LEGISLATIVE ASSEMBLY OF MANITOBA Thursday, 15 April, 1982 Time - 8:00 p.m. MR. DEPUTY CHAIRMAN, Phil Eyler (River East): Com m ittee will come to order. We're on Item 1. (

b) in the Departm ent of Economic Developme nt and Tou rism, Executi ve-pass. The Memb er for Tur tle Mou ntai n. MR. BRIAN RANSOM (Turtle Mountain): I've listened with some interest to the Minis ter's statements and replies to qu estions this afte rnoon and a cou ple of qu estions fall from what the Min ister said. I gather that, if I in ter preted correctly, that she said that com panies would be expected to meet mo re than ju st economic obje ctives. There wou ld be social objectiv es as well.

I'm ju st wonderi ng how a company that was int erested , how an investor that was int er­ ested in coming to the provi nce will kn ow what the rule s of the game will be? Presumably when they're mee ting economic objectiv es they kn ow in the laws of the provinc e what they are ex pected to do. How will an inv estor kno w what they're expected to meet in terms of the social objectives? HON. MURIEL SMITH (Osborne): Mr. Chai rperson, com panies that are coming on their own to inv est would follow the usual methods of finding out what the legisla tive req uir eme nts are.

It wou ld only be in the case of compan ies that were requir ing or seeking some kind of provincial supp ort that the social goals would be voiced and negotia ted , so that it wou ldn't be some thing that was worked out with every com pany. On the other hand, there are di scussions that go on, not jus t with new compan ies but comp an ies that are already here, on the gen eral goals of the govern ment, some ti mes in the cont ext of what is desirable but which the govern ment would ju st as soon not leg is­ late on, but wou ld attem pt to persuade some kind of co-operative approach by the corporate citizens.

This migh t be in the area of minimum wages or labou r practices above and beyo nd the minimum req ui red by law. So, there's a sort of area of discus sion and per­ suasion, but in gener al for most companie s who come on their own and don't requir e public supp ort, they would carry on as usual. MR. RANSOM: Mr. Chai rman , that's one of the thi ngs that concerns me a little bit is that when the Min ister says there are some areas that they wou ld prefer not to legisla te, which means they'd prefer not to set down in black and white what the conditions are that a company would be expe cted to meet.

I suppo se if that's coupled with the earlier statement that only in cases where an inv estor was requir ing provincial su pport, that might be workable. I wonder if I cou ld ask the Min ister jus t to elabor ate a little bit on what she means by com panie s that would be seek ing provincial support. What sorts of things wou ld fall in to the categ ory of provi ncial su pport? MRS. SMITH: Mr. Chai rperson, under the Enterprise Man itoba Progr am, there are suppor t funds of a var- iety of sorts. There are technical helps with research assistance, that type of thing, which cu rrently exist in our prog rams.

Some ti mes there are req uests for help with modern ization of eq uipm ent or trai ning of emplo yees. MR. RANSOM: So, we're not talking about a com­ pany then that wants to lease mi neral rig hts, for instance, from the provinc e. The Min ister doesn't consider that to be a form of provincial suppor t which wou ld necessitate this bei ng sub jected to this, as yet, rather nebulous set of criteria deal ing with social objectives? MRS. SMITH: Mr.

Chai rperson, I think that the que s­ tion of min eral rig hts would be appropriately dealt with by legisla tive req uir ements, so the rules of that game would be very clearly spelled out . If they're goi ng to change, they'd be publicly deba ted and pub ­ licly known. I think the gen eral opinion of the party that a hig her proportion of proceeds from resource dev elopment should go to the public is a well-known princi ple. But un ti l, or unle ss the legislation were to change, the rules of the game would stay as cu rrently stated, there wou ld be no ambigu ity. MR. RANSOM: Mr .

Chair man, I think the Min ister had been tal king about determ inin g what kinds of rates of retu rn wou ld be acceptable in the eyes of the govern­ ment with respect to potential developm ents, invest­ ment s in the province, at least certa in categ ories of them. Wou ld there be some consider ation giv en to the other end of that scale in terms of gua rant eeing that there would be minimum returns as well?

Once you take away the opportun ity to make that larger profit occasionally, it of cour se increases the risk to some exte nt, so would the Min ister be consid eri ng deal ing with the other end of the scale as well? 15 22 MRS. SMITH: Mr . Chai rperson, I think that is some ­ thing that would be in the area of responsibil ity of the group com ing in to invest. Presu mably, they would be com ing in to make a profit and it wou ld be up to them in their analysis of this situation as to whether ther e was an adeq uate profit being ma de.

I hardly see that one need to have a mechanis tic appr oach to the, you kn ow, guar antee of minimum because one is tak ing some responsibil ity for the rate of return at the up per end. It wou ld be like saying that all flood contr ol has to be ti ed in with water reservoirs, but ma ybe that ma kes sense in terms of water control. I think if you had a fully planned economy then both ends of the issue would have to be looked at, but in a mi xed economy I would think the concern at this point in time, the priority concern, would be at the upper end. MR.

RANSOM: So the inv estor would be faced with a situa tion where there would be limi ts placed on how much they cou ld make, and presu mably in some period of time, but the risks of inv estment won't have changed; they will still face the same risks that the y

Thursday, 15 April, 19 82 wou ld have faced if there had been no limi t on the return tha t they could ma ke. I wonder if the Minis ter would think that migh t not have some damp en ing effect on potential investment . MRS. SMITH: Mr . Chair person, yes, I think it would have some damp ening effect, but it's based on the premis e that the resou rces of the province, if we're thinking of mi nerals, belong to the people of the pro­ vinc e, and that if an outside com pany is grant ed the right to develop those mi nerals, that they should pay a fair rent to the people to whom the basic resou rces belong.

In other words, we don't think the entr epre­ neurial talent plus the in put of captial entitles a com­ pany to 10 0 percent rig hts. They are entitle d to some rights, but not 10 0 percent . MR. RANSOM: But do I take from that then, Mr . Chairman, tha t in the ar ea of mi nerals, for instance, that we are tal king about an economic rent agai n, that we're not tal king about the sort of royalty system that is in place now, but we would be looking at perhaps a two-tier ed type of mi neral taxa tion that was brought into place in 19 74 or 19 75? MRS. SMITH: Mr.

Chai rperson, I think th ese more det ailed qu estions are mor e properly put to the Mini s­ ter of Energy and Mine s. I think the broad principle that concerns us in Economic Dev elopment is the principle of the people of the provinc e own ing the resou rces, that's the constituti onal statement, and it's up to the people as a the province to determ ine un der what conditions those mi ne rals are ext racted. MR. RANSOM: I acknowledge, Mr.

Chairman, that detai led que stions of having to do with taxat ion in the mi neral area certainly should be placed there, but I realize that, or at least I un derstand that the Min ister of Economic Devel opment is part of a comm ittee that's deal ing with plan ning for the economic futur e of the provi nce, and so I would ju st wonder whether or not the comm ittee has been dis cussi ng that sort of thing in terms of changing the taxa tion struc tur e with respect to mi ning? MRS. SMITH: Mr . Chai rperson, I assu re the honour ­ able memb er that we di scuss many, many, many thi ngs.

We are interested in the whole range of resour ces, opportun ities, distri butions of bene fits, obli gations; but the concept of rent over agai nst roy­ alties, there are really different labels applie d, but the un derlying concept, I think, is how much of the return should properly go to the public and how much to the developer. MR. RANSOM: A couple of fairly specific qu estions in other areas, Mr. Chai rman. I wonder if the Min ister could gi ve some ind ication of what she think s migh t be the im pact upon the busine ss sector in the provi nce if the value of the dollar was to fall to, say, 75 cents MRS.

SMITH: Mr . Chai rperson, my belie f about the fall in the value of dolla r, I gue ss if you're tying it to drop in inter est rates is that there would be a drain of capital out. I think the position that I and my col- league s have taken on the se issues is that if you're going to lower int erest rates and let the value of the dollar go down, you have to be prepared to do other thi ngs as well or you will ha ve adverse effects. You have to be willing to look at exchange controls, look at inv estment priorization and move into - in broad terms - a planned approach to the economy. MR.

RANSOM: Si nce the government has recom­ mende d that the dollar be allowed to drop, Mr. Chair ­ man, then I assume that they are prepared to take that planned approach to the economy . Would that be a fair assump tion? MRS. SMITH: Mr. Chair person, that package of poli­ cies is what has been proposed at the Federal level. At the provincial level we don't have control of as many of the levers of economic activit y and we therefore are not in a position to plan an economy with anything like the effectivene ss or the power as a Federal Go v­ ernment would.

We belie ve in the planned approach but we are also realistic about the extent to which a provincial govern ment does in fact have capacity then. MR. RANSOM: Mr. Chairman, this recomm endation has been made at the Fi rst Min isters' Conference, that the dollar be allowed to fall in hope, of course, that int erest rates wou ld be allowed to go down at the same ti me.

Is it correct to assume then that having made that recommenda tion that the govern ment is also recommending to the Federal Govern ment that they un dertake this planned approach to the econ­ omy to deal with the other resulting im pacts that cou ld be expected to occur the consequence of the dollar falling? MRS. SMITH: Mr . Chair person, yes it's the recogni ­ tion of all the in terrela tionsh ips of the factors of the economy that characterizes our approach.

Our rea­ son for seeing that as a preferable alternative is that we see one of the defects of the open-market system, that the stronger economy adjacent or nearby will tend to drain the less strong, and that Canada has suffered in it's economic history from allowing too much of its dev elopment to be controlled by outside owner s. When secondar y ind ustr y develops its very largely branch plant and therefore volatile when ti mes are difficult; it tends to disappear.

As a result a coun­ try which has enormous natural resou rce endowment has in fact a rather imma tur e economy and much less abil ity to handle itself when the economic cycles are in a down state as they are presently . We realize that no countr y, certainly Canada which depends a lot on trade, canno t live in isolation from an interna tional econo my.

But we be lieve with an integr ated, planned approach that we cou ld be much less vulne rab le to the ups and downs and maintain a more matur e and balanced economic struc tur e and ride through some of the difficult time s, that we could achieve a greate r deg ree of self-sufficienc y even though we are not recommending or think ing possible complete self­ suf ficienc y, ju st a greater deg ree of it because it giv es you mor e resilie nce and more abil ity to me et you r own internal prioritie s. 15 23

Thursday, 15 April, 19 82 MR. RANSOM: Mr. Chai rman, can the Min ister advise us what other parts of specific recomm enda tions were made to the Feder al Govern ment at the same time as the govern ment recomm ended that the in ter­ est rate be lowered and the dollar be allowed to drop? Were there other specific recomm endations made in terms of offsetting the im pacts that mu st inevitably result? MRS. SMITH: Mr . Chai rperson, I can't remem ber all of the compon ents.

There was the identific ation cer­ ta inly of the two thi ngs you identi fied plus the need for some kind of exchange contr ol; some kind of dealing with the ban king system so that it became more of a tool for nati onal policy; some kind of setting of prior i­ ties for investment and a deli be rate atte mpt to develop a more balanc ed regional economy in the countr y. One of our great concerns has been the ineq ualitie s that have been growing in the reg ions of Canada.

There have been su bstantial shifts of cour se in the trad itional patterns of late because of the great resource development in at least the Alberta, Saska t­ chewan, British Colum bia part of the west, but really overall, the open mar ket approach to Cana dian eco­ nomi c development will tend to exag ger ate the inequal itie s rather than elimina te them.

There have been some in itia tiv es taken recently to try to strengthen the secondar y secto r across the cou ntry by means of better govern ment procurement policies and better encou ragement of small entrepr e­ neu rs to tune into the bigger projects, at least the ones that are expected to take place, but I don't think it's an adeq uate strategy to accom plish a real balan ced deve lopment. I think there has to be inter vention in order to get a mor e balanced development. I don't think the open marke t system can do it. MR. RANSOM: Mr .

Cha irman, can the Min ister tel l us what she think s migh t serve to stabil ize the dollar in the 75-cent area? I be lieve that is the range that had bee n recommend ed by the provi ncial govern me nt. What sort of analysis has been done to show what things migh t be put in place to stabil ize the dollar at that level? MRS. SMITH: Mr . Chai rperson, the full economic policy at the Federal level was not spelled out in great deta il at the Fir st Min isters' Conf erence, the broad parame ters were developed.

