Manitoba Hansard — Sitting 54B (32nd Legislature, 4th Session)

32-4-54b

Manitoba — Debates (Hansard)

LEGISLATIVE ASS EMBLY OF MANITO BA Thursday, 23 May, 1985. Time - 8:00 p.m. CONCURRENT COMMITTEES OF SUPPLY SUPPL Y - CULTURE, HERITAGE AND RECRE ATION MR. CHAIRMAN, C. Santos: Comm ittee, please come to order. By leave, we are leaving also Item 1.(

a) Salaries, and going back to Item No. 4., Telecommunications Policy, 4.(

a) Salaries, 4.(

b) Other Expenditures, 4.(

c) Grant Assistance. Mr. Min ister. - (Int erjection) - The Min ister responsible will now make some opening statements. HON. A. MACKLING: I ask your apology, Mr. Chairman. I was talking to the House Leader about a change in the Estimates review process, and I talked to one of the members of the opposition. I was anticipating going next in this commit tee. I un derstand they want Government Services next. I was just trying to clarify that with the House Leader. Mr.

Chairperson, members of the committee, as you are aware, responsibility for th e government's Telecommun ications Policy was transferred to this Min ister from the Hono urable Eugene Kostyra in January, at the same time as responsibility for the administration of The Manitoba Telephone Act was transferred to this Min ister from the Honourable Sam Uskiw. As you will note from the Estimates before you, the Telecommunications Policy office is a very small unit with only three staff who advise the government on polic y issues related to tele communic ations and broadcast matters.

When administrative questions arose after the change of portfolios, we could not create a new mini-department which would report to this Min ister , nor could we move it into the Department of Labour as there is no relation between my telecommunications responsibilities and my responsibilities related to the Department of Labour. My colleague, Mr. Kostyra, and I have agreed that although the Telecommunications Policy office will stand as a separate appropriation for which I am responsible, it will benefit from administrative support from the Department of Culture, Heritage and Recreation.

The work of the Telecommunications Policy office will be monitored by a committee of Deputy Ministers from the Departments of Culture, Heritage and Recreation; Industry, Trade and Technology; and Crown Investments. This is a time when we must follo w telecommunications policies very carefully.

In response to the introduction of compe tition in telecommunications services in the United States, the Canadian Department of Communications, DOC, and the Canadian Radio Television and Telecommunications Commission, the CRTC, have launched policy review processes to consider the introduction of competition in the provision of long-distance telephone services. We are concerned that introducing competition will result in a transition from the traditional rate averaging of the telephone companies and their regulators to a system where all services will be priced according to their cost.

If this occurs, rates for local telephone service would increase substantially in Manitoba with the greatest impact being felt in rural and remote areas.

As this is a critic al issue for Man itobans , this government has: 1. made the public aware of the issue; 2. advised Federal Ministers of Communications of the need to develop a national plan, rather than let various regulators across the country set policy; 3. invited the CRTC to hold a public hearing in Winnipeg and advise the commission of the government's concerns; 4. participated in a federal-provincial study to deter mine the im pact of inter-exchange competition on local telephone rates; 5. sent a letter to all Manitoba Telephone System subs cribers, asking them to advise their Members of Parliament of their concerns on this matter; 6. the Leg islature has passed an all-p arty resolution asking the Federal Government not to proceed further with changes to the structure of long distance telecommunications without the agreement of the Government of Manitoba.

In the coming months the government will take further action to ensure that Telecommunications policy is set through co-operative negotia tions between governments rather than through decisions by individual regulatory authorities. This is the key issue which we will be monitoring in this fiscal year. We have plans to undertake another federal-provincial study, this time to examine the extent to which Telecommunications traffic, currently using Canadian facilities, might be routed through the United States facilities in the coming years.

We are also encouraging our federal and provincial colleagues to undertake a study of Telecommunications rate structures in Canada to establish a common base of information upon which we can negotiate between governments any changes required to maintain the international competitiveness of the Canadian system without jeopardizing the affordability of high quality telephone service which we now enjoy throughout the province. Mr.

Chairman, and members of the committee, I think most of you have met or have been introduced to Joy Constant who is a Deputy Minister of Cultural Affairs and I think most of you know Charles Feaver who is the Senior Policy Advisor in respect to telecommunications policy matters. Miss Constant is with me and Mr. Fever is with me to help answer any questions that members may have on any item of the Telecommunications Estimates. Thank you, Mr. Chairman." MR. CHAIRMAN: The Member for Pembina. MR. D. ORCHARD: Thank you, Mr. Chairman. 2253

Tb...,aday, 23 May, 1185 Mr. Chairman, the Min ister mentioned three staff. Could the Minister indicate if all positions are filled and if they are filled in permanent staff position or whether any are filled on an acting basis? HON. A. MACKLING: I'm advised they're all permanent posit ions , all fil led with the exception of an admin istrative secretary who has been ill and is being replaced temporarily with a term position. MR. D. ORCHARD: Mr. Chairman, to whom does the Grant Assistance go? Who is supported under the Grant Assistance? HON. A.

MACKLING: That grant is to Nativ e Communications Incorporated of $126,800.00. I should elaborate I suppose, they provide media services to Native audiences in Northern Manitoba. MR. D. ORCHARD: Mr. Chairman .• yvhen was the grant to Nativ e Commun ications lnccvporated fi rst established? HON. A. MACKLING: I am advised that it's probably at least 10 years ago a grant was established, and it was then under Northern Affairs, and now it's been transferred under this section. MR. D. ORCHARD: So then I take it that transfer occurred prior to this fiscal year because it isn't in the reconciliation statement. HON. A.

MACKLING: My advice is it was two years ago. MR. D. ORCHARD: Mr. Chairman, the Minister has, in his int roductory remarks, dealt with the area of competition, the issue as it applies to provision of long distance and competition in that area. Mr. Chairman, could the Mini ster indicate whether his staff complement here are doing all of the research into the potential impacts of that competition, if it should be allowed, or are they working and using primarily information developed by Manitoba Telephone System staff resources? HON. A.

MACKLING: We are developing our own information base, but we are also privy to the information and the data collecting of the Telephone System, and also we are sharing information from other similar telecos, SaskTel, and the provinces themselves. MR. D. ORCHARD: Mr. Chairman, I am not sure what has happened in recent years or recent months of the com mun ications conference, Mi nisters of Commu nications having a conference. Could the Mini ster indicate whether there is agreement amongst the provincial Mi nis ters as to a posit ion on the competition, the application by CNCP to compete? HON. A.

MACKLING: I am advised that there is general agreement amongst the prairie provinces and the Maritimes. The Governments of Ontario and British Columbia - when I said the western provinces, I meant the prairie provinces - Alberta, Saskatchewan - B.C. and Ontario are taking a somewhat different approach. MR. D. ORCHARD: How does B.C. and Ontario's approach differ? HON. A. MACKLI NG: I am advised that Brit ish Columbia has taken a philo sophical position tha t competition will be encouraged and I suppose whatever happens will happen .

Ontario belie ves that while competition should be allowed that the rates must be regulated to ensure that there is no substantial increase. Now how they can do that we don't know. MR. D. ORCHARD: Where does Quebec fit into this debate? HON. A. MACKLING: I'm advised that Quebec does not agree with the competition because of the concern of the impact on local rating. MR. D.

ORCHARD: it's fair to say then that the provinces who have Crown corporations are the ones who hold the greatest concern over the potential impact of compe titio n from CNCP and tha t Al berta, Saskatchewan and Manitoba are primarily - if you could use the term - head manning the opposition. Would that be a fair assumption? HON. A. MACKLING: Yes, that is true. But in addition to that I'm advised that the Maritime Provinces, who don't have a high concentration of population and urban centres, are very concerned about the effect of competition on the rate base. MR. D.

ORCHARD: The Min ister mentioned earlier on in his opening remarks that his staff will be undertaking a study into how much - I don't know whether it's possible traffic or how much - traffic could be routed through the United States communication companies. Is there a time frame on that study and has any preliminary work been done to give an indication as to how that im pacts already because it's my understanding that there is a fairly substantive use out of British Columbia of the American network for long distance connection to Eastern Canada, Southern Ontario in particular? HON. A.

MACKLING: I'm advised that the Federal Government and the provinces are presently negotiating the study. it's anticipated the study will take six months from the time that agreement is reached on the study. Further, I should answer the second part of the member's question. That was the impact in British Columbia. There has been impact in British Columbia, but the impact has been the subject of a hearing in British Columbia involving the CRTC. MR. D. ORCHARD : Has tha t hearing drawn a conclusion? Has the CRTC reported on that? HON. A.

MACKLING: I am advised that a decision has been handed down by the CRTC, the effect of which is to increase the rates in the routing through the United States with the effect that there has been a reduction in the volume of routing of long distance through the United States already. MR. D. ORCHARD: Mr. Chairman, I suspect that when you take a look at the three prairie provinces that, quite 2254

Thursday, 23 May, 1985 possib ly, Manitoba would have the most severe impact of the three Crown telephone companies in terms of their percentage of revenues which come from interprovincial long distance tolls. Alberta and Saskatchewan have the quite favourable advantage in that they have each two major cities and a number of very vibrant smaller communities. I would suspect that intraprovinciallong distance in both Alberta and Saskatchewan would make up a higher percentage of their revenue based on what Manitoba is.

Mani toba suffers from a 600,000 person single telephone directory in which there is nothing but basic telephone monthly services derived in main from that. A lot of long distance certainly originates from that, but not nearly the circumstances of Saskatchewan and Alberta. Now that brings one into the interesting case study when you are taking a look at this proposal. Can the Minis ter indicate whether the Telephone System, or his communications staff, have developed any potential revenue impact figures on MTS?

We've talked about an impact on the telephone rates; have identifiable numbers been put to that discussion for Manitoba? HON. A. MACKLING: I will get some further information on the numbers, the dollars estimated, but I've been advised that there was a revenue impact study, that's a federal-provincial joint study, last summer and they had looked at the potential impact on each province, and their study confirmed that Ma nitoba and Saskatchewan would be very heavily impacted from a financial point of view from long distance diversion. Dollar amounts, I'm trying to get some further confirmation on. Mr.

Chairman, we don't have dollar breakouts, but the report indicates that if, out of the long-distance market, the competition captured 28 percent of the market, the local rates would increase in Manitoba about 51 percent. MR. D. ORCHARD: Could the Minister indicate on what basis the 28 percent figure was used? Surely it wasn't just simply picked out of the air. There must be some significance to the 28 percent. HON. A. MACKLING: I am advised that the study looked at the effects of deregulation in the United States where it averaged between 14 percent and 28 percent. So there was the two scenarios looked at. MR. D.

ORCHARD: Then the worst case scenario was the rate impact of 51 percent, and I presume that's a 51 percent anticipated or projected increase in the monthly rental rate, all of the charges remaining the same. What would the impact have been at the 14 percent assumption level? HON. A. MACKLING: While I'm getting information, I would like to clarify. The honourable member used the expression, "worst case scenario." We haven't seen the full results of the competition yet in the United States. At this time, it's measured at 28 percent.

I don't know whether that's necessarily the worst case scenario. lt could be worse than that. The 51 percent would not necessarily be just on the monthly rate. I think that part of that would reflect the local rate tolling. The effect is that they would have to apply for an increase in revenues within the province, the intra movements, and the short long distance rates within the province would also be affected, be Increased. MR. D.

ORCHARD: Well, are you saying that the impact would be that the intraprovincial revenue generation by MTS would have to increase by 51 percent whether it comes through long distance increases, or through basic monthly rentals? HON. A. MACKLING: The expectation is that since they would need an increase of 51 percent in the local returns, that would be a combination of an Increase on the base rate telephone service and long distance service within the province, because it's not anticipated they'd be able to recapture it on the commercial, because the commercial side is where you'd be facing competition. MR. D.

