LEGISLATIVE ASSEMBLY OF MANITOBA Tuesday, 13 April, 1982 Time - 2:00 p.m. OPENING PRAYER by Mr. Speaker. MR. SPEAKER, Hon. D. James Walding (St. Yitai): Present ing Petitions ... Read ing and Rece iving Petitions ... PRESENTING REPORTS BY STANDING AND SPECIAL COMMITTEES MR. SPEAKER: The Honourable Member for The Pas. MR. HARRY HARAPIAK (The Pas): Mr. Speaker, I beg to present the first report of the Standing Com­ mittee on Public Utilities and Natural Resou rces. MR.

CLE RK, Jack Reeves: You r Standing Committee on Public Utilities and Natural Resou rces beg leave to present the following as their first report: Your Committee met on Tuesday, April 13 , 198 2 and appointed Mr. Harapiak as Chairman. Your Committee ag reed that a quorum for all future meetings of the Committee should consist of six (6) members. Your Committee received all information desired by any member of the Committee from the Chai rman, Mr. G. C. Maclea n, Q.C., Mr. J.O.

Du tton, President and General Manager, and members of the staff with respect to all matters pertaining to the Annual Report and the busi ness of the Manitoba Public In surance Corporation. The fullest opportunity was accorded to all members of the Committee to seek any informa­ tion desired. Your Committee examined the Annual Repor t of the Manitoba Public In surance Corporation for the Fiscal year ending October 31, 198 1, and adopted the same as presented. All of which is respectfully subm itted. MR. SPEAKER: The Honourable Member for the Pas. MR. HARAPIAK: Mr.

Speaker, I move, seconded by the Honour able Member for Ri ver East that the report of the Committee be received . MOTION presented and carried. MR. SPEAKER: The Honourable Member for Flin Flon. MR. JERRY STORIE (Flin Flon): Mr. Speaker, the Committee of Supply has adopted certain resolu­ tions; directs me to report the same and ask leave to sit agai n. I move, seconded by the Honourable Member for Riel that the report of the Committee be received. MOTION presented and carried. 1380 MINISTERIAL STATEMENTS AND TABLING OF REPORTS MR. SPEAKER: The Honourable Minister of North­ ern Affairs. HON.

JAY COWAN (Churc hill): Yes, Mr. Speaker, I'd like to table the Annual Report for the year ended March 31 st, 1981 for the Communities Economic Dev elopment Fund. MR. SPEAKER: Notices of Motion ... In troduction of Bills ... INTRODUCTION OF GUESTS MR. SPEAKER: Before we reach Or al Que stions, I would direct the attention of honourable members to the gallery where we have 15 students of Grade IX standing of the Riv er Heig hts Junior High School. These students are under the dir ection of Ms. Hosfill and the school is in the constituency of the Honour­ able Member for River Heig hts.

We have 80 students of the Nelson Mel ntyre Colle­ giate who are host to a group of students from Sum­ merside, Prince Edwar d Island. These students are under the direction of Mr. Bill Peckham. The school is in the constituency of the Honourable Minister of Health. On behalf of all the mem bers of the Leg islature, I welcome you here today. ORAL QUESTIONS MR. SPEA KER: The Honour able Mem ber for Lakeside. MR. HARRY ENNS (Lakeside): Mr. Speaker, I direct this que stion to the Honourable First Minister.

The First Minister has, in recent days, publicly sug­ gested to Manitobans that they may possibly be fac­ ing some tax rises in various forms; the qu estion arises out of the Committee meeting this morning. Among those tax rises, could the First Minister indi­ cate whe ther or not his government is contemplating reintroduction of a gasoline tax for Autopac purposes? MR. SPEAKER: The Honourable First Minister. HON. HOWARD R. PAWLEY (Selkirk): Mr. Speaker, I believe you will concu r that the que stion is one that is not in order because it's a budget question. MR. EN NS: Mr.

Speaker, can the First Minister give Manitobans any assurance that will not be among the list of tax rises that we can expect? Mr. Speaker, I direct a further que stion to the First Minister, also arising from the Committee hearings dealing with Auto pac this morning. It was indicated by the Minister responsible that he, that is the Minister responsible for Autopac, was contempla ting moving away from the competitive tendering process by which government and its agenc ies insures various

Tuesday, 13 April, 1982 government properties. Has the First Minister and his government given that any consideration, to abandon competitive tenderi ng for govern ment insurance business? MR. PAWLEY: Mr. Speaker, I think as the Minister must have advis ed the Committee this morning, the government is reviewing that question. MR. ENNS: Mr.

Speaker, one further que stion, will the Fi rst Minister direct the Minister responsible, in a similar way as I suppose he directed the Minister of Govern ment Serv ices, that regardless of cost to Man­ itobans, as was the case in the case of the hiring of security guards, that Manitobans who after all have to foot the bill for paying the insurance premiums on govern ment property, that costs will not be a factor in making that decision? MR. PAWLEY: Mr. Speaker, I'm certain tha t in the review there will be a consideration of all factors that are relevant and are important to the public interest in Manitoba. MR.

ENNS: Mr. Speaker, I suppose we'll have to wait the Budget for a better answer to some of those questions. Mr. Sp eaker, I direct a qu estion to the Honourable Minister of Finance in his capacity as Minister of Labour. It's been brought to my personal attention inasmuch as it falls in my constituency that in a recent unfortunate closure of a major busi ness, a farm implement business dealership here in the City of Winnipeg, some very serious infractions of the labour laws of this provinc e have probably been violated.

I refer, specifically, to the fact that payroll deductions for group insurance plans, which were deducted from the cheque s were not passed on to the insurer and unfortunately, as a result of a death, that party now finds herself unable, or not in a position, to get the necessary help for which the employee was monthly or bi-week ly being deducted from his cheque. Has the Minister of Labo ur looked into the situation, is he looking into that situation? MR. SPEAKER: The Honourable Minister of Labour. HON. VICTOR SCHROEDER (Rossmere): Thank you, Mr.

Speaker, we, on this side are, indeed, concerned about a situation where someone might have been contributi ng to a plan and because of some possible misfeasance on someone else's part not being able to collect on a policy. But, as the member well knows, if he has read the papers today as I'm sure he has, the matter is under RCMP investigation at the moment. MR. ENNS: Mr. Speaker, I don't pretend to be that well-versed in the labour legislation of this province.

Can the Minister indicate to me was a Manitoba Lab our Law violated in the act of not forwarding pay­ roll deductions of this nature to the insurer in que stion? MR. SCHROEDER: Mr. Speaker, I'm sure the member is aware that it wo uld be inappropriate for me to be giving a legal opinion ·in this House as to whether or 138 1 not any law, of either this province or this country, has been violated by .anyone while a matter is under investigation. MR. ENNS: Mr. Speaker, can the Minister give me and, more importantly, one Mrs.

Tina Braun, any as­ surance at all that the labour laws of this province will be used to assist her in this particular situation? MR. SCHROEDE R: Well, Mr. Speaker, the matter is under investigation by the RCMP, there are allega­ tions, we don't know what the facts are, when the facts come out we will determine what the response will be. MR. SPEAK ER: The Honour able Member for Minnedosa. MR. DAVID . R. (DAVE) BLAKE (Min nedosa): Thank you, Mr. Speaker, my qu estion is to the Honou rable Minister of Tourism.

In view of the fact that it wi ll not be possible for the Prairie Dog Central to visit Bran­ don to assist in celebration of their Centennial year, I wonder if she could inform the House if she has had any representation from that committee or, indeed, from the mem bers for Brandon East and Brandon West to use her good influence to try and enable that very attractive tourist vehicle to make it to Brandon for their Centennial celebrations? MR. SPEAKER: The Honourable Minister ofTourism. HON. MUR IEL SMIT H (Osborne ): Mr. Speaker, I thank the member opposite for drawing this qu estion to my attention.

I have not, to my knowledge, at this point, had any representation from that group but I will undertake to find out just whether there is any possibility of your request being granted. MR. BLAKE: Just a supplementary to the same Minis­ ter, Mr. Speaker. I am pleased to hear that she will look into the matter and if she wou ld pass her findings on to me, because Minnedosa Centennial is in 1983, and we'd be interested in having it there because it has somewhat of a railroad backg round in that particular town. Mr. Speaker, I have a que stion to the Minister of Labour.

I wonder if he might be able to inform the House and the members how many employees of the government have left for Saskatchewan to assist their counterparts there in the election that is presently under way? MR. SPEAKER: The Honourable Minister of Labour. MR. SCHROEDER: Mr. Speaker, I assumed that it was the usual type of qu estion from the Member for Minnedosa, a rather inconseq uential question, I think I jus t caught the last part of it.

If it was a que stion of how many people are going to Saskatchewan, I might say that, if I can clear it with my wife, I intend to go on Friday after work for the weekend to do some work down there. I wou ld hope there would be some others on this side who have, traditionally, in the NOP helped each other. We believe in working together; in work­ ing co-oper atively. When I was running for election in Manitoba, I had some friends from Saskatchewan

Tuesday, 13 April, 1982 take time off work at their own expense to come and giv e me a hand - not for me, but for the people of Manitoba. We will do the same for the people of Saskatchewan. MR. BLAKE: It's not that easy in the backbench to get that camera exposure, Mr. Speaker, so we'll just let them qu ieten down. Mr. Speaker, the Minister obviously didn't hear the question. I asked him how many employees of the government had left to assist their counterparts in Saskatchewan duri ng the provincial election that's under way in that province, how many employees have left? MR. SCHROEDER: Mr.

Speaker, I know of no one who has left this province for Saskatchewan at public expense. I do not expect that anyone will leave this provi nce to work in Saskatchewan at public expense. Maybe the Memb er for Minnedosa might want to check on how many Conservatives went to the United States to the Reagan convention at public or private expense. MR. BLAKE: I don't know how many there were, Mr. Speaker, but they were fairly successful, whatever numbers there were. Mr.

Speaker, a supplementary qu estion to the Minister: I wonder if he could inform this House how many govern ment employees or con­ tract employees have requ ested leave of absence for the month of April in Manitoba. MR. SCHROEDER: Mr. Speaker, I would suggest that the member file an Order for Return if he thinks that is something that is so vital to his interest; if he thinks my mornings and days are spent with determining how many people are asking for leaves of absence. With in the last couple of weeks we had three people in my depar tments asking for maternity leave.

I'm sure there are people in other departments who have other rea­ sons for leaving; there may be be reavements in the family, there may be other reasons. There may well be several people who are asking for leaves of abse nce without pay to go to Saskatchewan to help to re-elect a government tha t has done extremely well for that province, a gov ernment that we hope to emulate. We hope that 11 years from now we wi ll be in the same position of having the Saskatchewan people come over here to help re-elect the Pawley government for a third or fourth term, whatever the numbers are.

And I'm sure that if we continue on with inconsequ ential que stions such as these for the next 4, 1O or 11 years then we will be here for that period of time. MR. BLAKE: I assure the Minister that we won't file an Or der for Return as he sugge sts, but I wonder if he would giv e it quic k attention that we might have the answer before next spring or the following year. MR. SCHROEDER: Mr. Speaker, we will take that que stion in the order of prio rity which it jus tly deserves. MR. SPEAKER: The Honour able Memb er for St. No rbert. 1382 MR. G. W.J. (Gerry) MERCIER, Q.C. (St. Norbert): Mr.

Speaker, my que stion is to the Honourable Minis­ ter of Urban Affairs. Could the Minister adv ise, Mr. Speaker, whether or not, when he made the grant of $39, OOO to the Logan Av enue Community Committee, did he approve a budge t for the expenditure of those funds at that time? MR. SPEAKER: The Honourable Minister of Consu­ mer and Corporate Affairs. HON. EUGENE KOS TYRA (Se ven Oaks): Mr.

Speaker, the req uest for assistance from the Logan Community Committee in it outlined general areas of expenditu res that they were anticipating and the approval for the grant was conditional on them spend­ ing money in general areas that they had proposed to us, in obviously lesser amounts than they had pro­ posed because their submi ssion was considerably higher than what was subm itted to us. But there was n't a specific approval to exact amounts of money to be expended. MR. MERCIER: Mr.

