Manitoba Hansard — Sitting 79B (33rd Legislature, 2nd Session)

33-2-79b

Manitoba — Debates (Hansard)

lEGISLATIYE �SSEMBLY OF MANITOBA Monday, 29 June, 1987. Time - 8:00 p.m. CONCURRENT COMMITTEES OF SUPPLY SUPPLY - GOVERNMENT SER VICES MR. CHAIRMAN, C. Baker: Committee, please come to order. The Leader of the Opposition. MR. G. FILMON: Thank you, Madam Speaker - oh sorry, Mr. Chairman. MR. CHAIRMAN: That's no problem. I've been called worse. MR. G. FILMON: Do you take that as a compliment? MR. CHAIRMAN: I've been called worse. MR. G. FILMON: Mr.

Chairman, I wonder if the Minister can give a response to the allegation which I understand is in the Cormack Report that an effective procedure for handling psychological cases is lacking. Does the board have any procedures for handling psychological cases? MR. CHAIRMAN: The Honourable Minister. HON. H. HARA P IAK: I think the Leader of the Opposition keeps raising and referring questions from the Cormack Report. I have told him that the Cormack Report was an internal working document that was asked for by the Workers Compensation Board for the very purpose of improving the system in the area of handling claims.

I don't think tha t we should be res ponding to questions from the report. That report has been dealt with. The review committee had a draft copy of the Long-Term Review Committee's Report. I'll read to the Leader of the Opposition just what the review committee had to say about the long-term study. It says: "For some time, the Workers Compensation Board itself has acknowledged its current del ivery system may not be the best one for those injured workers with long-term disabilities. The board therefore established a Long-Term Disability Committee in March of 1986.

In March of 1987, we obtained a draft copy of that committee's final report. The comments which follow are in response to this draft. "While ideally we would have preferred to comment on the final version of the report, the board was unable to provide the final version prior to our deadline. It is unlikely that any major recommendations of the Long Term Disability Committee will be changed in the final version and, because their general approach is of concern to us, we have chosen to comment on the report in its draft form.

"In its report, the Long- Term Disability Committee addrBs;;es many of the issues which were also concerns 3481 of our committee. Our proposed solutions, however, are diametrically opposed. We favour a system which is basically self-policing, relying on information supplied by doctors, employers and injured workers.

The Long Te rm Disabil ity Com mittee favours even greater intervention and direct contr ol by the Workers Compensation Board of injured workers." Now you're dealing with an internal study that was done, I guess, with their best intentions, and then we've got the review committee which was made up, as I've mentioned on previous occasions, of a chairperson who had been an injured worker himself, and had been the chair person on the Saska tchewan Workers Compensation Board with many years of experience; Lisa Donner, who is a labour representative, had many years of experience in assisting injured workers in putting in claims; and Mr.

Tom Farrell, a representative of industry, who is IN CO's Workers Compensation employee in charge of all Workers Compensation for International Nickel, one of the biggest corporations in Manitoba. Based on their experience, they differ in the views to the Long-Term Disability Committee. I'm not sure how you deal with two differing opinions of that sort. I would hope that we don't spend all evening discussing the Cormack Report, that maybe the Leader of the Opposition would like to table that report that he has and then we could all have it out . . . . MR. G. FILMON: Mr. Chairman, I find this incredible.

What gross incompetence for this Minister to be asking me to table a report which the King Commission has had since March of 1987, that has been available to the board of th e Workers Compensation Board, according to him, since April of 1987. He has not been given this or has not had the common sense or the interest to ask for it himself? That is incredible! That is a statement of self-admitted incompetence for him to have said that. Mr. Chairman, beyond that, he is talking about the solutions of the Cormack Report being diametrically opposed to the solutions which the King Commission would choose.

I am not talking solutions. I am putting on the table the criticisms that are contained within that Cormack Report and asking for a response from either the chairperson or the Minister, and I'm getting none. You mean to say that you just simply acknowledge that it's all true and that this report tells how bad it is at the Workers Compensation Board and you have no response? That's unbelievable. HON. H. HARAPIAK: The Leader of the Opposition is once again getting very emotional over nothing. I said to him I did have a copy. I had . . . MR. G. FILMON: A $18 4 million deficit is not nothing, Mr. Chairman. HON. H.

HARAPIAK: At this time, we are discussing the long-term disability where there is no $18 4 million deficit that the Leader of the Opposition has been told.

Monday, 29 June, 1987 MR. G. FILMON: Every single criticism leads to that loss and that deficit. HON. H. HARAPIAK: I have said to the Leader of the Opposition before, I had received a draft copy of that long-term disability and, when I had taken it under consideration to discuss it, many of the comments that were in there were asked for verification, so the Long Term Disability Committee is supposed to be coming back with the information on it. To this point, they have not come back with the information dealing with that long-term report. MR. G.

FILMON: Is the Minister telling me that he has no response to any of these criticisms? He doesn't know anything that's going on at the board and, for all he knows, all of these criticisms are valid? HON. H. HARAPIAK: I have told the Leader of the Opposition that the report has been looked at. Some of the recommendations are being substantiated by it because there was no clear indication as to why they were making those statements. It was just drawn out from a long series of reports. We asked for some evidence that this was taking place. Up to this point, that hasn't come.

The Long-Term Disability Committee is supposed to be coming up with that information. To this point, they have not come. The review committee had a copy of their draft report and they repudiated the report and they said that they were diametrically opposed to the opinions put forward in the . . . MR. G. FILMON: No. You just said earlier they were diametrically opposed to the solution. Now, they weren't diametrically opposed to the information that's in the report. You said they agreed with the information to a large extent, but they were opposed in the solutions.

Now you've changed your story, if you're now changing that. Mr. Chairman, can you just tell me one little bit of information that I find interesting? The Minister said that the board wasn't given a copy of this report until April of 1987. Yet the King Commission received the draft copy in March of '87. Do you mean to say that the Cormack dr aft report was given to the King Commission before it was given to the board? HO N. H. HARAPIAK: The review comm ittee was interviewing many people in Workers Compensation to get at a good understanding of what was happening in the Workers Compensation system.

They interviewed Mr. Cormack and, at that time, he shared with them that he was in the process of tabling a draft copy of their study, and so they asked for a copy of that report at that time. The board did not have a copy of that report at that time. MR. G. FILMON: I wonder if the Minister can indicate why an effective procedure for handling psychological cases is lacking at the board. How many years have they had to deal with psychological cases and not have an effective procedure? HON. H.

HARAPIAK: There is a board policy that has been in place for handling psychological conditions, which has been in place since '86. There was a policy in place for a procedure developed in '1984, and this was revised in January of '86. MR. G. FILMON: Since we're now talking about a report in March of '87 that says that there is not an effective procedure for handling psychological cases, is the board going to review that and come up with a proper procedure? HON. H.

HARAPIAK: As I told the Leader of the Opposition, this is also part of the area that the review committee looked at, and we are looking at all parts of the Workers Compensation procedures. In the final analysis, when we look at all the recommendations, if that's an area that we feel that there will be some changes needed, then we will be correcting that at the same time as we're addressing all the other policy changes. MR. G. FILMON: Is stress the major problem that is cla ssed as a psychological case? HON. H. HARAPIAK: Str ess is one part of the investigation, but I guess the main

part is when there's no organic basis for pain but pain exists. MR. G. FILMON: Can the Minister indicate what percentage of the psychological cases would involve stress? HON. H. HARAPIAK: I am advised that there are presently about 300 cases that are related to stress. llllR. G. FILMON: Three hundred cases that are related to stress? Out of how many psychological cases? HON. H. HARAPIAK: Tha t was 300 cases with psychological components. In total, there were 300 cases. MR. G. FILMON: And how many of them were related to stress? HON. H. HARAPIAK: That statistic is not kept. MR. G.

FILMON: Is there any breakdown as to what the nature of those 300 cases might involve? HON. H. HARAPIAK: I am advised that you would have to pull out the files and look at those cases individual ly, because many of them result from dramatic injuries that they may have experienced. I am personally aware of two cases where there were injured workers and then they developed psychological difficulties later. They were not able to cope with going back to work even though the doctor felt that there was no basis for it. They just had lost confidence in themselves and were not able to.

So I guess you'd have to pull the files of each individual case and see what may have started out as a very clear case of a broken hip or a broken leg and, later on, it turns out to have had some psychological effects. You would almo st have to take each case individually and analyze it in that way. An injured worker 3482

Monday, 29 June, 1987 does not start out with a psycho logica l prob lem. It usually starts out with an injury that takes place, and then they lose confidence and it develops into a psycholog ical prob lem . MR. G. FILMON: Is par t of it becau se t he rehabilitation process takes so long for them to become referre d t o rehabilitati on and undergo whate ver additional traini ng that, by that time, the y have lost confi dence? HON. H. HARAPIAK: I think that's one a rea that we have to be moving in is that reha bilitation shou ld be starting very early.

The boa rd is loo king at different ways of del ivering some of this rehab ilit ation, so it can be delivered in an earlier metho d or an earlier process . MR. G. FILMON: Within the past few weeks, I've ra ised to the attention of the Minister a num ber of areas in which the board's policy brea ches the act , one of which was obvio usly the carrying of a deficit in the class fund s. The other one was that instruct ions of the board were not to attempt to colle ct overpay ments.

The t hird one , ,/ as I understand it, was that the avera ge earni ng s were being increased after a p erson was on compensa tion, as opposed to the act, whic h said that the person was only en titled to collect in accorda nce with the income, the wage that they had at the time o f t he i njury. I understand , as well , th at the Corma ck Repor t details

section 34.1(1) of the act pert aini ng to pre-ex ist ing conditions is not being appli ed in totality. What commen t does the Minister have on that? HON. H. HARAPIAK: On the firs t one , you 're referring to 66(1) of the a ct , wh ich says that the bo ard should be collect ing the full amount of the assessm ent every year. We realize that' s so, and I have explain ed o n previous occa sions as to why we wer e n ot proce edin g with givi ng them an i ncre ase of 57 per cent, which was requir ed last year, becau se o f our economy that was in the rec overy st ages.

After the Minister con sulted with indust ry, they felt they would prefer to get an increase over a t hree-year period o f 20 percent per year, rathe r than a 57 perc ent increase at one time . So that's one of the areas tha t we will have to be ,; addressing when we are discussing the legislation . The ot her area , it was in our annual report that there was a clarifi cation dealing with pre -existing conditions . There was a clarificat ion of the 1972 policy in 1986 .

It addre sses the view that the inte nt of the legi slation is to c over situ ations wh ere a n injury is due to a combinat ion of compens ab le injury and a pre- existing cond ition . Direction is provided in regard to consider ing all necess ary medic al documentation , p re-acciden t status, and wheth er the work er has returned to his pre accide nt statu s. You also mentioned the overpayments of some claims . Overpayments are generally collected. There are certain situati ons where, dependin g on the amount of the effort re quired to collec t, it does not make it cost-efficient to coll ect.

But in most cas es, the over payments are collected. MR. G. FILMON: Since the Cormack Report , as I und ers tand it, said that there appea rs to be a lack of consistency in the applicatio n of the pre-exis ting policy , and that

section 34. 1( 1) of the act pertaining to pre exi sti ng conditions is not being appli ed in tota lity, I wond er if the Minister can indicate what is meant by that. HON. H. HARAPIAK: I guess there is a policy that has been in place since Aug ust 1 of 1972, dealing with pre exi sting co ndi tions and second injury. That policy is in pla ce and it's being prac tis ed. I guess it's his opinion that it i s not bein g prac ti sed, but that's again one ... MR. G. FILMON: What of the lack of consistency? He's obvi ous ly saying that it is being app lied, and it isn't being appl ied; there's no co nsist ency.

