ISSN 0542-5492 Third Session - Thirty-Second Legislature of the Legislative Assembly of Manitoba DEBATES and PROCEEDINGS 33 Elizabeth 11 Published under the authority of The Honourable D. James Walding Speaker VOL. XXXII No. 458 - 8:00 p.m., MONDAY, 18 JUNE, 1984. Printed by the Office of the Queens Printer. Province of Manitoba

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

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

Rose Springfield Thompson La Verendrye Minnedosa Rhineland Gimli Brandon West Ell ice Churchill St. Boniface Aiel Elmwood Kildonan Arthur Em er son Lakeside Brandon East River East Tuxedo Concordia Swan River Vir den Kirkfield Park The Pas Rupertsland Logan Portage la Prairie Sturgeon Creek Seven Oaks Niakwa Radisson Charles wood St. James St. Johns Morris Roblin-Russell St. Norbert Assiniboia Gladstone Pembina Selkirk Transcona Fort Rouge Wolseley Dauphin Turtle Mountain Burrows Rossmere lnkster Fort Garry Os borne River Heights Flin Flon lnterlake Lac du Bonnet St.

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LEGISLATIVE ASSEMBLY OF MANITOBA Monday, 18 June, 1984. Time - 8:00 p.m. SUPPLY - ENERGY AND MINES MR. CHAIRMAN, R Eyler: Committee come to order. We are considering the Estimates of the Department of Energy and Mines. INTRODUCTION OF GUESTS Before starting I would like to draw the attention of members in the Chamber to the Gallery where we have standing a group of 12 students, Grades 5-8 from Suncrest Colony. They're under the direction of Mrs. Pat Gyfelinck and Mike Maendel and they'r e from the constituency of the Honou rable Member for Emerso n.

On behalf of all of the members, I would like to welcome you here tonight. I believe we are on Item 3.(b)(1) - the Member for Arthur. MR. J. DOWNEY: Mr. Chairman, some time ago the government held a hearing as to the recovery of some of the oil in the Waskada Field by the introduction of some of the unusable gas or unmarketable gas that Is coming out of some of the oil wells in the area. Was that permit allowed to go ahead or was permission given to Omega Hydrocarbons to use the new recovery method or the recovery method using the natural gas that's unmarketable into the ground? Was that permission given? HON.

W PARASIUK: They've received a permit to rei nject the gas into the ground for enhanced recovery. That is what they deemed to be the most economic use for the gas right now. MR. J. DOWNEY: They've received a permit. Have they proceeded to use the technique? Mr. Chairman, is there any information as to, I don't suppose this is new, I imagine it's used in other jurisdictions, but they're actually using it now, are they able to increase the recovery of the oil wells that have been on stream for some time? HON. W PARASIUK: The injection start began last Wednesday, so it's too early to tell what impact it's having.

The hope Is that it would increase output by twofold . MR. J. DOWNEY: Mr. Chairman, some time ago I know the Minister was invited out to open that new gas plant in the Waskada area since I was invited to be there as well. For some reason there was a delay in the opeing; Is it because of supplies of product or was it technical problems with the plant, or what was the actual difficulty with that? HON. w. PARASIUK: Hope was to open a functioning plant and they had had some technical heaving-in problems and the plant was not operational and they wanted to have the opening postponed until they had sorted those out.

I would assume that in due course those heaving problems will be sorted out and we will all be invited back to the opening of an actual functioning plant. lt's been a bit intermittent, but hopefully it will be going full stream now. MR. J. DOWNEY: Earlier In the afternoon I'd asked the Minister about the oil well business in Manitoba. What was the - maybe it's in the report which I could refer to, but maybe the Minister has the information - what was the percentage of producing wells last year to those that were drilled? What is the success ratio of the oil wells drilled In Manitoba? HON. W.

PARASIUK: The success rate for the last two years has been something in the order of 90 perce nt. MR. J. DOWNEY: What has been the average production of the wells, the new wells, over the last two years? HON. W. PARASIUK: Roughly in the range of 15 to 25 barrels per day. MR. CHAIRMAN: The Member for Arthur. MR. J. DOWNEY: Mr. Chairman, as well, I was interested in how many actual drilling permits are waiting to go ahead and proceed to be drilled? How many have actually been given out by the province, say, to drill this year?

What is the anticipated number of holes to be drilled say in the Waskada, Plerson, Tilston, Virden field? What are the permit applications in numbers? HON. W PARASIUK: As of this morning there were some 98 issued and we're anticipating something in the order of 250. MR. CHAIRMAN: The Member for Turtle Mountain. MR. B. RANSOM: Mr. Chairman, does the Minister have any involvement now with the Manitoba Oil and Gas Crown Corporation? HON. W. PARASIUK: Ye s, I'm the Minister responsible for Manitoba Oil and Gas. MR. B. RANSOM: Can the Minister give us an update as to the present status then of that corporation? HON.

W. PARA SIUK: They are at the stage of conducting interviews to staff up - I think they'll have a staff in the order of probably four or five people. They are having discussions with a numb er of companies in the private sector and they're at that early stage of their operation. 2055

Monday, 18 June, 1984 As far as I can tell from my memory, there are no joint ventures agreed to as yet, but there are discussions under way and there are discussions relating to a final agreement with respect to a joint venture between Intercity Gas Manitoba and Manitoba Oil and Gas with respect to the Waskada Cromer Pipeline. MR. B. RANSOM: Has the government changed its ideas in terms of the goal for Manitoba Oil and Gas Corporation and what they expect that corporation to accomplish? HON. W.

PARASIUK: I think last year we indicated what the approach would be when I was Minister of Crown investments and we discussed that approach.

We said we would ensure that we moved to staff up properly; that we would have consultations with the private sector; that we were looking to joint ventures especially with small and medium sized companies, many of whom have some very good ideas and have done a lot of good research on what the possibilities might be, but to date have not been able to work out farm-outs or development agreements with too many of the larger companies whose interest in the past at least has tended to be on places elsewhere, where they believe that they had a better opportunity of finding the big elephants.

They felt that their overhead costs were too high to be bothered with wells that have an average production of 15 to 25 barrels a day. At the same time, these smaller entrepreneurs have shown some of the bigger companies that there is oil there, that the success rate can be very high and that they can be profitable. What they need are partners who can help them undertake this activity. That would be the shorter-term goal.

The medium-term goal would be to develop a good basis of information, a seismic information and knowledge of the south-west; and a third would be to keep a window on other types of developments with respect to enhance recovery because this gas injection is the first one of its type. People basically have been using salt water injection.

There are other techniques that could be explored and they're keeping a watching brief in a sense on what's happening with respect to deep well drilling and keeping a window on what's happening in the Hudson Bay, but the way in which it's proceeding is not departing from what I laid out before the Legislature last year. MR. B. RANSOM: Mr. Chairman, we've debated this previously, of course, as to whether or not there's any need for that kind of a corporation. I haven't changed my view, in that I don't believe that there is.

I don't think there's been a demonstrated need at all and I think that as time passes we'll obviously have an opportunity to assess just how valuable it's been to the taxpayers. But 1 notice one interesting thing in the Department of Energy and Mines Annual Report for the Mineral Resources Division, where on Table 6, we now see that beginning in 1981 that the industry reported total expenditures in 1981 slightly exceeded for the first time the total value of oil sales in Manitoba. That Is, in 1980 the total value of oil sales in Manitoba was about $55 million- just under.

In 1981, the industry was spending just over 55. In 1981, the total sales of oil were $64 million and in 1982, the following year, then the industry was reporting $82 million of expenditures; so that following a year behind the sale of oil in the province, the total industry Is putting more money back into the province than the value of the total sales of oil In Manitoba. Given that kind of a situation, it seems unusuai to me that the province should be contemplating getting into the business.

If the industry was taking far more out of the province than was being put back In, I could see the government making a case for it. Mr. Chairman, what we have, the last two years shown in this report at least, is it's just the other way around. lntlustry is actually putting more money back into the province than the total value of the oil sales which I take it includes royalties that are going to the province as well and it's not a net figure. On another issue, Mr.

Chairman, can the Minister give us some indication of how Manitobans are benefiting from the activity that's taking place there in southwestern Manitoba in terms of job opportunities and suppliers and that sort of thing? I know that the government has commented about Buy Manitoba Programs and set up a to.:�k force for the North to look at future Hydro development and how they'll benefit. How is that being handled with respect to the oil situation? HON. W.

PARASIUK: I'm actually glad that the Member for Turtle Mountain raised both points together because one of the objectives of the Manitoba Oil and Gas Corporation is try and ensure that the booms continue with a stable, balanced, ongoing development.

We've had booms before in Manitoba, but without that ongoing type of activity, and I believe and geologists believe that there is oil not only in the Waskada area - and I believe that the boom over the last two years has beeH primarily in the Waskada area - but there is oil in other areas of Manitoba as well, that people were flocking in around the Waskada well, the original find. lt's important that that activity be spread out into other parts of southwest Manitoba. We are hopeful that the Manitoba Oil and Gas Corporation will help to achieve that in concert with smaller entrepreneurs.

That's important to have that continued development if we're going to build up that base level of services within the southwest . I've had meetings with the oil industry, I've had meetings with local people, and the local people have been a bit frustrated that the private sector to date hasn't employed more Manitobans, hasn't bought more for Manitoba. Wh en I talk to the private sector, their comment back to me is that they feel that the prices weren't good enough; that there wasn't enough experience; that there wasn't guaranteed production.

I've been working with the companies asking them to try harder, to try harder to get more people involved in the oil servicing industry. I'm hopeful that Inter-City Gas, a Manitoba-based corporation, will in fact take that more to heart, but I've been getting some response from some of the companies that are based outside of Manitoba. But there is a tendency - to date, anyway - of people coming in, say, from Alberta, "in the past bringing the oil rigs with them, saying they were more used to them, more experienced and we've been working with them asking them to try and use local labour. 2056

Monday, 18 June, 1884 When I met with some businessmen in and around the Virden area and we talked about this, I asked them what level of government intervention they thought was appropriate. They said that they did not want government intervention because they were concerned that they might have the Saskatchewan Government apply some reciprocal type of intervention. They felt that they were close to some of the oil play in Saskatchewan and all they wanted, they said, was a fair chance.

They did not want to have people coming in and not paying proper Manitoba taxes so we contacted the Finance Department and we've asked them to increase their cheques; and we've contacted the Highways Department as well. We believe that those people who do business in Manitoba should be subject to Manitoba taxation and that there would be a fair approach that way. We have had some local activities; we've had new motels, restaurants. We've established ourselves, in fact, a local field office in Waskada. We have local employment that's increasingly being generated.

I think as they get more experience in dealing with Manitoba contractors, more local contractors are being used. I've been informed that two local drilling companies have drilled one-quarter to one-third of all the wells to date in 19 84 and I think that's a good sign because a couple of years ago they were saying they weren't being used enough. I think it was a matter of there being a lot of excess capacity in Alberta and Saskatchewan. These people are probably being extremely competitive in just trying to keep their crews together and keep them working, so in a sense it was probably a buyer's market.

We were concerned that not enough Manitoba content was being utilized. That situation, I think, is slowly improving but it's a matter of building up that capacity over a period of time, and secondly, hoping to in a sense, level out the booms and busts and hope for stable ongoing development and then I think we'll have the biggest possible spinoff for Manitoba involvement. MR. B.