Speaker, the Honourable Minis­ ter has referred to general areas of expenditure, and a letter to the Ed itor in the Winnipeg Press, counsel for the Logan Community Committee, indicated that a detailed budget was presented to and reviewed by the Minister prior to approval. Could the Minister indica te whether or not any additional funds have now been granted to the community committee to cover their costs? MR. KOSTYRA: Yes, Mr.

Speaker, there was a request for add itional funds since the initial grant was to the end of March 31 st and there was an add itional req uest, I think, in the neighb orhood of $25 ,000 and there was a decision by Executive Council to grant, I think it was approximately $17, 000.00. I can get the actual figures for the member. MR. MERCI ER: Mr. Speaker, could the Minister advise whether or not he has approved a detailed budget for the expenditur e of these additional monies? MR. KOSTYRA: No, Mr. Speaker, I did not approve a detailed budget.

The Logan Community Committee outlined a detailed budge t to me in amounts that were in excess of the grant req uested; the approval was given to the specific amount provided it was being spent in the general areas as outlined, because their req uest was for amounts considerably higher than what was granted. MR. SPEAKE R: The Honourable Member for Swan River. MR. D.M. (Do ug) GOU RLAY (Swan River): Thank you, Mr. Speaker. I have a que stion for the Minister of Edu cation.

Did the Min.ister receive a letter from the Town of Swan River indica ting their serious concern about the excessive tax increase, school levies in excess of $240, 000 over 19 81? This represents a 23 percent increase, I might say, over 1981 . I wo nder if the Minister did receive a letter to this context from the town of Swan River.

Tuesday, 13 April, 1982 MR. SPEA K ER: The Honour able Min is ter of Educ ation HON. MAUREEN HEMPHIL L (Loga n): I'll take that qu estion as notice, Mr. Sp eaker. MR. SPEAKER: The Honour able Member for Turtle Mountain. MR. A. BR IAN RANSOM (Tur tle Mou ntain): Mr. Speaker. my que stion is to the Attorney-General in his capac ity as Hous e Leader. I wonder if the Attorney- General can advise the House how many bills he expects to introduce before the end of the Session? MR. SPEAKER: The Honourable Attorney-General. HON.

ROLAND PENNER (Fort Rouge): I will take that as notice and hope to give the Op position House Leader some idea before Thur sday. MR. RANSOM: Mr. Speaker, a further que stion to the Attorney-Ge neral in his capac ity as House Leader. There have been a number of qu estions raised over the past few weeks that have been taken as notice by Ministers opposite. I wonder if the Govern ment House Leader would undertake to check on the number of que stions that are outstanding and have not yet been answered. MR. PENNER: Yes, I will. MR. RANSOM: Mr. Speaker, my qu estion is to the Minister of Natural Resou rces.

The Minister of Natu­ ral Resou rces advised the Committee some days ago that his govern ment does not fully accept the recom­ mendations which were made by the In ternational Joint Commission in their report with respect to the Garrison que stion, which report was made in 1977. Since that's a departure from the positions that have been taken by the government previously, Mr. Speaker, I wonder if the Minister could advise the House whether or not he specifically discussed that position with the Minister of External Affairs when he was in Ottawa last week. MR.

SPEAKER: The Honour able Minister of Natural Resou rces. HON. AL MACKLING (St. James): Mr.

Speaker, jus t so that the record does not carry the incorrect version that the honourable member is suggesting in his qu estion, I' ve indicated that this government as govern ments before, have taken the position that the In ternational Joint Commission's recommendations are to be followed, but I have indicated that looking at those recommendations it is, in my opinion, virtually impossible that the Lone Tree Reservoir can be deve­ loped, because as the honourable member recalls, the In ternational Joint Commission put two very diffi­ cult caveats on that approva l; one being that there be no fishing permitted in the Lone Tree Reservoir, and ttiat in the operation of the Lone Tree Reservo ir, works were to be maintained that would ensure that there wou ld be no transfer of foreign biota to Cana- dian waters.

In that same recommendation, in that same report. the International .Joint Commission pointed out the virtual impossibility of that kind of a guarantee. So, I have indicated that looking at the International Joint Commission's findings, on the face of them, it is difficult to formulate any other view than that Lone Tree Reservoir itself is virtually impossible to main­ tain, because that really is what the International Joint Commission has said.

That position has been recog­ nized not only by this government, but it is recognized by the Federal Government that Lone Tree represents a transfer of wate r from the Missouri River Basin to the Hudson's Bay Dr ainage Basin, and that is a real threat and that is the first major concern in respect to this whole development. Any development of irrigation with in the United States that uses water s that are normally contained in the Missouri Riv er Basin flow­ ing southward, is not our concern.

Our concern is when by the contrivance and the development of the proponents of the irrigation system in the Un ited States, they seek to change the course of nature in a massive way that will threaten our waters and our fishery, we have a ju st concern and that concern is evidenced not only by this govern ment, but the gov­ ernment in Ottawa and we have a very strong consen­ sus of view i n respect to that. MR. RANSOM: Mr. Speaker, my que stion to the Min­ ister of Natural Resou rces was, did he discuss his specific position with the Minister of External Affairs?

That is a new position that his government is reject ing in part, the first recommendation of the International Joint Commission. My qu estion was, did he discuss that position with the Minister of External Affairs? MR. MACK LI NG: Mr. Speaker. the honour able member continues to sugge st a rejection. I have not used those words. They are the words of the honour­ able member and he seeks in his backhand ed way of supporting opposition to Garris on, to undermine the position of this govern ment and undermine the posi­ tion of the Government of Canada.

The honourable member knows because these qu estions were put during the course of the Estimates of my department. But then the honourable member tried something else, Mr. Speaker. He left the meeting of that Commit­ tee and he came before the Committee of the Minister of Envi ronment, placed similar que stions, hoping to find a divergence of view. But what did he find, a general consensus in view. So then he didn't pursue the matter.

Now he still seeks to try and undermine, sow seeds of discontent or disunion between the strong position of this govern ment and that of the Federal Govern­ ment that we are not in favour of the transfer of water from the Missouri Riv er Basin to the Hudson's Bay Basin, and that transfer involves Lone Tree. We have said we' re opposed to that and we continue to be opposed to that. There has been no change in our position in respect to the International Joint Commis­ sion's recommendations which in effect rule out Lone Tree. 1383 MR. RANSOM: Mr.

Speaker, far from tr ying to undermine the efforts of Canada and of Government

Tuesday, 13 April, 1982 of Manitoba in trying to prevent the transfer of water into our province, we are attempting to assure that the govern ment continues to be successful in its efforts as it was over the past four years. What has happened is that the Minister has changed his position. I have asked him a very specific que stion. Has he discussed that specific position with the Minister of External Affairs? And he refuses to answer that que stion. It happens to be very fundamental, Mr. Speaker. Has he discussed that position with the Minister of External Affairs?

If not, will he discuss it with the Minister of External Affairs? MR. MACKLING: Mr.

Speaker, not only have I dis­ cussed the qu estion of Lone Tree and the Interna­ tional Joint Commission, their findings and their caveats, their concerns and in effect their misgivings about any real possibility of Lone Tree, not only have I discussed that with the Honour able Minister of Exter­ nal Affairs, I' ve discussed my reservations about the kind of support that this government is receiving from the official Op position in this province in respect to Garrison by the kind of que stions they put that seek to undermine our position, that seeks to qu estion the impetus that we have given to the Opp osition in respect to Garrison.

MR. SPEAKER: The Honourable Minister of Energy and Mines. HON. WILSON PARASIUK (Transcona): Thank you, Mr. Speaker, I'd like to respond to a que stion that I took as notice yesterday from the Member for Arthur, where he asked que stions as to whether, in fact, the people who have suffered some spillage of oil and salt water on their property would, in fact, get compensa­ tion. I'm informed that the company negotiates a set­ tlement claim with the landowner effected and if the two parties cannot ag ree to a settlement then

Section 28 of the Mines Act may be used - Ar bitration of the Di spute by the Mining Board. Very few disputes, indeed, have been presented to the Board, and from what I can gather from my staff, none in the last 1 O or 15 years. So that there is a compensation procedure; the company sits down with the landowner, if they can't reach an agreement they can then appeal to the Mining Board . Tha t was the second part of the que s­ tion he raised yesterday. With respect to the first part of the question, I've been informed by the inspection staff of the Petro­ leum Branch's Virden Di strict Office that the topo­ graphy of the

section on which the Run dle spill occurr ed is such that no runoff from the spill area · could have gotten off the section. They've done water tests on the west side of the culvert which indicated a minimal chloride content of 18 0 parts per million, the average chloride content of the drinking water of the Town of Virden is 350 parts per million. In the past when th ey've done tests from the Pipestone Creek they've said that it's not uncommon for the chloride content to have exceeded 300 parts per million.

So they are testing it on a daily basis and I' ve been informed by the staff, who are on top of the situation there, that there has not been the runoff that the member yesterday was afraid of. MR. SPEAKER: The Honourable Member for Arth ur. MR. JAMES E. DOWNEY (Arthur): I thank the Minis­ ter for his response, Mr. Speaker, I understand that the saltwater and crude oil has been sucked up and gathered up. Could the Minister tell us where that is now being deposited, where is the disposal area for that waste product? MR. SPEAKER: The Honourable Minister of Energy and Mines. MR.

PARASIUK: I was informed that the companies, in fact, were using the mixture to pump it back into the ground for the special recovery system that they were using, that's the information that I received a couple of days ago but certainly I'll check to confirm that. While I'm on my feet, Mr.

Speaker, I'd also like to take this opportunity to respond to a question that had been put to me by the Honourable Member for Rhi neland regard ing the wate rflow situation for the Manitoba Hydro System and I have been informed that the wate rflows in the overall system are expected to be average or slightly below average during 19 82. In gene ral terms the precipitation situation is slightly below average with the reservoirs in a normal position for this time of year.

The Winnipeg and Saskatc hewan river systems are expected to be close to normal and, although the precipitation on the Churchill system is near normal, the reservoirs, Rein deer Lake and South In dia n Lake, are well below normal and must be replenished. Accor dingly the flows from the Chur chill Di version will not return to normal before Novem ber. This affects cattle in Long Spruce stations. MR. SPEAK ER: The Honour able Member for Rhi neland. MR. ARNOLD BROWN (Rhineland ): I thank the Min­ ister for that answer; that is good news, indeed.

It must make the people at Hydro quite happy and it certainly is good news for the consumers in Manitoba. If memory serves me correctly then average runoff means that Hydro should be coming up with a surplus of $80 million forth is year. Now, can the Minister then confirm that there will be no need to lift the Hydro freeze in Manitoba? MR.

PARASI UK: It has always been my sincere hope and desire that the waterflow situation, the operating cost situation, and the change s in interest rates, the massive increases in interest rates, that have occu rred over the last few years would not lead to a situation wher e Manitoba Hydro's reserves were in a very vulnerable position. We, on this side of the Ho use, certainly do not want to increase Hydro rates. The news that the precipitation is increasing, that water ­ flows are coming back to normal is, indeed, good news, Mr. Speaker.

I assume that Hydro staff are tak­ ing that into acco unt when they are doing their own financial projections and I expect to be getting that report soon, but it is certainly our hope and desire not to increase Hydro rates, Mr. Speaker. MR. SPEA KER: The Honour able Mem ber for Emerson. 1384

Tuesday, 13 April, 1982 MR. ALBERT DRIEDGER (Emerson): Mr. Speaker, to the Minister of Natural Resou rces. Could the Minister indicate whether the upgrading of the dykes in the Red River Valley towns is still a priority in his depart­ ment for this year? MR. MACKLING: Yes, Mr. Speaker. MR. DRIEDGER: To the same Minister, could the Minister then indicate whether he has reached an agreement with the municipalities after proposing an unprecedented 1 O percent cost-sharing with them for the upgrading of these dykes? MR. MACKLING: No, Mr.

