Manitoba Committee Hansard — 1 May 1989 (Education Committee, Sitting 10, 34th Legislature, 1st Session)

34-1-ed10

Manitoba — Debates (Hansard)

MG -8048 First Session - Thirty-Fourth Legislature of the Legislative Assembly of Manitoba STANDING COMMITTEE on ECONOMIC DEVELOPMENT 37-38 Elizabeth II Chairman Mr. H. Pankratz Constituency of La Verendrye VOL. XXXVII No. 10 - 8 p.m., MONDAY, MAY 1, 1989. Print ed by the O ffice o f the Queens Printer. Province of M anit oba ISSN 0713 - 9969

MANITOBA LEGISLATIVE ASSEMBLY Thirty-Fourth Legislature Members, Constituencies and Political Affiliation NAME CONSTITUENCY PARTY ALCOCK, Reg Osborne LIBERAL ANGUS, John St. Norbert LIBERAL ASHTON, Steve Thompson NOP BURRELL, Parker Swan River PC CARR, James Fort Rouge LIBERAL CARSTAIRS, Sharon River Heights LIBERAL CHARLES, Gwen Selkirk LIBERAL CHEEMA, Guizar Kildonan LIBERAL CHORNOPYSKI, William Burrows LIBERAL CONNERY, Edward Hon. Portage la Prairie PC COWAN, Jay Churchill NOP CUMMINGS, Glen, Hon. Ste. Rose du Lac PC DERKACH, Leonard, Hon. Roblin -Russell PC DOER, Gary Concordia NOP DOWNEY, James Hon.

Arthur PC DRIEDGER, Albert, Hon. Emerson PC DRIEDGER, Herold, L. Niakwa LIBERAL DUCHARME, Gerald, Hon. Riel PC EDWARDS, Paul St. James LIBERAL ENNS, Harry Lakeside PC ERNST, Jim, Hon. Charleswood PC EVANS, Laurie Fort Garry LIBERAL EVANS, Leonard Brandon East NOP FILMON, Gary, Hon. Tuxedo PC FINDLAY, Glen Hon. Virden PC GAUDRY, Neil St. Boniface LIBERAL GILLESHAMMER, Harold Minnedosa PC GRAY, Avis Ellice LIBERAL HAMMOND, Gerrie Kirkfield Park PC HARAPIAK, Harry The Pas NOP HARPER, Elijah Rupertsland NOP HELWER, Edward R. Gimli PC HEMPHILL, Maureen Logan NOP KOZAK, Richard, J.

Transcona LIBERAL LAMOUREUX, Kevin, M. Inkster LIBERAL MALOWAY, Jim Elmwood NOP MANDRAKE, Ed Assiniboia LIBERAL MANNESS, Clayton, Hon. Morris PC McCRAE, James Hon. Brandon West PC MINENKO, Mark Seven Oaks LIBERAL MITCHELSON, Bonnie, Hon. River East PC NEUFELD, Harold, Hon. Rossmere PC OLESON, Charlotte Hon. Gladstone PC ORCHARD, Donald Hon. Pembina PC PANKRATZ, Helmut La Verendrye PC PATTERSON, Allan Radisson LIBERAL PENNER, Jack, Hon. Rhineland PC PLOHMAN, John Dauphin NOP ) PRAZNIK, Darren Lac du Bonnet PC ROCAN, Denis, Hon. Turtle Mountain PC ROCH, Gilles Springfield LIBERAL ROSE, Bob St.

Vital LIBERAL STORIE, Jerry Flin Flan NOP TAYLOR, Harold Wolseley LIBERAL URUSKI, Bill Inter lake NOP WASYLYCIA-LEIS, Judy St. Johns NOP YEO, Iva Sturgeon Creek LIBERAL

LEGISLATIVE ASSEMBLY OF MANITOBA THE STANDING COMMITTEE ON ECONOMIC DEVELOPMENT Monday, May 1, 1989

l) TIME - 8 p.m. LOCATION - Winnipeg, Manitoba CHAIRMAN - Mr. Helmut Pankratz (La Verendrye) ATTENDANCE - QUORUM - 6 Members of the Committee present: Messrs. Angus, Gilleshammer, Harper, Helwer, Lamoureux, Pankratz , Plohman, Rose, Taylor Hon . Messrs . Enns , Manness • Substituting for Mr. Harapiak, Mr. Storie • Substituting for Mr. Harper, Mr. Ashton • Substituting for Mr. Lamoureux, Mrs . Charles • Substituting for Mr. Pankratz , Hon . Mr. Downey • Substituting for Mr. Plohman, Mr. Storie • Substituting for Mr. Storie, Mr. Harapiak • Mr. Pankratz replaced as Chairman by Mr. Gilleshammer at 12 a.m .

APPEARING: Mr. Cowan, Member for Churchill WITNESSES: Mr. Ross Lewis, Stothert Engineering ltd . Mr. Mike Bessey, Policy Management , Executive Council Mr. Norm Brandson, Department of the Environment (Director of Environmental Services) MATTERS UNDER DISCUSSION: The Annual Report for Manfor Ltd ., year ending December 31, 1987 . Mr. Chairman: I would like to call the committee to order on Economic Development . Before we proceed with that , we have a few resignations. I have before me the resignat ion of Mr. Lamoureux: " I wish to resign lrom Economic Development." Is there a replacement?

Would somebody move a replacement? Mr. John Angus (St. Norbert): I nominate Gwen Charles. Mr. Chairman: Moved that Gwen Charles be the replacement. Committee in favour? (Agreed) I have before me the resignation of Mr. Plohman: "I wish to resign from Economic Development as of May 1." Mr. Elijah Harper (Rupertsland): I nominate Mr. Storie. 184 *

(2005) Mr. Chairman: Mr. Harper nominates Mr. Storie. Is the committee in favour? (Agreed) Before carrying on, I would like to introduce to you, committee Members, Patricia Chaychuk-Fitzpatrick, who has recently been appointed to the position of Committee Clerk, replacing Janet Summers , who has been appointed to the new position of Members ' Benefit Officer-Patricia. We have been considering the Annual Report for Manfor for the year ending December 31, 1987. Does the Minister have any opening remarks? Would he introduce any staff members present? Mr. Minister . Hon. Clayton Manness (Minister of Finance): Mr.

Chairman, at the last sitting of this committee, I undertook to report back in the month of April. I apologize for this date being not April , but May 1. With respect to a request by Mr. Taylor who sought, and I quote from Hansard, page 147, he says, " I am not asking for that .

I am asking for a quality of presentation that a concerned layperson can understand what the major changes are ." What he was referring to basically is the general terms as to the phased -in development and the commitments with respect to the alteration of the existing Manfor plant so that a larger facility would be built in the process by which trees would be converted to pulp . Mr. Chairman, to that end, I have today joining me Mr. Ross Lewis, who is the president from Stothert Engineering in Vancouver, who is prepared to make a major presentation to the committee .

I should indicate also that it has taken so long to convene this committee is the fact that Repap, the purchasers of Manfor, provided to us late last week by way of schematics a plan as to how it is they will be converting the Manfor site, firstly; and secondly, the processes involved in the activities there . So Mr. Lewis joins us today to give greater explanation to those processes that will be in place. *

(2010) I have one request, Mr. Chairman , that is if there are any questions specific to the forest management agreement - I should not even say the agreement, the forest management and how it is considered with the terms of agreement-I would ask that possibly they be posed now. Mr. Rannard , the Director of the Forestry Branch of the Department of Natural Resources is here

Monday1 May 1, 1989 and would like , if at all possible , to be away from the committee to attend to some pressing family busi"ness. I would request that if there are questions dealing with the forest man agement that possibly we deal with th em firstly . Tha nk y ou. Mr. Angus: Mr. Chairman, we have a far gre ater concern than just the area of forest management . The area of forest management is indeed an important area and I would like to be able to give it complete and full attention . The cause and effect on the environment is undoubtedly a very key and important component as agreed upon . Mr.

Chairman, I have a copy of the agreement before me, a copy that was filed with the Securities Exchange Commission in Washington, D.C. It is an annual report which summarizes information on the Repap-Manfor arrangement. I also have just received today , as a result of becoming aware that this information was public, nearly 200 pages of the agreement. The 200 pages for the agreement were apparently-I say, apparently filed in Washington some time ago, at some time before the committee began sitting.

I will bring to the Minister 's attention that on March 23, 1989, in the committee meeting, time after time after time we repeatedly asked the Minister to make available to us, to the committee, to the elected Members of the Legislature, either in camera or out of camera , information as to the specifics of the arrangement to buy-sell Manfor. Let me make it perfectly clear, Mr. Chairperson , we do not want to stand in the way of any opportunity to dispose of this Crown asset . Our whole intention and our whole role is to make sure it is to be disposed in the very, very best interests of the citizens of Manitoba .

The Minister referred that this is an open Government. I have indicated before we make every effort to make this document available. He moved on to say that he cannot make it available , and I quote from the Hansard : "Can the Minister make this interim agreement public?" "I cannot, it was a share-purchase agreement." It goes on and on, Mr. Chairperson. Mr. Chairperson, quite frankly , I am disappointed that (

a) as a shareholder in Repap, I would be mailed information on this arrangement , on this share-purchase agreement, on this deal to be sold-a deal by the way that is ldoking at selling out 40 ,000 acres of Manitoba 's trees . It disturbed me even more when I find out that any citizen of ·the United States of America who is familiar with the regulations and the rules of the Securities Exchange Commission could have had a copy of that report , and when legitimate, reasonable requests were made from this committee to this Minister , asking him to provide us with that information , it was not availaol~ . Mr.

Chairperson, I am offended as an elected representative, I am offended as a citizen of Manitoba . I believe, as a Minister, in his arrogance and self-serving passion, he has circumnavigated a just and fair, open , honest Government. He did not share this informat ion; he has misled the committee ; he is perfectly well within his realm to give us information that he had given to the people in the United States of America through the Securities Exchange. 185 Mr.

Chairperson , I have not ha-d an opp ortunity to scrutin ize this agreement to its fullest and I am s ure that I will, either before it is signed or after it is signed , but I do know that in spite of the fanfare of suggesting that Thur sday is going to b e the offici al sign ing, that the agre ement call s for the s igning of the agre ement to be done on the 2nd of May, which is tomorrow .

I a lso understand that there is a clause in the agreement near the beginning that sugg ests that by mutual agreemen t the purchaser and Repap , or that the Government and Repap, can postpone the signing , and I will quote from page 3 of the agreement , Mr. Chairperson, ". . provided that the other part y requests that such a date be postponed to a date no later than May 30, 1989 , that con sent of the other party shall not be unreason a bly withheld. " There are emanating from this document literally hundreds of questions and explanations that I believe the citizens of Manitoba are entitled to be apprised of.

Mr. Chairperson , I would ask the Minister to postpone the signing of the agreement until the 30th of May, to exercise his options , as defined on page 3, subsection 1.01 , Closing Time. I further ask that he allow the commitiee to adjourn and review the specifics of this agreement so that we can ask intelligent and related , relevant questions . My colleagues from the third Opposition Party may also have some concerns as this document has been shared between our groups. I would be most interested to hear what they specifically have to say, but I would also be interested in hearing what the Minister has to say. *

(2015) Mr. Manness: Mr. Chairman , first of all, I would like to ask the committee whether there is any wish to ask questions of Mr. Rannard. That was the question I put towards the committee. He has pressing family matters he has to attend to. If there is no wish to put questions to Mr. Rannard with respect to the forestry agreement , I hope Members would indicate so Mr. Rannard could take his leave . Mr. Angus: With respect to Mr. Rannard and to his family concerns, we do have specific questions of the environment and we have br0t1ght him in, Mr. Minister, to discuss those .

I do not want to offend him and/or dismiss him out of hand. I would be very interested in hearing what he has to say, but for the most immediate, there is a larger and more pressing question that has to be addressed , and it should be addressed. There are literally hundreds of questions that will flow from this document that may in fact be directed towards this gentleman . Mr. Manness: I still have not heard the answer. If th Members are saying there may be questions for Mrj Rannard, then certainly we will keep him in attendance .

