Manitoba Hansard — 22 June 1978 (Sitting 69B, 31st Legislature, 2nd Session)

31-2-69b

Manitoba — Debates (Hansard)

LEGISLATIVE ASSEMBLY OF MANITOBA Thursday, June 22, 1978 Time: 8:00 p.m. SUPPLY - FINANCE MR. CHAIRMAN, Mr. Warren Steen: Gentlemen, we have a quorum . Finance 1.(bX1)-pass - the Member for St. Johns . MR. CHERNIACK: Thank you, Mr. Chairman. Firstly , could the Minister inform us what function was transferred to Executive Council as shown on the reconciliation statement? $370,100 .00. MR. CHAIRMAN: The Minister of Finance . MR. CRAIK: Mr. Chairman, it will take me a minute or two oo ... Mr. Chairman, until we get organized on these specifics, I suggest that we . . . MR. CHERNIACK: Sure, Mr. Chairman.

I'm sure the Minister isn't looking it up so I can direct my question to him which is really his question and not that directly of the others who are involved in looking up the answer to the previous question . Could the Minister tell us what waste , management and horror stories he found in the Department of Finance? MR. CRAIK: Mr. Chairman , on the first one, it's transfer of personnel from Financeto the Management Committee of MEIS, Manitoba Employment Information Services. MR. CHERNIACK: How many? $370,000 worth. The question was asked : How many personnel were moved? MR.

CRAIK: Four SMY transferred and Other Expenditures of $325,000.00. MR. CHERNIACK: Well , Mr. Chairman , I'm more interested in the answer to the second question. I'll repeat it . What waste , mismanagement and horror stories did the Minister find in the Department of Finance? MR. CRAIK: Well, Mr. Chairman , we've gone over the change in the staff of the Finance Department totals and the reduction in the staff in total is approximately 15 from last year to this year .

The largest proportion of those are due to the changes in the SMY requirements for the taxes, death taxes , the mineral acreage tax, and the shifts , some small reduction, two or three in the Property Tax Credit Department. Those are the basic changes in the staff requirements of the Deparmment of Finance .

The Department of Finance , as the member I think probably recognites, is basically a service department that services the other departments of government and if we were looking for horror stories , i t's unlikely we would look in that service department since the Provincial Auditor has recognized in the past that the Finance Department role, if anything , has been one that has been under-rated and under-renognized in terms of its function in government and it's not likely we wouiJ look within the Department . It's more likely that if you are looking for horror stories that the Member for St.

Johns is concerned about, that the operations of the Finance Dpartment is more likely to ferret out those stories . If there 's been any weakness in the total operation of government , it's been in the lack of role of the function of the Finance Department over the years . MR. CHERNIACK: Mr. Chairman , I appreciate the Minister's answer .

I put him in partnership with his leader in being two of those who have been saying all along that there is a terrible story to be told which will be revealed in the Estimates to indicate the terrible waste and mismangement by the previous government which would be sufficient , when corrected, to justify substantial reductions in taxation without reductions in program. Mr. Chairman, I don't know if the Minister 4163

Thursday, June 22, 1978 wants to deny my suggesting that that is the kind of stories he has been spreading .

If he wants to deny it, I'll accept his denial because I don 't have with me pro of that he said it but if he wants to support his leader , who no doubt has said it more than once, then would he please indicate to us were , as Minister of Finance , he can find justification for t hat statemen t in view of the fact that he probably knows that in just about every depar tment, we have asked this question that I asked and in hardly any department has anything come up of any great sign ificance although probably there has been a certain amount of waste that takes place in any large operation the size of a government which deals with so many services.

So I'm ask ing the Minister , straightforward , direct , what , through his department , has he been able to find in terms of waste , mismanagement and horror stories that wou ld be revealed in the Estimates? MR. CRAIK: Mr. Chairman , as I've ind icated in relat ion to the Finance Department itself , I don 't think the Member for St.

Johns is looking for something within the d epartment , it 's more likely to be in the department's role or lack of role in the functio n of government that has allowed the other stories to take place over a period of time , and I think more specifica lly, one would have to look and ask the question as to why the primary function of financ ial control in the government was so watered down over the per iod of time when there was no need for i t to be watered down and no necessity for tha t to happen , or it got to the point where you had a management committee that sat with one group of Cab inet Ministers , as it did in the former adm inistrat on.

You had another group that sat as a Winter Works project to init iate other programs . You had another Public Works group that had a revolving fund of a million dollars where they cou ld initiate programs without necessarily the knowledge of yet the other two funct ioning. You had a third group that met weekly as a Cabinet. You had a Finance Department with a Comptroller that was supposed ly in charge and had knowledge of all the things that were happening and you had yet a fifth , the Auditor , who once a year told the other four what was going wrong and nobo dy paid any attention .

So if you want to look within Finance itself and look for a horror story , you 're not going to find it, but you 're going to find when you look to Finance - y ou say why, during the total picture , did Finance not have a grasp on the other four?

And you had yet a sixth , the Planning Priorities Department that was creating yet another batch of undertakings for the line departments to undertake, which they would immediately shed off , send off to either Management , Winter Works , Public Works or yet another one with your one clearing house once a week , Cabinet , maybe by accident receiving the recommendations of all of these and try ing to co-ord inate them , but in fact a multitude of responsibilities with no central function of cont rolling the flow of the dollars , the commitment of dollars , and names attached to groups or commi ttees of the Cabinet that did not in fact really have an overview of entirely what was happening .

And your Finance Department , which could have done it , was never in the position of actually being put in the position of doing it. So, Mr. Chairman, don 't look within , but look at the total structu re of where the Finance Department may well have been in controlling the dollar flow in all of these th ings that were happening . And that's where your stories will come from . MR. CHAIRMAN : The Member for St. Johns. MR. CHERNIACK: Mr.

Chairman , it 's interesting that this Min ister , w ho must know that we've covered - by far more than half and almost all of the departments in governmen t, is still hoping that we will find something . He said , " It's more likely to be found in, you must look in other departments to find it. " I'm telling him, the Minister of Finance , who , after several months or more in government as Minister of Finance , is being asked to tell us about the horror stories in government's financia l operations.

He has now descr ibed to us a form of decentralized government with which he doesn 't agree , and in seven months I assume his department now has colete control , and should have after seven months , of all the opera tions , of all the iinancial operations of government, so that clearly , by the time we're here a year from now , his department will be accountable for every penny of mismanagement throughout government.

But speaking about now , what we are trying to find out is what happened last year to just ify the accusat ions that were made , and all the promises that were made and not kep t, about reduction of taxat ion and no reduct ion of program because of correction of waste .

I'm asking the Minister , " What did he find " I'm not asking him to indicate to us?" where to look to find what he claims is somewhere , I'm saying to him that now that he has control of a department which he says should be in cnntrol of all government financial oper ations, what has he found to justify these extravagant statements that he, and the Premier of Manitoba , have been making? MR. CRAIK: Mr. Chairman , I've tried to tell the Member for St.

Johns that the biggest thing that has been found is an absolute contradiction in administration in having a number of disparate g oups of departm ents and delegations from Cabinet that do not in fact know what the other was 4164

Thursday, June 22, 1978 doing a great deal of the time. MR. CHERNIACK: Would you clasify that? How many dollars? MR. CRAIK : Well, Mr . Chairman , let me ask you , for instance if he wants a specific, one I inherited, Manit oba Energy Council , a wood gasification program , in fact , two wood gasification programs, a hydrogen heavy water program , a solar collector on the roof, all of which in romantic terms all sound very good. But what was the objective, what was the time frame within which the objective was to be met?

Take those four projects , any one of the four, there was not one for any one of the four that could tell me, as a Minister , what the objectime of the program was, what the likelihood was of meeting it, what the dollar commitment was going to be to achieve that goal if it was a realistic goal, and when we could be likely to expect an end result upon which government could base a decision to move forward onto the next step. Not one of any of the four , and those were the four that I met in one very small department.

What was the objective of the former government when it built the colex in Churchill, which we all agree was a very desirable social objective, to build the complex of Churchill in conjunction with some assistance from the Federal Government? Did they know at the time that itwas going to cost a million dollars a year to run it?

My information is that they did not know, but I don't know if that's the case because they didn 't ask the question, or if they did ask the question got the answer that said devil-may-care , we're going ahead anyway, because that is what we're faced with, and the Provincial Government is being asked for 500,000 a year to run the maintenance on it. Now, was that a planned program of the former government? I find no evidence that that was the plan of the former government. What of the provincial garage that has already come up for a significant amount of political discussion?

Was a complete cost benefit study done on that , or was it one of those crude growth projects that used to be referred to at one time by -the former government - that governments did when they got into an unemployment situation, where they plowed millions of dollars into Public Works? Was that the case? How far do you have to go to point out the projects? Where do we stop?

The general impression from a finance point of view is, that although many projects were well intentioned from the point of view of the social objective of creating jobs and well intended from the point of view of a social objective of providing amenities in the community that could not otherwise have afforded those things , had they really sat down and figured out and integrated into their thinking, any cost benefit analysis into any of it? You on't even have to use the fancy words " cost benefit" , all you have to do is, can you really afford it down the line?

That's the stories that come out of the Finance overview of the operations of government and , just to repeat again, you're not going to find them with in the Department of Finance, you 're going to find them within the lack of a role of a Finance Department in the operations of the government; a fairly small government too, represent ing the government of only a million people, which really isn't all that complicated to do. MR. CHAIRMAN: The Member for St. Johns . MR. CHERNIACK: Mr. Chairman, will the Minister be prepared to quantify these things which he claims were a waste and certify that they were a waste?

Is he prepared to say that these four energy conservation experiments, about which I know ntthing , except I think I've heard something about some solar heating up on top - is he prepared to say that this is wasted money, and if so, is he prepared to put a figure on it so we'll know what he's talking about ? Because I have to tell him that until now I have not received an impression of any size or quantity of wasteless management. In every other department , the Ministers have said , " I in the main have found that the department is well run .

I have found that the money is spent under proper conditions and I am satisfied that waste does not exist in my department." Now, I'm paraphrasing what has been said by a number of Ministers ; this Minister wants to continue to mouth the words that he and his Premier have been using . Is he prepared to put it on paper in such a way that we know what he's talking about instead of the vague generalities that we read in the Task Force report and in his own utterances? MR. CRAIK: Mr. Chairman , the Member for St. Johns has asked me for some examples .. MR. CHERNIACK: Well , I'm asking for quantification .$ MR.

CRAIK: On a point of order, you asked me for specific examples. I gave you four out of energy . 4165

Thursday, June 22, 1978 MR. CHERNIACK: I'm asking for your list of ... MR. CRAIK: If you want the Wood-Gasification Program, there are wood-gasification programs that are years old that are running in New Brunswick ; there are programs running in other pro vince s. The information could have been gleaned from those and applied to Manitoba . Why you would carry that out as a function of government and not through a research organiza tion , I don't know. But you did and you obviously don 't know that you did.

The Hydrogen Heavy Water Project, why again you would try and carry that out through some function of an off-shoot of a committee of Cabinet, a scientif ically based technical project, I don't know. You know, you do know . All I can say is, that the project on the roof , fine , we'll carry it on and if within a year it can produce the technical results that are of eenefit to the person in Manitoba who wants to integrate solar energy into his house, or int o some other application ; we'll carry it on and provide that information.

