LEGISLATIVE ASSEMBLY OF MANITOBA Wednesday, 23 July, 1986. Time - 2:00 p.m. OPENING PRAYER by Madam Speaker. MADAM SPEAKER, Hon. M. Phillips: Prese nting Petitions . . . Reading and Receiving Petitions . . . Presen ting Reports by Standing and Special Comm ittees . . . Mini sterial Statements and Tabling of Reports . . . Notices of Motion . . . INTRODUCTION OF BILLS MR. M. DOLIN introduced, by leave, Bill No. 47,

An Act to amend

An Act to provide for the establishment and maintenance of a Boys' and Girls' Band in the Town of Dauphin; Loi modifiant la Loi intitu h�e "An Act to provide for the establishment and maintenance of a Boys' and Girls' Band in the Town of Dauphin". ORAL QUESTIONS Credit Rating, Province of Manitoba - Standard and Poor's MADAM SPEAKER: The Honourable Leader of the Opposition. MR. G. FILMON: Thank you, Madam Speak er.

My question is for the Min ister of Finance and I'm sure that all Manitobans were surprised and ups et to learn so quickly of the drop in credit rating which we experienced from Standard and Poor's rating agency yesterday. This, of course, is the thir d time in the four-year term of this NDP admin istration that we have received a credit rating drop from the rating agencies.

My qu estion, Madam Speak er, to the Minis ter of Finance, is what information did he provide to the Standard and Poor's Credit Rating Agency when he met with them recently that caused them to change the credit watch status which they had placed on Manitoba just two weeks earlier into a credit rating drop? MADAM SPEAKER: The Hon ourable Min ister of Finance. HON. E.

KOSTYRA: Thank you, Madam Speak er, the information that was provided to Standard and Poor's related to details that they wished on aspects of the provincial budget and the provincial econo my. lt was an elaboration on information that was provided to them prior to them placing a credit watch. lt was clear at the time that they pla ced the credit watch, as was stated by them at that time, that the credit watch was put in pla ce with negative consequences, which meant that they were looking at the possibility of adjusting Manitoba's credit rating.

I certainly regret and am disappointed with the decision of the rating agency with regard to the credit situation in Manitoba, but 1 believe the decisions that this government have taken with respect to investments in the province, with respect to expenditures, are the right decisions for the people of the province of Manitoba. MR. G. FILMON: Madam Speaker, my question is for the Premier.

In view of the fact that the senior vice­ president of this credit rating agency has said that this will mean an increase in the interest rates that we will have to pay, a 15 to 20 basis points, I wonder if the Premier can indicate how much such a rating decrease and consequent increase in interest rates will cost the taxpayers of Manitoba. MADAM SPEAKER: The Honourable First Minis ter. HON. H. PAWLEY: Madam Speak er, the Min ister of Finance would deal in detail with that.

Needless to say, I think we've been gratified as a result of the response insofar as the $1 50 million, 7.75 percent Province of Mani toba debenture due in July , 20 16 . it's been com pl eted; it's been closed; and has been quite successful according to the reports that I have received from the Department of Finance in regard to that. Insofar as additional costs as a result of Standard and Poor's rating being consistent with that of Moo dy, which existed previously , that is a matter that the Min ister of Finance would deal with.

I think that there will be some additional cost, of course, to the province insofar as its rating is concerned. The precise amount is one that would have to be estimated by the Minis ter of Finance. MR. G.

FILMON: Madam Speaker, my question to the Premier is: In view of the fact that the agency vice­ president is quo ted as saying that "they were not satisfied with the province's explanations as to how it would reduce its debt," what plans does the Premier have to get our finances and our admin istration in order, and that once more we can restore our good status, in terms of the admi nistration of this province and our reputation has a good place in which to invest. HON. H.

PAWLEY: Madam Speak er, the Mi nister of Finance will respond to that at some length, although I do want to indicate to the Leader of the Opposition that his premises are not accurate. HON. E. KOSTYRA: In terms of the comment that the Leader of the Opposition made with respect to the cost to the province, I don't know of what he quotes because I met with thos e individuals from Standard and Poor's and they gave no such indication to me.

I did ask our lead underwriters in New York, Solomon Bros., in fact , asked the lead trader in terms of what he saw as the potential impact of any change, and he said at present mark et conditions that it could be up to 5 basis points, which is equ ivalent of 1/ 20 of a percent. So I don't know of the figures that the Leader of the Opposition speaks. 2126

Wednesday, 23 July, 1986 I would also say that the issue that was successfuly concluded, the $150 million debenture in the United States at 7.75, was put on the market prior to the credit watch being put in place, was marketed through the period of time when the credit watch, with potential negative consequences , was put on. All the investors were aware of the potential adjustment in Manitoba 's credit rating, but those investors had confidence in Manitoba to purchase those at the original conditions which reaffirmed the position that was advanced prior to the credit watch .

This government is concerned about overall government expenditures. This government is concerned about the deficit and budgetary requirements. We are and have indicated that we will take steps to deal with that. But , Madam Speak er, we will not ta_ke those steps simply to satisfy the n~eds and requiremen ·ts of a rating agency in New York. We will take those decisions on the basis of the need s of Manitobans.

The position of the Leader of the Opposition, as reported today in the Free Press, would be to take the position to throw 600-odd Manitobans out of work in The Pas in order to satisfy the needs of the rating agencies. We will not take those dec isions . We will look at the finances in a prudent fashion, Madam Speaker , in a way that meets the needs of Manitobans. MR. G .. FILMON: Madam Speaker, we are the ones who are saying that we don't want to have millions of dollars spent unneccessarily on increased borrowing costs because that impacts negatively on the people of Manitoba .

Madam Speaker, for the information of the Minister who asked where I was getting the information, it's a quotation from Phillip Bates, Senior Vice-President of Standard and Poor's who said a rating drop usually increases interest rates by 15 or 20 basis points. My further question to the Premier, Madam Speaker , and I would hope that, rather than simp ly introduce me to the Minister of Finance, he'd answer it himself , is: What does he intend to do to ensure that we once more restore Manitoba 's image as a soundly administered province, asa fiscally responsible province and one that is a good place to invest?

HON. H. PAWLEY: Madam Speaker, I have no doubt, although the Leader of the Opposition appears to have some doubt, that Manitoba 's reputation rema .ins as fiscally responsible, as a Province that is a good place to invest, and operates in a financially responsible manner. Madam Speaker, there has been no indication other than that. MR. G. FILMON: Madam Speaker , today the Minister of Finance is quoted as saying that they could avoid some of the consequences of the credit rating drop by investing in other markets. Does this mean that the Minister of Finance is now contemplating additional foreign borrowing? HON.

E. KOSTYRA: The suggestion by the Leader of the Opposition that because of this adjustment by Standard and Poor 's that Manitoba is not a good place to invest is simply not true, even in the statement that was released by Standard and Poor's with respect to this adjustment by them indicates that the provincial economy in Manitob a benefiting by public investment in employment programs , housing and the Limestone Hydro project has expanded steadily in recent years and has one of the lowest unemployment rates in Canada.

Indeed, our lead underwriters in New York, Madam Speaker, have indicated to us - and I'll give a copy of this to the Leader of the Opposition - that he believes , and they believe , on behalf of themselves, Solomon Bros., and on behalf of Merrill Lynch, Wood Gundy , Richardson Greenshields, and First Boston, that they believe that Manitoba still has and will have a significant reputation in the United States with respect to investment.

Indeed , they say that: "We are confident that the Province of Manitoba will continue to be well receiv ed in the U.S. markets on a cost-competitive basis ." It is simply not true to suggest, as the Lead er of the Oppo sition would suggest for his own purposes, that Manitoba is not a good place to invest. Manitoba is a good place to invest, Madam Speaker. The figures on private sector investment prove that , and it will continue to be a good place to inves t in Canada. MR. G. FILMON: My question to the Premier is when did he first learn of this reduction in credit rate? HON. H.

PAWLEY: Sometime yesterday afternoon, Madam Speak er. Foreign Exchange losses MADAM SPEAKER: The Honourable Member for Morris . MR. C. MANNESS : Thank you very much, Madam Speaker. Last year the Province of Manitoba lost $1 billion in foreign exchange (luctuation, $255 million of that within the Japanese yen account alone. In spite of that, Madam Speaker , the government authorized, signed Order-in­ Council 495 authorizing the borrowing of another $20 billion - pardon me, 20 billion Japanese yen .

The government attempted to amend the borrowing contract by Order-in -Council No. 601 , whereby dates were to be changed to negate a further deterioration in the Canadian dollar versus the Japanese yen. Since then, that whole borrowing issue has been cancelled. I would ask the Premier, Madam Speaker, what action is the Provincial Government taking to reduce the impact, the massive foreign exchange losses? In 1986- 87 alone , four months , Madam Speaker, those losses have totalled $130 million and that's in the Japanese yen account alone.

What action is this government taking with respect to those foreign exchan ge losses? MADAM SPEAKER: The Honourable Min ister of Finance. HON. E. KOSTYRA : Thank you, Madam Speaker. As has been the case for a number of years, the Province of Manitoba , looking at its borrowing 2127

Wednesday, 23 July, 19 86 requirements, looks at a number of markets including, where possible, the Canadian market, the U.S. market, and other markets throughout the world. I would just point out that this recent successful issue in the United States of $15 0 million was the first issue by the Province of Manitoba in the U.S. marke t for a number of years, four years, because of that particular market situation. The province has, as has been the case for many years, had strategy to look at all of the markets, looking at what the interest rates are and the impact of potential exchange requirements.

If one was to look at the cost as against borrowing in thos e mark ets, even taking in to account the fluctuations in exchange rates, as against the cost of borrowing those moni es in Canada, one would find that there still is a net saving to the Province of Manitoba in the overall costs of those borrowings. Foreign Borrowings MR. C. MANNESS: Madam Speaker , the Mi nister refuses to indic ate whether the province is prepared, or is contemplating more foreign borrowings.

I would ask the Min ister of Finance directly: Why would the government consider going back into the Japan ese market when they had lost $255 million in foreign exchange fluctuations in that market alone in the last fiscal year? HON. E. KOSTYRA: If one wants to review histor y, we can, and look back at losses that were incurr ed as a result of heavy borrowings in the past in the U.S. market, as an example, during that the time that his party was in government. The facts are that the situation with respect to various borrowings have impact based on exchange rate and based on the cost of borrowing in Canada.

The situation is that we will be looking at all markets on the basis of what is in the best interests in terms of the interest costs and the cost of potential exchange variat ions, the best deal for Manitobans. Foreign Exchange Losses MR. C. MANNESS: Madam Speaker, I have in my hands the Budget, and I refer to Page A-8, where in the last fiscal year thi s province lost in foreign exchange losses in the American market a sum of $518 million. So maybe the Mi nister would like to correct his answer. Madam Speaker , obviou sly , the Mi nis ter has no answer to the question.

I asked him if he wanted to correct his answer with respect to how secure borrowing was in the American market or, indeed, any foreign market. I would ask this question: What action will the government take with respect to the $28 million lost already within the Deutsche mark market on total borrowings of $290 million? This province in this fiscal already has lost $28 million in foreign exchange losses within that market. HON. E.

KOSTYRA: As I indicated in the past, the province looks at, as has been the case in the past, a variety of borrowings based on the interest rates that are available at the time, recog nizing the impact of exchange on those various issues and the state of those markets. If one reviews overall the borrowing cost as against what it would cost us to borrow the same funds if one had to borrow them in Canada, you'll find that there is a net saving in interest costs to the Province of Manitoba. MR. C. MANNESS: Madam Speaker , I' ll ask the Min ister of Finance.

Are we -and the Minis ter is talking about effective yields -setting aside a reserve to take into account those savings which are momentary, Madam Speake r, so to put them into reserve to have them in place to offset the massive foreign exchange losses that have occurred in the past and will continue probably in the future to offset those losses. Is the Min ister taking the savings associated with the interest rates and putting them in trust to have them in a place to offset the foreign exchange losses? HON. E.

