Manitoba Hansard — 16 April 1966 (Sitting 80, 27th Legislature, 5th Session)

27-5-80

Manitoba — Debates (Hansard)

THE LE GISLATIVE ASSE MBLY OF MANITOBA 9: 30 o•clock, Saturday, April 16, 1966 Openi!,g Prayer by Madam Speaker. MADAM SPEAKER: Pres enting Petitior s Reading and Receiving Petitions Pres eding Reports by Standing a1:d Special Committees Notices of Motion Introduc tion of Bills 1851 lViR. JAMES COW AN, Q. C. (Winnipeg Centre) ii.troduced Bill No. 114,

an Act to amend The Optometry Act. MADAM SPEAKER: Orders of the Day. MR. T. P. HILLH OUSE , Q. C. (Selkirk): Madam Speaker, bef ore the Orders of the Day are concerned, I wonder if I could address a questior.. I imagine it would be to the Honou rable the Provincial Secretary. It deals with the intention of the CBC to discontinue this program known as "This Ho ur Has Seven Days . 11 Would the Honourab le Minis ter advise the Ho use as to whether or no the Government of Manitoba intends to forward any protest to Ottawa in con nec tion with that cessat ion. HO N. MAITLAND B. STEIN KOPF, Q.

C. (Provincial Secretary) (River Hei ghts): Madam Chairman, I don't think this is within our jurisdiction and we have eo know ledge of this. I'll take the ques tion as no ted and se e if I can get a more definite reply. MR. DOUGLAS L. CAMPBE LL (Lakes ide): Madam Speaker, be fore the Orders of the Day are proceeded with, I'd like to direct a ques tion to the Honou rable the Attorney-General. Will the Honou rable the Attorney-General assure me that I can have an answer to the ques tions that I as ked regarding payments made to a certain well-known lawyer of this city be fore the Ho use prorogue s. HO N. STEWART E.

McLEAN (Sttorney- General) (Dauphin ): Yes , Madam Speaker, my impressi on would be that that would be ready by Monday or Tuesday of next week. MR. SAUL CH ERN IACK, Q. C. (St. Joh n's) : Madam Speaker, be fore the Orders of the Day, could I address a ques tion to the Ho nourable the Attorney-General to inquire as to whether it is his intention to move concurrence on the report of the Standing Committee which was filed on February 23, 19 66? MR.

McLEAN: Madam Speaker, as I answ ered on the previous occasi on, the notice of concurrenc e has bee n given and when we reach it on the Order Paper it is my in tention to pre sent it. MR. GILDAS MOLGAT (Lead�;Jr of the Oppos ition)(Ste. Ros e): Madam Speaker, be fore the Orders of the Day, I was going to ask of the Leader of the Ho use when we might expect the ba lance of Orders for Return for an Address of Papers that are outs tanding. There are many that are outs tanding from last year that were repeated this year. I se e a pile of material on his desk and I trust that it will be some of the Returns .

Can we expect all of them be fore the end of the Sessi on? HO N. GUR NE Y EVAN S (Minis ter of Industry and Commerce) (For t Roug e): This is just the few opening 'paragraphs of my address in pres enting my es timates . I am to my own knowl- edge and in my own mind ... ... how the individual returns stand. I think I should take notice of this and undertake to provide the information to the Ho use at a later date. Madam Speaker, i be g to move that Madam Speaker do now leave the Chair and the Ho us e resolve itself into a Committee to consi der of the Supply to be gran ted to Her Majes ty.

Seconded by the Hon ourab le the Minis ter of Public Utilities. MADAM SPEAKER pres ented the motion and after a voice vote declared the motion carried, and the Ho us e reso lved itself into a Committee of Supply with the Ho nourable Membe r for Winni peg Centre in the Chair. COMMITTEE OF SUPPLY MR. EV ANS: Mr. Chairman, be fore we be gin our busi nes s, I'd like to make sure that we have an understanding in the Hou se . It•s my understanding that agreement has been ar rived at between the parties for the conduc t of the remaining bu siness in the Committee of Supply.

Let me recite my unders tanding of the matter and I'll se e whether it's the same under standing on all sides of the Hou se ; and se cond, whether we have unanimous conse nt to proceed this way. It is my unders tanding that the Hous e would like be willing to complete all of the remaining estimates, including the es timates involved in Capital Supply, by the end of the 80

185 2 April 16 , 1966 (MR. EV ANS cont'd.) ... .. hours , then a further four hours would be allotted for considera tion of the estimates of the Department of Industry and Commerce including the pres entation of and discu ssi on of a statement in connection with the Monoca agreement.

That be ing the case, I think the Ho us e has generally expressed an opinion informally - that is , informal discuss ions - and have arrived at an opinion that this must be conducted in a sp irit of fair ness; that is, in the remaining time that no party will attempt to pre- empt the small remain ing time within - if I'm right it •s about an hour and 20 minutes remaining - no party will try to pre-empt that time or to occupy so large a part of it as to be unfair, and that if we can proceed in the sp irit of mutual agreement that this certainly appeals to our si de of the Hou se .

Now it is my understanding that some informal discussi ons have taken place and that this is the general agr eement in the Ho us e. I would like to hear whether this has been agreed to by the other parties . MR. MOLGAT: Mr. Chairman, this se ems like the general agreement that I understood, except that I don •t quite recall that the capital estimates were to come in sp ecifically this morning; that is, I thought they were going to be dealt with at the end of the total estimates .

Apart from that, that is the general understanding that I had, but my impression was that if we didn 't finish Public Utilities within the one hour and 20 minutes left that we would then proceed immediately to Industry and Commerce and then to Capital after that. However ..... MR. EVA NS: .. ..... not my understanding. The piece of paper I have here says that it •s agreed that we sh all do our best to finish all the work pres ently be fore the Committee of Supply except the estimates for the Department of Industry an d Commerce, be fore 80 hours.

That I take to mean, and in fact such further verbal discus si ons I had with the Premier, con firms the point that he expects that the Capital estimates will indeed be done. I don •t think there sh ould be much time to sp end on Capital estimates . · MR. RUSSELL PAULLE Y (Leader of the New Democratic Party) (Radisson) : Mr.

Chair man, this is my understanding too; that is , the remaining hours up to 80 be utilized with Public ut ilities, and the inference is there, it's implied if not explicit, then we could have our honourabl e fr iend the Ho us e Leader at our mercy for four hours or so on Monoca, if in deed it would be at our mercy. MR. EV ANS: ...... you at my mercy for some cons iderabl e part of that four hours. Well - oh, I be g your pardon. Were you contribut ing to this discus sion? I would say then, Mr. Chairman, take your marks, get set, go! MR. CHAIR MAN: The Hono urable Member for St. George. MR.

EL MAN GUTTORMSON (St. George) : Mr. Chairman, in view of the debate origi nated Thurs day night and continued yesterday, I feel that I should sp eak br iefly in view of the remarks that were made. I think at the outs et it sh ould be pointed out that inasmuch as I found myse lf in disagreement with the fin dings of the Tritschler Commissi on, I have no inten tions of bri nging the matter up again at this Sess ion.

The Fi rst Minister condemned us for sp eaking on this subj ect yesterday, and I think that he sh ould have -- in doing so he was really condemning the Minister of Public ut ilities, be caus e it was the Minister of Public Utilities who provoked the entire debate. He launched an attack on us and he launched an attack on the press in conn ection with this report.

Ha d the Minister chosen to ignore the Tritschler Report in his estimates , most of us on this si de of the Ho use would have done likewise, but he has attacked us and I feel that we must in our defenc e reply to him, so if the First Minister feels it was wrong for us to sp eak on this debate on this subject, he is also damning his own Minister because he was the one who provoked the entire debate in introduc ing his estimates. While I disagree -- as I said befor e, I disagreed with the ....... but I don •t intend to speak on it.

How ever, I think it sh ould be pointed out that those of us on this si de are not the only ones that disagreed with the findings. Both the Winnipeg Tribune and the Winnipeg Free Press also found fault with the findings of the Commiss ion, although admittedly for different reasons. I think it should be pointed out" and brough t to mind in this Hou se why all this matter was brought into the Ho us e by me.

We re ceived a telephone call from a gentleman who was concerned about the intentions of the government, and I went to se e this gentleman and he out lined to me the situation as he saw it, but what was really concerning him was the fact that the go vernment was planning to enter into a new agreement with Drake-Pears on without putting it out for tender. He said the agreement was virtually to be signed any day, and it was this reason , Mr. Chairman, that this matter was raised in the first instance, beca us e we felt it was unfair and wrong to extend this contract and we raised this matter in the Legislature.

The fact of the matter is , as a result of my introducing this matter into the Legislature, the extention

April 16 , 1966 185 3 (MR. GUTTORMSON cont 'd.) of the contract given to Drake-Pears on was cancelled and never proceeded with. I think it's important to point out that nowhere in our remarks were there any allegations of dishonesty or curruption. I didn •t make any allegations at that time and I am not making any now. I just think the government at that time was ted the taxpayers 1 money. I still think the government wasted the taxpayers 1 money by entering into this agreement. My reason for think ing so was the fact that this company made an exorbitant profit.

Now, we•ve been condemned for dealing with the subject of profit. When any company is give n a contract to make the am�unt of money that Drake-Pears on made on this contract, I think it's unconscion able and I think that the bes t in terests of the taxpayer were not looked after by entering into this contract. The res ponsibilit y of the Op position, if they think the government has acted unwisel y, is to raise the matter in this Legislature, and we did so at that time.

We would be failing in our duties if we refused to brin g matters of importance to this Hou se, at leas t that we thought were im-: portant, because that's our resp onsibil ity, and if we sh ied away from these res ponsibilities we would not be doing the job that we are elected to do.

On the subj ect of profits, I think it is important to point out that this government recently appointed a Commission to investigate the Totogan Farms, and I1ll just take one se ntence out of one of their conditions, and it reads: "in order to ensure that the said land was acquired without hope or expectation of be nefit or gain resu lting from the construction of the Portage la Prairie Diversion Channel. " In other words, they're trying to find out if profit was made.

Now if it is in the in teres ts of the province to find out if profit was made in this particular situation, then why is it wro n g for us to point out that exorbitant profit was made on another contract? At the Committee hearing, the Legisl ative Committee hearing, we were not allowed to brin g in the profit figures , but the statement of Mr. Dick Hu nter, counsel for Drake-Pearson, that the company had made somewhere in the neighbo ur hood of $300, 000 plus - $320, 000 I think was the figure he us ed -was accepted by this Committee.

Now if they were prepared to accept that figure, why were they not prepared to accept the other figures? If you recall, a few years ago there was an inquiry regarding the profits of the breweries in this province, and the First Minister, who was then the Leader of the Op position, as I recall it made quite a point to determine the profits that were made by the breweri es. On the matter of the contract bein g legal, no one has disputed that it was not legal.

The present Minister of Public Works has on occasion - and I say this to his credit because I be lieve his actions have been right - has recalled cos t tenders because he was not satis fied with them, and asked for other further teni ers, and I think his actions in doing this was correct. Therefore we feel that in the issuin g of this contract to Drake-Pearson, it shoul d also have been recalled when it was out of line. No one denies that it was the lowest, but do we still accept the figure regardless of how much money is goin g to be made even if it's the lowest?

This is not reason able, and the Minis ter of Public Works has , as I have said bef ore, has re jected the lowest tender on other occasion s because he felt it was too high. Now a great deal has been said by the Minister of Utilities about the criticisms of the Commission er. Well, as I said, I for one disagree with his findings because I felt the whole thing was a waste of time in view of the fact he did not deal with the crux of the case, and that was the profit.

If the Commissi oner wasn •t prepared to accept or look into the matter of profits, which is the matter that was the prime reason for raisin g these matters, then there was no point in having the inquiry at all. Is it the first time that people have found disagree ment with this Commissio ner when he sat on the Royal Commission or an inquiry? I recall a few years ago when this same Commission er investigated the situation at Brandon Packers , and he brought down a report which is a damning indictment of the entire labour movement, and his findings were based on one isol ated case .

