Manitoba Committee Hansard — 15 June 1979 (Legislative Affairs Committee, Sitting 5, 31st Legislature, 3rd Session)

31-3-la5

Manitoba — Debates (Hansard)

ISSN 0542-5492 Legislative Assembly of Manitoba STANDING COMMITTEE ON LAW AMENDMENTS Chairman Mr. J. Wally McKenzie Constituency of Roblin Friday, June 15, 1979 10:00 A.M. Office of the Queen's Printer for the Province of Manitoba

Hearing Of The Standing Committee On law Amendments Friday, June 15, 1979 ne: 10:00 a.m. !AIRMAN: Mr. J. Wally McKenzie. t. CHAIRMAN: We will listen to the briefs that are offered on Bills 27, 37, 39, 42, 54, 59 and Bill No. 39, Mr. Frank Steele; is he present? We will proceed then. Mr. Fr oese is not here. BILL NO. 54, THE MANITOBA OAT A SERVICES ACT t. CHAIRMAN: Bill No. 54, The Manitoba Data Services Act, Edward J. Kirby. Would you proceed , . Kirby? Bill No. 54. t. EDWARD J. KIRB Y: Thank you. My name is Ed Kirby.

I am appearing on behalf of several npanies in the data processing industry, including Cybershare Limited, which was pu rchased from ; government about 14 months ago. We take objection to ... :. CHAIRMAN: You don't have brie fs for all of us, eh? You just have your own presentat ion, :. KIRBY: Just my own presenta tion. :. CHAIRMAN: Fine, thank you, sir, proceed . :. KIRBY: I can assure you it will be very brief . .. CHAIRMAN: Thank you, sir. . KIRBY: I have a couple of points and l�will make them and leave them in your very good 1ds . . CHAIRMAN: Proceed . .

KIRBY: The objectionable featu res of the bill are roughl y this. The object of the commission, stated in the bill, is to provide and maintain computer and data processi ng services av ailable the government and government agencies and government-suppor ted institutions and other sons. We have certainly no objektion to data processing being done by the government for in-house rernment business. lt is when the powers are extended to gover nment-suppor ted institutions and other persons that it infringes upon the private secto r's ability and right to do busine ss.

For example, government institutions is also defined in the bill as the Board of a school distric t :1 scoool division. There are approxima tely 15 school divisions now served by the pr ivate sector, ! company alone, Cybershare: Transcona -S pringfield, St. Boniface, Dauphin-Ochr e, Pembina ley, Morris-Macdonald, lntermountain, St. Vital, Lakeshore School Dsstrict. The resident administrator of a local government district: The sales forc e of at least two of these rate organizations are working on computing patterns and programs for two government tricts.

The owner or operator of a hospital or personal care home: There are many care homes. Programs ·e now been developed for 81 private care homes by private organizations. The government 121

to infringe upon this business. Law Amendments Friday, June 15, 1979 And the board of a housing authority, Cybershare alone, for example, does the Manitoba Hous' and Renewal Programs, and student aids associat ions. All of these would come under the head of government-supported institutions, as we . . . Now, that accounts for a good deal of the busine ss that is available to the private sector.l educational services, Comcheq, whom I also repres ent, do a large percentage of educatio institutions in the province. This bill proposes or at least asks for the power to compete with thE concerns for the same busi ness and competes, I may say, Sir, on a compl etely unfair basis, becaL under

Section 13, the price is given as this : "As far as is practical, the cost charged for servic shall be the cost to the Commission," so, it will be operated at cost. Further, under 26, I notwithst anding any act of the Legislature, the Commission and any land, personal property busine ss of the Commission, is not liable to taxation or to be taxed by any municipality. So, I don't have to belabour the point, Sir.

We have here a proposal to set up a cost, or ratl a tax-supported business, which will go out in open competition with bus inesses already establish' One of which, for exam ple, Cybershare, was pu rchased from this government only 14 months a for $1,10 0,000.00. Now, it's hardly likely that had it not been the avowed intention and sta1 intention of this government to get out of the private sector, out of pr ivate busine ss and conf itself to governmental busi ness it is hardly likely that anyone but the village idiot would have gc in and paid that kind of money for that busine ss.

And so, I could go on, but I think you have my point. The advertisement, which appeared last Wednesday's Tribune, indicates it's already set up as Manitoba Data Services - rat! prematur e - and adver tising for person nel, for sales personnnel and operations service personr There is no doubt that the salesmen of Manitoba Data Services, under this bill, have the rig the power to go out and compete in the open marketplc;�ce for the busi ness, not only preser enjoyed by the existing operators, but the potential business, which they all need very badly, becaL it's a highly competitiv e busine ss.

The bill even goes on to say - although I don't know why - that with the appr oval of I Lieutenant-Gov ernor-in-Cou ncil, the Commission may enter into an agreement to provide compu and data processing services to a person other than the government, other than a governm� agency or other than a government supp orted institution. In other words, the field is wide op for extremely unfair comp etiti on, and competition, which as I stated before, was the avowed intenti of the government not to enter into it. Thank you very much, Mr. Chairman. If you have any questions, I'll be glad to ansv them. MR.

CHAIRMAN: Thank you, thanks. The Honourable Member for Transcona. MR. WILSON PARASIUK: Are you saying that if Manitoba Data Services Corporation is anott firm in the whole computing services' field, that that would be a decr ease in competition or increase in competition? MR. KIRBY: lt would be another competitor, an unfair competitor, because it is a tax-fr competitor, also a cost-free competitor. They are pledged under this statute, or pro posed statl rather, to offer services at cost. I would ask you to consider the principles be hind, rather than j1 the computer industry itself.

The principle is this: That the government is setting up an organizatic a governme nt-opera ted organization to go into the private sector, wherein 14 months ago it WE out of it. MR. WALDING: Mr. Kirby, I would like to ask you if this bill will enable Manitoba Data Servic to do anything that it is not presently doing? MR. KIRBY: 1 don't know what it is presently doing. I belie ve that it has physical limitations that it is doing mostly Manitoba Telephone and Hydro work. MR. WALDING: Well to Mr.

Kirby, it's my understa nding that Manitoba Data Services' n' operati ng, offering the sale of data capacity to anyone wishing to lurch ase from it. Do you s anything in this bill that would change that? MR. KIRBY: 1 don't know the powers of the Manitoba Telephone System to carry on that busine: 1 haven't seen their particular Act. I know this, that under

Section 11 , the object is to go into t busi ness wide open, no rest rictions whatsoever, and supp orted by the government at the cost the taxpayer. 122

Law Amendments Friday, June 15, 1979 R. WALDING: Would you explain that last ph rase, "at the cost to the taxpayer." R. KIRBY: Yes. The Taxation Charges

Section provides that the commission or any land, personal operty or business of the commission is not liable to taxation or to be taxed by a municipality. 1e other institutions and busi nesses that are presently doing this work, a lot of municipal and 'spital work as I've outlined, do pay taxes to municipalities and of course income taxes and business KeS. �- WALDING: Mr. Kirb y, did you read

Section 26(2)? �- KIRBY: "The commission as an opera ting expense shall make annually to any municipality which land or personal pr operty owned by the commission is situated, or in which the commission rries on business, such grants towards the cost of municipal and school services, as the lUtenant- Governor-in-Council may appr ove optional" - may appr ove and that is only for municipal d school services - no busi ness taxes, no income taxes, which are a very heavy item. �- WALDING: Mr.

Kirby, would they not need to make a profit before they would pay any income c? t KIRBY: Cert ainly, but not to pay business tax. t WALDING: I see. Thank you. t CHAIRMA N: Are there any more questions? I thank you, Mr. Kirby. t. KIRBY: Thank you very much, gentlemen. I. CHAIRMA N: I call Diane Slus ar. Then we proceed to Bill No. 59,

An Act to amend The manitoba dro Act and The Publi c Utilities Board Act, Vie Savino. t. VIC SAVINO: Yes, good morning, Mr . Chairman, and members of the committee. First of I want to make it clear that I'm appearing here as an individual who has been a consumer iOcate with respect to Manitoba Hydro's rates.

I am not able to appear here this morning rep res enting any particular group of people because ; legislation was introduc ed into the Hous e so rapidly and so late that there was no opportunity groups to get together to oppose this, I argue, very destructive legislation that has been ·oduced by this gover nment. Here we are again, in June of 1979, it was about this time last year that I appeared before ; committee to protest the destruction of the rights of ordinary people by this gove r nment.

At t time the protest was over the removal of rent controls and the dismantling of the most 1gressive Family Law legislation in the country and here we are again today.

Bills which destroy the legal rights of ordinary people, rights which people had before the elec tion, s are introduc ed to destroy these rights as late as possible in the ses sion, dur ing speed -up, s are intoduced to be rammed through so qui ckly, as quickly as possible with as little deba te possible, with as little publi c limelight as possible because this government knows that if these :; were open to normal public scrutiny and normal pu blic debate the people of Manitoba would 1rly see the heavy -handed deliberate removal of the rights of ordinary people in fav our of the 1ts of the wealthy and the privileged.

Bill 59, I submit to you , members of the Comm ittee and Mr . Chairman, is just such a bill. Before 59, it was legally recog nized that the people of Manitoba had a right to appeal both the amount a hydro rate increase and the distribution of that increase among different classes of sumers. In 1977 the Associated Tenants' Action Comm ittee did just that. The Pu blic Utilities Board umed its jurisdiction and gave a fair hearing to the Associated Tenants' Action Comm ittee and he consumers of Manitoba.

I would point out to this committee that the Associated Tenants' ion Commit tee was joined in its appeal by interveners such as Hooker Chemicals, Simplot, 1erous municipalit ies, school boards, trade unions and numerous individuals, a very broad :;s-sect ion of the Manitoba public who became involved in the exercise of this right to appeal determ ination of Manitoba Hydro rates in amount and in distribution. n February of 1978 the Public Utilities Board, having examined the economic position and grity of Manitoba Hydro, ruled on the consumer's appeal and rolled back hydro rates for a net 123

Law Amendments Friday, June 15, 1979 saving of about $1 1 million to the people of Manitoba. At the same time, the Public Utilities Board recogn ized our complaint that the rate struct itself was discrimina tory.

And what we were sayi ng to the Public Utilities Board at that time is 1 we have certain customers of Manitoba Hydro, namely lnco and Sherrit-Gordon and other la industrial consumers who are on fixed rate contra cts that last for periods of 20 and up to 40 ye; and lnco is paying the same rates now as they were paying 20 years ago, while the or dinary resider consumer is being asked to bear the burden of all of the increase in Manitoba Hyd1 activities.

And I should point out to this Comm ittee, and I think the government probably knows and th why they've introduc ed the legislation in the way they have, that in Nova Scotia, where such contr� were brought before the Pu blic Utilities Board there, the Public Utilities Board ruled that th contra cts were discrimina tory and unjust and unr easo nable as between classes of consumers. ) the utility in Nova Scotia went to the Nova Scotia Court of Appeal, and the Nova Scotia Cc of Appeal held that, indeed, the Pu blic Utilities Board had correctly exercised its jurisdictior In October of 19 78, in Manitob a, the Board reconvened and completed its hearings on pr lt agreed at that time to proceed to hear the arguments on the f airne ss of the rate structurE a future sitting of the Board.

What conce rns me most, gentlemen, about Bill 59, is that this proc has been termina ted or will be termina ted by this Hous e when you pass this bill. A termination of a judicial process in midstream - what might be called legislative abort and I'd like to read to you the

section that I am most concerned about.

Section 15, the final sec' of Bill 59, other than when the bill comes into force, states: "Any appeal to the Pu blic Utili Board, pending under

Section 39 of The Manitoba Hydro Act, as it was before the coming i force of this Act, is termina ted and the Pu blic Utilities Board shall not pr oceed to hear the ap� or take any further proce edings in respect thereof." Now, there's only one appeal, gentlemen, bel the Public Utilities Board and we all know whose appeal t hat is, and we all know what that ap� is about. Now, the introduction of legislation to termi nate that appeal is, I would suggest, irrespons government. lt is a very unusual kind of legisla tion.