So what is being applied and w hat isn't b eing appl ied? HON. H. HARAPIAK: I am not sure what he is referring to. The b oard is in the process of getting some of those stat ements clarified . Up to t his point, they have not had clarifica tion of that sta tement. MR. G. FILMO N: Wh at abou t 34 .1(1) of the act pert aining to p re-ex isting conditio ns not being applied in total ity. What p art of it isn 't being app lied? HON. H. HARAPIAK: Once again, I am not goi ng to be discussing th e Co rmac k Report .

The staff is in the process of getti ng clarific atio n on many of Cormack 's - which is one perso n's opinio n of wha t is happenin g as it pert ains to the Worker s Compens ation. The staff is presentl y deali ng wi th t hat a nd gett ing furth er clarificati on with it, and ther e sti ll has not bee n a final report of the Cormack Report. Wha t the Leade r of the Opposi tion has is a copy of the draft. Many of the statem ents in there are subjective . Theref ore, I will not be discus sing it until we have that info rmation in ful l. MR. G. FILMON: Mr.

Chairman , this is a Ministe r who 's supposed to know what's going on in the Work ers Compensa tion Board . He's the one who 's t elling us tha t he's going to clean th ings up. He has no idea wh at's going on , and he either isn' t inte rested enough to have taken the ti me to read the Cormack Report or to have discussed it with his board, or he has been kept in the dark about the whole thing . Under those circumstances, it 's not a quest ion of what he's prepared to or what he isn't prepared to discuss . H e doesn 't know anything about it to discuss it.

He hasn 't been briefed on it, he's been caught unawa re, and he' s in no position to disc uss the issues of a report that is very damaging. I forewarned him of thi s. For a month , I've been saying , there 's damming evidence in that repor t. Why aren't you looking at it? Why aren't you doing something about it? Why aren 't you making it public? What have you got to hide ? Now, I'm attempt ing to make some aspects of it public , and he is saying he 's not prepared to discuss it. The reason is that he' s been tota lly kept in the dark and he doesn 't know what's going on , and he just wants to cover up the mess.

HON. H. HARAPIAK: I have read the C orm ack Report and I have discussed it with the board . The board wants to be sure of wha t e ffe ct it woul d be having in the Worke rs Com pen sation Board . So therefor e . . . 3483

Monday, 29 June, 1987 MR. G. FILMON: So I don't have to go on a matter of privilege tomorrow, as I did with the Minister from Gimli, will you clarify whether you have or you haven't read the report? Because I tell you, just a day or so earlier or even within the past few hours, you said you hadn't read the Cormack Report and now you're saying you have. Which is the correct version, so I don't have to take you on a matter of privilege tomorrow? HON. H. HARAPIAK: I have read a draft copy of the Cormack Report. MR. G. FILMON. Oh. A MEMBER: You said you hadn't, and that's in Hansard. MR. G. FILMON: Mr.

Chairman, I have some other questions, but the Member for Kildonan wants to talk about the pre-existing condition policy and so I'll let him interject. MR. CHAIRMAN: The Member for Kildonan. MR. M. DOLIN: Thank you very much. I will just take a second. I just want to understand if there is a distinction made between a pre-existing condition and a predisposition, a pre-existing condition being an illness or a pre-existing condition being a state of less than normal activity of a body part?

Is there a distinction made between thos e two cla ssifications and a predisposition for a certain type of injury or what have you? HON. H. HARAPIAK: In

section 34 of the act: "In this

section "pre-existing or underlying condition" means a condition of the workman which existed or was discernible as an underlying condition before the accident and includ es a neurosis and a psycho neurosis." MR. M. DOLIN: Okay. I still have some concern about the three categories that I've outl ined not being really clear in that definition. Is a predisposition of something - if somebody for example has a 1/lfeakness in a leg and then trips and falls, it's not the same as somebody who has muscular damage in the leg. I'm just wondering how, is there - you know, the Leader of the Opposition talks about some inconsistency in

interpretation. I can understand that, if there is not clarity in those

definitions. HON. H. HARAPIAK: I guess the pre-existing conditions are the same. If those pre-existing conditions were the same for muscular disorder or a bad back, it's still a pre-existing condition that could effect an injury. MR. M. DOLIN: Would this have to be - thank you. To the Minister or whoever: Would this have to be a diagnosable condition rather, than a weakness? That's what I'm saying; that's the concern I have. HON. H. HARAPIAK: We are all made up of different conditions, I guess. You know, there is sort of a thin skull- theory and that is, if you and I were working in the same conditions and a hammer happened to fall on one of our skulls, that might be an injury,

whereas it might fall on another employee who has a thick skull and it wouldn't be an injury. So we are accepted in the condition we are in when we are hired. So you can't apply the same theory to every injury. I'm not sure if I made that clear. MR. M. DOLIN: Okay, I won't pursue the line of questioning. MR. G. FILMON: Another comment in the Cormack Report, Mr. Chairman, is that there is an apparent lack of control exercised on many files where chiropractic treatment is involved. What is the board doing about that? HON. H.

HARAPIAK : We have two chiropractic consulta nts who review all our files deal ing with chiropractic claims. MR. G. FILMON: Is that a new procedure? HON. H. HARAPIAK: We have had one chiropractic consultant exercising that responsibility since 1981 and in 1983 there was a second consultant taken on in that role. MR. G. FILMON: Why is there a lack of control then on th ose files in which chiropra ctic tr eatment is involved? HON. H. HARAPIAK: Once again, that's one of the difficulties with dealing with a report when - I guess that's from his objective. That's his opinion.

But again, the board has asked them to come up with some specifics on it and, up to this point, we don't have the specifics. MR. G. FILMON: Mr. Chairman, why would this Minister indicate that these people who are not competent to do the report, if that's the case, then why were they commissioned to do this report? HON. H. HARAPIAK: I didn't indicate that they weren't competent. I said they had done the report and many of the statements and recommendations were not subs tantive, so the board has asked them to clarify many of the recommendations that were brought forward.

I'm sure that the Leader of the Opposition knows what the terms of reference were to that report. Maybe, in case he hasn't got the entire report, I'll read to him the terms of reference.

It's: "to evaluate all claimants where benefits have been paid for in excess of 12 weeks and recommend specific courses of action where warranted; to identify specific deficiencies in the handling process of individual claims and bring to the attention of the respective department director or his/ her designate; define criteria to be used in th e identification of potential long-term disability or delayed recovery claims; to develop a comprehensive paper and recommendations on suggested changes to policy and/or procedures that are seen to be deficient." And the goals of the committee were: "to facilitate early and effective medical management as well as vocational rehabilitation involvement where warranted; 3484

Monday, 29 June, 1987 to identify and rectify systematic problems that come to a comm ittee's attention during the execution of its mandate; and to provide direction in individual cases where deficiencies are identified." I think that the Leader of the Opposition should realize that we could have asked for a patronizing report by patting everybody on the back and saying, hey, you're doing a good job. And I guess that's the difficulty with tabling an internal document of this sort.

It's unfortunate that we are really dragging these two employees over the coals because they were working on a report which was going to be making the Workers Compensation a better system. They've made some recommendations, and we'v e asked them to su bstantia te the recommendations they've made and they're in the process of doing that. So they should realize that when it's an internal report, those people were doing the work thinking that it was an internal working document but now, unfortunately, we find the Leader of the Opposition has a copy of the report.

I think that, in future, many Crown corporation emplo yees are going to be hesitant to put recommendations on the record knowing that at any time they could become political footballs. I know there are a lot of private corporations that have internal studies done on how they can make improvements into their system. So therefore, the private firms certainly don't have to make their recommendations and studies known to the general public.

I think if we're going to be having any efficient Crown corporations, we have to have that freedom for the employees to participate in studies and come forward with recommendations to make improvements where they see there are shortcomings in the existing system. I just said the Leader of the Opposition chooses to use it as a political football, and obviously that's what he's doing at this time. MR. G. FILMON: Mr. Chairman, in case the Minister hasn't noticed, it's not Doer and Cormack that I'm dragging over the coals. It's the Minister and the board.

I fully accept that Cormack and Doer did an excellent job and a great service to the Workers Compensation Board and to the people of Manitoba by doing a very th orough and ob jectiv e ana lysis of some ma jor weaknesses in the board. Now of course that these weaknesses are being aired publicly, the Minister is dumping all over Doer and Cormack, saying that they didn't know what they were doing and they were lacking information and that they aren't correct and all of those things, without giving any information to substantiate his position. He is the one who is dumping all over them.

If he would only come clean instead of being so defensive about this, we might attempt to find some ways to improve the operations of the board out of Doer and Cormack instead of him just simply defending the board at every opportunity and saying that it's Doer and Cormack who have got it all wrong. I tend to believe that they are pretty close to the truth in a lot of the things and that the board and the Minister could learn a lot and benefit a great deal by, in fact, reading these criticisms and responding positively instead of negatively to them. HON. H.

HARAPIAK: That was the whole intent of the Board of Comissioners asking for a report. They are 3485 concerned that some length of time has been taken to handle the claims and that is why they asked for the report, that long-term review committee, to deal with this area in the first place. They have come up with a report and nobody is saying that we rejected the report, or we have said they are incompetent. What we did say is we have asked them to substantiate the recommendations and the statements they have made. That's all we've asked, and they are in the process of doing this right now.

I would suggest that when we are dealing with the entire refo rm, that some parts of the Long- Term Disability Committee will be used, along with many other building blocks which include the review committee and some of the other Workers Compensation systems that operate across Canada, because I don't think that we have to reinvent the wheel in every instance.

If there are some parts of the Ontario system, the Quebec system or the Saskatchewan system that are working in a humane, effective way, then we should be willing to glean that information from those systems and make ours a more humane, cost-efficient system. A MEMBER: It's not humane and it's not cost-efficient HON. H. HARAPIAK: The Member for Portage la Prairie said why didn't they get that information.

They are employed in those very areas, so they are working directly with those claims, so I'm not sure why they wouldn't have got - they did get the information, and possibly they didn't supply enough of the information when they were submitting their draft report. MR. G. FILMON: Mr. Chairman, last summer sometime, the Provincial Auditor did an investigation at the Workers Compensation Board into certain allegations against Mr. Kurbis, and happily I think, most of the allegations against Mr.

Kurbis, personal allegations - in fact, I bel ieve all the personal allegations were unsubstantiated and he was cleared of that. Among other things, in the Auditor's report were some rather strong statements about hiring and promotional practices at the board that resulted, as I understand it, in new hiring and promotion practices and procedures policy being implemented as of the beginning of this year. Part of the report of the Provincial Auditor that was not made public involved an investigation into the rel ationship between the Labour Director on the Workers Compensation Board, and the Claims Director.

I wonder why that part of the report was not made public. HON. H. HARAPIAK: I am not aware that was part of the report or part of the investigation. It was not part of the report that was tabled. Part of the report, the Auditor's recommendations, they are dealing with the Auditor's report, and that's dealing with hiring and promotion practices. That's been in effect since January 7 of '87. He also reported that there should be a purchasing and tendering procedure. They upgraded them in the first quarter of '87 as well.

There's a full utilization of the Queen's Printer and the government printing consultant, and Supply and Services are now in effect.

Monday, 29 June, 1987 They also recommended that an internal auditor would be hired. That position has not been filled to this point but they're looking at filling that position, an internal auditor. It says a procedures manual for personnel policies and procedures in general administration matters should be developed. They are in the process of developing that by senior management at this time. MR. G. FILMON: Is the Minister telling me that the Auditor did not look into the relationship between the Claims Director and the Labour Director on the Board of Commissioners of Workers Compensation Board. HON. H.

HARAPIAK: That was not part of the report that I have seen. MR. G. FILMON: That's not the question I asked, Mr. Chairman. I know what report was tabled publicly. I want to know whether or not the Provincial Auditor investigated that relationship and reported internally on that relationship. HON. H. HARAPIAK: The Auditor reported to the Minister of Finance. The only report that the Workers Compensation Board, the directors, are aware of is the report that they received. MR. G.

