Manitoba Hansard — 5 November 1990 (Sitting 18B, 35th Legislature, 1st Session)

35-1-18b

Manitoba — Debates (Hansard)

l MG--8048 First Session - Thirty-Fifth Legislature of the Legislative Assembly of Manitoba DEBATES and PROCEEDINGS (HANSARD) 39 Elizabeth II Published under the authority of The Honourable Denis C. Rocsn Speaker VOL. XXXIX No. 18B - 8 p. m., MONDAY, NOVEMBER 5, 1990 Printed by the Office of the Ou86ns Printer. Province of Manitoba ISSN 0542-5492

MANITOBA LEGISLATIVE ASSEMBLY Thirt y-Fifth Leglslature Members, Constituencies and Polltlcal Affiliation NAME ALCOCK, Reg ASHTON, Steve BARRETT, Becky CARR, James CARSTAIRS , Sharon CERILLI, Marianne CHEEMA, Guizar CHOMIAK , Dave CONNERY, Edward, Hon. CUMMINGS, Glen, Hon. DACQUAY, Louise DERKACH, Leonard, Hon. DEWAR, Gregory DOER, Gary DOWNEY, James, Hon. DRIEDGER, Albert, Hon. DUCHARME, Gerry, Hon. EDWARDS , Paul ENNS, Harry, Hon. ERNST, Jim, Hon. EVANS, Clif EVANS, Leonard S. FILMON, Gary, Hon. FINDLAY, Glen, Hon. FRIESEN, Jean GAUDRY, Neil GILLESHAMMER, Harold, Hon. HARPER, Elijah HELWER, Edward R.

HICKES, George LAMOUREUX, Kevin LATHLIN, Oscar LAURENDEAU, Marcel MALOWAY, Jim MANNESS, Clayton, Hon. MARTINDALE , Doug McALPINE, Gerry McCRAE , James, Hon. MclNTOSH, Linda MITCHELSON, Bonnie, Hon. NEUFELD, Harold , Hon. ORCHARD, Donald, Hon. PENNER , Jack, Hon. PLOHMAN, John PRAZNIK, Darren, Hon. REID, Daryl REIMER, Jack RENDER, Shirley ROCAN, Denis, Hon. ROSE, Bob SANTOS, Conrad STEFANSON, Eric STORIE, Jerry SVEINSON, Ben VODREY, Rosemary WASYL YCIA-LEIS, Judy WOWCHUK, Rosann CONSTITUENCY Osborne Thompson Wellington Crescentwood River Heights Radisson The Maples Kildonan Portage la Prairie Ste.

Rose Seine River Roblin-Russell Selkirk Concordia Arthur-Virden Steinbach Riel St. James Lakeside Charleswood Interlake Brandon East Tuxedo Springfield Wolseley St. Boniface Minnedosa Rupertsland Gimli Point Douglas Inkster The Pas St. Norbert Elmwood Morris Burrows Sturgeon Creek Brandon West Assiniboia River East Rossmere Pembina Emerson Dauphin Lac du Bonnet Transcona Niakwa St. Vital Gladstone Turtle Mountain Broadway Kirkfield Park Flin Flon La Verendrye Fort Garry St. Johns Swan River PARTY.

Liberal NDP NDP Liberal Liberal NDP Liberal NDP PC PC PC PC NDP NDP PC PC PC Liberal PC PC NDP NDP PC PC NDP Liberal PC NDP PC NDP Liberal NDP PC NDP PC NDP PC PC PC PC PC PC PC NOP PC NOP PC PC PC PC NDP PC NDP PC PC NDP NOP

LEGISLATIVE ASSEMBLY OF MANITOBA Monday, November 5, 1990 The House met at 8 p.m. CONCURRENT COMMITTEES OF SUPPLY SUPPLY-FINANCE Mr. Deputy Chairman (Marcel Laurendeau): Order, please . We are resuming the sitting of the Comm ittee of Supply . When we had left off this afternoon the committee had been considering item 3.(

b) Financial and Management Systems : ( 1) Salaries $673 ,300.00. Shall the item pass? Point of Order Mr. Leonard Evans (Brandon East): Mr. Deputy Chairman , on a point of order, regrettably we are almost 15 minutes late in getting started, but I think by agreeme nt we should be prepared to rise at ten o'clock . I think that is a reasonable hour, so we could all come back fresh tomorrow and I think that is not unreasonable .

I do notthink it is going to make much difference in the long run in terms of the sitting of the House. -(interjection)- Well, I am just saying that is not unreasonable and, as I said, we had questions that could take us till around that time anyway . Although , we can certainly ask more questions and spend a week here, that is no problem . Hon. Clayton Manness (Government House Leader): Mr. Deputy Chairman, seeing that there is not a formal motion before us, I would like to address the comments of the Member . Firstly, I apologize for being late.

The reason for that is solely as a result of a discussion I am also having with the Opposition House Leader (Mr. Ashton) at this time to try and best use the time that we have over the next numbe r of days and weeks in the considerat ion of Estimates . *

(2015) I guess if I had a perfect choice or it was a perfect world and I had a choice in it, I would rather not sit till midnight tonight either, but we have a situation now where the Government basically has one call to it and the whole Estimat es review and extending beyond the normal sitting hours and that of course is Monday night, in other words, tonight. There are no other oppo rtunities to the Government to try and work away at the 240 hours that the Opposition and indeed Government backbenchers are given to question Government with respect to policy. So, Mr.

Deputy Chairman, I have no great love of sitting past ten o'clock, too, but the fact is that if we are going to get the work of Government done , and given that there is no agreement in place, I do not know what other time that we can do it. I am not interested in sitting till all hours in the morning. I say that in all honesty, and yet I think it would be wise if we tried to continue to eat up some of those 240 hours, because ultimately, as I have been told by the Opposition House Leader that certainly the NDP are interested in using all those hours.

The Liberals have indicated that maybe they do not need to, not to put words in their mouth. So I guess that is a dilemma I find myself in tonight . Mr. Deputy Chairman: The Honourable Member for Osborne, to the point of order which is not really a point of order. Mr. Reg Alcock (Osborne): Or to the remarks of the Minister. It is passing strange to me that while we are attempting to negotiate some sort of accommodation, the Minister chooses to enforce his will on the committee. I think it is unfortunate, and I would ask him to reconsider. Mr.

Deputy Chairman: Well, normally the Chairman asks at ten o'clock, what is the will of the committee. I will ask, what is the consensus of the committee regarding rising or continuing at ten o'clock . Mr. Manness: Mr. Deputy Chairman, I would suggest that question be asked at ten o'clock like you have just indicated. Mr. Deputy Chairman: The question , will it be put at ten o'clock? * * * Mr. Deputy Chairman: Okay. We are dealing with the item (b)

(1) Salaries $673,300.00 . Shall the item pass? Mr.Jim Maloway (Elmwood): I have a question for the Minister when he is finished .

769 LEGISLATIVE ASSEMBLY OF MANITOBA November 5, 1990 Last week I asked the Minister a question concerning the Government's financial statements, and he is awa re that small businesses or businesses normally have a balance sheet which indicates the assets of the business and the liabilities of the business, but that is not usually the case with the Government books. The Government makes a big production about the size of the deficit and so on and at no time do they really take into consideration the list of assets which backs up that debt. Now, perhaps the Minister could make some comments on that matter. *

(2020) Hon. Clayton Manness (Minister of Finance): I am well aware of the point that the Member makes. He has made it to me in private before. I guess we followed a system which is consistent with other provincial jurisdictions. We know from time to time-at least, not from time to time, but I can remember when I was in Opposition when the former Government requested an outside source to do an accounting of the stock, of the plant of Government, including highways and so on and so forth, and who was that? Was it Mason? Maybe the Member opposite would remember who did that assessment or evaluation.

I am well aware that -(interjection)- Yes. Clarence Barber did that some time in the past. When one takes into account the value of the highways and all of the other existing fixed plants, so to speak. and tries to put a value on them, there is no doubt that we still have positive equity, if you wanted to look at it in the corporate financial accounting sense. I say to the Member opposite, I question the meaningfulness of that. I really do. Unless he is asking us to borrow in the sense that we can borrow on that, but then those assets do not really return a positive cash flow in many instances.

They are of great value to the citizens of this province, there is no argument there; but in the sense that they are income earning, I wonder then whether or not it is fair to adopt the corporate model. I would defer almost to my colleague, the Minister of Energy and Mines (Mr. Neufeld), on another occasion to give us his views, too, because he is trained in that area. Mr. Maloway: Well, the motivation for the question really came about because of the incessant arguments that the Conservative Governments use about the deficit.

They seem overly preoccupied with the debt, the long-term debt, and at no time do you ever hear a list of the assets put up against that debt. That is really the comment that I had to make. Does the Minister have a current list of assets or the total of the assets of the province? Is that a one time- Mr. Manness: The short answer is no. We certainly know what our building stock is evaluated atthrough the methodology required by MPI, Manitoba Properties Incorporated. When it comes to evaluating, particularly highways and other fixed items of plant of Government, no, we do not have those numbers. Mr.

Leonard Evans: Just a comment, it is very difficult to compare public assets with private assets. I think the example the Minister uses when he refers to highways is a good example. I suppose you could put a value on it by looking at what it would cost to replace that given highway, but surely the highway has to be measured in terms of what it does for the economy of this province, you know, permitting traffic, permitting economic activity to take place, that would not take place otherwise.

I think sometimes we are inclined to discount or undervalue our public assets, whether they be parks, whether they be highways, or whatever they be. Some are more easy to measure than others, but the fact is a great deal of debt has been incurred, admittedly, but a great number of assets have been developed in this province that have improved the standard of living of the people. So, I just make that as a commentary. *

(2025) On this particular

section I only have some questions on (

d) Information Systems Support. So, unless any other Member wishes to ask questions, I am prepared to proceed down the list. Mr. Alcock: We are on the Comptroller's Office report? Mr. Deputy Chairman: We are still on (

b) Salaries, Financial and Management Systems: (1)-pass; item

(2) Other Expenditures $82,500-pass. (

c) Disbursements and Accounting:

(1) Salaries $1,963,400.00. Shall the item pass? Mr. Alcock: I am just wondering, is this the division that operates; the commitment accounting system? Mr. Manness: Mr. Deputy Chairman, every department of Government runs their own financial commitment accounting office.

November 5, 1990 LEGISLATIVE ASSEMBLY OF MANITOBA 770 Mr. Alcock: Is there any central co-ordination of that? Mr. Manness: Well, Mr. Deputy Chairman, in terms of actual detail in the process, no, but as far as policy, yes. Indeed we, I guess our department, is sort of in charge in assuring that policy is made consistent across Government. Mr. Alcock: Is the Minister satisfied that there are effective commitment accounting systems in place in all departments? Mr. Manness: Well, Mr.

Deputy Chairman, I guess we would take our lead-I mean, we have internally within our department, I guess we have from time to time, we look at other departments. We sense that we do it right and that others hopefully do it right also, but we are always mindful that the Provincial Auditor from time to time looks at various departments if he is suspect of something. What we do know is that his commentaries with respect to this process in various departments certainly have reduced over the years. So we sense that Government is getting better across all of its departments. Mr.

Alcock: Satisfaction that they do it right may come under some question in a moment. Just to come back for a second to the preparation of public accounts, is that also under this division? Mr. Manness: It certainly is. Mr. Alcock: Within this committee that the Minister chairs, the Management and Reform Committee, then have they looked at the question of Government-wide commitment accounting? Mr. Manness: No, Mr. Deputy Chairman, we have not. Mr. Deputy Chairman, I did not introduce Mr. Eric Rosenhek, the Assistant Deputy Minister of Finance, head of the Comptroller's Department.

I will let him make a comment with respect to that question. Mr. Eric Rosenhek (Assistant Deputy Minister of Finance): About a year ago we began a project that we call the integrated financial information system and what we are doing is looking at Government-wide requirements for financial information that will address commitment accounting systems as well. Presently they are done at the departmental basis, but I would not rule out us coming to some conclusion that we might do well by having that information passed along to a central system as well. Mr.

Alcock: On a related question, there has been some discussion although the Minister has participated in some discussion relative to the public accounts also with an eye to restructuring them and making them match better the information as presented in the Estimates book. Is that the project that has been looked at under the Management and Reform Committee? Mr. Manness: Mr. Deputy Chairman, the answer is no, but I certainly recognize the efforts put forward by a former colleague of the Member for Osborne.