I haven 't been able to determine yet that that information is going to be available in a year. I do know that from work that has been done for th last 20 years in the United States and in Israel and other parts where you have a high intensity of solar energy , where the information is not greatly different from what they're attempting to collect here and located on the roof of the Legislative Building , that a person can go out and design a solar home now based on most of that information that 's available and expect certain results .

However , the government chose to spend $200 ,000 or $170 ,000 , whatever it was , in capital costs at the time, in that vicinity, andcarry it on to collett more information . Public relations-wise , it's a good move , lots of exposure . Perhaps is a good move from that point of view by the government , but as a move to collect scientif ic and techn ical data and information, it's a lost leader . Now as I say, with that investment we'll carry it on. We'll get the information in a year .

If they can say to John Doe citizen in Manitoba , that if you build yourself a solar collector you can expect certain results , then it will be money well spent. I have found nothing in the reports that indicate to me that that was the objective of that undertaking . I have found no objective for that project other than to draw to public attention , the importance of solar energy in Manitoba , and perhaps from that point of view , that is what the intended experiment was for . If that's the case , I didn 't hear it from the former government . I don 't think it was , I think they just wandered into it.

Just like they wandered into heavy water , hydrogen , wood-gasification and all the other things that I've found in the purview of respons ibility of specific undertakings . Now , the Member for St . Johns is talk ing about where in Finance did you find it? - I repeat , Finance 's role is an overview role on the function of the financial undertakings and checks and balances that are to be carried out in government. If he wants more examples , there's plenty of examples around .

I simply repeat that the examination in my opinion , is that the former government did not have a grasp on all the things that were happening in government. They were spl it into committees - they had a Management Committee , they had a Winter Works Committee , they had a Public Works Comm itt ee - not a committee , a Public Works Fund under the responsibility of the Minister of Public Works who could initiate projects under his own likes or dislikes , perhaps r with th approval of Cabinet , perhaps not with the approval of Cabinet , if he so desired .

Those were all the indications - Capi tal Works projects that could be undertaken by schools, by hospitals , by Public Works , all of these in response to the whims and initiatives of the individual departments , the individual Ministers , with no overall real knowledge of what was happening to the dollar commitment or the cash flow . MR. CHERNIACK& Mr. Chairman , I'm going to step down in a minute and resume questions to him , but 1 want to make clear to the Minister , I did not expect him to find any mismanagement waste in the Department of Finance .

He is the one who 's been doing most of the talking , and as Finance Minister he should be the one who knows most about what he's talking about , and when he's making statements such as what went on in terms of authorizations or not , that does not help one bit to understand what it is he's talking about waste and mismanagement . He may not agree with the management methods used , but I'm more interested in knowing where is there waste , and 1 want him to say, "Is there waste in that solar thing up on top, or is there not?" I didn 't ask for examples , or if he thinks I did let me clarify .

I want him to quantify the amount of waste and mismanagement he found which justified the promise that he made , and his Premier made , to say that they will be able to finance a continuation of program without reduction in program and with reduction of revenue. That's what I want to find out and I don 't want examples because he's been dragg ing examples in, I think he put a figure on one of them, no figures on the others .

It's almost as if he were part of the CFI sell-out where that government not only let it happen , but rushed and pleaded and begged the people to come and draw $100 million out of the people of Manitoba. So let 's not draw com parisons along those lines , let's talk about what waste and mismanagement he has found , what he can correct , and not examples but how much was there involved in all that 4166

Thursday, June 22, 1978 he w as doing. And at this stage , Mr. Chairman , I'll step back and I'd like to put my name at the bottom of the list please . MR. CHAIRMAN: The Member for Transcona . MR. PARASIUK : Mr.

Chairman , I was rather intrigued by the Minister of Finance commenting about the f act that there were something in the order of three or four , possibly five Cabinet committees and he said this was unwieldly and he implied that shouldn 't exist. 1 turn to Page 65 of the Task Force Report and I notice that Conrad .-- . and his assistan Riley the Minister responsible for the Task Force , on Page 65 of Volume I, sets up a system with six Cabinet comm ittees .

There is one on Crown corporations , one on government administration , anothe r one called Finance and Inter-governmental Fiscal Relations, another Cabinet committee on Personnel Administration , another on Legislation and Policy Development , another on Northern Affa irs. Each one of these has a staff of people. This supposedly is set up on the Bank of Commerce model of management . It' s rather interesting that there are six Cabinet committees .

Now is the Minister of Finance trying to imply that if there is a number of Cabinet committees at the centre that this somehow is bad management, because their Task Force on management , their top gun supposedly in the area of management , is recommending something more complicated than what existed before. And he doesn 't because I don 't think Mr.

Riley, nor the Minister responsible for the Task Force, did enough homework to find out that there are, in addition to that, presently under the Conservative Administration, a Management Committee , a Land Use Cabinet Committee , a Native Land Claims Committee , so we've got nine Cabinet comm ittees if this thing is implemented. So I find a whole set of contradictions in what is coming out of the Conservative Administration regarding management.

Now , it wouldn 't be bad if you knew who in fact was running the show there because we have a number of people putting forward statements as to what constitutes good management , drawing diagrams , offe ing examples , never quantifying it but shooting from the hip. Now I would think that if in fact you do have technical people who supposedly were involved in preparing this Task Force , or if you have technical people who supposedly are involved in the Department of Finance , that they would provide the documentation .

The Minister brings out the term " Benefit Cost Analysis." Now ideally I guess it would be ideal to have a benefit cost analysis of every program. Well , you know, one of the most contentious programs that I think the Conservative Administration had to deal with was the Day Care Program . There were a lot of people who thought that possibly it could be horribly slashed.

Now the Conse rvative Adm inistration after some time and having told groups that came to petition it that they were analyzing the program , in fact came up with something which in a sense was a dollar increase and probably was a continuation of the program as existed last year if you take into account inflation .

Now since this obviously is one of the programs that the Conservative Administration had time to analyze , it had told people it was analyzing , would the Minister be prepared to table the benef it cost analysis that was used by the Conservative Administration in determining what the level of est imates for the Day Care Program for 1978-79 should be? MR. CHAIRMAN: The Minister of Finance . MR. CRAIK: Well, Mr.

Chairman , the former head of the Planning and Priorities Committee of Cabinet might well have the question reversed and ask him whether it's possible to put a benefit cost analysis on programs in the social areas to the same extent that there is on the technical areas. The questions to which I referred are in the technical area where benefit cost analysis are the usual application , not to the same extent as it applied in the areas that apply to the social fields because there 's a wide area of disc retion that is more likely to be applied in that area . But , Mr.

Chairman, before we leave this topic , you know , I don't think we should avoid the reverse of the question as to the Member for St. Johns asked us to, you know , what are the horror stories? One of the greatest horror stories was the whole Planning and Priorities Committee of Cabinet which was headed up by the Member for Transcona and which we were able to fold up without a murmur coming out of any lack of function of government. -(Interjection)- Yes, Mr.

Chairman, it's probably the biggest mistake that was ever made was initiating that , and when the former government left in 1969 it had a total staff of roughly three or four people and that way it was fulfilling its intended function which is to bring Cabinet Mini ters to discuss the different matters that were important to government.

And from there it grew like " Topsy " into a multi-headed monster headed by the Member for Transcona who 's the former head of it as the chief bureaucrat of the province into 70 or 80 people , or whatever the numbers were, which have now been changed, in some cases cease the function and in other cases to integrate it into the line departments. I can only say that from what I've seen, in the case of the integration of the line departments, 4167

Thursday, June 22, 1978 it has been a very wise move. We finished today a discussion with the four Western Ministers responsible for Indian Services Financing including, the Province of Ontario , and it was headed up by a former participant or member of the Planning and Priorities Committee, and the function is basically a financial function . I think we inherited two or three people from tt former committee .

I think that it's a very natural withdrawal into the departments and a very important move that they get back into the line departments , but one of the worst horror stories was the functioning of that Planning and Priorities Committee as it grew and became the multi-headed monster it was . It was probably as responsible for the defeat of the former New Democratic Party as government as anything in the province because it turned the line departments so completely against the government that they will never probably realize the extent to which they lost the vast majority of support of the Civil Service .

Now in that case the hor ror story worked to their own detrimentbecause they realized that this function of government which was foisting off onto the line departments their own self-created projects and then rapidly moving on to their next dream, were foisting off onto the line departments , in many cases impossible functions that immediately became money consuming functions that had lost the drive of the instigators of the function in the first place , while the planning group moved on to yet another dream to create yet another project to then foist off onto another line department.

And the line departments were so demoralized by this operation of government , this Planning and Priorities Committee , that they lost, by and large, from the people that had to assume the responsibility at the top tor the administration of it, they lost, in my estimation the vast vast majority of any sympathy for government direction that existed when the former government first took office.

And probably their greatest mistake that they ever made as a government was allowin that Planning and Priorities Committee to become the government , as a matter of tact, not only the line department, the alienation of the line departments , but the alienation of the former members of the former caucus of the former government. That 's how bad it was. MR. CHAIRMAN: The Member for Transcona. MR. PARASIUK: Mr.

Chairman , I find it very interesting that the Minister of Finance, the Minister who traditionally has been the Minister with the most tactual basis to whatever he would say, would go off and continue to hypothesize wihthout any facts . He's not only hypothesizing on how the past administration operated , but he's now hypothesizing on how the past New Democratic Party Caucus operated , and I think it shows a lot for the tactual depth of the Minister who has consistently refused to provide any documentation or any evidence with respect to the things that he says .

Now , the only thing that he provided of a tactual nature was, in tact , the group which is doing work right now on negotiating with the Federal Government regarding cost-sharing of Indian services , or services to Treaty Indian people.

Now, this was an area that 's obviously very critical because the Federal Government, consistantly over a period of years , has been sliding out of tooting the bill in the health area , in the education area , in the municipal affairs area , and it's the type of thing that doesn 't fall nicely into a department and it requires a group to determine what, in tact , the position of government, not the position of a department but what the position of governmen It , should be with respect to that problem .

Consequently a group was started up within the central organ ization which defined a problem , which did analytical work - the best that's ever been done in the country , and that's been acknowledged by everyone involved in the field - and indicated that there might be a shortfall of something in the order of $35 million.

That's a figure that escalates over the years, but then it'll be getting higher than $35 million , it's probably higher than that this year , and that therefore provides some very solid ground , provides some very solid ground tor negotiating with the Federal Government in order to try and deal with that prob lem . Because the Government of Manitoba was able to define that problem and communicate it to the other provinces we were able , as a small province , to mobilize support across the country with respect to this issue .

We were able to make it an issue because Alberta , British Columbia , Saskatchewan and Ontario supported that position, and the Minister can shake his head , but that doesn 't mean that it's not true, because , you know, an affirmative or negative shake of a Minister 's head when he provides no documentation, when he consistantly has been wrong , doesn 't amount to very much , and that's quite unfortunate. That's very unfortunate when that happens . Now , I'm glad that the Minister has, in his staff , a group of people who are carrying on that particular task , because in tact , that could do a lot.

