Manitoba Hansard — 9 January 1990 (Sitting 99, 34th Legislature, 2nd Session)

34-2-99

Manitoba — Debates (Hansard)

LEGIS LATIVE ASSEMBLY OF MANITOBA Tuesday, January 9, 1990. The House met at 1:30 p.m. PRAYERS ROUTINE PROC EEDINGS TABLING OF REP ORTS Hon. James Downey (Minister of Northern and Native Affa irs): Mr. Sp ea ker , I ris e to table an historic agre ement which was sig ned toda y between my colleague, myself, Chief Oscar Lathlin of The Pas Indian Band. I want to table that agreement as it relates to gaming on The Pas Indian Band. * (13 35) � Hon. Gerrie Hammond (Minister of Labour): Mr. J Speaker , I would like to table the investigation report of the ex plosion and fire at Solvit Resou rces Incorpor ated.

PRESENTING REP ORTS BY STANDING AND SPECIAL COMMI TTEES Mr. Speaker: Would there be leave to revert back to Pres enting Reports by Sta nding and Sp ecial Committees? Leave granted. Mr. Parker Burrell (Acting Chairman of Comm ittees): Mr. Speaker, the Committee of Supply has adopted certain resolutions, directs me to report the same and asks leave to sit again. MOTION presented and carried. INTRODUCTION OF GUES TS Mr.

Speaker: Prior to Oral Questions, may I direct the attention of Honour able Members to the Speaker's Gallery where we have with us today Chief Oscar Lathlin of The Pas Band and Councillor Jerry Hende rson. On behalf of all Honourable Members, I welcome you here this afternoon. ORAL QUESTION PERIOD Health Sciences Centre Emergency Facility Upgrading Mrs. Sharon Carstairs (Leader of the Opposition): Mr. Speak er, on November 23 and 24, we brought to this Government's attention the inadequate conditions of the Health Sciences Centre relating to safety as well as comfort.

We were particularly concerned about the transfer of patients from the emergency rooms to surgery, which required a circuitous route through the corridors and also a trip of seven floors on an elevator. Mr. Speaker, can the First Minister (Mr . Filmon) tell the House if this Government has changed their minds 413 3 with regard to upgrading these facilities, or are they still prepared to wait 15 to 20 years as enunciated by their Minister of Health (Mr. Orchard)? Hon. Gary Filmon (Premier): Mr. Speaker , I will take that question as notice on behalf of the Minister of Hea lth. Some Honourable Mem bers: Oh, oh! Mr.

Speaker: Order, please. Mrs. Carstairs: Mr. Speaker , this Minister had warning that conditions were inadequate. On December 30 at 2 p.m., a patient died while being transferred from emergency to su rgery because while in the elevator the elevator was stuck. Twenty minutes it took to get this patient out, and by that point it was too late. Can the Premier of the province now put on the record his Government's commitment to the upgrading of emergency facilities at the Health Sciences Centre? Mr. Filmon: Mr.

Speak er, I will take that question as notice on behalf of the Minister of Health- Some Honourable Memb ers: Oh, oh! Mr. Speaker: Order, please. Order. Health Care Premier's Intervention Mrs. Sharon Carstairs (Leader of the Opposition): Mr. Speak er, the Premier of this province sat in the House while it was outlined what these emergency difficulties were at the Health Sciences Centre. Can the Premier (Mr. Filmon) tell us what he did to ensure that his Minister of Health (Mr. Orchard) was adeq uately looking after the health need s of Manitobans? Hon. Gary Filmon (Premier): Mr.

Speaker , I would like to remind the Leader of the Opposition that this Govern ment, in two successive budgets, has provided increases to health that were double the rate of inflation, has brought in, in this most recent budget and set of Estimates, a program of capital construction that is one of the highest in the history of this province. I might say that the Leader of the Opposition (M rs.

Carstairs) voted against those increases to health, voted against giving them increases of double the rate of inflation, voted against the most ambitious Capital Program to expand hospitals and health care facilities in this pr ovince. So she need not lectur e this Government on what we are doing on health care. * (13 40)

Tuesday, January 9, 1990 Health Sciences Ce ntre Emerge ncy Facility Upgrading Mrs. Sharon Carstairs (Leader of the Opposition): Mr. Speaker , 60, 000 patients per year are treated at emergency at the Health Sciences Centre. That is why it has been rais ed contin uously for the need of upgrading. Can the Health Minister (Mr . Orchard) inform the House as to whether he has reviewed this and has now made the commitment that is so essential to the upgrading of these facilities? Hon. Donald Orchard (Minis ter of Health): Mr .

Speaker , I presume my honourable friend, the Liberal Lead er, is ref erring to the 15 -year-old temporary emergency services ATCO trailer at the Health Sciences Centre. I might say, 15 years old. We have been Government for a little over a year and a half. I indicated to my honourable friend, and she is wont to forget, that there were plans ready for the reconstruction of the emergency services at the Health Sciences Centre when I tabled the capital budget this year. It would have been added to the $40-million plus reconstruction long awaited that this Government has committed to the Health Sciences Centre.

Health Sciences Cent re Elevator Inspection Mrs. Sharon Carstairs (Leader of the Opposition): A question to the Minister of Labour . Can the Minister of Labour (Mr s. Hammond) explain why the Health Sciences Centre elevator has not been inspected since April of 19 87? Some Honourable Memb ers: Oh, oh! Hon. Gerrie Hammo nd (Minis ter of Labour responsible for Workplace Safety and Health): I did not hear the question, I wonder if the Leader of the Opposition could repe at the question. Mrs. Carstairs: Yes, Mr. Speak er, I will repeat the question.

Will the Minister of Labour tell this House why the elevators at the Health Sciences Centre, which are over 20 yea rs old, have not been inspected since April of 19 87? Mrs. Hammond: I will take that question as notice. Mrs. Carstairs: Come on. Mr. Speaker, can the Minister of Labour -(interjection)- Mr. Speaker: Order, please; order, please. Health Care Facilities Elevator Regulat ions Mrs.

Sharon Carstairs (Leader of the Oppositi on): The question to the Minister of Labour is this: can the Minister of Labour tell this House why the regulations for .elevator inspections for hospitals, personal care homes and other life and death threatening situations are no tougher than a three-storey warehouse? Hon. Gerrie Hammo nd (Mi nister of Labour responsible for Workplace Safety and Health): People are people wherever they are. We inspect all elevators the same. Sur ely someone in a warehouse, his life is not any more at risk than anywhere else. People inspect and make sure -(interjection)- * (13 45) Mr.

Speaker: Order , please; order, please. We are experiencing some difficulty with our Hansard services, so I would ask the co-operat ion of all Honour able Mem bers. The Honour able Leader has posed a question and she is having great difficulty in hearing the answer. The Honourable Minister of Labour. Mrs. Hammond: Mr. Speaker , I think the Members op posite want to make light of the elevators - (interjection)- 4 Mr. Speaker: Order , please. ***** Mr. Speaker: The Honourable Leader of the Opposition, on a point of order. Mrs. Carstairs: The Minister is imputing motives.

There is no way that we are making light of a death on an ele vator because of inadeq uate inspection by the Department of Labour. Mr. Speaker: Order , please. The Honour able Leader does not have a point of order, it is a dispute over the facts. An Honourable Mem ber: Mr. Speaker , on a point of order. Mr. Speaker: On a new point of order? The Honourable � the First Minister (Mr . Filmon), on a new point of order. � Hon.

Gary Filmon (Premier): If the Leader of the Opposition is concerned about comments being made by the Minister of Labour , then she ought to keep her caucus under control so the y wi ll not be so - (interjection)- Mr. Speaker: Order, please; order, please. I should point out to Honourable Members that a point of order should be raised to bring to the attention of the Chair and the House, br eaches of the Rules or departu res from the normal procedures of the House. I would ask for co-operation from Members. The Honoura ble Member for Thompson, on a new point of order. Mr.

Steve Ashton (Second Opposition House Leader): Mr. Speaker, we seem to have technical difficulties here. We are having difficulties in not only making out 413 4

Tuesday, January 9, 1990 questions but also with Ha nsard. You know, on the points of order there is a great deal of difficulty. I am wondering if you can get some indications when the technical prob lem can be resolved. If we require a five-minute recess -(inaudible )-if the situation were from this side of the House we cannot even tell you who the answer is from.-(interject ion)-Well, whether they were answers or not we cannot make out any of the comments from the Minister of Labour. So can we have some direction, Mr. Speaker , on it? Mr. Speaker: I would like to thank the Honourable Member for Thompson.

I am informed that only the interjects and the Speak er's mike are operating at the moment. Apparently , we have had a power jolt and we would have to shut down operations for 90 seconds. Is that agreed ? Agreed . We will recess for two minutes. RECESS Mr. Speaker: believe Ha nsard has repai red the technical problems. The Honour able Member for Concordia. Mr. Gary Doer (Leader of the Second Opposition): Thank you , Mr. Speak er- An Honourable Member: It do es not work. Mr. Speaker: It does not work? Order, please. The Honour able Minister of Labour , to respond. * (1 350) Hon.

Gerrie Hammond (Min ister of Labour responsible for Workplace Safety and Health): Mr. Sp eak er , I wou ld lik e to ind icate to the Li beral Opposition Leader (Mr s. Carstairs) that no matter what, a life is a life; but we will make sure that those elevators are inspected. Solvit Resources Inc. Public Inquiry Mr. Gary Doer (Leader of the Second Opposition): My question is to the Minister of Labour and falls upon the long-awaited tabling of the report in this Legislature. The report, and I quote, of the extensive damage caused by the fire and explosion has made it impossible to confirm a specific cause.

We go through the br ief report and we find no causes attribut ed to the fire and explosion.

Time and again since June, prior to the fire, after the explosion and subsequent to the explosion, we have called upon the Government and the Minister to have an independent public inquiry under 39(1) of The Dangerous Goods Handling and Transportation Act so the public could have the right to know what some of the circumstances were leading to the explosion, and what we can learn in dealing with dangerous goods and potentially dangerous goods, as citizens, through 413 5 the process of a public open cross-examination type of inquiry.

Is the Minister now going to give us the commitment to have a public inquiry so there can be proper cross exam ina tion and we can go from the Fir e Commissioner's Report and learn from this terri ble explosion that could have had tragic consequences for Winnipeggers? Hon. Gerrie Hammond (Min ister of Labour responsible for Workplace Safety and Health): Mr. Speaker , in light of the investigation where they were not able to find a cause, the Fire Commissioner's Office did a very thorough investigation, and they compared it to the only existing operation that was the same as the Solvit opera tion.

In light of that, we are referring the report to the Advisory Council on Workpla ce Safety and Health where it is a tripartite council. They may call in independent people if they have any questions and review the report. They are certainly free to do that, and we welcome any recommendations that they will bring forward . Mr. Doer: I am very disappointed that the public does not have the right to go from the Fire Commissioner's Report and be involved in a public inquiry so we can learn from this major explosion and learn wha t lessons the public can inject into this process for the future.

Fire Commissioner Report Mr. Gary Doer (Leader of the Second Opposition): My question is to the Minister of Labour . She has just stated that it was a very thorough process. Did the Fire Commissioner have access to the De partment of Envi ronment's files? Was the Fir e Commissioner appris ed of the fact that 15 7, 000 litres of solvent material were deposited on the Solvit site in the three months prior to the exp losion, which was literally three times more than the volume prior to the explosion?

Did the Fire Commissioner have that material and if he did, or the Report Committee had that, why is it not referenced in the terms of the capacity issues in this Fire Commissioner's Report? Hon. Ger rie Ham mond (Minis ter of Labour responsible for Workplace Safety and Health): Mr. Speaker, the Fire Commissioner had all the information that they ·could receive. They were in touch with the Environment as well as other agencies. Mr. Doer: My question again is to the Minister of Labour (Mr s. Hammond).

Is the Government satisfied that the vol ume of material tha t was sent into the Solvit explosion site, the 15 7, 000 litres of dangerous or potentially dangerous material that eventually blew up in the skies of Winnipeg, that the volume of material that was three times more than the previous three months, was adeq ua te and safe for purp oses of Manitoba citizens and the citizens of Winnipeg adjacent to that site? * (1 355) Mrs. Ham mond: Mr. Speaker , if that information is not in the report, I do not know where the Member is getting

Tuesday, January 9, 1990 it. So I would question the volume that he is referring to, but I will certainly go back to the Fire Commissioner and ask him if there is any truth to the allegation that the Member for Concordia is making. Storage capacity Statistics Mr. Gary Doer (Leader of the Second Opposition): The volume deposited, the number of litres received by Solvit in May or April was 54,000 litres; in April it was 70 ,000; and in June it was 32,0 00 prior to the explosion-3 2, 000 litres, Mr. Speaker .

