MG-8048 Fourth Session -T hirty-Fifth Legislature of the Legislative Assembly of Manitoba STANDING COMMITTEE on PUBLIC UTILITIES and NATURAL RESOURCES 42 Elizabeth II Chairperson Mr. Jack Reimer Constituency of Niakwa VOL. XLII No.6· 7 p.m., WEDNESDAY, JUNE 16,1993 ISSN 0713-9454

MANITOBA LEGISLATIVE ASSEMBLY Thirty-Fifth Legislature Members, Constituencies and Political Affiliation NAME ALCOCK, Reg ASHTON, Steve BARRETT, Becky CARSTAIRS, Sharon CERILLI, Marianne CHEEMA, Guizar CHOMI AK, Dave CUMMINGS, Glen, Hon. DACQUAY, Louise DERKACH, Leonard, Hon. DEWAR, Gregory DOER, Gary DOWNEY, James, Hon. DRIEDGER , Albert, Hon. DUCHARME, Gerry, Hon. EDWARDS, Paul ENNS, Harry, Hon. ERNST, Jim , Hon. EVANS, Ciif EVANS, Leonard S. FILMON, Gary, Hon. FINDLAY, Glen, Hon. FRIESEN, Jean GAUDRY, Neil GILL ESHAMMER, Harold, Hon. GRAY, Avis HELWER, Edward R.

HICKES, George LAMOUREUX, Kevin LATHLIN, Oscar LAURENDEAU, Marcel MALOWAY, Jim MANNESS, Clayton, Hon. MARTINDALE, Doug McALPINE, Gerry McCRAE, James, Hon. MciNTOSH, Lin da, Hon. MITCHELSON, Bonnie, Hon. ORCHARD, Donald, Hon. PALLISTER, Brian PENNER, Jack PLOHMAN, John PRAZNIK, Darren, Hon. REID, Daryl REIMER, Jack RENDER, Shirley ROCAN, Denis, Hon. ROSE, Bob SANTOS, Conrad STEFANSON, Eric, Hon. STORIE, Je rry SVEINSON, Ben VODREY, Rosemary, Hon. WASYL YCIA-LEIS, Judy WOWCHUK, Rosann Vacant Vacant CONSTITUENCY Osborne Thompson Wellington River Heights Radisson The Maples Kildonan Ste.

Rose Seine River Roblin-Russell Selkirk Concordia Arthur-Virden Steinbach Riel St. James Lakeside Charleswood Interlake Brandon East Tuxedo Spring field Wolseley St. Boniface Minnedosa Crescentwood Gimli Point Douglas Ink ster The Pas St. Norbert Elmwood Morris Burrows Sturgeon Creek Brandon West Assiniboia River East Pembina Portage Ia Prairie Emerson Dauphin Lac du Bonnet Transcona Niakwa St. Vital Gladstone Turtle Mountain Broadway Kirkfield Park Flin Flon La Verendrye Fort Garry St. Johns Swan River Rossmere Rupertsland PARTY.

Liberal NDP NDP Liberal NDP Liberal NDP PC PC PC NDP NDP PC PC PC Liberal PC PC NDP NDP PC PC NDP Liberal PC Liberal PC NDP Liberal NDP PC NDP PC NDP PC PC PC PC PC PC PC NDP PC NDP PC PC PC PC NDP PC NDP PC PC NDP NDP

137 LEGISLATIVE ASSEMBLY OF MANITOBA THE STANDING COMMITTEE ON PUBLIC UTILITIES AND NATURAL RESOURCES Wednesday, June 16,1993 TIME-7p.m . LOCATION- Winnipeg, Manitoba CHAIRPERSON- Mr. Jack Reimer (Niakwa) ATTENDANCE- 9- QUOR UM- 6 Members of the Committee present: Hon. Messrs. Cumm ings, Ducharme, Mrs. Mcintosh Mr. Alcock, Ms.

Cerilli, Messrs. laurendeau, Reimer, Santos, Sveins on APPEARING: Sharon Carstairs, MLA for River Heights Don ald Vernon, Chair pe rson , Mani toba Hazardous Waste Management Corporation MATTERS UNDER DISCUSSION: Annual Re port of the Manitoba Hazardous Waste Management Corporation for the year ended December 31, 1992. *** Mr. Chairperson: Will the comm ittee on Public Utilities and Natural Resources please come to order. We have before us the following report to be considered, the Annual Report for the Manit oba Hazardous Waste Management Corporation for the year ending December 31 , 1992.

Copies of the report are available to committee members on the table behind me. I would in vite the honour able minister responsible to make his opening statement and to in troduce the staff present this evening. Hon . Glen Cum mings (Min ister of Environment): I ha ve Don Vernon, the Chairperson and Acting CEO of the corporation; George Harms, who is the Manager of Finance; and Alun Richards, Manager of External Affairs; an d Jim Johnson, who is working with the corporation on our business plan. I will put a few comments on the record.

The corporation was established to plan to develop a comprehensive hazardous waste management system for the province, provide operational waste mana gemen t ser vices as req ues ted by govern men t, busin ess and in stituti ons. The corporation does not have a monopoly in providing services or in developing facilities. In fact, it has actively en cou raged the involveme nt of other in vesto rs and ope rators. The corporation is regulated by the Department of Environment on the same basis as any commercial hazardous waste operator or developer. The waste ma nage men t system plannin g is complete.

Much of it is focused on source-based waste management, which will be one of the major driving forces in the industry. Providing services to waste gene rators through audits, advice and onsite waste management conti nues to be the major part of the corporation's business. In 1992, it assisted about 170 waste gener ators.

I would indicate to the committee that I think this is one of the unique aspects of the corporation, in the approach that it is taking to reduce hazardous waste in this province, and that is the co-operative and in forma tive pr ocess that we em bark on with gene rators whenever we are in contact with them. The corporation helps sponsor The Manitoba Waste Exchange, em ploys people through the On-Site progr am, assisting un em ployed pr of essiona ls in finding em ploymen t in the environme ntal industry.

These are some of the means that have ensur ed that 85 to 90 percent of the hazardous waste produced in Manit oba could be managed at source. The ma jor prim ary sou rce-based waste management in itiative was the joint venture with Western Waste Management to develop and operate a system to capture, test, consolidate and treat about 20 mi llion litres per year of contami nated waste water. The success of this pu blic priv ate ventu re also demons tr ated cost-effective, source-based management through both onsite and offsite services.

The corporation has become a signi ficant operator and has waste business in this province.

138 LEGISLATIVE ASSEMBL Y OF MANIT OBA June 16, 1993 And '92 began with the board having to decide between two sites for the location of the Manitoba central hazardous waste management facility. In March, the "licence Application and Enviro nmen tal Impa ct Assessment" for Montcalm was filed and referred to the Clean Environment Comm ission following the June hearings, in which 13 of the 14 mostly local representati ons supported the project. The Clean Environment Commi ssion concluded that any environm ental im pacts for the facility construction and operation would be mitigated.

Manitoba Environment issued a Stage 1 licence in September to allow the basic site preparation work to begin. This was completed by November in readiness for facility constru ction. Full licence to construct and operate the Manitoba Environment Centre was issued in April of this year, and the site's innovative environm ental monitoring system is now in place. Mr. Chair p erson: I thank the mi niste r for his commen ts. Mr. Cummings: Am I being cut off, Mr. Chairperson? Mr. Chairperson: No. I am sorry. I thought you were finished. To conti nue, Mr. Minister. Mr. Cummings: I will make it quick. Mr.

Cha irperson: You pau se d too long for a breath. Mr. Cummings: The corporation and the province ne gotia ted and concluded historic agreemen ts with -we ll, this is the impo rtan t pa rt-the Municip ality of Montcalm, ensuring protection of the community's interests and effective implementation of the co-operative management process . This gives the co mmu nity a ma jor role in the developmen t and operation of the facility, an example of which is that we have appointed two locally chosen people to the corporation's board of directors.

Again, I think that we are finding this is one of the unique and very well-received aspects of the ap proach that corporation has ta ken, recogni zed both her e but na ti onally and internationally in groups where I have had an opp or tun ity to talk to them about how the corporation has managed to achieve a site. The Manit oba Environment Centre will include phys/chem treatment, biore mediation , secur e landfill, transfer and storage capab ilities. The 15 7-acre site pro vides the op portun ity to incremen tally develop the facilities necessary to meet the changing and growing market.

Both the siting process and the com mu nity­ corporate partn ership in developing and operating the MEC have attracted international atte ntion, were recognized through an award presented by the International Coalition for Land and Water Stewardship in the Red River basin. Montc alm's informed decision to support the project demonstrated through two years of public discussion and a referendum that siting facilities such as this can be done using communi ty as well as envir onmen tal, techn ical and commercial criteria.

The process begun in '89 was faster and more ef fe ctive than siting exp erie nces in other jurisdictions. The resulting site has exceptional environme ntal qualities, and given its proximity to the city of Winnipeg and to major transportation routes, we believe it is an excellent location from a business perspective. The corporation has been seeking outside investment in the Man itoba Environment Centre and the associated waste management system. There are signi ficant private sector interests from companies with both exp ertise and financial strength.

The business plan has been released to these companies and will be the basis for the next stage of discussion and negotia tion. We hope that by this time next year the fu ll Man itoba Environmental Centre will be under const ruction. In the me antime, to help solve press ing envir onment prob lems that we are fa cing, a bioremediation facility is being constructed at the site . This will safe ly and effec tively treat soil conta mi nated with petrol eum produ cts that otherwise could be an environm ental hazard.

Priorities have changed from system design and facility siting to inc reased comm ercial operation presence and full facility development. We expect this to be implemented through a combination of public and private sector involvement in a manner that is responsive to the needs of Manitobans and this region. This concludes my in troduction. I will now invite questions. Mr. Chairperson: I thank the min ister. Does the critic for the official opposition have any statement?

June 16, 1993 LEGISLATIVE ASSEM BLY OF MAN ITOBA 139 Mr. Conr ad Sa ntos (B ro adwa y): Mr. Chairperson , I am not the critic for the official opposition, but I would like to ask some questions. Mr. Chairperson: Okay. Then I will ask the member for the- Mr. Santos: Maybe the member for the third party may want to make some statement. Mr. Chairperson: Yes, I will ask the member for the second opposition, Mrs. Carstairs, whether she has some opening statemen ts? Mrs. Sharon Carstalrs (River Heights): No, I do not have an opening statement, but I do have also questions. Mr. Chairperson: Mr. Santos, to question. Mr.

Santos: In the annual report on page 3, it state s: Th e Man itoba Hazardous Waste Manage ment Corporation is a commercial Crown corporation. What does that entail-c ommercial? Mr. Cummings: I am sorry, is the ques tio n: Because it is a Crown, what does that mean in terms of the operation? Mr. Santos: It is classified as a commercial Crown corporation. I am just asking what signi ficance is the word "commercial," or the classification? Mr.

Cummings: Well, I think the one conclusion that can you can draw from it is that the corporation is not going to be operati ng in a monopoly, that it will be operating in a competitive com mer cial environment, but it is there to serve, as well, the public policy approaches of this government and future governmen ts in the inte rest of hazardous waste ma na ge men t in the provi nce . As a comm ercial Crown, the word "commercial" I am sure is what raises flags. That means it will operate in a competitive commercial environment. Mr.

Santos: Does it mean it has equal standing to compete with any other private concern? Mr. Cummings : In the areas for which it is mandated to operate, yes. Mr. Santos: Does it mean that it is also seeking profit? Mr. Cummings: Yes. Mr. Santos: If that is the case, why did it provide services, according to page 8, without charge-in the fir st paragra ph ther e un der Household Hazardous Waste? Mr. Cummings: As a Crown, I said it operated within its mandate.