KOSTYRA: As the member is aware, those charges appear on a regular basis on the books of the Province of Manitoba so we aren't setting up any special reserves with respect to that fund. The costs or the benefits are shown on a yearly basis as the interest ch arges as against the Province of Manitoba, or as netted out against the various Crown corporations for which that borrowing is done of a self-sustaining nature. MR. C. MANNESS: Madam Speaker, we lost a billion doll ars in foreign exchange losses last year; we've already lost upwards of $300 million this year.

My question is to the Premier: When is he going to come to grips with the seriousness of these massive foreign exchange losses and when he is going to put into pla ce our fiscal situation and provide some leadership that will help prevent the province from becoming a basket case of borrowing? MADAM SPEAKER: The Honourable First Min ister. HON. H.

PAWLEY: Madam Speak er, Manitob a is prepared to do its part by the continua tion of the policies that are directed towards the strengthening of this economy in Manitoba by way of emplo yment growth, by way of the development of capital investment, private investment, housing, that outpa ces the Canadian average in each respect. Madam Speak er, economic construction, economic buildup in the provi nce of Ma ni toba , which is considered, by way of all objective analysts, to be amongst the best by way of performances, including Standard and Poor's in their report of provinces in Canada.

That is the way we can best deal with the financial situation. Questions pertaining to fluctuation of the currency are interna tional, and par ticula rly the Canadian cu rrency, Madam Speak er, is a matter that is or ought to be a concern of the Canadian Government. Brandon University - Perkins' settlement MADAM SPEAKER: The Honourable Member for Brandon West. 2128

Wednesday, 23 July, 1986 MR. J. McRAE: Madam Speaker , my question is directed to the Minister of Education . On Thursday, July 10th, I asked the Minister whether funds administered by Brandon University, on behalf of the people of Manitoba, were being used to settle a law suit between Dr. Harold Perkins and Mr. Errol Black. The Minister responded by saying that he certainly hoped not but that he would check. He went on, Madam Speaker, to say that it was a spurious allegation .

The next day, Madam Speaker, the Minister said in the question period , and I quote: "Madam Speaker, yesterday the Member for Brandon West asked me about the relationship between the University Board of Governors and the professor at the university . I indicated at that time it was a spurious allegation. I can confirm today that it was." I ask the Minister today, Madam Speaker: Does he stand by that answer? MADAM SPEAKER: The Honourable Minister of Education. HON. J. STORIE: Yes, Madam Speaker , I con tacted Dr. Stewart and that was what was indicated to me. MR. J.

McCRAE: Madam Speaker , last week the Premier wrote to the Board of Governors at Brand on University asking them to do the right thing and to make public the terms of settl ement between the board and Dr. Harold Perkins. The Premier also told us that if he didn 't receive a satisfactory reply within a few days that he would take further action . I wonder ii the Premier can table the document today. MADAM SPEAKER: The Honourable First Minister . HON. H. PAWLEY: Madam Speaker, I don 't know what document the honourable member is referring to.

The letter which was referred to the University of Brandon was tabled in this Legislature A MEMBER: The one you wrote about, Howie ; a settlement document. HON. H. PAWLEY: Madam Speaker, I can hea r the questions just as well as honourable members across the way. The document involving the settlement is expected to be tabled by Brandon University , and it's my understanding that the lawyers for the parties that have inter est in this matter have met to discuss same. MR. J. McCRAE: Madam Speaker , to me, a few days means a few days; it doesn't mean weeks.

I would ask the Premier or the Minister of Education whether it's their intention to hold the members of the Board of Governors - presumably, government members recommended by the Honourable Minister of Employment Services and Economic Security - is it the intention of the government to hold those members of the Board of Governors personally responsible for the firing which has resulted in the settlement which will be hopefully coming very shortly . HON. J.

STORIE: Madam Speaker , without getting into the merits of the member's suggestion , I would indicate that regardless of how this issue has been reso lved , the question that was being asked in Brandon at the university , in the community in 1983, was a question of leadership at Brandon University . That issue had to be resolved . The member opposite has indicat ed, I have heard from people in Brandon , and the community in general , I understand, is very supportive of the current leadershi p at Brandon University . Madam Speaker , it is an important institution.

It requires a leader that has the confidence of the students and staff and the community of Brandon University . While there is sometimes no easy way to change leadership , a change was required . Madam Speaker, I have not heard from members opposite any indication that the current leadership is lacking . I believe it is what has been desired and what is desirable in terms of Brandon University and the community generally. Brandon University - Board of Governors MR. J. McCRAE : Madam Speaker, I have a new quest ion for the Minister.

Repeatedly in this House , the Minister of Education and the Premier make reference to the services being rendered by Brandon University by Dr. Mallea, the new president of the university. There is no question that the things that they are saying are true. I wonder why it is that the Minister and the Premier find it necessary to deflect attention away from the Board of Governors which had the power and did indeed fire Dr. Perkins, and presumably has the same power to do that to Dr. Mallea .

The question is: Why must this government deflect attention away from the Board of Governors, which is the real power at that university? MADAM SPEAKER: The Honourable Minister of Education . HON. J. STORIE: Madam Speaker , I point out to the honour able member that the Board of Governors made the change, the change which he applauds. I point out that the Board of Governors consists of 17 members, representatives from the communi ty, representatives from the student body.

Madam Speaker, a change was required, a change was mad e. - (Interjection) - The implication that comes from members opposite bears no relationship to the facts of the matter, the historical facts of the matter . Madam Speaker , the Board of Governors , as I've indicated, is an autonomous body and is representative of the committee and is a body of 17 individuals , not just appointees from the Provincial Government. Credit rating, Province of Manitoba - Standard and Poor's MADAM SPEAKER : The Honourable Member for Kildonan. MR. M. DOLIN: Thank you, Madam Speaker. My question is to the Minister of Finance .

In the correspondence received from Standard and Poor 's, explaining their reclassification of Manitoba's 2129

Wednesday, 23 July, 1986 credit ra ting, was there any reference to trans fer payments between the Federal Government and the province? MADAM SPEAKER: The Hono urable Min ister of Finance. HON. E. KOSTYRA: Thank you, Madam Speaker. I note that members opposite laughed when the question was asked, but I think that Manitobans are interested in that question and would certainly be interested in the answer.

Yes, indeed, Madam Speak er, Standard and Poor's did indicate in their reason for the change in Manitoba's credit rating that they saw very much a change in the transfer payment issue with the Federal Government In fact, they comment ed that the province's flexibil ity, in terms of revenue, was limi ted to only in-province revenue sources, because they clearly saw that the Federal Government was cutting back on support to the province.

So I would now sug gest tha t maybe mem bers opposite and the editorial writers at the Winnipeg Free Press would like to review their position because they would not believe the position of the Province of Manitoba. They would not belie ve the position of Cons ervative Governments in other parts of Canada, that Manitoba has -and other provinces in Canada have -been im pacted negatively by the transfer payments of the Federal Government MR. M. DOLIN: A suppl ementary to the Min ister of Financ e.

Is the impl ication in Standard and Poor's letter that if Bill C-96 were not to pass, that our credit rating could be reviewed again and probably upward? HON. E. KOSTYRA: That is a good question. I can't say that would be the case, that obviously that would add to the flexibility that the province would have in terms of revenue sou rces. lt seems that members opposite are not interested in the answer to the question, but I know, Madam Speak er, that Manitobans are interested in this - (I nterjection) - issue. MADAM SPEAKER: Order please. HON. E.

KOSTYRA: Clearly, that area and that source of revenue is an impor tant source for the Province of Manitoba, as it is for other provinces in Canada. If you look at the situation, with respect to adjustments of credit ratings in the provinces, it's been those provinces that ha ve been most heavily impa cted by the transfer cut decisions of the Federal Government that have had changes in their credit ratings over the past year. Bridge - North Selkirk MADAM SPEAKER: The Honourable Mem ber for Pembina. MR. D. ORCHARD: Thank you, Madam Speaker . My qu estion is for the Min ister of Hig hways and Transportation.

In view of the fact that our province has ha d its th ird reduction in credit rating due to the extravagant spending patterns of this government, could the Min ister of Hig hways and Transportation indic ate whether the Selkirk bridge, which was originally estimated at $10 .3 million, most recently upgraded to $1 9.5 million, whether an $8 million overrun on cost and waste of money is where the bridge is finally going to come in, at cost? MADAM SPEAK ER: The Ho nourable Mini ster of Hig hways and Transportation. HON. J. PLOHMAN: Madam Speaker, this matter was reviewed extensively during the Estimates process .

The Member for Pembina received all of the answers at tha t particular time and is aware of the various reasons why there was an additional cost associated with that particular bridge. I think he should peruse Hansard and he'll be very much able to understand the reasons for it MR. D. ORCHARD: Madam Speaker, the Minis ter of Transportation didn't obviously unde rstand the question. The cost estimate on the bridge has risen from $10 .3 million original ly, to some $1 9.6 million at last estimate.

What I asked the Minis ter is whether the $19 .6 million is now a firm figure on the compl eted cost of that bridge, almost double from the original estimate? HON. J. PLOHMAN: Madam Speaker, the member - as I've indicated - could find the answers in Hansard. He's aware that the original estimate was simply a preliminary estima te. lt did not take into consideration the fact that there would have to be an additional height to accommoda te the federal dredge and the Navigable Waters Boards, who would have to approve any crossings of major waterways in this province.

Therefore, the initial costs were prelimi nary only in nature. This is the case with many projects which are undertaken, both in the Department of Hig hways and Trans portati on, of cour se, and in others, where preliminary estima tes are given. How ever, once the details are worked out, obviously these change from time to time and that was the case here. In this particular case, the tenders are coming in lower than the final estimates, Madam Speaker, and we're very pleased to see that MR. D.

ORCHARD: With lower tenders and an almost dou ble-the-cost bridge, I'd hate to see that the tenders come in on this department's budget, Madam Speaker . MADAM SPEAKER : Question. MR. D. ORCHARD: Madam Speaker , my question for the Min ister of Government Services, and the Mini ster of Hig hways and Transportation is: Ha ve th e lando wners been equitably settled with in the expropriation process for the new Selkirk bridge? HON. J.

PLOHMAN: Madam Speaker, the landowners are being treated, as I did outline during the Estimates discussion, and I will have the opportunity and the member opposite will have the opportunity to discuss 2130

Wednesday, 23 July, 1986 during the Government Services Estimates when we discuss Land Acquisition and the Land Value Appraisal Commission . They are being treated the same in the case of the Selkirk bridge as they are with all the projects under the expropriation procedures ; and those procedures are being adhered to in the same way that they are for all projects. I will take as notice as to whether the settlements have been finalized in all cases at this time . Gimli Dragways MADAM SPEAKER: The Honourable Member for Sturgeon Creek . MR. F. JOHNSTON: Thank you, Madam Speake r.

My question is to the Minister of Public Works . The Winnipeg Sports Car Club and the Gimli Dragways leased a motor sport at the Gimli Indust rial Park and they hold drag races at that park. Beca use the government erred in leasing some land to the Dimar Training Systems , we find that the dragway land is too small to carry on the sports car races . It has devel oped in a cancellation of sport car races and if the problem is not solved, and it appears , Madam Speaker , that the problem is not solved, the long weekend in Augus t races, which are attached to the Icela ndic Festival , will not be held .

