Manitoba Hansard — 27 May 1985 (Sitting 56B, 32nd Legislature, 4th Session)

32-4-56b

Manitoba — Debates (Hansard)

LEGISLATIVE AS SEMBLY OF MANITOBA Monday, 27 May, 1985. Time - 8:00 p.m. CONCURRENT COMMITTEES OF SUPPLY SUPPLY - GOVERNMENT SERVICES MR. CHAIRMAN, C. S.ntos: Committee, please come to order. We have called all of Item No. 2, vote No. 2. We are now in Item No. 2.(dX1) and 2.(dX2). The Member for Virden. MR. H. GRAHAM: Mr. Chairman, this is the area where we see a rather rapid increase In Other Expenditures. In fact, it's about $36 million.

There's a note that says that this $36 million is for rental payments as the result of the sale and lease-back of government-owned buildings to Manitoba Properties Incorporated. Could the Minister indicate if that is a permanent sale that has occurred or what the terms of the lease back with Manitoba Properties Incorporated are? MR. CHAIRMAN: Mr. Ministe r. HON. J. PLOHMAN: Mr. Chairman, I trust that the members had an opportunity to discuss this matter with the Minister of Finance, because I'm not going to get into the financial arrangement aspect of this particular matter.

In terms of the purpose of MPI however, there are an additional $36 million included In our budget to pay the rental costs to MPI on these buildings, which have been sold as a financial arrangement to result in a net benefit to the taxpayers of Manitoba through a sale of shares. I think that the members are aware of that transaction, the purpose of it, and the cost saving involved for government.

We are simply, as the Department of Government Services, continuing to manage those buildings the same as always has been the case in the past, with the paying of the leases to MPI based on the going rate, the market value of leases out in the marketplace for those buildings. That's why we have the $36 million in there to pay those lease costs. MR. H. GRAHAM: Mr.

Chairman, I'm surprised that the Minister doesn't know his responsibilities. lt has been traditional that the Minister of Government Services Is responsible and he is the custodian of all of the provincial buildings In the province, and that has been his role ever since we had a Department of Government Services, and somehow you have allowed a whole bunch of these buildings to slip out of your hands. Now you have to answer to this committee on why you allowed it to happen. HON. J. PLOHMAN: You want to know why?

Because the government gains $8 million for the taxpayers of Manitoba every year because of it, that's why. MR. H. GRAHAM: Well, Mr. Chairman, that may be or it may not be and we will find out this evening, and we will not stop until we find out whether there was an $8 million saving. HON. J. PLOHMAN: Good. MR. H. GRAHAM: Now, If the Minister says there's an $8 million saving, I would ask him to show us where it is? HON. J. PLOHMAN: Well, I have Indicated to the members - and they can have some fun here tonight if they like. They should be asking and directing these questions. If they didn't, they slipped up.

They should have been asking these questions of the Minister of Finance. His depar.tment was responsible for the financial arrangement Involving Manitoba Properties Incorporated, and the Department of Finance is the department that identified the overall savings to government. MR. H. GRAHAM: Mr. Chairman, the Minister of Government Services Is responsible for all publicly owned buildings owned by the Province of Manitoba. HON. J. PLOHMAN: Not any more. MR. H. GRAHAM: Apparently you have lost control of a large number of them.

Did the Minister make any objection when the Minister of Finance seized a bunch of the province's buildings? HON. J. PLOHMAN: Mr. Chairman, the member asked if I made any objections. Of course, at the time that this was set up I was not the Minister responsible for this department, and I don't think, as a member of Cabinet, I would have objected too strongly to a benefit of $8 million to the taxpayers of Manitoba. Certainly, I feel that is very important. I don't think the member has been able to identify any negative aspects of doing this.

The fact is that it's a holding company, Manitoba Properties, and the operation of the buildings under that corporation continues in the same way as it always has, by the Department of Government Services, so there's really no change in that, In terms of our operations. MR. H. GRAHAM: Mr. Chairman, I received, thanks to the Ministe r, and I want to thank him for giving me the copy - five pages,

Schedule A and

Schedule B of the lease agreement between Manitoba Properties Incorporated and Her Majesty the Queen in right of the Province of Manitoba, effective the first day of August, 1984. The note that's in the Estimates says it's a result of the sale and the lease-back of government-owned buildings to Manitoba Properties Incorporated. Is there a difference between what occurs In the printed Estimates and what occurs in the sheet of paper that was given to us just - well, I got mine at supper time. Is it a lease agreement or is it a sale and a lease-back? 2341

Monday, 27 May, 1985 HON. J. PLOHMAN: The member is obviously not listening or considering this seriously. lt involves the sale of the buildings and then the lease-back. That's why the $36 million is involved. lt's the cost to the Department of Government Services of leasing those buildings for government purposes. MR. H. GRAHAM: Mr. Chairman, just recently - and I'll start with the very first item on this list is the Provincial Archives Building. The province has over the last four or five years spent many millions of dollars in renovat ing that building.

Can the Minister give us the cost of the renovations that have occurred in the last five years to that building? HON. J. PLOHMAN: I can get that information, Mr. Chairman. I can get that information for the honourable member; I don't have it available. I know it would probably be in the millions of dollars. MR. H. GRAHAM: Mr. Chairman, can the Minister indicate what the sale price of that building was? HON. J.

PLOHMAN: The actual price that was arrived at for each of this buildings was done after agreement by Revenue Canada and the auditing or consulting firm that did the planning and analysis for the sale of the buildings to Manitoba Property Incorporated through their acceptance of the values that were assessed by staff of Government Services. Both market value and replacement costs, we used as a basis for determining the value of the buildings. MR. H. GRAHAM: Mr. Chairman, Is the Minister of the Crown responsible for all public buildings in the Province of Manitoba?

Can he indicate to me what the sale price of the Provincial Archives Building was, which was under his jurisdiction and which he allowed to be sold to Manitoba Properties Incorporated? HON. J. PLOHMAN: Well, I don't have the actual price for each individual building. The total cost of them adds up to over some $500 million in total, including all of those on the list that the member has. Of course, they're still owned by the Crown and the Government of Ma nitoba still owns those buildin gs. They are admin istered by the Department of Government Services as they have been in the past under a lease agreement. MR.

H. GRAHAM: Can the Minister then indicate how much rent he is paying Mani toba Properties Incorporated for that particular building? HON. J. PLOHMAN: Mr. Chairman, the annual rent for the Archives Building is $979,530.00. MR. H. GRAHAM: $979,530.00. HON. J. PLOHMAN: If you put all the pieces together you'll find ... MR. H. GRAHAM: Rather than having to ask for each and every building, would the Minister be able to provide us with a copy of the rent paid for each and every building that is listed here as belonging to the Manitoba Properties Incorporated and no longer owned by the province? HON. J.

PLOHMAN: lt is owned by the province now, Mr. Chairman. Well, Mr. Chairman, the member has made an incorrect statement when he said that they're no longer owned by the province. They are owned by the province. In terms of the annual rents for each of the buildings, I don't think that information is of any value to the member. The members here, if they could tell me why they want to know what the rents are for each of those buildings, then I could consider providing it. I don't see the value or the purpose of it A MEMBER: Because we're spending taxpayers' dollars, man. What do you mean? HON. J.

PLOHMAN: You're not spending any money, you're saving money. MR. H. GRAHAM: We are spending money. Mr. Chairman, I haven't asked how much the Minister pays for rent on his house or a suite he lives in. I haven't asked for any of his own private things. I am asking for public information, dealing with public buildings, that were built at taxpayers' expense, and according to his Estimate Book, were sold and leased back.

So I think because the province has entered into a big deal, they've received an awful lot of money, but they are paying an awful lot of money and I don't think it is a good deal for the people of Manitoba at all, I would suspect that if the Minister is not prepared to give us the individual figures for each and every building, then I would have to say that examination of his Estimates is nothing more than a sham. HON. J. PLOHMAN: Mr.

Chairman, I've indicated that the details of this financial arrangement were all under the jurisdiction of the Department of Finance, and if the members were either unwilling to ask or afraid of the information they would get, or whatever, they had an opportunity, and I expect they examined in detail the arrangements for Manitoba Properties Inc. If they didn't, they obviously missed the boat. MR. H. GRAHAM: I felt that the Minister of Government Services was a very honest and forthright and open person, and we could get the information from him. I may be labouring under false . . . HON. J.

PLOHMAN: I've given the member the aggregate totals here. The annual rent is $35,267,000; the value of the buildings Is some $530 million - or it's $35 million for the rent; and the value of the buildings is some $530 million including the value of the land. So you've got all the information in that. I don't know if the re's any pro blem with giving the detailed information on each building. As far as the rents, I gave one that the member asked for. He didn't say why he wanted it, nor did he do anything with the information once I provided it to him, so I still don't see the purpose of it. Does he want 2342

Monday, 27 May, 1985 to follow up with some additional questions on that basis? Does he want to compute the cost per square foot? I could get him that too for the Archives Building if he wants and then he can start to work on that information and give me an indication of what he wants to do with it. MR. H. GRAHAM: Mr. Chairman, the Province of Manitoba has spent millions of dollars renovating that building and have sold it for a pittance. They are now paying almost $1 million a year in rental. We don't know how much they've sold it for. The Mini ster has refused to tell us what he sold it for.

Now he's going to change his mind and give us the information. HON. J. PLOHMAN: Mr. Chairman, the member was asking for all of the buildings individually. He wants to know about the Archives Building. lt was sold - the member has called it a pittance - it was sold for $10 ,883,666, so that's not a pittance, Mr. Chairman. I think that's a pretty valuable building. Got a good price for it. MR. H.

GRAHAM: Can the Minister indicate to me - he said he was going to get the information - were the renovations to the Archives Building that have been conducted over the last few years, were they more or less than $10 million? HON. J. PLOHMAN: I believe they were considerably less than that. I don't have the figures right here. I'll see if I can get them for the member. MR. CHAIRMAN: The Member for Morris. MR. C. MANNESS: Mr. Chairman, I'm Intrigued with these leases.

Could the Minister tell me whether his department will be paying a rental on a yearly basis, an annual rental, using this Archives Building as an example? HON. J. PLOHMAN: As long as the arrangements aren't changed, we'll continue to pay that rent on an annual basis for as long as this arrangement is in place. MR. C. MANNESS: Mr. Chairman, I've signed many leases in my life and they've all had some type of term to them. Can the Minister tell me or can he indicate whether there's a term in place or not, and if there is, what it is? HON. J. PLOHMAN: Mr.

Chairman, the financing arrangement, as I indicated, was the jurisdiction of the Department of Finance and the Minister of Finance will undoubtedly want to address some of these areas that the member is raising. These are based on a yearly lease, on a year-to-year basis is my understanding, and the lease costs are assessed to pay the dividends on the shares· that were sold. MR. c. MANNESS: I understand that there's an annual rent, Mr.

Chairman, but is the Mini ster indicating that the conditions that have been laid down with respect to, first of all, selling the properties and then leasing them back are open-ended such that there is no term, absolutely no term associated with the lease-back of these particular facilities? HON. J.

PLOHMAN: The member is aware, as I have indicated, that this is a financing arrangement to save realized benefits of approximately $8 million per year for the Province of Manitoba. lt is simply that financing arrangement and if he wants to ask detailed questions about that arrangement, he should talk to the Minister of Finance, as I've indicated, and I will continue to persist in that. MR. C. MANNESS: Mr. Chairman, I've gone through the Finance Estimates. I don't see this allocation of monies, although I do see it within the department that we are now reviewing.

I'm asking the Minister whether we can expect his department to have to pay this rental, or some variation of this rental amount of $36 million? Will his department have to be paying that sum for years to come, and does he have any idea as to when this payment is going to cease? HON. J. PLOHMAN: Mr. Chairman, I could get that information for the honourable member if he'd like to have it, but I can't provide it to him at this particular time as to the exact extent, length of time, and so on. MR. C. MANNESS: Mr. Chairman, yes, I would like to have it.

