Manitoba Committee Hansard — 7 November 1996 (Public Utilities Committee, Sitting 14, 36th Legislature, 2nd Session)

36-2-pu14

Manitoba — Debates (Hansard)

Second Session - Thirty-Sixth Legislature of the Legislative Assembly of Manitoba Standing Committee on Public Utilities and Natural Resources Chairperson Mr. Jack Penner Constituency of Emerson Vol. XLVI No. 14- 9 a.m., Thursday, November 7, 1996

Name ASHTON, Steve BARRETI, Becky CERILLI, Marianne CHOMIAK, Dave CUMMINGS, Glen, Hon. DACQUAY, Louise, Hon. DERKACH, Leonard, Hon. DEWAR, Gregory DOER, Gary DOWNEY, James, Hon. DRIEDGER, Alben, Hon. DYCK, Peter ENNS, Harry, Hon. ERNST, Jim, Hon. EVANS, Clif EVANS, Leonard S. FILMON, Gary, Hon. FINDLAY, Glen, Hon. FRIESEN, Jean GAUDRY, Neil GILLESHAMMER, Harold, Hon. HEL WER, Edward HICKES, George JENNISSEN, Gerard KOWALSKI, Gary LAMOUREUX, Kevin LATHLIN, Oscar LAURENDEAU, Marcel MACKINTOSH, Gord MALOWA Y, Jim MARTINDALE, Doug McALPINE, Gerry McCRAE, James, Hon. McGIFFORD, Diane MciNTOSH, Linda, Hon.

MIHYCHUK, MaryAnn MITCHELSON, Bonnie, Hon. NEWMAN, David PALLISTER, Brian, Hon. PENNER, Jack PITURA, Frank PRAZNIK, Darren, Hon. RADCLIFFE, Mike REID, Daryl REIMER, Jack, Hon. RENDER, Shirley ROBINSON, Eric ROCAN, Denis SALE, Tim SANTOS, Conrad STEFANSON, Eric, Hon. STRUTHERS, Stan SVEINSON, Ben TOEWS, Vic, Hon. TWEED, Mervin VODREY, Rosemary, Hon. WOWCHUK, Rosann MANI TOBA LEGISLATIVE ASSEMB LY Thirty-Sixth Legislature Members, Constituencies and Political Afriliation Cnnstltuenc)' Thompson Wellington Radisson Kildonan Ste.

Rose Seine River Rob lin-Russell Selkirk Concordia Anhur-Virden Steinbach Pembina Lakeside Charles wood Interlake Brandon East Tuxedo Springfield Wolseley St. Boniface Minnedosa Gimli Point Douglas Flin Flon The Maples Inkster The Pas St. Norben St. Johns Elmwood Burrows Sturgeon Creek Brandon West Osborne Assiniboia St. James River East Riel Ponage Ia Prairie Emerson Morris Lac du Bonnet River Heights Transcona Niakwa St. Vital Rupertsland Gladstone Crescent wood Broadway Kirkfield Park Dauphin La Verendrye Ross mere Tunle Mountain Fon Garry Swan River J.>.art)' N.D.P. N.D.P. N.D.P. N.D.P. P.C. P.C. P.C. N.D.P.

N.D.P. P.C. P.C. P.C. P.C. P.C. N.D.P. N.D.P. P.C. P.C. N.D.P. Lib. P.C. P.C. N.D.P. N.D.P. Lib. Lib. N.D.P. P.C. N.D.P. N.D.P. N.D.P. P.C. P.C. N.D.P. P.C. N.D.P. P.C. P.C. P.C. P.C. P.C. P.C. P.C. N.D.P. P.C. P.C. N.D.P. P.C. N.D P. N.D.P P.C. N.D P P.C. P.C. P.C. PC . N DP .

769 LEGISLATIVE ASSEMBLY OF MANITOBA THE STANDING COMMITTEE ON PUBLIC UTILITIES AND NATURAL RESOURCES Thu rsday, November 7, 1996 TIME-9a.m. LOCATION- Winnipeg, Manitoba CHAIRPERSON- Mr. Jack Penner (Emerson) VICE-CHAIRPERSON - Mr. Ben Sveinson (La Verendrye) ATTENDANCE - 11 -QUOR UM - 6 Members of the Committee present: Hon. Messrs. Findlay, Stefanson Messrs. Ashton, Jennissen, Laurendeau, Penner, Pitura, Sale, Struthers, Sveinson, Tweed APPEARING: Mr. Richard Yaffe, Counsel to the Province Ms. Shirley Strutt, Legislative Counsel Mr.

Julian Benson, Secretary to Treasury Board MATTERS UNDER DISCUSSION: Bill 67-The Manitoba Telephone System Reorganization and Consequential Amendments Act *** Mr. Chairperson: Good morning. Will the Standing Committee on Public Utilities and Natural Resources please come to order this morning. This morning the committee will be commencing clause-by-clause consideration of Bill 67, The Manitoba Telephone System Reorganization and Consequential Amendment Act. Did the minister have an opening statement? Hon. Glen Findlay (Minister responsible for the administration of The Manitoba Telephone Act): Yes, I do, Mr.

Chairman. I guess, I would have to say at the beginning, every time this committee meets, there is either a storm or a pending storm . We have had a few of them along the way. I imagine some of you had trouble getting in this morning, no matter where you live. Mr. Chairman, as you know, we are here to do clause by-clause review of Bill 67. I have my package of amendments, which I know the NDP have already received, I think , late Tuesday. I will be passing it around to the rest of the committee members as a package. We are dealing with each clause on a separate basis.

I am not going to pass them as a group of amendments. I am sure all members are clearly aware that Bill 67 is quite complex. You may appreciate that a number of technical amendments have emerged since this bill was introduced. In addition, there are a few substantive issues, and I will briefly outline how these issues have been resolved. Probably the most important issue certainly relates to the new pension plan for MTS employees and retirees.

I am pleased to report, subsequent to our discussion during the presentation hearing period, that a major amount of negoti ation has gone on between MTS and the retired employees. Mr. Harry Restal, I believe, has been chairman of that committee, and has been negotiating with the president, Mr. Bill Fraser. It is my understanding that the vast majority, if not all the issues, have been resolved or are in the process of final resolution.

MTS has obtained an opinion from Buck Consultants, an actuary and an asset consultant, confirming that the new MTS pension plan will provide for benefits to present and former MTS employees and their survivors, which, as ofthe implementation date of the new plan, are equivalent in value to the benefits provided under The Civil Service Superannuation Act. In fact, the Buck Consultants' opinion goes on to point out that certain benefits out of the new plan will exceed the present

770 LEGISLATIVE ASSEMBLY OF MANITOBA November 7, 19 96 benefits under The Civil Service Superann uation Act, so that the new plan will actually confer some enhanced benefits. Secondly, MTS has received an opinion from Towers Perrin. The Towers Perrin opinion confirms that if the new MTS pension plan were effective as of September 30, 19 96, the market value of the new plan's assets would exceed the obligations of the plan on an ongoing basis.

The opinion also confirms that the market value of the new plan's assets would exceed the plan's liability for purposes ofThe Pension Benefits Standards Act, which is the feder al legislation under which the new plan will be regi ster ed. Simply put, the Towers Perrin opinion confirms its new MTS plan would be fully funded on both a going concern basis and a solvency basis if the plan were in effect as of September 30, 19 96. Thir dly, the question regar ding employee representa tion on the pension committee has been resolv ed.

MTS is proposing that there will be equal employer and employee pensioner representation on the new pension committee. Fourth ly, MTS has undertaken that any surplus in emplo yee contributions to the Civil Service Super annuation Fund will not, and I stress not, be used to reduce MTS's costs or share of contributions to the new pension plan. Fifthly, you should be aware that MTS will be res ponsible fo r any future deficiencies between the asset values and the pension obligation liabilities that may arise.

The last point I would like to make regard ing employee benefits is that other employee benefit plans will provide enhanced benefits over the current employee plans at less cost. Bef ore moving into clause by clause, I will quickly summarize the other significant amendments to Bi11 67. Bill 67 will no longer contemplate a strategic partner owning shares in MTS or an affiliate of MTS. The individual ownership restriction which relates to owner ship of shares in MTS and its affiliates by individuals and by groups of associated persons will be reduced from 15 percent of the outstanding shares to I 0 percent.

A provision will be added prohibiting MTS from continuing outside of Manitoba. This

section will not, I stress not, be repealed after the special share has been redeemed . The pref erential offering that will be made available to Manitobans will be made to Manitoba individuals only and their self -directed RRSPs and RRIFs. We are eliminating the building of a holding company or a family trust to buy under the Manitoba pref erence . By doing this, it is the ordinary Manitoban who will be able to take advantage of the Manitoba-only portion of the public offering.

As I have already indicated, the balance of the proposed amendments are technical in nature and designed to clarifY and strengthen Bill 67. Thank you, Mr. Chairman , and I am prepared to move into the clause by clause. Have the packages been distributed yet? If they will be distributed right away, so all members will have a copy of each of the amendments . Mr. Chair penon: Thank you, Mr. Minister. Did the member opposite for the official opposition have an opening statement? Mr. Tim Sale (Crescentwood): I do. Thank you, Mr. Chairperson .

But bef ore I do I wonder, the minister moved very quickly through some quite substantive amendments and if he might just clarifY the third point that he made under the continuance certificate about not repe aling. I missed his words in terms of that issue, in terms ofl believe it was head office. I am not sure which he was saying would not be repealed, and the point that immedia tely followed that. I wonder if he might just, for clarification, since these are both very substantive issues, repeat those sections. Mr. Chairpenon: Thank you, Mr. Sale. Mr. Findlay: Mr.

Chairma n, I believe the member is ref er ring to continuing outside of Manitoba? * (09 10 ) Mr. Sale: Yes. Mr. Findlay: Okay. I will read very carefully what it is. A provision will be added prohibiting MTS from continuing outside of Manitoba. This

section will not be repealed after the special share has been redeemed In -

November 7, 19 96 LEGISLATIVE ASSEMBLY OF MANITOBA 77 1 other words, the end result is that MTS continues in Manitoba forever. That is the intent. Mr. Sale: A Manitoba corporation is what, head quartered and located here, is that the intent? Mr. Findlay: Mr. Chairman, absolutely. Then the next point on preferential offering, do you also- Mr. Sa le: That is right. That was the other one I was not clear on. Mr. Findlay: Okay. The preferential offering that will be available to Manitobans will be available only to individuals and their self-directed RRSPs and RRIFs.

In other words what it means is that it eliminates holding companies, corporations in Manitoba purchasing in that period. It is only ordinary Manitobans that can purchase in that preferential period. Mr. Sale: First, I would like to thank the minister for making some clarifications on some issues, and we will be addressing each of those issues I am sure in detail as we come to those sections and attempting to understand clearly the legal ramifications and the degree of the legal protection which is being offered by these various amendments. Mr. Chairperson, we are at an historic committee meeting this morning.

I believe that this is the first time in our provincial history that a major Crown corporation has been set up for privatization, and as many people have acknowledged, if this act passes, then we will no longer have the pleasure of sitting with members of the Manit oba Telephone System Board of Directors and officers and understanding more clearly how that system serves Manitobans well and has provided for Manitobans affordable and efficient and effective and technologically advanced profitable services over many, many years and continuing to the very present time.

We also will, of course, at some point have to express our sympathy to the minister who will no longer have the appell ation of Minister responsible for the Manitoba Telephone System. While that may seem a light point, and in some ways it is a point of somewhat humorous reflection, it is nevertheless also a very serious point, because for these 80 years a minister of the Crown has always had a special responsibility to all Manitobans to ensure that their telephone system is efficient, effectiv e, available, accessible, technologically advanced, soundly administered. Let me say, Mr.

Chairperson, that in the past number of years this administration has provided good direction for the Manitoba Telephone System. It pursued vigorously a long-term plan established by numbers of governments to ensure single line service throughout rural Manitoba, one of only three telcos to have I 00 percent single line service, or virtually 1 00 percent.

I think the minister probably would want to qualifY that to 99.9 or 99.44 percent single line service-we never want to say 10 0 percent of anything-nevertheless an immense benefit for rural Manitobans in particular, so that cities like Portage Ia Prairie and others can have enhanced 91 1 service where it was previously not available, but perhaps even more important, where individuals have a level of safety and security which was not available to them under party line service and where individual businesses, and I include in this our many, many farm businesses, can have access to the modem technological tools that they need to be successful.