However, the Federal party has a very well developed economic and ind us­ trial strategy , the com ponents of which are sub ­ scribed to by our pr ovi ncial group. MR. RANSOM: Mr. Chai rman, I realize the Min ister of Economic Development isn't fully responsible for the positions and recom menda tions that the Provincial Govern ment has taken.

Perhaps if she's not in the position to discuss some of the detai ls, maybe she could advise whether it wou ld be in the Estima te of the Minis ter of Fi nanc e or the Estima tes of the First Min is­ ter, where we might expect to have the positions of the govern ment explaine d in detai l. MRS. SMITH: Mr . Chai rperson, anyone who knows me very well realize that I don't need too mu ch encour agement to launch in to a very lengthy and 1524 spirited discussion of a Federal economic strateg y. I am prepa red to move in to that tonight if that is the honour able mem bers' wish.

I would have thought that was more appropriate at, well I sup pose at Federal election ti me. If the member belie ves that a better insigh t into the Federal New Democr atic Party's eco­ nomic strategy is essential to the deli berations here tonigh t I am ready and willing to launch on a full discus sion. MR. RANSOM: Mr . Chai rman, I only have an aca­ demic interest in the position of the Federal New Dem ocratic party . I have a very dir ect int erest in the positions that have been taken by the Provincial Gov­ ern ment and were put forward at the Fi rst Min isters' Conf erence some weeks ago.

I'm simply trying to find out what is the back ground to some of those recom­ menda tions; what leads the govern ment to believe that those recomm endations that they make could be actu ally made to work in the inte rest of the provinc e and of the countr y; that is why I'm asking. Wha t is there that is going to stabil ize the dollar at 75 cents? It's ni ce for the Prem ier of this province and the Premier of other provin ces to say, we think maybe 75 cents wou ld be a nice level for the dollar to stop at; it wou ld allow us to lower our interest rates.

Well, it happens that over the past couple of months the U.S. dollar reserves, I think , have been depleted by well over a billion dollars in supp ort of the Cana dian dollar and ther e are a great many anal yses that ind icate that once the dollar starts to slip ther e is no te lling where it's going to stop.

It's not going to be possible just to say 75 cents wou ld be a ni ce place for it to stop and so I'm in terested in knowing, in the face of all of the analyses that I've seen done by various institut es, one I happen to have before me, the Institute for Research on Public Policy, what does the Provi ncial Go vern­ ment kno w about what could be done to assure the dollar doesn 't go below 75 cents? MRS. SMITH: Mr . Chai rperson, it was not our gov­ ernment that talked about the 75 cent dollar. We talked that a lower dollar was not, in and of itself, the greatest thing to fear.

However, things like exchange controls and investment planning deal ing with the financial institutions, repatriating the economy of the cou ntr y, ensuring that not so much mo ney left the provinc e because of dividends to foreig n owners, that those thin gs would be dealt with; they would be essential compone nts, really progressive taxation, where loopholes that cu rrently make the tax syste m a rather schizophrenic tool because on one hand peo­ ple think that it's redistri buting the wealth of the coun­ try, on the other hand, there's the pattern of exe mp­ tions -not tax reductions -have the net effect of really subsidizing much, not only of the private ind ustry in Canada , with which I am not that un sym pathetic, but of many of the foreign in vesto rs who do not automati­ cally plough the proceeds of their economic activity back in to Canada.

As a matter of fact, they tend to follow a type of development where the research and develop ment tends to take place and the job creation in their own cou ntry where, as I descri bed earlier, the bran ch-type plant, the assembly sty le of economy tends to take place in our countr y plant; while the basic production of the parts, where the real value is

Thursday, 15 April, 19 82 added, where the real techn ically mor e advan ced, higher paid jobs, are retain ed in their own countr ies, that's the pattern of development that has been caus­ ing so many of our problems. So our recom mend ations were that this had to be dealt with by a responsible activist govern ment approach at the Federal level. I think th ere's a recogni­ tion that it's perhaps not so im portant where the dollar is pegged as what the struc tur e of the Canadian economy is and what the distribution of the costs and the bene fits are within the cou ntry.

Those are the im portant qu estions to ask and also the im portant problems to solve. So we were recommending a total package. It was inte resting to note at the Feder al mee tings that, although the provinc es seem to be all on the same wavelength in wanting lower int erest rates and letting the dollar slide, some of them wanted also a great many tax concessions to the private sector,

whereas others among us wanted more of a planned approach to the econo my. I think it's an approach that hangs together and is consis tent with what we are attempting to do at the provincial level. MR. CHAIRMAN: The Mem ber for Tur tle Mou ntai n. MR. RANSOM: Mr . Chairman, the term "let the dollar slide" has been used by many people I gu ess who've advocated that means as a means of loweri ng the interest rate. I gather from many analysis that a slide is perhaps not a way to desc ri be what would be lik ely to happen. It would be mor e lik ely to be a crash of the dollar rather than a slide.

I'm wonderi ng to what point do�s the province think that the dollar migh t go down to? How low does the Minis ter think it might go and what might be the effects on busi ness in the short-term in the province. recognizing that some of these other controls that the Min ister would like to see placed on the economy migh t take some time to put in place. If the interest rates were to be allowed to fall imme dia tely there would be also an im med iate result in terms of the value of the dollar. How low do you think it migh t go and what would the effect be on the provinc e, say if it went to 75 cent s. MRS.

SMITH: Mr. Chai rperson, the qu estion of a slide always so unds like some thing dreadfu l. There cou ld be advantages, ther e could be advantages to the manuf actu ring secto r of our economy which wou ld help us with our expor ts in that sector and it would help us to reduce some of our im ports because they wou ld become somewha t mor e expensive and therefore one sector of our economy cou ld actually get qui te a benefit. The relationship of cu rrencie s, one cou ntry to another, don't have any sacred or permanent ratios.

It's a device for balancing out, I gue ss you wou ld say, the economic activit y between cou ntries with an enormous numb er of variable s. I gue ss it's sort of like level of water, there's some thing about finding an appropria te level at which your countr y's activity relates to another coun try; but I think the idea of thinking of water levels always goes along with the idea of open mar kets and that somehow there is a natu ral and healthy balanc e if you ju st let everything go free and find it's natur al limi t.

That assu mes that one think s that the comple tely open ma rket is the best and healthie st pattern for economic activit y to organ­ ize itself around. We don't think that's the case; we think that coun­ tries differ enormously in their potential , their popula­ tion, their resources, their stage of economic devel­ opment and we see it, not only the right but the responsi bil ity of govern me nts to play a mana ging and balancing role in that cou ntries do not have to end up eq ually well-to-do.

But with in the potential that a par­ ticular countr y has, the govern ment in our opinion has a respon sibil ity to ensur e that the economy is as healthy and balan ced as it can be - a matur e economy. Canada does not have a matur e economy and we attribut e it to a real lack of economic leadership at the Federal level. We attrib ute it to reliance on theories which we think are frankly no long er adeq uate to explai n the problems, the situation and, therefore, they don't gener ate the kind of solutions that could make some sense.

I gue ss we wou ld lik e to work towards some kind of interna tional economic system where some of the trad itional concepts of com petition in the strong est group sur vivi ng, somehow, out of the great struggle is to come the greatest good of the greatest num ber. We frankly think that's a very un appealing, un healthy prospect for the world economy. We would like to su bst itute a much more balan ced approach where cou ntries could recognize that in the final analysis we have more to gain from mutually advantageo us trade relation ships than the rule of the strong domi nati ng.

We think that much that has caused great dis locations in the ind ustrial izing world has resulted from some ­ how a hope that the world mone y and trading system we've got is the best. Now that's not to say there aren't a lot of things we can all do to make what we've got work better; there are. Ther e are great gains that can be made, particu­ larly for a countr y like Canada and a provinc e like Man itob a, in using our ing enu ity and our inventiv e­ ness to be more productiv e, to seek out ma rkets.

There's a great deal we can do with in the cu rrent structu res but more could be acc ompl ished and a more, how should I say, econom ies could be man­ aged to serve the populations of cou ntries more effec­ tively in our opinion with a different approach to the interna tional economic syste m. MR. RANSOM: Un der this planned economy that the Min ister would like to see, Mr .

Chairman, does the Minis ter sti ll see that there would be a continua tion of the present needs for many bil lions of dollars each year to balance the cu rrent accou nts of the countr y, that there would have to be many bil lions of dollars borrowed abr oad to come into Canada? MRS. SMITH: Mr .

Chair person, I think the goal of the Canad ian economy should be to be as self-sufficient as possible, financ ial ly and in economic production, recognizing that there's an area of trade, im port and export, that we will need and want to mai ntai n. 15 25 I have a be lief in cou ntries living within their means, but, I think, in the Canad ian case, that the means that we have are less than we cou ld have if we mana ged our economy differently. I think it's partly because

Thursday, 15 April, 19 82 we've had great resour ce wealth tha t we've been able to get along for so long with an explo itative pattern of development of our resou rces. We've been content to sell them cheap and buy back the processed goods at a higher price, because we've had this wealth. To a certai n exte nt, I think, we've squan dered it; I think we've su rrend ered owner ship and control of it. Who can blame outsid ers from comin g in and developing our resou rces in the way they have? We haven't res­ isted .

But I think it's been an un wise pattern of devel­ opment and I, for one, and I think my party, along with me, don't think it's a wise cou rse to follow in the futur e. MR. RANSOM: Mr . Chairman, I would gather then from the Minis ter's state ments that und er the plan ned sort of economy that she wou ld find most accepta ble that there would be a much gr eater demand by at least, certainly by the Federal Go vern ment, and prob­ ably by provincial goverments, as well, for capit al.

At the moment, there is somewh ere between 70 and 80 percent of all of the invest ment capital that's available in Cana da is requir ed by the Federal Govern ment. That doesn't leave a great deal of capital left in the cou ntry for the provin ces to bo rrow for their efforts or for the private sector to borrow for reinvestment. Un der this type of planned economy, where does the Min ister see that the Provincial Govern ment would do its borrowing? MRS. SMITH: Mr .

Chai rperson, I ag ree with the des­ cription of the problem that the honour able memb er described, but I submit that one of the reasons we have that problem is because of the tax system and the fiscal policie s followed by the Federal Go vern­ ment. Much mone y drai ns out of this countr y every year in dividends to foreign owners. That's capital that coul d, in a more in digen ous economy stay here to sup port our own development.

An other problem has been that the strategy of the curr ent Federal Go vern ment has been to go very heavily in to capital intensive development in big ener gy projects and so on, and less in to labour inten­ sive developm ent, with the result that the capital needs are very high. I think some time s we mea sur e our economic growth solely in agg regate terms, and we somehow feel that rapid capital development is automa tically good and slower development is not as good.

I submi t that a more moder ate capital inv est ment program, coupled with labour int ens ive activitie s, social programs, redistri butiv e efforts, could produce a qu alitatively good economy, but it wou ld need dif­ ferent economic measur ement s, if you like, to evalu­ ate itself. I think some ti mes we get, instead of us using economi c data as a tool to assist us in our develop­ ment, we some time s are like the dog swung by the tai l. The mea sur em ents, these criteria, come to tyranni ze over us, and we forget to dip in our thinking into what are the basics.

The basics are not ju st mo ney; the basics are physical resources, are envir onmen tal assets, are people, and we have in Canada certa inly com pared to ju st about every other count ry, I kno w any thing about, we're really well endo wed . We have special problems, we have vast geogr aphy and sparse populati on, cold climate, so that we have to expend an inordi nate amount on keep ing ou rselves warm in win­ ter and transpor ting our selves, so that that's one of the relative difficultie s, if you like.

Bu t in balance, I think we're a well-endowed coun­ try, and with a better ma naged economy, I think, cou ld experience a selective type of gr owth where people could be gi ven a more equ itable access to the good things of life. MR. RANSOM: Ju st a couple of qu estions to finish up, Mr . Chairman. The system of govern ment tha t exi sts in Poland, for instance, is one that has been ext remely planned, and they have had to go outside the countr y for vast amou nts of capital .

I wonder if the Min ister would see that whether or not, un der the system of planned economy that she envis ages, that it would not be necessary to go outside the cou ntry for capital? MRS. SMITH: Mr . Chai rperson, I don't know whether we're tal king about transitions or end points, or wha­ tever. I think to label one count ry as planned and another as not, and tie it into capital needs, I think is perhaps oversimp lifying.

