Manitoba Hansard — Sitting 31B (32nd Legislature, 2nd Session)

32-2-31b

Manitoba — Debates (Hansard)

ISSN 0542-5492 Second Session - Thirty-Second Legislature of the Leglslatlve Assembly of Manitoba DEBATES and PROCEEDINGS 31-32 Elizabeth II Publlahed under the authority of The Honourable D. Jame• Walding Speaker VOL. XXXI No. 318 -8:00 p.m., TUESDAY, 22 MARCH, 1983.

MANITOBA LEGISLATIVE ASSEMBLY Thirty-Second Legislature Members, Constituencies and Political Affiliation Name ADAM, Hon. A.R. (Pete) ANSTETT, Andy ASHTON, Steve BANMAN, Robert (Bob) BLAKE, David R. (Dave) BROWN, Arnold BUCKLASCHUK, John M. CARROLL, Q.C., Henry N. CORRIN, Brian COWAN, Hon. Jay DESJARDINS, Hon. Laurent DODICK, Doreen DOERN, Russell DOLIN, Mary Beth DOWNEY, James E. DRIEDGER, Albert ENNS, Harry EVANS, Hon. Leonard S. EYLER, Phil FILMON, Gary FOX, Peter GOUR LAY, D.M. (Doug) GRAHAM, Harry HAMMOND, Gerrie HARAPIAK, Harry M. HARPER, Elijah HEMPHILL, Hon. Maureen HYDE, Lloyd JOHNSTON, J.

Frank KOSTYRA, Hon. Eugene KOV NATS, Abe LECUYER, Gerard LYON, Q.C., Hon. Sterling MACKLING, Q.C., Hon. Al MALINOWSKI, Donald M. MANNESS, Clayton McKENZIE, J. Wally MERCIER, Q.C., G.W.J. (Gerry) NORDMAN, Rurik (Ric) OLESON, Charlotte ORCHARD, Donald PAWLEY, Q.C., Hon. Howard R. PARASIUK, Hon. Wilson PENNER, Q.C., Hon. Roland PHILLIPS, Myrna A. PLOHMAN, John RANSOM, A. Brian SANTOS, Conrad SCHROEDER, Hon. Vic SCOTT, Don SHERMAN, L.R. (Bud) SMITH, Hon. Muriel STEEN, Warren STORIE, Jerry T. URUSKI, Hon. Bill USKIW, Hon. Samuel WALDING, Hon. D. James Constituency Ste.

Rose Springfield Thompson La Verendrye Minnedosa Rhineland Gimli Brandon West Ell ice Churchill St. Boniface Riel Elmwood Kildonan Arthur Emerson Lakeside Brandon East River East Tuxedo Concordia Swan River Virden Kirkfield Park The Pas Rup ertsland Logan Portage la Prairie Sturgeon Creek Seven Oaks Niakwa Radisson Charleswood St. James St. Johns Morris Roblin-Russell St. Norbert Assiniboia Gladstone Pembina Selkirk Transcona Fort Rouge Wolseley Dauphin Turtle Mountain Burrows Rossmere lnkster Fort Garry Osborne River Heights Flin Flon Interlake Lac du Bonnet St.

Vital Party NDP NDP NOP PC PC PC NOP INO NDP NDP NDP NDP NDP NOP PC PC PC NDP NOP PC NDP PC PC PC NDP NDP NDP PC PC NOP PC NDP PC NDP NDP PC PC PC PC PC PC NDP NDP NDP NOP NOP PC NDP NDP NDP PC NDP PC NDP NDP NOP NOP

LEGISLATIVE ASSEMB LY OF MANITOBA Tuesday, 22 March, 1983 Time - 8:00 p.m. CONCURRENT COMM ITTESS OF SUPPLY SUPPLY - CO-OPERATIVE DEVELOPMENT MR. CHAIRMAN, C. Santos: Order please. We are in the mids t of considering

Section 2.(a) (1) and (2). The Member for Minnedosa. MR. D. BLAKE: Thank you, Mr. Chairman, I'm not too sure where we left off now. I think the Minister was explaining to us the stabilization fund, the Credit Union Stabilization Fund. The stabilization board now is compris ed of representatives appoi nted by the government, is that correct? MR. CHAIRMAN: The Honourable Minister. HON. J. BUCKLASCHUK: The mem bers of the board are appointed by an Order-in-Council but two of the members are recommended by central. MR. D. BLAKE: Mr.

Chairman, I wonder if the Minister could tell us what the assets in the credit union system are, I should say liabilities I guess because the loans are assets and deposits are liabilities, could you tell me wha t the deposit pic tur e of the credit union movement in Manitoba is? From their last statement is close enough, Mr. Chairman. HON. J. BUCKLASCHUK: Yes, a round figure for their assets would be about $1 .25 billion. MR. D. BLAKE: And these funds are guaranteed by the stabilization fund? HON. J. BUCKLASCHUK: The stabiliza tion fund guarantees the claims on deposits by the mem bers. MR. D.

BLAKE: Without limit? HON. J. BUCKLASCHUK: There is no limit within The Credit Union Act. MR. D. BLAKE: So what you're saying is that the $1 .25 billion is guaranteed by the Province of Manitoba? HON. J. BUCKLASCHUK: I suppose one could say that the guarantee is similar to the CID C in that the sum in the CID C fund guarantees the deposits that far exceed that amount. Perhaps I could just clarify the statement I made previously with respect to the fund.

I did indicate that the fund is maintained through levies charged to individual credit unions and through ether borrowings as may be required to meet their obligations. While the Government of Manitoba is not obligated by stat ute to gu aran tee dep osits or investments in credit unions, the government has, in the last year, loaned $29.5 million on an interest-free basis to the stabilization funds to guarantee their stability.

I would wish to assure you that the Government of Manitoba is committed, together with the credit union syste m, to continue to ensure the stability of the Credit Union Stabilization Fund and the Les Fends de Securite des Caisses Populaires. 994 MR. D. BLAKE: Would it be correct to say that these funds, this $1 .25 billion, are guaranteed without limit by the Province of Manitoba? HON. J. BUCKLASCHUK: The deposits of the mem bers are guaranteed without limit by the Credit Union Stabilization Fund. MR. D. BLAKE: And the Stabilization Fund that we just lent $29.2 million to, to shore it up? HON. J.

BUCKLASCHUK: The two Stabilization Funds were loaned $29.5 million. MR. D. BLAKE: If there were calls on the Stabilization Fund, above and beyond that $25 million, the province would have to continue to provide funds to guar antee those deposits? HON. J. BUCKLASCHUK: I had indicated previously that the province, through its actions in the past, has indicated a commitment to continue to ensure the stability of the two funds. MR. D. BLAKE: I'm looking at an ad, Mr.

Chairman, which brings it to my attention on an RASP with one of the credit unions - it was an ad in the Free Press on February 23rd - "Deposits are guaranteed without limit by the Manitoba Stabilization Fund." Would that be a correct statement? MR. CHAIRMAN: Could you read it again? MR. D. BLAKE: "Deposits guaranteed without limit by the Manitoba Stabilization Fund." HON. J. BUCKLASCHUK: That is essentially correct. MR. D. BLAKE: So this becomes a liability to the Province of Manitoba then on all credit union funds on deposit? HON. J. BUCKLASCHUK: The liability is to the Credit Union Stabilization Fund. MR. D.

BLAKE: That's right. The Minister just indicated that all funds are guaranteed by the Stabilization Fund. So what you're saying is that all funds of the credit union are guaranteed without limit by the Province of Manitoba? HON. J. BUCKLASCHUK: No. When all of the other lending institutions, Mr. Chairman, are limited to - it's

Tuesday , 22 March, 1983 now $60,000 which was a long time in prodding the Federal Government into increasing that - it seems if they are limited to a guarantee of $60,000 per depositor, that it's a little unusual that all of the funds in the credit union would be guaranteed without limit. MR. CHAIRMAN: The Member for Minnedosa has a question. MR. D. BLAKE: That's right. I'm just at a bit of a loss here now.

The Minister is saying that the Stabilization Fund is guaranteeing those deposits but we've just lent the Stabiliz ation Fund $29.5 mi llion to cover the guarantees or the losses that they have suffered up to date. Should they suffer further losses, where will the Stabilization Fund get its funds from? HON. J. BUCKLASCHUK: First of all, I think there is a correction there. The $29.5 million was not to cover losses. It was to stabilize the fund and there is a distinct difference. MR. D. BLAKE: What is the distinct difference, I just can't catch it? HON. J.

BUCKLASCHUK: The interest on those monies is what is being used to maintain viability or to stabilize the Stabilization Fund, not the actual amount itself. Nor were these necessarily to be applied to losses but they could be applied and are being applied, as a matter of fact, to carry on some monitoring of the credit union system. MR. CHAIRMAN: Does the Minister have anything to add? Mr. Minister. HON. J. BUCKLASCHUK: The 25 million or 29.5 - whichever one you would like to look at - these figures are shown as assets of the funds. MR. D. BLAKE: I can understand, Mr.

Chairman, the loan process, but what if there were a run on credit union funds and there was a demand for withdrawal of funds of $500 million? Can the Stabilization Fund provide that kind of money and that protection to the depositor? HON. J. BUCKLASCHUK: The Member for Minnedosa creates a highly unlikely situation. But should that event occur, there is provision within the Act, as passed by - and I don't need to remind the members - the previous adm inistration, to stabilize a system in the event of massive runs.

It is the same thing as applies to the CDIC and that is that withdrawals would be delayed for up to 90 days. MR. D. BLAKE: What the Minister is saying is that all deposits in the credit union system of Manitoba are guaranteed without limit by the people of Manitoba. Is that what he's saying to us? HON. J. BUCKLASCHUK: No, I did not say that. I had said tha t the dep osits are gua ranteed by the Stabilization Fund. MR. D. BLAKE: But the province is gu aranteeing the Stabilization Fund. Am I correct on that assumption? 995 HON. J. BUCKLASCHUK: I did not say the province would guarantee the Stabilization Fund.

I had indicated that the province is committed, along with the credit union system, to continue to ensure the stability of the two funds. MR. D. BLAKE: Would the Minister say then, that this ad is somewhat misleading, saying the deposits are all guaranteed without limit by the Stabilization Fund? HON. J. BUCKLASCHUK: I'm informed that is clearly what the Act indicates, that the deposits are guaranteed by the Stabilization Fund. MR. D. BLAKE: Providing the province provides funds to the Stabilization Fund to meet their guarantee? HON. J.

BUCKLASCHUK: The Stabilization Fund, of course, is limited to the funds that it can raise, whether it be from the individual credit unions through levies, or through borrowing. Just continuing on that, I had indicated that the limit would be the limit to which the Credit Union Stabilization Fund could borrow, but it can borrow from a number of sources. It can borrow from the open market. It can borrow from government, as it did in the past year. It can borrow from Central, or it can borrow from CCCS.

Again, I think it's important that we clearly understand tha t the Go vernment of Ma nitoba, while not guaranteeing the deposits, is comm itted together with the credit union system to continue to ensure the stability of the Stabilization Funds. MR. D. BLAKE: So, the Minister is saying that deposit funds with the credit union movement are guaranteed without limit by the Province of Manitoba? HON. J. BUCKLASCHUK: Guaranteed without limit, but not by the province; but by the Stabilization Fund. MR. D. BLAKE: Well, I'm getting somewhat confused, Mr. Chairman.

God forbid that this should ever happen or ever come to pass, but you have to look at the facts as they're before us. Looking at the ultimate, if there was a tremendous run on credit union funds and the government could not get passed in the Legislature to lend them another $29 million or $50 million or $100 million, whatever they needed, then where is the depositor? HON. J. BUCKLASCHUK: Well, should that unlikely event occur, as I indicated before, the Stabilization Fund has a number of other sou rces from which it could borrow, and that is from the open market, from Central, or from CCCS. MR. D.

BLAKE: Could they borrow a billion dollars? HON. J. BUCKLASCHUK: That's a very hypothetical question. I don't know what the liquidity pool is for CCCS, but just maybe to go back to the Stabilization Fund . I guess I should refer to

Section 137-150, Subsection (2) of The Credit Union and Caisse Populaire Act. Those Acts provided for the establishment of the two funds and stated that these funds will ensure that

Tuesday, 22 March, 1983 funds are available to meet claims by credit union members for withdrawal of savings, deposit or share capital. MR. D. BLAKE: But apparently they couldn't meet that demand and they had to borrow $29.5 million to stabilize the fund or to provide funds. HON. J. BUCKLASCHUK: That again is an assumption that I'm certainly not willing to agree with. I don't know offhand if they went to the open market, if they went to Central, if they went to CCCS. I do know that they approached the government and the loan was granted. MR. D.