RANSOM: Is the Minister satisfied that operators, say, from Saskatchewan or Alberta, are indeed paying the same kind of gasoline fuel taxes that Manitoba-based operators are paying and that they're paying payroll tax that would render Manitoba operators at least in the same position as Saskatchewan and Alberta operators in order to be able to compete. I think that all most private business people want is to be able to compete on the same footing as the next fellow. HON. W PARASIUK: I believe that if one considers all areas of taxation, one would find that Manitoba taxes are competitive with other jurisdictions.

I would think that those people who do business in Manitoba, buy their gas in Manitoba, pay their payrolls in Manitoba, even if they may be headquartered in Saskatchewan or Alberta, and I certainly . . . A MEMBER: And pay tax on the gas in Saskatchewan. HON. W. PARASIUK: I'm not sure if people are running back and forth. I've just heard a comment that maybe they're running back and forth to Estevan to fill up and get a tank of gas and drive all the way back to Manitoba.

I think that would be a false economy on their part and I believe that when they do business in Manitoba they buy the gasoline locally and they pay the local taxes. That's all in fact that the local people were saying; they said that they felt the people there should be on the same footing as the Manitobans doing business and I think that we are having the Department of Finance monitor the situation. That holds true with any type of taxes at a border point.

I think when the member was the Minister of Finance and probably had comments raised to him before about possible differences in taxes, but the situation is being monitored by the Department of Finance and 1 understand being monitored by the Department of Highways as well. I would hope that they are doing their jobs. I believe they always have in the past. 1 can't set any targets with respect to satisfaction - one is a bit like Oliver Twist in this respect and would always like more - and we have said that we are trying to achieve more local involvement in the oil industry in southern Manitoba.

That means that we have to have some type of continuous development and that's something that we've always raised with all of the oil companies that we've dealt with. We have asked them to not just follow the practices that they might have followed elsewhere, but actually to be very conscious of Manitoba content and to try and meet it. I'm pleased to say that I believe there has been some improvement over the last two years. MR. B. RANSOM: Mr.

Chairman, will the Minister undertake to ask the Department of Finance and perhaps the Department of Highways what they know specifically about operators working in the area whose payroll cheques come from Saskatchewan, whether they are in fact paying the payroll tax, because it makes a difference to a local operator; and in fact what kind of returns 1hey're getting in terms of contractors who are based in Saskatchewan and doing business here? What sort of evidence is there that, in fact, they're buying their fuel here or else forwarding the tax to the Department of Finance?

Could the Minister undertake to check those two things and let us know what reports he gets? HON. W. PARASIUK: Certainly I'll undertake to check with the Department of Finance in that connection. I would think that if they have payrolls in Manitoba, these payrolls would, in fact, pay the levies that are allocated for Manitoba. I'll certainly check to see how it's done in the Virden area. We've probably had experience with respect to other areas. I know that the Flin Flon and Creighton areas are right over the border and I'll check on that as well.

I certainly will undertake to check those things as the member has requested. MR. CHAIRMAN: 3.(b)(1)-pass; 3.(b)(2)-pass. 3.(c)(1)- the Leader of the Opposition. MR. G. FILMON: Mr. Chairman, earlier today the Member for Swan River engaged in some discussion 2057

Monday, 18 June, 1184 with the Minister regarding the limestone deposits near Mafek ing. My understanding is that a mineral lease has been granted to - perhaps Genstar is one, and I believe Steel Brothers purchased the lease from Saskatchewan Minerals Corporation. There was some arrangement whereby one of the companies purchased a lease that had formerly been owned by the Saskatchewan Minerals Corporation. Am I right in recalling that? HON. W.

PARASIUK: Ye s, Steel Brothers purchased an exploration lease that was granted to them in 1980, I believe, granted to the Saskatchewan Minerals Development Corporation in 1980 and they purchased that exploration of these from Saskatchewan Minerals Devel opment Corporation. Genstar has leases in the area but they as well have exploration leases to explore some of the limestone deposits in the Mafeking area which are quite good. MR. G.

FILMON: Having travelled the Mafeking area a number of times last fall, and entered into discussion with some of the people there, I underst and that the limestone deposits are indeed good deposits and they hold out a great deal of promise for some jobs and development in the area. I believe, however , that the mineral lease that was purchased by Steel Brothers from Saskatchewan Minerals Dev elopment Corporation carries with it a caveat that requir es Steel Brothers to set up a cement plant in the Province of Saskatchewan. Is that correct? HON. W.

PARASIUK: Apparently the exploration permit that was granted to Saskatchewan Min erals Development Corporation carried no caveats. But Saskatchewan Minerals Dev elopment Corporation then attached a caveat when they sold it to Steel Brothers and we have told Steel Brothers quite clearly that that type of thing can not be done by another jurisdiction with respect to leases that exist In Mani toba. Sovere ignty in Manitoba rests in Manitoba and not with the Saskatchewan Minerals Dev elopment Corporation. MR. G.

FILMON: So, in fact, the Minister has taken the position that the condition that was put on the transfer of the lease is invalid and that Steel Brothers is not bound by that condition. Has the Minister obtained any legal interpretat ion of that, or any legal opinion on that? HON. W. PARASIUK: In fact, what's involved is the granting of a deve lopment lease and the exploration lease by itself is not worth much unle ss there is a devel opment lease granted. That soverei gnty is held with the Provincial Government.

We ha�te talked to Steel Brothers and we are hoping to work out alternative arrangements whereby it would be possible for Steel Brothers to look at some other areas, get li mestone that is just as good, and not be bound by a caveat to a lease that they purchase from the Saskatchewan Minerals Deve lopment Corporation. We are looking at that; we hope to resolve it. I think we can resolve it in a way that's beneficial to Manitoba and for the Mafe king area. MR. G.

FILMON: Is the Minister intending then to place as a condition on any development lease In that area that the limestone not be transported across a provincial border? HON. W. PARASIUK: With respect to this particular situation, yes, we have done that taking into account the particular circu mstances and historic situation regarding all of the companies. There are some companies that have taken lime stone out of Manitoba and processed it elsewhere but that has been an ongoing relationship. I don't want to change that, I think to do that categorically would be unfair.

However, if a new opera tion Is starting out where we believe that we have competitive and comparative advantage in Manitoba it seems strange that somehow the sove reignty over mineral leases in Manitoba could be traded by a party outside this province. That is what we are dealing with, and I belie ve we are dealing with it successfully. Hopefully over the course of the next few months we will concl ude an arrangement satisfactory to Steel Brothers and to ourselves, and have a situation where we do have the potential for processing in the Mafeking area.

There are some other aspects that we have to look at and we are taking a look at energy costs involved in doing further processing in the Mafeking area, but it certainly would be our hope to try and promote greater economic development in that area using the resources that are in that area where we belie ve we have comparative advantage to other jurisdictions. MR. G. FILMON: When the Mini ster refers to processing, is he speaking merely of cement production or is he talking about crushing for use as aggregate and so on? HON. W.

PARASIUK: Right now, we're talking about mine processing but again we leave the options open for people to look at even furthe r. MR. G. FILMON: At this point in time are any of the organizations that either have or are seeking mineral devel opment leases for the limestone deposit in that area, are they considering the fea sibil ity of se tting up a lime processing plant there? HON. W. PARASIUK: As right now, Steel Brothers will look at the feasibility; they want to take a look at the quality of limestone and the other areas that we've delineated and they'll take a look at the quality.

They'll do some feasi bility work and then, hopefully , we could discuss possibilities of processing further. MR. G. FILMON: Are the other limestone deposits that the department has delineated in the immediate area of Mafeklng? HON. W. PARASIUK: Ye s, it is near Mafeking. MR. G. FILMON: So at the moment, the Minister is hopeful that he would be able to convince some of the development companies to further process the lime in Manitoba, as opposed to expor ting it across the border. HON. W. PARASIUK: We're doing all we can to ensur e that. In the case of Genstar, I think they have exported 2058

Mond.y, 18 June, 1984 lime from Manitoba for further processing, historically, but in new cases we're trying to promote as much as we can within Manitoba. MA. CHAIRMAN: 3.(c)(1)-pass; 3.(c)(2)-pass. 3.(d)(1)- the Member for Turtle Mountain. MA. B. RANSOM: I guess the question can relate to both parts of it. Wh at's happening in this area, Mr. Chairman? I note there's a large reduction in the Other Expenditures area and I noted the Minister's interest earlier in developing seismic information in the oil area. I believe this one deals mostly with hardrock mining, but what sort of activity is going on there? What cutbacks have been made? HON. W. PAAASIUK: If you look at 2.(

e) on the next page, you'll see that we were able to have some of that picked up on a federal-provincial basis. This is the first year and we're hoping that we would expand that as our capacity expands in the course of the next year, in accordance with the Federal-Provincial Agreement. MA. B. RANSOM: Are there any staff reductions being made in this area? MA. CHAIRMAN: 3.(d)(1)-pass; 3.(d)(2)-pass. 3.(e)(1) - the Member for Turtle Mountain. MA. B. RANSOM: Maybe the Minister could just give us an indication of what's going on here. There's no item shown for last year and $1,800,000 for this year. HON. W.

PAAASIUK: Wh at we have here is a Federal­ Provincial Agreement under the ERDA framework. We have said that mining is very important to the longer­ term future of Manitoba. lt was one of our priorities. We indicated that there are a number of areas where we wanted to have some work done and we felt that this warranted federal involvement as well. There are four areas of activity that we are, in a sense, Increasing the priorltization of.

One of these is geoscientific activities and we'll be doing Precambrian geological investigations, minerals investigations, geological surveys, geochemical surveys, inflational prospecting, geological compilation. The federal share on what you see here is the provincial amount for this year. You see $1.88 million, but you're going to have a corresponding amount. We're sharing it on the basis over a five-year period of $1 4 million federal money and $9 million provincial money, so this is our share. This is just net.

In the past, in some of these other agreements, this is done on a gross basis but this is net because the feds are, in a sense, delivering direction or they would contract with us in particular cases, but it is not the shared-cost program. This reflects the Federal Government's new way of doing things. The work is on the geoscientific activities, research and technology, which I think is an interesting area and this is mining technology and mine productivity.

There's a lot of new type of activity being done with respect to geoscientific work and the President of Mineral Resources was commenting on some of the newer breakthroughs that they're achieving which I think augur well for us in Manitoba. They're also doing work on mining technology and mine productivity because there is a structural change taking place within the mining industry worldwide, so it is important for us to be competitive. That means we have to improve our technology; we have to improve our productivity.

We are doing some work in that respect and then there's work being done on ground control warning systems and exposure index. We have work being done on the processing technology; some work being done on 502 reduction, on milling research, on tailings research and on industrial minerals. Then we have the development studies. Those are with respect to particular ones and then we have, as is required in Federal-Provincial Agreements, a public information package that has to be put out. MA. B. RANSOM: How much are the feds spending on it? HON. W.

PAAASIUK: The feds are spending, on the public information side, this is a particular sub-set that we are required to cost share, $1.25 million for the Federal Government that we are required to spend, the $1.25 million as well, but I would expect that these would be more on the scientific publications that go directly to the industry and which we have done in the past.

If you recall from your years as Minister of Mines, the department does put out a lot of very good technical background work which is the basis of a lot of work undertaken by the private companies. lt provides a good base from which private companies take off. MA. B. RANSOM: Is that $2.5 million out of the $14 million of the program? HON. W. PAAASIUK: $2.5 million out of $24.7 million dollars. MA. B. RANSOM: Is the Minister certain that this includes the technical reports?

I've seen some Information from some of the other subagreements - I don't just recall exactly which one - but there were some extremely high figures for the Federal Government's public information aspect. A scientific report, simply reporting on what has been found, is usually not considered to be part of public information. HON.

