Manitoba Committee Hansard — 16 November 2016 (Crown Corporations Committee, Sitting 5, 41st Legislature, 1st Session)

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Manitoba — Debates (Hansard)

First Session – Forty-First Legislature of the Legislative Assembly of Manitoba Standing Committee on Crown Corporations Chairperson Mrs. Colleen Mayer Constituency of St. Vital Vol. LXIX No. 5 - 1 p.m., Wednesday, November 16, 2016 ISSN 1708-6604

MANITOBA LEGISLATIVE ASSEMBLY Forty-First Legislature Member Constituency Political Affiliation ALLUM, James Fort Garry-Riverview NDP ALTEMEYER, Rob Wolseley NDP BINDLE, Kelly Thompson PC CHIEF, Kevin Point Douglas NDP CLARKE, Eileen, Hon. Agassiz PC COX, Cathy, Hon. River East PC CULLEN, Cliff, Hon. Spruce Woods PC CURRY, Nic Kildonan PC DRIEDGER, Myrna, Hon. Charleswood PC EICHLER, Ralph, Hon. Lakeside PC EWASKO, Wayne Lac du Bonnet PC FIELDING, Scott, Hon. Kirkfield Park PC FLETCHER, Steven, Hon. Assiniboia PC FONTAINE, Nahanni St. Johns NDP FRIESEN, Cameron, Hon. Morden-Winkler PC GERRARD, Jon, Hon.

River Heights Lib. GOERTZEN, Kelvin, Hon. Steinbach PC GRAYDON, Clifford Emerson PC GUILLEMARD, Sarah Fort Richmond PC HELWER, Reg Brandon West PC ISLEIFSON, Len Brandon East PC JOHNSON, Derek Interlake PC JOHNSTON, Scott St. James PC KINEW, Wab Fort Rouge NDP KLASSEN, Judy Kewatinook Lib. LAGASSÉ, Bob Dawson Trail PC LAGIMODIERE, Alan Selkirk PC LAMOUREUX, Cindy Burrows Lib. LATHLIN, Amanda The Pas NDP LINDSEY, Tom Flin Flon NDP MALOWAY, Jim Elmwood NDP MARCELINO, Flor Logan NDP MARCELINO, Ted Tyndall Park NDP MARTIN, Shannon Morris PC MAYER, Colleen St.

Vital PC MICHALESKI, Brad Dauphin PC MICKLEFIELD, Andrew, Hon. Rossmere PC MORLEY-LECOMTE, Janice Seine River PC NESBITT, Greg Riding Mountain PC PALLISTER, Brian, Hon. Fort Whyte PC PEDERSEN, Blaine, Hon. Midland PC PIWNIUK, Doyle Arthur-Virden PC REYES, Jon St. Norbert PC SARAN, Mohinder The Maples NDP SCHULER, Ron, Hon. St. Paul PC SELINGER, Greg St. Boniface NDP SMITH, Andrew Southdale PC SMOOK, Dennis La Verendrye PC SQUIRES, Rochelle, Hon. Riel PC STEFANSON, Heather, Hon. Tuxedo PC SWAN, Andrew Minto NDP TEITSMA, James Radisson PC WHARTON, Jeff Gimli PC WIEBE, Matt Concordia NDP WISHART, Ian, Hon.

Portage la Prairie PC WOWCHUK, Rick Swan River PC YAKIMOSKI, Blair Transcona PC

111 LEGISLATIVE ASSEMBLY OF MANITOBA THE STANDING COMMITTEE ON CROWN CORPORATIONS Wednesday, November 16, 2016 TIME – 1 p.m. LOCATION – Winnipeg, Manitoba CHAIRPERSON – Mrs. Colleen Mayer (St. Vital) VICE-CHAIRPERSON – Mr. James Teitsma (Radisson) ATTENDANCE – 11 QUORUM – 6 Members of the Committee present: Hon. Mr. Schuler Messrs. Allum, Curry, Ms. Fontaine, Mr. Lagimodiere, Ms. Lamoureux, M essrs. Marcelino, Martin, Mrs. Mayer, Messrs. Reyes, Teitsma APPEARING: Hon. Andrew Micklefield, MLA for Rossmere Mr. Peter Hak, Acting Chief Executive Officer, Manitoba Liquor & Lotteries Corporation Ms.

Polly Craik, Chairperson of the Board, Manitoba Liquor & Lotteries Corporation MATTERS UNDER CONSIDERATION: Annual Report of the Manitoba Liquor Control Commission for the fiscal year ending March 31, 2014 Annual Report of the Manitoba Lotteries Corporation for the fiscal year ending March 31, 2014 Annual Report of Manitoba Liquor and Lotteries Corporation for the f iscal year ending March 31, 2015 Annual Report of Manitoba Liquor and Lotteries Corporation for the fiscal year ending March 31, 2016 * * * Clerk Assistant (Ms. Monique Grenier): Good afternoon.

Will the Standing Committee on Crown Corporations please come to order. Before the committee can proceed with the business before it, it must elect a new Chairperson. Are there any nominations for this position? Mr. James Teitsma (Radisson): I nominate Mrs. Mayer. Clerk Assistant: Mrs. Mayer has been nominated. Are there any other nominations? Hearing no other nominations, Mrs. Mayer, will you please take the Chair. Madam Chairperson: Our next item of business is the election of a Vice-Chairperson. Are there any nominations? Mr. Alan Lagimodiere (Selkirk): I'd like to nominate Mr. James Teitsma.

Madam Chairperson: Mr. Teitsma has been nominated. Are there any other nominations? Hearing no other nominations, Mr. Teitsma has been elected Vice-Chairperson. This meeting has been called to consider the following reports: A nnual Report of the Manitoba Liquor Control Commission for the fiscal year ending March 31, 2014; Annual Report of the Manitoba Lotteries Corporation for the fiscal year ending March 31, 2014; Annual Report of Manitoba Liquor & Lotteries Corporation for the fiscal year ending March 31, 2015; Annual Report of Manitoba Liquor & Lotteries Corporation for the fiscal year ending March 31, 2016.

Before we get started, are there any suggestions from the committee as to how long we should sit this afternoon? Mr. Teitsma: I recommend committee sits for five hours or until we're done our work and we can review it at that time. Madam Chairperson: Is there agreement from the committee to sit for five hours and revisit a t that time? [Agreed] Are there any suggestions as to the order in which we should consider the reports? Mr. Ted Marcelino (Tyndall Park): Globally, please.

112 LEGISLATIVE ASSEMBLY OF MANITOBA November 16, 2016 Madam Chairperson: It has been suggested we consider the reports globally. Is that agreed? [Agreed] Thank you. Does the honourable minister wish to make an opening statement, and would he please introduce the officials in attendance? Mr. Schuler? Honourable Government House Leader (Mr. Micklefield). Hon.

Andrew Micklefield (Rossmere): Madam Chair, I believe if you canvass the committee you'll find there's an understanding, as it pertains to manner of questions, that the opposition will take about 45 minutes, the government members will take about 15 minutes, the independent member about five or so minutes, and that that would be the cycle for the afternoon. Madam Chairperson: Is there agreement to conduct business as per the Government House Leader's suggestion, with the opposition asking 45 minutes, government asking 15 minutes, and i ndependents asking five minutes? Mr.

James Allum (Fort Garry -Riverview): My understanding in talking to the House leader was that was an informal arrangement. No one was going to be kept to four to five minutes to the dot or 15 minutes to the dot or fiv e minutes to the dot. There's a dialogue we want to have with –that everyone wants to have. It's all fair, but I would want to reiterate that this is an informal understanding and, frankly, to even put it on the table strikes me as not necessary. Madam Chairperson: That's a fair comment. I acknowledge that.

I will do my best to keep it in and around, and I will make eye contact and we can kind of go from there. Does that seem fair? Is everyone in agreement? [Agreed] Thank you. So back to honourable minister. * (13:10) Hon. Ron Schuler (Minister of Crown Services): Well, thank you very much, and I will keep my comments short. This is basically a historic meeting. I can't remember the last time when a Crown corporation, the same Crown corporation, was in front of this committee twice in one month, and, certainly, in recent memory that has not happened.

I think it's important for us to have the opportunity to find out what's going on in the Crown corporations that have such an important role in our provi nce and in society. I would like to table for the committee, and seeing as we met twice in one month, we can actually table it at committee rather than tabling it afterwards. There were two questions that were asked by the member for Fort Garry -Riverview (Mr. Allum), and we would like to table those answers to committee so the committee has those answers, and thank you very much for that, Madam Chair.

I would like to, at this point in time, introduce our officials today. Representing Manitoba Liquor & Lotteries, we have our board chair, Ms. Polly Craik. Thank you very much for being here again. We have our acting CEO, Peter Hak; we have Heather Mitchell, who is the acting vice-president of finance; and we have Robert Holmberg, vice-president, liquor operations; and we have board member, Jim Morden also here today. And we thank all of them for giving of their busy time and

schedule to be here and answer questions that the committee might have. Thank you, Madam Chair. Madam Chairperson: We thank the honour able minister. Does the critic for the official opposition have an opening statement? Mr. Marcelino : Welcome back to everybody who was here before and welcome for those who's here for the first time. Manitoba Liquor & Lotteries is a vibrant member of our family of Crown corporations and has played an important role in providing responsible access to liquor and gaming for Manitobans for many, many years.

It takes its role as a government provider of alcohol, wine and beer seriously. I like the beer part s pecially. It takes its role as a provider of gaming options for Manitobans also seriously. Both products that it offers are of high quality and are offered in a responsible way, a way that respects the negative effects that are known to arise from the consumption of alcohol and gaming. Manitoba Liquor & Lotteries is able to provide such a high quality of service to its customers because it is a publicly held Crown corporation.

Its profits are returned to the public for investment in important front-line services here in Manitoba rather than being sent elsewhere or placed into private

November 16, 2016 LEGISLATIVE ASSEMBLY OF MANITOBA 113 hands. And it can properly exercise its mandate to work on the public's behalf in the provision of its services through the work of its highly trained staff and experienced employees. In addition, because it is a publicly held Crown corporation, MBLL is well placed to meet and respond to new changes in the marketplace and in consumer preferences as well as changes to the regulatory and legal environment in Manitoba and Canada.

Whether it is through the creation of the Liquor Mart Express store option in grocery stores and through the exploration of new market opportunities, MBLL's past successes position it well for the future. We welcome this opportunity in committee to properly examine the past success of MBLL and to receive information regarding its future plans – emphasis, future plans –from the CEO, board chair and the minister responsible. Thank you, Madam Chair. Madam Chairperson: We thank the member. Do the representatives from the Manitoba Liquor & Lotteries Corporation wish to make an opening statement? Seeing none.

Thank you. The floor is now open for questions. Ms. Nahanni Fontaine (St. Johns): So I just want to maybe start the discussion in respect of what preparations has the corporation taken in advance of the expected legalization of marijuana. Mr. Schuler: The legalization of marijuana comes out of a federal election a year ago, where the government party made it a commitment during an election campaign. We are waiting for the federal government to come up with some kind of a framework. They haven't indicated yet what kind of approach they're going to take. We as a government are okay with them taking time.

This has to be something that is treated carefully. It's got to be done right. I mean, there are a lot of concerns about how this might proceed. And we've been given no indication from the federal government where they might be going with this and how prescriptive they're going to be with their legislation.

So, until we get some kind of a parameter from the federal government, it would be probably not appropriate for us to comment on how we're going to proceed, because we have no idea if this is going to be a pan -Canadian approach, if the federal government's going to allow provinces to have their own made -in-their-own-province approach. And we've been gi ven really no indication from the federal government how they're going to take on the entire issue. So we are waiting. And, again, we're not looking at pushing the federal government.

We would rather they would take whatever time necessary, that when they do put forward legislation, that they get it right, because this is a very important issue, I think, for Manitobans and all Canadians. Ms. Fontaine: I thank the minister for his response. And just in respect of his response, I'd like to maybe ask the minister if he could just maybe expand or clarify in respect of some of the concerns that his government has in respect of what we know will be coming down the pipe very, very shortly. Mr. Schuler : Well, again, it's hard to know what that's going to look like.

