Manitoba Hansard — 31 October 1996 (Sitting 74, 36th Legislature, 2nd Session)

36-2-74

Manitoba — Debates (Hansard)

Second Session - Thirty-Sixth Legislature of the Legislative Assembly of Manitoba DEBATES and PROCEEDINGS (Hansard) Published under the authority of The Honourable Louise M. Dacquay Speaker Vol. XLVI No. 74- 1:30 p.m., Thursday, October 31, 1996

MANITOBA LEGISLATIVE ASSEMBLY Thirty-Sixth Legislature Members, Constituencies and Political Afriliation Name Constituency � ASHTON, Steve Thompson N.D.P. BARRETT, Becky Wellington N.D.P. CERILLI, Marianne Radisson N.D.P. CHOMIAK, Dave Kildonan N.D.P. CUMMINGS, Glen, Hon. Ste. Rose P.C. DACQUAY, Louise, Hon. Seine River P.C. DERKACH, Leonard, Hon. Roblin-Russell P.C. DEWAR, Gregory Selkirk N.D.P. DOER, Gary Concordia N.D.P. DOWNEY, James, Hon. Anhur-Virden P.C. DRIEDGER, Albert, Hon. Steinbach P.C. DYCK, Peter Pembina P.C. ENNS, Harry, Hon. Lakeside P.C. ERNST, Jim, Hon. Charles wood P.C.

EVANS, Clif Interlake N.D.P. - EVANS, Leonard S. Brandon East N.D.P. FILMON, Gary, Hon. Tuxedo P.C. FINDLAY, Glen, Hon. Springfield P.C. FRIESEN, Jean Wolseley N.D.P. GAUDRY, Neil St. Boniface Lib. GILLESHAMMER, Harold, Hon. Minnedosa P.C. HEL WER, Edward Gimli P.C. HICKES, George Point Douglas N.D.P. JENNISSEN, Gerard Flin Flon N.D.P. KOWALSKI, Gary The Maples Lib. LAMOUREUX, Kevin Inkster Lib. LATHLIN, Oscar The Pas N.D.P. LAURENDEAU, Marcel St. Norbert P.C. MACKINTOSH, Gord St. Johns N.D.P. MALOWA Y, Jim Elmwood N.D.P. MARTINDALE, Doug Burrows N.D.P. McALPINE, Gerry Sturgeon Creek P.C. McCRAE, James, Hon.

Brandon West P.C. McGIFFORD, Diane Osborne N.D.P. MciNTOSH, Linda, Hon. Assiniboia P.C. MIHYCHUK, MaryAnn St. James N.D.P. MITCHELSON, Bonnie, Hon. River East P.C. NEWMAN, David Riel P.C. PALLISTER, Brian, Hon. Portage Ia Prairie P.C. PENNER, Jack Emerson P.C. PITURA, Frank Morris P.C. PRAZNIK, Darren, Hon. Lac du Bonnet P.C. RADCLIFFE, Mike River Heights P.C. REID, Daryl Transcona N.D.P. REIMER, Jack, Hon. Niakwa P.C. RENDER, Shirley St. Vital P.C. ROBINSON, Eric Rupertsland N.D.P. ROCAN, Denis Gladstone PC . SALE, Tim Crescentwood N.D P. SANTOS, Conrad Broadway N.D.P. STEFANSON, Eric, Hon. Kirkfield Park P.C.

STRUTHERS, Stan Dauphin N.D.P. SVEINSON, Ben La Verendrye P.C. TOEWS, Vic, Hon. Rossmere PC TWEED, Mervin Turtle Mountain PC . VODREY, Rosemary, Hon. Fort Garry P.C. WOWCHUK, Rosann Swan River N.D P

4653 LEGISLATIVE ASSEMBLY OF MANITOBA Thursday, October 31, 1996 The House met at 1:30 p.m. PRAYERS MATTER OF PRIVILEGE Manitoba Telephone System Mr. Steve Ashton (Opposition House Leader): I rise on a matter of privilege, and, as is the case with our rules, I will be following it with a motion. Madam Speaker, it is becoming increasingly obvious to members of the Legislature and to all Manitobans that this government has not been telling the truth to the people ofManitoba in regard to the Manitoba Telephone System. On almost a daily basis, we see contradictions.

We see misleading statements, and we see misrepresentations not only about the sale itself and the impact of the sale but also in the process that was followed in bringing us to the point where, within a few days, this government can ram through the bill, Bill 67, to sell MTS. It will be sold off; something we have owned since 1908 will be sold off.

Madam Speaker, I want to outline the many misleading statements and misrepresentations that this government has placed on the record that we believe should not only not be allowed to remain on the record but requires some analysis, some sanction and, in particular, I believe are so extreme that we and all the members of this Legislature should be looking very seriously at not proceeding with such a drastic move with the sale of MTS which will happen with the passage ofBill67. I want to go back chronologically to the origins of these misrepresentations.

The provincial election, we all know that the government said they were not going to be selling MTS. That was repeated in the House in May, 199 5, the first Question Period, the Premier at that time-and the Premier can quibble about no plans. We have had witnesses come before the committee, members of the public who have said that the Premier said no, they would not be selling offMTS.

What is interesting is that, according to the government, somehow in August of 1995 they suddenly, for the first time, had some realization that, for example, MTS was now largely competitive, and they have referenced the report of the Crown Corporations Council.

It is interesting because on September 26, 1996, supposedly after this discovery-and I think many people would question how realistic that kind of statement is, how anyone can believe that all of a sudden the Premier and his advisers just came to some realization of what had been happening in the phone system since 1992 -but on September 26, 1995, in committee, I asked the Minister responsible for MTS (Mr. Findlay), September 26 -recall that this is one month after the Crown Corporations Council supposedly indicated concern about the status ofMTS to the government, and what did the minister say, Madam Speaker?

He said that the only person talking about the sale of MTS was the member for Thompson, the only party was the NDP; we have no plans or intentions to privatize MTS. You know, not even the sort of shifting statements we have seen from the Premier, it was categorical. That was September 26. I want to run the calendar ahead, and these are just things that we know before we deal with some of the things, the serious questions that have been raised about what has happened. That was September 26.

Madam Speaker, the same minister this year in committee stated that they approached seven brokerage firms to look at the situation with MTS. He stated that those seven firms were interviewed in September and October of 1995. Did the minister not know about that on September 26? Was he contradicting himself? Was his memory faulty, or was he misleading the legislative committee and the people of Manitoba? Madam Speaker, we have confirmed that the three brokerage finns that became the so-called MTS fmancial advisory group were appointed in the middle of November to conduct the contract.

That was based on information that we got out of the government in December, on the day in which we, based on our knowledge from the investment committee, announced it in the House, and then the government put out a press release later that day announcing it to the public of Manitoba. We know that that group met in November. * (1 33 5)

4654 LEGISLATIVE ASSEMBLY OF MANITOBA October 31, 1996 Well, what is inte resting is right from the start we in the New Democratic Party did not believe the government's assurances. We had every reason to believe that this government had an existing agenda to privatize MTS. What is inter esting is we went throughout Manitoba and talked to Manitobans about the sale. What was also interesting is that the same Minister responsible for MTS (Mr.

Findlay), who said there were no plans to sell MTS, when confronted in the House in December, started to switch tunes, and when people wrote in about MTS, stated, and I quote from a letter of March 1996, that contrary to some rep orts, no decisions have been or will be made about the privatization without public discussion. Madam Speaker, that was sent throughout Manitoba; many people expressed concerns. The announcement was made on May 2 with no public discussion. That statement in itself was misleading, and this is under the minist er's signature and was sent to many people throughout Manitoba.

I think very serious questions have to be raised about the statement: "no decisions have been or will be made ." Let us go somewhat further because although the Premier had said in December that this supposed MTS financial advisory group was simply to review the matter, it became very clear with the release of the report on April 30, the MTS financial advisory group based on Bay Street in Ontario, that in fact this was the study, the one and only study that the governm ent was going to be using in terms of the privatization.

We were told in the House when we asked about the decisio n-ma king process that the chronology was essentially, April 30, it was addressed to Treasury Board, probably sent directly to Mr. Jules Benson who most recently has become the unofficial adviser to Mr. Tom Stefan son and the Minister responsible for MTS and the MTS committee. But on April 30, it went to Treasury Board-you would have the government word to be believed-to cabinet the following day. It was announced to its caucus on the Thursday morning; they were not involved in the decision, it was not taken to the board.

The only person it went to from MTS was Mr. Tom Stef anson, and then the government announced on May 2 the sale of MTS. And if there be any doubt about the finality as far as the government was concerned about the sale of MTS, the minister in May and June was already saying that it was too late, that the decision had been made. It did not matter what was going to happen in terms of public input, that decision had been made; MTS would be sold off, perhaps neglecting to mention once again, at that time not one single vote had taken place on MTS in this House. The first vote on MTS took place this week.

Well, what is intere sting again is that they contradict their own words. We asked questions in April about an advertising contract involving one Barb Biggar at a cost of several hundred thousand dollars on April 10 of 19 96, and what is interesting is that Barb Biggar was brought in. This was part of an adver tising contract that the Premier (Mr. Filmon) himself later in the House confirmed was to do with what he called the rec apitalization of MTS. So the advertising contract was being let in April. They are trying to say and had said that no decision had been made.

It is obvious that the decis ion had been made. Why would they have let the contract in April if the supposed decision was to be made April 30 and May 1 and then announced on May 2? It defies anybody's cre dibili ty on that side to suggest that that decision was really made within a day or two. I want to take it ahead to the committee this year that took place, the Minister respons ible for MTS (Mr.

Findlay), because the sam� minister who last year, one year ago, \\<as saying that there were no plans to sell MTS was now saying that deci sions started in August of 1995, September of 1995, October of 1995, and somebody said in committee last year that I think the only conclusion we on this side of the House can make on the minister's statements is that he did not tell us and the people of Manitoba the truth in September of 1995, that we were not told the truth in December when we were told by the Premier (Mr. Filmon) that no decisions were made.

We were not told the truth in April when we raised questions in the House that no decisions had been made when in fact the adverti sing contract had been let, and we knew about this as early as April I 0, 19 96. In fact, while the date on the letter selling off MTS is dated April 30, this two-day decis ion-making process, it appears very clear that this government had plans to sell MTS far bef ore that. What is also intere sting was in committee yesterday. A member of the public made a presentation, once again catching the minist er in his own contradictions. The -

October 31, 1996 LEGISLATIVE ASSEMBLY OF MANITOBA 4655 minister on CBC Radio, on the 18th of this month, stated and quoted from the Crown Corporations Council report, which, by the way, if one reads it in its entirety, gives a fairly good picture of MTS in terms of its financial health, did raise some concerns in terms of risk. He quoted this and tried to reference that this was somehow the reason why in August of 1995 they started this process. They suddenly learned what was happening at MTS and started this process.

It was interesting because the presenter pointed out that the document the minister had quoted from was not made a public document, was not a document that existed until April of 1996. *

(1340) There is a paper trail here that the minister is trying to set up, that the Premier (Mr. Filmon) is trying to set up, to disguise one thing, and that is-and I believe that even before the provincial election this was the government's agenda. I will not get into some of the coincidences of one Mr. Bessey, now on his way off to his $400,000 schol arship and book deal with a principal of Faneuil, rather coincidental that his thesis topic was going to be on the costs and benefit, if benefit is possible, sale of MTS.

We contract the many other developments within MTS with Faneuil, the cable deal, which we believe were part of stripping the assets of MTS, but I think we can conclude two things from what has happened, and this is why we believe that this is a very serious matter. The first thing we have on the record very clearly is that the government, the Premier (Mr. Filmon) and the minister who is responsible for MTS have not told the truth. We cannot conclude anything else because their own words even contradict each other.

They cannot even get the story straight themselves in terms of the dates, in terms of when the real decisions were made, so we know we were not told the truth, whether it be in the election, whether it be in May of 1995 in this House with the Premier and, most particularly, September 1995 in the committee. I think that is very serious because it raises very serious questions how we can believe anything that the government has to say about an issue as important as MTS.

But the second thing, Madam Speaker, is not only can we not believe the government, we believe that we are now, as members of the Legislature and as people of Manitoba, being asked to, in the case of the people of Manitoba, discuss the issue of MTS because they have not been given the opportunity to have a vote on it.

But we are now dealing with a situation that this government expects this bill to be voted upon, a bill that will sell off a Crown corporation that has served us well since 1908 and that the vast majority of Manitobans feel can serve us well in the future, based on a series of statements that have been placed in the House that are misrepresentations, that are misleading and have no resemblance to the facts.

