Manitoba Hansard — Sitting 17C (41st Legislature, 1st Session)

41-1-17c

Manitoba — Debates (Hansard)

First Session – Forty-First Legislature of the Legislative Assembly of Manitoba DEBATES and PROCEEDINGS Official Report (Hansard) Published under the authority of The Honourable Myrna Driedger Speaker Vol. LXIX No. 17C - 10 a.m., Friday, June 10, 2016 ISSN 0542-5492

MANITOBA LEGISLATIVE ASSEMBLY Forty-First Legislature Member Constituency Political Affiliation ALLUM, James Fort Garry-Riverview NDP ALTEMEYER, Rob Wolseley NDP BINDLE, Kelly Thompson PC CHIEF, Kevin Point Douglas NDP CLARKE, Eileen, Hon. Agassiz PC COX, Cathy, Hon. River East PC CULLEN, Cliff, Hon. Spruce Woods PC CURRY, Nic Kildonan PC DRIEDGER, Myrna, Hon. Charleswood PC EICHLER, Ralph, Hon. Lakeside PC EWASKO, Wayne Lac du Bonnet PC FIELDING, Scott, Hon. Kirkfield Park PC FLETCHER, Steven, Hon. Assiniboia PC FONTAINE, Nahanni St. Johns NDP FRIESEN, Cameron, Hon. Morden-Winkler PC GERRARD, Jon, Hon.

River Heights Lib. GOERTZEN, Kelvin, Hon. Steinbach PC GRAYDON, Clifford Emerson PC GUILLEMARD, Sarah Fort Richmond PC HELWER, Reg Brandon West PC ISLEIFSON, Len Brandon East PC JOHNSON, Derek Interlake PC JOHNSTON, Scott St. James PC KINEW, Wab Fort Rouge NDP KLASSEN, Judy Kewatinook Lib. LAGASSÉ, Bob Dawson Trail PC LAGIMODIERE, Alan Selkirk PC LAMOUREUX, Cindy Burrows Lib. LATHLIN, Amanda The Pas NDP LINDSEY, Tom Flin Flon NDP MALOWAY, Jim Elmwood NDP MARCELINO, Flor Logan NDP MARCELINO, Ted Tyndall Park NDP MARTIN, Shannon Morris PC MAYER, Colleen St.

Vital PC MICHALESKI, Brad Dauphin PC MICKLEFIELD, Andrew Rossmere PC MORLEY-LECOMTE, Janice Seine River PC NESBITT, Greg Riding Mountain PC PALLISTER, Brian, Hon. Fort Whyte PC PEDERSEN, Blaine, Hon. Midland PC PIWNIUK, Doyle Arthur-Virden PC REYES, Jon St. Norbert PC SARAN, Mohinder The Maples NDP SCHULER, Ron, Hon. St. Paul PC SELINGER, Greg St. Boniface NDP SMITH, Andrew Southdale PC SMOOK, Dennis La Verendrye PC SQUIRES, Rochelle, Hon. Riel PC STEFANSON, Heather, Hon. Tuxedo PC SWAN, Andrew Minto NDP TEITSMA, James Radisson PC WHARTON, Jeff Gimli PC WIEBE, Matt Concordia NDP WISHART, Ian, Hon.

Portage la Prairie PC WOWCHUK, Rick Swan River PC YAKIMOSKI, Blair Transcona PC

649 LEGISLATIVE ASSEMBLY OF MANITOBA Friday, June 10, 2016 The House met at 10 a.m. ORDERS OF THE DAY (Continued) GOVERNMENT BUSINESS (Continued) COMMITTEE OF SUPPLY (Concurrent Sections) (Continued) EXECUTIVE COUNCIL Mr. Chairperson (Dennis Smook): Will the Committee of Supply please come to order. This

section of the Committee of Supply will now resume consideration of the Estimates for Executive Council. As previously agreed, questioning for this department will proceed in a global manner. The floor is now open for questions. Ms. Flor Marcelino (Leader of the Official Opposition): Through you, I would like to ask the Premier. He say s his Cabinet is the most diverse in Canada.

However, there are only four ministers from the city, the farthest north is Lakeside; the Francophone minister doesn't speak French; there's no minister responsible for labour, conservation, environment, immigra tion, disabilities, LGBTTQ and much more. It's–does the Premier consider it reflective of today's Manitobans, the composition of his Cabinet? Hon. Brian Pallister (Premier): Yes, absolutely I do. And I think I have a very, very talented group of people.

Manitobans thought so too when they chose them to serve in the Legislative Assembly, and I know that, as the member knows, that tolerance, openness, acceptance of diversity are qualities that all Manitobans can possess. Regardless of their personal location of where they live, their race, their creed, their colour, their ethnicity, their religious beliefs, tolerance is a quality that each human being has the capacity to develop and grow. And the member raises issues concerning the labelling of departments. We have a smaller Cabinet.

There are fewer labels, but the work is the important thing, the work that gets done within those departments. And I think that's the key thing Manitobans want. They want to see progress on a number of fronts that has been li mited in the past, and they will see that progress with the hard work of not only Cabinet members but all members of the Legislature working together. Ms. Marcelino: So the Premier considers, Mr. Chair, his Cabinet as the more –most diverse with the presen t composition that he has now in Cabinet. We have other views of that, but anyway.

The Premier's composition of the Treasury Board, we don't see a female member or minister in the Treasury Board. Does the Premier consider that inclusive and diverse as wel l? And as we know, Treasury Board will be tasked with making funding decisions that would affect women, and there's no women–woman or women members of the Treasury Board. Mr.

Pallister: Well, again, I think the objective of all aspects of our government is to provide the best possible services to Manitobans, and I think that the structure of our committees and our various assignments is designed in such a way to ensure that people can serve to the maximum ability possible the needs, not only of their constituents but of Manitobans as people. And so, I have tremendous faith and confidence in the decisions that Manitobans made in the election and in the people they chose to represent them, and I extend that confidence to those members of other parties who were chosen in their ridings.

I think it's an honour to serve the people of Manitoba, an honour to be elected to the Legislative Assembly, and I think it's clear that all members accept those responsibilities with humility and will do their very best to fulfill them. Ms. Marcelino: I would like to ask again. I didn't quite see the –or hear the response. I was wanting to find out if the Premier considers all -male membership in the Treasury Board inclusive. What about if the Treasury Board needs to make decisions related to funding for projects that involve women or discuss–tackle women's issues?

The absence of women in the Treasury Board may not be serving Manitobans. Mr. Pallister: So the member had asked again a question about how it could be that a Treasury Board composed of five males could do the job that was

650 LEGISLATIVE ASSEMBLY OF MANITOBA June 10, 2016 assigned to it, and I have faith in men and women in this province to do the jobs that are assigned to them, certainly here at the Legislature, equally. I think the opportunities that have been given to the women in our caucus who Manitobans elected to come and represent them are very significant ones. We have the, I believe, the fourth female Speaker, chosen by all members in an election process which I would mention did involve a –actually a secret ballot. As well, we have a woman who is serving as Attorney General and Justice Minister.

We have–and that is only the second time in the history of Manitoba that we have a female in that role. But I would emphasize in each of these cases, in the cases of the other members who are serving in various capacities, wheth er involved in committee work, internal organizational work, policy work, again, as heads of committees, as –functioning as is our Chair doing–we have a female in that role–that these choices were made carefully and with consideration for the capabilities , aptitudes and interests of each member. Ms.

Marcelino: I still didn't hear why it is serving Manitobans or the Premier has faith in women if there are no women members of the Treasury Board. But, anyway, could I request my –to ask the next question? Mr. Chairperson: The honourable First Minister. Mr. Pallister: No, I wasn't asked a question, Mr. Chair. Mr. James Allum (Fort Garry -Riverview): Yesterday we spent quite a bit of time talking about the alleged $122 million in savings, and in the course of that discussion, the Premier wouldn't elaborate on it verbally, and that's, of course, his decision although this is the process where you would do that.

And then he said he would provide a list, and then, you know, somewhere around 5 o'clock yesterday , as we were rising from this particular meeting and –we found that the government had issued a press release attempting to articulate the $122 million, although our first observation on that, of course, is that it didn't add up to $122 million. It only added up to $108 million. It certainly didn't include the hundreds and hundreds of savings the Premier had said in the media in response to questions from reporters.

And, in fact, it's something that if this was the list that was purported to be –constitute th e $122 million, he could have done this 10 days ago because it's actually nothing new in there. So could he help us just to understand how this list that came out yesterday came to be, if this is the list we're now working with because it's been a moving target all along or if there will be another list and another story later today or tomorrow or over the weekend? * (10:10) Mr.

Pallister: Well, I think that the member demonstrates a lack of understanding, clearly, of the approach that needs to be taken to get the financial situation of our province righted and strengthened, but that's understandable given the fact he's been part of creating the problem on a consistent basis, year after year, as opposed to addressing any solutions. The process of finding savings is something that's virtually unheard of by the previous government and by former Cabinet ministers.

And so, of course, it would explain their bemusement and puzzlement at how it would happen because they were never part of doing it. The reality i s that it's a great challenge to get fiscal balance restored in our province because it's a monumental debt hole that we've inherited from the previous administration. And so it will take great amount of work to do it, and we're ready to take on that work and Manitobans want us to do that. The ways to find savings are many, and there are many effective mechanisms that Manitobans must use in their own homes and their own business operations to do that.

Perhaps the member hasn't had those challenges, but I know many Manitobans have and have faced them well and effectively over time and have created strong small businesses and supportive households by making those decisions. Some of those decisions involve things like saying no to proposals that are brought forward for spending. My brother and sister and I used to bring forward a lot of spending proposals when we were kids to our parents, and they frequently said no.

Too frequently for our liking as children, but as we grew to–in an understanding–and I encourage the member to do this –of the importance of having a balanced budget in a household, we began to realize the wisdom of the decisions that they had made in respect of saying no to some of the things we asked them to buy. The previous government, of course , didn't say no very often and likes to claim that it has great compassion because it says yes so frequently. But the result of saying yes was that they tripled the provincial debt, put us in a very vulnerable situation.

June 10, 2016 LEGISLATIVE ASSEMBLY OF MANITOBA 651 Said–of course, to pay for the yese s–said yes to tax hikes on a very regular basis: significant tax hikes – $727 million per year in tax increases, including $421 million in sales tax increases and including increasing the rate from 7 to 8 per cent; expanding the base of the PST so it applied to things like mechanical and electrical contracts, professional services such as legal and accounting services, insurance premiums, personal services; significant increases in other taxes as well, such as tobacco taxes going from 8 cents to 29 and a half cents, the highest tax in the country by a considerable amount; so high, in fact, that our advice has been that if the tax goes any higher, less revenue will be generated, not more, because more people will go to the black market to purchase their cigaret tes.

These are the situations we inherited. Fifty -two million dollars in fuel tax rate increases. So the solution for the members opposite, in their time in government, was to always say yes to more spending and to always say yes to more taxes. So it was a high -tax, high-spend agenda, and that's what we've inherited. And we propose to address it by reducing taxes and spending. Mr. Allum: Well, it's interesting. There's a lot in one answer to–for us to parse through. And I don't –have to admit, I'm not sure which of the things we should talk about first.

But for the –just for the –for simplicity's sake, maybe the Premier just could help, Mr. Chair, help the committee to understand how it is that he and his Finance Minister proclaimed from the rooftops of this building that they'd found $122 million in savings, said this 10 days ago, and then we find, 10 days later, that they've put together a slipshod list that adds up to only $108 million, I think. [interjection] Yes, 108 at last count, says my friend from Fort Rouge and my sister, the interim leader. So, maybe, he could just start with that most basic discrepancy.

