Manitoba Committee Hansard — 22 January 2001 (Public Utilities Committee, Sitting 1, 37th Legislature, 2nd Session)

37-2-pu1

Manitoba — Debates (Hansard)

Second Session - Thirty-Seventh Legislature of the Legislative Assembly of Manitoba Standing Committee on Public Utilities and Natural Resources Chairperson Bonnie Korzeniowski Constituency of St. James Vol. LI No. 1 - 10 a.m., Monday, January 22, 2001

Member AGLUGUB, Cris ALLAN, Nancy ASHTON, Steve, Hon. ASPER, Linda BARRETT, Becky, Bon. CALDWELL, Drew, Bon. CERILLI, Marianne CHOMIAK, Dave, Hon. CUMMINGS, Glen DACQUA Y, Louise DERKACH, Leonard DEWAR, Gregory DOER, Gary, Hon. DRIEDGER, Myrna DYCK, Peter ENNS, Harry FAURSCHOU, David FRIESEN, Jean, Hon. GERRARD, Jon, Hon. GILLESHAMMER, Harold IIEL WER, Edward IIICKES, George JENNISSEN, Gerard KORZENIOWSKI, Bonnie LATHLIN, Oscar, Hon. LAURENDEAU, Marcel LEMIEUX, Ron, Hon. LOEWEN, John MACKINTOSH, Gord, Hon. MAGUIRE, Larry MALOWA Y, Jim MARTINDALE, Doug McGIFFORD, Diane, Hon. MIHYCHUK, MaryAnn, Hon.

MITCHELSON, Bonnie MURRAY, Stuart NEVAKSHONOFF, Tom PENNER, Jack PENNER, Jim PITURA, Frank PRAZNIK, Darren REID, Daryl REIMER, Jack ROBINSON, Eric, Hon. ROCAN, Denis RONDEAU, Jim SALE, Tim, lion. SANTOS, Conrad SCHELLENBERG, Harry SCHULER, Ron SELINGER, Greg, Hon. SMITH, Joy SMITH, Scott, Hon. STEFANSON, Heather STRUTHERS, Stan TWEED, Mervin WOWCHUK, Rosann, Hon. MANITOBA LEGISLATIVE ASSEMBLY Thirty-Seventh Legislature Constituency The Maples St. Vital Thompson Riel Inkster Brandon East Radisson Kildonan Ste.

Rose Seine River Russell Selkirk Concordia Charleswood Pembina Lakeside Portage Ia Prairie Wolseley River Heights Minnedosa Gimli Point Douglas Flin Flon St. James The Pas St. Norbert La Verendrye Fort Whyte St. Johns Arthur-Virden Elmwood Burrows Lord Roberts Minto River East Kirkfield Park Interlake Emerson Steinbach Morris Lac du Bonnet Transcona Southdale Rupertsland Carman Assiniboia Fort Rouge Wellington Ross mere Springfield St. Boniface Fort Garry Brandon West Tuxedo Dauphin-Roblin Turtle Mountain Swan River Political Affiliation N.D.P. N.D.P. N.D.P. N.D.P. N.D.P. N.D.P. N.D.P. N.D.P. P.C. P.C. P.C.

N.D.P. N.D.P. P.C. P.C. P.C. P.C. N.D.P. Lib. P.C. P.C. N.D.P. N.D.P. N.D.P. N.D.P. P.C. N.D.P. P.C. N.D.P. P.C. N.D.P. N.D.P. N.D.P. N.D.P. P.C. P.C. N.D.P. P.C. P.C. P.C. P.C. N.D.P. P.C. N.D.P. P.C. N.D.P. N.D.P. N.D.P. N.D.P. P.C. N.D.P. P.C. N.D.P. P.C. N.D.P. P.C. N.D.P.

LEGISL ATIVE ASSEMBLY OF MANITOBA THE STANDING COMMITTEE ON PUBLIC UTILITIES AND NATURAL RESOURCES Monday, January 22, 2001 TIME - 10 a.m. LOCATION- Winnipe g, Manit oba CHAIRPERSON- Ms. Bonnie Korzeniowski (St. James) VICE-CHAIRPERSON- Mr. Gregory Dewar (Selki rk) ATTENDANCE -11- QUORUM - 6 Members of the Committee present: Hon. Mr. Lemieux Messrs. Cummings, Dewar, Faurschou, Ms. Korzeniowski, Messrs. Loewen, Maloway, Penner (Emerson) Substitutions: Mr. Schellenberg for Mr. Reid Mr. Rondeau for Hon. Ms. McGifford Hon. Mr. Mackintosh for Hon. Ms. Barrett APPEARING: Ms.

Shari Deeter Hirst, Chairperson of the Board, Manitoba Public Insurance Corporation Mr. Jack Zacharias, Chief Executive Officer and President, Manitoba Public Insurance Corporation Mr. Darren Praznik, MLA for Lac du Bonnet Hon. Jon Gerrard, MLA for River Heights MATTERS UNDER DISCUSSION: February 29, 2000 Annual Report of the Manitoba Public Insurance Corporation *** Madam Chairperson: Good morning. Will the Standing Committee on Public Utilities and Natural Resources please come to order. The first order of business is the election of a vice chairperson. Are there any nominations?

An Honourable Member: Madam Chair, would like to nominate Mr. Dewar, Selkirk. Madam Chairperson: Mr. Dewar from Selkirk has been nominated. Are there any further nominations? Mr. Dewar has been elected vice chairperson. Before the consideration of the Annual Report of the Manitoba Public Insurance Corporation, we have committee resignations to deal with. I have before me the resignation of Mr. Reid effective immediately. Are there any nominations to replace Mr. Reid? Committee Substitutions Mr. Gregory Dewar (Selkirk): Madam Chair, I move, with leave of the committee, that the honourable Member for Rossmere (Mr.

Schellenberg) replace the honourable Member for Transcona (Mr. Reid) as a member of the Standing Committee on Public Utilities and Natural Resources effective immediately, with the understanding that the same substitution will also be moved in the House to properly be recorded in the official records of the House. Madam Chairperson : Is there leave of the committee? {Agreed] Mr. Schellenberg has been nominated. Is it the will of the committee that Mr. Schellenberg replace Mr. Reid? {Agreed] I have before me the resignation of Honourable Ms. McGifford effective immedi ately.

Are there any nominations to replace Honourable Ms. McGifford?

2 LEGISLATIVE ASSEMBLY OF MANITOBA January 22, 200 I Mr. Dewar: I move, with the leave of the committee, that the honourable Member for Assiniboia (Mr. Rondeau) replace the honourable Member for Lord Roberts (Ms. McGifford) as a member of the Standing Committee on Public Utilities and Natural Resources effective immediately, with the understanding that the same substitution will also be moved in the House to be properly recorded in the official records of the House. Madam Chairperson: Is there leave of the committee? [Agreed] Mr. Rondeau has been nominated. Is it the will of the committee that Mr.

Rondeau replace the Honourable Ms. McGifford? [Agreed] I have before me the resignation of the Honourable Ms. Barrett, effective immediately. Are there any nominations to replace the Honourable Ms. Barrett? Mr. Dewar: I move, with leave of the committee, that the honourable Member for St. Johns (Mr. Mackintosh) replace the honourable Member for Inkster (Ms. Barrett) as a member of the Standing Committee on Public Utilities and Natural Resources effective immediately with the understanding that the same substitution wiii also be moved in the House to be properly recorded in the official records of the House.

Madam Chairperson: Is there leave of the committee? [Agreed] The Honourable Mr. Mackintosh has been nominated. Is it the wiii of the committee that the Honourable Mr. Mackintosh replace the Honourable Ms. Barrett? [Agreed] * * * Madam Chairperson: This morning the committee has before it the Annual Report of the Manitoba Public Insurance Corporation for the year ended February 29, 2000. Prior to consideration of this report, did the committee wish to indicate how late it is wishing to sit this morning? An Honourable Member: No time line. Madam Chairperson : No, there is no time line.

Agreed? [Agreed] We wiii now proceed with consideration of the Annual Report of the Manitoba Public Insurance Corporation for the year ended February 29, 2000. Does the minister respon sible have an opening statement, and would he please introduce the officials in attendance from the Manitoba Public Insurance Corporation? Hon. Gord Mackintosh (Minister charged with the admini stration of The Manitoba Public Insurance Corporation Act): Good morning to you, Madam Chair, and the members of the standing committee.

I am pleased, of course, to continue the discussion of the annual report for the 12 months ending February 29, 2000.

Joining me today are several members of the corporation's board and the executive including Chairperson Shari Deeter Hirst; President and Chief Executive Officer Jack Zacharias; Vice-President of Corporate Finance and Chief Financial Officer Barry Galenzoski; Vice-President of Insurance Operations Marilyn McLaren; Vice-President of Corporate Claims Wilf Bedard; Vice-President of Corporate Legal General Counsel and Corporate Secretary Kevin McCulloch; and John Douglas, Vice-President of Public Affairs.

The Director of Finance and Corporate Comptroller, Peter Dyck, and Financial Services Manager Mel Stadnyk, are also on hand today. I thank you for the opportunity to preface our review of the report with some general remarks. The report details a year of great success in achieving financial stability to benefit Manitobans. I am particularly proud that the annual report focuses on the efforts made by the corporation to continue educating drivers about road safety.

It is also gratifying to me that the report acknowledges the work of individual MPI employees whose efforts continue to make their communities better places to live. Let me say today that this corporation and this Government knows and understands what Manitobans expect of a public auto insurer. No one wants to pay more for their auto insurance than they have to. As the new minister, I believe we must respect every dollar entrusted to us and

January 22, 2001 LEGISLATIVE ASSEMBLY OF MANITOBA 3 provide Manitobans with the value that they expect. This Government believes Manitoba Public Insurance is strongest when it fulfils its mandate to provide a comprehensive insurance product together with superior customer service at the lowest possible price. The real strength and commitment of Manitoba Public Insurance is in delivering value to its premium payers. I believe this company should operate by three guiding objectives.

First, to provide guaranteed access to auto insurance to all Manitobans eligible to hold a driver's licence and register vehicles; second, at the lowest possible rates; third, with the coverages, benefits and customer service among the very best available anywhere. These are the things that Manitobans have told us they want and expect. By meeting these objectives, Manitoba Public Insurance has and will continue to meet the needs of its customers throughout its 30-year history.

The corporation's efforts should focus on providing insurance at the lowest possible cost, delivering outstanding customer service, control claims costs, and, through road safety measures, take the risk out of driving. * (10:10) Manitoba Public Insurance has been able to reduce the amount most Manitobans pay for auto insurance each of the last three years. Looking ahead, we are confident that the corporation will be able to keep rates stable for the next number of years.

In six short weeks Manitobans will begin sharing in what is the largest rebate Manitoba Public Insurance has ever offered: a 16 .6% dividend that totals $75.4 million. All vehicles in every region of Manitoba will share in MPI's success, with the average passenger vehicle owner saving $106. But the company wants Manitobans to know that it is not sitting back on its laurels. As MPI enters its 30th year of serving Manitobans, it knows that it must demonstrate its value to Manitobans each and every single day. It must ensure that insurance rates remain stable over time.

It must return more than 85 cents of every dollar collected in premiums to Manitobans in the form of claims benefits. It must ensure that its operating costs are less than 58 percent of the Canadian industry average. I am pleased to tell you today that MPI has surpassed all of these goals. Let me briefly touch upon a few highlights from the annual report that may be of interest to committee members and to Manitobans. Last year MPI was able to reduce the average basic Autopac premium to $524, a decrease of $28. MPI paid out nearly 88 cents in claims payments for every $1 of premium collected.