That could do a great deal to reduce any type of financial pressures that we might find ourselves in, because if you start taking $35 million or $40 million a year you're talking about a very big chunk out of the budget, right at the margin . Another area, Mr. Chairman , is an area that relates to the sales tax . I wonder, and I had asked 4168

Thursday, June 22, 1978 that question before of the Minister of Finance when we were dealing with the Budget and I noticed that he conveniently ducked it at that time, but I asked him quite specifically whether in fact his depa rtment had done any analysis to determine , from a governmental point of view , whether it would be bette r to accept the Federal proposa l for a 3 percent reduction in sales tax over six months , or the o ther proposal which was accepted by other provinces of a 2 percent reduction over 9 months . 1 thought that was quite critical because given the flow of farm cash income, and given the fact that our bigge st or largest shopping period is in the fall , leading up to Christmas, it struck me as rather strange that the Government of Manitoba would decide not to have a lower sales tax in the months of October , November and December .

Now , this is an area that obviously requires analysis. It could have been done by the Department of Finance , possibly it was . We, in the past , as a group in the Planning Secretariate, and it enjoyed a very good working relationship with staff of the Department of Finance. And I can say that from my impressions , and the Minister can say it from his particular advantage point, and given his track record of honest consistency , that he found it different.

And that's fair enough , that 's his particular perception of what took place , but when he refers specifically , specifically to the group doing work on Federal cost-sharing of Indian services , he has picked an example which is a good one, it demonstrates the need for a central agency to define problems from a governmental perspective , and to do the necessary analysis to get the ball rolling . I think it proves a need for one . 1 notice that this government has established a Cabinet Committee on land claims. It's a Cabinet Committee on land claims , it's not a Departmental Committee on land claims .

Conceivably it could have been put in the Department of Mines and Natural Resources , but it wasn 't. It was a Cabinet Comm ittee . Why? I assume because it's somewhat easier to co-ordinate activity if you establish a Cabinet Committee to look at it. It may turn out that in two or three years that Cabinet Committee will cease to exist and they may get back and look at another area. I notice that there is a Land Use Committee , conceivably that could be in the Department of Munic ipal Affairs.

I'm glad that the government, again , but that was established upon recommendation of groups who decided that it would be best if it was done that way. Now, the Attorney-General, the Minister of Municipal Affairs , points out that that was contained in Legislation so therefore it couldn 't be changed . Now, the Minister , of course , has taken other Legislation and seen fit that it could be changed quite easily to make it correspond to those things that he felt were administratively more efficient. -(lnterjection)- No, I didn't want you to do either, I think it's a wise Act , I'm glad you've maintained it.

And the point is, I think that the rest of the government probably thinks it was a good idea to keep it as a Land Use Committee . In fact, I'm quite surprised that the person who might be considered the greatest anarchist of the Conservative caucus is the Chairman of that committee, the person who doesn 't believe in any government interference whatsoever recognizes the need for some land use guidelines -(Interjection)- That's right. And he has undertaken that position . I was somewhat surprised that he's undertaken it, but again, he's undertaken it as Chairman of a Cabinet Committee.

He doesn't even have a portfolio as such . He doesn 't even have a portfolio as such , but he's taken it on as a Cabinet Committee responsibility . So, I would hate for this government to somehow try and paint itself into a straightjacket administratively where they would not consider establishing Cabinet Committees . . I would hope that you look , withou t a jaundiced eye, at the proposals put forward on Page 65, even though there a six Cabinet Committees it may turn out to be a somewhat effectiv system, so you should look at it seriously and try it possibly , and be held accountable for your decisions there .

But don 't start off with a blind eye and say, oh, no, we can 't have any type of central organization , because I th ink that is a great mistake administratively . MR. CRAIK: Well , Mr. Chairman , the Member has made quite a number of points in his comments. One point he makes is the statistics to back up the comments. Unfortunately for the Member for Transcona is he'll probably realize at some point in time that the Ministers are also politicians .

And I'm telling him, as a politician who 's been on the scene through a couple of terms , I'll repeat that he, as the former senior bureaucrat of the former government , probably lost the former government more votes than any other single man in Manitoba , simply because of the operation of the Planning and Priorities Comm ittee . I tell him that advisedly because he can absorb it, and if, in fact , in some point in time in the future , if he ever ends up back in government, he can perhaps recall it and apply it to his own usefulness , if and when that time ever comes . -(lnterjection)- So, Mr.

Chairman , it would be a little awkward to provide the statistics to demonstrate to the Member for Transcona that , in fact , he was one of the greatest liabilities to the former government because of the loss of confidence of the Civil Service in the former government, but I'll say that as a politician and there 'll be no problem in him getting a similar opinion from a number of other people who lived through eight years of the former government. Mr. Chairman , the operation of the -(Interjection) - The Member for St. Johns says, "cheap 4169

Thursday, June 22, 1978 shots", maybe that's necessary once in a while. MR. CHERNIACK: Cheap shots on your part are always necessary for your support. MR. CRAIK: Maybe , Mr. Chairman, that's necessary once in a while , or maybe in the long run the Member for St. Johns will recognize that necessity . He's pretty good at it himself when the time calls for it. As to whether or not we went to 2 percent versus 3 percent for the sales tax, the 2 percent proposal was proposed by the Federal Government.

There were two provinces that decided for their own purposes that it was more equitable to go to lu2ing it, spreading the percent over the nine months rather than the six months , and the balance of the provinces hhe Maritimes , Ontario, and Manitoba went with the Federal Government proposal for the 3 percent over the shorter term of the six months . So that Saskatchewan and British Columbia went for 2 percent spread over at least nine months , and whether or not they both continue it beyond the nine months is up to their discretion .

Whether or not in the long run it proves to be wise or otherwise time will tell. As far as the Cabinet Committees are concerned, the Cabinet Committees that have been formed are somewhat different than the Cabinet Comm ittees of Planning and Priorities , and Management Committee , and other Committees of the former government . It's not the intent nor the likelihood, in any way, shape or form , of any of the Cabinet Committees that have been formed to create their establishments or bureaucrac ies numbering in the order of 60 or 70 people .

The purpose of the Cabinet Committees that have been formed , whether it's Land Claims Committees , whether it's Polar Gas Pipeline Comm itt ee, or whether it's the Land Use Committee, the purpose in those cases is to , in fact , be what the name says, a Cabinet Committee , to bring together the departmental interest, not to create a new and separate operation and function of government , but simply to be a clearing house for the various interests that are required to be brought together when you address some of these prob lems.

One of the best examples is the one today , where the various provinces are meeting to look at the financing of the transfer of social services for Indians, whether they 're on reserve or off reserve , and it embraces the four departments . But it is not the intent to do other than bring together their particular concerns with regard to that service . MR. CHAIRMAN: The Member for Rock Lake . MR. HENRY J. EINAR ON: Mr.

Chairman , I don 't want to prolong the debate any more than necessary , but I've been listening to the comments from the honourable gentlemen opposite and found it rather interesting to note when they ask about some of the horror stories, and try to ask us to documnent them in figures and so on. But, Mr. Chairman , also it was mentioned about the Civil Service, and I think poss ibly while we have no proof , Mr.

Chairman, the Minister in answering to the Member for Transcona, I, for one, can certainly back up the Minister 's comments when he talked about the demoralization of many of the Civil Service , that certainly was true because I had many of them discuss various aspects of government when the NDP were in power. But , Mr. Chairman, I wanted to pose one question , having listened to the Member for St. Johns . r Perhaps the Minister can 't answer the question, and if he doesn 't want to he may know the answer , but I recall when the Member for St.

Johns was the Minister of Finance of his previous government and he saw fit to resign as that Minister . I've often wondered , Mr. Chairman , what was his reason for resigning? I would like to ask the Minister of Finance if he can enlighten us in any way as to why the Member for St. Johns saw fit to resign from the executive of that important portfolio which he is questioning the present Minister of Finance? Mr. Chairman , the Minister may want to answer it, or maybe he does not care to do so, but I just throw that question out to him, Mr. Chairman . MR. CHAIRMAN: The Minister of Finance .

The present Minister of Finance, I mean . MR. CRAIK: If there 's one question that I don 't have any comment on, Mr. Chairman , it would be that question . MR. CHAIRMAN: The Member for Brandon East. MR. EVANS: Thank you, Mr . Chairman, I feel a bit sorry for the Minister of Finance at the moment . 1 think he's a bit embarrasse d by the direct question put to him by my colleague , the Member for St. Johns , as to just what horror stories do exist in the Department of Finance . You know , where is the great mismanagement? Where are those millions of dollars that are to supposedly be lost , and so on?

And as my colleague , the Member for St. Johns has said , we have gone department by department, asking Minister after Minister , and we're getting relatively the same answer , that 4170

Thursday, June 22, 1978 the departments have been generally well run, the staff are competent and efficient and well qualified, and that they there really are no horror stories . And I think we're getting the same answer from the Minister . MR. McKENZIE: Saul , Sam made a fortune as a M·inister . t MR. EVANS: Mr. Chairman , I always enjoy listening to the Member for Roblin but I would like to make some remarks. MR. CHAIRMAN: Order please . Would all members of the committee try and resist from having personal conversations and allow the recognized speaker to carry on. The Member for St. Johns. MR.

CHERNIACK: On a matter of privilege . The Member for Roblin has just said that Mr. Uskiw , who is the Member for Lac du Bonnet, made a fortune as Minister . I want to know whether he said that or whether he wanted to say that for the record. Because that 's what I think I heard him say, across the table . A MEMBER: That 's what I heard him say. MR. McKENZIE: . . always . . . Honourable Member for St. Johns knows that he is MR. McKENZIE: have no microphone . MR. MILLER: But you said it; didn 't you? MR. McKENZIE: I have no microphone . MR. MILLER: You don 't need a microphone to say it. MR. McKENZIE: No.

Carry on with the Estimates. MR. CHAIRMAN: The Honourable Member for St. Johns, on . . . MR. CHERNIACK: I raised a matter of privilege on behalf of a member who was absent from this room and I wanted to go on record that the member has not taken the microphone to respond to what I say he said , and apparently others heard him as well. I think he should either withdraw that statement or make it public that he did not make such a statement , in spite of the fact that some of us believe that we heard him. MR. McKENZIE: Mr. Chairman , if anything I say is on the record , I will substantiate it.

If it's on the record and it' s on this recording system , I will substantiate it. MR. CHERNIACK: Good . You talk to Henry , he knows how to MR. McKENZIE: Carry on. MR. CHAIRMAN: The Member for Brandon East. MR. EVANS: Mr . Chairman , with the co-operation of the Member for Roblin, I would like to make some remarks , Mr. Chairman . I am always glad to listen to the Member for Roblin when he wants to have the floor and I promise that I won 't interrupt him. I think the Minister of Finance is a bit embarrassed when he is being asked what horror stories are there in the Department of Finance .

He really couldn 't find any. He did spend some considerable time talking about governmental organization and talking in very general terms about the committee system and the value of the committee system , and so on. I just want to comment , Mr. Chairman, that you know there are many, many ways to organize government. There is no one particular set of departments that are an ideal set of departments, and you can have many , many comm ittees ; you can have few committees . There is no magical formula .

Whether you set up three committees or six committees , .or five committees, surely th point is to get the job done . So I am suggesting , Mr . Chairman , that there are many , many , many ways to organize government and I don 't think that the Minister of Finance 's deviation into governmental organization in any way 4171

Thursday, June 22, 1978 substantiates the statement made by his leader that there are horror stories to be found in the departments when you go department by department, because we have not - at least I have not - heard of any horror stories. Now, the Minister did make reference to one group that he has in his department, namely the Manitoba Energy Council. Mr. Chairman , I find it very difficult to talk with the Member for Rock Lake , who has a much louder voice than I have. I am sorry to say that ; I wish I had a loud voice like he has but 1 cannot participate with that interruption . MR.