That's why I asked for it and I'll then accept it when the Minister provides it. I would hope that he would give us an undertaking to provide it yet this evening. Could the Mini ster tell me, in this lease-back arrangement, whether the government, whether his department has the opportunity to purchase back the buildings in question? HON. J. PLOHMAN: Well, the member is again asking details of the financing agreement and we'd have to get that information for the member. If it's required under these Estimates, certainly we can provide all of that information through the Department of Finance.

As I've indicated earlier, the members would have been more appropriately asking these questions under the Minister of Finance's Estimates, who is involved in that particular transaction·. I have indicated clearly where that money is being spent from the Department of Government Services perspective, and that is for the leasing of those particular buildings and it comes to some $36 million, and it's as simple as that. MR. C. MANNESS: Mr. Chairman, I wanted to ask a number of questions with specific reference to the sale and lease-back of the particular properties in question. I did n't have an opportuni ty.

I went thr ough the Estimates and saw that they fell within this department. it's on that basis that I've come here to ask the Minister of Government Services the questions. As the Minister has no answers, that's fine, but I believe that this is the appropriate time when I would ask the questions. HON. J. PLOHMAN: The details of the financing arrangement, Mr. Chairman, are the responsibility of the Mini ster of Rnance. He's here now and if the members want to discuss that arrangement further - 2343

MondaJ, 27 May, 1985 I doubt whether they will. They chose not to discuss it during the Minister of Finance's Estimates, I take it, from the discussions here tonight. They obviously missed the opportunity there. I'm sure the Minister of Finance would be pleased to discuss with them at this particular time if they desire to do that. MR. CHAIRMAN: The Minister of Finance. HON. V. SCHROEDER: Mr. Chairman, we did have a fairly lengthy discussion about this very issue during my Estimates. If members want to go over that again -although I'm not sure about whether that would be in order. HON. J.

PLOHMAN: If they want to take time to do it. HON. V. SCHROEDER: If they want to take time, we've got lots of time. MR. CHAIRMAN: Wh at's the pleasure of the committee? A MEMBER: We just ask questions, Mr. Chairman. MR. CHAIRMAN: The Member for Pembina. MR. D. ORCHARD: Mr. Chairman, the Minister has indicated that there is some $530 million worth of buildings on

Schedule A and

Schedule B. First of all, Mr. Chairman, could the Minister indicate why there is a

Schedule A and why there is a

Schedule B? HON. J. PLOHMAN: I think, Mr. Chairman, it would be sufficient to say that the buildings in the different schedules were valued using different processes and split up in that method. MR. D. ORCHARD: Would the Minister indicate what the different processes are that allow a

Schedule A and

Schedule B to exist? HON. J. PLOHMAN: Again, as I indicated, the auditing firm and consultants were involved in the methods that were arrived at and approved by Revenue Canada with regard to the assessments. In some cases, it was the market value and in some cases it was the replacement value for the buildings. MR. D. ORCHARD: So which was used in

Schedule A and which was used in

Schedule B? HON. J. PLOHMAN: I believe market value, Mr. Chairman, for

Schedule A and replacement value for

Schedule B. MR. D. ORCHARD: You believe? Mr. Chairman, under

Schedule B, Page 2, could the Minister indicate what lease the government is paying on the Boissevain land Titles Office to Manitoba Properties Incorporated? HON. J. PLOHMAN: I'm not certain, Mr. Chairman, that I have the specifics of that particular lease here at the present time. MR. D. ORCHARD: Mr. Chairman, I'd be very interested in seeing the lease agreement on the Boissevain land Titles Office because it's now closed and you're paying lease on an empty building. Now, that is some kind of a financial arrangement you've got going here. You're saving a lot of money.

So, if the Minister could provide us with the lease agreement on the Boissevain land Titles Office later on this evening, that would be of a great deal of interest to the taxpayers of Manitoba. HON. J. PLOHMAN: Well, it's incorrect information, Mr. Chairman, the building is not closed. The land Titles is no longer in that building but there are other occupants in the Land Titles Building in Boissevain. MR. D. ORCHARD: Well, would the Minister provide us with the details on the lease costs of the Boissevain Land Titles Office and the value for which it was sold by the province to Manitoba Properties Incorporated?

HON. J. PLOHMAN: I'll take that as notice, Mr. Chairman, and get back to the member on it. MR. D. ORCHARD: Mr. Chairman, the Minister indicated that the value of the buildings sold was $530 million. Could he indicate the amount of money raised by Manitoba Properties Incorporated? HON. J. PLOHMAN: That is a matter that should be referred properly to the Minister of Finance. MR. D. ORCHARD: He's here. MR. CHAIRMAN: The Minister of Finance. HON. V. SCHROEDER: We'll wind up knowing exactly what the final amount of the take-up on the warrants is by-I believe it's July 15, 1985.

In recent days, many millions of dollars worth of share warrants have been exercised. We expect that it will be fairly close to the full $400 million. MR. D. ORCHARD: Mr. Chairman, the Minister indicated earlier that the buildings were still owned by the province. Could the Minister indicate the security that Manitoba Properties Incorporated has offered to the investors who are investing upwards of $400 million based on the security of $530 million worth of buildings? HON. V.

SCHROEDER: The sole shareholder holding common shares in Manitoba Properties Incorporated is the Crown in right of the Province of Manitoba. The preferred shares sold have a maximum lifetime of 10 years; they do not vote; they do not appreciate in value as far as the province is concerned and they receive dividends at the rate of 9.25 percent per annum for that up to 10-year period. MR. D. ORCHARD: Mr. Chairman, the Minister of Finance mentioned something in his previous answer about warrants. Is Manitoba Properties Incorporated In addition to issuing preferred shares, also into other financial instruments? HON.

V. SCHROEDER: No, Mr. Chairman. 2344

Monday, 'Z1 M•y, 1985 MR. D. ORCHARD: Was it a slip of the tongue where the Minister made reference to warrants? HON. V. SCHROEDER: The original share issue for every share purchased, the purchaser was provided with one warrant which gave that individual the right to exercise an option to purchase an additional preferred share in Manitoba Properties Incorporated by - I believe the date is July 15, 1985. The warrant would have the precise terms and conditions which attach to the preferred share originally purchased by the purchaser.

So there was a total share issue of $200 million at which point the issue was stopped. Each one of those shares had a warrant attached to it allowing the purchase of an additional share on the same terms and conditions. That's the only other kind of arrangement involved with the issue. MR. CHAIRMAN: The Member for Pembina. MR. D. ORCHARD: Thank you, Mr. Chairman. Could the Minister of Government Services indicate who pays maintenance costs? MR. CHAIRMAN: The Minister of Government Services. HON. J. PLOHMAN: Yes, Mr. Chairman, the maintenance costs are the responsibility of the Department of Government Services.

MR. D. ORCHARD: Who pays the heating, electricity and the other utility bills? HON. J. PLOHMAN: That is the responsibility of my department as well. lt's a net lease. MR. D. ORCHARD: In earlier questions from the Member for Morris, the Minister of Government Services indicated he wasn't sure how long the lease ran. Is he a little more sure now? MR. CHAIRMAN: That was answered by the Minister of Finance. HON. J. PLOHMAN: I believe the Minister of Finance had given some information on the term of this arrangement.

I don't have the detailed information on the extent of those leases, any more now than I did five minutes ago, Mr. Chairman. MR. D. ORCHARD: Is it fair to assume that since the preferred shares are interest-bearing at 9.25 percent and for a 10-year duration, that your lease is also for a 10-year duration? HON. J. PLOHMAN: Mr. Chairman, I'm not certain that that would automatically follow. MR. D. ORCHARD: Mr.

Chairman, is the Minister of Government Services saying that when he is paying In line 2.(d)(2) a $36 million allocation for rental payments, is the Minister of Government Services telling us tonight that his department were not the ones that drew up the leases, and that he doesn't know that some other department drew up the leases? HON. J. PLOHMAN: Mr. Chairman, the lease arrangements were drawn up by the consultants who were engaged for the purposes of setting up MPI. MR. D. ORCHARD: And where are the leases? In what department are the leases? HON. J.

PLOHMAN: The Department of Finance is involved with handling the leases, Mr. Chairman. MR. D. ORCHARD: Then if the Minister of Finance has the leases and the Department of Finance has the leases and drew them up, why did the Minister of Finance not pay the rental? I find that a little difficult to believe. If that's the way you're operating, it's even more convoluted and more confused. Are you telling me that the Government Services Department, this department, has nothing to do with the leases; does not know what's in the leases; is not aware of any of the clauses of the leases?

Is that what you're telling me tonight? HON. J. PLOHMAN: Mr. Chairman, I never said that the Department of Government Services was not aware of anything that's in the leases. That is obviously not complete.

The leases have been reviewed by the department and the department is aware of the contents of those leases, but as to the terms and contents of those leases, they were drawn up by the consultant, since it's treated as a financial agreement and arrangement by the Department of Finance, that they have entered into on behalf of the Province of Manitoba to save the province, as I've indicated earlier, $8 million per year. We treat it as a financial arrangement and the properties continue to be operated by the department in the same way that they always have been in the past. MR. D.

ORCHARD: Well, since the department is aware of the contracts and the leases, as the Minister has just said, could the Minister indicate whether their awareness includes the length of term of the lease? HON. J. PLOHMAN: Mr. Chairman, I understand from the advice that I am getting from the department that these are not fixed-term ·leases, that they are a lease arrangement as part of the financial arrangement by the Department of Finance to support the shares that have been sold for a 10-year period and that has nothing to do with the extent of the lease or the length of the lease. There's no fixed term on it. MR.

D. ORCHARD: So then, next year, if the Provincial Government and the Department of Government Services decided they were not going to pay their $979,530 rent on the Provincial Archives Building, and the Department of Finance decided they weren't going to pay back the $1 0,883,660, what would happen, since the lease doesn't have a fixed term? HON. J. Pl.DHMAN: Mr. Chairman, that's a hypothetical question. MR. D. ORCHARD: Mr. Chairman, I realize that the Minister has some difficulties answering questions that 2345

Monday, 7:1 May, 1985 he doesn't know the answers to, even though it's in his Estimates and he's the Minister responsible, but we have a situation where this government has sold public assets to a dummy corporation. They are leasing those assets back. We don't know the term of the lease, how long it's in place. We know that this year he's paying almost $1 million in rent for the Provincial Archives Building. If he doesn't pay that rent, what happens to the building? Who pays the rent?

And if the lease that he has in place presumably with Manitoba Properties Inc., doesn't have a fixed term in it, then he's under no obligation to pay it. So under what circumstances can the Minister not pay the rent? After ail, you could save $36 million by not paying the rent. HON. J. PLOHMAN: Mr. Chairman, what we're doing is paying the bulk rent for ail the buildings involved, for MPI, and it's part of the financial arrangement and obviously that is part and parcel of the whole arrangement, to save the taxpayers the money that I've indicated to the member on a number of occasions.

Obviously, his concern about not paying the rent is one that I'm not concerned about. MR. D. ORCHARD: So then is the Minister now finally telling us that his leases are for a 10 -year period? HON. J. PLOHMAN: lt's a year-by-year lease for a minimum of a 10 -year period, Mr. Chairman. MR. D. ORCHARD: And that's part of the clause of the lease. HON. J. PLOHMAN: As I indicated, there's no fixed term lease involved here but, of course, it would be in existence for at least as long as the issuance of the shares, a 10-year period - the issuance of the shares by the Department of Finance.

Obviously we're going to have to pay the leases for at least that period of time, but there's no fixed term on this lease. MR. D. ORCHARD: Mr. Chairman, is the yearly rental fixed on the Public Archives Building and ail other buildings that are contained in

Schedule A and

Schedule B? HON. J. PLOHMAN: it's my understanding that it is fixed, that there are no escalations in that lease over that period of time. MR. D. ORCHARD: So that means that the lease, obviously, if it's fixed so that in the 10th year you pay the same rental as in the 1st year - does that not mean that you've entered into an obligation of a 10 -year lease? Why would any investor put up his money. and in the 10th year he's gett ing from the Ma nitoba Properties Incorporated, 9.25 percent interest on his preferred share holdings in Man itoba Properties Incorporated?