At the same time, he made recommendations for legislation that should be introduced by the government, and the government brought in their legisl ation based on this report. We on this side of the Ho use opposed that legisl ation because we said it was unwise and was based on one isol ated case, and it wasn •t fair to the labour movement that they shoul d damn the entire movement on the basis of one isol ated case. Howe ver, despite our protests, the government did introduce legis lation. Well now, what have we got at this Session?

We have this government brin ging in legis lation repealing the very legisl ation they brought in on the basis of the Tritschler Commission who inquired into the Brandon Packers . In other words, this government is rejecting the recommendations of the Tritschler Commission at that time by repealing the legislation that he recommended they brin g in.

185 4 April 16, 1966 (MR. GUTTORMSON cont'd.) I recall two or three year s ago where the present Attorney-General wrote a letter to the same Commis sioner and asked him for a comment on the debate that had been entered into in this Legislature, and the Commissi oner replied to the Attorney-General and was critical of some of us in this Legislature. He based his entire opinion on the Hansard reports. As House members know, a lot of the members of the legal professi on were rather surprised that this Commissi oner would inject himself into a political debate in this Legislature.

We've been accused of attacking the Hydro. This is the government's prime statement we're always attacking the Hydro. Mr. Chairman, we criticize the government because the government was the one that authorized the contract for the building of the road. The govern ment is responsi ble for the Hydro, the Telephones and other utilities, and, Mr. Chairman, who was it that announced the Nelson River project at this Legislature? Was it Mr. Don Stephens of the Hydro? No, it was the First Minister. Who announced in the fall of 1962 that the government wanted a mandate to go ahead with the Nelson River? Was it Mr.

Don Stephens? No, it was the First Minister. Whenever there is anything to be gained from the work or pro jects being entered into by Crown corporations, the government takes it upon themselves to make the announcement and take the ... ... ... for it. However, if there's anything that maybe goes wrong then they shy away and hide behind the officials of the Hydro. As was pointed out yesterday, it wasn 1t the members of this side of the House who brought criticisms of this contract.

It was the trucking industry and others, and there were numerous stories about their unhappiness with the contract that had been entered into. We did not go seeking the information regarding Grand Rapids on this contract; these people came to us . A gentleman came to me, showed me the facts as he knew them ; he produced audited statements and other documents to subs tantiate the profits that had been by Drake -Pearson, and it was evident to me that it was exorbitant.

It was pointed out also that the contract to Drake -Pearson, although the tenders were put out for 155,000 firm tons of material, that they subsequently issued a contract for 145,000 tons . One of the interesting developments of the whole matter is the fact that at the spe cial Committee of the Legislature, a gentleman by the name of Mr. Tuckwell appeared. He was not a witness called by us , he appeared on his own behalf; and he volunteered to the Committee that he was a Conser vative.

He volunteered to the Committee that he was a member of the executive in the Fort Rouge constituency which is represented by the present House Leader. He descr ibed this contract as a nefarious contract. He also said it was a blot on the Province of Manitoba. Well, this is coming from a man who did not speak to us about his opinions ; he wasn't sol icited by us. He appeared before this Committee on his own behalf. He made these statements. I think it 1s important to note, as I said before, t hat at no time were there any allega tions of impropriety, although we have been accused of it.

At all times were we concerned with the exorbitant profit. When we entered into this debate we produced these figures provided to us, and nothing has changed to this day. I have not changed my opinion in any way. I regret that the sp ecial Committee that delved into this matter refused to delve into the profit figure. Although they wouldn •t accept the evidence that we were prepared to put up, they did accept the figure provided by Mr.

Dick Hunter, and which was subseq uently proven wrong by the Leader of the Opposition who produced an audited statement with figures which showed unques tionably that those figures that were produced at that Committee were wrong. I think, Mr. Chairman, we should point out that when the Minister of Utilities introduced his Es timates he took issue with us and he took issue with the press for what they had reported.

Well, I'm rather surprised at that Minister because I would have thought that this particular Minister would realize that without the freedom of the press we don •t have a free society, and this condemnation of them for their views in this matter, I think was most unjust. There are several things in the Commissi on Report which I think should be brought out, or that I would like to bring to the attention of the House.

I was at a loss to understand a state ment of the Commis sioner who said; 11A shortage of judges and the arrears of court work prevented the establishment of an inquiry commissi on until December 24, 1964, when the Grand Rapids Water Haulage Inquiry Commissi on was established. 11 I don •t know why he said that in the report because after the First Minister announced an inquiry would be held, the Federal Government subseq uently appointed Mr. Justice Freedman to look into it and the CPR run-through, so why he made that statement, I don •t know.

I was very interested in the statement here where he said great harm had been done by

April 16, 1966 185 5 (MR. GUTTORMSON cont'd. ) .. ... Mr. Buie's initial television statements and the manner in which they had been completed in the news med ia, that those who brought Mr. Buie into Winnipeg and were in close contact with him for several days now knew that what he had said was without foundation and that he was anxious to retract them and make amends. Mr. Chairman, that statement is not true, and why the Commissioner made this state ment I have no idea, but it's not a fact, and I'd like to know the foundation for making those remarks because they•re totally untrue.

At no time were we aware that Mr. Buie was about to make the statement that he made to the Commissi on. When Mr. Buie was asked to come to Winnipeg by our counsel Mr. Schwartz, I was delegated to meet him at the airport, and I did so . He told me at that time that he was under press ure not to testify but he told me he plan ned to go ahead and testify, When he sp oke to our counsel Mr. Sid Schwartz he confirmed everything that I have said in the Legislature and he also confirmed the statements that he had made on television, and at no time did Mr.

Schwartz or members of the Liberal Party have 'any idea that he was going to make any other statement than that which he made to Mr. Schwartz when he was interviewed, and that statement mad e to Mr. Schwartz, as I said before - and I think this must be repeated - confirmed the remarks that we had mad e in the Legisla ture and he al so re-affirms remarks that he had made on television. Now he also says that Mr. Buie appeared drunk on CBC television when he made the remark.

I wonder what the basis of those remarks are, because I took the liberty to contact the CBC regarding this allega tion and the CBC pointed out to me that he was certainly not drunk when he appeared on their program , and they further stated that had he been drunk he would not have been interviewed. Now I think it 1s unfair that he should be cas ting reflec tions on the CBC. He's certainly casting refle ctions on Mr.

Sid Schwartz, the counsel for the Liberal Party, and he1s cas ting reflections on us by saying that we knew, and at no time were we aware that he was trying to make the statement that he did, As a matter of fact he was talking to a member of our Party the night before he made that statement, and at that time gave no indications that he wasn't going to make this statement as he had indicated he would to Mr. Schwartz. Mr. Chairman, the profit that was made -- ...... Drake -Pearson and this contract, was unques tionably exorbitant.

The contract was issued after a former Minister of Public Works told this House that the road to Grand Rapids would be built in one year, and he's on record in Hansard as saying so. It was after this contract was issued to build the road to Grand Rapids - and as I sa id, the Minister indicated it would be built in one year - that a four year contract was awarded. Truckers have told the Committee they could haul this material at $1 0. 00 a ton, in that neighbourhood, and the price that was being paid in total by the govern ment was in the neighbourhood of $27. 00 a ton.

I think it is important to note that prior to the road being built that only about 22, 000 tons of material of the 145, 000-ton contract had been hauled, and som e of that material was loaned because they didn •t have materials to haul - materials weren't available for them to haul. We were told that there would be a black-out in Manitoba if they didn •t proceed immediately. It 1s no secret now but the opening of the Hydro Plant was delayed by one year. There was no black-out.

Yet we were told by the Minister of Mines and Natural Reso urces that if the Plant did not operate on time the Province would lose millions of dolla rs . Mr. Chairman, I don't intend to take any more time of the committee on this matter or to indulge in personalities as the First Minister did. I'm not going to --I think we should deal with the issu es as they are and leave the innuendo and personal attacks asi de . The present Minister of Public Utilities has nobody else to blame but himself for causing this debate. Again he attacked the press; he attacked us . He did so in an unfair manner I thought.

He ac cused the press -- the press has been accused of reporting things that they shouldn't have. I suggest to them that the press has a res ponsibility, that the statements that are made in this Legislature regardless of who makes them and they should be reported. It1s their responsi bility. Editorial comments are those of the editorial board, and what they say is their privi lege, At all times -- I shouldn •t say at all times. I know I find myself in disagreement with ed itorials.

I'm sure the members of the government side find thems elves in disa greement with editorials, but this is their opinion and I think that they're entitled to make them. But as far as the handling of the news stories it's their res ponsibility, and if we want to keep a free so ciety we must not try and curb and tell the press what they should report. MR. EVANS: .... ...• rules just informally to say this, that of the hour and twenty minutes remaining to the committee he has now occupied some 33 minutes.

185 6 April 16, 1966 MR. GUTTORMSON: Mr. Chairman, I'm sorr y that I've taken as long as that. I1ll sum up and if someone else wishes to sp eak I'll allow him to do so. Mr. Chairman, in summ ing up, I wish to point out that I have not changed my opinion. I feel that the profit figures should have been allowed. They're the crux of the whole case and without introducing them the inquiry was of no import. There were no allegations, as has been suggested, of impropriety.

Wfl suggest that the government wastes the taxpayers' money and I still believe this to be true, and des pite the fact that the Commissi on refused to look at our figures hasn't changed my opinions, won't change them, and it won't change the opinions of a lot of others . However, I turn this to some other of the members wishing to reply. I will relinquish my time and abide by the wishes of the House Leader. HON. STERLING R. LYON, Q. C. (Minister of Mines and Natural Resources) (Fort Garry): Mr.

Chairman, I agree with the previous sp eaker who has just sat down that there is a responsi bility on the Opposition to bring before the House and the people of Manitoba ma t ters in which they feel there has been negligence in the handling of matters by government or by agencies of government. Nobody is going to dis pute that question with them at all.

There is also a responsi bility on the part of the Opposition to pay some heed to the facts of the si tu ation, and when the facts have been es tablished, as they have in this instance, in two se parate tribunals, then to have the courtesy, the grace, and the ordinary decency to admit that fact. It is not good enough for an Opposition to be like a broken-down record player that is stuck in a particular groove and to keep repeating and repeating and repeating a certain phrase or a certain charge or whatever, merely for the sa ke of hearing their voices.

Reiteration, cons tant repetition, doesn't make some thing true. Facts bear upon issues. What is at issue here is much la rger I think now than the original charges of Grand Rapids, the water haulage contract and Manitoba Hydro's handling of that contract. I repeat the Premier's words: what is at issue now and what is before the people of Manitoba is the credibility and the good faith of the chief critics of this matter. Their credibility and their good faith.

That is the issue . that is before the people of Manitoba today, and I want to deal with that question in the course of my few remarks this morning, because we can say what we want on either side of the House about believing this or not believing that, depending upon what selected portions of the Royal Commissi oner's Report we choose to select and quote from .

That issue has been se ttled, but the issue that remains unresolved and an issue that will probably have to be settled in the larger courtroom - the courtroom of public opinion - is that of the credibility of the people who made the charges in the first instance, and that is a very important issue because credi bility, credibility is the life-line, the heart-beat of the life of the Legislature or indeed the life of an individual legislator.

My honourable friends oppos ite have been very careful not to quote, except for the spea ker who just took his seat, from the Report and basically that's what is before us, the Report of the Royal Commissi oner who looked into this matter. Now they can repeat all they wish that the ques tion of profit has not been looked at and so on. They can sa y, as has the Member for St. George, that if the commission was not prepared to look into the question of profits, then there was no point in having the enquiry at all.

Is that just not another way of the Liberal Party sa ying, 11If the commission is not prepared to play according to our rules then the commissi on is no good. 11 or 11If you don't play the game the way we want it played, why then it •s no good. '' Well, that's not the way commissi ons are operated and that's not the way governments are operated, nor indeed is that the way that this Legisl ature is operated. There are certain common understood mea ns, certain common understood rules that must be follo wed, and I suggest with the greatest of deference that the Commiss ioner attempted to follow those.