FILMON: Is the chairperson saying that she was not aware of any investigation that the Provincial Auditor did into that relationship betwee n the Claims Director and the Labour Director on the Board of Commissioners? HON. H. HARAPIAK: The Auditor had asked the chairperson of the board questions on it, but she is not aware of what had come of it because there wa sn't any reference to it in the report. MR. G.

FILMON: I wonder if the Minister can indicate - the Director of Claims was promoted at a time, in 1983 by the board, when she had no supervisory experience, she had no post-high school training, moved from a position of being a claims officer to acting senior claims officer to director in six months, jumping over many people with 20 years experience and supervisory experience as well, people who had university degrees and supervisory experience, 12 to 15 years of work with the board. On what basis was that promotion made? HON. H.

HARAPIAK: I am informed that she was the only internal applicant and she had extensive experience in that whole area of handling claims. It was an internal applicant. MR. G. FILMON: Was the position advertised within the board? HON. H. HARAPIAK: Yes, it was advertised within the board. MR. G. FILMON: And she was the only applicant for that position? HON. H. HARAPIAK: She was the only applicant, that's correct. MR. G.

FILMON: Was the Minister made aware, or his predecessor, of concerns about the fact that there was a personal relationship between the Labour Director on the Board of Commissioners and the Claims Director, and that there could be influence over policy decisions or even claims decisions as a result of that relationship? HON. H. HARAPIAK: Yes, I was made aware of it. I was told that it was not affecting the work that the Claims Director was carrying out. So I thought that, in this day and age, I shouldn't be becoming involved in discussions of that sort. I shouldn't be discussing it as a moral issue.

I thought that, if it would be affect ing her performance as a Claims Director, then the board of directors should be addressing it. But from what I have heard, her work habits were not affected. MR. G. FILMON: Mr. Chairman, may I just clarify that I am not approaching it on the basis of a moral issue and I'm not approaching it on the basis of concern about work habits being affected. Who informed the Minister that there was no problem with this relationship and it didn't have any effect on the operations of the board? HON. H.

HARAPIAK: I was made aware of it by some media inquiries, and I raised it with the chairperson of the board and had a discussion with the chairperson of the board. MR. DEPUTY CHAIRMAN, M. Dolin: The Member for Tuxedo. MR. G.

FILMON: Does th e Minister not see any potential for conflict of interest in that situation, whereby the Claims Director could be influenced on a personal basis to bring forward changes in policy or procedure with respect to settling certain claims, let's say for instance, a policy on stress that would see stress claimed as an ill ness and workers put on indefinite Workers Comp ensation benefits as a result of a physician indicating simply that the applicant is under stress when in the workplace and, if that were a desire on the part of labour , for instance, to be brought in I as a policy, the Claims Director could be influenced to recommend that kind of policy and those kind of settlements?

HON. H. HARAPIAK: Policy recommendations come from many different areas but, in final, the board of directors are the ones who set the policy. They could be influenced by industry, by the industry rep, and I would hope that they would influence the policy, that's their role on the board. So I would think that there is some influence coming from industry reps, from labour reps and an impartial chair. So overall, I hope they would come up with policies that are geared towards meeting the needs of injured workers, and also make it a cost-effective Workers Compensation plan. MR. G.

FILMON: But if one of the th ree people on the board of directors wanted to see a certain policy adopted and could somehow convince the Claims Director to have that policy recommended to the board, then that would be an easy way of achieving that one 3486

Monday, 29 June, 1987 person's goal of having it brought in by an independent staffperson and then be able to be introduced as a policy. Do you not see the prospect of that happening? HON. H. HARAPIAK: Before any pol icies are implemented, they are circulated to all directors of Workers Compensation, and all directors have an opportunity to use whatever influence they would like. I'm sure that they do lobby and try and influence the Workers Compensation system if there's some need for change in policy. Would the pressures be any greater on that? I guess it would depend on the individuals. MR. G.

FILMON: Wouldn't it be a lot easier to influence that if a key senior staffperson had a close relationship with that director? HON. H. HARAPIAK: I'm not sure if that would be any more influential than having a close personal friend. I have many close personal friends who are influencing me in the area of establishing policy within government. Is that pressure? I think that we are all subject to a � bit of pressure from outside sources, and I think that ' we have people who are capable of making the proper decisions. MR. G.

FILMON : If th ose personal friend s were politically appointed, then the Minister would obviously be in a situation where he'd have a nice, cozy circle of his own personal friends also being politically appointed and also helping him to help each other influence government policy. That's the kind of cozy little circle that obviously this NOP administration sets up as often as it can. He obviously understands what I'm after. HON. H. HARAPIAK: He has a different opinion than I have. I feel that we get influenced and lobbied.

Every day of our political life, there is someone trying to influence us as to some direction we should be moving in in policy. Obviously when a board of directors is setting policy at the board level, they're going to be lobbi ed by people as well. � MR. G. FILMON: Is it a lot easier to influence when ' there's a close personal relationship between the influencer and the influencee? HON. H. HARAPIAK: Not necessarily. It might be harder. MR. G. FILMON: The Minister is in a dream world if he expects me to believe that. MR. DEPUTY CHAIRMAN: The Member for Portage la Prairie. MR. E.

CONNERY: One of the things I've come across was that there is now a board executive. Can the Minister tell us when the board executive was set up, established? HON. H. HARAPIAK: I'm sorry, I missed the first part of your question. MR. E. CONNERY: The board executive, the board now has an executive. Could you now tell us when this board executive was established? HON. H. HARAPIAK: Yes, tha t was one of the recommendations of the Auditor, and that has been in place since September of '86. MR. E. CONNERY: September of '86. Is it in the Auditor's Report?

I don't recall seeing it, that being a recommendation of the Auditor, but it could be. Is it? HON. H. HARAPIAK: They had meetings with the Auditor and that's one of the recommendations that the Auditor made, a verbal request that the Auditor made of the Board of Commissioners. MR. E. CONNERY: What was the rationale for that recommendation? HON. H. HARAPIAK: It formalized the process for making decisions on expenditures and procedures. MR. E. CONNERY: Who is on the board executive? HON. H. HARAPI AK: The three Board of Commissioners and the Chief Executive Officer. MR. E. CONNERY: Is that the same as the board?

Is that the same actual number of people who are on the board? HON. H. HARAPIAK: Yes, they are called executive meetings, but they are the Board of Commissioners, plus the Chief Executive Officer attend them. MR. E. CONNERY: These meetings are held then in camera. HON. H. HARAPIAK: There are executive minutes kept to those meetings. MR. E. CONNERY: But it's an in camera session. T he full minutes are not reported when it comes back to the regular board meeting. HON. H. HARAPIAK: It is more of an administrative function where they deal with staffing and things of that sort.

There is more normal day-to-day operations of building maintenance and responsibilities of that sort. MR. E. CONNERY: Of course the King Report was very critical of the board conducting meetings in this fashion. The information that should be available to the board is not being made available, of course, in the regular minutes. MR. DEPUTY CHAIRMAN: Excuse me, could I interrupt the member. We've had a request to pull the mike over closer to you, please. Thank you. HON. H. HARAPIAK: The review committee has made many recommendations.

We have said on previous occasions th at we will be look ing at all of the recommendations of the review committee at one time. So we will be dealing with all of the recommendations, and one of th eir recommendations is th at more information become available. 3487

Monday, 29 June, 1987 MR. E. CONNERY: So the Minister is satisfied that having minutes in confidentiality is the appropriate way to go. Is this another form of cover-up, because it is a change. I just don't buy the fact that there should be minutes that aren't reported in full. HON. H. HARAPIAK: They're not confidential reports. They do - all the names are minuted in these minutes that are kept. They are not confidential reports. The report is not distributed publicly because of personnel issues that they raise. Normal ly, personnel reports aren't tabled for the public to see when personnel issues are raised. MR.

E. CONNERY: I just can't accept that. You have changed very recently and it looks very suspicious when, all of a sudden, because the minutes of the executive are not appended to the regular board minutes. HON. H. HARAPIAK: The minutes of those meetings are available to all board members and directors also. I'll get copies of those. They're available for them to read. MR. E. CONNERY: I would like to read into the report here today some of the complaints that workers had. This government has said that they have been a very compassionate government, that previous government was not a compassionate government.

You've had reform, you've been doing all of these good things, and you've been in power for five years. Why would workers say they would benefit from less talking and more listening? Why would they say that staff members don't treat you like you're a human being, I've felt like a lower person than anyone else. One stated a preference for welfare, saying welfare officials are far more willing to listen. Another says, criminals have rights, injured workers have no rights. You give up every right as a human being except the right to vote.

Now this is in regard to an operation that this Minister calls a very humane, a very sensitive, very concerned about the children, widows, dependent children. It says, Workers Compensation Board only wants to pay for eight hours but to control you for 24, and then it said in the last one that we have here says, they take away a man's dream. Now, Mr. Chairman, I find these not the comments that would be made of a compassionate Minister, of a compassionate government, and of a board that was doing their job anywhere close to reality. HON. H. HARAPIAK: Mr.

Chairman, I guess when you're dealing with 54,000 claims and there are - you know, the Member for Portage likes to have it both ways. They're saying that we are approving all claims that come forward and that's why we've got a deficit like we have, and now they want to believe that there are people whose claims have not been dealt with or who have been rejected. There is an appeal process that can be followed and is followed but, when you're dealing with that many claims every year, there are bound to be some people who are dissatisfied.

There are some claims, and that person made a submission to the review committee, who has been appealing now, well, for all the time that I've been in government and he was around before I became elected. He was appealing at that time and he's still in the process of appealing. So, how can you control how people feel? When the review committee was going around and listening to the hearings, unfortunately, they didn't say, anybody who's been dealt with in a very humane, effective way, any of the injured workers and defendants who have been treated fairly by Workers Compensation, come on out and give your story.

They were asked to critique the Workers Compensation system. And again, they did it in an effective way, they critiqued it. So when you critique a system, you're going to come up with some criticism. The people who are coming out to make their complaints known are people who have had their claims rejected or - I'm not sure what specific cases - but there are cases when you deal with 54,000 claims, and this is compiled over many, many years. There hasn't been a review of the Workers Compensation since 1957. Surely there are going to be a lot of people who are coming forward and they have complaints.

I'm sure that some of the complaints coming forward were for the years when the Tories were in government that they didn't handle. As for the one particular one I'm referring to, it was in place before we formed the government. So obviously, he had a complaint against the Workers Compensation system before we got in. So we should ma ybe put tha t additional bit of information in there and ask him, are you complaining against the Tory government or are you complaining against the New Democratic Government. All we are telling you is there have been a lot of changes in the system. The system has become more humane.

There were four reports that were outstanding when we formed the government. We have moved and implemented the majority of those recommendations on those reports. If you want positive feedback, we can go out there and get you some stories of where people had been dealt with in a humane and effective way. So if you choose to listen to people who are not satisfied with the system, I guess that's your perogative. MR. E. CONNERY: Mr.

Chairman, obviously if this individual had been treated fairly, then after this government came into power five years ago, this person wo uldn't have been there criticizing the Workers Compensation Board. So really, what we see and what we're going to show is that the Workers Compensation Board is an incompetent, insensitive board, managed by an incom petent, insensitive Minister and an incompetent, insensitive government. Mr. Chairman, why does it take 21 months for cases to go through the appeal system? Why does it take 21 months?

If that person is in real trouble and needs money and isn't getting paid, 21 months is not an acceptable level. HON. H. HARAPIAK: The member makes a statement that it's an insensitive government. I guess you could multiply that statement over many times when you deal with insensitive governments. They were the insensitive government, because there was no rehabilitation system when they were in government. I think that you look at the recommendations of the Cooper report that was tabled in the House when Mr. Cowan was the Minister, 3488

Monday, 29 June, 1987 there's one response after another which showed that the previous government was insensitive. They did not deal with people in an effective way. We have established programs which do make it a more humane system, for exampl e, the Workers Advisors Program, which has helped deal with many outstanding claims that have not been dealt with for years and years.

