Manitoba Hansard — 31 May 1996 (Sitting 43B, 36th Legislature, 2nd Session)

36-2-43b

Manitoba — Debates (Hansard)

Second Session - Thirty-Sixth Legislature of the Legislative Assembly of Manitoba DEBATES and PROCEEDINGS (Hansard) Published under the authority of The Honourable Louise M. Dacquay Speaker Vol. XLVI No. 43B- 9 a.m., Friday, May 31, 1996 ISSN 0542-5492

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

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

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

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

, 3049 LEGISLATIVE ASSE MBLY OF MANITOBA Friday, May 31, 1996 The House met at 9 a.m. ORDERS OF THE DAY (Continued) COMMITTEE OF SUPPLY (Concurrent Sections) INDUSTRY, TRADE AND TOURISM Mr. Deputy Chairperson (Ben Sveinson): Order, please. Will the Committee of Supply please come to order. This morning, this

section of the Committee of Supply, meeting in Room 255, will resume consideration of the Estimates of the Department of Industry, Trade and Tourism. When the committee last sat, the member for Crescentwood was making his opening statements, and he had 16 minutes remaining. Mr. Tim Sale (Crescentwood): Mr. Chairperson, would it be possible for the committee to agree, by leave, to sit through lunch and adjourn early? Approximately I :30 p.m., I think was the time that the minister and I had talked about as a goal for today. I would ask the Chair that. Bon.

James Downey (Minister of Industry, Trade and Tourism): I would have no trouble with that, Mr. Chairman. Mr. Deputy Chairperson: I will just suffer right along. It is agreed that we will sit through dinner and adjourn at 1:30 p.m. Mr. Downey: If not sooner, it is up to the member. Mr. Sale: Mr. Chairperson, maybe we might also agree that we would take a short break around 11 :30 a.m. to allow people to rise and refresh, or earlier if the minister or anybody else wishes. Mr. Deputy Chairperson: Committee agrees? [agreed] Mr.

Sale: In terms of picking up from where we left off yesterday, we are talking about the realities that face many families in our society in terms of jobs. I want to contrast the vision that I think is underlying the current government's approach to development with a vision that I think might be a more appropriate and more helpful vision. Essentially, Mr. Chairperson, our world faces a medium-term crisis in terms of its sustainability. We know that virtually all natural resources are being pushed to their limits, from our oceans' ability to supply food to our rate of use of nonrenewable resources.

I think that it is very clear that in the medium and longer term, we have to find a mix of social, economic, environmental and other policies which focus on highly efficient societies that use resources at the maximum possible levels of efficiency, that produce high value-added jobs in order that those societies again may be the most efficient possible, that invest very heavily in human capital, because it is only when you have high investment in human capital that you can have that high value-added society that is focused on stewardship of resources, stewardship of the environment and stewardship of our communities.

That kind of society is incompatible with policies that produce poverty. I would say that Canadian federal governments and, unfortunately, a number of provincial governments, including this one, have advertently or inadvertently developed a policy mix which promotes poverty, which promotes low value-added kinds of jobs, that does not recognize that when a large number of people perceive that they have a very low stake in the economy or in their community, they begin to act in ways that are irresponsible because they basically feel they have nothing left to lose.

I would point to the unfortunate riot at Headingley as a symbol, in some ways, of this. Unfortunately, as we know, the people of the Headingley jail population are overwhelmingly members of a minority group that has suffered immense poverty and still suffers from racism, from unemployment and from a variety of things which minority groups around the world experience. It is not particularly unique to this country or this city or this particular group of people.

3050 LEGISLATIVE ASSEMBLY OF MANITOBA May 31, 1996 They suffer the fate of devalued minorities, and they do that to their cost, but they also do it to our cost.

I am sure the minister is aware that fully 23 percent of our young population that is moving into the workforce is of aboriginal descent, that one out of five new workers in Winnipeg, after the turn of the century, will be at least Metis or status aboriginal people or aboriginal people who have lost their treaty status for one reason or another, yet it is also this group that has suffered increasing levels of poverty in the inner city and, as at least part of a consequence of that poverty, has been the increasing level of juvenile delinquency, of violent behaviour.

Now, this is not to excuse or to condone the violence or the behaviour of young people who act out in ways in that are unac ceptable to society, but it is to ask the minister to take a broader view of the issue of job creation and unemployment and recognize that if we do not create the antec edent conditions for employment and lifelong success in our society, as opposed to lifelong marginalization, then no number of economic programs to attract capital or supports to industry are going to have the kind of effect that the minister wants to have.

We will see ourselves moving into what the Canadian Centre for Policy Alternatives has very clearly demon strated as a two-track society, a track in which 20 percent of the population does extremely well and another 20 percent of the population keeps its head above water, but does not particularly prosper, while 60 percent of the population watch their wealth and their share of the incomes, the market incomes of society, shrink.

It is a striking fact of which I am sure the minister is aware that for the bottom 20 percent of our population, that is, the poorest of our population, market income as a proportion of their total income, that is, income earned from employment over the last 1 0 years, has dropped by almost 50 percent. Their incomes have not dropped because social welfare programs have picked up the slack, our unemployment programs and our social assistance programs and other really important parts of our safety net. The minister knows, and unfortunately those affected know too, that those are the programs most under assault.

The notion that we cannot afford social programs is wide spread, and this government has endorsed that notion with its cuts to social assistance. I would particularly point to the most senseless cut of all, which is the cut to children under one year of age in terms of their food and incidental allowances in the city of Winnipeg rates. *

(0910) In spite of the fact that the government's own task force report indicated that those rates were still too low, the government has cut them by some $65 a month. I am sure the minister remembers well, and he may have grandchildren, I am not sure, but if the minister piled up the amount of food that $65 a month buys for a child, he would see a fairly significant pile of food. That is what we have removed from the tables of lower income children in the city of Winnipeg.

Now, the consequence of that is inescapable, and that is that they go to school hungry, they have poor educational attainment, they have poor workforce attachment, they wind up marginalized in terms of all aspects of their lives and, not surprisingly, they have a sense that their society, in which they are being asked to participate, has precious little to offer them. So they in turn, unfortunately, take out that lack of stake in terms of their behaviours, in some cases; not in all, but in too many cases. The direct result of poverty becomes kinds of behaviours which none of us want.

This government's response to that is to pretend to be tough on crime. Of course, it is not particularly tough on crime, as our crime rate, and our violent crime rate in particular, demon strates, but the response is hang 'em high and hang 'em often. That, unfortunately, is the American right-wing response, which is to focus on the behaviour instead of on the conditions that produce the behaviour.

Again, I would say this is not to condone the behaviou r, but it is to say that we do not get anywhere when we simply focus on the symptom, anymore than a person who has a serious illness gets anywhere by simply focusing on the S)'mptom instead of going and getting appropriate remedy for the disease. I want to just conclude, Mr. Chairperson, by talking a bit about the question of capital investment. The minister has made significant statements about capital investment, and, yet, when a review is made-and I will return to this when we consider the items in the Estimates that deal with this.

When we actually review both private and public sector capital investment over the last seven or -

May 31, 1996 LEGISLATIVE ASSEMBLY OF MANITOBA 3051 eight years, what we find is that occasionally Manitoba is first or second, but on average, it is fifth, sixth, seventh, and there are many periods when it has been ninth, tenth overall. We came off a very good year a couple of years ago, last year, in fact. This year, our capital investment intentions are significantly down, and if one reviews the history of capital investment in the province, it is again not a very encouraging picture.

As in the same sense that I asked the minister to consider the whole picture and the whole statistical profile of capital investment, in the same way I asked him to consider the whole picture of employment and unem ployment, I would ask him to look at capital investment and recognize that Manitoba has always been a province in which public and private partnerships have been critical in terms of capital investment; and, when the private sector is making strong investment, it has usually been historically because the public sector has led with clear intentions in terms of the investment that is needed.

I would also point out to the minister that private sector firms increasingly look for excellent infrastructure and for excellent health care and for excellent education for their employees, particularly their senior employees. That may be not something that we want to simply respond to in terms of firms' needs for their senior employees, but it is a fact that, when they look at relocation and when they look at making investment decisions, they look for excellence in infrastructure and in the services that their employees and their senior employees need.

So, when Manitoba stops investing in its health care system, as it has done in terms of the capital programs, for example, we set ourselves up for having the kind of second-dass system that people would rather not enjoy and, therefore, may choose to go elsewhere. When we stop investing in our public education system, the same result happens. We do not, in the New Democratic Party, make a distinction between public and private in terms of their value.

We see value in both and partnership as the model, and we would invite the minister and the government to come back to the formula that has made for success in the past in Manitoba, and that is a formula of partnership. With those remarks, Mr. Chairperson, I think it would ?e appropriate for us to begin to consider the line-by-line Issues. Mr. Deputy Chairperson: I would like to thank the hon ourable member for Crescentwood, the official opposition critic, for those comments. Under the Manitoba practice, debate of Minister's Salary is traditionally the last item considered for the Estimates of the department.

Accordingly, we shall defer con sideration of this item and now proceed with con sideration of the next line. Before we do that, we invite the minister's staff to join us at the table, and we ask that the lninister introduce his staff present. Mr. Downey: I have to restrain myself to respond to the member's final comments in a philosophical way, but I do antici pate as the debate goes on in the Estimates I will get a chance to make some comments, and in the interests of dealing with it, I have Steven Kupfer who is the assistant deputy minister within the Department of Industry, Trade and Tourism, Mr.

Jack Dalgliesh who is a managing partner for the Department of Finance, the fmancial administration branch of the department. I am pleased to have them with us this morning, and I look forward to the question of the member for Crescentwood. Mr. Deputy Chairperson: We thank the minister. We will now proceed to line 1. Adlninistration and Finance (

b) Executive Support (

l) Salaries and Employee Benefits on page 91, $625,000. Mr. Sale: I might just indicate to the minister that it is my intention to focus on a couple of reports. I am sure he expected this, in terms of the organizational review, the new SOA and the overall leadership of the department, and I am referring to the report that- Mr. Deputy Chairperson: Order, please. Could the honourable member for Crescentwood just say once more what part he was going to go into? Mr.

Sale: I am proposing under this item, which I believe by tradition is a broad item that allows us to move across issues that affect the department as a whole, Mr. Chairperson, I wanted to indicate to the lninister in case he wished to ask other staff to be present, and I �as thinking specifically of the deputy minister, that I was intending to spend some time this morning dealing with

3052 LEGISLATIVE ASSEMBLY OF MANITOBA May 31 , 1996 the Price Waterhouse report which was, I think, finished in, when was it, December 1995, and the KPMG report from a year earlier that looked at rural economic develop ment, considering I, T and T and rural development. So I wanted to give him an indication of where I was going in this section. Mr. Downey: Mr. Chairman, I apologize. My deputy minister who was here yesterday was under the weather yes terday and is even more so this morning, so it was impossible for him to join us.

