Manitoba Hansard — 31 May 1994 (Sitting 37, 35th Legislature, 5th Session)

35-5-37

Manitoba — Debates (Hansard)

Fifth Session • Thirty-Fifth Legislature of the Legislative Assembly of Manitoba DEBATES and PROCEEDINGS (Hansard) Published under the authority of The Honourable Denis C. Rocan Speaker Vol. XLin No •. 37 • 1:30 p.m., Tuesday, May 31, 1994 ISSN 0542-S492

NAME ASHI'ON, Steve BARRE'IT, Becky CARSTAIRS, Sharon CBR1LLI, Marianne CHOMIAK, Dave CUMMIN GS, Glen, Hon. DACQUAY, Louise DBRKACH, Leonard, Hon. DEWAR, Gregocy OOER,G&I)' DOWNEY, James, Hon. DRlEDGER, Albert, Hon. DUCHARME, Gerry, Hon. EDWARDS, Paul ENN S, Harry, Hon. ERNST, TlDl, Hon. EVANS,Clif EVANS, Leonard S. FILMON, G&l)', Hon. FINDLAY, Glen, Hon.

FRIESEN, Jean MANITOBA LEGISLATIVE ASSEMBLY Thirty-Fifth Legislature Members, Constituenc:les and PoUtical AtllUa tion CONSTITUENCY Thompson Wellington River Heights Radisson Kildonan Ste.Rose Seine River Roblin -Russell Selkhk Concordia Arthur- Virden Steinbach Riel SLJames Lskeside Charleswood Interlake Brandon East Tuxedo Springfield Wolseley GAUDRY, Neil GDLESHAMMER, Harold, Hon. GRAY, Avis St. Boniface Minnedosa Crescentwood Gimli HBLWER, Edward R. lflCKES, George KOWALSKI, G&l)' LAMOUREUX, Kevin LATin.. IN, Oscar LAURENDEAU, �el MACKINTOSH, Gonl MALOWAY,TlDl MANNPS S, Clayton, Hon.

MARTINDALE, Doug McALPINE, Gerry McCORMICK, Norma McCRAE, James, Hon. MciNTOSH, Linda. Hon. MITCHELSON, Bonnie, Hon. ORCHARD, Donald, Hon. PALLISTER, Brian PENNER, Jack PLOHMAN, John PRAZNIK. Dlllt'en, Hon. REID. D&l)'l REIMER, Jack RENDER, Shirley ROBINSON, Eric ROCAN, Denis, Hon. ROSE, Bob SANTOS, Conrad SCHELLENBERG, Harry STEFANSON, Eric, Hon. STORIE, Jeny SVEINSON, Ben VODREY, Rosem&l)', Hon.

WOWCHUK, Rosann Point Douglas The Maples Inkster The Pas SLNorbert SL Johns Elmwood Morris Bwrow s Sturgeon Creek Osborne Brandon West Assiniboia River East Pembina Portage Ia Prairie Emerson Dauphin Lac du Bonnet Tranacona Niakwa St. Vital Rupertsland Gladstone Turtle Mountain Broadway Rossmere Kirkfield Palk FlinFlon La Verendrye Fort Garry Swan River PARTY. NDP NDP Liberal NDP NDP PC PC PC NDP NDP PC PC PC Liberal PC PC NDP NDP PC PC NDP Liberal PC Liberal PC NDP Liberal Liberal NDP PC NDP NDP PC NDP PC Liberal PC PC PC PC PC PC NDP PC NDP PC PC NDP PC PC NDP NDP PC NDP PC PC NDP

2721 LEGISLATIVE ASSEMBLY OF MANITOBA Tuesday, May 31, 1994 The House met at 1:30 p.m. PRAYERS ROUTINE PROCEEDINGS PRESENTING REPORTS BY STANDING AND SPECIAL COMMITTEES Committee of Supply Mrs. Louise Dac quay (Chairperson of Committees): Mr. Speaker, the Com mittee of Supply has adopted certain resolutions, directs me to report the same and asks leave to sit again. I move, seconded by the honourable member for La Verendrye (Mr. Sveinson), that the report of the committee be received. Motiou agreed to. TABLING OF REPORTS Bo n. Harold Gilleshammer (Minister of Culture, Heritage and Citizenship) : Mr.

Speaker, I am pleased to table the Supplementary In for ma tion for Le gisl ative Review of the Department of Culture, Heritage and Citizenship. Bon. Darren Praznik (Minister of Labour): Mr. Speaker, I would like to table today the Sup plementary Info rma tion for Leg islative Review of the 1994-95 Departmental Expenditure Estimates of the Department of Labour. Bon. Albert Driedger (Minister of Natural Resources): Mr. Speaker, I would like to table the Supplementary Estimates for the Departme nt of Natural Resources for the year 1994-95. Bon.

Eric Stefanson (Minister charged with the administration of The Crown Corporations Public Review and Accountability Act): Mr. Spe aker, I am pleased to table the 1993 Annual Report for the Crown Corporations Council. INTRODUCTION OF BU..LS Bill 301- The Misericordia General Hospital Incorporation Amendment Act Mr. Marcel Laurendeau (St. Norbert): Mr. Speaker, I move, seconded by the honourable member for Niakwa (Mr.

Reimer), that leave be given to introduce Bill 30 1, The Misericordia General Hospital lncOJ:poration Amendment Act, Loi modifiant la Loi constituant en corporation le "Misericordia General Hospital," and that the same be now received and read for the first time. Motion agreed to. Introduction of Guests Mr. Speaker: Prior to Oral Questions, may I direct the attention of honourable members to the gallery, where we have with us this afternoon from the Royal School twenty-one Grade 5 students under the direction of Mrs. James. This school is located in the constituency of the honourable First Minister (Mr. Filmon).

Also this afternoon, from the Roseau Valley School, we have twenty-four Grades 2 and 3 students under the direction of Ms. Moya Geddes and Ms. Wendy Newman. This school is located in the constituency of the honourable member for Emerson (Mr. Penner). From the Leaf Rapids Educational Centre, we have twenty-three Grade 8 students under the direction of Mrs. Carol Bowman. This school is located in the constituency of the honourable member for F1in Flon (Mr. Storie). On behalf of all honourable members, I would like to welcome you here this afternoon. • (13 35)

2722 LEGISLAllVE ASSEMBLY OF MANITOBA May 31, 1994 ORAL QUESTION PERIOD Motor Coach Industries Acquisition Mr. Gary Doer (Leader of the Opposition): My question is to the Premier. Mr. Speaker, on May 18, the Motor Coach Industries comp any was acquired by a rival company, Grupo Dina from Mexico, a company that has over $900 million in sales U.S., compared to Motor Coach Industrie s, some $453 million sales U.S. Worke rs, about 1,700 workers at the plant, are very concerned, Mr. Speaker. We have talked to a fe w of them about this acquisition.

They are concerned that the cost of producing buses in Mexico is about $6 per hour. In the United States, it is about $30 per hour. In Canada, it is under $20 an hour, and now, with the Mulrone y NAFI'A agreement proclaimed by the Liberals, they are very concerned about their jobs-[inteJjection] If you were a worker at the plant, you would be worried right now yourself. I would just like to ask the government a question. Have they contacted the new parent company, Mr. Speaker, and have they received any guarantees about the existing jobs and workforce here in the city of Winnipeg and in the province of Manitoba?

Bon. Gary Filmon (Premier): Mr. Speaker, I can confinn that our Department of Industry, Trade and Tourism has had extensive discussions and briefings from the local management of the firm. As the member probably knows, employment at Motor Coach curre ntly stands at 1,615, which is a 13-year high. They have a very full order book, and they also have been showing, as I understand it, a very profitable operation as a result of many things that have happened over recent years.

In that respect, the local management is very conf ident that they continue to be the best alternative for bus pro duction even within the la rger comp any , that they have a ver y cost-eff ective , very efficient plant that is going to ensure that the work remains here and that the operations remain here with a very substantial workforce. I did hear the discussion that took place and the concerns expressed on the radio by the Leader of the Opp osition (Mr. Doer) and the Leader of the Liberal Party (Mr.

Edwards ), and just to absolutely verify the inf ormation, we will certainly be in contact with the parent company and request their assurances and requ es t their support for continuance of the company 's operations here. •

(1340) Western Diversification Funds Mr. Gary Doer (Leader of the Opposition): Mr. Speaker, I would encourage the Premier to contact the parent company. I think it is important I know local management fe els confident, and they are at a peak of their employment, but the workers at the plant are very conce rned, as you would expect, with the diff erent labour costs. They do fe el they produce a good prod uct, but they are very worried today about the developments with the purchase of this company. I have a further question.

When the government is contacting the parent company, the Premier will know that the Western Diversification grant and a provincial government grant to MCI in 1992 produced an investment of some $36 million, $10 million from the public sector and $26 million from the company here in Winnipe g. Will the Premier be contacting the parent company about the status of that investment in the new bus production here in Manitoba and the status of provincial government money and fe deral government money under Western Diversification being invested wisely in the Motor Coach Industries plant here in Winnipe g? Bon.

Gary Fdmon (Premier): Mr. Speaker, one of the issues that, you know, results in the knee -jerk re action that the Leader of the Opposition is perpetrating here is one in which the focus is made on the costs of labour. The company management informs us that labour is only 8 percent of the entire costs of the production th ere, so he should not, I think, fuel either speculation or

May31, 1994 LEGISLATIVE ASSEMBLY OF MANITOBA 2723 fear on the part of workers that this is in any way a ma jor factor in the costs of production. It is all of the other costs of production that, of course, are far more important. Obviously, the other 92 percent of the costs are far more important than the 8 percent that is the labour component, and I think be should be aware of that when be makes these kinds of judgments. With respect to the money that has been put towards the ex pansion that has resulted in the all-time record levels of employment that are there, Mr.

Speaker, my understanding is that, of the $5 million that has been committed by the provincial government, at this point, a small part of that has been flowed. I believe it is $1.3 mill ion. There has not been a flowing of the entire $5 million by any stretch, and it is based, of course , on them meeting certain targets and obligations, all of which they have met to this poinL That will indeed be part of the entire briefing that we get and that we discuss with the company . Mr. Doer: Mr.

Speaker, the Premier will note that Mercedes located a new bus plant in Mexico just recently, after the NAFrA ratification, so that concern comes from the worlters, and I would ask the Premier to follow that up. Atomic Energy of Canada Ltd. Layoffs Mr. Gary Doer (Leader of the Opposition): Mr. Speaker, on a related job quest ion, a supplementary jobs question, yesterday , we asked questions about the job situation at Bristol, and today we beard about AECL in tenns of potential la yoffs.

I was absolutely shocked today to bear that a minister in the government was criticizing the provincial governm ent for the loss of jobs at Bristol and AECL, partly due to the provincial government. Usually , political parties of all stripe s work together to get jobs for a certain provin ce. They do not blam e each other when jobs are lost. I would like to ask the Premier (Mr. Ftlmon): The concer n is that a cer tain amount of responsibility rests with the Filmon government for the layoffs at AECL and Bristol Aerospa ce.

I would ask the Premier, what blame does be accept responsibility for, for the layoffs of those jobs at those plants? Bon. James Downey (Minister of Industry, Trade and Tourism): Mr. Speak er, I think it is extremely unfortunate that we are not able to work productively with the fed eral governmenL In fact, the member fo r Portage-Interlake has made the comm ents be bas made as it relates particularly to AECL and Bristol when, in fact, the decisions they made as a fed eral government are the direct results we are seeing here in Manitob a.

For examp le, this province supported AECL and the community by cost-sh aring $25 ,000 of a $50, 000 study to see bow we could expand AECL. The fed eral government did not put one nickel into iL Atomic Energy of Canada Ltd. Layoffs Mr. Jen-y Storie (F1in Flon): Mr. Speaker, I may not be in quite as magnan imous a mood as my Leader. Mr. Speaker, approximately a year ago, I raised the question of MCI's stability because of the prospective purchase of MCI, and today , we are now aware that the First Minister (Mr. Filmon) is concerned.