I1m not going to sa y for a moment that that Commissi oner any more than any member of this House, particularly myse lf, is infallible. Of course he isn •t infalli ble and of course I'm not infallible. We •re all falli ble human beings . But I will sa y this, that he or any other commis sioner who could have been appointed from the Court, why do we appoint him? Because they are in a position of judicial res ponsibility, their whole life is hearing both sides of cases and then making judicial

interpretations and judicial findings upon these cases without fear or favour, and I don •t think anyone oppos ite could honestly suggest, Mr. Chairman, that this Commiss ioner or any other Commissi oner that has ever been appointed to look into one of these ma tiers in this province has ever done anything but that. And if they are sugges ting it, let them stand in their places and say so because I, for one, would like to hear it. The honourable member who jus t took his sea t, the Leader of the Opposition, yesterday

April 16, 1966 1857 (MR. LYON cont 'd. ) said that they were unwilling to get into this debate but they were stimulated by the Minister of Public Utilities. I don •t wonder at their unwillingness to get into the debate. I don •t wonder, after receiving this report a week ago, that perhaps there are a few on the other side who have had trouble sle eping at night, because this is the kind of report that would affect a person with conscience, and I•m presum ing that they have conscience. Mr.

Chairman, there were 42 se parate charges detailed by the Commissi oner who was appointed to look into this matter - 42 separ ate charges of negligence, lack of business sense and so on, which were attributed agains t Manitoba Hydro. He detailed these in the early part of his report. He made findings with respect to each of these charges throughout the body of this report, and in his index of the charges he indicates where those findings may be found. And, Mr. Chairman, he finds in each of those 42 charges, not all of which were levelled by the Leader of the Opposition or the Member for St.

George or the Member for Emerson; some he sa ys were in direction levelled by the press from editorial comments and so on, but by my count, which is only a rough count, some 36 of these charges emanated from the Liberal benches opposite, and in not one of these cases, Mr. Chairman, does he find a scintilla of evidence to support any one of those charges. Do you wonder then why we talk about credibility? In not one of these cases is a scintilla of evidence brought forward. Rather, we have the dram atic posturing taken by the Opposition.

First of all, in the committee in this House, when according to their standards of judg ment evidence with respect to profits was not heard, what did they do? They got up and they walked out of the committee. The committee carried on its business, heard the facts of the case from the Hydro witnesses under oath, and brought in a finding, which completely exoner ated Manitoba Hydro of any of the charges that were originally made in the Legislature by the Member for St. George. Now my honourable friends opposite, the Liberal Party, say well that was just the government majority operating.

Yes, it was a government majority on that committee, and there were members of the New Democratic Party on that committee, and of those two parties the majority said that Hydro should be exonerated and exonerated they were.

Notwithstanding this fact they continue their charges outsid e of the House and inside of the House, subtle, insinuating questions are asked on television and other news media by the Leader of the Opposition, - and these are not my words, these are the words of the Commis sioner - to the point where Manitoba Hydro then requests that a Judicial Inquiry be established to put to rest once and for all their innocence or their guilt with respect to these charges, and that inquiry was established and the report of that inquiry is before us and the report again com pletely exonerates Manitoba Hydro.

Thirty-six separ ate charges by the Leader of the Opposi tion and his minions . Now where does this leave us, Mr. Chairman? Where does this lea ve us with respect to the question of credibility? And this is the burning question before the people of Manitoba today. Still they stand up in this House and say, 11Well, we don •t care about the first inquiry; we don't care about the se cond inquiry; we •re still right' and everybody else is wrong. " You remember the old story about the mother watching the platoon of sold iers walking by and she said to her husband, "Look John, everybody is out of step but our David.

" Well, that 1s the position of the Liberal Party in Manitoba today. Everybody else is wrong except them. Well, Mr. Chairman, that comment, regrettably for the Liberal Party, just won•t was h, and the documentation of it is here before us in the Report of the Royal Commissi on. Let's take a look at a few of these comments that have been mad e about the question of profits. But first of all let •s look at the whole general question as to whether or not Hydro were charged only with the question of profit. That•s what we hear now. Our only concern, say the members opposite, is the question of profit.

That •s all we allege - no innuendo, nothing else at all, just the ques tion of profit. On Page 8 of the report, Mr. Chairman -I think we should refer to it and 1111 quote from it briefly: "The Commiss ioner pointed out what his terms of reference were and then he pointed out, in particular, paragraph (

b) of the terms, which said he was em powered to inquire into and report upon all matters which in the opinion of the Commissi oner are relevant to the subject referred to in sub-para (

a) hereof. " And then he goes on, and here I quote, "A combination of circumstances now to be related made it neces sary to use the very wide terms of reference given by para (b). Manitoba Hydro's principal justification for ar ranging the water haulage services was the target base set for the commiss ioning of the Grand Rapids Hydro Electric Plant, which date was based upon Manitoba Hydro's assessm ent and forecasts of Manitoba 1s ele ctricity requirements. Manitoba Hydro's critic challenged the validity of the timing and questioned the accuracy of Manitoba Hydro's estimate of the province's

185 8 April 16, 1966 (MR. LYON cont'd. ) .. ... power needs and available supply. The critics charged that Manitoba Hydro in response to political pressur e had commenced the project long before it was necess ary and without adequate planning. The chief critic ques tioned '•the whole concept of going into Grand Rapids, 11 and whether it was "properly investigated beforehand. 11 Because of alleged undue haste in prepar ation he was concerned with whether ''the dams are lea king " and rumours that "the dam is crumbling.

" And then, skipping a paragraph - 11At a pre-inquiry conference, counsel for the critics of Manitoba Hydro outlined to the Commissi oner the subject matter which his clients desired to inves tigate. It embraced the whole concept of the Grand Rapids project from its inception, through the execution, down to and including the delay in its commissi oning. 11 Not just the ques tion of profits but the whole concept of Grand Rapids was put at issue by these people making their charges which snow-balled month by month as they carried along, flying the kite, as the Premier mentioned yeste rday.

Let's turn quickly to the question of profit. I'll make it as fast as I can, because I merely want to put on the record for the sa ke of posterity some of the reasoning that was made by the Commissi oner and certainly with which I think any reasona ble person in the Province of Manitoba would agree, having been seized of the facts of the situation in such a thorough way and in such depth as was he. What about the profits of the contract? I invite honourable members of the committee to turn to Page 198 of the Commissi on's report. 11The profit of the water haulage contract.

A prime charge against Manitoba Hydro " - and here I am quoting 1 •concerned the profits said by the critics to have been made by the water haulage contractor. This was put at various su ms, the lowest being $1 million and the highest being related to a charge that •the government•, meaning Manitoba Hydro, have thrown away nearly $2 mill ion of our own taxpayers' money. (Mr. Elm an Guttormson, St. George, Hansard, March 6, 1963, Page 43). 11 This subject was not outside the Commissi on's terms of reference.

A further quote from the record of the Commissi on: ''In the opinion of the Commiss ion it would be improper to require any contractor to show or even to discuss his profit or loss unless a proper founda tion were laid or due cause shown. 11 On March 19th at the opening of the fifth day of the hear ing, the Commissi on ruled as follows on the submission of counsel for the critics that it should inquire into the profit made by the water-haulage contractor, and here follows a long quote cvntaining the judgment of the Commissi oner with respect to this issue, and I do not intend to quote all of that, but I will from Page 200 quote this paragraph which contains the nub of it: 11 In my opinion it would be completely improper, 11 sa y the commissi oner, 11for a govern ment or a Crown corporation to require contractors against whom no allegation of impropriety was made to produce their books . 11 Further on Page 201, "Nothing could be so well suited. 1 1 - now listen to these words , Mr.

Chairman, and I hope the people of Manitoba listen to them when they're evaluating these loose charges that are made by the Liberal Party of this province. Listen to what the Commissi oner sa ys about them: "If we were to fall into line and play the game according to their rather distorted rules, nothing" - and here 's the quote: "nothing could be so well suited to damage the trading pos ition of this province and its Crown corpora tions, and were I to concur with the submissi on of counsel for the Liberal Party, I would be doing irreparable harm to Manitoba and its Crown corporations.

" But the Liberals stand up in this Hous e, Mr. Chairman, and sa y, well, notwithstanding the fact that you •re going to do irreparable harm to Manitoba and its Crown corporations, go ahead and look into the profit. What an example of responsi bility in an Opposition? It doesn't matter about the interests of Manitoba. It doesn •t matter about the interests of its Crown corporations in doing business for the people of Manitoba. Play the game our way, and if the public interest suffers, what's the difference? Th_at•s what the Liberal Party is sa ying to us today.

Carrying on with his judgment: 11fu esse nce the submissi on 11 - this is Page 203. 11In es sence the submission of counsel for the Liberal Party was that Hydro, before awarding the contract, should have made a reas onable, close es timate of the profit which would accrue to the low bidder at the end of the contract four years hence. In my opinion, this was an impos sibility and by no amount of study and research could anyone have predicted the results.

This mus t necess arily be the case with almost all contracts ; otherwise there would be no prope r reason for the wide variations which are commonplace in all bidding, or for the wide variations so often experienced between the architects' or engineers' estimates of cost and the bids actually received. 11 And on and on the judgment goes, replete with logic, with fact -t wo

April 16 , 1966 185 9 (MR. LYON cont 'd.) . . . . . elements which have been sa dly missi ng, I1m afraid, from the comments made by the Libera l Party throughout this whole adventure that they have embarked upon. Mr. Chairman, what did the Libera l Party do when the inquiry was under way, after the judgment was delivered? They withdrew. They withdrew from the inquiry. Why? Why? After the statement made by the Commissi oner with respect to profit they withdrew; they withdrew from the inquiry. Ha ve any of them stood in their place today and told us why?

No, because the game wasn 't bei ng played according to their distorted idea of the rules, I supp os e. We've been looking at the facts, Mr. Chairman, for four years. We kno w what the facts are. A Committee of this House looked at the facts and know s what the facts are. A Co mmiss ioner looked at the facts and· knows what the facts are. Ev erybody in Manitoba, Mr. Chairman, knows what the facts are except the 13 members of the Libera l Party in this Hous e. The bulk of the su pporters of the Libera l Party in Manitob a know what the facts are and my honourable friend know s this as well as I do.

He kn ows this as well as I do. Well, Mr. Chairman, the Commissi oner made it quite clear that he would look into profits if the proper foundation had been laid by the Libera l Party or its counsel . But they didn't lay the foundation. No, it's much easier to walk out; walk away from the problem; make the allegations; cause these innuendoes to be circulated throughout the province. It doesn •t matter what harm it does to individual reputations of people who can •t answ er for themselves . And then when the test comes , walk away from it. That's the philosophy of the Libera l Party in their calls for inquiries .

The Honour ab le Member for St. George kn ows what I mean, too, when I say that. He made some statements once with resp ect to a man from Bra ndon. He was aske d to make the statements outs ide of the House, and what did he do? He never came out. He never came out. MR. GUTTORMSON: Mr. Chairman, on a point of privilege, the man has raised a point and I am obliged to answer on this point, in an allegation about what I had sa id in re gard to a man in Bra ndon. All right, why did subs equently this man settle out of Court and pay over a $100, 000 . Why? MR. LYON: Mr .

Chairman, I'm not going to waste any time on my honourable friend, beca use he was asked to make a statement outs ide of the House where he didn't have parlia mentary privilege and he refused to make it, and that fact remains . We can fin ish anything that my honourable· friends wish to start, any time at all. We know, we know the manner in which our honourable friends opposite approach questions of inquiry. What ab out the evidence of Mr. Buie?

He' s hardly mentioned by name by the Leader of the Opposition, and yet we know that the Leader of the Op pos ition places a great deal of faith in what this man says , because in the Winnipeg Tribu ne, May 19, 196 4, and this is a quote from the Trib une. I can •t vouch for the validity of it any more than anybody else can, but this is what he is quoted as saying; "Li bera l Leader Gil Molgat sa id today he will demand a judicial inqu iry into the water haulage contract between Hydro and Drake-Pears on Construc tion to supply the Grand Rapids Power Project. Mr.

