Manitoba Committee Hansard — 12 June 1974 (Legislative Affairs Committee, Sitting 7, 30th Legislature, 1st Session)

30-1-la7

Manitoba — Debates (Hansard)

LAW AMENDMENTS COMMITTEE 8: 00 o'clock, Wednesday, June 12, 1974 CHAIRMAN: Mr. D. James Walding. 221 MR. CHAIRMAN: Order please. There being a quorum, the committee will come to order. Is it the wish of the committee to continue consideration of Bill 71, clause by clause, we're part way through, bef ore we go to representations. A MEMBER: Yes. MR. CHA IRMAN: Proceed ? Mr. Jorgenson, use the microphone please. MR.

JORGENSON: My understanding was that the meeting tonight was going to be called to hear representations, this was specifically stated by the House Leader, and I think that we should hear those representations because the people are here, we can consider those bills tomorro w. A MEMBER: I would agree with that. MR. CHAIRMAN: Is that the wish of the committee? (Agreed) The bills before the committee this evening are as follows : No. 24 - The Mount Carmel Clinic Act. No. 41-

An Act to amend

an Act to incorporate the Sinking Fund Trustee of the Winnipeg No. 56 - No . 64 - No. 68 - No. 74 - No . 75 - No. 83 - No. 93 - No. 94 - School Division No. 1.

An Act to incorporate The United Health Services Corporation. The Treasury Branches Act.

An Act to amend the Law Soc iety Act (2). The Manitoba Trading Corporation Ac t. The Northern Aff airs Act.

An Act to amend The Au tomobile Insurance Act.

An Act respecting the fa mily of Cyril George John Orchard Deceased.

An Act to amend

an Act respecting the Ag ricultural Community District of Newdale. I have a Mr. Karlowsky and Mr. Thompson wishing to make representation. If there are any other members of the public, would you come up to the microphone. Would you give me your name and the bill you wish to speak to, and whether you are from out of town plea se? MR. TRITES: Mr. Chairman, my name is Trites, T-R-I-T-E-S, T. C. , I' m with the Wawanesa Mutual Insurance Company, and I'd like to speak on Bill 83, and I'm from the City of Winnipeg. MR. CHAIRMAN: Thank you. MR. WI EBE: Mr.

Chairman, my name is Henry Wiebe, Ilm First Vice-President of the Co-operative Credit Soc iety of Manitoba. I'd li ke to speak on behalf of Bill 64. MR. CHAIRMAN: An d that's spelled W-I-E or . MR. WIEBE: W-I-E-B-E. MR. CHAIRMAN: Thank you. MR. HECHTER: My name if Gerald Hechter, I live in Winnipeg, and I'd like to speak on the Bill 24. MR. CHAIRMAN: Thank you. MR. McDOWELL: Bob McDowell of Winnipeg, and I'd like to speak on Bill 83 on behalf of the Insurance Agents Association of Manitoba. MR. CHAIRMAN: Initial again. MR. McDOWELL: Robert - R. M. MR. KA RLOWSKY: I' m Ea rl Karlowsky . MR.

CHA IRMAN: Before you start, Mr. Karlowsky, is there anyone else wishing to make representation to the Committee this evening? MR. BROWN: I am Earl Brown of the Portage la Prairie Mutual Insurance Company, and I wish to speak on behalf of Bill 83. I am from Po rtage la Prairie. MR. CHAIRMAN: Thank you. MR. COULTER: Art Coulter to speak on 56. MR. CHAIRMAN: Thank you. MR. CO ULTER: An d I have with me Dr. Corne. DR. CORNE: Dr. Corne from Winnipeg wanting to speak on Bill 56. MR. CHAIRMAN: Thank you. Is there anyone else wishing to address the committee this evening?

222 June 12, 1974 (MR . CHAIR MAN cont '

d) Heari ng none , Mr. Karlowsky, would you come forward please? BILL 86 MR . KAR LOWSKY: Thank you very much, Mr. Chairman, and members of the House here tonight. I'm only going to take a few minutes to speak on Bill 86. Last year I was Pres ident of the Winn ipeg Cy cling Cl ub or Ass ociation, and ton ight I am here on behalf of the Winnipeg Bicycling Cl ub, and I'd like to get this stra ight between bicycl ing and motorcycles because there's quite a differ ence, and we have seemed to run into problems with this in the past.

However in Bill 86, there are a couple of clause changes which I think should be held over till such time as a national co mmittee, who has been involved with cycl ing in general - and now I'm talking of bicycling, not as rac ing only but as touring, pleasure ri ding, and tourists coming through the province back and forth. The Winnipeg Cy cling Cl ub as some of you may know is the largest bicycl ing cl ub in all of Canada, and this is some thing to say for Winnipeg.

We have well over a hundred, and some touring members alone, besides racing members and pleasure ri ders, and we generally and mostly abide by all the rules as set down.

However before any decis ion is made on the proposed changes in Bill 86 to el iminate bicycle ri ders fr om ri ding on certain highways at certain times, and I was only able to get a copy of Bill 86 tonight, which is partly my fault� as I saidJI was pres ident last ye ar, now I'm chairman of road racing and bicycl ing in general, and I would like to form a commi ttee between our club and other grou ps, which is the Manitoba CCA repres entat ives, but as a whole Jas I mentioned we are the largest club, and I'd just like to give you a little brief outline - I'm only going to take a few minutes - of what we have tried to do.

We have tried to stim ulate the sport of cycling, not only as rac ing but for touring and pleasure ri dersjwe have had safety cli nics that have not been in our safety clinic in the school, they have been a day or two days or two nights and some times two weeks . An d I feel we have done a lot to promote cycl ing in general for every body concerned in the Province of Man itoba.

Now in subsection 38 it says, in 136 (l) , "Exc ept as otherwise provided in this sec tion, every person operating a bicycle upon a highway has the same ri ghts and duties as the driver of a motor vehicle and shall obey and observe all signs , traffic control dev ices, and directions of peace officers ." We abide by these signs at all ti mes - I mean we can't control the bulk, but we try to control 99 perce nt. Now briefly as far as racing goes, we do have our own car with a speaker on it if we have a road race. Before we have a road race we contact the police on this and make ar range ments.

The same as at Birds Hill we co-operate with the Birds Hill Parks and Recre ation to the point that we start our races at 8: 30 and 9:00 o'clock, that we're off the fairway there at at least ll:OO o'clock in the morn ing where all the people from the city come to.

While on that subject I'd like to just say br iefly that the speed li mit going out of the city to Birds Hill Park should be reduced from 60 and 70 miles an hour to a reasonable speed of 40 miles per hour , because if you have ever done a survey like I've done on a Sunday and count the number of people ri ding out there on bicycles, they are just taking their life in their own hands at 70 miles an hour . An d when the speed limi t says 70, there is some doing 80. And now in clause 136 (2) (

b) it says the following: "H e shall ri de as closely as practicable to the ri ght hand edge or curb of the roadway and, except to pass or overtake another vehicle or bicycle, shall ri de in a single line with any other persons ri ding bicycles. " This is fine and most times they adhere to this. However in a road race this is not possible because the y're competing just like 7 or 13 horses going down a track, the y're co mpeting to win, and this is a challenge like in any other sport, so at this point I think the motorist has to give a lot, or a little bit, because we give warning, we have a car with flashing lights on it and so forth. But now we go into the bigger

section which is ten times what the racers are, and that 's your touring and pleasure ri ders. They mostly ri de in a single or double file, they don't ri de at any particular speed, and they don 't ride in great big bunches. And then we have the tour ing gr oups comi ng in from other provinces and through the States, and we get this because we have a phone directory number, we get inquiri es and phone calls are made to people asking for a tour, how do they go through Manito ba: we give them all this information, it comes out of our own budget.

We don't have any money, raise our own money, we don't ask for any money from anybody- we'd like the roads to be a little better in some instances though, but this is not why I'm here. But I'm very very concerned along with the rest of the Winnipeg Cycling Cl ub

June 12, 1974 BILL 86 223 (MB. KA RLOWSKY cont'd) . . . . . Committee group, which is now nearly 200 members, and these are what I call active members, to see that there is no proposed change made in stopping people from riding a bicycle on a main highway between a certain hour from 3 to 7 at night, etc. , and we would meet with them at any time and get a committee and discuss this in detail, in every phase that it can be. I'v.e had a lot of experience - I'm not a racer or any thing - I've had a lot of experience in cycling and running, pro motion of cycling and touring; I ride a bicycle myself, I enjoy it.

I think we have to give consideration here and this is why I brought this up because I just heard about this bill, and if it's passed I mean anything can be done, and a cyclist can't even be on a highway, something to say well he can't ride down the perimeter, he can't ride on Highway 3 to Oak Bhff. You've got one of the best highways in town with no black top on the shoulders though , which would be a Godsend for cycling on a lot of our highways.

Now you also say, "No person shall operate a bicycle upon a highway" - this your new proposal, 141 (4) - "No person shall operate a bicycle upon a highway or portion thereof, or cause or permit a bicycle to be operated. " You can make all these changes; or in (a) "on a highway or part thereof at a time when the operation of bicycles on that highway or that part thereof is prohibited under the regulat ions; or (

b) on a highway or part thereof on which the operation of bicycles is prohibited under the regulat ions. " Now if you make a lot of these changes, I mean if this bill goes through, anybody can come along and continue passing this where nobody will be on the highway and be able to ride a bicycle, and I'm talking of school kids all the way up to grandfathers and grandmothers who ride bicycles. I think in all due respect to everybody concerned, this is a tremendously growing, not athletic sport as much as a bodily physically fit type of sport to create fellowship between people.

I think an example of this, if you go out to Wellington Crescent when they close the street off and see the number of people that ride back and forth and there's no hazard of traffic. We ll in speaking on this greater group, I think we shouldn't curtail the fact that they can't ride on the highway at a certain time because they have to have a license - sure they don't pay gas but they have the bicycle license.

In regards to racing, a road race, we always contact somebody ahead of time, the police, or Department of Parks, to get permission to use a certain roadway, and we have as many people out, plus warning lights and a loudspeaker car . . . I certainly hope that you do not make a decision on making a change in this ruling till such time as you ask us - we can get a group of 12 or 15 people, cross-section of the whole part of bicycling in Winnipeg and Manitoba and discuss this with you. I wish to thank you very much, Mr. Chairman, for the time you 've allowed me. Thank you. MR. CHAIRMAN: Thank you, Mr. Karlowsky.

Are there any questions for Mr. Karlowsky ? Mr. Axworthy. MR. AXWORTHY: Yes, Sir, Mr. Karlowsky when this issue was raised in the House the Minister answered the question by saying that this rule would only be appl ied in circum stances where alternative routes or alternative bikeways would be prov ided. Is that, in your opinion, a feasible operation, is that something that's acceptable to your organization if that . MR. KA RLOWSKY: Not if you close No. 1 Highway because that's the only way for a person coming from Ontario to go to Sask atchewan really.

We can de tour them around as long as there is signs, but I can tell you, being President of the Winnipeg Cycling Club last year, that I had a total of about 28 phone calls, and maybe 30 or 40 letters, from people asking where they could stop, you know, and see people, and discuss and get information on cycling and camping. We do all that out of our own money that we raise ourself. We don't ask anybody for any money. MR. AXWORTHY: Well, let me ask a further question.

Again when this particular item was being debated in the House the response of the Minister was that in certain high speed highways, I would suspect mainly 4-lane, 70 mile an hour speed-limit highways, that it's dangerous to have bicycles travelling in the same roa dway as high speed cars. Now do you have inf or mation, or any statistics, or any evidence, to either support or contradict that particular position ? MR. KARLO WSKY: We ll in the nine years that I've been mixed up in the vario us phases

224 BILL 86 June 12, 1974 (MR. KA RLOWSKY cont'd) . . . . . of cycling I have never seen any accident outside of a spill because of a blow-up on a bicycle's tire; never anything involved with a car, or anything else, and this has been on some of your major highways here. Mind you, we control this pr etty reli giously ourselves, and have done for a race. We have no real control over--i f you and I just went out for a ride, for example, and you wandered over to that side of the road too far and I went, you know, too close to you, we can't control that.

