Manitoba Committee Hansard — LO Committee, Sitting 9 (30th Legislature, 2nd Session)

30-2-lo9

Manitoba — Debates (Hansard)

Legislative Assembly of Manitoba HEARINGS OF THE SPECIAL COMMITTEE ON LAND OWNERSHIP Chairman Mr. Harry Shafransky, M.L.A .. Constituency of Radisson Morden - 2:00P.M., Friday, February 21,1975. _ Printed by R. S. Evans- Queen's Printer for Province of Manitoba

February 21, 1975 2:0 0 P.M. MR . CHAIRMAN: Mr . A dam . 469 MR . ADAM: Thank you, Mr . Chairman . Mr . Harder, I just wanted to comme nt on your statement that you felt that the Provincial Government is not doing a good PR job in selling its programs. Is that correct? MR . HARDER: Well the impre ssion that I get in the country is that when farmers talk of the Government buying land, the general impre ssion that the farmers, in my opinion, seem to have is that the NDP wants to buy up all the land; and that's the impression; that's it .

And they are of the opinion seemingly that this is your aim , to eventually control the majority of the farmland in this province. I don't know. Is that your aim ? MR . ADAM: Mr. Harder, have you any suggestions to make on how the Provincial Governm ent would go about doing a good PR job in getting the information to the public in its proper context ? --(Inte rjections) -- MR. HARDER: Perhaps I' m getting all the answers. MR. ADAM: Pardon ? MR . HARDER : Maybe I don't have any suggestions, I don't know. Perhaps in some of their literature, perhaps via the news media . MR .

ADAM: This is very serious and I' m telling you, I' m not trying to be frivolous . MR .HARDER : No, no . MR . ADAM: . .. but I hope you realize that we 're having the same problems as the NFU is having, that you mention in your brief, insofar as the Co -operator coming out with the wrong information insofar as the NFU land program was concerned, and I' d like to suggest to you that we're having the same problem s as a government . We 're dealing with a hostile press the same as you are in your NFU organization. MR .

HARDER: Well I wasn 't aware that you were dealing with a hostile press, but I have my views on the Manitoba Co-operator. I think you 're well aware of that. Perhaps Mr. Morris on should be ... MR . ADAM: No . Are you not suggesting that we use public funds to get the programs or information to the people ? MR. HARDER: Well I realize that's very dangerous too because you can readily be accused of political partis anship, if I can use the words. MR. ADAM: Well I just wanted to make that clear, to understand that it 's very difficult for the Provincial Government . . . MR .

HARDER: Do you in fact have brochures in the agricultural offices ? Perhaps be cause I haven't been making an application for this, may be I' m not aware of it . I' m just trying to express freely what farmers have been expressing to me . Now, do you have brochures available clearly stating the aims and objectives, that this is perhaps a policy de signed to assist young farmers and so on ? Do you have that --are you making that kind of information available ? MR . ADAM: I believe that mos t of the ag rep offices do have the information .

Now it has come out at some of the meetings that some of the agricultural representatives did not have all the information themsel ves. Now, what the reason is for this I can't give you an answer, but I do agree with you that we have very much difficulty in getting our programs across to the people in the proper context, and one is Autopac, for ins tance - public automo bile insurance. MR . HARDER: Oh, is that a problem ? MR . ADAM: I agree that we don •t have the lowest premiums in Ca nada, but we have the second lowest . But do the people know that ? MR . CHA IRMAN : I may say, Mr .

A dam, that we are dealing with MR . ADAM: Sorry, Mr. Chairman . Sorry. MR . CHAIRMAN: . . . land policy. Mr. U skiw. MR. USKIW: Yes, Mr . Chairman . I was rather intrigued by your statement that you were very patrioric, loyal, that if you were to sell your land you would prefer to sell it to the Government of Manitoba rather than to some foreigner. That was your statement . MR . HARDER: Yes. MR .

USKIW: And I want to tes t your loyalty here by asking you whether that still applies if the difference in the offer was fairly significant as between the offer you received from the Government of Manitoba and that foreign buyer. In other words, if the Government of

47 0 February 21, 1975 (MR . USKIW cont 'd) •...• Manitoba offered you, say $10 0. 00 les s per acre, would your loyalty and patriotism hold up ? MR . HARDER: Well, I would probably have very serious problem s with my loyalty and patriotism at $10 0. 00 an acre. And this has been a problem with many of the people that have in fact sold to foreign invest ors. MR . USKIW: All right. Apart from that, you feel there is a role to be played by government in the transition of farmers from one generation to another, the transfer of pro perties . So you don't see a major reason to object to the land-lease option . MR .

HARDER: Well it's a personal thing with me . I feel that if there are no other avenues open, if the farmers cannot through FCC facilitate thi s kind of thing, then I see this is the best option left open to them . MR . USKIW: I raise one more question then . What is the difference between a mort gage and a lease ? MR . HARDER: Well that is of course a philosophical thing. A mortgage, some how you still feel it is your own land.

It really isn't; I know a lot of these FC C loans they're going to be many years, but there is a certain amount of freedom that if tomorrow I want to terminate that business I can get out of it . Perhaps I could with a lease too. At least you have some eventual hope perhaps of ever owning that, not for what it 's worth . I realize that business wise it doesn't make any sense because you'd be much better off with a lease, in fact, because you could use your capital in other business es, but this is just the way that we're trained to think.

We somehow , even myself, I would sooner own my land or make the payments on it . MR . USKIW: Do you prefer that governments provide various services to the agricul tural commu nit y, for example a line of credit, or would you prefer that we resort completely to the free enterpris e concept and completely remove government from any role whatever in this field? MR. HARDE R: Well if you did that, I realize you'd be doing it only in the agricultural field and not in other fields, so . . . MR . USKIW: Well let 's take it generally.

Do you think governments should be involved in the financing of private business of any kind? MR . HARDER: Well I think under the present situation you have no choice, because I don't see the banks, the banks certainly haven't done their share in financing private business. I am personally not that opposed to government involvement in financing. MR.

USKIW: My big problem here, sir , is that the impre ssion I have is that the banker, • - - - the finance company or the insuranc e company, is not as prepared to venture into high risk -circums tances and therefore it seems to be the public that always has to get involved in these areas, and I' m talking now not only about agriculture but let 's take a look at the Ind ustrial • Developme nt Bank, let 's take a look at the Manitoba Development Fund, or the Cor poration as it' s now called.

All of these activities are designed to facilitate those people, creditwise , that would not be facilitated through the private lending instit utions . In other words, the public lending system has been built up over the years as a system of last resort rather than a system that would be very selective and that would guard itself against the risks that they would undertake. Do you think that it 's good for the people of Manitoba or the people of Ca nada to be a lender of last resort , or would you think we should get right out of the lending field ? Because that's really the role we're playing, by and large.

We're the lender of last resort . After everybody else has said, "N o, we will not finance this venture," the industry or indi- vidual then go to the government , either provincial or federal, and say, "Well , we're a marginal industry, you know; there's a lot of risk; but we think it 's good for the community where we operate . We will employ people . Take a chance on us. " MR .

HARDER: Personally speaking, I don't --you know, if you do this - there again the public relation has been rather poor - if you do this lending of last resort, it is often not known, not known by the general public that that in fact is what it is. You know, this govern- ment -and I have no reason to think otherwise -have a rather bad record of loaning money to other industries . MR. USKIW: Why do you say that, sir ? MR . HARDER: What do you mean, why do I say that ? MR . USKIW: Why do you say it has a bad record ? On what bas is ? MR.

HARDER: Well we hear much publicity about Saunders Aircraft, etc., etc., Western Flyer , etc. , etc . and, you know, the press that we hear on it certainly . . . that the

February 21, 197 5 471 (MR . HARDER cont 'd) . . . . . Government should have taken a second look before they made these loans. MR . USKIW: Are yc-u also aware, though , in that context then, that almos t in every instanc e--not every, I would say 99 percent of those--were loans to private individuals or companies that went sour? And that's my point when I said should we be a lender of last resort, because every time a loan goes sour we end up having to make a decision .

Do we throw up our hands and lose the money and offer that business for virtually nothing, be it a farm or be it a business, or do we then say, "All right . To protect the public's investment we 're going to try to make this thing successful"? That's really the position we're in when that happens, and that's why it 's important for you to tell me whether, in your opinion, the public should get right out of these things entirely to protect the public purse, so to speak, or whether we should con tinue taking these high risk ventures, whether it be in agriculture or elsewhere . MR . HARDE R: Oh I' m not sure, Mr.

Us kiw -of course I' m biased perhaps because I am mainly a farmer -that you can compare agriculture with any other ind . MR . USKIW: Oh yes. MR . HARDER: Let me finish --any other industry in this country. Any other industry to some degree has some control over its managements and its margin levels.

Now as a farmer - and this is why the previous administration even perhaps went into MACC - I as a farmer don't have the controls of controlling my margin level and what I pay for my inputs and what I get for my product, and I am in the business of producing food, so therefore any agricultural area -of course I 'm biased -I feel that there is more room for government involvement perhaps than in the industrial area. MR .

USKIW: Well really what I' m leading up to is this: that we have a multiplicity of lending institutions in Manitoba and in Ca nada in the business of financing agriculture, but every time the economy slumps -and I can take you back to three or four years ago when agriculture was in a very serious state of depression -every time the economy slum ps, all of the private lending institutions pull in their horns and say, "You know, we have no money . We can't ex tend any more credit . We want you to catch up on your payment s.

We can't advance new op erating capital." And just to give you an insight , in the years 195 9, '6 0 and '71 the Province of Manitoba was very much involved in consolidating debts, which in essence meant picking up all of the arrears and bailing out the banks and the finance companies and the feed companies and the fertilizer companies in order to keep the farmers afloat. They were restructuring the debt , transferring it from the private sector to the public sector.

And I ask you this question, you know, because I think either the public sector should be into it in the first place, and on top of it throughout, or they should not always have to rise to the rescue whenever the private sec tor finds itself in some difficulty. If we 're going to operate on the basis of complete freedom of enterprise, then the public has no business being involved, and therefore the banks should worry about collecting their debts rather than the public . But our credit his tory has always been the opposite .

We always come in very heavily with money at the time when the private sector pulls out , or feel that they've had enough of it and they can't carry the debt any longer. MR . HARDE R: I realize the situation that you were in, a lot of people consolidating loans and you were paying out FCC mortgages, you were paying out banks, mainly FCC mortgages.

Now as a farmer my self, and other farmers, we were very pleased that the Provincial Govern ment was doing this, but as far as that, really it was not the responsib ility of the Provincial Government at that time, it would have been the respons ibility of the Federal Government , because they in turn were setting agricultural policy in this country. And it 's very noble and I realize the problem that you ran into . You did bail out the banks -you know, their records indicate that extensively -you did bail out machine companies. That was very noble .

The Federal Government took absolutely--didn't take that much responsib ility in that area. MR . USKIW: Well I app reciate--! 'm not sure if it was noble, because all these people have always told us that we shouldn't be involved in the private sector. Until they get into trouble.' MR . HARDER: Well I have never told you that . That 's where I differ perhaps . MR . USKIW: Okay. MR . CHAIRM AN: Mr . Johannson . MR . JO HANNSON: Yes . Mr . Harder, you made some remarks about your impre ssion for the reasons why so many lawyers have appeared on behalf of banks before our Co mmittee and -what was your statement ?

47 2 February 21, 1975 MR . HARDER: I said in my statement when the Bank of Montreal hires a lawyer to make the presentation . I said I had become somewhat appalled because I didn't see where the Bank of Montreal had done much to . . land policy in this country. I didn't say that a lot of lawyers. They may have . . I 'm sure they have. MR . JOH ANNSON: We had quite a number of briefs presented by . MR . HARDER: I think you' ll probably be getting some more of that today. MR . JOH ANNSON: . . people either who made them on behalf of banks or who were - working with banks .

Now what would their interes t be in th is ? MR . HARDER: Well that's not for me to say. Th at's for you to say. What would their - interest be in this? Well perhaps it has to do -you know, I can cite off the top of my head - perhaps it has to do with a land transaction , legal fees, perhaps that 's where their interest - lies. Although I don't see where government land purchase is going to hurt that any. They 're - still handling the land transfers and that . - MR . CHAIRMAN: Mr. Johannson , I believe that anybody can present a brief. Whoever they are I don't think is of particular significance.

