Manitoba Committee Hansard — 8 June 1979 (Public Accounts Committee, Sitting 9, 31st Legislature, 3rd Session)

31-3-pa9

Manitoba — Debates (Hansard)

ISSN 0542-5492 Legislative Assembly of Manitoba STANDING COMMITTEE ON PUBLIC ACCOUNTS Chairman Mr. D. James Walding Constituency of St. Vital Friday, June 8, 1979 10:00 A.M. Office of the Queen's Printer for the Province of Manitoba

me: 10 :00 a.m. Hearing Of The Standing Committee On Public Accounts Friday, June 8, 1979 iAIRMAN: Mr. D. James Walding (St. Vital) Fl. CHAIRMAN: Order please. We have a quo rum, gentlemen, the commit tee will come to order. vould refer the attention of honourable mem bers to Bill 2, Page 2. We are on

Section 8 of the I, 10 (f). �-CHERNIACK: Mr. Chairman, we adjourned yesterday, just as I wanted to make a statement, ·. Craik said that he would have to be convinced that the re is validity in removing it, and I was out to try, and we adjourned. So I'd like to try now. We amended 8( 1) (1) to read that the Minister may make such entries as he conside rs necessary show the accurate financial condition of the govern ment. That's the important thing in Public counts, to show the accurate financial condition of the gove rnment.

Section 9(

c) of the present Act, which is not being changed at all, or proposed to be chaneed, lds "the Minister shall prepare acco unts showing (

c) such other accounts and matters as are )Uired to show what the liabilities and assets of the govern ment are at the end of the fiscal year, respect of which the Public Accounts are prepar ed." As I understand it, Mr. Chairman, all the additional schedules and all the material that we are :ustomed to seeing in Pub lic Accounts are designed to give a clear picture of the accurate financial 1dition of the gove rnment, and unde r 9(

c) the Minister is expected to show such other accounts I matters, Mr. Chairman, matters as are required to show what the liabilities and assets Now, the reason I objected to (

f) and you may recal l, Mr. Chairman , I didn't object to (

f) initially il after we had started to discuss it and consider the ramifications, was the words, in 10 (f), eh other statements as the Minister deems necessary" . Now, bearing in mind that we are passing lW which may be in existence for years and years and years, through successions of Ministers ' after the other, I think that there should be a definition and parameters and restraints on the �nt to which there can be other statements as the Minister deems necessary.

The exam ple I could give, is that when the Budget is prese nted, the re are all sorts of additions, endices to the Budget which aren't even read in the House, but they are there, they are pu blished, 1 are distribu ted , and there you will find - and I don't know whether I started it or whether 1pied what my predecessors in Finance Ministry did - but we would have copies of certain eches which we thought were important, or briefs that we had presented, let's say, at a !raJ-provincial meeting which were both self-serving and political as is a budg et document - udget document is a political document. think that there should not be any indication of the possibility that a minister might deem it �ssary to include, let us say, an extensive brief which he prepared for prese ntation to a mee ting he federal-provincial ministers, or inde ed the Budget Speech itself, or inde ed the speech he le to The Trades and Labour Council to indicate what changes there would be had certain 1estions been proposed. 1nd therefore, I think that the minister should have the opportunity in Public Accounts to give, I'll go back to 8.1, what he consi ders necessary to show the accurate financial condition of gove rnment; and in 9(c), such other accounts and matters as are required to show what the 'ities and assets of the government are, or anything else that deals with an accurate presentation ;sets, liabilities, debt but not such matters that could have political overtones which do not, y mind, belong in Publi c Accounts.

I think (

f) which is not needed to show the full picture because ave all of 10 and these other sections I referred to enabling the minister to show the full picture, �ms to have broadened it to such an extent as to make it possible to include all sorts of political ments in the Public Accounts. ow I say that, Mr. Chairman, in the hope and expectation that one of my colleagues on our 329

Public Accounts Friday, June 8, 1979 side of the House will be a minister, and I don't think he should have that right either, to pu· statements that are not confined to an accurate presentation of the financial condition of government. That's my point. I don't think (

f) is needed to do that, but I think that (

f) is an invitation to that and I think that since it's not necessary, it should be deleted. MR. CHAIRMAN: Mr. Craik. MR. CRAIK: Mr . Chairman, I think first of all, and probably all that needs to be said, I hope 1 Mr. Cherniack ... neither he nor his colleague are the minister, but if that occurs 1 would object to them having that clause and I think that's the difference. The intent of the clause (

f) is not to turn the Publi c Accounts into a political document. 1 is the Budget, that is bound by tradition the patterns of the two; the Publi c Accounts are the finan statements of the Department of Finance which are examined and commented on by the in· and examined by both the Auditor and by the Mem bers of this Commi ttee. I just fail to see why anyone would want to restrict a comment by the Minister of Finance, who1 he may be, on the matter that involved the financial statements that he may wish to make, I think if you try and write it more tightly then it gets to be a bit too far.

I really fail to see that this particular item is one of any great signif icance, but I can't ima! why we would spend time trying to say that the Minister of Finance, the democratically ele1 , person to head up the department, should be somehow restricted from saying somethin� removing this,

whereas you would bend over backwards to make sure that the Provincial Auc had every provision to do it. I think it's a fundamental denial of the whole democratic proces try and put in prohibitions against a dul y elected Minister, not this Minister, but any Minister felt that something had to be said.

I'm not too sure what would come up. lt might be a discus of a contingent liability that required extra comment and I think that tha t's what it's primarily inter for, but it may be expanded to other things ; it would be for the portr ayal of the financial informc for the year-end statement to the people of the province, and I think probably a lot of license been taken in the past already without the statement being in there. I see absolutely nothing it being an innocuous statement that says that the Minister can do probably what he's already I practising in past years, if he felt so inclined to do it anyway. MR.

MILLER: Mr. Chairman, I don' t doubt in my mind that Mr. Craik would not take advan or abuse this particular clause, but let's realize that this is a clause that was not in there be By including it, it's an invitation to a future Minister to put in not matters dealing with assets, liabil they're actually what you find in Publi c Accounts, you know the dry facts, but the tempta sometimes, by some Minister some day to include some editorializing.

And although he c probably do it even under the existing Act, because it doesn't prevent it, although it does : that the matters are required to show what the liabilities and assets of the government are. lt of limits it. But this statement goes beyond that. lt talks about whatever the Minister deems necessary, if you're dealing in ub lic , I don't think ub lic ccounts P Accounts any editorializing should in< no matter who the Minister is. By including this clause, as I say, it introd uces for the first almost an invitation. If it was done today then somebody could say, well why did you put on what grounds?

After all you're supp osed to be dealing in assets and liabilities, and the nothing to prevent you from doing otherwise, but there's really nothing which says you can by includin g this clause, (f), that whatever statements the Minister deems necessary, then broa it far beyond what it is now to where, as I say, a Minister could decide to do some editoriali and he could do it qui te properly if this clause is included. Now, I recognize, and I'll accept Mr. Craik wou ldn't do it.

I think he has enough understan ding of Publi c Accounts, and enough re: for the tradition of Publi c Accounts not to do it, but we're not amending this Act for toda) long range, and the inclusion of this invites, and then makes it not only possible, but in a s something that one can 't argue about if it occurs that you get the inclusions, appendic es, schec which ar editorials, and which are really ther efore political documents rather than factual docun of assets, liabilities and explanations that deal with assets and liabilities.

So I would ask Mr. to reconsider seriously whether in fact this should be included, and whether he really needs function adequately. MR. CHAIRMAN: Mr. Craik. MR. CRAIK: Mr. Chairman, perhaps just one comment, and then I'd like to ask whethe Provincial Auditor has any reserva tions or comments about (f). There isn't any particular iten 330

Public Accounts Friday, June 8, 1979 10uld be ·commented on that I can name, but I could maybe suggest one that might come up. or instance, on the treatment of foreign debt, if to meet SEC regulations there has to be a statement 1 accordance with that FASB8 that they use in the United States, and if the CIC A in Canada comes p with another formula, I can foresee a paragraph inhhere saying that the debt that is shown is ook debt. The debt is also shown at March 31.

And then you want to perhaps put in a statement nd say, in the Uni ted States the practice is to use FASB8, and since we have securities that we eal in in the United States, that we might ind icate what their practice is so that they know. We 1ight also say that as of such and such a date, the CICA has brought out a certain formula for 11ortization of the foreign debt exchange losses, but that governments are not bound by this, and e have not adopted this because governments are not bound by it, but on the other hand, the rown corporations will have to be bou nd by it if that becomes reality.

Now, and I'm not suggesting it wi ll, but with those kinds of changes that are being talked about, would seem to me that it would be a bit erroneous to assume that a Minister could not make at statement. Now, it isn't a financial statement; t's not an editorial statement; it's the imparting information that shows the various ways in which things may be treated, and why, and that's e only one I can think of offhand that might come to pass at some future time, if all of these ings become the practices for corporations in Canada and the pr actices in some of the areas 1ere we have to deal in the United States.

Other than that, that's the only one I can possibly think of. Certainly, nobody's talking about 1tting in a budge t type of statem ent, but perhaps Mr. Chairman, in due course we can ask Mr . )rick whether he has any concerns about this . �- CHAIRMAN: Mr. Miller. I. MILLER: Well, perhaps I could wait for Mr. Ziprick. t. ZIPRICK: I don't foresee any concerns. Now if there was a statement of the kind that is \ntioned by Mr. Miller and Mr. Cherniack included, obviously the auditor would have to disassociate 1self from that kind of a statement in his report, so that would be unde rstood.

But, as this is ong-range, I don't know what could come up, but I'm satisfied that if there was any kind of ;tatement that was editoria lizing, that would not receive a certification or be included in the ditor's Report without su bstantial qualif ications . . MILLER: Yes, Mr. Craik proves that I'm right. I agree with him, that he would not do it. And :�.t he's descri bing is a statement or information or notes, which are very germane to Publi c :ounts, and which would, I can see add to Publi c Accounts, if he made that explanation with ard to the FCCA or the CICA. He can do that today.

The very statement he's described or the v notes that he describes as perhaps being necessary, he can do that because clearly that's n sugg ested and recognized under 9(c). lt is the extension beyond that, and as I say, I am satisfied t this minister would not do that. The invitation in this if ... which goes beyond what he's talking 1ut, because what he's explained as an example is very much germane to what perhaps should in Publi c Accounts, when, in fact, the Manitoba books are exam ined by people who are used hink ing in terms of the FCC presentat ions.