This government has made many great boasts, and some of them I think are fair, that rural Manitoba is enjoying a very strong economy at the present time, that there are great advantages available to rural Manitoban s in the kind of economy into which we are moving to strengthen the economy of our rural areas. I think it is clear that no modem farm person, no modem operator of an agribusiness, whether it is a family farm or a larger entity, can do that without access to modem telecommunications, access to markets around the world, to the Internet, to pricing information, to supplier information.

All of those things are crucially depende nt on telecommunications, and so the stewardship and role of this government and of other governments in ensuring that we have that kind of a system has been part of the stewardship of government from 19 08 forward. Mr. Chairperson, the fact that we are sitting here on the last day of the session and only now getting around to detailed consideration of this bill speaks to the immense complexity of doing what the government is doing by privatizing this corporation. There are so many complex issues from the maybe obvious issues of what will the

772 LEGISLATIVE ASSEMBLY OF MANITOBA November 7, 19 96 ownership structure of the corporation look like, what will the land transfers and asset transfers require, what kinds of Orders-in-Council, what kinds of division of the holdings of various things where MTS currently shares easements and rights of way and where it shares premises and where it shares in some cases, I believe, even some equipment with other corporations.

Certai nly, there is an immense amount of careful, thoughtful legal work to be done as well as, as I suspect, a requirement for a great deal of good will to sort out the complexity that we have before us, symbolized in actually a rather short bill. Mr. Chairperson, we are very concern ed that the detail contained in the amendments to this bill, which are in some cases housekeeping, probably about three-quarters of them would be termed housekeeping amendments, but a good quarter of them are very substantive amendments.

We were, and I think all Manitobans were outraged by the prese ntation to this committee of a package of amendments late in an evening and the demand that this committee consider such complex issues as the elimination of provision for a strategic partner, the red uction from 15 to 10 percent of any individual's holdings, as the minis ter has outlined this morning, many complex pension issues.

We had heard during our committee hearings from retired MTS employees and from members of the current plan, both union and the management union representatives, that they were deeply dissatisfied with the current state of neg otiations, that they were even more profoundly dissatisfied with the actual wording in the bill of the pension plan and the associated clauses in

Section 15 of the proposed act. *

(0920) Now, Mr. Chairperson, the government has known for at least a year, at minimum, that it was going to privatize MTS, even though it lied to people in the election and it lied to people after the election that there were no plans. There were indeed, as it is now clear, significant plans to privatize MTS. The member for St. Norbert (Mr. Laurendeau) does not like our use of that word. I do not like it either. It certainly does not give me any pleasure to serve in a Legislature where the words of the First Minister and of other ministers of the Crown turn out to be hollow.

I do not think any of us enjoy serving in such a situation, but on the other hand, the saying which was quoted to us at least once during the public hearings, that for evil to triumph all that is required is for good people to do nothing, is also true. So when promises are made and then broken in the most cavalier fashion, it is incumbent on all people, but particu larly it is incumbent on those of us who are entrusted with representing Manitobans, to do our best to discern the truth and to then do our best to speak the truth. The role of the faithful servant is defined in one place as speaking truth to power.

The government is power in this situation. The government has power. The government embodies the power given freely, given democratically, given after centuries of struggle to artic ulate that democracy to a thing called government. So government has a sacred trust, and I use that word advisedly as well. It is a holy trust to speak truth, to not dissemble and to only change its word when there is demonstrated serious reason to say such a new and unknown situation has arisen that the previous process or the previous structures cannot serve in this new situation.

Therefore, much as we regret that we said one thing in the past, we must now, for the good of Manitobans, do another thing in the future. Now, Mr. Chairperson, when such a situation arises, what would be the nonnal duty of someone entrusted with a sacred trust?

It would be at the very least to make available to all those who gave their trust the full and complete circumstance that caused the requirement for change to be so pressing that a mere matter of days after assurances were given that, no, there were no plans to privatize MTS and the only one talking about the priva tization of MTS was the member for Thompson (Mr. Ashton), and the only party considering the problem of privatizing MTS was the New Democratic Party, when patently and clearly and on the record now, we know this not to be the case.

So the first requirement would be to make it plain to all Manitobans why this new circumstance had arisen, what the urgency was, and to plainly share with Manitobans data as objective as can be obtained by government in a form and in locations accessible to Manitobans,

November 7, 19 96 LEGISLATIVE ASSEMBLY OF MANITOBA 773 particularly those Manitobans who live in parts of our province where telephones are even more vital and where their affordability and acces sibility, functionality are even more an issue than they are for us who live in urban settings. As was said more than once during our presentations, it is one thing, though not desirable in our modern world, to go next door to make a phone call and quite another thing to have to go a number of miles to make a phone call, and you know, Mr.

Chairperson, I think members opposite and members on this side of the House suffer from a very real problem. It is a problem that sometimes poisons our debates, and it is regrettable when that happens, and I would acknowledge that both sides-and I take personal responsibility for my

part in this-sometimes poison debate, because we do, by virtue of the fact that this is to a significant extent a class-based, sociodemographic representation that we enjoy here, work with disproportionately more poor people in our ridings than the Conservative Party does. Now, that is not said in any blame. It is simply said as a reflection of demographic fact. The inner part of this city has not been for decades represented by the party of the members opposite. The North has not been represented by members of the party opposite for a long time. It has in the past at various points, but not for quite some time.

We have a much stronger sense than government does, I think, of the urgency of the fact that we know from our work, from our involvement with our constituents, that slowly, slowly, but very clearly, fewer and fewer poor people have access to a telephone. As I said in committee and acknowledge, my partner works in an inner city drop-in centre where many people on social assistance are there. Most of them have some form of handicap, whether it is mental or physical. Increasingly, she reports that more and more of these folks are giving up their telephone because, at $17 5 a month, they cannot do anything else.

That is what single people on social assistance have to live on after their rent is paid. Now, I would ask members opposite not to trivialize that issue because in the United States of America, as phone rates have skyroc keted with privatization and with deregulation, the number of Americans with phones has fallen. Now, it has not fallen by 50 percent, but it has fallen from the high nineties to the low nineties, and in Canada the same thing will inevitably happen as phone rates escalate.

So the first duty of a government that has-let us give the gov ernm ent the scenario that it genuinely, although I have trouble with this, but let us give the scenario that it genuinely woke up and suddenly realized that 70 percent of the phone company's revenues were in fields where alternative suppliers were present. Now, I am sure this was no surprise to the telephone company, and I am sure it was no surprise to the minister responsible because he is a well-informed and competent minister. Let us give the government the idea that, yes, they woke up one morning and this was news to them.

What should they have done? The first thing is, they should have made available to all Manitobans factual information about this issue in open public ways, using all of the tools that they are so prone to use in crisis to make their case, to make their case not rationally or with data, but to make their case emotionally, with propaganda sheets devised by the former spin merchant of the Premier, Barbara Biggar and her company, and to shamelessly use not their own assets as a government or party, but the assets of the Manitoba Teleph one System, as though Mr.

Chairperson, the Manitoba Telephone System Board of Directors had approved the sale, this privatization, when in fact, they had not even been consulted. The decision had not been taken to them, only the chairperson of the board had much involvement in this decision. The issue, as the Premier (Mr. Filmon) said in the House, was not a management issue. *

(0930) Now, it is really interesting, the government takes pride in the fact that under its stewardship this company has made solid profits, has invested wisely in services to Manitobans, yet its board of directors was apparently not competent to use its wisdom to even advise the govern ment. Even if the government did not want to have the board of directors move a motion requesting privatization, because of these new circumstances that so ratio nally and logically required a change in the mana gement structure, ownership, even if the government did not want the advice of the board of directors, they

774 LEGISLATIVE ASSEMBLY OF MANITOBA November 7, 19 96 could have at least have gone to them and said let us get some information, some credible, logical, system-wide information based on privatizations elsewhere, based on this new technological environment.

Let us get out to rural and northern and southern and urban Manitoba, let us hold those public meetings, let us mail stuff out to people, let us explain this new circumstance to which we awoke one s ummer morning after the Crown Corporations Council reported and said, my goodness, you are at risk, folks, you better change, or at least consider how to manage that risk. But they did not do so; they did not do so. They have had one year to help Manitobans understand in a dispassionate way what the reasons for this change are. Now, Mr.

Chairperson, the opposttlon has been pil loried for going around and doing what the government was apparently unwilling or afraid to do, which is to say, come and meet with us, not as the Premier said this morning, on radio, at a by-invitation only coffee and chat, where those who are invited are very clearly members of the Conservative Party, and where the meetings are not publicized as open and public, at least not the ones in Winnipeg, certainly not the one that was held in my constituency at Crescentwood Community Club. It came as quite a surprise to the Premier (Mr.

Filmon) and his cabinet that there were many people there who would have liked, indeed, to ask questions and would have liked to approach the Premier at the podium and say, Mr. Premier, I do not understand this decision. The Premi er (Mr.

Filmon) at that evening, which I was present at the back of the room, essentially made a speech that could be s ummarized as the world is changing, the world is changing very rapidly, change is difficult, change for all of us is difficult, but we have to change because the world is changing and it is changing very rapidly, and change is difficult, but we all have to change because the wo rld is changing and it is changing very rapidly. It went around and around and around in circles. Mr. Chairperson, change for change's sake has no ethical, moral, or other content; it is just change.

It is just revolution like a wheel revolves. It is not based on the normative values of change. Change ought to have a normative value. What is the value of the change, not simply what is the change. We can change things all the time, but we do not get anywhere when we do so unless there is a direction and a normative content to it. The government made no information whatsoever available. What would be the second thing?

The second thing that a government really concerned about this might do would be to recognize that when you divest yourself of a $1 .5 billion asset, including the pension assets, that this is an extraordinary circumstance. If the government was not willing to do the appropriate thing of going around and informing Manitobans in a full and fair way, then the govern ment might at least have had the courtesy to sche dule public hearings on this bill, formal public hearings, in places other than Winnipeg.

It surely came as no surprise to government that in November and late October, it is a law of nature that there will be snowstorms. In fact, it is a law of nature that there will be a snowstorm on Halloween. I am not sure where it is written down, but I can remember a fair number of Halloweens standing in my snowmobile suit and boots while my kids banged on doors, shivering, high on chocolate, and that was about the only thing that was keeping them going. Indeed, we had another one of those storms this year.

So it should have come as no surprise that the government was pilloried by such groups as MSOS and the Union of Manitoba Municipalities, both for its decision to privatize and for the process of privatization. There was ample, ample, ample opportunity to have at least public hearings, and more preferably, the first thing, gov ernment should have done a campaign of dispassionate, rational, data-based information available to Manitobans. Now, Mr. Chairperson, in concluding my remarks, let me say that it is clear that government has some of this info rmation. Our very embarrassed Premier (Mr.

Filmon) stood in the hall the other day in the serum and ackno wledged to reporters that yes indeed, government and cabinet has studies performed by groups that he would not identify. He identified them as people who were competent in the field. Now if government has such information, surely if it bears out their case, they should make that information available. There is nothing to fear from clear information. I would ask those who inhabit the back benches if they have seen those studies. I would just acknowledge that -

November 7, 1996 LEGISLATIVE ASSEMBLY OF MANITOBA 775 it is much easier to be a backbencher in opposition as we at least get to participate in the debate. To be a backbencher in governm ent I think is very difficult often, because while you can serve your constituents, you do not have as much opportunity to be engaged in policy develop ment and in the House. I would ask the four backbenchers who are here, have you seen and read the detailed studies that cabinet has on the privatization of MTS? Have you read the rate implication studies, or have you read studies at all, and were there rate implications in them?

Have you read any major piece of rational, external information generated at government's request to sustain the decision to privatize this corporation? Have you in your caucus studied this information and debated it and come to a mind in caucus that you can defend to your constituents? Have you seen this information? Is there such information, and if it sustains the case that government is making, why is it not public?

Why, when the New Democratic Party goes to a reputable consulting firm in Toronto, which has been an intervener and served interveners such as the Manitoba Society of Seniors and others at CRTC hearings and clearly knows its business, understands the regulatory environment, that is why we went to them, because they are professionals. We tabled information that has a very disturbing fact in it, at least an alleged fact, which flies in the face of, goes against all of the assurances of the Premier (Mr. Filmon), the Minister responsible for Telephones (Mr.

Findlay), that the fact of privatization will have no bearing on rates. It is very clear that this finn does not believe that is correct. Now this is not just an assertion on their part. They not only asserted it, they gave you the mathematics. The gave you the formulas they used; they gave you their methodology; they gave you their references to CRTC.