Given that, we believe the only appropriate thing to do is to have the whole mess of MTS-and you know, Madam Speaker, I think the word "scandal" applies, because I think it is scandalous when we have seen the way this government has dealt with our public assets, when we see now that this hidden agenda, this private agenda, has surfaced. We now even see that the same brokerage firms are now going to be in charge of the sale. They are being called the lead runners, I believe-Qur assets, the same Bay Street bankers.

If there is one thing I think all Manitobans agree on, it is when you make a major decision such as selling MTS, first of all, the public should be involved. Second of all, the facts should be on the table; the truth should be told.

That is why we feel that this sale, the sale of MTS should not proceed any further until the fmal, the true story is told about what we feel is the scandal in which this government is implying a private agenda, and an agenda that is going to make certain Manitobans-well, certain people perhaps on Bay Street-very wealthy, and it is going to result in the destruction of the publicly owned telephone system we have known. That is why I move that the numerous misleading statements and misrepresentations of the Minister responsible for MTS (Mr. Findlay) and the Premier (Mr.

Filmon) have made on the sale of MTS be referred to the Committee on Privileges and Elections. Hon. Darren Praznik (Deputy Government House Leader): Madam Speaker, a motion of privilege is always a very serious matter before this House. One would hope that it is always used to deal with the matters for which it was intended rather than matters of political debate. The member for Thompson (Mr. Ashton) has to meet a number of criteria for this to be considered. One, of course, is the timeliness of the motion. The information

4656 LEGISLATIVE ASSEMBLY OF MANITOBA October 31, 1996 that the member has brought to the House in support of his argument is information that has been out there and in the public realm for some time. I would certainly hope, when Madam Speaker is reviewing this matter, that she cons ider this issue of timeliness because we would submit that it has not in any way met certainly that requirement. But more important is the issue of building a case, of making a prima facie case that the privileges of the members of this House have somehow been breached.

I listened very intently to the statements that the member for Thompson quoted. What surprised me in them is they outline, quite frankly, and I challenge his assumption, a process by which any minister, any government, any cabinet has circumstances before it that it must consider, must evaluate, must study, must see options come forward that ultimately lead to a decision. The comments that surround that, the studying of an issue, whether it be retaining advice to provide argument to governm ent to evaluate particular options in changing circumstances, is part of the process of government.

Ministers because they consider and governments because they review and consider matters in the public inter est does not mean that they necessarily lead to a decision other than the status quo. *

(1345) Madam Speaker, the member has made reference to comments about election campaigns and changing circumstances.

Many in this province will remember that his party while in government also were faced during their mandate with issues that they did not campaign on, that they did not expect to have to address, that during the course of their mandate circumstances changed, issues developed that they did not anticipate that led them ultimately to having to make decisions and, more impo rtantly, study options, assess them and make decisions and come to this very Legislative Assembly with their proposal to deal with it. I recall constitutional amendments on language in the period of 1981 to 1986.

I do not remember in any way the New Democratic Party campaigning in 1981 on bringing a language amendment to this Legislature. Yet, they did, and they would argue it was because of circumstances and courts' decisions that led them to have to consider options. I am not here to debate the options they chose, but that is just one example of them having to make decisions. They made decisions in their next term of office of 1986 and '88 to significantly raise taxes in this province. They did not campaign on that in the 1986 election.

So, Madam Speaker, I do not fault them; every government has to deal with the circumstances that present itself The case that the member has made, I would submit, is very much one of describing a process by which ministers, cabinets, governments see issues that come forward and do what is in the public interest, what is their responsibility to do, but to make themselves aware of those issues, to study those issues, to assess them to see what options are available and ultimately make a decision, and -what decision do governments make?

They make a decision, as in the case with the Manitoba Telephone System, to bring a proposal to this Legislature. The decision to sell this public utility does not rest with the government of Manitoba. It does not rest with the Minister responsible for the Manitoba Telephone System (Mr. Findlay). It rests with the Legisl ative Assembly of this province. It is the Legislative Assembly of this province that created the Manitoba Telephone System. It is the Legislative Assembly of this province, all of its members who have the authority with which to make changes to it.

So what the member has described is exactly what the Premier (Mr. Filmon) of this province has addressed in answer to questions, what the minister has addressed in answer to questions, a process by which circumstances change, that a government has to consider options and a government if it feels it has to act beyond the status quo brings a proposal to this Legislature. Now, Madam Speaker, if the member for Thompson (Mr. Ashton) was right in saying that governments should not do that, what kind of government could function where they could not assess, they could not consider, they could not study options?

We would have mindless government. You cannot have that. Ministers and cabinets have to be afforded that ability to study options. If the option chosen by this government was to do nothing but maintain the status quo, would this in fact be an issue? Not at all, but the same process that the minister described would have taken place.

October 31, 1996 LEGISLATIVE ASSEMBLY OF MANITOBA 4657 So., Madam Speaker, I would argue very strongly, and I would submit to you, that the member for Thompson has brought no evidence to this House, none whatsoever, that indicates that a member of this administration individually or collectively as a government has done anything to mislead the House-none whatsoever.

All the member has brought forward is a list of statements over time that reflect a process of evaluation and consideration and decision making that it is indeed, I would argue, not only the prerogative of government but the responsibility of government to make, and if this government or any other did not go through such processes of decision making it would be a sad day indeed for the people of the province of Manitoba. So we submit that that test of building and making a prima facie case has not been made in any way and that this motion of privilege should be rejected. Thank you, Madam Speaker.

Madam Speaker: I will take the matter under advisement and report back to the House. * (1350 ) ROUTINE PROCEEDINGS PRESENTING PETITIONS Guaranteed Annual Income Mr. Doug Martindale (Burrows): Madam Speaker, I beg to present the petition of Carrie Nelson, Nicholas McLellan, L. McLellan and others requesting that the Legislative Assembly urge the Minister of Family Services (Mrs.

Mitchelson) to consider withdrawing Bill 3 6 and replacing it with improved legislation which provides for a guaranteed annual income that allows people to have adequate food, clothing, housing, child care and health care, that this annual income increase as prices increase and that this new legislation also provide for the creation of real jobs, with the goal of creating full employment so that individuals on social assistance can find safe, meaningful work of their own choosing that allows them to meet their needs and the needs of their families. Manitoba Telephone System Ms. MaryAnn Mihychuk (St.

James): Madam Speaker, I beg to present the petition of Paul Chorney, Roger Geev es, Ernie Strauss requesting the Premier (Mr. Filmon) withdraw Bill 67 and not sell the Manitoba Telephone System to private interests. Mr. Gord Mackintosh (St. Johns): Madam Speaker, I beg to present the petition of Gerri Unwin, Mary Grabowski and Jerry Olfinan requesting that the Premier withdraw Bill 67 and not sell the Manitoba Telephone System to private interests. READING AND RECEIVING PETITIONS Guaranteed Annual Income Madam Speaker: I have reviewed the petition of the honourable member for Burrows (Mr. Martindale).

It complies with the rules and practices of the House. Is it the will of the House to have the petition read? An Honourable Member: No. Madam Speaker: Dispense.

THAT in 1976 Canada signed the United Nations Covenant on Economic, Social and Cultural Rights which recognized the right of everyone to make a living by work which is fre ely chosen, recognized the right of everyone to an adequate standard of living, including adequate food, clothing and housing, recognized the right of everyone to enjoy a high stan dard of physical and mental health, and provided fo r the widest possible protection and assistance to the fam ily; and THAT poor children and adults in Canada continue to die at a higher rate and earlier age than people with adequate incomes; and THAT Bill 36, The Social Allowances Amendment Act, will create even greate r poverty among the poor in Manitoba by eliminating gove rnment responsibility to ensure that everyone who lacks adequate fo od, clothing, housing and health care has these needs met; and THAT the bill proposes to punish people by cutting them off from social assistance or reducing their benefits if they fa il to meet employment expectations; and WHEREFORE YOUR PETITIONERS HUMBLY PRAY that the Legis lative Assembly of Manitoba urge the

4658 LEGISLATIVE ASSEMBLY OF MANITOBA October 31, 1996 Minister of Family Services to consider withdrawing Bill 36 and replacing it with improved legislation which provides for a guaran teed annual income that allows people to have adequate fo od, clothing, housing, child care and health care and that this annual income increases as prices increase and that this new legislation also provides for the creation of real jobs with the goal of creating full employment so that individuals on social assistance can fin d safe, meaningfUl work of their own choosing that allows them to meet their needs and the needs of their fam ilies. *

(1355) Rural Stress Line Madam Speaker: I have reviewed the petition of the honourable member for Swan River (Ms. Wowchuk). It complies with the rules and practices of the House. Is it the will of the House to have the petition read? Some Honourable Members: Yes. Madam Speaker: The Clerk will read. Mr. Clerk (William Remnant): The petition of the undersigned citizens of the province of Manitoba humbly sheweth that:

WHEREAS the provincial government has refused to provide a long-term funding commitment to the Farm and Rural Stress Line, thereby ensuring its demise; and

WHEREAS the Farm and Rural Stress Line serves a recognized need in rural and remote communities in the province and is supported by individuals and organizations such as the Canadian Mental Health Ass ociation, the Keystone Agricultural Producers, the National Farmers Union and the Manitoba Women's Institute; and

WHEREAS the Farm and Rural Stress Line is a cost effective, preventative, community-centred health care service such as promised by the Conservatives during the 1995 provincial election; and

WHEREAS the provincial government funds a similar line in the city of Winnipeg with an annual grant of $400,000, creating a double standard between services in urban areas and those in rural Manitoba. WHEREFORE your petitioners humbly pray that the Legisl atiye Assembly of Manitoba request that the Minister of Health consider continuing to fund the Farm and Rural Stress Line on a yearly basis. TABLING OF REPORTS Madam Speaker: I am pleased to table the Annual Report of the Chief Electoral Officer on The Elections Finances Act. Bon.

Barry Enns (Minister of Agriculture): Madam Speaker, I am pleased to table the report of the Agricultural Producers' Organization Certification Agency. Introduction of Guests Madam Speaker. Prior to Oral Questions, I would like to draw the attention of all honourable members to the public gallery, where we have this afternoon twenty Grade 1 0 through Grade 12 students from the Rising Sun School under the direction of Mr. Chris Kruchko and Mr. Paul Kushner. This school is located in the constituency of the honourable member for Point Douglas (Mr. Hickes).

On behalf of all honourable members, I welcome you this afternoon. *

(1400) ORAL QUESTION PERIOD Manitoba Telephone System Privatization-Impact on Rural Manitoba Mr. Gary Doer (Leader of the Opposition: Madam Speak er, the Manitoba Union of Municipalities, in presenting their brief to the Legislature in opposition to the Premier breaking his election promise, stated that providing telephone services to rural and northern Manitoba has never been easy or profitable. Rural Manitobans and northern Manitobans benefit from the political will over the years for the subsidization of rural and northern rates through the urban rates.

We are very, very worried about the user-pay concept, the cost recovery concept plus profit that is inherent in the profit private system that is the vision now of the Filrnon -

October 31, 1996 LEGISLATIVE ASSEMBLY OF MANITOBA 4659 governm ent after the election with the bill under privatization. We have looked at some of the charts, Madam Speaker. The real cost of providing service in Rob lin-Russell is over $48 and the actual bill is some $13.55. The real cost of providing service in Neepawa is $47; the customer bill is some $13.75.

Will the Premier now listen to the reality of the fact that rural and northern Manitobans are going to get shafted with his broken promise, and will he now agree to keep his promise and not proceed with the privatization as he promised in the election campaign to rural and northern Manitobans? Bon. Gary Filmon (Premier): Madam Speaker, the only reality that will prevail with respect to those decisions is that the CRTC will make those judgments.

In fact, I can share with the �embers opposite clippings of Saskatchewan newspapers in which the minister responsible for the Saskatchewan government telephone system is going through exactly the same public debate, is saying that these kinds of judgments made by the CRTC will apply to the Saskatchewan telephone system as it applies to every other telephone system in Canada. Those decisions and those judgments are made on a nonpartisan basis, on obviously the basis of assessment from expert advisers and from all of the information that is available to CRTC.