Part of its mandate is education and providing public education, and in and of itself can extend to the fact that they have been absorbed in the costs of running the hazardous Waste Exchange, which is really the Household Hazardous Waste exchange behind Ward Lab. I believe that is probably the item that the member is referring to. Mr. Santos : On page 3, objective 4, it says , "Encourage economic development through the provision of a cost-effective waste management system and the enhancem ent of environmentally based enterprise s." How does the min ister define the term "cost-effective"? Mr.

Cummings: As I st ated in my openin g remarks, I suppose cost-effective is just what it says, but I think, in the mandate of the corporation, we are talking about working with the corporations that are faced with waste managemen t problems. The corporation has a m andate to encour age source-based reduction to begin with. A lot of companies historically were, let me just pull figures out of the air, shipping X number of tonnes, but they could with the expertise and advice that we made available through the corporation upon contracti ng them to help them deal with their materials.

They may well find that is 50 percent of X and all of a sudden reduces their costs, but at the same time allows the corporation to be involved with them contractu ally, to treat their waste and treat it at a cost in the long run that might have been less than what the corporation was paying before. "Cost-effective" means at the best cost. That is why we talk about the corporation working in a com petitive business. If ther e is a company existing that can provide the ser vice and the needed handling capabilities and can un dercut the corporation in cost, then they are more than welcome in the market. Mr.

Santos: The fact that it is a commercial Crown corporation means it can have some business relationship with other private enterprises. Mr. Cummings: Yes. Mr. Santos: Does it have any such relationship with one so-called Ma n- West Envir onme ntal Ventures? Mr. Cummings: The answer is yes.

140 LEGISLATIVE ASSEM BLY OF MAN ITOBA June 16, 1993 Mr. Santos: Wha t is the na tu re of the relationship? Mr. Cummings: The question was? Mr. Chairperson: Mr. Santos to repeat. Mr. Santos: The item shows on the Statement of Operations and Deficits, page 18. Mr. Cummings: Yes, I can add to that answer. Man-West Environmen tal is listed here as: • ... has been contracted to develop and operate a com prehensive system to cap ture, test, consolidate and treat approximately 20 million litres per year of contami nated waste water." That was the matter that I referred to in my opening remarks.

There is an explanation on page 14. * (1 91 0) Mr. Santos : What is Man-West Environmental Ventures? Who constitutes that concern or that enterprise? Mr. Donald Vernon (Chairperson and CEO, Manitoba Ha zardous Waste Management Corporation): That is the corporation itself and a company called Western Industrial Services. We are involved with them in a joint project. Mr. Santos: You are in a joint venture with this concern? Mr. Vernon: Yes. Mr. Santos: How much did they cont ribute to the establishment of the facility? Mr. Vernon: I cannot answer that question. I will have to take it- basically it funds itself.

It is self-genera ting, it generates profit. As a result, we do not have any money in it. All we are doing is we are making money from the association. There was not a capital cost involved in it. Mr. Santos: Are you saying that in this join t venture, only the governmen t, through the Mani toba Hazardo us Waste Ma nagement Corporation, is putting all the risk and all of the capital? Mr. Vernon: No, as I indicated to you, the amount of capital was minor. Since that time it has been recovered, so there is no risk with respect to it at all. Mr. Santos: Mr.

Chairperson, according to the Statement of Operations and Deficit, share of net income is negative , $48,000 loss. Mr. Vernon: No, the way the statemen t is set up, that is actually revenue, that is net revenue. Mr. Santos: Oh, I thought it is in parent heses. Mr. Vernon: No, not the way the statement has been formatted. It is actually revenue. Mrs. Carstalrs: Let us begin with the board of directors. Can the minis ter explain why, when there is not a lack of women in environmen tal fields, there are only three out of 12 on the board of directors who are women? Mr.

Cummings: In fact, that is something that we have been working to correct. One of the ladies that was previously on the board resigned. We did mak e a poin t of replacing her with a lady. A numb er of these board members have been here since the previous administration, frankly. Yes, we are below what we would believe would be an equal or fair representation in terms of distribution between men and women, but it is not something that we are unm indful of. Mrs. Carstalrs: In tha t it is a relatively new corporation, can the minis ter explain why, of the five table officers, there is not a single woman? Mr.

Cummings: Mr. Chairperson, that is as a re sult of the func tio n of the boar d and not some thin g that th is mi nis ter direc ts . The appointment of the chair, obviously, is mine, but in terms of how the board arranges itself on committees, the board has made that choice itself. Mrs. Carstalrs: Can the minister tell me then if this particular board has an affi rmative action policy? Mr. Cummings: At the board level, no. Mrs. Carstalrs: Will the minis ter rec ommen d to this board that they immediately pursue obtaining an affirmative action policy? Mr. Cummings: That is fair advice, yes. Mrs. Carstalrs: In the

section on Hou sehold Hazardous Waste, the board report speaks about activities that they have been providing in rural and urban Manitoba. Can the board, or through the minister, inform us as to what are their projects are for 1993? Mr. Vernon: Mr. Cha irperson, the projects for 1993 are we will cont inue to maintain the Winnipeg operation on Owena Street. We will attend other areas as requested, and that is the basis on which

June 16, 1993 LEGISLATIVE ASSEM BLY OF MAN ITOBA 14 1 we have operated in the past. When requested to atte nd , we mak e our faci lities and exper tise available. Mrs. Carstalrs: Am lied to believe then that all of those who have requested facilities have obtained them from this corporation? Mr. Vernon: Not facilities, but certainly services. Any rural centre that has asked us to come out and run a Household Hazardous Waste Day, to the best of my knowledge, we have complied with that request and will cont inue to do so. Mr. Cummings: If I could add to that, Mr.

Chairperson , as the previous ques tioner was looking at, this is in fact something that we believe is proper for the corporation to take a proactive approach. While it is an expenditure, it is certainly not for profit, gener ally given the mix ture of materials that come in at the Household Hazardous Waste Days. That has been the subject of some discussion, actu ally, bet ween the corporation and the department over the years as to who this should be properly lodged with.

It seems to me that the corporation has some obligation to provide some community or public good will, if you will, because the pu blic should also feel comf orta ble approaching the corporation and getting advice or in formation that they need directly related to hazardous waste. So I have encou raged this to continue under this fashion. Mrs. Carstalrs: Dur in g the Estima tes of the Minis ter of Environ men t (Mr. Cumm ings), the actual report did not come up, but obviously the corporation came up for some discussion.

We were, I think, and I do not wish to put any words in the minis ter's mouth, given the understanding that the corporation would in fact be looking at raising fun ds through outside ventu res with other corpora tions. I think that is accurate. Can the min ister, or indeed the chairman, in form me as to what specific groups they are working with now in terms of finding that funding? Mr. Cummings: I will ask the chai rman to elaborate. In a general sense, we have looked for companies with, first of all, strong environmen tal kno wledge and basis that are already in the industry.

In looking at them individually, of course, then their financial strengths and relevance to our needs become important. I am not sure that we can, or should, in fact, I know we should not list companies by name. Some of them have received the business plan of the corporation on the basis that they provide us confidential informat ion. But I think perhaps the chairman could elaborate a bit more on some of the criteria that we are looking at. Mr. Vernon: The approach that we have taken is based on our knowledge of the industry.

We have contacted a number of corporations, both Canadian and American, and outlined to them the position that we are in, what our basic objective is and asked them if they would like to consider investing in the project that we have in mind. The response so far has been very encouraging. I think we have five major organizations that have indi cated a willing ness to discuss the proposal with us and have, in fact , visited us in Winnipeg and have seen the site. This process is proceeding. There are more coming to us all the time. We are very concerned about who we start negotiating with.

If they are not outstanding and with an unblem ishe d recor d in terms of their dealings with the envir onment, we are not interested in speaking with th em. That is the primary criteria. The other criteria is, of course, that they do have the resources to become involved in a project such as this. We are optimis tic that within the next month we will probably get down to four or five companies that we will get into serious negotiations with, with the view of perhaps taking two to three right to the wire. We want to do that because we feel that only by doing that will we get the best deal for Manitoba. Mrs.

Carstalrs: The mini ster was quite correct. I did not expect them to give me the names of the companies they are in the midst of negotia ting with. That would be fallacy. Can he give us some more details on the kinds of company, the kind of product that they are now producing or the kind of service they are now engaged in that would make them interested in looking at this facility? •

(1920) Mr. Vernon: Mr. Chairperson, we are looking at companies that basically, I guess, the best way to put it is, the organizations that we are looking at offer all services in the total spectrum of waste management,

whereas we are looking at basically a phys/chem operation. So any organization we

142 LEGISLATIVE ASSEMBLY OF MANIT OBA June 16, 1993 are talking with basically does far more in that area than we are doing. We are looking for a partner that has a clean environme ntal record, ideally a company that has not had problems with the courts, and beyond that an organi zation that can bring the operating expertise to Manitoba that we believe we need in order to run an efficient, effective waste disposal organizati on. Mrs. Carstalrs: Can the chairman or the mini ster tell us what the fees are that are paid to the board of the waste managemen t commission and the result of 811122 on this particular. Mr.

Cummings: All of our bo ards and com mis sions have taken the sam e 4 percent reduction as we are asking everyone else to take. The remuner ations are not high, but I do not know if we can remember them off the top of our head. I am told that they are being paid $190 per meeting, and that was reduced by the amount, by the 4 percent. Mrs. Carstalrs: Is there additional remuner ation for the chair and the vice-chair? Mr. Cummings: Yes, the chairman received originally $20,000. We have an agreement by contract to have him accept the dual role that he is presently serving on a tem porary basis. Mrs.

Carst alrs : One final questi on-the Provincial Auditor is listed here as the Auditor for the Mani toba Hazardous Waste Management Corpor ati on. Ther e have been a numb er of changes with a lot of agencies of government moving away from the Provincial Auditor. Is there a dete rmina tion with regar d to the Ma nitoba Hazardous Waste Management Corporation as to whether the Provincial Auditor will conti nue to be the Auditor on record for this particular corporation? Mr. Cummings: The Provincial Auditor, I am told, will continue. Mrs. Carstalrs: I am sorry, I did not hear. Mr.

Cummings: The Provincial Auditor will be cont inuing. Ms. Marianne Cerllll (Radisson) : Going back to the issue of the delay with finding some private inves tors and how it came to be that this was now delaying the construction of the facility. Just give us more of an explanation of the course of events that led us to where we are now. Mr. Cummings: Well, it depends on how far back one wishes to go. The fact is that the corporation has been going sinc e 1987. When Min ister Connery, who was Environ men t minister before I was , was in offi ce , he had en cou raged the corporation to speed up its activities.

The sites by then had been identified on a broad, regional basis as to where the acceptable soils were. Then we move fairy quickly to some specific areas. Without wasting mu ch time on it, in a nu mb er of communities, frankly, the corporation was, I guess to be polite about it, kicked out once they got past the first or second meeting. Following on that, Rossburn, Hamiota, Winnipeg and Montc alm, Pinawa in a general sense are most of the ones that made the shor t list, but the comm unity still seeme d to have some active support for the project or at least a group working actively in supp ort of the project.

That was narrowed down. Obviously, Rossburn went into a prevo te refe rendum whic h was lost. That eliminated them. The same thing happened in Hamio ta. Pinawa was not rated the highest in terms of environmen tal location. We moved very quickly to the next two sites, which were Winnipeg and Montc alm, and frankly Montcalm moved the process along. They had a referendum in the comm unity that established it as a responsive commu nity. Winnip eg chose to study and then study further.