They represent certain groups and they -present briefs, and I don't believe that there are any restrictions as to who should be present- ing briefs. MR. JOH ANNSON: Well, Mr . Chairman, I have some figures here that indicate that in 1971, for exampl e, the MACC paid out about $4 million for debt consolidation , and among the figures, a large bulk of that went to pay off the Royal Bank of Canada -almos t a million dollars. -and a number of other banks . Why were these necess ary ? MR . HARDER: Well because the banks, of course--you know, there again it 's a question - of my opinion .

The banks of course were probably starting to foreclose on farmers and there- fore there was room for government involvement . MR . JOH ANNSO N: In 1967 to 1969, MACC followed a policy, not of direct mortgage lending, but backing loans made by the banks. Is this an example of good free enterprise in action ? - MR . HARDER: No, I realize that it 's not . I' ve never been deluded by free enterprise, you know. Of course it is n't, but even the banks wouldn't go for that , some of them .

There wasn't a good enough guarantee because--! mean at that time the banks were not all that con cerned about the comm unit y itself . They're looking where they can make the bes t dollar at the bes t ti me. And incident ally, while I' ve been critical of banks, banks today are very good; you know, are starting to assist farmers to a large degree. I deal with banks and I want to make that very clear. MR . JOH ANNS ON: So do I. - MR. HARDER: B:ecause I want to go back and borrow money. I don't want them to get the wrong idea why I' m sitting here . Because it's going to get back to them .

The point is, they 're with you when you 're up , but when you 're down! There again MR . JOH ANNSON : Then they want government guarantees. MR . HARDER: Government bureaucracy. MR . JOH ANNS ON: They want it both ways . MR . HARDER: And I have been very critical.

I borrow a lot of money from the federal Farm Cr edit Co rporation -and some of those people may be here -and I have, you know, criticized them a lot , but in times of trouble, if I have a choice, I would still much sooner deal with the Federal Government than private lending institutions because the Federal Govern-- me nt at no time is willing to chase you off the farm . You could be three, four years behind in payments and if you were reasonable with them , you know , you could still talk to them .

And some body in a previous presentation here lamented the fact that trust compan ies, private inves tors, were encouraged to get out of the lending field . Well , I' ll tell you, when times are tough, if you have a mortgage with a private company and if they could see a dollar in it in foreclosing you, that would be their first thi ng, the first thing they would do. And you know, we can talk about the evils of government and that, but the Federal Government surely didn't take that approach and this is why I still support the FCC . MR . JOH ANNSON : Okay. MR . CHAIRMAN: Thank you, Mr. Harder. Mr. Graham . MR .

GRAHAM: Before you go on with the next witness, I would like to ask the Minister a question . This is for clarification. We have repeatedly heard references made to the trans fer of land from father to son through the land lease program . Has the Minister any informati<

February 21, 1975 (MR . GRAHAM cant '

d) as to the amount of purchases by the MACC that have been leased to the actual son ? Would it be more than 50 percent ? 473 MR . USKIW: I believe--I would guess at the mome nt , but I believe it would be in the order of about 25 percent . I think you have the information , Mr . Graham . We supplied the committee with a record of all of the transactions so I think you can establish that information. MR . GRAHAM: The records we have only indicate the person that has leased, not where the land was purchased from. MR . USKIW: Ye s, but you have two sets of records, Mr . Graham .

One, I believe it's the acquisition, or was that not distributed , Mr. Chairman ? MR . GRAHAM: The acquisition was not distributed . MR . USKIW: Yes it was distributed , as well as the records of the less ees , and if you compare notes you will find that there has been a trans fer from father to son in the process, and I am told it 's around 25 percent of the total . MR . GRAHAM : Thank you. MR . CHAIRMAN: Mr. Jorgenson . MR . JORG ENSON: I wonder , Mr.

Chairman, if you could read the numb er of briefs that are to be heard yet this afternoon, and the order in which they will appear, so the people who are going to be pres enting briefs have some idea of how long they are going to have to sit here and wait . MR . CHAIRMAN: Mr . Har land asked me, when I cam e in, he would like to present a brief. He came in ; he was on the list about the sixth or seventh , and he indicated because he has to leave for Winnipe g , if we would be agreeable to have him present his brief. He will be next , then we have Mr . Wheeler from Brandon; Geo rge- pardon me. Th ere was a Mr.

Doug Cr am who had phoned me over a week ago , in fact about two weeks ago, and I neglected to put his name down . He was one of the first ones who had contacted me, so he would come in after Mr . Harland; then Mr.

Don Wheeler, Brandon; George Smith , Rural Municipalities of Dufferin, Franklin, Macdonald, Montcalm , Morris, Rhineland , Roland; James Kitching , a private pre sentation; Lloyd Kitch ing, private presentation, from Ca rman; Lawrenc e Delichte, Livestock Producers; Geroge Froese, private presentation; Eugene Gaultier, Notre Dame; Mark--I didn't get the last name, from Darlingford, the Cow-Calf Association; John Harms: Jack Wayne's private presentation and Gerald Parent, Nine tte. So there are approximately thirteen br iefs to be presented . Thank you, Mr. Harder . Mr. . -(Interjections)--Pardon?

Well , I had--pardon me, sir , I had Mr. Doug Cr am, who phoned me about two weeks ago, I had the secretary phone him that he would be on the list . He was the first one to get in touch with me and I had the list ma de up. The Cl erk also had peo ple who phoned in yeste rday and the day before. I had one list; we did not get together to get all of these lists together, in the same order . That 's why you might have some names which are not exactly in the order that you mi ght have seen, that the Cle rk of the Legislative Asse mbly , Mr . Reeves, had .

But I had people phone me in the Legislature some time ago and one that I neglected was Mr. Doug Cr am; Young Farme rs. So I apologize. I know that there is always going to be some dis satisf action. Mr. Harland has asked me if we would be agreeable, and if it 's agreeable to the other gentle man , then we would proceed on that . Is it agreed? Mr. Harland. A message for Mr . John Hunter . Ca ll Municipal Office, Dominion Ci ty . Mr . John Hunter , call your Municipal Office in Dominion City . MR . HARDER : Let me say that there have been people that have asked for copies of my brief and I don't have 11ny.

I only prepared it Wednesday and Thursday of this week, and in the hall before I heard there were certain accusations that I hadn't prepared my own brief, and that's a bunch of BS . I don't let anybody do my writing for me. I want that very clearly under stood. MR. CHAIRMAN: Thank you, Mr. Harder . That is fine. Mr. Harvey Harland, Manitoba Beef Growers Association . MR . HARLAND: I guess this thing is all set up so I' ll just take the liberty of sitting down here, Mr. Chairman, if that 's all right . MR . CHA IRMAN: Proceed. MR .

HARLAND : Well, honoured me mbers of the Legislature, distinguished guests, and Mr. Chairman . I have been asked by the Beef Growers of Manitoba to present this brief here today. I would hope that one of our directors, Mr. Char lie May er from Carberry , would be here and if he is I would like him to come up and sit around here with me and help me field

474 February 21, 1975 (MR. HARLAND cont'

d) any questions that may be coming later. To get on with the brief, Mr . Chairman , the need for a land use policy in our province is at the present time receiving a lot of attention from both the rural and urban populations. The Manitoba Beef Growers would like to take this opportunity to comme nd the Government of Manitoba on its decision to establish this special committee of the Legislature and to thank them for the opportunity of appearing before the committee to express the views of the beef producers in Manitoba on this subject. At the outset, Mr .

Chairman, we would like to make a numb er of points that we believe are quite pertinent to the subject . The Manitoba Beef Growers Association were very dis appointed that the Working Paper presented by the Department of Agriculture was made avail able to the public for such a short time prior to the opening of the hearings . No . 2 Farmers have historically become som ewhat larger in their farming operations and have thus definitely become more efficient in the production of food products.

This fact has not been noted by the author of the Working Paper, and because an attempt has been made in the Working Paper to prove that large farmers are less efficient than smaller ones, the Manitoba Beef Growers Association certainly doubts the competence of the complete Working Paper . - - - We believe , Mr.

Chairman, that land use and not foreign ownership is the main issue - that our Government should be concerning itself with and, for this reason , we would highly recommend that this special committee consider the establishm ent of a land use and owner - ship commis sion such as the Province of Alberta has set up now, in order to give the public a period of time to have a direct input into such a program . We believe very strongly, Mr . Chairman , that if our province has a good land use policy we need have no fear of foreign ownership .

In fact it is our firm belief that Manitobans are much less fearful of foreign ownership than they are of government ownership of agricultural land . Many farmers in Manitoba at the present time are fir st , second and third generation farme rs. It would seem to us that if a foreigner, say from Germ any or France, wishes to purchase land in Manitoba, perhaps you should consider a policy whereby he would be required to show intent to actually settle on that land within a certain period of tim e.

We believe that a - policy of this nature would easily dispel any fears of foreign ownership that may be prevalent • in certain locations in our province. The Manitoba Beef Growers Association feels that a land use policy in rural Manitoba should respond to the needs of our rural com muni ties and, where possible, be kept separate and apart from the policies needed in our urban areas. There are a few other things , Mr.

Chairman, Many small natural bush areas in our province, we feel, should be left in their natural state, and we believe there should be tax -incentives for the owners of those wooded areas in order to encourage the land owner to leave them in their natural habitat where it is obvious it would be in the best interests of the majorit] - of Manitobans .

Where there have been, and will be, man y abuses or obvious abuses of some of our poorer quality lands -exampl e, from wind and water erosion -and it would appear that such lands could be more adequately supervised by a Department of Agriculture conser vationis then we believe that thi s course should be followed. The Manitoba Beef Growers Association, Mr .

Chairman, is of the opinion , and we feel - from our discussions with various segments of the agricultural industry that the vast majori ty - of M a nitobans are also of that opinion, that the best use of good farmland is that it should be farmed for the production of food by family farms, farming co-operatives, or farming cor porations. We are totally against the government of our province going out and actively pur chasing viable agriculturally productive land .

Now , this relatively new government land lease program does really nothing more than give the prospective farmer another party from which he can rent farm land . This rental agreement from our government is completely non-negotiable . After the first five-year rental- period, because of the traditional economics of production, the less ee will not likely be in a better position to purchase that piece of property from our government than he was five years == before.

And we believe , rather than be encouraged to enter into this agreement, he should have been offered a loan to purchase this property on a reduced interest rate, which would in turn encourage ownership of our lands rather than encourage mo re farmers to become tenant s. Also , Mr . Chairman, as the lease agreement stands now, there is no opportunity for the less ee to negotiate an agreement where the land owner would be obliged to share some of the risks of production .

February 21, 1975 475 (MR. HARLAND cont'

d) We also believe that Manitoba' s gift tax and succession duty legislation should be changed. If it were changed to encourage more farmers to pass their farms on to their sons, it would help solve any problems that may exist of non-resident ownership of farm lands. The Manitoba Beef Growers Association want to comm end our governme nt for the institu tion of a formula whereby land lease rates are now based on land productivity and commodity value. We feel, however, Mr.

Chairman, the main issue concerning our cattlemen is the con tinuity of tenure on Cr own land which has traditionally been used for grazing purposes. We feel that a five-year lease would be the bare minimum where land is used for livestock pro duction . Perhaps it could even be longer than that . In conclusion , Mr. Chairman, the Manitoba Beef Growers Association would like to st ress the importance of providing an opportunity for the people of Manitoba to be involved in reaching decisions on land policy that may significantly affect them .

We would again draw your attention to our earlier suggestion of having a commis sion set up to look into all aspects of land use and foreign owners hip . We certainly appreciate this opportunity of presenting the views of our Association to the committe e, and please consult us if we can be of any further assistanc e. Respectfully submitt ed . MR . CHAIRMAN: Thank you, Mr. Harland.

Before I proceed to have questions, possib ly for the benefit of those people who were not pres ent this morning -and there were a numb er of mem bers who came here late -I' d like to introduce the mem bers of the commit tee, and I 'm starting on my left: Ken Dill en, the Member for Thompson; Jim Walding, the Member for St . Vital; Les Os land , the Member for Churchi ll; Wally Johanns on , the Member for St . Matthews; Tom Barrow, the Member for Flin Flon; Pete Adam , the Mem ber for Ste .