You mean to say that that investor is putting the money in there for a 10 -year period without there being an offsetting income to Manitoba Properties Inco rporated, namely , a lease with the Provincial Government that is in existence for the same 10- year period? HON. J. PLOHMAN: As I indicated, it may go beyond 10 years and of course the investors that the member is talking about are very anxious to enter Into this arrangement. MR. D. ORCHARD: I bet they were. HON. J.

PLOHMAN: Yes, so they ail have a lot of confidence that the government is going to honour Its responsibilities with regard to this, unlike the Member for Pembina. MR. CHAIRMAN: The Member for Morris. MR. C. MANNESS: Mr. Chairman, the Minister says "all the shareholders." HON. J. PLOHMAN: Investors. I did not say shareholders. MR. C. MANNESS: Well, who are all the Investors? HON. J. PLOHMAN: The member can ask that of the Minister of Finance. I've indicated that clearly and I'm not going to play games here.

I've indicated clearly that the Minister of Finance is responsible for the financial arrangement and that's where the questions should be asked. MR. C. MANNESS: Mr. Chairman, I ask the question - the Minister doesn't have to become Indignant about it, because the Minister made reference to a single shareholder, that being the Crown and the Province of Ma nitoba - is that right or not? The Minister of Government Services talks about many investors. What is right? HON. J.

PLOHMAN: The member should distinguish between common shares and preferred shares and I'm not getting into additional detail, technical detail, financial detail on this particular arrangement. As the member is aware, it's the Department of Finance that has entered into this arrangement. The Department of Government Services is only co-operating In the total financial transaction and the member is aware of that.

He's aware that there's a difference between the terms with regard to common shareholders and preferred shareholder in this case and if he would like to pursue this matter In detail with the Minister of Finance, I'm certain he'd be glad to do that. MR. C. MANNESS: Mr. Chairman, one question. Is there somebody other than the Minister of Finance that has the preferred shares and the common shares? Is there another entity other than the Ministry of Finance? HON. J. PLOHMAN: The province and the Crown owns all of the common shares and that was stated by the Minister of Finance. MR. CHAIRMAN: The Member for Elmwood.

MR. R. DOERN: Mr. Chairman, just a few points. I think the Member for Pembina used the right terminology when he referred to this as a dummy corporation 2346

Monday, "ZT May, 1985 because there's obviously some sleight of hand and some shell game going on here. I want to ask the Minister a couple of questions.

All this information put into the scheme, all the raw data about the costs of construction of these buildings -in order to impute the value of a building and to determine the appropriate rent, one has to have information and would it not be the case that the information on the cost of construction and the cost of renovations and the market value and the current leasing values and so on, that all that information would have come directly from the Department of Government Services? HON. J. PLOHMAN: Mr.

Chairman, obviously the Department of Government Services was involved in certain aspects, in terms of supplying the information that the member has outlined. The replacement value, the market value of similar buildings, that kind of information was supplied by the Department of Government Services to the consultants. MR. R. DOERN: And when the market value of those assets was then struck and the lease rate was struck, was that then concurred in or agreed to by the department? HON. J. PLOHMAN: Those figures were supplied by the department and there was no situation involving agreement later on.

Those were the figures that were supplied by the department as to the market value and replacement value of similar buildings. MR. R. DOERN: So that the basic information was supplied by the department and I assume that the department recommended figures of market value and recommended lease rates. HON. J. PLOHMAN: I'm informed that the department did not provide the recommended leased rates. They just provided the value of the buildings. MR. R. DOERN: Can the Minister indicate why it was necessary to bring In an outside consultant since all the expertise is contained within the department? HON. J. PLOHMAN: Mr.

Chairman, this was not initiated by the Department of Government Services. The consultant was already in place to draw up the details of the financial arrangement that was made through the Department of Finance, and Government Services was just asked to provide the information by the consultant. So it was a case of the consultants already being there and of course the member could address that kind of a question to the Minister of Finance. MR. R. DOERN: Mr. Chairman, I prefer to deal with the Minister of Government Services, who is a more pleasant person. HON. J. PLOHMAN: Well, that's true. MR. R.

DOERN: I wanted to ask in terms of the consultants. Were these real estate consultants or finance wizards? I mean what is their expertise? Who were these consultants and what is their area? HON. J. PLOHMAN: Mr. Chairman, I don't have the name of the firm, but it was an accounting firm, I understand. MR. CHAIRMAN: The Member for Morris. MR. R. DOERN: Mr. Chairman, I . . . MR. CHAIRMAN: Is it on the same subject matter? MR. R. DOERN: Yes. MR. CHAIRMAN: The Member for Elmwood. MR. R. DOERN: So then the Minister is saying that a firm of accountants . . . HON. J. PLOHMAN: Tax experts, yes. MR. R.

DOERN: . . . took the expertise of the Department of Government Services and accepted their MR. CHAIRMAN: The Member is to ask questions, not to assume certain things. The Member for Elmwood. MR. R. DOERN: Mr. Chairman, I don't know what the problem is here. I'm simply saying, did these so-called experts then rubber-stamp or confirm the information that was passed on by Government Services, or do they have a real estate arm? Maybe they have a real estate arm, I don't kn ow. HON. J. PLOHMAN: Mr.

Chairman, as long as the Information that was given adhered to a certain formula that was drawn up that was acceptable to Revenue Canada, they accepted the Information. MR. R. DOERN: Mr. Chairman, can the Minister indicate who the consultants were? Does he have their names? HON. J. PLOHMAN: I can get that information, Mr. Chairman. I don't have it here. MR. R. DOERN: On tl:le fixed leases, 1 find this somewhat puzzling. On one hand the Minister seems to say that there are no fixed leases, and then he seems to say that they are leases fixed for 10 years. HON. J. PLOHMAN: Mr.

Chairman, what I did say, If the member was listening closely, that it was not a fixed-term lease, but the amount of the lease per year is the same. MR. R. DOERN: Are there escalating clauses in the lease, or are they fixed for a 10-year term? HON. J. PLOHMAN: My understanding is that the value, the amount paid each year is fixed, but there is no fixed term to the lease, in terms of the number of years that it would run. · MR. R. DOERN: Is the Minister saying that in the case of the Archives Building, the annual rental is $1 million a year and that $1 million will be charged indefinitely? 2347

Monct.J, XI May, 1185 HON. J. PLOHMAN: I wouldn't say that it would be charged indefinitely, but certainly for a minimum of 10 years. MR. R. DOERN: So it will start at $1 million and 10 years later it will still be $1 million? HON. J. PLOHMAN: That's my understanding, Mr. Chairman. MR. R. DOERN: The only other point I would make, Mr. Chairman, I think there's a lot of semantics in all of this and a lot of rubbish as well, and all this talk about preferred shares and common shares and so on, this is all meaningless. None of these terms are used in the normal sense. MR. CHAIRMAN: Those are legal terms. MR. R.

DOERN: They certainly are, Mr. Chairman, but they are hollow terms as well. MR. CHAIRMAN: The Member for Morris. MR. C. MANNESS: Mr. Chairman, the Mi nister indicated roughly an hour ago that he did have before him a

schedule of all the rental payments on an annual basis, plus the sum of money or the agreed selling price to Manitoba Properties Incorporated. The Member for Pembina asked specifically about the Boissevain Land Titles Office wanting to know what that rental fee was. Now, it's on the record the Minister has indicated that he has all this information, at least he said so 10 minutes into the Estimates process this evening. Then he indicated to the Member for Pembina that he didn't have them. Can the Minister now tell us which one of those answers is correct? HON. J. PLOHMAN: Mr.

Chairman, I did not say I did not have them. I said I would get that information for the member. Obviously I have some of them. I don't know if I have them all. I have a list of some of the major ones and it's possible that the Boissevan Land Titles Building is also there. I'm not certain that I want to provide all of the information for every single building at this particular time, until I have determined whether there's any difficulty in providing all of that information.

I did supply the one asked about the Archives Building as an example and before supplying the lists and the values of all of those buildings, I would like to check with the Department of Finance to determine whether there are any difficulties with supplying that information in terms of its confidentiality. MR. C. MANNESS: Well, Mr. Chairman, the Minister is changing his tune rather quickly. HON. J. PLOHMAN: I haven't changed any tunes, still the same one. MR. C.

MANNESS: One hour ago, roughly, the Minister indicated that if we were prepared, if we had specific questions on any of the items, that he would furnish the material or the information that we requested. He indicated that if we were just wishing to find out all the rental payments that would accrue to each one of these matters, that that was a different matter. At no time did he indicate that there was a matter of confidentiality associated with any of these listings, and therefore, under those conditions, I ask him why he has changed his mind over the last hour?

We have asked specific questions with respect to the Provincial Archives Building. We'd like to do so with respect to the Boissevain Land Titles Office and we would ask him again to give us the information that we so wish. HON. J. PLOHMAN: What I indicated to the members, that I would supply and I have supplied the complete list of the buildings that are listed under M PI. I did not at any time say that I would provide all of the details as to the values and the lease arrangements for each of those particular buildings.

I gave one example and have chosen to check with the Department of Finance before supplying all of the information for each of those buildings, If that's what the member is asking for. I feel that I should check those figures before I do that. If there's no problem with it, obviously I'll provide it. MR. C. MANNESS: Mr. Ch airman, this is public information. What is the problem? On what criteria is it determined which of these particular subjects and the rentals that accrue on a yearly basis should be held in confidence? Who makes that decision?

Does the Minister of Government Services not have the power within his Ministry to make those decisions? What higher authority Is it that he's reaching to, to help him make this decision? HON. J. PLOHMAN: I've indicated clearly to the members here this evening that this is primarily a financial arrangement through the Department of Finance that $36 million shows up in the Department of Government Services for leasing of the buildings, but that is only one part of a major financial arrangement that has been made by the government, so there is much more involved tha n just this department. The member knows that.

He is fully aware of that. On that basis, I feel that it is very important to check with the Department of Finance with regard to the details of this arrangement. Perhaps we can supply all of the contracts, all of the leases - I'm not certain at this time - but I think the one lease overall that's the umbrella lease for all of these buildings. I would like to check that first with the Department of Finance, as I've Indicated. MR. CHAIRMAN: The Member for Pembina. MR. D. ORCHARD: Mr. Chairman, the Minister has got a $36 million rental payment.

Earlier in the evening, the Minister of Finance indicated that the cost to government in reimbursing the preferred shareholders was 9.25 percent. Can the Minister indicate to us tonight if that same 9.25 percent is indeed the lease cost that's contained in the $36 million? HON. J. PLOHMAN: As far as the . . . of the lease are under the Department of Fina nce, that the 2348

corporation is run through the Department of Finance not through the Department of Government Services and, therefore, the figure of 9.25 percent I cannot verify or it probably would be very close, if not exact, but I can't verify that that is indeed the figure. The simple mathematics that the member might be doing might seem to indicate that is approxima tely what it is. MR. D. ORCHARD: Wel l, Mr. Chairman, the Minister has a line in his Estimates of $36 million, allocation for rental payments as a result of the sale and lease-back of government-owned buildings to Manitoba Properties Incorpor ated.

Is he telling us now that Government Services is paying a premium for the rental of those buildings above the cost to the Finance Department? HON. J. PLOHMAN: Mr. Chairman, I'm not telling the member that at all. I indicated that I could not verify with certainty those figures that he was using. MR. D. ORCHARD: Mr. Chairman, you know, I haven't sat through too many of the Estimates since Health; I've been in on Agriculture and a few others. But we've got a Min ister here tonigh t who, in Go ve rn ment Services, has a total allocation of $12 3 million.

About 30 percent of that, he's asking us to approve tonight for a lease agreement that he is paying - and he can't provide us any details on it. Now, Mr. Chairman, does the Minister of Government Services want the people of Manitoba to know that he's In Estimates tonight and can't answer why he's asking the people of Manitoba to pick up a $36 million tab for buildings that are leased back; that he can't even tell us what the lease-back rate is; whether there's a premium charged by the Department of Finance to the Department of Government Services, hence, the people of Manitoba?

How does he expect us tonight to approve this $36 million - brand-new request for money - in Government Services without having some very basic answers at his disposal. Mr. Chairman, if he can't provide those answers, I find that unacceptable that a Minister would come into these Estimates so un prepared to answer questions on a $36 million expenditure by this department. I find that unacceptable. So maybe the Minister would like to try again to explain to us the basis of calculation for his $36 million. What's the retail value of buildings? Wha t Is the preferred share value of buildings?