Speaker, as the honourable member recalls, I had a very good meeting with repre­ sentatives from all of the communities involved and I indicated to them that the matter would be reviewed further and that I wou ld be having a further meeting with them before there was any final decision made in respect to the developments. I am hopeful that I will be able to communicate with that group within the next week or two and have such a further meeting with them. MR.

EMERSON: The concern has been expressed by the municipalities that there has not been any further contact with the Minister after the initial meeting and I am hoping, or asking the Minister, is the Minister considering dragging these projects till they won't be undertaken this year and he can spend the money on other projects as he indicated in Estimates? MR. MACKLING: Well, Mr. Speaker, the honourable member is suggesting some inaccu racies in his que s­ tions.

First of all, there has been communication, my department has been in communication on at least two or three occasions since I met with them and have indicated our continuing work in respect to develop­ ing of a base that perhaps we could discuss further with them; and the sugge stion that we' re merely dragging the issue on certainly doesn't hold water. The honourable member knows that the previous administration didn't do anything for a year after it had a basis on which to move and we've only been in office for a few months. MR. SPEAKER: The Honourable Memb er for Morris. MR.

CLAYTON MANNESS (Morris): Thank you, Mr. Speaker, further to the qu estion of the Member for Emerson. This is the third occasion on which I' ve heard the Minister give the answer "in one or two weeks" and I think the officials municipally were wait­ ing for an answer March the 29 th, give or take a wee k. And I'm wonderi ng ifthe Minister agai n could be more definite in his period and will a one or two week exten­ sion from this date be more firm? MR. MACKLING: Mr.

Speaker, I'm one of those that likes to be able to get things done relatively quickly so I'll readily admit that when I spoke to the representa­ tives.of the communities I anticipated that we would be able to develop a strategy and a proposal that could be considered and I could discuss that with them in a matter of ten days or two weeks. I'm learning to appreciate the frustrations in the process and the careful review of government development of pro­ grams and spending and it takes longer than I wou ld like. But I do antici pate in a matter of ten days-two weeks I will be meeting with them agai n. MR.

SPEAKER: The Honourable Memb er for Fort Ga rry. MR. L.R. (Bud) SHERMAN (Fort Garry): Mr. Speaker, my que stion is to the Honourable Member of Hea lth. I wo uld like to ask him, in view of the current MMA job action and office closures by doctors, if he can tell the House and reassure certain individuals who have inquir ed what is being done for patients whose serums and medications are held in trust in those closed doctors offices? MR. SPEAKER: The Honourable Minister of Health. HON. LAURENT L. DESJARDINS (St. Boniface): Mr.

Speaker, the information that I' ve been given is that these people will receive the service and it's only when it's not an emergency that the actions are taking place. MR. SHERMAN: Well, Mr. Speaker, could the Minis­ ter undertake to investigate a specific problem and I can discuss it with him after qu estion period, wherein specific serums and medications are prescribed and delivered by the physician in question and held in the office in trust in the meantime and dates for receiving that medication come up and are being affected by these office closures? MR. DESJARDINS: Mr.

Speaker, I'll be only too pleased to discuss this with my honourable friend and investigate it immediately. 1385 MR. SHERMAN: Thank you, Mr. Speaker, I thank the Minister for that assurance and ask him a supplemen­ tary. Has the Minister's office or the College of Physi­ cians and Surgeons, Sir, received any sig nificant reports of difficulties either for patients or for hospi­ tals within the past few days? MR. DESJARDINS: No, Mr. Speaker. MR. SHERMAN: Mr. Speaker, agai n to the Honour­ able Minister of Health.

Has the Minister received any notice from the MMA as to substa ntive proposals to be discussed at his meeting on Thu rsday? MR. DESJARDINS: No, Mr. Speaker, but we've ag reed to hold a meeting at 9 o'clock on Thur sday morning. MR. SPEAKER: The Honourable Minister of Energy and Mines. HON. PARASIUK: Mr. Speaker, I'd like to take this opportunity to respond to a question that I had taken as notice from the Member for Turtle Mou ntain regard ing staff layoffs at lnco.

After checking with my staff, I am advised that the work force at the lnco operation at Thompson is now 300 people less than since prior to the strike. The work force reduction has

Tuesday, 13 April, 1982 been due to attrition or retirement only, or people not coming back to Thompson who left Thompson during the course of the strike. There have been no staff reductions or layoffs as such enacted by lnco at Thompson, unlike the situation in Ontario. Also, while I'm on my feet, Mr. Speaker, I' ve been informed by my staff with confirmation that the mate­ rial sucked up at the spill near Virden is in fact re­ injec ted by the company in other wells to a level of 2,500 feet below the ground. MR. SPEAKER: The Honourable Member for St. Norbert. MR. MERCIER: Mr.

Speaker, my que stion is to the Minister of No rthern Affairs responsible for the Workers Compensation Board. Mr. Speaker, in view of the cancellation of the public Nitikman inquir y into the allegations against the Board, and in view of the criticism of the Ombudsman, would the Minister undertake to file in the Leg islature as he undertook some time ago, but as soon as possible the report that was undertaken by private investigator? MR. SPEAKER: The Honourable Minister of North­ ern Affairs. MR. COWAN: Yes, we've addressed this issue both during the que stion period, Mr.

Speaker, and during the Estimates procedures. I have informed the member who asked the que stion on this occasion and numer­ ous other occasions that, in fact, I would be taking the report which has been presented to me and putting it into a form so as not to betray confidences and the confidentiality of that report. I wou ld check that report with the original author of the report to ensure that it, in fact, did reflect his overall observations and summaries and that I would make that report public. MR. MERCIER: Mr. Speaker, a supplementary que s­ tion to the Minister of Labou r. Could he advise, Mr.

Speaker, as to the status of the negotiations with the Manitoba Govern ment Employees Association? MR. SPEAKER: The Honourable Minister of Labour. MR. SCHROEDER: Thank you, Mr. Speaker. The negotiations are ongoing. They've been carrying on for the past several months and we' re slowly getting to a point where we have considerably less areas in que stion than there were in the beginning. MR. MERCIER: Mr. Speaker, a final que stion to the Honour able Attorney-General. Could the Attorney­ General, Mr. Speaker, advise this House that he will reject the position of Dr.

Henry Morgentaler through the Federal Min ister of Ju stice to all provincial Attorneys-Gen eral not to prosecute doctors perform­ ing abortions outside the restrictions of the present law. Will he enforce the existing provisions of the criminal code, Mr. Speaker? MR. SPEAKER: The Honour able the Atto rney­ General. MR. PENNER: Yes, with respect to the former Atto rney-Gener al the qu estion has about it the ring of impertinence.

Of course, as the Attorney-General, I will see to it that the laws are enforced as long as they are in place, and it will be up to the jud ges of the realm to rule whether or not a law as been broken. I will proceed in the usual way, whether it's Dr. Morgentaler or anyone and that it is that the police will be requir ed to investigate; they will report to the Crown; the Crown will make its recommendation - not to me - I don't want to sit in judg ment on those things, as I' ve said before, except in the extraordinary case that may arise and this is not one such.

I think that is a sufficient answer, namely that the law will take its normal course. MR. SPEAKER: The Honourable Member for Stu r­ geon Creek. MR. J. FRANK JOHNSTON (Sturgeon Creek): Mr. Speaker, my qu estion is to the Minister of Economic Deve lopment and Tourism. There was a committee formed by the Honourable Lloyd Axwor thy, the Minis­ ter of Employment and Imm igration, regarding the establishment of the Canad ian Ins titute of Aeros pace Training, the Trai ning Centre.

The report has been subm itted, and I wonder if the Minister could br ing us up-to-d ate as to where the status of that Centre is at the present time. Will it be in the province of Manitoba? MR." SPEAKER: The Honourable Minister of Eco ­ nomic Dev elopment. MRS. SMITH: Mr. Speaker, there is no decision about that Centre as yet. I wish very sincerely that we could report in the affirmative, but there's no decision available. MR. JOHNSTON: Mr.

Speaker, my last correspon­ dence with them when I was Minister was to the Minis­ ter of Manpower and Immigr ation, my concern regarding the Aerospace Trai ning Centre not coming to the Provi nce of Manitoba. My reasons for my con­ cern was an

article in Le Pas which stated that the Queb ec -(I nterjection)- well, Mr. Speaker, the qu estion is that the Queb ec federal caucus, including the Ministers from Quebec, including Mr. Lalonde, stated that they wanted it to go to Qu ebec. Well, Mr. Speaker -(I nterjection)- 1386 MR. SPEAKER: Or der please. The Honour able Attorney-General on a point of order. MR. PENNER: What we have heard is a continuing statement; there hasn't been the faintest sense of a que stion about it. The honourable member is misus­ ing que stion period to make statements. He can be entitled to a

preamble, but not the

preamble in the form of a speech. I wou ld ask that you draw the atten­ tion of the honourable member to the rules of the House. He may be an amateur with respect to those rules MR. SPEAKER: The Member for Turtle Mountain. MR. RANSOM: Yes, Mr. Speaker, the member was simply prefacing his qu estion prior to placing the

Tuesday, 13 April, 1982 qu estion. I believe it's entirely in order, Sir, unlike some of the rambling answers that we've been receiv­ ing from the Ministers opposite which have nothing to do with the qu estions that have been asked. MR. SPEAKER: I'm sure the honourable member will not keep us long in suspense as to his qu estion. The Honourable Member for Stu rgeon Creek. MR. JOHNSTON: Mr . Speaker, the reference to "amateur" in the House - I may be, but I do not try to shut members off in this Leg islature. Mr.

Speaker, I wou ld ask the Minister if the influ­ ence of the Quebec caucus, federal caucus, including the Ministers from Qu ebec, is such that there will not be the Aerospace Trai ning Centre in Manitoba? The report clearly recommended that it come to Manitoba. Will it be coming to Manitoba? MR. SPEAKER: The Honourable Minister of Eco­ nomic Dev elopment. MRS. SMITH: Mr.

Speaker, the Manitoba Govern­ ment will continue to press for such a decision by the Federal Government, but I need hardly point out to the members opposite that we are not the Federal Government, and that there are very loud voices voiced in the Federal Cabi net from Quebec as well, I am sure, very persuasive arguments, by the Minister representing Manitoba. We will continue to press for a favourable decision but it would be foolish of us to promise such. MR. SPEAKER: Or der please. The time for Oral Questions having expired, Or ders of the Da y. ORDERS OF THE DAY MR.

SPEAKER: The Honourable Government House Leader. MR. PENNER: Mr. Speaker, I would ask that you call the adjour ned debate on the proposed motion of Mr. Uskiw, the Honourable Minister of Transportation, standing in the name of the Honourable Member for Lakeside.

Before you call it, Sir, could I ju st make a brief announcement, that with respect to Estimates, I am advised that the Estimates of the Minister of Highw ays and Transportation having been concluded, that fol­ lowing the time when the debate on that resolution is adjour ned, and the House is moved into Committee, the Committee Estimates will be on Co-oper ative Dev elopment. MR . SPEAKER: On the proposed Reso lution of the Honourable Minister of Govern ment Servi ces and the adjour nment by the Honour able Member for Lake­ side. (Stands) The Honourable Government House Leader. MR. PENNER: Yes, Mr.

Speaker, I move, seconded by the Honourable Minister of Labour, that Mr. Speaker do now leave the Chair and the House resolve itself into a Co mmittee to consider of the Su pply to be granted to Her Majesty. 1387 MOTION presented and carried and the Hous e resolved itself into a Committee to consider of the Su pply to be gr anted to Her Majesty with the Honour ­ able Member for Flin Flon in the Chair for the Depar t­ ment of Agr iculture and the Honourable Member for The Pas in the Chair for the Department of Co­ operative Dev elopment. MR. PENNER: Mr.