BLAKE: I realize that and it was granted interest-free which - I see an item of $4,800,000 down below to cover the interest, the forgivable interest on that loan. Had that loan not been granted the Credit Union Stabilization Fund would have been in difficulty, is that correct? HON. J. BUCKLASCHUK: I'm not aware that they didn't have these other options open to them.

The situation that the Member for Minnedosa keeps putting before us with respect to massive withdrawal of funds and how the the Stabilization Fund handles that type of situation is not at all unlike what would happen in the banking sector if the depositors within the banks took massive withdrawals of their deposits. I don't know what the figure on the CDIC is, I recall seeing the figures during the trust company problems in Ontario.

Those were increased somewhat but I'm sure that, relative to the assets in the banks, the situation is probably very similar to what it is with the Stabilization Fund relative to deposits in the credit unions. MR. D. BLAKE: I can't really accept that as being about the same, Mr. Chairman, becuase there was a run in Quebec a while ago and, of course, we've seen what's happened with the trust companies in the recent fiasco in Ontario which prompted the government into some drastic action they should have taken some time ago.

What I'm saying when a customer sees an ad like this that says deposits guaranteed without limit, when the largest financial institutions in the country can only say to the customer you're guaranteed up to $60,000 -that's a pretty broad brush to use in an ad such as that. I'm trying to say to the Minister, are these funds guaranteed without limit or are they misleading the public in saying they'r e guarant eed without limit. Because I don't think they are guaranteed without limit by the Stabil izat ion Fund or by the Provinc e of Manitoba. HON. J.

BUCKLASCHUK: I don't think that particular advertisement is misleading. The funds are guaranteed by the Stabilization Fund and I'm rather perplexed or non-plussed as to why there is this concern since it was the previous administration that brought this Credit UPion Act into being, that did not establish any limits. MR. D. BLAKE: I don't think that's relevant at all, Mr. Chairman, about what gover nment brought it in.

I'm looking at an ad that appeared last February saying they're guaranteed without limit, when the largest 996 financial institution in the country can only say to the customer, "You're guaranteed for $60,000.00." Now we all know the variances. You can use three accounts, or joint accounts, or whatever, but I don't think that's a statement that should be thrown around with wild abandon that all of these depositors are guaranteed wilhout limit and nobody in the financial circles are concerned about the compe titive feature, they're well enough able to look after themselves.

What I'm saying is I don't feel that's a justifiable statement that these funds are guaranteed without limit, looking at the ultimate and most wild situation that hopefully may never happen. HON. J. BUCKLASCHUK: I will respond again. I think it is relevant. It is legislation that was brought in by the previous administration and I will repeat again, that our government is as committed, together with the credit union system, to continue to ensure the stability of the Stabilization Fund in much the same way as the Federal Government is committed with the banking system to ensure the stability of the CDIC. MR. D.

BLAKE: Up to $60,000 per depositor. HON. J. BUCKLASCHUK: Or $1 20,000 or $1 80,000.00. MR. D. BLAKE: Well, whatever its variations, but not an unlimited amount of $2 million. That is something that has to be looked at by future governments.

You can't commit governments 20 years down the road - and the credit unions are still going to be here and they're still going to have the Stabilization Fund, but governments do change and their attitudes may change and this statement may not be relevant 10 or 15 years from now where that customer has put the money in there with the full knowledge that he's guaranteed without limit. HON. J. BUCKLASCHUK: Well okay, to that I'll respond that the commitment or the lack of any limit was the re sponsi bility of the pr evious admi nistra tion.

I'd indicated before that we are presently reviewing credit union legislation. There is a Review Comm ittee that will be bringing forth amendments and we will consider that. MR. D. BLAKE: That's right, there's no argument there. What the Minister is saying is that the depositors are guaranteed without limit by the government. HON. J. BUCKLASCHUK: No, by the Stabilization Fund and there is a distinct difference between that and the government. MR. CHAIRMAN: Are we chasing our tails? MR. D. BLAKE: I just haven't got the Stabilization Fund there, Mr.

Chairman, clear, when the gover nment has just lent them $29.5 million. Why wouldn't they have gone to the market and borrowed the $29.5 million instead of coming to the government? HON. J. BUCKLASCHUK: Yes, at the time that the request for the loan was entertained, the Stabilization

Tuesday, 22 March, 1983 Fund was part of the credit union system. The mem bers are aware, I am sure, it was the previous administration that was involved in the initial discussions leading to that loan and we ju st followed through with the discussions. MR. D. BLAKE: Yes. I am not fau lting that, Mr. Chairman. The argument is not there. I am saying with that ad, they should also put the proviso in that the taxpayers of Manitoba are paying out $5 million a year to subsid ize the loan and to stabilize the fund that is guaranteeing them without limit. HON. J.

BUCKLASCHUK: Well, it is correct that the Stabilization Fund guarantees those deposits. It is also correct that the interest from the loan is maintaining the stability of the Stabilization Fund. Is the Member for Minnedosa suggesting that the ad should have indicated, all deposits guaranteed without limit by the Stabilization Fund. which in turn is supported by the Provincial Government to the extent of $5 million? MR. D. BLAKE: Something to that effect might have been a little more in keeping, or something that maybe wouldn't have attracted my attention as much as that particular ad did, Mr. Chairman.

The scenarios that we drew before about runs on the fund, and I don't want to see it happen because they may call my mortgage and I am in no position to liquidate it until I get my pension. MR. CHAIRMAN: The Member for Radisson. MR. G. LECUYER: All this Act says is our monies placed in RRSP's are guaranteed without limits and, of course, no one is allowed to place unlimited amounts. Nobody can place an unlimited amount of money in an RRSP on an annual basis. I mean, we are fixed on a maximum of $3,500 and it seems this

article only talks about RRSP's. MR. CHAIRMAN: The Member for Minnedosa. MR. D. BLAKE: Yes, Mr. Chairman. I can bring the mem ber another bulletin that says, "Deposits are guaranteed without limit," issued by my local credit union. I brought it to the manager's attention that I thought maybe he shouldn't use that in every bulletin he puts out. MR. G. LECUYER: Maybe what the Mem ber for Minnedosa is saying is the manager from his own credit union is doing some false adver tising. MR. D. BLAKE: Well, it confirmed it when I saw this, Mr. Chairman. MR. G.

LECUYER: Yes, but I was also starting to wonder if we were actually seeing some kind of free wheeling advertising of this nature being branded about. But in this particular case. and it does coincide with the getting down towards the deadline for application for RRSP's and this one says in big letters, just prior to - in fact the last few words before it says "unlimited amount" it says in big letters RRSP's, so I take it to 997 mean that this

article only refers to monies placed on deposit for RRSP's. MR. D. BLAKE: Well, if that were the case then, Mr. Chairman, someone depositing the maximum of $3,500, or whatever they might be allowed to put in for 25 years, they're going to be in excess of the amounts guaranteed by the Canada Deposit Insurance and other financial institutions. MR. G. LECUYER: Provided indeed that they were placing their maximum allowable amount and did it every year, yes, which is again another possibility, not necessarily a probability. MR.

CHAIRMAN: What is the pleasure of the committee with respect to Item 2.(a)(1 ) and 2. (a)(2)? MR. D. BLAKE: Pass them down to (b). MR. CH AIRMA N: 2.( a) (1)-p ass; 2. (a)(2)- pass; 2.(b)(1)-p ass. No, the Member for La Verendrye. MR. R. BANMAN: Thank you, Mr. Chairman. The department has entered after the loan has, I understand, entered into an inspection program as was part of the agreement made when the assistance was granted to the Credit Union Caisses Populaires system.

I wonder if the Minister could give us, maybe some of the figures as far as the number of additional staff man years that he has either got in that particular appropriation, how many people are coming on stream, and whether or not the ins pection system as agreed to by the government and the Central is now under way? MR. CHAIRMAN: Mr. Minister. HON. J. BUCKLASCHUK: Yes, with respect to staffing within the examinations branch, I am informed that four positions had been approved in the '81, '82 Estimates. Five new positions were approved in '82, '83, during the year, four of these have been filled.

There is presently one vacancy. There will then be a total of nine examiners. MR. R. BANMAN: I wonder if the Minister could give us an update as to the role that these inspectors or this inspection team is playing with regards to dealing with the central. HON. J. BUCKLASCHUK: Yes, if the member will permit, I will take a minute or two on this. With respect to the exam ina tion program, the objective of the examination process is to provide a diagnostic review of Credit Union Caisses Populaires operations. assessing the general health of the operation and identifying problem areas.

The scope of the examination will be comprehensive, will deal with all apects of the Credit Union Caisses Populaires, including credit granting and deposit raising functions, the management information systems, personnel human resource management and marketing strategy. The examination report covering the result of the examination will be presented to both the Credit Union

Tuesday, 22 March, 1983 Caisses Populaires Board and to the Stabilization Fund for remedial action, and Central as well. MR. R. BANMAN: Have the inspections started? HON. J. BUCKLASCHUK: Yes, the inspections started in the latter part of '82. Two credit union examinations have been comple ted an.d a thir d one is being completed this month. MR. CHAIRMAN: The Member for La Verendrye. MR. R. BANMAN: They inspected the Credit Union Central, South? HON. J. BUCKLASCHUK: The Credit Union Central is being examined this month. I believe I can give you the complete information.

I had indicated that two had been completed and one was ongoing. There are an additional two credit union examinations taking place during this month. So, in fact, a total of five will have been completed by the end of this month and Central and La Feder ation. MR. R. BANMAN: In these inspections, is the inspection team proofing the loans? In other words, are they going in and going through the loan portfolio to assure themselves that the loans are properly secured? HON. J. BUCKLASCHUK: The examination program goes into detailed examination of the loan portfolios. MR. R.

BANMAN: I'd just like to comment on that, Mr. Chairman, I think that becomes a very important aspect.

From a straight accounting point of view, I think many of the credit unions and caisses populaires can balance their books without having the inspectors of government in, but I think it is an important function of this inspection team to make sure that they do proof the loans and make sure that the loans are in good standing and do have the collateral and that we don't get ourselves into a situation where, even though the loan itself on paper might look good, the actual securities and that should be checked out to make sure that in areas where there are credit unions that are having difficulty, the true picture is really shown.

I would urge the Minister to make sure that these inspection teams do proof the loans as much as possible to ensure his department and all the people involved with the credit union and caisses populaires movement have good solid - that the paper they carry is as well secured as possible. HON. J.

BUCKLASCHUK: The points are well taken and, as I indicated, there will be a rigorous examination of the loans at the credit union level and, in addition, there is the examination at the central level as well as a loan committee, so that there is a better handle on the quali ty of the loans that are being made and maintained. MR. R. BANMAN: Two questions. I wonder if the Minister could tell us, in the number of credit unions that they have done, first of all, are they checking the credit unions that are in deficit position.

Is that one of the criteria they're using in establishing which credit unions they're inspecting right now? The other question is, is the Minister satisfied that the Credit Union Central will have the ability to take the necessary corrective measures to make sure that policies are implemented to deal with any problems that crop up or that the inspections reveal. HON. J. BUCKLASCHUK: In answer to the question as to which types of credit unions were initially examined - the first three examinations were testing the program and a cross

section of the credit unions were examined. Subsequent to the program being tested and accepted, priority will be given to deficit credit unions. With respect to what will happen upon receipt of these examinations, there is a commitment from the local credit union boards that they will assist in rectifying weak nesses tha t may be detect ed. Ther e is a commitment from the Central that they will strengthen their staff in those areas where assistance will be required.

There is a commitment from the Stabilization Funds to provide whatever services are needed to strengthen the stability of that particular credit union. So we have commitments from three different areas. MR. R. BANMAN: Just a small point. Has the Minister instructed the inspection teams to - for lack of better words - descend on a cred it union without prior notification to make sure that there is no prior warning, that is to say, to the credit union that is going to be inspected? HON. J.

BUCKLASCHUK: The credit unions will be examined after consultation with the Stabiliization Fund but with no warning to the credit unions involved. When I used the word "warning", in a sense I meant that they won't be notified that two weeks hence they can expect an inspec tion. Wha t will ha ppen is, after consultation with the Stabilization Fund, the examination team will move to that credit union and will sit down with the management and explain what the whole process is about and will carry out their examination.