So then moving at that point, as the member has correctly referenced, a lot of people thought that we would simply go to government coffers and raise the money and build the centre and operate it as a Crown, complete, separate and commercial Crown. It became apparent that there were other options that needed to be further exp lored, including coinvestment with companies that had resident expertise and had strong market development in te rms of how they had been dealing with the products and had strong financial backgrounds, so that it was not all taxpayers' dollars that were at risk.

I think one thing that we need to clear right away is tha t we are not talking abo ut the kind of arrangement that appears to be in place, and I do not mean to be critical because Alberta has moved along well and has handled an awful lot of waste, but in the arrangem ents that they have, it is could best be described, I suppose, as cost-plus with the

June 16, 1993 LEGISLATIVE ASSEMBLY OF MANIT OBA 143 company they have an arrangement with-does that properly summarize it? As I understand it, that probably is not as efficient a funding process as we believe we can put in place here in Manitoba. The province had really three options: the full Crown, fully owned as the government, taxpayers being the complete shareholder, to a complete, I suppose, devolution of the corporation to a private entity .

We are not interested in either end of that spectr um, because the pr ovi nce has given com plete ass ur ance through agree men t to Montcalm that we will continue to own the soil at that site . In other words, the long-term liabilities are assumed by the province. By putting people on the board from the local community, we have given them direct input into the kind and nature of any owners hip and mana gemen t devolution of the corporation. It seems to me that given the initial responses that we have had, that we likely are going to be able to find companies that will want to invest.

The real key becomes the fact that the Province of Manitoba and the taxpayers of Manitoba have approximately $13 million invested in this operation today. Some people would state that the actual value of that varies widely. It is our view that the site and the ex pertise and the licence, the goodwill, all the things that are there as a result of that investment, are of very high value and that may well constitute a good portion of the investment.

We would still maintain the owner ship, but the breakdown, the precise breakdown of how, in a general sense, going beyond that will depend on type of expertise and investment willingness that what we think our provincial partners out there would bring to the table. Ms. Cerllll: The issue that I am trying to have answered is, what changed from when we first made the decision that we were going to have this facility made where, I think the minister alluded to that there was an initial plan to operate it as a Crown, as we usually in this province have had a Crown operate, so what changed?

What was the course of events that led to this decision, and I guess from there, why was that decision made to go to this joint arrangement? Mr. Cummings: I have to tell you that as we were going through the licensing process, all of our energies wer e focused on that aspect of development. It became increasingly apparent to me and to the boar d th at there were oth er in vestment opportunities rather than simply have the Minis ter of Finance (Mr. Manness) write a cheque.

The province does not have unlimited borrowing loan capacity, and it seems to me that if you bring expertise to the table that has some of its own money at risk that they are going to provide very careful management and be able to bring private sector expertise to bear on some of the problems that the corporation will undoubtedly face as it develops its technical expertise and as it develops its market in terms of what materials it would be taking. *

(1930) Let us remember that even with this facility, not all of the hazardous waste materials produced in this province will be treated at this site and there may well have to be marketing opportunities to move that waste into other parts of the conti nent or treat it in facilities different than what this one would have the capability of handling. Tying all that together, I believe that it is an area where we need to have the expertise that has been developed and combine that with the expertise of the corporation and the regulatory capacity that we have through the licence.

The licence is a very strong licence and does commit the corporation to a very stringent opera ting regime. It seems to me to be as close as you are going to get to the best of both worlds. Ms. Cerllll: What the minister is saying is that they have decided that the Province of Manitoba did not want to pay the entire $30 million or so for the facility to have a Crown, and now we are having delays in construc ting the facility because of that decision. Mr. Cummings: Well, yes, I hope the member is not trying to put words in my mouth.

The term "delay. n if you consider that the construction for the site preparation began last fall, before the final licence was issued under a special permit from the Department of Environment, then you sure as heck cannot say there has been any delay. During that period of time, we also released the money for an engineering study of some $700,000. Now, that does not seem like a lot of money, but if it was yours or mine, it is a heck of a lot of money. The fact is it is a lot of money that has been put

144 LEGISLATIVE ASSEM BLY OF MANIT OBA June 16, 1993 forward in su pport of this corporation movin g forward. That preconstruction design and engineering that is being done is being done in the effort to make the construction phase move forward as quickly as possible. If the other offset was that we have to wait until the only option is have the Min ister of Finance (Mr. Mannes s), as I said, underwrite the loan authority, it could have been delayed longer than when we would like to have construct ion. We are on schedule.

In fact, we are ahead of schedule, when you look at the time frames that have been in place in order to get a site in other parts of the country or other parts of this conti nent. That is the nice part of this whole project. We have found a friendly communi ty. We are now moving into the soil remediation process. Agai n, ano ther in itiative th at the government has said, we will get it going now because we are not going to wait while these other negotiations and discussions are going on. There is a desired market out there right now.

We have got what look like some very positive opportunities to get that soil moving this summer. I really would be resentfu l if the member chooses to characterize that as being delaying. Ms. Cerllll: Well, were there not dates quoted, even in the annual report, that there would be construc tion under way the spring of '93, if I remember correctly? If there were those dates quoted, were they quoted when there was not the agreement ma de for inves tors and joint operations? (Mr.

Marcel Laurendeau, Acting Chairperson, in the Chair) If that is the case, why would those dates have been quoted for construction to commence if the corporation knew that there were no inves tors secured? It seems like there was this interest in putting forward the idea that this facility was going to proceed more quickly than it was. But the other issue of, why were there dates set for construction if you knew that there was no securing of joint investors? Mr.

Cummings: The closest you probably will find to a prediction of that date is that we said that the earth work preparation would be attempted to be com pleted by freez e-up and the licence to construct would be issued in early '93. The licence to construct, not that-and that has been our target. We are constructing. It may not be as fast as having a $1 0-million or $15-million investment in place, but we are on target. The site preparation has been done. We are spending $600,000 in getting the soil remediation underway.

I think the only delay that one could talk about this in terms of is whether or not the government is prepared to write a cheque and start constr uction, as far as I know , I do not think we have completed the engineering design yet. So you cannot really expect us to start putting cement and concrete , or concrete and steel in place. Mr. Vernon: Mr. Acting Chai rperson, there is one other point, I think, that needs to be made. You refer to delay. I am not sure why you think there is a delay.

I am not sure what date you are referring to but the point is that until the licence is issued, we are not in a position to negotiate with anyone because any private sector partner that we would choose to negotiate with will not even talk to us until they see the licence. You are perhaps correct, there were some individuals who were very optimistic. My position is a very simple one: I want it done right. If it takes an extra year, it is too bad. Ms. Cerllll: There are a numb er of issues that we are dealing with at the same time here.

Initially, when I started the questioning it was dealing with the decision to move to private investors. Initially, I do not remember hearing discussion of having private investors involved, and if I could just have a clearer indication of when the initial proposal for the facility was made, was it not the intent that this would be a Crown corporation? Mr. Cummings: It is and will cont inue to be a Crown corporation. That Crown corporation may well be involved in the joint venture in the operation and owner ship of the facility. The aspect of was ther e a change in ap proach made .

The corporation, as they came closer to their realization of a licence and began to turn its mind toward construction and finance , had to start putting forward its business plan and make presentations to substantiate further loan authority. In that process, it was recognized that maybe we had not explored all the options. To give you a time frame, I am not sure that I can, but I frankly do not apologize for the fact, as we looked at the financing

June 16, 1993 LEGISLATIVE ASSEM BLY OF MAN ITOBA 145 of the corporation , that the board agreed that there were additional options they could look at. Ms. Cerl lll: What is the cur rent

schedule for financing and construct ion? Mr. Cummings: As the chairperson just indicated, we had a list of prospective companies that we would hope would be interested in being involved, but frankly until the Departmen t of Environment put the final JT on the licence there was not anyone out there who was pre par ed- their imme diate response would very well be, until you have a licence that is signed, you really do not have anything for us to talk to you about. Those discussions are now underway with a number of companies who are responding to the busin ess plan that the corporation has in place.

You recall last win ter that we indic ated we wanted the corporation to refine and develop its business plan so that, whether it was seeking additional private sector dollars or whether it was going to conti nue to operate as a Crown, it has to have a busine ss plan and one that is supportable, and we believe that there is a very good one there now. There was certainly a business plan in place but one that needed to be expanded upon. *

(1940) That is quite a shift in gears for a company that has spent about five years intensively out there dealing with the public in terms of providing the assurances that they had the capability to operate a site safely, that they had a real need in the province. I think the majority of people accepted that there was a need for this sort of facility, but, frankly, when you go to talk to communi ties, they do not always agree. As we moved through that process, we moved into the next phase.

For me to say now, well, we expect to be pouring concrete by fall, I suppose I might be back here next year answering the same question if we do not make that deadline. I anticipa te that things will move forward, and whether there is concrete poured this fall or next spring, there is in fact a soil remediation facility going up on site that will be very active and will deal with an environmen tal problem that we have not been able to deal with in this province before.

Some of the soil has been left in the ground, some of it has been stored, some of its has been land farmed, some of it is hidden behind bulk tanks out in some of the tank farms I suspect. There is good progress being made. We cannot show you at this point in terms of the major facility but remember that the corporation is actively involved on a day-to-day basis right now moving hazardous waste, hazardous materials into safe hands, if you will, for treatm ent today.

Even without its own fa cility, it is out ther e com peting with other companies to find the best market on behalf of some of the operations in this province. The thing that we will have, when we have the facility going, is a cost competitiveness that we have not had before because of the transportation cost. We are stuck her e in the middle of the continent.

The greatest place to live as far as I am concerned but it is not necessarily close to the indus trial heartland where the facilities that we might need are readily available, so there is high cost to industry locating here if it has a high volume of hazardous waste that it needs to deal with. The sooner we get this facility in place, this is a very key part of indus trial expa nsion in this provin ce, but rem ember that the basis of the industries that we are dealing with also shift. I would suspect that you would not have a problem identifying, and I cannot off the top of my head give you a case study.

I think you would find that the dema nds of the indu strial com mun ities have changed over the last decade as well and that is something the corporation has to be very sure on as it takes forward its business plan.

That is one of the things that will help us decide whether or not their business plan is, and I am confident it is, as good as we believe it is in terms of the inves tors that will want to be here, because they will be double checking the work that the corporation has done to decide if the market is really there that they say is there, if the demand is there that they believe is there, if the volume is there, and in this business volume is everything.

That is why I have consistently said that I want to, and I am happy to say that I do have a good working relationship with the present govern ment in Saskatchewan in terms of looking at how they see their hazardous waste management unfolding as well, because some of the availability of market is very im portant. Some of their indus tries are parallel to ours. Farm machinery, construction and the waste that comes from that is parallel in both provinces.

146 LEGISLATIVE ASSEM BLY OF MAN ITOBA June 16, 1993 Frankly, we are a long way ahead in terms of that development and at the Western Environment Ministers' meeting about a month ago, we had a very good discussion on a regional basis as to the volumes that need to be considered. We are all busy identifying our volumes, but we all recognize the fact that we cannot in each province have the kind of facilities that would handle the complete cross

section of materials that need to be handled. Ms. Cerllll: The mini ster and the chair of the board have both talked about being on

schedule and even ahead of

schedule for moving to operation of the new facility. So I have just asked what is the

schedule that you are operating un der. There has been an indication that hopefully by fall, there will be some construction of the major part of the facility. If you could elaborate on that, or tell us even when you hope or plan to have an agreement signed with co-operating invest ors. Mr. Cummings: I was very careful with what I said, and I was not trying to be cute. I said-well, you cannot make me cute anyway.