I'm not concerned about that, only because that ow possible. it's the going beyond that, and it's true, this is in a sense hypothetical, because this isn't being dr awn up for today; I say Mr . Craik won't do it. t's drawn up for years from now. And it's true the auditor himself wouldn't be associated with particular statement but it would be enclo sed within the covers of the Gr ey Book, and it becomes of the Gr ey Book.

And that's why we que stion the need for it, because what you said you d do, you would like to do perhaps, can be done but we don't see the need for it because ere's enough scope within the Act now, that the minister and the auditor for that matter can e any comments at all about the actual assets, liabilities and method of acc ounting, etc., etc., h are requi red for a better under standing of Public Accounts. But not going beyond it.

This Id indicate almost as an invitation to some future minister, to maybe go into something that's ·eally properly within Publi c Accounts, but yet he would be jus tified in doing it and he couldn't riticized because the Act would say yes - if he deems it necessary then by all means he can t. That's the only reason. BLAKE: Yes, Mr. Chairman. I don't want to belabour this particular point, but it was obviously 1 there for a reason, and I can only see it being a vehicle to provide some additional information nnection with the Public Accounts, and the statements accom panying them.

I really can't see )roblem whatsoever. If some future Finance Minister should be making editor ial comments or ments of a political nature, as the auditor has suggested, it wouldn't receive the certifica tion, 331

Public Accounts Friday, June 8, 1979 but the opposition would certainly be tree licensed to slaughter him on it, if some minister we making statements that shou ldn't be in keeping with the Public Accounts, and the nature of t submis sion to the Legislature. So I really can't see any other reason for it being in there, oth than a vehicle to provide some additional information or notes of a clarification nature to the Pub Accounts and to the people that are going through them, that maybe not qui te understand withc some appendages and schedules of clarification. So I really can't see any cause tor concern w

Section (

f) whatsoever. If the opposition members feel that strongly about it, I suppose they c vote against it. MR. CHERNIACK: Just one point, Mr. Chairman. Mr . Craik said that he doesn't see why we shor try to restrict the minister. I'd just point out that we did not sugge st that it be put in. it's not the present law. I'm not sure that it has in any way prevented a full disclosure of the accur: figures of assets and liabilities. The real que stion is: Why is it being forced in, not why are trying to limit it? it's the minister's proposal that he have that power.

We don't see that it's necess; to have the power to do what is clear in rela ting to an accurate statement. He is bringing it here, and it's we who are saying, what's wrong with the way it was? And he has not, nor has 1 Slake indicated any particular reason tor having it in, and th erefore, I don't think you pass la' after all these years, unless you have some way to show that there was a restr aint, a trustrat and inability to present a full picture, which will be remedied by including it. So the point I'm making, Mr.

Chairman, is that there's a desire to insert it into the law, on our part - a desire to take it out of the law - it's not in the law. And I don't think ther been a proper case made tor going out of the way to put it in, except in a very speculative ' that Mr. Craik descri bed , and which Mr. Miller correctly pointed out, is available right now. N Mr. Blake is right; we don't like it; we're in the minority; we can vote against it. MR. CHAIRMAN: 10 (f)-pass. MR. CHERNIACK: Count, Mr. . Chairman, please. Or just on division; it's not necessary to co1 but just to show on division that we're opposed to (f). MR.

CHAIRMAN: On division (f)-pass; 10 (g)-pa ss; 10- pass; Sect ion 8- pass;

Section deleted;

Section 10 , there is an amendment, Mr. Blake. MR. BLAKE: THAT proposed new su bsection 17 (1) to The Financial Administration Act as set in

Section 17 of Bill 2 be amended by striking out the figures and word "(5) or (6)" in the thereof and substituting theretor the word and figure" and (5). " MR. CHAIRMAN: Any discussion on the amendment? Mr. Balkaran. MR. BALKARAN: May I suggest, Mr. Chairman, that before you've passed this that perhaps should move on to the new 17 (2), (3), (4) and (5), to see whether that's necessary. MR. CRAIK: Mr. Chairman, Mr . Balkaran's suggesting that we go on and deal with (2)(3)(4) (5) of the same

Section 17, and then deal with it all in total. I think I'll ask Mr. Anderson to comr on this, unless one of the members wishes to comment first. MR. ANDERSON: Mr . Chairman, the amended

Section 17 as it now reads, has specified tha! revenues will be treated the same way as they have been treated in the past with the excepi of 17 (4) and 17 (5). 17 (4) is a

section that relates to situations where funds are received by Car or another jur isdiction, but not earned. Examples of this are where moneys come in under Hig hway Stren gthening Act, and our obligation is to spend a dollar on building a road to a ce stren gth, and in which case we'll be entitled to the money. lt is our practice right now that these moneys are put into a deferred rev enue account and when the money is earned, they are then realized as revenues. So this is just putting into legisl what the practi c e is now.

If you look in the Publi c Accounts, you will find those types of accc sitting now in the revenue division, in I believe, it's the liability sec tion. If you want, I can you to the specific section. MR. MILLER: I'd like to ask Mr. Anderson, you mentioned the High way Stren gthening Fund. ' about programs under the Development Agreement with the federal government, where the pro is required to expend the money first, and on completion prese nting Ottawa with an au statem ent, wi ll then get recompensed by the federal government tor its share, whether it t 332

Public Accounts Friday, June 8, 1979 3rcent or· 40 percent? How was that treated? Is that also reserve funds ? 1 mean that isn't reserve nds, you don't get an advance on it, you get it after the fact. So do you show that as accrued venue, or something that's anticipated? R. ANDERSON: Mr. Chairman,

Section 17 (5) deals with that and we have reworded

Section 17 (5) be very specific that it relates to special expenditu res made under programs such as the type 1 has mentioned, the DREE programs. The logic behind this particular

section is that each year 1en the revenue Estimates and the expenditure Estimates are presented, if it shows $1 .00 of penditure for a DR EE program, for instance, under the bottom it shows the 60 cents of recovery �t we'll get back from the federal government. The

section is then intended that at the end of the year, if you'v e spent a dollar, if we haven't �eived the dollar from Canada but we know that it's coming back, we would show that as a rev enue. at is all this

section is intended to accrue for. Those programs where we know that the revenue related to the expe nditure, and they should be matched into the same period as the expenditure made to give a true picture of what the gove rnment's cost of that program is. l. MILLER: Mr.

Chairman, so that's compl etely apart from the cash flow system that operated, j that in fact, when agreement with Ottawa is signed and Manitoba undertakes to do certain rk over perhaps five years - certain programs over five years, or four years, or what have you that it may have to wait two or three years for the first payment from Ottawa, but within that t fiscal year of the program that a reve nue would be shown, even though it will not have been eived from Ottawa. The reve nue will have been shown to offset the costs to the provincial rernment, the expenditu res oi the provincial government.

Is that what you're saying? . ANDERSON: In taking your que stions one a time, this is a complete departure from what sently has been shown. In the capital division, revenues have been accrued in the past for those grams that were expended out of capital funds. Those can be referred to in

Section C, on Page

Section C(2) Expenditu res recoverable from the government of Canada. That is existing grams, ARD A, the Churchill Agreement, The Pas Special Area, those are examples. We would to treat them consistently in both reven ue and capital divisio n. The types of programs we're talking about will not have this two year delay. it's envisioned that will deal with and the words are written to deal with those kinds of programs, where the enditures are made and the recoveries are on an ongoing basis.

So it's not a departure, but making consistent now that we've done it in capital divisio n, it'll be done in rev enue for the lity of th ose kinds of programs. CHERNIACK: Mr. Chairman, we're dealing with the whole thing then, are we? Well then , < what Mr. Anderson implied in what he said, was that (2) and (3) are not different than the [2) and (3) except of course in wording and the dating, when I say the old (2) and (3). Actually 1ems to me, and I want this confirmed by him and Mr. Balkaran or Mr.

Ziprick, that (2) and 1 the amendment proposed now, are actually reconsti tuting the old exist ing (2) and (3) in the rather than the first amendment. That the first amendment proposed to make a change which now been put back, and that in effect is just a rewording of the intent of (2) and (3). Is that 3Ct? ANDERSON: That is correct with the exception of the re-refere ncing to different su bsections that we have (4) and (5) in there. CHERNIACK: All right. One other thi ng, as I read 17

(3) I get the impression that if the Minister 1atever it is other than Finance, receives a cheque in payment for something or other, and 1 just that day, and fails to send it in to the Minister of Finance, then that's not shown as lys received by the government in the year in which that Minister gets it. Do I misread 'ell, let me give that a more concr ete exam ple, and I really have no idea whether it's correct t.

Let's say the Minister of Health or the Minister of Agriculture gets a cheque in from wherever :es of rev enue come through that Minister, let's say, a federal cheque comes in for a certain am or payment is made of refund of some kind, and received by the Minister of Health, and Is to send it to the Minister of Finance within the time limited. Does that then mean that that ue is not shown as revenue received by gover nment, but rather is shown as the next year's ue? �NDERSON: Under

Section 17 (2), if the Minister of Agriculture, using the example Mr . 333

Public Accounts Friday, June 8, 1979 cited, had received the money within 15 days after year-end, even though he hadn't turned it ov1 to us it was received by a mem ber of the Executive Council, it would th erefore be revenue of th; fiscal year. MR. CHERNIACK: Yes. MR. ANDERSON: 17 (3) is jus t to deal with the reverse of that. If it's received after the 15 d1 period, then it's rev enue of the new year. MR. CHERNIACK: I'm read ing (3). (2) was not a problem to me so I didn't study it.

But readil (3), "revenues received by a Mem ber of the Executive Council and not paid to the minister as (2) shall be conclusively deemed to be reve nues of the year in which they are paid to the ministE that then means that revenues that are received subsequent to the 15 th day, is that what you' saying? MR. ANDERSON: Mr. Chairman, that has been the practice in our interpreta tion. If the Minis1 of Agriculture had received this, perhaps the word ing could ...

What we tried to do in the fi1 amendment was to clarify that particular situation, then we've now used this because it wot conform to the present practice which is if any moneys are received by a minister 15 days af· year-end under (2) , we take those in as rev enues. We assume that the receipt by the other minis is in fact payment over to our minister. That has been the practice; perhaps the Provincial Audi· would like to . MR. ZIPRICK: Mr.

Chairman, that has been the practice, We go through the new year's rever in the first month very carefu lly to ensure that there are no signi ficant items either deli berately inadvertently ommitted to change the financial position, so that we ensure that it's consister applied from year to year and any of these kinds of receipts have been turned over. MR. CHERNIACK: Well, that's okay, Mr. Chairman.