It's not a situation where they' re going to do an examination and then after, relate to them what they've been up to. 998 MR. D. BLAKE: To follow that along, surely there is an inspection system within the system whereby they do annual inspections or whatever time frame is given, where they do arrive at the credit union and inspect it without warning - the routine inspections of the functions of an actual credit union. I maybe should have used the word, Mr. Chairman, "audits", rather than inspections. HON. J. BUCKLASCHUK: There has always been a requirement for an external audit, and these audits will continue.

The examinations that we are referring to are operational examinations that will go into great depth as to the operation of the credit union. I should add that they will not necessarily be every year because of the number of credit unions involved and the staff that is available. It may well be that they'll be covered once every two years or three years. MR. D. BLAKE: But these are regular audits where they check the physical assets; they count the cash

Tuesday, 22 March, 1983 and make sure that somebody hasn't absconded with $20,000 of the credit union's assets. Those internal audits are done regularly on that basis. HON. J. BUCKLASCHUK: All credit unions have an annual external audit. The larger credit unions have the internal financial audits, Sir, I suppose you'd call them financial examinations. These smaller credit unions do not necessarily have th ese internal financia l examinations. MR. D. BLAKE: But they do have the external? HON. J. BUCKLASCHUK: They have the external. MR. D. BLAKE: That's fine, Mr.

Chairman, my local credit union manager wears a beard, and I'm always a little suspicious of people with beards. I want to make sure that he was being checked somewhere along the line. A final question, Mr. Chairman.

There's legislation presently before the Agricultural Committee of the Federal House in Ottawa, which would allow for loan and default, or in the farming commun ity would allow for a judge to come in and adjudicate the particular situation and either relieve some of the debt, or make some recommendations on how the loan could be liquidated, which may put the credit union in a loss picture, or they may be able to recover their funds. Does the credit union movement suppor t th at legislation? HON. J.

BUCKLASCHUK: Well, up until now, we've had no formal commun ications from the Central as to their concern, but I'm sure they will be reviewing the proposed legislation and if they do have concerns, they will be notifying us or discussing them with us. MR. D. BLAKE: Fine, Mr. Chairman. MR. CHAIRMAN: The Member for La Verendrye. MR. B. BANMAN: Yes, Mr.

Chairman, through you to the Minister, there has been in the past number of years, a certain feeling within some groups of the credit union movement that outside audits should be required and made mandatory, in other words, that a chartered accountancy firm should go in and provide a statement of the credit union and that should be mandatory. I don't know, I think Saskatchewan requires that. Is there any move by the government to possibly implement that kind of a policy? HON. J. BUCKLASCHUK: Yes, all credit unions are su bject to an external audit ann ua lly; that's a requirement of legislation.

At the present time, the external auditors are used as agents of the Stabilization Fund. Of course, they report their findings to both the local and to the Stabilization Fund. We are reviewing the possibility of having the external auditors report to the local credit union. I don't know if that's what the Member for La Verendrye was getting at. MR. CHAIRMAN: 2.(b)(1) - pass; 2.(b)(2)- pass. Resolved that there be granted to Her Majesty a sum not exce eding $1 ,460 ,200 for Co- operative 999 Development for the fiscal year ending the first day of March, 1984- pass. No. 3.(a) - the Member for La Verendrye. MR. R.

BANMAN: Thank you, Mr. Chairman. The first question I'd like to ask the Minister is one that I guess is starting to trouble a lot of people with regard to CCIL. Who is running that company and who is making the decisions with regard to the direction this company takes in financing? I'm not talking about the day-to day operations of the company. But, who sits on the board of directors that now makes the decisions? MR. CHAIRMAN: Mr. Minister. HON. J.

BUCKLASCHUK: Under the 1978 and 19 82 agreements, Co-op Implements' affairs were managed by an admin istrative commit tee consisting of government co-op groups and C.I. representatives. The Government of Manitoba took the position that the administrative committee role should be changed to that of the banker, and the management responsibility should be that of the Board of Directors of C.I. This proposal is now adopted and consent of all parties to the agreement is expected later on this month.

At the present time, the administrative committee consists of a representative from Co-op Implements, two representatives from the Government of Canada, three representativ es from the co-op groups - I should have said two from Co-op Implements - as well as one from the Saskatchewan Government and the Manitoba Government as I mentioned previously. The new board will consist of 13 members, of which 7 will be from C.I., 4 will be from the co-op groups and 2 from government - one federal, one provincial, as requested by the Federal Government. MR. R.

BANMAN: The seven mem bers on the board from Cl, will they be elected at the annual meeting of Co-op Implements? HON. J. BUCKLASCHUK: The seven directors from Co-op Implements will be the seven members from the present Board of Directors and they are elected. I was just going to continue, that the Member from La Verend rye had made a comment previously about C.I. not being a co-operative. I think this particular move will make it much more so of a co-operative. MR. R.

BANMAN: Will this new board be em powered to make all the decisions with regard to the sale of assets of C.I., the acquisition of new assets, everything to do with the major decisions of running this company, without any strings attached as far as the Federal Go vern ment and the Go ver nme nts of Ma nitoba, Saskatchewan and Alberta? HON. J. BUCKLASCHUK: Under the new agreement, the new Board of Directors will assume full management responsibility under the '78 and '82 agreements, and all caveats as to the lenders' securities will remain as per the previous agreements. MR. R.

BANMAN: Has C.I. requested additional loans or guarantees from either the Federal or Provincial

Tuesday , 22 March, 1983 Governments, and I wonder if the Minister could tell the comm ittee whether or not there have been indications that the province would be willing to put more money into this particular venture. HON. J. BUCKLASCHUK: It's a hypothetical question. Certainly, with respect to the province, there has been no approach for any further loans and I'm not aware of any approach tb the Federal Government. MR. CHAIRMAN: The Member for Minnedosa. MR. D. BLAKE: Just one question.

What rate of interest is being charged to Co-op Implements or what rate of interest is being charged on the forgiveness portion of that Joan? What rate is it being computed at, I should say. HON. J. BUCKLASCHUK: The interest has been calculated and it shows on 3.(

a) that it will be at 14.5 percent. That is the Farm Credit Corporation rate and it's variable. MR. CHAIRMAN: The Member for La Verendrye. MR. R. BANMAN: Could the Mini ster inform the comm ittee how the statement of CCIL washed out last year? HON. J. BUCKLASCHUK: As repor ted in the press, C.I. had about a $10 million deficit in the previous year. MR. R. BANMAN: What is the projection for this year's operation? HON. J. BUCKLASCHUK: I would have to consider that knowledge as being privi leged and confidential. MR. R. BANMAN: I guess, Mr.

Chairman, this is the dilemma we find ourselves in when we're dealing with a comp any th at has received funds thr ough the Manitoba Development Corporation, or is a Crown corporation, which in essence this one has been for the last two or three years, because it's been run by government and really wasn't a true co-operative. I see the Minister is now moving to put it back into the hands of the co-op movement.

While on the one hand one doesn't want to damage the com petitiveness of this particular company in relationship to its competitors, there is an obligation on behalf of members of the Legislature to ensure that these some half a million dollars right now that we are being asked to pass in this Budget, as well as the outstanding indebtedness which runs into the millions of dollars, that there is some indication to the members of what the state of the particular company is in. Therefore, I would wonder if we are looking at possibly being approached by C.I. in the very near future.

From looking at the statement and a knowledge of what the operating budgets are, the Minister must have some idea whether or not the company will be running into cash-flow problems or is running into deficit problems as far as this year's opera tion is concerned. I would appreciate some information with regard to the company , so that we don't find out two weeks from now that they've come and asked for more money because it didn't look that good. HON. J.

BUCKLASCHUK: First of all, C.I. is not a Crown corporation, it is a private company and to disclose its internal projections would be a breach of confidentiality. I think that there is a parallel here to a farm corporation making a loan from MACC which is also public funds, and I don't expect the Member for La Verendrye would expect me to go into the financial projections for a farmer who has made a loan from MACC. MR. R. BANMAN: The Minister must realize there is a distinction between a private corporation.

What, in essence, has happened is th at the Federal and Provincial Governments have run this company for three years. The co-op movement itself hasn't been in control of this and I speak from previous knowledge about the matter. It was really the governments that were running this particular company, so it's not like somebody just borrowing money from MD C or from MACC or FCC - it is a little different. The government had direct input into the operation decisions that were being made.

I say to the Minister that while I appreciate that you don't want to damage the competitiveness of this particular com pany, there are people who were appointed to this by the different levels of government who were involved and charged with the responsibility of making decisions. I would point out to the Minister that none of the big decisions about what happened with this company were made unless the admin istrators who were appointed to it would give their agreement to it, whether it be the purchase of White Tractor or some thing else that they were dealing with.

Those decisions were made by people who were appointed politically and not by people who were elected by the co-operative itself. HON. J. BUCKLASCHUK: Again, I would have to reiterate that C.I. is not a Crown corporation; it is a private company. C.I. made the approach to government for a loan, I believe, it was in 19 78; C.I. approached the government for additional loans in 1982. Certainly there was an administrative comm ittee but there was also a board of directors and C.I. was represented on those two bodies. Governments were a minority on those bodies. MR. R.

BANMAN: I wonder if the Minister would confirm - he may want to consult with his staff - that the decisions were made by the individuals who were appointed by government. HON. J. BUCKLASCHUK: I will confirm that decisions were made by the administrative committee, but that was only within the framework of the agreements that were entered into in 1978 and 19 82. The fact that governments had representat ion on the administrative bodies does not make Co-op any less of a private comp any and when we'r e dealing with pr ivate companies the internal financial situation is privileged information. MR. R.

BANMAN: Since it's a co-operative, I guess, if a person is a member one can get the statement 1000

Tuesday, 22 March, 1983 from them and get the information from them, so I don't see that as being a big problem. The only point I'm making is that for the last number of years, it was appoint ees of gov ernme nt that were running this particular company and the elected board was really not involved in the larger sphere of docision-making, which means that a lot of the decisions that were made, were made because the government had their people in place. The thing that I'm after right now is, of course, the bottom line with regard to Co-op Implements. There are a lot of people employed out there.

There are a lot of farmers who do have equipment and are working their farms with this equipment and, of course, require continued parts service, so the viabi lity of Co-op Implements is of concern to all of us. The question that has to be asked now is, in light of the losses last year based on a projection over the next number of years, what does the Minister feel the future holds in store for us. Does it look like the appropriation which we are being asked to pass here will be less next year? Is there a bright spot in C.l.'s future? In other words, what is the budget?

I guess I can't help but ask the question, what does the current projected budget look like? Is it good? Is it bad? Are we going to be asked to provide more money next year? What does it look like? HON. J. BUCKLASCHUK: With respect to the question about - I presume it's that $431 ,000 figure - this is the interest that is applicable to the loan. As the Member for La Verendrye likely knows, this is part of a five year agreement, so there may be some variation of that amount depending on the FCC rate - but there will be a figure in there for a five-year period.

With respect to the future of C.I., management has expressed some optimism. MR. CH AIRMAN: Wh at is the pleasure of the Comm ittee? MR. R. BANMAN: I wonder if the Minister could tell us - not an exact figure but an approxima te figure - what the total forgiveness in interest this year by Manitoba, Saskatchewan and the Federal Government would be. We're being asked to pass $43 1,0 00 here. Ho w much would the Federal Go ver nment, the Saska tche wan Go ver nment and the Alberta Government be providing in in terest relief to this company? HON. J.

BUCKLASCHUK: The provincial investments of the three provinces is $7 million; if we take 14 .5 percent of that, that's about $1 million; $1,015 ,000.00. MR. B. BANMAN: So you 're sa ying between the provinces, we're looking at providing about $1 million? How about the Federal Gover nment? HON. J. BUCKLASCHUK: The Federal Government's investment is about $6.4 million, so 14 .5 percent of that would provide you with some idea. MR. B.

BANMAN: Then we're looking at a total figure between the three Provincial Governments and the 100 1 Federal Government of about a $2 million interest relief or subsidy a year for the company? When do es the Mini ster expect that the new structured board, 13-member board, will be in place? HON. J. BUCKLASCHUK: If all parties agree to the proposed resolution, the composition of the board as I had previously referred to, the new board of directors would be in place sometime early in April. MR. B. BANMAN: One final question.