CHAIRMAN: Would all members please let the Member for Brandon East carry on without interruptions? MR. EVANS: The Minister of Finance said he could not find horror stories - if I heard him properly - in his department but then he went on to talk about some energy research projects. And I really am amazed at his reference to these . I am very , very amazed at that , Mr. Chairman . For one thing , you know the Manitoba Energy Council last year , its total budget was $154 ,000 and I see this year the government, the Minister , is asking for an additional $100 ,000 .00. He wants $253 ,400 .00.

He wants even more money this year . But you know he makes reference to specific projects and asks what are the objectives , what are the purposes and so on. He made refE!rence to the hydrogenat ion process . Well , I would like to remind the Honourable Minister that a few years ago there was a very , very great scare in this country . In fact , there is still a great fear in Canada as to future potential natural gas supplies .

There was also a point , I would remind the Minister , and he knows this - he surely should know this - that with our fairly abundant supply of hydro-electricity that there was a poss ibility of making hydrogen from electricity . This hydrogen the:refore being able to supplement the natural gas supply . Now, this is a known process but it's a matter of how commercially , how commercia lly feasible, this particular effort, this particular project, could be in the Province of Manitoba , given the costs that we have to look at, given our consumer demand and so on.

I point out to the Minister that that particular research project was jointly financed , not only with the Federal Government, if I remember properly , but also with the Trans-Canada Pipeline Limited, who was very interested in this project and is still interested in this project. I would say that if those other agencies saw fit to put up their money , each putting ip a third, if my memory serves me correctly , I would :;;ay that there must be some pretty substantial purpose and valuable objective in that type of a study .

It was a very practical thing , and it is a very practical thing - a possibility of making hydrogen gas, which would supplement a natural gas supply, using a renewable resource, namely hydro-electri ,city . I am hoping that eventually ... I am not privy to any of the results or anything . For all I know , the process of investigation , the research, is still going on, but I would certainly believe that that is a very worthwhile project. For the Minister to make reference to that as a horror story really boggles the mind ; i t really does .

I would say don 't argue with me; argue with the energy engineers, the Trans-Canada Pipeline , the Federal Department of Energy, as well as some of our own experts in the government , who are more qualified than I will ever be in this area , who recommended that this was a very , very worthwhile type of research to engage in. The Minister also made reference to the solar energy project , which involves solar collectors on the roof of this building .

I would say to him that if he wants to argue about the objectives and purposes - because he questions them - - I would like him to debate and discuss this with the people in the Solar Energy Society of Canada , because it was they who were very , very highly supportive of this type of project in the Province of Manitoba .

Sola r energy collectors and the solar energy system is an old system and there is not that much new, in a sense , to be found in some of the processes but what is of interest is just exactly how our weather conditions affect the collection of energy from the sun , in this particular climate , given our particular number of days or hours of sunshine and so on. The case was made that there was a very great deal to be learned by oollecting data here in Manitoba . The other point I would make , Mr.

Chairman , and the Minister should know this , that this building has a large collection or water storage system that was put in place when the building was built, around the time of or before the First World War , whenever the building was constructed . It was to have its own water system. One of the ~ : ey factors in solar energy is to have a storage facility . And of course water is one of the common types of storing medium that is used in solar energy projects and this building has a large water storage reservoir in the upper echelons of the building.

This is one reason why it was possible to put a solar energy project here for relatively few dollars. If you had to put in all the storage facilities , all the pip ing facilities and so on, it would be an extremely expensive project . But given that all of thos.e facilities were in place , $170 ,000 - if that's the final figure; I don 't remember but I believe this is what the Minister of Finance referred to - $170 ,000 4172

.. .. Thursday, June 22, 1978 is a relatively small expenditure when you look at the total costs of the infrastructure if you had to put it all there in the first place . But I say, you know, talk to the Solar Energy Society, if he has doubts . Talk to Dr. Roy Chant, who is at the University of Manitoba - Ray Chant , rather, pardon me, Dr. Ray Chant of the University of Manitoba's industrial development office , who worked on the project and advised the government , in his capacity not only fro m the university but also in his capacity of being a member of the Solar Energy Society.

You talk to the engineers in the Department of Public Works. Talk to the Federal Government because the Federal Government is paying a large chunk of the cost of this particular project. So 1 say for the Min ister of Finance to point to these projects , which are in the total scheme of government spending, relatively minor expenditures supported by other governments, other agencies, private enterprise and supported in the spirit of trying to cope with the problem of dwindling energy supplies , I think shows very poor judgment on the part of the Minister.

Now , the Minister has in his budget this year an additional item . As I said , his Energy Council item has gone up and I understand he is asking for $120 ,000 for a Polar Gas study. I would say, you know , if he wants to question the judgment of having a hydrogenation process research go on - that type of scientific research go on - I would question the $120,000 that you want to spend for Polar Gas , because, Mr. Chairman , this $120,000, this is for one year. I don't know what he will want for next year or the year after .

But you can talk to many many people in the gas pipeline business, in the gas production business, and they will tell you that the possibilities of Polar Gas Pipeline starting in the twentieth century are becoming very very remote . Maybe not. Maybe it 's a twenty-first century project and not a twentieth century project.

For some very good reasons, because there are some very are some very great technological difficulties in bringing natural gas fromhigh Arctic through deep cold Arctic Ocean bring ing natural gas from the high Arctic through deep cold Arctic Ocean weter, and that is a very serious challenge facing the Polar Gas people, which they themselves will admit. At the same time , with the increasing price of natural gas , there have been many new commercial finds in the Province of Alberta .

So much so that we have producers in Canada now arguing , which is quite a switch from a couple of years ago, now arguing with the Federal Energy Board, the National Energy Board, that we should be permitted to export even greater quantities of natural gas to the United States . We are exporting about 40 percent of our annual Canadian production and they want to increase this, at least in the short-run . So I'm saying , Mr. Chairman, that times do change. Factors vary . We are not livi ng in a static society or static world.

I would say that to spend $120,000 in conjunction with Polar Gas, I could make a very good case that that is waste , and that is mismanagement, and that is a very bad value judgment made by the Minister , because the Polar Gas Project is so remote , so far in the future, that for us to spend money at this time in our history is, in effect , throwing it out the window .

So, you know , I could come a year from now or two years from now and say, "You know this is a terrible horror story." I don 't know whether I would say that it's a horror story, because I'm sure the Minister is very sincere and he is using his best judgment. He is making a value judgment that $120, 000 should be spent in conjunction with the Polar Gas Project. I haven't got the details .

I haven 't got the expert advice as he has , but I am saying from what general knowledge we have now, the Polar Gas Project is becoming more and more remote, and I think a very good case could be made for not spending any of that $120,000.00. Polar Gas has a lot of very wealthy supporters that have millions and millions of dollars in United States and eastern Canada , and elsewhere , and I wou ld say that it is very well capable of looking after itself.

And even though these dollars -the $120,000 - may be for other than direct involvement with the company, neverthe less I would say that we're talking about something that is becoming more and more remote . So, Mr . Chairman , the Minister really hasn't answered .. . Well , I guess he has answered the Member for St. Johns, because he has said in effect there are no horror stories in the Department of Finance . It is very well run . It has some excellent people . It has some competent people, and even the new branch that he has got , the Manitoba Energy Council , has some excellent people.

It's a very , very small agency . I think all of three people , and maybe a secretary - three professional people , if I recall properly . It has a very small budget. And for him to begin to start pointing to that little agency and one or two ve y worthwhile projects as examples of the horror stories, I say I'm still waiting to hear about the horro r stories, eecause those are not horror stories . I think we should have been faulted if we didn 't try to, for instance , see if we could use electricity commercially in Manitoba to produce hydrog en to supplement natural gas supply .

I think we could be faulted for not following that course of action . I know we're not on this particular item, but the Minister raised it and used it in his examples of the horror stories. So I say, Mr. Chairman, . I'm still waiting to hear of the horror stories . We really haven 't had any, I really feel sorry for the Minister , I really think he's embarrassed by the 4173

Thursday, June 22, 1978 whole matter . I'm sure he feels that his leader had never made these types of statements because we've gone through about 80 percent, I think there are only three departments left and I've heard the Minister of Health tell us that he inherited a very well run department , it was efficiently run under the NDP, it had good personnel. Th€' Minister of Education told us the same thing , that he had inherited a good department and there were no horror stories .

I heard him myself, there were no horror stories and that generally is the response we've had from every Minister and I think we're getting it also from the Minister of Finance but he's trying to fudge the matter by wandering around talking about governmental organization. Well you can talk about governmental organization from now until doomsday because there's never any perfect governmental organization . There are many many ways to slice the cake and as I said it's a very fluid type of situat ion.

At one time it may be good to organize the government in such a way -- five years hence there ma.y be other reasons for having changes in departments , changes in committee . So that to me doesn'1 tell me anything about horror stories or anything about ~ mismanagement. And as I repeat , surely you can 't find horror stor ies in the Manitoba Energy Council. If that's your example of horror stories I'd say, Mr. Chairman , there are no horror stories . There ~ simply are no horror store stories . MR. CHAIRMAN: The Minister of Finance . MR. CRAIK: Well, Mr.

Chairman , first of all before we go further the Member for Brandon East has gone on at some length about the investment in the Polar Gas Pipeline studies and I want to say first of all, to agree with him, that I would agree that $120 ,000 would be an overinvestment at this point in time in those studies. HoWE!Ver, the fact is that the amount earmarked for that is roughly $20,000 and not $120,000 .00.

That is for the preparation for the interv ention at the General Gas Hearings to be held in Ottawa by the National Energy Board this fall and more particularly there is possibility of the Polar Gas Hearings themselves occuring in early 1979, so we heard a fair lengthy oration on $120 ,000.00 . I want to agree with the member to the extent that I will agree that $120 ,000 would be a little high . As far as the solar roof is concerned , I don 't disagree with the work that is going on on the solar roof , I just say that it's 20 years behind time.

We're at the point now where the technology has reached the stage in other parts of the world where we should be build ing houses and not playing around on the roof and I would like to see us redirect our attentions and our energ ies towards seeing that John Doe citizen gets a chance to integrate it into his home and stop waving the flag .$ I don 't know whether he realized it or not on his Hydrogen Heavy Water studies , but all the indications I've had since about the first day I walked into the office , that it would be feasible if you could sell them power at less than 10 mills per kilowatt hour .

So I don 't know whether he ever really looked at that , took a hard look at the hard cold facts of life as to wheth er you could afford that kind of an experiment or not. It seems highly doubtfu l. He keeps repeating this ques tion of whe1 her there are any horror stories in Finance or not. The Member for St . Johns I think agrees with rne that the role of the department itself is not what's that question, or what the Department of Finc:tnce or myself as Minister of Finance may have observed in the other functions of government in the way of the horror stories .

If you refer to Finance alone, I think the taxpayer regards , at least the observant taxpayer regards a deficit in the order of $200 million as being a horror story , one that they can 't go on with indefinitely without some sort of rectification and if you don 't think it's a horror story then ... and I know you don 't. I know the Member for Brandon East does not because he persistently prevails upon us to enter into more studies, to throw more money at more projects , which incident days ally, Mr.

