It may be a good time for those working in Crown corporations across the province to get that resumé up to date. Premier Brian Pallister told reporters on Monday that the government has set a 15 per cent management-reduction target as a starting point for all crowns.
But Mr. Pallister shouldn’t think that this is going to save money right off the top. As in any case where there are massive layoffs and voluntary buyouts, the savings aren’t realized for the first year.
Take, for example, the Friday announcement from Manitoba Hydro. The Crown corporation is planning on eliminating 900 positions, or 15 per cent of its workplace, in 2017. But that won’t ameliorate the need for Hydro to initiate double-digit rate increases for the next five years. More than anything, Friday’s announcement signals to the provincial government that the newly constituted Hydro board got serious about finding efficiencies before seeking government assistance in dealing with its growing deficit.
Hydro CEO Kelvin Shepard said the board hopes that a volunteer departure program can be used to help downsize, after regular retirements occur.
Last September, Shepherd foreshadowed Friday’s announcement, suggesting that the Crown utility would definitely "have to reduce operational costs." Staff represents 80 per cent of those costs. At the time, Shepherd said that in the prior three years, staff numbers had already been reduced by 400 through attrition, while a further 900 of Hydro’s 6,000 employees were coming up for retirement.
While not finalized, Shepherd says the basic framework for this new departure program would allow for two weeks pay for every year served, to a maximum of 30 weeks. Which means, any savings won’t occur until 2018 when it’s expected the Crown corporation will save $65 million annually.
This is normal when any organization does cutbacks — the benefits aren’t immediately realized. For example, when the federal government in 2012 attempted to cut 30,000 people from its public service ranks, it cost taxpayers an estimated $2 billion, according to a CBC report from that year. Unions ensure that their staff are protected, as they should, so the full effects aren’t felt immediately.
If we can glean anything from Friday’s announcement, it’s that access to Hydro services — especially in rural Manitoba — will be further reduced. As Shepherd told the Sun last week, there are a significant number of employees in Brandon who may be eligible for the voluntary departure program. But he said these cuts will be spread across the province, further eroding rural service. A dozen rural service centres were closed in the spring of 2014. And unless Hydro has deviated from plans it announced in 2013, another dozen service centres will close early this year.
During public meetings in October, the Manitoba Hydro board had suggested that it was hoping for a major equity injection from the province to prevent the need for double-digit rate increases. The rate hikes remain a possibility, but perhaps now there is an opportunity for the board to return to the province and revisit that request. How it will be received is another question altogether. Pallister confirmed Monday he won’t consider a bailout and questioned the need for double-digit increases.
There are suggestions within the labour movement that these Hydro moves are classic "shock doctrine" tactics to create a crisis, with the government responding that privatization is the only solution to get taxpayers off the hook.
However, the premier has denied that repeatedly, even going so far as to include it in the mandate letter given to Crown Services Minister Ron Schuler. The top priority is "above all else" to keep Manitoba Hydro public.
Manitoba Hydro has been in trouble for some time now. Its debt is set to double to $25 billion within four years. Within two days of winning the election last spring, Mr. Pallister’s government fired the Hydro board and replaced the members with appointees who have senior financial management and expertise.
So the Crown corporation says it has done what it can to cut 15 per cent off the top, but that’s not translating to any real savings in 2017. The premier remains doubtful that double-digit rate increases are necessary. And labour is suggesting this is all just a plot to drive privatization discussions.
Someone needs to shine more light on what’s really going on at Manitoba Hydro.
» Winnipeg Free Press and The Brandon Sun