LEGISLATIVE ASSEMBLY OF MA NITOBA THE STANDING COMMITTEE ON ECONOMIC DEVELOPMENT Thursday, 20 June, 1985 IME - 10:00 a.m. :>CATION - Winnipeg, Manitoba HAIRMAN - Mr. Ashton (Thompson) TTENDANCE - QUORUM - 6 Members of the Committee present: Hon. Messrs. Harapiak, Kostyra, Schroeder, Storie Messrs. Adam, Ashton, Gourlay, Johnston, Ransom, Santos. .PPEARING: Murray 0. Harvey, Chairman of the Board J.B. Sweeney, President and Chief Execu tive Officer MATTERS UNDER DISC USSION: 19 84 Annual Report - Manfor Ltd . III R. CHAIRMAN: The committee will come to order. Ne are continuing di scussion on the Manfor Report.

The Honourable Minister. -ION. J. STORIE: Mr. Chairperson, Tuesday, we took iS noti ce a number of qu estions regard ing the :>rendi ville sale, and a number of other questions. The :hairman has a number of answers to the questions that were asked . MR. CHAIRMAN: Mr. Harvey. MR. M. HARVEY: With respect to the Prend iville sale • I believe it was either Mr. Ransom's or Mr. Gourlay's questions, or a combi nation of the two - the fi rst question by Mr. Ransom: was considera tion given to waiting for the lease to expire as opposed to the purcha se? The ans wer is yes . lt was thoroughly investigated by Mr.

Jona s who determined that if Prendiville could not sell, he would start up his mill in order to protect his quota. The quota that Mr. Prendiville had, had a review da te of April 30, 19 85, at which time it was understood that if he had cut 80 percent he would lose nothing, but he could continue the lease at a reduc ed quota if his production was less than 80 percent. The amount of the quota would be de termined by how much less than quota he was cutting. Mr.

Jona s also found out if someone else were to buy the lease during the last two years of the review period , the production review da te would then be five years from the end of Prendi ville's da te or April 30, 19 90. He also de termined that there were two contractors interested in the quota - I gave you the 57 name of Spruce Products, that was an error, I was thinking of Spruce Products with respect to something else - but two local Cranberry contractors. Jona s felt that Prendiville would not let his rights to the quota expire.

He also felt that either of the two contractors involved could reasonably expect to get bank financing and buy the quota. If either did buy the quota, the chance for us to get the most desi rable wood, which is the larger stands, would be marginal because it would go to their own mills. The second question requested was: was the price negotiated? The answer is yes. The original asking price was $950,000.00. The purchase was at $700,000.00. They also asked who initiated the contact with regard to the lease.

Contact was initiated by Prendiville, not once but three times, once in the late 19 70s, once in 1982, and again in 19 83. As I understand it, he moved his mill from the Atik site to the Cranberry site when we didn't follow up on his offer in the late '70s. lt was also asked what Prendiville's volume was at the time of the purchase. To Mr. Jo nas' knowledge, he had cut something like 1, 000 cords in anticipation of starting his sawmill up in the spring of 1984 if the sale did not go through. He had shut the mill do wn because of markets in'83. One of his principal customers was the mines.

They buy a lot of timber from him and, of course, they weren't buying at the time either. Mr. Gourlay also asked: what kind of a sawmill did Prendi ville have? Accord ing to Mr. Jon as, the mill was moved from Atik, but there were some new ad di tions made to it. We wouldn't like to judg e somebody else's mill, but it would be described as a reasonable mill. lt wasn't a new mill by any means.

Our experience to da te with the quota ind icates that if we take wood to replace the wood, if we're to have to take that wood from our own rights, we would have to go to the far reaches of Kissinue or Conlin, and to obtain that kind of wood the di fference in savi ngs is approximately $25 a cord . lt might be slightly higher than that. That was the projected one, but the difference between taking the wood from the Prendivill e quota and from a place like Kissinue at the moment is about $25 a cord , mainly transportation costs. We have recovered about $400,000 in savings - Mr.

Jo nas' estimate this year are based on that kind of savings per cord and probably would recover the rest - sorry, that would be last year - and would probably recover the rest in this current year. MR. CHAIRMAN: Mr. Ransom. MR. B. RANSOM: I'd like to ask a couple of questions that followed on where the di scussion was when we finished on Tuesday. First of all, Mr. Harvey had indic ated that there were going to be - if projections held -a $17 to $18 million loss this year. How did that compare to the projection for this year? MR. M. HARVEY: Mr.

Chairman, we had hoped to get to a cash break-even position this year. Based on the

Thursday, 20 June, 1985 projections that we were using - I think you've heard me refer to the 10 -year model - the model performed faithfu lly up until this particular year, and we had based our projections mainly on our appreciation of the market as we could see it then at budg et time, and our experience with the mod el. I believe it was a cash break­ even position and about a $3 million loss, something in that area. MA. B.

RANSOM: The options that the government and the company had looked at in terms of investment to make the operation mo re viable, those ranged I believe, if I recall correctly, from approxim ately the $40 million option that was selected on up to some that were in excess of $300 million. Which of those options would have been consid ered to be the most likely to succeed as far as making the operation viable, aside from considerations of whether the government felt they could put up that amount of money or not?

Was there one of those other options of greater investment that would have been considered to have a better long term prospect of keeping the operation going? MR. M. HARVEY: Mr. Chairman, through you to Mr. Ransom, all the other options required us to go to a bleached product. At the time the decision was taken, there was a fair amount of concern about the capacity in the bleach product, and it appeared to go to ble ach would not be a useful alternative at this time.

That's one of the reasons we stayed in brown paper, in fact, probably the main reason we stayed in brown paper, and tried to establish some kind of a return to our position as a specialty prod ucer of stress paper. But I guess to answer your question di rectly, the bleach options, all of them, did not seem appropr iate because of the existing capacity in the ind ustry. MR. B. RANSOM: Does it follow from that, that the best option for the plant then, for Manfor tod ay, lies with simple utilization of the plant that's in place on a more efficient basis?

Or is there toda y an option for greater in vestment tha t wo uld imp rove Manf or's chances of survival? MR. M. HARVEY: Mr. Chairman, when we put the option in we indic ated that, in the short term, the preference was to stay with brown paper, increase the efficiency of the existing plant, if you wish, but we ind icated that it wasn't necessarily the long term for the plant. I would guess that the most immedia te possibility - and these are just possibilities - would be something that would increase the economy of scale at that plant.

We have a fairly large fi bre base, I believe we are taking about half of the allo wable cut. We have some possibilities in the aspen stands that are in our own limits and just outside of them. So the next thing that could be looked at would be some kind of increase in prod uctive capacity at the paper mill. My only other concern would be that it would have to be done once the market ind icates what the capacity already there would be. So we are still in kind of a conund rum with respect to capacity but the potential of the mill, if I get the sense of your question, is certainly not reached .

We have a de fensive strategy in place at the moment. 58 MA. B. RANSOM: Well, the sense of the question tha I am trying to de termine from Mr. Harvey is, would a1 investment of $300 million, to dou ble the capacity o the mill and change the product, make it more viabh as an operation in the long run; or is he satisfied tha it is a question of, as he said in his letter of transmittal that new and innovative ways of controlling costs wil have to be the next

chapter in the company's histo� if this firm is to survive? Does its best chance of surviva lie with new and innovative ways of controlling costs or might it lie with a very substantial investment tc expand and change the product? MR. M. HARVEY: Mr. Chairman, through you to Mr Ransom, I think essentially it depends on both. lt wa! not my intention to imply in my statement that the onll thing left to do was to control costs.

I think tl]at's E reality of life in the indus try as a whole; that if our cost! aren't controlled , if we can't get the productivity level! that we need , we already have some ind ication in thE international market that we can't compete. So the first order of business is to get our cost! under control. I think almost all forest prod ucts companies at the moment are engaged in that. Bul that do esn 't lose sight of the po ssi bilit y, in facl probabi lity, that we will have to look for new and innovative ways of attacking the market as well, so thal we might need to go into a white paper.

There is a lol of talk right now about coated paper. Those are the kinds of things that we also have to ind icate. lt was not my intention to say in that letter of transmittal that the only thing we have left to do is to control costs, but it is the most important thing we have to do at this time. MR. B. RANSOM: On Tuesd ay, I believe Mr. Harvey ind icated that the government would be amenable to private sector involvement, and perhaps it might even be said tha t they were look ing for tha t ki nd of involv eme nt but not very act ively .

If you were considering pr ivate sector involvement then, would it be on the basis of simply selling an interest in what is there or seeking to have a private sector partner invest additional money in the operation again to expand and change the product? HON. J. STORIE: Well, I don't think we have ruled out any option. The possibility, I suppose, always exists. The member knows that they took a number of years looking for private sector involvement of one form or another and were not successful.

I understand that the Saskatchewan Government is currently looking for private sector involvement in one of their mills in northern Saskatchewan without much success. I don't think we could rule out either scenario. I think Mr. Harvey's given a pretty good overview of the potential we feel is there with respect to the current upgrad ing. I could certainly foresee some interest in the current operation, but I think it's clear as well and I believe firmly that it is not good business sense to sell a house and not have it painted , looking good and in good structural shape.

The last three years have seen a lot of those kinds of improvements into Manfor. We have imp roved our product, impr oved our productivit y, have a prod uct that is now, by virtue of

Thursday , 20 June, 1985 its quality, alone in the market virtually, and I think have a much more saleable prod uct and a produc t that outside private ind ustry people would be interested in. So nothing need be ruled out. On the other hand, as I've indi cated and the member acknowledged yesterday, there would have to be a close look at the long-term intention and the commitment, because it is an important asset to not only the community of The Pas but the other communities in the area. MR. B. RANSOM: lt seems to me, Mr.