Speaker, while you are still in the Chair , may I indicate that to my knowledge there is no Private Members' business to be transacted and that it would be the intention when you come back, Sir , at 4:30, as we did yesterday, to interrupt the proceedings of the Committee to adjour n the House and then pro­ ceed to 5:3 0 and then into the evening at 8:0 0 p.m. CONCURRENT COMMITTEES OF SUPPLY SUPPLY - CO-OPERATIVE DEVELOPMENT MR. CHAIRMAN, Harry M. Harapiak (The Pas): The Committee will come to order. We' re on Co-operative Dev elopment, Page 33, on General Admin istration, I. ( b )( 1) Salaries. HON.

A.R.(Pete) ADAM (Ste. Rose): Thank you, Mr. Chairman. It is my pleasure to introduce to honour­ able members the Estimates of the Depar tment of Co-o perative Development for 1982-83. Many of the honourable members will recall the past Estimates of the department and the express significance of co-operative enterprise to Manitoba. That significance, Mr. Chairman, has very often been expressed in numerical terms; that is, by the numb er of Manitobans that are members of co-operatives and credit unions. This, of course, is understandable since both provincially and nationally the figures are impressive indeed.

I believe, however, Mr. Chairman, that it may be more appropriate and more fitting to express the sig­ nificance of co-operative enterprise to Manitoba in terms of the role and the function it has in our society today. Because co-operatives are locally owned and controlled, they provide a measure of economic sta­ bility in many of our cities, towns and villages. Sta bil­ ity, Mr. Chairman, that is so important during these turbulent, economic times. They fill the need wh ere that need is not bei ng met. They create employment and they create wealth, and wha t is most important, Mr.

Chairman, is the fact that the employment and the wealth so created is retained by the people of these communities. Until fairly recent times the economy of prairie provinces was based on agricu lture. For some of these prairie provinces this is still so. I need not remind honourable members of the contribution co­ operatives have made in the dev elopment of that economy. One only needs to look at the wheat pools but for one example. Conseq uently, Mr.

Chairman, this government, in recognition of the contribution co-operatives con­ tinue to make to our social and economic deve lop­ ment, will pursue the process of creating a climate in which co-operatives can develop and flourish. In the ensuing year, Mr. Chair man, the department will be concentrating its efforts on assisting the people of

Tuesday, 13 April, 1982 Man itoba to dev elop new and inno vat ive co-o peratives. The department will, Mr. Chai rman, continue to pr ovi de assistance to our Nor thern Fish ing Co-operatives. This development assistance will be available to all our citizens and to all our communities wh ere the need for goods and services on a co­ operative basis may exist. The Credit Unions and Caisses Populaires have also played a sign ificant role in the development of our province. 300, 000 Manitobans have deposited over $1 billion in these financial institutions.

This money has in turn been loaned to their members throughout Manitoba for housing, industrial devel­ opment, ag riculture and consumer needs. We look to strong Credit Union and Caisses Populaires systems to continue to render these services to Manitobans. Review of the Credit Union and Caisses Populaires systems, Mr. Chairman, indicated a need for a greater departmental involvement will add strength and sta­ bility for their further growth and development.

Lead­ ers and members of the Cred it Union and Caisses Populair es system have req uested tha t cer tain changes to legislation and the department be made to add support to their operations. Mr. Chairman, they have asked that the department become more active in the monitoring examination and general supervi­ sion of the system. A French capabi lity will be added to the department to work with the Caisses Populaires system. Mr.

Chairman, changes to the Credit Union and the Caisses Populaires Act of Manitoba will be intro­ duc ed to the Leg islature as soon as possible to accommodate the needs of the Credit Union and Caisses Populaires system as stated by them. In closing, Mr. Chairman, I want to take this oppor­ tunity to express my appreciation to the staff of the department for their loyalty, their dedication and their support, and I thank you. MR. CHAIRMAN: The Member for La Verendrye. MR. ROBERT (Bob) BANMAN (La Verendrye): Mr.

Chairman, I have a few brief opening remarks and then I think we'll get into the item-by-item scrutinizing of the Estimates. I want to say, first of all, that having been a Co-op member all my life, belo nging to the credit union, involved in the Federated Co-op System by retailing some of the products that they sell and many other things, that it has played an important

part in the development of my particular area, and I'm speaking in terms of the cred it union, as well as the areas that are outside of the City of Winn ipeg. I think many of the places, more agg ressive towns, you can see that the credit unions there have played an impor­ tant role in providing funds, providing capital for bus­ iness, for farms and for housing mortgages.

One of the things that particu larly disturbs me, and I guess sitting on this side of the House now one is a little freer to speak about some of these things, but one of the things that has disturbed me over the years is the socialist preoccupation with the feeling that they feel they are the true people of the Co-op Move­ ment and that a person is a good socialist if he or she belongs to a credit union. They've more or less gone ahead and taken that particular posture that they are the people who make the system work and make the system tick.

I would ju st like to tell the Minister today and put it on the record that the area that I represent has one of the best credit unions, represents 1 O percent of the total assets of the credit union system in Manitoba, and I'm pleased to say gave me a bigger majority last time than they ever did. The areas of Win kler, Altona, wher e you have other very successful good running credit unions also happen to be people who believe that if they go into this particular system of looking after themselves and helping their fellowman that it will benefit their whole community.

So, I ju st want to say and put on the record, Mr. Chairman, that there is no political party that has a monopoly on the develop­ ing of co-operatives or the encou raging of people getting involved into co-operatives. Having said that, Mr. Chai rman, I want to say that I hope this Minister does not follow the tack that was taken by the previous NOP gov ernment of starting into all kinds of programs which are ill-conceived and ill-timed.

One of the major problems this particular branch of gov ernment has had is that they have started up - and they did this to a large extent and I hope this Minister doesn't follow the role of the pre­ vious NOP govern ment - they force-fed a lot of co­ operatives, and the co-op system cannot work unless it has the support and the total input from the membership.

We need only look at a few things such as the Sweat Equ ity Prog ram, the Co-op Housing Progr am, which go to show that the members that were involved in these different programs did not have the commit­ ment to the co-op system to make them work and those particular co-ops don't work. 1388 The Minister in his opening remarks mentioned the No rthern Fish ing Co-ops. I' ve been par ticularly pleased in the last numb er of years to see the pro­ gress. I think if you look at the some 13, 14 northern fishing co-ops that are operating today, they are operating in the black.

In the last four years they have not requir ed any substa ntial amount of monies being put in by the govern ment. I guess what I'm saying to the Minister here is that in many of these instances to blindly go in and try and organize co-operatives for the sake of coming before the public and saying this year we increased the number of co-o peratives in the system by 15 , I believe is not the way you should be going. I think the time has come in the whole co-op system that we have a good look, a self-examination, if you will, of the direction that we'r e going. It 's a time for regrouping.

It 's a time to go back to the grass roots; namely the membership. I'm feared and many of the people that are involved in the credit union system are concerned about many of the bureau­ cratic buildups we've had within the system itself. The system will not survive and the y're going through some difficulties now in the credit union side unless the commitment is there from the members. That brings me to another point that I want to men­ tion very briefly. In reading the articles in the Credit Union Way, that's the monthly publication that's put out by the credit unions in the three Prairie Provinces.

Ther e was an editorial

article in the last one I believe which I wou ld commend to the Minister for reading. It touches on the point that many people in the credit

Tuesday, 13 April, 1982 union system are starting to ask themselves and that is, at what point in time should a credit union be allowed to close if they are not managing their affairs properly? Now, I don't, in saying this, advocate that we let them sink or swim on their own. I think that there's a rule that the whole movement has to play in helping themselves, but one has to really start exa­ mining, as the

article puts it, the sacred cow that has been put in place over the last number of years at which the mentality has developed that a co-op under no circumstances can be allowed to fail. I believe that is an area that the system is going to have to look at very carefully. Oth erwise they will, as has happened in Manitoba now on two different fronts, two large co-operatives, will be faced to come to government and government will be asked to bail them out.

So I say to the Minister that when he is looking at the different programs that the department may embark on, one of the areas that I believe is of utmost impor­ tance in coming into the 19 80s with the tighter money, the tougher economy, is that his department has to serve as a group of individuals that helps out existing co-o ps, trys to rationalize the system as I know they will be doing with the Cr edit Union Movement and that will mean fewer co-o peratives.

I will not be sur­ prised next year if the Minister comes back here and tells us that there has been a drop in the number of credit unions in the province, that branch offices have been closed down. I want to tell the Minister with regards to that, this particular Op position will not fault them for that, beca use I don't think as I menti­ oned before by going ahead and trying to force-feed these credit unions, such as the ones that were done in the north in the mid-70s, will not serve the best interests of the credit union system or the co-op sys­ tem in Manitoba at all.

So I realize he is entering an area of change with regards to the way the structure of the department will be. There will be more emphasis I understand on regulation, on control which is really going back to where we were I guess sort of in the early '70s when we were still doing the auditing in the department. Then, of course, that was given up, but there was more departmental control at that time.

So I say to him that, I hope that he will, in his mandate that has been given him, make sure that instead of expanding the system, he will see to it that it is strengthe ned, that the examinations wh ich have to take place in the system to ensure its future viability are taking place, and that the people of Manitoba that are committed to the co-op system will find that this is an environment in which they can thrive, in which they can help their fellowmen that are taking advan­ tage of the credit union system, and that this particu­ lar province of ours will be better for having had a good co-operative system in place, a sound financial co-operative system that will not have to come to the government and ask for assistance when we sort of hit the 11 th hour.

I say to the Minister, those wer e the challenges that I was trying to address when our particular govern­ ment left office and I hope he pursues that, path because in the long run I believe the only thing that will help this whole system survive is that if it is a strong one and if it has the dedication of the members and the directors and the competent management that it desperately needs. MR. CHAIRMAN: Mr. Minister. MR. ADAM: Thank you, Mr. Chairman, I thank the honour able member for his comme nts. Before I respond, I would like to introduce the staff that I have with me today; Mr.

Ron Pozernick, the Di rector of Ad ministration and Mr. Vic Hryshko, Dir ector of Dev elopment, Mr. Harold Johnstone is the Dir ector the Re gulatory Branch - Regu lations and Mr. Wes Hadikin is the Di rector of Research and Planning. Mr. Chairman, I appreciate the comments that the member has made and I ag ree that the co-operative movement in order to survive must have the support of the members that organizes that particular co-op and without that support it's difficult for any co­ operative to become viable.

On the matter of the government getting involved in organizing co-o peratives it is not the government that should be organizing co-operatives but rather it's the govern ment's role, the department's role to assist groups who wish to incorporate into co-operatives and wher e the grass roots support is evident. We realize that when you go into Northern Manitoba and we' re very pleased that the Northern Fishing Co-ops, those who are in place at the present time, are all doing well and they are receiving support from their members.

I' ve met with the Manitoba Fishermen's Federation just over the weekend and we did speak about co-o peratives and some of the fishing people that I met, the fishermen were involved in the co­ operatives and they are very very pleased with them. So, I believe there is a future for co-o peratives in this province and when the member mentions tha t when times are tough or when times are difficult and when it's tight money policy, we should back off and retrench and reg roup.

That may be well but I would submit that the beginning of the co-operative move­ ment began when times were difficult; in the times when farmers fought for their pools to try and develop their own ele vator system and those were difficult times and it seems that when times are difficult that's when people start co-operating together and start asking themselves whether they should not be talking together and trying to help one another and that is the entire meaning and the whole meaning of co-operative and co-oper ation.

It is that co-o perating together and trying to collectively improve their wellbeing, whether it's a consumer co-o perative or whether it's a United Grain Growers or Manitoba Pool or so on; whether it's a daycare co-o perative that has been set up. These are all things that are done by people who believe that collectively they can improve the environment that surrounds them and they want to improve the envi­ ronment so that they can have a better life. 1389 So, we intend to encourage where it's feasible.

The role of the department is to provide assistance until a unit, a collective group, beco me self-sufficient and that assistance will continue to be provided as it was in the past. We will not encourage ventures that we feel that are not going to work. We know that there are always problems. It 's not only in the co-o perative movement that there are problems. There are prob­ lems also with private industry as well. So, you have some co-ope ratives that may fail from time to time

Tuesday, 13 April, 1982 and I would say the majority of them will succeed in my opinion. We have approximately 470 co-operative movements in the province today and that's quite a record, Mr. Chairman. I think it's a record to be proud of. I believe tha t people are thinking more co­ operatively than they have in the past. They see a need for support from one another. I think that I detect that. Having only been in this portfolio for the last four months, I' ve already detected that there is a feeling out there that is maybe ju st on the edge of coming forward in new innovative ideas.

