Manitoba Hansard — 17 February 1981 (Sitting 20B, 31st Legislature, 5th Session)

31-5-20b

Manitoba — Debates (Hansard)

LEGISLATIVE ASSEMBLY OF MANITOBA Tuesday, 17 February, 1981 Time - 8:00 p.m. CONCURRENT COMMITTEES OF SUPPLY SUPPLY - CO-OPERATIVE DEVELOPMENT MR. CHAIRMAN, Morris McGregor (Virden): I call the Committee to order. 1(b)(l) - pass; The Honourable Minister. HON. ROBERT (Bob) BANMAN (La Verendrye): Mr. Chairman, before the committee adjourned this afternoon I indicated that I'd get some materials on fishing cooperatives. I have a four-year comparison here, which I'd like to give to the member and also a preliminary report; I hope the member understands that there could be some adjustments made to this report.

It's just a preliminary report, a draft copy with regard to the Annual Report which will be made public. MR. CHAIRMAN: The Member from Lac du Bonnet. MR. USKIW: What item are we on, we are still on 1(b )(2) is that correct? MR. CHAIRMAN: 1(b)(1) but I guess we'll have (2). MR. USKIW: Prior to our adjournment hour at 4:30 it seems to me I recall asking the Minister whether he could give us a bit of a

summary and perhaps it's in here but obviously we won't have time to peruse that. A

summary of the co-operatives in Northern Manitoba. The numbers of them, in other words, and how many become extinct, if you like or gone out of business; or any new bankruptcies or any new co operatives for that matter. MR. BANMAN: We are presently working with approximately 13 co-operatives, fishing co operatives, in Northern Manitoba and I believe there are four consumer co-operatives, so we're dealing with 13 fishing co-ops, four retail co-operative stores. MR. USKIW: Of the 13, now is the 13 the totality of all of the co-ops that were involved in fishing or have there been some dropouts? MR.

BANMAN: I believe a number of years ago there were a number of them formed and we referred to that before that the base wasn't as strong as we would have liked it to be; there are a number have dropped out. I believe this is the same number as we had last year and we are in the process now of looking at another two, expansion of one; and I understand from staff here that there is one that· is being dissolved, that is in the process of being dissolved, and there is a possibility of two new ones starting up. MR. USKIW: Yes, Mr.

Chairman, I wonder if the Department is in a position to indicate just what the status is of those that were having some difficulties over the last number of years. I believe IIford was one of them. Is it still in existence or is that one of them that's gone out? It was IIford, South Indian, there were three or four of them that were having real problems over a period of years. The number 13 doesn't tell me very much in terms of what happened to those in financial difficulty. MR.

BANMAN: IIford has dissolved a number of years ago; the South Indian Lake one - the Co-op Loans and Guarantee Board advanced the funds, I think were in excess of a million dollars for construction of that South Indian Lake - they have opted out of the co-op system.

We at present lease the structure to the Freshwater Fish Marketing Corporation for, I believe, something like $30,000 a year and that was started three or four years ago, and we are operating that facility; they are using it, but they are using it as a co-operative; tey're delivering right to the plant where the Freshwater Fish Marketing Corporation takes over. MR. USKIW: Who owns the facility then, Mr. Chairman? MR. BANMAN: It was owned by the Co-operative Loans and Guarantee Board. It's still there but it's going to be transferred to the Department of Co operative Development. MR.

USKIW: It'll become a government asset, in other words, if you can call it that. MR. BANMAN: Yes, but which really it is now. I should point out that with the taxes and different maintenance and things that are involved with that, it really sort of washes itself out. There really isn't any revenue accruing to the province on it. MR. USKIW: Yes, Mr. Chairman, I don't see in the Estimates where we can discuss this other than at the present time and that has to do with the question of CIL. There were a number of questions put to you, Mr.

Chairman, in the House, as to what is happening to the CIL plant in Transcona with respect to its operations and its financing and where the Province of Manitoba is involved or is going to be involved in connection with their refinancing. MR. BANMAN: I believe in May of '78 the three prairie provinces agreed to provide a loan guarantee of $7 million, Manitoba's share of that being $2.8 million; Saskatchewan's share $2.625 million; Alberta's share $1.575 million. The Federal Government at that time gave them an interest-free loan of, I believe, $8 million.

There was a group of individuals, some from the federal and one of the provinces that formed an administrative committee which worked together with the Board of Directors and the new general manager who was hired to try and help turn the thing around. They have done a fairly good job in the last number of years; their projections for losses in this last year that they've just finished were substantially higher than the actual loss; the actual loss was slightly under $1 million, so they consider that a fairly encouraging sign 799

Tuesday, 17 February, 1981 considering the drought in some of the other provinces that they've been experiencing. One of the major problems, I guess, from having being involved in the retail business myself, was with their depots. The system of retailing was one which really needed a lot of revamping and they are in the process right now of doing that.

As the member will appreciate, one of the problems they had was that every little community would like to have a depot or would like to have a dealer but that just doesn't become economically viable and as a result they have been trying to rationalize where their depots are and where they should be and trying to get the local organizations involved and hopefully we'll get their retailing industry in place.

Several months ago we were asked to take a lesser position with regards to, and I'm talking now of the three prairie provinces to the tune of I think some $600,000 so that they could go out and borrow, I believe, $15 million extra on the assets that they had. At that time the three levels of government, as well as the Federal Government and I believe the co-operatives involved agreed to that and they did borrow the additional funds. They are now seeking from the government and I should point out that we're looking at gathering information with regards to their request.

They are looking at trying to raise an additional $35 million worth of capita. I think they started out wanting an interest-free loan. I think we're down to maybe, they are talking about equity now. I guess what I have to say to the member is that we're looking at compiling information and that there has not been any decision or any concrete proposal made to us which will have to be studied by the prairie provinces as well as the senior levels of government, and I might add, by all the other co operatives and centrals that are involved. MR. CHAIRMAN: Member for Lac du Bonnet. MR. USKIW: Mr.

Chairman, given the fact that there is an administrative committee, and a new manager, which I understand was appointed in order that the loan moneys would be advanced and the provincial and national banking be attained. I believe those are the conditions as I recall it. Can anyone indicate to me why the CCIL people don't try to market through a normal - in the same way, let's put it that way, as do other manufacturers market their product through the regular dealerships throughout the country, as opposed to having exclusive CCIL dealership depots. MR. CHAIRMAN: The Honourable Minister. MR.

BANMAN: This is one of the things that the new General Manager is wrestling with and I understand that they are looking at possibly letting franchises, for instance, if somebody has a versatile dealership this might be something, another line that he could carry, which would relieve the heavy costs of operating just one facility for their particular one product. So, they are looking at that and I understand that is one of the options that is very viable. 1 guess as the system has developed; it was a true co-operative owned by the Pools and the different farmers.

What has happened is that they did try to create local co-operatives to run the depots rather than having head office run the depots. In some areas it just isn't viable because you haven't got the product line to support the total operation. So they are now in the process, I understand, of looking at awarding franchises if I can use that terminology to the different dealers in the different areas. MR. CHAIRMAN: The Member for Lac du Bonnet. MR. USKIW: With respect to the reduced security, as I understand it, the company wanted to arrange for additional financing outside the government.

I gather the figure was 15 million and in order to do that they had to have some security transferred to the other financiers. Would that be correct? MR.BANMAN: Right. MR. USKIW: If that is so, what amount of reduction did Manitoba have to accept in terms of the 2.8 being in dollars that were guaranteed by the province? What was the guarantee that Manitoba had for the 2.8 million when it was advanced and what is now the guarantee or security based on the amendment that was entered into later on? MR. BANMAN: Based on the guarantee and the assets at that time, our guarantee was 2.8 million.

In the event let's say that C.l. would wind up our position because of the move we made would be $280,000 worse, if I can use that terminology. MR. USKIW: Just to clarify that point, is the Minister saying that the changed position now puts us in the position of realizing 280,000 less in the event of a shutdown or foreclosure or whatever, why would the province have agreed to a reduction of the security? What was the basis of that agreement? MR. BANMAN: The main thing is to allow them to float that additional loan of $15 million and keep them afloat.

I guess one of the problems that you have right now is the high inventories that they are faced with and you have the assets but you, in this particular instance, just didn't have the cash flow to come up with that additional funds. That's why the $600,000 between the three prairie provinces was vacant. MR. USKIW: Could the Minister indicate who was providing the additional $15 million that required the release of the security? MR. BANMAN: Canadian Central. MR. USKIW: Yes, I see.

Could the Minister then indicate why, in order to maintain the province's security why the province did not take equity in the company in order to maintain its security position as opposed to reduce the security against the $2.8 million? Was that option considered at all or not? MR. BANMAN: Not at the time, no. MR. USKIW: Could the Minister indicate why that option was not considered, Mr. Chairman? MR.

BANMAN: This would seem to at the time be the simplest course of action with regard to all the parties involved and I think there was an understanding that even though it provided them with a certain line of credit, an operating line of 800

Tuesday, 17 February, 1981 credit at the particular time, that a more in-depth look would have to be taken in the near future with regard to the future operation of the company and it just wasn't an option at the time. MR. USKIW: Is there anything in the structure of the Co-operative or in law that would have prevented the province from taking an equity position in the company? MR. BANMAN: I can't say; I don't know. MR. CHAIRMAN: The Minister of Natural Resources. HON. HARRY J. ENNS (Lakeside): Mr. Chairman, on a point of order. I say on a point of order but I say it in a friendly way.

You know, the line of questioning that is being pursued by the Honourable Member for Lac du Bonnet seems to indicate that in some way or other, the department or the government indeed has been asked to take over a very substantial function of the management role of the company and I don't think that has been the case. I think some of the questions which are quite legitimate perhaps that the Member for Lac du Bonnet is asking, were questions that were not raised by Co-op to the Minister or to this government and therefore weren't considered.

I mean -(Interjection)- well no, but the honourable member is ... well, Mr. Chairman, I ... MR. CHAIRMAN: The Member for Kildonan on the same point of order. MR. PETER FOX: There is no point of order. That's what I'm trying to indicate to the Chairman. The member wants to make an argument, that's all, Mr. Chairman. MR. CHAIRMAN: To the Minister of Natural Resources, I don't at this moment think he has a point of order but maybe he can prove his point yet. The Minister of Natural Resources. MR. ENNS: Mr. Chairman, I think there is some onus for us for trying to keep the debate on a proper track, on proper record.

While I interjected gently I was simply suggesting that the Honourable Member for Lac du Bonnet was asking a number of questions which kind of implied a far greater degree of managerial control that the government was investing in Co-op Implements which wasn't in fact the case. Mr. Chairman, you know my modest and gentle nature; I would very quickly cease and withdraw from pursuing that point of order, always prepared to take the direction from the Chair, always prepared to acknowledge that ... MR. CHAIRMAN: I don't think that the Minister did have a point of order. The Member for Lac du Bonnet. MR. USKIW: Mr.

Chairman, I am kind of amused at the injerjection of the Minister because I think that all I would have to do at this stage is to reflect back on the debates of the Northern Co-operatives and the extent to which the government was managing those co-operatives during the 1970s, co-operatives that were having problems, financial problems. If I were to take some lessons from my members opposite I would have learned, Mr. Chairman, that even though we played an advisory role in management from their perspective at that time we were the people that were in fact managing the co-operatives, so, Mr. Chairman, ... MR.

CHAIRMAN: The Minister of Natural Resources on a point of order. MR. ENNS: Of course it was quite different in those years. We were in opposition in those years. MR. CHAIRMAN: All right, all right. Either let's get down to business or let's adjourn and go home. The Member for Lac du Bonnet. MR.