ORCHARD: Mr. Chairman, that's an interesting set of figures. I presume that they will be flushed out to a greater extent over the next number of months. Can the Minister refresh my memory? lt seems to me that in CN CP's applic ation to basically provide competition, they were going to, by and large, interconnect with Bell Ontario, is my understanding of the application. I also was lead to believe that in making the application CNCP indicated that they would provide a form of, I guess, if you will, cross-subsidization to the member companies of TCTS to lessen the kind of impact that we're talking about here.

Was that in fact, part of the application before the CRTC? HON. A. MACKLING: I'm advised that there is a copy of the report that we can make available to the member and we'll do that. But, in a specific answer, CNCP in their application to interchange with Ontario and B.C. has offered to pay some support to Bell and BC Tel, on certain conditions for calls which originate, or terminate, In their territories. They are not offering to share revenues with other Telecos stand to lose revenues.

As the honourable member knows we obtain revenues by the fact that the communications run through the province from B.C. to Ontario. MR. D. ORCHARD: Okay, that's interesting. Their application provides some conditional support to Bell Ontario to Bell B.C. Now, Mr. Chairman, this is one of those issues which there are pros and cons on.

The difficulty with this particular issue Is that there appears to be what could be a fairly significant impact on the nonlong distance telephone user which probably, if you took your statistics in Manitoba, would be, I would guess, probably better than half your telephone customers are very infrequent users of long distance. So that they would not benefit as significantly as your commercial customers in the business world and, for that matter, governments who do a lot of telephone calling.

One of the dangers that I can see for the telecommunications consumer in Manitoba and, indeed, Canada for that matter , is that is such a rapidly changing technological world. Soon you'll have - I believe there's an application right now, your staff can probably tell you - for cellular telephone 2255

Thurec:lay, 23 May, 1985 in Ontario, and that completely by-passes the whole system. We're not just talking about by- passing Manitoba on some long distance revenue sharing, that cellular telephone makes obsolete our billion-dollar investment in Manitoba, or has the potential to. We're caught in a very very thorny problem because, on the one hand, you want to protect your investment that all Manitobans have in the Manitoba Telephone System but, on the other hand, there's the other side of the coin, that you can't be protective to the extent tha t you make Ma nitoba not com petetive in the communications world.

That can have a far greater impact on Manitobans if, as an area to do business, we're not as effectively competetive. lt's a heck of a balancing act. But one of the problems that I think Manitoba has that makes the impact on Manitoba more severe than maybe Saskatchewan and Alberta Is, as I mentioned earlier about the revenue structure In Manitoba is probably more concentrated, a greater percentage coming from interprovincial sharing of long distance, rather than local toll and intra provincial long distance.

Secondly, that the Manitoba Telephone System has consistently run about an 85 percent dead equity ratio, and that leaves our telephone system almost with their hands tied to cope with the new investment and technology that will be here - that's not an if, that's not a maybe, that's a definite - and we get caught in the unfortunate position that we have enjoyed low telephone rates for the last number of years, amongst the lowest In Canada.

But it has had Its price on us in terms of what may well be a lack of flexibility at the Manitoba Telephone System right now to cope with the new technologies. we discussed this, before this Min ister was given responsibility for MTS, at the Public Utilities hearings last year, where Bell Ontario, I believe, has a dead equity ratio of about 53 percent, somewhere in that neighbourhood.

Therefore, they have the ability to meet new technology, they have much more market flexibility, if you will; and what we're probably seeing now is a situation where the government and, indeed, we have concerns on it as well, are forced to react and maybe overreact to a competitive situation because of the position or low rates that put us in, in terms of the fiscal maneuverability of our telephone system.

And maybe some of the past economies are going to come home to hurt us in Manitoba and we're going to pay a more rapidly increasing telephone service rate in Manitoba than say in other jurisdictions that don't have quite the same unique problems as Manitoba. But, on the other side of the coin, you've identified at a 28 percent penetration level with long distance, you 've guestim ated a 51 percent increase in intraprovincial revenues would be needed.

Has there been a calculation to indicate what would be the saving to the busi ness commun ity who would benefit theoretically by the competition hence presumably lower rates on long distance? HON. A. MACKLING: The honourable member made some statements and I would like to respond to some parts of the statements he made.

He is right that our debt equity ratio, that is the Manitoba Telephone System debt equity ratio, is higher than say Bell; but the cost of capital is lower for the Manitoba Telephone System because we borrow at a public rate rather than a private rate as Bell is required to - our cost of capital Is lower.

In respect to the issue of competition, what we're look ing at in Ma nitoba is price averaging, or subsidization, greater uniformity in sharing as against cost-base pricing so that the small homeowner, the small business person - and Manitoba is largely a small business province - gets the benefit of a full system at the average cost of that service.

So those who would gain in Manitoba by a competitive system would be the very large corporations, the very large users, whether it be stock broker comp ani es, financ e companies and so on, to all of whom the cost of that service is a cost of service that's calculated in our income and they can offset that cost against their income.

Whereas in a lot of the base that MTS serves is for individual homeowners, individual users right throughout the province to whom telephone service is not a business deduction, but is a basic communication tool.

I make the point that I think the position we have to take as a province is th at we must not fight technological change and we must be responsive to the need for change wherever that occurs when systems are developed, but we would rather negotiate and develop those changes in understandings with the Federal Government than have them forced upon us by a regulatory agency. · Now I think the member asked me what the savings would be.

I suppose they could be calculated, but again I say, the savings would be to that portion of the market that is in the fields I've mentioned, the heavy users, the banks, the lending institutions, generally, trust companies, stock broker companies perhaps, insurance companies, those companies that have a very heavy reliance on data communication. MR. D. ORCHARD: Then I take it that that aspect of it, the offset on potential cost savings has not been done then. HON. A.

MACKLING: Then the further point is in the dismemb erment, if that occurs, of the system we now have, we lose the benefit of the sharing of the revenue of the communications that transverse our province. MR. D. ORCHARD: Only that portion though that goes theoretically to the competition. HON. A. MACKLING: There would be nothing to prevent Bell from providing that service right across the province, once you open it up. lt has been pointed out to me, Mr. Chairman, that Bell own Trans-Canada Pipeline now, so they have a corridor. MR. D. ORCHARD: Maybe they'll take over the post office, too. Mr.

Chairman, what is the next step in approaching Ottawa? Has this Minister met with the Federal Minister of Communications to discuss the issue? Have the Communications Ministers across Canada - presumably they don't have a unified position to present to the Federal Government - but are there dis cussions scheduled with the Federal Government? 2256

Thursday, 23 May, 1985 HON. A. MACKLING: I have discussed with staff and we are looking at obtaining an early appointment with the Minister. The process is under way now to try and get that sort of meeting. MR. D. ORCHARD: Is the Minister indicating to me that until now he has not made an attempt to have a meeting with the Federal Min ister, that's been in place now for some - what? - seven months? HON. A. MACKLING: My predecessor, Eugene Kostyra, did meet with Marcel Masse and staff had arranged a meeting for me. A tentative meeting date was June 3rd, but apparently tha t was cancelled.

I'm endeavouring to get an alternative meeting date with Mr. Masse. MR. D. ORCHARD: Mr. Chairman, has Saskatchewan or AGT, to the Minister's knowledge, undertaken a mail promotion campaign? HON. A. MACKLJ NG: Saskatchewan has, the Honourable Gary Lane has had quite an extensive Communi cations campaign. I'm not famili ar with Alberta. I'm advised that Alberta has not. MR. D. ORCHARD: Mr. Chairman, I don't have that mailer here. HON. A. MACKLING: I can give you a copy of it. MR. D. ORCHARD: That was the only advantage to it. HON. A.

MACKLING: Maybe we don't have one here for the honourable member, but I think you're familiar with it anyway. MR. D. ORCHARD: Well, that's all right. The information that was on that, who developed that information? HON. A. MACKLING: Our staff. MR. D. ORCHAR D: Mr. Chairman, that was an interesting brochure. I have had a few calls on it, and people wanting to know what the story is. Now I say this and I try not to be political when I say it, but no doubt it will be interpreted as political, but they want to know if everything Is as bad as it would appear to be painted in that picture.

They certainly don't understand the issue because it's not anything that even members of the media have a great deal of und erstanding for because it's a fairly technical issue, and when everything is happening in Ottawa to Bell Ontario and CNCP. and not directly in Manitoba, it gets even less coverage. But there is a feeling developing that these sorts of things can't be entirely all bad, and I think if there is one criticism of the Minister's letter and his description in it, is that it was - what's the word the Premier uses, the knockers, or whatever he calls them - it was too negative a piece.

I think the Minis ter could have probably developed the same kind of response by not attempting to be quite so alarmist because it's sort of like the Limestone ads. They're asking, what's the matter with the Limestone project if the government has to advertise this to tell us how good it is? And, similarly, can this interconnect be all bad? The Telephone System, in general - and I am speaking for rural Manitoba - the public impression of it, I think it's fair to say, has been on the decline lately.

That used to be a top-notch credibility amongst its customers, and that has been on the decline lately because people are seeing areas where they're not satisfied with the service, where private lines are difficult to get, etc., etc. There is a whole related group of problems out there that make the Telephone System a not as highly thought of Crown corporation as it used to be.

One of the things that often comes up is when you mention the competition, a lot of people believe competition might well help them, not hinder them; and not understanding the issue and how the revenue sharing Is going, there is another area of suspicion because MTS, being a monopoly, has from time to time done things that m�ke people wish they had another area of competition to keep them sharp, keep them on the ball. So, Mr. Chairman, that's why I am keen to know who developed the message for the Minister, and those are comments that I am getting on it. HON. A.

MACKLING: I think I indicated that our own staff developed the message. I am sure that some of the calls that the honourable member is getting, and some of the returns I have seen, reflect the concern that we have and we bring it to the attention of every Manitoba Telephone System subscriber as to what is the result of deregulation and the opening of competition where it has occurred. it's not a matter of conjecture; it's a matter of fact. We are able to look at our neighbouring states south of the border and see what has happened there.

Those results, just for one state, were exhi bited In a comparison in that telephone stutter, if we can use that name, and it sets out just what happened there, and that is alarming. When we talk about a 51 percent Increase, that's the result of a study by a federal-provincial study group. So it's not conjecture; it's not just idle speculation or something that has been developed by a partisan government who is trying· to make any mileage, if you can use that, out of that issue. We have obviously a great concern that the people of Manitoba realize what the impact of deregulation would mean.

I am pleased that the honourable member, in referring to the booklet, wasn't as critical of my picture being on the information pamphlet as was his leader. But his leader kind of indicated that if his picture had been on the leaflet it would have been okay. Now I kind of thought that was a bit strange. But I met with Mr. Sutherland of CNCP, and he didn't react violently to the communication we were making, he had seen it. He had a copy of it with him when he met me in my office.

He had Indicated he was somewhat relieved that at least it wasn't as strident and as evocative a message as was being put out by our sister province in Saskatchewan. I think we have an obligation to bring to the attention of the users, who are the owners of the Manitoba Telephone System, what it is that's at stake. I want to 2257

Thur.clay, 23 May, 1985 impress that it's not just the base user. There are a lot of small busine sses in our smaller centres in Manitoba who have service obligations. They use either Brandon or Winnipeg as a service centre. There is a fair bit of lntraprovlncial long-distance use, and that service would go up markedly; that cost for those businesses would go up markedly in this process. So we are endea vouring to get as much public understanding.

The honourable member is right. it's not easy to appreciate and fully understand the ramifications of the revenue sharing that exists with the telecoms across Canada through that formula.

I have looked at the formula, and it's a mathematician's delight, but we know the results of the revenue sharing, that it's made it possible for us to provide excellent service at extremely low cost for the users in Manitoba, users that have come to appreciate that the Telephone System, while not being perfect In every instance, is invaluable from the point of view of business; and life in the province would just not be as full and as responsive without the excellent service we enjoy. MA. CHAIRMAN: 4.(a)- pass; 4.(b)- pass; 4.(c)- pass.