Does the Minister feel that he wants to tell the Comm ittee what this next year's outlook looks like for C.I.? HON. J. BUCKLASCHUK: Well, as I've ind icated before, management had expressed optimism. I believe there is a new swather that they're bringing out on the market this year and it's hoped that there will be demand for this product as it's a very large implement. MR. CHAIRMAN: 3. (a)- pass; 3. (b). The Member for Minnedosa. MR. D. BLAKE: Mr. Chairman, I want to know also the rate of forgivable interest on this one. I notice the figure is increased from last year.

Now, whether it could be a portion of the year, or were they estimating an increase in interest rates when interest rates are sliding down somewhat, I wonder if the Minister could give us those figures. HON. J. BUCKLASCHUK: Yes, the member is quite correct. The interest forgiveness for last year was slightly less than they estimated for 1983-84. The interest forgiveness covers a period from July to the end of March. With respect to the interest rate, and this is the rate I understand that is established for the duration of the loan, that is 14 718. MR. D. BLAKE: 14 718.

I understand the terms of the loan, it was a five-year term, with interest forgivable over five years. Could the Minister indicate to us, at the end of the five-year term is there good possibility of those funds being returned to the government? HON. J. BUCKLASCHUK: The credit union assistance projection shows that there is a good possibility that at that time, they will be in a position to repay the loan. MR. D. BLAKE: They drew down the full $29.5 million with the caisses populaires, the credit union. They drew down the full amount. HON. J.

BUCKLASCHUK: With respect to the two loans, the $25 million to the Stabilization Fund and the 4.5 to the Fonds de Securite - the monies were loaned to those two funds, reinvested in Province of Manitoba debentu res, and the interest from those debentur es is paid to funds, I believe, on a quarterly basis. MR. D. BLAKE: So they, in effect, didn't borrow the funds. They're borrowing the int erest off them each year? HON. J. BUCKLASCHUK: In effect, the interest from those debentures is maintaining the stability of the Stabilization Fund.

Tuesday, 22 March, 1983 MR. D. BLAKE: What is the term of the debentu re, and what rate? HON. J. BUCKLASCHUK: The rate on the debenture is 14 7 /8 percent. MR. D. BLAKE: The rate that you're calculating the forgivable interest at? HON. J. BUCKLASCHUK: That's right MR. CHAIRMAN: The Member for La Verendrye. MR. B. BANMAN: Last year we voted $29.5 million and borrowing authority for the government. Is the Minister saying that the government borrowed $29.5 million to lend to the credit union? HON. J.

BUCKLASCHUK: Well, the exact mechanics of how the $29.5 was obtained - I'm not sure that's within the purvue of this department. I think that que sti on should be add ressed to the Min ister of Finance. A MEMBER: The old shell game. HON. J. BUCKLASCHUK: It's not a shell game. But, in fact, there was a loan made to the funds, and the funds reinvested in provincial debentures, and they are being paid the interest on those debentures. MR. B. BANMAN: Did the credit union ever see $29.5 million? HON. J. BUCKLASCHUK: The Stabilization Funds are the ones that the monies were directed to, not the credit union.

I don't know the exact transact ion, although - (Interjection) - it was a transaction worked by Finance. MR. B. BANMAN: Really, to simplify matters so that the average person on the street could understand it, I guess what has happened is that the government has promised the credit union syste m, interest on $29.5 million at a fixed rate of 14 7 /8 for a five-year period. In other words, they will receive a grant from the government of - whatever. Really, what's happening is they were receiving a grant from the government based on the figures that we've been using here: $29.5 million at 14 718. Is that correct?

HON. J. BUCKLASCHUK: I guess the simplest way to explain it is that, in fact, the $29.5 million was loaned to the funds. Debentu res were purchased in the names of the two funds, and the interest from those debentures is that which keeps the Stabilization Fund stable. The debentur es, I believe, are shown as assets on the books of the funds and the loan would be shown as a liability. MR. CHAIRMAN: The Member for La Verendrye. MR. R.

BANMAN: What we're saying though is that the dollar, if you want to call it the grant, that would be going to the credit union and caisses populaires respectiv ely, will be constant over the next five years, will be paid on a quarterly basis because it will not be ... If you had given them $29.5 million and all they could get on the market on that $29.5 million was now 10.5 percent or 10 percent, but you have said that you have guaranteed them 14 718 percent on $29.5 million for five years. Is that correct? HON. J. BUCK LASCHUK: Yes, essentia lly that is correct. MR. R.

BANMAN: In having a little bit of knowledge I guess some of this was done to accommodate some of the concerns that the Provincial Auditor would have because I don't think the pr ovince cannot giv e somebody an interest-tree loan without attributing some cost factor to it.

What we're really hearing here this evening is that we have guaranteed the system X number of dollars, which we can calculate here very quickly, $4,000,388 for the next four years, unless of course hopefully they will be able to turn their ship around and have a few good years and then, of course, they wouldn't require these funds anymore, that's what we would all like to see. I wonder if the Minister could inform us what his feelings are with regard to the deposit of surplus funds by individual credit unions with the STAB Fund.

In other words, do es he believe th at it sho uld be made mandatory that all credit unions deposit excess funds with the central, which is not the case right now? HON. J. BUCKLASCHUK: With respect to that I'm informed that there are no regulations at the present time that state that a credit union cannot invest outside of the system. However, I'm also informed that the Stabilization Fund must approve all investments outside of the system. The matter that the member refers to has not been reported to us; we have not had a report on this.

But it is some thing that the Review Committee would be looking at should it be brought to our attention. MR. R. BANMAN: The Minister is saying it's not a matter he's dealt with and doesn't plan to pass any regulations in the near future to force credit unions to deposit any surplus funds with the Central. HON. J. BUCKLASCHUK: No legislation would be brought in without due consideration and with consideration of all interested parties, the STAB Fund, the Central, the members. MR. R. BANMAN: Further on there's a technical one.

Can the Mini ster tell us whether tha t can be accomplished without having to pass legislation or having the Minister, by Order-in-Council or some other method, pass regulations with regard to that? In other words, has the Central the authority to do it on their own or would it require government approval? HON. J. BUCKLASCHUK: I'm informed that Central can't put that into their bylaws but then these bylaws would have to be approved by their members which are the credit unions. MR. R. BANMAN: That can be done without any further legislation or regulation on behalf of the Minister.

I guess that's what he's saying. 1002

Tuesday, 22 March, 1983 Another question dealing along the same subject matter. I wonder if the Minister would tell us whether or not a group of credit unions, let's take for example a group of northern credit unions if they were to establish, could form their own Central. We have two Centrals right now, we have the caisses populaires and we have the other credit union Central. Is there a possibility of another group of credit unions establishing another Central? HON. J.

BUCKLASCHUK: I am advised that it would be legally possible for the incorporation of another Central under The Corporation Act, although I don't know what that would accomplish and it would probably be detrimental to the credit union system movement. MR. R. BANMAN: Maybe I'm asking too much and I don't expect the Minister to have this information readily available, but is he saying that the Act would allow a group of credit unions to form their own Central or would there be legislation required in the House to do that? HON. J. BUCKLASCHUK: I must admit I have certainly never faced this question before.

Central is established under The Credit Union Central Act, and I would imagine one would have to have an

interpretation of that Act to see whether, in fact, there is an avenue for another Central to be created. MR. R. BANMAN: The figure we see in the Estimates book with regard to this past year $3,76 1,3 00, is that total amount going to flow this year? HON. J. BUCKLASCHUK: Yes, I think that's a fairly realistic projection. The member may have his Estimates book from the previus year and I think there had been a reduction in the anticipated flow. There was no figure, I'm sorry, that was .. . MR. R.

BANMAN: That's the figure that the credit union system and the Caisses Populaires system will be receiving at the end of this month, I guess, that will be the total amount of money that they will have received from the province as of March 31, 19 82. HON. J. BUCKLASCHUK: They will have received that amount by the end of March but they have already received advanced payments of that amount. MR. CHAIRMAN: 3. (b)- pass. RESOLVED that there be granted to Her Majesty a sum not exce edin g $4,819 ,5 00 for Co -ope rative Development for the fiscal year ending the 31 day of March, 1984- pass. 4. (a).

We are now in Item No. 4. (

a) the Member for Minnedosa. MR. D. BLAKE: Yes, Mr. Chairman, what does this item represent, can the Minister quickly tell us? HON. J. BUCKLASCHUK: The capital grants, the $50,000 figure you see on Page 38 is a bit of a misnomer. That is the lending capacity we could use for the Co operative Loans and Loans Guarantee Board and 1003 provides a source of funding. The board may make loans to qualifying co-operative associations. The word "grants" has been used, I understand, at the request of the Department of Finance. In fact, it provides capital for loans.

I believe that I have already circulated the annual report for the Loans and Loan Guarantee Board. It's the one that the Member for La Verend rye has. MR. CHAIRMAN: The Mem ber for La Verendrye. MR. R. BANMAN: Thank you. Is the Minister saying that the authority required this year for any loans that his department is looking at possibly granting, either loans or guarantees, is $50,000; or is there an amount that's outstanding on an ongoing basis that he has available to them for loans and for guarantees? HON. J. BUCKLASCHUK: I'd like to make a clarification.

It is not the department that makes the loans; it is the board that makes the loans. They have their board of directors. The previous Estimates, I believe, had a $1 00,000 figure. That has been reduced by $50,000 in view of the past year's experience, but there is also an additional amount of $1 million provided for in the Act to cover guarantees that the board may authorize for qualifying co-operative associations. MR. R.

BANMAN: Is the Minister saying there is $1 million authority in the Act and there is something, I believe, in the neighbourhood of half-a-million dollars outstanding - no, I guess it's a lot less because you've had a bunch paid off here now; the honey producers have paid off their guarantee - so is the Minister saying there is roughly $840,000 worth of loan and loan guarantee authority at his disposal at the present time? HON. J. BUCKLASCHUK: $840,000 at the board's disposal, $50,000 is related to loans by the board - not loan guarantees - but to loans for qualifying co operatives. MR. R.

BANMAN: Up and above the $840,000.00? HON. J. BUCKLASCHUK: Yes, there is $840,000 in terms of room for guarantee, and over and ab ove that there is up to $50,000 in loans that can be made by the board. MR. CHAIRMAN: The Member for La Verendrye. MR. R. BANMAN: Why, if you've got 840 here, do you require 50,000 there? HON. J. BUCKLASCHUK: We're speaking of two different authorities. One is a loan in cash and the other one is a loan guarantee. MR. CHAIRMAN: 4. (a)- pass.

RE SOLVE that there be granted to Her Majesty a sum not exce eding $50,000 for Co- operative Development for the fiscal year ending the 31 st day of March, 1984- pass. Now, we can go back to the Minister's Salary, Item 1. (a). What is the pleasure of the committee? The Member for La Verendrye.

Tuesday , 22 March, 1983 MR. R. BANMAN: Thank you, Mr. Chairman. As I mention ed this after noon after the Mi nis ter had introduced his Estimates and had presented his opening remarks, we have seen in the examination of the Estimates that there are a number of areas which the department is embarking on which are new areas with regard to the inspection, with regard to regulation, of the co-operative system in the Province of Manitoba.

As I mentioned earlier, I think one of the challenges for this Minister is to be able to make some of the tough decisions that are going to have to be made, and as he has indicated throughout the discussion here this afternoon and evening, is that within the credit union system, this is a time for rationalization rather than a time for rapidly expanding growth, whether it be in the co-op movement, consumer co-operative field, or many others. I would reiterate what I said this afternoon.

That is, that I would urge the Minister to make sure that the proper inspection procedures are in place, that the proper regulations are in place, to deal with the different problems that are now cropping up here and there within the co-op movement. The movement itself is of vital concern to all Manitobans because it's not only a large employer of people, but it has helped many smaller communities, particularly in rural Manitoba, to do things for themselves that would not have been possible otherwise. I hope that the Minister will view this as one of his most important responsi bilities.

I'm sure that the co op mo vement will enter the '8 0s on a solid and financially stable footing so that the future generations in this province will be able to look back and say that there was a time when maybe the growth that we had wanted to see in the credit union system wasn't there; but if it hadn't been for a time when we had an inward look at ourselves, a time when we retrenched and regrouped our stand, if that hadn't taken place, we would not be around at all, and I think that's the situation we find ourselves right now.