I would just hope if Members sense around nine o'clock we are moving onto a course of questioning and answering that will probably tie up the rest of the evening, that they show the common decency to Mr.

Monday, May 1, 1989 Rannard to allow him to leave at that time. That is my only request to the committee . Mr. Jerry Storie (Flin Flon): On a point of order , Mr. Chairman, may we ask Mr. Manness how he expected us to ask int elligent questions without the agreement before us? He refused to give it to us. He said it was not available . He could . not supply it. It has been available t o those who had access to U.S. Securities Exchange Commission for more than a month , but Members of thi s committee did not have access to it.

Now he wants to force us to ask questions on an agreement , which we would not have seen had we not had our own resources track down the agreement . That is ridi culous, that is ridiculous . If Mr. Manness wants to have Mr. Rannard available tomorrow morning some time. after we have had a chance to review the terms of the a greement, then there might be some sense to it. Mr. Manness is asking the ridiculous and he should know bett er. Mr. Chairman : I would think that would not be a point of order. A dispute over facts is not a point of order . Mr. Manness: Mr. Chairman, let me say that if Mr.

Storie is here there will be many points of order tonight . Let me say from the beginning and I will ask Mr. Angus, seeing that he is the person who is in possession ,, of this so-c alled document, I would ask him whether or not that is the final - seeing he seems to know more about the development agreement than anybody , I would ask him if that indeed is the final , what he has ,n his possess ion is indeed the final draft that is about to be signed thi s week? Mr. Angus: Mr. Chairman. it is not on some sort of a point of ord er.

The question was directed at me; there were allega tion s made, suggestions made that I have got info rmation . This is public information that was provided to me. I have no idea whether this agreement represen ts the fin al agreement that this Government intends to o r has, in fact , signed. If they signed it, there are literally hundr eds of questions from this agreement, tartin g with why were we not given this copy of this · ~greement when it was public information in the United States of America? Now you tell me whether or not this is the final agreement. Mr. Cha irman : Again, Mr.

Angus, you were saying it ,s a poin t of order . I do not believe that is a point of order, but I will ask the Minister maybe he want s to respond . Mr. Manne ss: I th ank Mr. Angus because he did give the proper res pon se. He has no idea whether or not this is the final d raft. Let me assure him that it is not . Let me assure you, Mr. Cha irman , and all Members of the comm itt ee, one of the reasons we did not provide the first signing - the document of the fir st signing because it. basically , was a draft. Over the last two months. Mr.

Chairman , and Members of the committee , we, the Government and Repap, have been working towards a fin al draft to ready it for signing . I am, as the shareholder of Maniar , one of the parties to the 186 agreement. I, as representing the people of Manitoba, am the shareholder . As I indicated over and over again , there would be other considerations and there would be other materials and other problems as they arose during the development , during the final two months of working towards a final agreement that would come forward . *

(2020) Now, if the Members are suggesting that each time a draft came forward , and I can indicate there have been literally dozens of versions of drafts that I should share that with them, I would say that is working outside of the responsibil ities of executive Government. Quite frankly, the answer to that kind of request would be no. I would ask Members of the third Party , the New Democratic Party , how many of the drafts with respect to the Flyer divestiture did they share with the shareholders of the Province of Manitoba? I know I did not see one, Mr. Chairman, not one.

So let not the NDP nor the third Party stand up so holier than thou and indicate that we have withheld information from the people of Manitoba, because we have not . We did something that has never been done before in the history of this province or the history of any deal. We came forward before a deal was consummated and indicated to all Manitobans the basic tenets , the basic principles , of that deal. We laid them in an open fashion before all the people of Manitoba and their representatives here at this table . Mr.

Chairman , the Government of Manitoba was one party to the signatures that went forward with the first signing . We undertook as a Party to that signing not to make the specific requirements of that signing public . I indicated to Members of this committee why that was the case, why it is you cannot deal completely in an open fashion when you are talking about potentially a $1 billion investment. Certainly people understand that. Now, how it is that some copy of an earlier draft found its way into the United States Securities Commission obviously had nothing to do with the Province of Manitoba .

Obviously , if that is where they found it, have something to do -(Interjection)- well, now the share people I hear Mr. Rose talking about. What share people is he talking about? I mean , if we want everybody - (lnterjection)- Mr. Chairman, I will respond, but if Mr. Rose wants me to react to his comments, I will. I said many, many times , and I will reiterate for the record, we stand here, the Government, represented by myself , representing the people of Manitoba , as the shareholders , came forward to this committee to indicate , to divulge the basic principles of the sale . We were proud to do so .

If a document, a draft , has come into the possession of the Member for St. Norbert (Mr. Angus) who feels that he wants to take issue with some basic agreement, some of the basic covenants of that draft agreement, then it is his right to do so at this sitting . But if he is saying to me that deal be postponed, I am indicating to him that it is not the wish of the Government to postpone it because to do so would significantly affect the working capital of Maniar and the loss contingent with not signing this deal in an orderly fashion could be in the millions of dollars .

Monday, May 1, 1989 *

(2025) Now, I will go beyond that. As was the Intent this evening, it was to provide greater detail as to what Repap was wanting to do with the Manfor facility once and after they had received environmental clearances to do so, and on ly after having received that would Repap be allowed to physically alter any aspect of the Manfor site. Again, I repeat that , on ly after they had received environmen tal clearan ces would there be any change from the existing Manfor operation as it sits today. I indicated to Members that deci sion would be made after the environmental public hearing process took place. So, Mr.

Chairman, I am reporting tonight on the requests of Mr. Taylor. If the committee is indicating that they do not any longer want to have the detail with respect to the request of Mr. Taylor, then let them say so. Some Honourable Members: Oh , oh! Mr. Chairman: Orde r, please. Mr. Cowan . Mr. Angus: Mr. Chairperson, on a point of order , I think tha t the- Mr. Chairman: I am not recognizing you . I recognized Mr. Cowan. Mr. Angus : Mr. Chairperson, on a point of order , I have a document here signed by the Minister of Finance (Mr.

Manness) and registered on the 10th of March , a full 13 days before this committee met , outlining completely the deal, so everything that he has said in this particular documentation, everything he said that he cannot release this information to , was blatantly dishonest. Now stemming from that- Mr. Manness: Mr. Chairman , on a point of order . Mr. Chairman: First of all , I would like to state that is not a point of order . A dispute over the facts is not a point of- Mr. Manness: Damn rights it is my signature . Mr. Angus: It was signed for March 10 . . .. Mr. Manness: I do not give a damn when it was signed.

Mr. Chairman: Orde r. Mr. Manness : What point are you making? Mr. Angus: The point I am making is that here is the whole deal, in the United States of America where anybody . . . Mr. Manness: So did I file it there? Ask me if I filed it there. Mr. Chairman: Order , please ; order. Mr. Angus: What the hell right s do elected people have in this country? 187 An Honourable Member: Do you want to be removed from this committee meeting? Mr. Angus: No, I do not think it was st olen and, no, I do not want to be removed. I apologize for ....

An Honourable Member: The Americans seem to have the rig hts here but not the Canadian elected officials . Mr. Chairman: Ord er. I am recogniz ing Mr. Cowan. Mr. Jay Cowan (Churchill): Thank you, Mr. Chairperson . I would like to deal with what the Minister has said . I would like to remind him that what he says is a matter of pub lic record. What he says tonigh t is a matter of public record; wh at he said on March 23 is a matter of pub lic record.

I can tell the Minist er that I attr ibute it to faulty memory and not to a desi re to deceive, but the fact is what he said on March 23 contradicts what he said this evening, and what he said this evening indeed contradicts March 23. Let me explain why.

He is telling us that we have come into possession , quite legitimately so , through the Securities Exc hange Commission in the United States, an agreement which is entitled " A Shar e Purcha se Agreement ." The agreement was made on th e 10th day of March 1989 bet wee n Her Majesty the Queen in the right of the Prov ince of Manitoba, duly represented by the Minister of Finance (Mr. Manness ), hereinafter called the vendor , and Repap Pulp and Paper Incorporated, a corporation organized and existin g under the laws of Canada and having its required offic e in Montreal, Quebec , hereinafter called the purchaser.

That agreement is dated March 10; it is signed by the Minister. The Minister is now telling us that is not the final agreement and I seek from him some indication that is what he said this evening , that what we have in our possession is in fact not the final agreement . Mr. Chairman : Are you through , Mr. Cowan? Mr. Cowan: No, I h ad asked the Minister if he could indi cate by a nod of the head whether that is what he said earlier or not . Mr. Manness: Yes, it was . Mr. Cowan : It is in fact what he said earlier or not it is in fact what he said earlier.

He said that this is not the fin al agreement , that there had been many changes that have taken place , if I heard him correctly, and I believe I did. However, on March 23, when we were asking the Min ister if we could have a copy of the share purchase agreement, the Minister said, " I cannot, " and I am quoting him directly , "thi s is a share purchas e agreement.

It is, lik e I say, a share purchase subject only to closing, " which is what we find in this agreement as we read through it, " subject oniy to the development of some of the disclo sure schedules that have yet to be worked on ," and that is what we find when we have all of the schedules indeed, " so it is very much a sale purchase agreement which I cannot make public at this time ."

Monday, May 1, 1989 My question to the Minister was then, why would he not want to make it public? Was there information contained within it which he thought would damage the negotiations or betray corporate confidentiality on the part of the other party? •

(2030) The Minister then said th at he is in no position at this time to present the document . He said there were some minor technical things that had to be dea lt with. We indicated that was disappointing to us and we asked him, is the Minister prepared to make that document available to us in its entirety as part of the pack age of documents we will be reque sting once the sale has been consummated? Now this is the important part . This is what Mr. Manness said on March 23: " Mr. Chairman , let me say very clearly that the interim agreement, sale and purchase agreement referred to by Mr.

Cowan is, in essence , the final agree men t." On Marc h 23, he is telling me an agreement that he signed on March 10 is, in essence, the final agreement. Yet today, he is telling this committee tha t it is not the final agreement. An Honourable Member: You cannot have it both ways . Mr. Cowan: He is trying to follow in the fine tradition of the previous Conservative Member for Radisson , who said they could have it both ways. He said that while in Opposition. The Minister will find that while in Government they cannot have it both ways .

They never really could in Opposition as hard as they might try, but they did try, but in Government they have a responsibili ty to tell the truth, to tell the facts, to be honest and open. It is not good enough for the Minister to sit on his high horse at the head of this table and talk about how ope n this Government is and how open he is as a Minister, when in fact they are keeping from the public, through elected representatives, information which is freely available to anyone who has the capacity to pay the fee for it, to obtain it from the Securities Exchange Commission .

Anyone could obtain that document from the Securities Exchange Commiss ion. So what, in essence , has happened is those people , the shareholders of Repap , others who had an interest in this matter, could have had this document before them for one month. They have had an opportunity to review it in detai l. I will tell you , Mr. Chai rpe rson , that it is worth reviewing in deta il. I will tell you that we have some strong concerns about

Section 9.01(

d) which deals with the priority hiring. We think it is the weakest priority hiring clause for Northerners that has been put in place since probably the original CFI Agr eement. It is incredibly weak . It has no substance and it will do a disservice and a disadvantage to Northerners all across the North, and particularly those who are watching this sale as a way of creating new economic opportunities for themselves . We have some concerns about the confidentiality provisions of this agreement.

We have some concerns about the environmental standards in the side 188 agreemen ts that have been made between Repap and the Government with respe ct to this agre ement and this sale . We have some concern about the tax benefits contained within this agreement.

We believe this agreemen t could be read to prevent and I look to the Members of the front benches , the Cabinet Ministers , the Members of Executiv e Council co uld prevent them from exercising their duty and their responsibi lity, their legal rights and responsibilities , under thei r oath of office, under their mandate and under the legislation becaus e of things that are written in this agreement, which precludes them from taking certa in actions unless they want to do so, and at the same tim e exposing the province to great cost. So we have some concerns about that.

