Manitoba Committee Hansard — Legislative Affairs Committee, Sitting 6 (30th Legislature, 1st Session)

30-1-la6

Manitoba — Debates (Hansard)

LAW AMENDMENTS COMMITTEE 8:0 0 o' clock, Monday, June 10, 197 4 Ch airman: Mr. D. James Walding. 171 MR. CH AIRMAN: Order please. The Committee will come to order. Bills before the Committee for consideration this evening are as follow s: No. 71 -

An Act to amend The Con sumer Protection Act. No. 73 - The Buildings and Mobile Homes Act. No. 84 - The Statute Law Amen dment Act. No. 86 -

An Act to amend The Highway Traffic Act. No. 87 -

An Act to amend the Animal Husbandry Act. No. 90 - The Human Rights Act. If there are any members of the public wishing to make representation to the Co mmittee, would you come up to the microp hone and give your name and the bill you wish to speak to ? MR. HADDAD: Sherrold Haddad, the Manitoba Motor Dealers Asso ciati on, and we wish to speak on Bill 71. MR. CH AIRMAN: Thank you. MR. TERNETTE: Nick Ternette and I wish to speak on Bill 90, The Human Rights Act. MR. CH AIRMAN: Thank you. MR.

KENT: My name is Douglas Kent and I'm the Secretary of the Ca nadian Life In surance Associ ation and I wish to speak to Bill 71. MR. CH AIRMAN: Thank you. DR. PENNER: I'm Dr. Don Penner. I wish to speak on behalf of Bill 86, representing the Manitoba Medical As sociation. MR. CH AIRMAN: Thank you. MR. ROBERTON: Brian Roberton. I would like to speak on Bill 86 representing the general motorcycle public of Manitoba. MR. CH AIRMAN: Thank you. MR. GRAY: Robert Gray. I wish to speak on Bill 86. MR. CH AIRMAN: What was the last name please ? MR. GRAY: Gray. MR. CH AIRMAN: Gray? MR. GRAY: Yes. MR.

THOM PSON: Ralph Thompson. I'd like to speak on Bill 73, on behalf of the Manitoba Cons truction Co uncil. MR. CH AIRMAN: That was Mr. Thompson ? MR. THOMPSON: Thompson. MR. CH AIRMAN: Thank you. Anyone else present who wishes to address the committee this evening ? MR. ANHANG: Mr. Chairman, A be Anhang, w ish ing to speak on Bill 71. MR. CH AIRMAN: Would you spell your last name, please ? MR. ANHANG: A-N-H-A-N-G. MR. CH AIRMAN: Thank you. MR. BRAY: My name is Bray, B-R-A -Y. I'm here to speak to Bill 71. BILL 71 MR. CHAIRMAN: Thank you.

If there is no one else wishing to make presentation to the committee this evening, Mr. Haddad, would you come forward please? Order please. I've just been advised that there is one person from Toronto who has come down to address the Committee and would like to get away. Is it the wish of the Com mittee to hear Mr. Bray first ? Mr. Bray, would you come forward please ? MR. BRAY: Thank you, Mr. Chairman and members of the committee. Let me intro - duce myself as Bray. My first name is Carne ( ?) • MR. CHAIRMAN: You have copies of your brief, Mr. Bray? MR. BRAY: I'm sorry, Sir, I'll be speaking from notes. MR.

CH AIRMAN: Very good. Proceed please. MR. BRAY: I'm the Executive Vice-Presi dent of the Federated Council of Sales Finance Co mpanies . As qualifications for speaking to you I guess I'd generally be known by some

172 BILL 71 June 10, 1974 (MR. BRAY cont'd) ..• people as an economist. I'd prefer it that I was known as a student of business. That' s because in these t imes an economist means too much to some people and too little to others, so my major qualification is that I'm here as Executive Vice-President of the Federated Council of Sales Finance Companies. That organization is the national trade association of sales finance companies doing busi ness in Canada. It has 23 members.

Of the 23 companies, 15 of them are national companies doing business in the province of Manitoba and eight of them would be regional companie s, generally outside the province of Manitoba. Of the 15 national companies, it is es timated that we would have outstanding at any point in time, invested in Manitoba businesses, something on the order of 20 0 to 30 0 million dollars. Because debts are retired, this involves a rolling over of our debt portfolio occasioning something on the order of half a billion dollars or more, to be invested and reinvested annually in businesses in the province.

We do sincerely appr e ciate the opportunity to address you and we unders tand the pressure of time and, perhaps more urgently, your pressure, your need to resp ond to consumer concerns . Therefore, to save time, I recommen d that

Section 4 of Bill 71 in its entiret y be deleted from the bill, and that

Section 5 paragraph 1, represented as 25. 1(1) entitled Notification of Ass ignment, be deleted from the bill. If you need more than my conclusions, allow me to give you the reasons for these conclusions. With respect to

Section 4, I respectfu lly submit that this

section belongs in the Insurance Act. This is not to say that some of the points contained within this

section are irrele vant or impractical, but rather, if they are desired, perhaps they should be attached to the Insurance Act as opposed to the Consumer Protection Act. Our concern here is that problems of in surance and the difficulties of the insurance industry, of which I am not completel y familiar, should perhaps not be split between jurisdi ctions but should be held in the office of the Super intendent of Insurance when he is used to and knowledgeable of the problems of insuran ce. I suggest that there 's evidence for misunder standing in the drafting of the bill to confirm that consideration should be given to the suggestion. For instance, Sir, going to

Section 22. 1 (1) subsection (c), there' s reference made there that the insurer should not pay, directly or indirec tly, to the credit grantor or his assignees remuneration in any form or manner whatso ever in excess of five percent of the premium charged to the debtor. On January 2 of this year, the Superintendent of Insurance for Manitoba uttered guidelines to the insurance industry of Canada doing business in Manitoba.

Section 9 of those guidelines reads in full: "The premium collection fee provided by the Insurance Act may be paid to the credit or by the in surer if such function is fully carried out by the creditor at his expense.

In addition to the premium collection expense provided for above, the contract may provide that the insurer may reimburse the creditor for such administration expenses provided such expenses are rea sonable in relation to the services provided and are not calculated as a percentage of or otherwise related to the premium for the insurance ." Now, we're faced with a situation where inconsistent suggestions are being proposed to you in the sense that the Superintendent of Insurance has attended to the problem with the utterance of these guidelines on January 2, and then a different proposal is being made via the amendment to The Consumer Protection Act.

May I refer you to

Section 22. 1(3). "Where a debtor" - and I'm reading now from Bill 71 - "Where a debtor is not required by law to obtain insurance" - I want to draw to your at tention here that it does not say what kind of insurance so I guess we should read this to be any kind of insurance - "Where a debtor is not required by law to obtain insurance in connection with an agreement between him and a credit grantor ." Let's examine that for the moment. May I ask, Mr. Chairman, is there a law in Manitoba that requires insurance between a credit grantor and a debtor under any circums tances ?

Perhaps there is a law which says if you 'r e to drive a motor vehicle you have to be covered by insurance, but that doesn' t pertain to the law to obtain insura nce in connection with an agreement between him and the credit grantor.

And reading on: ". . • and to which this Act applies, the credit grantor shall not require the debtor to obtain, or in any way suggest or imply that the debtor is required to obtain, in surance, in connection with the agreement unless no premium or charge, or additional finance charges are charged to the debtor in respect of the insurance." You'll notice that it does not indicate to whom the charge should be paid, so that as the wording now stands if a person is going to put a mortgage, let us say, on a mobile home, it' s entirely consistent with this credit granting function that he would require property damage or

June 10, 1974 BILL 71 173 (MR. BRAY cont'd) • fiscal damage insurance on that property, since under

Section 56 of the Act, the Consumer Protection Act, he can only take as security for the indebtedness the

article being purchased under the conditional sale contract. That• s reasonable, then, that prudent credit granting and protection of the security would require that the credit grantor require insurance, whether issued by himself or by a third party, but these contingencies of the third party are not contained within the bill within this section, rather it's if the credit grantor shall require insurance. I refer you, please, to

Section 22. 1( 7): If a credit grantor should require insurance, then it follows that

Section 22.1(7) would apply. That would be that if he makes a specific charge for the insurance the person could be "found guilty of contravening or failing to comply with any provision of this section", it which case it goes on with: "the judge or magistrate before whom he is tried shall, " and there is no discretion in the word "shall", "shall ... order the person to pay to each debtor in respect of whom the offence relates the whole of any premium or other charge collected from the debtor" it doesn't say by whom - "in respect of the insurance." It doesn't say by what kind of insurance. I suggest to you, Mr.

Chairman, that the word "each" in the fourth line be removed, and substituted therefor would be the word "the". And the words "in respect of whom the offence relates" - those words should be deleted, such as to cause the whole of the

section to read: Where a person is found guilty of contravening or failing to comply with any provision of this section, the judge or magistrate before whom he is tried shall, in addition to imposing a penalty as provided in

Section 94, order the person to pay the debtor the whole of any premium or other charge collected from the debtor in respect of the insurance. And by making that change, I suggest to you that any allusion to class action under the rather innocent title of Order for Restitution, if you wish to have class action in Manitoba I suggest that you make a class action law, but to sneak it in, I suggest, in the bottom line of this

section perhaps des cribes an unfamiliarity with the topic at hand, namely insurance. Perhaps these reasons, as I've given you, suggest that the recommendation I have made that

Section 4 be deleted from the bill and treated, after study, as an amendment to the Insurance Act, would be much better than splitting the jurisdictions between the Insurance Superintendent and the Bureau of Consumer Protection. If I may go to 25. 1(1). In reference thereto I would like to describe to you a typical sales finance operation. Now this is important, gentlemen, I submit to you, because as I stand before you, as a person by the name of Bray, I have not really got long ears, I am not a donkey, and as a representative of finance companies I am not a devil. MR. BILTON: You've got long hair, though. MR.

BRAY: Yes, I covered them up. I suggest to you that sales financing is not under stood, and as briefly and as concisely as possible I want to go through what it means. First of all, I represent finance companies. There are two kinds of finance companies: those that lend cash to consumers, and those that render a financial service to dealers who extend credit. Those that lend cash to consumers are called consumer loan companies; those that service dealers who extend credit to customers are called sales finance companies. The organization I represent is composed of the major sales finance companies in Canada.

In Australia or Britain they would be called me rchant banks or hire purchase companies; in the United States they're called industrial banks and acceptance companies; in Canada they're called sales finance companies, not just the generic term "finance company". Retailers of many types of goods typically sell goods on credit because customers want to buy goods on credit. Most, if not all, retailers would be perfectly happy if everybody paid cash for the goods they want.

The only exception I can think of to this is car rental agencies where for a day's rental you should not expect the company to hand over the keys to the car and say, "I'll see you when you return", because the return might be a little bit too fast to catch. Everybody else would be perfectly happy to do business on cash. But because people want credit, over the years it has developed that most consumer businesses grant credit to customers . to satisfy customer needs. I'm not trying to tell you that this phenomena is either good or bad. There's no value judgment in this, in my description.

I only wish to say that it's a fact. Therefore, here's how the company fits into this - the sales finance company fits into this. Suppose a man and a wife have selected, let• s say a mobile home or a car or any con sumer durable good; they have first satisfied themselves that that particular stove or mobile

174 BILL 71 June 10, 1974 (MR . BRAY cont'd) .•• home or automobile or recreational vehicle has the features that they want and that the price that they have to pay is satisfactory compared to what they can get else where. But then the credit wrinkle comes in. They not only want the mobile home, or the stove, or the household appliances, or the recreational vehicles, they start to discuss terms with the dealer. They'll usually find that the dealer requires two things, a down payment and an execution of a Conditional Sale contract. The down payment is itself a deterrent to the easy use of credit.

That person has got to have demonstrated that he can save, that he has saved, that he has put aside the appeals to him of mass advertising to spend on this and that, and there's an amount of money that he has accumulated that he's willing to put down as a first pay ment on the purchase he wants to make. I represent, in this respect, that sales financing is without the impulse purchase notion that one might attach to, say, credit card sales. Now about the Conditional Sales Agreement.

As I said, the dealer would be perfectly happy to accept cash, but instead of that he's asked to accept in lieu of cash a promise to pay, a Conditional Sale Contract which, simply put, states that the purchaser agrees to pay payments of a stipulated size, on stipulated dates, for a stipulated number of months in the future. In lieu of cash, the retailer is asked to accept this personal promise to pay. Before he grants the credit, the trust to the customer, he'll want some information, particularly as to how he might expect the customer to perform under that promise to pay.