Chairman , used to be referred to in pre-1969by the former government , which was then opposition , as a crude growth philosophy and I've never seen a governme !nt yet that embraced and practiced the crude growth philosophy more than the former government between 1969 and 1977, that simply took dollars and threw them at public works projects whenever there was a slack period. And that has to be just the complete contradiction of the oppos ition that was provided when the government which I was very briefly with prior to that, pract iced it. But it came through in spades by the government of 1969-77 .

When you 've got a problem throw dollars at it, create publ ic works projects and it really smacks of any sort of real plan ning on the part of government. So, I throw the ball back in his court on that score. I still say that the bigges t - I don 't know whether horror story is the right terminology for it or not , but certainly a $200 million deficit or something in that order is one that's going to be of a pretty high priority concern at least to the taxpayers in Manitoba . MR. CHAIRMAN: The Member for St. Vitc:tl. 4174

" • Thursday, June 22, 1978 MR. D. JAMES WALDING: Mr. Chairman , I wanted to go back to a statement that the Minister made this afternoon when he refe rred to a speech that he'd made , either introduction of his budget or the ta bling of the estimate s when he said, that , had the government not made changes that the deficit wou ld have been $300 million higher . I wonder if the Minister would give us the basis for that figure please . MR. CRAIK: Well , Mr.

Chairman , upon assum ing office in late October , one of the first requests was for a rundown of the preliminary estimates of expenditure that had been prepared and which normally are started for preparation well in advance of the time of the elect ion at least , whenever the former government did it , whether it was July or August or September . In any event, the first preliminary rundown of the preliminary expenditure , estimates of expenditure by the various departments adding up the current account expenditures, plus the requests for capital expenditure, amounted to in excess of $300 million .

And the figure of $300 million was deficit, the deficit amounted to in excess of $300 million . The $300 million figure was used by myself in the statements in the Legislature as a fairly conservative figure of the estimates that I received. MR. WALDING: Can the Minister give the committee the dollar amounts for those two totals? MR. CRAIK: Of the current account and the capital? Yes I think I could . I can get them for you. MR. WALDING: You don't have them immediately to hand , I take it. MR. CRAIK: Not at hand, but I'll dig them up. MR. WALDING: Mr.

Chairman, when the Minister says the first preliminary figures, can he tell me just what he's referring to? Is this the figures from the individual Ministers or are these the figures that are presented by the staffs to the individual Ministers? MR. CIK: Well, Mr. Chairman, I would not know whether they had been presented to the Ministers or not of the former government. MR. WALDING: Then, Mr. Chairman , I assume from that that what the Minister of Finance is referring to are those requests that had been or would be submitted to the Ministers by the departmental staffs . Would that be correct? MR.

CRAIK: Well , Mr. Chairman , I think the question had was whether they come from the former Ministers and my answer was , I do not know whether the former Ministers had examined them or not. MR. WALDING: Let me put the question another way . MR. CRAIK: The usual procedure is I gather for the department people to prepare them and submit them to the Minister and then they move on from there . MR. WALDING: Now, are these the totals that the Minister is referring to? Those totals prepared by the departmental staffs . MR.

CIK: Well , I presume they are but whether or not they had been screened by any of the former Ministers , I can 't answer the question only he and his colleagues will know that . MR. WALDING: That's what I was trying to get from the Minister , Mr . Chairman, and I had asked similar questions of previous Ministers , some of whom indicated to me that they had examined the first prepared figures from their staffs and had in fact , reduced them somewhat before submitting them to Cabinet.

What I'm trying to ascertain from the Minister of Finance is these figures that he has, do they come about as requests by Ministers of his government to Cabinet or are they from the departmental people? MR. CRAIK: Well , Mr. Chairman , the figures that I refer to, the information that I requested as the Minister of Finance , and were presented to me, presumably from the collection of the estimates of the various departments . MR. WALDING: These figures then would have come to the Minister of Finance from each individual 4175

Thursday, June 22, 1978 Minister I assume. MR. CRAIK : Not necessarily, no , but would have emerged from the departmental considerati ons of estimates . MR. WALDING: Were any of them then considered by Ministers of this government before being forwarded to th Minister of Finance? MR. CRAIK: Not the first run . MR. WALDING: I see. Will the Minister then be able to give us an indication of, first of all the preliminary figures that he saw and secondly . the total of the departmental estimates that the various Ministers brought to Cabinet? MR. CRAIK: I'm sorry , I missed MR. WALDING: Mr.

Chairman , the inister has already undertaken to give us a total of the first preliminary figures that he saw. MR. CRAIK: Yes, current versus capital. Current and capital , yes. MR. WALDING : Both current and capital, right . Would he also undertake to give us the figures that the Ministers submitted to Cabinet? MR. CIK: The Ministers of the new government or the old government? MR. WALDING: The new government , Mr. Chairmnn . MR. CRAIK: I don 't know that we would have that.

I can tell you the first go around of estimates that was considered by Management Commi tee as presented by the departments , which presumably would represent the review of the various Ministers . MR. WALDING: Well , Mr. Chairman, havin~ l no personal knowledge , I asked other Ministers if they could explain this system to me and they clid explain that after the first preliminary estimates are submitted to the individual Minister , that they are usually exam ined and sometimes reduced.

They are then submitted to Cabinet and to a committee of Cabinet where they are further examined and further cut and there can be large amounts cut from those ongo ing estimates before we see the final figure in here . Can the Finance Minister confirm that this is the usual sequence of events and that this in fact took place? MR. CRAIK: Well , there are about three different steps in arriv ing at the final figures. I shouldn 't say exactly three because it may . . . There are about three go arounds on the estimates before you arrive at the final figures and each one is finr screened . MR.

WALDING: And is it usual for the arnosnt to be reduced at each go around? MR. CRAIK: It's not unusual. MR. WALDING: Was this a simi lar process to what occurred in the years 1966-69 when the Minister was previously a membe r of the Cabinet? MR. CRAIK: I wasn't a member of the Treasury Board at the time , so I'm not too familiar with the procedures that were used . I presume that they 're not greatly different , but they are substantially different to the extnt that the Management Committee , i n more recent years, has done its own analysis of the various Estimates of the dElpartment. MR. WALDING: Mr.

Chairman , I'm told by my colleagues who were in the Cabinet for up to eight years that a very similar sequence of events happened when Cabinet sat down to consider the departmental Estimates , that every year this same process went down from a preliminary figure , which was somewhere up there , and at each stage it was cut down and cut down until the final realistic figures were presented to the Legislature in the Estimate Book .

So, I'd like to ask the Minister then , that knowing that that system happened this year , and that he was in a posit ion to find out what had happened the previous few years , how realistic really 4176 •

.. Thursday, June 22, 1978 was it to tell the Legislature that had those prel iminary Estimates gone through that there would have been an additional deficit of $300 million , when he knows very well, or should have known very well, that there was not the slightest chance of those preliminary Estimates going through as prep ared? MR. CRAIK: Because such is not the case, Mr. Chairman. The $300 million figure was well within the realm of possibility, and probably quite realistic because we were already faced with the potential in early November of a $225 million deficit for the 1977-78 year.

So, $300 million for the subsequent year was well within the realm of possibility, and very much a likelihood if the procedures of the former government had been carried on. MR. WALDING: Mr. Chairman, I don 't really understand what the previous deficit has to do with this year 's when the Minister is referring to preliminary Estimates coming in from the departments. Is he suggesting then that it was unlikely that this government would have cut them down, that they would have simply accepted the request from each individual department? MR.

CRAIK: Well, I think that's highly likely, but just to repeat again, the figure that I originally received, as a result of the request, preliminary indications of the departmental requests for Estimates for the current fiscal year 1978-79 , were well in excess of $300 million. In the expectation that the normal procedure is to reduce them somewhat the figure that I used of $300 million was reduced, and I think that in view of the fact that the previous government had spent last year , or was well on the road to spending $225 million, that the $300 million figure was well within likelihood. MR.

WALDING: Can the Minister indicate to the committee when he formed that impression that there would be an additional $300 million deficit? MR. CRAIK: November 9th . MR. WALDING: Can the Minister indicate to the committee when Cabinet completed its deliberations and finally agreed on the figure that is published in the Estimates Book? MR. CRAIK: Well into the calendar year 1978. MR. WALDING: I believe the Minister has told us on previous occasions, or maybe told the Hous e, that the Department of Finance was receiving frequent and regular reports from Ottawa with new revenue forcasts for the province .

I presume that by the time Cabinet had finished it's Estimates revue that it would have had a much more accurate picture than it had on November the 9th. MR. CRAIK : Well , the member is probably alluding to the fact that the projected deficit of 225 was reprojected to 181 at a later date in the first quarter of 1978. Those changes were due in part to the reduction of expenditures of somewhat in the order of $15 million as a result of the restraint program and the balance as a resu lt of cost-shared receipts from the Federal Government.

The receipts , however , from Revenue Canada, the income tax receipts, did not change substantially from the information that were provided to the former government in late September of 1977. And while we were receiving on-going notifications by the Federal Government of the shared-cost receipts, the shared-cost receipts can move around somewhat, there was never any indication by the Federal Government that total shared-cost receipts were going to reach a certain level by the end of the fiscal year .

However, there was a very firm indication, at the Minister of Finance 's meeting in Ottawa on October 7th, that confirmed the late September information that the revenues from income tax were going to be some $50 million less than those projected for that fiscal year. So, the member can take it as he likes . I would remind him that we're now talking about the 1978-79 Estimates. MR. WALDING: I have no further questions at the moment. MR. CHAIRMAN: The Member fo Roblin. MR. J. WALLY McKENZIE: Mr.

Chairman , my questions on the Polar Gas, were already answered, but I'm wondering if the Minister can advise me if he inherited any studies on the full development of the Port of Churchill from the former government, or from the Federal Government, due to the many problems that's come to light in the delivery of grain through the Port of Vancouver or Prince Rupert? I'm wondering from the comments of the former Minister of Industry and Commerce if, in fact, the former government looked at the feasibility of additional facilities at the Port of Churchill 4177

Thursc:llay, June 22, 1978 to hopefully compensate and give us a lever to pay back some of the obligations we have in there, if any of those studies were done or if any of the departments have inherited any studies on the feasibility of the further development of the Port of Churchill. MR. CRAIK: Well , Mr . Chairman , it's just a case of carrying on and renewing and intensifying the efforts to expand the use of the Port of Churchill. The reduction of the NRC base there has caused a major problem in the reduction in the size of the total population of the Fort and the town.

As a result of that the town population is now down to of the order of 1500 and could reduce well beyond that, in which case it's going to put, in terms of municipal serv ices, it's going to put an intolerable load on the remaining people of the Town of Churchill , and in part , it's going to put basically an intolerable load on the Provincial Government to carry the services of that town unless there is an expansion by the Federal Government of their requirements for the port facilities because there 's no indicat ion of the re-establishmen t of the National Research Council activities at the base in Churchill.

So that apart from the Polar Gas Pipeline , which was pointed out by the former First Minister as being one of the stars on the horizon for the retention of some of the former buildings there for future use by the Polar Gas Pipeline interest- which I haven 't seen any indication of since I've had any responsibility for it - that the only potential I see for basic expansion of the economic base of Churchill is the seapor t itself , and that is grain , t he movement of grain . MR. EINARSON: Mr.

Chairman , I wonder , and I certain know the problems from the west of getting our grain delivered through Vancouver , now they 're talking about further development on Prince Rupert , but nevertheless , over the years, I can 't recall any ships in Churchill , the turn-around period there, in most cases , is about 48 hours and they 're loaded and gone . Maybe the government and an in-House committee of both parties , and with the help of the Fds we go back and press maybe f another terminal in that port.

