Manitoba Hansard — 18 December 1989 (Sitting 93B, 34th Legislature, 2nd Session)

34-2-93b

Manitoba — Debates (Hansard)

LEGISLATIVE ASSEMBLY OF MANITOBA Monday, December 18, 1989. The House met at 8 p.m. CONCURRENT COMMITTEES OF SUPPLY SUPPLY-ENERGY AND MINES Mr. Chairman (Mr. Harold Gilleshammer): I would like to call this meeting to order to discuss the Estima tes of the Depart ment of Energy and Mines. When last we met we were on item 3. Mineral Resources, (

a) Mineral Resources Ad ministration:

(1) Sal aries, $201,000 -the Mem ber for Flin Flon. Mr. Jerry Storie (Flin Flon): Mr. Chai rperso n, my col league and I spent some time dis cussi ng the LynnGold situation. I wonder if the Minister could update us on the current offer by the province in support of the workers both in terms of the severance package whatever term the Min ister is using-in suppor t of their reloca tion needs, and also the latest with respect to the town's assistance package. Hon .

Harold Neufeld (Minister of Energy and Mines): Dealing first with the relocation assistance, tha t is a com bined effort of the Emplo yment Services and Immigr ation, and the Manitoba Department of Labour. The assistance is for-I am not quite sure the formula used -up to $7,500 which can be raised up to $10 ,000 if it is warranted . The assistance to the town, we are comm itted to keeping the essential services going. I believe tha t the Min ister for Rural Dev elopment (Mr. Penner) was ther e on Friday, discussed their needs, and delivered a cheque, I believe.

But things like infrast ructure, schools and hospitals will be maintained at the level it is at now. In the short future, it will be downsized, I suppose, as it is found necessa ry, but the assistanc e to the town will be as needed and not in flat amounts. They will be prov iding us with requests for assistance, and it will be granted as need is shown . Mr. Storie: The Minister mentioned the $7,500 going up to $1 0,0 00.00. Could the Min ister indicate wha t guidelines or criteria are avai lable for people to assess what th ey might be eligible for? Mr.

Neufeld: Eligibility is if they are mov ing, of course, and it depen ds where they are movi ng. Each destination has a specific amount attached to it depen ding on the number of people in the family, depen ding on the weight of the household goods that are transported. It is a formula that is put out by Emplo yment and Immigr ation. I can get you more details on it, but I would have to go back to the paper. It is administered for the Manitoba Go ver nment by the Department of Labour. Mr. Storie: So this is the federal Depart ment of Emplo yment and Imm igration? Mr. Neufeld: Tha t is correct. 3908 Mr.

Storie: Ho w much does the province contri bute in all of this? Mr. Neufeld: The Minister of Labour has signed an agreement with the federal Minister, and the exact details of tha t agreement I am not certa in of, but Ma nitoba's contribution is appro ximately 50 percent of the total cost of the relocation expenses for each emp loyee. Mr. Storie: What would the estimated total of the reloca tion costs be to the province? Mr. Neufeld: There has been no dete rmination of what the total cost will be. That will not be determined until all th ose who wish to move have moved . Mr. Storie: Mr.

Chai rperso n, I assume tha t all of th ose who are currently miners will at some point move, virtually all of them. Can the Minister give me an esti mate? *

(2005) Mr. Neufeld: Even if all 200 moved , if th ey move to Thompson, th ey get one amount If they move to Flin Flon, another; if th ey move to Saskatoon , another; and if the y move to Newfoundland, still another. It is hard to deter mine even an estimate of what the total cost might be. It is not being admin istered by our depar tment; it is being administered by the Department of Labour. Mr. Storie: Mr.

Chai rperson, the Minister did not refe rence the sev eranc e packages and wha t the province might be doing in terms of any add itional assis tanc e, particularly in light of the bank ruptcy circumstances of LynnGold. What is the province's latest posit ion? Mr. Neufeld: The steelworkers asked for, and we have ag reed to fund, a legal chal lenge as to the appropria teness of their claim. They are going to fi rst of all ask a lawyer whether or not they indeed have a cla im, and if th ey have a claim tha t might be placed ahead of the secured cred itors.

Sec ondly, if the lawyer think s tha t they have a claim, the decision to challenge tha t in the courts will be taken. We have agreed to pay for the legal cost of tha t challenge. Mr. Jay Cowan (Churchill): Wha t would be the Minister's course of act ion if it was found tha t th ey did not have a claim that could be pursued while bankruptcy pr oceed ings were in effect? Mr. Neufeld: We will be, of course, at the bankruptcy table when meetings are held. If the question is, would the Man itoba Gov ernment assist in the payment of sev erance pay, the answer would in all prob ability be no.

That would be precedent-sett ing, and I do not think

Monday, December 18, 1989 we would do that, at least I would not reco mmend tha t to Cabinet. If the question is as has been asked in the Ho use, can we withdr aw leases of sister compan ies, I think th at would be inappropria te at this point in time, although we might consider havi ng our solicitor look at that pos sibility. We have requested legal opini ons on a number of matters, and th ose legal opin ions have not been received. I might say th at those include, among others, whether or not a bankruptcy vo ids leases, and things along th ose lines. We have not yet received the legal opinion. Mr.

Cowan: I go back to the original quest ion though. Obviously the Min ister said tha t he would be prepared to fina nce the court case for sev erance by the union. That would most likely, if it were to pro ceed , have an effect on others as well- non-unionized empl oyees. I believe the y have done so because the y believe tha t severance is owing to the workers, or the y would no t have financ ed the court case . Wha t if it is not pos sible for the union, or anyone, to bring a court case forward for severance pay at a time the bankruptcy proce edings are in pla ce?

The Minister has indicated, by the very action, tha t the y think there is some unfairness the re, oth erwise they would not finance the workers to seek fairness in the courts. Yet it may be impos sible by law for them to do so. What would be the fall-back position of the Go ver nment in tha t instance? Would the y then just say, well, tha t is the way it is, and abandon the workers in tha t respect? Or would they try to find some other way to help them obtain tha t sev erance pay? Mr. Neufeld: There is no question in our mind that legally the workers are entitled to tha t seve rance pay.

That is within their negotiated contr act . If the courts indeed decide the y will not hear the case, or if the lawyers decide it is not a case worth taking to the courts, our posit ion would be to look at other areas where we might be able to encourage the company to make some payment. I would have a great deal of doubt as to whether or not we could succeed. Mr. Cowan: Wha t might th ose other areas be? Mr. Neufeld: What areas do we ha ve?

We can encourage them, we can sit at the table, and if indeed we can void the leases, tha t might be of some help, but I think tha t to give a definitive answer to tha t question now is a little prematu re. We would have to wait and see what happ ens. We have not had the first cred itors' meeting as yet, so in all fairness we should wait until tha t meeting is held and see wha t the posit ion of each and every one of the cred itors is. * (20 10) Mr. Cowan: Let me tell the Minister why I believe tha t is not a prematur e decision at this point in time.

As he is aware, the union has asked for legal opini ons with respect to whether or not th ey can sue for bankruptcy, and the Minister had been encouraging them do so. The legal opinion th ey have received very clearly states tha t the y cannot sue for severance while the company is in th e mids t of the bankr uptcy pro ceed ings.

Sect ion 69 (1) of the bankruptcy Act provides quote: "On the filing of a pro posal made by an insolvent person or upon the bankruptcy of any debtor, no creditor with a claim provable in bankruptcy shall have any remedy against the debtor or his pro perty or shall comm ence or continue any action, execution or other pro ceedings for the recovery of a claim provable in bankruptcy until the trustee has been discharged or until the pro posal has been refused, unle ss with the leave of the court and at such terms as the court may impos e." That is a quote from the Act , and the interpr etat ion is and I quote: "That means tha t the union or individual steelworker members as creditors cannot start a lawsuit agains t LynnGold Resources for wages, severance pay or vacat ion pay, all being claims which are prov able in bankru ptcy , without fi rst obtai ning leave of the bankruptcy court.

The Man itoba Court of Ap peal has said tha t in order for leave to be granted the cred itor must demonst rate to the court tha t ther e exist compelling reaso ns to perm it an action to com mence. In another decisi on, the Court of Appeal empha sizes tha t the fundamental idea of the legislation is that all claims against the bank rupt be dealt with within the con text of the bankruptcy pro ceed ings. Leave to commence pro ceed ings is only granted where the re are highly unusual circumstanc es such as a fraud comm itted by the bankrupt. Where the claim is a claim payable in bankruptcies, such as

an act ion for recovery of sev erance pay, wages and vacat ion pay, it is highl y unlikely tha t leave will be granted , and even if it is, once you have your judgment against the company you cannot take normal civil litigation remed ies to col lect on the judgment.

You are left to sh are the pot with the other unsecured cred itors which would not put you in any better position than you are currently in." The "you" in tha t sentenc e is of course the steelwo rkers and the ind ividual members. (interjection)- Of course, the y get their 500 and then they get their 1, 200, but the point is the remedy which the Minister has held out to the steelworkers as a way to resolv e their problem and the remedy behind which he has put Go ve rnment money is a false start. It goes nowhere, it cannot be done. So the question is not premature.

The question is a very legitimate one, and tha t is why I ask what other options. You would think tha t the Minister would understan d, or at least his staff would tell him that this option which he was putting forward is a no-go right from the very beginning, and it does not take a brilliant legal mind to figure that out. It just takes some research of the bankruptcy Act and some research of the cases tha t have been put forward and decided upon by the Court of Ap peal he re in Ma nitoba and elsewhere. The fact is he has created expec tations and raised false hop es, and th ey are not going to lead anywhere.

No w what is he going to do? What are th ose other options? 3909

Monday, December 18, 1989 Mr. Neufeld: Let us not leave on the record tha t I held out any hopes at all to the steelworke rs. The request came from the stee lworkers whether or not the Gover nment wou ld be pr epared to finance a request from the courts. The Gov ernment said th ey would finance tha t request. That is the only thing we have discussed with the steelworkers. We have never discussed whether or not there was any pos sibility or probabil ity of success in tha t action. We have not held out any hop es for the steelworkers.

If at all, we have probably indicated to them th at we do not know of a precedent on thi s, but we are still prepared to exhaust every avenue with them if this is their wish. The only thing we have said is that we will finance this action. As far as what other act ion we can take, I think the Mem ber for Churchill (Mr. Cowan) indicates correctly tha t no act ion can be taken against the bankrupt except as perm itted under the bankruptcy Act. Where do es he expect us to go from here? We will do whatever we can to help the steelworkers, but we are very limited in what there is th at we might do. * (20 15 ) Mr.

Cowan: Let me read from the most recent edition of The Thomp son Citizen what the Minister is quoted as saying there, and he can take offence with the quote if he wishes. The paragraph starts out: "The Manitoba Gov ernment will help emplo yees of LynnGold Resources Inc., which is file for bankruptcy, fight in courts for seve rance pay, Energy Minister Harold Neufeld said Tuesday. Neufeld said tha t the Gov ernment would pay the legal costs of a cour t act ion by the Un ited Ste elworker s of Americ a.

The case would seek to have empl oyees' sev eranc e benefits given priority over secured creditors in bankruptcy pr oceed ings." Now here is a quote from the Minister: "A lawyer is work ing on it, " Neufeld said. "There apparently is some prec edent for it." The narrativ e of the story says the Minister said the propo sed severance package would amount to $2. 2 million and pay workers an average of $1 4,0 00 each. In the paper he is saying tha t there is apparently some precedent for it, and toda y he is saying ther e is no precedent for it, if I heard him corr ect ly.

The very statement tha t he said-"A lawyer is working on it. There is app arently some preced ent for it" -I would suggest would giv e to the normal reader of tha t quote some sense of op timism or hope. Now if the Minister did not mean to say it tha t way, tha t is just one more example of when he misspoke himself or he got things mixed up or he got them wrong. Maybe he is misquoted , I do not know. That may be the case as well. That happens from time to time, but that is the only document tha t many of the people in the com munity have to read for any analysis of what the Minister has offered to them as help.

I would suggest that by his act ions here, by tha t statement, he has given op timism where very clearly th ere is very little room for op timism, very little reason or cause for hope. I think tha t is just another disservice to the empl oyees. With tha t the case, notwiths tanding that, what other options which he said they would be prepared to take a look at if the court case on severance did not proceed are they prepar ed to look at? Or has he given any thought to this at all, to a point where he can come up with some answers? Mr.

