LEGISLATIVE ASSEMBLY OF MANITOBA Monday, 31 May, 1982 Time - 8:00 p.m. SUPPLY - CROWN INVESTMENTS MR. CHAIRMAN, J. Storie: This committee will come to order. I direct members attention to page 35. We're here to consider the Estimates for the Crown Invest­ ments Department. An opening statement by the Minister. HON. W. PARASI UK: Mr. Chairman, it gives me great pleasure to rise on this side of the House to present the 1982-83 Spending Estimates which are the first Estimates for the Department of Crown Investments.

As part of my introductory remarks I would like to share with you the distinction between my dual responsibilities as Minister of the Department of Energy and Mines and the newly created Department of Crown Investments, particularly as it relates to the so-called mega projects under review by the govern­ ment at this point in time. Mr. Chairman, I can make available to the members copies of a diagram showing the government's struc­ ture on dealing with the mega projects.

I head up a Cabinet Committee called the Mega Projects Commit­ tee of Cabinet which includes the Minister of Finance, the Attorney-General and the Minister of Economic Development. While staff of both departments are involved in technical and analytical work, the lead role with respect to potash developments and Man For is being taken by the Crown Investments Department under the direction of Mr. Mai Anderson, the Deputy Minis­ ter responsible for the Department of Crown Invest­ ments.

The lead role with respect to reviews of the Western Power Inter-Tie and the aluminum smelter projects has been assumed by the Department of Energy and Mines under the direction of Mr. Marc Eliesen, the Deputy Minister of Energy and Mines. What I propose is to review and answer questions related to both the potash development and the Man­ for Project under the Ministerial Estimates of the Department of Crown Investments; and the questions related to the Western Power Inter-Tie and the alumi­ num smelter projects be taken up when we discuss the Ministerial Estimates of the Department of Energy and Mines.

Now, turning to the role of the new Department of Crown Investments.

Our government has spelled out the following objectives for this newly created department over the next year: (1) to provide general administrative policy advice to Crown Corporations; (2) to coordinate the financial requirements of Crown Corporations both in the short term, medium and long term; (3) to review the short, medium and long-term plans of selected Crown Corporations to ensure compatibil­ ity with government policies, such as purchasing, export policy, possible building of plants outside Manitoba and investments outside Manitoba, etc.; (4) to assist in the development of new corporation thrusts.

For example, the Department of Crown Investments is taking a lead role in drafting legislation and laying the groundwork for the establishment of a government-owned oil and gas company. As mentioned in the Speech from the Throne on February 25th of this year, our government is commit­ ted to using public investment as the major means of sparking economic activity and the private invesment in Manitoba.

In order to improve upon financial administration and to ensure the most effective utili­ zation of all public investment, especially between diverse and competing possibilities within different Crown Corporations, we have established the Department of Crown Investments. The new department has begun to plan for provin­ cial investment by the Crown Corporations with par­ ticular emphasis on natural resources. We believe that Crown Corporations have had and will continue to have a major impact on provincial economic devel­ opment.

However, I would like to stress that we intend to complement rather than to supplant the role of private enterprise in Manitoba; Mani toba which has a mixed economy. It is our intention to limit the size and scope of this newly created department in order to ensure that the traditional corporate operating independence day-to­ day continues and the government does not find itself becoming involved in the day-to-day management of these corporations. Rather, the purpose of the department is to develop and maintain an overview of Crown Corporation activity, direction and future financial implications.

During the initial stages of developing this organi­ zation of the 1982-83 fiscal year, our Estimates call for the expenditure of $563,200 with a permanent staffing complement of six staff person years in addition to the Deputy Minister's position. We are presently in the process of defining the spe­ cific responsibilities of the four senior professional staff who will form the nucleus of this newly created department. All four senior positions will be bulletined and advertised in the usual manner. Competitions for the two clerical support staff are presently in pro­ gress.

Support in matters relating to financial admin­ istration personnel along with general administrative services will be provided by the Central Administra­ tion Division of the Department of Energy and Mines. I should also point out that we will be utilizing the services of external consultants to augment resources that will be available within the department. Presently, several significant activities are being undertaken by the government, including work on ManFor, potash development and the proposed oil and gas company.

Respecting the long-term options for ManFor, I'd like to point out to the House the following meeting on February 26, 1982, with the Honourable Herb Gray, agreement was reached on a joint review of the Man­ For complex at The Pas to examine alternatives to optimize the long-term viability of the complex. Pro­ ject authorization formally committing both levels of government to cost-sharing of these investigations up to a maximum cost of $800,000 was signed the third week of March with the starting date of April 1, 1982. These investigations are being implemented under 2866

Monday, 31 May, 1982 the auspices of a steering committee comprised of senior representatives of ManFor and the Govern­ ments of Manitoba and Canada.

Progress to date on this activity includes: ( 1) the appointment of Allan Bourgeois as a project manager to provide day-to-day management of the study process and provide coordination and liaison between all parties; (2) analysis of wood-supplying costs has been ongoing and is near completion; (3) retention of a consultant to examine options for the sawmill are in final stages of negotiation and it is expected a consultant will commence work on this component within the next two weeks; (4) a market analysis for pulp and paper is being reviewed and a consultant is to be engaged within the next few weeks to update existing data and material; (5) the ongoing review and examination of possible options for the pulp and paper mill with the request for proposals being finalized and sent out hopefully within the next two weeks is under way.

Officials associated with these investigations are carefully examining all available technical and resource data to ensure that the options to be exam­ ined include the widest possible range of feasible possibilities. We are optimistic that under these inves­ tigations work will be completed this fall as had been indicated earlier.

It should be noted that the management of ManFor are being utilized to the fullest extent possible, thus ensuring that the evaluations have the detailed knowledge of the present facility being taken into account and also the Board of ManFor is being kept informed of what is taking place with respect to future possibilities regarding ManFor.

As I have said previously in the House, we are con­ tinuing discussions with Repap with respect to their possible involvement in the future, but of course any development regarding the pulp and paper complex, especially Bell Pulp and Paper complex, as opposed to the sawmill complex, does require federal contribu­ tions and we are going through this joint process in order to maximize the possibility of getting federal contributions to the pulp and paper complex that exists in The Pas. To date, the response from the Federal Government in this respect has been very promising.

With respect to potash, in reviewing the potash pro­ ject there were several concerns which had been expressed by the previous negotiating team which we felt required further work. The areas of major concern were communicated to IMC and are subject to ongo­ ing discussions. Furthermore, Mr. Jack Roper, who was previously Assistant Deputy Minister in Mines, a Board Member of the Manitoba Mineral Resources Corporation and also a member of the previous administration's negotiating team, was retained as project leader in developing an up-to-date provincial position on matters related to potash.

The areas to be covered by this review includes geological informa­ tion, potash reserve estimates, private and public potash mineral rights ownership, provincial taxation and royalties, definition of bid areas, mine sites and sizes. Several factors have changed since the original Memorandum of Agreement which have influenced the world potash scene. These are countries such as Brazil and China who still have need for potash, have been unable to acquire it because of a lack of hard currency.

Third World countries that need potash are having great difficulty getting together the hard cur­ rency required for the purchase of potash, especially since they require so much hard currency to keep up with even minimal oil purchases and this has been difficult for them to do as the oil prices have increased. Hopefully, the glut in the oil situation right now worldwide might temper that to a degree, but we haven't noticed it yet. Continuing high interest rates have curtailed pur­ chases of fertilizer.

High costs of inventories, in addi­ tion to lack of demand, have caused a reduction in the production of potash with a temporary shutdown of some Saskatchewan mines. All of these factors have created a softening in real prices and the terms pro­ vided to customers. Also, the cash flow of companies has been negatively impacted. All of these factors are short-term conditions which affect bargaining posi­ tions of various parties.

We expect a strong future for potash over the long run, however, and we have had discussions with several firms in addition to IMC who have shown interest in developing Manitoba potash reserves. However, given today's downturn in potash markets, we expect that it'll be some time before we conclude agreements for development in Manitoba's potash reserves. With respect to the proposed oil and gas company, we have had discussions with several companies who are interested in working out joint ventures with the proposed provincial oil and gas company.

While the discussions with these companies have been good and the reaction has been very positive, I would like to indicate to the House it is not our government's inten­ tion to introduce legislation creating the provincial oil and gas company at this Session. We believe it is important to communicate with the industry in Mani­ toba and with those companies operating in Mani­ toba, but located in Alberta, and with other compan­ ies, many in Alberta, who we believe may indeed, and will indeed, be interested in more active activity within Manitoba.

It is not our intention to go into high-risk ventures on our own, but rather to proceed with joint ventures with companies to focus attention on the development of the oil reserves in Manitoba.

In order to ensure full communication of this message we intend to meet with oil companies in Manitoba and elsewhere and to outline our strategy for focusing development of Manitoba oil reserves. 2867 It should be noted that in the event that an excellent opportunity for joint activities to develop Manitoba's oil reserves should present itself before Manitoba oil and gas legislation is passed that we would utilize other mechanisms such as the Manitoba Mineral Resources Limited or Manitoba Development Corpo­ ration,

Part 11, to ensure the opportunity for develop­ ment is not lost to Manitoba, but it is our intention to focus our activity in the short run in further communi­ cation with the industry. In fact, in some of my discus­ sions with the industry, many of them have indicated that some of the larger ones just haven't focused enough attention on Manitoba because they, in part, felt that their overhead might be too high for the pos­ sible small Pool developments in Manitoba and that

Monday, 31 May, 1982 much of the activity had been undertaken by small companies who were, indeed, very entrepreneurial and who had been persevering but who were caught in very difficult cash flow situations, given the current worldwide and North American economic recession. These smaller companies have been very interested in dealing with us: we've had some very good discus­ sions with them.

I must say that, to date, the industry has been very cooperative and supportive and I wanted to take the opportunity of ensuring that I met with virtually all of them before we proceeded with the legislation because of the positive support that I had received to date. The 1978 Task Force on Government Organization and Economy stated that the mechanisms which link Crown Corporations to the Legislature are of critical importance. Freedom from political interference in day-to-day affairs must be balanced by accountability to government for the actions of the corporations.

The relationship between the corporations, the Legisla­ ture, the Minister responsible in Cabinet must be reviewed to ensure that they contain appropriate checks and balances. In my estimation the previous administrations made some strides toward defining the relationship that should exist between the corpo­ rations and government. For example, I was a strong supporter and I agreed when the previous govern­ ment separated the role of chairman of the board and the president or general manager.

However, there is further work required in clarifying the role of the board of directors and their respective responsibilities to government and ultimately to the Legislature. It is my intention as Minister responsible for the Department of Crown Investments to work with my colleagues in Cabinet along with the chairpersons and boards of the various corporations to come to grips with defining and agreeing to the links that should exist.

Maximizing public investment opportun­ ities of Crown Corporations, particularly as they relate to resource and industrial development, is the theme that will guide this newly created department over the years to come. I look forward to a positive and constructive review of our spending intentions for the 1982-83 fiscal year. MR. H. GRAHAM: Thank you, Mr.