W PAAASIUK: I can tell the member that on our side, what we spend will be primarily for the technical reports, since there is a type of direct delivery and we're matching these on a cost-sharing basis, a lot more of it might be spent on public information by the Federal Government, but we would rather have it going into the background technical reports because there certainly isn't ...

You're dealing with people within the industry who are quite knowledgeable. lt's not a matter of having people get a much better understanding of home insulation and having 300,000 homeowners look at that very carefully in terms of what they might do. We don't have that many people in the industry and they're quite knowledgeable. What they're looking is specific pieces of technical information and that's what they provide them with. · 2059

MondaJ 18 .IUM, 1114 MR. CHAIRMAN: 3.(e)(1)-pass; 3.(e)(2)-pass. 3.(f)( 1) - the Member for Arthur. MR. J. DOWNEY: Thank you, Mr. Chairman. I have a few comments and questions to make, Mr. Chairman, dealing with the Surface Rights Board and the recent action taken by the Premier and by the government. Mr.

Chairman, a lit tle less than a week ago I asked the First Minister to substantiate or inform the House as to the status of some of the members on the board and the fact that I'd received information that the Minister of Energy and Resources, I guess it is, had proceeded to fire three individuals off the Surface Rights Board and then to give the reasoning that they had done so to expedite the activities of the board or to get on with the business of the board, to hurry up with hearing the work that had to be done when, in fact, the last meeting that the board had to my knowledge was in January.

I would have suggested probably that to have them meet and deal with some of the decisions which had to be made would have probably expedited the activities of the board rather than firing some of the indi viduals, and I asked the Minister, was it because of the conflict? Did the members on the board have a conflict? Why did he, last September, make the decision to select individuals and then this June give them their lay-off notice without, what I would say, a sound reas oning for it. Mr. Chairman, I know that one individual in particular had been taken to court dealing with her dealings on the board.

She was being accused of having a conflict of interest. I know in the first court process that she went through she was seen not to have a conflict of interest. The oil company, I believe, appealed that decision. What I ask the Minister now is, will the appeal be heard and will a decision be made so that we know for future cases? I know this individual as well, Mr. Chairman, has put a lot of money into her defense in the court process. Will the government be covering those costs for her?

I know she took it in good faith and acting on behalf and doing a job for government has found herself now with, I would say, substantial legal costs. Is the government going to pay her for that or is it just goodbye? What is the government's intention dealing with that particular case? 1 think the Minister should comment on that at this time. HON. W. PARASIUK: Yes, the hearing, the appeal has been heard and a decision is pending. That is still taking place before the courts and is before the courts for judgment A MEMBER: There will be a decision. HON. W. PARASIUK: We are awaiting the decision.

As to the matter of court costs, my understanding is that this person decided to hire a lawyer for the original case at her own choosing, but the Surface Rights Board did have a lawyer who represe nted the Surface Rights Board and made the legal arguments on behalf of the Surface Rights Board. This person decided of her own choosing to have a lawyer. At the appeal, the Surface Rights Board had a lawyer and this individual did not have a lawyer. Since this person undertook to have a lawyer represent her at her own choosing, the government surely is not resp onsible for that type of decision on her part.

With respect to the people - I have informed the people that we had originally thought of having, in a sense, two boards going through there. We believe if there is one board, we can have the set of decisions that, I think, might have some consistency and coherence to them and I do want that board to get moving as quickly as possible. I think there were some inaccuracies in media reports on this and the Surface Rights Board certainly has met since January as was erroneously reported in the newspapers. Maybe the Member for Arthur isn't aware that the Surface Rights Board has indeed met since January. MR. J.

DOWNEY: Mr. Chairman, then to get it clear on the record, I would ask the Minister to table for us the actual meetings that the Surface Board had - the dates. Information I received , I think, was fairly accurate that the last meeting dealing with the busine ss of the board as far as the total membership of the board was concerned was last January. That was the major concern that people have and, that Is, the actual actions. I can tell you, Mr. Chairman, that the landowne rs in this community feel that they have been let down by the government.

They feel that the government are somewhat leaning towards the interests of the oil companies rather than the landowners. The Minister can certainly say otherwise if he so wishes, but I know that there are many numbers of people waiting for the board to make a decision. There are two basic areas of concern and one is in the sett ing up of the board. There was a backlog of decisions to be made.

Rights of entries were deferred by the mining board waiting for the new board to be established and people were waiting, waiting, waiting, till the new board was es tablished so a decision would be made - both the farmers and the oil companies. That's one of the major problems of the current hearings that are to be held so the oil industry can move ahead and so that farmers know where they're at.

The other one is some of the old problems that the oil Industry and agriculture have had; some of the saltwater problems, some of the disposal wells, in general, old oil activity that is causing hardship on the farm communit y, that being mainly in the Virden area. Now, what we have is a board that is, I would say, totally toward the south end of the area. They can probably deal with it - I'm sure they can. However , I would think it would be in the best interests of the operat ion of the board and the farm community to have representation from both communi ties.

I ask the Minister, is he intending to leave the board at three meMbers? Is he just going to leave the three members tt1'.it are on there now? Is there going to be an eypansion? What is the current status as far as the liOard is concerned? HON. W. PARASIUK: I will undertake to get information as to dates of the board meetings. I understand there has been some 17 board meetings held since September which is less than a year; 17 board meetings is quite a few, but I will get that information for the memb er. 2060

When he says that somehow the government has not responded to the needs, let me inform him that this government in less than two years established a Surface Rights Board; in less than two years passed the legislation. That had been a festering problem for some 30 years. So there were a lot of people in the past who didn't address it. There were some attempts to address it back in '77 or '78 or'79. lt was thought that maybe we should have a commission, but that did slow down the process. Soon after becoming Minister, there was a Nugent Report. We said to the local people that we would try and act on it.

I couldn't guarantee that we would do it at that Session, but I said i expected we would get it through the following Session. When we brought the legislation forward, we said that we are not trying to engrave any of these things in stone. We will try it on a trial and error basis to the best of our ability, using common sense. What we want applied is common sense. I think to say that someone from one part of the area has more common sense or less common sense than another part, is wrong.

I think that with a smaller group arranging their affairs so that they can have these meetings, getting the decisions under way, would be advantageous. We will monitor the situation. If we are finding that there are difficulties in terms of having those meetings scheduled and getting the job done, because I think it is important to get those decisions under way, and if we feel that there is a need to add we would consider adding, but at this particular time I will wait and see and judge in the next number of months. MR. J. DOWNEY: Mr.

Chairman, I didn't make reference to whether or not people from one area or the other would have more common sense or wouldn't have. I indicated that probably for some of the older oil problems that there could be people with a little more knowledge of the situation from that particular area. That was the comment I made, and I still believe that, Mr. Chairman. I ask the Minister, Mr. Chairman, in view of the fact that I believe - well, I will ask him - how many appeals or how many decisions are the board being asked to make? How many situations are the board now dealing with?

What is the current backlog of hearings the board has to make and how many have they made during those 17 meetings? HON. W PARASIUK: I think there is an historic backlog over the last 30 years of some 271 applications, but there are six test cases before the board for variation of compensation, which I think is a very major breakthrough.

I think it shows that maybe occasionally the public sector, government, does have to intervene to provide fairness and equity when the market never did, because a lot of good people in good faith find contracts which, in a sense, go on in perpetuity and that was unfair to them, but the oil companies did not unilaterally open up these contracts. So what some might call the heavy hand of government had to move in, I think lightly and judiciously, to provide for justice. So we have 271 cases that have to be dealt with and I am hoping that they will be dealt with as expeditiously as possible.

There are some 45 right-of-entry applications but at the same time - and this is a very good sign because we did expect the Surface Rights Board to be, in a sense, a board of last resort, or vehicle of last resort - there have been 224 leases or agreements registered since the Surface Rights Board has come into being, without the disputes. So it shows that the process can work. I think the process is coming along quite well if we have had 224 leases or agreements signed voluntarily by the parties knowing that if they ran into problems, ultimately couldn't agree, they could go to the Surface Rights Board.

I think that's a pretty good performance all told in that area. So when people want to, in a sense, magnify some of the start-up problems that exist with an organization, they should take into account the fact that 224 leases or agreements have, indeed, been signed. I think it is important for the Surface Rights Board to get on the right foot. They have had the opportunity now. Surely, the Surface rights Board, in oil activity and oil leases, will be around long after the honourable member and myself are gone from the scene.

I would hope that this thing gets off to a good start and proceeds to operate on a good basis. So we wish it the best of luck; we give it the best of help.

We are hoping that over the course of the next year, we may find a situation where most if not all of that backlog from the past 30 years will have been dealt with by this time next year, and that we have a system whereby people don't have to resort to the Surface Rights Board almost as a board of first appeal because we will have a whole set of judgments in place and people can make some judgments as to how they are faring in their particular negotiations as against what the pattern of judgments of the Surface Rights Board is.

So I think that if we have a bit of patience - we have done a lot in two years and compared to the last 30 years, I think we need to give it just a bit more time and a bit more patience, a bit more good will, and I am hoping that by next year we will have most of these things cleared up, which will be quite an accomplishment. MR. J. DOWNEY: Mr. Chairman, the Minister, I am somewhat surprised at his approach. He tries to leave the impression that these 271 have been hanging on for some 30 years.

The Mining Board has been in place and making the kinds of decisions on right of entry, particularly the right of entry, which has not been held up and dragged on for some 30 years. The main old problems, Mr. Chairman, are from the saltwater problems, old well sites and old agreements, and I am sure that there aren't some 271 of them. I would think that the majority of the .271 are current problems that have developed. For him to stand up and say that he has made a great move - Mr. Chairman, it was us that had the Nugent Commission Study put together, the guidelines for the legislation.

We supported the legislation last year and we wanted to move on with getting the proper mechanism in place to deal with these problems. The concern that I have is that the mechanism is In place, the legislation Is in place, the board appointments were made, and yet nothing has been hapJ)ening, Mr. 2081

Monclilr. 11 June, 1114 Chairman. There are people waiting for decisions to be made. The only action that this Min ister has taken is to fire three of the people who were on the board without giving a proper public explanation. He is trying to lead us to believe that he had it planned to have two boards operating and so that it operated properly, he now got rid of half of the members. Could they all not sit and make judgment on the decisions? Was that what the problem was? I think he is very unfair and has been very harsh to these three people who have now been given the axe, Mr. Chairman.

I don't believe that was the problem at all. I think if they'd had their meetings, if they had made their decisions, brought the people before it and listened to their cases and a decision made, get on with business. But something has been holding up the process. Has it been those three people? Is that the reason why? Will it operate smoothly now that he has those three people out of the road? Is that what the problem has been, Mr. Chairman? I am really trying to find out what has been the holdup. Now that that he has made the move that h9's made, will it speed up the process?

Can 1 go back to my constituency and say the Min ister has made the move of removing three people from the board, the actions of the board will now speed up, and by this fall we will have all the decisions made? For him to stand here and say 224 went through, the agreement between the farmer and the oil company went through without any difficulty, that is nothing new, Mr. Chairman. The oil drilling has been proceeding and going on because actually under the old system they couldn't stop the oil company from coming onto the property. They couldn't stop them.

The Mining Board automatically gave the oil company the right of entr y. So a lot of people have signed, they want to see the actions of the oil development take place, but they want it done fairly, Mr. Chairman. I know that the oil companies are anxious to have decisions made because 1 know it is holding up some of the activity. I know the landowners are anxious to see decisions made because it means their livelihood, what they are going to get as far as the returns from drilling sites. I would hope, Mr.