We have some real concerns about some of the provisions of the Forest Management Agreement , and that is a large agreement. There are probably 20 or 30 clauses in it that we want to go through in this agreement. We have some concerns about the exemption from changes in laws that is provided to Repap . We have some concerns about the exemptions to changes in sales tax that is provided to Repap under this agreement. We think this agreement is a very serious document that requires a great deal of serious consideration .

The fact that it was never presented to the Opposition , even although they asked for it, betrays everything that the Minister of Finance (Mr. Manness) and his colleagues have been saying for the past year about open Government. It proves that they are not an open Government. It proves that they are not prepared to provide to us what is provided to others. It proves that either they do not know what is happening or they choose to ignore what is happening . I find it difficult to believe that the Minister can say he did not know this document was going to be sent to the Securities Exchange Commission.

If he did not know this document was going to be made public in that fashion, then perhaps he should find someone who knows a bit more to be put in charge of negotiations , because that is a very, very major failing in due diligence and in understanding what is happening . Now, he smiles. He smiles perhaps because he is caught. He says that we cannot deal completely in an open fashion becaus e of corporate confidentiality requirements , and that is why we could not get this document and the schedules that are attached to it .

Well, the fact is that lots of people had the opportunity to get this document and the schedules that were attached to it, and Repap was not worried about corporate confidentiality. An Honourable Member: Like the shareholders on March 11. Mr. Cowan: Exactly . The shareholders had an opportunity to review it for a month and we had no opportunity because the Minister refused to provide it to Members who requested it on March 23, even although there was a document dated March 10 which

Monday, May 1, 1989 he had signed, which was being submitted to the Securities Exchange . By the way, there is also a clause in here, and I do not have it right at hand but I can find it. I believe it is 3.02, in that area, in the 3's. It says there any public notice of this document has to be shared between the parties. So, was this document given public notice in the Securities Exchange Comm issio n without that information being shar ed with the Minister? Because if it did , then Repap is not living up to its end of the bargain .

If the Minister did receiv e notice , then the Minister is not living up to his fine stated words , and that is all they are at this point in tim e, of being an open Government and being one that is providing full information. So, Mr. Chairperson, the M inister is not the shareholder for Manfor. The Minister takes on that responsibility on behalf of over a million Manitobans .

Just as Repap knew that it had to give to its shareholders open information about this deal , just as they knew they had to provide the detailed information so the shareholders could make a judgment that would be valuable and informed, so should the Minister as a representative of the million-and-some-odd shareholders of Manfor have been obligated to provide that information through the elected officials , or he could have bypassed us if he wanted and made it a public document. That could have been done.

But he had the responsibil ity to share that information, and it is a responsibility he either shirked , refused to live up to, or a responsibility that he did not understand. In either case, that impacts I think in quite a negative way on the competency or at the very least on the sincer ity of this Minister . We are going to spend this evening going through this document clause by clause , page by page , in some instances word by word , because as one reads through this document one finds that there are quite a few unanswered questions . I think that is why the document was not released to us.

I do not want to impute motives. I want to impute strategic thinking on the part of the Government, and perhaps I should not . I think that they did not want this sort of an open forum to take place before this deal was consummated, because they were afraid of either not being able to give the answers or afraid of some of the answers that they would have to give. I am not saying it is an entirely bad document. I am not saying it is an entirely bad deal. I am not even saying it is a bad deal yet , because we have not had the opportunity to review this document in the way in which we should.

But I can tell you what I think has been bad, and that is the handling of this whole sordid affair by the Mini ster and by his colleagues who by their presence here tonight and, I am certain, by their conversations in Cabinet and caucus are all allies of the Minister in his effort to keep thi s information from the public. An Honourable Member : That is right. It is a cover up. Mr. Cowan: Well , my colleagues say this is a cover up.

I perhaps would not be quite so quick to use that 189 word had it not been for all the times that charge was hurled across the floor at previous administrations by some of the Memb ers now sitting in the coveted positi on of being the owners of a cover-up because that, in essence, is what has happened. They have indeed attempted unsuccessfully-they failed to do so but they attem pted to cover up what was in this document unti l the agreement was signed. That is going to · bring me to my question to the Minister in a moment.

Before saying that, I want Members of the committee, the Minister and the general public through the media here to know why it is we fee l it is so important to be able to go through this document in that sort of detail before the agreement is signed. If it is a good agreement, it will reinforce the fact that it is an agreement that is good for Manitoba . We see nothing wrong with that, and we thi nk that would in fact support the Government in thi s deal that it has cut. *

(2040) But if it is not a good agreement, then we believe that part of the agreement th at is not good should be brought to the public light before the deal is consummated, because there are some very strong provisions for backing out of this deal. There are some very strong penalties for not fulfilling this deal. One may be put in a place if one does not have the time to go through it in detail, as having been party to an agreement that is not in the best interests of Manitobans , and yet we cannot get out of it becau se the Government acted in both secrecy and in haste .

We believe it is our job as Opposition to try in every instance, notwithstanding the intention of the Government , to ensure that this Government does not get caught up in its own hast e to consummate this deal , and does not get caught up in its own need for secrecy around a document that has been released so far and wide elsewhere. So we will be going through it. There are a large number of questions we feel must be answered. We do not know if there is time this evening to answer all those questions. We do not know if the Minister is capable of answering all these questions.

We do not know if the Minister would answer all those questions if he were cap able, because he has shown us that even althoug h he was capable of presenting to us a document , which we requested previously, he refused to present it to us on the excuse that it was bound by corporate confidentiality , when it was being circulated in other jurisdictions under no such restrictions. So it was either his misunderstanding or a blatant excuse, which does not hold water at this point in time, but the fact is that was the reason he gave. Mr.

Chairperson , I believe it would be in the best interests of this committee to put this sale back, to recommend to the Government this sale be put bac k, because if it is a good sale on May 2 or May 4, then it will be a good sale on May 31. If it is not a good sale on May 2 and we do not have time to help the Government make it a bett er sale , then there is no sense in signing it on the 2nd. The logic is irrefutable.

Monday, May 1, 1989 If, in fact, you believe-I say that to the Members of the Government side of the committee-that this deal is good for Manitoba, then have no fear. All the next 30 days will do is prove you right. If you fear that will not happen, you can only fear that will not happen because you are not certain of yourselves . If you are not certain of yourselves , why the haste, why the secrets , why the steam-roller? So we are going to stand in front of that steam-roller this evening.

We are going to stand in front of that steam-roller as long as it takes to make certain that haste does not overshadow the full flushing out of the facts of this particular deal. Mr. Chairperson, there are also others who share our concerns . Those concerns are borne more out of not having the information available to us at this point in time than they are in having the information available to us. It may be that they are borne out , or maybe that they are not , but those concerns are very real.

The Minister has to deal with the reality, the reality of the Town of The Pas, which is having some quest ions and concerns , individuals there ; the reality of the Native organizations and the bands, some in my own constituency, the Fox Lake Band, The Pas Band, that have some very serious questions about the effect of this deal on their future , on their livelihood, on their economic opportunity , on their quality of life. They have said very clearly they want some more time . They want more involvement in it . That is something-and I point to the Minister of Northern Affairs (Mr.

Downey) because I would hope that he would take this word back to his Cabinet colleagues-that is something that he should be supporting in Cabinet. He should be going into Cabinet and saying there are concerns on the part of Native organizations. There are real questions on the part of Native organizations that need answering , and I want those questions answered. I want those concerns dealt with, and I want the fullest possible economic opportunity given to them before this deal is signed, because I have a responsibility to them as well as a responsibility to the political future of my Government.

That is what he should be saying. That is what the Minister of Northern Affairs should be saying in Cabinet. Perhaps he is. I know we cannot ask him what is said in Cabinet. He could nod his head or blink if he wished , but I know he is much too disciplined even to do that. We certainly hope he is saying that.

If he is saying that in Cabinet , there is a way that he can put those same concerns in a non-partisan way on the floor here th is evening without betraying Cabinet confidentiality or secrets, but in doing so living up to his responsibility to those bands, organizations, Metis communities , Metis organizations that are looking somewhat askance right now at this deal because there is not that full information available to them. So what is the harm in waiting 30 days? The Minister says that would have an effect on the cash flow.

Well, I find that just about as difficult to believe as I do that the reason he gave for not presenting this to us was corporate confidentiality , because there are provisions in this document here to take into effect any delay in the signing of the document. As a matter of fact, as the Member for St. Norbert (Mr. Angus) has indicated 190 earlier , there is even an implicit provision that signing of this document can be put back a number of weeks.

Now that would not have been put into the document unless it was thought to be a poss ibility, and unless it was put in there to protect all the parties in the event that it was determined that there was more time that was needed to review this document. I can tell you, Mr. Chairperson, if the shareholders of Repap said to the company, do not sign that document until these quest ions are answered and these concerns are dealt with , that document would not be signed and they would provoke the 30-day clause .

They would do so in good faith, and they would do so because their shareholders told them that they had legitimate concerns and questions that they felt were not yet addressed fully or not yet answered to the extent that they need be. Now , if Repap would do that , why would not the Province of Manitoba do that, a province that holds itself open to be even more forthcoming , even more open , than is a private corporation?

The logic of the Minister befuddles me, and perhaps that is because I do not fully understand all the nuances and the intricacies and the subtleties of contract law, but I can tell the Minister that when we went through documents of this sort we knew there were questions that needed to be answered , we knew that documents were not perfect in the first instance, and we knew that there had to be an opportunity for people's concerns to be dealt with and people 's concerns to be answered. Let me read t he Minister something from the document. " Manitoba Hydro arrangements.

The company shall have entered into an agreement with Manitoba Hydro in form and substance satisfactory to the company, which makes available to the company hydro-electric power sufficient to operate the business of the company, including Phase 1 and Phase 2, which provides if , in the future , Manitoba Hydro has uncommitted capacity, then Manitoba Hydro will enter into agreements to provide additional hydro -electric power for any future expansion of the business of the company in Manitoba , on terms no less favourable to the company than to any other industrial consumer of hydro-electric power supplied by Manitoba Hydro using substantially similar demand in energy.

" So, what that means , Mr. Chairperson, as I read it, is that if Repap needs additional energy and if it is available, they are going to enter the negotiations at the best-this is where they enter negotiations-possible entry point ; in other words , at terms that are no worse than the terms of any other supplier who uses substantially similar demand in energy.

Well, does that mean if a supplier who entered into an agreement in 1950 or 1960 or 1970, when conditions were much different, has a favourable rate, then no matter what the conditions are in 1989, 1990, 1991 and 1992 or beyond, that they are going to enter in at the 1952 or 1960, 1970 negotiation level? Is that what that means, because that is how it reads? And if that is the fact , then we need only look to Labrador to see what the impact of that sort of an agreement can be on a province. So we have some very serious questions about that. The Minister will have to answer those questions this evening.

Monday, May 1, 1989 The Member for Flin Flon (Mr. Storie) has some very serious questions. The Member for Rupertsland (Mr. Harper), who has looked at the clause with respect to priority for The Pas residents and, like all of us, has found it to be weak, has found it to be inad equ ate and has found it to ign ore every lesson that we have learned under the construction of Limestone and with respect to affirmative action. Yet he is asking us to approve th at this evening without further questioning, without the detail, without asking very simple questions. Wh y do they not wan t a strong affirmative action clause?

Why do they not want a str ong community economic benefits clause in here? Those are some very serious questions and very serious concerns. Why is it that the bands themselves have not been given more opportunity to involve themse lves with equity in this operation , and the Minister of the plan will be addressing that. *

(2050) All those questions need be answered. They can save us a lot of time this evening , Mr. Chairperson. They can save us a lot of time this evening by indicating right now that they are going to push back the closin g date which is contemplated, called for in this agreement , until 30 days so that we as elected rep resentative s can get a better understanding of this agreement , so that the Minister can get a better understanding of what is happening-in fact, he did not know it was being presented to the SEC - so that the organizations out there in the public can get a better understanding. Mr.