They are the ones who govern the rate setting in Canada today in all provinces except Saskatchewan who will be very shortly coming under their jurisdiction, which is why the discussion is taking place in Saskatchewan right now. Those CRTC judgments will be made regardless of whe ther it is publicly or privately owned on exactly the same economic basis, and I would suggest to you that the availability of the telephone service and indeed even the probability of even better service is there in future whether it is publicly or privately owned. Privatization- Plebiscite Mr.

Gary Doer (Leader of the Opposition): The next time the Premier brings some clippings into the House, why does he not bring the clippings from the election campaign when he promised not to sell the Manitoba Telephone System, if elected? The last time he brought clippings in from Saskatchewan we found out later that, contrary to what the Premier had stated, there had been a rate freeze in Saskatchewan for the last three years, not the word that the Premier gave us in this Chamber, Madam Speaker.

The Alberta telephone system, which is now the model for Manitoba-according to the brokers on Bay Street who are obviously providing the leadership to this government, sadly speaking, in terms of some of the members opposite-has stated that they are moving more and more to a cost-recovery system. In other words, they are going to look at cost recovery in each community rather than looking at the telephone system in a nonprofit way which looks at the total province as a community, which we believe should be the vision of the future of the Manitoba Telephone System.

How does the Premier justify the actual cost in Flin Flon of$43 when the customer cost is $14; Hamiota, the real cost is $49 on a cost-recovery basis versus $13 in terms of what the customer bill is now? Why does the Premier, if he is so sure of what he is doing, not put it before the people and the shareholder � in a plebiscite so everybody can vote on it, rather than just getting shafted by members opposite? Bon.

Gary Filmon (Premier): Madam Speaker, I repeat for the edification of the members opposite that those rates and those judgments about the balancing of the costs will be made by the CRTC on a nonpartisan basis, on an objective basis, and based on advice from expert people that they will hire in order to do their analysis and it would not matter whether it was publicly or privately owned, the same analysis will be made and the same judgments will be arrived at. Mr. Doer: The Premier is afraid and does not have the integrity to have a plebiscite of all shareholders in this province.

I think that is absolutely shameful in terms of the democracy in this province, and I cannot believe these backbenchers going along with the brokers and the Premier. I cannot believe it. Privatization-Impact on Rates Mr. Gary Doer (Leader of the Opposition): Madam Speaker, we have tabled the AGT case of $6 this year and

4660 LEGISLATIVE ASSEMBLY OF MANITOBA October 31 , 19 96 $6 next year. We have tabled a vision which talks about rate incre ases based on a total comm unity, rather than a cost recovery that we will see in rural and northern Man itoba. That is why the UMM is opposed to it. They are opposed to it because they know they are going to get shafted by this government when we move to a private cost- recovery profit system.

I would like to ask the Premier, will he table in the House today any inf ormation they have on advance or existing tax rulings on the sale of MTS and its treatment as a private company and any impact on the rates in the fu ture that they have and should have for the people of Manitoba, and 'What the impact will be on the rates of all the existing shareholders, i.e., the customers here in the province of Manitoba? Bon. Gary Filmon (Premier): Madam Speaker, I will take that question as notice and bring a response back to the member opposite. Manitoba Telephone System Privatization-Impact on Rates Mr.

Steve Ashton (Thompson): Madam Speaker, the Premier not only misled the people of Manitoba when he said he would not sell the Manitoba Telephone System, he has consistently misled the people of Manitoba about the impact. In fa ct, he stated on May 2 and May 8 that under CRTC regulation, it will not make any diff erence whether it is privately or publicly owned, and he quoted on May 8, there will be no difference in the rates that are charged, whether they are public or private.

I am wondering if the Premier can explain then to, fo r example, the Manitoba Society of Seniors who have pointed to the tax liabilities and the borrowing costs being evidence of the higher costs that private companies face and the CRTC official, local director fo r CRTC who has co nfinn ed that private companies have to pay taxes and the cost is passed on to the consumers-when is the Premier going to tell the people of Manitoba the truth that rates will go up at a fa ster rate under a privatized company as they have already in Alberta? When will the Premier tell the truth, Madam Speaker? Bon.

Gary Filmon (Premier): Madam Speaker, there is a whole series of variables that will go into the an alysis, and many of them will counteract and wash out each other; some may even be to the fa vour of a private company being able to operate at less cost than a public sector company. For instance, instead of having to pay 7.5 percent or 8 percent interest on their debt, they may instead only have to pay 5 percent or 6 percent return on investment. That would be to the benefit-[interjection] Well, they would rather pay. This is how ignorant the members opposite are.

They think it is less expensive to pay 8 percent on money instead of 5 percent on money. That is unbelievable. That is the ignorance that we are dealing with. That is the level of ignorance that we are dealing with. That is why they accumulated all that debt that we have, that we are paying $600 million of interest, because they do not und erstand simple mathematics. They do not understand simple business prin ciples. Some Honourable Members: Oh, oh. Madam Speaker: Order, please. The honourable First Minister, to complete his response. It (14 10) Mr.

Filmon: Madam Speaker, I now know why their fo rmer Leader said that the New Democrats' problem is that not enough of them understand business, and that is a problem with them. When you are arguing about something that is as complex as this is, they come fo rward with pure trash as evidence that there is somehow going to be a diff erence. It is like dealing with a computer: garbage in equals garbage out. On that side all we get is the garbage in, and we do not get any int elli gence out. The fa ct of the matter is there are many fa ctors.

As I have already said, they may well have less cost based on the fact that they would pay less of a return on investment than they would on the same amount of money as debt. They may well have a situation in which their costs of operation are less and theref ore that would offset an y taxes that they might pay because they would have a lower cost of operation, and so all of this is taken into acc ount by CRTC. Those are the kinds of sophisticated analyses that are done by the CRTC, as opposed to the simplistic and often ignorant figures that are put fo rward by members opposite.

Madam Speaker: The honourable member for Thompson, with a supplementary question. -

October 31, 1996 LEGISLATIVE ASSEMBLY OF MANITOBA 4661 Mr. Ashton: Madam Speaker, it is obvious the Premier does not know what he is talking about. I would like to ask him, indeed if he can table any studies on the impact on rates, whether he is aware of the way the CRTC operates, and in fact if he can confinn-[interjection] Well, he says, yes-that in Alberta, the Alberta Government Telephones, AGT, approached the CRTC for a $6 increase because of a tax liability it incurred which would have let it have only a 2 percent rate of- Madam Speaker: Order, please.

Would the honourable member please put his question now. Mr. Ashton: Madam Speaker, I was attempting to phrase my question. I did not interr upt the Premier on his long answer. In Alberta, they were only going to get a 2 percent rate of return on equity. They went to the CRTC. They were allowed to get a 10 percent to 12 percent rate on equity. Will he confirm that the Manitoba Telephone System currently makes 6 percent, so automatically under priva tization they will be able to go to the CRTC and seek a doubling of the ROE?

By the way, those figures are from the investment bankers' report- Madam Speaker: Order, please. Mr. Filmon: Madam Speaker, I read the CRTC decision on Alberta, and they awarded a 6.4 percent return on equity, as opposed to currently the Manitoba Telephone System paying 8 percent interest on the debt, so they offset the debt with equity which they are paying a lesser rate for than they were as a debt. That is the reality of the analysis. Madam Speaker: The honourable member for Thompson, with a fmal supplementary question. Mr.

Ashton: Since the Premier obviously did not do a single study on the impact on rates, will he confirm that the CRTC allows a rate of return of as high as 12.25 per cent, double what the current rate of return was in terms of MTS, and that in fact it will pass through the cost, in this case a tax liability incurred by a private company due to their mistake, directly onto the ratepayers, that in fact, Madam Speaker, the representative of CRTC is right, there will be higher costs under a private phone system than under a public system. Mr.

Filmon: Madam Speaker, returns on investment vary depending on the business climate and the fiscal climate in which people operate. Returns on investment are obviously changed with changing interest rates. If interest rates are 20 percent, then nobody is going to invest in something in which they get a 1 0 percent return on investment, so returns on investment vary with interest rates over time. Those are things that are calculated. They are calculated, for instance, when people make decisions with respect to rent controls.

You are not going to have anybody invest in anything if they cannot get at least as good a deal or very close to as good a deal as they can get by just simply putting their money in Canada Savings Bonds, so those things vary. There may have been times in the past when CRTC awarded 12 percent. The recent award, for instance, in Alberta was 6.4 percent versus an 8 percent interest rate. That is the kind of decision that is made by the people at CRTC as they make their very broad and comprehensive analysis. An Honourable Member: You know nothing about regu lations of public utilities. You know absolutely nothing.

Madam Speaker: Order, please. An Honourable Member: You have not done a single study. An Honourable Member: You are a genius. Madam Speaker: Order, please. An Honourable Member: Do a study on it. Table one single study. All you have is the investment bankers. That is it. An Honourable Member: That is why you cannot get a job in the private sector. Some Honourable Members: Oh, oh. Madam Speaker: Order, please. Point of Order Mr. Ashton: Madam Speaker, on a point of order, I have no doubt that the Premier will be able to get a job in

4662 LEGISLATIVE ASSEMBLY OF MANITOBA October 31, 1996 the private sector, probably the corporate sector after he sells off MTS. I have worked in the private sector, and I am quite proud right now to work for the people of Manitoba, one of the most important jobs in this provmce. Madam Speaker: Order, please. The honourable member for Thompson does not have a point of order. It is clearly a dispute over the facts. Manitoba Telephone System Privatization-I mpact on Rates Mr.

Gary Doer (Leader of the Opposition): Madam Speaker, I asked the Premier whether in fact his government had obtained the tax ruling, an advance tax ruling, or has a tax ruling from Revenue Canada and has the impact study of that on rates. The Premier took that question as notice. Is the Premier telling us today that he has never read a tax ruling or information on the rate impact in the province of Manitoba or he has read it and he has not made it public? Bon.

Gary Filmon (Premier): As part of the process of anticipating what would happen under a private capitalization of the telephone system, we obviously have applied for a tax ruling. I am saying to the member opposite I have not seen the tax ruling, and I have to see the information before I can provide it to him. "'

(1420) Privatization- Tax Ruling Mr. Gary Doer (Leader of the Opposition): In light of the filet that AGT had an advance tax ruling on a one time-only depreciation but Ontario Hydro has been denied an advance tax ruling in terms of the treatment of the depreciation, how can the Premier make a decision today? And you know, the Minister of Finance (Mr. Stefanson), who gave us the great retroactive legislation on the Jets, has given advice for the Premier. That should be some comfort to Manitobans. Can the Premier today table the tax impact on the rates in Manitoba?

It is a huge issue, Madam Speaker, and the Premier should know what the answer is and be able to tell Manitobans. Bon. Gary Filmon (Premier): Clearly we have anticip ated scenarios that might involve tax rulings in one way, tax rulings in another way and any variation in between, and based on any and all of those rulings, we are confident that the Manitoba Telephone System can continue to operate efficiently and effectively in public or private ownership within the current rate structure that it does have. Mr. Doer: This is a $1.2-billion asset.

This is a huge decision the people of Manitoba are making and that shareholders and this Legislature are making. Now Ontario Hydro has been denied-in an advance decision from Revenue Canada which is available to this government-the one-time-only depreciation of AGT. The one-time-only depreciation of AGT has meant that rates have gone up $6 per month per year for the next two years. Ontario Hydro's treatment by Revenue Canada is even more severe. How can the Premier stand here today and not have an advance tax ruling so the people of Manitoba will know the impact on rates?

Are we going by blind ideology in terms of the broken promise, or do we have the facts that the Premier can table today in front of this Legislature? Mr. Filmon: Madam Speaker, as I said, the Manitoba Telephone System, or at least the analysis that we have undertaken, involves our looking at all of the various options that might occur based on various tax rulings, and based on all of these analyses, we are confident that the Manitoba Telephone System can continue to operate in its current form given the rate structure that it currently has.

The various different types of rulings might result in longer terms \\ithout increases in the future. That is part and parcel of what could happen based on the various rulings that could happen. But under the current circumstances the company in private ownership can still operate given its current rate structure and continue to be able to make a return on investment. So what we are saying is that we are confident that the telephone system-and given the analysis that has been done for us by the various different people who work in this kind of field- that they can operate with the rate structure that they have.

October 31, 1996 LEGISLATIVE ASSEMBLY OF MANITOBA 4663 Mr. Doer: On a new question, AGT had an advance tax ruling before they made the decision, a one-time-only depr eciation. Ontario Hydro has just sought and been denied an advance tax ruling from Revenue Canada. Now this government must have an advance tax ruling before this Legislature can deal with this matter a week today. If you do not have it, you cannot pass this bill. I would ask the Premier to table today the advance tax ruling we have from Revenue Canada and the impact on rates all across this province. Mr.