There are many kinds of planning; the model that has been used in the eastern bloc has been a model that I don't espouse; I think it's been a very centr alist type of planning, a very bu reau­ crat ic tal ked-down style of plan, the kind I un der­ stand, has a much more open partici patory character to it. I think one of the things we should recognize when we're looking at the economy of Poland is that it ha s been tied in a satellite relati onship with the USSR, where fai rly deli berate ly it was not encou raged to develop a div ersified economy and beca me very de­ pendent on the US SR.

No t to the same extent, but there is some element of simi larity, Canada has somewha t of a satel lite relationship to the U.S. econ­ omy.

As I say, I would n't want to push the parallel too far, but Poland probably, if they had been able to gener ate a more independent approach to their own economy, perhaps could have found themselv es in a much better situation now and I think we could impr ove our situa ti on. 1526 Obviously, if you were making a transition, you could n't elimi nate the need for for eign capital im me­ di ate ly, but change comes about by having a new idea of where you want to go, some idea of how to get there, and a willingn ess to take the first step. MR. RANSOM: One last que stion, Mr . Chairman.

Would wage and price contr ols be part of this pack­ age of planned controls that would be put in place? MRS. SMITH: Mr . Chai rperson, I could see in a truly partici patory govern ment, that people cou ld come to see that ther e are limi ted resou rces and therefore, if ther e's to be some kind of fair dis tributi on, that ther e cou ld be a process agreed on whereby some kind of minimum, maximum, social, a ratio concept could come to have broad consensus, but I think tha t would be arrived at if there was sufficient social ag reement as to what was desirable.

I think it's really inter esti ng; I found it extr emely inter esting to look at the developments in Japan sinc e the rapid post-war ind ustrial ization and they're often

Thursday, 15 April, 19 82 tout ed as an un planned economy and sort of an economy tha t demonstr ates the virtues of the capital­ ist system and yet what you find within their firms, is qui te a partici patory approach to labou r-management relations. You get some concensus that's been arrived at, as how they work out their wages and the gap between the bottom worker and the top worker is much much less than it is in our part of the world because they have a social concensus and I su ppose it's based on their trad itions of mu tual respect and the exte nded family and factors which are specific to that society.

I would hope that an economy such as I wou ld envision wou ld, by open and consu ltative pro­ cesses, enable the Cana dian people to reach the posi­ tion where they could ag ree on what was a fair dis tri­ bution of in come, but that's a very different concept I submit than imp osition of wage and price controls. MR. CHAIRMAN: The Memb er for Tuxedo. MR. GARY FILMON (Tuxedo): Mr . Chairman, the Min ister has gone on the record this evening in a varie ty of different areas as some what critic aJ of the developme nt of the Canad ian economy to date.

I'd like to if I may bri ng it mor e specifical ly down to the Man itoba economy and she can clarify whether or not the com ment s that she was ma king apply to the Manit oba econom y, i.e., that we have a rather im ma­ tur e economy that suffers from a lack of secondar y indus try, that it's rather resou rce based and that we ought to be moving towards the development of fur ther processing so that we get beyo nd this resou rce-base prim ary ind ustr y syn drome in to the area of true secondar y indus try,d evelopment and so on.

If this is her view of what is the case in Man itoba, what specific strateg ies does she plan to follow to develop this much needed second ary ind ustry for the province? MR. CHAIRMAN: Ma dam Min ister. MRS. SMITH: Mr. Chai rperson, I do think that the Man itoba economy is somewha t less than as healthy as what Canad ian average in most of the indic ators - we have what - 4 percent of the popula tion; we have somewha t less than 4 percent of the man ufactur ing.

Agai n, recog nizing that the average we're com par­ ing our selves to is all of Canada which I was mai ntain­ ing earlier, isn't necessarily at an opti mum stage, so I think there is room for impr ovement in the Man itoba situa tion. We do have a more div ersifie d economy than the provi nces to the west of us, at least we have had. We were a very im portant distribution service centr e in the earlier days of the open ing up of the west and did develop some man ufactu ring capacity when the other western provinc es didn' t, so we've had some lead time if you like in that regard.

Cu rrently, much of the man ufac turing of our eq uipm ent is ag ing and our state of product develop­ ment, in novation if you like, expansion is not as good as it could be, therefore I think the strategy to incr ease the processing, manuf acturing, in Man itoba is an im portant component of an economic strategy. I think it's im portant to identif y priority sectors where we have some probabil ity of com parative advantage and those are fairly natur al. They're the ones related to food processing, farm eq uipm ent, metals fabrica ting.

We have some lead - not lead - but some good activity in the fields that aren't neces­ sarily tie d to a geogr aphical location in the com puter field, in the technology field, some development in health products and for our size rather a good devel­ opment in aerospace.

So, I think it's a qu estion of selecting the areas where we have some strong possibili ty of developing, doing well and seek ing out new markets, working from the research and development end trying to get mor e of that here, get it mor e focussed on specific opportun itie s, looking at the capital needs and man­ agement needs, man power trai ning needs of existing and potential manuf actu rers and working out what is the appropriate role for a Provincial, Federal Govern­ ment, univ ersities, the indus try itself. I \hink all of these factors can be put toge ther and form a fairly realistic and healthy approach.

I should point out that the qual ity of our manuf ac­ turing capital stock right now is actually the second lowest in the cou ntry, it's next to Pri nce Edwar d Island, therefore we re ally cannot afford to be com­ placent about it and do ha ve to seek out ways to im prove. There is always a tem ptat ion to feel that we have to attract outsider s in. I think that's some thing that cer­ tai nly has to be done if it can be accompl ished, but there is also opportun ity to assist the people we do have, to develop.

Very often we find that someone ha s a reasonably good product and they are operating at a fairly constant level and they aren't ter ribly assertive about going out and seeking new mar kets, either in the province, to the west of us, or to the south and beyo nd, so we have a fai r job to do in finding ways to inspir e and assist our manuf actu rers to be more crea­ tive and inventive in that field. Those are some of the comp onents. Perhaps we can touch on more of those when we get to some of the specific parts of the Estima tes. 15 27 MR.

FILMON: Could the Min ister explain what she means by the qual ity of our manuf acturing capital stock be ing the second lo west in the cou ntry next to Prince Edward Island? MRS. SMITH: Mr . Chair person, it's the dollar value per person emplo yed in the ind ustry of the capit al eq ui pment and that reflects I supp ose, the quality and the amount of capital investment. A little earlier , I was critic al about a strategy that went too heavily into capital investment and not enough into labour intensive development.

In Man it­ oba's case I think we have qu ite a ways to go to get to a good mix, therefore those man ufactu ring processes which are using more advanced technology and can therefore gen erate more produc tive output, need to be encour aged . We have a fair development starting in the apparel indus try and in the metal fabrica ting to use comp uter assisted design and manuf acturing eq uipm ent. This is remarkable technic al eq ui pment which enable s a very high qu ality and high volume of production to be achieved. It also introdu ces some fairly challengin g

Thursday, 15 April, 19 82 and bette r qu ality job s fort he work force and if we can promo te some of this here, I think it bodes well for our expansion of trade. MR. FILMON: How does the Min ister I did n't qu it e catch how she rationaliz ed the com parison between her com ment that the govern ment isn't in terested in attract ing ind ustrie s that are too capital­ in tensive and don't create enough jobs, and her con­ cern about the fact that our ratio of capital investment per person emplo yed is too low. Isn' t tha t contr adictory? MRS. SMITH: Mr.

Chai rperson, I can und erstand the apparent contr adiction the mem ber heard. Ini tially I was talking about the economic strategy for Canada as a whole, following up on a qu estion of wouldn't we stil l have great capital needs for borrowing abr oad , and I was saying that I thought in a planned approach we would phase our capital investment in such a way that we wou ldn't put our selves into bankrup tcy, if you like, by trying to borrow too much abroad. But I was talking about what would the opti mum be, if you lik e, if we were having a planned economy at the nati onal level.

When we come to the Man itoban level, I think it's realistic to look at where Man itoba stands in relation to the cu rrent state of the other provin ces in Canada and develop a strategy that brings this at least up in to the middle level of economic health. I don't mean to aim low; if we find the magic combi nations that enable us to be very in ventiv e and su ccessfu l, fine. But I think it's reasonable gi ven our resou rces, to aim to hit the average ran ge.

And there I think looking at what we have and what we could have, it's fair to say that to bri ng our selves up to a proportiona te average, we'll have to moder nize our eq ui pment and look for more te chnologically advanced ways of carrying on secon­ dary ind ustr y. MR. FILMON: Mr . Chairman, that gets me back to the orig inal qu estion that was: what is this Min ister or this governm ent's strateg y, or to use her words, the mag ic combi nations that will attract investment and result in the cr eation of sign ificant jobs in secondar y in dustr y in this province?

When I asked that que stion origin ally, with respect, the Min ister merely read off from material that I've seen publ ished for years by the department that tells what areas Man itoba should have com peti tive advantages in. And she listed off food processing, farm eq ui pment, metal fabrica ting hig h technology, areospace, on and on, and all those thi ngs are things that have been around before.

What are her strateg ies or her govern me nt's strategie s that are going to result in the development of secondar y ind ustry, to arrest this trend that she sees towards resou rce-based economy, towards an imma tu re economy? What is she planning to do in Man itoba to change that? MRS. SMITH: Mr. Chair person, we are not going to accomplish mir acles qu ickly, as I have said befo re.

One of the problems we have is shortage of capital in the province and we feel we can remedy that some ­ what by seeing what more resour ce revenu es can be secur ed by bri nging our Cr own corporations into as healthy a condition as possib le.

We've also talked about negotia ting as much co­ operative programming as seems reasonable with the Federal Go vern ment because those can help us deal with the down-turn in the economy, the deficits and so on; then by strateg ically trying to focus what fund s we do have into the whole development process, not just attract ing outside mone y in but not excludin g that either; trying to look at the whole chain of devel­ opment starting from the research and development end.

We want to strengthen our research council so that we can get the univ ersities, the indus tries and government groups looking as strateg ically as they can as to how we can get technologic al advan ces applied in ind ustry; the same with the man power trai ning, how to get it somewha t more closely focused; looking at the needs for management skills and mar ­ keti ng skills of the busine sses that we have; increas­ ing the will and abil ity of our manuf actur ers to seek out ma rkets in the ener gy pr ojects to the west of us. We need a lot of servicing eq uipm ent and it's a natu ral mar ket for us.

It's not that distant and we have the capacity to provide many of the thi ngs they need so we'll conti nue in the reac hing out to th ose opportun itie s. 15 28 We've also been explori ng probably with the middle and longer term impr ovement in mind. We've been having me eti ngs with representatives from Jap an because the developme nts in their cou ntry are ma k­ ing it desirable for them to tran sfer as much of their ener gy consu mptive indus trial processes out of their countr y and into cou ntries such as ours.

So, we have been in suring that they know what we have here in terms of hydo-electricity, and wil ling ness to joint ven­ tur e, proxim ity to the big Nor th American ma rkets. So far we have I think, broken through a bit of a sound barrier with them in that we fou nd they saw us prim ar­ ily as a hog producing area that was going to be a replacement for the ... they've had to stop imp ort­ ing from Denma rk beca use of foot and mouth di sease that's been developing there.

And they'd never though t of us as having some thing to offer in terms of the hydro-electricity and the proxim ity to the North Amer ­ ican ma rket. So we've already started a dialogu e going in that dir ection to see if there are co-operative activitie s that we can un dertake in the mi ddle and longer term. I think the willing ness to review all the mega projects with the view not jus t to saying, we need outside investo rs to come in and help, but what are the conditions on which outside invest ment and provincial investment toge ther can maxim ize the return to the people of Man itoba.

Those are analy ses that you have heard about and have chastised us on occassion for bei ng rat her slow and not filled with great public pronouncemen ts. But our comm ittment to planning and to careful analy sis is very sinc ere and that kin d of work is not flashy and qui ck. It's a methodical type of work that has to be done . It's what you're accustomed to callin g go od busi nesslik e approach to economic development. We are qu ite happy to pick up the good aspects of bu si­ ness planning and careful financial and economic thinking to apply to our own planning in that field. MR. FILMON: Mr.

Chairman, I'm a 'little confus ed because the Min ister has said in response to my qu es­ tion as to what is the strategy of the govern ment, "We

Thursday, 15 April, 19 82 can't accomplish mir acles." Well, I'm not asking what she has accompl ished today but - there's a saying that says if you don't know where you' re going, any road will ge t you there - and all I am asking the Min ister is, what is the strategy that is so different and unu sual that her New Democr atic Go vernment wishes to follow that will resu lt in her vision of a planned, proper economy for the bette rment of Man itobans, will result in that down the road?