We know that governments in the past h introduced bills to reverse judicial decisions, but this is usua lly done after the Supr eme Cour Canada has ruled, and the government then makes a policy decision, that the particular deci! that they're not in agreement with should be legislated out of existence. Now, I would like to kn I would like to know why the Associated Tenants' Action Comm ittee's appeal is being termina by this bill. lt has not been to the courts; the Board has not had an opportunity to review al the evidence and this government sees fit to terminate this appe al in mid-pr ocess.

I would to know from the Minister, who doesn't seem to be here, just what re commendation of the Tritscl Commission this

section of the bill is based on. I don't see anything in the Tritschler Commis! Report about terminating a tax appe al to . the Pu blic Utilities Board. But indeed, this

section d appear in the legisla tion.

Now, getting to the Trit schler Commission and the other thrusts of this bill, we know that Justice Tritschler and his Commission accepted holus-bolus Hydro's position that the Public Utili Board should not have ju risdiction to actually roll back rates or ac tually make a decision on ra Now, in doing so, the Trits chler Commission ignored other submissions such as the Associa Tenants Action Comm ittee, where we urged upon the Tritschler Commis sion that consumers she have a right to a hearing and they should have a right to representation on consumer rate revie That su bject was not dealt with, either by Mr.

Tritschler or by this government. Now, we may agree to disagree on whether the Cabinet should have the final say on the set of rates. I think that I would have to state that I disagree with the government's position that put something to the Pu blic Utilities Board, and then you let the Cabine t make the final decis The Cabine t does not have the expertise of the Public Utilities Board to review the economic inte� of the utility with the kind of detail and the kind of carefulness that the Pu blic Utilities Bo does.

And as we know, virtually every other utili ty that serves the pu blic in Manitoba, comes un the pur view of the Pu blic Utilities Board, with the Board's ability to make a decision on rate: terms of amount, and rates in terms of structure, in terms of what classes of consumer pay 111 amount. I strongly disagree with taking a different approach to Manitoba Hydro.

But acce pting that, acc epting that we can agree to disagree over that, the government t has intr oduced in this bill a new form of review by the Public Utilities Board, where, upon the fi> of rates by the Corporation, any user of power is entitled to request a hearing of the Public Utili Board. So the question then arises, exactly what kind of hearing can you get under this Bill? V'l 1 would submit, gentlemen, that the hearing process that is created by this bill is a farce. Th is no right to a fair hearing by the consumers of Manitoba under this legislation.

First of all, there is no right of the Public Utilities Board to review the rate structure, anc 124

Law Amendments Friday, June 15, 1979 ourse we have already talked about the term ination of the existing appeal on that question. And ne of the big questions of jurisdiction before the Pu blic Utilities board in the hearings was whether r not that part of the Act gover ning rate structure and discrimina tory rates applied to a review f Manitoba Hydro's rates. That was the question that was going to be clarified by this bill.

Well, 1at question has not been clarified, except of course by the specific sect ion terminating our appeal; is still very questionable from this bill what the jurisdiction of the Public Utilities Board is. And would submit that it's the intention of this government that, although it's not very clearly expr essed 1 the bill, it's the intention of this government that the Public Utilities Board have no juri sdiction , review the rate structu re, to review the rates as between different classes of consumers. And would urge upon this committee that the legislation be made clear on that poi nt.

If that is government policy, let's have it on the table, gentlemen, let's tell the consumers of lanitoba that you do not belie ve that they should ha ve a right to a review of rates as between fferent classes of consumers. On the type of hearing that consumers will get, that's one thing which I think is clear, that the 1tes structure question is very much still a question. Another serious problem with the type of hearing which is pr oposed under this bill, is that the ctent of the jurisdiction of the Pu blic Utilities Board is still as foggy as it always was. The

section the bill which speaks of the Pu blic Utilities Board conceivably excludes most provisions of the Jblic Utilities Board Act. If that is the case, I would urge upon you gentlemen that any hearing �fore the Pu blic Utilities Board would be a farce; because under The Public Utilities Board Act, e Board has the powers of the Court of Queen's Bench to order up information that the Board ay require to make its decision. Under this bill, we don't know whether the Board has that power or not. lt's certainly not :pressed in Bill 59.

What seems to be expressed is that The Public Utilities Board Act will not 1ply, ther efore leaving the Board with no procedure, no jurisdiction, no basis upon which to oceed. There is some statement in the bill of the kinds of things that can be brought before the bill; aterial supplied by corporat ions,

Section 39(10 ): "A statement showing the prices fixed or proposed be fixed and the prices which were or are in effect prior to the new prices being fixed." Well, at's a couple of page presentation with some numbers on it, which everybody will already have ceived in the mail from Manitoba Hydro.

"A statement of the reasons for any changes in the ices fixed or proposed to be fixed' including a statement of the facts supporting th ose rea sons." ell, Hydro could put before the Board a couple of paragraphs about the dr ught that they had ;t year, which is o what they did in 1977-78, and satisfy that requir ement of the Act. "A statement of the manner in which and a time at which the changes in the prices were or e proposed to be implemented ." Well, that's pretty simple.

You put in that they're going to be plemented next month, and they're going to be implemented on residential consumers only, and course, not on the fixed-contract customers, because they're not going to touch those. And finally, the

section says, "Such further information incidental thereto as the Public Utiliti es 1ard may rea sonably require." "M ay reas onably req uir e." Now, Manitoba Hydro has always taken � position that the Pu blic Utilities Board may rea sonably require nothing. And I would suggest you gentlemen that those of you who feel that that

section will give the Manitoba Public Utilities 1ard any power to order information before it that is not included in (a), (

b) and (c), and that ·dro doesn't want the Pu blic Utilities Board to have, are kidding yourselves. Because, that

section so vaguely worded, that Manitoba Hydro if they did not want to give such information to the 1ard would simply force the Board or the consu mers to go to the courts to get an

interpretation that sec tion. Now, 1 would suggest that that in itself very severely limits the kind of hearing the consumers n have under this legislation. And I would suggest, gentlemen, that this sect ion, 39(10), is not cessary. If you simply make it clear to consumers that when the Public Utilities Board reviews tnitoba Hydro's rates, that The Public Utilities Board Act appl ies to its proce edings. Now what's ong with that? I'd like to know what is wrong with that, why the Public Utilities Board pr oceed ings :>uld be any different for Manitoba Hydro than they should be for any other utility.

Now, sure, you're taking the position, as a government, that the Cabinet should have the final r and that the Board should only make rec ommendations. But how can the Board make :ommendations if they cannot use their procedure to get information before the Board, to govern 1 conduct, and so on, of the hearings, to allow consumers to have their fair say. I would say, gentlemen, that, in conclusion, Bill 59 is a cruel farce on the people and the 1sumers of Manitoba. lt removes Hydro from pu blic pu rview comple tely because, as we all know, s bill doesn't mean anything for five years.

The sect ion says tha t you can appeal or at least bring 'ore the Board, any rates that have been fixed by the corpora tion. Well, in the next bill that J'r e going to consider, Bill 60, the se tting of rates for the next five years is removed from the 125

Law Amendments Friday, June 15, 1979 corpora tion. So how are consumers going to ha ve any hearings before the Pub lic Utilities Bo� in the next five years, gentlemen? Now, some of you may reply, well, we're freezi ng the rates. Well, what are you doing abc the rates of the fixed contract customers? What are you going to do when export sales produ profits to Manitoba Hydro that are much more than the utili ty needs?

Are you still going to requ the consumers to contribute more to the profits of Manitoba Hydro when low-income people � barely surviving with the cost of food and housing and utilities in this province? I would suggest, gentlemen for all of the reasons that I have advanced this bill, as I initi� pointed out, is a farce. There are no appeals for five years so what's the point in passing it the first place. Even if there were heari ngs, the Board would have no power and the procedur are such that the hearing would be a farce.

And, of course, the most important point, the abil of consumers to protest discr iminatory rate structu res is specifically termi nated by this legislatic As I have pointed out, tha t's a most unusual procedure for a Legislatur e and I would suggest, w all of those factors present in the introduction of this bill, the only rationale in terms of governmE policy that I can see for this bill is that it's a cover-up; it's a cover-up for the large industr consumers who have been and will continue to be on fixed contr acts well into the twentieth centu and u it's a cover-up for your friends in industry who are depen ding on you being in governmE to give them as many advantages as you can at the expense of ordinary people in Manitob; That concludes my remarks.

MR. CHAIRMAN: Are you prepared to accept questions, Mr . Savino? MR. SAVINO: Yes, I am, Mr . Chairman. MR. CHAIRMAN: Mr. Mercier. MR. MERCIER: I'll pass. MR. CHAIRMAN: Mr. Enns, the Minister of Highways. MR. ENNS: No, Mr . Chairman. I had thought that I had a question or two but after that outpouri of partisan support for this gove rnment, I really haven't any further questions. MR. CHAIRMAN: Are there any further questions? The Member for Transcona, Mr. Parasiul MR. PARASIUK: Yes, I would like to ask Mr. Savino a few questions in relation to

Section of this legislation which indeed does legisla tively abort the inquir y that the Public Utilities Bo< is presently conducting into the discrimi natory rate structure. In October of 1978, the Public Utilities Board dete rmined, I would think after due consider at1 because that's the way they operate, that there was reason to belie ve that Manitoba Hydro ra may be discri mintatory or pref erential and as a result they undertook to look into the discrimina t1 rate structur e of Manitoba Hydro, or at least the rate structure to determine discrimina tory prefere ntial aspects.

Now, obviously in coming to that conclusion, which was a reasoned conclusion and not a parti� conclusion by any stretch of the imagination, unless there is some type of inference that the Put Utilities Board is partisan - which I do not believe; I belie ve that they are an objective body since, oowever, they came to that conclusion in a completely non-partisan manner, could you indie< to us, what were some of the reasons put forward to them which they took into consideration wt they made the decision to investigate the overall rate structure of Manitoba Hydro? MR.

SAVINO: Yes, first of all on the question of the objectivity of the Boards, that should r be an issue at all. As you all probably now know, Mr. Waiter Weir is Vice-Chairman of the Put Utilities Board and it's certainly not a partisan board from the left.

But the reasons that were put before the Board with respect to the discrimina tory rate structu 1 ha ve indicated to you briefly the fixed contracts that the industrial customers, particularly in north1 Manitoba enjoy and have enjoyed for some period of time, and the reas oning that was put bef1 the Board is, look, at that time when those contr acts were enter ed into, it may have been tl the economic situation was such tha t the utility could preserve its integrity and not have too damag an effect on the other customers by having these prefer ential rates.

But here it is 1979, with inflation rates of 10 percent per year that ordinary consumers h< to bear, and the industrial consumers don't have to bear any of that. And that is the kind of argum that was put before the Pub lic Utilities Board here and in Nova Scotia, that these contr acts ' 126

Law Amendments Friday, June 15, 1979 utda ted and, in the conte xt of Public Utilities Board law, the common law decisions that have een made, statutory provisions of Pub lic Utilit ies Board Acts, those contracts and those kinds f rates are unfair and unr easonable within the meaning of the Publi c Utilities Board Act and the oard found some su bstance to those complaints in ordering a review. IR. PARASIUK: Thank you, Mr. Savino.

In Nova Scotia you indicate that the Public Utilities Board tere, which I assume again was a non-partisan objective pu blic body, after its investigation it ruled tat hydro rates were discr iminatory. Were there any changes in the rate structur e as a result of tat? IR. SAVINO: Oh yes, there were. There occurred in Nova Scotia, in the wake of that decision, milar things to what have occurred in Manitoba but only the other way ar ound.