Resolution 45: Resolved that there be granted to Her Majesty a sum not exceeding $254,900 for Culture, Heritage and Recreation, Telecommunications Policy for the fiscal year ending the 31s t day of March, 1986- pass. Back to the Mini ster's Salary, Item No. 1.(a)- pass. Resolution 42: Resolved that there be granted to Her Majesty a sum not exceeding $1 ,046,500 for Culture, Heritage and Recreation, Administration and Finance for the fiscal year ending the 31s t day of March, 198 6-p ass. Any other item? Committee rise. SUPPLY - AGRICULTURE MA. CHAIRMAN, P. Eyler: Committee, please come to order.

We are considering the Estimates of the Department of Agriculture, Item 3. Manitoba Agricultural Credit Corporation - the Minister of Agriculture. HON. B. UAUSKI: Thank you, Mr. Chairman. When we adjourned at 5:30, the Honourable Member for Arthur raised a number of questions dealing with specifics of MACC. I wish to reply to some of those points that he raised.

As well, the Member for Morris in his comments raised questions concerning the Young Farmer Rebate, and I'd like to indicate to the honourable member, while the press release, it was true, did not specifically indicate that the Young Farmer Rebate was not included, it didn't specify it was excluded.

I wish to advise the honourable member, put it on the record that in my statement that I released to the press and, during the press conference, I made specific reference to the Young Farmer Rebate Program and I indicated that once - and I quote from the press statement - "Once the Young Farmer Rebates for 19 84-85 are deducted the net cost to the province is approximately $6 million." So those statements were made at the press conference. Mr.

Chairman, the release of the names of the successful bidder, I think, certainly should be considered by the corporation in terms of the leasing of land as the honourable member had raised in his remarks to me before supper hour. He also raised the question about admin istrative costs, why there Is a reduction in admin istrative costs? There is no reduction in staff, Mr. Chairman, in fact there is an increase in staff In the corporation.

We are attempting to, because of the wide variety of programs, have for the summer - and it is for the summer months, for the season - have hired six credit agents to assist in the field offices to do most of the routine in handling the additional workload the corporation has, in fact, undertaken. The reduction in the adminis trative cost is due to the way that, I guess it's the auditor in the Department of Finance, wishes to show our allowances for doubtful accounts.

As I understand it, previous years we made provision In our estimates as to what might be the allowance for doubtful accounts for the year as an estimate; they are now to be shown on some actual lines after they are incurred. That, in terms of accounting, shows the decrease of $728.00. it's basically an accounting presentation change in terms of how the doubtful accounts will be changed. That's not only the main, it's the reason for the change in administrative costs in the corporation, Mr. Chairman. Mr.

Chairman, the honourable member also made some to-do about the new loan program under the Manitoba Properties Fund. He should be aware, and I ind icated it before, that our priority in the springtime has been to make sure that operating lines of credit are, first and foremost, made available, and we've had a fairly, as the record shows, major increase in the number of loan guarantee applications through the department and through the corporation. So that's been our priority.

We will be using and are using the funding that I indicated before, the funding that will be disbursed throughout the year to try and make sure that those funds can be used for refinancing of farmers who are in difficulty, and use that money in terms of in some cases levering, set asides, breakdowns, and basically trying to restructure some of the farm community that can have and will have a hope at long-term survival. So that we've never pretended that entire amount of money will be put on the market, put out very quickly as the honourable members have tried to suggest that they should.

There is no doubt that there are many farmers, and we've never pretended that, are in financial difficulty. I believe that there Is an onus on all other lendors to play their

part In the whole matter of agricultural credit. Clearly, that's not being done and it's not happening. it appears from all indications that tonight's Budget will not change that at all in terms of national commitment to the farm community. If anything, you will find, Sir, there will be cost transfers, reductions in service and, of course, basic offloading from the Federal Government onto producers and the provinces. In fact, Mr.

Chairman, what you will see in the next while, I predict, that to-do that we had the other day on crop insurance in terms of financing, the greatest attempt to offload onto provinces by this Budget on one of the major programs that we have had. That, I predict, will be the occurrence. While the program is a five-year program, Mr. Chairman, what you will find - you know, it's kind of interesting that the honourable 2258

Thursday, 23 May, 1985 members made such a to-do. Why can't we go ahead? Why can't we have new programs? Why don't you go ahead and implement these programs? Mr. Chairman, we will just see what kind of moves of offloading will occur as a result of this Budget onto the provinces and onto producers in terms of additional costs. That's what I will predict will occur. Mr. Chairman, all that fanfare that we heard yesterday and the day before in terms of crop insurance, it's just a puff Into the wind.

The puff, we will see what moves are going to be made nationally in terms of how agriculture and how the farmers will be treated. But certainly on the financial side, other than the capital gains for retiring farmers, a reduction, and I want to acknowledge that. The move on capital gains is the only move that we can see that has any direct bearing on that. For the existing farmers, Sir, those who are on the land who are having difficulties, really there is little they can cheer about. MR. CHAIRMAN: The Hono urable Mem ber for Lakeside. MR. H.

ENNS: I can't help but chuckle at the fact that here we have an NDP Mi nister acknowledging the removal of capital gains tax from farms, capital gains tax anywhere, as being a positive move. Mr. Chairman, I've been in this Chamber for far too long and listened to too many speeches about how wealth has not been tranferred from one generation to the other generation .. ..

The issue that I want to bring to the Minister's attention is what we discussed briefly, it was raised by my colleague, the Member for Arthur, and that is, what are the possibilities of extending MACC help to what we refer to as the hobby farmers, or the people who are getting into agriculture, because I believe that more and more young people, hobby horse farmers, who wish to get into agriculture will choose that route, and there's nothing wrong with that.

As the Member for lnkster says, is he opposed to something before he wants to make the plunge, that perhaps he purchases some little property, gets involved in agriculture? - (Interjection) - The Honourable Member for lnkster doesn't like the concept of property. That of course is the basic things of agriculture. You have to have property; you have to own; you have to love; you have to feel for the land that you take a partnership in. But my question to the Minis ter of Agriculture is, recognizing as we said prior to the supp er hour adjournment, the existing farmers are getting older.

Recognizing that financial difficulties that the farm community generally is in and even established farmers find themselves technically breaking the regulations and rules when they truck fuel for co-op, fuels during the winter, or drive a school bus, or do other things to keep the cash flow going while they hope for better cattle prices or for better grain prices. I would sincerely hope that the Mini ster would look at the corporation, to look at ways of not making individuals inadvertently break the rules, and to make entering Into the farming community a little easier.

I think you 've got acknowledgement from the opposition that we will not criticize the Mini ster or the corporation If they do this. I'm not talking about extending subsidized money into those speculators who want to dabble in agriculture, the doctor, the lawyer, the real estate developer who wants to run a few head of cattle or a quarter-section of land, but I'm talking about the person who is developing a small agricultural enterprise. Is there not some room for the corporation to give them some consideration? I simply put that question to the Min ister.

I think that, without looking at these avenues, the entree into farming is simply going to become more difficult all along. I have to confess to the Minister, many of us who originally got into agriculture, including myself, touched it perhaps a little bit as we purchased our first piece of land and our first number of head of cattle while still working in the city to meet the expenses. I remember that, that goes back, in my case, to 1959- 19 60. I think that, if anything, that situation is more important now.

I just simply indicate to the Minister and to the corporation that they ought to at least present to us, next time these Estimates come under consideration, some new programs that, within definable limits, exclude the taking advantage of those people who only dabble in agriculture for speculative purposes but, on the other hand, includes those people who are generally saying, okay we are taking it one step at a time.

Maybe it's just the purchasing of 40 acres that is sometimes allowable in the municipal bylaws; maybe it's the purchasing of a quarter-section, but the husband still has to work in the city to pay the bills, keep the kids in school, or the wife. I was going to say, the wife on the tractor, putting in the crop and looking after the cows while the other spouse is trying to earn a few dollars, that that should not disqualify automatically consideration by the corporation for some help.

I say to the Minister, quite seriously, when you view the demographic stats of our farmers, the fact that our farmers are getting older, how else do we encourage young farmers, young people into the industry? I hold out to the Minister that here's an opportunity for a bit of innovation on his part and the part of the corporation to introduce new people into the very satisfying field of agriculture. HON. B. URUSKI: Mr.

Chairman, I appreciate the honourable member's comments. lt sounds a little bit like a speech I made about a year ago when I was before this Chamber with. my Estimates, indicating that we certainly would be pursuing that kind of work. MR. H. ENNS: Why haven't you? What have you done? HON. B. URUSKI: Pardon me? Mr. Chairman, just don't panic. We are moving in the direction that I indicated. If he wants some indications, he'll have to just be a bit more patient.

Certainly the honou rable member should be aware that certainly I indicated last year that we would be pursuing that kind of an issue, because we felt that there is a legitimate group wanting to enter agriculture and do not have access to capital. We would try and accommodate that and see what changes we could make. We did some surveying, as well, in discussion with farmers in some of the meetings that the honourable members wouldn't . . . for, and some of the discussions we had with farmers were on that very issue.

There is a fairly feelirg in the farm community about how one designates and how one defines who is eligible or not. 2259

Thureday, 23 May, 1985 And that is the tricky area that a corporation will be faced with because farmers, for example, in our discussions and our surveys of the farmers, we asked the question if part-time farmers should be eligible for MACC loans? The vast majority, over 70 percent of the farmers said, yes. But when we - (Interjection) - Well no, Mr. Chairman, we wanted to get the views of farmers and raise a number of questions. That wasn't the only question we raised. We asked farmers who were forced to take a job, in defining the categories, to take a job to sustain their operation.

Ther e's where th e overwhelming support of the farming community said, almost over 90 percent of the farmers surveyed said yes. This group, who was actively farming and had to take off-farm employment to sustain their operation, should, in fact, be eligible to have capital from the corporation, or be eligible for loans .. We asked another question indicating that another category, people who wish to start farming but do not have an adequate farm base to be full time. There was still high support for that, overwhelming majority, almost 80 percent of the farm community said, yes they would.

The difficult one, and where the honourable member touched on, about part-time and doctors and professionals, people with full-time jobs off the farm who want to supplement their income and start farming, the vast majority of farmers said, no. They said, no, and that's where the difficulty of defining who will be eligible for capital will come in. That isn't the only issue, Mr. Chairman, and that's why I raised the question of the Budget earlier in my remarks. There is a major issue confronting the farm community, and that deals with

Section 31 of the Income Tax Act, as to how part-time farmers will be treated in terms of actual operating expenses, and that's been the difficult question for many people getting into farming and, over the last number of years, not having adequate returns from the farming operation to, in fact, get into it full time and the actual cash expenses not being allowed beyond the $5,000 limit. And that's where the difficulty comes in.

So it goes beyond just the desire of the province and we're looking at that. 1 want to indicate to the honourable member that there will be measures presented before this Chamber, this Session, to deal, at least in principle, with that question. We will be dealing with that and I indicated that last year, but it's taken a fair bit of work and it will not be a grandiose program, it will be a slow starter which will take time to develop.

There will be errors and mistakes and changes because it is a fairly sensitive area; because there is the argument by some of the farm community that we want to maintain full-time farmers and have farming as a full-time occupation. I think that's certainly a laudable objective but doesn't recognize the reality of what's happening, and that we have to look at provisions along the lines that I have suggested. But there also has to be some further sensitivity and further amendments to

Section 31 under the Income Tax Act to at least, Mr. Chairman, deal with the question of cash costs and the deduction of cash costs in a legitimate farming operation.

The question of - because I have had to write on behalf of constituents and negotiate with the Revenue Department, I put forward a proposition in some cases to them to say, all right, leave the deductions on capital costs allowance off for a while until that farming operation goes up, but at least recognize the cash costs. it's sort of a 50-50 proposition and is a very difficult one, and I recognize the revenue people, but that certainly is an issue tied to the question of making capital available for part-time farmers. I appreciate the comments because I made the same comments last year.