They referenced the fact that the Manitoba Telephone System itself applied in the summer to have in its rate application a provision for what is called an exogenous factor, and the exogenous factor being whatever costs of privatization or other effects of privatization that we cannot now foresee to be allowed as part of our going in rate as a private corporation under the rate cap proposals. When the NDP went to that organization and said, give us your views, and we tabled the views, we gave them to everybody.

Yes, they sustain our case, but we knew they would because the reading of the CRTC ruling in Alberta makes that very plain. *

(0940) If the government knows this to be wrong, why will you not put forward the data that shows that it is wrong? Why will you not table that information? Is it that you do not have it, or that you do have it and it sustains the view of the Ontario consultant and the CRTC in regard to Alberta? We have asked repeatedly, do the backbenchers have the data? Will you be able to go to your consti tuents and say, all of the opposition is wind and rhetoric. The Union of Manitoba Municipalities is comprised of those who do not understand the situation and have no access to competent advice.

So their opposition, the opposition of every single municipality in this province to what you are doing, is based on fearmongering by the NDP. Mr. Chairperson, when was the last time the NDP had the power to fearmonger in the council of Morden, Manitoba? When was the last time we had the ability to fearmonger in the Union of Manitoba Municipalities? You demean the elected officials of this province when you suggest that they are so feeble-minded that the NDP can just walk in and tell them to pass a motion. You demean those people by suggesting they are open to such crass manipulation.

They are not fools; they do not take their decisions lightly; and yet their president stood here and told you you were wrong and challenged you to make a case to the contrary. Not a case of the world is changing, change is difficult, we must change, the world is changing, change is difficult, we must change, but a rational case based on some data. If you have the data, table it. So we will now move into clause-by-clause consideration, and we will do our homework carefully, and I expect that we will have quite a number of questions. With those remarks, Mr.

Chairperson, I think we should begin, unless there are other members of the committee who wish to put some remarks on the record. Mr. Chairperson: Thank you very much, Mr. Sale. Are there any further comments by committee members at this time? Seeing none, we will then move into clause by clause con sideration ofBill 67. During consideration of the bill, the table of contents, the title and the

preamble are postponed until all other clauses have been considered in their proper order. Is that agreed? [agreed]

776 LEGISLATIVE ASSEMBLY OF MANITOBA November 7, 1996 Shall Clause I (

I) pass? Mr. Findlay: There are nine amendments in this partic ular

Section I. Mr. Chairman, I ask you, do you want me to read each of the nine in

Section I into the record and move them and discuss them all, or is there a desire just to do them one at a time? Mr. Chairperson: Let us proceed with one at a time. Mr. Findlay: Okay. Mr. Sale: I think one at a time is preferable, Mr. Chairperson, but read them all in and get them on the table. Mr. Findlay: All nine, read them all in now. Mr. Sale: Mr. Chairperson, with the advice of the clerk, I think that we have to proceed in the procedurally correct manner.

I have no objection if it is procedurally correct for the minister to read all the amendments in at the present time, but I believe we have to pass them ind ividually. I do not believe we can pass them as a group. So at the advice of the Chair and the clerk, we should proceed. Mr. Chai rperson: There are two ways we can do this. With the leave of the committee, we can get the minister to read all of them onto the record and then we can proceed in passing them singly after that. So what is the wish of the committee, that we read all of them into the record and then pass them singly? [agreed] Mr.

Minister, you may proceed. Mr. Findlay: Mr. Chairman, I move THAT the definition "associa te" in subsection 1(1) be amended by adding "or" at the end of clause (

e) and by striking out clause (

f) and substituting the following: (

f) a person with whom that person has entered into an agreem ent or arran gement, other than only by the granting of a proxy, under which such persons agree to act or do act in concert, whether by active participation or passive consent, with respect to any of their interests, direct or indirect, in the issuer; ("liens") (French version) II est propose de remplacer l'alineaj) de Ia definition de "liens" au paragraphe 1 (1) par ce qui suit:

f) Ia personne avec laquelle elle a conclu une entente ou un arrangement, exception f aite du'une procuration , en vertu desquels e/les s'entendent pour agir de concert ou agissent de concert , que ce soil par participation active ou par consentement pass if. a /'egard de interets qu 'el/es ont dans /'emetteur. ("associate" ) Mr. Chairperson: Mr. Minister, might I suggest that you oot indicate that you move every one of them as you read them. It would be preferable if you read them all and then we will move them as we consider them. Mr. Findlay: Thank you, Mr. Chairman.

The next one IS THAT the defmition "district registrar" in subsection 1(1) be struck out and the following substituted: "district registrar" means a person having the powers of a district registrar under The Real Property Act or the powers of a registrar under The Registry Act; ("registraire de district") (French version) II est propose de remplacer Ia definition de "registraire de district" au paragraphe 1 (1) par ce qui suit: "registraire de district" Personne inveslie des pouvoirs conflres a un registraire de district en vertu de Ia

Loi sur les biens reels ou des pouvoirs con fores a un registraire en vertu de Ia

Loi sur /'enregistrement fo ncier. ("d1strict registrar ") Next, is THAT the definition "foreign government" in subsection I (

I) be struck out. (French version) II est propose de supprimer Ia definition de "gouvern ement etranger .. au paragraphe 1 ( 1 ). Mr. Sale: Excuse me, Mr. Chairperson. My package does not seem to have that particular amendment. Is that

November 7, 1996 LEGISLATIVE ASSEMBLY OF MANITOBA 777 a new amendment or is it-well, I apologize if it is a charge, title, certificate of title or certificate of photocopying problem, but I do not have that amend- registration, ment. Mr. Chairperson: Mr. Sale, you are referring to the foreign government on e. Mr. Sale: Yes. Mr. Chairperson: Could we make sure Mr. Sale has a copy, and check with all members of the committee that they all have copies. Mr. Sale: Thank you, Mr. Chairperson. Mr. Chairperson: You may proceed, Mr. Minister. Mr. Findlay: Mr. Chairman, the next is THAT the definition "indebtedness to the Crown" in subsection l(

l) be amended by striking out "coming into force of this Act" and substituting "coming into force of this section". (French version) II est propose d'amender Ia definition de "endettement envers Ia Couronne " au paragraphe 1( 1) par substitution, a "de Ia presente /oi", de "du present article". Next, is THAT the definition "instrument" in subsection I (

I) be struck out and the following substituted: "instrument" includes (

a) a caveat or an instrument within the meaning of The Real Property Act or The Registry Act, (

b) an Order in Council issued by the Lieutenant Governor in Council for the purpose of conveying the custody, control and administration of land or any other interest in land, (

c) a right-of-way agreement, easement agreement or other agreement, a transfer, assignm ent, licence, permit or rese rvation to use property, a mortgage, encumbrance, (

d) a judgment, order, direction, appointment, approval or determination of a court, judge or other constituted authority, (

e) a pleading, notice or document in an action or other proceeding in a court, (

f) a document issued, registered, filed, lodged or deposited by or with a district registrar, and (

g) a document issued, registered, filed, lodged or deposi ted in the register evidencing the disposition of Crown lands kept and maintained pursuant to the provisions of The Crown Lands Act; (''instrument") (French version) II est propose de remplacer Ia definition de "instrument " au paragraphe 1 (1 ) par ce qui suit: "instrument" Sont assimi/es un inst rument les documents suivants: a) /e notifications d'opposition ou les instruments au sens de Ia

Loi sur /es biens reels ou de Ia

Loi sur l 'enrgistremen t fa ncier; b) /es decrets du lieutenant-gouverneur en consei/ ayant pour but de transporter Ia garde et Ia gestio n d'un bien fo nd s ou un interet dans celui-ci; c) /es ententes, notamment /es ententes de droit de passage et /es ententes de servitude, les trans forts, les cessions, /es licences, /es permis d'utilisation ou les mises en reserve de biens-fon ds, les hypotheques, les grevements, les charges, les titres, les certificats de

titre et /es certificats d'enregistrement; d) /es fu gements , /es ordonnances , les directives, les nominations et les approbations ou les determinations d'un trib unal, d'un juge ou d'une autre autorite constituee;

e) les actes de procedure ainsi que les avis ou les documents lies a une action ou a une autre procedure judiciaire;

778 LEGISLATIVE ASSEMBLY OF MANITOBA November 7, 1996

f) les documents delivres, enregistres, deposes ou inscrils par un registaire de district ou aupres de lui;

g) les documents delivres, enregistres, deposes ou inscrits dans /es regis/res servant a attester /'alienation de terres domania/es et tenus et gardes a jour conf ormement aux dispositions de Ia

Loi sur les terres domaniales. ("instrument ") Next, THAT the defmition "non-resident of Canada" in subsection l(

l) be amended by striking out clause (c). [French version] II est propose de supprimer l'alinea

c) de Ia definition de "n on -resident du Canada" au paragraphe 1 ( 1 ). Next, THAT the definition "non-voting common share" in sub

section l(

l) be struck out and the following substituted: "non-voting common share" means a share of the corporation the holder of which is not entitled to receive notice of or attend or vote at meetings of shareholders except as specifically provided under The Corporations Act, is entitled to receive any dividend declared by the corporation and is entitled to share in the distribution of the assets of the corporation upon dissolution subject to the rights, privileges, and conditions attaching to any other class of shares of the corporation ranking in priority thereto; (''action ordinaire sans droit de vote") [French version] II est propose d'amen der Ia definition de "action ordinaire sans droit de vote" au paragraphe 1 (1) par ce qui suit: "action ordinaire sans droit de vote" Action de Ia Societe qui ne confi re pas a son titulaire le droit de recevoir les avis de convo cation aux assemblees des actionnaires, d'assister a ces assemb/ees ou d'y voter, sauf dans les cas precis prevus par Ia

Loi sur les corporations, mais qui lui confi re celui de recevoir les dividendes que declare Ia Societe et de participer, en cas de dissolution de Ia Societe, a Ia repartition des actifs. sour reserve des droils, des privileges et des conditions rattaches au x autres categories d'actions de Ia Societe qui on / priorile de rang. ("non -voting common share") *

(0950) The next, Mr. Chairman, is THAT the definition "voting common share" in subsec tion 1 (

l) be struck out and the following substituted: "voting common share" means a share of the corporation the holder of which is entitled to receive notice of and attend and vote at meetings of shareholders, to receive any dividend declared by the corporation and to share in the distribution of the assets of the corporation upon dissolution subject to the rights, privileges, and conditions attaching to any other class of shares of the corporation ranking in priority thereto: ("action ordinaire avec droit de vote") [French version] II est propose de remplacer Ia definition de "action ordinaire avec droit de vote" au paragraphe 1 ( 1) par ce qui suit: "action ordinaire avec droit de vote" Action de Ia Societe qui confire a son titulaire le droit de recevoir les avis de convocation au x assemblees des aclionnaires, d'assister ac es assemb/ees et d'y voter. de recevoir les dividendes que dec/ar Ia Societe et de participer. en cas de dissolution de Ia Societe, a Ia repartition des actifs, sous reserve des droits, des privileges et des conditions rattaches au x au /res categories d'a ctions de Ia Societe qui ont priorite de rang . (' votmg common share") Next, THAT the definition "voting share" in subsection 1 (

I) be struck out and the following substituted: "voting share" means a share of an issuer the holder of which is entitled to receive notice of and attend and vote at meetings of shareholders on resolutions electing

November 7, 1996 LEGISLATIVE ASSEMBLY OF MANITOBA 779 directors, and includes a voting common share; ("action avec droit de vote") (French version] II est propose de remplacer Ia definition de "action avec droit de vote" au paragraphe 1 (1) par ce qui suit: "action avec droit de vote" Action d'un emetteur qui con fire a son titulaire le droit de recevoir les avis de convocation aux as semblees des actionnaires, d'assister a ces assemb/ees ou d'y voter relativement au x resolutions visant /'election des administrateurs.

Sont assimi/ees au x actions avec droit de vote les actions ordinaires avec droit de vote. ("voting share") Those, Mr. Chairman, are the nine proposed amendments to subsection 1(1). Mr. Chairperson: We will then proceed to the moving of the individual amendments. Mr. Findlay: Mr. Chairman, I move- An Honourable Member: Dispense. THAT the definition "associate" in subsection 1 (1) be amen ded by adding "or" at the end of clause (

e) and by striking out clause (/} and substituting the fo llo wing: (/} a person with whom that person has entered into an agreement or arrange ment, other than only by the granting of a proxy, under which such persons agree to act or do act in concert, whether by active participation or pa ssive consent, with respect to an y of their interests, direct or indirect, in the issuer; ("liens") (French version] II est propose de remplacer l'alinea

f) de Ia definition de "liens" au paragraphe 1 (1 ) par ce qui suit:

f) Ia personne avec laquel/e e/le a conclu une ente nte ou un arrangement, exception fa ir du 'une procuration, en vertu desquels elles s'entend en t pour agir de concert ou agissent de concert, que ce soit par participation active ou par consentement pass if, a l'egard de interets qu 'el/es ont dans l'emetteur. ("associate") Motion presented. Mr. Sale: Mr. Chairperson, I looked at the amendment, and I think it is quite minor, but could the minister just for the record indicate what the change is and why it was made? Mr.