Molgat sa id statements made on television Fr iday •by a man who shoul d know' vindicated the fact his party had tried to bri ng out during the 1963 Sessi on of the Legisla ture. 11 And here is the Commiss ioner's footnote: 11The Buie charges were a sensa tion. Their import was heightened by the press reports, whether accur ate or not, that Mr. Molgat had endorsed Mr. Buie as 'a man who shoul d know 1 and of bei ng a credible witness whom the Opposi tion had sough t to call. " · Well what did they do with this credib le witness when they had the opportunity to call him before the inquiry ?

Here is a documentation, Mr. Chairman, of action. Here is a docu mentation of action which I leave to the publi c of Manitoba to determine as to whether or not this is res ponsible Opposi tion. At Page 212, the Commiss ioner describes Mr. Buie 's partici pation before the Commiss ion. He describes his back ground. He says on Page 213, 11 He was then ill, suf fering from alcoholism. On one occasi on during the period of his illness he at tempted to take his own life. Some time later he was hospi talized - Winnipeg General Hos pital, Februa ry 17 to March 25, 19 64.

After release from hosp ital he was still very much disturbe d and went back to drink. He made the statements which appeared in the news papers and on tele vis ion while he was under the influence of alcohol. 11 My honour abl e friend from St. George tries to suggest this is an attack on the CBC. How ri diculous! What happened to this witness when he was before the Committee? Page 21 8 -- I hope these words remain engraved on the minds of the memb ers of the Libera l Party opposite, beca use it's a great commentary on the tactics of this Party, on their adherence to res ponsible

186 0 April 16 , 19 66 (MR. LYON cont 'd.) .. .. . opposition in this province. Page 218: "With reference to the remark 'I was prevented from making a statement at the inquiry, 'h e explained that he meant the Legislative Committee decided not to hear from him and he was not called. 1' And these are the Commissioner's words: "The Commission is satisfied that counsel for the critics and his clients knew what Mr. Buie would say if called; that he would not su pport, but would repudiate his charges. Great harm had been done by Mr.

Buie's initial television statements of the manner in which they had been treated in the news media. Those who had brought Mr. Buie to Winni peg and were in close contact with him for seve ral days now knew that what he had said was without foundation and that he was anxious to retract and make amends. It was clearly their duty" -- I am continuin g . the quote, "to disclos e this to the Commiss ion. Instead they withdrew. Only by accident was Mr. Buie 's retraction heard. When Mr.

Bui e 's public retraction took place, none of those who had propagated the stories he had told them while under the influence of alcohol came forward to explain their con duct, nor have any of them apologized or expresse d regret to those in whos e defamation they took part. " MR. MO LGAT: Mr. Chairman, could I ask the Honoura ble Minis ter a question? MR. LYON: Yes. MR. MO LGAT: Could he tell me what grow1ds there are for the statement of the Com missioner that we k:1ew? Could he tell me what grounds there are for that statement? MH. LYO N: Mr. Chairman, the Commi;;:.lioner had Mr·. Buie as a witness.

He did not have the pleas'lre of having my hon:mrable friend as a witness beca use he. had withdrawn from the inquiry. If my hono,lrabl e frlend wished to ques tion ·;he Commiss ioner ab.:mt h'.s findings, why didn't he stay at the in quiry and give evidence, as he was -:Jntitled to? MH. MOLGAT: ... ..... what gr ound that statement is made? M!l. LYOi�: On Lb.e g'"J<m::la ...••.. MH . MOLGAT: ... ... of opinion. MH. LYON: O::t the grounds of evidence that appeared before MH. MOLGAT: There are no facts at all backing that stateme�'lt. MFt.

LYON: Well if my honourable friend now wis hes to re-open the Commission, fine . (Jn·;erjection) -- I'm j•lst in the course of summ:ng up. MH. PAULLE Y: I thought we were going to have fair play in this remaining time of the Comml;;tee and I ask whether or not this is going to be adhered to. MR. LYON: Mr. Chairman, I have nothing more to say on this matter beca use I. think the Commission Report speaks for itself.

It's a sad com;.1on tary on what is allegedly a re sponaible O,:Jposition in Manitoba, a sad comme�1':ary on these critics who walk out of Commit tees, walk out of inquiries, and who are left with this document to record their participation in thls rather s·:n·djj affair for the rest of all time. Mr. Chairman, as I've said before , the great court of pub lic opinion will have the opportunity probably before too many months or years go by to record their opinion with respect t·) the credibility a�d good faith of these critics , and I for one have no doubt what that opinion is going to be. MH. PAULLE Y: Mr.

Chairman, as one who is interested in -.::he future of Manitoba, want to express to this Committee how much I regret that for over the 3t hours that we have been consi dering the es tima�es ·:Jf the DE;partment of Public Utilities, all that the Committee has donB be twe:�TJ. -�he Conservative and Liberal Parties have hollered from one side of the House to the other, "You did. W'; did not. We �Hd. You did," We have rehashed, time after time after time, whether or not an unco nsc ionable profit was made as a result of a contract for water haulage at G:cand Rapids.

A couple of years ago we sat in Committee for two or three days hearing evidence of one nature or the other in regard of this matter. As we are well aware the sub ject matter was referred to Mr. Jus tice Tritschler, whom I feel that the members of this House feel is qualified in many respects to make judgments, to hear evidences, and to come to conclusions. It was that same learned gentleman that made the report on the question of the Br andon strikers, and I never heard his report torn apart in that regard as it is in this regard. The whole ba sis of the argument here, Mr.

Chairman, is whether or not a profit was made. This is in herent in our free enterprise sy stem. Profit ...... . is th e basis. And what is happening here? The two presu med advocates of the free enterpris-e sys tem are trying to tear each other apart as to whether it was justified or not. I say, Mr. Chairman, a plague on bo th of their hous es. I say , Mr. Chairman, that we in this Comm�ttee have far m::.>re im portant things to consider than an eve�·� that took place three or four years ago, It is done. What good for Manitob a, anj in particu:ar, what good for M:o!nitoba Hydro, our pub licly-owned

April 16, 1966 186 1 (MH. PA ULLE Y t:ont' d. ) ..... encerp rise, to continue raking this matter over the coa ls? Sure, it 's sensation:.tlism foL· the press and they go bole it up. I wonder whether or n·Jt the press ml ght ta',ce under consi deration that wh�le this has been going on now in this Hous-e, n:>t one wor d has been said of the future of Manitoba in re gard to future developments of Hydro. This yea�, Mr .

Chairman, we requested, in oppoai tion, that the ma nagement of the Ma;1ltoba Hyjro alJpea� before our Comm .·xtee on Public Utilities to consider whether they can justify expansion of their energy-producing fa.-::llities to the ma·.;nitude of a billion dolla rs . A billion doll ars, Mr . Chairman, in the Nelson R:;.ver Derabpment. And what has this Com:':!littee been doing? Talking of a mi llion jollars that mi ght have been a profit on a Nctter haulag-e contract, and I say, M:: . Chairman, the people of Manitoba 1re d<Js:J�ving of something better.

During the Com: .1lttee hearin gs , becaus<l of our gr eat interest in the future of Manitoba, we asked the governmen t to supply - and I give them credit; they did - full transcript services so that we might be enabled to cross -examine the officials of Hydro as to the advisabllity or otherwise of proceedi ng with the Nelson River Developm ent . I'm not sure vffha'ld, Mr.

Chair man, of the total number of hours that we spent in the Public Utility Comm ittee wi th the higheat placed brass I think possi bly that there is in the province, collec tively, for the n'lmbers that we have - answering our questions �espec ting the future, not the past, of Manitoba. I though:• that this was our job to do that. And I wan� to say, Mr .

Chairman, that as far as I am pers onally concerned, when ·che DEnal opmem was first announced by the First Mi aister in the House and I stood in my place anj I said, "My friend, in an undertaking of this magni tude, I'm ll::Jl prepared to buy a pig in a poke, that I want the ma tter thoroughly in vestigated before we proceed ." In some quarters I was som ewhat chastized for my statem ent . However, Mr.

Chairm a'l, as I say, all of the investigations went on to endeavour to maice sure that we weren't buying a pig in the poke, and one of the very im portant aspects of power development that was cons idered by the co mmit tee was that of the future developmen t in the use of atom �c power in regar d to electrical energy. I have taken ·�he stand, and I must confe ss when I say that I have taken the stand, I must conf ess that I don't hold my knowledge comparable to the officials of Hydr o; but I say, Mr.

Chairma n, we have n·:>t had sufficient investigation lnto the future of the developm ent of power by atomic ene rgy as yet . I have before me at the present time, Mr . Chairm an, a document titled "Electric Power Industry in Japan 1965" dealing with the matter of the future of electrical energy production in that coun�ry; anj in this report it is pointed out that there are vast changes taking place in the developmen t of electrical energy .

To quote, 110wing to rece nt attainmen t of high grade technology in Japan there have been com pleted in succes sion a number of large capac ity highly efficient therm o c�lectric power plan·�s in Japan . " They mai ntain that even in the Thermo power energies producing powr�r that costs are going down rapidly. They claim that thermo power generation will prove to be a matter of great significance, for thermo power plants shall have to carry the base load of a power system in place ·:>f Hydro power plan·;s more in creasi ngly from now on. And I mi ght say, Mr .

Chairm an, in connection with that statement, Japan still has a consjje rabi� 1mo u�1t of undeveloped Hydro sites that they could utilize for the purpose of developi ng Hydro energy - or electrical energy . In this report they say that judging from ·•he general trend of Japan's recent energy demands it is clear that fuel as an energy resource in solid form s·�ch as <Joal will increas ingly be replaced by those in liquid form such as petroleum , as the coal.

At the same ':ime, impo rtation of fuel materials of energy res o'�rce will show a conspi cuous increase in the amo.mt - and herein they are refer ring to atomic 11Se of power, of generation for power . I say too, Mr . Chairman, that in Japan at the present time the emphasis is on the de velopment of atomic energy as rapidly as possible. It is stated that amo: 1g the trends in elec trical powe�· genera';ion ln Japan is that more em phasis i.s being placed on thermc generation than on Hydro genera�ion today. And they're doing this, M::.

Chairman, because of a aim�lar fact that they have there as here, that is a necessi ty for long lines of tran smis sion between the source of the energy and the loca tion where it may boil used to a greater degr ee. They ma imain, Mr . Chairman, that by the year 1977 in their opinion the development of atom ic energ y will be com parable to that of the cost of Hydro energy at com parable rates . So I say, Mr.

Chairman, if all here we have been discussi ng the past, when ::�ur emphasis should have been on ·�he future, I regret very very much that we haven't had an opportunity to disc :1ss in this commi ttee am o:�.g all of the members of the House the future of Manitoba . It is well, it is well, Mr . Chairman, I think from time to time for the members of this House to let

186 2 April 16, 1966 (MR PAUL LF.Y con�' d. ) ..... their hair down, to stand -�p on the pro-.rerb1al so:q b.Jx an::! say, "You did, that you didn 1t, " but I w:o�nt to say how dee ply I regret, Mr . Cha\rma�J, that the - deeply regret the trend, the trenj of -politicia ns at least of tw."J parties :n this Hous e, mo 1·e to the political self g.ratifying nature, if inieed there can be any self satisfying results of the debates that have been taking place in l'es pect of power, in res pect of developm ent. I recognize the power of verbiage, Mr .

Chairman, but I think the fu ture of Manitoba will depend mo re on power that can he developed from 01 r Hydro energy producing resources, from oar coal, from o� r mines, than the pow<:r of the verbiage that we 've had here during this comm�ttee, and l for one, whether my statem ents are spectacular, whether they will receive any publicity or not, I don 1t give a continen tal, but I do say to the people of M<..'l'.toba , your repres entatives here, both Liberal and Conservative, for all of the discussi ons that they took

part in d.1ring the cons ideration of the estimates of the D.'lpartment of Publ ic Utilities in -�he year 196 6 was devoted entirely to a rehash of things gone by and neither one apparently exhibit any interest in the futu re of M<..n�toba and future generations yet un born. MH. CHAIRMAN : . • . . . . . . (a) - - passed, (b) -- passed MH . STEINKOPF : Mr. Chairman ..... . M.H . CHAIRVIA N: We have thtJ Capital Ea timates to do before 11 o' clock as well as Utilities . MR. STEI NK•')PF: That doesn 1t give me very m.1ch dme, does it? M.l:t . CHA�RM.-'.. N: I suggest that yo•1 .. . . . . MH.