This is significantly better than the Canadian insurance industry target of 67 cents. For the past fiscal year, MPI's operating costs were slightly higher than one-half that of the Canadian industry average. For every $1 most insurers pay to operate, it cost MPI 52 cents. Manitobans continue to benefits from MPI's investment policies. The interest earned on investments help reduce the amount of premiums required for motorists. Last year's investment income of $77.2 million reduced each and every premium by $84. MPI's 22 claim centres handled more than 825 claims every working day.

Approximately $1.5 million in claims benefits were paid out to Manitobans every working day. To look at the big picture then, MPI achieved a total net income of $51.4 million last year, an increase from the previous year's surplus of $38.3 million; retained earnings were just over $79 million; total earned revenues at $535.4 million were $26.3 million better than the previous year; cash and investments were slightly over $1 billion, an increase from $958.9 million in the previous year. MPI achieved a basic Autopac Rate Stabilization Reserve level of $104.9 million.

Known as the RSR, the Rate Stabilization Reserve protects customers from sudden and dramatic premium increases resulting from unforeseen events such as periods of severe weather. What remains important to Manitobans is the assurance that they are receiving an excellent insurance product, together with superior customer service at a premium, which is amongst the lowest in Canada.

4 LEGISLATIVE ASSEMBLY OF MANITOBA January 22, 2001 As the new minister, I have thought over the last couple of days of what the overall objective is of this portfolio. In my mind, without a doubt it is to ensure low, stable rates, incrementally improved benefits and services. We also recognize, of course, around this table in particular, that there have been controversies over the last number of months or weeks with regard to Manitoba Public Insurance. It is important that we learn from these controversies.

It is important that we listen to the different insights that Manitobans have to offer when these controversies arise. Madam Chair, Manitobans made it clear a number of weeks ago that they do not, in general, support donations of monies from the operations of the regulated monopoly from the basic Rate Stabilization Reserve going to fund such programs as college and university infrastructure.

It is my belief that Manitobans also do not support grants going to matters that are totally unrelated to the business of automobile insurance from this Rate Stabilization Reserve, matters that are unrelated to road safety, for example, matters unrelated to the marketing of MPI products. It is my belief that Manitobans as well do not support these monies from the basic Rate Stabilization Reserve and its surplus going to general government operations.

So today I am pleased to assure Manitobans that I agree and this Government agrees that no surpluses from basic Autopac premiums should pay for totally unrelated grants like in the case of university infrastructure, including general government operating expenses, also known as the Consolidated Fund, through dividends paid to government or other appropriations. The surpluses, where they accumulate over $100 million, must be paid back to those Manitobans who paid the premiums, and I, working with the board, will take whatever steps are necessary to ensure this into the future.

It is also, I think, worthy to note that MPI, in addition to its mandate of low premiums and good service and benefits, has a role through the purchase of bonds, for example, to enhance the Manitoba community in the broader sense.

MPI will continue of course to provide corporate sponsorships and grants and donations to events or organizations where there is a direct benefit to MPI and its mandate either through social messaging such as do not drink and drive advertisements, RoadWise advertisements sup porting our arts events, for example, or programming that markets MPI products or enhances public and road safety. For example, grants to Operation Red Nose is one that immediately comes to mind, and others like that that are known around this table. Manitobans must have confidence in their auto insurer.

They must know that there is a frugal entity that everyone knows cares about the amount of premiums, the amount of money that Manitobans must pay in premiums. There has been another controversy in the last number of days that I also would like to address. That is the issue of the payment of bonuses to employees of the corporation and executive members. Over the last couple of days I have looked at how and why this decision was arrived at. As well, of course, Mr. Zacharias is here today and is available to answer questions.

From my understanding of discussions with those under my jurisdiction, I understand that this was a plan that was conceived and indeed pushed by a former board, for those interested in knowing who the players were aside from the merits of this issue, which I will get on to. This plan that the former board had conceived included payments to management and the executive, including the CEO, as well as the rank and file.

It is my understanding from a discussion with the former minister yesterday that it was her understanding that she was being asked to honour a board decision and that she was doing so and implementing a commitment already made. This was not the only Y2K-related bonus package that the Government has inherited. As members may well know, Manitoba Lotteries, as well, some time ago instituted a bonus package in respect of Y2K. Getting back to the MPI package, it is my understanding that the package in general was formally approved by the board of directors on January 18 of 2000-that was by the former

January 22, 2001 LEGISLATIVE ASSEMBLY OF MANITOBA 5 board-and discussions, I understand, of details following I believe about September 1999 or just before then, included actually more generous bonuses then eventually paid out by the new board. I want to say that I do not generally support across-the-board bonuses like this, but I also understand that in the current market conditions there have been decisions made in a number of organizations both public and private that there should be incentive pay for information technology functions, for example, in a very competitive market.

I understand that in private organizations some form of incentive pay is implemented in about 92 percent of the organizations and in about 56 percent of public sector organizations. I then therefore have some questions about the role of bonuses. In this case, this was across the board; it was after the fact, and in other situations there is incentive pay where there are measured objectives and performance expected before there is additional pay available.

So there are different models of what can be called bonuses or incentive pay, as I understand it. * (10:20) I am referring the background of this particular bonus plan to Mr. Arthur Mauro, and he can pursue any further information as he sees fit. He has also been asked to review and provide recommendations as to the appropriateness of bonuses in MPIC, as well as bonuses or other forms of incentive pay in other Crown corporations. As well, Mr. Mauro has been asked to review and provide recommendations on how the governance of MPI and its accountability to the public can be strengthened. want to hear from Mr.

Mauro recommendations as to how we can strengthen and how we can make sure that there is effective protocol in place around the role of the minister, for example, of Cabinet in MPI affairs. How can the role and communicating the responsibilities of the CEO, the board, the role of the annual report, the role of the legislative process, be strengthened? In other words, how can the public be assured that MPI is not just a political tool run for the political benefit of people at the Legislative Building, yet be accountable to the public through the legislative process?

There is a balance here, and I think that there have been questions in the mind of the public about these issues of governance and accountability and certainly in my mind. Finally, there has been a recent controversy about the subsidization of bus passes for certain employees of MPI. I understand that this is a plan that was conceived by the City of Winnipeg, and there was a request to MPI to sign on to this idea on a pilot basis. My understanding from staff is that the expected cost of this pilot project is between $40,000 and $60,000. I will say this, I think the objective may well be a laudable one.

Being environmentally conscious is important for each one of us, whether we are corporate citizens or individual citizens. It is also important I think that we make efforts to reduce traffic congestion and perhaps even claims costs in downtown Winnipeg and increase bus ridership. But I question whether this is the fairest and most effective way to achieve these objectives. That is my question. Now, this matter was not one, as understand it, that ever went to the minister, it never went to the former board of directors, it was a matter that was determined by the human resources committee of MPI.

Is that [interjection] No? It went to the board? It did not go to the minister. I have an interest in this area because of the context within which it is raised. I understand that a pilot is beginning next week at the request of the City of Winnipeg, and I have asked whether we can reduce the pilot program at this point and, in the meantime, put in place a way that we can effectively assess the fairness and effectiveness of this pilot program. As well, as part of the assessment, I want to determine whether there is any subsidized parking made available to employees of MPI.

There may be more effective and fairer ways to encourage bus ridership and less use of automobiles than the current pilot program. As Manitoba Public Insurance enters its 30th year of serving Manitobans, it continues to play an important role by providing the services that we have talked about this morning and by

6 LEGISLATIVE ASSEMBLY OF MANITOBA January 22, 2001 working to improve the quality of life for all Manitobans. I would be pleased now to answer any of your questions. I understand, as well, that the CEO and the chairperson, by tradition, are before the committee and able and willing to answer any questions that come from committee members. Madam Chairperson: We thank the minister for those remarks. Did the critic from the Official Opposition party wish to make an opening statement? Mr. David Faurschou (Portage Ia Prairie): Good morning, committee members. Mr.

Minister, it is my pleasure once again to appear here at committee and have the opportunity to question the operations of the Manitoba Public Insurance Corporation on behalf of the people of Manitoba. I would like, though, to ask the minister whether or not it is permissible at this time-the chairperson of the board did not have an opportunity when last we had a chance to open the discussions of this report, whether she would like to have opportunity to put a few comments on there.

In her absence, I know there was a great deal of discussion, so I would like to take this opportunity to offer the floor to the chairperson and then have opportunity for the balance of my remarks. Madam Chairperson: We thank the member for those remarks. Did the chairperson from the Manitoba Public Insurance Corporation wish to make a statement to the committee? Ms. Shari Deeter Hirst (Chairperson of the Board, Man itoba Public Insur ance Corporation): Madam Chair, actually, Mr.

Faurschou, I would certainly like to reinforce the comments by the minister on our annual report, that Manitoba Public Insurance has 1200 dedicated employees who spend a great deal of their time and effort- Madam Chairperson: Pardon me for a moment. I would just like to recognize Ms. Hirst as the speaker. Ms. Deeter Hirst: -working for the service of Manitobans, that we take a great deal of pride in not only our economic success but also the delivery of and the incomparable level of service to Manitobans, that, again, we have dedicated employees who work very hard.

I would certainly like to commend them and again reinforce the comments by the minister and his commendations toward our staff. Madam Chairperson: We thank the chairperson for those remarks. Mr. Faurschou: I appreciate the chairperson's remarks, to see that she is in support of the minister's opening remarks and that she concurs with those remarks. I would like to have the opportunity to question some of the particular practices that effectively were touched upon that have been of newsworthy note of recent, that being the particular bus passes as well as the bonus structures.

However, I am remiss, first off, to welcome the new minister to his place of tenure as the responsible minister for the Manitoba Public Insurance Corporation and hope that his appointment is one that will allow him to bring forward some of the notes which he has already alluded to and enhance the particular responsibilities of the Manitoba Public Insurance Corporation. So having said that, I would like to effectively ask the minister, starting first with the bus passes.

You have mentioned that this is now just a pilot program only and that effective analyses of the pluses and minuses to this program-what is the time jurisdiction allocated for the evaluation of this program? Mr. Mackintosh: It is my understanding, and Mr. Zacharias may have more information on this, but the City of Winnipeg had asked that MPI be involved in a six-month pilot program beginning February I. So the approval has already been made, the decision has been made, and the program, the bus pass use, will begin next week.

January 22, 2001 LEGISLATIVE ASSEMBLY OF MANITOBA 7 I think that the assessment and questions have begun already. As I say, on its face there is some value but I also can say that on its face I have a problem with some aspects of it and whether this is a fair way of dealing with the challenge of traffic congestion, environmental concerns and bus ridership. I suspect that there are more effective ways.

Some questions in my mind regard, for example, whether the people taking advantage of this program are those that already buy bus passes anyway so that it is a question as to whether then basic premium payers are subsidizing those that already take the bus. That would be an unfortunate outcome. As well, I want to ask questions about what the checks and balances are to ensure that the bus passes are not purchased by someone at MPI and given to a family or friend, for example. Those are some issues I have. I also have questions about the parking regime, the policies for parking.

I had a brief discussion with the CEO this morning on whether parking was subsidized at MPI, and I understand that there is some subsidization of parking for certain employees. That raises a question as to why basic premium payers are also subsidizing parking, which would go against the objectives of this particular pilot program. * (10:30) So, just given the time available so far, I have questions and I need more answers.

That is why I would like to see if the pilot program could be shortened, just given the concerns I have, and I want to see developed a good, effective measure of the value of this kind of program. If MPI's enrolment in this program spearheaded a very significant change in traffic and bus ridership then I suppose we could look further at that and how the program is funded because I do have a problem as to how it is funded.