Chairman, I wonder if the Minister - and this is purely a procedural thing - would be kind enough to give us either his opening statement which was a prepared one, or copies of the same because Hansard probably will be a day or two and we'll be completing this before we get copies of Hansard. HON. W. PAR ASI UK : I haven't received copies, but through the course of the discussion, I'll send out to get copies made. In fact, I brought some extra copies and I'll check MR. CHAIRMAN: The Honourable Member for Turtle Mountain. MR. B. RANSOM: Mr.

Chairman, it was interesting to hear the Minister's explanation of what this depart­ ment might do, but I must say that at this point I'm still uncertain as to exactly what we can expect to see accomplished by the Department of Crown Invest- ments. Clearly, they're going to spend money and they're going to hire people and they're not going to interfere with other Crown Corporations that initially have had their individual freedom of operation. It still remains a little uncertain to me what we would expect to see accomplished by this department.

I wonder if the Minister can outline to us some sort of time span by which he expects to see certain things happen. How are we going to measure the success of this department? Will we gather a year from now to review the Estimates of the Crown Investments Department again? What should we expect to have happened in the meantime in order that we'll be able to say that the Crown Investments Department has been a success or a failure? 2868 HON. W. PARASIUK : I think that governments have created Crown Corporations and they've established mechanisms in the past to deal with Crown Corpora­ tions on an individual basis.

They haven't developed, in our estimation, good enough mechanisms for keep­ ing an overview of what would be called the aggregate of Crown Corporation activity. When you have gov­ ernment guaranteeing the bonds there is a type of Treasury Board function that can be played in the general overview manner with respect to Crown Cor­ porations. In the past Finance has done this to a degree: Finance's activities have been geared more so to look at the regular departmental activities.

Activi­ ties of Crown Corporations are somewhat different from activities of regular line departments and there­ fore, we felt that it was important to provide that spe­ cial focus and I must say that sometimes this special focus was just lodged in a department in a fairly ad hoe manner. For example, my predecessor Minister in the Department of Energy and Mines had a position on the letterhead called "Director of Crown Investments." Now, obviously, that Director of Crown Investments had some activity in relation to some Crown Corpora­ tions but I think it's more important to institutionalize that.

There was the whole set of activities undertaken in the Department of Energy and Mines that really in some way went beyond the Department of Energy and Mines. They picked up the tabs of consulting work relating to possibilities of Crown Corporations, either with respect to ManFor, or with respect to potash, or with respect to other activities.

What we decided to do was to institutionalize this in a clearly identified entity; to staff it with a small core staff of people; to develop some expertise in Crown corporate activity; to relate to external consultants and to use them for specific tasks but in a sense, not to turn over the entire task of relating to Crown Corporations or doing an analysis of a Crown Corporation's viability solely to an outside consultant. So we.wanted to develop some in-house capacity.

We feel we can hire and put together a very small, highly competent team that will, in fact, be able to relate to the Crown Corporations in an overview sense. We are as I said, taking the lead with respect to the potash development; with respect to ManFor; we're acting as the coordinator there, we've involved the management. We'll certainly be doing this with respect to other Crown Corporations if new thrusts

Monday, 31 May, 1982 are thought of, indeed, we're an embryonic body so we have not as yet done an overview with respect to what all the Crown Corporations are doing. I think it might have been useful for the government to have a better idea of what some of the immediate or long-term implications of an Ida project might be, or for the government right now to develop a longer term appreciation of what some of the implications might be if Manitoba Telephone System gets involved in some activities with partners in Canada relating to some export possibilities.

These are opportunities but they are also liabilities or contingent liabilities and it's important for government to get a clear idea of what these directions are and what their future financial implications might be. It's all well and good for Crown Corporations per se to be looking at project possibilities and working these up from the point of view of what is good for the Crown Corporation per se, but in the final analysis it's the government that has to raise and guarantee the money.

It's important for them to have an overview as to what these various opportunities are and what the cost implications of them will be in the long run and that's the intent of this department. It's going to be a small one; it's going to be one which we hope will work in a co-operative way with all the Crown Corporations and provide the overview position for government that I think government needs and has, I think, developed in a more mature way with respect to other depart­ ments. This is a small step in trying to develop that type of overview and mature relationship with Crown Corporations.

I think over the course of the year, as we proceed with some of the negotiations that are presently under way, we will certainly be reporting to these. We'll bring them forward next year in the Legislature and I'm hoping that by that stage they'll be far more mature and in a position whereby I can bring forward more details on those.

I hope by that stage we'll be able to develop a much better overview position with respect to different thrusts of the Crown Corporations and what some of those implications might be for our financing - not only over the course of the next five years but possibly over the course of the next 10, 15 and 20 years. Also what some of the implications might be for staffing and what our relationship is with respect to other Crown Corporations and with respect to salary levels. There is always difficulty within Crown Corporations comparing salary levels between senior executives, there are a lot of anomalies.

I think these have to be looked at in order to ensure that again, from a government point of view, there is some consistency and coherence from an overall perspec­ tive with respect to the Crown Corporations. MR. CHA IRMAN: Before we proceed, the opening statements having been made, the Honourable Minis­ ter could bring in departmental personnel at this time if he wishes. The Honourable Member for Turtle Mountain. MR. B. RANSOM: Mr. Chairman, I'm still not that much clearer on how the department is going to func­ tion in terms of directing investment. How, for instance, will it relate to Manitoba Hydro? HON . W.

PARASIUK: I'll use ManFor as an example and I think it's a good example. The previous adminis­ tration had some thoughts about possibly selling or entering into a joint venture with another company with respect to Man For. That work was not carried out by ManFor management or the ManFor Board, they really weren't that aware of what was going on but rather the Department of Energy and Mines hired some consultants who undertook analyses in that respect but there wasn't that close link between the government and the Crown Corporation that had existed for some time.

We think that's a normal activity for government to undertake. We think that maybe there should have been closer links with ManFor but that rather than have this possibly take place in the Department of Energy and Mines or the Department of Industry and Commerce, depending upon the Min­ ister, that this type of overview activity should have a permanent ongoing home and that is the Department of Crown Investments, it relates to the Crown Corporations.

It will have that type of knowledge that often the Department of Finance, often Treasury Board has with respect to specific departments and when, in fact, one talks about the development of the pulp and paper complex and sawmill at The Pas there are obviously some governmental perspectives that are involved as well as those that might be looked at from a more narrow ManFor perspective. That's why we are taking this role and it's the lead role with respect to the ManFor options and the developments; it is clearly identified.

The people in the industry know it; the Federal Government knows it; ManFor knows it; it's part of that process and the focus is clearly identified. We aren't undertaking any activity at this particular stage with respect to looking at any sales - Flyer Industries - but I know that the previous government had undertaken that type of activity. I don't know if it undertook that activity with the knowledge and full participation of the management of Flyer Industries but that was an activity carried out by the previous government.

Again, I'm not sure if people in the indus­ try were aware as to what the focal point for that was, whether people in the Federal Government were aware of what the focal point for that was, and we think that could better have been done through a focused Crown investment department. Again, it's an approach that this government is taking. 2869 I know there was some thought when the previous administration had commissioned a task force to pos­ sibily create a Ministry of Crown Investments.

The previous government chose not to do that but I do know there had been some discussions at the task force level in that respect. Now the government chose to do otherwise; that was their prerogative three or four years ago. We have decided to establish a focal point to develop this overview, to look at the financial implications, to look at the opportunity costs of investments and to be able to inform and advise Cabinet in a much more focused way than has been done in the past as to what the pros and cons of various investments that government, basically, has to underwrite are.

We will indeed do this in close co-operation with the Crown Corporations themselves but there are perspectives and elements that I think are larger than those of a Crown Corporation per se

Monday, 31 May, 19 82 that have to be addressed and brought to Cabinet's attention and that certainly will be my intention. MR. B. RANSOM: Mr. Chairman, I believe my ques­ tion was, how will it relate to Manitoba Hydro? HON. W. PARASIUK: You said, for example, how would it relate to Manitoba Hydro? I took some partic­ ular examples. When we talk about Manitoba Hydro, the discussions relating to the aluminum smelter and the Inter-Tie were not undertaken by Hydro.

They were undertaken by the Manitoba Government with certain people of Manitoba Hydro being involved to provide information, other people being involved, supposedly, as part of the negotiating team, but cer­ tainly government took the lead in that respect.

We do want to ensure that, in these discussions, the Crown investment overview position, as it might relate to future Capital implications, as it might relate to future contingent liability implications, is indeed addressed, and that Cabinet is advised of these dimensions when government has to make those types of decisions which ultimately are made at the Cabinet level. With respect to senior personnel, there have been audit procedures of the company's activities, little checks at its efficiencies in certain areas vis-a-vis other companies.

This again will be done in co­ operation between the department and the profes­ sional staff of the Crown Corporation. We are looking at ways and means of actually improving the way in which Crown Corporations operate and we believe that we can be a small step but a very valuable step in this direction. We believe that the first step required is to get a good overview of the different types of Crown activity that take place, some of which is related to resources, some of which is related to manufacturing.

In some senses that developed through the back door but still the government is involved in the manufactur­ ing business. Some of those activities are different; they require different types of financing, they require different types of contingent liability and it's impor­ tant for government to have a handle on that and that's what we'll be doing. MR. B. RANSOM: Mr. Chairman, why would the negotiations on Alcan and the Grid then not come under this department as well?

If we're going to have a Department of Crown Investments and we're under­ taking those kind of negotiations and personnel in this department and are going to be dealing with potash and with ManFor, why would they not also be dealing with Alcan and the Grid? HON. W. PARASIUK: This department is, indeed, very closely involved in that activity but the lead activ­ ity is being undertaken by the department that has the responsibility for the marketing of electricity between provinces or with respect to major users.

I'm pretty sure the previous government recognized that by establishing a special procedure whereby it was the government of Manitoba, not Manitoba Hydro, that was negotiating the Western Inter-Tie. The same thing held true with respect to the aluminum smelter proposal. This is not to say that the department isn't involved in that activity but the lead role is being taken by the Department of Energy and Mines. In part, it's a function of time at this particular stage having come into office with four different types of negotiations in various stages of progress.

It was a decision on my part, then, to break it down that way. One conceivably could have added the aluminum smelting potential to the activities of the Department of Crown Invest­ ments, but with respect to the Inter-Tie, I think we're dealing with the marketing of electricity outside of the province and that's why that lead role was kept within the Department of Energy and Mines. MR. B. RAN SOM: Is a member of the Crown Invest­ ments Department represented on the negotiating committees then, for Alcan and the Grid? HON . W.

PARAS IUK: I'm sorry, I did mean to pass this out, if I could get a Page, I certainly would pass this out to members. Mr. Anderson is a member of the negotiating team related to the Inter-Tie and to the aluminum smelter. MR. B. RAN SOM: Would it be the Minister's expecta­ tion that corporations like McKenzie Seeds and Moose Lake Loggers and Channel Area Loggers and maybe even the Manitoba Telephone System, that the other Crown Corporations will all eventually be reporting to the Legislature through the Department of Crown Investments? HON. W.