The utility in Nova cotia was put squa rely under the jurisdiction of the Pu blic Utilities Comm ittee, an independent ::>ard, in terms of rates and rate determ ination and rate structure. That was legisla ted into place. 1e board did find these contr acts to be discrimina tory and ordered that they be review ed . The mtracts were reviewed and the rates were upped for the industrial customers. In addition, the board heard a considerable amount of evidence on different types of rate ructu res that can assist people who are getting pinched by the rate structure syst em.

People such ; electric heat customers, you know, who we all know a number of years ago were encouraged r electric utilitie s around the world that, "Live better electrical ly", and, "E lectric heat is cheaper", ld we all know that that just hasn't panned out. Those kinds of rates were reviewed by the Board 1d a considerable amount of specialized evidence was put before the Board to give them a basis >on which to reorganize the rate structure. And the rate structur e was reorganized.

In addition that, in addition to the reorganization of the rate structu re, the government of Nova Scotia troduced rate stabil ization type of legislation to freeze the rates for particular kinds of particularly >pressed customers. R. PARASIUK: Yes, I think

Section 39(4) of the proposed bill limits the application to the Public tilities Board for a review to reviewi ng any price increase or possibly a pric e decrease but it doesn't table the public or any groups within the public or any individuals within the pu blic to appeal the Board to review the situation to determine whether in fact there mightn't be a price decrease hydro rates, as a result of export sales. Manitoba Hydro is launching a fairly major export ing of hydroelectric power. Hydro has gone .out securing rights of ways for a large transmission line.

There is some disruption to the Manitoba 1ciety and Manitoba environment as a result of this. And this supposedly is all being done in order benefit the average Manitoban. So, if the average Manitoban, then, feels that, say in the next 'O or thr ee years or so when there is a tremendous increase possi bly in export sales of ·dro-electric power, that maybe this should arise in a situation whereby the price that they may 1y, that the Manitobans pay for hydro-electric power, should be lower than that export price.

That .nnot be invest igated by the Public Utilities. �-SAVINO: No, it cannot, and that exactly - and I didn't state it succinctly enough - is a ry important point. The rates that are being charged to American customers of Manitoba Hydro e rates that are below the cost of production, while Manitobans are subsidizing those rates for a American customers.

Now, there are all kinds of jurisdic tional problems involved there, including ttional Energy Board and so on, and so forth, but because of the great surplus of power which � have in Manitoba, in spite of what the rates are to the Americans, Manitoba Hydro's rev enues a going to be considerably increased by export sales, even if we're selling it at below the cost production.

And those benefits of the increase in export sales are not going to be passed on Manitoba consumers because, (a), the rates are frozen for the next five years, and (b), you cannot peal the determination of price, since it's being determined by the government and not by the rporati on. t PARASIUK: Yes, I was interested in your comments, Mr.

Savi no, with respect to 39(10), where u indicate that 39( 10) really limits the power of The Public Utilities Board Act; that this really :1 su bstitute for The Public Utilities Board Act and yet, with respect to all the other utilities, Gr eater nnipeg Gas and Manitoba Telephone System and other utili ties such as that, both pu blic and vate, the full powers of The Public Utility Board Act apply with respect to proceed ings, and in ur es timation, and you are a practising lawyer, 39(10) limits that legislation. t SAVINO: Yes.

You know, it's not clear from this legislation what the Public Utilities Board as as the basis of its proced ure. I mean it can only proceed, I guess, in the ordinary fashion 127

Law Amendments Friday, June 15, 1979 until Hydro takes them to court again. That question has not been resolved by this governmE I thought that's what this bill was supposed to be about, but that's not what this bill is about, afraid. MR. CHAIR MAN: Mr. Mercier, the Attorney-General. MR. MERCIER: Well, firstly, Mr. Chairman, I thought the delegation would have, rather tl addressing the Commit tee as gentlemen, would have acknowledged the presence of the Progr es5 Cons ervative Member for Assi niboia, the Honourable Norma Pric e, Minister of Tourism and Cultt Affairs. My que stion is Mr.

Savi no, I belie ve that you are reputed to be or acknowledge yourself to or at least indicated in your introduction that you have, as your basic interest, the interest of consumer. Is that correct? MR. SAVINO: That's correct, yes. MR. MERCIER: How do you reconcile that, Mr . Savino, with the suggestion that the appeal sho be allowed to continue before the Pub lic Utilities Board for a rate increase by Manitoba Hyc with the policy decision of our government, to gua rantee that Hydro rates not be incr eased, wh is obviously the best interest of the consumer? MR. SAVINO: Very easily, Mr . Attor ney- General.

The Rate Increase Application has been he and has been dealt with. In the course of the Rate Incr ease Application, a question was rah about the rate structure. That que stion was decided by the Board to be dealt with in a separ hearing. That hearing is in process; that hearing has been terminated; and that hearing, you hi to understand is a separate kind of consideration.

In reviewi ng rates, you look at how much inco the utility needs and you look at how the utility will get that income - how it will be distribu among various classes of consumers, and I suggest that it's a bit much to say that because Y' government is free zing rates for the next five years it's no longer necessary for our appeal to contin That question has already been dealt with by the Public Utilities Board - the question of h much. lt's the question of who pays which is presently before the Public Utilities Board and I th that this government knows very well the intent of

Section 15 of Bill 59. MR. MERCIER: You would then rather see that appeal besallo wed to continue with the possibi that there might be a rate incr ease, were it not for the fact that the government has gua rantE that Hydro rates will not incr ease. MR. SA VINO: Well, I don't see how there can be a rate increase when that sssue will not be bef the Board. The issue before the Board in that Hearing will be rate structure. MR. CHAIRMAN: The Honourable Member for Selkirk. Mr . Pawley. MR. PAWLEV: Mr. Chairman, I would be interested in hearing from Mr.

Savino whether or r to his knowledee, and possi bly he can provide us with instances where government has, by � of legislation, arbit rary legislation, removed the rights of individuals to continue with an app� whether it be in courts, or whether it be quasi-judicial bodies or before a Board such as we hi in this legislation? MR. SA VINO: Mr.

Pawley, I'm not a constitutional expert, but my limited knowledge of constitutio Jaw and Canadian legal and legisla tive history leads me to answer that question by saying I kn of no such precedent; I know of no case where a legislature has, in the middle of proceedil such as this, termina ted the proce edings by legislation before they could be completed. MR. CHAIRMAN: Proceed . MR. PAWLEY: Mr. Savino, I wonder if you could advise us as to what you see as the consequen' of this intrusion into ju risprudence where rights of appeal of individuals or groups are rem01 in this manner? MR.

SAVINO: Well, 1 think it's a very dangerous kind of prec edent; I mean, it would lead to situation that, wherever the government didn't like what was going on with the courts, or one 128

Law Amendments Friday, June 15, 1979 s quasi-judicial, independent bodies that had been appointed by the government to conside r uestions independent of the influence of the gover nment, it would mean that with a precedent JCh as this, if the government didn't like what a court was doing, or if the government didn't like hat a Board was doing, they could just pass legislation terminating what they're doing. IR. PAWLEY: Mr .

Savino, would it be your view that confidence by the general citizenry in respect , appeals or hearings before other boards and commissions would be undermined by the type f precedent which we have before us? IR. SA VINO: Most certai nly, most certai nly. I mean, I just have never seen a case where some thing ce this has been legislated in midstream. IR. CHAIRMAN: The Honourable Member for Brandon East. IR. EVANS: Thank you, Mr. Chairman. I heard Mr. Savino make a statement to the elfect, if I �ard him properly, that Hydro power is being sold in export markets for less than the cost of ·oduction.

Are you critical of that fact, or do you think that that is some thin g that shou ldn't :�ppe n? !R. SAVINO: Yes. I think it's some thing that sho uldn't happ en. You know, we've had this massive cpansion of the Hydro capacity in Manitoba to meet the needs of Manitobans, out at most times, e have this tremendous surplus of power.

The problem is and, I think many of you are aware ' this, that the pricing formula in the utility, the electric utility industry is such that there are certain nds of contracts that you have for pric e; the kind of contr act that we have for export power means :at we end up selling the power for less than the cost of production, and I think as an economic ·inciple with a utility - with a util ity that's pro viding a vital commodity such as energy - that e people of Manitoba should be able to realize at least what it's costing them to deliver that )wer to a customer.

And you know, this is a separate issue, I think, from this Bill, but it's certainly )mething that has to be worked through the National Energy Board and the customers of Manitoba ydro. R. EVANS: Yes, well, I can appreciate what the member is gett ing at, but given the fact that anitoba Hydro has developed a certain capacity to produce electrical power; and given the fact at this capacity exceeds the firm demand in the province; and given the fact that there seems be no alternative Canadian markets readily av ailable to take up the additional capacity, what ternative does the utility have? R.

SAVINO: I see the point you're get ting at. Certainly, no alternative at all under the present ·icing formula , but I'm sayi ng, you know, it's fine, we accept that, but let's work on changing the icing formula so that the people of Manitoba get more benefit out of this public investment. R. EVANS: Mr . Chairman, would Mr.

Savino agree then that it is probably in the long run interests Manitoba consumers, given the fact that we do have excess capacity, to sell this power in fore ign arkets, namely to the United States, even if it is less than the price we can command domestically, ven the fact that the alternative seems to be to dump that water into Hu dson Bay, and ther efore, oviding even less reve nue to the utili ty, so that in the long run, what appears to be an unfair :uation really does accrue to the benefit of Manitoba consumers? R. SAVINO: Yes, exactly.

And there's another point here, which is why Manitoba Hydro rates ould be reviewed regularly, because in the Hearings in 1977 -78, Hydro was talking about a sasterous economic situation caused by the drought and, all of a sudden in the middle of the �arings, there was a $6 million windfall in export sales that reduced Manitoba's reve nue problems • $6 million. And we've all been read ing in the papers of the incr ea sing revenue that's coming through these export sales even though it's at below the cost of producti on.

The problem is, you know, with the present system of Manitoba Hydro acc ounting, export power les are not adequately accounted for, and that was made quite clear in the Public Utilities Board :arings. They were referred to almost as windfall sales for the util ity and, you know, a windfall $6 million in the middle of the hearings had to have a considerable impact on the result.

But u know that windfall has been improving over the last number of years and I think that it has be rational ized and built into the rate structure as something that's going to occur on a pretty gular basis and not just going to be a windfall. 129

Law Amendments Friday, June 15, 1979 MR. EVANS: Well thank you. Mr. Chairman, Mr. Savino made reference to the domestic mar� rate structure requiring review and change. Just briefly what is being sugge sted here, that we lo at the comparative rate structure of commercial customers versus industrial customers vers domestic customers, and are you somewhat inferring in your questions that the domestic consumE are bearing too gr eat of a burden of the cost compared to the commercial and industrial customer Mr. Chairman, is this ... MR. SAVINO: Yes that is exactly what I'm sugges ting, Mr .

Evans, and, you know, I think we appreciate that large users of power who provide economic stimulation in the province and so < should probably have because they use power on a volume basis and because they provide econon stimulus, should probably have lower per kilowatt hour hydro rates than the residential consum But the gap has grown so wide with inflation and the domestic consumer versus fixed prices a the industrial consumer, that I'm suggesting that that gap has to be narr owed somewhat, and indus has to pay more of its way as we go along here.

I'm also suggesti ng, and this was a big part of the presentation that we made to the Put Utilities Board, I'm also suggesting that in the domestic-user category you have to look at a concE of life line rates. You have to look at a concept of provi ding a minimum package of power people on fixed incomes, and you know it's these people who are suffering the most with uti rate incr eases. They have fixed incomes and when their utility rates go up 20 percent they ea pay it unless their income changes.

So you'v e either got to look at government looking after thE people in some other way, or you've got to look at changes in the rate structure that recogn that there is this kind of customer, and this has been happ ening in utilities boards across the Uni1 States and across Canada.