But if we run an event we co ntrol it to our best ability with the help we got, and the help of the police, which have been good for us . MR . AXWO RTHY: Well, can you give us any idea though as to what the condition is in terms of general bicyclists, and how they match up with high speed cars on high speed highways . Is this really a problem - presum ably this is what this clause 141 (4) is designed to deal with. MR .

KAR LOWSKY: I can answer that the same as --if everybody drove a car within the same speed limit - and I drive a car - and the same laws that you are supposed to abide by and the rules as a driver to get your license, if a bicycle rider operates a bike the same way, then you won't ha"re a problem.

I incident ally--we have four bicycles which are licensed in our home, plus two cars, and I have had no problem but I mean ther e's always the in-betweens on one side and the other side, and I don't know if you'll ever eli minate that, because just a seven-year old kid in the city the other night ran into a car on a bicycle, and ther e's no way you can elim inate that part. I know that big trucks are a problem, but generally if there's only one person involved riding down the highway, and if he's touring he's nor mally going to ride on the curb anyway.

He's ri ding on curb tires which aren't the same, or what we call touring tires, the same as a racing tire, very expensive, and this is no problem. He's never on the road that long; the most the average tour rider will ride in a day, if he's a real aggres sive fellow, is a hundred miles, the average one, 40 to 50 . An d then som e days he'll stop and he won't ride for five or six days. Does this answer your question ? MR . AXWO RT HY: Just one final question, Mr. Chairman.

Could you re peat - I think you said in your statement, but perhaps you could just repeat what the numbers of interprovin cial tours would be using bicycles. I mean are we talking about a hundred people, or are we talking about a thousand, who would now be using say major interprovincial high-speed highways such as Highway 1 or 75 or 59; what kind of bicycle traffic or touring traffic does that really cover now? MR . KAR LOWSKY: The only answer I could give you there is on a weeke nd , one day or one afternoon. Cou ld I give it to you that way ? MR . AXWO RTHY: Sure. MR . KARL OWSKY: Al l right.

We had a race out at West Hawk a couple of years ago and during that period of a race - our whole grou p had took out their own lunch, and every thing, and we had like a great big picnic, because we had a road race all the way out to Brere ton and back, which is a long stretch, about four hours, and during that period we had about 25 touring people ride through and talk and visit, and we even fixed som e of their bicycles for them and gave them some parts.

Some of them stopped and stayed in the city for thr ee or four days, in fact I kept one at my hous e for three days, but he was a good worker, he cut my gras s.

But there is a tre mendous, and as you can tell if you ever get a re gistra tion of cycling bikes - I'm not talking of 10 speed race rs, there are five speed and three speed, and touring bikes generally, I think if - and maybe I didn 't make this clear - if you know that the main highway traffic is bad from 4 to 6 and you have a sign up there, I think every ri der will obey that sign, and if ther e's a shoulder that is blacktopped and he can ride on it, then he must ride on. it. Is there any other questio ns ? MR . AXWOR THY: No, thank you very much. MR . CHAIRMAN : Mr. Cherniack.

If there are no further questions of Mr . Karlowsk y, thank you. Mr . Cherniack. MR. CHE RNIACK : I rec eived the definite impres sion that yotl were going to take the briefs, the pres entations in the order in which they gave their names, and I point out that they gave their names without re gard to the order of the bills. It seems to me that now that we know who is here to speak to the Comm ittee, we have one person on Bill 24, we have one plus an atta chment on Bill 56 - I say that because Mr. Co ulter said that Dr. Co rne is with him, and I didn 't know whether Dr. Co rne was going to speak.

Then we have two on 64, and three on 83. I'd like to suggest that for an orderly hearing we should take them in order of the bills rather than in order of the way they came to the podium, so that we would have a continuity; and since it so happens by coin ciden ce that the larger number is towards the end, it would relieve some

June 12, 1974 BILL 24 225 (MR. CHERNIACK cont'd) . . . . • people who may want to make their presentation and go , and make it less of a burden on them. So I don't know if there would be any objection to that. I'd like to suggest that that's a logical proposal. MR. CHAill MAN: Does the Committee agree ? (Agreed) I would then call on Mr. Hechter please on Bill 24. BILL 24 MR. HE CHTER: Gentleman, my name is Gerald Hechter. I'm Past President of the Mount Carmel Clinic. As such I have a working knowledge of their operation.

My uncle before me is also a Past President of the Mount Carmel Clinic, and members of my family have been involved with the clinic almost since its inception. I think in fairness to you gentlemen that I should po ssibly review with you the Clinic, the reason for the Act of incorporat ion of the Mount Carmel Clinic back in 1926. I have with me here tonight Mr. Klif fer who is now 87 years of age, and came out here tonight specifically for this hearing. He was one of the original people whose name is listed on the original bill back in 1926.

I might add that there are four people living of the original people who were involved in the bill. One is living in England now, and the other two, on the very short notice that we were given this evening, were unable to attend and they regret that they weren't able to be here. And I talk of Mr. Max Isaacs, the layer here in town and Dr. Guttman, A lex Guttman. When the Mount Carmel Clinic was incorporated it was incorporated for a very specific purpose. Some of these facts that I am going to give you, you can have verified with Mr. Kl if fer should you so desire later on in the program.

The Mount Carmel Clinic was formed by the Jewish people of this city, and one of the reasons that it was formed, during that time Jewish doctors were on a quota being able to go to medical college, and some of them who did go to medical college and were fortunate enough to get in had problems of getting interning in a city hospital here. I think if you go back, I think the uncle of the Leader of the Opposition, Dr. Peikoff, had to go to Edmonton to intern in order to be able to practice medicine in the Province of Manitoba.

There were times in this area when Jewish doctors could not admit patients to hospitals here. Some of the patients could only speak Jewish, and the result of it was they decided to build their own hospital. Hence the starting and the funding of the Mount Carmel Clinic. The Jewish people, they used to go out and amongst themselves collect dollar s; they used to buy a brick for a dollar to build the clinic. If some of the gentlemen would look at the people who are involved in the or iginal membership list, who formed the Mount Carmel Clinic, their sons today are very prominent citizens in our area.

The result of all the hardship that existed at that time caused the formation and the building of the clinic. The purpo se of it, as stated here in the letters of incorporation, was for health benefits immaterial of race, colour or creed. In the or iginal letter s of incorporati on it states in here who can and cannot be a board member. It also states in here what doctors could be board members.

It states in here that there was different Jewish organizations such as the synagogues, free loan organizat ions, the sisterhoods of various places, had the right, the right given to them by this letter of incorporation to be able to put people on that board. The idea of the board at that time, and as stated here, was to have a meeting every January. I have subsequently learned that there was an amendment to the bill back in 1930, and the amendment stated very clearly that these organizations may appoint members to sit on the Board of the Mount Carmel Clinic.

That right was given to any organization to withhold or to take and appoint board members to this board of the Mount Carmel Clinic without being voted on, or anything at all. These organizations had that right, as is stated in these letters of in corporation. I might add that the organizations are listed here, are spelled out. I know that the Honourable Mr. Cherniack, and probably the Ho nourable Mr. Sp ivak is familiar with a number of these organizatio ns. I believe their parents belong to some of them. They were all Jewish organizations like the Bnay Abraham Synogogue. It's still here in the north end.

The Hebrew Sick. I mean that a number of all these vario us Jewish organizations had the right to put people on the board. As time went on the need to have a place for doctors to intern diminished. The quota system was eliminated; doctors were given privileges in hospitals. At the Mount Carmel Clinic at one time we used to have an operat ing room there where surgery was performed. Today it would be very crude, of course, with the modern equipment that we have, but nevertheless at that time it served a purpose.

226 BILL 24 June 12, 1974 (MR. HECHTER cont'

d) As I stated when I first started to speak anybody, immaterial of race, colour , or creed, could attend the clinic at all times and the services were rendered free. Doctor Guttman, who unfortunately couldn't be here ton ight, was one of the doctors who gave his services free. There were a number of doctors in the Gr eater Winnipeg area who gave their services free to the clinic to assist people who were sick, and what have you. As time went on the complex of the clinic has changed. With some of these changes that took place I couldn't understand them, and I complained bitterly about some of these changes.

The Star of David was removed from the building. The memorial plaques to the people who donated money to help build the building were taken off the walls, and never replaced. Max Isaacs, who was one of the founding members, went to the clinic with me one night and asked where they were. He was told they were at some exhibit at Man and Nature of the Jewish history of Western Canada. I went there; they were never there. He was told they were go ing to be replaced; they never were replaced.

It was in the by-laws, there was minutes passed that the Star of David should be put back on the walls and on the doo rs; we're not ashamed of ourselves or what we've done in this community. To go fur ther, and I read a letter, and I want to read you part of this letter from a nom inating committee, which says, "The consenses of the nominating committee were that all you board members should acquaint themselves with the aims, philosophies, and pr inciples, of the clinic, and be prepared to support the present program.

An yone disagreeing with any part of the program is free to discuss this with the committee, or· with the executive director, and if they are not able to agree with the clinic program it is advisable that such persons should not undertake to sit on the board. 11 Now they've put a restriction in there. So at the next meeting I asked the question, and I'll read to you the questions that I asked, and the answers that I got. And it says here in the minutes, "Mr.

Hechter wanted to know why a notice had been issued by the nominating committee saying that prospective board members would have to agree with the programs and philosophies of the clinic. 11 In other words, why take a person who is a free thinking individual, can think for himself, and confine his thoughts? The answer I received was this: "Dr. Blouw explained that the nominating committee had thought this necessary in view of the fact that some of the board members had resigned because they could not accept the clinic's policy on birth control and abortion referrals.

" Now here, this is the thing that sur prises me. They were talking here of birth control, and I will suggest to you that we were one of the first people in the City of Winnipeg who brought out birth control, and one of the first people in the City of Winnipeg who referred people for abortions, and we have a bill such as this, No. 24, brought up by Father Malinowski, who I think is dead against abor';ions. What are you seeking ? To change the Act now to get bigger and better abortions. Is that what you're trying to accomplish ? MR. PAULLEY: Oh come now, come now. That's not proper I would suggest, Mr.

Chairman, to accuse motives against the person that introduced the bill, and I would suggest to Mr. Hechter that he restrain himself. MR. HECHTER: I'm sorry if I have of fended him. I just merely felt that way and I expressed my opinion . . . MR. PA ULLEY: I accept your apology, Mr. Hechter, but I suggest that it is improper. MR. HECHTER: Al l right. Then it goes on and states that in the or iginal by-law that the function of the clinic was for medical purposes, which is quite all right. But then again another member of the board, Mr.

Pullan, he added that if any bo ard member is against family planning, he should not be a board member. In the past unhappy board members have left for this reason and he would like not to see it happen again. Gentlemen, these things here are things that I am very very much opposed to, and that is this. I have no objection to birth control; I have no objection to abortion. As a matter of fact it was during my term of presidency that the birth control thing really came in big, I consulted the Deputy Attorney-General at that time to see whether we were doing things that were legal .

I was assured that we were within the law. The thing that bothers me is the identification of that location, the identification of that building. We have one Star of David there that is in concrete. That's been covered by a sign. I might add, as a past president, I cannot attend a meeting at that building anymore. I have been barred from coming there because I wanted the Jewish identification replaced on that building. I still want that Jewish identification replaced on that building so we can have it. I

June 12, 1974 BILL 24 227 (MR. HECHTER cont'd) . . . • • want those memorial tablets put back up there for the Jews that gave dollars, and hard dollars at that time, to have their sons and daughters and their mothers' names put up there as a memorial. I want those things replaced on th e wall. We in the Jewish faith have that sort of a type of tradition.

I think that poss ibly the Honourable Minister of Finance can agree with me, and possibly the Honourable Leader of the Oppos ition, that any Jewish place where funds are gathered we have memorial plaques that we can buy in the way of a contribution to the place that is collecting money, and you find them in synagogues, you find them in the Jewish Old Folks Home, you find them wherever the Jews collect to be able to raise funds, we do it in that manner . I would like to see them replaced. I have checked with a number of these organizations, I have checked with Mr. Kl iffer, I have checked with Dr.

Guttman, I have checked with Mr. Isaacs, and asked them if Father Malinowski, or anybody else, had contacted them and referred, or asked about Bill 24. Al l of them denied any knowledge of Bill 24 coming up. They are sorry that they won't be here tonight. I asked some of the organ izations, who have the right to appoint members to the board, if they know anything about it. They know nothing about it. Gentlemen, the thing that I object to, and I object to strenously is what's happening here in the Province of Manitoba.