I know from my own constituency, there are several claims that were settled, that these people had not received their proper due for many, many years, and they were settled with the Workers Advisors Program when they showed the people how to put together a submission and how they should go about it. I guess one other point I would like to make, the Memb er for Portage la Prairie keeps referring to it as a workmen's compensation system. I would hope that he would come into the 20th Century here and know that it is a "Workers" Compensation, because we have many workers who are of the opposite sex.

Many of them have been injured in the workplace as well, so th at it's a Workers Compens ation system, not a "workmen's." MR. E. CONNERY: The Minister is absolutely right and I apologize for that slip of tongue. It is the Workers Compensation Board, no question. Can the Minister tell us why it takes up to three months for an initial pay cheque to be issued, up to three months for an initial pay cheque? HON. H. HARAPIAK: I am informed that, in the majority of cases, the cheque is issued within eight days.

There are cases where there are appeals and again there are sometimes claims that are questionable and there's some need for some additional information. So there may not be enough information to make a decision on it, and we recognize that there are some difficult decisions to be made and an injured worker has a right to appeal, and the appeal process does take a long period of time. There are some recommendations by the review committee of how this can be improved and, once more, we will be looking at that and doing an assessment of what this will do to the costs of the operation.

We will be making rec omm endations, and all of the recommendations at one time. MR. E. CONNERY: What happened in 1985 when, in the Claims Department, the length of time required to produce the first cheque went from an average of 14 days to over 25 days in 1985, and stayed high or higher thereafter? Did you plug into a computer or something? Well, something went wrong. HON. H. HARAPIAK: That was done in 1985 and it was done manuall y, a random sampling. It was done for financial purposes. MR. E. CONNERY: But it says that's the length of time it takes to get a cheque out, the average length of time.

This is not just a random sampling; this is the average length. HON. H. HARAPIAK: I'm informed that those figures include, from the date of notification, that it usually 3489 takes eight days from the time they get the file, but there may be many delays in the claim coming to the Workers Compensation Board. There could be a delay in industry making the file, or there could be a delay in the worker making his report, or reporting the injury. So there are many delays that could cause that long period. MR. E. CONNERY: Why did it almost double in one year? Something went wrong. Something changed, some procedure.

If that was the case, it would have been consistently like that, but it alm ost doubled in one year, 1985. HON. H. HARAPIAK: Once again, the member is using selective figures and he is using some figures from the King Review Committee, and we are still in the process of pulling all the information together. We have not had an opportunity to assess it completely, and there are some recommendations dealing with that. I am told that isn't the time that's used for a normal claim. MR. E. CONNERY: On page 3218 of this year 's Hansard, the Minister referred to study after study on the cost of rehabilitation.

Can the Minister tell us what studies these are that he's referring to? HON. H. HARAPIAK: There were six studies. Some of them are based in Manitoba, a University of Manitoba study, I believe the University of Minnesota, and also there is a study from Wisconsin, and there are several other studies that are based on American statistics. MR. E. CONNERY: How many studies, in total, and are those studies publicly available? HON. H. HARAPIAK: We can provide you with a bibliography of where these studies are available. MR. E. CONNERY: I would appreciate that, if you can give it to me in writing another day.

How long does it take for a claim, once it is finalized, to go to the rehab department? HON. H. HARAPIAK: It doesn't necessarily go to the rehab. It depends on where the claimant goes. But they are working to a goal, a two-week processing of claims. MR. E. CONNERY: I'm talking ones that are finalized to go to the rehab, not all of them, ones that are going to the rehab specifically. HON. H. HARAPIAK: Two-week periods is what they work on. MR. E. CONNERY: Can that be substantiated, because my information tells me it's four to six weeks? HON. H. HARAPIAK: It used to be four to six weeks but that has been reduced.

In the last four months, it has been improved to two weeks. MR. CHAIRMAN, C. Baker: The Member for Portage.

Monday, 29 June, 1987 MR. E. CONNERY: I'm happy to see that improvement. Is the claim paid while it's in the holding pattern? How many claims are in the holding pattern for any given month? What would be the average numb er of claims per month waiting? HON. H. HARAPIAK: Yes, the claims are paid but it depends on how many accidents there are. There is no average month; it fluctuates on the employment picture. There are many factors that influence how many claims come in. MR. E. CONNERY: Okay, then what was the total for 1986? HON. H. HARAPIAK: For rehabilitation? MR. E. CONNERY: Yes, and in the holding pattern.

They'd have to be one and the same. HON. H. HARAPIAK: As of December 31, 1986, there were 1, 4 7 4 active claims in the rehabili tation department. MR. E. CONNERY: Fourteen seventy . . . HON. H. HARAPIAK: Seventy-four, 1,474. MR. E. CONNERY: What was the cost of this number while they were in that holding pattern? HON. H. HARAPIAK: I'm not sure what you're referring to when you are saying the holding pattern. MR. E. CONNERY: Wel l, while they're waiting, after they're finalized, before they get into the rehab. What was the total cost of that period of time? HON. H. HARAPIAK: It changes every day.

Some claims come on, some are going off. So there is no constant level of claims. We would have to pick a day and say what were the costs for that particular period. It fluct uates daily. MR. E. CONNERY: I'm not asking for the daily, I'm asking for the year 1986. What is the cost? Now, if the Minister doesn't have this . . . HON. H. HARAPIAK: Yeah, we've got that information. They're just looking for the information, so you may have some other questions you may want to ask while they're looking for that information. MR. E. CONNERY: How many new workers were in the rehab in 1986?

You said that 1,474 - would that be the number that went into the rehab in 1986? HON. H. HARAPIAK: Yes, that was the total. MR. E. CONNERY: Tha t was the new workers. How many in total are in the rehab at this point? This is a new question. What's the total in the rehab? HON. H. HARAPIAK: At the year-end, that's how many injured workers there were in the rehabilitation in total, and that went up from 1,200-and-some the previous year. MR. E. CONNERY: My question was: How many new ones earlier went in, in 1986 into the rehab program? HON. H.

HARAPIAK: Approximately 200 - there was 1,200 and some on December 31 of'85, and then it went up to 14. MR. E. CONNERY: A little over 200 increase. HON. H. HARAPIAK: A little less than 200. It was 1,294 at the end of 1985, and 1,474 in 1986. MR. E. CONNERY: Yes, 180. HON. H. HARAPIAK: You asked for the cost of the breakdown for rehabilitation? MR. E. CONNERY: Wel l, the cost, while they're in that holding pattern, from the time that they've been finalized till the time they start rehabilitation. HON. H. HARAPIAK: For 1986, it's $261 ,429.98. MR. E.

CONNERY: So by decreasing the holding time to two weeks, if this is the right figure, you've initiated some large savings or there was overexpenditure in the previous period when it was four to six weeks or wh atever the time period was. HON. H. HARAPIAK: There may be some savings in one area, but then they get on to rehabil itation process sooner. So wh atever you save in one �rea, they will be paid in rehabilitation. But then if they get on the rehabilitation sooner than they would be, it will be cost effective. They' ll be off that sooner as wel l. MR. E.

CONNERY: Wel l, yes, if they're waiting for rehabilitation, Mr. Chairman. Obviously, in the holding pattern, rehabilitation isn't taking place. The longer the delay from the time that they're approved to go to rehab, the more it costs us because technically they're not being rehabilitated. That's the whol�' id�a in going into rehabilitation. If we could reduce that figure to nil, then of course we could save some significant amount of money. I know that's impossible but, you know, it's not cost effective by having them in a holding pattern, it's costly to have them in a holding pattern. HON. H.

HARAPIAK: Very clearly , that's the secret to the whole Workers Compensation becoming very cost efficient; it's to get the injured workers on rehabilitation as soon as possible, and there are some examples of how that can be moved up to a much shorter period. We're looking at all those recommendations as to how we can start the process sooner. The caseload for 1981 - we're talking about the rehabilitation and I guess we want to make a reference to the caseloads for the counsellors. ln'81 , there were 185 claimants to each counsell or.

In 1986, there was a ratio of 78 to one, so that caseload has been reduced a long way. I guess that's one of the areas that is becoming more cost effective. 3490

Monday, 29 June, 1987 MR. E. CONNERY: Can the Minister tell me how many people in total have gone into the rehabilitation since its inception? Is that figure available? HON. H. HARAPIAK: We would have to take out our close-outs in the last three or four years and then add in our intakes, and we could come up with a figure there. We haven't got that, it's not one of the statistics that we keep. MR. E. CONNERY: How many received permanent placements in the last year? HON. H.

HARAPIAK: There were a number of claimants who returned to accident employers, 264; the numb er who returned to an altern ate employer was 88; the num ber with transferable skills identified was 23; transferable skills obtained is 30; the number who received institutional retraining was 5. For the number who made a lump sum request, one. There are two who are on pension augmentation. There are 82 who had no rehabilitation warranted; 79 where there was recovery from compensable injury; 22 were from non compensable injuries; 12 deceas ed. Is tha t th e information you wanted?

There were 67 who were unavailable for the rehab process, and there are . . . MR. E. CONNERY: Unavailable? HON. H. HARAPIAK: Unavailable. And there are 41 who were retired from the labour market. MR. E. CONNERY: Wha t happened to the 64 unavailable? HON. H. HARAPIAK: If they are not available for the rehabilitation process, their file is closed. MR. E. CONNERY: So they don't receive any payments? HON. H. HARAPIAK: That's correct. MR. E.

CONNERY: All those who went into permanent placements and whatever, how many received wage loss - like they're not back at their full, pre-accident pay - how many of them would be receiving some wage reimbursement? HON. H. HARAPIAK: During 1986? MR. E. CONNERY: For 1986, yes. HON. H. HARAPIAK: During 1986, a total of 846 injured workers received wage loss and pension augmentation. They were unable to return to the position they held during the time of their injury. MR. E. CONNERY: What was the cost of that for 1986? HON. H. HARAPIAK: The cost for 19 86 was $3,6 13,998.00. MR. E.

CONNERY: How many workers, in 1986, were on permanent and partial disability pensions? 3491 HON. H. HARAPIAK: The total number of permanent and disabled workers . . . MR. E. CONNERY: Permanent and partial - permanent partial. HON. H. HARAPIAK: Permanently disabled were 4,642. There, it would be the same figure. That's permanently and partially disabled. MR. E. CONNERY: You don't have a breakdown on that. HON. H. HARAPIAK: No. MR. E. CONNERY: I think the Minister said before, some of those numbers that went out to the rehab, some of them went to vocational rehab programs like bu siness schools and universities.

Were those mentioned in that list of figures you gave me earlier when you had that long list? HON. H. HARAPIAK: Yes, they were. MR. E. CONNERY: Do you have a cost? Is there a cost as to what it was for those particular things like the vocational, university, whatever, Red River College? HON. H. HARAPIAK: I think, if the member turns to his annual report, all the figures are listed on Vocational Rehabilitation Services on page 11 of the annual report. MR. E. CONNERY: Okay. If it's there, I will find it.

Some of the people going into the vocational training, did some of them have jobs before they went into vocational training and went into a particular training because they had a job? HON. H. HARAPIAK: They had a job before they got injured. There is some different training required sometimes because if the injury prohibits them, if they were in the area of physical work and then they have a back injury, then they would provide training that is different than what they have had previously.

In some other cases, a person might have the qualifications to become an engineer or something of that sort, which wouldn't require the physical work, so they could train in that area. MR. E. CONNERY: But the question is, the assumption is vocational training is when you are going to train them for something different from what their previous vocation was. That's the whole idea of vocational training. Do some of these people have a job, or is it just done on an assesment that this is the kind of thing they should be doing? How do you determine what vocation they go into? HON. H.