Neufeld: I think that first of all a lawyer was engaged by the steelworkers to look into this- Mr. Cowan: And the prece dent. Mr. Neufeld: -and we are payi ng for tha t solicitor. As far as a preced ent is conc erned , the steelworkers at one point suggested to us that there was a precedent. I am not aware where tha t pr ecedent is, but the steelworkers have suggested to us tha t the y were in it for tha t reason, tha t they asked us to assist them in the action. As far as taking an action against a bankrupt, the answer is very clear, and the Mem ber for Church ill (Mr.

Cowan) has already indicated there is very little act ion one can take against one who is bankrup t. What more can one do to a bankrupt's estate? You stand in line with the cred itors as defined by the bank ruptcy Act, and if you can not get the courts to put you ahead of the other creditors you stand in line. There is noth ing more tha t can be do ne. Mr. Cowan: So then why encourage a court case in the first instance? The other issue-th ere are lots of issues but one of the other issues is the vacat ion pay.

The Minister of Labour the other day said in the Ho use tha t the Go vern ment is going to vigorously pursue the directors for tha t vacat ion pay. Can the Minister indic ate what act ion has been taken in tha t regard to date and what act ion is antici pated to be taken and when? Mr. Neufeld: First of all, the Mem ber for Church ill (Mr. Cowan) sta rted off his comments by sayi ng why encourage a court case. We did not encourage it. We simply told the steelworkers we would assist in it; we would pay the legal fees for it. I do not see why he keeps on putting on the record tha t we have encouraged it.

We have never encouraged it. *

(2020) As far as the vacat ion pa y for the workers is conce rned, the Minister of Labour has indic ated, I believe, that the first $1 ,200 will be paid by the provincial Go ve rnment. The pro vincial Gov ernment will then take the workers' pla ce in line in the bankruptcy. They presumably get $500 back from the bankruptcy estate. As far as the other $700 are concerned, if there is indeed a case against the directors, I presume the Minister of Labour would take

an act ion against the directors for tha t other $700.00. I supp ose tha t the steelworkers and the other emplo yees would take an action against the directors for the monies th ey have coming to them for vacat ion pay. Mr. Cowan: I believe the law, and I looked and my learned col league across the table from me states tha t 3910

Monday, December 18, 1989 vaca tion pays are due in full. We are not deal ing with the $1 ,200 limit with respect to vacat ion pay. We are referring to the di rectors being liable under The Emp loyment Stand ards Act for the full amount of the vaca tion pay -(interjection)- Payment of Wages Act, and I appr eciate his assist anc e. The fact is th at the direct ors are liable for the full amount, if I understand the Act corr ectly. Is tha t not the case? Mr. Neufeld: We have the legal opinion tha t the directors will be liable for the vaca tion pay. Mr.

Cowan: That is the total amount for the vaca tion pay even if it exceeds $1 ,200.00. Is tha t not the case? Mr. Neufeld: I have never suggested any other thing. I have said that, if the Manitoba Go ver nment pays the $1 ,2 00, th ey will go aft er tha t $1 ,200 and the steelworkers will go after the rest. It ma y be a joint action, but the total vaca tion pay would be paid if the y indeed are the liability of the directors. Mr. Cowan: I believe the Go ver nment would have a respons ibility to go after tha t full amount because it is provincial legislation that has been viola ted . The Minis ter of Labour (Mr s.

Hammond) has said tha t she will vigor ously pursue that. I am asking the Min ister: what act ion is going to be taken and when , because . it is an extremely important question? I was in Lynn Lake this weeke nd. People are starting to leave tha t commun ity. Some of tho se individuals are owed thousands of dol lars, and in some instanc es app roach ing $1 0,0 00 for vacat ion pay and sev erance on top of that. If the Minister says they cannot do anything about the sev erance, at least-I am not certain that the Govern ment should take th at pos ition. I think th ere are a number of things the y can do.

They may not be legal options in all instanc es but the y are av ailable to the Gove rnment. Wha t is it going to do, if it is not going to do anything about sev erance, to ensure tha t the vacat ion pays are colle cted quickly so tha t the y can be distri buted to the workers to whom the y are owi ng? Mr. Neufeld: I am not a lawyer and I do not know what the lawyers' advice will be, but I think tha t the lawyers for both the steelworkers and the Manitoba Gover nment will be pursuing, I am told , the directors for the vacat ion pay. Ho w fast tha t can be done is up to the solicitors and up to the courts.

The Minis ter cannot speed up tha t pr ocess. Mr. Cowan: I am asking wha t act ion is the Min ister taking to ensure tha t the pr ocess unfolds as quickly as is possible. Has he encouraged the Minister of Labour (Mr s. Hammond) to bring the ch arges or the action quickly? Ha s he encouraged the Minis ter to set up the board of arbitration which, I believe, would be the appropria te authority for dealing with this par ticular matter under the labour relations proced ures in the pr ovince?

That tribunal most likely would be struck on the Labour Relations Board , which is some thing that the Min ister can provide some initiative in. Ha s he or she, the Minister of Labour, done tho se things and, if not, when are they going to do them? Mr. Neufeld: The act ion will be a civi l act ion and it has to be brought, I would think, by th ose who have the money com ing. I am sure tha t the y have already engaged a solicitor to look at this. I know the Man itoba Gov ernment has engaged a solicitor to look at it. *

(2025) Mr. Cowan: Let me tell the Min ister what my understan di ng of it is then , and perhaps he can pr ove me wrong. The recovery of vacat ion pay is pr operly made before the Labour Relations Board of Man itoba, sitting in its capacity as a tribunal which determi nes vacat ions with pay and emplo yment standards matters. This avenue is already being pursued by the Department of Emplo yment Stand ard s. Is the Minister still saying tha t this will be a civil act ion and this course, which already app ears to have been initia ted by the Department of Emplo yment Standards, will not be followed? Mr.

Neufeld: I am not a lawyer and I am not going to pretend to know what legal course has to be taken. I leave tha t to the solicitors who have been engaged . Mr. Cowan: Just one last point and then I will yield the floor to the Mem ber for St. Jame s (Mr. Edwards), and we may come back to this following tha t . The Minis ter is not a lawyer, but the Minister has staff av ailable to him. He has access to legal counsel, greater access to legal counsel than anyone else in this room most likely or to different numbers of legal counsel.

I would think th at if he genuinely cared about recov ering th ese wages quickly and seeing tha t the wage earners had coming to them what is owed them, then he would take the time to find out how the matter is pu rsued.

He would take the time to find out if the re were any barriers in the way of pursuing the matter or, if his colleagues are not movi ng along quickly enough or if th ere are ways that the process might be expedited, he would make himself aware of this situation-I hope th at is not too much to ask for-a nd then take the appropria te act ion by giving the di rec tion tha t is required to pr otect the workers in this instance. His answers to date have been totally unsatisfactory in tha t regard , but th at is what we have become used to with respect to this par ticular Minister. Mr.

Neufeld: I do not know how many times I have to tell the Mem ber for Church ill tha t the Department of Labour has engaged legal counsel to do the very thing tha t he suggests we should be doing. I do not know how many times we have to tell him and I will tell him aga in, legal counsel has been engaged and the pr ocess is moving as it should. Mr. Paul Edwards (St.

James): One of the interesting aspects which I raised in the House earlier this week and which the Minister of Labour and the Minister here toda y did not respond to spe cifically in the Ho use but did in the hal lway afterwards was the ability to claim under The Payment of Wages Act for severance pay. 3911

Monday, December 18, 1989 By that, I mean go to the directors thems elves for severance pay. The Payment of Wages Act defines wages and it is very clear tha t vacat ion pay is included . You can go after th ese directors. Having spoken with the directors, in par ticular Bob Buchan, he has informed me tha t the directors are insured by a major insurance compa ny. He would not give me the exact name of the company . He said it was a rec ogn ized insuranc e comp any, presumably with many times sufficient assets to cover the seve rance pay, in this case some $2.3 million.

On my reading of The Payment of Wages Act, while it is not common in this provinc e for the direct or of Emplo yment Standards to pursue sev erance pay under tha t Act as a form of wages in trying to colle ct from the di rect ors, tha t is something which this Minis ter has not add ressed here tonight as an op tion. Presumably from his respons es, the lawyers or lawyer enga ged by the department is not looking at tha t. Can the Minister tell the Mem bers here tonight whether or not tha t av enue has been pursued?

Quite frank ly, while it is a novel argument, one tha t would no doubt poten tially be lost, it is cert ainly one with some hope which, as my frien d, the Mem ber for Churc hill (Mr . Cowan) indicates, is not the case with respect to the bankruptcy Act , at least not so much as the case if it were pursued under The Payment of Wages Act Ha s tha t ave nue been pursued? Mr. Neufeld: We are dealing with an area tha t is the purview of the Minister of Labour (Mrs. Ha mmond).

If it has not been pursued, and if there is a pos sibility tha t some action can be taken under that Act, then I will talk to the Minister of Labour tomor row and ask her if tha t has been done and, if it has not been done, th at she ask her solicitor . *

(2030) Mr. Edwards: I thank the Min ister for undertak ing to look into tha t av enue. I truly believe tha t it is one with some hope or I would not suggest it. The fact that 220 miners were left high and dry after negotiating a collectiv e agreement which quite clearly gave them cert ain seve rance pay rights and incurred obligations on the corporati on, left high and dry by the Dynamic Capital Corpora tion with some $500 million in assets absolutely incenses me, I believe, and I think all Man itobans believe, tha t some thing is desperately wrong when tha t is allowed to occur.

On top of the great loss of equity in ho mes in Lynn Lake and the loss to the com munity when people are going to have to leave their homes which the y want to live in, on top of that, th ey are strip ped of what is a negotiated right under a collective agreement to severance pay. It just goes beyond belief, and I think that really strikes at the heart of what the Mem ber for Church ill (Mr. Cowan) and indeed all Mem bers of the Ho use, or at least the Oppo sition, are tal king about when they raise this issue with such fervo ur and such regularity.

I put tho se comments on the record for the Minis ter simpl y by way of explanation about our Party's sheer rage over what has happened in Lynn Lake. I want to ask the Minister specifically whether or not he will be present on January 4 at the offices of Touche Ross as a cred itor to the company at the first meeting of cred itors. I believe Mr. Douglas is the solicitor . He was the one who has informed me tha t the meeting is January 4. I may be incorr ect on the exact date. Will the Minister be present, in tha t the Gove rnment is in fact an unsecured creditor to the amount of some $2 million. Mr.

Neufeld: Whether or not I will be present personally, I am not yet sure, but the Government will be well repr esented. There are a number of departments that ha ve mon ies coming including Fi na nce, the Dev elop ment Corpora tion, Workers Compensa tion, among others, and I can assure the Mem ber for St. Ja mes (Mr. Edwards) tha t the Gover nment will be well repr esented. Mr. Edwards: Can the Minister indicate who is paying the trustee's fees? Mr. Neufeld: It is my understan ding tha t the trustee's fees are paid out of the estate of the bankrupt. Mr.

Edwards: As the Minister knows, there are some $17 million in secured creditors and roughly $16 million in assets. It is my understa nding tha t in par ticular upon revie wing the bankruptcy propo sal, trustee's fees are pref erred. However, the y do not gain the priori ty of a secured cred itor. Therefore, it is my understanding tha t it is normal in the se situations that someone, pr esumably one of the people who ranks early on as a secured cred itor, do es undertake to cover the trustee in bankr upt cy' s fees.

Othe rwise, trus te es in bankruptcie s do not take on cases in which the assets do not cover the secured cred itors. I know that the Minis ter, with his experience and expertise as a char tered accountant, would know probably a lot more about tha t than I do, but I leave th ose comments with him and ask him again, has he any idea who the trustee's fees are being secured by? Mr. Neufeld: Under normal cir cums tances, the petitioner will guarantee the trustee's fees, but I do believe the trustee's fees are paid out of the estate, and th ey come first This is my understanding, and I have never worked in bankruptcy.

Mr. Edwards: Certainly the petiti oner generally does. This was a vo luntary bankru ptcy , a volunt ary assignment, so there is not a petitioner. Will the Minister undertake to have his officials who atte nd the first meeting make tha t inquiry and report back to th e House, because I think it is relevant to know which cred itor is funding the trustee's fees in this particular bankruptcy, which is of so much public interest in this pr ovince? Mr. Neufeld: I have no objection to letting the Member know who is guarante eing the fee. Mr.