Frankly, I'm not sure that I understand v we need that (3) at all. lt seems to me that (2) makes that clear, and the fact that (3) was th1 made me wonder whether it wou ldn't be possible that a minister receives a cheque and sits it because he doesn't want it in that fiscal year, but there's nothing to prevent his doing it anyw you know, so it is not a change to the previous year. Well, in dealing with (4) and (5) , I would like Mr. or any of the gentlemen, but I should th Mr. Ziprick or Mr. Balkaran to confirm that (4) and (5) which are new or broadened from what tl were . Mr.

Anderson states that that relates to specific cases such as payment by the governm for moneys not yet spent. Are we being assured by these gentlemen that it is only that, and of any other broader type? I'll ask that in the context of the debate we've had for a long ti about the setting aside as an account payable a revenue receipt of over $30 million for Govern ment of Canada, which is shown in Public Accounts and which we said was improper!) wrongly put off for another year as an account payable,

whereas it was really moneys recei and will never be paid. I don't want to go into that; we've discussed that at great length and sure we're not through with it. Was that done in accor dance with the law as it stands today, and is the re anything in 1 and (5) which will broaden the discretion to do things like that? 0 is it specifically limited to itE such as are shown in the R2 schedule, where the bigg est item was 19 76 Flood Agreement o1 million? 1 said R2 - I meant R10. That's the clarification or assurance that I'm looking for MR. ZIPRICK: Mr.

Chairman, my unde rstan ding of these two sections are that they are q restricted to actual existing agreements betwe en, I think, Canada and Manitoba; that cer conditions being met that in effect the amount is either payable or receivable. Using the exan of Expenditures the re would be an agreement in existence for cost-sharing; there's been that rr expended in that fiscal year and it's due and payable from Canada under those terms of agreem that amount would be set up as rev enue.

On the other hand, if Canada sends some money ahead of a certain expenditure and conditional that that money is not realized until these conditions have been met in accordance that agreem ent, that would be shown as a deferred reve nue until that money has been spent as I read those two sections they are specifically confined to those conditions only. MR. CHERNIACK: Thank you, Mr. Chairman. As I read 17(4), it seems to me that it's pos: to go backwards - am I wrong about that?

I mean, I can see R10 as a future account pay1 Is it possible to re-allocate backwards and say, well that expenditure was made 2 years ago 334

Public Accounts Friday, June 8, 1979 herefore we will retroactively credit the reve nue to that, and retroactively vary the deficit or surplus or that year? ,R. ANDERSON: Mr. Chairman, the sect ion deals with the situation where mone ys are received 1efore the expenditure is made, th erefore the situation that Mr . Cherniack just dealt with would 10t occur. �R.

CHERNIACK: I'm not sure it says "before." lt says "relate are to be made in more than one seal yea r, the moneys shall be deemed to have been received." lt seems to me that that could e moneys received which relate to th ree years ago, four years ago, and two years hence. Now, ou know, it was my inter rretation of that that made me wonder whether that wou ldn't be a retroactive hange in the financial statem ent. If the intent is only to deal with forward expenditures, then I'd <e to ask Mr. Balkaran does it say that, and if it doe sn't, is there any reason why it can't say 1at? IR. BALKARAN: Mr. Cherniack's

interpretation may be right. lt seems that is you're going to deem 1em to have been received in the respective fiscal year, 2 years down the road of a 5year rogram , lU can go back and say "well, this is deemed to be with respect to 2 years ago," and the language consistent with that type of

interpretation. R. CHAIRMAN: Mr. Anderson, you had a comment? R. ANDERSON: All I would suggest then is that perhaps we could just change the words right 1w with Mr. Balkaran becausesthe intent as described must be consistent with the words 'itten. �-CRAIK: Mr. Chairman, in view of the fact that it says, "That a statement of the apportionment those moneys among respective fiscal years shall be included in the Public Accounts" - would 1t not cover off adequa tely? t ANDERSON: Mr.

Chairman, just also for clarifica tion, if moneys were received for which the :>enditure had been made, they would then be revenues and they would not fall into the deferred •enue category. · I. CHERNIACK: No, that's right, but ... t. ANDERSON: And they could only be put into the fiscal year that we would be dealing with they cou ldn't go backwards . . CHERNIACK: Well, Mr. Chairman, I am inclined to rely more on Mr .

Balkaran's opinions. lt ms to me that if you get a sum of money in the third year of a 5 -year program for payment 111 five years, then you could say for pub lic pu rposes that we apportion to the last two years, books of which have been closed, revenues as if they were accounts receiv able shown in those rs and ther efore retroactively adjust the surplus or deficit position for those years.

What Mr. lerson might imply is that if the situation I'm describing occurred, then the year in which it's �ived , let us say the third year of the program will show revenues for years one, two, and thr ee, four and five wi ll be deferred. it's not my

interpretation, and Mr . Balkaran's

interpretation is ainly one which has more validity than my

interpretation because he is the expert. I think if clearly intended for deferral for expenditures not yet made, then it should say so in this section; 1 I don't see the problem . BALKARAN: Mr . Chairman, the suggestion is made that in the fifth line of the sugge sted ndment to 17 (4), that the phrase, "more than one" be struck out and the words "made in and in any subsequent" fiscal years - whether that would help, Mr. Cherniack. CHERNIACK: I think that certainly will clarify for me what was in doubt before. If Mr. Balkaran es that that accomplishes the pu rpose, it certainly makes it clearer to me.

CRAIK: Perhaps we could let Mr. Anderson dig est ... CHERNIACK: While Mr. Ander son is looking at that, Mr. Chairman, may I reverse to the tion 1 asked earlier of Mr. Ziprick - the $30,500,000 shown in R10 being the often discussed 335

Public Accounts Friday, June 8, 1979 overpayment by Canada of 1976 tax equalization - by what authority was that show as an accoUI payable? Let me just enlarge on it. My recollection is that in Mr. Ziprick's report he disagreed with being done. -(lnterjektion)- no? In any event under what authority was it shown? MR. ZIPRICK: I didn't disagree it was being done because there was a right to do it and I tal it it's under the authority that I gue ss is qoing to be left out and that was that the Minister Finance can allocate reve nues between years and can deem one year's revenue to be the ne year's rev enue and vice versa. MR. CHERNIACK: What

section is that? MR. CRAIK: I wonder if we could get back to the clause, we've looked at the amendment he and it's satisfactory as far as the finance people are concerned. So it says, "made in that ar in any subsequent fiscal year." A MEMBER: Year. Singular. MR. CHERNIACK: You need a motion ame nding the amendment. MR. CHAIRMAN: Gentlemen, we've been conducting ou rselves a little informally.

There is a moti on the floor and it's not one that deals with the matter that we're discussing at the moment, if there is no further discussion on this 17 (4) and (5) that you are on, maybe we could go ba and pass the motion that is on the floor. MR. CHERNIACK: Mr . Chairman, what is on the floor? I mean I believe this is an amendmE to the motion that's on the floor. This proposal is an amendment to the motion on the floor. I have to deal with that first. MR. CHAIRMAN: No, we hav en't got to that yet. We're still on the second motion on the fi page of the amendments. MR. CHERNIACK: Mr .

Chairman, I thought we had agreed that that second motion, su bsecti 17(1), will wait until we've passed (2) , (3), (4) and (5), so that we can then go back and make 1 correc ting adjustment which becomes automatic in 17(1). But as you say, we've not been tl technical and as long as we get the work done - I'v e not yet explored (5), that's why I'm s of hesita ting. MR. CRAIK: This is a proposed amendment that we will deal with when we rotate back thrm this. MR. CHERNIACK: 17( 1 ). MR. CRAIK: Yes.

Then are we agreed we'll come back and do 17(1) and appr ove this amendm or any other amendments on the way back through. MR. CHAIRMAN: Yes, this motion is on the floor at the moment. MR. MILLER: lt hasn't been read yet. MR. CHERNIACK: Mr. Chairman, I think Mr. Craik sugg ested that we set that aside, or ma Mr. Balkaran did and Mr. Craik agreed we set aside 17(1) amendment until after we deal witt the others in 17. So I think you can just leave it in abeyance and revive it later. MR. BALKARAN: Mr. Chairman, the amendment to 17(1) depends on what you do with 1T(2 (5), because that's a numb ering change.

So if any one of these su bsections is struck out t obviously we have to go back to ( 1) and make that change. MR. CHAIRMAN: On 17(4), Mr. Cherniack. MR. CHERNIACK: Mr. Chairman, I was asking Mr . Ziprick by what authority this $30,500,000 shown as an account payable, and trying to see whether it relates to either (4) or (5) , and he see1 336

Public Accounts Friday, June 8, 1979 > be quoting a

section which I don't see, and if he could clarify it for me then we could set it side. I'm not debating the point, I just want to know how it came about �R. ZIPRICK: The authority that's there would be probably two places:

Section 21 (1) of the old et, or the Act in effect now, and

Section 38(3). R. CHERNIACK: The old 38(3). 21(1) - is there a proposal to change that? No? They're repealing R. BALKARAN: They're repealing it, that's right. R. CHERNIACK: Mr. Chairman, I'm really still trying to understand (3) and (4) and its ramifications, nean (4) and (5).

Section 21(1) says "tha t where there is an excess in revenues over expe nding" other words . . . Cl. ZIPRICK: I'm sorry I would say it's

Section 38(3) ... �-CHAIRMAN: Mr. Anderson indicates he can perhaps th row some light on it. �- ANDERSON: Mr. Chairman, that particular entr y was made under the authority of

Section [3). This type of entry will not be made under

Section 17 (4) because the read ing of

Section 17 (4) licates tha t it's for programs which relate to special expenditur es. Expendit ures is the key word. e Fiscal Arrangements Act was the Act which gen erated the overpayment of tax revenues, and . not an expenditure of the program. t. CHERNIACK: I under stand that now, Mr . Chairman, and I apprecia te the explanation. Could just get clarification on (5) ... I think I understand it, but how does (5) differ from (4)? Is that expenditure, rather than a revenue? . CHAIRMAN: Mr. Anderson . . ANDERSON: Mr. Chairman,

Section 17 (5) is the situation where a dollar of expen diture is de. We know that 60 cents of it will be coming back under an expen ditur e arrangement with 1ada over another jurisdiction , and to correctly match the expenditure with the recei pt, which he way that it is shown in the Legislature in the Estimates, those revenues will be set up. lt ot inconsistent with the way that they've been handled in the past in the Capital division under :tion (c)(2). Those expenditures have been set up in the past. We will now be show ing expendit ures ted to the combined Consoli dated Fund. Page 15 . . CHAIRMAN: Mr .