PARASIUK: They will be reporting to the Legislative Committee, as they have to date, through the Minister responsible, but when we run into a situa­ tion that I guess we'll have to take a look at in the near future, namely, possible refinancing of McKenzi e Seeds, and I think the government should take a look at that from a governmental perspective as well.

I would expect that in that activity the Department of Crown Investments will be involved in that because it will entail a potential Crown investment just as they are involved in ManFor because any activity there will entail a potential Crown investment and one will look at the general benefits and costs of that, what the financial implications are, and make appropriate comments to Cabinet on that matter.

As I've pointed out, we haven't had a chance to get too involved with the Telephone System to date but I think, had we been involved we would have looked at something like an Ida in the past, or would have taken a closer look at some of the export possibilities that the Manitoba Telephone System could get involved in from the point of view of what is the contingent liabil­ ity from the province's perspectives or how much, in a sense, financial resources do we want to allocate to activities which really, in a sense, are going to take place outside the province even though they will derive some funds, money, back to the province.

I think those are important perspectives for the Provin­ cial Government to have and that's the type of activity that we'll undertake as we develop more staff capac­ ity. But again, we don't feel that we need a large group to do that type of work. 2870 MR. B. RANSOM: I take it from that answer then, Mr. Chairman, that it's not the Minister's expectation that a company like McKenzie Seeds would eventually be reporting through the Minister of Crown Investments

Monday, 31 May, 1982 which, I guess, strikes me as a little curious that if you're going to have a department that is to coordi­ nate Crown investments I suppose to a layman it comes fairly quickly that you might expect to see the Crown Corporations reporting through that Minister ­ ! believe that really was what the recommendation of the task force was, not to have a department that was coordinating investment of tax dollars ... one Minis­ ter who was reponsible for the different Crown Corpo­ rations in their reporting to the Legislature.

I believe the Minister made some reference to allo­ cation of financial resources. Will the Department of Crown Investments have a vote of money, so many millions of dollars that they'll be able to apportion to areas where they think that it's necessary to have investment take place in the economy; or will they be placing some control on other Crown Corporations such as Hydro or Telephones in telling them that investment of a certain type is perhaps not in the best interests of the province or investment of another type would be in the best interests of the province? HON. W.

PAR ASIUK: That's a function that is under­ taken by Cabinet. Traditionally, it's been the Depart­ ment of Finance that has allocated the funds. The advice will still in

part come from the Department of Finance, but there will be a particular focused approach through the Department of Crown Invest­ ments with respect to alternative investment, possibil­ ities that do come forward for Cabinet consideration. That is what the department will do and provide the technical work, review what the Crown Corporations come forward with, take a look at what the situation is with respect to other Crown Corporation activity because, again, it all comes down to demands for funds and in a period that I think will be extended for some time where financial resources are somewhat limited.

Therefore, one has to be very judicious and prudent with investments and in order to try, I think, to get the biggest bang for a buck, one would want to make sure that one has done this work with respect to alternative investment possibilities that come forward. This in no way will detract from the Crown Corpora­ tions themselves doing their work, putting forward their best case, but it is important for the government to have the overview as well. MR. CHAIRMAN: The Honourable Member for Lakeside. MR. H. ENNS: Thank you, Mr. Chairman. Mr.

Chair­ man, despite the fact that I've been around for awhile, the importance of this occasion doesn't escape me. We're watching the birth of a new bureaucracy, a new department at it's very infant stages and we really don't have a great deal to talk about other than the philosophical intent of that department. It's pretty well one line in the Estimates of some-half-million-dollars and we're talking about the coordination and review of activities of Crown Corporations and their direction. Mr.

Chairman, I come from that period of time where the Crown Corporations were, indeed, operat­ ing at an arm's length from government, but reality doesn't escape me in that that has changed. That was changed demonstrably in the late '60s when govern­ ments became more directly involved in the opera- 2871 lions of Crown Corporations. One that I was particu­ larly involved with was Hydro and such decisions as to whether or not Hydro should proceed in the develop­ ment at South Indian Lake on the Nelson River.

Then the next year, in 1970, with the incoming of a new government on a very highly-charged political issue; and the creation of a new major Crown Corporation such as Autopac; and the involvement, and much closer involvement, of government with Crown Cor­ porations and we have seen that develop, Mr. Chair­ man, indeed, the previous administration had Cabinet Ministers as chairmen of Crown Corporations, of Autopac. The current First Minister was the first Chairman of Autopac, followed by the now Minister of Agriculture, followed by the former member for Dau­ phin, Mr. Peter Burtniak, as Chairman of Autopac. Mr.

Chairman, I should say that I have not caucused this with my party and I speak as the individual Member for Lakeside. I've come to the conclusion that the separation of politics from Crown Corporations is not possible in the 1980s, in the complex natures of the kind of involvement that major Crown Corpora­ tions have in the everyday life of Manitobans.

Even though we made a point of attempting to separate that during the past four years, by separating the executive officer, the presidencies with the chairmen and appointing separate chairmen, I candidly acknowl­ edge to the honourable member that, in my judgment, that really is passe. Mr. Chairman, the present government, by appointing very well-known, active, immediately past politicians, members that I have a reasonable amount of respect for, into those same positions in the person of the current Chairman of Hydro, current Chairman of Manitoba Telephones, have seemed to take it one step further. Mr.

Chairman, the question that begs is, why don't we take that final step further, indeed, making the Chairman of Mani­ toba Hydro the responsibility of a Cabinet Minister; the Chairman of Manitoba Telephone Systems the responsibility of a Cabinet Minister, as was the chair­ manship of Autopac once the responsibility of a Cabinet Minister during the NDP years? What bothers me here as I watch a new bureaucracy being born here is that what is the rationale for having a Minister answering for Telephones in this Chamber as we now have, the Member for St. George? What is the responsibility of Autopac?

What is the rationale for having the Minister of Corrections answering for MTS in this Chamber, if this bureaucracy, this Minis­ try in this department that we're now discussing, is going to provide that coordination and review of activ­ ities of Crown Corporations? Mr. Chairman, there'll be prophetic words. We are now dealing with an Estimate line of half-a-million dollars. Would anybody want to guess what it will be at the end of this government's term of three or four years?

If that's the case and I'm simply saying - I'm begging the question, in fact, I'm possibly agreeing with the concept - that today's complex or interrela­ tion as between Crown Corporations and the every­ day business of Manitobans is such that I don't think we can take the position that we can simply appoint a board, remove them at arm's length and pretend that they are not going to be directly responsible to this House, to a government, to the people of Manitoba. I know it didn't matter what Chairman we appointed,

Monday, 31 May, 19 82 what board of directors we had, didn't save my former colleague, Don Craik, any of the slings and arrows that were directed against him for whatever members opposite that day, or the general public, perceived that was going wrong with the Crown Corporation that he was responsible for. Nor, indeed, is it going to save you any of those slings and arrows that are going to be tossed across, not just in this House but by the public.

It seems to me that if we're seeing developed in the embryo stage right now a brand new department which this is, then the Minister should favour us with some conceptional ideas about how he sees this run. This really follows on the questions by my friend, the Honourable Member for Turtle Mountain, that who will the various Crown Corporations eventually end up answering to. I say this in deference to the Crown Corporations.

If they have to worry about a kind of a super department of Crown Corps, headed by Willie Super Corp, or if they have to be responsible to the individual Ministers that are assigned to them, it creates unnecessary friction and unnecessary diffi­ culties. I have problems with knowing just where this department tends to go with the existing Crown Corporations. Mr.

Chairman, I think we could probably get into a far livelier debate, I suppose, about where they intend to go; how much of Manitoba taxpayers' dollars they want to put into future Crown Corporations which we may take issue with, such as ManOil, or brick facto­ ries, or shoe factories which have been tried in the 40s and other jurisdictions, then we could get into a live­ lier debate.

But right now I'm more interested in where are the existing Crown Corporations that we have in this province, mainly the principal ones, Hydro, Tele­ phones, Autopac, all of whom have individual Minis­ ters now answering to this Chamber for their activi­ ties, but at the same time charged by this new department are supposed to coordinate their activi­ ties with the Minister's Estimates that we're now dis­ cussing. So that already gives these Crown Corps two masters or two persons that they have to report to. Mr.

Chairman, I think sometimes we wonder when we sit back and see how complex government gets, how much red tape we build into the system. I just ask members to pause for a moment to consider. We are right now creating some of that red tape; we are right now building that bureaucratic empire. Right now it's only one line and it's a fine high-sounding line. This Minister just wants to coordinate the various activities of the existing Crown Corporations.

But what he hasn't quite had the determination to do is to say to his colleagues in Cabinet, or to his Premier, and say hey, if I'm going to be charged with the responsibility, then don't have me second-guessing the Member for Brandon East or the Member for St. George, how he's running his Crown Corps. You know, you're being charged with the responsibility of coordinating all these Crown Corps. Now, who do we really zero in on? Mr.

Chairman, maybe it escapes the Honourable Member, the Minister of Energy and Mines but - I'm possibly even speaking supportively of his cause - in the sense it seems to me that rather than make gov­ ernment unnecessarily cumbersome and rather than make a blur, the lines of responsibility that are already far too blurred in most instances, then let's at least be clear-cut who's responsible to this House, who answers directly to the people of Manitoba for the activities, the coordination of Crown Corporations in this province.

I see an opportunity here, except I don't see a will on the part of this Minister or on this government, to in fact carry out what otherwise passes as being an acceptable position on paper. I have no indication from this Minister that that is his intention. I say to the Honourable Minister that he has accepted a very responsible role in the whole affairs of the Govern­ ment of Manitoba if this department is indeed going to coordinate the activities of Crown Corporations because, Mr.

Chairman, I happen to be one that believes that the Crown Corporations need a substan­ tial amount of direction of their activities from time to time. I'm not particularly pleased or proud to have to acknowledge in this Chamber that a Crown Corpora­ tion made a half-a-million dollar loan to a private company without so much as informing a Minister then responsible to this Chamber and only learning about that because of a question from a member in the Opposition.

I'm not particularly pleased about that at all; I'm not particularly pleased that a Crown Corpora­ tion can go on self-generated, no matter how righte­ ous or how justifiable that is, of spending X-number of tax dollars, $4 million, $5 million, $6 million on a futu­ ristic communications program and then finally say­ ing that, hey, the thing didn't work out but that's all right, all we have to do is go to the Public Utilities Board and ask for a rate increase and the telephone users will cover the bill.

If I have to answer for that, or if any future Minister has to answer for that in the House, I at least want to be in on the decision-making, that's all I ask.