He asks for credit information which can then be used to check the individual's credit worthiness. It's not done on a blanket basis; it's done on an individual basis. Assuming that the down payment and the credit rating requirements of the dealer are met and that an agreement for the purchase of the goods on credit is reached, then the dealer can do one of three things:

(1) He may elect to hold the Conditional Sale Contract, receive the agreed upon payments, and earn for his business the finance charge represented in the credit contract. No one says he has to sell it but dealers have high inventory costs. They may not have the financial depth to hold all their own Accounts Receivable. Particularly smaller busi nesses are not in the position of the large national chains to do that. So financial institutions are growing to serve those needs. He can take a second alternative.

He can pledge those con tracts or that contract to his bank and accept a loan, which satisfies his need for ready cash, in which case he will incur himself a credit charge and he will earn for himself and his busi ness the difference between the finance charge expressed in the Conditional Sale Contract and the finance charge he has incurred at his bank. Let me stop at this second alternative for a moment and examine 25. 1(1).

In this respect, when he pledges the contract for a loan at his bank, it should be recognized that he will receive such as a gift, premium, or benefit of any kind whatsoever, inasmuch as he will earn the dif ference between the two finance charges, the one at the bank that he pays, the one in the Con ditional Sale Contract that he is being paid. But how do you put that, as this

section would require, with respect to the dollar value? It cannot be pre-computed how long this loan at the bank may run, and if the dealer happens to a windfall he will indeed shorten the term of that loan. You can't determine in advance how much this is in dollars. Now let's go to No. 3. The third alternative is that the dealer would sell to a sales finance company or to a bank, and perhaps to a credit union. In the Province of Quebec, if not in Manitoba, credit unions are very much in the field of discounting Conditional Sale Contracts even on large industrial and commercial equipment. MR.

CHAIRMAN: Order please. MR. BRAY: When this occurs there will be what is known as a dealer reserve set up. The sales finance company will in recognition of the work done and the risk being taken by the dealer hold in reserve a portion of the finance charge earned and paid by the consumer, such as to have those funds available for the dealer as the contracts retire. What has the dealer done to deserve this reserve? 1.

He has made out a Conditional Sale Contract in conformity with the Consumer Protection Act of this province, no mean feat in itself, gentlemen - inasmuch as the penalties for non compliance are rather severe, he's put himself on the line with respect to that Consumer Pro tection Act. Few people in this province I would estimate know that Consumer Protection Act. Few people know it well enough to execute a contract and yet this is the position of the dealer. 2.

The dealer warrants the merchandability of the goods being sold - and further, that the person is bona fide that makes the application for the credit, because he has to warrant to the sales finance company that that is a good contract.

June 10, 1974 BILL 71 175 (MR. BRAY cont'd) 3. He investigates by asking questions of the consumer those points of the consumer's area of concern, income, employment, prospects, other obligations, such as to allow a detailed credit investigation to be made on that individual. He collects information of the order of the life in surance salesman taking an application or a medical history. Now don't get me wrong, we're not involved in medical histories with credit insurance, but it's still detailed in its point form and the dealer does it. 4. The term "recourse contract" may be known to some of you.

In the Province of Manitoba, it is estimated that 99 percent of the sales finance contracts are done on recourse. What does this mean? It means that after the assignment of the contract has been made to the sales finance company, should anything go wrong with the payment schedule, should the consumer default, the finance company has the option of triggering that recourse agreement such as to require the dealer to repurchase the contract.

This is an important social and economic fact, inasmuch above all other things it prevents the indiscriminate credit granting and overloading because the dealer knows off the top at the start should that contract foul it comes home to his nest. From the dealer's point of view however, it means that he is willing to put his financial resources behind the credit judgment in that contract. He stands at risk throughout the term of that contract and that is the fourth major consideration for the dealer to obtain re muneration. In

Section 25.1(1), any gift, premium or benefit of any kind whatsoever does not differentiate with the sharpness of a dull ax between a gift and an earning - besides which, what has happened? The consumer has learned after the fact, a fact which has become known as a s . . . or a kick back - not as an earning but as a kick back. Those that would depend upon these kinds of propaganda terms must at first admit to their own misunderstanding, inadequacy or culpability of misrepresenting the facts. Further, he's learned after the fact, not before the fact, when he can use such information.

Most consumers are going to ignore the fact that the finance charge has been in part and mostly earned by the sales finance company; and in part, to a minor extent, earned by the dealer. Let me justify those words. The finance rate by Conditional Sales Purchasing Companies, sales finance companies, at this time would be worth in the order of 15 percent. No, it is not all one rate; yes, it does vary. There is such a thing as collusion, we do not practise it.

There are various rates, but they're in the order of 15 percent, depending on the character of the indivi dual; the strength of the dealership to support the contracts; the quality of the goods being pur chased, such as used cars versus new cars; the term of the contract, such as a short term or a long term mobile home. Fifteen percent. So with a $4, 000 initial balance, you can look at something on the order of $850 being earned on the investment of those funds over a 36- month contract for a new car purchase, for instance. How much does the dealer get?

Out of $850, he's made out the contract; he stands behind the merchandability of the goods and a bona fide contract; he warrants to the sales finance company that it is a bona fide contract; (3) he takes credit information upon which that check can be made; and (4) he guarantees the contract. Now what does he do? He gets about 10 to 15 percent of the finance charge. We're talking of $100, $120 per new car unit. On a dealer's turnover of new and used cars, one large company last year calculated that the per unit cost or revenue to the dealership was $88 on a three-year deal.

Now gentlemen I want to give you - if anything, the dealer reserve is not sufficiently high to cover his risks. It only takes a few contracts to wipe out the totality of his dealer reserve that he's accumulated over several hundred. When he has to repurchase that contract he has to make sure that the goods are then once more marketable. He has to repair them. He has to pay another salesman commission on the matter - or if he doesn't accept the vehicle back, he's got to undertake the costs and the risks of suing on the contract to obtain the funds he's advanced.

It only takes a few such contracts to wipe out the total of his dealer reserve. But there's another point - the dealer is not being asked to tell this himself. If it's such thing as squeezy kick-back, he's not being asked to admit to this and disclose to this himself, but rather it will be a financial institution, a third party removed financial institution that will be asked by this

section to be as a tattle-tale in school; to go behind the dealer's back and to tell the consumer the amount that the dealer's going to make out of it. No obligation in this

section that the dealer should also or that the assignee will also advise the customer what the dealer did to earn those moneys. But on top, it's after the fact, what's the dealer going to do about it, or the customer going to do about? What has he got in his hand that• s going to help him? Is he going to renege on his contract on the strength of this? No, I venture that the

176 BILL 71 June 10, 1974 (MR. BRAY cont'd) ••• majority of the consumers will say that's the finance charge; how the finance company earns it is its own business.

What it does with it is its own business� If it elects to go mass media advertising and put a lot of people in the field and spend it on salaries, that's the sales finance company's own business; but if it should elect the more eco nomical route of employing the dealer and employing the dealer by keeping him in the contract as a guarantor - if they elect to go the less expensive route and thereby permit the lower finance charges to consumers, what happens then? Then, by this, we will be required to go behind the dealer's back to disclose the amount the dealer earned in the situation. And what happens further?

Let's say that some of the consumers are caught by surprise by this requirement, to the extent that they vow to themselves that next time they shall go to a cash credit grantor and get their money that way first and bargain with cash with the dealer. If this is the turn of events, is the customer better off? First of all, at current rates you're not going to get that much of a break for consumers by going to a cash credit grantor. If all rates on a new car transaction are in the order of 14 to 15 percent, how much cheaper can you get it?

And if it's one or two points cheaper over a three-year contract, tell me what it is in dollars - why, damn little. But on top, under

Section 56 we are required as sales finance companies, and the dealers are required as credit grantors in the initial instance, to take no security other than the

article being purchased for the evidence of the debt. But if he goes to a cash credit grantor, what happens? Is there any limitation on the security that can be taken with respect to that credit granting transaction? So, not only is there that much - or little advantage, rather - in rate, if any, but on top of this the consumer is required to pledge a great deal more security. Is this doing them a favor? But more. I refer you to

Section 67 of The Consumer Protection Act, which says that during the term of the contract the assignee will be responsible for the value of the goods. This is a contingent condition that was brought in after Mr. Basford changed the Bills Exchange Act to rule out the holder and two-course doctrine in Canada. Now in an amendment to the Consumer Protection Act of Manitoba, you hinge on that Bills Exchange Act amendment, such as, assignees provide the greatest protection to consumer credit grantors of any credit grantor going. What is the sum and substance then, should some consumers, some citizens of Mani toba be chased to cash credit grantors? ( 1) Small advantage of rate, if any.

(2) They will be required in many instances to put up excessive security.

(3) The holder in due course doctrine shall for all intents and purposes be reinstated, notwithstanding

Section 67 of your Consumer Protection Act. I suggest, Mr. Chairman, gentlemen, that this is not a desirable amendment; that it should be deleted; that you have not asked us as sales finance companies to treat our customers well, namely the dealers; you have not recognized the advantages being awarded those who do business by a conditional sale contract. Customers are not going to be better off on balance - and you have given your weight, should this be passed, to a nefarious situation in which people will be advised of something after the fact that they can't use. Why not go before the fact?

Would you advise that dealers then should be required to issue and disclose to the customer in the Conditional Sales Contract the amount of dealer reserve they're going to get? Let the dealer do it before the fact. But wait. Let's not stop there, gentlemen. How about the mark-up on the goods? Should not the dealers also advise of the wholesale price of those goods so that the customer has that bargaining point too? And what about commission sales men? Should they not be required to put out the amount of dollars and cents that they are going to earn should this deal be consummated?

Let the consumer have that information too as bar gaining points. Now what about, also free delivery and installation of such things, refrigerators and stoves and freezers? Why not have this be disclosed to the consumer in advance of entering the contract too. Give him all the bargaining points he wants. Why pick on the credit aspect exclusively after the fact nefariously? Thank you. MR. CHAIRMAN: Mr. Bray, there may be some questions. Would you remain at the microphone, please? I should point out, you can answer or not answer just as you choose. Mr. Turnbull. MR. TURNBULL: Thank you, Mr. Chairman.

I am sure that Mr. Bray, having made many trips to Winnipeg, will find my questions easy to answer. Mr. Bray, you did mention with reference to

Section 25(1), that disclosure should be made before the fact - and you seemed to think that that would be better than as we have drafted it, after the fact. But how in fact can the dealer disclose the fact that he may have signed the

June 10, 1974 BILL 71 177 (MR. TURNBU LL cont•d) . credit arrangement, when at the time he makes the sale he may not know that he will assign it. MR. BRAY: There is a similar situation with respect to even the way it's done now and I'd like to have my recommendation put in perspective. I suggest that the arrangement between the dealer and the financing agency is their business, and is without public interest and public use. So I don't want you to misconstrue my words and say I'm recommending that.

I'm saying, if you're going to do anything along these lines to disclose the business relation ship, then do it in its entirety. Now with respect to the prior knowledge. Sales finance companies operate on two bases to assist dealers - and keep in mind any revenue they obtain in this respect may not be suf ficient to cover them for losses. Those reserves are held by the finance company as an in surance that the dealer will be able to repurchase the contract, and the whole of this credit balance may very well be wiped out in a relatively short period of time on misadventures. But there is another way.

Generally speaking, there is an arrangement which is re ferred to in the industry as a "volume bonus". The volume bonus says that if a certain volume of business is transferred to the sales finance company during the course of the year, as the volume increases in recognition of economies of scale, then there will be a bonus provided for the dealer. This is only known at the end of the year. It is not known on the way in, and is a practical limitation on the application of 25. 1(1). Now, I suggest to you that perhaps you didn't expect such full disclosure with respect to volume bonuses and dealer reserves.

We're not ashamed of the way we do business. We can't do it even "after the fact" except with sub stantial delay, until at year-end, before we are able to give the dollar figure. We had con templated the possibility of asking you to consider that we would - if this

section goes into law - that we would advise the an10unt of the dealer reserve and issue to the customer the

schedule upon which volume bonuses may be made available - not knowing in advance what level of volume the dealer would reach, therefore not knowing how much in dollars he would obtain. MR. TURNBULL: But you do think that "before the fact" is practicable. You've just explained how it could be done. MR. BRAY: Yes. I believe it's just as practical to do it before the fact with respect to option No. 3, the assignment of the Conditional Sales Contract to a sales finance company as it is in option No. 2 of the dealer where he assigns this to a bank and earns a differential rate.