Rose; on my right, Warner Jor genson, the Member for Morris; Harry Graham , the Member for Birtle-Russell; Jim Ferguson, the Member for Gladstone; George Henderson , the Member for Pembina ; Gordon Johnsto n, the Member for Portage la Prairie; Sam U skiw , the Member for Lac du Bonnet and the Minister of Agriculture. We also have with us the Member for Rhine land, Arnold Brown, who is not a member of the committee but all members of the Legislature are entitled to sit in on a commit tee . The only time that they come in question is if there should be a vote --(Interjection) --. MR.

CHAIRM AN: I 'm Harry Shafransky, Member for Radisson and Chairman of the Comm ittee . Proceed, Mr. Us kiw. MR . USKIW: Yes. On Page 2, sir, you suggest that there should be some incentive for owners of land, in particular farmers, to leave some of their land in its natural state. You're talking about a tax incenti ve . Is n' t it your opinion that that is the existing policy? As I under stand our asse ssment sys tem, there is consideration given to the over-all value of a quarter of land , bas is its productivity, its soil condition , etc., so that that already is a consideration of assessment . MR .

HARLAND : Yes, it certainly is a consideration in the asse ssment , but we feel that there is still too many small bush patches that are being bulldozed off and for one reason or another they're felt by the owner, perhaps, to be of more value if the bush was removed, but the immediate farmers around him may suffer wind or water erosion because of that , and rathern than set up legislation to restrict him from doing this sort of thing, we feel that perhaps there should be even mo re tax incentive , even perhaps pay a person to leave the land in its natural habitat . MR .

USKIW: My next question has to do with your second major point , and that is having to do with the public purchase of land . I want to ask you, sir , whether you are a believer in a freedom of choice ? MR . HARLAND: Freedom of choice ? MR . USKIW: Yes. MR . HARLAND: Yes. MR .

USKIW: Then do you believe that that individual that doesn't have money or equity on which he can borrow further sums of money -mortgage financing is what I' m getting at - whether that individual should be the only one with the right of access to land , or do you believe that public policy should also accommodate those individuals who don't have equity, or a down payme nt , or whatever you want to call it ? MR . HARLAND: Well, I feel a young fellow that wants to buy farm land, if he doesn't have the money his record or his back record or track record should be able to be of some

476 February 21, 197 5 (MR . HAR LAND cont'd) . assistance to him . Now, I think that he's probably in a much better position, or just as good a position, to make a deal with another land owner; it would not necessarily have to be the Government. Because I feel he can get locked into this thing with the Government as well and it's not negotiable

whereas, if he was able to go out and make a deal with a private farm er, after a year or two if we had a turn-down in our ag ricultural industry it is negotiable, whereby this five-year deal is not negotiable. MR . USKIW: Why do you say that government is not a body with whom you could negotiate I thought it was the most negotiable body there is. MR . HARL AND : This five-year agreement is not negotia ble. MR . USKIW: Well let me put it in perspective for you . Many cattlemen have made known ___ _ to the government, and to myself in particular , that they are having certain income problems this year.

And again, they ask us for a response to their needs For the year 1975 we have eliminated our lease fees on Crown lands, which is a very substantive contribution towards their needs. Why do you in that context maintain that govern ment is not a body with whom one can negotiate when the exact opposite is revealed within your own brief where you commend the government for having changed the lease policy to reflect the productivity of an acre of land rather than the straight cash rental system as bef ore ? MR .

HAR LAND : Well it seems to us that you'd see it a little different situation when you 're dealing with a number of individual grain producers in different locations where you might , you know, for crop conditions I don't think you'd want to be adjusting that lease. -MR . USKIW: Could you name me one private owner of land that for 1975 would be willing to give up the use of his land for a zero revenue ? Is there one that you can illustrate for me? MR . HAR LAND : No I wouldn't think so. MR . USKIW: All right . So th en why are you saying that the Crown is much more uu.uc:uH to deal with than a private landlord .

MR . HAR LAND : We ll , I'm suggesting according to your lease agreement , that I have a copy of, that I didn't see any indication in there that it was negotiable. MR . USKIW: All right . Then if the Crown is a body which does not negotiate with its people, then how do you explain the presence of yourself and all of the people here today and th� government and Members of the Legislative Assembly if it was not for the express purpose of - arriving at an optimum position on land policy. Isn't that a negotiable approach or position that we are taking ? MR . HARLAND: Yes, this is today a negotiation . MR .

USKIW: You've overlooked that. MR . HARLAND: I was going from the paper and I still don't believe that that paper is negotiable. MR . USKIW: The Member for Birtle-Russell whispers to us . He says that the govern ment negotiates from strength. I want to inform him in case he doesn't know the democratic proc ess that it is the people that negotiate from strength because government is only represent----- ative of its people. It cannot be government otherwise.

Now you indicate on Page 3 that a lessee will be in no better position to purchase land on the fifth year than he would otherwise be if he was purchasing it on day one . I want to re peat the illustration I gave this morning that if you buy land at $200 .00 an acre and land values ---- go up to 250 you are buying land at 250 and the Crown foregoes the recovery of its subsidy, which is the other $50 . 00, for that five year period1 so aren't you at an advantageous position if land values go up under the lease program ? MR . HAR LAND : Uh huh . MR .

USKIW: You have a distinct advantage if land values go up from where they were when you entered the lease. The only problem you have is if land values go down and there the government says, "But we are not going to lose any of the people's money therefore we will want you to pay us back the minimum cost which is what the public put into this program ." ••••• That 's the only time that there is a negative result. MR . HARLAND: That 's right , but what I meant here was that I don't feel that the young farmer would be in any better financial position at the end of five years. MR .

USKIW: Well all right, let me put that in perspective then, sir . Let 's say that five years ago you leased a

section of land from the Crown through this program because you weren't eligible to arrange for mortgage money to acquire your farm, and of course this was the year in which you would decide to opt to purchase under the agreement. Why do you say

February 21, 1975 477 (MR . USKIW cont'

d) that you wouldn't be in a better position given the fact that in the last two years the returns to agriculture were so dramatically increased that in those in stances where there was a succes sful crop and a successf ul pric e, and that's the last two years, that your net returns exceeded $100 .0 0 an acre, and why wouldn't you be in a position now to say to the government, "This is my fifth year.

I've made myself a pile of money in the last couple of years because things were good , because things were good ." --(Interjection) - Well I 'm not so sure because no one can co nvince me that agricultural income was not good last year or this year. Why couldn't you apply the earnings on your farm towards the purchase of that farm ? MR . HARLAN D : Well I'm not suggesting that you're all wrong in saying that everybody's made a lot of money the last two years. MR .

USKIW: I 'm saying those that had a succ essful production year and who grew commodities that were paying well - I'm talking about grain for example - that those people certainly would be in a position to exercise that option at a very much advantageous position . MR . HARLAN D: That's right if they were going to be guaranteed that at the end of the five-year period we'd have had two or three years just passed like these. MR .

USKIW: Well all I 'm saying is that their guarantee is as great as the guarantee of the man that goes into the mortgage fi eld and borrows his money to buy a farm, his guarantee is just as great. MR . HARL AND : All right , but I'm getting around to the point where I feel that the young fellow would have been just as well to rent land from you , if you owned it, individually rather than you as the government. MR . USKIW: No , but all right . Let me then draw you into this question . I know I'm giving you a problem, but do you believe that the public should be involved in mortgage fin ancing ? MR .

HAR LAND : The public should be involved in mortgage, any kind of mortgage fin- ancing ? MR . USKIW: I mean for agriculture, farm mortgages. MR . HARLAN D: Yes. MR . USKIW: All right . Then why are you saying to me that, (

a) you believe in the free dom of choic e, but you only want to provide a program for those people who can borrow money but have no program for those people that can't borrow money, since it 's public money and public policy we 're talking about, if we believe in the freedom of choice. MR . HARLAN D : Well I think that there's enough young people to farm our land that can come up with the necessary funds from MACC. MR . USKIW: That is not freedom of choic e, sir . Let 's say that I have a lot of money but I want the freedom to have a lease versus a mortgage . That 's my economic management decision .

I would prefer to lease rather than to own my land; rather than to tie up my money in land I would prefer to lease because five years from now I want to get out of agriculture, I want to move to British Columbia into the Ok anagan Valley; why do you want to deny me the freedom to choose between two programs of government, one that involves a mortgage, the other one that does not involve a mortgage. MR . HAR LAND : Well if you were just going to farm the land for a short period and move out of Manitoba then I would . MR . USKIW: Well that's just one illustration . MR . HAR LAND : .

I realize it 's just one illustration . Basic ally when it comes down to the, I suppose, the last of the eleventh hour I don't believe that the majority of Man itobans want the government to be involved in a lot of land . MR . USKIW: All right , I'll accept that, and I think you're right . MR . HAR LAND : Yes. MR " USKIW: We also don't believe though that because, or rather we also believe that because the majority of Manitobans don 't want us to do that , that (

a) they won't sell it to us; and (

b) they won't lease it from us . So all we are going to be doing, and are doing, is respond ing to those that would want to be in the program , we are not forcing anyone in . So really we 're saying we 're providing a free choice to those that want to get into that kind of a program . That's why I raised the question. Are you opposed to the free right of an individual to choose the way in which he has access to land ? MR . HARLAND : I suppose I'm not . But I want to stress here that we believe that it would be really better if you would encourage them to own the land .

478 February 21, 197 5 MR . USKIW: Oh, that 's what we're doing. MR . HARLAND : . • initially, rather than get into your lease program . MR .

USKIW: That's exactly what we're doing through this program , is encouraging them to eventually own the land because we are basing an assumption here, or our position on an assumption , and that is as the world becomes smaller due to greater populations, there will be greater demands for land and hence land will become more valuable for each genera tion , and therefore the land values will creep up to the point where in most instances when it comes to the point of exercising your option to buy you are probably going to come out with a subsidy to own land under this program .

We hope that we can come close to a break-even position on it but we rather doubt it . We think that we are going to be subsidizing the purcha se __ of land on the fifth year, that's what we think is going to happen, based on the curve in land values . MR . HARL AND : Well we feel it would be better to encourage them on the first year rather than the fifth year. MR . USKIW: Well but they are already denied mortgage money because the present system says to them that they are ineligible, (

a) they haven't proven themselves in terms of their ability; (

b) they have no financial backing . You can only borrow money when you have money, is what I'm saying, under our present system . So that all of those options are not there for them so they really are not in the same position as their neighbour who has money, and therefore this program - di sregard the fact that your neighbour does not have any money. MR . HARLAND: Are you suggesting that no young farmers that are entering into this lease agreement have the financial backing to purchase then ? MR . USKIW: No , no , not at all .

All I'm saying is that we have two bo ys, they're both 21 years of age, or 25 , one is yourself and the other one is your neighbour, you are lucky your father helped you and you had another fortunate break you were able to accumulate some money,

whereas your neighbour due to other circums tanc es was not . MR . HARLAND : Yes. I think there's historic things here that enter into this picture. MR . USKIW: I mean there are many cir cum stances. MR . HAR LAND : You're using two people and . MR . USKIW: That 's right . MR . HARLAND: . . I could say the one fellow didn't deserve to have any financial support . MR . USKIW: That may be very well so, and therefore if you are looking at this program it will be determined very quickly in the initial years of a lease, (

a) for the individual himself whether he is able to farm that land , whether it 's rewarding fo r him , and whether it's worth while after five years to exercise the option to purcha se. Maybe he shouldn't commit himself on year one because he's not quite sure of hi s own abilities. MR . HARLAN D : But if the government's not quite sure of him maybe it'll be at the tax payers 1 expense that you did have him on there for five years . MR . USKIW: Oh you know if we loan him money and he goes broke it's also at the tax- payers 1 expense if we can't recover our money. MR .

