12/13/2012 12:25 EST | Updated 02/12/2013 05:12 EST

Manitoba government sells property registry to private firm, Teranet

WINNIPEG - The Manitoba government is selling its property registry to Teranet Inc. for $75 million, as part of a plan to keep the provincial deficit from growing.

Teranet, which already handles land titles and other documents for the Ontario government, will set up a Manitoba headquarters, upgrade the agency's technology and not layoff any of the current 137 employees, NDP Finance Minister Stan Struthers said Thursday.

The workers "will be part of the same union, their health benefits, their pension benefits will be protected as they move forward," he told reporters.

But the Manitoba Government and General Employees Union was taken aback by the move to privatize a money-making Crown agency and said workers and consumers will suffer.

"When governments start selling off their services, then the public ends up paying for the private profit," said union president Michelle Gawronsky.

The agreement will see Teranet invest $35.5 million in technological upgrades to make it easier to conduct searches and registrations online. The company will also pay the government royalties that will ramp up from $11 million in 2013 to $24 million at the end of the three-year licensing agreement.

The government will maintain authority to set user fees, which Struthers said will see "small, stable and predictable increases." The government will also retain ownership of the agency's records and they will continue to be covered under privacy laws.

While Teranet has committed to no layoffs, job cuts are likely because some retiring workers will be replaced by automated systems.

"More than half the staff is actually eligible for retirement over the next five years, and we need to put processes and systems in place that will allow the organization to continue in the absence of those individuals," Teranet CEO Jay Forbes said.

The sale is part of a NDP promise made in last spring's budget to sell $83 million in government assets. The remaining $7 million will involve aging water bombers that are being replaced.

The asset sale is part of the a plan to keep the province's deficit to $460 million for the fiscal year that ends in March. The government has also been looking to cut program spending by $128 million.