In other words, Sir, both are impractical. MR. TURNBULL: I see. Then although you find it impractical, you also find it nefarious that the purchaser of a commodity know that the dealer that he's buying that commodity from is making an arrangement with a finance company. Why do you find that knowledge to the con sumer so nefarious? MR. BRAY: How the finance company allocates its income and invests in production of business, whether it be in salaries or in advertising, sales promotion or whatever, that• s the business of sales financing.

It is not of public interest. lt' s a matter of a business arrange ment between the dealer and the finance companies. MR. TURNBULL: So you don't think that the consumer then should know that in fact he won' t be dealing with dealer A, he will have his credit arrangement with finance company B. You really believe that the consumer should not know that, he's not entitled to know it, and it's none of his business. MR. BRAY: Not entitled to ... Now I think you've changed the question, if I understand correctly.

There is no question there that the finance company will advise the customer that the paper has been assigned, that it's been purchased by the sales finance company and that the payments will forthwith be made to the finance company. That is done. That is required that is done. MR. TURNBULL: But you don' t find that nefarious. MR. BRAY: No, because the finance company has got to obtain the funds or r.eceive the payments. · MR. TURNBULL: You don' t find that nefarious then because that is the present practice. What is nefarious then - the disclosure of the gift, the benefit, the amount of money? MR.

BRAY: It isn't a gift. MR. TURNBULL: Well whatever. MR. BRAY: It's an earnings. It's a remuneration. It's a compensation for work done

178 BILL 71 June 10, 1974 (MR. BRAY cont'd) ••• and risk being taken. It is not a gift. It is not a premium. It is a benefit, and by the breadth of that word it involves the whole thing. But there' s not proper recognition of the reason for the benefit, it is not separated out.

And where I too as a sales finance company go direct to the consumer with mass media advertising, I could spend three times as much for the same market effect - and yet I would not be required to disclose how much my advertising costs are; nor am I required to disclose how much my money costs are ; nor am I required to disclose how much I pay my president as a sales finance company presi dent. MR. TURNBULL: Is it nefarious, Mr. Bray, that the consumer know that finance com- pany is paying a cer tain amount of money to the dealer for that credit agreeme nt ? A MEMBER: Where do you get the word "nefar ious" ? MR.

TU RNBULL: From Mr. Bray. MR. CHAIRMAN: Order please. Order please. MR . TURNBULL: I am really curious as to why he would use that word, and I'm trying to get from him what it is that he finds nefarious about the principle of disclosing that kind of information to a consumer. MR . BRAY: I think I've made myself perfectly clear in my answers. I even referred to a tattle tale episode of a public school student to his teacher. MR. CHAIRMAN: Thank you. Mr. Green. MR. TURNBULL: I'm sorry, I'm not finished, Mr. Chairman. With regard to 22(1), Mr. Bray, the stipulations in that

section require that the Superintendent of Insurance satisfy himself. Now despite that co-ordination set out in this section, you still feel it should not be here but in the Insur ance Act. MR. BRAY: Well I gave several reasons why I believe there has been an insufficient unders tanding of the insura nce operation, even to the point that . . . MR. TURNBULL: I'm speaking here in general of the whole section, not

Section 22. 1 (1 )(

c) which •.. MR . BRAY: The whole of the section? We do not object to contracts, the master con tracts being submitted to the Superintendent of Insura nce for approval, or the other items. I've brought out the inconsistency between the writing in this

section as I see it here. MR . TURNBULL: In (c) . MR. BRAY: Par ticularly in (c) - and the inconsistency between that and the guidelines uttered by Mr. Swain in the early part of January this year. MR. TURNBULL: (

c) we will alter, I think - you know, along the lines that would be satisfactory I believe to the intent of your presentation. But still I do not see why you feel that this whole

Section 22. 1 should be in the Insur ance Act. MR . BRAY: No, it wasn' t the whole of

Section 22. 1, it was the whole of

Section 4 of Bill 71. Because it' s a matter which pertains to insura nce, which is being very properly handled by the Superintendent of Insura nce in his office. MR. TURNBULL: Okay. Thanks, Mr. Chairman. MR. BRAY: The speed with which he acted upon the guidelines to utter them - Mr. Chairma n, for the benefit of the Committee the guidelines came out under date of November 30 in the Province of Ontario - you have never seen anything sweep the country so quickly. At this time, six of the ten provinces have put them into effect, including Manitoba, on January 2 of this year.

Two other provinces, notably Nova Scotia and Quebec, are expected to install the guidelines within a matter of weeks. That leaves eight out of ten. I believe that that' s something of a record for concerted action. MR . CHAIRMAN: Thank you. Mr. Green. MR . GREEN: First of all, I want to make sure that I'm properly unders tanding one of the contentious points. I take it that what you are complaining about is, that if a vendor sells an

article to a purchaser for let us say $2, 000 and then is going to sell the paper for 1, 800, that what the Act says is, that the purch aser should know that when this paper is being pur chased by a finance company the vendor is only going to get 1, 800, and that is what you are objecting to. First of all, am I correct in that is what the Act is req uiring and that is what you are objecting to ? MR . BRAY: No, I don' t believe you are correct, Sir. MR . GREEN: All right. Just tell me where I'm wrong. MR . BRAY: In the sense that the finance company will exercise a rate something on the

June 10, 1974 BILL 71 179 (MR. BRAY cont'd) . order of 12 percent and the contract, using our typical example, will be in the order of 15 percent. So there is a three-point spread. The finance company will earn the 15, or will accept the 15 as it receives the payments from the consumer,

whereas in fact there will be more money than is paid initially for the contract accruing to the dealer as these three percent portions pile up and this is in recognition of the service done. Another way of putting it, is that there is a wholesale price for the commodity credit, as there is for the car or snowmobile or whatever, there's a wholesale price and there• s a retail price.

Since he goes to the effort of producing the contract, taking the risk and examining the credit worthiness of the individual, he's entitled to compensation- even as he maintains a place of business and realizes a mark-up on the goods in the first instance, he• s entitled to that. MR. GREEN: So the hypothesis that I presented is not covered by the Act then. W s not intended to be there. The Act would not deal with the situation that I hypothesized on. MR. BRAY: This is where the finance company is paying less than? MR.

GREEN: I'll give it to you again, because apparently you understood me as little as I understood you. If a vendor sells an

article to a purchaser for $2, 000, he is going to sell the paper for 1, 800 at whatever rate it is, at the same interest rate. Does the Act require the vendor to tell the purchaser that the paper is being sold for $1, 800. 00? That• s the first ques tion that I asked you. MR. BRAY: I don't believe so. As I understand that ... MR. GREEN: So you do not think that the Act requires the vendor of the item to disclose to the purchaser that the contract is being sold to a purchaser who is going to pay less for the item than the face value thereof.

That• s not provided for in the Act. --(Interj ection)-- Well I just want to see whether this gentleman says that that is provided for in the Act, because he appears to have a good understanding of the Act too. MR. BRAY: Thank you, John. 25. 1(3) would refer, I guess, to that kind of a situation where there's a discount of the amount, but that only fits where there is zero cost of borrowing or no cost of borrowing is included. I wasn't making any reference to that particular ... MR. GREEN: You were not dealing with that section. MR. BRAY: No, I was dealing exclusively and only with

Section 25. 1(1) , wherein the situation is that the dealer will receive something extra than, that there's a gift or benefit involved. MR. GREEN: All right. So then the

section that I have referred to you, you have no representation to make with regard to that. MR. BRAY: No I do not, Sir. MR. GREEN: Thank you very much. MR. BRAY: Pm glad I now understand your question. It took a long while. Pm dull. MR. GREEN: Pm glad I understand you. MR. CHAIRMAN: Mr. Spivak. MR. SPIVAK: What you're saying is, it's a 2, 000 to 2, 000 without any discount. MR. GREEN: I understand that he's got a $2, 000 contract and he sells it to the finance company for 1, 800. 00. MR. SPIVAK: No.

But what happens in this case is that it's the $2, 000 contract goes to the finance company for $2, 000, of which there is a percentage which is set up for the reserve for all the services that are provided. MR. BRAY: The full 2, 000 would be paid. It's a matter that the extra 200 would be paid back to the dealer, and under the first paragraph the assignee would have to disclose the amount of 200. MR. GREEN: Isn't this intended to merely indicate to the purchaser that if he paid in cash that the vendor would be happy to take a smaller amount, that the . . MR. BRAY: There is nothing implied in that. MR.

SPIVAK: The vendor gets 2, 000. MR� GREEN: The vendor is getting - in the example that you are indicating, the vendor is participating in some of the earning from the financing contract. MR. BRAY: Yes. MR. GREEN: Now, isn't the

section intended to indicate to the purchaser that the cost of borrowing involves something which he could probably have reduced from the purchase price if he paid in cash. MR. BRAY: I don't believe so.

180 BILL 71 June 10, 1974 MR . GREEN: Well, if the vendor was to disclose that he is making an additional $200 by virtue of the financing arrangement, then would it not indicate to a purchaser who is enter ing into such an arrangement that if he paid in cash he would save that $200. 00. MR. BRAY: Why would he? Why would the merchant forego the $200 under any circum stances? He has a price for the goods. It's $2, 000. 00. He wants cash. In lieu of cash he accepts a Conditional Sales Contract.

Therefore he makes a finance charge on top of the $2, 000, which would be in the order - we'll say over a 36-month contract, $4, 000 - it would be in the order of $850. 00. Now it's a matter that they're not going to do anything with the 2, 000. That doesn't nudge. MR . GREEN: There is no change in the amount that •.. MR . BRAY: Right. All that nudges is, where will that $850 be arrayed? MR . GREEN: Who is sharing the proceeds of the financing ? MR. BRAY: That's right.

So that the finance company costs, our money costs, our dealer costs, our promotion costs, our employee costs, our advertising costs - part of those costs 10ur dealer reserve is the most economical device by which he can obtain business. MR . CHAIRMAN: Are there any further questions? Mr. Spivak. MR, SPIVAK: Well with respect to - the Minister of Consumer Affairs has mentioned that 21. 1(

c) is to be changed, and I think I have some idea of what they're going to do there. I think I'll leave that until we have some announcement. But dealing with 22. 1(3) --(Interj ection)- You':re going to change that as well. Well it's dealing with the question of being able to imply that a debtor is required to obtain insurance, is that correct? Otherwise I'll ask questions directly. --(Interjection) -- Well the point that he made, and there's no point in going over it if you're prepared to accept the position that in 21. 1(3) where it says) or in any way suggest ... MR. TURNBULL: 22. 1(3) you mean. MR .

SPIVAK: 22.1(3), Pm sorry, "or in any way suggest or imply that the debtor is required to obtain insurance" -if that's what you're going to be changing as a result of the position that he placed, then that's fine. MR . CHAIRMAN: Would you come forward and use the microphone, Mr. McKenzie, please. MR . McKENZIE: Mr.

Chairman, I've just one or two brief questions to ask the honour able gentleman in his comments and I wonder if he understands under the insurance laws of this province, the public insurance, this government insurance, that they operate outside the jurisdiction of the Superintendent of Insurance of this province which the other insurance com panies have to abide by? MR. BRAY: No, I was not aware of that. MR .

McKENZIE: Do you also understand that there's a new bill on our desks whereby the government will go into, and I'll list the various insurances: accident, aircraft, boiler, fire, guarantee, inland, livestock, marine, plate glass, property glass, property damage, public liability, theft and weather, without the benefit of the Superintendent of Insurance office. MR. BRAY: No, I did not know, Sir. But may I in response to the question, Mr. Chair- man ..• MR. CHAIRMAN: Order please. Mr. Paulley. MR .

PAULLEY: On a point of order; that is not what is presumed to be done or is con templated, and I would suggest that we only deal with the Act we have before us. Whether or not the delegation is knowledgeable what's on the grist mill is inconsequential as far as I'm concerned. MR . BRAY: Mr. Chairman, I respect the point being made, the points being made. We did try to find out the intent of the bill and studied the News Service of the Manitoba Govern ment release, dated May 30, 1974; we did try to find out what was involved.

I understand that explanatory notes have been deleted, and perhaps that left us a little bit in the void, so we used whatever sources we might. I'd like to read to you the paragraph on the top of Page 2. "The Superintendents of Insurance of the Provinces of Canada pointed out" --(Interjection)- No, this is the Provinces of Canada - "pointed out . . • MR. PAULLEY: Page 2 of what, Mr. Chairman? MR . BRAY: This is Page 2 of the release dated May 30, 1974, of the Manitoba Govern ment, entitled News Service. A MEMBER: That has nothing to do with the Act before us. MR .