The fact is that I have been very careful to talk about the fact that we were looking at if I said we were going to be having cement poured by fall, I would probably be back here trying to defend the fact if we did not make it. When I said we were ahead of schedule, I am talking about the fact that we did not even antici pate having a site by now, frankly. We did mo ve ex pedit iou sly when the com mun ity of Montcalm made up its mind that it was prepared to accept a site. The engineering and design, as I said, is not com plete at this point. The discussions are beginning with the potential investors .

Frankly, I guess I am a little bit reluctant to say, well, on this date, we will begin. But if you want to quote me as saying where I believe we will move to, I see that we will have some very careful discussions before we sign any agreements, and I would think that getting cement poured this fall would be unlikely. But I am quite confident that we will be in a position to move on that front by the next const ruction year. That is why it was not inappropriate , however, for us to start with the soil preparation at the site, because it was entirely possible that financing might have been in place earlier.

But landscaping, installing the monitoring equipmen t-we have, what, a half a million dollars worth of monitoring equipment on site. Well, you can go to the site and not necessarily see a lot of activity. There is a lot of money sunk into that site that is of very high value to us as a province and, I believe, to potential inves tors who will want to operate on a joint basis. I believe the chairman is chomping at the bit to add something to what I just said. Mr. Vernon: Mr.

Chairperson, it is interes ting, but once a decision of course is made to go ahead, then the question that my political masters ask is, how soon can you have the agreement in place. I think I was asked if I could have the agreement in place by the end of the summer, and the answer was no. By the end of the year, I hope so. We have to be very careful with this. We are talking millions of dollars. We are talking a major investment for this government and this province, and the people who we are dealing with are very sharp people.

As a result, we have to be very careful as we proceed, because we want the best deal possible for the province. So I think when the minister says, pour cement this fall, I am happy to hear he retracted that, if in fact he made the statement to begin with. I am optimistic that the agreements will be in place by year's end, and that we will start full speed ahead with construction as soon as the frost is out the ground next spring. But I have to say to you that is an optimistic view, because many, many things could go wrong.

But our concern, and as I said to you earlier, I am more concerned about doing it right and not making mistakes, than rushing it and fouling up. Ms. Cerllll: Moving then to some of the criteria that you mentioned in answers to the member for River Heigh ts (M rs. Cars tairs), it see ms you indicated there were two criteria, having money and having a clean en vir on men tal record . I am wondering if there are any other criteria, particularly inves tors from outside of the province or outside of the country.

Have there been inves tors from outside the province and outside the country that you have had application from and that have been considered? Mr. Vernon: Mr. Acting Chairperson, yes, there have been inves tors outside of Manitoba and outside of the country. In fact, based on our knowledge of the industry, we invited a number of

June 16, 1993 LEGISLATIVE ASSEM BLY OF MAN ITOBA 147 companies to indicate if they had an interest in being considered. We did that by letter, and they have responded to us. We also ran an ad in The Globe and Mail and in the Wall Street Journal indi cating that we had a facility and we were looking for a partn er, and the responses from those ads are coming in now. *

(1950) So basically we are looking around. There is no question that we are looking for a $20-million investment. That is what we feel we are going to need from the private sector partner to make this thing fly. So they have to have resources. They have to have a clean environme ntal record. They have to know the business, and I am sure the professionals on staff could give you a list of a couple of dozen other criteria, but we are looking at them very, very carefully. Mr. Cummings: Mr. Acting Chairperson, not to detract the comm itte e, but I realize I have a correction to make.

I have been using the terms cement and concrete int ermittently. Cement is a dust-like powder that when you pour it it blows around in the win d . Con crete is ma de from cement, aggregate and sand and water plus other additives, and when you pour it, it is thick, goopy and dries to be very hard and does not blow around in the wind. The Acting Chai rperson (Mr. Laur endeau): Thank you for the clarification. Ms. Cerllll : I thought you were going to add to my question about where these potential investors are com in g fr om. Can we get some indi cation of where, geographically, cities, that kind of- Mr.

Cummings: I do not think that would add a whole lot to the discussion. I am aware of some of the companies, and they are from the general geographic areas that Mr. Vernon outlined, North America primarily, and I guess I am not opposed to any particular nati onality. I am interested in their environmen tal record. Ms. Cerllll: I think it is a legitimate question to ask where potential inves tors in a Manitoba Crown corporation are going to be from. I think that having this kind of partnership can really change the kind of corporation that we are going to have. There are questions of risk.

There are questions of control. There are questions of how this new model is going to be implemented in terms of the relationship with the staff and the board. So those are all the kinds of issues that I want to deal with tonight, and I think that, you know, it is reasonable to just get some indication, particularly, if they are from out of the country. I think Man itobans would want to know these kind of things. Mr. Cummings: Well,l think it is important to point to one aspect of the siting of this facility that has been unique from the start.

No matter which communi ty the corporation went into, they indicated that the province would become the owner of the property in perpetuity. In other words, if there were perceived in any way to be environm ental history left behind in the operation of the corporation, the Province of Manitoba will be the responsible body. That then leads to-in response to your question about the type of investor and how controls would be in place, and I think that was part of what you were asking-the Department of Environment will regulate this operation probably more tightly than anything else that we do.

Because not only will it be there as a commercial entity in being regulated, it will have the added responsibility placed on it to know that once you get past the-and there is no way that one can buy enough insur ance to offer complete and absolute assurances. Although I think the operation of any of these facilities is where you will get your complete assurance of its safety. So the liability question becomes one that also drives the requirement that we carefully monitor and regulate any operator onsite. I think it is worth re mi nding our selves that Cr owns are not necessa rily safer.

It does not take too much time to call to mind some of the problems that we have had in this pro vinc e in terms of envir onme ntal degradation by Crowns. Therefore, I have no qualms about saying that a joint inves tor may well be the combination of expertise and regulatory responsive ness that you get from a private/public type of corporation that will provide the best possible scenario for this province. I only point to the fact that Manfor left behind one of the, as far as I know , big ge st trails of environmen tal problems in this province to date, and it was a Crown. Ms. Cerllll : Mr.

Acting Chair, when I was referring to control I was not thin king at tha t poin t of environmen tal control, I was thinking in terms of political and financial control. I think that one of the advantages of Crown corporations, and I will not go

148 LEGISLATIVE ASSEMBLY OF MAN ITOBA June 16, 1993 into a litany on Crown corporations, but one of the attractive aspects is that it gives public owner ship. It does give us financial control over assets that then belong to the Province of Manitoba. That provides some security. I would think that there would be risk if there was foreign investment, parti cularly to this kind of industry, where it is dealing with environmental contami nation issues.

So again, I am asking for some elaboration and clarification for how this financial arrangement would work, the format in terms of author ity over the assets and the operations. Mr. Cummings: Let me assure the member that there will be plenty of opportuni ty to discuss more detail of any arrangements that we might consider. I think she has to appreciate , however, that what we are pu tti ng before ou rselves is a set of principles in an area in which we would be prepared to discuss with potential investors .

One of the first things that is of basic importance to us is the in tegrity of the company, its investment, its expertise, its record, its management, but we are also very conscious of the fact that we need to protect the best in terests of Manitobans and Man itoba dollars. That is why we are embarking on the route we are, in order to protect the investment that is there.

If the only way we can protec t that present investment is to spend another $30 million-a nd somewhere between $20 million and $30 million would be a good figu re-of additional Manitoba loan authority and ultimately tax dollars that would be put at risk, I think there are a lot of taxpayers out there who would say, well, we have quite a bit of risk already. Let us see, if this busines s is so good, is there somebody else out there who is prepared to put some expertise and some dollars at risk as well.

I do not see American-the memb er is asking as an example what would happen if American dollars were there and if they were suddenly pulled out. I have considerable faith in the expertise of the corporation and my own abilities to make sure that we will draw up an arrangement that will provide the protection that is needed for Manitobans. There are lots of ways that governments can do that. The problem is that over the years they have not always exercised those options the way they should have. I am confident that we will come up with an arrangement that we will be able to defend. Ms.

Cerllll: One of the other issues that has been raised in relation to this joint investment scheme is tha t the faci lity is being used as a poss ible investment under the Maple Leaf Fund, or I imagine another for eign in vestor would also get some mo ney though the Maple Leaf Fund. Is that something that is in fact a possibility, or has it been a possibility? Mr.

Cummings: I am not sure where the member takes her advice from, but it seems to me that we are not very likely to end up in that position, given that the in vestor fund is now in limbo, to begin with, if that is what she is referring to, and secondly, we are not talking about bringing in a private investor and then giving him loan authority for $10 million, if that is the suggestion that perhaps she is leading to. We are talking about an investor who has some real manana. Ms.

Cerllll: I think manana means tomorrow, but-1 will leave the whole issue of the Maple Leaf Fund for now, and conti nue on just dealing with the format for the agreement with a potential joint investor. What kind of implication would this have for the board of the corporation? Mr. Cummings: I am sorry, that went right over my head. Do you want to try that again? *

(2000) Ms. Cerllll: What would the relationship be, and what would the implication be of having a private investor for the board of the corporation? Mr. Cummings: I su ppose that the ultimate relationsh ip would be subject to some of the conditions of investment, but I frankly do not see the powers of the board being diminished. I think that is one of the things that will protect the taxpayers' dollars is that the Hazardous Waste Corp. board conti nues to exercise its authority, the same way as it does today. Ms. Cerllll: Would the investor have then the purview to appoint people to their board? Mr.

Cummings: Well, the member is asking a lot of hypothetical questions, and I think that is an area that is more appropriately answe red-and I would not want to put words in her mouth, obviously-but I am sure that it is more appropriate to say, what

June 16, 1993 LEGISL ATIVE ASSEM BLY OF MANIT OBA 149 possible means of protecting the environment and the investment can we put in place in any potential agreement. There is a number of formats that can follow, all of which, as far as we are concerned, we are open to discussion on. But the basic principles are that we will not relinquish our authority to take action. We will not relinquish our environmental enfor cement, and we will not put at risk any dollars that we would not consider to be a safe investment. Ms. Cerllll: Again, I think that it is a legitimate question.

I am trying to get the minister to put out the proposal for what the format for this new kind of partnership in a corporation would be. So, maybe then, just to ask the question that way-the mini ster has said that this will not be like the Alberta format. Can the minister clarify then, how will this work? How will the agreement work its way through the corporation?

I would think that an investor, particularly if they are coming with the kind of knowledge that the min ister is saying, that they should also have some expertise in the field, particularly some kind of expertise in the area of chemistry, that there would then be an interest of having some influence on the business and corporation. (Mr. Chairperson in the Chair) So I would ask for some clarification of how this relationship would work. Mr. Cummings: We are not going to lay out a sample or a model agreement under these types of scenarios , because we are ju st now getti ng feedback from the potential investors.

But, as I said, what we are starting with are some basic principles as I outlined a moment ago. I think that it is extremely speculative for me or the chairman to lay out potential models, but it is quite possible to have an investor and not have the province relinquish control, or the ability to protect its own investm en t and protect the environmen tal matters that could be at hand. There are a number of scenarios.

I think I could have the chairman speak to a couple of scenarios that could be a way of dealing with this, but I refuse to put anything on the record if down the road I am going to have it fed back to me that this is the way that we said we were going to set up an agreement. I am not so stupid that I cannot read the twinkle in the mem ber's eye when she think s she is going to get me to put something on the record she might be able to use back on me, because we started- Ms. Cerllll: My eyes are twinkling? Mr. Cummings: Well, she did not think I was cute.

The fact is that the format will have to start with the basic principles, as I stated, use different ways of accomplishing that all the way through to the type of investment similar to what we used with system ma nage men t and bri nging priva te investment to the systems management industry in Manitoba where the province has a golden share. That model, all the way throu gh the whole numb er of others, whereby the province can establish for itself the means of control.