And that means as she says, the accomplishme nt of increased secon­ dary ind ustr y and all those thin gs that I repeated before the qu estion. Now what's the strateg y? Talkin g to Ja pan isn't a strateg y. Following a good busi nesslike approach in di scussions isn't a strategy. What's the strategy? MRS. SMITH: Mr.

Chair person, the strategy is to seek out in as syste matic a way as we can, the opportuni ­ ties that grow out of the kind of base that we have now to explore the full range of ways of developing those opportuni tie s from co-op, to join t ventur e, to Crown corporation, to encour ag ing private corporations to proceed on their own, then when a join t ventur e is involved or some kind of agreement, to see that the terms are as fair and benefi cial both to all parties consider ed.

We re memb er the long and bitter experience with CFI, and I know it's easier to have hindsight than foresight, but I think we realize it's not easy to develop a forest produc ts ind ustry in the Nor th of Man itoba - we are having our cu rrent dif ficu ltie s with Man For - but our development strategy is a building on some ­ thin g that is there - so we will take each sector and each ind ustr y on its own terms and see what the devel opment needs are and work with whatever resou rces we have - and the Feder al Gov ernment is able or willing to put into the mix - to see that the dev elopment process occur s to the benefit of Man itoba.

Now, strategy I gu ess, has to start from opportuni ­ tie s and finding out wha t the resou rces are that you can bring to bear, or what the stages of developme nt are and how you can assist in focus, how you can choose to put your mone y here rather than there because you think it will create mor e jobs or gener ate mor e wealth for the province, or provide mor e lin­ kages to things you've got, or thi ngs that you cou ld produce. It is a strategy.

If I had to differentia te it from the predecessors, I'd say we are willing to enter tai n a wider range of organi­ zational patterns and mi xed public -private activity, but much of what was bei ng done before and many of the types of programs that had developed in my department, I am very happy with. I think they were necessary and im portant, perhaps not sufficient, We may not be able to impr ove on all of them. I hope we will have the sense to maintain the ones that are effec­ tive.

We'll try to develop as rig orous an approach to evalua ti ng mo ney in and value out as we possibly can so that what resou rces we have at our disp osal are well and effectively spent. MR. FILMON: Mr. Chairman, the Min ister has referred to the long and sordid history of the CFI project. We too, re member some long, sordid and bitter tales of Saunde rs Ai rcraft, King Choy Food�. William Clair Publishing, and I could go on an on, but I'm sur e the Min ister remember s them.

She says that the major thrust of her department is to seek out and ident ify the opportun ities that are here in Man itoba for people to develop ind ustr y and eco­ nomic entitie s that will cr eate jobs, stimu late our economy, produc e tax dollars and all the good things that can accrue from economic development, but that's always been the strategy. Ther e's a next step to that strategy and that is, having ide ntified those opportun ities, what's requir ed to develop them is massive inv estmen t, and she has said that the govern ment is somehow going to be involved in that massive investment.

Well, I jus t point out that the entir e bud get of her depar tment is $24 milli on this year, and even instead of having all of these people on staff who are doing the seeking out and iden tifica tion of opportun ities, she turned all that $24 milli on into investment in oppor­ tun itie s, it wou ldn't create a hill of beans with respect to economic development in this province. So some ­ where, som ebody is going to have to be encour aged to invest massive amou nts of mo ney in Man itoba to take advantage of these opportun itie s that her depart­ ment is identif ying and where is that going to come from?

She's talked in theoretical terms about co-operative developme nts and shared partner ships and all sorts of buz z words that I've heard before, but how will they apply in Man itoba and what will be the in centive for people to bri ng in the massive amou nts, the hundr eds of milli ons - not the $24 milli on in her budge t - but the hundr eds of mil lions of dollars that are going to be needed to take advantage of these opportun ities that are identifie d in Man itoba?

There has to be a strategy that will encour age people to take their mone y out of interest-bearing inv est ments and put them into risk capital to develop ind ustry in this pro vince and jus t merely listing all of Man itoba's advantages isn't going to attract people to invest here.

There has to be an attra ctivene ss by virtue of the climate tha t she creates, by virtue of the stab ility of our Man itoba economy, of the com petitiv ene ss of our taxa tion structu re, all of those things that - and it seems to me that everything that the Min ister has indi cated in her open in g remarks has been one of discour agement to anybody who migh t want to come here -s ugge sting that she is a little concerned about the level of profits that are being taken by some types of corporations, that she's a little concerned about the lack of good corporate moti ves of many of the corpo­ rations that exist in Man itoba, the lack of their contri­ butions to the overall good of our economy, all those thi ngs seem to me to be a slap in the face to anybody who migh t want to come in here with any amount of capital and inv est in the futur e development of our economy.

I think that this Min ister is going about it in entir ely the opposite way. Rather than attract any ­ body with the kinds of pronounc ements she's been making in the last couple of days in this Commit tee, she is going to do exact ly the opposite and send them ru nning away from here. 15 29 Let's tal k about some specific s. Let's tal k about Alcan as one project - and the Min ister has said that with respect to the mega projects - they're proceed­ ing slowly because they want to take a very good

Thursday, 15 April, 1982 busi nesslik e approach to each one of these potential ende avour s. Wha t potential ly in the Alcan project smacks of a bad investment or a bad deal for Mani­ toba, what aspects of it migh t have negative effects on Man itoba in the Minis te r's view? MRS. SMITH: Mr .

Chai rperson, I can un derstand how the honour able memb er reacts to someth ing that isn't com pati ble with his approach, which is that you have to rely on the private sector for invest ment and the only way you can do it is by giving them in cen­ tiv es, cut ting their taxes, promising them, how should I say, a very attract ive climate within which to func ti on. I ag ree that would be the best strategy if that were the only sort of thing that one had to consi der, but I ask you to look at a provinc e which develops itself in that way and that way alone.

It may attract a lot of companie s, but their attac hme nt may not be that strong. There is no gu arantee, particul arly if it's an out-of-country comp any, that the profits get rei nv­ ested and, while I know there are jobs created and ther e are taxes paid and there may be very good thi ngs happen, there are also some nega tiv es and there are some thin gs that don't happen in a commun­ ity that way. Also, the control that the people of Mani­ toba have over their own economic development is not that great.

We may end up cut ting back our taxes and offering incentiv es in an in creasing rate and find that the benefits we're get ting somehow aren't jus tif y­ ing that pattern of development. No w, we aren't saying that pattern is all bad.

What we're saying is it needs to be balan ced with another parallel approach and my reading of the com pan ies that I have had to deal with now. and although we've only been in office for four months, we've actually talked to a very large numb er of companie s, my read­ in g of them is tha t they recognize that part of the clima te of a healthy economy is based on the willi ng­ ness of the public to invest as well as the private; that it is the total economic and social activity in a commun­ ity that gener ates activit y and health, that it is not always a strict botto m line calculation that they make.

There is a work force and their trai ning; there is qu al­ ity of life; there's cost of housing and all those thi ngs. In fact, we've identi fied 28 projects in the resour ce area which are potentials for development and we are finding that ther e are people interested in in vesting. So mehow, the world out there does not seem to calcu­ late things qu ite as black and white as the honour able memb er does. We are also finding int erest in the pos­ sibili ty of joint ventur es or comple te public development.

The futur e for Man For, if we can get ou rselves con­ verted to a product that is in demand in today's rapidly changing mar ket, is not bleak, it can be bright. It's jus t we have to have the cou rage and take the time to do the careful research to see that we send it in a healthy dir ecti on. There is activit y in the Tant alum mining field and in the ener gy technology field.

Frankly, we're findi ng, in the high tech field, that often in ves­ tor s aren't so much looking for ju st the best tax breaks; they are looking for an area where they can plug into research abil itie s where there is a group of comp anie s of like mind where ther e can be a fai r degr ee of excitement and inno vations. Although we don 't we have glamor ous clusters of ind ustries lik e this, nor are we be reft of them, there are group s that are willing and I think able to expa nd.

The economic time s are very difficult and the seeking out of the specific projects that stand a good chance of goi ng is a careful and painstakin g task , but I personally don't feel that pessim istic about the prospects. The bud get of the department does not reflect a high priorit y to public capital inv estment in the secondary sector.

As I said earlier this afternoon, the prior ity for the govern ment, in the fi rst part of our term, is to deal with the ener gy and prim ary resou rce field to bring our Crown corporations into as healthy a state as we can, to do some catch up work in the social service field and to put in place the ana lytical capac­ ity, the plannin g capacity, that will enable us to seek out investment opportun itie s in the man ufacturi ng fie ld. Admit ted ly we have not earmarked big amou nts of public mo ney for that pu rpose at this time. MR. FILMON: Mr .

Chairman, with due respect, I have to say to the Min ister that she's part of a govern ment team who has Min isters responsi ble for various areas and that she has been giv en the responsibil ity for Economic Development and Tourism in this provinc e.

If she then says that there hasn't been any in crease in the bud get on Economic Devel opment, which there hasn't other than the additional $2 milli on for the horse racing ind ustry, and that's because, in her vie w, the priority of the government is in "the developme nt in the social service field" and she was saying that she's aband oning, in effect, the economic develop­ ment aspect of this province.

I don't think that this provinc e can afford to aba ndon, as a priority, Eco­ nomic Development for its futur e because there will be no funds to pay for the needed social service developme nts in this province in the futur e if there isn't a strong, healthy economic base.

Although she can, on a co-operative basis, work with her fellow Cabi net Min isters, she had better be working as a priority for Economic Devel opment or turn her portfolio over to somebody else and she can worry about the social service developme nts in the provinc e while somebody else, who's more int erested in Economic Development, will take the lead role in that. She has referred to my statement as having said that I advocated cut ting taxes. I did not once in my previous remarks refer to cut ting taxes in this pro­ vinc e.

When I spoke in terms of a healthy clima te, an att ractive climate for indus try to come here, I think all we need to do is be com petitive and it seems to me that there are several major ind ustrial concerns who were on the verge of putting billio ns of dollars into this provi nce on vent ures that they were satisfied with, had a sound economic base, and this Min ister's gov­ ernment for some reason is holding off on them. She has not answered my qu estion as to what are the concerns that she has with respect to the Alcan project?

She referred earlier to having some public funding go into joint ventur es and said that resource reven ues can be secu red for channel ing of our own funds into futur e Economic Development and I assume that she's still after that comment in the New Democr atic party's campa ign literatu re that said that with resou r­ ces from ManOil and Man itoba Hydr o, we can do all 15 30

Thursday, 15 April, 19 82 sorts of wonder ful things in this provi nce. In that par­ ticular folder it referred to the development paying for social services in this provi nce. I think she's now say­ ing that maybe Man Oil and Hyd ro are now going to pay for Economic Development in this pro vi nce and I tell her that it jus t is pie in the sky. Ther e's no way that amount of mone y can come out of those Crown cor­ porations to pay for futur e Economic De velopment in this provin ce.

Her govern ment is going to have to attract investment, whether it be from with in this prov­ in ce or from outside this provi nce or countr y into this provi nce, to start the bal l rollin g on Economic Devel­ opm ent an d there are several projects that are av ail­ able to her right now. I want to know what she sees as bei ng negative thin gs and things that ought to be avoide d about the - let's take one for instance - the Alcan project are thin gs that this goverment does not wish to giv e up or to ag ree to on that type of deve lop­ ment.

What are the pr oblems, what are the negativ es that she sees in that particular project for instance? MRS. SMITH: Mr . Chai rperson, with due respect to the honour able mem ber I do think he's exercising selective listen ing. I did not say that increasing or im proving social services was the top priority.

I said to increase the public retu rn from natur al resource development so that in the longer run we have mor e resou rces under our own control to suppor t our development, not as a total strategy, but as a part of a mi xed strategy; that the development of our Crown corporations to the point wher e they're healthy and able to gener ate more in come for the provi nce. Mone y that can stay in Man itoba and assist with other development is an im porta nt component.

Then perhaps most imp ortantly and perhaps one of the most difficult concepts to compr ehend is tha t there was very little plan ning capacity left in the gov­ ernment when we took over. By planning capacity I mean the abil ity of people - having the people there in the fi rst place - but having an abil ity for them to work as a total uni t to plan from all the different com­ ponent s, the social, economic, financial, tying into provi ncial fiscal policy. We jus t don't have that, we haven't in herited that type of capacity.