HARAPIAK: They would do an aptitude test on the individual and then they would do a study of what the market requires and then, based on the aptitude and what is required in the market then, if the person has the capability, then they would give them some vocational training in that area.

Monday, 29 June, 1987 MR. E. CONNERY: Who determines what the market is for jobs and who would determine then what vocation they should be placed into? HON. H. HARAPIAK: The counsellors would make a determination with the assistance of some outside agencies that are involved in placement of workers. MR. E. CONNERY: How many workers are there in the rehab who have non-work-related, pre-existing conditions? HON. H. HARAPIAK: They would have to look at every file and every case individually to ma ke tha t determination. That statistic is not kept. MR. E. CONNERY: Do you have any idea?

Is it a significant number, you know, 5 percent, 10 percent, 20 percent? HON. H. HARAPIAK: That statistic is not kept, but it is a significant number. MR. E. CONNERY: Are there any in there solely with non-work-related, pre-existing conditions? HON. H. HARAPIAK: I guess the Member for Portage seems to have the idea that those people are coming forward with some injuries. When they are hired, the employer hires them in the condition that they're in.

So there may have been some previous condition in the person's body that the employer was not aware of, maybe that the worker wasn't even aware of, but it comes forth when there's a little bit of a strain put on the human system. Then some part of it may break down. So it's difficult to say what the pre-existing condition was. MR. E. CONNERY: Is there any determination when a worker comes to know if there is a pre-existing condition that is not work-related. Before I became elected, you know, I didn't have to have a heart by pass.

Did that come about by listen ing to the government and the inadequacies of it and is that why I really had to . . . A MEMBER: Your colleagues. MR. E. CONNERY: Oh, my colleagues. Is tha t the sort of thing tha t happens? Some conditions are pre-existing. HON. H. HARAPIAK: Taking your particular case, was that a pre-existing condition? Or maybe if you would have stayed on your farm and you would have had a crop failure, maybe you would have had the same tra uma tha t you experienced by an incom petent Opposition.

So you would have had the same trauma because your colleagues would not give you the support that you felt you deserved. MR. E. CONNERY: I think you've got it turned around about 180 degrees, Mr. Minister. I think it was the government side - no, this is what I am saying. This was a pre-existing condition. Is there any attempt to determine whether there was really a pre-existing, because otherwise we've got a safety net and if Workers Compensation is going to be a safety net, that's fine. Maybe if that's required, we should do it, but not at the expense of the employers.

Then it should become a social program, like our health system. So if we want to look at that sort of a program, then we've got to assess it for what it is. HON. H. HARAPIAK: I take it for granted the employers all give a medical whenever we're hiring, and maybe that's some thing tha t doesn't happen to ML A's. Unfortunately, maybe that should be one of the criteria, that you have to have a strong physical, a stress test before you let your name stand for an elective position. Whenever anybody hires a person . . . MR. E. CONNERY: Then you guys would all be out. HON. H.

HARAPIAK: I think that there's a medical required for most occupations and I think that many of those conditions would show up. But then when there is an injury, our Workers Compensation commissioners, when they're making a determination, do take the advice of their medical people on determining the case. MR. E. CONNERY: Is there an aging of your files in the rehab? What I'm getting at is how many are carried over at full wages from back to 1982, 1983,'84,'85 in the rehab? What kind of numbers are there at full sal ary, or at full benefits, not full salar y. HON. H.

HARAPIAK: We have the figures on the total cost of rehabilitation for the year. The only way we could get that information is to work with the different codes and search it out as to how many more have been brought on, how many have been deleted, and then we could come up with the information as to which ones have been on since 1982 to '86. MR. E. CONNERY: It's not the cost I was looking at. How many workers have been carried over? How many are still in the rehab program at full benefits, going back to'82,'8 3,'81, if you have it back that far, just to know how long people can stay on the program? HON. H.

HARAPIAK: I'm told that it would have to be a manual examination of all the files in order to determine how many have been carried on since 1982. MR. E. CONNERY: Are we not computerized at the Workers Compensation Board? There should be a concern as to the aging of these people in the rehab. Is the system effective? If they're there since'82, why are they there that long? Is there no progress in their rehabilitation? If they're not going to get any better, why keep them in the rehabilitation program unless there is some improvement?

I would approve of that if, you know, they can't go back to work, but we can still improve their health. But I think you should know that. HON. H. HARAPIAK: We started making those technological improvements in 1984, and so we are constantly making improvements with this data that is put into it. 3492

Monday, 29 June, 1987 Some of your suggestions have merit. Maybe we should be adding some of that information into the computer so we would be able to assess if some of them are on from 1982. If there is no rehabilitation being carried out, then maybe there is a need for some reassessment but they are reviewed on a constant basis, so anyone who has been on since 1982 has been reassessed but we don't have that information just so we can read it out of the computer. MR. E. CONNERY: In business, you have your aging of bad debts and accounts and so you know always how old they are and know if you have a problem.

I think the Workers Compensation Board likewise needs to know how long people have been on it. It's very important. Mr. Chairman, one of the concerns that the industry has is the merit system. A survey was done and it came up that 94 percent of the industry, of the employers, were in favour of the merit system, and yet this government has steadfastly said no to the merit system. Can the Minister rationalize that position? HON. H. HARAPIAK: There are various examples across the country on how the merit system would work. British Columbia has had it in for one year.

Al berta has done a consultative study and, at this time, it isn't in place. They are still studying it further. I guess it's one of the areas that have to be looked at. Once again, getting back to the review committee, the review commit tee recommended unanimously against it, including the industry rep, Mr. Tom Farrell, who is opposed to a merit rating because there are some difficulties with the way claims are handled when there are merit ratings. MR. E.

CONNERY: The Auditor's report said it's not apparent how the board and the government intend to prevent the employers in future years from not being unduly and unfairly burdened with payments that are to be made in those years with respect to accidents that have previously happened. As you know, the act states that you aren't supposed to be in the deficit position you are. The Attorney General has indicated that there is no need to change legislation.

Is the Minister not concerned that in the future there could be lawsuits where the government would have to pick up the deficit out of the general funds because the government has been acting in an unla wful way? HON. H. HARAPIAK: You're referring to

section 66(1) of the act? There is no danger of any claim not being paid because of the position that we find ourselves in at the Workers Compensation Board. All claims will be handle d. In 1984, Mr. Ziprick, the Provincial Auditor at that time, stated that the government should either comply with or change the act. So I guess it's again a difference of opinion between different people. The Attorney-General indicated that an amendment to the current legislation is unnecessary, as a review of the act will address and resolve this issue.

Once again, that was touched on by the review committee's report, and I guess we'll be dealing with it when we'r e dealing with all the other recommendations. MR. E. CONNERY: One of the figures that came through in assessing the Class "G" operations shows from 1981 to 1986, the assessable payroll increasing 28 percent but the assessment revenue increasing in that same period of time 136 percent. Is this not just a little bit of a high figure? HON. H. HARAPIAK: Could you repeat that? I think you 've got the report of last year's assessment statistics? MR. E. CONNERY: Yes.

From 1981 to 1986, the assessable payroll went up 28 percent, but th e assessment revenue, which was the premiums, went up 136 percent. That's five times the payroll increase. HON. H. HARAPIAK: I'm not sure where you're gleaning those figures from. We have figures here that there was an increase in assessable payroll over the last five years, from'81 to '86, of 35 percent, and an increase in rate per 100 of 84 percent. You're reading some other information that I don't have here. MR. E. CONNERY: It's a photostatic copy of Class "G" operations assessment statistics. HON. H.

HARAPIAK: It would be interesting to know how the member got that photostatic copy and what source he got it from. That was a copy that was prepared for the Minister, so I would be interested to know where he got that information from. MR. E. CONNERY: Can the Minister then tell us why those figures are that way? HON. H. HARAPIAK: It must be revised figures that you're using, from what we've got here. Maybe if you gave us a copy of that . . . MR. E. CONNERY: The Minister says they're revised figures ... HON. H. HARAPIAK: Maybe you revised the figures. They're broken down . . . MR. E.

CONNERY: Does the Minister dispute those figures? HON. H. HARAPIAK: According to the figures I've got here, there's been an increase in assessment from the last five years,'81 to '86, of 35.2 percent. MR. E. CONNERY: Would the Minister table his figures? HON. H. HARAPIAK: Certainly. MR. E. CONNERY: Okay. Then that would help us out. In vocational rehabilitation costs, from the years 1981 to 1986, the increase has been 2,512 percent. Does the Minister concur with those figures? HON. H. HARAPIAK: I guess, with the implementation of all the reports we've done, the Cooper Report, the 3493

Monday, 29 June, 1987 Lampe Report, I guess the costs could have gone up that amount. MR. E. CONNERY: Do you think any business can survive with those kinds of substantive increases? It's unbelievable that any sector cost could go up to that extent, especially in light of all of the complaints from workers. The Minister knows that I brought a complaint from a constituent of mine, who was somewhere in the area of two years since his accident, and was still waiting to go to review. Another constituent who phoned me, and I found out she was 111th and it would take three months before that figure.

I marked the date down that I was given that figure to see when her claim finally does come to review. But, you know, it's kind of strange these things happening the way they are. If you did such a great job for the people at this horrendous increase on cost, why are all these problems there? Mr. Chairman, you know, we're dealing with a government that has mismanaged the money. They haven't put it in the hands of the workers as they say they have, which they should have done. They've just refunneled a lot of that money.

You take a look at the administration costs that have skyrocketed under this government's administration. Administration costs don't go to pay workers' benefits. We see a whole raft of problems here with this government. In the Class "G" funds operation, the appropriation for future cost to reserve, why is there none in there for'83,'84 and'85? HON. H. HARAPIAK: The member makes a number of allegations which are erroneous.

I guess the reason we had to increase those rates as much as we did is because unfortunately there was a government in place in the years 1977 to 1981 who did not increase their assessment when the rest of the country saw the wisdom of increasing the assessed rates. Saskatchewan had a rate at that time of $2.4 0 per hundred. They increased and they opened up their books and showed industry exactly what they were in for. In order to help the system survive, they needed an increase of that sort. We, in Manitoba, or the Government of the Day in Manitoba at that time was reducing their costs.

It's no wonder that we were in the financial mess that we were in. There was no rehabilitation taken on. Otherwise, it wouldn't have been necessary to have reports of this sort that your government did not act on, and the recommendations here is where the workers were not receiving these services. Now they are receiving those services. We know that we are not meeting all of the needs out there but, if we were settling all the claims that you and your colleagues are bringing forward, then the money can only come from one place. There would be a need for an increased assessment again.

Our administrative costs are leaner tha n most Workers Compensation systems right across the Dominion. If you want to start comparing the cost of the Workers Compensation operations compared to the United States, well then, there is no comparison wh atsoever. There is rea lly no satisfact ion from anybody's perspective in the system they've got where the free-enterprise system is delivering the service. The workers aren't satisfied, the industries aren't satisfied. There are many industrial groups that are going broke because of claims that are long, claims that are costly.

When the judgments are made, it goes against the employers, it breaks many of them, and the employees get very little settlements. Who is getting rich is the legal system. I really don't think that's the kind of system you're proposing that we move to in this province. MR. E. CONNER Y: Mr . Ch airman, the Minister condemns our party when we were in power for not raising the premiums to the way they should be and, in fact, to be reducing. Then this Minister is also condemning the Ed Sch reyer administration because he also reduced premiums. I think one year it was frozen and two years they were decreased.

That's also in, I think, the King Report, showing those decreases. So when you say that our party was neglectful in looking after or raising the premiums sufficiently, then you're saying that the Sch reyer Government was equally bad. A MEMBER: No. MR. E. CONNERY: Wel l, the facts are facts. The member says no, but how can you dispute it? That's there. HON. H. HARAPIAK: The first year that we formed gover nment, we also red uced the rates. It was unfortunate, but just the timing of the election was in November'81. There wasn't time to do a thorough assessment of what there was in store for us.