I would ask the Minister to confirm those numbers, and was that any problem for the safety and capacity of the plant that did blow up eventually? Workplace Safety and Health Regulation Amendments Mr. Gary Doer (Leader of the Second Op position): Second, Mr. Speaker , we have called time and time again for the Government to rescind their changes that were opposed by the tripartite committee on cancer causing goods in the workpla ce. Why has the Minister taken so long to return back to the old standards of cancer-causing goods? She is now saying she is waiting for the tripartite report.

When she did not have agreement from the tripartite report, the Government and the Cabi net went ahead and put at risk all cancer-causing goods and label ling goods in this province. Hon . Gerrie Hammond (Mi nister of Labour responsible for Workplace Safety and Health): Mr. Speaker , the recommendations that have come out of the report certainly will be followed. We will be bringing in regulations to deal with the health hazard regulation. That will be coming as soon as we hear from Workpla ce Safety and Health on the labelling. Health Care Facilities Elevator Inspections Mrs.

Sharon Carstairs (Leader of the Opposition): Mr. Speaker , regulations introduced by the Department of Labour under the previous administration in 19 87 weakened the need for compulsory inspections because new ele vators, the y said, did not re quir e ann ual inspections. However, the regulations clearly stated that more frequent inspections should take place if age, maintenance or circumstances ordered by the Minister as relevant were determined that they should take place more frequently.

Can the Minister of Labou r tell this House why she does not consider the annual inspections of hospital elevators to be a relevant circumstance to make that order? Hon. Gerrie Ham mond (Mi nister of Labour responsible for Workplace Safety and Health): Mr. Speaker , at this time, that has not been an issue to have a yea rly inspection. The Health Sciences Centre, I understand, has their own maintenance staff right at the Health Sciences Centre who look after it, and if there are any problems they ask the mechanical and engineering to come in to inspect.

At this time we have not had that type of reference and are in contact with the hospitals, but I certainly will ask our division to take a look at that specific regulation, and if the y recommend it, then we will do so. Mr. Speaker: The Honou rable Leader of the Opposition, with a supplementary question. Mrs. Carstairs: Common sense would indicate that an eleva tor which is over 20 years old carr yi ng emergency patients to surgery should be inspected at least once a year. * (14 00) Workplace Safety and Health Regulation Amendments Mrs. Sharon Carstairs (Leader of the Opposition): Mr.

Speaker , I have a supplementary question to the Minister of Labou r. Can the Minister of Labour tell us what evaluation of regulations, all Workpla ce Safety and Health regulations, are going on in her department in that they do no t inspect chimneys, and a person dies of carbon monoxide poisoning despite the fact that we have up-to-date equipment that can do it, and now they do not inspect elevators? Hon. Gerrie Hammond (Mi nis ter of Labour responsible for Workplace Safety and Health): Mr.

Speaker , I am sure that the Opposition Leader would not expect the Department of Labour or any Government to be able to inspect absolutely every chimney in this province and every elevator every week, but we do what is sensible and what is practical. We do protect the safety of our citizens, and when there is a problem that comes up we will correct it. Elevator Inspections Regulation Amendments Mrs. Sharon Carstairs (Leader of the Opposition): There is a problem right now. That hospital elevator, over 20 years old, has been almost three years since an inspection.

Can the Minister now tell this House that she is prepar ed to introduce a regulation in which elevators over five years will be automatically inspected once a year? Hon. Gerrie Hammond (Minis ter of Labour responsible for Workplace Safety and Health): Mr. Spe aker, the Health Sciences Centre has their own maintenance staff. They are looking after that elevator at all times and an inspection is not going to change that immediately, something can happen from day to day. We will certainly inspect that elevator right now and we will take a look at the regulations. 413 6

Tuesday, January 9, 1990 Village at Portage Place Gove rnment Intervention Mr. James Carr (F ort Rouge): Mr. Speaker , my question is to the Min ister of Urban Affa ir s (Mr . Ducharme). No one takes any joy in the serious financial trouble which curr ently faces the North Portage Corpora tion. Eve nts have conspir ed to thro w the housing component of the development into a financial crisis and the question remains: what can be done about it?

The property is scheduled for public auction on January 24, but the president of the North Portage Dev1:1lopment Corporation says, if necessary, he will step in and assume the arr ears and payments which are reportedly in excess of $1 million. What role has the Minister played in this decision, and what is the position of his Government? Hon. Gerald Ducharme (Minister of Housing): First � of all, Mr. Speaker, the Member for Fort Rouge follows ' the same procedure from '89, he calls everyt hing a crisis.

First of all, the role that this Minister has played is, "I am Minister of Housing and in our mandate in Housing we must put the building on public auction." In talking to the chairman of the board just this morning, the board will be holding a meeting on Janua ry 15 and they will decide what they will do with the building. They will decide under a mandate that they do hold. As long as there are no additional funds required, they can take over this building and carr y it on where the tenants are not affected and proceed just as normal. Cost to Manitoba Mr. James Carr (F ort Rouge ): Mr. Speaker , what is normal?

Normal is taking over $1 million in arrears and topping up the payments each month which could be $30 ,000, $40,000 or $50,000.00. My question to the Minister is: what wi ll it cost the � North Portage Development Corpora tion, therefore the taxpayers of the Province of Manitoba, to do what the Minister wants them to do? Hon. Gerald Ducharme (Minister of Housing): Mr. Speaker , you have to remember that because I wear two hats-in this particul ar , I am the Minis ter of Housing -I have to watch in case of some legal complication that might arise.

This agreement was signed by the previous federal Liberal Government and the previous NOP Govern ment in 19 83 giving them the authority to take this building over. My main mandate, as Housing Minister at this time, is to make sure $18 .5 million is protected under insurance agreement with CMHC. My mandate under Urban is tha t this is a very important part of the North Portage mandate, and we want to see the housing stay so it can be so successful as the rest of the project. 413 7 Vacancy Rate Mr. Speaker: The Honourable Member for Fort Rouge, with his final supplementary question. Mr.

James Carr (F ort Rouge): Mr. Speaker , judging by the Minister's answer, some people may think he is wear ing too many hats, two too many hats already. My final question to the Minister is very simple. What is the vacancy rate at the Village in Portage Place, and how much a month is it going to cost to keep it afloat, taxpayers money? How much a month? What is the vacancy rate? Hon. Gerald Ducharme (Minister of Housing): Mr. Speaker , it goes without saying that the Mem ber for Fort Rouge was negative in '89; he cares to be so negative in 19 90. North of Portage is a very, very positive project, Mr.

Speaker , and we will not put any further monies into this. I have had the assurance of the chairman at a meeting on Janu ary 15 that they felt that they will go and carr y on with this project through their cash flow that they have in existence right now. Solvit Resources Inc. Fire Commissioner Report Mr. Steve Ashton (Thompson ): Mr. Speak er, in revie wing the inves tigation report fol lowi ng the explosion and fire at Solvit Resources, the situation that emerges is a very scary one.

The report lists five sepa rate events or possible combinations of events that could have lead to the explosion, and yet the report also says that there is no evidence to suggest that the normal Gover nment re gula tory pr ocess was not followed, apart from a number of cases where citations were made. Where problems were identified, no action was taken.

In view of that, in view of the fact that this long awaited report really does not make any recommendations about improvements when it is clear that those improvements and regulations are necessary, in fact it only recommends a long-term process, I would like to ask the Minister of Labour . Will she immediately, on an emergency basis, attempt to draft up regulations that will deal with the scenarios that are outlined in this report? Will she indicate to this Legislature today when those emergency regulations will be in place to ensure that we do not have a reoccurrence of this type of explosion? Hon.

Gerrie Hammond (Minis ter of Labour responsible for Workplace Safety and Health): Before a licence is let for this type of operation, they have to apply to the Minister of Environment (Mr . Cummings), who then in consultation with Workp lace Safety and Health and the Fire Commissioner's Office, we ar e now liaisi ng. When the former Government, when this Member was in Government, they did nothing to prevent this type of occurr ence from happening. We in turn will make sure that we will put in regulations that are needed now.

Once the advisory council has reported to us, then we will make other recommendations and corrections.

Tuesday, January 9, 1990 Hazardous Goods Storage Emerge ncy Regulatio ns Mr. Steve Ashton (Thompson): This document states that all the regulatory processes were followed, and also states however on the other hand, there were serious omissions of important safety considerations. This is identified in the report. What action will the Minister of Labour take on an emergency basis to bring in regulations to ensure that those types of br eaches of safety do not occur again and that we do not end up with another major explosion in the City of Winnipeg or in the Province of Manitoba? Ho n.

Gerrie Hammo nd (Mi nister of Labour respon sible for Workplace Safety and Health): Mr. Speaker, because of this explosion, we were able to amply investigate the only other business that there is doing this type of thing who are following all the types of regulations that we would want in a new building. I would think right now that we will be putting in measures to make sure that another Solvit occurr ence does not happen. Solvit Resources Inc. Public Inquiry Mr. Steve Ash ton (Thomp son): I ha ve a fina l supplementary, Mr. Speaker.

In view of the fact the Minister is not willing to bring in emergency regulations, will she at least on an urgent basis call for a public inquiry to ensure that there is a complete investigation not only of this particu lar occurrence but of other situations that could develop in Manitoba? How many more Solvits are there in Manitoba, and how much longer is the Minister going to delay any action in terms of dealing with the kinds of pr oblems that are identified in this report? Hon. Gerrie Hammo nd (Mi nister of Labour respons ible for Workplace Safety and Health): Mr.

Speaker , there is only one other Solvit of this size, and the Fire Commissioner's Office did a very thorough inv est igation. We are ref erring this matter to the Workpla ce Safety and Health Advisory Council, who have technicians, who have labour rep resented, who have management, and they will be looking into the issue. They will be report ing back to the Govern ment, and we in turn then will take action. Women's Post-Treatment Ce ntre Minister's Intervention Ms. Avis Gray (Ellice): My question is for the Minister of Family Servi ces (Mr s. Oleson).

This Gover nment preaches words about commitments to women and servi ces for women. While this Government talks about the commitment, crises are happening at their doorstep. The Women's Post-Treatment Centre, a specialized counselling service for women, has closed its doors to new clients effective yesterd ay. One reason given for the closure is the lack of adequate stable Core funding. My qu es tion to the Min ister is, becaus e of this Govern ment's piecemeal app roach to services, is the Minister now prepa red to quickly intervene and resolve this crisis? Hon.

Charlotte Oleson (Minister of Family Services): Mr. Speak er, I will look into that matter immediately. * (14 10) Waiting List Mr. Speaker: The Honour able Mem ber for Ellice, with a supple mentary question. Ms. Avis Gray (Ellice): Mr. Speaker , 14 0 women are on a waiting list, waiting for services from the Post Treatment Centre. My question to the Minister is: is the Minister prepared to immediately after Question Period today meet with the board of directors to discuss what some of the options should be so that servi ces can resume to the many women who are in a need? Hon.

Charlotte Oleson (Minister of Family Services): � The Member knows full well that the Estimates of Family Servi ces are being debated this afternoon. In the light of that, I will make arrangements at my ea rlie st opportunity to meet with that board of directors should they wish a meeting with me. Mr. Speaker: The Honour able Member for Ellice, with her final supplementary question. Ms. Gray: Mr. Speaker , I always thought that staff were able to make phone calls for Ministers, but that may not be the case.

I would ask the Minister of Family Services, is she aware that with the piecemeal funding approaches that have been given to the Post-Treatment Centre over the year that in fact they knew, and her depar tment knew, they would be forced to close their doors to new intakes and still sit with over 14 0 women who were waiting over one year and half for any type of service? Mrs. Oleson: Mr. Speaker , I have indicated to the Member that I will look into that matter and that I will meet with that organization. Solvit Resources Inc. Arson Investigation Mr.