Chairman, that to simply have private sector involvement, say, to sell the present operation to the private sector would invite the possibility of it not continuing to function

whereas, if you can get some private sect or partner to invest very substantial amounts of money in it, that would be the very best guarantee that the people of The Pas and the employees and everyone else would have that the corporation would continue to function. That's why I'm asking these questions, because we're interested in seeing the corporation have a viable future. We recognize that the chairman himself raises the question in his letter of transmittal. So everybody realizes that there is a problem, and it's a great cost at the moment.

So I am trying to determine what kind of private sector investment might go furthest towards gua ranteei ng - in the sense tha t the re are any guarantees - that Manfor would continue to operate? MR. M. HARVEY: Mr. Ransom, I'm sure you are aware that there are other reasons why a private sector investm ent, a partner , wou ld be bene fi cial to the company. Integration is one, marketing ability, financial dept h, all of those things which would be desirable for us would be available to us if we could interest the proper people in some sort of an arrangement.

I guess I would say as chairman of the board , my primary interest is to see the thing succeed, and all of these id eas are important. Wha t we have now is a mill that has got a very narrow produc t line. We have a good product line, and we think we're on to some good market future with these product lines, but we are also not able at the mome nt to capitalize on some of the other things we have, such as the total wood fibr e base.

I wanted to tell you also that most of the expenditures in the pulp mill are items that are usable in bleach as well, so we are not commi tting ourselves to something, although we want to assure that our customers in brown paper don't think that we are going to change on them either. So what we are really looking for is a way to get enough investment in there to get some economies of scale and to utilize the wood that is in the area in the rights in the best possible way. I think all of those options need to be consid ered.

I agree with you, if we can get that, that will make the mill's future that much more secure. MR. CHAIRMAN: Mr. Gourlay. MR. D. GOURLAY: Thank you, Mr. Chairman. I thank the chairman of the board for bringing back the inf ormat ion we had req uested regard ing the Prendiville timber rights. However, I am still not satisfied 59 that Manfor needed to put out $700,000 for these timber rights at a time when they have admitted that the economy is sl ow. lt do esn't look all that bright in the months ahead according to the chairman.

I'm wondering, who did the negotiation for Manfor with respect to obtaining Prend iville's rights, other than Mr. Jona s' name was mentioned. Was he the only one involved in the negotiations? HON. J. STORIE: Mr. Chairman, the decision was made by the Board of Directors of Manfor in the first instance. In the second place, I think the suggestion that the honourable member is making is erroneous. I think Mr. Harvey dealt with the facts of the matter. In the second year, since that purchase, the costs have essentially been recovered to Manfor. Henceforth, benefits will accrue to Manfor in the millions of dollars.

So to suggest that somehow this was not a good purchase or not in the best interests of the company is folly, inaccurate and silly. MR. D. GOURLAY: Well, I don't accept those remarks for one moment. lt was ind icated that there were two local contractors in the Cranberry-Portage area that might be interested in these timber rights. These are, as I unde rstand it, very large timber quotas. At a time when the market is dep ressed, and by Manfor's own admiss ion, the markets haven't been great, what market potential would two local small contractors have for investing the kind of money in these timber rig hts? HON.

J. STORIE: In the first place, we are talking about a quota that was purchased by Manfor of $700,000.00. The commercial value of that timber is in the many millions of dolla rs. Both of the indi vid uals, at least to my understand ing, have been involved for years, have dealt with purchases of quota before and certainly have the capacity to do that.

So it isn't out of the question at all. lt would have been a good purchase for anyone; it was a good purchase for Manfor; it made sense; it is good for the company. lt fits in with our strategy to be able to supply large logs and improve the sawmill production and performance. lt was a good purchase and a good decision made finally by the board of dir ectors. MR. D. GOURLAY: Mr. Chairman, the only logical company that could have dealt with this kind of volume is Manfor. lt is right in their backyard.

I don 't see why they had to rush into this $700,000 purchase when they did. lt was ind icated the other da y that Manfor had suffi cient suppl ies in the area. Being a Crown corporation, they would have had, no doubt, a good opportunity to purchase the cutting rights or have them assigned to them at some later da te. The chairman of the board has ind icated that the sale was initiated by Prendiville on three dif ferent occasions. I don't fault the Prendiville company for wanting to sell their rights for the sum that they did because they were in a di fficult situation with respect to the economy.

No doub t they were despe rate to sell. However, I don't think this is reason for Manfor to jump into purchasing these rights at $700,000 when

Thursday, 20 June, 1985 they could have waited it out and perhaps purchased these rights at a much lower figure even one year or two years do wn the road . I don't see Manfor's role in perhaps trying to bail out Prend iville, it may have been it found itself in an economic bind at the ti me. That is what it looks like has happened, to me. HON. J. STORIE: Mr. Chairperson, there is certainly no bail out of Prendi ville. I think we have ind icated that what the company had was a very valuable lease, a value piece of property.

I think the chairman of the board has already ind icated that there were a number of benefits to Manfor, not the least of which was the availability of saw logs of significant size and value that would have had to have been taken from other areas quite remote to Manfor. So the bottom line for Manfor is a significant saving, in the millions of dol lars and, again, to suggest that it would not be feasible, first of all, for Prendi ville to find another purchaser is I think wrong. Second, the suggestion that we wait it out is also wrong.

I think the chairman ind icated very clearly that a number of scenarios could have allowed that to continue for many years. As the member knows, the chance you take in waiting, of course, is that the market turns around and it becomes much more valuable. In fact, in terms of lumber, that's what has happened, we have a much better lumber situation toda y than we did six months ago even. So the value of that quota obviously fluctuates with the value in immedia te terms of the price of, in this case, lumber. So it was a good de al all around, and it was a wise de cision.

We can always second-gue ss and say you should have waited or you shouldn't have waited . What would the member be saying if we had waited till this time and had to pay double tha t to get the required benefits? lt was timely and it was approp riate and it wasn't done in haste or without due forethought. MR. D. GOURLAY: Well, I don't intend to pursue this at length, but I am not convinced for one moment that Manfor had to pay this kind of money at this time.

Sure, maybe two years down the road they would have had to pay more for the same timb er rights but, under dif ferent circumstances and perhaps better markets, who knows? But the chances also were there that they could have picked up these timb er rights at a much red uced price. HON. J. STORIE: Mr. Chairperson, in business terms, I suppose, when you can recoup your investment in two years, you haven't done that badly . MR. M. HARVEY: I just would like to remark on the questio n of mark ets. This pu rchase was made in February of 19 84.

At that time, we were in a rising market, beginning to see the rising market, in fact, our statement shows that. I think the other times that he approached us, it may not have be en the same thing, but I just wanted to note that the da te of purchase was in February of 19 84, and that markets looked like they were coming back at the time. MR. D. GOURLAY: In any case, Manfor is the only mill in place that really logistically could have hand led this 60 kind of operation. lt was fairly close to them. There are no other operators in the area that could have hand led this kind of volume, not likely.

I think th at the decision to purchase Prendivill e's rights at $700,000 was in haste and certainly could have waited . MR. M. HARVEY: Mr. Chairman, I don't accept that it was in haste. I think it was studied, it was a conversation that took place over several years. Those contractors in Cranberry are very capable of taking on that lease and using the timber in their own mills, the saw timber and getting rid of the pulp.

On the basis of our Wood lands people there and in appreciation of the situation, the logistics with respect to bringing wood from a far place and the payback, which has been almost totally realized, I don't think it was a bad decisi on. We did have some concern about the dif ficulties of a company deal ing with Crown leases but, from a commercial point of view, I think it was a good move. I believe that those contractors could well have taken it on, they've been in the Cranberry area for years. There is a market for mine timb er there and the saw tim ber is quite easy for them to handle. MR. D.

GOURLAY: I wonder if we could get an upda te on the work situation at Manfor between now and the end of September of this year. What do es it look like as far as the operations at Manfor? MR. M. HARVEY: Our sawmill is back up on two shifts; the planer is also up. lt will very likely continue right through the summer and, hopefully, right through as planned. The July shutdo wn in the pulp mill will go ahead because, although the order book is coming along, we're committed now to a shutdo wn in Ju ly.

The loss of the usage of inventory will likely not make any change in the Woodlands shutdo wns announced earlier which, I believe, was a 14 -week

schedule to lower the roundw ood inventory back to a level where it should be by September. So essentially two weeks in the pulp mill, sawmill up and running, planer mill up and running, and the 14 weeks, including a four-week vacation period of course, will be maintained in the Wood lands. MR. D. GOURLAY: Mr. Chairman, did Mr. Harvey ind icate that the sawmill was functioning at the present time, or was it just a tryout to see if the bugs were out of the com puter system? Is the sawmill working at all right now? MR. M. HARVEY: Yes, the sawmill is working on two shifts. We started the second shifts yesterday.

We're running about half capacity as we move up the curve in coming back up. We made about 13 0,000 board feet yesterd ay, and we planed about 7 4,000 board feet. Accord ing to Mr. Sweeney, who was in the mill yesterday, that's all been sold. MR. D. GOURLAY: Mr. Chairman, I und erstand that there was a wildcat strike took place for a da y last week, I believe. Can this be confirmed ? MR. M. HARVEY: Yes, that's confirmed . The issue was resolved in about a six-hour period .

Thursday , 20 June, 1985 MR. D. GOURLAY: Could Mr. Harvey indic ate how this came about? MR. M. HARVEY: Ess entially, it was a misunderstanding over our intentions with respect to one job in a particular part of the pulp mill. The indi vidual believed that his job was being phased out and when we pointed out that the job was contained in this year's bud get and next year's budge t, the issue was essentially resolved . MR. D. GOURLAY: So the mill was shut down for how long? MR. M. HARVEY: About 14 hours. MR. D. GOURLAY: And this job in question, what were the terms of reference for the job or the classification?

What was it ident ified as? MR. M. HARVE V: The job in question is a bulk unload ing job, and it has to do with moving salt cake from cars to the storage places that they keep the salt cake in. We were looking at some changes in that area to increase efficiency. MR. D. GOURLAY: So, in fact, was the job being considered to be phased out? MR. M. HARVEY: No, the job was not to be phased out; it was to be changed a bit, but not to be phased out. MR. D. GOURLAY: Did the changes involve red ucing a position of some sort there? MR. M.

