It’s a hard lesson at the expense of Manitoba taxpayers: Manitoba Hydro is billions of dollars in debt. “It’s a big problem,” Hydro’s Chair of the Board conceded last year.
Now that problem just got a whole lot bigger. The Crown corporation’s latest report pegs its long-term debt at a staggering $16 billion, up $1.9 billion from a year ago. That means every single Manitoban would have to kick in about $13,000 to pay it down.
As Manitoba Hydro and the province try to figure out how to get out of this mess, it’s worth taking at look at how they got into it in the first place.
The biggest factor driving up costs are two massive capital projects – the Keeyask dam in northern Manitoba and the Bipole III transmission line. Both fall under Project Labour Agreements (PLAs) that were arranged with the Building Trades unions in the 1960s.
PLAs are basically agreements to provide labour for the duration of a project. In the case of these massive projects, owners granted the Building Trades unions a monopoly on the work in return for labour peace. That may have made some sense half a century ago, when a steady, stable source of labour was needed, especially in remote regions. But times have changed, and Manitobans are now realizing this labour arrangement at Hydro’s Keeyask and Bipole lll projects comes at too high a price.
As construction of the Keeyask and Bipole III projects continues, Manitoba Hydro will keep digging itself further into debt. Over the coming months, the Crown corporation’s debt is expected to balloon by another $8 billion.
Hydro rate increases are inevitable and the finger pointing predictable, with the current government blaming its predecessor. While the Pallister government didn’t create this problem, it does need to fix it. During the 2016 election campaign, the premier promised to level the playing field.
“We want more Manitoba companies to participate in our bidding process,” Pallister said. “The better the participation, the better value for money.” Well, what are we waiting for?
Today’s Manitoba workforce is highly skilled, safe, diverse and confident. Many otherwise qualified Manitoba workers would love to have the opportunity to work on these projects, but cannot. Many otherwise qualified companies would love to be able to bid on the work, but cannot. Labour monopolies may have made sense in the days of rotary phones, but those days are gone. It’s time to open up Manitoba’s Project Labour Agreements and let Manitobans share in the benefits – jobwise and costwise – of fair and open competition.
Opening up construction competition on government infrastructure projects is the right thing to do. First, it’s fair. This work should be open to all who qualify, not just members of a select union. Secondly, it saves tax dollars. The benefits of greater construction competition are well founded. In the U.S., research suggests that costs are between 12 per cent and 18 per cent higher on projects where bidding is restricted. In Ontario, there’s a growing and compelling body of research by the Hamilton-based Cardus think tank that shows restrictive tendering has driven up project costs by up to 30 per cent in many municipalities. In other words, competition saves taxpayers money; monopolies cost taxpayers money.
It doesn’t have to be this way in Manitoba. The province has come a long way since the rotary phone and the first cable TV. Taxpayers don’t deserve Hydro sticker shock. They do deserve better value for their hard-earned infrastructure dollars.
By Paul de Jong, president of the Progressive Contractors Association of Canada (PCA)