Why is it that the Premier proclaimed $122 million and then suddenly we've got, put out at 5 o'clock on a Thursday afternoon after a long day of committee, a list that only adds up to $108 million? Mr. Pallister: Well, I know this is a new concept for the member, and I know it's something he hasn't had any experience in, this idea of actually reducing year -over-year expenditure to achieve deficit reduction. I know it's a challenge for him to understand it, and I accept that.

I feel, I gue ss, at this point, like the –as a former teacher, like one of my colleagues who lamented in the staff room one time that–she said, I taught those kids again and again but they just didn't learn. You know, I think it's – I'm accepting some of the responsibil ity here too, because I think it's important for the member to understand something he's never understood before: the need to reduce our deficits year over year.

It's important for him to understand that, and he should–and I know he's never seen –I'm not s ure he was part of Treasury Board ever, but Treasury Board takes a look at all spending proposals that come before government and, in the coming year, there'll be a grab bag of proposals that come forward; there always are. And the approach under the previ ous administration was just to nod and spend more money, or–every project pretty much.

I mean, we saw during the election campaign some examples of this sort of freewheeling, spend-it- all-today-at-the-expense-of-tomorrow approach that resulted in a massi ve increase in our provincial debt and massive increases in tax. We saw it with their commitments to spend on virtually every proposal that came forward in the hopes that people would like them more, I guess, Mr. Speaker. But, ultimately, if you're doing that beyond your ability or beyond your means to repay then you're creating a very difficult financial circumstance, and that's what the previous administration did.

So back to the Treasury Board thing. Just so the member understands, let me just review t he purpose of Treasury Board. Now, Treasury Board is there to protect the best interests of not just governments, of course, but of people, tax payers and users of services. Treasury Board is there to screen every proposal, take a look at it, make sure there's value for money being derived from that proposal. Now, we know that this member was part of a government that looked at Treasury Board proposals, for example, to throw millions of dollars into the hands of a sole-source provider of Tiger Dams. It's j ust one example.

Treasury Board nodded, acquiesces to that and approved all those expenditures. None of them were ever tendered. In fact, none of them were disclosed for years and years. They just went ahead and did it. Now, this is an example –I give him one–where there'll be savings derived over the coming year. You know, he says it's only $100 million of savings that we've outlined to try to instruct him in the ways of savings, and that we have left out $20 million. Well, I remind him that we're only 10 weeks into the fiscal

652 LEGISLATIVE ASSEMBLY OF MANITOBA June 10, 2016 year and there are, of course, 42 weeks remaining of lots of opportunities to evaluate spending proposals. Our plan is to find additional savings. We'll adjudicate fairly and clearly and make sure that we're protecting front-line services while we're doing that and the people who provide them too. That's exactly what this budget does. But we'll definitely make sure that we take a clear look at things, like the aforementioned sole-source contracts that the previous government approved on a regular basis and then covered up.

These are the types of things we're committed to eliminating from the lexicon of government spending, and we are looking to do a better job of shopping with Manitobans' money. And, in the process of so doing, we will find the savings the previous administration failed to find. This would be just one ex ample. I know the member, very likely, would like to offer an explanation as to why it was that his administration continued to hand out these sole -source contracts.

I know, even after the Auditor General warned them that this was an epidemic and told them that they weren't getting value for money by shopping effectively, they continued to do it. So maybe would like to offer up that –either an explanation as to why he doesn't think there'd be savings doing–by shopping like Manitobans do, or maybe apologize t o Manitobans for just not shopping smart with their money. Mr. Allum: Well, it interests me that every time the Premier (Mr.

Pallister) fails to answer a question, he starts off by suggesting that either myself–I'm a child and I'm too infantile to underst and–or the people we're representing are children who are not to ask these kinds of questions because, I guess, they're too infantile to answer questions. And so, you know, I'd ask the Premier, rather than resorting to offhanded remarks that, in a differen t setting would be characterized as rank insults, maybe he could just concentrate on trying to provide an answer to the very simple question that I asked.

And it's sort of like –think of me as Denzel Washington in the movie Philadelphia, where he says to the judge there: Explain it to me like I'm a nine-year-old, because that's the way you're treating me right now. So, quoting Denzel Washington in the movie Philadelphia, explain it to me like I'm a nine-year-old. * (10:20) Why did you go out and say you had $122 million in savings, take 10 days to provide a list–that we're going to explore in great detail today, by the way –take 10 days to provide a list that actually could've been provided on day one?

Explain to us why there were three, at least three, different stories as you –how you, the government, the Premier, the Finance Minister got to the $122 million. But what we're asking him right now, very clearly, very succinctly, very simply: Can he explain how it is that he proclaimed $122 million in savings and yet produced a list that only added up to $108 million? Mr. Pallister: Well, the member demonstrates a lack of understanding, again, of how purchasing works through the course of a fiscal year.

I've attempted to explain to him that all governme nt purchases aren't made in the first 10 weeks of the year but occur over the course of the year. I've attempted to explain to him and draw the comparison not to children but to Manitoba shoppers who shop intelligently with their money because they have to; they pay some of the highest taxes since the NDP was in power in Canada, so they have a lot less left than people across the country.

I've attempted to explain to him that these decisions on finding savings would be made as–in the course of a more regi mented and more disciplined approach to fiscal management through the course of the coming year. We have close to 10 months remaining in the fiscal year to achieve savings. We've tried to demonstrate to the members; they–this member doesn't seem to compreh end. I expect other members of his caucus will comprehend how the process works and know that exercising greater fiscal discipline in the purchasing of goods and services will achieve savings.

The Auditor General's report actually was a good chance for the member to learn a little more, and I'm hopeful that he would have read it, but there wasn't any demonstrated comprehension as a consequence of the reading by the government after the issue of this report, which the Auditor General put out in March of 201 4, two years ago. What this Auditor General's report found in respect of government purchasing was very clear. And, you know, frankly, the Auditor General's reports often are very instructive to members, and I encourage them to look at them, read them, read them with comprehension.

What the Auditor General did in her report was to explain what tendering was, first of all. What is

June 10, 2016 LEGISLATIVE ASSEMBLY OF MANITOBA 653 tendering? Tendering a contract means to seek bids on it. An untendered contract is one that people could not bid on. Okay, wel l, you know, why would the Auditor General have to explain that? Because the government issued a number of untendered contracts and there was such concern about that raised from within the civil service and elsewhere that the Auditor General felt that it w as a fit topic to research.

In looking at this, the Auditor General made some conclusions, and those are conclusions that should have resulted–if the report was read by the preceding government ministers and with comprehension that should have resulted in changes in practice. But there is no significant evidence that that happened.

The Auditor General concluded that, and I quote from her report now, and this is actually page 409 of the March 2014 report: Our objectives were to determine whether departm ents and special operating agencies ensured fair access to govern - ment contracts by waiving competitive bids only when acceptable circumstances identified in the government's Procurement Administration Manual were demonstrated, assessed quoted prices on untendered contracts for consistency with fair market value, publicly disclosed untendered contracts over $1,000–as the member may know, that's required under The Financial Administration Act –and we examined untendered contracts in five departments and three SOAs.

We concluded that fair access to contracts was not always assured. There were significant gaps in public information on untendered contracts over $1,000, be cause there was little to no documentation on the information that departments and SOAs us e to ensure quoted prices represented fair market value, we could not conclude on whether they ensured fair market value was obtained. Now, 26 of 50 contracts that were examined in this study were not supported by an acceptable circumstance needed to justify waiving competitive bids.

I give this to the member as just one example where savings can be found in the coming year. We've outli ned a number of examples where we have budgeted anticipated savings.

We anticipate a considerable amount of savings will be derived from using the marketplace more effectively than was the case in the past, and we anticipate that those savings will be derived the same way that Manitobans, in their businesses and in their homes, would derive savings by using the marketplace to compare prices, something the members opposite did not do during their time in government effectively according to the Auditor General of Manitoba. Mr. Allum: It's–you know, it's not a disappointment to me that the Premier's (Mr.

Pallister) unable to give a straight answer to a straight question, a direct answer to a direct question. But it must be disheartening to the new member s of his caucus to see such cynicism displayed when it comes to a simple question and answer between myself and him. On budget day, the government claimed that they had achieved $122 million of savings.

Over the course of 10 days we were given three diffe rent explanations for what –how those savings were achieved, and then, suddenly, on a Thursday night – the first day of Estimates–we get a press release put out that purports to be –account for the $122 million, but it only adds up to $108 million. So you can understand if there's some degree of disappointment among his numbers that the Premier seems unable to actually speak directly and, frankly, honestly on matters of import of public policy.

One of the explanations for the $122 million that was offered was from his director of communications in Cabinet communications, she wrote the media and indicated that that $122 million was composed of $52 million in new revenue , not savings at all, but new revenue–and I know the Premier , as a business person, underst ands the difference there–and then $70 million in lapsed spending, which is a standard operating procedure.

So can he tell me, when the director of communications wrote to the media to articulate this particular answer–$52 million in new revenue, $70 million in lapsed spending–equaling, by the way, $122 million–was she wrong? Mr. Pallister: Of course not. But the member is wrong and constantly illustrates with his remarks his amusing puzzlement at the facts that I give him. I've outlined for him, very clearly, intended savings to be derived from listening to an Auditor General's report and using common sense to shop intelligently. Yet he fails to acknowledge that's a sufficient answer.

I guess because he never demonstrated in government that he could do that, and that's an amusement, I'm sure, to all Manitobans and, perhaps, to his colleagues as well, who very likely know how to manage money far better than he does.

654 LEGISLATIVE ASSEMBLY OF MANITOBA June 10, 2016 Now, what the Auditor General has said very clearly in her report is that bids have been waived far too frequently, or not achieved, because sole -source contracting was used. This would result in a higher price being paid. I would think common sense would dictate that, if you shopped, you might find a better deal. I think, if you were to go to Manitobans and ask them could they find a better deal by shopping around, they would tell you, yes, very likely I could do that.

The government didn't bother because it was –I guess it was because it was spending other people's money. I'm not sure what the rationale was for not shopping around, the government hasn't explained that. And it wasn't just Tiger Dams. I'll just, again, quote from page 409: 11 of 50 contracts we examined lacked the required approvals. And I repeat, 11 of 50 contracts we examine d lacked the required approvals–lacked the required approvals. So they just went ahead and spent the money without the proper approval. You think you could save money if you actually went through a process.

An earlier question from the interim leader was about the makeup of Treasury Board. What difference does it make who's on Treasury Board if you circumvent Treasury Board to make your purchasing decisions? What possible difference could that make? The previous administration circumvented Treasury Board, lacked the required approvals, went ahead and spent the money anyway, and now is bemused at how anybody could possibly find savings by shopping around.

This, unfortunately, is not the only part of the report that's cause for concern. * (10:30) This, unfortunately, is not the only part of the report that's cause for concern. On page 410 the–and this is about transparency –the Auditor General says most contracts were not disclosed within a month. Many were not disclosed at all, departments and SOAs.

Dur ing, and I quote now: "during our 18- month audit period, 1,857 of the 2,133 untendered contracts disclosed in the public access database . . . were not disclosed within the required one month of contract signing." In other words, they did not abide by the rules in The Financial Administration Act that the government should abide by in 1,857 of 2,133 cases of untendered contracts. "For contracts not disclosed within one month, the average number of days between contract signing and disclosure ranged from 48 to 182" days. That would be approximately six months.