Gary Doer (Leader of the Second Opposition): In the report tabled by the Minister of Labou r (Mr s. Hammond), it states that the financial information on the property was tu rned over to the Winnipeg Police Department on September 19, 19 89. Can the Minister report on the state of the investigation by the Winnipeg City Police on tha t issue raised in the report? Hon. Gerrie Hammond (Minister of Labour): Mr. Sp eak er , I und erstand tha t the Winnip eg Pol ice Department is still investigating. Mr. Doer: Mr. Speaker , the report deals with arson but does not take a definitive position of whether arson 413 8

Tuesday, January 9, 1990 can be-the whole thing blew up seven months ago, Mr. Speaker , and you would not have an investigation, a public investigation as we called for. My question to the Minister of Labour is, has the issue and the questions raised on the overcapaci ty, as well as the arson issues, been referred to the Winnipeg City Police and what was their conclusion? Mrs. Hammond: Mr. Speak er, as far as I know, the Winnipeg City Police have not made a conclusion, and they have been involved actively in the investigation. In fact, it was the Winnipeg City Police Department that asked us to delay the report.

Storage Capacity Statistics Mr. Gary Doer (Leader of the Second Oppos ition): Mr. Speaker , the repor t on page 20 states that the fact that the plant was unattended also worsened the situation, an accusation and an issue we have raised � with the Minister on previous occasions. I would ask the Minister whether in fact the unattended plant, combined with what we believe to be overcapaci ty, in any way led to this explosion. What is the conclusion and action going to be taken by her department to protect Manitobans from this unattended plant which is stated on page 20 in her report? Hon.

Gerrie Hammo nd (Minis ter of Labour responsible for Workplace Safety and Health): Mr. Speaker, the Fire Commissioner was not able to answer that question and certainly I cannot, but we do feel, from the comparison of the prime motor oils, that these machines should not be left unattended. I understand that the manufacturer made a point of calling them automated, and they felt quite safe doing that. Solvit Resources Inc. Labour Citation Mr. Paul Edwa rds (S t. James): Mr . Sp eaker - (interjections)- Mr. Speaker: Order, please. The Honour able Member for St. James has the floor. Mr. Edwards: Thank you, Mr.

Speaker . It is true that the Fire Commissioner was unable to conclusively determine the cause of the explosion at the Solvit factory; however, at page 11 of the repor t the commissioner does find as fact that the Mechanical and Engineering Branch of Manitoba Labour cited this bu ilding occupied by Solvit Resou rces for a fir e separa tion violation between the boiler room and the main plant area. No action had been taken to correct the violation. Mr. Speaker , for the Minister of Labour , how long had tha t violation been occurring up to the time of the explosion?

Why had her ministry not made sure that a fire separa tion wall violation in a solvent plant with highly flammable, highly hazardous materials was not taken care of immediately? Hon. Gerrie Ham mond (Minis ter of Labour responsible for Workplace Safety and Health): Mr. 4139 Speaker , that was not a protocol that was in pla ce under the former administration, but we have now, since this explosion, found that this is one of the areas that we are going to cor rect in our department. We have a committee set up now who will track compliance orders to make sure that they are followed up on and that action is taken. Mr.

Speaker: The Honourable Member for St. Ja mes, with a supplementary question. Mr. Edwards: If the Minister is sayi ng that regulation was not in place at the time of this violation, she is absol utely incorr ect and at odds with the Fire Commissioner. Mr. Speaker -(interjections)- Mr. Speaker: Order , ple ase; ord er , please. The Honourable Mem ber for St. Ja mes, kindly put his question now, please. Mr. Edwards: Mr.

Speaker , for the Minister of Labour again: again at page 11, I ask the Minister why had her department not enforced the regulations which required these flammable materials to be kept on pallets at least six metres from any building or property line, which was not done and which was found and proven by the Fire Commissioner in this report, again at page 11 ? Mrs. Hammo nd: Mr. Speaker , these are procedures that the Fire Commissioner's Office has found, and these are areas that will be looked at, not only looked at but will be corrected.

Before any other licence is issued we will make sure that this type of incident does not happen. This is the kind of area also that the Winnipeg Fire Department does inspect, and they did not inform our department in any way that they were in violation. Workplace Safety and Health Regulation Amendments Mr. Speaker: The Honourable Member for St. James, with his final supplementary question. Mr. Paul Edwards (St. James): Mr. Speaker , the Mechanical and Engineering Branch is part of her department.

Finally for the Minister of Labour , will this Minister commit today to coming up with a new policy with respect to these work orders which pr otect Manitobans and Manitoba workers all over this province and indeed peo ple living in residences near these hazardous storage sites, commit today to coming in with a policy that makes these work orders final and makes them binding, so that they are not consistently extended because in fact they lose their- Mr. Speaker: Order , please. The question has been put. Order, please. The Honourable Minister of Labou r. Hon.

Gerrie Hammond (Minis ter of Labour responsible for Workplace Safety and Health): Mr. Speaker , if the Member had listened to the first answer, I indicated that we have already done that. Ther e is a

Tuesday, January 9, 1990 committee in the department put in place and protocol will be followed. Some Honourable Mem bers: Oh, oh! Mr. Speaker: Order. LynnG old Resources Inc. Creditors Meeti ng Mr. Jay Cowan (Churchill): Mr. Speaker , my question is to the Minister of Energy and Mines (Mr. Neufeld). As the Minister is aware, the creditors of LynnGold Resources met early in the new year to discuss the situation with the bankrup tcy of LynnGold Resources.

The Min ister had pr evi ously ind icated that the Gover nment would be sitting at that table hoping to recover its money as well as to protect the vacation pa y, seve rance and wages owing to workers at LynnGold. Can the Minister now indicate what action he ha s taken in response to that meeting, or further to that meeting, to protect the investment of the province in this area and also, more importantly, to protect the vacation pay and the severance pay of workers at LynnGold Resources? Hon. Harold Neufeld (Minister of Energy and Mines): Mr.

Speaker , at the first meeting of the creditors of LynnGold Resources, the only action that was taken was to the appointment of inspectors. Aside from that, no action was taken. As far as the Government's position is concerned , that will be decided in terms of its position in the line of creditors. The liability to the Government is not secured , and it will have to wait in line for the secured cred itors to be paid off. Severance Pay Mr. Jay Cowan (Churchill): Mr.

Speaker , earlier when we had addressed this issue with the Minister, we asked him to ask his colleagues to ask the Gover nment to step aside with respect to the monies owing them or to collect those monies and then disperse them to the employees so that the employees would have the monies owing to them coming to them. I would ask the Minister if he has taken any further action to ensure that the Manitoba Government, when it is in line with the creditors, whether it be preferred or uns ecured or secured, is not inadverte ntly taking money out of the hands of employees of LynnGold Resources in Lynn Lake. Hon.

Harold Neufeld (Minister of Energy and Mines): Mr. Speak er, when that time comes, a decision will be taken. I should remind the Member for Churchill (Mr. Cowan) that the Minister for Labour (Mr s. Hammond) is work ing on behalf of the employees, on behalf of the union employees, as well as on behalf of the non union employees and using her good office to protect the position as far as possible of the workers. * (14 20) Lynngold Resources Inc. Employee Benefits Mr. Jay Cowan (Churchill): Mr.

Speaker , perhaps then the Minister of Labour would indicate if she has had any response from her letter, just previous to the new year, to Barb ara McDougall, in which she asked for the federal Gover nment to forego the regulations which req uir e the vaca tion pa y to be assessed agai nst unemployment insurance payments and benefits to workers in the area. Also, if she can indicate why it is that Manitoba Labour , par ticularly the Pension Commission, shows up as an unsecured creditor for an unknown amount on the list of creditors for LynnGold Resources. Hon. Gerrie Hammond (Minister of Labou r): Mr.

Speaker , as of this morning we had not received any information from the Honour able Barbara McDougall, but we have been in touch with her office and are expecting to hear ba ck. Louise Dacquay Policy Adviser Appointment Mr. Kevin Lamoureux (lnkster): Mr. Speaker, I have a question for the Minister of Housing (Mr. Ducharme). It concerns the rece nt appointment of Louise Dacquay, a former executive director of the Conservative Party of Manitoba, to a position of policy adviser to the Minister of Housing for the sum of $49,836 .00.

We are concerned how the Minister could select someone as policy adviser on Housing who has no apparent expertise in this area. In fact, during her three years at Winnipeg City Hall- Mr. Speaker: Order, please; order, please. Kindly put your question now, please. Mr. Lamoureux: Mr. Speaker , my question to the Minister of Housing is: on what criteria did he use to justify an appointment of this nature to this particular position, given that Ms. Dacquay has no apparent visible qualifications for the Department of Housing or housing issues? Some Honourable Members: Oh, oh! Mr.

Speaker: Order ple ase; order , please. The Honour able Minister of Housing. Hon. Gerald Ducharme (Minister of Housing): Mr. Speak er, I am surp rised that the Member from across the way, after a year and a half, has not decided that a Minister is in charge of Housing and Urban Affairs. I am honoured to ha ve selected this individual. I am sure she will do very much to benefit Urb an Affairs and Housing. If he would like I will start reading through her resume. It would probably take about 10 minutes, Mr.

Speaker , and I am su re tha t the Mem ber , thr ough his corre spondence with this individual, will find her very, very nice to deal with. 414 0

Tuesday, January 9, 1990 Some Honourable Mem bers: Oh, oh! Mr. Speaker: Order, please. Order . The Honourable Member for lnkster. Mr. Lamoureux: Mr. Speaker, let there be no doubt that the reason why she received this appointment was strictly because she was- Some Honourable Mem bers: Oh, oh! Mr. Speaker: Order , ple ase; ord er , ple ase. The Honourable Member for lnkster will take his chair now, please.-(interject ion)- Mr. Lamoureux: My question- Mr. Speaker: Order. Order, please. I do not think the Honour able Member for lnkster (Mr.

Lamoureux) heard me through all the ruckus, but I did ask the Honourable Member for lnkster to take his chair now, please. (interjection)-Order . Order, please. The Honourable Minister has answered the question. I will remind the Honour able Member for lnkster that Ha nsard has been instructed that once the Speaker says "ord er, please," all mikes are dead. The rules are very clear. When the Speaker is standing and asking for order, Honourable Members will take their seats. The Honour able Member for lnkster has time for one very short question. Mr. Lamoureux: Mr. Speaker , first I must apologize.

I did not hear you calling for order. Mr. Speaker: I understand. Mr. Lamoureux: Mr. Speak er, my question to the Minister of Housing is: can he justify or explain to all Manitobans on what criteria did he use to justify the appointment of this past executive director activist in the Conservative Party? Hon. Gerald Ducharme (Minister of Housing): Mr. Speaker , first of all this qualified woman candidate the Li berals speak with forked tongue, Mr. Speak er. Our Leader , Mr . Speaker , Pr emier Communications has a qualified woman, his special adviser is a qualified woman.

His special adviser on communications for the Liberal Party -woman. On this particu lar resu me, Mr. Speaker , her communications skills, her resume makes her fully qualified to handle the job. Mr. Speaker: Time for Oral Questions has expired . ORDERS OF THE DAY COMMITTEE CHANGES Some Honourable Mem bers: Oh, oh! Mr. Speaker: Order , please. Order. The Honourable Member for Gimli has the floor. 4141 Mr. Edward Helwer {Gimli): Mr. Speaker, I move, seconded by the Member for Lac du Bonnet (Mr.

Pra znik), that the composition of the Sta ndin g Committee on Municipal Affairs be amended as follows: Manness for Findlay. Mr. Speaker: Agreed ? (Agreed) Mr. Steve Ashton (Thompson): Yes, Mr. Speaker, I have a committee change. I move, seconded by the Member for Dauphin (Mr. Plohman), that the Member for Rupertsland (Mr. Ha rper) be substituted for the Member for the Interlake (Mr. Uruski). Mr. Speaker: Agreed ? (Agreed ) ***** Hon. James Mccrae (Gover nment House Leader): Mr. Sp eake r, we are setting the Muni cipal Affairs Committee to sit this afternoon at 3 p.m.