This is a matter of employee benefits but, nonetheless, I think that we have to ensure that Manitobans recognize that the corporation is frugal, it recognizes the importance of the premiums that Manitobans have to pay, because it is a big chunk that Manitobans must pay on an annual basis even though we average the lowest, on average, premiums in Canada for auto insurance. It is important that the people know that the corporation is very mindful and uses its premiums wisely and for the purposes of the organization first and foremost on road safety.

Those were my initial thoughts when I heard about this issue and had discussions with senior staff about it. Mr. Faurschou: I thank the minister for his clarification and expansion on his opening remarks in regard to the bus passes being provided to employees. I attended the Manitoba Clean Environment Commission's day in regard to greenhouse gases. Without question the automobiles that are operating within the province here in fact are the leading source of greenhouse gases, as the minister expressed the thought. It is in fact a laudable suggestion. I appreciate the minister's questions in that regard.

Just specifically, though, how many Manitoba Public Insurance Corporation employees are we speaking of in this regard as to the opportunity to ride the metro? Mr. Mackintosh: It is my understanding that the estimate is between about 400 and 600 employees. Mr. Faurschou: So potentially almost one-half of Manitoba Public Insurance Corporation employees will have the opportunity to effectively take advantage of this bus ridership program. Mr. Mackinto sh: There are possibly 1200 employees of MPI. The ones who I understand will be the subject of this pilot are employees who work in Winnipeg locations. Perhaps Mr.

Zacharias could provide any further detail on that. So if as many as 600 do enrol, it would affect about half of the workforce. Mr. Jack Zacharias (Chief Executive Officer and President, Man itoba Public Insurance Corporation): Yes, the offer is open to all Winnipeg employees. Certainly I think it is a little more than 600 that would be in Winnipeg. The uptake rate expected is not great, 300 or 400 at best we thought. At this point in time I think we have a hundred or so that have responded, or just over a hundred that have responded to this

8 LEGISLATIVE ASSEMBLY OF MANITOBA January 22, 2001 point in time with a February kick-off date. Certainly the cost is dictated by the number of people that take up on it. Mr. John Loewen (Fort Whyte): Minister, welcome to your new role as the Minister responsible for Manitoba Public Insurance. Certainly I appreciated your opening statement. You attempted to touch on the three issues I think which are of the most significant concern to the people of Manitoba. I do have a number of questions for you on that.

I do find it very interesting that we are seeing today a very dramatic reversal in a number of policy areas from you as the minister responsible as opposed to the previous minister, Minister Barrett. I would like to ask some questions about that a little later on, particularly as they pertain to Cabinet discussions. We all understand that different ministers from time to time have different responsibilities, but it is the will of Cabinet that will determine how those issues are handled.

I guess I would like to start off by asking the chairperson if she would like to make some further comments on her perception of her role as the chair of MPIC and perhaps share with this committee. I appreciate that in our first meeting in April she had just assumed the chair and was unable to attend the second committee meeting dealing with this report so really has not had an opportunity to speak to her vision of MPIC.

I guess I would like to give her the opportunity to maybe give this committee a little better understanding of where she sees MPI fitting in with its role and mandate in the province of Manitoba and what her vision is for the future of the corporation as her tenure in chair. Ms. Deeter Hirst: The role of the board chair at Manitoba Public Insurance is carefully prescribed in our act, in our legislation, that I am required to report to our minister following all board meetings and to make sure that our minister is informed about decisions that are being made at Manitoba Public Insurance.

In terms of the governance of a billion-dollar corporation, which is certainly the role of the board, we spend, again, a great deal of effort ensuring that we have low rates, comprehensive programs and services and guaranteed access. In terms of management style, our new relationship with this minister is approximately three days old, and we will feel our way along. Mr. Loewen: Thank you for that. I am not hearing much information on your vision for MPIC. I guess I am just a little curious.

It seems from your public statements that you are certainly at odds with some of the statements that the minister has made today. I think, to the credit of the minister, he seems to be falling back more towards the position we heard from staff at the July meeting. I guess I would like to maybe ask you to describe in a little more detail your comment, your public comment, on the donation that was being considered to the three universities. In justifying that, you went on the public record as thinking that was something that was within the mandate.

Your quote was that Manitobans simply did not understand what the corporation was trying to do. Could you explain to this committee a little more about what you meant about that? Ms. Deeter Hirst: I would be delighted to.

When our board began looking at this issue after the change of the board in March and as we were looking at filing our application towards the Public Utilities Board for the upcoming year, we obviously had a situation where, because of some very prudent and astute investment decisions-we sold Nortel when we should have as well as just general luck of having three very mild winters in Manitoba and again the hard work of the employees at bringing a lot of costs within our operating budget under budget, we were sitting with a surplus in our RSR, our Rate Stabilization Reserve. *( 10:40) The Public Utilities Board the previous year had requested of the previous board a decision about how they would spend or disburse those surplus revenues, what was their strategy.

As we were preparing our PUB submission, we were looking at what would be our guiding principles around the disbursement of surpluses in the RSR, the Rate Stabilization Reserve.

January 22, 2001 LEGISLA T1VE ASSEMBLY OF MANITOBA 9 As a general principle we felt that funds in the Rate Stabilization Reserve that were in surplus to what we needed to ensure that catastrophes would not leave us in a vulnerable position, in excess of the ceiling, that we would return those funds to ratepayers. That was what we had filed with PUB, and in fact that has been adopted by PUB.

We were left, though, with a situation where we had $75.5 million which at the time we spent a great deal of time trying to explain to people that this was unprecedented, this was a windfall situation, this was not based on general day-to day operations, this was good luck. So how were we going to share that success with Manitobans? Obviously, our very first priority and the group that got the largest share of those surpluses were ratepayers. Our first obligation was ratepayers. We recognized that with a 10% discount.

So, again, their rates were going to be going down by 1 0 percent, and, again, this is in a market nationally where rates generally are going up, so that the fact that not only had we kept them level but now we are going to be offering a discount, it very much was shared success. The next group of people that we wanted to again share that success with were people who drive but do not own vehicles because they, too, pay into Manitoba Public Insurance. Drivers in Manitoba also contributed to our success. What could we do for them?

Again, anyone who has gone to renew a driver's licence knows the pressures that the drivers' licensing system is under, and, again, we were working on a very short time line. We knew that this was an area and a group of people and a group of our customers that we wanted to share our success with. We did not have time to begin any discussions with the Minister of Highways (Mr. Ashton) or the department of motor vehicles or drivers' licensing system, but we wanted to ensure that those funds would be available in the course of time because, again, MPI plans a year to two years in advance.

We are always looking very far ahead. So those funds were set aside to benefit drivers in Manitoba. So we were now left, because, again, of a very large surplus of $75 million, we were left with $20 million, and we decided that we wanted to tangibly recognize the fact that we are owned by all Manitobans, that, in fact, all Manitobans contribute to our success.

All Manitobans, coincidentally, are also our customers because they are also covered by PIPP benefits, by accident protection benefits, and, again, what could we do for all Manitobans that would ensure that they could see the benefits and the value of owning a Crown corporation. So whether it was a person who drove, a person who bought car insurance or someone, in fact, who did not buy car insurance or who did not drive, we wanted to get them to understand that we had had a remarkable series of situations that resulted in a $75-million surplus over our RSR.

So at the end of the day, that was how those funding decisions would be put into place. Again, the majority of our commitment is to our ratepayers. We had recognition of drivers, and, again, we were a public insurance company that just the same as when any other private corporation has a surplus it goes back to the owners, we wanted to ensure that all Manitobans could see the value of a Crown corporation. Does that answer your question, Mr. Loewen? Mr. Loewen: Thank you, Ms. Hirst, for your explanation.

We will touch upon this later, but we certainly hope that when we are talking about a billion dollars worth of investments, funds invested on behalf of the people of Manitoba, that we are relying more on good management than on good luck, would be my opening comment, a significant amount of money to rely on luck. [interjection] Well, once again, I would hope that it is more good management than good luck. Certainly I hope we are not at the point of throwing dart boards at the stock market quotes on a daily basis to determine whether the people of Manitoba are going to benefit.

But I certainly appreciate your explanation. I guess, having said that, my question to you would be, and you stated in the paper on the public record, having had the time and opportunity to explain that position to the people of Manitoba, would you make the same decision again?

10 LEGISLATIVE ASSEMBLY OF MANITOBA January 22, 200 I Ms. Deeter Hirst: I want- Madam Chairperson: Ms. Hirst. Ms. Deeter Hirst: Sorry, thank you. I tend to get a little ahead of myself here with my jumping in. Actually, just to respond to your comments about good luck, in fact the Department of Finance manages our funds, our investments. Again I would just like to commend them for their astuteness. We have a portfolio that not only manages to invest in Manitoba, but also manages to generate significant returns, which, at the end of the day, is one of the reasons why we have the lowest rates in Canada.

So, again, it is through their astute good judgment that we were able to benefit. Would we make the decision again? I think that MPI has always prided itself, in its 30-year history, of responding to our customers. I wish that we had had a chance to discuss who owns Crown corporations in Manitoba and how Crown corporations can benefit Manitobans. That certainly is a very general discussion. I would certainly never wish to put the employees at Manitoba Public Insurance again under the pressures that they endured during that time.

Again, at the end of the day, I personally believe that this is a Crown corporation that belongs to all Manitobans. We should be proud of the fact that we have a Crown corporation that is managed so astutely and so well that we have the lowest rates in Canada. Our private sector colleagues in fact cannot do the job that we do, and I think that is to our credit. Mr. Loewen: I take it that the answer to the question was yes, you would do it again. Ms. Deeter Hirst: We have told the Public Utilities Board that all surpluses will go back to ratepayers.

The Public Utilities Board, as you know, is a very effective watchdog on Crown corporations and public utilities, of which we are one. We always abide by our legislation, and currently we do not have the ability, at this point in time, to disburse our surpluses to anyone but our ratepayers. Mr. Loewen : Madam Chairperson, certainly the Public Utilities Board has ruled and, under pressure, the corporation has reversed its position. The Government in fact has reversed its position quite dramatically.

I guess what I am trying to get a bit of a feel for is whether with the reversal of that policy you still feel comfortable in your role in living within the policies that have been re-formed by the Province of Manitoba. Going back to the first discussions and I believe this issue was first passed by the board of MPIC in May following a motion by Paul Moist, that an amount be set aside in a somewhat general way. Can you tell this committee whose idea it was to set aside that large amount of funds for distribution back to general government revenues? • (1 0:50) Ms. Deeter Hirst: Certainly, I would be delighted to.

Again, with basically two-thirds of the funds going back to drivers, ratepayers, we were looking at what we would do for all Manitobans. At the time, again because of the pressures that we were working under, we did not have an opportunity to develop a strong focus beyond that we wanted to do public good. We wanted to show in a tangible way our commitment to the Manitoba community. It was originally filed with Public Utilities Board either as a community legacy fund or an endowment fund, and again, at the time the board was looking at a variety of options.

Once our application was filed with the Public Utilities Board we were able to sit down and try to put some meat on the bones of some of these very broad objectives. We began with conversations with our minister to try and determine, as the representatives of the people of Manitoba, what were some of the priorities.

Again, through the course of several months, discussions evolved so that at the end of the day we wanted to look at ways that we could contribute to the future of Manitoba through education and again looked at a variety of kinds of ways of doing that and felt that crumbling infrastructure was certainly a huge outstanding obligation towards the post-secondary sector and

January 22, 2001 LEGISLA TIVE ASSEMBLY OF MANITOBA 11 that we would be very proud to be able to assist the three universities in · those goals and objectives. Mr. Loewen: Well, a couple of points to that. Correct me if I am wrong. My understanding is then that it was at the board's initiation, that they began to discuss the possibility of making a $30- million legacy donation to some unprescribed group at the time and that that then was taken by the board to the minister. Ms. Deeter Hirst: No, just to correct you, it was $20 million.

