Thursday, May 30, 1996
LEGISLATIVE ASSEMBLY OF MANITOBA
Thursday, May 30, 1996
The House met at 9 a.m.
ORDERS OF THE DAY
(Continued)
COMMITTEE OF SUPPLY
(Concurrent Sections)
RURAL DEVELOPMENT
Mr. Chairperson (Gerry McAlpine): Will the Committee of Supply please come to order. This section of the Committee of Supply will be considering the Estimates of the Department of Rural Development. Does the honourable Minister of Rural Development have an opening statement?
Hon. Leonard Derkach (Minister of Rural Development): I certainly do, Mr. Chair. It is a pleasure for me to present the Estimates for the Department of Rural Development for the 1996-97 fiscal year, and I am particularly pleased to announce that, for the '96-97 funding year, appropriations for the department have been increased by 2.6 percent from $48,743,200 to $49,994,900.
I think this is very good news for rural Manitobans, and it is rural Manitobans that will benefit directly from the programs and services that the department will be able to deliver. However, I believe that rural Manitobans are primarily responsible for this good news, as well. After all, it is they who are working hard to strengthen their communities and to take their ideas and make something positive out of them.
As has been done in the past, Rural Development hopes to be able to give Manitobans the tools in order that they may continue to contribute to the renewal and the revival that we are witnessing province-wide.
Fiscal year '95-96 was a case in point during which time rural Manitoba continued to grow, and I would like to briefly review for you some of the achievements. For Local Government Services Division, the last fiscal year was an extremely busy one. The final report of the Municipal Act review was completed last June, and since that time the department has been working very hard to prepare the new legislation. The new act will also introduce a new beginning in municipal governance throughout Manitoba. After more than a hundred years, Manitoba's municipalities will have a new set of guidelines to help administrators and elected officials meet the challenges of running local government.
The new legislation, when introduced, will give local government more autonomy, as well as more flexibility. They will be able to make decisions that work best for their local constituents but within a framework that provides uniformity province-wide. At the same time, the new act will make local governments even more accountable to the people of Manitoba by including provisions for more open, accessible government.
The credit for the improvements to the act largely belongs to the thousands of Manitobans who attended some 26 public meetings and who participated in close to 3,000 oral and written presentations and who basically, through their input, provided the framework upon which new legislation could be crafted.
Additionally, I think it is worthy to note that since the review began in 1993, the process has been completed on time and well within budget. I am pleased to say that the new act was in response to calls from both the Union of Manitoba Municipalities and the Manitoba Association of Urban Municipalities and others who have been urging government to make changes for over 15 years.
Other activities of the division have been focused on amending or fine tuning existing legislation to provide clarity to assist local government in carrying out its duties. For example, amendments recently announced to the reassessment process will help municipalities to stabilize and streamline their property assessment and tax collection activities. This will be achieved by changing property tax assessment from a three-year to a four-year cycle.
While the groundwork for the new Municipal Act and property assessment changes was laid during the past fiscal year, the benefits of all this hard work will begin to be repaid in the coming year and also in subsequent years.
Local Government Services Division also provided assistance to municipalities prior to last October's municipal elections. Staff assisted the Manitoba Association of Urban Municipalities in developing a video series on municipal government and staff, and staff also travelled throughout the province to hold a series of information sessions for officials. I think this was an extremely positive part of municipal elections because it allowed those people who normally took a fairly inactive role in municipal politics to become more aware of what municipal politics was also about and also to become more involved in the process. We think that because of the video we had more competition, if you like, in local elections in the last round.
Similarly, with the Economic Development Services division, much effort went into building existing programs and introducing some new initiatives to continue to build on the progress that has been made to date. For example, the Community Works Loan Program that was announced by our Premier the Honourable Gary Filmon in the spring of 1995 is a case in point.
After the announcement by the Premier, I had the pleasure of announcing the details of the program last fall to community and business leaders. The program is designed to give communities a direct role and financial stake in sustaining their economic future. It will allow communities to capitalize small business start-ups, home-based and other small ventures, which will in turn help to create new jobs. The province, through Rural Development, will provide an interest-free loan of up to $50,000 to participating communities which will be required to contribute $25,000. Here again, while the program was announced in the fiscal year 1995-96, we are confident that it will really begin to blossom in the current fiscal year.
It is common knowledge that small business is the engine that helps to drive our economy. This is particularly true in Manitoba where much of our economy is reliant on the success of small businesses, and the Community Works Loan Program is certainly a substantial improvement for the climate for small business in our province.
Meanwhile, the department's other economic initiatives continue to benefit rural Manitobans in '95-96. The Grow Bonds program now has 19 projects with four new projects being announced in 1995-96. Included in these were RCS Greenhouses of Waskada which raised $280,000 to grow tomatoes year round; Dyck Forages and Grasses Ltd. of Elie which raised $390,000 to assist it to produce forage seeds for export markets; Sterling Press of Selkirk which received its second Grow Bond of $135,000 to allow it to undertake a second expansion; and Westman Plastics of Dauphin which received $250,000 to expand its plastics product line.
All told, the Grow Bonds program has raised over $7 million, leveraging an added investment of more than $21 million. In the mean time, Grow Bond projects will create an estimated 450 jobs.
The Rural Economic Development Initiative or REDI has helped to create 1,300 jobs in rural Manitoba. REDI contributions of $21 million have generated more than $170 million of new investment.
Youth programs continue to benefit our rural youth in 1995-96, as well. Green Team and Partners with Youth to date have created over 3,000 jobs since these programs began in 1992. In addition to a long standing agreement with Junior Achievement of Manitoba to deliver business and entrepreneurial programs to rural Manitoba school students, last year we also announced support for a company program to enable high school students to live the experience of starting and running their own small business. These were the programs and initiatives upon which we continued to build during the last fiscal year, and they will help set the course for the coming fiscal year, as well.
There were also other notable changes last fiscal year, and one of them is sure to dominate the change in the future direction and actions taken by my department, as well as others like Agriculture. That change occurred when we saw the close of the freight rate subsidy that farmers had enjoyed in Manitoba for so long. The end of the Crow rate ended an era of low-cost transportation for western Canadians. However, as one door closes, another one opens. Rural Manitobans have an opportunity to capitalize by finding more end uses right here in our province for the crops that they grow, as well as look for alternative crops, and it is happening today. I think if you look at the types of crops that are going into the ground this spring, you will find a greater variety of crops that are being grown to provide the farm greater diversification and to capitalize on the markets that are out there. Certainly, prices are a big factor in that, as well.
In anticipation last year, Rural Development was pleased to participate in a Working for Value Task Force which travelled to 26 communities around our province during February and March to enlist the ideas of rural Manitobans about adapting and diversifying for our future. It is the goal of the government to expand the range of value-added exports by $1 million over the next 10 years. Notably, Rural Development will have a vital role to play in ensuring the goal is met.
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One of the ways in which we will be able to assist rural Manitobans is through the Food Development Centre, and I know many of you may have been recently on a tour to visit the Food Development Centre. If you have not, I would certainly encourage you to take the opportunity when you are in Portage to visit the Food Development Centre. Our department took over the responsibility for the Food Development Centre, formerly known as the National Agri-Food Technology Centre, which is located, as you know, in Portage la Prairie.
As of April 1, the food technology centre has become a special operating agency to offer a cost-effective means for our province's agricultural industry to carry out product research and product development. With its experienced staff and technological resources, the centre will have the ability to support Manitoba businesses in their efforts to expand agri-food processing initiatives province-wide. The Food Development Centre will be able to contribute to the creation of new jobs and investment in Manitoba.
At Rural Development we believe that if we give rural Manitobans the tools, they will build the economy. Time and time again we see examples of how this is happening. For example, through the Community Choices program, communities continue to utilize a true grassroots approach in developing their communities. Today, there are approximately 71 Community Round Tables encompassing more than 120 municipalities that are actively addressing local economic and community issues. A total of 59 of these communities have developed vision statements which will set their course for future growth and development on a priority basis as determined by community members. To quote Oliver Wendell Holmes: The great thing is the world is not so much where we are, but in what direction we are moving.
I think that is so true in rural Manitoba today. The events of the past year do indeed indicate that rural Manitoba is moving forward on both the economic development side and on the local government services front.
At Rural Development, our intent is to stay the course, to continue with the initiatives begun in the last fiscal year and to continue to partner with our government departments, associations and Manitobans in general who look for a brighter future for the province and for their community. Indeed partnering has and will continue to play a very significant role in operating our department for the coming year. The Community Works Loan program, which I discussed earlier, is truly a partnership involving the province and Manitoba rural communities, and to date five communities have established Community Development Corporations and are applying for lender status under the program. We anticipate a number more will be approved in this fiscal year.
Another example of partnering for the benefit of rural Manitoba was the agreement the province was able to reach with Centra Gas as part of the Infrastructure Works Agreement to deliver natural gas services to a number of our rural communities. These communities will now be experiencing the benefits of this major undertaking, and I know that many of you are aware of the communities that have now been receiving the gas services.
We have another series of communities coming forward today, as a matter of fact, requesting natural gas services. Swan River, as you know, is one community that was identified as probably the first candidate in the original round but because there were some problems in getting gas to the border from Saskatchewan and because there were some internal problems in the community, that was not accomplished, but we are certainly looking to working with that community in the future to make sure that that community does indeed receive this service because it is a larger community in rural Manitoba.
In addition, our department has also worked with Industry, Trade and Tourism to help launch a number of new initiatives, and I would like to mention the Manitoba signage program that will help promote Manitoba's growing tourism industry. A Manitoba business expansion program will complete the gap in funding working capital for expanding businesses in Manitoba, and we are participating in that. Rural Development is also pleased to say that we support this kind of initiative because it will serve to benefit small businesses, not only in the city of Winnipeg but also in rural Manitoba, as well.
I think one of the more successful events that we held this year was the Rural Forum, where we joined with I, T and T, Manitoba Agriculture and various departments in our government, along with the chambers of commerce to put on the Rural Forum. I think many of you noticed how many sponsors there were, and they certainly were long in number, but I think that Forum is really a success because of rural Manitoba's participation.
It is not necessarily what departments in government do, rather it is what Manitobans did by coming together, displaying their businesses, displaying what they produce in rural Manitoba, and it was really impressive. I know the member for Interlake (Mr. Clif Evans) was there throughout the course, and I know he had an opportunity to look at the many wonderful displays that were there. There were over 300 displays and over 10,000 people crossed the gates to participate in the Rural Forum. That is more than double what it was in 1994-95, because then I think we had about 3,500 people, and people are still talking about it. I am still receiving notes from people about the Rural Forum and about the positive experiences they had.
What was also encouraging was we have now included the city of Winnipeg in Rural Forum. One of the participants at Rural Forum was the Fort Garry Hotel, who were just absolutely amazed at the response they received by being a displayer at the Rural Forum. There were others, as well, who commented very positively on the forum. So that is certainly a feather in the hat for rural Manitobans, and I think you will see that the forum will continue to grow as time goes on.