Rather than having two or three ships in we could bring in four or five, because the railway system has be1en able to deliver the grain historically over the years through the Churchill route .

We certainly have problems at the west coast , and the problem of the farmer today is to get their grain delivere cl, and it's certainly not the answer to all the problems but it's certainly one that maybe a committee of the Legislature , with the guidance of the Minister and the government , that we should continue to pursue and press and see if maybe we shouldn 't talk to the grain companies or to the Wheat Board and because Church ill' s a port of this province, it's there , and it's going to be there forever , and maybe it's some thing that we could look after in the next four or five years and see if there isn 't better cooperation with the Federal Government and at least we not backing off and forgetting that it's there.

MR. CRAIK: Well , I couldn 't agree more with the Member for Rob lin, and probably the approach is to work more actively through the likes o·f the Hudson Bay Route Association in order to achieve those ends . MR. CHAIRMAN: The Member for Brandon Esst. MR. EVANS: Thank you, Mr. Chairman . I would just say that although I believe the topic is out of order , the discussion on the Port of Churchill , I agree with my friend , the Member for Roblin . ii really believe that we should do everything we can to promote that port considering the grain handling difficulties that we are having on the west coast.

Just very very brief lh, I have something else I wanted to talk about on the department , but just for information of the comm ittee. Manitoba , along with Saskatchewan and Alberta , has formed the Port Churchill Development Board , so the three prair ie provinces together are attempting to support and promote the use of the Port of Churchill. And I might add that the Minister of Industry and Commerce has, and does meet, as I used 1t o, with the other Western Ministers of Transport , from time to time with Mr. Lang , the Federal Minister , and that is a favourite topic. I might just say, in passing , Mr .

Chairman , we're very pleased to get the support of both B.C. and Alberta in the promotion and development of the Port of Churchill. What 's going on now is a multi-million dollar renovation program of the Churchill port , and also the CNR is spend ing several millions of dollars upgrading the rail line to take the new heavier hopper car . Well , at any rate, I do share the thoughts of my friend from Robli n, but back to the Department of Finance.

The Minister, in again trying to put his finger on the horro r story said , well , maybe the biggest horror story is the deficit, you know , the multi-million dollar defic it. I want to preface my remarks by saying that I too believe in motherhood . I believe in efficiency of government spending. 1 believe in prudency . 1 believe that spending should only take place if it's for worthwhile projects. 1 don 't believe in waste. I don 't believe in superfluity of civi l servants and so on, so we all agree on the same objectives . I would only point out to the Minister , he seems to th ink that for some 4178 -

• Thursday, June 22, 1978 reason or other to have a defic it is a horror story. I want to advise the Minister that Manitoba is not the only province to have a deficit. There are other provinces , indeed there are other states and indeed the Federal Government has a large deficit.

I would only point out that in the last several years , the last few years , the Province of Manitoba obta ined a double A rating and I would say that is a time when government spending was increasing, and I would suggest that the fact that we did achieve a double A rating for the first time in our history, is indicative of the economy of Manitoba was such that it could sustain a deficit of that order. As a matter of fact, I think if you talk to any expert in public finance, that expert would tell you that Manitoba is a long long way from its limit of borrowing .

I think we're a long long way from our capacity to bor row. In other words , I think we can sell many more bonds , we can do a lot more borrowing if we really wanted to for worthwhile purposes, of course. So I just want to make that as an assertion because I think if you got any public finance expert or group of them together , they would tell you once they've studied the Manitoba situation, and I've had some comments from some of them, that we're a long way from our limit of borrowing capacity . As a matter of fact, maybe your own staff could advise you on that.

But I wanted to point out that if our deficit of the last year was a horror story, then the entire era of John G. Diefenbaker as Prime Minister of Canada was one big horror story because he had a deficit year after year while he was Prime Minister . I believe , I stand to be corrected , but I believe that every single year that John G. Diefenbaker was the Right Honourable Prime Minister of Canada he had a deficit and he had whopper of a deficit. He had a very big healthy deficit. Now why did John G. Diefenbaker and the Federal Conservative Government of the day, from I guess 1957 to 1962 have a big deficit.

The reason they had a deficit was because Canada also had a great deal of unemployment. It had a major recession and this always happens . When you have a recession, your tax revenues fall off, your incomes fall off, your tax revenues fall off and indeed some of your other expenditures go up.¢ In the case of the Federal Government, the unemployment insurance payments go up obviously. In the case of the provincial governments, you have welfare costs going up. But the fact is that revenues do fall off .. . I've got everybody talking again . Mr .

Chairman , I guess somebody 's been listening at sometime because we've got a lot of conversations going again . At any rate and I'm glad I've got the attention of the Member for Rock Lake in particular because I do want to discuss this question intelligently because the members of th is committee and the members of the Conservative Government for the life of me, don 't seem to appreciate that at some times it is good to have a deficit. It is good, in fact, it's necessary to have a defic it at some time . I'm not saying every year should have a deficit .

In Canada , we had deficits every year between 1957 and 1964 if you take the Canadian provinces and the Federa l Government togther, we had deficits every year, but , between the year 1965 and the year 1974 - now hark this - between 1965 and 1974 the governments of Canada collectively had surpluses each and every year . So we had a period of deficits and then we had it followed by a per iod of several years, year after year , of surpluses . So, I'm not suggesting we should have year in and yea out forever and ever a deficit , I'm not suggesting that.

But I'm saying at times of recession , governments are almost forced to go into a deficit position and that's what happened to Diefenbaker . I say that we're unfortunately today suffering a recession , we have been suffering a recession for some time and I would say that unless you do something very drastic in the way of cutting government spending, that you will continue having these deficits . And if you do cut the government spending, you're going to contribute to unemployment, you 're going to reduce services as we've seen in the hospitals , the personal care homes and elsewhere in the province .

I'd like to point out that th is Ministe r when he says about deficits being horror stories , of course , should recognize that he is contributing in some way to the deficit position for this current fiscal year when he has cut taxes. By cutting out gift taxes , by cutting out succession duties , by the reduction in sales tax - I know it was a Federal-Provincial agreement, but nevertheless by the reduction in sales tax - any reduction obviously of government revenues is going to in some way contribute to a deficit unless you do something else on the other side on the spending side.

So really this Minister and this government has through the cutting of taxes made a fairly significant contribution I would submit , Mr . Chairman, to the amount of deficit that they are going to experience this year . And the Minister can 't deny that, if he didn 't have all these cuts, he'd have a smaller deficit . It's quite simple , it's quite straightforward, but I do plead with the Minister to understand that if you have a recession , or worse still a depression , you're going to end up with a deficit and that is a historical fact.

It happened in Canada in the dirty thirties and as I said, it happened during the Diefenbaker era when there was a very serious recession as well. I would submit, Mr. Chairman, that we've got to learn someth ing surely from the depressions and recessions of the past and that something is that government is the only vehicle that can do something to help offset the depression and the massive amount of unemployment. I would say that John G. Diefenbaker recognized this and did it. He went into a lot of additional 4179

Thursday, June 22, 1978 deficit spending to stimulate the economy and I say today if the Federal Government which has got the biggest deficit of all was to try by nHxt year to eliminate that deficit entirely, we would have a massive amount of additional unemployment in Canada . It would be an extremely serious - it's serious now, it would be a disaster . I would say categorically it would be a disaster if the Federal Government tried to eliminate its deficit blt next year. So I suggest, Mr. Chairman, that the Minister would do well to study a little bit of economics.

He'd do very well to understand that deficit!i do arise automatically when there is a recession . He'd also do well to understand that he can, by discretion, add to the deficit if he so wishes as he has done by certain tax cuts. I'd also point out that if this province in the next year or two continues to try to reduce government spending , I'm going to suggest , Mr. Chairman , that this government will no doubt, there 's no question in my mind, will contribute to the level of unemployment.

I'm not trying to make a political speech , althouqh nobody will agree with my observation but I'm doing a good job at it, I'm not trying to make a political speech , I'm simply saying let's recognize that government spending can be useful and can produce jobs , can create and generate income within the economy . And also let's recognize there·'s a lot of waste in the private sector too - God help us, there 's a lot of waste. You and I, all of us we waste a lot , whether we waste it by buying unnecessary gadgets or changing the models of cars too often , or the companies through advertising.

Let's face it, there 's waste in the private sector as well. I say that this province would do well if our Minister of Finance, the present of Minister of Finance would recognize the fact that having a defic 1t isn't necessar ily a horror story, that deficits do occur automatically when you have recessions .

You can also use your budgetary instrumen ts, your spending and your taxing power to create jobs and this is the message I've been trying to get across - thus far unsuccessfully - but I submit to th•3 Minister that it would do him well to study this matter and not to simply pass off the deficits of the last year or so as one of the horror stories. I say in all candor and as objectively as I can, that if you consider defic its of that magn itu de to be a horror story , then you don 't understand what the double A bond rating is and you haven 't learned anything from Canadian economic history . MR. CRAIK: Mr.

Chairman , I think only to just underline . If I understand the member correctly , he's saying that in his opinion we should have a higher deficit than we've got this year. MR. EVANS: I didn 't make that statement that we should have a higher deficit, I said that I disagree with the Minister's statement when he pointed to last year 's deficit as a horror story . MR. CHAIRMAN : The Member for St. Johns. MR. CHERNIACK: Mr.

Chairman , I appreciate very much the commnts made by the Member for Brandon East because he's brought this to a different level and shown a basic difference in philosophy which I think is the important element of politics and it's the important thing that should develop as between a government and its opposition . There are nevertheless some points I want to mention in addition to what Mr. Evans said . Firstly , the Minister said , " Well you mean we should have a higher deficit. " Well , he didn't hear the member, Mr. Evans, very well because Mr.

Evans accused the Minister of giving up substantial revenues which would actually serve to reduce the deficit and we've had philosophic discussions ~ on whether or not the government was rig l'1t in reducing the revenues, but setting that aside , it should be admitted that those are revenues that were given up by the government and therefore , :!:- added to the def icit that's being projected by this government in this year. I don 't think we should fudge it or try to deny it. It is a fact.

The government thinks they did the right thing , we think they did the wrong thing , but the fac t is that what they did will result in a reduction in revenue unless the government will go further and say, " Well , in the long run we're going to stimulate the economy, there 'll be more money spent asa result of re!duction in taxes. All the people who die will now spend more money instead of paying succession duties and that will be fine ." I'm joking only because , Mr . Chairman , I don 't believe it can be quantified. You can have your point of view , we can have ~ our point of view.

It would be rather difficu t except as economic historians to really assess what is the true picture , but the temptation to point to Ontario is there and , therefore , I must point to Ontario to say that they are running very high deficits, much higher proportionately than we are running and have run, and they must agree with the principle of succession duty taxation because they still have it, and there is a difference as between two governments side by side , neighbours to each other , presumed the same philosophy who are approaching it differently .

Just to comment on the crude growth that the Minister referred to. As I recall it, we attacked the principle or the philosphy of crude growth of the free enterpr ise system that seems to think -..... that as long as you have growth it's great , and we talked about the fact that the quality of life is important , that the differential between the high and the low incomes has to be reduced and 4180

Thursday, June 22, 1978 that , therefore , one just doesn 't just go for crude growth, but one rather goes for a planned economy which does work to minimize the difference in incomes between people and which does work for the benefit of the people who have a lower opportunity to develop themselves as far as quality of life is con cerned . And , therefore , when he says throwing money around to create public works , that has nothing to do with crude growth .