To ask me or the chairman to specu late on what type of a model precisely, whether there will be join t boards or whether there would be joint investments or subsidiary companies, those types of things, that is far too far away today from being jus t pur e speculation as to what format we might use to use that as anything more than broad-brush comment on how we see ourselves being able to control and regulate. Ms. Cer llll: So it seems the mi nister and the corporation are taking the ma ke-u s-an-o ffer approach.

What I am looking for is, if you are not modeling it after what has happened in Alberta, then give us some other jurisdiction that has this kind of a joint corporation that you are looking at, or talk about how it would be different from Alberta because you would explain what you do not like about what Alberta is doing. I mean those are some of the kinds of answers. Mr. Cummings: Mr. Chairperson, I simply want to put it on the record that, as you ask myself and the chairman to comment, we are more than prepared to be candid about what some of the models might be.

I want to make it very clear that we have not discussed any of these. The member asks, are we taking the make-us-an-offer approach? Cer tainly in term s of the expertise and the knowledge that some companies have out there, we are asking them to tell us what expertise you have, what knowledge you would have to bring to the table, what dollars you have got to bring to the table. That is only a fair and reasonable approach to find what might ultimately devolve into a short list of potential partners . I would invite our chairman to perhaps add some comments in this area, but it

150 LEGISLATIVE ASSEM BLY OF MAN ITOBA June 16, 1993 seems to me that we are putting ourselves in a very vulnerable situation, if we talk about specifics when we go beyond what we believe should be the principles in the agreement. Mr. Vernon: Mr. Chairperson, I guess the way to approach this is to start and discuss the value of what we have. We have a 157-acre site. We have a licence, and we achieved that in a very, very short period of time at a comparatively small price. We believe that is worth a great deal to a potential private secto r partner who is already in the business.

They will look at that and say that is a nice thing to have. Therefore, the approach we have taken is to say, here is the business plan, here is what we believe we can do in this province, here are the volumes that we believe are in this province, we have a site, we have a licence, tell us what you think. Now, I will run through the discussion I had with an eastern-Canada Canadian company. We sat down with the president and basically said, here is where we are at, and here is one of the scenarios we see as a possibility, some sort of joint venture .

By the time this facility has reached operational stage, the province will have probably something in the neighb ourhood of $20 million invested. We know we are going to need another $27 million to build the facility. We have said that we feel our investment is worth $20 million, we would like to see you bring $20 million to the table and we will take it from there. We have been very specific with them that, although we are looking to a potential private sector partner to operate it, the corporation and the Department of Environment will monitor it.

They have been told in spades that the shareholder's agreement, if you want to call it that, or the joint venture agreement that we strike with these folks will lean towards the province. There will be a hammer in it. There will be a golden share in it, and if they break the rules, we would have the option to buy them out at their net book value.

As the min ister says, we are not at the point yet where we are getting down to negotiati ng various points in the agreement, but the initial discussions that we are having with these people, and we are having the same discussion with all of them, is that it is going to be, in our view, a 50-50 arrangement. There is going to be an agreement between the province and the private sector partner, and there are going to be some real tough clauses in it. .. (201 0) When I got finished outlining that to the president of this com pany , he said, how do we get an exclusive? I said, you do not.

It is not in the best in terests of the Province of Manit oba to give anyone an exclusive. I said, we are going to take two or three companies right to the finish line, because only by doing it that way can we be assured of the best deal for the province. Basically, that is the approach we are taking. It is too early to talk specifics, but I can assure you, we are not going to give a thing away. Ms. Cerllll: That provides with some clarification.

I think it would seem, then, that they would be involved once the investment is made with having some further interest in how the business is going to develop, where the focus is going to be. I know that the facility already has been given an environment licence which sets out some pretty clear parameters, but there still is room for this to develop in a certain direction, depending on the kind of partner that you get. That is what- Mr. Vernon: Mr.

Chairperson, the other point that I have ma de is th at the corporat ion has an agreement with the community, the province has an agreement with the community, and we have no intention of allowing anybody to play games with those agreements. As I say, I told the president of the company, if we find you playing games, we will exercise clause such and such, and you are out of it. Mr. Cummings: And he said, understood. Mr.

Vernon: He said, we do not operate like that, and we appreciate what you are saying, and we would expect you to monitor our operating activities to give yourself the comfort you need that we are doing it in accordance with all the agreemen ts that are in place and the licence. Mr. Cummings: Perhaps something that would help in this discussion is what I said about 1 0 minutes ago, and that is that this facility would not likely be all things to everyone in the province in terms of hazardous waste treatment.

It may well be able to provide service, market advice, even do some contract ual marketing, but it will not be of a capability of treating every single known hazardous waste.

June 16, 1993 LEGISLATIVE ASSEM BLY OF MAN ITOBA 15 1 So when the memb er refers to the potential expertise of invest ors, that is true, but that has to be tailored also to what the known market is and the business plan of the corporation, and that business plan of the corporation is based on what they believe is the known volume of materials and types of materials that would be served. Any investor would, obviously, examine that, and we will be talking to some of the potential investors that we are talking to.

However, they are operating in a way that probably has a very broad spectrum of capability and would be able to respond to what this market is or they would not likely be interested . Ms. Cerllll: One of the big questions in this area of how the relationship between the province and a joint investor would work is, how would the profits be shared? Mr. Cummings: They would be shared based on whatever agreement would be struck. Ms. Cerllll: In one of the oth er answers, the chairman of the board made a reference to the scope of the facility.

I am wondering if having this kind of joint investment from other provinces could change the scope of where the waste will come from for the facility? Mr. Cummin gs : We are governed by the three-way agreement that Mr. Vernon referred to earlier-the municipality, the pro vince and the corporation. This facility is designed for Man itoba first, but over the last decade and a half, there have been discussions in western Canada on whether or not each pro vince, as I said earlier, could have complete facilities to do everything that needed to be done.

In talking to Saskatchewan, obviously I think that a potential for some material to come from, but that is not the primary objective at this juncture. The objective is Manitoba first, and the Province of Saskatchewan certainly has not put forward a plan. They do not have a plan province-wide at this point themselves. My point is, however, that they have shown considerable interest. As I understand it, any discussions that would occur would very quickly become a subject of discussion of the board.

The local community has input, through their representation on the board, in term s of whether the corporation would even extend beyond the Manitoba boundaries in that respect. Manitoba first; bilateral agreemen ts second. I have been on record many times talking about bilateral agreements. As I said, Saskatchewan has even reached the point where they are becoming quite open with us in discussions and use the expertise of our people on some occasions. I believe there is potential there. Mr. Santos: Mr.

Chairperson, going back to the initial questions that I was asking, so there is in place now an agreement between the Mani toba Hazardous Waste Management Corporation and the town of Montcalm- An Honourable Member: Munic ipality. Mr. San tos : -mu nicipality. The muni cipality provided the land. [interjection) What was provided by the municip ality? Mr. Cummings: The mu n icipality held a referend um, first of all, to determine the degree of acceptability within the community of having this corporation estab lish a site there. There was a favourable referendum.

The agreement between the mun icipality and the corporation revolves around the recognition of the right of the local residents to have input into the board. The agreement recognizes their right to have two mem bers on the board . It also recognizes the nature of the oper ation of the corporation which is, as we have consistently presented it across the province , Manitoba first; any other material, other than Manitoba, on a bilateral arrang ement. The corporation purchased the land with loan auth ority un der which it ope rate s. Then the province also drew up an agreement with the mu nici pality .

The pro vinc e re in forced the principles that were included in the agreement with The Hazardous Management Waste Corp., plus recognized its respon sibility in terms of long-term liability, licensing, monitoring and control of any operator on that site. So those are the types of formal and binding agreements that we have in place to provide the assurance to the community. Frankly, you cannot go in today-you virtually need armed guards to establish this type of facility in an area where it was not welcome. So this has been a pretty successful

152 LEGISLATIVE ASSEM BLY OF MANIT OBA June 16, 1993 operation in that respect, and we have freely undertaken these three-way agreements that I refer to. The community has provided the response and the welcome, if you will, and the input by local people into what will occur there, but they did not put up any dollars. In fact, the commu nity of St. Jean or other parts of the mu ni cipality should benefit from the location of jobs there. Mr. Santos: Right now there is that agreement between the municipality and the corporation acting as agent of the province. Mr.

Cummings: No, ther e is a three-wa y agreement, the corporation acting on its own behalf with the munici pality, and the muni cipality and the province have an agreement as well, entirely separate but reinforces the same principles that are in the agreement between the municip ality and the corporation. Mr. Santos: I am not clear about the Man-West Environm ental Ventures. Looking at the balance sheet there, what is that $73,000? What does it signi fy, Investm ent in Man-West Environmental Ventures Capital Assets? Mr.

Vernon: The $73,000 basically represents the $48,000 which the corporation earned as a result of its involvement with the joint venture. In effect it is an account receivable. At the year end we had an investment of $25,000. I am informed that the $48,000 has since been received as has the $25,000. At the current date all of that money has been recovered. •

(2020) Mr. Santos: That money has been recovered. It came from the province? Mr. Vernon: No, $25,000 of that was the money owing to the province, that is right, and $48,000 was our share of the profits that were earned. So in effect that is no longer an investm ent. As of today all those funds have been returned to the province. In fact, the $48,000 represents revenue earned by the corpora tion . Of that $73,000, $48,000 is revenue earned. Mr. Santos: Mr. Chairperson, I am just trying to outline in my mind the nature of the relationship between these two venture capital investors.

The Man-West corporation contributed to the cost of the incorporation by providing you with its expertise. Mr. Vernon: Yes, they provide the operating expertise. Mr. Santos: That had been capitalized. Mr. Vernon: Our capital contri bution equals theirs, and our share of the earnings from the joint venture have been paid back to the corporation. It makes money. It is a cash flow in, not out, if that is what you are getting at. Mr. Santos: So it is a joint venture partner. I just want to find out what value it put up of its own resources. What did it get in return? Mr.

Vernon: My under standing is that it put up $25,000. I understand that any money that the joint venture makes, it is shared 50-50. Is that correct? Mr. Santos: Okay. The government, which is the financial backer of the corporation, ha�contributed all the operating costs, the general administrative costs. Mr. Vernon: Jus t the $25,000. That was our contri bution. Mr.

Santos: I am just trying to figure in my mind the role of the regulator which is eventually the province, but it will be acting through the Crown corporation as well, but the Crown corporation is an in ves tor in join t ventures with other priva te concerns. Am I correct in analyzing the situation? Mr. Cummings: I do not think we should overly complicate this. We are not trying to make it more complicated. I am suggesting we try and make it as straightforward as we can .

What we have here is a join t in vestment that is treating waste water from CN, a problem that they had that they were by regulation being required to deal with. The corporation and this other investor coi nves ted af ter having won a contract, a competitive contract, to deal with this material. Then the company has been making money on that contract, and the profits are represented here. The original investment has been paid back to the corpora tion, not to the govern men t. The corporation received its investment back, and it is receiving the profits from the operation.

It is one of those situations where the technology and the knowledge is where the profit is more than the investm ent in capital. There was very little risk,

June 16, 1993 LEGISLATIVE ASSEM BLY OF MAN ITOBA 153 but there was capability of doing this, because the expertise was resident with the corporation and the coinvestor. H you refer to page 14, I believe there is a further explanation that might help. I think we were using the term "government" and "corporation" inter changeably. In this case, it was the corporation not the go vernment. The corporation receives loan author ity from the government for which it must account in its process the interest costs against that. In other words, this is not like father giving son five bucks on the week end.