USKIW: The Minister confirms exactly the point that I am making and it depends on whose ox is being gored I suppose, that is the substance of his contribution to this debate. 1 am not suggesting that the government is managing the CCIL plant but my unerstanding of it is that one of the conditions for the loan was that there be an administrative committee set up with government representation and I believe we have a government representative on that committee and that a new manager be appointed and that manager would have to be satisfactory to that committee.

If I am not correct perhaps the Minister would wish to correct me but my understanding is that those were some of the conditions that were applied in order to provide the necessary financing two or three years ago. MR. CHAIRMAN: The Honourable Minister. MR. BANMAN: Just to correct a few things; the Administrative Committee that was set up was at the request of, I believe, the Federal Government in Saskatchewan. Manitoba and Alberta took the position that we were providing a loan guarantee and in no way wanted to get involved in the internal workings of the company.

Hence we did not have a man sitting or a person sitting on that committee on the Administrative Committee. Saskatchewan has an individual and the Federal Government has some representation but Manitoba and Alberta took the position that we were going to provide a loan guarantee at the time with the operation of the company, would be left in the hands of the Board of Directors as well as the Administrative Committee. MR. CHAIRMAN: The Member of Lac du Bonnet. MR. USKIW: Does the Minister suggest to us here today that Manitoba does not have a representative on the Administrative Committee? MR.

BANMAN: Manitoba and Alberta both don't. MR. USKIW: Mr. Chairman, that does raise a question in my mind. The Minister indicated that Manitoba has guaranteed $2.8 million to this company based on certain security at that time, which has subsequently been reduced because of additional financing needs of the company and that Manitoba plays no role in trying to protect its interest. Then it reinforces my other question, Mr. Chairman, and that is given the fact that the 801

Tuesday, 17 February, 1981 government has advanced loan guarantees amounting to $2.8 million with minimum security, why it is that the government would not take as an option, at least the right to equity in the company should the need arise. I'm not saying they have to take an equity interest but if there was a problem in the company in order to protect Manitoba's interest, to the government's interest, why would not there be an option for equity participatation; should that kind of a crisis arise and should that be the only way in which we could realize on our guarantee.

What would be wrong with that arrangement, Mr. Chairman? MR. DEPUTY CHAIRMAN, Lloyd G. Hyde (Portage Ia Prairie): Mr. Minister. MR. BAIIIMAN: The members knows whether it be equity or a guarantee; it doesn't matter if a company fails. An equity position is no better than a loan guarantee position if they are paying out 50 cents on the dollar. If the the creditors finally foreclose on the company, if you own half of the company, and there is nothing left of the company, there is no sense in having an equity position.

It was considered at the time because of the large scale of the operation because it was a loan guarantee developed between the three provinces that Manitoba and Saskatchewan both indicated at that time that the guarantee was the thing that they were interested in doing.

We were not interested in an interest-free loan or an equity position, hence all three levels of government got together, this was the agreement that was struck and as the member will appreciate that you're dealing with not only three governments on the provincial levels, you are also dealing with the Federal Government and dealing then sometimes becomes a little tougher, but this is the deal that was struck. We are now reviewing, not only the security on that particular guarantee, but what the requests of the Co-op Implements is and we'll be making a decision with that in due course. MR. USKIW: Mr.

Chairman, could the Minister then indicate to me just what is the security that Manitoba has against the $ 2.8 million. MR. BANMAN: The assets of the co-op. MR. USKIW: The assets of the co-op. Could the Minister then indicate to me who else has the assets of the co-op as security? MR. BANMAN: The co-operatives are involved. They have a loan through, for instance, the Manitoba Co-operatives through the central; Saskatchewan Co-operatives are involved. I understand and I'll make this point too, that we are head of common equity in the ranking of the security, secure positions.

When the refinancing package took place, for instance, the Federal Government gave them an interest-free loan and the co-operative movement, I believe it was 7.5 that the co-operative system advanced. MR. USKIW: Mr. Chairman, where does Manitoba stand in line to realize on their security in the event that they had to realize on their security? Who are the parties that are ahead of the Province of Manitoba? MR. BANMAN: No. 1 is factory bonds, which 1 guess would be mortages and other things; preferred shares and then the provinces. MR. USKIW: Mr.

Chairman, I would ask the Chairman to confirm, or otherwise, that it is reasonable for the province to take a lower position on their security to the preferred shareholders. Is it reasonable, in your opinion, that the province should take a lesser degree of security than do the preferred shareholders? MR. BANMAN: Just to straighten that out we rank No. 3. The factory bonds are No. 1; the operating line of credit is No. 2; the province is No. 3. MR. USKIW: Does the province have a fair degree of confidence in the viability of the plant? MR. BANMAN: This is the whole thing that we're looking at right now.

I think one of the problems, whether it be government enterprise or any enterprise, is one thing building a proper product that's got to be sold. We just touched on that briefly before, one of the problems was in the marketing system. In the old depot system the factory owned it; they would ship out equipment to the factory and not even charge any interest to that particular depot. The system was really out of touch with what should be happening.

Given the preliminary sort of report that we've had which indicates that they've reduced their loss substantially from what the projections were seems to be sort of an encouraging factor, but I cannot at this time, until we've gone through the whole thing; we've been meeting with the chief executive officers to go through all the projections exactly where they feel they'll be heading in the next little while; how they intend to market; the different product lines they expect to bring onstream and that.

Until that is done I would be unable to say how viable the company is, or how well they intend to perform in the future. MR. USKIW: Can the Minister indicate just what is the purpose for which additional financial requests are being made of the Government of Canada and the three prairie provinces, the amount of some $30- odd million? Is that for expansion, or refinancing, or a combination of both? MR.

BANMAN: It's a number of things; it has to do with some R and D work that they want to do; they want to replace some of the existing manufacturing equipment, I believe; the other thing they want is to expand some of the product line. MR. USKIW: Is the Minister saying that none of that money would be used for refinancing? MR. BANMAN: Again, Mr. Chairman, I don't want to negotiate in public but, from what we can gather right now, it doesn't look that way, but we're in the process, as I mentioned, of hammering out exactly what we're looking at. MR. USKIW: Mr.

Chairman, in the event that the decision by all is that we advance additional sums of money, what then is the security position of the province? Does that diminish, proportionate to the 802

Tuesday, 17 February, 1981 then total amount of money, or is there new security that is going to be provided for the additional amount of money? MR. BANMAN: I can't really say at this point. MR. DEPUTY CHAIRMAN: The Member for Virden. MR. MORRIS McGREGOR: Mr. Chairman, I would just like to ask, through you, to the Minister. Last week when we all saw it in the newspaper, and apparently that was the first shot, of problems with Cl L. My first impression was, is this another Chrysler? Remember a year-and-a-half ago when Chrysler was showing some problems, and I remember well seeing in the paper an

article where the top man was getting something like $160,000 and he very graciously passed up that salary in order to keep the company afloat, but his bonus contract came to something like $183,000 if the paper report was correct.

Then that company indeed went to the government for billions of dollars and also went to the employees and said "well, now we don't want you to have any more increase" and yet one man there, just on the bonus, was getting a huge salary, probably a good deal more than the President of the United States; and the question I would like to put to you is where does the head of GIL's wages compare to, say, the Premier of this province; salary and bonus, if there is such a thing?

What influence when the federal and the two or three provincial governments get nailed or get approached with $35 million or so, do they have the right to say where is the employee; who is the top man; is there $100,000 going to the top man in salary, and things such as that, in other words, the real heavy-paid employees of that company? Is the Minister privy to those kinds of facts, or do they indeed ask for those before they advance those $35 million approaches, whatever way? Maybe I'll stop there and there might be a response. MR. BANMAN: I'm just briefly checking here.

The new general manager or chief executive officer doesn't have nearly the kind of contract that the chairman of Chrysler has; I understand that it's somewhere in the range of $60,000 to $70,000 so he's not looking at a quarter of a million dollar salary. MR. McGREGOR: That is one of the duties, Mr. Chairman, of the Minister, to find out those facts in all cases such as going into those kinds of millions. Is it a normal procedure to ask those questions, or not necessarily? MR.

BANMAN: It would normally be the Board of Directors who would be hiring the officer, as well as establishing salary for that particular individual, and 1 wouldn't get involved in that. MR. MCGREGOR: You think then that included any bonus arrangement, even though sometimes the bonus arrangements are a good deal more than salary in many of these high positions. I'm not saying it's so, I just would be inquisitive if that might be the case. MR. BANMAN: I can't give the exact arrangements of the contract and that, but I understand that the annual salary is in the range that I quote before. HON. JAMES E.

DOWNEY (Arthur): Mr. Chairman, the only comment I have to make is that some of the reasoning behind the initial support for the Co-op Implements, and of course, it was the fact that they were providing equipment for a lot of the farm community in Western Canada and the initial move by the Federal and Provincial Governments was to support the company that was manufacturing a product right here in Manitoba with the security of the farm industry being one of the main considerations being given.

I think basically, that the Minister in his work that he has done over the past two or three years has helped a lot of the people in the farm community without getting overly involved with the concern over the exact amount of security he has; the main security was based on the strength of the agricultural community. I think we all know what has happened over the past year with the purchases of farm equipment.

In a lot of cases the decision to purchase new equipment or expand in certain areas has been put off for some time because of climatic conditions and incomes that weren't as great as they normally would have been. So the fact that the Minister has, I think, moved ahead to give support to the company in the past augurs well with the farm community and I want to compliment him for that kind of action. MR. CHAIRMAN, Morris McGregor: The Member for St. George. MR. BILLIE URUSKI: Thank you, Mr. Chairman, just on another note although we're talking about some very very large investments and very large industries.

I wanted to ask the Minister on a very small matter I'm sure that is in his department, a small co operative that was closed down I think a year or two ago and that is, I think it's called the Dauphin River Co-op, a fishermen's co-op, or in the process of winding down. Mr. Chairman, has the Minister got any background information on that co-op?

As I understand it, the co-operative was operating and now a new shed has been opened up under private ownership under one individual and I would like to know some of the background information, whatever information the Minister has, with respect to the operations of that co-op and what are their reasons for deciding to close down. MR. BANMAN: I guess this is one of these cases where if the people that are trying to make the co operative run can't get along among themselves, there is very little that I or you or the department can do with regard to that.

There is a certain conflict within the community where several groups couldn't get along and they decided not to operate the co-op and as a result it's in the throws now of being dissolved. MR. URUSKI: Mr. Chairman, it's not a matter of financial insolubility or anything like that; it's a matter of just the membership not being able to get along, is that really the basic problem? MR. BANMAN: That's right. MR. URUSKI: Yes, because it's come to my attention that the former manager of the co-op has now - I guess because the service is required in the 803

Tuesday, 17 February, 1981 community - gone on his own and established a packing plant in the community. I gather, at least from people in the area that some of course as the Minister said, some would like the co-operative to continue and it appears that may be the case. I don't know a great deal about the operations other than people have been very - some people anyway - sad to see the operation not closed but in effect change hands. So it's really not a matter of any financial difficulties that is closing it, it's strictly a decision made by the Board of Directors, am I correct? MR.

BANMAN: That's right, staff has been in and out of there for about a year-and-a-half hoping that maybe some of these impasses would be resolved but there is a conflict within the community that the Board of Directors has just said, that's it. It's not a matter of real financial problems that is forcing them to close; it's just a matter of some certain local conditions. MR. URUSKI: There wouldn't be a problem for the department to become involved in the event that the ownership of the present facilities decides to allow a co-operative to start again.

You don't see that as a problem for the department of becoming involved again? MR. BANMAN: We would rather encourage that but the way things stand right now, it just isn't in the cards. MR. CHAIRMAN: The Member for Logan. MR. WILLIAM JENKINS: Thank you, Mr. Chairman, through you to the Minister, I don't know if he's given this information or not because I was in and out of here this afternoon but I believe the Minister said that he had nine development officers for the development and promotion of co-ops and credit unions within his departmment; is that correct? MR.