Edwards: The Minister, in respons e to a question from the Mem ber for Church ill (Mr. Cowan), said what can you do to a bankrupt estate? In large measure, tha t comment typifies some of the despondenc y and 3912

Monday, December 18, 1989 despair tha t must be felt in Lynn Lake and indeed is felt all over this provinc e. The fact is tha t this company went bankrupt on October 27 of this year. On October 26, the day before, the superint endent was quoted in the Winnip eg Free Press as sa ying tha t the company had every intention of payi ng severance pay. Ther efore, the workers were led to believe by public pronou ncement that their seve rance pay would be paid. On the other hand, the Min ister in negotia tions with the company for some months before tha t knew tha t the company had absolutely no cash assets.

They had some $3 0,0 00 in cash at the time of filing. They also had some $16 million in assets with $17 million in secured cred itors. It was patently obvious to anyone who look ed at the balance sheet, as the Minister had been provided with, that this com pany had absolutely no intention of paying tha t sev erance pay, which the y had negotia ted some time before in a col lective agreement. Why did the Minister not raise tha t concern with the directors at any time prior to the filing of bankruptcy on October 27? Mr. Neufeld: I cannot believe tha t question. I cannot believe the Member for St. Ja mes (Mr.

Edwards) would ask a question of why we did not insist tha t the com pany pay the severance pay. We did insist. It was one of our con ditions. I cannot believe he would ask a quest ion because, once a company is on the verge of bankruptcy, are you going to tell them to pay another $2.5 million or else we will let them go bankrupt? What can you do to a company tha t is about to file bankruptcy? You cannot do any more to it. You cannot do any more than kill somebody. That is the ultimate. The company was asked to make cer tain comm itments if we were to make certain commitm ents.

One of tho se commitm ents was clearly tha t the y were to pay all the debts of the company and one of th ose debts was the severance pay. That was a condition from the outset back in July, a con dition tha t we pla ced upon the compa ny, and I have mentioned this to the Member for St. Jame s (Mr. Edwards) a number of times. If he cannot understand it, wha t more can I say? We put the condition to the company that the y make a commitm ent to pay all the debts of the company including the severance pay if we were to put our money up. Mr.

Edwards: The Minister, I take it, is referring spe cifically to the letter th at was tabled in the Ho use I believe, No vember 2. Perhaps I may be mixed up with my dates, but I believe it was No ve mber 2, in any ev ent, a number of days after the vo luntary assignment into bankruptcy was filed, being October 27. Is tha t the letter he is referring to as requiring tha t assurance tha t sev erance pay would be put forward by the compa ny? Mr. Neufeld: On October 4, one of our conditions was to remove all outstanding debts of the company . Mr.

Edwards: Is the Minister saying that as of October 4 the sever ance pay in his view qualified as outstanding debt? Mr. Neufeld: There is officially and legally no debt for sev eranc e pay until the layoff is comple te and tha t was on No ve mber 6, but on October 30 -w ell, seve rance pay was brought up in numerous conv ersat ions. Official ly, the debt is not th ere until such a time as layoff is comp lete, and October 30 , in contemplation of that layoff being comp lete a week hence, we put tha t specific ally on the table. Mr. Edwards: The Minister says severance pay was raised on many occa sions.

Wha t was said about severance pa y on thos e many occa sions? I am parti cularly interested in what was said prior to October 27. *

(2040) Mr. Neufeld: The question was often rais ed of what would happen . The fact of the matter is, first of all, if the company keeps opera ting the re is no severance pay liability. Our discussions with them were primarily to keep tha t company opera ting. It appe ared early in October tha t they had no intention of keep ing this company opera ting. At tha t time severance pay came into the question and the y told us that the y would try to make a deal with the empl oyees to take sh ares in lieu of severance pay. They told us they would make a deal with the emplo yees to take sh ares in lieu of vaca tion pay.

They told us the y would make a deal with all the other creditors to take shar es in lieu of the debt owing. These were all conditions tha t the y were going to meet, conditions they never have met. The severance pay was to be looked after by way of shares. Mr. E�wards: Did the Min ister ever ask the compa ny, as a sign of good faith in the se negotiations in which the provi nce was not going to put up any small sum of money-b y their own statements repeated ly, $24 million apparently was on the table from the province did the Minister ever ask Mr.

Buchan, as a sign of his good faith in respect to the se negotiations, to set aside �onies then and th ere to cover the severance pay, given th ey had clearly no intention and no money in the company to pay the roughly $2.3 million in severance pay? Why was tha t stat ement not made to Mr. Buchan, and why was he not confronted early on with the fact that he was out to sh aft the workers from Day One? Mr. Neufeld: It is strange tha t both Parties are now so solidly against the company when just a month ago they were standing with the company and telling us to make a deal with the compa ny.

I ask the Mem ber for St. Jame s, how do you ask somebody to put up more money when he has said that he is not going to put up any more money? He is on the verge of bankruptcy and you say to him, in good faith, put up $2.5 million. That is nonsense. Mr. Edwards: The Minister was off ering some $24 million. Clearly the company had no intent ion of paying the severance pay. We did not know tha t. The balance sheet for tha t company was not in the hands, at least , of myself. Mr. Neufeld: You could have obtained it any time you wanted to from any broker. It is a public stock compa ny. 3913

Monday, December 18, 1989 You could have obtained the balance sheet and the financial statements any time you wanted from the same source tha t we received it from. Mr. Edwards: Is the Minister saying th at he was aware-m aybe he can answer th is. When exactly did he become aware th at the company had $30,000 in cash? Mr. Neufeld: I have seen their balance sheets for the last couple of years. I have known for some time the financia l position of the comp any, since I took office a year and a half ago. Mr.

Edwards: In the conv ersat ions, when the company was st ill deal ing with the province, did the Minister ever ask Mr. Buchan, and I will repeat this, did the Minister ever ask the company or Mr. Buchan what spe cifically his intentions were with respect to an agreement negot iated some time before a colle ct iv e agreement with the workers of Lynn Lake? Mr. Neufeld: Officially we knew noth ing about th at agreement. We did know about it from the steelworkers. The agreement was negotia ted by Sherri tt Gordon Mines many years ago. It was taken over by Sherr Gold and subsequently taken over by LynnGold.

They have ass umed an agreement tha t somebody els e had negotia ted . Tha t takes noth ing away from the fact th at the liability is there in the ev ent of layoff, and layoff had not occurred , layoff was to occur. We were afraid right from the start tha t layoff and bankruptcy both would occur and emplo yees would not get their money. We could see their balance sheet, we knew the direction the company was taking. Tha t was easily understood by us, but what do you do at this point in time ? You cannot say to somebody who is contem plating bankruptcy, put up another $2.5 million or we will not giv e you 24.

If we do not giv e them 24 the y are in bankruptcy anyway. If we ask them to put up another two and a half th ey simpl y file bankruptcy, which th ey in fact did. One of the reasons th ey filed was because of our insistance tha t they commit $2.5 million, or wh atever the sev erance pay was, to a trust account. Tha t was a condition on the October 30 letter in contem plation of the layoff date, Nove mber 6. Mr. Edwards: Tha t letter was sent October 30, that was thr ee days after the voluntary assignment into bankruptcy. Why was tha t demand not made prior to October 30 ? Mr.

Neufeld: Because prior to October 30 we were dealing with them in good faith in keeping the opera tions going. We were deal ing in good faith; th ey may not have been and you can -t here is no question in our mind tha t we thought tha t we were dealing in good faith and the company was deal ing in good faith. They may not have been, but if you are going to negotia te the continuing opera tion you do not have a layoff, and if you do not have a layoff you do not have liability. Wh ich way do you want? Do you want to negotiate the layoff or do you want to negotiate the conti nuing opera tion?

You have to make up your mind, you can not have it both ways. Even you should know that. Mr. Edwards: Mr. Chairman, the Minister has said tha t he knew- and the record will show this earlier on this even ing-a s of early October tha t the company had no intention of going through with this and of taking a- ***** Mr. Chairman: On a point of order, the Hono urable Minister of Health. Hon . Donald Orchard (Minister of Health): I realize my honourable friend for St. Ja mes is a lawyer, and because of his substantiv e duties as an ML A he often maybe does not get in court any more. But this is not a court, Mr.

Chairman - about what did you say, and what your impress ion was, and what did you do with th is, and then what word did you say, and were you aware, and all of the court-quizzing. If my honourable friend, the lawyer from St. James, wants to pr actise lawyer, go to a court. Mr. Chairman: There is no point of order. ***** Mr.

Edwards: Perhaps the Minister of Health does not want to get to the bottom of what happened , which resulted in 220 workers in Lynn Lake being not only without sev erance pay, without equity in their homes, and without anything, relativ ely speak ing, in terms of an ability to live in the pla ce tha t they have ch osen, and the ho mes tha t the y have made in a community in northern Manitoba. Perhaps he is not keen to get to the bottom of that. I am.

The fact is tha t this Minister, his col league, did not do all tha t was necessary and all tha t was called on by him in the se negot iations, and he basically got hamm ered by this comp any. I want to get to the bottom of it so tha t he and all his col leagues in the Gov ernment will know, and perhaps learn from his mistakes. An Honourable Member: If we gave you time off you could go back to court if you want. Mr. Edwards: With respect to the-the Minister says he can give me time to go back to court.

The Minister may be interested to know tha t I was there tod ay, and I will be th ere tom orrow, and I will be th ere Thursday, and I certai nly get enough time in court that- An Honourable Member: You mean you are double timing it? You are not a full-time ML A? Mr. Chairman: Order, please; order, pl ease. Mr. Edwards: I have lots of time to pra ctis e my pro fession. The Minis ter said earlier in this discussion this ev ening tha t early in October, he knew the company was not going to go through with the deal and tha t the y were intending on bankruptcy and on laying off.

He then went on to say that he came to the conclusion tha t he should force this issue with the com pany on October 30. So at the beginning of the month he knows 3914

Monday, December 18, 1989 tha t LynnGold has no intention of going through with this, but he does not force the issue of sev erance pay until the end of the month, until October 30 . That is th ree days after the bankruptcy. Why did he not take the initiativ e that he saw better of taking later on in the month? Why did he not take it when he knew the company had no intention of going through with this and had every intention of laying off workers without sev erance pay? Mr. Neufeld: First of all, the Mem ber for St. Ja mes said I got ham mered by the compa ny.

I would like him to explain to me where I got hamme red by the com pany and then I will answer his other question. Mr. Edwards: The Minister got hamme red by the company because a major industrialist has pulled out of here leaving 220 Manitobans without sev erance pay and having absolutely no responsi bility in this province. The Minister does not even know the remedies av ailable to him. He does not even know tha t the director of Emplo yment Stand ards can launch

an act ion independently and does not need to launch a civil act ion, as he suggests. *

(2050) He is total ly out of touch with what is going on in this case; he has been for months. The fact is, the workers are paying the price and yes, he got hammered. He got ham mered by Dynamic Capital Corporation out of Toronto and by Bob Buchan all the way down the line. He knows in early October tha t they were not going to go through with it. He waits an entire month after the y have filed bankruptcy and, he knows what bankruptcy causes, he waits a whole month to force the issue of sev erance pay. Why? Mr.

Neufeld: Well, I have said a little while ago tha t when you are negotiating the continuing operations you do not negotia te layoff. When you negotia te layoff and bankruptcy you do not negotiate conti nuing opera tion. You cannot do both. You have to make up your mind which one you want. We decided that we were going to negotia te con tinuing opera tions. We went to the end to negotia te con tinuing opera tions, even to the point of our letter on November 9, I believe it was, in which we finally demanded tha t the company take a position and make their comm itment to this province.

We have, from the start, negotia ted conti nuing opera tions, and when you are doing that, you cannot ask the company to put up monies for which they may not have a liability, indeed for which th ey would not ha ve a liability. As far as the comme nts you have made about what the Mi nister of Labour should or might do, I have said from the start, I am not a lawyer. I do not pretend to be a lawyer. I leave tha t to sol icitors. Wh atever action th ey wish to take, th ey will take. The company has not hamme red this Gov ernment.

We have negot iated with this compa ny, and we have made demands tha t the y make comm itments, and if tha t is being hamme red, so be it. Mr. Edwards: You made a demand tha t they make a comm itment with respect to sev eranc e pay th ree days too late. You said tha t you were negot iating to keep the company open, to keep the opera tion going. You were negotiating with tha t in mind, and tha t was what possessed you, and tha t was why you did not force this issue. The fact is, you said about 20 minutes ago tha t you knew early in October opera tions were not going to continue.