We've had some enq ui ries about water co­ operatives; people who would like to provide water services for their little communities somewhere, rather than go to the municipality and get the municipality to do it, they say let's do it on our ow n. The se are new innovative things that are coming forward, but we are geting enq uiries on this, and we have to look at them and provide all the assistance we can. I don't know if I' ve answered all the qu estions that the member had. If he has any more; I might have missed some.

If he has anymore qu estions he would like to put forward , I will try to respond to them to the best of my ability. I have an able staff here with me, if I don't have the answers, to provide the answers for me and assist me. MR. CHAIRMAN: 1. (b )(1), Salaries-pass; 1. (b)(2), Other Exp enditu res-pass; No. 2, 2.(a )(1), Co­ operative and Credit Union Development and Regus­ lation, 2.(a )(1), Salaries - the Member for La Verendrye. MR. BANMAN: One of the reasons, Mr.

Chairman, I mentioned what I refer to in this particular department as the numbers game was I was somewhat disturbed when the Minister spoke during the Speech from the Th rone De bate and made several observations in that speech and I'd like to deal with them. I have certain pertinent qu estions at this time. I would like to know how many people are involved, how many SMY s are involved in the Co-oper ative and Credit Union Development Services? MR. ADAM: We have at the present time 25 SMY s. We have 34.26. MR. BANMAN: How many development officers would there be on the co-operative side? MR.

ADAM: I believe there are nine at the present time. MR. BANMAN: I wonder if the staff could tell me, roughly, how many there were back in '77'-78? MR. ADAM: There were 15 . MR. BANMAN: Just to get this straig ht, you say we have development officers now? How many devel­ opment officers would we have had in '77'-78. MR. ADAM: In '7 8'-79 we had 15 and that includes the Director. MR. BANMAN: In the Minister's Speech in the Leg is- 1390 lature, in his reply to the Throne Speech, he menti­ oned that there was absolutely nothing happening in the field of co-op housing.

I wonder if he could tell me what is happening in the field as of right now. MR. ADAM: There is no new development at the present time I am advised, but those co-o perative housing developments that are in place are doing very very well and the vaca ncy rate is almost nil, zero to two percent is the vaca ncy rate in the co-operative housing so they are doing very well.

I would like to, in spite of the fact that the member indicated that some of the housing developments had not succeeded, I think this is an area that we should be looking at, not only to provide decent housing for people of Mani­ toba, but also, if possible, to stimulate the economy while we're doing this, while we' re providing housing for people. MR. BANMAN: Is the Minister then saying that the govern ment will be reviving the high impact grants which were provided to housing co-operatives some four, five years ago? MR.

ADAM: Well, the Federal Government has not been coming forward with any great amount of fund­ ing for co-operative housing at the present time, but there is no need that has been expressed so far forthis kind of support that the honourable member mentions. MR.

BANMAN: Yes, but I think if the Minister will check his files, he'll find out that had there not been that kind of assistance, which was advanced at I believe a more rapid rate than was initially anticipated to the co-operative housing projects in Brandon, Seven Oaks, Pembina Woods, that those particular co-op housing units wou ld have failed back in the late '7 0s had it not been for additional funds being put in by the govern ment.

Agai n, I gue ss, I have to come back to what I said earlier, one of the problems I found in dealing with this was that many of these co-o peratives were formed without having the dedication of a group of people who were convinced this is the way to go. Wha t happened is, you had one or two people that went out and sold five dollar memberships and sud­ denly they had a list of 10 0 members who wanted to get into the co-operative housing business and really for five dollars that's really not a commitment on anybody's part.

Back in '79'-80 I believe some of them, the one in Seven Oaks was in so much trouble they had a 45 percent vacancy rate. What had to happen was there had to be a substantial infusion of taxpayers' funds to keep that thing going. Of course, what has happened now is the housing market has tig htened up a bit and now the vacancy rates are way down and I'm happy to see that. But agai n I caution the Minister. He mentioned in his opening remarks during the Throne Speech De bate that nothing had happened and intimated that the previous administration hadn't done anything about it.

I want to tell the Minister that we did do something about it. We kept these things afloat and did not open the floodgates, so to say, as far as provi ncial dollars were concerned to get into this because they were

Tuesday , 13 April, 1982 just not viable at that time. I urge him to tread very lightly oh this because it was a real headache to deal with and I'm glad to see that the vacancy rates have dropped. The other thing I should point out to the Minister, the other thing that was tried in some of these co­ operatives, which I refer to as sort of a social experi­ ment, was that some of them were set up and the ability to pay principle was used by some of them.

In other words, if somebody had an income of $1 2,000, he or she would pay 25 percent of their income, let's use that figure, and if another person had an income or $1 8,000, they would pay 25 percent of $1 8,000, which means they'd be getting exactly the same apartment ju st that it was based on income. That ju st totally broke apart. It.j ust did n't wo rk. People are not ready, even though they're in a co-operative system, to .start cross-su bsidizing in that particular area.

I think this is one of the maybe misgivings or miscon­ ceptions about the whole co-op movement is you get out of it what you put into it. The problem is there have been a lot of people trying to get things out of this system without putting anything into it. That I referred to in my earlier remarks.

The other program that - I don't know if the Minis­ ter is looking at it and maybe he can inform the Legis­ latu're whether or not he is looking at a program some­ thing like the one that was establ ished back in '74'-75 called a Sweat Equ ity Prog ram wher e people from the department would go out and help people build houses. MR. ADAM: Mr. Chairman, in response to - I thank the member for his comments.

I believe that the prob­ lems that did develop in the past with co-op housing when it was getting established in the province was because of the fact that there was a high rate of vaca ncy and that is why there was need for extra input offunding, buttha t is certain ly not the case now. That problem has rectified itself, it has resolved itself. The rate of vacancy is extremely low, probably much lower than in regular housing, and we'r e thankful for that.

I think, sure there are lessons to be gai ned by past experiences and what we have to strive for is to move forward and try and improve the situation so that things that have taken place in the past that are unde­ sirable, that we try to avo id those in the future. I appreciate the memb er's comments and his advice. I' ve always indicated that I am open to advice on all sides of the Ho use and if it's constructive advice and even constructive criticism it is welcome as well.

I'm certainly making notes of wha t the member is com­ menting and I want to advise him though that when he mentioned that the regulations at 25 percent, a req uirement for the rental fee based on income, I'm advised that is a req uirement of CMHC, but it certainly presents no problem to housing co-ops. That is the regulation that was insisted by the Central Mortgage and Housing Corporation. So that is why some of the co-ops were requir ed to use that method of rents on the Sweat Equ ity Program has not been reinstated.

Our neighbouring Provinc e of Saskatchewa n; they have a very successful Sweat Equ ity Prog ram. We only consider sweat eq uity if there is a justification for it. Saskatchewan has, I believe, built some 1, 600 homes under the Sweat Eq uity Progr am. I think this is a very high record. It certainly must have contributed to their economic activity and I'm sure that those who are involved should be very satisfied. I'm not sure ju st how many we ha ve her e, how many uni ts -(l nterjec tion)- MR. CHAIRMA N: Point of order. MR. BLAKE: Mt.

Chairman, just on a point of order for clarification. 1, 600 and some homes, is that in last year? How many years does that cover? MR. CHAIRMAN: Mr. Minister. MR. ADAM: We can't give a definite answer to the honourable member. I believe that it's in one year but we'd have to verify that. We will take that qu estion as notice and I can get back to the member for that. MR. CHAIRMAN: The Member for La Ver endrye. MR. BANMAN: Well, Mr. Chairman, this was another program that the previous administration did not con­ tinue and, of cou rse, I took a lot of flack over it.

I think this a prime opportunity to mention really what had happened with that program. The first attempt at sweat eq uity housing happened in 19 72 up in Thompson under the Co-o perative Housing Association of Thompson where some seven families were prepared to build seven houses. Because of a number of problems the houses wer en't com­ pleted till two years later with only three families remaining to witness the final outcome. Those houses later had to be sold and I inspected one or two myself. It was a dismal sight because of the way they were constructed and the final product was just really bad.

I realize that Saskatchewan has had a program and they've had some success with it. The unfortunate part of this program here in Manitoba was that you allowed people to build and use this program and didn't have any repayment clause.

In other words, if the department went ahead and provided expertise, provided people to help under the construction of this program, what wo uld happen is - and I know this has happened in my area; happened up in the Stonew all area; I believe it happened in the Portage la Prairie area - where people built houses, used the assis­ tance from the department and then turned around and sold it and made a fairly substantial profit with the province never getting any money back. 1391 In Saskatchewan, Mr. Minister, they make you pay it back if you make capital gains on it, which I think is only right.

Why should the Department of Co-operative Dev elopment help people to build a house so they can build it a little cheaper, so they can turn around six months later or a year later and make a $1 0,000 profit on help they received from the government. I think it's wrong. I have to say to the Minister this is one of these programs which I think that the former NOP go vern­ ment was wrong- headed on.

I think they embarked on it too hastily and again I repeat what I said before, I hope the Minister before he gets involved in any of these programs, he really thinks them over carefully because what I was faced with and what the previous

Tuesday, 13 April, 1982 govern ment was faced with was taking over a Depar tment of Co-operive Dev elopment with 50- some SMYs. The Minister has indicated to me in his speech again several weeks ago that we virtually dismantled this particular branch of government and tha t by inference it was our fault that many of these thing s weren't happening that should be happening; i.e. co­ op housing, sweat eq uity, and these other thing s.

Ther e are reasons for these things and I hope the Minister, now that he's in possession of all the facts, will weigh these very carefully because there were a lot of problems that we inherited that hopefully are on the way to bei ng straig htened out, and I hope he carries out that particular position, that he will try and make sure that things like this don't happen, but if he has a chance to look at this program, what happened here is the Manitoba taxpayer got taken for a ride and very few people out there really benefited from it. MR. ADAM: Yes, Mr.

Chairman, we shall be taking the honourable member's remarks under advisement. We shall review how they operate in Saskatchewan and I want to assure the honourable member that we're not about to go out holus bolus, if you will, and start forming co-ops all over the place as far as co-op housing is concerned, but wher e there is a demon­ strated need. There are groups that are dedicated to wha t they want to do. I think we should look at these endeavou rs very seriously and if we think that they're worth while we should try and assist them to the best of our ability.

I believe the role of the Depar tment of Co-oper ative Dev elopment is to pro vide assistance and we shall try to do that. MR. CHAIRMA N: The Mem ber for Minnedosa. MR. BLAKE: Thank you, Mr.

Chai rman, I just want to make one or two remarks and it was encouraging to hear the Minister say that they will not be encouraging unprofitable ventures because a few years back I was chastised to some degree by one of his colleagues for some of my former association with one of Canad a's larger financial institutions because we wouldn't go into areas like Pukatawag an or Pikwitonei and those areas and develop financial services for those people in there. I had to point out to them in no uncertain terms that those financial institutions operate under a very strict federal charter.

You have to provide regular hours, proper security facilities, alarm systems and various other things. So, it's ju st not an economically viable operation to go into some small hamlet unless the busi ness is there to warrant the firm making of profit. Th ere are some instances where they go in to pro­ vide a service on a payroll basis or something where the benefits are with the larger parent company where some branches are losing propositions, but the Minis­ ter has had some opportunity now to see what happens when you go in with operations that aren't viable.

There's had to be some credit unions closed up in the North and others that have foregone substantial losses. It 's encouraging to hear the Minister say that they're going to be keeping an eye on ventures that aren't unprofitable and trying to avoid getting involved in them, because I'm a member of a co-op and a credit union, strange as it may seem to the Minister, and I don't carry any particular torch for large financial organ izations.