"These long delays mean that for extended periods of time many contracts that should have been disclosed were not. Many other untendered contracts were not disclosed for reasons other than timing. They totalled $183 million." So what we have here is a willingness to spend other people's money without shopping around and then a willingness to cover up the fact that you did that in violation of the laws of the province, in fact.

Now the Tiger Dams is one that's received some media attention, and it's quite rightly that it has, and some of the member's former colleagues rebelled as a consequence, were told of that egregious violation of the trust of Manitobans within his caucus. That being said, there are literally, according–hundreds, in fact, over–more than into the thousands of examples where the government spent money in a way that Manitobans spending their own money would not choose to spend theirs.

So the member, again, seems bemused by the fact that, over the remaining 10 months of the fiscal year, we could actually save some money shopping with Manitobans' money smarter than he and his colleagues did, but I would suggest that he submit that thesis he has that we can't find those savings to Manitobans. They'd be puzzled, as puzzled as he appears to be at the concept of actually spending less and getting better value for it. Mr. Allum: You know, if I'm puzzled by anything, it's by the Premier's (Mr.

Pallister) inability to answer a straight question asked of him and then to answer questions that aren't asked of him. At some point, we'll get on to the issues that he's going on and on and on about, but right now we're concerned about $122 million in savings which the government proclaimed from the rooftop that they had found, all 122. We went through three different stories and 10 really tortuous days of trying to find an answer.

The media also has gone through this same process of trying to get a straight answer to straight questions and, instead, what we've been witness to is a degree of verbal gymnastics that might qualify for the Olympics but doesn't do this committee any good. It certainly doesn't do the people of Manitoba any good and, frankly, is a disservice to the new members of his caucus who have come here to be part of

June 10, 2016 LEGISLATIVE ASSEMBLY OF MANITOBA 655 a process and engage in a fair dialogue around government choices –by the way, Mr. Chair, the Premier's (Mr. Pallister) government, not some government that existed elsewhere or at another time, but his government. He's now the duly elected Premier of Manitoba. We accept that. The people are always right. We recognize that there's a new government in place. We recognize that there are 40 new MLAs here. We welcome them to be here, and I think the Premier needs to –[interjection]–29 new members? There we go. The Premier –I don't know –it's a rook ie mistake.

I always think of my friend, the Minister of Infrastructure (Mr. Pedersen) as being new, but of course he's actually been around for a while, but what we're really asking here is quite simply for him to try to explain, in a straightforward way, not about issues that are not germane to the line of questioning, but a very simple question. So I'll repeat it for him. His director of communications wrote the media and said that the $122 million was composed of $52 million in new revenue and $70 million in lapsed spending. Will he now elaborate on that particula r question? I've asked him: Was she wrong?

He said: Certainly not. Then I ask him: Why wasn't she wrong? Because to the rest of us sitting around the table, that's not consistent with the answer that came out yesterday that, actually, didn't even add up to $122 million. Mr. Pallister: Well, I appreciate the member's question in respect of the issue of finding savings within government spending so that we can move closer to balance. I appreciate him raising the topic. I know it's a new one for him, and it is an important topic, and we need to discuss it.

So I've been outlining for him, to assist him in developing a better understanding of how we can do things differently and better, issues of purchasing and spending because this involves, literally, billions of taxpayers' dollars. And achieving savings in purchasing of goods and services is a very important part of how we move towards balancing our books. So, when he expresses the comment that's not germane to his topic, his topic is, of course, how are we going to get closer to balancing the books.

And I am addressing that by telling him we intend to abide by the recommendations of the Auditor General where he and his colleagues did not. And I've outlined examples to try to illustrate to him the importance of doing so. I don't think that most Manitobans need these lessons or instructions from me. I think they instinctively know what they have to do. They can't spend more than they bring in every year and hope that they're going to continue to support their family in the long term. And, so, they live within their means as best they can with what they have left after they pay their taxes.

In this particular example I've given him, I'm dealing with an issue that is totally, totally relevant to the issue that he's raised because it involves how we manage the spending of government departments, and this, of course, is a very critical aspect of this. So his failure to understand is an amusing thing but not helpful in moving forward on our discussions. I think I w ould go on to explain to him, from the Auditor General's report, that there were recommendations made.

If he would choose to review it, he would see that there was a recommendation, for example, on page 425 of the Auditor General's report: recommendation 4, we recommend that the Treasury Board Secretariat develop guidelines for delegating purchasing authorities for untendered contracts and related extensions during emergency events. In particular, the purchasing authorities for Treasury Board, ministers an d deputy ministers, and require comprehensive reporting after an emergency event on how the delegated authority was used. That recommendation was made. It was not followed.

And then what happened, of course, was further proposals came forward from the mi nister's former colleague, the Infrastructure m inister, to Treasury Board. In spite of the premier's public statements that he ordered these contracts to be tendered, proposals came forward from the former Infrastructure minister after the premier claims h e ordered them to be tendered, asking for them not to be tendered. And that proposal came forward to Treasury Board, but not during the emergency when one might argue there was an essential need to get these flood protection devices purchased.

Later in the summer, and into the fall –this is when these proposals came forward. This is in direct contradiction of the very recommendation from the Auditor General that was issued prior. So, when the member asks how are we going to find savings, well, we intend to follow these very worthwhile and well -reasoned recommendations where they were not followed in the past. Another example of how a government can get better value for money by making better decisions that use the marketplace to get better value but that also are

656 LEGISLATIVE ASSEMBLY OF MANITOBA June 10, 2016 transparent and open in their processes. This is very important. This was not done before. So, again, recommendations not followed, not listened to, result in waste. They result in excess expenditure. As a consequence, we believe that we can make progress on reducing the deficit by spending smarter. And, so, I've attempted to explain to the member how, and I've attempted to explain, without recrimination, I would hope, that the –some of these opportunities for spending smarter were missed in past y ears.

It's important to understand that. * (10:40) Again, on page 425, the conclusion of the Auditor General is that we cannot conclude on whether departments and SOAs ensured fair market value was obtained. Surely, the member understands fair market value and understands that when it is not obtained, taxpayer's paying more than they should.

And so we proposed to alter that practice, that misguided practice, very dangerous, very wasteful practice, and replace it with some common sense in the way we make purchasing decisions in government and the way we make them transparent to the people of Manitoba whose money we are, after all, using. Mr. Allum: Can the Premier (Mr. Pallister) tell the committee where we find tendering processes as part of the list of $122 million, or $108 million, actually, that was put out there? I–I'm–have the press release in my hand right now. I don't see tendering process es in there whatsoever.

I just said I had it in my hand. I don't see tendering processes in there in any relationship. I see a bunch of other things that aren't savings but, in fact, are significant cuts to the things that–the programs and services that th e people of Manitoba rely on. So we're going to get into a discussion about your alleged savings versus cuts, and that's coming in this morning and in the days to follow because that's exactly what you've done.

But , right now, we're just trying to explore the shifting story that the Premier keeps telling about the alleged $122 million in savings that only added up to $108 million of story – savings. The first story we got was one from the director of communications about $52 million in new revenue. I know the Premier knows the difference between revenue and savings–or cuts, as we're going to call them–and $70 million in lapses.

And then the second story we heard came right out of the Premier himself, who said there were literally hundreds of examples, a list so long that it would keep the Finance Minister busy until some long time in the future. He'd never get anything else done, so the Premier said. Were you wrong? Or, sorry, Mr. Chair. Wa s the Premier–will the Premier admit that he was wrong in that particular characterization of where the $122 million came from? Mr. Pallister: No, not at all. Nor is the member right in any of the

preamble that he cites in respect of the targets. What I would have to do here, I guess, is go back to some basic things. The member doesn't appear to understand what a budget is. A budget is a forecast. It's a forecast of decisions that will be made over the future time. So what we're talking about is projecting on categories of savings –that's what we provided the member with a t his request yesterday – projected savings to be derived over the coming year as a consequence of certain decisions.

Gave him some categories to help him understand better, but he needs to understand, also, that the intricacies of finding savings are not going to be found very frequently in things like, you know, tendering a helicopter instead of just buying it just prior to an election. There, for example, there might have been a hundred–there might have been $100,000 saved, there might have been millions of dollars saved. We don't know because the previous government never tested the marketplace to determine it. All we know is we paid about four times as much as Saskatchewan for the same services. We know that.

But without testing the marketplace properly – and using untendered contracts is something the previous government did with increasing frequency. According to the Auditor General, one would not know how much those savings were; one could only make a prediction. That's what a budget is. So, in the pr evious administration's phony budget, their pretend budget, their fiscal prediction but not a budget, a government who doesn't put out a budget just prior to an election, they said that they wanted to have a slush fund.

And they said that – where is this her e–it's called –they called it the discretionary prevention fund, and they included $35 million in their March 8 outlook, they said. They said there would be $35 million set aside. This was created so that government departments could apply for funding late r: mostly,

June 10, 2016 LEGISLATIVE ASSEMBLY OF MANITOBA 657 probably, Family Services and Health. These are the two major –and Education– the major departments that would make applications. So this fund was set up as a discretionary prevention fund, a slush fund. That's an example of the government's methodologies in respect of setting budgets. They predicted–and this is what a budget is–they predicted that there would be a need at some point during the coming year for $35 million. Okay? Well, we predict that in the coming year we can find $20 million more savings than you have on your sheet.

That's what we predict, and we predict we'll do it by shopping smarter than you did–the previous administration did; I'm sorry. So, again, budgets are about predictions. The member seems bemused by that fact, but his own fiscal outlook document, which purported to be a sort of quasi -budget, made a prediction. That's what budgets are. It predicted a $35- million slush fund. Well, we predict we can find savings by shopping smarter. The actual outcome of the exercise would be the thing that Manitobans would most care about, I would think.

We know that in virtually every year that the previous administration was in power, they predicted spending. They made predictions on how much they would spend, and they would lowball it. So they ended up spending about $3 billion more than they predicted they would spend; $3 billion off, that's a little bit of a margin of error. The fact of the matter is that a year ago, they predicted they would run a deficit of about $440 million or so, and now it's about double that, more than double, two and a half times that size.

So we know that their ability to predict their spending isn't very good, hasn't demonstrated–hasn't been demonstrated over the years to be very good at all. We hope to change that. In fact, we think it's very important that we do. And so we've set targets in terms of spending that we believe are achievable, and we will aim to achieve them. The member is focused on getting a list of predicted savings, but he's never been focused, when he was part of government, on achieving savings. He's only been focused on spending more and raising taxes.

And, on both those fronts, he's achieved those goals very efficiently year after year after year. Mr. Allum: You know, it's remarkable that in the course of a five -minute answer, a premier, the Premier (Mr. Pallister) of this province, the Premier of Manitoba, holding arguably the highest office in our province, could put so much misinformation on the record in the course of five minutes. He refers to a helicopter –and this is, for my friends on the other side, that helic opter is the STARS helicopter that he's referring to. That helicopter saves lives.

And while the Premier is talking about some homespun wisdom around smart shopping that I'm sure, in the caucus meeting, must be just tiresome to hear about, I heard him refe r to common sense earlier. And, you know, I've told him before, I'm from southern Ontario; I know who made up the political meaning of common sense; that's Mike Harris, and that's the path you're follow –he's going to be following for this province in the y ears ahead. He's already declared war on organized labour. He's going to follow a path of austerity and cuts to the future. We just got the tip of the iceberg yesterday at 5 o'clock on it.