HARVEY: No, it didn't involve red ucing a position, it involved the way the position was being used and the amount of overtime being generated, that kind of thing. MR. D. GOURLAY: Just recently there was an

article in the Free Press regard ing a very serious budworm problem on the jack pine. This problem was very evident in 19 84. I unde rstand that there was a spray program in place ready to go last year, but it was scrapped at the last minute by the Minister. Could the Minister verify this? HON. J. STORIE: No, Mr. Chairman, I cannot verify that. The member has two issues confused. The jack pine budworm infestation, which is in the Easter ville­ Moo se Lake area, has been recog niz ed and the Department of Natural Resources was recommending some action this year.

They are pred icting some losses that wou ld have a pretty severe impa ct on the opera tions of the Moose Lake Logger s, but tha t decision, because it's stand ing tim ber, is a decision that is made, by and large, with the Department of Natural Resources. The issue that the member is referring to dealt with a test spray program that was being reviewed by Manfor, but it had to do with our reforestation efforts.

As the member knows Manfor has been spending increasing numbers of dol lars on reforestation, as they should, as part of a Canadian effort to reforest our cutover 61 areas; and one of the ways of ensuring that reforested areas survive, something that has been used in other jurisdi ctions is chemical sprays, in this case, Roundup - the chemical spray, Roundup - which is quite familiar to the member and anybody who is from a farming community. The intent of the spray program was to see what impact spraying had on the regrow1h of reforested areas.

As you know, there is a lot of competition between species and obviously, when you are spending money reforesting, you want the product species to survive and using chemical herbicides is one of the ways of doing that. lt was, as I say, a test spray program only, going to be conduc ted on a small number of hectares, and becaus e ther e had been no consultation with communities in the area the public had concerns about what was going on and what it was to be about. I did suggest that it would be appropriate to put a hold on it for a year while the public reviewed the issues.

A committee was set up in The Pas - and this isn't something that's not public knowledge, it's an issue that was reviewed extensively in the press and the media in No rthern Manitoba - a committee was set up, established, various interest groups were represented; they reviewed the plans of Manfor; they reviewed the specifications and the properties of the chemical that was being recommended and have subsequently said, yes, the test spray program should go forward, given a number of safeguards in testing, monitoring to make sure that what is planned in terms of the use of the spray, it is actually the result; that there is significant benefit in terms of regrowth.

So that was a separate issue. MR. D. GOURLAY: I thank the Minister for that answer. I wond er, though, was there a problem identified last year with respect to the budworm? HON. J. STORIE: Yes, the Department of Natural Resources has been aware of the Ja ckpine budworm potential problem for some 10 years, I believe. MR. D. GOURLAY: In the event of a controlled program unde rtaken, would the cost be borne by the Department of Na tural Resources, or would this be a cost picked up by Manfor? MR. M.

HARVEY: The mature grow1h, the trees that are being attacked by budworm, th at is the responsibility of the de partment. lt is our responsibility, Mr. Gourlay, to look after our new plantation, which is what the Roundup would be used on, so the costs of using Roundup to pro tect the young trees from aspen overtaking them would be our cost; the budworm control program would be the cost of the Resources Branch. MR. D. GOURLAY: Mr. Chairman, I believe I had asked for some information with respect to an item on the Financial Statement. MR. M. HARVEY: Yes, I have it here, Mr. Chairman.

That was a GNA Statement, you were asking about general ad ministrative costs, Mr. Gourlay.

Thursd ay, 20 June, 1985 There was an increase around $900,000.00.

The major items that increased were communications, mainly due to the upgrade; we had more travel and more marketing promot ion; there was some employee training with respect to the upgrade of some fire protection systems repairs; there was an increase in di rectors' expenses due primarily to more meetings; professional fees were up, that includes legal audit, counselling, some reports that we had done; business and property taxes were up; and salaries, wages and benefits were up, principally because of an extra week in that year; a 4 percent general increase in salaries and wages and benefits; and, of course, we operated most of the year previously without a president, and we added a di rect or of marketing this particular year.

MR. D. GOURLAY: I wonder, could we have the amount of remuneration paid to the di rectors. MR. M. HARVEY: The di rectors are paid $15 0 per diem, and if there is a considerable amount of material to review before the meetings then we allow a half da y for that, and there has been in the last year or so. They also recover their travelling expenses. MR. D. GOURLAY: I believe the last da y we met - the value in rental housing went up by $59,000, and I believe the answer was, this was a purchase of a house that is now lived in by the president. How much money was spent on renovating this house? MR. M. HARVEY: Mr.

Chairma n, Mr. Sweeney says it is in the order of several thousand doll ars, but certainly not a great amount. lt was carpets, dr apes and things like tha t. MR. D. GOURLAY: Is that figure available? MR. M. HARVEY: I don't believe we have it with us. We would have it, but we don't have it with us. MR. D. GOURLAY: You say in the neighbourhood of several thousand dol lars, would it be over $50,000.00? MR. M. HARVEY: Mr. Chairman, I think Mr. Sweeney meant several, by referring to under 10 . MR. D. GOURLAY: So the total ren ovation bill was less than $10,0 00.00? MR. M. HARVEY: That is what Mr.

Sweeney says, yes, and I believe that is correct. MR. D. GOURLAY: What about new furnishings? MR. M. HARVEY: I believe there were some furnishings purchased when Mr. Sweeney first came on board. They were put in his suite and they were moved to the new house. MR. D. GOURLAY: So the furnishings that were in the corporate suite were then moved to the rental house? MR. M. HARVEY: That is correct. 62 MR. D. GOURLAY: With respect to the modern ization of the plant, I believe it was ind icated there was some legal suit un der way with respect to part of the construction.

With respect to the modern ization , who was the general contractor, or was that looked after by Manfor itself? MR. M. HARVEY: Mr. Chairman, that matter is before the courts, and we would prefer not to ans wer any questions on it at this time. MR. D. GOURLAY: I appreciate this is before the courts, but can we not have the information as to who was the general contractor involved in the modern ization project? MR. M. HARVEY: There was no general contractor of the overall project, if that is Mr. Gourlay's question.

No, there were several contractors involved , and our own crews, I suppose, our Engi neering Division would be acting as general contractor. MR. D. GOURLAY: Who is involved in the lawsuit then? MR. M. HARVEY: lt's Krait Construction, Mr. Gourlay. MR. D. GOURLAY: Agai nst who? MR. M. HARVEY: lt is Manfor and Krait Construction. MR. D. GOURLAY: lt is deal ing specifically with the concrete installation or are there other things involved ? MR. M. HARVEY: Not entirely, but basically. MR. D. GOURLAY: Supplying of the concrete, was that tender ed out? MR. M.

HARVEY: I have been advi sed not to ans wer any more questions on the Krait Construction matter because of where it is at the moment in the courts. MR. D. GOURLAY: We can't have the information with respect to whether tenders were called or not for concrete? I don't see where this really would affect any court case. MR. M. HARVEY: lt would be up to Krait Construction, if they wanted to give you that information. MR. D. GOURLAY: The other da y I believe Mr. Harvey ind icated tha t Manfor was employing some BOO people at their plant and that they spent something like $1 million in taxes to the Town of The Pas.

What were the other figures? I believe, was it $33 million in . . . MR. M. HARVEY: This a 10- year accumulative figure I'm giving you: corporate capital tax, $1.5 million; payroll tax, $769,000; mining and use tax, $1. 7 million; automotive fuel tax, $1 .4 million; and pro vincial sales tax on operations, and this is an estimate, Mr. Gourlay, $1 1 million; interest, which was the payment of interest on the money from the province, $33 million; and the employee deduction remittance, Province of !\ianitoba

Thursday, 20 June, 1985 share of personal income tax, $19 million - that is a 10 -year accu mulative. MR. D. GOURLAY: I would suggest that this represents that Manfor is a very good corporate citizen not only for the province, but for the Town of The Pas. Would the Minister not agree to that? HON. J. STORIE: I don't think I can di sagree with that, no. I'm pleased to hear the member say that. MR. D. GOURLAY: I wonder then, why would Manfor want to make a dona tion of $5,000 to an arena in The Pas when they are already looking at an $18 million deficit in this current year.

Why would the corporation feel obliga ted when they are already being a good corporate citizen, why does the Manfor corporation feel that it has to give a dona tion of $5,000 to The Pas for the arena? HON. J. STORIE : Mr. Chairman, I suppose that, like any corporation, they have a budg et, and as the member probably knows, all businesses in a community get requests from charitable non-profit organizations to support various events, facilities in the com munity, whether· you are Manfor or Chicken Delight.

There is a small bud get for that, and like any other company, they provide those kinds of small dona tions to support community projects. I remind the member that they are indeed a good corporate citizen and they are viewed as a corporate citizen by the people of The Pas. From time to time, requests were made for dona tions. MR. D. GOURLAY: I think that the people also recognize that the company is in trouble fina ncially and would like to see it improve its bottom line.

In comparing it to Chicken Delight, or what have you, I don't think Chicken Delight would be giving a dona tion if they were running a serious deficit. I would suggest that the people would certainly unde rstand if no dona tions were being provided at a time of obviously economic do wnturn and the Minister may say that $5, 000 is not very much money. I think it is a very healthy dona tion, especially at a time when the company didn't have any money. lt was coming out of the taxpayers' pockets. HON. J. STORI E: Mr. Chairperson, I have no major problem with the mem ber's comments.

He would be pleased to know that a deci sion was made shortly after that not to provide those kinds of things. The member is again partially right when he sug gests that is part of our message, one that we've been promoting and one that has been supported , by and large, by people in The Pas, that there has to be a concerted effort at all levels from all people interested in red ucing costs and making this a more successful corporation. The member should be happy to know that's one of the initiatives, I suppose. Small as it may be it's, I suppose, symbolic too. MR. D.