HARLAND : You don't really have a problem with farmland . MR. USKIW: We've had that problem all the time. MR . HARLAND: Not with farmland though . MR . USKIW: Well unfortunately farmers have been discr iminated against . We've only had that problem with big compani es like CFI and Flyer, and Flyer's too early to say, you know, that may be a good one yet. --(Interjection) -- But there's still hope, that 's right , but with CFI we know we've lost our shirt. The farmers have not been that fortunate. I think that deals with all of the points that I have noted on your brief, sir .

On the foreign ownership thing I'm not sure whether you were strong on your position. Do you feel that there should or should not be legislation ? MR . HAR LAND : I would say that we would not be against having some type of legislation that the person would have to show intent to be here within a certain period of time. MR . USKIW: Oh yes, I know, there's one point here that I wanted to pursue.

You raise the question of estate taxes, and we had a presentation at the hearing on Monday where I believe one of the spokesmen for the Bank of Montreal indicated that that is a major barrier in the transfer of farms from one generation to the other. After we pursued that question for some period of time, and after he was able to during his noon break get ahold of some statistic: - - • - - -

February 21, 1975 479 (MR . USKIW cont 'd) • he came back with the following information, namely that there was 7, 000 transactions in a 12 -month period that he was alluding to , out of which some 120 were taxable under the estate tax laws of this provinc e, and which resulted in less than one-third of l percent of the total involving agriculture. Then he wasn't able to indicate - there were only 22 farms involved - and he wasn't able to indicate the extent of their tax !;_ability .

My question is, since it only involved so few people, you know, and then the exemp tions being so large, why do you mention that as a significant consideration that we should add ress ourselves to ? MR . HARLA ND : Okay , number one: What year was that, those statistics that you just MR . USKIW: The last 12 months . MR . HARLAND : All right . Perhaps if the succ ession duties had been changed you would have had more people passing their farms on to their sons rather than selling the1n, you'd have had perhaps a larger number to take the statistics from . MR .

USKIW: And you believe that there are a significant number of people in Manitoba that would have a net worth of $2 00, 000 or more, a net worth after all bills are paid? MR . HAR LAND : I think there 1 s a few. MR. USKIW: There are a few, I appreciate that, and those are the ones that we want to tax . MR . HAR LAND : Not at gross . MR . USKIW: The estate tax is a tax on wealth. The estate tax is a tax on wealth . That's the definition of it . Now if we remove the Estate Tax we stand to lose somewhere between four and five million dollars a year in this provinc e.

Let 's assume that we would go along with your observation and we removed the estate taxes, where should we re-apply the taxes in order to recover that four or five million dollars ? MR . HAR LAND : I wouldn't want to suggest where you would get that money. MR . USKIW: No, but let's keep it in perspective . The Estate Tax is a tax on wealth; it 1 s a tax on something that you or I get for nothing . MR . HARLAND : Yes. MR . USKIW: Okay . Now we have people in Manitoba that go to work and after they earn $1, 800 they pay taxes.

They have about $1 , 800 of exemptions , roughly for a single person, after which they pay income tax . Do you think it would be fair that if I received $3 00, 000 as a gift with no taxes against you going to work earning $3 , 000 and paying several hundred dollars of taxes . MR. HARLAND : I feel that if you 're really serious about having young fellows continue in the farming operation that you should do as other provinc es other than Saskatchewan have done , and that's waive this. MR . USKIW: That's what I'm trying to get at .

How is this a barrier to a young fellow that wants to inherit his father's farm and to continue farming, how is this a barrier? How is the Estate Tax a barrier ? It has not yet been demonstrated by any single example th at it has been a barrier . MR . HAR LAND : Well I think . MR . USKIW: I could understand it, if I may, in the context of several years ago when the exemption at the federal level, because it was then a federal tax, was aboet 50 to 60 thousand dollars , but at $200 ,0 00 how can it possibly be a barrier in Manitoba for the transfer of one's assets to a descendant. MR .

HARL AND : Well we feel that it disco urages, it may not be a barrier but it dis- courages the passing it on, it encourages selling the property. MR . USKIW: J'o, but you can't demonstrate for me by way of example . MR . HARL AND : I have no statistic s. MR . USKIW: . . . someone has had a very serious problem in transferring one's assets over by way of an estate because of the estate tax . MR . HARLAN D: No I haven't. No, I haven't got any examples of that . MR . USKIW: The banker in Winnipeg told us that if one inherits $300 ,0 00 that one would have to pay about $22 , 000 of inheritance taxes or estate taxes.

If I were to give to you $3 00, 000 every month, would you say that it would be too difficult for you to pay to the Government of Manitoba $22 , 000 out of every 30 0, 000 that I gave you . Do you think you would turn it do'Ml on that basis ?

48 0 MR. HARLAND: Not very likely. MR" USKIW: Okay . Thank you . MR" CH AIRMAN: Mr . John ston . February 21, 1975 MR . G. JOH NSTON: Mr . Harland , you say in your brief that we, meaning your group , are totally against the government of our province going out and actively purchasing viable agricultural land . Government, through the Minister here, has told a group such as this many times that the MAC C does not actively go out and chase down land buys or they don 't actively or aggressively go out looking for land . Your statement says the opposite.

Do you know of cases --- where government agents have actively gone out after the land ? MR. HARLAND : Well our Board of Directors who helped me put this brief together in dicated that they know of instanc es where the farm people that have sold some parcels of land to the MAC C have been encouraged to sell the land .

I, at this point, and I think I could get the statistics of one, because this was the one that was given to me but I didn 't bother to find out who it was, but one young fellow was trying to borrow money to buy a piece of land , and I understood it was in the Carman distric t, for some $80 , 000 -now this may be hearsay and it may not -b ut the MAC C representative shortly thereafter found that the land was in fact for sale; it was purchased by the government and offered to this young fellow for rent. MR . G. JOH NSTON: Do you think you could verify that . . . MR. H\RL AND : I could try to, I ... MR. G.

JOHNSTON: . . . and supply the information to the committee. MR . HARLAND: I could try to; I'm not suggesting that I could be succes sful in it but again I say, it may not be accura te. MR . CHAIRM AN: Well, Mr. Harland, we've had the type of statement that you just made a number of times. The MAC C has made enquiries and have written to the people who have made these particular statements or allegations .

To date we have not been able to asc ertain in any particular case of this having happened, and the MACC is very interested in order to be able to find if this is happening because it is against the policy of MACC to go, - actively to go and purchase a farm from some individual . It has to be that the individual comes ____ _ to the MACC and says , I'd like you to buy the farm . MR. HARL AND : We ll , Mr. Chairman, that's why I didn't put the point in the brief; I wanted to make it clear that we were against that type of thing and in answer to the question MR. CH AIRMAN: So is the MACC. MR . HARLAND : Yes . MR. G.

JOHNST ON . Thank you for your assistance, Mr . Chairman . I understand that Mr. Harland will supply details if he can . MR . CHAIR MAN: That would be very much appreciated . MR . G. JOH NSTON: Also you state as one of your major points that you object to the lease agreement because it 's so inflexible, and you developed that point when you discussed it with the Mini ster. Would you be satisfied if the government gave an option where there could be a crop-sharing arrangement or a fixed sum such as they now have in their lease -I believe it's 5 percent interest of the capital amount, the first three years . . .

MR . HARL AND : Five percent of the purchase pric e. MR . G. JOH NSTON: • . . and then it goes to seven, is that correct ? It moves up depending upon the cost of money but it's subsidized, then if the farmer takes the option to purchase all the subsidized interest is added back on to the pric e. Now , as I understand the lease -we 'll use round figures for examples -a $100 ,0 00 piece of property, that's what the government paid for it; they leased it out to the farmer for the first three years at five percent of the 10 0, 000, which means he would be pay 5, 000 a'year lease rent. MR .

HAR LAND : $20 .0 0 an acre. MR. G. JOH NSTON: Yes. Now at the end of the five-year period the government says now you can buy that land at today 's price. If high prices prevail land will probably go up in pric e, so the farmer will have to pay the 100 ,0 00, plus the increased value, plus about $20 ,0 00 of interest.

The Minister said I'm incorrect, and I'll let him explain it in a minute to clear that point up , but the point I'm making is if the price of land goes down, and while it appears unlikely but it has happened in the past, do you think you as a farmer would pay $100 ,0 00 for a piece of land that you desperately wanted although the market value is now 75 ,0 00 ? - -

February 21, 1975 481 MR. HARLAND: Well, absolutely not, and this is where I feel that if it was negotiable to some extent, you know, if the price of land goes down the government are going to find them selves owning more and more land. MR. G. JOHNSTON: Well that was going to be my next question. Do you think that this program is designed to actively encourage farmers to purchase their land ? MR. HARLAND : Well I don't, that's why I put that in there.

We feel that it's more desir able for the government to encourage them, and really encourage them by providing low rates of interest to buy the land initially rather than hopefully buy it five years hence. MR. G. JOHNSTON: Then, in your discussion with the Minister a moment ago the Minis ter took some pride in saying that in the past year the Provincial Government has forgave lease payments for grazing lands.

If, and I 'm surprised that you didn't ask the Minister, what would the government do if there was - individuals or province-wide - some farmers who had taken advantage of the leasing program, if they ran into financial difficulties due to light crops or crop failures or poor prices, would you expect the government to have a policy ready for that eventuality ? MR.

HARLA ND: Well, no I wouldn't expect them to have one and I think it was because the Cow-Ca lf people and the Beef Growers asked them to review the rates this year, that they did that on grazing land, and I pointed out in the brief that we commended them for doing this, and I certainly--no, I wouldn't expect them to have a policy ready to refund some of the rent that they would have in grain land . MR. G. JOHNSTON: Well, would you then expect the full letter of the agreement to be lived up toJ that if the individual could not pay his lease he be kicked off.

In other words, it's an inflexible agreement and if you can't pay you leave. MR. HARLAND: Well that was the point of my saying that. MR. G. JOHNSTON: So you think that should be modified, or would you wait for the gov ernment at that time to make an announcement. MR. HARLAND: I wouldn't want to suggest it be modified; I'd go right back to my state- ment in the brief that I would prefer them to not be involved in it. MR. G. JOHNSTON: Thank you, Mr. Chairman. MR. CHAIRMAN : Mr. Barrow. MR. BARROW: Just one question, Mr . Harland. I think your brief was very good .

The part that really interested me, I think the highlight of your brief was on Page 3, paragraph three, you say, "he should have been offered a loan to purchase this property on a reduced interest rate which would in turn encourage ownership of our lands rather than encourage more farmers to become tenants. " So then, me as a non-farmer, or anyone that doesn't farm, is actually subsidizing the young farmer. Is that right ? MR. HARLAND: You have been doing it for years. MR. BARROW: Yes, but this is what you're saying? MR. HARLAND : Yes. MR.

BARROW: Well, would you go a little further and say the government should loan money to anything that is a worthwhile project at low interest rate? MR. HARLAND: No, I wouldn't go so far as to say that, and I'll tell you why. You people in the city probably understand part of it, probably you don't, but you've been given a very low cost policy for a number of years and . . • MR. BARROW: Just a moment there, I'm not from the city I'm from Northern Manitoba. MR. HARLAND: I know, but there's not a lot of agriculturally product ive land around Flin Flan, is there? MR.

BARROW: No, but we've been saying this for many years that the government should enable a miner to buy a house at a reduced rate. Would you say that was equally as important as a small farmer buying land, or a young farmer buying land ? MR. HARLAND: Gosh I wo uldn• t want--no, I don't think I'll comment on that. MR. BARROW: It wouldn't be fair then? MR. HARLAND: Pardon ? I don' t know the circumstances of the problems that would arise around Flin Flan. I understand it is a mining town owned by the mine. I, you know, I'm not sure, so I wouldn't want to say yes or no to that. MR.

BARROW: We have the same problem with housing as you people, younger farmers, do in buying land. lt' s hard to get started, not only to miners, different people. But, if I wanted to buy a farm, if I had the money I'd just buy it; second, I'd go to the bank and borrow

482 February 21, 1975 (MR. BARROW cont'd) •••. money from bank. Can I? MR. HARLAND: Certainly, you can borrow money from the bank. MR. BARROW: But the interest rates are exceptionally high. MR. HARLAND: Yes, very high. MR. BARROW: Well would you suggest the government go into banking and lending money at a reasonable rate or a lower rate than the Royal Bank, HFC, lAC, and so on ? MR. HARLAND: Well, it is. I'm not suggesting this, it's already there, and I agree with it for agriculture purposes. MR. BARROW: You mean it should be .•. general? MR. HARLAND: I wouldn't say that it has to be more than it is now. MR.