There's a lot of good co operatives out there, there's a lot of people that are dedica ted to seeing the system survive, and with that kind of input from these people and good guidance from a department in the field of inspection and regulation, I'm sure that the system will overcome its current difficulties and will go on to serve the people of Manitoba in the years to come. MR. CH AIRMAN: Wh at is the pleasure of the comm ittee? 1. (a)- pass. RESOL VE that there be granted to Her Majesty a sum not exce edin g $11 7,300 for Co-ope rative Development for the fiscal year ending the 31s t day of March, 1984- pass.

Tha t comp letes the Estimates for Co-ope rative Development. Comm ittee rise. SUPPLY - AGRIC ULTURE MR. CHAIRMAN, P. Eyler: Commi ttee come to order. We are considering the Estimates of the Department of Agricultur e, Item 2, Ma nitoba Cr op Insurance Corporation - Adminis tration. The Honourable Minister of Agriculture. HON. B. URUSKI: Mr. Chairman, at the adjournment hour, at 4:30, I rose to speak on the matter that was raised by the Honourable Member for Pembina when he accused myself of being very selective in the presentat ion of a . . . MR. D. ORCHARD: Dishonest actions. HON. B. URUSKI: Disho nest, Mr.

Chairman. Mr. Chairman, the honourable mem ber, I want him to withdraw those remarks because, talk about dishonesty, when one reads and takes his analysis and one reads the calculations that were made, in terms of the presentation of the press release. Mr. Chairman, the fact of the matter is, that when you calculate out the premiums on the basis of the changes that were made there is a saving to the farmers. Those farmers, the majority of whom pay after the first of the year, after January 1st of the year, there is a saving of over 6 percent on the basis of the new formula, Mr. Chairman.

The key to that question is, and it was dis honest on the basis of the Honourable Member for Pembina in selectively reading only a portion of the press release, because the key to the question is that the interest charges were retroactive to the previous May 1st, if the premium was unpaid after December 31s t. That is the fact of the matter in dealing with the question of the premiums and how they are calculated by the corporation. Mr. Chairman, that is the dishonesty in terms of the unfactualness - and I will use the parliamentary word - unfactualne ss of the mem ber's statements with respect to this issue. Mr.

Chairman, the fact of the matter is that when you take a dollars premium, in terms of today's, or a thousand dollars worth of premium, and you previously, under the old system, we did a calculation at 12 percent interest and if it was paid on or before August 15 th, initially the premium was $1 ,025 and you received a discount to make a payment of $963.50 on the basis of the discount that was received; and if you calculated it out and on August 16 th, if that premium was paid, you then went back and didn't receive your discount and you were back up to the $1 ,025 on the basis of the old program, which was an increase of 2.5 percent.

By September 30th, at 12 percent interest, the $1,0 25 plus 2.5 percent; October 1s t was $1 ,025, an additional 2.5 percent; Nov ember 1s t, $1 ,025, an additional 2.5 percent; December 1s t, $1 ,025, an additional 2.5 percent; December 31s t, $1 ,025, an additional 2.5 percent; the 1st of the year was $1, 10 7 with an additional 10. 7 percent, Mr. Chairman. That is the crucial point because what you then did, what the farmer then had to do, was pay back interest all the way to the previous May 1st, Mr. Chairman.

Under the new calculations, only $1 ,000 was required because there was a reduction in the premiums of 2.5 percent, the $1 ,000 initially on August 15 th there was no interest charged, it was an additional 3.6 percent over what he would have received in terms of discount, a change to the previous year; August 16 th, as well, $1 ,000 minus the 2.5 percent; September 30th, $1 ,000 minus the 2.5 percent. Interest is paid on October 1s t, 1004

Tuesday, 22 March, 1983 it becomes $1 ,010 at 1 percent, or still 1. 5 percent lower; November 1s t, $1, 020, interest rate at 2 percent because it's 1 percent a month, a downward .5 percent; on December 1s t it is $1 ,030 at 3 percent where he pays an additional amount as compared to the previous December 1s t of .4 percent; on December 31s t, $1 ,030 and 3 percent, the same increase of .4 percent. When you hit the January 1s t where more than half of the premiums are paid, Mr. Chairman, it becomes $1 ,040 at 4 percent, or a reduction of 6. 7 percent over the previous figure, on actual dollar terms, Mr.

Chairman. The fact of the matter is, Mr. Chairman, what the honourable member seems to forget is how the Crop Insu rance Pr ogram, on what basis was the Crop Insurance Program predic ated on. Mr. Chairman, the whole program is a cost-shared program between the farmers of Manitoba and the Federal Government, basis of premium dollars 50/50. Mr. Chairman, in this House we have heard, and rightly so, over the years, from myself and I'm sure the Member for Morris and other members raised in this House, why can't we build up the coverage, why can't we increase the coverage in terms of the program. Mr.

Chairman, every time that the corporation ostensibly goes into a discount program they, in effect, reduce the federal contribution on a dollar-for-dollar matching basis from the farmers of Manitoba; that's ostensibly what happens. So when the Honourable Member for Pembina talks about losses, Mr.

Chairman, every time you go into that kind of reduction all you are doing is not assisting the farmers of Manitoba at all because what we should be doing, I believe, is making the insurance program to make sure that ade qua te coverage and increased coverage is available for the farmer s because the program do es - is a 50150 program. So for every dollar that we discount we in effect lose, the farmers lose, the federal matching contribution in terms of the program. What we should be doing is working towards an equitable program that more coverage is increased. Notwithstanding that, Mr.

Chairman, the honourable mem ber is, and has been, very very selective in terms of the arguments that he has put forward. He is living up to his true portrayal in this House as being slippery, being very selective and being very slippery with his words, Mr. Chairman, because when he quoted from the press release he was very selective in terms of the words that he was using and how he described - and what he selected out of the press release - that's the argument he based.

I guess I should know better that the Honourable Member for Pembina likes to play that kind of a game, to attempt to bring people into an argument and if he can do it by means of being very selective he will do it to make his case. I should know the honourable member better than that and not even rise to the challenge, but he is inaccurate. The fact of the matter is he is inaccurate, and he is inaccurate because of the selective way he made his calculations, Mr. C'1airman, in terms of the way the program was funded. MR. D. ORCHARD: Thank you, Mr.

Chairman, the Minister by his own press release, and his own words tonight, has told us that 40 percent of the insured are now paying 3.5 percent more for their coverage than they did prior to the change. The Minister, by his own words, has confirmed that anyone who was accustomed to paying their premiums before year-end, December 28th, 29th or 30th, pays .5 percent more for their premiums. That is why I objected to the very misleading and false press release the Minister put out. There is no mention in the Minister's press release of the gobbledygook he just gave us tonight.

He accuses me of selective statistics. Well, I want to read a line for the record , two lines actually from the Minister's own press release, and you, Mr. Chairman, can judge who is being slippery. I will submit that you will find that the Minister of Agriculture is the greasiest person in this House. Now, Mr.

Chairman, he said - and this is from the Minister's own press release - he says, in the second paragraph, "the general reduction in premium rates could only be achieved by eliminating the 6 percent general cash discount." He goes on further to say, "to put it another way, insured were being charged 2.5 percent more than the basic cost in order to pay for cash discounts." Those are the Minister's own slippery words, Mr. Chairman; not mine but the Minister's.

What he has done is brought out a press release to lead the insured in the Manitoba Crop Insurance Corporation to believe that they were receiving a 2.5 percent reduction in rates. What, in fact, the Minister has given to the contract holders of Manitoba Crop Insurance Corporation, is a 3.5 percent increase for 40 percent of the insured who happen to pay by August 15 th - something I think, in this day and age, Mr.

Chairman, would be welcomed by any company to get their money in ahead of time - and for the other people who paid before December 28th he is charging them 3 percent interest which they never paid before; all for a 2.5 percent reduction. To me, Mr. Chairman, in the case I made this afternoon, that the 40 percent who pay early pay 3.5 percent more; those who pay before the end of December pay .5 percent more.

The Minister was not factual; he was issuing a false press release; he was creating false impressions in the farm community and my case still stands, and no matter what the Minister says, his press release indicated that and he was wrong. He mislead the public; he put false information in a press release. Mr.

Chairman, if the Minister would provide me with four pieces of factual information: No. 1, the number of contract holders under the Manitoba Crop Insurance Corporation; No. 2, the number of contract holders which have paid in 1981 prior to August 15 th; No. 3, the total premiums collected from all contract holders; and No. 4, the dollar value of premiums paid after January 1st in 19 81 crop year. HON. B. URUSKI: Mr . Chairman, we'll get that information for the honourable mem ber. MR. CHA IRMAN: Order please. The Mem ber for Springfield. MR. A. ANSTETT: Mr.

Chairman, I just heard remarks from the Member for Pembina, from his seat, direct allegations at the Minister which I'm sure every other member in this House and people in the gallery heard, and I think the Member for Pembina, regardless of his 1005

Tuesday , 22 March, 1983 feel ings, he sugge sted the Mi nis ter is false, his statements are false, his press release was misleading, to accept those; they're borderline in terms of being parliamentary, but the last statement he made should be withdrawn and he should apologize, not only to the Minister but to the House because he knows the rule. MR. CHAIRMAN: The Honourable Member for Arthur. MR. J.

DOWNEY: The Minister did the same thing from his chair , calling the Member for Pembina the same unparliamentary word, and would ask him to withdraw if anyone on this side has to withdraw, the same words were used by the Minister, Mr. Chairman. HON. B. URUSKI : Mr . Chairman, even though I responded, and wrongly, in terms of being provoked in this instance, I withdraw the statement that I made from my chair to the honourable mem ber. MR. D. ORCHARD: Mr. Chairman, I gladly accept the Minister of Agriculture's apology. MR. CHAIRMAN: The Member for Brandon West. MR. H.

CARROLL: I heard the Member for Pembina use the words, the man is lying, I think, Mr. Chairman, you can't weasel out of your duty. I think that man has to be made to withdraw or it's a sham in this House. MR. D. ORCHARD: Mr. Chairman, I take it there is some controversy on remarks I made and, if I offended any Member of the House, I apologize. MR. CHAIRMAN: Would the Member for Pembina care to consider his remarks and withdraw them? I would ask the Member for Pembina to withdraw his remarks. MR. D. ORCHARD: Mr. Chairman, which remarks am I to withdraw? MR.

CHAIRMAN: The use of unparliamentary language, specifically the term liar. MR. D. ORCHARD: Mr. Chairman, if I perchance have used unparliamentary language I apologize for those remarks. MR. CHAIRMAN: The Member for Pembina , I would ask you to withdraw your remarks. HON. B. URUSKI: Mr. Chairman, I rose on a point of privilege. I apologize to this Hous e, and I apologize to the honourable member for the remarks that I made after I was provoked in the statements that he made. I would hope that he would have the same courtesy to myself in this House to withdraw that remark. MR. CHAIRMAN: The Member for Pembina. MR.

D. ORCHARD: Mr. Chairman, once again I accept the Minister of Agriculture's apologies, and I withdraw any inferences I made on the Minister's character. MR. CHAIRMAN: The Member for Lakeside. MR. H. ENNS: Mr. Chairman, just as introducing a slightly different subject on the matter of crop insurance. I note with some satisfaction, as I'm sure we all note, the percentage of participation by Manitoba farmers in the Manitoba Crop Insurance Program.

I would ask the Minister, particularly, whether he has further information - I didn't see it in the annual report - having to do with the participation of farmers, ranchers particularly, I suppose, and farmers, in the Cultivated Forage Crop Insurance Program; I know this is a relatively new expansion of the crop insurance program. Has the Minister any figures indicating the degree of participation in the Forage Program? I could be wrong, but it's my impression that the takeup in this program is less than what I'm sure he perhaps desires, and I'm sure I desire. HON. B. URUSKI: Mr.

Chairman, in terms of actual numbers dealing with forage crops for hay production. In 1982 we had 482 contracts, which was an increase of 83 over '81, which is a fairly substantial increase over the previous year in terms of hay contracts. MR. H. ENNS: Does the Minister have any indication of what that 480 represents in terms of percentage of those who are engaged in forage production as, for ins tan ce, he has, and his repor t indi cates, the percentage of farmer s involved in cereal crop production. HON. B. URUSKI: No, Mr. Chairman, that kind of information hasn't evolved in a corporation.

That kind of data is still not available. The data, in terms of cereal crop production, is over many years of information and analysis. Mr. Chairman, I should point out to the honourable member that there is work being done by staff now with respect to a new forage program for insurance purposes; that's in the working stages at the present time. MR. H. ENNS: Well, Mr.