However, the individuals who are with me and myself will be able to cover the areas, any areas the member may wish to raise. Mr. Sale: Mr. Chairperson, I am amenable to holding that until Monday if the minister wishes. If the minister wishes to go forward, I am prepared to go forward. Mr. Downey: Please proceed. Mr. Sale: I wonder first if the minister could indicate whether and what changes have occurred in the organiz ational chart,

schedule 2, page 4 of the sup plementary material, in terms of individual persons in the various blocks. Mr. Downey: Mr. Chairman, basically the department structure is at the current time the deputy minister in the position of Mr. Fred Sutherland and the assistant deputy minister, Mr. Steven Kupfer, who is with us today. In the job of heading up the Tourism department will be Loretta Clarke and-[interjection] Mr. Sale: That is in place? Sorry. Mr. Downey: It is in the process of being put in place, yes. We are in the process now of-[ interjection] Mr. Sale: That would replace Mr. Mesman? *

(0920) Mr. Downey: That is right, and Mr. Mesman is now taking over the responsibility of a position working with the Pan American Games, dealing with business opportunities and the whole tourism side of it. He will be the province's person who has been appointed to that full time responsibility. We believe there is a major economic and major thrust for the province and that a person of his stature and his capabilities should be in that position. We also have heading up Manitoba Trade, Mr.

Rod Spr ange, who will be heading up Manitoba Trade Organization, and I am talking about the restructuring, where we are moving to. We also will have a new position for industry development of which that position has been advertised for, both from within and without. Mr. Sale: Mr. Chairperson, I thank the minister for the info rmation. What puzzles me is why in this document, which was really just circulated, the announcements of the deputy minister in regard to a new structure for the department and new roles for various staff including Ms. Clarke and Mr. Sprange and Mr. Kupfer, lTC in that regard is now an SOA.

This chart really does not reflect in my understanding the most current reality. In fact, the deputy minister made quite a significant announcement of reorganization. I cannot put the exact date on it, but I believe it was in February. Perhaps the minister could correct my memory in terms of the date of the announcement by the deputy of the new positions and the new roles. Mr. Downey: Mr. Chairman, when the development of the budget took place, the final decision had not been made.

We were in a process of first of all reviewing the department, and so the budget basically was struck on the former style, the former make-up of the department. So that may be helpful to the member. The story following the leak of the Price Waterhouse review, which I think was extremely unfortunate both for the department and for the public impression, basically was one which probably was incorrect to say, to give its best treatment, and as the member has referred to, a lot of the decisions to change, make some changes, had come about somewhat prior to that.

But the basic budgeting for what we are dealing with now was based on the structure that we had previously to the Price Waterhouse report and the changes that have been recommended and we are moving towards. Mr. Sale: Mr. Chairperson, would the minister be prepared to table a new organizational chart with the names that had been filled in and with blanks where of course people have not been secured, if there are places

May 31 , 19 96 LEGISLA TIVE ASSEMBLY OF MANITOBA 3053 where people have not been secured, that would more clearly reflect the real world of 19 96-97? I recognize that there is always a difficulty when you make a change in a department and reorganize it because you have to cast your budget in the fa ll fo r Treasury Board consideration and approval, and when you make major changes in the winter, it makes it difficult fo r transition, but it also makes it very difficult to discuss the Estimates of the department which really are meant, and correctly, I think, to be in a new mode.

I am not critical of the new changes, but the real world of the Estimates which we are considering now I understand will be under the new model, and so it makes it difficult to have that disc ussion when the organizational chart and the casting of them does not reflect the new reality. So is the mini ster prepared to give us an organizational chart that represents the new world here? Mr. Downey: Because we are in the process of working with the department and working within government as it relates to what the final draw will be as it relates to all of the detai ls, I do not have a chart that I could table.

I have indicated to him basically the structure as it is being developed with the head of Manitoba Trade, with the head of Manitoba Tourism, where the fo rmer Tourism director will be, with the Financial Services section, the ADM of which Mr. Kupf er is here today and the position which is currently being advertised fo r. So it is on the record, but as far as laying out a structure, how it would look diff erent, it would not be any different than what I have just put on the record. Mr. Sale: Mr. Chairperson, I do not fm d that a very helpful answer.

If the minister is proceeding to fill pos itions, then he is working from an organizational chart, I assume, and I am sure he is. I am not being critical of the new approach, but he just ref erenced Manitoba Trade, fo r example. I cannot see Manitoba Trade on this chart anywhere. So I do not know where it is intended to report, and it is a terribly important is sue. So could the minister be of more assi stance than saying we are in process. I know they are in process, but I also know they are filling positions, and having been a bureaucrat in the past I know that generally proceeds from some organizational chart.

Mr. Downey: Mr. Chairman, I respect what the member is asking, and I have said to him the budgets were basically prepared on the basis of what the structure was at the time when we were-in fa ct, the decision had not been made to restructure at the time of the fm alization of the budget We were in the process, some final decisions were made. For example, and I will be as helpful as I can because I think it is important fo r the member to understand.

What I see, and I will try and be helpful, what we anticipate and what will happen, as fa r as I am concerned, is that the head of Manitoba Trade will answer directly to the deputy mini ster. The head of Manitoba tourism will answer directly to the deputy minister. The head of the industrial sector will answer directly to the deputy mini ster. Mr. Sale: So, Mr. Chairperson, the minister seems to be saying that he has flattened the department by removing one layer of the reporting relationship between the heads of the critical sectors and the deputy mini ster, so that Mr.

Kupf er's role will be as was announced in the press releases in terms of special initiatives, special programs, that are of high priority fo r the government to develop. The three senior persons, and perhaps the minis ter can tell me whether they will be ADMs or what they will be, will then be reporting directly to the deputy mi ni ster. So we have essentially removed a layer of organization. Mr. Downey: I would think the opposite, Mr. Chair man, from levelling a department. I would say it has taken away some of the spread-out eff ect, if I could.

We had something like 13 managing partners answering to the deputy mini ster, which was a fa irly flat organization. We have fo cused it in probably three particular areas with the changes that are taking place, and I would say, you can call it flat or you can call it more pyramidal, however you want to ref er to it, I think it will more reflect the priorities through the deputy mini ster back and fo rth. But he asks me about the titles, they will be equivalent to ADM posi tions. They may not be called ADMs.

They may be fo r reasons that the business community say in the international marketplace could relate to, the head of Manitoba Trade may not be called an AD M. I believe that we call him the president of Manitoba Trade. *

(0930) 3054 LEGISLATIVE ASSEMBLY OF MANITOBA May 3 1, 1996 Mr. Sale: I thank the minister, Mr. Chairperson, for that response. It is helpful to know where it is going. I agree with him that the previous reporting relationship span of control, or whatever you want to call it, was too broad, and, certainly, that was an issue raised in the Price Waterhouse study, that it was difficult for the deputy minister to have an effective supervision and resourcing and support role with that number of people reporting directly, so I think those are helpful changes. Mr.

Chairperson, I want to express a policy concern that I hope the minister will take back to his colleagues in cabinet. We have had a number of different times this year when issues of conflict of interest have arisen. The way our conflict of interest legislation is drafted, it specifically mentions ranks; ADM, for example. Mr. Downey: It mentions which? Mr. Sale: It specifically mentions positional ranks within the civil service, deputy minister, assistant deputy minister. We have had people in positions, such as Mr.

Robert Sopuck, for example, who was the executive director or the CEO or some such title of the Sustainable Develop ment

section of cabinet, clearly a very important position and one which paid a salary that was at the top of the ADM scale. It was an ADM-like position, but it was not an ADM, so when Mr. Sopuck left to go to Pine Falls, he was not technically covered by the conflict of interest regulations. I have no problem with titles appropriately reflecting the kind of description you would want the private sector to have for understanding Manitoba Trade, for example.

If a CEO is something that it is easier to go overseas and talk about in terms of what is my job as the head of Manitoba Trade, I have no difficulty with that, but that position should clearly be covered under conflict of interest regulations, when the minister states that they would be of an ADM-type rank, but they might not have that title.

I just express to the minister our concern that we clarifY that when there are those kinds of senior persons, with very important responsibilities, that they be covered by the appropriate legislation and that it not be gotten around by virtue of the fact that the name is not in the current regulations. I was disappointed when questions about Mr.

Sopuck's role were raised, and the defence was, well, he was not senior enough to be covered, and, clearly, he was extremely senior and carried a very important role with government, and his new role involves him directly with government since his title is director of governmental relations for Pine Falls. That clearly puts him in a delicate position, offering advice to his employer in an area about which he has intimate knowledge, but technically he is not covered by the regulations. I believe he should be, so I raise that concern for the minister. Mr. Downey: Well, Mr.

Chairman, I am not taking it as such because we could get into a tussle over this because I would hope the member is not accusing Mr. Sopuck of having a conflict of interest. If he is, then let him clearly put the accusation forward and put it forward through the process that is appropriate.

I am a strong defender of the senior civil service, as I am sure the member would want me to be, and I would have a hard time naming an individual case where a senior person within government has in any way, shape or form abused the position either in future employment which one may take on and/or present employment of any department of our government, and I feel very strongly about that. They are very professional people and have high integrity, so I am challenging him, if he is, in fact, wanting to put that accusation forward, to substantiate it.

I would say that it is my belief that anybody that does leave and does so under their own will, they are not in my estimation in any contractual arrangements with government. Mr. Sopuck was not involved directly with anything that I would be aware of that would be regulatory of nature, that would be dealing with the company which he has gone to work for, so I just put that on the record, that I would stand strongly in support of Mr. Sopuck and what he is doing, and I do not believe there is any reason to bring his name forward in any way other than to wish him well with his new career that he has chosen.

As it relates to a broader policy issue, the member has asked for that to be looked at as it relates to all positions. Again, I would suggest that, to my knowledge, if he has any specific cases other than the one he has referred to, he should raise it with further backup. Again, I have no reason to believe that there has been anything -

May 31, 1996 LEGISLATIVE ASS EMBLY OF MANITOBA 3055 inappropriate in any way within any department and hold that position. Again, if he wants to raise it with the Premier (Mr. Filmon) for further discuss ion, that would be his call, but, as I say, I have no reason to at this time suggest that there are any improprieties or could be under the system as it currently is. Mr. Sale: The minister, I do not think, responded to my concern . I used Mr.

Sopuck's case as an illustr ation of an issue in which somebody held a senior position at a senior salary rank but was not apparently covered by the provisions that affect others with that salary and that rank and that kind of position simply because the name of the position was not assi stant deputy minister or deputy minister. The issue here is the appropriate policy question. If the minist er is going to restr ucture his department, that is fine.

All governm ents restructure departmen ts, but if one of the consequences is that people who formerly would normally be covered by a conflict of interest legisl ation are not covered simply because the name is wrong in their title, then I think that is inap propria te. I think the minister would think that was ina ppropriate.

I was simply asking him to carry forward a concern that, as we move into things like SOAs and new structures that may reflect chan ging tim es, we also bring up to date our conflict of intere st regulations so that the conflict of interest rules which the Premier, and we are talking here to the Deputy Premier, Mr. Chairperson, has defended strongly. That is fine.