We are moving along the way and there will be measures introduced to further that approach this Session. MR. H. ENNS: Well, Mr. Chairman, I appreciate the Minister's indication that he is prepared to ask the corporation to look at the matter that I raised. But, Mr.

Chairman, I just want to remind him this year that he is responsible for a legacy that was left to him by a predecessor of his and mine that established the Manitoba Agricultural Credit Corporation, probably in response to an institution that is perhaps attacked more vociferously than any other one, the banking system, and certainly this Min ister has attacked the banking system as of late.

But there was a previous Minister of Agriculture who said I am not satisfied with what the private banking institutions bring forth, meeting the agricultural credit needs in Manitoba, and established the Manitoba Agricultural Credit Corporation. I think it's just my responsibility now to remind the Minister that it is his bank that we are talking about. HON. B. URUSKI: M'h uh, our bank; not my bank. MR. H. ENNS: Well, I use "his" in the sense that he is responsible for its policies, that he can effect those changes by bringing up the necessary changes for Cabinet consideration. There Is no other elbow room here.

Let's not talk about what the Bank of Nova Scotia, the Bank of Canada, or the Royal Bank or the Imperial Bank of Commerce is doing. This is your corporation, Mr. Minister. Just as a predecessor of yours did the pre-innovative move of saying, hey, we are going to establish an agricultural bank to begin with, and we are going to say that young farmers - at that time it was under the age of 34 - will get money at 4 percent; we are going to extend certain conditions.

Those are all the kinds of things that were done because it was recognized at that particular time there was a failure, quite frankly, on the part of the private institutions, the private banks, of meeting agricultural needs. Mr. Chairman, in the Intervening years, the private institutions, and I will be the first one to acknowledge, to a large extent, spurred on by the public institutions, have changed a lot of the attitudes of private banking. There Is a great deal more co-operation going on now between the two and that should be encouraged. But we have heard too much from this Minister, Mr.

Chairman, about still carrying on a little battle, regaling against the banks, calling them In to reduce Interest rates when this Minister has so very little leadership in that field. Mr. Chairman, I can't think of any better comments than were made by the Honourable Member for Turtle Mountain just a little while ago this afternoon reminding him about what kind of deals there were. He was sitting there next to the Minister of Finance 2260

Thuraday, 23 May, 1985 and he was always going to raise $2 million and if some of those coins are going to be made available to the Ma nitoba Agricultural Credit Corporation. All I'm suggesting to this Minister is that he use the authority he has with respect to bringing about innovative credit needs of the agricultural communities of this province at this time. HON. B. URUSKI: Mr. Chai rman, I enjoyed the comments of the Honourable Member for Lakeside and at times in fact I agree with him a fair bit and he does bring up points that certainly I have on many issues. Mr.

Cha irman, to suggest tha t somehow this government and this corporation hasn't done enough just really flies in the face of reality when they were in office. Mr. Chairman, this little graph just really tells the picture of the activity In '75-76 it's still up and started going down. Number of approved loans. Just look at the chart, and then, when the change in government occurred, it changed the way we went.

We did get actively involved, but the role of the corporation has been to provide a com plem entary role, to complement the lines of credit provided by both the Federal Government, private lending Institutions, the co-operative movement to act as a catalyst primarily for young beginning farmers. That has been their role and will continue to be the role of the Manitoba Agricultural Credit Corporation as long as I am Minister here. But, Sir, for the Conservative opposition now to suggest that somehow we haven't done enough or haven't really responded, Mr.

Chairman, I take that criticism very negatively because we have been critical of the banks. Mr. Chairman, the members opposite say that your loaning money and you're charging serious rates, where were they when the rates were at 17.5 percent? Where were they when they were loaning money at 17.5 percent? Where were they when we were calling for a write-down? I was standing here two years ago when the Member for La Verendrye and the Minister of Finance were saying, "Why don't you do something about the write-downs? What are you going to do about those loans at 17.5 percent?" Well, Mr.

Chairman, we did something about those loans at 17. 5 percent and it took us two-and-a-half years to convince either the Liberals or the Conservatives in Ottawa to write down FCC rates to more lower levels, more acceptable levels. They're still not acceptable until those rates are down to at least two to three points over the rate of inflation. Mr. Chairman, the Interest Rate Relief Program, almost 1, 300 farmers received $12 million worth of assistance. That isn't peanuts, Mr. Chairman. The Honourable Member for Lakeside smiles, Mr.

Chairman, comprehensive refinancing to the farm community, guaranteed operating loans- $100 million loan program. You know, Mr. Chairman, there were very few loans. The banking community wouldn't even touch your quota when you guys were in office. That's why the Conservative record says, we are for farmers and I'll tell you how we'll deal with those. We will deal with them. We will deal with the farmers by shutting the doors of the corporation. We'll shut the thing down, but we are for farmers, just like the Federal Government in their Budget.

We will now reward the farmers by transferring $50 million of extra cost from the farmers of Canada. That's how we'll do it, over and above the 60 million. That's how we will treat agriculture in this country. it's a prime industry, $8 million in November, $60 million by the cuts of Neilsen, $30 million recovered out of that $60 million and now an additional $50 million. We'll wait to see when we find that. Mr. Chairman, that's how we support our Canadian farm community in terms of national policy. Boy, that's performance, Mr. Chairman. MR. H. ENNS: Mr.

Chairman, the trouble we had with this Minister, it's an automatic reaction to when anybody gets up on this side, he has to call it a record player and charge. Mr. Chairman, I would ask the Minister tomorrow to read Hansard and ask what I asked him in this little exchange. I wasn't attacking the corporation. I wasn't telling the Minister that the Agricultural Credit Corporation wasn't doing its job. In fact, what I was doing, Mr.

Chairman, and I'm sure you will recall, being the neutral chairman that you are, Sir, objectively at all times in the process that Is reached, that you will remember, Sir, that all I asked the Minister about whether or not the corporation under the Minister's direction reminding him of the legacy that he holds as being responsible for this very important Agricultural Credit Corporation, whether or not they would consider widening the parameters of consideration of hobby farming, start-up farmers, farmers earning off-farm incomes, etc. I didn't really Invite the tirade that I just got from the Mi nister. Mr.

Cha irman, you would acknowledge that. Mr. Chairman, just nod once in my direction and I'll know that you are a fair and objective chairman. I didn't deserve those comments from the Min ister, Mr. Chairman. Mr. Chairman, I'll leave it at that. What I was asking for from the Minister is to direct the corporation into examining more ways of allowing young entrants into agriculture. That's all. HON. B. URUSKI: Mr. Chairman, I think I answered that question in my first set of remarks. I certainly said we would and I said that would be coming before the Legislature.

That was my second comment and I'll leave it at thatf MR. CHAIRMAN: The Member for Arthur. MR. J. DOWNEY: Mr. Chairman, in listening to the Minister, I said before the supper hour that I had a few questions dealing with particularly the Young Farmer Rebate Program, and I have some specific questions in that area, but I would like to know the policy of the Min ister and the Manitoba Agricultural Credit Corporation. it falls along the lines of my colleague from Lakeside, some of the comments that are being made.

Some of the activities that have taken place in the last few days, particularly dealing with the people who want to ship cream and sell cream to creameries. The simple fact Is that there Is a certain amount of hypocrisy to this Mini ster and to this government when they stand up and say we're all for supporting the young farmers and the entrants to agriculture; that we are very supportive or going to be introducing legislation to allow part-time farmers to participate in the Manitoba Agricultural 2261

Thuract.y, 23 May, 1915 Corporation. But what I have a hard time understanding, Mr. Chairman, and I would like the Minister to answer, is to what line of farming or what type of farming is he able to encourage people into un der his administration? We have a dairy industry that has got complete restrictions of transfer of partial quotas so that a person, a family, who wanted to start farming in a part-time way and producing milk, milk cows in the morning, drive a school bus, milk cows at night and sell the milk to the system, they in fact can't do it, Mr.

Chairman, because they don't have the ability to have any quota or cows to do it with. They have no market opportunity. An Individual who wanted to milk - and I had a call this morning from a person who milks 12 cows, shipped three cans of cream of week, but they now have no place to market it because they don't have a quota, Mr. Chairman. An individual who wants to produce 500 eggs from 500 hens, Mr.

Chairman, on a part-time basis to help supplement their income, because they have a desire - (Interjection) - The Minister, I would hope, would listen to this, because he has got to deal with it. - (Interjection) - Yes, you're darn right he has to, and we'll make sure that he does because we do have some answers that will support the farm community. We were able to deal with the challenge that came before us. But, Mr.

Chairman, how does the corporation, the Manitoba Agricultural Corporation, deal with the policy principle of helping people to get involved in agriculture when in fact there is nothing for them to get involved in? Oh, they can get involved in the production of wheat and compete with people like my colleagues who are farmers or people who are already involved in the production of wheat. Yes, they can produce special crops and rapeseed, flax. They can find a piece of property to get into. But, Mr.

Chairman, the cash flow to service the · debts that are going to be incurred through MACC is not there on a very regular basis. So I'm having a difficult time, as I'm sure many farmers are, in understanding this government and this Minister as to what they can do in the area of agricultural production. Further, Mr. Chairman, we have a Min ister who has introduced draconian legislation in farmland ownership laws that have in fact prohibited support from other family members or other people through a corporate structure to assist in the financial aid of that farm person.

What I'm saying, the restrictions and the lack of opportunity developed and created under this administration really brings the question forward as to what are they really talking about when it comes to supporting the young family farm, the person who wants to get off farm employment, when in fact they really can't get into farming. They really can't get into farming on a part-time basis in the same way as which would be I think part of a policy that would fit together.

As I said, I use the example of people working a few hours of the day off the farm, as well trying to produce some eggs, trying to produce some cream, sell it to who? To whom, Mr. Chairman, are they going to sell it to? I ask the Minister of Agriculture, that under Manitoba Agricultural Credit Corporation policy, if individuals - (Interjection) - well, Mr. Chairman, if the Minister is prepared to listen, I am prepared to talk to him about it. What I am saying, Mr. Chairman, is that there is a dilemma in the farm community.

They aren't able to go out and look after their farm operations and make payments to the Credit Corporation if they have a loan, because they can't sell their commodity. If a cream producer today who has a loan with MACC and has a note due, Mr. Chairman, and cannot sell the product which he or she is producing, what are they going to do? Are they going to foreclose from MACC? I don't think they would take that harsh view, but I am saying that I can see no direction. I can see no light at the end of the tunnel for young people who are part-time farmers, who are full-time farmers, who want to diversify.

There is nothing there, Mr. Chairman. There is nothing there. How misleading can he be when he stands up and he says our objective is to create an opportunity for young people to get into farming? lt isn't there, Mr. Chairman. He criticized me a year or two ago for saying what did I want the people to do, did I want them to go back to more cows? Was that my objective? Mr. Chairman, I want the freedom for people to produce agricultural commodities in an unlimited way. MR. A. ADAM: Except when they're in trouble. MR. J. DOWNEY: I want them to produce in an unlimited way. The Member for Ste.

Rose makes a comment from the peanut gallery saying, except when they're in trouble. Mr. Chairman, they appear - and I go back to the Schreyer years; I come to the years now under NDP administration - to be the years that farmers get into trouble. Mr. Chairman, we had four years of relatively good agricultural success. We had the drought; we had flood. We were able to cope, Mr. Chairman. We introduced programs on a short-term basis that dealt with it.

You know, the Minister - this is interesting, because there's a principle here - makes a lot of to-do about the fact that under our term of office there wasn't the kind of activity under the Manitoba Agricultural Credit Corporation that was under his government. Mr. Chairman, let me tell the Minister of Agriculture that you don't better the farm community by putting them further in debt. HON. B. URUSKI: So you close the doors. MR. J. DOWNEY: No, you don't close the doors, Mr. Chairman.