Chairperson, my question to the Minister is, when is the signing day? Is it May 2 or May 4, and is he prepared to push that back 30 days so that a thorough analysis could be undertaken on this document , the same time which was allotted to those who obtained this document from March 31 from the Securities Exchange Commission? Mr. Manness: Mr. Chairman , let me respond to the question firstly and then let me respond to some of the earlier comments and

preambles . First of all, Mr. Chairman, let me indicate that the signing date is tentativel y set for May 4. That is Thu rsday of this week. I use the w::>rd "tentatively" bec ause of course at this point we are still working on various drafts and indeed May 4 may not be achievable. That is the reason that we wrote the May 2 to the May 30 he has . It fully recognized that there are reasons, man y times good reasons, why agreements cannot be entered into in the last days , indeed in the last hours, working towards a tentative timetable.

As a matter of fact, for the record , let me say that on the signing date , Marc h 10 I believe, there was no deal in place as of roughly two o'clock in the afte rnoon , Montre al time . There was no deal struck. So again , let me say for the record th at May 4 is a tentative date and that it may or may not be achieved. It is the hope of the Governm ent that as of today, sitting here, that it will be. So I say that for the record, Mr. Chairman. But let me first of all reply to Mr. Cowan and let me indicate that his feigned indignation misses the mark by a considerable amount .

Indeed his summation of 191 events fails miserably when put in comparison to my colleague , the MLA for Pembina (Mr. Orchard), when he was on attack in a committee just like this, Mr. Chairman, because let me say - and I will deal with every one of the comment s put on the record by the MLA for Churchill (Mr. Cowan), in all honesty beca use throughout all of this I have attem pted to indicate to members that I will provide in as open fashion as possible all the basic principles and tenets of the agreement.

We have sat in committee, in this committee , for 10 hour s over the last six weeks , for th e most part, from the last five weeks , at which time Members of the Opposition have had an opportunity to ask very specific questions with respect to the share agreement. Let me say, Mr. Chairman, we have done that and we have answered almost every question that has been asked of us. So I do not hide from the claims that we have attempted to cover up because we have not covered up anything.

We have provided virtually all the detail we could, and I can think of only one or two occasions when we have indicated to Members of this committee that we were unabl e to answer because of the spirit of the agreement that we had entered into with Repap. Now , Mr. Chairman, I apologize to this committee and indeed to the Members or to the people of Manitoba that I could not release a draft of the share purchase agreement .

I honestly believe , and I sti ll do, that the re was some incumbency upon the Government not to release a draft agreement because, just as the Member has pointed out -and he uses as an exam ple the Hydro example. Let me indicate that it will not be wri tten that way in th e final document to the best of my understanding , because that and many other aspects have had wording changes associated with them.

Now, if the Member had wished t he opposite approach , that we spend the best part of all the next number of months of having worked then on a final document and presenting it a fait accompli to the people of Manitob a, and at that time indicatin g not only what the basic prin ciples were but laying before the people of Manitoba, as we promised we would and we will , the completed sign ed agreement in an open way, if that was the approach the Member wished we would take , I would say, firstly, why did he not take it and why did not his Government take it with respect to the Flyer divestiture; and seco ndly, I would ask him to name one other case , one other exam ple of a divestiture of a publicly owned company of this magnitude where that had been done.

Mr. Chairman, I know for a certainty that the Memb er for Churchi ll (Mr. Cowan) could not name one example, becaus e nowh ere in the history of divestiture of Crown operat ions has the Government been more open and provided more inform ation with respect to the principles . Let me say another thing, if there was something radic ally in shortfa ll with respect to some of the substa nce of the documents, indeed of the draft that the Member has before him , he would be holleri ng in great measure . That would have been the focus of his attention.

His silence speaks volumes as to indeed this agreement we have signed , draft in his hands , still draft in our hand s, because a final agreement has not been signed or entered into.

Monday, May 1, 1989 Some Honourable Members : Oh, oh! Mr. Chairman: Mr. Minist er has the floor . Order , please. Mr. Manness: Mr. Chairma n, the Member knows well, I used the word " interim ," I used the word " fin al" with respect to the principles , but certainly everybody knows when you give yourself two to three months to finaliz e an agreement, it has something to do with the disclosure schedules. It has something to do with some of the final important wording around the principles. The principles have not changed and if the Members of the committee -(Interjection)- I did say "minor", I did say minor to Mr.

Cowan because the principles have not changed since March 10. The basic principles of this agreement remain intact , and the technical detail takes two or three months often, to commit to paper. I do not know what point it is the Member for Churchill is attempting to make. If he thinks you make these agreements and you come to a final draft , a final agreement , in terms of two or three weeks, you do not . I am saying the agreement gave us two to three months .

I indicated to Members earlier on that we hoped to sign the agreement at the beginning of May, and if the Member wants to be honest at all he will indicate that. That is fully part of the record . The beginning of May was our objective . It still is, Mr. Chairman , but there is no certainty as of today that May 4 will be the final day. The Member says we have attempted to cover up something.

I do not know how it is you attempt to cover something up when you lay before the people of Manitoba the basic principles of the agreement, and not one of the basic principles of the agreement is under attack here tonight, not one of the basic principles of the agreement because, Mr. Chairman, I am that intimate with the agreement to know that the basic principles of the agreement are today as they were on March 10 when I signed on behalf of the taxpayers of this province. *

(2100) The Member for Flin Flon (Mr. Storie) obviously does not understand anything about corporate activities. Today we do not have a final agreement. He knows we do not have a final agreement. We entered into a share purchase agreement on March 10 and both parties have committed since that point in time their energies to putting into place final wording around the principles and indeed to many of the disclosure schedules that are appended to that agreement. I am of the understanding that is the way commercial agreements are entered into , that we are doing nothing out of the ordinary.

So again let me say for the record that the Members opposite have a draft, probably the first draft that was signed . It is the one that we came back quickly to the Province of Manitoba , reported to , reported in a most full and open fashion, reported all the basic principles, came to committee and gave greater detail to those principles , over 10 hours of committee hearing, and tonight we brought forward Mr. Ross Lewis from Stothert to get yet greater detail as to what it is Repap is wanting to do with respect to the Manfor operation . 192 Mr. Angus: The question has been asked and the Min ister has avoided it.

On March 10, he entered into a share purcha se agr eement. On March 11, the Repap indic ated to their shareholders that they have entered into an agreement with the Government of Manitoba to acquire the assets of Manfor. It appears from the information we have at this table that the deal is done, and I suspect what the Minister is talking about is subject to closing , and that would be dotting the i's and crossing the l's in the closing arrangements . Now, notwithstanding the fact that date can be altered from May 2 to May 30 -(Interjection)- The Honourable Member for Churchill (Mr.

Cowan) remarks from his chair , "without penalty ," and I suspect that the very questions that we are asking that will stem from this agreement come back to the original summation that was made by the Honourable Member for Churchill, in that if this agreement can hold water, if it is something that will stand the scrutiny in a real-world test, a test that the people of Manitoba will hold up and say yes, this is a good opportunity for the citizens of Manitoba, then we should postpone the closing date and go through this clause by clause.

If he is not going to postpone it, then we will start right now , tonight , going through it clause by clause. So I will ask the Minister again if he will consider exercising the clause on page 3 of the agreement, which states that both parties can ask for, and it will not be held by mutual agreement, the extension of the closing date. Mr. Manness: Mr. Chairman, let me repeat again for the record, on March 11, the Province of Manitoba also did report to its shareholders. We indicated to the people of Manitoba that it had entered into an agreement with Repap Enterprises of Montreal.

It indicated the basic principles of that agreement. It indicated that we were as a province prepared to make certain commitments if Repap Enterprises were prepared to invest certain sums of money, if they were prepared to maintain certain numbers of employees, if they were prepared to husband our natural resources in a manner that was acceptable to us, and given the fact that they could only start any phase of the development after the orderly processes, the environmental processes had been met. Mr. Chairman, we made that announcement to the people of Manitoba in an open fashion.

Let me also say that per our commitment to the people of Manitoba , we will also release the final document, spelling out all of the final wording around the principles which have not changed , the final disclosure documents which have been worked on over the last two months . Specific to the question, Mr. Chairman, we are charged as Governme:,t to make certain decisions. We were charged by the people of Manitoba, per an election just a year ago , to divest ourselves of Manfor. We deem that it is our responsibility to do so .

This share purchase agreement, the draft before the Members and its basic principles, has been agreed to by the Executive Council of the Province of Manitoba . We have done everything right within the law. Beyond

Monday,. May 1, 1989 that , we fiave been open to the people of Manitoba and to their representatives in this forum , and provided information far beyond which has ever been provided before. The deal will be struck this week if and only if the representative of the people of Manitoba, the Government in place, is totally satisfied that all of the fina l wording necessary to safeguard the interests of the people of Manitoba is in place. When that happens , that final document will be released to the people of Manitoba. Mr. Storie: Mr. Chairperson , I appreciate what Mr.

Manness said, particularly when he talks about the need or the desire of Government to divest Manfor and to structure a deal which is advantageous. He set out the principles, and they were set out before he assumed responsibility, as he well knows. I want to get back to some comments he made about the openness with which he has dealt with this committee and committee Members. He talked quite willingly about 10 hours of debate before committee .

Well, I want to refer him back to the March 21 meeting of committee at which time the Minister was not present , at which time the Minister responsible for Industry, Trade and Tourism (Mr. Ernst) was present , at which time every time he was asked the question virtually he said, I cannot comment on that. That is a subject that you will have to discuss with Mr. Manness. Mr. Chairman , those questions would be more appropriately addressed to Mr. Manness on Thursday morning. As I indicated , those questions would more appropriately be addressed to the Minister of Finance .

He said that on virtually every question that he was asked of any import whatsoever. If you want to get into that dialogue , you should do so with Mr. Manness on Thursday. Mr. Chairperson, this committee has not had access to any informati on which will be the basis for deep and penetrating questions . The unfortunate fact is th at information was available to other members of other the fact of the matter is that had we had access to more than the PR representation from Mr.

Manness and some of his colleagues and firms or officials hired to present what he called the basics of the agreement in its most glowing light , perhaps those 10 hours would have been constructive. I ask the Minister responsible to go over the record of those meetings, particularly now that we do have the advantage of seeing some of the specifics of the agreement and recognize that public relations effort for what it is.

The fact is that the majority of the questions were not answered, that the majority of the questions were slid over, or answered so vaguely that no one could really get any meaning from them whatsoever. Mr. Manness also seems to be having difficulty with whether he has a deal or not. In March , he said the agreement was substantially complete, substantia lly finalized , and now he comes before committee and says, well, we are sti ll working on it . As you know , there are agreements and further agreements in these kinds of negotiations. Mr.

Chairperson, I have an invitation for May 4 from Repap to be in The Pas at 10:45 a.m. with the official transfer of ownership ceremony at 11 :30 193 p.m. This does not sound like something that has not been finalized . Mr. Chairpe rson, the Minister may not know that Repap has hired Town of The Pas staff and had them working on preparing the Johnson Arena for those ceremonies . The Minister is still not being forthright with Members of this committee about the status of the agreement.

The Minister still wants to maintain the charade that Members of this committee can somehow ask legitimate questions to protect the interest of the real share holde rs, the- people of Manitoba , without having adequate information. He wants to dismiss this agreement . He wants to ignore or avoid answering the serious questions and maint ain his now become appare ntly ridiculous position that he cannot provide us with an update on wher e negotiations are and what the terms and the precise implications of this agreement are . Mr.

Chairperson , let it be very clear that a single word change in a single clause in a single

section or a word change in the agreement can fundamentally affect the rights , the opportunity of individuals in The Pas and the surrounding areas, one single word. *

(2110) Mr. Chairperson, the Mem ber for Rhine land (Mr. Penner) says from the peanut gallery that we are making it better. That is exactly why we are here , to make the agreement better. If Mr. Manness can sit ther e and talk at length about the openne ss of the agreement and the desire to involv e Members of this committee, he can certainly begin that pro cess by dealing with this committee in a forthright manner , mak ing sure that we have the information that we need .