Chairman, allow me, and I'm certainly pleased to put on the record and acknowledge - I think it needs to be done from time-to-time - a program that has been provided by governments, various ad mini strations over the years since the inc eption of this pr ogram, 19 60-6 1, by the then administration - it happened to be a Conservative administration - under the then chairmanship of one Mr. Percy Ford who I remember well and who served this province well, and I'm more than prepared to acknowledge that his successor, Mr. Tolton, is providing equal service to the farmers of Manitoba in that capacity.

It has to be a satisfact ion, Mr. Chairman, to note that there's bee n a steady pro gression of farmer participation in this program, starting in 1961 with some 38. 1 percent down to this last year, '81- 82, of which the report covers to 83 percent of the farmers taking advantage of this program that has provided a degree of stability in an area of endeavour where stability is perhaps pretty hard come by. That has to say a lot for the program in itself, the fact that 83 percent of Manitoba farmers participate in this program.

It's a voluntary program and obviously a very substantial majority of Manitoba grain producers feel that this is 1006

Tuesday, 22 March, 1983 a worthwhile program, a program well administered, a program to their advantage to participate in. My questions arise from the forage question as to - and I explore this with the Minister - I am not, in a genuine sense, using the Estimate time to perhaps see whether we can improve on programs - why can't we develop the Forage Insurance Program to the extent that it can play a bigger role from time to time when we have hay failures in the province.

The department is called upon and has been called upon, and the Minister has participated in the government at the time he was called upon, just as my colleague, the Member for Arthur has been called upon, to kind of meet the difficult situations - drought years, hay crop failures in certain regions of the province - and then we get ourselves into massive programs of relief of one form or another - transportation of hay, hay subsidies, hauling subsid ies - and we move hay about. Now, Mr.

Chairman, I'm not unaware of the fact that of course substantial amounts of the hay produced in this province for our cattlemen are on Native stands, and I take it we have no program in place for that and I suspect it's probably difficult to do that; although knowing the sophisticated approaches that are now available to this corporation, one might be worked out.

What I'm suggesting to the Minister is whether or not it wouldn't be possible through a little more attention to that aspect of crop insurance - in this case, hay, forage insurance - if this government in future years couldn't relieve itself of the kind of ad hoe programs of assistance that we find ourselves in when there's a failure in the hay crop in this province.

I don't know whether it could be possible, but I recommend to the corporation and to the Minister that he examine - we have always had some problems with some of the hay hauling, hay subsidy programs, that we have introduced from time to time in response to the shortage of hay in this province, and we find ourselves involved in sub sidy programs tha t one sometimes wonders who the net benefactor is, whether it is the trucker, the hauler, or the owner of the particular hay that had a good crop, and we find ourselves moving a lot of this product around.

The success of the Crop Insurance Program in cereal production has really taken the government off the hook and properly so. It's a self-sustaining, self-insured program, and even when we have problems of a serious nature like the Red River Valley flood, the one thing that a government is not faced with - they're faced with enough problems at those times in replacing and repairing damaged homes or dikes or services - but we do not have to conscientiously worry about the compensation for crop loss as a result of those kind of disasters because we've got a sound Crop Insurance Program in place.

I simply explore with the Minister at this time whether or not some energies of the corporation could not and should not be directed to further refining the insurance coverage available to our forage producers, to our hay producers, generally, with the goal in mind to diminish the need for the kind of ad hoe subsidy programs that are available when there are hay shortages in this province. MR. CHAIRMAN: The Minister of Agriculture. HON. B. URUSKI: Mr.

Chairman, I appreciate the Honourable Member for Lakeside's comments with respect to the expansion and improvement of the particular aspect of forage coverage under our crop insurance.

That's precisely the work that is being undertaken now with our staff and the federal people to try and evolve and present a program that is more acceptable and much more in tune to the needs of farmers to be able to expand that program, to basically deal with the kinds of questions he has raised, to try and get away from the pressure and the adhockery that takes place during times of crisis, whether it be in hay, whether it be in incomes as we have done in beef and in hogs, to take away from the problems that crop up from time to time to make sure that a sound insurance program is in place.

It may take the course that there may have to be a part of this program, even some banking of hay, to make sure that there is a storage fund to cover off some of the losses that might be experienced annually for the farmers who are enrolled in the program. That may be part of the program, so that you don't just go out and have to then scramble around to either meet those needs or ther e may be some supp lies avai lable.

That's a possibility, but an ongoing improvement is what is necessary, and I should tell the honourable member tha t work is under way between the federal and provincial people to try and get into place the kind of program that he envisages. We have no difficulty with it. In fact, it is our hope that the kind of program that he spoke about just a few minutes ago can be put into place and provide long-term insurance stability for farmers who are in need of pay during times of stress or weather or whatever. That kind of work is being undertaken present ly, yes. MR. H.

ENNS: Well, I thank the Minister for that response and I look forward to the department and more particularly the corporation, in examining this question further and seeing whether better programs can be provided for the forage producers of the Province of Manitoba. Mr. Chairman, just one more question.

Inasmuch as the Province of Manitoba certainly was one of the leaders in crop insurance in the country, and I am aware that the Government of Canada, of course, provides financial assistance to the Canada-Manitoba Crop Insurance Program by contributing 50 percent of the total premium required each year, and the Government of Manitoba contributes all of the administration costs; can the Minister tell me - and there is a reason for this question, it relates to my earlier concerns about the Forage Program, since the inception of Manitoba crop insurance in Manitoba, I believe most provinces have similar programs in place - can the Minister assure me that the contribution made by Canada, the Federal Government, is as good in Manitoba as anywhere else?

I ask the question because, for instance, in a province like Quebec where forage is a much more important crop - much more forage is grown in the Province of Quebec. They have, of course, one of the largest dairy industries in the country and that is understandable. Their land is such that it lends itself to forage production and dairy production. Can the Minister assure me that the deal th at the Manitoba Go vernment and 1007

Tuesday, 22 March, 1983 subsequently that Manitoba farmers are getting from Ottawa, with respect to support to the Crop Insurance Program, is as good as any in the country? HON. B. URUSKI: Mr. Chairman, I would have to be precise. I will take that question as notice from the honourable member just to make sure that, in terms of our losses and in terms of federal contributions I can say, yes, in terms of the contributions based on our losses.

To be equ ivocal or unequivocal on the basis of saying that the type of program that is being worked on here in Manitoba will be identical to what may come about in other provinces, I have to take that question as notice because I can tell the honou rable mem ber, for example, that some provinc es have gone in and expanded their crop insurance strictly on the basis of provincial contributions and have gone beyond the Federal- Pr ov incia l Agreement in some of their programs. So I cannot be very definite on that without having that matter checked out specifically.

In general terms of the existing program, the agreements are similar to those in Western Canada. The contributions that we receive here on the general program would be, in terms of dollar-for-dollar contributions, very similar, but I want to make sure that I check out. The member raised the question of whether or not there may be a different forage program to suit the needs of the Province of Quebec. I am not aware of what the scope of the program is; what the provincial contributions might be there; whether they vary from the norm that has been in place over the years.

That I will check out, because that's part of the process of discussion going on now. I think the member raises a valid point. We would want to make sure that we examine what is happening across the country and especially in the area of new programming, especially in the area of forage, that there is some consistent treatment in term of the premium share as one province vis-a-vis another in terms of federal treat ment. I accept the com ments of the honourable mem ber. MR. H. ENNS: I think we understand each other.

I am aware that each province can and should, in fact, develop and tailor a program to meet its farmers' needs so there could be an enrichment of a program - one province may cover certain crops that another province doesn't, and may enhance through premium collection like that. But my question, and I think the Minister understands is, are we getting equitable treatment by the Federal Government. I raise it in conjunction with the forage question, knowing the proponents of forage that is grown in Eastern Canada.

The Minister made the comment that he's pretty sure we' re being treated eq uita bly as far as wes tern provinces are concerned. But then you know, Mr. Chairman, that's been part of the problem with us westerners. We probably have no difficulty in being treated equally as far as Saskatchewan or Alberta or British Columbia are concerned. It's down east, Mr. Chairman, where the Federal Minister of Agriculture lives and where there are a lot more votes in the House of Commons and a lot more seats in the House of Commons coming from Quebec and Ontario, and where the dairy industry is that much stronger.

He knows the political clout that they can wield. I accept the answer the Minister gave me, that he will take that portion of the question as notice to satisfy himself and to satisfy the House and through the House, the farmers of Manitoba, that Manitoba farmers are being treated equitably with respect to the federal participation in any program. The program may be designed differently.

A province may have, on its own volition, agreed to enhance a program but it is simp ly the qu es tion of federal participation that if, for instance, the Province of Manitoba were to enhance its program, it would have access to the same kind of federal participation. HON. B. URUSKI: Mr. Chairman, I accept those comments. So that we both understand each other, the Federal Government does participate in premium sharing with the farmers in Manitoba on a 50/50 basis. They do share in the losses with the province in terms of the insurance fund and losses in excess of the premiums collected.

Those kinds of comparisons are the kinds that I will check out. MR. CHAIRMAN: Item 2, Manitoba Crop Insurance Corporation- pass. Resolution No. 9. Resolved that there be granted to Her Majesty a sum not exceed ing $3,897,800 for Agriculture, Manitoba Crop Insurance Corporation - Administration for the fiscal year ending the 31s t day of March 1984- pass. Item No. 3, Manitoba Agricultural Credit Corporation. The Member for Arthur. MR. J. DOWN EY: Mr.

Cha irman, the Ma nitoba Agricultural Credit Corporation, I think, will warrant some discussion, particularly at a time when we are seei ng the kind of di fficult times tha t the farm communi ty are seei ng in Manitob a, not only in Manitoba, but all across Canada. This, Mr. Chairman, probably is the main tool that the Minister of Agriculture has available to him, to support or to get involved in directly with the agriculture commun ity, to sustain them and to help them, not only during difficult times, but on an ongoing basis to provide both the ongoing credit requi rements for land purchases.

I have a question there which I would ask the Minister to make note of that, in fact, have they stopped the purchase of land through MACC or land lending. I understand that they have. He has indicated, yes, that he has stopped providing funds for the purchase of land. I have never seen an official press release or an announcement come from the Minister that that is a stated policy but it's just been a matter of one of those things that slipped away and has never been highlighted or announced. He says it was in this House. It possibly was, but it has to be made very clear, Mr.

Chairman, on the record that there is no longer financial support for farmers to purchase land - (Interject ion) - he says, at the present time - well, that's over a year now. Mr. Chairman, I want to make two or three points because we are at a very critical point with, particularly those farmers who have seen either a shortfall in their crops through drought, frost or lower grain prices which they are all seeing at this present time. Farmers who 1008

Tuesday, 22 March, 1983 were overex tended, farmers who are in a position, not only on land loans but on operating loans through financial institutes and the individuals were not working on a fixed interest rate but were working on a floating interest rate, where we saw some operating loans increase from probably 10 percent to in excess of 20 percent interest, without the farmer being able to control that level of interest rate. As I indicated, the shortfall in the crop in 19 80 and the frost of last year put a lot of individuals in an extremely difficult situation to the point, Mr.

Chairman, where if an individual were in a vulnerable position, such as some of the ones that I'm aware of personally, then those particular people are facing either closure, bankruptcy or just walking away from their operations. Last year, Mr. Chairman, we'd done some work as a caucus to try and get some numbers of people who were in that situation and found through the work that we'd done, that there were and extremely large amount of farmers, if the conditions didn' t improve that would be very strained with their economics and their financing of their operations. I want to make this point, Mr.

Chairman, because I think it's important for the rest of the public of Manitoba to understand. When you're dealing with a family farm operation or a farmer that is in economic difficulty, you aren't just dealing with the hard cold facts with business as you would probably deal with in a family-operated small business, but you're dealing with a family operation. You're not dealing with just numbers, you're dealing with people. You're dealing with people, Mr.

Chairman, who have probably lived on a piece of property all their lives, their hearts and souls are in that homestead or that particular enterprise and it is somewhat of an emotional situation. Mr. Chairman, as I indicated in my opening comments, the Ma nitoba Agricultur al Cr edit Co rpor ation is probably the best tool or the only tool that the Minister of Agriculture has available for him to give the kind of protection to individuals who are in that situation on an individual basis.

I believe in the latter part of our administration when we had some individuals who had operating loans at different suppliers throughout the commun ity, we introduced a program that could allow them to consolidate those debts and pay them off over a longer period of time. I think that was the basis or the start up of a program that could have, in fact, been expanded to accommodate some of those particular individuals. Carried on, I'm sure, but I think could have been expanded. Mr. Chairman, at this point I don't mind going on the record, Mr.