I am also a past member of the board - I sat on the board of the Jewish Old Folks Home, now known as the Sharon Home. In checking with some of the board members - the president to be exact - he informs me that they no longer have the right of admission into the Old Fo lks Home anymore. An d I said, "What do you mean?" He said, "A person makes an application to come into that home, " he said, "we have to send it up to Empress Street. They send a social worker, they send a nurse to see these people. Some of them don't speak English too well.

They try to stutter their way through to find out where they can go to a home. " I'm talking of Jewish kosher people who are religious. At the Old Folks Home we have kosher kitchens; we have a synagogue in the building for the old people, so they don't have to go outdoors during the cold months. Now they tell me at the Old Fo lks Home that they have been told of the Human Rights Bill, and that the government today can place whoever they want to in that building be they Jew or non-Jew. Whether our identification will come down from that building or not, I don't know.

But that is the situation at the Sharon Home today. I feel gentlemen that we as Jews in this community do have some rights, and I appeal to you as human beings to allow us the priv ilege of having those rights, and having our own iden tification, and our own place of recognition. There are a number of us who want to do things in our community. I think if you check through the charitable organizations here on various boards, you will find people of the Jewish faith sitting on them and doing their

part in the corn munity. I feel that we have the right, we should have the right to be recognized in this com munity. And I feel that to take this away from us by this bill, and throw an insult at us by specifying specifically in the bill, we have the right to appoint two persons to a board of 25 by the Jewish Community Council. I showed this to a Ukrainian man today and he says, "Well what's the matter with the Ukrainian people in the north end?" He says, "There's more of us than there are Jews.

" He says, "Why aren't we represented on the Board ?" Gentlemen I think this thing here is a fiasco, it's a fa rce, and an insult, and I ask you to let us reside here in this city as free people, people who can have our own rights, have our own religion, and be able to do our

part in the community without taking it away from us by the passage of this bill. I would be prepared to answer any questions for you, gentlemen, if you care to give them. MR. CHAIRMAN: Thank you. Are there any questions for Mr. He chter? Mr. McKenzie. MR . M cKENZIE: Mr. Hechter, can you give us any idea who took those plaques off the building ? MR . HECHTER: Yes I can. Our executive director that we have there is Mrs. Anne Ro ss.

She is the wife of William Ross, who is possibly known as the Leader of the Communist Party here, and she had those plaques removed, she has covered up the Star of David on the front of the building; she is the one that we've passed by-laws on and ordered her to take and put a Star of David back on the door; it's never been replaced, and all those things are not there today. Talking about that philosop hy, I can appreciate that philoso phy that she has.

I can recall on two or three occasions her going on vacation with her husband behind the Iron Curtain to Russia and places of that nature, and she told us how she was entertained by people in high pos itions of the Communist Countries, and as you people know, and it's common knowledge, the chances that a Jew has in Russia today with their own identifi cation . We haven 't even got a synagogue there, never mind anything else, any place behind the Iron Curtain. MR. CHAIRMAN: An y further questions? Mr. Sherman.

228 BILL 24 June 12, 1974 MR . SHERMAN: I would like to ask Mr. Hechter one question, Mr. Chairman, and that is in the

section of the bill having to do with the make-up of the Board. It's true that it provid es for the appointment of two persons by the Jewish Community Council, Mr. Hechter, but you 're not suggesting that that would necessarily li mit the Jewish representation on that board to those two persons, or are you? MR. HECHTER: Mr. Sherman, why should we even wonder or question that? When we go back to the original Act of Incorporation, all those are covered in the Act if you'd care to see it. MR . SHERMAN : Well I have had a chance to look at it, Mr. Hechter.

I appreciate having it again, but I just - what I was trying to determine from your presentation was whether or not you felt that this was a camouflaged discTimination . MR . HECHTER: Correct, that's all it is. MR . SHERMAN: Okay, thank you, Mr. Hechter. MR. CH AIRMAN: Thank you, Mr. Hechter. Mr. Cherniack. MR . CHERNIACK: I was just approached by two of the people present who have not indicated that they wished to speak. I don't know whether the Committee would want to hear them. Mrs.

Ro ss feels that she has a right to say something since she heard, she was just talking about her own name being attacked, and I'm not speaking on her behalf, I'm just tell ing you; and Mr. McNairney who is a member of the Board, the present Board of Directors, and one of the applicants, also told me that he was waiting for their president who hasn't come yet and he wants to speak. MR . CHAIRMA N: What is the wish of the Committee? MR. PAULLEY: Mr. Chairman, jus�. if I may on this: we don't want to get into a hassle of charges and countercharges before this Committee.

We are here to consider the contents of the bill, and I think that is the only consideration that we should be giving. I can apprciate that sometimes people want to express their individual opinions of other people, but we're only here to consider the contents of the bill, and I would suggest in all due respect to you, Mr. Chairman, and to the members of the Committee, this is all that we should be concerned with. MR. CH AIRMAN: Mr. Jorgenson. MR. JORGENSON: Mr. Cherniack has changed the rules once, and he now seeks to change them again. MR . CHERNIACK: No, I didn't . . . MR.

JORGENSON: . and I think we should go along. We agreed in the first instance to go along according to the number of the bills, and if you're going to continue to bring people in - some of the people that are here tonight are from out of town, and they won't get an opport unity to be heard tonight if we continue in this practice suggested by Mr. Cherniack. I suggest that we proceed now to the next witness, who is Mr. Coulter, and his associate, who are going to speak on Bill 56. MR. CHAIR MAN: What is the will of the Committee? MR. CHERNIACK: Mr.

Chairman, I want to make it clear I am not suggesting that they be heard. I thought the committee was entitled to know what I learned as I was walking in the back of the room. MR. CHAIRMAN: Mr. Jorgenson. MR. JORG ENSON: Well, Mr. Chair man, if there is time after we have heard the wit nesses who have indicated, and who were here in time to make their presentations, we would be glad to hear them. MR . CHERNIACK: Well, that's fine. MR. CHAIRMAN: If that is the will of the committee, I'll call on Mr. Coulter please. BILL NO. 56 MR. COULTER: Mr.

Chairman, I am representing United Health Insurance Corporation as the Chairman of the Board, and one of the petitioners for this bill. We are in support of the drafted bill, and don't expect to deliberate on it at all. I think you people have had it, you 've had some debate in the House, I presume, or you've looked at it. We will be prepared to ans wer any questions, if there are questions to be asked. We don't see that there's anybody else wanting to speak on the bill so probably the quickest way to deal with this thing is to leave it to questions, and we'll take it from there. MR. CHAIRMAN: Thank you, Mr.

Coulter, are there any questions ? Mr. Cherniack.

June 12, 1974 BILL 56 229 MR. CHERNIACK: I indicated to Mr. Coulter before we came in that I had a couple of thoughts in relation to the method of appoint ment of directors, and also to remuneration paid to directors. This is a non-profit organization which is now representative of the broad com munity, and I have made suggestions to Mr. Coulter. I wonder if he would care to comment on what he is prepared to recommend. MR. COULTER: Well I think, Mr.

Cherniack, first of all you made suggestions with regard to having directors nominated from various organizations in the community, three in number from each of five, and the board having the liberty of selecting one of the three for each one of those organizations. We've looked at the list of organizations, and if you wish me to repeat them I can.

I might say in our practice of selecting board members, we have been concerned with having a broad representation of the providers of service, and also the subscribers, and part icularly from the larger groups, and we have, such as myself, from the largest group I guess, organized labour . We have representation from the City of Winnipeg, T. Eaton Company, the Manitoba Gove rnment Employees, and hospi tal institutions - just to give you an idea from the broad subscribers, we have representation from the pharmacists and the medical profes sion.

The medical prof ession had been the predominant ones in this organization, they have been going down because we are broadening our representation. If you don't know, that United Health is a subsidiary of Manitoba Medical Service, which established United Health Insurance for paramedical coverage beyond the doctor's services in 1959, and MMS was a non-profit organi zation, and the MMA, Manitoba Medical As sociation, had the right to nominate two-thirds of the board, so you can see that we had a predominance of doctors on MMS.

We had somewhat the same type of influence on the United Health originally, and it's been diminishing - I think we have probably two doctors now that are also on the MMS Board, so that's diminishing. We are really broadening it. I think the suggestions of Mr. Cherniack were the City of Winnipeg - and I've mentioned we've already got somebody from that organization - and here again he suggested the United Way and the Social Planning Council of Winnipeg.

Now those are all Winnipeg oriented, and we're trying to broaden our scope to the province, and he mentioned the Winnipeg Chamber of Commerce - we would sooner see that the Manitoba Chamber of Commerce. We are looking, and we are servicing - a lot of our subscribers are now in the north; Hudson Bay Mining and Smelting and some of the major mining fir ms are some of our biggest grou ps, so that this is the type of thing that we would like to see the representation if you want us to br oaden it, and we can.

We have ten directors now and it was suggested in the bill that it could go to five so by adding another five we can accommodate it quite easily. It's just a question of --(Int erject ion)-- Well I think that we would suggest, Mr. Chairman, that the Manitoba Chamber of Commerce could be one, the Manitoba Federation of Labour , the Government of Manitoba it self, the Union of Manitoba Municipalit ies, and the Manitoba Teachers Society. It was sug gested if the Manitoba Gove rnment was to name people such as on the United Way, or the Social Plann ing Council, they could.

You know, we're interested in trying to get people that are vitally interested in the programs that we're running, both from the pro viders of service and also from the users of the service, the subscribers, so that's our reason for suggesting those particular five elements, and we're quite agreeable that that be one way of doing it. MR . CHERNIACK: Remuneration. MR. COULTER: Well, the remuneration. We've had a policy of I think a very nominal director's fee, an annual fee of $300. 00. We have recently, in addition to that, suggested that the attendance of meetings also be an amount of $25. 00 for a meeting.

Now we have people that are involved in other things and they have to give up what they're doing to come, and I think it's quite in keeping with the Go vernment committees that they do give a nominal per diem to cover such as we've suggested. We don't mind having something stipulated in there that would allow us to do similar to what we're doing now. We think it's warranted. I might way that under the MMS there was similar provis ions for directors fees of a nominal nature. MR. CHERNIACK: Mr. Chairman, may I just ask, would you then suggest $30 0. 00, plus $25 per meeting?

Ho w about a ceiling on the number of meetings so that we would know there's an annual maximum. MR. COULTER: Well I think it's kind of diffi cult to ask me to do that right at the moment, but I think that we could do it very shortly if you wish to do it. If you want it before this com mittee, I'll have to do it right now, but if you want me to submit it to you later ...

230 BILL 56 June 12, 1974 MR. CHERNIACK: Well, Mr. Chairman, in the light of the reaction of Mr. Coulter, I would hope that he could give us some inf or mation, or advice, or guidance, today, so that I would be in a pos ition to move . . . MR . COULTER: Well, I'll tell you what we've got right now. We've got $300. 00 for a director, that is increased to $500. 00 for a person that's on the executive committee, they meet more regular, and are more involved in the day to day operations of the corporation, and the Chairman of the Board I believe is $1, 200 per annum, is the present stipend. MR .

CHERNIACK: Plus $25. 00 a meeting? MR . COULTER: That's right. MR . CHERNIACK: How many meetings in the year, say? MR. COULTER: Well I wouldn't say that there'd be more than ten, directors it might be about six, seven. The executive could go to 25 -though when you take into the others - they would take in 10 or 12 meetings. MR. CHAIRMAN: Are there any further questions ? Mr. McKenzie. MR. McKenzie: Mr. Coulter, do I understand that you have problems with this

section to select another five members, because as I read it you're allowed a number not less than 10 or more than 15 under the proposed legislatio n here. MR. COULTER: We have no problem with it at all, and Mr. Cherniack has asked whether we would consider a means of selecting the five people, and it just so happens that we have five vacancies, but that would be a continuing requirement as far as we're concerned. We've been doing precisely this type of thing in our selection so we see no harm in doing it that way and having it built in.