Chairman, that the Minis ter would make a little more clarifying statement, that he would say we replaced or we removed these three people because - 1 don't know why - a justifiable reason, and I wish he would stand and say so. 1 am not happy that the individual who has acted on government business really is now being left - and the Min ister indicated that she had made the decision to hire a lawyer on her own - I am not so sure that she was satisfied with the Surface Rights Board lawyer; she must not have been.

But I'm sure that the Min ister would have had a little better unde rstanding, and an agreement with her, or there must be some clear policy as to protecting individuals when they're in that position acting on behalf of the government because let me tell you, we all know as individuals in society that you don't take on oil companies - that you aren't taking on a pretty big customer and it costs money to do so. 1 would hope for the members that are still sitting on the board, what about them? Are they sufficiently protected in making decisions in future actions?

Are they in a position where they could as wel l, be challenged by oil companies on decisions that they're making? I want that stated and stated very clearly, Mr. Chairman, because I don't think any one of those individuals who are on the board are going to put their own financial beings on the line, or financing of their own situations. Where are we at? I don't think this Minister's really taken hold, Mr. Chairman, and taken a look at this wt .. Jie Surface Rights system. I think he's been playing politics with it, I don't think he's been serious about it. I would ask him, Mr.

Chairman, to tell us why he replaced those three people and why there haven't been more decisions made, and why the whole thing has broken down the way in which it has? Why Is it In the shambles, Mr. Chairman, if it isn't his inability to run the whole department that he's responsible for? HON. W. PARASIUK: Mr. Chairman, I'm surprised and astounded at how ill-informed the member Is. To begin with, it is stated very clearly in the act that members are indemni fied in the act; so they are not liable. lt's clearly stated in the act.

Secondl y, when he says that somehow the variations for compensation, the 271 backlog cases, could have been dealt with by the Mining Board in the past, that is completely and totally incorrect, totally and completely Incorrect. There was no power within the legislation for the Mining Board to make any of those variations, that's why they were never ever made. A MEMBER: Keep it straight. HON. W. PARASIUK: Well, no I am, I'm providing the straight information on this. - {Int erjection) - Well I'm surprised; I've been postured on this. Someti mes people posture without getting the facts straight.

The final case with respect to the time delays. There have been legal challenges by parties in this matter . Those legal challenges have been taken through the court system, that causes delays. To blame the board for legal challenges is completely wrong. The case has been heard, .ve're awaiting a judgment. I indicated previously the judgment I made with respect to the board, I will not, I think it's wrong to pass comment on this board member or that board member. That is a function of government to appoint, and then to disappoint, and I do not call that firing.

Those are made in the judgments of time, and I thank those people for the contribution they make and I hope the th ree that are there will be able to proceed. I hope we don't have a whole set of court challenges that might be used as delaying tactics. I'm hoping now, and I'm not saying now, I'm hoping that we've had the case being heard, we're awaiting a decision, hoping that there will be a numb er of judgments made and that we • ·11 be able to act as expeditiously as possible. T,,at's what I told the various people that I met with, an j I did meet in the past with the Surface Rights Association.

I have talked with local people; I have talked with others, and I'm hoping that the procedure will go on in an expeditious way. I do believe that we have come a long way in the last two years, if one looks at the whole history of what existed since the early '50's. I believe we've achieved some major breakthroughs that people should be thankful for. People who are locked into unfair contracts, in a sense forever, now 2062

Monday, 18 June, 1984 have the opportunity of getting some social justice, some economic justice. I think that's a good thing, I think that's a very good thing for them. lt did require the government interv ening to provide for that. I do acknowledge that there was support on both sides of the House for that type of intervention in terms of breaking a private contract. lt's one of the few times when in a sense private contracts have been broken by the government, but both sides of the House felt that those contracts in the past have been negotiated unfairly, or over time were unfair.

We are all going to try and do it, and I can appreciate if the member says he has concern, he wants to make sure it works better, I want to make sure it works better. We're certainly on the same side of the fence on that. When he says people are being changed for political reasons, again, that is completely and totally untrue and unfair. You know I was looking at newspaper comments where people who are accused of being left on for political reaso ns are saying that they are members of the Progressive Conservative Party.

I'm not sure if we checked with that individual when those statem ents were made, those comments were made. He has a lot of municipal experience; he has to make judgments; he is the Mayor of your commun ity. I did not say "political." That accusation came from the other side. I think it's unfair to those people who are on the board and who were on the board. it's not done for any type of political reasons. MR. J. DOWNEY: We ll, Mr.

Chairman, seeing as the Minister mentioned it, I made it very clear in my comments to the Press, even though it wasn't reported as such, that the one individ ual who he refers to, and that's the Mayor of the Town of Melita was not, in my estimation, sypathetic to the present government, that in fact I knew that he wasn't. I was asked prior to the appointment of the individual by the Minister, and I indicated that he'd probably work very well on the board, but the other two individuals, Mr. Chairman, are political. They are political, one of them is a former candidate for the New Democratic Party, Mr.

Chairman; the other one is a known contrib utor, Mr. Chairman, to the New Democratic Party. We ll, Mr. Chairman, so it is political, two members are political and I say this in - (Interjec tion) - We ll, Mr. Chairman, no. They removed the three people from the Virden area. They left one known person who is not a New Democratic Party, and two who are known NDP. I have nothing against those individuals. In fact, Mr. Chairman, I know them quite well, I consider them friends. They have their political affiliation, I have mine, ·and I hold nothing against them, Mr.

Chairman, because of whom they're associated with politically. I have friends who are Liberals, and New Democrats. They do a job in their communi ty. The Minister appointed them - fine. But as I indicated, it appeared to be very much a political action by the Minister. However, let that be as it is, I will suggest that the Minister is being judged very carefully by all people in that area because of actions that he has taken. I suggest that the actions of the board, the decisions, and the expedience of that board is going to be watched very careful ly, and he may find he may have to make other moves, Mr.

Chairman. He may have to make other moves to straighten out the situation if it doesn 't work as he's now suggesting that it should; he's the one, Mr. Chairman, that is being judged by the community in the south and western part of the province In the oil industry. lt is he, Mr. Chairman, who has to justify his actions. He will be watched very careful ly, I suggest, Mr. Chairman, because of the im portance of a good relationship between the farm community and the oil industry, that ever ything be done to make it work effectively and in the best inter ests of both. lt's a difficult job that he has.

I don't believe, Mr. Chairman, that he has gone about it the right way. However, he has taken an action and we will wait and see, we'll give him a month of two to see how the process is working and then we'll be prepared, Mr. Chairman, to make our criticism at that particular time. HON. W. PARASIUK: Mr. Chairman, I can accept the latter part of the comments of the Member for Arthur. Sure, I'm re sponsible, ultimately .

People can make judgments about what's happening in the oil ind ustry, what the relatio nship is between the oil Industry and municipalities; whether, in fact, age-old problems are being dealt with; whether, in fact, age-old problems that have been left to fester for many many years will, in fact, be dealt with. I say we've come a long way within the last two years, but we'll be judged over the course of the next three months, six months, nine months as to how it will proceed and, ultimately , I acknowledge that 1 am accountable for that. So that

part I accept. The first

part I don't. I think it is really quite wrong, quite unfair - I would get a bit more hyperbolic than that but I decided not to - to say that someone who says that he is a Progressive Conservative is not a political person, but to say that anyone who has had any involvement with the New Democratic Party in the past somehow is. That's what the person said, he said, you know the person from Melita isn't political, but the other two are. We ll, that's complete nonsense. You pick people on their ability and their experience, what experience they've had, whether in fact they'll work out or not.

We pick people and we hope that they will exercise their best judgment without refe rence to whether they are New Democrat, or Conservative, or what have you. I never raised or introduced anything about anyone's politics with respect to board appointments and using their best judgments.

Those, unf ortun ately were raised by members - at least someone, or maybe misinterpreted through the press on the other side - because I have faith in those people exercising their judgment and I hope they exercise their best judgment. lt is a difficult task, it Is hard being Solomon, and I hope they exercise that task to the best of their abilities, and we will judge, over the next few months, as to how well that's done. MR. DEPUTY CHAIRMAN, H. Harapiak: The Member for Arthur. MR. J. DOWNEY: Mr. Chairman, a final question to the Minister.

For what reason did he remove the three people off the Surface Rights Board that he removed? 2083

Monda� 18 June, 1884 HON. W. PARASIUK: Mr. Chairman, I answered that que stion earlier in my pres entation of Estimates. MR. DEPUTY CHAIRMAN: 3.(eM2)-pass; 3.(fM1)­ pass; 3.(fM2)-pa ss. Resolution 65: Resolved that there be granted to Her Majesty a sum not exc eeding $6,346,400 for Energy and Mines for the fiscal year ending the 31s t day of March, 1985- pass. 4.(

a) Expenditures Related to Capital Assets - the Member for Arthur. MR. J. DOWNEY: What is this being spent on, Mr. Chairman? HON. W. PARASIUK: These are being spent on a lot of energy conservation projects that I went through this afte rnoon when I discussed Item 2.(c). I indicated a whole set of areas in relation to Enerschool, the Arena, RetroFit, Community Recrea tion RetroFit, the Home Demonstration Projects, those types of projects on this.

This is one area where, unlike the mineral agreement, this is being shown on a gross basis because it is a fully cost-shared program and $953,000 is Recoverable from the Federal Government. MR. DEPUTY CHAIRMAN: 4.(a)-pass. Resolution 66: Resolved that there be granted to Her Majesty a sum not exceed ing $1 ,906,600 for Energy and Mines for the fiscal year ending the 31s t day of March, 1985- pass. The only item we have left to discuss is 1. (

a) Minister's Salary. We will ask staff if they would take leave. The Member for Arthur. MR. J. DOWNEY: Mr. Chairman, it's just a matter of making a general comment that a lot of the Minister has given, I think, less than a desirable amount of information in a lot of the activities that he's carried out.

I think, particularly in dealing with - and I made reference earlier - the deve lopment of pipeline, some of the lack of public information, or the informational­ type hearings that were needed , as far as the activities that he's carried out on the Surface Rights Board, some of the negotiations that are taking place. Some of the energy agreements, I think, in my estimation are somewhat less than desirable as far as providing this Legislature with the kin d of detail that I think is important, particularly when he's commiting resources of the people of Manitoba into long-term agreements.

I think that we want to be extemely cautious and make sure that there is full disclosure of all details and that they are understood. I think it is extremely important, Mr. Chairman, in the time of what I would consider energy shortages, or we've gone through what appeared to be an extremely serious energy shortage period, where all details are fully disclosed and understood by all the people of Manitoba. lt is not, Mr. Chairman, an area where he should be playing politics, and if he were, if he does, he will reap the kind of reward that is not in the interests of Manitoba.

I think it is incumb ent upon him to fully and honestly give as much detail and as much information as possible, because I do believe that the resources that we have have to be dealt with in a very serious and competent manner. I'm not sure, Mr. Chairman, that this Minister is capable of doing that. MR. DEPUTY CHAIRMAN: The Member for Niakwa. MR. A. KOVNATS: Thank you, Mr. Chairman.

First of all, I'll apologize to the Honourable Minister for not being here this afternoon and the department or the part that I wanted to ask, I'm not sure whether it's been asked or not asked, but if the Honourable Minister has answered I'm sure that he will state whether he has answered immedia tely. lt's not going to be of a technical nature that I'm going to bring it up.

I had received a call from an instructor over at Red River College and I was advised that some of the classes were going to be reduced and that funding over at Red River College - it all leads into energy so don't anticipate that I'm out of order - but I was advised that these classes were going to be cut back because of lack of funding and that other departments, other industry would pick up the slack.