He expects us to somehow , through osmosis or some other metaphysical process , ask questions of detail when he has not been willing to provide us with any of the detail that is necessary. But we have obtained that information , and whether Mr. Mann ess wants to admit it or not, the substance of the material that we have access to is in fact the basis for the agreement between Repa p and the Province of Manitob a. As my colleagu e from Churchill has said , there are seriou s shortcomings in thi s agreement.

We are not here to debate whether divestitur e in principl e, whether Repap is the right or the wron g company to divest this enterprise to, but the agree ment itself is flawed and it makes some fundame ntal errors , and my co lleagu e mentioned one of them. He mentioned the fact that there is no northern hiring preference. This is a northern resort. This is an opportunity to train and employ hundreds of Northerners, but there is no mention of any dollars , any sup port for trainin g.

There is no mention of the provinc ial activity curr ently under way to make sure that any of the people, the tradespeople who need to be trained for the construct ion phase , is under way. There is no mention of the involvement , the participation of co mmuniti es like Cranberry Portage, Wanless , Snow Lake, Wabowden , Sherridon, East erville and Grand Rapid s, all of whom are directly tied to Manfor's operation . This is flaw ed seriously to the people of northern Manitoba , and the Minister has not been

Monday, May 1, 1989 honest about the nature of this agreement. He certainly has not dealt with committee in any forthright way about these issues and it is time that we did. Mr. Chairperson, is the Minister prepared to put off signing the agreement until we have had time, as Members of the Legislatur e, to deal with those impo rta nt issues on behalf of our constituents and on behal f of the people of Manitoba? Mr. Chairman: Mr. Minister. Excuse me, Mr. Minister, I would like to ask Mr. Angus-I think he has a few comments to make. Mr. Angus: Thank you , Mr. Chairperson .

Notwithstanding the evidence that has come to light as to the dates that the information was made public and that sort of thing, it is somewhat like the Budget . It is bad news but it is still bad news no matter whether we get it yesterday or today - or it may be bad news . Let me just say, it may be . Mr. Chairperson, the part that is the bad news that the Minister seems unable to comprehend is - (Interjection) - Well, the fact is the bad news is , specifically , that the Minister misled the committee . I find it personally repugnant that he has misled this committee . Mr. Manness: Point of order , Mr. Chairman.

Mr. Chairman: On a point of order? Mr. Manness: Mr. Chairman , on a point of order, the Member has indicated that I have misled the committee. He indicates it in a fashion that makes it sound like I knowingly misled the committee. I ask him to state his case clearly or to withdraw the remarks unequivocally . Mr. Angus: On the point of order, Mr. Chairman , you go first. Mr. Cowan: On the point of order, Beauchesne is very clear that if the Member did not say that the Minister deliberately misled, then there is not a point of order . The language is not unparliamentary .

The fact that the Member said the Minister misled is not subject to a request for a withdrawal because it is in fact parliamentary and can be found in those provisions in Beauchesne which indicate it to be so. Mr. Chairman: Mr. Angus , on the point of order. Mr. Angus: On the same point of order , Mr.

Chairperson, I would point out from the minutes of the March 23 meeting where the Minister answers specifically the question: " Can the Minister make the interim agreement public?" He says: "I cannot ." But the agreement is public in the United States of America and, by the rules and regulations, it even talks about the Securities Commission and the security laws so he knew that it was ava ilable and it was released. He is either misleading the committee or he is incompetent . Mr. Chairman: On the same point of order , Mr. Minister? 194 Mr. Manness: Well , Mr.

Chairman, on the same point of order , the Member is indicating that I knew that this document was going to be released in the United States, the United Stat es Securities Exchange Commission. Any refe rence made at other sittings of this committee with respect to Securities Exchange Commissions was totally in the Canadian context. Mr. Angus: Mr. Chairperson, are you going to rule? I do not believe it is a point of order. The document was released in the United States; the Minister has said he could not releas e it to us publicly , yet our American brethren were - Mr.

Chairman: You are speaking to the point of order. Mr. Angus: -able to scrutinize it, Mr. Chairperson. You can call! it whatever he wants to call it. He can mix his words however he wants to mix it, but the facts are that the agreement was public, and he chose not to make it available to the citizens of Manitoba in that form, or to the elected representatives . Mr. Chairman: Mr. Cowan, on the same point of order. Mr. Cowan: The Minister has indicated he did not mislead the committee. Mr. Angus actually gave the Minister a choice. He said either he had misled the committee or he was ignorant.

An Honourable Member: Incompetent. Mr. Cowan: Incompetent, excuse me. I think the record this evening stands for itself.

I want to make the point that if the Minister did not know this was going to be presented to the Securities Exchange Comm issio n, then the draft agreement which he signed on March 10 was violated by whichever party let it go to the Exchange Commission , or he overlooked the fact there was a clause, Clause 13.01, Public Notices, in the agreement which says, and I quote , " The parties hereto hereby agree that all notices to third parties ," such as the Securities Exchange Commission-the reference is my own- "and all of the publicity concerning transactions contemplated by this agreement shall be jointly planned and coordinated , and no party hereto shall act unilaterally in this regard without the prior approval of the other, such approval not to be unreasonably withheld.

" So the agreement itself calls for notification that this document is going to be given to a third party. I would suggest the Minister either is incompetent indeed, because he is not ensuring the agreement is followed, or he did mislead the committee when he indicated this could not be made public because of corporate confi dentiality requirements , when it was being made public in the Unit ed States. He should have known that to be the case. Mr. Chairman: I did not hear the Members say deliberately misleading . Misleading, I understand, can be used both ways .

In that respect, I must say it is not a point of order. An Honourable Member: Mr. Angus had the floor before the point of order was raised.

Monday, May 1, 1989 Mr. Chairman: Before the point of order was raised. Mr. Angus: During the point of order, I had the floor. Mr. Chairperson, notwithstanding the fact that I think the document should have been released at the same time as it was made publ ic in the United States, notwithstanding the fact the Minister has said he would be open and honest, etc ., notwithstanding any of that , I would like to go through the agreement on a page by-page, virtually clause-by-clause basis, to have clarification.

If there are any areas in there the Minister should be aware of or his staff shou ld be aware of before the closing is entered into , then we should. With respect, I know we have visitors from out of the province . If at all possible, I would like to accommodate them so they can be on their way. We do not unnecessarily want to hold up this arrangement, Mr. Chairperson. I will say it was our intention and is our intention to divest ourselves of the Manfor properties , and this may be a good package.

It may in fact be a good package, but we do not know because of the closed-door policy that the Conservatives have maintained, feeding us only what they want to feed us. So now we have the document. We will go through it on a piece-by-piece basis. The Minister wants to say something, but then I will let the Honourable Member for Churchill (Mr. Cowan) have the floor and we will start the process of going through this document and see if we can *

(2120) Mr. Manness: Mr. Chairman , I request of the committee some decision as to whether or not, before we go through paragraph by paragraph as may be the wish of the Member for St. Norbert (Mr. Angus), whether or not there is a wish to review certain aspects , as requested by Mr. Taylor. Again, Mr. Taylor requested an understanding, in general terms , and I quote, "what we are talking about." I think, in essence, what he was requesting was a layman 's explanation as to the processes in place in taking a tree and from it producing pulp, the chemicals that are used and the effluents that are put into place . Mr.

Chairman , I appeal to the Member that we let Mr. Ross Lewis make that presentation to us, to the committee, because he has come some distance to do so. Indeed , that was the request of the committee . That is what I undertook to provide to the committee at our next sitting , was to provide that detail. I would request of the committee that we be allowed to make that presentation so that Mr. Lewis can go back to Vancouve r, and his trip in this case is not wasted . Mr. Harold Taylor (Wolseley) : . Mr.

Chairperson, that I had initiated this issue of getting an environmental briefing before the public environmental hearing so that we , as legislators of the province , could at least understand some of the proposed t echnological changes that Repap is expect ing to implement here. I am very much concerned th at this issu e not be lost, that it not be swept under th e tab le or put off for ever or never, whatever the case may be. I would like to 195 deal with tha t in fairly short order, either later this evening or tomorrow morning .

There are a few questions, and I w ou ld hope a few only, on the table though that are germane to the opening of this other discussion th at I would like for the record to be discussed. I only have a few myself. I have discussed it with Mr. Ang us, the Member for St. Norbert, and the other Opposition Party House Leader. I would like those points on th e table because they do relate to the opening of the subject matter , as opposed to getting into the cla use-by-clause examination.

I would propose that second part, if we are to get into clause -by-clau se, page-by-page exam inat ion of the document , that we do that a little bit later, after we have heard from the environmenta l presenter s of the corporation. But I would ask th e Minister's cooperation in getting a few other related items on the table because they do tie in with this changed orientation that this committee session has taken this evening . I think it leaves some loose ends out there that do need to be tied up before we get into the presentation, hopefully in fairly short order. Mr. Manness: Mr. Chairman, if Mr.

Taylor is proposing to ask some two or three questions that, as he says, are loose ends and requi re some ans wering before we can move into the presen tation which we hope to do in roughly 15 minutes or 20 minutes with respect to som e of the processes in place , I am prepared to undertake those. I just hope that there is general agreement in the committee that we at least have this aspect completed. I am prepared to sit here quite late personally and go through the document that the Member s have obtained .

I am just requesting now , howeve r, that we have an opportunity to at thi s time go through the technical aspects of the process. Mr. Chairman: Is it the will of the committee? (Agreed) Mr. Taylor. Mr. Taylor: Mr. Chairperson, the Minister made comment about the fact that the document that the Opposition

Partie s have released this evening is not current. That could very well be the facts. When one is dealing with a sale of this proportion , of this complexity, generally these agreements tend to evol ve. They are not draft s in the sense of rough cut , but they are a cas e of that is wher e they are , that is the state of the art at a given mom ent in time. As one gets closer and clos er to a signing point , the document gets refined . I would ask the Minist er, is it not true th at therefore ther e would be a final draft document reg istered with the U.S. Secur iti es Exchange Commission at thi s time? Mr.

Manness: The answer is no. Mr. Chairman , the Member states the case very well. There are som e points , not the basic matters of principle which are well known and have not changed over the course of the last two months, but there are some points that as of today have not been determined , have not reached a point of finality. There are some points today that are being negot iat ed at this time, and if not at this time first thing tomorrow morning. Yet at this point , agree ment has not been reached upon ; so therefore

Monday, May 1, 1989 no document has been filed because there has been no signing take place by representa tives of the Province of Manito ba. Mr. Taylor: The Minis ter is indicat ing, Mr. Chairpe rson, that there are a few final points yet to be atte nded to. Theref ore, the final docum ent is not regis tered. Poss ibly there has been a more up-to-date document registere d in any case , more up to date than what the Minister suggests the one before us this evening is. I guess it begs the point as to the purpose of this sales document being before the U.S.

Securities Exchange Commission in the first place, and at what point does that U.S. Governm ent agency have a document th at is up to date , that is displayable to the U.S. public . Maybe he would lik e to make a comment on that. Mr. Manness: Mr. Chairman , the final point first , I would think that there would have to be a filing with the Secur ities Exchange Commission immediately upon closing, as indeed was required by law in the original share purchase agreement. The laws are very specific in that , as the Member would know . There was no choic e.

It is one of the reasons why there is no choice for the Government and indeed an interested party to work through all of the detail that is associat ed with a $1 billio n divestit ure over a period of a number of month s, because of course it i s impossible to hide the fact that one company has been selected and the fact that there is much negotiation and discussions going around certain aspects of that deal. If some people had inside information on that, you can imagine how they could use it to their own monetary gain in purchasing shares.

That is why, as soon as the Province of Manitoba selected one out of many proposals , there was no alternative but to put some finality by way of signature to the share purchase agreement, basically a document in principle, because the secur ity exchange laws of the country demand it in fairness to all the shareholders of that company, so we were not doing anything untoward. We were following the laws of the land . *

(2130) The Member s know that, and the Members know it full well.