I believe that would be in Room 254 because we will have Estimates in the Chamber and in Room 255, Estimates being Family Servic es in the Chamber, and Energy and Mines outside the Chamber. Mr. Speaker , I move, seconded by the Minister of Health (Mr . Orchard), that Mr. Speaker do now leave the Chair and the House resolve itself into a Committee to consider of the Supply to be granted to Her Majesty. Mr. Speaker, I am reminded by the Clerk of the House that in order for us to

schedule the Municipal Affairs Committee for 3 p.m. this afternoon in Room 254, we would req uire the leave of the House, and I would be asking for that. * (14 30) Mr. Speaker: Is there leave of the Hous e? (Agreed) MOTION presented and carried and the Ho use resolved itself into a Committee to consider of the Supp ly to be gr anted to Her Majesty with the Honourable Member for Minnedosa (Mr. Gilleshammer) in the Chair for the Depart ment of Energy and Mines, and the .Honour able Member for St. Boniface (Mr. Gaudry) in the Chair for the Department of Family Services. CONCURRENT COMMI TTEES OF SUPPLY SUPPLY -ENE RGY AND MINES Mr. Chairman (Harold Gilleshammer): Order, please. I call this

section of the Committee of Supply to order to consider the Estimates of the Department of Energy and Mines. When last we sat, the Committee of Supply had been considering item 3.(

a) Mineral Resources Administration; 3.(a )( 1) Salaries, $20 1,0 00- pass; item 3.(a )

(2) Other Expen ditures, $45,000- pass. Item 3.(

b) Mines; 3.(b)

(1) Salaries, $1, 51 9,9 00 -the Honour able Member for Flin Flon.

Tuesday, January 9, 1990 Mr. Jerry Storie (Flin Flon): Mr. Chairperson, I do not have a lot of qu es tions di rectly related to the expe nditures in this area, particularly in the Sal aries area, but there are some questions related to mines that I would like to follow up on. I would like to know what the latest position is with respect to negotiations on HB M&S modernization. Hon. Harold Neufeld (Minister of Energy and Mines): The latest was a meeting on Thursday last week in which a pro posal was put forward to HB M&S, and the y are going to take it back to their boards of directors. Mr.

Storie: When the Minister says a proposal, is that a join t pro posal from the federal and provi nci al Governments, or is that a federal proposal? Mr. Neufeld: This is a proposal that the Manitoba Government felt was fair to all parties and is a propo sal therefore of the Manitoba Govern ment. Mr. Storie: So Manitoba has participated. The Minister has been saying all along that the negotiations that had yet to be done were between the federal Government and HB M&S. The Minister is now sayi ng that they were tripartite negotiations and that there is some support level on the table from the province.

Is that correct? Mr. Neufeld: The province has always been at the table. It is true that the federal Government and the company have to reach agreement, but we are trying out a proposal which might be acceptable to the other parties. Mr. Storie: Well, that leaves one to have some concern. This Mi nister's tr ack re cord when it comes to negotiations is a dubious one to say the least. My question is, is this a final offer? Mr.

Neufeld: I think we should wait until HB M&S and their boards of directors and the boards of directors of their parent company have looked at it and have decided whether or not they are prepared to accept it. If they are not prepared to accept it, then it is also a matter of the federal Gover nment accepting it. There are some negotiations still to be done on this matter, and to do it publi cly I do not think would be in the best interest of all parties. Mr. Storie: Well, Mr.

Chairpers on, perhaps the people of Lynn Lake would still be employed if there had been a public process or a more public process. * (1 440) Mr. Neuf eld: Let the record show the Mem ber snickered . Mr. Storie: No, Mr. Chairperso n, it was a cynical laugh, not a snicker. Mr. Chairperson, the Minister raises an interest ing point. He said that while there is an offer on the table, there is no certainty that the federal Government will accept the offer. Do you mean that an offer has been made by federal civil serva nts that has not been auth oriz ed by the federal Gove rnment? How are negotiations proceeding?

How can an offer be made and then retracted? I do not understand what this form of negotiations is if that is the case. Mr. Neufeld: The federal Govern ment and the company are negot iating and ha ve pr esu mably come to a reasonable conclusion. By reasonable I mean they have gone as far as they can go as far as the federal Government is cohcerned . In light of that, the Manitoba Govern ment has put forward a proposal using the federal Government's bottom line as a starting point. Mr.

Storie: So the Minister is saying that the federal Government has put forward a proposal that is an ultimatum if the Minister is interpre ting the federal Govern ment's actions correctly. Mr. Neufeld: Well, I would never call somebody else's proposal an ultimatum. It is the offer that the federal Government says it will not improve upon. An ultimatum is describing it probably a little too severe. � Mr. Storie: Mr. Chairperson, can the Minister indicate what the price of copper and zinc is today? Perhaps we could have some comparison prices with six months ago and a year ago. Mr.

Neufeld: It is our opinion that copper today is about $1. 10, zinc today is about 60 cel'lts. Six months ago copper was approxima tely $1 .30 and zinc was appr oximately 75 cents. Mr. Storie: You can never be certain when you are quoting copper or zinc or metal prices because it depends on the basis on which the quote is made. My last recollection is that zinc is now 44 cents; that may be a U.S. price. Clearly the circumstances for Hudson Bay Mining and Smelting are deteriora ting fairly rapid ly.

There was a window of opportun ity, a time in which it was a good time to negotiate as far as the province is concerned , but because negotia tions ha ve dr agged on I am concerned that negotiations are likely to become more difficult, certainly from the province's perspective. I want to be certain tha t this Minister understands tha t his obl igation to the mining communiti es in Manitoba is a serious one and that he has failed on a number of occasions. We have had communities close down , two of them si nce this Min ister became responsible for Energy and Mines.

I do not want to be the MLA who has to see his communities further eroded by an attitude that says, well, these people have to sur viv e on their own regard less of what the circumstances. So my final question on this topic is, has the Minister indicated in any way to Hudson Bay Mining and Smelting that this is the Government's best offer? Mr. Neufeld: The only thing we have ever indicated to the people of Hudson Bay Mining and Smelting is that the Govern ment stands behind the community and will do all in its power to ensure the continued operations in Flin Flon. We have never at any time indicated to 414 2

Tuesday, January 9, 1990 the directors of Hudson Bay Mining and Smelting that this is an ultimatum. Mr. Storie: While tha t may reassu re some people, it does not reassure many, because the same words of sympathy and empathy were made to the people of Lynn Lake.

Obviously I do not want to jeopard ize negotiations by asking the Minister for further specifics, but I certainly put him on notice that if there is any sense that negotiations are not proceeding in a positive light that I will not be shy about asking this Minister to step aside and let someone else assume responsibility who I guess understands the consequences of fai lure in this instance. I am not convinced that the Minister appr eciates what this means to not only the community of Flin Flon, but the surrou nding area. Mr. Chairper son, I would like to move on to another topic that I want to spend-I am sor ry.

Yes, go ahead . * (1 450) � Mr. John Angus (St. Norbert): I am not sure I am • going to be as kind as the Honour able Member for Flin Flon (Mr . Storie). He has a different constituency that he has to pay attention to, and perhaps even more familiarity with the function. I am not entirely satisfied with the answers that the Minister has indicated. Lloyd Nielsen made it perfectly evident, very clear that they were looking for a three party loan arrangement where each partner would put in the same amount of money, accumulating to in excess of $10 0 million.

In the report that I read he very adequately explained , in what I considered a fairly logical fashion, the proposal. If I remember correctly, and I am going from memory, it was $45 million or $40 million apiece that he was looking for. I think he cited, perhaps the Member for Flin Flon can refresh me on this, but I think he cited an example, a precedent example of the federal Gover nment, and he took his model for this, I am not sure if it was Baie Comeau or some place in Quebec, in Noranda in Quebec, which had made a similar proposal , and fortunately they had received the funding.

Perhaps you can just fill me in on what the state of the negotiations are, because we have gone from that which was black and white, factual on the table, to newspaper reports of, perhaps we can get people in Sask atche wan to make contributions to help this company survive as they use power, or something of that nature. The reason I would like to pursue this vein of questioning, just so that the Minister is totally aware, is pretty simple.

We did not ask these questions in LynnGold, and when we tried to ask them after the fact, after the deal was done, when we tried to keep out of the negotiations, we did not want to interfere with the negotiations, we recognized that there was some sensitivity or some delicacy to them, we found that did not do us any good at all. So I want to ask these questions up front in advance. I do not want to see happen to the people of Flin Flon the same thing that happened to the people of 414 3 Lynn Lake.

I want to know that there is sufficient money in this particular portion of the budget, Mines portion of the budget, for salaries, for any expertise that you need, and I want a full explanation, if you like, of what is currently happening in this set of circumstances. Mr. Chairman, with that sort of opening salvo I will turn it over to the Minister. There are specific questions that I would like to ask, but I would like a better review of the proposals, the negotiations, the procedures, what can be expected, when are the deadlines.

They had to have commitments to meet their S02 emission controls by last fall as I understand it. Are they going to meet these deadlines? Mr. Neufeld: First of all, Mr. Chairman, the emission control dea dline is 19 94. The time frame for the construction of a new mill is approxi mately two to three years, so we do have time in which we must start the construction. I must remind the Member for St. Norbert (Mr. Angus) that the monies involved are rather substantial in amount. It is no longer $43 million per party, it is now closer to $65 million per party.

These are monies that the taxpayers of Manitoba must put up. I think it behooves us to treat the taxpayers of Manitoba equally. It is not for us, as the Member for Flin Flon (Mr. Storie) suggests, in negotiating to simply capitulate to any requests that the company puts forward. We cannot allow ourselves to be railroaded into making a decision. We are not going to be held to ransom by the company. We expect that the company shall pay its own share of the cost, and if it makes money to repay the entire amount. Those are the terms of the negotiations.

I think with having said that, we should not openly discuss too many of the details. I will discuss privately with either of the Members the state we have come to, but I do not think we should discuss openly the negotiations and the extent to which they have come at this point. I should mention also that the negotiations have been amicable to this point and we expect them to remain that way. The company understands that the Government has to protect the taxpayers of Manitoba. The company understands also, obviously, that the Gover nment of Manitoba wishes to see the Town of Flin Flon continue to flourish.

I should mention to the Member also that Noranda was not exactly the same kind of situation we have here. It is safe to say that political forces on all sides came into play when the request came down for help in financing this new smelter. I must say at this point that negotiations are going along as well as can be expe cted and we would hope that they will come to a conclusion sometime before spring is here. Mr. Angus: Is there another deadline, Mr. Minister? Is there a point of no return?

The last report I had was the same one as you, in relation to the S02, the acid rain emissions, but I was lead to believe that they had to make a decision sooner. They had a tighter time frame. What is the new deadline for decision? Mr. Neufeld: The only deadline we have is the one for the emission reductions in 19 94. It is obvious that we

Tuesday, January 9, 1990 have to have the lead time to bring that about. We in our department are confident that we will bring this to a conclusion sometime in the very near future and would like to think in those terms. We do not think in terms of not bringing them to conclusion, but we will bring them to a conclusion in the interests of all Manitobans and not to special interests groups. Mr. Angus: I appr eciate that, Mr. Chairman, through you to the Minister, it sounds good. There must be some form of a point of no return.

There must be a time where the company has said, or you r department has said, if we do not order the equipment for the upgrading of the plant by this particular date then we will not meet the deadlines that have been imposed by the provincial Gover nment. So that would be what is commonly referred to as a point of no return, that is a deadline as tar as I am concerned . I would assume that you would have worked that deadline out so that you know what you are negotiating to. Mr.

Neufeld: Well, if it is a two-and-one-half-year construction program, then our deadline would be June 30 of 19 91, inasmuch as January 1, 19 94, is the deadline for the emission reduction. Going back 30 months would put us back to June 30, 19 91. Mr. Angus: June 30, 19 91, you have from now until then to negotiate? Mr. Neufeld: If it is a two-and-a-half-year construction program, and that is what I am lead to believe, then that is the period of time. Mr.

Angus: Is there any explanation then as to why the indications were that it was this fall that they had to have, was that simply a pressure tactic by the negotiating committee for the company? Mr. Neufeld: The company will tell you tha t the construction period has to be during the summer months, so if we cannot start the construction period by fall it is a six-month delay before spring before we can start construction again. I guess that has to do with the weather. I am not familiar with the construction program to the extent that I know when , and when they cannot work in Flin Flon. * (1 500) Mr.