One of the events of the forum, I have to point out, was Junior Achievement's business game. This one-day business game was the first in Canada, you might say, and it was the first time that Junior Achievement had put on a one-day business game. There were over 300 Junior Achievement participants at the forum, and I think that number is correct, or it could be larger. I know we were talking up to 400, but I will be conservative and say there were 300 for sure.
Those students were busy all day in the business game. When I walked into the room there was a hum in the room but everybody was on task, everybody was paying attention, and the highlight was after the business game was over, of course, the winners were announced. They were presented some prizes and then some of the winners also participated in the evening banquet.
In addition to that, they were joined by the Youth Business Institute game that was held in Brandon at the same time, and the winners from that game also were there. I believe it was St. John's Ravenscourt that took first prize. Second prize went to Swan River Collegiate. Both second and third prize went to Swan River Collegiate, who have participated in this program a long time, but there were other smaller high schools that did very well, as well. So it was not size necessarily that made you win, but it was the interest of students, and true to their creative and entrepreneurial spirits that made this a very successful event.
Mr. Chairman, with those few remarks I would have to say that we have had a very successful year in Rural Development and I would like to, at this time, thank my deputy minister and his staff for the stewardship they have provided to the administrative side of the department, because they have given beyond the call of duty.
If anybody was around during Forum '96, they saw people working morning, noon and night, into the wee hours of the morning, certainly not something that is expected from working people. They worked on weekends, on Sundays, and if anybody was around during the Winter Cities--we also participated in that event, and those who attended that event saw my staff were all dressed in the appropriate attire for the display area. Their spouses came out and participated, as well, which was really encouraging. I have to say that I am very proud of the staff that I have at Rural Development and the work they have done for Manitobans.
An Honourable Member: Thank God you have good staff.
Mr. Derkach: Thank God I have a good staff, that is true. With those remarks, Mr. Chairman, I conclude my opening remarks. Thank you very much.
Mr. Chairperson: I would like to thank the Minister of Rural Development for those comments. Does the official opposition critic, the member for Interlake have some opening remarks?
Mr. Clif Evans (Interlake): Mr. Chairman, it is a pleasure to deal with our '96-97 Rural Development expenditures and Estimates. It has also been somewhat of a pleasure to have been the Rural Development critic over the past few years, probably because it has made my job a lot easier as a critic with a department such as Rural Development and its importance.
I know that certainly we on our side of the House, and myself as critic and a rural member, support many of the initiatives that Rural Development has and certainly do encourage the department and the minister to encourage the future of rural development and the economic future of rural development.
Especially now with what is going on in this province, I think Rural Development is becoming and is going to become a much more important player in the role of government, in the role of our rural settings, and I say this before I continue on a positive note. I say this on a negative note. I say this because I fear that some of the issues going on right now in other departments within this government are going to greatly affect rural Manitobans, with infrastructure, with privatization, with many of the things that this government has brought about to Manitobans, which is certainly going to affect rural Manitobans, I think, perhaps more than the urban settings.
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I wonder at times, knowing rural development and the future of rural areas, our small communities, why the Rural Development department is being put in the position, I think, to have to deal with maintaining the economic future of rural Manitoba, when some of the other departments and some of the other ministers are bringing in initiatives that are going to, in my mind, put back certain areas of rural development and certain rural communities.
I know that with Highways, the communities, the municipal elected officials, are disappointed, upset and dismayed with this government as to offloading the provincial highways onto them. I think it is going to be a great burden on rural Manitobans. It is going to force our local politicians to increase taxes to them, to the communities. It is going to force them to expend and spend much more money than they have got to do the necessary work for their rural communities, and I do not believe that that is a positive. I know it is not a positive because I have been told it is not a positive. I am not hearing anything positive about the way the government, in fact, is offloading some of its responsibilities onto our rural people. The costs are going to rise continuously to our communities, and it is going to make it more difficult for our rural people to be able to get involved and perhaps do the things that this department is providing or has the ability to provide for them.
You cannot continue improving something if you have not got anything there to improve with and, if the government as a whole continues in the way that they are going in the other departments, it is going to make it so much more difficult for the Department of Rural Development, I feel, to be able to provide and attempt to increase its benefits, its positive ideas.
Yes, there are good ideas out there. Yes, the small communities want to get involved, and we have seen that, but it is going to make it more difficult. I say this also to sort of encourage and enforce my support for the department to work with the department and the minister to, hopefully, be able to provide even better and further, easier services for our rural communities and our northern communities who are basically going to be put back, I feel. It may not show now, this year or next year, but it will show eventually, and I think it is going to put a tremendous burden on our rural areas.
I am pleased to see the attempts that this minister and his department are making to provide the economic benefits and futures for our rural areas. I look forward, of course, to debating and discussing the new act when it is presented in the falltime when we do debate with it. I have had only small concerns raised with me, those being from the LGDs, and I think the minister is aware of that. We will be asking him what his department is doing to accommodate the LGDs.
I am pleased about the certain programs, the availability of the programs that the department has. It is nice to see that there are jobs being created, but if I go back to the negative side of my remarks I am afraid that we are going to be needing a lot more than 1,300 and 450 jobs in rural Manitoba to be able to maintain rural Manitoba. I just hope that we can do whatever is necessary to continue to provide our rural people with the best possible ideas, best positive issues that we can bring to them so that they can deal with the other negative things that I feel are going to again, I say, put them back, some communities many years perhaps.
I am pleased with some of the programs that the department has for small businesses, and I feel that this is another part of rural Manitoba that needs a boost, quite a boost. Being a small-business man myself in the past years I know how important it is to have a vital and vibrant economic future for an area because small businesses depend on that. I do want to make comments on the Rural Forum and the participation. I feel it is one of the initiatives that this department has brought in that is a very positive initiative.
The Rural Forum was a tremendous success from what I saw and from what I have heard. I know that some of my communities were involved in it, and it was very nice to see many of the young people who came and participated in the Rural Forum presenting their ideas and that, but it is like--I made comment when the minister made his announcement about it in the House, the part of it is listening to the people, to the young people.
That is the opportunity through, I believe, the Rural Forum and through Rural Development, that we have the opportunity to listen to the people of rural Manitoba, what is needed, how it is needed, what can be done, what can they do, how can the government and Rural Development get involved, and I think it is important that Rural Development listen, but also that the government listen.
On the negative side, as I made mention, it is nice to see one department making an effort to listen to Manitobans young and old, seniors, whoever, but to do what is required or to try and achieve what the people of rural Manitoba are saying is needed is another thing.
I feel that perhaps there would not be such a large amount of dismay if they knew in rural Manitoba that our infrastructure was not going to be destroyed, higher tax, cuts to education, cuts to the highway department, privatization. So now we have to listen to rural Manitobans because it is very important, and what is going to come about, I am not sure, but I know that I will certainly, as a rural member, and as member of the opposition, do whatever I can to make this minister and his department aware of the problems in rural Manitoba that come to me.
I hope that we will work to achieving the economic future that he has talked about for our rural communities, and we have to do it in a broader scale. We cannot pinpoint. We have to get people; we have to get initiatives; we have to get small businesses going; we have to get jobs in other areas of rural Manitoba, not in just pinpoint areas; and we have to do this, perhaps with natural gas. The minister knows that I have been a proponent and a big supporter of natural gas in rural areas. In my constituency and others surrounding me, there is now an initiative that is being proposed to the communities and the LGDs and the municipalities to form a co-operative together to try and bring natural gas up to the northern areas, rural northern area, and that is a positive. That is part of what it will be to get our rural communities going.
We have to, and I say this, and I do not think, looking back, that I have ever said this before, we have to stop looking only as far as a certain line. We have to forget about it. We have to remember that Manitoba is a large province with many small communities, not just south of the northern Perimeter.
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So I hope that over the year we will be able to achieve some of these goals. I hope that the communities themselves get involved more, come to the minister, come to this department, and I would like the minister at times, and I encourage him because he will get support from me, to talk, perhaps at times, to his colleagues in cabinet and point out to them some of the things that are happening in rural Manitoba because of some of the initiatives that the government is bringing in, how it will affect rural Manitobans.
I think, and I hope, that the minister feels the same way as I do about that. That is what I am hearing from mayors and reeves, councillors, and people that everything is not wonderful, but it can be as long as we get support from everybody in government.
I encourage the support that Rural Development and this minister and this department and staff are providing. Also, I would like to say that I also appreciate very much the efforts by his department and his staff over the past two or three years that I have been critic, and that I have enjoyed working with them and they are always available, and also put on record that perhaps some of my colleagues might want to come to me with an issue so that, if they have a problem in Rural Development, we would be able to work together with it.
So, again, I look forward to the year and look forward to completing the Estimates as quickly as possible.
Mr. Chairperson: I thank the critic of the official opposition for those remarks. Under the Manitoba practice, debate of Minister's Salary is traditionally the last item considered for the Estimates of the department. Accordingly, we shall defer consideration of this item and now proceed with the consideration of the next line.
Before we do that, we invite the minister's staff to join us at the table and indeed ask the minister to please introduce his staff to us.
Mr. Derkach: Mr. Chair, I will just wait for them to come forward, and then I will introduce them.
We have at the table, Mr. Chairman, my deputy minister, Mr. Winston Hodgins; in addition, Mr. Brian Johnston, who is the director of finance in our department.
Mr. Chairperson: We thank the honourable minister for that.
We will now proceed to line 13.1.Administration (b) Executive Support (1) Salaries and Employee Benefits $408,400--pass; (2) Other Expenditures $78,000--pass.
13.1.(c) Brandon Office (1) Salaries and Employee Benefits $167,400.
Mr. Clif Evans: I see there have not been many changes in the Brandon office as far as staff years. Expenditures pretty well stayed the same. Can the minister just tell us, in the Brandon office, how much work comes through the Brandon office? How much does the staff there take on as far as Rural Development, REDI, Grow Bonds, et cetera?
Mr. Derkach: Mr. Chairman, the Brandon office is our Westman cabinet office. It does not only serve my department; we administer the office from my department. However, the office is basically meant to serve the Westman area in terms of cabinet ministers' needs over there. It provides a location for cabinet ministers to hold functions and meetings in the Westman area. It also gives us a point of contact between the Westman Region and government. The office itself, it provides information regarding government programs and access to contact people to people in the Westman area, and it is a liaison office for the government, as well.
So I think it has served a very good purpose. We also have one in Thompson, however, that one serves the needs of northern Manitoba. So the idea, I think, is a good one. We are trying to keep the costs down as much as possible in that office and run it with--I think you would have to agree, it is run on a bare-bones budget, and basically the people there do very good work for us.
Mr. Clif Evans: Mr. Chairman, the minister has indicated that there is a small office in Thompson, one or two staff--[interjection] Two staff. Would the minister also perhaps consider providing these resources in a more central area in the province, so that, let us say, besides the northern communities that have Thompson that they can deal with, now we are talking more on the central, not the southern and the western? Is there a possibility that the department might consider providing such a resource in central Manitoba?