So based on the information that had been given to us, we made a decision quickly in order to strike the assessment for that year, and that year there was a reduction. Unfortunately , we have to accept that responsibility that we reduced rates that year when we should have been increas ing them by a large degree, or a lar ger percentage. Yes, we admit that there were times that we did make mistakes as well. MR. E. CONNERY: Thank you. I'm glad that you are not infallible, Mr. Minister. It's a blessing. You say that you have a committee reviewing the King Report. Can you tell me who is on that committee? HON. H.

HARAPIAK: There is a committee of Cabinet. There are several committees in Cabinet, and there is one committee that is set up to deal with the Workers Compensation system. MR. E. CONNERY: Can I have the structure of that committee? Who is on that particular committee? HON. H. HARAPIAK: The Ministers on that committee are Parasiuk, Cowan and Harapiak. MR. E. CONNERY: What expertise have these people who are on that committee, these three people, to determine which of those recommendations should be implemented? These people have been involved with the Workers Compensation up until now, this government.

It has been a mess. You said the name of Cowan and Harapiak. Well, Cowan was the originator of this whole debacle when he got it started back in 1982. Now he's going 3494

Monday, 29 June, 1987 to be on the review committee to determine which recommendations they are going to implement? I mean, Mr. Chairman, we're ... HON. H. HARAPIAK: That is not the review committee; it is a Minister's committee that is responsible for Workers Compensation. MR. E. CONNERY: Is the Minister at this point trying to determine if there actually is an additional $100 million loss in Workers Compensation? HON. H. HARAPIAK: No, there is no additional $100 million unfunded liability at this time.

The auditors just dealt with the annual report, and they were satisfied that the $84 million figure of that unfunded liability was the actual figure that is in place at this time. MR. E. CONNERY: So then, going by that, if you're not going to be looking at the additional cost, as suggested in the King Report, then you're not going to be increasing pensions to those people who are within the Workers Compensation system? HON. H. HARAPIAK: Historically, the pensions have been increased every two years since 1974, except for one year. During the Tory administration, they went for a three-year period.

I would think that it would be appropriate that, if the pensions were increased every two years, then this is the year that the pensions would be due for an increase. MR. E. CONNERY: Then you're saying that not by statute, but just by doing it, you are increasing the pension benefits on a regular basis. If you're increasing the benefits on a regular basis, there's going to be an increased cost, there's going to be an increased deficit or, in your terms, an unfunded liability.

So obviously, that figure of $84 million is not an accurate figure because, if you increase it, basically you're indexing it just by policy rather than by act or statute. So to say that the $84 million is sufficient is to - well, it just flies - it's unbelievable that you would accept that position. HON. H. HARAPIAK: It's not me who's accepting that position; it is the auditors who are the people who are charged with that responsibility. I would ask the member what he would suggest we do. Should we de-index the way the Federal Government has done. Should we be de-indexing rather than indexing the pensions?

Do you not feel that these injured workers are entitled to an appropriate cost-of living increase or would you rather have us de-index the way the Federal Government has done? MR. E. CONNERY: I didn't say that. I didn't say I wanted to de-index it. I think that pensions should be indexed; I'm all in favour of it. You've got these widows who are unfortunate and dependent children, etc., who have to be looked after. But in doing so, there's going to be an additional cost that is not being reported.

So, if you're going to take it on one side - and I agree with you - then we have to take an actuarial look at what that additional cost is going to be, and King says it's somewhere in the area of $70 million to $90 million. HON. H. HARAPIAK: The Auditor has looked at the rehabilitation costs and they said that there was now a history that had been in place for four years and, based on that four-year history, they said that there would be some additional unfunded liability.

The process for handling the pension increases have been in place since 1974 and the Auditors have not chosen to follow the suggestions that are being put forward by the Member for Portage la Prairie, that there will be additional unfunded liability. The Auditors have not accepted your argument. MR. E. CONNERY: The King Report says that it was very obvious some time ago that you should have been aware because you were increasing the pensions on a regular basis, even though not by law, and you should have been aware of the unfunded liability at that point. Now you've been warned. You saw what has happened.

Now you're going to fly in the face of fact that you don't have to take another look at what this unfunded liability is going to be in the future? You got burnt. Do you get burnt twice or do you act in the proper way the government should act? There is going to be an additional liability there. You know it. It's proven. Now you're saying because it's not law you don't have to take a look at that part that could be unfunded. HON. H. HARAPIAK: I should mention to the member that we are looking at that and that was one of the recommendations of the review committee. So, quite obviously, we are looking at it.

The actuaries are aware of it; they are looking at it. We're doing some additional assessment on it and we will be acting on it, along with all the other recommendations of the review committee. MR. CHAIRMAN: The hour now being ten o'clock, committee rise. SUPPLY - FINANCE MR. CHAIRMAN, C. Santos: Committee of Supply, please come to order. We were considering Item No. 2., Treasury Division, 2.(

a) Salaries; 2.(

b) Other Expenditures; 2.(

c) Payments re: Soldiers' Taxation Relief. The Honourable Minister. HON. E. KOSTYRA: I've got some of the information that the member requested and am anticipating, as soon as the rest of the staff arrives, we'll have the other information. With regard to the question that I had taken as notice, in effect last year, I have the information both for 1986 and 1987 - it's just handwritten so if the member wants to write it down as I give it. The forecast assumptions that went into the 1986 Budget, in terms of real output, we were anticipating a 3.25 percent increase.

I might just add that the consensus on the actual is 3.5 percent for last year, and the assumptions in this year's Budget were 2. 7 percent, which is what I said earlier this afternoon. On emplo yment growth projections in the 198 6 Budget year were 2.25 percent. The consensus on the actual was 2. 7 percent; and the presumptions in this year's Budget is approximately 2 percent. 3495

Monday, 29 June, 1987 Unemployment, 1986, the assumptions in the Budget were 7.75 percent; the actual was about 7.7 percent; and the forecast for this year is 7.5 percent. In 1986, Capital Investment presumption was 8.9 percent; the actual was 11 .3 percent; and the assumptions in this year's Budget were 2.3 percent. I'm sending over, with the Page, three pieces of information which the member has before him. One is entitled "Refunding Requirements, '87-88, " and that's the detail the member had requested on that including the Sinking Fund information.

So I guess the bottom line is the 278.3 which is net of Sinking Fund; the actual would be 343. The listing of the borrowing for '86-87 is one of the other sheets and then the borrowing for this year, which I had previously indicated, would be in and CPP to this point in time. MR. CHAIRMAN: The Member for Morris. MR. C. MANNESS: Thank you, Mr. Chairman. I thank the Minister for that information. It's detailed and I'm glad to receive it in this fashion, particularly the assumptions.

I haven't seen the government attempt to forecast before and I'm happy to see it, even though the '86 figures probably could have been provided a year ago. Mr. Chairman, I asked a question specific to the refunding requirements, refinancing the issues in the '8 7-88 year, and the Minister shows me the reconciliation at the bottom of the page as to what portion has to be refunded, net of accumulated Sinking Funds.

I would ask the Minister, because I haven't had a chance to review this in detail, can he tell me that the par value, and of course there are equivalent dates given, but what were these loans taken - what were they floated at roughly? I can't see specifically the value. He tells me, for instance, that series 10-G, Swiss francs, is that the stated value of the loan, 16,000, or is that indeed how much? -(Interjection)- I guess I'm looking for the equivalency. I don't know whether indeed the exchange fluctuation has been computed in here or not. Maybe the Minister can help me. HON. E.

KOSTYRA: That information, just to go through it, staff are getting the other information. The par value is what that was at the time of issue in Canadian dollars. The same with the Sinking Fund and the balanc e to be refunded. We're jus t gett ing information as to what that - well, first of all, we can't give the actual because it's not due till March 15 of '88, but the rest of that will be accounted for in the amortization that has been placed on the books of Public Accounts. MR. C.

MANNESS: So then what the Minister is telling me when he talks about refinancing, he's talking about the par value of those loans. There's no charge been put against these loans as to the drop in the value of the Canadian currency vis-a-vis some of these different currencies, some of these foreign currencies. I then would ask the Minister whether he could give me some rough estimation as to what is today's value of the 343,520 par value that we would have to pay back, given that the exchange rates which exist, as of today, remain in effect. This is a complicated exercise.

I'm not asking for detail right to the dollar. I just would like to know basically how much more we do owe today because of the decreasing value of the Canadian dolla r vis-a-vis other currencies. HON. E. KOSTYRA: This would be an approximate figure, not to the dolla r. But the par value, the 6256 at this point in time, would be $14 .06 million. Using your example of the Swiss franc issue, 10-G, the Swiss franc issue which matures on March 15, 1988, the par value in Canadian dollars is $6.256 million at time of issue.

You have the rest of the information on that sheet there, but that equivalency today would be $14 .06 million, approximately. MR. C. MANNESS: Mr. Chairman, I won't request that those numbers be provided all the way through. The point I'm trying to make is, given these loans that I suppose at one time were thought to have favourable interest rates, can the government tell me then what the effective rate of interest is, let's say, on the Swiss franc loan, again using 10-G.

Given that now we owe $1 4.06 million; given also that many of the interest payments had to be paid back also in Swiss francs, not many, all the interest had to be paid in Swiss francs, do we have an estimate of really what the rate, the effective rate of interest, given that we've borrowed back in - I take it maybe it was 1973, maybe it was . . f HON. E. KOSTYRA: This one was 1976. MR. C. MANNESS: 1976; 12 years ago.

Is there some method by which the Minister, again just for the sake of example, can tell us what the effective rate is on this loan, and indeed in time can he provide us with the effective rates for all these as they come due, now that we know what's happened over the last 10 years? HON. E. KOSTYRA: We don't have that here but that information is kept in terms of what the difference in the interest rate would be if those funds could have been borro wed on the Ca nadian market at tha t particular point in time. But I'm afraid I do not have it here.

If you want, we could have staff go downstairs and retrieve it now, or if the member is interested in some examples, we could provide that on some of these issues. MR. C. MANNESS: Mr. Chairman, I won't belabour this. I find this somewhat interesting. It gives, I think, a better understanding and that was my purpose for asking. The other day in committee, Public Accounts, the Minister provided information re allo cations to the provision for unrealized foreign currency losses. It was a sheet looking like this. The Deputy Minister provided it to me.

Under the public debt, in the '87-88 Estimates, there is a figure of 59.3. From that, do I take it then that out of the public debt that is shown - and again, Mr. Chairman, I will refer to the figure of, I believe it is $440 million. i should have it right here, but I don't. Right, it's $438 million in public debt, and $60 million 3496

Monday, 29 June, 1987 of that then is the amortization based on foreign currency debt. Can the Minister tell me again the formula in place to provide for the $60 million? I know this has been covered before, but I guess I ask, for instance, how much of that $60 million would deal with these loans specifically? I take it a large portion of it, of the $60 million estimate, would take into account the maturity of the loans in question. Or is it equally spaced out for all the loans?

I guess what I'm trying to get at, I don't know what the value is, the total value of the loans listed today or over this fiscal year, when we have to meet them. How much of that has been covered off in Estimates and will the remainder of it show up as a cost directly against the debt of the province, the direct debt of the province? HON. E. KOSTYRA: That figure refers to the amount of additional amortization as a result of that th ree-year moving average that we talked about, and relates to all outsta nding deb t tha t is su bject to curr ency fluctuation. MR. C. MANNESS: Mr.