What wilt the Minister do, to see that this tou rist attraction which brings in a lot of money to the Province of Manitoba, brings in cars from outside of the province to race at Gimli, to solve this situation? MADAM SPEAKER: The Honourable Minister of Government Services. HON. J. PLOHMAN: Madam Speaker , I don't agree with the premise that the member has raised that the province erred in the lease. What we hav e is a disagreement between a sub-lessee and a leaseholder at the Gimli properties . Gimli Dragways have sub-leased from the Winnipeg Sports Car Club a

section of the old runway at the Gimli Industrial Park and there has been a lease arrangement made with Dimar Training Systems for another portion of that area of the runway. The Gimli Dragways had left the impression clearly with our staff people that they were satisfied with the amount of property they were leasing for their drag races to be undertaken as they have in previous years. However, it is found now that indeed that is not the case and so there is a dispute between the two. We are hopeful that the two parties will be able to come to some agreement that is satisfactory to both

partie s and have left that in their hands for the next couple of weeks to see whether there can be arrangement arrived at between the two parties . MR. F. JOHNSTON: Did the Minister 's department consult with the Dragways or the Winnipeg Sports Car Club before entering into the lease for discussions with Dimar? HON. J.

PLOHMAN: Madam Speaker , it's not usually the case that when a group is leasing a piece of property or owns a piece of property and they are using additional 2131 property that is owned by someone else that if the owner wants to lease or sell that piece of prop erty does not usually go to the person who is using the excess property without having any formal arrangement for doing so. It's the sam e as if you are park ing your car on a corner lot and it' s sold.

The new owner may very well ask you to get your vehicle off of that piece of property and the per son who has his car park ed in there certainly would not be consulted when that land is sold . In the same way, this lease was entered into between Dimar Training Systems on the basis that was not part of the lease and as late as October of 1985 , Gimli Dragways and the Winnipeg Sports Car Club had indicated that they were satisfied with the amount of property they had for the lease. MR. F.

JOHNSTON : Mada m Speaker , I would ask the Minister if he is aware that Gimli Dragways have been operating at the Gim li Industrial Park since 1977 and using th at amount of land before, and has he read or taken the time to peruse the release presented by Gimli Dragways July 21, 1986? HON. J. PLOHMAN: Madam Speaker , I certainly am aware of that particu lar document and have it available . I am pleased that the honourable member has also read that and he should read all of it, understand as much as possible what is contained therein.

The fact is that they have leased the property for a number of years , but have not leased that

part icular property that is now under lease to Dimar Training Systems. That is very unfortunate because it turns out that they were using more than they were leasing. MR. F. JOHNSTON: Madam Speaker , my question is the Minister of Touri sm . Destination Manitoba and the tourism programs of the Department of Tourism have over the years granted , I believe , an amount close to $200 ,000 to help the construction of the Dragways and the advertising of a tourist attraction in Manitoba wh ich brings in a tremendous amount of money to the Province of Manitoba through the tourist industry .

I wonder , Madam Speaker , what the Minister of Tourism is going to do to see that the races are carried on in Manitoba and will the races be carried on on the long weekend in Gimli in conjunction with the Icelandic Festiva l. MADAM SPEAKER : The Honourable Minist er of Tourism. HON. M. HEMPHILL: Thank you, Madam Speak er. First of all, I just want to bring to the member 's attention that Destinat io n Manitoba doesn 't exist anymore. That agreement has ended and we are into a new tourism agreement with the Federal Governm ent. It's like - (Interjection) - Public Works . MADAM SPEAKER: Order please . HON. M.

HEMPHILL: I also want to indicate that we are as concerned on this side as the member is on the other side that the races continue, and we recognize that they have made a contribution and that they are a major tourist attraction .

Wednesday, 23 July, 1986 The staffs from both of our departments have been meet ing with both parties and were under the impression up until fairly recently that they were both satisfied with the agreement and with the amount of space and felt that space they had was adequate to run the races. Since we have become aware tha t there is some dispute between the two parties, our departments have been working very actively to try and bring them together and get a conciliation and an agreement that will allow the races to proceed. MR. F.

JOHNSTON: I would ask the Minister of Tourism, Madam Speaker, if she feels any res ponsibil ity, or her department feels any resp onsibil ity, for the error in the signing of the lease when it was an officer from her department who recommended the signing of the lease with Dimar to the Department of Public Works and they in turn signed it? Does the Minis ter have any reason to think that she should be involved to solve this problem when it was her department that recommended the lease in the first place? HON. M. HEMPHILL: I think I was trying to indicate to the Member for Sturgeon Creek that I am involved.

I am concerned, we are concerned and we are all invol ved in trying to resolve this. What I also said is that initially we were all under the im pression, the staffs of our departments, that there was agreement between the two parties and that ther e was adequate space to carry on the drag races. So there was no reason initially to believe that there was a problem. As soon as it came to our attention, both departments have taken an active role in trying to resolve it between the two parties. What we all want to happen is to get an agreement between the two parties that will allow the drag races to proceed. MR. F.

JOHNSTON: A final question to the Mini ster, Madam Speaker. The fact that the drag races have been held in Gimli since 1977, and they have been using the industrial park for the races since then, and they can see the cars running and where they use the park, and how much of the park they use, why did not the Min ister's department consult with the Dragways, who they have dona ted lots of money to, given money for advertising before reco mmending a lease, is your department blind? HON. M. HEMPHILL: No, Madam Speaker. Crop year, extension of MADAM SPEAKER: The Honourable Mem ber for Virden. MR. G.

FINDLAY: Thank you, Madam Speaker. I direct my question to the acting Min ister of Agriculture or the Premier. In the last few days, I've had the opportunity to visit a numb er of fairs and talk with farmers in Western Manitoba. There is a great degree of concern about the end of the crop year approaching on July 31. There is concern about soft rail beds, plugged elevators, grain that they must dry yet. The Provinc es of Saskatchewan and Alberta have both requested the Canadian Wheat Board for an extension of the crop year.

I have sent a letter to the Canadian Wheat Board and requesting extension of the crop year beyond the 31 st of July, and I would ask if the Provincial Government of Manitoba is prepared to make a similar request, particularly for No. 3 Red Wheat on behalf of the Manitoba farmers. MADAM SPEAKER: The Honour able First Min ister. HON. H. PAWLEY: Madam Speaker, I would welcome the Member for Virden pairing off with me so I could attend some of those rural fairs that are indeed an important part of the fabric of rural Manitoba. Madam Speaker, the request from the Member for Virden, I think, is a reasonable one.

I will check to see whether or not the Minis ter of Agriculture has made such a request. If not, I think it should be cons idered taking into consideration the situation that is caused in parts of rural Manitoba because of the July 31 date. MADAM SPEAKER: The time for Oral Questions has expired. ORDERS OF THE DAY MADAM SPEAKER: The Honourable Government House Leader. HON. J. COWAN: Thank you, Madam Speaker. it's our intent to go directly into this debate on Interim Supply . We will be prepared to grant leave to continue right through Private Mem bers' Hour, if that is required to com plete Interim Supply today.

We are hopeful that we can compl ete Interim Supply on this day. The Mi nis ter of Finance will be moving the motions to put us into the debate. HOUSE BUSINESS HON. J. COWAN: Previous to that, however, I'd like to indic ate that there will be no commit tee hearings tomo rrow due to the Economic Development Comm ittee having finished its review of Man for. On Tuesday and Thu rsday next, the comm ittee will be reviewing MPIC. MADAM SPEAKER: The Honour able Mi nis ter of Finance. HON. E. KOSTYRA: Thank you Madam Speaker.

I move, seconded by the Minis ter of Health, that Madam Speaker do now leave the Chair and the House resolve inself into a Committee of the Whole to consider the report of Bill No. 7,

An Act for Granting to Her Ma jesty Certain Sums of Money for the Fiscal Year Ending March 31, 1987, and to Authorize Comm itments to Expend Additional Money in Subsequent Years and to Authorize the Borrowing of Funds to Provide for Cash Requir ements of the Government, (The Interim App ropriation Act, 1986), for Third Read ing. MOTION presented and carried and the Ho use resolved itself into a Committee of the Whole to consider and report on Bill No. 7, (The Interim Appropriation Act, 1986) with the Honourable Member for Burrows in the Chair . 2132

Wednesday, 23 July, 1986 COMMITTEE OF THE WHOLE BILL NO. 7 - THE INTERIM APPROPRIATION ACT, 1986 MR. CHAIRMAN, C. Santos: Committee of the Whole, please come to order . We are about to consider Bill No. 7, The Inter im Appropriation Act, 1986 . The Honourable Minister of Finance. HON. E. KOSTYRA: Thank you, Mr. Chairman. I have provided information to the Opposition Finance Critic , the Honourable Member for Morris, with respect to the clause-by-clause explanation of the bill, so I will not bother taking Committee of the Whole through that at this tim e unless there are any questi ons .

On July 4 during the previ ous debate on Interim Supply, the Member for Pemb ina asked for an ana lysis of the increase in direct debt as shown in the Unaudited Financial Report for the year ended March 31, 1986. The Statement of Direct and Guaranteed Debt indicates a net increase of $810 million. I have prepared an analysis of this amount and I would like to table it for the member's information.

Also, on July 4 during the debate on Interim Supply, the Member for Morris asked for greater detail with respect to the increase of som e $24.3 million with respect to the budgetary requirements of the Department of Finance.

This increase was shown in a Prelim inary Unaudited Statement for the year ended March 31, 1986, and it's accounted for as follow s: public debt foreign exchange increased costs, $22.1 million; interest costs, $11.2, for a total of $33.3; less increased earnings on sinking fund in advance to government agencies of $18 .7; lower debt discount expense of $5.1 which meant a net cost of $9.5; also energy rate stabiliziation authority foreign exchange increase costs of 16.9; recoveries due to new foreign exchange only was 2.2; which netted out at 14.7; which came out to the figure that is in the Preliminary Unaudited Statement for the year ended March 31 , 1986 .

MR. CHAIRMAN: The Leader of the Opposition. MR. G. FILMON: Thank you , Mr. Chairman. I wanted to speak on this particular bill, Interim Supply, in a general vein, not with respect to a particular item of expenditure but to the broad general question that we ought to be addressing today in the wake of the loss, the reduction, in our credit rating. We today, of course, received the bad news; bad news , which I might say, was available to the government sometime yesterday.

I note with some disdain that the y waited until 4:35 p.m . yesterday afternoon to hand out the news releases until, in their view, the television cameras had left the building and they could avoid as much publicity just as - and I see the Minister of Industry, Trade and Technology smiling because he knows full well how this works - he issued the Second Quarterly Financial Statement right at the end of the day as he was leaving for the Brandon Winter Fair. Mr. Chairman, the Minister thinks that he's perfect and he can't be criticized on these things, but this is not coincidence.

This is another example of the kind of manipulation that we have of the media , or the attempted manipulation . I say "attempted," because the media are on to thi s now and they know that the government issues bad news wheneve r it's possible to avoid as much publicity on it. Mr. Chairman, we'll carry on in the discussion of the loss of credit rating. We'll carry on with respect to the consequences that this drop in credit rating has for the people of Manitoba and for the Province of Manitoba because this is not an isolated incident.

This is the thi rd time that we've had a credit rating reduction under the NOP in less than four years. This is an objective view , taken by outside observers of the strength of our economy here in Manitoba. This is a credit rating agency that deals with governments through out the world, that deals with private corpo rations throughout North America, that evaluates just how well they are being operated, just how effective ly they are being administered, and jus t how competently they are being operated in a financial sense.

They have once aga in said that this NDP Government is incompetent to manage the financial affairs of the Province of Manitoba. They have said once again that this NOP Government doesn't kn ow how to operate prudently the affairs of this province on beha lf of the peo ple of Manitoba. Mr. Chairman, this isn ' t a partisan po litical commentary by a Conservat ive Opposition. This isn't a partisan political commentary by the Conser vati ve Party of Manit oba or its leader. This is an objective outside evaluation of the capabil ity of this NDP adm inistration at running the affairs of this province.

They have said that these peop le are hopelessly inc ompetent and for the third time , since the NDP took government , in fact the third time in less than four years, they've now again reduced their cred it rating. They've said to the people, who are the investors throughout the world, who will buy bonds on the financial markets of the world, that this government is not capable of handling the financial affairs of this province. Mr. Chairman, now, of course, we're being lumped in with the have-not provinces in terms of our credit rating today.