Filmon: I have said, Madam Speaker, that I will undertake to fmd out whether or not we have received a ruling from Ottawa at this point, but based on whether we received the ruling or not received the ruling, they will be able to continue to operate the Manitoba Telephone System-[interjection] Madam Speaker: Order, please. Mr. Filmon: What I am saying is that the telephone- Some Honourable Members: Oh, oh. Madam Speaker: Order, please. Mr.

Filmon: In either case scenario, Madam Speaker, whether the ruling is favourable or not favourable, the telephone system can operate within the rate structure that it curr ently has. That is the information and the analysis that we have. Mr. Doer: The Premier has now admitted to this House that he has not done his basic homework and obtained an advance tax ruling. He has scenarios that have been provided to him by Bay Street brokers who are going to get com mission from the sale of our asset to private owners.

Is the Premier saying today that if he has a good tax ruling it will make no difference than a bad tax ruling and he should not have an advance tax ruling? Why is this Premier not seeking an advance tax ruling, and why can he not table it today in this House so that all Manitobans will know the impact on the tax ruling from Revenue Canada which he can obtain in an advance way on the rates right across this province? That is a basic right that Manitobans have before we make this decision. Mr.

Filmon: May I just say, so that the member opposite knows and understands this, as clearly as I can possibly put to him: Firs tly, we have a scenario in which the telephone system operates today with a certain rate structure. With inflation in costs that rate structure could not possibly remain in place as is forever. Over a period of time as the-[interjection] Madam Speaker- Madam Speaker: Order, please. Mr. Filmon: -would you please call the member for Transcona (Mr. Reid) to order. I am trying to fully respond to the question. If he wants to keep hassling from across the way, have him leave, Madam Speaker.

I assume that his Leader wants to hear the answer. Madam Speaker: Order, please. The honourable First Minister, to complete his response. Mr. Filmon: Madam Speaker, there is a current existing rate structure for the Manitoba Telephone System that will remain in place even after the telephone system is privatized.

If a favourable ruling occurs, it would mean that instead of having to increase rates somewhere down the road with inflation of costs, which would occur whether it was publicly or privately owned, that future rate increase would be forestalled by a favourable tax ruling because they would have that available to them to offset the increasing costs that occurred due to inflation. That is the benefit of a favourable tax ruling and that is the way the analysis has been done. Mr.

Doer: The Premier knows that the existing rate struc ture is based on the existing corporation that is a nonp rofit, publicly owned corporation. When you are pr oceeding to privatize a publicly owned corporation, you have to have an advance tax ruling from Revenue Canada so you can project the actual rate impact for the people of this province. I would like to ask the Premier a very specific question: Does he have an advance tax ruling, and will he table it to this Legislature today? Mr. Filmon: I already responded to that. I said that- Some Honourable Members: Oh, oh.

4664 LEGISLATIVE ASSEMBLY OF MANITOBA October 31, 1996 Madam Speaker: Order, please. The honourable First Minister, to complete his respo nse. Mr. Filmon: Madam Speaker, I said that the tax ruling has been applied for and that I will find out whether or not the tax ruling has been received. I will then table it for the mem bers, but I repeat that what we are dealing with is a matter that will not impact the current rate structure for the telephone system, and whether or not the telephone system were publicly or privately owned , in the longer term, with inflation, future increases would have to be applied for.

The advantage of a favourable tax ruling would be that it would fore stall future rate increases for a longer period of time because that depreciation would theref ore be able to be applied in the favour of the corporation, which obviously would not be done in the favour of a publicly owned entity. So that is exactly what will be decided by a tax ruling. I know it is complicated . I am trying to understand it-trying to explain it so- Some Honourable Members: Oh, oh. Madam Speaker: Order, please. An Honourable Member: Either you have an advance tax rul ing or you do not. Mr.

Filmon: Madam Speaker, the Leader of the Opposition says it is yes or no. The fact of the matter is it has been applied for and I will undertake to determine whether or not it has yet been received. *

(1430) Manitoba Hydro Privatization-P ublic Hearings Mr. Kevin Lamoureux (Inkster): Madam Speaker, a week from today, no matter what happens between now and then-and the Leader of the New Democratic Party points out a major flaw and demonstrates how incompetent this government has been with respect to the dealing and the selling of Manitoba Telephone System, but no matter what happens , thousands of Manitobans have expressed their opposition. A couple of hundred people want to make presentations to the standing committee.

What is abundantly clear is that Manitobans want to be heard on this issue, and what I am asking the Premier today is, will the Premier agree to have public hear ings on the future of Manitoba Hydro? Bon.

Darren Praznik (Minister charged with the administration of The Manitoba Hydro Act): Madam Speaker, with all due respect to the member for Inkster, this Legisl ature in committee last week, in consideration of annual reports-in fact, I think at the request of other opposition members and certainly with my full concurrence-wanted to have and is engaging currently, because the committee will sit again in a very thorough discussion about the chan ging electrical markets, about options as they appear today.

I want to underline the point to the member, and perhaps it makes the argument that the Minister of Telephones (Mr. Findlay) has made : In the area, whether it be electricity or telecommu nications, these are rapidly changing industries. We are in the middle, in the case of electric ity, of a revolution . I want to make clear to him-and his colleague the member for The Maples (Mr. Kowalski) was in attendance in that meeting-that there is that opportunity.

I would invite him to join us at that committee when we reconvene later in November, because that discussion about options and the cha nging world of electricity is happening as we speak and in this Legisla ture and the committees on which he can be a memb er. Mr. Lamoureux: Madam Speaker, I would then go to the minister, when he makes ref erence to rapidly changing industry, much similar to MTS, my question to the minister is, does he believe that the privatization of Manitoba Hydro is one of the options that he is making ref erence to when he says that there are options that are there?

Is that being considered by this minister? Mr. Praznik: Madam Speaker, the member for Inkster gives me far more credit than I would ever give myself that I would be so presumptuous to indicate, whatever options in the future, today that I would know the answer. In fact, I think the comments we made at committee, that were made in the discussions at committee, is that the world is changing rapidly, and as trustees of this utility, we have an obligation, just as my colleague for Manitoba Telephone has an obligation and fulfilled it, in studying the world and ens uring that the best decisions are made, -

October 31, 1996 LEGISLATIVE ASSEMBLY OF MANITOBA 4665 and that is what we were talking about, is studying those issues. I would table for the interest of the member here today, for the members of the House-l tabled the same newsclipping at committee. It just describes what is happening in the province of Quebec, is their decision to open up their power grid, and it just gives the member a sense of the context in which we are now living in this world. I know his colleague the member for The Maples (Mr. Kowalski) has a copy, but I table it for all members of the House here today. Mr.

Lamoureux: The question to the minister is fairly simple and straightforward in terms of, is the privatization of Manitoba Hydro an option which this government and in particular this minister is actually looking at? Given the response that he has put in his two previous questions, the answer is yes. I would want to hear confirmation, yes or no, is it an option?-fairly straightforward. Mr. Praznik: The fact that the member for Inkster would ask that question and expect a yes or no answer today indicates to me that he has yet to grasp-and in fairness to him he was not at committee.

He is not involved on a day-to-day basis in electrical industry, but he has failed to grasp the complexity of what is happening in the electrical world and the considerations that have to take place, and the reason I say that is, if he had been at committee, if he had read the public remarks that I have made and that others have made, the ftrst issue that Manitoba-the prime issue that Manitoba Hydro has to face today to protect our investment, to protect our quarter of a billion dollars of sales into the U.S. market, to protect our ability to service our debt by having the hedge of U.S. dollars, to protect our future by pursuing opportunities, is to consider how we have to ftt into a new regulated world, and to be blunt to the member, that is the fust and prime task that this minister has to entertain and this Legislature has to deal with, and that, quite frankly, is the issue that is being addressed.

Manitoba Telephone System Manglobe Role Hon. James Downey (Minister of Industry, Trade and Tourism): Madam Speaker, I rise today to respond to a question that was brought forward by the member for Elmwood (Mr. Maloway) a few days ago, and again the question demonstrates the inaccuracy and the incompetence of the member opposite in bringing such information to the Chamber. The question was, earlier this year, the government, through MTS, entered into a contract worth $3 million with a newly formed company called Manglobe Virtual. That is not the case.

There is not a $3 -million contract entered into between the telephone system and Manglobe. There is a business arrangement between several partners in Manglobe, but it certainly is not anywhere near the magnitude of $3 million, and it is not an untendered contract which the member referred to and put on this record. I would hope that he would get his facts straight before he comes to the House with such inaccurate information. Manitoba Telephone System U ntendered Contracts Mr. Jim Maloway (Elmwood): Madam Speaker, I have a question for the Premier.

As the Premier knows, MTS has signed a contract with Clifford M. Watson of Toronto. Will the Premier today table the contract and tell this House what roles Mike Aysan and Dennis McCaffrey play in this untendered contract? Hon. Gary Filmon (Premier): Madam Speaker, without accepting anything that is brought forward by the member opposite as being factual since time and time and time again these contracts that they bring forward or this knowledge of contracts is absolutely false, I will take it as notice on behalf of the minister and ask him to look into it and bring it back for the member opposite. Mr.

Maloway: For a Premier that supposedly knows a lot about what is going on in this department, he is very selective. Madam Speaker: Question, please. Mr. Maloway: His memory is very selective. I would like to know how this Premier who has previously condemned Mike Aysan, as well as the contracts and bonuses given to Mike Aysan in 19 80 by Don Orchard, now can become a business associate with

4666 LEGIS LATIVE ASSEMBLY OF MANITOBA October 31, 1996 Mr. Aysan. Can the Premier explain the connection with Mr. Aysan? Mr. Filmon: Madam Speaker, again, I am not sure how I would be expected to know everything that goes on in every department, let alone a Crown corporation. So I will find out. I will take this as notice on behalf of the Minister responsible fo r the Telephone System (Mr. Findlay) and have him bring back the inform ation, but I would suggest that again I accept none of the

preamble and the so-called inf ormation brought fo rward by the member opposite because of the lack of quality and veracity of most of the inf ormation they bring fo rward. Mr. Maloway: While the Premier is checking, could he also find out who approved Dennis McCaffr ey, the director of marketing fo r MTS, to sit on the board of Cliff Watson's MG Communications when Mr. McCaffrey knows the MTS marketing strategy, its weaknesses and has all the inf ormation on MTS customers? Is this not a conflict of interest? Mr. Filmon: Madam Speaker, I will take that as notice as well on behalf of the minister.

Madam Speaker: Time fo r Oral Questions has expired. * (1 440) Speaker's Ruling Madam Speaker: I have a ruling for the House. On October 15, 1996, during Orders of the Day, the opposition House leader (Mr. Ashton) raised a point of order which the Deputy Speaker took under advisement. The opposition House leader ref erred to a letter tabled earlier in that sitting by the honourable Minister of Justice (Mrs. Vodrey). That letter referred to a transcript and the transcript had not been tabled when the letter was tabled. The opposition House leader asked whether the transcripts should not also have been tabled.

When he raised the point of order, the opposition House leader indicated that he had just received a copy of the letter and this had been his first opportunity to examine the letter. Beauchesne Citation 495(1) states that a minister is not at liberty to read or quote from a despatch or other state paper not bef ore the House without being prepared to lay it on the table. In reviewing the exchange in Question Period on October I 5, which is when the letter was first ref erenced, the minister did read into the record the paragraph of the letter where the transcript was mentioned.

Ha"ing researched this issue very thoroughly indeed, I have fo und no precedent to require the tabling of an attachment or enclosure which was not cited or quoted. Theref ore, I am ruling that the honourable minister does not have to table the transcript ref erred to in the letter which the minister tabled. MEMBERS' STATEMENTS Hedley Technologies Mr. Frank Pitura (Morris): I would like to announce that Hedley Technologies has entered into two technology agreements with Agriculture and Agri-Food Canada's cereal research centre in Winnipeg.

Hedley intends to place privately up to $900,000 of equity securities to finance sales growth of Protect-It and to broaden Hedley's future research collaboration. Protect-It is an eff ective nontoxic, environmentally saf e grain storage protectant that uses a nonchemical means of controlling insects. Protect-It is also to be used to control insects in flour mills, food -processing fa cilities, grain storage warehouses and transportation vessels such as rail cars.