Chairman, I ask the Minister - and I see there's additional staff being brought into one of these branches - can the Minister tell me what has gone wrong? Why have we found ourselves in having such a large amortized debt associated with our foreign currency borrowings? Has he attempted to find out the reason why we have so miserably found ourselves on the wrong side of some of these borrowings? Has he himself undertaken to do his own review as to what has gone wrong? Because, quite frankly, right today we have a $1 billion liabi lity associated with the foreign exchange fluctuation.

And, quite obviously, whoever has provided information to us has provided us rather, I'd say, faulty information. And I know hindsight is perfect; it provides for 20-20 vision. But quite frankly, Mr. Chairman, there have been major fluctuations, and I notice that other provinces are not nearly as heavily borrowed in foreign markets as we are and therefore have not suffered the great foreign exchange losses that we have. \'5 Has the Minister done some type of review within his department to see from where this advice has been coming in from over the years and what has he done to correct it? HON. E.

KOSTYRA: Yes, I think we have to recognize that Manitoba, as a province, has had significant capital requirements for a numb er of years, certainly during this time or this term in government of our party, and that existed also during the time that Conservatives were in government, not only during the period of 1977 to'81, but even prior to that.

As a result of having those large capital requirements, we've had to look at raising those funds, not only in Canada, because the Canadian market would not be in a position to fulfill all of our requirements in total, and certainly from time-to-time is not able to meet our requirements at a reasonable interest level. As an example, over the last while, though we did an issue in Canada two months ago, Marett and in February, the marke t has not been tha t fav ourable to any Canadian issues up until just a week ago when the Al berta Telephones did an issue in Canada.

As a result, other markets have had to have been established, including the United States and the three foreign markets. The decision on an issue - I can only speak for the time that we've been in government, I can't refer to times when we're not in government. I would just point out to the members, some of the loans, in fact, if you look at the one that we were just, not the one we're debating, but others have taken place at times when members opposite were in government. But the decision on borrowing in a particular market is based on the conditions of all the markets.

The first preference is for borrowing in Canada where at all possible, and we're certainly attempting to keep at least 50 percent of our borrowing requirements in Canada, second to the U.S., and then thirdly, beyond that.

The decisions at the specific point in time are made based on what needs are when there are specific needs for capital, recognizing that has to be balanced over a period of time, because it's obviously not feasible to go into the market for all the borrowing requirements at one point in time in the year, whether it's the early part of the year or the latter part of the year, when most of that money may be required because the markets may not be open or may not be competitive at that point in time. That is one consideration.

The second consideration is what the interest rates are vis-a-vis the Canadian market and, secondly, what are the projections in terms of appreciation of that currency as against the Canadian currency or the reverse for that matter? Projections are made based on the difference in interest rate and looking at the amount of appreciation that would have to take place until that interest rate would not be attractive vis-a-vis the Canadian interest rate.

Also recognized, even if there is that kind of advantage, if one looks - and obviously now, with some currencies at what many consider their all-time high and expect them to move in the other direction, it can be argued that this is the time to have significant borrowings outside of Canada. However, at times when decisions on borrowing are made, there may only be limited markets that are open at that particular point in time. So that is the way we have been looking at it.

In terms of doing a review for all of the borrowing that has taken place in the province from the first point in time that foreign borrowings have taken place, no, I have not done that kind of review. But we do review and look at the experience and try to learn from that. I don't know that anyone can predict some of the changes that have taken place. I guess some have and that was recognized at the time when decisions were made. MR. C. MANNESS: Well, Mr. Chairman, I find the Minister's response most unacceptable.

I mean, we're talking about $1.1 billion losses - he would object that I use the word "losses." Let's say amortized foreign exchange fluctuation, much of it, Mr. Chairman, having occurred over the last four or five years. I do know that the American dollar did digress or did divulge from ours a year or two previous to that, but the point I'm 3497

Monday, 29 June, 1987 trying to make, it seems to me that there's such incredible risk associated with these currencies that the Minister - and he says we need money, we'll go out and get it where we need it. We'll go out and get it wherever it exists, then we'll worry whether the fluctuations occur after that. It seems to me that is particularly dangerous, that it puts at risk the flexibility that future governments, that future Ministers of Finance will have.

I know that ther e's nobo dy who can la y claim to a perfect understanding of the various fluctuations of currency versus another currency, but it seems to me that when there's so much borrowing going on in outside markets that the Minister, rather than at times relying on the market, alm ost has to have some of that very strong expertise within his own department. I ask him who is his highest authority within his department with respect to providing information and maybe the ultima te decision of where to borrow, where to float a new issue? HON. E.

KOSTYRA: Firstly, let me correct a statement that the member made. I did not say that the decision was based only on the need to borrow money and that we go into any market based simply on the need to borrow money. What I did indicate was the various factors that go into it and, on each and every borrowing that does take place, there is the analysis of the interest costs. There is the analysis of what the best advisers, both within the department and outside financial private sector, provide us in terms of where they see the currencies going in the future. The decisions are based on all of those factors.

In the department there is staff in this particular branch that we're dealing with who are in constant contact not only with the needs within the government in terms of financing but are in constant contact with financial advisers outside of government, those within Canada and those outside of Canada. On a regular basis, briefings are held with various forecasters on the fiscal side from the banks to other financial institutions asking their advice in terms of what they see taking place with respect to capital markets.

Indeed, briefings are held for myself to get acquainted with what people outside of government are saying. In terms of staff of th e department, the recommendation on any particular issue comes from the Deputy Minister to me, and we consult on each of them, and go through the options and the need. It then proceeds by way of Cabinet decision. MR. C. MANNESS: Mr. Chairman, for next year's Budget, I'm wondering if the Minister would consider providing a table somewhat similar to Table B-1 1 in this year's Budget, but one that measures our debts in Canadian dollar equivalents on March 31, the year end.

The table that has been provided gives our debt but it's on the basis of the loans being taken at par value. I'm wondering if the Minister would give comment to prov iding tha t information in Canadian dollar equivalents. Secondly, could he tell me why the $259 mill ion is shown as a 1988 fiscal year-end req uirement for refinancing for repayment? It's not quite similar to the $278 million figure that he provided me just at the beginning of this evening's sitting. I don't need a long, detailed explanation.

I'm just wondering why there isn't some type - well, maybe the Minister has given me the reason, because at the very top of B-11, I see "as at December 31st," so maybe there were some fluctuations in three months that has caus ed tha t numb er to increase. So I have that explanation. I would just ask the Minister whether or not a table like this, and from his viewpoint, would serve any meaningful value if it represented in Canadian dollar equivalents as of March 31, using of course December 31 exchange rates. HON. E.

KOSTYRA: There was an additional point I wanted to make in regard to the previous question on borrowing. As I indicated, just to use the current situation as illustrative of the way we attempt to deal with this, we had wanted to do our first issue in this new fiscal year in Canada. Unfortunately, the markets were not there. In fact, it was our Canadian lead underwriter, who obviously has a vested interest in us proceeding in the Canadian market, was the one, among others, who had suggested that we go into the Japanese market because of the unavailability of capital in the Canadian market.

It was certainly unavailable at reasonable or what was considered reasonable interest rates. In regard to changing this into somewhat different, I guess we can review how we provide information in the Budget in terms of providing more information, and I'll certainly take that under advisement. I'll just point out that this one is only dealing with the refunding, which is only one part of what we would be raising capital for in each year.

Again, this particular graph shows that net of Sinking Fund which again, if you simply just take these tables and add on, the fluctuations would not provide the true picture because those actual costs would have to be reflected in the public debt costs in that par ticula r year for any unamortized exchanges. I'm certainly prepared to look at how we could provide more detailed information on those areas as it relates to what has taken place with currency fluctuations, and I bel ieve the next table provides some of that detail on the total debt outstanding.

I'm prepared to look at that and see if there are better ways of providing that information so that we all can get a better understanding of what our potential liabil ities or costs might be associated with our debt. MR. C. MANNESS: Mr. Chairman, I'll ask one question dealing with the Sinking Funds. I believe there's a statutory requirement that some certain contribution be made to them. Is the Minister satisfied that those Sinking Funds are gr owing in an appr opriate mann er vis-a-vis the exponential growth in public indebtedness? HON. E.

KOSTYRA: We're satisfied that the provisions are adequate at this point in time. MR. C. MANNESS: Mr. Chairman, before we move on and pass No. 2., Treasury Division, I would ask the Minister if he would undertake to give me a little further detail associated with the public debt allo cation or the 3498

Mooday, 29 June, 1987 allocation to the 1987-88 estimate of $59.3 million public debt, an allocation of the provision for unrealized foreign currency losses. I know he attempted to provide that information in Public Accounts. I haven't read the transcript of that meeting yet. But I'm wondering if he could provide a further breakout of where the $59.3 million - not today, Mr. Chairman, but for another time - to show how the various loans, and each make their own contribution to the $59.3 million figure. HON. E. KOSTYRA: Yes, I can take that request as notice and will provide that subsequent to the Estimates on an issue-by-issue basis for this year. MR. CHAIRMAN: 2.(

a) Treasury Division, Salaries pass; 2.(

b) Other Expenditures- pass; 2.(

c) Payments re: Soldiers' Taxation Relief-pass. Resolution No. 69: Resolved that there be granted to Her Majesty a sum not exceed ing $1, 151,400 for Finance, Treasury Division, for the fiscal year ending the 31st day of March, 1988- pass. The Honourable Minister. HON. E.

KOSTYRA: Just on a point on the procedure, I don't know if the member or other members had any questions with regard to any of the statutory payments, public debt or hydro rate stablization, because the staff who would be having the detailed information would be the staff who are present for this particular line and, since we're passing it and moving on, they will be leaving. So if there is any question with regard to the statutory payments of public debt and hydro rate stabilization, this would be the time to ask and it would facilitate our work, or Manitoba Properties Inc. MR. C. MANNESS: Mr.

Chairman, I decided not to pose questions with respect to MPI. It seems like we spent an inordinate amount of time last Estimates dealing with it and I guess I, by design, thought that we might pass it this time quickly. The Minister's invitation, though, dealing with hydro rate stabilization, I know there is a bill before the Legislature which will, of course, change very drastidlilly the manner in which this particular item is handled.

I'm wondering whether the Minister can give us any indication at all - not the 1987-88 fiscal year but the year beyond - given the passing of the bill dealing with hydro rate stabilization and the new manner in which it will be handled in the years to come, can he give me some rough indication as to the reduction therefore in the requirement under the statutory obligation. In the year preceding 1987-88, he shows that figure is an estimate of $29.4 million. It's shown in this year's Estimates. Can he indicate what that might be the year following? HON. E.

KOSTYRA: First of all, I should explain that if we would have proceeded this year without any change, we would have seen a figure in the Budget of about $60 million for hydro rate stabilization. As you are aware, the figure is considerably lower than that and it's a slight reduction from last year, but it would have been considerably higher if we wou ld have maintained the U.S. pay debt.

We would see some increase next year on that figure because of a $200 million Swiss issue coming due and then, following that, it will generally go down to the point in 1997 when it will be concluded, but there may be a few peaks and valleys through that period. MR. CHAIRMAN: Let me call Item No. 3. (a)

(1) Comptroller's Division, Comptroller's Office: Salaries; 3.(a)

(2) Other Expenditures - the Honourable Member for Morris. MR. C. MANNESS: Mr. Chairman, I understand and I r ead in the O/C listings that there's a new division head. I'm wondering if the Minister would introduce the new comptroller. HON. E. KOSTYRA: I'm afraid I can't do that because I did that at Public Accounts and the comptroller is not here tonight. The reason he is not here, just so the member knows, it was his son's graduation tonight and he is not here. It is Eric Rosenhek, and I did take the opportunity at Public Accounts to introduce him at that point. MR. C.

MANNESS: -(Interjection)- Yes, my colleague reminds me. I hope the son, after the final level of education probably provided to him by the taxpayers of this province, stays here and doesn't leave like so many other of our young educated people. Mr. Chairman, it's my view that there have been a number of internal labour problems within this particular division. Can the Minister of Finance indicate why so many of the staff over the year have left the employ of this division? HON. E. KOSTYRA: I don't know. Maybe the member will want to ampl ify his comments on labour problems in this division.