Angus: I can tell you from experience, Mr . Chairman, it is pretty cold there in the winter and in the shaft. It would be hard to be installing equipment and whatnot. Let me just-y ou said something that caused me to think, and that is in relation to the winter months and the winter construction. Your 30-month construction period -is that 30 months of summer weather, given say March until October constructions? Is this somewhat misleading? Mr. Neufeld: Mr. Chairman, it is the groundwork that has to be started in the spring of the year, I am told, and not the building part. The building

part can be done in the winter months, but the starting point is all the groundwork which has to be done in the spring of the year and in the summer of the year when the frost is out. Mr. Angus: On another point, you had suggested that it was money, but are you still negotiating in terms of a loan arrangement or are you now talking in terms of a giveaway? Mr. Neufeld: We in the Manitoba Govern ment, since we have taken office at least, have never talked in terms of a grant. We have talked in terms of a repayable loan of some kind.

It is a type of repaya ble loan or a type of repa yable advance tha t is part of the negotiations. Mr. Angus: Mr. Chairman, in relation to the negotiations with the-there are three players in this game: the feds, yourselves and the company. The company ha s the need . The provi ncial Government and the federal Government are putting the regulations in that are sort of pre-empting that need. Have you actually met with anybody from Ottawa � yourself? Have you taken the negotiations sort of first , hand?

Have you gone to Ottawa to discuss these with the people or have they come to you here in Manitoba to carr y on the negotiations? Mr. Neufeld: Yes, on both counts. I have met in Ottawa with the Minister, and I have met in Winnipeg with the Minister. The negot iations, by and large, are being carried out at a staff level at the Deputy Minister's level. Mr. Angus: Our Deputy Minister is talking to the Deputy Minister of the federal Minister trying to negotiate those two. I presume they are going in tandem then to the company to make a presentation of some form of an offer. Is that accurate? Mr.

Neufeld: We at times meet collectively. At times we meet alone with the federal Government. At times we meet alone with the company. I presume that at times the company meets alone with the federal Government. We are tryi ng to reach a point where all three Parties are agreed on the type of arrangement that is best for all concerned , for all concerned being the people of Flin Flon, the workers in the company and of course the taxpayers of Manitoba who are going to advance the money. Mr.

Angus: Have you worked out the costs, the payba ck, the reve nue that is generated from this company in terms of-hydro is certainly one of the big bonuses, they use an awful lot of hydro -b ut income tax, any of those other items that are applicable? Mr. Neufeld: Hydro is-I will not consider a payba ck. Hydro is something that we sell to them of course, but hydro is also something we can sell at any time and at all times. As far as income taxes are concerned the company has not paid income taxes for a number of years. The company has not paid royalty taxes for a number of years.

The decision for the Government is not a commercial one. The decision for the Government is, very simply put, a social one. 414 4

Tuesday, January 9, 1990 We have to do ever ything in our power to ensure the continuation of Flin Flon. It is a different situation completely from that of LynnGold. Here we have base metal mines. Here we have a smelter that could contract the milling of ore from other mines. We are not totally dependent upon the discovery of new orebod ies in the immedia te vicin ity. We are dependent upon the discovery of orebod ies in any number of places in the North. It is my information that base metal mines are probably a better future for the North than are gold mines at this point in time. Mr. Angus: Mr.

Chairman, could you just advise me as to the-th ere were alle gations, there was a suggestion, there was some communication that you had made the suggestion-and corr ect me if I am wrong, which I am sure you will-that we should be asking the Sask atchewan Government to make some contribution. I was wondering why you were making that suggestion. Mr. Neufeld: It is indeed correct. I have met with the Minister of Energy and Mines of Saska tchewan, and the Premier (Mr. Filmon) has discussed it with the Premier of Saska tchewan.

The reason is, very simply, appr oximately one-quarter of the people who work at Hudson Bay Mining and Smelting live in Creighton, Saskatchewan. Creighton, Saska tchewan, makes up approxima tely-the Member for Flin Flon will corr ect me-25 percent of the total population of the area. Creighton, Saska tchewan, will definitely benefit from a new smelter in Flin Flon. Aside from that there are a number of deposits in northern Saskatchewan that may well be developed if a new smelter is built in Flin Flon, so the Saska tchewan Government would benefit again.

Another reason is half the plant, as it is presently designed, will be located in Saskatchewan. So half the plant-if the total cost is $18 0 million, over $90 million will be subject to sales tax to the Saska tchewan Gov ern ment. Yes, inde ed we have asked the Saska tche wan Gov ernment to partici pate in the construction of the smelter. Mr. Angus: And? Mr. Neufeld: And what? Mr. Angus: And has the Saska tchewan Govern ment, your Tory partners in Saska tchewan, have they agreed at this windfall, have they agreed to contribute? Mr.

Neufeld: We have not had agreement from the Saska tchewan Government at this point in time. We are not at the same time laying back and forgetting about it. We are continuing to discuss or follow up on our original proposal to them. Mr. Angus: Okay, let me just see if I have this st raight. You have the company that directly employs 2,400 people in northern Manitoba, indirectly affects another 1, 900 people in the surro unding areas , would provide probably a direct loss annually in excess of $10 0 million.

The Governments have said, we want to control acid rain, we think that sustainable development and the eco nomy have to be link ed to the environ mental protection and all of those good things at both levels, the federal level and the provincial levels. They brought in measures to control the acid rain. By 19 94 they want at least, I think it is 25 percent controls, or up to 25 percent more controls- Mr. Neufeld: No, minimum. Mr. Angus: Minimum at that particular time. Mr. Neufeld: Reduction. Mr. Angus: Reduction of 25 percent.

So the company comes forward and says, we would like to borr ow because you are bigger than we are and because you have more authority. Well, they come to you for whatever reason and they say, look we would like to bo rrow the money from the province, not a grant. We are prepared not to borrow it all, but we are prepared to put up our third of the cost of doing this, we would like you to put up a third and we would like the federal Government to put up a third. We use as a precedent the same deal that Que bec got from the federal Government earl ier.

Jack Epp, I suspect, is the Minister you have been working with in Ottawa? Mr. Neufeld: And the previous one. Mr. Angus: Okay. They have been dragging their heels, as I understand it, so that now the cost has escalated from $45 million, which is the original request, to $60 million. We are looking at another year and a half before we have to finalize the arrangements. Who knows what the costs will escalate to then? I am sure they will escalate to the fact that they will be beyond the capabil ities of Manitobans. The federal Tories have said, gee, we are not sure we really want to get involved in this.

The Saska tchewan Tories, who you have indicated have a great advantage, have said, we do not want to get involved in this. We are not real ly sure we want to get involved in this. Meanwhile every body in Flin Flon is sort of waiting to see what happens. Is that a fairly good review of what is happ ening, Mr. Chairman? * (1510 ). Mr. Neufeld: No, Mr. Chairman. The federal Tories have not said we do not want to get involved in this. The fact of the matter is they have made offers. The Saska tchewan Tories have not said we do not want to get involved in this.

The y have not come and offered any amount, but they have not said they do not want to get involved in this. The provincial Government has certainly never said we will not get involved in this. We have said from the start we want to get involved in this. I might also say, Mr. Chairman, that the escalation from $13 2 million to $17 5 million to $18 0 million is because of inflation. That would have happened regardless of when it was bui lt. The original numbers simply no long er ap ply and inflation was not appl ied to the original number s. That 414 5

Tuesday, January 9, 1990 would have escalated in any event and will escalate from here on in, I suppose. In the meantime there is a certain number of dollars that are not spent, so we saved the interest on those dollars. It is as broad as it is long. I have to repeat that the provincial Government has and is and will continue to work toward a conclusion of having the smelter built so tha t the community can continue to flourish.

I might say, as wel l, that the building of a smelter will not only help in the reduction of S02 emissions, it will also presumably increase the profitability through efficiency of the company, so it has a two-pronged effect Mr. Angus: Yes, and I am sure that the company is looking at repa yi ng the loans out of the improved efficiencies. It seems to me to make some sense that some sort of an arrangement be entered into very qui ck ly.

If you had total ly ignor ed the federal Government in the first place and said, to heck with them, we will jointly fund this 50-50 and get started right now with a cap on how much we are going to pay them, it would be all over, signed and sealed. You would be a hero, the people of Flin Flon would be secure and the deal would be done, and you would not have paid any more money than you are looking at payi ng now as your third. Mr. Chairman, through you to the Minister, you are also responsible for Manitoba Hydro.

Are you aware that the Hudson Bay Mining and Smelting Company is the second largest consumer of electrical power in the province? They generate $20 million a year in revenues for Manitoba Hydro or close to $20 million. Mr. Neufeld: Yes. Mr. Angus: I am pleased about that. Does it not concern you that you run the risk of losing that $20 million revenue? It is just not a replaceab le, it is not going to be transferred over to somebody else. It is jus t going to go. Mr. Neufeld: It could well mean then that we could postpone the building of a $5 billion genera ting station and bipole line. Mr. Angus: Mr.

Chairman, and losing all of that money that we have negotiated successfully through loan arrangements with the Provi nce of Ontario. Mr. Neufeld: What loan arrangements? Mr. Angus: Well, the ones that you had to cancel or that were cancelled on your behalf because of the poor state of your management skills, I am sure. Mr.

Chairman, you are also aware, through you to the Minister, that some $12 million per annum in additional tax revenue is generated for the provincial Treasury in terms of tax revenues, that if the Town of Flin Flan is forced to close or if the mill closes and those people are thrown out of work that we are likely to lose that revenue as well. Do these figures, this $32 million annually, form any part of your equation in terms of making an offer to the company? Mr. Neufeld: We are well aware of the revenue losses if the mine should close. We do not look at this and we never think about this as the mine closing.

We look at this as a positive conclusion. We will negotiate it, but we will not give it away. Mr. Angus: Mr. Chairman , with respect, I heard exactly the same type of thoughts in relation to the Lynn Lake negotiations. With respect, and I appreciate that you are in a difficult situation because of the recent poor track record that has developed through the demise of LynnGold, but I do not want to see it happen with this Hudson Bay Mining and Smelting. Can we get back, Mr.

Chairperso n, to the proposal that I am sure that the Minister is aware of, which is the conver sion option or the sunrise scenario, and the amounts of money that you are prepared to put on the table, and the conversion process? Could you just go over again, in as much detail as you feel comfortable in giving, including deadlines, the negotiating process, and who in fact is in control?

It sounds to me like the company is caught, much � as a pinball in a pinball arcade, bouncing between levels of bureaucr acy, and I do not have a comfortable feeling that anybody is in charge of the negotiations on behalf of the company or tryi ng responsibly to solve this problem. Could you just run the scenario by me again so I can get a more comfortable feeling? Mr. Neufeld: I am not quite sure what you want run by you, but we are-the company is negotiating in the way it feels it should. The negotiations have been amicable as I have said earl ier .

The Manitoba Government has discussed, in the greatest of detail, the numerous scenarios and the numerous projections that have been put forward by the federal Government, by the provincial Government, and by the company. The company in turn has looked in detail at the projections put forward by the other two parties. We have in turn made a proposal to the company, which as I said earlier they are taking up with their board of directors as late as last week, which takes into account the federal Gover nment's position of their final offer.

We have then put this into our proposal, and we will await the company's reaction to that. Mr. Angus: When do you expect to have that reaction, if you do not mind? Mr. Neufeld: I am told that we may have it as early as tomorrow. I would hope-if we had it early next week, we would be happy. Mr. Angus: Obviously, hoping for a positive re sponse. Mr. Neufeld: I would guess, yes. Mr. Angus: Mr. Chairman, let me just ask, have you done any mineral explor ation in the area? Have they got sufficient resources in terms of raw material to be able to meet their demands for the next 25 or 30 years? Mr.

Neufeld: The company, Hudson Bay Mining and Smelting, has seven years of reserves. 414 6

Tuesday, January 9, 1990 An Honourable Mem ber: Seven? Mr. Neufeld: Seven years of reserves at this point in time, but they have had seven years of reserves for the la st 40 years. Mr. Angus: It could be a damned if you do and damned if you do not scenario, Mr. Chairman, because the wheel could turn, depending on how much money you decide to give away to the people of Flin Flon. Have you just taken the company's word on the seven years, or have you actually sent your people in to ensure that the minerals are there? Mr. Neufeld: We have no reason to doubt.

Our people have seen sufficient amount of their records to feel satisfied that there are seven years in reserves. As I said earlier , the seven years in reserves may not sound like a great deal, but they have had seven years of reserves for the last 40 years. As they mine out a body, they find new orebodies, and hopefully that will continue. We can only go ahead with the positiv e assumption that shall happen . If we did not think that could happen, we may not at all be talking. Mr. Angus: Are you only then looking at a seven-year payba ck period for the loan? Mr.