And so we–you know, some of the concerns that we have: is this going to be –is it going to be prescriptive insofar as what age you can access marijuana? Like, who can it be sold to? Is that going to be a pan- Canadian–is that going to be an age that's going to be set by federal legislation? Our concern would be, if it's not, then you have what happens in regards to alcohol, you have different jurisdictions can set different ages. And that's not appropriate.

And you see that a lot in the United States w here, you know, one state has 21 and–as an age and one state has 18 as an age, and you just have to cross over the border. You know, those are the kinds of things that we find Manitobans are bringing to our attention. But we don't want to get ahead of ourselves on this and start having a debate without seeing, at least getting some kind of indication of where the federal government's going to go with their legislation. And I think we should allow them the opportunity to take time.

I'm sure they're getting lots of feedback, whether it's Mothers Against Drunk Driving, whether it's various groups for and against. And we would recommend to all Canadians, all Manitobans, if you have a concern one way or another, you know, speak to the federal government, because that's where the legislation is going to be drafted. So we don't want to get ahead of ourselves in the debate. But there are a lot of issues that have to be resolved, I think, within the federal government before they'll be prepared to table legislation.

114 LEGISLATIVE ASSEMBLY OF MANITOBA November 16, 2016 So we are basically looking at the things that we can control and deal with those. And we'll wait for the federal government to come forward with their legislation which, then, we'll all see. And I suggest at that time there'll be a very healthy and fulsome debate on what they're proposing. Ms. Fontaine: Again, miigwech for that. So, just to be clear, then, I guess there's no direction or there's no–anything on the part of MBLL in respect of some 'preparary' or research going on and taking place right now?

I mean, the bottom line is that we know that this is coming down, right, and so I want to know if the corporation is actually taking steps to do some preliminary research and look at, you know, other jurisdictions in which it is legalized. * (13:20) Mr. Schuler: Clearly, there is work being done on various scenarios. However, we don't want to get into the public debate on where things might go. I think if you go across Canada and you look at every jurisdiction, they're waiting to see, or at least g etting some indication from the federal government, where they might go with their legislation.

Until then, our concern is is that we get ahead of the debate. And that's something I know, as Manitoba Liquor & Lotteries, we want to be careful that we don't get ahead of ourselves, that we respond to something concrete. There are, obviously, are discussions, and there should be, and inner workings, but, again, that is something that would be more internal, and, again, we're waiting to get some kind of indica tion from the federal government how prescriptive they're going to be.

Because that will decide what a Crown corporation, or what a government, or what a department of justice or anybody involved in this — how far they're going to go—because, you know, we will then, obviously, have to get our legislation in line with federal legislation. But, again, we don't feel that we should be spending a lot of money on this. We obviously should be mindful, like you've made it clear, something's going to come, and we should be ready for that.

But I –again, without at least some indication, and from what I understand and from those that I've spoken to, they're not even giving a lot of direction to their members of Parliament. This is something that they're –within their gove rnment, they're working on, and when they're ready to produce something, they will. So they–again, we don't want to start doing a lot of work and find out that the federal government's going in a different direction.

And–sorry about this – and just for thi s dialogue, if —you know, there was also a commitment made about changing the way Canadians would vote, and that's taken a different direction. So, you know, it's sometimes better just to wait to see what kind of direction they're going to give and then react to that. Ms. Fontaine: So, again, I just want to clarify some of your comments because I'm a little confused now. Because you just said that there is some work being done–that's what you just said –so I'm just curious in respect of what specific work is being done.

And then I just would like a little bit more clarification. You noted that Manitobans are bringing this to your attention. So is there a, like, a formalized process in which this information is being brought to yourself or to the corporation? So, I'm just wanting a little bit more clarification on those two pieces. Madam Chairperson: I'm just going to remind the member to direct her comments through to me so that they can be reflected that way. Thank you. Honourable Minister. Mr. Schuler: Thank you, Madam Chair. And to the member it's the kinds of work that's being done right here, right now.

And those kinds of conversations are taking place, I mean–and, of course, people are going to have conversations. And we have no idea if this is going to be –the federal government's going to do all of it, or they're going to delegate some of it to the provinces. We have no idea, and we are getting really no indication from the federal government where they might be going, because, you know, they–this is a very tough issue.

Sometimes commitments made during elections seem a lot easier than after you're elected, and you have to put forward legislation, because there are ramifications not just within our country but trade agreements and all the rest of it. I mean, the federal government has to figure all that out, and we encourage them, when they do it, that they have a fulsome approach, that they take their time. So conversations can take place, and should take place, and people can have a dis cussion about it.

However, there is no value in spending a lot of public money on an issue where we have no idea how prescriptive the federal government's going to be. And it is their jurisdiction; it is their purview. So

November 16, 2016 LEGISLATIVE ASSEMBLY OF MANITOBA 115 we respect that. We would ask that they take as much time as possible and get it right. Insofar as individuals, a process, yes, there is a formal process: it's called constituency offices. Constituents are always encouraged to contact their MLAs. They can do it by email, telephone call, Facebook, Twitter, contact us. I'm sure the member opposite has received some emails on it. And I would suggest to her that when the time comes, and the federal government does put legislation forward, that should be part of the debate.

And we should all be taking that information and bringing it into this building, whatever the legislation might be federally and whatever the decisions are we have to make here. So that is the process. I mean, people –we are all out at events and people come up and speak to us and have concerns, and that's the most appropriate way to do it. Ms.

Fontaine: So I–just to clarify, again, so really there's no process at this, there's no formalized process at this point, because the minister just finished saying that this is a pro cess in respect of some of those preliminary kind of research into the legalization of marijuana, and that constituents calling our offices or Facebook messaging me, that is what the minister is constituting as a process.

But just to be clear that–at this point, and I do want to remind everybody, and I don't need to remind everybody, but we know that the Liberal government, they're a year into their mandate, so we know that they're actively looking and researching and engaging in respect of this particular legislation that will come down the pipe. So, at this point, Manitoba has no formal process in respect of looking how we're going to distribute it, who is going to– excuse me–who's going to undertake this whole piece in respect of Manitoba.

So, again, I just want to kind of clarify that at this point, if the minister can just clarify, that this is the process here, just this –the discussions here, and that constituents can call me or call my colleagues. But then that's not really a formal process. It's very informal. And it's kind of willy -nilly for something that we know that is coming down the pipe. So could the minister, Madam Chair, just clarify that, please? Mr. Schuler: Well, willy and nilly can have an opinion. There is no legislation. There is no indication when legislation is coming. I don't believe it's on the Order Paper.

We as a government, and the member might know, when her party was the government, we cannot shadowbox. We don't know what it might look lik e. We don't know when it might come out. We don't know in what format it would come out. And that is the purview of the federal government. We encourage them to take their time. You know, however long it takes, it will come out. And at that point in time we will then be able to respond. And I would suggest to the member it's–this isn't the only forum in which people are talking about this issue. There are a lot of forums in which people have the opportunity to have their say.

I would suggest one of the places they could probably take their concerns to, I believe there's a Member of Parliament by the last name of Lamoureux who holds court in a McDonald's every Saturday morning. And it's open to anybody, and, you know, if you have concerns, great opportunity to go and raise those concerns. But I would suspect even he would be the right individual to send concerns to. Ms.

Fontaine: So I just want to clarify for everyone that I am in no way saying that–first off, I said willy- nilly in respect of the proces s, so I wouldn't want it interpreted that I was in some way talking about Manitobans in respect of the way the minister responded that willy and nilly can have opinions. I think that that's not something that I would certainly not say about Manitobans.

Again, as well, I understand what the minister is saying in respect of that, you know, we don't have anything concrete in respect of this legislation that we all know around this table is coming down the pipe, and so that, you know, he doesn't want to spend a huge amount of money and, you know, how are we going to prepare for whatever is coming down the pipe. * (13:30) But, in the same way that we prepare for all kinds of things that we don't know are coming down–or we know are coming down the pipe or potentially coming down the pipe, but we still do prepare.

I think that it is incumbent on government, the government of the day, to at least in some small way begin a formal process at engaging Manitobans and at the very minimum begin looking at some

116 LEGISLATIVE ASSEMBLY OF MANITOBA November 16, 2016 research in respect of other jurisdictions and how that manifests itself within their own jurisdictions. So, you know, I would encourage the government and the corporation to start looking at some really formalized engagement of Manitobans, not through just Face book or not just through these discussions right here or even just to–not at McDonald's with our colleagues –one of our federal colleagues.

I think that it is absolutely incumbent on Manitoba to –and the corporation to start looking at how we are going to deal with legislation that is coming down the pipe that will change everything here in respect of marijuana and its distribution, its use, its –all of these pieces is a huge shift for Manitoba, for Canadians. So I would encourage the government to look at that.

And I would ask the minister –or I would ask the Chair–through the Chair to the minister, I note that the minister had said that it's not the only forum, these pieces, and so I'm just curious at what forums he was speaking about and whether or not government or corporation were actually at these forums to hear, actually, some of the discussions from Manitobans in respect of this very critical issue. Mr. Schuler : Well, I thank the member for the question. And she's absolutely right: the federal government has been in power for more than 12 months, of which six months of which she and her party were government.

And I don't remember any formalized process that they had established at that time because they knew this was coming. And they never started a p rocess, as such, on it. I do believe some amount of money was spent sending individuals to Amsterdam. And I would say we're getting ahead of ourselves, and I would point out to the member that this entire issue does rest under the Minister of Justice (Mrs. Stefanson), and there's going to be an opportunity in spring to speak to the Minister of Justice during Estimates to see where that is going.

But, again, the Crown corporation is a business that is–has a legislated mandate, and the corporation is supposed to focus on its mandate. We can sit here and debate the theory and talk about where one should or shouldn't go. And if she has ideas, you know, maybe she wants to go out and have consultations on her own. Maybe it's something she wants to do and have consultations on something that doesn't exist, on something we have no direction on. She can go and consult on something that we have no jurisdiction right now.

Somehow, she doesn't believe speaking to a federal Member of Parliament is worth it, and that's fine. I would say if you have concerns one way or another, speak to individuals who sit in the federal government caucus. It's a good place to go. I suspect they're still in the process of designing their legislation and trying to come up with something that they can put forward in front of Canadians. However, the committee here–and what we're basically here is –about is Manitoba Liquor & Lotteries and our mandate.

And we've decided to go globally, but this issue is within the purview of the Department of J ustice until such time as the legislation is put forward and we know where the parameters are. Perhaps the federal government will decide that this is going to be purely their purview and they're going to be prescriptive on it. We have no idea. So we could spend a lot of public money talking about something that we're not too sure where the federal government's going to go on, and I don't think that is prudent time spent.

I think we should focus on the finances of our Crown corporations and what's happened the last 17 years in our Crown corporations. We've got annual reports in front of us and issues that we want to deal with. I would suggest to the member, if this is a burning issue, in spring, there will be an Estimates process and that would be probably a good opportunity. She also has access to question period. Perhaps she wants to ask the Minister of Justice on this issue.

However, at this point in time, this is really a committee of Manitoba Liquor & Lotteries, and right now that's not part of their mandate, and I think we should probably focus on what their mandate is and what they're doing and probably spend less time on what if and what may be or what perhaps. Ms. Fontaine: So I will just go back to what the minister said not more than five minutes ago, that this is a process in which to undertake discussion on the legalization of marijuana, so I will continue with some of those questions, but I appreciate him trying to direct me otherwise.

But I would like to just direct my question, actually, to the corporation's chair, and the reason why I'm bringing up these very important and critical questions, is because I would imagine that most of us in this room could agree that Liquor & Lotteries has

November 16, 2016 LEGISLATIVE ASSEMBLY OF MANITOBA 117 the expertise and the capable staff and the structure and the infrastructure in respect of when this legislation comes down in respect of the distribution and co-ordination, or whatever it's going to look like, and so that is the reasoning for my questions. I'm not asking these just for–to waste people's time here. So I would direct my question to the chair in respect of, you know, whether they are looking at any research or if they are looking at any models or if they have any plans in respect of what is coming down the pipe. Mr.