I will make reference to a policy and a program that was introduced during our term of office. - (Interjection) - Yes, it was the Young Farmer Rebate Program. They didn't cancel it, Mr. Chairman. In fact, what am I hearing the Minister say? I've heard the Min ister say in his press releases, we've helped in a big way, through the Young Farmer Rebate Program, a lot of farmers, $2 million rebate. I am proud, Mr. Chairman. I'm an extremely proud person that I had a program in place that assisted people with interest rates, that I didn't have to be hounded.

I didn't have to be pushed and shoved by everyone in society to take action to support the farm commu nit y; that we showed leadership; that we developed a program, Mr. Chairman, that supported the young people to get into farming. 2262

Thursday, 23 May, 1985 Yes, Mr. Chairman, I will say this, and we'll have more to say about it when we get into the marketing area in agriculture, that our dairy policy did allow people to buy cows and quota, not a total dairy farm. They didn't have to spend a half-a-million dollars to get into a dairy farm operation. They had the opportunity to buy five cows with the quota for five cows or 10 cows and quota. Yes, they had that opportunity under our government, Mr. Chairman. They had the opportunity to produce a reasonable amount of eggs from the policy of egg production. Yes, Mr.

Chairman, and at the same time, the Minister of Agriculture and our government were emphasizing the expansion within Canada of the opportunities to produce and to sell into the Canadian market and into the international market. But I tell you, Mr. Chairman, and I tell the directors of MACC that you have to look over the horizon a little bit. You have to have a little bit of vision. That's something that this Min ister of Agriculture lacks. He has not introduced one program in MACC, the Manitoba Agricultural Credit Corporation, that really had any of his own initial thoughts in it; I don't know of one program.

He was forced to deal with the Interest Rate Relief Program; we kept pushing him, challenging him. - (Interjection) - No, Mr. Chairman, the Min ister makes reference to losing the election. That is not true. What I am saying to the Minister Is, I have not seen one evidence of leadership come from his office. But I would ask him, Mr. Chairman, as to why and how he is going to encourage all these young people to get jobs when they have an MACC loan, If they have off-the-farm jobs?

Is he now saying policies of his government are that you can get an MACC loan at the same time you can drive a school bus; but you can't milk or produce cream to ship to your creameries; is that what he's saying? Or you can't produce enough eggs to help sustain your operation; Is that what he's saying? Where do his priorities lie? Do they lie with the supporting of the agricultural community, or is he saying; I, as a New Democratic Min ister of Agriculture, am admitting defeat?

I am admitting defeat because I can't, within the agriculture industry, that he can't within the agricultural industry, he can't create the kind of environment which has been traditional to the production of food. lt's an admission of failure; it is totally an admission of failure by this Mi nister of Agriculture. lt is an admission of failure. So I say to him, where does he stand? Why, Mr.

Chairman, does he not come forward and say he is beat with Ideas, that he has not got an original idea as to lead the farm community through times of difficulty; that his only option and his only answer is to change The Manitoba Agricultural Credit Corporation Act which would provide the farmer who has the opportunity, yes, to produce wheat and to produce oats, to produce barley, to produce the coarse grains or the special crops. But there isn't one other opportunity. Oh yes, he can produce beef cattle and hogs, that's right, he can produce beef cattle and hogs.

But when it comes to the dairy industry, there is no opportunity; when it comes to the poultry industry, the feather Industry, there are no opportunities; when it comes to the production of cream, there are not opportunities, because there is no market there.

He says the only answer now, because I'm beat, I really, as the Mini ster of Agricultur&, can see no opportunities for you because I've got the system completely sealed and I have no new directions within that industry; that I will provide you the opportunity to borrow money from MACC, but you'll have to get a job off the farm to make ... - (Interjection) - But that's the point. A MEMBER: You've got a job off the farm now. MR. J. DOWNEY: Yes, you have a job off the farm. The point I'm making is that he is defeated, he has not got an idea as to how to deal with the problems. A MEMBER: He's a farmer. MR. J.

DOWNEY: That's debatable. Mr. Chairman, I ask the Minister how many young farmer loans have been made in the last year? How many applications are now before the Credit Corporation?

The majority, and I would say the majority, I guess if the average age is 27 years of age, that the majority of the people who are applying to MACC qualify for a program which we're very proud of and introduced, they have the Young Farmer Rebate, automatically, they don't have to go through a lot of hoops; they don't have to through a bureaucratic red tape; but, on approval of the loan, they automatically qualify for a 4 percent reduction on the first $50,000.00. But that was in place, I didn't have to be pushed to do that; I didn't have to be shoved and dragged, kicking and screaming. No, Mr.

Chairman, we showed leadership and moved with programs. So I ask the Minister to tell me what type of agriculture production he expects the new farm entrants to get in within his policies? I ask him, does he recommend they go to the Credit Corporation and borrow money to get into production of cream? Does he recommend they go to get into the production of milk on a part-time basis? Does he recommend they go to try and borrow money from MACC to get into the production of laying hens up to 500? No, Mr. Chairman, because they can't do it. That's the point I'm making.

He can pretend, he can let on, he can talk about, on one hand, all the assistance in the world that he's providing, through Manitoba Agricultural Credit Corporation, and they can't do a darn thing with it. There isn't one opportunity, Mr. Chairman. So that's the point that has to be brought forward. And he has to be shown for his incompetence. lt's tough, I know he's hurting, Mr. Chairman. He's hurting because he has had very few success within his operations as Minister of Agriculture. Tell me what he's going to encourage the people to get Into that go to the Manitoba Agricultural Credit Corporation?

Or is he going to say, we're going to encourage you as a young farming person to get into the production of grain, which my colleagues all know, is a very very comp etitive and tough business. Is he going to encourage them to get into the production of beef, which is, again, an extremely tough and extremely high cost operation? Certainly, the production of hogs which today we've seen extremely difficult times because of the imposition of tariffs In the United States. What are the opportunities? What is he telling the Manitoba Agricultural Credit Corporation when it comes to laying out policies for their loans?

I am extremely anxious to know, as are the farm people extremely anxious to know, what are the policies? 2263

Thur8deJ, 23 M•J. 1915 As well, Mr. Chairman, he makes a lot to do about the Interest Rate Relief Program that he was pushed and shoved into introducing. Mr. Chairman, what about the repayment, because there is a repayment of half the funds; half the $6,000, as I understand it, is a loan and half, as I understand it, is a grant; am I incorrect? Has he now taken action to put forward a request for those loan portions of those Interest Tate Relief funds? Has he, and if so, what Is his success in getting back those funds? I think, Mr.

Chairman, we have a lot of answers that have to come from this Minister of Agriculture when it comes to dealing with the Agricultural Credit Corporation and its operations under the Minister. I would like to know what the longer-term objectives of he and his government are when it comes to the lending of monies from the Manitoba Agricultural Cred it Corporation? Is it, Mr.

Chairman, the objective of the corporation to lend money only to a dairy farmer if he wants to buy a complete dairy farm and the operation; a broiler farm if they want to buy the complete operation; egg producing farm if they want to buy the complete operation, or a grain, beef or hog farm if they want to go into debt, to the tune of how much money - a quarter of a million dollars? Or why doesn't he follow along with the principle which he says he's going to introduce and allow people to do part-time farming and borrow money from MACC?

But why force them to get off the farm employment when in fact they could produce agric ultu ral commodities if he would take hold of his responsibilities, deal with the marketing problems that are now before us in the cream shipping area, the milk shipping area, the egg producing area? lt is incumbent, Mr. Chairman, upon him as Minister to deal with it. He says the Member for Arthur knows that it's a federal problem. We've got a problem with our national supply management system. He says we know we've got a problem with overproduction. Mr.

Chairman, under this Min ister, it has been worsening, not getting better. I would ask him if it is possible to borrow money from the Ma nitoba Agricultur al Credit Corporation to get into the production of a few chickens, to get into the production of cream. Remember, responsible management in the Manitoba Agricultural Credit Corporation has to take a look at the situation and say, well, really, we can't finance your cream shipping operation because when we lend you the money, we want you to pay it back. He says, well, I'm sorry, I am going to milk cows and produce cream, but I can't sell it to anybody.

So, end of story. So let the public know that this Minister of Agriculture isn't capable of dealing with the Credit Corporation, Isn't able to deal with opportunities that could be created in this province for the production of all agriculture commodities. I would hope that he would tell us how many farm applications, how many young farmers has he got now currently getting support under the Young Farmer Rebate Program; and how many applications are before the corporation with young people trying to start farming; and what are the types of farms that people are trying to buy with the Credit Corporation money? HON.

B. URUSKI: Well, Mr. Chairman, I want to address the comments made by the Honourable Member for Arthur. I think what I should be doing is likely writing every farmer who is in Supply Management commodities and tell them what a member of this Legislature, who was a former Minister, is suggesting. Because, Mr. Chairman, what the Conservative critic Is suggesting that we do is disband all the marketing boards in this province. That's what he Is suggesting. MR. CHAIRMAN: Order please, order please. MR. J. DOWNEY: Mr. Chairman, a point of order. MR. CHAIRMAN: Order please. The Member for Arthur on a point of order.

MR. J. DOWNEY: Yes, Mr. Chairman, I want the Minister to withdr aw that statement because it Is totally inaccurate. I did not say that I wanted the disbanding of marketing boards in the province. I was asking the Minister questions as to how he was going to deal with the difficulties that were created under his administration, and I did not - and I say it again - did not say I wanted the disbanding of marketing boards in the province. MR. CH AIRMAN: I thank the member for th at clarification. However, a difference of opinion Is not a point of order. The Minister of Agriculture. HON. B. URUSKI: Mr.

Chairman, I will make sure that I will tell you how the member Is intending to disband all the marketing boards by the very comments that he has been making here this evening and all through the Session. Mr. Chairman, whenever a problem comes up In a supply management commodity, what do you hear from the Conservative caucus? Let's get everybody to produce, let's go ahead and let's dilute the system and let's break the system down, because if we overproduce the system will fall apart and let it go. That's what the Conservative Party is advocating in this Legislature. That's what they want, Mr. Chairman.

Now let's look at the situation one by one. Mr. Chairman, when that party was elected, we heard a great to-do for a couple of years that we are going to fight for Manitoba in our share of natural products under the existing marketing board structure In the province. Mr. Chairman, what did we find? We gave away the barn, Mr. Chairman; not only the horses, we gave away the barn. When he was Min ister, he allo wed one of the marketing boards to break the long-standing tradition of using comparative advantage as a major criteria from the overweight quota, Mr. Chairman. MR. J. DOWNEY: Mr.

Chairman, on a point of order. MR. CHAIRMAN: Order please, order please. The Member for Arthur on a point of order. MR. J. DOWNEY: Yes, Mr. Chairman, I believe I was debating and making a complete reference to the Manitoba Agricultural Credit Corporation and the money which they would be lending for farm operations. 2264

Thunday, 23 IIII J, 1885 He Is dealing totally with the marketing

section which, If that's the way he wants to handle his Estimates, then we'll have a full and wide open debate. HON. B. URUSKI: Mr. Chairman, all my comments were related to the viability of the farming community dealing with credit, and I am dealing with them in a context of the Issues raised by the Mem ber for Arthur. The former Minister of Agriculture virtually, by the actions that he undertook In 1978, could have blown Manitoba off the map in terms of agricultural products in the supply management. Mr. Chairman, the Member for Morris says, what do you mean? Mr.

Chairman, it took us two-and-a-half years to get back to the position of making sure that comparative advantages have made this criteria. Now he gets up in this House and has the audacity to suggest that what we should do in order to allow people to produce eggs and chickens and cream, we should break down the system because that's what he is suggesting, Mr. Chairman. MR. J. DOWNEY: The systems broke down under you. HON. B. URUSKI: Mr. Chairman, the honourable member hasn't got a clue.

The Conservative Party, and I ask the deputy leader, and it may be to his advantage to get himself another critic in agriculture who understands something of the workings of marketing boards and the whole structure of agriculture, Mr. Chairman. Maybe he can accomplish something more. Mr. Chairman, the young farmers of this province have benefited greatly under this administration to carry on through these difficult times. Let's just compare what MACC has done and what other lending agencies are doing in this province.