Protect-It is intended to reduce the need fo r chemical fumigants and gradually replace other chemical insecticides used fo r the protection of stored agricultural products. The new technology licensing agreement gives Hedley the full and exclusive right to commercialize Protect-It worldwide in return for a royalty based on sales. The agreement acknowledges that Hedley and Agriculture and Agri-Food Canada own jointly any and all intellectual property rights, and the parties will share the cost of applying for the patents pending in North America and under the PCT application worldwide.

The research and consulting agreement expands Hedley's collaborative research with Agriculture and Agri-Food Canada in order to develop equipment and procedures for applying Protect-It in large-scale grain operations. The research team is also testing Protect-It on more commodities and insects in order to broaden areas of intended use.

October 31, 19 96 LEGISLATIVE ASSEMBLY OF MANITOBA 4667 Finally, the research team intends to study the eff ectiven ess of fo reign diatomaceous earth deposits in order to supply Prote ct-It locally from these mark ets. Here is an example of how research and tech nology out of Manitoba will be benefiti ng grain producers worldwide . Thank you. Manitoba Hydro Ms. MaryAnn Mihychuk (St. James): Madam Speaker, Manitobans have every reason not to believe this government when it comes to their promi ses. Days bef ore the last election, the Filmon government announced a huge capital program in health care .

After the election all spending was cancel led, emergency wards were closed at night and over $75 million was cut out of hospital budgets and Pharmacare was gutted. Similarly, they said MTS would not be sold and are now proceeding to do just that. Manitoba currently has the second-lowest residential rates in North America. Rural rates are less than one-third of the actual cost of providing service . It is not hard to guess who will be hurt the most and quickest by this sale. Now the same government says that since Manitoba Hydro is in a regulated environment, there is no need to sell it off.

Like MTS, Manitoba Hydro has the lowest hydro rates in North America. Manitoba Hydro makes over $250 million a year in export sales. This is not good enough fo r this government so, like MTS, they are dividing it up into business divisions. Again, like MTS, they are fo rcing Manitoba Hydro to sign contra cts with their major competitor, in this case, Centra Gas. Both Manitoba Hydro and MTS have had large layoffs in the recent past, with many more expected once MTS is sold off. According to the Premier (Mr.

Filmon), it is now nece ssary to deregulate Manitoba Hydro just as the same government decided to deregulate MTS in 1992. Small wonder that Manitobans do not trust this Premier or his colleagu es. In all of this, the position of the Liberal Party is firmly on all sides as it is typically. While the three elected MLAs oppose the sale of MTS, their new leader does not. She says that the Liberals do not ob ject in principle to the sale of a Crown corporat ion. Like the Tor ies, she thinks that low rat es, service and jobs are not worth defen ding. The choice fo r Manitobans is incr easingly clear.

We can either keep our Crown assets that provide jobs in Manitoba and aff ordab le service or we can dump them like the Liberal s dumped the railroads and the airport or the Filmon government is dumping MTS and in the future Manitoba Hydro. Impaired Driving Mr. Mike Radcliff e (River Heights): Good afternoon, Madam Speaker. I know that all members acknow ledge the danger of driving while impaired, whether it be to the driver of the vehicle or the general public.

While our governm ent's 19 89 and 19 91 legislation, which brought into eff ect the toughest drin king and driving penalties in North America, has been tremendously succes sful, the issue rem ains . From 19 88 until 1994, alcohol-related charges in our province fe ll 36.8 percent. This is a dramatic decrea se. It reflects a growing public awar eness of the consequences of driving and drinking. This decrease is also testament to the success of our legislation. However, our government recognizes that impairment of on e's driving does not begin at an alcohol blood level of .08.

Theref ore our government intends to introduce even more eff ective legislation in the spring. The legislation will provide fo r immediate administrative 24-hour licence suspension fo r drivers with a blood alcohol level of between .05 and .08, strong financial consequences fo r driving with an over .05 limit, an automatic Addictions Foundation assessment of alcohol dependency where there are two administrative suspensions in three years . If alcohol dependency is fo und, it must be dealt with before a licence is reinstated.

Our government has made a commitment to the safety of all Manitoban s, and we continue to build on that comm itment. Thank you, Madam Speaker . Legislation

Schedule Mr. Gerard Jennissen (Flin Flon): Madam Speaker, the curr ent legislative session has been rightly called the most packed in terms of legislation in at least 10 years. For reasons best known to themselves, the Filmon

4668 LEGISLATIVE ASSEMBLY OF MANITOBA October 31, 19 96 government has brought forward far-reaching legislation on a number of areas, from the sale of MTS to stripping workers of their rights, creating major roadblocks and hurdles for unions, attacking teachers and post-secondary educational institutions and forcing through regional health authorities which will be blamed for govenunent cutbacks in funding and service, among others. Of the more than 70 pieces of legislation being debated, only a tiny number at best were even hinted at during the last provincial election.

It is obvious to all that none of the major bills would have been brought forward if this govenunent did not get a majority in the last election. Of particular concern is this govenunent's attack on the rights of workers. Fundamentally, this assault on the rights of workers is predicated on intense hostility to unions having any ability to negotiate issues like workplace safety, salaries or conditions of employment. This is easily seen in the actions of the same govenunent in their cutting back workplace inspectors and refusing to be proactive in terms of- Madam Speaker: Order, please.

I am experiencing great difficulty hearing the honourable member for Flin Flon. Mr. Jennissen: Many people are calling this legislative sessi on one of payoffs and paybacks. Foes, real and imaginary, of the govenunent are being dragged down while friends, particularly financiers of the Progressive Conservative Party, can look forward to lucrative contracts and fire sales of govenunent assets. Once MTS is sold, can Hydro be far behind?

The arrogance of this govenunent can be seen in actions such as the treatment of the mayor of The Pas, Chief of the Opaskwayak Cree Nation and other delegates from The Pas region who met with the Minister of Health on October 29. The delegation came to discuss the crisis created by this govenunent at The Pas Health Complex by cutbacks and bungled policies that were causing a shortage of doctors there and in many other communities across this province.

Instead of treating this delegation with respect, the minister scolded them for representing their community and told them to go back and talk to the regional health authority, which, like others, is a nonelected Tory dominated regional health authority. Shocking yes, surprising no, unfortunately not. The minister by his actions showed the purpose of the regional health authorities and much of the- Madam Speaker: Order, please. The honourable member's time has expired. * (1450 ) Winnipeg School Division No. 1 Mr.

Gary KowaJski (The Maples): Madam Speaker, it is a pleasure that I rise and acknowledge the 12 5th anniversary of the Winnipeg School Division. On October 29, I attended the banquet along with the other members from this Assembly, and it was a pleasure to acknowledge that an niversary. The theme was remembering the past as we look into the future, and one of the events was honouring all the nominees who were nominated for recognition by the school division. I think there were 67 present there. Of course, being in the political field, I took note that both the Premier (Mr.

Filmon) and the Honourable Lloyd Axworthy were acknowledged as nominees for the award. It showed that Winnipeg School Di\'ision has given Manitoba some of the best and brightest in the community, and that was remembering the past. Looking into the future, the keynote speaker, Mr. Frank Ogden, who is commonly known as Dr. Tomorrow, I found his speech very frightening. He forecast a future with SUT\'ival of the fittest, where the weak die, where the global economy dictates that commerce rules over all social needs, over all care for individuals and contact with human beings.

So I found his speech very frightening, and I know he would be challenged the following days at the symposium. It shows that Winnipeg School Division is not scared to bring controversial speakers forward and speak on such a matter, and I think his fee of, I have heard $1 2,000, if nothing else, they got a very interesting speaker. Thank you, Madam Speaker. ORDERS OF THE DAY Committee Changes Mr. George Dickes (Point Douglas): Madam Speaker, I move, seconded by the member for Broadway (Mr.

October 31, 1996 LEGISLATIVE ASSEMBLY OF MANITOBA 4669 Santos), that the comp osition of the Standing Committee on Law Amendments be amended as follows: St. James (Ms. Mihychuk) for Welling ton (Ms. Barrett) ; Osborne (Ms . McGifford) for Broadway (Mr. Santos), for Thursday, October 31, 1996, for 6:30 p.m. I move, seconded by the member for Broadway (Mr. Santos), that the comp osition of the Standing Committee on Public Utilities and Natural Resources be amended as follows: Selkirk (Mr. Dewar) for Swan River (Ms. Wowchuk) for November 1, 1996, for 9 a.m. Motions agreed to. Mr.

Edward Helwer (Gimli): Madam Speaker, I move, seconded by the member for La Verendrye (Mr. Sveinson) , that the following committee change that was moved yesterday of the member for Lac du Bonnet (Mr. Praznik) for the member for St. Norbert (Mr. Laurendeau) for the Standing Committee on Public Utilities and Natural Resources for October 31, at 9 a.m., be rescinded. I move, seconded by the member for River Heights (Mr. Radcliffe), that the composition of the Standing Committee on Public Utilities and Natural Resources this was for October 30, at 6:30 p.m.- be amended as follows: the member for Roblin-Russell (Mr.

Derkach) for the member for St. Norbert (Mr. Laurendeau) . I move, seconded by the member for La Verendrye, that the composition of the Standing Committee on Public Util ities and Natural Resources be amended as follows-this is for Thursday, October 31, at 9 a. m. : the member for Lac du Bonnet (Mr. Praznik) for the member for Roblin-Russell (Mr. Derkach) . I move, seconded by the member for La Verendrye, that the comp osition of the Standing Committee on Law Amendments for October 30, 1996, at 6:30 p.m., be amended as follows: the member for St. Norbert (Mr. Laurendeau) for the member for Roblin-Russell (Mr.

Derkach) . I move, seconded by the member for La Verendrye, that the comp osition of the Standing Committee on Law Amendments for Thursday, October 31, at 6:30 p.m., be amended as follows: the member for Lake side (Mr. Enns) for the member for St. Norbert (Mr. Lauren deau) ; the member for Rossmere (Mr. Toews) for the member for Niakwa (Mr. Reimer) . I move, seconded by the member for River Heights (Mr. Radcliffe), that the comp osition of the Standing Com mittee on Law Amendments for Friday, at 9 a.m., November 1, 1996, be amended as follows: the member for St. Norbert (Mr.

Laurendeau) for the member for River Heights (Mr. Radcliffe) ; the member for Portage (Mr. Pallist er) for the member for Rossmere (Mr. Toew s). I move, seconded by the member for La Verendrye (Mr. Sveinson), that the composition of the Standing Committee on Public Utilities and Natural Resources for Thursday, October 31, at 6:30 p.m. : the member for Kirkfield Park (Mr. Stef anson) for the member fo r Ste. Rose (Mr. Cummi ngs), the member for Roblin-Russell (Mr. Derkach) for the member for Steinbach (Mr. Driedger) , the member for Gimli (Mr. Helwer) for the member for Lac du Bonnet (Mr.

Praznik), and the member for Springfield (Mr. Findlay) for the member for Emerson (Mr. Penner) . I move, seconded by the member for River Hei ghts (Mr. Radcliffe), that the comp osition of the Standing Committee on Public Utilities and Natural Resources for Friday, November 1, at 9 a.m., be amended as follows: the member for Ste. Rose (Mr. Cummings) for the member for Rob lin-Russell (Mr. Derkach) . * * * Hon.

Darren Praznik (Deputy Government House Leader): Madam Speaker, just on a point of procedure, although one probably does not exist, I am about to announce some of the committees that the member- An Honourable Member: No, no. I did not. Mr. Praznik: Okay, all right, fine. My mistake, Madam Speaker. * * * Motions agreed to. Madam Speaker: The honourable member for Point Douglas, with additional committee changes.

4670 LEGISLATIVE ASSEMB LY OF MANITOBA October 31, 1996 * (150 0) Mr. Hickes: I move, seconded by the member for Broadway (Mr. Santos), that the comp osition of the Standing Commi ttee on Law Amendments be amended as follows: Radisson (Ms. Cerilli) for Dauphin (Mr. Struthers) for Friday, November 1, for 9 a.m. Motion agreed to. House Business Mr. Praznik: Madam Speaker, my apologies to the member for Gimli (Mr. Helwer). I misunderstood on his calling of com mitte es; I can appreciate that he was not making changes on committees that I am about to call.

I would like to just reconfi rm: I understand that there are two comm ittees that have been called for this evening already, and I understand that two committees have been called for tomorrow, Law Amendments and Public Utilities and Natural Resources , to sit between 9 a.m. and 3 p.m. in the aftern oon. I would also like to announce that for Saturday, the 2nd ofNovember, the Standing Commi ttee on Public Utilities and Natural Resources shall sit between 9 a.m. and 3 p.m. to continue hea ring presentations on Bill 67.