Schuler: Well, the member's right: any member can ask any question, and I think we've been very forthright. We are not prepared to spend a lot of time, a lot of energy, a lot of money on an issue that we have no idea where it's going to go. And I would suggest to the committee that, you know, we've made that clear; it's out of scope for this committee. It's not the mandate of Manitoba Liquor & Lotteries; it's not part of their legislation. They have a mandate, and their mandate is on the liquor side and on the lotteries side, to do th e best for the taxpayers of Manitoba and provide good service.

I would suggest that the questions are out of scope, and I know we as politicians want to come to committee and go after hot-button issues like the one the member is asking, and I would sugge st she avail herself of her local Liberal Member of Parliament and have this debate with them, what she would like to see, where she would like to see it go. That's fair. I mean, I –from what I understand, the legislation is still in the design process. Now would be a good time for any Manitoban, any Canadian, who has a concern about this, go speak to the Liberal caucus members and have your input there.

And that –I've had that opportunity on occasion to speak to different members of Parliament, and I'm allow ed to have my say, and I'm sure they'd appreciate that feedback. However, here at this committee, Manitoba Liquor & Lotteries, it's –they don't have that mandate. They don't have that legislated mandate; we have no legislation federally, we have no legislation provincially, because why would we legislate something that we don't know where it's going to be.

And I gave the example to committee: you know, we could've gotten way ahead of ourselves on the changes to the way elections were going to be run, and I understand those changes aren't going to be coming anytime soon. So let's focus on how we can make Manitoba Liquor & Lotteries a better corporation, how we can keep them accountable, how we can, you know, have them provide a good service. Those are the issues that we should be dealing with. This issue, the lead department is the Department of Justice. You know, we've gi ven some latitude here at committee. I'm – I've answered questions very openly.

I've made it very clear we are waiting for the federal government. I would suggest we move on to other questions that we do have jurisdiction in and that we can answer. Until tha t point in time, this is speculation at best, and I don't think that serves the public well. Again, if you have an issue, avail yourself of the Liberal members of Parliament, and I'm sure they would love to hear anybody's opinions and input. * (13:40) Ms. Fontaine: So, I do again just want to clarify, because the minister seems to kind of be projecting all of this stuff that isn't entirely accurate.

So, I'm not asking the minister to engage in instituting legislation. I am simply asking whether or not there are any processes taking place in respect of, again, what we know is coming down the pipe in respect of the legalization of marijuana which, again, I'm sure everyone in this table can agree is going to have huge impacts. So I just want to clarify that again because, again, the minister seems to kind of be projecting and noting things that are not actually what I was saying.

So, again–and I just want to have clarification on whether or not, Madam Chair, the chair for the corporation is going to answer my question or is being prevented from asking my question, and it's a simple question. I'm just wanting to know whether or not the corporation, who I would suggest is probably the best institute in respect of the distribution in all of that piece, so in that vein, whether or not there is any work being undertaken by the corporation in preparation–not legislative–research, undertaking an environmental scan of othe r jurisdictions, at this point. Mr.

Schuler: Well, the member knows that that's a political question, and she's asking a political question. And I'm not certain that the board or the corporation wants to get themselves involved in this member or any other member's political questions. There is no legislation. It was a political promise made by a political party who won an election and now has to craft legislation, and they're taking their time because they want to get it right, and until such

118 LEGISLATIVE ASSEMBLY OF MANITOBA November 16, 2016 time, we have a lot of work to do within government. We've got Crown corporations as in Manitoba Hydro that are struggling with massive amounts of debt. We found out Manitoba Liquor & Lotteries got involved with a building that was at best awkward and could have been financially difficult for the corporation to undertake. I'm sure there's going to be all kinds of other things that we want to discuss at committee.

Why would we spend time discussing a political issue when we have question period we can do that, we have session where we can do that, we have Estimates where we can do that. This is where we can ask the corporation what – how they run their company and what's happening within the company and how the corporation is doing. Asking political questions of a boar d chair and a corporation isn't probably the best use of committee's time. We can keep having this discussion; that's fine, but it's out of scope of the corporation because there's no mandate; there's no legislative mandate for them to do this.

Until the federal government tells how prescriptive or how they're going to delegate authority or how they're going to legislate this, we can sit here and talk 'til the cows come home, but that's not going to help us because we have no idea where the federal government is going on this issue. So, I would suggest that we move on and we ask questions that are in scope. If the member wants, she could ask for a meeting with the Minister of Justice (Mrs.

Stefanson) and –Justice is actually the lead on this issue because i t is a legal issue right now, and I would suggest that'd probably be a good place, probably very important would be –we all know our members of Parliament and they show up at a lot of events. We can talk to them at these events. That would be a good opportunity to deal with these issues. This is really out of scope for this committee. Ms.

Fontaine: So, again, I just want to remind the minister that not more than, I don't know, 15 minutes ago, the minister indicated that any discussion in respect of the legalization of marijuana could take place at a table like this, and so that is exactly what I'm doing. I'm not asking political questions. I am asking process questions. So all I'm doing is, you know, executing what the minister, not more than 15 minutes ago, said, that any of us at this table could be doing, which was asking questions and having these discussions. So I'm going to ask again.

I don't know why the minister is trying to construct my questions about process as a political question. It's not a pol itical question. It is about what this government is currently undertaking in respect of legislation that we know is coming down. So I want to just know from the board chair–again, so this is my third time asking this just process question, is in respect of whether or not any work is currently being undertaken in respect of research or best practice or what other jurisdictions are doing as we await legislation that will have phenomenal changes and impact.

So I will ask that question, that process question, not a political question, and I'm simply doing what the minister said that we could do 15 minutes ago. Miigwech. Mr. Schuler: And we have indicated that we are prepared to sit here as a minimum for five hours, and we can revisit and sit for another five hours. I've put my calendar aside. I think the member absolutely can keep asking those questions. Now, I would caution the member –and I'll wait 'til she finishes conferring with her colleague –that it was her premier, the member for St. Boniface (Mr.

Selinger), who I believe it was him who was offside with the former CEO of Liquor & Lotteries on who was the best venue to be selling marijuana. So they decided that they would have this very public, and in a newspaper, discussion to no avail, didn't help anything. We still don't have legislation in front of us. It is still a theoretical discussion. And it didn't help the member for St. Boniface and the then-CEO to have this discussion. One was going one way and one was going the other way. That doesn't do us a ny good until we know what the thinking is with the federal government. And that's all we know.

We know that a party ran in the last federal election, and we can all go online and we can see their commitment. And their commitment was not to decriminalize but to legalize marijuana. That was the commitment. They've formed government; they said they're going to live up to that commitment. More than that, we don't know. So to ask people at a committee–this is not having constituents come in and you have a bit of a debate with constituents in your office or the member, she can go into the Chamber and have a debate with other elected officials.

What an elected official at this committee is asking for is that people who are not part of our politics in this legisl ature speculate on what they think the federal government may or may not do and how they should or shouldn't

November 16, 2016 LEGISLATIVE ASSEMBLY OF MANITOBA 119 get themselves ready for something they may or may not have a jurisdiction over. Why would we use valuable time at this committee for something tha t's so out of scope? And, frankly, that's not actually reasonable to expect a Crown corporation to get involved in our world. Once the federal government tables legislation, it does become part of the political process. That becomes part of that debate. And we as legislators debate that process, whatever it's going to be, whatever the federal government puts forward. That is our process.

Once we've passed legislation and the Legislature has spoken, then whatever comes out of that, that's then what'll be done. * (13:50) But even within her own party, when they were in government, they were offside with where the corporation was suggesting things might go. And it was in a newspaper article–I'm not divulging anything here that you can't google –the premier, the member for St. Boniface (Mr. Selinger), said one thing, and the CEO of the day said something different. Why would we want that kind of a discussion here at this table?

I mean, then this isn't a committee, this becomes like a university debating club and we all have our opinions. And, folks, that doesn't make sense. Until we have something concrete, we're all just a debating club debating in a vacuum. And that might work as university students, but we've got a corporation here that has a responsibility , that's been legislated to have a mandate, and that's what they should be focusing on right now.

To ask the corporation– I don't think it's appropriate to ask a board chair or a CEO to start speculating on something that none of us, nobody here–and if th ere is somebody who has insider information, please raise your hand we'd love–would absolutely love to have some insider information on what that legislation would look like, because until then I do not believe that anybody here has an idea of what that legislation's going to look like.

So to ask professionals to come forward and start grilling them on what they think they should be doing when nobody has a clue what this is going to look like, I'm very uncomfortable with that. And I think that puts our professionals on the spot. And we should get back to the corporation, what their mandate is, what they've done, what they plan on doing; you know, are they going to order more red wine or whatever, like, we should be dealing with the mandate of the corpora tion and not ask the corporation to sit here and speculate on what may or may not happen in the future as far as federal legislation. Ms.

Fontaine: So, again, I find I have to–we waste a little bit of time when I have to keep going over the minister's comment and correcting the minister's comment. So, if we were to go back in Hansard, at no point in the last 40 minutes now have I asked the Crown chair to speculate in respect of legislation coming down. At no point have I asked them to do that. I've simply asked whether or not there are any – there's any plans for research. If there is any plans or–currently being undertaken in respect of an environmental scan on other jurisdictions.

So I just want to clarify that in no way, shape or form have I asked the Cr own to speculate. None of us can speculate. And, actually, I agree with the minister, we don't know at this point. So I certainly wouldn't come to committee and ask the Crown, hey, what do you guys think is going to happen? It's inappropriate; it's not my question. So I just want to clarify that I have not said that.

What I am asking the Crown, very simply, and I'm asking the Crown–and let me say it again, so that everybody is clear, so that the minister is clear –the reason for my questions is that if we w ere to look at the infrastructure for Manitoba it would seem that Liquor & Lotteries is the most suited in respect of however this is going to manifest itself, and so all I'm asking is whether or not there is any formal process going on in respect of resea rch or looking at other jurisdictions.

And I do just want to comment in respect to the minister's, you know, attempt at, you know, formulating some type of argument in respect of, you know, not having the Crown kind of speak to this right now because of the former premier and they were both kind of offside from one another –that is actually precisely my point. That is precisely my point, and he actually proved my point that we are going to have huge variations in respect of how do we respond to this legislation.

So does this government take an active role right now in kind of mapping out or looking at all of this, or when the legislation comes down all of a sudden we're in months and months of negotiations and back and forth and whatever it may be?

120 LEGISLATIVE ASSEMBLY OF MANITOBA November 16, 2016 So I want to thank the minister for pointing that out. It actually did confirm what I'm trying to say here. And, again, all I'm trying to say is that it is incumbent on this government to start looking at this legislation that is coming down the pipe. And, again, so I'm going to direct my question– I'm not sure why the minister is not allowing the Crown to speak to now what will be my fourth question.

So I'm going to ask again, just the chair of the corporation of Liquor & Lotteries, whether or not there i s any current research being undertaken, if there's any, you know, discussions with other jurisdictions, anything like that that's going on right now or if there's any plans. Miigwech. Mr. Schuler : I made it abundantly clear. The Department of Justice –it is the Justice Department that will take the lead on this issue. They will speak to this issue. Manitoba Liquor & Lotteries has no legislative authority. Member opposite, through you, Madam Chair, was government for 17 years.

At no point in time did they change the legislative authority because, evidently, we're all supposed to be clairvoyant here; we're all supposed to be able to see into the future. They had 17 years to change the legislation, to change the mandate of Manitoba Liquor & Lotteries. Neithe r the board chair, nor the CEO, nor the Minister of Crown Services are the lead on whatever legislation might be coming down federally. That will be within the Department of Justice. And I've said to the member she has question period; next week question period starts up again.