ST EJNK OPF : I think I should get an opprtun�ty to :m 3W} :' ::nme .::.f �he que stions that were put to me. It seem s like an awfully iong time ago, but I won 1t take very long then. I have prepared them, and thes-e have n )thing to

d) with the su bject of the G::and Rapids In quiry, b\lt the Honourable Member for Lakeside was interested in knowing abou t- what the policy of the Hydro was tn connection w:th powJr for lVI':•nse Lake .

I want to tell him ·•hat the Hydro have a policy now for all resort areas in which power is ma de available on the basis that a suffi cient nmnbe:.. · of custom.:o.rs can be signed up and that the customers will be respon- sible for their own clearing ...... aa much indicated that the telephone policy was wrong by one of the early questioners tnsofar as the rates that were charged for country as ')ppos'3d to the urban �ustomel ·s.

A full report of that - I have it availab:e -b ecause of time, I' ll make it available to him personally, b:1t this story is not a new one and the statistics are there to back •1p the reasons for the variation ln the costs .

The question of direct distance dialing, practically all of the ca�ls now that can be m&de by DDT are bein,s made in the provin::: e, som ething like 95 percent of all the dia lable traffic is being handled by direct distance :iialing an::! there have been new stations set up during the past few mon ths, and it is the i.nten;;ion of the telepho�'les �-O han all of the a::-ea:> in the province connecte d to the direct dialing system just as quickly as possib le. There was some questions r'olgarding advertising of the telephone system .

The telephone system has an ad vertising b.1dg0t of less than one percent of its total volu me. Thls advertising taJ,:es imo :1-ccount - or this figure does - everyth�g from the promotion of yellow ;Jag·es i.n the books to the trucks to the participation in fares to radio, televis ion and newspa,Jers advertising. I can see that there 1s not too m :-cb. interest in what my remarks are so I th�nk I'll let the co;>m mi ttee get on with the last few m· ;n;ttes 'lf lts W·}J:k. MH. CHAIRM AN: (a) -- passed, (b) - - pa.ssed, Resolu tion No. 96 passed. MH.

MO.GGAT : ...... on the contrary, as far as -,w�•re concerntld there 's a good deal of interest in what the Minister is saying. As far as we 're concerned, we have n::> objections at aU to having an extension of the time anj we •re quite prepared to give leave and have full discussi on . MH. CIIAIRr.L<\��: (Res ::>lutions No. 96, 97, 98 and 99 were read and pa.;;sed) Capital Es timates

Schedule 11A" -- MH. MO L.GAT: Mr. Chairman, I wonder if we could get under Capital Es tima tes the carryovers in ea-:::h one of the categor ies that are shown. ThesB are normally sup plied to us in each year so that we can see what the total am ount available is for the .JO�trse ·:Jf the year. MH. EVANS: Wouli my 'io 1ourable friend be agreeable if these figures were supplied to each party or indeed to eaoch member.

I'm s•)rry that I haven't the figures here at the mo me nt. -- (Interjection) -- I was inquiring as to whether my honourable friend w·JuU be satisfied to have these fig-J.res compile d and distributed. I know it is customary to provide them ac1d I haven 't them here at the m�Jment an::! the Provincial Treasurer isn •t here.

April 16, 19613 186 3 Mlt. MO L GAT : I have n::> objections, Mr. Chairman, as long as we get the figures . I think that the importan·� thmg for the com:r.n \·:tee to know is in addition to what ha.3 been a.3ked this year wha: is carried over so that the comm;.t·�ee know.3 -:!l.ea:-ly what the total am.:;un·� avail able is in unexpended capital in view :)f the fact tha'; it doesn 't laps<� ::J.t. the en:.! .Jf the year. MH. CHAIRMAN:

Schedule A passed. Committee rise . MR. MO :;...GAT: Mr . Chairman, may I ask one question ;.·egarding this. This is all under

Schedule A this year. Is there a change i.n the procedures because in the pa;;t, for example, the University of Manitoba wa::> under

Schedule C. What is the difference between - is it being used in a different way, or advan ced to the University in a different way than in the past? MH. EV ANS: Would my honourable frien1 be good en:mgh to repea t the question. The Minister of Education may be abi.e to help us . MH. MO:.C.,GAT, T;1e poini is th�s. Mr. Chai.rman. In the pa.>t we had a number of schedules, A, B, C, anj then sep arate appropriations as well, and I was just wondering this year the University which is normaJ.ly under

Schedule C, it •s changed and broaght into

Schedule "A 11• Does this indicate any differen·Je in the way the money is advanced, any difference in the way of the han�lli ng ,)f the affair, the resp onsibllity of the university - why has it been shifted? HON . GEOR•J:E JOHNSON (ML1ister of Education) (Gimli): Mr. Chairman, I'm not just sure why the shift occurred other than that I th:nk we completed that original building program .

These are lOO percent mon�es from the governmeili :owa:d the construction of capital works at the un�versity this year and I think it must have been the Provin·Jial Treasu rer 's choice to put it in here in this way under Capital . These are to carry out the building program o:.' the university in the current yea:r. Now I don't know any other reason really for H. MR.. 11-f.) LGX.f; •••. .••• as long as we get it the same time as we get the answer from the Provincial Treasurer with regard to the rest. MH. EVANS: MH. CHERNL"-CK: I didn •t hear what the Leader said, but I wanted .. ... . MU.

EV ANS: I sa id that I will undertake to see that some statemem - I'm no� aware what it's going to be -w ill be ma-Je on :hat subject. MH. CH.i!:RNIACK: Mr. Cha:'rman, pa::-don my i:lexperience, are we dea!ing with

Schedule A. to the Ma::1ltoba Loan Act. MH. CHAIRMAN: Yes . MH. CHER�'i!IACK: Well, I wanted to get some clarification from t:!J.e Minister on the $40 milli on to The Ma1itoba De1r�lopment Fund. Is this just being poured into the Fund for all purposes of the Fund or is there any special des ignation for it or any conditions attaching to it or is lt to be used in any different way from the way that past funds of the Development Fund have been used ; and could the Minister also indicate theamo:.mt that the Fund n::>w has to work with before this 50 million. MR.

EVANS: I th.'nk if my honourable friend would be willing to, I1ll be glad to answer those questions c)n my estimates when we come to the Mamtoba Devalopm ent.Fund . MR. CHAIRMA:-.1: 'Schedule 11A11 -- passed. Industry and Commerce, Resol ution ND. 45 . . . . . • contin 'led on ::text page

18 64 April 16 , 1966 MR. EV ANS: I wou Id like to do my part to contribute to the economy of time with regard to thebe debates. I appreciate very much the consideration that the House has given to allow my estimates some additional time agreed upon as four hours. I think the matters to be raised are worthy of that considera tion and I apprecia te the fact that we've had this co-operation.

Short as the time is, I will not allow the occ asion to go by without paying a tribute to my st<.•ff, the best industrial development staff in Canada -- and I make that statement subject to no argument -- as to their professional skill which is so clearly demonstrated, and the hard. and devoted work that all of them put into the service of the people of Manitoba - and by hard and devoted work I don't mean just during office hours, because this staff works well beyond office hours, works on their weekends and in doing a good many arduous tasks out in the field and up in the north.

I think the people of Manitoba should know the quality of their civil serva nts and this is not confined to my department because during the negotiation of the integrated forest industry in the north, we have had the closest associa tion with the members of the civil service from other departments, notably the Department of Mines and Natural Resources, and their work has been of equal devotion and of equal skill; not to mention other respects in which we are working with the Departments of Educ ation and Labour, particularly in the inplant training field and in other ways.

So I have had a good deal of experience now with respect to the civil service having at one time been the Chairman of the Civil Service Commission and able in that way to come to know the men and women involved and their work, and I rejoice in this opportunity to be able to pay tribute to them. I pay tribute also to the brilliant leadership in my own department by Mr . Rex Gross , whose knowledge and energetic pursuit of the programs under his charge I think are an example to all in public service, whether in the elected side or not.

So I'm sure the committee will recognize that I would want to take a minute or two even of the short time to mention an item as important as that. Normally in presenting my estimates I review the activities of the department in the past year and then go on to mention the programs that are being proposed and the extension of · programs for the coming year. In order to help conserve time, I have had compiled a review of activities during 1965 - and I'm going to ask the pages if they would now dis tribute these so that each member can have a copy and that will enable me to abbreviate my remarks in this field.

I would invite members when they receive their copies to note that really the object of the Department of Industry and Commerce -- the activities of the Department of Industry and Commerce are really ehanneled toward the creation of jobs for Manitoba people to work at.

We do this by means of encouraging the expansion of existing plants for the cre ation of jobs , to attract new factories to Manitoba with the object of increas ing work opportunities for our people; to promote the tourist industry with the same object in view; and to help local communities out side of Greater Winnipeg partic ularly to organize themselves for the kind of industrial develop- ment which wi ll produce more jobs for their people. � In Manitoba we are completing, have now completed a good year.

Manufacturing produc tion for the first time in Manitoba exceeded the sum of $1 billion and we are achieving the job creation targets that were set for us by COMEF. COME F se t a target before Manitoba to create in secondary indus try or in the manufacturing industry 1, 770 new jobs per year. In 1963 which was the first year of operation after the COMEF report was received, we achieved 1, 800 jobs, or just above the COMEF target; in 1964, 2, 023 new jobs and the 1965 figure for new jobs was 2, 293 . Total employment in manufacturing reached as estimated 48, 000 in 1965 .

Turning to the last year, particularly, I would direct members attention to the third paragraph on Page 3, where it will be noted that 54 new manufacturing establishments were announced in 1965 involving a total capital commitment of $32 million. Of this total, 38 were in Greater Winnipeg and the balance were located in rural Manitoba.

Even more significant - and I would ask members to note this - that in my opinion it 's even more signific ant that 304 existing manufacturers expanded their plants and that the total investment of capital in that regard was $30 .9 million and of this $7 million was for entirely new buildings or equipment and $23. 9 mil lion was for additions to present plant or equipment. Further details follow that my honourable friends are invited to re ad for themselves.

On Page 5, I draw attention to the fact that the COME F report ca lled for the establish ment of certain basic industries which when created will of themselves c.ause the cre ation of further industries themselves. It is a chain reaction that if certain basic industries start certain others will automatically follow. And of these three, a major chemical fertilizer

April 16 , 1966 186 5 (MR. EV ANS cont'd) ... complex costi ng $30 milli on was announced for Brandon; The Nelson Ri ver Development was announced - and while of course this is not a project in my department, it was one that was contemplated by the COME F report; and a third, a $100 milli on newsprint, kraft, pulp and lumber development was announced for northern Manitoba. I draw attention particularly to the bottom of Page 5, because this is a new announcement. The Brandon plant is expected to become the centre of a wide variety of chemic al-based indus tries .

That development has already been expanded from the time it was first announced. The anhydrous ammonia plant originally proposed was for 300 tons per da y production; this has been increased to 345 tons per day. The capacity of the nitric acid plant has been increased from 200 to 250 tons per day. The ammonium nitr ate plant has been increased 50 tons per da y to 300 tons per day capacity. The ammonium phosphate plant has been increased in size from 225, 000 tons per year capacity to a plant capable of producing 275, 000 tons per year.

A large nitrogen solutions plant capable of producing 450 tons during a 16 -hour da y has been added, and in addi tion we are informed a dry urea prilling plant capable of producing 200 tons of dry urea per day plus the necessary storage and bagging facilities will also be included in the final complex. That is a part of the natural multiplex, the self-creating nature of these basic industries, and those expansions are very gratifying indeed.