Again, $1 0 million was to go towards the driver's licensing system, that the legacy monies were $20 million, and that, again, it was felt that we needed to do something to recognize the fact that we were owned by all the people of Manitoba. Mr. Loewen: Well, I think we can recognize in the committee that it started as $20 million and grew to $30 million by the time it was announced to the public, so, you know, my intent is not to split hairs there. You have mentioned a number of times that you were under a lot of pressure in terms of a time line, and I guess that escapes me. What was the rush?

The money was not going anywhere. Who was pressuring the corporation or the board to make a decision? Ms. Deeter Hirst: The Public Utilities Board application has to be filed early June, which means that the board has to make a decision in May.

Obviously, both meeting the requirements of what we would be doing with surplus funds had to be part of that application, as well as the financial impact of the $75 million had to be reflected in the application, that we were looking at a very innovative way of addressing the needs of our ratepayers through the discount, and that had to be included in the application, as well, because that was part of the rate structure. So, again, in March when we first came in, we had basically three months to decide what we were going to be doing with it. Mr.

Loewen: Madam Chair, so really what I understand from that is what was driving the process was the fact that the Public Utilities Board was scheduled to meet, and it was going to become public that the initial $20 million had been up to $30 million, and therefore there was a need by the board and by the organization to make a public statement about the $30 million. So really what you are saying is between the time the decision was made in May and November, virtually no public discussion had been undertaken on how the money could or should be disbursed. Ms. Deeter Hirst: That is correct.

Again, the focus was on making the adjustments to the accounting records to ensure that the balances, the application, reflected those numbers, that we felt that following that we would be able to begin the discussions of how those funds could best be directed. Mr. Loewen: So it was determined in May that there would be excess funds at that time. It was considered a $20-million amount was satisfactory, later up to 30.

I guess going back to your initial statement, you mentioned that a decision had been made to make a refund, as was indicated in the first Public Utilities Board filing to the ratepayers, which you felt was your first obligation, and you stated that the excess then should be given back to the people of Manitoba. I guess my question is if the first obligation is to the ratepayers, why would there be an excess? Ms. Deeter Hirst: Mr.

Loewen, the board strongly feels that we have an obligation to three different constituencies, that the majority of our customers are ratepayers but we also have customers who are drivers who do not own vehicles and who do not insure vehicles and yet are still paying into Manitoba Public Insurance. We also feel very strongly that this is a Crown corporation that is owned by the people of Manitoba. So it was to those three audiences that we address this. Mr.

Loewen: That is very interesting because that is certainly contradicting the minister's opening statement where he clearly indicated that the responsibility of the corporation was to provide the lowest cost possible price for insurance and that any surpluses should go back to the ratepayers. Is the board still at odds with

12 LEGISLATIVE ASSEMBLY OF MANITOBA January 22, 200 I the minister as to where excesses should be paid back to? Ms. Deeter Hirst: The board would never be at odds with the minister. We are in fact very aware that the Government represents the people of Manitoba, our customers are the people of Manitoba, that we would work co-operatively together to achieve common goals of the lowest rates possible, the highest level of service possible.

Again, this was a situation that was unprecedented, that we had never been in a position that we would be able to do this financially, that we felt comfortable that with a general rate that is the lowest in Canada plus a I 0 percent discount that our first obligation to our ratepayers was being met, that how could we again address some of the needs of drivers, who are also our customers, that we have never been able to do beyond drivers' education those kinds of programs.

We felt that we should take this opportunity to look at how we could recognize that relationship, and again, we have never been able beyond the billion dollars that we have in our investments, a huge portion of which are bonds in municipalities, hospitals and education, we have never been able to recognize the fact that we are a public insurance corporation. We felt that was certainly a priority, that it was again an opportunity we did not expect to have, and it was an opportunity we probably will not get to express again. Mr.

Loewen: Madam Chair, the chairperson has just indicated that a large proportion of over a billion dollars in funds is invested in Manitoba. I wonder could she tell me what percentage is invested in Manitoba. Ms. Deeter Hirst: Could I defer that question to Jack because he has the numbers there. Mr. Zacharias: I believe at present the numbers are around 40 percent to 45 percent, in that range. Mr. Loewen: I thank Mr. Zacharias for bringing that information to the committee.

In response, I guess to the statement by the chair, has the board now changed its approach and as a board understands fully that it is responsible to change board policy regarding the refunding of excess amounts to coincide with the minister's opening statement? *( 11 :00) Ms. Deeter Hirst: Yes, Mr. Loewen, as passed by the Public Utilities Board and passed by our board of directors, surpluses will return to ratepayers in Manitoba. Mr.

Loewen: So since the Public Utilities Board has ruled, there has been a motion passed by the board of directors of the corporation to the effect that any excesses will be returned to the ratepayers. Is that correct? Ms. Deeter Hirst: Could I get you to just repeat the question? Mr. Loewen: Well, you just stated that the board understands and you mentioned a motion was passed by the board to the effect that any future surpluses would be returned to ratepayers. Has that motion been passed by the board and when was it passed? Ms.

Deeter Hirst: It was passed in June as part of our application to the Public Utilities Board, who then passed it in November. Mr. Loewen : Well, I am having a little trouble with the timing. If your board passed in June of 2000 a motion that all excesses would return to ratepayers, why did we have in the fall an announcement that $30 million would be given away? Ms. Deeter Hirst: The rate application that we are discussing is for 200 I, which is going to be upcoming on the 1s t of March, which is the discount period that the minister referred to in his opening remarks. Mr.

Loewen: Are you saying there was a board motion, and, if so, maybe you could table with this committee the motion and when it was approved by the board to return any excesses. I am just trying to get clarification here because the timing does not jive with public reports at all.

January 22, 2001 LEGISLATIVE ASSEMBLY OF MANITOBA 13 Was there a motion passed by the board, as you said, in June of this year, that any excesses would be returned to the ratepayers? Mr. Zacharias: Maybe I can help. The rate application that we filed on June 5, 6, 7, in there somewhere, did have an allowance for public good.

The board also looked at what we would do going forward with respect to surpluses and passed a motion that in the future when we had surpluses beyond that application, that we would wait till all the surplus was earned, but once the surplus had actually been earned, then we would return that back to ratepayers by way of either dividends or lower premiums, that it would flow back. That was the go-forward position. The rate application had already been filed before that, but in the future this was the go-forward position.

That was passed by the board at the end of June and filed with the PUB as what we wanted to do in the future. The PUB referenced that in their order and certainly is onside with that. Mr. Loewen: Well, certainly they are onside with it. In their decision, they reiterated the fact and I believe instructed the corporation to return all excesses to ratepayers. So what I am hearing is that the board recognized it had an obligation to pay money back to the ratepayers, but the board thought it would be all right just to take out $30 million as a one-time gift to give it to whomever the board determined.

Is that what happened? Ms. Deeter Hirst: The board felt that it was extremely important to recognize ratepayers and that because we were sitting on a surplus of $75 million, it was an opportunity to recognize the other customers that we do not usually get a chance to recognize in that way. It was also important for the board of directors to respond to the request of the Public Utilities Board on what we would do in normal circumstances with surpluses, and the board certainly had no problems passing a motion that said that surpluses go back to ratepayers. Again, the $75 million was extraordinary circum stances.

It was not something that we had anticipated or that in fact the majority was not coming out of our day-to-day operations, so it was an opportunity that would not impact our ratepayers. Mr. Loewen: Well, it is unfortunate that the chair was not here for the July meeting where we had an extensive discussion. Again, I am just trying to reconcile the statements that were made both by the minister at the time as well as the president and CEO of the organization, which in my mind do not coincide with what this committee is being told today, and I have a great deal of discomfort with that.

Just for clarification again, it was a decision, an idea that was formulated at the board to make this one-time legacy deduction that was then taken to the minister? Ms. Deeter Hirst: I think that reviewing the transcripts of Hansard, the public comments by the minister, that the recognition that Manitoba Public Insurance is a public insurance company, the previous minister has always been very outspoken in those regards.

Again, the Public Utilities Board application is a public document that was filed in June, that there was certainly ample opportunity for people to examine that document, many of our interveners examined that document. At our own media conferences we discussed the fact that not only were motorists going to be paying the lowest rates in Canada and getting this discount as part of this application but in fact there was going to be an opportunity to do community good.

Those were all part of the media announcements, that the primary focus was certainly on the impact on ratepayers and the fact that they would be rece1vmg a considerable discount which generated certainly the most amount of media attention at the time. Certainly the board of directors lives within our legislation and within the Public Utilities Board guidelines and a variety of other regulatory agencies. In fact that is the universe that we operate in, and we are privileged to do so. Mr.

Zacharias: I guess, reflecting on the last comment, if there is something in my previous testimony that I had in July that you feel is

14 LEGI SLATIVE ASSEMBLY OF MANIT OBA January 22, 200 I inconsistent with what I have said today, I would like some reference to it because certainly I have been through it, and I see nothing that is inconsistent with what I said at that point in time. Mr. Loewen: Thank you, and I appreciate the clarification.

Madam Chair, just to clarify my statement, in case I was not clear, where I would see inconsistencies in statements, in no way do I see an inconsistency in what you have said at that time or anything you have- well, possibly of some of your comments to PUB that you have said on that, but there are certainly incon sistencies on what we heard from yourself and the minister and what we are now hearing from the chairperson. Those are the inconsistencies that I was referring to. Certainly, Mr.

Zacharias, I have not seen inconsistency in your statement, but in my mind do not match up with-but I have a question to the chair. She mentioned that Manitobans were made aware of this legacy fund by a number of media releases. Can she tell the committee when the first media release was? Ms. Deeter Hirst: Madam Chair, there was an extensive communication strategy that always accompanies every filing of the PUB appli cation. What the media chooses to cover versus what we put out for them to cover is certainly something that media determines.

There was a great deal of interest in the fact that ratepayers would be paying less for the third year in a row. There were a lot of bar graphs and pie charts that showed that we have the lowest rates in Canada. Again, there was a great deal of interest on behalf of reporters of how much their own personal rates would be going down. Again, Manitoba Public Insurance recognizes that one of our guiding objectives is to provide the lowest cost of insurance possible, and that seemed to be the story that the media wanted to talk about at that time. *( II : 10 ) Mr.

Loewen : I would ask the chai rperson, maybe she could check with staff if there was a media release at the time of that PUB filing that brought to light to the public that there was going to be at that point a $20-m illion giveaway from the Rate Stabilization Reserve. I think it would be fair to ask if that media release could be tabled by this committee and when it was. Mr. Zacha rias: It is in the public statement that we did at the time of the PUB filing, and our PUB application did contain numbers for drivers and legacy.

Part of the comments of my statement at that was that, in addition to the rate decrease, the corporation was looking at some other projects that involved both drivers and Manitobans as a whole and that there would be further statements on those issues forthcoming as the year rolled out. Then there was further reference when we amended the application that there were still to be announcements with respect to the benefits to all Manitobans and drivers. Both times we talked publicly about the PUB app, there was reference to that. Mr.

Loewen: Well, can I ask then when it was that it was first announced to the citizens of Manitoba that there would be either $20-mill ion worth of donations or $30-million worth of donations? When was that first made available to the public of Manitoba? When was the first media release with that in it? Mr. Zacharias: The exact nature of that expenditure was released about a week prior to the PUB hearings at an announcement done at the U of W. Mr. Loewen: Thank you for clarifying that. So what we understand now is that there was a motion passed by the board in May.