We had mega pr ojects which were be ing developed by a clutch or a group of consu ltant s that did n't necessarily work together, conseq uently what we had were proposals that sounde d good but when we ana ­ lysed them, found they were inconsis tent, that they did n't give due weight to the fai r return to the people and frankly we didn' t find them in a state of readine ss where they could be brought to fru itio n. Now ther e's none of the projects that we have said that the door is closed on.

What we want ed to do, and what we think it's only appropriate for a public author ­ ity to do when negotia ting with outside provinc es or comp ani es, is to set the framework with in which it makes sense for the public of Man itoba to pursue a line of development in with that particular company, to set the parame ters if you like, below which it does not make sense to make a deal about which you're into the net benefit situa tion. With reg ard to Alcan we had concerns as the member well kno ws.

We had concerns about the prin­ ciple of giving owner ship on a Hydr o damn when we feel very profoundly, how should I say, a loyalty to or a 15 31 comm itment to developing the Hydr o resou rces of Man itoba for the public good and we were not satis ­ fied that the kind of deal proposed in the Al can project was in fact going to do that, neither the terms of ownership, nor the price range.

I think the dif ference between our strategy and that of our predecesors was that because they saw - well they wanted dev elopment and that I'll grant you - but they saw the private sector as the only sou rce of that kind of development in itia tive and capital. Cons e­ qu ently they were willing to make any kind of a deal . Well, that's too str ong. They were willing to make a deal that was less than opti mum for the people of Man itoba in order to get that outside investment. We were not persuaded that the terms on which the Hydr o electric ity was to be made available to Alcan were a good deal for the people.

It wou ld have been very temp ting to go ah ead and say, aren't we great, we've got this going and we have all this 11c tivity. But tal king to our friends in British Col umb ia who had rued the day that they had enter ed in to a city five-year ag reement with Alcan at prices that, gi ven the rate of inflation in recent years, have proven to be ludic rous. The Hydr o electric ity is one of the, not glamor ous, but very su bstantial natu ral resour ce assets in renewable ener gy that Man itoba has and we were not prepared to enter into that kind of a deal.

We had concerns about the evironme ntal im pact but those were concerns that could in an orderly - and will be if the negotia tions get to the point of a locational focus - thoses issue s can be dealt with by open public heari ngs and a consu lting of the envir ­ onme ntal experts in that field. We un derstand that our predecessors when they negotia ted on the location for Alcan played a neutr al role. They said, Alcan here's the informa tion about Manit oba but we'll play hands off when it come s to where you locate.

Now I respect that was the way they thought government should relate to private indus try, that it was an ar ea where private indus try, private in vest ments should have comple te freedom of desci sion -making. Well, we don't belie ve that.

We think that the public has some responsi bil ity to at least enter into a negotia tion and atte mpt to have some influence on where an enterprise locates - and it doesn't mean that we would play a dictato rial role and say you have to go up to Pu kataw agan or some ­ thing because we wou ld like you to be ther e - we recognize the costs of transpor tation and the needs of people to have places to live and all the rest. But we don't think that the govern ment should necessarily accept a kind of eunuch role in the negotia tions.

We think we have a legitima te right to put our concerns about location into the mix and into the negotia tions. Another concern that we've had with the Al can is, is there any way that we can link the processing of the alumina with some kind of fabrica ting or pr ocessing of the fin ished ingo ts so that more value added , more jobs, more mone y gets gener ated here in Man itoba so that we aren't ju st followi ng an extension of the old pattern of development.

Now the Alcan plant, how should I say, aluminum smelting is a natu ral compli ­ ment to the Man itoba economy and in fact as such we're int erested in having an aluminum sme lter. We feel thoug h, that we should discuss the pros­ pects with several aluminum com pani es and not con-

I Thursday, 15 April, 19 82 fine ou rselves to one. We think that that's only bei ng responsi ble and bei ng good stewards for the futur e economic development of Man itobans . It's a slower process, it's more complex, but we feel comm itted to it because we think it's honouring the kind of syste­ matic analysis and approach that we think is the mo st responsible in the long run. MR. FIL MON: Mr. Chairman, I think the Min ister has identifie d her hangup s by virtue of some of the state­ men ts that she's jus t made. She said that it was the principle of giving owner ship of a Hydr o dam to Al can.

Well, let's set the record clear. I think what the Min ister meant to say was selling owner ship; there was no intention of anybody to giv e anything away to Alcan, they were going to be paying the full costs of every meg awatt of in stalled capacity that was ther e. As the Min ister well kno ws, the ag reement called for escalating claus es so that the returns from the Hydr o plant to the Province of Man itoba were not ju st fixed for 35 years, but that there were escalating claus es and on and on.

Alcan would not be here unle ss ther e was an economic viabil ity to the development of a sm elter and if the Min ister belie ves that by dictating where they can go, and that happens to put them in an area which does not allow them to operate viably, econom ically -since they are not get ting any grants from Manit oba or Canada or anyone else to come here, it's based solely on the economic viabil ity of that operation -then I can assur e her that they won't go to Pu kataw agan or anywh ere else unle ss that plant is economic ally viable .

The healthiest relation ship for the Provi nce of Man itoba and the economy of Mani­ toba is for that plant to be located where it can pro­ duc e the best return for Alcan, assumin g there are no other envir onme ntal or socioeconomic problems that would prevent it from being ther e.

That was the whole pu rpose of having set up the most ext ensive series of socioe conomic and envi ron me ntal assess ment reviews that has ever been seen in this provinc e, or perhaps any other provi nce, for that particular pro­ ject, so that we, the people of Manitob a, wou ld be assu red that there would not be the socioeconomic and environme ntal negati ves that the Minis ter says she's concerned about and there is a process in place. The Min ister keeps tal king about moving things over that I have a hangup about in volving the private sector. Well, I gue ss I do have a hangup to a certain extent.

Everybody in our society, with respect to taxa­ tion, can be classified as either tax payers, tax avoid­ ers or tax consumer s. What my hangup is tha t the Minis ter keeps wanting to transfer people out of the. taxpayer category into the tax consumer category because she has a hangup about tax avoidance by some companie s, in the manner in which they struc­ tur e their operations . It seems to me that's a hangup that's a very valid one and as a tax payer in this prov­ ince I have a right to hold. Mr .

Chairman, I think I'll probably leave my rema rks at that because I think the Min ister has bounc ed us all around the mul berry bush on this and we'll be better served by get ting at some of these thin gs on a topic ­ by-topic basis as we go in detail into the Estima tes. MRS. SM ITH: Mr. Chai rperson, one more time around the mul berry bush please. I never mentione d di cta­ tion, honour able men ber, of location. I said willing­ ness to negotia te on the basis of location and play som ewhat more active a role, not a neutr al role.

I said "of course we had to look at the economic viabil ity of the com pany," but betw een the econ omic viabil ity and what can be a better deal for Man itoba is qu ite a lot of negotia ting space. Al can is a company that has operations around the world, 40 to 50 operations, and it is in relati onship to other com pan ies and other govern ments all the way from O to 90 percent control by the other partner .

They're not stranger s to govern ment s that take their social and economic responsibil ities seriously and I don't think that they are at all su rprised that there are certain que stions our govern ment wants to look at. I don't think they're going to run away from the negoti­ ations because of that.

On the glob al scale they are mor e concerned about secu rity of supply of power than they are at differen­ ces to them that are fairly min or in the cost, but differ­ en ces that to them can be fairly mi nor can be qu ite major to a provi nce like Man itoba where hydro­ electricity is one of our value d and im portant resou rces. The escalating price that you say you negotia ted - you kn ow there's room for differe nce of opinion - at the moment we felt it was too sligh t an escalating factor, but that's some thin g where one can und er­ sta nd there be ing a range of opini on.

St ill we wanted time and needed the time to look at that in some det ail. On the envir on mental issues, I don't have any han­ gup on the process that was described be ing one that could be carried out, provided there was full access to a range of data and no t ju st com pany -suppl ied data. I ag ree with the honour able memb er tha t I think we're all "b abes in the woods" in this field of envir onental and social in pact analysis, but I think when we are new at it we mus t be cautious and be willing to learn as we go.

I don't prejudge the outcome of that process and I presume that the mem bers opposite didn' t either . With regard to taxpayer s and resou rces and tax evaders and tax consumer s, ... MR. FILMON: Avoide rs, not evaders. 15 32 MRS. SMITH: Par don? Avoiders? Tax avoider s, I apologize. MR. FILMON: The other one is illegal. MRS. SMITH: Is tax avoidance not illegal? MR. FILMON: No, tax evasion is illegal; tax avoidanc e is legal. MRS. SM ITH: Oh I see.

Well all right, it is a tax expen­ ditur e thou gh if you're referri ng to the pr actise of govern ments giving exemptions or whatever to com­ pan ies as an incentiv e. Basically I'm not hung up on any particular kind of tax. Wha t I am hung up about, and I don't apolog ize for it, is that there's only so mu ch resou rce and ther e's only so much to go ar ound . So me of the resou rces can be depleted; some can be protected and preserved and well used. My comm it-

Thursday, 15 April, 19 82 ment is that what we've got we use carefully and that we share the benefits of it. These resou rces are not owned only by the people who have the mo ney to develop them, they are owned collectively by the people of Man ito ba. I think. to be qu ite consistent, my colleag ue s and I have said that we would favour resour ce owner ship by the people of Canada, but we have a situation where it's resou rce owner ship by the people of a provi nce and we are very hun g.up about the que stion of how those resou rces are used and developed and how the bene fits of them are distrib ­ uted.

So I do accept that hangup, honour able mem ber. The other ones I think your way of stating them was a little wide of the mark. MR. CHAIRMAN: The Memb er for Tuxe do. MR. FILMON: I ju st wanted to int erject, Mr.

Chair ­ man, that if the Min ister, by referri ng to the fact that Alcan is used to dealin g with governmen ts who take their social and economic responsibil itie s seriously, was sugge sting that our govern ment did n't, I sug gest to her that was the reason that Alcan was here in the first place, was they felt they were deal ing with a govern ment that took it's social and econom ic responsibil itie s seriously. MR. CHAIRMAN: The Mem ber for St. No rbe rt. MR. G.W.J. (Ger ry) MERCIER (St. Norbert): Mr. Chairman. I jus t wonder, would the Min ister confirm - I think I heard her correctly.

Did she indic ate that she and her party and her govern ment had no magic solutions to im prove the economic clima te in Man itoba? MR. CHAIRMAN: The Honour able Min ister. MRS. $MITH: Mr. Chai rperson, we have no magic ones, but we have a philosophy and an assump tion about people. We have certai n explicitly stated values about economic development and about people in the com muni ty and their right to partici pate and share and those are by which we function, and on which we build our strategies; they're not magic, they're care­ fully thought out and seriously proposed. MR. MERCIER: Mr.

Chairman, can she offer any gu a­ rantees in impr ovements in the economic climate in Man itoba? MRS. SMITH: Mr. Chairperso n, I think it would be foolish at this stage of the economic trials and tribu la­ tions of our part of the world to gu arantee anything, and to gu arantee any kind of im provemen t. I think what we guar antee is that we will do our best gi ven these circµms tances, to use whatever means we have to ensµr e that we get the healthie st development that is possible. and in doing that, we will not have the di fficu lty or the cost rest unequally on one portion of the com muni ty.

We feel that the economy, good, bad, or ind ifferent, is to me et the needs of the people, and that govern­ ment has an im portant role to play in doing some balancing out. tha t the mone y economy left to itself will not do it. If it weren't for a lot of the protect ive programs that do exist, almost a thir d of the people toda y would be not needed by the economy, and the thing could func ti on as well without them arou nd, and we submit that that's not an economic system that's adeq uate.

It has some strengths; it's certainly not irredeemable, but it needs some additional ap­ proaches, and tha t's why we adhere to a mi xed stra­ tegy, and why we say we wish to link social and eco­ nomic goals. MR. MERCIER: M r. Chair man, if as the Min ister has stated , it would be foolish to make any guar antees und er exis ting situa tion of world-wide conditions, could the Min ister exp lain the basis for the state ment of the Premier in his election material and prom ise, he says, " ... that we can gu arantee, we can turn around the harsh economic circums tances of the past four years.

We can provide interest rat!'1 relief and an economic clima te to ensur e that small bu!jine ss stays in busine ss. That is we, the New Demo cratic Party , acting alone ." And we have seen, Mr. Chairman, the recent bankru ptcy stat istic& which show that the fi rst three months of 19 82, bankru ptcies have doubl ed over 19 81 , more than doubled. as the Mem ber for Stu rgeon Creek inqic ates, and those are only the hard statistics, the numb er of b1Jsine sses that have simply closed up aren't shown in those statistics, can the Min ister indic ate the basis of that gu arantee?