She has 40 minutes to ask questions in question period every day. She can go to her House leader and say, I would like to have all 40 minutes; I want to ask Justice where they are on this. That's where the lead is. It's in the Depa rtment of Justice. And to ask the Crown corporation to speak to something that Justice is speaking on, then we're going to have the same kind of dysfunction that we saw the last two and a half years under the NDP where, seemingly, everybody was premier and everybody was House leader and everybody was a minister of something, and there –factionalism.

No, we have within the government a department that is the lead on this issue. And all's that I'm saying is to sit here and keep asking individuals who have no legislative authority to deal with this issue –they don't. And we have no idea where the federal government –I mean, they might–they might–pick a vehicle by which this must be distributed. They have legislative authority. They have the right to pick a vehic le if they want. Or they can allow the provinces decide how this will be dispensed. Until such, Manitoba Liquor & Lotteries has a mandate, a job to do. We asked them to do it.

We asked them to come to committee, answer questions, but we can't ask the cor poration to speculate about something that they have no legal authority to speculate on. It's not in the purview of Manitoba Liquor & Lotteries. It was not given to them under the last 17 years of NDP and neither have we passed legislation in the last six months giving them that authority. We are waiting to see what the federal government does, and until then, the lead department is Department of Justice. An Honourable Member: Point of order. * (14:00) Point of Order Madam Chairperson: Mr. Marcelino. Mr.

Marcelino: It's becoming clear that the minister does not want the Crown chair to at least answer one simple question from the member. And although it might sound ridiculous that we are here asking for whatever it is that the Crown might have prepared themselves in order to anticipate the law that might be passed, the conduct of the minister in not allowing the Crown to say yes or no, we don't or we do have those research, impinges on my right to hear the answer from the Crown. I guess I should have raised the point of order about an hour or maybe 50 minutes ago, but this is becoming a ball game for the minister.

Mr. Schuler: It's not a point of order, Madam Chair, because we have, over the years, a tradition: members are allowed to ask questions, and it i s the minister, or the board chair, or the CEO that decide who's going to answer the question. And, couple of weeks ago, the very same member passionately argued for, you know, the ways things are always done. Well, that's the way they're done. Now he doesn't want them done that way. I would suggest it's not a point of order. The questions are being answered in a full, upfront, transparent fashion.

You can't ask people to comment and speculate and freelance on something that isn't their mandate. I don't know how clear you

November 16, 2016 LEGISLATIVE ASSEMBLY OF MANITOBA 121 can become. L ike, I don't know how much clearer you can be. It's not their mandate. It's not been given, wasn't given in the last 17 years. It's not a point of order. Madam Chairperson: Order, please. This is not a point of order. This is a dispute over facts.

And it is – we're not to rule over the quality or the content of the questions. * * * Madam Chairperson: Seeing that we are coming close to our 45-minute allotted time, I just would like to interrupt and offer a general caution that I would like to remind all honourable members that their remarks should be kept to –relevant to the matter before the committee. Our rule 41 states that speeches shall be directed to the questions under consideration. There are other avenues that are available for these types of questions. They can be posed during oral question or any other proposed–on any other proposed legislation.

So, with this in mind, I'd like to ask all members to focus their comments on the matters currently before the committee. This is now the government's opportunity to ask questions, unless you have one summation, Ms. Fontaine? Ms. Fontaine: Well, and I think at the beginning we agreed that we would see how it was going, so– Madam Chairperson: That's why I'm asking. Ms. Fontaine: –yes, miigwech. And I appreciate your intervention. So, again, I know that the minister– Madam Chairperson: Order, please. We're dealing with the matter of a point of order. I've answered the question.

So we –I have stated that it is now government's opportunity, but do you–are you close to 'summission' within five-ish minutes? Is that agreed by committee that we will allow an extension to no more than 10 minutes? We are – oh, Mr. Martin. Mr. Shannon Martin (Morris): I'm sure my understanding is that we had a general understanding at the front end. I think it's important that the independent member also has an opportunity to ask questions and that the independent member's time is not taken away as a result. As well, I am sure that there are government members who also have questions.

It's not that the floor will not be returned to the members opposite, but I think in the interests of a fair and equitable committee that we should move and stick to the original parameters discussed at the front end of committee. Madam Chairperson: So do I hear agreement from committee that we will stick with the formal–the informal agreement as it was outlined? Some Honourable Members: Agreed. Mr. Allum: Madam Chair, as I said at the outset of the meeting, the House leader approached me about an informal understanding. There was no tight timelines about it. The member from St.

Johns is almost finished her line of questioning with the minister on this particular subject matter. The way committee has worked is that the member would complete her line of questioning and then it would go to the independent member for further questioning and then the government side can take a few minutes to ask some questions as well. The member for St. Johns (Ms.

Fontaine) is not finished her line of questioning yet, and, frankly, if the minister would keep his answers a bit shorter, we might actually get somewhere here this afternoon and not need the five hours suggested by my friend from Radisson at the start of the meeting. Madam Chairperson: Order, please. Order, please. Order, please. So we did have an informal agreement to conduct business as it was outlined with the 45, 15 and five. I will allow Ms.

Fontaine to finish her questions, but please ask her to formulate her questions in a way that she can come close to allow government to answer their–or, ask their 15 minutes. Ms. Fontaine: So, in order to expedite the questions, the many, many remaining questions that I have, the reason why I'm asking this line of questioning, which is fully right in respect of asking the corporation this line of questioning, because we know, and the minister would know this, that there was an

article in the media on November 19th, 2015, in which the – and I'll read it directly: Crown corporations in Manitoba have begun research to prepare for the sale, distr ibution and regulation of marijuana now that pot legalization in Canada looks inevitable. The CEO of Manitoba Liquor & Lotteries, John Stinson, said his agency will meet with jurisdictions that have

122 LEGISLATIVE ASSEMBLY OF MANITOBA November 16, 2016 already legalized marijuana this winter, such as Colorado, to learn of the pitfalls of selling pot legally. One of the first questions that need to be addressed, Stinson said, is do we want to treat marijuana more like alcohol or cigarettes. So, while the minister is, you know, trying to bring up all kinds of s tuff to kind of detract from my line of questioning, my line of 'questionining' is absolutely and wholly legitimate, particularly in line with media reports already that there was some work that had been undertaken.

And so, I ask again, is Manitoba Liquor & Lotteries beginning to do some research? Are they beginning to look at other jurisdictions as this media piece is illustrating and in preparation for the legalization of marijuana? Mr. Schuler: I thank the member for the question and I will endeavour t o take Hansard which has all her concerns and questions in it and send it to the responsible jurisdiction, which is the Department of Justice. And I will endeavour to do that as soon as Hansard comes out. * (14:10) Ms.

Fontaine: So, again, I do want to just clarify again–there's been a lot of clarifications here in respect of the minister's comments. I know that the minister has indicated that, if I wanted, in theory, I could take 40 minutes in question period, and probably, if I asked my caucus if they –they'd probably give it to me if I asked nicely. The problem about asking questions in question period is that you actually don't get answers from government, including from this minister.

So I want to just–again, this was the process, this was the space i n which this minister now, I don't know how long I –you originally said that this was the process and the space in which I could ask these questions. None of the questions have been answered, and it's now my sixth time now asking the Crown whether or not any research or any visits or looks or environmental scans that other jurisdictions is currently taking place, whether or not there's going to be a formal process to undertake that.

So, I mean, yes, I would love to go to question period and ask questions a bout the legalization of marijuana, but I'm afraid that I wouldn't get any answers in the similar way that I'm not right now. Mr. Schuler : Well, I thank the member for that statement, and I feel her pain. I lived that for 17 years; we never got a straight answer. Insofar as the question goes that she asked, we will endeavour to take Hansard, we will send it to the department responsible, the lead department on this issue.

And I'm sure they will be very interested to hear the positions that her and her pa rty have taken here and their concerns, and we will endeavour to send all of those on to the lead department. I've answered every question straight up, full transparency. We've answered every question, and I would suggest that she have a good read through Hansard and recognize that she can ask the questions, but she should be asking those questions of the people who actually either are the lead or ask members of Parliament who are part of the process writing the legislation.

To ask members of this commit tee to freelance and to speculate, it doesn't do us any good. Mr. Teitsma: I do want to change gears a little bit and take some of the advice that we've heard from the member from Tyndall Park and the minister to focus our questioning on some of the past activities of the corporation and also the future plans of the corporation. And, specifically, I'd like to talk a little bit about the downtown flagship Liquor Mart, the 50,000-square-foot one that we all got to read about in the papers earlier this year.

Now, the previous government, I think, and some of the members are here, mentioned that they'd like to hire consultants in order to make major decisions, and I would term, you know, entering into a lease of a large downtown flagship Liquor Mart would be a major commitment. So I just want to ask, you know, was a consultant –when was a consultant, I guess, approached and who was hired and what kind of report did you receive from that consultant about this flagship store? Mr.

Peter Hak (Acting Chief Executive Officer, Manitoba Liquor & Lotteries Corporation) : I don't believe there were any consultants hired in relation to [inaudible] Madam Chairperson: Order. Order, please. Mr. Hak, would you mind speaking up so that we–or, yes, a little closer to the mic. Thank you. Can you repeat your –[interjection] Can you repeat your answer, Mr. Hak?

November 16, 2016 LEGISLATIVE ASSEMBLY OF MANITOBA 123 Mr. Hak: Yes, I don't believe there were any consultants hired in relation to that property. Mr. Teitsma: Thank you for that response, Mr. Hak. Then I won't bother asking when the report came from the consultant because I guess there wasn't any consultants. So–but I assume then, certainly, a detailed business case would've been made to defend the decision to go ahead and undertake a lease or an offer to lease with a space of this size and the kind of financial commitment you're –we're 'tealing' with here.

So could you maybe give us some information about that business case: When was it undertaken, and when was it completed? Mr. Hak: Again, we couldn't locate a ny business case in relation to that property. [interjection] Madam Chairperson: Mr. Teitsma. Mr. Teitsma: Thank you, Madam Chair, sorry, just getting into the swing of things here. So, if I'm understanding you correctly then, you're saying that the decision to enter into an offer to lease for the 50,000- square-foot new downtown flagship Liquor Mart was made without a consultant report and without a detailed business case.

Was there at least some form of business case like that? Was there–was Manitoba Liquor & Lotteries even looking for downtown space prior to this? Was there any justifiable need for this? Mr. Hak: Not to my knowledge. We weren't really looking for additional space, but we couldn't find any, whether it's consultants or business case, related to that property. Mr. Teitsma: Okay– An Honourable Member: We can't hear you, Peter. Madam Chairperson: Mr. Teitsma. Mr. Teitsma: Sorry, I think have the advantage of sitting right next to Mr. Hak here, so I can hear him clearly–hopefully, Hansard can hear him.

Madam Chairperson: Mr. Teitsma, continue. Mr. Teitsma: I think, just for the interests of the minister, it might be good for you to just reiterate, then, that there was no consultant engaged, there was no business plan undertaken and that this was not part of a long- term strategic plan for Manitoba Liquor & Lotteries to enter into such a lease. Mr. Hak: That's correct. Mr. Teitsma: Well, I heard that answer. Now, the impression I have is that this is an untendered lease. Is that correct? Mr. Hak: Yes, we did not issue any RFP for that property, for that lease. Mr.

Teitsma: And under whose direction was that done, then, to make a decision not to– or to enter into a lease that was not tendered or went –gone through an RFP process? Mr. Hak: I'm not sure. The former CEO took the lease to the former board, and the former board approved the lease. Mr. Teitsma: Okay, but, so the –as you understand it, then, the former CEO did this of his own accord, no direction given to him? Or was there direction given to him, any evidence of that? Ms.