There was perhaps some vague reference made to a legacy fund with announcements to be made later, and then a week before the Public Utilities Board is set to sit and hear under oath, examine people under oath, that is when the announcement was made. Are those the timelines? Mr. Zacharias: Certainly an announcement had been made prior to the start of the Public Utilities Board, because we had numbers in our application that we had received some interrogatories about, and we were waiting for direction from the board with respect to clarification as to how those funds would be used. Mr.

Loewen: To the chairperson, with regard to the extensive communications package that was

January 22, 2001 LEGI SLATIVE ASSEMBLY OF MANITOBA 15 put together at the time of the filing, was there any discussion at the board that there should possibly be some public consultations prior to a decision being made on how to spend $20 million or $30 million of ratepayers' money? Ms. Deeter Hirst: Madam Chair, the discussion of who owns Crown corporations in Manitoba generally, who owns Manitoba Public Insurance particularly, was a consultation that did not take place generally in the public prior to the announcement at the U of W. Mr. Loewen: For clarification, that was not my question.

My question was: Was the public of Manitoba consulted about how the $30 million that the board, or the $20 million, whatever the chairperson would like to call it, was there public consultation on how that money should be distributed prior to the announcement that it was going to three of the four universities in the province of Manitoba, or was this simply a decision that was made by the government of the day? Ms. Deeter Hirst: I think that again public consultation in the terms of hearings, clip and mail coupons, call-in show discussions, none of those things occurred.

Certainly when the board had made the decision to allocate a portion of the surplus toward the common good to recognize that commitment to our owners, the people of Manitoba, we did at that point sit down with our minister to decide what would be the most appropriate area where those funds could be utilized. Mr. Loewen: So then the only specific discussions with regard to how those monies would be allocated were with the minister of the day? Ms. Deeter Hirst: That is correct.

There were no public discussions with, again, the general populous about the use of those funds nor did we consult them about providing the lowest auto insurance in Canada. We just presumed and assumed that was one of our responsibilities as a board. Mr. Loewen: Certainly it is the responsibility of the board and one that is recognized by the minister, to provide the citizens of Manitoba with the lowest possible car insurance. That is why the corporation was formed in the first place.

The corporation was not formed to take ratepayers' money and distribute it at the will of the board to any agency or group in Manitoba. This is appalling, and the people of Manitoba have spoken to that. My question would be, just to get back to, I guess, the first question: Whose idea was it that $20 million subsequently growing to $30 million of the excess in the corporation should be distributed by way of a legacy fund or a dividend? Whose idea was that? Ms.

Deeter Hirst: I would like to point out that one of the founding principles of Manitoba Public Insurance was to benefit the people of Manitoba and that was certainly one of the principles that we looked at, that we have the lowest rates in Canada and how could we again express the fact that we are a public insurance company. The decision to express that through a legacy fund or legacy funds or community good was made by the board prior to filing our PUB application in June. Mr.

Loewen: It was a decision of the board to give that legacy donation to three of the major post-secondary institutions in the province of Manitoba, three of the four. Ms. Deeter Hirst: When we were meeting with our minister to discuss the best focus for those funds and how they would provide the best community good, we looked at several different kinds of projects. It was felt that education touched all Manitobans, that most all Manitobans would believe that a strong foundation in education was a strong foundation in the future of Manitoba.

We felt that the education system had been underfunded for several years and that certainly driving down Portage and seeing the facade ofthe U of W held up by netting was again an everyday reminder about crumbling infrastructure. Mr. Loewen: In its deliberations did the board consider other possible areas to allocate this legacy fund? Did they ask people to make presentations to the board on the suitability of where these donations would go, or did the board just simply decide, under instruction from

16 LEGI SLATI VE ASSEMBLY OF MANIT OBA January 22, 200 I the Government, that it was to go to post secondary education? Ms. Deeter Hi rst: We did not ask the people of Manitoba to make presentations to the board about the best use of those funds. Again, in consultation with our minister, it was determined that this would be the most effective use of those resources. * (1 1: 20) Mr. Loewen: With regard to that, and you stated earlier that under your legislation you were only allowed to send the surplus back to ratepayers, did the board bother to get a legal opinion based on its act? Ms.

Deeter Hirst: In the first reference, that is a Public Utilities Board guideline for us; that is our legislation. We have a legal opinion that in fact we could make gifts for the community good. We have been doing that and proud to do that for 30 years, we have supported the community. It was cert ainly felt that this was merely an extension of that former practice. Mr. Loewen: Well, it is a far reach you know to go from corporations making the types of everyday donations that any corporation would make to a charity or to the Winnipeg Symphony or for that matter to the Pan Am Games.

I mean, that is a normal course of business. When a corporation gives away more than or roughly half of its book value in one fell swoop, that is certainly not a normal corp course of operations. You know, to leap from one to the other is an interesting political defence but does not make a whole lot of business sense. Would the corporation be prepared to table that legal opinion with this comm ittee? Would the board do that? Mr. Zacharias: The board certainly consulted with our general counsel and sought advice with respect to authority of the board.

I think there is consensus in our statements with respect to what is legal or not legal because certainly things like donations to the United Way and others may fall outside the strictest sense of some of the

interpretation that is there, but as an inherent right of the board, they have the authority and responsibility and sometimes a legal obligation with respect to some of the environmental things to make those kinds of expenditures. So it is not a matter in my mind of do they have the legal right or not; it is a matter of when do the dollars make it become illegal. I do not think that situation exists. Either all expenditures of that nature are excluded or they are in, and if the argument is with respect to how much, that is not a legal argument. Mr.

Loewen: Well, Madam Chair, my question to the chair of the organization is quite simply will you table the legal opinion that was given to the board on the legality of this type of donation with this committee? Ms. Deeter Hirst: I apologize, Mr. Loewen. I must have misspoke, because it has been pointed out to me that a legal opinion is something that you pay for to prove that you are right. In fact, we did not incur those expenses. We have legislation, The Manitoba Public Insurance Corporation Act, and we feel that this certainly fell within those guidelines based on our legal counsel. Mr.

Darren Praznik (Lac du Bonnet): I am actually very shocked by the comment that the chair of a public Crown corporation would make that a legal opinion is something that you pay for- if I heard her correctly-to prove that you are right.

Her minister who is a lawyer-1 attended the same law school as he-we know full well that on many occasions when there is going to be a question, particularly of a Crown corporation that has been charged by the Legislative Assembly to administer public automobile insurance, if there is a question or an issue as to whether or not that corporation is acting within its power, obtaining a legal opinion is to canvass reputable members of the bar who have a knowledge of the law to determine whether or not you are within the realm of your power and authority.

This board, chaired by this individual, was about to give away, I believe, something like half the book value of the corporation, half the book value. She has indi cated that some legal opinion was sought and albeit within house, there is nothing wrong with MPI employing some excellent counsel to seek that opinion.

January 22, 200 I LEGI SLATIVE ASSEMBLY OF MANITOBA 17 What we would like to ask today, since she has diminished the value of legal opinions in her comments-and obviously she is now in trouble. They have had to retract this payment. It is easy to throw out a comment about legal opinions, but obviously her board and her corporation felt strongly enough to seek advice of their legal counsel. Could they today, could the chair today tell us if she in fact saw that legal opinion, and would she commit to have it tabled before this comm ittee? She may now value it.

She may think it is only there to prove a position is right. There may be two views on a question. Not every question is clear-cut, but surely a responsible chair of a public Crown corporation entrusted by the people of Manitoba and the Legislative Assembly to deal with their business would want to know in giving away one half of the net value of that corporation, or the book value of that corporation, whether or not they were acting within the authority given to them by the people. So I ask her today, did she as chair personally seek an opm10n from her administration?

Did she look at the opinion they obtained from their legal counsel, and will she commit to table it to this Assembly today? Madam Chairperson: Could I just remind all members to make it absolutely clear that the questions are being directed through the Chair. Ms. Deeter Hirst: Thank you, and through you to the previous speaker, there is nothing ever wrong with listening to the voice of Manitobans, and there is nothing wrong with listening to the voice of our customers. We have done that for 30 years, and we take a great deal of pride in that.

Our legal opinion was verbal, and so unfortunately I am not able to table that. Again, we have a 30-year practice of supporting initiatives within the community, something that we are very proud to do. We are a public insurance corporation, and we felt that it was certainly within our mandate. Mr. Jim Rondeau (Assiniboia): I have one question, Madam Chair. What is $20 million as far as a book value?

What percentage of $20 million would that be as far as MPIC, because reference has been that it is half the book value? {interjection] Madam Chairperson: Could I remind all committee members to please respect the person who has been recognized as speaker. Ms. Deeter Hirst: Thank you very much. Mr. Rondeau, it is certainly a billion-dollar insurance company. Our book value would be-and again, I will have to ask for some guidance from Jack, but I would think that it would be about $200 million. Mr.

Zacharias: Just for clarification, in addition to our hard assets, the corporation does have signficant retained earnings, and therefore the combined value of assets and retained earnings would be approaching $200 million. Mr. Loewen: Just for clarification, so that this committee does not get into this hairsplitting, my

interpretation of book value is basically assets minus liabilities. I will include in the liabilities category the Rate Stabilization Reserve, because that reserve there is to set up. So if the definition should be clarified, then the corporation was looking-[interjection] Could I ask the Chair to please draw order to the comm ittee? Madam Chairperson: Order. Mr. Loewen: For clarification then, the corporation is talking about giving $30 million away. Their retained earnings according to the February 29, 2000 statement is $79 million.

Now, I think it is generally understood that [interjection] Look in the statement, the statement itself, retained earnings, $79 million. If the committee would like clarification, let the record indicate that we are saying that it would be very, very unusual for a corporation to give away what amounts to close to 50 percent, maybe 40 percent of their retained earnings on their book. So we are comparing the $30 million to the stated retained earnings of $79 million on the book. If members opposite want to call it something different or say it is something different, so be it. * (I I :30)

18 LEGI SLATIVE ASSEMBLY OF MAN ITOBA January 22, 200 I Mr. Rondea u: I just was going to ask Mr. Zacharias what percentage that would be as far as the assets of MPIC. An Honourable Member: Here is your number right here. An Honoura ble Member: I know that, I 0 percent. Madam Chairperson: Again, a reminder to ask through the Chair. Mr. Zacharias: The corporation would consider its assets to be $I8 4 million plus buildings and items that we own. We have $79 mill ion in the retained earnings. That is the surplus from the competitive lines of business.

In addition to that, we had the $I 04 million in the Rate Stabilization Reserve, which is the earning money from the basic program plus the hard assets. So the number giving away would have been around I6 percent of our assets. Mr. Praznik: Very interesting. We are not going to care in disputing these numbers, because there are two opinions, but even by the New Democrats' own admission, they were prepared to give away I6 percent of the value of that corporation-I6 percent. That is unheard of in the private sector.

But my question for the chair of the board is that given the fact that she said there was an oral, legal opinion, would she be prepared today to have her counsel appear before this committee to discuss that opinion and share it with members of the committee since she cannot table a written opinion? Ms. Deeter Hirst: One point of clarification I would like to point out is that the Manitoba Public Insurance Corporation was not in a position to retain those surpluses as well.

The Public Utilities Board made it very clear that our RSR had a ceiling of a hundred million dollars, that we could not retain those funds, and they had to be disbursed. It was our job as a board to decide how we would disburse those funds. As I had said previously, our primary commitment was to ratepayers, then to drivers and then to the people of Manitoba. Mr. Praznik: Madam Chair, the crux of the issue here is not whether or not MPI should have returned the surplus to some group or individual. Preferably, in our case, we believe it should have been to the ratepayers. That is not the issue.