There have been a number of changes and I'll run through the ones that I'm aware of at the senior level. If the mem ber has some particular com ments or concerns beyond that, I would be interested in hearing them. The former comptroller, Bill Fraser, was successful after being requested by the government to go on secondment to the Manitoba Telephone System at the time of change in senior personnel there. He was successful in being appointed to the permanent position of vice-president of finance for the Manitoba Telephone System, which is a promotion.

Bill Carrothers, who is the head of the Finance and Management Systems Branch, left to go to Ottawa. The only other change at the senior level would have been the director of the Treasury Board, which was formally part of the Comptroller's Division, moved into the separate area of Treasury Board, which is outlined further in the detailed Estimates.

That particular individual received a promotion into the Department of Employment Services and Economic Security as Assistant Deputy Minister, so two of the three senior staff changes were people who accepted promotions, which we're pleased about, because it's recognized from time to time that staff in Finance have opportunities in terms of understanding and knowing all areas of government because of the overview role that Treasury and Finance plays in government. It's also at times 3499

Monday, 29 June, 1987 viewed as a good area for staff training or staff development into other areas of government. MR. C. MANNESS: Mr. Chairman, the second-lar gest branch within this division is the Financial and Management Systems Branch, formerly directed by Mr . Carrothers. Specifically, in that branch, can the Minister tell me why there's been such a large number of people who have left that particular branch? I'm thinking specifically of people like Lloyd McBurney, Karl Sprolle, Don Rice, Arlene Laventure, Mike Bilenki, Bruce Penner, Hugh Barnstead, Paul McDonald and Tom Millington. Mr.

Chairman, that seems like a significant numb er of people and I'm wondering, first of all, if the Minister is aware that all these people have left, and if he ever took the effort to ask a few questions why such a large number may have left that branch? HON. E. KOSTYRA: First of all, I wasn't aware of the detail, obviously, of the people who have moved. If the member wants, we can go through them one by one and indicate where they are. Don Rice is sitting right before you, so he's still alive and well in the Department of Finance.

Others of those have moved or were promoted within the Department of Finance as changes have taken place. A number of others left the government and have gone elsewhere, but I was not aware of that list of staff changes. That's something that I would not see in terms of the specific names other than those who would be promoted by way of Order-in-Council appointments. I don't think many of them, other than the ones I talked about previously, would fall into that category. MR. C. MANNESS: Mr.

Chairman, if one looks at the Public Accounts and looks at that particular branch, there are roughly 14 people on the basis of'84-85 who were employed within that particular grouping and some one-third of them have moved elsewhere as the Minister indicates. Can the Minister indicate whether any of them were forced to resign, asked to resign? HON. E. KOSTYRA: I understand that two of the staff changes in that area were related to performance of individuals in that branch.

Those two individuals were relocated elsewhere within the Department of Finance, not terminated from government or forced to resign from government. Those are the only ones who would fall into that category. MR. C. MANNESS: I would ask the Minister to tell me who those two were and, furthermore, can he indicate whether it was the director of the branch at that time who requested those resignations? HON. E. KOSTYRA: First, I'll maybe just outline the general process and then raise a question with the member before I get into specific names.

The changes, the two that I indicated were transferred as a result of performance evaluations that did take place at the time of the previous director who has left, the practice of those kinds of things is that it would be on the recommendation of the director to his or her immediate supervisor. In this case, it would have been the comptroller at that time with the status of Assistant Deputy Minister in the department, who would then confirm that decision along with, ultimately, the Deputy Minister.

In terms of the two individuals, I would just ask the member whether or not it would be fair to those individuals to place those names on the public record. I'm just a bit sensitive to those kind of personnel matters, or the member would accept those names privately, but either way I'm flexible except I'm a bit sensitive to getting into th ose kinds of detailed personnel matters with respect to two individuals who are still in the employ of the government. MR. C. MANNESS: Mr. Chairman, I will accept those names privately . I would ask the Minister further whether Mr.

Carruthers left with the blessing of the department. (lnterjection)- I will accept those two names in private. Mr. Chairman, furthermore I ask the Minister of Finance, under the conditions under which Mr. Carruthers left, was that an amiable, amicable parting as between senior staff and that branch head? Or was there some problem associated with his employment? Or did he to go elsewhere to greener pastures, so to speak? HON. E. KOSTYRA: I'm told that was at his initiative as a result of an offer from Ottawa.

That individual did come initially under an interchange agreement from the Federal Government about three years ago. MR. C. MANNESS: Was everything professional in the sense of the severance with Mr. Carruthers in his last two or three weeks at work, in the manner in which he conducted his affairs, and I'm talking now in support of his job with the Provincial Government in Manitoba? Was there anything untoward in his final leaving? HON. E.

KOSTYRA: I'm certainly not aware of anything, and asking staff, they're not, other than the fact he was off on sick leave for a period of time prior to his termination as a result of a back problem. MR. CHAIRMAN: 3.(aX1) to 3.(dXd), inclusive, were each read and passed. Resolution No. 70: Resolved that there be granted to Her Majesty a sum not exceeding $3,6 61, 200 for Finance, Comptroller's Division, for the fiscal year ending the 31s t day of March, 1988-pass. Item No. 4.(

a) Taxation Division, Administration: 4.(a)

(1) Salaries; 4.(a)

(2) Other Expenditures - the Honourable Member for Morris. MR. C. MANN ESS: Mr . Ch airman, in the Supple mentary Information provided by the Minister, looking specifically at this division, Taxation, one can't help but notice that there is a significant drop in staff years but a major increase in salaries. Can the Minister explain why? HON. E. KOSTYRA: It took a moment because I was puzzled by his comment where there were significant staff reductions.

The only area of any major change in staffing is shown on page 53, on Reference No. 3, Appropriation 07-4C and that was the border dye officers were reduced from 20 SY's to 8 SY's, and that was on the basis of experience as against what was 3500

Monday, 29 June, 1987 put in place. We've never utilized it to that extent because it wasn't needed. So while it's a reduction in SY's, it wasn't an actual reduction in staff because all of them were not hired. Other than that, there haven't been any major reductions in staffing of the branch. In terms of the salary increases, they all relate to the general salary increase increments, and I bel ieve there were als o some recla ssificat ions and minor reorganization that would have accounted for the other part of the increases. MR. C. MANNESS: Mr. Chairman, I refer to the Minister's own Su pplementary Information,

Schedule 5, pages 12 and 13 where it indicates that the staff years have dropped from 220.5 roughly to 206.5 and maybe that's explained away by some of the changes internally within the department, plus the removal of the dye station empl oyees. But I thought it sort of stood out in some fashion and that was the reason I posed the question. But of much more importance to me, Mr. Chairman, is th e Minister's commitment as to where this government stands vis-a-vis the latest federal tax reform initiative.

The Minister leads me to bel ieve on occasion that the Government of Manitoba is presently preparing a comprehensive report. I know the Minister on several occasions has had an opportunity, through meetings of Ministers of Finance, has been very involved in parts of this discussion leading to the federal initiative.

I would like to ask him specifically when it is that he will lay before the people of Manitoba the Government of Manitoba's comprehensive viewpoint on federal tax reform; and secondly, could he also give me some further indication as to the critical time path that lies ahead, not only with respect to th e P �ovincial Government, but also in the sense that he's aware federally what is happening there?

I would like to get some idea of the time path over the next six months within this whole area of tax reform and dealing specifically with federal sales tax and the degree to wh ich he' ll be making input towards an ul timate decision, as rendered by the Federal Government. HON. E.

KOSTYRA: I think the member is aware of some of the time paths or time regions that are in place with respect to how the Federal Gov ernment is proceeding with parts of th eir reform package, particularly that related to personal income tax and corporate income tax which would result in legislation being adopted by the House of Commons some time later this coming year, some time in the winter months. It's certainly our intention to provide comments to the Federal Government on those two aspects of the tax reform package prior to that being concluded by the House of Commons.

We've also been asked by the House of Commons Standing Committee on Taxat ion to provide comments to that committee. We have also accepted that invitation and will be providing that sometime into the coming months once the committee indicates when they wish to see us specifically.

We've started a process with government to have some detailed analysis done by various departments of government to look at the various impacts of the reform package, department s like Business 3501 Development and To urism, the Department of Agriculture and other departments to see what that might mean for areas of economic and other activity in the province.

So I would anticipate, with respect to those portions of the reform package, to have some response in the early fall months to provide to the Federal Gove rnment, to the Ho use of Commons Standing Committee and indeed to the public of the Province of Manitoba. With respect to the sales tax reform, the federal officials have not to this point in time provided us with any detailed information with respect to their option of the federal-provincial sales tax.

Interestingly enough, the very first meeting of the Finance Ministers that I attended back in May of just over a year ago - and that was when the Federal Government was talking solely of sales tax reform and, to a limited extent, corporate income tax reform - there was no talk of personal income tax reform. I was provided with details as it was an official detailed presentation on business transfer tax option. It's now turned into an option. At that time, it was the only position being proposed by the Federal Government with respect to sales tax. I think the member is aware of what transpired subsequent to that.

The Federal Government decided they were going to expand the reform package to include personal tax, which we welcomed, and then further options were being reviewed with respect to sales tax. Without breaking confidence in terms of the detailed discussion we've had at the Finance Ministers officials' level, we've not had a great deal of detailed discussion on the issue of sales tax at this point in time. Now early next month, in July, there is going to be the start of staff discussions on the options for federal provincial cooperation on sales tax and there is an indication from the last meeting held with Mr.

Wilson that there will be a meeting in September for Finance Ministers to review the progress or discussions at officials' level on sales tax and also to revisit the other parts of the reform package. The position we're adopting, which I've indicated previously to the member, is that I think generally we're in support of efforts that can take place in this country to harmonize tax efforts. If there is a way that we can come up with a better system, a more simplified system of levying something like the sales tax between the Federal and Provincial Governments, I think that is good.

That's a goal that we ought to work for because it would mean greater efficiencies, less costs, less paperwork for small business, indeed for all business, and hopefully less competition between provinces if you get some agreement. Obviously, you won't be able to do that on rates, but hopefully you can get some agreement on the base, in terms of what is covered by the base and, if we're able to achieve that, I think that would be a good move for all governments in Canada.

While that's a laudable goal, it's certainly not one that is necessarily easily attainable because of the situation that now exists with respect to the federal sales tax system, which is a system of taxing just certain areas and excluding a whole number of areas. It's not easy when you review what happens between provinces with respect to the sales taxes that provinces levy

Monday, 29 June, 1987 because it's not only differential in rates but differences in things that are covered between various provinces. I guess one of the major concerns that we have, it may not be true of other governments - and I know that here the member opposite and I would disagree. I haven't heard his comments in the Legislature, but I did see him on the media one night making a comment on sales tax, where he indicated he thought that was preferable to increases in income tax, that a greater reliance on sales tax revenue was better than greater reliance on income taxes, and I do not agree with that.

I think obviously that we have a system of sales tax, and we're not going to be able to go to a point of not having any sales taxes either here in Manitoba or in the country. It's not in the near future. But I worry a bit, in terms of the mix that we have of taxes, that we rely more on consumptive taxes rather than taxes based on income or on wealth, because I don't believe that a greater reliance on consumptive taxes is necessarily fairer or equitable to taxpayers as a whole, nor do I believe that it is progressive.

So we had those concerns, but that is not contrary to what the Winnipeg Free Press reported the day after the Wilson statement. We a

Document details

Collection	Manitoba — Debates (Hansard)
Citation	33-2-79b
Type	hansard
Volume / chapter	33rd 2nd hansardpdf 79b.pdf
Language	en
Format	pdf
Source	PROVINCIAL
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