Findlay: The defin ition of associate is expanded to clarify the concept of acting in concert and to correct a typographical error. Mr. Sale: Could the minister indicate what the words "active participation or passive consent" mean in law? Passive consent, as a concept, troubles me as to what this is actually meaning.

I do not know whether I passively consent when I do not know that something has happened to which I ordinarily would be entitled to information but fail to receive that information, for example, in regard to a trust involving a minor or a trust involving a mentally inc ompetent person, or any other shareholding arrang e ment or corporate arrangement where a corporation is in some associate status. What does "passive" mean in law in regard to this? Mr. Findlay: Mr. Chairman, I am informed it means "acquiescence." Mr. Sale: I do not want to make a major point of this, and I am not trying to.

I just am wondering whether legal counsel-and, Mr. Chairperson, I have no objection if the minister would like to have the legal counsel explain directly. I do not understand these things, and I am happy to have others speak at the committee if that is the committee's wish. I know there are traditions about that, but if he could simply give us a short explanation of what "passive cons ent" means, I would be happy to have that. Mr. Findlay: Mr. Chairman, I would ask if there is leave to have legal counsel comment directly on the

interpretation. Mr. Chairperson: Is there leave? [agreed] Mr. Richard Yaffe (Counsel to the Province): Mr. Chairman, the intentio n of the addition of the words "passive consent" is to broaden the scope of the conce pt of associated persons so that persons who are silent initially, and then subsequently it is determined are acting with a common goal or are acquiescing with respect to a common goal, would be caught by the definition of associate.

780 LEGISLATIVE ASSEMBLY OF MANITOBA November 7, I 996 Mr. Chairperson: Thank you, Mr. Yaffe. Mr. Sale: So would that cover the situation of two companies who had some kind of silent agreement and might be involved with MTS, the new MTS, in some formal business arrangement, and that silent agreement had implications of common process, common purpose, but by virtue of its silence was not known, and so then subsequently some event takes place that has legal implications, this definition would link those companies by their passive or silent consent and have that effect. Is that correct? Mr. Yaffe: Mr.

Chairman, that is correct. Mr. Sale: I thank the chairperson and the minister for that. Can I just clarify, Mr. Chairperson, that the consent of the committee was meant not just to cover this one

section but to allow for counsel to provide advice throughout? Mr. Chairperson: Amendment-pass; Mr. Findlay: Mr. Chairman, I move- Mr. Chairperson: Dispense. THAT the definition "distrid registrar" in subsection 1 ( 1) be struck out and the fo llo wing substituted: "distrid registrar" means a person having the powers of a district registrar under The Real Property Act or the powers of a registrar under The Registry Act; (''registraire de district ") (French version) II est propose de remplacer Ia definition de "registraire de distrid" au paragraphe 1 (1) par ce qui suit: "registraire de distrid" Personne investie des pouvoirs con fores a un registraire de district en vertu de Ia

Loi sur les biens reels ou des pouvoirs con fores a un registraire en vertu de Ia

Loi sur /'enregistrement fo ncier. ("district registrar ") Mr. Chairperson: Amendment-pass. Mr. Findlay: I move- Mr. Chairperson: Dispense. THAT the definition 'foreign government " in subsection 1 (1) be struck out. (French version) II est propose de supprimer Ia definition de "gouvernement etranger" au paragraphe 1 (1). Motion presented. Mr. Stan Struthers (Dauphin): We heard a lot of presentations at the public meetings that were held here in this room express a great deal of concern about where the shares of MTS will eventually end up.

We had one fellow in particular that comes to mind who talked speci fically about our phone company becoming an American phone company. There is a great deal of worry out there amongst people. I do not know if this is just a teclmical thing that the minister is addressing here, but I am wondering why the definition of foreign government has to be deleted, has to be struck out in that section. Is there an explanation for that? Mr. Findlay: There are actually two separate issues here. You will fmd elsewhere in the bill that foreign ownership is restricted forever at 25 percent, an ongoing provisi on.

We are striking it out because now it is unnec essary to have that because we are prohibiting ownership of the shares by any government. It is a I 00 percent share offering to public and there will be no government ownership. Mr. St ruthers: The minister said that there were two sides to this, two reasons. I do not believe I heard the second one. You explained the first one and that seems to be fairly clear to me, and what was the second part that he was talking about? Mr. Findlay: Because of the noise in the background, I can und erstand you could have difficulty.

I think you were referring to a presenter who was worried about ownership going outside of the country into the U.S That is covered in my first comment that there will never be more than 25 percent foreign ownership. What we are doing is, we are providing for here, that no government shall own any portion of MTS. So the need for the definition of foreign government is no longer necessary.

November 7, 1996 LEGIS LATIVE ASSEMBLY OF MANITOBA 78 1 Mr. Sale: For greater clarification, that is the new

Section 8. 1( 1). Mr. Findlay: Yes. Mr. Chairperson: Amendment-pass. Mr. Findlay: I move- An Honourable Member: Dispense. THAT the definition "indebtedness to the Crown " in subsection 1 (1 ) be amended by striking out "coming into for ce of this Act" and substituting "coming into fo rce of this section". (French version] II est propose d'amender Ia definition de "endettement enver s Ia Couronne" au paragraphe 1( 1) par substitution, a "de Ia presente loi ", de "du present

article ". Motion presented. ... (1 000) Mr. Sale: I am not clear why this

section reference, indebtedness to the Crown. It seems strange in that this is

Section 1(1) , why do we refer to the

section when indebtedness to the Crown, the special share function in this act is such a central issue and one to which some of the initial comments of the minister were addressed. After the special share is extinguished, the minister is attempting, by other amendments, to protect some of the things government wishes to protect. Why

section rather than act? Mr. Findlay: Mr. Chairman, the bill will be proclaimed in different stages so we have made many changes throughout the amendments. When coming into force this act is replaced by coming into force this section. So when the

section is actually proclaimed, this provision is covered. Mr. Sale: Mr. Chairperson, I am not a regulatory drafter, but I do not understand.

Section 38 says this act comes into force on a day fixed by proclamation, so

Section 38 covers the whole act. There does not seem to be, in other sections, something saying this

section comes into force on a day fixed by proclamation. There is just one overarching statement about coming into force. So help me understand the confusion that is in my head if nowhere else. Mr. Findlay: Mr. Chairman, effectively I have had confirmed what I just said, that the bill is proclaimed in stages, portions, sections, if we want to change that statement here so that it allows the indebtedness to the Crown to become enacted when that

section happens. I interjection] Oh, yes. I am sorry. Also

Section 38 is also being amended, to which the member referred to, so that amendment is to come to effectively do the same thing there. There is another element here. The

Interpretation Act-maybe I will ask counsel to comment directly to be sure we get this clear. Ms. Shir ley Strutt (Legislative Counsel): In The

Interpretation Act there is a provision that indicates, if you state in

an act that it comes into force in proclamation, that you can proclaim the act in parts or by section, and this is being amended to make sure that this particular

section comes into force, therefore, on proclamation of the section. It is a standard thing that we do in drafting. Does that clear that up? Mr. Sale: Mr. Chairperson, just for the record, I suspect that all of us are fatigued. I did read also

Section 38 last night, but it did not stay in my head. There are proposed amendments on that section, so I thank the minister for clarifYing that issue. Mr. Chairperson: Amendment-pass. Mr. Findlay: Mr. Chairman- An Honourable Member: Dispense. THAT the definition "instrument" in subsection 1 ( 1) be struck out and the fo llowing substituted: "instrument" includes (

a) a caveat or an instrument within the meaning of The Real Property Act or The Registry Act,

782 LEGIS LATIVE ASSEMBLY OF MANITOBA November 7, 1996 (

b) an Order in Council issued by the Lieutenant Governor in Council for the purpose of conveying the custody, control and administration of land or any other interest in land, (

c) a right-of-way agreement, easement agreement or other agreement, a transfer, assignment, licence, permit or reservation to use property, a mortgage, encumbr ance , charge, title, certificate of title or certificate of registration, (

d) ajudgment, order, direction, appointment, approval or determination of a court, judge or other constituted authority, (

e) a pleading, notice or document in an action or other proceeding in a court, (/) a document issued, registered, filed, lodged or deposited by or with a district registrar, and (

g) a document issued, registered, filed, lodged or deposited in the register evidencing the disposition of Crown lan ds kept and maintained pursuant to the provisions of The Crown Land s Act; ("instrument ") (French version) II est propose de remplacer Ia definition de "instrument" au paragraphe I (

I) par ce qui suit: "instrument" Sont assimi/es un inst rument les documents suivants:

a) les notifications d'opposition ou les instruments au sens de Ia

Loi sur les biens reels ou de Ia

Loi sur /'enrgistrement fo ncier;

b) les decrets du lieutenant-gouverneur en conseil ayant pour but de transporter Ia garde ell a gestion d'un bien fon ds ou un interet dans ce/ui-ci;

c) les ententes, notamment /es ententes de droit de passage et /es ententes de servitude, Jes transferts , /es cessions , /es licences, Jes permis d'utilisation ou les mises en reserve de biens-fon ds, les hypotheques, les grevements, les charges. les titres, /es certificats de

titre et les certificats d'enregistrement;

d) les jugements, /es ordonnances, /es directives, /es nominations et /es approbations ou les determinations d'un tribunal, d'un juge ou d'une autre autorite constituee;

e) les actes de procedure ainsi quye /es avis ou les documents lies a une action ou a une autre procedure judiciaire; f) /es documents de/ivres, enregistres. deposes ou inscrits par un registaire de district ou aupres de lui; g) /es documents de/ivres. enregistres, deposes ou inscrits dnns /es registres servant a attester /'alienation de terres domaniales et tenus et gardes a jour conf ormement au x dispositions de Ia

Loi sur les terres domaniales. ('instrument ") Motion presented. Mr. Sale: Mr. Chairperso n, the change here seems to be the addition of a number of clauses, particularly the Order-in-Council, which becomes (

b) and some other wording changes to make this a much more exhaustive definition of instrument than was already in. Could the minister indicate what the role of an 0/C here is, why an 0/C might be necessary? Mr. Findlay: There are certainly parcels of land that are held in the name of the Crown for MTS, and we have to be sure that we have provisions for all the means of conveying those kinds of lands to the MTS of the future. The intent is fully that any land that is held in the name of MTS will become land ofMTS in the process here. This is just to be sure we have all the vehicles of conveyance in place. Mr.

Chairperson: Amendment-pass. Mr. Findlay: I move- Mr. Chairperson: Dispense. THAT the definition "non-resident of Canada" in subsection I (1 ) be amended by striking out clause (c). (French version) II est propose de supprimer J'alinea

c) de Ia defimtion de "non-resident du Canada" au paragraphe I( /)

November 7, 1996 LEGISL ATIVE ASSEMBLY OF MANITOBA 783 Motion presented. Mr. Sale: This is the first-well, no it is not, it is the second-of amendments that go to a very central issue of the future of the corporation in terms of the ownership. Again, I do not have any legal expertise, let alone the legal expertise required to enquire in this area, but in law, is a government a person, and is a foreign government a foreign person? I guess to be plainer, I cannot see what is lost by leaving this in. If it is unnecessary it will not be the first act in Manitoba's history that has an unnecessary clause in it.

We have lots of examples of acts which attempted to foresee problems which perhaps were never there, so I am uncomfortable with eliminating this. I am uncomfortable in terms of potential future developments within our own country and potential developments which none of us can foresee, because we all take history to be a slow thing, but as the last 20 years has shown us, the evolution of the world makes it a place that will be barely recognized from 20 years ago in terms of nationalities, boundaries, legal entities.

Countries have changed their shape and texture and governments in ways that no one could possibly have foreseen. So I am wondering why it is a good idea to eliminate this. If it does no harm, then maybe we should take the Hippocratic oath as a guide that our role here is to do no harm. We hope to do good, but we must at least do no harm. So if it does no harm, why not leave it in? (Mr. Vice-Chairperson in the Chair) Mr. Findlay: Mr. Chairman, it does no harm to leave it in ifyou want to leave it in. Mr. Sale: Mr. Chairperson, I thank the minister for that.