As we ll, the Standing Committee on Law Amendments will sit from 9 a.m. to 3 p. m. to continue hearing or dealing with Bills 32, 48 and 72. I also wish to announce that on Monday, November 4, I bel ieve, if that is the correct date, the Standing Committee on Public Utilities and Natural Resources will sit between 9 a.m. and noon to continue dealing with Bill 67 presenters, if required . The Standing Comm ittee on Law Amendments will sit also between 9 a.m. and noon to consider the following bills: Bills 4, 55, 59, 61, 75, and 76.

I understand those bills have a very limited number of presenters , and that is why the number of bills are being called for that particular committee. I would also announce today, as well, in the inter ests of giving proper notice to presenter s, that the Standing Committee on Law Amendments will sit beginning at 6:30 p.m., on Monday eve ning, the 4th ofNovember, to give consideration to Bills 58 and 57, and this committee is being called today in order to ensure that presenters can properly be accommodated and have sufficient notice.

I would ask as well, Madam Speaker, if you could call the following bills in this order, Bills 63, 17 and 41, for continuation of debate on second rea dings, and there may be some willingness to waive private mem bers' hour. That might be dealt with later on in the afternoon. There may be other announceme nts. Thank you. Madam Speaker: Is there leave to waive private member s' hour? An Honourable Member: No. Madam Speaker: No? Okay.

Standing committee announce men ts: For Saturday, November 2, 9 a.m. to 3 p.m. , the Standing Committee on Public Utilities and Natural Resources will meet to continue to consider representation on Bill 67. On Saturday, November 2, 9 a.m. to 3 p.m., the Standing Committee of Law Amendments will meet to consider Bills 32, 48, and 72. On Monday, November 4, from 9 a.m. to 12 noon, the Standing Committee on Public Utilities and Natural Res ources \\<ill meet, if required, to continue to hear public representation on Bill 67.

On Monday, November 4, from 9 a.m. to 12 noon, the Standing Committee on Law Amendments will meet to consider Bills 4, 55, 59, 61, 75 and 76. The Standing Committee on Law Amendments will meet 6:30 p. m., Monday, November 4, to consider Bills 58 and 57. DEBATE ON SECOND READINGS Bill 63-- The Statute Law Amendment (Taxation) Act, 1996 Madam Speaker: To resume second readi ng debate, on the proposed motion of the honourable Minister of

October 31 , 1996 LEGISLATIVE ASSEMBLY OF MANITOBA 467 1 Finance (Mr. Stef anson), Bill 63, The Statute Law Amendment (faxation) Act, 1996 (Loi de 1996 modifiant diverses dispositions legis latives en matiere de fiscalire), standing in the name of the honourable member for Rupertsland (Mr. Robinson). Is there leave to permit the bill to remain standing? [agreed] Mr. Steve Ashton (Thompson): I wish to speak very briefly on this particular bill, because it is ironic that we are debating this bill, which deals retroactively with one of the biggest tax scams we have seen in this province for quite some time .

It has been called the Quebec shuffie, part of that ill-fated plan of the government to work with those very civic-minded individuals who wanted to continue their owner ship of the Jets and maintain it here in Manitoba, and I say, civic minded, because we saw one of the most incredible tax scams that we have seen in this province, something that is just absolutely unbelievab le. It is interesting because today we dealt with another tax issue, another major potential tax problem for this province, and that is related to the Manitoba Telephone System.

This government does not even have a tax ruling, and, to put it in perspective, in Alberta, AGT received a tax ruling based on the $6 increase, which is $1. 1 billion less than what they had estimated-$ 1.1 billion. An Honourable Member: What is a billion or two? Mr. Ashton: What is a billion, I guess, as the member for Kil donan says, seems to be the buzzword of today's corporation. This government has not even got a tax rul ing.

It gets even worse because they also apparently, and we can thank the Financial Post for this, over the next fe w weeks the rating agencies are expected to complete their anal ysis ofMTS. They do not even know what the credit rating of MTS will be under a private company and what they will have to pay for debt capital as an independent company without a government guarantee. Madam Speaker, this is incredi ble. This government expects us to be sitting in committee dealing with Bill 67, to be voting on the sale of MTS, when we do not know what the company is going to pay in terms of its deb ts.

We do not know what the tax lia bilities are . Not only that, we will not even see the prospectus according to this government until two days after this bill is passed through the Manitoba Legisla ture . Madam Speaker, I ask you this question, would anyone, except maybe this incompetent group across the way-just imagine yourself as an individual. Once again here, as somebody is coming, first of all you get a real estate agent, three real estate agents come to your house and they say, well, I am going to do something for you. I am going to advise you on whether you should sell your house.

An Honourable Member: What if you do not want to sell the house? Mr. Ashton: The Premier says, what if you do not want to sell the house? What the Premier should have done here-you know, a Premier should know, though. I am using the analogy of MTS. The people of Manitoba do not want him to sell the house, but this government has said, welL give us some objective analy sis on whether we should sell the house, the real estate agent is here. Now, gues s what the real estate agents, in this case the investment brokers, said. Guess what. Do you think they said no? Do you think they said, oh, it is not a good idea?

Guess what they did. They said, sell the house. But it gets even better . Let us imagine the Deputy Premier there standing in the front doorstep of his house talking to these three real estate agen ts. I wanted to create this image here because this is actually what is happening. * (15 10) You know what the Deputy Premier and the Premier have said in this situation? Do you think they have said, well, I want full deta ils, what is going to happen, and the rest? You know what, he stands there and says, well, that sounds like a good idea. In fact, I was probably thinking ofdoingthat anyway.

Forget about the rest ofthe family, they will find somewhere else to live, but we are okay. All right. Gues s what. Guess what deal the investment brokers came up with. Actually, what we are going to do first, we

4672 LEGISLATIVE ASSEMBLY OF MANITOBA October 31, 1996 will give you a rough idea. We might make this amount of money, but we have a deal for you. We are going to sell it, but you get to keep halfthe mortgage. If you are lucky enough, we might rent it back to you at a reasonable rate . That is what is happening with MTS here. We are going to be maintaining the debt. More than half the debt is going to be maintained by the Province of Manitoba, and we are going to count on this private company to pay it back. [inteijection] That is right. They will throw in a bridge. You know, this is what is happening.

This government now, on top of that-let us use the House analogy-does not even know what the costs are going to be, does not even know the sale price, does not even know the sale price. But do not worry, they are going to trust those real estate agen ts, those objective people who have come in and decided that, jeez, we could sell one way or the other, but we are going to sell it off here. This is absolutely incredible.

Nobody in their right mind would do this if they were looking at selling their house or their car or anything, and now we have the government expecting us, members of the Legisla ture, and the people of Manitoba to decide upon the sale of MTS when it is absolutely clear this government does not even know the tax liabilities, the impact on rates because of the debt rating that is going to happen and the ability of the company to raise. We do not know what is going to be put in the prospec tus. We do not know any of that information, but we are still supposed to vote to sell MTS.

That is absolutely not acceptable to the opposition and we are speaking, I can assure the members opposite, on behalf of all Manitobans because the people of Manitoba do not accept that this government has any right to sell off MTS. That is why symbolically, as it is on this bill which deals with another Tory scam, the scam that we saw just a few months ago of the Quebec sh uffie on the Jets, we want to adjourn this House until we get to the bottom of what is happening with the other scam, the sale ofMTS. That is why I move, seconded by the member for Kildonan (Mr. Chomiak), that the House do now adjourn.

Madam Speaker: It has been moved by the honourable member for Thompson (Mr. Ashton), seconded by the honourable member for Kildonan (Mr. Chomiak), that the House do now adjourn. Agreed? Some Honourable Members: Agreed. Some Honourable Members: No. Madam Speaker: No? Voice Vote Madam Speaker: All those in favour of the motion, please say yea. Some Honourable Members: Yea. Madam Speaker: All those opposed, please say nay. Some Honourable Members: Nay. Madam Speaker: In my opinion, the Nays have it. Formal Vote Mr. Ashton: Yeas and Nays, Madam Speaker. Madam Speaker: A recorded vote has been requested.

Call in the members . Order, please. The motion bef ore the House was moved by the honourable member for Thompson (Mr. Ashton), seconded by the honourable member for Kildonan (Mr. Chomiak), that the House do now adjourn.

Dh·ision A RECORDED VOTE was taken, the result being as fo llows: Yeas Ashton, Barrett, Cerilli, Chomiak, Dewar, Doer, Evans (Brandon East), Evans (Interlake), Friesen, Hickes, Jennissen, Mackintosh, Maloway, Martindale, McGiff ord, Mihychuk, Reid, Robinson, Sale, Santos, Struthers, Wowchuk Nays Cummings, Derkach, Downey, Driedger, Dyck, Enns, Filmon, Gi/leshammer, Helwer, Lamoureux, Laurendeau, McAlpine, McCrae, Mcintosh, Mitchelson,

October 31 , 1996 LEGISLATIVE ASSEMBLY OF MANITOBA 4673 Newman, Pal/ister, Penner, Pitura, Praznik, Radcliffe, Reimer, Render, Rocan, Stef anson, Sveinson, Toews, Vodrey. Mr. Clerk (William Remnant): Yeas 22, Nays 28 . Madam Speaker: The motion is accordingly defeated. *

(1610) Mr. Neil Gaudry (St. Bonif ace): Madam Speaker, I was paired with the member for Turtle Mountain (Mr. Tweed). If I would have voted, I would have voted for the benefit of Manitobans. * * * Madam Speaker: To resume second reading debate, on the proposed motion of the honourable Minister of Finance (Mr. Stefanson), Bill 63 (T he Statute Law Amendment (Taxation) Act, 1996 ; Loi de 1996 modifiant diverses dispositions legislatives en matiere de fiscalite). Mr.

Tim Sale (Crescentwood): Madam Speaker, Bill 63 is a statute law amendment bill which is normally details that are being brought before the House to amend the smaller and finer points of our taxation system. Usually such bills do not attract wide-spread attention, and, in most cases, they are passed reasonably routinely by the House because they simply serve, for the most part, to implement a budget which has already been passed by this House.

But, Madam Speaker, this bill is an exception to this rule, and I hope the honourable Minister of Finance is paying attention to the issues that are being raised, because he knows they have been raised not only by the members opposite him but by many in the professional community. Bill 63 has a clause in it which purports to deal with the so-called Quebec shuffie. The Quebec shuffie is a relatively simple mechanism in which there is the option on the part of companies locating in Quebec to value their assets differently for Quebec tax purposes than they value them for federal tax purposes.

Quebec makes this opportunity available because it has not yet complied with general anti-avoidance rules which were put in place in the mid to late 19 80s by the federal government. The federal government assured all provinces that the GAR rules would have the impact of avoiding the kind of interprovincial shuffiing which goes on when companies take advantage of the fact that in Alberta and Ontario, it is also possible to gain tax advantages by locating assets in those provinces for various tax purposes, but that particularly in Quebec it is advantageous to do so.

Most companies that are moved for tax purposes at the point of asset disposal or change in ownership make use of the Quebec rules, Madam Speaker, although there are a number that do make use of the Alberta rules as well. Now these are well-known measures. We are assured by tax lawyers and by accountants and by legal professors that these are very well-known measures of avoidance. They are also very serious measures which are worthy of a bill unto themselves. I would ask the Finance minister to recognize and to acknowledge that, indeed, he has had advice to this effect.

The Finance minister has received advice from the Chartered Accountants of Canada, the Chartered Accountants of Manitoba and their associations, and from the Manitoba association of tax lawyers. He has correspondence from those three bodies which, unfortunately, he has not seen fit to share with this House. In the correspondence, the professional people involved in those professions urged the minister to take much more seriously than he apparently does the overall impacts of this legislation.

Madam Speaker, I am told by members of the professional associations involved and by members of the tax lawyers committee that they have made very strong presentations to the Minister of Finance (Mr. Stefanson) urging him to present the Quebec shuffie, anti-avoidance rules for Manitoba, as a separate piece of legislation as they believe it ought to be. The reasons for their concern are manifold. Specifically, the minister has proposed that he will undertake retroactive tax legislation.