Part of the ability to defend them in future will be that they were not gotten around by using different names and skating around on technicaliti es, something which the public will not, I think, agree with, but the regulations will not cover because they were not adapted to the new world of different titles which I think the minister is quite appropriately doing in terms of his department . I think the changes are fine, but I raise it as a minor issue in terms of the overall scope of the department's Estimat es, not as a major issue. Mr. Downey: I appreciate it.

I think I underst and where the member is coming from. It would not be the intention of the government to make a name change or change of an indivi dual's title for the purposes of circumventing in any way the conflict of interest; and, if it means changes to that policy, I would be prepared to be part of a review of that and make sure that does not take place. Again, just referring to the case which was rai sed, it was a matter that he had a senior officer position and not classified as an executive position. Mr.

Sale: Could we look at page 10 of the Price Waterhouse report and page 4 of the highlights of the KPMG report? The broad issue here is one that I am very sensitive to because of my role as critic in Ind ustry, Trade and Tourism. I fmd it a fascinating area, and in many ways I am grateful to the minister for providing the various information and at various times he has kindly assisted my understand ing of the breadth of the area. But one of the consequences for the critic is that many of the things that I am concerned about and touch on bear on other criti cs' areas of responsibility.

So we are concerned about economic development over all of Manitoba, which necessarily brings us into discussion with Rural Development. We are concerned with overall economic development, so that involves Finance in terms of taxation policy. It involves all sorts of different departments of govern ment, so the minister is always in a position of brokering the role of economic development among the various ministries that have a concern here.

I am not surprised, and I do not imagine that he or his staff is surpr ised, to find that both Price Water house and KPMG have said that one of the problems that has resulted from that is that some people do not really know which department they ought to be dealing with, and in some cases the staff is not really clear about that either. At least in the Price Water house report, this is seen as a very, very serious issue that has impacted on morale and effectiveness of the minister's department.

The Price Waterhouse study seems to indicate that what happened over a period of years, perhaps three or four years, particularly when Mr. Bessey was carrying his role in government as a senior policy and decision guider in government, is that there evolved a pattern of champions or almost freelancers who would champion a program or project or an area in a very competitive way. Some departments that either did not have a particular internal champion or perhaps did not have the ear of management at the political or at the senior bureaucrat level, those

3056 LEGISLATIVE ASSEMBLY OF MANITOBA May 31, 1996 departments languished. They fell outside the loop; they did not get communicated with on key issues. *

(0940) I do not find that surprising. It is too bad when that happens because it does really affect morale. I have been in situations where that happens, and it is very, very hard on people. What I would really appreciate the minister indicating is, what steps are being taken to deal with the points raised under the

section of strategic context, page 10 in particular? The discussion of the issues goes on for some four or five pages in the Price Waterhouse report. It really focuses on the question of how you guide economic policy and economic development when you have to have many different ministries involved in it. How do you do that in a way that preserves morale, develops champions, rewards performance, but provides, from the public's point of view, key focal points so that the public is not confused and there does not appear to be competition, duplication, overlap, et cetera? I know that is a very broad question, Mr.

Chairperson, but I am sure the minister knew it was going to be asked and that he has a response. Mr. Downey: I do appreciate the question because I think that is what we can accomplish through the com mittee and also through some of the debate and dialogue. I say this, the member has had some experience in working within government, so he can sure appreciate some of the frustrations that develop as governments interface with the public.

I think the first thing that the member would appreciate, and that is the role, to some degree, of government departments and the economy of what is happening and the changes that are taking place, whether caused by federal government decision to remove the Crow rate to the agriculture community, with some of the investment decisions that are made within the garment sector, with some of the expansions that are taking place, and in manufacturing. Generally, we are in a changing, a very rapidly changing, role as a province.

There are a lot of things happening out there which I would have to say at the outset are very positive. The member in the earlier part wants to question the numbers. I think, again, what we saw in today's press from the Investment Dealers Association of Canada is generally a pretty positive mood that is out there. That is something that I am not going to dwell on, but I again make reference to those kinds of reports that are coming out.

There have been different times in the province when we have been certainly struggling to maintain some businesses that we have had here, have been part of announ cements or have seen announcements. We have seen the packing house, for example, sizing down in Manitoba, and now we are seeing the reversal. So the roles of different departments and governments have changed.

Rural Development, for example, has traditionally been what would be considered more of a service department directly involved with the develop ment of assessments and dealing more with the regulatory side of municipal affairs under our govern-ment. I compliment the Premier, and I was part of it as Minister of Rural Development, in the changing role that Rural Deve lopment has played in economic activities that are taking place throughout the province. How does that fit in with a department that has traditionally had the role of more the economic develop ment side of I, T and T?

Well, I use one word that is extremely important to everyone whatever you are doing in society whether it is within government, business or social activities, and that is the word called com munication, that people have to clearly fully be informed and brought up to speed as to what is going on across the sector. It is not a matter of whether any one person or any one organization gets credit. The important thing is are things happening and are they happening of a positive nature.

I also have to tell the member that I think we are in process of seeing some positive change come about and he may say-and I do appreciate his positive support for the changes that we are proposing within the department, because what we are doing is trying to reflect better the role that we think I, T and T can play as a co-ordinator working with EDB which is, of course, another decision making committee of cabinet with a structured staff working with it, that it does, in fact, co-ordinate the activities of government along with I, T and T.

The point I will conclude on is that we are seeing some tremendous changes. It is a matter of making sure that all people within departments of I, T and T, Agriculture, -

May 31 , 1996 LEGISLATIVE ASSEMBLY OF MANITOBA 3057 Rural Development, every department that has a develop mental role, that we are all part of that developmental team. I am not making excuses. What I am just saying is that it is a matter of making sure that we do not have a stovepipe management system that is so spread out that you have a whole lot of small smokestacks out there within the department and it not fully being part of a corporate decision making and/or a corporate supportive role.

I think we have made tremendous progress, and I compliment the department, and I say this to him and to the public through this committee. I think what we have been able to do in this last few months is to-as it was reported, the morale was maybe not as good as it should have been. Certainly, I do not like to see people when they come to work not feel good about their job and about the way things are going. I think in the last three months we have seen a tremendous turnaround within the department and a tremendously positive view being brought to the table.

They are all involved in bringing forward their own thoughts, their own concerns and part of the building of a team that will be able to work very effectively across government. The member is quite correct. He has questions that deal with economic affairs that deal with the Department of Finance and with all those areas. I think that is the kind of the way in which governments are now having to respond in a broad way, and people have so focused a mind on them that they think that one particular project is theirs or their sole responsibility. It is not going to work. They will be extremely disappointed.

They are facilitators and they will have to work as a team to accomplish the goals that we are all trying to get to. Mr. Sale: Mr. Chairperson, I would like to ask the minister a couple of specific questions in regard to his previous answer. Who is now heading up the Economic Development Board of cabinet?

What is the interface, what are the mechanisms-not just the reporting relationship-for developing that kind of co-operative relationship which is referred to in the second paragraph under 3 .1 , for example, a history of operational co-operation with another department has turned into tension and conflict because of the growing uncertainty and insecurity inherent in two conflicting departments, each demanding that their employees "take the lead" in a particular area.

My assumption, perhaps incorrectly, is that the other department is Rural Development in this case, and I unders tand the competitive instinct, but it is not an instinct that serves the province particularly well in this regard. So how is this new attempt at co-ordination and a co-operative culture and all those other goods things being actually organized at a senior government level, at cabinet level? Mr. Downey: Mr. Chairman, the answer to the first question is Stu Duncan. Stu is the head of the Economic Development Board Secretariat.

How structurally is it that we are working, seeing more positive things develop, I think the reference ifi could, if I can analyze as close as I can, was probably made more to say a specific area that may have been an agricultural food processing initiative which at one point may have seen either as an Agriculture or as an Industry, Trade and Tourism or as Rural Development. *

(0950) How we have been able to structurally make some tremendous improvements which-and again, thank goodness, we are seeing these kinds of things take place was the McCain development at Portage la Prairie where structurally there was the team of EDB people involved, Agri culture, Natural Resources because of the water implications, Rural Development, and there was a team of senior people who were specifically charged with making sure that all parts of that were covered. Environment, as well, was part of that management team.

So I would put it as more of a specific project team approach for some of the larger projects. In the general areas, for example, whether it is dealing with Agriculture policies in the hog industry, in the recommendations that have been brought forward and the regula tory changes, that is pretty much an agricultural policy area, but again it all comes together to make sure that when Schneider's makes the decision that govern ment is there in an overall way to be supportive to help the development of that project. Mr.

Sale: Is there now going to be, or is there already a formal structure at the senior staff level to co-ordinate

3058 LEGISLATIVE ASSEMBLY OF MANITOBA May 31, 1996 economic developm ent, or is it still- I should not say still beca use I am not wanting to make it a judgmental statement but is it a project-driven structure in which for Can Agra, for example, it would be a team, and when the industrial park is underway then that team is gone? My sense, from having worked at a senior level and of having taught a bit in this area and consulted in this area fairly extensively, is that if there is not a senior bureaucratic structure that is mandated, that is, that it is part of Mr.

Sutherland's job description to ensure that this co-ordination takes place, and perhaps even ideally some of his compensation might be tied to that-a very private sector model you will notice, Mr. Minister-then I have the sense that what happens is that when push comes to shove, deputies will support their ministers. That is primarily what they are paid to do. The minister referred correctly to the old stovepipe problem.

Some consultants have talked about the steel wall syndrome which I guess is just a thicker stovepipe in which departments do not ever talk to each other unless they are directed to do so, and then they only do so at a very senior level. They do not work with each other very effectively because all the rewards, all the regulatory structures, all reward internal department loyalty in government, and we are only beginning to think about how to change that.

What I would like the minister to address is whether there is anything formal or structural that has been put in place or is going to be put in place that would formally address the issues of interdepartmental collaboration that is more than just ad hoc, because my sense is that that is one of the roots of the problem is that we have ad hocked our way, sometimes successfully, sometimes unsuccessfully. Mr. Downey: I would say there is a structure there, and it flows from the Premier (Mr.

Filmon) through the Economic Development Board of cabinet through to the Economic Development Board which is the co-ordinating unit. Stu Duncan is the equivalent of the deputy minister position, of which that is the responsibility. That is the most structured part of it from there, and the member says, is it project driven? When there is a project identified or someone identifies themselves with a particular project, then the appropriate team of people, of which EDB are part, that team comes into play.

The overall genera l activities of, how should we put it, general prospecting for business or business development in Manitoba is not as structured, although, with our reorganization of our department, what we are working to do is to make sure that there is a full cross-understanding of what is going on from one department to the other, if it is Manitoba Trade that has identified a major investment opportunity coming out of, whether it be Asia, whether it be coming out of the United States, that Manitoba Trade are tied through the executive structure of the department to fully communicate that opportunity, and the Department oflndustry, Trade and Tourism, for examp le, would be carrying the main responsibility for that initi ative.

However, once it got to the stage, for example, of further decisions to be made in Manitoba, whether it be working on site location, environmental concerns, the whole business, then the team of other departm ents are brought into play-so structured to a point, structured both at the overall government level through EDB.