Polly Craik (Chairperson of the Board, Manitoba Liquor & Lotteries Corporation ): It's my understanding that the direction came from the board to the former CEO to enter into a lease for between 45 and 50 thousand square feet. It's also my understanding that the direction was given to the board from the former government. [interjection] Madam Chairperson: Excuse me, Mr. Teitsma. Mr. Teitsma: Misbehaving Mr. Teitsma. Can you be more specific about; you said the direction came from government. Was there, like, a particular office? Was it from the minister, from the premier, Cabinet? Ms.

Craik: The information that I'm sharing is what was told to me from the previous CEO, that the direction came from the former government, no one in particular. The direction was given to the board, and the former board gave direction to the CEO to enter the lease. Mr. Teitsma: And, again, part of this is I'm relatively new to government, I guess some of us are new to this table, as well, but what would the normal decision-making process be for entering into this kind of an agreement? Mr.

Hak: Typically, when we look to either add additional liquor stores or renovate existing stores, we do look at the return on investment in terms of how much it costs and how much additional revenue we anticipate will be generated from it. That would be the typical process. And, then, that business case would get the required approvals.

124 LEGISLATIVE ASSEMBLY OF MANITOBA November 16, 2016 Mr. Teitsma: And, then, in terms of, would it normally–would it be normal to tender such an arrangement? Mr. Hak: We don't normally tender for the location. We do an analysis based on the market. So, as an example, we opened a new store in Sage Creek last year because that was a whole new development. What we do tender for is the construction after the fact. But the location is just done by a market analysis that we do. Mr. Teitsma: Can you table the market analysis that was done for this location? Mr.

Hak: As far as we can tell, there wasn't one done. * (14:20) Mr. Teitsma: Okay, I'm trying not to–I'm trying to contain my righteous indignation, I guess, on behalf of taxpayers, because I think when we look at Manitoba Liquor & Lotteries Corporation, I think it's good– An Honourable Member: Point of order. Point of Order Madam Chairperson: Mr. Marcelino, your point of order. Mr. Marcelino : I didn't hear the last answer from Mr. Hak. Madam Chairperson: That's not a point of order. Mr. Teitsma, can you rephrase that last question, not the one you're currently on? Go back and give Mr.

Hak a moment to re -answer that question so it's clear for committee? It's hard. * * * Mr. Teitsma: Could he table the market analysis that was done for the downtown location of the new flagship store? Mr. Hak: As far as we can tell, there was no market analysis done for that property. Mr. Teitsma: All right.

And now I will start to ramble again about my righteous indignation, but I just wanted to say with Manitoba Liquor & Lotteries, I think, it's important for taxpayers to–I think taxpayers recognize that Manitoba Liquor & Lotteries corporation's operations a re either going to hit them on one side of the pocket when they're purchasing the stuff that you're selling–the price is either going to go up there if there's money being wasted within the corporation, or the benefits to government that the revenue that should be generated is going to be somehow reduced.

So I guess I'm concerned, and I'm wondering if that concern is shared, that these processes were not followed and that essentially without a business case, without a market analysis, without even a strat egic need identified by Manitoba Liquor & Lotteries, that we would enter into such an agreement. Now, I mean, speaking of the agreement, maybe since I asked for a tabling, can I ask if we can table the letter of intent and the –was it an offer to lease that was signed or– Mr. Hak: This is an offer to lease .

Any agreement we have with third parties would require the approval of the other party before we can make it public. Mr. Teitsma: Okay. Thank you. I'm still trying to wrap my head around how this was done and how it should be done. Were there checks and balances –like, are there–what are the normal checks and balances that you have in place? I know you mentioned an ROI and a business case. Are there other checks and balances along the way that you would undertake through a large kind of a commitment like this?

Like, where would it source from and where would it have to get to–what hoops would it have to pass before you would be in a position to sign it? Mr. Hak: Well, this did not clearly follow our typical processes because typically we do a business case. It gets approved by senior management, and, based on the value, then it goes to the board for approval. So all those steps are typically the checks and balances we have. Mr.

Teitsma: So then just, again, getting back to this particular decision, when did that direction, then, come from government and, like, what was the overall timeline from when we went from the non- existent business case to issuing a letter of intent and then to signing an offer to lease ? How long did that take? Can you give us specifics? Mr. Hak: The board approved it December 13th, and the letter of intent was entered into on December 18th. Mr. Teitsma: And then what about the offer to lease? What was the date on that? Mr. Hak: That's the document I'm referring to that was signed on December 18th.

November 16, 2016 LEGISLATIVE ASSEMBLY OF MANITOBA 125 Mr. Teitsma: Sir, when was the letter –were they simultaneous, letter of intent and offer to lease? Was that one package, then, or was that two separate things? Mr. Hak: The only thing that's signed is the Letter – offer to lease. Mr. Teitsma: Okay. When was the letter of intent issued then? Mr. Hak: I don't believe there was a letter of intent. We found–we just found the actual offer to lease as well as the board motion approving the transaction. Mr. Teitsma: I'm a little bit flabbergasted; I'll be honest.

It took me longer to lease my constituency office than it seems to have taken our previous government to sign a lease for a 50,000- square-foot downtown flagship Liquor Mart. My const ituency office, just for the record, is 890 square feet, so that's a little smaller, and I think I checked it over and actually built a business case for myself that was a little more thorough than the one that doesn't seem to exist here. So, then, when the board–like, what material did the board have before it when they made the approval on December 13th? Mr.

Hak: I don't believe they had any material other than the terms of the lease. Mr. Teitsma: I have to–getting into the rhythm here. And the terms of the lease, I guess –are we able to notionally describe some of those terms to us? Mr. Hak: Yes. As with most –as with any lease, we always require a third party to approve the specific terms and conditions before they're made public. An Honourable Member: I think my last question– Madam Chairperson: Mr. Teitsma. Mr. Teitsma: Yes. Sorry. My last question. Then, just to be clear, the –according to what was said earlier by Polly–sorry, Craik, Ms.

Craik, was that the previous government, I guess, had di rected the board. Did the board then feel that –have you had an opportunity to discover the board's decision- making process? Like, were they simply following orders or were they taking their responsibilities seriously? What's your impression of how things transpired? Ms. Craik: As it relates to this item, I was unable to find any documentation leading up to the decision that was made by the board. Madam Chairperson: Thank you. Ms.

Cindy Lamoureux (Burrows): I wanted to begin by thanking and welcoming the members from the Manitoba liquor and lottery commission for being here with us today. I have four questions in total and it shouldn't take more than four if I get the answers. The first line of questioning is going back to what the member from St. Johns w as asking about.

And I did want to thank the minister for referring people to go and see my father at his local McDonald's, and I also want to put on the record that I'll also be sitting at the local McDonald's on McPhillips starting in the new year on Monday nights and as a provincial politician, I'll welcome the issue. So one thing that's worrisome, the minister did say that he doesn't want to go into a public debate as to which direction this legislation may go. I disagree with that. You know, I do. I think it's worrisome, and I would argue that this is when Manitobans should be engaged.

We want to form legislation that are going to – that's going to better Manitobans as a whole, and they need to be the ones forming it in order to do that. So I just wanted to give the minister an opportunity to perhaps correct that statement or put a word on record. Mr. Schuler: Well, I thank the member for using this opportunity to let us know when she's going to be hosting her community events. And perhaps she has more information on where the federal government's going to be going on this issue.

But I would suggest to the mem ber that we can all have discussions and we can all have opinions, but we have to be very careful that we're not irresponsible in regards to taking positions and having public statements being made on something that we have no clear direction on. We have to be very responsible on this issue. This is a very touchy issue for a lot of people. A lot of people have very strong opinions on it, very passionate about it. This tends to be a –you're on one side or the other. It's not a –and I would suggest the public has a right to engage their elected officials.

We would argue that the best place to engage would be at the federal level. And if the member wants to

126 LEGISLATIVE ASSEMBLY OF MANITOBA November 16, 2016 tell us when the –her local MP has his McDonald's moment, that would be a good place to start. * (14:30) But, insofar as a provincial government, we will wait, and again, the lead on this is Department of Justice, but we will wait. Before we start making statements and talking about what kind of direction, we will wait for the federal government to put forward legislation. Ms. Lamoureux: The Member of Parliament for Winnipeg North, Kevin Lamoureux, he sits at McDonald's from 10 to 2 every Saturday. It's the McDonald's location on Keewatin.

I recognize it is a very sensitive issue, but that being said, it re inforces the importance that we do need to start preparing for it. We're not naive; it's inevitable. It is going to come to the provinces here in Canada. I will make my question as simple as I can, just requiring a yes or a no response. I want to know if the Manitoba Liquor & Lotteries commission has begun to look at the models that has been used in any other place: Colorado, Washington, Portugal, Alaska. Mr. Schuler: I find the questions incredibly interesting as a political scientist.

We have a member who clearly has connections to the federal Liberal Party indicating that a corporation who does not have in their mandate anything to do with the distribution of a narcotic, but that they should be out doing studies and spending money on all kinds of stuff. Really, the question is : Has she given that advice to the federal government who's coming up with that legislation?

Isn't that the jurisdiction that should be going out and finding out what impact this has on other jurisdictions and on how they're doing i t, so that when they write the legislation they're not depending on people meeting at McDonald's to find out how it impacts other jurisdictions? Isn't that the role of the federal government who's writing the legislation?

Like, why would we send legislative committees and Crown corporations and all kinds of stuff on an issue we have no idea where the federal government's going on, when that's actually what the federal government should be doing before they write the legislation? Because once the legislat ion is written, we will have to follow federal legislation. That's how it goes. They won't put forward federal legislation. Let's hope–let's hope –that they've done their homework.

And what the member is describing for us is something that we hope the federal government's actually going to do, because before they write the legislation, let's hope that they've gone to other jurisdictions and seen what impact it has and how they're dealing with it and how it impacts individuals, before they write the legisla tion. That would be the appropriate place. It's not in scope; because we can do all kinds of stuff and spend all kinds of money but we're not at the table writing the legislation.

When the legislation comes down, then we will do our due diligence in regards to what kind of enabling legislation –and the word is enabling legislation–the federal government will set federal legislation and then we will have to pass enabling legislation. Let's hope that the federal government does exactly what the member recommends. Madam Chairperson: Ms. Lamoureux, as we are over or extended our five minutes, are you finished your questioning? Okay, well, we can come back to you after opposition is done their questioning. Mr. Hak: I just want to clarify an answer I had previously given in terms of dates.

The letter of intent was signed on December 18, and the board of directors approved on December 11th. I believe I said 13, but it was actually December 11th. Mr. Allum: I am prepared to have my friend Ms. Lamoureux complete her line of questioning so that we can just put an end to this particular component of the conversation. And then, if that's okay, we'll move on to the–to what–after next. Madam Chairperson: Okay, Ms. Lamoureux. Ms. Lamoureux: I appreciate that.

And I, actually–I only had two more questions, but it wasn't on the same topic, so maybe I'll just make a closing remark on the topic that we were discussing there. The reason that I'm bringing it up and the reason that the opposition party rightfully is bringing it up today is because she –the member from St. Johns quoted earlier today that the Manitoba Liquor & Lotteries commission had taken a lead on this. They initiated discussion. The discussion is happening. So why would we not discuss it here in committee with the very people who are taking the lead on it?

November 16, 2016 LEGISLATIVE ASSEMBLY OF MANITOBA 127 Mr. Schuler: To be very clear, the lead department on this issue is the Department of Justice. And that's where, if the member has questions, she should direct her questions to the Department of Justice. Today we have business of the Crown corporation called Manitoba Liquor & Lotteries, and it has to be within scope of what their mandate is. Ms. Lamoureux: I'll finish there for this topic. Madam Chairperson: Thank you. Mr.

Allum: Well, if we've learned nothing else today, we've learned that the minister has given no direction or –to the Crown corporation regarding marketing research or distribution plans going forward. And, secondly, I would suggest that we've heard that the current board has shut down the research that was under –being undertaken by the previous board. I'll just leave it at that, because that's what we've learned here today. I want to return to our conversation about the Medical Arts Building that we had a g ood dialogue on last time.