Mr. Derkach: What the government has done is it has tried to provide access to people who are remote from the city of Winnipeg, and that is why the two offices, one in Thompson and one in Brandon. There has been no discussion about any further expansion of those offices because they are costly, and I have not personally heard a request from people in that area.
As I said, we try to locate offices where, you know, people are fairly remote in terms of access to the city of Winnipeg. I think the central area has greater access to Winnipeg than does, say, the extreme western side or the northern part of the province.
Mr. Clif Evans: Mr. Chairman, it is just a thought, and I, too, have not had many requests for such a resource to be provided, but that has been a thought and an idea bantered about at some meetings where we have a fairly substantial population base as far as many communities together. Perhaps we, the minister and I, can discuss that at another time and also perhaps discuss it during the rural UMM meetings and see if it is logical to do. So I thank the minister for that.
Mr. Chairperson: Item 13.1. Administration and Finance (c) Brandon Office (1) Salaries and Employee Benefits $167,400--pass; (2) Other Expenditures $53,400--pass.
Item 13.1.(d) Human Resource Management (1) Salaries and Employee Benefits $114,100--pass; (2) Other Expenditures $20,900--pass.
Item 13.1.(e) Financial and Administrative Services (1) Salaries and Employee Benefits $246,800--pass; (2) Other Expenditures $197,500--pass.
Item 13.2. Boards $638,400 (a) Municipal Board (1) Salaries and Employee Benefits $404,100.
Mr. Clif Evans: Mr. Chairman, I have a few questions on the Municipal Board. Can the minister indicate some of the issues that the board has had to deal with in the past year and if there are any difficulties that have come up before the Municipal Board that should be brought forward?
Mr. Derkach: Mr. Chair, the Municipal Board deals with assessment appeals to a large extent, also zoning appeals and those kinds of issues.
In the 1995 year, a total of 477 new appeals were filed, and the Municipal Board in total disposed of 559 appeals including those that were on the backlog list, if you like. A large portion of the backlog is with the city of Winnipeg appeals. They go back to, I guess, prior years, and for one reason or another the appellants have not been prepared to come forward and deal with those. They have been postponed from time to time.
We are trying through the amendments to The Assessment Act to put some, I guess, reasonable limitations on how appeals are handled and how they are allowed, because at the present time just anybody can appeal anyone else's property, and that creates a lot of unnecessary work for Boards of Revision and even the Municipal Board.
But, by and large, we believe the Municipal Board has functioned well. They are constantly trying to reduce the backlog. I think, as of 1996, the backlog in rural Manitoba, and this is as of April, was 160, so I guess that is not all that bad, but we would like to see that even less. In the city of Winnipeg there were 395 appeals outstanding as of April 18, and they go back to 1993 and prior to that, as well.
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Mr. Clif Evans: Please correct me here if I am wrong. The full-time chairman has been in place now for a year?
Mr. Derkach: Yes, Mr. Chair, the present chairperson of the board is Mr. Bob Smellie, and he has been in place now for about a year, I believe.
Mr. Clif Evans: The board, seeing that you have 25 members of the board itself, they are from all over Manitoba. The chair is the one that basically goes to all the different areas that have to be heard for Municipal Board issues, and the other members come from the areas surrounding where the meetings might be. Is that how it works?
Mr. Derkach: Mr. Chairman, the role of the chair of the Municipal Board is to organize the work and the Municipal Board hearings. He selects the panels that will hear issues. In normal hearings there are three panellists who will listen to the hearings. The panel will not necessarily be chaired by the chairman of the Municipal Board. It may be chaired by someone who has been designated as a chair of a panel.
We also have a vice-chair who is Mr. Don Pratt from Brandon. As a matter of fact, he was the acting chair when we were doing the search for a new chairperson. So, basically, the issues are dealt with by panels who are selected from the list of Municipal Board appointees. The panels then sit and hear the cases and make their judgments, but it is not the same panel for each case. We try to utilize the appointees from all over the province. Sometimes it is difficult when you have long distances for them to travel. So we try to utilize people that do not have so much travelling to do, but that is all handled by the chair. It is not something that my deputy or I get involved in.
Mr. Clif Evans: Does the board sit, if you call it that, as per requests of number of cases that may be brought, or is it regular scheduled sittings of the board in certain areas to address the situations or issues in those areas?
(Mr. Jack Penner, Acting Chairperson, in the chair)
Mr. Derkach: The panels are set up throughout the month, and I had an opportunity to discuss with the chair of the board their schedule for the month. There is a hearing scheduled almost every day of the month, at some point, in the province or somewhere in the province.
The role of the staff of the Municipal Board is to ensure that there is a staff present at these panels, that the minutes are recorded, that the panel or the hearing has been set up properly, and notification is given to people who want to make representation.
So it is a quasi-judicial kind of process that takes place. Some of their cases are appealed to them directly. Others come from the minister's office, where someone has perhaps objected to a by-law or a zoning amendment, and instead of the minister getting involved in the decision, that is then forwarded to the Municipal Board, and they dispose of the case.
The Acting Chairperson (Mr. Penner): Item 13.2. Boards (a) Municipal Board (1) Salaries and Employee Benefits $404,100--pass; (2) Other Expenditures $193,300--pass.
13.2.(b) Surface Rights Board (1) Salaries and Employee Benefits.
Mr. Clif Evans: I stop at this line, seeing that there is proposed legislation that has been presented. I also notice that there are no staff members as such involved with this board. So, basically, the Rural Development department just provides financial resource for the board members of the Surface Rights Board to deal with issues between oil companies, landowners or occupants.
How often does this board have to meet, and, specifically, besides adjudicating problems, what else would this board be responsible for?
Mr. Derkach: Mr. Chair, this board's responsibility is to deal with issues between landowners and oil companies. When the oil patch was not active, the board did not have to deal with many cases, and the board sits only when there are cases that have to be dealt with.
There is staff provided for the board through the Department of Rural Development. Mr. Bill Hildebrand performs the duties of secretary to the board, and his staff here is in the Local Government Support Services, but the board does have a responsibility to settle issues between landowners and oil companies.
They also bring recommendations to the minister with regard to changes that should take place in The Surface Rights Act, and that is how we have arrived at the amendment that is before the House at the present time. The other thing that they do is keep informed as to what is happening in other jurisdictions, because we are trying to bring in as much consistency as we possibly can throughout the three prairie provinces, if you like, with respect to how we deal with issues between landowners and oil companies so that if an oil company comes to Manitoba from Alberta, for that matter, they understand the process because we are trying to make the processes as similar as possible between the jurisdictions.
Additionally, I might say that they have provincial meetings, and our board does participate in those.
The Acting Chairperson (Mr. Penner): 13.2.(b) Surface Rights Board (1) Salaries and Employee Benefits $25,600--pass; (2) Other Expenditures $15,400--pass.
Resolution 13.2: RESOLVED that there be granted to Her Majesty a sum not exceeding $638,400, Rural Development, Boards, for the fiscal year ending the 31st day of March, 1997.
Item 13.3. Corporate Planning and Business Development (a) Salaries and Employee Benefits $652,200--pass; (b) Other Expenditures $81,200--pass.
Resolution 13.3: RESOLVED that there be granted to Her Majesty a sum not exceeding $733,400 for Rural Development, Corporate Planning and Business Development, for the fiscal year ending the 31st day of March, 1997.
Mr. Derkach: I thought it might be appropriate to introduce Mr. Ed. Sawatzky who is in the provincial planning department. He is the co-ordinator in the provincial planning department. He is the gentleman who deals with some of the complex planning issues that arise from time to time throughout the province, and a good man he is, absolutely.
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Mr. Clif Evans: Mr. Chairman, I wonder if the minister and the committee would give me leave to request that we deal--because there are certain items in 13.4 and 13.5 that I would like to discuss with the minister, but I would like to go to 13.6, if he would give us leave to deal with item 13.6. That is Rural Economic Programs.
Mr. Derkach: If we are going to deal with that section, as long as we deal with it and pass it, so that we are not dealing with it now and then coming back to it.
Mr. Clif Evans: Yes, Mr. Chair, I would appreciate that and will concur that if we are going to jump to 13.6, deal with it, we will accordingly pass it after we have dealt with it instead of going back and forth.
The Acting Chairperson (Mr. Penner): Is there agreement of the committee? [agreed]
We will proceed then to item 13.6 Rural Economic Programs (a) Grow Bonds Program (1) Salaries and Employee Benefits.
Mr. Clif Evans: Mr. Chairman, as indicated here, the Grow Bonds program was established in 1991, and the minister had indicated in his earlier address that there are now 19 Grow Bond issues in place, and they have created upwards of 450 jobs.
Now, we also know that last year there were some changes made to the act. Some amendments were made to the act, Grow Bonds issues. Can the minister indicate to me--he said that there were 19 with four being put in place from '95-96.
Are there any applications for Grow Bonds issues that are in the works right now, and what are they?
Mr. Derkach: Mr. Chair, I cannot give you the names of the companies. I think it would be premature for us to divulge the names of the companies which are looking at Grow Bonds at this time, but I can tell you, there are about 11 or 12 companies, along with their communities, who are looking at Grow Bond projects at this time.
They are what I would call active files at this time, and they are at various stages. Some are more advanced than others. Others are doing their financial plans. Others have completed their business plans. So there are various stages that these projects are in, but there are 11 or 12 that are active and will be coming forward at some point in time.
(Mr. Chairperson in the Chair)
Mr. Clif Evans: Can the minister take us through the steps that ABC company has to take for a Grow Bond issue, and where lies the responsibility of approving the final issue, and what are the steps that ABC company has to go through to get a Grow Bond issue?
Mr. Derkach: Mr. Chair, it is not as complex as one would sometimes believe, because, first of all, there has to be a need by a company for funding a particular project. The company then applies to one of our local Grow Bond officers by first of all exploring the possibility of that company fitting into a Grow Bonds program.
We have certain criteria that have been set down for a company to participate in a Grow Bonds program, and then there are certain conditions that have to be met if a company is going to, in fact, participate. Those involve such things as doing the appropriate business plan. It probably begins with a feasibility study, then moves on to a financial and a business plan, and then, of course, we have to establish a local Grow Bond committee which takes the responsibility of ensuring that they are the drivers of the Grow Bonds program rather than the department taking the lead in it, because these are, after all, supposed to be community-based and community-speared, if you like, activities.
After the Grow Bond corporation is formed and the financial plan is in place, then approval is sought for a Grow Bond. Depending on what size it might be, it will always come before government for approval. When that approval has been given, the company then can proceed with selling their Grow Bond. During that period of time, certain activities will take place. Not everything is on hold until such time that the Grow Bond is given approval, because if the Grow Bond is denied, it is well known that the company will have to seek its funding elsewhere, and that is always made known at the very beginning.
So a company can start proceeding with construction on the assumption that they are going to get the Grow Bond. They have to know that if the Grow Bond is denied, then they are going to have to seek funding elsewhere, but we work with them as much as possible. We try to involve the communities as much as possible, remembering that this is a new program and that communities are not necessarily astute in terms of how they are supposed to respond.