This is a loan for which they mu st account their interest annually. In fact, the biggest single bill that the Hazardous Waste Corp. must account for annually is its interests costs against accumulated debt, which means that they must continue to move forward.

When the member asked about whether or not we were on track and whether or not we were moving along with our busi ness plan, · one of the things that requires this corporation to keep moving its business plan forward is that if it does not, its interest costs are going to eat it alive, which is what should happen if we are really respectful of what it costs to put an enterprise of this nature, which is very unique in many of its aspects. If we are ever going to get it into action, we have to recognize the true cost of doing it. Mr. Santos : Mr.

Chairp erson, can I have a clarification now as to the proportionate share of equity ownership of Man-West in the corporation? Mr. Vernon: I am not sure of the question. You are as king, does Man-West own part of the corporation? Mr. Santos: Shares and stocks in it? Mr. Vernon: No, it does not. Mr. Santos: It does not. Is it then the corporation simply su bcontracting its obligati on with the Man-West corporation? Mr.

Vernon: I think, and staff can correct me if I am wrong, but I think the best way to describe it is that CN had a problem, they came to us and the best way to deal with this problem was to form a joint venture with Man-West Environmental and deal with the problem. As a result, in setting up the joint venture with them, we are dealing with the problem and the reve nue is being shared-50 percent to them, 50 percent to the corporation. It is making money, and it is also dealing with the problem of 20 million litres of contami nated waste water. Mr.

Santos: Okay , so ther e is this existing par t ner ship between the corporation and Man-West in cleaning up this contami nated waste water. As of now it is a profitable venture, you are saying, and the corporation is getting 50 percent of the profit. In that joint venture, what was the contri bution of the Crown corporation, as distinguishe d from the contri bution of Man-West? Mr. Vernon: Mr. Chairperson , it was $25,000 each. Mr. Santos : So, Ma n-Wes t is jus t a shell corporation, set up and also financed eventually by money coming from the province. Mr. Vernon: No.

It is a stand-alone joint venture between ourselves and another organizati on, and they contribute to dealing with this water and we do, and we share the revenues. Mr. Santos: A partn ership is an arra ngement where the partners contribute capital, each, and they ma ke money and then they distribute the profits to each, and the risks are also shared by the partner.

I am concerned about the risk, because there is right now in the statemen t, I do not understand all this state ment, but the last pa ge, you have borrowing costs there of $242,000 and $250,000 that has to be paid somehow, but there is also a net loss for the year of $234,465. *

(2030) Mr. Cu mming s : The me mber's qu estion regarding the bookkeeping amount for the year, there was not a loss. That money was recovered. Now you asked about the concern for the risk, and the corporation has indicated to me that not only, first of all, was the $25,000 in their mind not at risk because they knew they could do the job in partner ship with this other investor, but it was insur ed, so if yo ur concern was, was the corporation playing footloose and fancy-free with government loan authority, they double insu red it to make sure that it was not at risk.

In fact, what they have done here is to establish, and if I might add in terms of trying to bring this to some perspective, it is no t a lot different than wha t I believe

154 LEGISLATIVE ASSE MBLY OF MANIT OBA June 16, 1993 gove rnme nts shou ld do under many circumstan ces. They have a very specialized job, for example, that needs to be done. Why should you put somebody on staff forever that you only need for one year or for a duration? This is a joint venture where they are able to deal with a specific tender and deal with a specific problem. They minimi ze their risk. I guess there is a second part to the question that none of us are talking about.

That is the fact that we want, through this corpora tion, to have the principles of accou ntab ility and even competitiveness through free enterprise, but they have a greater responsibility as a Crown to go out and deal with some of the environmen tal problems that companies are having trouble dealing with that maybe are not getting done otherwise. So rather than being a problem, this can be a rather fortu itous situa tion, bring some of the expertise to bear in a cost-effective way, and I think one of the first questions you asked was about cost-effectiveness.

They were able to bring to bear the expertise that I talked about here in such a way that they won a contract, and that contract even turned out to be profitable. Mr. Santos: Mr. Chairperson, does it mean then that this joint venture agreement will termina te as soon as that contaminated water is cleared and the job done? Mr. Vernon: Mr. Chairperson, the answe r to the question is yes. Jus t one other point, for the '93 year to date that project has earned $150,000; $75,000 of that flows to the corporation. Mr. Santos: The system development costs, I want to focus on that.

Is that the same term as the incorporation cost? Mr. Chair person: Mr. Santos to rep eat the question. Mr. Santos: Systems development costs. Mr. Vernon: No, that basically is all the money that the corporations have spent throughout the siting process, dating right back to the beginning. There were a couple of ways of handling that. Initially, it was being expended. In other words, all the costs that were expended in attempting to get a site, we were just treating as expenses.

When I came on board, I did not like it that way, because I said, when the time comes that we build this facility, we want to know what all the costs incurred were to in fact build it. So what we did was, we capitalized those costs. Mr. Santos: These initial system development costs have been capitalized and amortized? Mr. Vernon: They have been capitalized. It is not being amortized at the present time because there is nothing to amortize it against. Mr. Santos: It says there in the notes in 2.(b), the end of the report: • ... capitalized to reflect the Government's investment ....

"; and then, "The in vestm en t will be am ortized over the useful econom ic life of the facility when the facility becomes ope rati ona l." That will become operational when you get the full licence. Mr. Vernon: When we have the full licence and the facility is in fact built. Mr. Santos: I heard the minis ter saying this facility will be in perpetuity. Is that the am ortization period? Mr. Cummings: Wha t I referred to was the ownership of the location. If there are materials stored ons ite , which there may well be, the question was raised about whose liability is that for future generations.

When you raise the question about private inves tors and so on, right away, the question comes up: Who owns the future liability? The pr ovince assured the com mu nity of Montcalm that the population of this province, who are producing the waste, will own that site in pe rpe tuity, so th at they will not be left with something that they are not sure about down the road. It is not an in signi ficant commitment, frankly, but it is important to the success of this facility. Mr. Santos: Mr. Chairperson, I can see now the emerging pattern of relationship developing here.

There will be a series of joint venture agreemen ts with whichever private concern, like Man-West, may want to be interested in the activities of the corporation. Is that the idea? Mr. Cummings: I think to say that there is a series or could be a series would be a misrepresentation of what occurs. The corporation today has some offices, a very minimal amount of equipment, and it has now moved into the next phase where it now has a site and is starting to put some facilities on that site. The only way that it could actually be operational today is to enter into these types of

June 16 , 1993 LEGISLATIVE ASSEM BLY OF MAN ITOBA 155 arrangements, because it was frankly under some direction from us through contr ols on loan authority that they are not going to be out there playing with taxpayers' dollars willy-nilly. That has never been their intention. Frank ly, the restricting

part is that govern ment was not putting forward loan authority without some known need for it, not just a theory, but something that needed to be actually done. The corporation should not be characterized in the future of potentially devolving itself into a contractor, if you will. That is not what is anticipated. It will be co-owner of an operating facility which may or may not have some, for example, delivery contrac ts, those sorts of things, but this was a very specific situation. Another example, I guess, that we should put on the record of where we actually made some profit was contracti ng.

The corporation, on behalf of the Province of Manitoba, was able to win a bid to operate, what, a three- or fou r-day household hazardous waste program in Thunder Bay. It is the only time we ventured outside of the province, as I recall. Sorry, it was Kenora, a little closer than Thunder Bay, obviously, but that was done on a for-contract basis, for profit. As the corporation devolves into the facility that we are talking about here, at the Montcalm site, those will become minimal. Their main focus will be the education aspect and the management of the corporation. Mr. Santos: Mr.

Chairperson, we are now entering in to another ce ntu ry which is classified and characterized as the knowledge-based society, dominated by technology and knowledge. The most important investment there is is knowledge. The corporation may have the physical facility. They may have the site, but unless and until they get the exper t knowledge, they cannot hope to succeed in whatever objective or goal they may have in mind. Therefore , in seeking out venture capital partners out there, they are seeking actually not only money, but also expertise.

All right, but these private venturers are not at all imbued with care for the environment. There is a motivating bottom line for private concern, it is to make money. Sometimes govern ment, and often they do, enter into joint venture capital agreements with these private entrepreneurs at the expense of the environment, at the expense of the public welfare. There is a book, and again I am repeating the theory here, one of the best sellers in Cana da today, Systems of Survival.

It details that there is an inh erent conflict in government entering into private venture with any profit-seeking concern because they cannot disassociate themselves, no matter how responsible the corporation is, they cannot disassocia te them selves from this aspiration to make money. *

(2040) Usually it is at the cost of the environment, risking not only the future of the present gener ation, but also the future generation, even the planet itself. This is the inherent conflict there. The go vernmen t is act ing, through the corporation, as an investor as well as a regulator. Yet it is going into partnership with all these private sector concerns who are primarily inte rested in making money.

That is why I am later focusing question as to the question of control, how the corporation will state its objective , its short-run, long-run and middle-range objective, how the corporation will be holding this kind of control so that it will protect the interests of the environment. Because the environment, in any geographical unit, is in herently a subsystem of the total global environment. It cannot be tolerated any more, that any of these private concerns will be sucking the resources of the public for their own private benefit at the risk of the environment and the welfare of all our people.

The question is: Is this again another instance where the government, through the corporation, is providing all the facilities, all the resources, and at the same time these private venture partn ers are providing knowledge and money, but not taking any of the risk? Mr. Cummings: No. Mr. Reg Alcock (Osborne) : Mr. Chairperson, I just have a few quick questions for the corporation, and I apologize if I tend to be a little repetitive. If I am, I am sure Ms. Cerilli will let me know, and I will read the Hansard rather than take up the time of the committee.

The only qu estion I have, just to get a little information on the difficulty in obtaining a private partner, I would just like to get a sense of what is

156 LEGISLATIVE ASSEMB LY OF MAN ITOBA June 16, 1993 standing in the way, what is preventing it? Has there not been an intention to have a private partner in this? Let me just go one step further, why is Petro-Canada talking about siting their own site and not partnering with you? Mr. Cummings: I presume you are referring to the cu rrent comm ent tha t was about the soi l re med iation propo sal. That has actu ally proceeded rather well, despite the reflection that is in the

article that perhaps we should have had a private sector partner. That partner I think had reasons that went a little bit beyond just looking at this facility to not be involved at this time, although they are subcontracting their technology to the corporation. One of the things that enters into this is a subset of a question I answered earlier, and that is to begin the oper ations and deal with some of the envi ronmental problems that we have here in the province, and I have, I make no apology for the fact, wrestled with the contami nated soil problem for quite some time.

I would make it very clear that the owners of a lot of the contami nated soil in Manit oba are large corporate bodies, primarily the large gas and oil companies, and they have known for some time that the province was going to regulate and wanted this mo ved along. They have had ever y opportunity to strike an arrangement with the corporation. They chose not to work very closely with the corporation. They did not really want to negotiate . The fact is that the corporation now has a very competitive price that is on the table.

A number of them, not repr esented by the ones who were quoted or I believe referred to in the

article in the paper, have indicated a pretty signi ficant volume of soil will be avai lable at somewher e in the com petitive range that the corporation is now talking. It is my view the corporation made the right decision knowing that we have chosen to proclaim and en force the regulations in this area. It has been known for quite some time that this summer is the year that they would become effective. The corporations, as I said, have had three years to deal with this, knowing that they would have to take this soil to a licensed facility.

As it happens, there is only one licensed facility right now, and that is the one that is about to become operational in Montcalm. For them to say that they have other licenc es pending is not true. We have an application for a test, but they want to run several thousand tons through this test. Well, I may not be cute but I ain' t stupid neither, and it seems to me that this was a rather deliberate scenario that evolved. They can take the soil where they like as long as they take it to a licensed facility, and I believe the corporation can be competitive. So this seemed like a sound investment. Mr.