Neufeld: No, that would be impossible. * (1 520) Mr. Angus: Let me ask you as a professional, from your professional background: does that not stick in your throat just a tad? The company has said, we want to borrow money over a 20-or 25 -year period. We expect to pay you back over a 20-or 25-year peri od, but we only have seven years of material in the ground to be able to pay it back . You have not bot hered to go out or ask your department to go out and verify that in fact they have the seven years or more.

This sounds to me like there may be a scenario whereby eventually the company will be able to say, well we have been telling you we only had seven years of material in the ground, now we do not have any more material and we cannot produce what we do not have, and so we are going to default on our loans. Does that not cause you any concern? Mr. Neufeld: We have never indicated-I said from the start today that this is not a commercial transaction.

I should also say that part of the negotiations are and part of the agree ment shall be, tha t there be a commitment to continued explora tion each and every year to a minimum amount. The company, itself, would not invest the kind of money it is prepar ed to invest without a commitment to further exploration in the hope of finding additional deposits and for increasing their reserves. Mr. Angus: The company would do that, Mr. Chairman, because they have a different economic driving force. They do not have the same social driving force.

Although I am sure they are a good corporate citizen and have a social conscience they do not have the same degree of concern about the social aspects that we should as elected repr esentatives. They are going to be driven by a bottom line, unfortunately, from a boardroom in New York City, which is just going to look at the bottom line. It would be in their best interest to continue to explore and plow money into that explora tion to ensure that they have enough reve nue generating product. I am concerned about the people from Flin Flon.

I do not want to lose the opportunity to sustain the town, but at the same time I would think a conscious decision made with all of the factual information in front of you is better than a gut-type decision. You have clearly indicted, Mr. Minister, that-a nd I give you your due on that-it is a social saving that you are doing, not an economic, not a business decision. You are saving it because of your political conscience and the political responsibility, and that is admirable. Mr. Chairman, through you to the Minister, that decision may in fact be affected by the facts.

It would seem to me incumbent upon the Minister to go beyo nd the seven-year projection and get at least a sense for how long the company is going to maintain its business. Mr. Neufeld: Mr. Chairman, we are getting arguments for both sides of the fence now from the Member for St. Norb ert (Mr. Angus). If we were to say, today, unless we can show proven reserves for 20 years we will not negotiate this agreement, then we may as well quit right now. I have said earlier that there are seven years in reserves, and there have been seven years of reserves for the last 40 years.

The company has continued, through exploration, to discover new deposits as quickly as it mined the old ones. It is a fact, I believe you will understand, that any ore deposit will one day run out, no matter how large, it will one day run out. That is a fact of life that miners have to live with. We are hopeful and indeed confident that through explora tion new deposits will be found in the area surrou nding Flin Flon and within the area in which they can transport the ore to the new smelter, otherwise we would not be entertaining a venture with the company to build a smelter. Mr.

Angus : You mentioned the company has not paid any income tax. Have they paid any provincial tax, and have they paid any provincial mining tax specifically? Mr. Neufeld: Mr. Chairman, they have paid no mining tax, they have paid no provincial income tax. I am not aware and I have not checked , I could if the Member wishes, to see if they have paid corpora tion capital tax, undoubtedly they have paid some sales tax in the purchase of equipment. Mr. Angus: Mr. Chairman, there was some suggestion that the federal Government offer of $18 million was a cap. Has that been changed , have you moved from that position?

Mr. Neufeld: It is my understanding that the federal Government will be prep ared to move somewhat from 414 7

Tuesday, January 9, 1990 that position, but not to the extent that the company had wished. Mr. Angus: Is there any indication in tracking of metals that there is-the reason I bring that up, Mr. Chairman, is that the cost of metal or the world price of gold apparently was one of the major undoings of LynnGold. Is there the same type of fluctuation in zinc and copper? Mr. Neufeld: I do have here, Mr. Chairman, the copper and zinc prices for the last year. The average price of copper went from a top, a high of $1 .60 in Janua ry of 19 89 to a low of $1 .07 in December of 19 89.

It has been coming down for the last year. Zinc on the other hand has gone from a high of 95 cents early in the year, March of the year, to a low of 59 cents, which was in December of the year. Again it is going down. Yes, there is a fluctuation in all metal pr ices. I might say to the Member for St. Nor bert (Mr . Angus) that most mining companies recognizing that will sell forward for a period of time, in some cases as far as 18 months. Mr. Angus: Are part of your negotiations giving them a break in their hydro rates? Mr. Neufeld: No. Mr. Angus: Mr.

Chairman, have you evaluated the price of metal over a 10 -or 15 -year period? Have you looked at the ups and downs, the swings? Mr. Neufeld: Yes, we have to use past experi ence to project it into the future. Yes, we have taken an average pr ice for both copper and zinc, as these are the major prod ucts of Hu dson Bay Mi ning and Smelting in pr ojecting the future earn ings of the company. Mr. Angus: It seems to me that there were a lot of questions to be asked and hopefully the Minister will have the answers.

He has indicated that he would be prepared to share some of the more specific information sort of in an in-camera vein. I can appr eciate that you do not want to tip your hand, if you like, to the board or to the company. I hope that the Minister has covered all of the bases. If he thinks that the negotiations, in relation to LynnGold and to the concerns of the people from Lynn Lake, are tough, I think that it was just a small impact of what would happen, if anything, if you were not able to negotiate a successful conclusion with Hudson Bay Mining and Smelting. With that, Mr.

Chairman, I did jump in on the Member for Flin Flon (Mr. Storie) who was in the middle of asking mining questions and then was apparently going to leave Hudson Bay Mining and Smelting, so I have no further questions on this specific issue at this time. Something may come up. Mr. Chairman: Shall the item pass-the Member for Flin Flon. * (1 530) Mr. Storie: Mr. Cha ir per son, unfor tuna tely , I had intended to move on, but the Minister's responses of course raised more questions. The first one that I would like to put on the table the question about the reserves.

The Minister continues to-or has not mentioned in the course of his discussion of this issue the commitment that HB M&S is obviously going to make to northwestern Manitoba, should the modernization go ahead , by virtue of the fact that they are prepared to commit something like $200 million for explora tion and mine development, a significant investment in the province and an important one. My question was in terms of negotiations. Has MMR's role- have they been all ocated any role in the negotiations?

Is there any suppor t on the part of the province for continued explora tion, joint ventures with HBM &S as part of the negotiations? Mr. Neufeld: Mr. Chairman, yes indeed the Hudson Bay Mining and Smelting will commit a substantial amount of monies to future explora tion. That, as I have said earlier , will be part of the commitment when an agreement is reached. The Manitoba Mineral Resources, with respect to the negotia tions, acts as a techn ical advisor to the Government.

As far as future development -in Manitoba Mineral Resources joint venturing future developments, future exploration work with Hudson Bay Mining and Smelting-we leave that to the Manitoba Mineral Resources. We do encourage them as you know to joint venture so that we can leave our additional monies for explora tion work. Where it is deemed necessary or it is deemed beneficial, Manitoba Mineral Resources will have no hesitancy in entering into joint ven tur e agre ements with Hu dson Bay Mining and Smelting for future exploration work. Mr.

Storie: The Minister did not formally answer the ques tion about whether part of the provi ncial commitment was actually extra dollars through MMR for explora tion to assist them in that venture. Perhaps either I misunderstood or the Minister was not clear. The follow-up to that, however, I want to point out to the Minister that this Minister chose, as the previ ous Conservative Government did, to divest itself of assets that the people of Manitoba owned in partner ship with HB M&S.

Trout Lake, which has been a very, very profitable mine, once belonged 47 percent to the provinc e and the pr evious Gove rnment sold the province out, sold the people of Flin Flon out by reducing our share. This Minister chose to sell out a 49 percent interest in a mine which local experts, local prospectors, people with long whiskers in this industry believed was going to be a very profitable mine, chose to sell out our interests at cost.

I believe that it was a major blunde r, particularly in view of the fact that this Government su bseq uently got into heav y negotiations where involvement equity in the mine and a reserve of some magnitude would have been a tremendous barga ining chip. It is unfortunate that this Government has no 414 8

Tuesday, January 9, 1990 vision and has no foresight. It leaves negotiations in a more difficult place. I want the Minister to answer specifically whether there has been any commitment in terms of explora tion directly related to negotiation? Mr. Neufeld: Mr. Chairman, let the Member for Flin Flon (Mr . Storie) not leave on the record that the divestiture of Callinan Mines ore deposit was anything but a good deal for the Government. In the outset, Callinan Mine joint venture was entered into with Huds on Bay Mining and Smelting not as a commercial venture; again, it was more of a social venture.

The Hudson Bay Mining and Smelting requested Manitoba Mineral Resources to participate in that deposit. Having said that, as far as additional monies for explora tion work as part of the agreement with Hudson Bay Mining and Smelting, that has not come up. The company has never requested in its negotiations that additional monies be put on the table by the Manitoba Gover nment or by Manitoba Mineral Resources as a condition of entering into an ag re ement with the Ma nitoba Government and the federal Govern ment. Mr. Storie: I guess only time will tell whether it was a good investment.

Certainly, I do not believe that it was and I believe that it has made negotiations more difficult for this Minister. However, I want to also take issue with another comment made by the Minister. That is that he wants to do what is in everyo ne's best interest. The Minister may feel that is what he did in Lynn Lake, but I can tell him quite unequivocally that he did not do what was in every body's best interest. The fact is that when he goes on and says that this is not a commercial decision, it is a social decision, he could not be more wrong. This is a commercial decision.

What the Minister failed to take into consideration, in the Lynn Lake agre ement, was: wha t did this contribute to the economy? What are the additional costs to support the hospital and support the school? Never mind the lost employment, the lost taxes, payro ll taxes, and everyt hing else that was involved. It is not just a social decision. It can also be a commercial decision. My colleague from St. Nor bert (Mr . Angus) raised the question: what analysis has this Minister done with respect to the contributions of HBM &S's opera tions to Manitoba, to Flin Flon, to the su rrou nding area?

What are the total numbers? My colleague suggests $10 0 million may be generated by that opera tion in a year. My guess would be that it would be higher than that given the employment, not only in Flin Flon because this is not just a decision that affects Flin Flon. It affects Snow Lake, it affects Leaf Rapids, as wel l as Flin Flon, to a major extent, other communities to a lesser extent. For every individual employed directly by HB M&S there are at least two, and perhaps three spinoff jobs that are going to be lost. Can the Minister table today with us any analysis of the cost of losing this operation?

It is a commercial question. It is a question of: what will the province lose? That number is the number that the province has to balance in negotiations. The Minister appears to think that he can simply pick a number out of the air, based on a proposal made by HB M&S, and say, well, we are not prep ared to pay that much, without doing any analysis of the benefits of having HB M&S there. What are the benefits of having another $200 million invested in mining exploration? Where are the numbers? What analysis is the Minister doing? What is the basis for the assertion that this is not a commercial decision?

Could we see that? Mr. Neufeld: Mr. Chairman, anytime you have seven years of operations left and invest that kind of money, it is not a commercial decision. Having said that, the Member for Flin Flon (Mr . Storie) continues to ask us qu estions in a way that we are about to cease negotiations, we are about to close the town. We have said from the outset that we are confident, and I will say again I am confident, that we will reach a conclusion that will ensure the continued operat ion of the mine in Flin Flon. I have no reason to believe that the company is not acting in good faith.

I have no reason to believe that the federal Government is not acting in good faith, and we are certainly not acting in anything but good faith. We will finalize an agreement with the company, but we will not put our negotiating points on the table publicly for all to see so that we have nothing left. But we will-I can assure the Member for Flin Flon that the agreement will be reached with the company in due course. Mr. Storie: Mr. Chairpers on, I would like to feel that was a likelihood, and I certainly believe it is possible.

I know that if the Minister continues to maintain that the only question that needs to be asked is-what does this cost the province?- rather than-what does Flin Flon con trib ute, and HB M&S cont rib ute to the province? -he is going to err. If that misconception, if that failure to recognize the importance of that mining base is not understood, then when push comes to shove in negotiations, this Minister is going to back away because he misunderstands again, and that is a major concern.