With regard to the Nelson River power development, it should be noted that the Aluminum Company of Canada's decis ion to build a $3 million rod mill and electrical conductor cable mill in Transcona has been made. They have made that announcement and are going on and there will be other developments of a simila r nature that I'm not in a position to announce now but I have every expectation that others of the same general nature will follow.

In the same way, The Pas forest industry could expand and I have every e'xpectation that over the ye ars it will expand and that once it is established at The Pas there can be and are ex pected to be further developments in the fields of paper converting, container production, moulded paper products, fine papers and writing papers, chemical supply industrie s, logging and sawmi ll equipment and supplies, and secondary wood products and so on. The report goes on to give details for my honourable friends to study of the departmental activities in 1965. Details are there concerni ng the tourist business.

On Page 8 we come to regional development activities. On Page 9, some details of applied research; on Page 10, in dustrial development, which really means - and I draw attention to this fact that a good deal of the industrial promotion that has taken place in this province has been as a result of face to face salesmanship on the part of the staff and to some very limited extent on calls that I have person ally made myself. Some details of that activity are given on Page 10 and 11.

We come, on the bottom of Page 11 and Page 12 , to the inplant training scheme and the details of what it has accomplished in the past year. Page 13, industrial design; page 14 , mar keting and industrial research. On Page 16 , I invite particular attention to the fact that our drive to secure export markets for goods manufactured in Manitoba is achieving quite a remar kable success.

I think if anybody knew anything for sure a number of years ago with respect to Manitoba it was that we're too far from markets, that freight rates were too high, that tariff barriers were too great, and besides the Americans were too smart for us and their mass pro duction made it impossible for us to produce and compete in common markets.

All these things just turn out to be not true, and we are achieving quite remarkable success in some of the ex port endeavours that have been made, and my honourable friends will see some of the details given here; lists of farms that are now partic ipating in the export markets from Manitoba, and on Page 19 some quite remarkable examples chosen at random of the kinds of things that are now being exported from Manitoba that were not being exported at the time that this campaign began. There are details on Page 20 of the exhibits that Manlt;oba has taken

part in and the Department has helped to organize, and the activities of bringing in-coming buyers to Manitoba to see the goods tihat are made and to place orders. Similarly with sales missio ns . An activity has been undertaken in helping Manitoba manufacturing and export managers to become more acquainted with some of the requirements for exporting goods from the province. On Page 23, the activities in connection with transportation, and some other matters are refer red to.

So with that bare mention of the activities which have taken place in our department during the year 1965, I would like to turn now to the new programs and the new policies which are going to be pursued during the coming year, and for which the estimates ask the required financing. In addition to regular activities the department intends to carry out some special

18 66 April 16 , 19 66 (MR. EV ANS cont'd) .. . plans and programs for the coming year. These are out lined in these remarks and represent a strengthtening of the provinces industrial program. Much of it takes the form of expanding and extending the present programs because they are being successful, and one of the best principles is to re-enforce success, or to continue to press forward in the fields where you are achieving success. The inplant training program that was started in 19 64 , has been successful in the soft goods industry.

This prog ram, last year was expanded to cover other manufacturing skills including structural steel draughting, mechanized logging operations, metal and wood fabrica tion, electronic assemblers, graphic arts and upholstering. So that program is no longer con fined to the soft goods industry. It is intended that the inplant training program be further ex panded this year and applied to other occupations and to certain approved service industries which have not been in that category before. To step up the pace of the on-the-jo b training industry itself must take some active steps to enlist trainees.

The hard truth is that Manitoba, in common with other industrial areas, is heading into a manpower shortage. Industry is complaining now about a shortage of workers , especially for jobs requiring skills. Business, or businesses that don't make use of in-plant training programs in order to develop their manpower resources are plainly going to be the ones that miss some of the growth opportunities for the future.

The Technical Assi stance Program which commenced last year, and made available grants toward the cost of retaining consu lting services for advice on modern management tech niques in production, marketing, design and product development, is an important program to assist productivity in Mani toba firms, and it is intended that this program be continued in the present year.

Because markets and economic research is the corners tone of our Industrial Development Program it is proposed that this program be expanded so that we may make avail able to business every service which properly falls within the scope of government responsibi lity. The Design Deve lopment Program has been very well received by business community, and has revitalized and has had good practical results throug h its Product Review Board, De sign Seminars, and other activities. It's proposed to step up this program.

With respect to air transportation, air transports has a catalytic effect upon other forms of commerce. The accomplishment of Winnipeg, or the establishment of Winnipeg as an air freight cen tre will be an important factor in the economic and industrial development of Manito ba. One of the keys to the future growth of air freight traffic in Winnipeg will be a cargo termi nal to meet the requirements of several airlines.

Such a cargo terminal should facilitate the loading and unloading of cargo between airline s, and between air and ground carriers, and have common Customs clearance facilities and matters of that kind.

I think it's important that any cargo centre provide free and easy access to all air carriers that may wish to use it; and it may surprise some to know as it did surprise me to find that we have something in the neighbour hood of 12 regional air carriers in Manitoba, and that if we are going to have the proper use of air transport, and the proper benefit from it in Manitob a we must make it easy for regional carriers to exchange loads with the trans-cont inental carriers -- the two great ones Air Canada and the Canadian Pacific Airlines. So there must be ease to exchange loads between airlines.

But equally I feel that there must be access to this cargo terminal for highway transportation and rail transportation as well, so that in any load we can make the best possible and the most economic possible, combination of carriers to get it to it's destination. Present air cargo facilities are totally inadequate for the present traffic volumes and are poorly situated in the Winnipeg Airport Terminal which is designed for passenger handling, toge ther with some mail and small express parcels. Ca rgo traffic at the Winnipeg Airport is growing at a rate higher than the national and North-American rates.

Excluding Dew Line traffic of about 2 1/ 2 million pounds .annually , air cargo traffic in Winnipeg in 19 65 is estima ted to have exceeded eight million pounds, double the 19 64 total. Air Canada's Winnipeg air cargo is now moving at 1 1/2 million pounds a month. This indicates not only the necessi ty for a greatly expanded air cargo terminal but also underlines Manitoba's conviction that these faci lities must make provision for expansion in keeping with traffic growth. Winnipeg is now served by two trans-co ntinental airlines. One trans-border line, and 12 regional carriers, including Trans Air.

The needs of all carriers must be satisfied in any new cargo terminal. Including Dew Line cons ignments the regional carriers move about 40 percent of the air freight traffic pass ing through Winnipeg. The Manitoba Government is convinced that an air freight centre that serves the needs

April 16, 1966 (JIR. EVANS cont'd) ... of all carriers and shippers must have the following characteristics: It must be accessible to all types of transportation, surface as well as air. It must have colllmton �] clearance fac111t1es. That is to say, customs and health inspection and other facUlties of that kind. It must have handling faciUties to facilitate the interchange of cargo between air carriers and air and surface carriers. Air Canada's plan for a separate terminal for its own use does: not meet these requirements.

Exclusion of other carriers from any particular terminal would result in time-consuming interchange between carriers; duplication of clearance facilities; and duplication of handling equipment. It's clear therefore that the proposed cargo terminal at Winnipeg must be planned to fill the needs of all cargo carriers and of shippers; and of course we must keep firmly in mind that public interest demands that shippers have the most economi- cal and the most convenient means of shipping goods, whether it be by air or by surface.

Accordingly, the Minister of Transport in Ottawa has been informed that the Province of Manitoba is prepared to assume a most active role in developing an air cargo complex at the Winnipeg Airport. Specifically, we are prepared to provide financing for the faciUty if neces' sary; to take an active

part in developing the necessary Long-range plans for this project; and to ensure that suitable facilities will be provided as required. We are prepared to carry out this role in association with the Federal Government Air Canada. and all other private interests which might ut1Uze the facility. We recognize that individual carriers have individual needs in accommodation.We are therefore, also prepared to provide for these various carriers the type of accommodation demandeli by their mood of operation.

On the subject of general aviation, prime responsibility for aviation development rests withthe Federal Government, but there is need to stimulate greater local participation in air port development. It is intended to institute a new general aviation development program to complement and extend federal programs. The essential points in this program are as follows:

(1) Grants for local airport construction and for planning assistance with a ceiling of $2, 500 or 25 percent in the former case, and $1, 000 or 33 1/3 percent in the latter.

(2) Publication of a new more comprehensive air travel guide plus special advertising aimed at private flying vacation markets. Such grants would not commit the province to complete const�uction, nor to operate an airport in the event of default by the organizations receiving the grants. It is believed that such a program will be of material assistance in develop.ing small landing strips and airports and in promoting flying tourism in Manitoba. One important field of development wm be the establishment of major tourist develop ment programs in the province.

Tourism is now a $50 million industry in Manitoba and it should be doubled by 1975. To accomplish this will take some very bold action. As a start, the depart ment this· year plans a greatly broadened program which will include the following:

(1) Interest ing and attracting to the Province an experienced resort operator in the establishment by 1967, of at least one major first class family resort in an area which can operate a minimum of 9 to 10 months in a year. The type of resort required would be capable of handling 300 to 350 gnests ' with convention facilities, indoor swimming pools, sauna baths, indoor and outdoor recreatiOn \ facilities, golf course, marina, and facilities for such winter sports as tobogganing, skating, \ / etc., and if at all possible, ski runs.

(2) Interesting and experienced operator In establishing by 1967, at least one major first-class hunting and fishing lodge, capable of handling 100 gnests with such services as pool rooms, quick-freeze equipment, top notch boats, gnides, and the things necessary to attract sophisticated and good paying fishermen and hunters to the Province.

(3) The establishment of business management advisory services for existing tourist and hotel operators in the fields of accounting, modernization, advertising, promotion, and general busi ness practices necessary for good and profitable operati9ns.

(4) The encourage:l!nent and pro fessional development of new regional festivals, special events, and other attractions.

(5) A competition for the. design of economical tourist accommodation, which wiLL be distinctive and meet the problem of seasonality in Manitoba. It is proposed that this competition be carried out under the auspices of the Manitoba Design Institute.

(6) Extension of training on-the-job to the hospitality industry. Hospitality industry being further defined as people working in hotels, motels, resorts, and accomodation fac111ties of that kind, but includes al� restaurants and other facilities that tourists use. And No. 7, the establishment of a strong and active con vention program and the co-ordination of existing convention promotion efforts.

The matter of research is one of great and fundamental interest in the Province and ls a great necessity- the further development of research facilities in the Province is a necessity for our further leap forward ill economic development. The lack of adequate scientific and technical know-how is a problem facing many Manitoba industrial firms. The Manitoba Research

186 8 April 16 , 1966 (MR. EVANS cont'd) ... Council was established in 1963 and since that date has been examining the industrial needs of Manitoba for applied research and development as well as the facilities available from the National Research Council and other provincial research agencies. The results of these inves tigations indicate that time has now arrived when the Manitoba Research Council should establish physical facilities and that such facilities should be the focal point for a research park simila r to Sheridan Park in Ontario.

It is therefore proposed to est ablish an industrial research park and arrange for the constructi on in it of research facilities as recom mended by the Manitoba Research Council. Prior to the development of actual constructi on plans for such a research facility a research conference will be called to ensure that the ser vices to be offered are those required by business and industry and which will complement ex is ting research faciliti es. In other words it is pla nned to get the views of business on the gaps in research that need to be filled. Immigration of skilled and unskilled persons.

A provincial labour shortage of both skilled and unskilled persons is becoming increas ingly evident and requires constructive atten tion. The government must move quickly and adopt a realistic immigration program to ease shortages otherwise the degree of success of the other developmen t programs could be serious- . ly impaired, Such a program must complement federal immigration programs. It is proposed to put under way an immigration program involving employers as sponsors and it assumes the closest working relationship with the federal immigration officials.