Just to catch up the committee and members of the audience here, could the c hair tell us what future plans does the corporation have for the Medical Arts Building, for the surface parking lot and for the parkade? Ms. Craik: We have engaged in a process to divest of the Medical Arts Building, including the parking lot. Mr. Allum: So it might help the committee to know what the nature of that process is. Could you elaborate on what the process is, all the way through? Mr. Ha k: We're just in a process of engaging a broker to assist us with disposing of that property. Mr.

Allum: That engaging a broker was a RFP-tendered process? Mr. Hak: Yes, it was. Mr. Allum: Closing date of that process will be? Mr. Hak: Well, the closin g date is passed. We're in the process of evaluating the respondents we got. Mr. Allum: Sorry, I'm banging my glasses, which I shouldn't do, so–I was only reminded three times, but–so I'll try to get it right. Madam Chairperson: Please continue. Mr. Allum: I'll put all my toys down so that I can do it.

The–does the chair and/or the acting CEO at this point have a potential cost for what that process will be or what the nature of the financial element will be of that deal–will be at this point? Mr. Hak: We haven't finalized our evaluation of the proposals we received. Mr. Allum: So maybe he said that while I was banging my glasses. That process will be completed by–on what date? Mr. Hak: We anticipate to complete that shortly. It could be within a week or so. Mr. Allum: I appreciate that, thank you very much.

When we last talked about the Medical Arts Building and the new board's decision to cancel the utilization of the building for the centralization of MLLB, the chair indicated that a board member , Jim Morden, had prepared a report for the board. Can she provide details of what was in that report? Ms. Craik: I'm just trying to get clarification on the specific report. The report that I think you're referencing is the recommendation to the board for the cancellation. There was no formal report. It was a recommendation to the board for cancellation. * (14:40) Mr.

Allum: Okay, so, sorry, my understanding, and this is genuine, was that you had identified Mr. Morden as the lead on the file. The CEO had– or, the chair had identified Mr. Morden as the lead on the file –I think that's a direct quote, but close anyways–and that a report had been prepared by him to the board in order to evaluate the business case for not proceeding with the consolidation of the corporation. Am I incorrect in that regard? Ms. Craik: If I said –there's no formal report. The report is a report that was given to the board that had all the information and facts that we based our decision on. Mr.

Allum: So, a recommendation–I'm just trying to follow–I think we're engaged in the same –trying to get through the morass here. A recommendation came to the new board to not proceed with the previous deal, and in that recommendation, there was all kinds of facts and figures. Who prepared those facts and figures within the recommendation? Ms. Craik: The facts and figures were prepared and throughout discussion, in looking at the report that was provided to us, that was the analysis that was done by Deloitte, and looking through that as part of

128 LEGISLATIVE ASSEMBLY OF MANITOBA November 16, 2016 the process and coming out with our decision. And our decision was solely based on the fact –really, three areas: one, that we don't require a new head office, period; the second, that we do not want to be in the business of being landlords and property developers, and any potential savings that could potentially be in the future would be mitigated by any cost overruns that we felt were not clearly indicated in the report. Mr.

Allum: So, then, I take it, based upo n those general principles, if I could call them that, that there was no business case prepared for the board to evaluate and to help them in the decision -making process? Ms. Craik: I believe I also commented last time that we felt no need to hire any ext ernal consultants or spend any money or time putting together a formal documentation. We based our decision on the facts and information that we received. We do not want to be landlords.

We do not require a head office, and we would not put ourselves or the public in the position of entertaining cost overruns on a building that would clearly be happening in the future. Mr. Allum: Okay. So, the previous board, as we went through in minute detail the last time where we're here, went through a two -year exhaus tive process with many, many different elements to it. A business case was prepared in full and complete for the board's analysis before the final decision was made, and on the basis of –I don't–a whim, the new board decided to just can the whole project? Ms.

Craik: The decision to abandon the project was, quite simply, an easy one to make. It was a bad decision in the first place to purchase the property, and we don't need it. We don't require the space for a new head office. Mr. Allum: I'm sorry. It's hard for me to understand how you know any of those things when you didn't do any analysis on it. Ms. Craik: All we had to do was read the analysis that was done and it was clear that, first of all, we don't require a new head office, period. Mr. Allum: But there was a business case prepared that suggested this would have several advantages to the corporation.

You just ignored all of those advantages that would come to the corporation as a result of this investment? Ms. Craik: We disagreed with the analysis of the advantages given that there were things not included in the document that was provided. Mr. Allum: Things such as? Ms. Craik: Such as potential cost overruns and the need to look at reworking some of those numbers based on the projections that were done. Mr.

Allum: So, you just –thank you very much for the document, correspondence that you provided to us earlier, in a –which it indicates that the total project cost was $66.8 million, which was comprised of a contingency of $14.6 million, which would address any cost overruns that may had been incurred–may have been incurred. That's a pretty sizable contingency fund to address cost overruns, wouldn't you agree with that? Ms. Craik: No, I would disagree. Mr. Allum: So if I could ask the acting CEO, then, what would be a normal contingency built into a project? Mr.

Hak: You can never guarantee what the final costs will be because at this point in time, we still hadn't designed–the design work still hadn't been done and the work hadn't been tendered yet. So you can never predict what the final costs will be. Mr. Allum: Appreciate that. I wasn't asking about this particular project. In the business of project management for a new undertaking, a new project such as this, what would be the normal percentage contingency built into it? Mr. Hak: I'm not a construction expert, so I can't tell you what normal would be.

I think it would depend on the nature of the project and the market at the time and all those things, so. Mr. Allum: Would you–would the acting CEO agree that a 20 per cent contingency is a pretty sizable contingency? Mr. Hak: I think at this point, these are really, you know, class D estimates, which means that you haven't even in –aren't taking the design, so 20 per cent may or may not have been sufficient. Mr.

Allum: Well, that's a pretty remarkable answer, I h ave to tell you, because I think, really, under normal circumstances, was this not such a politicized environment, you would probably be inclined to agree that 20 per cent is actually a pretty significant contingency amount built into–in any project, but anyway, it's believed, be that as it may. I want to return to the acting chair and just act –about Mr. Morden's role as lead on the file. Could she describe what his role was?

November 16, 2016 LEGISLATIVE ASSEMBLY OF MANITOBA 129 Mr. Schuler: Well, thank you very much, and insofar as contingency funds go, ther e is a comparative project that was done where a City of Winnipeg department, Winnipeg Police Service, decided to take on a building, buy it and retrofit it. And in that case, probably, a 50 per cent contingency fund wouldn't have covered the overages. And what we just heard from the company is that there were actually no concrete drawings, no build drawings completed. What, basically, we had in front of us was a best guesstimate.

It was –as soon as you get into the actual drawings, when ceiling tiles are pulled down, walls are opened up and you actually see what's inside of them, that you start to find out what the true cost is going to be. So insofar as the question, is 20 per cent a large contingency fund? On renovation projects like this, no. No, actually, that's probably pretty average. And in the case of the new Winnipeg police headquarters, 20 per cent wouldn't have come close to cover the overages and the expenses that they ended up incurring.

When they got real drawings that are stamped off, that are approved and then are tendered, that's when rubber hits the road, that, then, you'll find out is–20 per cent is probably conservative at best. Mr. Allum: Well, as far as I know, the minister isn't a construction manager either. In fact, he's been in this Legislature for a long time, so I take his opinion as anecdotal only, but I appreciate his intervention when I, in fact, asked the chair an entirely different question, which was: Could she describe Mr. Morden's role as lead on the file in relation to the decision to cancel the downtown consolidation? Mr.

Schuler: Well, actually, I thank the member for, again, never bothering with research because why would you research when you can just have opinions? * (14:50) And, actually, the minister knows a lot about tendering, and, in fact, my father was part of the group that built the Richardson Building back in its day, and he single-handedly was the project manager of the Disraeli overpass. I grew up in a construction environment, and I won't bore the committee with all of it, but, actually, I have actually managed my own projects.

If he wants, I'll take him on a tour and I'll show him what I've done, and I do actually know a lot about–it's actually in the family; it's–it's–and I can fill him in. I don't wan t to give the family all of an advertising plug here or a shout out, but I can sit down with him and show him, probably in the realm of several billion dollars worth of real estate, that a family has built and been involved in, not just in Winnipeg, but around North America.

So it is something that I do have a little knowledge of, and you don't have to be a rocket scientist to figure out that when you buy an older building that you build in a strong contingency fund. It doesn't matter if it's a home renov ation, and I would tell the member I renovated my living room and found out I had a $5,000 hit because the chimney in the fireplace needed to be completely replaced. And that ended up being a more than 20 per cent cost overrun on that little renovation project. It happens. Twenty per cent is responsible.

Coming from somebody–the price should have been higher, but that coming from somebody who actually was involved in the industry. Mr. Allum: Yes, you–agreed. In fact, the minister is such a rocket scienti st on this file that he gave – looked the other way when Manitoba Hydro completed an untendered contract with $4.2 million from a group in Boston in order to recommend that Manitoba continue to rely on fossil fuels going forward. That is rocket science; you' re right. You're quite correct on that matter. I want to move on, if we can.

Has the corporation, at this point, and I guess I'm asking the chair, had any discussion with developers regarding the Medical Arts Building? Mr. Schuler : And I thank the member for that comment, and I'd like to point out that the Boston Consulting Group is an international consulting group and they actually have rocket scientists on their team. They are some of the brightest minds. In fact, they even went to Europe to that–the documents that were put in front of Manitoba Hydro board, that they were the best information, and I think the corporation got–sought and got the best advice they could–rocket scientists.

Madam Chairperson: I'm just going to interject here and ask that Manitoba Hydro is not relevant to today's discussion of what's in these reports, so I'll ask all members to go back to their questions of relevance to MLCC. Mr. Allum: It's no more relevant than the minister's rec room, if I might add that to your commentary– Madam Chairperson: Order. Thank you, Mr. Allum, and that's why I'm redirecting you to go back to asking the question, so thank you.

130 LEGISLATIVE ASSEMBLY OF MANITOBA November 16, 2016 Mr. Allum: Yes. No, absolutely the question was not about Manitoba Hydro. It was simply in the context of the question that I– Madam Chairperson: Excuse–order; order. So thank you. I appreciate your comments. I am presiding in the Chair's position, so please continue with your questions and please refrain from reflecting on my comments in regards to t he chairmanship. So please continue with your question–your relevant question as it pertains. Mr. Allum: Yes, I'm still waiting for the answer. I asked a question of the chair of the board.

I'm still waiting for the answer. I asked the chair about whether or not they'd had any conversations, any discussions with developers at this stage regarding the Medical Arts Building. Ms. Craik: As presented, we've gone through a public process to hire a broker to be responsible for the sale of the buildings, and tha t's how it's being handled. Mr. Allum: I appreciate that, but I'm asking: Have there been any discussions between you, any board member, or members of the corporation with developers about the Medical Arts Building or about the parkade, and if you have, who? Ms.

Craik: To the best of my knowledge, there haven't been any formal discussions with any brokers. Mr. Allum: I'm not sure if we're using the same terms or not. A broker, to me, would be the real-estate agent who goes out and sells the building on y our behalf. I'm asking whether any developers have expressed an interest to members of the board or to the corporation or to anyone else about their interest in acquiring any parts of the medical arts complex. Ms. Craik: There's been no formal discussions. People–I can't speak on behalf of everybody.

If there's an informal discussion around a dinner table or a social event, there's a lot of people that have interest in what's going on in the Medical Arts Building. There's a lot of discussion, so I can't answer that. Mr. Schuler: Any inquiries that we get in our office in regards to the building, we are told they are supposed to direct them direct to the corporation and at such time as they find a broker, they are to go to their broker. Individuals have approached me at numerous events, and I tell them it is not with in the purview of the minister's office.

They are to deal directly with the corporation, and when they have an agent–it's a formal process, so just to be very clear on that one, that anybody who approaches myself or, I take it, anybody else for that matter, there will be a proper process set in 'prace' –place that, frankly, we would love everybody who has an interest in it, like, bid on it. It's great. Mr. Allum: Well, I appreciate that.

