In so many ways, it was the perfect scam.
The Progressive Conservative government approved a plan with Manitoba Public Insurance to skim $113 million in excess Autopac revenue — money that should have been returned to vehicle owners — to help pay for information technology upgrades and increasing operating costs at driver and vehicle licensing (DVL).
The worst part is they tried to hide it from the public.
The skimming of funds was first reported in the Free Press in October. However, it was also flagged by the Public Utilities Board in a decision released this week on Autopac rates.
In approving a $321-million rebate and 1.57 per cent rate cut, the PUB found MPI improperly diverted money from excess revenue that would have meant larger rebates and rate cuts. It also said MPI’s financial statements "lacked transparency" because the Crown corporation didn’t tell vehicle owners what it was doing.
Unfortunately, as concerned as the PUB was, it lacks the authority to force MPI to return the money.
Take away all the legalese and the accounting gymnastics, and you have the PC government agreeing to let $113 million, which should have been paid back to vehicle owners, underwrite an expense that should have been paid by general revenue.
Was this illegal? Probably not. Immoral and dishonest? You bet.
The seeds of this sorry tale were sown in 2004 when the then-NDP government decided MPI should operate DVL along with selling auto insurance. The government agreed to transfer $30 million annually to cover the cost of DVL, ensuring that insurance premiums would not be used to cover the costs of something the government should pay for.
As the province grew, and the number of vehicles on our roads increased, so too did the revenue from driver and vehicle licensing. However, over the past 18 years, the government’s support for DVL remained at $30 million per year. That has created a huge cash grab for the PC government.
In 2021, the Tories collected $212 million from driver and vehicle licensing but transferred only $30 million to cover DVL overhead. That is a $190-million windfall each year.
The cost of upgrading Autopac’s online services has exacerbated the pressure from DVL losses. The new system will cost about $100 million when it’s fully installed, with about half of that amount attributable to DVL. Again, the government has refused to use general revenue to pay for those costs.
Eric Herbelin, MPI’s president and CEO, said that after repeated attempts to get the PC government to cover its costs, he came up with the plan to use extraordinary and unexpected surpluses in Autopac revenue over the past two years to cover off DVL operations and the new digital platform. The plan was submitted to the PC government, and approved.
However, Herbelin was told by senior staff at the Crown insurer that the diversion of Autopac revenues for non-Autopac expenses was strictly forbidden and would violate the terms of an agreement between the PUB and MPI, struck in 2019. He waved away those concerns.
Why would this government approve Herbelin’s plan and collaborate to keep the information away from vehicle owners? In a word: money.
The Tories have devised multiple strategies to drain hundreds of millions out of Crown corporations, often using secret directives that only alert the public after the money has been taken.
Some Crowns, particularly Manitoba Liquor and Lotteries, are deliberately structured to funnel money into the government’s general revenue. After paying for the cost of operations, MLL channels all of its profits directly into government coffers to pay for services such as health care.
However, others — most particularly MPI and Manitoba Hydro — are by law required to guard their revenue to protect ratepayers: Autopac customers in the former, and electricity and gas customers in the latter.
Under former premier Brian Pallister’s watch, however, MPI and Hydro have become can’t-miss slot machines that spit out hundreds of millions in windfalls, often without any attempt to tell the public what’s going on.
With Hydro, for example, the Tories will howl about how poor decisions made by the former NDP government to build new transmission lines and dams are driving up hydro rates. However, largely because of those decisions, the PC government is now collecting nearly half a billion dollars in fees, taxes and surcharges from Hydro. If the Tories took less money, hydro rate increases would be much lower.
Similarly, laws and regulations governing MPI and Autopac require that surplus revenue be used to fortify reserves, or returned to vehicle owners as rebates or lower insurance rates. Ignoring those imperatives, the Tories have been happy to allow MPI to use surplus revenue to pay for expenses the government should cover.
Could the government reverse this situation, and take less money from Hydro and MPI? Yes, but you can bet it won’t.
On Friday, as Finance Minister Scott Fielding delivered a fiscal update, he lauded his own government for delivering tax cuts to help Manitobans at a time of great economic uncertainty. But those tax cuts have clearly come at a price for electricity customers and vehicle owners.
That’s the essence of a good scam. Give something to an unsuspecting public to distract them while you take with the other hand.