You knew this company was not negotia ting in good faith. Why did you not do anything then? Mr. Neufeld: First of all, the com pany on October 27 put, I think the y call it a holding propos al, so tha t the bankruptcy will not be final until that proposal is heard - An Honourable Member: Retroactiv e to tha t date. Mr. Chairman: Order, ple ase. Mr. Neufeld: Mr. Chairma n , it is retroactive to tha t date if the com pany decides to go through with the bankruptcy, but if the pro posal meets agreement of its creditors, the bankruptcy will not go forward.

The holding pro posal in effect holds at bay all the creditors until such a time as the company has made a propo sal known. If the creditors agree to it, the bankruptcy wi ll not pr oceed; if the creditors do not agree to it, the bankruptcy proceeds retroactive to the date of October 27. At the same time, the emplo yees were not laid off until Novem ber 6, and it was not until layoff that the sev erance pay became a liability to the compa ny. If we are going to negotia te the bankruptcy, tha t is one thing. I think then we could be blamed . We did not negotia te the bankruptcy.

We negotiated the continuing operation. That was our demand of the com pany from Day One, that the opera tions be co ntinuing and it not be a band aid solu tion. We wanted the contin ued minin g opera tions in Lynn Lake and not just a tempor ary one. Tha t was our demand from the start. We deman ded tha t the com pany make its comm itment to th e co mmunity as well. The company was not prepared to make th at comm itment and filed bankruptcy. That is not our decisi on. Mr. Edwards: Well, the se demands that the Minister speaks so ferv ently about sure went a long way. Good work.

The fact is, 220 people have not received a dime out of tha t company except, by vi rtue of the bankruptcy Act , $500 .00. This Gov ernment is going to end up paying $700 per worker. The fact is, th ose people got off scot free. The Minister did a fine job, given tha t he knew a month before he forced the issue of severance pay that the company was going down and had no intention of payi ng it. That is called being a sucker. Mr.

Chairman, the fact is tha t the workers in Lynn Lake are payi ng the price for the fact tha t this Minister did not force the issue with people who have hundreds of millions of dolla rs, and $2.3 million is owed to the workers of Man itoba and the y did not get a dime. Mr. Neufeld: Mr. Chairman , if the Mem ber for St. Jame s does not realize tha t Dynamic Capital Corporation or American Barrick, the two princip al parents of LynnGold Resources, have no liability, absolutely no liability, to 3915

Monday, December 18, 1989 the workers of LynnGold-L ynnGold owed the money if he do es not know thi s, he better go back to law scho ol. Mr. Edwards: Well, Dynamic Capital Corpora tion, for the Minister's informa tion, and I am sure he knows- Mr. Chairman: Order , plea se; ord er, pl ease. The Member for St. James. Mr. Edwards: Dynamic Capital Corpora tion is the very company tha t this Minister was as king for some $10 million in new inv estment from, a company that has some $500 million in assets, and that is linked to Corona Mines, with many more hundreds of millions of dolla rs in assets.

The fact is, this Minister knows full well tha t money was avai lable or he would not have been propo sing a deal which provided for millions of dolla rs to come into LynnGold from the outside inves tors. Mr. Chairman, one of the suggestions put forward by Paul Bergan, who is the chairperson of the Lynn Lake Ci tizens Commit tee, is tha t they asked the Minister -a nd this is a letter to Mr. Filmon, the Premi er, dated the 23rd of Novem ber. It says, they would like the Go ve rnment to preclude the need for col lection of realty and school ta xes, and water and ga rbage collection fees.

I am sure the Minister has been made aware of this letter. Can he comment on th at specific request? Wha t consi deration has been given to it? I understand of course tha t th ere is a $243,000 grant which has been given to the municipalit y, but wha t spe cific respons e is going to be made to tha t request? Mr. Neufeld: First of all, let me answer his first al lega tion. Dyn amic Capital Corpora tion owns approxi mately 16 percent if you pier ce all the corpo rate ve ils of LynnGold Resources. Dynamic Capital , yes, has a lot of money, but th ey have no liability.

They were under no obligation to make any payments. I do not know how the Mem ber can sit th ere and say, the y owed the money and should have paid, we should have forced them to pay. No w, what utter bloody nonsense is this? As far as his question with respect to the com munity of Lynn Lake, the Department of Rural Devel opment has made a commitm ent tha t the services will be maintained. The grants, so far, have been roughly in the amounts necessary to make up the revenue shor tfall due to the dis cont inuance of operation by LynnGold. Mr. Edward: Mr.

Chairman, the fact is that this Minister was ask ing for a significant infusion of cash spe cifically from the directors, and in

part icular Bob Buchan and Dynamic Capital Corpor ation. He was ask ing for tha t money to be put forward. They were the parties tha t were negotia ting, in fact. The Minister of Health (Mr. Orchard) says -is th at wrong? Certai nly not. What was wrong was tha t the Minister of Health 's colleague knew in early October that LynnGold had no intention of continuing that mine. Yet he co ntinued to negotiate and not force the issue of sev eranc e pa y until afte r-h e negot iated with someone he knew was not negotia ting in good faith. Perhaps the Minister of Mines and Energy (Mr.

Neufeld) is taking a lesson from the Minister of Health in respect of his fiscal ability. The fact is, there were th reats which could have been made. I want to ask the Minister why he did not at tha t time have with him -(interjection)- The Minister of Labour (Mrs. Hammond) says, threats. Well the fact is, LynnGold very clearly said, we are not going to pay severance pay. We have no intention of paying severance pay.

The Govern ment's obligation in tha t context was to use whatever tool it had to provide for the workers, knowing tha t the mine was going to shut down, as the Minister has adm itted . * (2 10 0) The tool th ey could have used was to have said to the directors, we have every intention of pursuing you pers onally for severance pay under The Payment of Wages Act.

We would like you to set aside, at this time, mon ies to cover th ose severance pay agreements, and perhaps could have suggested to them tha t th ey might have talked to their insurers before they gave a negative answer, because the fact is the y are insured. There is direct ors' liability, which all of the se directors have. There is a pool of resources avai lable to pay the severance pay, which was not raised by this Minister. Mr. Neufeld: If we had made th reats, as the Mem ber for St. Ja mes (Mr. Edwards) suggests, they would have filed bankruptcy on Sept ember 1. That goes without saying.

That would not have helped the matter. You could have ch astised me severely if I had made tho se th reats on September 1, if I had not negotiated with them. We negotiated with them until thr ee days beyond the layoff date. We negotiated in go od faith with them. You say we should have insisted th ey put up the money. Ho w do you insist somebody put up money? They did not owe it. If negotiations succeeded they would not owe it. I have asked you this before. You either negot iate the co ntinuing opera tions or you negotiate cessat ion of opera tions; one of the two , you cannot do both.

I ask you to explain to me how I could have negotiated both parts at the same time. Mr. Edwards: What this Minister did was continue to negot iate with a party tha t had made clear it was negotiating in bad faith. He contin ued that, probably because of the pressure in the Ho use, th at he felt he had to. It was a charade. The fact was, he had knowledge which the miners did not have with respect to the real intentions of tha t com pany, and he did nothing about it.

Is he aware that the company, as recently as a number of weeks ago, has offered to put up I believe 50 percent of the money owed under the severance pay pa ckage, with a further 50 percent to take the form of shares, keeping LynnGold open as a Shell research company . Is he aware tha t the company was willing to put some money up, not just shares, not just stocks- cash? Did he ever ask tha t question to find out if th ey are willing to put cash on the table for severance pay? Mr. Neufeld: The Mem ber makes much of my knowing the intention of the company .

I obviously do not know the intention of the company when I am negot iating. 3916

Monday, December 18, 1989 An Honourable Member: You said half an hour ago- Mr. Neufeld: I said it was our impr ession tha t the company was not going to meet the cond itions tha t we imposed upon them . Wha t the company offered to the workers I am not pr ivy to. They may have offered them a par t cash sett lement and par t share sett lement. If the y did, and the empl oyees turned it down, tha t is not my problem. That is the problem of the empl oyees and the company . Mr. Edwards: That is true.

The last part of th at is true, but the fact is th at the company , the directors, were willing to put cash on the table for part of the severance pay. The question is, did the Minis ter ever ask the directors to put some cash on the table when the province had some leverage thr ough supposedly good faith negot iations? Had tha t request been made, it would have been abundantly clear -i f the answer had been in the negative from the company -tha t they were not negotia ting in good faith. Mr.

Neufeld: The company continually and repea tedly said we will try to make deals with the creditors; we will try to reach a sett lement with the emplo yees; we will try. We tried to pin them down as to how they were going to settle-would it be for cash or for shares? They would hint tha t it might be sh ares, or it might be part shar es and

part cash, but the y would never put their money up. In all the times that we had discussions with them th ey refused to put money up. We repeate dly asked them to put some money up so we could carry on with the negotia tions, but the y refused. That was the reason for finally-in frustration we wrote one letter, I think earlier in No vem ber, and one letter on the 9th of Novem ber, where we insisted th at they either make a commitment or we would withd raw ours. Mr. Edwards: Mr. Chairman , I am cogn izant of the fact tha t my col leagues from the thir d Party may have some other questions.

I have simpl y one more question. Again it refers back to the letter to the Premier (Mr. Filmon) from Mr. Paul Berg an. Among other thin gs he asks for, on behalf of the Lynn Lake Citizen's Commit tee, is special subsidized rates for Ma nitoba Hydro. What has been the Go vern ment 's respons e to tha t request put forward in the corre spondence to the Prem ier, dated Nove mber 23 of this year? Mr. Neufeld: Did you say in the Premier's response? Mr. Edwards: I am asking what the Premier's respons e will be. Mr.

Neufeld: As far as I know ther e are a number of questions tha t were asked , and the questions were all answered by the various Ministers involved . At this point in time, Manitoba Hydro will not giv e discounted rates. If there is to be a subsidy it will have to come from the Gove rnment. Mr. Edwards: Can the Minister indicate, with respect to this $243,000 grant, what period of time it is meant to cover, and what arrangements have been made for renewal of a grant in the event tha t the com munity of Lynn Lake needs further funding? Mr. Neufeld: The $243,000, Mr.

Chairman, represents th ree quarter grants from the compa ny, grants in lieu of taxes tha t the company was paying. The company was paying the community $8 1 ,000 a quarter. They had made the first quarter pay ment, but had not made the seco nd, third and fourth quarters. The $243,000 repr esents $8 1 ,000 times th ree, $243,000 being the rev enue shor tfall from the company during the last th ree-quarters of the year. That was to December 31, 19 89. Mr.

Edwards: Is it assumed then that, starting again in the first quarter of 19 90, further discussions will take pla ce with respect to subsidies to the commun ity of Lynn Lake? Mr. Neufeld: I think tha t is a fair assumption. They will have to bring forward their budget. I would think they will be downsizing their budget somewhat from the pr evious year , and they will then come to the Depart ment of Rural Devel opment for assistance as needed. Mr. Cowan: The Min ister of Rural Development (Mr.

Penner) was in the commun ity of Lynn Lake toda y and presented a cheq ue for the amounts which the provi nce was going to pay to help the commun ity maintain its base of the Mining Community Reserve Fund. Can the Minister indic ate what conditions were attached to tha t cheque? Mr. Neufeld: The money came from the mining reserve, but it is paid by the Department of Rural Development. I am not aware of cond itions tha t the Minister of Rural Dev elopment attached to it. Mr.

Cowan: Normally when th ere is money coming from a fund for which one Minister has responsib ility, and is being presented or giv en thr ough another Minister, there would be a joint submission to Cabinet and Treasury Board , which would outline the conditions. Was tha t not the case in this instance or did the Minister just hand over the money from the Mining Community Reserve Fund to the Minister of Rural Development (Mr. Penner) and say, do with it what you will? Mr. Neufeld: In fact, the fund belongs to th e Department of Finance and is admin istered by them. The mon ies were turned ove r to the com munity.

Officially, I guess the Minister of Rural Devel opment is the mayor of the co mmunity, inasmuch as it is a local gov ernment district. They must acc ount for the monies, and it is to be used in the ordi nary course of their business. * (2 11 0) Mr. Cowan: Was ther e a co ndition, and I do not know this to be the case, I am asking the question, that if the company were to go back into operatio n, tha t the money would have to be repaid to the fund? 3917

Monday, December 18, 1989 Mr. Neufeld: If the company were to go back into opera tion the fund would demand tha t money from the company . Mr. Cowan: What if another company were to purchase the mine? Would the fund demand the money from another company? Mr. Neufeld: I would ha ve to check with the solicitor but my own guess would be tha t we would have n� claim against any company for past debts of a former company . Mr. Cowan: This matter would not be passed onto a future comp any, only the present company .