I mean, the question is that we're concerned about the informal conversations that appear to be going on and we're wanting to be assured that this is an open and transparent process that the people of Manitoba can rely on. The decision to counsel the building was –seems to be made internally without any kind of process made. We want to be sure that at the point at which the new board decides to sell it that this is an open, transparent, accountable process in which the people of Manitoba properly understand what's transpired.

So, when we hear that there's been no formal process but there have –probably has been informal conversations, it generates concern about what's going on behind closed doors. That's all. Ms. Craik: It's important that I'm really clear; this is absolutely an open and transparent process. And I'll hand it off to Mr. Hak, well, who can walk you through the steps of which we are entering into the sale of the process. My intent in answering your other question was, any discussion at all? There's lots of discussion that goes on, but absolutely everyone is told that we will be hiring an agent. Anybody goes through them.

There are no side conversations going on. So Mr. Hak will enter into this discussion with you. Mr. Hak: Yes. So, as I indicated, we issued a public tender looking for a services of a broker. That tender is closed and we're in the process of evaluating the responses, and we'll be making a selection hopefully shortly, hopefully within a week. And then w hoever we select will be tasked to get us the best value we can for that property.

So, anybody that's interested in bidding will be dealing with that broker, and they'll be tasked to, you know, go through their own marketing and however else they find tena nts, but that's why there are specialists and that's their job. So the corporation really is relying on a broker to find us the best value for the property.

November 16, 2016 LEGISLATIVE ASSEMBLY OF MANITOBA 131 * (15:00) Mr. Allum: Well, we do want to be sure that it's open and transparent and accountable. It's–as the minister just said, he wants lots of bids on it because they got an–actually got a fantastic deal on the original acquisition of the property, and quite likely, money is going to be made with the resale. I don't think that's open to a whole lot of dispute. So, I think it's incumbent upon the board and the acting CEO as well as the minister to ensure that Manitobans are kept in the loop.

And that's all we're trying to establish at this point, is that this is open and transparent, and we're –you're right, I guess conversations–I'm not in the business world, so I don’t know what kind of conversation happens among the movers and shakers of the business community. But we don't want –we want to be sure that there's no insider deals or nothing's happened, and I've –we've received the assurance of the board chair and the CEO. I thank them for that. I appreciate that, and we'll certainly be looking to hold the minister to account for that very process in due course when the time comes.

We think it's re ally unfortunate decision making that's happened. We certainly don't agree that we shouldn't leverage the capacity the Crown corporations have to have multiple benefits, including their main lines of business, but also to helping to develop the downtown, creating more demand downtown. I have to tell you that even my own mechanic was excited about the fact that 400 people may be coming down and he may have a whole new market to address to. So there are direct benefits to the previous deal as well as indirec t benefits to it. Our position has been that we don't agree with the process that was used.

We don't regard there to have been any due diligence undertaken. It seems to be a wholly political exercise that was done, but we respect the–their ability to do so, and so we want to ensure that when you transition the Medical Arts Building into something else–let's hope it's of public benefit–that it's open and transparent. So I thank you for the questions and answers that we've had today. Mr.

Schuler: Well, I want to assure the member that, unlike what we've learned with the lease that was signed where there was direction directly out of this building, that there was direction giving from the members–from the NDP, from their government, that there was no direct ion from the Premier (Mr. Pallister) or the minister or government on the Medical Arts Building. At no point in time was there any direction given. We made it very clear in the mandate letter to the minister, and there was a framework letter sent to the board, and that was the only direction given, and that was open, public and transparent.

So, I want to assure the member that unlike a lease– 50,000-square-foot lease, which was politically driven by him and his government out of this building with no due process, that this actually was given–the entire corporation, it's –they are responsible for it, the board, and they're supposed to deal with the professionals within their corporation and come to government with their decisions. And there was no political interference by myself, any other minister or the Premier's office, unlike was done with the lease. I want to assure the member of that. Mr. Jon Reyes (St.

Norbert): I've been living in the south end for probably 15, 16 years now and, you know, I served in the forces; I've been to a lot of liquor establishments, and sometimes I can't find, you know, the proper beers when, you know, when there's a big fight going on. You know, I'm Filipino background. I love watching Manny Pacquiao fight, and when I want to buy San Miguel beer , I can't get at the Liquor Mart in the south end. So, sometimes I have to call my mom or go to the area where my friend from –the member for Kildonan (Mr. Curry) lives in, and she gets San Miguel beer there.

My first Liquor Mart, actually, when I was legal, I actually went to the Liquor Mart in Tyndall Park. So, I guess I've been to all these Liquor Marts, and I just want to know which Liquor Mart has the largest location in Manitoba and how many square feet is it? Mr. Hak: The largest L iquor Mart we have would be the Grant Park store and it's just over 15,000 square feet –15,456 square feet to be exact. [interjection] Madam Chairperson: Mr. Reyes. Mr. Reyes: Thank you, Madam Chair. I'm just getting into the routine now. I'll talk a lot slower.

So, would the Liquor Mart location in Grant Park, if it's 15,000 square feet, and if we had this proposed 50,000-square-feet flagship location, would that improve its performance if it was more than triple in size?

132 LEGISLATIVE ASSEMBLY OF MANITOBA November 16, 2016 Mr. Hak: You're sort of comparing two di fferent things, because the Grant Park is in a good location, lots of population around it. It's got good street presence, it's in the mall,

whereas the downtown location, it doesn't have some of those benefits. So you can't just take the 15,000-square-foot liquor store and transport it downtown and expect to get the same results. Mr. Reyes: Again, I've been to a lot of provinces, and I remember when I was in the navy and, you know, when I went to Nova Scotia, I would–I loved to drink Keith's and Moosehead and you could never get it in Winnipeg, but I'm glad that now you can get it here in our local Liquor Marts. And I've been to a lot of American bases where, you know, it's great to have options.

When I was in the navy, I got this Philippine rum at the US base at their liquor store, but I can't recall one being that's 50,000 square feet. So do you know how many provinces in Canada have retail liquor locations that are approximately 50,000 square feet, because that's pretty big? Mr. Hak: I'm not aware of any, but. Mr. Reyes: So the proposed 50,000- square-foot Liquor Mart location, from the research that I've done, because in Calgary and in Toronto, I guess they have liquor retail locations that are 30,000 square feet, so this one would be the largest one in Canada. Would that surprise you?

Does that surprise? Mr. Hak: Like I said, there was no –we haven't been able to find any business case or justification for that size of property as a liquor store, so it would be probably unrealistic to think a space that size would be profitable, given that our largest store today is only 15,000. Mr. Reyes: Was there any market analysis done to show that a downtown Winnipeg location could be sustainable, given the fac t that this would be the largest retail liquor store in Canada ever? Mr. Hak: I know we have –we do have existing downtown liquor stores.

We have one at Cityplace, and it's approximately–it's under 4,000 square feet. Mr. Reyes: Does it surprise you to lea rn that this proposed flagship liquor store would actually be approximately five times larger than the two stores – storeys of retail space at the MEC store downtown, which is 10,000, over–just over 10,000 square feet? Mr. Hak: Would it–sorry, what was the question? Mr. Reyes: Does it surprise you that the flagship store would actually be five times larger than the two storeys of retail space at the store downtown? Mr.

Hak: Yes, it would surprise me, but we don't, like I said, there was no –there's no busine ss case, there's no formal due diligence done to determine what we would do with 50,000 square feet. Mr. Reyes: I used to own a business in Polo Park Shopping Centre back from 2002 to 2008, and I remember the Liquor Mart was on Ness, and I think it's still there. Since becoming an MLA, I've been more familiar with the downtown establishments, one of them being Winnipeg Square, which is 55,000-plus square feet. That's how big the retail Liquor Mart flagship store would be.

So does that surprise you, that it would be similar to the size of Winnipeg Square, a liquor store the size of Winnipeg Square? Mr. Hak: Yes, I think it would be difficult to find a liquor store of that magnitude and that size in Winnipeg being profitable. Mr. Reyes: Having owned a bus iness and owning businesses, I always want to improve –to provide more convenience and better options for my customers. And I guess MLCC began opening express locations back in 2011 because the argument was smaller locations were the best way to provide more options and increased convenience.

But is opening a 50,000- square-foot flagship Liquor Mart consistent with the existing market research and business plans that are developed for the express locations? * (15:10) Mr. Hak: Again, the decision to enter into a lease was done by the previous CEO and the previous board, so I can't really comment on what the thinking was back then. Mr. Reyes: So we found at the previous committee meeting that the MLLC made the decision not to renew the lease for the location at the Winnipeg James Armstrong Richardson International Airport. They cited high rent and low sales as the central reasons.

By square foot, was the rent at the airport significantly higher, significantly lower, or roughly comparable to what will be paid for the new downtown flagship store? Mr. Hak: The rent at the airport was higher.

November 16, 2016 LEGISLATIVE ASSEMBLY OF MANITOBA 133 Mr. Reyes: So was that a lot higher, significantly higher? Mr. Hak: I mean, it's hard to quantify it. It was higher. It wasn't double, but it was higher. Mr. Reyes: By square foot or by total? Per square foot? Mr. Hak: Per square foot. Mr. Reyes: So volume in sales was also part of the announcement to close the airport location. That location was fairly small because, if I remember correctly, when I travel back and fort h from Winnipeg going to the airport.

If sales cannot sustain that location, what kind of sales volume will be required to sustain a 50,000-square-foot flagship location that's downtown? Mr. Hak: I think, as I repeated, I don't think it's–you would get whatever sales you need to make a 50,000-square-foot liquor store downtown viable. Mr. Reyes: Okay. Is there a formula that the MLCC–MLLC, sorry, uses to calculate the necessary sales a location would have to do on a quarterly or annual basis against the location's cost per square foot in order to provide a good return on investment? Mr.

Hak: As I indicated, whenever we open a store we do a business case. We estimate what the sales and costs will be. Every location will have different costs associated wi th it, and if there's a positive return on investment, then we'll proceed. Mr. Reyes: I haven't heard the term that the previous government used when it comes to business, because I don't know how many people are with a business background on the other si de, but what would be the break-even for a 50,000- square-foot location quarterly and annually? Mr. Hak: I haven't done that calculation. Mr. Reyes: No further questions. Ms.

Lamoureux: In 2014- 15, Manitoba Liquor & Lotteries spent $5.6 million on advert ising. In 2013-14, a year prior, there was a combined liquor and lottery total of $3.5 million spent on advertising. My question is: What should we expect, roughly, to be the total spent on advertising this fiscal year of 2015-16? Mr. Hak: So you have the report in front of you for '15-16, and the total advertising is part of marketing and public awareness, so the total amount actual for '15-16 was $11.7 million compared to the previous year where it was $12.1 million. Ms. Lamoureux: Can I ask what page that's on? Mr. Hak: Page 53.

Ms. Lamoureux: Just want to take a quick look at that. I will ask my next question. Two weeks ago there was a report in the Winnipeg Sun that outlined how senior executives at the Manitoba Liquor & Lotteries commission spent almost $300,000 on travelling to junkets over the past three and a half years. Has this situation been looked into, and was there justification or recommendations issued? Mr. Hak: Yes, so the –all that travel occurred under the previo us CEO and the previous board, and we have dealt with that. Ms. Lamoureux: Can I ask you to elaborate on that a bit–how you dealt with it? Mr.

Hak: Yes, we're going to really restrict travel in terms of report –in terms of overseas travel. But it's a–travel will be, you know, restricted to business requirements, a little more focused. Ms. Lamoureux: Okay, just to go back to my first question on advertising. So I just did a quick calculation. So for the fiscal year of 2015 to 2016, we can expect to see $23 ,884 spent on advertising. Can you confirm that? Mr. Hak: I'm sorry, can you repeat the question? Ms. Lamoureux: Just a quick calculation: so we can expect $23,884 to be spent on advertising for the fiscal year of 2015-16. Mr. Hak: No.