My question to the First Minister or the Minister of Ind ustry, Trade and Tourism is, did Dr. Jon Gerard, the minister of science, research and development contact the provincial government? Has be contacted the provincial government, the First Minister or anyone else to outline bow these cutbacks are going to affect AECL, the people at Pinawa and the hundreds of people who rely on AECL for employment in that constituency? •

(1345) Bon. James Downey (Minister of Industry, Trade and Tourism): lfl understand the question correctly, Mr. Speaker, it is what communication bas there been by Mr. Gerard, the federal Liberal member as it relates to that . I am not aware of any calls or any contacts directly with the community , directly with the government, to find out what may , in fac t, be done

2724 LEGISLATIVE ASSEMBLY OF MANITOBA May 31, 1994 or to give us any inf ormat ion, and I am dis app ointed in that. Mr. Storie: Mr. Speaker, given the fact that some 600 people stand to lose their jobs across Canada , can the First Minister (Mr. Filmon) indicate how many of those jobs are likely to fall out as a result of the cutbacks at AECL in Pinawa? How many people are going to be affe cted, and how many millions of dollars in wealth is this economy going to lose as a result of the cuts? Bon. Darren Praznik (Minister of Labour): Mr.

Speaker, I must say to the member for F1in Flon that no notice was provided to me as local MLA or to ministers of this govermnent until after the fact. In fac t, it was people from the community who wer e co ntacting us yest erday to relay the infonn ation. But how badly this is organized, Mr. Speaker, is that nobody knows, quite frankly, what positions are going to be aff ected, and what the fe deral anno unce men t made ye sterday did was to basically leave most people in the communities aff ected, or those which have AECL facili ties, not knowing who is affected. It is an absolute mess, Mr.

Speaker, and it is shameful the way it was carri ed on, in my op inion, by the Govermnent of Canada . Mr. Storie: Mr. Speaker, with all due respect to the response from the First Minister (Mr. Filmon) and the member for Lac du Bonnet (Mr. Pramik), these charges that Dr. Gerard has laid out cannot be completely without fo undation. They have been said by members opposite , the fonner member for Portage Ia Prairie. I and others in the business community have made the same allegations about the lack of a proactive response on the part of this government. My question is, when is the First Minister (Mr.

Film on) going to take it upon himself to correct the in activity, the lac k of direction from the government that perhaps caused some of these layof fs to occur in Manitoba, as well as many others in the aerospace industry and other industries in the province? Mr. Pramik: Mr. Speaker, as a minister of this government who has been working with AECL for a long period of time, along with my colleague the Minister of Industry (Mr. Downey) and with the Premier (Mr.

Filmon), I can tell you that we have ma de on man y occasions suggestions and comme nts about some of the fu ndamental problems that AECL is experiencing in getting itself together to be a company that can survive into the future. I regret to say that, despite the assist ance of a local member of Parliament there , very little has been taken up by the fe deral administration in making some of the key changes that they have to. I have said this publicly before , and I say this here today .

They have some fundamental problems in their senior management that they have yet to addre ss, and we as a province have been very willing to work with them on a host of things, but they, quite frankly, cannot get their act together at the senior level. Until they do that, we are going to have very serious problems with that particular company. Manitoba Telephone System Layoffs Mr. Paul Edwards (Leader of the Second Opposition): Mr.

Speaker, a few weeks ago, the government announced throu gh the Manitoba Telephone System that 200 individu als would be laid off-somewhat like the AECL layoffs that my friend is speaking about-over a period of time, no naming of who that would be, sometime over the next nine months. Now, Mr.

Speaker, since that time, there has been a petition filed with over some 200, 220 names on it with respect to one of the unions coming forward and specifically asking that union to hold a vote, a secret ballot, amongst all of the members of that union to detennine whether or not, in fa ct, those union members are prepared to take the 10 days off, rather than face the layoff s. That is the equation and the trade -off that this government put forward at that time. The union has rej ected that. It bas not seen fit to allow that.

My que stion for the Minister responsible for Manitoba Telephone System: Will he, in order to ensure that there is an ac curate reading on what the members of that union want, solicit the views in a

May 31, 1994 LEGISLATIVE ASSEMBLY OF MANITOBA 2725 proper fashion of those members with respect to that very fundamental question which is going to have serious impacts on whether or not 200 people have jobs or not? • (13 50) Ron. Darren Pramik (Minister of Labour): Mr. Speaker, the Leader of the Liberal Party, who one would think would have a better understanding of labour relations than he has exhibited here today , is asking the government to interfere in what is in essence an internal union matte r. They have to determine as a union how they make a decision.

That was one of the reasons why, in fa ct, this government brought in Bill 22 and provided the mechanism to have that imposed if a union would not be co- operative. Now, the situation is such that they are not within our jmisdic tion. So the question that the member poses about whether or not the members of a particular union, quite fran kly, should have the opportunity to decide must be answered by the leadership of the union who must bear the responsibility for that decision. Mr. Edwards: Suffice it to say, Mr. Speaker, that the minister and I obviously have a disa gree ment as to the extent of what he can do.

But leaving that aside , my further question for the minister: Given his comments, has he spoken to the unions involved and specifically asked them to have that secret ballot vote to indicate whether or not the members of that union, the workers, want to accept the 10 days off in lieu of the layoffs, because there appears to be overwhelming support to have that vote taken. As well, there are serious allega tions in the petition that the initial decision wa s made by somewhere around 300 to 400 people. They are saying it was not an accurate reading of what they wanted.

All they are asking for is a chance to have their views known. Has the minister spoken to the union leadership about those concerns? Bon. Glen Findlay (Minister responsible for the administration of The Manitoba Telephone Act): Mr. Speaker, the Minister of Labour (Mr. Praznik) has made it very clear. 1be dispute is between the membership of the union and their leader ship.

I can assure the member that the executive and the boar d members of MTS have been in discussion with the union leaders, have had several meetings, and we all want everybody who has the right to vote to have the opportunity to express their opinion through a secret ballot. I wish they would get on with it. Mr. Edwards: Mr. Speaker, this petition has just gone to that union at the end of last week. I would ask the minister to clarify his comments just now.

Has he, in fact, since that petition came fo rward with over 200 names on it, spoken to the union leadership and exp ressed those very views, that the government would like to see an accurate reflection by secret ballot of what the workers want? Mr. Findlay: Mr. Speaker, the spokesperson in a Crown corporation for the minister in these kinds of matters is the executive of that Crown and the board of that Crown, and they are in constant and continuous negotiations and discussion. If the member wants my feelin gs, I have just given them in the answer to his second question. Medical Research Funding Mr.

Dave Chomiak (Kildonan): Mr. Speaker, the fe deral minister of science and technology made some rather strong comments today respecting health funding. The fe deral minister said and I quote : The basic provincial funding for medi cal research is drastically underfunded in Manitoba, and the result is that Manitoba did very poorly on the national funding to the Medical Resea rch Council in the last competition. Mr.

Speaker, my question to the minister: Does the minister agree with the statements of the fe deral minister that medical research funding is underfunded in Manitoba, and, as a result, we have received less money from the fed eral government? Bon. James McCrae (Minister of Health) : Whether it be for research or delivery of program in the area of health or a number of other areas, Mr.

2726 LEGISLATIVE ASSEMBLY OF MANITOBA May 31, 1994 Speaker, it bas been a subject of ongoing concern for seve ral years here in Manitoba about the contribution that comes our way from the federal government. We recognize that federal governments have sign ificant chall enges, including the presen t fe deral government. I will use all my efforts to make sure that Manitoba gets its fair share of the pie , whatever size the pie happens to be. Mr. Chomiak: Mr. Speaker, can the minister explain why fu nding to the Manitoba Health Research Council, provincial funding, has gone down by $200, 000 from two years ago? Mr.

McCrae: I will make some investigations on this point It is a question the honourable member could have raised when we bad staff here at the time of the examination of the Estimates, but there are a lot of issues in Estimates and only so much time , and I understand that. I will make some inquiries and make some inf ormation available to the honourable member. •

(1355) Mr. Chomiak: Mr. Speaker, will the minister today promise this House that be will take definitive steps to secure additional funding from the federal government, so that next year at this time, we will not have a federal cabinet minister coming into Manitoba and saying, you have not devoted enough to medical research and therefore you are not getting money from Ottawa? Mr. McCrae: Mr. Speaker, I think there were those who thought that with 12 members of Parliament out of 14 represe nted on the governmen t side in Ottawa, Manitoba would be the benefic iary of maybe a better deal than we seem to be getting .

Ye s, indeed, I will move at every possible opportunity to make Manitoba' s point with Ottawa. It is basically the case we make itself that is going to be very important, but bow well we make it is also going to be very important when it comes to political terms . North American Free Trade Agreement Impact on Canadian Wheat Board Ms. Rosano Wowchuk (Swan River) : Mr.

Spea ker, the Canadian Wheat Bo ard was established to assist grain produ cers in selling their product in world mlllkets and in getting a fair price for farm ers and bas been very successf ul in ensuring adequate returns for producers and a fair price for consum ers. However, the Canadian Wheat Board's success is the reason the Americans are now attacking it and want to see the Canadians follow their exam ple of a less efficient private market system . They are using the Fre e Trade Agreement and NAFT A to attack the Canadian Wheat Board.

I want to ask the Minister of Agriculture if be will explain to this House and to agriculture producers across the province why be and his governmen t supported NAFT A and free trade when it was clear, even in the early days of the agreement, that the deal was only going to foster disputes and threats to crucial institutes such as the Canadian Wheat Board and marketing boards . Bon. Harry Enos (Minister of Agriculture): Since the signing of the se agreements with our biggest trading partner, Manitoba's exports to the United States have risen some 44 percent.

More specifically, the agricultural component of these exports has risen some 58 percent. Mr. Speaker, Manitoba farmers and particularly the grain producers would be in a very serious situation right now if we would not have bad that mcuket that allowed us to move an extraordinary amount of grain into the American market, which by the way, has brought about the current situation that is being expressed by the American Secretary of Agriculture, Mr. Espy. I am satisfied, Mr.

Speaker, that the international commission that was in Winnipeg just a few weeks ago bas taken a calm and deliberate look at our trading practi ces and will come to the same conclusion that was arrived at the last time Americans looked seriously at our marketing and the Canadian Wheat Board and found it in order and not constituting an unfair trading pract ice.

May 31, 1994 LEGISLATIVE ASSEMBLY OF MANITOBA 2727 Ms. Wowchuk: Mr. Spe aker, I would ask the minister to admit that part of the reason for the incre ased trade is the change in the do llar value. This government has to recognize that the U.S. government is using the Free Trade Agree ment to attack the Canadian Wheat Board, which is a very important institution for Canadian fanners. I want to ask the minister what steps be will take to ensure that the Wheat Board is protected Will be contact the federal minister of agriculture and trade and urge him to take a tough stand to protect the Canadian Wheat Board and ensure that it is there to serve Canadian farmers as it has done for many years? •

(1400) Mr. Eons: Mr. Spe a ker, responding to the member for Swan River, first of all, let me say that having had the priv ilege of having several meetings with our new federal Minister of Agriculture, the Honourable Mr. Goodal e, I am satisfied that be is, in fa ct, acting on behalf of the farmers of Manitoba and indeed western fanners and grain farmers in particular in a very strong defence that be bas publicly and privately stated with respect to the curre nt trade harassm ent by the Americans. Mr.

Speaker, what the honourable member I think should understand is, what we are witnessing here is an American administration led by President Clinton trying to pay off some political debts, as they do in American hardball politics.

When be needed the NAFTA agreement signed through the American House of Congress, be was looking for specific votes , and be got those votes from the wheat states, Montana, North Dakota and South Dakota, on the promise that be would do precisely what be is doing now, that be would review the Canadian grain industries because of the su ccess that we were having in penetrating the American marlret. American millers, American processors of pasta and other products , they are busy down there in Washington right now telling the American admini stration, do not bother the Canadians too much about their wheat.

California senators are in Washington right now saying, do not bother the Canadians too much about their wheat because we want to send them our concentrated orange juice; we want to send them our vegetable produ ce, our lettuce; we want to send them our California wine. Mr. Speaker, this is all being played out on a stage of politics in the States. I am satisfied that the Wheat Board is in no jeopardy. Ms. Wowchuk: Mr. Speaker, the minister bas admitted that this is tied in to NAFI' A. I want to assure the minister that we all want trade, but we want fairness, as well.