Alcock: There was an intention on the part of the corporation to secure-1 am not talking about a corporate customer at this point, I am talking about a corporate partner. What prevented that? What are the im pedimen ts? What are the potential partners saying to you? Are there reasons why they do not want to be involved? Mr. Cummings: It is like the environment licence, as I talked earlier, companies that we talked to about potential investment in the corporation said, when we see the director's signature on that licence then we will believe you have got it.

Even though everything was in place, except some final adjustment s on what

part icular levels or some small adjustment of figures that might be needed to finalize the licence. Nobody in this business takes a step unless they are sure that it is 1 00 percent guarant eed. In this particular instance, the coinvestor was seeking som e ironclad assurances, and those assu rances we could provide, but eventu ally it seemed, as the corporation explained to me, that the demands for their assurances were getting to the stage that they were becoming exorbitant , not only on the corpo ration but on the poten tial customers out there.

In other words, they wanted their risk eliminat ed, and the advice the corporation gave government when it asked for the loan authority to proceed was that they felt that they had exceeded the bounds of what would be a respectable arrange ment. Again, I have to say it occasionally appears to be a little bit of a game of chicken in this business, because some people have chosen to take the position that they do not want this facility to get going. There are certain interests out there who would rather own the licence but never operate, and I make no apologies for saying that.

I am not pointing fingers or trying to libel anyone. In the business world there are companies that would like to own this licence but never operate on that site

June 16, 1993 LEGISLATIVE ASSEMBLY OF MAN ITOBA 157 because they have other facilities somewhere in North America that they would feed the waste stream into, and they would use the licence simply to run a transfer station and the economic benefits to this province would not be there. So I and the board of the corporation are running a bit of a balancing act here. Mr. Vernon may want to be able to add a little bit to your question, but I think I have covered the general concerns as we saw them being responsible for the loan authority. *

(2050) Mr. Alcock: Mr. Chairperson, I apprecia te that and I am in no way critical of the decisions that the minister and the corporation have taken. I just am trying to understand the playing field at this point. You have a variety of commercial customers, and I under stand the issue that you are raising there.

Your potential investors, were they people that were seeking better control over their own pricing, or were they-the last part of your answer seemed to imply that these might be partners from other ventures international ly, or I assume from south of us, that are making a business investment, looking for some sort of return. Is that still in the offing? Is that realistically out there, or have we made the decision that this will not occur at all? Mr. Cummings: I am certainly trying to provide as much in formation as I can in ans wering the question.

The potential coinvestor is still going to be involved because they are going to rent their technology to the corporation, but they will not be involved in the profit.

The corporation in this case has rearranged its approach to this so their capital inves tment will be mu ch lower than they had originally intended, and therefore they were able to accept the risk easier because the risk of them doing it alone would now be probably in the same range as the original joint venture might have been, even though we expect to be able to handle virtually the same volumes as I understand it-1 am getting a nod from behind me here.

I think the bottom line, to be perfectly honest, in trying to put this into a context is that it was the recommendation based on the knowledge that the corporation has that some of its confidential information that I cannot put on-or the corporation would not want on the record, but basically the assurances that were needed to be provided were star tin g to become so bur densome that the corpora tion actually saw a sign ific ant profit potential here and decided that it had now reached that balance, flipped it the other way, that we would go it on our own, although that is not our choice for the long range for the major facility.

Mr. Alcock: So you are still seeking an additional partner, or seeking to refine the relationship with this current potent ial. Mr. Cummings: The Hansard will show that we discussed this at length before, and the major facility is still seeking probably $20 million of private sector investment. Ms. Cerllll: I was going to ask questions on this too. So the soil remediation facility is going to go ahead, and the corporation is going to put forward the entire $600,000. Will that $600,000 be from next year's budget, or is that from un der this budget? I do not see that indicated here. Mr.

Cummings: Current year, that would be '93, '92, no '93-94 loan authority, or was it old loan authority? It is old loan authority from '92. Ms. Cerllll: Oh, so that does not answer the question I was going to ask about the loan authority that was just issued. I do not know if there is a date on this one. There is $2 million that has just been allocated. Is that for this project or is that for something else? This is June 9. Mr. Cummings: That is ongoing loan authority for the corporation.

Some of that will go for Systems Development as well, which is the ongoing costs of operating the corporation as it prepares to get up to speed. Their costs, however, do continue to be offset by revenues that they earn. In fact, they will be close. I suspect that the corporation, in terms of operations, will break even this year. Ms. Cerllll: That sounds excellent. That was one of the things I was going to ask. Looking at the deficit from the last couple of years, I was going to inquire about what the losses have been or what kind of things have been creating the greatest expenditur e without having recovery. Mr.

Vernon: Mr. Chairperson, if you would go to page 18 of the annual report, maybe it would serve the group if we just went through that statement. The first part of it deals with the Operational Waste Management Programs and that is basically our commercial operation, which showed that at the end of the year we gene rated some $25,000 in cash, based on volumes of about 1.1 million.

158 LEGISLATIVE ASSEM BLY OF MANIT OBA June 16, 1993 Basically the net loss for the year is because of the Public Waste Management Programs that we carry out. This is done basically without revenu e. I guess the Household Hazardous Waste Program is in there, plus any other public venture that we get involved in. Then, of cou rse , the Syste ms Development costs do not appear here. They go into the balance sheet item on page 17, Systems Development, and it is cross-referenced to Note 3. So, from the point of view of our Operational Waste Management Programs, they are break even.

In other words, we are generating more than enough revenue to cover our costs, and the only items that are contributing to the net loss for the year are the Public Waste Managemen t Programs. Ms. Cerllll: So the $2 million for the loan from this Order-in-Council is just going to the revenue that comes in the line for this coming year? Mr. Vernon: Mr. Chairperson, during the year, as we go through the process of finding a private sector partner, as we carry out our public programs, we need money. That, basically, funds the general operations of the corporation.

Some of that will be for System Development; some of that will be for Public Waste Managem ent Programs. A lot of it is for interest, as I keep reminding the minister. Ms. Cerllll: So this year we want to be balancing the budget, but we are still going to be paying the in terest from the prev ious years. How mu ch mo ney is going to in terest, and where is that shown? Mr. Vernon: Well, the interest is being capitalized. It is $626,000 to finance last year for interest. Ms.

Cerllll: So ther e is an agreement, or an arran gement, though, where that is being paid, I think it is to the Royal Bank, even though the loan is coming from the Province of Manitoba? How does that work? Mr. Vernon: Interest is paid to the province, but at the prime rate of the Royal Bank. Ms. Cerllll: In the long run, how does the province fare with this relationship, with the way that they give out money through The Loan Act? Mr.

Cummings: Well, as I tried to explain before, this provides a framework within which all of our Crowns can recognize that, and I think it is very valid that they recognize that loan authority is not just free money. Somebody is paying interest on that money, particularly when the province is in debt. We are borrowing to ope rate within the province, and any loan authority that we have ultimately has a cost. It does not have a cost when it is sitting there; it has a cost as soon as it is spent.

If the question is, how does the pro vinc e ma ke out on this arran gement, the dollars are im portant, but it seems to me, in my own simple acc oun ting method, that if the corporation has to acknowledge the real cost of the dollars that it is using, it helps them deal with their own business plan to recognize that there has to be a return.

That return has to recognize that there has been a cost to getting into business, and if that is not recognized, then you are never able to answer the question about whether or not you should have done this beyond the policy and the desire to deal with environmental matters correctly. It does not me an that you deal with it stupidly in terms of finance. There has to be an accounting for the way the dollars are spent, and this adds, I think, a real impetus to the corporation to get on with the job. * (21 00) Ms. Cerllll: I can appreciate that. This is a way of keeping the corporation more accountable.

What I am trying to understand is, what is the comparison between the interest that the province gets from the corporation as com pared to the interest that it is paying on the loans that it has? Mr. Cummings: I do not have the figures. The Minis ter of Finance (Mr. Manness) would probably have to do a little calculating. We would probably make a wee bit. Ms. Cerllll: It is inter esting if people wer e recognizing, then, that the Crown corporation is actually, through this kind of arrangement, making money for the province. Mr. Cummings: I am being totally candid with the member.

It could flip the other way, I suppose, but highly unlikely. The fact is that it depends on what the province is able to borrow money for. That has been quite favourable in most cases recently. Ms. Cerllll: I will move on to another area that also has been a concern in terms of the corporation, and that was the surprise of having the director leave. I think, as was reported, it was a surprise, and there was never really any explanation for the reasons for

June 16 , 1993 LEGISL ATIVE ASSEMB LY OF MAN ITOBA 159 that or the course of events that led up to that. Can the mini ster put any more information forward to clarify what were the reasons for Mr. Cooke leaving the corporation? Mr. Cummings: No, I cannot. Ms. Cerllll: Was it, then, a personnel matter? Mr. Cummings: Mr. Cooke had a contract with the corporation and, yes, it was a personnel matter. It was decided by the board that his contract would not be renewed. He was, I believe, treated fairly, and I made it very clear and Mr. Vernon has made it clear that we will not comment beyond that in the interest of Mr.

Cooke's best interests and everyone else's. This is a private matter and a nonrenewab le contract. Ms. Cerllll: So did Mr. Cooke leave, then, at the end of his contract? Mr. Cummings: Yes. Ms. Cerllll: I think it raised a lot of questions in people's minds, then, if they did not know it was at the end of the contract, but even then, if it was still a personnel matter, but after that, seemed to be when all the issues around the private investment into the corporation started becoming more public. Was there interest in having private investors before Mr. Cooke's contract was completed? Mr. Cummings: No. Yes? Ms.

Cerllll: Yes, I thought so. I guess the other question, then, is, where are we in terms of finding a new director? Mr. Cummings: Mr. Vernon has taken on the dual role, and while we are not frantic ally looking for a new president We are reviewing that role, and we are getting along qu ite well, in my view, at a cost to the corporation somewhat less in total than we would have had before, because Mr. Vernon is doing it on a dual role and that has allowed us to manage efficiently.

The roles will emerge and change as the company goes through the next process and, yes, it is very possible that we would have a new president, but I cannot give you a date as to when that might happen. Mr. Vernon has given me a commitment that he will work with us in the near term to keep the process going, and I am quite happy with those arran gements. Ms. Cerllll: This is, I think, highly unusual, is it not, to have a former chair of the board of a Crown corporation then fulfill the role also as the president or CEO of that corporation? Mr. Cummings: It is not unusual.

I remind you that this corporation only has 25 employees. What we have is some pret ty capable middle management people that are working with Mr. Vernon, and that makes the job one that can be managed under the arran gement that we have outlined. Ms. Cerllll: How have the staff, including the presidents , been hired in the past? Mr. Cummings: Would you repeat the question, please? I kind of missed the first part of it. Ms. Cerllll: How are the staff and the president hired for the corporation? How have they been hired in the past? Mr. Cummings: The board is respon sible.

The president's position is ratified by cabinet, and the other staff are the responsibility of the corporation, and beyond some of the gentlemen that I see regularly, and ladies, I have no knowledge of most of them. Ms. Cerllll: Well, without any disrespect for Mr. Vernon, this does seem kind of unus ual. When would you have had Mr. Vernon become the president or the chair of the board? Mr. Cummings : It was about two and a half years ago when Mr. Vernon first became chairman of the board. Excuse me, when I recall the process here, Nick Carter was the chairman when we became government. Nick served under Mr.