A lot of the people who are on the Grow Bond committees are there because they have a genuine interest in their community. They are not necessarily financial wizards who come to the table because of their financial skills. They are there because of their genuine interest in the community and wanting to see their community grow.
Mr. Clif Evans: Mr. Chairman, how many Grow Bond issues, since the program has been established, how many have failed?
Mr. Derkach: We have one company that has failed since the program began, and I think that happened last year. There was a company that was from Morris, Manitoba. That company--well, I guess we could name it. It was Mass Technologies from Morris. A variety of reasons why the company went down. We worked very hard to try and save the company. There were times when there were people who were interested in taking over the company who came forward. However, there have to be two willing partners if you are going to have an agreement sometimes, and that just was not possible, and in the end the company did go down.
Mr. Clif Evans: Mr. Chairman, are prospectuses for the Grow Bond issues that companies put forward, are they public knowledge? Can they be obtained by the general public?
Mr. Derkach: Well, before anybody would invest in a company, they would want to know what this company is all about, so, therefore, those kinds of documents have to be made available to ensure that if you, for example, want to invest $10,000 in this company, you will want to know certain things about it. You will want to know how much equity, perhaps, is present in the company, and, you know, the stability and the future outlook, the markets and that sort of thing. Those are all made available as much as possible to the people who are investing through the Grow Bond corporation.
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Mr. Clif Evans: Mr. Chairman, they are made available to those who may want to invest. They are also made available to the minister, of course?
Mr. Derkach: Absolutely. I should note that staff from my department work in conjunction with staff from the Department of I, T and T in their financial management division. Instead of duplicating that kind of service in our department, we work with the staff in I, T and T to do the due diligence. So those documents are all made available to us.
Mr. Clif Evans: Then, at request, the prospectus would be made available on any of the companies that have Grow Bond issues from the minister's department directly to myself, if I request it?
Mr. Derkach: My understanding is that if, in fact, an individual requests that kind of information through the Grow Bond corporation--they do not request it through my office. That would have to go through the Grow Bond corporation in that local community to get that kind of information.
Mr. Tim Sale (Crescentwood): Maybe just to finish that line of questioning up, it seems to me it cannot be both ways. Either it is public or it is not public, and if they are public documents, then, presumably, one does not have to apply for them. They are simply available. Prospectuses that have been issued by the Manitoba Securities Commission or by any company, once they are public, they are public.
Mr. Derkach: Mr. Chairman, they very much are a public document, but practice has been that those kinds of documents have been available through the local bond corporations, rather than people writing to me to get that kind of information.
Mr. Sale: Mr. Chairperson, the Manitoba Securities Commission rules are very clear in this regard, that once a prospectus is public, it is available from a securities commission. There is a file in the securities commission that you can go and examine. Is the same true of the Grow Bonds office, that there is a file on whatever company, company A that has received a Grow Bond? Can a member of the public go to the office and say, please, I would like to see the prospectus for a company and be shown it, and if he wishes, or she wishes, be given a copy?
Mr. Derkach: I believe that is the case, Mr. Chairman. I have never checked myself with the Securities Commission, but I would think that is the case.
Mr. Sale: I was asking about the Grow Bonds office, Mr. Chairperson. Would, for example, if we asked for a copy of the prospectus of Crocus Foods in Portage la Prairie, could we receive that prospectus without any delay, and presumably in the same way we would if we walked into the Securities Commission office and asked to get a copy of the prospectus?
Mr. Derkach: Well, Mr. Chairman, because they are public documents, if you chose to go through the Grow Bond office, absolutely.
Mr. Sale: I thank the minister for that response. I am simply trying to clarify his earlier response in which he said that the prospectus would be available through the Grow Bonds corporation for, say in this case, Crocus Foods. Now the minister is saying that it would be--
Mr. Chairperson: The honourable Minister of Rural Development.
Mr. Sale: I am sorry, I still have the floor, I believe.
Mr. Derkach: Just for clarification, no, but--
Mr. Chairperson: Order, please. Does the honourable member for Crescentwood wish a clarification on your remark to the committee?
Mr. Sale: Thank you Mr. Chairperson. I would be glad to have a clarification.
Mr. Derkach: Mr. Chairman, when I said that those are available through the Grow Bond corporations, and I said that because most of the time that kind of information is desired by people from the community who want to invest in the issue, and because they are from the community it makes sense that that information would be available at the community level, rather than going to the Grow Bond office. But if somebody outside the area, for example, the member for Crescentwood who may wish to examine those documents, would go to the Grow Bond office, we would make them available because they are public documents.
Mr. Sale: I appreciate the clarification. I want to ask the minister whether there has been, or have been any changes or--well, let me use the term changes--in the procedures of issuing or supervising Grow Bonds and Grow Bond corporations as a result of the difficulties encountered by Woodstone Foods, now Woodstone technologies?
Mr. Derkach: Mr. Chairman, yes, to the member for Crescentwood, this is a relatively new program in Manitoba, and so there have been some changes since the beginning of the program. Last year, my department asked for the Provincial Auditor to do an audit of our program, just to ensure that our processes were correct, and if there were any deficiencies that we, in fact, knew what they were and could address them. The Provincial Auditor did respond with some recommendations. Those recommendations are currently being implemented to try and improve, if you like, the processes so that they are more effective and efficient, and so indeed all of the information is available, and I guess, in the future, there will be other changes that will be necessary as we go along.
The member referenced Woodstone Foods. Department staff have been working very, very hard with the company to try and restructure it. We have been working with financial institutions to try and restructure the company so that it does have a future. There are 35 people employed in the company from the Portage area. Those are important incomes for those people, and I think we acknowledged right from the very beginning when it became known that the company had financial difficulties that there was a restructuring that was required.
I can tell you that staff have worked extremely diligently to find every possible opportunity to allow this company to survive. I might also say that financial institutions have been very co-operative in trying to also find a way to restructure this company, because they see this company as being a very viable operation. They see it as filling a need in the marketplace, and the product that is being produced is one that there is a demand for.
Mr. Sale: I appreciate the background the minister gave, but he did not answer the question I asked, which is, as a result of difficulties encountered with the Grow Bond corporation for Woodstone, which I am prepared to detail if the minister wishes, have there been any changes in the way the Grow Bond office supervises the remaining Grow Bonds?
Have there been any tightening up of procedures? Have there been any changes to the requirement for annual meetings and the sharing of information with the Grow Bond holders? Has there been any increased supervision or more frequent review of financial statements of Grow Bond companies? Have any procedures changed?
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Mr. Derkach: Mr. Chairman, as a result of the Provincial Auditor's recommendations, we have implemented certain changes with regard to procedure on the administration of Grow Bonds and that sort of thing. It did not come from the experience at Woodstone, though. The member says, because of the problems at Woodstone. We know that there are a variety of issues at Woodstone that have to be addressed, but Woodstone is just one project. There are 19 in total that we are dealing with, but the processes that we are changing are as a result of the Provincial Auditor's recommendations that have been made to the department.
Mr. Sale: Could the minister tell the committee the current legal status of Woodstone, the numbers of people that have been called back to work and are actually working in the plant, and whether the plant is producing product of the kind that was envisaged?
Mr. Derkach: Mr. Chairman, the company started operation again on April 29, and has rehired 29 people in total. Twenty-one of those are in Portage la Prairie and the other eight are in the city of Winnipeg here and since that time have been working on restructuring their internal organization so that they can achieve success in terms of long-term viability and operation.
Mr. Sale: Can the minister confirm that the engineer who was hired to attempt to make the plant function effectively has quit?
Mr. Derkach: Mr. Chairman, we know there is a new engineer that has been brought on with Woodstone, but we are not aware of somebody quitting recently, so that is something I am not aware of.
Mr. Sale: Mr. Chairperson, I think that an engineer from a Saskatchewan firm was brought on and apparently has indicated that he no longer wishes to be associated with the company within the last three or four days. The minister may wish to check that out.
I want to ask what level of due diligence is done on bonds, given the fact that there is quite an amazing contradiction in the prospectus for Woodstone, which shows specifically that there was an inventory on January 31, 1993, of 2.4 million, and December 31, one month earlier, there was an inventory of 3.4 million. They certainly did not sell $1 million worth of product in a month.
The two statements, one from the Auditor and one from the company, unaudited, have major differences in them, and it has always puzzled me how the company could include two such different statements in the prospectus without some kind of note or some kind of at least questioning on the part of staff as to whether these two statements reflected the same reality.
Mr. Derkach: Mr. Chair, I cannot get into the specific details of a particular company and answer questions in detail. However, let me say in the general sense, that the due diligence, which the question was about, that is done on each of these projects is done not simply by staff within my department, but our Grow Bond staff in addition to people from the departments of Industry, Trade and Tourism, and Finance, all participate in the due-diligence process.
That process is a fairly comprehensive one, and once we receive the information from our staff that, in fact, all of the due diligence has been done, and there are certain criteria that have to be followed, we will either proceed with or reject the project. Now, in the case of Woodstone we have referred the case of Woodstone to the Auditor to look at. The response from the Auditor is not in, and until such time that that is in I will ask the member to be patient, and we will certainly provide that as soon as the Auditor's report is in.
Mr. Sale: Mr. Chairperson, I understand the minister's concern and I respect it. The point of the question is not being unhappy with the company. I support the notion that we have Grow Bonds. I support the program. I think it is a useful program, and I think that in the main it has gone quite well. What I am concerned about is that my understanding is that there is really only one senior person in the Grow Bonds office, that some of the criticisms that were made in the Auditor's report and I have had passed to me by individual people who are concerned about their application is that the staff is overloaded, that they do not have the support they need to get the job done in a timely fashion. That was certainly one of the issues raised by the Auditor, and it has been raised with me by companies.
I think we have an example here in Woodstone of a situation where a fairly complex company with a lot of international linkages required a level of due diligence and scrutiny which perhaps the staff were not able to provide, not because they are incompetent or because they were not willing or for any--no reflection on the staff, but a reflection on the resources of a program that the minister himself has indicated is a growing program and is a relatively new program in the sense that it is still on a learning curve. I am glad it is still on a learning curve. That is a good thing; it is not a bad thing. But I want to ask the minister if he could reflect on the adequacy of the staff and resources assigned to this program to do the kind of due diligence that is necessary in a complex situation.
I would just add one more item to this for the minister's consideration, that it appears it was well known even as long as a year and a half ago that this company had a long list of creditors, including a company such as Canada Messenger, which is holding some 750,000 pounds which the Woodstone company values at more than $1 a pound but is, in fact, landfill for all intents and purposes. That company was holding that product against unpaid warehousing charges. There were unpaid bills in the town of Portage la Prairie at the time of the issue of the Grow Bond. There were products frozen and held for some significant period of time at Versacold in Winnipeg.
The product for which the company really applied, because it was such a leading-edge product, Lighten Up--it is a fat replacer--in fact, it has had almost no market at all in spite of what is stated in the Grow Bond. There have been virtually no sales of Lighten Up at all. There may, in fact, have been a few samples sold, but, at best, perhaps $10,000 to $20,000 of Lighten Up sales over the whole period of time, and a fair amount of that product, Mr. Chairperson, has rotted and is essentially landfill, as well.