Given that supply ma nagement bas always protected producers and commodity markets have fluctuated, will the minister guarantee Manitoba producers that be will speak to the fe deral minister of tra de, who is negotiating very weakly, and encourage him not to cave in to the pressu res of the U.S. government and ensure that be will not allow a trade-off between the marketing boards and the Canadian Wheat Board? Will be encourage the federal minister of trade to stand up and put up a good fight for Canadian farm ers? Mr. Eons: Mr.

Speaker, on the road to Damascus , many conversions have taken place, both in the distant past and in the not-too-distant past. The most recent one was our Prime Minister, the Honourable Prime Minister Chretien, and the entire Liberal Party with respect to NAFI'A. I will do the honourable members of the New Democratic Party a favour. You will also make that conversion if you are ever placed in autho rity to have to face that issue. So save yourself the trouble. Acknow ledge that trade means jobs.

Jobs are important to all of us, so get off that ide ological horse you are riding and understand what trade is all about. Foster Care Fee Schedule-Extended Families Mr. Clif Evans (Interlake): Mr. Speaker, I have received many letters from my constituents raising their concerns about the reduction in allowances to children in foster care on reserves being looked after by fam ily members. As the minister knows full well, it is a tradition on reserves that children are often cared for by extended fam ily members.

2728 LEGISLATIVE ASSEMBLY OF MANITOBA May31,1994 When we have questioned the Minister of Family Services about this matte r, she has refused to admit that the changes in policy dis criminate unfairly against aboriginal peoples. My que stion is, since ther e has been no consultation with the people affected by the change in policy, why has she approved the reduction in per diem funding to foster families who are relatives of the children in their care? Bon. Bonnie Mitchelson (Minister of Family Services): Mr.

Speaker, I am glad to have the opportunity, again, to respond on record to the change in our vision around support for children in Manitoba. That vision is family support, family preservation and family responsibility. We have indicated that there is still more money in the child welfare system today than there was last year, over $6 million more. That is to e nsure that the supports are put around the children and to look at a new way of doing business for children in Manitoba.

I believe the decision that has been made is the right decision and there will be the opportunity, with the additional dollars that are within the system today, to e nsure that children are kept in their family unit with the supports put around them to ensure that we can keep families together more often in the future. Mr. ClifEvans: Mr. Speaker, will the minister tell the House today when she expects to meet with the federal Minister of Indian Affairs to discuss this discriminatory change? Will she put the cuts on hold until that meeting has taken place with the federal minister? Mrs . Mitchelson: Mr.

Speaker, it is not from lack of trying to meet with the federal minister. I have corresponded with him and have not had the opportunity, as yet, to receive a response. I had one meeting set up with the federal minister that he cancelled, and I am working really hard to try to get another meeting. The federal government does have financial responsibility on reserve, and we talked in great detail in the Estimates process around the task force that was done on aboriginal peoples for Child and Family Services.

We are yet awaiting a response from the federal government to indicate whether they will accept their responsibility to support Status Indians on and off reserve and whether, in fact, they are looking at federal legislation. That was the key recommendation. We all know there is a special federal responsibility, and we want them to live up to that responsibility and that commitment and ensure us that they are going to take on that role. Mr. ClifEvans: Mr. Speaker, what rationale was used to make this change in policy, since it clearly was not through consultation with the people aff ected?

Can the minister tell this House today what response she has today to the many people who have written to me to share their concerns about this discriminati on on them 7 Mrs. Mitchelson: Mr. Speaker, I would encourage my honourable friend to share the correspondence he has received with me so that I could respond in greater detail to each and every one of those people who has written. But, Mr. Speaker, I go back again to indicating that we have a new vision for child welfare, and that is family support, family preservation and family respons ibility.

I believe this is the right direction to go. 1bere is still more money in the system today than there was last year or in any other year, including those years under the NDP administta tion. The dollars will still be there to support the children in the system. As a matter of fact, we will be able to work with families more aggressiv ely to ensure that children do not have to be taken into care and removed from their family unit. We will put the supports in place around the family and around the child for the child's sake. Provincial Laboratory Committee Restructuring Ms. Avis Gray (Crescentwood): Mr.

Speaker, my question is for the Minister of Health. The minister is well aware of the continuing con trove rsy over his Provincial Laboratory Committee, and he knows, I would say, that we are in jeopardy of getting a report that is very much

May31, 1994 LBGISLAnvE ASSEMBLY OF MANITOBA 2729 fair, unbiased and truly reflective of the needs of Manitobans. I am wondering if the minister is prepared to rethink the committee structure and put in place a committee which will ensure that, in fact, we are not pitting private lab interests against public labs and that, in fact, we get the best recommendations for the needs of Manitobans. Bon. James McCrae (Minister of Health): Mr. Speaker, I apprec iate that the bonowable member prefaces her question by putting a high priority on the needs of Manitob ans .

That is where I am coming from, too, and I am concerned in the same way that the honourable member is concemed. I think what is happe ning is-well, earlier today, Mr. Olfert, the bead of the Manitoba Government Employees' Union, made a particular point about this, about union representation on this committee, and in doing so made comments about the other peop le on the comm ittee . See, you cannot advocate that we ask care providers and people involved in this system to give us advice, and then when we do that, be critical of us for doing that. If Mr.

Olfert does not have the confidence in the leadership of Ron Wally, who is the Manitoba Council of Health Care Unions' representative on this committee, if Mr. Olfert is not comfortable with that, it is not for me to sort out disputes that go on within the union movement here in Manitoba. I suggest that Mr. Olfert take this matter up with Irene Giesbrecht, who is the bead of that council, and tell Irene Giesbrecht about his problems with the leadership of Mr. Wally. I do not have that same problem. Ms. Gray: Mr.

Speaker, with a supplementary to the same minister, can be tell us, should this committee come up with recommendations which are contrary to the Bass report which is already well documented, a report commissioned by this government, what is the minister going to do if the recomm endations from this particular committee are contrary to those of the Bass report? Mr. McCrae: It is always a dangerous thing, Mr. Sp eaker, to attempt to answer hypothe tic al questions, so I will pose my own hypothetical question and answ er that one instead of the one asked by the member.

My question is, if there is any recommendation that is contrary to the public's interests, I will not acce pt such recommendations. Ms. Gr ay: Mr. Speaker, with a final supplementary to the minister, if the minister is not prepared to accept the recommendations of this committee if they are contrary to the Bass report, why, in fact, are we having another committee when there are well laid out recommendations from the Bass report in regard to laboratory services in this province? •

(1410) Mr. McCrae: Mr. Speaker, lab oratories in Manitoba play an important role, and a lot of money goes into the operation of these labs, be they publicly run or privately owned. I think we should look to a very large number of people who are already on this committee, representing various backgrounds and interests, but bringing to the table expertise that we need, that we in government do not possess all by ourselves. You cannot, as I say-and this is directed to my friends in the New Democratic Party more than the honourable member.

You cannot suggest or urge us to seek the advice of the people in the system, and then when we do seek that advice, come at us for some other thing that really is driven by some major disagreement amongst the unions. I would have thought the New Democrats would have been better placed to iron out those kinds of difficulties than I would. I do not think it is my role to be a refe ree between unions. My concern is the same as the member for Crescentwood's, that is, the nee ds of Manitobans. Legislative Building Wheelchair Access Mr. Gregory Dewar (Selkirk): Mr.

Speaker, my questions are for the Minister of Government Services. As is obvious to anybody visiting the Legislative Building, the provincial government is currently spending hundreds of thousands of dol lars repairing the steps to the building.

2730 LEGISLATIVE ASSEMBLY OF MANITOBA May 31, 1994 My question is , could the minister inform Manitobans bow much money they are spending, bow long the coostruction will take and whether there will be a wheel chair access ramp added to the front of this building? Ro n. Gerald Ducharme (Minister of Government Services): Mr. Speaker, I am surprised the member from across the way bas notic ed. We have been go ing since la s t We dnesday. First of all, it is not just repair of the steps. There is a complete removal of the granite steps.

There is demolition and removal of the existing reinforced concrete structural slab. There is rebuilding the reinforced concret e structural slab, and then we will replace the steps . All fo ur steps surro unding the building will be done. The period is until November 1. The first phase will be finished about July 1. The lowest of all tenders was $752,000 to do the total building and the total steps, four steps surrounding the building, Mr. Speaker. Mr. Dewar: It is a good thing, Mr. Speaker, that the minister can read his briefing notes, but be did not find the answ er to the question. Mr.

Speaker, this week is National Acces s Awareness Week. My question is to the minis ter. Is be including m the plans of the rebuilding of the Legislative steps a whee lchair access ramp for handicapped Manitobans? Mr. Ducharme: Mr. Speaker, if we would have gotten to :Estimates last year, the member would have seen in the :Estimates that we spent in this building $152,000 for wheelchair access upstairs, and new whee lchair access at the back was done also in that $152,000 last year. Mr. Dewar: Mr. Speaker, it is a shame that handica pped Manitobans have to enter the building from the back door. Mr.

Speaker, my final question is for this minister. What example is this government setting for all community organi zations in this province when they will not put whee lchair access facilitie s at the front of this building? Mr. Ducharme: Mr. Speaker, lam amazed that the member would ask, when they waited-the y were here for 20 years, and wheelchair access could not even be upstairs in the gallery.

We bad wheelchair access in the west end of the building updated last year, so I hope this year maybe the member wi ll get to Gove rnment Services, and we can explain some of the things we have done throughout this building. Capital Gains Tax Family Trust Exemptions Mr. Leonar d Evans (Brandon East): Mr. Speaker, I have a question for the Minister of Finance . Family trusts were exempted from capital gains tax by the Liberal governm ent in 1972 for a period of 21 years.

Instead of allowing this exemption to end in 1993, the Mulroney government extended this exemption for another 21 years, thereby giving up an estimated $1 billion in tax revenue. It is now under review by the fe deral Minister of Fm ance. Can this Minister of Finance advise the House whether be has a position on this matter? Ron. Eric Stefanson (Minister of Finance): Mr. Speaker, I will take the details of that question as notice. Mr. Leonard Evans: I would ask the minister, Mr.

Speaker, if be would undertake to contact his fe deral count erpart and urge him to end this exemption on the basis of bringing about a fairer tax syst em. The federal government is cutting UI bene fits, yet allows fam ily trusts to be exempt from taxes. It is time to end this unfair situation. Mr. Stefanson: Mr. Speaker, I will take that part of the question as notice, as well. Mr. Leonard Evans: I appre ciat e that, Mr. Speaker. Has the minister been lobbied by anyone or by groups such as the Canadi an Association of Family Enter prise on this matter of exte nding the exemption of taxes on trusts? Mr.

Stefanson : Mr. Speaker, the organization the member for Brandon Eas t refers to bas not made contact directly with my office or myself. They

May31 ,1994 LEGISLATIVE ASSEMBLY OF MANITOBA 2731 may have somewhere within Finance, but if they have that infonnation, it bas not been brought to my atte ntion. Mr. Speaker: Time for Oral Questions bas expired. Introduction of Guests Mr. Speaker: I would like to draw the atte ntion of honourable members to the loge to my left, where we have with us this aft ernoon Mr. Jean All atd, the fonner MLA for Rupertsland. On behalf of all honourable members, I would like to welcome you here this afternoon, sir. NON��CALSTATEMENT Portage School Division Award of Exc ellence Mr.

Speaker: Does the honourable member for Portage Ia Prairie have lea ve to make a nonpolitical statement? [agreed] Mr. Brian PaBister (Portage Ia Prairie): Mr. Speaker, I am pl eased to rise in the House today to pay tribute to a friend and a fine teacher from Portage Ia Prairie. Mrs. Lou Colle tt, a teacher at the Crescentview School for the last 13 years, was recognized by her peers last week in our school division. Lou was presented with the Portage School Division Award of Excellence for her dedication.

School Principal Cornie Furdievicb said that Lou genuinely cares for the children and is always there for them. Lou was praised as standing above many of her peers for her willin gness to take an active role in the education of our children. She takes on tasks that are given to her without comp laint, and she does not seek personal recognition. In addition to her prof essional duties , Lou is a dedicated wife, mother and volunteer in our community, Mr. Spea ker.