BARROW: Thank you. MR. CHAIRMAN: Mr. Adam. MR. ADAM: Sorry, Mr. Chairman, I'm throwing all the papers on the stage here. I just wanted to ask Mr. Harland to clarify on Page 2, paragraph seven. I'll read the paragraph for the audi ence. "Where there may be obvious abuses of some poorer quality of farm lands, e. g. wind or water erosion, and it would appear that such lands could be more adequately super vised by the Department of Ag riculture cons ervationists, then we believe that this course be followed.

" Now, I presume you have to be talking about privately owned land because if it's Crown land we have the land, so the Department of Mines can adequately decide what the land use is for. Now, you're suggesting that where there is privately owned lands, perhaps of poor quality, that we should do something with this land rather than farm it. Now could you elabor ate on what method we would use to acquire this land. Should we use the same expropriation as in the Ontario law? MR.

HARLAND: Or if it's obviously being abused, and I'm not sure of the Ontario law, but if it is obviously being abused and not being used to the best of it's ability and production that it could be, then I think that the stage is here now where our government should be involved in taking some of these pieces of land over and putting them into a better state of productivity. MR. ADAM: So we should walk into a small farmer, maybe a half

section or more, and say, "Mister you're not managing this properly, we're taking it over. " Is that ... MR. HARLAND: No, that's not really what I had in mind. MR. ADAM: Well, could you explain. MR. HARLAND: Well, if it's obviously being abused. MR. ADAM: Yes. MR. HARLAND: And there'd be a committee of people, perhaps it would be, you know, your agricultural people; you already have them.

I don 't think there's many places but I know there are some in the province, that I think it would be in the general interest of Manitobans partic ularly to have, and even agricultural Manitobans, to ha� these parcels of land in a state of productivity, and certainly if the man is not doing his duty to conserve that land I think that the government should step in and encourage him to do it or else if, then ... MR. ADAM: Would we not be accused of being socialistic or land-grabbing and everything else that we get accused of ? MR. HARLAND: Well, perhaps if it was not within reason. MR. ADAM: Thank you, Mr.

Chairman. MR. CHAIRMAN: Mr. Graham. MR. GRAHAM: Thank you, Mr. Chairman. Just to carry on that point one step further: Is it not true Mr. Harland that at the present time under the Noxious Weed Act and Weed Con trol programs that the government is already doing this ? MR. HARLAND: Yes. MR. GRAHAM: I wanted to carry on a li ttle with the suggestions you had on the gift tax and successi on duty.

I'm a farmer myself and I have a 20 year old son \\ho would like to start farming and he has come to me and suggested to me that I give him the farm, and when I look at the Gift Tax Act I find out that really I can't afford to give it to him. -- (Interjection) There's a suggestion been made by the member for St. Matthews that I incorporate, and I that probably that will eventually be the avenue we follow. But, I would like your suggestions, or your advice; should I give the farm to him or should I lease it to him until maybe the gov ernment changes and we won't have those punitive gift taxes? MR.

HARLAND: Well, far be it for me to give advice to a rural MLA . I suppose if I was giving you advice I would suggest that you rent it to him. MR. GRAHAM: Thank you. A second thing. The Minister of Agriculture had indicated -

February 21, 1975 483 (MR. GRAHAM cont'd ) •.. there might be a loss of as much as $5 million in revenue and he suggested, or was asking for advice in what other avenues they could tax to recoup that. Do you really think that a government that has borrowed, in capital borrowing, over $2 billion in the last five years, which is really a mortgage of $2, 000 for every man, woman and child in the Province of Manitoba, is really concerned about transferring that $5 million to some other avenue ? MR. HARLAND: Well, I didn' t come here to get into any political debate, so I think I'd rather not comment on that.

A MEMBER: That's what he came here for. MR. CHAffiMAN: Order please. Mr. Walding. MR. WALDING : Mr. Harland, on Page l of your brief you recommend the es tablishment of a land-use and ownership commission. Could you tell us what you visualize this commission to be and how it would be an improvement on this committ ee? MR.

HARLAND: Well I was thinking of somet hing along the lines of the department in Alberta whereby they, as you are probably aware, have a commission set up to look into all aspects of land-use and foreign ownership, and ownership of any kind, and they go out and, I think, over a two year period, from various groups of our whole society have a total input into what land-use and ownership policy should be for that province.

And I'm not suggesting it to be larger group than what you have here, but I can see it going into every town and village almost in the province and really getting the complete ideas from the people rather than from people like myself who represent a group and come here and tell you what it should be.

I can see your Department of Agriculture, Regional Directors, and Agricultural Representatives conducting these meet ings and getting a real input into this thing of what the land use policy should be in Manitoba, and I think you' ve got the pers onnel there right now to go out and seek this informa tion if the department wishes to do this. MR. WALDING: Well I had hoped that our committee was doing just that and you know, going out and getting information from people ... MR.

HARLAND: Maybe you are, ma ybe you're intending to go for two years, I don' t know, but it was my understanding, I was led to believe you were going to wrap this thing up in a few weeks and start drafting some legislation. A MEMBER: Who told you that advic e? MR. WALDING: So your concern really is for the length of the hearings rather than the make-up of the group doing the inves tigating. Do I understand you right ? MR. HARLAND: Yes. This body would be fine if they are prepared to travel throughout the province, to the length that I have felt they should. MR.

WALDING: I think that is a general feeling among committee members that we do need further meet ings and that maybe thev should be continued. One other point on this that hasn't been or only been touched on so far, is that this series of hearings has dealt only with agricultural land . I am told that the department intends to com e up with a further paper on recreational land and another paper on urban land use, which would presu mably have a similar series of hearings on th ose, so the procedure looks like being a long on_e. T h�tnk you, Mr. Chairman. MR.

HARLAND: Well the one point that I would like to draw back to the brief was that we feel that agricult ural land should be looked upon as agricultural land, not be lumped in with any urban policies that you're going to bring out. MR. WALDING: That ' s why they were separated in separate papers. MR. CHAIRMAN: Thank you, Mr. Harland. Mr. Adam. MR. ADAM: I just had one mo re question, Mr. Harland. You've been quite patient and we'll let you go. You mention in your brief that you did not like to see the MACC be out act ively purchasing farmland.

I just wanted to point out that to date we have only purchased and leased out 40 percent of the land that has been offered for sale. So that doesn' t appear to me to be very active on the part of MACC of acquiring land. A MEMBER: It doesn' t appear to be a question either. MR. CH AffiMAN: No it certainly is not a ques tion. Tha nk you, Mr. Harland. Mr. Render son. MR. HEND ERSON: Yes. You were spe aking that you believed in ownership and you were saying that our gift tax was rather tough and our succession duties were tough, and Mr.

Uskiw read it into the field of succession duties where he talked about 200, 000, you know, and from that point it got looking ridiculous. But are you aware of the fact that Manitoba has tougher

484 February 21, 19 75 (M R. HENDERS ON cont'd) ••• gift taxes and succession duty taxes than any province in Canad: MR. HAR LAND: Well I'm aware that it's high. I'm not aware of the exact figures because I'm not MR. HEND ERSON: It's the highest of any province in Canada. MR. HARLA ND: • • • quite to the point of really thinking about it. MR.

HENDER SON: So if they believed in transferring of ownership they don' t have to talk about $2 00, 000 farms> they could talk about any amount and they could just change the Gift Tax Act, if they really believed that they co uld transfer ownership from father to son, and keep people being owners rather than lessees. MR. CHAIRMAN: Mr. Uskiw. MR. USKIW: Yes on that same point, Mr. Chairman, we found out that there were only 24 farms that were in a A MEMBER: 22. MR.

USKIW: ••. 22 in a taxable position in the last year and my question is to you, it seems to not affect the vast majority of people and I'm still to be convinced that it is an oner ous problem, shall we say, on those people that it does affect in that we're dealing with a transf er of wealth from one person to another and the choice has to be in the taxation field as between the taxation on one's earning ability, versus a taxation on natural resources, versus a taxation on wealth, one form or another.

Just on a point of principle, do you think that we should shift the taxation from wealth where there is no work input and onto the backs of those people that have to go to work daily to earn their daily bread ? Because that' s what it implies. MR. HARLAND: When you put the question that way there's no way that I can disag ree with what you're saying. MR. USKIW: Okay. MR. CHAIRMAN: Thank you, Mr. Harland. Mr. Jorgenson. MR. JORGENSON: I'll follow that up.

The Minister has suggested that this is not an oner ous task and that the governments have a right to take that money away from a farmer who has worked for it all his life. A farmer who has $300 , 000 ... MR. USKIW: I'm not taking it away, at all . . • MR. JORGENSON: ••• a farmer that has $300 , 000 to pass on to his son. Did he not pay property taxes on that earned income during all the years that he was earning? Did he not pay income tax on all that money that he earned as well?

And did he not pay taxes on all the other taxes that are being levied while he earned that, do you not think that he has the right to pass it on after all those taxes had been paid, and he has earned that money by the hard work that he has done, without having to pay a further tax to the government on it? (Applause) MR. CHAIRMAN: Mr. Uskiw. MR. HARLAND : Well co uld I answer that question ? MR. CHAIRMAN: Well proceed I didn't think there was a question? You may answer the question. MR.

HARLAND: Yes I think that the farmer has the right to pass the land on to his son without being further taxed but I had to answer Mr. Uskiw's question the way he asked them to me and I couldn' t disagree with what he was trying to get forward either. MR. USKIW: We now get to the point of the ridiculous, obviously. Dead people don' t pay taxes. The people that pay taxes on inheritance are the survivors.

It's the receivers of wealth that pay taxes, and I can't quite understand the context in which this discu ssion is moving in that it is alleged, it is alleged that the person that is deceased pays the inheritance tax, and that is incredible. I thought we all knew more than that. --(Interjections) MR. JORGENSON: ••• there is also capital gains tax and there is also gift taxes to pay, and he's ignored that. MR. USKIW: Now, Mr.

Chairman, I want to pursue the specific question, and that is that it is alleged that people that have more than $2 00, 000 of gifts and who they pass on through to their descendants when they pass away, that somehow they should be exempt because they have paid property taxes and because they have paid income taxes. I should like to inform Mr. Jorgenson that people that are not taxable in the Estate Tax deal, those that have property assets below 200, 0001a lso pay property taxes and income taxes, and every other form of tax that society imposes· on people. A MEMBER: Why differentiate? Why discrim inate? -

February 21, 1975 485 MR. USKIW: Dis crimination is based on a principle of a tax on ability-to-pay and hence it is assumed that those that have a gift of more than $200, 000 can pay some thing back to society, and those that have less than $200, 000 are less able to pay somet hing back to society. It' s an ability-to-pay princip le. MR. CHAIRM AN: Mr. Barrow. MR. BARROW: Just one question, Mr . Chairman, We've heard this argument over and over again. Could I address this question to the audience? How ma ny ... MR. CHAIRMAN : Just ask the question to the witn ess. Ask the question. MR.

BARROW: I'l l ask the question of the witn ess, okay. How many people in that aud ience, Mr. Harland, has a farm worth $200, 000 net ? A MEMBER: That' s a very small farm. MR. HARLAND: I wouldn't really have any idea. The audience is behind me and I don' t know half of them that are there, so I wouldn't even hazard a guess. MR. BARROW: Yes. Thank you, MR. CHAIRMAN: Thank you, Mr .. Harland. Mr. Doug Cram, Young Farmers, would you indicate -Young Farmers Ass ociation, where you're from ? M orden? MR. CRAM: Mr. Chairman, I believe our report is being submitted to you, it' s being passed around.

There are also copies for the audience as well. , Actually we don' t repres ent any organization, there are simply a few of us young farmers that got together, and the two or three meet ings that we've had we had these with bankers included, there was an accountant and older farmers, younger farmers, have put this brief together. I 'm afraid the last 20 minutes that you' ve spent on succession duties, death taxes, gift taxes, I'm afra id we're not going to make the rest of your afternoon any easier for you. My name is Doug Cram.