LynnGold Resources, if it were to, for some reason, avo id the bankruptcy and go back into opera tion, then the y would be liable? Mr. Neufeld: I would have to check with the solicitor but again I say it would be my guess tha t if a new legai ent ity comes forward and takes over the opera tions, we would have no claim against them for debts incurred by the bankrupt. If indeed the claim co uld be agai nst the pr oper ty, the lawyer would tell us this . It is my understan ding tha t the se grants were grants in lieu of taxes and cannot be attached to the prop erty itself.

As such, my guess would be, although I must confess tha t I do not know the legal impl ications of that, if tha t were the case, indeed we would ask our solicitor to give us an opinion. Mr. Cowan: I would appr eciate th at informa tion at a future commit tee hearing, if tha t would be possi ble. The commun ity had been asking for some relief on their municipal taxes. The reasoning was as follows. A lot of people in the commun ity will not be work ing now, the y will be in financially difficult circumstances.

They would like to stay in the com munity in the ev ent tha t the mines should be pu rchased and opera ted by the same or different compa ny, so that they could be ther e in order to take advanta ge of the succession right s that would accrue to them normally, and the oppor tunity to continue emplo yment in their home commun ity. A lot would like to stay just until June, so tha t their kids can stay in school, and that is particularly impor tant to th ose who have childr en in the higher grades in the high school. It is also important to a lot of the fam ilies with childr en in the lower grades as well.

They would like some relief from the pr ovi nce with respect to the taxes they have to pay. The fact is tha t the y would require agreement by the Minister, if not the Cabinet, for tha t relief to be provided. They have asked for two types of relief, I believe. One would be for the penalt ies on late taxes to be foregone in any ev ent. So tha t if they did not pa y their taxes for a perio d of time, and then th ey were able to because the y had gained emplo yment again-t hey want to maintain the house in the commun ity-the y would not have to pay the penal ty.

The other was for, and I think the more realistic one at least, was for the comple te relief from tho se municipal taxes for a period of time, so tha t they could sit this 3918 out in the com munity, so tha t the com munity would not be entirely abandon ed , and tha t they would not ha ve to pay tha t extra cost on not ha vi ng any emplo yment. It is my understanding tha t the Minister of Rural Development (Mr. Penner) gave a flat no to both requests toda y when he was in Lynn Lake, but I have not had the opportun ity to confirm tha t.

I would ask the Minister if tha t was the direct ion tha t was given to the Minister before going to Lynn Lake? Mr. Neufeld: I would take it tha t the Minister of Rural Development (Mr. Penner) took tha t decision because tha t is what he felt at the time, and I think tha t is under his jurisdiction and he can make tha t decisi on. I think it is a little early to start talking about what other assistance we should give. We have to have need demons trated before we start handing out taxpa yers' money. If indeed there is a need, tha t will be met.

We have indicated tha t in the past and we will indic ate tha t again. For a flat gr ant to every resident of the com munity, I do not think tha t is the way to go at this point. Mr. Cowan: The Minister has always said throughout this entire fiasco, and it has been a fiasco on the part of the Minister, th at now is not the time to discuss tha t issue. We have more time, we have weeks left, we have months left, we have days left, and the fact is tha t while he has been very patient, and it has had very little influence on him, it has had a tremendous impact on the com munity and the people in the commun ity.

I will tell you right now th ey are fighting for their future. I was there, I spent a bit of time th ere this weekend, talked to a fair number of people and th ey said that th ey need this sort of assistance from the Gov ernment. They said tha t it is important to them tha t they be able to stay in their communities. It is a tragic sight to watch families and friends split apart. It is just not co- workers who will never work with each other again, who have probably worked with each other for years and in some instanc es a generation, it is families tha t are splitting apart.

One of the people with whom I spoke this weekend was going to Marathon, he was leaving his family behind at least until June. There are no accommoda tions in Marathon, the kids were in scho ol. He was going to go down there and stay with a friend. There was another family tha t was pack ing up every thing on Boxing Day and travel ling to another mine in Ontario. There are at least a couple of dozen stories like tha t right now, there will be more after Chr istmas, and th ere wi ll be many more after June.

All th ey are asking from their Gov ernment is a little bit of compas sion, a little bit of understan ding, a little bit of assistan ce. They are not asking for a lot. They are ask ing for what is owing to them. They want their severance pay from the compa ny, they want their vacat ion pay from the compa ny, th ey would like their jobs from the compa ny, but if tha t is not to be the case at least the y want what is being owed to th em from their past work. They would like the Gov ernment to assist them with respect to some of the tax burden

Monday, December 18, 1989 tha t the y have to pay, now tha t the y will not have work, the Go ve rnment to assist them with respect to maintaining the co mmunity, the Gov ernment to assist them in other ways if pos sible. They wanted the Gover nment to make a deal, to strike a deal , to bargain hard but bargain in good faith to keep the mine opera tional. Quite frankly, I blame the Go ve rnment for the failure of the negotiations as much as I blame anyone else.

As a matter of fact, I may even blame the Government a bit mor e for the failure of the negotiations.- (interjection)- The Min ister says they should have paid more. No, I never said that and I do not think tha t is the case. I think they could have negot iated better. I think it was a classic example of each party antag onizing the other until the lines of commun ica tion broke down to the extent where prod uctive negotiations were impos sible. I do not blame the Go ver nment entirely for that, and I do not blame the company entirely for that.

I do know tha t th ere was an honest effort to try to keep tha t mine opera tional. Maybe too much was being asked, maybe too much was being offered. I had a bit of a dilemma about this, because in a way I thought maybe the Go vern ment was paying too much tha t th ey had negot iated thems elves into a bad deal, but I was pr epar ed to allow tha t to unfold and not to be critic al of it if it would have saved the com munity. I, unlike the Minister, do not think tha t this is only a bottom-line issue. Those are his words, he uses them quite a bit-a bottom-line issue.

If he did not use the term itself, he used the concept, and we will go back because we have it all, every bit of it, on the record tha t is in the record av ailable to us. The fact is the commun ity required a bit of good negotia ting from the Gov ernment and the y got exact ly the oppo site. They got bad negotiating. * (2 12 0) They got a Gover nment tha t constantly changed its posi tion. It put a position on the table and then could not val idate it. Others came forward and said, many others came forward , not just the compa ny, but the union came forward and said, we never heard th at posit ion.

No one seemed to have heard tha t posit ion until the Minister mentioned it in the Ho use. I do not want to get back into all that because we will go over old ground. I do believe tha t the Gove rnment did bungle the negotiations. I also believe tha t the com pany should pa y what it owes to the emplo yees, tha t it should pay the severance pay to the empl oyees, and tha t it should pay the vacat ion pay to the emplo yees. There should not be any argument about that. That is owing and tha t should be paid. There is a resp onsibility there. I wish it did not come to that.

I wish we could have had a deal and whether $24 million was too much or too little, I never did make comment upon because I quite frankly did not know, but I did know tha t the negotia tions were handled quite badly. Tha t is behind us. No w what we have is a circums tanc e where the Go ve rnment can continue along with its misha ndling of the situation by saying, well, we need to review this more, we need to pro tect the taxpa yers' money at any cost, and therefore we cannot provide the type of relief whic h is being asked in this instance. The requests are th ere just the same.

It is going to be a very difficult time for tho se families and workers and their friends in Lynn Lake. It is not just the 250 people who are emplo yed by the mine. It is many , many more, and some in much worse circumstances, some who are losing their jobs who do not have reloca tion and mobility benefits av ailable to them, many who are losing their homes who do not have any back vaca tion pay coming to them tha t can tide them over for a little while, many who are losing everyt hing the y ha ve inv ested in the business commun ity there stand to lose quite a bit.

Although I ha ve to tell you, the y are fighting hard to survive, and to stay alive out of hope tha t perhaps something will happ en which will turn the com munity around, but th ey have quite a bit at risk at the present time. They are the ones who are asking for some assistance and the re are ways to shape tha t assistance. If the Min ister is worried about tho se who might not need the money, having the money made av ailable to them, th ere are ways to get around that.

If the Minister is worried about putting out all this money and maybe something happ ening, the mine becoming opera tional, there are ways to strike agreements to deal with th ose issues as well, as long as the Minister is prepared to be somewha t flexible. We have not seen enough of tha t yet. There are ways to deal with the se issues. I do not believe it is entirely a decision for the Minister of Rural Development (Mr. Penner) to make as to whether or not tha t tax relief will be provi ded.

He will be the one who will sign the document, but cert ainly tha t has to be a colle ctiv e decision on the part of the Go ve rnment. That has to be a Cabinet decision or a decision which at least goes to his ministerial com mittee, about which the Premier (Mr. Filmon) has made such great note in the past. So I ask the Minister would he be prepared to recommend to the Minister of Municipal Affairs tha t the y look at a flexible arrangement which can front some of th at money now, or at least give some indication tha t there will be tha t relief from, in this par ticular instance, taxes.

That is long way from the original request of the repayment of homeowners' equity and business-owners' equity, which was the first request from the com munity and one which is still justified, but they have realized tha t will be a request which will not be granted by this Minister or this Go ver nment, so th ey have tried to appr oach it from a scaled down app roach th ey feel might find some favo ur from the Go ve rnment.

On their behalf, I would like to know if the Minister would be prepared to look at tho se different options immediately to give them some indication as to whether or not they are going to have some relief afforded to them. (Mr. Edward Helwer, Acting Chairman , in the Chair) Mr. Neufeld: First of all, we have to understand tha t this is not under my jurisdiction. The relief on taxes would be tha t of the Minister of Rural Developme nt (Mr. Penner). I have said from the outset tha t where 3919

Monday, December 18, 1989 need can be demons trated , help will be avai lable. I think the Mem ber for Church ill (Mr. Cowan) should understand as well tha t there are a number of people in Winnipeg and other Manitoba com munities who are unemployed through layoff. If pr operty tax relief is avai lable to th ose people in Lynn Lake, should they not be made avai lable to th ose people who are laid off in Winnipeg, or laid off in Portage la Prairie, or laid off in Bra ndon, or laid off in Winkler, or Altona, or any other of those co mmunities?

I think we have to make a rule which is acce ptable and can be appl ied broad ly, not just locally to the people of Lynn Lake. We have to make it fair. I want to make one more comment. The Memb er continually talks about our negotia tions, or lack of negotiation knowledge. I want to say just one thing. I would accept his position perhaps if I thought he had any knowledge hims elf in negotiations . Mr. Storie: Mr. Acting Chai rpers on, I can assure the Min ister tha t the Mem ber to my left has a great deal of experienc e in negotiations and unlike the Minister th ey were successful negotiations .

I am not going to rehash the issue of negotia tions . I want to say the issue seems to have escaped the Min ister and he continue s to com pare the circums tanc es in Lynn Lake with unemplo yment elsewhere, layoffs elsewhere. What we are talking about here is not sim ply layoffs. The peo ple who are laid off in Fort Garry can be emplo yed in St. Jame s. They do not have to give up their ho mes. They do not have to lose the equity. They do not have to lose their businesses. They do not have to leave their families. They do not have to uproot their lives and mo ve thousands away to re-esta blish the mselv es.

We are not talking about the same thing. Tha t is why when the people from Lynn Lake and my col league for Churchill or I or anyone else ask for some except ional consideration, we do so with some empathy for th ose people, and the Minis ter app ears to have none. He appears not to understand the dilemma tha t the se people face. Mr.

Acting Chai rpers on, I was somewha t relieved to hear the Minister say, well, yes, we had not thought about the whole issue of The Payment of Wages Act and whether there is some thing we can do to have vacat ion pay and seve rance benefits considered under that issue, and the Min ister cont inues to say, well, tha t is somebody else's responsi bility. That is somebody else's resp onsibility. Frank ly, we are gett ing tired of the Min ister saying, that is somebody else's responsi bility. We want the Minister to show some leader ship .

I continue to hear the Minister say that with respect to my com munity, with respect to the modern ization effort, well the federal Gover nment has to take the lead , someone else has to do the work, someone else has to show they care, I am just not prepar ed to do that, I am busy. It is really frustrating. Mr. Acting Chairperson, the Minister also impli ed that, because the Oppo sition was suggesting the Gove rnment get serious about negotia tions, tha t the y sho w some fle xibili ty and not this one-u pmanship and confrontational attitude, somehow this meant we were siding with the company .