To that end, I am prepared to discuss that matter in fair detail at Public Accounts Committee when it is called forth, I believe in a week or 10 days. Mr. Deputy Chairman: Shall the item pass-pass; 3.(c)

(2) Other Expenditures $1,003,500.00. Mr. Alcock: Other Expenditures? Mr. Deputy Chairman: Yes, under Disbursements and Accounting:

(2) Other Expenditures $1 ,003,500.00. Mr. Manness: The Member wants a rough breakdown. It is to do again with basically communications meaning mainly postage and telephones. The postage number is so high because this is where the cost of mailing all the cheques are included, also office supplies which includes cheques and envelopes, capital and again computer related costs. Mr. Alcock: Just a question then on the computer related costs. What are those? At the same time, what are the recoverable from other appropriations? What specifically is that? *

(2030) Mr. Manness: Mr. Deputy Chairman, our computer related costs are basically the amount that Manitoba Data Services formerly charged us. Our recoveries are the bill-backs to the various departments. Mr. Alcock: Bill-backs for what, for computer services? Mr. Manness: No, for the mailing. For the whole mailing effort and the computer services involved in mailing or in preparing cheques. Mr. Deputy Chairman: Shall the item pass-pass; 3.(c)

(3) Less: Recoverable from Other Appropriations $500,00Q-pass. 3.(

d) Information Systems Support:

(1) Salaries $679,300.00. Shall the item pass?

771 LEGISLATIVE ASSEMBLY OF MANITOBA November 5, 1990 Mr. Leonard Evans: Mr. Deputy Chairman, I understand this is where the ISSB Group is located. I had thought though that one of the functions was to oversee the acquisition of computer equipment and related processing equipment to make sure that Government departments did not duplicate, that there was efficiency, also oversaw the activities of MTS and MOS to ensure that there was co-operation and not competition and additional buying of equipment that was maybe duplicated, et cetera. Is this the

section that does that? I am simply asking the question. Is this the area that this is done or has that been totally moved to Treasury Board? Mr. Manness: Mr. Deputy Chairman, that has now been totally moved to Treasury Board. Mr. Alcock: Perhaps I misunderstood that. Then what does this system do? What does this group do, this branch? Mr. Manness: Mr. Deputy Chairman, the vestige of this branch, that is still contained within this division. It is still directed toward computer training and word processing training. Mr. Alcock: Perhaps the Minister could explain this a little more fully.

As I understand from the objections here, it says to ensure the cost effective and economic use of information technology within the public sector through support services and now you are saying, no, it is a training centre. Mr. Manness: Mr. Deputy Chairman, we left the name intact. Up to this fiscal year and starting this fiscal year, ISSB was as it always had been.

When we inherited Government, it was involved not only in training but also represented an element of corporate control over the system's needs of all departments and indeed even was used as a source, a reference source, or indeed a resource for Crowns and ultimately how they came to use information technology. Now, added to that, during this year or last year, of course, was the Wang system that is part of this building, and indeed it was housed-its activities were housed also within ISSB. That is the way we started the year.

Around summertime, the Government made a decision that it wanted greater control with respect to the adaptation of new systems in information technology with respect to all of Government and chose therefore to split ISSB, the training function left within the department, plus the Wang responsibilities left within this department, and took monJ of the control policy areas, I indicated before dinner, and moved that over to Treasury Board. Mr. Alcock: So then a lot of these objectives and activities are really better applied to some function of the Treasury Board. Mr.

Manness: Well, maybe the control functions, certainly not the support. The support is still the main objective. Through training and consulting, they are still there, and that is the support that we talk about. Mr. Alcock: I do not want to belabour this too long, although I am interested in this particular unit. Undertake special projects such as feasibility studies, cost benefit analysis, is that Treasury Board or is that this unit? Mr. Manness: Mr. Deputy Chairman, I guess the greater lead in that role is now over in Treasury Board, but certainly we still will assist this branch.

The vestige of what is remaining still will be there to assist. Mr. Alcock: Central liaison with the supplier of Government information technology-Treasury Board or this group? Mr. Mannesii: Mr. Deputy Chairman, that is still housed within this division. Mr. Alcock: I wonder if the Minister could update us on the Wang project. Mr. Manness: I knew that someone was going to ask that question. Mr. Deputy Chairman, I will seek the support from Mr. Rosenhek. I think most of the equipment has been certainly delivered; it is in place.

The system is for the most part functional and we are expecting Wang now to honour its commitments under the contract and to begin to use this building and the system as the showcase. That was the bai~is on which we entered into the agreement and we expect them now to begin to deliver more of their responsibilities under the contract. Mr. Alcock: This Government has a predilection for associating itself with companies that are in financial trouble. Can the Minister tell us what some of those showcase items might be from this system? *

(2035) Mr. Manness: I am kind of at a disadvantage here. Although this activity is housed within the department, I do not pretend to be close to this project, but I will ask for help.

November 5, 1990 LEGISLATIVE ASSEMBLY OF MANITOBA 772 Mr. Deputy Chairman, the Member is well aware that this was a new generation of technology, imaging technology, that was to be introduced. The Member is smiling at m1r- Mr. Alcock: It is a new generation of language, I am not certain that it is technological advancement. Mr. Manness: The Member, who is much more schooled in information technology than I am, maybe likes to have fun with me at this point, and that is fine, he can.

The point that I am trying to make is that we believe this technology or language or whatever he wants to say, once we are through these difficult times will indeed have a profitable future. We believe we are on the bottom floor as far as being a partner in a sense in this demonstration. We believe that the well-being will ultimately flow to Winnipeg and to Manitoba as a result of people visiting this technology in its presentation in Manitoba and that many spinoffs will come as a result of it.

The Member made a shot about Wang, and we are all aware that they have experienced some difficulty, and yet we are assured from the very highest levels that this is part of their asset base that they will not sell off, that remains one of the integral parts of their future. We take some comfort from that, notwithstanding that they have had considerable losses over the last year. Mr. Alcock: I do not mean to make the Minister uncomfortable, shall I say. The language I was referring to was the political descriptive language, not the operating language of the system, which I think he would be more comfortable with.

I would like to try to understand how we got into this project in the first place. Did the Government approach Wang, did Wang approach the Government, where did this idea get born? How did it come into being? Mr. Manness: Well, Mr. Deputy Chairman, I ought to be honest, the Province of Manitoba received a proposal from Wang Canada Limited to establish a centre of excellence for imaging technology in Winnipeg using the Manitoba Legislative Building to introduce and showcase that new technology. I think that basically answers the question. Mr.

Alcock: Can the Minister give us some details on this centre of excellence? Mr. Manness: The system is housed in this building. It uses the system, of course, in the Premier's Office, all of the Executive Council, Ministers and Deputy Ministers offices, Speaker of the House, staff of the Legislative Assembly and all three caucus offices. It is basically self-contained within this building. Mr. Alcock: And the centre of excellence? Mr.

Manness: I believe that the centre of excellence is the Wang building itself at 363 Broadway, and it is there that, I take it, the classroom will exist as far as those people coming from outside of our city to be introduced to this new technology. It is there that Wang will make their pitch to potential purchasers. *

(2040) Mr. Alcock: Now then this group, the ISSB group which advocates the proper use of information technology across departments, et cetera, were they involved in the selection of Wang for this particular project? Did they approve of or support this particular project? Mr. Manness: Mr. Deputy Chairman, they were asked to provide an assessment, and they were also asked to determine what system might be of greater adaptability to a situation such as exists here within this building. There is no way I would want anybody to believe that they were advocates of this system or indeed were they detractors from it.

They were asked for an assessment and they provided such. Mr. Alcock: Asked for their assessment by the Government after receiving the project from Wang, asked by Wang-I need a sense of where this thing arose. Mr. Manness: Mr. Deputy Chairman, by the Government. Mr. Alcock: Can the Minister just quickly detail the financial arrangements on this? Mr. Manness: Manitoba, our Government will spend approximately $4 million on Wang hardware and software in order to facilitate the integration of existing Government information processing equipment in the Legislative Building.

Wang will spend $15 million over five years to establish the centre and will establish a Canadian centre for training those using the new technology. We expect that at least 50 direct jobs will be created as a result of the centre of excellence being established in our province. Wang has also estimated the direct and indirect scope of the financial investments to be slightly over $20 million or five years with a commitment to spend a minimum of $14.9 million.

773 LEGISLATIVE ASSEMBLY OF MANITOBA November 5, 1990 Mr. Alcock: I am sorry, is that 14.9, the 15 that the Minister first referenced, or over and above the 15? Mr. Manness: Yes, I think so. I think it is the same number. Mr. Alcock: The $4 million that the Manitoba Government has spent, that is to purchase the units that are currently in operation or are being installed in the Legislative Building. Can the Minister tell us how many units? Mr. Manness: Mr. Deputy Chairman, I am led to believe three computers and all the equipment in this building. Those three computers were housed at MDS, by the way. Mr.

Alcock: This has introduced something I perhaps was unaware of. Are we talking about three Wang mainframes? Mr. Manness: Yes. Mr. Alcock: Three mainframes housed at MDS and how many work stations? Mr. Manness: Mr. Deputy Chairman, I am a little vague because I think most of this detail is probably in the briefing notes of the Ministry of Industry, Trade and Tourism, but I want to indicate that we think there are over 200 users, so there must be over a hundred stations. Mr. Alcock: I would be interested in receiving more information on that if it is available.

If the Minister could undertake to get it to me at some point after this. We need not belabour this now other than to ask the question, has the Government subsequent to this purchase purchased Wang equipment for other departments? Mr. Manness: Mr. Deputy Chairman, I cannot answer that question at this-I will undertake to find an answer. Mr. Maloway: Mr. Deputy Chairman, could the Minister-I am just following up on the Member for Osborne's questions on the Wang contract-would the Minister be in a position to provide us with a copy of the contract, the $4 million contract that the Government has with Wang? Mr.

Manness: Mr. Deputy Chairman, I will take that question under advisement. I guess I do not see why not. I forget in all honesty who was the--there were two Ministers that signed the agreement with Wang. I was one of them and Minister Ernst was the other. I will endeavour to try and obtain a copy. I am not promising, but at this point I cannot see any reason why we cannot provide that. Mr. Maloway: Mr. Deputy Chairman, for a clarification, would that be before the Estimates wind up or at what point do you anticipate being able to get us a copy of the contract? Mr. Mannes1s: Mr.

Deputy Chairman, if it is not a proprietory item, in this case one to be held by Wang, it could be released, sure. The answer is, yes. Mr. Maloway: A final question: At what point was this contract signed? Do you have a date? Could you give me the date that the contract was signed with Wang? Mr. Manness: It seems to me, Mr. Deputy Chairman, it would be '88, early '89. We will try and dig out the date. Mr. Deputy Chairman: That is item (1) 679,- Mr. Alcock: The section-and perhaps I missed the Minister's reference to it, he says he had spoken about this prior to the adjournment before supper-but the

section that moved to Treasury Board, which part of that office is this? Mr. Manness: Which part of the office? Mr. Alcock: Well, you are saying that a portion of the ISS- Mr. Manness: Oh, yes, maybe you were not in attendance. Firstly, let me respond to the question previous. That was signed in March '89. The agreement il; between the Government and Wang. Secondly, the policy section, I would tend to characterize it more as the Government control function moved to Treasury Board. Mr.

Alcock:: So that the 18 staff years that are currently shown here, in the previous year that number would have been somewhat bigger; how much bigger? How many staff were transferred? Mr. Manness: It would have been six larger-it was 24 the year before, six transferred to Treasury Board. Mr. Alcock: The sale of Manitoba Data Services has introduced some new elements into the relationship between the Government and that organization and this branch. Now, can the Minister tell us what the nature of that working relationship is? Mr. Manne,ss: Mr.

Deputy Chairman, the responsibility for monitoring that sale and ensuring that the interests of Government are safeguarded are contained within Treasury Board under the managerial ability of Mr. De Luca. I just want the

November 5, 1990 LEGISLATIVE ASSEMBLY OF MANITOBA 774 Member to know that. If he wants to pursue his questions now, that is fine, but it is certainly housed within the Treasury Board. Mr. Deputy Chairman: (d)

(1) Salaries $679,300-pass; (d)

(2) Other Expenditures $143,100.00. Shall the item pass? Mr. Alcock: $143,000.00? Mr. Deputy Chairman: $143,100.00. Mr. Alcock: Where am I looking at? I am looking at Information System Support Branch. Mr. Deputy Chairman: Give him a blue book. Mr. Alcock: Oh, that is right, you are going through the blues. That is right. *

(2050) Mr. Deputy Chairman: Page 69.