We knew you had to do it. The question, Madam Chair, is: Did you act within the authority of the legislation, or were you in contempt of the Legislative Assembly of the Province of Manitoba, who passed your statute? The statute involved puts some very clear limitations on what this corporation can do. They were put in place for exactly the kind of concern that this Opposition has raised on countless occasions since this announcement, that this Crown corporation was created by Manitobans to provide to them not the lowest cost in Canada of automobile insurance, but automobile insurance at cost.

The fact we are the lowest is not an excuse for brea ching the legislation. It was to return those surpluses. It was to be a well-managed corporation. It was to conduct its business, the normal course of a business. There were restrictions put on how it could spend its money. It is legislation that the chair, I would have hoped, would have read when she assumed this responsibility as chair. It states very clearly that the government cannot even take money back for public purposes.

That was done because when the Schreyer government brought in MPI, when the New Democratic Party brought it in, they were very clear on their principles, that the principle was to provide automobile insurance to the people of Manitoba at cost. Now, the ancillary benefit was that the money that was invested to support the pool would be invested in Manitoba, but it was still the principle of insurance at cost. I notice some long-serving members of the New Democratic Party are nodding in agreement. What we saw here today was this new NDP administration breach that principle.

Now, what we wanted to know is, given that this new administration was breaching this long standing legislative principle, if in fact you sought from your counsel opinion as to whether or not you were acting within the statute in

January 22, 2001 LEGI SLATIVE ASSEMBLY OF MAN ITOBA 19 making such a large contribution to a purpose outside your act. Now, as one of my colleagues announced last week, we obtained an opinion from a reputable law firm in Manitoba that says you were out of that authority. Now, granted, there may be some dispute among lawyers as to this particular matter, but clearly it should have been enough to flag that there was a problem.

What we are asking this chair is if she was acting responsibly, not only within her mandate as a public official, but also an appointment of a New Democratic government who founded the principle of automobile insurance at cost. We want to ask this chair if she sought, and her board sought, opinion, which she says they did. It was a verbal opinion, not in writing, which astounds me, because I would have thought that the chair at least would have had something on which to build their case, should it come into question.

But we are asking today if we could have our opinion shared with your counsel and an opportunity to hear your counsel's response and what they said and their view of the statute to understand whether in fact you did exercise your due diligence as chair of a public corporation in respecting the legislation, in respecting the principles, the law with respect to MPI, or did you just ignore that, not even think about it. Maybe you did not think about it. Maybe you never read the statute. But we are asking the chair today: Did she and her board do that investigation?

Are they prepared to have us question the legal counsel who provided your opinion, have that legal counsel look at the opinion we obtained and tell us why there is such a difference? We want to know if this chair acted responsibly and within the law in discharging her duties. That is really the question. That is the question here. So I ask the chair: Is she prepared to have her legal counsel of the corporation have an opportunity to look at this? Then we can perhaps call the committee back at another time for us to be able to question and determine what legal advice she did get, if she did in fact get any. Ms.

Deeter Hirst: To the question about whether the board acted responsibly, yes, it did act responsibly. We certainly consulted to find out what the legal implications of the act were. In fact we did extensive due diligence. We looked at the precedents of the community support that Manitoba Public Insurance has put back into Manitoba over its 30-year history.

We looked at it in terms of the scope of the projects, which have included Manitoba junior hockey, the Pan Am Games, the United Way, a variety of community centres, an extensive amount of road safety initiatives including MADD and T ADD, Mothers Against Drunk Driving. We felt that certainly, again, going by the

interpretation of previous boards, they felt that the community good, Madam Chair, was an important part of the delivery of the services of a Crown corporation, and we felt that that was one of the aspects that would encourage us to, in fact, look at this opportunity. Mr.

Faurschou: Madam Chairperson, I take great exception to some of the comments just made by the chairperson of the Manitoba Public Insurance Corporation in respect to comparisons that she has made between Mothers Against Drunk Driving and eff ectively a one-time capital expenditure that she proposed through her board to make towards the universities. There is no comparison and, fundamentally, corporations traditionally operate between I percent and 2 percent, not 16 or 30, whatever figure you would like to use, towards being good corporate citizens.

I commend the corporation for taking up that task and challenge to maintain a good corporate citizen posture within our community. However, this is not in the league, and it is a complete affront to all members of the Manitoba Legislature sitting here at this table today. I beg her to reconsider her last comments. Effectively to continue to say that you are in the right is absolutely wrong, and complete consultation which you say you had with Manitobans was incorrect as well. You said you respond to Manitobans-

20 LEGISLATIVE ASSEMBLY OF MANITOBA January 22, 200 I Madam Chairperson: Order, please. Would you please direct your comments through the Chair. Mr. Faurschou: Madam Chairperson, my apologies to the Chair for not addressing directly. However, this course of action that I am taking at the present time is to respond to statements made that draw the ire and should draw the ire of all Manitobans in respect to this decision and the process of this decision. So I will get back to the specifics of the legality of this decision that was brought forward by the board.

Obviously, there was no consultation, as was admitted, with the people of Manitoba. There was a statement that there was consultation as to the legality of it.

However, I would like to have opportunity for response to particular statements that have been included in a legal opinion that we have received by Thompson Dorfman Sweatman, and I would like at this point in time to table the document which we received and presented to the public on Friday, January 19 . *( 11: 40) I believe it very important that the chair take opportunity to review some of the points that have been made in that document and to have the opportunity to respond, because I believe that the chair is way off base when she has made some of her comments as to her consultation process and to be doing what Manitobans want to be done and, in fact, with the legislation very, very clear that the lowest possible price for public auto insurance and personal injury insurance be afforded Manitobans.

Without returning these particular monies, that is clearly contradictory. Effectively, we have heard today from the minister that made the statement that no one wants to pay more than they should, and he has made it his mandate as Minister responsible for Manitoba Public Insurance to return in fact to the lowest possible price. I would like to commend the minister for making those statements. I would like to leave you also with this point to consider: that you have made erroneous statements here this morning when you refer to all Manitobans receiving the lowest rate in Canada.

It is not every motorist that receives the lowest rate in Canada. It is in fact the lowest average rate. I would suggest that if we canvassed around this table today and persons had opportunity to have a competitive quote from jurisdictions that aff ord private insurance the vast majority of individuals in this room would in fact be paying more than they would if we had an option in this province. In fact, 1 personally have compared my premiums over the years, and I pay personally 30 percent more for comparable insurance here in Manitoba than I would in a province where I had the option of private insurance.

So, Madam Chair, with those clarifications, it is approaching noon here at the present time. I have tabled the document. It will be duplicated for all those persons who have a chance to do that, but I would like to return to questioning later this afternoon on this part. I would like now to turn the microphone over to my colleague Mr. Praznik, in fact because my points were made as clarification, and I thank the Chair for that. Madam Chairperson: I must apologize to Mr. Penner from Emerson. I should have recognized him before you spoke, so I will give him the opportunity to speak now. Mr.

Jack Penner (Emerson): Thank you very much, Madam Chairperson. I will just make a few brief comments. Having been a member of the board at MPIC I have a great deal of respect for the integrity of the executive at MPIC. I think the working relationship that we had as board with that group of people demonstrated to us the integrity they had and also the wisdom and advice in most cases that were made to us. I find it absolutely interesting that the chairman of the board would say that it was a matter of good luck that there was a $75.5- million surplus at MPIC. I find that absolutely astounding.

If she would read the record and if she would study the minutes and the records of the corporation, she would know that there were decisions made, and largely based on recommendations by the executive, but decisions made in the board that brought us to a position of surplus. The board and management certainly knew that we were headed in that direction. The reinsurance scheme that we initiated made sure

January 22, 200 1 LEGI SLATIVE ASSEMBLY OF MANITOBA 21 that the big ups and downs in indemnities paid during high periods of accidents would be much less than they were. So we levelled out that whole process and that drove us to a point where we knew that we would go back to the Public Utilities Board at some point in the future and make some significant recommendations of rate reductions. That was always the discussion around the board that we would be in a position of reducing rates substantially and even increasing benefits under the public policy.

I am quite amazed that the new chairman of the board would say this is a piece of good luck. I think the piece of good luck was that there was an election and that the New Democratic government found themselves in power to their surprise, and they looked at the books at MPIC and had a gold star in their eyes. I think they found that there was a corporation that had come from a huge deficit position when they were in power to a large surplus while under a Conservative administration. So now the new chair says, you know, this was good luck. I think it was good management.

I think it was good direction from a board of directors and management doing an exemplary job of managing a corporation to ensure that it would function as it ought to function to a break-even or better point. I find it absolutely astounding that this kind of attitude would persist in the chairman's opinion. I want to go back to the question as to who directed what in the affairs of the $30 million. I find it very interesting that the chairperson said they met with the minister time and time again.

I would suspect and I would ask the question of her, has she not only met with the minister but has she and her board also had, or some of her board members, discussions with the Premier (Mr. Doer) and other Cabinet ministers as to whether they should or should not take $30 million out of the operating account of MPIC to do some other inordinate things that might be beneficial to the future election of the NDP government? Ms. Deeter Hirst: First of all, actually, Mr. Penner, I would like to reinforce your commendation about the management and staff at Manitoba Public Insurance.

In fact, going from a $50-million deficit to $1 75-mill ion surplus in that time period, at the same time managing to improve service and to keep rates low and do it with existing staffing levels, is commendable. I cannot tell you how proud I am of the work that they do there as the current board.

Certainly, again, the previous board I know was involved in many of those decisions that resulted in that financial security, and again the work of that board's efforts were also a significant portion of that success. * (1 1 :50) I would also like to clarify my comments because I had commended, as well, the astute good judgment of the Department of Finance in managing our investment portfolio. My comment about good luck was like any Manitoban who looks out their window in November, and if it is snowing or not snowing it is the vagaries of fate.

Again, certainly the fact that we were able to drive up and down that highway and around the streets of Manitoba over the last three years without having a lot of ice and snow was also a contribution to our success. I think that going back over some of my previous remarks, the board of directors of Manitoba Public Insurance realized that they needed to disburse $75 million. It was not something that we could retain, but in fact by the direction of the Public Utilities Board was something that we had to disburse. We felt that it reflected our ob jectives of a board to go back. The majority went back to ratepayers.

Some went back to drivers, and some went back to the people of Manitoba. Mr. Jack Penner: Madam Chairman, again, reflect on some of the comments made about monies that had to be returned. I find that comment interesting as well, because we have met on numerous occasions with the Crown corp as a board, and there was always a very interesting kind of discussion between Crown corp and the board. It was always made clear that Crown corp would pay a lot of attention to good advice by the board.

So my question to the Chair again is: How much discussion or what kind of discussion did you or your board members or as a board have with your Premier (Mr. Doer) on this matter of

22 LEGI SLATIVE ASSEMBLY OF MANIT OBA January 22, 200 I distributing the funds that you deemed surplus and needed to be distributed in one fell swoop? How much or what kind of a discussion did you have with your Premier, or did you have a discussion with your Premier? Madam Chairperson: A reminder, Mr. Penner, please direct the questions through the Chair. Ms. Deeter Hirst: My responsibility is to meet with the Minister responsible for The Manitoba Public Insurance Corporation Act. I did so on numerous occasions regarding this issue as well as many other issues.

What happened beyond that with the Cabinet, those kinds of things, I do not know. We were able to work out an objective that would meet the needs of many Manitobans, certainly students in the post secondary education sector, and address some of those needs. It was an opportunity that we chose to act upon very decisively. Mr. Jack Penner: Well, Madam Chairman, I would ask then whether the direction to distribute these monies to universities or other educational institutions actually came from the minister to the board, from the Premier (Mr.