BI.-NMAN: Maybe I should just explain a little bit; to these development offers there is two or three through the north as well as through the south. A lot of them work on a monthly basis helping with financial reports with the individual co-ops. So they are in one sense promoting the co-op by actually working with the people helping them run their own business. MR. JENKINS: Through you, Mr. Chairman, to the Minister, do they also take

part in helping groups in various communities, develop and establish new co operatives and credit unions as such? MR. BANMAN: That's part of their job. MR.

JENKINS: Then does the Minister for the past three years, for the years 1978, '79 and '80, I wonder if the Minister and his staff here can give us an idea, how many co-operatives were new co-operatives, I mean, absolutely new co-operatives were established to the year 1978; how many were established in the year 1979; how many were established in the year just passed, 1980; and also for the same period; how many co-operatives were closed because of bankruptcies, inability of people to get along?

I think that has been one of the statements that's been made here that there is a lack of compatibility amongst certain members of the community and with the result that the co-ops fail. I wonder if the Minister has any data or statistics on say, the last three years, to see exactly how the department is proceeding.

Because as we look at the Co-operative Development department in the past three years, the activity as reflected by the amounts that are set out here in the departmental Estimates, unless I am very sadly mistaken, the Minister said this afternoon I believe that they were trying to consolidate some of the weaker co-operatives. I understand that's an understandable feature but in the meantime, what is being done to encourage people to start co operatives within the province and how many have been established within the past three-year period? MR.

BANMAN: We had some discussion with regard to promotion this afternoon. With regard to the three-year comparison, I can undertake to get that for the member. There, to my knowledge, haven't been any co-operatives that have more or less declared bankruptcy. Most of them have become insolvent of dissolve because of inactivity with regard to them and as a result then, are dissolved. MR. JENKINS: I thank the Minister for that. Is he saying then, he doesn't have any information at the present time for how many new ones there were and how many were disbanded or dissolved in one shape or form or another.

Do you know of any new ones within the past three years yourself, personally, that have been established? I'm not talking about expansions to existing co-operatives such as the Home Centre for Red River or that because they're all tied in within the same co-operative unit. The expansions at McPhillips; the new expansion that took place at St. Norbert, which I think the Minister was speaking about this afternoon, are all part and parcel of the one co-operative that I happen to be a member of, the Red River Co-op but I don't consider those as new co-operatives, as such.

In the consumer field, in production, fishing co-ops - well we have some notes here on fishing co-ops - but outside of expansions, and I know that there was one a year or so ago I believe in the City of Brandon which I think was a consumer co-op that pretty well had to go out of business. But other than that is the Minister aware, and I'm not talking just about plant expansions of an existing co-operative, I mean absolutely new co-operatives that have been formed within the province? MR. BANMAN: There have been a number.

I'll get the exact figures but one of the things that we've been doing in the last year-and-a-half is to identify the ones that have been inactive over the last number of years and try to clean up the loose ends on a lot of them; as a result there is a fair number that were, over the last little while, closed down. We have a number of the northern ones which were just sitting there for years that had not been closed down; I think we closed down something like 20 which would include a number of the northern fishing co-ops that have just been inactive over the last year.

There have been several new ones, I believe a milk transport company which was a co-operative; 804

Tuesday, 17 February, 1981 we had Manco which severed the dairy division from the poultry division and went into a large expansion out in my constituency and I think are doing very well out there which is now known as Granny's Poultry, I think the expansion was about $1.5 million; so they've got a large new plant out there.

As I mentioned a lot of the programs that have evolved over the last number of years such as the Co-op Housing Program, and I guess previous Ministers could have got up and said well we started a co-op housing over and over here and over here; wwat has really happened is it's been a time for us to try and maintain those operations in a position where they will turn out to be viable ones and it's taken considerable time of the staff to try and bring those around.

As I reported earlier on this afternoon I'm happy to say that most of the co-op housing units, with the exception of a few, are at a very low vacancy rate and hopefully will be able to turn their situation around but there hasn't been a dramatic increase because it's been a time to really sit down and look and make sure that the ones we have are in good financial shape before we move on to other areas. MR.

JENKINS: I appreciate what the Minister is saying but if he's using Manco as an example well that's really just a splitting off of an existing co operative into another division and of course you could also say that the Red River Co-op, by opening a Home Centre, going into the retail trade of selling hardware, lumber, building products, it's a new venture for that existing co-operative, but it's not a new co-operative, as such; it may be in a different field.

I believe that in the main in the past the Red River Co-op has been a co-operative dealing mainly with groceries, with a small building products branch out in Teulon, I believe it is, or Stonewall, I forget, I believe it's Stonewall.

That is not the kind of information that I'm seeking from the Minister; the kind of information I'm seeking from the Minister, and I realize that the department has had to curtail its activities because the amount of staff that is employed I am sure is down to what it was; we are down to nine development officers, I believe we have an increase of 1.26 man years is it, staff man years from last year and I'm sure that there are people out there that would like to see other types of co operatives being established.

But I must say that if those are the only ventures that the Minister has given me so far I must say I'm very sadly disappointed in the department and, of course, in the Minister because after all he is the one that is supposed to be directing and giving policy direction in this department.

The staff only operate under his instructions and of course if it is not the philosophy of this government to see that the co operatives, and when we're speaking of co operatives I would also include in those requests, with another proviso thrown in too, how many of the new credit unions have been established in that time and how many have disappeared through amalgamation; because the credit union that I belong to is now all of a sudden, which is quite legitimate, by vote has become part and parcel of a larger credit union.

So when the Minister is getting those figures for the co-ops I wonder if he could also get the figures for the credit unions - how many had to disband and dissolve over the past three years; how many new ones were established; how many mergers took place? I wonder if the Minister would be able to supply that sort of information to the committee? MR. BANMAN: That'll take some time to dig up but we'll dig it up for him. MR. CHAIRMAN: The Member for St. George I think had the . . MR. URUSKI: Thank you, Mr. Chairman.

The Minister sent me a note on the fishing co-operatives with the production in pounds and net earnings and equity. Could he indicate how many co-operatives are included in the year '77, '78, '79 and '80 or how many there are in '80, whatever figures you've got; how many co-operatives make up the . MR. BANMAN: 13. MR. URUSKI: 13 co-operatives. Where would they be located? Mostly north of 53 or there would be some south of 53? MR.

BANMAN: I'll just read them; Big Black, Dauphin, Easterville, Eddystone, Grand Rapids, Lake Manitoba Co-operative, Norway House, Lundar, Travis Bay, Viking, Winnipegow, Madison Island and Winnipegosis. So actually there's only a few over the 53 with the exception of Norway House I guess. MR. URUSKI: Primarily Lake Winnipegosis, Lake Winnipeg and Lake Manitoba are co-operatives . MR. BANMAN: Thanks. MR. CHAIRMAN: (1)(b)(1)- the Member for Lac du Bonnet. MR. USKIW: Mr. Chairman, according to this

summary sheet there are going to be 34 staff man years, 34 1/4 staff man years. Could the Minister indicate to us of the 33 staff man years in the '80-'81 fiscal year, how many positions are vacant? MR. BANMAN: One. MR. USKIW: Yes. Could the Minister indicate in which capacity or which

section of the . . . ? MR. BAN MAN: Yes, Development officer and the bulletin closed yesterday. MR. USKIW: Yes, so the department has nine Development Officers. Could the Minister indicate to the committee just what the nine Development Officers are involved in, what fields, and how many in each field? MR. BANMAN: They are all involved in dealing with co-operatives; I guess we can go through the list.

By providing incorporation assistance, in other words, responding to groups seeking and corporation; they attend annual meetings of co-operatives throughout the Province of Manitoba; they help them with the preparation of feasibility or viability studies, budgeting, financing, operating forecasts; they assist in organizing and the preparation of by-laws and policies; they get involved in training, bookkeeping, managerial skills, policy and procurement 805

Tuesday, 17 February, 1981 development; get involved in management support and operating plans; preparing budgets, again through the whole spectrum of operating a co operative and operating the business - so they are involved in the whole field. And, I might add, the nine officers that are there, I think that's the same staff component that's been there since about '73 or '74; the same number of Development Officers have been there for a fairly long time. MR. USKIW: Mr. Chairman, I think the Minister misunderstood my question. We have nine Development Officers.

What I wanted was a breakdown of their involvement as by sector of the co-operative business in Manitoba. There are northern co-operatives; there are consumer co operatives; there are fishing co-operatives; there are producer co-operatives. What are the specialties and how many to each specialty? MR. BANMAN: They are assigned to certain regions in the province and handle all the requests from those particular regions. MR. USKIW: Yes, the Minister indicated that one of their functions is to assist in the setting up of new corporations. How many such corporations did they assist in the last year? MR.

BANMAN: I understand there were two new ones established. MR. USKIW: Could the Minister indicate which two new ones, in what area of co-operative enterprise; producer, consumer, credit unions? MR. BANMAN: The two that were incorporated, were incorporated under the system, was the Granny's Co-op and the Milk Producer's Trucking Co-operative; Mound Milk Transport. MR. USI(IW: Was that a restructuring of an existing operation, Mr. Chairman, or is that a brand new co operative that was established there? MR. BANMAN: I understand that's it's a brand new one. MR.

USKIW: Could the Minister indicate to the committee just how many feasibility studies were carried out by the nine Development Officers in the last year? MR. BANMAN: Well, maybe I can just give him some idea.

We had new incorporation requests of 10; we had attended 180 annual meetings and special meetings; we prepared budgets for 30; financial statement preparation of about 50; field training and information was over 150; management support was 20; monitoring and administration services to co-operative loans and Loans and Guarantee Board at 24 instances; we assisted in 18 dissolutions; information on co-operative securities 15; dealt with different requests under The Co operative and Credit Union Acts of 40. MR. USI<IW: Yes, the 10 new requests for incorpcnation, Mr.

Chairman, the Minister just indicated moments ago that there were two new incorporations. Could the Minister indicate what happened to the other eight applications for incorporation? MR. BANMAN: I understand that a number of them are still under active consideration and the department is working with the people that have inquired. MR. USKIW: Well, Mr. Chairman, now we are beginning to see the light of day since the Minister can't tell us how many new co-operatives were established in each of the last three years.

He has told us something very important and that is that there have been 10 new requests for incorporation of which two have already been carried out and eight are in process. So surely then, the Minister is in a position to indicate to us, what is on the horizon, because he is talking about 10 new ones of which two have been done and eight are in the process of being done. Could the Minister give us an idea of what the eight are? MR. BANMAN: I read it out this afternoon, Mr. Chairman, but I'll do it again.

It has to do with consumer co-operatives; it had to do with some retail co-operatives; it had to do with some recreation co operatives as well, as I mentioned the one specifically dealing with a group of individuals who have kidney problems who want to form a co operative, so they can purchase food on a co operative basis and some agricultural co-operative requests. MR.

USKIW: Would it be possible for the department to provide the committee with a list of co-operatives that were indeed established in the last three years and those that are now in process, the sort of list that the Minister is referring to; the list of eight more that are on the horizon. MR. BANMAN: Well, Mr. Chairman, the member will appreciate that the people that we're dealing with right now, I wouldn't want to say who we're dealing with at the present time.

Once they are incorporated it becomes public knowledge, and I have indicated already to the Member from Logan that I would try and provide him with the number of new co operatives that have been formed as well as providing the information on the ones that have been dissolved MR. USKIW: Well, Mr. Chairman, we don't want to belabour the point. I don't have to know or don't want to know specifically who the applicants are but by the nature of their co-operative, whether they're consumer, producer, credit union, whatever it is.