Section (d)

(2) Other Expenditures-pass. No.

(3) Systems Operations $653,400.00. Shall the item pass? Mr. Alcock: Two comments. It would facilitate this discussion if these two books matched. -(interjection)- They do not. The question is on the Other Operating, $368,700.00. Mr. Deputy Chairman: Is that not yesterday's news? Mr. Alcock: It says right here, Systems Operations $653,400.00. Information Systems Support, over here, the number here now is-- Mr. Manness: Mr. Deputy Chairman, if the Member would add (d)(2) and (d)(3). Mr. Alcock: There it is, in your Supplementary Book, it says $368,700.00. Mr. Manness: You are wanting to know what that is? Mr.

Deputy Chairman, the Other Operating charge is $368,000.00. For the most part, it is the facilities management agreement that we have in place with Manitoba Data Services for managing, I guess all of our computer installation and all our computer software. Again, this is in support of the Wang system. Mr. Alcock: So this is part of the $4 million that was contributed by the Government of Manitoba or is this over and above that? Mr. Manness: Mr. Deputy Chairman, this is over and above. Mr. Alcock: Is this strictly for the Wang system, or does any of this have to do with the MHO Unisys project? Mr.

Manness: Strictly Wang, Mr. Deputy Chairman. Mr. Alcock: Manitoba Data Services houses three mainframe computers supplied by Wang that the Government of Manitoba owns, and this is the operating support to those three units. Mr. Leonard Evans: All the MOS, you see the three mainframes are housed there. They were not sold to STM systems incorporated. Mr. Manness: Mr. Deputy Chairman, as was always the case in the past, Manitoba Data Services purchased the computers in question. We have paid them over some pre-arranged agreement of a pay-back schedule.

That is where we have a capital charge further back in the Estimates, and that is shown as a capital charge. Mr. Leonard Evans: So this is in addition to a real great sale of the company to STM Systems Ltd. for whatever amount-I forgot the amount, $18 million--whatever the amount was. Mr. Manness: Big bucks. Mr. Leonard Evans: Yes, a lot of money. How much was it so far? At any rate this is-- Mr. Manness: The keyboards have extra keys. Mr. Leonard Evans: This is in addition. This is apart from that sale. Mr. Manness: No, no. Mr. Deputy Chairman, you see the former Minister feels that MOS never had any debt.

It had debt against this. I mean they went out and borrowed the money to buy this from Wang, so there was a debt. The net was between the debt they owed and the receivables that they had been receiving from the Government by way of this capital charge in the years to come as the net value and that is $18 million. Mr. Leonard Evans: What was the selling price? Was that the $18 million? Mr. Manness: We have received an $18 million cheque, plus we had several million dollars worth of credits, and to be exact $3,779,000 worth of computer time credits that was provided to us by STM. Mr.

Deputy Chairman: Shall the item pass-pass.

(4) Less: Recoverable from Other Appropriations $137,300.00-shall the item pass? Mr. Alcock: Just wait a sec. Mr. Manness: Mr. Deputy Chairman, these are the training charges that we apply against other departments for our training services.

775 LEGISLATIVE ASSEMBLY OF MANITOBA November 5, 1990 Mr. Deputy Chairman: (d)(4) $137,300-pass. Resolution 55: RESOLVED that there be granted to Her Majesty a sum not exceeding $4,660,700 for Finance, Comptroller's Division, for the financial year ending the 31st day of March, 1991-pass. 4. Taxation Division--shall we do a staff change? Oh boy, those hands are up quick. I would like to ask the Honourable Minister if he would like to introduce his staff at this time for the Taxation Division. Mr. Manness: Mr. Deputy Chairman, just let me calm down for a second and collect my thoughts.

I would like to introduce another one of the Assistant Deputy Ministers of Finance, Stan Puchniak, and also tonight, capably supported by Ralph Moshenko who is the Executive Director of the Retail Sales Tax Branch. Mr. Deputy Chairman: Thank you, Mr. Minister. We are now moving on to 4. Taxation Division, $9,198,900.00. We are going to (

a) Administration:

(1) Salaries, $286,100.00. *

(2100) Mr. Leonard Evans: I would like to ask the question regarding the GST. Can the Minister advise us what arrangements or what liaison the province has with the federal Government in that area? Mr. Manness: Mr. Deputy Chairman, it might be better that the Member direct these questions not in this division, but in the Federal-Provincial Relations Division. I say that only because Mr. Gannon and Mr. Boschmann probably are more involved in any discussions . Certainly, Mr.

Puchniak and his staff are dialoguing as they always do in areas of common taxation concern, not with respect to policy so much, but with respect to details associated with existing tax law. So if the Members have questions dealing with existing tax law and how it is our officials of this division relate with the federal Government, certainly this is the right time. With respect to a tax that is not yet law and where there are policy discussions not taking place in any great fashion, probably the next division is the one, but that should be considered. Mr. Leonard Evans: That is fair enough.

We can discuss that item then under Federal-Provincial Relations. My coll eague from Elmwood (Mr. Maloway), I know, has a number of detail questions under taxation. I have one or two later, but I will defer to my colleague from Elmwood. Mr. Deputy Chairman: I will recognize the Honourable Member for Osborne. He had his hand up. -(interjection)- Mr. Alcock: I had my hand up. -(interjection)- I went to school. I know how to do this. I just noticed on this Taxation Division reorganization the establishment of three n13w divisions, one of them being Management and Research.

Can you speak a little bit about the research component of that. Mr. Manness: Mr. Deputy Chairman, as I indicated in my opening remarks, much of the reform within the whole department is occurring within this division. We have not officially yet put it into place, so some of the commentary that the Member may be reading, I take it, in the Supplementary Report is not at this time in place. We were hoping, when we prepared this, that indeed a lot of this would be in place, but it is going slower than we had thought and indeed had hoped. Mr. Alcock: Who prepared this book; it was prepared by the Department? Mr.

Manness: I prepared it. Mr. Alcock: II mean, that is the second time now that what it says here in terms of what you do is not what you do. Mr. Manness: Mr. Deputy Chairman, it is- Mr. Alcock: When you put information before us it should be least be accurate. Mr. Manness: Mr. Deputy Chairman, it is still our attempt, or wish, to try and have some portion of this done in this fiscal year. I am reporting for the '90-91 fiscal year, imd what cannot be effected this year will be completed next. Mr. Alcock: Then the question is: What are you doing? What does management and research mean? Mr. Manness: Mr.

Deputy Chairman, what we are endeavouring to do here is basically three areas of activity. First of all, we are trying to improve the accountin g function within the whole tax assessment area. Secondly, we are trying to improve the information that is available to the public through our tax information officer. Thirdly, we are trying to always internally review the procedures that we have in place, so that we can remove redundancy and strive for maximum efficiency in the collection of taxes. Those are the three ongoing areas that we are committing to this area under a

November 5, 1990 LEGISLATIVE ASSEMBLY OF MANITOBA 776 new listing, Director of Taxation Management and Research. Mr. Alcock: So the administration and information functions are all under management and research. Mr. Manness: Mr. Deputy Chairman, that is not right. The administration functions are under the Administration Branch. What we are talking here about are two things: management of our own taxation activities, and secondly, we are talking about research to look at ways and means of which we can do a more efficient job of collecting the taxes that Mr.

Alcock desperately likes to have in support of all of the good social activities that he reminds us that we underfund in the House on a regular basis. Mr. Alcock: Well, I would be just as happy blindly supporting the Minister on anything he wishes to do, but I do have a couple of questions here. Do you conduct research right now within this division? Mr. Manness: Mr. Deputy Chairman, in a very, very limited basis. We found that we were not-we inherited a system that continued to build on its own.

This is not a criticism, but I sensed it was very much becoming inbred, and I sensed it needed a greater opportunity to be scrutinized from a research analytical point of view. Mr. Alcock: But this is the tax collection branch, and these are the fellows with their hands in my pocket. Do you do reviews of the effects of certain taxes, or is that done in another division? Mr. Manness: That is done in the policy area of taxation and that is not this area.

When we say research, on my understanding, we are talking about the implementation of how it is we collect taxes, the process of collecting taxes and how it is that we can do a better job. Mr. Alcock: I would like to ask a little bit about tax avoidance and uncollected, outstanding accounts. Would that be appropriate? Mr. Manness: Yes. Mr. Alcock: Then I would like to start off by asking on the across the various categories, how much uncollected tax is outstanding? Mr. Manness: Mr. Deputy Chairman, covering three areas within the mining and use area, we sense there is nothing. We know there are no arrears.

Secondly, within the payroll tax area, we believe that there is roughly $1 million in arrears, and that is on the basis of the information we know, and/or assessments that have been made. Within the sales tax area, the number that we have for the end of October, a few days ago, was $7.4 million roughly. Mr. Alcock: Corporate and personal? Mr. Manness: Mr. Deputy Chairman, the federal Government collects those on behalf of ourselves and they would know those figures, we do not. Mr. Alcock: But if they are collecting them on your behalf, do they not submit arrears reports to you? Mr. Manness: Mr.

Deputy Chairman, it is tax owing, period. It is not split as between federal or provincial share. It is owed to the federal Government, so it will be federal Government. Mr. Alcock: But surely you have an interest in how much is not being collected. You must have some estimate on what ... Mr. Manness: Mr. Deputy Chairman, I am led to believe that officials from another division may have a better understanding of how that system works, and whether or not there is a number we can report. Mr. Alcock: I am beginning to feel sorry for Pat Gannon. •

(2110) Mr. Maloway: Mr. Deputy Chairman, I wanted to follow up on the arrears question, because I asked the Minister about that a few days ago, and I would like to get a comparison from last year to this year. Now, he has given us the figure on retail sales tax, the payroll tax, and I believe the mining tax, but what about the gasoline taxes and the whole list you have. I mean, I can read them out to you if you wish, but do you have the list there? Mr. Manness: Mr. Deputy Chairman, we believe, to the best of our knowledge there are no gasoline tax arrears.

These are paid basically at the wholesale level by the major suppliers, so they are paid upfront before they hit the retail system. Mr. Maloway: Mr. Deputy Chairman, so would the Minister be in a position to give us the comparative figures for the year before for the retail sales tax arrears. Mr. Manness: October 31, 1981, $7.3 million. Mr. Maloway: $7.3 million, that is not 1981-1989. Mr. Manness: Exactly the same number. Mr. Maloway: $7.3 million. Mr. Manness: In both years, this year and last year.

777 LEGISLATIVE ASSEMBLY OF MANITOBA November 5, 1990 Mr. Maloway: Also to the same Minister, was there any change in the payroll tax arrears over the last year? Mr. Manness: Mr. Deputy Chairman, I regret we do not have those numbers in detail, but from memory, they were more or less the same, the million dollars. Mr. Maloway: To the Minister, the Corporation Capital Tax arrears, do we have totals for and the comparisons between this year and last year? Mr. Manness: Mr. Deputy Chairman, we do not have those figures. We can try and attain them for tomorrow. Mr. Maloway: I have a final question.

Would the Minister undertake then to give us figures when there is an increase in arrears? In other words, what he has done is given us figures in two or three categories where the arrears are about the same. I think what the Member for Osborne (Mr. Alcock) and myself are interested in is any category where the arrears have risen substantially in any area of taxation of the provincial Government. Mr. Manness: Mr. Deputy Chairman, we will survey the whole tax field, and we will look at our arrears numbers. In those cases where the arrears are higher this year as compared to a year ago, we will report. Mr.

Alcock: I have a couple more general questions, and this may or may not be the division. There was some work done in the State of Massachusetts, actually, some years ago enforcing tax collection statutes and regulations, which produced a considerable increase in the revenues to that particular state. Has that been looked at by this Research Department at all? Mr. Manness: Mr. Deputy Chairman, this Research Department is not operational at this point. It is in the process of development.

I think that one of the items it will be looking at is ways of reducing the backlog of assessments and ensuring that those people who have a responsibility to pay their taxes do more so on time. So that will be one of the responsibilities of the Research Department, to find ways and study examples in other jurisdictions whereby those that are owing pay more quickly. Mr. Alcock: Perhaps I have to ask the question a little differently then. Perhaps, if not this Research division that is being created, has this division looked at that question in the past? Mr. Manness: Mr.