If that is the case, would he withdraw the amendment then? Mr. Findlay: Mr. Chairman, we would be prepared to withdraw it if that is the will ofthe committee. Mr. Vice-Chairperson: Is it the will of the committee to withdraw the amendment? [agreed] Agreed? The amendment is withdrawn. Mr. Findlay: Mr. Chairman, I move- An Honourable Member: Dispense.

THAT the definition "non-voting common share" in subsection 1 (1 ) be struck out and the fo llo wing substituted: "non-voting common share" means a share of the corporation the holder of which is not entitled to receive notice of or attend or vote at meetings of shareholders except as specifically provided under The Corporations Act, is entitled to receive an y dividend declared by the corporation and is entitled to share in the distribution of the assets of the corporation upon dissolution subject to the rights, privileges, and conditions attaching to an y other class of shares of the corporation ranking in priority thereto; ("action ordinaire sans droit de vote'') (French version] II est propose d'amender Ia definition de "action ordinaire sans droit de vote" au paragraphe 1( 1) par ce qui suit: "action ordinaire sans droit de vote" Action de Ia Societe qui ne confore pas a son titu/aire le droit de recevoir /es avis de convocation aux assemblees des actionnaires, d'assister a ces assemblees ou d'y voter, sauf dans les cas precis prevus par Ia

Loi sur /es corporations, mais qui lui confore celui de recevoir /es dividendes que declare Ia Societe et de participer, en cas de dissolution de Ia Societe, a Ia repartition des actifs, sous reserve des droits, des privileges et des conditions rattaches au x autres categories d'actions de Ia Societe qui ont priorite de rang . (' non -voting common share") Mr. Vice-Chair person: Amendment-pass. Mr. Findlay: Mr. Chairman, I move THAT the defmition- An Honourable Member: Dispense. THAT the definition "voting common share" in subsection 1 (1 ) be struck out and the fo llo wing substituted:

784 LEGISLATIVE ASSEMBLY OF MANITOBA November 7, 19 96 "voting common share" means a share of the corporation the holder of which is entitled to receive notice of and attend and vote at meetings of shareholders, to receive any dividend declared by the corporation and to share in the distribution of the assets of the corporation upon dissolution subject to the rights, privileges, and conditions attaching to any other class of shares of the corporation ran king in priority thereto: ("action ordinaire avec droit de vote") (French version] II est propose de remplacer Ia definition de "action ordinaire avec droit de vote" Action de Ia Societe qui con fire a son titulaire le droit de recevoir les avis de convocation aux assemblees des actionnaires, d'assister a ces assemblees et d'y voter, de recevoir les dividendes que declar Ia Societe et de participer, en cas de dissolution de Ia Societe, a Ia repartition des actifs, sous reserve des droits, des privileges et des conditions rattaches au x autres categories d'actions de Ia Societe qui ont priorite de rang. ("voting common share") Mr.

Vice-Chai rperson: Amendment-pass. * (1010 ) Mr. Sale: Mr. Chairperson, just for a matter of procedure, again not meaning to delay consideration, but I think, given the complexity, that we would pref er that sections be passed

section by

section and not page by page or group of clauses by group of clauses, that we go in

section by section. Mr. Findlay: Mr. Chairman , going back to the amendment that we had deleted. I am informed that the definition of foreign government is out, so this

section has no force The legalese is working here. Mr. Sale: Mr. Chairperson, perhaps the clerk could advise how we might bring that back in. I say that on the basis that I have had a moment to reread the definition of person in the act, and person does not include government. So, for clarity, I think it is useful. It provides some increased confidence to the public of the government's intention. So, if the clerk could advise as to the proper procedure to put the previous deletion back in, either I would be glad to move it or the minister might wish to do so himself. (Mr. Chairperson in the Chair) Mr.

Chairperson: Could we come back to order. have been advised that we need to ask leave of committee that we may in fact move a withdrawal of an amendment that was passed that speaks to the definition of"foreign government," which was passed before. I need permission. Some Honourable Members: Leave. Mr. Chai rperson: Leave has been granted now. The amendment is withdrawn. Agreed? (agreed] It has been requested that I read into the record the amendment that has been withdrawn. It was moved by the honourable minister THAT the defmition "foreign government" in subsection 1 (

l) be struck out. (French version) II est propose de supprimer Ia definition de "gouvernement etrang er " au paragraphe I (I). That is the one that has been withdrawn. Some Honourable Members: Agreed. Mr. Chai rperson: Now, we are on motion 9. Mr. Struthers, sorry about that. Mr. Struthers: I want to make sure I am clear with what we are doing here. In the same act that prohibits ownership by a Crown, we are still allowing foreign government or agents of a foreign government to buy shares or not? Mr. Findlay: My understanding is the answer is a definitive no. Mr. Struthers: A definitive no.

An Honourable Member: As opposed to a regular no. Mr. Struthers: That is fine. He made it perfectly clear. Mr. Chairperson: Can we proceed then?

November 7, 1996 LEGIS LATIVE ASSEMBLY OF MANITOBA 785 Some Honourable Members: Proceed. Mr. Chairperson: It has been moved by the honourable minister THAT the definition "voting share"- An Honourable Member: Dispense. THAT the definition "voting share" in subsection 1 (1) be struck out and the fo llo wing substituted: "voting shar'(!

" means a share of an issuer the holder of which is entitled to receive notice of and attend and vote at meetings of shareholders on resolutions electing directors, an d includes a voting common share; ("action avec droit de vote") [French version] II est propose de remplacer Ia definition de "action avec droit de vote" au paragraphe 1 (1) par ce qui suit: "action avec droit de vote" Action d'un emetteur qui confore a son titulaire le droit de recevoir les avis de convocation aux assemb/ees des actionnaires, d'assister a ces assembtees ou d'y voter relativement au x resolutions visant /'election des administrateurs.

Sont assimi/ees au x actions avec droit de vote les actions ordinaires avec droit de vote. ("voting 'Share") Mr. Chairperson: Amendment-pass. Now Clause l as amended-pass; l(l}- I am sorry-pass. Shall Clause 1(2) pass? Mr. Sale: Mr. Chairperson, this goes back to the whole question of what affiliation means.

The first part, it is clear to me that if there is a subsidiary relationship, ifl am understanding "(b)" correctly, this pertains to a situation where a company, let us say, Northern Telecom, who is a big vendor of telecommunications products, has two independent subsidiaries which themselves are not related-in other words, Northern Tel either owns or controls two separate companies, neither of which has a beneficial ownership relationship between them.

Nevertheless, for the purposes of this act, they are deemed to be affiliated by virtue of their common parent, whether or not they have anything to do with each other at a company-to-company level. Is that correct? Mr. Findlay: Mr. Chairman, the answer is yes. Mr. Sale: Then, just briefly, without getting into a great long explanation, what is the purpose of this kind of clarification and protection? What is the event against which this is protection? Mr. Findlay: Mr. Chairman, I would ask the member to be more clear in what he is asking for, so counsel could understand what he is asking. Mr. Sale: Mr.

Chairman, I am trying to be; that is my problem. I am not clear about the implication of needing to have-I am not arguing against; I am simply trying to understand. Why do we need to have this? Why is it a good idea to have this particular protection of (

b) in? An Honourable Member: Under "instrument"? Mr. Sale: Under Affiliated bodies corporate, which I think is what we are debating now, 1( 2)(b). Maybe the Chairperson needs to clarify. I think that is what we are on. Mr. Chairperson: That is what we are on. Mr. Findlay: In the example the member describes where a parent owns two subsidiaries, although the two subsidiaries are not related in any direct fashion, they are deemed to be related to the fact they have a common parent to prevent any context of acting in concert to override the maximums of ownership put in place there. Mr.

Sale: Would this then arise for situations where there was non arm's length? Would such companies to be deemed to be not at arm's length, even though they are not related directly, and therefore for any tendering or other business purposes would not be deemed to be at arm's length for legal purposes? Is that the point here? Mr. Findlay: Yes, Mr. Chairman. Mr. Sale: Okay. Mr. Chairperson: Item 1(2}-pass; item 1(3}-pass. Item 1(4). Mr. Sale: I think this is the same issue. At least 1(4) and 1 (5) are the same kind of issue ifl am correct, that

786 LEGISLATIVE ASSEMBLY OF MANITOBA November 7, 19 96 what we are doing here is attempting to be clear-1 am sure not attempting, I am sure we are being clear-about for other legal purposes of defming transactions, bidding procedures, tendering procedures, entering into agreements. We are defining how companies are viewed from the point of view of the new MTS, and how then they have to operate in regard to conflicts of intere st, a combi nation under the federal anticombines-it is not cal led anticombines-th e federal Competition Act, et cetera? * (1 020) Mr.

Findlay: I think the most succinct way to say it is eventually we have a I 0 percent commitment that the maximum ownership is I 0 percent. What we are doing is putting in place here requirements to make sure we can achieve that maximum of I 0 percent, that there is no way of gettin g around it, avoiding it or bridging it. Mr. Chairperson: Shall item 1(4) pass? Mr. Sale: Mr. Chairperson, that then gets clearer under I (6) and I (7), if I have read this correctly, that this is where then the effect ofwhat we are doing in I( 2), I( 3), I ( 4) and I (5) then actually takes effect? Mr. Findlay: Mr.

Chairman, the answer is yes. Mr. Chairperson: Item 1( 4)-pass; Item 1( 5)-pass. Item 1( 6). Mr. Sale: Mr. Chairperson, this one puzzled me a bit, and I am not sure whether there is any other place. I think there is, but the minister probably can advise me. In a legal partnership there is usually a requirement that the partnership consent to actions of partners in regard to the holdings of the partnership, and of course as the minister and everyone knows, partnerships are a very common form of business arrangement.

I am not clear about how the issue of obtaining consent or direction pertains to a legal partnership. What this says is that I control securities. The definition of control for the purposes of this act-which is a very important iss ue because the members will know that the government is proposing to reduce the maximum number of shares that can be controlled, maximum percentage, from 15 to I 0 percent, so the question of what constitutes control is a vital legal issue.

As I read this, as a layperson, I have been involved in some partnerships and have some knowledge of others who are involved in partnerships, and they have to obtain consent or direction before they can dispose of partnership's assets or their own assets held under and through the partnership. If I give the example of a general partner versus a limited partner, then I think that everyone will understand what I am getting to. I think there is an important issue here because this is a very common arrangement in busines s.

So I am wondering if the minister and his counsel could clarifY whether in fact the question of obli gation to obtain consent or direction has been carefully thought through in regard to the partnership question. Mr.

Yaffe: The purpose of subsection I (6) is to make it clear that, again for purposes of the individual ownership restriction that we will be corning to, a person will be deemed to be the holder of a share even in the event that person is not the registered owner of the share, but if that person has the abil ity, the authority to dispose of the share without getting the specific authorization of the beneficial owner. So there would be a very limited number of circumstances where that would arise. One would be, for example, a committ eeship. Mr. Sale: A committeeship? Mr. Yaffe: Yes. Mr. Sale: Thank you.

I am still not satisfied, Mr. Chairperson, that the minister and counsel have addressed the issue of general and limited partnerships. The most publicly known example of that is the Winnipeg Jets, in which the general partner maintained corporate residence in Manitoba. The limited partners decamped to Quebec, some of them ironically just about the date the Nordiques decamped for Denver. So even though Quebec did not think it had a hockey team, in fact it did. It is just its hockey team was playing in Winnipeg, that is all. It was a nonresident hockey team for purposes of this act.

I am not clear, having read •he corporate documents in which the various partners moved their limited partnerships and their assets to Quebec while the general

November 7, 19 96 LEGISL ATIVE ASSEMBLY OF MANITOBA 787 partner stayed here, Jets 8 Hockey Ventures Inc., I am not sure how that is all affected, because under the terms of that limited and general partnership, the partners could change the ownership of the assets. They could shift them either among themselves or to others, with permission. They could not be prohibited from reasonably doing so. Very clearly, the world of corporate legal exist ence is a very complex world.

I am not satisfied yet that this issue of control of securities has contemplated the issue of general and limited partnerships which are a common form of investment co-operation. Quite legal, and I am not suggesting anything to the contrary, but I am not clear at all yet that this issue is addressed, and I would appreciate more discussion. (Mr. Vice-Chairperson in the Chair) Mr. Yaffe: I guess the first point I would make, Mr. Chairman, is that again, 1( 6) is in the bill specifically for the purposes of adding strength to the individual ownership restriction .