It's certain assurance I think for the public in general to have this type of representation, so that it's not really a self-perpet uating board in the complete sense. MR. CHAIRMAN: If there are no further questions, thank you, Mr. Coulter. MR. COULTER: Okay. Continued on next page

June 12, 1974 231 MR. CHAIRMAN: Mr. Wiebe please. Bill 64. I'm sorry, I have Mr. Thompson on 64 . Is Mr. Thompson here? Mr. Wiebe, please. Mr. Adam. MR. ADAM: Mr. Chairman, I understood at the beginning that there was a Dr. Cor ne, is it? MR. CHAIRMAN: Dr. Corne was accompanying Mr. Coulter. They were to speak to the same bill, or to answer questions to the same bill. Mr. Wiebe would you proceed please. BILL NO. 64 MR. WIEBE: Mr. Chairman, I have copies of my submission for the members of the Law Amendments Committee - could I have them distributed?

I am not going to read all of that submission, but the former brief that we distributed, I gave to the Cabinet, is also attached to my submission for reference. Mr. Chairman, honourable gentlemen, I am pleased to have the opportunity to convey to this body of legislators the deep concern felt by Manitoba's credit union movement about Bill No. 64 . The position of credit unions and caisses with respect to this matter is outlined in a lengthier submission. On behalf of Manitoba's credit union movement, I wish to make reference to several points in that submission and appropriately raise some additional points.

The major point in the earlier submission to the Government is that the co-operative system stands ready to do the job which Bill No. 64 would appear to ascribe to government. In conjunction with the proposed Northland Bank, which is now in the preliminary stages of chartering, we feel that the co-operative sector of Manitoba's business community is in a position to meet the objects purported in the establishment of Government treasury branches. Page 9 of our brief reveals the dramatic growth which has taken place in Manitoba credit unions during the past three years.

As supplementary information, it is significant that 139 out of 226 total of credit unions and caisses operating in Manitoba are providing chequing services. As you probably are aware, this means that they operate under

Part 3 of The Credit Unions Act and that gives the credit union. an open bond of membership. In other words, a credit union can take into membership any person residing in the Province of Manitoba, and so there are 139 credit unions under that section. Additionally, 35 branches of main credit unions providing chequing. This indicates that credit unions and caisses have developed predominantly into a full-service type of insitutuion, now offering these services at 174 locations throughout the Province of Manitoba.

It also may be of interest for members of this committee to know that the total volume of negotiable orders cleared by the credit unions through the Co-operative Credit Society of Manitoba totalled $1. 5 billion in 19 73. In our present-day society it is a fact of life that where people do their chequing also is where they do most of their saving and their borrowing. Therefore, if treasury branches were to operate in Manitoba a requisite for viability would seem to be the pro vision of full services.

The crux of this matter, as credit unions see it, is the implementation of treasury branches would seriously impede dramatic growth experienced by credit unions during the recent years. This rationale is based on the precept that credit unions now offer a distinct alternative to chartered banking. The elements of alternative lie not so much in the rates, important as these are, but in the considerations that go along with the user ownership and control. This implies what might be termed as a "business culture," different from other types of financial institutions.

Injection of a state business culture into the financial services field at this point in time, we feel, would have the effect of primarily diluting credit union influence while having only a minimal effect on chartered banks. Government spokesmen have attributed certain objectives to Bill No. 64 . We in the credit union movement believe those objectives to be valid and laudable. Yet we sincerely believe that the credit union movement is in a better position to attain those objectives than would be a new treasury branch system.

Let me now comment on the three main objectives of government, as these have been relayed to us.

232 BILL 64 June 12, 1974 No. 1. The matter of narrowing the spread between borrowing and lending rates. The unique principles and practices of credit unions assure that surplus earnings go back to the members. It may be of interest to this committee to see a direct comparison between Mani toba credit union movement and the Alberta Treasury Branch system with respect to returns to patrons and comparative operating costs for 1972 .

There on the top of Page 3 we have given you the figures, the operating figures for the credit unions and the caisses during the year 1972 which means that we have 232 offices operating; assets of 325 million; interest paid 15 million; salaries and benefits 3. 7 million; loans and savings insurance 1. 893 million; and the printing, stationery and office supplies 451, 000 . Compare that to the Alberta Treasury Branches for that same year.

There were 76 offices operating; Assets of 303 million - you notice it's very similar to the credit unions in Manitoba; Interest Paid on Savings 10 million compared with 15 million; Salaries and Benefits $4, 425, 000 ; and Printing and Stationery 140, 000 . Perhaps the most significant statistic in the foregoing comparison is• that of saiaries and benefits. We suggest that the major reason for this broad spread is that credit unions utilize much volunteer service from their officers. This is particularly so with regard to credit and supervisory committees.

The obvious conclusion, based on Al berta experience and allowing for higher salary rates in that province, is that treasury branches in Manitoba also would face high levels in operating costs. I think I might point out there that if the treasury branches could be established and would reduce the borrowing rates and the spread between the cost of borrowing and the cost of money, we could do nothing else but support the treasury branch system.

We find it however difficult to believe that operating costs can be reduced by government below the credit unions when we have thousands of volunteers who give freely of their time in the administration and operation of credit unions. We also believe that Bill 64 establishing treasury branches does not insure that all expenses and costs of operating treasury branches will be absorbed or paid for by the treasury branches.

If numerous expenses are paid out of Consolidated Funds - that is out of public funds - we will most definitely not be in a competitive position because of the unfair advantage held by government. We believe all expenses relative to the operating of treasury branches must be charged against the treasury branch operations. The second objective outlined to us refers to maximum retention of funds within Manitoba. By their very nature credit unions do this almost exclusively. The cnly exception lies in the reserves and liquidity, where the credit union movement invests some money out side of Manitoba.

This is done for sound business reasons and the amount is relatively small. Treasury branches unquestionably would have to follow the same course. Turning now to the third objective; this is the attainment of a better distribution of funds between the regions of the province. Again, credit unions perform this very role through their central. There are few credit unions which do not use the Co-operative Credit Society almost exclusively for their borrowing and investment needs.

In actual practice, this means that a credit union experiencing even a temporary surplus of funds invests these with CCSM in contract or term deposits. By way of illustrating this point, I refer to the April 30 , 1974 financial statement of CCSM. On that date, CCSM held some 54 million in term and demand deposits of its corporate members. At the same time, the central had some 33 million out on loans to members, in addition to providing extensive lines of credits to its members. These figures bear out the significant aspect of money pooling.

There appears to be some belief in government circles that treasury branches would offer substantial lending services to small-to-medium size commercial firms and light industrial companies. We agree that such a gap in financing does exist, based on the feasibility studies in connection with Northland Bank sponsorship, and we respectfully suggest that nothing short of a financial facility with extra-provincial powers would adequately serve those needs. The constraints of a treasury branch system, with no direct access to the national and international money market, we feel, would constitute a serious impediment.

Another impedi ment we see is that treasury branches would havenQ direct entry into the cheque clearing system.

June 12, 1974 BILL 64 233 (MR. WIEBE Cont1d) .. ... Finally, there have been suggestions that the Manitoba Credit Union movement has deliberately refrained from going into non-profit locations such as Leaf Rapids in the north. This is partly true, and there are good reasons for it, When the need in Leaf Rapids was first broached to the Co-operative Credit Society of Manitoba some two years ago, we had neither the human nor the financial resources to embark upon that type of a project.

Further more, there appeared to be virtually no commitment from the citizens of Leaf Rapids for operating a credit union facility. This latter condition is considered a fundamental requisite in terms of credit union philosophy. But things have changed during the intervening short span of time. Leaf Rapids residents now want a credit union -- that is they want one today - and some local leadership has appeared. In fact, that group has already presented an application for chartering a credit union.

And CCSM now is in a position to provide substantial support services, both in financial assistance and technical expertise. Though our resources are still limited, we stand ready to work with this government in providing the same kinds of help to other needy communities in Manitoba. In

summary, we reiterate that the credit union movement in Manitoba has the dynamics and the potential to fill the needs ascribed for treasury branches. We merely request an opportunity to demonstrate our newly acquired capability, without the weakening dilution which treasury branches would pose at this stage. I thank you. MR. CHAI RMAN: Thank you. Mr, Boyce you had a question? MR. BOYCE: Mr.

Wiebe, on Page 3 you made the statement that credit unions invest most of their funds in Manitoba with the exception of reserves and liquidity, and over on Page 4 - just so I understand it - you illustrated the point that you used, At this one point in time there were $54 million in term deposits by its corporate members against which there were $33 million out in loans, so that that would mean that at that point in time there were $11 million , , . MR. WIEBE: Twenty-one million. MR. BOYCE: My arithmetic is off. How do you like thaL? Twenty-one million.

Where would that 21 million have been invested in your example? MR. WIEBE: Well it could be invested in almost any short-term paper that we can buy on the market, MR. BOYCE: Usually out of the province from your experience? MR. WIEBE: No, we try to stay in the province, but if it•s not available in the province we have to go outside the province, MR. BOYCE: Well in this instance couldn't a treasury branch be of service to you as a facility in this area, where you yourselves find yourself in surplus? MR. WIEBE: You mean that the treasury branch would pick up short-term money on a competitive rate, MR.

BOYCE: Well this is what we are informed, The treasury branch is going to operate at competitive rates so if, you know, treasury branches were in existence, would they not be an instrument to you to keep one-third of your 54 million - roughly one-third is surplus to you according to your own illustration, MR. WIEBE: Most of this money is picked up within the province. It's very seldom that it goes out of the province, It1s picked up by large corporate companies that need funds on a short-term basis and can supply that kind of security, MR. BOYCE: For Manitoba needs, MR.

WIEBE: Yes, that•s right, We of course are tied in with the Canadian Co operative Credit Society as well, There is a shifting of funds across the nation in that regard too, MR. BOYCE: Thank you, Mr, Wiebe. MR. CHAIRMAN: Mr, Brown, MR. BROWN: Thank you, Mr. Chairman, I would like to ask a few questions of Mr, Wiebe, and my first question is: when credit unions were started within the Province of Manitoba, did they have quite a bit of difficulty getting started, or were they on easy street right from the start?

234 BILL 64 June 12, 1974 MR . WIEBE : Well I think, Mr. Brown, the answer would have to be that most of the credit unions were started in the late thirties and forties, and it took most of the credit unions at least a decade, or even longer, to really get moving, but as I pointed out in my brief the real growth of credit unions has really only been experienced in the last three or four years. MR .

BROWN: Would you then anticipate that if the province were to set up treasury branches that they would be facing the same kind of difficulty for a period of years before they would actually be operating and making money for the province ? MR . WIEBE : I don't know whether that would be a question that - I don•t think I could answer really except to say that the funds that the treasury branches would try and get from the general public would be fairly slow in coming in to begin with. The treasury branches would have to establi sh themselves first.

However I presume that there would also be corporate funds from the various Crown corporations, and would depend on how much of that kind of money flows into the treasury branch system. MR . BROWN: In other words, Mr. Wiebe, there could be a very good possibility that the taxpayer would have to put quite a bit of money into a treasury branch before it could be receiving any return that would be worthwhile on this ? MR . WIEBE : It's obvious that any financial facility has to have a certain size and volume of turnover before it can really generate a good profit. MR . BROWN: Now, by and large, Mr.

Wiebe, who are the pe ople that started credit unions, were they the wealthy corporations, or who are the people who started credit unions ? MR . WIEBE : Well they certainly were the lower income people that felt the need, or did not have an opportunity to go to a bank or a finance company possibly to get credit - both - as it was organized of course both as a savings institution as well as a lending institutio n. MR . BROWN: Does it not stand to reason then, Mr.

Wiebe , that these same people are the ones that are going to be affected most by money draining away from credit unions and possibly going into a treasury branch ? MR . WIEBE : We have found that in the larger credit union operations within the prov ince where a fairly large cross

section of the community, that is, the wage earner as well as the business community, participate within the credit union operations, you generate the kind of turnover and volume and size that makes it easier to give more competitive rates to all borrowers, and in that respect if money is drained off from the credit union system of course the spread between the interest paid and the interest charged could get larger. That•s our concern really. MR . CHAIRMAN: Mr. Bostrom. MR . BOSTROM: Thank you, Mr. Chai rman. Mr.

Wiebe, on !-age 1 of your submis sion you mention that Page 9 of the May brief reveals the dramatic growth which has taken place in Manitoba credit unions during the past three years. To what major factor would you contribute this rapid rate of growth? MR . WIEB E: Well, I think there would be several major factors. Of course the economy has been buoy;mt to some extent in the last few years, there has been more money around.