We're being lumped in with the Maritime Provinc es, with the provinces who have most difficulty in an economic sense in this coun try; we are now being put in the same category by the bond-ra ting agency , Standard and Poor 's. Mr.

Chairman , that is the tragedy because this Minister of Finance and his predecessor and the Premier are all saying that they are somehow doing a good service to the people of Manitoba by choosing the priorities that they have chosen ; that they 're not going to be stampeded; that they're not going to be forced into doing anything they don't want to do; and they're not going to be cons trained by the financial rating agencies of North America .

They're giving the impression that somehow they are helping Manitobans by following along the ir incomp etent route of choos ing priorities and choosing the financial future of this Province of Manitoba. They are someho w saying that they are doing better for the people of Manitoba by doing it their way as opposed to do doing it in a way that would conform to normal good business practice, to normal sound administration, 2133

Wednesday, 23 July, 1986 to normal fiscally responsible manners of dealing with the finances of a government.

As a prudent admini stration, as people who are wisely husbanding the resources, the scarce resources tha t they talk about from time to time and acknowledge tha t we have under our control as a government, they are now being told by an objective rating agency from outside this province, indeed from outside this countr y, that they're doing a lousy job, that they're incom petent, and that the people of the financial sectors of the world ought to be concerned with the abil ity of this government to manage the affairs of the Province of Manitoba, that's what they're being told.

They're being told so by an objective group. They can't say that that's a partisan, political comment as being made by me or members on this side of the House or anybody else in a political role in this provinc e or this count ry, that is a factual statement from the bond-rating agency who is telling the people who want to invest in bonds throughout the world that these people are not good managers. Mr. Chairman, when they give the impression that somehow they are doing more for the people by choosing their spending priorities, that they are doing a better service for the people, that, Mr.

Chairman, is the biggest dis service that they could possibly do to the people of this province. Because, in fact, the consequences of the reduction in credit rating are, that more money will have to be spent going to satisfy the needs of the bondh olders throughout the world. The financiers in Zurich, the bankers in London, in New York, all of those people will get their additional pound of flesh from the taxpa yers of Manitoba.

All of them will get more mone y, and those people who really need it in this province of ours, who need additional health care, who need better education, who need all those things will be getting less because more of our tax dollars have to go to the financiers of the world.

These are the people who tell you that they abhor the financial people, the bankers; these are the people who tell you that those people are not going to tell them what to do, but indeed, by this credit rating drop those people throughout the financial world are telling Manitobans and are ordering Manitobans' affairs; that's precisely the point. So, Mr. Chairman, I want to - (I nterjection) - ensure MR. CHAIRMAN: Order please. The Leader of the Opposition has the floor. MR. G. FILMON: Mr. Chairman, I am having difficulty in speaking because of the heckling of the Member for Thompson.

The Member for Thompson has made the transition from rookie back b enche r to veteran backbencher without having any noticeable effect on his capability for his presence here in the Legislature. - (Interjec tion) - MR. G. FILMON: That's a clever one Stevie boy. I wish that I had said that. - (I nterject ion) - MR. CHAIRMAN: The noise coming from both sides. The Leader of the Opposition. MR. G. FILMON: Mr. Chairman, we've been lump ed in with the have-not provinces by virtue of this credit rating drop again.

We've now been told by the people of the financial markets that we are in difficulty under this kind of admi nistration from this NDP Government. We've been told that our credit rating has been dropped because this admi nis tration could not an swer, could not give any plans for the future as to how they're going to change the financial affairs and direction of this province. I quote from an

article today, Mr. Chairman, as to what was being said by the people in the financial markets.

Here we're talking about a vice-president of Standard and Poor's and he said, and I quote: "The agency was not satisfied with the province's explanations of how it intends to reduce its debt." lt's not only that they've been so inco mpetent, and the y've done such a terrible job over the past four years, but they can't convince the people who wish to invest in this province, in bonds in this province, that they know where we're going to go in the future, that they have any plans that are going to put us on a better track in future, that are going to put us in a better ci rcumstance in future.

All they know is that these people have no plans, have no ideas and that we're doomed to continuing financial misma nagement under this NDP admin istration. That's the consequence and that's the conclusion of Standard and Poor's, the rating agencies who are looking at Manitoba's credit rating, Mr. Chairman. I find it so irresponsible of the Mi nis ter of Financ e to tell us that they're not going to be influ enced by the credit rating agencies, that they're going to do their own thing.

Because in fact, their own thing is leading us down the wrong path, is leading us down to the path of spending more and more money on interest and less money available for education, for health care, for community services, for all the things that the people of Manitoba expect of them, highw ays maintenance, all of those things that people need from a good government, they're not going to get because the rating agencies have once more downg raded Manitoba's financial position in the eyes of the investors of the world. Mr.

Chairman, that's the tragedy -the tragedy that they keep mouthing the same words, that we have our own priorities, tha t we'll stand up for Manitobans first and in fact they're undermining Manitobans. That's the real tragedy of this whole affair of the credit rating reduction, that they don't understand why it's been done and that they have no plans by which they can convince the rating agencies that we are going to get better in the future. The other conclusion, of course, that the rating agencies have come to, Mr.

Chairman, is that although the Premier and the Min ister of Finance say that there have been substantial investment in Manitoba and that investment is increasing, the major responsibility for those increases in investment lies with the taxpayer. This admin istration chooses to invest money year by year by year in record amounts in the economy to try and stimula te the economy , to try and employ people, to try and make their sh ort-term figur es look credible. They've been successful in doing it. There's no question that the rating agency acknowledges a low level of un emp loyment. But go od heav ens, Mr.

Chairman, if you were going to prepare to spend almost $2 billion in the general economy in job creation 2134

Wednesday, 23 July, 1986 activ ities each year and another $2 billion spread over five years on the special one-time project, the hydro­ electric project of Limestone, surely, Mr. Chairman, you could create jobs by investing that kind of money in the economy, that isn 't the point. The point is that all of this activity, that all of this job creation , that all of this unemployment level is founded on debt , debt that we ultimately have to repay , debt that is costing us more and more and more each year because our credit rating goes down.

The interest that we have to pay goes up and that involves millions of dollars every year in additional cost, millions of dollars that are being robbed from the poor and needy people of this province of ours , who expect to have proper health care, who expect to have proper education, who want to have bette r social services , they're not going to be gett ing it becau se this NOP administration has chosen the wrong priorities. The other tragedy that I see in this, Mr.

Chairman, is that the new Minister of Finance has to sit there and take the flak over it when indeed his predecessor, the Minister of Industry, Trade and Technology and the Premier are the ones who ultimately should be held responsible. It is their incompetence, it's their lack of understanding that has put us where we are today.

It is not just what has been done by this new Minister of Finance in the last three-and-a-half or four months that has resulted in this, it is all the incompetence of four years of the Member for Rossmere, the Minister of Finance, that has put us in the hole that we find ourselves today with another drop in our cred it rating, Mr. Chairman. Mr. Chairman, the other point of course that the Minister of Finance and his predecessor and the Premier will say is that all we ever do is ask them to spend more money , that we never give them the other side of the coin and we never tell them what monies we wouldn't spend.

Well, Mr. Chairman , just so that there is not a foolish statement being made again by people on that side, I'm going to list for him suggestions tha t we have made during the course of this Session alone as to areas that they can save money that they needn 't put their expenditures into . Becaus e, Mr. Chairman, when you take a look at it, we have made .many suggestions over the past while .

ManOil, a company getting involved in high-risk oil exploration at a time when we got all sorts of private companies drilling in the southwestern part of our province, at a time when we don't need to have one whit to do with exploration and development because there's lots of it being done . In fact, every barrel of oil that we would produce out of our investment would cost us money because, right now, the price of oil is such that it would cost us money to produce that oil.

In any case, we have said to them we don't need to be in ManOil, up to $10 million that coul d be saved probably this year alone in their investment in ManOil. We don't think that it's appropriate; we don't think it's necessary; and we don't think they need to do it. We said the same thing with respect to them taking a bigger and bigger position in potash. I find it absolutely fascinating , Mr. Chairman , that Canamax, our private­ sector partner , won't put any more money into that potash development this year. They said , enough's enough. There's no world market for potash; the prices keep dropping.

Everybody who's producing potash worldwide is losing money. Let's put the brakes on. So what happens? This government, at a time when all these things are going in the wrong directions, says, we ' re going to put more money into the potash exploration this year . Canamax , the pr ivate- sect or partner won't risk any more money at the present time, so they 're going to put it in. There 's another area of very questionable investment that we suggest, Mr. Chairman, isn't an appropriate use of that funding right today. But there are more, Mr. Chairman. There are so many more that we could talk abo ut.

I mentioned yesterday Manfo r, and the Minister of Finance jumped on that and said , aha you want to wip e out 600 jobs . Did he wipe out the jobs when he privatized Flyer Industries? No, he didn 't. He privatized Flyer Industries to preserve the jobs. That 's what we're talking about. We're talking about bringing private investment and ownership and management into Manfor so that we'll preserve the jobs. Those jobs will disappear if this government continues to operate Manfor at the massive losses, another $12 million this year. Mr. Chairman , we're not advocating these things to reduce jobs.

We're advocating these things to preserve jobs because, as long as these incompetent people put the money into Manfor and continue to operate it as their plaything, they are going to lose money and lose jobs because eventually nobody will tolerate the kinds of losses that they are encountering in there . Mr. Chairman , we talked about getting out of MTX, the corporation that this year, I believe, is putting another $8.5 million into a corporation to do business in Saudi Arabia and , leaving aside all the morality and all of the side issues , it's losing money . It lost money last year.

It's projected to lose money this year, and yet we continue to invest in it. Anothe r place where they could be saving money, Mr. Chairman, but no, they want to ignore that. They want to say that the members opposite onl y want to spend more money. Well, we're giving you lots of examples of places that you don 't have to spend money. You don 't have to invest taxpayer s' money, and you can reduce the borrowin gs and the debt load that has caused us to have this interest rate reduction, Mr. Chairman. Do you want some more? Well, Mr.

Chairman, I find it very interesting that the Minister of Finance spoke about preserving the priorities that they have set for themselves. He said this in the news release. He said: "Our province will continue to pursue the social and economic policies that are in the best interests of the people of Manitoba. " Mr. Chairman, we're not talking about the social and economic policies. We're talking about priority choices, such as contracts for friends , 55 ,000 for Andy Anstett. How much for Doug Davison every year - $50,000 , $100 ,000 a year?

Friends of theirs who are always on contract, who are always getting money , wh o are always on the take from this government at the expense of the taxpayer of Manitoba. There's plenty of money for that. They always find plenty of money for that. Those are the kinds of areas I'm sure that Standard and Poor's is concerned about. Those are the kinds of priorities that nobody in his right mind would choose , but that they have chosen, Mr. Chairman. They are now spending, Mr. Chairman, over $4 million a year on those 2135

Wednesday, 23 July, 1986 13 0-odd apple polish ers that the former President of MGEA, now the Mi nis ter of Urban Affairs, identified just a year-and-a-half ago, those apple-polishers who cost the taxp ayer a bundle of mon ey. Those are the kinds of prioriti es that cost us millions of dolla rs a year that never need to be spent, that are only there to try and prop up the ima ge of this incomp etent admi nistration. Those are the things, I am sure, that worry Standard and Poor's, not the investment in health care. not the investment in education. Those are the kin ds of things.

I am sure Standard and Poor's knows about the increase of almost 70 percent in the senior Civil Service under this admin istration. They know about it because that costs us millions of dollars a year to have all the additional Assistant Deputy Min isters, all the additional Deputy Mini sters, executive directors and all of those people. Every time they have more people in Cabinet -and they do now. They have now the Member for Rupertsland, the Min ister without Portfolio. He has an executive assistant or a special assistant support staff. He has people that he needs.