I do not have to remind the Minister that the decision to modernize at HB M&S, the commitment to add another $200 million to the explor ation bud get of HB M&S over the next 10 years, does not simply come from the mana gement of HB M&S. I believe they are an extremely capable, competent, group of individuals. * (1 540) The investment decision comes from another board who have a different set of pr iorities. Once a decision is made, a negative decision, if that should ever happen, there may be no going back. It will then fall on this Minister's shoulders to explain why he failed.

I want him to be aware that there is another way of looking at this and that it may increase his flexibility when he gets to the bargai ning table, and that is what I want him to do. Certainly we want him to bargain in a fair and tough manner to get the best deal possible, but on the other hand I do not want him to be cavalier 414 9

Tuesday, January 9, 1990 or to misunderstand the real importance of this venture. It is not simply an exercise of saving the provi nce $1 million. The contribution of that community in that enterpr ise has been incredible over its last 56 years of opera tion, and we cannot be too short-sighted when it comes to that. I feel that perhaps the Minister was short-sighted when he negotiated in his deal with Lynn Lake. Mr. Chairperso n, th ose are all the questions I have on this particular topic, but I would like to move to another community just down the line that also is in this area.

An Honourable Memb er: You said you did not have any more questions. Mr. Storie: Mr. Chairperso n, the Minister of Northern Affairs (Mr. Downey) has no interest in mining, but there are many people around the table here who do. Mr. Chairperso n, the community of Snow Lake has been awaiting an announcement by lnco Gold, who pu rch ased most of Hi gh River Resou rces, on the establ ishment of-or a production decision in Snow Lake. Can the Minister indicate what intelligence he may have with respect to the probability, the likelihood, the timing, of that kind of announcement? Can he indicate what the prospects are?

Mr. Neufeld: The latest information I have is they have not yet established the viabilit y of an opera tion, and they are still in the process of conducting feasibility studies. Mr. Storie: Mr. Chairpers on, certainly that would be welcome news, and I am wondering whether the Minister has offered any technical assistance. Has MMR been involved in any joint explora tion activity, joint work with lnco Gold, in terms of proving up the reserves? Mr. Neufeld: There is probably no corpora tion or Government more capable of analyzi ng the situation than lnco.

They have not asked for assistance in this, and would probably not accept it if it were offered . Mr. Storie: Mr. Chairpers on, that leads me to another area, another question, related to Snow Lake. The Minister may be aware that the community has been attempting to build an airport in the community, an airstrip, for some seven or eight years. The community has felt that a community of that size, isolated, requires access to the emergency evacuation services, those services provided by the air ambula nce, air flight, the emergency medical evacuation flight.

Unfortunately, they have not been able to complete the ai rstr ip. They did rece ive, un der the pre vious Government, some support to begin construction. Some 2, 500 feet of airstrip have been constructed, however, they need another 500 or 1, 000 feet to finish. The local Snow Lake Airport Development Committee believes that they need an additional $500,0 00 or slightly more to complete the airstrip, so that it can serve the community in times of emergency such as last summer. I want to put on the record here that perhaps most people will never know how close the Snow Lake community came to a disaster.

In fact the flames moved so quickly that Emergency Measures, who had been planning the evacuation, were saying pr ivately at the time that they may not be able to get all of the people out. There were some 11 fixed-wing aircrafts and a number of other helicopters working to evacuate people, and if it were not for a change in wind some time in the early morning of July 21, they probably would not have succeeded. So I think they are entitled to feel they need this airstrip. They are a mining community.

There is also the possibility-a nd fortunately to this point we have never seen a major mining emergency, a collapse, a major catastrophe related to the mine. There is need for emergenc y med ical eva cua tion as wel l. The community is certainly feeling that in the 19 90s now they have a right to be able to access that service, which is provided to some 33 -1 think it is 50 now other communities. One of the sources that has not been explored to date is the Mining Community Reserve Fund.

The Minister indicated in a previous meeting, and I am not sure under what guise, but in a previous meeting, that the Mining Reserve. Fund contains some $9 million. I am asking the Minister today whether he is prepared , or would be prepared , to commit the $500,000 or $600,000 that would be req uired to complete that strip, including providing the necessary crushed rock surface, to the community of Snow Lake? Mr. Neufeld: I think, Mr. Chairman, that if we are going to build an airp ort at Snow Lake, it should be built by the department that is responsible for it. They should set the priorities.

If they come to us for a request for monies from the community reserve, we would consider it. It would be a decision taken by Cabinet, and not by this Minister. I would not want to commit today to definitely recommending that the Community Reserve Fund be used for that purpose. I think we need more information. We need more information as to need and priorit ies as far as the northern communities are concerned with respect to where the airp orts are needed, indeed if they are needed. Mr. Storie: Mr.

Chairper son, we could go into a long history of how the majority of the airports were built in Manitoba, the majority of emergency strips, and they were built in the 19 70s by the Schreyer Govern ment. Unfortunately, some of the larger communities that at that time had road access were not deemed to be the highest priorit y. Su bseq uent to tha t of cou rse the fed eral Govern ment's role in supporting rural and emergency air strips has diminished significantly. Snow Lake is left at this point with very few options.

I can assure the Minister that I and the community have worked with the Depart ment of Higi1ways to see whether additional funds can be used to support that, and have found nothing but, I guess, words of comfort from that department. Certainly there has been no financial support. The Minister most recently wrote to 415 0

Tuesday, January 9, 1990 the community on December 15 indicating that it was not within the mandate of the Department of Highways to provide that kind of support. It is my opinion that the Mining Community Reserve Fund is a likely sou rce of funds, and I a m heartene d, I guess, by the Minister's willingness to look at it. I believe it is an important initiat ive and one th at this Minister would receive a good deal of credit for if he were to view such a proposal positively . This is important to the community . It is rather fortunate that there has been no major mine disaster in Snow Lake .

If there were, the closest exit is by road ambulance, and it is about two hours or two and a half hours out of the community . That just is not good enough in an emergency. Could the Minister indicate what other projects have been supported by the Mining Reserve Fund over the last year? *

(1550) Mr. Neufeld: I believe there was a project to do with the taili ngs pond at Sherritt Gordon Mines. There were , and I think I mentioned this at a previous meeting of this committee , monies provided to the Town of Leaf Rapids for a development officer or tourism officer . There were monies provided to the City of Flin Flon for a touris t officer . I cannot think of any others at this point in time here is some more - the sewer and water at Wabowden, the re was 14,000 for that.

There was the Sherridon, there was , this was just recently -we have advanced money to the LGD of Lynn Lake, but I do not think you are up to that point. You went up to the point of the LynnGold payments. It looks like we have advanced $243, 000 for the LGD of Lynn Lake to finance the essential services and we have advanced $300,000 for labour. I guess that is for the $1,200 per employ ee that is guaranteed under the Manitoba Lab our Act. Mr.

Storie: I hope the Minister has garnered the reason for my questi on, to illustrate to the committee that the uses to which the Mining Community Reserve Fund has been put are very broad . They include water and sewer in Wabowden, they include the containment of leaching in Sher ridon , job creation support for miners.

It certainly seems to me that an emergency airstrip in a mining commu nity that has shown a great deal of willingness to do it on the ir own, and have worked now for three and a half years to put together a strip that is usable, but not at this point for aircraft such as the Cessna which is the emergency medical evacuation plane- I make that point simply so the Minister appreciates that this fund was designed for those kinds of purpo ses. I s aid earli er that we were talki ng about evacuation .

The Minister jogged my memory when he mentioned that funds from the reser ve have gone to support an economic develo pment off icer in Lynn Lake . They have also gone to su pport a tourism officer in the communities of Flin Flon and Snow Lake. That may have been several years ago. So the fact is that they have been used for those purposes. The community views this airstrip as having 4151 three essential purposes: emergency mass evacuation , emergency medical evacuation in the event of a major disaster, and also as a tool for econom ic development.

There are a char ter company and a number of lodges in the area that could certainly use an airstrip which would support wheeled planes. So there are many, many aspects to this thing . What I am wondering is, would the Minister be pre pare d to join me in a trip to Snow Lake to meet with the council and the Snow Lake Airport Development Comm itt ee to discuss such a proposal? Mr. Neufeld: I wou ld enjoy very much- Mr. Storie: I will go with him to St. Petersburg later. Mr. Neufeld: -taking a trip with the Member for Flin Flon to Snow Lake.

However, I do not think it is up to me to determine the level of priority that an airstrip should take in the communi ty of Snow Lake. That should be a decision of someone else. It may well be that it should be a proposal that comes from the communit y of Snow Lake , but not to the Department of Energy and Mines . They can certainly ask to access the Community Reserve Fund , but I do not think it is up to the Department of Energy and Mines to determine the level of priority of an airstrip in that comm unity. That is another department, and it should be left to them.

You can ask the department and ask the Minister to access the fund , that is true , but you should not ask him and it is unfair I think to ask him to determine whether or not an airstrip should be built . Having said that, I would certainly entertain an offer from the Member for Flin Flon (Mr. Storie) to go to Snow Lake to discuss it with the community and to listen to their arguments for the need . of an airstrip . Mr. Storie: I appreciate that. I certa inly want to indicate right now that I intend to take the Minister up on his offer, or on his acceptance of my offer I guess.

I am a little intrigued as to the Minister 's view of his responsibility when it comes to the Mining Community Reserve Fund. Did the Minister not play a role in using the Mining Communi ty Reserve Fund to advance money to the community of Wabowden? Did a proposal come to the Min ister with respect to that? Mr. Neufeld: That, I am told , has been ongoing for many years . It is true, however , that a proposal for assistance and access of the fund comes to the Minister fro m whatever source and the Minister must make his decision based on the arguments put forward for such access.

I do not think the fund can be used as a milk cow for every expenditure we think are needed in northern communities . We have to be pru dent in our use of the funds . Mr. Storie: Well, I appreciate that. I certainly had no intention of suggesting I wanted to turn the Mining Community Reserve Fund into it. As the Minister knows, I had a different vision of what that fund should be and how it should be funded and how large it should be .

Tuesday, January 9, 1990 Ther e are considerable funds at this point in the Mining Community Reserve Fund tha t have come from northern Manitoba. In fact the interest alone on tha t fund would more than suppor t the completion of this airstrip to a sufficient degree that it could evacuate people in a medical emergency. So I will be in further touch with the Minister.

I hope that he will see his way clear to make this a priori ty, because certai nly it relates dir ectly to a mining community, it also rel ates to mining activity, explora tion access, et cetera, et cetera, for mining companies, and there is considerable exploration going on in the area. So I leave on the record my appr eciation to the Minister for his willingness to consider it and his willingness to attend a meeting at some mutually convenient date in Snow Lake as wel l to discuss with the community the possibilities. Mr. Chairpers on, those are my questions in this area. Mr. Jay Cowan (Churchill): Mr.

Chairperso n, earlier in the day during the Question Period I asked the Min ister some qu es tions regard ing the creditors meeting in the matter of the bankru ptcy of LynnGold Resources. The Minister indicated that at the Janua ry 4 meeting, I believe it was, they had appointed the trustee, or the receiver was in place, was confirmed, and that there were scrutineers that were appointed. My un dersta nding is that thr ee scruti neers were appointed.

I would ask the Minister who the Province of Manitoba had present at that meeting, and are we playing any role with respect to scrutineering of the matter as it unfolds thr ough the legal process? * (16 00) Mr. Neufeld: The Deputy Minister was in attendance at the creditors meeting and the Deputy Minister of Labour was in attendance at the meeting. As far as playing a role as an inspector, no, the Government will not be playing a role as an inspector, and the reason for that is that you can not be an inspector if you are contemplating litigation against the estate. Mr.

Cowan: What litiga tion, specifically , is the Government contemplating against the estate in this regard? Mr. Neufeld: That is something we have not decided . We do not know what direction this will take, whether or not at this point in time the $2 million that is owed to the development corpora tion has been deemed a non-debt by the trustee. It could well be that would be something we will challenge. Mr. Cowan: We may want to come back to that, but previous to that, Manitoba Labour , specifically the Pension Commission, shows up as an unsecured creditor for an unk nown amount in the list of unsecured creditors.

I would ask the Minister if he can provide us any background with respect to that particular claim? Mr. Neufeld: I would have to check with the Min ister of Labour (Mr s. Hammond) and I would recommend to the Mem ber for Churchill (Mr. Cowan) that he ask that question of the Minister of Labour, because I am not aware of what that specific amount rep rese nts. Mr. Cowan: I did ask that question of the Minister of Labour today in the House and received no answer, so I thought perh aps the Minister of Energy and Mines (Mr . Neufeld) could be somewhat more forthcoming with respect to that particular matter.