Deputy Chairman, in discussing the matter with Mr. Puchniak, what is obvious to us is, we have at.tended conferences in North America with respect to the systems that we have in place in the methodology of collect ing tax. Probably, Canadian jurisdictions are far ahead in most areas. Where we probably are a little bit behind is in the area of fraud .. We are probably not as prepared to deal with fraudulent behaviour by taxpayers as may be the case in some American taxing jurisdictions.

I can tell you, tc::> that end, we have dispatched one of our people to, attend a conference on fraud in the States, I believe, this month or next month. Mr. Alcock: I would be interested in-and we have had discussions in the House in the past on the expenditure side, as these quarterly reports come out, about whether or not we are on or off a particular target, but leaving that argument on the expenditure side alone for a moment, on the revenue tax collection side, there seem to be some flows or some periods to the income.

I notice in the budget that was tabled there is an indication that, for example, corporate income tax will be up. There will be a significant increase this year, or an increase-how significant is our question-yet in the statement of revenue for the first three months it indicates a significant decrease in the levels for the first threo months of '89-90 to the first three months in '90-91. So the question is: Can you explain the difference between those two periods? Can you account for the $8.2 million difference? Mr. Manness:: Mr.

Deputy Chairman, the questions are fine in most areas, but not in the income tax area. That is more appropriately put in the next division, because those individuals, of course, are in a daily dialogue or a weekly dialogue with-well, monthly dialogue at least with individuals in Ottawa who are forecasting those numbers for us. Mr. Alcock: ~lust for the sake of this discussion and so I might understand, the corporate income tax, individual income tax and-what?-Revenue Act '64 would all be relative to, or would they be under the other divh,ion? Mr. Manness: Well, Mr.

Deputy Chairman, the other divisions are all the transfers areas including and also incom13 tax, personal and income tax, corporate. This division is in charge of The Revenue Act, 1964 plus Corporation Capital and all the other areas.

November 5, 1990 LEGISLATIVE ASSEMBLY OF MANITOBA 778 Mr. Maloway: Perhaps the Minister could provide us with a list of the arrears under the Retail Sales Tax area, the $7.4 million this year and the $7.3 million last year. Mr. Manness: Mr. Deputy Chairman, I cannot believe my ears if I sense that the Member is asking for us to detail for him and the public which of our corporate citizens are in arrears in their corporate tax and he would like to have access to that. If that is his request, I can tell him certainly that will be denied. That is privileged information. Mr. Maloway: Mr.

Deputy Chairman, I am asking for the categories. The Minister mentioned a few days ago that the hotel industry- Mr. Deputy Chairman: Order, please. Come on, you guys. Mr. Maloway: -that the hotel industry was one industry that was contributing greatly to the arrears in the sales tax field. So what I want is a breakdown of this $7.4 million, okay, into the industries. I would also like to know whether these are the same-he told me that the arrears this year were $7.4 million, the arrears last year were $7.3 million.

It does not look like there has been much of a change one way or the other, so I would be very interested in knowing whether these are the same companies and the same industries, or whether he has a new set to chase this year. Mr. Manness: Mr. Deputy Chairman, we will endeavour to try and provide some broad groupings by industry for two years to address that question. Mr. Maloway: Could the Minister detail the efforts that are being made to collect these arrears, because they do not seem to be changing? Mr. Manness: Mr. Deputy Chairman, I guess we have done two or three things.

First of all, we have communicated much more quickly with those that are in arrears, and maybe there was some misunderstanding or some information being sought, so we have attempted to reduce the time that we communicate and respond to the taxpayer. We have also, in some cases, suggested that they make their payments more timely in keeping with some format at time, make them aware of their responsibilities, and that certainly has helped in the first instance. So we have just tried at this point to communicate better.

We have had more contact with these individuals with our compliance officer, and I guess in the general cases we are revising the collection policies and procedures, and redirecting resources to develop and maintain an effective collection system. *

(2120) We sense that sales tax arrears have increased only by 8.6 percent from September '89 to September '90 compared to 40 percent between '88 and '89. So we feel that we are stemming the tide, that we are doing what we think we can do with our limited human resources to try and prevent this number from growing, and indeed, not only trying to hold it at a static level, but striving to reduce it. Mr. Maloway: I have two more questions to the Minister. The Minister mentioned earlier that the department was contracting out the collection of some of the tougher accounts.

Could he give us some information as to who is doing that and how they are going about doing what his department cannot do? Why would he have to contract this out? Mr. Manness: Mr. Deputy Chairman, I have left a very bad error on the record earlier on. I thought it was in the area of collection. What it is, we have entered into an agreement with a consulting group called Fed-Pro whereby they have looked at the federal sales tax, by all purchases of the Government of Manitoba and its agencies, where we have overpaid federal sales tax.

They have gone on a hunting mission to find out where they can find that overpayment, and indeed, when they are successful in doing so, we give them a good portion of their find. That is the agreement I was talking about, so it is not near as spicy as the Member might have thought. Mr. Maloway: Could the Minister tell us just how much money is involved here that these people have found? Mr. Manness: It seems to me, and from memory, that they have reported after a half-year or a year, and they found half-a-million dollars. Mr.

Maloway: Just to backtrack a bit here, the Minister, when I ask him for his list, actually the breakdown that I was interested in, the sales tax arrears, he thought I was asking for a personalized list. Upon reflection, I recall last year that the City Council did produce a list of people who were in arrears. Some well-known names, in fact, were in arrears with their city taxes. I wonder why it would be appropriate for the city to provide such a list and not appropriate for the

779 LEGISLATIVE ASSEMBLY OF MANITOBA November 5, 1990 provincial Government to do the same in the retail sales tax area. Mr. Manness: Well, Mr. Deputy Chairman, I do not know what legislation guides the city, but certainly the legislation that guides the province prohibits the making public of that information. Mr. Alcock: Let me ask one question. Are you saying that The Retail Sales Tax Act specifically prohibits the release of identifying information on those people who are in arrears? Mr. Manness: Mr.

Deputy Chairman, I do not know what Acts it is in, but information that we receive from taxpayers is privileged information to those taxpayers. It is between themselves and ourselves. Mr. Alcock: Now, if that is a blanket statement, I mean, if that is true on all areas of taxation, I would like the Minister to undertake to provide me with the references in the Act that does that. If it is specific to personal income tax information, I am aware that does exist. I believe, in small corporate, non-public corporations, that is also the case, but now we are talking about retail sales tax . Mr. Manness: Mr.

Deputy Chairman, we will endeavour to find that short ly. Maybe the Member would like to move on to a new question. Mr. Leonard Evans: Since we seem to be all over the place here-I think we are still technically under Administration. Mr. Deputy Chairman: Salaries, (1 ). Mr. Leonard Evans: Salaries--we have been asking questions about retail sales and so on, so I would like to ask a question whether there are any updated forecasts of retail sales tax revenue. I realize the Minis ter has just issued his budget report, but I am not sure when all these numbers were calculated.

We have been in the year for six months, and I appreciate that the retail sales tax revenues are shown to be really flat. In fact, if you take inflation into account there is actually-in constant dollars, there is a reduction shown here in retail sales tax between '89-90 and '90-91 . *

(2130) At any rate, is the Minister still satisfied with these projections? Are you working on other projections, or does this department even do that? Mr. Manness: Let us clear up one matter first of all. I said I would respond.

Section 12 (4) Retail Sales Tax reads and I quote, "Subject to subsection (5) except for the purposes of administering and enforcing this Act or any other Act of the Legislature imposing a tax, fee or levy, no person employed under the Minister shall communicate to any person not legally entitled thereto any return, record, or information submitted by a vendor under this Act or any information obtained therefrom for the purposes of this Act, or allow any such person to inspect or have access to any such return, record, or information." Again, Mr. Deputy Chairman, that is privileged information.

With respeGt to the question from Mr. Evans, if he is focusing in on retail sales tax revenue I said this in the budget that retail trade we sensed was forecasted to increase at a rate of 4.5 percent. I draw that from one of the tables in the budget. I believe it is--I do not know if it is in the appendix or if it is in the body of the report. I saw it the other day. Yes, here we go right here, on page 18, 19 of the budget, retail trade as the source being Statistics Canada, the Manitoba Bureau of Statistics, as we have measured trade, if one looks under sectors-- An Honourable Member: What page is that, Clay?

Mr. Manness: Page 18, under sectors, you will see the last item is retail trade. That is the forecast of the 4.5 percent, which is included within the body. Now when we talk about retail sales tax revenue that is a different issue, and that is the distinction I was trying to draw in the House the other day. Mr. Leonard Evans: What I was asking was, what was the projection of the revenue . Is the Minister telling me he is satisfied with this particular projection, given the information we are getting? Is he satisfied that this is a reasonable projection? Mr. Manness.: Mr.

Deputy Chairman, I am satisfied that retail sales tax revenue is going to grow nominally, possibly not at the rate of inflation. I wish it were going to grow at that rate. Nevertheless I have freely admitted that we are in recession. I said so in the budget, and naturally the reflection of that will be manifest in the numbers that come forward. Mr. Leonard Evans: The Minister was referring us to page 18, retail trade increase. That is for 1989. We were talking about 1990-91 Estimates. Mr.

Mannesii: I am prepared to enter into this dialogue in greater fashion when the people that helped me develop the budget come forward, and that will be the next division. If the Member has questions that are dealing with revenue this is the time.

November 5, 1990 LEGISLATIVE ASSEMBLY OF MANITOBA 780 Mr. Leonard Evans: This was my question. My question was: The revenue from The Retail Sales Tax Act, whether that was a reasonable estimate given the most recent information that we are getting, namely that retail sales are weakening the last month and also average earnings are very sluggish, the increase in average earnings are very weak according to the recent information that has been put out by Statistics Canada. I am talking about retail sales tax revenue not retail sales. Mr. Manness: Mr. Deputy Chairman, I will confide in the Member.

Up till the end of September we were bang on our projections, right on, October, we have fallen a little bit I will acknowledge that, but I mean right now given that I am reporting on a six-month-the Member now has some advance knowledge of what might be involved, included, in the second quarterly report. In the sales tax revenue area as of half-way through the fiscal year we are right on. Mr. Leonard Evans: I had a comment about the mining taxes. I guess we are sort of all over the place so we might as well do it now.

I was under the impression that the mining industry was very prosperous a couple of years ago and has fallen on very sad times recently. Certainly that is reflected in your estimate of mining tax for the '90-91 year. It has dropped dramatically from $115 million plus for '89-90 to $43,500,000 for '90-91. It is a very substantial decrease. Of course earlier on it wa&-I do not have the figures for the previous year, but it seems to me that we had even greater tax revenue, and I felt that the Government had missed an opportunity to collect even more revenue from the mining industry.

Inca in particular was flush with money. I think it had more money than it knew what to do with. It seems to me that this Government missed the opportunity-and I do not have the details with m1r-but my impression is that we eased up on mining taxes when we should not have. Given the fact that there is this increasing demand on Governmentfor more and more spending, which the Minister keeps on telling us about, we have to take every opportunity to raise revenue.

So I just want to take this opportunity to express my disappointment that we did not obtain greater tax revenue from the mining industry a couple of years ago. Mr. Manness: Mr. Deputy Chairman, I really do not understand where the Member is coming from. In the defeated budget that he was quoting from so liberally earlier on today he indicated that they presented a lot more figures. I want to remind him that in that budget an increase in mining tax from 18 to 20 percent was also defeated. When we brought down the ti rst budget of the new Government we enacted that same tax policy. We took it at 20 percent.

Let me also indicate that subsequently we also put on a 1.5 percent special mining tax. We have the highest mining tax in existence in Canada , to the best of my knowledge, or close to it. Let me also say that at one time we were expecting, given what we knew about the price of nickel, that Inca would be paying-I should not say lnco-that the mining industry would be paying to the Government a figure around $180 million.

Because corporations have the ability to change some of their activities to save themselves from having to pay high taxes, which every citizen and every corporate citizen has the right to do, Inca was able to restructure some of its mining techniques. It reached down for a lower grade of ore, which had a much higher cost of recovery attached to it, and they were able therefore to reduce their profitability and therefore reduce the rate at which they paid tax to the Province of Manitoba, much to my chagrin. That is the freedom they have as a corporation . Mr. Maloway: Mr.