The Ontario Energy Commission has been looking at lifeline rates over a year now, and this was one of the issues that was raised before the Tritschler Commissi and ignored by the Tritschler Comm ission and ignored by this gover nment, but was raised at 1 Public Utilities Board and the Public Utilities Board was prepared to hear expert evidence that had already prepared , and evidence of their own that they were going to be get ting independer on this question of lifeline rates for people on fixed incomes. MR. EVANS: Yes, thank you, Mr . Chairman. I find Mr. Savino's remarks very interes ting. I won1 if Mr .

Savino when you talked about rate structure and making it more equitable and makin� fairer particularly for those people on lower incomes, whether you would agree that it would a useful restruc turing to have the rates charged for electric power incr ease in some proportion the incr eased use of that power. In other words, a reverse of the rate sett ing method that's w today. The rate se tting method that is used today as I understand it, is that if you as a domel - I'm jus t talking about a domestic consumer - if you use more of the power as you get i1 higher consumption levels you get a cheaper rate.

So a big consumer, domestic consumer, n on average pay less per kilowatt hour than a small domestic consumer, presu mably. I'm going make the assumption that the large domestic consumer is probably better off than the lower domel power consumer because, a richer family is likely to have more television sets, freezers, or whate other electrical appliances one may have.

So that, is this what you are saying that, are you suggest this that in your rate review that you would cause a complete reversal so that you would cha higher rate levels at higher consumption levels rather than the reverse that we· have now; � secondly, do you think that this might have some bearing on the conservation of electric po 111 In other words to cause people to pay higher prices if they're going to be wasteful of electric po1 or to be large consumers of electric power.

In other words you 're penalized if you'r e a large dome� consumer rather than a lower domestic consumer and ther efore using the price mechanism somewhat bring about more conserva tion of electric consumption. MR. SAVINO: Absolutely, Mr. Evans, but it's not that simple, you know, that's the problem.

Th; why this question should be before the Pub lic Utilities Board, because on the one hand yes I tll that you want to look at lifeline rates for a particular kind of customer, and on the other hl for the customer who is a large domestic user and in many cases wasteful -(I nterject ion) - ri! domestic user, the rates should be higher. But into the formula you have to put the user of elec heat who will be a large domestic consumer because he or she heats his or her dwelling v hydroelectricity and that demands a lot more usage than does normal usage.

So between th two ideals you also have to take account of the electric heat customer. And you know we lean from our experience at the Public Utilities Board that at the present moment, Manitoba Hydro no way of identifying who their electric heat customers are. They have no way of isolating tll out in the rate structure and you know certai nly that has to be done. There is a very obvious exarr of why these hearings should proceed so that we can, you know, look at all the various catego1 and look at all the needs within the rate structure. And on your point on cons ervation I agree ' 130

Law Amendments Friday, June 15, 1979 >u absolutely, Mr. Evans, that if you increase the rates in accordance, at a run -off level, you know, ere's a certain package of power which is a normal average usage and if you use more than at as a domestic consumer, then you pay more versus a lifeline basic package for the low income msumer, that will encourage conservation of much needed energy resources in the Province of anitoba. R. EVANS: Yes, well on the matter of the role of the Public Utility Board and the role of the :lbinet in this matter, I am inclined to agree with you.

I wasn't always of the view but I am now clined to agree with you or others that the Utility Board should play a very important, very vital ·le, as a separate body taking a completely, hopefully completely, independent assess ment, depe ndent analysis of what's being requested, either up or down. But what I wanted to get from r. Savino, Mr. Chairman, is an indication of whether he is opposed to Cabinet's review, let's say 1 a final step, let's say after thorough public hearings by a separate Public Utility Board, and orough analysis, etc., etc.

But are you then saying that you would not favour any sort of last view or last say, or even I guess even a veto power, by the provincial Cabinet. Is this what you 're 1gges ting? R.

SAVINO: Yes, that is what I'm suggesting and the reason, I think an obvious reason, Mr. rans, why I would take that position is that if the Pub lic Utilit ies Board completely reviews the uation and goes into the kind of depth and study that it should and always has with utiliti es Manitoba, and makes a rec ommendation, I cannot understand what would move a Cabinet to verse that recom mendation unless it were strictly political reasons and I don't think that the utilitie s' tes sett ing procedure should be used as a political football like that.

Utility rate setting is a process tolving the integrity of the util ity financially and the integrity of the customers of that utility in 'ms of their ability to pay. And knowing what this Cabinet is introducing in this particular piece legislation, to give that particular Cabinet a veto power over what the Public Utilities Board might '· I think would be wrong.

Now I appreciate the argument from the other side that politically the tbinet has to be res ponsible for the Utility and so on and so forth, but it's clear that the mandate the Public Utilities Board is to ensur e the financial integrity of the util ity, at the same time as looks at fairness as between different cla sses of consumers. And you know if that ever became problem, the Public Utiliti es Board not looking after the financial integrity of the utility, then of urse legislation could be introd uced to make it clear that that's the board's mandate.

But the •ard knows that tha t's its mandate, and I don't see that it's ever in the history of Manitoba not cercised that mandate in accordance with, you know, the best principles of economics and cou nting. t. EVANS: Yes, thank you, Mr. Chairman. Well I think there's a large element of truth in what ·. Savino is sayi ng with respect to who needs, you know, another look-see at it after the Utility >ard has done its work.

But would you not acknowledge that somewhere, somehow, the government the day would have some considerable impact ulti mately on, I would suggest, on rates in general virtue of its control over the financing of the Manitoba Hydro system inas much as Manitoba dro bonds are gua ranteed, or seem to have to be gua ranteed by the province of Manitoba to t a lower interest rate, so that would you not agree that there is a leverage there that may be ·y fundamental and very important. l.

SAVINO: Yes there is and of course that is a very valid point that Manitoba Hydro's credit pends on the provincial government and the provincial government negotia tes all the bond deals ::1 so on and so forth. So you as a government have a pretty solid control over those financial )ects of Manitoba Hydro and, you know, preservi ng the economic integrity of the utility as between 1 different classes of consumers and setting the price, I think is something that can be correctly t under the purvue of the Public Utilities Board. I. CHAIR MAN: The Honourable Member for Logan, Mr. Jenkins. I. JENKINS: Thank you , Mr.

Chairman. Mr. Savino, in your pres entation to the committee you te stated that the Hydro rates would not be raised in Manitoba for the next years pending the >sage of Bill No. 60, which is presently in the House. Can you inform this committee where in > Act the government gua rantees the rates of Hydro for the next five years? Let us take for lance a hypothetical case in the next five years. If in the next five years, two or thr ee of tho se trs are drought years ... :. CHAIRMAN: Could I call the honourable member to order. lt's another Act that deals with 131

that particular su bject ... Law Amendments Friday, June 15, 1979 MR. JENKINS: ... Well, Mr. Chairman, Mr . Savino and other mem bers have questioned rv Savi no, and it has been generally acknowledged that there is

an Act guaranteeing the rates, a1 it's part of his pres entation. You didn't object at the time when Mr. Savino made that stateme before the commit tee. If you objected well then you should have objected at that time, not at tt time. What I'm asking Mr . Savino is that he must have studied Bill No. 60 in conjunction with E No. 59, and I'm asking him in his opinion, studying the two bills where he can inform this committ' in that Bill that Manitoba Hydro's rates are guaranteed by the provincial government of the d for the next five years. If we have a drought for two years the costs of Hydro are going to ! up.

Instead of having the incr eases in reve nue we could concievably wind up buying power elsewhe1 Can you inform the committee where in Bill No. 60 the present government bill that is before tl House is gua ranteeing those rates? MR. SAVINO: Well I don't see it anywhere. I haven't reviewed Bill No. 60 as extensiv ely as 1 ha Bill No. 59, but I think the important point is the definition of the right to a hearing under Bill N 59.

And the point there is that the corporation fixes a rate; it's at that point in time that you ha 60 days within which to bring a hearing to the Pub lic Utilities Board, to initia te the proceed in before the Public Utiliti es Board. I'm saying that if the corporation is not going to fix rates for tl next five years then where is that right going to occur? MR. JENKINS: Well, if the Hydro Board of Manitoba, the Manitoba Power Commission suffers deficit, where is the gu arantee that the rates will not increase? MR.

SAVINO: Well, I suppose it's somewhere in Bill 60 that the government is going to make su that the utility preserves it integrity. I don't know how, but I suppose it's somewhere there. 1· certainly not something that they expect the Public Utilities Board to do, from what I hear abo Bill 60. MR. JENKINS: In your cursory perusal, then , of Bill No. 60 you have not come across anythil where the Manitoba government gu arantees the rates of Hydro for the next five years? MR. SAVINO: No. MR. JENKINS: Thank you. MR. CHAIRMAN: The Honourable Mem ber for Winnipeg Centre, Mr. Boyce. MR. JENKINS: Mr .

Chairman, I have another question. MR. CHAIRMAN: Oh, I'm sorry. My apologies. MR. JENKINS: Mr . Chairman, through you to Mr. Savino. In your presentation to the committe you have said that in Nova Scotia and Ontario that the Public Utilities Board or equ ivalent there in those provinces have reviewed the fixed rates that are being charged to industry.

In your studi of the various power rates across Canada and perhaps in some of the jurisdictions in the Unit1 States - 1 belie ve you mentioned the United States as well, where they've been doing studies these rates - how do you find the fixed rates for industry in Manitoba in comparison, say, to No Scotia, which is a sister provi nce, or say to Ontario, which has a very extensive Hydro-elect1 program, as well as a nuclear program and an ordinary thermal program and which would be mayl even closer in comparison, say, to Manitoba than Nova Scotia. But how do our fixed rates compa with those provinces? MR.

SAVINO: As 1 recall the figu res which were put before the Public Utilities Board by Hyd in 1978, Manitoba had the lowest rates for industrial customers on fixed contr acts in the count1 And as I say, what was happ ening at that time was that fixed rates in Nova Scotia were bei1 adjusted upwards. So unless there's been some sizeable give-aways in the last year or so by oth Tory governments in Canada, we have very � ery low rates for industry on fixed contr acts. MR. JENKINS: We'll get down, Mr . Chairman, through you to Mr. Savino. We' ll get down specifics.

We have a company that operates in two provinces, I NCO. Has your committee comparati figures for INCO in the Sud bury area and INCO in the Thompson area? 132

Law Amendments Friday, June 15, 1979 R. SAVINO: I'm sorry, I can't recall exactly what those figur es were, no. R. JENKINS: Could you later supply them to the committee if they are avai lable to you? R. SAVINO: I could certainly go back over the material that came before the Board in 19 78 1d see if the answer to that question is there. R. JENKINS: Wel l, I don't know if other members are interested, but I certainly would be :erested , and if you would care to make a copy available, I would be very appreciative. Thank u, Mr . Chairman. Fl. CHAIRMAN: The Honour able Member for Winnipeg Centre, Mr. Boyce. Fl.

BOYCE: Mr . Chairman, the Member for Logan - I think he raised his hand at the same 1e I did. We reacted to the Attorney-General using the term "freeze" relative to Hydro rates, d the Member for Logan has covered that particular area. But in the establishment of rates, albeit the Hydro Board or the Public Utilities Board or by Cabinet, if somebody says that they'r e going freeze the rates, is it not the case, Mr . Savino that "freeze " means that they can't go down ;o? :t. SAVINO: Well, that would seem to be what's implied by the word "fr eez e".

I mean, when u freeze some thing, you put it in an ice cube where it can't move up or down. �- BOYCE: Well, if, as has been indicated, it's a myth that the government is taking action to tbilize rates, it is because of prior prudent management of the system that it has stabil ized itself, 1eit the present government - in spite of the present government perhaps, but nevertheless I lieve Dean Wedepohl said that a one cent shift in the Canadian dollar is worth $25 million, so er the next five years - well, it is an outside possibil ity, but we're dealing almost with Ouija ards, I suppose, but nevertheless if the Canadian dollar rises to 90 cents or so, then that would an additional windfall to the general reve nue of the province rather than to Hydro: l.