What's the value of the buildings that he's paying this $36 million worth of rental on? HON. J. PLOHMAN: I've given the member the answer to all those questions but he's obviously not willing to listen. I'm satisfied that there's an $8 million benefit to the people of Manitoba through this arrangement. I have Indicated clearly that it is a financial arrangem8f!t through the Department of Finance and the members obviously didn't understand or didn't get the answers when they were in the Estimates of the Department of Finance and that is no credit to them. it's unfortuna te that they didn't.

But I'm not golng to sit here and answer Department of Finance questions and I've indicated that clearly to the members. As far as the benefits, I've indicated there's $8 million benefit, that there's a lease arrangement so that the Department of Government Services leases back those buildings and the net arrangement results in a profit to the people of Manitoba.

I un derstand from additional information that I've received now that the consultants inv olved were Buchwald Asper Henteleff, laywers, and Thorne Riddell, accountants; that the lease is for 99 years, renegotiated every five years; the shares may be redeemed in 10 years. That is the information that we received from the department. The 99 years, as I've indicated earlier, was an indefinite term and no fixed term - in a sense it is but it's a very long term and, therefore, is the same as no fixed term for all intents and purposes. MR. D. ORCHARD: Mr.

Chairman, now that the Minister has found out that he's got a 99-year lease here and that the first term is fixed for 10 years, theoretically, and that there's a five-year renewable, could the Minister indicate what the five-year renewable clause has pertaining to t�is lease agreement? HON. J. PLOHMAN: Well, Mr. Chairman, I've indicated that I don't have all of those details here. If the member wants that kind of detail, he will have to wait for it. We don't have the lease In my back pocket to table here.

I have indicated that this is drawn up through the consultants that were working for the Department of Finance and that all of these details could best be sought from the Minister of Finance. MR. D. ORCHARD: Mr. Chairman, the Minister may well think that's an easy way to get out of answering the questions by saying we should ask the Minister of Finance.

Unfortunately, this Minister - I say unfortunately for the people of Manitoba - during these Estimates that has a $36 million request that the taxpayers of Manitoba are going to have to come up with or else the Minister of Anance is going to go with his tin cup to New York City and borrow the $36 million to pay the rent on the building which gives him interest on a preferred shareholding company seam. lt gets very convoluted, very complex; but, Mr. Chairman. the Minister of Government Services has the responsibility, as I understand it, in providing facilities for government operations, buildings, etc., etc.

Where those buildings are leased, I believe the Min ister of Government Services and his department undertake that lease. We are talking tonight about a rental payment on a lease-back for 99 years with a 5-year renewable. The Minister can't tell us anything about that. He can't tell us, whether in the 5-year renewable, that there's an escalator clause. He can't tell us whether that's right or wrong, whether at the end of five years we're not going to be paying $36 million, but rather $40 million or $50 million. Does the Min ister know what his department signed on behalf of the taxpayers? HON. J. PLOHMAN: Mr.

Chairman, the member has every right to ask any detail of this financial arrangement to the Minister of Finance at any time in the House and that's exactly where it will be answered. MR. D. ORCHARD: Mr. Chairman, the Minister of Finance told us tonight that he believes they will raise something in the neighbourhood of $400 million. My 2349

Mondey, 'D May, 1185 quick calculation tells me that $36 million, if the Minister, who doesn't know what's in his own lease-back, but if the lease-back Is based on 9.25 percent, that means the Minister of Finance has raised some $389 million. This Minister who's paying the lease can't confirm or deny that. He doesn't know, but what he should know, that's the financial arrangement the Minister of Finance explained, but what this Minister should know, as Government Services Minister, Is what his lease says. That has nothing to do with the Minister of Finance.

Sur ely we could expect the Government Services Min ister to know what space for government undertakings and operations are costing the taxpayer and what the terms and conditions of his leases are. HON. J. PLOHMAN: Mr. Chairman, I've given him the terms of the lease. He knows what the cost is to the province on a yearly basis and he knows the total value of the buildings and certainly that Is all of the information that is the responsibility of this department. MR. D. ORCHARD: At the end of five years when the lease Is renewed, what will the cost be to the taxpayers of Manitoba? HON. J.

PLOHMAN: As I've Indicated, it can be renegotiated every five years. it may be the same; it may be different at that point. it's very difficult to say, isn't it? MR. D. ORCHARD: lt wasn't difficult for this Minister half an hour ago to say that the lease costs were fixed for 10 years. Now he's saying that it's up for negotiation in five years. Which story is correct? HON. J. PLOHMAN: I simply said that the province would have to pay enough to raise enough to pay the dividends for a 10 -year period, whatever that may be over that period. MR. D. ORCHARD: Mr.

Chairman, the Min ister of Finance earlier on this evening told us that the 9.25 percent was fixed for a period of 10 years. Wha t Is this Minister telling us about the lease, with a five-year renewable? Is the price of the lease up for negotiation at the end of five years, so that the preferred shareholders In Manitoba Properties Incorporated, knowing that this government can't come up with the cash to pay them off can demand a higher lease-back and force the people of Manitoba to pay double the rent because this government has bankrupted the Province of Manitoba so they can't go out and borrow In any other way?

Is that a possibility, Mr. Chairman? MR. CHAIRMAN: it's a hypothetical que stion at this point In time. MR. D. ORCHARD: Mr. Chairman, on a point of order. If you're going to play your hypothetical game as Chairman, we may have to Impeach you. This is the people of Manitoba's money that we're talking about tonight and If this Minister doesn't know what the terms, at the end of five years are for his lease-back, then he does not deserve to be the Minister of Government Services, Mr. Chairman. HON. J. PLOHMAN: Mr.

Chairman, it's not uncommo n to renegotiate leases after five years and I've indicated that to the member. He wants me to be a prophet in that regard and tell him what it's going to be negotiated at after five years. I think that obviously is hypothetical and totally una cceptable, In terms of any answer that I could give. He's aware of that; I cannot predict what that would be. lt may be the same; it may be somewhat different. MR. D. ORCHARD: Mr.

Chairman, can the Minister simply tell us as to whether, at the end of five years when the Government Services Department renegotiates the next five years of the lease, Is the rental payment open to negotiation at that time and subject to change? HON. J. PLOHMAN: I would assume that if the lease Is up for reneg otiation, that the rental may be open at that particular time. lt's part of a renewal of a lease, or a renegotiation of a lease that's written into the terms for five years and if the member wants to speculate on what kind of hardship and bankruptcy that's going to cause the province, he can do that.

He can also speculate as to why the province would want to do anything like that to themselves, as the owners of Manitoba Properties Incorporated. MR. D. ORCHARD: The Province of Manitoba, under this government, has lost control of how they can react to the preferred shareholders In this company. The Minister Is saying that at the end of the five-year lease, the rental payment Is up for negotiation. Under that renewal clause, what conditions are to be considered in the process of renegotiating t.he new rental payment?

Are such things as increased market value of the buildings to be considered In drawing a higher lease? HON. J. PLOHMAN: Perhaps, Mr. Chairman, they are. I think the member should correct his statement. The province has not lost control over the arrangement that it can make. He is qui te aware that preferred shareholders cannot vote and therefore do not have control over the changes that are made. I reiterate, why would the province - and he could speculate on that - cause, make changes to this arrangement that would negatively affect its position? lt's totally ridiculous. There's no loss of control.

The member knows that; he's attempting to grandstand here. He knows very well that it's not possible for myself as Minister to predict exactly what the figures will be after the five-year term. I've Indicated that after the first five years it will be renegotiated and that's sufficient at the present time, obviously. At that time, we will know what the terms will be. MR. D. ORCHARD: Mr. Chairman, can the Minister indicate what conditions - obviously a lease has conditions - at the end of five years, when the lease is up for renegotiation, what conditions affect that renegotiation process? HON. J.

PLOHMAN: I 'm not certain, Mr. Chairman, at the present time. I could provide the member with some of those details at a subsequent sitting, but I do not have that information at the present time. 2350

Monday, 27 May, 1985 MR. CHAIRMAN: The Member for River Heights. MR. W. STEEN: Yes, Mr. Chairman, earlier the Minister of Finance said to the committee that he hoped that the shares that we've been discussing for the past number of minutes would, by July 15, 1985, be sold at a value of $400 million and yet, the Minister of Government Services said earlier tonight that they placed a value of $530 million on the buildings.

If the Minister of Finance is quoted correctly on Page 1801 of the Supply of Rnance Estimates of Thursday, May 9, 1985, and he Is answering the Member for Turtle Mountain and he says that 263 and the $36 million to come Is what it's going to cost the public on $263 million worth of shares that have been sold to date. Therefore, in next year's Estimates if the Minister of Finance's wishes come true and he is successful in selling 400 million of shares, then we can expect in this item in the Estimates of next year be maybe $60 million instead of 36 million. Is that correct? HON. J. PLOHMAN: Mr.

Chairman, we'd have to wait and see when the total amount Is finally sold by the 15th of July before we could make a determination of what the cost might be. Obviously, the 400 million that is being raised, the 530 million value of buildings at the present time and any additional buildings that might be included, is simply collateral for the province in order to issue those shares. The total lease costs that might be Incurred when that is completed are not known at this particular time. MR. W. STEEN: Can the Minister tell us what the latest figure is of shares that have been sold?

Is this figure I quoted him of 263 stated by the Minister of Finance on May 9th a correct figure, or is it somewhat higher than that? HON. J. PLOHMAN: Well, Mr. Chairman, some time has passed since then as we move towards the deadline date that the Minister of Finance indicated, so it would be somewhat higher than that at the present time. I don't have the figures nor do I get a report on a daily or weekly basis as to whether the total has reached 290 million or 300 million or whatever at the present time. MR. W. STEEN: So, therefore, Mr.

Chairman, to the Minister, the 36 million that is in here in his Estimates is a guesstimate as to what it would cost to rent these buildings back, based on how successful the Minister of Finance is in selling these Treasury Bills by placing these buildings as assets? HON. J. PLOHMAN: Yes, it's my understanding that is Finance's best estimate of what they would be. MR. W. STEEN: I see, okay. MR. CHAIRMAN: The Member for Virden. MR. H. GRAHAM: Mr. Chairman, the 36 million or the 35-plus - I believe it's not exactly 36 million -can the Minister indicate what share value that figure was based on? HON. J.

PLOHMAN: Well, Mr. Chairman, that is a question that is most appropriately directed to the Minister of Finance. MR. H. GRAHAM: Well, Mr. Chairman, we are here to pass these Estimates and we are approving a sum of money which is supposedly a rental for various buildings, but we find out now that the amount of rent paid is dependent on the number of shares that are sold. I want to know what number of shares that 36 million is based on.

If shares are constantly being sold, then I would assume that the rent is probably going to go up or else those shares will probably not draw any interest until a set date which would fall next year. Now, I don't know the terms and conditions of the sale of the shares and those questions are properly questions of the Minister of Finance. But it is quite proper for us to ask questions of the Minister of Government Services who is paying out some 36 million, more or less, on rental and it is quite proper that he tell us what share value that 36 million is based on. HON. J. PLOHMAN: Well, Mr.

Chairman, as I've indicated, the details of what the assumptions were are best directed to the Minister of Finance, but I assume that the $36 million rent estimate is based on a take-up of the 400 million. MR. H. GRAHAM: Is that an assumption or can the Minister verify that figure. - HON. J. PLOHMAN: I can verify by looking Into it as to whether that is the case. That is what I assume would be the projections in the Estimates by the Department of Finance. If the member would like to have that verified, I can verify that next sitting. MR. H. GRAHAM: Well, Mr.

Chairman, obviously the Minister has not prepared himself for these Estimates. We have been very very patient with him: HON. J. PLOHMAN: You've been excellent. You've been nice guys. MR. H. GRAHAM: We would hope that the Minister would have the opportunity to inform himself and prepare himself. I have to tell you, Mr.