The Farm Credit Corporation, which normally has two, two-and-a-half times the quotas, and the lending, it does more lending than MACC; it has a much larger staff. Mr. Chairman, last year, MACC loaned out over $75 million to Manitoba farmers in refinancing. The bulk of the financing was to young farmers under the age of 39; almost 90 percent funding under MACC went to young farmers. Mr. Chairman, what did the FCC do in the Province of Manitoba last year? Eighteen million dollars worth of credit. Why, Mr. Chairman? They are still hung up on continuing the policy of high interest rates.

We have the 17 .5 percent Minister In charge, Mr. Chairman. Did they do anything to farms? Oh no. Now, Mr. Chairman, we have to pick up all the di fficulties that went on for four years because bankruptcies, Sir, don't occur overnight. They are not there with the snap of a finger; they are there as a result of financial difficulties over many years, Mr. Chairman. The Mem ber for Pembina smiles; he doesn't need the money. Mr. Chairman, I should write every client of MACC and tell them you guys don't need the money because the Member for Pembina said that you don't need the money. MR. D. ORCHARD: Do it, do it. HON.

B. URUSKI: The Honourable Member for Pembina says do it. Mr. Chairman, I b!!! lieve that that may be what I should be doing. MR. J. DOWNEY: Why not? You lied to everything else. Why don't you do that too? A MEMBER: Let Pete do it. He'll do your dirty work for you. HON. B. URUSKI: He doesn't have to do my dirty work, Mr. Chairman. I will do my own dirty work, Mr. Chairman. If nothing else, it will be a pleasure. lt will be a pleasure to deal with the kind of comments that I have been getting from members. What they want to do, Mr.

Chairman, as negative as they have been in these Estimates, they are trying to cover up for their four years of failures, and they are now trying to cover up for the neglect of their federal counterparts. What they are trying to do - (Interjection) - Well, Mr. Chairman, the honourable members will see when the farmers start paying that additional $50 million in extra charges this year imposed on them, then we will see hQw well they treat the agricultural commun ity. Mr.

Chairman, the honourable mem ber opposite In his comments about how does the breakdown of MACC loan portfolio work and who has the opportun ities. I will tell you, the bulk of the lending that MACC has done In the last number of years has been to both the grain and the livestock industry.

The bulk of the loans, in percentage terms, just under 80 percent of the loans made are both to the livestock and the grain sector; specifically, farming in beef about 7 percent; dairy about 2 percent of the loans; hogs, specifically in the hog sector, about 3.5 percent; and mixed farming In terms of hogs and grain, just under 10 percent. Those are the bulk of the breakdowns of the loans In terms of categories under MACC - (I nterje ction) - Mr. Chairman, pure grain, 36 percent, 36 percent of the loans In the last four years are for grain operations. Mr.

Chairman, the Honourable Member for Minnedosa asked that question from his seat. But what I find incredible are the comments of the Honourable Member for Arthur about opportunities. What he has suggested is that we tear down the present system in favour of opportunities. Mr. Chairman, every producer of eggs, for example, has to pay a levy of 38 cents, a penalty of 38 cents a dozen of eggs that Is produced by an un registered produ cer. They understand what unregulated production means in terms of their Income and their opportunities.

What the honourable member is saying, let's expand the industry and let's put on 200 or 300 farmers additional production, and let's make sure that those in the program are paying an additional 38 cents for every dozen eggs. That's what he's suggesting, Mr. Chairman. We will cut the incomes of existing producers to allow for the expansion of others. Mr. Chairman, rather than promoting the sale of eggs and the consumption of eggs in this country, and making sure that the industry expands, no, we in fact will cut down on the incomes of the existing producers. Then what would the corporation do?

What would MACC then do, Mr. Chairma11? What would those egg barns be worth, Mr. Chairman, when their production has been cut in half by unregulated producers? Is that what he's suggesting, Mr. Ch<lirman? Let's look at the milk situation. What happens In the milk? We have a national quota; there has been a 2265

Thur.cleJ , 23 liar. 1885 reduction in milk. Now we have an overproduction. Does he suggest that if we sell quota for producers that there will be more producers in the business? What a bunch of malarkey, Mr. Chairman. What Is happening is that the industry itself recognizes that there is a contraction In the industry? There will not be any more milk producers, there will be less, Mr. Chairman. That's what will occur, not wha t the honourable member suggests. Is he suggesting, let's allow any new producer into the milk industry? Can you imagine the cutbacks on the existing producers?

Because that's precisely the role that he wants to take, Mr. Chairman; that's what they're advocating. Let's look at the chicken industry, the only industry that has had an expansion in terms of production, Mr. Chairman, and it is as a result of some very hard negotiations and some very hard work on behalf of our staff and our boards to get back to the position we were before 1978. Mr. Chairman, we were on the slippery slope as of 1978 ... SOME HONOURABLE MEMBERS: Oh, ohl MR. CHAIRMAN: Order please, order please. HON. B.

URUSKI: There are 17 new producers building new barns or filling barns in terms of the broiler industry. That has been our only area in supply mana ged commoditi es that there has been an expansion. lt is clearly, Sir, and I say this for the record, that it is as a result of the hard work of members of the Broiler Board and all the other boards and our staff in the National Products Marketing Council, and our Policy Economics Branch that assisted the boards in working very hard to . . . MR. C. MANNESS: That happened over two terms, two governments, you know that. HON. B. URUSKI: Mr.

Chairman, that change in criteria . . . the Honourable Member for Morris from his seat said it happened over two terms. Mr. Chairman, let the record be clear that it was under their administration that they allowed the Turkey Board to deviate from the normal criteria to allow for population growth, for regional market share, and downplayed comparative advantage in terms of the national agreement. lt was your admin istration that put all the supply-managed commodities on the line. lt put Manitoba's neck on the line in terms of future production, and Manitoba, Mr.

Chairman, is a province tha t has to depend on interprovincial trade and production out of the province. - (Interjection) - Mr. Chairman, they don't like to hear the facts, that's why they want to chirp from there. They don't want to hear what the story was, because that's what happened, Mr. Chairman. The Honourable Mi nister of Agriculture, when we confronted him in 1978, didn't even know what was going on, and now he wants to suggest that we should get involved in deregulation and In the delivery the setting up and monitoring, or actually handling, of quota in the dairy industry. Mr.

Chairman, what would you hear tomorrow? You would hear, Mr. Chairman, that this government is Interfering in the workings of the marketing boards. They now want to get themselves involved in the day-to-day operations of the boards, that's what you would hear from honourable members opposite. Mr. Chairman, that is nonsense. The responsibility for the handling of quotas and the interproducer relationship between the board and their producers is, In fact, their responsibil ity. MR. CHAIRMAN: Order please. The Member for Morris on a point of order. MR. C. MANNESS: Mr. Chairman, on a point of order.

I think the record should show and I would, hopefully, lead into a major discussion of this once we move Into the right section, but I want the record to show that, as a former signatory to national planning, as representing the provincial Natural Products Marketing Council, I attended several meetings on behalf of that council, in attendance with Morris Kraut, the former Assistant Deputy Minister of Agriculture, at which time we fought very hard to bring forward comparative advantage dealing with overbased quota within the broiler Industry.

The Min ister knows that and I've heard him now for two years indicate that something was contrary to them, so I put that on the record. This isn't the time to say so. If the Minister wants to engage in a further discussion on this matter, once we come to the proper part of the Estimates, I would be glad to do so. MR. CHAIRMAN: I thank the memb er for that clarification, it was not a point of order. The Minister of Agriculture. HON. B. URUSKI: Mr. Chairman, the agreement that was signed was with the Turkey Board; that placed Into jeopardy all the other boards. Mr.

Chairman, I would not have gotten onto this debate if the honourable member ... MR. J. DOWNEY: I ask you how you're going to handle it. HON. B. URUSKI: Mr. Chairman, I would not have gotten onto this debate. They don't like the information I am putting on the record, Mr. Chairman, when, In fact SOME HONOURABLE MEMBERS: Oh, oh! MR. CHAIRMAN: Order please, order please. HON. B. URUSKI: Mr. Chairman, if the Honourable Member for Pembina wishes to speak, he'll have his turn. MR. D. ORCHARD: I will. MR. CHAIRMAN: Order please. The Member for Pembina will have his opportunity to speak. The Minister of Agriculture. HON.

B. URUSKI: Thank you, Mr. Chairman. When the honourable members want to take away from the negative situation that we are getting on the 2266

farm community in terms of the financial situation of Canadian farmers by today's Budget, Mr. Chairman, and dovetail it and try to remove responsibility away from themselves and away from their colleagues in Ottawa by the dribble and the misinformation in terms of how they intend to deal with the issues In agriculture, Mr. Chairman, then I certainly will move back to the specifics of the Estimates. Every time that anyone of those members rises and wants to put in extraneous information, Mr. Chairman, I will do likewise.

So, if they want to hold to the subject, I will be very pleased to hold to the subject, but when the Honourable Member for Morris gets up and says, "Let's deal with the Issues in the Estimates in front of us," Mr. Chairman, we listened for 20 minutes to his colleague, the Member for Arthur, on the whole range of quotas and quota systems and how he would deal with this whole matter. - (Interjection) - Opportunities, baloney. You want to play around, Mr. Chairman, I can play around as well.

We've got lots of time in terms of the Estimates as far as I'm concerned and the members want to play around and talk and talk around in circles, Mr. Chairman, I can talk around in circles In terms of what we are hearing. Mr. Chairman, In terms of the specific information of loans, we have approved since March 31 , 1985, 31 direct loans of just approximately $2 million. As I indicated earlier, the loans under the 9.75 percent, eight loans just under $900,000 and 272 loan guarantees of almost $15.5 million. MR. D. ORCHARD: Now, Mr.

Chairman, it's interesting to hear this Minister of Agriculture talking In such glowing and wonderful terms about MACC and the job it's doing In terms of lending money to the young farmers In Manitoba. As you know, one of the main reasons I got into politics was because of the mismanagement of the Department of Agriculture during the Schreyer years, and I mentioned to him the other night that I got one of the last long-term loans that MACC put out before they went into that infamous land program.

I think the Min ister needs to have his memory refreshed. it was in 1978 that we reinstated these long term loans that now he is so glowingly talking about lending out - that MACC is doing In terms of providing money for our young farmers in long-term loans You know, he's pretty quick to forget about the ultimate goal in the Schreyer years and he still ascribes to it. In his first set of Estimates he told us that the agricultural system - what was that he mentioned about the western agricultural system? The guy still hasn't learned any of his lessons.

He is carrying on programs that my colleague, the Member for Arthur when he was Minister of Agriculture, reinstituted to provide young farmers with the kind of long-term financing and the capability to borrow money on a long-term basis from a pro vincia l agenc y, something that when he was a Minister of the Schreyer Government they took away. And he stands up here tonight and he tells us what a wonderful job MACC is doing, lending money like they're supposed to be doing, that they are mandated to do and, if it hadn't have been for having a change in 197 8, there would be no long-term mortgages.

So don't let this Minister of Agriculture try to distort the facts and rewrite histor y. He Is carrying on Progressive-Conservative lending policies In MACC, policies that were put in place in 1978 to replace the Land Lease Program that he and his left-wing colleagues were so fond of during the latter years of the Schreyer administration, policy which got them quite frankly massively unelected in rural Manitoba because it was against every bone In most farmers' bodies, that they would be tenant farmers to the government. So you know, Mr.

Chairman, the Min ister of Agriculture can't sit around in this House and try to distort and try to take credit for something that he did not introduce, that the Progressive Conservative Government of Sterling Lyon reintroduced under my colleague's direction, the Minister of Agriculture, the Member for Arthur. lt's a long-term lending policy that Is successful, that Is beneficial to young farmers. That was the campaign note we made In 1977, that we were going to do that, and we did it. This Min ister, I give him at least some semblance of Intelligence, credit for intelligence, and that he's carried it on.