It does not deal with control of assets other than control of securi ties, and in the context of Bill 67, the relevance would be that the securities referred to would be shares either of MTS or of an affiliate. So the effect, if one were to put this into the context of shares of MTS owned by a limited partnership, one example of the implication of 1( 6) would be that if a general partner of a partnership had the authority to dispose of shares owned by its limited partners, the general partner would be deemed to be the owner of those shares.

To the extent that the general partner was so deemed, you would aggregate the shares over which it had control. So, if there were 15 limited partners, and the general partner had direction and control over the shares of all of those limited partners, the general partner would be deemed to be the owner of the shares of all of those limited partners. * (1 030) Mr. Sale: I appreciate that explanation.

I think what I am asking, though, is if the general partner did not have that power-and we used the analogy of the Jets situation where you have a general partner and eight limited partners-but the shares were held beneficially in the limited partnerships but not requiring the consent of the general partner, then are those shares deemed to be part of a block of up to l 0 percent, or by virtue of the fact that they are only held in a limited partn ership, are they separate, and so eight partners could hold l 0 percent each, to use an extreme example, by virtue of the general partner not having explicit control over those securities?

I think the case of the Jets is not an inappropriate analogy because I believe the way those companies are structured, each individual partner has the right to dispose of or alter its holdings without consent of the general partner. Now, I may be wrong about that, but it would not be the frrst time that a cabal of people decided to take control of a valuable asset by means of a legally constituted device, very technical, but nevertheless achieving that effect, so I am concerned that we do, in fact, what the government is saying it is doing, and I trust the government in regard to their intent here.

I am asking, does this really achieve the intent? (Mr. Chairperson in the Chair) Mr. Yaff e: Mr. Chairman, the response to that question, I think, is to tum back to the definition of "associate" as amended in I (I )(f), and that would be exactly the situation that would be contemplated particularly in the broadened wording as a result of the amendment that has been passed. That would contemplate your favourite term of passive consent. Mr. Chairperson: Clause 1( 6)-pass. Clause 1( 7). Mr. Sale: Could, just briefly, the minister or counsel just outline the intent of this held as security or in a managed account?

A security held as security, that presumably does not mean held as security against a loan or against something else but held in the form of the security itself. What does as security mean? Mr. Yaffe: Mr. Chairman, it is intended to ref er to a share held as collateral. Mr. Sale: Held as collateral. So just maybe interpret for me beneficial ownership of shares held as collateral security. Does that mean that the entity holding the shares is deemed to be the beneficial owner if they are

788 LEGISLATIVE ASSEMBLY OF MANITOBA November 7, 19 96 holding them as collateral? For example, if I wish to buy a house and I pledge my MTS shares to the Bank of Commerce as collateral against my mortgage, is the Bank of Commerce the bene ficial owner for purposes, or do I maintain my beneficial owners hip? Mr. Yaffe: In those situations, I would refer you to 1( 7)(d). In those situations, as a result, if neither of the arran gements is in (

a) or (b), the beneficial owner would continue to be considered to be the beneficial owner, and the person holding the shares as collateral or the portfolio manager holding the shares on behalf of a client would not be seen to be the beneficial owner. Mr. Sale: So just to summarize then, the intent of this would be to clarifY or, in fact, to prevent somebody from, in fact, holding a larger number of shares than to which they were entitled by virtue of placing them in a banished account or pledging them against a loan that they have made. Those shares cannot be seen to be somebody else's.

In fact, they are still held by the original owner even though they are pledged; thereby preventing the original owner from exercising a larger than I 0 percent owner ship. That is the effect of this, it seems. Mr. Yaffe: The effect is twofold. One of the ramifications is as you have stated. The other is that a portfolio manager would be able to hold in excess of 10 percent if the benefi cial owners of the shares were a number of clients, each of whom held less than 10 percent. Mr. Chairperson: Clause 1(7)--pass; Clause 1( 8)-pass. Clause 2(1) . Mr. Sale: I believe that there is no issue here.

It is just providing for a new name, but this is not the same as contin uation and the disconti nuance clause, so I have no problem with this na me. Mr. Chairperson: Shall the item pass? The item is accordingly passed. Clause 2(2)-pass; Clause 3(1 )-pass. Clause 3(2). Mr. Sale: Mr. Chairperson, could counsel advise whether this is a common provision where there is a technical complex act to supersede The Corporations Act? Mr. Yaffe: It is typical. This act, as you pointed out in your introductory comments , is a relatively brief act.

It does not include all of the very, very standard provisions relating to corporate structure, and for those purposes the intention is to rely on The Corporations Act. Mr. Sale: Mr. Chairperson, could the minister or counsel indicate ifthere are what counsel would consider substantive places in this act where The Corporations Act is being superseded? I read this; I understand the intent, and I accept that this is perfectly reason able, but could there be a couple of examples where a substantive overriding is contemplated? Mr.

Yaffe: The two most obvious examples, I think, would be subsection 14 (2) which actually contemplates prospectively items that will be required to be included in articles of continuance under The Corporations Act. Typically that would not be something that would be thought through prior to the time of application for articles of continuance . The other area in which The Corporations Act would be superseded would be an amendment that we have not yet looked at, and that is the addition of a new subsection 16 (4) which we will be looking at. Mr.

Sale: Just by way of comment, that was one that I was going to say, help us. So when we get there, I will say, help us. Fair enough. * (1 040) Mr. Chairperson: Clause 3(1 )- pass; Clause 3(2)-pass. Clause 4( 1). Mr. Sale: Mr. Chairperson, this is the one that I guess I understand why we need to have it, but it appears to provide more than it does. I think one of the very real concerns in regard to the privatization of this corporation is the example that has been seen in other provinc es, where sophisticated telecommunication services are simply not available in rural and remote areas.

I can recall in the last couple of years being in Fort Albany, for example, at the mouth of the Albany River in Onta rio, in which there is no sophisticated telecom munications available. There were two phones in the airline office of what at that time was still Austin

November 7, 19 96 LEGISLATIVE ASSEMBLY OF MANITOBA 789 Airways in Ontario. Most people did not have phones. The quality of the phone connections and service was clearly, clearly inferior to what is present in many northern communities. What this really says is, if you can afford it, if the company wishes to make it available at whatever price, then the company shall do so, but this is one of those clauses where the substance is considerably less than the appearance, instead of the other way around. The substance appears to give some guarantees.

I think we have heard from many, many presenters their very real concern that there is lots and lots of evidence that private telephone companies are skimming the cream ofT the profitable services in our own city. Videon and Unitel are two examples. Videon is in the process of tapping into very major fibre optic installations that Manitoba Telephone and its ratepayers have paid for and requiring MTS, as it is required under CRTC, to carry Unitel's business.

There are other examples in which Unitel, Sprint and others have absolutely not the slightest shred of interest in providing telecommunication services to individual rural residents, or even whole communities in more remote areas, but they are terribly interested in taking over the business ofthe University of Manitoba and have been enabled to do so by virtue of this government saying, well, it is the University of Manitoba's business. We do not really mind if U of M thinks it can get a little better deal from Unitel. We do not mind if all that traffic goes somewhere other than the Manitoba Telephone System.

Let the university manage its own affairs and make its own economic decisions as it sees fit; there is no problem. Well, there is a problem, and it is called in economics the tragedy of the commons, that if people are able to take advantage of those things which are seen to be in the short run and in the narrow scope advantageous to them but the broader public interest is never protected, then we have that tragedy occurring. So this section, simply, I think legally Mr. Yaffe will probably say all this is doing is providing a little more flesh to the bones of continuance of the corporation under 2(1) .

Well, now we are saying what it is going to continue to do. It is going to continue to provide tele- phones under a competent regulator. I know competent regulator is the legal meaning of competent-that is, the regulator to which the right to regulate is given, which is the CRTC at this point. One might argue that the CRTC is not a competent regulator in some other ways, and I think that the minister might even agree with that.

Certainly, the Manitoba Telephone System and its Stentor partners would agree that CRTC has passed some regulations that have banned the best interests of those telcos, though they may have provided short-term advantage to particularly major users.

So I think when we pass this clause-and there is no particula r reason not to pass it-we have to understand that it really does not say anything except in law you are giving it permission to do what it now does, but I do not think we should read it as in any way providing the slightest guarantee that any services will be provided on an affordable basis anywhere in Manitoba. They are just going to do what private companies do best, which is provide services that can make a profit in their best corporate sense of what their strategic interest is now and into the future.

If that means to reduce service or eliminate service in some areas or pay a very high premium, then that is what is going to happen, so we should not be under any illu sion that 4( 1) means anything other than what it actually says. Mr. Chairperson: Clause 4(1 )-pass. Clause 4(2). Mr. Sale: Mr. Chairperson, what is the effect of 5-I am sorry, we are on 4(2)? I beg your pardon. Pass. Mr. Chairperson: Clause 4(2)-pass. Clause 5(1) . Mr. Sale: Mr.

Chairperson, what is the effect, if any, of the pension changes and the obligations of the current MTS in regard to present and future pensioners of the corporation and the rights and responsibilities of the corporation in this regard, because currently it functions through the Superannuation Board, and I know that the idea is to separate that entirely. What does "not an agent of the Crown" mean here?

790 LEGISLATIVE ASSEMBLY OF MANITOBA November 7, 19 96 Mr. Chairperson: Maybe what I might suggest to the committee before we continue questioning that we put the amendment that is being proposed in this

section on the table and then debate the amendment or the clause as it might be amended, if that is agreeable. [agreed) Mr. Findlay: Mr. Chairman, I move THAT subsection 5(1) be amended by adding", and shall not be deemed to be," after "not". [French version) II est propose d'amender le paragraphe 5(1) par aqjonction, apres "Couronne ", de "et n 'est pas reputee l'etre ". Mr. Chairperson: Amendment-pass. Mr. Sale: Could we just have some explanation of the relationship of5(1) and 5(2)? This whole

section down to 5( 4) deals with the old question of Her Majesty in Right of Manitoba and the role of the Crown. Are there not some residual roles or responsibilities that carry on here, or am I mistaken? Mr. Findlay: Mr. Chairman, the answer is no, there are no further responsibilities by the Crown. Mr. Sale: Mr. Chairperson, I thank the minister for that clarification. Essentially, then, under these four sections-I know they are not all on the table; in fact, all of

Section 5, five sections-are we clear how easements and land assets which are shared with Manitoba Hydro and with gas and other utility corridors and have an impact on private owners to which they now have some avenue of appeal because there is a Crown entity here, are we clear how this is all functioning? I recall a presentation by Mr. Kowalski who is, perhaps unnecessarily, but he is worried about the role of this new corporation in his backyard where there is a telephone line. Mr.

Yaffe: I think the short answer is that there has been some very, v ety careful due dili gence with respect to all property matters on the part of outside counsel and also on the part of the company's internal law department. The provisions of

Section 5 have been reviewed very, very carefully with those people, and there is a very high comfort level that all contingencies have been considered. * (1 050) Mr. Sale: Thank you. I am sure that is the case. The defmition of land, I believe, is further on. I think there are amendments to that, and I do not want to go further ahead, but I would appreciate the opportunity to just ask a question about that, because what we seem to be doing by this is completely divorc ing government from the Manitoba Telephone System. There is not going to be any relationship legally.

There are no duties of one to the other anymore. These are totally separate corporations, and you have been very careful under these sections to achieve that. But by virtue of the definition of land, as I read it at least, are we transferring beneficial rights to Manitoba Telecom, I have to get used to this, Services- Mr. Findlay: It is still MTS. Mr. Sale: MTS, that is the easy way. Yes, I know, we would like to say that, would we not? It brings to mind the chairman of the board telling the committee when he presented his armual report that under the new reality nothing would change.

The mandate of the company would be the same. Mr. Benson was present during that discussion, and he knows how ridiculous that statement is, and so does the committee. In fact, as we arc making very clear by these detailed considerations, a great deal changes, and the mandate will change, of the corporation; otherwise it would not be behaving as a proper corporation with fiduciary responsibility to its O\\ners because the ownership structure is so radically different.

My concern in this, and I think it is a very important issue, is it seemed to me that we may be transferring more than we want to transfer to this new corporation, given that land apparently includes subsoil rights, mineral rights, all of the rights. Land is deemed in this act to have an incredibly exhaustive definition, and I appreciate that, that it is very plain, but I am sure we are transferring some land. In fact, I know we are transferring some land. I, for one, am not much interested in transferring to the Manitoba Telephone System, MTS, subsoil rights to anything.