GOURLAY: I wonder if the Minister can confirm that there were other donations made of some $1,2 25 for prize money to the Trappers' Festival, which was an increase of $500 over the previous year. I believe this was made in Janu ary of 19 85. Also, I wonder if 63 the Minister can confirm that $1 ,2 00 was dona ted to the Husky's Hockey Club in The Pas; and I wonder if the Minister can also confirm that $10 0 dona tion was made to the Societe franco-man itobai ne. As I indi cated earlier, we had a bud get for public relations. I am not aware of the last item.

We had a budg et for public dona tions which subsequently we ind icated that we would not be making any more public do nations. We have been donating to the Trappers' Festival for several years. If there was an increase, undo ubted ly the Trappers' Festival came, as they did to all the businesses in town, and asked for additiona l sponsorship. The Husky's one I was aware of. But as the Minister has already ind icated , we have said we would not be making any more dona tions to the commun ity until such time as the company was beginning to recover from the circumstances it finds itself in.

The last one, I have no knowledge of. I would have to check on it. MR. D. GOURLAY: I wonder if we can be provided with a breakdo wn of all the donations that were made by Manfor dur ing the past year. HON. J. STORIE: I don't think we have any problem with that. I presume that the member is a faithful subscriber to the Opasquia Times and that information is made public, certainly. I think the corporation has made a practice of identifying its sponsorship of events, and we'll provide the member with a list. MR. M.

HARVEY: Ju st clarify the time period please, one year from now or last year or up-to-d ate, the last 12 months. MR. D. GOURLAY: I would like for the year-end review ending September 30th, including tha t year, up to the present time; include the last annual report, in ad dition, the period up to June of'85. MR. M. HARVEY: We can get that information to the Minister. MR. D. GOURLAY: Who would be responsible for paying out the dona tions to the various organizations? MR. M. HARV EY: lt's under Mr. Sweeney 's responsi bilit y, but the person cha rged with tha t particular task is the Department of Human Resources.

Mr. Clement is in charge of all those public dena tion kinds of things. We also have recently struck an Ex ternal Affairs Comm ittee of the board which is composed of three board members, and we are attempting to put together an external affai rs strategy so that our relations with the community and the general public in the areas that we work in will be as beneficial to the company as they can be. MR. D. GOURLAY: Mr. Sweeney would not recollect the donations that have been made this past year? MR. J. SWEENEY: Mr. Chairman, I am not aware of any other donations, other than those recited by Mr.

Thursday , 20 June, 1985 Gourlay. There may have been, but they would have beerl mirtot and I'm not aware of them. MR. D. GOURLAY: So tha t Mr. Sweeney do es recall a donation to the SFM? MR. J. SWEENEY: No, Sir, de fin itely not. MR. D. GOURLAY: Is Mr. Sweeney saying there wasn't a donation made? MR. M. HARYEY: No, he's saying that he doe sn't recollect. He's saying exactly as I di d, that he doe sn't know of a donation being made to the Societe franco­ manitobai ne. We said that we would try to det ermine, but neither one of us is aware of that dona tion. MR. D.

GOURLAY: To move on to another area, I would like to ask Mr. Sweeney if he maintains a staff in Montreal. MR. J. SWEENEY: Mr. Chairman, Mr. Gourlay, we do not maintain a staff in Montreal. We do have a sales agency in Montreal. MR. D. GOURLAY: I came across a receipt signed by Mr. Sweeney for a luncheon with a Montreal secretary for services render ed . I wonder if Mr. Sweeney could explain what that's about. MR. J. SWEENEY: Mr. Chairman, Mr.

Gourlay, because of the fact that we do maintain our contacts with the indus try at large, I have put in a receipt, I believe, for a luncheon for my ex-secretary who forwards to me items pertinent to Manfor. Montreal is the centre of the pulp and paper ind ustry in Canada; Consolid ated Bathurst is very large; it's a source of information to me. lt pays off hands omely and I had no hesitation at all in recognizing the service she had made to me. MR. D. GOURLAY: I notice there are expenses over $1 ,000 for computer components for Mr. Sweeney's computer in Montreal. I wonder if Mr.

Sweeney can explain to us what function the computer that he has at Montreal plays in the role of Manfor. HON. J. STORIE: Mr. Chairperson, I don't believe this is an appropria te line of questioning for a committee. Mr. Sweeney's expense account is reviewed by the di rector of fina nce and by the chairman, and I don't know that the committees were set up to cross-examine the executive officers of our Crown corporation. Mr. Gourlay has asked a number of questions. I think, suffice it to say, that the expense account of all officers are reviewed.

I have indi cated publicly in the House that I am satisfied , that the board of di rectors are satisfied and the chairman is satisfied that the proper procedures and proper process is taken. I don't think it's appropriate and I don't think there is any need to pursue this line of questioning whatsoever. I don't think it is a healthy practice for the comm ittee, nor do I believe it's necessary or valuable. MR. B.

RANSOM: I would point out to the Minister and to the commit tee with respect to the general 64 functioning of government, that we have the opportunity through the Public Accounts Committee to review such things as expense accoun ts of Min isters, Deputy Ministers, whatever, and that from time to time that is done. That opportunit y does not exist through Public Accou nts for the review of items deal ing with Crown corpora tions, as I would sugge st that this is an appropria te place to ask these questions.

Of course, the Minister, when questioned on a number of items with respect to the corporation in the House, has always said, ask those questions in the committee. We are now in the committee, Mr. Chairman. HON. J. STORIE: Mr. Chairperson, while it is true that I sugg ested we could ask cer tain quest ions in comm ittee, I don't believe I ever referred to these specific questions. While it is true that the expense accounts numbers are reviewed in Public Accounts, detailed explanations are not required from members of ind ividual expenses.

There are global numbers and we are deal ing again with intangibles, and we have had a perfect example where a question was related to an ind ividual luncheon. The question has to be, what is the value of that and what is the purpose of it? Those explanations are due to the board . The larger questions of the policy and dir ection of Manfor are matters of concern to commit tee. lt has certainly not been the practice of this comm ittee to review expense account items . Despite the fact that I am aware that the Member for Turtle Mountain has such items, it has not been the practice, nor do I think should it be. MR.

B. RANSOM: Mr. Chairman, I just point out to the Minister that in Public Accounts it is possible to seek out specific de tails with respect to expense accounts. From time to time in going through Public Accounts, that is done. The request can be made to the Minister of Finance to provide all the detai ls of any particular transaction, any item that is listed in the Public Accounts and that's there for a purpose. lt's not very often done, but occasionally it is. That opportunity doe sn't exist through Public Accounts to deal with the Crown corporations.

I suggest to the Minister that when we are dealin g with a corporation that is owned by the taxpayers of Manitoba and , of course, is costing the taxpayers a great deal of money, that questions regarding the expenditur e of money, however small or however large, questions asked by the representatives of the taxpayers are in ord er. · HON. J. STORI E: Mr. Chairperson, I do know that it has not been a practice of this committee to ask for detailed accounts from ind ividual executive officers for their expenses. Mr. Gourlay has asked on a number of occasions in the House and I have responded.

I have indi cated that this matter is reviewed , the total expense bud get and so forth, and general admin istration bud get has been revie wed mo re thor oug hly than under most corporations. If Mr. Gourlay wants that information, I will certainly make myself available to sit down with him and dis cuss ind ivid ual items.

Thursday, 20 June, 1985 I do not think it is appropria te. I think it leaves an nnecessary cloud of suspicion over ind ividua ls. I do ,ot appr eciate tha t and I don't think th at it's ppropriate. I am perfectly prepared to sit down with M. Gourlay and provide any information that he wants •n a private basis. I can assure you there is nothing o hide . The best int erests of Manfor have been onsidered , taking into account that is the responsibility •f the chairman, and that has been done. If Mr.

Gourlay feels that he has a need to know specific nformation above and beyond, then I am prepared to •rovide that because I will have to respect his integrity o use that in the best way he feels necessary. �R. B. RANSOM: Mr. Chairman, the Minister is doing 1i mself exactly what he is accusing my col league of. fh ere have been unusual circu msta nces simply Jegin ning with the size of the contract with the chief �xecutive officer, an unprecedented contract in the 1istory of government. We are in the comm ittee; we have the opportunity to ask the questions. Mr.

Sweeney has the opportunity to answer the questions on the record, not the Minister passing some detai ls privately behind closed doors wh ich lea ves exactly the opportu nity for a misund er-standing that the Minister says he is trying to avoid. We are at the committee, it's open; it's on the record; and this is the opportunity to answer the questions and to clear the record very openly. I should think that would be an opportunity that Mr. Sweeney would welcome, but he is able to speak for himself obviously. HON. J. STORIE: Mr. Chairperson, Mr. Sweeney has ind icated that he is prepared to respond.

I simply want to state that I do not believe this is a necessary nor acceptable practice in committee. The qu estions tha t Mr. Gour lay had could have been answered - not secrets - I was not swearing him to a code of silence. I simply ind icated that I didn't believe the public area was the best place to review this particular kind of information because, as we both know, what looks like questionable or unusual items in a cursory review are explainable in the circumstances of the position of an ind ividual and the circumstances of a particular event.

So those ind ivid ual kind of items I don't think have to be part of a commit tee. If the member is ind icating this is a kind of practice he wants to establish, I don't thin k it is necessary. Mr. Sweeney has indica ted he is prepared to answer questions, and I presume he will do so. MR. CHAIRM AN: Mr. Sweeney, could you speak into the microphone. MR. J. SWEENEY: Mr. Chairman, I wish to make it very clear that I have a computer. lt belongs to me; it is not in Montreal. There are one or two items that com puters require to connect them, for instance, to a telephon e.