If you would give me a list of how many are in process; how many in Winnipeg; how many in Brandon; or Thompson; or how many outside of the urban area, and so on. Just so we have a picture of what the department is involved in with so that next year we can ask you how many you were successful in putting together, Mr. Chairman. Maybe that's unfair, but you know, we'd like to measure your batting order, Mr. Chairman, by a year from now. We don't know where we are vis-a-vis the last three years but we expect to receive that information.

We now expect that there will be eight additional to the two that you had just mentioned that are already 806

Tuesday, 17 February, 1981 incorporated, so that a year from now we should be able to know, of the eight applications, how many have been successfully established? MR. BANMAN: We'll try and categorize that for you. MR. CHAIRMAN: 1.(b)(1) - pass; 1. the Member for St. George. MR. URUSKI: Mr. Chairman, I have another question with respect to the dairy co-ops.

What category would the department hold the co-op plants at Arborg, the North Star Co-op that's been under the jurisdiction of the Stabilization Board, I believe; how do you categorize that kind of a co-op where it's operating but it's under management from elsewhere under contract? How do you categorize that kind of a co-op? In what area do you put that; is that co-op able to go back into producers' hands in the community or where is that co-op standing today? MR. BANMAN: I understand from some of the information that the staff has given me that it's just been recently sold. MR. URUSKI: It has been sold?

To whom, to another co-op or what? MR. BANMAN: I understand a private operator. MR. URUSKI: Could the Minister indicate how does the Stabilization Board view that operation now? Does the private owner who has taken it over assume the liabilities that were outstanding at the time of financial difficulty or what are the arrangements of such a venture? MR. BANMAN: I'll have to beg for a little more information. The member refers to a stab. fund ... MR. URUSKI: The Stabilization Fund was actually operating the co-op on their management because of, I believe, the loan capital that was advanced by a local credit union.

Management was put into that co op by, I believe, the Stabilization Fund. If my information is wrong, then let the Minister correct me. MR. BANMAN: That could very well be, Mr. Chairman. The operation of the stabilization fund does not come under me and I'd have to go to the Stabilization Fund to see. In other words, my department wasn't involved with the operations of it. MR. URUSKI: At all? MR. BANMAN: At all. I'm informed here that the new buyer had arranged his own financing. MR. CHAIRMAN: The Member for Lac du Bonnet. MR.

USKIW: Could the Minister give us an update on - well, perhaps maybe we should get down to Resolution 43. MR. CHAIRMAN: 1.(b)(1) - pass; 1.(b)(2) - pass; 1.(c)(1)- pass; 1. the Member for Kildonan. MR. FOX: The Chairman was in an awful hurry. We did discuss some of the lotteries in Fitness and Recreation and now we have the report before us, Mr. Chairman, and I'd like to say it looks like a very slick report. But, unfortunately, it's also to a great extent confusing because it really doesn't lay out the money aspect of the expenses and revenue of the Manitoba-Western Canada distribution system.

It does give you on Page 23 the breakdown in repect to the Western Lottery, the Provincial Lottery and the Super Loto, but it doesn't tell you what its breakdown expenses are. On another page it gives you a little graph with little percentages and you have to do a hell of a lot of figuring and then I'm not certain whether that would give you the true picture of what it's all about. Now I'm just wondering whether the Minister can provide us with that breakdown of the true operations for the distribution for Western Canada or not. MR. BANMAN: There are two other reports probably that he wants.

He wants the Western Canada Lotteries Foundation Report which is the corporation which runs the lotteries; in other words, that is the corporation that's owned by the four prairie provinces. They put out an Annual Report and we can get him a copy of that. The other one which he would probably want is the WLMD, which is the Western Lotteries Manitoba Distributor, which is the group which is comprised of the four non-profit organizations. They also put out one.

This is an attempt to show an overall - there was criticism that nobody knew where the whole thing tied together and this is an attempt, I might add, in sort of the first year to try and bring it all together and show an overview of what it is and shows basically where their revenues go. If you want a detailed breakdown, I can get you those two reports and they should show you exactly the figures that maybe you're interested in. MR. FOX: Yes.

The other thing that I find in this booklet that is supposed to break down the lottery dollar, and it does it very well for the Western Foundation, where the Commission distributes its share and also the distributor and the retailer, but also at the back it indicates where the advertising goes. Now, again, there is overlapping advertising. One, if my calculations are correct, amounts to over $600,000.00. Now whether that is for the total or not, I can't say.

Then when you're going into the specifics of the breakdown and the balance sheet and the statement of expenditure and revenue, we find again costs at a much smaller level for advertising. So I just would like to know why they have duplicates in advertising. Is one advertising for the fact that they exist and the other one for the fact to promote the lottery? That's what I can't determine out of this general statement. MR. BANMAN: The exact breakdown of those figures would be contained in the two other statements.

WLMD, which is the Manitoba distributor of the tickets, does some advertising and the Western Canada Lotteries Foundation does the other. Then we also belong to the Interprovincial Lotteries Corporation which handles the $5.00 and the Super Loto ticket. The Province of Manitoba itself doesn't do any advertising. The amount of money that you see here that flows to government through the Manitoba Lotteries Commission, we 807

Tuesday, 17 February, 1981 don't advertise anything. It's the Western Canada Lotteries Foundation, as well as the Manitoba distributor, that advertise, and those figures, you would be able to see those in the Annual Report. MR. FOX: The other question I would like to ask, in respect to the breakdown that they have on the lottery ticket itself on the very last page - if the Minister will look - it says in the top one, prizes are 45.2 percent; then the Provincial, 49.8 percent; and Prize Fund, 58.3 percent. Is that relative to Manitoba or is that relative in respect to the Super Loto?

Is that relative to the whole picture across Canada for Super Loto and, of course, the Provincial for the other provinces? MR. BANMAN: The Western Express is established by the Western Lotteries Foundation which is the four partners. Every ticket sold - the Express ticket sold - represents that kind of a prize fund. It doesn't matter if you buy it here or if you buy it in Vancouver; it would be the same. The same with the Provincial; you could buy it anywhere, you could buy it in the Maritimes or Manitoba or Quebec or wherever and that is the prize fund that's involved there and the same with the Super Loto.

I might add that our prize returns are fairly heavy. People like the Australians say that we're crazy; we shouldn't be giving any more than about 38 percent away but the prize funds have been kept at a fairly high rate and if you average them out it's about 50 percent. MR. FOX: Yes. It says on Page 7 the lottery dollar is divided into . . . and then it gives you the breakdown for that so therefore that must correspond with the Western Express for 45 percent. Is that what we're talking about? The Lottery Foundation. MR. BANMAN: That's right. MR.

FOX: So it's one and the same really, the other two are a different breakdown. Since I'm going to get the information from the Minister I'd like to switch to the other area in respect to Lotteries and that is he indicated that there was also a lot of work done in respect to licensing for various lotteries. Could he indicate whether there's been any change in respect to the guidelines as to who is eligible to have a licence for a lottery? Also I understand that casino nights and things of this kind are licensed - what the basic parameters are for applying for that?

Further, who is entitled to get licences to have these - what are they called - Nevada tickets or whatever? MR. BANMAN: Just to give you an idea of what gross revenues, where we always talk about the Winsday and the Provincial which are the high profile ones but really when you look at what has happened to some of the other products that we licensed - and 1 might add that particular

section used to be with the Attorney-General's Department and has just recently come over to this particular department - gross revenues on bingo licensing last year was over $9 million; these break-open tickets, the Nevada tickets, in excess of $13 million retail sold of those by the different groups. MR. FOX: Could we have a breakdown of that revenue? Does any of it flow to the province? MR. BANMAN: Just in licence fees. MR. FOX: Just in licence fees. MR.

BANMAN: If you put this aside we act strictly as a licencing agency, for instance, the province doesn't run any bingos, doesn't run any casinos, doesn't run any of the Nevada games or anything like that, that's strict . . MR. FOX: It doesn't share any of the revenue either? MR. BANMAN: The revenues that we accumulate are through licence fees, for instance, on a casino the licence fee is 2 percent of the gross wagering if you want to call it that; but we don't share in any profits that may accrue to the group that has it. On the casino side we are licensing 12 casinos a year now, trying to spread them one a month.

MR. FOX: Can the Minister indicate who gets the licences? MR. BANMAN: The Licensing Board every year looks through a list of applications - non-profit groups, cultural groups, sports groups, charitable groups. Last year I believe there was something like 72 to 74 applications with only 12 casinos so what the board attempted to do was to try and make different groups double up so that everybody would get a fair chance at it. MR. FOX: Could you get a list of the people that were licensed? MR. BANMAN: Yes, sure. There's just a press release that has just gone out MR. FOX: Pardon? MR.

BANMAN: We'll get you a copy of the press release that went out announcing out. The other thing that the group tries to do, with the exception of a few casino licences, is to try and spread them over so that we can say that everybody can sort of get a kick at the cat, so that there aren't just a few groups that get it every year. Some of the ones, like the Festival du Voyageur who if you want to say pioneered the casino business here in Manitoba, because of the nature of the festival and everything, have since the last five, six years have always received a licence.

So I guess with the exception of that one group the other licences we try to spread them around so that everybody can have a chance. MR. FOX: The Nevadas - how do they go, to whom? MR. BANMAN: The Nevadas you have to apply for in a licence; you have to be a charitable or a religious organization; you have to sign the proper documentation saying that's what you are and then you can sell them. The Legions sell a lot of them, a lot of the curling clubs sell them, during casinos they're sold. But you've got to get a licence for it, you've got to sign for it. MR.

FOX: I wonder if the Minister could provide us or could tell us where there's a financial breakdown 808

Tuesday, 17 February, 1981 of the kind of revenue that comes in from this aspect of the lotteries and gaming licences. MR. BANMAN: The revenue to the province? MR. FOX: Yes. MR. BANMAN: It accrues to the Minister of Finance and I can give you a rough idea. Last year there was roughly $650,000 collected in licence fees. MR. FOX: And the Minister will provide us with a list of those that were involved will he? MR. BANMAN: I guess we could but . . . MR. FOX: You said there was only a dozen. MR. BANMAN: On the casino side. MR. FOX: Yes. MR.

BANMAN: But if you're talking Nevadas there's hundreds and hundreds, and there's thousands of bingos. I guess we could dig it up. But I'll get you some numbers here, I've got some here.

Bingos, there were 183 bingos licensed; break open, these tear open Nevadas 551 licences issued; Wheels of Fortune, 101; Casinos, as I mentioned there were 9 last year, there'll be 12 this year; raffles were 131; Calcuttas, that's at the curling bonspiels and that, there were 43; agricultural fairs and exhibits, 4; we also licensed some midway operators on the Wheels of Fortune that they use and there were 8 of those - total revenues as I mentioned were $650,000 and I'll get the member a copy of the release which showed which groups got the casinos this year. MR.

FOX: When we have the Red River Ex do those outfits that come in and have their various midways, do they pay the same 2 percent as well? MR. BANMAN: No, that's a different setup. MR. FOX: No, they don't. Are they licensed separately or do they just not pay anything? MR. BANMAN: I think they're examined like a lot of the local fairs that tour the rural areas, the Crown and Anchor games and that. MR. FOX: But all of those that are licensed is it 2 percent line only, nothing else? So in other words the amount that is raised would be 49 times the 2 percent; is that right? MR. BANMAN: Yes.

If you want to use that example you're talking like about $30 million worth of . MR. FOX: Gambling. MR. BANMAN: ... gambling. On the licensing side only, which is actually more than - and this is the astounding that I found interesting after being Minister a little while - there's almost more of that going on than we sell in all the lottery tickets combined. MR. CHAIRMAN: (1)(c)(1) - pass; (1)(c)(2) - pass; (2)(a)(1). The Member for Logan. MR. JENKINS: Yes, Mr. Chairman, thank you.