But when he refers to the helicopter, he's referring to the STARS helicopter that saves people's lives, and he ought to recognize that in saying so. But, so far, I've tried to get him to say which story was correct.

So, I'm assuming now that the press release that was put out yesterday at 5 o'clock was the story, the –certainly the latest version, that's for sure, but this is a story we hope, this time, this Premier, this Finance Minister and this government is going to stick to so that we can actually have a conversation about the real story as opposed to a moving target that makes it impossible for anyone to have a good conversation, a good dialogue, a good debate, in order to get to the bottom of the government's intentions.

The–one of the things included in yesterday's press release was the $44 million related to the Seniors' School Tax Rebate estimated to be $44 million. Will the Premier agree, Mr. Chair, that when you claw back a tax break, a tax credit, that's a raise in taxes? Mr. Chairperson: Before I recognize the First Minister, I'd like to remind all members of the committee that comments should come through me. Thank you. Mr.

Pallister: I would agree that the most shameless vote-buying effort that I've seen in politics was the misguided and desperate promise of the previous administration that they would reduce–or they would increase by, I think, four or five times in a single year, a seniors' tax rebate that they had failed to elevate for 17 in any significant degree. * (10:50)

658 LEGISLATIVE ASSEMBLY OF MANITOBA June 10, 2016 This was desperate beyond belief. And, of course, combining that –the cynicism, the pure cynicism of trying to buy seniors' votes in this manner, which seniors–many seniors approached me and told me they were offended by, the government tried to endear themselves to the very seniors who depend upon health care to a far greater degree, actually, in most cases than non-seniors do. This is the same administration that jacked up taxes on seniors in so many ways, you know, after promising not to.

You know, if a senior had a tipple now and again, there's a much higher tax, of course, on wine or beer. Or, if a senior had the good fortune to have some investment and had a dividend coming, the dividend tax rate was jacked up by a significant amount. Or, if a senior was able to live in their own home or rent an apartment or something, they would want to insure their property, they jacked up the PST to include that insurance premium, so then they're paying 7 per cent and then 8 per cent more on that. And, you know, these things all dented seniors' incomes considerably.

And add to them, of course, accelerated hydro rates because of misguided Americanization strategies. And further, to the various other costs that seniors had to pay on items they purchased that were included in the PST, but then PST was raised by a further 1 per cent. So, you're seei ng these folks hit particularly hard by the PST hike, something former premier of Saskatchewan Lorne Calvert decried, of course, mightily, was the impact that raising the PST would have on low -income families and seniors, in particular, seniors on fixed incomes.

So look at this record over the previous four years and then consider the pure cynicism of trying to go out as this administration did, and tell seniors how much you care for them and how much you want them to have more money on their kitchen table after you, for years, raided that same kitchen table with various tax hikes, and you get the bemusement seniors felt and feel today at this desperate attack on them and on their incomes.

Now, combine that with the fact that seniors depend upon health- care services, and those health-care services, despite the mas - sive record-setting tax grab of the previous administration, continue to deteriorate so that seniors are waiting in Manitoba longer than seniors in any other part of the country when they go to emergency, waiting hours and hours and hours. I think four of the top five lengthy waits in the –in our country's hospitals are here in the city of Winnipeg. That's a momentous failure to deliver on the promise of better services for seniors.

Compound that with the reality of the highest ambulance fees in Canada and seniors actually telling us they walked to emergency because they didn't feel they could afford the five- or six-hundred-dollar bill for an ambulance, and you see, Mr. Chair, why I use the word cynical in this, that the quality and access to health care that matters so much to seniors, sliding, the tax burden on seniors rising, and what's the end result?

Not a commitment to improved health care, not a sincere commitment to reduce the tax burden on seniors, just this monumental, insincere promise from a government whose deficit projections had gone from $400 million to, if you believe their own prebudget estimates, over $600- million deficit, and they're suggesting they're going to do tax breaks for people that they've hurt over the years in addition to the $600-million deficit they're already predicting.

Now, this is a monumental –monumental– insincere effort on the part of any political party that would make such a promise at such a time o f grave mismanagement in the health -care system, at such a time of injurious tax hikes to seniors. This was the desperation of this government –previous government–and this member. So we're going to retain the tax–the rebate. We're going to retain it for the families who need it most, for the seniors who need it most and make sure that it's administered more efficiently and well so that all the seniors who deserve it can get it.

And that's a great improvement, I think, to better protect the seniors of our pr ovince who deserve that protection. That's how we'll be doing it. Mr. Allum: Well, I'm sure there was an answer to the question I asked him in there somewhere. But – and I know the Premier's (Mr. Pallister) clearly quite proud of himself for the –his inability to give a straight answer to a straight question. He started off his comments over the last question about vote buying. He needs to remember that the only government convicted of trying to fix an election was the very government that he was a part of.

So he should be very careful when he makes allegations in that regard because, in fact, he was part of a government that was convicted in court. And out of respect, I won't quote what the judge in that particular case said about the government of the day and the political hacks associated with it. But he

June 10, 2016 LEGISLATIVE ASSEMBLY OF MANITOBA 659 should be very careful, and I would advise him not to go any further in that particular direction. We make public policy choices here when we're in government. His government makes public policy choices. We're trying to have a conversation about the public policy choices his government has made, and what the simple question that was asked to him, Mr. Chair, and I will ask it again, when you claw back a tax credit, isn't that raising taxes?

And, as a result, did he not mislead the people of Manitoba when he said that he didn't raise taxes, because the fact of the matter is he took $44 million out of the pockets of seniors. That is raising taxes. Isn't that so? Mr. Pallister: I accept that the member has gr eat expertise and personal experience in raising taxes, so he can evaluate as he wishes. I would say that continuing with a rebate that was offered in the past at the level it was offered and income testing it is a very valid way to deal with it.

What it d oes is it, of course, makes sure that it protects those families, those individuals who need that support the most, and what it also does is make sure that those who need it get it. The previous administration had an application-based process which resulted in, I think, approximately 14 per cent of people who were eligible for –we can verify the number –but a significant number of seniors didn't get the rebate at all, and many others applied for it and weren't eligible for it.

So it was a tremendous waste of time for seniors the way it was administered and also, in an unjust way, I think, excluded many seniors from getting it who can get it now because what we're going to do is run it through the tax returns so that Canada Revenue Agency can evaluate it much more efficiently. There'll be a savings there close to $1 million in reduced administration costs and also an insurance that low -income seniors are able to get the benefit that they deserve to get.

So not keeping a very misguided and misleading promise of the previous administration is, I would think, quite honourable and certainly, in this case, does serve to protect those who need the protection the most far better than was the case with the previous administration. Mr. Allum: Well, I want to congratulate the Premier (Mr. Pallister). That's about as close to an answer that we've received over the course of the two days, and maybe we can keep on this path so that we can get to the bottom of the things and issues that matter to the people of Manitoba.

Now, it's quite clear that his government, the first thing that he did, Mr. Chair, in his budget was to raise taxes on seniors. It's clear to the people of Manitoba. It's certainly clear to the seniors that we've heard from that their tax bill went up. They'll be paying more in taxes as a result of a clawback and a public policy decision made in his budget.

And so we just want to get it on the table and make it clear that this Premier and this government raised taxes on the people of Manitoba because the fact of the matter is that when in opposition and then during the election campaign this is a government that was sanctimonious about never raising taxes, and yet their first action that they did was to raise taxes, raise taxes on seniors so much so that they actually reached into the mailboxes of Manitoba seniors and took out the cheque that was in the mail, which I think is quite disheartening to seniors across Manitoba.

The public policy choice that the govern- ment makes is the public policy choice that the government makes, but he has to concede, Mr. Chair, that he raised taxes on seniors even though he said he hasn't raised taxes, and therein lies the contradiction at the heart of the government's messaging. And then he says, well, okay, we're going to take that $44 million and we're going to put it into those that need it most. So will he table for us how he's going to take that $44 million and put it into supports and programming for seniors? * (11:00) Mr. Pallister: Well, now we're getting somewhere, and a great idea.

The member suggests that the clawback that he refers to–which isn't, of course, a clawback at all, it's not acting on a previous government's desperate last-gasp election promise, which seniors themselves have told us they didn't believe in. I am a senior –I quote now from an email here from a senior –I'm a senior that thought the original school tax rebate was crazy because it just increases the tax burden for my kids who deal with housing costs, other expenses that we did not have when starting out as a family.

Here's another senior who says: Thank you so much for the indexing of the income tax brackets to the rate of inflation, and continuing with the existing education tax relief for Manitoba seniors. Very much appreciated, continued success. And we have many more like this.

660 LEGISLATIVE ASSEMBLY OF MANITOBA June 10, 2016 The reality, of course, of the situation is that seniors saw through what the government was doing when it ran. The political organization that made this promise wasn't acting as any government wo uld, not really. The reality of the situation facing Manitoba seniors is well understood by those who spend time with seniors, and the additional costs imposed by the previous administration on seniors hurt seniors, reduced their incomes on a regular basis and made life harder for seniors.

What this does is it makes sure that those seniors who are in the most difficult financial straits are protected. I'll go back now to the STARS ambulance for a second because the member had put on the record what a great thing it was when his government didn't shop around and actually went out and, just before the 2011 election, purchased a shiny red helicopter, the services of which are wonderful and the people who work the helicopter are wonderful too. It's just the fact that the government didn't shop around that concerns us.

The Manitoba government –this is from a CBC news posting March 19th, 2014: the "Manitoba government did not follow proper procedures." I'll just repeat that part, the Manitoba government did not follow proper procedures when it signed a multi-million dollar contract with the STARS air ambulance, and it's paid way more than other provinces, a report by the provincial Auditor General has found. The report, by Auditor General Carol Bellringer released on Wednesday, looked into why the shock trauma air rescue service was brought to the province without the contract being tendered.

When Manitoba Health signed a 10- year service purchase agreement with STARS in 2011, no one else was given a chance to submit bids. I cite this as an example where, if we had given the opportunity for the marketplace –for other providers to actually bid on providing this service, we may well have achieved a better value for Manitoba taxpayers while getting the service that we wanted. We won't know–and we can't know–because the fact is that the government acted without any consideration for getting value for taxpayers.

Here's a quote from the Auditor General: "W e concluded that the procurement of the helicopter ambulance progra m was not in compliance with provincial tendering principles, policies and legislation." Okay, well, you know, wonderful thing to have a helicopter. Great to buy that nice helicopter. But how about buying it intelligently. How about letting the marketplace see if it'll provide a little better value for taxpayers instead of just going out days before an election and doing a photo op with a shiny little red helicopter. So a nice photo op, but Manitobans paid a heck of a lot of money for it.

So, I–you know, I–it says right here, and I don't dispute the Auditor General's words on this, that, at the end of the day, you might have landed exactly where you did, but there's no way to know unless you put the tender out, and that's my point. She added that the STAR S contract is not an isolated case; elsewhere in the report auditors found problems with several other contracts in other government departments. Quote: " If you want to keep your eye on the bottom line and you want to keep those dollars under control, you got to do it." So am I panicking about it? No. Am I concerned? Absolutely.

Do you think it's an isolated incident and there aren't others happening? No, I don't, because of the report we did on the waiving of competitive bids, which I cited earlier. So, again, I remind the member –and I expect he does this himself with his own money, when you go and shop, especially on a larger purchase–say something in the line of tens of millions or hundreds of millions of dollars, you would do that, I expect, if you were doing that personally. I can't imagine you'd be doing that personally, but let's say you were doing shopping for a vehicle or a larger item.