I charg ed those to Ma nfor with the permission of the chairman. Those items belong to Manfor. My computer is in The Pas. MR. CHAIRMA N: Mr. Santos. 65 MR. C. SANTOS: I'd like to talk about the principle of public accountabil ity, Mr. Chairman. MR. D. GOURLAY: Mr. Chairman, on a point of order, are we going to be allowed to continue in the area that we are de aling with or are we going to be sidetracked here? SOME HONOURABLE MEMBERS: Oh, oh! MR. CHAIRMAN: Order please, order plea se. recognize Mr. Santos. MR. C. SANTOS: Thank you, Mr. Chairman.

The principle in our government is tha t the elected official who has spent public money has to explain and justify the expenditur e. So I think there should be no dif ferent rule for appointed officials. No spring of water can rise higher than its source. If those who are publicly accountable have to justify the expendi ture of public mo ney, so do es the public function arie s who are appoi nted only and who have no other means of justifying their behaviour as public officials in the performance of their role other than answering to a committee like this committee.

That is the only point I want to make and I' d like to make it a public point that this is a good policy. Thank you. IIII R. D. GOURLAY: I appreciate the comments of my colleague, the Member for Burrows, and I would just like to put on the record that if there is any cloud of suspicion created , it has been caused by the Minister, by his dia tribe that he has just put on the record. I am just asking Mr. Sweeney, in his role as president and ch ief executive officer, whether in fact he did have some staff in Montreal?

I don't di spute that maybe they could be useful there, and I did notice an item of expense and he has explained that. There were other items of expenses involving in the neighbourhood of $1 ,000 for compo nents for a computer. I'm just asking whether this computer is tied into information regarding markets, or is it used in the day­ to-da y operations of Manfor? I think that is a legitimate question to ask in this committee. After all, the taxpayers are paying $1, 000 for the cassettes and computer components, and I think we have a right to know what it is being used for. Mr.

Chairman, my question is: what role do es this computer play with respect to the operations of Manfor? MR. J. SWEENEY: Mr. Chairman, the role of the computer has not played as high a role as I would liked to have had it done because of a surplus of work. The computer is owned by me. I use it to connect to Compu­ Serv which is a company providing information out of Baltimore. I had ambitions which have so far been frustrated by a surplus of work. I had am bitions to have it connected to Into-Globe, which as you know would provid e me with information from the Globe and Mail on the da y it is publis hed.

The Globe and Mail arrives in The Pas a da y after, or it is available a day after it is publis hed. Because I moved , it ha s no t been connected up to Into-Globe and Manfor has not been charged with it.

Thursday, 20 June, 1985 I would say further that an ambition of mine is to bring the com puterization of Manfor fully into the 20th century. One way to do that is leader ship. I have the equipment to do it, no one else had the equipment to do it at that time. The equip ment that was bought, and you speak of $1 ,000, which I suppose could be correct, is mainly for a printer which is the property of Manfor and may be used by Manfor in any and many of its computer applications.

I find, if I may say so, that over the months from April 27 to Jun e 27th or thereabouts, the opposition has taken Manfor to task and, in fact, in doing so, considerable harassment has come my way. Thank you, Mr. Chairman. MR. CHAIRMAN: For the benefit of the committee, the referral to this committee is the rapport, while the discussion the last 25 minutes has not involved a formal point of order, it has touched on various points of order. I would suggest that if there are any further disp utes, we will have to confine our di scussion in this regard to specific items in the report.

I raise that only in terms of dir ection for the committee. Mr. Ransom. MR. B. RANSOM: Committees deal ing with reports of Crown corporations, because of the nature of the fact that they are usually deal ing with a report that is six to nine months old have, in my experience, always received an upda te of current activities. The questioning has always centred around current activities of the corporation, as well. Because the questioning may not be the sort of questioning that the Minister might like has never really entered into whether it has been considered in order or not.

If we're simply going to deal with an annual report that's nine months old, of course, it removes the ability of an opposition to perform a function. I would certainly hope that the Chairman would not break with that, attempt to rule against that practice of the House to deal with current operations as well. MR. CHAIRMAN: I appreciate the member's comment. I was just making little suggestions in terms of procedure for the committee.

If we do become further bogged do wn in terms of that situation, we may have to revert to more specific di scussion of the report, either on a page-by-page basis or on a line-by-line basis. Hopefully, with the assistance of the commit tee, we won't have to do that. Mr. Gourlay. MR. D. GOURLAY: Mr. Chairman, with respect to Mr. Sweeney's remarks, I appreciate the situation that he may have found himself in in recent months. However, Mr. Sweeney has to realize that we are deal ing with a Crown corporation.

I am a duly elected representative of the people of my constituency; I am charged with the responsibility of critic for Manfor; and I feel it's my duty to fully get explanations for every dolla r of taxpayers' money that is spent, wherever it may be, in this case, it happens to be Manfor. I don't see anything wrong with Mr. Swe eney's answers. I was just wondering about a charge of $1, 084 for computer parts and components. He has explained why these were purchased, and I accept that. 66 I don't know why the Minister has created such a cloud of suspicion because I have raised these issues.

Certainly to talk to the Minister behind closed do ors to get an explanation is not good enough, and I don't want to do tha t. I want to have everything on the record, because I represent the people of Manitoba, and they want to know where their tax dol lar is being spent; that includes flights to Swan River for the Member for Swan River. HON. J. STORIE: Mr. Chairperson, I can appreciate the member's concern. I only point out that the records Mr. Gourlay is using were obtained surreptitiously.

The expense accounts of indi vidual corporate officers have not, to my knowledge, been the point of dis cussion for committee members in the past. I have indic ated I, too, am an elected person charged with the responsibility of the Crown corporation, in this instance, Manfor. I take my responsibility seriously. I have ind icated that I have reviewed with the chairman the matters that the member has raised. I have indi cated publicly on many occasions that those matters were justifiable and within the guideli nes and acceptable.

I have ind icated that, as a public servant, a public official charged with that responsibility, that I would ensure that where there are, not in this case but in any case, misallocation or misuse or inappropriate use of public funds, that that's also my responsibility. I have ind icated on a number of occasions that this did not have to be a public issue, that I would provide those explanations. Your responsibility, I agree, is to find out. I don't know that it is necessarily to make it public in the way that it has been made. While I appreciate your responsibility, I also have one that I take quite seriously.

MR. B. RANSOM: Would the Minister prefer that these questions be put in the House to him? HON. J. STORIE: Mr. Chairperson, I think I have ind icated on a number of occasions that I am prepared to answer, in a public way, questions that concern the operations of Manfor.

When those questions - and this is my own personal feeling, and the Member for Turtle Mountain is quite aware of it - when those dis cussions, by their nature, tend to reflect, rightly or wrongly, on an indi vidual, I have a lot of trouble di scussing those in public because, as we all know, once you're accused, even inadvertently, the cloud of suspicion is there.

That's an unfor tuna te circums tance and people involved in public life, even those including members of the Legislature, but certainly to a greater extent those who are not dir ectly elected, when their character is put in question, inadver tently let's say, I don't think that is necessarily a healthy thing for the ind ividual, or the agency, the corporation that he's involved with; I don't think it is a good thing in terms of the public perception of agencies and corporations. I don't condone wrongdoing; I take my responsibilities seriously. I have ind icated to the House that I have reviewed the matters.

The answers that Mr. Gourlay got toda y were no dif ferent than those that I provide d or would certainly be willing to provide, and I don't see the need - and this is again a personal comment - I don't see the need for this kind of public airing. I take my responsibilities seriously, too. I assure the

Thursday, 20 June, 1985 nem bers that I have reviewed those issues. That's my leeling. The member asked , would I prefer them in the House. I have had them in the House, and I have answered . I would prefer not to have those kinds of questions. MR. B. RANSOM: Mr. Chairman, I suppose there are many Ministers in government who would prefer not to have questions asked of them, that do esn't mean that the questions shouldn't be asked . The Minister, I'm afraid, do es not seem to unde rstand the question of accountabil ity that is at stake here. HON. J. STORIE: I und erstand it perfectly. MR. B.

RANSOM: Well, if the Minister under stands it perfectly, then he is attempting to avoid answering, because he hasn't answered specific questions. Does the Minister not realize, Mr. Chairman, that if he is asked specific questions in the House, and he do es not have the information at his fingertips, he cannot answer it imm edia tely, the question then rem ains unanswered for a period of time, and that is when a straightforward question can become interpreted as being an accusation . . . HON. J. · STORIE: Let's not play games, Brian; let's not play games. MR. B.

RANSOM: . . . when it is not an accusation; that people who can answer the questions immedia tely are here. That seems to me to be the most appropria te time is that, when a question is put, an answer can be giv en . There can be no opportun ity for misunde rstanding or misinterpretation. If he wants to refuse to answer, it's up to you. HON. J. STORIE: Mr. Chairman, I have never refused to answer a question, nor have I any need to. I have simply ind icated that there are two or three or half-a­ dozen dif ferent ways to answer the question. One is with specific intention which can be malicious, or otherwise.

Another is to ask those kinds of questions which require a public airing; some do and some don't. MR. D. GOURLAY: I would like to ask Mr. Sweeney how much time he has spent at The Pas dur ing the last year? MR. J. SWEENEY: Mr. Chairman, Mr. Gourlay, it is a pleasure for me to tell you that, notwithstanding a contract which you're aware of, I have taken six weeks of vacation; I have worked half-da ys Saturd ay, half­ da ys Sunda y on every weekend that I have been in The Pas, bar the two or three statutory holidays between Christmas and New Year's.

Obviously, no answer can be absolutely accurate, but I am telling you what I believe others observe to be the facts. If you ask me how many da ys I have spent in The Pas last year, I would have to say about - excuse me, I was speaking of working da ys, Sir - or are we speaking of weekends? Which are we speaking about? MR. D. GOURLAY: I am speaking about working da ys. MR. J. SWEENEY: Well, I have already mixed up working da ys and Saturda ys and Sunda ys which, to 67 me, are working days.