Can the Honourable Minister advise whether there's been any discussion with the Department of Education wherein the Department of Energy will be picking up the slack and helping to train people in the energy field in the future? HON. W. PARASIUK: I would have to take that question as notice. lt's a bit unusual for it to be raised during the discussion of Minister's Salary, but I certainly would take it as notice and check it out and get back to the member directly. MR. A. KOYNATS: Thank you very much. I wasn't trying to embarrass the Minister.

I really want to know so that I can advise these people at Red River College and some of the other colleges why their funding is being cut back and what is going to happen through industry picking up the slack. I have another couple of questions and they're not of technical basis, but I want to kn ow from the Honourable Minister if he can advise whether the develo pment of hydrogen power has taken place in the province over the last year since the last time that I spoke to him. Can he bring me up to date on whether we've spent any money any time on the dev elopment of hydrogen power? HON. W. PARASIUK: Mr.

Chairman, this was discussed in the Estimates this afternoon. I would ask the member to look at Hansard and if he has further questions to deal with me directly on it, and I would certainly deal with him. I know he's had an interest in it and so do I. We are making progress. MF. �. KOVNATS: I can accept that. Again, I'm not trying to embarrass the Minister, I'm really looking for an:>wers. One other question conce rning the dev elopment of ammonia out of hydrogen out of water energy. Can the Honourable Minister bring me up-to-date on the devel opment of amll)onia in that regard? Was that asked also? HON. W.

PARASIUK: But they both are related in that we have been looking at hydrogen as a feed stock. 2064

Mond ay, 18 June, 1984 People look at it two ways. You can look at it as a fuel; you can look at it as a feed stock. lt would appear that the economics of using hydrogen as a feed. stock in the production of ammonia and other chemicals is probably a bit better than using hydrogen as a fuel. So that's been encouraging and we hope to do further work on that over the course of the next year. MR. F. FILMON: Mr.

Chairman, I wonder if I could ask the Min ister - with respect to the proposed Alcoa smelter, was it the request of the Aluminum Company of America that the Manitoba Government take a 50 percent interest in the equity in the smelter? HON. W. PARASIUK: The subject arose and I can't say what the exact genesis of it was, because when one talks about trying to establish longer-term security you look at different mechanisms of doing that. How do you have peoples' interest being into the good operation of a facility over a period of time?

We started looking at the economics when that subject arose and I can't exactly say what the genesis was. Obviously, we're not against it. We may have proposed it first, I can't say specifically, because these things arise in the course of discussions. I don't know, for example, and I asked people questions as to how the notion of the province holding 25 to 40 percent of a potash mine arose and I didn't get a very clear answer as to how those arose in discussions of the previous government. Certainly, that subject did arise.

There are some very good points from a provincial perspective and it's something that we are pursuing. MR. G. FILMON: Would the Aluminum Company of America be pursuing the establishment of a smelter in Manitoba without a provincial participation to the extent of 50 percent of the equity? HON. W. PARASIUK: I'm not sure that people there have been different aluminum companies looking at possible joint ventures. They themselves have been coming forward talking about joint venture possibilities. Their homework hasn't been done to the point that Alcoa's has. I can't make that type of judgment.

All I can say is that if an aluminum smelter makes sense and if the numbers indicate that an aluminum smelter, given our comparative advantages - because we have a num ber of them, and we also have some disadvantages with respect to transportation - but if it shows that an aluminum smelter makes business sense then I think it would be a good thing for the people of Manitoba to have a share of that particular venture that could provide value-added to electricity in Manitoba, provide jobs and at the same time, provide wealth and keep wealth in the province for recirculation within the province.

That's one way of maximizing the benefits from our resource development in a way that ties us to the latest technology in the world and, at the same time, keeps more of the wealth within the province to be reinvested within the province, hopefully, for other resource or other economic activity. In that way, I think, we can add to the long-term betterment and economic well­ being of the province. MR. G. FILMON: Mr.

Chairman, given that governments have requirements to invest capital in facilities that they alone have control over and responsibility for - I'm thinking in terms of health care institutions; I'm thinking in terms of infrastructure such as highways, such as electrical transmission and distribution systems, such as water supply systems, such as all sorts of things - given that there are tremendous demands on the capital available for governments into public works, why would the Min ister choose to utilize that scarce capital to invest in a project that somebody else may well be interested in investing in that involves some risk, that inv olves some competitive advantages and disadvantages on a worldwide market?

Why would the government choose to take that risk and to utilize available capital that is being called upon tor so many other social and public service purposes on perhaps an investment that carries some risk to it such as an aluminum smelter? HON. W. PARASIUK: Well, we have had some very good discussions with financial institutions in Canada, in North America, and around the world. They seem to think that it could be a very very good Investment for Manitoba They are of the opinion this could be an excellent investment.

They believe that it is a self­ sustaining investment. lt is one that will make a lot of returns for the people of Manitoba and we have confidence in Manitoba. We believe that we do have a good comparative advantage because we have a publicly owned hydro system that can provide power at very very competitive rates, virtually the best rates in the non-communist, industrialized world. That will provide a good comparative advantage for an energy­ intensive industry, if we could overcome the comparative disadvantage of transportation.

So, in that sense, if the numbers work out, it is a superb deal for Manitoba. lt is a very good long-run deal for Manitoba. We, in fact, will be able to translate this cheaply priced electricity in Manitoba to value­ added, to jobs and to a good return of wealth and benefits to the Province of Manitoba. The investors right around the world are telling us that this is an excellent deal, if the numbers make sense with respect to the business viability and that's what the feasibility study is looking into. Why wouldn't we have confidence in Manitoba?

Why wouldn't we want to maximize the returns from that resource development for reinvestment, to keep in Manitoba, to in crease and possibly to lessen the requirements that we might have for capital for other no n-self-sust aining reasons. We admit and we acknowledge that we have to be careful with all types of investments, but there are different categories. There are limits to what investors are willing to provide with respect to non-sustaining debt.

That's the area of certain types of capital regarding highways and other types of debt, but there are other types that are self­ sustaining and one that looks on the quality of that particular type of investment. When investors look at our hydro potential and the capability that it has and the fact that these dams may last for hundreds of years, they are very very excited because they realize that we have tremendous wealth in Manitoba. lt's a matter of ensuring that those 2065

Mondq 18 June, 1984 resources are developed in such a way that we can keep those rates low in Manitoba, have the maximum spin-off development in Ma nitoba, and hav e reinvestment in Ma nitoba for the betterment of Manitoba over the long run. We believe that that is a very sound and rational way In which to do development.

We believe that if an aluminum development makes sense, it will pay for its fair share of the hydro that it consumes out of the Manitoba hydro-electric system, that the people of Manitoba can make a very good return on their publicly­ owned hydro system and help pay for those dams, pay for the costs and, at the same time, retain the ongoing ownership of those dams which will last really for hundr eds of years and 10, 20, 30, 40 years from now will be worth so much more than they are worth today. Now isn't that wonderful that the people of Manitoba have that tremendous resource and that it's theirs?

We think that's wonderful and we want to keep that resource in Manitoba. We want to keep it owned publicly in Manitoba and we want to keep it owned publicly in Manitoba and we want to keep those assets owned publ icly. We believe that the people of Manitoba want that as well, and we believe that when it comes to self­ sustaining good investments that might come along like an aluminum smelter, when numbers make sense, we are prepared to take a position on it. We 'll look at that with potash; we'll look at it with others.

At the same time, we believe - and we've said this consistently - that we bel ieve it is possible to do good joint ventures with the private sector. We have said consistently that we can tap people's skills and resources and yet, at the same time, maximize ret urns and benefits for the people of Manitoba. We were told In the past that no companies would want to deal with us; that we couldn't arrange these deals; that we couldn't get them. We couldn't get these deals unless we sold them a power dam or a portion of a power dam.

We said that there's another way, that we would try the other way and see if it could work because we believed that it would. I think we've been very successful in showing that the New Democratic Party way works. Now the Conservatives legitimately and validly can claim that is not their way, that they would proceed another way, and that is their right. There is a clear difference between how the two would develop the birthright of Manitoba's natural resources. Our approach is to try and keep the wealth from those resources circulating in Manitoba for the future benefit of Manitobans.

We don't shy away from saying that is the approach that we take; we don't shy away from saying that we have confidence in our institutions in Manitoba to ensure that; we don't shy away from saying that we have confidence in Manitoba's future.

In fact, when you start looking at Manitoba's future into the long term - and that's what one has to do in looking at energy developments - you have to look 25, 35, 40 years ahead and it's difficult because it's more difficult to predict at that time, but we are talking about a renewa ble resource, we're talking about a renewa ble re source in comparison to the rest of the world's non­ renewa ble resources. So we have nowhere to go but up, if we only have the will and the cour age and the capacity to achieve those objectives, and we on this slde believe we do have that. IIA. G. FILMON: Mr.

Chairman, I'm not sure whether or not the Minister was listening to the question that I asked, or whether he was anticipating my further line of questioning, or whether he didn't understand it. I wasn't asking about an investment in a hydro-electric plant which may last hundreds of years on the Nelson River and a resource to Manitobans and all that.

We may get to that and he may have to replay his record again because he obviously has his sales pitch down and wanted to use the whole 10-mlnute sales pitch, but what I really am after is in reference to the investment of $350 million in a half interest in an aluminum smelter. If it's such a good investment, as he started out to say, why would the Aluminum Company of America not be willing to Invest In the entir e 100 percent of the plant Itself? MR. CHAIRMAN, P. Eyler: Mr. Minister. HON. W.

PARASIUK: We believe, and we have just heard, that we can get a good return for our investment and we want to get a good return on our Investment. There's nothing wrong for Manitoba gaining a return for reso urce development or value added to energy in Manitoba. Why not? Why not have Manltobans make wealth and money from the resources? I would have thought that was a way to proceed . We belie ve that's an approach that makes sense and we have had companies come forward saying that they are concerned about long-term security, they don't want the rules changed.

We have said, look, If we are joint partners it is in our Interest and your interest to make sure that this works and works well. And I believe that has dealt with anyone's concerns about long-term security without having to, in the process, sell off a portion of a hydro dam that in 25 years might be worth millions of dollars more than it is today, and that would be a direct transfer of wealth, without risk, from the people of Manitoba to a private company. We don't think we have to do that, we think that is wrong and we said that was wrong before the last election; we clearly stated that.

We ran on that and we won the elect ion. We won it by being very substantive and not playing politics, and we will have the opportunity. I remember the Member for Arthur was saying that we are playing politics with development proposals and projects in the middle of our term, providing Information to the people. Are we making announcements on the death days in election, as the previo us government did? A MEMBER: Ye s, you are. HON. W. PARASIUK: Not at all. A M"'MBER: You're dead and you just don't rec ognize it. HON. W. PARASIUK: Who made announc ements during a campaign?

I can reca ll the worst one of course was the one made on a Saturday night before the election when somehow there was this big announcement that Concordia would get a new storey or two storeys or three storeys, on a Saturday night at the old barn dance. Playing politics with announcements, Mr. Chairman, they know of what they 2066

Monday, 18 June, 1184 speak. But on this side we came forward, we presented the information, it is there for the public to look at. Take a look at what information was provided by the Conservatives in the past. Have we ever seen the We stern Grid document? Did we ever see all the documents pertaining to Alcan? We never saw those.