Now, this kind of legislation, Madam Speaker, has generally been found by courts to be lawful, to withstand challenges in court, and so tax lawyers have told the Finance minister-and I suppose his own officials have told him-that this legislation will likely stand up if it is challenged. There is indication, however, that it is likely that it will be

4674 LEGISLATIVE ASSEMBLY OF MANITOBA October 31, 19 96 challenged. Theref ore, if it is like most tax legis lation that is challenged, we will all be significantly older be fo re the word on the law is any clearer, because typically such challenges take some years to wend their way through the tax labyrinth of the fe deral government . Madam Speaker, first of all, it is at least possible, and some whom we have consulted indicate that it is likely, that this legislation will be challenged dela ying significantly its implementation. Secondly, retroactive legislation should always be approached with great caution.

It is rather like Humpty Dumpty who, in fa lling off the wall, gets himself rather messed up, and all the Icing's horses and all the Icing's men will have a great deal of difficulty putting Humpty back together again. Madam Speaker, many of the deals which made use of Alberta, Ontario or Quebec were done in the late 19 80s, early 19 90s and right up through to the present day. Many of them involved companies which no longer exi st. A number will have involved estates . Some will have impl ications fo r personal trusts.

Others will have impl ications fo r pension plans and the benef iciaries of pension plans who hold assets in companies which have been disposed of using the Quebec shuffie and the Alberta version-1 guess it would be the Alberta square dance or Quebec shuffie. So, Madam Speaker, in going after the unlamented owners of the Winnipeg Jets to get the assets which should properly have been sold in Manitoba, this government is opening up a can of worms which may have very large volume in it. This is not a small can. This is one of those big commercial catch cans that has many, many worms in it.

Now, the requirement, of course, will be on Revenue Canada to investigate back to the 19 91 implementation date of this tax legislation fo r the 1991 -92 year and, in some cases, back to 19 88 to discover what deals might have been done which might have implications fo r Manitoba's capital gains tax revenue s.

The government has been warned by many of its supporters-! do not know of a lot of tax accountants and tax lawyers who are supporters of any party other than the Conservative or Liberal Parties-have been warned by their supporters and by prof essionals in those bodies that they are tread ing on very dangerous ground with this legislation, but they are doing it because they are horribly, horribly embarr assed.

Madam Speaker, here is a government which was so enmeshed with the Winnipeg Jets that they had signed an interim operating agreement in 1991, that it put in place an interim steering committee which quarterly audited the Winnipeg Jets operation, that it had a securities commission reviewing the prospectuses and draft prospectuses and memorandums of off ering all during 19 94, '95 and '96 in increa sing numbers as the panic around the Jets escalated . * (1 620) This is a government which, through The Freedom of Inf ormation Act, finally, after a great deal of work on the Ombudsman's part, was revealed to have thousands and thousands of pages of documentation on this team .

Yet some day last June the Finance minister (Mr. Stef anson) awoke from a long sleep and said, my goodness, the assets have shuffied off to Quebec , the old shuffie off to Buff alo, but, in this case, it was Quebec . Well, this is really a tragedy. What an irony that, just as children were brea king open their piggy banks on Peter Warren's flatbed, the owners of the Winnipeg Jets were petitioning their lawyers in Montreal to establish companies so they could avoid Manitoba taxes .

These fm e, upstanding corporate citi zens in whose inter ests Manitobans were asked to sacrifice and \\ith whom the government of Manitoba did many a dance were quietly hiding their assets in the province of Quebec . Is it not a fm c irony that just as les Nordiques went to Denver, les Jets went to Quebec? So Quebec did not actually lose a hockey team ; they just had one they did not know about, and Quebec' s hockey team last year played in Winnipeg, but it really was Quebec's hockey team . I guess that is kind of a quid pro quo; they lost the Nordiques, they got the Jets. The Nordiques won the Stanley Cup.

The Jets are the desert weas els, or is it the Phoenix Coyote s? I am not sure which. This is a tale that could only be written by someone with a great sense of humour or a great sense of tragedy. Bill 63 has in it legis lation which by any precedent should be separate legislation in this House. It should go before committee so that people can tell the government what the likely implications of this kind of retroactive tax legis lation is.

October 31 , 19 96 LEGISLATIVE ASSEMBLY OF MANITOBA 4675 Now, Madam Speaker, we will vote for this legis lation, because we believe in closing corporate loopholes. We believe in a tax system that is fair and treats everyone fairly and equally. We believe in Manitoba assets and Manitoba companies being taxed under Manitoba law when that is appropriate, so we will support the legis lation.

But let there be no doubt that we are watching through this legisla tion a tale of incredible incompetence on the part of this govermnent and its advisers, that such assets should move to Quebec without their notice, that a well-known tax loophole known to this govermnent for many years should be used by unscrupulous business people who want to maximize their return on their capital investment while steali ng from the piggy banks of Manitoba children and calling themselves leading citizens in company with the Premier (Mr. Filmon) and his Finance minister (Mr. Stef anson). This is a tragic piece of legislation.

It should be sep arated into at least two bills. It should go before public committee for hea ring. It is not simply a statute law amendme nt. House Business Hon. Darren Praznik (Deputy Government House Leader): Madam Speaker may just want to check at 4:30; there may be a willingness not to see the clock if she canvassed the House. On House busines s, as well, I would like to announce that we would like to call the Standing Committee on Industrial Relations, I believe is the correct title of that committee, for Monday eve ning to commence at 6:30 to consider Bills 50 and 73 .

I believe both those bills are being taken through by the Labour minister (Mr. Toe ws). I beli eve, to date, there are 14 presenters on one particular piece oflegislation. I am calling it today in the interest in ensuring there is sufficient time to inform those presenters so that they can govern the mselves accordingly to be in attend ance. I believe the opposition House leader (Mr. Ashton) concurs in that, so I would like to make that announcement, as well, this afternoon.

Madam Speaker: First of all, is there leave for the Speaker not to see the clock at 4: 30? [agreed] The Standing Committee on Industrial Relations will meet Monday, November 4, at 6: 30 p.m., to consider Bills 50 and 73. Committee Changes Mr. Edward Helwer (Gimli): Madam Speaker, I have some committee changes. I move, seconded by the member fo r Sturgeon Creek (Mr. McAlpine), that the composition of the Standing Committee on Law Amendments for Thursday, 6:30 p.m: the member for River Heights (Mr. Radcliffe) for the member for Minnedosa (Mr. Gillesh ammer) . I move, seconded by the member for St. Vital (Mrs.

Render) , that the composition of the Standing Committee on Public Utilities and Natural Resources for Friday, Nove mber 1, at 9 a.m: the member for Gladstone (Mr. Rocan) for the member for Gimli (Mr. Helwer) . I move, seconded by the member for St. Vital (Mrs. Render), that the composition of the Standing Committee on Law Amendments for Saturday, November 2, at 9 a.m., be amended as follows: the member for Niakwa (Mr. Reimer) for the member for Lakeside (Mr. Enns); the member for Fort Gany (Mrs. Vodrey) for the member for Portage la Prairie (Mr. Pallister). I move, seconded by the member for Sturgeon Creek (Mr.

McAlpine), that the composition of the Standing Committee on Public Utilities and Natural Resources for Saturday, November 2, at 9 a.m., be amended as follows: the memb er for Steinbach (Mr. Driedger) for the member for La Verendrye (Mr. Sveinson) ; the member for Lac du Bonnet (Mr. Praznik) for the member for Morris (Mr. Pitura); the member for Emerson (Mr. Penner) for the member for Sturgeon Creek (Mr. McAlpine); the member for Brandon West (Mr. McCrae) for the member for Gladstone (Mr. Rocan). I move, seconded by the member for St. Vital (Mrs.

Render) , that the composition of the Standing Committee on Law Amendment for Monday, November 4, at 9 a.m. , be amended as follows: the member for Ste. Rose (Mr. Cummings) for the member for Assiniboia (Mrs. Mcintosh); the member for Kirkfield Park (Mr. Stef anson) for the member for Pembina (Mr. Dyck); the member for Charleswood (Mr. Ernst) for the member for St. Vital (Mrs. Render) .

4676 LEGISLATIVE ASSEMBLY OF MANITOBA October 31 , 19 96 I move, seconded by the member for Riel (Mr. Ne wman ), that the composition of the Standing Committee on Public Utilities and Natural Resources for Monday, November 4, at 9 a.m., be amended as follows: the member for Morris (Mr. Pitura) for the member for Kirkfield Park (Mr. Stef anson); the member for Gimli (Mr. He lwer) for the member for Ste. Rose (Mr. Cum mings); the member for River Heights (Mr. Radcliffe) for the member for Lac du Bonnet (Mr. Praznik); and the member for La Verendrye (Mr. Sveinson) for the member for Brandon West (Mr. McCrae) .

Motions agreed to. * * * Mr. Leonard Evans (Brandon East): I am rising to speak on Bill 63, which I believe is standing in another person's name, but after speaking we are prepared to have it pass so that it can go to committee stage . Thank you, Madam Speaker. * (1 630) Madam Speaker: Okay. Just one moment, then. Is there leave to not allow Bill 63 to remain standing in the name of the honourable member for Rupertsland (Mr. Robinson)? [agreed] Mr.

Leonard Evans: As usual, a statute law, a taxation bill is one that is an omnibus bill containing many items on various matters of taxation, and indeed this one is no exception. We finally did get from the minister rather extensive committee reading notes, which helps to explain the various provisions. Many of the provisions, of course, are very minor, and that is what is supposed to be in this bill, that is, minor adjustments to tax laws. But, as my colleague for Cres centwood (Mr.

Sale) has very well outlined in a speech a fe w moments ago, this bill does contain a very important item, an item of policy that has been debated at length in this province, and that is the government 's handling of the whole Winnipeg Jets issue. It is just incredible that no one seemed to know that this company or indeed, I suppose, any companies could do what it has obviously done, and that is to shift assets to avoid paying taxes in the province of Manitoba. The question is going to be raised, I am sure, when it goes to court whether we can pass retroactive legislation. That is the real question.

I, for one, want us to be able to collect this money. I do not think there is any disagreement on either side of this House, but the very real question is whether this is a possibility, because it is retroa ctive. So this remains to be seen, but it is regrettable that we have exposed ourselves in this sense . It is regrettab le, the whole Winnipeg Jets issue has been one of great debate in this province, and while we all wanted the Winnipeg Jets, it is a matter of how much people are prepared to pay in keeping a privately owned hockey team.

As the Leader of the Opposition has said, we seem to be ready to privatize publicly owned assets and assets which serve the public of Manitoba, yet we are willing to get into some form of public arrangement for the private companies where we should not have any business, frankly. At any rate, it remains to be seen what will happen with this particular tax item with the so-called Quebec shuffle episode. (Mr. Marcel Laurendeau, Deputy Speaker, in the Chair) The bill contains, as I said a moment ago, a lot of miscel laneous measures , some of which are very technical. They are not controversial.

They are amending some existing tax law. They are making provisions for miscel laneous adjustments . For examp le, we do not oppose this payroll tax refund for workplace training as being eliminated for workplace training costs incurred after April 2, 19 96. These amendments will help to mitigate the tax impact for small corporations in the year they become an associated group. In other words, there is a limit under which you do not pay any payroll taxes, and when small companies are gathered together and are formed into one larger group, they then become subject to taxation.

What this particular amendment does is to not exempt them from that taxation, but it does not click in, the taxation will not click in, will not become operative until the time they become, the precise part of the year in which they become, associated or amalgamated. So this is a very minor amendment, but the point is that this government has failed the people of Manitoba on a very important policy promise they made back when the now Premier (Mr. Filmon) was Leader of the Opposition. The Premier, when he was in opposition, stated, and I heard him with my own ears on more than one occas ion,

October 31, 1996 LEGISLATIVE ASSEMBLY OF MANITOBA 4677 that a Conservative government would totally eliminate the payroll tax, the Health and Post-Secondary Education Levy, as it is referred, but it is still there. Yes, the exemption level has been raised, which we support. Fewer companies may be paying this tax, but nevertheless it is still an important tax. I do not have the numbers with me, but I think it is close to $200 million. It is a lot of money, and I predicted at the time that the Premier, when he was Leader of the Opposition, was making this promise, and also the former Minister of Finance, Mr.

Manness, on many an occasion, I said, you will never do it. You will never eliminate the payroll tax, given the fact that the Manitoba government needs the revenue and given the fuct that it does provide us with a new source of revenue which is not only beneficial, but a new source of revenue from the large corporations and from large federal Crown corporations that were not providing us with this revenue previously. Nobody wants to hurt small business.