BRAY: Except it's an explanatory note with respect to, Consumer Bill would cover mobile homes. It speaks to Bill 71, Sir.

June 10, 1974 BILL 71 18 1 MR. CH AffiMAN: Continue, Mr. Bray. MR. BRAY: Thank you. I'll read this paragraph, it's brief. "The Superintendents of Insurance of the Provinces of Canada pointed out in a 1973 report that frequently the premiums being charged for credit, health, and accident insurance were considered in excess of pre miums for similar insurance available to individual insurance buyers.

The higher premiums enabled the insurance companies to pay substantial rebates to the seller who prepared the conditional sales contract, also some companies have inadequate provision for premium re bates to insured buyers when they prepay their conditional sales contracts. " Sir, with respect, in trying to find foundation for this report which pointed out the ex cesses, there is not any foundation for an explicit remark with respect to premiums being charged on a group basis being in excess of those that would be charged to individual insurance buyers.

And further, any reference or allusion thereto that could be construed as implying that such is the case, refers to loan transactions only and not with respect to conditional sales con tracts, as is referred to in the two other sentences contained within that paragraph. MR. CHAffiMAN: Mr. Paulley. MR . PAULLEY: Again, Mr. Chairman, it's not contained within this Act. I think, Mr. Chairman, in accordance with the general rules of procedure the delegation should deal with the contents of this Act. If my friend from Toronto, I believe that's where he's from . . . MR. BRAY: Yes, Sir, thank you. MR .

PAULLEY: ... desires to make representation on The Insurance Act, then he should await in our great city - and I trust he would enjoy himself here - he should await until such time as that bill is given second reading, and is before this committee. MR . CHAffiMAN: Mr. Spivak. MR. SPIVAK: Well, Mr. Chairman, as it happens I think this is contained within this Act, contained within the section. MR . PAULLEY: Where? MR. SPIVAK: Well if the Honourable Minister of Labour will allow me just to continue.

First,reference is made to the fact that their terms, conditions, and costs of the policy have been approved by the Superintendent of Insurance of Manitoba. Then there's reference to the fact of the premiums being limited to five percent with expenses, that's how it now stands. The point that has to be mentioned, Mr. Chairman, is that the Auto Insurance Corporation does not operate, is not under the supervision of the Superintendent of Insurance, and it may very well be, Mr.

Speaker, that with respect to financing that's required for or, excuse me, in surance that's required in connection with certain contracts, as an example in fire, that Autopac may very well, if the Act does proceed, provided it will not come under the Superin tendent of Insurance - and it may, but at the present time it does not - and therefore the Honourable Member from Roblin' s point that these various conditions for insurance may very well become part of Autopac, would lead the question to be raised in this committee at least, and the question to be asked • . . A MEMBER: On this bill? MR.

SPIVAK: Yes, on this bill; the question to be raised on this bill as to whether Autopac now must be included under the Superintendent of Insurance of Manitoba to be able to qualify as an insurer for a credit grantor in the transactions that we've talked about, are in tended to be covered by this. MR. PAULLEY: But, Mr. Chairman, with all due respect to the Leader of the Opposition, the point that I am raising, I believe, is a valid one. At the present time it is not contained within this Act.

If during the process of the other bill that is before the Assembly, it is deemed advisable to bring the new provisions, or the extension if I may use that terminology, under the Autopac and the insurance under the Superintendent of Insurance, then at that particular time we can consider, but under the bill that we have before us this evening it is not within the ambit of this particular bill.

And I say in all due respect to the Leader of the Opposition, to the delega�ion from Toronto, that that is the time after the passing for second reading of the bill introduced by my colleague responsible for Autopac, we should consider as to whether or not these news ventures - to use that term very broadly - will or will not be under the general supervision of the Superintendent of Insurance in the Province of Manitoba. I say, Mr. Chair man, they are not contained within this Act. MR. CHAmMAN: Mr. Turnbull. MR. TURNBULL: Mr. Chairman, on that point of order, I would very much like to hear

182 BILL 71 June 10, 1974 (MR. TURNBULL cont'd) •.. the representations that are to be made - Mr. Bray has made his point on this; I think he understands that 22. 1(3) in fact excludes certain categories, cer tainly insurance companies . • . MR. BRAY: Would it exclude •.. MR. TURN BULL: Well it says "where a debtor is not required by law to obtain". MR. BRAY: I'm concerned about a mobile home contract which will come in under The Consumer Protection Act now, where it will be required by the credit grantor that insurance be obtained, such as referred to in this release. MR.

TURNBULL: But I think the Leader of the Opposition - I don't see him at the moment - I think his point is that certain considerations should be now entertained to go in Bill 71, valid points, and I would prefer to hear the representation from other members, other people that have come here. I think we can carry on our debates later. MR. BRAY: Mr. Chairman, for clarity. I am speaking not about a motorized vehicle. MR. TURNBULL: That's right. MR. BRAY: That's clear, is it? MR. TURNBULL: Yes. MR. CHAIRMAN: Mr. Graham. MR. GRAHAM: Mr.

Chairman, on the point of order, I think it's very apparent to mem bers of this committee that either the government has been putting out false information in their Information Service, and whether it's false or not so applies to any bill that comes before this committee. And the information that was released by the witness here, Mr. Bray, indi cates that there is certain inconsistencies at least between the reports that came out from the government News Service and the clauses that are in this bill and under consideration at the present time.

So I would hope that either the News Service be informed of it and publish a correct form of information, or I would suggest that maybe that information service cease to exist if they're continuing to publish incorrect information. MR. CHAIRMAN: Order please. Are there any further questions of Mr. Bray. MR. PAULLEY: No. MR. CHAIRMAN: Questions on Bill 71. MR. McKENZIE: On the same point of order, Mr. Chairman, I can refer . MR. CHAIRMAN: There was no point of order, Mr. McKenzie. MR. McKENZIE: Well may I raise a point of order, Mr. Chairman. MR. CHAIRMAN: Mr. McKenzie to a point of order. MR.

McKENZIE: . . • on the inconsistency of the information service where a certain meeting was supposed to be held by the Minister of Industry and Commerce, and a meeting was never held and . . . MR. PAULLEY: That's not a point of order, Mr. Chairman. MR. CHAIRMAN: Order please, that was not a point of order. Mr. Pawley. MR. PAWLEY: Mr. Chairman, I don't see at all where the point of order is germane to the bill that we're dealing with, and I think that either we should ask any further questions of Mr. Bray or proceed on to the next submission. MR. CHAIRMAN: Are there any further questions to Mr. Bray.

Hearing none, thank you, Mr. Bray. Mr. Haddad, please. MR. HADDAD: Mr. Chairman, my name is Sherrold Haddad. I am the President of the Manitoba Motor Dealers Association, and our association represents approximately 65 percent of the franchise automobile dealers in this province, and these dealers sell about 75 percent of all the motor vehicles sold in the province.

Just as a point I would like to remind you that motor vehicle sales in this country account for about one-sixth of all the retail trade in Canada, and this is not including the many after market outlets that supply tires, rebuilt parts, glass, mechanical and body repairs. This is far more than any single category in our country, including food, and it's obvious that the auto mobile industry is a very dynamic part of our country.

Now we feel it is necessary to appear here to discuss Bill 71 as certain aspects of it - and please don't take offence at my language - are completely unacceptable if not detrimental to our industry. We don't wish to lay specific blame on any individuals but perhaps "A Personal Point of View" that was expressed by Douglas Fisher, who was a former Member of Parliament, and I've forgotten whether he was a Conservative or a Liberal .•.

June 10, 1974 BILL 71 183 MR. BILTON: He wasn't a Co nservative. MR . HADDAD: I see. But in any event --(Interjection)-- Yes, there are, Mr. Spivak, should I give them out? Mr. Ch airman, I do have copies of the brief. If you gentlemen thought you had been in speed-up in the last little while, you should have seen my secretary this afternoon preparing these, and you'll excuse, please, any mistakes that she might have made. A MEMBER: Not you. MR . HADDAD : Not me. No I don't make mistakes, that's why I employ people, Mr. Paulley. Okay.

Douglas Fisher states, and I'm sure that a lot of the members here today would have read this with great interest, "W hile government as a bureaucracy, and business as a cor porate community, have grown and expanded, the parliamentary system has, comparatively speaking, remained very much as it has been for generation s. Few businessmen are either in parliament" - with the exception of Mr. Banman - "or linked closely to it through individual MPs or parties.

Parliament insists on its right to priority on information, and obj ects strongly to the idea that there should be informal and private exchanges of confidences and in formation between government officials and the private sector. Now the fantastic growth of technology has been reflected in both the busin ess community and the bureaucracy of govern ment.

In recent years there has been more appreciation in executive suites of how deeply intertwined the public and private sectors are, and will continue to be, but this only deepens the dissatisfaction that there are so few clear channels or means for ready exchange and actio n. " Looking at Bill 71, is a perfect example of lack of communication between government bureaucracy, government and the business sector. Now when this bill was first presented to the Legislature very little explanation was given. When the Minister closed the debate, very little additional light was thrown on this bill.

Some explanation of the intent of the bill was given in the "News Release" May 30 th, 1974. The net result is that the busine ss community is very apprehensive as to the intent of this government in proposing to pass some sections of this bill - the some sections is not on your sheet. --(I nterjection)-- Okay that's all right, Mr. Green, we both have our points of view. Thank goodness. MR . GREEN: Who started it ? MR. CH AIRMAN: Order please. MR . HADDAD: Okay. Gentlemen I am going to pass along because Mr. Bray did cover some sect ions and I don' t want to belabour them.

Now in 22(1), if the purpose of 22(1) is to force the automobile dealers out of the credit insurance business we would suggest respectfully that the legislation be written that way. --(Interjection)-- In times of rising costs that have been unparalleled in our history, it is ludicrous to suggest that anyone can operate or provide any type of service on a five percent margin. It is interesting to note that the three levels of government in this country have a hard time planning their objectives, and they're using approximately 44 percent of the gross national product. A MEMB ER: Hear. Hear. MR .

CH AIRMAN: Order please. MR . HADDAD: It is obvious that the person)or persons, who suggested this legislation are looking at it as a one-way street - that is to say, that the amount of reserve that is set up for the automobi le, appliance, or heavy equipment dealer is all incoming. And I think all you gentlemen know that there' s a whole bunch of costs involved; Mr. Bray just covered a few of them. The situation that exists between most dealers and their finance sources is relatively involved and goes beyond the mere scope of providing retail financing to their customers.

Now the finance inst itution provides low-cost financing to enable us to stock thousands and thousands of dollars worth of automobi les in inventory so that our customers can rapidly choose whatever they like. This is low-cost money that they put out. The major dealers must provide a ·full time employee, and sometimes two, in order to properly service those people wanting credit. Our busine sses are open for selling on the basis of approximately 13 hours a day, and we have to have somebody there at all times to look after these people. A MEMBER: Including Sunday. MR . HADDAD: I hope not, Sir.

As a matter of fact we couldn' t get the Attorney General, I should say the former Attorney-General, to even pass on that. We sent him a number of letters.

184 BILL 71 June 10, 1974 (:MR. HAD DAD cont'

d) The dealership must guarantee to the finance company the proper performance of the contract by his customer. If the customer fails to pay, the dealer is obligated to reimburse the finance company for the net payout on the account. Now there are people within your de partment, Mr. Turnbull, who are well aware that losses on repossessions can easily average six to seven hundred dollars.

I made a presentation here a number of years ago, I think when The Consumer Protection Act was coming in, and at that time one of the honourable members suggested that we made just a potfull of money by repossessing cars and reselling them. I offered to sell them all at our payout figures; we'd be very happy to get rid of the problem. Now these losses must be absorbed by us. Under our present consumer protection legislation we have no recourse to the customer. We take the loss, and that is it.

Now business dictates that such exposure, and in the case again of larger dealers this exposure exceeds a million dollars very easily in terms of contingent liabiliti es. They have to be protected with an ade quate reserve fund. At the present time we prepare a bill of sale and it's in three sections, one for our records, one for the customer, and one to be attached to the finance copy. The conditional sales contract, if it is financed, is completed in four copies showing in detail the total trans action, the amount financed, the cost of borrowing in dollars and cents, and the cost of borrow ing as a percent.