We have the Speaker having an executive assistant where none ever existed before, but that's a prio rity. That's what concerns Standard and Poor's, Mr. Chairman. These are the kinds of things that people who evaluate this government know are absolutely rotten, wrong­ headed priorities, wastes the money on the things that are nobody's priorities. You'll see what happens to your credit rating as your debt goes up and you spend more and more and more money on interest costs. Those are the things that are being referred to by Standard and Poor's when they evaluate this admi nistration, Mr. Chairman. Mr.

Chairman, I jus t wanted to make one final brief comment with respect to this area and that has to do with the comments that were made earlier when we were put on credit watch. On July 9, we had quite an extensive exchange in this Legislature, in question period and then beyond, with respect to this reduction or the potential reduction in credit rating. At that time we were just put on a credit watch. We asked the Minis ter of Finance what he was prepared to do to try and avert this potential reduction in credit rating that we said would be dis astrous to the people of Manitoba, very damaging, very expensive.

You know what he said, and I' ll quote from Ha nsard of that day. He said that he was going to contact Standard and Poor's: ". . . to meet with them in the very near future and to provide them with the positive information with respect to the overall econ omic performance in the Province of Manitoba"; further information with respect to the financial affairs for the Province of Manitoba. Well, he went there, provided them with what he thought was the positive information, and our credit rating was immedia tely dropped down, immed iately reduced. Mr.

Chairman, I'm glad he didn't go and provide them with some of the negative information, because indeed there is much more information there that probably wasn't provided that would have Standard and Poor's reduce our credit rating even more because they probably aren't even aware of some of the incomp etence that we have uncovered this Session alone over the past few months, this Session alone the incomp etence that we've uncovered from these people opposite. That's why we are where we are. Thank heavens, Mr.

Chairman, that the Mi nister of Financ e didn't go and give them any of the negative information, because who knows where we'd be in terms of our credit status in the world marke ts for finance? So, Mr. Chairman, I just want to put on the record in the strongest possible terms my concern, not only the fact that we had our credit rating reduced for the third time in the last four years under these NDP, not only the fact that these people, Mr. Chairman, keep saying that they are pursuing the right priorities. But Mr.

Chairman, I want to put on the record that Standard and Poor's, first and foremost, dropped our credit rating because. not only have we been an absolute and total financial failure over the past four years, but we don't know where we're going in the future and we have no plans to make it right again. MR. CHAIRMAN: The Honourable Min ister of Trade and Technolo gy. HON. V. SCHROEDER: Thank you, Mr. Chairman. I take it that's from their time, Mr. Chairman. I think maybe we can now get out of . . . MR. CHAIRMAN: Let's get some order here. HON. V.

SCHROEDER: . . . fantasyland and into the land of reality and take a look at the statement that Standard and Poor's made. Did Standard and Poor's talk about MTX? No. Did they talk about the Minis ter of Northern Affairs? No. Did they talk about any of those things the Leader of the Opposition just raised? No. They did talk about federal transfers. Did the Leader of the Opposition talk about federal transfers? No. His happens to be a fantasyland and I think it's about time he got into the land of reality .

All of those expenditure reductions which he has referred to, and I want to say before he leaves that I am very pleased on behalf of this government to hear finally , specifical ly, the Cons ervative position on potash in Manitoba. That position is going to be taken by us into Western Manitoba, you can be sure of that, over this summertime. lt is a distorted position. lt is a position that incredibly falsities what is happening in Western Manitoba.

As that man was speaking, Canamax is in contact with eight different subcon tractors whom it is asking to do more work in the Province of Manitoba at the same time that man was telling you that Canamax isn't working any more; they'v e given up. They've said no more in Manitoba, no more because of the world market. At the same time as he was saying that, Canamax is out there finishing up the contracts to get eigh t subcontractors working in Manitoba - (I nterjection) - not with our money. We either have the mone y or we have the interest. Rip Van Winkle cannot have it both ways.

The public works man cannot have it both ways. You cannot say it's our money and we have half the interest in tha t property. We either have half the interest in the property and they have the mo ney, or we have the money and they have the full interest in the property. Either way, you can't have it both ways and say that we have half the property and we still ha ve the $5 million we spent 213 6

Wednesday, 23 July, 1986 in purchasing half of the property . It doesn't make any sense whatsoever . They and we are quite enthusiastic about those projects up there and I would think that the Conservative member for that region , for Roblin-Russell, would be explaining a few things to his leader so that these things don't stay on the record. He refers to MTX. It has been explained in this House. People like Standard and Poor's understand that there are net benefits to the province even when you have losses on the books.

ManOil - here we have a view of the future that only a Manitoba post-Roblin Tory could possibly have. Hide your head in the sand and pretend that the world is just going to somehow fumble along; everything is going to be wonderful. They are saying, the Opposition is saying, that we shouldn't be exploring for oil when we have more than an 80 percent recovery rate in terms of getting oil.

At the same time their federal brothers and sisters are looking to assist the Province of Newfoundland with oil that will cost $35 or $40 a barrel minim um in today's costs, forgetting about the costs when they will actually be pulling them out of the ground, a billion dollars to do that, because their federal brothe rs and sisters happen to have a little bit of faith in the future. They are saying we shouldn't do it based on $15 a barrel and less. That's the kind of future Manitoba Tories under Filmon believe in.

I think it's about time you had a leadership review , which I know a lot of you are talking about in the back rooms. Maybe that's one of the reasons why we've heard the high pitch in your leader 's voice this afternoon . He knows that the wolves are baying . The Member for Sturgeon Creek was around, fortunately not in an active role, in the 1960's when we had a Conservative Government which had a little bit of vision, did a number of things for this province under Roblin, pulled back under Weir, and that was the end of them . They had a single A.

They dug the ditch around Winnipeg for which we are grateful. - (Interjection) - with a single A, a single A. The Leader of the Opposition refers to our debt. I would refer him to this year's Budget Address, page A-14, Manitoba's debt, as a portion of the ten-province debt in Canada, 1978 to 1984, and he will see that in 1984, Manitoba's debt is a smaller proportion of the all-province debt than it was in 1978. Indeed it was a smaller portion than in 1983 or'82 or in'81, a much smaller portion of the ten-province average.

That only stands to reason when we know, those of us who are at all interested in accurate history, that when this government took office we had a projected deficit of approximately $275 million. It's gone up to $529 million last year. That is compared to, say, Saskatchewan, when the Conservatives came into office they had a zero deficit, practically no debt; they have boosted it up to about $600 million of deficit.

Alberta is up to $2.5 billion for this year of deficit as compared to our under 500 million, and they make it sound as though we're somehow an exception, that somehow something that we're doing is absolutely out of line and crazy. Talk about job creation based on debt, and he says anybody who spends this kind of money is going to have this strong economy. Well, he should talk to Don Getty. Don Getty is spending far more money per capita in Alberta and is having much less success at job creation than we have had over the last while.

So it is simply not correct to say that we are fueling our strong economic recovery on the basis of large provincial expenditures. In fact, on a per capita basis , our expenditures are somewhere in the range of seven; that is, approximately seven provinces spend more money per capita than the Province of Manitoba does.

That surely deflates the argument of your leader when he suggests that the reason we are No. 1 in terms of overall private sector investme nt over the last four years, the reason we are among the strongest in terms of employment creation , the reason we have done so well in terms of population growth is that we have spen t more money than other provinces. That is nonsense. It is simply not a fact that is true. All he has to do is look at the record. Mr. Chairman, one other little point I would like to make . We've heard the Member for St.

Norbert tell the House that he would like us to file quarterly reports and he wants specific dates on them . I don't know what will come of that, but what I do hope will come of any quarterly report in the future is that at least the Opposition will bother to read it and to understand it , because the gobbledegook they have been giving us in the last little while - (Interjection) - well , have you read that report? Now the Member for Roblin -Russell is very quick at the draw. He has been listening to people like Mr. Duguay from St.

Boniface who kept telling us last year that we wer e getting more in transfer payments. We were getting more in equalization and EPF and so on and - my goodness! - everything is wonderful. Look at the Fourth Quarterly Report which shows that, if you total all of the payments from the Federal Government for health and education and for equalization, you will find that, in 1985-86, the province received $3 million less than in 1984-85.

During that year, we were constantly bombarded by the Federal Governmen t telling us that they were paying a part of the 8 percent or 9 percent or 10 percent increase in hea lth and education expenditures, and those expenditures were going up very dramatically. Their $1,500 per Manitoban, approximately $1,600 per Manitoban, is what those expenditures are . When you put a complete cap on the half that the Federal Government used to pay and then lie about it, and then say that we're paying you more when you're not paying more - (Interjection) - I'm not referring to any member of this House .

I'm referring to the Federal Tories , who have said, and Mr. Duguay said constantly last year that we were getting more money in 1985- 86 than in 1984-85. That Fourth Quarterly Report, which you so desperately wanted , demonstrated clearly that we received, out of about $870 million, $3 million less than in the year before. Clearly, on the record, Mr. Duguay was wrong. Now let us take a look at what is coming down the line in the future in those areas. I hear a lot of nonsense from these people opposite that it's only Manitoba complaining .

I want them to know that the Conservative Province of Newfoundland has put out a Green Paper, which refers to the privatization of the Medicare system because of the federal cutbacks . I want them to know that most provinces in this country strongly support 2137

Wednesday, 23 July, 1986 the position Manitoba has taken. In most provinces, the Op position suppor ts the position th at their governments take, because they can see the dangers to the future of both health and education coming down the pipe with the passage of Bill C-96. In the year 1986-87, we are going to be receiving equalization which would be less than it was about five years ago, without the one-time payment of $6 5 million, which will end the year after as a result of the new legislation. That's going to cause quite a ripple, and tha t is something Standard and Poor's can see.

They can see those numb ers and, when they were discussing the Manitoba economy which they said was strong and Manitoba Government's ability to pa y, they specifically referred to federal transfer payments. They didn't refer to all the nonsense your leader was giving. They referred to th e real is sue, the real is sue being tha t the Cons ervative Government, which of course has flip­ flopped totally from where they were in Opposition, is cutting health, education and equalization payments in this countr y.

Jake Epp, in 19 82 when I was in Ottawa, said it was unconscionable that the Federal Government would cut EPF payments to the provinces. What did he do once he became Mini ster of Health? He cut them further. He cut them by 2 percent under GNP after the Liberals, who he said were scoundrels for it, took the tax portion off of it. He said that was terrible. He's kept the tax portion off of it. He's come back, and cut it by 2 percent off GNP. And you people have been silent. You people have said nothing while the Federal Government has stolen that money from our hospitals and our schools.

You people are silent, as those transfers, expenditur es - I haven't heard a single word from one member of the Cons ervative Opposition with respect to federal expenditu res in the Province of Manitoba. I haven't heard a single word from members opposite with respect to suppl ementar y spending in Manitoba, as an example, for Hig hways. There is not one province to the east of Ontario which doesn't receive now Hig hways fun ding from the Federal Go vernment. I' ve heard a lot of complaints from members opposite with respect to Hig hways. They would like more money in Hig hways.

One cons titu ency in the Provinc e of Qu ebec, Manicouagan, which happens to be represented by the Prime Mi nister of this count ry, gets $49 million for Highways, zero for Manitoba. We've got 14 ridings, zero from the Federal Government, zero -Manicouagan, 49; Manitoba, zero. That's the kind of ball game that you people are in, and you're not talking about it. You're not talking about research centres which are being built and staffed in Eastern Canada, in the Maritimes, in Montreal.

Here in Winnipeg, all they did was com plete it, and then they turn around and say to the province, now you've got to run it. lt's no longer a national centre. lt's no longer a centre where we can bring people from other regions of the country and develop industry and manufacturing here. You people have been silent. Now, my goodne ss, it seems to me that at some stage you have got to re-evaluate your leadership and look to standing up for Manitoba, to standing up for a province which needs assistance just like any other region of the coun try. We have done the improvements.