In their attempt to-because they have been able to attain a copy of the document and to make it appear like I purposely kept it from the people of Manitob a, and yet for some reason , because it had to be filed in th e American Security Exchange and somebody was able to attain it through that process make it appear like the Government of Manitoba had failed in its commitment somehow to be open , is so far -fe tch ed it is basically , and I will use the word , a dishon est attemp t to impose upon the Government a belief that we are doing something untoward , because we are not.

We are following the laws of the land . Mr. Taylor: Possibly the Minister wou ld be interested in explaining the relationship between the Repap Pulp and Paper Incorporated and Repap Enterprises Incorporated . Mr. Manness: Repap Pulp and Paper Company owns all of the Canadian assets of Repap Enterprises , 196 inclu d ing S keena and inclu d ing Mira michi in New Bru nswick, and now Manitoba. Mr. Taylor: Yes, I was aware that Repap Pulp and Paper Inc. was the prop rietor of those operation s. I guess t he questio n is, what is the link , and the question was , what is th e lin k to Rep ap Enterpri ses Inc .?

Is it owned by Repap Pulp and Paper Incorpor ated or is it the o ther way around? Mr. Manness: The latter . Mr. Taylor: Repap Enterprises Incorporated owns Repap Pulp and Paper Incorporated? Mr. Manness: Right. The Member is correct in the latter . Mr. Taylor: Thank you . Then is Repap Enterprises Incorporated a Canad ian-incorporated company? Mr. Manness: Yes, it is. Mr. Taylor: I see. Now the deal, the sales agreement we have - is Repap Pulp and Paper Inc. though a corporation organized and existing under the laws of Canada , having their required office in Montreal , Quebec?

What is the ownership of Repap Enterprises Incorporated? The Minister has said it is a Canadian incorporation . Maybe he would like to enlighten us as to why the link between that incorporated firm and another incorporated firm . What is the purpose of that linkage and what is the ownership? Is the ownership it may be incorporated in Canada, but who owns it? Who owns that corporation? Mr. Storie: On a point of order before we began, I handed in a resignation form. I have another meeting to attend . My colleague would like to nominate a new Member. Mr. Chairman: That is no point of order. Mr.

Manness: That is a relief . An Honourable Member: A point of interruption, yes. Mr. Chairman: That is no point of order. Mr. Ashton: On a point of order, I believe the resignation of a Member and replacement of that Member is-I believe the Member gave due notice to the committee . Mr. Chairman: I understand that is not a point of order, but I would like to deal with it. " I wish to resign from the Standing Committee on Economic Development. Jerry Storie. " Mr. Storie , are you nominating Mr. Harper? Oh, he cannot , okay. Mr. Harper: I would like to make a nomination, Mr. Harapiak. Mr.

Chairman: You are nominating Mr. Harapiak. Is that the will of the committee? Agreed? (Agreed)

Monday, May 1, 1989 Mr. Minister , are you prepared to answer the question now of Mr. Taylor? Mr. Manness: Mr. Cha irman , the- Mr. Angus: Could we have order , please, M r. Chairperson? Mr. Manness: Mr. Cha irman , the Member has hit upon one of the prime examples as to why the d raft agreement should not be released. It is not clear , as of the signing of March 10, as to the corporate vehicle that Repap was going to use, wished to use, with respect to the ownership of Manfor. Mr.

Chairman , one thing that the Government of Manitoba did though to ensure that it always knew what was going on, it had a final veto , in essenc e, as to how Repap Enterprises was going to structure , if it was going to change , alter at all, its assets . So right today, Mr. Chairman, here is a classic example of why it would be foolhardy to take a draft out and make it appear as if it is the final document because indeed the Members are not holding the final document, because the basic principles are agreed to.

They were announced as required by law , but their final form, as the Member knows fully well , will take two months and more to put to paper. Mr. Taylor: Mr. Chairperson, I find that enlightening , but we have the information on the table that Repap Enterprise Incorporated is incorporated in Canada. That is all we know about it. The Minister so far has not said anything else about what appears to be or is, pardon me, the parent corporation . It may be incorporated in Canada , but where is its ownership? What linkages does it or does it not have to other countries? Is it tied in with other conglomerates?

I do not know that. Could the Minister inform the committe e of that? Mr. Manness: Mr. Chairman, I did not bring my annual report along with me. I notice Ms. Charles has one , and certainly all of those relationships are described in full detail within the Annual Report of Repap . Mr. Taylor: Mr. Chairperson , my point in asking those questions is to put them into the public reco rd, as opposed to making reference to something that is a private corporation's annual report, a document not of the Legi slature of Manitoba . And I would ask now , on a fourth try, if the Minister would clar ify that poin t for us.

I do not th ink that is asking too much. (The Acting Chairman , Mr. Edward Helw er, in the Chair.) Mr. Manness: Mr. Acting Chairm an , it is my understanding tha t Repap Enterprises Incorporated is a fully-owned Canadian company , owned by Georg e Petty and other Canadians. Mr. Taylor: Is the Minister aware of the degree of Canadian ownership? He mentions one of the principles , but I Mr. Manness: Mr. Acting Chairman , from memory , I believe that it is owned by Mr. Petty and other 197 Canadians, roughly in the range of 95 percent plus, or something simi lar. Mr. Taylor: Thank you. The Acting Chairman (Mr.

Helwer): Do we want to go on with the pre sentation? Mr. Manness: Mr. Acting Chairman, I wonder if ther e are any ques tio ns spec ifically as to the forestry. Mr. Taylor: Just as a point of order, there were, Mr. Acting Chairperson , questions taken by the Minister in the last Ses sion when there were a lot of forestry questions in which not all the answers were there . Many of them were . The Minister said that he would bring the answers back on certain of those question s. I think much of that would ans wer those remaining question marks for us, and I am sure we will get more out of this evening .

The Acting Chairman (Mr. Helwer): Okay. That is not a point of order, Mr. Taylor, but - Mr. Minister? Mr. Manness: Mr. Acting Chairman , I wonder then if I might respond to those unanswe red questions in writing. Can we do so in wri tin g within the terms of the next week? Would that be suffici ent? The Acting Chairman (Mr. Helwer): Some of the questions , Mr. Minister, might be answered ton ight. Mr. Manness: Well, Mr. Acting Chairman , then I ask Members of the committee to pose their questions at this time if they are dealing with the forestry area . I just sense that it is better to do so . *

(2140) Mr. Taylor: The questions that we posed some, I guess , five weeks back, what is the Minister intending to do to deal with that? I know Mr. Bessey is advising him that he will have trouble answering them in writing within a week because he will be so busy signing agreements here , but maybe we could get a better idea on a window here of when we might see those questions back . I do not think the Minister has to give the information tonight if he has not got that informatio n prepared . I am quit e prepared to see it come out in a week, 10 days.

We can alw ays deal with it after the 18th, but I would much rather get on with the environmental presentat ion instead . Mr. Manness: Mr. Acting Chairman, we will undertake to request of staff that we have respon se back to Mr. Taylor with respect to the unanswered questions. The Member probably could help if he has a list of them , or if he wishes that we peruse Han sard and dig them out ourselves, whatever his wishes. Mr. Taylor: Please , could the Minister share those with other Member s of the committee? Mr. Manness: Certainly . Mr.

Acting Cha irman , then if it is the will of the committee, I would ask that Mr.

Monday, May 1, 1989 Rannard take his leave, and at this time I would call for Mr. Ross Lewis who will make a presentation with respect to the process envisaged by Repap Enterprises at The Pas site. I wonder if we should ask Mr. Lewis to have a microphone . Would that be better so that the recor ding is made easier? Mr. Ross Lewis (President, Stothert Engineering): Basically, I was asked to come and give a talk on the pro cesses at Manfor and some of the changes that are intended to take place as part of the purchase by Repap .

So basically , what I thought I would do tonight is, for those of you who are not that familiar with the kraft pulp process, I would briefly go through it to define some of the terminology that is used , and give people a little better understanding of how the process works to begin with . Then I will go through the Manfor process itself, using some block diagrams and describe what the existing process is and what the proposed changes are to the plant, in order to bring it up to sort of curre nt day standards in terms of technology for the environment, and also for the manufacturer of the pulp.

Following that, we will have a brief review of what impacts these changes have on the layout of the plant , and then at the end some questions , if anybody has any further questions. I am going to try not to be too technical here because I could basically go on for several months with a techno logy course . So I will try and keep it fairly simple. Basically , in the manufacture of kraft pulp , there are a number of stages that take place . First of all , the procedure is to take the logs that come into the plant and manufacture them into wood chips, which is the basic ingredient in the manufacture of kraft pulp.

As part of the sawmilling or wood room process, bark and sawdust is generated as a by-product. These by products are used in a conventional steam boiler for the manufacture of steam used in the process, and also can be used in the manufacture of electricity as a by-product. Once you have the wood chips prepared , there is some screening that takes place to separate them into overall size, and in some cases into thickness , so that the quality of the pulp manufactured can be consistent. The basic process of pulping is fairly straightforward . You take the wood chips.

You heat them up using steam , which softens the chips and makes them pliable , tends to separate the fibres. You add some chemicals to the wood chips . These chemicals are primarily sodium hydroxide, which you may know as caustic soda , and sodium sulphide . The sodium sulphide does not really take a

part in the process, other than acting as a bit of a catalyst in the breakdown of the lignin . Wood chips are made up of a number of different components. They are made up of cellulos e, which is the final product you see in your paper . It is made up of a number of cellulosic materials , which dissolve in the process and are basically sugars, wood sugars of different types. It is made up of lignins, which is basically the glue that holds it together.

When you are in the pulping process, what happens as the result of the pulping process, you make sort of slurry that is composed of pulp mixed with the dissolved wood 198 sugars , the ligni n that is dissolved in the chemicals and the residual chemicals from the pulping process. I will get into the basics of the pulping when we talk about the plant itself. So out of the pulping proces s bas ically, yo u get a mixture of pulp lign in and chemical s of variou s types. The initial process in pulping is you screen the pulp to remove the wood chip particles that have not been fully pulped .

As part of the screening process , a lot of the chemicals are removed . They basically drain off the pulp as it is screened. Then any of the material that has not been fully pulped is recycled back to the pulping process. The next stage in the process is what is called " washing" and , in this stage , water is basically used to wash the dissolved chemicals out of the pulp . Basically , what you are washing out is the residual chemicals that are used in the pulping process, and also the lignin that comes out, plus some of the dissolved wood sugars .

These then go to a recovery process, which I will describe a little later . Once the pulp has been washed, basically you have what is called an " unbleached" pulp. This is a pulp similar to what you see in your grocery bags. It is a brown material, very fibrous. At Manfor , this is sort of the final process, other than the drying of the pulp.

As part of the recovery process, what happens is that the water , chemicals and lignin that separated in the screening and the washing stages is evaporated, and basically what that does is it concentrates the chemical components and the lignin components of what they call a "black liquor " which is basically the pulping liquor . It is concentrated up to about 60 percent solids or higher at which point , because of the wood sugars and the lignin that is present, it will burn .

So this chemical mixture is then put into a recovery boiler which is basically like a conventional boiler that is firing oil, except that rather than firing oil it fires what they call a strong black liquor, which is like the residual chemicals that are in the process .- (Interjection)- Yes? Mr. Taylor: A question, I wanted to go back just a moment here . The top bubble there , water, chemicals and lignin, now where does this other material, this flammable material come from? Is that out of that? Mr. Lewis: That is basically the flammable material.

Yes, it is basically sugars, wood sugars and lignin from the wood. Mr. Taylor: Okay , this is aside from the usable product- Mr. Lewis: That is right. Mr. Taylor: -that becomes paper . Mr. Lewis: That is exactly right. Mr. Taylor: Okay. Mr. Lewis: So, anyway, this material is evaporated and it is burned in a boiler . Now, one of the major sources of emissions from a kraft pulp is from the recovery

Monday, May 1, 1989 boiler, and that is because of some of the sulphurous compounds that come along with the lignin, and the chemical residuals are released in the recove ry boiler. Now, modern technology has significantly reduced the amount of these what they call total reduced sulphur emissions or odorous gas emissions, which contain hydrogen sulphide and dimethyl disulphide , and you can go on and on with all the various compounds. This whole process has been radically changed since the time that Manfor was originally built. •

(2150) At any rate , out of the bottom of the recovery boiler , instead of what you would get, an ash that comes out of a typical power boiler or your firepla ce, what you get is a molten salt. Now the molten salt is tapped off and it is basically like a heavy, hot syrup that comes out of the bottom of the boiler, and that is dissolved , redissolved in water . At that point , rather than having sodium hydroxide , the sodium hydroxide is converted into sodium carbonate and the sodium sulphide remains pretty well untouched.