I acknowl­ edge that in today's politics the day, in my judgment, is over, is long gone and over where you can have an arm's length, when we can in a Utopian way think that we can appoint a board of directors, where you can appoint a board of directors and that some way absolves us from our responsibility of the activities of that Corporation, through this Legislature to the peo­ ple of Manitoba. 2872 Our problem with the Minister's presentation to date on this set of Estimates is that he has not indi­ cated to us in any way just how bold he intends to become in this regard, or that he intends to want to become indeed if we are to accept this role for this department - a justification for even the half-million dollars that he's asking for.

I don't see that half-million dollars, or half of it, or $100,000 coming out of the now Minister responsible for Telephones' appropriation or the now Minister responsbile for Autopac's appropria­ tions. I simply see another layer being added; we're just watching how another layer of bureaucracy another 10, 15, 20 feet of red tape gets added to the system. Mr. Chairman, that's all I wanted to say. HON. W. PARA SIUK: Yes, I quite appreciate the comments of the member.

I think he was being quite candid in relating some of the difficulties that exist in being a Minister responsible for a Crown Corporation or being a government and having a number of Crown Corporations existing. The examples he gives are very good ones; they did involve and entail Capital invest-

Monday, 31 May, 1982 ments on the part of the Crown Corporation involved. They entailed funds being really allocated by the government. It's just not a matter of going to the Pub­ lic Utilities Board and asking for a rate increase because the rate increase pays for that over a period of time. What should have been looked at I say, and hopefully will be looked at more fully in the future is, what are the implications of those types of things because often they don't start with a $6 million expen­ diture, they start with $100,000 expenditure that appears minor - it's still a Capital expenditure.

People don't ask the questions about what the future implications of that might be and what the liabil­ ity implications of that might be but I don't think Minis­ ters and government ever get a clear appreciation. So when the Minister says will this confuse accountabil­ ity, I'd like to point out the Treasury Board example. You have a Treasury Board, you don't have a Chair­ man of Treasury Board; you have some of the func­ tions, not all of the functions of Treasury Board, per­ taining to Crown Investment activity. These are allocations in a sense, of public funds.

The Cabinet ultimately has to make those allocations, or guarantee them because if there is a $500,000 loss and there has to be a borrowing to cover that: or a $6 million loss and there has to be a borrowing to cover that; or a conting­ ent liability that could exist of say, $1 O million or $20 million, it's a contingent liability but it still has to be covered. Then there should be people who look for those things, advise Cabinet, do it through a Minister. The Minister can deal with the other Ministers. Now we've had this process operating, in part, this way with line departments for a long time.

There always has been a type of review, say, of new expendi­ tures or what have you, from a central perspective. That's never confused the accountability of the par­ ticular line department Minister within the House and to the general public. When the member says it's pos­ sible to have a Minister of Crown Investments who then becomes Minister responsible for all of them, that is a possibility. There are some features to it that are strong but I would recommend against it because I don't think that the Minister would be able to relate to the public which, I think, is important.

In his other comments the member did indicate that a Minister just can't be at arm's length from a Crown Corporation. You are going to have to pay attention to some of the day-to-day activities of a Crown Corpora­ tion in terms of how it deals with the public, and we've had instances in our administration and there have been instances in the past where not only should government look at, and should have looked at, Capi­ tal investment decisions but the Minister or govern­ ment should look at day-to-day operating decisions.

The carpenter who is looking for work and puts an ad in the paper and then gets a phone call saying your rate's going to be changed or he's going to have it cut off, those will go on always and there are circumstan­ ces where people feel that they have been wronged by a Crown Corporation. I'm sure the member, when he was the Minister responsible for a Crown Corpora­ tion, had many instances of that.

It's important that that openness and relationship with the public con­ tinue and that there be sufficient attention paid to those public concerns regarding day-to-day activities that come forward as an appeal, almost, to the Minis- ter and the Minister looks at it to see whether, in fact, it makes sense or not. Is the individual getting depro­ cessed? Is he or she being fairly treated by that Crown Corporation? That takes up, I would think, from my experiences as a Minister responsible for particular Crown Corpo­ rations, a fair amount of time if one wants to perform that function well enough.

We have reached the stage where Crown Corporations do constitute a significant portion of our lives. One might argue about whether, in fact, it's too high or too low but I think that there would be agreement that there is a significant portion of our lives affected by Crown Corporation activities. I think there would be consensus that a substantial amount of economic activity is influenced by Crown Investment decisions; those are of a different nature. So there always is this tug between a type of central­ ization and a type of decentralization on it.

We hope to be able to provide a Cabinet, on an ongoing basis in the future, with this overview without interfering with the day-to-day operations and responsibilities. The final authority and the final accountability rests with the Minister responsible for the specific corporation, as it does with respect to line departments. The Treasury Board has played a role; we don't want it to play as big a role as Treasury Board with respect to line departments but we do want it to play that type of overview role. This is new ground, I don't think it's been done like this anywhere in Canada.

Saskatchewan had a very detailed organized system. We hope to keep ours very small and I can appreciate the members comments when he says, is this the first step of this massive entity; that's a valid comment and I respect that and I say the proof of the pudding, obviously, is in the eat­ ing.

It's in Hansard and I expect that the member isn't shy about referring back to past statements that he or I have made or will make today and will be looked at in the future. 2873 But I think if one keeps a small contact group and is prudent in the way that the member himself says he wishes more prudence had been shown, then I think we'll have contributed somewhat to public administra­ tion with respect to Crown Corporations in the coun­ try, because I think that this is a problem facing all governments in Canada. You take a look at the Fed­ eral Government - they have literally hundreds of Crown Corporations.

If you ask anyone what's the list of Crown Corporations and what do they do, and are there some that are useless and some that could be improved, there's no one there that could tell you. When we wanted to find out years back what the operating costs, what the major decisions might be regarding C.N., I can recall the Minister saying, "Well, I'll have to pass some legislation to get the information out of C.N.," because the Minister responsible for C.N . at the time couldn't get the information.

So if the Minister feels badly that he possibly wasn't suffi­ ciently informed when he was Minister responsible, let me tell you we have a real zoo in Ottawa and they are doing nothing. They are doing nothing to try and correct that situation. Now the Conservative Party when it became Fed­ eral Government, had what they thought was the solu­ tion. They would basically disband or get rid of a number of Crown Corporations because they felt that

Monday, 31 May, 19 82 government wasn't handling them but I think rather than doing that, we should try and see whether it's possible to get a handle on Crown Corporations, and if we can do so with a lean apparatus then I think it will be a step in the right direction and I say we can be judged in terms of our performance over the next two or three years. MR. CHA IRMAN: The Member for Lakeside. MR. H. EN NS: I appreciate the Minister's comments. Mr.

Chairman, I should indicate to the Minister I'm well aware of the role that Treasury Board has always played in the Province of Manitoba, having been a member of that body in 1966, '67, '68, and having enjoyed being a member of Treasury Board during the immediate past four years, but that just adds to my problems. The Treasury Board already plays to some extent that overall, governmental watchdog role of allocation of resources. My problem is partly because I tend to believe some of the NDP propaganda.

You see, I happen to be one of those Manitobans that every once in awhile actually believes what they say and I do believe that when they say - and I say this seriously - that you expect Crown Corporations to play a major role in the economic development in the Province of Manitoba and that really is part of the rationale for the creation of this department.

I am well aware that Crown Corpora­ tions, principally having been part of a government that didn't have the benefit of having a Crown Corpo­ ration put upwards to $200 million, $250 million in late 1970, into the construction industry in Manitoba as the previous NDP administration had during the 70s, how important that is to the economy of Manitoba.

My problem is that I take verbatum the direction given under this heading of the Estimates, provides for coordination, review and activities of the Crown Corporations and that you will be instrumental in mak­ ing some of the decisions, so that the decisions of the Crown Corporations happen to coincide with the economic goals of your government; that the manner of staging different developments within the Crown Corporations. the manner of how different Crown Corporations go to the money market, all of these things will be funnelled through this department.

I then have trouble buying the concept that you still nonetheless, have to have Treasury Board doing their function, this new Crown Corporation agency doing their function, plus the individual Ministers answering for their functions. Now, Mr. Chairman, the Honourable Minister says that 101 individual consumer complaints come to the line department of the Minister responsible. Of course they do. I'm also aware, and the Minister is well aware, that it's the function of the Minister to have good and capable people, whether it's the lain Grieves of Auto­ pac or others, to look after these kind of matters.

The Minister surely is not saying to me that he is spending 60 percent of his time answering Autopac complaints or that the Minister of Agriculture is doing that. He's had enough trouble trying to answer to the complaints of the cattlemen of this province right now, Mr. Chairman, but I'll desist at this particular point. All I'm saying is, we're seeing the birth of a brand new bureaucracy. The Minister has done a pretty good job of saying that the current Ministers respon­ sible for Telephones and for the individual Crown Corporations are essential because they're doing an essential job.

He has also made a pretty good job saying that the overall review that Treasury Board, of which I assume he's a member, is doing a pretty good job of allocation of government resources and things like that, then begs the question, "What the hell is this agency really going to be doing?" 2874 MR. CHAIRMAN: The Honourable Member for Virden. MR. H. GRAHAM: Thank you, Mr. Chairman. I'm very thankful that the Minister has given me the opportu­ nity to take

part in the debate, mainly on account of some of the comments that he has made and some of the concerns that I have had and I'm sure all Manito­ bans have, when he sets up this Department of Crown Investments.

He was speaking a little while ago about his own personal experience when he was a researcher in Ottawa and the concerns they had with the various Crown Corporations down there and the fact that probably they weren't even able to get a handle on the exact number in which the Federal Government was involved and the fact that they couldn't get answers to the various legitimate questions that could be asked and should be asked regarding the activities of those various organizations.

So with that background in mind I was somewhat surprised when, in the Minister's opening statement, he itemized the role where he said: "Our government has spelled out the following objectives for this newly created department over the next year." One, was to provide general adminstrative policy advice to Crown Corporations; second, was to coordinate the financial requirements; the third, was to review short, medium and long range plans of selected Crown Corporations to ensure compatibility with government policy; and four, was to assist in the development of new corpora­ tion thrusts and there the Minister left it.

He has told us personally of his own experience and yet he has failed in putting forward his program, to provide for any accountability. Probably he thinks that there is maybe sufficient accountability in his power as the Minister, but I suggest to him that his role as a Minister is one role but there is also a role for this Legislative Assembly and that is where the Minister is to account to this Assembly for all of his guardianship activities as the Minister of the Crown.

So I would have hoped that the Minister would have had, in his general policy direction, some method of accountability to the people of Manitoba and to the Legislative Assembly.

I hope it was just an oversight on the Minister's part because I want to tell him that if he doesn't provide it, there's a very good possibility that some member in the Opposition would bring forward a resolution ask­ ing specifically, for accountability to the Legislature and some means of an orderly review of all of those activities throughout the year, on either an ongoing basis or on an annual basis because when the Minister goes to the people, or this government goes to the people with their Budget requirements and their Throne Speech of their aims and objectives, when they start spending one dollar of taxpayers' money there should be a means of accountability.