Chairman, I was very tempted to make a suggestion that we don't proceed any further with these Estimates for possibly a week to allow the Minister the time to prepare himself so we can get the answers to the questions that are so essential and necessary so the public can know how this Minister is spending the taxpayers' money. That money has to be accounted for some way or another. Now, we do know that last year the Government Services Department was singled out for a fair degree of criticism by the Provincial Auditor.

If things proceed the way they're going at the present time, the Provincial Auditor may very easily be a guest in his department for quite some time. I would suggest to the Minister that he take some time and inform himself so that he can property answer the questions of the committee. However, there may be another way around it. If we want to leave this question for the time being, we may 2351

Monday, "Z1 May, 1985 be able to ask a few more questions of the Min ister on other parts of this appropriation and, hopefully, the Minister might prevail on the Government House Leader to put another department up tomorrow until such time as he is fully prepared to answer the questions. HON. J. PLOHMAN: Well, Mr. Chairman, that is total and straight garbage by the Member for Virden and isn't becoming of him, obviously.

I thought that he would have more common sense than to make statements of that nature here. lt was obvious that this is a financial arrangement right from the beg inn ing and conferring with my colleague, the Minister of Finance, I understood that thi s matter dealing with the Ma nitoba Properties Incorporated had been adequately covered by the opposition in discussion in the Minister of Finance's Estimates.

They, at no time, indicated that they couldn't get the answers they wanted there, or else they did not ask the proper questions at that time and decided, after getting together again, they had to take another kick at the cat. lt's obvious that details of the lease arrangements could be brought before the committee at any particular time in the future, if it had a bearing on the Estimates of this department.

I've indicated clearly that because there is an overall financial benefit to the government, I am very comfortable with the fact that we are leasing these buildings back. lt is a total government effort to save the taxpayers' money, and if the members want to quarrel with that in the House and in public, as the Member for Pembina indicated, I invite them to go ahead and do that. I think that we should put one matter on the record and that is that it was equally as much garbage with regard to the statements he made with regard to the problems that the auditor apparently had with this department.

I've been advised that there is no such problem with the auditor with regard to this department. I don't know what the member is referring to, but it's a matter of sensationalizing and certainly the matter of MPI properties has no im pact whatsoever on the auditor's feelings with regard to this department. He would be dealing with the proper department, the main department that's involved with MP I properties, if he has any concerns at all, and that is the Department of Finance. So the Memb er for Virden, with all of his experience, should not be attempting to mislead and misrepresent at this commi ttee. MR. H.

GRAHAM: Mr. Chairman, nothing could be further from the truth. I have been offering through my generosity . . . HON. J. PLOHMAN: Oh, you're so nice. MR. H. GRAHAM: . . . and well-being, my feeling for the Minister - a suggestion which I hoped would be to his own benefit, because I'm sure the Min ister doesn't want the public record to stand the way it has so far tonight, where the Mini ster has practically been unable to answer any questions, although I shouldn't say any , he has answered a few. But, Mr.

Chairman, if the Minister doesn't want to use that approach, then I suppose we'll have to proceed and I know the Honou rable Mem ber for Pembina has some questions he would like to ask the Minister. MR. CHAIRMAN: The Member for Pembina. MR. D. ORCHARD: Thank you, Mr. Chairman. The Minister, in answering my colleague from River Heights, raised another area. The Min ister said earlier on that the appraised value, either by market value or by replacement, I believe, were the two criteria used in establishing

Schedule A and

Schedule B. At any rate, the Mini ster indicated there was $530 million worth of buildings within these five pages. Now under ordinary circumstances a lease and a value of a lease is determined on the space that you rent, therefore with all this list of buil dings, the Mi nister should be able to tell us the lease will be so many dollars, the rental payment will be so many dollars. But that isn't the case with this particular operation.

What the Minister is saying is that he doesn't know what the lease is going to be because the lease isn't based on the amount of space that's contained in these buildings, or its utility to the government and the various departments that use it. The lease is based solely on the amount of preferred share borrowing against the building. Now that brings up the question that I'd like to pursue with the Minister.

Is it a straight pass-through of cost or is there an escalation, an add-on if you will, that the Finance Department is tacking on for administration, etc., because they hold Manitoba Properties Incorporated and must manage it? Is there an add-on, a premium that this Min ister in Government Services is paying, or is it a straight pass-through of the 9.25 percent preferred share interest rate? Can the Min ister answer that question? HON. J. PLOHMAN: As I've clearly indicated, Mr. Chairman, Finance is totally responsible for the running of the corporation.

I understand MPI is a break-even corporation, so if there are admin istrative costs associated with going to the market and so on, tho se obviously have to be taken into consideration in the overall lease arrangements. I don't think it matters if the Department of Finance, as one other department of government, is passing on the cost of administration. it's all part of the lease arrangement and as the member has indicated, essentially it is true that the amount of dividend payout that's required is the determining factor with regard to the amount of the leases.

So it is a very unique arrangement and it's a unique arrangement in order that we can reduce the costs of borrowing to the Province of Manitoba by some $8 million per year. I make no apologies about that. MR. D. ORCHARD: Is the Min ister now saying that, yes, the Finance Department does add on its costs to determine the value of the rental payment that this Department of Government Services is paying? HON. J. PLOHMAN: They may, Mr. Chairman. I've indicated that it's a break-even corporation with regard to the costs associated. MR. D. ORCHARD: Mr.

Chairman, if the corporation is break even, they won't pass through any costs, but yet the Minister said they may. Which is the answer? 2352

Monday, 27 Mer, 1985 HON. J. PLOHMAN: Mr. Chairman, if they have some costs, they obviously have to pass them on if they want to break even. I don't know what kind of logic the member is using . MR. D. ORCHARD: Mr. Chairman, I wish the Mini ster would use some logic and had sat down and found out some of the basic answers to the $36 million request he's making tonight. Not too many Min isters have ever come into comm ittee to ask approval for $36 million of expenditur es that kn ows as little about his department and what it's doing as this Mini ster. Now that's not anybody's problem but the Min ister's.

Unfortuna tely , the taxpayers don't take lightly the fact that they're being asked for $36 million tonight and they'd like to know what constitutes the $36 million. For instance, are we paying, on a pro rated basis, the consulting costs and are there ongoing consulting costs in this deal? Is that part of the rent that we're paying, so that isn't all within the government, as the Minister says. You see, if he had the answers he wouldn't be facing a series of questions. If he simply had the answers and had prepared himself for these Estimates, we wouldn't be sitting here tonight asking for detail.

He would have provided it. But unfortunately this Minister did not come prepared, so we don't know whether the consultants are still being paid and it's included in this rental of $36 million. I don't believe the Minister knows that, but I'll give him the opportunity to answer, yes or no, if that's fact. HON. J. PLOHMAN: The arrangement that was made and the engagement of consultants has nothin g whatsoever to do with my department. The point is that the members have obviously missed the boat in the review of the Min ister of Finance's Estimates.

They did not ask the right questions because they were undoub ted ly ill- prepared; and if they talk about someone being ill prepared or not prepared for their Estimates, obviously they were not prepared when they dealt with the Mini ster of Finance's Estimates or they would have had these answers and they had an opportunity to ask all of those. The point is that the net benefit to the taxpayers of Manitoba is $8 million per year. That is what I am concerned with. MR. D. ORCHARD: Mr. Chairman, the Minister keeps talking about being prepared, etc., etc.

I think the $8 million is a saving to the Finance Department, nothing to do with his department. His department is paying $36 million. HON. J. PLOHMAN: The Department of Government Services. MR. D. ORCHARD: Mr. Chairman, the Minister says we should have posed to the Min ister of Finance a question regarding the calculation of the lease paid by the Department of Government Services.

I would suggest to him that the Min ister of Finance would have said, ask the Min ister of Government Services, which we are doing tonight and he isn't prepared enough, doesn't have the knowledge or the answer to tell us, to give the answer to those kinds of questions. it's not us who are not prepared to deal with Estimates. it's the Minister that's presenting them tonight that doesn't have the answers because he doesn't know what he has signed, what his department has negotiated, what the $36 million is for.

He can't even answer if it's a straight pass-through of cost; he can't tell us whether there's surcharge, whether ther e's premium paid. He doesn't know anything about this $36 million expenditure that he's requesting us to approve tonight. Mr. Chairman, that is disastrous; that is incom petence of the worst degree and only this Min ister could be that incompetent and still maintain the Ministerial authority for Government Services. HON. J. PLOHMAN: Mr. Chairman, there's more rubbish coming from the Member for Pembina which I've come to expect from him.

There was no negotiations with regard to this figure. lt's a figure that came from the Department of Finance under a financial agreement that would save the province $8 million per year. The member is aware of that. That is the bottom line; that is what I'm concerned about. I'm not concerned whether one department is saving and another one is paying. The overall saving to the government and to the taxpayers of Manitoba is what I'm concerned about and that is the only relevant point here. MR. D.

ORCHARD: Can the Mini ster tell us whether he expects to expend the full $36 million this year that he's asking for tonight? MR. CHAIRMAN: Could you please repeat the question? MR. D. ORCHARD: The Minister's so concerned about knowledge and about overall saving to the government. Can the Minister tell us tonight if he expects to fully expend the $36 million in rental payment in this fiscal year? · HON. J. PLOHMAN: That is the best estimate that we have and obviously, at this time, I would expect that it would be spent. That's why it is the estimated figure that is put in there, Mr. Chairman.

In answer to the othlir points that were made, in terms of the information or lack of information that the members feel they're getting from the Minister of Government of Services, for myself, with regard to this matter, they should be aware, as they are, that all of the details of this were worked out by the Min ister of Finance, by the Department of Finance, were announced by the Department of Finance and they should have used the opportunity that they had to deal in detail with those questions to assure themselves that they had all of the answers and they were as satisfied as I am that the Department of Finance is Indeed putting in place a program that is saving the taxpayers of Manitoba some $8 million per year.

If they had apprised themselves of that fact, they wouldn't have as much difficulty with the details of the financial arrangements from me, as Mini ster of Government Services. They should have directed their questions to the Min ister of Finance and they missed the boat on it, Mr. Chairman. 2353

Monday, 27 May, 1885 MR. D. ORCHARD: Mr. Chairman, this Minister of Government Services, I don't know what he does in his spare time, but it certainly isn't looking after the Department of Government Services. HON. J. PLOHMAN: I see that it's getting to you now. MR. D. ORCHARD: Mr. Chairman, the Min ister of Finance, and of course you weren't In the Estimates of Health, but the Minister of Health sent a letter out which was offered by the Minister of Finance in his department which contained incorrect information as to the fiscal position of the province, in terms of federal transfer payments, etc., etc.

Now we're having this Min ister of Government Services tell us tonight that we're supposed to accept, carte blanche, without any question, a figure that he put in his Estimates on the basis of the Minister of Finance saying, that's what it's going to be. Mr. Chairman, that's a rather Interesting position. We don't need this Minister of Government Services If all he's going to do is mimic and mime what the Minister of Finance tells him to do. What's he here for? We don't need him. We don't need to pay him half the salary here tonight if he doesn't have the answers to the questions.

We don't need him and that's the point that we're trying to make tonight. This man is in here as a Minister of the Crown asking for $36 million and he doesn't have an answer to any questions that are posed on him. That means that he's not worth his salary. Under ordinary circumstances, one wouldn't pay an incompetent Minister like this, but unfortuna tely you've got 33 votes that'll make sure you pay for his Incompetence and that's what's happening tonight, sir. We 've got a Minister of Government Services that is caught in a financial seam. He's paying $36 million of costs.

He can't tell us whether he's going to expend it all or more or less; we don't know. He can't tell us that. He says this is the best estimate. He can't tell us on the basis of what that estimate is made. He tells us that they're paying the maintenance, the upkeep, the renovations, the heat, the light, the utilities, plus $36 millon worth of rent and he expects us to swallow this on behalf of the taxpayers of Manitoba. We ll the taxpayers of Manitoba are waiting for a chance to elimin ate this kind of ministerial incompetence from government and they'll do it at the first call of the election. HON. J.

PLOHMAN: Again, straight garbage by the Member for Pembina when he talks about all of the other costs in addition to the $36 million. I Indicated that it was a net lease and all of those costs are included In the $36 million that we were talking about, in terms of a net lease; and the costs of mainten ance are added to that of course, but the lease itself is a net of all of the costs attributed to the operation of those buildings.