It is that kind of dedication to the future of our education system in the community of Portage Ia Prairie and in the province of Manitoba that I know all of us in this Chamber want to praise and recognize. Lou Collett deserves our recognition and our thanks . I join with my colleagues, her associates, family and her many friends in off ering her our congratulations. Thank you. *( 1420) ORDERS OF mE DAY Bon. Jim Ernst (Government House Leader): Mr. Speaker, I move, seconded by the Minister of Finance (Mr. Stefanson), that Mr.

Speaker do now leave the Chair and the House resolve itself into a committee to consider of the Supply to be granted to Her Majesty. Motion agreed to, and the House resolved itself into a committee to consider of the Supply to be granted to Her Majesty with the honourable member for St. Norbert (Mr. Lauren deau) in the Chair for the Department of Agriculture; and the honourable member for Se ine River (Mrs . Dacquay) in the Chair for the Department of Justice. •

(1430) COMMITI'EE OF SUPPLY (Concurrent Sections) AGRICULTURE Mr. Deputy Chairperson (Marcel Laurendeau): Will the Committee of Supply pl ease come to order. 'Ibis afte rnoon this

section of the Committee of Su pply meeting in Room 255 will resume considerati on of the Estimates of the Department of Agriculture. When the committee last sa t, it bad been considering item 3. Manitoba Agricultural Credit Corporation, Administration, on page 16 of the Estimates book. Hon. Harry Enns (Minister of Agriculture): Mr. Deputy Chairperson, allow me to introduce senior management officials of the Manitoba Agricultural Credit Corporation. To my immediate left is, of course, Mr. Gill Shaw, the General Manager. We have Ms.

Charlene Kibbins who is the Regional Credit Manager operating out of Morris and also responsible for special loans. We have my Dep uty Minister, of course, Mr. Greg Lacomy, whom you have met before and Ms. Dave tta Sbeppatd who is

2732 LEGISLATIVE ASSEMBLY OF MANITOBA May31, 1994 the Director of Finance Administration of that corporation. Allow me a very brief introduction of this item of my Estimat es. The Manitoba Agricultural Credit Corporation has proven over the many years to be one of the main tools available in the ;u:senal of the Department of Agriculture to support agriculture in the province in its many diverse areas.

Bu t specifically, it bas enabled gover nments, both this one and previous administrations, to find some method of expression in a real way of the priorities of the government of the day whether it is the direction of special assistance to young fanneiS, whether it is the consideration of other dif ficulties in the far ming are a as it was in the mid-'8 0s when extremely high interest rates were of considerable concern to the then administration. It enables the government to focus in on the specific areas that are deemed to be of import to that government and ministry.

In that light, in the past fo ur or five months or certainly the past half -year, some significant amendments have been made to the Manitoba Agricultural Credit Corpora tion's way of doing business. They include upping the limits of loans available , more or less taking into consideration the reality of farming today. They also have created more flexibility in enabling us to consider seriously what could in the past have been termed bobby fann m, if you like , though that perhaps is not the right term.

There were specif ications in the regulations that prohibited the Agricultural Credit Corporation from considering a loan appli cation from peiSons who were earning in excess of a certain amount of dollm off fann. MembeiS of the committee will be only too well aware that in today's world all too often start-up farmers , young fa rmers , that we encourage and want to see enter agriculture, have to have employment off the fann to enable them to get started. The amendments that I refer to take that into consideration.

Amendments have also been made to one of the programs that we have bad considerable success with, and I predict a growing success mainly due to actions taken by the provinces of Alberta and Sa skatchewan. I am referring to the support programs that the corporation provides to entice, encourage and try to build up the cattle fe eder industry in the province again. We have a number of co-operative groups of young fann eiS, cattle fann ers, joining together and being supported by the corporation in this endeavour.

To recognize the increasing importance of livestock operations in the Manitoba agriculture scene , a further amendment has been concluded and passed just recently that strikes out the word "cattle" because it was specific and inserts the wor d "livestock" which would enable a corporation to respond to similar proposals from other producers involving livestock other than cattle, and of course bogs , polk, come to mind. So, Mr. Deputy CbairpeiSon, I make these few comments and invite honourable members of the committee to hopefully offer their constructive advice, criticism, if need be.

No operation of government is above and beyond criticism from time to time, and I am sure that senior membeiS of the corporation will accept your comments in the spirit and manner they are given to enable them to do a better job for the primary producers of Manitoba. Ms. Rosano Wowcbuk (Swan River): Mr. Deputy ChairpeiSon, I thank the minister for those opening comments . There are several questions that we want to address in this area.

The minister indicated that many young farmeiS are working off farm now, and in fact it is not only young farmeiS but many fann eiS and their spouses have bad to take off-f ann jobs to continue to be able to bang on to their fa rms because of the diffi culties that the industry has been in for the past several yem. I think that is a good move, that there is more flexibility in that part of the act to all ow those people who are trying to get started in farming, but when their assets were looked at or their occupation was looked at, they were not classified as farmers and could not access the money.

So I think it is a good move on that part of the corporation to address that.

May31, 1994 LEGISLATIVE ASSEMBLY OF MANITOBA 2733 The questions I have to ask are, to begin with. general questions about the ccnporation, about the number of people who are acce ssing loans and whether the corporation is still being called upon as often or whether there is a change in pattern. I would like to know some comparison over the last couple of years to this year on the people who are acce ssing funding. Is there a trend to move away from the Farm Credit Corporation, and are people going more to their local banks and getting funds more through their local banks? Mr. Enos: Mr.

Deputy Chairperson, I can comment just generally to the honourable member for Swan River that the corporation has in the past 12 months experienced a fair bit of activity with the situa tion being that interest rates have dropped substa ntially in the other sectors- well, just generally speaking, by the various money-lending imtitutions of the province. That has put a call on the corporation to enable contract holders to take advantage of the clause in the contract that provides for no specific penalty for writing down a long -term mortgage in favour of another imtitution.

I would want to fre ely acknowledge that a number of accounts had done just that, principally with the fede ral credit corporation, which have, I think it is fair to say, actively pursued some of the accounts to do just that. However, the inte rest situation is volatile . The Bank of Canada rate is going down a few weeks , then going back up again. This is a normal situation for the corporation to deal with.

It is always our primary interest, of course, to serve the best interests of our contract holders, and if in fact they can save themselves some dollars by making that change, they have done so and we have accommodated them. There have been some costs associated with that, of course, because mortgage documents are not drawn up for free, and the institutions, both the other institutions and ours, have to make these charges . Now, the other part of the question, there has been considerable activity with respect to the '93-94 loan applications.

Some 456 direct lending loans were concluded for a total of some $24.5 million. We have a fairly active program of guaranteeing loans, which is another form of support that we provide . We did that to some 370 appl icants, in effect guaranteeing an additional $26.6 million. We have established two more additional fee der associations-these were the ass ociations that I alluded to in my brief opening comments-for a total outlay or exposure of some $13. 8 million. I believe we have in the order of eight of these fee der associations operating with a total exposure of about $17 million.

These are doing extremely well. They are providing just the right amount of help, in my opinion, to make it happe n, and I predict quite frankly that the corporation will see more activity in this area as more and more Manitoba producers realize, and Saskatchewan and Alberta producers, that there is no particular advantage out of taking the calves out of our province. They may not be completely finished here, but I think you will see more backgrounding programs and, generally speaking, more fee ding programs taking place in Manitoba.

There are some 281 members involved in these eight fee der co-ops that I speak of. •

(1440) Further information for the honourable member for Swan River (Ms. Wowchuk), as indicated, the fed eral credit corporation has been aggressive and quite active in Manitoba. Their total of loans to date numbers some $50.2 million, which covers some 729 accounts as compared to $29 mill ion just a year ago covering some 391 accounts. So that gives the member for Swan River (Ms. Wowchuk) a pretty clear idea of the action taken by the fe deral credit corporation this past year.

Suffice to say, though, what is important is that Manitoba farmers are accessing credit, whether it is our corporati on, whether it is the fe deral credit corporation or indeed whether it is the credit unions and the private banking insti tutions. Ms. Wowchuk: Mr. Deputy Chairperson, can the minister indicate, then, what you are saying is that the people-is the minister saying that the clients that were with the MACC have been able to get

2734 LEGISLATIVE ASSEMBLY OF MANITOBA May31, 1994 lo wer interest money from FCC and have transferred their accounts there? Is that why the increase has go ne- Mr. Enos: Mr. Deputy Chairperson, st aff advises me that, yes, that has occmred, and the reason for that, I will just cite a fe w examples where the diffe rences become app arent Under, for imtance, a 15-year mortgage rate with our cmporation, the interest rate would be 8. 75 and they are at 10.25. Why wo uld they change ?

This is not the information that I- Allow me a little bit-but we are satisfied that on any length of period of time Manitoba Agricultur al Credit Corporation consisten tly provides probably the best money at the best rates available.

But loans that were made some years ago at considerably higher interest rates-we have situations where a farmer will have an outstanding mortgage, 15 -20 yea r mortgage, that we are charging him 12 or 12.5 or 13 percent interest rates and along comes FCC, as they have done this past year, and say, look, we will offer you a 10-year mortgage rate at 8.5 percent or a 15 one at 10.25 percent. That, then, has been reason enough, depending on the amount of savings that the actual borrower can accrue to incur the expenses involved in making that change.

I point out our coipOration has no penalty for that buy out of that mortgage, but there are costs involved in meeting the redrawing, redrafting of the new mortgage arran gements with the new lender, but those are the kinds of examples that have caused this to happen. Ms. Wowchuk: Mr. Deputy Chairperson, I underst and that with the Fishermen 's Loans Program, when the interest rate was at a high rate and then the interest dropped in this last year, the fishermen were able to negotiate on the fishermen loans a lower interest rate without changing to another institution.

I wonder, was there a possibility of doing that, and did the department give any consideration in order to retain those accounts to write down the interest rates? Is that a possibility? Mr. Enos: Mr. Deputy Chairperson, the fishermen have always had a kind of special relationship, and it is true that they have en joyed some particular provisions under the borrowing provisions that enabled them to, for instance, convert a loan.

If he had an outstanding loan that perhaps was taken out at a time at 11 or 12 percent and he was taking out some additional money, it would then be blended and brought down to the current level of interest which may be 7 or 8 percent or 9 percent.

I am not really qualified to deal too excessively with respect to the fisherm en's loans because the member will recall that entire portfolio was taken from the Manitoba Agr icultural Credit CoipOration a year ago now, I believe, or two years ago and transferred to the economic development council or corporation under the then capable leadership of my great friend Hamish- what is his name? His name es capes me-Downey, the member for Arthur. So the honourable member would have to await the Estimates of my colleague the Minister of Natural Reso urces (Mr.

Driedger) to delve into the specific details of the fishermen 's loans. (Mr. Ben Sveinson, Acting Deputy Chairperson, in the Olair) Ms. Wowchuk: Mr. Acting Deputy Chairperson, the minister misunderstood me. I was not trying to get into the details of fishermen 's loans. I was asking whether there were provisions under the Manitoba Agricultural Credit Corporation to write down inte rest rate loans rather than the farmers having to go through the expense of transferring to another institution, such as the Farm Credit CoipOration or a credit union or another bank.

I was only using the fisherm en's lo ans as a comparison because I know that they have the ability to do that there. Is there any ability in the legislation with the MACC to write down the interest rates? Mr. Enos: Mr. Acting Deputy Chairperson, this has been an issue that the corporation has discussed with me on numerous occasio ns. My re commendations to the corpora tion have been that in all instances to be as fo rthcoming and co-operative as possible with the contractholder. We reco gnized that in some instances that there

May 31, 1994 LEGISLATIVE ASSEMBLY OF MANITOBA 2735 would be significant savings involved for the contractholder. All the time, I think the honourable member should app reciate , this differe nce showed up on the co1p0r ation's books as a cost or charge to us because we contract that money from the provi nce. At the time the mortgage was given, and that procedure has not changed since virtually the inception of the corporation, we have as good a rate as we can get from the province. I think it is the provincial rate of inte rest plus 1 percent to cover some of the administration costs.