Then, of course, it flows to the different departments as it breaks down to either prospecting and identifying of activ ities so that there is an understanding that what is going on on the overall economic development front within the department, and a lot more effort being worked at to co-ordinate within government.

I can say, as well, that our government, the changes that were made some time ago in our whole budget process and putting together the different ministerial teams, the deputy minister teams to help in the budgeting process to make sure that we take a more corporate view, I think, has been extremely helpful in the overall exercise ofbringing government together so that you do not have 18 departments of government each standing alone with the view that their whole defence is their department, and they cannot see that another department of governm ent is overall doing part of the agenda work that they should be doing, as well.

You get as many areas of co-operation as needed. For example, Family Services comes into play when it comes to the whole area of trying to make sure we have people who are currently on some form of assistance, that we can, in fact, tie them in to a job activity. Again, so it is a matter of trying to maximize the cross-activities of government so that everyone is part of the team, and I think, under the Premier's (Mr. Filmon) direction and

May 31, 1996 LEGISLATIVE ASSEMBLY OF MANITOBA 3059 under EDB and the ministries and our caucus colleagues as part of it, that we have a system that is, maybe not perfect, but it is working considerably better than it has done in previous years that I have observed. I am confi dent that as we grow and build our economy, each department, whether it is Health, whatever it is, will be part of the overall growth factor. Mr. Sale: Mr. Chairperson, the conversation is interesting, but I do not hear any specifics here.

Is there a structure that is staffed at Economic Development Board that includes, for example, a regular meeting of the involved deputy ministers with minutes, with direction out to the various departments, with some sort of formal communication that attempts to overcome the barriers? For example, in this report, there are very, very serious communication problems in the department as late as the fall of 1995 when this study was underway and was being written. I quote from page 13: In short, the effects on morale of poor communication and consultation have been negative throughout the organization.

Now the structure the minister just spoke of and the changes the minister just spoke of took place several years ago, and he is talking about a corporate culture that the Premier (Mr. Filmon) has been promoting for some time, and that he is confident in. Well, a pretty good consulting firm talked to a lot of his staff, and his staff told him it is not working, that the department was demoralized and lacking in overall clarity of its mandate and focus, and many other very critical comments. I do not want to dwell on the negatives in the department, particularly.

What I want to find out is what is being done to address these issues, and so far the minister has given some interesting generalities, but no specific information about what you are doing to overcome the internal barriers that are noted, for example, on page 10: People in I, T and T feel that, rather than deal with fundamental internal barriers, important and high-profile activities have been moved outside. The effect of this widespread perception-not a few people, widespread perception-has clearly been very damaging to morale.

So if the minister could be more concrete, specific as to what is being done to address what I think are very, very serious and important issues, then we could move on to some other items. *

(1000) Mr. Downey: Yes, Mr. Chairman, within the re-org of our department, basically what we are doing is developing, and I have said the four areas basically that we have talked about. Tourism will be part of the overall executive activities as it relates to decision making, as part of the industrial side will be part of that senior executive, rather than having one deputy minister and 13 managing partners, which, it is clearly indicated in the report, was probably- I am not sure of the wording of it-but a little more cumbersome.

It was more difficult to have 13 people come to an executive meeting; as the member knows, it is easier to assemble the deputy minister and the ADM equivalents to be part of it. It flows from that. So I would say, yes, there is more of a cluster approach, and it is structured, and will be structured, under the new departmental activities.

Industry will be in one section, meeting with Tourism at the same time at executive level, and there will be executive meetings held on a regular basis, and, yes, at the EDB level, there is-it is a structured meeting-a secretariat in which decisions are made and decisions flow from that structure to different departments to mandate whether it is Rural Development to take a l ead role or whether it is I, T andT to take a lead role. Those are the kinds of decisions that flow from that structured process. Mr. Sale: Mr. Chairperson, the minister has responded in part, and helpfully.

I understand that the developments are still underway and that we will hear more about it as time passes. But he has responded primarily in terms of the changes that have been made to the structure internally. I am still not clear whether there are any structures at the senior level of government, other than the existing ones which have existed for some years now, of the Economic Development Board, with Mr.

Duncan now in the senior position there, that would tend to overcome the interdepartmental rivalries, the lack of communication, competition for resources and for pre-eminence, and all of those other things that happen in any bureaucracy.

3060 LEGISLATIVE ASSEMBLY OF MANITOBA May 31, 1996 It seems to me that both the KPMG report and the Price Waterhouse report indicate a need for serious attention to the co-ordination of economic development thrusts at an interdepartmental level. I still have not heard any changes in any mechanisms that would promote that, and I wonder if the minister could focus on that in a response. Mr. Downey: Mr. Chairman, again, I go back to our Economic Development Board that I referred to, and from that flows different activities as it relates to decision making.

We also have what one could refer to as a water management strategy committee of senior mana gers, because without the resources being organized and managed across the board from Agriculture, water resources, I, T and T, so there are a lot of, I would not necessa rily say formal structures, but there are a lot of informal organizational activities which are developing as we see some of these things be identified-and I think that we are well down the way to correcting some of the problems that were identified in the reports the member has ref erred to. (Mr.

Kevin Lamoureux, Acting Chairperson, in the Chair) The member, I know, has and will be free to talk to members who work for the Department of Industry, Trade and Tourism, where I think there can be identified some positive results that are now flowing. Overall in govern ment, if he is saying to me, are there cabinet committees that are structured specifically for this, the answer is EDB is the cabinet structure.

If he is saying, are there some informal activities that are trying to deal with this, the answer is yes, and I use one as an example, the water mana gement strategy committee of senior officials within government, that they work on projects like the increased demands that irrigation is placing on us, that flow from the McCain decision, the environmental decisions that have to be part of any of those activiti es. The answer is a structured yes; formally structured by Order-in-Council or by direct paperwork, probably no. Mr. Sale: Two points.

Would the minister first of all be prepared to indicate whether he has a formal plan to review the very important issues that are raised in the Price Waterhouse report, say, one year out from the date of the report, December '96 that would be, using an appropriate external group to assess impartially and confidentially whether the issues that have been identified are seeing some progress? They may not all be resolved, but are we making progress? That is one question. Let me leave it at that, for the minister's response. Mr.

Downey: If the member is asking if I am prepared to have a measure of the success following the work that is being done and the report that has come out, I have no difficulty with that. I think it is a positive suggestion. Mr. Sale: I will hope the minister then will report in our next series of Estimates. I am sure he will still be the minister, and I may still be the critic. Who knows? Mr. Downey: Well, I hope that is not reversed, that you are the minister and I am the critic. Mr.

Sale: It is a consummation devoutly to be wished, but unlikely to be realized in the short term, though it may well be in the longer term. I think it is very important that the department send a very clear signal that it has listened once and has heard clearly what people are concerned about and that it is prepared to act and then to listen again very clearly and find out what progress is being made, and I appreciate the minister's indication that he will do that in a structured way, so that these very important issues can be tracked. (Mr.

Deputy Chairperson in the Chair) The second comment I wanted to make is that I had asked the minister to seriously consider the need for a management structure that parallels the EDB structure. I think there is a lot of evidence from industry, certainly, I think, some evidence from literature, that if you do not parallel the political level with some serious management resources, then the competition and fracturing which this report speaks to will likely continue to emerge at least from time to time if not more generally. *

(1010) In other words, I think you need a senior management, whether it is called a secretariat or whether it is called whatever, an implementation group, but it needs to have some structure and some resources so that the manage ment of initiatives is seen to be an important issue that

May 31, 1996 LEGISLATIVE ASSE MBLY OF MANITOBA 3061 has resources attached to it and that we do not continue what I think has been the pattern that led to this, which is the ad hocking of each issue that comes along because, when it can be ad hocked, then people who are either good champions of something or have political, small-p political smarts as to how to gather resources, do so, and you wind up with then the resentment and confusion that I think this report points to.

I think one of the reasons we have got this is because, as we pointed out when we started this part of our discussion at 9:2 0, I, T and T by its nature is inter departmental. It cannot be anything else in the kind of modem world we are in, so it needs to have, I think, some interdepartmental structures reflecting that reality that are more than just the political structures.

I do not intend to go on any further with that, but I just ask the minister if he has considered that and whether he would consider a further need for senior management structures that pull departments together apart from the senior political structures which are there. Mr. Downey: Mr. Chairman, I would suggest that it is taking place today. The member is suggesting a more structured process. That is one that could be considered. Mr. Sale: On page 13 of the report, Mr. Chairperson, there are some very serious human resource issues pointed in the second paragraph.

What is the department doing, what has the department done to deal with the fact that it appears at least that as late as last fall there were people doing jobs that did not match their job descriptions and there were personnel practices which I am sure the minister would agree would be extremely destructive of morale? I cannot imagine anything more destructive of my morale if I were in a senior or medium level position, and I suddenly found myself one morning at a new desk with nobody there to tell me why and a new job description that nobody told me about.

I think I might be more than a little dismayed by that, and I would like to know very, very specifically what the department has done to deal with the issues raised in that second paragraph. Mr. Downey: Basically, Mr.

Chairman, we have internal committees that have been established that are working on those issues, one with human resources, a committee within the department that is working to bring forward some of the concerns of individuals that have been talked about to try to from within solve without having to use a lot of outside resources, but if outside resources are required, the Civil Service Commission and support through that agency have worked.

The industrial development committee is working to make sure that we have got a co-ordinated approach and that people feel, again, as we talked about, part of the team in industrial development. The third one is the communications group that is working to make sure that we do have a very full and effective communications system not only within the department so that as news develops and as activities of a nature that should be reported to the public can be done so in a way which comes from across the board.

So we are in the process with the establishment of those three committees, and I think, again, I can report that they are working very positively. I think, Mr. Chairman, if I could say, we have seen considerable positive developments take place. The department, as was reported, I am not disagreeing with the report, there was seen a need to make some change and do some things. The main thing that I saw from that was that the department themselves wanted to be part of developing those changes. But you cannot go in and say, this is the way it will be.

They are professional people, they have dedicated their time and their effort to working for government and they should be part of helping give direction to the department, and that is how we are doing it. Mr. Sale: At whose initiative was the Price Waterhouse report commissioned? Mr. Downey: That would be the minister. Mr. Sale: Was it around the occasion ofthe hiring of a new deputy that these issues became suddenly clear to the minister? When did the minister become aware of the need to have an organizational review? Mr. Downey: I cannot give a specific time, Mr. Chairman.

I guess I should not say it was only the minister; it was in discussion with senior people within the department. I cannot put a specific time. Again, we

3062 LEGISLATIVE ASSEMBLY OF MANITOBA May 31, 19 96 saw some developments taking place on the economic front. We were hearing some comments coming from the private sector that maybe we were not either equipped or as capably interfacing with them as we should be to max imize both the resources of the department and the opportunities that were out there. So I cannot give a specific time. The member knows when it was initiated, so that is when the decision was made. Mr.

Sale: I appreciate the question he cannot give me a specific date, but this minister has been minister of this department for some time, and he obviously became aware sometime in 19 95 perhaps that feedback was coming that said there were some problems out there and they were serious enough that you should spend $70,000 and then another $10 ,000 on some further follow-up work which I suspect is money well spent. I have no criticism of spending that.