Monday, 31 May, 1982 I would hope the Minister would consider very seriously adding a fifth point in there to provide the means for accountability to the Legislative Assembly for an annual review of all activities that occurred, even if it means setting up a special committee of the Legislature to review purely activities of corporations where the Crown has either a minor or a major direct financial interest so that that committee, a special committee of the Legislature, could have the oppor­ tunity to review on an ongoing basis.

Whether or not it's necessary for them to have the power to sit inter­ sessionally, I don't know. It would depend on the activ­ ities that are involved and the number of corporations that are involved. At the present time, some Crown Corporations are reporting through the Public Utilities Committee, some of them, not all of them. We have some that are reporting through the Committee of Economic Devel­ opment, some of them, but not all of them.

Perhaps it is time that we have a review of those activities and put all of the activities in which the Crown has a major or a minor role into one specific committee for annual review so that the public then could get a handle on the extent of public participation in the everyday activ­ ities that go on within this province. HON . W. PARASIUK: Well, the comments of the member are well taken. I'd ask him to look to Page 8 of my statement where I said I thought that the previous administration made some strides toward defining the relationship that should exist between corporations and government.

I then said that further work is required in clarifying the role of the Board of Directors and their respective responsibilities to government and ultimately to the Legislature. I said that it is my intention as Minister responsible for the Department of Crown Investments to work with my colleagues in Cabinet along with the chairpersons and boards of the various corporations, to come to grips with defining and agreeing to the links that should exist. The points that the member raises about the differ­ ent reporting procedures to Cabinet, different Cabinet committees, one could say that about the reports.

When do the annual reports come out? Is there any consistent way in which they've been treated in that manner? Which ones are tabled in the Legislature and which ones aren't? There are differences. We hope to come to grips with that, bring all this information in and I hope that over the course of the year we'll be able to do this and I'll be able to report back when my Estimates come forward next year in a more definitive manner with respect to some of the points that the member raises, which I take as being legitimate points, and say that I will certainly be pursuing over the course of this year. MR .

CHAIRMAN: The Honourable Member for Roblin-Russell. MR. W. McKENZIE: Thank you, Mr. Chairman. I'd like to ask the Minister who in the province is asking for this new branch, Crown Investments? Where does it come from? In my years in this House and touring this province, it's the first time it's ever been raised to me that we need this type of a new department to be set up, so I hope the Minister would be kind enough to 2875 answer. Is it part of their political philosophy, or does it come from the Honourable Member for Ste. Rose?

Is he the one who's been asking for another department with a whole lot of bureaucrats added, running around our constituencies? Because over the years govern­ ment has done a pretty good job in the rural areas. I'm also wondering if the Minister intends to move into the field of agriculture in these Crown Corpora­ tions as he mentions here, to assist in the develop­ ment of new corporations thrust. Does this take over maybe MANCO and help us solve the cheese prob­ lems which the Honourable Minister of Cooperative Development hasn't been able to resolve?

Is that the thrust that we can expect, that we'll maybe get into cheese? Can I ask then, as a means of sparking economic activity in private investments in Manitoba, the tax­ payers in my constituency will be asking, what kind of costs are attached to those figures?

I'd like if the Minister would be kind enough to give us some indica­ tion of what kind of dollars are we looking at to spark the economic activity in private investment in this province, or are we going back to listen to the resolu­ tion that we heard this afternoon from the Honourable Member for Thompson, was it, espousing his philo­ sophy as to the activity? The other one that says the new department has invented a plan for provincial interest by the corporations with particular emphasis on natural resources. What kind of bucks are we look­ ing at to move into that field on behalf of the taxpayers?

I notice over further it says, "Our intention is to limit the size and scope of this newly created department." I wonder if anybody in his wildest im agination could make that statement. When you set up a Crown Cor­ poration, and we only have to look at the example of Ottawa, how can you limit the size of it? It's expanded and I think historically, it has all over the world. But it says here, "I t's our intention to limit the size." I wonder if the Minister would tell the Committee how he hopes to limit the size because once you set it up, how are you going to limit the size of it?

I think the people of this province are entitled to an answer to that. There was one other one. Yes, it says here, "And would ensure that the traditional corporate operating independence continues." Corporate independence, how can you say that it will be political from Day One? How can a Crown Corporation keep its independence as explained in the Minister's comments here? Those were a few of the questions. I have more later on I would like to discuss under the potash, but I'd like some answers to those if I could, Mr. Chairman. Thank you. HON. W.

PAR ASI UK: Well, I think the member had concerns about whether, in fact, we'd be expanding the role of Crown Corporations significantly with respect to economic activity. I think the Budget indi­ cated the extent to which the government is actively making investments through the Crown Corporations in a manner which we believe will, in fact. help spark some economic activity in this province. When it comes to resource development we have said we are going to be active in that area, but prudent.

I indicated to the memberthat I have been in consulta­ tions with oil companies, for example, and we have made a statement to the effect that we would be invest-

Monday, 31 May, 1982 ing so meth ing in the or der of $20 mil lio n in oil devel­ op ment, but I'm pr epar ed to take the time through the consu lta tion with the industry. I know tha t many of them -and I don't know if the memb er was in when I made the se poi nts -have come to us, the smaller one s tha t are entrepr eneurial, but have been su ccessful in Manitoba, sa ying that they are having difficu lty get­ ting the big companie s.

They've had difficu lty over the past numb er of years, the past four years prior to that time as well, get ting the larger companie s that have better cash fl ows and poss ibly have a better tax posi­ tion with respect to the Federal Go ver nment, with respect to the Federal Go vernment's tax expenditur e polici es, with respect to the estab li shed large oil com­ panies, get ting these peo ple interested in Manitoba because they think the picki ngs are too small and their overhead's too hi gh, so the y don't get involved with the se small entrep reneur s who are active and ag gr es­ sive in Manitoba.

We belie ve that the Cr own can pla y a useful ro le as a catalyst in dealin g with th ese entrepreneurs. It's im por tant tha t again we try and separ ate the whe at from the chaff. We hope to be prudent in this respect, to be carefu l, but at the same time we have said tha t the Cr own will get involved and will conside r joint ventur e activity with entrepre neurs that are opera ting in Mani toba who want to come to Mani toba with respect to futur e oil devel opment in the provi nce. We think that's a useful role tha t we can play. We have said we'd do it on a volu ntary basis as well.

We're not going to force anyone to come into a joint ventur e with us; we're not going to do what's calle d the backdoor joint ventu re, have them develop some thing and come along and take a 25 percent shar e of that. I' ve ma de tha t sta tement with respect to the mineral industry. It 's wha t exis ts right now. We've said tha t we wou ld n't change tha t and tha t we wou ld continue on tha t basis. We have received a numb er of inquir ies from differ­ ent com panies in the mi neral sector lo oking to the Cr own for some join t activit y.

I know tha t the previous admini stration and this admin istration were lo ok ing at some pub lic input of one sort or another with respect to wha tever devel opme nts migh t take pl ace at Man­ For. Tha t wou ld req uir e some pub lic input of one sort or another; it could be a gr ant; it could be an invest­ ment; it could be a loan or a lo an gu arantee. So there were those options. So I can't set this gl obal figur e to the mem ber whe n he asks for one right now.

As I said, I think that's one of our tasks to look at tha t and see what ma kes sense from the perspective of the Cr own as to wha t should have been invest ed. What can it inv est; what are the limi ts; or do we ju st add up the total tha t come s for­ ward as pos sibili tie s from different Cr own Corpor a­ tions and the n go out and try and raise tha t money; or do we say we'll see if we can't afford some of the se thing s, maybe this is a mor e jud ici ous invest ment than the others?

And since gove rnment does have to gu a­ rantee or underwrite th ese we feel that's an ap prop­ ria te task for the go vernment to take and we're set ting up this small entity to undertake that ta sk. When the memb er says it's critical that we limi t size and how can I li mit size? Wel l, as I said, the only way I can say tha t is to say, yes, it's our intention to limi t that size . Ob viou sly, I come forward next year.

You'll be able to see the se Estim ates; you' ll be able to see wha t happ ened; you'll be able to comment and criti cize me on that, and it is all here with in the public forum for everyone to consider. I think that is the way in which we want to appr oach this activity, very much in the open with Estima tes sta ting wha t we've done. It pr o­ vide s a forum each year for the Legisla tur e to hold a Min ister responsible for Cr own Investments acco un­ table in terms of what's happ ened in the overview.

You 'r e going to have the par ticu lar instances of Min isters bei ng answerable with respect to individual Cr own Corporation act ivi ty. There will be the op por­ tuni ty -we think it's a valid one-for these ma tters to be raised and discus sed with in the Leg isla tu re and for the gov ernment to be held acc ountable for it. MR. W. McKENZIE: Mr . Chairman, the Min ister did n't answer a lot of the qu estions I put into the reco rd. I'll not repeat them because he ap parently isn't going to answer them.

I note here tha t dur ing the initial stages of the devel­ opment of this organ iza tion -we're pas sing some 560,000 - wha t's it going to cost us in the thir d or four th year of your gove rnment? HON. W. PARASI UK: We're hoping tha t we can keep this figur e constant in constant-dollar terms, that is, we don't expect that we should be incr ea sing in constant-dollar terms beyo nd wha t we are right now. If it's $563,000, if you take into account inflation and di scount tha t, the n we will stay at this level. It 's not our intention to go beyo nd that. 2876 MR.

CHAIRMAN: The Honour able Memb er for Tur tle Moun ta in. MR. B. RAN SOM: Mr . Chairman, tha t famous election manifesto whic h has been referred to on a numb er of occa sions by mem bers on this side of the Ho use, said tha t Ma nitoba Hydro and ManOil were going to be respo nsible for pr oviding the funds tha t would allo w the gov ernment to save every hous e and farm and busi ness that mi ght be lost in this pr ovi nce as a con­ seq uence of high inte rest rates.

We have learned in com m ittee, loo king at Hydr o, that, indeed, th ere's very li ttle prospect that the mem bers op posite ar e going to be able to use any funds generated by Hydr o to fulfil! tho se pr omis es. Ther efore, tha t leaves ManOil as esse ntially the only ec onomic th rus t which the gove rnment, the NOP Party, had held out to the peo­ ple as a means of generati ng the kind of economic activit y tha t would allow the m to sus t ain a level of services tha t the y inherited from this gove rnment. I' m wonderi ng, ther efore, Mr .

Chairman, why the Min ister of Energy and Mines wou ld choose at this tim e not to bring in that kind of dev elopment which they said held out so much pr omi se? HON. W. PARAS IUK: Yes, reca lling that state ment that the memb er keeps referri ng to, I think Hydr o and ManOil were used as indicative example s of what can be done through Crown activity tha t cou ld have im pact on Manitoba's economic perfo rmanc e.