Connery, and he stayed on with myself for some period of time. I have been minister for fou r years, so that means he was chairman of the board for almost two years un der my tenure, and he tendered his resig nation. I accepted, and in looking for a potential chairman, I knew of Mr. Vernon's obvious strong financial background, which was important when the main function of the corporation at that point was its siting but also was going through an awful lot of dollars. As I said, we have spent $13 million in this area since the incep tion of the corporation, I believe, as we total everything up.

So it was, I think, a very happy arrangement. We still have some existing board members from the previous administration on for a long time. Fran kly, I see the corporation as one of those areas where

160 LEGISLATIVE ASSEM BLY OF MAN ITOBA June 16, 1993 we have got all of the political parties from the province and all of the various philosophies coming together and saying, this is a job that has to be done. It really has not been a problem for me. Ms. Cerllll: Is the board chair just appointed by the min ister or does that go through the boards and commissions process? Mr. Cumming s: It is from the recommendation of the min ister through cabinet. Ms. Cerllll: So we have had Mr.

Vernon appointed to become the chair and then within a couple of years the previous chair did not have the contract renewed and then he became both the chair of the board and the CEO for the corporation. Mr. Cummings: Just to correct the terminology, it was the previous president or CEO that was there by contract . His contract ended, ran out, and was not renewed, and Mr. Vernon agreed to take on both responsibilities. Mr. Santos: If the chief executive officer is hired by the board, is it not then the board hiring one of its own? Mr.

Vernon: The Hazardous Waste Act stipulates that the pr esident mu st be hir ed by Order-in-Coun cil on the recommen dation of the board. Mr. Santos: So it is really the board who is the recru iti ng, recom me nding authority , and then confirmed by cabinet. But if it is hiring one of its own members, especially its own chairman, is that not acting as contracting with itself? Mr. Cummings: No. *

(2110) Mr. Santos: How can tha t be no when the chairman is the spokesman of the board and the board is the policy-making body and the hiring authority of the table officer, and then the chairman of the board will be hired as the chief executive officer who is also the chairman of the board? Mr. Cummings: This is not that unusual. As I said before, we are talking about a corporation that is very small. We are also talking about an interim position. You do not find chief executive officers overnight. I came in to government, we operated for a year on an acting head of MPIC, multimillion dollars annually.

We picked somebody from the internal workings of the organization. But your point about the chairman and the president, both authorities being resident with one person ·, that is not all that unusual. Under a number of circumstances you can point to a lot of rather large corporations where that in fact is the ca se. The chairman in this case identified this as an issue and very clearly allowed the board to ma ke a decision and a recomm endation without any coercion from him. That was indicated by the communic ations that I received from the board.

I concurred with the recom me ndation on an acting basis to put Mr. Vernon in as chair and president. It has worked exceptionally well, thank you. Mr. Sant os: If this wer e a fa mily-owned corporation, I could un derstand it. The chairman of the board of a family-owned corporation may also be acti ng as his own chie f exe cutive officer because it is owned by the family, there is only one owner and one interested party. This is a public Crown corporation and with all due respect, I see some kind of inconsistency there, unless this is simply a tem porary emergency arrange ment.

I suggest that it should not cont inue for long. It is the obligation of the corporation to find a new chairman or elevate its vice-chairman and then hire the former chairman afterwards, but not during, at the same time. It would be like a person eating his own vomit. Mr. Cummings: Well, I totally reject your analogy. Mr. Chairperson : Shall the Annual Report of the Mani toba Ha zar dous Waste Ma nagement Corporation for the year ending- Ms. Cerllll: I will move on to another area.

I want to deal with one of the references in the annual report, and it is made a number of times, that this whole industry depends very much on enforce ment of regulations. I want to, first of all, ask the min ister to explain-! alluded to this also in the Estima tes on the department-regard in g the enforc ement policy that the government is un dertaking. Has there been any change in the operations or the business of the corporation because of changes in enforc ement of regulations? Mr.

Cummings: I would say no, because the corporation is terribly conscious of the regulatory regime that we have in the province and has,

June 16 , 1993 LEGISL ATIVE ASSEM BLY OF MAN ITOBA 16 1 frankly, I would have to say in my view, sometimes been exceedingly cautious in terms of its actions and its recommen dations as to how its operations are performed because of the added onus that is on it, being a publicly owned Crown. I think the subset of your question is, is the province more capably enforcing its regu lations these days? The answer is yes, because we have modestly but gradually and consistently increased our enforcement body out there.

We now have the additional sections of The Danger ous Goods Handling and Transportation Act proclaimed, and we are beginning to see results from that as more material is driven into the regulated waste stream. Ms. Cerllll : Well, that was going to be one of the questions I was going to ask. I know that there has been a lot of talk about how im portant those regulations were, or additions to the dangerous goods act, so if the minister could elaborate on what is happening differently now so that this is helpful.

It shows in the report that there is a 150 percent increase in capacity of business that the corporation is doing. How has the new sections of the dangerous goods act affected or benefited the corporation more specifically? Mr. Cummings: Well, they were not passed to benefit the corporation. The influence will be that there are people out there who are now regulated who will need to contract expertise and find ways of dealing with their materials. I think one need not cast about too much in terms of just the dangerous goods, there is also the fact that we are now prepared to regulate the soils in the province.

One of the things that held us up was the argument that the corporations always brought forward, well, there is no place to treat it. The loop is now closed or will be closed within a couple of months. There is a place to treat it. A regulatory regime is in place. That will have a major impact, frankly. That is one of the things that will impact on the corporation, because they will be a major player in treating these soils. Ms. Cerllll: Do the changes in the dangerous goods handling act affect other areas besides soils? There is shown an increase in business for the corporation that has not come from soils yet.

Where has that increase come from? Mr. Cummings: I am told that it comes from a broad range of activities, bidding on waste service contracts of a variety. I can give you a couple of examples if you give me a second. The Man-West contract that we talked about before obviously is an example. The corporation is contrac ting with Bristol. Ms. Cer llll : Neither of those seem to be increases due to impr ove men ts in legislation an d enfor cement. Mr. Cummings: Bristol is. Bristol's licence is being updated, so that is a direct result of increased activity on the part of the De par tm ent of Environment.

I agree there is a linkage between the department and Hazardous Waste Corp., but I hope we do not spend too mu ch time on this discussion, because it really does relate to whether or not the Department of Environment is doing its job more than whether or not Hazardous Waste Corp. is. Ms. Cerllll: Well, part of the question I am asking is if there can be shown to be an increase in the amount of hazardous waste that is coming to the corporation. I just want to get some more clear explanation of where this is coming from. Mr.

Cummings : Well, the Hazar dous Waste Corp. will be a benchmark and will be a major player in the ultimate neutralization or handling of a good portion of the waste in the province. They are not the sole operator. There is a lot of activity going on with other operators as well. The increase in volume of material that is regulated in the province does not all end up in the hands of the corporation today, nor will it in the future. •

(2120) Ms. Cerllll: I guess what I am looking for is some indication of what industries or what kinds of operations are having more of their business for waste management come to the corporation. Mr. Cummings: I think the correct answer to the question is related to a number of factors that we have talked about before, part of which is, that one of the mandates of the corporation, as I indicated, was to help waste gener ators right onsite.

Whether it is the Hazardous Waste Corporation or whether it is their own technology, there is an awful lot of waste that is being managed out there right now that never leaves the site of the company that produces it. The reduced volume may end up in the hands of the Hazardous Waste Corporation or in the hands of another treatm ent facility or even at

162 LEGISLATIVE ASSEMB LY OF MAN ITOBA June 16, 1993 a transfer facility that will send it somewhere else to be treated. So everyth ing you say is correct about volume being driven into the system, and that is one of the things that makes the siting of the facility and the construction of the facility more meaningful. A regu latory re gime has to be wor king. The corporation tells me that it is working, but you cannot always judge just how well it is working by what the corporation ends up with because there are people, as I said, managing it themselves.

The volume of waste that is being managed in the province, I am told, has gone up considerably. The corporation is one of the benchm arks you would use to judge that. Ms. Cerll ll: I can app reci ate that ther e is a diffe rence, and I know that it is a smaller percentage of waste that is dealt with that comes offsite from a corporation, and that is the intent. The 85 percent is the figure that is usually used for the onsite handling.

What I am wanting to get some indication of, and I am not looking for names of specific corporations, just general industries: What industries are using the corporation, and where is the increase coming from in terms of industry? Mr. Cummings: Metal fabricati on; aerospace, which has an element of metal fabrication in it as well; and transportation industry. Ms. Cerllll : When you say transportati on, what do you mean? Mr. Cummin gs: I am refe rring to the transp ortation indus try generically. Airlines, railways and trucking companies do produce a fair bit of waste. Ms.

Cerllll: Well, there we are looking at waste oil and fuel left over and- Mr. Cummings: That plus waste from solvents, from mainte nance and so on, and each of those where there are major infrastructures also has machine shops that generate the same things as the metal fabricating or any other machine shop or any other industry would. So it is just part of the larger scheme. Ms. Cerllll : If those are the majority, then, of areas that are using the corporation's expertise, are those the ones that are increa sing, or are there others that are increasing? Mr. Cummings: Both, really. There are two things that happen.

I do not think I could quantify it. The corporation might be able to, but certainly the nature of the industries that are here have changed some wh at, even though we st ill have manufac turing, fabricati ng, aerospace, but even what happens within those industries has changed. The types of materials and processes are changed, and each one creates a different waste stream that has to be managed a little differently. Printing of course is another industry, and dry cleaning, I suppose. There are all sorts of different waste streams.

If the member wanted a list of what the various waste streams are, I am sure we could put that together either in the department or in the corporation, but the corporation up to this point is there in a broad sense to help industries that have a problem and to make money helping them deal with that problem or, if they do not make money, at least help them find a market for it when we do not have the treating facility ourselves. That is a little different mandate than you would get out of a totally privately owned corporation. That is why we are embarking on the model that we are.

I do not understand where you want to go with this line of questioning. I am trying to get you the information that you are looking for. Ms. Cerllll : I just want the information that I am asking for: Which industries? There is no hidden, mysterious agenda here. I am just asking for the facts. We think of all the different industries that are out there using more and more chemicals every day, and I think that we want to get some sense of accountability and to know which indust ries are using the corporati on. I think that might be an example of which industries are using any waste managemen t sort of expertise.

Mr. Cummings: I will have the cor poration prepare a generic list without company names of the areas in which we work and where they see the waste stream growth and have that mailed to you over my signature. Ms. Cerllll: Thanks. I would appreciate that. You know, one of the things that flows from this is if we have certain industries in the province that we think need to be focused on, if the corporation and the mini ster are aware of certain industries that we should be concerned about or that perhaps are not disposing of their waste like they could be because

June 16, 1993 LEGISLATIVE ASSEM BLY OF MAN ITOBA 163 we do not have the facilities here, we do not have the expertise, and we know all the time that there are industries that are in violation of licences on-at knowledge of the department. The mini ster himself has talked about this, but are ther e cer tain industries that we should be particularly concerned about? Mr. Cummings: Well, as mini ster responsible for Department of Environment, I suppose I have to say that I think we went through this to some extent in the Estimates there.

I did not hear anything that the corporation is indi cating wher e they see specific problems. I think it would be fair to say that we are under no illusions that there probably are a number of areas where increased regulation will give us some nasty surprises, but at this point, some of the nastiest su rpri ses come from the neighb ou rhood gas station, and that is not unusual. The other thing, just on that vein, one only needs to look across North Dakota and go onto the side roads and see how some of their bulk storage of one thing or another is handled.

They have not even beg un to deal with their problems, large co ntai nmen ts with no diking or no special provisions in place. So Manitoba will have its weaknesses, but by comparison we are doing rather well, I think. Ms. Cerllll: I will just go after this one more time. Are we aware of indus tries that we should be particularly concerned ab