In any event, having told you I have taken six weeks vacation, that's 36 da ys out; plus I have, I am sure, taken the 11 statutory holida ys in one form or another being between Christmas and New Years. Now we are up to 47 da ys. I have taken out on weekends, having said I work half-days, it could be said tha t there are 52 other da ys in total - excuse me, 52 x 1/ 2 is 26 other days - and my mathematics haven't been written do wn, but I think you will find that maybe your mathematics are faster than mine are this morning, but I would say that I have spent over or close to 300 da ys in The Pas.

Now I could be off , I will grant you, 10 days more or less, but probably more than less. I hope that answers your question, Sir, which I consider another qu estion which is prac tically a harassment. lt is, if not a harassment, Sir, I look at it as one which may have been intended to embarrass me. I wouldn't for the world put the word in your mouth, but I have not spared myself at any time. MR. D. GOURLAY: Mr. Chairman, I respect Mr. Sweeney's answer. I was only asking the question to deter mine how much time Mr.

Sweeney has to spend at The Pas with respect to the work there in comparison to maybe calls that may take him to other parts of Canada on business. I am just asking as an approximate breakdo wn as to how much time Mr. Sweeney spends at The Pas. Mr. Sweeney apparently is read ing other things into it. However, we know that this job could take the president and chief executive officer to many parts of Canada with respect to the work and I'm wondering just how much travel Mr. Sweeney do es have to incur on the job. MR. J. SWEENEY: Mr. Chairman, when Mr.

Gourlay spoke of my da ys at The Pas, I must admit or agree that some of those days were in fact Vancouver, New York, Toronto, Montreal. I was in Montreal last week for two da ys; I was in Toronto the previous week for two days, counting travelling; I was in Vancouver I would suspect six months ago or more, two da ys. I count those days as working da ys. I have visited our sales offices in Montreal a maximum of six times in that period of time. So the figure I just gave you of 300- odd days in The Pas is inaccurate insofar as The Pas is concerned.

That is not inaccurate with regard to where my work effort is concerned. MR. D. GOURLAY: Mr. Chairman, I would like to have information with respect to contractual arrangements that Mr. Bourgeois has with Manfor, the current contract arrangements. What is Mr. Bourgeois' present role with Ma nfor and under what circu mstances and arrangements? MR. M. HARVEY: Mr. Chairman, there is no present contractual arrangement. We had a contract originally to employ Mr. Bourgeois as a dir ector of marketing, and he is still doing that job for us until we are able to replace him in that role.

He·has given us an ind ication that he would provide so many hours a week, and I am certain that he is the loser because I can't think of a day or an hour when I was aware that he wasn't working for us full time. But I believe I am right in saying

Thursday, 20 June, 1985 that the contract that we di d have with him is now just being renewed by a renewal clause on a da y-to- da y basis. MR. D. GOURLAY: I respect that. I just want to know, do es Mr. Bourgeois still operate a private law practice in conjunction with his other dut ies? MR. M. HARVEY: I believe Mr. Bourgeois operates a law practice, in name only, I would suggest; he may do some work in that respect. lt certainly doe sn't interfere with his dedica tion to Manfor, and I suspect that if anyone is the loser it is probably the law practice. MR. D.

GOURLAY: Well, that is kind of a loosy-goosy arrangement, I would suggest. The chairman should know what the employment arrangements are with Mr. Bourgeois. Does he operate a law practice out of Manfor of fice, by any chance; does he use the Manfor staff for some of his private law practice work? MR. M. HARVEY: Mr. Bourgeois has an office, which he pays for, in the same building as Manfor; he also has an office in our suite. He do es not, to my knowledge, use any of our staff to do his legal work, he has arrangements to do that of his own.

There was an unde rstanding, which I said is now expired , where he would provide us with x-num ber, a minimum of x­ number of hours a week for which he charged us a certain amount. As I have already ind icated , it is not loosy-goosy at all except, if it is, it is in Manfor's favo ur because we are getting more than he has ind icated to us he would give us. MR. D. GOURLAY: Up until last fall Manfor's off ice was located on Notre Dame Avenue, I believe. Under the working arrangements there, was the situation that Mr.

Bourgeois had his law office beside the Manfor office, or did he have a separate office somewhere else in the city? MR. M. HARVEY: I don't think he had a law off ice at that time, Mr. Chairman. MR. D. GOURLAY: So, Mr. Chairman, Mr. Bourgeois did not cond uct any of his private law practice out of the Manfor office on No tre Dame? MR. M. HARVEY: Not to my knowled ge, Mr. Chairman. MR. D. GOURLAY: What is Mr. Bourgeois' present role with Manfor, is he dir ector of marketing? MR. M. HARVEY: Mr.

Bourgeois is cu rrently dir ector of marketing, and he is also acting as corporate secretary at the moment because we had chosen not to refill a position that was vacated . He has also indica ted to us that he do es not want to consider this a long-time arrangement, so we are trying to come to some resolution of a di rector of marketing position and , until that time, we have asked him to stay on in that capacity. MR. D. GOURLAY: What expertise do es Mr. Bourgeois have in marketing of lumber and pulp and paper products? 68 MR. M. HARVEY: Mr .. Chairman, Mr.

Bourgeois, as you know, has been involv ed with the fo rest produc t situation since the beginning of the analysis that was done to deter mine what option would be taken. In the process of that, he has picked up a fair amount of expertise in the ind ustry as a whole. I am not an expert in the ind ustry, but Mr. Sweeney is, and I think he would be prepared to give you an estimation of how well Mr. Bourgeois stacks up in the area of marketing forest prod ucts. MR. J. SWEENEY: Mr. Chairman, Mr.

Gourlay, as the chairman has remarked , Alan Bourgeois has been involved in the upda te and the upgrade and the paper talk for a numb er of yea rs. Decem ber 1s t, or ther eabouts, 19 83, he was appoi nted Marke ting Manager because there was no such thing in the corporation. Mr. Bou rgeoi s, with in a period of four months, developed more street smarts and more marketing capability than any man I have known in 44 years in the same period of time - four months. Mr. Bourgeois is on the road , I hate to say it, but I would guess, close to half of his time, if not more. He travels on his time. Mr.

Bourgeois has represented us better than any man that I am aware of as a marketer; he has engaged marketers who are capable; he has stood off marketers who were not capable and, in spite of the fact that I'm sure he blushes at these words, I consider him one of the top pulp and paper marketers in our grade s in Canada, if not in the United States. MR. D. GOURLAY: I appreciate the remarks from Mr. Sweeney, and I am very pleased to hear that he has this confidenc e in Mr. Bourgeois. I'm sure that is to the benefit of Manfor and to Manitobans to have a man of this calibre. I'm wonderi ng, Mr.

Chairman, if we can find out why ind ividuals such as Tony McGill, AI Penner, Ted Turner and Paul Demare were relieved of their duties at Manfor during the past year, or several months, I guess. MR. M. HARVEY: Mr. Chairman, this is one of the areas that I have been perplexed with all morning. I listened with great interest to the de bate on what was available to this committee and what is not available to this comm ittee and , frankly, it gives me a bit of a dil emma. There are some items that are commercially sensitive, that it would be not appropriate for me to talk about.

That is something I think the comm ittee would understa nd. No w I'm asked to com ment on the factors surrounding the personal affairs of ind ividuals. I don't think that is my privilege to talk in public about the ind ividual situations surrounding employees who are no longer with us. I have always made it a practice to, if someone asked me something involving another indi vidual , tell them to ask them about it.

I don't know where I am basically with respect to my responsibilities of this committee, and I certainly don't want to appear to not want to di scharge them, but I have some di fficulty with questions about people who have now left the employ of Manfor who are now named publicly. I don't think that I am in a position to answer those questions. MR. D. GOURLAY: I can appreciate Mr. Harvey's comments. I wonder though could he indic ate that in

Thursday , 20 June, 1985 the case of Mr. McGill and Mr. Turner and Mr. Desmarais, were they relieved of their du ties because they wouldn't move to The Pas? Was that one of the reasons? MR. M. HARVEY: Mr. Chairman, no, there was no indic ation tha t they were relieved for not wanting to move to The Pas. One of them, in fact, ind icated that he would move to The Pas. One of them was not required to move to The Pas. MR. D. GOURLAY: In the case of Mr. Desmarais, can we be provided with detai ls of this ind ividual's severance arrangements with Manfor? MR. M. HARVEY: Mr.

Chairman, the severance package with respect to Mr. Desmarais is, I believe, at this moment currently being negotiated between our lawyer and his. I would not want to comment on it at this time, except to say that we tried in all cases to make a settlement that recognized the years of service and was in line with settlements made for people of that nature in ind ustry generally. MR. D. GOUR LAY: Are severance arrangements completed with the other indi viduals I mentioned? MR. M. HARVEY: I believe they are, yes. MR. D. GOURLAY: McGill, Penner and Turner? MR. M. HARVEY: Mr.

Penner, as you know, is before the courts at the moment. MR. D. GOURLAY: Mr. Penner's case is before the courts? MR. M. HARVEY: I believe that's the legal terminology for the point that it's at, yes. I think I ind icated that to you on Tuesday. MR. D. GOURLAY: With respect to Spencer Balmer, I had questioned the Minister in the House with respect to Mr. Balmer's role. I believe it was ind icated that he is operations manager and would subsequently take over as chief executive officer at some time in the future. The Minister did not ind icate to the House what salary arrangements were in place.

However, it was reported in the Free Press that he indi cated that to the media or to some of the med ia at least. I wonder if the Minister can now provide detai ls to this comm ittee with respect to Mr. Balmer's employment arrangements. HON. J. STORlE: Mr. Harvey has that. MR. M. HARVEY: Mr. Chairman , through you to Mr. Gourlay, Mr. Balmer is on a two-year contract. The figure reported in the Free Press is accurate. Sorry, that's a three-year contract. MR. D. GOURLAY: Excuse me, I didn't catch those. MR. M. HARVEY: I said Mr. Balmer's contract is a three-year contract.