As Minister responsi ble for this entire matter and as part of the Cabinet, I would hope that he would have that information available to him. I would ask the Minister if he can give some indication as to when it is felt this matter will be finalized by the trustee. Mr. Neufeld: From my expe rience in the past with bankrup tcies it would be very difficult to guess at a finalization. I would not like to even hazard a guess. It depends on whether there is litigation and depends on the kind of litigation there is. If there are no objections it could be finalized very quickly, but there could well be some objections.

Only time will tell if that leads to litigation. Mr. Cowan: Yes, the sheets outlining the creditors also identifies monies owing to the Mining Recording office. Can the Minister indicate what those monies would be owing for? Mr. Neufeld: Surface lease rentals, Mr. Chairman. Mr. Cowan: One would assume that those surface lease rentals are not up to date at this time to the amount of $37,032 according to

Schedule F of the creditors list. Mr. Neufeld: There were some leases due on December 16, and they have a month from that date to pay it. So they have another week in which to pay that. Mr. Cowan: Who would pay that in that respect? Would that be the trustee who would make that decision at this point in time? Mr. Neufeld: The trustee would have to make the decision whether or not to pay that, yes. The trustee would have to get the authority from the inspectors, if my memory serves me corr ectly, because it is not a prior claim. It is not a secured claim. Mr.

Cowan: What happens if those amounts are not paid within a week's time? Mr. Neufeld: If they are not paid the leases are cancelled. Mr. Cowan: In that case the leased property would revert back to the province. Mr. Neufeld: That is correct. Mr. Cowan: How would it be dealt with by the province at that stage? Would it be payable to other companies to claim, and if so what process would unfold? 415 2

Tuesday, January 9, 19 90 Mr. Neufeld: Ina smuch as these are surface leases, Mr. Chairman, the land would revert back to the Crown and be the property of Natural Resources to be dealt with in whatever manner they saw fit. Mr. Cowan: What would be the difference in this case between a surface lease and a mineral lease or would there be any? Mr. Neuf eld: At one point in time the Mines Branch issued the surface leases. Now the Mines Branch only issues the mineral leases, and Natural Resources issues the surface leases. Mr.

Cowan: These surface leases may expire, but there may well be mineral leases that would not expir e at the same time. Would that be the case? Mr. Neufeld: If the mineral leases expire the surface leases automatically expi re. If the surface leases expire the mineral leases do not automatically expire. If these are surface leases that will expir e next week the mineral rights to those properties would still be with the leaseholder, which would be the company. Mr. Cowan: What would be the disadvantage then of the surface lease expiring at that particular time?

What impact would that have on the abil ity of the buyer of this opera tion to access the mineral rights? Mr. Neufeld: Any buy er could pre sumably apply for a new surface lease and there would be no impact at all, if this were to happen . Mr. Cowan: Well, there may not be any impact if the same person who has the mineral rights appl ied for the surface lease. Would it be possible for someone other than the person or the company, the entity, having the mineral rights to have the su rface lease? * (16 10) Mr.

Neufeld: If the surface lease reverted to the Crown and an appl ication were received for a new lease on that proper ty, Natural Resources would check with Energy and Mines to see if there is any reason why they should not issue this lease. Energy and Mines would check with the mineral rights holder to see if there was any objection to issuing a surface lease to who ever , and if the mineral rights owner had no objection, a surface lease could be issued. In this case, the probabilit ies of that happening are slim. The mineral rights owner would probably not want another surface rights owner. Mr.

Cowan: So it is then up to the mineral rights owner to determine whether or not someone else would get a surface lease. Mr. Neufeld: That is correct. Mr. Cowan: Who would be the mineral rights owner on these particular claims, would they all be LynnGold Resources? 415 3 Mr. Neufeld: The mineral rights owners are all LynnGold Resources. Mr. Cowan: Then this prope rty, these claims, would really stay under the control of the trustee until the matter is dealt with, even if the surface lease has exp ired? Mr. Neufeld: That is technically correct, yes. Mr.

Cowan: Well, if it is technically correct that begs the question -(interjection)-well, as the Member for St. Norb ert (Mr. Angus) says , where is the gap? Yes, it is technically correct. Is it not essentially true then, essentially correct, or is there something that we are missing? Mr. Neufeld: I would pr efer to answer that question privately. Mr. Cowan: Okay, that is a fair comment. Let me just explain to the Minister why I was following that line of questioning.

It followed on the heels of a conversation I had with one of the workers at LynnGold, ex-workers at LynnGold, who would like to see this opera tion get back into operation, general ly, and thought that these claims, whatever they might be-and he was also aware of this, that group having had a rep resentative at the creditors meeting-felt that if these claims stayed with the package it might make it a more saleable package if another party wanted to buy it and wanted to be ass ur ed tha t these claims were not going to be separated off from the existing package, therefore, making it a less desirable package for a potential purchaser.

I guess, from what the Minister has indicated, that would most likely not be the case if this matter is dealt with in any sort of an expedient manner. Mr. Neufeld: I can assure the Member for Churchill (Mr. Cowan) that whatever is best for the community would be the direction tha t the Gover nment, to the extent that it is possible, would take. Mr. Cowan: The list of creditors identifies the Province of Manitoba in a number of different capacities as being owed money, or being creditors. The mining and royalty tax claim is unknown.

Would the Minister have any indication as to what the amount pay able for that par ticular claim might be? Mr. Neufeld: If I were to guess, I would have to say zero, because the mining royalty tax is based on profit, and I doubt if the company had any profit. Mr. Cowan: There is also a claim for workers compensation, among others. I am just listing off a couple of them. Can the Minister indicate what action is being taken with regard to that

part icular claim, or is it part of the package? If it is, where would it come in the line with respect to payouts? Mr. Neufeld: I believe that falls behind the secured creditors, as would most of the Government receivable. It would fall behind the secured creditors and be paid out only if the secured creditors received all their money in full.

Tuesday, January 9; 1990 Mr. Cowan: We have gone over this matter before, but just to set the stage: Can the Minister indicate where the MDC loan of $2 million-or actually I think it is probably $2 million and some interest owing, probably $49,000 -falls with respect to the other creditors? Mr.

Neufeld: The trustee has indicated that because the company is out of business, and he relies on one clause in the loan agreement, which says, in effect, that if a company goes out of business permanently, the loan need not be repa id-r elyi ng on that, the trustee has not included that $2 million in the list of debts of the estate. That is what I referred to earlier. It may result in some litigation. Mr. Cowan: That litigation would be in essence against the estate through the trustee. Would that be the case? Mr.

Neufeld: It would be against the estate through the trustee, and we would have to deter mine whether or not we could salvage any of it if we did win our case. We would have to determine what monies might be available for the preferred cred itors. Mr. Cowan: As the Minister can appr eciate, this whole matter is one of some importance and great interest to the workers. I just go through the list and see people I know and have worked with, a lot of them being owed in the neighbourhood of-here is one for $26,840, another for $22,452.00.

Those would be long-term employees, employees who have been there for quite some �ime. That is not unusual. I mean, $1 7,0 00 figure, $1 4,0 00, here is $25,0 00, and I can go on and on with figures in that particular range, which would be, for the most part, severance. These employees do not really know how much they are going to be getting from the company until this whole matter has been finalized. They have to get on with their lives. They do not like the way this turned out. They would have preferred it to have resulted in somewhat different circumstances for themselves, but they have to make some decisions.

The ones who are owed the most money are going to be the longest service employees. The longest service employees are generally going to be the older workers, many of whom will never work again in a mine, a number of whom will never work again at all, even though they probably would have continued productive work for four, or five, or 10 years had this closure not happened . I would suggest that the vast majority, if not all of whom, will never work at the wage at which they were working when this mine closed.

It is going to affect them in all sorts of financial ways with respect to their future, as well as the fact, as we discussed before, they are going to be losing the equity in their home for the most part. I understand that homes in the area now that a year ago would have probably sold for $30,000 or $40,000 are now selling for $3, 000 or less, if you can sell your home. It is certainly not a seller's market.

They would like to see this whole thing finalized so that they can start structuring their overall response to it.They have had their immediate response, but now they are going to have to get on with their lives. They r certainly do not want to see this matter tied up in litigation for any length of time. Opposite that, of course, is the desire for the province to obtain all that it can, all that is owing to it, from the trustee, and the province, of course, has to defend the money that is owed to them, its receivab les in this particular instance.

If that is the case, I would ask the Minister if litigation is being contempla ted , to consider the impact of litigation on those individuals who really want to see this matter finalized, and I would ask him if there is not some way that litigation may be severed from the finalization of what these workers will receive. * (1 620) They are expecting something out of this, although not a lot, but even if they are expecting a third out of $30,000, that is $1 0,0 00 which would be a significant amount of money in their present circumstances, and money which they probably need right now.

If they were to receive 50 percent out of $30,000, of course that would be $1 5,000 and one can work out any percentage he wants, but they do expect to receive something. They would not like to see the process unduly delayed . I am certain that they want to see the Government treated fairly as they want to see themselves treated fairly, but I would ask the Minister if there is some way those actions can be severed. Mr.

Neufeld: Well, in sofar as the $2 million is concerned , we would not probably contemplate any action there unless we felt that there was a possibility, indeed a probabi lity of salvaging some of it. I would certainly be open to discussion and to hearing from, among other people, the trustee, to see whether there would be enough available for the employees were we not to proceed. There ma y still not be enough available. Indeed, there may not be enough available to cover the secured cred itors, in which case it wou ld be foolhardy for us to waste money in litigating for the $2 million.

I have sympathy for the request of the Member for Churchill (Mr. Cowan) and would certainly consider the employees and the hardship it might impose upon them if we were to prolong the conclusion of this bankru ptcy. Mr. Cowan: I want it to be clear that I am not suggesting the Government should not go after everyt hing that at least it has coming to it, and that it can win.

I am not actually being amb ivalent about it, I am just suggesting that if they do go after that amount, which by the way is listed as a preferred creditors claim, and what I am being told by the Minister is tha t it has not been accepted by the trustee as a preferred creditors claim. Is that the case? Perhaps we should clear that up first. Mr.

Neufeld: It is true that in the original letter from the trustee, or from the lawyer, I cannot recall who wrote the original letter, it was included as a preferred claim, but since then we have received a letter in which the trustee suggests, or indeed claims that because of the clause in the loan agreement, they do not owe us 415 4

Tuesday, January 9, 1990 anything. That is the most recent information I have and rely on that for my an swers to you. Mr. Cowan: In that case, to go back to the original point, I am not suggesting that if the Gover nment thinks that is a litigable case, they not go after that amount of money, but if they do go after that amount of money, and I know the difficulty because this is one package, one pie in which everyt hing is cut up according to listing, ranking and propor tionality, but that they try to do so in a manner that it does not prevent the workers obtaining anything that might be coming to them.

If the Gover nment cannot do that, then they have to make the decision as to whether or not it is worthwhile prolonging the agony with respect to this particular claim, and that is a judgment call that they will have to make. My question to the Minister is more direct, however. He had indicated earl ier that it may be the employees may get nothing out of this process, if I heard him correctly, and I would ask him how he has come to that conclusion, upon which assumptions he has based that particular suggestion, not even conclusion, but that statement. Mr.

Neufeld: In any bankru ptcy there is always a possibility, and in most ban krup tcies there is indeed a probabil ity that unsecured creditors receive very little, if anything. We have an instance here of a one-purpose asset that will be available to the vultures, if you like. People are not known to bid more than they absol utely have to in purchasing assets from an estate. I think we will find that the principal shareh olders are secured to the extent of probably $14 million to $15 million. The National Bank has not been dealt with. It is secured to the tune of about $4.5 million to $4.7 million.

So we have close to $20 million that to my understanding is secured . Against that we have assets, the principal one would be the mine itself. How much a person will bid on those assets is highly problema tical. My experience is that they will pay no more than they absolutely have to. My guess is there will be a reserve bid

Document details

Collection	Manitoba — Debates (Hansard)
Citation	34-2-99
Type	hansard
Volume / chapter	34th 2nd hansardpdf 99.pdf
Language	en
Format	pdf
Source	PROVINCIAL
Identifier	a4cdcc7c014832177a005e7332d6a76a8d9197a6

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