I think cert ainly you can look at wha t's tak ing pl ace in other pr ovi nces with respect to resource devel op ments tha t have contri buted very su bst antially to the public pur se and one can look to the pr ov ince next to us and

Monday, 31 May, 1982 look at a bill ion-dollar He ritage Fund. Tha t certa inly didn't help the gov ernment tha t was in power at the time tha t it develop ed tha t billi on-dollar Herit age Fund; the y were defeated. Bu t tha t billion -dollar Her ­ itage Fund certa inly will, in fact, have some substan­ tial im pact on the living conditions and the economic pr ospects of the people of Saskatchewan and so much of that came through Crown activity.

No w, I thought I explai ned to the -(l nterjection)­ no, not real ly, if you look at the potash returns, but ag ain, you can look at the potash returns if you want to look at the Saskatche wan situa tion. I think one could do some work in tha t respect and sho w how much came into Saskatchewan's coffers and will come in over the futur e through tha t activity.

But when the memb er asks about ManOil or the Mani toba Oil and Gas Corpor ation, I did explain that it was our intention to go thr ough a very thorough process of consu lta tion with all memb ers in the industry in Mani toba; to have consulta tion with the memb ers in other pro vinces who migh t be interested in coming to Manitoba so tha t the y got a very clear underst anding of the fact tha t we weren't going to have compul sory joint ventures; to have a very cle ar understanding tha t we weren't going to have compu lsory back door par ticipa tion.

I wanted to take tha t op portun ity to go to the indus­ try, spend some time with them, explain tha t to them because the re were some people in the industry tha t have concerns. They had concerns about when the y heard th at the y'r e going to establish an oil and gas com pany. When I explai ned our intent that we would not have com pu lsory backdoor par tici pation, that it would be vol untary joint par tic ip ati on, the y indeed were very open, very receptive and very positive and I want to take the time requir ed to do tha t. I hop e it will be the best cou rse of act ion.

Certai nly we could have passed the legi sla tion, then gone to ex plain it to the people, but I'd ra ther take the op portun ity at thi s stage and do tha t and come forward in the futur e with the legisla ­ tion. As I said, if some ou tst anding op por tunity becomes av ailable or become s ap parent in our dis­ cussions with the industry, the govern ment does have mechan isms to pr oceed with some type of a joint par tici pation but it's my hop e that the consu ltative process will work and that we' ll be further on.

Certa inly I expect tha t over the cour se of the summer I'll be going out and ta lking to some firms in Al berta th at have exp ressed some int e rest in coming to Mani toba. They've said in the past tha t often the y ju st haven't focused their atte ntion sufficiently on Manitoba because Manitoba is smal ler in comparison to wha t migh t take pla ce in Al berta, or the United States, or Saskatchewan, but some of the factors that augur well for Ma nitoba are tha t when you drill her e if you find something there's a pr obabil ity tha t it'll be oil, as op posed to gas.

They'r e finding a lot of gas in Al berta but the y'd like to lo ok for oil. Some of the se compan ies have gone to the United States and they've been bur ned. They'r e looking cl oser to home so I think the prospects for further and gr eater activity in Man itoba are th ere and we hop e to pur sue these fully. MR. B. RANSOM: Mr . Chairman, dur ing the last six years or so of the Schr eyer admin ist rat ion the gov­ ernment was involved in joint ventur es with the priva te sector in oil expl orati on.

I think they spent some thing in the neighbour hood of $1 million on joint explor a­ tion dur ing tha t period of ti me. Wha t is it tha t the Min ister then is contem pl ating by way of an oil and gas expl oration company tha t differs from wha t was done dur ing the Sch reyer adminis tra tion? HON. W. PARASI UK: Generally this was done th roug h Man itoba Mi neral Resou rces Corpora tion, I do n't know if the y had had tha t much expertise in the oil industry. I think it's im portant to develop a mor e focused type of expertise and we ho pe to do tha t.

I think the develop ments in Manitoba, with respect to different te chniq ues used, are substa ntially different than tho se tha t were used six years ago. I think that th ere's been some new br eak thr oughs. People have been far mor e agg ressive, far mor e patient in tr ying different te chniqu es for finding oil at different levels. I think in the past people tended to follo w wha t Chev­ ron had done and stoppe d th ere but ther e was far mor e work done and I think tha t the prev ious admin is­ trat ion simpl ified the royalties, simpl ified the taxa tion proc edur es.

I would have to say that tha t was an incentive and we haven't changed tha t. We do find, in our discussions with the small com panie s espe cially, espe cially gi ven today's circums tances, tha t the y need some par tners and, again, we have to be very jud icious and very prud ent. We have said tha t we are prepared to consider joint ventu res. No w, if the Opp osition says tha t the Go v­ ernment of Ma nitoba should consider no joint ven­ tu res with any entrepreneurial enterp rising oil com­ panies who are active in Mani toba, or want to become active, fine, tha t's a cle ar po sition.

We have said tha t we are prepared to consider these types of joint activities. MR. B. RANSOM: Mr. Chairman, the Mini ster said he di dn't belie ve tha t there was any par ticular expertise in Ma nitoba Mi neral Resou rces to deal with the area of oil explor ation, perhap s tha t was why they migh t need a new Corp orat ion. The Min ister also has said tha t the y have met on a number of occa sions with some small er oil compan ies tha t migh t be interested in Man itoba right now. I wonder if the Min ister could advis e the Commit tee who has been meeting with these oil companie s. HON. W.

PARASIUK: I didn't really want to downplay the capabi li ty of the people in MMR because the y're good; it's ju st that there tends to be different pr oce­ du res used for deal ings with oil people. To date when we've had mee tings they've tended to have been meet­ ings tha t were held by the Deput y Mini ster and myself and these oil compan ies.

At time s, wearing a different hat, we've had general discussions with the oil com­ panies from the position of the reg ula tor; we admin is­ ter the leases and we have peo ple who are expert there but the knowledge tha t the y have is not passed on to the knowledge of the Depar tment of Cr own Invest­ ments. We do n't want to gi ve Cr own Invest ments, or any Corpor ation tha t migh t be created, any type of inside knowle dge. We want them to have the same footing as does any priva te operator in Man itoba. So, to date, we have ju st been talk ing in general terms with them.

We ho pe to talk to people and we've 2877

Monday, 31 May, 1982 had some discussions with people in the oil industr y about wha t types of staff cap abili ty are req uir ed and, ag ain, they've been very co-operative, very open with us and we appr ecia te tha t. We cer tainly will be moving in tha t respect over the cou rse of the summer and fall because it is im portant to get good people who can assess the oppor tu nitie s wel l enough and at the same ti me, I think it's im portant for the govern ment to be pr epared, to get involved in joint ventures. We have said tha t before and we stand by it.

Again, I'm not sur e whether the memb er is as king or su gges ting tha t we should n't be involv ed in contempl ati ng any types of joint ventur e activ ity with any pr ivate oil entrep re­ neurs in Manitoba. MR. B. RANSOM: Mr . Chairman, I'm not sugg esting tha t, I'm ju st tr ying to find out wha t the gover nment's intentions are with respect to fulfi lling their comm it­ ments to the elec torate.

The Min ister mak es a com­ ment tha t he thinks Ma nitoba Mi neral Resou rces per­ haps weren't ju st the right Cor pora tion to carry out this kind of activity because perhap s they didn't have the expertise and then he tells me that he, and the Min ister and his Deput y are the people who have been meeting with the oil compan ies because thi ngs have changed in the oil busi ness, tha t there are new tech­ niques involved.

I recog nize tha t's why the Min ister wou ld be meet­ ing in tha t capacity and I recognize that the Deput y Minister is a very capable adminis trative person who has served the gov ernment in the past but I'm not espec ially aware tha t the Deputy Mini ster of Cr own Investments has had any par ticular backgr ound in the oil industry, th erefore, it raises some que stion as to what dir ection the govern ment is going and how they're real ly going to fulfil! these commit ments.

The Min ister made some refere nce to adj ustmen ts in taxa tion and royalty structu re as one of the reasons why we're now experi encing al most unprecedented levels of oil expl ora tion in the pr ovince. One of the other reasons why we are experien cing tha t kind of explor ation, Mr.

Chairman, is tha t the govern ment went back to lea sing the Cr own rig hts agai n to priv ate corpor ati ons for expl oration activitie s contr ary to the method tha t was fol lowed in pr evious years by the Sch reyer admini stration in ma king those leases cap­ tive to Man itob a Mi neral Resou rces and tha t wo uld be a very key to whe ther or not we would conti nue to see the private sector active in the pro vince.

I would th ere­ fore ask the Mini ster whethe r it would be his intention, in the cr eat ion of a Cr own oil and gas corpor ati on, to pr ovide them with the inside track on Cr own leases, or whether or not the corpor ation wo uld have to bid com petiti vely for tho se leases. HON . W. PARA SIUK : I indicated that to the Memb er for Ru ssel l. If I didn't I'd lik e to cl arify it.

It is cert ainly our intention tha t a Cr own Co rpora tion would be treated as other entrepreneurial actors in the oil industry and tha t the y would have to bid com petitively on leases and the y would not be rec eiving favour ed, insider treatment. That is what I have commun icated to those people in the oil industry that I have met with to date. MR. B. RANSOM: Mr .

Chairman, in the Min ister's sta tement he said that it is not the intention of the gov ernment to go into high-risk ventu res on thei r own, but to track joint ventu res for high risk and then he pr oceeds to tal k about the development of oil reserves. No rmally, my underst anding of an oil reserve is some thing tha t is known to be in existence and devel opme nt of it is simply get ting it out of the grou nd. Expl ora tion for it is qu ite another thing. The Mini ster has made reference, basically, to dev elopment of oil reserves in the same way tha t he mak es reference to development of potash reserves.

Potash reserves, of cou rse, we know in many cases are there. I wonder if the Min ister could gi ve a li ttle ela bora tion on tha t poin t. Is it hi s intention tha t the Cr own Corpor ation, then, is only going to op erate in areas wher e there are known reserves or is it act ually going to become involved in expl orat ion activit y?

I bel ieve, in the elec­ tion, tha t th ere was talk even tha t this company wou ld be, perhaps, even ex ploring in Hu dson Bay and per­ hap s in areas where no other company has even dared to go to look for oil, tha t we would find this corpor a­ tion going there and into other areas. 2878 HON . W. PARASIUK: Certa inly it's our intention and, if my state ment wasn't clear in this respect, it's our intention to consid er both explor ation, join t ventu res and join t ventu res to enhance recovery from exi sti ng reserves.

Some compan ies have said that they wo uld be interested in explori ng pos sibili tie s in this area and it's one thing finding the oil and, someti mes if you 've got the oil alr eady, if you can develop better methods of get ting mor e oil out, then tha t will add to the pro vin­ cial economy and the pro vi ncial treasury su bst antially so that would be our priorit y. With respect to poss ibilitie s in Hu dson Bay, we note tha t the Qu ebec Gov ernment and the Ontario Gov­ ernme nt are undertak ing some su bstantial com m it­ me nts in tha t respect.