Deputy Chairman, to the Minister, I do not recall whether the Minister gave us any figures for the arrears in the mining tax area. I have that blank. Mr. Manness: None. Mr. Maloway: There were none, in either year? Mr. Manness: In either year. Mr. Deputy Chairman: Item 4.(

a) Administration:

(1) Salaries $286,100-pass;

(2) Other Expenditures $12,500-pass . (

b) Retail Sales Tax Branch:

(1) Salaries $3,423,600-pass;

(2) Other Exp enditures $641,300- Mr. Alcock: Just in the detail in this Supplementary Information book, computer related costs, what are they? Mr. Manness: Mr. Deputy Chairman , was the Member asking of the computer related costs of sixty-six seven? Mr. Alcock: Yes.

781 LEGISLATIVE ASSEMBLY OF MANITOBA November 5, 1990 Mr. Manness: That was basically the fee for service that we pay Manitoba Data Services in support of operating and maintaining our system. Mr. Alcock: Okay, so now under ISSB we had $368,700 paid to MDS for support of the Wang and now we have got sixty-six seven to MDS for some other system? •

(2140) Mr. Manness: Well, Mr. Deputy Chairman, this is the system that brings in over $600 million of cash by way of revenue. What we are talking about in the other division was in support of all of the cheque paying activities of Government. This is a revenue receiving system; the other system was basically an expenditure cheque paying system. They are on two different sides of the ledger. Mr. Alcock: Well, I am not making any comments on what it is for. I am just asking-I am not asking what is it for. Is the payment to MDS for computer services? Mr. Manness: Correct. Mr. Deputy Chairman:

(2) Other Expenditures. Mr. Leonard Evans: Obviously we are not going to finish by 10, so I want to get into some more details here. Under the Mining and Use Taxes Branch, which is the one we are on, I would like to ask- Mr. Deputy Chairman: No, we are on the Retail Sales Tax right now, Other Expenditures. Mr. Leonard Evans: Okay, well, I will wait till we get to-- Mr. Deputy Chairman: Okay.

(2) Other Expenditures $641,300-passed. (

c) Mining and Use Taxes Branch:

(1) Salaries $2,099,500-shall the item pass? Mr. Leonard Evans: I understand under the activity of this branch that it inspects and audits the records of tax collectors and taxpayers, conducts investigations into the smuggling of tobacco products and fuels, and prosecutes for offences under the Act. Could the Minister tell the committee, could the Minister give a report to the committee on the degree of smuggling of tobacco products that is now occurring? Mr. Manness: Mr.

Deputy Chairman, we have not had cause to see charges laid in any area of tobacco smuggling, but let me indicate that there is close liaison between our taxation branch and others across Canada, in other provinces, indeed, in other jurisdictions in the United States, in an attempt to monitor and share information. Also, the RCMP I am led to believe, in the Province of Manitoba, is now dedicating a 1'ull time person to also be involved in monitoring procedures so that this does not become a problem. Mr.

Leonard Evans: I thank the Minister for his answer, but could he not indicate to what degree smuggling of tobacco products is a problem? Could he give us some degree of the magnitude? How many millions. of dollars, for instance, are we talking about? Mr. Manness: We sense that we do not have a problem. We also are cognizant of the press reports which talk about millions of dollars of smuggled tobacco existing in Ontario and Quebec.

That is why I suppose we have done what we can to bring in these procedures and to increase our monitoring to ensure that type of problem does not manifest itself within our jurisdiction. It does not mean that some is not occurring. Right today we do not believe it is a massive problem in the Manitoba context. Yet I can assure Members that we are trying to ensure that it never does become a problem also. Mr. Leonard Evans: The description of activity identification says: and prosecutes for offences under the Act.

Is the Minister telling us there has been no prosecution going on under the Act with regard to this problem? Mr. Manness: There are many prosecutions under the Act, not for smuggling. I can think of 85 successful prosecutions that occurred through the courts in the last fiscal year, I take it. There are many prosecutions under this area. In the tobacco area alone there werir-most of the 85 were in the tobacco area. Some 68 of those were in the tobacco area under various sections that were contravened. Mr. Leonardi Evans: The problem does exist, although the Minister believes it is not of a very large magnitude.

I do not want to put words in his mouth, but that is the answer I think I got from the Minister. What about fuel, smuggling of fuels? What kind of fuels are we talking about, and who is involved in this? Mr. Manness: Mr. Deputy Chairman, we sense that there probably is some smuggling of fuel occurring either from Saskatchewan or more likely from

November 5, 1990 LEGISLATIVE ASSEMBLY OF MANITOBA 782 northern states, North Dakota. We are working closely with customs officials and officials in North Dakota and the authorities to try and assure that again this type of activity is kept to a minimum. Mr. Leonard Evans: I wonder if the Minister can elaborate a bit. What kind of fuels are we talking about, strictly automotive, gasoline are we talking about, or are there other types of fuels? Exactly how do we go about conducting these investigations? The other question is: Have there been any prosecutions for offences under the Act for these fuels? Mr.

Manness: Where we can identify that a contractor for instance, bringing fuel in from Saskatchewan, or a large quantity tanker load coming across the border from the states has indeed entered without paying tax, rather than prosecute we approach them with the evidence that we have and ask them to remit. In almost all cases, when faced with a choice of being prosecuted or remitting, they do remit. *

(2150) Mr. Leonard Evans: How many staff do we have involved in inspecting, auditing and conducting investigations? How many staff do we have, and what kind of training do they have, what category? Are they trained as almost like police investigators, or are they strictly auditors or accountant types, or just what? Mr. Manness: Mr. Deputy Chairman, it depends on the seriousness of the alleged fraud or crime, or whatever you want to call it.

If it is deemed to be serious, we have within our staff ex-RCMP officers or ex-City of Winnipeg police detectives who are very much trained in ensuring that any evidence gained or seized is done so in a rightful manner. In lesser cases, in the sense of not so serious, many of our staff are schooled and are obviously trained in the principles necessary to collect tax from a business point of view. Mr. Leonard Evans: How many staff do you have involved in this? I do not think you answered that question. Mr. Manness: Mr. Deputy Chairman, the answer is 10. Mr. Leonard Evans: Mr.

Deputy Chairman, I am surprised that the number is as high as it is, but I am sure they are busy. Mr. Manness: Mr. Deputy Chairman, that is for all taxation statutes. Remember, we are talking about $1.4 billion here. Mr. Leonard Evans: Mr. Deputy Chairman, my questions were related to tobacco products and fuels, the prosecution, the investigation and subsequent work that had to be done. That was my question-not all forms of taxation. Mr. Manness: Mr. Deputy Chairman, I would ask the Member to repeat the question, please. Mr.

Leonard Evans: How many staff are involved in inspecting, auditing and investigating with respect to the smuggling of tobacco products and fuels? Mr. Manness: Mr. Deputy Chairman, we do not segregate staff that way. If they are in the compliance area, then they are expected to do all the duties. Mr. Maloway: Mr. Deputy Chairperson, today the Minister undertook to get the information on the effect of the tax holiday for new businesses that was established last year and continued under this budget. Could he perhaps give us the information that was requested? Mr. Manness: Mr. Deputy Chairman, sure.

I will defer the question to my colleagues in the next division who will be more than prepared, I am sure, to try and give greater insight into that small business tax holiday that has been so much heralded by the businesses in this province. -(interjection)- I do not need to; I am very proud of that. Mr. Leonard Evans: Mr. Deputy Chairman, just carrying on with the activities of this branch, references made to -(interjection)- Mr. Deputy Chairman: Order, please. If you want to carry on some conversations, do it out in the hall. The Member for Brandon East (Mr. Leonard Evans) now has the floor. Mr.

Leonard Evans: Thank you, Mr. Deputy Chairman. References made to the staff co-operating with the Department of Agriculture to reduce the price of farm fuel by obtaining tax exemptions or reductions from U.S. states and by the dyeing of farm fuel at the U.S. border, I am just wondering if the Minister could elaborate on how this is done, how you would go about this particular process of getting the price of farm fuel reduced by obtaining tax exemptions or reductions from U.S. states.

783 LEGISLATIVE ASSEMBLY OF MANITOBA November 5, 1990 Mr. Manness: Mr. Deputy Chairman, I am going to ask Mr. Puchniak to reply directly. Mr. S. J. Puchnlak (Assistant Deputy Minister, Taxation Division: What happened is that we requested to obtain the same benefits for farmers in Manitoba as accrued to farmers in North Dakota and Minnesota. North Dakota declared in their law, in order to accommodate Manitoba farmers, that a Manitoba farmer was deemed to be a North Dakota farmer so that they could obtain tax-free fuel in North Dakota. In the State of Minnesota, Mr.

Goyette went there and arranged with them to provide like accommodation to Manitoba farmers. Then, when they brought the fuel up to the Manitoba-U.S. border, arrangements were made to colour that fuel so that it would be tax exempt in Manitoba. Mr. Leonard Evans: Well, it sounds very ingenious. I congratulate the staff; they have apparently been successful. I guess my question then is: How long has this practice been going on, or this method of assisting to reduce the price of farm fuel been going on? Mr. Manness: Mr. Deputy Chairman, four years. Mr. Deputy Chairman: We are down to (

c) Mining and Use Taxes Branch:

(1) Salaries-pass.

(2) Other Expenditures. Mr. Alcock: Just a question on the operating, $62,000.00. Is that a computer related expense? Mr. Manness: Mr. Deputy Chairman, I am led to believe the computer expenses charges are $2,900.00. Mr. Deputy Chairman:

(2) Other Expenditures-pass. (

d) Corporation Capital Tax/Health and Post-Secondary Education Tax Levy Branch:

(1) Salaries. Shall the item pass? Mr. Leonard Evans: Mr. Deputy Chairman, this is the so-called payroll tax that we often debate about; at least the monies are collected in this particular branch. I was wondering whether the Minister could tell us now, when will this tax be totally abolished? The Government has talked about the commitment they have made to the people of Manitoba and the business community of abolishing the tax. We have had some minor adjustments, but the tax is still there. It is still bringing in a lot of money -(interjection)- $180 million, I am reminded.

Even though there has been a raising of exemption levels so that a great deal, if not most, of the business sector has been eliminated, nevertheless, there are corporations and federal Government agencies paying this which may be very necessary revenue. I am not suggesting that this is not very necessary revenue, but nevertheless this Minister and this Government is committed and has made a lot of noise about this over the years of getting rid of this particular tax, yet it is still here, alive and kicking. How long is it going to stay? Mr. Manness,: Well, Mr.

Deputy Chairman, we have made remarkable progress in this area. When we took over there were roughly 40,000 accounts, and today as I sit here there are 2,068 accounts still paying this taJ<. We have made remarkable progress in wiping off thousands, tens of thousands of firms that otherwise would have been paying this insidious tax that destroys jobs and the will to invest capital. We would like to go further. Unfortunately, at this time, we cannot. •

(2200) Mr. Deputy Chairman: The time is now 10 p.m. What is the will of the committee? Some Honourable Members: Committee rise. Mr. Deputy c:halrman: Do I have a motion? Mr. Leonard Evans: I move that the committee rise, seconded by the Member for Elmwood. Mr. Deputy Chairman: Moved that the Committee of Supply-Finance now rise, moved by the Member for Brandon East (Mr. Leonard Evans) and seconded by the Member for Elmwood (Mr. Maloway). AU in favour? Say aye or nay. Some Honourable Members: Aye. Mr. Deputy Chairman: All those opposed? •

(2210) Some Honourable Members: Nay. Mr. Deputy Chairman: I say the nays have it. -(interjection)- There has been a request for a formal vote for the motion that the Committee of Finance shall rise. We shall just see if the

section of Supply meeting in the Chamber has risen for the evening. If it has not, we will proceed to the Chamber for the formal vote. If the Chamber has risen, we shall have the vote in this room. The Chamber has risen? In that case we will have the vote in here. Let the bells ring. We havu to have the bells at least one second until the Whips tell me to shut them off. Let the bells ring. Let us wait them out. We will go till two in the morning now.