I think it's Important that I emphasize once again, with regard to the Member for Pemblna, that he has obviously not taken the time to deal In detail with the Department of Finance's Estimates. If he had done that, he would have had the answers to the questions on this financial arrangement, which are part of the Minister of Finance's responsibilities. MR. D. ORCHARD: Mr. Chairman, now the Minister has changed his story again on this $36 million. Is the Minister now saying that the $36 million includes such things as utilities, electricity, heat, maintenance?

Because that's what he just tried to make out here a few minutes ago. Is he changing his story again tonight? Wha t does the $36 million give the taxpayers of Manitoba? What is included in the $36 million? HON. J. PLOHMAN: Wel l, I Indicated, If I didn't say that at this last occasion, Mr. Chairman, that the operating costs are In addition to the lease costs of the $36 million that we'r e paying. MR. D. ORCHARD: Well, Mr. Chairman, now the Minister has changed his story back to what it was original ly.

Is that last version that he just gave us the correct one, the one that we can assume is the correct one; that the $36 million goes to the Department of Finance to pay off the preferred shareholders, and that somewhere In these Estimates are the maintenance, renovations, heat, light, water, utilities, etc., etc., janitorial services, security services? HON. J. PLOHMAN: Yes, that's the case. MR. D. ORCHARD: That's the final and correct version of it? HON. J. PLOHMAN: That's the version I've Indicated right from the very beginning, Mr. Chairman. MR. D. ORCHARD: Oh, no, it isn't, read Hansard. MR.

CHAIRMAN: 2.(d)(1) - the Membedor Sturgeon Creek. MR. F. JOHNSTON: The Min ister is indicating that we missed it In Finance and I have trouble with that, I wasn't involved In Finance. I can remember clearly when the Department of Economic Development and Tourism went Into a lease arrangement for the Technology Centre out in St. Bonlface, or out on Lagimodlere Boulevard, we did some negotiating on it.

But all of those negotiations were sent down to the Department of Government Services to examine them, to make sure that we were doing the right thing for the people of the Province of Manitoba when we entered Into a lease. The same happened when we went into the centre in Brandon, and the same happened when we went into the centre In Dauphin, and all of the departments of government, when they are Involved in any leasing of properties, or any arrangements, sure, we can go in and do some negotiating but the final authority comes from Government Services as to whether we were doing the right thing.

Now the Minister is leasing buildings from the new company that's put up and, do you mean to tell me that the agreements are not worked on and looked at by the Department of Government Services, regardless of what Finance has done as a policy of the province, but the actual final arrangements of the leases are not done by Government Services? Is the Minister telling me that he allows a line to be in his Estimates that he has absolutely no control over? HON. J. PLOHMAN: Mr. Chairman, we're dealing with one bulk lease here, we're not dealing with leases on 2354

Monday, 27 May, 1985 each individual piece of property. This is an aggregate or bulk lease that we're dealing with, the $36 million for leasing all of the buildings back. The Department of Government Services is still involved, as the department was in the past when the member was Minister of Economic Development, when there was particular property leases required to house certain aspects of the department, is still involved. As a matter of fact we are doing a more critical analysis by the department of leases that are engaged in by various departments.

However, in this case, what we have is a situation with the province dealing with itself and it is simply a financial arrangement, as has been indicated clearly, and those financial terms and arrangements were worked out with the Department of Fina nce in consultation with its consu ltants, the fina ncial consultants and legal consultants.

So the only role the Department of Government Services had to play in this was to provide those consultants in the Department of Finance in their undertaking, to provide them with information on the values of the buildings with regard to replacement values and appraisals of the buildings, based on similar buildings in the city in their location, to determine a realistic market value or a replacement value for those particular buildings. That was the role tha t the Department of Government Services played in this whole arrangement. MR. F.

JOHNSTON: Well, after all the research that the Minister speaks of is done and we've got something in the neighbourhood . . . we've got two schedules of buildings, A and 8, and you know what the buildings are worth, you do the examination of the value and the square footage, and the value of rental. Did the Minister of Finance just send you a note and say put $36 million in my Estimates, whether you like it or don't? HON. J. PLOHMAN: Essentially that's it, Mr. Chairman.

What we're dealing with is a situation of the province having to raise sufficient money to pay the dividends for the shareholders, and I've indicated that. So it took this amount of money to do the job. MR. F. JOHNSTON: There was no consultation with the Minister of Finance or the Finance Department and your department as to whether the $36 million is correct? HON. J. PLOHMAN: Yes, that's correct.

I've indicated that the Minister of Finance, the Department of Finance, in conjunction with their fina ncial consultants, determined that the $36 million figure was the figure required to meet the responsibilities for the payment of di vidends. lt was not part of a normal lease arrangement. MR. F. JOHNSTON: The Minister has kept informing us all night that there's an $8 million saving and I guess that the Minister of Finance informed you that there was an $8 million saving.

Would there not be a situation, could it not possibly happen that the Minister of Government Services would say to the Minister of Finance, it should be more of a saving, after we'd examined it? Do you just say that the Department of Finance is absolutely right on this subject? HON. J. PLOHMAN: Mr. Chairman, that is not the role of the Department of Government Services at all, in terms of advising on financial arrangements; that's the role of the Department of Finance and the member knows that, as a former member of Cabinet. MR. F. JOHNSTON: Mr.

Chairman, is it the financial arrangements are being made on the basis of the value of the buildings that this Minister is in charge of? HON. J. PLOHMAN: I indicated that the value of the buildings was estimated and recommended by the Department of Government Services, an area that they have some expertise in, but not in the fina ncial arrangements; that is a matter for the Department of Finance. MR. F. JOHNSTON: Mr. Chairman, what involvement did you have In the $13 ,943,000 that were left? What buildings are those? HON. J.

PLOHMAN: The other buildings that are leased throughout the province, the government certainly has an extensive list of leased buildings in the province. I think I've provided that information to the Honourable Member for Vlrden earlier and therefore that would account for those other figures, other dollars. MR. F. JOHNSTON: These buildings are used by other departments? HON. J. PLOHMAN: I've indicated, Mr.

Chairman, just a few moments ago to the Member for Sturgeon Creek that the Department of Government Services is, as was the case when the memb er was a mem ber of government In 19 77-8 1. that the Department of Government Services performs a role of negotiating the leases for the departments and analyzing the space requirements for the various departments determining, to a certain extent, whether the requirements that are there are legitimate, and whether the amount of space that they're requesting is legitimate.

They perform a critical role in analyzing the submissions from the various departments and assist them in negotiating and providing for the space requirements for the staff so that they can function In an efficient way. MR. F. JOHNSTON: The Mi nister uses the word "negotiate." In other words, the Min ister had no input into the negotiations or discussions or policies or anything regarding the 36 million, the Minister of Finance just said that's it? HON. J. PLOHMAN: There were no negotiations that had to take place, Mr.

Chairman, when we're dealing with the province dealing with itself. lt wasn't a matter of the Minister of Government Services negotiating with the Minister of Finance; it was simply a matter of the government, through the Department of Finance and its financial advisors, determining that this was a way to reduce the province's borrowing costs. That is a financial matter. · 2355

MR. F. JOHNSTON: So the Minister is clearly stating that, other than giving some information on square footage, etc., they had no thing, there was no involvement whatsoever in the 36 million? HON. J. PLOHMAN: Yes, that's correct, Mr. Chairman. MR. F. JOHNSTON: Can I ask the Minister why he didn't have the 36 million put in the Minister of Finance's Estimates then? Can I ask him that if he has a line in his Estimates he should know more about it than he does, even if he takes half an hour to say I don't know anything about this, will somebody tell me? HON. J.

PLOHMAN: I've clearly indicated the pertinent information with regard to this 36 million. The members are aware of why it's there and what benefits it has to the province and the Involvement the Department of Government Services had. lt really does not affect the overall program effectiveness of the decision to go forward with this particular arrangement. Whether the 36 million was in the Department of Government Services which manages the buildings and so would seem appropriate to have the figure there, or to have it in some other department, it really doesn't change the nature of the decisions that were made.

MR. CHAIRMAN: 2.(dX1) - the Member for Pemblna. MR. D. ORCHARD: Mr. Chairman, since the Minister is so bubbling over with information, could he provide me with some additional pieces of information? From

Schedule A, Page 1, could he provide to me the price and the rental assigned to the Provincial Agricultur al Services Building located at 89 - 2nd Street S.W . in Carman? Then, could the Minister go to Page 3 of

Schedule B and provide me with the same kind of information for thr ee buildings in Morden, Manitob a - the courthouse, the Manitoba Highways Building and the Morden Land Titles Office, all three of which have been sold? HON. J. PLOHMAN: The member has indicated the Provincial Agricultural Services Building and three in Morden, courthouse, Manitoba Highways Building and Morden Land Titles Building.

I've Indicated earlier, as with the Boissevain Land Titles Building, that I would take that as notice to determine whether there was any difficulties or impr opriety in providing all of that detailed information, and I will do the same with those requests as I did earlier for the Member for Morris when he asked about the Boi ssevain Land Titles Building. MR. D. ORCHARD: Well, Mr.

Chairman, I really don't kno w what would be impr oper about telling the taxpayers, who originally paid for the building, what they receive from, theoretically, Manitoba Properties Incorporated for the sale of that building and what they're now paying, after selling their asset, to lease it back. I think the people of Manitoba would want to know what their tax dollars have done for them over the term of this government's reign in the Province of Manitoba.

I have one more question to the Minister. lt's indicated that the new courthouse at Kennedy Street and York Avenue in Winnipeg is also one of the properties sold. The paint hadn't even dried before it was sold and probably it was sold before the paint was even on it. Can the Minister indicate what the value of the new courthouse was in terms of its sale value to Manitoba Properties Incorporated, and what the yearly lease to the Manitoba taxpayers is for the new courthouse? HON. J. PLOHMAN: Mr.

Chairman, first of all, I want to say to the member that, from my perspective, the taxpayers are concerned with the fact that there will be a significant reduction in the province's borrowing. That is a good thing; that is what the taxpayers are concerne d with. In terms of the details of what the member has asked for Is another specific building that he would like information on. I'm going to be discussing this matter with the Department of Finance to determine which information can be released and the possibility of releasing all of this Information.

If we can do that, I would certainly provide that information and the detail on all of those buildings to the members but, as I've Indicated, not at the present time. MR. CHAIRMAN: 2.(dX1)-pass - the Member for River Heights. MR. W. STEEN: I'd like to ask the Minister a question relating to office space that's leased by the government, and the particular one I'm interested In is on Page 6 of the foldout leaflet that he distributed earlier, and that is that 307 Kennedy Street. The occupant is the Housing Department and then the Consumer and Corporate Affairs. The lease expiry date is the 30th day of April, 1987.

Now, with the North of Portage concept going In, what Is the arrangement that these departments have with the North of Portage concept? Do they get their moving expenses paid and their relocation expenses paid, which I hope the people In the private sector that are in that vicinity are going to receive from the North of Portage people when they're expropriated? HON. J. PLOHMAN: Yes, I understand, under the expropriation procedures that are used, that moving costs are part of the allowable figure with regard to the relocation of existing businesses. MR. W. STEEN: Mr.

Chairman, have these two clients been moved to date or is the move pending? HON. J. PLOHMAN: I understand, Mr. Chairman, that those are in the process of being moved at the present time. MR. W. STEEN: In the same listing there's a numb er of locations. Say, for example, there's one in Steinbach on Page 2, 321 Main Street not, assigned, 1,000 square feet; is that a temporary measure? Further down, Mr. Chairman, If I can continue on Page 3. There is at 1981 Portage Avenue, Gordon Motor Inns is the landlord and it says "not assigned, 2,000 square feet." Right below that one is 379 Broadway, 2356

Monday, 71 May, 1985 5, 100 square feet, not assigned. Are these all temporary vacant spaces, or is the government cutting back and are we trying to buy our way out of some of these leases, because some of them don't expire until 1987? HON. J. PLOHMAN: Well, it varies.