That was openly discussed and clearly stated to be an effort to stimulate employment and again there could be a difference of opinion as to whether it's a good idea or a bad idea because there is no doubt that when one fights unemployment one can, in the same breath, increase inflation and there has to be a balance and there has to be a choice and I think that the government of Manitoba when it was New Democrat chose to see to it that they didn 't tell individual people , you have to go on the street , you can't have work because we're fight ing inflation and we said we will fight unemployment to the extent of not creating make-work jobs, but creating jobs and creating funds for those jobs of work that may be shelf work , that may be on-hand desirable work, but work which isn't of the utmost urgency except for the purpose of fighting unemployment and in doing so, possibly adding something to the inflation .

Now the Conservative Government is saying, we're fighting inflation, we are fighting a deficit, we will not have a defic t, therefore , we will reduce our expenditures and thus there is no doubt they are creating unemployment. They seem very proud of the unemployment they've created in the Civil Service . I don't think they ought to be proud. I don't criticize them as much for doing it as for the fact that they're saying it's great, we're cutting down on public works . So, we're cutting down on nurses and we're cutting down on all the people that are providing a service to people in order to reduce the costs .

And yet , Mr. Chairman, this government is already plannig to have a deficit in this year in excess of $150 million. I wouldn't be surprised if it wouldn't add up to $200 million in deficit and this Minister talks about the horror story of a projected $225 million deficit which was reduced to $181 million deficit and we sill have to probe and find out how long he knew the truth before he told the truth, but the fact is that now today, this government is facing a planned deficit of its own in excess of $150 million easily.

It's got $114 million in crude black and white on its own statement of revenues and expenditures, where it is planning a deficit of $114 million. It has indicated $30 million that was not revealed anywhere until we started to probe and ask for it, and finally got another $30 million in capital works, which is a carry-over from before, that adds up to $144 million . There was $2 million for something or other, there was some other money, it has been estimated that there's some $15 million of additional money that has yet to be authorized or that will come through Supplementary Supply . For example , Mr.

Chairman, we learned that the Ministry of Health has approved capital works in excess of $8 million, which will be spent by hospitals, which will become a burden on taxpayers for the future , and that can be added . So, if I'm saying that we're going to be $200 million , I'm not far wrong . Maybe it's $175 million , that is now being planned, and the Minister shakes his head. Will he agree to $150 million? He's not sure , but he says , no. Well, I've got $144 million in his figures , so, I will tell him that on the base of $144 million, it'll be over $150 million. All right , Mr. Chairman , we've discussed that.

I'm sorry the Minister of the Task Force has left. He was here briefly , but I didn 't have the floor at the time. I believe, Mr. Chairman , that this afternoon's exercise with the Member for Transcona , has had this Minister disassociate his department from the figures in the Task Force .

I believe that he has not accepted any responsibility on his own behalf or that of his department , for the figure of $400 million of deficit, and for the figure of, what is it, three times income tax revenue, I believe that the Minister was careful not to say he disagreed with the figures , but rather not to accept responsibility for them on his own behalf or on his department. Since that is my

interpretation of what was said , I must say that I'm pleased, because I have tremendous respect for the competence and the integrity of the people in the Department of Finance , and , Mr. Chairman , there's usually an occasion when one pays tribute to one 's co-workers , and I've had that opportunity as Minister of Finance, and now, as a Member of the Opposition, I could repeat that I do believe in their competence , I do believe in their integrity, that does not pass on to their politicalleadership of course .

One can't expect me to go that far, but the fact is that I am glad to be able to say that I don't believe that they would be parties to giving a wrong impress ion or to misuse of figures , and therefore, I believe that they had nothing to do with the Task Force figures , and I'm happy that the Minister did not associate them with it. However , the fact is that he used the figure of $300 million, which I think, in the questioning by the Member for St.

Vital , has shown that those figures were as meaningful as the figures that were used by Gurney Evans, his predecessor, when Gurney Evans described on one occasion the horrendous - and these are my words, not his, I don 't remember his words , but they're on record because they were used right after this Minister gave his budget address this year , where he implied there was a great deal of blood letting from the original demands of departments. By the time the Cabinet got down to the hard rock figures that he was presenting, there was an awful lot of work done , and he was telling the truth .

The only thing is that when the Federal Minister of Finance said 4181

Thursday, June 22, 1978 it, Mr. Stanfield laughed his head off , openly and publicly, because he said , " What government does not go through that process? " And the Mini:;ter now has admitted that the $300 million figure which he says was conservative , was nevertheless based on figures given to him by departments , not reviewed by any Ministers to his knowledge and therefore are the figures which a department might hope to get and expect to be bargained clown from .

The institution of the Management Committee of Cabine t is there in order to have an adversary position with the departments , and all of those who have seen Management Committee work and Cabinet work on Budgets , have seen that the Management Commi ttee is usually there to support cuts - hardly ever recommends a program well enough to suggest increases , but is there on behalf of Cabinet to keep the expenditures to a minimum , and I think sometimes to the detriment of a government 's program , presuming a government has a program , which I've yet to see develop in this current government. Now , Mr.

Chairman , there was a question asked of the Minister which he didn't quite answer . I think it was the Member for Transcona who said , " This governmen t made a decision to drop three percent in sales tax for six months , rat her than two percent for nine months ." I think , I'm pretty sure he asked the Minister , what cost-benefit studies were carried out?

Was there an evaluation made by his department , his advisors , who tl1erefore came to him with a program, with an evaluation of the impact on the economy of Manitoba , or on the revenues of the province, as to the difference between the 2 percent for six months or the 3 percent for nine months, and I don 't think I'm inclined to ask for a report on what was recommended lest the recommendation was contrary to the political decision .

I recognize that the department rnight recommend one thing , and the political decision might be the opposite , so I don 't want to embarrass the department nor the Minister to get involved as to whether there is a difference of opinion betweenh im and the department, unless he wants to assert that the department , having rnade an investigation and evaluation and made a recommendation and he followed it, then if he claims he followed the recommendation I would feel entitled to question it further . So I hope he'll answer that quest ion.

What was the nature , not the advice , but the extnt, of a cost-benefit stL1dy that had been done by his department or by the government before it made its decision on the 2 percen t? Now , Mr. Chairman , I do want to come to the def icit which th is Minister talked about , the $225 million , where that figure was used by the Task Force , I think , in a document which is dated just days before the Budget when this Minister announced the happy disco very of a $50 millio n increase in revenues , and a no , - there was $44 million of whic h . . . MR. CRAIK: $35 million. MR.

CHERNIACK: 15 and 35, and then 6 million another way. I'd like to know when the Minister learned these changes? I think we're entitlted to know that. When did he learn from his officials these changes as they took place? Now , at one stage he said , " Well you know these Estimates that we get from Ottawa change back and forth ." The fact is he used them on one occasion , and is he now suggesting that he had them on another occasion and didn 't use th,em because they can go back and forth , and therefore , he didn 't use them .

Because it obviously came as quite a shoc k to us to have the people in government talk about two and a quarter million , I think , 229 million , and using that figure time and again and again , and repetitiously , and suddenly having it reduced to 181 and some of them not even realizing that was still talking about $225 million defici t. That kind of lack of honesty is one which I would like to explore . I'd like to know when did the Minister learn about that , because when we get down to $180 million , we know that much of that was well beyond the positive action of a government. So I go to one step further .

This Minister , like the Task Force Minister, seems to believe that a government , any government , faced with a deficit , would in the follow ing year , ignore the deficit and continue to spend on the same basis as before . And that , Mr . Chairman , is a foolish assumption . Now , it may well be that the governmen t today is loaded with the respons ibility of cop ing with a greater reduction in revenue than had bee1n expected in the previous year , and I can sympathize with that government.

I could even say I'm glad I'm not the one that has to do it , but to imply that it wouldn 't be done is also an assumption which is " unfa ir", is to put it midly , but " foolish " is to put it, I think , i n a more correct basis . I don 't believe that one extrapo lates the way the Minister for the Task Force did, or one takes the ballpark total figure of what has been requested , and assume that any subsequent year , that would be carried out by the same government or by a different government. I think that that should be laid to rest.

I think that in the end we will be gett ing down to the kind of discussion that the Member for East Brandon was involv ed in today , talking about a philosophic approach and it would be a lot more helpful for the people of Manitoba to learn the differences between our parties , without th'a need to name -call and without the need to accuse . 4182

Thursday, June 22, 1978 To point out that there are differences , and I think it's pretty clear that it is likely that an NDP government would be spending money to create jobs today, where this government is not doing it. The fact that an NDP government would be probably putting more money into student aid and into student work , summer work , than the Conservative Government, that's a fair assumption, and in that way, increasing the deficit. That's a fair assumption.

On the other hand, it's a fair assumption to say that the NDP government would not have given up revenue to the extent that the Conservatives are doing. On that basis, we are back to talking in a philosophic approach and we are not throwing around the wild accusations that were thrown around - and I repeat the fact that very little money has been found in waste and extravagance or mismanagement by this government.

In spite of their protestations that they would do so, in spite of their promises that they would be revealed, the fact is that this government is trapped by the assumption that they cosld have found so much in waste, that they could have continued all the programs that were worthwhile and not increase the deficit. Now they 're finding differently, so they're cutting throats and programs and that is something that they should not blame on previous governments, but blame on their own problems which are there, which are real, with which I sympathize, and which they are tackling their way.

I guess all that ii've left by way of question, Mr. Chairman, is the one question as to the cost-benefit studies on the decision on the 2 percent or 3 percent reduction in sales tax, and also the challenge to the Minister to, in detail, refute my suggestion that the planned deficit for this government for this fiscal year is in excess of $150 million? MR. CRAIK: Mr. Chairman, there were a number of points made by the Member for St.

Johns on a number of questions implicit, if not direct First of all, maybe I can deal with this accusation about lack of honesty, at least the term is a little less grating than being called a bald-faced liar. But coming -(Interjection)- which he never used, which is right, but I understand from reading the newspapers, which I haven't raised as a matter of privilege in the House, that I've been called a bald-faced liar on the matter. But let me first of all, deal with this issue in which you think that that sort of accusation is ... MR. CHAIRMAN: Order please. Order please. The Minister of Finance has the floor.

The Member for St. Johns on a point of privilege. MR. CHERNIACK: I'm beginning to think that some members believe that the Minister said that I am quoted as calling him a baldfaced liar, and I wanted to clarify that MR. CRAIK: No, not so. No, not so. MR. CHERNIACK: Well , then will you tell your colleagues that you are not accusing me of saying that? MR. CHAIRMAN: The Minister of Finance has the floor. MR.

CRAIK: The point that I want to clarify, if it's possible, and I'm not at all sure it's possible, because I think there's an intention to have it otherwise, a deliberate intention to have it otherwise, and it's this matter of $30 million of capital carry forward.

I would ask the members opposite if they zill not accept the fact that if we had included the $30 million of capital carry forward inorder to compare it on a comparable basis either through the Reconcilliation Statement in the Estimates or by inclusion last year, we would have had to add in last year, which we did not include, in excess of $40 million in capital carried forward, which would in effect have put the projected deficit from last year up by that amount, which was not included last year .