So in the year '15- 16, $23.7 million was spent –sorry–$11.7 million was spent on marketing and public awareness, which includes advertising and promotions. Ms. Lamoureux: I'm just trying to make a clear distinction between the two columns. There's one column with 11 and one column with 12. Mr. Hak: Yes, so the $11 million is for the fiscal year '15 -16,

whereas the 12 was the year before, '14-15. Ms. Lamoureux: Okay, thank you.

134 LEGISLATIVE ASSEMBLY OF MANITOBA November 16, 2016 Mr. Marcelino: Let's deal with the privatization and the concept, just the concept, and the strategic direction of the MLLC–did I say that correctly? –was to focus the corporation's strategies toward growth and refinement of its core operations. That's what has been said. And I agree that it's part of –is that a redirection or more of a refinement of the direction that the corporation has to take under your leadership? I believe that you're very capable.

I read up on your blog, and we're in for some successful redirection. * (15:20) Now, my question is: Do you believe in the possibility that the Liquor & Lotteries or any one part of it might be privatized ? It's your belief, a question. Mr. Schuler: I would like to thank the member for his vote of confidence of our board cha ir, and I would concur. I've said at this committee that I have two young daughters, and I've said to them, if you want to see a role model or a hero, Polly Craik is one of those individuals. I recommend they look at her.

We are very fortunate as Manitobans that we have such dynamic individuals who are prepared to come to the forefront. I think if you could get back into one of those time machines and go back, she may not be as eager to take on the appointment a second time. Thank goodness those time machi nes are only in the movies, because we'd actually take the machine away from her if she had one of those.

We–I do want to point out to the member that I don't think asking members of the corporation board or otherwise to reflect on a political issue that would clearly have to come out of this building, that that is a policy debate that, and it would have to come out of government, that would not –Crown corporations can't sell themselves. It's just not possible. It's –they can't. So–and I would suggest to m embers that we be very careful that we don't start getting into what ifs and what maybes. We believe very strongly in our corporations. We want to make them strong and independent and provide services.

And now I'm hearing we don't have enough Filipino beer in our liquor stores–see, very important that we brought the corporation to this committee, because I hope they've noted this, hope somebody wrote that down, clearly there is a problem, need more Philippine beer in– An Honourable Member: South end. Mr. Schuler: –in the south end. And so but – [interjection]–insofar–you know, this committee can make recommendations, I don't know if that's political direction–but back to the other issue.

I would suggest that we have a very clear mandate, and it's laid out in the mandate letter that we would like the Crown corporations to become independent, strong economic corporations within our economy. Mr. Marcelino: And thanks to the minister for that, but I'm just asking for an opinion from the board chair. Same question: Do you believe that privatization is a concept that's worthwhile focusing on the strategic direction of the Liquor & Lotteries Corporation? Mr. Schuler: I would recommend to members of the committee that we should (

a) stay in scope and we shouldn't be asking members of a corporation, board or otherwise, questions that are clearly political and that put them in an awkward position. We're not here to be a university debating club. If that's something, you know, you can go out and go for some beers or something and you can have these debates. Everything that's said here is on the record. We take this very serious. I don't think it's fair or appropriate to ask board members or professionals of the corporation to give personal or private opinions or – that's not the scope of this committee.

This committee is for them to tell us what they've done, what they're doing and what they're planning on doing on a go-forward basis. I would ask members to not–please don't put our professionals in an awkward position. Mr. Marcelino : What is the channel partners advisory committee? Anybody could answer that. Mr. Hak: It's–a number of our liquor products in Manitoba are sold through other channels. We have beer vendors in Manitoba; we have private wine stores now; we also have liquor vendors.

So, this is just a committee with representatives of all those groups including the hotel association and the restaurant association. And its purpose –one purpose is to meet to find things of mutual benefit to grow the industry. Mr. Marcelino: And is there a role for private liquor stores in the channel partners committee? Mr. Schuler : Again, we don't want to have professionals from the corporation or the board start

November 16, 2016 LEGISLATIVE ASSEMBLY OF MANITOBA 135 to speculate on what may or may not happen. I would point out to committee that the last time there was an expansion of sales outside of Manitoba Liquor & Lotteries, outside of their own buildings, was several years ago under his government, his administration, where retail operations were given the opportunity to sell some wine and other items within their store, but those were still independent operations, but it was a attempt to look at something new.

I would caution the member again, anything that would involve expanding anything like that would come under LGA, and that would be under the Department of Justice. Mr. Marcelino : And it is the minister that's been answering my questions, so I better ask him, does the minister support present structure of the corporation, specifically the merger of Manitoba Lotteries an d Manitoba Liquor? Mr. Schuler: Well, does the minister, first of all, support the board of directors? Absolutely, one hundred per cent, check. Does the minister in the government believe we've got a very solid and good corporation? Check.

We believe that . We believe we've got a good corporation. We believe there are men and women who work very hard, many of them who are in this room, and we believe that the corporation has its mandate, its legislated mandate, to sell alcohol on the one side and lottery tickets and all the rest of that that goes with it on the other side. And that's their mandate, and we don't foresee any change in that mandate. Mr. Marcelino : Does the minister support Saskatchewan's recent privatization of government - owned liquor stores? Mr. Schuler: I want to put a qualifier on my last statement.

In light of the discussion we had for the last couple hours, unless there was a federal government that would maybe bring down another line, there's a potential that Liquor & Lotteries could conceivably have a different line of product, but again, like we said to members opposite, we will not speculate one way or another on what the federal government might bring down. So, I don't want those words later on brought back and yes, but you said hard and fast –well, you know, things could change federally with legislation, but we'll leave that up to what the federal government's going to do.

And, insofar as what other jurisdictions go, I would say to the member opposite, I spend a lot of time, seven days a week, my full days, worrying and working and trying what I believe is best for the people of Manitoba in regards to our Crown corporations and I don't spend a lot of time worrying about what Ontario or British Columbia or any other province does. That's their business. I don't interfere in what they do; neither would I suspect they would interfere in what we do here. * (15:30) We believe we've got a lot of work to do insofar as our Crown corporations.

There will be legislation coming forward and we h ope that the member will support that legislation. And we want to get on with the business of fixing the finances of this province, and I'd point out to the member, that's exactly what we plan on doing. Mr. Marcelino: Is the board planning to increase the number of private retail liquor stores in Manitoba? Mr. Schuler: That is out of scope. That would be a decision made by the LGA, and that's the Liquor and Gaming Authority, which is under the Department of Justice. Mr. Marcelino: How about wine stores? Mr.

Schuler: Any expansion of gaming, of liquor, any change in those mandates, would come under the LGA, and that's under the Department of Justice. Manitoba Liquor & Lotteries is not a self - legislating body. They cannot create its own legislation, debate its own legislation, pass its own legislation. They would require legislation done through the LGA. Decisions would have to be made under the LGA. What you have befor e you is the business of Manitoba Liquor & Lotteries. It would– you–these questions would have to go to the LGA under the Department of Justice. Mr. Marcelino: I thank the minister for that.

And just to go back to the question of marijuana, and it just stirs up more questions about the answers given by the honourable minister. To the chair of the Crown corporation, is there a need to research how to comply with the federal – with upcoming federal legislation about the distribution and legalization of marijuana? Mr. Schuler: That's been answered and that question is out of scope. It's best if that question was sent to the Department of Justice.

136 LEGISLATIVE ASSEMBLY OF MANITOBA November 16, 2016 Mr. Marcelino: And I understand that the minister wants to muzzle the chair of the Liquor & Lotteries. It's a simple question of being prepared for what's up and coming. It's not a question of whether we are prepared or not, but are we even considering preparing for such an eventuality? The questions that were asked by the member from St. Johns were very simple and direct and to the point. And I don't want to argue and debate with the minister, because my head will just be swirling all over. I already have pain.

The minister's propensity for answering questions that were directed to the chair or even Mr. Hak is good in a way. And even the questions from Mr. Teitsma were good and to the point, but they were answered a little bit more succinctly by Mr. Hak without the interference of the minister. So, there seems to be that particular portion of it where we are being stonewalled. So–[interjection] No, he's from St. Paul, not Stonewall. My question then is to the board chair and CEO. What is the long -term vision to promote local products and ensure a viable market for the growing number of craft breweries in Manitoba?

Well, anybody could answer that, right? Mr. Hak: With the –we have a new board and we will be embarking on developing our long- term strategy in the near future, but our objective will be to grow both lines of business responsibly as we have been. Mr. Marcelino: Sorry about that, Madam Chair. So, to the same CFO –or CEO, Mr. Hak –sorry. Part of your mandate from the minister was to preserve the L iquor & Lotteries Corporation as a Crown corporation. Is that true? Mr.

Schuler: We tabled the framework letter in the Legislature for the member and we actually sent him a copy, so I would suggest he have a good look at it and it's very clear in there what the framework for the corporation is. Mr. Marcelino : My understanding of the m andate letter that was tabled by the honourable minister might be different from the understanding from Mr. Hak. So is that par t of your mandate, to maintain Liquor & L otteries Corporation a Crown corporation? Mr. Schuler: Again, any changes to the corp oration can't come organically from the corporation.

One way or another, those questions would have to go to the LGA, which is under the Department of Justice, and the member knows that this isn't stonewalling. This is –we can no more ask about steel produc tion and potato production at this committee than we can ask those questions. It's not in scope. The corporation does not self -legislate itself.

Any of those questions would have to go to the LGA, which is found under the Department of Justice, and I under stand where the member's frustrated, but he knows this, having been a government member, that there are different agencies that –it is probably one of the first times ever we've taken the business of government and put it into one department and the regulat ory authority is under the Department of Justice or under –some of it finds its way under Manitoba Infrastructure, and that has to do with MPI.

So the regulatory side is not held by the minister who is responsible for the businesses of the Crowns, and thus the Minister of Crowns is not in a conflict, on the one hand being the proponent and on the other hand being the individual who has a complaint against the corporation, so any concerns that come into our office in regards to the Crowns have to go either to Justice or MI or wherever that authority lies, and I'm sure that, you know, the member who's been around for a long time, recognizes that's what would happen.

So, to ask the corporation, you know, one of these questions, well, that actually has to go to LGA. That's where the regulatory authority lies. It does not lie within the corporation itself. They cannot self - legislate. Mr. Marcelino : I will go to another point. My frustration is building up so I better go to another point. The stonewall is getting higher, and let's go to that letter signed by both the chairperson of the board and by acting chief executive officer, Mr. Hak.

I have a very simple question as to how –what's the need for an in camera discussion to suspend the head office project, which is the Medical Arts Building, on June 20th? Who called for that in camera discussion? * (15:40) Ms. Craik: With regard to the in camera session, the purpose of it was to make sure that things were kept confidential. We had stakeholders involved in this

November 16, 2016 LEGISLATIVE ASSEMBLY OF MANITOBA 137 decision, such as people leasing space in the building, and I had not yet spoken with the minister, as well, and so we held an in camera session with the board of directors to discuss, openly, amongst ourselves and in confidence, the decision. Mr. Marcelino: Who called for it? Ms. Craik: Are you asking who called the in camera session meeting? Mr. Marcelino: Yes, please. Ms. Craik: That would have been myself who called the meeting. Mr. Marcelino: And how did you call it? Ms. Craik: I'll have to look it up.

It would have been either by a request through email or some other means, but I would have to check. Mr. Marcelino : Is there any way to refresh your memory by suggesting that it might have been by email? Ms. Craik: I can check my records and get back to you. An Honourable Member: Is that something that you could– Madam Chairpers

Document details

Collection	Manitoba — Debates (Hansard)
Citation	41-1-cc5
Type	hansard
Volume / chapter	41st 1st hansardpdf cc5.pdf
Language	en
Format	pdf
Source	PROVINCIAL
Identifier	bf47ff91b505b50ec1812526eb679d609ae4a9b6

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