Asi say,we don' t represent any organization but we hope that what we have to present here this afternoon is perhaps some alternatives that we hope that you will have a look at. As young farmers we're in this posit ion of farming and hopefully we'll be able to contribute somet hing to your problem of land-lease policy. Traditionally we have tended to react to a problem only after it has reached our doorstep. Provinces of British Columbia, Alberta, Saskatchewan, Ontario, Nova Scotia New Brunswick, Prince Edward Isla nd and Newfoundland have all reacted to the question of foreign ownership.

Not one of them we suspect would admit they have found the answer. If Manitoba is seriously concerned about retaining ownership in her province then we as young farmers should play an important role in that plan. If we represent the future of farming in Manitoba, then surely we should have a say in that fu ture. In recent meet ings which we have had in regards to ownership of land we have accepted and rejected many ideas. Today we'd like to develop for you the si tuation of the young farmer and how his future can be ma intained.

Today' s farming unit at the time of transition could contain a father age 50 - 55 with almost all the farming assets in his name. He carries probably five to twenty thous and dollars worth of whole life insurance and might also carry a reducing term insurance to age 60. He has a will that divides his assets equally among his beneficiaries. He does not have an es tate plan because it is too complex. He doesn't have a pension but would like to retire in ten years. The farming unit also has a wife.. She st ands in the middle between the husband and her children.

The lack of a proper estate plan will surely see her lose the most in this transition for in the end she will probably outlive her husband but live to see the struggle her children will have .created by death taxes. The farming unit will also have children. These children could have univer sity diplomas or degrees. If they do, they bring to the farm st udent loans and probably a wife and family. They bring the education we badly ne ed on the farm but will they ever have the opportunity to use it.

Low equity, high risk, high cost of inputs, low returns and high cost of own ing land are problems faced by the yoLmg farmer s. Probably at no other time in hist ory has the need been so great to have these individuals in farming and probably at no other time has the cost or the risk been so high. The goals as we see them are: to acquire a pension for the father and the son -this pension could be through the sale of the farm to the highest bidder or the most

486 February 21, 197 5 (DOUG CRAM cont'd) . desirable bidder; by maintaining the farm as a viable efficient unit the farm will pay tax -i f the farm is payi ng tax the farmer is eligible for Canada Pension and your Registered Retirement Savings Plans; to make the transition of the farm from father to son as smooth as possible; total exemption on inter-spousal transfers in regards to death tax; -forgiveable death tax on the farm as long as the farm stays in farming; and to allow the modern farmer to bid competitively for land. Now in a farm sale you might find the following buyers.

What we've attempted to do here is to take a situation where we'd probably have all of the buyers that we'll have in Manitoba. They will probably fall into one of the four groups. For example, in this area that we live in here you probably will find all four of these bidd ers. We'll assu me in this case that you had a product ive value of land of $300. 00 an acre on toda y's market. The family farm in our opinion is the most desirable buyer but he can only bid to the maximum product ive value of the land.

The rural land inve stor: This can be your agricultural buyer, but again he's only large enough to pay cash for probably half or a percentage and then the rest would have to be on borrowed funds and again he can't go any higher than produc tive value. Urban investors: Now this can be into a couple of categories of the people that have bought into this particular area.

It can be the over 50 -55 age group of a fellow that per- haps he's got some farm background - he might have grown up on a farm but now he may be a lawyer, doc tor, dentist whatever it may be, but at age 50 he has reached the age where he thinks he would like to retire and he would like to retire to the farm. He has sufficient cash to probably outbid any agricultural buyer but he might be looking for some return on his ment.

Again I don' t suspect that the fellow that is retiring is looking for investment, a return on his investment, but I would suspect that investment clubs - now these things are not as common here as perhaps they are in Ontario around Toronto or Montreal and B. C. - but again investment clubs can certainly invest sums of money, this will not be money to make returns but rather simply to put some aside into what they feel is probably a firm security for a short period of time and they buy it into land.

The foreign investor: If you had these four buyers in a particular situation the foreign investor would probably be your eventual buyer because these funds that he brings could be industrial funds, they could be low interest funds, and maybe a large number of in vestors seeking security for their money in a foreign stable country. Now again on the foreign investors there might be at least three categories here. If this is strictly industrial money which they're putting in we have absolutely no way of competing with that kind of money.

If it's agricultural-industrial, in other words if this is a group of farmers, say United States for example, who are investing funds in Canada in farming, this isn't that serious. We can bid, not competitively on toda y's system of borrowing money but at least we're a lot closer to that one than we are to the indus trial foreign industrial money.

The last one is the immigra--- tion)if there are gro ups of people in the foreign investor who are going to immigrate to this country and farm it, we're lOO per cent in favour of this because how else are we going to have people coming in, new ideas, and after all that' s how we all got here too. Now the questions arising from these examples: Would the seller have sold to the family farm if they could have bid higher? If the answer is yes, how much higher do we have to bid before a farm in this area will sell to the family farm rather than to an urban investor or to a foreign investor ?

How can we make the family the most desirable buyer? How can we discou rage the absentee land investor from purchasing prime agricultural land ? How can we encourage the absentee land investor to purchase only poor land or non-'"'nL:u<cul�, land ? If absentee landowners purchase poor agricultural land can land-lease programs or policies be developed so that these lands can be farmed efficiently? Answers which we came up to these questions are: In questions number one and two, reduced interest rates, and we've got this in a table you'll find on the second last page if you would turn to that in this brief.

For example, if you were using a reduced interest rate on $30 0. 00 an acre land on a half-section of land and it cost you $96, 00 0, if you took it on a 30-year term at 10 percent versus 5-1/2 percent you can see the difference of annual payments $6, 000 versus $10, 000. 00. Now if a farmer was trying to pay for 30 years $6, 600 a year, I don' t think you'll find too many farmers in this area that will even go for that. It would be very difficult to maintain this type of an annual payment on a half-

section of land. From this we must assume then that the father would also have a half-section of land if the other half

February 21, 1975 (MR , CRAM cont'

d) purchase it, or inherit it . 487 . was purchased by the son, which he could rent it back, Now the second part to that was forgivable int erest rates, and that 's Table 2 that you have below that . Forgivable interest rates would work much the same way only over the period of say a 30-year loan you could forgive off on the first 15 years. This has the incentive that it keeps the fellow in farming for as long as he only has to pay his principal and has the other portion forgivable, he's more likely to stay in .

If the land ceases to stay in farming the int erest then could become payable -that's on the basis that this farm changed from farming to industrial . Third part of that was the Land Review Borderland Commissi on . Again this is some thing you have heard before and we are certainly in favour of it as well . Question to No . 3 in regard to discouraging absentee land owners; restrict the purchase of agriculture land by absentee land owners to 160 acres or a total of $15, 000 worth of land. This isn't unlike what Saskatchewan has, they use $15, 000 I believe of asse ssed value for municipal taxes .

This type of restriction will control purchases of prime agricultural land. Only land on classes four to seven can be purchased by absentee land owners. In other words, you are immediately classifying the land and then you 're moving people into it in the areas of four to seven, or your non-agricultural classed lands . Unfortunately, if you were going in this direction the first thing that would have to be done is a reclassification of the present land system . Tax of foreign investor: Land transfer tax is what Ontario does .

Higher tax on money leaving the country, as you say, 15 cents on the dollar I think it is now. Well you could sim ply go higher on that if you were thinking of discouraging them in that regard. Zoning: This is probably the single most powerful unit you could use. It can work to the benefit of the public, it could also work against them . This could involve land classi fication maps , Again the same as what we' ve indicated before, and you would simply zone according to the . . Class 1, Cl ass 2, Class 3 lands, and you can zone them, if they 're agriculture they stay agriculture.

The point has already been raised, what do you do about the value of lands within that if they don't change within agriculture ? There has been different proposals brought forward under that. I know the Province of Ontario has suggested zoning. They have zoning in effect, certainly - I believe it was about four or five years ago now, they had briefs before them and this was to do with development rights, and so on . I am sure you are probably aware of those steps involved in that and it is extremely complicated and can be costly, but under proper management that could certainly work as well .

You could use the watershed boundaries for zoning . This crosses then across your municipal boundaries, which may or may not work as well . The municipal and provincial governments could control the zoning . Again you run the p roblem that if you had zoning agriculture up to the border of one munic ipality and the municipality on the opposite side didn't agree, then you have problems of res idential across boundaries . Success of the above alternatives could weigh heavily on the independent agriculture review board.

Very important exceptions to the restrictions above on absentee land investors could be: No . 1. If the absentee land owner takes up residence within a specified period of time and agrees to maintain the land at maximum agricultural efficiency during his absence, then he could be allowed to purchase prime agricultural land . If the absentee investor enters into a purchasing agreement with a resident Ca nadian farmer as de fined by the review board, the investor will not be allowed to contribute more than 49 percent of the purchase price of the sale . This is really a step down from taking him out altogether .

Within the same context, there are other factors that will ass ist the young farmer in establishing and maintaining a viable agricultural unit . For one, a review of Succession Duty Act and the Gift Tax Act . We have that in Table 3, we've worked through, it 's on your last page of the brieL We've used a half-section of land, we've used this that we've actually costed this out.

We kept a figure of $300 .00 an acre of land and that 's in buildings, equipment, livestock, life insurance and feed inventory that he may have, giving him an asses sed value, exemptions to preferred beneficiaries, taxable estate at rate, giving him a total tax payable of the $29, 000.0 0. The important thing that we feel in regards to succession duties is that you don' t have any control over the value of No . 1. That land, if you're taking, for example, in Saskatchewan where their land values went up

488 February 21, 1975 (MR . CRAM cont'd) 100 percent one year and dropped 60 percent the next - I think Manitoba's was some thing like 30, or something, percent, it wasn't as much -but if you happen to die when the price is high, what's that done to your estate plan No . 1, and then what control did you have, and what provision have you made for it ? And, in effect, of course, a half-section of land today is not really --(In terjection) --it 's a viable unit, or can be a viable unit, but if he had to start from scratch it probably wouldn't be.

So you 're looking at probably -if you went to double that figure, of course it wouldn't be double the tax because you would be paying mo re, a higher rate of tax on that -we are suggesting on this that the tax could be pro rated and forgivable over 25 years as long as the farm remained in farming; failure to comp ly with this could cause the remainder of the tax to become payable as of the date the farm ceased to remain in farming . This is already in effect in Ontario .

Full exemption on int er-spousal transfers: What this does in an estate plan, of course, is that if you can put the name of that farm in both the husband and the wife, and if you can work a proper gifting program, if he happens to be a married son, on $2, 000 automatically you 're looking at $8, 000 in stead of on the present system, and $8, 000 a year certainly can go a long ways to clearing off, or reducing an estate down to a non -taxable estate . Low interest rates or no interest rates payable on succes sion duty tax: Flexible repay ment period.

We feel that if in case of - I believe now it 's five years for repayment, perhaps the situation, the age of family, or so on, may not be that five years is adequate. Extensive research into alternatives for agricultural products: We feel that the res earch into agricultural products perhaps can take some of these ups and downs out of our marketing for surely there must be more alternatives to the meat industry than eating our way out as Eugene Whelan has suggested.

Temporary freeze on purchase of agricultural land by absentee landowners until a proper asses sment of the situation can be made, and a review of land-lease programs. In

summary: The basis of our brief lies in pride of ownership . If the young farmer owns his own land then a larger step towards maximum efficiency has been taken. If he con tinues to work at maximum efficiency he will pay taxes, he will have an opportunity to have a pension, he will be able to pay his bills . We feel that the following recomme ndations should be considered: Temporary freeze on the purchase of prime agricultural land by foreign investors and undesirable absentee landowners. At the same time we are suggesting the esta blishment of an independent, non-political agricultural review board.

This board will be set up to advise. Say in the time that you have your freeze on if there are people that are in the urban area that, maybe the second son who would like to go back to farm now, we don't feel it is necessa ry he wait that term, or whatever it may be six months or one year, or two years, whatever the freeze may be on, for him to stay out of farming . So there must be some exemptions, an appeal board set up immediately when the freeze is set up, so that they could still get back into farming, or could get into farming.