Cherniack. CHERNIACK: Mr. Chairman, I understand that, and tuat's okay. Are we assured that (4) and ·elate to the Government of Canada, and if we are, then why doesn't it say so? Why is it this id? How many instances are there where it might be other than the Government of ad a? CHAIRMAN: Mr. Anderson. ANDERSON: Mr. Chairman, the key words here are "Special Expenditure Programs." I can't 11 off the top of my head any other jur isdiction that we deal with where we get recoveries on lxpenditure basis. There are the odd ones that come up from time to time. CHAIRMAN: Mr. Curtis. eURTIS: Mr .

Chairman, we have had in the past joint programs with other provinces, in which either we, or they, handle all of the expenditures on the program, and it's a matter of - o's an example perhaps - but I was thinking of joint impr ovement programs where one province 'l.ctually handle the expenditure flow, and the other province will then rei mbur se. CHAIRMAN: Mr. Cherniack. :;HERNIACK: Mr. Chairman, are we dealing over only with governments in (4) and (5), because 337

Public Accounts Friday, June 8, 1979 the way I read this it could be a deal with any private arrangement other than government? Ar' we only concerned about governmenta l agreements? MR. CHAIRMAN: Mr. Ziprick. MR. ZIPRICK: I think that there was an arrangment with Sherritt-Gordon that there was recover of expenditur es. MR. CHAIRMAN: Mr. Anderson. MR. ANDERSON: Mr . Chairman, that particular recovery tor the Fox Mine Agreement is also sho \11 on Page 15, but it is envisioned that Sec tion 17(4) and

Section 17 (5) would deal mainly with Canad who we have joint shared cost programs with. There are, however, these others which occur fro time to time. MR. CHAIRMAN: Mr. Miller. MR. MILLER: lt could be included here a reference to inter -governmental, rather than it not I Canada because it goes beyond Canada only, but it really is designed tor restrict1 inter-governmental programs, provincial or federal, and perhaps that could be included to she that it is referring to the different levels of gover nment. MR. CHAIRMAN: Mr . Craik. MR.

CRAIK: Wel l, it's true they are prima ri ly, but we've just had an example where there's excepti on. There's no gua rantee that there won 't be another excep tion. MR. CHAIRMAN: Mr. Miller. MR. MILLER: Wel l, would it be wise to include other than intergovernmental arrangements hand ling the money in the same way, even though this is a priv ate firm , tor example. Would it wise to handle that in the same way as in dealing with another gover nment? Can things go wro in an arrangement with a private MR. CHAIRMAN: Mr. Craik. MR. CRAIK: Perhaps Mr . Ziprick would like to comment. MR; CHAIRMAN: Mr. Ziprick. MR.

ZIPRICK: I don't see any difficulties because there'd be a firm agreement, and it the mo1 had not been received before the books areclosed after the later date, they would certainly received not too long after, and if there was any danger of bankruptcy, then it certainly woulc be included; and it it was included, the auditor would be obliged to point it out that there 1 some rev enue included that is not likely to be realize d. lt's not likely to happen very often but th could be some arrangements with mining, which in the context of the province's operation are that large, but would present a more tidy position, jus t the way this Sherritt-Gordon Mine Agreem has been handled.

MR. CHAIRMAN: Are you satisfied with 17 (5)? MR. CHERNIACK: Yes. MR. CHAIRMAN: Then Mr . Slake, the motion at the bottom of Page 1 be . ... MR. BLAKE: The Amended Motion: THAT proposed new su bsections 17(2), (3), (4), (5) and (f the Financial Admi nistration Act as set out in

Section 10 of Bill 2 be struck out and the tollo1 subs ections be substituted theretor: Certain revenues received after end of fiscal year. (4) and 17 (2) ... MR. CHAIRMAN: Mr. Craik. 338

Public Accounts Friday, June 8, 1979 MR. CRAIK: Mr . Chairman, perhaps it might be agreeable to take it as read, with the exception of the change in 17 (4) in the fifth line. Agreed? MR. CHAIRMAN: Mr. Balkaran. MR. BALKARAN: Mr. Chairman, might I draw the mem bers' attention to the second line. The word "relate" should be "rela ting". MR. CRAIK: Mr. Chairman, maybe it would be wise to read the entire 17 (4) and take the rest as read. III R. CHAIRMAN: 17 (4), Mr. Blake. IIIR.

BLAKE: 4) Where moneys received pur suant to an agreem ent 17 ( or arrangement relating to �pecial expenditur es made by the government and those special ependitures to which the moneys ·elate are to be made in that or any subsequent fiscal year, the moneys shall be deemed to have >een received in the respective fiscal years in proportion to the expenditur es made in those fiscal •ears to which the moneys relate, and a statement of the apportionment of those moneys among he respective fiscal years shall be included in the Public Accounts. IIR. CHAIRMAN: And 17 (5) as printed? IIR. BLAKE: As printed. �R.

CHAIRMAN: 17 (2)- pass; 17 (3)- pass; 17 (4), as corrected - pass; 17 (5)- pass; ,mendment- pass, as corrected;

Section ... the previous motion that was moved by Mr. Blake, le first Amendment having to do with

Section 10. Is that agreed? (Agreed) Amendment- pass; ection 10 as amended- pass;

Section 21 would seem to be the next one that is outst anding, and re have an amendment for 21. Mr . Blake. Page 3 of your sheets. IR. BLAKE: Are you ready for the amend ment? A proposed new su bsection 24(2) to The Financial Administration Act, as set out in

Section 21 f Bill 2 be amended by adding thereto, at the end of the reof, the words, "and shall be shown v rev enue account in the Public Accounts as a sepa rate ite m". R. CHAIRMAN: Any discussion? R. CHERNIACK: I don't agree with it, Mr . Chairman, but by all means pass it. I agree with the nendment by Mr. Blake, and I don't agree this

section but ... R. CHAIRMAN: Any further discussion on the amendment? Amendment- pass; 24(2) as nended- pass; On division,

Section 21 as amended- pass; Sections 22, 23 and 24 have been tssed; there is an amendment to Sect ion 25. Mr. Blake. ft BLAKE: THAT proposed new su bsection 38(2) to The Financial Administration Act, as set out

Section 25 of Bill 2, be struck out and the following subs ection be substituted therefor: Payment after end of term. 38(2) Where an appropriation has been voted or authorized for expenditur es to be made in a cal year, and an account for a liability incu rred dur ing that fiscal year, property examined and uched for, is received by the Minister not later than the 20th day of the month following the d of that fiscal year, it may be paid up to and including the 15 th day of the month following ! end of that fiscal year, or such earlier date as may be designa ted by the Minister, but not er, and to be charged to the expenditur es of the fiscal year just ended .

I. CHERNIACK: I think this takes care of the point that was raised. The only thing that I'm not ar on is the meaning of the word, "term ". Payment after end of term, I'm still not clear on it. es it mean fiscal year, or does it mean period following the fiscal year? I. BALKARAN: Migh t I point out that everywhere you have "term" in the amendments we've m discussing it's intended to mean "fiscal year ." We'v e been changing it, so with your permission, t you change term to fiscal year. 339

Public Accounts Friday, June 8, 1979 MR. CHERNIACK: Now we're back to fiscal year, I assume, and that's just a head ing? MR. BALKARAN: That's just a head ing, yes. MR. CHERNIACK: Is that acceptable then, Mr. Chairman? MR. CHAIRMAN: Is that agreed to the commit tee? MR. CRAIK: I have it in the amendment, or the new Act, as being fiscal year and in the old on as being term. MR. CHERNIACK: Yes, Mr. Craik is right. In any event, we're changing it to fiscal year. Is thi right? Mr . Chairman, I want clarifica tion, I hope we've not yet passed 38( 1) .

I mean, I think we're dealir with this amendment, but did you deal with 38( 1) because I want to ... MR. CHAIRMAN: No, we haven 't dealt with 38( 1) . We'll go back to it as soon as you've finishE this. Any further discussion on the amendment? 38(2)- pass; 38 (1) -M r. Cherniack. MR. CHERNIACK: On that one, Mr. Chairman, I asked questions several times and the definiti' answer that I rece ived, I believe, is that current authority in capital is being retained and will n be lapsed until the department figures out all the commitments that have yet to be charged the Capital Authority.

And then an 0/C will be passed elimi nating them all. I'm wondering wheth that isn't more ponderous than to stipu late that by a certain date, giving the department all tl time it needs, by a certain date all Capital Authority, unu sed on

Schedule B, be lapsed. And tl impr ession, I would think, is that if, after a period of time, that

section takes effect, then anythil that is found later which should be of a very small nature would then be charged, as it would any event, to the accounts of government. The point I'm making is that it seems to me that there should be a clear finality to the old Capi Authority, to remove any possibility of any existing authority still being on the books of t government.

In other words, that the 0/C, I envision, will say that so many dollars of Capital Author issued by this or the other Act shall lapse, but I don't expect there to be, and I'm not sure 0/C can, just generally lapse all Capital Authorities whether they are known , recog nized, found not fou nd. And I'd like to know from Mr. Curtis or Mr . Ziprick whether it is possible that the propo: to lapse it by 0/C will ensure that all possible authority dating back 10 0 years will elimina ted . MR. ZIPRICK: Mr. Chairman, only the items specified in the 0/C would be eliminated.

Now through oversight or some way some item was left, as far as I unde rstand it, it would still h� the Legislative authority to spend. MR. CHERNIACK: Mr. Ziprick confirms my impr essi on. Unle ss Mr . Curtis has some contribut to make on this I would like to suggest to the Minister that legislation shou ld, in a blanket w wipe out all authority, unus ed authority, of a capital nature, effective as from some date, to prot the department. But let's get rid of it. We said we're doing it, we agree we should do it, let's it. MR.

CRAIK: I guess it boils down to the question of the deadline date and setting it in the f. 1 don't seem to sense that there is any, on the one hand, any gr eat problem with setting sa date; but on the other hand, it is pr etty clear that there has to be an Order-in-Council passed t does it. lt has to happen, it is public knowledge. The 0/C is tabled, the information fs made availa when it occurs.

I don't think we should build in any more, I think we need some deadlines t: in, 1 don't know that we sho uld, on the other hand , go so far as that it creates a straitjacket the activities of both the Finance Depart ment andthe Auditor, who have to both eventually appr it before the Order -in-Council cancels the old authority. MR. CHERNIACK: Mr. Chairman, I don't quite follow what Mr . Craik said in relation to there to be an 0/C. There doesn't have to be an 0/C. lt can be lapsed by either 0/C or certainly legislation. If you have legislation you don't need an 0/C.