In fact, when we brought in the Health and Education Levy, we did provide for exemption of a lot of small businesses, and I am sure, over the years, this limit would have been raised because no one wishes really to penalize the smaller or medium-sized companies. However, the limit has been raised, but the fact is that that tax is very much alive. I simply point out and remind honourable members opposite that they have failed to live up to a very important election promise that they made in 1988. There is another area that I am concerned about in this particular bill, Mr. Deputy Speaker.

That is the one with reference to personal care home fees. There are technical amendments here that affect individuals, including a restriction on Manitoba tax reduction claims in the year of a personal bankruptcy; well, that is a different issue.

But there are other amendments related to changes in the rules governing the property and cost of living tax credit programs to clarifY their application in regard to personal care home fees, and then I am concerned about that this particular amendment will provide the basis for the government to reduce assistance to those residents of personal care homes, in particular, as we stated, the cost of-living tax credit and the property tax credit. Both of these credits were made available by a previous Schreyer NDP governm ent to personal care home residents, and it helped them financially over the years.

Now we are seeing an amendment, and it is not clear. One cannot tell precisely what will happen from this amendment even though there was an explanatory note provided by the minister. I would read it here if I could just put my hand on that particular page. But, having read the explanation, we are still not clear as to the impact. It refers to personal care homes-here it is.

Section 5(1 .2) limits personal care home costs claimed as a rent equivalent for property tax credit purposes to one half the portion of per diem charges not claimed as a medical expense. As I would understand that, it lowers what is deemed to be rent paid in a personal care home. That is an estimate that has to be made, but if you do that, then you might be reducing the property tax credit and the cost-of living tax credit available to those particular residents. On that matter, Mr.

Deputy Speaker, I am particularly concern ed at what the government has done over the last few years in terms of personal care home fees, because I found out in my constituency that the rates charged personal care home residents were raised to such an extent that those people living on the basic government Old Age Pension and Guaranteed Income Supplement were now being charged to such an extent that they only had about $1 or $2 a day left for their personal expenses. * (1 640) We have to remember that when you are in a personal care home, yes, you have a bed, you have accom modation, you have meals provided, but you still have the respo nsibility for buying your own toothbrushes, your clothing, medical aids, dental work. [interjection] Yes, you have grandchildren or great-grandchildren coming in.

You might like to buy them a little bit of candy or something. There is no money left for these people. It was to the point where that particular category could apply for welfare. The government had reduced the disposable income left for those people to such an extent that they were considered under provincial allowance rul es, the social allowance rules/regulations under the Minister of Family Services, to apply for welfare.

In fact, I wrote to every resident in a personal care home in Brandon East pointing out that, yes, the rates had risen, but if you are in this category, you should inquire with the administrator or your family to see

4678 LEGISLATIVE ASSEMBLY OF MANITOBA October 31, 1996 whether or not you can apply for welfare or provincial assistance. In fact, Mr. Deputy Speaker, many did. I recall being told later, about a year or so later, that this one gentleman who is very active in the Salvation Army -that is beside the point, I guess-[ interjection] Yes, I was playing my accordion for a seniors group there. We were having a singsong at the local Salvation Army Citadel. At any rate, the point is that he said thanks very much, Len, for telling me about this because my mother was in that category.

She was really having a difficult time, and now she gets about $10 0 a month welfare. Well, I said to myself, this is crazy. I mean, one branch of government is jacking up the rates to personal care home residents to such an extent that they can go to another branch of government and get some financial assistance to offset the situation they were being put in. I mean, this is not logical, and I do not think any member of this House wants to see that or would like to put those people in that particular bind or in that particular position. Nevertheless, that is what happened.

I do not know exactly where people stand today, [interjection] but the fact is it is worse after Bill 36, my colleague from Burrows (Mr. Martindale) said. So those people that are very vulnerable, that depend on the public through their government to provide them with security and safety and a healthy environment, we are actually penalizing. That, to me, is not acceptable. We give a lot oflip service to helping people who are elderly and who are deprived and disabled. So we give all this lip service, but in reality, we really socked it to them.

This governm ent has socked it to them by raising those rates to an incredibly intolerably high level. I am concerned that this particular part of The Statute Law Amendment (Taxation) Act will put another tum of the screw , in other words, reduce, for those who may qualify, the availability of the tax credits for property tax credits and for the cost of living tax credit. We can discuss this in more detail in the Committee of the Whole when we do this

section by

section and try to get a clarification, but I do not think it is good news for residents of personal care homes. I am speaking up on behalf of people who cannot speak up on behalf of it. These people do not have easy spokesmen out and around the community. There are certain groups in our society, invariably the poor and the people with very little income and people who are handicapped, whose voices are often not heard, and as a result, they are hurt by government policies. We do not realize it, and yet the reality is that they are being fmancially, in this case, hurt and it has a great bearing.

If you only have a dollar or two a day, that in this day and age is not adequate. Mr. Deputy Speaker, there are other parts of this bill, as I said, very technical in nature. A large part of it deals with motive fuel taxes, and there is reference to retail sales taxes affecting interprovincial trucking and how these matters are calculated. Those items are really not controversial, so I have nothing really to say about them in second reading. I would just, in closing, reiterate what my colleague for Crescen twood (Mr.

Sale) has stated, and that is that it is not acceptable that we have had this possibility of this Quebec shuftle and that it is something that is simply-well, it is definitely going to be challenged in the courts as retroactive legislation which has no application. An Honourable Member: We hope we win, though. Mr. Leonard Evans: The Minister of Natural Resources (Mr. Driedger) says, we hope we win. I hope we win, too, because, goodness knows, we need the money. This item is so important it should not have been included in this bill.

There should have been a completely separate bill on this item so that there would be more attention to it and it could be debated perhaps more fully than it can be in this particular legislation. I realize that we have certain time limits here, so I am not going to continue further, although one could discuss other items and the policy spin-offs from them, including clarification of definition of revenue sharing with the municipalities, other items regarding income tax and how they impact on our people.

I have figures tabulated by a national taxation resear ch agency showing that Manitoba has the highest tax rates for low-income people in the country, and it may be unbelievable, but it is true. When it comes to the people in the lowest category of income, according to The Income Tax Act, Manitoba has the highest rate of income tax. So there are these items that we could spend some time on if we were not around the closing portion of the session. But, as I said, there are some parts of the bill that we have no problem with and certainly would be supporting.

October 31 , 1996 LEGISLATIVE ASSEMBLY OF MANITOBA 4679 So, with those few words, Mr. Deputy Speaker, we are prepared to see this bill go to Committee of the Whole. Messages Hon. Darren Praznik (Deputy Government House Leader): On behalf of the Minister of Finance (Mr. Stefanson), I would like to table the message from His Honour the Lieutenant Governor that accompanies this particular piece of legislation. -lr -lr -lr Mr. Gary Kowalski (The Maples): Mr.

Deputy Speaker, I would like to put a few words on the record, on behalf of our caucus, before this moves to the committee stage to hear representation from the public. From my understanding, this bill contains amendments to five different tax laws : The Corporation Capital Tax Act, The Health and Post Secondary Education Tax Levy Act , The Income Tax Act, The Motive Fuel Tax Act and The Retail Sales Tax Act. This bill has already made it into the media since it closed what has been called the Quebec loophole. By incorporating their company in Quebec prior to sale, corporations can avoid paying tax in Manitoba.

The Winnipeg Jets owners pulled this move, and this bill is something like damage control for the government. This bill is retroactive, however, and this is generally not seen as a good move. One would also question why this loophole was not closed earlier.

Part 1 of this legislation is a housekeeping amendment that is an attempt to make the definition of the fiscal year clearer.

Part 2 of this bill concerns tax exemptions for health related corporations. In essence, it offers a tax break in what seems to be an effort to encourage such corporations to merge.

Part 3 covers The Income Tax Act, making some minor changes to bankruptcy provisions and the definition of principal residence. Other changes also include the 1 0 percent education benefits promised during the election. This

section also contained the Manitoba tax avoidance

section that goes back to 1991. This

section closes the Quebec loophole.

Part 4 allows the oil and gas industry to take advantage of tax-free coloured diesel fuel for mineral exploration. Currently farmers have this advantage. -lr (1 650)

Part 5 contains changes to The Retail Sales Tax Act. This change will affect the auto sales industry the most. Amendments brings the act up to date, including fleet vehicles and the formula for figuring out the tax rate. Amendments also cover interprovincial sales, geophysical survey of mining equipment, again getting another tax break into this legislation. We welcome this bill to move forward to a committee, so we can hear representations from the public. Thank you, Mr. Deputy Speaker. Mr. Deputy Speaker: Is the House ready for the question? The question before the House is second reading ofBill63.

Is it the will of the House to adopt the motion? Agreed? Some Honourable Members: Agreed. Mr. Deputy Speaker: Agreed and so ordered. Private Members' Business. An Honourable Member: It was agreed not to see the clock. Mr. Deputy Speaker: Where do you want to go to? An Honourable Member: 60, 41. . An Honourable Member: Bill 17 and Bill 41. An Honourable Member: 17 first, please. Mr. Deputy Speaker: I am sorry. Bill 17- The Government Essential Services Act Mr. Deputy Speaker: On the proposed motion the honourable Minister of Labour (Mr. Toews), Bill 17, The

4680 LEGISLATIVE ASSEMBLY OF MANITOBA October 31 , 1996 Governm ent Esse ntial Services Act (Loi sur les services gouvememen taux essen tiels), standing in the name ofthe honourable member for Inkster (Mr. Lamoureux), who has 29 minutes remaining. Is there leave for this matter to remain standing? Some Honourable Members: No Mr. Deputy Speaker: No? Leave has been denied . Is the House ready for the question? The question bef ore the House is second reading of Bill 17 . Is it the will of the House to adopt the motion? Some Honourable Members: Agreed. Mr. Deputy Speaker: Agreed and so ordered.

Biii 41-The Fisheries Amendment Act Mr. Deputy Speaker: On the proposed motion of the honourable Minister of Natural Resources (Mr. Driedg er), Bill 41, The Fisheries Amendment Act; Loi modifiant Ia

Loi sur Ia peche, standing in the name of the honourable member for Brandon East (Mr. Leonard Evans). Is there leave for this matter to remain standing? Some Honourable Members: No. Mr. Deputy Speaker: Leave has been denied. Ms. Rosano Wowchuk (Swan River): Mr. Deputy Spea ker, I want to take a few moments to put some comments on the Fisheries Amendment bill. The fishing industry is a very important industry in our province and very important to the economy of many of our northern and aboriginal communities, and it is an industry that we must look after.

Unfortunately, in my opinion, particularly in my constituency, when I look at what the government has been doing, there has been neglect in keeping this a sustainable industry. The purpose of this bill is to transfer some of the regulatory powers currently held by the fe deral fisheries over to the province. The bill deals mostly with licensing requirements and enforcement The concern we have, and a concern that has been raised with us, is what the implicatioos of this bill are for First Nations peo ple.

The agreement the First Nations have with treaty rights is between the federal governm ent and the bands, and when we have a provincial governm ent now taking over some of the regulatory powers, it has been raised with us that there might be a concern for aboriginal communities. An Honourable Member: The First Nations are excluded from this. That stays with the fe deral govern ment. Ms.

Wowchuk: Now the minister tells us that the First Nations have been excluded from this, and I wish that message had been communicated to the First Nations to ensur e them that was actually true, that they do not have any concerns with it, but when I look at the record of this government ·with communicating with the public, for example, we have had great discussions in the last fe w days about how this government has refused to travel out to rural communities and talk about the privatization of Manitoba Telephone, I seem to see a bit of spillover here .

If the minister is accurate and indicates that there are no problems for First Nations, I wish that his department had been in contact with the aboriginal communities and let them know what the intent of this legis lation was, to give them that insurance, because that has been raised with us and there are people who are coming, I understand, from some of the First Nations communities, who are going to be making presentations when this bill goes to committee to address these conce rns. So I hope that that would be accurate .

We must be sure that when we transf er powers from the fed eral to provincial government s, there is not inter fe rence because these agreeme nts, these treaties that have been signed, are from First Nations to the fe deral governme nt. Those people have been given the right to hunt and fish, and the provincial government should not be

Document details

Collection	Manitoba — Debates (Hansard)
Citation	36-2-74
Type	hansard
Volume / chapter	36th 2nd hansardpdf 74.pdf
Language	en
Format	pdf
Source	PROVINCIAL
Identifier	6d52c994a681ac6401e05d1013eee2b8ac330ea3

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