The figure, I believe, in the Free Press was $1 30,000.00. Is tha t correct? That is the correct amount. 69 MR. D. GOURLAY: Were there any bonus clauses with that? MR. M. HARVEY: No, the salary figure is all inclusive. That's a straight salary figure, no bonus. MR. B. RANSOM: Mr. Chairman, there were some questions last year that we asked of the Minister in the House concerning the engagement of a contractor on an untendered basis to do some work in the vicinity of Thompson.

There were at the time some questions raised by contractors in Thompson as to why they could not be offered the opportunity to bid on tha t work. I believe a contractor was brought from The Pas to within 20 miles of Thompson, and the Thompson contractors had equipment sitting there and couldn't do the work. I wonder if I could just have an explanation of that as to why that was done. I would ask for the explanation and so on. HON. J. STORIE: Mr.

Chairperson, I do recall that qu estion. lt had to do with some work tha t was essentially piecemealed on an hourly basis to a company called No rth Point that Manfor had been doing some work with and had established a relationship with. Subsequent to that, I did raise the matter again with the chairman and ind icated that certainly as we work in dif ferent communities every opportunity should be given to local contractors to become involved at least competitively with, if not on some other basis, an hourly basis with contractors who we have traditionally have used .

So I think that there was a good point made there and I think, as a matter of practice, Manfor would prefer to deal with local companies. Obviously, the more people who are interested in providing services, the better prices that we can get in the long run as well. So we have taken that matter under advis ement. Hopefully, as we move into new commun ity areas, we'll be able to use some of the services available from other contractors. Mr. Harvey would like to add a comment to that. MR. M. HARVEY: I just wanted to advise Mr. Ransom that we have, since last year, made certain revisions in our purchasing practices.

They are all under Mr. Betz now. All goods and services will be going through his department. We are trying to develop a policy that will let us be sensitive to such issues, so that when we're working at the far limits of the Manfor's operations we can take account of this and also make certain that the contractors concerned have some idea of it by doing some public notice of tendering work. MR. B. RANSOM: Could we have an ind ication of how much untendered work would have been given to, I believe it was No rth Point, the company that the Minister named?

How much untende red work would have been given to them in the year under review? MR. M. HARVEY: Mr. Chairman, obviously not very much because he was in my office as little as a week ago complai ning that he is going to have to move to Alberta if we didn't give him some work. I feel that, whether it's our cutback in operations or what, he is not getting very much work at the moment, and that's

Thursday , 20 June, 1985 a concern to us because he operates the only local float service. If we lose him, then it's going to be very difficu lt for us to move some machinery around without making some expenditur es ourselves. So I can't give you an exact figure, but our work in that area has been fairly low and he nasn't been gett ing too much. MR. B. RANSOM: I was speaking about the year that ended, September 30, 19 84. If that information is read ily available I would appreciate having that.

I have asked similar questions, by the way, in Public Accounts with respect to untender ed work that has gone to other contractors, and I have fou nd, for instance in the Depart ment of Na tu ral Resou rces, one company receiving $1 1 0,000 worth of work untend ered , and no work that was tendered .

I realize how that comes about, that people in a government agency, or probably in a private agency, too, work out a working arrangement with a contractor and they get satisfactory work and they just continue to want to use them, but the public has di fficulty appreciating that when they don't have an opportunity to break that relationship that sometimes exists. Since I have the assurance that at least the policy is being revie wed and tha t others will have an opportunity to bid, then it is not so important. I wouldn't expect them to go to great di fficulty to come up with that information.

I am interested in if you could tell us where the primary loss has taken place in the company, whether it's in the lumber operation, or whether it's in the pulp and paper operation; for the Annual Report that we are looking at is satisfactory. MR. M. HARVEY: Well, as you know, Mr. Ransom, the major di fficulty that's plaguing us now, and then, was market dif ficulties. Our losses are pretty well dic tated by the price and volume of paper and pulp.

We did have some major problems in the lumber division, historically, and that was the major reason for the rebuild to overcome that; but what happens to us on a bottom-line basis is basically related to mar ket prices for paper and pulp. That even affects, as I think I'v e di scussed with you before, our inventory of roundwood because the value of it fluctuates as well with the price because we value that inventory at the lower end of cost or net realizable value.

We can have as much as a $5 million swing on a bottom line without anything happening except the price of paper dropping off and our inventory dev aluating on it. Of course, when the market price comes back, you get the reverse kind of thing. So the majority of our loss, I would say, to answer your question more di rectly, it relates to the volume and pric e that we can get for our paper products. MR. B. RANSOM: And that would be a change, if I recall correctly, from a couple of years ago.

I believe before the comm ittee a couple of years ago the ind ication was that the lumber division was the big loser and that, by some additional investment there, that we could stop such a huge loss at least. I take it then that you have been somewhat successful in stopping the loss there, but this loss then is intending to be on the other side. Is that carrying over into the current year that we are in as well? 70 MR. M. HARVEY: �11. of course, we haven't realized any benefit as yet from the upgrade in the sawmill.

So there would be some sawmill losses in the $9 million, as well, but the spectacular fluctuations are on price and volume of paper. I would say the current situation, which I have di scussed with you on Tuesday, where we were talking about a $17 million to $1 8 million loss, is almost totally due to the fact that the paper prices and the pulp prices, the market is so soft. What it do es then is reflect also if we have high inventory. So if we have a high inventory and we get a poor paper price - I think I used the statement dou ble­ barreled effect in the transmittal letter - that's what I was referring to.

Prices of paper go up, we can sustain the sawmill, and if we can get the sawmill in a break­ even position, which we were trying to do with the retrofit, then we would maximize the profits on the paper side. But it's actually the paper side of the operation that det ermines whether we will make or not make money. MR. B. RANSOM: On Statement 3 it lists the expenses. There was a substantial improvement in the cost of sales from $62,265,083 do wn to $58,456,0 00.00. How was that red uction achieved ? Is that basically through management, or is tha t through changes in the equipm ent? MR. M.

HARVEY: I think cost of sales is di rectly related to your ability to run the paper machine continuously and a good price for the paper. When you engage in shutdo wns, or anything like that, your overhead cost rises, so your price per ton rises and your cost for sales go up. So the improvement that you get by running is di rectly related to the volume and the price that you can get for the paper. I am told that a paper mill is actually just the process of selling time on the machine.

So if you can sell the time and sell it at a good price, then you achieve a lower per unit overhead cost , and the selling costs go do wn as well. MR. B. RANSOM: A question perhaps to the Minister. I recall seeing some weeks ago that a corporation called Repap - I am not sure that's the complete name of it - was engaged in an operation in New Brunswick, I believe, either buying into a mill there, an operation there, or in some manner making an investment in it in any case.

As the Minister will be aware, that is one of the compan ies that we were negotiating with while we were in government here, and we were unable to conclude an agreement. Is the Minister aware of what took place there and, specifically, is he aware of whether or not the Fed eral Government was involved in providing any financing in that deal in New Bruns wick? HON. J. STORIE: Mr. Chairperson, I am not aware of it, but there is a pulp and paper weekly news letter that makes reference to it and the chairman has some comments. MR. M. HARVEY: I haven't read the article, except the title, Mr.

Ransom, but it do es refer to Repap acquiring Boise pulp mill and, und er a sub-title Federal Aid to

Thursday, 20 June, 1985 Project, cost of the pro ject is estimated at about $300 million U.S., including U.S. $90 million for the purchase of Newcastle and, aside from the limited partnership units, some other elements of the finance include about U.S. $30 million in grants from the Canadian Fed eral Government; about $7.5 million of that refunda ble, plus about $7.5 million in refundable provincial grants. MR. B. RANSOM: We ll, it's very interes ting, Mr.

Chai rman, to hear that now because one of the snags at the time we were negotiating here was that the Federal Government didn't want to be involved in that particular arrangement . MR. D. GOUR LA Y: On No te 5 to the Financial Statement, fixed assets, it mentions government grants received and receiveable, these grants aggregated $16 ,638,000 as of September 30th. I wonder if we could get a breakdo wn on tha t $1 6.638 million. MR. M.

HARVEY: About $12 million of that, I am told, was there at inception, it was a grant from the Federal Government at inception, and there's $4 million grants since towards our current one. We have a current grant in the current upgrade at around $10 million; $4 of that is ind icated in this statement as receiveable; and the other $12 million one is one that has been there, I guess, since the very beginning. MR. D. GOURLAY: I wonder , in the chairman 's report, he says; "To continue to reduc e its operating deficit even though that means some dev elopment plans may have to be moved forward in time".

I wond er, through you, Mr. Chairman , the chairman of the board can tell us toda y what those plans might be and what the cost might be. MR. M. HARVEY: Yes, I have already referred to one plan we were working on or looking at, which is the doubling of the mill and the looking at white paper. What I was trying to put across in the statement is that those kinds of plans, while still on the burner, need to awake our ability to make the mill that we have now function in a financial way that would attract any investor to making a further investment in the property.

So that's basically what I meant with respect to the developmental plans. MR. D. GOURLAY: So before we finish tod ay, I wond er, could the chairman give us any ind ication as to what might take place in the next six months with respect to a marketing thrust to de velop, obviou sly, orders that aren't available right now, either for lumber or kraft paper? MR. M.

HARVEY: Yes, the lumber market; of course, seems to be getting stronger at this time and we're doing as much as we can to get lumber cut and into the kilns and dried and out the door , so our thrust in that particular department will be to bring production up because the market seems to be there and we hope it will stay there for some time.

With respect to the paper side, we need to make as much advantage as we can the annou ncement from Pensicola, and we are engaged in the moment in 71 working with people who were buying paper from Pensicola, who have shown an interest in our sheet, and I would guess the next six months would be, by and large, devoted to try and take as much of that kind of market as we can.

I believe I mentioned last year that the strategy is to move away from checkstand paper, which is the shopping bags, the grocery bags, which is being heavily eroded by plastic, and our intention is to move away from that and into the U.S. multiwall market. This announcement by Pensicola makes that niche even larger and we will be certainly devot ing 90 percent of our short-term attention to gaining that particular opportunity. MR. D. GOURLAY: Thank you, Mr. Chairman, for those remarks.