If they have to bury some cable, bury some

November 7, 19 96 LEGISLATIVE ASSEMBLY OF MANITOBA 791 cable. If they have to string some cable, string some cable, but they bloody well do not get what is underneath, nor ought we to be giving them what is underneath. So when we get to that section, I am certainly going to be concerned about the implication of that. I simply put on the record that I understand and take what the government is saying. There is going to be no relation ship. We are transferring everything. There are no formal duties or requirements in future.

Fair enough, but lets us then be clear about what it is we are transferring, so when we get to that section-maybe I am giving counsel and everybody warning that I am very concerned that we appear by the definition of land to be including stuff that I am not so sure I want MTS to own. What happens if we suddenly discover how to make oil out of clay, with all that clay we have transferred to them? I guess we could say there is lots of other clay we can use, and MTS will not have any need of their clay, but I will be asking that question, so counsel should be ready for it. Mr. Frank Pitura (Morris): Mr.

Chairman, I have a question with respect to

Section 5(5) with regard to the land transfer tax. Mr. Findlay: We are not there yet. Mr. Pitura: Okay, sorry. Mr. Chairperson: If you allow me the latitude, we will move into that area, and I will allow you the question. Clause 5(1) as amended-pass. Now, the next amendment. Mr. Findlay: Mr.

Chairman, I move THAT the following be added after subsection 5(1): Shares of affiliates 5(1 .1) 1 00 shares of the capital stock of each of MTS NetCom Inc., MTS Mobility Inc. and MTS Advanced Inc. are deemed to have been validly issued to the corporation on January 1, 19 96, and the stated capital of those shares is deemed to be $1 .00 per share. (French version) II est propose d'ajouter, apres le paragraphe 5(1) , ce qui suit: Actions des groupes 5(1.1) Sont reputees avoir ete dument emises a Ia Societe le I janvier 1996 cent actions du capital-actions de MTS NetCom Inc ., de MTS Mobility Inc. et de MTS Advanced In c.

Le capital declare de ces actions est repute eire de 1 $p ar action. Motion presented. Mr. Sale: Mr. Chairperson, in the dark of night when I was trying to remember, I thought we had four subsidiaries, four sections ofMTS. We have four vice presidents that came in. What is the fourth one of? Just help me understand this. Mr. Findlay: Mr. Chairperson, if you look specifically at the amendment, you will see MTS NetCom. Then there is MTS Mobility and MTS Advanced. NetCom is one company. Mr. Sale: Yes, I understand. Mr. Findlay: You understand that. You think in terms ofMTS Net and MTS Com as two.

Effectively, they are one. There are two divisions in the one company. Mr. Sale: Mr. Chairperson, then, just for the record, they each have a vice-president, but they are one company? [inteljection] A president? I beg your pardon, Mr. Benson is correcting me. They each have a president, but they are one company, with Mr. Fraser CEO of the whole shooting match. Okay, I appreciate that clarification. Mr. Chairperson: Amendment-pass; Clause 5( 2)-pass; Clause 5( 3)-pass. Clause 5(4). Mr. Sale: I think there is an amendment here, Mr. Chairperson. Mr. Findlay: Mr. Chairman, I move THAT the

section heading for subsection 5( 4) be amended by adding "of land" at the end.

792 LEGISLATIVE ASSEMBLY OF MANITOBA November 7, 19 96 (French version] II est propose d'amender le paragra phe 5(4) par adjonction, au titre, de "du bien-f on ds". Mr. Chairman, that is intended as a clarification of the intent. Motion presented. Mr. Sale: Mr. Chairperson, I am just having trouble finding where that definition of land is in such great detai l. I recall it, but I cannot remember where it is. (interjection] Right at the beginning?

Yes, okay, so we have passed it, and I thought that quite appropriately we want to have that kind of detailed definition, but this is where the definition has some real effect. I think it is plain to the minister and to counsel what my concern is here, and I think, historically, we only need to think about the Hudson's Bay Company and the CPR, two great Canadian examples to know just how apparently worthless the Government of Canada's grant of what was seen to be waving prairie grassland and trees and a whole bunch ofwater was to both the CPR and the Hudson's Bay Company, although I may be wrong.

It may have been that the parents of Confederation unders tood that there might well be gold in them thar hills, but I do not know whether that was the case and certainly we know as citizens of the 20th and 21s t Centuries that there is a great deal of wealth represented under Manitoba's soil, a great deal of wealth in the soil too, but there is a great deal of wealth under the soil, and governments have benefited by helping corporations to exploit that.

But what I read this to mean is that we are conveying to the new company not simply the need to use the land for purposes of stringing wire or burying cable, but everything on that land. Now, I have no idea of the extent of the lands being transferred.

I understand that we may be talking about narro wly defined land, but when you include paths, passageways, ways, water courses, waters, water rights, water powers, water privileges, air rights, licences, liberties, privileges, easements, trees, timber, mines, minerals and quarries, now I know we are not setting up a multinational corporation here that is going to have immediately on the Alberta stock exchange a penny mine to exploit some gold that it has discovered at the comer of somewhere. Nevertheless, I really question the wisdom of this

section and the extent of the definition. I am wondering ifthe minister and counsel could respond. * (1 10 0) Mr. Yaff e: Mr. Chairman , the salient words in subsections 5(2), 5(3) and 5( 4) are found in 5(2). The only land that is the subject of those subsections is land that is now beneficially owned by the corporation or an affiliate of the corporation and registered in the name of the Crown. So, although the definition of land is broad, as you have correctly observed, if the land or any element of the definition is not now beneficially owned by the company or an affiliate, it is not the intention of

Section 5 to transfer the land or any element of the land to the company. Mr. Sale: Mr. Chairperson, I am not sure that that helps me. Maybe it does, and maybe I just do not understand enough about law to-welt, I know I do not understand enough about law-know for sure what that means. Currently, the protection against the company becoming a harvester of timber or the miner of minerals is that it is a Crown corporation, and the Crown would not undertake that kind of activity lightly.

It would do so, presumably, for the greater benefit of Manitobans and all those other things that make a Crown corporation a servant of the whole entity, Her Majesty in Right of Manitoba. I do not know how much we are transferring here. I do not know whether we are transferring corridors that arc two feet wide or corridors that are a mile wide I do not know whether we are transferring corridors that are two feet wide or corridors that are a mile wide. I do not know whether we are transferring major holdings in rural Manitoba or minor holdings.

I simply do not know But I believe those are all beneficially owned now by the Manitoba Telephone System as a Crown. They are owned under the Crown, and that is the whole reason for having to do what we are doing here because in fact they

November 7, 19 96 LEGISLATIVE ASSEMBLY OF MANITOBA 793 are currently held by the Manitoba Telephone System or its affiliates. I do not think it is an insubstantial amount ofland that we are talking about or an insubstantial area of the province. I am not trying to suggest that it is anything like the Hudson's Bay or the CPR rights. Obviously, it is not. But I do not take from what Mr. Yaff e has said any great comfort, because it does not change the fact that we are conveying rights which I cannot, for the life of me, see any need to convey.

I do not know why we would need to give this new company anything other than the right to use the land that they are acquiring for telecommunication purposes, and particularly the notion of subsoil rights, subsurface rights. If they need to bury cables six feet down, then give them rights to six feet down but do not give them the extensive rights that are contemplated under this section. Mr. Findlay: Mr. Chairman, can I understand Mr. Sale is concerned with just the mineral rights under the land that be used to bury cable or build buildings or whatever the case may be? Mr.

Sale: For clarification to the minister, I do not know what the holdings are. I do not know how wide the corridors to which Manitoba Telephone currently has beneficial ownership in the North are. I do not know what the timber that it has is. I mean, I just do not know, but I do not see the need to convey those rights to the new corporation when the purpose of this is tele communications. Why do we do something that is much broader than what everyone agrees is a valid purpose? Mr. Chairperson, I wonder if we might agree to a three or four-minute recess for urgent personal purposes. Mr. Chairperson: Agreed.

Five minutes. The committee recessed at 11 :05 a.m. After Recess The committee resumed at 11 :16 a.m. Mr. Chairperson: Could the committee please come back to order. Mr. Findlay: I thank the member for Crescentwood (Mr. Sale) for raising the issue of the definition of "land." Mr.

Chairman, I would ask leave of the committee to withhold any amendment to the definition of "land" until legal counsel can draft what we believe would be appropriate and reasonable and acceptable to the committee, and that would be that the definition of "land" with regard to mines and minerals would be consistent with what is currently the provision under The Cr own Lands Act, which is that when land is sold, for instance, to a farmer, it is with the exclusion of mines and minerals, sell him the land but the mines and minerals are retained by the Crown.

Our intent, I believe, and I think the intent of the committee, as I understood it, was to be right and reasonable in this instance, that land that is currently held by the Crown be transferred to the new MTS exclusive of mines and minerals. An Honourable Member: Timber. Mr. Findlay: I am thinking it consistent with The Crowns Lands Act; only, in my understanding, it applies to mines and minerals. Just hold it for a second, we will clarifY that. Mr.

Sale: I have no problem if we pass by this point at this point and come back at some point later in our discussions when there has been a little further clarification. If I might also ask, and this may not be the place where it needs to be done, but let me put it forward and you can tell me whether it is the place or not. We also have concerns about The Municipal Act and tax assess ment questions. Under the Crown, the land occupied is not assessed for property tax purposes, and I am not clear where in the act the status of the lands that are so transferred by these sections for assessment purposes is clarified.

So that is an issue, I am sure, for many jurisdiCtions, obviously municipal level jurisdictions, what are the tax implications. This may not be the place to clarifY that, but if we could pass by this whole

section and come back, unless the minister is able to provide that clarification right now; then that is fine. I am just raising it so that he knows that this is an issue for us, and we are unclear how it is dealt with. Mr. Chairperson: Would it be possible to raise that again when we get to the section, and we will make note of it? If there is a will to pass by, that can be done.

794 LEGISLATIVE ASSEMBLY OF MANITOBA November 7, 19 96 Mr. Sale: Mr. Chairperson, I have no problem with that, and I may just again in fatigue have missed it, but I did not see where it was in terms of the status of their land for assessment purposes, so I am quite happy with your direc tion. I would have no need to discuss it further now as long as we understand that we are going to raise it and we do not know where to raise it. * (l 12 0) Mr. Chai rperson: Is there leave of the committee to pass by this

section until we have consideration of amendment? [agreed] The last clause we were dealing with was 5 ( 4 ), and we had not passed the amendment . We were debating the amendment. So we will leave this amendment and the clause, 5(4), until there has been reconsideration of this item that was raised by Mr. Sale. We will pass on to 5(5), 6(1). Mr. Sale: I think we should leave 5(5), as well, Mr. Chairperson, and get on to 6. Mr. Chairperson: Is that agreed? Mr. Yaffe: Mr. Chairman, ifl could just respond to Mr.

Sale's earlier question, I think we will be dealing with your other concerns when we turn to Sections 31 through to-the consequential amendments sections which are 31 through to 36 at the back of the bill. Mr. Sale: Would it be specifically

Section 34? Mr. Yaffe: It would be 33, 34 and perhaps 35, and I think Legislative Counsel could assist me on this. Mr. Sale: Mr. Chairperson, if l could just sort of give notice that I do not have with me and I honestly did not look up

Section 22( l)(a)(6). I presume what that is is the

section that exempts MTS currently from assessment, so it puts it into an assessable class. Am I right, Mr. Yaffe? Mr. Yaffe: That is my unders tanding. Again, I would def er to Legislative Counsel on the consequenti al amendme nts. Mr. Sale: Why do we not just leave this for now? Mr. Chair person: We go then to item 6(1) . Shall Clause 6(1 ) pass? Mr. Sale: I think this is a fairly standard clause. understand that the capital of the company is proposed to be 67 million conuno n shares.

I am not aware of whether there are any pref er ence shares being issued immediately or not because I have not seen the prospec tus, but I understand that the suggestion, at least to me, was that there be 67 million common shar es. The second one was puzzling to me because I thought that the purpose-I am sorry , I am confusing two issues. I am unclear about the purpose of

section (b), an unlimited number of nonvoting common shares of a single class. The government is getting a share called special share under

section (d), so I am unclear about the implication of common shares at an unlimited number that are non voting. Why is this contemplated? Mr. Yaffe: Mr. Chairman ,

Section 6 ofBill 67 will for all intents and purposes constitute the articles of incorpor ation, the constating documents of the company when it is no longer a Crown corpor ation. Subsection 6(1) sets out the authorized capital, as would the articles of incorporation for any company, and in not every event will authorized capital be issued. The inte ntion right now is that there will be issued capital pursuant to 6( l )(a), and the number has not yet been set. That number consistent with

Section 7 which we will be looking at shortly will be related to the reduction of indebtedness, and it is not contemplated now that there would be any shares issued under (

b) or under (c), and then, as you observed, (

d) authorizes the crea tion of the special share, and one special share would be issued. Mr. Sale: Mr. Chair person, I am certa inly not aware of the real implications here, but the thing that occurr ed to me and raised some concerns for me is that a private company can apply to a secur ities commission to authorize the issuing of nonvoting common shares which are neverthe less dividend bearing or entitled to rights and privil eges such as warrant rights, warrants to purchase common shares of other classifications or pref erence shares or whatever. I mean , this is a common financing device the companies going to the market for capital might use.