We were not siding with the company at all. We bel ieve, like many others, tha t a deal was there to be struck. We believe if the Minister or his staff had been serious or understood what was involv ed in the negotiations it could have been saved. The fact re mains the Minister has not lost anything by th is. The Minister can sit in his comfor table office and say, well you know, gosh, we did the best we could. He did not take advice from anyone else. He did not take advic e from the union nor from the community, and the end result was tha t negotia tions failed. Well, who are we to blame?

Who are the people in Lynn Lake to blame and, yes, they do want someone to blame. The Minister says, well, you cannot just blame me. You can not blame me tha t your severance pack age is not going to be what you thought it was, or your vacation pay is not going to be av ailable, or that you have lost all of your equity in your town and every thing else. Well, maybe the Minister is partly right, maybe th ere is someone else to blame. Maybe DCC or Americ an Barrick have to share the responsi bility. Americ an Barrick is a big company .

Given that negotiations have failed, clearly we believe the Minister should be doing everyt hing he can do to make sure tho se compan ies provide as much support as the y can , as the y are legally resp onsible to pay, as much as we can legally force upon th em to pay. Recog nizing tha t compan ies operate with one motiv e, and one motiv e only, and tha t is to make a profit, the fact of the matter is this company has enough resources to treat th ese people fairly.

Maybe the Min ister can answer the question: does the Min ister feel it is his responsi bility to act on behalf of the people of Lynn Lake to ensure tha t the se companie s, American Barrick include d and their di rect ors if necessa ry, are held responsi ble, accou ntable, for their obligations? Is the Min ister prepared to not say, well, tha t is the Minister of Labour's (Mrs. Hammond) responsi bility, or the Labour Board , or someone else. Is the Minister prepared to say, yes, tha t is part of my resp onsibility. * (2 13 0) Mr. Neufeld: The Mem ber for Flin Flon (Mr.

Storie) leaves a lot on the record , but asks very little. Let us talk about what he has left on the record. I have not comp ared Lynn Lake to other communities. I have said tha t if tax conc essions are made to tho se who are laid off in Lynn Lake, why should they not be made to those who are laid off in Winnip eg. We cannot isolate one com munity and say we will make tax conc essions here. The laid-o ff workers, for tho se who are laid off in Winnip eg, it is equally traumatic as it is for th ose in Lynn Lake. Nobody likes to be laid off, and nobody likes to see people get laid off.

We think the situation in Lynn Lake is tragic. I agree, it is tragic, but it has happened. I have never said it was somebody else's responsi bility. What I have said 3920

Monday, December 18, 1989 was tha t where you ask me a question and it is not with in my jurisdiction, I have said tha t falls under the jurisdiction of the Minister of Labour (Mrs. Hammond) or the Minister of Rural Dev elopment (Mr. Penner), and I do not want to answer it for them. You indicated tha t you did not side with the company . Well, I suggest you did.

When we insisted the company put aside sufficient monies to make the severance pay, and we made tha t one of the conditions under which we would advanc e mon ies to the company , you sided with the company and said we should withd raw that condition.- (interjection)- Yes, you did. Mr. Storie: Well, Mr. Acting Chai rpers on, tha t is just nonsense, and the Min ister knows it.

What we said was th at the pr ovi nce was laying out conditions, some of which were totally unaccep table and would be unaccep table to virtually any company in the same posit ion, regard less of their intentions with respect to cont inuing opera tions. That is what we said, not that workers should not be pro tected . The second point is, and my colle ague made the point tha t because of the way negotiations occurred , the Minister did not negoti ate. He did not start off by trying to determine what the company needed and by making a counteroffer and stag ing negotia tions.

He apparently rather clumsily said, th ere is $24 mill ion on the table, take it or leave it. It was not even structured in the appropria te way. How ever, the Minister began his remarks by saying tha t he was not comparing the situation in Lynn Lake with others, and then he went ahead and tried to compare them again. The fact is, and he said, quote, a layoff is traumatic anywhere, it does not matter whether it occurs in Lynn Lake or occurs in Winnipeg. An Honourable Mem ber: Is it not? Mr. Storie: Well, yes, Mr. Acting Chai rpers on, it is traumatic, but the situations are not analogous at all.

An Honourable Memb er: They are not? Mr. Storie: I have just said the person in Lynn Lake is losing his equity. He is losing his job. He is losing his town , his com munity, where he built his life. The person in St. Ja mes can work some where else and still live in St. James and not lose anything. The situations are not analogous at all. The Min ister contin ues to confuse tha t in his mind, just as he has confused the negotia tions from Day One, tha t is the problem. He does not understand the circumstanc es. Now we have a circumstanc e where the Minister says, well, I am not prepared to do anymore.

We are asking now tha t he make sure that the compan ies including Amer ican Barrick and DCC live up to their obligations and, if the y will not live up to them willingly, then the provinc e use every avenue at its disposal including legal recourse to make sure tha t the y do, and to carr y it to the full extent so tha t whatever the people in Lynn Lake might be entitled to by law, whether we finesse it or not, th ey receive. Mr. Acting Chai rper son, I would like to ask the Minis ter as well, how much money th ere is in the Mining Com munity Reserve Fund. 3921 Mr.

Neufel d: The Mem ber for Flin Flon says he no longer wants to discuss the negotiation tha t went on and then goes on to discuss at length the negotiations as he might have done it, or possi bly as we should not have done it. I ask the Mem ber, which condition should we have withd rawn? Should we have withd rawn the conditions tha t the severance pay be met, or should we have withd rawn the condition th at the other creditors be paid? I suspect tha t the Mem ber for Flin Flon (Mr. Storie) has gone to the Mem ber for Churchill's (Mr. Cowan) school of negotiations. I do not understand him at all.

There is appro ximately $9 million in the Commu nity Reserve Fund. Mr. Storie: There is $9 million in the Mining Community Reserve Fund, and obviously the Minister has not commit ted anywhere near tha t amount of money to support the commun ity at this time. He also con tinues to say tha t where there is need -th e Minister continues to be very reactive to situations, whether it is the negotia tions or the trauma tha t is in Lynn Lake, and continues to say, well, when someone comes to me, I will do some thing.

I want to know whether the Mi nister can table with us any analysis of what the needs might be for the commu nity of Lynn Lake over the next 18 months, the next six to 18 months. Ha s the Mi nister done any anticipa ting? Mr. Neufeld: Well, I am sure tha t the Mem ber for Flin Flon does not want us to make a grant of any amount to the com munity without a need being demons trated . I am sure he understands tha t taxpa yers' money has to be accounted for, and the Gov ernment in its spe nding must be acc ountable. That may be strange for him, but that is the way we came into power.

We feel tha t we are accountable for the monies and, if th ere is no need , I do not think we should pay out the money. I have said from the start if a need can be demons trated , we will be there helping, but until th ere is a need demons trated -if the empl oyees get a substantial amount out of their vacat ion pay, should we still pay them the monies equal to their taxes, or should we give them a grant equal to their taxes? What would you expect? I would expect tha t if they get a substantial amount for vaca tion pay or severance pay or both, tha t we should not pay their taxes.

That is, we should not make an automatic grant for tax relief. That should be on demon strat ion of need . Mr. Storie: Mr. Acting Chai rpers on, I do not know whether the Min ister intentionally misunderstands or whether he con tinues to be conf used about what the company's obligations are, what we are asking the Gov ernment to do as part of their obligation to the se people. The fact of the matter is, the question I asked the Minister is whether he had antici pated any need. What is going to happen ?

What I am asking the Minister is, has he or his staff made any attempt to look at what the future looks like for the people of Lynn Lake? Ho w many people are going to be in school a year from now? Ho w many staff are th ey going to need? What

Monday, December 18, 1989 are the hospital needs going to be? How many people are they going to reduce? How many businesses are going bankrupt? How many people are going to be left there to support the business infrastructure? How many stores are going to be closed? What is the population level going to be? Those are all problems that I can predict right now without having any access to any of the informatio n the Minist er has access to. There are a whole series of problems coming for that community.

I am willing to bet this Minist er has not said one word to his staff about what the future is going to look like and what needs they are going to have and how he is going to address them, how he is going to respond, and whether there is something he can do in advanc e of thos e small but continuing cris es to assist the community, to soft en the blow , to make life easier. Is there anything that he has done in that regard ? Mr. Neufeld: There is not one problem that the Member for Flin Flon suggests that we have not anticipated . It is the answers that are hard to come by.

It is easy enough to sit here and suggest the problems . We have to find the answers, and we are in the process of looking for answers. We are in the process of deal ing with the comm unity itself . We are in the process of dealing with the workers and the community to find answers, but to expect answers for something that is going to happen 18 months hence today, I think is being a little unrealistic. Mr. Storie: Mr. Acting Chairperson , I was not asking for answers for problems, what I was asking was if he had done any thinking about it. Can he tell us what problems are going to exist?

Are there any ways that thos e problems can be avoided ? I referenced the school. I mean , there are at least a half-a-dozen poten tial ways to prevent the enrollment losses tha t are going to naturally occur if the Minister does not do anything. I mean , what I am trying to find out is if the Minister has developed any sens e of being pro active and trying to anticipate pro blems and deal with them befor e they become overwhelming . The Minister 's answer is obviously no. Mr. Acting Chairperson , the com munity has receiv ed some assista nce from the Minister of Rural Development (Mr. Penner).

That money com es from the Mining Community Reserve Fund? That was what was indicated earlier. Can the Minister indicate whether the municipality has asked for any ongo ing assistance from the Community Reserves Fund, other than the lost revenue? Mr. Neufeld: The $243, 000 will approximately, I understand, make up their budget for the rest of this year, their revenue budget. They have not to my knowledge asked for any additional assistance at this time . It is my understanding the Department of Rural Development and the community will be looking at preparing their budgets for the coming year.

In that they will have to recog nize some dow nsizing, and I should thi nk they will be coming back with that in due course. •

(2140) Mr. Storie: Mr. Acting Chairperson, I heard part of an inter view with the mayor of the community this evening in which he suggested the community was going to be be looki ng for support. Either they have already made the request, perhaps to the Minister when he was in town but perhaps through other sources as well , for assistance for operation of their recreational facilities, particularly their curling rink . Is the Minister prepared at this point to indicate whether money might be available to support those activities, at least on the short term , while the community re-establishes itself? Mr.

Neufeld: We have indicated to the comm unity that we are prepared to fund the revenue shortfall to the extent it is needed. To that end, we have advanced some $243, 000.00. Now , I am not awar e or I am not certain whether the company funded any other activities for the town but, if indeed there are monies needed for the community club, it is something we have discussed in our committee meetings . I should think that, if the monies are needed to fund the community club and the curling rink, the request will be looked upon with favour . Mr.

Edwards: I must apologize I have not sat through the entire Estimates in this department. Can the Minister indicate what amount of money is presently sitting in the Mines Reserve Fund? Mr. Neufeld: I have just told the Member for Flin Flon (Mr. Storie) it is about $9 million . I think it is $9 million plus some change . Mr. Edwards: Can the Minister , specifically , tell us what the purpose of that fund is? Mr. Neufeld: It is to assist communities in distress, as LynnGold is now. Mr. Edwards: That is its only purpose? Mr.

Neufeld: We have also, in the past, funded some other acti vities like economic development officer, tourism officers. It is not something we have done a great deal of, but we have done it in the past. Mr. Edward s: Aside from this payment of $243,000, what monies have bee n paid out of that fund in this fiscal year? Mr. Neufeld: Approximately $49,000 to the community of Leaf Rapids , a nd abou t-there was an amount to the City of Flin Flon , I am not quite certain . That may not have been in this fiscal perio d.

It may have been last year, both of those may have been last year, so this $243,000 may have been all of it. But in total, since we took office, we made one payment to Leaf Rapids, I believe, for $49,0 00 and one payment to Flin Flon do not hold me to it -in the area of $25,000 or $30,000.00. Mr. Edwards: Presumably th at $9 million sits in some form of interest-bearing accounts . Can the Minister indicate how much interest is earned per year on that account? 3922

Monday, December 18, 1989 Mr. Neufeld: The money sits with the Minister of Finance (Mr. Man ness), and I believe he pays interest equal to the interest he pays on his other borrowings. Mr. Edwards: Would it be safe to say that would be in the range of somewhere between 8 percent and 10 perc ent? Can the Minister give any indication as to what roug hly tha t percentage would be and ther efore what figure we are deal ing with in terms of interest earned on tha t fund per year? Mr. Neufeld: It would be in tha t area, in the area of 10 percent.