Now, these are issues which various people had awareness of at the time or very shortly after the time of the approval of the Grow Bond. The information was available, but it was ignored at the time. Again, I am not finding fault with staff, but I think you have a program which is very complex, which is understaffed and which is not providing or may not be able to provide the kind of supervision and due diligence.
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I just note in closing on the Woodstone case, I do not know whether this is typical, but the annual meeting of the Grow Bond corporation for Woodstone did not provide audited annual statements to bondholders. Bondholders received their interest cheque with a letter from Mr. Mullen, president or general manager of the company, and no financial operating information whatsoever about that company, simply a very positive letter from its office manager saying everything is wonderful, but no data at all.
I do not know whether that is typical of other Grow Bonds that have been issued or not. Perhaps Woodstone was the aberration, that information was not provided to all the bondholders in a timely manner.
So I want to conclude my questions just by asking the minister if he could inquire of his staff how many Grow Bond companies, Grow Bond corporations, are in arrears by any amount of time, whether it is a week or a month or more than a month in payment of interest on their bonds.
Mr. Derkach: Mr. Chair, the member has made a number of statements that one could take issue with, but I, first of all, would like to address the question of adequacy of due diligence on the part of this department and on the part of government, and I simply reject what the member says with regard to the due diligence process that is done.
As I indicated to the member, not only does the staff from my department do the due diligence, but, indeed, we participate co-operatively with staff in other departments who have financial management resources to do that. In cases where we have to bring outside consultants in to help us in certain cases, we have the availability to be able to do that, as well.
If I could go back to what the Auditor says in his conclusions after, and it was on this department's request that the Provincial Auditor was brought in. It was not as though we were sitting back and waiting for someone to find something. We wanted to make sure that as the program was growing, that, indeed, we were following appropriate processes in the program, and the first concluding sentence that the Auditor says, based on our findings we conclude that the approval process is satisfactory, but the Provincial Auditor does note that there were some information types of issues that had to be addressed, and those are being addressed. We have brought on staff to deal with those issues.
When you talk about a specific case, Grow Bonds is not a bank program. Anybody who can walk into a bank and borrow money to start up a program means that that company has a lot of assets to be able to borrow money, so the companies that we participate with are companies that have a bright future, we think, and have potential but, yes, some of them will go down and some of them will be failures. I think it is unfair to say there are shortcomings in the way staff approach this. It is not done by me as a minister or by any of my colleagues in terms of the due diligence that is done, but we try to follow every process possible to ensure that the information is, first of all, available to us before our decision is made and we go into a decision having a fair understanding that there is potential in this company, that if, in fact, there are some shortcomings that those are addressed.
At the time of the approval of the Grow Bond for Portage, I might say to the member that not only were we comfortable that this company had a future and there was potential with the product, but everyone who was associated with the Grow Bond corporation felt the same way, as well, because there was not a negative, if you like, attitude towards Woodstone at that time when that Grow Bond was approved. The corporation itself was very supportive.
Now, the people who invested in the Grow Bond were people who simply were looking for an opportunity to invest and to receive a dividend on their money, and I think so far no money has been lost in that regard. Everyone who invested in the company also understood that if the company did not survive, their principal would be guaranteed, but the interest would be lost. To date, that has not happened in the case of Woodstone, and, as a matter of fact, it is operating again. Are we over the hump? Not at all. There are still many challenges out there in front of us with regard to Woodstone, and I have to tell you that staff like the director of our Grow Bonds Program, Mr. Paul Sweatman, who is at the table, have been working very, very hard to find every possible way to allow that company to succeed.
When you talk about the product Lighten Up, and its potential in the marketplace, I am no expert, but I am told, and this is a discussion that occurred with the financial institutions, even they are comfortable that there is potential and there is market availability for this product.
So, yes, there may be problems out there. I would not go so far as to say that Lighten Up is a landfill product. There are products out there that are landfill products. They have sold some inventory to bring up their requirements to start operating again, so there must be some value in the products they are selling, and I am no expert in that regard.
But we will do everything we can to allow us to make sure that our processes are right. That is why we have brought in the Provincial Auditor at this time to ensure that we do follow appropriate processes and that we give every opportunity for a company that is having difficulty to survive and to have a future, regardless of who operates that company.
Mr. Sale: Mr. Chairperson, the minister answered in part. He did not answer the last part which was the question of how many Grow Bond recipient companies are currently in arrears.
Mr. Derkach: We have at the present time three Grow Bond projects that are in arrears in the province, and once again the staff of the department are working with these companies to make sure they are brought up to current status with regard to their interest payments on the bonds.
Mr. Sale: Crocus, Woodstone and what is the other one?
Mr. Derkach: Gilbert International is in arrears at this time.
Mr. Clif Evans: Mr. Chairman, I would like to continue with the Grow Bond line. The minister had indicated that Crocus is also in arrears, Crocus Foods out of Portage, and can the minister indicate what steps the department is taking to deal with the issue at present?
To follow up on the question, the minister had indicated that Crocus Foods was also one that was in arrears and some sort of difficulty. What is the minister's department doing with the Crocus Foods issue?
Mr. Derkach: Well, Mr. Chairman, I want to take a bit of a broader perspective in terms of looking at how our Grow Bond projects are functioning. You know that each one of these projects is one that has a potential. The important aspects of these programs, or projects are that they employ people, and in the case of Crocus, we know that the number of people that are employed there, about 25 people employed, recently their activity has increased, their business activity has increased and they have hired an additional three people onto staff to bring it up to 25.
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Now that means that the company is in a growth mode. Does it mean that the company is instantly profitable? I think that requires some time, and as cash flows, I guess, go up and down, the company experiences difficulties from time to time, and for that reason I guess sometimes interest payments are not met on time, at least initially, and we work with the company to ensure that those interest payments are addressed and that they are met.
With Crocus Foods, it is not a case of a company not being viable or having a future. As a matter of fact, they have some very, very attractive contracts, especially when you look at the contract with McDonald's and I believe it is with Mr. Sub, Mr. Submarine?
An Honourable Member: Subway.
Mr. Derkach: Subway, I am sorry, and there are other potential customers that are being developed right now. So the company does have a future, and there is potential there, but we have to be patient and work with them to get them over these difficult periods of time.
If we come down hard on these companies and try to close them down the minute that they go into arrears with something like an interest payment on a Grow Bond, I can tell you that we will have companies falling all over the place, because it is not just businesses, and the member has been in business and understands that you have to go and live through these difficult periods of time, and we have to hold the hands of these business people as they go through these difficult times and look towards the brighter future, and they do have a bright future. There is no question.
In the case of Crocus Foods, there is a future there. There is no question about that. It is just a matter of living through this period of time as they approach profitability, and they will be very profitable in the next month or two. So those kinds of issues will be behind them.
But we are very watchful of these companies, and I guess I could at the same time talk about a company the member would be very familiar with, and that is Gilbert International which that company too has gone through a period of trials and tribulations, if you like, but today there are some 38 people employed at that company who are finding a future in the community. The company is growing.
Is it out of the woods? No, I would say that there are still issues that have to be addressed, and we will work with that company again, bringing in partners when necessary, working out challenges and finding the opportunities where they exist.
So there are three companies that are in arrears today, but I think that those companies do have a future if we are patient and work with them. If, in the end, any one of them should happen to become nonviable, then we would have to take the appropriate steps to ensure that the bondholders are paid out, and that is to protect the integrity of the program and to ensure that the company is closed down in a respectable way, but we are not there to try and close down anybody or run them out of business at this time.
Mr. Clif Evans: Staying with Crocus Foods, it states in the Daily Graphic of Friday, May 17, 1996, a motion was passed, and a letter was sent. Basically it says that legal action is imminent by one or more of the parties, and I would assume that would be parties that are not being paid for whatever reason in some way, and yet the minister indicates that within a couple of months, Crocus Foods will be viable. We do not want to see any company, whether it be through the Grow Bond issue or through any other program or through the financial institutions, but I wonder out loud, and being in business, do not some of these businesses that come to the government for a Grow Bond issue and to the public, are they not aware what kind of business plan do they have that they have to be put in a position that they are now?
I will get to Gilbert down the line here when I deal with Crocus, and basically then we are also talking that there is supposed to be a meeting, bondholders have been invited to attend the corporation's annual meeting June 19. I am asking from what I am reading and also from what I have heard in the past two or three days that there is concern in Portage among the bondholders. What is the minister's response to that, and how are we going to get this settled?
Mr. Derkach: Well, first of all, contrary to the letter that was sent by Mr. Munro, I do not know of any imminent legal action that is pending, and I would have to say that in the case of Crocus Foods the bond corporation met and for whatever reason decided to send the letter. Again here is a corporation that was very supportive of the project, and then for whatever reason decided that they would withdraw their support. I think it was premature. I think that the bond corporation did not seek out information on Crocus Foods that would allow them to make a more informed judgment and they responded in a knee-jerk mode, I believe.
We have since met with the bond corporation and we have indicated to them the status of the project. We have indicated to them the potential that this project has. We have told them about the increased number of jobs that have been put in place, and some of this information the bond corporation should have sought before they sent their letter out. However, the letter has gone out.
The company is not in a situation where it is going to close its doors tomorrow. However, these kinds of rumours and these kinds of actions that are taken by individuals do not do the company any good either, in terms of allowing it to continue and to expand its marketplace and continue serving its clients because the contracts that they have are solid, but they are contracts that have to be filled on a daily basis. When you get news like this--and not all the information in the article is factual, so therefore we have to be careful about what we take from that kind of reporting, not that it is necessarily intended to mislead, but I do believe there are some circumstances there that are not spelled out appropriately or fully in the article.
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Mr. Clif Evans: The flag of concern has been raised, and obviously it is going to be a concern to the 128 bondholders who have invested, also a concern I feel should be with the department because you are guaranteeing that loan, that issue. So if there is a problem, basically why has it not been nipped in the bud? As the minister is saying that everything is okay with it, why has the flag gone up then?
Mr. Derkach: Mr. Chairman, I want to tell the member for Interlake that when we have a problem or a challenge with a Grow Bond project, we do not run to the media and begin to ask media to come and look at this problem because there has been a red flag raised. That is not the way we deal with this situation. The annual meeting for this particular corporation is called, and at that time the bondholders will be informed fully as to the status and the potential and the circumstances surrounding that particular project.
So someone has decided to make that a public issue in Portage, and it finds its way into the newspaper, and it does raise fears in the people who have invested in the company. That is not the way it should be because if we have a sense that this company is going to be going down, we will certainly take appropriate steps to inform the bondholders and the bond corporation.
The bond corporation has a responsibility here, as well, and we will take the necessary steps to inform people as to the status of it, and it is done through either a quarterly meeting or an annual meeting but, in the interim, staff from the department are certainly aware and are working with that company to get over some of those hurdles. It is the case with Crocus, and it was the case with Gilbert where staff from the department have worked almost endlessly with them to bring in other players, to bring in other partners, to ensure that the project has a hope of success.