I think it's like a lot of thing s, big gove rnment, big business, big unions, big is not always best, but they do have some advantage s and some of the Minister's comments would indicate that all the co-ops are maintained on a local control basis. Well the Minister knows very well that a lot of the decisions are made at Central nowada ys because they've become very very large.

I wou ld sugge st that Manitoba Pool Elevators is now very close to becom­ ing a multinational, the same as some of the other ones are, and the Co-op is now getting into the oil busi ness, Federated Co-o p, so you're verging on mul­ tinational status, Mr. Minister, and you're getting away from that concept that made the Co-op move­ ment so strong and so useful and the same with the Credit Union movement. They were set up in rural areas with local membership and local autonomy to operate and to provide a facility on a help your neigh­ bour basis, which made them so successful.

I think that over the years they tended to get into the mainstream of the financial organ izat ions and when you get into that league, Mr. Chairman, through you to the Minister, you're playing hardball as the saying goes and I think that's what happened to cause some of the problems that the Credit Union movement is facing now.

It was fine when they were financing automobiles with the local credit committee, they knew their borrowers, mortgages on homes, they knew the people, they knew where the homes were and it was things that they could see, they could put their hand on, they could put a value on and they had a handle on their whole operation.

But as things have transpired over the last 1 Ot o 20 years, as we know, a $1 0,000 loan 20 years ago was a pretty big loan, but now you'r e talking hundreds of thousands and I think they got into that type of a ball game without really realizing and without the expertise to make the sort of judgme nts that were necessary when they were han­ dling half-a -million and million dollar loans.

It 's encouraging to have the Minister say that they're going to be keeping a very close eye on ventures that are going to become too large and possibly get out of hand because I think the strength of the whole move­ ment was in local control and providing assistance at that local level on the basis that they were set up to do. 1392 So I jus t wanted to make that comment, Mr.

Chair ­ man, because there is no que stion about it, if they have operations that are not viable they have to take the bull by the horns or bite the bullet as the saying goes and cut them out because they're going to drag down the whole system and they have to make some real hard busi nesslike decisions in order to streng­ then the movement at this time of financial troub le that they are facing.

I think it's a strong enough movement that with the support that's bei ng provided by the govern ment in spite of some of the criticism that they're going to get from various sources for providing taxpayers assis­ tance because you will have the criticism, Mr. Minis­ ter, that interest on $29.5 million comes to $3 million or $4 million a year which is really a subsidy to that operation from the taxpayers of Manitoba, and those criticisms are going to be made and they're going to have to be borne. But I think probably the position

Tuesday, 13 April, 1982 that's been taken is jus tified because the movement, if it strengthens it enough to have it survive these troubled times, well then it's certainly going to be very well worthwhi le. There comes a time when, as I say, you have to bite the bullet because the well is not going to be endless, you just can't keep pumping money in year after year after year.

So I think the movement has got enough management expertise at the top and enough strength now with this particular help that it'll be able to over­ come these particular difficulties that they're expe­ riencing and become a good, strong, viable source to its membership. I think they do have to abandon the path that they tended to take where they were getting into the big league and trying to play hard ball with the large financial institutions, because I don't think that's their function, I think that's where they got in trouble. MR.

ADAM: I want to thank the Member for Minne­ dosa for expressing his support for our decision to provide financial assistance to the Credit Union Movement and the Caisses Populaires. I want to say I believe that those comments are most welcome indeed, and there will be those who do not understand, who do not have all the facts, who will make statements perhaps rashly.

I believe that the credit union system have provided services in many many localities as the member mentions and small towns where understandably a major ban king com­ pany wou ld not want to put a branch in there - and it wou ldn't be viable to do so - and it's understandable that they wou ld not go in a place like Laurier with about 300 population or less and have a very viable and profitable credit union to serve the people in that locality.

This has happened all over the province and I want to say to the Member for La Vere ndrye and to you, Sir , that it is not only socialists who patronize credit unions, it's people and there are no political stripes when it comes to being members of a credit union. It is people that belong to them and it's not only socialists that -(l nterjection)- Mr. Chairman, I really welcome the comments that I' ve heard today in support.

I know that will be getting some criticism and I share the member's beliefs that the strength of the system depends on the members' support and control and I hope that it will continue to be owned and controlled by members. It is not our intention to get into individual credit unions and start telling them what to do. I don't think this is the role of govern ment or the role of this department. I think what we are doing is providing financial stab ility to the system as a whole.

There is only a very small percentage, if you will, of the credit unions that have had problems and not entirely of their own making; much of it happened because of the sudden escalation of high interest rates and some of the credit unions have found them­ selves with long-term low-interest mortgages and provi ncial bonds and so on. They have found them­ selves paying high interest rates to their members and having to pay for short-te rm money and having to receive low-i nterest rates on long-term money. So why I'm most pleased with the credit union sys­ tem, Mr.

Chairman, is that it is local people's deposits that are put there and those deposits are loaned to people who live in their - it's a parochial system, if you will, in many cases, and they lend the money out in their own locality, the money is spent there, it doesn't leave the province, and I think that is some­ thing that is worthwh ile preserving. I appreciate the comments that I' ve heard from both the Member for La Ver endrye and the Mem ber for Minnedosa. MR. CHAIRMAN: 2.(a )

(1) Salaries -t he Memb er for Roblin-R ussell. MR. J. WALLY McKENZIE (Roblin-Russell): I have a couple of comments I'd like to bri ng to the committee on the Credit Union Movement. The statement was made in Roblin recently by Pat Clift from the Central that the credit unions are going to go extensively more so than they have been into the commercial field and that kind of scares me. As I recall in my years with the Credit Union Movement, the credit union was basically set up to provide funds for the man with a couple of kids that maybe didn't have a job and he didn't have many assets.

The movement built around him by credit unions handling more of the personal type of loans and they've been very very successful over the years, the Credit Union Movement. But I sometimes wonder, I'm not sure as I sit here today if, in fact, this is where the Credit Union Move­ ment got itself into trouble with commercial loans. I was kind of taken back when I saw this

article in the Roblin Review in the 7th of April issue where Mr. Clift said that presently credit union loans are personal ones, 73 percent, while commercial banks have 65 percent of their loans in the commercial area. The

article goes on, this is an area Central has been look­ ing at and will agg ressively work at increasing the number of commercial loans undertaken by the Credit Un ion Movement. That does concern me because the problems that the union is experiencing at the present time has snowballed across this province. Th ere are a lot of people who are pretty concerned out there and on the last two weekends I' ve had a lot of cred it union members coming to me and asking me, what the heck's going on.

They are concerned so I think the Minister and his staff has got to come out and assure the public and the credit union members that all is well and that the movement is not going to be facing more and more of these financial problems. There are a lot of credit union members in this province and I don't think that they actually know what has taken place or the reasons for these set­ backs.

I wou ld certainly recommend to him and his staff that they come out with some statements and assure the credit union membership that they are going to make certain that these problems in the past are going to be hopefully corrected and not occur agai n. But it scares me to hear Mr. Clift say that they're going to escalate into the commercial field. By gosh, this day and age some of the commercial enterprises are the ones that are facing the most difficult eco­ nomic problems. I wonder if the Minister would care to comment on that?

I also have some qu estions I want to raise regarding the cheese plants at Rossbur n and Pilot Mound, but I'd like to deal with this specific problem first if the Minister would care to comment on it. MR. ADAM: Yes, I thank the Honourable Member for 1393

Tuesday, 13 April, 1982 Roblin-R ussell for his comments. I wou ld really appreciate if he could provide me with a copy of the article. We can have copies made for the staff to review and myself. Mr. Clift works for - my understanding is - that he works for Credit Union Central as an economist. I would advise the honour­ able member that there is qui te a lot of liquidity in the system at the present time. These excess funds are being funnelled through the Central who now by leg­ islation - legislation controlled the granting of com­ mercial loans through the credit unions.

So there are some controls at the present time by legislation. So I think that - and with the new staff that we have req uested this year in the Depar tment of Regulations and the regulatory branch to - we have a head exa­ miner there or a top or - I don't know whose head he's going to examine, but anyway, he's the top exa­ miner and he'll have two assistants along with those presently on staff and also a secretarial support staff. So I think that the system recog nizes that there have been some problems in the past. They have made great strides in rectifying these problems.

Some of the mismatches that have taken place over the years that caught some of the credit unions with low-i ncome investments will be rect ifying themselves over the next year or two. With the assistance that the people of Manitoba are providing to the system that provides a very good service to over 300,000 members in the Prov ince of Manitoba, I think, with the assistance that the province is now providing for them that they will be able to become very very viable and also expand. Not only will they be viable, but they will expand. Tha t is my hope. MR.

DEPUTY CHAIRMAN, Gerard Lecuyer (Radis­ son): The Honourable Member for Roblin-Russ ell. MR. McKENZIE: We ll, Mr. Chair man, some of the concerns that were drawn to my attention was the release that the Minister himself put out on - or maybe the Pr emier was the one that made the state­ ment where they talked about the problems where this Reagan-inspir ed recession was causing serious economic disruption and it was his hope that eco­ nomic madness in Washington would end soon. The

article went on - and maybe there are some prob­ lems in Wa shington that need to be drawn to the attention - but the problem of the Credit Union Movement in this province is very hard to relate to this economic madness in Wa shington. There are cer­ tainly some problems at the local level in this province that the Minister should put his finger on instead of shifting it off on somebody else. Certainly, maybe Washington has some beari ng on it, but that was one statement that concerned a lot of people and wond er­ ing if the Credit Union Movement was trying to blame their problems on Wa shington.

Of cou rse, as the member says, there are 300, 000 members in this prov­ ince and in a lot of cases they don't all read it the same, but it did create some concern among the membership. MR. ADAM: Well, Mr. Chairman, there is no doub t in my opinion that the high interest rate policy followed by the Federal Govern ment of Canada which is pretty well in lockstep with the, because of our economic ties, with the United States, is pretty well in lockstep with the monetary policies of the Government of the United States.

That has not only caused a considera­ ble amount of trouble for the credit unions as I explained ju st a few moments ago, but it also has created a lot of problems for a lot of private citizens and private businesses as well and private individua ls, ranchers and farmers and you name it. They're all faced with the same problem. The credit unions ju st happen to be perhaps in an even more vulnerable situation because the y had long-term mortgages on buildings at 1 O percent, eight percent and so on.

Suddenly the interest rates over a very short period of time, maybe three months·, six months went up to 20 percent and they have to pay 17 percent, 18 percent for money and at the same time receiving only 8, 1 O percent on long-term money that they're tied into. There is the mismatch. I'm not saying that it's entirely because of that, but I wou ld say that perhaps 95 to 97 percent wou ld be because of the high interest rate policy. MR. McKENZIE: Mr. Chair man, of course that's wh ere the problem starts. We can criticize Reagan here all day long but he's certainly getting some action down there.

Their inflation rate in the United States today is down what, 5 or 6 percent; that's a heck of a lot better than we've got in this country. You can drive ac ross the border here and get gas for less than a dollar and what are we paying, close to two.

So, maybe it's mad­ ness, whatever he's practising down there, but they're getting more results than we're getting here and those are some of the things that's causi ng some concern. 1394 Can I raise the matter of the cheese plants at Ro ss­ burn and Pilot Mound to the Minister and ask if he as a Minister and his staff, can tell me why these plants are not functioning today? MR. ADAM: Mr. Chairman, I'm pleased that the hon­ ourable member has asked that qu estion. It's a very important que stion and it's one that we have a great deal of concern for.

It is a decision of the board, my understanding, a decision of the board had decided to close down some of the cheese factories that they were operating and for var ious reasons, I'm not sure of all the internal reasons, they don't appear to be in that big of a difficulty. We have offered our assistance if they needed it and the y have not approached the Minister or staff for any assistance, to my knowledge. The member asked what is the reason for the clos­ ing of the plants.

Well, the fact is that there's a surplus of inventory on hand and the market is soft at the present time and the margins are extremely low because of competition, if you will. Particularly, the big markets are in Ontario and the problem with the Manitoba plants is that they have to pay a five cents a pound freight for cheese that's shipped out of the province. I believe that is where the bigge st problem lies, the freight rate to ship the cheese into Ont ario where the big market is, and there are, over the number of years, Quebec and On tario have expande d their dairy industries up there in those provi nces.