SA VINO: Yes, and you know, I should point out to this commit tee that it became clear through ! material that was submit ted to the Public Utilities Board that the rates for the next five years re going to be pretty stable because what Hydro had done in the previous years was to recover ! reve nues that they needed to compen sate for the incr eased costs of Hydro expansion. And 111as made clear by Mr.

Bateman in October of 1978 that from 1980 onwards consumers could ticipate incr ease-free years, that there would be very little need for any increase in Manitoba dro's rates, so I found it rather surprising when Premier Lyon announced - or the Minister of ance announced that the government was going to freeze rates when in fact it was clear at the blic Utilities Board that there was no need to freeze rates, that the economic viability of Manitoba dro was assured for that period of time. t. BOYCE: Thank you very much, Mr. Savino. t. CHAIRMAN: The Honour able Minister of Highways, Mr. Enns. :. ENNS: Mr .

Chairman, I do have a few questions for Mr . Savino, who, like all of us, expresses l is concerned about the costs of the major utility, essentially a utility like Hydro, particularly domestic users. Did you or the action group that you represent make any representation during years '73, '74, '75, '76, when Hydro rates were going up on average 20 percent per annum any committee, to any Utilities Board, or more specifically this committee dur ing those trs? . SAVINO: Well, I should point out first, Mr. Enns, that dur ing most of th ose years I was not Vlanitoba.

And secon dly, the Associated Tenants Action Comm ittee was not formed until the r 19 76, so it would have been impossible for me or them to be before the Pub lic Utilities Board that time . . ENNS: There was a very subs tantial increase in Hydro in '76. Did the Associated Tenants up make presentation at that time, either through you or some other spoke sman, to your 1wledge? 133

Law Amendments Friday, June 15, 1979 MR. SAVINO: lt was in 1977 thatHydro was brought to the Public Utilities Board. MR. ENNS: lt coincided with the elec tion. I think, Mr. Chairman, members of the committee alwa are well served if they kn ow, you know, a little mor e about the par ticular interest that a persc has when he's spe aking to us. Do you intend to be the NDP candidate in the forthcoming electic in Fort Rouge? MR. CHAIRMAN: A point of order. The Honourable Member for Logan. MR. JENKINS: Mr . Chairman, on a point of order. MR. CHAIRMAN: A point of order. Order please. Order.

The Honourable Member for Logan MR. JENKINS: The question that the Member for Lakeside, the Honourable Minister, has raise is strictly out of order, it has nothing to do with the presentation that was made before this committ< and questions are t o be before the brief that is presented and the bill, and that has nothing do with the bill, and I suggest that you rule it out of order. MR. ENNS: Mr. Chairman, on the same point of order. MR. CHAIRMAN: The same point of order. The Honour able Minister of High ways. MR.

ENNS: it's a common practise of this committee to ask persons who represent themselv in front of this committee as to which association they repres ent, which group they represe nt, whi' labour union they represe nt, or which farm union, which farm bu reau they represent, whether they' speak ing for a professional associa tion. I'm simply asking, I think , a very legitimate question, unle members of the New Democratic Party are that sensitive about being identified.

I'm simply askil and wanting to know whether we are indeed witnessing this morning a nice half an hour, you kno start to somebody's election campaig n. We've had a nice series of questions back and forth, a1 so the question was asked, "Are you going to be a candidate ... ? -(Int erject ion)- MR. JENKINS: Mr. Chairman, I ask you to make a ruling. MR. CHAIRMAN: Order please. Order. On the point of order, the Honourable Member f Transcona. MR. PARASIUK: Mr . Chairperson, I belie ve that Mr .

Savino identified hims elf at the be ginning his brief by saying that he was here in a capacity on behalf of the Associated Tenants Actic Commi ttee. I think he said that he had had that position when the Associated Tenants Actic Comm ittee existed. This government cut off the funding for the Associated Tenants Actic Comm ittee. lt no longer exists, so he's here in an individual capacity, and I think that's the releva point. I don't know what bearing Mr. Enns' question has, unless of course it's to deflect from tl su bstance of the presentat ion. MR.

CHAIRMAN: The Honour able Minister of Labour on a point of order. No point of order would think that it's in order for any meer of a committee to ask the witness who he's repres entin I don't see any problem in that type of questioning, but other than that, i don't think that his politic ground should be discussed around the table, but I have no problem with them asking who hE repres enting here today. Other than that, I feel that the question is partly out of order and il partly in order. it's very difficult. The Honourable Mem ber for Elmwood.

MR� DOERN: I just say that it is out of order to ask any representative before the committe I think , about their political affiliation or about their interests in seek ing any political nominatia and, you know, I have to say that if we push that to its limit we get into an absurd situation becau� Mr . Chairman, I have it on pretty good authority that the Minister of Highways was once seen tal ki1 to a Liberal. A MEMBER: Shame, shame. MR. CHAIRMAN: We ll, for the benefit of the honourable members of the committee, it is 134

Law Amendments Friday, June 15, 1979 IR. ENNS: On the same point of order, Mr . Chairman. R. CHAIRMAN: The Honourable Minister of High ways. R. ENNS: We know what the New Democratic Party does to people that talk to Liberals or 1dor ses Liberals. We're not that sure what they do to people that openly conspire and work with ommunists. However, Mr . Chairman, it is in order to ask the question. lt is entirely also in order r the person not to answer the question. R. CHAIRMAN: The Honourable Government House Leader. R.

JORGENSON: On the point of order, what we 're witnessing here is the inevitable result of witness who appears before this commit tee and becomes overtly political. If the witness had stuck the bill and made his comments about the bill, there would have been no problem. However, 1 chose to use this oppor tunity to do some thin g much more than that, and these are the almost evitable consequenc es of departing from the purpose of appe aring before this committee. R. CHAIRMAN: The Honourable Member for Logan. R. JENKINS: Mr. Chairman, on the same point of order. R. ENNS: Mr.

Chairman, I withd raw on the point of order ft CHAIRMAN: Okay. fl. JENKINS: Speak ing to the same point of order as the Govern ment House Leader. Mr. 1airman, I suggest that the remarks of the Honourable Hous e Leader are a reflection on you as 3 Chair of this commit tee. You all owed the person who was here making the presenta tion to make 3 remarks that he did.

You did not rule him out of order, and for that I respect your rulings a Chairman, but for the House Leader to come in here and say that this person who is here 'fore this committee deviated from the bill that was before us - it's not his opinion. lt was your ,inion he was in order, and ther efore I say that the remarks of the Honourable Hous e Leader a nothing but a lot of hot air. �- CHAIRMAN: We ll, may I remind the committee and the member that's a witness that he has his remarks taken wide strips off the government of the day on several occa sions. So I'm at � mercy of the commit tee. I shall proceed.

The Honourable Minister of Highways. The Honourable Minister of Highways - are you finished ur questions, sir? t ENNS: No further questions, Mr.Chairman . t CHAIRMAN: The Honourable Member for Pembina. adequa tely. t ORCHARD: No questions, Mr . Chairman. They've been answered t CHAIRMAN: The Honourable Minister of Labour. t MacMASTER: Yes, Mr. Savino, you made reference to two major mining industries, I belie ve J· said, in northern Manitoba that are on set rates.

I know the circums tances somewhat surro unding e of them with the Inca opera tion which you specifically made mention to, that some 20-odd 1rs ago under, I believe the Campbell era, the Li beral era, an agreement was reached where o put up front $20 some-odd million, I believe, at a very low inter est rate to develop the Kelsey lject so that the City of Thompson could become a reality. I'm pleased that some thing happened 1t it became a reality, because it happens to be my home town, and there are many thousands people who have made a living out of it.

Whether we like the agreement or not, there certainly re some benefits that came out of it. I'm wondering if you know the circums tances surrou nding the other major development that took ce. You know, you made reference to two; I'm aware of those loose facts surrounding the Inca/ eral Government arrangement which , of course, was a long-term contract. You are correct, and t contract went through the Li beral re gime, through the NDP reg ime, the Cons ervatives and 135

Law Amendments Friday, June 15, 1979 and nobody has made an effort, none of those governments, to open that contr act. You are awar of course, that in a few years it expires and it will be renegotiated. Now, those are the circum stances surro unding the Inca one. I'm wondering if you have tt circums tances surrounding the other development? MR. SAVINO: Yes, Mr. MacMa ster.

First of all, with respect to Thompson, I can appreciate wh you are saying and what was arranged almost 20 years ago with respect to the Kelsey Generate but I think we also have to appreciate that in 1979, the residents of Thompson are payi ng considerable amount per ki lowatt hour for their electricity, while Inca is paying the same rate tht were payi ng 20 years ago.

My point was that 20 years ago, those contracts might have made sens or even 10 years ago, to the economic planners of the day they might have made sense, and bel ieve that the Sherritt-Gordon arrangement with respect to Lynn Lake and Fox Lake was negotiate in 19 69- 1970, in that area there. In analyzing that question, I made no reference to the political stripe of the government of tt day.

Wha t I did say was that we all recognize that industry needs encouragement with lower rate but I also said in my presentation that the rates for industry in other provinc es are not as lo1 The point that I was getting at throughout is that in the inflationar y economy that we have h� for the last number of years, the consumers, the domestic consumers have had to bear all of tt burden of the increased costs of debt, all of the burden of the increased costs of constructic through their rates, while Inca and Sherritt-Gordon have not had to bear anything.

I don't thir it matters what political stripe the gover nment was tha t created th ose rates, I think it's a questic that has to be examined in the best interests of the consumers of Manitoba Hydro. MR. MacMASTER: I see. You don't know the exact circums tances surrou nding the other - ye say it was Sherritt-Gordon - how they came about to get a long-term contr act; you don't kno the circu mstances there? I had mentioned all I know about the Thompson one was the Liber Government negotia ted it. lt was X number of years.

They lived with it, the Con servatives live with it, the ND P lived with it, we have lived with it for a period of a year and a half and I understar the circums tances there. I was wondering what prompted the other? MR. SAVINO: I would imagine the same considerations but I don't know, I was not party to tho! negotiations. MR. MacMASTER: Have you brought this concern that long-term agreements should not t negotiated in the best interests, as you allege, for all people - have you brought that conce1 to anybody else except ourselves? Have you been advocat ing this type of thing for years or daJ or weeks or what ?

MR. SAVINO: Well, there was a presentation made to the Tritschler Commission which will in the gove rnment's file on the Tritschler Commis sion Hearings, which dealt with that and a I• of other questions that I have raised here. MR. MacMASTER: I also noticed, . Savino, that you said that countr ies didn't use very muc foresight when they were encouraging people at random and loosely to use Hydro, because of tt situation we are in today. Does this apply to all countries, including our own province?

You g• in a difficult position where you own the utilit y; you are trying to push it and at the same tirr you have sugge sted that now we see that that maybe wasn't a good act ion. How does governme1 who own a utility, operate under th ose circu mstances? MR. SAVINO: 1 think what I indicated was that utilities across the country in that period of t� early 1970s were encouraging - we all thought the slogans and the advertisements, Live Bettt Electrically - were encouraging people to convert to electric heat.

I think it became clear wi1 Manitoba Hydro and the Nova Scotia Power Corporation and other power corporations over t� years, that the problem with encouraging electric heat was that it put such a demand on the syste1 in terms of your firm pe ak, in terms of how much power you need at any given point in time, th; you had to build an overabunda nce of power supply for your domestic needs for those times whE the water flow was low, and that resulted in electric heat not being such a good bargain as t� utiliti es were promo ting .

But this was a utilit y-wide problem and what I would suggest now is now that we know abo1 that problem, that- we look at the electric heat customers who ha ve been misrepresented to t Manitoba Hydro and other uti lities about how they should heat their home and the economies t that, and that some formula has to be looked at for those kinds of customers. You know, whE 136

Law Amendments Friday, June 15, 1979 Nas talking to Mr. Evans about run- off rates, domestic users up to a certain limit, except you tve got to make an exception for electric heat customers. I think in light of the knowledge that we have now which we didn't have 10 years ago, that ts to be looked at. R. MacMASTER: So what you are sayi ng is· this government should consider corrective measu res it relates to the advertisements and the push that was made in previous years. R.