You would probably go and check around a little bit. But the government didn't check around at all, perhaps because they thought it was okay because they were spending other people's money, I'm not sure. B ut I know one thing for sure: Manitobans are going to appreciate having a government that's as careful with the money that it takes from them when it spends it as they are with the money they left after they pay their taxes. Mr.

Allum: Well, it's an astonishing, astonishing admission on the part of the Premier of Manitoba that he would put the STARS helicopter –a unique service by the way, and he well knows that, a unique service–but he would put some phony bottom line ahead of the lives of Manitobans. And that's just exactly what he did here, even though we were asking about $44-million tax increase on seniors this year, his budget, his government. And when he said that he did not raise taxes, we're asking him to admit that he did raise taxes. Of course, he won't admit

June 10, 2016 LEGISLATIVE ASSEMBLY OF MANITOBA 661 anything because we've never heard him admit anything. And then I –we followed up with a question about will–how will we know that the $44- million tax increase on seniors will be used to provide supports, programming and services to seniors. Will he be issuing a report in that regard? Will be –he be tabling a list in that regard? What, actually, is his plan of action to show that there's a one -to-one relationship between the $44- million tax increase on seniors and $44 million in new programs, services and supports for seniors? Mr.

Pallister: Well, the member uses the phrase phony bottom line, but that's actually the phrase – bottom line's a phrase that t he Auditor General used in her report, and I don't think she used it in any way except to explain that it was important to be aware of it. And I would agree with her. And I think the member's comments illustrate a lack of understanding of the importance of what we are emphasizing here today. How will we move towards balance? Well, I know some ways we won't move towards balance.

For example, in this particular article, it says here, during negotiations with STARS Manitoba Health was aware that it would likely be paying 231 to 618 per cent more per mission than what other provinces pay for similar services. The Auditor General said, despite what she called significant variances, Manitoba Health did not do enough to determine if it would get value for its money and, in fact, instead, quote, relied on STARS as the main source to define program delivery needs. They should have done more, she said. Mr.

Bob Lagassé, Acting Chairperson, in the Chair The quote goes on to say, and I hope the member will get this, because it's very important – this will actually, I think, be instructive to him in his questions about bottom line –despite those differences, they really did not assess whether or not they would be obtaining value for money. Those variances are ext reme and, most certainly, it would warrant a much more detailed analysis.

So one example, an example that could have – though we will not be able to test the market retroactively, Madam Speaker, could have saved tens of millions of dollars for Manitobans –one example of one untendered contract that, I think, serves to illustrate my point about shopping smarter with the money we take from Manitobans, something that hasn't been done, something we aim to do. Mr. Wab Kinew (Fort Rouge): Is the First Minister happy with the performance of his Finance Minister to date? * (11:10) Mr. Pallister: Absolutely.

Now, you know, he is following on the heels of some other Finance ministers I wasn't that impressed with, I would have to say that. So maybe he doesn’t have much to compete with at this point, but he is endeavouring to do his best in a very challenging and difficult time. The reality is we've inherited a mighty mess from the previous administration. We have endeavoured–in the interests of producing both a Throne Speech and budget in the last few weeks, something that I'm told hasn't been attempted before, we've taken on a task some would describe as Herculean.

But it is a mess we have to clean up, and the Finance Minister has shown great dedication. He is a very capable person and works well with his colleagues, both in the Executive Council and in caucus, a diligent worker and a caring and committed person. I have great admiration for him. Mr. Kinew: Mr. Chair, to date, the Finance Minister has tabled a budget in which the tax burden on seniors increased, following a campaign in which there was numerous attacks made on the NDP for raising taxes.

There is a higher deficit than last year, following a campaign which the NDP were vilified for tabling budget deficits, and over the past two weeks the Finance Minister has struggled to explain how they arrived at a $122- million claim of savings which was bookended by a press release in which they were able to identify $108 million in savings. So it seems to me that–I'm a little surprised, after all those, you know, fumbles, to hear the First Minister say that he's absolutely happy with the Finance Minister's performance to date.

I would surmise that perhaps a more hedged claim might be more accurate and more credible, but that is what it is. I'd ask the First Minister whether he's happy with his own performance on the Finance file to date. Mr. Pallister: I'm never happy with my own performance. I'm probably my harshest critic, and so I would say there's lots of room for improvement, but I wouldn't say that of the Finance Minister. Let's be clear about that.

662 LEGISLATIVE ASSEMBLY OF MANITOBA June 10, 2016 I have a little bit of bemusement, though, at the attempt by the member to label us not keeping a very bogus and very dangerous NDP commitment made in desperation in the last days of their administration as somehow something that they would like to label a tax hike when, in fact, the promise of lower taxes is something they never fulfilled in all their recent years, anyway, of being in government, so why anyone would believe they would actually have kept their promise is a puzzlement to me. But I would go further and say, I mean, here's a comment from the CBC news

article that was done after we released this, and maybe the member can explain this to me. I mean, it' s pretty clear that our plan didn't produce all the, you know, didn't fulfill all the predictions of the NDP in the last number of years about, you know, be afraid, be very afraid. We haven't proceeded with any significant layoffs of civil servants or cuts to programs. Every department apart from my own and Agriculture had an increase, most as –fairly significant increase in spending. We've been much criticized for that. Many people say we haven't cut enough, other people say too much.

One person that agre ed with our approach was the interim Leader of the NDP who said in a CBC news interview that–she said her party agrees with preventing wealthier seniors from receiving a property tax rebate brought in by the Selinger government. So, interesting. I agree and I submit that it's all right for members to differ on their views, but how can it be that what the member is describing as a tax hike is actually supported by the interim leader of his own party as a good move and a reasonable thing to do? It seems a bit of a contradiction there. Mr. Kinew: Mr.

Chair, can the First Minister confirm for us that the tax burden on seniors has increased this year over last? Mr. Pallister: I won't confirm that. What I will do, though, is remind the member of his own views in respect of things like the previous government's attempt to gouge seniors by –and successful attempt, I might add–raising the PST, when he tweeted: How does raising the PST help grow the economy? How is a tax which takes a proportionally bigger slice of poorer people's incomes fair? Those are the words of the member. I –you know, I agree with those words.

I don't think raising the tax on seniors, as the previous government did– and it wasn't exclusively the PST, it was many other things. I outlined a bit of t hat earlier–I don't see that as beneficial or fair to seniors' incomes, so it seems passing strange, now, that the member would talk in this way when, in fact, he himself recognized the error of the previous administration's tactics in respect of eroding s eniors' incomes, as did we. I think we have a point of agreement on that. Mr. Kinew: It's simply a question of fact, to ask for a confirmation of whether the Premier (Mr.

Pallister) agrees with the evidence that the burden via taxes borne by seniors is greater this year than last. I'm glad to see that the Premier is aware of comments I've made on Twitter, and I'd point out I've never distanced myself from those comments. I'm comfortable with those being on the record. I am in favour of progressive taxatio n. That is something that I believe is a good economic policy in most instances. But, you know, the question here is whether or not the Premier will confirm that the tax burden is greater. And, you know, not having heard an answer, I'd move on.

You know, he wants to raise the issue of the PST. So I noted in the news release that we were provided with yesterday that there is some language here about Building Manitoba Fund reductions due to PST decreases. Can the First Minister walk me through how there would be a net savings to government in this instance? Mr. Pallister: I apologize to the member for Fort Rouge (Mr. Kinew) and I missed part of the

preamble to his question and I'd like him, if he wouldn't mind–I'm sorry, I'm just saying I missed part of–I apologize, I missed part of your

preamble, so I didn't get the gist of the question; I just got the tail end. Mr. Kinew: I believe the part that's relevant here is, in the news release that came out yesterday evening that, you know, we're told is where the –identifies where the savings will be found, there's a bullet point that outlines that Building Manitoba Fund reductions due to PST decreases resulted in $5 million savings. Can the First Minister walk the committee through how the reduction in PST revenues, leading to Building Manitoba Fund expenditure reductions leads to a net savings? Mr.

Pallister: And again, I'm –apologize to the member for not getting that the first time. The issue he raises, as I understand it, pertains to the timing of the booking of infrastructure projects.

June 10, 2016 LEGISLATIVE ASSEMBLY OF MANITOBA 663 Once the project is completed –and, actually, the fellow to his right will be much more qualified to answer this technically than I can. But the understanding I have is that the project does not begin its amortization, if I'm us ing–I hope I'm using the right phrases, and I think the Finance Minister would be able to address this better than I can–it isn't booked until the project is completed and, because of delays in some projects, we anticipate they will not be booked this year .

And so, the writedown doesn't begin until they're fully completed and, so, that is the–as a consequence, moves the amortization writedown to the subsequent year. Mr. Kinew: Okay, you know, respectfully, I would submit to the First Minister that he might be talking about a different point in this press release. I believe he's referring to the $11 million in amortization and interest expenses, which I'm happy to return to later. * (11:20) Currently, I'd like clarification on the point about the PST and the Building Manitoba Fund reductions.

It seems to me as though those decreases in revenue and decreases in expenditure move in lockstep, but I would like clarification as to how there can be a net savings booked by government from that. Mr. Pallister: Great, now I'm –again, I apologize to the member for answering a question he didn't ask. We'll dig those numbers out so that we can get the detail to the member on that, and we're looking for them now. So, if the member would like, I can revert back to that as soon as I get the numbers. I'll answer his question, and, in the meantime, I'd be happy to address any other issue he would like to raise. Mr.

Chairperson in the Chair Mr. Kinew: Could the First Minister provide some indication as to whether his staff w ould need one - two minutes for this, or whether it would–if this is something imminent that we could– Mr. Pallister: Yes, we're working on it. As soon as we can get the numbers, we'll get them to him. I undertake to do that in the shortest possible time frame. Mr. Kinew: All right. On a related point, returning again to the news release which the $108- million savings claim was presented. The –well, it looks as though we might have answers to the– An Honourable Member: I wouldn't count on it yet. Mr.

Kinew: Still in process? All right. So the press release outlines $9 million in savings from schools and universities having their requested increases reduced.

Looking back over a press release of funding announcements earlier in the year, can the minister –First Minister confirm whether any of the following are part of this $9 million list: $844,000 to support the joint bachelor of midwifery program at University College of the North and University of Manitoba; $208,000 to support internationally educated engineers qualifications; $450,000 for Assiniboine Community College's internationally educated licensed professional nurse program; $83,000 to expand seats in Red River College's primary care paramedic program; $440,000 to support the Manitoba Transfer Credit portal allowing students to seamlessly transfer credits between institutions; $276,000 to increase access supports for indigenous, newcomer and marginalized students; $1 million in capital support for the National Centre for Truth and Reconciliation at the University of Manitoba; $350,000 to provide each college and university with funding to support indigenous culture on campus; $150,000 to support a Metis studies program at Brandon University; $3 million to support graduate students at the Univers ity of Manitoba; $80,000 to found a Premier's Award and Chair in Post - Secondary Teaching Excellence and Innovation; and $10,000 to support the Len Evans Memorial Scholarships at Brandon University.