My understanding is that there have been no decisions yet as far as the future of the two plants are con­ cerned. My understanding is that the dairy producers are disposing of their milk in the Province of Sas­ katchewan and there are two that are operating; that

Tuesday, 13 April, 1982 is in Winkler and Dau phin. Ap parently this provides the markets .for MANCO for all their Manitoba requirements. I don't know what else I can add to the Minister's qu estions. We have offered our assistance to the MANCO people, to the board , and they have, as yet, not accepted our offer of assistance, so in view of the fact that they have not approached us to discuss any of their problems, if indeed they have problems, far be it for us to go out there and say. we want to run your show for you.

I don't believe that is our role; it's up to the board to do the day-to-day management and it's not up to the Minister to go down and do it. MR. McKENZIE: I wou ld ask the Minister, did you offer them financial assistance or what kind of assis­ tance did you offer? MR. ADAM: We offered to meet with them to discuss their problems and they haven't accepted; they haven't contacted us. Tha t is a written offer, it's a written offer that we wrote to them and offered.

It was made in Dec ember of 19 81 to assist with management, etc., if they had any problems there and, since Dece mber 3rd, when the letter was mailed and we haven't had a response from them. So it would appear that they don't req uire our assistance or else they wou ld have come forward. MR. McKENZIE: Have you offered them marketing skills of the govern ment, the Depar tment of Economic Dev elopment? MR. ADAM: We have written them and asked them if they would like to meet with us and to discuss any problems that they might have and, if it has to do with marketing, we would be happy to assist them.

We don't have a marketing br anch in our department but I know that the Department of Agricultur e has and that wou ld be more applicable to the Department of Agriculture. MR. McKENZIE: I wonder if the Minister has seen the news. On one of the television stations last evening the news came out that the employees have offered to take a 15 percent cut in pay and re-open the plants. I wonder if the Minister supports that approach to re­ opening them. MR. ADAM: Well, agai n, it would be up to the employees and the members of the board .

I under­ stand, I believe I heard the news item that the employees were going to present a proposal to the board wher eby they wou ld go back to work for a reduction in pay until things straig htened themselves out. I hope that they can resolve the problem there and I believe the problem is one of finding a market for the cheese. Now, perhaps, I should be asking my colleagues to see if we can't supply all of the govern­ ment institutions with Manitoba cheese. I intend to inquir e; where are we getting our cheese for our own use so that we can maintain these jobs in the Provi nce of Manitoba.

I wonqer if the member would suppor t me in that effort? MR. McKENZIE: Mr. Chairman, can I ask the Minister then, what, his staff, his department, do any of his staff go in and check MANCO to check their records, check their operation. You have no say in their opera­ tion at all, just their charter . . . MR. ADAM: Mr. Chair man, they have a charter and, under the legislc:ition they have to file an annual report to the departm!mt, which is entered in the central registry and it's a req uirement of all co-o peratives so to do that they have to make an annual report.

But insofar as this situation as it is at the present time, I had my staff contact the Manitoba Dairy Co-O perative Limited and wrote to the President. Further to the last answer that I gave him on whether we had authority, we do not have any authority to go in there and take over the co-operative. We have no authority to do that unless the legislation is violated or breached by the co-operative group themselves.

Other wise, until they come to us and say, look, we've got a problem here, could you come and help us, and unless we see some­ thing, even if they have an annual report, I don't know what the annual report was, the last one that came in, and I don't think that we could make that public even if we did have it. It's private and confidential information. But I would like to read into the record the letter that we did write to Mr. Shelbourne, and that is at Dec ember 3rd. "This will confirm our recent conversation regard­ ing the possibility of departmental assistance to your co-ope rative.

By this letter I would like to reassure you that we are most willing to assist to the extent of our resources. "To be fully conversant with the current situation, however, we would like to have a representative sit in on your board meetings in order that we may familiar­ ize ourselves with the various problems facing the Co-Oper ative. This will enable us to determine in what areas assistance from the department is possible. "I look forward to hearing from you in the near future. Your s sincerely." That was sent on Dec ember 3rd and, Mr.

Chairman, if there is a major problem out there surely they wou ld be coming to discuss it with us. MR. McKENZIE: It 's a strange set of circumstances Mr. Minister. Mr. Sharp, the President of the Manitoba Milk Produc ers Co-Op, he's also offered all the servi­ ces that he could possibly provide to MANCO and apparently they haven't accepted either. I don't know do we ju st sit back and apparently do nothing and in the meantime these milk producers out there now are dragging their milk or trucking it to Saskatchewan and that's certainly not a very favourable situation for the whole industry.

The future is getting worse every day and I can recognize these producers wonderi ng where we'r e going and yet the department can't seem to find out what's going on, Sharp, he's tried to find out at least he's offered his service and there it sits and nothing seems to be happening except now the employees have offered to take a pay cut but I jus t can't understand and I'm sure the people in Rossbur n and Pilot Mound can't understand why this thing keeps going around in a circle and nothing happens. 1395 Is there nothing you can do as a Minister or the government can do to try to get them bac k, at least

Tuesday, 13 April, 1982 talk with them or negotiate with them and find out wher e their problems are and hopefully come up with a solution to it. They've opened two of the plants so it can't be that terribly serious when two are functioning. MR. ADAM: Mr. Chai rman, agai n I want to repeat to the honourable member that the authority rests with the members of that Co-O perative it is up to the members to impress upon their board to do whatever the members want them to do and if they do not want to respond to the membership they have recourse, I suppose, the same as any co-operative movement. MR.

DEPUTY CHAIRMAN: Thank you, Mr. Minister. The Member for La Verendrye. MR. BANMAN: Thank you, Mr. Chairman, I have some qu estions which I'd like to pose to the Minister with regards to the loan that is going to be made to the Credit Union Central and to the Cais ses Populaire Movement, who I understand are facing the same difficulties that the credit union system is. First of all, I wonder if the Minister could inform the committee whether or not the Credit Union Central has sold the building which they built a number of years ago?. MR. ADAM: Yes, they have. MR.

BANMAN: Does the Minister feel that this will give them a better chanc e of reducing some of their costs with regards to operating, in other words, is this part of the bargain that will help strengthen the movement as a whole? MR. ADAM: It 's not part of the bargain, Mr. Chairman, but it will, I guess, have a saving in annual operation of $750, 000 a year less operating expenses. That in itself, of course, is a step in the right direction to remove the overhead that they had to carry that bui ld­ ing. It has been sold to, well I don't know who bought it, somebody in Toronto anyway bought the building. MR.

BANMAN: So the Minister is saying that the sale of the building will, if you want to use the expression, cut the losses and should help the credit union system regain some of the funds tha t will be necessary to reconstruct or rebuild the whole system. MR. ADAM: Well, it removes $750, 000 annually from the overhead that they were having to carry. That's a very significant step, Mr. Chairman. MR.

BANMA N: One of the reasons, I believe the sys­ tem got into a lot of trouble is that back in 19 70 the legislation was changed by the province which didn't make the reserves that the cred it unions had up until that point had, they didn't make those reserves a compulsory aspect of running the credit unions under the Act in the Provinc e of Manitoba and I gue ss one of the thing s that a lot of people don't realize is that in 19 70 the system had 3. 7 4 percent of its assets as reserves and now today I think we'r e down to - the Minister can correct me if I'm wrong, I think we' re around .3 percent and of course the latest cleanup that's going to have to take place to cover the ones that are not in good financial situations, that face 1396 deficits over the last number of years, of course that was depleted and hence the govern ment's injection of those $25 million.

Does the Minister anticipate with the infusion of this money that the reserves of the individual credit unions as well as the reserves of the Central will be bui lt. And I guess it's important to point out to members of the committee as well as other people who are not aware of the system that the credit union system is not branch ban king system in that many of the credit unions have their own reserves and do very well, thank you. But th ere are a few that have had problems and those have drawn on Central's reserves because they did not have any reserves themselves and have created the problem.

And I say again to the Minister that one of the problems we have had is that the Act was changed back in the early '70s which did not make it mandatory for the cr edit unions to have reserves. If we would have had the same type of legislation in place agai n as Saskatchewan had had, I don't think we'd be facing this particular problem.

Does the Minister feel that with the financing pack­ age that is now in place that the reserves at the credit union level, which I believe are now 5 percent com­ pulsory reserves for each credit union and the reserve levels for the stab fund, will be built up over the next five years enough to repay this particular loan? MR. ADAM: Yes, I'm hopeful it will, Mr. Chairman, in response to the honourable member's qu estion.

The main objective of the assistance is to make the whole system more viable and allow the stab fund to rebuild and we are hopeful with the assistance that's going to be provided to the system that will allow them to do that and to expand their assets to the req uired level of reserves that are desirable. MR. BANMAN: Could the Minister confirm that the level for the individual credit unions, the reserves, the target is 5 percent? MR. ADAM: That is a level, Mr. Chair man, of course they're not all up to that mark at the present time. MR. BANMAN: Well, I appreciate that.

If they had been all at that level we probably wouldn't have to req uire any money. And I come back to what I said before that it's really unfortunate that in the early '70s we didn't have the foresight to see that a reserve was req uired, so that in the seven good years you store up for the seven bad years.

I suggest to the Minister that what is happening here - and this is the unfortunate part of the whole system - is that many of the good credit unions that did see that happening and did put money away are now having to pay the price for being frugal because they're being asked to pay into the Central heavy amounts of money which in their par­ ticular operation is draining their membership and, of course, this not bei ng a branch ban king system, the local members are now going ahead and helping members on the other side of the thing and causing some concern to some of the members that have run their ship in a very tight position.

Of course, I guess in society generally one should reward the people that have done a proper job but wha t happens in this case

Tuesday, 13 April, 1982 is that it works jus t the other way, not only in in this case but many others. So, I understand that. One of the que stions that I have: the report that was commissioned by the previous govern ment, the indi­ viduals that were involved, are those the people that fin.ally made the final subm ission to the govern ment with regards to that report? MR. ADAM: Yes, Mr. Scarth is it? Yes. MR. BANMAN: How about, Mr. Chairman, the gen­ tleman that was hired to help Mr. Scarth in that report, a man who has had a lot of experience in the banking field, Mr.

Reed , who I believe was the treasurer of the Bank of Canada. MR. ADAM: Yes, I know. He had been req uested by Mr. Scarth to come and assist and I want to publicly thank Mr. Scarth for his work and Mr. Re ed as well for the assistance that they provided to us. MR. BANMAN: The financing package which I wou ld gather was worked out along with the Central, does it basically follow the recommendations of that particu­ lar report? MR. ADAM: Not entirely because they are very close to the recommendations with the exceptions that the review was undertaken perhaps a year ago, is it?

Yes, it basically is fairly close to the recommendations of the Scarth Committee. MR. BANMAN: Are the details in regards to the loans to the Credit Unions and the Caisses Populaires, have the details been worked out with regards to the loan that they will be receiving? MR. ADAM: Not at this point in time. They're still being worked on at the present time. MR. BANMAN: I wou ld, I gue ss in repeating some of the things that the members of the committee have previously stated, I'd like to ju st address a few con­ cerns that I wou ld have.

No. 1, I know the Minister mentioned that a lot of the problems were caused by high interest rates. I think that if one examines the problems that have taken place over the last little whi le, that definitely is one of the factors. One of the problems was, of course, man­ agement of the smaller credit unions. The other thing that I think shows up everywhere you look is that where you've lost a large amount of money is in the field of large busi ness loans. The Member for Minnedosa mentioned that in his few remarks.

I think that it's important in dealing with this whole system that one recognizes the facts that the expertise in the system did not exist at the local level on the small credit unions to deal with these large loans. One jus t has to look at the Da uphin Plains one which is, I understand now that they have received a certain assistance from the Central, has managed to hold its own in the last little while. But, what has happened is that the local directors as well as the managers did not have the expertise in dealing with these very large loans.