So that when five yea rs ago or eight yea rs ago the corpora tion received X number of millions of dollars at what then was the rate, 12 percent, 13 percent, that is a charge to the corporation that we have to pay back to Treasury Bo ard to the Consolidated Revenue Fund at those levels . So to the extent that we accommodate the contractholder in getting out of that obligation, if you like, to take advantage of cheaper money, that costs the corporation some money. We are monitoring that on a fairly constant basis. I share the concern that the corporation has, that this is manageable .

I am advised that it is, that we have not had reason to, fo r instan ce, seek additional funds from Treasury money to cover any of this shortfall, and we will be in a better position a year from now to indicate to you what, in fact, the changes were. It is volatile, and even Bank of Canada rates, I do not know what they did today . They went up a bit today and people are watching that. For a period of time interest rates were on a steady and regular decline. That bas changed somewhat in the last little while, and that is being reflected in this kind of activity. • (1 450) Ms.

Wowchuk: The minister had indi cated that there were in the last year loans for some 456 clients that have direct loans at the present time. How does that compare to the number ofloans that we would have bad a couple of years ago? Has there been a large decrease in the number of people who are taking out their money through the corporation? Mr. Eons: I should have the '92-93 immediate past year by way of comparison. We find numbers that I would say are very comparable . Direct loans, 341; stocker loans, 91; guaranteed loans , 370, which is virtually the same as-well, no, pardon me, 377. We have these charts .

If we go back a few more years to '91 -92, '90-91, '89-90, '88-89, that five -year period, the total loans range from 414 for '91; 458 for '90; 475 for '88-90; 282 for '88---so basically a fa irly level flow , yes. Ms. Wowchuk: Many farme rs, because of high interest rates and situations that they have gotten into, have not been able to carry through on their financial commitments and have had to renegotiate or else close down their opera tions. In the last year, how many farmers have had their loans fo reclosed on them by MACe? Mr. Eons: Mr.

Acting Deputy Cllairperson, I am ple ased to report that the general manager informs me that we have had no fo reclosures in the past year. Now that is not to say-and I want to indicate to the honou rable member that we do have continuing activity, although, again, much less with the Farm Mediation Board which, you know, the corporation has some familiarity with but which is dealt with some what separately in the Estimates. I would be pleased to try to answer any questions that I can at this time.

Again, just for fu rther inf ormation fo r the committee members, there were a total of 78 loans that went to mediation of which 54 were resolved. Again, it is a percentage figure that I take some comfort in in the sense that these are obviously situations , as the member herself described, that bad some pretty serious diffi culties to trigger this mechanism. So, of those 78, 54 were resolved. There are curre ntly some 24 cases still unresolved, but they are being worked on, and they are being carried fo rward-54 resolved, 24 unresolved of a total of 78. Ms.

Wowchuk: We will get back to that a little later on, but the minister had talked about new loans and new are as that the corporation was lending money in. There is a new indu stry, talk about extension in the fee der ass ociations. The hog industry is growing very quickly. Another ind ustry

2736 LEGISLATIVE ASSEMBLY OF MANITOBA May31, 1994 that is very important to rural Mani toba is the PMU industty , and I wonder, bas the association lent any money to PMU operations, and bow many of them have borrowed money through this corporation? Mr. Eons: Mr. Acting Deputy Chairpers on, staff advises me that, yes, we have involved ourse lves in supporting the expansion in the PMU industty. Some 28 new accounts were provided financial assistance, too, by the corporation, which represented some 40 percent of the total of the new and expanded PMU operations in the last year.

I do not have the total amount, dollar figures, involved in the loans. I suppose we could take that as notice and provide that to the member at some later date. Ms. Wowcbuk: I would take it that those loans- you bad indicated that it was just over the last two years that you bad begun lending money into the PMU industty. Mr. Eons: Mr. Acting Deputy Chairperson, the member may or may not be familiar with the fact that one of the difficulties about providing assistance to the PMU industty was that up until just the last two years the contracting company, Ayerst, provided only one -year contracts.

That provided a difficulty, understandably , for credit grantors, whether it was our corporation or the private sector, banks and credit unions, to respond to legitimate loan requests from PMU operators. It was under the kind of forc eful direction by this government when approached by Ayerst Organics to provide some assistance to them, as we were ple ased to do in the final analysis, along with the Government of Canada through the Western Diversification Fund, but I was certainly strongly suppor ted by, again, my colleagues like the member for Arthur (Mr.

Downey) and others, that we lean on the company to provide longer-tenn contracts which would then provide the kind of security that the corporation and the private sector could respond to. • (1 500) We knew that there would be demand for these monies. We were being told, and we were being assured that there would be an expansion take place .

Existing opera tors, in some ins tances, you know, nee ded to modify, enhance and enlarge their facilities, and of course the new operators building to the now fa irly stringent conditions that are involved in housing requirements by the company's own code of ethics in the humane and app ropriate treatment of the animals housed in the PMU barns- that there would be demands for credit.

So we were able to convince Ayerst Organics for the first time in its considerably long history of doing business in the province of Manitoba to provide and to off er to our PMU contract holders extended-! think they were five-ye ar-contracts , which is a first for the company. So that then gave the corporation sufficient confidence to provide loan assi stance to these operators. Ms. Wowchuk: Are all loans negoti ated at an equal rate? Is the interest rate regular for everybody?

I guess I am looking at, because the minister says this a more stable indu stty, whether there is a variance in the interest rate or whether it is people going in to borrow money for land or cattle or for the PMU industry , or is it all negotiated at the same interest rate? Mr. Eons: Mr. Acting Deputy Chairperson, the member is correct. The rates are the same for all loans made to any primar y producer in the province of Manitoba. The diff erences are in the tenns of the loans, ranging from one to 30 years.

There is a different scale of interest rates charged, and they are amended or changed in mid-tenn on an ann ual b�r mid-month, pardon me, on a monthly basi s. The difficulty was that with a one -year contract the corporation was simply not in a position to consider them. I am adv ised that that was also the case for many of the private lending instit utions.

They just wanted greater security, because it is understandable that unlike other agricultural products for which markets are the re, maybe not always under the conditions and tenns that the producer would like-but you know , I may not be happy with next year's cattle prices, but I will sell my cattle. The difficulty with this product is there is only one end user of the product. If that end user, for one reason or another, is not there to purchase

May 31, 1994 LEGISLATIVE ASSEMBLY OF MANITOBA 2737 the next year's product, the credit lending agency bas absolutely nothing to fall back on. Ms. Wowchuk: I am pl eased that the corporation has seen that this is an important industry in Manitoba. It is a very viable industry . The company bas now given the farmem more stability, because it is ttue there were fann em who were investing a very large amount of money but without'any guarantees that they would continue to be able to sell the product Indeed, they still do not have any guarantees if they do not follow all the rules that are put in place by the company.

The rules are good rules to ensure that there is a high-quality product and that the animals are being treated humanely . I guess I would-just one question on that. I want to ask, of the 28 accounts that are in place ri'gbt now, are there any of them that the corporation is experiencing any difficulty with, or are they all sound ope rations? Mr. Eons: It seem s to be corporate agree ment at the table here that they are all very sound. Ms. Wowdluk: I have many more questions in this area, but I will defer to the member for Arthur-Virden (Mr.

Downey) who bas some questions as well, and then when be is done go back to the que stions that I have. Bon. James Downey (Minister of Industry, Trade and Tourism): I not only have some ques tions, I have a few comments I would like to put on the record as I think it is important to acknowledge , as Minister of Industry, Trade and Tourism but also as a member representing a farm community in sou thwester n Manitoba, the important role that MACC bas played and I believe will continue to play .

I think it is important to acknowledge as well for some of the new members that if one were to look back at the history of the province of Manitoba, the establishment of the Manitoba Agricultural Credit Corporation came about under the Duff Roblin Progressive Conservative government, as we saw not only the Manitoba Agricultural Credit Corporation fonned but also the Crop Insurance Corporation and many tools which fur ther suppor ted-and call them safet y nets if we like-but tools which were put in place to enable the farm comm unity to play a more active role in the whole Canadian agriculture picture .

So I think one shoul d acknowledge the leademhip role that was taken, and I should as well acknowledge the current minister 's role in his ea rly days as the Minister responsible for Agricultu re. I am sure there have been many changes that be bas seen as they have come about, probably more traditionally from land-based loans to more diversified activity. I think. that I would ask for a comment at a later time as to really what is the breakdown now as it relates to the loans that are more tending to the dive rsification sector rather than just strictly land-based. Let me as well sa y, Mr.

Acting Deputy Cbairpemon, I am as well aware of the fact that it was a Conservative government that introduced the Young Farmer Reba te program which encouraged young people to get into farming, to reduce some of the up-front costs; and as well acknowledge the fact that it was a Conserv ative government that brought in the off-farm income capability where people were not penalized if they earned money off farm, but they can in fact go to MACC to borrow money and were not restricted from borrowing from them. Again, the member for Swan River (Ms.

Wowcbuk) may not like to bear this, but I think it is important that the membem of this committee app reciate it as well. I note the numbers of feeder cattle co-ops that are in the province of Manitoba, now some eight feeder cattle co-ops which again are adding value to a very important resource in the province of Manitoba, that being the beef industry.

The ones that I am aware of, and the minister may want to comment, are working extremely well as it relates to the maintenance of livestock on farms, but adding value to those cattle using the resources that each farmer produ ces and, again, adds stabil ity to the industry all the way through that sector. So I am just trying to do a bit of an overview , Mr. Acting Deputy Chairperson. I say as a rural member, and also the Minister of Industry, Trade and Tourism, I am pl eased the direction that the

2738 LEGISLATIVE ASSEMBLY OF MANITOBA May 31, 1994 credit corpor ation is going. They have mad e changes as it relates to the needs of the farm community. I also would like to ask the question as it relates to turnaroun d times for loans. It is my understanding, and I know one of the concerns that constituents that I have had brought to me is that they are concemed about the amount of time that it took to get at least an indication from the Manitoba Agricultural Credit Corporation whether or no t they would qualify for a loan.

I would like to know what the current turnaround time is from firs t contact to office as it relates to some indication if it is at all viable, as to when they may be able to proceed. Maybe the minister could give us what it was some five years ago as to what it is today as it relates to turnaround time within the corporation. (Mr. Deputy Chairpers on in the Clair) I wo uld also like to know , Mr.

Deputy Chairperson, what is the direct connection between the mediation and the mediation department within agriculture and also the ability for the Manitoba Agricultural Credit Corporation, how does it use the mediation as p art of the corporation 's activity? H an individual is in trouble, can they say to the constituent or to the fa rmer, look, you have a financial diffi culty, we have had difficulties with you in dealing with you before, we would appreciate that you go to the Mediation Board and get some kind of a statement or a support , then we as Manitoba Agricultural Credit Corporation can help you.

It is my understanding the policy is if you have lost money, the corporation has lost money with a client, that they have to go through the mediation system to in fact qualify to get into MACC support again. I wonder if the minister could give us a little clarification on the connection between the credit corporation and the mediation within the Department of Agriculture. I would also like him to comment as well, Mr. Deputy Chairperson, because I think that the member for Swan River -and I app reciated her comments and her questions about PMU.

I again acknowledge the wor k that the MACC did in working with the banks and the government to encourage Ayerst to expand the length of time on which they could contract to the producers.

Would it be helpf ul if there wa s a statement that continually came out fro m the New Democratic Party and the Liberal Party of a full endorsement of an industry like PMU that would give support to MACC and their loans, the confidence in those loans? • (15 10) Could I as well ask, if it would help the minister in the expansion of agriculture-because we know that if we were to double the hog production in Manitoba, MACC would be playing a considerable role in the financing of some of those operations . There are some 8,000 to 10,000 jobs, I understand, if that were to take place .

Would it be helpful as well if we had the two opposition parties to make a statement of policy as it relates to supporting MACC, a vote of confidence in them and their ability to lend money in this field? Would it be helpful for the minister if the two parties would come out and endorse an expansion in both the PMU operation and the hog indust ry in Manitoba? Would that be helpful in his drive to create jo bs in rural Ma nitoba and related processing jobs as it relates to-[inteJjection] No, these questions are directed at the minister.