November 5, 1990 LEGISLATIVE ASSEMBLY OF MANITOBA 784 Mr. Deputy Chairman: Order, please. There has been a request for a formal counted vote on the motion that the Committee of Supply and Finance now rise, moved by the Member for Brandon East (Mr. Leonard Evans) and seconded by the Member for Elmwood (Mr. Maloway). A COUNTED VOTE was taken, the result being as follows: Yeas 15, Nays 26. Mr. Deputy Chairman: The motion is defeated. The committee will continue until a motion is brought forward. We are now in

Section (

d) Corporation Capital Tax. *** Mr. Steve Ashton (Opposition House Leader): Mr. Deputy Chairperson, I think what has happened tonight indicates some of the difficulties-and I must indicate my disappointment on the first day of Estimates of the Government insisting on sitting past ten o'clock without agreement from the Opposition Parties and running into the type of gray area in the rules that we have run into. *

(2220) It is very, very unusual to have the bells rung on a vote, as took place in this particular case, when the other

section of the committee in the House was not sitting. I am not saying there is no precedent, there may indeed be precedent, but it certainly has not been the regular practice of this House the last number of years or the nine years that I have been in this House. I do want to express my disappointment that we are dealing with Estimates on this the first day- Mr. Deputy Chairman: Order, please; order please. Was this on a point of order? Mr. Ashton: No, you recognized me in terms of discussion of Estimates so I am not raising- Mr. Deputy Chairman: No reflecting on a vote that the House has already taken. Mr.

Ashton: Mr. Deputy Chairperson, I could reflect on-if there was a breach in the point of order I could not raise that point of order during a division so it would be the first opportunity, but as you may recall I did not raise this as a point of order. I am raising it out of concern. I know in terms of our caucus that we end up in this situation where here it is 10:30, and I am impressed by the turnout- Mr. Deputy Chairman: Order, please; order, please. I would like to bring to your attention that we are now dealing with

Section (

d) Corporation Capital Tax/Health and Post-Secondary Education Tax Levy Branch:

(1) Salaries, $1,610,900.00. Mr. Ashton: -my point, Mr. Deputy Chairperson, is indeed that this

section would have been better dealt with-- Mr. Deputy Chairman: I do not believe I have recognized you. Mr. Ashton: -at another time as was suggested by the Opposition Members, rather than have us sit here- Mr. Deputy Chairman: Order , please; order, please. You have not been recognized at this time. The motion that we voted on is non-debatable, and I would appreciate it if the Member kept it in tune with what we are dealing with. Mr. Ashton: Mr. Deputy Chairperson, I am not debating the vote. I said I was not speaking on a point of order.

I was expressing the frustration of the Opposition that the Government, on the first day of Estimates-and this is the Government that said it was going to continue the procedures, and I am relating it-- Mr. Deputy Chairman: Order, please; order, please. *

(2230) Mr. Ashton: -to this specific item in the Finance Estimates. This would be better considered by the Opposition and by Government Members if we had at ten o'clock, as agreed to by the Opposition, finished our sitting and come back to deal with this tomorrow. I would suggest-and I say this openly to all Members of this House-the best way to deal with issues such as this is through co-operation rather than this type of tactic that we see on the Government tonight. Mr. Deputy Chairman: Order, please; order, please. The Member is not being relevant to what is before us at this time, so I will rule you out of order.

785 LEGISLATIVE ASSEMBLY OF MANITOBA November 5, 1990 Point of Order Mr. Jerry Storie (Flln Flon): On a point of order, Mr. Deputy Chairperson, I recognize that you are in an awkward position. However the fact of the matter is that this Legislature operates in a large measure by consensus. We have all agreed-and the Minister of Finance has made the point a number of times-that we have to get back on a regular schedule. The Government's intention was to introduce a light legislative Session to introduce a budget and to review the Estimates in a timely fashion.

I remind the Minister of Finance and the Government House Leader (Mr. Manness) that can be done only with co-operation, and that means co-operation from all sides. I remind the Minister of Finance and the House Leader -(interjection)- the First Minister (Mr. Film on) expresses it very well. We can do it the easy way or the hard way. I remind the First Minister and the Government House leader (Mr. Manness) that one of the Estimates budgets was reviewed tonight. Executive Council was completed, because we were willing to co-operate.

If the Government wants to continue to control the agenda with an iron fist rather than through consultation, the 240 hours can drag out to be an awful long time. So if the Government wants to misuse and abuse its slim majority it can try at its own peril, because there are many, many games, as the Minister of Finance knows, that can be played. -(interjection) The First Minister wants to say it has nothing to do with the issue. I take exception to that. It has everything to do with the issue. We started off in a co-operative vein. Your Estimates were finished this evening.

The Minister of Finance's Estimates could have been finished-- Mr. Deputy Chairman: Order, please; order, please. Mr. Storie: -and it is only your obstinance, your obstinance and that of the Minister of Finance, that have prevented it. Mr. Manness: Mr. Deputy Chairman, on the same point of order. Mr. Deputy Chairman: The Honourable Member did not have a point of order. So if you have another point of order you might want to raise, it will be up to you, but the Honourable Member did not have a point of order. Point of Order Mr. Manness: Mr.

Deputy Chairman, on a new point of order, we all recognize that co-operation makes this system work much better. That is why I guess I asked the Members of the House today, the Opposition House leader (Mr. Ashton), whether or not there was a predisposition towards waving private Members' hour, because we all recognize that 240 hours is a lot of time to chew through. The Members in their wisdom decided not to provide that, and I have no quarrel with them. That was a decision made purposely by them.

The Government, in trying to strive to take us through these 240 hou rs and to provide the leadership of the process, has basically one call as far as trying to use a maximum number of hours in a day, and that happens to be Monday evening. I served notice to both House leaders that I would probably be seeking support from the majority Government position to exceed the ten o'clock sitting hour.

I am cognizant that certainly Executive Council was given consideration before ten o'clock tonight, but I say to the Members there is also another department of Government waiting to have its Estimates reviewed subsequent to that within the Chamber. We do not do it because we like working to midnight, none of us, but there is the people's agenda at stake here, and that is that we are trying to expedite the business of this Session so that it indeed is finished in the month of December, so indeed the Government can do the proper planning that is necessary to do so they can bring back into

schedule the proper ordering of the people's business. Mr. Deputy Chairman, I make no apology for that. I wish we did not have to sit to midnight tonight, but I cannot think of any feasible way we can chew 240 hours sometime before Christmas unless we put in the work. Mr. Deputy Chairman, I recognize that is not a point of order and I do agree that co-operation does work better. Mr. Deputy Chairman: The Honourable Minister did not have a point of order, as stated. Now, if we can get on with the business of-the Honourable

November 5, 1990 LEGISLATIVE ASSEMBLY OF MANITOBA 786 Member for Flin Flon. We could continue to be here all evening if we want to continue this. Mr. Storie: Mr. Deputy Chairperson, I appreciate the Minister's stated objectives. I appreciate what he is trying to do. I remind him, however, that this is the first day of Estimates. We have already finished one of the items to be considered under the Estimates review-one out of 26 items, whatever the number is.

The fact is that substantial progress was made on his own Estimates, and perhaps if there had been less insistence on sitting, regardless of the wishes of the committee or the others involved in the committee, we would also make substantial progress in the days to come. If the Minister wishes to have it all his way, then he is making it more difficult for himself. We all have responsibilities outside this Chamber, in our constituencies and with our families. To pursue this beyond ten o'clock was unnecessary. If the Minister wants to insist, he has the majority.

Certainly that can be done, but it certainly is not going to facilitate co-operation over the next several months. Mr. Manness: Mr. Deputy Chairman, I realize we are all out of order, but I think this discussion is very relevant, it really is. It is a discussion that has probably never been held in public before in quite this fashion, but it is relevant. I acknowledge the fact that one department of Government was passed today. Mr. Deputy Chairman, I have to work within the Rules of the House, and the Rules of the House say that there are 240 hours to be allocated toward Estimates review.

So theoretically 25 departments could have been passed today. If there was one left, the rules still allow for 240 hours of review of that one department. That is all I have to go before, and I indicate to the Member for Flin Flon, all I am trying to do is provide an opportunity for Members opposite to use the 240 hours in their best fashion. Mr. Deputy Chairman: Neither Member had a point of order. I would recommend that the Members not sit here and discuss points of order all night.

I would recommend to the Honourable Members that perhaps this disagreement could be resolved by the three Parties outside of this committee rather than tying up the time in the Estimates. Mr. Alcock: I would like to make one observation on this. The Minister has asked for significant accommodation outside of the rules, accommodation which both of the Opposition Parties are prepared to- Mr. Deputy Chairman: Order, please. Are you rising on a point of order? Mr. Alcock: I am rising on the same point of order that the Minister of Finance raised. An Honourable Member: He said it was not a point of order. Mr.

Deputy Chairman: Let him go. Go. Continue, please. Mr. Alcock: The Minister of Finance has made a request for significant accommodation outside of the Rules of this House in order to facilitate the passage of the Estimates within a certain compressed time frame in order to get back on a proper fiscal plan. Everybody who has been involved in those discussions has agreed that that is an appropriate thing to do. Those negotiations are underway. I think that the Minister of Finance, by choosing to force a decision through at the beginning of the Estimates period, is making a significant mistake.

I agree with the Deputy Chairman's recommendation that the three House Leaders should go off to a dark corner someplace and sort this out, that this is not an appropriate forum. I remind the Minister of Finance that the rules also allow for unlimited time on concurrence debate. I think that we are just getting ourselves headed down a path that is foolish and is not going to allow us to achieve the goals that we all want to achieve. *** Hon.

Gary Fllmon (Premier): I wonder if the Minister could indicate what is his estimate of the cost of the measures that he has implemented in the change to the health and post-secondary education levy with respect to allowing for offsets for training being done in the private sector? Mr. Manness: Mr. Deputy Chairman, to the First Minister, we have sensed thatthe revenue foregone because of that measure is roughly $8 million. Mr. Fllmon: Eight million dollar s. Is there a substantial indication that there are private sector employers who would wish to perform training functions and education functions with their

787 LEGISLATIVE ASSEMBLY OF MANITOBA November 5, 1990 employees and take advantage of that reduction that they will get as a result of those changes to the health and post-secondary education levy? Mr. Manness: Mr. Premier, when we had our Skills Training Advisory Committee, STAC, representation was made to that committee on several occasions with respect to possibly a training offset being used as against a payroll tax. *

(2240) As you know, Sir, in our wisdom our Government decided that there was some wisdom in considering that approach. As a matter of fact you and I discussed it as a possibility, indeed made the decision, to include it as part of the tax reform program. Let me say that subsequent to the budget coming down, many, many companies have called me as to when it is that the final criteria will be put into place so they may be able to apply and indeed have their offset as against their payroll tax. -(interjection)- Mr.

Fllmon: There is obviously no desire to discuss the Estimates or to question the Minister on the part of the other Members of the committee, so I am very happy to participate in what I believe is a very important responsibility to the people of Manitoba. If the Opposition Members do not choose to participate in that responsibility then I certainly want to fill the breach, because I believe I was elected to do that, Mr. Deputy Chairman. Point of Order Mr. Ashton: Mr.

Deputy Chairman, if the First Minister had not resumed to what I assume was a number of questions, he would have found that I did indeed have some questions on the Estimates related to this matter. In fact, I was just going to ask the Government House Leader the cost to the public of sitting-- Mr. Deputy Chairman: Order, please; order, please. The Honourable Member did not have a point of order. *** Mr. Deputy Chairman: Now, the Honourable Member for Thompson, your question? Mr. Ashton: Well, Mr.

Deputy Chairman, I find it interesting that the Premier has to come to Estimates to find out what is happening in the Department of Finance. Any time the First Minister wishes to do that, I suppose, we in the Opposition should be the first ones to-- Mr. Deputy Chairman: Does the Honourable Member have a question? Mr. Ashton: Well, yes, Mr. Deputy Chairperson, I just did.

I wanted to ask the Government House leader if he c:an indicate if he has any idea of how much will be raised by the province on payroll tax from the overtime and the levy that will be paid by the legislative Assembly for the sitting tonight beyond ten o'clock, which I am sure will result in people-- An Honourable Member: That is silly. Mr. Ashton: Well, it is no more silly than the questions by the First Minister who should have known the answers. I do not know the answer to this, and I would like to ask the Minister if he has any estimate of the cost involved with this type of measure? Mr. Manness: Well, Mr.

Deputy Chairman, that is a very good question. I say so because I would think that one of th3 host Members of a Government that brought in this insidious tax in the first place would have an understanding of the cost. The net cost, of course, to Government is zero because it comes out of one pocket and goes into the other pocket, so in theory, I thought that the Member for Thompson would know that, because I know he was intimate with the taication policy of the former NOP Government.