Now , I'm not asking you to publicly acknowledge it, I'm simply stating it because I think you know it, but you keep repeating it that somehow we did not add in the capital carry forward and that was a lack of honesty . Well, let me say this , that if we had done it in order to show it on a comparable basis to last year , we would have had to add in last year approximately $43 million which we did not attribute to your spending last year which would have made your picture look not 225 or 181, it would have added another 43 million to whichever figure you use, but we did not include it in that figure .

So it's a question of comparing apples to apples and oranges to oranges, but not one to the other and that has always been the case which you've refused to allow that point to be clarified and that is the issue. MR. CHERNIACK: Would you permit a question? MR. CRAIK: Mr. Chairman , I didn't interrupt the Member for St. Johns, he can come back. If he 4183

Thursday, June 22, 1978 disagrees he can make his point, but I'm making that point now to clarify it. You 've said it, the opposition has said it six times if they 've said it once; that we deluded or we expressed, or we're lacking in honesty because we did not include that 30 million. Well then they were lacking in not including 43 million the year before and 40 the year before that , and 28 the year before that and 50 the year before that.

The fact of the matte 1· is that capital carry forward is money that is committed to capitel projects in a year that is carried forward into the next year but it's carried forward because it's committed the year before . And that has happened every year , and that is exactly why we're going to combined accounts and that is why we're going to start lapsing capital , so every year from here on in you will know, but the capital carried forward this year is primarily for those projects which were committed by the former government and they will be all done .

But, if they really want to go back and use that technique and say, " Ah , but we want to lapse last year, " we'll say, " Fine, we'll add in 30 million , but to compare it to last year , you add 43 in and you 're going to look $13 million worse than you did ." So at least accept that , that you 're not going to be able to get away with compar 1ng one without comparing it to the other . Now in the 2 percent versus the 3 percent on the sales tax , as far as the benefit-cost study is concerned , the negotiations on the alternatives on the sales tax went on for approximately three weeks.

There was in all of this period the problem faced by all of the provinces in the old fashioned idea of budget confidentiality in the discussions and this isn't isn't exclus ive at all in any way, shape or form to Manitoba , but most of them felt bound by that notion which the former Ministers of Finance here will have some sort of idea ol'.

Ministers of Finance and governments have been in trouble before when they started getting open in their discussions about budget matters and that is one of the strictures whether it's old fashioned or not , I don 't know , but we felt somewhat bound by it in the discussions and I th ink the other provinces did too . And with regards to the 2 'l2 percent versus the 3 percent , our understanding in discussion with the Federal Government was tha t that was basically the offer of the Federal Government. That was the name of the game and that was it.

Now , the members opposite can say, " Well , you didn 't do a very good job in negotiating. You should have tried to do something better ." Well we did try first of all to suggest to them that perhaps the 2 percent reduction inasmuch as we had a 5 percent reduction would be adequate and that our equivalent of $21 million roughly would be put into job creation programs and that way the absolute amount of the sales tax would be relatively equitable across the country and the beneficial effects would be equitable and so on.

They said , " No dice." Our next move was to, along with Saskatchewan and Quebec - I didn 't talk directly to Quebec - but Saskatchewan to try and negotiate an arrangement whereby for those three provinces they want 2 '12 percent to 'l2 percent. We had delegations to Ottawa , staff people went down and came away with the story of no dice. None of the provinces were going to get that arrangement and that's it. By this time we were at Budget date and it was a case of we were back to the two to one .

Basically we agreed with the concept that a sales tax reduction at a time of requiring stimulation of the economy was as good a measure in total as there would be to achieve stimulation of the economy. It would cut across the income brackets better , of course , than thellikes of the settlement that's now emerging in Quebec and that all told , it wasn 't a bad move .

As far as the benefit-cost ratio is concerned, the information was that we had from the only other experiment that had been done which was in Ontario two or three years ago , that we could expect a stimulative effect particularly if it was done across the country . We recognized in doing it that the watershed effect would bring more benefits to Ontario and that's why we tried to negotiate 2 '12 percent to '12 percent because there is a certain leakage effect because the commodities that are purchased tend to be the fridges , stov :es, and automobiles and other things that are made there .

We could have taken that position and held tough and done the same as Quebec , but I think in total what happened was that Western Canada proved that by and large they 're much more interested in a national interest, a Federal intE~rest than almost any other of the provinces in Canada . When it really came down to the crunch , t hey all recognized the leakage , they recognized the watershed effect , they recognized that we bargained for two or three weeks .

They knew that benefits were going to accrue more to some provinces than to others, but in spite of that , they were quite prepared to do it in the national interest and to co-operate with the Federal Government and in the final analysis to oive a tax break to the people of the respective provinces. Now, it can be said and has been said, lrhe Federal government has been accused of it being an election ploy because at that time they were probably contemplating an election in June . That allegation was made immediately ; I haven 't any comment to make on that whatsoever .

Strictly on the basis of the stimulative effect to the economy , I'm not in disagreement with the concept of doing it. Whether it 's constitutionally correct or not , is quite another argument that I haven 't entered, but others have on the constitutional argument sicle. But in total that 's the total picture of the negotiations 4184

• Thursday, June 22, 1978 on the sales tax and we'll know in due cou rse whether or not in fact it has been beneficial. I can say to the Member for St . Johns that another two or three months will prove an awful lot more than any beforehand benefit-cost study because the re's nothing like having the real facts of life befor e y ou a nd learn fr om histo ry. But it wou ld appear from the Federa l statistics and our own , that it is having a good sti mulative effec t. Whethe r or not in total it has been a good move only time will tell. But we took the gamble and having to do it over again , we'd do it again.

Apart from the con stitu tional conflict , from a straight tax point of view , and stimulative point of view, putting money back into the taxpayers ' pocket , doing it as equitably as possible - it's a fairly efficient means of doing it and we don 't back away from that position at all. Now as far as the Student Work Program is concerned , I happen to think that the program that we did undertake , the Private Sector Youth Employment Program , has worked very effectively.

Again we're now going into the phase whe re we'll do the complete examination and we'll know next year how many new jobs were created out of the 3,000 to 4,000 job application forms that were filled and jobs that were filled out of it. That analysis will be done . I happen to think it's worked out extreme ly well ; it's been a good program and that it has introduced students to permanent jobs rather than temporary jobs . We again, at this point in time , come to the conclusion that to do it over again , we'd do that over again too .

It's been a good program and the results have been very satisfactory as far we're concerned . MR.CHAIRMAN: The Member for St. Johns . MR. CHERNIACK: Mr. Chairman , I appreciate the answers by the Minister . Firstly, I want to clarify something. I understand him when he's talking about comparisons and I understand what is shown on these revenue sheets , I would have said . .. Now , I want to make something clear , I have not called the Minister a liar , I do not consider him to be a liar -(Interjection)- Pardon, no, no, just a minute.

No, I said that the statement is less than honest and I'm going to support that statement because I don 't mean it as a personal accusation against this Minister . I'm talking about the statement he presented as being less than honest. And the reason I'm doing that is this. When we presented statements in the past on the old basis of separate capital and separate curren t, the statements were there , they were voted on, they were all clear. This government for its reason , and I don 't challenge it - you know, it 's a good idea , I think it's a good idea, others don 't.

To consolidate the two and to present the current and capital together should have done a couple of things . One, it should have lapsed all cap ital and start from zero base budgeting and, therefore , the picture would have been complete and therefore , more honest. I said " less than honest" because had they lapsed it all and said , now this is what we're spending in the coming year , then we would know what they 're spending in the coming year and I don 't care what figures they would have used on the left side had they added 43 million or not. The fact is that that 43 million wasn 't spent I'm told .

And if t hat 43 million wasn 't spent then it's not very meaningful to put it in there unless it were spen t. But that's academic . I'm talking about the righthand column , I'm not talking about comparisons . MR. CRAIK: It was spen t. MR. CHERNIACK: It was spent , well then maybe a different 40-odd million that I was talking about.

The important thing to me is not the comparison , the impor tant thing is that this Minister in his statement and in the press news bulletin made the statement that this year our total combined spend igg will be - and the figure was the one used in the Estimates of $1,650,000 ,000 etc . It was later discovered , and I use that advisedly , later discovered that there was another 30 million that was going to be spent this year , used from former authority .

And when I say less than honest , I th ink the honest statement would have been in that news release and in the Minister's statement that this government's total combined spending for this fiscal year will be 1.680 billion and some dollars made up of 1.650 billion as shown on the Estimates and 30 million of capital moneys authority carried forward . That wou ld have been more honest and that's why I'm not calling the Minister a liar , I am saying that the statement was less than honest. And that I hope clarifies the fact that I'm not getting into an argument of comparisons last year or this year .

I'm just talking about his statement , "total combined spending will be" and it turned out$ to be 30 million more than what he said it was, and I assume he knew then that it was and that came out later . Mr. Chairman , one other thing. I had asked him in relation to the sales tax to tell us whether there was a cost-benefit study made as between the two proposals and the alternatives which the provinces picked up. One 3 percent for six months , 2 percent for nine months . Was there a cost benefi t comp aritive study of the two and he didn't answer that.

The other question , much more im portant , is I asked him to challenge in deta il and to show me where I'm wrong when I have shown 4185

Thursday, June 22, 1978 him I believe that this government will be paying out in this fiscal year a deficit in excess of $150 million , based on the $114 million which he admits plus additional moneys that we've learned about since this was printed , plus the $30 million he's told us about - whether I am wrong in saying that the projected deficit in this fiscal year will be in excess of $150 million , and if I'm wrong, could he spell out for me how I'm wrong? MR. CRAIK: Mr. Chairman , let me put it this way.

If, to repeat , we had done that , we would have had to add in capital carry forward last year , which would have added 43 to last year 's deficit , another 43 which was not included in the figures that have been given out , any of the figures that have been given out. The long and short of it is, that next year when the Estimates come out , in order to compare next year 's with this year 's, the capital carry forward for this year will have to be in this year . So if you are patient enough to wait until next year , you will see that that has happened . MR. CHERNIACK: No, I'm not. MR.

CRAIK: Well, what else can you do? You have to compare this year with some year. MR. CHERNIACK: I'll tell you , I'll tell you. My turn , and I'll tell you. MR. CRAIK: Are you going to compare it to last year or next year? You pick your poison , it's either one, but you know , if we do include that this year , then last year would have been up by an amount of 43 million , and I don 't know what else can be said . The deficit this year, in spite of the tax cuts would still have been a deficit , a very substantial deficit.

The net result of the tax cuts we've made have not changed the fact that we would still have had on the combined accounts probably in excess of $100 million deficit. What the opposition is telling me is that they think that the combined deficit this year should be higher than $100 million, and that's what it boi ls down to . There will be Supplementary Estimates , I have said that all along , they will probably be in the House within two weeks.

We are in preparation now , we're gleaning through all the departments to round up the final figure for the Supplementary Estimates ; they will be in the House probably within two weeks. MR. CHERNIACK: Mr . Chairman , I want to disassociate myself from a discussion of comparisons . I want to talk about the righthand column . want to talk about what the government is spending this year , and therefore what the deficit will be as a burden on future taxpayers . That's what I want to get at; I want to know the difference

Document details

Collection	Manitoba — Debates (Hansard)
Citation	31-2-69b
Type	hansard
Volume / chapter	31st 2nd hansardpdf 69b.pdf
Language	en
Format	pdf
Source	PROVINCIAL
Identifier	e6b62637c6e2b78d50a2cf963fa46c013b5fd70c

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