We certainly would have to say, too, that the fact that government has seen fit to relax some of the regulatio ns, and some of the changes in the Act have helped the growth of the credit union movement, these are the type of things that I think are necessary for credit unions in all provinces if they want to move forward. The fact that we have a strong stabiliza tion fund now guaranteeing the funds, the savings of members, certainly has helped the image of the credit union movement as well. MR .

BOSTROM: I notice that on Page 9 of the May brief, as you refer, the total members • savings and deposits have gone up from approximately 150 million to 350 million, and total assets in that period from approximately 180 million to almost 400 million. Would you consider that a major share of that new deposits and savings came about as a result of the relaxation of the prohibitions which were in effect before ? MR . WIEBE : I don't think that some of the relaxation has really taken effect yet.

There are very few credit unions, for instance, that do handle or operate the accounts of municipali ties and schools and hospitals, which is one of the relaxations that took place in the Act . Now some credit unions are in a position to do this, others of course are too small, they are not able to handle it, so there hasn't been a flow of large corporate funds into the move ment. These are savings of individual members more than of large corporate structures . MR. CHAIRMAN: Mr. Spivak.

June 12, 1974 BILL 64 MR. SPIVAK: Mr. Wiebe, I wonder if you could tell me, do Board of Directors of Credit Unions do they receive remuneration, are they paid? 235 MR. WIEBE: The Credit Union Act allows the Board of Directors and the officers to be paid an honorarium or indemnity, and most credit unions do pay something to the expenses to the Board of Directors, and many of them are paying a per diem per meeting such as $5. 00, $10.0 0, $15.0 0. I think 15 is the highest I'm aware of. MR . SI-IVAK: So 15 would be the maximum then,?

The group that make up the loan committee, are they paid any particular amount in addition to being on the board of directors? MR . WIEBE: No, I don't believe so. MR . SPIVAK: So the loan committee then who do the supervision of the loans are not paid. Can you tell me what would the average salary be of a manager of a credit union? MR. WIEBE: The average, the word ·a verage' is sort of misleading I guess because of the fact that you have very small operations and very large. I think they would range from 6, 000 a year up to as high as 22, 23 thousand a year. MR .

SPIVAK: So 22, 23 thousand would be the highest for a manager? MR. WIEBE: I believe that•s the highest, yes. MR. SI-IVAK: All right. At that point is that a part-time or a full-time manager? MR. WIEBE: That's full-time. MR. SPIV AK: That's a full-time manager. Can I ask, what would the advertising budget of credit unions, the credit unions be in Manitoba? We have 232 . Have you any idea of what their advertising budget would be? MR . WIEBE: We have suggested to the credit unions they should spend one percent of their income on advertising, but very very few are doing this.

It•s more like between a quarter and one-half for the province of the total revenue. Now I can •t give you dollars and cents there. MR. SI-IVAK: If the Government was to go into a major advertising campaign opening up treasury branches and ess entially offering the same services that you are offering, would you believe that you would suffer as a result of the advertising campaign? MR.

WIEBE: Our advertising campaigns or promotions in the past have not been the very strong type of a forceful campaign, although this is being stepped up at present, but I would believe that if there was strong promotional activity on the part of treasury branches we would have to spend considerably more in promotion than we do now . MR . SPIV AK: If the treasury branches were to offer on savings an interest rate higher than yourselves, would you suffer? MR. WIEBE: Yes, I believe we would. It's true that we have the bond of association in membership but I think we must remember that only goes so far.

There is a type of loyalty to the credit union, but our members shop around, they look at interest rates both on the saving side as well as on the loan side. MR. SPIV AK: Do you have any projections of what in, say, the next five year period, what the asset picture would have been, or should have been, based on the escalation in the last period of time, and on some analysis by economists of where you'd likely have been in , say, five years ago, or at the end of this decade? MR. WIEBE: We have no definite projectors on our growth.

In the last three years it •s been between 25 and up as high as 33 percent increase per year in assets. year? MR. SPIV AK: Would you have anticipated a 30 percent increase this year, or next MR. WIEBE: In 1974 ? MR . SPIV AK: Well, 1974 isn't that vital. -- (Interjection) -- Without competition. MR. WIEBE: Yes. If the farm community is not going to suffer because of the slow spring, I would say that we would anticipate that kind of an increase. MR.

SPIV AK: In the analysis that the credit unions have made of the financial facilities available in Manitoba, did you find many gaps in which there was either no financial facility available, or no competition with, say, a chartered bank? MR . WIEBE: There are a number of small communities of course that do not have competition. There are a number that have only a credit union in the community. I think where we find the greatest gap, as I mentioned in the presentation, is in the commercial and industrial, small loans to industries and commercial institutions, commercial endeavours. MR .

SPIVAK: Can you indicate when an application for a loan to a commercial under taking comes to a credit union within the community it serves, what procedures are normally followed?

236 BILL 64 June 12, 1974 MR . WIEBE : I would believe that this would vary somewhat with the community because, as you know, the credit unions are autonomous bodies. But generally speaking the applican t would come to the loan office in the credit union and if it's a sizeable loan, at least let 's say over the $25, 000 figure , a meeting would be called where the credit committee would meet with the entrepreneur and sit down and listen to his discussion s and his projections.

Usually an accountant is called in, and very often a lawyer when it comes to the legal documen tation, and if the operation looks viable , even though there hasn •t been say a two or three year experience behind this operation, credit unions usually look very favourably on this kind of a .. . MR .

SPN AK : Would you say that some of the loans for commercial enterprises that credit unions have given have been loans that have been based not just on the financial securit y, or the financial viability of the project not being obviously a consider ation, but on the general concern of the community for the economic development that would be caused as a result of the undertaking ? MR .

EVANS: Yes, I would believe that, first of all , the character , the capacity , the character of the person applying of course rates very highly with the credit union, because in all cases the credit committee and the board do know the person , and they know what he has accomplished in his past performance, so that is one of the large considerat ions given. On the other hand, if it looks like a viable operation to the community and is going to be something that the community is going to benefit by, it receives a very strong support from the credit union. MR .

SI'NAK: Is it fair to say that there are a number of business undertakings in this province that would not have been started , would not be in operation today had it not been for both the loan of the credit union and the spirit under which the loan committee made the decision in the interest of the community that the project should proceed ? MR . WIEBE : I couldn't quote a number but I•m sure there are many of those :t;"ight across the province. MR . CHAIRMAN: Mr. Blake , MR .

BLAKE : Mr , Chair man, Mr, Wiebe, I wondered what stages the final chartering of the Northland Bank was now in, if you could bring us up-to-date on that. MR. WIEBE : The application is before the House , or was before the House, and of course it will wait now until the election's over. I just spoke to the Chairma n, or the previous Chairman of the banking committee in the last few days, and he believes that we are still on target as far as getting the charter some time in the fall, maybe September , MR .

BLAKE : Also, in some of the regulat ions, the relaxing of regulatirms in the past couple or three years which have allowed the credit unions to acquire , accept deposits from municipalities or government agencies where it was a field that wasn't available to you before, with the slackening of these restrictions the credit unions were also allowed to grant loans under the government-guaranteed loan system , and I'm thinking now of farm improvement loans where the rate of interest is about 7 1/4 percent and yet they haven't been granting these loans1 do you see them entering this field as funds become more available to them ?

MR . WIEBE : I think we find ourselves in the same kind of a bind that banks find them selves in. The rate is too low and they have them on the books, they have the legislation available or they have the opportunity to make these loans, but they don't really make them because when you pay 9 and 10 percent for money you can•t put it out at 7 1/2 and 8. But the legislation is there and a number of credit unions have applied and are ready for this kind of operation, MR. CHAIRMAN: Mr . Axworthy. MR.

AXWORTHY : I just have some questions I wanted to raise concerning points that came up during the course of debate on this bill. One issue that was mentioned two or three times by proposers of the bill was that the Credit Union Society has become a large organiza tion and, as a result , has become very conservative and insensitive to change and not particu larly responsive to the demands of consum ers and users , and yet I•ve always thought that your organizations were consumer-controlled through the Board of Directors. What is your own experience in this kind of operation ?

Is in fact the Credit Union Society still very much a consumer-controlled operation or has it become bureaucratic as it has been claimed ? MR . WIEBE : The credit unions that I know, which are more in the community type of an operation, are certainly consumer-controlled, democratically controlled by the membersh ip,

June 12, 1974 BILL 64 237 (MR. WIEBE cont•d) ••••• and I think that all the large credit unions that I• m aware of are certainly very, very sensitive to the needs of the small borrower. The small borrower would never be turned down.

If there •s a choice between him and the large borrower, the large borrower is the one that gets chopped down first because the funds are, first of all -- our first responsibility is the consumer loan field, to the individual who•s a member of our credit union, and when we cut down and restrict, like we do right now, we restrict first of all on commercial industrial loans, and then real estate, and then down to -- well of course we won't restrict on the consumer loan at all. MR.

AXWORTHY: Did you find that the board of the various credit unions meet with some frequency and actually exercise discretion and judgment and decision, or are they simply kind of rubber stamping decisions made by managers and so on? MR. WIEBE: First of all, the board meet very often, at least twelve times a year, and most boards I think find themselves meeting another two or three times a month at special meetings. Those may not be as long as the regular meetings. The credit committees meet as often as sixty and seventy times a year, and are very active . MR. AXWORTHY: In that respect, Mr .

Wiebe, do you find that there are members of the credit union movement in the province who have become engaged in different kinds of, oh, what you'd call kind of social development projects or working in low income areas, or providing assist ance for different kinds of groups? Does it become kind of a complacent organization, again as has been claimed during debate? MR.

WIEBE: I know of a number of credit unions that are involved in senior citizens' housing, homes for aged, and there are a few there that are involved in low income housing, and I think that the first field that the credit unions have entered as far as that kind of activity has been the senior citizens• housing. MR. AXWORTHY: I see. That raises one questions, Mr. Wiebe. I• ve always been kind of intrigued by the operation of the Savings and Loans Societies down in the United States which have always provided a pretty major source of mortgage money, particularly for moder ate income owners.

What has been the position taken by the credit union societies in the province in relation to operating similar kinds of savings and loans, going into the mortgage field in housing and so on? MR. WIEBE: A number of the larger credit unions are in the mortgage field. There are quite a few that are giving mortgage money up to 25 years repayment. But you can only do that after you reach a certain size and have the funds to put out on long-term loans. A smaller operation cannot do that. MR.

AXWORTHY: Do you have any idea, do you have any information with you as to . what percentage of assets would be presently committed into the housing and mortgage field by credit unions in the province? MR. WIEBE: I can give you the experience of our own credit union. We•re 22 million in size and we have 1. 5 -- one -- 50 million ( ?) out on loan, so that 8 million is in real estate. MR. AXW0RTHY: 8 million. So well over 50 percent ... (inaudible) MR. WIEBE: Right. MR . CHAIRMAN: Mr. Hanuschak. Proceed. MR. AXWORTHY: Yes, I•m sorry. I just have one other line of questioning, Mr. Chairman.

One of the questions that were raised - and I• ve read both your briefs, I listened to your brief - we have had the experience of treasury branches in two other provinces in this country •. . A MEMBER: Three others. MR. AXWORTHY: Three others. All right. You are making the claim that the opera tion of treasury branches would seriously injure or impair the ability of the credit union movement to prosper, grow and expand, and bring kind of a consumer-run financial institution into the province. How in fact, from the experience of other treasury branches, would that kind of dilution work?

What kind of impediment would be placed in your way as a consequence of the operation of treasury branches ? MR. WIEBE: I think we• re making the point in our brief that we feel the competition, or the people that will go to treasury branches, will come to a large extent from the credit union area because there are people who deal with charter banks and are happy; there are others that don't want to deal with charter banks and they would now divide between the treasury branches and the credit unions. We feel that this would drain off a portion of our funds, and

238 BILL 64 June 12, 1974 (MR. WIEBE cont•d) ..... of course also slow down the growth. I think this has been shown pretty clearly in the Alberta situation. MR. AXWORTHY: In the Alberta situation - you must communicate with them with some frequency - do credit union members in Alberta feel that their own operation has been restricted as a result of . . . ? MR. WIEBE: Oh yes.