We should not look at these three projects or the one project that has failed as examples of how the Grow Bonds program is working because, on the other hand, we have some very successful projects out there that are employing people, that are creating wealth in the communities, creating activity in the province, that are very successful. So as the program goes along, we will always have issues that have to be dealt with, but there will always be good success stories, as well. So we have to deal with both.
Mr. Clif Evans: Mr. Chairman, I appreciate what the minister is saying, and I appreciate the position, certainly, that staff within a department and the department itself are put when something such as this surfaces. I know it creates uneasiness. It creates a sense of fear amongst not only, well, the community but the bondholders, and it is unfortunate. I say that too.
It is unfortunate that perhaps not all the right information has come out, perhaps. I say that perhaps, perhaps it is pertinent information that is in the article, and perhaps more will come out at the annual meeting, but it just shows me that perhaps there should be something more available when Grow Bond issues are issued and okayed to deal with the potential of a Crocus or of a Woodstone or of a Gilbert International.
Now, Gilbert International received its issue two years ago, two years in July, and up until just lately there was absolutely virtually no production out of that plant, creating a sense that the community has put a $700,000 Grow Bond issue into that and basically I think not being let down by the department or by the government, of course not, because the government is not the one that is running the plant or operating the plant but sort of leaving a sense of insecurity amongst the people in the community because they are not sure what is going on. Their investment is sitting for two years. They finally had an opportunity to use a facility that has been sitting there for many years, a wonderful facility, good intentions. What goes wrong?
Mr. Derkach: Each project that we have referenced in terms of the difficulties has its own set of circumstances and difficulties that arise surrounding the project.
In the case of Gilbert, a contract was lost because the company moved from a building that they were--I guess they were not evicted from it, but the building was being used for other purposes, so they had to move. In moving they had to set up their equipment and get started up again. In the interim, they did lose contracts which had to be found again.
So the start-up of a company is not immediate. There will be a period of time, and in this particular case it was fairly lengthy, and I have to give credit to the staff in the Grow Bond office who worked just tirelessly to bring other players to the table to ensure that the company would succeed and would start up properly to get over as many humps as possible.
So whether it is Crocus Foods or Gilbert International, those kinds of situations will always occur, and you do not just have to look at Grow Bond projects. You can go outside the Grow Bonds program into businesses that start up without Grow Bonds, and they go through similar kinds of situations in some circumstances. Our job is to make sure that we give them every possible opportunity to succeed, at the same time ensuring that the public in that community remains supportive of the project because it is there where the jobs are being created.
It is not for the Department of Rural Development. It is within that community. So we try to keep the community on side and as positive as possible and as patient as possible to allow that project to succeed. Sometimes reports in newspapers are not necessarily misleading, but they do not present the full situation, and it does cause some nervousness in the community and in the investors, but in a general sense I would say that my telephone has not been ringing off the wall with people who are concerned about their investments. They know their investment is guaranteed, the principal of their investment, is guaranteed by the province. They look at the benefits that the project has for their community. I have spoken to people in Portage, community leaders in Portage, about that project, both projects as a matter of fact, and they are concerned because they think this is a--they like their jobs that are associated with the project in their community. They desperately want to see this project succeed, so they are being as patient as possible, but sometimes it is inaccurate stories that get out that create the nervousness.
Now, that does not say that some of these will go down. They may, in fact, and we will be there to ensure that the principal of the investor is guaranteed as we have promised, with the establishment of the program.
Mr. Clif Evans: Still with Gilbert, without knowing the full details about Gilbert International, and again from what I have heard and bits and pieces of what I have heard, what I have seen, and if it was the minister's department, the Grow Bond staff, who did work as he has said to maintain that issue by bringing in new partners, then I compliment the department and the staff for that.
I can tell the minister that I was getting rather worried and a little antsy about Gilbert International, going by there for the last two years, over two years, in my trips through Arborg, seeing no cars there, seeing nothing being done, hearing all kinds of rumours and, yes, of course, bondholders, the majority, were not concerned in a small way because the money is guaranteed back to them. It is not a problem. I think the idea was that they were anticipating, and perhaps someone did not do his homework before applying to the GrowBond issue to make sure that the development or the production did not just step into line as they were moving, if the minister can appreciate what I am saying, understand what I am saying.
Was there enough preparedness done by Gilbert International going from one place to the other? So that is part of the business plan, but can the minister indicate how much of Gilbert International does Mr. Gilbert now have?
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Mr. Derkach: Mr. Chairman, with every bond project, not just Gilbert, we try to ensure that first of all the marketing plan is there and is a solid one. We cannot sometimes ensure that a market is not going to be lost, and in this case, because of startup difficulties--they had to manufacture some pieces of equipment, as I understand it--there was a market that was lost, so there had to be some work done to recapture or to find a new market for the product. That has happened, but it has taken longer than we would like, but in the interim I think staff from my department have kept the people in the community informed. The community in Arborg have been extremely supportive. I have to say that the council over there have been just extraordinarily patient and positive in working with this project to give it every opportunity to succeed.
(Mr. Frank Pitura, Acting Chairperson, in the Chair)
I do not know what percentage of the company is still owned by Mr. Gilbert himself. That is not something that I get involved in, and I do not know whether that is an issue that we should be even debating right at this table, but let me say that other partners have been brought in to the company who have an interest in this kind of project and I think who will allow it to be successful.
Mr. Clif Evans: Of course, I am sure the minister is aware that Manitoba Pool has come into play with Gilbert International. The minister made a statement that perhaps it is not necessary to really know who are the players within the business that is applying for a GrowBond issuance. Well then, the minister can correct me that there should be knowledge of who the players are, totally. Am I not correct on that?
Mr. Derkach: Mr. Chair, of course. Before a bond is approved we know exactly who the players are and who the investors are. However, I said that how much of the company is owned by Mr. Gilbert is not necessarily something that we need to be debating at this table. That was the question, how much Mr. Gilbert owned of the company, and my response was with regard to that. But in terms of knowing who the proponents are, who the players are, the background on them, the management, all of that is known by the professionals in the department who work with them on a daily basis.
Mr. Clif Evans: The minister has indicated 11 or 12 other companies have applied lately, and they are through different stages. I want to say, and I do not want to belabour this portion of the Estimates, but I can certainly tell the minister that I encourage the activity of the Grow Bond issues very much so.
Again, as I said in my earlier statement, and I know it is up to companies to come and make their applications. I understand it is not up to the minister, nor his staff nor the department, to go marketing the Grow Bond issue out to Manitobans. It is something that is available. I am certainly hoping that more companies take advantage of the Grow Bond issues and certainly do whatever is necessary to be able to expand or implement new business and get the support of the local people. I feel that the Grow Bond issue, and perhaps the REDI program, may be one of the steps that I had indicated earlier that would be needed and be available to keep some of the businesses, small or large, or entrepreneurs, have something available to expand in a rural area and get the support of the people.
Some of the smaller companies that I have talked to and I have encouraged--and I thank the staff for their quick participation when I have brought a matter to them with a small entrepreneur in Riverton. I made this comment to the minister before--from my constituent--that for all the hoops and rings I have to go through to be able to get an issue going, he said, I can get it done myself in less time. I am still going to try and encourage him to try and get involved and get the community involved, but the difficulty sometimes is local people do not want to know what their business is.
When you are going through a Grow Bond issue, where you have to involve the community, it makes it difficult sometimes. I hope that there is something that we can continue further with the Grow Bond and encourage. I will do my part. I know my colleague for Dauphin will encourage all the entrepreneurs and small businesses in his constituency to look into these different programs that are available and keep a--[interjection] That is what I hear. I hope that Gilbert International becomes as successful as the potential that we thought was there initially.
I toured the plant the day that the issue was announced and met with Mr. Gilbert. I was very, at that time, confident, and so now, of course, I am getting my confidence back a bit and pleased to see that the minister's department and staff has done what is possible to keep Gilbert going for the future and for the future of the community of Arborg and its holders.
Mr. Derkach: Just very quickly, Mr. Chairman, I have to say that the marketing side of the Grow Bonds program is extremely important. We have to continue to inform communities about the availability of the Grow Bonds program and what it is about no matter where I go, district meetings at UMM, the larger meetings, the annual meetings of the UMM, chambers of commerce meetings, rotary clubs, all of those that I attend throughout the province. I have to say there still is not enough knowledge about the program. Even though we spent dollars marketing it, we still need to spend more dollars in marketing it so that people are very familiar with it.
I think we have to highlight success stories. Unfortunately, newspapers highlight sometimes the ones that are in difficulty, but we also have to highlight the success stories, as well, and there are lots of them. The member for Dauphin (Mr. Struthers) knows that Westman Plastics from Dauphin to this point in time is a very successful company. They were allowed to be successful because of the availability of the Grow Bonds program. I think the same will be true for Mr. Gilbert at Gilbert International.
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Here are individuals who have put their lifesavings on the line and have tried to get into a business where there is potential, where there is a market for their product, but there are difficulties that arise as the business grows. Our responsibility as a department is to walk in step with the company as they progress from the start-up stage onto the development and onto the marketing and the production side of the process.
We should not fool ourselves that down the road there will be challenges that will be faced by companies. I do not think there is a need for us to raise all kinds of alarms about the program, rather we have to ensure that the appropriate processes are followed. We also have to ensure that we give the companies every bit of support that we possibly can and allow them to succeed and that is what we will do.
As the member knows, I said there are 11 or 12 files that are now active. There are more companies beyond that which have indicated an interest in the Grow Bonds program. There is one in the member's own area, the project involving the extraction of peat. Now, that is also going to be an active candidate for a Grow Bonds program, and we are certainly going to be there working with them to give them every bit of support that we can.
Mr. Clif Evans: The minister, again, took away my next question, but I do want to go on that a bit. I know that that would be also under the REDI program, and correct me if I am wrong. Has the company from Alberta indeed requested assistance and co-operation under the REDI program for a project plan?
Mr. Derkach: The progress on that particular initiative is one that is ongoing. We have looked at the application, I guess, and staff from the department have done their work in terms of looking at the viability of the project and so forth, or at least looking at our approach in terms of funding the project at this level. We are still working with the company and hopefully in the next while, we will be able to have a positive response to their application.
Mr. Clif Evans: That is strictly for the feasibility portion of the program and, of course, of the project.
Mr. Derkach: That is what they applied for.
Mr. Clif Evans: That is what they have applied for. You had indicated earlier that a company such as this would be, as many, eligible for a Grow Bond issue at a time if, in fact, they are going to come in and start with the project itself, which seems to be right now at a bit of a standstill. In just discussing it yesterday with one of my constituents who is on the board, I asked how quickly is the community moving with this and are the companies moving on this. It seems that right now there is a bit of a standstill between the community and two of the other interested parties for coming into the community to begin.
I would at this time, and on that topic, offer the minister and some of his staff, if possible, to come out to Riverton and Arborg to meet with councils, with myself, and discuss the potentials and futures of rural development for our area, an open invitation to him. Then, of course, perhaps do a tour of the site and the area that we are hoping will be soon resourced. So the invitation is there. I say that now to the minister and hopefully he will come out and support, because I have said that the Minister of Rural Development supports this project and certainly will assist myself and the communities in whatever way possible.