The Federal Department of Immigration does not, and cannot, direct people to speci fic positi ons. These people must be sold on Manitoba after they arrive in the country. It is therefore intended to institute the follow ing programs:

(1) In co-operation with the Department of Labour and Immigration to identify or to find out what vacancies there are in the province - the kinds of people who are both required now and who will be required in the near future;

(2) Where employers or groups of employers are prepared to interview applicants and to sign employment agreements to share with them the cost of advertising for specific job. open- ings;

(3) Where employers at their own expense are prepared to travel overseas or out of the country to meet and interview applicants to arrange government-employer recruiti ng mis si ons and to arrange for interviews , testing, etcetera;

(4) This may sound like a fairly trite item -t o publish informational pamphlets. But that is a more important item than it appears at first glance because one of the crying needs is that people shall have adequate information on many subjects before they will pick 011 one loca tion in a country. We l1ave come to believe that further development in this field is necessary;

(5) A program of employer-government assist ance in the repayment of loans to immi grants from the Federal Immigration Branch for moving costs which will be shared as follows: the Federal Government will provide loans to move an immigr ant. We now propose to refund these loans to immigr ants on the following basis: there will be a program shared between the manufacturer and the province to repay these loans as follows: at the end of the first full year of employment, the manufacturer wi ll repay 40 percent of the loan.

At the end of the second full year of employment, the manufacturer will refund a further 10 percent and the province will refund 20 percent. At the end of the third full year of employment, the province will re fund a further 30 percent; thus the refunding at the end of the three years has amounted to 50 percent by the manufacturer and 50 percent by the province.

(6) Employers will be made eligible to borrow their portion of the cost from the Mani toba Development Fund;

(7) Immigrants will be provided by the manufacturer with suitable arrangements on arrival, inc luding an establishment grant equal to one month's salary or pa y, temporary accom modation for two weeks and assi stance in obtaining permanent housing accommodation. Turning now to the field of transportation and in the light of the most recent developments in our province, considerable attention is going to be paid to northern transportation. Northern developments continue to be hampered by cost.

The rai lways claim they are unable to quote lower rates _and the province is not in a position to know whether or not northern rail lines pro duce revenues in excess of operating costs. This is a matter that's receiving the attention of the Prairie Ec onomic Council. Meanwhile, Manitoba has asked the Government of Canada to establish a joint Provincial-Federal Enquiry to enquire into the existing operations of the Hud son's Bay Rai lway to determine ways and means by which it may be made more effective as a development tool within the context of changing regional, national and international conditions.

Ap:I,"il 16 , 1966 18 69 (MR. EVANS cont 'd) ... The Hudson Bay Ra ilway could be used more effecti vely to sti mulate the economic de velopment of the northern part of Manitoba. It is recogniz ed, of course, that it has given rise to a number of small comm:rnities at various points between The Pas and Churchill. The de velopments such as the International Nickel Company in Thompson area were made easier by the existence of the line . The line however is not fulfilling its role as a development tool.

At present, this situ ation is becoming particula rly critica l as the conditions within Northern Mani toba and in world markets are changing rapidly . It is considered that lower railway freight rates would lead to an almost immediate increased use of the ra ilway and would therefore be come another development tool. The inability of this transporta tion routes to achieve its poten tial as a development tool so far has resulted from several factors.

An official enquiry into the entire transport ation situation in Northern Manitob a is esse n tital to establish what is the appropriate balance in modern conditi ons. The following should be inc luded in , and, in large measure, form the terms of reference of such an enquiry. These are as follows : The terms and conditions under which the rai lway should provide the necess ary equipment, spurs, si dings, to encourage the development of resources and asso ciated resource processi ng indu stries.

Those general terms of course refer to some of the additional manufac turing productions that may follow from the establishment of the basic forest industry in the north. The extent to which the institution of commodity rates that reflect the costs and distances on the Hudson Bay Ra ilway and which are not competitively based would promote the development of Northern Manitob a.

One of the facts of transpor tation life is that a railway will take competi tion into consider ation only after the competition exists , and we believe that is a principle which should be reviewed, because what is the use of buil ding either another rail way or road merely to establish competition, and at that point the railways bring down their rates to what they should have brought them down to in the first place.

A further point would be the measures necess ary to ensure that the Port of Churchill is able to take full advantage of its geographical position to serve as the major supply point for far northern developments compatible with new technologies and innovati ons. The economic feasi bility of a through Manitoba rail-ra te to ChurchiLL to avoid the present detour through the Hudson's Bay Juncti on or, alterna tive ly, a rate to reflect the shorter dis tance shouM be instituted.

I think, from: memory, it's about 200 additional miles to take the Hudson Bay Ra ilwa y from Winni peg to Hudson Bay Junction and then bring it back into Manitob a and up to Churchill. One alter na tive would be to construct a rail line which would go stra ight north and join on and be some 200 miles shorter, and instead of having to construct that, the railway could construct the same thing by hauling freight to Churchill on a rate which would reflect that shorter mileage.

The feasi bility of other service routes through central Manitoba between Winnipeg and Churchill - rail lines could be extended north from Gypsumville or Ri verton, or car and train ferries may have some applic ation on Lake Winnipeg. The role of air transportation in Northern Manitob a development - requirements to make air transportation a more efficient development tool in that area and the role of water transpor tation in Northern Manitoba development generally.

These are some, although certainly not all of the matters which should be investigated by a Northern Transporta tion Commissi on, and our request has been made to the Federal Gov ernment for the estab lishment of such an enquiry . . . . • . . . . continued on next page

187 0 April 16 , 1966 (MR. EVANS, cont'd) •..• In aid of our export development program, it is proposed to take some pra ctical steps - some further practical steps. If Manitoba industry is to expand, it must increase sales outside of Manitoba. One industry that has good potential is Women's Apparel Industry. There is a big opportunity in Ea stern Ca nada.

Investigations have shown that the most effective way to capture a bigger portion of this market would be for a group of, say, ten or more Manitoba manufact urers to work together to pre sent what might be termed the "Manitoba Line" from one location in Eastern Ca nada. It has been determined that the logical location is Toronto. A combined appare l-sa les centre would reduce individual costs and make.a bigger impact . on ea stern buyers than could be accomplished by Manitoba firms operating individually by themselves.

It's believed that a combined sales centre could increase Manitoba's industry sales volume in East ern Canada alone by $4 million annually by the se cond year, and could reach an extra $10 million by 1975. The annual cost to operate such a centre would be about $50, 000. To get such a centre started, we'll need some agency to underwrite the operation for a minimum of two to three years and this could be repaid at the rate of about 1- 1/4 per cent of the sa les volume written by each of the participa ting firms. There's a new progra m to help expand existi ng industry and increase export arrangements.

Arra ngements will be made for the Manitoba Development Fund to establish Export Sales Offices for groups of industries, providing a group of manufacturers are prepared to work together. The first centre will be es tablished this year in Tor onto for the La dies Apparel Industry. At a future date, similar sale s offices will be established in the United States and the United King dom, and for other products as well as the soft goods.

This can be an exciting program but it will only be successful if Manitoba manufacturers increase production and if an increased number of workers can be found for the industries concerned. Special attention is going to be paid to the chemical industry .

The establishment in Manitoba of the chemical industry is a success story in which pers istence has played its part because there was no shortage of those who said that the chemical industry could not become es tablished or prosper in Manitoba, and some not very far from the sound of my voice didn't believe that and went ahead, and some others have also taken some steps in that direction.

But it has been clearly es tablished that there is a great future in Manitoba for the chemical industry and the department can take pride in the fact that at no time did they believe even some of the profess ional advice that was tendered to us by advisers that Manitoba is a little too far from the main stream of the chemical industry and it was not likely that it would grow up here.

I was always convinced that this view was wrong, especially in contemplating the r\lquirements of the farming industry with respect to the chemical industry at the start, and over a period of six to eight years now this progra m has been pursued. The decision of the J.R. Simplot Company to build a major chemical industry complex in this province. In the next 12 months, a comprehensive analysis will be made, a comprehensive profess ional analysis will be made to evaluate the poss ibilities for chemical industry expansion � in Manitoba. Some of this work has already been done.

The results of preliminary screenings show that the following projects warra nt further investigation. That should be noted carefully the phrase that is used there "warra nts further investigation". They are sufficiently promisi ng to be worth further investig ation, but the further investigation must be made before it can be determined, whether, or at what point ea ch of the following 15 operations can or will be started: 1. Ca ustic-c hlorine; 2. Soda Ash; 3. Chlorinated Hydrocarbons; 4. Insecticides and Fungi aides; 5. Ca ustic Potash; 6. Detergents; 7. Electric Furnace Phosphorus; 8.

Phosphoric Acid and Phosphates; 9. Methanol; 10. Forma ldehyde; 11. Melamine Resi ns; 12. Phos phorus Electric Furnace; 13. Electric Furnace Iron Smelting; 14. Aluminum Smelter; 15. Soda-Lime Glass and Sodium Silicate. I read those terms which not being a chemist I don't attempt to explain - some of them are very large indeed. The whole field, for ·example, of insecticides and fungicides is a very large one. We come to the matter of detergents � that's a very large field indeed . And those who know these things tell me that the others are in most cases equally important.

Undoubtedly further investigation will show that some of these projects are feasi ble now, and another five or ten years can bring about further developments. In addition, if it is found that there are certain factors limiting the feasi bility of certain projects, some of these factors can be modifie d. With respect to our policy on regional development, to date there has been little evidence of a national development policy. Economic fragmentation rema ins one of Canada' s most serio us

Ap:ril 16 , 1966 187 1 (:MR. EVANS; cont'd) •••• problems. The central provinces have become the country's indus trial giants, but at the cost of retarded industrial development, lower incomes and highe r prices for other regions of the nation. Like Ca nadians everywhere, those who live in the industrially less -favoured regions contribute to the tax revenues only to be rewa rded by being supplied with high cost goods manufactured by tariff protected industrie s in Canada and made ev en more expensive by high freight costs.

My purpose in pointing out these facts is merely to desc ribe an exi sting situation and to suggest that Manitoba is faced by a problem that might become increas ingly serious if plans are not made to combat it. These plans can best be made by Government and private busine ss working together and it will continue to be a matte r of government policy to urge the Govern ment of Canada in co-opera tion with provincial and private interests, to adopt a national devel opment policy of ba lanced regional growth which makes full allowance for the right of the Prairi e Region to prosper and to grow.

That is an outline of the new developments, the new policies and the new progra ms in the Department of Industry and Commerce in the coming year. Now I would like to lay before the Com mittee some information concerning the Monoca development and to provide a basis for discussion of this important matter. The government of course has its responsibility to determine a number of things . First of all, the integrity of the people being dealt with, satisfy ourselves as to their financial means and their technical ability.

Those at least had to be present before a proper industry could be established; and both at the sta ff level and on my own responsibility an extensive inquiry was made into these fields and a good deal of informa tion was obtained and considered, and a good deal of advice was tendered to us, part of it verbal, much of it confidential.

But in view of the interest in this subject that has been evinced in the Legisla ture, I have been given permission to refer to the substance in a number of cases of the advice that we were given and the source from which the information was given, and I think it's right that I should provide the Committee with some information for further discussion later on. Questions have been asked recently in the Legisl ature with respect to Monoca -- I believe that's the way the people concerned pronounce it.

I started off by pronouncing it Monoca my self; but I hear both pronounciations in the House -- about Monoca AG, which I understand represents an incorporated society. Those who speak German will no doubt laugh at me when I say Actien Gesells choft. Doesn't that mean incorpora ted soci ety or incorpora ted company? (INT) Yah. ) Yah. Thank you.

Well, my honourable friend and I travelled to Germany together on The Manitoba Trade Mission and I must say I admired his ability to carry on conversa tion with people in their own language in Germa ny. so I welcome his advice on this occa si on about how to pronounce this. Monoca AG is a private Swiss financial corporation investing in the pulp and paper indus try, not only in its own account but also for the account of third party investors of western Europe and United States origin - substantial persons desirous of entering into long-term investments with growth potential.

Monoca is assoc iated with Tec hnopulp AG, of Char, Switze rland . This company also engages in the establishment of factories and enterprises in the cel ane se and paper fields. Monoca and its Assoc iates have been and still are assoc iate d with the Celanese Corpora tions of America and the SNIA Viscosa in a highly automa ted paper mill near Ca tania in Sicily. The 1965 annual report of Celan es e makes a po int of mentioning that this mill uses automatic process control and mater ial handling equipment usually found in the most modern US mills.