Keep in mind folks that, when you people left office, there were fewer people left in Manitoba than the day you walked into office. People voted with their feet under that terrible Lyon regime, and we've had the strong est rate of popula tion growth since we've kept records since the Howard Pawley Government came into office. We've had stronger private investment than the national average, while you had among the lowest in the countr y.

All of those numb ers -and we've done that despite a Federal Government which has as the - (Interjec tion) - you will recall, about two years ago, the Federal Finance Minister was in town and his Deputy Min ister had a piece of paper, a memo to the Minis ter which was quo ted in the Free Press which said that Manitoba was the province which was the worst hit by the equalization changes. That's on the record, not just under the Liberals. lt's under the Conservatives as well. To their credit and to Mr.

Wilson's credit, he did negotia te a two-year change which comes to an end at the end of this year, which drops us down at the end of it to below where we were th ree or four years ago, but he did give us that two years. But then he went along and, with the compl icity of Jake Epp and the Manitoba Tories -the Federal Tories were probably more to blame than you are but, with your silence , they're now taking another big chunk off EPF payments. You people have been silent, silent while our hospitals are going to suffer more, while our post-secondary education institutions are going to suffer more.

You quote letters to the editor when you can look at your Fourth Quarterly Statement that shows conclusively that we received less money from the Federal Government for health and education, for EPF, for equalization in 19 85-86 than in 19 84-85, less last year than the year before. Yet, you people were trumpeting throughout that we were getting more. That was not true. I bel ieve you believed Mr. Duguay - (I nterjection) - well if you're saying that our Fourth Quarterly Statement is wrong, stand up and say so. Demonstrate that with some integrity and proof.

I tell you that statement is correct. lt is an audited statement. lt demons trates that you are wrong. Don't lis ten to Mr. Dugua y. Mr. Duguay is misleading you; he has been misleading you. Read the numb ers ; the evidence is there. lt is conclusive. We received less money in 1985- 86 than in 19 84-85, notwithstanding all the protesta tions of Jake Epp and Mr. Duguay, notwithstanding all the statements that we were getting a better deal.

That simply was not true. lt is demonstr ated in that Fourth Qua rterly Report and, as we discuss this issue, I expect that at some stage you will get out of the fantasyland your Leader is attempting to put you in and into some reality. All those numbers he mentioned to you were less than 1 percent of our expenditures. They would cause the loss of hun dreds of jobs, the loss of future investment in the province. Of course, he doesn't understand what is happening in Western Manitoba. He's saying that the oil patch is healthy today. If he went into the oil patch today, he would find out tha t it is very unhealt hy.

The only money being spent there, basically , is money that had been budgeted from some time ago, and even that is being cut back because of the price of oil. That includes ManOil and it includes everybody else. To suggest that indus try is in a healthy shape demons trates tha t he has no contact with reality. 2138

Wednesday, 23 July, 19 86 There's no contact with the real world there. Basical ly, that fantasy land is something you're going to have to get out of. So this 1 percent saving -and I get back to that - you've spent it. You've spent this 1 percent saving time after time. How many times can you save $30 million? You're going to cut the Health-and-Education Levy. That's $12 0 million. You've already spent four times what you told us you're tough enough to save, four times, just in that one stroke.

You've been telling us you need more money for Hig hways; you need more money for Agriculture; you need more money for Health. Every single department we come along with practical ly, you've been telling us to spend more mone y. The only time you told us not to spend more that I can recall was in the Department of Finance -in the area of where? The area of the financing of Health and Education and of equalization. That's the area where you said, let's cut -how much? -$50,000 -wow! -out of an expenditure of $3.7 billion. That $50,000 is an investment. We've been doing that kind of spending over the years.

That's one of the reasons we got $1 15 million in special payments on equalization over a two­ year period in 1985-86 and 19 86-87 We took on the feds, and we will take them on again when they are wrong. I believe they're wrong now. I believe you believe they are wrong, on refle ction. If you want to talk about Standard and Poor's, start talking about Standard and Poor's. Don't interpret into what they say. Read their documents; their documents are clear. One of the references they make is to payments by the Federal Government. Your leader didn't make any reference to that.

At what time are we going to get some reference to reality in your statements. Of course, if we were to follow his 1 percent of expenditure reductions, which I will not do - I certainly would not recommend to the Mi nister of Finance that he would do that -that would mean less investment over time in the oil field. lt would mean no investment whatsoever in the potash industry, no investment whats oever. That would mean the next mine would be in Saska tchewan or in Jordan or in New Brunswick or wherever but not in Manitoba, because Tories don't believe in our future.

I think that is basically the shame of the tack that the Leader of the Opposition was taking. There is no vision, no belief in the future of Manitoba, no belief in the ability of our people to work together with our resources to develop a stronger , fairer soc iety. That is why you people are going to be on that side of the fence for an awful long time to come. You've lost four of the last five elections quite legitima tely, quite prop erly, and I would say it'll probably be five out of six if you continue the way you're going. MR. CHAIRMAN: The Member for Pembina. MR. D. ORCHARD: Thank you, Mr.

Chairman. lt's interesting to listen to the former Mini ster of Finance and then, after you've listened for as much as you can tolerate, you realize why he was and is the former Min ister of Finance. With his kind of guidance in this province for four years, we inh erited a $2 billion general debt which was - I think the latest figures, it more than doubl ed in his term of Finance Minis ter in four years after this province existed for 11 7 years.

The incredible thing about it is that he still laughs about his borrowing practices and his inability to run the Department of Finance and provide financial leadership in the Province of Manitoba. Mr. Chairman, these Min isters now will stand up and constantly berate the Federal Government for some reduction in the rate of increase of EPF payments and transfer payments supporting health and education.

The only person who's really told the truth on it that I've seen in print was the Minis ter of Health in a recent letter to the Manitoba Society of Seniors, wherein he said, quite legitima tely, that the Federal Government was not cutting back trans fer payments because that leaves the impression, as the Premier and the Minis ter of Finance and the past speaker just left the impression, that the Federal Government is actually reducing the number of dolla rs available, because that's what a cutback means to anybody with half a mind and a thought in their empty head, which the previous spea ker, I don't think, has.

Mr. Chairman, the Federal Government funding to the Province of Manitoba is increasing. it's not being cut back; it's increasing. And it's increasing at a rate that is going to be, by all estimates, above the inflation rate. This government and many governments across Canada, I'l l admit, are complaining to the Federal Government that this is not adequate, that this certainly is not what they would desire. I can understand that fully .

I can understand that comp letely because, if the Provincial Government's got 7 percent, 8 percent, 9 percent incr ease in transfer payments, then they wouldn't have to take a look at their own financial situation, and they wouldn't have to make some decisions as to whether they want to continue to waste money. Mr. Chairman, it's interesti ng. When the previous speaker was talking, I made a short list of what this government has achieved in the last 15 months in terms of wasteful spending of the taxpayer dolla rs.

First off the top, it has to be the Selkirk bridge, where it started out at a little over $10 million. Now it's close to $20 million. it's a $9 million waste of taxpayer money that's going into the Selkirk bridge. Do they mention that to the Federal Government, that we want our trans fer payments incr eased to health and education so we can waste more money building bridges in Selkirk? No, they don't say that. They don't want to talk to the people of Manitoba about that. This government is the same government that the former President of the MGEA accused of having some 135 apple polishers on staff.

The cost of those people is $5 million per year and, by the time you add in pension benefits and other benefits to the emplo yees, it's higher than that, and office space and staffing and other operating costs. So we could be up to $7 million on that line alone for apple polishers to try to im prove this government's image. We've got extra Min isters in now this new Cabin et. That's at least .5 million.

We've got a settlement for a wrongful dismi ssal at the Brandon University of the president, wrongfully dism issed by an ND P-appointed and directed board, wrongfully dismissed, and the settlement will be at least .5 million. We've got Manfor last year losing $35 million in the Province of Manitoba, $35 million. Now how much is this $35 million loss in Manfor? What does it represent 2139

Wednesday, 23 July, 1986 in relationship to the decrease in the rate of incr ease from federal transfer payments? it's more than what they're projecting to not receive from the Federal Government in Manfor alone. We go through MTS and MTX, $9 million, $8.5 million to be exact, invested in MTX to take on out-of-province adventurism, after having lost a minimum in MTX already of $350,000 since they'v e started, without knowing what the true accounting costs are within the Telephone System . If those were known, that loss would be a multiple of at least 10 times if true accounting costs were available to us.

They won't be available unless we get an independent auditor , the Provincial Auditor, to go in and audit the books of MTX and MTS. But that loss is definitely there, and they'r e pouring bad money after worse. They've got accounts receivable in Saudi Arabia that are very doubtful. We've got Flyer, we've just settled the Flyer fiasco, total cost over its run in the Province of Manitoba, $1 35 million. What was the cost in the last four years of NDP admin istration? Sixty million, I believe. That was their priori ty. That was where they chose to spend the money in their first four years.

That's $60 million that wasn't avai lable to health and education. But did we hear them complain about Flyer losing that kind of money? No. They kept telling us it was going to turn around and it was going to get better, the same story that we've been getting from Manfor . HON. V. SCHROEDER : I never said that. MR. D. ORCHARD: Oh, Mr. Chairman, the Min ister says that he didn't say that.

They constantly projected for the first two-and-a-half to th ree years of their term that Flyer would improve, as they said with Manfor , and all the time they were saying that the losses in both th ose Crown corpor ations escalated and escalated. Mr . Chairman, we've go t a go ve rnment th at negotia ted a salary settlement with the MGEA, the sweetheart deal with the now Member for Concordia when he was an independent representative of the Manitoba Government Empl oyees. lt was like twin brothers dealing with thems elves.

I mean we had an NDPer as the president of the MGEA dealing with an NDP Government, fattening the pockets of the MGEA, a 27 percent incr ease over a 30-month contract. This Min ister has inherited that with a no-cut con tract and with a 27 percent wage increase base, that he is now building on every single percent that's added to wages this year, is added to that 27 percent sweet heart settlement negotiated between the NDP president of the MGEA and an NDP Government. He talks about the Federal Government treating them bad ly .

They'v e treated thems elves bad ly, Madam Speaker , and that's why we've got this horrendous financial situation in the Province of Manitoba. To go on just slightly , we've got foreign exchange bor rowings, and remember, that this government in four years added $1. 9 billion to the general debt of the province - 1.9 billion. The Mi nister of Finance will co rrect me if I'm wrong, but I would say at least 90 percent of that was borr owed in the offshore markets where my colleague, the Mem ber for Morris, today ind icated that the losses last year in foreign exchange were $1 billion. Now, Mr.

Chairman, is that the kind of spending priorities and fiscal management that Standard and Poor's are looking for? No, obviously not, because they'v e reduced the credit rating of this province twice, and Moody's reduced it once, because they understand that this government has no control over their finances. They understand that this government is repres enting borrowings of increasing financial risk and that's why they're lowering the credit ratings to protect the borrowers.

This Mi nister will stand up, as the former Minis ter of Finance will stand up, every time we'r e on a credit watch and our credit rating goes down, and they will say in pious terms that we are not going to be beholden to the money lenders in New York. We are going to do what we think is best for the people of Manitoba. Therefore, we're going to go out and borrow whatever we can and we're not going to control our spending. Mr. Chairman, that works for a few years and then the whole world collapses around your financial heads and that is the danger that the NDP in the last four years have put this province in.

This Min ister of Finance is exacerbating that problem because he's doing nothing to attempt to control the financial hemorrhage in the Province of Manitoba and that is why our credit rating reduced once more. Now, Mr. Chairman, place yourself in the scenario where this government in the years 1990, 19 91, 1992, 19 93 are going out and they are going to borrow money. They're going to borrow money to cover an operating deficit which by then may we ll be up in th e neighbourhood of $600 millio n-$700 million. And do you want to know why it'll be up into that kind of a range?