Obviously there is always a certain amount of lease space that the government has that is vacant for various reasons, moves that have taken place, and a short period before a new occupant is moved In, or the case where the particular location is not suitable for leasing for a particular branch and it's required to have different occupants located there. 1 don't have the particular circumstances of those particular leases, but generally what we're dealing with here is a situation of a temporary non-assignment and that would be filled as soon as possible, but I can get the details on those particular leases for the member.

MR. W. STEEN: In going through this listing of leased accommodation, which the Department of Government Services handles for the other departments of government, I can't find one In there for the Horse Racing Commission, which has office space in the Asslniboine Downs and utilizes the building that Is on the race-track property. So it's obvious that either the government owns the building and leased the property rights, or leased the space within a building owned by the race-track. HON. J.

PLOHMAN: Well, I wanted to comment on two of the matters that were raised by the Member for River Heights with regard to vacant leased space. 198 1 Portage Avenue, 2,000 square feet of 9,924 square feet that are leased; there's 2,000 square feet vacant. lt is not assignable in the present configuration. The entire building was once a supermarket and the vacant area is that

section formerly used for fruit and produce preparation and packaging. it still contains stainless steel counters, sinks, etc., and would require extensive renovations In the short-term lease facility to convert it to office space. So there's some concern about getting into that major cost to make it suitable for occupancy. As far as 379 Broadway Avenue, there's 5,100 square feet that is vacant of the 7,574 that are available, or at least it was the case.

The reported vacancy is no longer applicable as this space, previously vacated by the Department of Culture, Heritage and Recreation, has since been reoccupied by the Electoral Office. it's from the Legislative Building and by the Advertising Audit from the Woodsworth Building. MR. w. STEEN: I didn't hear whether the Minister said that he would undertake to check into where the Racing Commission Is located? HON. J. PLOHMAN: Well, I don't know their location but I'm advised that the department is not involved with their lease arrangements. MR. CHAIRMAN: 2.(d)(1) -the Member for Virden. MR. H. GRAHAM: Mr.

Chairman, is the Department of Government Services involved in schools and that, for the Department of Education, or is that handled by a different authority? HON. J. PLOHMAN: The schools are not, unless by advice, we do the community college additional space, assisting with the lease renewals and requirements, and advising, but I don't believe that any of the schools are handled through the department. I just want to check it. Apparently there hasn't been any Involvement by the Department of Government Services in the area of schools. There was some involvement with the Frontier Division but not for some time.

MR. H. GRAHAM: Can the Minister indicate why your department would be involved then with the community colleges? HON. J. PLOHMAN: I indicated that we do provide assistance to the Department of Education with regard to community colleges. The major buildings, the major community colleges like Red River Community College, are owned by the Government of Manitoba and operated by the Department of Government Services, so there's an obvious relationship there.

However, a lot of the additional leases, extension leases and so on that the Department of Education has for the community colleges, are done through their own department. We do provide a review of some of the arrangements that they make to provide them with technical expertise and assistance. However, they undertake most of the leases themselves that are not part of the major complexes. MR. H. GRAHAM: Does ·the Department of Government Services get involved at all with, say, the University of Manitoba? HON. J. PLOHMAN: I don't believe so, Mr. Chairman. MR. H.

GRAHAM: Well, if the department doesn't get involved with any of the schools or with any of the universities, why would they get involved with the community colleges? HON. J. PLOHMAN: We own the buildings, the province owns the buildings of the community colleges. However, as far as the University of Manitoba, I think there's only one building that the department is responsible for and is directly involved with. MR. CHAIRMAN: 2.(d)(1)- pass; 2.(d)(2)-pass. The Member for Vlrden. MR. H. GRAHAM: Mr. Chairman, the Minister has indicated that he was going to provide us with answers to the various questions.

I notice by the clock that it's 10:20, is there any indication that the Minister would be prepared to hold this Item until he provides us with the answers? HON. J. PI..OHMAN: Mr. Chairman, I'm not certain what answers the member is referring to.

If he's asking for the information that was requested with regard to specific buildings, in terms of the leases, I don't feel that will affect -it's up to the opposition obviously, if they don't want to pass a particular Item, but I have no particular problem with passing it and still providing the Information. it's not going to affect the decision as to whether we can provide all that information or not. 2357

I've indicated that I want to discuss it with the Department of Finance to determine whether there's any difficulty with providing that information. If there isn't, I will be providing it regardless of whether this item is passed or not. MR. CHAIRMAN: 2.(e )(1) - the Member for Virden. MR. H. GRAHAM: Mr. Chairman, it does pose a bit of a problem because the Minister isn't giving us a guarantee that he'll provide the answers. He said he wants to discuss it with the Minister of Finance.

Now, if the Minister comes back and says, no, that he will not provide us with the answers, then there may be some more qu estions that we would want to ask of the Minister if he didn't provide the answers, so you can understand our reluctance to pass this issue at this time when we haven't had that assurance from the Minister. MR. CHAIRMAN: The Honourable House Leader. HON. A. ANSTETT: Mr. Chairman, the Minister has made it clear half a dozen times that he has to consult with the Minister of Finance regarding the information the honour able member has asked for.

He cannot give the guarantee the member has asked for, but aside from that it's conventional practice that where questions are asked about an item the information is provided some time before the end of the Estimates. If the information that the mem bers receive raises more questions, that those questions are usually raised during the Minister's Salary at the conclusion of the debate. Usually the in format ion provided satisfies the member's Inquir y. In this case, the availability of the information is in some question, and the Minister has said he will get the answer to that question.

If mem bers are unhappy with that, there's not a darn thing we can do about it. For two and a half hours, we've had members, who know better, rag the clock about leasing questions about MPI's holding of property and the province's leasehold interest in that property, when they know it was purely a financial arrangement based on Bill No. 26 or 27, which was brought in last Session. We've played games with the Minister of Government Services on an item that was purely the administrative and financial responsibility of the Minister of Finance.

Now, we're going to continue to do that and hold up the Estimates, because members forgot to ask those questions of the Minister of Finance. I think that's a charade, Mr. Chairman, and I think members of the opposition have been very unfair to the Minister of Government Services tonight, who's tolerated them rather well I dare say. MR. CHAIRMAN: The Member for Virden. MR. H. GRAHAM: Mr. Chairman, it would appear from the Government House Leader that he is spoiling for a fight. He is imputing motives to members of this committee and that is . . . HON. A.

ANSTETT: I called "foolishness" foolishness, I didn't impute anything. Foolishness is obvious. MR. CHAIRMAN: The Member for Virden has the floor. The Member for Virden. MR. H. GRAHAM: Mr. Chairman, I felt that the questions that have been asked of the Minister tonight have been very good questions. We are pointing out to the people of Man itoba the inept way that this Minister has prepared himself for his Estimates, and that is our proper role to play. If it takes us two-and-one-half hours to do it, that is the role of mem bers of this committee and we have done our job.

So the Min ister of Government Services (sic) had better not get up on his high horse and accuse members of ragging the clock and various things of that nature, because if the Minister wants to find co-operation In the operation of this House, he's certainly not going about it in the present way he's going. He'll find that things do get difficult from time to time. HON. J. PLOHMAN: Yes, Mr.

Chairman, I certainly resent the sugges tion, and more than that, the allegation, that I have been inept in preparing for these Estimates. lt's obvious that I'm not about to prepare, in addition to the Estimates of the Department of Hig hways and Transportation, and the Department of Go vernment Services, for the Estimates for the Department of Finance, and that is exactly what these members have attempted to do this evening.

They knew very well it was a financial arrangement and they bet before they came in here that I would not be aware of the details of that and they attempted to show that off as something that would make me look as if I am not aware of what's happening in the department. I think, as the Minister of Municipal Affairs has said, that it has been a charade, and one that I don't believe is fair.

But I've accepted it and I believe that the members have continued and persisted throughout this evening's proceedings to waste the valuable time of this comm ittee simply to try to entertain themselves with the silly game that did not involve this department directly and they knew that. MR. CHAIRMAN: The Honourable House Leader. HON. A. ANSTETT: Mr. Chairman, for the benefit of the Member for Virden, I don't want it left on the record by him that I was imputing motives, I was describing behaviour. If there was any imputation of motives, I'll withdraw that. I described the behaviour as foolish and a charade.

I'm not sure that's what the member intended; that's how it looked to me. I wouldn't attempt to characterize what he intended his behaviour to look like tonight, that would be imputing motives. I only described what I saw. MR. CHAIRMAN: No one can look into the mind of another. The Member for Pembina. MR. D. ORCHARD: Mr. Chairman, the Minister of Government Services was not and is not prepared to handle this line in the Estimates. He demonstrated his total ignorance of the situation tonight. No matter how hard his hireling, the Government House Leader, tries to bail him out, that is clearly the facts.

Not only did he change the story several times tonight in terms of his answers that he gave to questions posed 2358

Monday, 27 May, 1885 over the last two-and-a-half hours, that only further demonstrated how little he Indeed knows and how ill prepared he was to deal with that item. The questions that were posed were regarding the lease that this Go vernment Services Min ister is requesting some $36 million of funding authority for tonight. That happens to be something that Is not considered foolish In the eyes of the taxpayers. lt may well be foolish in the eyes of the Minister of Government Services. but then to him $36 million probably doesn't mean all that much since it isn't his money he's spending. Mr.

Chairman, we would like the Minis ter of Government Services to attempt to find out a little bit more about this line, provide us with the answers to the questions that we have posed to him tonight. For Instance, I'm very interested In knowing what the conditions are that will be exercised in renegotiating the lease five years out. That's a very good question that this Government Services Minister should provide to this committee.

Now, if the government decides that they don't want to answer that because it's embarrassing to them and they want to hide the information, that's fine, but don't play games; tell us you don't want the people to know what kind of a bad deal you made. Then simple as that, we'll just tell people we can't get the information because they're hiding it, but don't play games with time. Get the answers, go home and do your homework, and come back here tomorrow afternoon and attempt to answer the questions that we've posed to you, and then we may be able to continue on with the Estimates.

The games were played by the Min ister of Government Services and they weren 't games of learning what his Estimates were, they were games of something else, because he wasn't prepared to deal with his Estimates tonight. HON. J. PLOHMAN: Mr. Chairman, the questions that the mem ber was asking during the greater part of the time dealt with financial matters dealing with the creation of MPI and the involvement of the Department of Finance directly.

There were some aspects of the questioning dealing with leases that were dealt with, and I believe quite clearly, so it is to me quite clear that all of the information that is required, except for the fact that they wanted to get some detailed specific information that the mem bers wanted with regard to various buildings, in terms of the values that were assessed to them and the lease arrangements that were allocated under the global aggregate lease, and that this was simply set up as a matter of direct involvement by the Minister of Finance through his department; that there was no negotiations and no involvement of the department other than to supply some basic information where they have expertise dealing with the assessment or the appraised value, the replacement value and market value of buildings that are owned by the department.

Other than that, there is no involvement by this department. MR. D. ORCHARD: Is the Minister now saying that he won't provide us with the answer to the question as to what is involved in the five-year renewal on this lease, this 99-year lease that's renewable in five years? He won't provide us now with the terms of renewal and what is considered in terms of setting the rent after the five years, is that what he's telling us tonight, that he won't provide us with that information? HON. J. PLOHMAN: Mr.

Chairman, I don't believe that is a substantive point, but I will be pleased to determine whether there are certain provisions that have been outlined or laid out with regard to the renegotiation after five years. I have no difficulty whatsoever In providing that information, but that does not mean that this particular line has to be held up In the Estimates. MR. D. ORCHARD: Then why doesn't the Minister simply provide members of the committee with a copy of the 99-year lease? HON. J. PLOHMAN: Mr.

Chairman, I' ve indicated on nu merous occasions this evening and it was reiterated by the Minister of Municipal Affairs . . . MR. D. ORCHARD: We don't need his help. HON. J. PLOHMAN: . . . I have indicated clearly that I'm going to be discussing this and consulting with the Department of Finance and the Minister of Finance as to what information with regard to MPI can be released. Once that has been determined, I will supply the information that I can release to the committee. MR. CHAIRMAN: 2.(dk1)- pass; 2.(dW2)- pass. 2.(eW 1) - the Member for River Heights. MR. W. STEEN: Mr.

