporate boards than we can list here, including the previously privatized MTS which Bell Canada currently is trying to buy under bogus pretences (supported by Mr. Pallister). And just in case you need an ideological shot in the arm, Mr. Riley sits on the board of the Fraser Institute, Canada’s preeminent free enterprise cheerleader.
  6. Swear you have no intention to privatize _______________ (fill in the blank).
  7. Start carving off bits and bobs to private corporations. A new twist on that move is to sell up to 49% of shares to private investors and claim that the corporation is still publicly owned and still puts the public good ahead of private profit. Saskatchewan is musing about such a move.
  8. Slowly start changing the way you talk about how to fix “the crisis”.
  9. Continue the media campaign explaining what deplorable shape _____________ (fill in the blank) is in.
  10. Privatize.

It might take more than one election cycle to implement all steps, but once you privatize, you will be able to increase rates far more than you would ever have been able to if ________________ (fill in the blank) had been kept public. You and your friends will be able to profit greatly from the rate increases because you will have been able to buy up stock in the new company. With any luck you’ll profit even more if you’re able to sell the company down the road (think MTS).

So readers, now that we think about it – maybe we really do need to panic. After all, we’re already at number five out of the ten steps.

We’ll keep you posted as events occur.

What’s the Deal With Manitoba Hydro?

11_2col_file-bjd062712power_lines_4The media is lapping up Conservative alarm bells about Manitoba Hydro. At issue is the amount of debt the utility is taking on to fund new capital projects. We believe Manitobans deserve a clear response to two pointed questions before the Pallister appointed board makes major decisions that will affect the sustainability of this critically important publicly owned utility.

Is there a crisis with Manitoba Hydro? Keep reading—we’ll explain that there is not. We’ll then answer follow up with another post about the second question: Why do the Conservatives want us to think there is a crisis?

There is no crisis

We have known for years that Manitoba Hydro was planning on taking on more debt to build the new Keeyask dam and Bi Pole III transmission line. The oft-cited Boston Consulting Group (BCG) which the Conservatives hired to evaluate Hydro’s plans agrees that going ahead with Keeyask is the best alternative to meet our increasing demand for energy and for ensuring energy security (see their report).

These projects are being financed in the normal manner – through borrowing, or taking on more debt. One measure experts use to see if a company can handle more debt is the “equity to debt ratio”. It works the same as when a bank looks at your income and assets to see if it should lend you more money. The higher the ratio, the more equity there is relative to debt. The lower the ratio, the less equity there is relative to debt. So generally speaking, the higher the ratio, the better.

We also need to make an important distinction between debt taken on by Manitoba Hydro vs a private corporation.

A provincial crown corporation is a much safer bet than a private corporation because the Province guarantees 100% of its debt. While that’s not to say that Manitoba Hydro should be reckless with how much it borrows, there is no magic formula to determine what too much debt might be for a crown corporation. The BCG report thinks the ratio will bottom out at twelve per cent. It also notes that the Public Utility Board/Needs For Alternatives To (PUB/NFAT) report found that: “Single digit equity ratios were not highlighted as a significant risk when projects (were) approved” and that the ratio should recover to twenty percent by 2025.

So do we really need to be alarmed?

Sanford Riley, the newly appointed Chair of the Hydro board argues that we should be alarmed. He is arguing that hydro rates must be increased so that Manitoba Hydro will have more revenue to increase the equity to debt ratio.

But hold on. Why is this suddenly a problem when, as explained by economist John Loxley, the experts have known and accepted the decrease in the equity to debt ratio for years? Manitoba Hydro’s financial staff updates a twenty year financial forecast every year: this is made public through the Public Utilities Board, and has been rigorously evaluated by external experts, including bond rating agencies who review these forecasts every year.

A projection from the PUB/NFAT report, page 225 also shows us, as Mr. Riley and Premier Pallister know, that once Keeyask is completed, Manitoba Hydro’s payments to the Province (paid via increased water rentals, capital tax and debt guarantee fees) will double by the early 2030s to $516 million per annum.

So even if you were to agree that rates should go up to buoy the ratio, the large increase in provincial revenue could then be used to prevent large increases or as recommended, to help low-income earners pay their utility bills.

After all – and this is a point rarely mentioned – Manitoba has the second lowest hydro rates in North America, so there’s a lot of wiggle room there.

Why then are we being told that Manitoba Hydro’s debt is out of control? This is where it gets interesting.

We’ll explain more in our next post “Manufacturing Crisis”.