Looking at the Annual Report here dealing with co operative associations and their classifications and their members and active members, I want to draw to the Minister's attention that some of these seem to be incomplete here. I find here some that have had no members in 1979; no members in 1980; no active members in the same two periods; I'm just wondering if these are some of the ones that are inactive and in the process of being disbanded or just what? If the Minister looks at Table 1, he will find that there's an elevator at Alexander, incorporated on May 13, 1927.

There were no members in 1979; no members in 1980; no active members in the two years. The Alonzo Co-op Limited, Winnipeg, date of incorporation June 6, 1968; housing - again no active members in 1979, or '80. Now, I don't know, I see this thing is dated as of December 31, 1979, yet we do have memberships shown here for 1980, inactive members. I can go page by page on this part of the report and find quite a number, some of a fair size.

On page 4, Kernhill Co-op Limited, Winnipeg, incorporated November 27, 1972; merchandising. (Interjection)- Well, whoever he is, yes, I don't know - but it shows the same amount of members for 1979, 1980, 2,838. In 1979, there were 2,823 active members but in 1980, no active members. I mean, what gives with this report the way it is here? Are some of these in the process of being dissestablished? We have another one at the bottom of the page, Isabella Co-operative Elevator Association, located at Isabella, Manitoba, August 9, 1940; an elevator. No members in the years 1979, 1980; no active members.

There is not a page where there isn't some shown here as - some for a fair length of time, back in the Fourties, Fifties, some even earlier. Is this Table that the Minister has prepared, and I know it's only a rough draft, is it not complete? MR. BANMAN: One of the problems when we go back to what we've been discussing all the time here before - I'm talking about getting our house in order before we move on to do all kinds of other things - one of the problems we've had over the last number of years is that there never was a proper reporting system in place.

The staff has been busy this last year developing that particular system, trying to standardize a reporting system for all these credit unions to put together a meaningful report and all report in that fashion. I think you will notice that the ones we've been working hard with now, the fishing co-ops and that, most of them are in there and most of them have reported. Some of the elevator co-operatives report through the Manitoba Pool system and we get a joint submission on that whole thing.

So it's a matter of standardizing the reporting system, making it meaningful and then being able to go ahead and make sure that we pass on the information in this type of form. But a lot of them that you're looking at, the elevator associations and that, are ones which report directly through the Pool system and we pick up the information through the Pool side of things. MR. JENKINS: Well, I can appreciate that the Minister has some problems just looking at this 809

Tuesday, 17 February, 1981 report. Here's the Buckwheat Growers Co-operative of Manitoba Limited, located in Winnipeg, May 16, 1974, agricultural classification. In 1979 it shows no members but it shows in the following column, 47 active members for the year 1979. In 1980 it shows 69 members and lo and behold, on the opposite side it shows no active members. Now, how long has the Minister been working on trying to get and establish a standard reporting procedure? I know the Minister has had the department for what, for two years now?

It's just too bad I don't have last year's report here to see just where we have made any improvements and I can quite understand the ones he says, like the elevators, that they are reporting, but they are still co-ops under The Co-operative Act of Manitoba even though they report through the Manitoba Pool Elevator system. Are they being instructed to follow the same procedures, as the Minister is sending out instructions to other co-operatives, that are dealing in other ventures?

When you look down through here, it's merchandising, housing, recreational, miscellaneous, fishing, financial, daycare, ambulance service. When the Minister is talking about standardizing this reporting procedure, does he also include the Manitoba Pools? These elevators, in what shape or form are they part and parcel of the Manitoba Pool system? Are they Manitoba Pool Elevators, or are they affiliated to the Manitoba Pool Elevators Association of Manitoba? MR. BANMAN: I understand from staff that about 40 years ago the co-operative elevators were allowed to file through the Pool system.

Further to the question the Member asks, whether they're on their own or what, the majority of them are dealing with Pool, some are going to be amalgamated with the Pool operation. The other question he raised with regard to inactive credit unions, an inactive credit union can be inactive for three years before action is taken. In other words, they have three years before they dissolve. During that time . . . MR. JENKINS: I'm not talking about credit unions, I'm talking about co-operatives. I'll get to credit unions later. MR. BANMAN: The same thing applies. MR. JENKINS: They have the same reporting procedure?

MR. BANMAN: Yes, the same annual reporting procedure. and it started about a year-and-a-half ago. MR. JENKINS: A year-and-a-half ago. Thank you, Mr. Chairman. MR. CH.IRMAN: 2.(a)(1) -- the Member for Logan. pass; 2.(a)(2) - pass MR. JENKINS: What is covered in Other Expenditures here? MR. BANMAN: It provides for general operating and administration costs associated with the co-op. Major expenditure items are: fees and honorariums $2,000; automobiles $26,000; office equipment, supplies, printing, telephone $18,600; travel, freight, express, miscellaneous expenses $46,000; educational assistance $4,000.00. MR.

JENKINS: Item (3) here, Grant Assistance. see last year there were . . MR. CHAIRMAN: 2.(a)

(2) Member for Logan. pass; 2(a)(3) - the MR. JENKINS: I see that last year we had a Grant Assistance here of $30,000 and there is no item here for this year. Could I ask what was the grant for last year and was it a one-year shot affair or is it something that comes up periodically? MR. BANMAN: Over the last number of years the Co-op Department gave CHAM, which is the Co-op Housing group, a grant for advertising and promotion. CHAM has become inactive because there is no activity in that particular field at the present time and the vacancy rates are very low; that grant is not required at this time. MR.

JENKINS: Then I get from what the Minister is saying that in the past there was a higher vacancy rate and in order to pick this up the department granted a ... MR. BANMAN: There was a fairly substantial vacancy rate in some of them and as a result there had to be some promotion to make sure that we could get them filled up. MR. JENKINS: Thank you, Mr. Chairman. What did this promotional program entail? MR. BANMAN: I remember driving down the street and looking on the side of a bus which was advertising Westboine Co-operative Housing; it took the form of ads, bus billboards and that type of thing. MR.

JENKINS: Was that the only type of advertising? It's not a very large sum of money, if you're talking about advertising. I must say that if the Minister reduced it from 40 percent, I think he said a 40 percent vacancy rate, down to, I believe he said somewhere in the vicinity of a little in excess of 5 percent. I would like to know the secret of the Minister's success, of a grant of $30,000, being able to turn around a situation, when we find that the government is spending $62,000 here to tell everybody what a good place Manitoba is to live in.

Just what seems to have been the secret of his success in this pudding, then, in being able to turn a 40 percent vacancy rate down to around 5 percent? MR. BANMAN: There was an aggressive type of advertising put on. It started back, I believe, in '77 and in a number of successive years they were in building shows, they were in a number of areas. I might add that the vacancy rate is down in some of the units to less than 2 percent. This means, really, that there isn't a vacancy rate but they were facing some serious financial problems if they hadn't been able to fill their occupancy. MR.

JENKINS: Is the Minister telling us then, that this Grant Assistance has been in effect for say, a few years? Could the Minister tell us how many years 810

Tuesday, 17 February, 1981 this has been in effect and what was the grant? Has the grant assistance been around for $30,000 every year for the last two or three years? MR. BANMAN: It started back in 1977. It started off at $50,000 for the first two years I think, then we negotiated it down to $40,000 and the last year was $30,000, and this year we haven't got anything in it. MR. CHAIRMAN: 2.(a) - the Member for Lac du Bonnet. MR. USKIW: Yes, Mr. Chairman, perhaps the Minister has covered this ground, but if he has he can so advise.

What is the status of the various credit unions that have had to fold up or close down? MR. CHAIRMAN: To the Committee, that's the next section. If we want to go onto that ... 2.(a)(3) - pass; 2.(b)(1)- the Member for Lac du Bonnet. MR. USKIW: Well perhaps the Minister could give us some idea as to the status of a number of credit unions that either had to fold or are in the process of winding up and the reasons for it, Mr. Chairman. MR.

BANMAN: As the member will know, one of the real problems that has not only caused a lot of anxious moments for the business community and for the average person on the street is the high interest rates. Some of the credit unions got caught in the squeeze by having established fixed mortgages over a longer term and did not go to the demand type mortgage system which a lot of the other credit unions had. Those credit unions, of course, could protect themselves and pass on the increased cost of interest to the people who had made the different mortgage loans or whatever loans possible.

Maybe we could deal first of all with the ones that have been closed in the last little while. Several months ago it was decided that because of the problems that were faced by Thompson, The Pas, Leaf Rapids and Lynn Lake, that those particular facilities should be closed.

One of the problems that you have in the credit union movement is that a lot of people don't understand that it's not a branch banking system and they think that if you deal with the credit union in Thompson, Manitoba and you move back to Nova Scotia that one of the same credit unions over there will be responsible or look after whatever happens to you over there.

One of the problems that you have in an area where you have a high turnover of people all the time is, for instance, you can put a loan on a car, that person moves away or if he defaults, you can't phone your branch out in Nova Scotia or in Victoria or wherever and get them to collect. That was one of the big problems of the Thompson one with the high turnover of the population. The Thompson Credit Union, unfortunately, ever since it has been incorporated has lost money every year.

It never saw the light of day, to the point where it had, since 1974, for instance, lost $149,000; the next year it lost $215,000, $140,000, $224,000, then in 1978, which includes Lynn Lake, they were down to $46,000, 1979 a little less and in 1980, for the half year were up again. So that they had an accumulated deficit of $1.2 million in Thompson alone. The Pas had accumulated deficits; again, the same situation. It never saw the light of day except for the one year where they did a little better than break even, accumulated a deficit of $1.16 million.

Leaf Rapids accumulated a deficit of $267,000; Lynn Lake $308,000.00. There was just no light at the end of the tunnel and Co-op Central just couldn't continue to see this kind of a cash drain go on. The Pas, really, in all intents and purposes, had wound down already a while back because there wasn't any chequing involved or anything so it was a matter of finally bringing the whole thing under controL The Stab.

Fund has taken the view that if they are going to put the whole system under proper management and get a good management reporting system to them, they will have to take some of the tougher decisions like closing down some of the smaller branches in rural Manitoba. You will see more amalgamations probably within the city and a few of the other things that will have to be done, some of which won't be the most pleasant tasks but will have to be done in order to strengthen the system.

I know that a number of the credit unions within the City of Winnipeg, as well as out in rural Manitoba, have got involved in a number of ventures which, in retrospect, I would imagine they are very very sorry they got involved in. Basically the biggest problem with the whole credit union system when they're dealing with large loans, the large commercial loans, they have not got the expertise. The management doesn't and they haven't got the big branch bank system to fall back on to try and get the proper managerial skills in developing and looking after and monitoring these extremely large loans.

A case in point is the one in Dauphin where they lost close to $5 million on one plastic factory. That happened back, I believe, in 1974. That particular operation, I might add, is doing well if it wasn't for that tearing that big balloon, that one big loss. So what has happened is that the Central will be tightening up on the operations of all these credit unions. The credit union seems to do very well when they are dealing with small mortgages on houses, dealing with individual loans, whether it be for vacation or education and things of that type. But the problem has been the large commercial loan.

As I mentioned before, the system is right now examining all their monitoring systems and their reporting systems to them. They will be concentrating on managerial courses to strengthen management throughout the credit union system and also will be going ahead and undertaking a number of courses for directors to show them what their responsibilities and what the obligations are when you accept the responsibility of becoming a director in any of these co-ops, which I may add, control some pretty sizable assets as far as the amount of money that is involved.

I believe the system this year has assets of about $1.2 billion, which represents a fairly large investment in the province and there are a lot of people who have got their money invested in the system. The system realizes that and they want to make it as strong as possible and are working on trying to build up reserves and trying to get tighter control of the operations of the credit unions. 811

Tuesday, 17 February, 1981 MR. CHAIRMAN: Is the Member from Lac du Bonnet finished? The Member from Lac du Bonnet. There was another hand up at the same time. MR. USKIW: Mr. Chairman, what is the financing arrangement that carries the Stab. Fund at the present time, the Stabilization Fund of the Central? What is the financing arrangement to establish the funding itself, which in turn is drawn down whenever there is a credit union in trouble? MR. BANMAN: It's a levy which is placed on the credit union, on each local, which then of course goes to the general reserve.