SAVINO: Not only with relation to the advertisements, with relation to the rates that people e payi ng and that's my point about the Public Utilities Board Rate Structure Inqu iry. They could )k at all of these questions and they could look at the economics and they could look at various 1ys in which the util ity could adjust their rates as between different classes of customers, to come 1 with a fair rate structure. The problem is, the rate structure as it now is, is not fair. R. CHAIRMAN: The Honourable Member for Winnipeg Centre. R. BOVCE: Yes, Mr . Chairman, through you to Mr.

Savino, the Minister of Highways demonstrated interest when you made represe ntations. Did you perchance make a represe ntation to the former nister of Mines and Natural Resources back in the latter part of the Sixties, that the figur es that · was using and the deparmment was using and the Hydro Department was using, projec ting erest rates to be stabili zed at 4-% percent was ...

Did you make any represe ntations in the ter Sixties? �- SAVINO: No, we didn't. �- BOVCE: Did you make any represe ntation to the committees that were running around the ovince talking to people in the north that would in effect, if they followed through on the former nister of Mines and Natural Resou rces' suggestion to proceed with the development in the north, 1t the City of Thompson would now be part of the Burntwood River? Did you make any xesentat ions relative to that? �- SAVINO: No, I was not part of that. �- BOVCE: Thank you. �- CHAIRMAN: Thank you, Mr. Savino. �- SAVINO: Thank you, Mr .

Chairman, and meers of the committee. BILL NO. 68 - THE STATUTE LAW AMENDMENT ACT (1979)(2) �- CHAIRMAN: 1 call Mr. Frank Cvitkovitch, the Mortgage Loan Associa tion of Manitoba, on Bill 1. 68. Proceed, sir. t FRANK CVITKOVITCH: Thank you, Mr . Chairman. Mem bers of the Legislature, I have with � Mr. Warren Barnard who is the president of the Mor tgage Loan Associat ion, and I would like .

Barnard to come up here in case there are any questions that the members might have as 11 of him. t CHAIRMAN: Do you have a brief, or just a verbal brief? t CVITKOVITCH: No, it will be a brief verbal, I hope. t CHAIRMAN: Thank you, sir. 1. CVITKOVITCH: Mr . Chairman, so there's no misundersta nding of whom I represe nt, the 1rtgage Loan Association of Manitoba has made pres entations to the Legisla tive Amendments mmittee before.

The members of the association are basically the major mortgage lenders in � Province of Manitoba, comprising of the life insur ance companies, the trust companies, chartered nks, credit unions, and direct mortgage lenders. We are here merely, Mr. Chairman, to mowledge the action of the government with respect to

Section )0 of Bill 68 rela ting to the tendment to

Section 7 of The Payment of Wages Act. 137

Law Amendments Friday, June 15, 1979 Our association had recog nized, unfortu nately only recently, the confusion and complicati< and the undermining which that particular legislation, after its recent amendments in the last cou of years, has created with regard to title, not only with regard to security to lenders, but title the owners of that property. Therefore, we would like to merely go on record here today as support the amendment which will return to this jur isdiction the philo sophy of priority of registration in Land Titles Office. That, Mr . Chairman, is our subm ission. MR. CHAIRMAN: Thank you, sir.

The Honourable Member for lnkster. MR. GREEN: With regard to priority of a mortage, you are in a similar position with regard taxes, despite the fact that your mortgage is registered, the taxes take pr ecedence to your mortga is that not correct? MR. CVITKOVITCH: Mr. Chairman, that is correct to the extent that one can make enquiry ab' taxes and determine and verify what the tax position is. Whether they are buying or lending a property, they can ascertain if there are any outst anding realty taxes. MR.

GREEN: But if there are no outstan ding realty taxes, then next year there could be outstand taxes, and they take priority to your mortage. MR. CVITKVITCH: That is correct, Mr. Chairman. MR. GREEN: And you can find out if those taxes are paid. MR. CVITKOVITCH: That is correct. MR. GREEN: And indeed you do. You find out that the taxes are pai d, and if they are not, ) don't let them get too much in arrears, you have a right to foreclose on your mortgage if the tal are not paid. Outst anding taxes is a default in mortgage, is it not? MR. CVITKOVITCH: That's correct, Mr . Chairman, yes. MR.

GREEN: Could you not do a similar thing with regard to an empl oyer and wages, that in eff, before you advance the moneys on a mortgage you could ask the emplo yer: how many emplo yE does he have; what is his wage exposure; and ask him to in some way bond that that will be p� and that will protect your security. MR. CVITKOVITCH: Mr . Chairman, there is a correction that is being made I think by 1 government at this stage in the Act, which we app rove and agree with , but there are many otl areas in the Act that require review and I understand this bill may be reviewed by the Law Rete Commission.

The definition of emplo yer under The Payment of Wages Act, I would submit, may be aim broad enough to involve the Mem bers of the Legislature as emp loyers of the people who we for the Government of Manitoba, because of the elephant-gun approach of the definition. So tl when you talk in terms of the emp loyer, that's one point.

Another point that we have had actual experience with is that an employer may not have be an emp loyer when he entered into the loan, and he becomes subsequently an emp loyer and ) have no idea that this man has decided to establish a business, and subs equently he becon involved in a wage cla im. MR. GREEN: But, Mr. - I'm sorry, I didn't get your name. Cvitkovitch. Yes, I'm sorry, we kn each other and I apolog ize for that. But every year you find out whether the taxes are pai d.

You r mortgage companies determ as to whether or not the taxes are paid, in order to protect their security, at least I think tt do. -(I nterject ion)- They don't? MR. CVITKOVITCH: Well, Mr. Barnard perhaps will answer that with regard to the procedu because there is a variation of procedures between the lenders as to how they follow up on re< taxes. MR. CHAIRMAN: Mr . Barnard. 138

Law Amendments Friday, June 15, 1979 R. BARNARD: Mr . Green, as you 're a well-kno wn lawyer and so forth, and as for taxes, it depends 1 the mortgage itself, it depends on the company whether it's a 75 percent mortgage or a high tio mortgage, and in today's inflation and so forth, with taxes being so high, most mortgage 1mpanies collect monthly taxes so they ha ve no worry about the taxes. But we are paying them . the individuals are remitting their payments. · R. GREEN: There are many mortga ges on which the taxes are included as part of the payment, 1d you do that for exactly the pur pose that Mr .

Cvitkovitch has given, that the taxes are a first 1arge on the property despite your registered mortgage. So you have found a way of protect ing mself with regard to outstan ding taxes. R. BARNARD: Yes, we've started out on the right foot but ... R. GREEN: Do you think that you can find a way, and if you can't, I am willing to offer my services r a fee, of course, of protecting the mortgage company from outst anding wages. R. BARNARD: Would you be willing to pay the administration costs of doing this? R.

GREEN: I am willing to offer my services for a fee, and I am sure that the -(ln terjec tion) at 's right, I think I'm raising that. The fact is that when you talk about the administration costs 1d the other costs, I assume that your administrative officers will try to see that all costs are paid, :imately, by the consumer of the loans - and I have no illusions that this will also be the case. 1t I am concerned with a man who is working and performs services for an emp loyer for a period time and then finds that he has no wages coming in.

I am concerned with the security of his lges, as you are concerned with the security of the mortgage. And I am asking you, whether u cannot find a way of protect ing yourself, with regard to payment of wages, in the same way you have found a way to protect yourself with regard to taxes which are a charge against a operty, which comes before your registered mortgage. Ft CVITKOVITCH: Mr. Chairman, perhaps I should answer that on two points. One, Mr . Green s offered his services . :t. GREEN: For a fee. :t. CVITKOVITCH: . . . I'm sure not directly to my client . . . :t. GREEN: To the world. R.

CVITKOVITCH: ... from that point of view, because the association /has retained legal unsel and I have ident ified myself as repres enting them. I think, with respect to the matter of 3 tax claim, frankly that this is a comple tely different item. lt is a known factor against the property, !S set annually by a corporation, a civic or municipal corporation where you can go to and obtain 3 information. Mr . Green is now a practising lawyer, he is well aware of the fact that he can certain those taxes.

He cannot, however, deal with a pu rchase where he is acting for someone 1o's buying a property and determine really, from the vendor, in any certain way, whether or not 3 vendor has emp loyees. We have what we call a declaration as to possession which deals with, have you done any work your property? That means that you would then have to rely on the statement of the person 10 is declaring who could then be moving to Edmonton and gone, and you don't know where 3 liens could be coming from. However, when you deal with the city of Winnipeg for the Realty xes, you know exactly where you 're at.

Now, let me conclude t hat with regard to the working m there's no suggestion in our agreeing with this recom mendation that we are putting down the ht of that individual to have a cla im. But the legislation as drawn conflicts even with such matters The Mechanics Lien Act, which is a basic right of the working man to file a lien on a property der construction. Now, where is his lien right?

There is a mechanism, there is a machi nery that developed over a number of years, and suddenly the person who works as: for example, a okkeeper or clerk for the owner of that pr operty that is under construction, he has a prior claim the man who has been working down there and putting up that building, and for which there s for years been some security. That security is undermin ded. What we 're sugges ting, and the legislation seems to provide at least a stopgap measure, is that :locument be registered in the Land Titles Office so that people can then recognize and relate 139

Law Amendments Friday, June 15, 1979 their priorities and their rights that present legislation does not allow for that. MR. GREEN: Mr. Chairman, I have forgotten my question. I wonder if the clerk would go ba because Mr . Cvitkovitch apparently ... MR. CVITKOVITCH: I think the question was, could we not develop some thing in relation to tax and I explained I thought, Mr . Chairman, the difference. MR. GREEN: No, I said, could you not develop some thing, could your mortgage companies 1 develop something to protect thems elves with regard to wages as they do with regard to taxc And your answer was as given.

And I will try desperately to relate your answer to question. MR. CHAIRMAN: Any more questions? Thank you. MR. CVITKOVITCH: Thank you, Mr . Chairman. MR. CHAIRMAN: Mr. Waiter Kehler. Bill No. 68. MR. WAL TER KEHLER: Thank you, Mr . Chairman. -(I nterject ion)- I'm not a candidate, I th it's fair to say I have done legal work for the last administra tion, for this administra tion, I he for the next one as well, but I am repres enting the Manitoba Branch of the Canadian Bar Associat and really, just briefly to speak in support of the amendment that is before you on The Paym of Wages Act.

We're a little dismayed, actually, that the amendment does not cover the probl altogether, in fact it covers only about half of it, because as I understand the amendment at le� it appears to relate itself primarily to security priority in relation to Real Property, an equally la problem exists in respect to Personal Property. lt is my understa nding that the matter has also been put before the Law Reform Commissi and I would hope that there would be speedy movement to further amendment to correct wh we've gotten off on to a bit of a wrong track in attempts to protect one group of people at expense of others.

And I think if the Bar Association has a concern it is that the labour relations! which I think obviously does bear scrutiny and which we have no wish at all to effect in a v derogatory to the workman, is now being used to effect the rights of thir d parties who have noth to do with that rela tions hip, and that should always be kept in our view, at the very minimum other words, all the rights that can be created as between emplo yer and emplo yee are one thi and they should be there, but as soon as they affect the rights of third parties, who have no v of either influencing, control ling or even knowing about the particulars of the rela tionsh ip, the think you begin to develop bad law.

And that was the concern that the Bar Association had v the sections of The Payment of Wages Act as they now stand. And specifically we had sugges that the lien right that was created under that sect ion be retai ned, but that there be some mechani set up that the lien must be recorded before it has a priority, and then that it have a priority fr that point onward, because the alternative, and we already have some case examples that are n either decided or are in process before the courts, where you're going to get very fUI results.