The reason they're doing it by 01� to give thems elves the time they need to search their records, and to make sure that all authori expenditures are inde ed charged to a Capital Authority before they close it off. But I think any loose ends that may be found over the many years past should be closed off, and that's 340

Public Accounts Friday, June 8, 1979 feel that since we are doing as we're saying that we're doing, then I would guess tha the department nows pretty well which expenditur es have been authorized under certain capital authorities. And hy not even a year ahead. But not to leave that loophole, which will be there, Mr. Chairman, if 1ey overlook some authority which is available to be used and was not used, and which a :>vern ment five years from now could resur rect and use. Now, all I'm doing is suggesting that we Jt it off, finally, by legislation so that there won't be a slipup, and I think that's logical.

But I don't know how much more time the department needs, because we have not passed apital Authority for over a year now. And it is, as I un derstand it, the intention of gov ernment )t to use any more authority.

I think we had statements last year, showing some $30 million of Jthority that was going to be used and we find that it wasn't used; and there was another, I think, 15 or $16 million, or something over $10 million of authority that was not intended to be used. 1d rather than require the department to search all the records all the years back, to make sure at they'v e taken care of it all, then I think there should be blanket cut off ahead to such an extent 1ere they feel sure they can do it.

There's no harm done, because if it is found later that they've 1t out some item that could have been used and wasn't used, then there's the regular accounts at make it possible. But would Mr . Craik not agree that there should be some finality, and that e only way you get a finality is by legislation of a general nature, rather than specific. Ft CRAIK: Well, Mr. Chairman, I gather that what we're really doing is just legislating for this ar, with these comments, that from here on in it is already governed by the chang es that we ve made in here, and if I'm incorr ect in that I stand correct ed.

What's being referred to here this particular year. �-CHERNIACK: Mr. Chairman, 38(1) as I read it, will apply to every current year in the future, ar by year. The point I'm making at this stage is there's nothing in this Act, in this bill, which tes care of the accumu lated past, which will not repeat itself, because we're not going to have pital Authority.

So what I'm saying is, that if 20 years ago there was an authority issued to borrow order to rebuild the highway which we own, let's say, on the street that is owned by government hind the Legislative Building, Assiniboine - if it's sitting there somewhere, 20 years ago and ter used, then as I interpr et the law, a government five years from now finding that authority 1y use that authority. And th erefore, I'm suggesting that there should be in this Act, a

section ring, "All authority issued and unused as of June 30th" - whatever date - shall lapse. That's I'm saying. :. CRAIK: Well, that's okay. If it makes Mr. Cherniack feel easier, we' ll be doing it anyway, but n it'll be spelled out in the Act that all previous ac cumula ted carry forward capital will have sed as of March 31, 1979 . . CHERNIACK: Mr. Chairman, I must say that it'll satisfy me to the extent that I think it's tidier. :ondly, 1 was once told that an 0/C costs something like $78.00 to process on average, and ink that with this

section it may not be necessary to have an 0/C at all, and maybe we've saved :.00, or whatever it costs to pr ocess an 0/C . . CHAIRMAN: Any further discussion on 38( 1) ? , CHERNIAK: Do we understand that there will be a (4)? . CRAIK: 38(4)? Mr. Balkaran, can you dr aft a quick clause? CHAIRMAN: I under stand there's another su bsection coming that would take care of what 're sugges ting. CHERNIACK: Yes, thank you. Thank you, Mr. Chairman. CHAIRMAN: In the meantime, can we pass 38( 1) ? 38( 1) -pass; 38(2) has been passed , we an amendment; 38(3). Mr. Cherniack.

CHERNIACK: Is it cle ar that where there's no appropriation in that su bsequent year, then o such appropria tion in that su bsequent year as the minister may dir ect? In other words, he charge it to his own department in some way because it doesn't exist. Is that clear, that if �·s no appropriation then it shall be charged to another appropriation in the same fiscal year, not ... All I'm concerned is retroactivity. 341

Public Accounts Friday, June 8, 1979 MR. CRAIK: Well, it indicates where a program termina tes, and there are payments to be ma the next year, and there's not an appropriation - termination of the ARD A program for instar is finished, wound up; if there are some late accounts come in and there is no appropriation which to pay them, they can be transferred to another accou nt. MR. MILLER: Another appropriation? MR. CRAIK: Another appropriation. Now, whether it's in the su bsequent year in which they : received in, I guess it'll tall under the gu idelin es we've already approved here. MR.

CHERNIACK: But that phr ase, I think, has been taken out from the Act itself, the phr a "for any su bsequent year", and I just didn't ... We ll, yes, but it says, "To such appropria t as the minister may dir ect", but here it says, "To any appropriation for similar pur poses" - reading the Act now, 38(4), "for any su bsequent term." So, I'm wondering if the omission of t phrase changes the intent? MR. ANDERSON: Mr. Tallin assisted us in drafting this. Perhaps Mr . Balkaran could commE it's a legisla tive counsel matter. MR. CHERNIACK: Well, while he's doing that, Mr .

Chairman, I have an unanswered questior my mind which relates to either a late account for liabilities, or late revenues. I posed a ques1 much earlier on that

section that I didn't agree with, up on top of the page. Where there is a reb: and it will now be charged to revenue, how would it wo�k when there is no rev enue in exces! the amount of rebate? Just how does that work ? An example, the obvious example is succes! duties, if there is a rebate of succession duty and we're no longer taxing for succession duty quite conceivable that there will be a rebate in excess of the rev enue. MR. ANDERSON: Mr. Chairman, ref erring back to the amendment made to that particular sect it says, "By separate item". So it will be netted from the bottom of the account. MR.

CHERNIACK: Thank you, Mr. Chairman. I'd forgotten that change. MR. MILLER: Mr. Chairman, I'm jus t curious about the mechanics. Since there is no appropriat will it have to be by special warrant that these moneys are paid out, because there is appropriation, or the appropriation is overex pended and the money is taken from ano appropriation; now you need a special warrant, will that still continue? Will that procedure continue? MR. CURTIS: We ll, Mr .

Chairman, where we've had samples of this kind of a problem in the � what we have done is set out a separate sub-appropriation with in an appr opria te appropria 1 and made the expenditure out of that appropriation. MR. MILLER: Well, that's fine if in fact you do that, in the Estimates itself it's shown that 1 But where an appropriation is expended, or you simply can 't take any more from that approprial and you want to pay the moneys that have to be paid out from some other appropriation wl there's an unde rexpenditure, then the instrument is a special warrant. MR. CURTIS: That's correct. MR.

MILLER: Now, will that still continue? MR. CURTIS: Mr. Chairman, that's correct. Because there's no fu nds available we would ha\ apply for a special warrant. MR. MILLER: You say there'e no funds avai lable. I'm saying even if there are funds availab one appropriation, and you want to tap that appropriation because the money in the co appropriation is not avai lable, Then, would you need a special warrant in order to tap the mo that are avai lable in the und erspent appropria tion, because you move from appropriatio appropriation. Right now you need a special warrant; will that have to be done in the tutu MR.

CURTIS: That's correct. If there were not fu nds available in an appropria te appropria 342

Public Accounts Friday, June 8, 1979 e would -have to apply for a special award . R. CHAIRMAN: 38(3)- pass - Mr. Cherniack. R. CHERNIACK: I'm still waiting for clarificat on as to whether the deletion of a ph rase is of 1y sign ificance. Mr. Anderson thinks not, and I would like to agree with him. But we're waiting. you rec all, the present -(I nterjec tion)- I think it's okay. �-CHAIRMAN: 38(3)- pass. We'll leave

Section 25 then, pending another another amendment, d move on to

Section 32 which seems to be the next one that is still outstan ding. Page 7, 45(2) and 45(3),

Section 32 of your Bill. lt's upper page 7 - there's no amendment, 't we didn't pass it when we went throug h. �- CHERNIACK:

Section 45 . . . this is page 6, top of page 6. �-CHAIRMAN: We're not on 36 - we're on

Section 32. Oh, I see, it's out of order. My apologies. ere is an amendment. Mr. Blake. t BLAKE: Thank you, Mr . Chairman. THAT proposed new su bsection 45(2) to The Financial ministration Act is set out in

Section 32 of Bill 2 be struck out and the following subsection su bstituted therefore: Future commitments. 45(2) A member of the Executive Council may in any fiscal year with the approval of the minister su bject to guidelin es established by written directive of the inister, enter into a contr act on behalf the government which commits the government to expenditures in future years in an amount t to exceed in the aggregate the amount provided in the annual Appropriation Act other than :ontract gua ranteeing the payment of a debt incurr ed or to be inc urred by any person, and the 1ister shall report on such commitments to expenditures in future fiscal years to the Public :ounts of each fiscal year. :.

CHAIRMAN: Any discussion on the amendment as read? . CHERNIACK: Mr . Chairman, I think that's good . I think it creates flexibility and yet makes ccountable in a much more precise way. I think it's an improvement, and I think that that makes ection which I was concerned about reasonable and logical. If Mr. Ziprick agrees, then I'm happy 1 it. . ZIPRICK: Mr . Chairman, I find this to be a satisfactory provision . . CHAIRMAN: Amendment - pass. 45(3). IIEMBER: We didn't have an amendment on that? , CHERNIACK: No. Well, we didn't really discuss 45(3) either, Mr. Chairman.

I'm wondering 1ther 45(3) is there only to recognize proposed 54(2), or whether it is there to protect Hydro 1 gua rantee or some other kind ... I'm not sur, so could we get clarification on that? CRAIK: Mr . Chairman, my notes indicate that it's intended to make it clear that

Section 45 s not apply to commitments by the government gua ranteeing debts where the gu arantee is torized un der

an Act of the Legislatu re. lt's intended just to make it clear that the

Section 45 s not apply to commitments by the government gua ranteeing debts where the guarantee is 10rized under

an Act of the Legislature. CHERNIACK: lt broadens the scope actually; it makes possible what appeared not to be ;ible, but that may not make it wrong. See, 45, which will become 45( 1) reads, THAT no member 1 contract any indebtedne ss on behalf of the government not authorized by the Legislature. 1, No. (2) said - but wait a minute, if we have to contr act for the future, we should be allowed o it; and then (3) says it also should not apply, this prohibition that's in the existing Act should apply when there's a gua rantee authorized. low, that means to me that they are broadening the powers of counsel rather than limiting I. ANDERSON: Mr. Chairman,

Section 45 in the past ha.d been util ized in the government itself 343

Public Accounts Friday, June 8, 1979 for its operations in terms of entering into contr acts extending beyond one year.

Section 45(3) was put in to make it very clear that the commitments authoriz ed by the Legislatur now in the annual Appropriations Act, would not refer to the gua ranteeing of debt that would I done un der the gover nment's gua rantee sections. There are

Schedule A guarantees under other sources of authority. MR. CHAIRMAN: Further discussion on 45(3)? 45(3 )-p ass.