I do not know what interest rate the Minister pays, but it would be somewhat less than the prime rate the banks charge. Mr. Edwards: So without dipping into the principal amount, there is $900,000, roughly, per year av ailable in this fund of which in this fiscal year $243,000 has been paid out. Ha ve I got that corr ect ? Mr. Neufeld: We did pay some out I am told for ta iling research at Sherr idon, but tha t was a minimal amount, $25,000 to $30,0 00.00. Mr. Edwards: So there is a minimum of appro ximately $600, 000 avai lable in interest for this fiscal year.

That is money which would simply be added to the principal at the end of this year for payments in exact ly this type of situation. Mr. Neufeld: I think tha t arithmetic is right. Mr. Edwards: I want to reference an answer the Minister gave in respons e to a question on October 27, the very day tha t LynnGold pro posed bankruptcy, filed their proposal . He said: "I said yesterday and I will say again tod ay, the decision to keep the mine open or close the mine will not be tha t of the Go vern ment.

It will be tha t of the company , and I think it is out of respect tha t we must wait for them to make the decision and for them to make the announcement ." Did the Minister know at that time th at in fact th ey had filed a propo sal in bankruptcy and , if so, when did he first know th ey were going to definitely file for bankruptcy? Mr. Neufeld: That was on October 27. We did not know, we probably were advis ed on tha t date by letter tha t the y were going to. I cannot now recall what day I first had knowledge of their intent. They may have phoned us and told us or th ey may have written us.

I cannot now recall. I am told it must have been after October 27. (Mr. Chairman in the Chair) Mr. Edwards: Can I then assume the company did not inform the Minister of their meeting on October 25 when they decided , in fact, to file a pro posal in bankruptcy. That deci sion, made October 25, was not commun icated to the Minister. Is that correct? Mr. Neufeld: I am not aware of any-who held the meeting on October 25? Mr. Edwards: Just for clarif ication, the direct ors of LynnGold held a meeting on October 25 at which the y decided and made the decision to file a proposal in bankruptcy .

That decision was not communic ated at tha t time to the Minister, is tha t correct? Mr. Neufeld: I can not-I am told that is correct . It was not com municated to us at that time. I think, as I recall, our first knowledge of the bankruptcy was when we received the proposal from the receiver. Mr. Cowan: Mr. Chai rperso n, the other evening we had a discussion with the Minister respect ing a new analysis tha t had been done of the Mingold gold reserves. At the first commit tee hearing, the Minister clearly stated tha t he did not know of any analysis, tha t none had been done is actually what he had indicated .

At the next comm ittee meeting, we informed him that we had indeed found out from reliable sources that a study had been done. He confi rmed tha t in fact he had been wrong the day previ ous and that there was a study which had been done, but would not tell us the amount of depletion tha t the new study indicated in the gold in the orebody at the Farley Lake depos it. We have now been informed that it is about 30 percent less gold, accord ing to the new study. Can the Min ister indicate if tha t is the case? Mr. Neufeld: Mr.

Chairman, the difficulty here is tha t you deal in quantity and you deal in grade, and to make comment or statement of 30 percent reduction would be very difficult to do. The Strat hcona people, in arriving at their conclusions, decide d their own numbers were better than th at of this new report, or more reliable than tha t of this new report, and used their own figures in arriving at their conc lusions. Mr. Cowan: Then it is not the case tha t this information became avai lable after the Strathcona Report had been released publically or comp leted ? Mr.

Neufeld: The Strathcona people, in arriving at their conclus ion, had access to the report, but in their review decided the figures they had previously were more reliable and used th ose figures in writing their report. * (2 15 0) Mr. Cowan: So before Strathcona comple ted its report, it had access to the se new figures which sh owed appro ximately 30 percent less ore at the Farley Lake deposit than was indicated to be the case in their report. Is tha t what the Minister is saying? Mr. Neufeld: I had never said th ere was any decrease in the value of the deposit.

We are talking value, we are not talking decrease of ore quantity. We are talking total value, and in arriving at their concl usions, Stra thcona, who are more knowledgeable in mining than I am and I am sure than the Mem ber for Churchill is, decided their figures are more reliable and I will accept tha t decision. Mr. Cowan: The second report -l et us call it the second report before we can get the time line established because I am having some difficulty doing tha t with 3923

Monday, December 18, 1989 the Mi nister. The report which became known to us just the other day was a report tha t was commis sioned by MMR and Mingold jointly. Is tha t the case? Mr. Neufeld: Yes. Mr. Cowan: When was tha t report comm issioned? Mr. Neufeld: Some time earlier in 19 89. Mr. Cowan: Can the Minister be a bit more definitive than that? Mr. Neufeld: We will have to tal k to the president of Ma n itoba Mi neral Resou rces and I will ge t tha t information for the Mem ber tomor row. Mr.

Cowan: When the Minister is given tha t information, can he also obtain from him the date upon which that repor t was comple ted and forwarded to Stra thcona Minerals? Mr. Neufeld: Yes. Mr. Cowa n: Will the Minister also provide us with his definition of how the orebody could be deter mined to have 30 percent less gold and yet not have a decrease in its value? Mr. Neufeld: I do not think I have acknowledged any percentage decrease, so I cannot provide you with an opin ion. Mr.

Cowan: Can the Minister then contradic t with any authority the figure of a 30 percent decrease which was provided to us again by a very reliable source. We can go back and confirm if necessa ry, but I can tell you it was a source directly involv ed with the report. Mr. Neufeld: All I can say is tha t I have confidenc e in the reports written by Stra thcona Resources. They have qualified people . They have knowledge of tha t orebody.

They reviewed the seco nd repor t and decided the figures from their original report -and in total th ere have been some four reports on this, four different studies-w ere more reliable than this second report. I will acc ept, as I said before, the opinion of tho se more knowledgeable in the area than I am. Mr . Cowa n: Who did the se cond report? Wha t company? Mr. Neufeld: We had the name of tha t company the last time and I cannot recall the name of the company now. You gave it to us and we confir med it, so you should have the repor t. You should have the name. I do not know the name of the company . Mr.

Cowan: Does the name Roscoe Postal ring a bell with the Minis ter? Mr. Neufeld: If you know the name of the compa ny, why go through this charade? Mr. Cowan: It is not a charade. What I am trying to do is make certain tha t we are indeed talking about the same report because the Minister is very unsure of himself, very vague. Either he does not know or he is trying to hide what he does know, and I do not know either to be the case.

The fact is, he is making it very difficult for us to confirm this information in a repor t tha t was compi led with public money, which was done on behalf of Manitoba Mineral Resources and on behalf of Mingold, and done by a company which one would hope th ey would have some confidenc e in. Otherwise, th ey would not have given tha t company the task of determ ining what the orebody was at the Farley Lake deposit. So the fact is tha t I do not know, because the Minister has not been very forthc oming, if we are indeed even talking about the same report.

He will not tell me what figures were included in the report , about which he knows. I am, at least, asking him to tell me if it is in tha t instance Roscoe Postal tha t did the report. Mr. Neufeld: I think I have already said that is the name of the firm. I repeat for the Mem ber for Church ill, we have to accept the opinion of Stra thcona Resources in tha t their figures, the ones they used in their report, are more reliable than the ones used in the second report. Mr. Cowan: Why? Mr. Neufeld: I think the y were talking techn ical matters here of which neither you nor I are very conversant with.

We have to accept , for tech nical details, the opinions of th ose who are qualified in tha t area. I am prepar ed to do that, and I would have expected you might be as well. Mr. Cowan: Maybe we would have been, had we known there was this repor t, or had when we first found out tha t there was this report which was kept from us. I do not know if tha t was intentional or unintentional , if it was done with some purpose in mind by the Minister or the president of MMR when we had them before comm ittee, or whether it was just an ov ersight on their pa rt. The fact is, it do es make us somewhat suspicious.

Then when we do find out tha t there is this repor t that was not before known to us, we asked if th ere is a report. The Minister says no, there is not a repor t. We go back and check our sources, and our sources indicate that yes, th ere is such a report. So we come back here and ask the Minister, is there a repor t. He says, oh yes. Now, toda y is a different day, and toda y there is a report when yesterday there was not a report. It is like the $24 million tha t bounces around like a bouncing ball whenever the Minister speaks.

So then we ask the Minister, well, what was the decrease in the orebody accord ing to this before unknown report, or at least the report that was unknown to us? And he says, we do not know. So we go back to our source and the source says tha t the decrease was in the area of 30 percent. We come back to the Minister and we say -(interjection)- Some Honourable Members: Oh, oh! Mr. Chairman: Order, plea se; order, please. 3924

Monday, December 18, 1989 •

(2200) Mr. Cowan: Well, the Minister for Rural Dev elopment (Mr. Penner) says th ey do not like a certain ind iv idual in Lynn Lake. I can tell him tha t he is not endeared to the hearts and minds of th ose in Lynn Lake tod ay, particularly after his meeting tod ay, particularly because he is part of a Gov ernment that has so badly bungled this whole episode. They have put an entire commu nity out of work and essentially destroyed it unless some turn of ev ents takes pla ce now. Tha t will be no cred it to the Gov ernment if it does happ en. An Honourable Memb er: Prop up the gold pr ices. Mr.

Cowan: The Minister of the Environment (Mr. Cummings) goes back to the old red herring of propping up the gold pr ices. No one asked this Go ve rnment to prop up the gold pric es. All they asked this Gover nment to do was to negotia te fairly, confidently and in good fait h, and that this Gov ernment did not do. This Gov ernment totally rejected its opportun ity to pr ovide some leadersh ip in this area and to strike a deal tha t would benefit not only the com munity but the province as a whole. He has to assume a great deal of respo nsibility for tha t as well.

It is not just the Minis ter of Mines, although we target most of our criticism toward him. Perhaps tha t is unfair in a certain respect because he has told us alr eady toda y tha t he had nothing to do with the fact tha t you will not giv e tax relief-and when I say you, I look direct ly at the Min ister of Rural Dev elopment (Mr. Penner)-to the co mmunity when they request it. He said that was your decisi on, and your decision unto yourself -(interjection)- Well, now it gets interesting because now the Minister of Mines (Mr.

Neufeld), from his seat, cla rifies himself when he says tha t it was the Minister of Rural Dev elopment's decisi on, but not his decision unto himself. Perhaps we can go back to tha t issue and ask the Minister of Mines if he gave any advice to the Min ister of Rural Development with respect to tha t par ticular decision. Mr. Neufeld: I have given no advic e to the Minister of Rural Development (Mr. Penner) with respect to his decision. I want to comment on one other thing. Much has been said about the Farley deposit and the techn ical details of studies tha t were done with respect to it.

I think it has to be remem bered tha t Farley deposit is owned by Man itoba Mineral Resources, 55 perc ent, and Ming old. Man itoba Mineral Resources is a Crown corporation but it is not their report tha t we are here to review. We are here to review the repor t for the Department of Energy and Mines. The Depart ment of Energy and Mines does not have knowledge of what happened to the Farley deposit studies. That is a question tha t should be asked of the pre sident of Ma nitoba Mineral Resources. It is unfair to ask tha t question of staff here or of me now.

I accept your request for it, and I will get the information. Mr. Chairman: Shall the item pass - pass. The hour being 10 p.m., commit tee rise . •

(2000) SUPPLY-NORTHERN AFFAIRS The Acting Chairman (M rs. Iva Yeo): This sect ion of the Commit tee of Supply will come to order to continue consideri ng the Es tima tes of the Depart ment of No rthern Affairs. When it last met, the sect ion was dealing with item 1. (b)(1) -the Hono urable Mem ber for Nia kwa. Mr. Herold Driedger (Niakwa): To continue where we were last time, we had an unspoken agreement tha t we would continue to ask questions in general topic areas rather than going line by line, and I would like to follow up on a few points which were raised by the Min ister of No rthern Affairs (Mr.

Downey) in his open ing add ress. He referenced a few points and I would like to ask a few questions on that. With respect to the Northern Flood Agreement, the Minister referenced that global negotiations had begun. Is this process something which was come to by agreement with all the groups concerned? Rather than going the arbitration route, you were going to basically have a series of negotiations or one global set of negotia tions would come up with a final sett lement, or was tha t agreed to by all parties? Hon. James Downey (Min ister of Northern Affairs): Madam Acting Chairman, yes. Mr.

Herold Driedger: This is just because I have had some questions brought to my atte ntion by some of the people involv ed. On these negotiations, when an agreement has been reached, is this agreement binding on all four parties, or is this a situation whereby individuals may decide the y do not like the agreement and noth ing is going to happen , so basically th ey will go back to what th ey had before? Mr. Downey: It is unfortunate tha t the Mem ber has not been payi ng more attention to the activitie s wh ich have been going on as we have been talking about it.