I come back to the misconception that a lot of people have about the credit union movement in itself, is that the central or the Stab. Fund has its own reserve fund which they try to build up through levies to credit unions. On the other hand, the inidividual credit unions are trying to build up their own reserves. Some have accomplished that very well, others not.

In retrospect now when we look back, what happened in the whole movement in the early Seventies, one of the problems we had is that there was nothing in place which said that the local credit union had to have X percent of their assets involved in reserves and this has caused some of our problems now. It is now mandatory to build up a reserve fund and hopefully the credit unions will be able to do that. not only build up a healthy reserve on the Stabilization Fund side, but build up their own reserves. MR.

USKIW: Can the Minister indicate whether there is an impediment to the idea of participating in the Canada Deposit Insurance Corporation Fund as ,Jpposed to the Stab. Fund; is there a legal impediment there or is it just that it isn't desirable? Is it more expensive? The levies that are applied in order to establish the Stabilization Fund in Manitoba, are they sufficient to pay the premium on the Canada Deposit Insurance Corporation system if they were to move in that direction?

Or is it even possible to do so, given the fact that the Canada Deposit Insurance Corporation is a Federal arrangement governing banks and trust companies? MR. BANMAN: There are several schools of thought and the member has expressed a few but I understand that the Central at present is negotiating with them and it could quite possibly be applying to the federal organization for that type of insurance. MR.

USKIW: Just to follow up on that, is the Minister suggesting that the Stabilization Fund or the Central would be applying for recognition with the Canada Deposit Insurance Corporation as a reinsurer, or is it applying on behalf of all of the credit unions? Is it to protect the Stab. Fund that they are making application or is it to protect each credit union.? MR. BANMAN: First of all, the Central belongs for liquidity of the Central. I understand that the Stab. Fund has been looking at the same type of liquidity insurance. MR.

USKIW: Does the department know whether or not it's Within the jurisdiction of the Canada Deposit Insurance Corporation to become involved or to become an insurer of credit unions, whether the legislation governing the deposit insurance corporation permits it to take on credit union obligations? MR. BANMAN: I understand for liquidity purposes there is legislative authority to do that. MR. USKIW: Does the Department know whether other jurisdictions are now using the Canada Deposit Insurance Corporation in Canada? MR. BANMAN: Again, only for liquidity purposes. MR. USKIW: It is being done in other parts of Canada.

Okay, that's fine. MR. CHAIRMAN: The Member for Kildonan. MR. FOX: I wonder whether the Minister could inform the committee if under the regulations there is any necessity for the credit unions to be involved in any kind of education of their members. The reason 1 ask is because at one time I recall CUNA used to have some seminars and inform people, not just on how to form and carry a credit union but also other aspects in respect to the use of money.

What I am trying to get at is whether there is anything that would engender some education of the members of credit unions so they could handle their finances better and so on. As you know we are into some real tight money situations in respect to inflation and cost of living, etc., and I would hate to say that credit unions only serve the same purpose as the banks and that is grant loan associations and no more. I would hope that the real origin of co-operatism and credit unions would be towards educating their members towards better husbandry of their financial resources.

I am just wondering whether anything in the regulations is there to do this and if there is any kind of work being done in this particular area. Also, secondly, is the department doing any research to see whether it is necessary or not? MR. BANMAN: There is no legislative or regulatory requirement to do that. A number of credit unions - for instance, I know one that holds, not a seminar, but holds a little bit of a series of lectures inviting newly-wed couples to come in and take in a few lectures dealing with money management, for newly married couples.

The other question, whether we are doing research along that line, I haven't requested that type of research being done. I know what the member means, that one of the problems that you have in the system today is with the high interest rates. You have some people who have purchased certain things, have bought that particular thing when the interest rate was maybe 10.5 percent, and now with most of the institutions going ahead and having even their mortgages on demand, what used to be a payment of 325.00 a month, which you could handle, suddenly jumps to maybe 450.00 because of the increased cost.

Again I would hope that the loan officers involved in that type of thing do some counselling. I know in my particular credit union they are very cautious and do provide you with a lot of information and a lot of counselling before they do give you the loan. 812

Tuesday, 17 February, 1981 MR. FOX: I can appreciate that some of the credit unions would probably be doing that on their own, providing they have the resources with which to carry that out.

If they are large enough, naturally they can afford to hold seminars and it wouldn't affect their budget too much, but I was just wondering whether there was any other input through the department to alert the credit union, the small ones, that they should be advising their customers in respect to how they are investing their funds, because after all, if you're involved with a financial institution, and that's what a credit union is, they should be able to give you advice whether to buy bonds or not just stick your money in and borrow out of the credit union because, you know, that is I believe insufficient of a credit union.

Now, yes, you can get some of that advice from the banks too, but I would hope that the credit unions, if they're going to serve the public, and because they are built on the co-operative principle would be able to support and give that kind of service as well. To what extent are the people that are involved in guiding the credit unions from the department initiating this kind of information to the credit unions? MR.

BANMAN: When the new Credit Union Act was passed a number of years ago, a lot of the functions that the department did were taken over by the Credit Union Central, namely, the auditing and a lot of the other functions that the department was doing. The Credit Union Central, along with the Stab fund, really now are charged with the responsibility of looking after the credit union system.

Our particular role right now is registration, monitoring certain aspects with regard to them, as far as regulatory requirements; but the development and that with regard to the system has now virtually been taken over by the Co-op Central. MR. CHAIRMAN: (2) - the Member for Kildonan. MR. FOX: There was no monitoring whether the Central is doing a good or bad job; we're just going to leave it to them now? MR.

BANMAN: No, that's precisely what we're monitoring because the registrar who has to approve the forming of co-ops, the dissolution of co-ops, the merging of co-ops has to be apprised of the type of figures that we're talking about, whether they are viable or whether we're going to be forming additional problems by getting a merger together and things like that.

So we are monitoring it constantly with assistance from the Central; but as far as the direct input which we used to have with regard to the co-op movement, that has changed about five, six years ago when the new bill went through the House; I think it was 1974. MR.

FOX: I can appreciate what the Minister is saying that they're checking to make sure that the merges and so on are viable and that there is sufficient capital and so on, but I still maintain that I thought that the premise of credit unions had a greater impact than just being glorified loan companies and functioning efficiently at a loan and savings level. I was hoping that there would be some input and some direction from the department to make sure that this is taking place.

I can understand that there may be a desire to give the Credit Union Central some autonomy but they should be living within guidelines of their original principles. If they have just become autonomists and then forgotten all the other issues which originated them, then I'm afraid that they are no better than the banks. I was hoping that the credit union movement, through this department, would be alerted to this and that there would be a watching brief on this continually that they do not just slump into being glorified banks in a different form. MR.

BANMAN: I think anybody that deals with them, and I've dealt with them all my life, appreciates that there are certain differences but in the world of financial institutions I think when they hit a certain size, and maybe because they cannot survive unless they hit that certain size, smaller ones are just having too much of a hard time struggling. Many of them have adopted some of the very businesslike tactics that the banks have in order to just survive through the tougher times.

But I think the other thing that should be pointed out is that in many areas, especially I'm talking about rural areas now, if it isn't for the credit union, and hadn't been for the credit union, many of the business ventures that have been started, many of the people who have received their loans and that just wouldn't have got a start and wouldn't have got going. I know in my own community when ours was started you're looking at having one bank and there was no alternative and the credit union has played an important role and, I might add, is continuing to play a very important role with a very broad

section of the populace out there. MR. CHAIRMAN: 2.(b). the Member for Logan. MR. JENKINS: The Member for Lac du Bonnet raised a point here and the Minister was giving him some information. This had to do with the Stabilization Fund and then the Minister said that some of the larger branches now are actually in the process, or have been in the process for some time, of establishing a reserve fund; has the Minister given any thought to changes in legislation that, say, of the total assets of a credit union, in that branch itself, a certain amount of money must be in reserve; or is that covered within the Act?

From the way the Minister answered I got the idea that it was not mandatory within the Act; and I realize they have to pay their levy to the Co-op Central for the General Stabilization Fund but I'm talking about on the local level, at whatever credit union we may be talking of, and as the Minister said, some of them have already, on their own, from what I understood the Minister to say, have already established reserve funds. Is it mandatory under the legislation of The Credit Union Act of Manitoba that local branches must maintain a certain amount of their assets in reserve? MR.

BANMAN: Several weeks ago Cabinet passed some regulations saying that the funds would have to be built to 5 percent. The previous figure was 3 percent and the formula on which you try to build it is 1/4 of 1 percent a year should go into that reserve fund. Now the problem that you have is that once you have a fairly large credit union, most of them have not been paying income tax because they pass 813

Tuesday, 17 February, 1981 the profits, if you want to call them that, along in the form of increased interest to the person that has the savings there, or the shares there; and as a result some of the co-operatives, especially the larger ones, will be put in an income tax bracket which they would rather not see. But I think the whole system realizes that in order to strengthen it and to insure that the depositor has the maximum protection that this is a good step forward.

I referred before, in the early '70s the requirement for that local reserve was taken away totally and what happened was that a lot of the credit unions that had built up reserves over the years paid it out to their members during the early '70s; which really is now causing some part of the problem now. If we would have maintained - and hindsight is a wonderful thing - if we would have been able to maintain that we would be in a much better position right now than we have been before.

The other thing I might add, at that time there was something else coming crawling into the mix and that was the uncertainty of what Federal legislation would do, and I think a lot of people were kind of nervous, with that reserve sitting there, what would happen under Federal legislation. So I guess in an attempt to avoid any problems with that it was paid out to the membership and hence we do have a bit of a problem with that right now.

But there are a number of credit unions, for instance, I know my local one is up at 3 percent, which means they have a very healthy reserve, I think they're over $3 million in reserve, their own reserve, a number throughout the province that way; hopefully over the next couple of years we can build it up, as I mentioned, it's supposed to be built up at a rate of 1/4 of 1 percent per annum supposed to be put away in the reserve, which is 5 percent of assets. MR. JENKINS: The Minister said 5 percent, and they are to build that up at 1 I 4 of 1 percent till they reach the maximum . . . MR. BANMAN: Or more. MR.

JENKINS: ... or more. There's no stipulation that they can't, if they wanted to, put 10 percent in reserve. MR. BANMAN: Well, they could do that but I would doubt whether any of them would want to because of the income tax ramifications on that. MR. JENKINS: The Minister was also discussing, and I believe he said the Dauphin, and I think the Portage one that we were discussing last year, the Portage Credit Union, got themselves into some difficulty with the issuing of a large loan that subsequently went belly-up, and I think we did pass some changes in the Act.

I just forget what it was, whether it was done by legislation or regulation or whether it was the Co-op Central itself that took upon itself to have that expertise and advice and even some authority to say to a local branch that if you're going to lend money of that size that they would have some say over it. How has that worked in the past year since we met last year? MR.

BANMAN: By regulation the Central was given the authority to limit the loan level to $50,000 on commercial loans of credit unions that they felt were not in the position of going ahead and giving loans of a higher amount than that; so they are screening these applications as they come through. To date, and I guess I'll have to really check with them a little closer, but to date I haven't heard of any major problems that have been encountered since then; the track record, I think, has been pretty good.

But the member will appreciate it's been in effect one year and it's not usually the first year that a loan goes sour; it's two or three years down the road. So we'll have to see what that policy has done, but hopefully it will stop that type of thing that we're talking about in Portage and particularly the one in Dauphin where you had almost the whole reserve fund eaten up by one big loss. It started out with 500,000, and constantly trying to bail it out till all of a sudden it had $5 million. MR. CHAIRMAN: 2.(b)(1)- pass; 2.(b)(2)- pass.