Section 32 as amended - pa!

Section 33, I believe there is an amendment. Mr. Blake. MR. BLAKE: Yes, Mr. Chairman: THA T

section 33 of Bill 2 be struck out and the following sectio su bstituted ection 47 of the Act amended therefor: Clause 47(

c) added 33 s (

a) by striking out the word "or" at the end of clause (

a) thereof; (

b) by adding thereto at the end of clause (

b) thereof the word "or"; and (

c) by adding thereto immedia tely after clause (

b) thereof the following clause: (

c) that the payment of the whole or part of expenses relating to advance subscriptions registrations not exce eding $1 ,000 for any individual item of expenditure is required. MR. ZIPRICK: The Aud itors have taken a look and there are some instances where these ki of items could be in excess of $500 and it could present a difficult y, so it was inc reased. MR. CHAIRMAN: Any further discussion on the amendment? Is the amendment agreed 1 (a)- pass; (b)-p ass; (c)- pass; amendment -pass; 33, as amended- pass; 35, I have 54(2) being passed, but not any further sec tions. 54(3) was held over for some reason. Mr.

Craik. MR. CRAIK: Mr . Chairman, I think the discussion on this was that it's in here so that the governm1 may do it, although it's done very infrequently, and there was some suggestion that if that v, the case, as 1 believe was the case historically and the case of MDC, that it ought to be de by Act of the Legislature rather than by Order-in-Council, and I think that may have been the rea� that we held it. The only thing I can sugge st is that I guess nothing is really changed.

There rr be cases where there may be a decision required to make such changes, and I can 't tell you tl this would be the case, but there may be a case, such as in the transfer of the debt with the remo of the Data Service from the Telephone System, where it may be necessary to make changes acco mmodate the debt allocation, and the government may wish, with it becoming a governm agency, to make accommodations by this, now I can't sugg est that that is the only case wh it wou ld apply, but I would think it would apply in that case. MR. CHAIRMAN: Mr. Miller. MR. MILLER: lt wo uldn't require

an Act of the Legislature, as it did in the case of MDC, bu simply could be done by an instrument by the Lieutenant-Govern or-in-Council and acco mplis! that way. Well, is Mr . Ziprick satisfied that this is highl ighted enoug h, or adequate enough, accou ntable enough? MR. CHAIRMAN: Mr. Ziprick. MR. ZIPRICK: 1 don't have any difficulties with this particular sec tion. As I und erstand it, advances to any agency, the government, by Lieutenant-Gover nor-in-Council, decides what partic1 debt is allocated to constitute charges for that particular agency, and I still, am assumin g that situation prevails.

Now, with regard to gua rantees of agency debt, I don't think that any of 1 comes under the section. MR. CHAIRMAN: Any further discussion? Mr. Cherniack. MR. CHERNIACK: lt's too com plic ated for me and I'd like a little more clarificat ion. Is there a clear-cut definition as to what is self-sustaining and what is, what I would call, deadweight self-sustaining not one where the repayment is not out of general taxation, but rather from enterprise itself? MR. CHAIRMAN: Mr. Ziprick. MR. ZIPRICK: Mr . Chairman, that's what under stand, that self-sustaining is the debt that 344

1-'UDIIc Accounts Friday, June 8, 1979 tterprise �s able to carry, and if for some reason or another it's not able to carry, just as it happened the case of MDC, then the gover nment, by Lieutenant-Governor -in-Council, can dir ect it to be lclared as being serviced from Consoli dated Fu nd. Now, there is no other way out really, and ' it doesn't present me problems in that regard. ft CHAIRMAN: Mr. Cherniack. 11. CHERNIACK: Mr. Chairman, Mr. Ander son has pointed out that in the Act,

Section 76( 1) , tich I'm guessing will be removed, or maybe we've already ... No, 76(1) is staying, and it describes tat the Lieutenant-Governor may call self-sustaining. lt defines it.

Now, is there a conflict between � apparent absolute discretion in 54(3) of declaring whether it's self-sustaining or not, and 76(1) tich remains, which deals with provincial securities; and if there is too broad an authority in 54(3), 1ether it shou ldn't say, in accordance with the definition or description in 76( 1) , because it seems me that there are certain things that obviously cannot be considered as self-sustaining one way the other, and there should be some kind of a guidelin e rather than just an arbitr ary thority. I. CHAIRMAN: Mr. Benditt. I. BENDITT: Mr. Chairman, I think I can clarify this. Under

Section 76(1) we are talking about :>t issued in the name of the Province of Manitoba. Now, under this new

Section 54.3 we are dng about debt in the name of a government agency. And let us take an exam ple of, say, the nitoba Development Corpor ation, where there are securities issued in the name of that poration. If the government decides to assume the debt of the corporation and leave the poration with no debt, then the government has to state whether that is going to be general pose debt or it is going to be self-sustaining.

And the whole idea is that if the Manitoba telopment Corporation can service that debt, that is, provide the funds to service it, although s mechanically being serviced by the government, then that would be declared to be -sustaining. And if that debt were to be entir ely paid for by the government, the government Jld then have to declare it to be of a general pu rpose nature because it is prov iding the funds 11 its own rev enue . . CHAIRMAN: Mr. Chern iack . . CHERNIACK: Mr. Chairman, Mr .

Benditt said that if, for exam ple, MDC, the debt were taken r by the government and left MDC clear of debt, that's what he said, then the government might , if the MDC could pay it, that it would be self-sustaining. How could MDC possibly be cleared he debt and still consider that it's going toppay the debt in the future? lt seems to me -sustaining is where the debt, itself, has a charge against it which is expected to raise and pay If. CHAIRMAN: Mr. Benditt. BENDITT: Mr. Chairman, I probably should have said, not cleared of debt but cleared of the nent of the securities. The intention of this particular

section is, due to the fact that it has been :ticed for some time now, in most cases, to issue securities in the name of the Province of litoba and to make advances to government corporations, and it appears that this policy may well continue; that at some point in the future there will be fewer and fewer Crown Corporation trities outst anding and no real need for those Crown Corporations to maintain servicing facilities, hat the government could take over the serv icing of the debt.

But if the Crown Corporation lying for it, and the likelih ood is, in most cases such as Hydro and Telephones, that they will then that debt would be declared by the government to be self-sustaining debt, that the 1rnment will simply be servicing that debt; and if the government were to repay it on maturity, have to refu nd it, the new debt wo uld, perhaps in the name of the Province of Manitoba itself, d then be self-sustaining debt. CHAIRMAN: Mr. Cherniack. CHERNIACK: Mr.

Chairman, if the Province of Manitoba borrows money and lends it to Hydro, surely it takes security from Hydro and Hydro is obliga ted to repay that to the government. wo uldn't the gover nment, when hen it lends the money, then allocate that loan to Hydro against lebt owing to the pub lic, that is, to the bond holder; and then Mr . Benditt sugge sts it could 345

Public Accounts Friday, June 8, 1979 either call it self-sustaining or general pu rpose. I assume that that is correct, that if it borrows Hydro and lends it to Hydro, then it will be self-sustaining.

If, however, it borrows the money a lends it to some other agency, which is a loser, then it can say, "Well, we'll never get our mor back, so we 'll call it general purpose." The Federal Government gets around it by calling it a gra and I'm jus t wondering whether the Lieutenant-Governor should have the right to do as it do to say self-sustaining or general purpose, or whether it isn't a judg mental matter which should co before the Auditor, or which the Auditor is required to comment on, because we've had so mt deba te about what is self-sustaining, what is general pu rpose, that either we should elimi nate difference between the two, or we should remove from the political entity the right to call it c way or the other without having to define it, as it is defined in 76(1) .

If 76( 1) , the government says, we ll, this is really general purpose,

whereas it clearly should self-sustaining under 76( 1) , ther e can be a big argument as to whether or not the Lieutenant-G oven is making a correct judgment in accordance with some guideline, but there's no guideline in 54 and I think there ought to be. Now, I'd like to ask Mr . Ziprick, if the Lieutenant-Governor uses an arbit rary gui deline or guideline, as it says, in an obvious case, wel l, this is self-sustaining - as I think Mr . Wackie Benr did in his time when I think he elimi nated all debt of the province by transferring it on to agenc and calling them self-sustaining there. What would Mr.

Zipri ck's role be under th1 circums tances? MR. CHAIRMAN: Mr. Ziprick. MR. ZIPRICK: Mr. Chairman, what Mr . Bend itt has brought up is a point that I did not envisa and that is, assuming gua ranteed debt of an agency as a provincial debt under this kind of secti because it would be that they cannot sustain it anymore, and because of that reason really in eff1 you're carrying out the gua rantee, because they cannot sustain it so you take it over as a provin debt. And then there is no question of self-sustaining.

As with regard to the province's securities issued and advanced to an agency, regardles! what the law may say, in essence, it's only self-sustaining when the agency is generating eno 1 income to be able to carry it. If it's not generating income to carry it, whether you call it self-sustair or not, it's still not self-sustaining. lt has to be serviced from the Consolida ted Fund. As to at 111 point exactly it becomes obvious as to when it cannot service, is to some degree an evalua and judg mental considera tion.

But having determined that it cannot sustain that debt, then it doe matter what the Act says, it is a charge against the Consolida ted Fu nd because it has to pay debt. MR. BENDITT: lt should be pointed out, Mr. Chairman, that under

Section 54 of the Act, government can borrow, to refund Crown corporation securities which it has gua ranteed, anc that time it would have to make the judg ment at maturity date as to whether the debt to be iss in the name of the province is going to be self-sustaining debt or general pu rpose debt. All · happens here is that this allows the government to make a decision dur ing the term of the Cn corporation debt. MR. CHERNIACK: What is a general pu rpose debt, how can you call it a general pu rpose c if you are lending it to an agency which is expected to pay it back? MR. BENDITT: Mr .

Chairman, that's really a matter of government polic y as to whether particular gover nment, now or in the future, expects any agency to pay any money back wl it advances to the agency or grants to the agency. Some future government may decide th; wants no money back from Manitoba Hydro. MR. CHERNIACK: Then it should do it by grant, it sho uldn't suddenly say, we'll call it gen pu rpose. I think that a self-sustaining debt shou ld be converted by grant and cancellation of < in order to become general pu rpose. We've had deb ates with Mr .

Ziprick about CFI, we had deb about whether we should be writing it off, or part of it, and those de bates went on, I guess were internal rather than public, but then they became pu blic because there was a decision m And then the decision was made in effect by relievi ng, by buy ing, I think it was preferred sh� from the CFI and giving CFI the money on preferred shares with which to pay off the debt, w in effect, created a grant but yet a retention of the possibility that as the company grows, m1 it will be able to pay it back, but then it sho uld be a grant. 1 really think it ought to be a decision of Mr.