My concern is that the mrruster has to accept responsibility for presiding over a situation that created a great deal of the problems that we are seeing here, and he answers that we have got committees working and committees under way. I am glad that he is prepared to give me assurance that he is going to have a formal, structured progress report. I am wondering whether he could indicate a little more specifically than he has so far what are the process measures or the benchmarks that have been put in place that will allow him and his department to be aware of whether these serious issues are being dealt with.

The context of my question is that he mentioned the internal working groups were beginning to work. My understanding is, they were appointed in January and that they were staffed or were given resources sometime in that period of time. That is five months ago now. I would think when you look at the private sector's work in dealing with this, one would expect some progress of substantial nature by now. I would like to know how the minister is actually tracking in a concrete way dealing with these very serious issues that have been raised. Mr. Downey: It was a poor choice of words, Mr.

Chairman, on my part to say that we were just proceeding with them. They have been working for some time. There are measures. There is a reporting system, the deputy minister to myself as to the progress. I do expect to see progress and as I see that progress I am prepared to report it. I am also taking some judgment from the general reports that I get from the public which the department is dealing ·with as to the effectiveness. Let us be straightforward, Mr. Chairman, customer satisfaction is a big part of what our department is.

Everybody, every secretary, man or woman, every person who interfaces with the public should be of a positive nature and one which is developmental orientated, so that will be a measure as to the responses that people have. Their daily attitude to their work will be reflected in how the public feel about the job that they are doing. So there are several ways in which we will be measured. I know there can be some that will be more scientific, as the member has asked for, whether it is by an accounting firm or a consulting firm or a professional way of doing it.

There are other ways, as well, which, quite frankly, have a way of getting through to the minister's office and to government. Of course, the measure that is ultimate is-[interjection] And the opposition. The ultimate, of course, is that they also have a way of getting through to the Premier's Office, and that is the fmal determinant as to how, and who, he has managed the certain portfolios. Mr. Sale: Mr. Chairperson, I appreciate the minister's response, and I do not fault him for making it somewhat general.

Can I just ask, in closing consideration of this piece of this study, although there are other issues that I want to raise later on, whether the minister would consider asking Price Waterhouse or some internal resource for some very specific management tools in terms of mana ging cultural change in the department, managing the communication changes, the various things that are identified in here as problematic, from job position feedback to morale, to a sense ofbeing in the loop and not out of the loop. There are quick feedback mechanisms.

There are lots of informal confidential temperature takers that are used in private consulting practice and are really effective at generating both accurate feedback and enthusiasm for change, and they produce a positive culture. Also, they are respectful of the people who felt devalued. * (1 020) I think it is very clear in this report that there are a number of people in the department, probably particularly -

May 31, 1996 LEGISLATIVE ASSEMBLY OF MANITOBA 3063 in ITC, but in other parts of the department, who felt devalued over the last period of time.

When you continually ask them for feedback on progr ess and suggestions and that kind of thing, in a structured way and in a way that respects their confidentiality, because it takes a long time to build up trust on the part of employees who felt like they could not be frank because they would face consequences for their frankness, would the minister consider asking for some-if he has not already done so, he may have done so already-tools to work at implementing the cultural changes and the shifts that do not just rely on verbal feedback from his senior staff but give all of his staff secure channels to measure marked progress and develop that sense of excitement, collegiality, teamwork, that I think can come from cultural change that is pursued and not just kind of let die on the vine?

Mr. Downey: That is a recommendation that is worthy of consideration, Mr. Chairman . Mr. Sale: Mr. Chairperson, I am prepared to pass this section. Mr. Deputy Chairperson: 10.1. Administr ation and Finance (

b) Executive Support

(1) Salaries and Employee Benefits $625,000-pass;

(2) Other Expenditures $73,600-pass. 1 O. l .(

c) Financial and Administr ative Services

(1) Salaries and Employee Benefits $630,200. Pass? Mr. Sale: I do not think you looked up, Mr. Chairp erson. I did have my hand up. Mr. Deputy Chairperson: I am sorry. l. (c)( l). Mr. Sale: I commend the Chairperson for his enthusiasm. I wonder if we might just ask a couple of questions about the human resources work that is implied. I believe Financial Services contains the human resources

section of the department. Am I correct, Mr. Chair person? Mr. Downey: Yes. Mr. Sale: Could the minister indicate specifically what has been done to improve the feedback on performance, the mechanisms that are referred to as lacking in the Price Waterhouse report? There is the allegation, at least in the report, that people who were demoted had not received any feedback on their performance; on page 14 , personal success within the organization is seen as to be as much a function of personal contacts and informal relatio nships as performance and impact.

These are very, very serious morale questions, and they, primarily I guess, turn out to be the responsibility of the min ister, but through the minister through his official, Mr. Dalgliesh, who is responsible for that area of the department. What specific things have been done to address these issues? I hope the minister will be specific and not simply general in response. Mr. Downey: We have a resource management team that has been established to deal with the specific issues that were raised in the report, and I am expecting a report on that in the near future. Mr.

Sale: Can the minister indicate whether senior staff or staff in general have received any training or support or resources to deal with the iss ues of performance feedback, performance feedback mechanisms, success markers, some ways in which performance is measured based on results and not on simply personal relationships as is indicated in the report? Mr. Downey: The answer is yes. Mr. Sale: Could the minister indicate what the training or support or resources consisted of that were given? Mr. Downey: Yes, Mr.

Chairman, if I understand it correctly, the request went through to the Civil Service Commissi on, and they identified the appropriate resources that were available and needed, and that is how it came about, through the Civil Service Commission. Mr. Sale: The minister may be under the impre ssio n that I was seeking to identify Mr. Goldie's work in lTC in terms of the human resource work. Let me be very clear that my understanding from my feedback is that Mr. Goldie is a very competent individual and that he does very good work.

Our issue with that contract had nothing to do with the individual and the competence, but rather with the way in which the contract was entered in to, and the previous role of Mr. Goldie in relation to the

30 64 LEGISLATIVE ASSEMBLY OF MANITOBA May 31 , 19 96 Premier's (Mr. Filmon) election campaign. It is in no way a reflection on Mr. Goldie's competence or on the need for his services. That, however, was not the intention of this question. It was really to ask the minister to be quite specific about what things have been done specifically to deal with lack of feedback, performance measures, people being in positions for which they do not have job descriptions, and so forth. Mr.

Downey: As I said, the human resources committee of the department will be reporting shortly to me with some specifics as it relates to the concerns that are raised. The deputy minister has also had a series of total departmental meetings so that he has been very open, and given the opportunity for people to express themselves either in that system or process or individually. So there have been, I would say, some very aggressive activities taking place as it relates to the question the member has put forward. Mr.

Sale: I would have hoped that the minister might say something like we have reviewed all of the job descriptions and functions of the people in our depart ment who might have been affected by this criticism. We have determined what the performance requirements are in consultation with them. We have identified performance measures. We have identified specific feedback mechanisms.

Staff are meeting for 18 0 degree or 360 degree-depending how you want to term it-feedback and evaluation with their colleagues, and we are now satisfied the job position descriptions match function, that performance management is in place and that we are beginning to get feedback from staff that indicate that they understand the way they are being evaluated, that they fmd that helpful and so forth and so forth. That is the kind of response that I would have found helpful to my question, and I am wondering whether the minister can elaborate further to his previous answer. Mr. Downey: No, I cannot, Mr. Chairman.

Mr. Sale: Mr. Chairperson, I hope the minister will be able to do that. I think there are many, many good techniques. The Civil Service Commission, I am sure, is a resource, for some of them at least and probably for all of them, which could deal with these issues. Again, the minister probably knows-I certainly know because I have been in the position of being in a department that was trying very hard to manage its human resources effectively, more effectively, that this is a very difficult job, particularly when you are working in a very quickly changing environment.

So how do you develop appropriate performance measures? How do you both support people and hold them accountable? Those are challenging human resource management questions. I accept the minister's answer, as I must, but I find it lacking in specifics and disappointing given the scale and importance of the criticisms in the Price Waterhouse report, criticisms which he has not disputed in terms of their accuracy and which are very, very, very damaging for the long-term career paths of dedicated civil servants which both the minister and I support as an honourable and a vital career for people.

So I urge him to be more specific and proactive in asking for progress in this area that is built on modern human resource management methods and look at things like 360 or 18 0-<iepending on the text you read-feedback mechanisms, performance measures, all those other things that I think make for solid human relationships in an important department like I, T and T. Mr. Downey: Well, Mr. Chairman, I do not want to be repetitive. I want to cover as much ground as we can in the Estimates process for the member, but I can go through it again.

We do have the Human Resources Committee of the department examining all the issues that the member has raised, expecting to have a report within a short period of time to come forward to the deputy minister so that what positive recommendations that will be helpful can be carried out and put in place. We have also, as I have said, called on the Civil Service Commission to be helpful and they have been. * (1 030) The competence of Mr. Hugh Goldie certainly is not in question and I do not know why he would have any question as to why the process of hiring him was.

It was done by the Civil Service Commiss ion and the depart- -

May 31, 19 96 LEGISLATIVE ASSEMBLY OF MANITOBA 3065 ment and absolutely no connection to the Premier (Mr. Filmon) and/or any elected officials. I think it is important that that be put on the record, as well.

It is a matter of bringing forward best management practices, best putting in place opportunities for individuals to make sure that their job description is one which they feel comfortable with, that the right people are in the right jobs and that the overall objectives are being met by the people of Manitoba for the people of Manitoba which, hopefully, will coincide with what the minister wants and the government and so far that has. Without having discussed the final report with my deputy minister, I am satisfied that the process that is going to accomplish what we want to happen is, in fact, taking place.

That should, hopefully, cover it for the member. Mr. Sale: Mr. Chairperson, could the minister indicate whether Mr. Goldie is doing work for any other area than lTC? My understanding is it is the new SOA that he was working particularly with. Mr. Downey: I do not have that information, but I can take that question as notice for the member. Mr.

Sale: My under standing from the Price Waterhouse report is that the issues that are raised here go beyond ITC and cover the whole department, and many of the other initiatives, particularly I think in some of the areas where there were former managing partners and small working groups under them, many of the concerns raised here really referred to that, as well. What resources have been put in place to deal with the human relations, human resource questions, outside of ITC? If Mr.

Goldie is not doing that, or perhaps some other consultant is, or perhaps there has been a team assembled with some resources, can the minister indicate? Mr. Downey: Could the member make a little bit more clarification as to what he is referring to in lTC? Mr. Sale: My underst anding is that Mr. Goldie is work related primarily to the new SOA and the staff of that SOA which was created I think April l, 1996. Mr. Downey: To help correct it, and I should have asked this question, what he is referring to in ITC? Basically Mr.

Goldie has been working with the human resource committee of the department, not just ITC, whatever he is referring to there. So it has been more of a general nature that he has been involved in. Mr. Sale: Mr. Chairperson, it may be that my addled brain has the wrong name of the organization that is the new SOA. The new SOA is the Industry Technology Council, am I not correct? Mr. Downey: Mr.