Mr. Derkach: Well, I cannot resist, Mr. Chairman. I certainly thank the member for the invitation, but I encourage him to also invite his colleagues, and specifically the member for Crescentwood (Mr. Sale), to the rural part of our province to look at the positive nature and the attitude of Manitobans. The last thing we need is someone recommending that a company be moved into the city of Winnipeg because it is having difficulty in rural Manitoba. I mean, that--
An Honourable Member: And now we are playing politics.
Mr. Derkach: Well, the member says, now we are playing politics. That is not politics. You look at--well, it is politics--but you look at the comments that were made in the newspapers from the member for Crescentwood with regard to his proposal about moving this company from Portage to Winnipeg. What does that do for the 35 people who are employed at that company in Portage?
So, therefore, I guess what we need to do is, yes, I would love to come out and I will, but I also encourage that members of his party also know and get to understand the benefits of these very important jobs in the rural part of our province.
Mr. Clif Evans: Mr. Chairman, I just want to say to the minister that my colleagues--and not my rural colleagues, of course, because they understand the importance of economic development in rural Manitoba, but I can assure you that my urban colleagues also support rural Manitoba and know exactly what is required and what can be done and what the potential is in rural areas. So whatever brought on the debate between the minister and my colleague from Crescentwood, that he will have to deal with on a one-on-one with him. I can assure you that my colleagues know the importance of rural Manitoba and know what is going on in rural Manitoba and what needs to be done and will support that.
Can the minister indicate, under the REDI program, Programs-Operating has received an increase in funding, and Programs-Capital, can he enlighten me with those two expenditures and how the REDI program is doing?
Mr. Derkach: Mr. Chairman, under the REDI program on the capital side, as the member notes, the program has increased from the $3.7 million to the $4.1 million, and basically that is in the Portage la Prairie waste water infrastructure program where we have allocated an additional million dollars to that project as a result of McCain coming into the Portage area and the need for the upgrade of the waste water treatment there.
(Mr. Chairperson in the Chair)
Mr. Clif Evans: It says under Activity Identification: Provides provincial loan guarantees to financial institutions under the Rural Entrepreneur Assistance program. Can the minister enlighten me on that program a bit further?
Mr. Derkach: The REA program is a program that is delivered through financial institutions in the province. It is a loan program, and what our involvement is in the program is that we guarantee up to 80 percent of the loan. The loans are up to a maximum of $100,000 per business. To date, we do not have a wide range of banking institutions participating in the program. The Imperial Bank of Commerce is a participant in the program, and the largest participant is the Manitoba Credit Union system in the province.
We have a number of loans that have been taken out for a variety of businesses. These do not have to be in a value-added or in a manufacturing sector. They can be in any type of business. A lot of these businesses are being taken out by women in rural Manitoba. We have had some failures in some of them, as well. I mean, that is only normal, but our loss ratio is not abnormal. The program, I think, does fill a need in local communities where small businesses have had difficulty in accessing funds from traditional banking institutions.
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Mr. Clif Evans: Mr. Chairman, if I, with support from the minister, ask if we may just have about a two- or three-minute recess, if you do not mind, I have another issue that I would like to deal with with my colleague and get right back to it.
Mr. Chairperson: Is it the will of committee that we take a short recess? [agreed]
The committee recessed at 11:11 a.m.
________
After Recess
The committee resumed at 11:16 a.m.
.Mr. Chairperson: Order, please. Will the Committee of Supply please come to order. We will continue with the Estimates of the Department of Rural Development.
Mr. Clif Evans: Mr. Chairman, the minister had indicated last year in Estimates that the Community Development Corporation program was going to be into play for this year. I have heard concerns about it. In one way, I guess it is a community works program that is there to promote growth of small businesses as indicated here.
The concerns that I have heard--and these are just concerns. The minister certainly does not have to turn around and lash back at me for my comments because these are not necessarily my comments. These are comments that I am bringing to the minister from concerned people, and some of the concerns I heard were basically from the Community Futures people with this program. They felt that perhaps this program was getting in the way with what they were doing.
Now, those are concerns. The minister can explain to me just, do they have concerns? I know it is federal and provincial programs, but those are concerns that were raised with me in some of the areas that I have gone to. I would be interested in seeing the program continue and how it will work. Presently, are there any loans out through this program in the province? How many programs have been established already is what I am trying to ask.
Mr. Derkach: With regard to the concerns that are being expressed to the member for the Interlake by the Community Futures groups or whoever, I cannot speak to that because our mandate as a department is to provide these kinds of delivery services to rural Manitobans. As a province, we have the mandate to deliver these programs for the benefit of the people in our municipalities and our communities.
My experience with the Community Futures people has been more positive than the member indicates. We did a review of our delivery programs, and we asked the participation of the Community Futures organizations, so that we, in fact, would not be duplicating our programs. We had some limited success in their participation, and we have been in contact with them, but what we are finding is, right now in the last year, that they are developing programs which are very much the same as or similar to the ones that have been implemented by the province, whether they are in the Department of I, T and T or the Department of Rural Development. So we are doing what we can to encourage them to work along with us in co-operation, rather than duplicating some of the things that are being done by the provincial departments.
In terms of the community development corporations, this is not a new concept. It was started 25 years ago in the community of Winkler. It was a vehicle for them to raise money through taxation for economic development purposes because that is allowed in The Municipal Act. We have just simply built on that experience that Winkler had, and that is how we have created the Community Works Loan Program. The reason we are using the CDCs is because they are the sort of the legitimate arm that is required in order for a municipality to participate in economic development.
Of the number of CDCs that we have in the province, four were existing prior to October of 1995. Since October 1995 we have incorporated five more. Included in that list are Dauphin, Deloraine, Grandview, the mountain region, Souris, and Glenwood CDC. We have nine more in the process of being finalized: Rossburn, Woodworth, Gilbert Plains, MacDonald, Montcalm, Rivers, Pinawa, Pelly Trail and The Pas.
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So there is activity going on in that area. Communities are raising their funds in various ways. The first new incorporated CDC in the province was in Grandview, and in that case the credit union came forward with their share--that was a community share of the money--for the establishment of the CDC. We are finding that communities are taking up the program, and, by and large, the response has been positive to date on that program.
I am also informed that staff from my department did consult with the Community Futures people during the development of the Community Works program, and it is also my understanding that Community Futures is also jointly promoting the program within the communities that they are functioning in. So there is some work being done in a co-operative fashion between the federal and the provincial programs.
Mr. Clif Evans: Under rural Canadian development projects, and that is under Unconditional Grants, that $5.5 million, is that the return to the municipalities on a per capita and a base payment of VLT funds?
Mr. Derkach: The $5.5 million is the unconditional grant that goes to the rural communities; in addition to that, we top that up by an additional million dollars that is being taken out of the community development projects area and that is for the benefit of the very small municipalities that do not have a village or a town or are not likely to access the REDI program, the feasibility studies program, because they do not have a centre in their municipality.
So to allow them to get some benefit out of the lottery funds that we distribute to municipalities, we have provided an additional million dollars in that regard.
Mr. Clif Evans: Can the minister tell me what this year's formula is for VLT money going back to the communities, the per capita and the base?
Mr. Derkach: First of all, that $5,000 base grant is still there for each community, plus a per capita grant which this year was $12.58.
Mr. Clif Evans: Mr. Chairman, I believe that that $12.58 is up from $11.09 of last year, somewhere around there, $11.10?
Mr. Derkach: Mr. Chairman, it was $11.44 a year ago.
Mr. Chairperson: 13.6.(a) Grow Bonds Program (1) Salaries and Employee Benefits $371,500--pass; (2) Other Expenditures $1,298,000--pass.
13.6.(b) Rural Economic Development Initiatives (1) Salaries and Employee Benefits $274,300--pass; (2) Other Expenditures $102,100--pass; (3) Programs - Operating $7,529,100--pass; (4) Programs - Capital $4,175,000--pass.
13.6.(c) Unconditional Grants - Rural Community Development $5,500,000--pass.
Resolution 13.6: RESOLVED that there be granted to Her Majesty a sum not exceeding $19,250,000 for Rural Development, Rural Economic Programs, for the fiscal year ending the 31st day of March, 1997.
We will now proceed to 13.4. Local Government Services (a) Executive Administration (1) Salaries and Employee Benefits $104,500--pass; (2) Other Expenditures $32,600--pass.
13.4.(b) Assessment (1) Salaries and Employee Benefits $5,550,500--pass.
13.4.(b)(2) Other Expenditures $1,194,800.
Mr. Clif Evans: Mr. Chairman, just a few comments or questions. Can the minister tell me a little bit more about the Manitoba Assessment Computer System, the MACS, and the Board of Revision Assessment Support System, BRASS? Is that new technology, not new technology, new names to it, or is it something I have missed previously? What are the programs?
Mr. Derkach: No, it is not new. The program has been operating for some time. Since I have been Minister of Rural Development, the computer program has been there. It was just in the final phases of implementation when I became minister, I believe, and it is basically the computer program that we run the assessment system on.
Well, programs like that always need upgrading, but when you compare it to what our systems are like in the city, it is quite advanced from what they have currently.
Mr. Clif Evans: Mr. Chair, I would appreciate the minister's acknowledgement that--memory fails me. Could he indicate whether the '97 assessment--is the 1997 assessment based on 1994 year? Is that where we are looking at?
Mr. Derkach: Mr. Chairman, the base year is 1995.
Mr. Clif Evans: Base year?
Mr. Derkach: The reference year, I am sorry, is 1995.
Mr. Clif Evans: Mr. Chair, and the next base year will be?
Mr. Derkach: The rule is, it is the year following the previous reassessment. The next reassessment is 1997. The year following the next reassessment is 1998, so the next reference year will be 1998.
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Mr. Clif Evans: I thank the minister for that. I was even confused when I was asked just last week about that, and I could not remember exactly how. I was under the impression that it went every three years. Your taxes were based on--for example, '97 taxes were still based on the '94 assessment. That is three years previous and it stayed for three years. Am I correct in that?
Mr. Derkach: The 1997--well, now we are changing--1998 taxes will be based on the 1996-97 reassessment, and I am looking at my assistant deputy minister to--okay.
Mr. Clif Evans: Thank you. That clears that up. I will have to actually even go back to Hansard and make copies of it so I can have a better knowledge to explain it.
Mr. Derkach: To help the member, I would be pleased to have staff from my department give the member a briefing note that explains that so that when he is dealing with constituents, he can have that as a reference.
Mr. Clif Evans: Well, I thank the minister for that, and, yes, I would greatly appreciate that. At times, it does come up, and, of course, sometimes it is very difficult to deal with, not when you are dealing with the elected officials who are part of it, but when you are dealing with constituents. I would appreciate that information.
I would also appreciate, in going back, and I was going to ask the minister, I would also appreciate the updated list for all the municipalities, towns and that having received the $12 and the $5,000 and how much is being sent to each, as he has provided me in the past.