Chairman, and putting it very plainly, I was asked the question yesterday and I asked the First Minister what his position was on the current debt moratorium legislation that is being proposed. Mr. Chairman, I don't support debt moratorium legislation. I don't believe that it's in the best interests, the best long-term interests of the total farm commun ity to put in place legislation that would prohibit the normal process of a good exercise of business going on between the banking communi ty and the farming commun ity.

I would think if you did a survey throughout Manitoba and the majority of this country that, in fact, you wouldn't find the majority of people that would support that heavy a hand or that hard a move taken by government. I do believe, however, Mr. Chairman, because of the sensitivity of it and the family conc erns, tha t an emergency group could have been established by the Minister of Agriculture within the Province of Manitoba.

I call it an emergency group, a group of farmers, good business people, a mix of the community to be put in place by the Manitoba Agriculture Credit Corporation to be a first place of appeal, not a legislative body but a first place of appeal, where individuals who couldn't possibly see their way through it on their own could have given a call to the Manitoba Agriculture Credit Corporation or the Department of Agriculture and contacted .this group of individuals who could have come in and offered first-hand advice and made recommendations to those individuals on how best they could cope with the situation - not just the day-to-day routine application of going through the bureaucracy of the MACC; phone call to the office, and they'll deal with you whenever they get time; phone the Department of Agriculture; the Minister's office, and he's too busy for you.

I believe there could have been a mechanism put in place for this particular time for those individuals who, in a lot of cases, are facing debts of probably from a quarter of a million dollars, to in excess of $1 million, that they owe, Mr. Chairman, and they owe interest on. In fact, some cases I believe could be over the long term worked out. Some of them, Mr. Chairman, with the current lower grain prices and initial prices, there probably would be a very difficult time in making them ever viable because of the overload of debt.

Probably there could be some ass istance gi ven from the Department of Agriculture, from the Credit Corporation on an emergency basis of, not the board of directors, not the current management, but individuals who have had some expertise in this field and paid for through the costs of admini stra tion of the the Manitoba Agriculture Credit Corporation. It's a mechanism that would give those individuals some emergency connnection where, in fact, they could have consultation take place; they could be given what opportunities that there may or may not be and a decision could be made. I have a concern, Mr.

Chairman, a ser ious conc ern that if toda y through an announcement that was made a few weeks ago by this Minister of Agriculture - because we are in a very serious economic time with some of these individuals - we have an announcement that if I'm a farmer that's in trouble and I have the banker putting a lot of pressure on me or another creditor, a credit union, it could be anyone in the financial institute and I read this press release and I see that Manitoba Farm Credit guaranteed double, now $1 25,000 per farm, says Uruski. That gives me a little bit of hope, but it is very false hope, Mr.

Chairman, and I'm sorry that the Minister of Agriculture has proceeded in this fashion because when you read through the press release, Mr. Chairman, he is giving false hope to people who are hanging on by the skin of their teeth, Mr. Chairman. In fact, in some cases they are supporting debt mo ratorium legislation because that is the only alternative they have at this point. I don't think, Mr. Chairman, that the Minister has acted responsib ly. He could have, in fact, got more involved directly. A week ago, Mr. Chairman, a group of some 30 farmers came and sat in his office.

He didn't give them any assurances that he was dealing with the situation. They met with me, Mr. Chairman. I certainly sympathized 1009

Tuesday, 22 March, 1983 with them, but there was very little that could have been done at this particular time. If there'd have been a real program like the $1 00 million that he suggests is in this program, if those groups of people or the committee that could have been established could have recommended to the Credit Corporation that, yes, there was a chance that this particular farmer who possibly owed $250,000 or $300,000, that if an emergency line of credit, an emergency establishment of a credit could have been put in place, paid out the bank, and given him a 30 year loan - (Interjection) - Mr.

Chairman, I am saying help the farmer; that is precisely what I'm saying. This program, as I understand it, Mr. Chairman, is $10 0 million, but when you read through it, there's $12 ,5 00, 000 that's avai lable for loan gua rantees. They're going to guarantee 12.5 percent of the bank loan to the farmer (Interjection) - A pretty good guarantee? It's useless, Mr. Chairman. There aren't any farmers that are going to qualify, Mr. Chairman. First of all, it'll take them six months to get a decision from the Credit Corporation, and if it doesn't, they've certainly changed.

That's not a criticism of the staff; it's a criticism of the total bureaucracy of any government operation. It was the same when I was a Minister, Mr. Chairman. It's the process you have to go through. What I am saying is, cut the red tape crossways instead of lengthways, Mr. Chairman. I do believe there could have been a more effective use of these funds for those people who are desperately strapped . Now, Mr. Chairman, I am not saying that everyone would necessarily qualify, but if they didn't qualify, tell them next week.

Don't tell them six months from now because by then they've gone through months of anguish, Mr. Chairman. They've gone through months of hoping they could save the operation, and with lower initial grain prices and the future the way it's going with higher fuel prices, some of them are not going to be able to be given that kind of encouragement, and shouldn't be given it. I do believe, Mr. Chairman, the Minister has created a false hope in the farm commun ity.

I'm sorry that has happened because there are people who really looked at the Government of Manitoba for some support, particularly in light of their past promises during the election campaign. I would also say, Mr. Chairman, that the individuals he said he has helped, he's helped 700 farmers through the Interest Rate Relief Program, some 700 people. They, first of all, had to have less than $70,000 as a gross income. That, in today's terms in the farm commun ity, is a very small number.

I would ask the Minister how many of those people today that got that Interest Rate Relief Program are still on the verge of going into further economic difficulties, or have further economic difficulties? I would challenge him to say that he has just again tried to let on to the public that he has given them some meaningful program. Mr. Chairman, the Minister persists on almost being immune from the current difficulties that he refers to a 1, 000 in his press release.

I think he's far too conservative and I hate to give him the credit for being anywhere ne ar a Con servative, but he's far too conservative with his figures. I think there are greater numbers than that are having economic difficulties, Mr. Chairman ... A MEMBER: But you said nobody would join the program. MR. J. DOWNEY: Well, nobo dy can qualif y, Mr. Chairman. The Minister - (Interjection) - No, this week it's the same as I said last week. MR. CHAIRMAN: Order please. MR. J. DOWNEY: I'll quote again the sentence from the press release that eliminates the majority of those farmers who are in trouble.

If he'd listen, I'll quote it. I quote from his own press release: "G uarantees will be strictly limited to operating credit and will not be used to cover existing loans in arrears." Well, I ask him again, how many farmers don't have existing loans or arrears that are in financial trouble? How many? I don't think there is one, Mr. Chairman, that will qualify on the basis of this press report and the basis of this program. I would suggest, Mr.

Chairman, that he would have been far wiser to take the money, the credit authority that he's asking for in these Estima tes, to establish an emergency credit agency of the Manitoba Agriculture Department and deal with those on a priority basis of individuals who need, in fact, that immed iate credit availability and give it to them, those that haven't, in consultation with them through the Emergency Credit Comm ittee of farmers and qualified people, to assist them in trying to ease them out of that operation. There's nothing wrong with that, Mr.

Chairman, because in a society with the right to succeed, we have the right to fail, and it's no shame because it's none of their fault in the majority of cases. Who could have entered into a floating loan with a bank at 10 percent and a year later being faced with 20 percent and make it? Not very many people, Mr. Chairman, could do that.

Long-time established people who didn't owe money probably could come through it and still maintain the kind of operations that they have, but anyone - and I think these are important years - that started farming or expanded their farm operation in a major way since 1973 when inflation really took off, farmers were the receivers of the inflationary costs and weren't able to pass them on to the rest of society. Anybody that's in that time frame find themselves in a most extremely difficult situation. Again, Mr.

Chairman, that was part of the years in which we were in office and we tried to deal with it and I think to some extent did, because we introduced some programs that did in fact help the cash flow situation.

However, that doesn't absolve the Member for Springfield, who took his pay cheque sitting in here and now found himself better in the New Democratic Party, and who should have paid attention to what was going on instead of politicking while he was in this Assembly. - (Interjection) - Well, I could go through hundreds of programs and hundreds of farmers' names that were helped. - (Interjection) - Sure, I can tell you there was $40 million put into a Greenfeed Program without any limitations put on who or when they got into the program.

I can give you the numbers of dollars that went in to support the people who were involved in the drought and the flood problem in the Red River Valley. 1010

Tuesday, 22 March, 1983 How many millions of dollars were spent on hopper cars to move grain out of this country? Who introduced the lending for farmers for Manitoba under the Manitoba Agriculture Credit Corporation and put in, Mr. Chairman, the Debt Consolidation Program? That was under the Sterling Lyon Government. Mr. Chairman, does the Minister want to continue to hear more? We increased the funding to 4-H, Mr. Chairman. We didn' t decrease it and give money to the Marxist group at the university. (Interjection) - Yes, today's 4- H'rs are our future farmers.

Yeah, that's right - (Interjec tion) - Of farmers, I said, a list of hundreds of farmers. Mr. Chairman, I want to not deal with this in a light fashion like the Member for Springfield is trying to drag me into. It is serious. It is so serious, Mr. Chairman MR. CHAIRMAN: Order please. MR. J.

DOWNEY: . . . that the recent proposal - and I want the Minister to pay attention to this - on debt moratorium legislation could, in fact, endanger the future financial support that the banks have been working with the farmers and the relationship that has been built up over the last few years, because the portfolio that the banks have is some thing like 2.4 percent of their business in Canada. There is a $9 billion loan to the farm community from the banks, Mr. Chairman. If the banks pull out of the farm financing, then who has to pick that up, Mr. Chairman?

The general taxpayers have to pick up the funding through MACC, and I submit to you, Mr. Chairman, to the Minister, that there isn't enough capability for the public sector to do it and I don't think it's necessary to do it. I think that the relationship can be worked on by this Minister of Agricultur e, by the banks and by the Federal Government and the farmer commun ity at large, this problem can be resolved without the kind of debt moratorium legislation that some people in this country would advocate. I don't advocate it, Mr. Chairman, and I don't want to see it happen.

However, I don't want to see the banks playing tricks with the farmers or playing games and saying one thing and doing another. I do not want that to happen, Mr. Chairman, and that's why I, again, call for this Minister of Agriculture to empl oy, to put in place, an emergency finan cial comm ittee to deal with these hard-pressed people to make sure that there is fair play going on and a judgm ent can be made without the legislative process. Mr.

Chairman, I think from what I've seen in this press release, from anything I have seen this Minister do, that he has taken away the support from the farm community, not added to it. I would as well, Mr. Chairman, ask the Minister how many farmers were currently involved in the program which he said was already in place - and it was, we're aware of that, it had a cap of some $60,000 per farm on it - how many farmers were participating in that particular program, the one that he said, all that had to happen to help farmers was to increase it to $1 25,000.00. The ceiling was $60,000.

How many farmers were participating in that particular program and why would it be so much better now that it's increased to $12 5,000.00? Was it the limitation before that restricted farmers from using it? I don't think it was, Mr. Chairman, and I ask the Minister precisely how many farmers were using that program that he has expanded. HON . B. URUSKI: Mr. Chairman, the Honour able Member for Arthur has made a number of statements with respect to assistance or lack of it towards the farmers who are in financial difficulty in the last year. Mr.

Chairman, in terms of his comments, I believe that the honourable member is a year behind. He's a year behind time. We have had the staff of the Department of Agriculture over this past year, devoting their time in trying to assist in the very things that the member says should be in place now. They've been doing that for over a year in terms of trying to assist farmers in difficult times through either counseling, or through mediating, or through completing cash flows and trying to rework the situation.

Tne entir e Department of Agriculture of the Province of Manitoba, in terms of their hour extension staff has been doing, in very essence, what the member is suggesting that we should be undertaking now - for approximately a year, Mr. Chairman. Mr. Chairman, the honourable member is a year behind time. The problem has been here for a number of years and we are now unfortunately seeing some of the difficulties, over the last two years, of the toll that high interest rates have taken. Mr. Chairman, the honourable member spoke about high interest rates.

Coming from a government that supported the Federal Go ve rnment's position on high interest rates - (Interjection) I know and we viewed the situation very seriously but I can't take the comments of the Honourable Member for Arthur very seriously insofar as some of the programs that he and his colleagues criticized, Mr. Chairman. The fact of the matter is that they said we couldn't find any farmers in Manitoba that would qualify for the Interest Rate Relief Program. Mr. Chairman, more than half of the farmers on the program come from the areas represented by the Member for Pem bina and the Member for Arthur.