They had a Letter of Understanding but they had some other agreements involved, some of which contradicted each other; some of which said, well it doesn't make any difference if Alcan owns part of a hydro dam because we could increase the water rental rates; and the We stern Power Grid Agreement says that the water power rates can only be agreed to by a board consisting of people from Manitoba, Saskatchewan and Al berta. Isn't that an interesting type of contradiction that exists there; isn't that an interes ting thing that exists as a contradiction?

No, !t never said that and that's the thing about the opposition, they want to spend all of their time talking about the past, about a number of the things that they did not do. We are going to talk to the people about the things we are doing and the things that will happen to the people of Manitoba; and certainly, when the appropriate time comes, the people of Manitoba can make those judgme nts, as the Member for Arthur said, and that's part of the political process. We'll put forward our particular approach to development.

We think it is fair; we think it is sensible; we think it makes sense both today and in the future because these assets, which will appreciate in value tremendously - indeed, the Governor of Wisconsin, when they were in the middle of their discussion on acid rain, right in the middle of a conflict, one Governor versus another Governor, knowing full well that the costs of scrubbers and the costs of coal are going to go up and they've got a lot of problems said, I wish we could all buy Manitoba power. Of course, they can't; it's limited. That's a very valuable resource, and the water will run.

The water will run forever and we have a number of dams that we can build there and we believe that those assets will increase in value tremendously . They will be owned by the people of Manitoba; they will provide benefits for the people of Manitoba for today, and virtually into all ages. MR. G. FILMON: Mr. Chairman, if the Minister insists on filibustering his own salary, we can stay here for hours and days. I'm happy to listen to his philosophical diatribe.

We, on this side, don't need lectures about the water running down the Nelson River , or the attribut es of hydro-electric development, the Conservative Government that started it in the sixties, the Conservative Government that developed it. When I worked on the Nelson River for Manitoba Hydro in the mid-60's, there was a Conservative Government in power. We were doing the prelimin ary surveys for the projects that this Minister has now just learned about during the past few years.

We knew about those things, and Conservative governments and politicians have had a great deal to do with setting the prioritie s and the future development interest of Manitoba Hydro and talked with utilities all over North America before this Minister even found out about hydro-electric energy. So we don't need to listen to his lectures. Mr. Chairman, what we do need to do is to have this Minister stop all of his posturing, all of his political philosophizing and get down to some answers.

We know about his morality, we know about how he deals in a public sense, as he wanted to talk to us, about playing politics, about these mega projects and major resource developments. We know what kinds of games he played during the 1981 election campaign where he preyed upon the fears and the concerns of the physically disabled in this province, where he brought the handicapped out and utilized them for crass political purposes to try and put across his sleazy philosophies, Mr. Chairman.

We know about his morals and his tactics and what he will stoop to in a political sense, so we need no lectures about playing politics. But if I can ever get this Minister down to some reality, Mr. Chairman, I would like him to get back on to the topic about which we are speaking, and I want an answer from him. The question that I want to ask him, Mr. Chairman, very simply is the same question I have now posed twice and he has refused to answer, and that is, would Alcoa come here if they had to pay 100 percent of the capital costs and own the smelter 100 percent themselves? HON. W. PARASIUK: Mr.

Chairman, I don't go around when we are negot iating, saying, will you come here if you pay 100 percent of the capital costs? 1 try and negotiate something that is best for Manitoba. That's what we are doing. This person across the way seems to want us to negotiate something that is best for the other side. We ll, they can negotiate their deals; we will negotiate our deals for the benefit of Manitoba. If they are saying that they have a difference in approach and we say we have our approach, that's fine, we are prepared to acknowledge what those differences are.

If people want to go on and debate that for a long time, fine, but there is a difference in approach. We have said that we believe it is in Manitoba's best interests to have a share in an aluminum smelter if the numbers show that is a business proposition and that's what the fea sibility study is doing. I am not going to try and go around negotiating away something which we think is very good for the long-term future of Manitoba. We don't go around saying we have power, you come In at whatever terms you want.

We come along saying we have power, we think there is a good comparative advantage and we think that there are these good possibilities, and let us look at them and see if they make sense. That's the approach that we are going to take with respect to our resources. The member has indicated that there are differences and that's fair enough. I believe that we will let the electorate judge between those differences. MR. G. FILMON: Mr. Chairman, I haven't indicated any differences. I am just trying to find out a simple fact.

The Minister has given us reams and reams of justification as to why he thinks it is a wonderful thing to invest in 50 percent of an aluminum smel ter. If it is such a good deal, why wouldn't Alcoa invest in the smelter totally themselves? HON. W. PARASIUK: They might. I never went to IMC and said, would you invest 100 percent in a potash 2087

Mond•r. 18 June, 1984 development if we somehow took away a conservative indication that they would invest 25 to 40 percent in a potash mine? People weren't raising those types of que stions. The previous government thought it made sense for them to have an investment In a potash mine in Manitoba. The interesting thing Is that there has been no potash development in the world apart from New Brunswick which is right beside ports. We are looking at the future and there will be some very interesting possibilities. We have a happy situation now of having two potential mine sites.

We do have the possibility of taking an interest in it and If they make economic sense . . . MR. G. FILMON: Try and stay with the Alcoa. HON. W. PAAASIUK: Well, no, I am talking about the question of public investment. The leader of the Conservative Party is conveniently forgetting what position what his own government took with respect to potash develop ment. The pQint about this Is that we believe that this does make eminent sense from a provincial perspective.

We are indeed proceeding on a course of action which we think will provide tremendous returns to the people of Manitoba over the next 15, 20, 25, 30 years. We believe that we are at an important time in our history and we believe that we can accomplish a number of these objectives in a way that will provide the greatest return to the people of Manitoba. That surely should be the objective of government and people In this Legislature; providing the greatest return to the people of Manitoba. A MEMBER: Which deal would Lougheed rather have, the one you negotiated or the one we negotiated with NSP? Te ll us that. MA.

G. FILMON: We will see when you get to the National Energy Board, my friend, which deal he would rather have had. When the facts come out on the table, Mr. Chairman, we'll see. Mr. Chairman, the interesting thing about the parallel that the Minister is trying to portray, is that he fails to recognize that in the case of the potash development the Crown owns mineral rights and the Crown already has a vested interest in the development of the potash. We own nothing in terms of the smelte r. We don't own the technology; we don't own the feed stock; we don't own anything with respect to the smelter. This, Mr.

Chairman, Is a commercial decision to make an investment in something of which we have no part at the moment. We have no part, Mr. Chairman, so there isn't a parallel situation. But if it is such a good deal, Mr. Chairman, why won't Alcan invest 100 percent them selves to develop it? Why do they have to have the Manitoba Government as a 50 percent partner in order to make the deal viable? HON. W. PAAASIUK: I think we had a Freudian slip on the part of the Leader of the Opposition. He said why won't Alcan invest 100 percent. MA. G. FILMON: Alcoa. HON. W.

PARASIUK: Alcan, of course, said they would invest 100 percent If in tact they had the real weal th, if they got a portion of a hydro dam because that is where the real wealth lies. They were quite shrewd; they were quite smart; they were dealing with a very weak government. Here we have a situation where anyone knows right now, everyone knows that the hydro is the famous key, that the hydro resource Is critical, that it's key, and everyone comes to us saying that they would like to own the hydro resource. They all say they want to own the hydro resource.

We say that we will keep the resource In Manitoba, when the leader of the Conservative Party was on record as saying that the only way in which we can have a development is to sell off a share of a hydro dam to an aluminum company. He has been proved totally wrong. We are saying that we can have a development if the numbers work out, if the feasibility study works out, whereby we can have retained ownership of something which will create wealth, literally for decades if not hundreds of years, all of that owned by people of Manitoba.

At the same time we can have a share in a smelter which may last for a 30, 40, 50 year period of time. We will pay for it up front without any obligation to buy it down the line at then market value which was the situation that the pre vious gover nment talked about. That was a secret agre.;ment that they did not table, that there was an agreement whereby the Manitoba Government would buy the aluminum smelter if they could not agree on the on water rental rates that they had, that Manitoba had to buy the smelter, would have to buy the dam, at what price?

If you look at the situation in Saskatchewan, what happened in Saskatchewan where Hudson Bay Mining and Smelting paid $10 million for a dam in the Province of Saskatchewan? Some years later they had to pay $68 million tor a plant that was paid off many times. That is a difference in approach, understood? What we say clearly on this side is that we do not have to sell off a hydro resource or a portion of hydro resource, in order to have economic development in Manitoba. We say that quite clearly, very clearly, and the other side said you have to. We've shown that isn't the case. We'll work out the num bers. Fine.

We have the opportunity over the cou rse of the next year determining whether those numbers are there. That's right. We have done that; we are doing that. In tact, the interesting thing is - (Interjection) - the Member for Turtle Mountain says, come clean. Did he table the secret agreement between Manitoba and Alcan on the return sale of power? No. Did he do that? No, he never. We 've provided an agreement, you'v e got an agreement. We said last week, you want to meet on Friday and Saturday, we'll meet on Friday and Saturday to go over it. We'll go over it this week.

We could have given you the first briefing; we weren't going to wrap up those committee meetings, and you kno·v that. A MEMBER: Give us the information. HON. W. PARASIUK: You've got a whole agreement in front of you. A MEMBER: We asked for information. HON. W PARASIUK: You'll be getting it. I've been sitting In the House right through. 2068

Monday, 18 June, 1984 A MEMBER: We're talking to you about Alcoa. HON. W. PARASIUK: We are talking. about development. There is a Letter of Unde rstanding that you have an agreement that you tabled and you tabled the agreement. A MEMBER: We tabled all sorts of things including HON. W. PARASIUK: Aha, aha. lt's one thing, it's like playing blackjack, they table the cards that are up but they don't table the cards that are down.

A down card was the fact that Manitoba had to buy back the whole smelter, had to buy the smelter from Alcan if they could not agree on price of water rentals in the future; that was never tabled, and their advisors argued against that position. That agreement was reached despite the advice of their technical people politically, and that was never tabled. Your own lawyers were negotiating something different, very differ ent. So if you want to talk about what's happening, we tabled the Letter of Understanding and we said that we would seek to try and reach an agreement by the fiscal year ending March 31, 1985.

If we do have someth ing, that'll be made public and shown to the public, all of it, no hidden caveats. A MEMBER: Too late . . . HON. W. PARASIUK: They say too late. Was it too late when they made an agreement to sell a dam, or a portion of a dam to Alcan, to buy it back at market value in 35 years?

When they made agreements regarding the We stern Grid, waved a piece of paper - not even waved a piece of paper - called a Press Conference during a campaign, spent $650,000 of taxpayers' money on advertising, tying this with ads paid for by the Progressive Conservative Party where the Premier would go on and say, well this ad is paid for by us, it's one of $600,000 worth but this one is paid for by us, and I will make this speech telling everyone how we're sitting on a gold mine, and all these wonderful things are happening? lt led people to go out - and they told me this in Balmoral - and subdivide land In anticipation because they were told it was a sure thing by government adve rtising, taxpayer­ paid advertising, before the event.

We have said that we will brin g forward these agreements; we will table them when they are done. People can look at them. People can assess them, they can analyze. This goes before the National Energy Board, they will have the opportunity there, and we will determine whether it makes sense. We believe it makes great sense for the people of Manitoba. We bel ieve it makes great sense to have jobs but at the same time to make a profit from our sale, and there's nothing wrong with that. That produces more wealth In Manitoba, for Manitoba.