The central organization feels very much that it has, and if you take the total assets of the treasury branches and the credit unions proportionately to their populatio n, they are about the size of our credit unions in Manitoba - a little bit larger. MR. AXWORTHY : Again, can you just give some information? To what degree do you rely upon assets that have some kind of government source? And by this I' m saying that there may be individuals or organizations or companies that use government loans or other forms of financial assis tance.

Do you find that you have a fair number of these who use your services, and do you feel that these would be eliminated as a result of the treasury branch operation? MR. WIEBE: I don •t believe we •ve had too many government accounts or municipal and hospital accounts transferred to credit unions since the changes of the Act .

We•ve made bids for them in various communities but the banks have of course, in cases where there has been tendering - and I know there has been in a number of communities - the banks have really sharpened their pencil and it has been to the advantage of the corporation, the fact that we now compete with the banks, because of that at least schools boards and municipalities are getting better rates . MR. AXWORTHY : I see. Thank you, Mr. Wiebe . MR. CHAIRMAN: Mr. Hanuschak. MR. HANUSCHAK: Mr. Chairman. Mr.

Wiebe, you have mentioned that the presence of treasury branches in most provinces wherein they exist and the one to which you referred to was Alberta, has to some extent curtailed the growth of credit unions. Well in the light of that statement, Mr.

Wiebe , would you care to comment on the fact that during the past four years , to which you have also referred as having been years of considerable growth for the credit union movement in the Province or Manitoba, the assets have increased by approximately 150 percent, from 168 million to 401 million, and in Alberta for the same period of time from 118 million to 321 millio n, which is practically 200 percent; and there is a similar increase in membership in Manitoba from 183, 000 to 251, 000 , which is somewhat less than 50 percent about 40 I suppose - and in Alberta from 147, 000 to 228 ,0 00, which would be well over 50, possibly 60 percent increase, in a province wherein there are treasury branches?

This is Page 16 in your May 1974 brief. MR. WIEBE: Well I would just comment generally on this . First of all , Alberta is a richer province and the population of course is about • 6 million higher than Manitoba is. I think for that reason, of course, there has been more growth potential there than there is in Manitoba. In Manitoba a lot of the growth can be attributed, I• m sure, to the very aggressive way in which our central organization has not only gone out to improve the operation· of credit unions , but I think we•ve built up a much stronger army or pool of personnel than we had before.

We now have managers that are capable of running a good operation, which in the early years we didn •t have, and we have placed a lot of emphasis in building up the personnel within the movement. I think this certainly is one reason why the growth is there in Manitoba. But I don't know whether I•m answering your question really, exactly . I think I would simply say that the Province of Alberta is a richer province and it has more people , and really, the growth of the credit unions there should have been -- the size of the credit unions should have been higher, considerably higher than Manitoba. MR.

CHAIRMAN : Mr. Hanuschak. Mr . Bostrom. MR. BOSTROM: Thank you, Mr. Chairman. I'm afraid your answer on that one certainly doesn •t satisfy me in the sense that I was already looking at this when Mr. Hanuschak asked the question. By comparing the growth in Manitoba and Alberta over the last four years, you can see that the assets in Manitoba have gone up 113 million

whereas in Alberta in the same period the assets had gone up by 203 millio n, which is almost double the amount - (Interjection) -- Pardon me? In Alberta you have the operation of treasury branches which you state in your submission here is - and I quote - "The crux of the matter, as the credit unions see it , is the implementation of treasury branches would seriously impede dramatic growth experienced by credit unions during recent years." Now we•re comparing the same period , the same years. In Manitoba it's gone up by

June 12, 1974 BILL 64 239 (MR. BOSTROM cont'd) . . . . . 113 million as compared to 168 million in 1969 . In Alberta, where they had 118 million in assets in 1969 , they are now up to 321 million, which is an increase of 203 million - double the amount . You also made the statement that the credit unions in Al berta are approxi mately the same number . I notice the comparison on this chart verifies your statement on that, that in Al berta you have 219 credit unio ns, in Manitoba 196, so the comparison there is similar .

You've also made the statement that the credit unions in Al berta feel that they have been re stricted. Now, you are giving us the view that over the past four years you have the impres sion that you have had a dramatic growth in the credit unions in Manitoba. Now why would not the people working in the credit union movement in Al berta not consider that they have also had a dramatic growth if they've had double the growth that Manitoba has had ? MR.

WIEBE : I think the point we are making , though , is this: that in Alberta you have a popula tion of approximately 1. 6 - a little better than 1. 6 millio n, and Manitoba has one million, and the assets of Al berta are $321 million

whereas in Manitoba they are $400 million, and if you add to the 321 the assets of the treasury branches, then you have a propor tionate figure - if you compare popul ation assets you have a proportionate figure to what Manitoba has . That 's the point I was trying to make. Because the treasury branches, the total of the treasury branch assets and the credit union assets would be approximately the same proportion to their populat ion as the $400 million is to our populat ion. MR . BOSTROM: You know, Mr. Chairman, through you to Mr.

Wiebe, you seem to be ignoring the " dramatic growth" that is evidenced in the statistics here in terms of the dramatic growth of the Al berta credit unions . The dramatic growth there is double the dramatic growth in Manitoba, whichever way you cut the cake.

You know, if I may pose the question: If, in fa ct, treasury branches are implemented in Manitoba, and over the next fo ur years if the credit unions in Manitoba experience a similar dramatic growth as they have experienced over the past four years, or in fact if they were to experience the kind of dramatic growth that we see that the credit unions have experienced in Alberta in spite of these treasury branches, would you be satisf ied with that kind of growth? Would you be pleased to have the kind of growth that the credit unions in Al berta enjoy ? MR.

WIEBE : Yes, I think we're happy with the kind of growth we are experiencing and have been experiencing in the past few years. Thirty percent increase per year is a good growth; but that doesn't mean of course there isn't much room for improvement. There 's a great potentiality which has not been tapped in the province of Manitoba as far as growth is concerned. MR. BOSTROM: Mr. Chairman, Mr.

Wiebe has also made the statement that he differentiates between people who deal with chartered banks and people who deal with credit unions , and somehow he has made the inference that if treasury branches are established, then people who deal with credit unions now may be siphoned off and will begin to deal with treasury branches. How can he justif y that kind of statement considering the increase in the membership in Manitoba over the past fo ur years has been in the nature of 67, 000, and the increase in the membership of the credit unions in Alberta has been 81, 000 ?

Now even if you compare the dif fer ences in popu latio n, which I admit Alberta is approximately 50 percent greater than ours, but if you compare the growth in membership of credit unions in Alberta you see that their growth in membership is proportional as well to their popul ation and does not seem to have been impeded by the presence of treasury branches. How do you justif y that statement ? MR.

WIEBE : I think the point we •re making is again this: that the treasury branch system in Alberta has run alongside the credit union system in Alb erta, and both of them have not really experienced dramatic growth in proportion to the wealth of Alberta and the popula tion of Al berta, and if the treasury branch system would be merged with the credit union system of Alberta you would have one system that cwld really serve the pop ulation well . I think this has already been suggested in government circles in Alberta.

The time for treas ury branches possibly has expired where the need for treasury branches is there. It was use ful in its infancy at the time when Aberhart organized them, and has served a useful purpose, but today I think they're looking at the fa ct that there isn't really room for two near-bank systems like that in one prov ince; and that•s the point we're trying to make. In a small prov ince like Manitoba there is not room for two systems like that. MR. CHAIRMAN: Mr. Brown.

240 BILL 64 June 12, 1974 MR . BOSTROM: Mr. Chairm an . MR . CHAIRMAN: Order please. Before you proceed, Mr. Bostrom, your questions have been getting a bit argumentative. Can you ask questions for information rather than as an argument ? MR . BOSTROM: Well the final questio n, Mr. Chairman , to Mr.

Wiebe , is that, you know, he made the statement directly that people who deal with chartered banks are somehow differentiated from people who deal with credit unions and that somehow the establishment of credit unions in Manitoba would siphon off people who are now members of credit unions in Manitoba, and would in that sense impede the development of credit unions.

I would just ask him to look at the statistics honestly and tell us how that kind of stateme nt can be justified by the statistics comparing Manitoba to Alber ta , where the growth of the me mbership in Alberta has been greater than the growth of member ship in Manitoba by a much greater percentage. MR . WIEBE : First of all, let me say that as far as the Alberta Federation is con cerned ,in their studies they definitely feel that the people that deal with treasury branches would be dealing with credit unions if the treasury branches weren •t there.

It •s a matter of choosing between the banking , chartered banking institutions, and another near bank, and there are two choices so they choose between the two - and this is the statement we're making. When the treasury branch system comes into existence in Manitoba we will find that the peo ple will choose. This is fine for people to have a choice , but we are not in the position to thin ourselves down like that in the province. This is our position. MR . CHAIRMAN: Mr. Brown. MR . BROWN: Thank you, Mr. Chairman. First of all, I would like to ask a sort of personal question of Mr. Wiebe.

How long have you been involved with credit unions ? MR . WIEBE : I•ve been managing the Winkler Credit Union since July 2nd, 1950 . MR . BROWN: In your opinion you stated that there seemed to be a deficiency as far as servicing light industry and commercial , Do you think that once the Northland Bank is establishe d, which you said hopefully would be in September, that this would pick up that deficiency ? MR .

WIEBE : It will take the bank several years to get going at a rate , we feel at least, where it can really enter into this field , but the credit unions feel that they need a reference for their larger commercial loans , and I think at least in the rural communities where commercial and industrial applications come in, quite frequently credit unions have tried to refer them to the banks but the banks don't handle them.

They will look at a business that has been established and has been going well for three or four years and has financial statements to prove , fine , they'll accept that, but a new business has a very ha»d time getting started. Mind you, there are other institutions, other financial facilities such as the MDF and the IDB and government grants , and this all of course helps the situation too. MR . BROWN: In your opinion, Mr.

Wi ebe, since we •re going to or it seems as if we will be getting the Northland Bank, do you think that we should possibly wait with the Treasury Branches Act to see just exactly how the Northland Bank is going to affect the prairie pro vinces and see where there is going to be a real need , or do you feel that there could be a need at the present time for the treasury branches ? MR . WIEBE : Mr. Brown, I would think that in our presentation and our discussion with the Premier we made this point. We felt that at least let•s wait until the Northland Bank has gotten off the ground.

I might say at this point that the fact that Manitoba is looking at treasury branches has caused some real problems for the organizers of the Northland Bank. Discussions have now been re-opened to see whether the head office shouldn't be moved into Saskatchewan or Alber ta , and one of the reasons given by the people from these provinces is, well, if Manitoba is looking at treasury branches, maybe we should look at another place for the head office of the Northland Bank. -- (Interjection) -- Pardon me ?

I'm sorry. - (Interjection) -- If Manitoba is looking at treasu ry branches, then maybe the head office should be moved , or at least we should have another look as to where the head office goes. Should it be in Manitoba or should it probably be in Saskatchewan or Alberta ? MR . CHAIRMAN: Mr. Brown. Mr. Cherniack, MR . WIEBE : I•m just saying that the people from Alberta are saying , "Let•s review this once more. " MR . CHE RNlACK: Mr. Wiebe , I had a couple of questions I wanted to ask you, I don•t know whether you used the word "starving" or someone else , about the credit unions in

June 12, 1974 BILL 64 241 (MR. CHERNIACK cont1d) ••••• the first number of years of growth, How was the deficit handled if they were starving ? Was there a _deficit or was it just famine ? MR. WIEBE : There was just famin e as far as interest rates were concerned. MR. CHERNIACK: You mean the interest paid on deposits? MR.

WIEBE : That's right , At the end of the year , as you well know, the credit unions figure what their operating net profit is and they pay that back to the membership, and if the net profit was low they paid as low as one percent dividend on shares, one and a half, two percent at that time, and they lowered it so that they would still come out with a balance sheet that was operating more or less in the black. MR. CHERNIACK: I see. You mean there was never actually a def icit; it was only a shortf all in payment of interest on deposit, MR.

WIEBE : There are occasions, or have been occasions where there have been def icits, but these have usually been picked up in the follo wing year. They've never been that grave . MR. CHERNIACK : Now, you were talking earlier about short term financing polici es. You were saying that you would take commercial papers; big companies would want to borrow short term. Do you ever bid on Manitoba treasury bills ? MR. WIEBE : You 're talking about the Co-operative Credit Society now. MR. CHERNIACK: Well I'm speaking of any credit union. MR. WIEBE : Yes, The credit unions no . No, I'm not aware of any credit unions .