Pro-interest rates for young farmers for the purchase of land; forgivable succession duty tax; full exemption of death tax under espousal transfers to allow for maximum gifting in estate plans . In establishing a proper land-use policy the government will have to consider all the aspects influencing land in this province. This includes, ownership, transferage usage, rental agreement s, and most of all the future. Thank you, gentlemen . MR . CHAIRMAN: Thank you, Mr . Cr am . Mr. Henderson. MR . HE NDERSON: Thank you.

This is a somewhat different brief but there is -one of the things I' d like to question you on is on Page 3,

section 3, where you talk about restricting a purchase of agricultural land by absentee landowners to one-quarter of a

section . Now, are using the same definition of an absentee landlord as was used in the Red Paper ? MR . CRAM: Our definition of an absentee landowner applied to anyone who is not farm ing the land, who was not on the farm to farm the land . Now, we would certainly allow for, let 's say for example a fellow who also had two jobs, lived in town and farmed, we don't con sider him an absentee landowner. There are certain things that we feel do not classify him as an absentee landowner . But prim arily, simp ly a foreign investor, a city dweller, a . MR .

HEN DERSON: You 're not using the word foreign investor in your paragraph here, and I' m talking about possi bly some body that lives in Morden, who is retired from the farm because they aren't using feed and livestock but they are still interested in looking after the grain crops, and so they drive out and do their farming this way . And, according to this paragraph, he' d be restricted because he isn't living on the land . - - - -

February 21, 1975 489 MR . CRAM : No , that 's what I say , we 're not making restrictions against the people that farm in that particular instanc e. MR . HE NDERSON: Well, how about somebody then that was living in town and was rent ing it out and it was over a quarter-section , would you stop him ? MR , CRAM: No . Of course if he still owns it, he's renting it , it 's agriculture, the guy that 's renting it is taking the income anyway, the agriculture income other than the rental . MR , HE NDERSON: Well the way this paragraph reads it says, "restrict the purchase of agricultural land by an absentee landowner to a quarter of a

section ." MR . CRAM: Hm hm . MR , HE NDERSON: So that 's very small . A ME MBER: That 's you George, that's you . MR . CHAIRM AN: Order please . MR . CRAM : Okay. I don't think that we have a problem--your talking about a person that's here, that 's been in agriculture, that person is , in our opinion , is not one that 's really going to fall into thi s category. This is a man going out now and purchasing land as a doctor, or a professional man purchasing land . In other words , you're talking about all people that already own their property and have retired, or any other aspect of it .

They don't fall into that category; they 're not purchasing more land they 're simply farming the land that they have now and have retired. MR . HE NDERSON: Do you think it's such a bad thing if, we'll say , even the doctor in town who has done well, who has got, we'll say , some farming in his blood, if he would like to buy a half-section and rent it out to some tenant on a share-crop basis , do you see anything wrong with that ? MR . CRAM : The re's nothing wrong with it unless there's a better alternative . MR . HEN D ERSON: Under this paragraph he'd be restricted from doing that . MR . CRAM: That 's right .

We're hoping that the alternatives are better , that if another fellow can afford to buy it, a young fellow can afford to get it rather than the doctor, we feel that he'll do a better job on that property than the man that he rents it to . MR . HE NDERSON: That 's all. MR , CHAIRMAN: Mr . Us kiw. MR , USKIW: Yes , sir . I' m rather intrigued with your submissio ns . I have always been impressed by the Co ns ervative me mb ers of the Legislature on the philosophy of most of their constituents.

They have always alleged in the House that their constit uents were the sort of the last frontier , is it, of the free enterprise system who wouldn't want to impose on society for anythin g, and in your subm ission, sir , you are suggesting that the public first subs idize the purchase of your first half-section of land up to - a totality in subsidy would be $107 , 34 7, plus you're saying that we should forgive the inheritance tax on the second half-section which you would hope to inherit of $29, 000 -I think you're a little high on that , but be that as it may - for a total public forgiveness of $136, 34 7. 00 .

Then I would want to know if land values appre ciate, what your position would be on the capital gain, because that is another very relevant com ponent . First of all, let me ask you what is your philosophy on this question, you know, it's certainly a vast departure from the free enterprise concept . MR . CRAM : Well, are you finished ? MR , US KIW: Yes , please . MR 0 CRAM : We ll, number one,on the succession duty part of course, that was ours to start with .

If you're taking the twenty-nine and adding it to your total, unfortunately that 's not right because those are as sets which my father worked for, not your father . MR 0 USKIW: No but you 're not--let me correct you. They are not yours they were your father's.

You come by them only by way as a gift, and in the law of the land there is a gift tax so they were your father's, they were not yours, so , therefore, you come by it quite with out any charge if there was an absence of the inheritance tax, and you're asking society through its government to forego the gift tax or the inheritance tax, which implies that you want a shift in taxation. So , to that extent , you are asking the state to help you acquire your property asse ts.

And first of all you are asking the state to subsidize your purchase of land up to a $107, 000 and then to waive the other $2 9, 000 on estate taxes for the other half-section, so you are asking for a compromise from the state from its present position of $13 6, 000 .00 Th at's what you're asking for. Now, in light of that, I want you to tell me what is your philos ophy in the whole business of agriculture, is it free enterprise , should it be state and free

490 February 21, 1975 (MR . USKIW cont'd) . jointly , co -operatively? You lmow , you are really involving the state very heavily here and I'm trying to understand your position. out . MR . CRAM: Well let's take, going back to that $29 ,0 00, or less, whatever it may work MR . USKIW: It 's about 22 . MR .

CRAM: Okay , if it 's 22 . . $22 ,0 00 and suppose I was 35 - 40 years old when my father died, and I worked that farm now for 35 , well, I've been there all my life, worked it productively as a man say for 20 years, now, $20 ,0 00, 20 years of working it, doesn't make it as much mine as it did my father's who worked it for 50 years? MR . USKIW: Well, you lmow , obviously you 're alluding to a management decision that you have made during your lifetime and your father's management decision .

If you had worked for him in the building up of his assets without an agreement, or understanding , which would be definable in a court of law so that that amount could accrue to you during his lifetime, you lmow, or by agreement, then that is a management problem that you have, it has nothing to do with the estate question. MR . CRAM: I would disag ree.

I worked five years in the Ontario Government in estate plans and we, and estate plans , we found that the majority of the families of young people in the same age group as I am - and you've got lots of them in this room here right now - now , the number of them that have that estate plan that you 're talking about is very, very small. -MR . USKIW: Well let me . MR . CRAM : Now why ? I'm asking you as the Minister of Agriculture, why we don't have an estate plan for our young farmers. MR .

USKIW: Let me then tell you that I too worked in Ontario as a young fellow some 20 years ago , and I too sent to my parents many thousand of dollars to enhance their farming operations , but after the first year of doing that I flew home to draw up an agreement with my father in order to protect my investment. MR . CRAM : Yes, but how many others did that ? MR . USKIW: That is their own management decision, the state cannot be responsible for that . That is every individual's own decisi on that determines the final outcome, that is not something that the state can provide for , obviously . MR .

CRAM: But the majority of farmers now that grew up , say in that 50 -55 age bracket,--- that came up say during the depression, during the wartime, how many of these had assets that you know, that they were even concerned about now ? But now all of a sudden that asset that they only purchased for 12 ,0 00 or 20 , 000 is worth 300 ,0 00 .00. Now, how do you propose that he make that adjustment in such a short period of time ? MR . USKIW: Well, first of all, I don't think he has to .

I don't believe that if you were to inherit $300, 000 that you would be hard done by if you paid the state $22 ,0 00 in inheritance taxes. So , to me, that is not a problem . That is a problem in your mind , sir . MR . CRAM : But, I don't get $30 0, 00 0.0 0. If I'm out there feeding those cattle today, and my father dies today , tomorrow I go out and feed the same cattle but I don't say, by gosh now all those things are worth $3 00, 000 to me; and the land for example, I've got to work that land whether it 's worth a $100 .0 0 and acre or if it is worth $300 .0 0 an acre.

So you're talking about a value which the young farmer will never see. He doesn't see that unless he liquidates every bit of asset that he has. MR . USKIW: You're now getting us into the position where you have not looked after your affairs again, and there's no point in pursuing that . I now want to ask you, though , again --(Interjection) -- Well, but that is a fact . That is an absolute fact. MR . CHAIRMAN: Order please. Order please. I believe that if you people feel that it's going to be determined on the type of reaction that Mr .

Jorgenson would like to have this meeting condu cted , I think it is not going to be very conducive to that type of exchange of ideas. Mr . Minister, proceed . MR . USKIW: Yes. It is a fact that the reason you have a problem is because you haven't dealt with your own management decision, and therefore I don't think anyone can help you if you haven't done that . That 1 s all I 'm pointing out . MR . CRAM: Yes, but the problem is not mine. I'm speaking of young people in this province .

February 21, 1975 491 MR . USKIW: Oh I agree. I am speaking of everyone that is involved in this . MR . CRAM : Well then, why can't you see what the problem is rather than saying it is my problem and my only problem . MR . USKIW: Well the problem is education, sir . MR . CRAM : Very good. MR. USKIW: The problem is not the Inheritance Tax, it is an education as to how to use it or how to get around it . Now, the question that I have put to you, sir, is I 'm trying to determine from you your philosophy as to ownership of property .

You say you want to own property because of the pride that goes with the ownership of land or property , but at the same time your pride doesn't suffer when you ask the state to subs idize that ownership to the tune, without the Estate Tax portion, of $107 ,0 00 . You know, Ic an be proud to own land too, if you give it to me . MR . CRAM: The example here is a joke. Unfortunately you missed it . Because $6 ,0 00, if you 're going to pay the half

section of land in $6 , 000, what we 're saying is that even if the interest rates were 5 1/2 percent, he couldn't afford to buy for 30 years paying $6 ,0 00 . Now, if we can find a way , an alternative, to having to do that, then we've found the answer . MR . USKIW: Yes . All right. But your whole suggestion is really relevant only in the sense that it says to us here, as legislators, how much can we do for you ? How much can the people of Manitoba do for you in the area of property ownership '? That 's really what you are suggesting .

Now, you are saying the state can subsidize your ownership by X number of dol lars a year, and I could go further. I could say may be the state shouldn't do that, maybe the state should give you the farm without any cost to you. I mean, that 's just an extension of what you are asking for in this brief. It's a question of how much should the state give you, is what we're discussing here.

Now, why should the state give you land ownership with a huge subsidy, in other words of any amount of money, be it lOO, 000 or more or less, why shouldn't the state give any individual in Manitoba property at the cost of the state ? I mean, why you? Why is the farmer to be preferred in that way ? MR . CRAM: No , I agree that we shouldn't be involved in that at all . If the farmer can bid competitively for land, there should be no need for subs idy . Corre ct ? MR . USKIW: If he can which ? MR . CRAM: Bid com petitively for land. Now why can't he bid compet itively for land ?

What is wrong with you or me bidding competitively in this province? MR . USKIW: All right . That then brings me to the important question: do you believe in the freedom of enterprise ? MR . CRAM : Well , yes . MR . USKIW: All right. Then it follows that in the free market system the highest bidder should get the land . So then why are you asking the state to do som ething about the fact -and I don't want to be overly critical but that's what you 're saying -to do somet hing about the fact that you can't bid as much for land as your neighbour can, or as Mr.

Render son, who is an absentee landowner, can, or someone in Europe? I mean, what is your problem ? (

a) You believe in free enterprise, but now you are telling us , "Please do somet hing because I want to own my land but I have competitors that I can't cope with ." That 's what you are saying . "So please legislate some way in which I can compete with my competitors." MR . CRAM : That 's correct . That 's the role of the Governm ent . Right ? Do you want farmers in farming or don't you ? MR . USKIW: No , no. I' m just trying to pin you down on your philosophy here . You said you believed in a free enterprise approach.

Now you are contradicting your statem ent by saying , "But help us do it by giving us a Government grant ." MR . CRAM: We can bid against farmers . We 're not having a problem with our own people . It's with the other people that we can't bid against . So now if you would like us to continue the way it is and let them buy all they want to buy--okay. So in certain areas of this province it may be--we're not talking about foreign investme nt , let's talk about urban invest ment or anything else--they 're going to buy up these tracts of land .