Be it resolved that there be granted to Her Majesty a sum not exceeding $867,100 for Co-Op and Development - pass. 3. pass - the Honourable Minister. MR. BANMAN: This provides the Co-op Loans and Guarantee Board to make loans to qualifying co operatives and associations as the board may approve. Some of the outstanding - I can give you an example of what they're dealing with right now. MR. CHAIRMAN: The Member for Lac du Bonnet. MR. USKIW: Mr. Chairman, the description here is Acquisition/Construction of Physical Assets. That has nothing to do with the Co-Op Promotion Board.

Promotion Board moneys are their own moneys; these are appropriations of the department. MR. BANMAN: There's two different boards; there's the Co-Op Promotion Boards and the Loans and Guarantee Board. The Loans and Guarantee Board has to, because of some financing changes, has to go back to the Legislature every year to receive additional authority. The authority that we're talking about here now is a request for $55,000 for loans which could be given and we will be asking for a million dollars authority to provide loan guarantees. MR. USKIW: Well, Mr. Chairman, then perhaps the title should be changed.

The title reads Acquisition and Construction, or Construction of Physical Assets. MR. BANMAN: It's capital money, that's why. MR. USKIW: Why do we have a provision in the Estimates for loans of $55,000 and then we're going to go through the Department of Finance, General Purposes Capital for a million dollars, why don't we put the million and the 55 together in the general purpose capital? Why does it show up at all in this department, Mr. Chairman? The whole of it isn't showing. MR. BANMAN: Mr.

Chairman, I will say this is how Finance instructed us to do it and this is how we've done it but this is what the moneys are for; $55,000 for direct loans and we'll be asking for a million dollars under the loan authority for guarantees - $55,000 loans and one million dollars for guarantees. 814

Tuesday, 17 February, 1981 MR. USKIW: Mr. Chairman, what is so magic about $55,000 in direct loans? How do we arrive at $55,000.00? MR. BANMAN: There is an outstanding loan for $5,000 and we wanted to have some flexibility so we've asked for $50,000 which we may loan throughout the course of the year. We are asking for authority. MR. USKIW: Could the Minister elaborate as to which co-operatives are involved in making loans from this fund? MR.

BANMAN: The only outstanding loan is one to the Seymourville Consumer Co-operative for $5,000, then we have a number of guarantees that we're involved with right now; Bonnie Co-op; Grand Rapids; Independent Co-operative Enterprises; Manitoba Co-operative Honey Producers; Northern Co-operative Service; and Traverse Bay Co-operative Limited - those are guarantees. MR. USKIW: Could the Minister then give us an indication as to whether there is a ceiling on the size of any one loan; direct loan? MR. BANMAN: Yes, $25,000 on the direct loans. MR.

USKIW: So presumably then what the Minister is saying is we have a potential for two loans for the next fiscal year then, that is being approved in this MR. BANMAN: Or ten $5,000 ones. MR. USKIW: All right, let me pursue it a different way, Mr. Chairman. Is this to finance small loan requests generally or what is the rule of thumb or the history of this program? MR. BANMAN: I am informed that there has only ever been one of $25,000.00. Historically it's the $5,000, $10,000 loans which are required maybe to get some small co-operative that happens to have a cash-flow problem over a period of time. MR.

CHAIRMAN: (3) - pass; 1.(

a) The Minister's Salary. Resolved that there be granted to Her Majesty a sum not exceeding $55,000 for Co-operative and Development- pass; 1.(a). The Member for St. Vital. MR. D. JAMES WALDING: Mr. Chairman, I wanted to ask the Minister a few questions on the Lotteries and Gaming Licensing Board. I apologize to the committee for not realizing that it was coming before this committee this evening and I was sitting in the other committee. I would wait for Hansard because I understand one of my colleagues was asking the questions but with Hansard running a bit late it would then be too late to ask the Minister.

I noticed that this particular board has changed its name - it used to be the Lotteries Licensing Board. I understand it might have come about following a report, I believe it was the Haig Report that commented on Lotteries and the Licensing Board. I would like to ask the Minister when he took over authority for this board and has it changed its functions and responsibilities with the name change? MR. BANMAN: The member probably recalls that in the last Session of the Legislature we passed the new bill, Bill No. 84, dealing with this which effected all the name changes and everything.

It was passed in the Legislature last Session. MR. WALDING: Could the Minister tell me when he took over the responsibility for the Board and what the changes are in its responsibilities? MR. BANMAN: I took over the Board about four or five months ago. MR. WALDING: Mr.

Chairman, I understand the Board used to be under the responsibility of the Attorney-General, and it used to have the responsibility for issuing licenses for a number of different organizations in the province who ran Bingo or Lottery or some game of chance on a one time only basis or on a regular basis and that there was a good deal of money involved in it. Does the board still have those responsibilities or has it been given other responsibilities since the Act? MR. BANMAN: The Board has precisely the same responsibilities as before under the Attorney-General. MR.

WALDING: I would like to ask the Minister, if he could give us details of the make-up of the Board. Is there any change in the Board membership numbers or personalities; are there any vacancies there? MR. BANMAN: I believe the Board consists of five individuals and there are no vancancies. MR. WALDING: I would like to ask the Minister now about the staff that is allocated to the Board. MR. BANMAN: There are a number; I'll get the exact figures.

The General Manager who was looking after the whole lotteries field with the other side of the lotteries which is namely the government sponsored lotteries, they then have an Administrative Secretary, Compliance Officer, an Auditor. There are seven people that are going to be employed in the overall lotteries scheme in the Province; that has to do with the other side running the Winsday, Super, and the Provincial. MR.

WALDING: Is the Minister now telling me that this particular board has responsibilities other than the licensing arrangement and if so, what is the arrangement with the staff, he mentioned the other side of the lotteries I'm particularly interested in the licensing aspect of the Board and it's duties; how many individuals are involved in the inspection and auditing functions. MR. BANMAN: The Manitoba Lotteries Gaming Control Commission and the Lotteries and Gaming Licensing Board, share the same staff and that's one of the reasons for bringing them together.

The number of staff persons involved in that, the seven which includes the General Manager, is a Compliance Officer, Auditor, and some administrative secretaries. MR. WALDING: I would like to ask the Minister then, how many of those seven individuals would be 815

Tuesday, 17 February, 1981 involved in the actual inspection overseeing, checking of these various games of chance, and lotteries that are being put on. I gather from the title, Compliance Officer, that would be one person. Now would the Auditor be involved in doing those sort of checks? MR.

BANMAN: Yes, the Auditor would be involved with post audit reports and the compliance officers would spend time at for instance the casinos that are held in the Convention Centre; also one of the admin secretaries is fairly active in checking out the different gaming things that are going on so that we have a number of people that are involved in that particular function. MR. WALDING: Mr.

Chairman, the Minister is probably aware that the number of events, if I can call them that, over a year are extremely numerous, run into hundreds probably thousands of events that are held and the amount of money involved in the total turnover on which the government gets its, I think 1 percent, runs into the tens of millions of dollars, and the Minister may also be aware that there was concern expressed by a number of people including the Provinvial Auditor, about the degree of control and this is a matter that goes back several years, even before this particular government.

I recall raising it with the Attorney-General a year ago when I seem to recall there was one inspector become Auditor and that another one was to be hired. I would like to ask the Minister whether he thinks that number of staff involved in auditing and checking on such a large operation involving so many millions of dollars is in fact adequate to do the job. MR.

BANMAN: We are in the process of bringing the two shops together, if I can use that terminology and we'll be now assessing, there's a new General Manager that has come on and we will be assessing precisely what the member is talking about and if there are more compliance people required, we will make those recommendations to my colleagues, so there are basically two new people that have been added this year and that's the Auditor who does the post a\Jdits and the compliance officer and if there are more compliance officers required, we will move in that direction. MR. WALDING: Mr.

Chairman, Maybe the Minister could bring me up to date as to how many licenses are issued in a year and perhaps give me an indication of how many millions of dollars are involved in the total. MR. BANMAN: I went all through that before but I'll go through it again. Last year there were 183 bingo licenses issued for $9 million; 551 break open Nevada tickets licenses issued for a total $13 million; 101 wheels of fortune for $56 million - these are gross revenues to the individuals who are operating it. Total, about $30 million. MR.

WALDING: Is that $30 million an increase from the previous year and if so by how much? MR. BANMAN: I would say '79 over '78 about $5 million. MR. WALDING: And the province takes one percent of that, or the board takes one percent of that as a fee? MR. BANMAN: Two percent. MR. WALDING: Is that a recent change, Mr. Chairman, the figure of I percent, sticks in my mind for some reason? MR. BANMAN: It was changed this past year; don't know the exact date. MR.

WALDING: The Board has doubled its take, or more than doubled since the amount has gone out, or perhaps I should say that the government has doubled its take since that amount goes directly into general revenues, I understand. I wanted to ask the Minister about another recommendation in the Haig Report having to do with casinos, I believe is the term, the Report had recommended that twelve, no more than twelve be held in the year. I don't recall any announcements from the government whether they had accepted that recommendation.

I'd like to ask the Minister whether that is a matter of policy that there will be no more than twelve or is there some other number that is in effect. MR. BANMAN: No, that's the policy we have adopted. There will be twelve casinos this year. MR. WALDING: In that case, I'd like to ask the Minister what his policy is in deciding which organization gets the benefit of the very profitable undertakings. Is the decision made by the Minister or if not where is the decicion made and what are the criteria for deciding? MR.

BANMAN: It has to be a non-profit group which will spend the funds in Manitoba as something happening here in Manitoba. The decisions are all made by the Board, the announcement, and I told the Member for Kildonan that I would provide him with a copy of the groups that got it this year. There were something like 74 applications if my memory serves me right and what happened is that the Board decided to double the number of them up to give more groups an opporunity to share in it.

They do, with the exception of the Festival du Voyageur who gets a license every year, try to see that different groups get it so that it can be worked out on a rotating basis. MR. WALDING: When the Minister says that the Board decided to double the number, is he indicating it was doubled to 24 or was it less the year before. MR. BANMAN: I said doubling up, which means that you have two organizations that might have to share a casino. MR. WALDING: I understand, but the number of 12 in a year is a matter of policy. Was that decided by the government or by the Board itself? MR.

BANMAN: No, that's a government decision. MR. WALDING: One further question on the Board and how it allocates these casinos. The Minister mentioned that there was just one festival that gets it every year and I'm wondering how the Board handles requests from an organization that held a casino the previous year and wants a repeat for the second 816

Tuesday, 17 February, 1981 year. How does the Board handle that as opposed to another group that would come along and says, well, we haven't had one of these yet and we want to get in line? How is it decided which groups will be so favoured and why is it just the one example that the Minister gave us as getting an annual grant that apparently doesn't go to any other group? MR.

BANMAN: As I explained before the Festival du Voyageur was really sort of the pioneer in the field of the casinos and have established a winter carnival and part and parcel of that particular carnival is the casino and they have built their whole activities for that week to include that particular function as well as over the last five, six years, come to depend heavily on the funding of it.

So the previous administration as well as ourselves have indicated to them that as long as they obey the rules and regulations and that there aren't any problems with regard to the operation of it, that they will, in all likelihood, continue to receive that. The others are done on the determiniation of the Board that is looking at all aspects of it and they are looking at a rotating sort of a cycle so that they try and get as many groups involved. in it as possible, and hence having all the applications this year, they have tried to couple the groups up so that you can have more people sharing it. MR.