Furthermore, I wish that there were other ways, and I know th13 Member and I are trying to find other ways to prevent us from sitting all around the clock. That is not thE1 desire, yet if there are questions that want to continue for a long period of time, this Minister, in trying to do the right thing on behalf of the people of Manitoba, trying to bring onto

schedule again the legislative and fiscal agenda of the people of the province, will work those extra hours to try and bring this thing into cycle. Mr. Ashton: Well, Mr. Chairperson, I hope the Minister also recognizes the commitment of the Opposition to do exactly that. That indeed is why we expressed th1~ concern about the fact that here on the first day of Estimates rather than operating on a consensus basis we were ending up in a very unreasonable situation. The number of years that I have been in the House, I do not recall the bells being rung, although there may be a precedent in other years cm an adjournment motion after ten

November 5, 1990 LEGISLATIVE ASSEMBLY OF MANITOBA 788 o'clock. Apart from some of the points of order and various side discussions in the last period of time, I hope those discussions will be taken seriously, because it is not a question whether the Government is living within the rules or not. Indeed the Government to a certain extent is living within the rules. We are following the rules at this point in time.

The fact is though, if we are going to accomplish what the Finance Minister is suggesting, it is going to require some consensus that goes beyond the rules, not violates rules, it goes beyond the rules, and I think that the Government House Leader should recognize that requires a significant commitment from the Opposition. I would ask that the Government House Leader make the same sort of commitment himself to a consensus. Mr. Deputy Chairman: What we are discussing at this time is the Corporation Capital Tax/Health and Post-Secondary Education Tax Levy Branch, and we are on line (1) of Salaries of $1,610,900.00.

I would appreciate it if the Honourable Members here present would keep their discussions relevant to this and their questions relevant to it. Mr. Fllmon: Mr. Deputy Chairman, I think it should be put on the record that the only reason that this is considerably different from the operations of former Governments is to say that the New Democrats when they were in a majority Government refused to sit beyond ten o'clock. For their own purposes, it was their view that their responsibilities ended at ten o'clock. -(interjection)- Mr. Deputy Chairman: Order, please; order, please.

I have asked that we keep this relevant, and I am going to keep the line a little bit tighter from here onin. Mr. Leonard Evans: Mr. Deputy Chairman, I would like to ask the Minister a question about the future existence of the Health and Education Tax Levy, because as I was indicating before the vote I was reminding the Minister that there was a commitment as I understood from his Party and his Government to get rid of this tax. He called it insidious, he used other terms as well to cast aspersions on this particular tax. Nobody likes to have a tax.

Nevertheless, it has been a very vital tax for the province, given the fact that expenditures are exceeding revenues. Nevertheless, I want to ask this question: Is this Government, is this Minister still committed to completely eliminating the payroll tax? I know many thousands of small enterprises no longer pay it. That is not the point. The point is that it is still a major source of tax revenue in the order of about $180 million as estimated for the year ending March 31, 1991. How long is this tax going to be around? Mr. Manness: Mr. Deputy Chairman, I cannot answer that question.

The commitment to remove it in its present form is still a genuine commitment of the Party and indeed, therefore, of the Government of the Province of Manitoba. The timing over which that may happen I cannot share with the Member, because that is dependent upon many other factors which of course include, amongst some, the revenue increases and other taxation fields. Mr. Leonard Evans: Mr. Deputy Chairman, it seems to me that the rate, that the tax has been reduced. It is going to take us well into the 21st Century, at the current rate at least, for this tax to be abolished.

It is going to be around for a long, long time. In fact, I am quite prepared to predict that it will be around for an indefinite period of time. *

(2250) Mr. Deputy Chairman, I wonder if the Minister could advise, give the committee more detail on who pays this tax now. He was mentioning some numbers before the break for the vote, but I am wondering more specifically, who is paying? My impression is, it is the large corporations and also Government of Canada agencies and departments, but I wonder if the Minister with his staff could give us more information as to who exactly-how much, for instance, is the federal Government paying and how much are the large corporations paying? Mr. Manness: Mr. Deputy Chairman, we do not have those numbers available.

I can indicate that we can try and give a broad breakout. We will indicate how much the federal Government is paying. We will indicate how much we are paying ourselves, because this is not $180 million dollars net in the sense that it is coming from outside of Government. It seems to me upwards of $20 million or $30 million must be coming through ourself by way of our own agencies. What the Member is asking then for is, how much is the federal Government contributing?

Maybe we can also try and break it out into some broad industry sectors to see, for instance, what the financial services industry is providing and maybe some of the other broad breakouts.

789 LEGISLATIVE ASSEMBLY OF MANITOBA November 5, 1990 Mr. Leonard Evans: Well, I appreciate the Minister's willingness to provide the committee with that information. We look forward to getting that table from the department. I am wondering if the Minister could indicate to what extent revenue is brought in from outside of the province. In other words, to what extent is the burden being levied on I suppose federal agencies and national corporations whose head offices are not in Manitoba? In other words, it was always my impression-and I do not have any reports on this or any detailed information, Mr.

Deputy Chairman-that one of the arguments for the tax was that it would bring us revenue from agencies and corporations whose head office, whose executive functions were outside of the Province of Manitoba and to that extent it was a net gain for the treasury of this province. Mr. Manness: Well, Mr. Deputy Chairman, we do not really know that in detail for sure. For instance, the T. Eaton Company has a head office in Toronto, but they pay this levy in support of their employee numbers in this province.

Furthermore, with respect to the federal Government though, there is no way that they have guaranteed that they will continue to pay this tax forever and a day. It seems to me they have acknowledged that they will continue to pay it in the provinces in which it is applied until the end of 1991. That is the only safeguard that we have. So unilaterally the federal Government could walk away from paying their $30 million or $40 million in tax. Right now, we have a situation where reciprocal tax agreements seem to be breaking down as a result of the imposition of the goods and services tax.

There is no incumbency on the federal Government to pay this tax. Unilaterally, they could decide after 1991 that they are walking away from it, and therefore, all of their agencies are walking away from it. Mr. Leonard Evans: Mr. Deputy Chairman, I have noted a news release issued or a comment made shortly after the federal Government consented to pay the Ontario tax. This was with the previous Peterson Government-as I read: The federal Government will voluntarily pay an extra $90 million in each of the next two years to cover Ontario's payroll tax, according to Finance Minister Michael Wilson.

In other words, the Ontario Government has just now imposed the same tax, one incidentally which has existed for some years in the Province of Quebec, as I understand. What it means, according to this article, is that the federal Government will pay a tax on the salaries of people who work in its departments and institutions in Ontario. Pn3sum ably, that is exactly what they are doing here to the extent that there are more federal employees, there is a greater amount of tax paid and vice versa.

As the Minister indicates, there is a reference to Ottawa doing this voluntarily, because under the Constitution of Canada, it does not have to pay provincial taxes. The reference is made also to the fact that over the past 12 years some provinces have reached voluntary agn3ements with the federal Government to pay each others' taxes, and usually all Governments have broken even under these deals. At any rate, it says the federal Government has similar agreements with Manitoba and Quebec, as we know, and that Ottawa will review this in 1991.

He also refers to the fact that many provinces, such as Ontario, are adopting payroll taxes. So it would seem to me that there are other provincial jurisdictions that are seriously looking at this as a means of raising revenue. I can understand why, Mr. Deputy Chairman. It simply, as I was referring to in the 1988 Kostyra budget, reveals the very serious debt situation that many other provinces are having.

I would say that this is a tax that is being discovered more and more by provincial Governments for good reason, and that is, they are not securing sufficient revenues or are unable to reduce expEmditures in their own particular provinces. At any rate, I am going to assume, therefore, that this tax will be around for some time and the staff vvill be very busy collecting it for some time. Just talking about the staff, I would like to ask a question. How many more staff personnel were added because of this particular tax coming on? Mr.

Manness: You are asking staff to go back several years, I believe to '82 and '83 when this tax was implemented. I do not know if they can recall, at that point in time, how many staff were added. We do not have it accurately. I would ask the Member to take as a guesstimate the number 25. Let me say though, Mr. Deputy Chairman, he says he assumes that this tax is going to be around for a long period of time. I do not know how he can make

November 5, 1990 LEGISLATIVE ASSEMBLY OF MANITOBA 790 that assumption. I am not saying that taxes are not going to be with us for a long period of time; I am not saying that there is going to be some form of another tax that comes into being, but I am saying, as far as the federal Government is concerned with respect to this tax, I think it would be foolhardy for anybody to suspect that the federal Government will be paying this tax in 1992.

They may very well be, but I am saying to the Minister, when I go to the meetings of Finance Ministers, I am always forewarned by the federal Minister that this is temporary and it is not forever, thatthey unilaterally may withdraw their payment under it any time. Mr. Leonard Evans: I would appreciate it if you could bring a little order and quietness into the House, because it is difficult to hear the answers. Mr. Deputy Chairman: One second here. Order, please.

Any Honourable Members that are standing around just having a conversation, if you could bring it out into the hall so it would stay a little quieter in here, I would appreciate it. Thank you. Mr. Leonard Evans: Thank you, Mr. Deputy Chairman, for your help. I can appreciate the fact that since this has been around for a few years it may be difficult just to have some of those numbers handy, but I guess I have a reverse question. Given the fact that exemptions have been brought in to eliminate certain small businesses, to what extent has the staff been reduced in the last year or two on that account? Mr.

Manness: Mr. Deputy Chairman, I apologize to the Member. I promise I will listen more attentively if you will repeat the question. Mr. Leonard Evans: My question is: Given the fact that some small enterprises have been exempted from the tax-and the Minister has quoted different numbers and so on-has the Government, has the department been able to reduce the number of staff in this particular area? Mr. Manness: Mr. Deputy Chairman, two answers to the question. First of all, staff positions themselves, we reduced significantly. The individuals in question, in many cases, moved over into other tax areas.

So that is the full answer to the question. Mr. Leonard Evans: Maybe the information is available somewhere, but could the Minister tell us how many staff are involved in the Corporation Capital Tax versus the Post-Secondary Education Tax Levy-Health and Education Levy side of it? *

(2300) Mr. Manness: Mr. Deputy Chairman, I will undertake to find those numbers. From memory-I hope the Member will not hold me to this-approximately half and half. Mr. Leonard Evans: Those are all the questions I have for now in this particular branch. Mr. Alcock: First, on the tax credit for employee training, are there provisions in the way this is structured that prevents corporations from simply claiming a credit for existing training programs? How does that mechanism work? Mr. Manness: Mr. Deputy Chairman, I shake my head in sort of an acknowledging fashion.

I say to the Member, that is why we are giving ourselves a few months to ensure that existing training or generic training, to use another term, is not eligible for this type of offset. We want to see specific skills training. We want to see something beyond an introductory course to the office, and we want to make sure that the people who are going to qualify for this are legitimately providing a training into skill enhancement. So we have a little bit of work to do to define the parameters and the criteria. We will be calling forward again those involved in the Skills Training Advisory Committee.

We do not necessarily want to build a major auditing function, yet we will make sure the criteria are in place so that if on a spot basis we go in and do a check we can satisfy ourselves that legitimate, new, different or meaningful training is being provided. Firstly let me say, Mr. Deputy Chairman, the tax has to be paid at 2.25 percent. The 0.3 percent rebate is only offered after we are satisfied that the corporate citizen in question has undertaken and provided the hoped-for training. Mr.Alcock: If I understood the Minister then, the program is not in effect yet. He needs some time to establish the criteria.

When does he anticipate that the program will come into effect? Mr. Manness: Mr. Deputy Chairman, I will answer that question more fully when Mr. Boschmann is sitting with me. He is more involved in the tax policy area. I would think that we would hope to have it in effect for the taxation year 1991 , even though the criteria may not be in place until summer or maybe even later. We must remember the tax has to be paid for the calendar year and then it can be rebated. Mr. Alcock: So you would have it in place for the taxation year 1991? The $8 million cost to the

791 LEGISLATIVE ASSEMBLY OF MANITOBA November 5, 1990 treasury of this represents one quarter of this fiscal year? Mr. Manness: Theoretically, yes. Mr. Alcock: Then the annualized costs of this tax are $32 million? Mr. Manness: No, the annualized cost is $8 million. Mr. Alcock: Help me clarify this, Mr. Minister. You state in the budget that this is going to have a cost to the treasury in the '90-91 year of $8 million and change, and yet it is not in effect until the '90-91 year. So at best it is in effect for one quarter of the fiscal year. Mr. Manness: Mr.