The Mechanics Lien Act has been mentioned already as one of those, and I know of one c; that is now, well I sho uldn't say that it has become a law suit yet, I know that it is just un consideration in another law firm, not mine, but where there is a very real possibility that the fl created under The Mechanics Lien Act for the benefit of creditor workmen, suppl iers of labour � material, is now going to be superseded in that case by a group of emplo yees who probably, least as far as an analysis of it can be dete rmined, had a pretty good awareness of what was go on in the busine ss, and it seemed to us that that's probably unfair to the workmen who suppl work and materials for the project.

The Mor tgage Lenders Association has presented a brief on behalf of its group in respec1 lenders but actually the same problems that occur for lenders equally exist for pu rchasers property, and I think ttat it would be unfair that any one of you who go and enter into an agreem to buy a house, compl etely unrelated to any busi ness arrangement that your vendor has with employees, either now or hereafter, should suddenly be later on made su bject to that kind a priority.

I know of another case involving an elderly couple in a pr etty classic situation who sell tl house when they are no longer able to maintain it, they take a mortgage back because they ne to invest the money somewhere anyway, it helps them to sell and gives them a regular incor Now these are little people, they'r e not a big insurance company. They are now stan ding beh 140

Law Amendments Friday, June 15, 1979 a series of workmen years later and there goes their retirement fund. And it seemed to us that is easily possible to protect workmen from their emplo yers without interfering in comple tely nrelated business rela tionships. And indeed, finally, to the extent that lenders are involved, it's our view after study in the ssocia tion, that it doesn't really probably have any good effect for the benefit of workmen anyway, s it stands, and consequently should be changed. The reason we say that is that in all logic, I link Mr.

Green is quite right that it is possible for the lenders to fig ur e out a way to protect 1emselves. One of the ways, certai nly, would be to requir e regular declarations from their borrowers 3 to whom they're employing and that they're paying them. But you can imagine the kind of dministrative cost that that involves, and we'd be kidding ourselves if we didn't say hhat that cost ill be passed along as a cost of borrowi ng, and then the already high interest rates that everyone 1ust pay on mortgages will go even higher. That's going to be at least one sure resu lt.

Another way is for mortgage lenders to cut back as to whom they'll lend to, or how much they ill land. That equally detrimentally affects the common man. Finally, if one is looking at major financings, and I've looked at some of those, too, it really vites you to play games with this kind of legislation, and you start sett ing up one organization 1at emplo ys the people and another organization that has the assets, and then you lend to that 1e.

And things like that, there are all kinds of legal creative possibilities, if you like, but frankly, 1e Bar Associat ion, I think has always taken the position that those kind of things are not good 1r either the legal profession or the general pu blic. And consequently we have suggested that the )Vernment should take a look at the provisions of this Act, and that certainly

Section 7(1) should :! immediately changed because we've already had to tell the members of our assoc iation to report 1 all lending transactions and to all pu rchasers that this legislation exists and there is no way 1at we can protect them against it. So the results will inevitably begin to flow in, and we submit at all it will do is set up one group of labou rers against another, the general pub lic against a lrticular class of the pu blic, without benefit to any of them. That is essentially my submission. I would like to make one comment in response to the questions 1ised by the Honourable Mr .

Green in relation to the comparison to taxes. I think that's not really valid comparison, part has already been touched on. Taxes are a part of pu blic record. Employ ees 1rnings, and their payments by emplo yers, are not part of pub lic record, and I think that a lot emplo yees, emplo yees not emplo yers, would be very loathe to have them made part of pu blic 'Cord. And I think you certainly as a lender, I'd think it would be a very inter est ing exercise to > around through some plant and ask all of the emplo yees to tell you how much is owing to them 1 the emplo yer, and how much it should be.

And that's really what the lender would have to ). So, moreover, if there is a default in the tax situati on, the law now is that the taxing authority, e municipality ordinarily, must give notice to a registered security holder of any tax sale proce edings • that notice comes forward relatively automatically. That kind of machinery does not now exist r payment of wages. So, in sum mary, the amendment as it now stands doesn't remove the right of lien as such, but nply requi res that it become pu blicly ascertai nable. We suppor t that.

We say only that you've me half the way now, and we really think you should equally go the rest of the way because e same problem applies with all personal property. Thank you. R. CHAIRMAN: Mr . Mercier, the Attorney-General. R. MERCIER: Mr. Chairman, through you to Mr . Kehler. In addition to the lien for wages having iority over a claim for wages by workmen under the Mechanics Lien, Mr.

Kehler, is it not also 1rrect that that lien could also take priority over a lien under The Builders and Workmen's Act r work performed; for work performed under a lien under The Garagekeepers Act; for work lrformed in a lien filed under The Repairshops Act; for an exe cution to collect an order for wages r a lien under The Threshers Lien Act for wages; and in fact over an order for maintenance for fe and childr en filed in the Land Titles Office. R. KEHLER: That's qui te correct, it cou ld.

The problem is, I think we had a list of some thing e eight other lien rights that there is a conflict with, and one of the problems really is that there more than one Act which says that "notwithstan ding any other legislation, this takes priority," 1d frankly, we don't know what the courts will do as it now stands but clearly that possibility ists. And if you look at just the Payment of Wages Act as it now stands, it would appear to leave le question because it says, "notwiths tanding any other legisla tion", but when you get to the xt Act and it says the same thing, which one has priority?

I think that our best judges would 141

Law Amendments Friday, June 15, 1979 have a very difficult time, and that's why we 're suggeszing, you know, the clean up by amendm is necessary. MR. CHAIRMAN: Mr . Mercier. MR. MERCIER: Mr.

Kehler, I don't know if you're aware, but perhaps jus t for your informal with respect to your second requ est that we've only gone half way, I should indicate to you 1 I have referred to the Law Reform Commission the confusion over existing prior ities of various li and encum brances, I believe, referred to in at least 27 different pieces of legislation in exister and asked them to study this matter and report early to me so that we can attempt to clarify in legislation as early as possible. MR.

KEHLER: Well, cer tainly when that comes forward I think I can assure the Comm ittee 1 the Bar Association will study it. I think probably - I can only speak as an individual here - think we would welcome an attempt generally to bring some order into lien claims and perh some central izat ion into how these things are created , how they are register ed, and how one ' find out about them, because I think the pu blic at large would be much better serv ed. lt has nott do with the rights of one group as against another .

I think it would be much better for the pu if it were always clear because I think every lawyer has far too many experiences of someb' coming in not knowing that a lien right existed , or else not knowing that they should have checl for it if you 'r e on the other end. This happens all the time, and anything that can be done to cl that up would obviously be welcome. MR. CHAIRMAN: Mr. Green, the Honourable Member for lnkster. MR. GREEN: Yes, Mr. Kehler, I'm rather confused when you say that you're not asking that security be done away with, that you're just asking that it be registered . Is that your positic MR.

KEHLER: What we're suggesting is not that there be no ability to get a loan, but we 're sa) that the lien should begin when the lien has been specifically register ed, in terms of priorit) least. MR. GREEN: But that is a significant, as I perceive it , no, it's a significant difference security. MR. KEHLER: Yes, of course. MR. GREEN: Because you are suggesting that I only ha ve that security after I don't get paid • file a lien, and the present Act is that I have that security even if I'd been paid every penny th: owing to me on wages that may not be paid to me a year from now.

So it's not registratio : mean, would you permit me to register a lien now for potentially outstan ding wages, which is w this Act does? MR. KEHLER: No, I think we would be opposed to that. We're saying there must be another 1 to protect a workman in a bu siness rela tionship, not . . MR. GREEN: I just question, Mr. Kehler - I'm sorry. MR. KEHLER: rela tionship. not against uns uspecting third parties who have nothing to do with t MR. GREEN: Well, I am just then questioning what I thought was your statement that you're inter ested in removing the security; you just want it to be register ed.

Because there is a signific difference in what you are suggesting insofar as security of wages, unpaid wages, are concern with what is pr esently in the Act, not merely the registra tion. MR. KEHLER: I agree with you, and perhaps I did not put it well, obviously I didn't.

No, wE suggesting that if you 're going to have an automatic lien right that is created from the date the commenc ement of the employment, and will always take precedence over everyt hing else, tl there is going to be a cost involved to the whole of society that is very su bstantial, but will ultima 1 end up affect ing a specific group, those who are pu rchasers, those who are borrowers, but v have no necessary relationship whatever with the emp loyer/ emplo yee rela tions hip, and in princi 142

Law Amendments Friday, June 15, 1979 seems to us that that doesn't give rise to good law; it gives rise to a lot of misunderst anding; gives rise to a lot of unhappy results for people who have no way of det ermining what risk the y'r e king. And it's not so much the big lender who can 't determine the risk, he can, and he'll charge •U a good fee for it. But what really happens is the average man on the street can't protect hi mself >m that. There isn't any good way.

I'm not the labour management expert, and I wouldn't purport suggest which other good ways there are of protecting that relati onsh ip, but I'm sure that there e a good many other ways that can be found. For example, if you really wanted to have the n right from Day One, well, fine. You know, you can pass legislation which req uir es that that ing be registered, and once I know it's there, fine, then I can protect my clients against it, but at 's not the position we're about. Fl. GREEN: That is the position. You know that it's registered because you ha ve

an Act which ys that it is ... You say you can protect your client against it if it was registered. This Act nstitutes registration of a lien right for every emplo yee. You say you can protect your client. Go ead and protect him. =t KEHLER: The problem is it protects against every employee. I can protect now, but I can 't otect ten years from now. That's the real problem. And I don't know, if you asked me to lend u money today, whether you have any emplo yees or not, but it really doesn't matter whether lnow or not because five years from now you may have. �- GREEN: But Mr .

Kehler, you said that if the lien was registered , you would know, and you 1uld be able to protect against it, and I'm suggesting to you that this Act is tantamount to the listration of the lien. �- KEHLER: Well, no, I'm saying there should be a specific registra tion, because just a general e is of no use to anybody because that may mean . . . For example, in my law firm where I 1 a partner and we have maybe some 20, 25 emplo yees, if currently our arrangement in our firm that the firm pays the staff, then I have 25 emplo yees and a potential, or a contingent lien at times against me equal to $50,000.00.

Now, if, for example, I have th ose emplo yees hir ed by nanagement company that suppli es our firm, I probably have no emplo yees, and that can go ck and forth at any time. And what use is it to the general pub lic to say, "Well, there's always leneral lien rig ht", if you don't know who it applies to. If you have a specific lien, sure, let the 1plo yee file it from Day One if he wants, I don't think that causes us the problem. But then when ceases to be an emplo yee there is also then presumably a right of withd rawal of it, and so : no longer there. So you can know who you 're dealing with.

That's the concern that we ve. l. GREEN: Mr. Kehler, this legislation has been in effect for two years. Is that correct? t. KEHLER: Approxima tely. t. GREEN: Do you know of any mortgage company that has lost their security to an emp loyee 1 holder by virtue of this legislation? t. KEHLER: I think there are some, and there are some that are now before the courts. There 1 a number of cases now pe nding. t. GREEN: You've told us about cases where different emplo yees are conten ding for the lien 1ts. I'm asking you whether you know of any mortgage company that has lost its security by :ue of this lien on wages? t.

KEHLER: Well, I can 't say that there are any completed cases, and I wouldn't want to comment the ones that are before the courts, I think that's proper. :. GREEN: Well, you did comment on the ones that were before the courts, and you said, and on't think it's improper to tell me that there's a case in court where lien rights are claimed by ien holder under this Act, or a lien claimant under this Act, or one under The Builders and ·rkmens Act. Certainly it's not impr oper for you to tell us that, and if you think it is, I for one Jld want to absolve you from any impropriety.