As honourable members will know, Cela neE;e Corporation is an United States corporation that operates internationally with a sales last year, a sa les volume, of $860 million - something of the order I imag ine of about three times the income of the Manitoba Government. Viscosa is a very larg e Italian fibre manufacturing company producing 350 million pounds of fibre annually and with annual sales last year of $140 million.

The fact that Monoca and the group they represent are assoc iated with companies of this stature is evidence that they will have available to them technica l experience necess ary to carry out the northern pulp development. Naturally we investigated the company during the course of our negotiations . In the first place we checked the company through normal banking channels.

Although actual reports recei ved are confidential and were provided on that basis, and were provided on the basis that they were not made public, I think it is proper that I should provide the following information and I do so with the consent of those providing the information: Royal Bank, Main Office, Winnipeg. The Manage r advised that their banking associa tes in Switzerl and reported Monoca AG St. Moritz is a valued client and that all their rela tions with the company had been most satisfactory. They further advised that it was their opinion that

187 2 April 16 , 1966 (MR. EV ANS, cont'd) ...• Monoca would not enter into any commitment that could not be ful filled. The same report indicated that Dr, Oscar Reiser, Pres ident of Monoca, is well known; considered a competent and experienced busine ssma n who enjoys an excellent reputation in the business community. 2. Swiss Bank Corporation of Kreuzl ingen, Switzerland, advised that Monoca is well known and disposes of large funds and short term investments and is financ ing its bus iness with means of their own and from other source s. The Swiss Bank Corporation advise Dr.

Reiser is well known in Kreuzl ingen and en1oys a very good reputation and is regarded as a. serious, experienced and responsi ble businessman . The Swiss Bank Corporation also expressed the view that Monoca would not enter into any obligation which it cannot meet. 3. The Canadian Consular at Berne, Switzerland.

He is of course an official of the For eign Trade Service of Trade and Commerce of Canada -t he Canadian Consular then advised, ''Reliable financ ial sources report Monoca as a reputable private Swiss company special izing in arranging, financing and counselling services for large scale projects including woodpulp and paper industries. " They pointed out Monoca's share capital amounted to 50, 000 Swiss francs, but beyond the official capital, the company commands very substan tial further finan' cial means .

They further reported the company meets its requirements and there have never been any prose cutions for debt. 4. The Union Bank of Switzerland. Information provided stated that Monoca was founded on October 17, 1961 with a fully paid-up capital stock of 50, 000 Swiss francs. They pointed out that the object of the company is the acquis ition and administration, construc tion and planning of paper mills and other industries. They reported Dr. Reiser was well known to them and that he was held in very high es teem and that they consi dered him as a trustworthy and experienced businessman.

They stated the company has sufficient means at its disposal and can be trusted and that they were of the opinion that Monoca AG would not commit itself unless it could fulfill its engagements. The First National Bank of Boston advise that Monoca is associa ted with Technopulp AG of Switzerland and that Technopulp has a Montclair, New Jersey plant. They advise that the principal of Technopulp, New Jersey is a Dr. A. Kasser, who is well known and regarded by American and foreign ban ks.

The President of the Royal Bank in Montreal, members will recall that my first item dealt with the local inquiry here - this is the Pres ident of the Royal Bank in Montreal� In addition to these normal checks, the government also asked Mr . McLaughlin, Pres ident of the Royal Bank of Canada to check into the bonafides of Monoca and he reported that this company is engaged in projecting and installing pulp and paper mills in the field of cellulose and related activities.

He reported interlock ing directorships existed with Technopulp AG of Char, Switzerland and that both companies have built pulp and paper mills in Italy and els ewhere. He advised the principals behind the two companies were reported to have at their disposal sub stantial funds . Dur ing all this time we were in close associa tion with the officials, and my officials were in close assoc iation with the employees of this company.

These negotiations have been going on over a consi derable period and in any busin ess trans action I think you form your own impressi ons as you begin negotiations with the people concerned. During the period of nego tiations, Monoca arranged for their own foresters and engineers to come to Manitob a. The Pres ident of the company himself, acc ompanied by other senior officials, foresters and engineers spent a considerable amount of time in the north inspecting the timber and eva luating the economics and feasibi lity of a pulp development in that area.

They were accompanied by enginee rs and other officials from the Department of Industry and Commerce, and foresters from the Department of Mines and Natural Resou rces. Our officials gained a very high opinion of the thoroughn ess of their investigations and their practical understanding of methods.that must be employed to overcome some of the diffi culties inherent in northern forestry development. As a resu lt our departmental people reported favourably on the impressi ons of the technical capacities of the Monoca officials, as well as the person al integrity of the people that they had met.

At the request of Monoca, arrangements were made for their foresters and technical personnel to meet with consulting firms that had previously carried out investigations in the north so that various technical aspects could be checked. This was done, and again we were informed by our consu ltants that in their opinion, the Monoca officials were knowledgeable in forestry matters, and had a practical appreciation of the economics of forest development.

April 16 ; 1966 187 3 (MR. EVANS, cont'

d) We were fortunate to have been able to interest Monoca and the group they represent in Manitoba. In accordance with the agreement with the government I can further report as follows; Churchill Forest Industries Manitoba Limited has been incorporated and organized under the laws of Manitoba with an initial authorized capital of $5 million, At the request of the company, the Roy al Bank has informed the government that $500, 000 in cash has been transf erred to Winnipeg to be immediately applied on the purchase of shares in the Churchill Forest ][ndustries.

As se curity for the proper performance of this obligation, under it's agreement with the province, Churchill has provided the government with a performance bond in the amount of $100, 000 from a leading Canadian Bonding Company.

As is usual in the case of a bond of this type, it is not only the monetary value that's concerned with $1 00, 000 that will be paid in certain eventualities, but it's the investigation people engaged in the investigating busin ess make as to both the character and integrity, and on the other hand the means, both technical and financial that the people that they are bonding will bring to the accomplishment of the task on which the bond stands, There have been some comments that Monoca itself has only a paid up capital of 50, 000 Swiss francs, This is really beside the point.

They have already transferred a lialf a million dollars in cash to Winnipeg and have provided a performance bond of $1 00, 000. 00. They have entered into certain ob ligations and we are confident that they will fulfill them. Should they not do so of course, the agreement between the company and the government will be cancelled and the rights to the forest would immediately revert to the Crown. The only thing at risk really is the forest which cannot be picked up and taken away. There's also been some comment regarding the authorized capital of the new Canadian company.

In the first place may I point out that by agreement $5 million is the initial authorized capital. The authorized capitalization of a company refers only to the share capital and does not represent the actual investment which may be made. The purchase of shares in a company is merely one method by which capital is provided. Other channels by which a corporation can provi de capital are through the is sue of bonds, or debentures or other securities. So the amount of the authorized capital is no indication whatsoever of the extent of the investment.

The govern ment has given no undertaking to guarantee funds, but the company is eligib le to apply to the Manitoba Development Fund. Turning now to the agreement itself. COMEF reported that the lumber industry, and I am quoting from the report, "is a sick industry which has been los ing ground for a generation or more, particularly during the last decade, "The last decade, that is from the date of their report. It went on to point out that during the 1955 - 1959 period, the physical output of spruce lumber declined to 68 percent of the 1950 to 1954 level while the net value declined by 50 percent.

During the same period total Canadian production increased by seven percent, and the net value held about cons tant. COMEF said "Inte grated logging was es sential for the combined production of pulpwood, together with saw log veneer boats and other things to be economically pos sible ." COMEF also stated unequivocally, that "a shift to larger saw mills will make practicable better facilities for kill drying and planning as well as the production of profitable by-products. With appropriate policies and prog rams COMEF felt employment in our forest industry could be doubled by 197 5.

It recommended a major .forest development in northern Manitoba, and I quote, "should be pursued vigorously beca use there is some danger that if such development does not occur in the near future the opportunity for it may be lost permanently." COMEF then recommended the institution of policies and measures designed to overcome the locational disadvantages. COMEF sa id, "to make such an investment attractive, the government must be prepared to grant substantially higher reserve timber areas than in other parts of the province and for longer periods. Provide power at reasonable cost. Provide water without charge.

Es tablish reduced stumpage rates. Assist in the construction of roads in timber areas. Pro vide fire protection and provide assist ance in townsite development and community development facilities. Certain honourable members have commented on various aspects of the agreement between the government and the Churchill Industries. First, it is in line with other similar agreements in other parts of Canada. We bel ieve it is reasonable and fair to both the government and the investor. But prior to the execution of the agreement it was reviewed by two well-known con sulting firms.

The Stadler Hurte r International Limited of Montreal and Arthur D. Little of Cambridge, Mass achusetts. Both firms stated the agreement represen ted an equitable basis

187 4 April 16, 1966 (1\ffi . EVANS, cont'd) ..•• for northern forest development and recommended it to the govern ment. In this connection, I wish to read to the Committee - in the one case, the complete letter by Stadler Hurter, and the other -- I will read the letter of Arthur D. Little, but only excerpts from the memorandum, but I have copies of the memorandum available and I'll be glad to pass both these documents across the House so they'll be available in case some points that I don't read are of interest to the members.

Now, reading a letter dated February 18, from Stadler Hurter International Limited - I know they're in Montreal -- Oh, yes, St. Catherine Street, Montreal, addressed to my Deputy Minister.

The subject is "Agreement between the Manitoba Government and Churchill Forest Industries (Manitoba) Limited, Dear Sir: We have reviewed your Agreement for the granting of timber rights to the Company known as Churchill Forest Industries (Manitoba) Limited, for the initial establishment of a lumbering operation and newsprint mill, and the ultimate establishment of a pulp mill for the Northern Forest Products project. 'The essence of such an agreement is to establish the conditions under which the Company may make the necessary financial investments and operate competitively on a world-wide basis, while at the same time safeguarding the interests of the Government.

"The northern forests present to your Government the opportunity to foster the expansion of industrial activity in an area presently quite dormant and yet of high potential value. To accomplish this, however, it must be recognized that operations will encounter many problems peculiar to the area apart from the nature of the operations themselves. Some of these problems ·a re as follows:

a) the under-developed nature of the whole area;

b) the higher transport costs due to its remoteness;

c) difficulties in attracting working staff;

d) extreme weather conditions .

Each of these problems will, to some extent, adversely affect the costs of production for timber, pulpwood, pulp or newsprint, and before any private interests would be prepared to make the neces sary capital investments in such undertakings, they would have to receive some compen sating considerations, particularly during the early years, to permit them to maintain their competitive position. ''we believe the Agreement accomplishes this by having the Government supply the aerial photography and forest inventory for the area, and by fixing the stumpage rate realistically at . $0. 75 per cord on a liberal volume basis.

The Agreement also calls for a 50 percent reduction in the stumpage rate for the first 7-l/2 years which is a desirable incentive for the early years of operation. 'We note further that after the 15th year stumpage rates are to be adjusted in accordance with the then current newsprint price index, which will serve to increase the rate after this period of time when the Company will be in a position to afford it.

"The building of a short all-weather road by the Government to the plant-site and the sha ring of costs on other roads by the Government is reasonable, and forms part of many other agreements under similar circumstances. The interests of the Government are protected by the following means:

a) Guarantee bond by the Company to ensure its adherence to the contract � in its early years.

b) Adequate capitalization by the Company with the paid-up capital perma nently available for operating and financing.

c) Setting up reasonable but rigid time schedules and productions for the various phases of operations by the.C ompany.

d) Setting forth impartial methods of arbitration in cases of disagreements.

e) Limiting pollution of waters. We particu larly mention this item as pollution has become a serious problem at established mills and is best regulated at the outset. In this connection while the Agreement stipulates thatthe Company generally must not dispose of bark into the water, it should be permitted to so dispose of those s

Document details

Collection	Manitoba — Debates (Hansard)
Citation	27-5-80
Type	hansard
Volume / chapter	27th 5th hansardpdf 80.pdf
Language	en
Format	pdf
Source	PROVINCIAL
Identifier	e1162d62d202ea29e74ab098fcfa3b64f3b19dc0

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