Chairman, this is a brand new area of Employee Housing, as there others, Security and Parking and so on, and three other sections, (g), (

h) and (j), I would suggest that the committee rise and that we start tomorrow with whatever Information the Minister can provide based on tonight's conversation and we'll carry on into the Employee Housing. I move that committee rise. MR. CHAIRMAN: Is that agreed? (Agreed) Committee rise. SUPPL Y - AGRICUL TURE MR. CHAIRMAN, P. Eyler: Committee, come to order. We are considering the Estimates of the Department of Agriculture, Item 4.(

c) Veterinary Services Branch

(1) Salaries - the Member for Arthur. MR. J. DOWNEY: Thank you, Mr. Chairman. Prior to dinner hour, I mentioned a couple of areas of concern, and I'll deal with the artificial Insemination licensing.

A concern that has been brought to my attention, that a individual who is fully licensed and accredited under the department, and has been carrying on a business in the We stman region, has recently got into some difficulties with the fact that a person who has been given an assistant's job, or licensed as an assistant, has now tendered as a fully licensed practising AI technician and is causing some concern for an individual who has been carrying on an artificial insemination business. His concern, and I relay it to the Minister, Is 2359

MondeJ, XI May, 1185 that this individual, who is only licensed as a helper, is now tendering for a job as a fully licensed technician and it causes him some concern. The situation, I'm sure the Director of Veterinary Services Branch and Dr.

McPhedran Is aware of the situation. 1t is in the Brandon area - the work which has been tendered was the work at the Federal Government Research Station in Brandon- and I would ask that the Minister take a look at it, because I think the person has a legitimate concern, and would ask the Minister to report back after he has an opportunity to look into the situation as far as the eligibility of a part-time or the person licensed as a helper, is now given the opportunity to provide full service. So if the Minister would look into the particular situation, I would appreciate it.

As well, I had some questions to raise dealing with the computerization of the drug centre and to what im pact it's had on certain in dividuals throughout Manitoba in the Veterina ry Services Branch. I asked the Minister earlier if he could comment as to whether he has had any complaints, or concerns brought forward from any individual veterinary districts, or veterlnarlans, who had some difficulties with it. MR. CHAIRMAN: The Honourable Minister. HON. B. URUSKI: Mr.

Chairman, I understand on the first item that my office has received correspondence from the gentleman in the Brandon area, and we are in fact investigating it and looking into the whole matter as to what is the background of this tender to the Brandon Research Centre and we are Investigating that. 1 won't go any further than that, we're having a look at it. Insofar as the problems with the new computerization, Mr. Chairman, the program is presently just being developed in terms of computerization. There are no major difficulties vis-a-vis the computerization program.

Much of the discussions that have been held between the Veterinary Services Commission and veterinarians, and fee schedules, and sharers and the like have been done in a mann er, I think, no different than they have in the past, and there have been compromises reached on fee schedules and the like. There was a complaint raised about the fee for testing of blood and the way the Vet Services Com mission now handles the blood testing.

Initially, when staff sat down with the veterinarians who, in fact, raised their concerns they, of course, realized the scope of tests have increased virtually twelvefold in terms of the amount of testing. Because of new equipment we were able to purchase In 1984 to widely expand the scope of testing of blood, and once the whole process was set out and the scope of the testing that is being done, specifically in that one area - that was a major complaint that we did received from several veterinarians - there have been basically no difficulties since then in terms of the service.

I should point out that the Vet Services, in terms of diagnostic fees, are, If not among the lowest, the lowest anywhere in West ern Canada even today. MR. J. DOWNEY: Mr. Chairman, I'm sorry I can't delve further in to the concerns dealing with the computerization of the drug centre, but will proceed to do so, probably on his Salary or we'll take the opportunity to do so when we deal with the supplies under the drug centre and the Al. I just make reference to the fact that I have to do a little more checking into the concern and I'll have to bring it forward at that time.

In view of the fact that we have another chance to debate it, then I will bring it forward. I appreciate the Minister looking at the specific situation at Brandon, as far as the AI business is concerned, and am prepared to pass Veterinar y Services Branch. MR. CHAIRMAN: 4.(c)( 1)- pass; 4.(c)(2)- pass. 4.(d)

(1) Soi ls and Crops Branch, Salaries - the Member for Arthur. MR. J. DOWNEY: Mr. Chairman, I think this is a good opportunity to bring forward - and if the Minister is sensitive about it, maybe he can tell me that I'm in the wrong place, but If it doesn't come here, it comes in the next area, and that is dealing with the lack of support by this government, and lack of support by this Minister in supporting the Manitoba farm commun ity, the rural mun icipalities in the western region with a grasshopper control program.

I would think under Soils and Crops that would be one of the areas in which he would want to deal with it, but if it's not, Technical Services would be and, whether he deals with it now or in a couple of minutes would be no different to me. The point I want to make, and there are two of them, Mr. Chairman, and one is that last year we saw thousands of acres, we saw hundreds of livestock producers devastated, and grain producers, by the infestation of grasshoppers.

We saw the expenditure of 98,000, 1 believe it was, for road allowance spraying to support the municipalities, which In some areas helped, but virtually was not, In any major way, effective in killing of the grasshoppers. I, personally, in the last couple of days, over the weekend, have checked certain areas of southwest Manitoba, and we are going to have, again, a heavy infestation of them. He has hired individuals to count the grasshoppers and I say, rather than count them, he should be killing them.

We know how many grasshoppers there are; we know the areas that are affected, the mun icipalities know the areas that are affected. Certainly, it's important to identify them, but I think it's also Important to follow up with a program of support, and there were specific areas last summer that, if the government had provided the spray , that the farmers would have provided the labour, they would have supplied the equipment, and they would have, in fact, controlled and provided more feed for some of the producers in the southwest area of the province, in the western region general ly.

This year, because of lack of control or mechanisms of control last year, we are again going to see, as his department has indicated, a major outbreak. Now, I ask the Minister if he's going to be prepared to expand his program in any way. I cannot see any funds either in Soils and Crops, or I cannot see any in Technical Services, any area of expansion, and I criticize the Minister for it because he, last year, the 2360

Monday, 21 May, 1885 Federal Government and he joined together, they put together a Feed Support Program. lt may have cost less than a Feed Support Program if, in fact, they had provided a grasshopper control program; but, as well, it's incumbent upon him to urge the Department of Natural Resources to control the grasshoppers in some of the wildlife management areas, which are real breeding grounds, or nesting grounds for grasshoppers. 1 would like the Minister to take seriously the problem that is faced by many of the farmers of western Manitoba, and if he's just going to stand up and say, wel l, ther e is a program in place to spray road allowances, well, then we know that he's not prepared to do any more.

I find it hard to swallow, and the farm community find it hard to swallow when his government provides flood assistance for basements in Winnipeg where, In fact, they can buy insurance for that kind of protection, and yet there isn't any support from the Department of Agriculture for the control of grasshoppers, which it Is very difficult for farmers to buy insu rance for the devastation of their pastures. Yes, they can buy insurance for their hay ground, they can buy a Beef Security Program for their winter feed supplies, but they can't do anything for the devastation of their pastures. That, I think, Mr.

Chairman, is where the Minister should speak out a little more firmly. I think he should go to his Cabinet, and I think he should have his department prepare a far greater spraying program not only for the farm commun ity, but as well he should encour age the Department of Natural Resources with his department a control meas ur e for wildli fe management areas. I used this one area for example. In the R.M. of Cameron, which is next to Sift on, there are 11, 000 acres of wildlife management area basically in the sandhills around Lauder.

The municipality does not get one nickel of taxation off that 11, 000 acres; there isn't one nickel of revenue that comes to the province. There is wildlife produced there and it is a tremendous area to produce grasshoppers. Every farmer bordering that area has an extremely difficult time In controlling them. I think it's encumbent upon the Minister and the Department of Agriculture and their resources to put a control measure or to spend some money to control them.

Now, last year we had a meeting his ch ief entomologist at Pipestone and we were assured that there was a program being worked out. lt never came about, Mr. Chairman. I think if we're going to expect people to feed wildlife, if we're going to expect people to continue on in the lifestock busi ness and we'r e goin g to expect municipaliti es to deal responsibly with problems that they have to cope with, then we should see an expansion of the Grasshopper Control Program. I ask the Minister if he wouldn't in fact give some consideration to it and I don't need to hear a lot of bafflegab about counting grasshoppers.

As I said earlier, rather than count them I'd like to see them killed. Has he got an up-to-date report as to what's taking place? Because I can tell him right now, from my own personal experience, there are lots of them hatching, the ground Is moving with them in certain areas of the southwest. Is he going to do anything more than he did last year, which was nothing? HON. B. URUSKI: Mr.

Chairman, I want to indicate to the honourable member that there's no doubt that given the right weather conditions, the in festation for grasshoppers could be as much as two and a half times as severe as 1984 according to our forecasts. The area of infestation is quite large in the western part of the province extending from lnglis in the North to the United States border, and southeast through Miniota and Oak Lake to Boissevain. A severe area of infestation is located between Hartney and Pipestone extending south to Medora.

A large moderate area of infestat ion extends southwest from Pipestone to the Saskatchewan border, and from Medora south to the United States border. Smaller areas of moderate infestation occur west of Miniota, south of Oak Lake and east of White Water Lake. In central Manitoba, a very large area of light to moderate infestation lies approximately between Neepawa, Brandon and Wa wanesa; on the west, extending to Fannystelle, and Roland on the east.

In the Red River Valley, areas of light infestation occur between Kane and Brunkild extending east to Glenella, and between Otterburne and Dufrost east of the Red River. In western and central Manitoba, the clear-winged grasshopper is the dominant species occurring on pastures, roadsides and hay land. In the Red River Valley, the two-striped grasshopper is dominant and occurring along headlands, roadsides and drainage ditches. · This forecast, Mr. Chairman, is intended only to provide a general indication of where grasshopper infestations will occur this year and at what level.

Under hot, dry conditions, infestations will be more severe than forecast, and economic infestations may occur outside the forecast area. Cool, wet weather, favourable for crop development, will lessen the impact of grasshoppers. Mr. Chairman, meetings have been held.with a large number of municipalities, particularly in southwestern Manitoba, to outline the potential grasshopper problem and plan a co-ordinated program. Farm meetings were also held to ensure that farmers were informed of the potential hopper problems and the most effective control measures.

An expanded series of similar meetings will be held during - and they were held - during January to April of this year. Mr. Chairman, Manitoba Is the only province in We stern Canada that does provide financial assistance to mun icipalities In the provision, or the rebate, of the cost of chemical to spray on Crown land and roadsides. We assisted munic ipalities last year, In 1984, 28 municipalities received a total of $90,000 compensation under this program. Mr.

Chairman, we have hired a numb er of summer students, the department has, and thr ough the Careerstart Progr am, a numb er of mun icipalities have hired students to do the monitoring and the assisting with whatever spraying programs that municipalities are prepared to undertake. The honourable member is suggesting some greater area of compensation. Mr. Chairman, it has not been the case that the province ever has dealt with grasshoppers any differently than any other major infestation in terms of crop damage, primarily, as the member indicated. The·Crop Insurance Program does 2361

Mondar, 27 May, 1985 provide coverage for the losses and that's not to lessen the severity or to downplay the severity or potential severity of the infestation. That is to say that, within the province's means, this is about the extent to which the province is prepared to go and does deal with the areas where the greatest infestation does occur, and that is, along roadsides and in Crown lands and those areas, and the province is prepared to reimburse the municip alities for the cost of those chemicals. If the honourable member is suggesting that we go further, Mr.

Chairman, any change in policy that we would make at any time in the future, the funds would not be budgeted for it; in fact, the funds ar

Document details

Collection	Manitoba — Debates (Hansard)
Citation	32-4-56b
Type	hansard
Volume / chapter	32nd 4th hansardpdf 56b.pdf
Language	en
Format	pdf
Source	PROVINCIAL
Identifier	088fbf6b6bf70df6248bebd3675f80f685f0c934

Source file is stored in the law ingest library (pdf).