He's carried on a working good policy of the Progressive Conservative Party which was government in 1977 to 1981. Mr. Chairman, in the question period a short while ago, I asked the Minister about the Interest Rate Relief Program and how the collections were going In terms of the loan portion on the Interest Rate Relief Program. That was several weeks ago and I presume the Minister will have that kind of information here this evening so we can discuss it. Some specifics I would like to find out from the Minister.

First of all, I'd like to find out from the Minister how many farmers were eventually on the Interest Rate Relief Program, and of those farmers would all of them have been billed now on the loan portion of the interest rate relief, so that the Minister should have some indication from MACC as to what percentage of those clients of the Interest Rate Relief Program are In arrears and are not able to meet their $6,000 commitment.

Probably the Minister also will have, because MACC probably has this on computer, he could probably tell us how many of those farms that were given Interest rate relief are no longer .in the business of farming, that they have left voluntarily or through bankruptcy in the business of farming. Mr. Chairman, I would like to know under what circumstances and what the interest rates are of the roll-over capability where the Individual farmer does not have $6,000 to be paid? The Minister indicated the other day that it's turned into a longer-term loan.

Can the Minister indicate to me how long a term loan, the interest rate on that, and what security that MACC is taking to secure that $6,000 loan? HON. B. URUSKI: Mr. Chairman, the length of the loan - I am trying to get the figures for the honourable member - and the option Is either for paying now, immediately, on the time that the promissory - it is a promissory note that Is signed In terms of the program - and the period in which the option Is available for a five-year pay-back on a five-year term, the remaining portion can be termed out for five years under the Interest Rate Relief Program. 2267

Thunder, 23 ... , 1185 Mr. Chairman, I did pass the information onto the corporation when the honourable member raised it. Because of the way the honourable member wanted Information, it is taking a fair bit of analysis and hopefully by next week we may have that data together, but it Is being worked on and we will provide it to him as soon as we can. When he raised the question, and I took it as notice -it is being worked on -but in the way that he rais ed th e specific ques tions, the information is not readily available and is taking a fair bit of research to put that together. MA. D. ORCHARD: Mr.

Chairman, I am not familiar, I don't recall the exact details I requested , but I think what I want to find out is how many people were billed, or how many people are really being asked to pay their promissory notes, how many are unable to pay them, how many are taking the five-year loan, etc., etc.? I would think that would be fairly routine information on the program, not anything that's technical and hard to put together. If you can't have that kind of information on your program, I make no other comment. But, Mr.

Chairman, the Mini ster will provide that information and presumably if it's next week sometime we might have an opportunity to take a few minutes to ask questions on it at that time, so I won't bother any further with it tonight. Mr. Chairman, I've got a question for the Minister which involves the Operat ing Loan Guarantee Program that the MACC has had in place for a number of years but hasn't been used in particular the last couple of years . Mr.

Chairman, the farmers or farm producers who signed up on that are under the Im pression, and I believe the financial institutions that partici pate are under the impression that the province was going to guarantee $100 million for the loans and would pay to the financial institutions up to $15 million In a prorated loss -talking fund -that's right, $1 2.5 million In prorated losses. Now, presumably , that could be the entire operating loan to aid an individual farmer. lt's not 12.5 percent of his loan that's in def ault, it's his entire loan as long as it's under the $1 2.5 million of the $100 million program.

Now, Mr. Chairman, the MACC Is in the process right now of collecting on some of those operat ing loan guarantees and I can't comment, but one instance that I am attem pting to make some inquiries on, there see ms to me there might have been a misconception at the start of the program, and if there Is no misconception when the individual signed that promissory note, but now the corporation is attempting to collect the operating loan from that farmer. They had him under the guarantee program and when his farming operation was not succe ssful, they wound him down.

He didn't, of course, have enough inventory machi nery to pay out. This particular individual is managing to keep the land and he is working at various things to get back into the farming business within a year or two. One of the things that's happening to him is that this collection from MACC is killing him. it's absolutely killing him; he has managed to clear off most of his other financial obligations.

MACC come up to him In the field, or one of the representatives I believe from Winnipeg, and was pretty direct and pretty insistent that he sign up with them, what further documentation it was, that he give this out and he signed up, and basically it would put him severely behind the eight ball. Now, my impression, I have to tell the Minister that I did not read or I did not Investigate that program sufficiently.

I promoted that program to a number of farmers at home who I thought could benefit from it because I was under the naive impression - I now admit -that the government was genuinely going to risk $1 2.5 million to support the farm Industr y, and that by the time they put their customers through the hoops, the farmers who qualified, through the hoops, their risk would be minimal, but that they were prepared , the government was prep ared, through MACC, to risk the $1 2.5 million.

I did not know that farmers took the program out, signed their name to the promissory note to secure on a personal basis the operating loan being guaranteed by the MACC. I did not know that, and I was quite frankly shocked when this individual came to see me, having wound down his farming operation, and was now being approached by MACC to come up with the goods on th e operating loan. lt was not genteel collection methodology; it was as good a collection agency as you will get. The fellow was quite upset by it.

He is not going to shirk his obligations if there is any way that he can do n, but this is putting him under a lot of stress. - (Int erje ction) - He has talked to your people and I will follow it up. I have been expect ing some additional information from him in terms of the calculation and what cash flow had been and where the cash flow went. There appears to be a dispute between MACC and the bank on this . . . I haven't received this Information from him, so I haven 't been able to follow it up directly with MACC. Mr. Chairman, is there not an ability within MACC to undertake some quite flexible repayment

schedule on that? I even go so far as to suggest that the risk the corporation could put up for individuals like these -he is not down and out; he's down and out temporarily but he is keeping his land base because he is going to get back into the farming market come hell or high water -but it will be a very major help if that repayment on the operat ing loan was deferred with no Interest, and that being the sacrifice that MACC make and we, as taxpayers, I'll admit make. I sugges t that because that was my impression, that you were going to be risking that $12 million.

There was no risk on the government's part at all in that In terest relief program. - (I nterjection) - No, I say that because every one of your clients,you signed up tig hter than a drum, just like any bank, just like the multinational banks you criti cize so vehemently whenever you get on your high interest rate diatri be. Your MACC signed those people up, personal gu arantees on those operat ing loan guarantees so that, as long as there was equity in the land, MACC was not at risk. And If there wasn't equity in the land, I suggest that the person did not get the operating loan, he was refused .

I know of cases where people were refused because there was not sufficient equity in either the banks or MACC's opinion. So, Mr. Chairman, I'm going to follow this up with MACC, I'm going to follow it up when I get the additional information I need, but I'm pointing 2268

Thuredey, 23 Mar, 1885 it out tonight to the Minister because there are some major concerns In that program that are now coming to light. And some of the collection is being undertaken at a very very inopportune time for any of these fellows that are winding down their farming operation. HON. B. UAUSKI: At the beginning of the honourable member's remarks he ind icated that it was their program and I accept that he wants to take some credit and that's fine. Mr.

Chairman, if the honourable member would like to provide myself or the general manager the details, we have not been able to directly determine circumstances, we would be pleased to look at that. There certainly is room for flexibility in terms of how the guarantees are handled after, in fact, the farming operation has not progressed very well. But it does take co-operation and it does take discussion and negotiation with the Corporation. I don't know the circumstances and I'll not even try to speculate what's behind it.

If the honourable member wishes to provide me with information we'll certainly have a look at it and then the Corporation can assess it and the person, who the member speaks of, should certainly come in and it can be discussed. We haven't been able to second guess as to the type of loan because there's over 700 of those under the program, and In terms of the guarantees that have been there, there's no doubt we will be paying, the public will be paying for those guarantees.

There are losses and they are on the . . . but in specifics, in terms of spreading the loan out, or making some provisions or holding back some interest it's a matter of negotiations and looking at that and we're prepared to do that. But I can't do it without having the details of the ... MA. CHAIRMAN: Order please. We are having a little trouble with the sound system. Apparently the only microphone that's really working is mine and the one under the tables. I'm advised by the Clerk that the system can be fixed, with about a five-minute recess. (Recess) MA. CHAIRMAN: Committee, come to order.

The Member for Pembina. MA. D. ORCHARD: Mr. Chairman, can the Minister indicate out of the Loan Guarantee Program what percentage of problem accounts they have and the dollar value of those? Can the Mini ster provide that information as well? HON. B. UAUSKI: I am not able to give the honourable memb er Information as to ho w many claims are doubtful, but what information I can give him is what has happened to date. When I say we can't tell him about which claims are doubtful, we won't know until the bank actually declares them unpayable, but I can tell him what the record is so far.

We did pay on 20 loans a total amount of just under $900,000, $898,000 of claims, and there are claims pending for $296,000, and there's two claims in dispute for $149,000.00. Those are the claims under the program to date. MA. D. ORCHARD: Presumably in each instance where a claim has been paid out to the lending institution that participa ted in the program, that MACC has followed through with an attempt to obtain security through second mortgage, what ever, on land or whatever basis, and that has followed through in each of those cases. Mr.

Chairman, another area that I'd like to discuss with the Minister just briefly is- and it's been mentioned, I think, before but I apologize I wasn't here for the discussion - the Throne Speech, I believe, contained a $20 million announcement, for which the Minister has made nine approvals, or the MACC has approved eight applications. Can the Minister indicate whether the $20 million Is going to be MACC's, the Department of Agriculture's total share of the over $200 million that was raised through the tax program, the tax seam by the Min ister of Finance.

I'm interested in this because - I think the Minister will recall when the Finance Minister introduced the program - he said that were three prime areas that that money was going to go to. I think housing was one, and small business support and agriculture through MACC. Now it would appear as If the Minister has only received something less than 10 percent of the money, probably 7 or 8 percent of the money - I think it was $250 million raised.

Is that the entire access to those loans is funds that the Minister's going to have or does he anticipate that he will be able to, in the course of this year prior say to the end of the calendar year, will he be able to make another announcement that the Finance Minister Is providing MACC and Agriculture with more of the low Interest rate money, as was indicated would be part of the rationale and the reason for going through the whole tax and share issue? HON. B. UAUSKI: I can't give the honourable member that indication. lt Is possible that those decisions can be made later on.

The money that is there now is what is in the program. I can't say one way or the other as to what it might be, but the honourable member would have to wait for further announcements if there is any change. MA. D. ORCHARD: Does MACC still review its interest rates on a quarterly basis, or is it monthly? Monthly, okay. What is the guideline - and this may have been discussed, my apologies - but is the guideline to stay somewhere close to the Bank of Canada prime at the date of the monthly review? What are the guidelines used by MACC to set interest rate policy? HON. B. UAUSKI: Mr.

Chairman, it is the cost of government borrowing averaged, and that Is how the Department of Finance . . . the policy In terms of the money supplied to MACC has not changed from the Department of Finance when they were in government and when we're In government. The policy Is the same, cost plus one-half. MA. CHAIRMAN: The Member for Morris. MA. C. MANNESS: Mr. Chairman, I would like to ask the Minister what the lending policy Is under MACC 2289

Thursday, 23 May, 1985 with respect to those individuals who purchase farms that produce commodities that are supply management, and the quota value that obviously has come into place over the years. I would like to know specifically how MACC treats quota value in its !endings to individuals. HON. B. URUSKI: We treat quota value at zero. MR. C. MANNESS: Have there been any instances in the past where boards have, in attempting to monitor transfers of quota and seeing where, in their view, there was quota value in place?

Were there any instances where MACC has asked or told the boards, in fact, not to make an issue out of it; that in fact the sale should go through with the higher value which included quota value to be involved? HON. B. URUSKI: Mr. Chairman, I am advised that there was one case in a dairy operation where there was a sale of a herd - I may not know all the details - where, in terms of the financial transaction, there was some dispute on the value of the cows and, of course, the quota was to go with the cows.

I believe there was an appeal to council on the situation, and there was one incidence that I'm advised where quota actually went with cattle. MR. C. MANNESS: Mr. Chairman, I am wondering then whether the Minister would like to reconsider his answer. Does MACC, similar to other financial institutions, in dealing and trying to determine the amount of the money it will borrow for the acquisition of a supply managed farm, whether they look at the value of quota? Does it show somewhere on the paper?