Recognizing, Mr. Chair, that that was quite a lengthy list and lengthy

preamble, I just restate the question as to whether the First Minister can confirm whether any of these programs are part of the $9-million reduction in funding to schools and universities? Mr. Pallister: No, I can't do that. And the member would understand why. I've just had the list read to me, so I would like to–if the member would like to table it or make a copy that would assist us in comparing the detail of what he's outlined there to our planned expenditures for the year, and then we' ll add that to the previous task and get both bits of information back to him as soon as is possible. Mr.

Kinew: I'm happy to provide a list and table, but I would ask, perhaps, whether he could refer to his staff and–whether referring to the list from Ha nsard would be acceptable for–[interjection] Okay, sorry; I withdraw that. Rather, I've been told that I can table

664 LEGISLATIVE ASSEMBLY OF MANITOBA June 10, 2016 a list imminently, and so I'll return to that point when I'm prepared to table the list, Mr. Chair. Can the minister–the First Minister, rather–direct me to the portion of the Estimates document or budget and budget papers document that outlines the reduction of $11 million in amortization and interest expenses for the year? Mr. Pallister: That was the issue I addressed earlier unnecessarily, but, again, what the member would be wanting, I expect, is which projects were the ones that caused the detail to emerge that he has before him.

I'll undertake also to give him that list. I–if I could, though, I would remind the member that in doing this, I think it's important to understand that the goal of this government is to chart a new course towards a reduced amount of deficit and to pursue that goal each and every year, moving forward.

And so, of course, it would not be possible to say yes to ev ery proposal as was done in the run-up to the last election by the previous administration who made, in addition to knowing that they would have a deficit I expect well in excess of $700 million–we now know closer to $1 billion– they made an additional number of announcements committing to spend in the area of 600 million additional dollars.

This profligate spending is dangerous, reckless and actually would go further to damage our fiscal circumstances not just tomorrow but today, because as a consequence of this approach, had we followed it–and we did not, in the budget; we turned a new course, a new direction –I think we would have greatly endangered our credit rating. The previous administration was warned a couple of years ago to get their spending under control, undertook to do so, again, after years of saying they would, didn't. And then we had, as a result, a downturn in our credit rating, a downgrade for the first time in 30 years.

And that, of course, is a negative consequence. It makes moneylenders happier, but makes seniors waiting for health care not as happy because it takes resources away from front -line services and moves them over to Toronto or New York and to a bond issuing company's balance sheet.

And so, with each provision of information I've undertaken, I want to accompany it with an admonition to the member that getting spending under control by demonstrating that you have the ability to choose between high priorities and high needs today and wants is a very important aspect of governing, one that wasn't demonstrated sufficiently well in the last number of years. So, when the previous administration went out to the people of Manitoba during the election campaign and promised to–the moon, they were actually also promising the crater at th e same time. These promises add up to enormous amounts.

Manitobans did not elect them. They chose not to elect them on the basis of these promises, lists and lists of promises. They decided–Manitobans decided they would elect a government and a politic al organization that made about one sixth as many promises and actually undertook to find the savings within government operations to fund those promises. This is a responsible approach, one that Manitobans adopt themselves by necessity or they go bankrupt.

The–so I would encourage the member, when we have that information to him, as I've undertaken to do, to remember that: that sometimes the most caring parents say no more often than yes, and sometimes the most caring governments and foresighted governme nts say no to projects today because they recognize the limits of their financial resources, and they hope to be able to say yes tomorrow or in the future but in a sustainable way so that their promises are kept.

This is the fundamental challenge that we are willing to face as the new government and will, I believe, succeed in facing, but it is a fundamental challenge which the previous administration failed to accept in its spending practices, which clearly demonstrated, not just to bond rating agencies but to Manitobans, were dangerous and were reckless in their nature. Mr. Kinew: Yes, can the First Minister tell the committee whether it was his direction that the reductions in the booked expenses for amortization and booked expenses for interest occurred, whether that was his decision? * (11:30) Mr.

Pallister: Well, I recognize that the member has sought election in a party that has experienced tremendous dysfunction, and I recognize that the member understands that a historic rebellion occurred within the organization that he has now joined. I also recognize that that dysfunction caused a tremendous amount of hurt to my predecessor. I recognize that that was unfair and I've stated it. I do not believe that the people who instigated that

June 10, 2016 LEGISLATIVE ASSEMBLY OF MANITOBA 665 rebellion were thoughtful or considerate in their actions. That being said, that was their decision to make, not mine, but I do think that it's important the member understand what solidarity means, and I would expect many of his colleagues who come from–as I do–come from a labour background would be able to explain it to him. When we make decisions on our team , they are team decisions and that is how we make our decisions. Mr.

Kinew: The reason why I'm interested in this topic of the booked expenses for amortization and interest this year is because this repres ents the amount–the portion of capital costs that are being borne this year. But they don't reflect, necessarily, the total costs of the capital asset. Rather, it's discounted over the lifetime of the asset.

So, if we're talking about a potential decreas e in amortization this year of $11 million for amortization and interest and we refer in the Estimates and Expenditures document from the budget papers, page 137, and we note that the useful life of general assets range anywhere from four years for things like computers to up to 40 years for things like buildings, a reduction this year in $11 million of amortization could potentially mean a reduction in the real value of infrastructure –or capital spending, rather, in the hundreds of millions of dollars.

So, can the First Minister tell us what is the impact in real capital spending this year as a result of this $11- million reduction in amortization and interest spending? Mr. Pallister: And I appreciate the member raising the issue of infrastructure investment. It is critical. I've said for a quarter of a century or more that we need to get our strategic infrastructure built, and when I say strategic, I mean strategic. The previous administration underspent over its term in only one department, and that was in infrastructure, and they did so year after year after year to the tune of close to 25 per cent.

Now, they didn't underspend the year before the election, and I think that was partly to do with something called conspicuous construction–an attempt to be noticed. I believe there were a coup le of million dollars ' worth of Steady Growth signs that were assembled and put up in key areas around the province to be visible at great expense to Manitoba taxpayers, but I think they would have rather had pothole s filled with the money. That being said, the only department of government that was underspent on an annual basis – every other department was overspent on almost all on an annual basis–was infrastructure.

So I appreciate the member's questions because infrastructure investment is critical. I have been saying so for a long time , and our government plans to invest strategically in infrastructure on an annual basis, not on a raid the department, raid the department, raid the department, and then have a parade-type of approach. That isn't how infrastructure should be built. That isn't how we work in partnership with the industry to effect better prices and value or how we help the industry grow to meet the needs of Manitobans. That once-every-four- years deal results in waste.

It results in higher prices being paid by taxpayers because –imagine, if you will, Mr. Chair, that there are companies looking to bid on a job in the spring of a year in which, well, a pre-election year, there is a record number of contracts as was the case last fiscal under the NDP. And imagine that there were a limited number of companies, as there are in Manitoba, and imagine, also, that your company, Mr. Chair, won the first bid. Now all your resources are put to place to fulfil l that job. Isn't that exciting for you and your company.

The problem is, of course, that, because there are only so many companies in Manitoba to meet these needs, and each of these companies has experienced an underspend or underinvestment over the pre vious four fiscal years by this administration, they didn't bolster their assets to be able to bid on a job the second time. So your company doesn't bother because you couldn't do the work anyway, so why bid. So now we have fewer companies bidding, and this goes on. And then the next bid is awarded and another company –the member for Midland (Mr. Pedersen), his company gets that contract.

And then, well, he's only got so many people and so much asphalt production capacity and gravel access, so he doesn't bother bidding on any other jobs because he's got all the work he needs for that year because, well, it's more work than he had the previous four years, that's for sure. And you follow that logic and what happens is at the end of the year you're ending up paying far too much because there are far fewer companies that are bidding, far few companies t hat are participating in the process. And because of that,

666 LEGISLATIVE ASSEMBLY OF MANITOBA June 10, 2016 you get–you pay more and you get less. And that's exactly what's happened under the previous administration over a number of years now. We don't plan to follow that line of attack, so what we wan t to do is invest strategically in infrastructure projects that will work for Manitobans to assist them.

You build better roads, better drainage, better bridges, but do it on a systematic basis, not on a once -every-four-year cycle that sees dips in the bid offers and increases in the prices in the final year, because that's what has happened on an ongoing basis in Manitoba. Other provinces do this job better. We can do better, I think, than other provinces do by learning from best practices around the world . And we have high hopes that we can continue the investments in strategic infrastructure. We've made a major commitment to do that. But, most importantly, our commitment is not just to invest more money.

It's to get better results with the investments we make. Mr. Kinew: I would submit to the First Minister that that's not actually the situation that we see reflected either in the budget that his Finance Minister has tabled or in the press release that we saw yesterday which says Budget 2016 begins to correct the course, but, perhaps, may have better been titled: This press release begins to correct the course on all the misinformation that has been shared by this new government. What we're actually seeing is a scenario where on infrastructure we pay les s and get less.

That's what we see with the reduction in the booked expenses for amortization. That's also what we see in the reduction of some $40 million in the infrastructure line item for highways.

So, you know, I would like the First Minister to return now to the question that had been posed earlier about the PST and tell us, you know, how is it that he can continue, with the PST being at 8 per cent, not using it to increase infrastructure levels, potentially over the lifetime of his governm ent collecting some $1.2 billion in the additional point of the PST, and, you know, how he can continue to demonize the NDP for raising the PST and yet spend the increased revenues without showing any indication that it will be spent on infrastructure. Mr.

Pallister: The member talks about demonization, but self -demonization is what occurred under the previous administration. They made a promise that they would raise the PST–well, actually, they didn't make a promise, they promised they wouldn't, that's r ight. They promised they wouldn't raise the PST. Then they decided to broaden it. Then they decided they'd raise it. Then they went to court to fight for the right to raise it while ignoring the right that they'd guaranteed Manitobans that they would have to vote on it.

And a year later, after making announcements, glorious announcements about splash pads and murals, decided that they'd make the statement that it was going to go into infrastructure. So, when the member talks about misinformation and paying more and getting less, I think he's got a textbook example right in front of him if he looks at the recent history of his own government's performance. The fact is that even after the government made a commitment that it would take the PST revenues and pu t them into infrastructure, it did not.

And only in the year prior to the election did the government actually, finally, spend what it had budgeted in infrastructure. Now, our intention is to spend what we budget in infrastructure, and our commitment is si gnificant. And we will spend it on infrastructure, and we will spend it more wisely. * (11:40) Now, another way we can do it more wisely, I think, Mr. Chair, is to take a real good look at the strategic aspects of investing, as opposed to putting up signs in target ridings as the previous administration was fond to do.

I believe Manitobans want us to invest where the needs are greatest and where the potential for them to share in the benefits of the infrastructure investments are greater. And so that analy sis needs to be done, and we are developing a model that will be utilized to help us determine where those best investments can be made in infrastructure. There are tremendous benefits to be derived by catching up on this strategic infrastructure deficit.

We've seen very clearly, in Manitoba and across the country, problems as a consequence of failure to recognize the importance of investing in infrastructure and investing in infrastructure strategically as a paramount aspect of that investment. So that is exactly what we plan to do, and we believe that that is an important aspect of getting better value for Manitobans, as well. I would, again, emphasize another aspect of infrastructure is of course the purchasing that

June 10, 2016 LEGISLATIVE ASSEMBLY OF MANITOBA 667 companies do in support of their projects and their bidding is done through a tendering process. It is critical to understand –back to that, Mr. Chair –it is critical to understand the previous administration failed on many occasions, as was noted in the Auditor General's report, to actually utilize the marketplace to determine how to get the best value for money. The issues around investments made in infrastructure are important.