Mr. Derkach: Mr. Chairman, that was in the previous section, but I do not see any difficulty in giving the global amounts. You want the specific amount each municipality got?
Mr. Clif Evans: Yes. I have had it provided to me, a list of the towns, municipalities, LGDs, villages.
Mr. Derkach: Mr. Chair, I do not see any difficulty with providing that kind of information.
Mr. Clif Evans: Mr. Chairman, I thank the minister for that.
Mr. Chairperson: Item 13.4. Local Government Services (b) Assessment (2) Other Expenditures $1,194,800--pass.
Item 13.4.(c) Local Government Support Services (1) Salaries and Employee Benefits $740,500--pass; (2) Other Expenditures $286,800--pass; (3) Transit Grants $1,382,600--pass; (4) Centennial Grants no expenditure--pass; (5) Municipal Support Grants $1,003,100--pass; (6) Less: Recoverable from Rural Economic Development Initiatives minus $75,000--pass.
Item 13.4.(d) Grants to Municipalities in Lieu of Taxes (1) Grants $15,120,700. Shall the item pass?
Mr. Clif Evans: Mr. Chair, can the minister just please, on a short explanation, explain this line, Grants in Lieu of Taxes? We are looking at $15 million; then we are looking at Recoverable from other appropriations. Can the minister just explain that line?
Mr. Derkach: The grants in total, the $15 million, is for Grants to Municipalities in Lieu of Taxes on Crown properties that is paid to municipalities. Recoverable from other departments is $14,962,000. What Rural Development pays then is the remainder, which is $158,000.
Mr. Clif Evans: Mr. Chair, basically then, the department is the administrator of that section of government.
Mr. Derkach: That is correct, and we have tried to move away from the Department of Rural Development paying Grants in Lieu of Taxes for other agencies and departments and move that more appropriately into those departments where they should be paid. We do that for more accountability within the various other areas of government.
Ms. Jean Friesen (Wolseley): Mr. Chairman, I wanted to ask on the line of Grants to Municipalities in Lieu of Taxes about the grants in lieu of taxes that used to be paid to post-secondary institutions, to colleges and universities. Could the minister explain the line of accountability now?
Mr. Derkach: That line has been moved over to the Department of Education. They pay that to the universities, and they are accountable for that. That used to be with Rural Development at one time, and it has been changed and moved over, more appropriately, I think, to the Department of Education.
Ms. Friesen: Will the minister tell me where it is written in Education that there is a line of Grants in Lieu of Taxes with a number attached to it?
Mr. Derkach: I am sorry, I cannot give you that information at this time, but I think that is something that should be available from the Department of Education upon request, because it is there. I am sorry, I do not have it here, or I would tell you what it is.
Ms. Friesen: Mr. Chairman, I understand the minister does not have it here. I understand that he is saying it is no longer in the Department of Rural Development.
Would the minister undertake to let me know in writing where it is, with a copy of the line that it appears in the government's overall Estimates, as well as in the Department of Education?
Mr. Derkach: Yes, I will. It might take me a day to do that, but I will get that for the member.
Ms. Friesen: Mr. Chairman, my second question arises out of the committee on Bill 32, I think it was, last fall. This was the one that eliminated the line Grants in Lieu of Taxes and indicated that the Universities Grants Commission, in making its allocation to universities and colleges would take into account, I believe was the word he used, the absence now of grants in lieu of taxes.
There are a number of things that arise from that. One is that the minister did undertake to me at that last committee in the fall to write with an account of the amounts of taxes that were paid by commercial establishments on campuses, both universities and colleges. I subsequently wrote to the minister a number of times asking for that information and never received a reply, so I am wondering what has happened. Hansard does not read facial expressions, but it appears to be news to the minister.
Mr. Derkach: It is.
Ms. Friesen: I am still interested in that information. We were looking at the prospects for the raising of funds by universities. At that time the minister said, well, this is nothing new here because commercial establishments--and I think the example I used was a pizza operation in the basement of some college or university--already pays taxes. Remember my mythical pizza?
Mr. Derkach: I remember it.
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Ms. Friesen: It was a mythical pizza, and I asked the minister to provide me with information on how many of such institutions there were and what taxes they paid. He said that he would provide it in a few days, and I followed up.
Mr. Derkach: If I did not follow up on that information, I apologize to the member, because somehow that slipped through the cracks.
But with regard to the letters that have been written by the member to me, I am sorry, I do not have a copy of that letter, but I will find out where that letter has gone to in my department. I have not seen it. I will certainly make every effort to provide that information to the member. I apologize--I cannot even recall seeing the letter, to be honest with you, but I will look for it, and if not we may have to ask you for a copy of the letter again, and then we will certainly respond to your request.
Mr. Clif Evans: Mr. Chairman, I have to apologize here. I have lost my place listening to pizzas.
Mr. Chairperson: Item 13.4.(d) Grants to Municipalities in Lieu of Taxes (1) Grants $15,120,700--pass; (d) (2) Less: Recoverable from other appropriations ($14,962,400)--pass.
13.4.(e) Information Systems (1) Salaries and Employee Benefits.
Mr. Clif Evans: I just want to ask the minister and his department, has the issue that was brought to the minister's attention last year from the LGD of Armstrong, where they had a concern about grants in lieu of taxes for noninhabited lands, has that matter been resolved?
Mr. Derkach: I think they were just seeking clarification on that issue. I believe it was resolved because I met with the LGDs last week, and they were represented, but nothing was brought forward from them in that regard. So I assume that the matter has been dealt with.
Mr. Chairperson: Item 13.4.(e) Information Systems (1) Salaries and Employee Benefits $673,800--pass; (2) Other Expenditures $1,509,800--pass.
Resolution 13.4: RESOLVED that there be granted to Her Majesty a sum not exceeding $12,562,300 for Rural Development, Local Government Services, for the fiscal year ending the 31st day of March, 1997.
Item 13.5. Rural Economic Development (a) Executive Administration (1) Salaries and Employee Benefits $104,500--pass; (2) Other Expenditures $30,700--pass.
13.5.(b) Infrastructure Services (1) Salaries and Employee Benefits.
Mr. Clif Evans: Under this section it states that the department provides information assistance for connecting feasibility studies for water- and sewer-related projects. Is that for specifics, upgrading the existing sewer systems or water systems, or is it for new projects? What service does this department provide?
Mr. Derkach: Whatever requests come in, we work with the communities to try and provide the necessary information and studies that are required on the requests and the projects that come in, so it is just a matter of the department working with the various communities.
Now, if you are referring to the PAMWI program, that was an established program between the federal government, provincial government and the municipalities and there were identified projects under that program. However, as the member knows, the program was reduced by the federal government, so we were not able to carry it out in all of our communities that were identified.
Subsequent to that, I guess, two communities have been identified by the federal government that have been put back on the program and those were the communities of Selkirk and Virden.
Mr. Clif Evans: So, basically then, the minister is saying even though the line states that the grants are the same as last year and the finances are there, however, there are not enough finances now to continue with the other projects that have been--I am perhaps missing something here.
Mr. Derkach: Well, Mr. Chairman, the federal government, by reducing their participation in the program, basically reduced the program by $7 million, which means that some of the projects that were identified for completion and for proceeding with have not been able to go ahead. Now, of that list that have not been able to go ahead, two were given the go ahead and those were Virden and Selkirk.
Mr. Chairperson: Item 13.5.(b) Infrastructure Services (1) Salaries and Employee Benefits $1,292,100--pass; (2) Other Expenditures $327,200--pass.
13.5.(c) Community Economic Development Services (1) Salaries and Employee Benefits $2,829,500--pass; (2) Other Expenditures $809,500--pass; (3) Grants $545,000--pass.
13.5.(d) National Agri-Food Technology Centre $997,100--pass.
Resolution 13.5: RESOLVED that there be granted to Her Majesty a sum not exceeding $6,935,600 for Rural Development, Rural Economic Development, for the fiscal year ending the 31st day of March, 1997.
Mr. Derkach: Just for the benefit of honourable colleague and critic, I would like to introduce Mr. Gerry Offet, who is the new CEO of the Food Development Centre. Mr. Offet joined us on April 1, and he is the new general manager of the food centre.
Mr. Clif Evans: Thank you for the introduction and welcome, sir. I will probably be in touch with you in July, I hope, in my touring around and meet with you and see the facility and discuss any issues regarding food. Seeing that I am an ex-restauranteur, I am very interested in food.
Mr. Chairperson: Item 13.7 Expenditures Related to Capital (a) Transit Bus Purchases $180,000--pass; (b) Water Development $944,100--pass; (c) Sewer and Water $4,000,000--pass; (d) Canada-Manitoba Partnership Agreement on Municipal Water Infrastructure $3,300,000--pass; (e) Conservation Districts $2,197,800--pass.
13.7.(f) Downtown Revitalization $191,600.
* (1150)
Mr. Clif Evans: On this line, I know I brought this to the attention of the minister last year during the Estimates. I think that this program, Downtown Revitalization, would be an important one to perhaps establish a better resource, perhaps establish a program with more resource in the program itself. I know that some of the communities in my constituency are in the process of doing different things to improve their infrastructure, improve their situation within their own community.
I just feel that Downtown Revitalization would be a very important project for the future for smaller communities to be able to establish themselves and to be able to set their communities up, make it more attractable, of course, and do the necessary work for their downtown areas. I really do believe in that and support that program, perhaps it should be upgraded and more resources made available to it. I am just putting that on record.
Mr. Derkach: I thank the member for that suggestion, and I do not disagree with him in terms of the value of a revitalization program, or whatever it might be called, for the infrastructure in our communities. However, that has not been one that we have considered at this point in time, but it is something that perhaps is a good project for us to consider down the road.
I do not disagree with the member when I look at what has happened in Thompson and in Brandon as a result of the program. This program has levered private dollars, federal dollars and provincial dollars in terms of revitalizing the aging infrastructure in the downtown areas of these two cities, and it has really done quite a marvelous improvement in the area.
More importantly, it has created jobs and it has created activity and I am sure that the taxes that have been paid on those improvements have more than paid for the program over the term.
Mr. Chairperson: Item 13.7.(f) Downtown Revitalization $191,600--pass.
13.7.(g) Less: Recoverable from Rural Economic Development Initiatives ($2,250,000)--pass.
Resolution 13.7: RESOLVED that there be granted to Her Majesty a sum not exceeding $8,563,500 for Rural Development, Expenditures Related to Capital, for the fiscal year ending the 31st day of March, 1997.
The last item to be considered for the Estimates of the Department of Rural Development is item 13.1.(a) Minister's Salary on page 120 of the Main Estimates book. At this point, we request that the minister's staff leave the table for the consideration of this item.
All right, proceeding with item 13.1.(a) Minister's Salary $25,200--pass.
Resolution 13.1: RESOLVED that there be granted to Her Majesty a sum not exceeding $1,311,700 for Rural Development, Administration and Finance, for the fiscal year ending the 31st day of March, 1997.
This now completes the Estimates for the Department of Rural Development. Committee rise.