I think the only ones that would be doing it is the central office and our • • . MR. CHERNIACK : Well what do the credit unions invest in ? Could you give us a ••. MR. WIEBE : In the central. MR. CHERNIACK : Only in the central. MR. WIEBE : Basically in the central, yes. In the rural areas we invest in long term. We usually pick up the school debentures - well there aren't many any more of those , but sewer and water debentures, improvements for the community . Those are picked up by credit unio ns. There are very few communities where banks or other financial institutions pick those up .

They've been picked up in the last several years by credit unions . MR. CHERNIACK : That's local improvements. MR. WIEBE : That's right. MR. CHERNIACK : What about hospitals ? MR. WIEBE : Hospital debentures •.. MR. CHERNIACK : I mean, do you know of that ? I•m not talking in generality, I 'm talking in specific s. Are you aware that there have been purchases of • MR. WIEBE : Yes I'm aware of th at, Yes. MR. CHERNIACK : Have you any idea the extent to which it's .. MR. WIEBE : Not too large . The one I•m thinking of is actually a mental institution and there were some debentures picked up by a credit union there.

MR. CHERNIACK: You mean a private mental institution . MR. WIEBE : Yes, the Eden Mental Health Centre. MR. CHERNIACK: Yes, but I'm speaking of hospitals generally in Manitoba, MR. WIEBE : No , I 'm not aware that they've been picking those up . MR. CHERNIACK: By municipal bonds ? MR. WIEBE : Municipal bonds ? Yes, they'll pick those up . MR. CHERNIACK : You mean bonds, not local improvement bonds, but general borrowing. MR. WIEBE : City of Winnipeg bonds have been picked up , ye s. MR. CHERNIACK: Are they traded or are they kept ? MR.

WIEBE: They're usually kept because these represent the long term reserves of the credit union, MR. CHERNIACK: What about the Province of Manitoba and its bonds and . . • ? MR. WIEBE: Yes. Parity bonds. Credit unions pick those up and use them_ as their cash reserve. MR. CHERNIACK : That 1s the bonds of the agencies long term. Like Hydro bonds ..• ? MR. WIEBE : Hydro bonds are picked up, ye s, but the larger portions would again be pi cked up by the central -- I thought you were referring to the Manitoba Savings Bonds. Those are picked up by credit unions .

242 BILL 64 June 12, 1974 MR. CHERNIACK: Well there's only been one issue in the last number of years. 1970 was the last one. MR . WIEBE : Yes, but there have been more than that over the years and they've been . MR. CHERNIACK: Pri or to that. MR. WIEBE: Yes. Of course the amounts were limited that you could buy, MR . CHERNIACK: But I am speaking about the bonds, the long term bonds that are put out on the market. MR .

WIEBE : Generally speaking, I think credit unions try not to get into anything longer than 10 years as far as debentures and bonds are concerned, and the amount of money that they invest in loans is usually based on the amount of reserves they have set aside for long term reserves. MR. CHERNIACK: Now you mentioned the eff ort to get, I think you said school divi sions• or hospitals • business, and you say that the banks have sharpened their pencils and on the tendering have been able to win them. In what way, what would be the factor that would win it for the bank as against the credit union ? MR.

WIEBE : The interest rate, MR. CHERNIACK : You mean the banks would charge less than the credit union ? MR. WIEBE : They charged less on the tenders that I• ve seen - at least am aware of. In the case of the Winkler Credit Union we bid on the Garden Valley School Division; we offered them a rate for the year of 1974 of eight percent and the banks outbid us. Now they also offered them a rate on a savings on a day to day basis which was better than ours, MR . CHERNIACK: Does that mean that you1re sorry you didn't sharpen your pencil more or couldn't you aff ord to ? MR.

WIEBE : We didn't feel that we wanted to go into that kind of an account at the expense of our members. We fe lt this was very close to our average cost of money and we would have to get that. MR . CHERNIACK: Well th en, that brings me to tho next question. Do you have any idea - and I imagine it•s dif ferent in many credit unions - of the spread between inte1·est paid and interest charged? MR. WIEBE: Yes, it varies I think fr om -- let me quote; we have this fr om two and a half and as high as five in smaller operations .

Well again in our particular operation, our cost right now is around 6. 1 percent - that's average cost of money - and we•re charging 9 and 10. A good portion of portf olios have been written at 9 and still at 9; the others at 10 . MR . CHERNIACK : What is your cost of operating in terms of that interest rate ? Had you figured that out ? MR . WIEBE : The total cost of operating ? MR . CHERNIACK : Yes, in terms of an interest rate spread. MR . WIEBE : I•m speaking from memory now. I can give you a few breakdowns.

The cost of salaries is under 10 percent of total income ; cost of administration is about 7 percent; maintenance and office overhead is 2 percent; this type of thing. MR . CHERNIACK : Th at•s of your own credit union ? MR. WIEBE : Yes. MR . CRERNIACK : It's one of the older and larger • MR. WIEBE : Right. MR. CHERNIACK: Well then your spread, you say, goes as high as five percent. How is it determined? How do you determine the interest you pay and the interest you charge ? MR. WIEBE : You determine the average cost of money .

You have your checking accounts; you have a certain amount of basically free money or cheap money in there . You have your reserves and you have your savings accounts, and you take the average cost of that money per year, which can average out between 6 and 7 or 8 percent, and then of course you determine how many percent above that do you need to cover your operating cost, your over head.

Now not all credit unions are using the same cost ratio approach, and we are now in the process, through our central, to develop a system where they all use the same and we can compare apples with apples and not apples with oranges . MR. CHERNIACK: You mean the same kind of fo rmula but not necessarily the same rates. MR. WIEBE : Yes, that's right. The same kind of formula .

June 12, 1974 BILL 64 MR. CHERNIACK : Do you have credit unions that compete with each other , say in Winnipeg where there are a number of them? MR. WIEBE : Oh, yes . MR . CHERNIACK: Do they compete within rates? MR. WIEBE : They compete within rates, yes. Yes. MR. CHERNIACK: Well, it was said by Mr. Bl ake in the House that he found, as a bank manag er, that there were occasions when he would be able to work with, co-operate 243 with a credit union � I think I 'm putting it correctly; you can correct me if I•m misstating what he said. -- (Interjection) -- Thanks . Well then I 'll ask Mr . Wiebe more directly.

Do you find that you can work together, or do work together with the bank in providing the best service to a mutual customer ? MR. WIEBE : Yes, I think that we can say that in our particular operat ion I think this holds true. At least generally in our

chapter area , where there are about nine credit unions, in our discussions as managers we have very fine relationships with the bank and we have a good exchange of inf ormation - banks pho ning us for customer experience and we pho ne them, this type of thing . MR. CHERNIACK : Well that•s sort of credit standing, but do you make deals in combination in any way? MR. WIEBE : We have attempted twice to make a joi nt type of a loan where the bank would pick up the operating loan and we pick up the long term real estate loan, and we haven't succeeded. MR. CHERNIACK : Thank you , Mr. Wiebe . MR. CHAIRMAN : Mr.

Minaker. MR. MINAKE R: Mr. Walding, through you to Mr . Wiebe. I, too , was looking at the growth of credit union chart that•s in your presentation that was to Cabinet. I•m not a banker but I would presume that the success of a credit union depends on how many dollars they can get each member to invest or deposit in the unio n. Is that correct, Mr. Wiebe ? MR. WIEBE : That•s correct, yes. 1\lffi .

MINAKER: Then possibly you could maybe explain why that even though it would appear Alber ta's growth was greater than Manitoba's, that if you take the 228 , 000 -or -so-odd members and divide it into the assets, you get an average of I think $1, 410. 00 invested per member for Alberta. If we do the same calculation for Manitoba for 1973, we end up with $1, 590 per member average investment, and I am wondering why this is so , if Al berta is a richer province and presumably has a higher average pay scale, why they would not be in vesting as many dollars per member.

Would it be because of the fact the competition is keener with the treasury branches? MR . WIEBE : That •s quite a difficult question to answer. I think I would have to answer it this way: The fact that a person earns more money doesn•t mean he saves more. I think that•s a general ex perience we have and I think the average balance that the member has in his savings account doesn't vary that much fr om a poorer province to a richer province per individual. MR. MINAKE R: Would you have any suggestions why the people , the members in Alberta, would only be investing, say $1, 410 . 00 ,

whereas it looks like the average member in Manitoba invests $1, 590 .0 0? MR. WIEBE : Well I think the only point I can make there is that if the treasury branches were not existent in Al berta, I just feel that the membership, the total membership would be considerably higher and the assets of course would be higher, but that doesn •t necessarily mean that the average per member, savings per member, would be higher. MR . CHAIRMAN : Mr. Adam . MR. ADA M: Thank you, Mr. Chairman . Mr. Wiebe, you made the statement that you diff erentiated the people who patronize the chartered banks and credit unio ns.

Now I can accept that perhaps in the City of Winnipeg, where you have your industry, large industrial corporati ons , and low wage earners, workers, but that statement would not in my opinion apply to my constituency that I represent ih Ste. Rose, which is predominantly agri culture, and I would say likewise for the Member for Minnedosa who was, I believe, Manager of the Royal Bank there. It 's predominantly agriculture in my opinion, and the statement that different people bank in credit unions, use their facilitie s, does not, in my opinion, apply to my constituency.

244 BILL 64 June 12, 1974 (MR. ADAM cont'd) . . • . • But the question that I wanted to put to you is that there has been quite a bit of discus sion in the last four years, I believe, about a prov incial involvement, or a public involvement in financial or banking , if you will.

There have been to my knowledge several trust companies incorporated in Winnipeg: finance companies, Unicity Bank, Western Bank, several differen t financ ial institutions, and at no time have I ever heard any express concern from the credit unions on this, and I'm wondering why at· this particular time that, sin ce treasury branches are not a socialistic idea, they're rather a capitalistic idea, you know, they or iginate in provinces that were governed by , let•s say, capitalistic governments. MR. WIEBE : I think I would like to answer that in two parts.

First of all , backing up to your first comment as far as the agricultural communities are concerned, I think in the past, and I know this is a fact in the past, the farmer dealt largely with the bank because of the government loan programs that were available through the bank and were not available through the credit union, and the rates were much more attractive, and so it fo llowed that he went to the bank for much of his financ ing. I think that•s obvious . That•s happened in every community. Now that credit unions are very closely competitive in their rates, this has changed considerably.

Coming back to the second part of your question, I think I would express the view of the credit union movement when I say that we are not scared of competition. But, as I said in my brief, I think that things that your government wants to accomplish through the treasury branches, we would like to offer to do through the credit unions , because those are basically very similar aims to what we have in the credit union movement and we would like to do these things , and we•d like to suggest that the government should take a long hard look at doing these very things through the credit unions in the provin ce. MR .

ADAM: Mr . Wiebe, to you through the Chairman. I want you to know that I•m a member of three credit unions and I do support the credit union movement, and I personall y do not have any concern about the treasury branches and I'm not about to rush over and withdraw all my funds or my savings with the credit union to rush over to the treasury branches. But nevertheless, I envisage the credit unions and the treasury branches progre ssing more or less together, and this is the way I fe el about it. I know that you don•t agree with me, but .. MR . WIEBE : I think that this point, if you would allow me , Mr .

Chairman, I• d like to refer to at least one

section in the Act, which I think is

Section 14 (2), where it very expressly says that expenditures in connection with the operation of the branches that are not to be paid out of the fund under subsection (1) shall be paid from and out of the Consolidated Fund. If you take the treasury branch financial statement from Al berta and look for instance at their clearing costs, they have a clearing costs figure for $25, 000 fo r the operation of one year . The Co-operative Credit Society uses that in one month in their cost of clearing.

So it •s obvious that there are costs and expenses that are being paid, not out of the operational income of the treasury branches, but if all costs of the treasury branches will be paid out of the operation of that branch then it's fair competition; otherwise we feel it is not. MR. ADA M: Well, Mr . Wiebe, on that particular po int I think that that answer should come fr om the Minister of Finance. We also have the MDC which was established several years ago , you know, Manitoba Developmen t Corporatio n, which was introduced by the former administrations, and the FCC which provides ... MR.

