ISSUES IN THE NEWS


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Government operating agencies


What works, what to be cautious about. I


n a world where governments have become bloated and inefficient, there is a search for leaner, more responsive answers to conducting public business. Government operating agencies are sup- posed to allow a government to operate more effectively in a given area. These operating agencies are expected to operate like businesses but are different from the P3s, or private public partnerships, used for capital projects where the government fi- nances the work, owns the asset but leases it to the contractor, which manages its ongo- ing operation. The private sector efficiencies are quickly transferred to the project, which can be delivered at a lower cost and on time. Such a project is the Charleswood Bridge, which is well-maintained and provides the city with accurate cost projections. However, when it comes to operating agencies, the results are not so clear. These agencies are mandated to manage ongoing government re- sponsibilities. Often they are set up by simply slicing off a section of government, bringing all the former government employees and their biases, habits and attitudes with them. They may or may not be given a new boss from the private sector.


supportable – food services, where the food is transported to hospitals from distant kitchens, comes to mind. The fare is almost inedible. There is also rampant waste in hospitals thanks to packaged sup- plies imposed in the name of efficiency. The WRHA also likes to exercise its mus-


Dorothy Dobbie


cle against the hospital foundations that raise money from the private sector to fund special initiatives by hospitals. While it has no direct authority over the foundation or its board, the WRHA is not above acting as though it does, demanding of executive directors that the foundation turn over money to fund WRHA-preferred projects. This is very diffi- cult to push back against by foundation EDs, whose boards have a mandate to spend mon- ey on things that would not normally be af- fordable to the specific hospital they support. Travel Manitoba expands into private sector


The other agency is Travel Manitoba, which is mandated


to promote travel to the province. It was given a healthy budget increase over the past year, thanks to the premier, who believes in tourism as an income generator for the province. And he is right in this.


Sometimes effective in the early stages, operating agen- cies can take on a role and an authority perhaps not origi- nally envisioned. Let’s look first at how these agencies work. Most are not allowed to run deficits (although the health agencies have been doing just that). The expectation is that if the private operating agency makes money, some of the returns will come back to government, which may reinvest in the proj- ect or not. More often in recent experience, some operating agencies develop large surpluses and keep them, claiming that they need these funds as contingency against some fu- ture emergency. These surpluses can run into the hundreds of millions of dollars when you add the agencies all together. The profit motivation is a double-edged sword. While it


is in place to promote efficiency, it can also create a bully in the marketplace, whose taxpayer-supported elbows can be sharp and damaging when it comes to competition with pri- vate sector firms in the same or similar business – or when the agency begins to empire-build and move into areas that were not contemplated in its original mandate. The agency is now not only using tax dollars to compete


in the marketplace, it has the additional benefit of quasi- government authority, something that can be very intimi- dating to the private sector.


WRHA not efficient


Two operating agency examples come to mind in Mani- toba, both of which have been around for some time. One is the Winnipeg Regional Health Authority, which has a massive budget of over $3 billion, representing about one- fifth of total government revenue. Last year, it rang up a $2.8 million deficit, quite a small loss compared to the year before when its deficit exceeded $25 million. In spite of this, health services did not improve and, in some cases, performance was actually lower. Some of its “efficiencies” have made life for the user in-


However, Travel Manitoba has expanded its mandate to include a takeover of the travel publishing market. Years ago, these publications were produced by the government without containing advertising. Now Travel Manitoba is actively competing with small local publishers by selling advertising in travel publications that used to be produced by the private sector. Over the past year, we estimate that Travel Manitoba has


taken well over a million dollars out of the local travel-ad- vertising market.


Travel Manitoba is not only in competition with small


local publishers. The agency competes for ad dollars with small independent marketers, such as the guys who used to sell ads in the washrooms, those who sell ads through social media and the Internet, those who sell ads on exterior and interior video screens and the Internet, and so on and so on. The agency is basically creating a monopoly over the travel ad business in Manitoba, pushing small independent busi- nesses out of the market.


This is unfair competition, since the agency is supported by tax dollars and so has the advantage of scale that no in- dependent can compete with.


There are other examples of this (the Winnipeg Centen- nial Corporation and the mandate given it by Gary Doer to compete with the local performing arts is one), but these two will suffice to say to government, before expanding in this field be very careful to spell out the mandate: no deficits allowed, no bullying of associated private agencies, no com- peting with the private sector.


As well, ministers should be expected to police the activi-


ties of the agencies to ensure that they stick to their man- dated jurisdictions. Otherwise, the “efficiencies” of Crown agencies are no


more than a fiction and a licence for ambitious staff to cre- ate private empires that do tremendous harm to local busi- ness.


May 2017


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