I will try to be helpful to my friend and col league. The four parties agreed to put in pla ce four senior negotia tors, and before the conclusion and/or anything which would be advanc ed, I would expect tha t all four parties would agree to th ose negotiations. That would be my underst and ing, and tha t is my understanding of what is in fact taking pla ce-four parties to the agreement. Before a conclusion to tha t agreement would be rea ched , the four parties wo uld be in agreement thr ough their negotiators. Mr. Herold Driedger: I thank the Minister for tha t bit of clarif ication.

I know what the term "negotia tion" means as well. I am just wondering whether or not every body within the pr ocess -a nd I am not talking just from the Gov ernment side, Hydro side, but rather from the Northern Flood Comm ittee side as well. Is every body in that particular group also in agreement with that? I guess when you negotia te, you normally 3925

Monday, December 18, 1989 end up not always getting everything that you want. Sometimes we have to compromise, and I think that is something a negotiator understands. I am just wondering if one of the Flood Committee bands, say, is not satisfied with the process, is there a contingency plan that is in place , or is a settlement or-no, I guess agreement could be involved with negotiations. If one of the groups is not pleased with the situation or decides that the negotiations are not going their way, is there a contingency plan whereby Government might come to a decision that imposes a will of some sort? Mr.

Downey: Madam Acting Chairperson, as I understand it, the five Northern Flood Committees entered into negotiation by hiring a senior negotiator who was to represent those five bands. We have a senior negotiator, Hydro has a senior negotiator, and the federal Government has a senior negotiator . It is my understanding that those senior negotiators are representing all the groups that they are hired to do. So I cannot answer specifically on behalf of the Flood Committees that are involved, but I would expect that when their negotiator speaks, he speaks for the five chiefs that are on the Northern Flood Committee.

Mr. Herold Driedger: Is there any contingency being planned for, should these negotiations not bear fruit at all? I understand that before the negotiation process began, as it is now with senior negotiators for all four interested parties, individual claims were settled by arbitration and it essentially depended upon each individual claimant making his/her case . Is there any contingency within the department as to what to do, should these negotiations not bear fruit? Mr. Downey: Madam Acting Chairperson , that is strictly and totally hypothetical. Mr.

Herold Driedger: I understand it is hypothetical, but we are dealing here with something that has been going on for a long time. I would think that people are entitled to know whether or not the process can have a solution or will have a solution one way or the other . I assume, as we all do, that when you have people negotiating and they are negotiating based upon a set of cond itions or set of ideas, eventually an agreement will be reac hed. But sometimes negotiations do not bear fruit. We see this in labour negotiations. We sometimes call in an arbitrator. We sometimes call in for outside assistance .

I am wondering if the Minister has either a policy , or whether there is-other than the comment that it is a hypothetical situation . Because it is hypothetical, we are looking forward to a possibility that may happen . I do know that in other labour negotiations this is something that is available and is thought about ahead of time because sometimes negotiations do fail. Mr. Downey: Madam Acting Chairperson, I made a comment earlier that the question was hypothetical. Let me just give a brief history for the edification of the Honourable Member opposite, and I am sure the Member for Rupertsland (Mr.

Harper) will want to join in or confirm or deny some of the things that I may want to say. I will try to be brief and keep it to the point because I think it is important that we do, that the Members clearly understand this. •

(2010) On being elected almost two years ago now, spring of this coming year, we found that discussions and negoti ations between the Northern Flood Committee and the previous administration had not gone very well. It was signed in the fall of 1977, the Northern Flood Agreement, and we have come to the time some 12 years later when the community people had seen very little compensation from the Flood Agreement. It was a commitment by our Premier and by our Government to put in place a senior negotiator, that the bands would put in a senior negotiator , Hydro would do the same, and so would the federal Government.

That was done , Madam Acting Chair. As well, to show that the Government of Manitoba meant what they were saying in good faith, we advanced $10 million to the Northern Flood Committee, and that money probably was some of the first money that had a major impact in those communities . I hope the Member is clear. I am telling him what has happened to date . The hiring of those senior negotiators has put in place at the senior level , negotiations to try to get a final resolve both in financial reward and land settlement which has not been done . Progress had been very minimal.

People in those communities had not seen the benefits . I can tell you who has seen a lot of benefits, and that is the legal profession in this country and the consultants. We through our Government made the determination that enough was enough, that the people deserved to have settlement and resolve of this issue. So I will bring the Member where it is to date. We have had very positive negotiations and discussions among the four people involved, the four units: the bands, the province, the Hydro and the federal Government. It is in, I would say at this point , a delicate situation.

I am aware that the Members have had discussions with some of the councils of one of the communities. I say, with the best interests of those communities in mind, that I would not want to get off into a political fight on the issue here and have what I would consider a degeneration of the positive discussions that have taken place . That is why the protocol as far as I am concerned is to leave with the negotiators the job of doing what they were hired to do, that is, to get a global settlement prepared for us as principals.

At this particular time, and I say it straight out , I am waiting for a response from those senior negotiators. I hope Members opposite would be of the same mind , and I hope the Member for Rupertsland (Mr. Harper) would be supportive of this, that it is time to get the land issue resolved and to get the financial reward issue resolved so the people in those communities can get the benefits . I say without speculating into the future whether it is going to be accepted or whether it is not, the protocol as far as I am concerned is to deal with the senior negotiators and wait for the report back.

I am hopeful that it is positive . 3926

Monday, December 18, 1989 Mr. Herold Dri edger: I thank the Min ister for that lengthy answer and the histor y. I quite agree. Just to summarize then, it is his belief tha t the negotia tions will reach an ag reement tha t will be satisfact ory to all

part ies. Mr. Downey: Let me repeat for the Mem ber. We have each hired a senior negotiator . It is my hope tha .t th ose senior negotiators will be able to put together the finalization of a settlement th at all parties can live with. When I say all parties, the pr otocol is the pr ovince, Hydro, the federal Go ve rnment and the five bands tha t have made the decision thr ough legal agreement to work together to a resolve of the Flood Agree ment. That is why we have entered into it.

When one looks at what we have paid in, Madam Acting Chair , the provi nce has probably put in, with the $10 million we have put in, some $22 million from the provincial taxpa yers, and I feel the majority of tha t should be going to the res idents of th ose com munities. Unfor tunately, a lot of it has not. The first $12 million a lot of it did not. I just want to make it absolutely clear tha t I have faith in the No rthern Flood Comm ittee, I have faith in Hyd ro, I ha ve faith in the federal Go ver nment's negot iator and our negoti ator.

When more can be discl osed or when we are thr ough negotia tions and if it is not accept ed, then the Mem ber will know. If it is accept ed , then the Member will know also, but I do not want to derail or to cause problems in the negotiations tha t are currently taking pla ce. Mr. Herold Driedger: It is not my intention to pr ejudice tho se negotiations either. One last question on this topic, Madam Ac ting Chai rperso n, in the Flood Agreement, the Gov ernment has just announced or has signed a deal with Ontario regard ing the Conawapa Dam.

Is this in any manner, shape or form, the Conawapa project itself, a part of this global negotia tion package, or is tha t a comp letely new area of concern? Mr. Downey: As far as I understand it, it is a comp letely new area to be dealt with and it is not tied to the No rthern Flood Agreement settlement. Mr. Eli jah Harper (Rupe rtsla nd): I guess I will continue with the questioning on the No rthern Flood Agreement. I do not want to prejudice the negotiations myself. Could the Minister clarify? You said you have a legal agreement in pla ce in respect to the global negot iations. Is tha t correct?

Is there an agreement in pla ce to ach ieve th at gl obal nego tiations are going? Is th ere a legal agreement amon gst the four parties? Mr. Downey: No, the only legal agreement was the one tha t was signed in 19 77. What is currently in pla ce is an unwritten agreement between the four

partie s to get to some final conclusion, a resolve to an agreement that, as I have poi nted out and I think the Mem ber is well aware, has not totally been missing the mark, but a lot of com munity people have not been gett ing the benefits. That has been the cont inual criticism I have had. Legally, ther e is the 19 77 agreement between the four parties. Currently, there was an agreement between the Flood Commit tee, the Hydro, the federal Go vern ment and the pr ovi nce to use four sen ior negotiators to try to get a final resolve to this long outs tanding problem for the Northern Flood com munities. *

(2020) Mr. Harp er: I just want to reply to the state ment tha t the Min ister had made when we were deal ing with the negotiations when we were in Gov ernment. We would like to think tha t we were doing quite well in negotia ting with the bands. As a matter of fact , the negotiations tha t he talked about in trying to ach ieve the $10 million advance was the time when we were going through an election, and I believe we also indicated tha t after the election we would pursue that.

I would like to ask the Minister, are the re any conditions or anything attached to the $10 million tha t was advanc ed to the No rthern Flood bands at all, or is tha t to be appli ed against the final settlement tha t is to be reached ? Could the Min ister answer that? Mr. Downey: Yes, it is to be appl ied to the final sett lement. Mr. Harper: The Minister has mentioned tha t we had been talking to one of the commun ities outlying. One of the concerns they had: was the Govern ment bringing in any kind of legislation respect ing No rthern Flood?

Is ther e any indication or any purpo se in bringing in legislation with respect to the Northern Flo od Ag reement because the y had asked me that? I would like to clar ify that- maybe it was just a rumour-j ust to put it to rest. Mr. Downey: I thank the Member for tha t question. It would be my hope tha t through mutual agreement a resolve is acc ompl ished between the four parties and at this point I see no need for legislation to be introd uced. There is not legislation on the Order Paper. I am not pr oposing at this point any legislation. Mr.

Harper: I thank the Minister for tha t answer. believe it would not be in the best interests of the bands to bring in legislation. I think this would be negotia ted with all the parties concerned . The other ques tion I would like to ask of the Mi nister -I kn ow that modern-da y tr eaties are pro tected under the Constitut ion. Does he consider the Northern Flood Agreement as a modern- day treaty that would be recog nized under the Cons titution? Mr. Downey: Madam Acting Chai rper son, I consider the No rthern Flood Agreem ent a legal agre ement between four parties. Mr.

Harper: Yes, I know it is a legal agreement, but I wanted the Minister to answer tha t question in regard to whether this could be consi dered a modern-da y agre ement. I kno w that land claims under the Constitution could be as a modern-da y agreement, so I wanted to know from the Minister whether he considers tha t or not. 3927

Monday, December 18, 1989 Mr. Downey: I am not absolutely clear on the question. The No rthern Flood Agreement is a legal agreement between four parties. I do not see it as being anything more or anything less than pr ecisely tha t. Mr. Harper: The reason I asked tha t question of clarif ication was tha t treaties are pr otected under the Constitut ion, and also under land claims and other agreements tha t are reached with the federal Gove rnment and pr ovi ncial Govern ment.

The land claims ar e recog nized and pr otected under the Cana dian Constitution and so forth, so I wanted to get the facts on record as to whether this Gov ernment or this Minis ter would rec ogn ize the Nor thern Flood Agreement as a modern-da y treaty which is worded in the Canadian Constitution. I would app reciate if he would take this as notic e and maybe report back to me later if he is not sure. Mr. Downey: I would say again to the Mem ber tha t this is a contr act ual agreement, not a constitutional agreement. Mr. Harper: I will take his answer then, and then maybe follow it up later.

On the negotiations tha t are taking pla ce, I wanted to know if a final offer is being discussed at this time, whether it is still in negotia tion with all the parties or whether actually a sett lement, a final offer, has been offered to the bands. Is tha t on the table now, or is it still at the discussion stage? Mr. Downey: As I indicated earlier, there is a land issue and a financial issue. There is a range of which is being discussed .

The Hon ourable Mem ber, Madam Acting Chai rperso n, indicated he did not want to jeopardize the negotiations, and I would feel by gett ing involved in discussion of the specifics of negotiat ion, it could in some way prejudice those discussions that our senior negotia tors are havi ng. I say there is a range and tha t is all I can say at this point. Mr. Harper: I did indic ate to the Minister tha t I did not want to prejudice the negotiations. All I wanted to know was whether negotiations are con tinuing. I do not want to get a specific amount of dolla rs tha t are being offered to the bands .

I just want to know whether the se discussions are ongoing or whether at this time the offer has been made. I know tha t in deal ing with land, this is a matter which would take a long time, but I want to know as to the status of the negotiations. Mr. Downey: Let me make

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Citation	34-2-93b
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