Deputy Chairman, Appendix C, Budget Paper C, page 2, gives the detail around the credit for training costs. I have talked about two measures, one the provincial trucking and also the credit for training cost. I say it is anticipated that these two changes will reduce payroll tax revenue by about $8 million annually. I did not make a reference as to the year, and I also said that in 1990-91, if you look it up, the revenue impact would be negligible. Mr. Alcock: I am looking at Appendix C, page 2. I see the reference to the tax, but I do not see that information. Mr.

Manness: Are you looking at Budget Paper C, Taxation Adjustments? Mr. Alcock: Budget Paper C, Taxation Adjustments, page 2, Payroll Tax 1990-91, revenue impact negligible. But then what was it- Mr. Manness: If you come up from the bottom in that same page, second last paragraph which is a single sentence covering two lines, "It is anticipated n Mr. Alcock: Yes. Are you saying here that the $8 million is negligible as far as a revenue impact or that it will not fall in the 1990-91 year? Mr. Manness: Mr. Deputy Chairman, I am saying when it is fully in effect, the annualized cost to the Treasury will be $8 million.

In as much as it will not be fully in effect for the 1990-91 fiscal year, there will be no negligible loss in revenue. Mr. Alcock: So the Manitoba New Small Business tax reduction--the impact on revenue as a result of that? Mr. Manness: Mr. Deputy Chairman, I think when I introduced it, I said $1 million. That was in last year's budget. We have no reason to change that estimate. That indeed is a full annualized cost. I believe we now where probably the full agist is in, and we are probably seeing that lost to our revenues as a result of that measure.

It is not a new measure; it is a continuation 1lf one announced a year or two ago. Mr. Alcock: Do you have evidence of that? I mean, do you have hard evidence that the people have claimed up to $1 million in tax exemptions as a result of this new tax? Mr. Manness: Mr. Deputy Chairman, I will probably ask the Member to repeat the question when the tax policy people are here. I think that the answer is probabl y "no." I do look at the number of remissions sta tements that cross my desk , that I sign person ally, and there are large numbers of them.

I cannot put an estimate to them as to what tax they may hav1~ otherwise paid at the 10 percent rate, but I do know there are significant numbers of companies that have applied for the remission under the first year of this program. Mr. Alcock: Can the Minister tell us how many companies? Mr. Mannes!;: From memory I would say-I had asked for this: information, and I cannot recall it. It seems to me 60, 70, 80 companies -(interjection) The officials are telling me in excess of 100. Mr.

Alcock: On the payroll tax, it is a situation that existed-actually it was created under the previous Government , but it exists to this day with the payroll tax where Government funded agencies are funded at the 1.5 percent level, where they are charged at the 2.25 percent on payroll tax. Is that a policy decision of Finance? Mr. Manness: Mr. Deputy Chairman, I do not accept that fact, because I am very well aware of what we do in a general support grant to municipalities and universities where we offer 2.35 percent, a full .1 percent beyond because there is a lag in effect.

I cannot accept his fact that at 1.5--1 have no reason to disagree or agree; I just do not know at this point. I will certainly find out in due course. •

(2310) Mr. Alcock: What the Minister stated, the 2.35 percent, would that be policy, the Government to support public:ly funded organizations that have to pay the payroll tax to that level? Mr. Manness: Well, inasmuch as it is not a statute that I am aware of, it is a policy of Government. We

November 5, 1990 LEGISLATIVE ASSEMBLY OF MANITOBA 792 inherited it from the former Government and have maintained that level. Mr. Alcock: Would it be fair to say to the Minister that if he were to become aware of situations where that policy was not being applied that they would take steps to correct that? Mr. Manness: Well, Mr. Deputy Chairman, I will not give the satisfaction that maybe the Member is asking for in that respect. I guess a lot of it has to do as to what your source of funding is.

Indeed, if it is pure Government funding and you seem to be under in one hand, I mean the Government ultimately ends up picking up the costs anyway as compared to municipalities that for the most part have their own source of funds and university which, to a lesser degree, takes funds from outside, still though, very highly dependent upon Government funding. Mr. Alcock: If I understand-I am just allowing the Minister to hear the question. I think he should have lots of information. I get up at five o'clock in the morning you know. Mr. Manness: Mr.

Deputy Chairman, I can provide a little bit more clarity on that answer. I guess the approach that we inherited and that we continue to support is that those agencies and institutions outside of Government for the most part are drawing all of their funding from Government, because indeed if there were shortfalls the Government would be expected to provide all of its funding. We did not sense an offset was necessary. I am thinking now, even in the sense of universities, I thought they received a general support grant, and they do not.

Funding was made up to them in support in the first year as an offset against that additional tax that they had to pay in the payroll sense. Municipalities though and school divisions which are autonomous organizations which of course raise a significant portion of their revenue on their own, in these cases a general support grant I think was provided to these types of institutions. Mr. Alcock: Well, now, let me see if I understand that.

Organizations were initially charged I believe it was 1.5 percent as their payroll levy, and there was for those organizations that were largely funded by Government and where Government did not have sort of a deficit pick-up provision within their relationship, Government provided a 1.5 percent or the equivalent of a grant to cover the total costs of that particular tax. When the tax was then raised to 2.25, I am wondering whether or not the Government then established this 2.35 percent policy and, if so, will it be applied to all organizations who fall under that category? Mr. Manness: Mr.

Deputy Chairman, let us go back to the first year when that one and a half percent was in place and subsequent to that. I guess when the former Government decided to increase the levy there was an increase in grant provided to the agencies in support, strictly a portion of which was to be as an offset against this new tax, so in the first instance using one and a half. During that year I am told that the former Government provided outside of the normal increase to agencies an additional one and a half percent in support of these agencies having to pay the payroll tax. Mr.

Alcock: When the tax was raised from 1.5 to 2.25, was an additional grant in support of that provided? Mr. Manness: Well, Mr. Deputy Chairman, that was under the former Government, my understanding is that yes, part of the increased support in a total grant that went to the agencies, three-quarters of 1 percent of that total grant increase was to be allocated as an offset against the payroll tax increasing from 1.5 to 2.25 percent. Mr. Alcock: If the Minister were to become aware of situations where that grant was not paid, given the policy, would he take steps to rectify that? Mr. Manness: Mr.

Deputy Chairman, it is very difficult for me after the fact to make that determination. I mean, I do not think the grant went out to the recipient agencies in two or three parts. It went out as a single grant to cover the increase of requirements for the year and- An Honourable Member: To change the base to reflect the new tax. Mr. Manness: -to change-now, whether the former Government, whether they broke it into two or whether they said to an agency, well, here is a 3 percent increase, 2 percent is to cover this and another 2.25 percent is to cover here and three-quarters is to cover here, I do not know.

I do not know what was said by the former Government. I do know though that I was led to believe that a portion of that grant was to be in support of the increased levy that was now in place.

793 LEGISLATIVE ASSEMBLY OF MANITOBA November 5, 1990 Mr. Alcock: Right, and I am not asking the Minister to take responsibility for the actions of the former Government. I am simply asking that given that there is a policy in place to support organizations fully, organizations who are Government funded and have to pay that tax, if he becomes aware of situations where that grant was never paid, where that situation was never rectified, is he prepared to take action to see that the policy is applied equally across all organizations that lean with the Government? Mr. Manness: Mr.

Deputy Chairman, again I repeat, there was no explicit grant provided in lieu of agencies having to pay that particular tax. It was never demarked as such. It was, I am led to believe, to be included in the global figure of increase, whatever that increase was that year, and I am sorry but I do not know what it was. Mr. Alcock: If a person got such a global increase and had that figure included within it, they would have it in the detail and they would be aware that they had received it. Mr. Manness: No, they would not be aware that they had received it.

They would not be aware of what portion of the grant maybe was in support of it. I do not know what communication the former Government made to it. I know what they would be aware of probably that there was a singular value, a nominal figure of increase that was coming down to them. That was to include two parts probably, the additional levy and the natural increase, but they would still be presented with one figure increase. Mr. Alcock: Okay, let us look at it in a slightly different way.

The Minister states that there is a policy to do exactly that, to bring the support up to a level where these agencies can carry the full costs of the 2.25 percent levy. In fact, he stated earlier that there was a 2.35 percent grant to organizations that were largely Government funded. An Honourable Member: For good reason. Mr. Alcock: For good reason, I am not disputing it at all. My question is: Where there are situations where that was not done, that can be demonstrated that it was not done, is the Minister prepared to act to see that the policy is evenly applied? Mr. Manness: Mr.

Deputy Chairman, I am always prepared to look at situations. If the Member can show me cases that he thinks warrant some review, I will look at them. The great difficulty here is that I am not the policy maker that was in place during the implementation of this levy, nor am I the Minister and indeed part of the administration that decided to increase it and how that increase was communicated. We are short of information. •

(2320) Mr. Alcock: Well, I would like to thank the Minister for that undertaking. I will take that message back to the groups involved and suggest that they approach him to state their case. I am aware of one set of agencies where that policy was not applied. Mr. Manness: Let us be honest here.

What would have to be shcJwn to me, if an agency, for instance agency X, in that year received O percent increase, I would have to be convinced that the Government of the Day wats not planning to provide them with basically a three quarters of 1 percent decrease in funding, and that the offset represented a three quarters of 1 percent increase such that the level of support was beyond that which they had, in the first place, considered. I say that because that is the information that, unless I have it at my disposal, Mr. Deputy Chairman, I cannot deal with. Mr.

Alcock: I agree and I sympathize with the Minister completely. I think an agency making that case would want to come forward with signed documentation from a previous Minister or from the department that detailed what their various grants were for, and then they can make their case. If they do not have that kind of information then of course they cannot. I am aware of a circumstance that exists. It has been a problem for some time, and I think the Government should be consistent in the application of :such a policy.

I understand the Minister to have said that he is prepared to look at those circumstances, and I will pass that message on. If the agencies choose not to, fine. If they do, I would encourage the Minister to examine it with some care, because it has been a significant problem in this system for some time. Mr. Deputy Chairman: We are now working on (d)(1)- An Honourable Member: We have not passed anything. Mr. Deputy Chairman: I am just asking if you want to. I want to ask if you do want to pass it. -(interjection)- Order. Another question-- Mr.

Leonard IEvans: On the payroll tax credit for employee training, I wonder if the Minister can tell

November 5, 1990 LEGISLATIVE ASSEMBLY OF MANITOBA 794 us how many-have there been any applications received from employers so far under this scheme-under this tax credit for employee training? Mr. Manness: Well, Mr. Deputy Chairman, no formal applications, because there is no process in place to receive it yet, but certainly many inquiries. Mr. Leonard Evans: Is the Minister and his department going to make some effort to advise employers that this is available? Mr. Manness: As I said to the Member for Osborne (Mr.

Alcock), as soon as we have a criteria developed that we sense does what it is that we are hoping it will do, and it safeguards revenue that we need, and we have some way of tracing whether or not the good principles under the program are being followed, we then will bring that process into place. Mr. Leonard Evans: Is the Minister telling us he does not really have criteria for applications now? The material , the applications have not been prepared. The advertising has not been done.

Does the Minister not have any idea as to certain criteria he or his department wish to implement in making this a meaningful program? In other words do you have no idea of types of employers you want to include or exclude, or is there going to be absolutely no exclusion? Are you going to emphasize on-the-job training as opposed to institutional training or vice versa? Mr. Manness: Mr. Deputy Chairman, we have done some thinking in these areas. Yes, we sense that it cannot be offered across the whole spectrum of employers.

To the extent that we can we probably would like to direct it more so into the manufacturing sector. I do not know how successful we will be in targeting it. There are some service related areas that I think we would like to see it come into being, and yet not across the full spectrum of service activity either. I think although we have not developed a program we have done a little brainstorming on the principles. I can tell the Member that we do not feel a great pressure to rush in a program that is flawed inasmuch as every corporation is going to have to make their remittances next year anyway.

Once they have a course in place they then can apply for a rebate in the '91 year. I guess I am answering, yes, in many respects. I would like to target it somewhat if I can, in-house training, to the extent that it can be verified and it can be audited, yes, but no, to the extent that it is ongoing pure generic training, just introducing individuals to where the coffee room is. I mean it has to be somehow put into place properly, and we will take the time to do that properly so I make no apology.

Yes, it is not ready to be sold in a communication sense, and it is certainly not ready to be advertised because it is not

Document details

Collection	Manitoba — Debates (Hansard)
Citation	35-1-18b
Type	hansard
Volume / chapter	35th 1st hansardpdf 18b.pdf
Language	en
Format	pdf
Source	PROVINCIAL
Identifier	d958beddb6f3684af5a645811e7fa0987621f1ed

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