Do you know of a case, do you know of any :e -(I nterject ion)- Well, I can tell Mr. Kehler that it is absolutely not impr oper, under Legislative es, for somebody to bring to the attention of a Commi tte that there is a case before the court 143

Law Amendments Friday, June 15, 1979 where somebody is suing somebody, and I'm asking you whether you know of any mortgage compi in the past two years that has lost its security - mortgage company - because of a lien claim under this Act? MR. KEHLER: I'm not suggesting that I know of any specific mortgage company that has alrei had a loss. I think Mr. Cvitkovitch could tell you better than I could whether there has been < of those.

I do know of one case where it involved pr ivate individuals, and that case is not compl either, I don't believe, but where it appears that the mortgage rights will be lost, or at leas1 part. MR. GREEN: Do you know, Mr. Kehler, of whether there is any change in the mortgage lend rate in the Province of Manitoba as against the Province of Ontario where this lien right does exist? MR. KEHLER: Well, the rate differences exist for many reaso ns. Agai n, I think I shou ldn't comm on the practices of the mortgage lenders since their assoc iation is represented here. 1 think t question would properly come before them.

That wasn't our considera tion, we were concerned t obviously there is a potential for it there, but our association looks at legislation in terms of workability of the law as it stands, not the policy of it. That's not the function in the I Associat ion. MR. GREEN: But you indicated, Mr.

Kehler, that this is going to lead to a rise in lending ra because it will be passed on to the consumer, and I have asked you whether in two years ' mortgage company has lost money, or whether there have been any difference in the pattern lending rates in the Province of Manitoba as distinct from other provinces, and you seem to saying you don't know. MR. KEHLER: I think it's far too early to say, frankly. MR. GREEN: it's too early. I see. Then, there is no su bstantiation of the fact that any comp. has lost money.

You say there is a case where it may be the case, but there certainly has been, to your knowledge, a whole series of mortgage companies who have lost their security beca of this lien? MR. KEHLER: No. Well as I say, I think that you need more than two years to determine re how that will work. But I think there's obviously I don't know that we need to wait for whate length of time it is till we've had the disaster and then deal with it, because I think the practi of lenders are well known, and they set rate in relation to risk. I think that, Mr .

Green, you kr that as well as I do, and I think the logic of that subm ission is not really refutable, because obvious that that's the longer term result. Now, whether it's happened in the relatively short len of time, I think that the Mortgage Lending Association told you that they only recently really bec8 aware that it was there. Now, what they're going to do as that awareness spreads . . . I know that I've had se interesting calls in my office from lawyers, from mortgage lenders, and others who are sayi ng, "1- what's this thing that you sent around a practice note to the legal pr ofession about?

We're gc to have to look at what we're doing." Now, what they'll do - perhaps next year we can tell � but we're suggesting that the pr ojected results are obvious enough so that another method protection for the workman should be found, and this isn't the right one. MR. GREEN: Mr. Kehler, I would hope that I could get a rather definit ive answer to the ques1 as to whether you know of any problems that mortgage compan ies have had - not the projectic because your project ions of disaster is someth ing that one can argue about. Do you ha ve the disa! projections with you? MR.

KEHLER: No, I'm not in the busi ness of making disaster projections. MR. GREEN: Well, you have jus t done so. MR. KEHLER: I think that ... MR. GREEN: You say that it is an irrefutable logic that there will be a disaster and don't \ for it. Now, I would like to know whether you have your disaster projections on hand? 144

Law Amendments Friday, June 15, 1979 R. KEHLER: That's not what I said at all, and obviously I don't have disaster projections on md; I don't maintain them. R.

GREEN: Well, that is exactly what you said; you said, "Why wait for the disaster; the logic the position is so clear as to be irrefutable, and ther efore, you don't wait for it to occu r." Now, want to know whether other than your logic, which I may belie ve to be refu table rather than ·efutable, is supp orted by any disaster projections or any past experience, other than what you 1id that there might be one case where a mortgage company is in danger of losing its iCUrity? R. KEHLER: No, there are a number of cases that are now in process, or in contemplati on.

I m't have a complete list, obviously and I haven't ... In The Bar Associat ion, this matter came !fore us about late March of this year, and it takes a while to get all of the material together, 1t we do know that there are cases in process, and that there are more under contemplation. >u know, more than that I can 't say to you, and if you wish to argue with my suggestion that mething which either increases iisk, or which makes risk undefinable in dollar terms, or if the . well, that kind of thing, generally results in incr eased cost.

And if you want to say that isn't ·, of course that's your privilege, but I think I stand by that submis sion. Ft GREEN: Mr. Kehler, you've indicated some thin gs which I consider to be the possibility of •nstructive changes. You say that two groups of wage earners can be arguing about the same n. Wouldn't that be su bject to remedy by indicating that the amount of the lien would be divided 1ri passu amongst the wage earners who are contest ing, or that . they would all be entitled to an ual lien? And if that ate up the property, they would share equally.

Cou ldn't we put in a provision of the Act that said that where it is two lien claimants, and both e claiming with regard to wages, that they are share equal lyOO and by the way, the AttorneyGeneral s indicated that The Builde rs and Workmen's Lien would be affected by this lien, and both of Jse would take priority to the mortgage. =t KEHLER: Okay. Yes, sure you could pass another amendment that ranks them equally, if that's 1at you want to do.

That isn't sort of what's under contemplation in the amendment as presented, t the problem, though, is that you are then saying that your own legislation that you have pa ssed other Acts is bad, and that the amount of remedy that you allowed for to another class of workmen now to be affected negatively by an amendment here. And I agree with you, you can do that. nay question, however, whether that's again the way to go about it; I think you have other erna tives. t GREEN: I assure you, Mr .

Kehler, we have been here long enough to know t hat the fact that · are amending some thing or changing it or revising it doesn't constitute an admission that what ists now is bad. The government has come in with legislation which they've amended the next y; it happens. But you have raised a problem that workers are competing with each other for ! same lien, and you . say that if we pass a law saying that they share equally, we are somehow 1ting that the other legislation is bad.

That's another part of your irrefutable logic. t KEHLER: I didn't say it was irrefutable logic at all, but it does seem to me that, for example, 10u take The Mechanics Lien Act or The Builders and Workmen's Act and the lien rights that J created there, you set aside a certain fund that by this time is pretty well known to all of the :>pie that are affected by that legislation, and that is the standard our community has as being ficient protection for those people.

And now if you start introducing another class of employees o are workmen who will share that same fund - and I know of one particular case where that Jears now to be about to happen - then that 15 percent or whatever is was that was held �k suddenly becomes some thing considerably less, and how much less, nobody knows, including 1se workmen who are used to having their right at the 15 percent of the contract, and they know at it is, they can determine that readily and easily, and they don't know what's going on in the �k rooms of the emplo yer with maybe his own emplo yees.

And I'm suggesting that there should another way found and this isn't the place. l. GREEN: Mr. Kehler, you'v e also indica ted and I accept it as a real matter for consider ation t an emplo yer's home may be some thing comp letely and apart from where the emplo yee works. 1uld you consider that that kind of thing can be corrected by sayi ng that this lien will only apply the premises where the emp loyer conducts his busine ss, and where the emplo ye e's emplo yed? 145

Law Amendments Friday, June 15, 1979 so that we won't worry about your house being taken over by your emplo yees whose wages 1 say might not pay, although I don't bel ieve you, I belie ve that you will pay your emplo yee's wa! and that most people will pay their emplo yees wages as a priority, in any event, but that we eo change the law so that it refers to the building in which you are employed, and if you don't hap1 to own that building, then there's no lien. Cou ldn't that take care of that particular problem MR.

KEHLER: lt's another way of going about it. lt has about an equal number of problem think we looked at that to some extent as a possibility and it tends, we thought, it tends to im more machinations on the part of anyone who really wants to termin ate the lien rights, � particularly those people who are advisors to busi ness people as to how they should organ ize tl busi ness, long before any problems exist.

What would I do as a lawyer with the businessman who's going to set up his busine ss? · first thin g I would tell him is, "Ge t that property out of the busine ss and put it in another nan and it's that kind of thing that we fear is one of the results and again if that happens, it doe1 help the workman ' but it doesn't help the businessman or the general pub lic either and th< why we rejected it in our own little group as an alternative, but I agr ee with you, it could approached that way. MR. GREEN: Mr.

Kehler, did The Manitoba Bar Associati on, in its sub-Commit tee try to fig out a way how this lien could be made more effective rather than saying that it should removed? MR. KEHLER: Well, you should understand that the su bsection that I'm particularly at tending is The Real Property su bsec tion, so we are dealing with it. in terms of the problems that it crea in Real Property law. Now, in terms of the context of enhancing lien rights for workm en, therE another

section of The Bar Association that looks -(I nterject ion)- Pardon me? MR. GREEN: When are they going to appear here and tell us how to make this

section m effective? MR. KEHLER: lt's a volunt ary assoc iation of people; I don't know if they have an intention to sp� to it. They know what our rec ommendations were, but just how they're proposing to deal witt that I don't know. Perhaps you as, presumably, a member of that su bsection have a bel idea. MR. GREEN: I'm not a mem ber of the su bsec tion, nor do I know that it has ever come here tell us how the empl oyees can collect their wages. lt doesn't seem to be a pr eoccu pation of the I Associa tion. MR. CHAIRMAN: Mr . Enns, the Minister of Highways. MR. ENNS: Mr. Chairman, just one short question of Mr.

Kehler. When you refer to the paten disaster for somebody ... MR. KEHLER: That's an unfortuna te way to MR. ENNS: Well, I want to come back to it and I want to not refer to specific cases of wh I know there are only a few. I think really what you are doing is alert ing government to a probl area with one of our Statutes; that would it not be fair to say that the likeliho od of difficulty wo accrue most often to those in the least possible position to properly defend thems elves?

Tha that the companies, the more sophis ticated borrower, will indeed find ways to protect his investmE that it may be costly administratively which ev entually will get passed on to the lender, but i· the retired couple, that senior citi zen that sells her home or his home to move into an apartmE then decides to lend out her money in a pr ivate mortgage. The least sophisti cated mortgago1 the type of person who could get entrapped in this kind of situation, and to whom it could a disaster in a smaller sense. In other words, I'm prepared to concede that Mr .

Green wa making the point that you coulc name a string of difficulties or disaster cases for mortgage companies, but the likelihood that 1 could hurt the individual - lesser sophis ticated borrower - is real, and for that reason we ou to make amendments. MR. KEHLER: Well, aga in, I don't carry statistics with me, but I would expect that to be the res 146

Law Amendments Friday, June 15, 1979 at is nearly always the result of legislation, that the most sophistic ated people have the gr eatest ility to avoid the largest part of the results. I can speak from my own experience in relation to ger scale financings, where we've been aware of this, the existence of this for sometime, and jally there are a number of ways that it can be dealt with fairly satisfac torily. But one of the �ults is that it av oids the intent of the legislation as it stands. In other words, it's not that difficult w to avoid the effects of

Section 7(1) as it has been, but this would normally only come to the ·e if you have a major, a larger debenture, and you 're acting either for a lender or for the phistic ated borrower, and you cover a broad range of fields and yes, you can avoid it if you tnt to. But it's usually the less sophistic ated transaction and the less soph isticated people who � either not aware and are the first to get caught. I think that's generally true, although I can't e you statistics in this particular case. �-ENNS: Thank you , Mr. Kehler. t CHAIRMAN: Thank you, Mr. Kehler. Any more questions? Is Mr. Steele here?

Frank Steele? ke Froese, Edward J. Kirb y? We had Mr . Kirby. Diane Slusar, I'm sorry. Then that is all the people o have signified their intention to make presenta tions .to the commit tee. Comm ittee rise. 147

Document details

Collection	Manitoba — Debates (Hansard)
Citation	31-3-la5
Type	hansard
Volume / chapter	31st 3rd hansardpdf la5.pdf
Language	en
Format	pdf
Source	PROVINCIAL
Identifier	6c2c6a6bfe61c48875582298e87e32966a432fbd

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