We must then complete a safety certificate, or if the automobile is unsafe a non- safe certific�te, which must be certified by a mechanic. We then complete in triplicate tax forms and the sale of vehicles required to be registered under The Highway Traffic Act. Besides these items we must discuss transferring of plates and insurance, terms of contracts, warranties, etc. A MEMBER: All for nothing. MR . HADDAD: Well we hope not. We've managed to stay in busine ss, but in any event, besides these - pardon me, I'm off the point here. My point here is it is an onerous task now to sell an automobile.

Each year sees us with more and more restrictions and paperwork. The sections referred to in the Act would be an actuarial nightmare. As a matter of fact quite frankly, Mr. Turnbull, we could not comply with the Act because we don't know - there are various rates to be considered where we are trying to ascertain the amount of risk and there fore the rate the customer should pay. And there is also the fact that a sliding scale exists in terms of reserve, and therefore the ultimate reserve cannot be computed until the end of our fiscal year and that is still a gross figure only.

In addition there is no reserve credited to our account until the contract is matured for over three months. If the contract is paid out, we get nothing. We do not feel that we are really giving you any inform ation today, and we feel that you have this information, and we're wondering quite frankly if we're not approaching 1984 ten years too soon.

We further consider that this type of legislation will prompt other bureaucratic legislation about the fact that we should probably post the wholesale prices of our cars, and our parts, and that all retailers should do the same at all levels. ' A MEMBER: The government will probably take it over. MR . HADDAD: I hope they take it over in a bad year. --(Interj ection)-- Hear, hear. Gentlemen, the automobile industry . . . MR . CHAIRMAN: Order please. Order please. Excuse me, Mr. Haddad. May I ask all members of the Committee to please refrain from these interjections and let Mr.

Haddad proceed with his presentation. Proceed please. MR . HADDAD: The automobile industry - and I think you will agree - I don't know of a more maligned industry. We are everybody' s favourite kicking boy, and you know we're getting a little bit sick and tired of it, and it's about time, and I feel quite strongly about this, that business stood up and said some thing.

Now our industry, and the automobile dealers, have traditionally been the backbone of the free enterprise system, and with all of the free enterprise system faults, it has managed to bring the North American community the highest standards of living and probably the lowest levels of unemployment in the history of man. Now in conclusion, there has not been in our memory a more insidious - I didn't use nefarious now - insidious piece of legislation than what this government is proposing.

We can not imp ress upon you how strongly we feel about this matter and we trust that good judgment will prevail, and that these clauses will be withdrawn: 25. 1( 1), 25. 1( 2) and 25. 1( 3). We find

June 10, 197 4 BILL 71 185 (MR. HADDAD cont'd) • it very difficult normally in reading any piece of legislation, even though we don't agree with it we can sit back and say, yes we understand why the govern ment is taking this approach, it' s reasonably obvious that there have been some abuses in a certain sector, and we might not like the interjection but we can appreciate it -- We have been at an absolute loss to understand where you're going with this piece of legislation. The cus tomer - and we can • . • MR. CHAffiMAN: Order please. MR. TURNBULL: Twenty-five or the whole bill ? MR.

HADDAD: No, just the ones that I mentioned, Mr. Turnbull. The customer really and truly is interested in only one thing, how much does it cost me ? We tell him how much it costs him in dollars ; we tell him how much it costs him in percent. As a matter of fact GMAC , a very well known and highly reputable sales finance company, can finance customers today at lower rates than the bank, and still give the dealer a portion of the reserve. Now nobody criticizes the bank at 13 1 /2 or 14 percent if they pay their president $200, 000 a year, because the bank is doing what they want to do with their money.

We find that an interj ection into a private transaction between two business people is abhorrent. We really feel quite, quite strongly about that particular fact and we don' t, as I say, know where you're going. I'd like to thank you for your patience and kind attention. I've probably lost a few friends or acquaintanc es on this presentation, but in any event I had to get out my thinking, a nd we trust that we've given you some small insig ht into the traditions - and it' s very traditional - and the practices in our industry. Thank you. MR. CH AffiMAN: Thank you. Are there any questions of Mr. Haddad ? Mr.

McKenzie would you come forward to a microphone, please. MR. McKENZIE: I just have one brief question. I wonder if the honourable member giving his brief can guess what the salary is going to be of the president of the treasury branches ? MR. CH AIRMAN: Question is out of order, Mr. McKenzie. MR. HADDAD: Maybe Mr. McKenzie has applied for the job. I don't know. MR. CH AffiMAN: If there are no further questions ? Thank you, Mr. Haddad. . • • • • continued on next page

186 June 10 , 1974 MR . CHAIRMAN : Mr. Ternette please. Bill 90. BILL NO. 90 MR . TERNETTE: Mr. Chair man, members of the Comm ittee, let me begin by con gratulating the Honourable Attorney-General, Howard Pawley, in his attempts to overhaul the mothballs in which the Human Ri ghts Commiss ion has found itsel f, and to add som e teeth to it. The Commi ssio n has become a laughing stock in the past year since its defeat in the court re the McGavin Toastmaster case where it became obvious that the Co mmiss ion was both judge and jury.

The inabili ty of the Co mmiss ion to func tion at all became more and more obvious, and this sense of frustration piled on and on and led indirectly to the fir ing of the Executive Director, Trevor Berry, as well as the res ignation of several staff members who saw the fu tilit y of the Co mmiss ion.

Of course this ineffe ctiveness could not cont inue as a drainage of taxpayers' money, and the NDP Co nvention clearly rai sed the issue of inef fectiveness of the Commi ssion on the floor, and the Honourable Howard Pawley stood up and explained that he definitely would be intro ducing legislation to put teeth into the Co mmiss ion. This has been ably done. Let me remi nd you of the resolution of the Human Ri ghts Commiss ion that was passed at the 1973 NDP Convention. It states, "WHEREAS it is vital to our socie ty that human rights be fully protected; and

WHEREAS the Mani toba Human Ri ghts Ac t does not in its present state provide adequate protection to human rights;

BE IT RESOLVED that The Human Ri ghts Ac t be am ended to incorporate the following concerns : (

a) That the Human Ri ghts Commiss ion be made as independent of the Governme nt as possible, including being given the authority to independently issue orders under the Ac t; that separate boards of inquiry be appointed to hold public hearings when necessary; (

b) That discr im ination be prevented as well on the bas is of marital status , age, political affiliation, and physical appearance, or character istics; (

c) That discrimi nation on the basi s of sex be prevented in all categor ies ; (

d) That discrimi nation be prevented in the profes sio nal organization and in the sale or ownership of property in addition to those areas already covered; (

e) That agencies and businesses holding government contracts be required to establish affirmative action programs which could ident ify goals and guidelines to carry out the intent of The Human Ri ghts Act, and that they impleme nt those as a condition of that contract; (

f) That the penalties under the A et be increased; and (

g) BE IT FURTHER RESOLVED that we strongly urge that the Co mm iss ion be provided with the financial and staff resources to enable it to carry out its mandate, inc luding an expanded public education program. We clearly see that although several points, as demanded, are sti ll left out of the am ended Human Ri ghts Ac t, progress ive steps have been taken to strengthen the Ac t. We clearly see the separation of being both judge and jury, hopefully allowing more indepth investigation to be carried out so as to enable the board of adjudicators to properly judge the case.

Unfortunately it does not go far enough in making the Human Ri ghts Co mmiss ion more independent of the government, or as the Honourable Leader of the Opposition suggests, making the Co mmiss ion responsible to the Legislature as a whole. One can however be glad of the insert ion of non- discrimi nation because of age, marital status and political bel iefs . These three areas broaden out the horizons of the work of the Co mmiss ion and should allow the Co mmiss ion to invest igate cases that have often been referred to the Co mmiss ion which they could not touch as it was not inclu ded in their mandate.

Dis crim inatio n because of age has become a substantial factor in our li ves, where the old people are looked on as second-class citizens, having been useful to soc iety once but are now useless and therefore excess baggage to be carried by the taxpayer. It is funda mentally impor tant that these beliefs be challe nged by all those who are old in effec tively demonstratin g that old people are wis e,knowledgeable and creative, and have som ethin g to offer to soc iety as a whole.

Mar ital status has also led to great dif ficulties of women who have been si ngle and then gotten marrie d and found themselves dismisse d from their jobs because of their status . Busi nesses usually are retice nt in hir ing married women, or keeping women who are getting mar ri ed, because they are afraid that the women wi ll have chi ldren and their loyalties are not to

June 10, 19 74 BILL 90 187 (MR . TERNETTE cont•d) .•.•. the company in the first place but to their husbands. These beliefs have to be challenged, and complaints should be laid by those bein g so discri minated against so as to clearly indicate that one•s ability should not, and cann ot, be judged by one' s marital status. The most important legislative amendment to me personally is the one concerned with political belie f s , because this one is so difficult to prove directly .

But so many people suffer from such discrimination indirectly that they hide their political affiliation because they are afraid of letting anyone know where their political beliefs are; otherwise they may be fired . With this amendment it will be heartening to see people being able to lead open lives, to talk openly about their politics, without recrimination in their work . All of these changes are admirabl e and yet they are still a long way from ensuring that discrimination will stop. As the saying goes, one can stop discrimination but you can•t legis late prejudice; and this is the key to the problem.

An extensive public education campaign is necessary to be carried out by the Human Rights Com mission if it is to succeed in becomin g effective, because only through the elimin ation of prejudice is discrimination going to disappear so that no longer will we need legislation or commissions to protect our rights. Now in order to put more teeth into the Human Rights Act, let me recommend the following changes in Bi ll 90 : On Page 4 ,

Section 4 (1 ) in "Discrimination prohibited in occupancy of commercial unit or housing accommodation " , I recommend that in addition to "(

b) discriminate against any person with respect to any term or condition of occupancy of any commercial unit or housing accommodation, because of race , nationali ty, religion, colour, sex, age, ethnic or national origin, or source of income of that person" , political belie fs as well as physical appearance , that political beliefs and physical appearance be included in that particular section. There 's a slight discrepancy between

Section 4 (1 ) and

Section 5 in "Discrimination prohibited in the purchase of property, " in the sense that "because of race , nationality, religion, colour , sex, age, marital status, ethnic or national origin of that person. 11 However source of income is not listed. It's listed in terms of buying commercial property, but it's not listed in terms of purchase of regular property. So I would recommend that source of income be included in that

section as well as political beliefs and physical appearance . And physical appearance , I mean that some people can be very ugly looking, and some people can, and have, discrimi nated against people who are ugly looking in giving them places to live . Further on on point 6, "Discrimination prohibited in employment . 11 Again in this case I would add - we have political belie fs in this particular case , we would add physical appear ance in this particular

section because of race , nationali ty, religion, colour , sex, age, marital status, ethnic or national origin, and physical appearance , or political beliefs, of that person , and I would recmpme nd a further

section which would be point (

d) on

Section •. ·Which would include the NDPs original aspect1which that agencies and busin esses holding government con- tacts be required to establish affirmative action programs which could identify goals and guidelines to carry out the intent of the Human Rights Act and that they implement those as a condition of that contract. And that would be point (

d) under

section 6 (1 ) . Further on under government employm ent, the bottom of page, 6

(5) Em ployment Agencies, again under the discrimination aspect, political beliefs and physical appearance should be added . Now we come to the

Part II the Admini stration aspects of the Act, and under this case I recommen d that

Section 10 (3) under Memb ers , that the members of the Com miss ion shall be appointed by a committee of the Legislature, would be my recommend ation. Under Responsibil ity , 11, that the Commission should be responsible to the Legislature as a whole for the administration of this Act would be my recommendatio n. Under Function, point 13, I would recomm end again that the first statement put forward the pri nciple that every person is free and equal in dignity and rights without regard to race , creed, religion, sex, colour, nationali ty, age, marital status, ancestry, or place of origin, inc hlding political beliefs as well as the physical appearance be included. Then under the last

section that I recommend, in order to tighten up this Act, and again I would like to comme nt that until we have eliminated prejudices , and until we have gotten it, we need legislation. I personally do not believe in any form of legislation to protect rights, but in this society as long as we have people who are going to discriminate and going to get away with it, we must have

an Act to protect those rights. Hopefully som e day we will have the kind

188 BILL 90 June 10 , 1974 (MR . TERNETTE cont 'd) ..••. of soci ety in which we will be able to have no legislation and everybody will be sw eet . Under "Offences and Penaltie s" , 33 (1 ), I fe el that the amounts for a person or a group that is to be fined are very minimal, because it so often happe ns that in many cases of where a person cheats on his income tax or anything else, if he gets the minim um fine he will contin ue on cheatin g .