As I said today in the Ho use, it's our intention to monitor wha t the y do very clo sely because if, indeed, the i r pretty significant inputs there result in the finding of oil, obviously I t hink the peo ple of Manit oba wou ld want Manit oba to be in a pos ition to take fulle st advantage of that. We certa inly aren't doing that as a first pri ority; we don't have it as a plan for the foreseea ble futu re. As I said, it's our intention to moni tor wha t the Govern ments of Ontario and Qu ebec do in this respect for a period of time. MR. CHAIR MAN: The Honour able Memb er for Arthur. MR. J. DOWNEY: Mr .

Chai rman, the Min ister has made a few com ments tha t, first of all, have created some concern. I wou ld first li ke to ask the Minister where he and his party and now go vernment felt the gr eat pressure to come forward with a concept of get ting into the oil busi ness, the development of our energy. I represent an area that is some what, I wo uld say, sat isfied with the development tha t has taken pla ce.

I know tha t there are a few individuals who mayb e have found it difficul t to lease their pr operties in the past, but the gene ral comme nts have not been tha t it should be the gov ernment's responsi bil ity to develop an oil company, to get into the develop ment but rather to, first of all, upda te the su rface rig hts legislation and giv e them the kind of pr otec tion in tha t area. Tha t, ba sically, has been the numb er one pres-

Monday, 31 May, 19 82 sure point to gi ve them tha t kind of legisla tiv e protect ion. But following on the que st ioning from my coll eague from Tur tle Moun tai n, when the Min ister has indi­ cated tha t the y're inter ested in the proven reserves or devel opment of them or the pumping of them, is the Min ister prepared through the ManOil or Manitoba Oil and Gas Corpor ation, plan ning to buy an exis ti ng company in the pro vince to get in the imm edia te oper­ ation of a gas and oil company?

If th at is the case, seeing it will be taxpayers mo ney tha t he's using, is he plan ning to pur c hase a company that is pr esently operat ing or movi ng in tha t dir ection? Sec ondly, if so, wha t about the fur ther step to move into the distr ibution and the pro viding of gas and oil to the consumer at the pump level such as we're seeing at PetroCan? I think it's fairly imp ortant for people who are pa ying tax dolla rs towards gove rnment oper­ at ions that the y have some answers to these. HON . W.

PARA SIUK: I'd li ke to poin t out to the memb er tha t we acted fairly qu ickly with respect to the whole que stion of su rface rig hts; we moved on tha t faster than anything else. We have received ma te­ rial from the Su rface Righ ts Ass ocia tion; we've been in com munica tion with them. I'm not that sur e tha t we'll be able to get the legislation done this Sessi on; I indic ated tha t to them. I expect tha t we 'll probably have to bri ng it in next Sessi on, but I indicated tha t to them and we've been wo rkin g on that as a top priori ty. I think our priori ty is to move on su rface rig hts.

I don't know if the memb er is aware, and I don't have it with me but I can bring it. I' ve received a letter, I think the Premier has received a letter from the Ma yor of Vir den, as king tha t when the pro vincial oil and gas company is esta bl ished we would estab lish the head­ quar ters of tha t company in the Town of Vir den; I bel ie ve that the Memb er for Vi rden has received a copy of tha t letter. So ther e are some people out there who aren't being negative about it, in fact, see it in a positiv e li ght and that's understo od.

I'm hopin g tha t we' ll be able to respond in some way with respect to some pr esence in tha t area. -(I nterject ion)- I would like to see Im perial Oil' s headq uarters in Virden. The point is, I talke d to them and the y haven't been active in Man itoba. I poi nted that out to the memb er, indicat­ ing tha t I had hoped tha t some of the larger co; npanies would have been involved and they say tha t their overhead is too high and tha t mayb e small er com pan­ ies mi ght be mor e efficient, gi ven a scale with Mani ­ toba or gi ven the scales of the Pool and we've had conti nuing discussions.

Hopefu ll y, we 'll see fur ther activity and greater act iv ity from Chevron, which is a large company, which does have skills and which does have some very good seism ic abili ty and some good explor at ion abil­ ity. They' re the company tha t drill ed Hib ernia. We hope that they'll be mor e active and we've had some discussions with them and the discussions were I think very construc tiv e and pr omi sing, but again the proof of the pudding th ere will be in the ea ting.

So th ere have been local people who have exp ressed some positiv e com ments to us with respect to the whole qu est ion of an oil and gas corp ora tion for exp lor at ion or further enhancement of ret urn from existi ng reserves. When it comes to set ting up some type of a Cr own Co rporation in Manitoba to compete with PetroCa n, that's not our inte ntion. We wou ld hope that Petro­ Can, which I think is involv ed in ret ailing which I belie ve the people of Manitoba and the people of Can­ ada supp or t as an entity involv ed in expl ora tion and development and distri bution and retail will continue .

I don't know abou t the memb er op posite but I feel pretty good when I drive by and I see some of the PetroCan signs with the Maple Leaf up th ere. No w, maybe he doesn't. No w there is laugh ter, but - (I nterject ion)- yes, it does, it does and I say tha t, fine, I wouldn't equa te PetroCan with a Gumm Store in Moscow.

I belie ve that PetroCan will serve a very leg it­ im ate need in Canada and ther e migh t be a difference of opin ion between memb ers on this side of the Leg is­ latur e and people on tha t side of the Leg isla tur e as to the value of PetroCan but we aren't goi ng to compete and tha t was the que stion tha t I was as ked. I said tha t we would not be competi ng with PetroCan and I hop e tha t they conti nue to operate in an effective manner.

When it come s to whether , in fact, we will pu rchase an exis ting com pany, I don't exclude tha t pos sibi lit y, but at the same time I do n't think that it is really a probabil ity. Wha t I foresee is a pos sibil ity of get ting involved in some joint activity with an exis ting com­ pany and tha t's different from pur cha sing out, from buying out an exis ting company. But there is room for join t ventu re, join t activity with existi ng compan ies and tha t's wha t we cert ainly hop e to pur sue . MR. CHAIR MAN: The Memb er for Arth ur. 2879 MR. J. DOWNEY : Mr .

Chair man, I would take from the Min ister's answer tha t there could be a poss ibil ity that the Go vernme nt of Mani toba may move into a pu rcha se of an exis ting corpor ation if tha t were to best suit their objectives and their needs and gi ve them the im media te kind of exposur e the y want or the im media te kind of -intrusion maybe isn't the pr oper word -but involvement in the research and energy field. Mr .

Chairman, the que sti on of the Town of Vir den or the Ma yor of the Town of Vir den pu tti ng forward a request that the He ad Office of ManOil or Man itoba Gas and Oil Com pany is I gu ess -one could put it this way -if it's inevitable that one is going to have to have such a corpor ation in the Pro vince of Manitoba, tha t the y have to make the best out of a bad situa ti on.

I'm sur e tha t the Town of Waskada and Me l ita and all th ose other towns in the south west are equally as happy tha t they have a pr ivate comp any, a nd I gue ss Om ega is one of those comp anies tha t has moved in and rea lly made the Town of Waskada a fairly major centre as far as the oil develop ment is concerned.

I think tha t any town where the y see tha t kind of devel­ opment take pl ace is anxious and set ting the phi loso­ ph ical thing aside, whether the ManOil is sup ported or not by the Ma yor, he wou ld be not doing a responsible thing if, in fact, tha t were to take pl ace in put ting forward the bid for tha t organ iza tion to be -if it's inevitable that it's going to be-lo cated in his commun­ ity. So I don't think tha t adds any suppo rt to the Mini s­ ter's argument tha t ther e's some great ur gent need to get into the oil and energy development field in tha t whole busine ss.

Monday, 31 May, 19 82 I think, Mr. Chairman, tha t there is a desi re by a lo t of lo cal people and par ticularly in my constituency, who wou ld like to see the oil devel op ment take pla ce, who feel the y would like to be involved in it, bu t ba sically the way in which has been tr aditionally most satisfac­ tory has been to create tha t devel opme nt through a program of tax incenti ves, a removal of taxa tion from them and from the energy or the industry tha t the y want to develop, not to further put another layer of taxa tion on them to sup port a govern ment im posed energy company.

I, again have not been able to identify when I visit with the people of tha t constit uency -and the Memb er for Virden can speak for hi mself -but I have yet to this point had anybody ham mering down my door with great amou nts of supp ort for a Pro vi ncial Gov ernme nt oil company. As I' ve indicated, there is qui te a bit of satisfac tion, in fact, I would say the majority of people that I ha ve talked to in recent time s have been qu ite ple ased wi th the devel opm ent of the oil fields that have taken pla ce in the last few months.

Again, as my colleague from Tur tle Moun tai n has indicated, the changing of the taxa tion system in the pro vi nce and, of cou rse, the increased pric es of oil and gas have cer tai nly added to it. But I think the devel opme nt tha t has taken pla ce without the kind of government bur eau cratic company tha t we all had some expe­ rience with, is happ ening at a good and reaso nable pace. Again -and I want to ma ke this poin t very clear - without adding the addi tional cost of a gove rnment com pany onto wha t th ey're now payi ng in taxes and tha t, I think, is the other side of the coin. Mr.

Chair ­ man, we have to look at wha t the cost is tha t's going to be applied to th ose people who are now either in the busi ness of pr oduc ing oil and gas; tho se people who are the own ers of the mi neral righ ts and have leased them out and I would advis e the Mini ster to take a pretty care ful lo ok at the overall abil ity for him with the taxpayers' money to obtai n su fficient enough areas in which to drill with in the pr ovi nce to be able to main­ tain a corpor ation.

You know, we talk about $20 mil ­ li on when you go into the oil busi ness, tha t's the tip of the ic eberg and I would think you'd have to have a pretty big bank acc ount and cheque book to carry on with that kind of an organ iza tion because it's not small busi ness, it's busi ness that takes trem endous amou nts of capital and, ag ain, the cap ital has to be raised from the taxpayer who at this par ticular ti me, I think, ha s a heavy enough bur den as it is, to carry.

The idea tha t the gove rnment has that it will pay for the gr andiose social ideas tha t the y want to im plement is a Jong long way off in the futu re, Mr. Chairman. Jn fact, I would think tha t the oil and gas company the y'r e going to develop will for many years be a drai n on the taxpayer ra ther than a help to them. HON . W. PARA SIUK: I ju st wanted to mak e a correc­ tion. I had one letter in my fi les here. I thought I had a letter from the Ma yor of Vir den. I ma y have inadvert­ ently mi sled the Ho use on tha t because I'm pretty sur e there was one from the Ma yor.

I also have one from the Vir den Chamb er of Commer ce, but I'll have to check through my file s to ma ke sur e tha t there were, indeed, the two letters. Ther e ju st could have been one but I was qu ite certa in tha t th ere were two and the one I ha ve in my file righ t now is the Vir den Dis trict Chamber of Com merce. They say that the y have the expertise, manpower as well as the supp ort industries to ach ieve the proposed Crown Corp ora tion 's objec­ tives of explor at ion and development of Mani toba's petr oleum resources.