I would just like to conclude by saying that, in spite of what the Minister has been ind icating for several weeks now, that there's a defi nite turnaround in the operations of Manfor, I don't believe that it is evident at all at this point in time. We hear that the current year we're in we're looking at something like an $18 million def icit. To be frank with you, I'll be surprised if it comes in that low. The plant has been shut do wn, or will have been shut down, something like 9 months.

We apparently don't have much in the way of orders for lumber or paper, and this is in spite of the fact that we have what I believe is a very fine kraft paper and should be selling well over that of our competitors. I know that the lumber industry in Manitoba - and I have some mills in my own constituency - they have been swamped with order this year so far. They have been struggling to keep up with the orders and yet we don't hear this coming out of the Manfor operation.

I would suspect that, although the Minister ind icated that some companies were dumping their lumber, but when you question the Minister it would appear that Manfor is ma ybe one of those, they're dump ing lumber to try and hold markets. I am sure that the mills that are busy are able to compete where Manfor is not able to compete.

And when you speak of dumping lum ber I am sure that Manfor is probably one of the guilty parties involved , in spite of what the Minister has ind icated to us earlier this week. · So I'll be really pleased if Manfor can show in their next Annual Report that their defi cit is in the $18 million range. I hope that it's that low, but I'm not optimistic that it will come in at that rate, in view of the fact that we have had no production and very little sales, and yet we have kept most of the man power on staff.

So you don't have to be a chartered accountant to figure out that we are in a very dis astrous year at Manfor. Hopefully, with the innovations and the modern ization at the plant, we will be in a much better position in the future to turn out the product and to mar ket our product. I would say that this past year the marketing expertise at Manfor has been gutted . We heard this morning that Mr. Bourgeois is coming on strong, and that is fine. But he hasn't been with the company very long, and it will take time for that expertise to improve.

But certainly, we have lost people who were with the company for a long long time. They had, obviously,

Thursday, 20 June, 1985 some deg ree of expertise in marketing; they are no longer there. We have no markets for a very high quality kraft paper, or very little market for it. I would say that this Minister and the present management have to take a lot of responsibility for the very dis astrous position that Manfor is in tod ay. Another factor, too, is the fact that we have purchased timber rights from Prendiville at some $700,000, almost . 75 million. We don't need those at the present time, although they would be and are a bonus to ha ve those timber rights. The fact is we didn't need them now.

We didn't have to lay out that kind of expend iture at Manfor, and there was a good chance that they could have been picked up do wn the road for that price or even lower. So, Mr. Chairman , I hope, sincerely, that the situation will improve in the months ahead . There is no way that the current year can show a very bright picture. We can only hope that in the years ahead we can get this Manfor functioning so that it can at least break even on an operation basis and leave aside the $18 4 million that the taxpayers have put into the plant.

Certain ly, if we can get an operating situation to break even, that would be a big plus. lt do esn't look like it is just around the corner, but with the renovations and whatnot in place, hopefully, the future will be brighter not only for The Pas community but for Manitobans in general. Thank you, Mr. Chairman . HON. J. STORIE: Ju st a couple of comments, one is that Manfor has not been one of the compan ies dumping lumber. We have not had any quantity of lumber to dump. As the member knows, the sawmill has just come back into production of any significant number of board feet.

The comments that the member makes with respect to the implications of the loss from Manfor are taken quite seriously. I'm certainly not pleased that we are reporting or have projected a loss of $17 to $18 million for 19 84-85, but I think the chairman has pretty clearly ind icated the cause of that. I think it is fair to say that the next fiscal year stands to be a better test of the results of the upgrad ing proced ure itself. We have not really had the impact of either the lumber upgrading or the pulp and paper upgrading to this point. We are really only getting back into the market with those two produc ts.

We are only going to be experiencing the benefit of the increased produc tivity from those two sections. So, you know, to say what we have done hasn't worked , I think is somewha t prematu re. We had projected certainly a better performance in the current year , the one tha t we' re reporting on, and it is disapp ointing that didn't occur. But those factors are beyond our control.

The mem ber ind icated that our losses di ctated in Manfor by the price of pulp and paper and dim ension lumber. lt is equally true that in other sectors of the economy, farming, for example, losses are di ctated by the price of wheat and the price of beef and the price of hogs. We both compete in an international market and, despite our best efforts, cannot always influence those in any dr amatic way. I think that we are certainly taking the challenge seriously.

I believe that our estimate of losses for the 72 current year will be certainly no higher - and, as I have ind icated , we've got three months left in the current year - we are hoping to reduce those, to bring them in at a lower than estimated figure. Once we are in the market with our new prod uct, at our new capacity, I think we do stand every chance of becoming a company that can report on a year-by-year basis an operating surplus . Manfor has certainly a mixed history, but five of the last 12 years, we have reported an operating surplus. lt hasn't been all bad news.

Let's hope that the next do zen years have an even better record. I think that is a necessity and something that I believe we worked very dili gently to wa rds, both in undert aking the upgrad ing in the refinancing, in the reorganization that is taking place. The mem ber made some comments about the marketing capacity. Certainly the market changes and from time to ti me changes in pers onnel are advantageous. Changes in personnel are never easy and create animosities, di scomfort, di slocation and all the rest of it, but sometimes it is necessary. Someone has to make those decisions.

All we can say is tho se decisions are being made in the best interest of the corporation and the sharehold er. I believe they are. Finally, I'd like to say that I'm certainly pleased and proud of the way th at sen ior ma nagement have contributed and have expended a lot of effort to make Manfor work. That goes right down to the shop floor. MR. B. RANSOM: Mr.

Chairman, no one denie s that there isn't a lot of effort and sincerity going into the management of the company, but if the Minister would be a little more forthright with the committee and with the public, we might have a little more confidenc e in the future.

I refer specifically to the way the Minister began the presentation to this committee, that he made a statement in which he said, "The efforts already under way and those yet to be mounted will, I am satisfied , allow the company to experience an even greater financial turnaround than was recorded in the year under review." At that time, the Minister had not ind icated to the committee that the corporation was going to lose $17 to $18 million in the present year. He made that statement following upon the presentation of a financial report which showed a substantial improvement over the previous year.

Had we not pressed the Minister, he evi dently had no intention of volu nteer ing to the committee that far from an extension of that turnaround we were going to see the loss perhaps double, more than dou ble, if one was accounting in the same way and taking interest into considera tion. I don't think that works to the credit of the Minister at all, that he would not simply have made a statement here and said we had a good year last year compared to a di sastrous year, or the year before, but it doe sn't look good again this year.

Instead , he put on the record a statement that was intended to lead us and the public to believe that the situation was improving and, sadly, it was not. So I would hope that the Minister in the future would simply be mo re for thright and straigh tforward in presenting to the people of Manitoba the financial picture of their forestry operation.

Thursday , 20 June, 1985 HON. J. STORIE: I have two comments. One, Mr. Chairman, the standing committee is here to review the 19 83-84 year; second, I don't believe for a moment, and I know that the member doe sn't believe, that one year's loss is an overall ind icator of progress that's been made. I have indi cated that the board and management have been deal ing with a number of fronts to improve the situation at Man for. I acknowledge the current loss.

There was no hesitation when asked what the current loss was; although that's not the business of the standin g committee to acknowledge it, and I do the same thing. The point is the loss is not the sole issue. We have to get at the root causes of why there are losses at Manfor, and that's what we are trying to do and I have been forthright about what we are doing to achieve that. So I certainly didn't mean to mislead the honourable mem ber. There is more to running a corporation than reporting on a specific year. it's a longer term prospect. MR. B. RANSOM: Mr.

Chairman, when is the Minister going to realize what his responsibility is and what this comm ittee is here for? We are here to talk about the operations of this company. If he thinks that he could simply concentrate on an Annual Report for a year where there was improvement, although the loss is still huge, and ignore the fact that the company was losing $17 million to $18 million more than they had projected to lose, then the Minister simply doesn 't seem to unde rstand what his respon sibili ty is and wha t the comm itte e's responsibil ity is. We have his assurance that things look good in the future.

We have had assuranc es from Cr own corporations for years that things look good in the future, whether it was Flyer Indus tries or whether it was McKenzie Seeds or whether it was Manfor, and the comm ittee and the people of Manitoba have come to the point where assurances don't mean anything. The only thing that will mean something is when the Annual Reports finally come in and sho w results. All we can deal with at the moment are results. Unf ortunately, the results from this year are not very good . We all hope that next year will be better.

But we 73 have had so many assurances of next year - we are all a bunch of next year farmers, I guess, in that extent - but next year has sad ly never proven to be very good . HON. J. STORIE: Mr. Chairperson, I acknowledge that we are here hoping for better things next year. I acknowledge my farming roots, and we are eternal optim ists.

I think that we have done some things that needed to be done, that should have been done, that should be able to support that and I hope to be here next year again talking, not about the current year or the year that's being reported , but the current year telling you that we are in a better situation. I have not in any way attempted to dis courage di scussion of the current year. I said at the opening of the committee that while we were here to consider the report for 19 83-84, that it was trad ition to dis cuss a lot of other issues in the current year, and we certainly did that.

Let's end on an optimistic note and say that we'll see you next year with a better report. MR. D. GOURL AY: I bel ieve earlier the Mini ster ind icated there would be a new brochure coming out with the promotion of the produc ts coming out of Manfor. When can we expect this publication to be avai lable? MR. M. HARVEY: I believe, Mr. Chairman, we are looking at what is called the mock-up at the board meeting next week and it will probably go to the printer right after that. I don't know how long though it will be, maybe three weeks, something in that nature. MR. CHAIRMAN: Will the committee pass the report? MR. B.

RANSOM: Pass. MR. CHAIR MAN: Pass. The next meeting of this committee will be to consider McKenzie Steele-Briggs. I believe the next meeting is schedu led for Tuesday. That being the case, committee rise. COMMI TTEE ROSE AT: · 12 :22 p.m.

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