Now is this desirable as far as the Mini ster of Agriculture is concerned ? MR . USKIW: No , I think it 's fair to say that I have the same concerns as you have, but I wanted to know how you arrived at them and if you arrived at them in the way that Mr . Jorgenson and Mr . Henderson would lead me to believe that you have -and they 've always led me to believe that in Morden and in Morris people never want anything from government, they

492 February 21, 1975 (MR . US KIW cant '

d) just want government to leave them alone. And if that is the case, then I would have difficulty in understanding why government should do anything to help you to own your land . It doesn't make any sen se . It contradicts itself, sir , is what I' m saying . So to get a perspective on it, you are putting the position that som ehow it should be in the public interest . You know , if you said that it was in the public interest rather than your own interest, then I could take a look at it a little more broadly .

If it 's in the public interest that the state should help you own the land , then I think we can discuss how that should be done. MR . CH AI RMAN: Order please . Mr. Adam . MR . ADAM: Thank you, Mr o Chairman . Mr . Cr am , I just had one question to ask you on your brief, and that is in your

summary Item 2, the establishm ent of an independent and non-political agricultural review board. My question is in two parts . Mr . Chairman , could you ask the audience . MR . CHAIRMAN: Order please . Proceed. MR . ADAM: There 's a considerable amount of mumbling at the back and it 's difficult to hear . I have two questions and that is, do you believe you want a non-political agricultural review board ? You suggest that we do this ? Do you believe that there's anybody on this stage here that would qualify to sit on that board ? MR . • Not a single one. MR . ADAM: Not a single one .

Then my second question is, is there one person in the room here -and I' ve watched what 's happened , you know, some remarks , interruptions, I' ve watched what 's happened here -is there one person in this room that could sit in clear con science on that board as a non-political person ? A LADY : I could. MR . CRAM: As non-political yes . MR . ADAM: Well we have two at least who are non-political. I suggest to you, sir , that it would be very very difficult, very difficult to set up a non-political review board. MR .

CRAM: If, for examp le, that board had -say you were to take people that are in the industry - now when I say non -political I mean by that that they don't hold office at the present time . We all vote so perhaps we have an opinion, so you 're not going to rule that out anyway . But the fact is that if you were to take a board which is people in the industry -and there's some very intelligent people in the farming industry that could very easily perform the functiom of that board. MR . ADAM: Thank you, Mr . Chairm an . MR . CH AIRM AN: Mr . Us kiw. MR . USKIW: Yes .

We have had suggestions like that from time to time and I think I should throw out a proposition to you so that you could then tell me whether that kind of agency would be non -political. The Federal Government for years has sought the advice of what they consider to be very important people in the Province of Manitoba on prairie agriculture, on government policy and so on, and they relied heavily, and still do by the way to some extent , on gentlemen like Mac Runciman, the late Mr .

Parker was a very significant individual in making his policy contributions to the Government of Ca nada, and a whole host of other people. Would those kinds of people in your view be non-political individuals? MR . CRAM: I don't know the gentlemen so I couldn't really tell you whether they . MR . USKIW: All right . Let me then cite people that you would know about. Let's say that we appointed Roy Atkinson on to that board . No, and I' m serious because you know your question has to be taken seriously . MR . JO RGENSON: Mr . Chairman, I' d like a point of order. MR . CHAIRMAN: Mr . Jorgenson, on a point of order.

MR . USKIW: What is the point of order? MR . JORG ENSON: Mr . Cr am made it very clear. I think Mr. Us kiw's pursuing a line of questioning that doesn't really bear any relevance to what Mr . Cr am said . What he sug gested, and I' m sure I understood him correctly when he said what he is suggesting that you don't appoint anybody on that board that currently holds a political office. He made no rpfp·,·p'n"' at all to that person's particular politics. MR . USKIW: Mr . Chairman , I think that the gentleman is quite capable of answering the question without any intrusions from Mr . Jo rgenson .

Let's as sume now we zero in on an individual that appears before us from time to time -and by the way who has aroused a degree - - - - - - -

February 21, 1975 493 (MR . USKIW cant 'd) • • • • . of discussion in the political arena but who' s not a political individual -and I' m talking about the pres ent Chairman of the MACC. In your mind you are satisfied that he is a non-political individual ? MR . CRAM : No, if I was selecting this group I would take it from -you may even, take it from some of your own people, you farm management specialists in the field . You have some very excellent farm management specialists; I think some of those would certainly qualify to sit on this board .

Now if I was going further I might make a selection of somebody from the economic staff at the University of Manitoba . If I was going further I might take prominent people -if I was selecting them there are people I know in this community who would do very well on that type of board. Perhaps an accountant, perhaps a farm law yer . MR . USKIW: You know I want to take you back a few years . During the years 195 8 through to the spring of 1969 I couldn't identify any si gnificant degree of non-partiality on the part of the then Governm ent of Manitoba in their appointm ents to boards and commi ssi ons .

I don't recall the representation on these commissions or boards as being composed of a numb er of people of different political philosophies . By and large the trend was to try to make sure that the representation on boards and commis sions reflected the then thinking and policies of Government . I' m not sure that there's anything wrong with that . I think we have deviated far from that since 1969 . But, you know, all I' m trying to point out is it is difficult, very difficult to try to pin down what one would ass um e to be a neutral individual in the political context . Th at's all I' m pointing out.

It 's not an easy task. MR . CRAM : I agree. MR . CH AIRMAN : Mr . Johann son. MR . JOH ANNSON: Mr . Cr am , in 197 3 the people of this province elected a government and what you now want us to do is to turn over government -making policy decisions to non elected people do you ? MR . CRAM: No . You 're talking about the board now are you ? MR . JOHA NNSO N: Yes . You're suggesting that the Government that was elected by the people of this province should now turn over the decis ion-making on politics to people who weren't elected. Is this democracy in your view ? MR .

CRAM : How many people are represented by the NDP vote and how many are rep resented by the other ? MR . JOHANNSO N: Mr . Cram, that 's not the way , that 's not the way the parliamentary system works. MR . CRAM : I agree. MR . JOH ANNSON: If I may , if I may , Mr. Chairman . The Governm ent of Duff Roblin never had the majority of votes in this province. I never questioned their mandate to govern this province, because that 's the way the system works. You are mw questioning it because your government doesn't happen to be in office. MR . CRAM: No . I wasn't talking about . MR .

JOH ANNSON: You question the ground rules of the democracy under which we've operated for a hundred years in this province, for several centuries in the British parliament ary system . MR . CRAM : No , the question we 're talking about here is of rural agricultural land. MR . JOHANNS ON: Now Mr. Cr am supposing -and this could happen - supposing that this Governm ent does nothing in this area for the next two years, until the next election comes around , and then the Cons ervative members of the Oppos ition who sit here campaign for re election, Mr. Jorgenson, Mr. Graham, Mr.

Henderson, and they campaign on the basis that if they are elected they will do away with a land-lease program, they will do away with inher itance tax, inheritance tax on the farmers of this province. Are you saying that they will be being democratic , that they will be being fair to you -supposing that you then elect them and the people of the province elect them -they 're being democratic if they then don't do that but proceed to turn over these matters to a non-partisan group. Is this the way democracy func tions ? MR .

CRAM : First of all, I didn 't know how you found out whether I voted NDP or not, that certainly must be . MR . JOH ANNSON: I don't know how you voted, but I know that this area certainly didn't. MR . CRAM: But if this government has those powers I 'm afraid we 're already beaten before we get started . But speakers before have said we don't want to make this thing political .

494 February 21, 1975 (MR . CRAM cont '

d) Now if we' re concerned about the young people here then why do you people keep bringing back politics. That 's the trouble with this particular board perhaps . If you're arguing amongst yourselves politically then what are we supposed to do. MR . JOHAN NSON: Mr. Cram , politics is what we call democracy and I happen to believe in democracy otherwise I wouldn't have stood for election . And I happen to have a lot of re spect for Mr . Jorgenson . I don't think that he's a bad man because he's a politician. So I don't share your aversion to politics. MR .

CRAM: Well would it not be be tter for people then to talk to, as independent , you say you can't get one -let's say as best you could do for an independent board to listen to the people, to then advise the politicians . I mean, why is it then that we must talk to the politi cians and then have to just listen to the fact that we didn't vote for the Government . I mean that in my opinion is a real slap in the face just because we showed up here. MR . JOHANNSON: Well, Mr. Cram, we wouldn't be here if we weren't interested in lis tening to the opinions of people . MR . CRAM : Then don't bring up politics into it .

MR . JOHANNS ON: I' m not getting through. I' m sorry . The fact that all of us were elected means that we were elect ed to do something, and that one of the basic functions of MLAs is to make laws , and that happens to be political . Now we 're comi ng here to consult with the people of the province as part of the law-making process and you say that is bad . MR . CRAM: No I say that's excellent . I would just do it . --(Interjection) --My apol ogies, I didn't me an that . MR . CHAIRMAN: Thank you, Mr . Cr am . Mr . Wheeler . Mr . Don Wheeler from Brandon. Order please . We have not concluded the me eting yet .

Would you please allow the presen tations to be proceeded with . MR . WHEE LER: We are here on our own responsibility , we represent no organization or institu tion . We welcome the initiative of the Provincial Government in launching an inquiry into problems of land tenure in Manitoba . In the course of the hearings important issues have been clarified and a dialogue established, nevertheless there is reason for disappointment in the Special Co mmit tee's work.

The Com mittee was set up , it is said, in response to expresse d concern of Manitobans with respect to speculation in land , land transactions involving non-residents and absentee ownership of land . But it is clear from the Working Paper submitted by the Manitoba Depart me nt of Agriculture and from many of the bri efs submitted to the commit tee, that Manitobans are concerned with the future of agriculture in general and not only with those matters stip ulated in the

preamble to the resolution setting up the commit tee . The concern is with a continued trend toward concentration of land holdings, the impov erishm ent of much of the rural population and the decimati on of rural communiti es , the terms of reference of the committee are too narrow to compre hend these grave concerns. The key factors producing these trends are: (1) the decline in pr ices of farm products compared with the pric es of goods consumed on the farm and with purchase of farm inputs, and (2) the in stability of farm prices and thus a farm incom e.

This cost -price squeeze is the result of the weak bargaining position of farmers compared with monopolies which supply farmers with their inputs and the mo nopsonists who buy their products . To meet these pressures the stronger farmers expand in order to take advantage of economies of large scale . The smaller farms are liquidated or stagnate at subsistence level . The bidding up of the price of land leads to a great increase in the initial capital required to enter farming and this in turn is contributing to the depopulation of rural Manitoba .

The Working Paper demonstrates that one of the factors contributing to the plight of rural Manitoba, the inflation of land prices , has been aggravated by the increasing participa tion of non -residents in the bidding for agricultural land . Non-residents evidently acquire land in the hope of speculated gain. This tendency for non -resident holding of agricultural land to increase, of course, leads to an increase in leasehold farming; quoting from the Work ing Paper, "a separation between the owner of the land and the operator of the farm" .

There fore, the authors of the Working Paper conclude, this trend threatens the family farm structure and the very fabric of rural Manitoba . The authors of the Working Paper demonstrate that non-resident ownership results in a drain of cash from the region, that the beneficiaries of risi ng land prices are landlords and that there is no economic justification for paying rent to landlords . This implies that legislatim - I - I

February 21, 1975 495 (MR. WHEEL ER cont'd) . to curb non-resident ownership would be justified . The signers of this brief support such action and suggest that legislation similar to that recently passed in Sa skatchewan should be adopted in Manitoba . But this would be only a small step in the right direction . The logic of the Working Paper's argument leads to the conclusion that all land should be publicly owned including land in urban centr es . The equities of present holders should, of course, be respected but the Government should be prepared to acquire land at every opportu nity .

Ce rtainly there is a widespread opinion held by many farmers that outright ownership of land is necessary to protect the tenure and the equity of farm families . It is understandable that man y immigrants from Europe had faith that the outright ow

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Collection	Manitoba — Debates (Hansard)
Citation	30-2-lo9
Type	hansard
Volume / chapter	30th 2nd hansardpdf lo9.pdf
Language	en
Format	pdf
Source	PROVINCIAL
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