I know that the New Democratic Party made promises during the election to spend more on infrastructure, but their record speaks better than their promises, I think, at illustrating how likely those promises are to be kept.

And, because they have a record of not investing what they said they would in infrastructure, including after they raised the PST and didn't put it into infrastructure, I don't think that stated commitments by the now -opposition party to invest in infrastructure and saying that they'll spend more carry a lot of weight with those who understand their past record of failing to invest strat egically and well and consistently in infrastructure. So, those would be my thoughts on that issue. Mr.

Kinew: The First Minister raises an interesting point about whether or not spending under a given government on infrastructure might be tied to political fortunes. I, therefore, ask whether the First Minister would commit to making infrastructure investments over his term in government so that, at the end of that term, that an analysis would show that infrastructure spending had been fair across all co nstituencies–electoral constituencies in the province, and was not disproportionately targeted to those held by Progressive Conservative candidates. Mr.

Pallister: Well, I've undertaken already to the member and to all present that –and for the record in Hansard–that we will invest strategically in infrastructure that pays for Manitobans, that has a return on its investment. That is an important aspect of how strategic infrastructure should be managed and that's how we'll manage it.

The issues of transparency that we've committed to will ensure the member that he has access to the data in respect of which projects are undertaken, where, when, how much is spent, in terms of the tendering aspects that we are in charge of as a government, that those will be available, that the information will be readily available, not, as it was under the previous administration, covered up for some years.

These are important commitments to us because we are committed to being very open and transparent about fulfilling our priorities and expect to be accountable and measured on the results that we achieve for Manitobans. Mr. Kinew: So, will the First Minister commit that infrastructure investments will be made fairly across all electoral constituencies in Manitoba and will not be made with any calculation to spend preferentially on those areas which are currently held by Progressive Conservative candidates? Mr. Pallister: Yes, oh, sorry– Mr. Chairperson: You've got the chair. Mr. Pallister: Oh, okay, sorry.

So, yes. So I get what the member's asking is he doesn't want to have another Tiger Dam situation, and I agree hundred per cent with him, and we're not going to have that happen. No, we're not going to be–we're going to be making the information available to him and transparently so, so that he's able to determine –I, mean, he uses the word, fairer, you know. Everybody's got a definition of fairer. I expect some of the members on the government's side might define fairer as in a way that I might not define it.

I've already attempted to explain to the member how I define fair, and the way I define fair is it works for Manitobans, that the investments we made work for Manitobans. The member's asking about investing in every riding in the province. That might not be possible by my definition, and so he'd have to clarify what he means by fairer. If he's meaning by fairer that we're going to put money into every riding so we can say that we did, I'm not really interested in that approach. I think we have to invest in projects that benefit Manitobans, and there are –there's some urgent ones.

I'll highlight one, if I could, to make more clear my thinking on this issue to the member. I believe that the issue of an outlet at the north end of Lake Manitoba is an emergency. I believe it's critical that that be pursued. It has been delayed for a long time. It needs to be proceeded with. It is something that will benefit– yes, it will benefit the First Nations communities, Metis people, communities in that basin, but it'll benefit all Manitobans too.

And those people in that area of the province have lived under the cloud of fear for a long, long time as a consequence of the lack of an outlet of sufficient size to direct water out of Lake Manitoba that is directed

668 LEGISLATIVE ASSEMBLY OF MANITOBA June 10, 2016 in, in part, by a diversion at Portage la Prairie, the Assiniboine River diversion. So these –this project was recommended back in the '50s, and I'm not blaming the previous government and many governments that didn't proceed with this project.

But my point is that it's clear, in a high -water cycle, and we appear to be in one now, with extensive uncertainty for all who live in that basin and the need, very likely, to use diversionary tactics to protect the city of Winnipeg and people along the Assiniboine basin, continuing as we go forward with the added stresses put on our drainage system as a consequence of changed agricultural practices such as zero tillage, the drainage, unfortunate drainage, I would say, of many permanent wetlands in the Assiniboine basin upstream in Saskatchewan, excessive drainage, in my estimation, that I think that Saskatchewan government will regret at some fu ture point if we hit a dry cycle.

And I know the government made some efforts in this respect, and I appreciate those efforts because I think it is important that we recognize that without that channel not only will those folks live with the continued unc ertainty that they –that makes their lives more than difficult, but extremely difficult. I think it's important we act on that project.

So I give him that as an example of a project which I think has considerable benefit; nonetheless, I think it's importa nt that we proceed to evaluate all proposals on an empirical basis with criteria that make sense so that we get away from the ad hocery many other governments have practised in terms of investing in infrastructure for too long.

It results in too much was te, inefficiency, and it results in less benefit than would be derived by a more logical evaluative process that bears in mind the consequences of the investment over the mid and long term. * (11:50) In respect of the outlet issue, there have been numerous coffee parties held and many discussions over the last number of years, but no dirt has yet moved, and we want to see that project move ahead in fairness to the people who live there . We believe it to be an emergency. The–it is a very shallow lake .

It has a considerably significant impact, more considerable, f or example, Lake Manitoba being such a shallow lake, if a relatively small amount of water is added, it makes a significant difference. And the wind event the premier and I discussed, actually last year at –in this process, that wind event that occurred that –and the previous flooding in that basin, that it's really put the lives of those folks at risk. Not their lives at risk; that's an overstatement, but their normal day -to-day lives and their businesses with their families; the security they deserve to feel they can't feel.

They're protecting other Manitobans, and I believe we need to take every possible measure to protect them. So there's an example of the type of project that I believe would satisfy a criteria that might be developed because it does satisfy the need to protect those Manitobans who have given so much for us. Mr. Chairperson: The minister's time has expired. Mr. Kinew: You know, I appreciate the First Minister's grasp of the issues related to drainage of Lake Manitoba. The only thing that I'd add to that is that, you know, I do think it i s a life-and-death issue.

I've personally attended the funerals of people from the First Nations; Lake St. Martin, Pinaymootang, Little Saskatchewan, Dauphin River are communities affected, and I've been, you know, recently to the funeral of somebody from Little Saskatchewan, and so, you know, it is a life -and-death issue in a certain sense. So I'd like not to disparage or diminish his comments at all, but just offer that, you know, bit of perspective, and, you know, in the interests of bipartisanship I have many good relationships with the First Nations in the area.

If I can ever help, you know, to advance those conversations I’m more than happy to do so. Again, my interest is not to score political points on the issue of Interlake flooding; rather it's to ensure that people from those communities can return home, and so I'll put that on the record as an offer. That being a good comment , I'm sure the First Minister won't like this next comment, unfortunately.

When he says that investing in every riding might not be fair, perhaps that was a misstatement, but I would have to challenge that and say that every riding does have a representativ e in the Chamber of this building, and it seems to me that there should be at least some infrastructure spending being delivered to every constituency that each of those members represents. And it's been a little concerning for me to see the initial actions with respect to the Kewatinook constituency, which, again, is not a constituency that the NDP holds; rather, it's just one that I'm watching with interest.

June 10, 2016 LEGISLATIVE ASSEMBLY OF MANITOBA 669 In spite of the fact that the East Side Road Authority was dissolved, and I understand, you know, the statements that have been made with respect to that, I would like to ask the First –whether the First Minister will commit to seeing the east -side road itself built and Freedom Road built? We can provide clarity today on those two specific projects, Mr. Chair. Mr. Pallister: I really appreciate the member's comments and his offer, as well.

I think it's really critical, and I wanted to commend also, I could, the former leader of the Liberal Party, I guess, maybe future leader of the Liberal Party; I hav e no idea or control over that. Also, on his work with people from those communities, I know that he has been in regular and consistent contact with the people affected by the flooding and the removal from their homes and from their lifestyle and their da ily lives. It's been more than onerous, and I wanted to clarify I really meant as a consequence directly of the flooding when I was referring to their lives not being at risk.

I didn't want to–I appreciate the member clarifying. Yes, we know that people ha ve passed away far away from their homes and their communities, and it's a dire situation. And I would share with members here that I have raised this with the Prime Minister as an emergency situation, and I will, at some point, I expect, asking for the s upport of all members of our House to make it clear to the federal government that this is an emergency situation. And so, yes, the member asks me about specific projects, and I don't wish to contradict my earlier statements.

At the same time I recognize the importance of both projects he specifically names and recognize the commitments that the previous government's made and, actually, also that the federal government has made to both projects. So I would expect that construction in both areas would continue as is committed to. At the same time, I have also clearly outlined that I think we need to take an approach which perhaps is somewhat different from the previous administration, which involves doing fair analysis of all proposed projects, as oppose d to picking and choosing.

Without criterial assessment models such as the one I described, we would always be subject to criticism. I expect the members opposite would criticize us as well, as they should, for picking and choosing certain projects without merit, perhaps because they aren't in their ridings, perhaps because they don't see the value in them. And so, I think it's important to do the evaluative work of determining which projects have the best benefit to Manitobans.

I think that's vitally important to all of us here, not just to make us accountable for the decisions we make, but, more than that, to make sure that Manitobans derive the best possible benefit from those projects. The reinvestment, not just in new infrastructure projects which t he previous administration focused on significantly in the run -up to the last provincial election–that is an important aspect of infrastructure investment, but there are other important aspects too, not as glorious in their investment, but just as important. For example, maintenance.

Now, you don't see a lot of ribbon cuttings around maintenance. There aren't a lot of press releases about it. It's not really a thing that gets a person, I suppose, elected, because they're so good at maintenance. But maintenance is an awfully important part of infrastructure. I'm told by friends I have in the heavy construction industry that, basically, a dollar invested in maintenance will save you seven dollars in repairs. So, maintenance is really important.

In an area–some far more expertise than I have commented to me that that was an area that was, sadly, lacking in the previous government's focus of investment around infrastructure. So maintenance that didn't –there are no Steady Growth signs up around that, but prett y darn important. Now, if you don't maintain properly, you have to repair, and repairs cost about seven times as much. So, then you do your repairs. And repair isn't necessarily a bell -ringer for the general public, either. I don't know that many people would really vote for somebody just because he did repairs, either.

So the tendency tended to be, under the previous administration, to spend seven times as much as a repair on replacement or on new projects. Now, there's where you get your ribbon. See, and you cut that ribbon and, boy, there's a lot of recognition. What I'm talking about here is making sure we're doing the right balance between maintenance and repair and new projects, and that we make sure we assess each of these in light of the overall benefits to Manitobans. I think that's the right way to do infrastructure investment.

I've spent a bit of time consulting the people who, as I say, have far more expertise than I, and they believe that that is

670 LEGISLATIVE ASSEMBLY OF MANITOBA June 10, 2016 the approach government should take that has n't generally been taken in the past. And it's an approach we would want to take. Mr. Kinew: The First Minister makes reference in his comments today to smart shopping and also to empirically based criteria for evaluating projects. He also, you know, alludes to this criteria that it might be developed, you know, implying therefore that there is no criteria currently at work. And that seems to me to be the case.

It seems unlikely that there is a rich evaluative framework in place given the First Minister an d the Finance Minister and the Cabinet communications staff's inability to explain their $122-million claim–savings figure, to provide detail today, and to the $108 million that was outlined in this press release yesterday.

Specifically, an inability to ex plain the $9 million in the post -secondary and school funding that was cut, and inability to explain how a PST decrease, which is tied to Building Manitoba Fund reductions would result in any net savings to government, and an inability to provide, you know , an explanation into the changes for amortization expenses being booked clearly this year. * (12:00) All of that to say that that inability to provide explanation leads me to suspect that there has not been a careful consideration, that we are not seeing smart shopping, that, in fact, t hat there is just some arbitrary targets being set and then a rush after the fact to try and justify those things.