I feel that the fines that are given will allow people to say: "Well I 'm going to pay so much on the dollars and I will continue to discrim inate ." And even if they go to court two or three times in two or three yea rs , that's $300 ,0 0, It is not a strong enough fine in order to state very clearly to those persons : "If you 're going to discri minate you •ve got to pay for it ." And so my recommendation is that under

Section (

d) of an individ ual to a fine of not less than $500 .0 0 and not more than $2, 000; and on an (

e) point, of a corporation, trade unio n, employ ers' organizat ion, employme nt agency or occupational asso ciation, to a fine of not less than $2, 000 and not more than $10, 000 would be my recom men dation in stif fening those fines in order to make the Human Rights Act more eff ec tive . I thank you very much for being allowed to speak, and hopefull y you will take my sug gestions into consideration. MR . CHAIRMAN : Thank you Mr . Ternette . Are there any questions? Mr. Bi lton, MR . BILTON : Yes, Mr. Chairman. Iw onder if l could ask Mr . Ternette -w hat your occupation is ? MR .

TERNETTE : I'm a Comm unity Development Worker of Ne ighbourhood Service Centres - and I've been concerned in my whole life substantiall y of human ri ghts and problems , both in my own political si tuations which I have been discri minated against because of my own personal political belief s , as well as other ethnic and opp ressed minor it y groups in which I have been working with. I work with poor people , Indian groups, minority groups, Port ugese - all the opp ressed minority groups in this soci ety . MR . BILTON: Who do you think we're workin g for ? But in the meantime .• , MR.

TERNETT E: That' s a good question. (La ughter) MR . BIL TON: Mr. Chairman, I hesitate to ask this question, but I would like to ask it with your permi ssi on, through you, Sir : who pays your sal ary ? MR . TERNETTE : I don 't know whether that 's parti cularly •.. but I 'm quite prepared to , The agency is ••. MR . CHAIRMAN : You may answer it or · not an swer it� it's up to you, MR . TERNETTE : I will answer it , I have nothing to hide . I've never hidden anything . Most people have alway s said that , you know , us who are Marxists and so, all are behind the screens and everything else .

I' ve been very open; everybody knows what my political beliefs are and who I am. I work for Ne ighbourhood Servic es, which is a private social service agency funde d by the United Way. If you 'd like to know, the United Way pays my salary , MR . BILTON: Thank you, Mr . Chairman. --( Interjection )-- MR , TERNETTE : No, I do not believe in the United Way and I do not contri bute to the Unit ed Way, if you'd like to know that, MR. CHAIRMAN: Order plea se, Mr . Spivak , MR . SPIVAK : I wonder , if ! may , because I had the opportunity of talking to Mr.

Ternette just bef ore he came in for his presentation - and I' d like to pose this ques tion; I think it 's fa irly important in relatio n to this Act . The question of political belief s or dis crimination for political beliefs has been mentio ned and you 've in dicated you wanted it inc luded in other sections that were not suggested to be incl uded by the Attorney-General. But I think you've admitted that the determination of whether one has been discri minated on political belief s would be a very diffi cult thing .

Neverthele ss , if a complaint was made , at least the Commis si on would invest igate it, and that would have some effect - and it may very well uncover a si tuation, Now within this Act - and you've had opportunit y to read it - there is a distinction be tween the investigation by the Commission and an investigation by a board of adjudication or a board of inqui ry .

Now I wonder whether - recognizing the problems that you've just indicated with respect to the is sue of political beliefs - whether you would be prepared to consider that the undertakings by the Commission in its investigation entirely - which would go maybe from a stage just of investigation by an officer , then ultimately by the com missi on itself - should be in camera , while a board of adjudication inquiry, which would be the next stage, should be essenti ally an open court or a public hear ing. Do you see the distinction between the two ?

June 10, 1974 BILL 90 189 MR. TERN ETTE: I have to admit that I haven't given as great a thought on that particu lar matt er, except that on princ iple I don't belie ve anyth ing should be in camera. Basically I believe everything should be in the open. There may be certain aspects of invest igations that would have to be taken in camera on certain poin ts, because1as I admit 1political belie fs is a very d iff icult one to prove.

Substantially people will use arguments that are not based on, you know, that they are being discri minated; they will pull somebody off a job if they find out that somebody belongs to a certain political party, but they will use something else as the reason for it. But I'm not sure. I really honestly have to admit that I can't give you a stra ight answer on that . But all I'm saying is, it is imp ortant that people are given the opportunity to lay com plain ts which they were not able to do befor e.

I once laid at least three complaints to the Human Ri ghts Commiss ion on several aspects where I thought I was pers onally be ing dis crim inated on, and I felt that I had justification laying it, and the Human Ri ghts Co mmissio n answered back to me that because political beliefs is not in their mandate they could not even attempt to even look into the case.

I think there are substantially a lot of other people who are involved in union organizing, in various other political activities, both from the left and from the right, that are involved in situat ions where they get fired for political reasons but those reasons do not come out clear and they have no basi s on which they can lay a complaint on. An d it's im port ant that they at least be given the opportunity to lay that complaint so that an invest igator can find out certain causes and may be able to prove some point ithat there is som e polit ical implicatio ns) and then take a case to court.

I mean, that happened with me and, you know, I don't want to go back to my own case, but in fact because I did lay a complaint to the Police Co mm iss ion1 we did have an investigation on my partic ular case and certain facts did come out which were import ant at that time. This opportunity as given to me through the police action to be taken, has now been gi ven to many other people who have compla ints due to political reasons, and those people ought to be given the opportunity to lay complain ts. I'm not sayin g that they're all justified, and don't in any way mis interpret me.

I couldn't guarantee that everybody who says that they are be ing discr imi nated because of political bel iefs are in fact be ing dis cri minated because of political beliefs, but at least they've got to be given a chance to be invest igated on that basis. So if there is some truth to that matt er, that person can be shown that that person is discrimi nating on the basi s of political bel iefs and be gi ven a heavy fine so that he does not do that with other people comi ng into hi s fir m, business or whatever else. MR . CHAIRMAN: Mr. McKenz ie. MR . McKEN ZIE: Well, Mr.

Ternette, I congratulate you com ing here befor e the Commi ttee ton ight and bringi ng us the benefit of your wisdom. Some of it I find very interesting, and I support the conc ept basically where you suggest that som e level on the human rights legis lation, that the commi ttee should be dealt with by not only the Li eutenant-Gover nor- in-Council but the Opposition as well, and concepts along line. MR. TERNETTE: Yes. May I answer you ?

The reason why I say I may be differ ent from other people - the reason as I was say ing I don 't believe human rights is the prerogative of eit herthe NDP, I don't believe it's the prerogative of just the Conservatives, I don't think Ws the prerogative of the Liberals - it 's the prerogative of all, everybody, all of us who are ci ti zens of this country , to guarantee everybody else that we have those ri ghts that we deserve. And that's why I believe in that. MR . McKEN ZIE: I support that, and I thank you for bringing that point to the Comm ittee - and the other one, the Com mittee of the Whole.

But you were likely here in your chair when we were dealing with the consumer matter a moment ago - would you feel it's fa ir that some place in the legislation that we should treat the female sex equally with the male sex in the credit granting agencies ? MR . TERNETTE: Yes, absolutely. I do not believe in any sex discr imi nation in whatever field. MR . McKENZIE: Well, would you agree that that should be included in this ? MR .. TERNETTE: Yes, I' m sorry. I didn't follow it exactly.

I' m not as info rmed about that particular thing, but if that 's not included in the Consumer Ac t, I would definitely say that should be included. MR . McKEN ZIE: Thank you. MR . CHAIRMAN: Thank you. Mr. Sher man. MR . SHERM AN: Thank you, Mr. Chair man. Mr. Ternette, you began your remarks by saying that you were strongly in support of this legis lat ion and of the At tor ney-General's action,

190 BILL 90 June 10 , 19 74 (MR. SHERMAN cont'd ) ..... because you felt that for the fir st time that the Human Ri ghts Commiss ion would have some teeth with which to act and enf orce its orders. You then went on though to make several suggestions, propose several amendments, which to my mind would give the Human Ri ghts Com miss ion and this legislation some teeth. And wit hout those sugges tions and amendments you've made, I find it diffi cult to understand your opening proposition that the Co mmiss ion now has some teeth to it. MR .

TERNETTE: Let me again point out, let us look at the progress of the si tuation, and I'm not trying to modify anyth ing. I' m saying what the Commi ssion is at the present tim e is an ineffective organization. We have had many staff people quit because they have found it unable to deal wit h anything ef fectively. Several staff people have quit because they have found that they have been able to do nothing, really absolutely nothing.

Now for the first time we see some legislation that puts a little more teeth - and again, you know I'm not happy with it, I'm clearly indicating that as far as I'm concerned it's a step towards the right direction, but obviously it's a long way from being wher e it ought to be. Al l I'm saying is, for once maybe in my lifetime I'm giving the Government som e credit instead of attacking them all the tim e, and suggesting that they have moved a step forward instead of a step backward. Because in most cases in thi s government right now we seem to be winding up moving a step backward instead of a step forward.

A MEMBER: I'll tell you, I appreciate that. MR . GREEN: We had better find out what he means by forward and backward. MR. SHERMAN: I'm not go ing to examine those two def initions, Mr. Chair man, nor am I going to ex amine your inclination, Mr. Turnette, to give the Government some credit in this area. But I would like to ask one other question, and that is based on your dual opening propo sition, that the legislatio n now makes it impos sible for the Co mmiss ion to operate as both judge and jury - and I don 't read the legislation quite that way. I'm not clear on what you mean by rendering that impossible.

It seems to me that unless a disp ute or unless a qu estion or an inquiry went to the Board of Adjudication, the Co mmiss ion would still be fu nctioni ng as a judge and jury. If the complaint goes to the Board of Adjudication, it then is no longer funct ioning as ju dge and jury, but if it can be settled by the Commiss ion, the Commiss ion it seems to me is fu nctioning as judge and jury. Not that I have any particular objectio n to that, but you seem to have some objection to it. MR.

TERNETTE: Well, the only reason I have objections is the way the courts have ruled on this, particularly a couple of cases where in fact the Commission has been ruled - that in fact it has been doing a duali ty although it should not. And my im press ion - I may be wrong, and Mr.

Pawley can probably explain it better than I can - is that this adjudication was to separate to some extent the dif ference of bein g a judge and jury, so that in fact the kind of qualms that arose in a court case where a legitimate dis cri mi nation was thrown out, not because of discri mination but because of a technic ality of the legislation, that that be avoided. MR. SHERMAN: Okay. I see, I see.

You're saying that if the Co mm iss ion cannot settle a complaint and it goes to adjudication, then there no longer is a duality of judge and jury as was in the ... but where the Co mmiss ion is ruling on a question, it still really is the judge and jury. MR . TERNETTE : If it 's acce ptable to both si des, then I wouldn't hes itate to argue with that point. MR . SHERMAN: Okay. Thank you. MR . CHAIDMAN: An y further question s? Mr. Pawley. MR. PAWLEY: I would ask Mr. Ternette, if he has a copy of his brief, to leave it with us. MR . TERNETTE: Part of the brie f. MR.

PA WLEY: I was somewhat intr igued by reference to physical appearance. I just wonder what basically you had in mind there by suggesting the inclusion ... MR . TERNETTE : It was basically part of the NDP resolution at the convention, if you'll remember, and people were complainin g that there are people who look ugly. I mean, it's something like protecting the ugly.

We have the Gay Movement, we have all kinds of move ments, but we now have people who have legiti mately - I've heard of cases in my work that because of their phys ical appear ance1li ke, you know, boils and ugly looks and faces have been told, no, they can't. Espec ially secretari es, for example. I mean , we not only have sexual discri mination there, but substantially a lot of businesses will look for women who are

June 10, 1974 BILL 90 19 1 (MR. TERNETTE con t'd) ..... attractive, not if it is an efficient secretary who can type 60 words a minute but is physically ugly looking. Should she be discri minated against in favour of a good looking woman ? This is the key question, in the sense of it should be judged on cap ability, not on your appearance. An d yet at this time we still have a lot of discrimi nation based on the kind of appearance that you have. -- (Interjection) --! don't think I'm that ugly. MR . CH AIRM AN: Ar e there any further questions ? Hearing none, thank you} Mr. Ternette. MR . TERNETTE: Thank you. MR.