As he went on to say, ''That's a promis e we can gu arantee ." Cou ld the Min ister ind icate the basis of that state­ ment, or was, in deed, the Leader of the New Demo ­ cratic Party fo olish to make that state ment? MRS. SMITH: Mr. Chai rperson, I wish that the reali­ tie s that we have to face in terms of conti nuing eco­ nomic decline, we believe because of tigh t mo ney and high inter est, economic strateg ies held at the federal level, that we think are inappropriate and ine ffective. have contin µed.

I think we didn' t really believe that the Federal Gov ernment wou ld remai n so blind to the events that are occu rring in this countr y, and that they would hold back from the kind of corrective me asu res that are with in the lexicon of hu man though t and enterpris e.

We don't need to be in as bad a state as we are in the Canad ian scene. 15 33 Within that, we in the Man itoban situation have lim ited capacity, but I submi t that with in our lim ited capai:;ity and within the very lim ited planning capacit y that was left us by the pr evious govern ment, we are making a very strong effort to tur n thi ngs around here, and I submit that the emergency programs will assist the most hard hit for awhile, that the increased capital investment by the government will gi ve some sti mu lus of p4blic in vestment to the economy .

The mai ntai ning and s light impr ovement in the social service field will ensur e that the people who are most vul nerable don't pay the worst price in this economic depression, and that we wil l be working as hard as we can to find the next range of things that are within our provincial capacity to ease and impr ove the ne xt months and years. There is a gap between complete securit y and eco­ nomic recovery and where we're at now, but I submi t we've made very sign ificant steps and that our inten­ tion is th ere to keep moving in that dir ection. We reg ret that the gap between where we're at and a mor e

Thursday, 15 April, 19 82 secu re economy is still there. MR. MERCIER: Mr . Chairman, would the Min ister then be honest enough to admi t that she and her govern ment and her leader canno t gu arantee that they alone can provide an economic climate to ensur e - and there is no reference to the hardest hit, etc. - that small busine ss, all small busine ss, stays in busi­ ness? Wou ld she be honest enough to admit that she can not guar antee that promise can be fulfil led? MRS. SMITH: Mr .

Chairman, if we're looking for 10 0- percent guar antees, we can't; if we're looking for the kind of guar antees that people would have had if they retained the previous govern me nt's policy, then I think you would have been looking at a low percent.

What we're ai ming at and I think will have achieved , is some thing in the mi ddle, because by mai ntai ning our social services by increasing the public investment in needed assets, we' re put ting mone y into the system and into the pockets of people, with the beef stab iliza­ tion into the pockets of the beef farmers, and so on down the list, so that ther e at least is some greater sti mulu s to the economy in the se difficult time s.

One can not turn around an un planned and half­ developed policy in four months, and I submit that the way we have been working, the open consulta tion and the careful plannin g, and the work ing as a team in each area where we have some capacity to move, our record is a sound one. It is not a mir acu lous one. MR. MERCIER: Mr . Chairman, the Min ister is saying that their record is a sou nd one, and in spit e of the doubling at least of the bankrup tcy statistic s in the fi rst three months of 19 82 com pared to 19 81 , ther e is no reference here in this promis e, Mr .

Chairman, to the fact that only 75 percent of small bu sine sses will stay in busine ss, or 60 percent will stay in busi ness, or 90 percent will stay in busine ss. This is a promise to provide an economic clima te to ensur e that small busi ness stays in busi ness. Would the Min ister be honest enough to admit that state ment, that prom ise, cannot be fulfilled? MR S. SMITH: Mr .

Chai rperson, I think if we can be consid ered naive in any way, it's in thinking that the Federal Government wou ld not see the developm ents that have occu rred in this cou ntry in the past year and done noth ing, or moved only in a tight mone y-high inte rest rate, dir ecti on. You know as well as I do, that when you have a tight mone y situation there are prob­ lems that occur ini tially where there's a little rati onali­ zation, a litt le shaking out. The longer that kind of a policy is in place, people stop purchasing, they pull back.

The people who were in the ini tial round of tight mone y and econo mic decline, the people who go un der are usually the ones that are poor mana ger s and I supp ose that we can say there's always some healthy cycling of busi nesses starting up and busi­ nesses going in to bankr uptcy. No t every person who goes into busine ss is going to make it and the system is desig ned so that movement in and out can be accomplis hed without people losing all their personal assets and giving them some chance to start again.

What we are exper iencing now is the cumula tive effect of a tight money -high interest rate policy; what we're exper iencing now is incr easing numb ers of compan ies who have been well mana ged for years and years who are suffering because they have in ven­ tory which the producer s have pushed to them, if you like, and which the consu me rs are not able to pur­ chase. We're getting the cumu lative effects of a reces­ sion tha t are very cruel in deed and a provincial gov­ ernment does not have the economic levers to do everything that is needed .

I submit that a govern ment which is willin g to do what is with in its capacity is a govern ment that is acting hu manely and responsibly. I don't claim perfection, but I clai m a very strong concerted sinc ere effort to build and to do what we can and to not rest until we've explored every possible means of weathering this difficult economic time and building a better time for Man itoba in the weeks and months to come. I sup pose you could say politi cal literatur e tends to get written in a simpl istic form and that's probably true. These problems that we are dealing with are very comple x.

The im portant thing, I think, is the under ly­ ing assump tions you make about the system, the goals you have and the vigor and sinc erit y with which you'r e willing to work at put ting those ide as and phi­ losophies into practice. I submit that the interpreta­ tion we have of the economic syste m; why it's got problems; what the natur e of those problems are and the kind of solutions that we're willin g to introduce are the best that can be done, giv en the circums tances of today. MR. MERCIER: Mr .

Chairman, the Min ister is refer­ ring to the fact that a provincial govern ment does not have the eco nomic levers, etc. that they are depen­ dent on Federal Gov ernment policies, etc. without answ ering the specific qu estion. Considering all of the factors that she raises, would she be honest enoug h to admit that a bare state ment that we can provide int erest rate relief and an economic climate to ensur e that small busi ness stays in busine ss, this govern ment and the Premier of this govern ment can­ not gu arantee that?

She's ad mi tt ing that then, by virtue of her previous statement, that a provin cial government does not have the autho rity or the power or the fi nancial resou rces to do that, is she not? 1534 MRS. SMITH: Mr . Chai rperson, we are saying that between ina ction and comple te success there is a very wide range and that we are proud of the record of achie vement of what we have done so far.

We can not turn the thing around completely, but there are ma ny people who struggled, I sup pose, to create a better world and they will often say, it's not where you arrive at but it's the spirit with which you travel the road. It's your will ing ness to try, you r willingn ess to care enough and not to sacrifice the weaker or the mo re vul nerable mem bers of the com mun ity. I think the programs we've put in, we've tried to deal with the people who are most vul nerable in the sit ua­ tion because we feel they have fewer other options.

At the same time, we are trying to find the ways by put­ ting and mai ntai ning mo ney in the pockets of people by not cut ting way back on all our social services or on our public investment in construc tion; we're trying to gener ate the economic activit y in a percolato r-up fasion, if you like, so that as much primin g of the

Thursday, 15 April, 1982 pump as can be mai ntai ned here in Man itoba as pos­ sible is in fact done. If the condemna tion is that we have not achieved perfection, we're gui lty of not achieving perfection, all of us are, but I think the will to do what we can and to be inv entive and creative and care and keep working at it is a record that I am proud of and I kno w my col leagues are as well. MR. MERCIER: Mr . Chairman, I want a simp le answer to this qu estion.

This was an im portant election doc­ um ent; this was an im portant promis e to the people of Man itoba, the people in small busi nesses, a gua ran­ tee that they would stay in busine ss: all small busi ness would stay in busine ss und er an NOP govern ment and we've seen what has happened so far; that prom­ ise hasn't been fulfil led, and I want the Min ister to admit that a provincial government cannot guar ant ee that type of a promis e. MRS. SMITH: Mr . Chai rperson, a provincial govern­ ment cannot do all things for all people at all time s, but it can do a lot.

I think we have provided the kind of program where the wmst hit small busine sses can get some assistance. They can get some management consu ltation. We can not make them avail thems elves of that; in recent days the bankrup tcies that have been occu rring. Many of them preferred to go through their bankru ptcy proceed ing in private, in a confidential man ner. It would be un wise really of a govern ment to intrude if they did not ask for assistance. There is a variety of aids availab le; there are gaps.

The Interest Rate Relie f program can assist the smaller groups, 80 percent in numb er actually of smal l busine sses in the provi nce, if the int erest rate is the main sour ce of their di fficu lty. They can avail thems elves of the consu ltation help which should en­ able some of them to manage better in their dealing with the crisis. The consu ltation can also enable us to put them in touch with some of the ban king institu­ tions, some of the federal programs which can assist them.

It's a step one while we put in process the plan for a longe r-term supp ort prog ram, but in the long run small busi ness's best secu rity is going to come from there be ing a high level of emplo yment and mone y circu lating here in the provi nce, not cutbacks but mai ntai ning a healthy level of activit y and a willi ng­ ness, I gue ss, for the mone y end of thi ngs to be handle d in such a way that the bur den is no t left entir ely on the poorer groups of people, that there is some recog nition that when tou gh time s hit, as any fam ily, or at least most fam ilies, will deal with it; they'll all tig hten their belts and they won't do it at the expense of the smalle st or the weakest or the least vocal.

Ther e's a variety of ways that the storm can be ridden through, but I think the natur e of the economic storm that we're weathering now is much more than jus t a provincial storm; it's a world-wide economic recession, but it's also a crisis in the struc tur e of the world mone y and tr ading systems of the Canad ian economic system.

If election brochures perm itted a full economic analysis of global economic relation­ ships, some of these su btleties could be put in, but I submit that when a govern ment such as ours puts in place, as quickly as is feasib le, the em ergency pro­ grams, and then starts planning and building the longe r-term programs, that is a sou nd record and a responsible way to deal with the cu rrent economic woes. MR. CHAIRMAN: The Memb er for St. No rbert. MR. MERCIER : Mr . Chair man, the Min ister would admit then that she canno t gu arantee an economic clima te to ensur e tha t small busi ness stays in busi ness? MRS.

SMITH: Mr . Chai rperson, the busine ss itself has to do part of the work. We can assist with man­ agement helps, we can provide some of the circula ­ tion of mon ies, if you like, that will provide a demand for small busine ss. We can gradually build the better, toug her, more balanc ed economy in the provin ce that will increase the opportunit y and secu rity in the years ahead, but there is a transitional stage that has to be gone through, and that is what we are going through now. MR. MERCIER : Mr .

Chair man, I don't kno w how long the Min ister can keep it up, but she's giving all the reasons why she should answer the que stion in the affi rmative. And perhaps if she would get on to that, in view of these most recent reasons, would she ag ree that she canno t provide an ec onomic clima te to ensur e that small busi ness stays in busi ness? MRS.

SMITH: I suspect that the honour able memb er is trying to phrase his qu estion in a black-white way, because he think s that there are black.-white answers but, you know, the problem is not that simple a prob­ lem, and I have gi ven you as honest an answer as I can. MR. MERCIER : I assume then, from the ans wers of the Min ister, that she is agreeing that she, as Minis ter in this depar tment, canno t gu arantee an economic clima te to ensur e that small busine ss stays in busi ness? MRS. SMITH: Mr .

Chai rperson, you know there's a way of read ing that takes a very literal, lim ited int er­ pretation, or un derstands the spir it of a stat ement, and I submit that the mem ber is reading that in the most literal, narrow way he can. I have said that in a transition from one condition to another that a 10 0 percent success is not possible. It take s time to build the conditions where small busi­ ness stands a much high er probabi ltity of staying vital and alive, and that's what we claim to do and that's what we are work ing at. MR. MERCIER : Mr.

Chairman, I than k the Min ister for finally answering that qu estion in the affirma tive. MR. CHAIRMAN: The Member for Stur geon Creek. 15 35 MR. JOHNSTON: Mr . Chairman, I am no t going to be long beca use, as the Min ister said, tha t once more around the mul berry bush, I intend tomo rrow to fol­ low up on some of the state ment s that have been made tonight. The Min ister would n't agree that the state ment was

Thursday, 15 April, 19 82 false and I did -(I nterjection)- Well, that it can't be done.