Chairman, the human resource team has been working throughout the Department of I, T and T, and the resources that we have asked for through the Civil Service Commission have been employed to help with the overall human resource activities. Mr. Sale: I appreciate the clarification. My under standing was different, and the minister has provided helpful information. I am glad to know that Mr. Goldie is working with the whole resource team for the whole department. That makes sense. I had misunderstood his assignment, so I thank the minister for that. Pass. Mr. Deputy Chairperson: Item lO .l .(

c) Financial and Administrative Services

(1) Salaries and Employee Benefits $630, 200-pass;

(2) Other Expenditures $3 16 ,600-pass;

(3) Computer Services $11 0,0 00-pass. lO .l .(

d) Research and Economic Services

(1) Salaries and Employee Benefits $383,7 00. Mr. Sale: Is this the area under which the Manitoba Bureau of Statistics falls? Mr. Downey: No, Mr. Chairman. Mr. Sale: It is two pages later. What I wanted to ask, Mr. Chairperson, was whether there has been any consideration given to the need to co-ordinate more effectively this research work, which, again, the Price Waterhouse report refers to as an area of weakness for the department.

The areas in which Price Waterhouse suggests there has been exemplary economic deve lopment support in other jurisdictions focus on what I think they termed more strateg ic market research. In many ways, some of the work that the bureau does and some of the work that Research and Economic Services does must overlap, at

3066 LEGI SLATIVE ASSEMBLY OF MANITOBA May 31 , 19 96 least it certainly draws on the same data set. I have often wondered why we have the two groups separately but under the same department. Maybe the minister might discuss that issue a bit. Mr. Downey: Not to spend a long time on it, but this area again, as we are reorganizing, will be part of the final decisio n-making process which I as minister will be dealing with with my deputy minister. So I again take note the comments the member has made . Mr.

Sale: I wonder if the minister could indicate whether there is any intention of expanding the resources in this area to give it more capacity to do some of the things which the Price Waterhouse study indicate. This is a very lean branch in terms of the task that it is given.

The production and helpful sharing of this kind of complex and very, very strategic information 1s a difficult task, particularly the dissemination end of it, because you are seeking to share this information in a very timely fashion with a very large number of potential consumers, the export industries of Manitoba which , as the minister rightly takes pride in, a very rapidly growing and successful part of our economy. This is a very small unit to support that kind of a mandate.

I am wonderi ng whether in reaction to the issues raised in Price Waterhouse and just the new world that we are living in the minister has considered the need to expand this area? Mr. Downey: Consideration will be given to strengthening this area. Just to what level and how much has not been finally determined by myself yet, but I would say there is a consideration in process. Mr.

Sale: Does the minister accept the criticisms that were raised in the Price Waterhouse report in regard to the strategic information gap or deficit that is detailed, and I am having trouble finding the page referen ce, but I am sure the minister is aware of the criticism that was raised It is on page 24, the item h, Policy, Research and Intellig ence Capability, a wonderful consultant teclmocratese, is underdeveloped from the perspective of economic development best practices. Mr. Downey: It is not, I guess, a matter of how the criticism is presented. I am one who is not afraid to accept criticism.

I think the other side of the coin though, as it relates to the department and to staff, is that if over development of the past budgets and where we have gone there are limitations of which the department has been able to operate, what we have talked about previously, that it is under consideration for improvement, then I think that speaks for itself, that there is a need for some improvement and we are worki ng to address it.

Again, one has to be mindful of the customers that we are providing service for, and I have not had direct criticism from the public in this particular area but, again, as it is reported there that it is an area of concern that should be dealt \\'ith and I can tell the member that we have it under consideration. Mr. Sale: Pass. * (1 040) Mr. Deputy Chairperson: 10. l .(d)

(1) Salaries and Employee Benefits $383, 700-p ass;

(2) Other Expen ditures $14 2,200-pas s. 1 0. 1. (

e) Manitoba Office in Ottawa

(1) Salaries and Employee Benefits $20 I, 700. Mr. Sale: Mr. Chairperson, is there any change anticipated in the role of the Ottawa office, given some of the very major cha nges that are happening in Man-not Manpower, it is not called that any more-H uman Reso urces Development strategies as announced today by Minister Young or any of the other changes that have taken place in fe deral-provincial relations? Is there any change anticipated in the Manitoba office in Ottawa? Mr. Downey: Not at this time, Mr. Chairman. Mr. Sale: Pass. Mr. Deputy Chairperson: 10 .1. (e)( 1) Salaries and Employee Benefits $20 1 ,700-pas s;

(2) Other Expen ditures $1 19, 1 00-pa ss. 1 O.l.(

f) Manitoba Bureau of Statistics

(1) Salaries and Employee Benefits $443,900. Mr. Sale: Mr. Chairperson, I wonder if we might take a five-minute or so recess and come back to this item.

May 31 , 19 96 LEGISLATIVE ASSEMBLY OF MANITOBA 30 67 Mr. Deputy Chairperson: Is it the will of the committee to take a 10 -minute break? Agreed? [agreed] The committee recessed at 10:42 a.m. After Recess The committee resumed at 10:54 a.m. Mr. Deputy Chairperson: Order, please. We will resume the consideration of the Estimates of Industry, Trade and Tourism 10 . 1.(

f) Manitoba Bureau of Statistics

(1) Salaries and Employee Benefits $443,900. Mr. Sale: Mr. Chairperson, I do not want to spend very long on this area, but I want to underline how important I think the work of this branch is. I am sure the minister agrees. You cannot steer a modern economy if you do not have good information because you are just steering in the dark then, and the critical issue for me this year was that I wanted to see whether there had been any discussion about linking the two of these branches together Research and Economic Services, and Statistics. They need so many of the same kinds of resources and skills.

When you are competing for the attention of a very busy public, a very busy executive level of any industry, and you have the statistics people sending out stuff and you have the research people sending out stuff and it seems like it is not the same stuff, it is not necessarily on an integrated data platf onn, I think it undercuts the effective use of resources to not have one visual identification, and one sort of source, for everybody who wants to know what the critical intelligence is in a given area, whether it is telecommunications or data processing or canola crushing.

It seems to me that it would be in line with what the government has talked about doing in other areas, which is to go to a one-stop approach and to have a very clear presence in each area. I know that the minister is pleased with what he intends to do in terms of trade, using Manitoba Trading Corporation, single image, single identity. I think the same issue goes for this kind of resource.

If we punched up and made more attractive the data basis that we use, followed some of Statistics Canada's approaches of popularizing key information, as they do, for example, through their monthly publication Perspectives and through many of their special purpose publications, where they tailor information to sectors and publish it in a very attractive, easily read format, use a lot of visual effects, bar charts, pie charts, a variety of those kinds of tools to get key information into people's hands quickly and in a format that people begin to recognize as a consistent provincial format that they look forward to, they know where it is, and they can get access to it either on-line themselves through Internet servers or some other form of on-line resource and they have got one place that they can call, it seems to me this would be a very proactive move on the government's part to pull this area together.

Is the minister or his staff considering such a move? Mr. Downey: Mr. Chairman, I cannot agree with the member on this. I think there are some areas of support which can be identified or some activities which may well be co-ordinated, but to put them under the same umbrella I think would be a little bit troublesome to the Bureau of Statistics. I think they like to, certainly, try to maintain some independence from the policy side of government. I also think that the

section dealing with policy have another range of activities, particularly dealing with internal trade, more different related activities than the Statistics branch, and so, although there may be some areas, and it is like the rest of government, co-ordination is extremely important, but to say they should be directly linked under one entity, I think he would probably get some debate from the people within the Statistics branch, as I am prepared to discuss it and debate with him, as well, on that particular issue.

It is one which I think would take a considerable amount of discussion, and both points of view would have to be fairly thoroughly examined before that kind of amalgamation took place. Mr. Sale: There will always be debate. It is a good thing when there is a lot of debate about the need for change in areas, but I would just underline to the minister that the source of information for both branches is often similar. They are both pulling on Statistics Canada data and data from other databases that are not originated here in Manitoba, particularly in terms of economic opportunities elsewhere.

You are having to deal with

3068 LEGIS LATIVE ASSEMBLY OF MANITOBA May 31, 1996 international sources of data, OECD, World Trade Agreement and other kinds of inf ormation. I simply urge the minister to think about the possibility of establishing a single point with very readily accessed, not print-oriented but electronic-oriented resources availa ble to industry and to businesses, as well as to groups that draw on the current, very good products of the Bureau of Statistics.

I would say that while the quality of the Bureau of Statistics' work is very, very good, the appearance and the kind of accessib ility of the data is pretty dull by comparison with a lot of data sources that we draw on now, and I think we need to consider moving up the profile and accessibility of MBS's very good work, and this also may be a case of resources being so constrained that they cannot do that. * (l lO

O) I think the Price Waterhouse study makes it very clear, page 23 and following, that the data support just is not there right now in Manitoba in comparison with other lighthouse jurisdictions that are referenced in the report. Mr. Downey: I would like to pass this item, Mr. Chairman. Mr. Sale: So would I, Mr. Chairman. Mr. Deputy Chairperson: 10. 1. (

f) Manitoba Bureau of Statistics

(1) Salaries and Employee Benefits $443,900- pass;

(2) Other Expenditures $224, 800-pass;

(3) Less: Recoverable from other appropriations ($60, 000)-pass. 10.2. Business Services (

a) Industry Development

(1) Salaries and Employee Benefits $1 ,57 9, 10 0. Mr. Sale: Mr. Chairperson, I am having trouble following you. Mr. Deputy Chairperson: 10.2. Business Services. Mr. Sale: Yes. Mr. Deputy Chairperson: 10 .2.(

a) Industry Development

(1) Salaries and Employee Benefits Mr. Sale: $3,5 00,000, is that the figure referenced? Mr. Deputy Chairperson: No, $1 ,57 9, 1 00, page 25. Mr. Sale: Okay, I am sorry. I am on the

Summary page, that is the problem. In this area, I have only one group of questions, but I would want to first commend the government on its recognition of the need for a variety of flexible and lower level Venture Capital funds and tools to allow small businesses to develop more readily, to get that initial leg up that is very, very difficult when you do not have the assets that banks used to require before you could borrow money. Of course, if you had the capital to secure a loan, you really did not need the loan in the first place. It was a wonderful circle in v.hich the banks won and everybody else lost.

So I am glad the minister and the government and the banking industry are all recognizing the need for more flexible approaches to that first stage of development. I would like to ask the minister to elaborate on the role of Industry, Trade and Tourism and to identifY the specific area in Industry, Trade and Tourism where the Grow Bonds Program approvals are made. Mr. Downey: Mr.

Chairman, we as a department directly do not have the responsibility for the Grow Bonds Program, as he is aware, but we do have a staff member from Financial Services that sits on the Grow Bond approval process with the Department of Rural Development. So going back to some of his initial discussions, there is a way in which we do participate across the departments, and that is a way in which we do it as it relates to Grow Bonds. Mr.