As a by-product of the recovery operation, you also generate quite a bit of steam which is again used in the process for pulping and other activities. Mr. Taylor: What are you using those by-products for then? Mr. Lewis: These by-pro ducts here ? I will get to that in just a minute. Now, what happens as part of what they call the chemical recovery cycle, basically you can operate a pulp mill by buying fresh chemicals on a continuous basis, put them in, extract them and dump them into whatever source you have. That is the way pulp used to be made , which is why it was such a heavy polluter .

All the chemicals that were used in the process were wasted. Now, back in the ear ly part of the century, people found that they cou ld not afford to run pulp mills this way, No. 1, from an economi c standpoint , No. 2, from an environmental standpoint, so what they did is they deve loped a chemical recovery system to re-use basically the salt components of the chemicals. So basically what they do is you have the sodium carbonate and the sodium sulphide and you go through a chemi cal reaction in the recaust isizing or the caustisizing pro cess where you combine it with lime , which is basically calcium oxide .

If you are familiar with basic chemistry , the calcium and the sodium in the chemicals change places . The calciu m component precip itates out and you are left with sodium hydroxide plus sodium sulphide. Now , this is the same basic pulping chemical that was used in the pulping process, so that then goes back into the pulping cycl e. The calcium carbonate which precipitates out in the process is then burned in a lime kiln and convert s from calcium carbonate.

The carbonate component is driven off as carbon dioxide and you reg enerate the calcium 199 oxide, and that is the basis of the kraft process, this chemical recove ry cycle . Now , there have been changes that have taken place in that proc ess and I have tried to simplify this as much as I can. It can be quite complex because there are a number of other chemicals that play minor roles in the process. Now , basically in the existing process at Manfor , you stop at the unbleached pulp proces s.

That contains the unbleached pulp, basically contains the cellulose with some residual lignin which gives it the brown colour. In modern pulping where you are tryin g to make a fu lly bleached kraft pulp, what you want to do is you want to bleach out that lignin or remove it in some fashion. One of the modern ways to give the pulp a white colour and at the same time to minimize the effects of chlorine on the environment, what you do is you first, before bleaching it, give it what is called an opt ion delign ifica tion or an oxygen bleaching stage.

What this does is it essentially reduces by about 50 percent the amount of lignin that carries on from the unbleached pulp into the bleaching process, using oxygen basically substi tuting as part of the chlor ine used in the process. The oxygen is directly inject ed with the pulp. It is retained in a pressure vessel for a period of about 45 minutes . It reacts with the dissolved ligni ns and the lignins that are attached to the cellulose and allows them to be washed out in a further washing stage .

Now this lign in that is washed out from the washing, after the oxygen delignification, is also put back into the recovery process and is burned in the boiler. Now , the next stage in the manufacture of what they call fully bleached kraft pulp, which is the blea ching stage, is quite complicated and involves a number of stages of chemical addition and washing where basically what you do is you ad d a material, such as chlorine or chlorin e dioxide or sodium hydroxide, mix it in with the pulp, you let it sit for a period of time for the chemical to take effect and then you wash it out.

So in the process that is being proposed for Mania r there are basically four stages or what they call four full stages of bleaching . The first stage would be chlorine; the second stag e is an extraction process whic h is basically a sodium hydroxide addition with what they call an inter-stage addition of chlorine dioxide , followed by an inner-stage addition of oxygen , ch lorine dioxide and chlorine dioxide .

Now , what the objective of this is, is to max imize the amount of chlorine dioxide that is substituted for chlorine , and the intent of this is to minimiz e or, by all means , reduce to an absolute minimum the possibi lity of generation of any chlo rinated organics .- (Interjection)- No, this would be part of the new proce ss.- (Interjection)- Not r elated at all. Alce ll is not involved in the proce ss at all. That is a completely different process and it is not related to kraft pulping whatsoever. Mr. Harapiak: So this is the process . Mr. Lewis: This is kra ft pulping.

Alcell is what is called an alcoh ol pulping and, rather than using chem icals such as caustic soda or sod ium hydroxide , you use an alcohol base for dissolving the lignin.

Monday, May 1, 1989 Mr. Harapiak: Where is the effluent that would go on into the Saskatchewan River from this process? Mr. Lewis: Some of the effluent will come as a result of the bleaching process . Some of it will come as a result of washing water that has to be disposed of at a certain point. We have to dispose of a certain amount of it. Mr. Taylor: . . . the more detailed part of the bleaching process.

Today there is a certain brown sludge that is produced at the plant now with the sort of process they have now, of which there is more than a little concern, altho ugh the scale of the production of that brown sludge is nowhere near what I understand it will be when you go into the different type of paper production that is proposed. So, could we just for a moment talk about this oxygen delign ification that is in your middle bubble there? That is the tomorrow process, that is not today. Is that correct? Mr. lewis: That is right , that is tomorrow. Mr. Taylor: Okay.

At some point I would like-you do not have to do it now-but at some point before the presentation there was talk about the sludge that is produced today and its volumes and its ways of being handled in comparison to what you are going to be doing in the new processes. Mr. Lewis: Okay , I am not exactly sure what slud ge you are talking about . This is from the effluent treatment system itself? Okay, I will get into that. Maybe I can talk about that a little bit later . It is sort of a secondary process.

Basically what this will do will be to reduce the amount of organic material that will reach the bleach plant, and so it reduces the potential contact of organ ic materials with chlorine and reduces the amount of chlorine that is required for bleaching. That is the intent of the oxygen delignification process .- (Interjection)- Yes, I believe it is used in Espanola Eddy Forest Products, something similar to this, and it is used quite extensively in Scandinavia. The Scandinavians were the ones who really did the initial development of the oxygen delignification process . (Mr. Chairman in the Chair.) Mr.

Harapiak: Are there any dioxins? When the process is completed, are there any dioxins passed into the water? Mr. Lewis: Certainly not as a result of this . This is a means to reduce them to an absolute minimum. The dioxin is produced - there are several theories regarding dioxin generation, but they feel some of the causes or some of the chemicals that are used in what they call foam defoamers in the process. The balance are as a result of reaction between the organic materials and chlorine.

So the intent in going to modern technology is, No. 1, to reduce the amount to an absolute minimum of chlorine that is used in the process ; No. 2, to reduce 200 the amount of organic material that reaches the bleaching process that can possibly cause some contamination. At any rate , carrying on with the bleaching process , this bleaching seque nce maximizes the substitution of chlorine dioxide for chlorine.

Now, work that has been done by the Pulp and Paper Research Institute of Canada has indicated that this type of a process is basically the sta te of the art in terms of reducing the potential for dioxin generation. Now, there is a certain amount of dioxin everywhere so you have to be aware that there is a background level in everything . *

(2200) The product of th is process is basically a fully bleached pulp in a slurry form. In order to minimize the amount of water that is generated which essentially becomes effluent , there is a full counter current cycle in the water-washing system so that you can keep this to an absolute minimum. The amount of water now that is used in the bleaching process is roughly 10 percent of what used to be used and what is currently used at Manfor, I believe. Let us put it this way.

If you were to compare a bleach plant of the 1980s or '90s with a bleach plant of the 1960s or '70s , you would find there is about 10 percent or less water that is used in the bleach plant today than there was used then . There would still be more water used because there is not a bleach plant in the existing Manfor system. The final stage in the bleach kraft process is converting this bleach kraft slurry into a final product. Basically, the slurry is put over a pulp drying machine, similar to a paper machine or a pulp machine, you can call it that, where basically you form a sheet.

On a wide wire , it is dried; it is cut into sheets; it is bailed ; it is weighed; and it is ready for shipment. That is the final stage. Mr. Taylor: . . . previous sheet about the chlorine dioxide substitution for chlorine . That, as I understand, is not a full substitution , but a partial one. Mr. lewis: According to what I understand, they are planning to have what they would class as an 80 percent substitution of chlorine dioxide for chlorine, which is about as high as is done anywhere at the present time. Mr. Taylor: The question is then twofold. There is still chlorin e.

Mr. lewis: There will still be some chlorine used. Mr. Taylor: One-fifth of the amount, granted. I would like a general feel for what you are going to be doing in the process to guard against pollution from that reduced amount of chlorine . Also , are there new types of pollution that would result from the chlorine dioxide steps within that bleaching process? The third part related to this is, where else in the world or in Canada can we see this 80-20 split of chlorine dioxide substitution that we can say, okay, there

Monday, May 1, 1989 is a working example or one under construction? Maybe you can give us a little more info . Mr. Lewis: Okay, if I can answer your questions now , maybe I wi ll answer the last one first. There is no other place in the world, I do not think, where you will see this 80-20 substitution. This is the most that anybody will have gone to. Basically, chlorine dioxide is not as good a bleach as chlorine.

So, for quality control and tor maintaining a very high brightness in your prod uct, for economic reason s in order to sell your product , you would like to maintain a certain percentage of chlorine in the bleaching process . Chlorine dioxide is less effective as a bleach. It requires a lot more capital equipment in order to achieve a similar brightness. That was your last question. Mr. Taylor: Right .

The statement has been made by the Minister at an earlier comm ittee meeting that a plant proposed , and I believe it was in Alberta , that would be under way maybe just ahead of this one , of a new plant which I cannot recall the locati on, is proposing the same technology. Are you aware of it and can you comment on it? Mr. Lewis: Yes, they are proposing the same technology. I am not aware of how much substitution exactly they are proposing . I would doubt that it is too much less than this in terms of substitution , but I do not believe it is as high a degree of substitution as this. Mr.

Taylor: Who is it and where is it please, Mr. Chairperson? Mr. Lewis: Crestbrook Forest Products, in northeastern Alberta . That plant is really not in any sort of a fin al stage of design at this point. It is very, very preliminary. Mr. Taylor: Okay. Mr. Lewis: I think to answer your question , all of the plants that are being designed now plus any retrofits that are being done to control dio xin emissi on s from existing plants are including a very high degree of substituti on of chlorine dioxide for chlorine in the bleaching process.

This is based, I guess, to a large degree on lab trials done by the Pulp and Paper Research Institute , and as a reaction to basically public and environmental pressure to reduce that contaminant. Mr. Taylor: Is the research institute - Mr. Chairman: Mr. Taylor, let us wait to be recognized because everything is supposed to be record ed into Hansard , and the way it is going around it is lik e a general discussion, so let us all wait to be recognized. Mr. Taylor: Thank you, Mr. Chairperson.

Is there general research then being done by the institute in Pointe Claire which is then being picked up by various companies or are they going to have to do their own? Is there a cost facto r in this? If this is going to be , if you want to call it, the most advanced sta te of the art in the sense of substitutional chlorine dioxide , I am interested in cost implications and risks , environmental risks . 201 Mr. Lewis: In terms of research , basically mos t of the research that has been done in this area has taken place in the last few years. There has been very little done previ ous to th is.

However, chlorine dioxide has been used as a bleaching substance for probably the last 10 years I would think , primarily in Scandinavia but also in North America. To the best of my knowledge , there have been no other contaminants generated as a result of chlor _ine dioxide that were not there with ch lorin e. Now , that is to the best of my knowledge. I am far from an expert on that particular area .

In terms of the cost implications and the risks, I would th ink that the risks are minimal in terms of substitution , other than, as far as I am aware of , the costs are slightl y higher for chlorine dioxide use than chlorine. Mr. Taylor: There was one other part , and that was, Mr. Chairperson , the aspect of 20 percent chlorine employed or propo sedly employed is, how will the firm de al with potential pollution from that lower-use product? Mr. Lewis: On that point, I cannot comment. I have not been privy to that inform ation at this stage.