I would only say about the statement, and I don't relate it to the Min ister; I feel rather bad for her and some of the mem bers of the NDP party that they have to defend, and I'm sure that the mem bers would ag ree and the Mi nis ter would ag ree, with all due respect, it is a stupid statement from the point of view that passing law that cannot be carried out, pa ssing regul ations, or putting up roadblocks, or governing people, when you kn ow it can't be done, is probably the worst type of legislation that anybody can possi­ bly do. So from that point of view, the statement is stupid.

From the other point of view, it was made, and it's an insinc ere statement which mi slead the people of the Province of Manit oba. My colleague was bas ically not tal king about what you are doing now; I think you would agr ee that he was ask ing you that, when you wrote that statement, could you do it; and it can't be done.

The Mini ster has referred to the economy that they took over in the Province of Mani toba, and nobody is going to say it was perfect, because we don't make those kind of statements, but I can tell you that your own prospectus said man ufacturing was up consid­ erably, every type of in dustry that we were working on, paper, food, machi nery, clothing, all of them li sted in your prospectus, was up in the Province of Mani­ toba and moving up from 19 77.

And when the 19 81 prelimi nary figur e from the Conference Board of Canada, at the present tim e, says that in 19 81 Mani­ toba would have a real domestic product of 3.3, Can­ ada was 2. 7, and Man itoba would be the thir d highest in Canada behind only Alberta and Saskatchewan. So would the Min ister agree that the economy, although not being perfect because we don't make ir responsible statements, that since that time we have seen a compl ete turnaround in four months?

And you will put it down probably to the national and interna­ tiona l situations within the country, but for it to do that, to make the change s that have been made in four months , maybe the reason why people are qu ietly going out of busi ness is because they don't really see that invest ment in Man itoba is going to be that good, especially if the governm ent is going to not move ahead with the projects that they have avai lable to them; and also the atmospher e that possibly the gov­ ernment is planning to go into more busine sses; and also, Mr .

Chairman, that the govern ment may have some sort of prog ram that they'r e working on that will maintain or hold profits within this province. So would the Mi nister agr ee that the economy wasn't all that bad when it was taken over, and it has dropped drastically in the last four months? MR S. SMITH: Wel l, Mr . Chai rperson, I guess we can sit here and read statistics backward and forward all nigh t. MR. JOHNS TON: They're your statistics. MRS.

SMITH: Our assess ment of the economy under our predecessors was that there were gains in some areas, and had there been a match ing public invest­ ment main taining the services and the investment in social assets, that the total package would have been sound, but we maintain it was an unbalan ced type of program. It's not that what was bei ng done was all wrong, it's that there were some impor tant thin gs that were being left out. What we want to be able to do now is, through careful analysis and planning, work out where the public money invested will get the most benefit for Man itobans.

We are not runnin g around buying up all sorts of busine sses and discourag ing investors who are coming in. I think we're behaving in a thoughtful and prudent way.

We're giving open informa tion to busine sses that come and talk to us and being very clear that the kin d of change s we want to see; some better em ployment rate with the people who have been tra ditionally dis advantaged; some gr adual im provement in minimum wage; some better access for the people who have had inadequate housing and so on to those services; tha t a careful development on all these lines, people with money in their pockets who are going to spend them for necessities that these very small busine sses were talkin g about, that the total package is the best that can be done in the current situation.

I haven't heard us legislating busi nesses to stay in or stay out of busi ness. We have looke d at busine ss as an economic activity that is encounteri ng speci al dif­ ficu lties. We' re offering emergency help for one type of dif ficu lty such as high inter est rate which is very much beyond the control of the small busine ss. At the same time, we're offeri ng the counselling help to impr ove the management practices and skills of small busi nesses because that is within their capacity to im prove and it's within our capacity to assist them in it.

I don't think there has been any legislation such as the honourable member describes, so I guess I just disassociate myself from that opinion. Conference board figur es have been adjusted down. I don't kn ow the specific compon ents of the earlier predictions . One thing that I would like to see is that we don't just work on agg regate figur es of percen­ tages and so on, but get somewhat more of a break­ down so we see which people in the society, which Mani tobans, are getting the advantage of the devel­ opment and which are often bei ng left out.

We choose to concern ourselves with many of the people who have been left out and I think we do it, not just because we have soft hearts or are more moral or anything lik e that, but I think we honestly think that in the long run a society that doesn't pay attention and take due regard for all its member s will end up paying a dreadful price in all these social breakdown figur es. 15 36 I would rather put some extra effort into high er wages, better job training, im proved housing, support services now rather than put money into prisons and psyc hiatric faci li ties and all that later on and I submit that this is a sensible and balanc ed approach to both social and economic development.

I think it will stand the test of time and get us thr ough these really very diff icult economic time s in a reasonably healthy condition. MR. CHAIR MAN: The Mem ber for Stu rgeon Creek. MR. JO HN STON: Mr. Chair man, I really kind of take exception to the att itude of the Min ister and the gov­ ernment that not much was done. The pro forma that

Thursday, 15 April, 1982 has been brought up in the Hou se and tabled in the Ho use many ti mes which is the pro forma of this govern ment to borrow mone y, states that Man itoba was doing qu ite well, in fact very well, for the ti mes that we were in, in 19 80 and 81 . The Min ister speaks about grad ual in crease of the minimum wage; it was grad ually in creased over the last four years. If the Min ister would speak to the Min ister of Housing, she would find that there was more public housing built in the Cit y of Winnip eg in the last four year s than ther e was in the previous eight, and that is fact.

She would also find that the public and private investment in Man itoba in 19 80 was 70.9 and the main reason for the public in vestment bei ng down was because there was no Hydr o con­ stru ction which was stopped by the previous govern­ ment, which was an average of about $250 million a year. So, I take exce ption to the fact that this govern­ ment took over and found this province in a drastic state because the figur es don't show it and the figur es presented by the govern ment don't show it. So, Mr .

Chairman, I would really ask that the Mini s­ ter kind of ag ree that tl:le prog rams that she is going forward with is going to be the decision of thei r gov­ ernment and rig htly so, but to be critic al of the pro­ grams that were there previ ously when all of the fig­ ures show that it wasn't that bad, in fact, it was moving forward really well.

The Min ister has in her posses­ sion, I'm su re, and I will ask when I get to the specific department, the work that is bei ng done to put out a statistical pro book of Man itoba in the '80s that can be presented to people that will show them that Mani­ toba is working hard and has been moving forward. If I have any criticisms of her program, it will be maybe on the basis of philosophy or whatever, but the Min ister, I'm sur e, has to ag ree that they did not take over a ship that was sunk. It wasn't even starting to sink. MRS. SMITH: Mr .

Chai rperson, I don't think I referred to the drastic record of our predecessors. I said they were doing some things that were working out well. Our criticism was the lack of balance and the dispr o­ portiona te wei ght that was falling on people who were perhaps the most vuln erable. I think the out -migration figur es are one of the statis tic s that we had great concern with. Perhaps that's a good point to leave it for tonig ht.

I think as we mo ve along through the department programs that we can look forward to some good de bate as to what is the best way to operate each program for the public benefit and I look forward to that process. I haven't assu med my du ties in the department thinking that everyth ing that went on before or in fact finding that everything that went on before was not productive. Many thin gs were first class. Some needed str ength ening, but that's always true of programs.

Ther e are some new ini tiati ves that were not in place which we would like to in itia te and I look forward to the chance to explain those and pres­ ent them in later su bseq uent mee ti ngs of this Comm ittee. I'd like now to propose that Commit tee rise. MR. CHAIRMAN: Commit tee rise SU PPL V -AGRICU LTURE MR. CHAIRMAN, Jerry T. Storie (Flin Flon): The Comm ittee will come to order. We are continuin g with Item No. 7.(d)

(1) Salarie s-pass; 7.(d)

(2) Other Exp enditu res-pass; (d) -pass. 7. (

e) Agricu ltur al Land Util iza tion: 7.(e )(1 ) Salarie s-pass; 7. (e)

(2) Other Expen ditu res-pass; (e) -pass. 7. (

f) Man itoba Agr icultur al Lands Protection Board: 7.(f )

(1) Salaries. The Honour able Memb er for Arthur . MR. JAMES E. DOWNEY (Arthur): Mr . Chairman, the Minis ter has for some tim e now, I wou ld say probably in his four years in Op position, has made certai n com ments that there has to be certain changes made to Farm lands Protect ion Board to further accomplish what his objecti ves are. He's ind icated prior to the November election, that he felt compelle d to bring in some change in The Farm lands Protect ion Act, Mr . Chairman, that he has some major change s.

The basic qu estion I have, is he going to proceed with amend ments to The Farm lands Protect ion Act, and change s to the Board, and what basically does he plan to have the Board do? Wha t new dir ection does he plan to gi ve the Agricultur e Protection Board, or changes to the Act? Is he going to make change s and in what dir ection does he plan to go, Mr . Chairman? MR. CHAIRMAN: The Honour able Min ister. 1537 HON. BILL URUSKI (Interlake): Mr . Chairman, I'm sure the honour able memb er would like me to indi ­ cate what the polic y thrusts of the new govern ment will be in this.

We announc ed that we wou ld be bring­ ing in legislation dealing with Farm lands Protect ion and those, I have to tell the honour able mem ber, they will have to await the tabl ing of those amend ments, whether it will be a new piece of legisla tion or whether there will be amendm ents, the honour able memb er will, of cou rse, have to wait for those changes. MR. DOWN EY: Mr . Chai rman, I asked the Min ister di rectly if he would be introducing either changes or a new Act this year. Is it his intention to do that? Does he intend to introduce changes in this Sess ion of the Leg islatur e, Mr . Chair man? MR.

URUSKI: Mr . Chai rman, it is out intenti on if we can possibly make sur e that all the changes that we're contempla ting are handle d through Cab inet and Caucus and if that's been able to be accomplished, it's my intenti on. MR. DOWNEY: Mr . Chair man, he plans to operate somewha t dif ferent than the Mem ber for Gimli. He is prepared to take some of their positions or some of the dir ection the government goes through Caucus and throu gh Cabi net unlik e what we saw earlier today.

We saw some su rprised looks on faces on the govern me nt's side with the in trod uction of the amend ment to the Metric Res olution, Mr . Chai rman. That's somewha t agai n a different dir ection for all the mem bers. I would have thoug ht, Mr . Chairman, that the Min is­ ter would have been able to gi ve us some idea on this at this time. After all, we are voting fund s for the

Thursday, 15 April, 19 82 board . Has he made changes - yes, he has made changes to the Farmlands - he has fired the board and has made new appoi ntme nts to that board, Mr . Chairman, the same as he has done on some of the other boards. Well, Mr . Chairman, if the Min ister is not going to tell us the dir ection that he is going or has any plans, then I am somewha t disappoint ed that he isn't going to. He still hasn't confi rmed whether he is moving on the legi slation this year. I wou ld think that what is in place is very adeq uate.

We made changes to it as a government and feel that the effective control of the land is placed in the hands of the people of this prov­ ince without making any changes. He is not able or not going to disclose tonight what his plans are, so it's very di fficult then to de bate any further on this partic ­ ular item. MR. URUSKI: Mr .

Chairman, it appears that the hon­ our able memb er doesn't recall the tone and the thrust of our debates when he brou ght in amend ment s in the last Sessi on, in terms of where we indic ated that it was more wi ndow dressing than actual su bstance that the amend men ts they brought in the la st Session would have and that's basically what has occurred. They are still, in terms of allowing Cana dian corporations to purchase farm land, the legisla tion is still enough loopholes that almo st anyone can get arou nd the leg­ islation.

I ju st recall that for the honour able mem ber, but he will have to wait the legislation when we bri ng it in. MR. CHAIRMAN: The Mem ber for Minne dosa. MR. DAVID R. (Dave) BLAKE (Minnedosa): Mr . Chairman, jus t while we're on this item, I wonder if the Min ister could inform the House and the mem ber s, has he had any representa tion from municip alities or farm group s in conne ction with the purchases of fairly large tracts of land by the Hu tterian Brethren in Man itoba. MR. URUSKI: Mr . Chai rman, any direct representa­ tions, no.

There is always comm ents that one hears about in terms of an area when a colony deci des to split off. One has to realize that when one ca lculates the numb er of acres per fami ly, a Hu tterite colony, in its share of land per fam ily, is one of the smalle st farm ing un its found anywher e in this provinc e or anywher e in this continent. MR. BLAKE: That, Mr . Chairman, could be in fact true, there's no que stion about that. Sur e that could be true, no que stion about it because there are a large numb er of fam ilies suppor ted on the colonie s.