Doer) to the board, or whether the board recommended to the Premier or the minister? Which way was it? Ms. Deeter Hirst: The board informed the minister sometime prior to June, probably May, and again I have not got that information in front of me, that we were intending to make this allocation of funds to recognize our commitment to Manitobans. We asked her for some guidance and direction about what some of the upcoming priorities were going to be to ensure that would be able to complement those.

We also, again, over the course of the summer, after we filed our PUB application, refined a lot of that discussion so that at the end of the day it was agreed that education would be where we wanted to direct those funds. The board met, I believe, in August, and decided specifically how we would like to direct those funds. I took that information back to the minister. Time passed, and it was agreed that that was a good initiative, that we should in fact try and get some details from the universities on specifically what kinds of projects they were looking at. We were quite excited about some of the initiatives.

The historic landmark at the U of W that is falling down is a crime and a shame. The fact that we would be able to help students at the university, College St. Boniface, that we would be looking at expanding facilities to train nurses in Brandon, those are all wonderful initiatives again that the board was very proud to be part of and I believe serve the needs of Manitobans. Mr. Jack Penner: Madam Chair, I am actually not surprised that I have just heard the chairperson indicate that it was at government's direction to find monies to fund the university, that the board made the decision.

That does not surprise any of us. It is always interesting when government comes very close to the actual management of Crown corporations that these kinds of thi ngs happen, and therein lies the difference of the previous administration and this administration. The NDP administration has always believed that they must have a very close hands-on type of operation, and the previous administration believed in an arm's-length operation. I referred before to the integrity of the management team, and I maintain that. I think they truly are a reliable source.

However, I really question now the integrity of the administration, and I mean government with that and including the chairperson of the board and the board itself because it is not clear at all to the general public who directed what aff airs and when those directions were given and how they were given. It is very apparent now because of what the chairperson said, that it was a direction of government that this kind of money be sought, looked for, and found to encourage programming that would make the government look better in the long term and therefore be in a better position to be re-elected. Ms.

Deeter Hirst: I think that I have said for the past several hours now that the board was looking at a situation where we would have to disburse $75 million. The board at that time made a decision to make funds flow back to ratepayers, to drivers, and to the people of Manitoba. The board filed its application with

January 22, 200 1 LEGIS LATIVE ASSEMBLY OF MANITOBA 23 the Public Utilities Board in June with that information included and that is when we began discussions with our minister to determine, because we had funds that we wanted to allocate towards the public good and in consultation with the representatives of the people of Manitoba where the best use of those funds would be. The board again in August passed a motion that we would direct those funds towards the universities, because that was felt again in consultation to be a huge need in the province.

Again, just reading the headlines in the Free Press about the infrastructure, there was not a board member around that table who did not appreciate the fact that the universities needed to be supported in that way. Again, I think it would be prudent of any Crown corporation to ensure that they were not moving out of step with their government. The consultation with the minister is part of my legislative duties, and I take that responsibility extremely seriously.

Certainly, the board was involved in the discussions about retracting the decision and at the end of the day, again, it was the reputation of Manitoba Public Insurance that was affected. I think the board of directors, and I can say this personally, certainly wanted to ensure that the board of directors and the corporation would never be in a position where it would lose the confidence of the people, because in fact the trust of the people in that corporation should be paramount.

We have worked very hard to ensure that we in fact are meeting the requirements and the expectations of people of low rates and good service. Mr. Dewar: Madam Chair, I am going to suggest to the committee that we break for lunch and that we reconvene back here at 1 :30. * (12: 00) Madam Chairperson: It has been suggested that the comm ittee recess from 12 to 1: 30 for lunch. Is that agreed? [Agreed] The comm ittee is then recessed until 1 :30 p.m. I would like to remind everyone that this room will be locked, so if you would like to leave whatever belongings you choose, you may.

The committee recessed at l2:01 p.m. The committee resumed a/ 1: 30 p.m. Madam Chairperson: Good afternoon. We will now resume consideration of the annual report of the Manitoba Public Insurance Corporation for the year ended February 29, 2000. Prior to recessing for lunch, Mr. Penner, Emerson, had been asking questions. Mr. Penner, Emerson, to continue with your line of questioning. Mr. Jack Penner: Madam Chair, I had finished my questions for the moment. I would refer to Mr. Praznik. Mr. Praznik: My questions again are for the chair of the Board of Directors of MPI.

I would like the chair to just confirm to us, I believe she indicated earlier that a legal opinion as to the decision of the corporation to make $30 million in grants was, in fact, obtained by the board but was provided orally. That is my recollection of her comments, and I wonder if she would confirm that view. Ms. Deeter Hirst: The board looked to a variety of things as we were determining what we would be doing-again, past precedents; we looked at the legislative act; we looked to see if there were any issues, again in regard to the Public Utilities Board.

It was the opinion of our counsel that Manitoba Public Insurance, in fact, again, given those issues, that we did have the authority to decide how those funds were to be disbursed. Mr. Praznik: I would ask the chair of the board, given that she did make those inquiries-although she did not acknowledge to me that they were orally, I assumed that they were, and I wish she would just put that on the record.

But I would ask her then, given that she is chair of a board of directors of a corporation created by the Legislature, if she could please point out to me her statutory authority to make such a grant, for her board to make such a grant, given that all powers of that corporation have to come from statute. There has to be authority in

24 LEGI SLATIVE ASSEMBLY OF MANIT OBA January 22, 200 I the enabling legislation. Sometimes that legis lation provides authority by way of regulation, but I would ask her to please point out here today the provisions of the act that gave the board the authority to do what they did. Ms. Deeter Hirst: I would actually ask Mr. Zacharias to give some background material before I respond. Mr. Zacharias: Certainly the Thompson Dorfman Sweatman opinion was passed to our general counsel for review.

I think that with an opinion that has been formulated over a period of time and just thrown in his lap that it is not appropriate to expect comment, but certainly the whole premise of the legal opinion appears to be based on that the grant to universities was directed by government, and, certainly, when you get into the use of corporate funds by government, there are some restrictions. The MPI position, certainly the opinion was that the corporation has a long-standing policy of corporate sponsorship and charitable donations.

Certainly in the past we have been involved with many, from United Way to Rossbrook House to Pan Am Games. The legacy endowment fund including grants to universities are charitable donations and within the corporate authority. I guess in the end this initiative did not proceed forward, and so spending a lot of time or at least, from our point of view, a lot of energy now on legal opinion on something that did not happen, I do not know if there is a lot of merit there. Ms. Deeter Hirst: Yes, I just again would like to concur with that.

Certainly the issue of precedents and past practice in regard to corporate and community support for the corporation has gone on for 30 years. As I said previously, it is something that we are extremely proud of. I think we contribute to the well-being of all Manitobans by that. Again, now that we have had a chance to look at the opinion by Thompson Dorfman Sweatman, I mean we will just have to obviously have some time to digest this before we can respond. Mr.

Praznik: Madam Chair, I would ask the chair of the board, since she did inquire, she has told this committee that she did inquire as to whether or not this could be done, that an oral opinion was provided, I am wanting to know what statutory authority did she, as chair of the board, act on with her board when the original decision was made? Because the corporation has not indicated that they changed their mind on the basis of finding they did not have the authority. She is telling us that they made their decision. They must have checked into it.

I would like to ask her on what legal basis, what authority of this Legislature did she act. This is a very important question on the way in which she runs the corporation as to whether or not she has the authority to do what she intends to do. Ms. Deeter Hirst: The Manitoba Public Insurance Corporation Act precludes us from paying a dividend to the Government. At no time was that an issue because, in fact, the Government was not requesting a dividend. It did not go to the Government. There was no discussion about funds going to the Government as a dividend. In fact, that was not a

section of the act that would be relevant to the final decision that we made. We are to benefit Manitobans, and the

preamble to our act says that. We are a corporation with ongoing corporate responsibilities that we exercise. Again, those were certainly the issues that we were looking at. The act is very clear that the Government cannot receive a dividend, and again that was not an issue. The Government was not to get a dividend. Mr.

Praznik: Madam Chair, I would like to ask the chair of the board just to confirm again that in her desire to help Manitobans she, in fact, consulted with the Government and the Government to which she is responsible said yes, go ahead and spend this large amount of money, knowing that that Government could not collect a dividend. Ms. Deeter Hirst: The board of directors passed a motion that would direct those funds towards three initiatives. The board of directors had the authority to make that decision and made it.

We then needed to put some detail behind those decisions as to where those funds would be directed, and we then began consultation with

January 22, 2001 LEGI SLATIVE ASSEMBLY OF MANITOBA 25 the representatives of the people of Manitoba to determine what the priorities would be. Mr. Praznik: I ask, Madam Chair, the chair of the MPI board again, given that she said that the board of directors had the authority to make the decision and made it-those are her words-can she tell me where that authority lies? * (13 :40) Ms. Deeter Hirst: The authority to make charitable donations and support for the community has been a past practice of the corporation for 30 years. There is nothing in the act that precludes us from supporting commun ity initiatives.

Looking again at the precedents that had been set by previous boards over 30 years, there had been a strong support of community initiatives. The corporation, the Manitoba Public Insurance Corporation, like any other corporation has a responsibility to be a good corporate citizen, and that was a consideration. Is there a

section in the act that says MPI should not make dividends to the government? You are correct, but that was not an issue. Mr. Praznik: Madam Chair, here we have the chair of the MPI board who just said to this committee of the Legislature that there is nothing in the act that precludes us from making these kinds of grants or supporting community initiatives, one assumes, whatever they may be. I would point out to the chair of MPI, who has said she is responsible for a billion-dollar-a-year corporation in our province, that her authority does not come from some general statement in the act.

The MPI act, which I would suggest she read and learn, gives specific authority as to what her board and corporation can do. It does not create a carte blanche authority that then says here you can do everything except these things. It says something quite different. It says here is the authority with which to operate. I am going to ask her again because she obviously does not seem to even know where authority comes from, so I am going to ask her that.

I also want to ask her another question in the same vein, because she gave as another reason why this board decided to give away, by their own admission, at least some 16 percent of the net asset value of the corporation. An Honourable Member: Not quite half. Mr. Praznik: Well, we would argue it was higher, but I will this time use that number. I would ask her given that she said there was nothing stopping us from doing it-and quite frankly, that is contrary to the law.

She has to have the authority to do it, but I would ask her given she talked about the role of being a good corporate citizen about supporting activities in the community.

I would like to ask her if she can point out any other time this corporation in its history provided donations that were worth, by their own admission-is it 16 percent that they said? [interjection]-16 percent by their own admission, if she can show this committee one single precedent where any other community group or any other donation was made without any services in kind returned, any advertising in kind, any promotional things that often a corporation will do, or any other charitable donation that was worth, by their own admission-we would argue much higher-some $30 million of ratepayers' money, some 16 percent-plus of the book value of the company.

Can she provide us one precedent to support her argument that she was acting on a precedent of the corporation? Ms. Deeter Hirst: The legal principle of the inherent powers of corporations include our ability to donate to charities, and I am presuming that the honourable member is, in fact, not implying that 30 years of boards of Manitoba Public Insurance, in fact, have exceeded their authority by their support. Manitoba Public Insurance certainly feels that it has a very strong role to play in benefiting Manitobans.

I also understand from the way he has repeatedly stressed his concern about our vulnerability in taking 16 percent of our book value and giving it towards public good initiatives. Again, at the end of the day, with the numbers being the way they are, I mean 30 percent of our book value has gone back to motorists, and that certainly has not left the corporation in a vulnerable position. The corporation today is very strong. At the time,

26 LEGI SLATIVE ASSEMBLY OF MANIT OBA January 22, 200 I again, the decision was made to exercise those inherent rights to support the community, and, again, at the end of the day the decision was made. Mr. Praznik: Madam Chair, this chair of this board is demonstrating a contempt for this Legislature that I have not seen by many chairs of public boards.