The Liberal Party will have ample opp ortunity in the coming weeks to put their position fo rward as it relates to how the y support the livestock sector in this pro vince. They have been vecy silent, in fac t, somewhat negative to this point. I am saying that of the Liberal Party because they have not-silence is certainly not good enough. I would also like to-and it does not have to happen today, but the minister could probably give us some of the limits which they now have in place as it relates to loans.

As the industry has grown, there has had to be changes in maximums which producers can borr ow, and I would like the minister to give us some of the indication as to what has happened as it relates to limits that are available to the producers. I would also like to just get an idea of, as I said at the outset, the numbers of loans that are now in di versified operations as it relates to straight grain opera tions. What has that

May 31, 1994 LEGISLATIVE ASSEMBLY OF MANITOBA 2739 change been over the last period of, say, five or so years? I want to conclude my commen ts, Mr. Deputy Chairperson, by saying that I compliment fully the minister, the staff and all those people working at the Manitoba Agricultural Credit Corporation for their worlc because it is an important tool for the expansion and growth of agriculture, particularly as it relates to the diversification of agriculture .

That is why I ask the question, if it would be helpful for the two opposition parties to come out fully behind the work and activities of which public monies are being lent: into PMU, into hog expansion, into the feedlot co-op activitie s.

Those are the kinds of policy statements that we really have not heard come from the Liberal or the New Democratic Parties, so I am asking the minister, in his operations with MACC, if it would be helpful for them to come out and fully endorse the expansion of both the hog industry, the PMU operation, because it adds security to the public monies that are leant in these operations . I would just like the minister to comment on those questions and again acknowledge the wotk of the MACC and all the staff for their hard wotk and effort on behalf of the constituents that I represent and the fann community , Mr.

Deputy Chairperson. Thank you. Mr. Enos: Well, Mr. Deputy Chaiipe rson, I do welcome and I am genuinely appreciative of the kind comments directed at me personally and at the senior staf f. However, I say that with some reservation. His somewhat partisan attacks have aroused deep within the bosom of my agricultural critic deep and dark and emot ional political rej oinder which I fe ar will disturb the pastoral serenity that has thus far dominated these considerations of the Department of Agriculture. Nonethele ss, he has reminded me of my responsibility and he has a point.

For instance , on the question of the turnaround which is of some impo rtance , the turnaround today is 11 .42 days as compared to 78 days in '87 or 47 days in '88 and in '89, 31 days. There has been a steady pr ogression. I take no credit for this, but I am certainly pleased to read these into the records because the member for Arthur is corre ct. The senior management at the corporation has made that an obvious priority, and they have succeeded. So I am pleased to read that into the record.

Other questions that the honourable member has indicated were about raising the limits and being in greater recognition of today 's agriculture. They have been raised from $15 0, 000 to $250, 000 for long- and immediate-tenn loans. The guaranteed operating loan has been raised to $1 50, 000. The stocker agreemen t loans have been raised to $60,000 which in combination were at a maximum of $3 million and are now up to $5 million, partly anticipation of the added activity that we will see in this area of loans. We should understand that.

We do not attempt to service those, whatever it is, 10, 15 or 20 percent of what you would call the large commercial fanning opera tions. They have , quite frankly, no need of our service . They are fi nancially sound, secure, to make their own banking arra ngements. We are targeting specifically the medium- and the start-up fann er. That is the mandate of the corporation and, unless otherwise directed, that is the mandate that we will contin ue.

Our jo b is to get them into that quarter-of-a-m illion dollar range and, if they then choose , to be moved one step further into the more commercial type farm ing operation, God bless them. That is the role of the corporation. We have specifically directed and I would ask the corporation, even in the last year, what was the direct support, if you like, of the Young Farmer Rebate program? It was in the millions of dollars, $4 million I am advised. The honourable member for Swan River (Ms. Wowchuk) frequently asks that question.

What is the goyemment doing for the young farm er, the start-up far mer, is a $4-million rebate on interest rates that the young farmers have received from this corporation during the past year. I would hope that the corporation members of the committee will support me and the corporation in recognizing that they have , in my opinion, an expanding role to play in the future livestock expansion that, in my humble opinion, needs to take place for numerous reasons. We will perhaps

2740 LEGISLA'TIVE ASSEMBLY OF MANITOBA May31, 1994 get into greater discussion about that when we deal with the Animal Industry Branch and its various components , but certainly the credit corporation has a very specific role to play in helping to accommodate, helping farmers adjust, in some cases, coming back into a livestock operation that they had abandoned or their fathers had abandoned years ago to gain re-entry into that part of the farming business. • (1 520) Ms. Wowdl uk: Mr.

Deputy Chairperson, the minister referred to the Young Farmer Rebate program, and he had indicated that $4 million had been deferred in loan payments. I want just some information on how the Young Farmer Rebate program wodts. Does it app ly only to people who are borrowing money through MACC, or does it app ly to those people who cann ot borrow money through MACC and have chosen to borrow money through a diff erent financial institution? Mr. Eons: Mr. Deputy Chair person, no, the program is restricted specifically to accounts held by Manitoba Agricultural Credit Corporation. Ms.

Wowdluk: Then I would take it that-bas that amount decreased from what it was last year, or has there been an increase in the amount of money that is paid out through the Young Farmer Rebate program? Mr. Enns: 1be actual rebate paid figures for the last three years indicate that we had some $3.2 million paid out in '92, some $3.7 mill ion paid out in '93-pardon me, 4.1 app lied to this point of time in the '94 year. What has occurred, I am advised, that there is virtu ally a hundred percent compliance with meeting the due date on their loan payment to take advantage of the rebate being offered .

That may be somewhat surprising to the honourable member in view of some of the harvest conditions that we have had in the last fe w ye ars, but it again indicates the kind of support that payments under the diff erent safety program s, notably the GRIP program, have enabled farmers to make these paymen ts. They have made the payments and have received full advantage of the interest rebate on their accounts . Ms. Wowdluk: Hthis only app lies to farmers who have their loans with MACC, it seems like that is an unf air advantage to those farmers.

What percentage of the farm ers' accounts would MACC have as compared to those that are through other financial institutions? I am wanting to know how much of an advantage it is, and I guess I look at this and I wonder whether the corporation has ever looked at the possibility of applying the Young Farmer Reb ate to loans that are held with other institutions. Is that possible then to create some fairness for those people as well who are borrowing money through other ones? They are still operators. They are still facing fi nancial diffic ulty.

Is that an unrealistic goal, or is it something that has ever been considered? Mr. Enns: Mr. Deputy Chairperson, I think the simple answer to the question is no, that it has not really been considered. It is questionable whether it ought to be considered. It is, after all , a program that is offered to young farm ers of Manitoba. If they wish to avail themselves of this service , they step forward to the various offices throughout the province of Manitoba and do just that.

We have no way of knowi ng-it would be very dif ficult to track any number of loans that may have made credit arrangements with the private lending institutions of the province. That is just too difficult a number to inquire about. I should point out to the honourable member that upwards to 96, 97 percent of all our new clients are young farmers. Obviously, it indicates to me that we are successfully and particular ly targeting this group of new entrants into fa rming.

I think that is certainly an objective that members of the committee would want to see supported We are concerned about the age of existing farm operators, and if there is to be government sponsored, by one means or another, support for new entrants into fa rming, it surely ought to be focused on what we call the young fa rmer. It would seem to indicate that is a message that has been reasonably well communicated to the farm community in Manitoba when such a high percentag e of our clients are in fact in the young-farmer category .

May31, 1994 LEGISLATIVE ASSEMBLY OF MANITOBA 2741 Ms. Wowchuk: I certainly agree with the minister that we have to look at ways of targeting our young fann ers and giving them the oppo rtunity to come back to the farm , par ticularly with the aging population that we have in many communities and in the fann community. Since this rebate applies only to loans that are with MACC, is there any pr ovision for fanners who are with a banking institute or a credit union to transfer their loan over to MACC as there was with-they have transf erred out from MACC to FCC to get a lower intere st rate .

Is there any provision to take up loans to allow these young fann ers to take advantage of the program? Mr. Enos: Mr. Deputy Chairperson, I am advised that we do encourage young fann ers to come to us if they are facing a situation of refinancing of debt that they have accrued elsewhere where this program is not available . If they otherwise meet the age criteria, they are then eligible for that Young Fann er Rebate.

ID other words, a young farmer who bas farm debt at a credit union or at a bank and is made aware of the fact that bad be bad that portfol io with us be would be eligible for-and they are substa ntial savings on any length contracts, 10 year. It is 2 percent of the outstanding principal of the loan for the first five years to a maximum of $1 0,000. So it is app ropriate to say that upwards to $1 0,000 is available as a direct support payment, if you like, for that young fanner.

As I started to say, that young farmer who may not have started with our program but bears of our program, wants to take advantage of this program , as the honourable member for Swan River (Ms. Wowcbuk) is suggesting, can come to us. We will refinance and consolidate his debt and if otherwise eligible for the program would be eligible for that upwards to $10, 000 support. An Honourable Member: And young. Mr. Enos: Ob, it is so cruel. Young is under 40. I do not qualify any more. Ms. Wowcbuk: Just one more point on the Young Farmer Rebate, does that app ly to any loan or is it loans just for land?

Can it be loans for livestock, loans for equipment? Mr. EnDs: I am advised that it app lies to virtu ally all loans with the exception of the stocker program , which is treated as a separate pr ogram. Ms. Wowcbuk: Moving on then to the fe eder association pro gram, the minister bad said there bad been a large expansion, going from two loans to eight ass ociations that have been established. How many applications were made to es tablish fe eder associa tions-there are eight now-but bow many areas, groups of people have tried to get loans but have not qualified? Mr. Enos: Mr.

Deputy Chairperson, staff advises me that we are not aware of any group that bas seriously app roached the corporation being turned down. 1be honourable member will appreciate that it takes a bit of doing to get them started. These are groups of farmers who wish to fe ed cattle on a co-operative basis. They have specific individual requirements to have in place with respect to funding.

Facilitie s, of course, have to be in place , and there are , for instance, at this time four additional groups that are in discussion with the corporation for still further expansion of this program. • (15 30) For the record and for the committee members ' information, the associations can be identifi ed: Delta Plains in the Carman district, we have one in the Teulon district, one in the southwest district at Del oraine, one in the Ste.

Rose district, Vita, Riverton, Prospect, Hamiota, and the Dugald area, the Baldy Moun tain are a, Sif t on, Killarne y, Sandbills, in the community of Austin, Beausejour and Roblin, involving a total of 327 individu al producers. They are contracting with, what they call, 149 contracts involving over 13 ,500 fe eders, and the loans currently outstanding on the se, at time of this compilation on this particular group, was some $8.79 million. I indicated to the honourable member that it is my fee ling, I could be wrong, but I just believe that there will be considerable growth in this program .

The program bas grown, for instance , from 1992, when the program was intr oduced. In the first year,

2742 LEGISLATIVE ASSEMBLY OF MANITOBA May 31, 1994 we had some 8,000 cattle on feed. In the year just concluded, 1993, that moved up to slightly in excess of 20,000. I suspect that the '94 figures will show again substantial growth. As I mentioned, the actions taken by our sister provinces of Alberta and Saskatchewan will in fact encourage that growth. So I have asked officials within the COipOration to kind of anticipate that gro wth.

I ask honourable members of the committee, if I should need some additional financial resources to acc ommodate that growth, I would like to think that the honourable member for Swan River would be among the first that would accompany me to Treasury Bo ard on some occasion and help me persuade that group of my colleagues that I will choose not to put on record what I sometimes may wish to put on record. Ms.

Wowchuk: I would welcome the minister 's invitation to join him to pursue additional funds to help the growth of any sustainable industry in rural Manitoba, and I will wait for that invitation to deal with that. I want to still continue on the feeder association program . When an ap plication is made, is the credit rating of each of the people who is in the association taken into consideration?

It is my understanding that if an individual bas been involved with the COipOration, bas had diffi culty in farm ing, perhaps bas gone through the Farm Debt Review Board, that be or she will not be allowed to be one of the partners in the COipOiation. Mr. Enos: Mr. Deputy Chairperson, I want to report to the committee that we are dealing with public taxpay ers' funds, and we wish to do that with the prudence that the taxpayer would expect of us.