Ziprick,if any, but I think it should be self-defi as to which it is, and that's why you have 76(1) which gives you the principles on which it 346

t�uonc Accounts Friday, June 8, 1979 one. Now, under 76 (1) if the Lieutenant-Govern or-in-Council under 76(1) arbitrarily calls something eneral Purp ose, Mr. Ziprick will certai nly, in his report, I'm sure, say, wait a minute, this falls within 1e description of 76(1) and should be called self-sustaining. I think he would be required to do 1at, and there would be that kind of restr aint. But if Mr. Ziprick has to certify the books, and the Act says the Minister, or the government has the discretion of calling it what it like s, then � may not have the sam opportunity to comment, and it may slip by.

And I don't thin k it's �ht. I'm not sure I know why it's there at all, because I believe that it has been done in the past, 1d could be done without this provis ion. But if it's there, I think it should be removed from complete scre tion. Mr. Benditt has not convinced me that it's necessary, does he believe it's necessary, or is it st that he likes to be tidy in that respect? R. BENDITT: Mr. Chairman, certainly we like to be tidy, and I agree that if a grant were to be ade, that the debt, if there were to be any debt in respect of that grant, that that debt would 1 general purpose debt, automatically.

And if we were to attempt to call it self-sustaining debt, en I'm sure we would have a comment from the Auditor on the su bject. Fl. CHERNIACK: Mr. Chairman, I must say, Mr . Benditt fell into the same trap. If we would wish call it self-sustaining, then Mr. Ziprick would comment. Mr . Benditt will never have the authority decide which it should be. it's the political authority that makes that decision, and ther efore, 1-tink that that is a different thing. Motivations are different, Mr . Chairman, and Mr.

Benditt knows lt, that what the administration may think is right may not be what the political side agrees with. 1d the political side should have the final authority, of course. But it should be so defined that �annot do it in an arbitr ary way without being acc ountable, and that's why I think 76(1) is there d has not been changed. There is no proposal to change 76(1) and that kind of definition makes clear. If we had that, we wou ldn't be arguing, would we? t BENDITT: Mr.

Chairman, when I was saying that we, I'm talking also with respect to the general rpose debt of the gover nment, not this particular secti on, I'm talking about the fact that we are 1fined by this

section 76. lt might be desirable, if we'r e talking about self-sustaining in this rticular new sect ion, to make it subject to the guidelines as established in

Section 76. I. CHERNIACK: Mr. Chairman, you see, my note to myself was, what are the guidelines? I wasn't m aware of 76(1) until Mr. Ander son brought it to my attention. I would say, as Mr. Benditt says, •4(3) said, "in accord with the guideli nes as set out in

Section 76( 1) , the Lieutenant-Governor tll declare," that answers my concern. I think it does, to the extent that I would buy it, and Jarently Mr. Benditt sees no problem with it. So if we had that in, fine, let's go. :. CHAIRMAN: Are you suggesting an amendment be prepared along those lines? •· CHERNIACK: Yes, I think it's just ... Mr . Balkaran would want to see it, but . . BALKARAN: Would it be sufficient, Mr. Chairman, for Mr. Cherniack's standpoint, if at the )inning of the su bsection it simply said, "su bject to su bsection 76(1) "? . CHERNIACK: You tell me whether that's suffi cient.

I would have thought it should say, "where servi cing and repayment of debt is assu med , that under su bsection (1) then in accordance with terms of 76(1) the Lieutenant-Governor shall declare." Because I don't think it's su bject to, a different kind of a debt. But the definition is there. Or "in accordance with

Section 76." . BALKARAN: Would you be satisfied, Mr . Cherniack, if we put at the end, "in accordance 1 the provisions of Su bsection 76(1 )"? CHERNIACK: Yes. Either self-sustaining or general pu rpose debt in accordance with provisions '6. BALKARAN: ( 1 ). CHERNIACK: No, not (1) . 76, because (2) is general pu rpose. (1) is BALKARAN: In accordance with

section 76. 347

Public Accounts Friday, June 8, 1979 MR. CHERNIACK: Right. Yes, I think so. Shall I move that, Mr. Chairman? MR. CHARIMAN: Please do. MR. CHERNIACK: I move, that at the end of proposed 54.3 su bsection (2), the words be addl as follows: "in accordance with

Section 76". MR. BALKARAN: The provisions of

section ... MR. CHERNIACK: I'm sorr y,"in accordance with the provisions of

Section 76". MR. CHAIRMAN: You've heard the amendment. Is it agreed? (Agreed) 54.3( 1) -pass; 54.3 amended- pass. MR. CHERNIACK: Mr. Chairman, did you pass 3, sub (3)? MR. CHAIRMAN: No, not yet. I'm on 54.3(2) as amended -pass. 54.3(3)- Mr. Cherniack. MR. CHERNIACK: I want to pass that. lt's 54.3 I want to do. The whole section. MR. CHAIRMAN: 54.3(3)- pass.

Section 35. MR. CHERNIACK: Mr. Chairman, I want to ask whethe .r this sect ion is what will be used, a becomes necessary in order to transfer su bstantial hydro debt to the province. MR. MINAKER: Mr. Chairman, my understan ding is, no it won't be. MR. CHERNIACK: By what technique is that going to be done? MR. CURTIS: The intention is for the government to intr oduce a separate bill which will provi for the transfer. MR. CHERNIACK: Could it not be done under this sec tion, without the need of a separ; bill? MR.

CURTIS: Our und erstan ding in discussion of the legislation with the Legislative Counsel that we would have to have separate legislation. MR. CHERNIACK: Yet, from reading this, the Lieutenant-Governor may assume the servicing � repayment of debt obligations of a government agency, so I marvel at the opinion reported to that it must be by special Act. lt seems to me that this gives all the authority that's needed government to assume telephone system debt, or MDC debt or, I don't know if I'm asking fo legal opinion from a person that isn't here, that's the danger. MR. BALKARAN: I don't know what opinion Mr .

Tal lin gave, Mr . Chairman, but l'mjuus t going assume that perhaps in assuming some of these obligations, there may be a lot more detail t we need to have to be covered than just general langua ge authority as set out in 54.3. I am privy to some of those terms and conditions under which some of those debts are going to assu med, but then perhaps maybe more specific authority is required than is set out in 54.3 hl I don't know if I am correct, Mr . Curtis. MR. CURTIS: Mr. Chairman, that's my understa nding. MR. CHERNIAC K: Mr. Chairman, I'l l let it go, of course.

We are assured that it will not be de except by special Act. So that's clear. The fact is, I still belie ve it can be done under this sect because it says the terms and conditions th at may be es tablis hed by Lieutenant-Gov ernor-in-Council. I think it gives them complete authority. I'm not sure the Cab should have that authority, but I under stand it doesn't assert it, and if in the future it does, t it will be a political question as to whether or not it did the right thing. No other comment MR. CHAIRMAN:

Section 35 as amended- pass. Mr. Balkaran. 348

I"'UUIII[; �I[;I[;UUliUi Friday, June 8, 1979 IR. BALKARAN: I wonder if we may go back now to

Section .25 to consider new 38(4)? IR. CHAIRMAN: That's a good idea. IR. CHERNIACK: Mr . Blake isn't here. IR. CHAIRMAN: I'm sure another member of the commit tee would be pleased to move the mendment. Mr . Orchard. IR. ORCHARD: Proposed, Mr. Chairman, that a new

section 38 to The Financial Administration et, as set out in

Section 25 of Bill 2, be amended by adding thereto, immedia tely after su bsection ) thereof the following subsection: "L apse of borrowing and expenditure authority,

Section 38(4) ; at March 31, 1979 any borrowings and expenditure authority of a general pu rpose nature, provided 1at any annual loan Act, as differentiated from borrowing in expenditure authority of the !If-sustaining nature, lapses, and shall be written off". R. CHAIRMAN: The amendment as moved by Mr. Orchard. Is there any discussion? mendment- pass.

Section 25 as amended -pass.

Section 36, there is an amendment. Mr. rchard. R. ORCHARD: Mr. Chairman, I'd like to propose an amendment to the motion that proposed !w subs ection 56(1) to the Financial Administration Act as set out in

Section No. 36, of Bill No. be struck out and the following su bsection be substituted therefor: Annual Debt Charges.

Section 56(1) Notwithstan ding any other provision of this Act or any other Act of the Legislature any regulation or order, there shall be allocated annually from the Consolida ted Fund (

a) the amount required to be al located annually for a sinking fund or other means of retirement debt, and there shall be charged annually to the Consolida ted Fund (

b) the amount re quir ed for the payment of interest; (

c) amount sufficient to pay or otherwise satisfy the discount or the loss, and all other costs d expenses inc urred or sustained upon or in connection with the placement, sale or other ;position of provincial securities that constitute the debt; (

d) amounts sufficient to pay or other wise satisfy bank charges and the cost of premiums and ·eign exchange and all other costs and expenses incu rred or sustained in connection with the ncipal sum of, or interest upon, the debt; and (

e) inter est allowed and paid from the Consolida ted Fund under su bsection No. 43(2); in respect of money held in trustand the annual or other amounts so allocated or charged are 1tutory provisions which do not require to be voted annually by the Legislature. I. CHAIRMAN: The amendment moved by Mr. Orchard, is there any discussion or que stions? . Cherniack. t. CHERNIACK: We ll, Mr . Chairman, I remember that this is what we agreed would happen and nkly I don't qui te remember all the discussion relating to the reason but it is what we agreed uld be an improvement. t. CHAIRMAN: The am endment -pass? 36 as amended- pass.

Section No. 37 was held, I belie ve there is an amendment to tha t too. Mr. Orchard or Mr . Blake, uld you move? :. BLAKE: That proposed new

section 56. 1 to the Financial Administration Act as set out in :tion 37 of Bill No. 2, be amended by striking out the word, "where" in the first line thereof I substituting ther efor the words "su bject to the requirements of any sinking fund legislation 3re." . CHAIRMAN: Mr. Cherniack . . CHERNIACK: Is it only by legislation is there any occasion when ; there is a borrowing made !re there are sinking fu nds set out in the 0/C contract, whatever? I don't know the wer. 349

MR. CHAIRMAN: Mr. Curtis. Public Accounts Friday, June 8, 1979 MR. CURTIS: Certain types of loans have in the past provided for specific amounts to be provide In most cases they were, not all cases, they were higher than what other wise would have be, the normal sinking fu nd. MR. CHAIRMAN: Mr. Cherniack. MR. CHERNIACK: When Mr . Curtis says the normal sinking fund, is he ref erring back to that percent that we've already dealt with? MR. CURTIS: Yes. MR. CHERNIACK: So that this would be over, above and beyond the 3 percent which required. MR. CURTIS: Mr . Chairman, tha t's correct. MR.