CH AI RMAN: Mr. Kent, please. BILL NO. 71 MR. KENT: Thank you, Mr. Chair man. As I explained at the start, I'm the Secretary of the Canadi an Life Insurance As sociation representing 130 life insurance co mpanies. We had a couple of remarks to make with respect to Bill No. 71. I have spoken to the Dir ector of the Bureau and have been assured that the po ints we wish to raise have been taken care of. I thank you for allowing me to speak. MR. CHAIRMAN: Thank you, Mr. Kent. Dr. Penner, please. BILL NO. 86 DR. PENNER: Mr. Chairman, gentlemen. I am here to speak in favour of

Section 186. 4 of Bill 86, an amendment to the Highway Traffic Ac t, which would make it mandatory to wear helmets while operating or riding a motorcycle. I am Ch a irman of the Manitoba Medical As so ciation Commi ttee, which is concerned with medical emergency services. Am ong other things , this Co mmittee is responsible to study accidents, recommend on their preventions and the treatment of injuries which are sustained in acc idents.

An examination of the studies on the value of helmets to reduce severity of injuries and death leads us to the ines capable conclus ion that helmets do indeed reduce the severity of injuries and death.

Conversely, we believe there is no good evidence to show that the use of properly con structed helmets, and I stress properly constructed helmets - helmets which are not properly constructed which reduce vis ion, which are not strong enough and which impair hearing are not the kind of helmet which we would sponsor - that we do not suggest that helmets which are properly constructed will result in increased injuries or indeed in death.

There have been suggestions made that the use of helmets has resulted in the increase of certain types of inj uries, and this indeed may be true, but the alternative is that if you ar e protected against a lethal injury to your head and sustained another type of injury which was compatible with life or recovery, then perhaps it's not a bad trade-off. We recognize that the use of helmets will not prevent all injur ies or deaths , but if they prevent only a few injuries or indeed a few deaths, then I think they're justified.

In my role as pathologist, the doctor who examines the unfortunate victims of fatal acc idents to deter mine the extent of inj uries and the cause of death, as part of this examination I can never escape the asking of myself in each motorcycle death in which a helmet has not been used, "Would the use of a helmet have resulted in a prevention of this tragedy?" An d in so me cases, I could not escape the conclusion that they indeed would have. We recognize that many people hold different viewpoints , and that people resist certain restrictions of their freedom of choice of lifestyle.

However, gentlemen, I suggest that if you consider it your responsibility to reduce the epidemic of injuries and deaths on our highways, then this

section of the Cr imi nal Code should be passed at this session. If we in any small way reduce the number of severe injuries or prevent a si ngle death, then it has been worth while. Thank you. MR . CH AIRM AN: Thank you. Ar e there any questions ? Mr. Spivak. MR . .SPIVAK: Dr. Penner, this is not meant as a facetiou s question, but in order to make a point I have to put this to you. Do you believe, or is it the Man itoba Medical As socia tion 's position that cigarette smoking can cause lung canc er? DR. PENNER: Indeed I hold a very strong viewpoint on that. Indeed it does. MR.

SPIVAK: Do you believe there should be legislation banning cigarettes ? DR. PENNER: I personally would like that idealistic state to be achieved. It's like banning alchholC I don't think it's achie vable and therefore I wouldn 't vote for it, but I certainly think it's very important that every effort be made to convince people that they ought not to

192 BILL 86 June 10, 1974 (DR. PENNER cont'd) ..... smoke. It is not in the interest of their health. MR. SPIVAK: But on the bas is of the medical evidence1is it not in the interest of soc iety that cigar ette smoking be banned ? DR. PENNER: Yes. MR . CHAI RMAN: Mr. Pawley. MR . PAWLEY: I would li ke if Mr. Penner could provide us with any infor mation as to whether or not in other juri sdictions in Ca nada - I understand that most other jurisdictions, provinces, in Canada have banned, or have required, passed legislation requir ing the wear ing of helmets. Is that correct? DR.

PENNER: I cannot speak for every province. I'm sorry1 I don't know. I know that there are some, and of course you people are aware that they are mandatory in a number of the states south of the border, and in Europe in certain states . I can't give you the status in Ca nada. MR . PAWLEY: You have acces s, or do you have before you any stat istical material indicat ing the effective ness of compulsory helme t wearing ? DR. PENNER: Yes I have a cons id erable amo unt of info rmation on this.

I thought that the hour bein g late, and I' m sure that you gentlemen have been subjected to a lot of statistical data in the past, that I would not provide the deta ils of respect . . . MR. PA WLEY: I don't know, maybe the Commi ttee would app recia te some info rmation along that li ne if you have it in your presence, Dr . Penner. DR. PENNER: Very brie fly. A number of studies have indicated that depending on a number of ci rcumstances the am ount of injuries and reduction in deaths can am ount to as high as 37, 38 or 40 perce nt in those who wear hel mets on the over-all versus those who don't.

Now it is not an absolute - there is no helme t constructed that will prevent all fa talities or ser ious injuries, but we think that it provides suf fic ient protection and reduces injuries suf ficie ntly to justify its us e. MR. PA WLEY: Could you give me the source of those statis tics ? DR. PENNER: Yes I could leave you with a number of reprints which I have ri ght here, Si r. I could leave you with them. MR . CHAIRMAN: Mr. Mar ion. MR. MARION: Dr. Penner, is there any clinical evidence, scientific clinical evidence that would substantiate the case that you hold that helmets can prevent deaths ? DR.

PENNER: Yes Sir. Yes Sir. MR. MARION: An d these are scie ntifically proven. DR. PENNER : I think so, Sir. MR. MARION: And you have inf ormation substantiat ing this, Dr . Penner ? DR. PENNER: I have, Si r. MR. MARION: Could you table that evide:1ce with this Co mmittee ? DR. PENNER: I would be pleased to. I would be pleased to. MR. MAR ION: Thank you. MR. CHA IRMAN : Mr. Jorgenson. MR. JORGENSON: Dr.

Penner, do you not think that one of the cardinal principles in the drafting of any legislation is that the major ity of the people to whom this legislation will apply, the vast major ity of them, approve of the legislation and are prepared to go along with it ? DR. PENNER: Ideally that is right, Sir, but I think as you walk down the road of trying to br ing about changes ther e's an aspect of education which is essential.

I'm not an author ity on the evolution of the regulations in our Traffic Ac t, but I suggest that a number of the regula tions which were drafted which produce definite restr ictions on our li festyle and how we behave, and so on, on the highway, were passed aga inst the common will of the majority of drivers. But based upon evidence and education, then these things become acce ptable. MR. JORGENSON: Do you not think then that the education and acce ptance must come first in advance of the principle of the legisl atio n ? DR.

PENNER: I think that on the basis of the . 08 alcohol legislation, which was enacted not long ago, that the two should march hand in hand. If we wait for one to happen we'll never get the other done. MR. CHAIRMAN: Mr. Bostrom. MR. BOSTR OM: Mr. Penner, you mentioned that not all helmets are of a type which would be useful in case of acc ident in preventing injury. Do you have a type of helme t in mind

June 10, 1974 BILL 86 19 3 (MR. BOSTROM cont'd ) ..... which could be acceptable in your view to pr eventing injury to the head and at the same ti me avoid ing a neck injury, which seems to be so prevalent in these types of acciden ts ? DR. PENNER: There is unquestionably a number of - there' s a great deal of information available upon the type and construction of helmets which will increase the safety and will at the same time not reduce vis ion, and not impair hearing, and so on.

Now, the question of preventing neck injuries; Unquestionably if you get enough force applied to a well protected head you may not get a head injury but you may sustain a neck injury. But then the alternate is that you would have had your head smashed, and so which do you choo se ? MR . CH AIR MAN: Mr. Paulley. MR. PA ULLEY: Dr. Penner, in your involvement with acci dents, are you conver sant with the regulations under the Workmen's Com pensation Ac t and the Workmen's Com pensation Board charged with the responsibility of industrial safety?

Ar e you knowledgeable of the requirement of the wearing of certain safety pieces of equipment for employees under the Workmen's Com pensation Ac t in order to prevent injur ies that may be, or may not be serious ? DR. PENNER: Yes, Sir.

I have, I guess, a working knowledge of some of the devices, the hard hats, certain types of boots, and things like this, and I think they're based on good sound evidence which have proven their worthwhilene ss, and they are really in the same cate gory if you get thrown to the cement viol ently against your head, or if you have a brick dropped on your head, the net result is about the same, or can be the same. MR. PAULLEY: Mr.

Chairm an, just carrying this further, not dealing precisely with helmets, is it not true that insofar as - let's use that phrase''compulsory wearing of safety equipment, "that this also deals with welders that they must wear protective eye equipment, and whether or not the indiv idual concerned may feel that he should, or she should, or should not? DR. PENNER : Yes indeed. Being human beings we often resent these restrictions when they interfere with the way we think we would like to do things, but for the co mmon good of the individual, and as a doctor1 I must support them. MR . CHAIR MA N: Mr. Graham. MR .

GRAHAM: Thank you, Mr. Ch airman. I would like to ask Dr. Penner, is he that familiar with the Workmen's Com pensation Ac t on Safety Equip ment ? Does it insist that when a worker is not on the job that he wear the safety equipment when he's at ho me? DR. PENNER: Obviously the Ac t does not provide that he do this. MR . GRAHA M: Well if he's in danger of an acc ident at work, is he not subject to the same type of accid ent when he's at ho me ? DR. PENNER: I suggest that the risk at work is greater than the risk, the same type of acc ident risk at home, on the whole.

I think that is why legislation has been passed to cover one and not the other. MR. GRAHA M: Thank you. MR . CHA IRMAN: Order please. Mr. F. Johnston. MR. F. JOHNSTON: Thank you, Mr. Chairman. Dr. Penner, I think we're all aware that you're very famous for your physical exercise yourself with your bicycle that you - your mode of transportation. Do you feel, yourself, that when on the bicycle that you should have a helmet on for your protection, or would you find it uncomfortable, or would it be uncomfortable enough that it might be of some harm to you on a hot day, or something of that nature? DR.

PENNER : I've discussed this already tonight with a person who will be speaking shortly to you. I suggested to him that if and when evidence becomes available that it is to my safety, and that there is a signifi cant increase in the safety to my being, my well-being, by wearing a helmet while biking, I will wear one, and I will promote their wearing. MR. F. JOHNSTON: Yes, I think I could agree with your thoughts, Do::tor. DR. PENNER: So far that evidence is not yet here. MR . F.

JOHNSTON: But the po int still remains that the acc idents on motorcycles in many cas�s are caused by collis ions with automobiles, or so mething on the road that throws them, which in turn may cause head injury. I think - I'm not going to refer to you - I think the same thing could apply to anybody, boys and girls, or anybody riding a bicycle or that type of mode of transportation, and it would seem to me to be something that we have to be very sure whether it would be to the benefit of safety or not, from the point of view of wear ing these hel mets. DR. PENNER: I agree with you, Sir, it is impor tant.

194 BILL 86 June 10 , 19 74 MR . CHAIR MAN: Mr. Mi naker . MR. MINAK ER: Yes, Mr. Cha irman, through you to Dr. Penner.

Earlier one of the gentleme:1 asked a question with regards to Workmen's Com pensation Act, and wouldn't you agree that one of the reasons that safety equipment is mandatory on certain projects is not only that it 's to safeguard the individual, but also any other person who happens to be workin g with an individual such that by failure to wear a helmet that he may result in getting injured, but also he in fact might in turn, because he's operat ing equipment or machinery with other people in the vic inity, cause an acc ident to injure some one else� · DR. PENNER: Well both factors operate.

A great number of the safety devices are for personal safety dir ectly, and they obviously can have a spin-off on somebody else if the person is in a critical pos ition in terms of operating equipment, and so on. So it can apply to both. MR . MINAKER : Now, Mr. Chair man, again through you. Then, Dr. Penner, in the instance of wearing a motorcycle helmet most injuries that would be infl icted on any body would be on the indiv idual himse lf. Would you not say that it is very unlikely that any injury would be caused to someone else if the indiv idual did n't wear a helmet? DR. PENNER: That is correct.

Generally speaking that is correct. I sup pose there's the odd tim e when the bi cycle spilli ng, the bike spilling, could harm so mebody else as part of the acc ident, but generally speaking the person at risk are the people on the motorbike. MR. MINAKER: So then in fact what is being suggested is legislation be passed mandatory to try and have someone save his own injury, or his own lif e, you might say. Even though there are . DR. PENNER: Just as we have done in many other sections in this Traffic Ac t. MR. MINAKER : But I think, Mr.