Sale: Could the minister indicate what the role of his staffperson is on this committee and who that-not necessarily the name of the staffperson, although he could tell me that, but where in the overall organization is that staffperson located? Mr. Downey: He is an individual within the Manitoba Development Corporation who is there to make sure that all the documentation, the legal approvals are part of it. It is a part of government services that we have for our own activities within I, T and T and are provided for the support of Rural Development and the Grow Bond process.

So it is a matter of making sure that all the work is done and the necessary documentation is there as it -

May 31, 19 96 LEGISLATIVE ASSEMBLY OF MANITOBA 3069 relates to approvals of activities under the Grow Bonds Program. Mr. Sale: I am not aware of MDC having any specific staff resources anymore. I thought that it has officers but not specific staff. Could the minister be more specific about who it is that is representing the department on this committee? Mr. Downey: The Manitoba Development Corporation is really the responsible unit that looks after the activities that we flow our resources from relating to all the programs. The individual is Mr. Gary Alba. Mr. Sale: Mr.

Chairperson, is his SY located in Manitoba Development Corporation, or is his SY located somewhere else in the department? Mr. Downey: It is within I, T and T, Mr. Chairman. Mr. Sale: Mr. Chairperson, I assume it is within I, T and T. Where within I, T and T? Mr. Downey: Financial Servic es. Mr. Sale: Within Mr. Dalgliesh's area, then, I under stand. No, that is administrati on. Financial servic es. Okay.

Could the minister indicate how that person reports back through I, T and T or, maybe more specifically, how does the minister, then, have a role in a specific Grow Bond approval, as a result of the work of his staff or only at the cabinet table? Mr. Downey: Mr. Chairman, basically the process to which the member refers is at the technical level that helps the Department of Rural Development in the processing of an application. The other manner in which we would be involved or the department would be involved would be if the proje ct had to come before cabinet, would be the process.

The other would be the opportunity to see the proje ct at Economic Development Board. Mr. Sale: My concern here is that, it appears that in at least a couple of cases, and I hope this is not a general pattern within the Grow Bonds Program, that two different kinds of problems have emerged, at least in the case ofWoodstone and, I think, in the case ofCrocus, as well in Portage. Unfortunately, both the programs that are in troub le are in Portage la Prairie . They have to do with the level of due diligence that is undertaken in regard to the prospectuses that are put forward.

Because The Grow Bond Act specifically exempts the Grow Bonds from the Manitoba Securities Commi ssion's scrutiny, the level of due diligence is done internally by government using staff who may well be capable of assessing the financial viab ility of different programs that are being put forward for Grow Bond consideration, but they are not people who have securities experience in their background, with the exception, I believe, of Paul Sweatman, who has some background in the securities industry, but not in the securities approval process. So I am wondering, Mr.

Chairper son, whether, given the importance of the Grow Bonds Program, which my party supports as a tool for local development, but given the growth of that program and the importance of that program, should the minister and the government not be considering recommending that once a project is identified for approval that the approval process should follow the regular issuing of securities process in Manitoba because, after all, what is being issued are securit ies. They are guaranteed by the province, It IS true.

Nevertheless, they are securiti es in every sense of the word, and I am wondering if they should not be approved by the Manitoba Securit ies Commission, which is the body that approves every other form of security that is sold to the public in Manitoba. Could the minister respond to that policy question? Mr. Downey: Mr. Chairman, I guess first of all I could ask the member ifhe did not ask those questions in Rural Development why he did not, because that program falls within the Rural Development ministry .

Secondly, as I understand it, the due diligence which is carried out is done so by the Department of Rural Development and again supported by an individual from our staff, as I have indicated. "'( 111 0) If I understand it correctly, the Securiti es Commission is more of a regulatory agency rather than carrying out a

30 70 LEGI SLATIVE ASSEMBLY OF MANITOBA May 31, 19 96 due diligence activity, as it relates to the viability of a project rather than just the-I do not think it is a measure of whether or not a company will be successful or could be successful. It is more of a matter of the appropriatene ss of the structure which has been es tablished for the flowing in and out of money as it relates to either share or personal investment by individuals.

So it is regulatory versus a full due diligence as it relates to the perf ormance or the potential performance of an investment or a company as it relates to the Grow Bonds Program. So, again, I will def end the system that we have. think it has worked pretty effectively . The member makes ref erence to one in Portage la Prairie, which I understand is back on track again from the information that I have . Well, the member makes a facial expression which would be questionable.

To my knowledge, and I say that maybe I do not have the full informat ion, but I understand there have been some events of recent that have improved the situation there. What we do not want to do is expose the taxpayers through the government and/or have the taxpayers who would be investing in a project put in a way in which they do not go into fully understanding what the program is. I think Grow Bonds are clearly under stood. They are clearly explained .

I can also tell the member that it is our intention to do considerable amount more work as a Department of Industry, Trade and Tourism, and I do thank him for his acknowledgment of the programs that we have announced, whether it is the Manitoba Capital Fund, Vision Capital, Crocus, the Grow Bonds Program . We, in fact, will be holding a series of semina rs. We have had one. We will be holding another one in Brandon bef ore too long with businesses that are looking for pote ntial expansions to further explain to them what instruments are available to them.

Back to a specific question, I guess we want to make sure that the inve stors are secure . We want to make sure that each organization carries out its responsible role. Mr. Sale: Mr. Chairperson, I would take issue with the minist er's description of the role of the Securities Com mission. They approve the issuing of prospectuses, and in so doing they have staff who assure themselves as to whether the due diligence work that has been done meets the standards of Securities Commiss ions across the country.

There is a considerable amount of work been done in the last while, as the minister responsible for the commission will testify, to make interprovincial standards comparable and to allow for good quality work to be done in each of Canada's provinces that regulate securities industry. It is not in Manitobans' interest to have a less than adequate due diligence process when you are expanding a program as rapidly as Grow Bonds is expan ding and other programs are expandi ng.

What we want to do is build investor confidence and communit y confidence that risking capital is no more risky than necessary, and that we all can become successful investors and successful community builders through pooling our resour ces, and the old co-operative principle is still a very good principle. I would simply, I guess, underline that if we are going to expand those areas which our party supports-we support the expansion, I think as we said yesterday in our initial opening remar ks.

We support the notion that pension funds ought to invest back in the communi ties from which the pension funds come, and we support the notion that local investors should invest in building and expanding local industry. So these are all positive initiatives, but if we are going to do that as rapidly as it appears to be happening, and those are good developmen ts, we need to expand the capacity of government whether through departments or through the Securities Commi ssion.

My pref erence would be through the com missi on to ensure that good bus iness plans have been developed, that the due diligence has been done and that we do not have failures. As the minister knows, I am sure as well or better even than I do, nothing undercuts public confidence quicker than a couple of high-profile failures. Even ifyou have 10 successes alongside of them, a couple of high-profile failures will sink a program because investor confidence is compro mised.

So my comments are not meant to be critical of current staff but simply to say that there have been no additional resources identified for this area that I am aware of or that I can see through the Estimate s, but the area is expa nding. Theref ore, I think the risk government is taking is expanding, because you cannot provide quality oversight of high-risk ventures without some staff resources -

May 31, 19 96 LEGISLATIVE ASSEMBLY OF MANITOBA 307 1 assigned to support that, not in a way, Mr. Chairperson, that is punitive or intetfering with the legitimate develop ment, but in a way that provides the kind of supports that anticipates, sees problems developing and moves in in a supportive and proactive way to help new businesses get on the track that we all want them to be on. Mr. Downey: I appreciate the concerns of the member, Mr. Chairman. Again, I think these would have been good questions for the Department of Rural Develop ment.

However, in the overall, we want to make sure that all decisions made by government have supportive mechanisms in place, whether it is due diligence for Grow Bonds, whether it the process by which the Securities Commission has a regulatory responsibility to carry out, and I can tell you that the head of Grow Bonds is fairly familiar with the whole Securities Commission process. The member is recommending that Grow Bond decisions should be approved by the Securities Commission.

Again, I do not see that that would change anything, because it is my understanding that the full due diligence is carried out by the Department of Rural Development, supported by I, T and T, and I guess they are quite free to discuss with the Securities Commission any concerns that they may have, if there is anything that would fall within the Securities Commission's mandate, as it relates to an investment proposal. Mr.

Sale: My concluding comment on that is that I was not suggesting that Securities Commission should have the policy approval of a Grow Bond, but simply the regulatory function of issuing approval to allow the prospectus to be placed before the public. That is their role in every other security that is sold to Manitobans. I think it would increase Manitobans' confidence in the program, and it would protect the government from any accusations that perhaps processes were less rigorous in some areas which might be seen to be prone to political intetference than others.

I think that this would be a way in which Manitobans could be supported to take more investment decisions to support their own provincial development, locally and at a provincial level. So I leave that comment and point of view with the minister, and appreciate his response, and I am sure he understands where I am coming from on that, but I do want to be clear that I am not suggesting that the policy matter of cabinet approving a Grow Bond be shifted. That is entirely appropriate.

It is the question of the technical due diligence and the issuing of the prospectus being given the same dignity as every other security that is sold to the public in Manitoba. Pass. * (112 0) Mr. Deputy Chairperson: 10 .2. Business Services (

a) Industry Development

(1) Salaries and Employee Benefits $1 ,57 9, 1 00-pass;

(2) Other Expenditures $2,270,3 00-pass;

(3) Grants $650 ,900-pass;

(4) Less: Recoverable from Rural and Urban Economic Develop ment Initiatives ($ 1,0 00,000). Mr. Sale: Mr. Chairperson, could the minister just indicate what the source of this is? Is it related to the new SOAs? What is the source here? What is the point? Mr. Chairperson, this item did not exist last year. It is a new item, and I am simply trying to understand where it comes from, what it is for. Mr. Downey: Mr. Chairman, I will take as notice for the member to get the information for him for the first of the week. Mr. Deputy Chairperson: Item 10 .2.(

a) Industry Development

(4) Less: Recoverable from Rural and Urban Economic Development Initiatives ($ 1,0 00,000) pass. 10 .2.(

b) Financial Services

(1) Salaries and Employee Benefits $744,700. Mr. Sale: Mr. Chairperson, could the minister indicate who represents the province on the Vision Capital corporation? Mr. Downey: Mr. Steve Kupfer. Mr. Sale: Mr. Chairperson, I have a number of questions about Vision Capital's investments, and I understand the sensitivity of providing information about individual companies. I do not wish to put at risk any companies, but I do have some concerns and some questions here, and I will hope the minister will find a way of responding that respects the need for confidentiality but also perhaps can deal with some of the issues that I think are important for Vision Capital.

3072 LEGISLATIVE ASSEMBLY OF MANITOBA May 31 , 19 96 Could the minister indicate how much has been invested in Iris Syste ms, one of Vision Capital's holdings, at present? Mr. Downey: Mr. Chairman, I appreciate the comments the member has made in relationship to the disclosure of information which may not be in the interests of the public, a company that is operating, or the activities of the individual companies.

I will try to accommodate the member as it relates to information that may be helpful for him and the work that he is doing, and still at the same time, protect the individual companies which, quite frankly, have entered into this without the expectation that it would be fully debated and discussed as it relates to that investment through the public process. It is not a matter of attempting to not give him the information.