In terms of the regions involved - (Interjection) - MR. D. ORCHARD: Prove it, you said it was from Arthur. You prove it. 1011 HON. B. URUSKI: -( Interject ion) - and the areas, Mr. Chairman. The southwest region - (Interjection) MR . D. ORCHARD: Oh yea h, from Pem bina constituency - prove it. MR. CHAIRMAN: Order please. The Mi nis ter of Agriculture. HON. B. URUSKI: Mr. Chairman, the highest region in the province to take

part in the Interest Rate Relief Program is in the region that the Honourable Member for Pembina is speaking of. Mr. Chairman, I will look up the Ag Rep District to see whether or not the Ag Rep District that is within - (Interjection) - whether or not - (Interjection) - MR. J. DOWNEY: What are you proving?

Tuesday, 22 March, 1983 HON. B. URUSKI: Mr. Ch airman, the Honour able Mem ber for Arthur says, what am I proving. Mr. Chairman, it was your accusation that there are no farmers in Manitoba who would qualify for assistance under the Interest Rate Relief Program. So there are 700 farmers who qualified who aren't in need. That's what I understand from the Member for Morris. The program dealing with debt consolidation has been one of the maj or activities of the Manitoba Agricultural Credit Corporation this past year.

In fact, in terms of debt consolidation in 19 80 - about $3 million worth of debt consolidation and it has been increased and last year, in 1982, we have had approxima tely 125 farmers in terms of the Debt Consolidation Program, with funds expended in this area of over $9 million in terms of the funds used under debt consolidation. This program has been extensively used to the extent that farmers have been coming forward, being referred in attempts to assist farmers with their financ ial institutions to bring about some reworking of debt load, to bring about the viability that is so necessary, Mr. Chairman.

That program we are continuing with and the Debt Consolidation Program is a major part of the lending program of MACC. Last week, the Honourable Member for Arthur, when he spoke about the Loan Guarantee Program, indicated that very few farmers would take

part in this program. Today he has said something comp letely the opposite in terms of the Loan Guarantee Program, saying that, look, you're really not helping anybody. What we really want you to do is use the mechanism of MACC to take over the existing debt load of farmers and pay off the banks. Is that the Conservative policy, dealing with credit for farmers, to make sure that we put - (Interjection) - the farmers' needs in terms of operating credit, or what, somewhere between $600 million to $800 million annually. Mr.

Chairman, is that what the Conservative Party is saying, look, put that kind of loan capital into place, pay off the banks and then you can do something in terms of assisting farmers. Mr. Chairman, I'm amazed at the Honourable Member for Arthur or the Conservative caucus even allowing him ... I don't think most Conservative members at the back bench would agree to such a policy of saying, spend $800 million, pay off the banks. Mr. Chairman, the honourable member says he didn' t say that. Let him clarify himself. MR. CHAIRMAN: Order please. The Member for Arthur. MR. J. DOWNEY: Mr. Chairman, I did not say that.

I told him precisely what it would cost of the banks got out of the farm financing. I did not say that the government should get into it on a full scale; there isn't a possible way of them doing it. What I said was, in those particular difficult situations where farmers do have a chance of making it with a long-term credit arrangement then, in fact, there should be the capability of the MACC to move in, not six months from now but as quickly as possible to bail those individuals out, Mr. Chairman.

I don't accept what the Minister has said, trying to put words in my mouth and saying that I think the government should take over all the bank financing and pay them off, no, and I don't think the banks want that either, Mr. Chairman. In fact, I know they don't. They want to continue with a working relationship with the farm commun ity. HON. B. URUSKI: Mr. Chairman, the fact of the matter is, the Member for Arthur indicated that we should use that $10 0 million to take over some of the existing debts that farmers now have. That was the context of his remarks. Mr.

Chairman, the fact is that this program will assist those very farmers because part of the agreement is that lenders have also agreed that where there is an old op era ting line of credit th at is outstanding, the portion secured by inventory will be frozen off and paid out as inventory is sold. The unmargined portion, if any, will be termed out to improve viability, Mr. Chairman. The lending institutions will do exactly what, under this program , the honourable member seems to be suggesting that we should do - to jump in and make sure that we term out all those old debts in terms of operating credit.

That's the part of this agreement, of this new program, Mr. Chairman, that already we have four financial institutions who have signed agreements, Mr. Chairman, the Royal Bank, the Toronto- Dominion, the Canadian Im perial Bank of Commerce and the Bank of Nova Scotia. Mr. Chairman, there is the Bank of Montreal, the Caisses Populaires and the Credit Union Central, there are still resolutions from the boards required and they are in the process of working out their details, Mr. Chairman. Mr. Chairman, this program is doing precisely what is being recommended in terms of Conservative policy.

This program, therefore, really serves two purposes, one being to ensure adequa te operating capital for 19 83, and the oth er, to resolve the dilemma that many farmers face of being unable to cover old lines of operating credit, Mr. Chairman. That's the basis of this new program. So we don't intent to take financial institutions off the hook but we are sincerely attempting as much as the province can do to assist farmers in obtaining the necessary operating capital that they will need.

Part of the problem the farmers have been faced with is that where they have been squeezed into a corner, they've had to go to the trades to try and obtain loan capital at far higher interest rates than if they were involved in one lending institution and paying the going rate.

Of course, this rate, while it can be argued is maybe not the best rate that might be negotiated by some people but certainly 1 percent plus prime is certainly much more favourable rate than many farmers would be able to receive from their fertilizer dealers, from their fuel dealers, who they have had to turn to because of the pressure in terms of operating credit in the last year or two. Mr. Chairman, obviously the Province of Manitoba cannot supply enough funds to deal with the credit needs of Manitoba farmers.

I think even the honourable members opposite realize that, that it is impossible, that we would not be able to do it, I think they even know that. To suggest that some assistance has not been provided, Mr. Chairman, the entire department in terms of extenson work has been doing the very essence of the assistance to farmers that now the honourable members opposite are saying should have been in place. Mr. Chairman, we have been meeting and we are meeting this week again, with the financial 1012

Tuesday, 22 March, 1983 institutions to see whether or not we can convince them to actually set up some kind of a referee process dealing with some of the problems that they have with their own clients, where discussions have broken off, where people can't seem to communicate, to facilitate ongoing discussion to see whether the problems can be worked out, Mr. Chairman. Tthat is what we are hoping to do, notwithstanding the legislation that is being discussed in the Federal Parliament to make sure that if there is a reasonable expecta tion where farmers can be put in the postion of having a viable operation.

We will endeavour to do whatever we can to assist Manitoba farmers. MR. J. DOWNEY: Mr. Chairman, I asked the Minister a while ago for a figure of how many farmers were presently engaged in the Loan Guarantee Program and the report indicates that there are 14 0 farmers are now in that program. The report indicates, if I have the number correctly, it says guaranteed loan accounts, 14 0 farmers. What is going to now make it such a magical program to help those other thousands of farmers that he's saying he's going to help? Was it the fact that there was a $60,000 limit on it?

Because a $70,000 limit, he's trying to tell us now, was adequate to restrict the Interest Rate Relief Program at. Now he says it's going to be wonderful because it goes to $1 25,0 00 and helps 1, 000 farmers. Why haven't there been a lot more farmers using this program if it's so effective and such a good program? I'm encouraging the Minister to stop trying to delay some of the decisions that have to be made by farmers and put a mechanism in place that could deal with it right now, Mr. Chairman, not six months from now. Let 's get on with it, Mr. Chairman, and deal immed iately with the problem at hand. HON. B.

URUSKI: Mr. Chairman, the honour able mem ber should be able to answer his own question. He was the Minister at the time. Mr. Chairman, he should know that the financial institutions didn't understand that previous program. Only one institution took

part in that program to a limited degree. We already have four institutions who have signed agreements under this new program. They didn't know and understand the program, Mr. Chairman. The former Minister never talked to the banks in terms of trying to seek their co operation. Maybe he didn't want to make it work for the farmers of Manitoba, Mr. Chairman, maybe he put a program there and said here's some window dressing farmers, you can do it. Only one institution to a limited degree participated in the program, Mr. Chairman, no other institutions were involved in that program.

Now the honourable member suggests get on with the job, Mr. Chairman, he didn't even understand his own program. MR. J. DOWNEY: Mr. Chairman, that program has been on the books probably since the introduction of the Manitoba Agricultural Credit Corporation Program in 19 58. Now the Minister is trying to say that we didn't explain it to the farmers. Mr. Chairman, the farmers didn't have the severe economic difficulties that they're having under his administration. In fact, the figures show for the first six months of last year there was an increase of 380 percent in farm bankruptcies in Manitoba, Mr.

Chairman, at a time when he said his government wouldn't allow that to happen. Over a nine-month period, 380, those are Statistics Canada figures, Mr. Chairman. Mr. Chairman, those are facts. The other point has to be made that if he's made such a good deal and the banks are going to be so well protected, why is he paying them 1 percent over prime and charging that on to the farmers if it's such a good deal to the farm community? MR. CHAIRMAN: Mr. Minister. HON. B. URUSKI : Mr . Chairman, I challenge the honourable member to produce the figures of 380 percent incr ease from Statistics Canada of bankruptcies.

I want the honourable member to produce those figures that he has alleged are there. MR. J. DOWNEY: Mr. Chairman, it may take me a while to find those figures, but I do have them available. It was a report about a year ago at this particular time. It was reported on the noon-time farm show; it was taped. It may not have been Statistics Canada, but it was figures. They were figures that were available to the farm community and I have them available, Mr. Chairman. I will provide those numbers for the Minister, but they are accurate, Mr. Chairman. HON. B. URUSKI: Mr.

Chairman, as serious as the situation is in terms of farm bankruptcies, the figures that are provided by Consumer and Corporate Affairs Canada show that there has been an increase from 14 in 1980 to 30 in 1982 of farm bankruptcies in this province. That's the kind of increase that has occurred in the last two years - 14 in 19 80, 14 in 19 81, and 30 in 1982, Mr. Chairman. I ask the honourable mem ber, as compared to 176 in Ontario in '82 and 14 3 in the Province of Queb ec in '82 as global figu res, Mr.

Chairman, I wonder where the honourable member gets his figures and I certainly would want a copy of the figures that he has quoted. MR. J. DOWNEY: Mr. Chairman, I will have to do a little more checking with the radio reporter that reported these figures but I can give it to you. It was a CBC news report by James Feeny on Monday, October 18 , 19 82, and this is what the repor t was: "F arm bankruptcies in Manitoba are up 380 percent from last year, the highest increase of any province in Canada. After the first nine months of this year, 24 farms had declared bankruptcy compared to just 5 last year." Mr.

Chairman, I will provide the Minister with the source and the numbers for him, if he so desires. MR. CHAIRMAN: The Member for Turtle Mountain. MR. B. RANSOM: Thank you, Mr. Chairman. Prior to the last election and especially during the last election, the New Democratic Party were able to tell the public and did tell the public frequently and repeatedly that our government favoured high interest rates. The same sort of statement was made in this House last year by some of the members opposite - the Minister of Finance, 1013

Tuesday, 22 March, 1983 the Mem ber for Springfield, for example - until they were challenged by me to essentially put up or shut up. What they chose to do was shut up because they could not find any quotation, any position, where we had said that we favoured high interest rates, Mr. Chairman. Now, for a while the members were quiet about that. Now, we have the Minister of Agriculture coming back with the same sort of statement again. Mr.

Chairman, my request to the Minister of Agriculture is that he either point out to the House where we took that sort of position, or else he should cease to say that we took that sort of position. MR. CHAIRMAN: The Member for Emerson. MR. A. DRIEDGER: Mr. Chairman, I would like to take this oppo rtun ity to exp ress some concerns and disappointments with the Minister and with the MACC Program.

One of the disappointments - the first one I would have to indicate - is last year when the Minister indicated that he would not be borrowing for land anymore through MACC, which I still fail to see the reasoning behind that, and I want to clarify why it was a great disappointment

Document details

Collection	Manitoba — Debates (Hansard)
Citation	32-2-31b
Type	hansard
Volume / chapter	32nd 2nd hansardpdf 31b.pdf
Language	en
Format	pdf
Source	PROVINCIAL
Identifier	8c69054f83a44d1fc754b504be728c5418f95361

Source file is stored in the law ingest library (pdf).