Is it just this one incidence or, in fact, are they like other financial institutions who I believe understand fully that there Is value in quota in some cases - there has been for a number of years - and therefore will lend to cover it? HON. B. URUSKI: Mr. Chairman, the corporation does not allow any calculations or allowance for quota. When I said there was one incidence that involved a dairy operation, it was where in fact the corporation tendered a sale. lt was on a repossession of cows which did not, in fact, include the quota in that transaction.

The corporation had to be involved with the Milk Marketing Board in terms to assist the client who bid for the cows from the corporation, to make sure that there was a quota there. MR. C. MANNESS: My intrigue is heightened a little bit, Mr. Chairman. Was an auction attempted, in which case originally the quota did not transfer the ability to market milk to not transfer, just the cows? Was that attempted? What transpired? HON. B. URUSKI: As I indicated, Mr.

Chairman, the herd on the repossession was tendered, and there was quota with that herd in line with the existing policy, but the board attempted not to allow the quota to go after the tender had been completed. That's the only issue that the corporation was involved in. MR. CHAIRMAN: The Member for Arthur. MR. J. DOWNEY: I'm not very clear, Mr.

Chairman, on the details of what we're hearing. lt appears as if from what we'v e heard that the policy of the Credit Corporation does not calculate any value on the production quota and yet, now the Minister is disclosing that there was one specific case which had been tendered - somebody purchased the cows and the farm - and then there had to be quota made available. HON. B. URUSKI: The farm had quota. MR. J. DOWNEY: The farm had quota, okay. So the farm had quota, it had cows. Is the Minister saying In that case, that there was value applied to the quota? HON. B. URUSKI: Mr.

Chairman, when you tender cattle, you get the commercial value of the cattle that were tendered. Our assumption was that there was no value for quota. MR. J. DOWNEY: Now, Mr. Chairman, he indicated earlier that there was an appeal. Well, Mr. Chairman, we're getting more confused all the time with the Minister's answers. He is in fact, now changing direction from what he's told us five minutes ago. He shrugs as if there's nothing to it. Well there is something to it, and we want to know what the value of the quota was that was transferred in the transaction of which MACC was a part.

What was the value of the quota? Or, if he would sooner do it this way, what was the value of the cows on a per cow basis in that transaction? HON. B. URUSKI: Mr. Chairman, approximately $1, 100.00. MR. J. DOWNEY: Mr. Chairman, that was the value of the cows and the quota combined? HON. B. URUSKI: Mr. Chairman, that was the tender value for the cows. MR. J. DOWNEY: That was the tender value of the cows without quota. What was the value of the quota? HON. B. URUSKI: The tender value for the cows was $1 ,10 0 per cow. The value for the quota was zero. MR. J. DOWNEY: Mr.

Chairman, In other words, the Mini ster was saying that those cows actually then were bringing approximately twice what the market price for a cow would be. That's really . . HON. B. URUSKI: What? What? MR. J. DOWNEY: For the beef price of a cow. I'm talking about the beef price. HON. B. URUSKI: Dairy cow? MR. J. DOWNEY: Well, Mr. Chairman, talking beef production, or beef price on cows of $600.00. HON. B. URUSKI: That's what cows were selling for when you were in office. MR. J. DOWNEY: Mr. Chairman, the Minister can laugh about it if he likes.

What I'm making reference to, what I am c:>tablishing or trying to establish ... 2270

Thuraday, 23 May, 1MS SOME HONOURABLE MEMBERS: Oh, ohl MR. CHAIRMAN: Order please. MR. J. DOWNEY: Mr. Chairman, what I am saying is that there is a value to the quota that the Minister is talking about. He made reference to it himself. We've heard two different stories from him now. He Initially said there was a case in which there was value on quota in a transaction that MACC was Involved in. Yes, he did. Well, he shrugs his shoulder. He's the one who looks like he's not telling totally what was all taking place. What I'm saying, Mr.

Chairman, is that the value of the cows with the quota is $1, 100 per cow, and I agree that a good milk cow is worth substantially more than the beef price. But I have heard many dairy producers say in the last while that, without any quota, a lot of dairy cows aren't worth any more than what they would be either on the market or for beef cow production. So there is in fact value to the quota. There is In fact a value on the quota, so that's what we're trying to establish. At what date did this particular situation take place? Was this a recent transaction that took place within the Credit Corporation? HON. B.

URUS KI: Mr. Chairman, I'm advised, somewhere over a year, a year to two years ago, somewhere In that range. I don't recall. Staff can't even recall the date, but they recall the incident. Mr. Chairman, for the ho nou rable member's information and I will give him the Ontario situation, cows, as I recall and I did see a chart, range from about $800 to about $1 ,500 on the market where, In Ontario, they do sell quota on quota exchange.

So the dairy cows on the markets themselves, and the range is anywhere from $800 to about $1 ,500 has been the flowing range for cows in the last couple of years. lt's the quota there in Ontario that runs at a .25 million per farm. So that, in terms of the sale of cows here, $1, 100 in terms of the value of the cow is not far out of the commercial range. lt may be for that kind of year. lt may have been somewhat. One cannot ever say that absolutely 100 percent certain that there isn't $1 in that amount for quota. No one can say that, and I won't even pretend to stand here.

But, in terms of the commercial value of cows, the $1, 100 figure would have been In tha t range for a good dairy cow that was tendered, and basically the quota situation was zero. MR. CHAIRMAN: The Member for Morris. MR. C. MANNESS: Mr. Chairman, I don't want to belabour this particular subject, because I honestly don't know an awful lot of the details. When I listen to the Min ister, I end up being a little bit more confused. I am told that the Milk Producers Marketing Board, in this particular case, did not want to allow a transfer quota because they saw where quota value was associated with it.

I'm later told that MACC, and maybe they were the ones that were the appellant - I don't know. Somebody took this case before the Natural Products Marketing Council to be heard. I have no idea who that was, but somebody appealed ttiat and insisted that, in fact, if the cows that were sold carried a quota with them so that there would be a much higher value such that MACC could realize a greater return for those assets.

Now, I know nothing more than that, and I guess I bring forward the question to ask the Minister whether or not MACC had some complicity in this whole issue of seeing a sale go forward involving the value of quota. HON. B. URUSKI: Mr. Chairman, anyone can make the argument, even the honourable mem ber can obviously, that there was complicity. There is no way that one can conclusively - and I can't stand here before the member and say conclusively that I will lay my life on the table that there wasn't any value for quota. No one can do it because, Mr.

Chairman, even if the value of the cows was $1 less, then you can attribute a dollar value for quota - absolutely. So one can't argue any other way. All I can say is that, in terms of the value for cows of what there would have been, the figure as viewed by the corporation that there was in terms of policy that there is no value for quota. MR. CHAIRMAN: The Member for Lakeside. MR. H. ENNS: Mr. Chairman, not to enter into this debate, but I was handed this anonymous note. I just want the Minister's concurrence whether or not he does not believe that a dairy cow which gives no milk Is an "udder" failure. HON. B.

URUSKI: We can get the "udder" one. MR. CHAIRMAN: The Member for Arthur. MR. J. DOWNEY: A couple more questions dealing with the Credit Corporation. I ask the Minister how many applic ations does he have for the general Manitoba Agricultural Credit Corporation programs? He has pointed out there were 96 applications for this coming year. What is the actual normal business being carried out by the Credit Corporation? HON. B. URUSKI: Mr. Chairman, in the process on all the programs, 180 applications, what one would say in the mill at various stages, in field offices, applications out - 36 of the 96.

So you could add another 50 to that. So it's 240 loans in the mill. As I indicated to the honourable member earlier, we hired six staff In terms of field staff to assist the field staff in doing the preparatory work. I should mention, we did attempt to use FCC field staff since their loan program is way down and they're not very active in terms of lending. We did attempt to arrange the use of their personnel on a secondment basis to do certain preparatory work for us, appraisals and the like, because they are qualified people. I didn't realize it, but we were turned down in terms of the use of FCC personnel.

But we did attempt to make those kinds of arrangements to assist us in dealing with the backlog of applications, doing the appraisals, and then we would follow up with our own work. I have to say, I didn't ask this question of my staff. I knew we were negotiating and I thought things were moving, but I regret to say that we were declined in receiving that assistance from them. 2271

Thursday, 23 May, 1985 MR. J. DOWNEY: What is the current interest rate in which the Credit Corporation is borrowing money from the government? HON. B. URUSKI: lt"s basically - I think I gave the honourab le member the inte rest rates that we're charging. Knock off .5 percent from that you will get the rate that the government providing. The rates that I put on the record yesterday, from 2 to 5, we charge .5 percent above the borrowing rate to cover - well we don't cover the administrative costs, but that"s basically where we're at. MR. J. DOWNEY: Mr.

Chairman, before I conclude, I asked the Minister yesterday whether or not he would consider taking the lead in the reduction of interest rates through Manitoba Agricultural Credit Corporation. As we've seen, some of the commercial organizations have been dropping at a rather substantial rate and I am not aware of what the mortgage rates did today on the money market - (Interjection) - a substantial amount? My colleague for Swan River indicates they went down again. My colleague says they're under 10 percent.

I think it"s incumbent upon the Minister to lower interest rates through MACC at a more progressive rate than he has been doing so. I have an indication here, I just have a communication from the Department of Agriculture in Saskatchewan where they have now made an adjustment to their loan programs, and they're now something in the neighbourhood of 12 percent, at 12 percent. Well, no, the Minister indicated yesterday they were at 12.75 percent on long-term money.

So the question is, and really the point I want to make is, with the continued decline in interest rates, and the Minister's comments and what he has been talking about in lowering of interest rates, will the Minister of Agriculture, and I'm sincere, make sure that he is keeping up-to-date with the lowering of interest rates? Will he do everything possible, and I want a commitment from him tonight before we pass these, to make sure that we keep the in terest rates going down, not following what is happening elsewhere but that is leading the way? Mr.

Chairman, I want the Minister of Agriculture tonight to commit that he is going to do everything possible to live up to what he said, that he does believe in lower interest rates, that he does lead with MACC. I would ask him when his next review of the interest rates are, and when we can expect a lowering of rates with MACC, in view of the fact that all other organizations, all other lending institutes are, in fact, lowering their rates at the current time. My colleagues may have another question or two, but I want the Min ister to indicate if he will do that. HON. B. URUSKI: Mr.

Chairman, I am not the Minister of Finance. Perhaps he can get some advice from his colleague, the Member for Turtle Mountain. A MEMBER: I wouldn't take his advice. HON. B. URUSKI: Well, maybe he will give him solid advice on finances, although he's tried to play games on the borrowing that the province does on the world market. Well, Mr.

Chairman, I tell the honourable member that short-term interest rates, while they are dropping, there have been periods of time when the reverse was occurring, short-term rates were climbing, and long term rates were below the prime rate. lt just happens now that the long-term rates are not coming down as fast as the short-term rate has been coming down. I know he realizes that the province is no different than the farmers of this province, the province is an interest-rate taker; it is not an interest-rate setter.

Every dollar that we pump out into the economy and into the farm population and, if it's at a lower interest rate, we have to subsidize those rates. lt"s as clear as that, there is no magic, Mr. Chairman. But what we can do collectively, and what I would have hoped members of the Conservative Opposition would, in fact, have joined with us in demanding that the Federal Government change. its monetary policy and lower the interest rates to farmers. I pledge to the honourable member that I will continue to fight for lower interest rates and a change in monetary policy in this country so that, not only

Document details

Collection	Manitoba — Debates (Hansard)
Citation	32-4-54b
Type	hansard
Volume / chapter	32nd 4th hansardpdf 54b.pdf
Language	en
Format	pdf
Source	PROVINCIAL
Identifier	579acc0ba926beb8b6f24f107d38af7613618fc3

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