I would assume that they will be using sort of the best availabl e pollution abatement technology to pick up wh at is remaini ng after that occu rs. Mr. Taylor: And existing technology will give a near perfect recovery? What is the degree here? Mr. Lewis: Certainly there will be less. There is a minimum that is generated at the present time. From the inform at ion that we have available, it should be below what they would consider the detectable limit. Mr. Taylor: Thank you. Mrs. Gwen Charles (Selkirk): Mr. Chairperson , can Mr.

Lewis indicate how much water is anticipated to be used in the process , and how much of that water will be recoverable? Also , at what temperature will the water be put back into the source? Mr. Lewis: I cannot answer those questions at the present time. Mrs. Charles: Mr. Lewis , could you indi cate if anyw here in the process , with any mino r revisions , could a recycling paper progr am t ake place? *

(2210) Mr. Lewis: The manufacture of bleached kraft pulp does not include any provision tor addition of recycled papers. The basic use of kraft pulp is in a primary furnish for th e manuf act ure of paper. When you are manuf acturing the pap er product itself is where you would subs titu te or add in recycled fibre products. Mrs. Charles: Could you te ll me if you are aware of what form the chemicals will take in being shipped into the area, how they will be shipp ed in and from where? Mr. Lewis: The only chem ical s I am aware of that will be shipped that are not shipped in at present will be

Monday, May 1, 1989 the raw mate rials for the manufacture of the chlorine dioxide, which typ ically involves the shipment of sodium chlorate , and also the shipment of chlorine . Mrs. Charles: Could you tell me where those chemica ls will be coming from? Are they generated within the province? Mr. Lewis: I think there are some chlora-alkali {phonetic) plants in the province but I am not certain. Mr. Manness: Mr. Chairman, of course Repap will purchase them partially, but certainly there is some avai lability of the chemical compounds in Brandon and there is also a growing potential also in . Mr.

Lewis: I think that would be the chlorine . I think the sodium chlorate would be coming from somewhere else . Mr. Harapiak: At what stage will this - you said this is tomorrow's technology, the oxygen delignification. What process will be used until that process is in place? Mr. Lewis: When I said tomorrow 's technology , that is relative to Manfor. It is today 's technology as far as pulp and paper mills that are being designed and built today. Mr. Harapiak: So once the bleaching process starts , then the oxygen delignification process will be in place . Mr. Lewis: As far as I am aware , yes. Mr.

Harapiak: I did not hear your answer on the recycli ng of newspaper . Why can it not be used? Mr. Lewis: The bleached kraft pulp is what would be considered a primary material in the manufacture of paper products, which would include your printing and writing papers and all of the other papers that are produced . So it is during the manufacture of the paper product itself , which does not take place at Manfor , that the recycled fibres would be added . I believe , for example , you have a newsprint manufacturing plant here in Manitoba at Pine Falls .

That would be the likely spot, if you were going to recycle fibres, where that would take place. Mr. Harapiak: Would this be considered a new development, the chlorine dioxide process , or oxygen delignification? Would you consider that a new development compared to what is there now? Mr. Lewis: Certainly oxygen delignification would be a new development. As to the present time in Canada, the only place I am aware of that is using oxygen delignification is at Eddy 's plant in Espanola , and it is an older technology . It has been in place for a number of years .

They have been doing development work with it, so this would be as modern as any of the plants that are being designed today. Mr. Harapiak: I would like to ask the Minister if he feels that the Clean Environment Commission would 202 be holding hearings on this process before putting it into place? Mr. Manness: Mr. Chairman , upon final agreement, if it can be reached , all the province is doing is selling a going concern , Manfor as it exists today , to Repap . Nothing will change at that location, nothing until the environmental process has been followed completely and in a public way, in a publicly open way.

That is written within the agreement. Mr. Harapiak: The construction process is scheduled to start in May. When does the Minister foresee holding those public hearings on environment? Mr. Manness: The construction probably cannot begin in May. It cannot begin until the full environmental licensing procedure and process has run its full course . I do not foresee that happening until some time in the summer . Mr. Chairman: Any more questions? Mr. Cowan . Mr. Cowan: Is an application for a permit under The Environment Act required for Phase 1 of the program? Mr. Manness: The answer to that question is yes but , Mr.

Chairman , I wonder whether there are additional questions of Mr. Lewis with respect to the process that he has just highlighted . If there are , I would beseech that Members of the committee deal with them so we could complete the exercise. Mr. Chairman: Mr. Angus , questions to Mr. Lewis? Mr. Angus: Mr. Lewis, you may have addressed this but I am not sure. What quantity of chemicals are we talking about in the future? Never mind what has happened in the past. Are we talking about gallons, are we talking about trainloads?

What sort of quantities are we talking about and what method of shipping that material up to the pulp and paper mill is being employed? Mr. Lewis: At this time, I cannot tell you that. Mr. Angus: I am sorry to be so earthy. Mr. Manness: I can, although Repap will be the final authority, but it is our belief that they will be transported by way of rail. But the quantities involved, only Repap will be able to provide that answer and I am sure they will do so at the environmental hearings. Mr. Angus: Okay, so we are not sure again . The relevance of the questions in relation to the environment is fairly obvious .

So I consider it a legitimate question and I am surprised that you cannot give me some order of magnitude anyway because that would be a concern . The Minister assures me that is not applicable however - Mr. Manness: This is not the place. Mr. Angus: It is not the place , he says. Securities Exchange in the States, may I ask? Sorry, I realize the

Monday, May 1, 1989 humour of"stretching it at this late hour, Mr. Chairper son. Let me- Mr. Lewis: Perhaps I can address that just briefly. Just for your information, Mr. Angus, I have not been involved in the actual design itself. I am not working for the engineering firm who is doing the design. I am acting basically as a consultant to the Government. So I am not privy to their design information other than I am familiar with the general processes that are being used . In the process, there can be quite a variation in the amount of chemicals that are used in the manuf acture of the pulp. Mr.

Angus: I app reciate , Mr. Lewis, who your employers are and I suspect that as the people of Manitoba are employing you, one of the questions they would be most interested in is, what chemicals , how much chemicals, how are they going to be transported . and what safeguards are being in place to ensure that the environment and the citizenry is protected? Now having said that , Mr. Chairperson , I take in good faith , as the Minister is suggesting , that Repap will answer that. I suspect that given time you will be counselling the Government on whether they are making legitimate submissions or not . Mr.

Chairman: Excuse me , Mr. Angus . We have problems with the taping equipment. We have been requested to have an adjournment for five minutes . Agreed? (Agreed) RECESS *

(2230) Mr. Chairman: I believe Mr. Lewis was going to respond to Mr. Angus' question. Mr. Angus: The questions that I was asking, Mr. Chairperson , were related to the amount of chemical material, toxic material that was being shipped in. The answer was , we do not know yet. The question has relevance and is serious as we are not only increasing the size of the plant by a third, if you like , from the 800 to 1,200, but we are also going from an unble ached to a bleached type of paper product. Now that means more chemicals, and it means more effluents and that sort o f thing.

So the whole idea of having the environmental concerns addres sed was to come here and say, okay, what does this mean , and how is it going to affect the people of The Pas , primarily? Mr. Manness: Mr. Chairman , again I state for the record, those types of questions should be addressed to the Clean Enviro nment Commission hearings, at which time Repap will be tllere. Indeed other interv eners will be there . It is not up to those of us around this table at this time to pass judgment from this point of view at this time as to those processes .

That is why we have a Clean Environmen t Commission, people with technical expertise who will not only ask those questions but indeed be able to deal with the answers . I think that to ask the questions in the fashion Mr. Angus does at this hearing really does not do just ice at all to the 203 basic requests put forward , fir st of all, by Mr. Taylor and other Members of the committee . Mr. Angus: The Minister and I may again have to agree to disagree . It seems to me, Mr.

Chairperson, that if you are divesting yourself of a company, if you , as a Government, are saying that we are going to take this Crown corporation that we know and we are going to sell it off to a company and they are going to look at increasing the productivity by a third , tha t they are changing it from an unbleached type of an operation to a bleached operation, one of the very basic questions that may be asked would be the cau se and effect on the environment.

The cause and effect on the environment certainly , in my mind, and I am only a laypers on, it would seem to me though that I might be interested in asking the question of the purchasers what their intention is, how much chemicals they intend to impor t, how they intend to disperse the chemicals . If I remember accurately , the Minister waxed eloquent about the fact that Repap had introduced a new form of pollution control and were going to be introducing it into the plant . I may not have a total grip on the situation. The Minister will be quick to point that out, but it seems to me that it is a doorstep issue.

It says, is this purchase , is this sale of this asset going to cause any environmental impact? One of the very basic questions that you would ask is, how much chemical are you going to be hauling in there? How are you hauling it in there? What sort of safeguards are there? You can still go to the Clean Environment Commission wh ere the rules will be enforced and the logistics will be upheld, etc. It seems to me that it is a pretty basic question that the Government might want to ask when they think about divesting themselves of this particular industry. Mr. Manness: Mr.

Chairman , those are legitimate questions , but they are not questions th at can be answered in fullness at this hear ing. Indeed , there is no represe nt ative from Repap here who can answer them. The Government cannot answer them because the Government at thi s point is not expe rt in those areas. That is why the Government has in place on behalf of all the citizens o f Manitoba a Clean Environment Commission , so that the experts on tha t commission can ask those questions indeed in an open fashion so that people such as Mr. Angus can come forward and also ask thos e questions if he so chooses.

That is why we have in place the Clean Environment Commission because those of us who are elected to represent the people of the province do not have the natural expe rtise within that area. And here , ton ight , there is nobody to answer specifically on behalf of Repap. Believe me, that is why the Governm ent of Manitoba will not issue a licenc e to Repap for any aspect of their development unless th ose types of questions are answered, but they have to be answered in the proper forum . This is not it. Mr. Angus: In selling a resou rce like 40,000 square miles of trees in northern Man ito ba and in recognizing

Monday, May 1, 1989 that there are going to be chemicals used, as have been pointed out, and that there is going to be a change in those chemicals, it is incumbent in my mind, Mr. Chairperson, upon the Government to say to the potential purchaser , what is going to be the cause and effect of the chemicals that you are going to use?

It seems to me that if you sell an asset like Manfor, which depends on the trees and depends on the chemicals , that if you are going to sign the arrangement and then se nd it to an environmental hearing, and environmentally you find out that there is a potential for danger , you may have not wanted to sell the thing. Again, I do not have the expertise to ask the technical questions. My questions are fairly legitimate and fairly general, and I think they are doorstep issues that people of Manitoba would like to know. Look, you are selling a plant off; somebody is going to buy it.

They are going to do a whole bunch of different things with it. What sort of effect is that going to have on Manitoba? Now, you are still telling me that after we sold it, after we signed the deal , then they go to a public hearing and they have to abide by the laws. Up until just recently, there were no environmental impact laws on Manfor. I am not sure whether those continue or do not continue. The agreement seems to say one thing, the Minister seems to say something different.

The consultant says that he is not aware of how much chemicals are going to be hauled in and how it is going to be hauled in and we are waiting to find out. Mr. Manness: Mr. Chairman, let us be fair to Mr. Lewis who has come some distance here to basically address the basic elements of the processes in place . I request that he not answer questions that are not in his domain. They are in the domain of Repap . Now, I will state again for the umpteenth time with respect to what it is we have agreed today, or tomorrow , or indeed next week. or next month, if indeed we complete the share agreement with Repap.

They will take over Manfor as it exists today. Nothing will occur on the development , no chemicals will be introduced, no building will take place until or unless they receive an operating license as a result of Clean Environment Commission hearings, at which time all of these q

Document details

Collection	Manitoba — Debates (Hansard)
Citation	34-1-ed10
Type	hansard
Volume / chapter	34th 1st hansardpdf ed10.pdf
Language	en
Format	pdf
Source	PROVINCIAL
Identifier	9eb8cffea61f44026ba34ac1948cf72c5feec652

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