CHAIRMAN: Any further discussion on the amendment? The amendment as -pass. Secti 37, as amended- pass. moved- pass. 56. 1 as amended

Section 39 would seem to be the nt sect ion. Mr . Blake. MR. BLAKE: Yes, that proposed new

Section 58 to the Financial Admini stration Act as set c in

Section 39, of Bill No. 2, be amended by striking out the word "Min ister" in the fourth line then and substituting th erefor the words "L ieutena nt-Governor-in-Council. " MR. CHAIRMAN: The amendment as moved -pass. (

a) as amended -pass; -pass. N• (b)- pass; 58- pass; Secion 39 as amended is

Section

Section 50-pass - I Cherniack. MR. CHERNIACK: Mr . Chairman, I'm just trying to review what it could possibly mean. I de think we've had a report yet on what it means, unless Mr. Craik can clarif y - I think this is one sentence, isn't it? MR. CHAIRMAN: Mr. Craik. MR. CRAIK: Mr . Chairman, actually it comes about as a rec ommendation from the Legislat Counsel durin g the transition period and it's his word ing as far as the details are concerned. course it's rec ommended by the Finance people, dr afted by Mr . Ta llin and the only other th I can do is ask Mr. Ziprick whether he feels okay about it.

I think everybody else has been consult He probably has been too. MR. CHAIRMAN: Mr. Ziprick. MR. ZIPR ICK: Mr. Chairman, I don't really unde rstand it but we 'll do what's reason able. MR. CHAIRMAN: Mr. Anderson. MR. ANDERSON: Mr . Chairman, I could give one or two examples that we can think of at · time. We talked about

Section 17 (4) and 17 (5) in Revenue Accruals, Revenue Deferrals. We we want to ensure com parative statement from year to year and because of the fact that the reven had not been accrued in the past we would want to start in the transitional way not to doL count the rev enues, and acc ording to legisla tive counsel this would give us the ability to brin! the transitional provisions in a way that would not distort the financial statements by accounl both cash revenues and accrual rev enues in one year. That's one example. There are also the transitional provisions.

We talked about closing out the depr eciation resen things like that. Those are administrative and have to be wound down and we would have to re1 back to the Legislature how There may be we wound them down. Those are just two of examples. unforeseen things that we can't consider, but that's how the legis lative counsel wrote up, · we would have to report back to you and then do all of these things. 350

ruom; ACCOUniS Friday, June 8, 1979 �R. CHERNIACK: The important thing, Mr . Chairman, is that whatever statement we look at such tS the one we have before us, March 31s t, 19 78, year end, and the next one should have a continuity, .nd I'm just wondering about the provision in this

section that makes it possible to do part and ot all. I'm wondering whether - I guess it would be quite a burden to do it but whether you ouldn't have two sets of books for this transitional year, one the old way and one the new way. )r whether the Public Accounts for this next period will have to show the comparison between 1e old and the new, like Mr . Ziprick attempted to do in a conjectural way in his reports for tha t revious fiscal year where he showed a sort of a statement that would be -(i nterject ion)- No, e showed an assets and liabilities statement based on the proposed changes.

Surely the next time ·e get from the Department of Finance a report, it should have side by side the two methods and . table of explanation of the changes and how they occur, so that there will be clarity involved ,r all people. And I hope there'll be clarity and necessarily the clarity would have to be greater 1an the sect ion itself which none of us has the courage to claim to unde rstand. And very often is the case that when we don't understand something we rely on our servants, in the proper mse of the term, to tell us, such as legislative counsel and the auditor. But what about that 1ggestion?

Firstly the concern that you do part and not all and that may not be good, and secondly, e thought of having two comparable statem ents, one in each way. R. ANDERSON: Mr. Chairman, Sections 50 and 51, should be read almost as companion secti ons. 1e reason for certain things com mencing in 51, is so that we will be able to provide the comparative atements as at April 1, 19 78. We would translate the old year figu res as Mr .

Ziprick had done a rough way in his report, so that you would be able to see then the 19 78 results as compared the 19 79 results in a comparative consistent manner, and that's why these two sections are very LJch linked together. Perhaps Mr. Ziprick would like to further on the second sentence. �- ZIPRICK: Mr.

Chairman, that wassmy understanding that the Publi c Accounts for the fiscal ar ended March 31 st , 19 79, will ha ve a statement which wi ll show the position as at April 1, 78, that will be consistent with the new practice and that there will be a flow-through as to how �t ransfer was made from March 31, 19 78, to April 1, which starts the new system, and so that I disclose the transition period on a comp arative basis. �-CHERNIACK: Wel l, Mr.

Chairman, apparently there are not two sets of books required, there l two sets of statements required - that's a more correct description of it - and there would ve to be a statement as of the year end and the year begi nning, and that's really I suppose ! second of midnight - there's a change in the statem ent, the end statement and the beginning .tement which normally are exactly the same, in this case would be different. And that is why, . Chairman, I wi ll argue, and Mr . Ziprick is right in saying 50-50, or Mr. Anderson said 50-50, � should be together.

That would make much more sense to make this April 1s t, 19 79, the whole t. I'm sorry, March 31s t, 19 79, and then we know exactly where we 'r e at rather than going back ull year to do something which unle ss it was done without authority would not be done.

And ink it would be a lot better to do it in such a way that you don't even have to have that in-again, -again feature of 50, where you can do part and not all but some, and ther efore why would ot be smoother to say the retroactivity will be March 31s t, 19 79, which is beh ind us, and then se statements will come forward in such a way as to reflect what actually happened, and that that the law is going to be passed soon, and in this current fiscal year and not more than a r ago . . ZIPRICK: Mr.

Chairman, to make it effective, March or April 1, 19 79, would present problems hat although lately, and we've gone through and as far as we're concerned, whatever has been .e legally, there have been certain changes effected that have a su bstantial implication on the 1lic Accounts for the year ended March 31, 19 79. Now, if you don't make this retroactive, you'd e major changes in acc ounting policy that the Minister of Finance and the governme nt are able lo under the Act now, and then you 'd have further major changes for the fiscal year-end March D, after this Act is passed .

And you 'd have a two-year transition period, which would give many e problems in comparability. This way, by starting as of April 1, 19 78, for the fiscal year ended eh 31, 19 79, that one year will pick up all the major changes in transition, and as a result, ;ent a much better picture. CHERNIACK: We ll, Mr.

Chairman, that's a logical explanation. lt just points out to me that gov ernment jump ed the gun by a year, because the minister ordered su bstantial changes to nade in the year dur ing which he had certain authority, and not complete authority, and thus ::>ut the passage of this bill creates a problem of two years, as Mr . Ziprick says, then it means 351

Public Accounts Friday, June 8, 1979 to me that the government should not have done what it did until it had the whole package rea to go - the whole framework within which to work. So then , I believe the retroactivity feature here to take care of the fact that the government was precipitous in making a decision over a ye ago, or about a year ago, to do certain things in a partial way. MR. CRAIK: Mr. Chairman, I want to point out that it should come as no surprise.

We said fr< Squa re One we were going to make certain changes, the amalgamation of the Revenue Divisi and the Capital Division, and so on, and it's been stated over and over and over again, and 1 fact that people are at work getting prepared for the new system and working on the accoUI should come as really no surprise, in fact, that that and other things are being done, and I do think that the point is a very valid one. lt's a judg mental decision as to when the change ta� place.

The work is well under way; it's spelled out here, and as the Provincial Auditor said, can now get done a job that other wise would have spread out over a longer period of time. M� of the things that have been done, of course, have been done under authority that alre� existed. MR. CHERNIACK: Mr. Chairman, I was assumin g that every thing that has been done is un1 existing authority, not just many of them but all of them, and that doesn't derogate from my statem which I made yesterday.

I think that firstly, retroactivity is something that has to be checked v carefully, and justified very fully, and in this case I belie ve it is being jus tified on the basis t there was no question that the government said they were going to do it, and I, for · one, ne disagreed with the intent. But it is still the fact that the government did do in this last year w it said it would do, but only partially, andis now completing it. So my criticism is there.

I certa cannot vote against this, because once it was done as it yvas done by the government, and I th wrongly, then we need Sections 50 and 51 apparently, to make it work more smoothly and a better than would have happened if it were not done by the government as it did it. But si1 it chose to do it, then I think we should go along and assist it in simplifying the presentation i one year rather than two. MR. CRAIK: Mr. Chairman, just to correct a comment that I made. The implication was that se of the moves may have not had authority. Everyt hing that has been done is under existing autho1 and there's nothing ..

MR. MILLER: Yes, no impr ession. MR. CHAIRMAN:

Section 50-pass;

Section 51- pass; Pream ble- pass; Title- pass. Bill reported. Mr. Cherniack. MR. CHERNIACK: Mr. Chairman, in view of the very, very su bstantial amendments to the bill, we expect that there will be a revised bill prepared and distribu ted before it is dealt with in House? I think that's the practice. MR. CRAIK: Well, today is Friday, and we probably won't deal with it next week, so I prest that the printer can get to work. MR. CHAIRMAN: ... for two days anyway. Bill be reported -pass. MR. CRAIK: Mr.

Chairman, re the next sitting, we 'll have the House Leader hopefully by the sit at 2:30, have clarified when we may have another sitting of the comm ittee, and hopefully announce at that point. MR. CHAIRMAN: lt was indicated to me by the Government House Leader last night, that if comm ittee didn 't finish this bill this morning that they would sit again this ev ening at 8:00 o'cl But now we have, I'm not sure whether we will or not. MR.

CRAIK: We ll, the only other question would be as to whether it's at parallel with Pub lic Util tomorrow morning, to deal with the Grey Books, but we can leave until 2:30 anyway. MR. MILLER: You have to be at Pub lic Utilities. MR. CRAIK: I have to be at Pub lic Utilities. 352

Public Accounts Friday, June 8, 1979 IR. MILLER: No, you have to be at Public Utilities. IR. CRAIK: Mr . Minaker might want to sit instead. IR. CHAIRMAN: Comm ittee rise. 353

Document details

Collection	Manitoba — Debates (Hansard)
Citation	31-3-pa9
Type	hansard
Volume / chapter	31st 3rd hansardpdf pa9.pdf
Language	en
Format	pdf
Source	PROVINCIAL
Identifier	2e548027bd6b61070372a552c6d70743224f1ba5

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