I'm ju st wonderi ng, that land of cou rse, once it is purchased into that type of an operation, never comes back onto the ma rket or very very seldom come s back onto the ma rket,

whereas land purchased by other investors, whether they be other Cana dians or not, that land will eventually come back on the ma rket and be pur­ chased by other smal ler, farmer operators. That's happened in the past and it will happen agai n in the futur e but I'm afraid that's not the case with the lands that I was referring to earlier. MR. URUSKI: I'm not sur e what the honour able memb er is drivi ng at. Ma ybe he wis hes to elabor ate on his comm ents. MR.

BLAKE: I merely asked the Minis ter if he'd had representa tion from any mun icipal groups or indi vid­ uals sugge sting that there maybe should be some gentleman' s agreement, such as was in effect in the past I under stand, that the colonie s wou ld not be any more than so many mi les apart, it wou ld appear, over the years that they are now virtually mer ging toge ther. I bring this up, Mr . Chairman, because there's jus t been large tracts of land bought in my particular area and it's caused great concern with the neighb our s there, because they gradually become squ eezed out.

They buy up land around and it squ eezes the farmer s that are left to the point where they have to sell and ju st move out of the way. MR. URUSKI: Mr . Chairman, my com ments in that respect still stand in terms of what I've gi ven the hon­ ourable mem ber, noth ing direct, any direct represen­ tation. There have been comme nts from time to time I'm sur e to whic hever Min ister has been in office.

But as far as I'm concerned my information is that in terms of the establish ment of a fam ily farm unit on the basis of a colony, the numb ers of fam ilies that are sup­ ported on the tract of land is probably the smalle st acreage per family anywher e in this province. MR. CHAIRMAN: The Mem ber for Min nedosa. MR. BLAKE: Well, that might be a good analogy, Mr . Chairman, but if one of those famil ies decide s to leave that particular operation there's no way that they're allowed to take any assets with them, so it can't really be regarded as a smal l fam ily farm .

If one of those famil y un its decide to leave the colony there's no way they can take any assets with them so it can't really be consider ed a small family -farm uni t. 15 38 MR. URUSKI: Mr. Chairman, I'm not p repared to get into the in ternal argu me nts of how colon ies work. We know what history has, in terms of court cases and the like, that have been involved; I'm not prepared to get drawn into any in ternal matters of the Hu tt erian Brethren amongs t thems elves. MR. CHAIRMAN: The Honour able Member for Mo rris. MR. CLAYTON MANNES (Morris): Thank you, Mr . Chairman.

I'd like to ask the Minis ter if he could expand somewha t on some of the shortcomin gs, as he sees it, with the present legisla tions on land protec­ tion. And I don't want an all-encompassing philoso­ phical speech. I'd like some specific exam ples as to what he feels, or where he feels regulations are being circu mvented . MR. URUSKI: Mr .

Chairman, clearly the allowance of Cana dian corporations to pu rchase farm land has allowed the establish ment of dummy corporations within this countr y and has allowed that leg islation to be circu mvented , because you can easily allow the setting-up of paper and move paper around but you really can't move people. And when you allow the

Thursday, 15 April, 19 82 establish ment of, allow the legisla tion to perm it land purchases by corporations, thereby you allow anyone to pur chase land, even though you may have exclu­ sions of foreign ers, it is not very hard for legal people. And I have to ad mit this, that's basically the major flaw in the leg islation. No piece of legislation un less you made it so very stri ngent that almo st no one could purchase farm land will be able to close all the sort of purchases that one mi ght consider less desirable or in terms of owner ship of land in the province.

There will always be certain - not loopholes - certain grey areas in any legislation; even the former legislation we had brou ght in was not 10 0-percent proof; there is no legisla tion that anyone can bring in that will be 10 0- percent proof. However, one can br ing in legisla tion to cur tail to a far greater deg ree the nonr esident absentee owner ship to a greater degr ee than the present legislation does. MR. CHAIRMAN: The Memb er for Pem bina. MR. DONALD ORCHARD (Pembina): Mr .

Chairman, this government has prjded itself on consult ation with the groups that are affected by any policy and pro­ gram and legisla tion they're going to bring out. They prided thems elves on their consu ltation with the beef producers, and we now see some of the resu lts of that exte nsive di scussion they had with the beef produc ­ ers and jus t how well they heeded the advice.

My qu estion to the Min ister is, when you 're in the process of drafting this legis lation and we listened very atte n­ tively to all of the complai nts in all of the areas that the now Min ister of Agricu ltur e was extr emely critical about in our leg islation; my qu estion is, will the pro­ posed legis lation , the draft legisla tion, will it be put out for com ment to the various interested parties in the farm communi ty, the Manit oba Farm Bur eau and other group s representing the farm com muni ty, to assur e that this legislation has some semblance of concu rrence in rural Man itoba and in deed in Mani­ toba and not be the same kin d of hollow consu ltation that he un dertook in the beef program?

MR. UR USKI : Mr . Chairman, the memb er well kn ows that representat ions have been made by the Farm Bur eau to the govern ment deal ing with farm lands protect ion legisla tion when they were in office. They have made certa in comme nts to us now and they will have the opportun ity as anyone in Man itoba will have when the legislation is brought before this Leg islatur e. MR. ORCHARD: So, in other words the Min ister is saying that his consu ltation program is already dropped. The prom ise to talk to Manit obans, the promis e to consult Man itobans is al ready gone; he's not going to talk to anybody.

He's going to let those group s make their presentat ions known at Law Amend ment s and not have any in put in to the legislati on. MR. URUS KI: Mr . Chairman, it appears that the memb er can't hear very wel l. He would be the first to stand up in this Hou se, in this Chamb er to criticize me if a draft piece of legislation was released to groups in the provi nce, prior to bei ng table d in this Ho use. He wou ld be the first to get up on his hau nches and say "this Min ister has circumv ented the rules of this Hous e and has taken legislation and giv en it to group s outside the Chamb er." Mr .

Chairman, I've been around here long enough and obviously for some mem bers -(I nterject ion)- no, no, we're ju st beginning, Mr. Chairman, we're ju st beginni ng. There have been representa tions made to my self by other groups, by indi viduals, by people within our party, Mr . Chairman, that we made certain state­ ments. The mem bers well kno w what those state­ ments are and we intend to proceed on that basis and the mem bers will know what the legislation will be and there will be ample opportun ity to discuss it in Commit tee. MR. CHAIRMAN: The Honour able Mem ber for Ni akwa. MR.

ABE KOVNATS (Niakwa): To the Honour able Min ister, it's really with ag ricultur al Crown lands - and I'll wait until Min ister's Salar ies if he prefers - I ju st really wanted to check on one item under the Crown Lands Appeal Board. Now, one of the people that was jus t appoi nted was a Mr s. Mo nty Patrick. Cou ld the Honour able Min ister gi ve me any ide a as to Mr s. Patrick's qual ifications, her backgr ound, things of that natur e; any kind of a backg rou nd that really ma kes her a fit and proper person to be a member of that board? 15 39 MR. URUSK I: Mr . Chairman, Mr s.

Patrick is a long­ time resident and a farm person from the south east corner of the provinc e. I bel ieve the honour able memb er has property in that area, probably kno ws her maybe as well if not better than I. Her name was recommend ed to the government in respect to her rural backg rou nd and she does reside in an area where ther e is a lot of Cr own land and kno ws and has experience and is a farm person. They farm in li vestock in the Pine y area, Mr . Chairman, and amongs t other people she was recom mended, I accepted those recomm enda tions and she has been put on the board . MR.

KOVNATS: To the Honour able Min ister, I go back an awful long way with Mr s. Patrick, when she was a Mar y Mon ty, when she was sing le. We went to school toge ther, and I do kno w her backgr ound; and kno wing her background and she is a friend, and I'm not here to make fun of her, but she really has no qualific ations in this regard at all, because she lives in a farm com muni ty seems to be the only criteria in why she was picked. The thin g that is upsetting to me, Mr . Min ister, - (I nterjec tion)- Oh, I love women; I would n't sta nd up here and make fun of them at all, I love them all.

But the thing that is very disturbing to me is that the previous memb er of the Board, a fellow by the name of Bill Tkach uk who also is a personal friend and very very qu alifie d and in that same area in Menisino, was replaced by somebody - and I'm not going to call Mr s. Patrick in com petent because she's not in comp e­ tent - but she really knows noth ing about Crown lands or any of the backgr ound that she req ui res to be on this Board . That's the disturbing part, Mr . Minis ter, that this party replaces somebody who is really

Thursday, 15 April, 19 82 almo st, what I would consid er, an exp ert on Crown lands and the political affiliation really should have . MR. CHAIRMAN: Or der please. The Honour able Min ister on a Point of Or der. MR. URUSKI: I believe that the honour able memb er really should know and should meet again - maybe he kne w Mr s. Patrick as he says, many years ago. I bel ieve she has every bit of qualific ation in terms of serving on that Board , Mr . Chairman. I object to those state ments. MR. CHAIRMAN: The Honour able Memb er for Nia kwa. MR.

KOVNATS: Well, to the Honour able Min ister, he can certainly object and I unde rstand him objecting, but he kno ws not of what he objects. I have kn own the woman over the years. I have had some conta ct with her ju st in the last short time. I was in Pi ney curling in a bonspiel and I had occasion to be associated with some very close fam ily memb ers of this same Mr s. Pat rick, who told me straight to my face, wel l, it was Mrs. Patrick - and I'm not going to tell you the rela­ tionship because it could cause some fam ily prob­ lems -w hy was Mr s. Patrick put onto this Board, she knows nothing about it?

And why was Bill Tkach uk taken off? If the Honour able Min ister tells me it was a strai ght politic al ploy, I'm ready to accept it, and that's really all I want ed to hear from the Honour able Minis ter, that it's a political appointment, that the abil ities of these parties were not taken in to conside ration, that's all I want to hear. MR. URUSKI: I am not about to start deba ting the qu alifications of one person versus another, Mr . Chairman.

The fact of the matter is, we have had people recomm ende d to us, we feel that they will do an excel lent job, as I'm sur e the people who are on the Boar d when you were in office were doing an excel­ lent job for you. Obviously a Min ister, in terms of appointments to Board, wants to bring on people to the Board who he hopes will tr y and reflect more closely the views of govern ment, that's always been a fact of life and I said that before, and nothing I am going to say tonight will change that. But specifically, Mr.

Chair man, it seems I sort of get the impr ession that there is a su btlety here bei ng sugg ested that because Mr s. Patrick happens to be a woman, and what do women kno w about farming and farm land, is really get ting to the he art of the issue, and because she is a woman she doesn't know anything about farm land, and that's the kind of sugge stion that I sense. Ma ybe I'm wrong, maybe the honour able memb er isn't sugge sting ii, but he'll cer­ tai nly correct me if my im press ion is wron g. -(l nterjection)- Well, Mr .

Chairman, if that's what is not bei ng sug­ gest ed, the mem ber will tel l me and I certainly will accept it, but I don't accept that kind of a criticism that someone doesn't kno w any thing. Mr . Chairman, I don't accept that comment at all and I don't take that lig htly, especially in light of the person who is on the Board happens to be the only woman who is on this Board. MR. KOVNATS: I have to arise to respond to the Min ­ ister's last remarks where he makes remarks that I am anti-anything that as far as a woman being on the Board , and it leads to some further di scussion, and I would like to dis cuss it.

When I go back a little ways when - and this is all concern ing whether a woman should be on the Board , or a black should be on the Board, or a Native should be on the Board -y ou started it, Mr. Min ister, and I've got to bri ng it up because you are not going to make me back down because I am not ant i-woman, I am not anti-coloured, I am not anti-Native, I am not anti-Jewish, or any of this. As a matter of fact, some of my best friends are Je ws.

But I would jus t like to bring to the Min ister's atten­ tion that - I heard a remark, I think it was the Honour ­ able Attorney -General, when he made a remark a little earlier in the week about that was a low blow - and that was a low blow. It really wasn't deserving of the Minis ter to make that remark about me making that remark, it was a low blow. I stand here and I tell the Min ister right to his face that it was a low blow, and I don't appreciate it. But anyway, the thing that I was trying to estab lish is that I do know both of these parties and th ey're both from the same area.

One I know to be abso lutely qu alified because I have