Why should we tra nsfer wealth out of Manitob a to neighbouring provinces by selling something at cost, or lower? This former government, the Conservative Government, was prepared to do that for 25 years. They said clearly that they cannot make a profit for 25 years, and after 25 years if there was any benefit that happened way before that, they could only claim a cert ain amount. Compare that to a projected $1. 7 billion over 12 years compared to zero or possibly less over 25 years with respect to a sale of much more electricity. Were we going to get oil and natural gas cheaper from Alberta?

Were we going to get it at cost from Alberta or Saskatchewan? No. The people of Manitoba were going to pay the going price which wasn't related to cost and isn't related to cost for hydrocarbons while we were going to sell our birthright at cost, or possibly · lower, for a guaranteed period of 25 years. That is the difference. Was that tabled so that everyone could come clean on that dur ing an election campaign? No. But a lot of money was spent on advertising; a lot of public money was spent on advertising.

The interesting thing is that the people who were doing the adverti sing were flying in from Toronto because they were also writing speeches for the then Premier of the Conservative Party. The advertising was supposed to be for ind ustrial benefits. Bringing in people - (Interjec tion) - the fellow was named Scott? Paid a pretty penny for that. A MEMBER: Ron Scott? HON. W. PARASIUK: No relat ion at all. Used to work in the Premier's office before that. So when we want to talk about laying the cards on the table, ours are there for the public to look at, for the National Energy Board to look at.

We will defend ourselves and take it forward before the National Energy Board. it's going to be Interesting to see the position of the Conservative Party. Are they going to be trying to negotiate for other parties? Do they want to say we should know, we should sell this at cost to Alberta when we have the option of making $1.7 billion over a shorter period of time with less hydro? Is that what they're going to do?

Is that the position that they are staking out, that they want to defend Manitoba, In a sense, subsidizing great possibilities when we have an opportunity of making a very good return for the people of Manitoba for development? it's an Interesting position that they have to deal with. We are pleased that we are able to accomplish profit and jobs. We 're saying that when we are accused of not providing information, I say that I reject that completely and totally. I say that we have provided far more Information than the Conservatives did and also lt deals with reality.

You see, the interesting thing about that is they say that one should negotiate these things. When we were looking at ways in which we might see whether the lntertie Agreement could actually be brought to fruition, we said at that time that these are negotiations and we will make them public afterw ards, and they said that's right, that makes sense. it's exactly what they said. The stories turn that we have a $1. 7 billion possibility. it's there and they're laughing at it. They didn't even want it. We 'll be able to indicate why they didn't pursue anything with WAPA or Wisconsin or Minnesota. Why didn't they?

They didn't do it because they put all of their eggs In this Western Grid basket, even though they had the opportunity of pursuing these negotiations with parties 2069

Monday, 18 June, 1984 to the south of us. They turned their backs totally on these potential sales, and that can be documented, turned their backs on them and said no, no, we don't want to consider other options because all of our eggs are in the We stern lntertie basket. Now, from a Manitoba perspective, that is gross negligenc e. You cut off your options, you put all of your eggs into a basket and ultimately they did not produce.

We have considered all the options and we are pursuing all the options because we believe it's in the best interests of Manitoba to canvass all the options to ensure that they'r e pursued and to get the best deal for Manitoba. If that is something that the Conservatives condemn us for, for pursuing all these options, for working very diligently over the last two years to accomplish them, fine, they might condemn us but we on this side are very pleased that we've pursued those options. We've been able to achieve results and we will achieve more results in the future. MR. G. FILMON: Mr.

Chairman, it's obvious that the Minister has a great deal to cover up because he has proceeded for the last 20 minut es to set up all sorts of straw men here, to enter into discussions and conversa tions well into the broad gamut and range of all sorts of activities that he obviously has been working on over the past while. There were no questions from my side on anything other than the Alcoa; that's all we got int o. Mr. Chairman, all we got into was a discussion in an endeavour to bring out some facts with respect to the Alcoa arrangement; that's all I've been attempting to do.

The Minister is obviously very sensitive. He talks in terms of information that hasn't been - (Interject ion) - Mr. Chairman, we're trying to talk about Alcoa. I know that the Minister doesn 't want to talk about it and his colleagues prefer to go off on all sorts of tangents and want to encourage him on . MR. CHAIRMAN: Order please. Mr. Minister. HON. W. PARASIUK: I have been just accused by the Leader of the Conservative Party that I didn't want to talk about Alcoa, then when I talked about it for a period of time, I was accused of filibustering. Surely, he can't have it both ways in terms of accuracy, Mr.

Chairman. MR. G. FILMON: Mr. Chairman, was that a point of order? MR. CHAIRMAN: That was not a point of order. MR. G. FILMON: Thank you, Mr. Chairman. As usual, the Minister doesn't know what he's talking about and he persists in setting up all sorts of straw men and attempting to - (Interject ion) - in deference for the Member for Wolseley , straw people. He refuses to address the topic at hand; he avoids all of the issues.

He talks about not wanting to share Information, not wanting to give out information that the former government didn't do it, yet he has never tabled the Chase Econometrics Report, the report that was produced and paid for by the taxpayers of Manitoba that said that his whole thesis about owners hip or not of a hydro-electric generating station was a red herring. it makes no differ ence, Mr. Chairman. The fact of the matter is that the same benefits have to be conferred regardless of whether ownership is part of the deal or a long-term agreement is part of the deal, the same benefits have to be conferred.

In fact, in this case, I suggest to you that greater benefits will be conferred - (Interjection) - if Alcoa doesn't own the plant they still may indeed get more benefits conferred by this process. Mr. Chairman, we're interested in what the Minister is going to be doing with Alcoa. I ask him, does he not believe that he's in a conflict of interest position being a 50 percen t owner of the plant and also being the owner of the hydro-electric resource?

That resource that is the single most important factor in the viability of an aluminum smelter, how can he negotiate with himself over the price of hydro when he's a 50 percent owner? MR. CHAIRMAN: Mr. Premier. HON. H. PAWLEY: Mr.

Chairman, I want to be fair to the leader of the Opposition and I'm not certain whether the leader of the Opposition would like to correct me early into my remarks or not because I think I heard the Leader of the Opposition indicate a few moments ago in the Chamber that we too had spoken to the Utilities in the United States while we were in government and had instead gone the route that we had gone - or words to that effect. The Leader of the Opposition isn't attempting to correct me ... MR. CHAIRMAN: The Leader of the Opposition on a point of order. MR. G. ALMON: Mr.

Chairman, if I may ask the Premier a question because I don't understand his point when he speaks about "we." Now, who is the "we" in the sentence? HON. H. PAWLEY: Wel l, Mr. Chairman, the term "we" was used by the leader of the Opposition.

The Leader of the Opposition proclaimed in this Chamber a few moments ago that "we" - ref erence to the Leader of the Opposition when he was a member of the Treasury Bench - and his colleagues have also had discussions while they were in government with the utility companies in the United States that we/they had as much opportunity to have finalized a transaction as indeed this government had. MR. G. FILMON: We ll, Mr.

Chairman, I don't believe that 1 put those statements on the record, but I'd be glad to put it on the record because I attended at Columbus, Nebraska on behalf of the then Minister of Energy and Mine s to sign a Letter of Intent on behalf of Manitoba with respect to the MANDAN, which was with the utility in Nebr,aska, for instance. So that's an American utilit y. I can also indicate that there's no question that there were discussions throughout our term of office with utility operators and government officials in Minnesota, 2070

llondaJ, 18 June, 1114 in Wisconsin, in various other American jurisdictions, with respect to power sales. HON. H. PAWLEY: That's precisely the information that I wanted the leader of the Opposition to clear. I think it's important this evening, in fact, so that Manitobans will know precisely what the position of this opposition leader and this opposition party is in respect to the sale of energy .

Are we to believe by way of the admissions that were made just now and also a few moments earli er, that that party while in government had the opportunity to finalize agreements, could have negotiated, were aware and had discussions with Minnesota utility companies, had discussions with Wisconsin utility companies such as Northern States Power, and either due to their inability to negotiate or because of negligence on their part, which would be of the grossest form, that they would have turned their backs on a pote ntial $1. 7 billion transaction and, instead for some reason or other, after announcing in three Throne Speeches, 1979, 1980, 1981, then entering into a prel iminary agreement during the provincial election campaign of November, 1981 with Alberta and Saskatchewan in principle, not finalized, by way of the Ministers that would have been only a cost to the Province of Manitoba with no benefit by way of profit to the Province of Manitoba, is the Leader of the Opposition then tonight acknowledging because if he is then, Mr.

Chairman, I would like to debate that issue and debate it ext ensively? That group when they were in government, performed the colossal blunder of the centu ry, turned their back on a $1. 7 billion profit for the benefit of Manitobans, or fell short by way of negotiations with utilities to the south of the United States, to enter into a transaction which was, at the best, only a cost to Manitobans; at worst, a loss to Manitobans? Mr.

Chairman, if there ever was a clear indication of the approach of that group who claim to be competent busine ss managers; to be protectors of the public interest; to be the stewards of the natural resources of the Province of Manitoba; to be interested in ensuring maximum re turn to Manitobans, Mr.

Chairman, if there ever was an example of a colossal blunder, of the extremest form of negligence, it is the admissions by the Leader of the Opposition and probably previously by the Member for Arthur, and I believe I've heard earlier comments in earlier discussions that they too could have worked out an agreement with the utility companies in the United States. Mr. Chairman, what we are talking about - and the Leader of the Opposition can say, what is $1 .7 billion? Mr.

Chairman, what it is, is $1. 7 billion poured down the drain and in its place an agreement that had been entered into after proclaiming it during three Throne Speeches, at the very very best , a simple cost retu rn; at the very worst, a loss to the Province of Manitoba. Mr. Chairman, this is an unbelievable admission on the part of the leader of the Opposition in respect to the ste wardship on the part of the previous government in the Province of Manitoba. Mr.

Chairman, with that kind of admission, where in the world could we ever trust that group across the way to manage the affairs of the Province of Manitoba in a way that would benefit Manltobans? What would be the reason that the former government of this province would have turned their backs on a $1. 7 billion profit? Would it be sheer partisanship? Would it be out of kindness and affect ion for Premier lougheed in the Province of Alberta? Mr. Chairman, I think there are questions that need to be answered now. When honourable members want to suggest that there's some sort of giveaway, Mr.

Chairman, on the part of this government, I think the finger now points directly back where it belongs and that Is on honourable members' parts across the way when they had the · opportunity, when apparently they could have completed the negotiations that could have led to the finalization of a contract such as that which was finalized by the Minister of Energy and Resources, that would have re sulted in substantial profit and benefit for the people of the Province of Manitoba, they decided to turn their backs and instead follow the path of least resistance to enter into an agreement with the Alberta Government that would not have resulted . . .

I challenge the Leader of the Opposition to tell me whether there would have been profits to Manitoba from the Al berta deal. I challenge the Leader of the Opposition to rise In his place and say he still would have preferred the Inter-tie transaction to the agreement that was finalized by the Minister of Energy . I think we want to know, Mr. Chairman, where the Leader of the Opposition stands in respect to this matter. Is he prepared to take a stand this evening or would he prefer to sit on the fence, and not indicate where he would stand?

Or would he prefer that deal that was proclaimed about and talked at great length? lt was suggested we had blown a deal that would not have returned a profit or a benefit to the people of Manitoba. MR. G. FILMON: Mr. Chairman, we'll find out just how good the deal is for Manitobans when the questions are answered that need to be answered. We're talking about the Northern States Power transaction. We'll find out whether or not $1. 7 billion is profit or" poppycock. We 'll find out whether or not there is any benefit to the people of Manitoba or whether this is a giveaway.