WALDING: Does the Board take applications on a first come, first serve basis or do they have a means of priorizing those who are more worthy or more deserving or more in debt than others? MR. BANMAN: There is a deadline for receiving applications, I think this year they had all the groups that were interested and wanted to make a presentation to them. They arranged a time and those groups could then come and put their case forward why they needed the casino and the Board then in their wisdom, awarded the ones to which they thought should be getting it. MR.

WALDING: One further question in regard to the particular gambling devices that might be used in a casino. I have no idea where they come from, whether the group themselves own these or whether they rent them. Does the board itself have technical expertise to assure the public that these games are absolutely fair? MR. BANMAN: Unfortunately some of the more technical staff is gone here, but the equipment belongs to the Red River Ex. That was another one of the recommendations so we're not using all kinds of different equipment.

The operators, we have two basic operators here in Winnipeg, who have a very good reputation. Just last week I know one of the television stations, CBC, did an in-depth study on how to beat the system and interviewed a lot of people involved with it and did a lot of checking themselves and came up with the conclusion that the only way you're going to beat it in Manitoba here was to have a lot of lady luck on your side. The control is pretty tight. They can't use just any wheels and both operators are of a good calibre and a good quality. MR. WALDING: I don't have any further question, Mr.

Chairman, just a word to the Minister. Really the only way to beat the system is to stay at home. MR. CHAIRMAN: 1.(a) - pass. Resolved that there be granted to Her Majesty a sum not exceeding $216,800 for Co-operative Development -pass. Committee rise. SUPPLY - HIGHWA VS AND TRANSPORTATION MR. CHAIRMAN, Albert Driedger (Emerson): Call the Committee to order. For the Committee's consideration the Estimates of Highways and Transportation, Resolution 83, Item 5(b) - pass. The Member for Ste. Rose. MR. A.R. (Pete) ADAM: Thank you. If I can just find my Estimate book here somewhere.

We're on Construction now, is that right? MR. CHAIRMAN: On Resolution 83, Item 5, Assistance Programs 5(b), Construction. and Maintenance. MR. ADAM: I wonder if the Minister can tell us, did he give us a breakdown on the gross expenditures, did we get that before supper? HON. DONALD ORCHARD (Pembina): Yes. MR. CHAIRMAN: (

b) pass. The Honourable Member for Ste. Rose. MR. ADAM: We got that into the record. What about the other appropriations? That comes from Other Appropriations, that $1,574 million? MR. ORCHARD: Yes. MR. ADAM: What are the amounts recoverable from Canada? MR. ORCHARD: Nothing in that appropriation, Mr. Chairman. MR. ADAM: Mr. Chairman, is that moneys that comes from Canada? MR. ORCHARD: No. MR.ADAM: What is the purpose of its being in the book now? MR. ORCHARD: Mr. Chairman, on (b), Construction and Maintenance, sorry. A little bit of explanation here. That's the UTAP money, Mr.

Chairman, the Urban Transportation Assistance Program. MR. ADAM: That's for the cities, Urban Transportation, Brandon, Winnipeg? MR. ORCHARD: That is the anticipated recovery on the construction of the CNR rail overpass on PTH No. 12. MR. ADAM: That's just the one appropriation for that one particular job. Is that it? MR. ORCHARD: Yes. MR. CHAIRMAN: The Member for St. George. MR. BILLIE URUSKI (St. George): Mr. Chairman, when we broke at 4:30 we were discussing with the 817

Tuesday, 17 February, 1981 lilinister the other item and he will recall that r was mentioning other communities, that the department v:as viewing and looking at other areas that might be c::>ming up next in the event that a decision was made on the Vogar situation, that other communities rr ight be next in line just waiting in the wings for the highways Department to be approached to see whether or not access routes could be provided for those communities. Mr. Chairman, I'd like the Minister to consider that this community has been in existence for I don't know how many years.

There isn't admittedly much of a commercial establishment in the community. There is basically one store. There is a school in the community and many residences within that area. The community probably, in terms of description, would not be much different than the community for &xample. just down the road of Mulvihill where there is an access road into the community and in terms of long establishment I believe that there is precedence there.

As I mentioned to the Minister after we stopped the Estimates, I indicated that the department has C~lready moved and I should say that I believe most of the people are very pleased with the moves the department has made in the reconstruction of Provincial Road 235, where the approaches have now been corrected. The problems that were there earlier have been basically taken care of in terms of making the right-angle approaches and making it easier for public service vehicles, the buses, in entering the community.

It would really be a matter now of designating this route and probably some upgrading would be necessary in order to bring it up to a standard that some dust treatment would be able to be put on for that community as it has been in other areas. On behalf of those residents I once again ask the Minister to review that situation and see if there can be any change in the long-standing policy. MR. CHAIRMAN: (b) - pass. The Member for Ste. Rose. The Member for St. Vital. · MR. D. JAMES WALDING (St. Vital): Mr.

Chairman, I would like to follow up a rather short remark that the Minister made about a UTAP program in an amount of $1.4 million Recoverable from Canada. Could the Minister just confirm for me what UTAP stands for? MR. CHAIRMAN: The Honourable Minister. MR. ORCHARD: Urban Transportation Assistance Program. MR. WALDING: I ask the Minister, under what conditions the program operates? Is it a cost recovery basis? Is it a divided jurisdiction? Can the Minister give us some idea of what the parameters or the criteria are evolved for the projects to come within this particular program? MR.

ORCt!~RD: The UTAP program is a cost shared program with the Federal Government and in this case is for grade separation, that the highway improvements were undertaking on PTH No. 12.

It's cost-shared according to the formula with the Federal Government which involves the Federal Government up to 50 percent, I believe up to a given maximum on a project and it's a part - this almost $1.5 million is part of, I think it was $12 million - that the Province of Manitoba was allocated under the federal UT AP program that was instituted about, I think it's three years ago, and is coming to an expiry date the next fiscal year with the possibility of an extension of one year to expend our allocated funding. MR. WALDING: Just so that I understand it clearly, Mr.

Chairman, can the Minister inform the Committee whether eligible projects are initiated by the province which seeks the federal approval or are they initiated by the Federal Government or is there some other criteria for deciding which particular grants and indeed how much money is involved? Is there in fact a ceiling as to how much the Federal Government will put in? The Minister mentions that an amount of up to 50 percent can be approved as being cost-shared. How is this amount arrived at and is there any criteria involved about the positioning of a particular program?

One would imagine from the name "Urban Transportation" that it would be in cities and towns, yet the Minister has mentioned just one particular project which, at a quick glance at the map, would seem to be some 20-odd miles outside of the city. MR. ORCHARD: Mr. Chairman, I suppose the name lends itself to believe that you would only expend the money within urban centres but in fact the program has been used, not only in Manitoba but other jurisdictions, in providing a type of grade separation on rail level crossings that we are undertaking in here.

It's the same funds that were slated for the Sherbrook-McGregor Overpass that may or may not come to a fruition and I believe was the only other major project that the province undertook under that UT AP funding.

It was a five-year funding program on the basis of $2.00 per capita per year and that gave us roughly I guess $10 million or $12 million, but it was between $10 and $11 million that the province was eligible to receive but had to expend and, as I understand it, there's no particular limit as to how much could be expended on an individual project; only a limit on the total amount that was available to the province for allocation. MR. WALDING: Thank you, Mr. Chairman. That fills in a few details of the program. I believe I understand it somewhat better now.

Do I understand from the Minister that there is only about $1.5 million which is recoverable on a total program of something like $11 million or $12 million that he mentioned or is that only the portion that is recoverable for the coming financial year? The Estimates Book doesn't indicate that there was an amount recoverable for this particular fiscal year. 1 wonder if the Minister could just clarify that for us please. MR. ORCHARD: This amount of funding is recoverable in this fiscal year only because we're undertaking the construction in this year.

We didn't undertake in the Department of Highways and Transportation, in the last year or this current fiscal 818

Tuesday, 17 February, 1981 year, any project within our departmental construction budget which was eligible for UT AP funding so that we are only recovering this portion because we've got roughly a $3 million grade separation under way this summer at PTH 12 - (Interjection)- roughly $3 million, yes. MR. WALDING: Mr. Chairman, that would indicate that this particular project is to be shared about 50- 50.

Can the Minister tell us whether the approximately $10 million to $11 million that he mentioned over a five-year period as being cost shareable, I'm not quite certain which the Minister is telling us - cost-shareable by the Federal Government - will in fact be expended in that particular five years? Do I also assume from his remarks that the five-year period would end March 30. 1982? MR. ORCHARD: That, as the honourable member may well appreciate, is rather up in the air right.

As I understand it the Sherbrook-McGregor overpass is defunct unless something happens to revitalize it and tilve construction take place; that is where the bulk o: the UT AP funding for the Province of Manitoba was earmarked. Now if the Sherbrook-McGregor overpass per chance doesn't proceed then quite frankly we're going to have to scramble to get designs in place to find a home for that $8.5 million that are going to be allocated to the province and have to be expended in the next two years.

That causes us some problems because the Sherbrook McGregor overpass was as I understand it slated for construction very shortly and would have cash flowed those dollars and taken advantage of the UTAP funding. So if there are no changes in direction by the City of Winnipeg on the Sherbrook McGregor overpass we have to identify other projects in which qualification for that other $8.5 million available from the Federal Government would be eligible. MR. WALDING: Mr.

Chairman, I'm having a little difficulty in fully comprehending the program and perhaps it's my fault for asking the Minister several questions all at once. Can the Minister tell us when this five-year plan began and when it will end? MR. ORCHARD: From 1977 to 1982 and there is some indication that the Federal Government will allow one year, in other words 1983 fiscal, to expend any unexpended funds so that there'd be a one-year grace period, with no increase in funds, but just a one-year grace period to expend the provincial allocation. MR.

WALDING: The Minister made reference in the previous answer to an amount of approximately $11 million which I understood from him was the federal contribution cost-shared 50-50 with the province. Can he explain whether that amount is the total for the five years or whether that is the amount to date? MR. ORCHARD: That, Mr. Chairman, is the total that was available to the province on the basis of the UTAP funding formula. To date the only qualification of any major consequence in this department is the Ste.

Anne Overpass on the C.N. and PTH No. 12. ~hat is the only funds in which we are assured at this time of getting, unless we move ahead with some other projects, namely the Sherbrook-McGregor Overpass as I say, was the major one. In other words, to expend the $10 to $11 million the Province of Manitoba, between the city and the provincial jurisdiction, had to expend some $22 million on UTAP eligible projects. To date we have only got approximately $3 million in the works in the presence of the grade separation on PTH No. 12. MR. WALDING: I believe I'm beginning to understand, Mr. Chairman, if I can just recap.

The Minister is telling us that the Federal Government will make available to Manitoba somewhere between $10 and $11 million within a five-year period provided that the province will put up a like amount and that so far approximately $3 million is being spent on a particular grade separation of which some 50 percent or $ 1.5 million is Recoverable from the Federal Government, which would leave some $8.5 or $9 million eligible, which I understand had been provisionally earmarked for a Sherbrook-McGregor Overpass in the city, and that is where we get the 8.5 and 1.5 coming to around 10 million, still working in rough figures.

The Minister has suggested to us that in view of the decision made by the city that he may have some difficulty in finding sufficient projects on which to expend a further $8.5 million of federal money within the next couple of years.

Would I then be safe in deducing, from what the Minister has said, that the government had agreed and was willing and ready and able to spend some $8.5 million out of provincial funds to match the $8.5 million that was coming from federal funds, so that a total of $17 million from senior governments would be made available to the City of Winnipeg if it should decide to continue with the Sherbrook-McGregor overpass. MR. ORCHARD: N

Document details

Collection	Manitoba — Debates (Hansard)
Citation	31-5-20b
Type	hansard
Volume / chapter	31st 5th hansardpdf 20b.pdf
Language	en
Format	pdf
Source	PROVINCIAL
Identifier	564820e31aa2e1de3611afa0834f23d0290228b5

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