So I would like, you know, some reassurance because it seems to me that, while we are hearing rhetoric and message about smart shopping, that the evidence that we are seeing from the Finance Minister, from the First Minister, that we are hearing in this Estimates committee so far, suggests that the large budget deficit that we saw this year is evidence that, ye s, there is shopping, but that that said shopping is not smart.

And I would like the First Minister to tell us: You know, since all of his criteria and smart shopping and explanations lie in the future, what confidence do we have that there has actually been an empirically based, sound, strategic, you know, thought process going into developing the budget and the papers and the Estimates that have been tabled so far? Mr. Pallister: Well, the member is asking this government in its sixth week to solve the pr oblems that the 17-year predecessor government created, and that's a stiff order.

He has failed to acknowledge that, when he speaks about problem solving, he fails to acknowledge the problems that were handed to us. For example, 10th out of 10 on wait t imes, the highest child poverty in the country, 10th out of 10 in terms of educational outcomes for our students in schools. We've got major challenges to face. We're ready to face them. The previous government handed them to us. He speaks about confusion about our forecasts. How can we believe forecasts? Wow, that's a fairly good question. Glass houses come to mind. How can you believe forecasts?

Well, 17 years of the NDP making spending forecasts, which they exceeded every single year to the tune of over $3 billion of excess spending beyond what they budgeted, would tell me that the previous administration didn't hit its targets and did not take those targets seriously. Therefore, what validity are–what value could Manitobans, observing their budget books year after year, place in those books? Waste of paper and ink. Trees destroyed for no good purpose. Not really useful. The difference here is, of course, we're serious about our targets. We've established them. We're a new government.

We intend to keep t hem, we hope to keep them and we're dedicated to keeping them where the previous administration missed their targets for 17 years. Now, when we talk about commitments, this is a government, the previous government, that cared so little about assuring Manitobans –the member refer - ences assuring Manitobans, he references giving Manitobans assurance and how can Manitobans believe. How can they believe a government that's been in power for 17 years, doesn't even table a budget?

They put out a financial promise book that promises to spend $600 million more than the $1-billion deficit we now know they were leaving Manitobans with. Wow. So I get the cynicism of the member, but he's directing it at the wrong person. He needs to take a look around the table on the side he's sitting at. Now, we know that a year ago –we know a year ago that the administration did table a budget, and that budget predicted a deficit that was truly significant. And we now know that that deficit is actually close to two and a half times as large in one year.

That's an excess expenditure beyond the already amazingly large deficit of $10 million a week. That's $2 million every single working day

June 10, 2016 LEGISLATIVE ASSEMBLY OF MANITOBA 671 beyond what they promised to spend, and that leaves out the bulk of the promises they ran on. If they were to keep those promises, well, they could drive us to a lower credit rating in a matter of hours. So thank goodness for Manitobans, that they made the change they did, because I'll tell you: there is no way they could have afforded the promises and desperation and recklessness of the previous administration throughout their campaign. Let's talk about reducing staff as –for an example, reducing Cabinet from 18 to 12 ministers.

Let's talk about that for a minute. Because that is an example of setting a new tone at the top and finding savings at the top of the organization. Now, that is going to result in savings that will add up to about $4 million. Four million dollars is not a small amount of money, but it is a small amount of money compared to the deficit we're inheriting. Now, we would have to find 2,500 other examples–2,499 other examples of savings like that to get to balance. That's the monumental nature of the task we face. But at least we've taken a step in the right dire ction.

We have reduced the number of departments, reduced the number of Cabinet. We have reflected that change. We have done it, as well, by reducing the size of my department. I think this is relevant to this discussion. The Executive Council in the prev ious fiscal year had 56 positions funded by Manitoba taxpayers. It will now have 44. That is a reduction of 27 per cent. That is a significant reduction, and a savings will be derived as a consequence of that. Now, the Planning and Priorities Committee is also being reduced in terms of the number; that's the committee of Cabinet secretariat.

It had a significant number of positions in it. It will have a lower number of positions. In addition, a significant amount of secondment was done in the Executive Council office, so that previous year, 25 of the 56 positions within Executive Council were seconded. They were seconded from other departments. They were taken out of the budgets of other departments and moved into the Executive Council for centralized contr ol and operations, but that deprived those departments of those resources and those people.

So Executive Council seconded people from Agriculture, Finance, Families, Growth, Enterprise, Trade, Sustainable Development, Indigenous and Municipal Relations, Sports, Culture, Heritage, Infrastructure, Education, Training and Health, Seniors and Active Living to the tune that the –what we're talking about here is taking the number of political staff– Mr. Chairperson: The honourable First Minister's time has expired. Hon. Jon Gerrard (River Heights): I'm going to try and ask questions which, maybe, because of the limited time, you could keep the responses short, which would be great.

First of all, a governance issue. Where is the responsibility for T he Forks North Portage corporation, which is a –hopefully, we want to consider as one of the star jewels of our Manitoba? Mr. Pallister: Indigenous relations. Mr. Gerrard: I wondered whether it might be with intergovernmental affairs where you are or with Tourism or with, you know, any of a number, but thank you.

One of the things that has, you know, been apparent is that there was a significant increase in the deficit from when the NDP presented a fiscal update to the budget documents, and I'm just trying to have a little bit of an understanding as to where that increase came from, and I just wondered whether there were things that the NDP had done. For example, there was a series of negotiated contracts, labour contracts which were finalized by the NDP in the last several months, whether those contracts were accounted for in the fiscal update or not.

Normally , those contracts would be booked as soon as they are made, and I'm just wondering whether that would account for some of the difference. Mr. Pallister: The–I can't give the member the detail in short order on the second part of the question. On the first part, just as an example, he raised the issue of commitments made in the previous government's fiscal update. There were a couple of very significant departures in reality when we have the opportunity as government to go through the actual numbers.

One of the major ones was a commitment to –now I'll just read the –from the document here, but a commitment to find savings. The member for River Heights would under stand that the previous government had made, on a repeated basis, promises to get its spending under control. Previous Minister Struthers had said, I think about four years ago when he was the Finance minister, he would find I think it was 1 per cent across -the-board savings. It wasn't achieved. The opposite happened. And then in a subsequent year the same commitment made and not achieved again, and the opposite happened. So this

672 LEGISLATIVE ASSEMBLY OF MANITOBA June 10, 2016 previous administration has made consistently and repetitively claims that it would get its spending under control; never has. They made the same claim in the fiscal update. They said they would find savings of almost 1 and a half per cent in this case, so pushed it a little fur ther up, of approximately $215 million. That was in the fiscal update released in March of this year. No savings have been identified. None.

So we have a $215-million add -on to the deficit, so of all the examples I would say that might stand out as the most egregious. * (12:10) There were also other line- budgeted items under the fiscal update, anticipated federal revenues from infrastructure that were multiples of previous years' federal infrastructure support, $316 million of anticipated federal support when, on average–I don't have it here, but I believe it would be about a fifth as much would be the federal support over the previous years on average. So significant departures from the reality in the fiscal update. Mr.

Gerrard: Were there also some envir onmental liabilities which have not been booked? Mr. Pallister: That's an excellent question. We are kind of peeling away the onion here and we're hoping we're getting to the point where we don't have to peel it anymore. It's kind of that exercise, and similar to peeling an onion it causes one to weep occasionally. The actual issue the member raise s we are not yet aware, but we will investigate further any unbooked obligation that has– that exists.

Neither of my friends is assigned in those departments, so we're going to dig for the member and see if we can get any additional information. Mr. Gerrard: Yes, I appreciate the effort to provide additional information on that and on the labour contract situation. Last year, and you mentioned again, that there was spending of about $10 million per week over budget, and how will –what's the plan of your government to monitor this on a weekly basis? Because that clearly is going to be necessary if you're not going to get into trouble with overspending. Mr.

Pallister: That's the plan every government wrestles with and I expect, to be fair, that the previous government wrestled with, as well. How to get the constant pressures –spending pressures dealt with effectively while maintaining services. We know we inherited a situation where the spending pressures were very great and, generally, they weren't successfu lly addressed. So, as a consequence, deficits generally rose and de bt increased at record pace. We know the credit rating agencies expressed concerns about this. We know Manitoban's concerns about this.

So systematic change is required in the first 40 or so days. We have instituted some initial measures to ensure that our processes address proposals as they come in. I think quite frankly it is at the point where we need to take a serious look at having departments who come in with spending proposals also come in with where they think the money should come from. That hasn't been the case in the past.

But we think that, within our departments, we have very knowledgeable and very capable people who also understand the need to 'priorize' more effectively and wh o are in a good position to evaluate and assist us in our decision making. So a more consultative approach is what we're after. We'll extend that also, of course, to issues like the performance review that we have planned where people within the civil serv ice will be more than welcome to participate and encouraged to participate. This was not as effectively done in the Drummond exercise in Ontario a few years ago.

Not to the satisfaction certainly of labour friends I've spoken with; they didn't fe el that the working people within government service – providing services to government were sufficiently consulted in the process, and we do think that's an important aspect of this. And I would say to the member I appreciate him raising this issue because it gives me the opportunity to clarify why certain–that there was some confusion about this initially, and largely I expect due to my own inexperience, but people were concerned that, and the opposition did raise it, this should be open and transpare nt.

Well, it's my concern to be open and transparent, too, but at the same time, I want to recognize that there are people within our government service who wish to remain non-partisan and would be in–would be concerned about participating, even in an exercise as–of general benefit like this, would be concerned at being seen to be participating in something that they might fear reprisals for being part of, you know. The Scarth report you're familiar with noted this concern, very real concern, among folks who work in our civil service. I guess what I'm saying is I'd like to

June 10, 2016 LEGISLATIVE ASSEMBLY OF MANITOBA 673 see–I'd like to have our civil servants, not exclusively our front-line workers, but people in every aspect of our civil service, feel confident in participating in this exercis e, but I recognize that many of them would not wish their names to be published in a document or to be seen to be participating and for that to be known.

So this is a principal reason why I say that some aspects, due to the privacy obligations we have an d also due to the respect we have for people who wish to remain anonymous in pursuit of their roles within the civil service, would be protected and be able to be participants in an exercise that means a great deal to them as Manitobans and as people who a re directly involved in the provision of services as well. Mr. Gerrard: Back very briefly to The Forks . The government has moved very quickly to change the boards of the Crown corporations.

Is the government's plan to do similar changes to the appointments to The Forks board? Mr. Pallister: I just–I'm–sorry, I just missed the last part of that–to the member, through you, Mr. Chair. Mr. Gerrard: The government has appointments to the board of The Forks North Portage corporation. Is it the government's, you know, view that it's going to move quickly to replace people there, just like it has with Crown corporations? Mr. Pallister: We have moved to, and I could be wrong on the exact number, I t hink two or three boards have been addressed now; their memberships have been changed.

There are, I think, in the area of 180 boards. No work on replacement will be undertaken overly quickly. This is a significant, significant task, and I would assure all members that the methodology to be used

Document details

Collection	Manitoba — Debates (Hansard)
Citation	41-1-17c
Type	hansard
Volume / chapter	41st 1st hansardpdf 17c.pdf
Language	en
Format	pdf
Source	PROVINCIAL
Identifier	60683063a62da98ec35676159bb85aa366719cd6

Source file is stored in the law ingest library (pdf).