It is a matter of trying to make sure that the company or companies that we are talking about are not, in some way, disadvantaged because of public disclosing of what their current situation is because of a competitive nature, which they could be providing services and/or a product. So maybe we could deal with some more general questions. I might be able to provide that information to the individual, but I would certainly want to do a check with the company on it, and make my decision from there. Mr. Sale: Mr.

Chairperson, the province is a significant partner in Vision Capital and some other public sector derived funds are also major partners in Vision Capital. I would ask the minister again how much money has been advanced? What is the scale of the investment from Vision Capital in Iris Systems at the present time? I am sure this is not something that would be unavailable, given the nature of the public funds that have been invested. Mr. Downey: Again, Mr. Chairman, I do not feel at liberty to give the specifics of any particular company as it relates to the status of that company .

What we do not want to do is put it at risk because of public expression as to what or where we are at as an investment and the status of that at this particular time. I think we can certainly talk in global numbers, but to deal with specifics could well put in jeopardy the investment that has been made by the province and by other investors. I am not trying to be difficult. I hope the member appreciates tha!, but I have never been one that has had any problem with disclosing what is appropriately disclosed to the public. Mr. Sale: Mr.

Chairperson, the minister makes regularly available lists of grants that have been made to corporations, lists of loans that have been made to corporations, that the government has loaned money to. I cannot see the diff erence. If disclosing what total sums have been invested in a variety of companies does not harm those companies, I cannot for the life of me see how revealing the scale of investment from Vision Capital in the various projects in which it is involved can harm those companies . We regularly receive reports from government about funds that have been invested.

I give the example of Linnet where the minister responsible indicated very clearly $5 million was the direct funding and indicated that, yes, there had been funds from other projects invested in that company. We know we are a 24 percent shareholder in the company . So what is the confidentiality involved in revealing the investment, at least in part by the public, in a company such as Iris? Mr. Downey: I will try to explain, Mr. Chairman, as to how I see the difference.

When providing a direct loan through MIOP or through any other program, I see it as a company that has come forward well knowing that that is going to be expressed and discussed. Under the Vision Capital, it is different. We are providing a source of capital which is managed by a management team where they make their decision to participate as partners in investments and projects.

Yes, I believe there is a responsibility for the govern ment to be fully aware and knowledgeable through the staff as to what those investments are, the amounts of money that are invested, but again we are in there not as a majority or not as part of that investment where the company would be expecting that someday that it would be fully disclosed as to the participation of Vision.

However, what I am prepared to do is discuss with the individual companies and make a judgment as to whether or not and ask professional people within the department as to whether or not it could be, in fact, and I say could be damaging to the stability, the viability and the future -

May 31, 19 96 LEGISLATIVE ASSEMBLY OF MANITOBA 3073 of that company, because if it could in some way endanger that investment or not endanger it but lessen the worth of that investment then the overall benefit of the taxpayer would be lessened and put at risk. It is not my intention to do that and, again, I will do what I can.

I think it is appropriate to answer questions and deal with questions in the global amounts of money that governments have put in and projects which those partners have no trouble with disclosing how much equity position would be put forward by Vision Capital, but I do not feel free to do so in the interests of the public, who have money invested through Vision Capital to do so at this time. Mr. Sale: Mr. Chairperson, I appreciate the lunch. No, I am kidding. I find that response quite unacceptable, quite unhelpful and unacceptable, and I would like to tell the minister why.

There are a large number of Venture Capital funds around, and those funds report to their shareholders in a variety of ways. Take, for example, the health care and biotechnical venture fund. Take any of the working ventures funds supported by labour. Take the Crocus Fund. All of these funds disclose regularly their stake in the companies in which they have invested.

There is nothing lost and, in fact, when a Venture Capital fund makes an investment in a company, usually the company sees that as a very good thing, a positive thing, and they crow about the fact that they have attracted the interest of a Venture Capital fund to invest in their new and developing company. They usually have a press release and they note it as a matter of pride that they have been able to attract interest from these funds. I regularly receive reports from a variety of Venture Capital funds in which they identifY their successes, their failures, the scale of the investment.

They sometimes identifY other investors in those companies, but I have yet to see a Venture Capital fund, other than perhaps a family trust, that does not report where its money is being invested. Here we have a situation where the partners in the Venture Capital fund are largely public, either in the derivation of the monies or directly so as in the case of the Province of Manitoba. So I fmd the minister's response unacceptable, as well as unhelpful.

Virtually any company that I know of that attracts venture capital is pleased with that, and many, many, many press releases are issued saying our company is on the road to success, and we are pleased to announce we have just acquired a shareholder in the form of the Vision Capital corporation of Manitoba. They are holding 15 percent equity position, and we are sure this is going to give us the kind of secure investment that we need to have a rosy future.

I challenge the minister to justifY why we should not have a full list of all the current investments of Venture Capital fund in which we are shareholders. * (1 130 ) Mr. Downey: Mr. Chairman, it is my understanding that approximately two months ago Vision Capital had a public meeting which the media were at, and that they were prepared to discuss in general the activities of Vision Capital, which the member may or may not have been aware of. I am reporting that to him.

Let me further elaborate a little bit as it relates to what I see, and let us talk not about any one particular company, but let us talk in terms of whether or not the member feels that it is responsible at this public forum, or at any public forum, because we have investments that any decisions that may be made as it relates to the company of which we may be a minority shareholder through Vision Capital, that through public discussion of what is taking place of that individual company, could in some way lessen the value of the investment that we and our shareholders have in that particular project.

I cannot give him a specific issue or a specific case at this particular time, but I am trying to run a scenario which, hopefully, he understands.

I would be prepared, and would be in discussion through Vision and through the companies that are invested in, if it is deemed advisable and if the member insists, that under a process of making sure that there is no endangerment of devaluing the company or the investment of which we are a part, which he does not, I hope, want to be part of-ifhe as a member of the Legislature were to disclose information or have information disclosed that in some way could lessen the value of our investment. I hope that he would not want that to happen.

If we could explain in some way, in a confidential way, to any member of the Legislature that, if there is a process that could be established, then I would be prepared to look at that, but I am not prepared today to give information on specifics as it relates to investments that have been made by Vision Capital in the interests of all those individual companies.

3074 LEGISLATIVE ASSEMBLY OF MANITOBA May 31, 19 96 I appreciate where he is coming from. We are there as an investment through Vision Capital, but I am prepared to deal with the global numbers that are before this committee, but on individual cases I think it could be, and I say could be, damaging to the investment that has been made by the province with other partners. I am at this point not prepared to put in jeopardy any individual company that may be in that situation. So we can dwell on this for some time ifhe likes.

I will look into how we might be able to accommodate the member and get information that is important to him in carrying out his responsibilities. Mr. Sale: Mr. Chairperson, I think there is a general policy that is well accepted, and that is, as the member for Broadway (Mr. Santos) has noted to me in a note, the simple principle that if public monies are invested, why should the public not be entitled to know how much has been invested in a given investment?

The securities industry, stock exchanges of Canada, in particular Toronto, which is the most highly regulated of Canadian stock exchanges, make it very, very plain that there must be disclosure and that the disclosure is not prejudicial to anybody's interests. If a company has attracted investment from a publicly held entity, it does not matter what it is, that entity in reporting to its shareholders must report its investments, must report the percentage and the dollars, and cannot keep that kind of information from its shareholders.

Well, we are the shareholders of Manitoba Inc., and I again say to the minister I find it unacceptable that there is not simply, as a matter of course, a listing of all investments made by Vision Capital year by year. If the investments grow, fine; and if there is disposition of assets that result in a profit, that is fine, too; and if there is disposition that results in losses, well, that is expected from time to time in a Venture Capital operation.

But the failure to do that kind of reporting does not instill confidence on the part of Manitobans, and it certainly does not instill confidence on the part of the opposition as to the government's need for secrecy in regard to the particular investment decisions. So if the minister wishes to respond again to that, I would be glad to have his response, but then I have some very specific questions. Mr. Downey: Mr. Chairman, I am not trying to be difficult, and for his friend, the member for Broadway (Mr.

Santos), if he feels that he wants to put a company in a position, of which the taxpayers through Vision Capital have an investment, that in some way would lessen the value of that investment on behalf of the taxpayers, if that is the position that he is taking, because he is philosophically bent to do this when I have said that we would try to do what we could to accommodate, providing him the information- Point of Order Mr. Sale: Mr.

Chairperson, we have had a very civil debate here, and I think that the minister may have begun to stray from that by imputing motives to the honourable member for Broadway who asserted a principle of public accountability. He certainly had no motives, and it is inappropriate to attribute motive in terms of putting a company at risk, and I am sure the minister may want to consider those remarks. Mr. Deputy Chairperson: The honourable member for Crescentwood, I am ruling, does not have a point of order. It is a dispute over the facts. * * * Mr. Downey: Mr.

Chairman, I did not mean to be in any way disruptive and to try to have the committee break down as to our discussions that have taken place. All I am trying to do is further satisfy the debate that in providing what is requested on a specific company, whatever one it may be at this particular time, may, in fact, be not in the best interests of the investment that we have made as a minority shareholder in, I am sure, the majority of companies.

I am certainly prepared to answer anything as it relates to the overall global investment and go one step further to try to accommodate the requests of the member as it relates to some more specifics, and not in some way exposing information that may be not in the interests of the investment that we and other investors have made. I think if he would look back at last year's Hansard, I believe we may have had this same debate. I am not sure. I will look back and see whether or not, but I think the member was a little more understanding at that particular -

May 31, 19 96 LEGISLATIVE ASSEMBLY OF MANITOBA 3075 time. I do not know whether it has been another year in opposition that has changed his attitude or whether there is something more specific that he would like me to deal with. But I would be prepared, as I said, to deal with the overall questions as they relate to more generalities with Vision and try to provide the detail in a manner which would not be in any way harmful to the investment that has been made by Vision and the other investors in any one company. Mr.

Deputy Chairperson: I would like to add to my last ruling, and ask all members of the committee, because, in fact, the minister was very close to impugning motive in my perception. However, as all honourable members know, a small word or just certain words used in certain ways can, in fact, make that difference. So I would ask all honourable members to choose their words carefully, and, indeed, I am sure our Estimates can move along smoothly. Mr. Sale: Thank you, Mr. Chairperson, I appreciate your admonition, and I am sure we will all try to follow it.

I think we have done very well so far, and I hope we will continue. Could the minister indicate whether it is his under standing that the head of the Vision Capital corporation, which I believe is James Obome-I will leave the question. There appears to be some disagreement about that, so I will leave that as a question. * (1 140 ) Mr. Downey: Mr. Chairman, Westgate Capital is the corporation that is hired to manage the Vision Capi

Document details

Collection	Manitoba — Debates (Hansard)
Citation	36-2-43b
Type	hansard
Volume / chapter	36th 2nd hansardpdf 43b.pdf
Language	en
Format	pdf
Source	PROVINCIAL
Identifier	9410d49e5e46ee70dd7a4597bb1980ba337959be

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