I would urge the Minister to make sure that we don't head off in that direction agai n; that the system doesn't head off in that direction and that you monitor those loans very carefully. I think that's one of the concerns that I have when going in to doing an audit in a credit union; when you go in it's okay to see if the books balance. That's one thing. But, I think what you have to really look at seriously now is the kind of paper they're writi ng. In other words, what is happen­ ing with regards to those loans. Are they well secured? How many refinancings have taken place?

I think if that had been in place in places such as Da uphin and some other places we wou ldn't have seen the prob­ lems that we have right now. The other area which has caused the credit unions a lot of problems in the last little while is wrestling with the computer problems. We've seen the whole system over the last number of years go onto computer. It 's the only logical way to go.

But I know and the Minister probably knows of some cases where companies in haste to sell their eq uipment managed to sell a credit union on a particular commodity or a particular pro­ duct and then the system finds out only a couple of months later that it's not adeq uate for their needs. I think that's another area which we'll have to receive a lot of attention and scrutiny from the Central to make sure that monies aren't spent on systems that will not be of benefit and will be outdated very qu ickly as far as the system is concerned. MR.

CHAIRMAN: I wish to remind the mem bers at this time that it is 4:30 p.m. and we should be interrupt­ ing the procedures for Private Members' Hour . I understand we will be coming back here in a few minutes time. All right, the Committee will come back to order again and we proceed. Did the Minister wish to respond to the last intervention from the Memb er for La Verendrye. MR. ADAM: I'm not sure whether the member has completed his remarks when we were interrupted. Do you want to complete your remarks? 1397 MR. BANMAN: Mr.

Chairman, as I mentioned earlier there are a few things I think that the Minister will have to keep in mind, I hope in dealing with the que stion.

I think this is the hope of everybody in the system that this particular amount of money that has been now earmarked for the system will provide the system with the stability that is req uired; that they can go ahe ad and strengthen their existing structure and make the adj ustments with in the system that will have to be made in order for them to be able to repay the loan and agai n be a viable force in the community without the assistance of the taxpayer in this type of a forum. I have one ques tion with regards to the filing of annual reports for the Central as well as other credit unions.

In those reports, for instance, the Annual Report of the Central and the Annual Report of the Stab Fund I believe are filed with the Reg istrar. Are those reports public documents? MR. ADAM: Mr. Chairman, I'll first beg in with the que stions that were posed prior to the adjourn ment. I want to say that insofar as suggestions were made

Tuesday, 13 April, 1982 that they were management's problems that has caused some of the difficulties that have become evi­ dent, there is no doub t in a few cases there have been some poor management decisions, but I believe that I am safe to say that they've been in the minority.

Ther e have been a few bad decisions, but the major ity of the problems have been, I believe can be attribut ed prim­ arily to the sudden increase in interest rates even though there have been some management problems and the system is now, as far as loans are concerned - the honourable member mentioned about the commercial loans, many of the loans are now syndi­ cated where they were not in the past and funded by several credit unions rather than one,

whereas some credit unions were trying to carry large loans by themselves. With the syndicating of large loans the risk is, of course, reduced substantially. Some of the credit unions did get into problems as the Member for Minnedosa indicated a while ago and the Member for La Verend rye, that there's a new ball game into the commercial field but they are now spreading the risk when they're taking these big loans to reduce the risk. An expertise is being acquir ed now at Central, who will provide the consultation to the credit unions, management assistance and so on, and advice.

The other que stion that was raised about the reports being public. The Annual Report of the Stabi­ liza tion Fund and the Central's are not made public by the department; they are available only to the members the same as the reports from the individual credit unions. MR. BANMAN: The Minister is saying that I, as a member of the credit union, can go to Central and ask for an Annual Report. MR. ADAM: No. I'm not saying that, Mr. Chairman.

I'm saying that if the member is a member of the Steinbach credit union he would have access to their Annual Repor t as a member of that credit union and if the Steinbach credit union is a member of Central, they would have access to that. I believe that's the way it operates and that's the way it should operate. I don't think that that kind of information can be just avail­ able to anyone on the street.

I don't think it wou ld be proper for - after all they are in competition with other financial institutions -(I nterjec tion)- the Honourable Member for Minnedosa says the bank statements you can get, but you only get the one, Mr. Chairman, you get it from headquar ters. You get one ba nk statement from the Bank of Nova Sco tia, or whoever it is, and if you want to get information on how the Royal Bank did in Ste. Ro se, if they lost $80, 000 this year or made $80, 000 you won't find that out, because there is only one statement and that is the difference.

It would not be proper to provide that information to the public. You see it's privileged information, Mr. Chairman. MR. BANMAN: How would I, as a member of the Steinbach credit union, go about trying to find out what the Stab Fund is like, what the annual statement is? MR. ADAM: Well, the Board is appointed by the Lieutenant-Go vernor-i n-Cou ncil and the role of the members appointed by the gove rnment are going to be strengthened and you would have to ask the man­ ager or the board of you r own credit union if you want ed to get that information as a member of your credit union.

You could ask your mana ger or your board and say I wou ld like to know what are the financial conditions of the Stabilization Board and perhaps if you will think back, perhaps you can't remember that far back, but back in the early 70's I was raising qu estions in the House myself from the then Minister of Co-O perative Dev elopment about how the Stabilization Fund was operating. Tha t was back in the early 70's. MR. BANMAN: I think this is an important point.

If we' re going to be providing a substantial amount of funds for the credit union system, I think the Minister will appreciate this, that the people who are providing the funds, of course, will have to be told where these funds are being expended or how these funds are going to be expended. I know that from his comments here today he has not finalized the whole package yet.

But I would have to say to him that when that is acco mplished I would hope that he together with the system would make as much of this information pub­ lic as possible, because after all the whole system works and derives its support from who? From the membership and I come back to what I said before, the grass roots has to know what's happening with regards to the whole system. I think the people of Manitoba have the right to know where we' re going.

You've indicated in your press release and the Pre­ mier in a speech to the Central, to the Stab Fund that the provi nce is not going to allow the system to fail, that's in essence what we have said, and I believe that it's only right.

I think we do the credit union system a disservice if we don't provide as much detail to the public as possible, because we have made the announcement I think that rather than sort of have an air of mystique about the whole thing where what's happening with the funds and that, I think it's only good public relations on behalf of the system as well as the government to make people awar e of what's going to happen and how it's going to strengthen the system and how the Man itoba people in rural Mani­ toba, as well as in the City of Winnipeg, are going to benefit from making sure that we have a viable credit union system in the province. 1398 I gue ss I have to say that as much of the stuff should be made public, as I said it's owned and should be operated by the membership, and as much informa­ tion that is made public as possible is, I think, in the best interests.

The reason I say that, I guess, if any­ body wanted to take the time to go out and check all the annual reports you could gather them all up and you could make sort of your own composite from it. Righ t on the statement it shows how much money went into the Central from each credit union, what the levy is on the credit union for the Stab Fund and then you could get it that way.

I ju st say to the Minister that, as the Member for Minnedosa said, there will be cer­ tain factions that wi ll and are not happy with this particular help that's been afforded the credit unions and I think that we have to explain why it's happening and be as open about it as possible because it is public money involved as a very sort of public opera-

Tuesday, 13 April, 1982 tion that these people are conducting. I ju st throw that out for the Minister and hope that when the package is developed that there will be as much information dis­ seminated to the public on this matter as possible. I would ask another qu estion. There was some con­ cern by the directors of the different co-o peratives over the last number of years with regards to their responsibility, in other words, what their legal responsibilities were should something go wrong in a credit union. In other words, were they liable for any damages or action that members wou ld bring agains t them?

I must say that I would not want to see directors being held personally liable for things that happen with in their particular credit union beca use you prob­ ably wouldn't get anybody to run. And yet, on the other hand, the other danger is that we don't want to take the directors who are elected by the membership off the hook, totally.

In other words, there has to be some responsibility because the only way you're going to run a good system is if you're pretty responsible to your member­ ship and I would ask that the Minister watch that one closely because there's nothing like having a little bit of feeling within you that, if things don't turn out the way they should turn out, you might have to pay for it in one way or another.

I think it makes a person much more responsible and I think that happens in this area, recognizing, as I said in the beginning, all the time that one cannot make them totally liable because you wouldn't get anybody to run. Ther e's nobody that's going to sacrifice his or her own personal assets so that somebody can go after them for those if some­ thing goes wrong in the system. MR. ADAM: Mr. Chairman, I think I'll take the last que stion first and the first qu estion last this time and advise the honourable member that the director s are covered for any liabilities that they undertake in being directors.

They are covered by bonding or insurance and that is how the public is protected and, also the directors as well. I can assure the honourable member that the assistance, and he wants to have as much information as possible on how the system is going to operate, I want to advise him that the assistance that is going to be provided will go towards assisting the credit unions that are in a deficit position to try and endea­ vour to make them viable and so that they can expand and operate on their own.

No doubt some of the assis­ tance will be used for mergers; there have been mergers in the past and there may be some in the future. It's hard to tell what may happen but this is where we have some credit unions that pick up other credit unions that are either in serious financial diffi­ culties but the receiving credit union gets all the assets as well. But they also have to take over a lot of deficits along with the assets, but it expands their operation so this is the intent of the assistance, to see that it gets to the areas wher e there are difficulties.

The Stabilization Fund, in regards to the making public of the financial report of the stabilization fund, that's never been available. I remember I ju st menti­ oned this recently, that I was making inquir ies back to one of my own colleagues, when he was the Minister, about the stabilization fund. Depositors are gua ran­ teed 10 0 percent; they're not covered by the Canadian De posit In surance. They have provided their own gu arantees through the stab ilization fund and so, in that way, all deposits are protected and remedial action will be applied by the stabilization fund to those management problems.

The government will be monitoring the actions of what is happening out there. With the extra staff that we have we will be able to tap into the computer system that will be available, immediately to the department to find out how things are going out there. The affairs of each credit union are confidential and the Minister is not going to go out on a public stand and start letting everybody know the affairs of any individual credit union. That is up to the members to go in and get their information for themselves.

If they want to go and publicize it that's their affair but it's not the role of the department to go out and make public. And members do have a right to know but it's up to the members of each credit union to obtain that informa­ tion through the local credit union and, if that credit union wishes to make available to those members financial statements of the Central or the stabilization fund, that's entirely up to them. I don't think it's the role of the Minister to do so. MR. McKENZIE: Mr. Chai rman, I never said that it should be.

I guess my only que stion was, many of the credit unions, I think, the Steinbach one, which I belong to, publishes their annual report in the paper. It shows the whole report to everybody and it's a public document. That's why I asked the que stions with regards to this and I hope I have a good enough rapport with my local credit union that they can pro­ vide me with the information that I req uire. MR. DEPU TY CHAIRMAN: The Memb er for Minnedosa. MR. BLAKE: Thank you, Mr. Chairman.

I wanted to mention to the Minister, and he's just answered the que stion for me, tha t they do not participate in the Canada Deposit In surance Fund. I was jus t wonder­ ing what the reason for that was? There must be a reason because the Minister has ju st stated a moment ago that the depositor is protected 10 0 percent by the stab ilization fund. Mr. Minister, that's not qu ite true, because if you hadn't gotten $29.5 million, the stab ili­ za tion fund couldn't have really protected all of the depositors in the system. So, have they considered the stabi lization fund?

I don't know what the fees are, whether it's not feasible for them to do it, but maybe in the situation that they're in, maybe they should take a long look at it. It might be some comfort to some of the depositors to know that their deposits were protected up to a certain amount by a fund like the Canad ian Stabilization Deposit Insurance Fund. There may be a reason for it and maybe a com­ pletely good, legitimate one, I don't know. But it's difficu It to say that the depositors are protected 10 0 percent when we've ju st had to bail the fund out for $29 million. 1399 MR. ADAM: Mr.

Chair man, the legislation at the present time provides unlimited guarantees. The leg­ islation provides that and I believe that there were some - the Law Review Committee that we have is

Tuesday, 13 April, 1982 looking at the whole Act if you will. There's a possibil­