November 7, 1 996 LEGISLATIVE ASSEMBLY OF MANITOBA 795 I am wondering whether it is consistent with govern ment's intent to protect the investments of ordinary Manitobans to have the right to the income stream from the company via dividends to enable the company nevertheless to issue common shares, which could have significant rights attached and certainly could have the effect of diluting the authorized capital of the company by either a minor or a major amount. Obviously, to investors, dilution is a real issue. So I am wondering whether it is wise to give this right to a new company at this point.

It seems to me that if the company is successful and profitable and does its job well, which obviously we all hope would be the case, even though we oppose the creation of it, nevertheless, if it is created, we would wish it well as a private company, as we would wish any other private company well. But ought we to be giving at least at its formation the capacity to so dilute the earning streams by issuing shares? Secondly, Mr. Chairperson, my question that goes with that is, do the share restrictions on the Class A, the voting shares, apply also to these Class B shares?

That is, could some investor or partner own all of the nonvoting common shares that are dividend bearing and might have preference share rights attached or share warrants attached? In effect, if you think of a company like Dia Met, the diamond company in the Northwest Territories, you will see li sted on the Toronto Stock Exchange two kinds of shares for Dia Met, Class A and Class B, and they have very different rights and privileges. Different investors will buy them for different reasons. So I think this is a very important section, and I am prepared to move that this

section be deleted unless the government can persuade me that there is some good reason why this power is needed by the new corporation in addition to the power to issue preference shares. So I would appreciate an answer to that. * (1 130 ) Mr. Chairperson: Is there leave of the committee that we skip over 6( 1) temporarily and move on? [agreed] Mr. Sale: Mr. Chairperson, this is 6(2) then. Mr. Chairperson: I am going to ask the question whether we deal with 6(2). Shall Clause 6(2) pass? Mr. Sale: Mr. Chairperson, maybe Mr. Yaff e could advise whether or not I am correct.

I do not have an absol utely clear memory on this, but I believe that The Corporations Act already provides for this right under the act, and so I am wondering why we need to put it in here. Maybe Mr. Yaffe can clarifY whether my memory is faulty here, which it often is. Mr. Yaffe: Mr. Chairman, you are correct, Mr. Sale. However, for purposes of clarity and specifically for purposes of

Section l 0 where we talk about class vote, as a protective measure really you will see that

Section l 0 refers back specifically to subsection 6(2). So it is a protective measure, clarification that there will be a class vote in respect of a resolution for the creation of a new class of shares and that that vote would require the affirmative vote of each class of shares. Mr. Chairperson: Mr. Benson, for clarification. Mr. Julian Benson (Secretary to Treasury Board): So, for instance, now in 6(1 )- Mr. Chairperson: Would you please use the mike. Mr. Benson: -6( l )(

b) that we are removing, if the company wanted to create that kind of class of shares, then each existing class of shares would have to vote on that type of share so that the province's special share would vote as a special group and that special share could, ifyou want, thwart the creation of another class. Mr. Chairperson: For clarification and benefit of the recorders, that was Mr. Jules Benson, and they are here sitting at the table advising on the logistical and legal matters . Mr. Sale: I believe I understand the issue here.

The protection the minister is suggesting is that, while the special share is still in existence, the Crown would have the ability to protect its rights and to vote. Mr. Chair person, Mr. Yaff e indicates he has clarification, so I would be glad to defer. Mr. Yaffe: The protection works both for the Crown and for the holders of the voting common shares. Either class has, in effect, a veto power.

796 LEGISLATIVE ASSEMBLY OF MANITOBA November 7, 19 96 Mr. Sale: Mr. Chairperson, like all good legal counsel, Mr. Yaffe anticipated what I was going to say, that while we were still in the special share situation, the province is protec ted. After that, as a private corpora tion with all the normal rights and privileges, then all classes of shareh olders are protect ed.

So when we delete (b), then the company is not in a position to immediately create, bef ore there are such share holders , classes of shares which might impact on the rights of the common shareholders bef ore they had an opportunity to pass on that question. So I think that I am comfortable with this, although only a corporate lawyer would know. Mr. Chairperson: Clause 6(2)-pas s. Clause 7( 1). Mr. Findlay: Mr.

Chairman, I move THAT subsection 7(1) be amended by striking out "coming into force of this Act" and substituting "coming into force ofthis sectio n". (French version) II est propose d'amender /e paragraphe 7(1) par substitution, a "Ia presente loi", de "/e present art icle". Mr. Chair person: Amendme nt-pass. Clause 7( 1) as amended . Mr. Sale: Mr.

Chairperson, just for the record, this is the clarification we had earlier about sections, I believe, of all owing for the act to be claimed in sections, and specifically the ref erence is to 38(3) where the coming into force is the day this act rece ives Royal Assent; in other wor ds, sometime in the next fe w days, as currently contemplated by the House. I am not sure why we have to do this since re ally what we are saying under 38(3) is that it rece ives Royal Assent as

an act, as the whole, and there is no contem plation of delaying the proclamation. Mr. Yaffe: Mr. Chairman, there is an amendment proposed to

Section 38 which would result in three stages of imple mentation of the bill, one retroa ctive, three sections, I believe, on Royal Assent and the rest by proclamation which would likely appear as a group. Mr. Sale: I see your point. Mr. Chairperson: Item 7( 1) as amended-p ass. Clause 7(2). Mr. Sale: Could counsel just explain Clause 7(2) in a little detail, so that we can be clear as to what it is we are looking at here? Mr. Yaffe: Mr. Chairman, the purpose of Clause 7(2) is to.deal with the event where there was no public offering, at this time, of the shares .

This would contemplate the ability of a public offering of shares at a later date, and the offering would be of such number of shares as had be en tran sferred from the company to the Cro·wn in consideration for payment of indebtednes s. * (1 14 0) Mr. Sale: I thought I understood about half of that, and I wonder if Mr. Yaffe would just indulge me with a bit more of an explanation. I do not think this is what is contemplated at this point.

I think what is contemplated is an offering relatively soon, but if you could just explain again, if for some reason, let us say for some reason the Manitoba Securities Commission-well, maybe you can tell me, is the primary issuer and approver going to be the Ontario Secur ities Commission or the Manitoba Secur ities Commission? Mr.

Yaffe: The Manitoba Securities Commission will be the principal jurisdiction, and 7(2) simply is there to cover off the event where for whatever reason we do not close the public off ering, and we would then have the ability under Bill 67 to have a public offer ing at a future date, and the number of shares that would be the subject of the public offering would be whatever number of shares had been issued to the Crown in consideration for a satisfaction of indebtednes s. Mr.

Sale: Mr Chairperson, what that sounds like to me is an agreement to enable the Crown to accept equity in the corporation in exchange for its current debt; in other words to securitize its debt in the form of common shares or some other instrument that is not a debt instrument, which is what we have now.

November 7, 19 96 LEGISLATIVE ASSEMBLY OF MANITOBA 797 I am just not clear why this is needed . If what we are doing right now is to contemplate a public offering-! can understand that a securities regulator might say, I am sorry, this prospectus does not adequately disclose, there are some technical problems here, and without ever implying an ything, somebody has made a big mistake. We have to go back and do some more work here, so there is not going to be a prospectus for a while.

Now, I cannot imagine that that is going to happen. think the mini ster already knows and everyone knows that there is a draft prospectus out there that has already been seen by some people and is ready to be registered with the Securities Commission, presumably the day or the day after this bill passes the House. I do not think that any of us believe that there has not been a lot of careful work done to draft a prospectus and that the disclosure requirements have not been properly addressed.

I believe that everyone is trying to do that in the appropriate fashion, but in the event that the Securities Commission lawyers, who I am sure will be very careful in approving this, as they should be, see serious problems, we may have a delay, but I cannot imagine that we would have a delay of more than a matter of weeks or at most a month or two.

There have been lots ofprivatizations in Canada at the federal level, although relatively few provincially, so there are patterns, precedents and templates out there that I think probably deal with the vast majority of the unknowns that we might have, if this were the very first one, and it is not. So I am not clear what this achieves, why we need it. If we need it, then I am still unclear what it means, because it is not plain to me why we should securitize our debt with an equity participation in this company when we are saying that is exactly what we do not want . Mr. Yaffe: Mr. Chairman, under

Section 7(1) , the company will issue to the Crown shares, and it is those shares that will be offered to the public. Mr. Sale: This is so complex. I do not mean to be rude to Mr. Yaffe at all, but what he just said puzzles me even further. The company will issue shares to the government, and the government will issue shares to the public? Is that what you just said? Mr. Yaffe: That is what is conte mplated by

Section 7. Mr. Sale: I apologize to the committee. I did n ot understand that, and I am not want ing to ask for a revisi on back, but I am going to ask a question about 7(1) then if the Chair will allow me. Mr. Chairperson: Is there leave? [agreed] Mr. Sale: Mr. Chairperson, is then the issuer of the common shares the government and not MTSCom? Mr. Yaffe: The issuer of the shares is the company . The selling shareholder, un der the public offering, is the Crown. It is shares of the company being held by the Crown, which the Crown will receive under

Section 7. Let me take it to the next step. Under

Section 7 there will be a finite number of shares issued by the company to the Crown, and

Section 7 contemp lates a public offering of those shares. I thank you for your confidence in securities an d corporate lawyers in en suring that transa ctions close as and when scheduled. It does not always happen that way, and sometimes for reasons within our control and sometimes for reasons not within our contr ol. If for whatever reason the offering does not close, 7(2) says, you can try again, and even though shares had already been issued under 7(1). So there had been a transf er from the company to the Crown for the purposes of the public offering.

If the public offering has failed and there is a second go at it two months later, there can be further shares issued if the company is in the position to pay down debt in that int erim period, and the company, therefore, is in the position to issue further shares to the Crown. It is a mechanical provision. Mr. Sale: I thank Mr.

Yaffe for that explanation and for his patience in making plain something which had not dawned on me, and maybe not on others, but certainly had not on me, that the actual marketing and selling of the common shares, the 67 million cont emplated in the draft prospectus at least, will be under the auspices of government as the current owner of that equity, and that, should some portion of that equity remain unsold, for example, it would be held by government still.

Presumably there will be some penalties to brokers in that case; nevert heless, government retains the beneficial ownership of those shares, and should there be a lapse of time between that initial public offering and the clearance

798 LEGISLATIVE ASSEMBLY OF MANITOBA November 7, 19 96 of the prospectus-oh, no, wait a minute, you cannot sell the shares without the prospectus. Floor comment: Right. Mr. Sale: So the shares will be issued, but they may not be able to be sold initially unless the Securities Commission approves the prospectus.

In the interim, and I am paraphrasing back to make sure I understand, in the interim period of weeks or months between the initial application and the actual offering to the public, delayed for whatever good reason, the company is in a position to say, we are going to pay down another $1 00 million or another $200 mill ion of our outstanding debt as contemplated at present. Additional shares could be issued, could be made available for that subsequent marketing and that would be acceptable under 7(2), and that is the purpose of 7(2). Mr. Yaffe: Correct. For clarification, if I may,

Section 7 as a whole will contemplate only one offering, but that is absolutely correct. Mr. Chai rperson: Cla use 7(2)- pass; Clause 8-pas s; Clause 9-p ass. Clause 10 . * (1 15 0) Mr. Findlay: I have an amendment. Mr. Chairman, I procedures which are contemplated in

Section 6(2) and wherever we just were talking about. Where was it? Some Honourable Members: Page 10. Mr. Sale: Yes. It is simply protecting the right to vote by class on the par

Document details

Collection	Manitoba — Debates (Hansard)
Citation	36-2-pu14
Type	hansard
Volume / chapter	36th 2nd hansardpdf pu14.pdf
Language	en
Format	pdf
Source	PROVINCIAL
Identifier	68c4cb505a1a042ffc2359a2979c157a5f60e6f1

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