She is asking this committee, Madam Chairperson, to somehow believe that the inherent ability to donate to charities, which, in the normal course of affairs, is usually I percent to 2 percent of the net pre-tax profit of a corporation, that somehow stretching that to the $30 million or by their own admission 16 percent of the book value-and we would argue it was much higher when one realizes that the reserves are really the ratepayers' money-that somehow that gave the legal authority to give that amount of mon ey, when nowhere in the statute is that authority provided for.

This side of the House will gladly agree that we believe there is an inherent responsibility on the part of public corporations, as with private, to be making some charitable donations, but we would never expect that a public corporation which is responsible to the ratepayers, the citizens of Manitoba who have to go to work each and every day to pay their premiums, that that amount of money should well exceed what the norms are for other corporations.

I would like to point out to the chair again some of the fundamental principles of the corporation that she has been given the responsibility, for however long, to manage on behalf of its ratepayers. I would like to go back to the debate in the Legislature when Autopac the first Autopac bill was introduced back in 19 70 by the then-minister responsible and then a future premier of Manitoba, the Honourable Howard Pawley.

When that bill was first introduced in Manitoba, a provision was clearly put in the bill prohibiting government from using ratepayers' dollars to fund public activity, and when we listen to the chair of the board, we hear this story about how we came up with the idea and we talked with the minister, and, you know, we knew we could not give a dividend, so maybe this was a backdoor way of circum venting the intent of the Legislature. I would just like to quote Mr. Pawley who was wise enough to put in the original bill the prohibition on the corporation being used to fund public purposes.

In his opening remarks about the speech, he said and I quote: We further believe that if we require all motorists to purchase such insurance as a condition of driving, then the government has an equal obligation to provide that insurance sold in the most efficient manner possible. Those are not my words. Those are not the words of a Conservative.

Those are the words of a New Democrat who firmly established that MPI was created to provide motorists with the most efficient automobile insurance product available, not the lowest, not the lowest in the range, not at a low price so that we could shuffle off monies to the pet projects of the chairs of the board or of the minister of the day, but to provide Manitobans with the most efficient product on the market, and in that, this chair has failed by her actions to take to her board and get approved a $30-million contribution outside of her statutory authority. She has failed.

She has failed the Legislature; she has failed the motorists of this province who paid the premiums, and I would say she failed her government who appointed her, to whom she owed the responsibility to ensure she was acting within the law. * (13 :50) So I ask her again what responsibility is she going to take for flagra ntly ignoring the principles on which her own-the party that I understand she is a member of, who appointed her, established an MPI, one that has been reiterated in legislative change over the years, one that stands today, what responsibility is she going to take to the motorists of Manitoba, to the Premier (Mr.

Doer) who appointed her, to the people of Manitoba for flagrantly ignoring the legal responsibilities that she had, even if she has now taken it back; by the way, Madam Chairperson, forced to take it back, forced by her minister who had to get up publicly and say we made a mistake, one of the most embarrassing

January 22, 2001 LEGI SLATIVE ASSEMBLY OF MANITOB A 27 things a minister ever has to do, a minister who today does not hold this portfolio, and we can speculate on why she does not hold it. But I want to know from this chair who is continuing in this role, who has flagrantly said I can spend any amount of the motorists' money as long as it is there under the guise of my inherent ability to donate to charities, I want to know from her today, is she going to accept responsibility for acting outside her statutory authority?

If she is not, if she is going to continue on, do we have her guarantee that she will change her view and go back to the principles on which the New Democratic Party founded Autopac and on which this Legislative Assembly has authorized its operation and recognize that any of her pet projects for charitable donations are restricted to the 1 percent to 2 percent of net profits, as any other public or private corporation would operate in this province? Ms. Deeter Hirst: There were many points in that that I would like to address. First of all, I am extremely pleased to hear that Mr.

Praznik, in fact, has agreed that charitable contributions are within our authority, that perhaps he has a disagreement on scope, but at the end of the day we agree that we do have the inherent right to support charitable activities within the community as per our statutory legislation. The second issue that I would like to address is the fact that the Manitoba Public Insurance board of directors has passed a motion that has been, in fact, accepted and passed by the Public Utilities Board, that has said that ratepayers will get any surpluses at the end of the year. That is on the record.

We discussed that this morning. In fact, the Manitoba Public Insurance board of directors has made sure that the surpluses will go back to ratepayers.

Again, I do not understand why we continue to dwell on these other issues when, in fact, the operations of this company are certainly in keeping with the sense of community and the priorities of Manitobans, because, in fact, the board of directors certainly looked at the issue of financial stability as one of the issues that we had to ensure, that there was no risk to the financial stability of the corporation to make the dividend to ratepayers, to support DDVL and drivers' licensing systems and to support community interest. There was no threat to the financial security of the organization.

That was never a question. We were also wanting to ensure, in fact, that our rates would stay down because we take great pride in the fact that we can exceed the expectation that we provide the lowest rates in Canada. That issue was addressed as well. Not only are we able to maintain these low rates, but we are giving discounts back to our policy holders. The issue of provision of services through the Personal Injury Protection plan was enhanced in this period. In fact, Manitoba Public Insurance has delivered an increasing level of service in these regards.

The decision to support the universities in no way impacted or put any of those decisions at risk. Mr. Praznik: Madam Chair, I do not think this chair of the board understands what she and her board did. No one is arguing that the universities or even the Department of Highways are not good causes to be supported. The question is is that within her mandate and the mandate of her board?

What we continue to hear, despite the fact that her former minister got up publicly and said: We made a mistake; we should not have done it, her current minister to his credit has said: My policy-as I understand his opening statement-is to ensure that surpluses go back to motorists. We still have a chair who does not get it, who continues to try to skate around it like nothing wrong happened. What this chair, Madam Chairperson, of the committee does not fully understand is that her goal is not to produce the lowest rate in Canada.

It is to provide, as Howard Pawley said to this Legislature, the most efficient manner possible delivering automobile insurance. Now, we know the statute clearly provides that MPI can enhance benefits. The statute provides for spending money for the reduction of risks. We would even acknowledge, as does the Public Utilities Board, that spending I percent to 2 percent of one's net profit in a year on charitable causes for which one derives good will and given that this corporation is operating in a monopoly, we recognize that this is part of the operation. No one will criticize that from this

28 LEGI SLATI VE ASSEMBLY OF MANIT OBA January 22, 200 I side. But that is not what this chair did. This chair offered $30 million or 16 percent by her own admission of the book value of this corporation, well above I percent to 2 percent of the net profit for that given year, offered that money not to enhance benefits to people who would like them enhanced, and some of them are in the audience today who would love to see some of their benefits enhanced, who have paid automobile insurance over the years. This board did not choose to use that $30 million to enhance benefits.

She did not use that $30 million to reduce risk to the motoring public. She did not use it for education purposes to reduce risk. No, this board voted to spend $30 million of ratepayers' money on a pet charity to them. Yes, it is a good thing; no one has denied that, but it was not within their authority.

Not only not within their authority to do under this act, not within the authority of any reasonable assessment of making a charitable donation, but certainly not within the principles on which the New Democratic Party, a successor government which has appointed her, we assume because she is a supporter of it, not even within the spirit of the principle that MPI was established. Yet now she rises up to this committee and said: Well, we passed a resolution saying that in future all surpluses will go to the ratepayers. Well, that is like a deathbed confession.

She is dragged there by the Public Utilities Board; there is legal opinion now out there that she did not have the legal authority to do it; the minister who appointed her is embarrassed publicly and has to go out and say: We were wrong, which this chair at the press conference never could get out of her lips the words "we made a mistake, that our constituent base are not happy with this." Her minister did, to her credit. Her minister was a strong enough person to get up and say: We made a mistake; the ratepayers do not agree with this. But not the chair.

No, the chair said: If only we could explain ourselves better, the public would agree. The ultimate in arrogance. Now, she says: We passed a resolution. Well, yes, they passed a resolution because the Public Utilities Board said they had no choice. What we are trying to understand from this chair-we would just like this chair to get it. We would like to get a sense of comfort on behalf of the ratepayers that this chair understands the limitations of her responsibility and the mandate of MPI. What we are hearing is: We can give away as much of the ratepayers' money as we want to as long as we call it a charity.

We can give it to any cause we think worthwhile. Do you think the Member for Rossmere (Mr. Schellenberg) or the Member for Selkirk (Mr. Dewar) or the Member for La Verendrye (Mr. Lemieux) or the Member for Assiniboia (Mr. Rondeau), that the people in their ridings who voted for them who pay MPI premiums think that this chair is right, that this chair can give away any amount of money with no restriction of their money simply because they think it is a good charitable cause? Absolutely not.

And if this chair went and talked to the members, the backbenchers and the Cabinet of the New Democratic Party, I think she would learn a lesson in what her mandate is. What we are saying to this chair is we want to get a comfort level from this chair that she understands the limitations and the principles behind the billion-dollar-a-year corporation that she runs and that we know that in her heart of hearts she is not going to attempt to do through the back door what this Legislature, which New Democrats in this Legislature have prohibited her from doing in the front door.

That is the commitment we are looking for from her today. I ask her is she prepared to make it, Madam Chairperson? • (14: 00) Ms. Deeter Hirst: I would like to respond to those comments on three issues. One of them is stewardship. Manitoba Public Insurance has passed a resolution, a motion at the board that says the surpluses will go back to ratepayers. That was endorsed by the Public Utilities Board. The Public Utilities Board is comfortable that, in fact, we now have the legislation and the regulation to serve the best needs of Manitobans.

The second issue I would like to address is efficiencies, and I am pleased to see that, in fact, the comments of Howard Pawley were read into

January 22, 2001 LEGI SLATIVE ASSEMBLY OF MAN ITOBA 29 the public record because those were words to live by and still are today. To be efficient, we run at 58 percent of the industry average and have been doing that for the last couple of years. In fact, Manitoba Public Insurance is run as efficiently or more efficiently than any other insurance company almost in Canada, so that is an incredible record of achievement. We, again, are sitting in a situation where we have the ability to maintain rates, and we are not anticipating that we are going to need to address that issue for some time.

Do we have the authority to make those decisions? Again, Mr. Praznik, I know you have mentioned in the past that you have no problem with the scale and the scope of the initiatives to the Pan Am Games, the United Way, Rossbrook House and all of the other charitable initiatives that we support. So if you are talking about the authority to do those, why is it different? If you are talking about the scope and the scale, that is different. That is not a legal issue. Our first concern was the financial stability of the corporation, and it is stable and secure. Our second concern was for ra tepayers.

Rates are level going down. Our third concern was to ensure that we would be able to maintain the stability so that, in fact, our ratepayers were not going to be at risk. That was addressed. The financial stability of this corporation is an asset to Manitobans, and I am proud to say, in fact, that is true. Mr. Loewen: Madam Chair, interesting remarks from the chairperson.

It is hard for me to understand how she tries to correlate the fact and we have already congratulated the staff for doing an excellent job at controlling expenses, but in my view that does not give the board the authority to take advantage of their good work and take $30 million and spend it on initiatives of their concern, as opposed to refunding it to the ratepayers.

We are pleased that not only has the Public Utilities Board agreed with that view and told the board that it is not in their purview to distribute these kinds of funds as they decide to, we are more pleased that the Government has changed their policy and also decided after some deliberation and much consternation from the pub

Document details

Collection	Manitoba — Debates (Hansard)
Citation	37-2-pu1
Type	hansard
Volume / chapter	37th 2nd hansardpdf pu1.pdf
Language	en
Format	pdf
Source	PROVINCIAL
Identifier	31b4e619b1c44e65cee4786b0a210cbdec1ee326

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