I attach absolutely no blame on governments past or curren t, but particularly in the area of beef livestock we have bad several diff erent programs which, while I am sure provided support to certain levels, certain de grees, but also in some inst ances , and including even to the current time, left the department or the government of the day holding on to some accounts that simply have not been repaid. That is, I sup pose, normal happe nings whene ver you grant lines of credit.

It happens to banks, it happens to credit unions, it happens to our Crown COipOration, although I am pleased to report, and I will be pleased to answer a specific question on that, to a very, very low degree. Certainly in the area, particularly of some of the past support programs for the beef cattle industry there have been some less than totally satisfying exper iences , in terms of putting the necessary security behind the kind of loan guarantees and loans that were made. So the procedure is quite rigid, quite frankly, in this instance, and it bas a high degree of self-discipline in it.

First of all, the individu al, if an individual bas a poor credit rating or bas bad a bad credit experience, be bas to first of all be app roved by the group that be is joining. The seven or eight or nine other people that are part of the co-operative group have to accept him or her into their association. Their individual credit ratings then have to be app roved at the bank, because the major portion of the financing is done through the bank and private ly. It then is app roved by our own credit coipOiation because of our involvement.

We have had instances , I am advised, where a member that bas fo rmed a co-op group like that bas bad an outstanding balance with the COipOration of a loan that had not been paid off. It is then incumbent upon that member, prior to app roval being given, for that loan to be repaid. In fa ct, I am advised by the general manager that that bas happened on several occasions.

So there is a great deal of -you may wish to say from one point of view maybe too much-int egrity attached to the kind of exposure that the public purse bas in its program, but we have all the more of the confidence that we have in the program and all the more, quite frankly, that I am prepared to press my colleagues, my government for our full support of this program. It is in the interests of the agricultural community that more of our livestock is fed in Manitoba rather than shipped abroad , because when we ship them abroad, we ship the jobs out of the province as well .

We have re asons to be concer ned about consuming more of our fe ed grains available in the province, particularly should there be ongoing

May31, 1994 LEGISLATIVE ASSEMBLY OF MANITOBA 2743 changes to the levels of support for putting feed grains into export position as a result of changes to the Crow benefit. 1ben all the more reason for us to be placing ourselves and positioning ourse lves in such a manner that we can find a home for a substantial percentage of our home-grown barley and other feed grains through various forms of livestock. Ms.

Wowcbuk: I have to agree with the minister that we should be looking at fiojsbing as much stock as possible , and I hope that as minister be will pursue even further the possibility of also processing that product so that we get even more value-added jobs from the livestock that is raised here in Manit oba. Pursuing the fe eder association loans further, the minister said that first the person has to be app roved by the seven peo ple that be or she is involved with, but if that person, for examp le, bad a loan written down by the cotporation, is that a rej ect?

A doubtful account written off, so to speak, would that be reason for the cotporation to reject him or her? •

(1540) Mr. Enns: Mr. Deputy Chairp erson, the short answer is yes. I have a short conection. 1be limit of the total in the association that can form is 15, so they can have fairly significant groups . Ms. Wowcbuk: Mr. Deputy Cbahperson, I have a specific case that I would like to talk about. However, I do not want to put any names on the record, and I would perhaps later be able to talk to the members of the st aff to have this particular case pursued.

It is a farmer who bad faced some diffi culties several years ago and bas now become well established, but because of the record that be had several years ago, be is unable to participate in a fe eder association although the association is, in my understandin g, operati ng. I would like to perhaps talk to the st aff and see what we can do to help him pursue this avenue of farmin g. Mr. Enos: Mr. Deputy Chairperson, I certainly invite the honourable member for Swan River to do just that.

It is always appropr iate , in my opinion, for any member of the Legisla ture to approach st aff with sp ecif ic constituency problem s. I, quite frankly, think it is helpful in this case. We are talking subjective opini on. It is recognized that the individuals can have bad a diff icult ex perience but that ou ght not to unnecessarily fol low them throughout their lives .

How does one re-establish that credit reputation is by interve ning in terms of, in some instances, simply good character ref erences, which in my judgment the honourable member could provide and/or providing the lending agency with additional information or just causing them to open the tiles and review a past appli cant's situation. I am sure that st aff will be more than willing to do that, and I want to invite her to provide that information directly to the staff at her convenie nce. Ms. Wowcbuk: I will pursue that after we are done with this section.

I want to just ask, again, about where the cotporation is going as far as leasing land. 1be cotparation over the years came into a lot of property, property that was taken back. Has there been any change in policy? Is the cotporation pursuing to sell a lot more of the land they have taken or are they still renting land out? What direction is the cotporation going in right now as far as the land that they have in their holdings ? Mr. Enos: We have two kinds of basic categories of land held by the corporation, those that are covered under long term and/or short term.

One to five-year leases are, of course ,-the decision to sell or not to sell is at the call of the lessee to some extent. There are provisions in the lease for the lessee to exercise a purchase option, but in any event they are long-term leases, you know, over five years up to the age of 65. We have some 42 of such leases covering some 12,000 acres of land valued at over-around $1. 5 million. We have another 262 short-term leases, that is one year to five years, and that covers some 84,000 acres ofland. Now that is a category ofland held by the cotporation.

From time to time some land moves as the lessee exercises the option to purcha se, but as I said before that is at the call of the les see.

2744 LBGISLAnvE ASSEMBLY OF MANITOBA May 31, 1994 Other than that the corporation is under instructions to move land, to sell land whenever app ropriate and possible, and there is a steady sales activity that takes place, and overall the figure is declining. We bad, for instance , in the year '92-93 so me 121 ,640 acres of land held by the COipOration. That figure in '93-94 was reduced to 109,016 acres. Total value of the land in '92-93 was $22.4 million, '93-94 is $20 million. 1bere is no direction or certainly no instruction to the corporation to fire-sale the land.

We have app ropriate procedures in place calling for a tendering process, unless it is to an existing les see who bas the option, after due appraisal bas taken place, to meet the price that is being asked by the corporation. 1ben the land is sold. It is the desire to reduce the land portfol io, and the corporation is under that instruction. Ms. Wowchuk: Well, there are a couple of questions here. It is the desire to reduce the amount of land that the COipOration is holding. I wonder is there difficulty leasing that land out? Is it sitting idle?

Has that always been the intent of the COipOration to tty to reduce the amount of land that they are holding, and is that a new goal to tty to reduce the amount of land in the corporation 's holdings? Mr. Enos: Mr. Deputy Chairperson, let me explain it this way to the honourable member for Swan River. You see, an acre ofland owned by the government bas a capacity to produce 40 bushels of whe at. That same acre of land simply transf erred to private ownership produces 60 bushels of wheat. That is bard to explain, whether it is genetic or whether the Lord meant it that way, but that is the fa ct of life .

So that is a political philoso phy that differs from the one that you bold but one that I bold very deeply. Very big and proud nation that I am proud to say my fo rebears came from, tried for seventy years to change that They are finding out now that that simple equation I just put on the record in fact is true. There is a de sire, a greater husbandry, a greater stewardship of the land that is owned by a farming producer than of land that is leased. Ms.

Wowchuk: I do not know where the minister gets those figures because I know many fann ers who lease land and who make a very good living of it and put their best effort into taking off a good crop. I do not think it is fair to taint all farmers who lease land as people who are incapable of producing to the best of their ability or that they take advantage of renting land and do not wolk as bard at it, because I do not agree with the minister on that.

But since it is the direction of this minister, and be bas indicated in the past seven years that the direction be is taking is to reduce the amount of land that the corporation owns, I wonder what kind of hardship bas this put on some farmers and of the land that is being sold.

Are the people who have been leasing the land given the first chance to buy that land when it is put up for sale 7 Is there any special consideration that is given to them because they have been worldng on that land for some time, and in many cases it is land that they have owned but through diffi culties have lost it and are now leasing it back, or is it that when the corporation decides that it is going to sell a piece of land, are they just going to put it 01,1t on the market and then put a tremendous amount of pressure on those people who are in it right now? • (15 50) Mr. Enos: Mr.

Deputy Chairperson, there is every effort made to accommodate the fa rmer in his time of difficulty. H for reasons of farm fai lure, the farm operator requires the services of our mediation board, and the corporation is forced to fo reclose or take back the la nd-and that is how the corporati on acquires the land-every effort is made, and in many instances succe ssfully, that we lease back that same land to the person who is in diffi culties .

Now , having shed himself of some of his immediate financial proble ms, very often be is able within a relatively short period of years, within that five-year period, to exercise the option that be still retains to buy back the land that he formerly owned at the evaluation placed on it by the corporation.

May 31, 1994 LEGISLATIVE ASSEMBLY OF MANITOBA 2745 Now, quite frankly, this is usually done at some cost to the publi c Treas ury. When I take these Order s-in-Council fo rward to full cabinet for appr oval, they are looked at pretty directly. Because there have been some significant l osses for the Consolidated Revenue, if you like, in the sense that here you bad fann er A who bad maybe a $1 50,000, $200,000 or $300,000 loan with the corporation and, for whatever reasons, ran into financial difficulty and could not pay off the loans against the land. The land of course was chattel security for the loan.

The corporation moves in and takes the land away, fore closes on the farmer, but does not throw the farmer off the farm, and offers the fann er an opportunity to stay on that property and to rebuild himself. Very often operating loans and other loans have built up far in excess of the value of the land.

While maybe a $300,000 loan in fact has been written off and is on the books, four years later or five years later, when that farmer has brought himself into a position where be can now make a bid on repurchasing his land, be is purchasing land that may be at a price of $18 0, 000 or $200,000, and on the books, and in real life, we do not ask the far mer to pay back the accumulated debt that originally got him into trouble . He has an opportunity to purchase back the land at the value as duly app raised by the corporation at the time of sa le, and very often that is a considerable diff erence.

So quite the contrary to what the honourable member is suggesting, I think this is a very legitim ate and serious support, that through the co rporati on, through our Mediation Boa rd, through the Department of Agriculture, we try to do and provide every service possible to help regain a farm fam ily onto a firmer fi nancial fo oting, which includes the ownership of their land. Ms. Wowcbuk: The minister indicates that the leasing program, holding the land and leasing it back to farme rs, costs us money and it costs the province money and that there have been loans that have been written down.

Can the minister indicate in the last year what it bas cost the corporation to write down loans? When he indicates that there is a loss in leasing land versus selling it off, how much bas it cost the corporation to hold that land and lease it out versus selling it? Mr. Eons: Well, Mr. Deputy Chairperson, it has been made plain to me that what in effect happens is that when a loan is defau lted, which brings about the taking back of the land by the corporation, there is an ongoing mortgage against that land that we owe to our Treasury Boanl, to our consolidated revenue .

The corporation assum es these costs, plus any interest charge s, and those are some of the costs that I refer to. Those payments are made and the mortgages concluded quite separate from the future sale of the land back to the party who was ori ginally in trouble. The party is not-y ou know , the loan, the mortgage is looked after by the corporation and we in fact assume, absorb , all that cost (Mr. Bob Rose, Acting Deputy Chairperson, in the Olair) I do not have the global figure for what that may have cost. You· know, I do not know bow large it would be-4 and 8 percent of the value of the land.

We would have to compile a figure to put that in a global context. Ms. Wowchuk: I would appreciate that if at some point the st aff could find out what it is that it is costing the government to pick up mortgages, and what kind of costs are absorbed by the province when these situations arise where the province has to take back the land and carry the mortgage. I think that that is an important figure that we take into consider ation. Many times we have urban members who question us on what the cost is of these corporations, and I would appreciate that figure.

Just on the doubt ful accounts, then, I would think the doubtful accounts would not take into consideration the mortgages that you pick up from land. These are accounts that are not being paid off, I suspect, and I wonder how much was spent on doubtful accounts. Perhaps the minister could give some clarification on what those doubtful accounts are .

2746 LEGISLATIVE ASSEMBLY OF MANITOBA May 31, 1994 Mr. Eons: Well, again, Mr. Acting Deputy Chairperson, I can only state that in the past few years there has been a very satisf actory overall turnaround in the perform ance, partly reflecting a somewhat more optimistic mood and feeling out on the farm along with some improvement in commodity prices, notably in the cattle prices, the red meat cattle prices. We have a very low percentage of arrears. As of March 31, '94, only 2 percent of our entire loans portfolio is in arre ars. That is out of a total loans portfolio of $2.4 million and some 6,322loans.