With all of his preening and puffer y, we'll find out whether the Premier knows what he's talking about, or whether this deal is just as good a deal as was Saunders Aircraft, as are all of the other investments that this government has made and that the NDP have made for the people of this province that have sold them into debt. We 'll find out, Mr. Chairman. it's obvious that we've hit a soft spot. it's obvious that the Minister and the Premier want to cover up something in the Alcoa arrangement. Ali i' m attempting to do is find out a few simple answers.

Maybe the questions are too simple for the Minister of Energy and Mines to deal with, but I'd like to bring him back to the topic of Alcoa; I'd like to bring him back to the topic of Alcoa arrangement and I'd like to ask him how he believes that he can act on both sides of the fence in negotiating a price for energy for Alcoa, for the smelter , when he's a 50 percent owner. Is there not going to be a case whereby, in order to justify the investment of $350 million in a smelter, in order to justify that risk and that inves tment, he is going to give the aluminum smelter such a good deal that it proves 2071

Monchlr, 18 June, 1184 that the investment was a good investment ? At the same time, it doesn't maximize the return to the people of Manitoba on the natural resource of Hydro. HON. W PARASIUK: I am extremely delighted to be able to answer that question. We have said, and I said that when I made the announcement with respect to Alcoa, and I think you should go back and look through the material on this. I did indicate that the principle of the negotiations on the power contract and over the life of the contract, Manitoba Hydro would recover all of the costs.

Isn't that what The Manitoba Hydro Act says, that they will provide power to people in Manitoba at the most economical cost, the assumption being that we can recover the costs? That's the way we provide power to Hudson Bay Mining and Smelting; that's the way in which we provide power to Sherrltt Gordon or Interprovincial Pipeli nes or anyone else - even the member of the opposition. That's the way we provide power to his home. So there is no conflict if we are going to say that we will recover all those costs. That's an interesting contrast when he said, isn't there a conflict?

When they have to change The Manitoba Hydro Act because they would have had to do that to sell off a portion of a dam, change the law, change the act, sell our heritage. That's what they were doing. That's the position they took and they said, there's no conflict there. Is there a conflict when I come Into office and I go through a lot of other files - didn't have too many - and find the draft Order-in-Council giving lnco the right to build a power dam on the Burntwood River? All the cards on the table Conservatives, up their sleeves, down their boots. Did you know about that? Was that brought to Cabinet?

Was the We stern Grid Agreement brought to Cabinet? Was your turning your back concerning utilities in the United States brought to Cabinet? I'll go through the files and I'll bring out the letters. A MEMBER: Why don't you spend your time negotiating? HON. W PARASIUK: That's exactly what we're trying to do, exactly what we're trying to do, negotiate. HON. H. PAWLEY: Why did you turn you go back on a $1. 7 billion opportunity? HON. W. PARASIUK: Mr. Chairman, last year in my Estimates, they said that they were disappointed that 1 had not achieved successful negotiations. You'll be bringing it forward this year.

We provide the invitation. We provide $1.7 billion. We come forward ... MR. CHAIRMAN: Order please, order please. HON. W. PARASIUK: . . . with options and we are deve loping, through hard work in the United States, with respect to other utilities which put us in a very good bargaining position with those other utilities, put Manitoba into a very good bargaining position into the long-term future. That is what we accomplished and the Member for Turtle Mountain says, why don't you get about negotiat ing? Do you want more negotiations brought forward? I'll bring you some more; I'll bring you some more.

I say clearly the well is not dry yet because we have worked a lot harder than they did. We didn't turn our backs on the obvious. We've gone out, we've worked and we've produced and we believe we produced for the benefit of Manitobans. Let the people judge. We know and they get the fa cts, the entire agreement tabled; no hidden agendas. No secret deals like they had. Very clear , very clear on the table. We do not sell a power dam to lnco, we don't sell a power dam to Alcan, we don't have to, to have develo pment. You say you have to sel l the dams; we say we don't. There's the difference.

If you are so lacking in confidence in the future of Manitoba that you believe you have to give ever ything away at final sale prices to get development, fine, take that position forward, but there is a difference. We said we didn't have to do that and we have proved we don't have to do that. Who is doing the complaining now? They are, Mr. Chairman. They don't have a development position that's rational. They do want to basically cave in because they never think through their position, they never think through, they never do their homework, they never check out the options. There is a big differ ence.

They want to refer back to the past? What's the last big agreement In this province? The last big agreement was the CFI agreem ent. Do you want to look back at the past and to the agreement? The then Attorney­ General said I don't reme mber signing it. He became the Conservative Premier of this province. Do they remem ber looking at the other ones? Do they remember looking at what they did? A MEMBER: There was an election campaign. They were kind of busy. HON. W.

PARASIUK: We have the Member for Rhineland getting up and making the comment the other day when someone asked something about a We stern Grid, saying, oh, that was hypothetical, that's hypothetical. We all heard that he said it was hypothetical. They want to cast a lot of stones In all directions and they have been casting those stones in all directions but the stones are not hitting any mark. The stones are bouncing back and pointing out that the Conservatives live in a pretty big glass house and we have the proof.

The proof of the pudding is the agreement we have compared to what existed with the Grid negotiation. The proof of the pudding is that we have discovered more options for the people of Manitoba at better rates, at •·etter prices. We are still open to discussing power saies with Saskatchewan and Alberta but our bargaining position has improved tremendously.

We won't turn our back on other options because we believe that the first and foremost res ponsibil ity of a government in Manitoba is not to be in cahoots with Peter Lougheed or anyone else; but the best possible deal for Manitoba, that's the position we· take. We have said that we are prepared and we are willing to try and promote a grid In fair terms to all parties but they have to be fair terms to all parties. When we 2072

Monday , 18 June, 1984 come forward with a $1.7 billion profit that also has job creation as compared to zero , instead of having the opposition get up and say congratulations, Isn't this marvelous, we have these other options, we have wealth coming into Manitoba that will do good for Manitoba into the future, do they say that at all? No, they try and rain a lot of negativism all over this whole thing. But let me tell him that we have in fact already been talking with the busine ss community and with the working commun ity in this province, and they are very pleased.

They find your position ludic rous; totally ludicrous. A MEMBER: That's to put it mild ly. HON. W. PARASIUK: Let us go forward. In fact, I will invite the member of the opposition to come forward with me to some of these meetings and I want him to sit down with these people and say that he doesn't want this to take place, he is against it. Let us come clear on this. What's his position? A MEMBER: Where does he stand? HON. W. PARASIUK: They have come out against these developments. They don't want us to make a re turn. They want us to sell things at cost.

They want us to take the position of possibly taking a loss. We say that it's possible to negotiate better deals. We say that it's possible to negotiate deals on Manitoba's terms, keeping the resources Manitoba owned, keeping the wealth circulating in Manitoba, and we believe that's a very good position to take forward to the public. We do have two years to take this forward. We do have two years to develop it. We do have two years for people to be participating in this, and not as an election gimmick. Have we brought in a whole bunch of advertising?

We will talk to people at the right time because it's important that they be Involved. I want people to have the fullest opportunity to get training, to work, to have the best advantage in terms of sourcing materials here. I want the Manitoba busine ssmen to benefit. The Minister of Finance wants that to happen. The Premier has instructed that I ensure that takes place and we are all going to work on that collectively, co­ operatively, over the course of the next few months to ensure that it takes place. And where will the Conservative Party be on this issue? On the negative side, on the down side against it.

They are the knockers; we are the doers. MR. CHAIRMAN: The Member for Rhineland. MR. A. BROWN: Thank you, Mr. Chairman. I have been listening with a great deal of interest to the debate that has been going on. If only that government could have been as enthusia stic about development of electricity in this province when we were government as what they seem to be at the present time. A MEMBER: Right. They forget so quickl y. MR. A.

BROWN: There is no doubt in my mind that they will be able to make this current deal with Alcoa that they are presently involved with because that is the sweetheart deal of all sweet heart deals and there is no doubt about that, that deal with Alcoa. HON. H. PAWLEY: What about the $1. 7 billion giveaway? Le t's talk about that. MR. A. BROWN: Mr. Chairman, if the Premier is just going to listen for a while. Just listen for a while, Mr. Premier. A MEMBER: How come you're in love with mult inationals, Howard? How come you fell in love with multinationals? MR. A. BROWN: You are allowing a company . . .

A MEMBER: lt's not their money, that's the problem. A MEMBER: lt's your money, the taxpayers' mone y. MR. CHAIRMAN: Order please, order please. The Member for Rhineland. MR. A. BROWN: Mr. Chairman, they are allowing an aluminum company to come into Manitoba that will be able to play with entirely different rules than any other aluminum company anywhere in North America or the world.

They are going to let this company come in here with very little investment of their own money. lt's Manitobans that will be paying for the investment as far as getting electric ity, getting transmission lines out wherever they are going to establish. it's going to be Manitobans that are going to be pay ing for it. lt's going to be Manltobans - (Interjection) - We are talking about Alcoa. You will be building new transmission lines very very shortly, my friend, if you are going to go ahead with some of these views that you are talking about because we only have one and we would need another one.

A MEMBER: For Conawapa, yes, but not for Northern States Power. MR. A. BROWN: Okay, but if you are going to go ahead with Northern States Power, with Alcoa, with all the SOME HONOURABLE MEMBERS: Oh, oh! A MEMBER: Oh shut up, Howard, and listen. You'll learn something. Just listen and you'll learn somet hing. MR. CHAIRMAN: Order please. MR. A.

BROWN: Manitobans will be asked to invest at least $1 billion before we are going to see this plant in operation in Manitoba, there is no doubt about that, along with the $350 million which they will be investing in the construction of the plant and that's at a minimum of $1 billion. There is probably going to be a lot more that will be Invested , I don't know the figure, the Minister should know that figure, but we know that it is going to be one huge investment . 2073

MondaJ, 18 June, 1184 Now what is going to happen? The price of aluminum has always fluctuated and it always will. Now this is going to be the place in which Alcoa is going to have the least amount of money invested in a plant. Which plant are they going to shut down if the price of aluminum goes down and there is an overproduction in the world? lt's going to be this plant because they have very little investment in this plant. lt's going to be this plant that will be shut down. Where is that going to leave you at? A MEMBER: Wel l, did you ask about Alcan the same way? A MEMBER: They had their own money.

They had their own money. MA. A. BROWN: They were going to pay for a plant themselves. They were going to have the investment, my friend, they were going to have the investment. They wouldn't dare shut it down, at least not sooner than any other plant. But what is going to happen, Mr. Chairman, is that this is going to be the first plant that they will close because this is where they' ll have the least investment. Now, Mr.

Chairman, where's that going to leave Manitobans? lt's going to leave us, first of all, with a huge investment in . . .. lt's going to leave us with a huge surplus of power, and we'll be paid interest on the money that we have borrowed In order to put that power into place. Yet we will not be able to sell elec tricity to this plant because it's shut down. This could be for a long period of time, because $350 million for Alcoa to come into Manitoba, is a drop in the bucket. They won't think twice about closing this plant rather than closing any of the other plants that they'll have. So, Mr.

Chairman, what is going to happen when we see these things, when we see them shutting down the plant? Before they will shut down the plant they'll be coming up and saying, okay, we cannot continue to operate. They will want a better deal on the electrici ty. You will not dare say no because you cannot afford to say no when they come in for a better deal for electricity bec ause you have too much money invested in it. You will not dare say no when they come and ask for a lower rate for the price of electricity. Mr.

Chairman, these people are going to hold you up for ransom forever and a day as long as you're going to be involved with them because you are sett ing yourselves up for that type of a situation. There is no way that Alcoa will not take advantage of it, any corporate company would, especial