CHAIRMAN: Order please . Mr . Adam , would you just ask a question and not use it as a basis to put a poin t of view or make an argument with . . • MR. ADAM: Do you view the MDC and the FCC and the IDB as a detriment to the credit union? MR. WIEBE : No we don•t1because they're basically an area that many, at least certainly of the smaller credit unions, cannot get involved. However, I might say out of the 20-odd industries started in their own community, we have yet to get some loans fr om IDB or MDC.

The approaches used by these corporations and the red tape involved are such that many people don•t want to deal with them. MR . CHAIRMAN: Mr . McKenzie. MR. ADAM: Thank you, Mr . Chairman. MR . McKENZI E : I have one question, Mr . Chairman. Mr . Wiebe, I note that at the end of your 1972 statement you say, and I quote : "We are confident that if we are successful in chartering a bank, the Provincial Government will review its approach regarding treasury

June 12, 1974 !MR. McKENZIE cont•d) , still share that view? BILL 64 245 • branches. " Can I ask you , Mr. Wiebe, if the CCSM board MR. WIEBE: After our discussions with the Ho nourable Premier and after hearing the discussions, at least reading about the discussions in the House , I don•t know whether we share that view. I think some of the board probably fe el that the treasury branches are going to become a reality. We are here, though , to say that that shouldn 't happen. MR . CHAIRMAN: Mr. Wiebe, thank you. Mr. Brown, plea se. Mr. Earl Brown, Bill 83. BILL 83 MR. BROWN : Mr. Chairman, honourable gentlemen.

I'm here, Earl Brown, President and General Manager of the Po rtage la Prairie Mutual Insurance Company , which was organized 90 years ago this October in the Province of Manitoba. With regard to Bill 83, we have listened to many statements in the Hou se, reported in the paper and to the press outside of the House , that has said that rural Manitoba needs more insurance facilitie s, or the market is tight in rural Manitoba. So that you 're fam iliar with our operation, we insure between 16, 000 and 17, 000 far mers in Manitoba. This is out of around a little over 30 , 000 real operating farms in Manitoba.

The balance of th is, at least 90 percent of the balance , is insured by our largest competitor, the Wawanesa Mutual, and the Red River Mutual Insurance Company. These three companies, in total, insure at least 90 percent of the farm setups in Manitoba . This also in a smaller degree applies to the rural habitational holdings of the people in Manitoba. The large bulk, as you know, of insurance in Manitoba is government buildings , international corporatio ns, and centered in Winnipeg and the larger cities, so that really the rank and file people of the province are insured with these three home-based companies.

I come here today rather frustrate d, really not knowing what to say, because I know that the bill is going to go whether I speak or I don•t speak. It is going the way it is. We went throu gh Bill 56 and tried to give a lot of good advice, but didn't stop Autopac getting into one helluva mess to start with and is still. Now, we•re not worried about competition, we•re wor ried about improper statements and improper competition. If we were, as an operating ind ustry, to make the misleading statements that come out of Autopac to the public, we would have the Consumers Department after us pretty quick.

In the notice that I got in my auto license and insurance this year, it quoted a 1972 car with the previous 1972 rates and then it compared it with 1974 rates for that car under Autopac afte r the car depreciated anywhere between $2, 000 and $3, 000. If we are up against this same type of competition in the fire insurance field, and this same kind of statement, it is rather difficult to compete against it . Again, and I say this, in last night's Free Press there were furthe r statements about how cheap Auto pac•s premiums were.

There is nobody buying insurance fr om Autopac who had a proven automobile record, good driving record, and was claim-free , that is buying their insurance less than they bought it from our company when we were in the automobile business. Now we would like some leadership from this Govern ment . It is actually the Governme nt of the people of Manitoba . We had approximately 50 , 000 policyholders in our company who were buying their automobile insurance by choice from our company , who are members of the com pany and wanted to do it.

These people were prohibited from buying, providing their own auto mobile insurance any longer . Now we are going to have competition, as it will be, in the fire insurance business, and also in the bill that is setting up this permission for fire insurance it•s setting up a provision that they can take us over if they desire, giving them author ity to absorb any insurance company that they so wish.

Now if our company is made up of the middle class people , not necessarily the lower class person who can•t aff ord a car, or the money baron, or the corporate rip-off ers - and I understand from the national leader of the party that these are the people that the party want to protect. So where do we go from here ? An organization made up of these people trying to look after themselves being torn apart and now prov ision made for takeover, and I•m not surpr ised at the previous speaker to me worrying.

He•s in exactly the same position as we were back four years ago , and I•d prophe sy in the next two years that co ops better watch out too . Thank you. MR. CHAIRMAN: Are there any questions of Mr. Brown? Mr. Uruski. MR. URUSKI: Thank you. Mr. Brown, you are the General Manager of the Por tage Mutual ? MR. BROWN: Right.

246 BILL 83 June 12, 197 4 MR . URUSKI: Tell me, you made the statement that Autopac is in a hell uva mess. Could you tell us how much money Portage Mutual lost in the last year of operation ? MR . BROW N: We lost $1, 700, 000 underwriting lo ss. We lost from our surplus a mill ion dollar s. MR. URUSKI: Is your management being questioned now by the Board of Directo rs ? MR . BROWN: Yes. In fact, not only by the Board of Directors but by the Super intendent of Insurance at Ottawa. MR .

URUSKI: Could you tell me what perc entage of the insurance business your co mpany does in Manit oba in respect to general business? MR . BR OWN : This is at, before you took the auto mobile business away from us . MR. URUSKI: Exc luding automobile. MR . BROWN: Oh. About 40 perce nt of our business approximately. MR . URUSKI: No, no. I'm sorry, you probably didn't understand me. What perc entage of the Manito ba business in general insurance would your company write ? MR . BROWN: We don't wr ite certain lines of insurance, so if you gather it all in, we are out of it.

We write about 12 percent of the fire insurance business in Man itoba but, again, the habitational insurance, the people that you are supposed to be looking after, we write 40 per cent of it. MR . URUSKI: Forty percent of the farm business ? MR . BR OWN: We write fifty percent, better than fifty percent of the farm business. MR . URUSKI: Thank you. MR . CHAI RMAN : Ar e there any other questions of Mr. Brown ? Mr. Spivak. MR. SP IVAK: Mr.

Brown, I wonder if you can tell me whether you believe, if your company was allowed to compete with A utopac in the auto insurance field, you would be able to under sell Autopac ? MR . BROWN : If we were allowed . . . Not now. The attitude that Autopac has devel oped among the people of Man itoba with re gard to cla ims, auto insurance has become very much like rel ief now, or any other handout the Govern ment is giving, and I think it would be hard to turn this off.

I think the people of Man itoba, the Government of Manitoba, is going to be called upon to subsidize automo bile insurance now for a long, long time. MR . CHAIRMA N: If there are no further questions ... Mr. Uruski. MR . URUSKr:· Just one more question, Mr. Chair man. Could you tell me, Mr. Brown, if your co mpany will be sell ing exte ns ion coverage in the automo bile insura nce ? MR . BROWN : Our com pany ceased to write any new exten sion policies w;th effect the 1st of Ju ne. MR. CHAIRMA N: Mr. Ad am. MR . ADAM: I just wanted to make Mr.

Brown feel good and tell him that I had my farm insured with Portage Mutual. MR . BROWN: An d we 're looking after you well. MR . CHAIRMAN: If there are no further questions, thank you, Mr . Brown. Mr . Tr ites please. MR . TRITES : Mr. Chairma n1I have a few copies of my submission here. I didn 't expect as many people out so I may not have a copy for everyone but I'd like to make sure that my friend Mr. Uruski gets one though. Mr. Chair man, my name is Trites.

I'm Pres ident and General Manager of Wawanesa Mutual Insurance Co mpany, and I do thank you and the members of your com mittee for the opportun ity to be here ton ight to speak to you on Bill 83. When introducing Bill 83, Mr. Uruski the Mini ster in charge of the Manitoba Pu blic Insurance Co rporation, accused fire insurance companies of not living up to our responsibilities. Wawanesa Mutual Insurance Com pany was founded in the Village of Wawanesa ri ght here in Man itoba in 1896. It has been giving the people of Canada good service at reasonable cost for over 78 years .

Wawanesa is a mutual co mpany, com pletely owned by half a million members, and on their behalf I strongly object to Mr. Ul'Uis ki's accusation. It just isn't so. I so metimes wonder what this Government, how they look at we Man itoba insurance com panies . It seems to me they picture us as being great big, rich corporations that are gouging the people of this province - and that 's not so either. We're a home -grown, Mani toba co mpany. We operate much the same as a co-op. We 're owned by our policyholder s.

The only difference between us and a co-op is that we pay taxes, regular corporate taxes, where I understand they

June 12, 1974 BILL 83 24 7 (MR. TRITES cont'd) . . . . really don't pay them in the same fashion. It's true that our assets exceed our liabilities. If it weren't so, we couldn't meet the test of adequacy and we'd be out of business, and the dollars of surplus that our statements show may look like a lot of money, it might look like a fair amount of money, but when you break it down, per policyholder, our surplus is less than $50. 00 per pol icyholder, which I really don't think is very much money.

During the 1973 Manitoba Election campaign, a number of references were made by Premier Schreyer as to the po ssibil ity of the Manitoba Government entering the fire insurance business. It was obvious from some of the statements made that he was misinf or med. We felt that it was our respons ibil ity to offer to meet with him to discuss his concerns. As suming that the Premier would be interested in knowing the truth, we wrote to him soon after the election it was August 9th to be exact - giving some facts and figu res, and asked to meet with him before a decision was made. In the Premier's absence, Mr.

Cherniack replied to my letter by his letter of Au gust 14th saying that "no decisions had been made in regard to the matter and there fore the points that you have raised will certainly be considered before the point of decision may be reached, " and that was very fine, very encouraging. I thought I was getting somewhere. However, a few days later, on September 5th, Mr. Uruski was stopped by a reporter on the way to his first Cabinet meeting and he made the statement that it was 99 percent certain that legislation would be introduced in the next session of the Legislature to implement public fire insurance.

So again we wrote the Premier on September 6th, 1973, a letter in which we expressed our concern, enclosed a copy of our letter of Au gust 9, 1973, and again asked to meet with him. He replied on September 24, 1973 , saying, "Since no final decisions have yet been made in this area, I would suggest you discuss your concerns with the Honourable Bill Uruski, the Minister in charge of the Manitoba Public Insurance Corporatio n. " I then quickly phoned Mr. Uruski and finally got to meet with him on Nove mber 7, 1973.

Early in that meeting he made it very clear to me that the decision had already been made - in effect I was wasting my time. He conf essed that he had never seen my letter to Premier Schreyer. I gave him a copy, he read it, and promised to write me before the end of the year replying to the points I had raised. Af ter a number of phone calls to him in January and a letter on January 22, he did reply on January 24.

He didn't respond to the points we had raised but merely stated that the Government's entry into the general insurance business was ju stified based on the following: It was part of an election platform and that a market problem exists in the general insurance business. We submit that these are not good reasons, only excuses. When we assumed that our Premier would be interested in hearing the truth about fire insurance and interested in meeting with the industry's people to discuss government concerns, we were obviously wrong. Mr.

Uruski states that we fire insurance companies have not lived up to our responsibil ities and I ask him in what way have we not. If we have not, why haven't we heard about it from the Department of Insurance? Fro m time to time, we check with the Department of Insurance and have always been told that the legitimate complaints received by them are few and far bet ween. It's the duty of the department to make sure that companies are living up to their respon sibilities and, if we are not, why doesn't the Government cancel our licence to do business? It doesn't because it has no reason to do so. Mr.

Schreyer has said many times that our Government would get involved in an industry only where there's a need or where private enterprise is not performing to the satisf action of the public. We see no evidence that this situation exists in the field of fire insurance and there fore there seems to us no ju stification for Government involvement. I submit, Mr. Chairman, that if the Government goes ahead at this time with thi

Document details

Collection	Manitoba — Debates (Hansard)
Citation	30-1-la7
Type	hansard
Volume / chapter	30th 1st hansardpdf la7.pdf
Language	en
Format	pdf
Source	PROVINCIAL
Identifier	75f6cd6c24657fe3b862197cb94b6c3a7c4215ca

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