We have in '93-94 what we would call direct loan write -offs, in total some 55 for a monetary total of $1, 31 2,000. •

(1600) That action was taken in the year '93-94, but it covers a span ofloans over a period of three or fo ur years or more. These actions , as the member will app reciate, take a considerable time. It is a fa irly lengthy procedure bef ore the COipOration makes that final decision to totally write off a loan. We make every attempt through the various leasing arran gements, the various arran gements we have with the fo nner property owner, to maintain some presence on their farm .

Well, the member asks these questions, the write-offs, and these were the kinds of write-offs that were called upon because of the very serious difficulty that too many of our producers found themselves in. Some date back to the years '83, '84, '85, but they show up-I give the member the figures fo r '92, '93 and '94. In the year ending March 31, '92, upwards to $3,470, 000 of doubtful accounts were written off. 1be following year, '93, some $4,348,000 written off.

I am advised by my manager that really we are over the hump of the bulk of the bad loan situations, and that is reflected in the pretty consid erable drop in this year, 31st, '94. From where it was in excess of $4 million last year, it is now $1, 31 2,000. I will think aloud, and if the staff shakes their heads in unison with my talking, then I know that I will be on the right track.

I am assuming that that is the total write -offs of the loans that have gotten into trouble, $300,000, $400,000 loans that a farm er may have had that we have had to maybe fo reclose and take back the land, and the land value is only maybe worth subsequently $50,000, $60, 000 or $100, 000, but there is a $200,000 loan. 1be staff are shaking their heads in unison, so I am right, and that accounts fo r these write-offs. What it says, and I want to say this not unkindly, something about the management that allowed the COipOration to have that level of doubtful loans.

I am quick to also acknowled ge, as the honourable member will quickly remind me, the extreme difficulty that the fa nning population face d in those critical years, commencing perhaps '86, '87, '88, when the sudden collapse of the grain pri ces, along with other prob lems associated, generally speaking, in the farm industry . So there has been a sizable acknowledgement of the difficulties on the farm as evidenced by the actions of this coipOration. Ms.

Wowchuk: So then, as I look at the Estimates , there was about $2.5 million allowed fo r doubtful accounts in the year '93-94, but of that, only about $1. 3 million was actually spent Is that correct? Mr. Enns: I am advised that the $2.5 million that the honourable member refers to is the provision that we put in to have available to the corporation for the write -off loans. It can be exceeded in a given year and in surplus in another year, but that is the actual provision that was written in for that pUipOse. Ms.

Wowclluk: But as I understand it, over the past few years, we have lost a lot of fa rmers because of the difficult financial situation. They have been fo reclosed on, or their debts have been written off, and there are less and less of those people who are out there. We have fewer farmers , and that is one of the reasons you see a lesser number of people in this situation here. There are less people who are now taking-those people who were in diffi culty were weeded out quite a bit earlier, and there are less of them in difficulty now , or does the minister anticip ate that it is an improved financial situation?

Mr. Enos: Mr. Acting Deputy Chairperson, I think what it indicates in the first instance is that

May 31, 1994 LEGISLATIVE ASSEMBLY OF MANITOBA 2747 there is a considerably more proactive position taken by the COiporation in moving in to provide farm management advice on the part of, you know, within the departme nt 's staff, using the full facilities of the Farm Mediation Board and a host of support programs that have reduced the number of loans that fall into the doubtful category. Ms. Wowcbuk: How many fa rmers in the last year used the Farm Mediation Board? Mr. Enos: I know that the honourable member is interested in these figures not for simply the fig ures' sake, but they do indicate the trend.

In the diffi cult years, again, '87 particularly, we bad as many as 331 app licants before the Farm Mediation Board. That then successfully was reduced, 319 in '88 to 309 in '89; 220 in '90; 194 in '91-92; 161 in '92-93 , and then with the coming of Harry Boos, 87 in '94. It is moving in the right trend. • (1610) 'lbese are appl icants before what we call

Part 6 of the act. In addi tion, there was another group under

Part 3. Those are the totals . Those are the combined totals . So what it indicates was that their workload is reducing. They are still extremely active, and the corporation is very much engaged, because part of the su ccess in tenns of successfully keeping these farm fam ilies that are in diffi culty that have app roached the Farm Mediation Board is the loan guarantee program that is being offered by the corporati on.

Very often the kind of deal breaker, if I can use that expression, between diff erent pres sures from diffe rent lending agencie s and the financial difficulties the farm fam ily finds itself in is for the corporation to be able to judiciously move in with the appr opriate loan guarantee that gives that farm fam ily the additional time or years to get itself back on its fe et. Mr. Neil Gaudry (St. Boniface): Mr. Acting Deputy Chairperson, I have missed a lot of your questions this af te rn oon, I bad a meeting previously . But going back to the Allowance for Doubtful Accounts, a lot of figures were given there .

Over the years since '87, you have given figures of all owance. What is the rate of recovery even on the Allowance for Doubtful Accounts over the periods, let us say, of the last six years , because there is always a recovery amount that ap pears no matter what business you are in in recovery? Mr. Enos: I suppose in this context the recovery would be the monies realized by the government in the land sale . You know , when a doubtful account is fore closed on it may have an accum ulated deficit with us of X number of thousands of dollars, let us say $30 0,000.

We have to for eclose on the operator, but in doing so, because we have a mortgage against land, we take ownership of the land. That is, the corporation takes ownership of the land. We have borrowed that money from the consolidated revenue , and that bas to be paid back. That is the charge against the corporation, if you like. 1be only recovery would be when we sell the land, which we do quite often and quite frequently . In some instances it could be, you know, just about very close to full recovery.

There have been some instances where in fact there bas been a slight profit made because of slight increasing in land va lues or some other parties particul arly competing for a particular parcel of land that is important to them and are prepared to pay that price. In the main that is not the case. In the main there is a significant and substantial loss because the total indebtedness is not just associated with the land val ue.

It usually bas an operating component to it, or it ma y have a cattle component to it that are no longer on the farm , you know, built-up machinery costs of which the ma chinery has depreciated and is sold for little of its original value at a forced auction sale, or something like that. So that in the main, you know, we have too many instances where that write off is substantial . The staff is giving me a figure of an actual loss on the property sal es.

I am assuming that is property sales that we have appraised on our books at certain val ue, and when we tender it out or when we go to sell it, we still lose $148,000 on a sale, but it is difficult to give the honourable member the kind of-I appreciate what be is saying. You know, if a business goes bankrupt, the business sells the remaining ass ets.

2748 LEGISLATIVE ASSEMBLY OF MANITOBA May 31, 1994 Creditors get paid maybe 10 cents on a dollar, and that would be the return. Our return essentially would be from the monies realized on the land sale . Mr. Gaudry: Mr. Acting Deputy Chairperson, having been in the accounting field longer than farming, I thought I would try and get the minister. [interjection] No, I understand, but usually the recovery is strictly from the land, and you do not go after the farmer after he has gone bankrupt or he has fo rgiven his title to the land. Mr.

Enns: The director of Administration advises me that we do not pursue that individual after we have made a settlement. 1bere are some instances of settlements where the terms and conditions of a settlement allow us to continue to pursue. I would imagine that we would probably also, of course, as in the case the honomable member for Swan River (Ms. Wowchuk) asked about, an unsettled account, and then the party , that farmer pursued, comes back some yea rs later to the corpo ration for some further consideration.

Understanda bly, we would then pemaps want that initial account paid off prior to accepting him in good credit standing, him or her. Mr. Gaudry: Mr. Acting Deputy Chairperson, in the Net Interest Cost and Loan Guaran tees, is this just interest cost on the loans, or what is the diff erence between the net interest cost and loan guarantee s? Mr. Enns: Mr. Acting Deputy Chairpers on, that is a combination of the cost of the Young Farmer Rebate progr am. That is a direct interest reduction cost that we pay.

We have probably borrowed the money again, as I have said several times, at fixed amounts from the Consolidated Revenue from the Department of Fina nce. It is also- yes, as I indicated, that amount constitutes some $3,720,000. The len ding programs account for another $350,000, the interest portion thereof, and the loan guarantees which we provide to the co-op fee der loans and our guaranteed operating loans-we offer a program of guaranteed opemting loans to farme rs, and that guarantee costs us some $200,000 in intere st. Mr.

Gaudry: This guarantee that you are talking about is guarantees to the financial institutions? Mr. Enns: Yes, these are dire ct guarante es to either the credit unions or the private banking institutions that are involve d. Mr. Gaudry: Thank you. Ms. Wowchuk: I want to deal with the MACC and leasing of property again, and I want to talk about a specific case where the client was leasing. He refinanced his property and, in fa ct, it went to court. I am talking about a Mr. Phil Schwarz. It was my understanding that MACC fo reclosed on him and that he did not agree with the decision of MACC.

The courts twice ruled in his fav our that the property should be sold to MACC, and they were wa iting for an Order-in-Council to go through cabinet That has not happe ned, and in fact that land has been sold to someone else at this time. I know that minister maybe does not know about this case in detail, but can we have some explanation as to why, when the court said that it should go in Mr. Schwarz's favour, that the land should be sold to him, in fa ct it did sell to another person and the Order-in-Council for the other person has passed already? Mr.

Enns: I am advised that at issue really is simply a question of an amount of money that has yet to be determined, that constitutes the difference between what the co1p0ration sold the land for and what Mr. Schwarz believes he is entitled to. The land belonged to the Manitoba Agricultural Credit Co1p0ration. The corporation sold that land, and I invite Mr. Schwarz to continue in whatever action he chooses to take in this regard. •

(1620) Ms. Wowchuk: But the co1p0rat ion chose to sell the land to someone else rather than Mr. Schwarz, when the courts had directed them that they should sell it to Mr. Schwarz for a particular price. The only reason that it did not go, as I understand it, was that it had to go through Order -in-Council , and that never happe ned. It never went through Order-in -Council, and then the government

May 31, 1994 LEGISLATIVE ASSEMBLY OF MANITOBA 2749 corporation chose to sell it to another individual, and that Order-in-Council bas passed. Mr. Schwarz was leasing the land until last year. In fact, this year the crop bad wintered over, and be bad to take that crop off and then found out from a neighbour that that neighbour was now going to be owning the land . Mr. Schwarz fee ls that be bas not been treated fairly because the comts bad said that that land should go to him, and a different decision bas been made. Mr. Eons: Mr. Acting Deputy Chairperson, I know enough of the details of the case.

I do not for a moment pretend to know them all, but that the cor poration had given Mr. Schw arz ever y opportunity to avail himself of a number of conditions attached to this particular piece of land, including in the final analysis an extension of time to do precisely what the honourable member indicate s, to take the remaining crop off in the spring. Furthermore, be was further in a position to make whatever arran gements he wished to make with the new owner in tenns of further tenure or use of the land . 1be fact of the matter is that Mr. Schwarz was severely indebted to the corporation.

There can be some question made as to why or what reason the loan portfolio got so seriously out of order, and be was treated in no way different than regrettably other persons who find themselves in this position. The Order s-in-Council that the honourable member re f ers to are not the automatic rubber stamping procedu res. It is obviously within the purview of the Executive Council to make a decision one way or another and the Executive Council chose to exercise that prerogative . I am not a lawyer.

It would be foolish for me to get into a legal discussion as to the interp retation of the court case that the honourable member refers to, but I am reasonably assured that the legal advice that the Crown corporation had in pursuing and dealing with this matter is such that it led them to the opinion, and the opinion was passed onto myself as minister that the action taken in the circumstances was correct, appropriate and le gal. (Mr. Deputy Chairperson in the Chair) Ms. Wowchuk: I have to say that from what I have been told I disa gree with the minister. It is my understanding that on April 13 of 19 92 Mr.

Schwarz paid over to the solicitors of MACC the sum of some $89,922, being the full amount due in accordance with the judgment. The funds were sent over to the MACC

Document details

Collection	Manitoba — Debates (Hansard)
Citation	35-5-37
Type	hansard
Volume / chapter	35th 5th hansardpdf 37.pdf
Language	en
Format	pdf
Source	PROVINCIAL
Identifier	13ebd57f41193c67fdaee767902236221b10dd4d

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