Chairman, in most cases in the Traffic Ac t where it 's mandatory for safety reasons to drive accor ding to the speed and so on, that the legislatio n is there not only to protect the individ ual but also someone else who could be conseq uentially af fected by breaking this law. DR. PENNER: Both. This is right. MR . MINAK ER: It boils down to almost simi larly that if smoking is dangerous to the individual and can cause death, then if we follow your premise, that smoking should be outlawed in this country. Is that correct ? DR. PENNER: That would be ideal. Yes, if you wouldn't get a worse substitute. MR .

CHAIRMAN : Mr. Brown. MR. BROWN: Thank you, Mr. Chair man. I would like to ask Dr. Penner whether he thinks that wearing a helmet would give somebody ri ding a motorcycle a false sense of security, and that he would take chances not ordinarily taken and thereby caus ing more acc idents than you would have by not wearing helmets ? DR. PENNER: I suppose this is always a poss ibil ity. I'd like to think that motorcycle drivers are respons ible people concerned about their own welfare and the welf are of people on the str eet and that they are concerned about increas ing their safety.

You know)the y're human beings though and I sup pose from time to tim e all of us may feel that we can take chances be cause we have certain protective devices . This would be unfortunat e if this happened. MR . CHAIRMAN: Mr. Turnbull. MR. TURNBULL: Thank you, Mr. Chair man. Dr. Penner, I did not hear if you men tioned this point or not, on whether your prese ntation repres ents a consensus of medical opinion in the province or in the country. DR. PENNER : This is an official prese ntation on behalf of the Man itoba Medical Ass oci ation; it is our adopted policy on this, it is a position on this si tuat ion.

MR . TURNBULL: Ad opted in convention ? DR. PENNER: Well ... MR. TURNBULL: What I'm thinking, you see, is to the extent to which it is a consensus amongst the medical people in the province. DR. PENNER: In this sense it is that recomme ndations which are brought up by com mittees which are charged with the responsibility of these things are endorsed by the com mittee first, then the executive, and then the membership at large at the annual meetin gs. MR . TURNBULL: Thank you. MR . CHA IRMAN: Mr. Sherman. MR. SHERMAN: Mr. Chair man, Dr. Penner.

Are there many members of the Ma nitoba Medical As sociat ion that go motorcycling, ride motorcycles for fun, enjoym ent ?

June 10, 1974 BILL 86 195 DR. PENNER: I can only identify one easily; I could even name him. I won't. He wears a motor helmet all the time. A helmet. MR. SHERMAN: But then there is not a great proportion of the profession that's exposed to the ... DR. PENNER: We're all driving bikes now, Mr. Sher man. MR. SHERMAN: It's not a great proportion of the profes sion that leaves their Ch rysler Imperials at home and rides motor ... and is exposed to the experience of riding motor bikes then ? DR. PENNER: That is right. MR . SHERMAN: Do you think that there's - maybe this is an unfair question, Mr.

Chairm an, but I'd like to ask Dr. Penner , do you think that there's any danger that this kind of step, this kind of mandatory regulation with respect to clothing for motorcyclists could lead to another step, and another step, and another step, in that area so that there, you know, the whole activity is controlled by com pulsion and mandatory orders and regulations ? DR.

PENNER: Well if we as a group of respons ible citize ns in socie ty recognize certain dangers, and we try to educate, and indeed legislate certain th ings which are in the interest of the individual, after all I'm not interested in making a group of people, minority or anybody else, wear a helmet just for the sake of wearing a helmet. I'm convinced that it's in their own interests, for their own benefit. I suppose there's always the poss ibility that1 you know, you get the foot in the door and one thing leads to another, and very shortly we have no freedoms left, but I don 't view this in that category, Sir.

Perhaps I view it as a doctor who has seen the other side and think it's a tragedy every time I see a serio usly injured individual, or,� worse than that, I meet him in the morgue. This to me is an inordinate tragedy which I just don't want to have happen. MR. SHERMAN: Well I'm sure of that, and I certainly sympathize with that viewpoint. I just wondered whether you - obviously you've come to the conclusion that this kind of thing can't be, this kind of safety can't be achi eved through education. It can only be ... DR. PENNER: Not alone, not alone.

An d we also recognize that passing a law doesn't mean that it will necessarily be used. You know, laws aren't all immediately completely put into effect and, you know, people wi ll violate the law. I don't expect that if this law is passed that everybody will then and forthwith drive with a helmet, but I'm hopeful that it will achieve some good. MR . SH ERMAN: Well are there things that you would like to have seen in this bill, this particular bill, pertain ing to highway safety, and vehicular safety generally, rather than just sort of si ngling out the motorcycle rider ? DR.

PENNER : I would dearly have loved to have seen the use of seat belts. MR . SHERMAN: Made mandatory? DR. PENNER: Made mandatory. MR . SHERMAN: What about the use of helmets for drivers ? DR. EENNER: Indeed we may not be too far from that if we insist on using cars which are inordinately unsafe as they are. A ME MBER: Right. MR . SHERMAN: What is your view of the kinds of surveys and studies and conclusions that now seem to be in the process of being developed in certain parts of North A m erica, notably Cali fornia and New York!

I understand there is a concerted move under way in New York to repeal the Motorcycle Helmet law there in the State Legislature. What's your view of those kinds of conclus ions, surveys? Do you think that they're not adequate, haven't been based on comprehensive studies ? DR. PENNER : Well I'm not aware that this legislation is pending in New York. I'm unfamiliar wi th the fact that they are reversing their stand, if indeed they are. So I can't express a view on it, not having had a chance to study it. MR . CH AIRMAN: Mr. Bostrom. MR. BOSTROM: Thank you, Mr. Speaker. Mr.

Penner, as you probably know1 this particular

section will be coming up for a free vote, and the th ing that has me puzzled in terms of my making a personal decision on the basis of this question is that it's not really clear to me, from the different points of vi ew that I've heard, whether deaths as a result of no helmets exceed the deaths as a result of helmets. The reasons given for more deaths as a result of helmets, that I've heard, are those of impaired vision, impaired hearing, discom fort to the

196 BILL 86 June 10, 197 4 (MR. BOSTROM cont 'd) ..... rid er, broken necks from whiplash, and so on, and statis tics have been presented to members of the Legislature which give some basi s of comparison before and after legisl ation involving hel mets. Now what in your opinion and in view of your looking at the various sta tistics, what in your opinion is the true case here in terms of before and after ? Are these statistics that are pres ented comparab le ? Can you say conclusiv ely that there will be fewer deaths as a result of wearing helmets ? DR.

PENNER: Well we are convinced, or we wouldn't be here today, that that indeed is the fa ct, providi ng properly des igned helmets are used. Now it's impossible, as you will recognize, that if one argues that an acc ident was caused because of a somewhat restric ted vis ion and, you know, thes e are intangible facto rs relating to one's alertness and so on, which indeed you can't measure or really deter mine; particularly if a man is seriously injured, or he's dead, he really can't be a good witness in this.

An d I recognize that there are areas of differ ence of opinion, and there are obviously differences of how you evaluate stat istical data. This is the way we have come up with it, and we think, obviously, that we have some right to this conclusion. We recognize that some disa gree with us. MR. CH AIRMAN: Are there any further questions ? Mr. Graham. MR. GRAHAM: Doctor, you have expressed your concern about the safety and the use of helmets. Have you as an assoc iation made any repres entation to the manufactur ers of helmets to improve the standards of those helmets ? DR. PENNER: No, not specifically .

We are aware of certain standards which are pro mulgated by national safety standards, and that they exist, and that considerable amount of research and so on has been done on this , but we have not personally made representat ion to companies, Sir. MR. GRAHAM: Have you made any repres entation to the National Safety Standards As sociation ? DR. PENNER: No, not as such. MR. GRAHAM: Thank you. MR. CHAIRMA N: If there are no fu rther questions, thank you, Dr. Penner. DR . PENNER: Thank you. MR. CHAIRMAN: Mr. Roberton1 please. MR. ROBERTON: Hello.

As you all know, or as most of you probably know, my feelings towards the compulsory crash hel met legislation is taboo. I've been a motor cyclist in Winnipeg, in Manitoba, for a matter now of 18 years. I've been involved in acc idents, but I must say to you that oft entim es when these acc idents occur they're not my fault, they're the fault of people around me. An d through ri ding a motorcycle I've become a very very consc ientious, very defen sive driver. Now we met with the NDP caucus. We had the opportunity to talk to you fellows, to the other people, the other parties, I'd like to make this point clear.

When the origi nal introduc tion of this came about in 1966 or '67, it was us, the motorcyc lists of the Province of Man itoba, who drew to the attent ion of the Motor Vehicle Branch of the Government, the Government members, and the Police Department, the fact that there was inadequate driver testing; that if you had an auto mobile lic ense you could in Manitoba drive a motorcycle. We felt that this should be improved upon. We made pres entations, we made a bit of a stink about it, we were heard. Now in Man itoba we have by far probably the best driver testing available anywhere in North Am erica.

We do have driver instruction available through the Winnipeg Safety Co uncil, which a lot of my fellow motorcyclists volunteer their time. They set a course up for youngsters, for beginners, for people who want to learn motorcycling. I think this shows that by doing these type of things1 we are concerne d; we do care.

An d if you could turn around, and if you could provide us with inf ormation that you could provide us with a helme t that di dn't restrict or impair hearing, peripheral vis ion, didn't cause you to perspire, to get itchy, that bees or bugs can get in and irr itate you when you're going down a highway and you should be concentrating on your driving, accor dingly if you could provid e us with a helmet that would protect us at a dir ect im pact, at over and above the speed limi t, which isn't so now with the existing standards, we, because we are responsible people, because it does concern us and us only, we 'd probably turn around and say, "Well fine, you know, you don't have to compel it because everybody out there would be wearing it.

" But this isn't so. It just doesn't happen. It's not feasible. You can't make a helmet that doesn't restrict, doesn't restr ict your hear ing or your vis ion, that doesn't cause you to perspire, that will protect you at a direct impact at 60 miles an hour, using the

June 10, 197 4 BILL 86 197 (MR . ROBERTON cont'd) ..... existing materials, it's got to be eight inches thick. Now this th ing we'd have trouble lifting it, let alone holding it on our head. I've circulated the statistics, the briefs, the material that we had. It's nothing secret. We don't want to keep it until now and bang1hit you with it.

I wanted to give it to you to give you ample time to read this and to digest it, and to think it over, and to realize that if you were me as a motorcyclist driving down the street with a crash helme t on - and if you realize that if this was legislated and I had to wear it, I had no choice in the matter at all - and all of a sud den there's an obstruction in front of me; ther e's a car; bang1 I hit it. The whiplash type action occurs. Because I have a helme t on that weighs maybe two, maybe five pounds - my spinal column is not made to absorb this extra weight - so what happens ?

Oh no, you didn't die from a concussion but you ended up with a broken neck. Poor Brian out ther e in the ceme tery. No thanks . Now I realize that you people are here because the major ity of the people of Manitoba have put you here no matter what party you are from, and you're here to pass laws to benefit people. Now I'm a person and I ask you, how many people from the motorcycle population} dealers included, representat ives of clubs, or indiv iduals, are here speaking for this law ? I don't see it.

I see a pathologist, a doctor, but I don't see motorcycle people, the people who they themselves have got enough comm on sense about them to realize that if this law is going to benefit us - fine, go ahead)put it in. But you can't convince us; the doctor can't convince us. The doctor says, well if a helme t was made that didn't restrict vision. Fine, show it to me. It's just not poss ible. Now, as I say, I'm not going to quote statistics to you. I could go on indefinitely doing it, but there is one I would like to draw to your attention.

This is the sta tistics we have from California where you can ride all year round, where you have more motorcycles in view than anywh ere in North Am er ica, 72 fatalities per 100, 000. Everybody's heard th is. New York, which is a clim ate simi lar to ours, are restr icted maybe four, maybe six mon ths out of a year that you cannot ride, you had a compulsory law in effect since 1967 , you end up with 1 36 fatali ties per 100, 000. You look, you realize that there's been a slight decrease in fatalities due to head injuries, but there has been over 100 percent increase in fatalities due to broken necks .

Now you can do a lot with statistics. Ac cordingly the broken neck may have numbered one, an over 100 percent increase can be three. I know it; I

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Collection	Manitoba — Debates (Hansard)
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