Because your revenues will not be growing as fast as your expenditures. You know which expenditure will be growing the fastest of all of your expendit ures when you hit 19 90, '9 1, '92, '93 and on? It'll be your interest cha rges. Take a look at your incr ease in expenditures in your budget this year and you will find by far the greatest percentage of increase and the largest dollar volume of incr eased spending this year is to cover interest costs on your past and previous borrowings. Mr.

Chairman, when you get into that kind of a scenario and you hit the five-year period, 19 90-19 94, and you've got to refinance in the neighbourhood of $2 billion, and I say refinance, not borrow, to undertake the construction of a Hydro dam or expansion to the Telephone System or building hospitals or providing any kind of capital support in terms of hig hways or schools or office buildings -no capital expenditure - you'r e simply going out and refinancing your previous exc essive spending and borrowings.

When you hit the end of the rope in that first five years of the 19 90's, that is when the credit-rating agencies are going to say I'm afraid no more. At that point in time, Mr. Chairman, is when the people of Manitoba, least able to defend themselves economically, are going to be hurt the most. The people with the money, the people who are so much hated by New Democratic and social is t governments, the people with the mone y won't be affected when those social services are cut back because this government can no longer borrow money. lt will be the very people who they claim to champion their cause.

Those will be the disad vantaged people in 2140

Wednesday, 23 July, 1986 Manito ba who will be denied access to health care, to personal care homes, to education, to ordinary programs that they expect governments to provide for them because this government will have spent its ability in the decade of the Eighties and late Seventies . That's when this whole scenario will come crashing down around their ears, and they don' t understand it.

I don't even think, after what I've been hearing from the Minister of Finance, the new Ministe r of Finance, that he understands the gravity of the problem that Standard and Poor's is trying to point out to him and his financial department . I don't think they understand. But you better understand , because the people of Manitoba are the ones that are going to suffer when you come to the end of your borrowing rope, and it's gradually happening - three credit rate reductions within a 3.5 year span. How many more are we going to see now that we are engaging in Hydro expansion?

We're continuing to run a massive deficit. We're continuing to have to borrow to refinance the borrowings during those glor ious three terms of New Democratic Government that the previous speaker just spoke about. Bear in mind, and I've used these statistic s before, and I don't have them with me today , but if you take a look at where the fin ancial pos ition of this pro vince was as recently as 1969, you will find that we were running surplus budgets .

So that what the problem is in the Province of Manitoba is that we have successive ly elected New Democratic Party Governments and they have driven the deficit up and up and up. They have driven up the provincial debt; direct debt through government deficits, guaranteed debt through Hydro expansion and building in Hydro that was unnecessary in the Sevent ies. That's where our debt is, and we are not charging Manitobans in hydro or in telephones sufficient rates for their electricity or for the use of their telephones to pay off that debt.

So that when we come to the Nineties, we refinance that debt; we don't repay it from earnings of either of those corporations . Yet we brag about the lowest hydro rates and the lowest telephone rates . Well, of course, they're low when all you're doing is paying the operating costs of the corporations and not retiring the debt.

This year in Manitoba Telephone System alone , and the Minister responsible knows this because of this government's pre-election interference with the Telephone System's rate application before the Public Utilities Board, our debt equity ratio will increase from 82.5 percent to 84.5 percent , and it is projected to be at 86.5 percent unless there is a massive rate increase this year. Now, Mr. Chairman , I think you can understand why our telephone rates are amongst the lowest in Canada . We're not paying for the plant that we're putting in place to provide the service.

All we're doing is payin g operating costs and you can't make a compa rison to Bell Canada in Ontario with your telephone rates because Bell Canada's debt equity ratio is 50 percent , yours is 35 percent higher, you have 35 percen t more unretired debt. And you know how Bell Canada retired their debt? By charging their customers a monthl y rate that was higher. That's how they did it. So all we've been doing is foolin g the peop le of Manitoba, and the Manitoba Telephone System recognizes the p robl em and have underta ken a conscientiou s program to reduce the debt equity ratio by 1 percent per year.

They were doing that until this government and the Minister responsible interfered with their rate increase because it would not have been popular before an election to have a rate increase go before the Public Utility Board of 7 to 8 percent. Now that kind of interference, that kind of misman agement in the Finance Department, that kind of mismanagement in your spending priorities from the Selkirk bridge to the extra staff, to the extra Ministers, and on and on, is buying short-term comfort. You can get by with it for a few years, but you cannot do it forever.

Because if you could, there would not be one farmer, not one business, not one homeowner that would ever lose their farm, their business or their home because they got into financial difficulty, because all they have to do is use the NDP method of getti ng out of financial trouble by borrowing more . Now, you know, and I know, and the people of Manitoba know that no farmer can borrow his way out of tro uble. Farmers are in trouble today because they have too much debt. Businesses cannot borrow their way out of trouble . Businesses today are in tro uble because they have too high debt.

Homes have been lost to individual Manitobans because they couldn't afford the debt incurred in the mortgag e. Yet these people, these New Democrats , persist in telling the people of Manitoba , no, we don 't have to worry about a credit rat ing reduction; no, we don 't have to worry about the size of deficit; no, we can keep on borrowing ; no, we're not going to have the money lenders in New York dictate our fina ncial poli cies.

Well, they 're not telling the people the truth because the financial money markets will dictate this governmen t's policy because the financial market s will say no to you r borrowi ngs. It may not be tomorrow; it may not be next year; it may take until the 1990's , but it will happen . It happened in Philadelphia. It will happen in this province with your curren t spending patterns and you r mismanagement of the finances of this provinc e. When it happens, the people that will suffer the most are the most disadv anta ged and the lowest-income Manitobans becau se their services will be reduced the most.

Their services and support provided by the government will be cut back the most. The very people that you claim you 're protecting are the ones that are going to suffer with your continued mismanagement of the provincial economy and of the fiancial affairs of this province. Unless you understand it and come to your senses and tell the people of Manitoba the truth, we're headed for a disaster of incredible proportions . The unfortunate thing about it, Mr.

Chairman , is that many of these people who are currently making these mismanaged financial decisions will not be around because the people of Manitob a will learn the lesson and they'll get rid of them, and it will be up to us in the Progressive Conservative Govern ment to clean up the ab horrent and abysmal mess that we have been left with to deal with on behalf of the people of Manitoba.

That' s the sad part of it, but it's the truth, it's going to happen, it's simply a matter of time; and if this Minister of Finance doesn't get control of his department , get control of his colleagues' spending, it will happen sooner rather than later, Mr. Chairman. 2141

Wednesday, 23 July, 1986 MR. CHAIRMAN: The Member for Gladstone. MRS. C. OLESON: Thank you, Mr. Chairman. I just wanted to raise for a few minutes matters that have come up in my constituency over these last few weeks. I think the problem seems to be, insofar as from talking to others, fairly widespread. One of the problems I raised in the House the other day was the fund ing cheques for the Sp rucedale Indus tries at Austin, which is a sheltered workshop for mentally handicapped people and others. This is an ongoing program; it's been going for several years.

They are requir ed on the third working day of every month to submit their report for the last month's operation to the central office in Portage who, in turn, on the eighth working day of the month, send their report into the Department of Community Services. They were calling me because they were getting behind in receiving their payments. They received their April cheque in June. Now it doesn't take very much thought to figure out how hard it would be to operate a place like this when you're a couple or three months behind in receiving your funds. Their cheques were held up.

I asked the question in the House and the Min ister said that it was because -well, the gist of her answer was that because Estima tes were late and because the Session was late this year. Well, whose fault is it that the Session is late this year and the Estima tes are late this year? 1t certainly isn't the fault of the people at Sprucedale Industries. I think that this is just a little bit ridiculous. This is an ongoing program; people have to be paid for their work. I've been at that place.

They're hard working people, they're serving a need in the commu nity, and it is through a longstanding - I don't know how longstanding -but an agreement that's been going on for some time that they regularly get their payments. Now I notice that everyone else in connection with this, for instance, the civil servants, I'm sure, got paid in April, May, June and July on time. I know that we, as legislative members, certainly did.

Why are we going to pick on these people? 1t wasn 't their fault that things were late and that the government chose to ins tead of calling a Session, decided to hold an election. 1t isn't the fault of the people that need these cheques. So I don't find that that is a reasonable reason for this dela y. The Mini ster also tells me that there's a change in the program. Fine, that's great. But, in the meantime, could they not be receiving their funds, their regular funds, in the regular way with a retroactive payment later if it had to go to Cabin et and then there had to be some agreement?

That's the way other incr eases are often dealt with. I don't see any reason to make a difficult job more difficult for these people by doing this sort of thing. Surely, it didn't mean that this legislation had to pass today so that some people in these workshops could get their money. Surely, we're not down to that; we're not down to the last dime in the coffers of the province. The museum at Austin, the Western Agricultural Museum, suffered the same problem. They receive a regular grant every year.

This year they were told that they would get it early because they were in quite 2142 considerable financial difficul ty. Ins tead of getting it early, they got half of it late. Now that isn't, to me, cooperation and help in a time of difficu lty. This isn't a new grant, this has been ongoing for several years, and it's something that they expect to get. 1t isn't something new that we've just invented this spring to trouble the government with. So, all in all, I think that there needs to be some explanation of why these regular payments can't be done regularly .

I've had other calls from people in my constitu ency who have done work for the government, pre-arranged, you know, a contract of some kind. Months go by and the y don't receive their payment. We don't work that way in most fields. You have to pay up and get it done immedia tely or you get interest charged.

People in business find it very difficult to operate this way, their margins are very close as it is, and I think that perhaps this government better take a closer look at how they operate the finan ces of the province in these everyday matters, let alone the matters that we're discussing here and have been discussed this afternoon of credit rating and so forth. Wha t I'm talking about is the everyday business of government.

Can we not do it more efficiently so that people can get their payments on time and so that people don't have to wonder where their next dollar is coming from? lt's an agreement that has already been put in place. They know that they're sup posed to be getting it. In the meantime, they have to borrow money in order to finance, costing them and us, as taxpa yers, of course, more money in the long run to operate the program. Programs could be done a lot more reasonably if there was efficiency in when the payments were paid to the program.

I just thought I would put that on the record and see if maybe the Finance Mi nis ter could give us some explanation as to why this sort of grinding slowness has happened, particularly this spring, and is it all because of the timing of the Estimates? HON. E. KOSTYRA: Mr. Chairman, I don't have a specific response for the member in tho se two areas. I can just take the specific concerns as notice.

I'm not aware, other than I know the situation somewhat with respect to the Manitoba Agricultural Mu seum in Austin because there was a shift in the funding source for that from the Department of Agriculture to the Department of Cul ture, Heritage and Recr eat ion, and I would presume part of the dela y, if not all of it, would be due to that transfer of resp onsibili ty. Other than that, I don't know the explanation in terms of the othe r. In terms of general government, of payments to cont ractors, I believe there is no overall dela y, that they are being processed within the average of 35 days.

There's some departments which are not as good as others and we went through this in some detail during the review of the Department of Fiance Estimates. I will take the specific areas as notice and see if we can provide a more full explanation for the Member for Gladstone on the two areas that she raised. MR. CHAIRMAN: The Member for Morris. MR. C. MANNESS: Thank you very much, Mr. Chairman.

Wednesday, 23 July, 19 86 Mr. Chairman, I rise with a smile on my face. lt won't be there for long, but I must tell you that I felt good only for a few minutes listening to the former Mi nister of Finance. I haven't heard him speak that loudly since this Session, which tells me one thing, he misses that portfolio. Mr. Chairman, his love is in Finance, and that's so obvious. Part of the reason, I'm sure, is the speech he gave today was the same one he's given for the last five years, Mr. Chairman.

So I can see why, when you have something rehearsed and you can talk about, in his view, the days when migration net was flowing out, and now, in his mind, it's coming back, you can use those arguments, Mr. Chairman, and you've got control of them, you love to put them on the record. So I must tell you I enjoyed the manner in which the former Min ister of Finance deliv ered his pres entation. How ever, Mr. Chairman, I must tell you, from that point on, I must confess, the same numbers of things that the former Min ister has been putting on the record for years now still concern me. Mr.