They go on to say wha t type of expertise and resources they have; the y say that the y're avai lable at any time to dis cu ss with me and my Min isters or with the Prem ier and his Mi nisters, the benefits of locati ng the Man itoba Oil and Ga s Corp o­ ra tion. And tha t's fair; we' ll cert ainly pur sue tha t. As I said, we cert ainly have had positive respons es in our discus sions with people in the oil industry. I'm hop eful tha t we, indeed, can pur sue tho se fru itfu lly as I hop e tha t all people would be in favour.

No w, gr anted the memb er takes a different position with respect to oil and gas devel opmen t. He's sa ying tha t $20 milli on is a drop in the buc ket; isn't enough. We're going to be care ful and prudent and hop efully tha t money will be spent judi ciousl y. It ma y not even be an entir e $20 mi llion over a four-year period. Again, a lo t depends on the opportun ities. We're ta lking ab out volu ntary joint ventu re. But certa inly, from our di scussions to date with the industry, we bel ieve tha t we can be a very good catalyst, and response from them has been very good. MR.

CHAIR MAN: The Memb er for Vir den. MR. H. GR AHAM: Thank yo u, Mr . Cha irman, ju st to add furthe r to wha t the Mini ster was sa ying and also to some of the com ments from my good col leag ue and friend, the Memb er for Ar thur . Yes, ther e were letters from the Ma yor of the Town of Vir den and also from the Vir den Chamb er of Commer ce. You have to, I think, take them in their proper perspective. I have had the oppo rt unity of ta lking both to the Ma yor and to the Vir den Chamb er of Commer ce.

Basically, it goes back to the old story tha t when yo u'r e up to your waist in alli gators, someti mes you forget the main pu rpose is to drain the swam p. 2880 The Town of Vir den and the Ch amb er of Com merce rea lly are concerned about who has the con ces sion for the waist waders. If they have the oppor tu nity to sell the rubb er boots and the waist waders, that is their numb er one concern. It's qu ite logical, too, because the Town of Vir den for many years has boasted qu ite pr operly, tha t Vir den is the oil field capital and the oil capital of Man ito ba.

Th ey have the expertise, and the headq uarters of the various companies tha t are active in Mani toba are in the Town of Vir den. If there's going to be another oil company active in Man itoba, they feel tha t if the headquar ters was in tha t town as well, it would be qu ite agreeable with them .

The concentra­ tion of the head offices in that area wou ld probably facil itate the various act ivit ies and the cross referen­ ces that are so necessary qui te often because I don't think th ere are too many memb ers -and I certa inly do n't underst and -all of the various activit ies that do occur in the oil expl ora tion and development field.

But I can tell the Honour able Min ister that today the activi­ tie s of our Land Tit les Offices are so antiq uated tha t the activitie s in the oil field today are mainly done in lawyers' offices on agreements that are su bject to final search to prove tha t caveats do or do not exist. The oil industry is one tha t cannot sit and wait

Monday, 31 May, 19 82 forever for a search of title to finali ze an ag reement, because they are operat ing qu ite often in a highl y com petit ive field. It's absolutely necessary to have im med iate decisions made so the y don't even bother with the Land Titles Office anymor e. They work on legal agr eements tha t are drawn sub ject to the final proof tha t the y can get from the Land Ti tles Office at some futur e date. I do n't want to pre clude any further discussion on oil, but th ere were one or two comme nts made by the Min ister earl ier on that did cause me a gr eat deal of concern.

I go back to the rema rks tha t the Honour able Min ister made with respect to the Heritage Fund tha t was estab li she d in our sis ter pro vince. One or two of the commen ts he made cert ainly do not bear close scru tiny when you consider all of the impl ic at ions. I can't speak for the oil industry or some of the other resou rces but in the field of potas h, there has been consi derable money tha t has been siphon ed into the Heritage Fund.

I want to tell the Mini ster tha t when the basis of your argument starts from a false premise, then you can cer tai nly get led away off into left field and I would ask him to consid er agai n very seriously the impl ica tions of wha t he said. He stated tha t much of the mone y in the Heritage Fund did not come from taxes and royalties.

I would sug gest to him that if you take a look at the potash industry in Saskatchewan that had the normal taxes, royalties and all of the other incidentals tha t a pri vate company is su bject to -high interest rates and all the rest of it -tha t Saskatche­ wan's investment in the potash indus try would sti ll be in the red today. The people of Saska tc hewan have sti ll not recovered the mo ney tha t has been invested in potash develop ment and mi ning in Saskatchewa n, gi ven tr1e normal royalties, taxes and in terest rates tha t accrued of priv ate industry.

So if you don't real ize that, you ma y start off in a very wrong dir ection because of wrong information that you started from. I can't speak for the oil industry because I don't know enough about the Llo yd minster field and the reve nues tha t have been th ere for a long, long time and the total im pact tha t it's had on their He ritage Fund. But I know in the potash industry, the Pro vince of Saskatchewan sti ll ha s not recoup ed their invest ment in tha t respect. HON. W. PARASIUK: The poi nts of the memb er ar e well taken in that sense.

The bulk of money in the He ritage Fund ha d come from royalty and taxa tion. Ther e was a good base establishe d and there is a good base esta bli shed in Saskatchewan right now with respect to thei r Cr own investment. Their investment in potash was only recent and I think the y've gone some way to pa ying a good por tion of tha t off and, of cour se, a lo t of it's open right now as to what the pr esent gov ernme nt will do.

They cert ainl y have the option of selling out wha t the people own with respect to potash or the y have the option of keep ing it and, of cour se, we' ll have to watch with interest and see wha t they do th ere. The point of the memb er in terms of wha t exis ts right now in terms of tha t $1 milli on Herit age Fund is. indeed, a poin t well taken and I do ma ke tha t correc­ tion tha t the bulk of it is co ming from royalty and taxa tion, but the base is a very so lid base.

It has been esta blis hed by an aggr essive activit y with respect to publi c investment in Cr own Corpor at ions because 2881 they did run into some difficu lties with respect to taxat ion as I think the memb er can rec all, with respect to the Su pr eme Cour t and federal interve ntions when Saskatchewan attempted to get wha t the y thought was a fair er shar e of returns from potash. MR. CHAIRMAN: The Honour able Memb er for Stur ­ geon Cre ek. MR. F. JOHNS TON: Mr . Chairman, on Page 2 of the Min ister's remarks: No. 2-to coordi nate the financial req uir em ents of Crown Co rpora tions .

No w, as far as I know at the present tim e tha t coor di nation and all of the financial requir eme nts for Crown Corp ora tions has been handled by the Department of Fina nce. Is tha t going to change now? Is the Depart ment of Fi nance not going to be involved with the coord ina­ tion and financial re quir ements of Cr own Corpor ations? HON. W. PARA SIUK: As I indicated to, I think it was the Member for Lakeside, the Department of Fi nance raises the mo ney and will continue to raise the money and will continue to have that fu nction.

The task of lo ok ing at wha t tho se me dium, long-term, poss ible, financial req uir ements of various Cr own Corpor a­ tions mi ght will be undertaken in a mor e systematic way by the Department of Crown Investments, because you l1ave demands for financing coming forward from different Cr own Cor porat ions tha t tend to lo ok at the world through their par ticular perspectives. Yet it's the gove rnment overa ll tha t has to do the overa ll financing and so we will be pro viding advic e to the Cabi net in tha t respect.

I expect tha t Fi nance will conti nue to play the role that the y have when it come s to rais ing funds, jus t as the y have with respect to dep artmental spending. There is a function tha t is pla yed by Trea sur y Boar d as well and we say tha t we're going to perfo rm a mor e limi ted function and tha t we will be doing this asse ssment in a mor e syste­ matic way in pro viding advic e to Cabi net. MR. F. JO HN STO N: In It em 3 then. to review the shor t, medium and long-range plans -well tha t's all pl ans, sh ort, me dium and long range is all plans -of selected Crown Corpora tion s.

I'm not sur e wha t is meant by selected Cr own Co rpora tions - I gu ess ma ybe Autopac will be in there, ma ybe it won't -to ensur e compa tibil ity with govern ment pol icy such as pur cha sing expor t polic y, etc. Mr . Chairman, I would su ggest tha t sect ion 3 neans that the Crown Co rpora­ tion is going to be the body that dir ects the pol icie s and the opera tions of the Cr own Corpor at ions which are selected to be there by the Cabi net It seems to be a very, very strong stat ement tha t this body will be the decision maker s of the long, shor t, mediu m-range plans of Cr own Corpor at ions. HON. W.

PARASI UK: The state ment says tha t we will review, not that we will make tho se decisions, but we' ll review them. The plans come forward from the Cr own Corp orati ons. When we say selected ones -if we said Cr own Cor porat ions. then you cou ld turn ar ound and say wel l, do you expect to do this for everyone over the cou rse of the next year, and we'd have to say we wouldn't be able to. Ther e are some tha t we'll be able

Monday, 31 May, 19 82 to look at tha t we will, as we sit down with them and review them -and we're sit ting down with ManFor - obviousl y, tha t's the one that we're most involved in right at present. We are involved in the potash negotia­ tions. There migh t be impli cations for MMR in that. So this is the activ ity tha t we're undert aking on a selected basis at present. We don't have much in the way of staff, and I said we're del i berately keeping the numb er of staff small, ke eping the complement small and mayb e there migh t be one or two others tha t we wou ld look at over the cou rse of the year.

Next year I'll be re por ting on what we've done and I hope tha t we' ll be able to sit down and have some discussions of a very prel imi nary natur e with respect to all the individ ­ ual Cr own Corpor ations but that the mor e detai led work wou ld, indeed, take pla ce with those selected ones who are ac tually contem pla ti ng activit ies that ma y, in fact, be a bit di fferent from wha t have been undertaken in the past. Agai n, I see the Mem ber for Lakeside, who indi­ cated ther e were a couple of instances when Manit oba Telephone System got involved in some new act ivi ty.

Again, we hop e to be able to get a handle on tha t and be aware of wha t the impl ications migh t be, because often many of the se items start off as very small items and often people don't ask wha t the long-term im pli­ cati ons are, so when the mem ber says well we're talk ­ ing ab out sh ort, medium and long-range pla ns, but they'r e all pl ans. Often people ju st put forward the shor t-run plan and the y say well this is jus t going to cost $100,000 or $200,000.00. Push them and find out what the long-term pos sibil ities migh t be, wha t are the contingencies.

You migh t find out that we're ta lking ab out a $10 mill ion item. It's im portant to know that and be aware of it, and that's what we hop e to do. MR. B. RANSOM: Mr. Chairman, we have some further que stions specifically on potash develop ment and on Man For Devel opment which we will want to get into further. I wonder if the Minis ter migh t be disp osed to have the Comm ittee rise. I think we've dealt with the general it ies her e now and we have tho se two specific areas tha t we would deal with tom orrow. HON. W.

PARAS IUK: So you'r e say ing tha t you want to deal with Ma nFor and potash tomor row in terms of specific s. Yes I'm agreeable with that. MR. CHAIRM AN: If th ere's agr eement, Commit tee rise 2882