Chairman, the former Min ister talked about the deficit in Saskatchewan and Alberta as if by comparison we can use as logic as to where we stand fiscally within this province if we simply go out and compa re ourselves to other provinces, then all is wel l. lt's as if the Min ister is saying, Mr. Chairman, that should calm every concern within your mind, that should calm the waters. Mr. Chairman, is that what we've come to in this nation, where one province will continue to incr ease spending, incr ease deficits, and feel comfortable and safe in doing so as long as other provinces have done that? Mr.

Chairman, I can't accept that type of argument Hopeful ly, some day that Min ister and maybe this present Min ister of Finance will tell us how it is and why it is that in their minds as long as we, as the Province of Manitoba, fall somewhere in the mid-section of the ranks of all the other provinces in various standings that we then are in a state of relative health, fiscally speaking. Mr. Chairman, I can't accept that To me, the issue is too serious. At times though, I must confess, Mr. Chairman, I wonder if members opposite, if membe rs of the media, really understand the seriousness of the situation. Or, Mr.

Chairman, am I lacking some understanding? I ask myself that question. Is there something that I don't understanding about government funding that allows me to come to a wrong conclusion? Because there's something terribly disturbing in the present plight, in the present fiscal stan di ng of the province, Mr. Chairman.

The former Min ister of Finance talks about transfer payments, and today you were in the Hous e when you saw the questions being directed towards the Premier and to the Min ister of Finance, and thr ee-quarters of the way th rough th ose qu estions you ha d some reference to transfer payments, and then you had a back bencher th ere ask the qu estion as to what Standard and Poor's had to say with respect to the area of, in his words, reduced federal support. Mr. Chairman, every time we try to bring forward any consideration, any discussion on this issue, members opposite deflect the issue into transfer payments.

Well, Mr. Chairman, I have to tell you, I am concerned also about not only transfer payments but the state of the health of the Federal Government Mr. Chairman, isn't that what is, in essence, happening here? Do the members opposite care or do they realize that we're the same taxpayer? Do they realize that if, federal ly, 25 percent, 28 percent of all the tax revenue collected is channelled into servicing national debt, that it im pacts upon each and every one of us? 1t hur ts the services that we so desperately cherish?

Don't the membe rs realize that it's the same taxpayer that funds both federal and provincial concerns and responsibilities? I don't think they understand that, Mr. Chairman; and if they don't and if they have a different understanding, I wish they would share it with me because I want to understand better their logic, if it's there, because that's where we disagr ee. This is where we dis agree. I have the Federal Mi nister of Health, he's written two letters to the Free Press over the last week, one of them dealing with the total area of transfers, one specifically dealing with educational matters, Mr.

Chairman, and the Min ister of Education says that they were both misleading articles. Mr. Chairman, I know that we disagree on these tax transfer points. I understand; that's where basically we disag ree. And yet, Mr. Chairman, when the Federal Government is saying to the Provincial Government, acknowledge the fact that when we've turned over these transfer points to you that that has reduced our ability to tax and ther efore it's to your benefit; no dif ferently, Mr.

Chairman, than if you look at the tax form that you and I fill out today, you will see under the marginal rates, 2.2 percent out of our 54 percent, 2.2 of it to go to the municipalities, no different; the Provincial Government asking the filer of income tax to recogniz e that out of that 54 percent, 2.2 of it goes back to the municipal and the junior level of government So, Mr. Chairman, I don't expect that we'll ever agree, the Federal Government and this government, as to the level of federal support That's why, over the ensuing days and weeks, Mr.

Chairman, you'r e not going to hear me say an awful lot more about that issue. I'm not confused, but I can tell you, you can argue any side of the argument that you wish. Mr. Chairman, I want to put that on the reco rd, but I also want to take issue with the former Min ister of Finance when he says that we're not critical of our Federal Government, that we sit here and apologize on their behalf. Nothing is further from the truth, Mr. Chairman.

I can tell you, if the Min isters opposite can show to me where the Federal Government is pumping in millions of dollars in road building and bridge building, I will be critical and I'll say so for the record right today, and I'll be as critical of that as they are because you'r e right; when I look at the transfer side and I see a Federal Government trying to deal with a deficit, an accumulated debt around $250 billion, and yet I see on one hand that they're prepared within the area of Education and Health to reduce the level of incr eases to a point where it reflects inflation, that within that area of spending that the reductions will be the least, then I have to say well at least their priority is correct.

All other areas, Mr. Chairman, all areas of federal expenditur es are being reduced more significantly and the members opposite are aware of that. But yet if they can point out where the Federal Goverment is taking millions and directing it in an unfair fashion to 2143

Wednesday, 23 July, 1986 other provinces in support of infrastructure like roads, in a manner that they're not doing within this province, Mr. Chairman, I will share in that criticism, and I'll be with them. So when they provide that specific documentation let the records show, Mr. Chairman, that I, too, will be critical. But we're talking here about a much broader issue. The Min ister talks about equaliza tion, Mr. Chairman. We know why our equalization payments have dropped some what this past year.

Ther e are many other provinces in this nation that obviou sly, by way of the formula, are suffering worse than we are. So, Mr. Chairman, they're in greater need. Isn't it obvious, if they're in greater need, and if we're sharing in some sense through that formula, that we will receive less. Yet, the former Mi nister of Finance, who I think, who I believe understands that, refuses, Mr. Chairman, to acknowledge that fact. I think it's very important, how ever, that he do so. Mr. Chairman, a lot has been said about the debt of this province.

I tell you I take no satisfaction, I take no solace from the fact that maybe we're only half as bad, not half as bad, but that we're only the fifth worst amongst ten provinces. By my records, we're the ninth worst, Mr. Chairman. But the point is, I think it's incum bent upon me, Mr. Chairman, to lay on the record how our debt has accumu lated over the last 15 years. I hope the Min ister of Finance will listen to this. Mr. Chairman, the former Min ister of Finance stood here and told us what the Roblin government did for Manitoba.

I can tell you nobody takes greater pride in those achievements than members on this side. Those of us that come from the rural areas are well aware, Mr. Chairman, are well aware of the major changes in inf rastructure in this province that occurred during that period of government. Today, Mr. Chairman, we have the vestiges of a road system that was once the envy of all rural Canada. lt was horrible before 1959, Mr.

Ch airman, '58 -59, but a government made a commitment to those of us from rural areas to improve and to gi ve us some opportunity to drive from community to communi ty, indeed to a larger centre within this province. Mr. Chairman, tha t Roblin government also consolidated schools and, for once, and I dare say for the only time in his tory of this province, allowed quality of education in the rural areas to come somewhat parallel, somewhat to a position of being similar to that which exists within the City of Winnipeg. I could go on and on, Mr. Chairman. Yes, there was some borrowed money involved.

But how much, Mr. Chairman, 1968, 19 69 that government, the Roblin years left under the leadership of Mr. Weir, former Premier Weir left, and it left this province with a debt of $988 million, Mr. Chairman, that was in 19 69. That's net, Mr. Chairman, net of sinking funds. What happened through the Schreyer years.

Well the members opposite will say it was a western world phenomenon; that's when the economists took hold; that's when the Keynesians came forward and they said: "Borrow today because you can employ people, you can employ people today." Of course, what the Keynesians or the neo-Keynesians wouldn't subscribe to was that part of Keyne's theory that said: "But when times change around save some money, try and reduce that debt." Mr. Chairman, for the record, the debt in 19 70 moved marginally up to 1. 06 billion. 2144 In 19 71, Mr. Chairman, all of a sudden it doubled, it went to 2.28.

Who was the government in that year, Mr. Chairman? Well, we're well aware of that. But, Mr. Chairman, some of that was very short-term funding because the net debt the year after that dropped; it dropped in 19 72 back to 1. 32, Mr. Chairman, it was short funding. The economy was producing well and we know well that in the first five years of the Sch reyer term the economy was booming, Mr. Chairman, and most of it on its own. Then when this government became involved in the Hydro projects up north, that just fired it up and fueled it up even more so.

So the debt decreased -1973 marginal increase up to 1. 54 billion, Mr. Chairman, 1974 net debt again 1. 8. I know we were borrowing for the purposes of Hydro, Mr. Chairman, I'm well aware of it. 19 75 it went to 2.15 ; 19 76 here, Mr. Chairman, .5 billion incr ease in one year from 19 75 to 19 76, and that total at year-end was 2.65 -.5 billion increase between 19 75 and 19 76. Mr. Chairman, we used that to political expedienc y. I know, I wasn't in the House then but I know my former colleagues told the government of that time, be careful, be sure you know what you're doing.

But the members opposite said it's going into long-run investment; it's going into Hydro, and how can you ever be critical the directions of funds to that source. Mr. Chairman, to go on, it didn't stop there though. In 19 77 all of a sudden that 2.65 billion became 3.23. So there it was, Mr. Chairman, the Sch reyer years. lt moved from 988 million to 3.2 billion. Mr. Chairman, I think and a Conservative Government came into power partly, and were given a mandate by the people of this province to begin to work away, do what they could to reduce that deficit. Well that didn't happen, Mr. Chairman.

I want to tell you though about the numbers. 19 78 the first full year of the Lyon government, the debt jumped to 3.6 billion, from 3.23 to 3.6; 1979 it moved to 3.94 billion. But, Mr. Chairman, finally after two years, that's how long it takes, Mr. Chairman, that's how long it takes, but the next two years 1980 and 19 81 tho se figur es moved from 3.94 to 4.00; and for 19 81 it totalled 4.12 5 billion. Mr. Chairman, in four years the Cons ervative admin istration had increased .5 billion.

So we turned over the reins of government in 19 81 and the province then had a deficit, accumulated deficit, net of 4.125 billion. Well, Mr. Chairman, what's happened since. I honestly believe that we turned the government over to the members, that we had spending somewhat under control. The members opposite of course said that those are the times of protracted restraint. That's the time that people were being driven out of this province, Mr. Chairman, and they had all those economic indicators at their hands to prove that, at least to the electorate in their mind. Mr .

Chairman, do you know what's happened in five budgets from that 4.25 debt that was given to this government under the leadership of the Member for Selkirk. Do you know what it is today, Mr. Chairman? Today, as of March 1, 19 86, five years later, five budgets later, Mr. Chairman, it's 7.3 billion. Mr. Chairman, we know it'll be close to a billion more in March, 19 87. Mr. Chairman, that's why some of us are si ncere when we're asking the Min ister of Finance if he can tell us what plan he has in pla ce, what long-run plan

Wednesday, 23 July, 1986 he has that will allow him to convince us that there will be revenues in place to meet the orderly servicing, and the orderly wind-down of a large portion of this indebtedness. Mr. Chairman, it can't go on. The Minister can talk about what Standard and Poor 's had to say about how it was that our problem was somehow related to transfer payments. Mr. Chairman, he can tell us, as the former Minister of Finance did, that our province spends the seventh least per capita but when one looks at the issue, you realize that we don't know where we're going . We have no idea .

I think and I hope that the Minister will now stand and tell us how it is, where this debt figure is going to be in three or four years. Mr. Chairman, we are directing this year $380 million to servicing the debt in the form of intere st. I know , even though interest rates are dimi nishing , that we are going to be directing that figure next year also to interest. Mr. Chairman, I know my time is almost up. I'll rise again and ask the Minister some specific questions but I hope he'll take this opportunity to once again tell me where the province is headed beca use, in my view, it's head ed to fiscal suicide.

There's no other word for it, Mr. Chairman. None of my understanding associated with macro-economics gives me any confidence that the government knows where it's going. Mr. Chairman , I can tell you, my family has been here for four generations and my children 's children will be here and it's for their sake that I want to know. MR. CHAIRMAN: The Member for Arthur. MR. J. DOWNEY: Mr. Chai rman , I rise to put a few comments on the record because I think that we have reached a time in our province where ,