WHEREAS the Manitoba Telephone System has served Manitoba well for 78 years; and
WHEREAS the decision of the provincial government to divide MTS into four corporate divisions, each with their own president and executive, is expensive and of questionable value; and
WHEREAS at the same time that MTS has increased payments to board members and increased senior management, MTS has laid off employees who provide important service directly to the public; and
WHEREAS Manitoba is one of only two provinces that locally owns it telephone services; and
WHEREAS the Manitoba Telephone System offers among the lowest local rates in North America; and
WHEREAS increased local rates are reflected in those provinces where local services have been privatized; and
WHEREAS the deregulation of the telephone service market has led to an increase in residential and local costs; and
WHEREAS lower income families will be unable to afford local telephone services as a result of the present competitive climate in telephone service among corporations for cheaper long distance rates; and
WHEREAS the provincial government has already begun selling off components of MTS at fire sale prices.
THEREFORE BE IT RESOLVED that the Legislative Assembly of Manitoba urge the provincial government to oppose the privatization of MTS and maintain its Crown corporation status.
Motion presented.
Mr. Ashton: Madam Speaker, I find it absolutely ironic that this private member's resolution is before the House, this the week in which the committee hearings are taking place on a bill that will sell off Manitoba Telephone System and the week in which we will see further votes on Manitoba Telephone System because, for the record, I filed this motion at the beginning of this session back in December of 1995.
Now that is significant because we have not--theoretically, we did not see the decision made about MTS until the two-day period between April 30 and May 2. I am not claiming to be any great visionary. The fact is, I did not trust or believe the Premier (Mr. Filmon) when he said he had no plans to sell off MTS in the election, nor did I trust or believe the Premier who said the same thing in the House, nor did I trust or believe the Minister responsible for the Manitoba Telephone System (Mr. Findlay), who, in September of 1995, said the only person talking about the privatization of MTS is the member for Thompson, the only party that is talking about it the New Democratic Party. Well, to quote a song that has been fairly popular recently: Isn't it ironic, isn't it ironic. In September they were saying, no, no, never, we have no plans to sell off MTS, and you know what? In the same month, according to the minister's own words, which, of course, on other occasions have contradicted his other words, they started this process of appointing the three investment brokers that led to the report in April 30, 1996, which recommended the privatization.
Madam Speaker, I could say a lot about the process or the fact that we brought in this resolution in December, but I want to talk more about the scandalous nature of this government, and I use that word because I cannot think of anything more scandalous than the way this government has dealt with our telephone system. These same three investment brokers are now selling off the company. We always suspected in December that this was going to happen. They were paid $300,000 by the government to produce this seven-page report and slides that were used as the basis. The report itself is a seriously flawed document. I have read through that report. It does not look at all the angles. It is incomplete in its information. It does not have much information in it, quite frankly. I think it is scandalous to begin with that they paid $300,000 for that.
We have now learned--we did not learn it from this government; we learned it from the Financial Post. Guess who is not only one of--we were told there were 15 to 17 brokers, I have heard different numbers--guess which two companies and in fact, three, because Richardson Greenshields is now merging with RBC Dominion Securities, guess which companies are going to be running the whole prospectus. The same companies that recommended the sale. Wood Gundy, to use the terminology of the stock market, is the book runner, meaning its name will be on the top left of the prospectus. As the book runner, Wood Gundy will guide the deal through the markets, have the most contact with the issuer, and co-ordinate the institutional coverage.
How much will they get paid for that? The minister took that as notice today, the Premier. We want to know because I consider it absolutely scandalous--I mean, I could not think of any more corrupted process than to say that the same three supposedly objective brokers who made the report on April 30 are now--one of them is on the top left of the prospectus as the book runner.
Well, what about the other unlucky firm, Dominion Securities? I want to mention again, as I did, that Richardson is merging with Dominion Securities this week so they are one and the same. Well, they are the No. 2 spot--and this is the terminology of the trade--in the syndicate, and will likely have the same allocation as Wood Gundy. The syndicate, I found that interesting because between book runner and syndicate I was wondering if we were dealing with something to do with the Mafia because, quite frankly, when you look at the level of ethics of this government, I do not think it really is too much different.
To get the same three companies that you paid $300,000 for this bogus study and then to have them running the sale is absolutely unethical; it is unprecedented in anything that any government has ever done. Do you have no sense of ethics? Do you have no sense of conflict of interest? I do not know how the Minister responsible for MTS (Mr. Findlay) can even continue to sit as the Minister responsible for MTS with this situation going on. I realize the minister himself saw no problem in his buying shares in the company that he was selling off until it was pointed out by members of the opposition that there might be a slight conflict of interest. But, you know, to have the same group of people that recommended the sale now benefiting, the lead brokers in this particular case, is absolutely scandalous. Do you have no ethics, no sense of morality over there?
I mean, I have never seen a more unethical, immoral handling of something as important to Manitobans as the Manitoba Telephone System than what this government is doing on this particular--you do not even have the decency to get some outside body to do the study. You do not even have the decency to disqualify these three brokerage firms from now being the prime movers of the sale, not just one of a series of brokers, as the minister would have had us believe in committee a couple of weeks ago. I mean, I do not understand here. What do you owe these companies? I really wonder what kind of inside connection there is in this. Why have you picked these three brokerage companies when you based the decision on that tainted $300,000 report? I say tainted because it stinks. It stinks, Madam Speaker. This government stinks in the way it has handled MTS. I have to be careful with the language I use because I--well, the minister nods.
There are a lot of things I would like to say about this, a lot of Manitobans are saying the same thing. I do not know how you can face anyone, other than the fact that you are not--you have not had a single public meeting, let alone a vote on this issue--and say to them that there is not something wrong with doing that when you have the three groups that recommended the sale now benefiting from the sale. I say to the Minister responsible for MTS (Mr. Findlay), he is an absolute fool if he thinks that these investment brokers would recommend anything other than the sale. I mean, give me a break. You end up appointing three investment bankers who now just coincidentally are running the sale, and you say, I want to pay you $300,000 to recommend to me whether we should sell off MTS. Is there anybody across the way--is there one person across the way who would even with a straight face suggest there would be anything other than a recommendation to sell? You would have to be a fool to expect that.
You know, this is what really gets to the point of this whole thing. This is a corrupt decision made by a corrupt government because I do not believe that this phony seven-page report and the technical briefing notes were the real basis for the decision. I think this government had its mind made up long before even the provincial election, and I will name the people who are responsible for this sorry state of affairs. One, Mr. Tom Stefanson, whose most favourite quote in the committee on MTS was that, well, under the sale of MTS, you would not have to have MTS subjected to Question Period. I asked him to put that on the record and he did. Then I asked him when he was concerned. He was concerned about something that happened in 1991. So, once in six years it had to respond to questions in Question Period and that was a reason to sell it off. Mr. Tom Stefanson, who already admitted to private agendas in terms of the breaking up of the four components, I believe, was absolutely derelict in his responsibility to MTS. There was not a single MTS study. He did not even take it to the board of MTS. He was involved. We had that confirmed by the minister.
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Who else was involved in this? Well, Mr. Jules Benson, who seems to appear out of thin air every time there is something to do with MTS. He was in the standing committee. He has been in the committee listening to the hearings. Mr. Jules Benson, with Treasury Board. Where did the report go from the investment bankers? First, it went to Treasury Board, and I believe I think now we see where this little core group is coming from.
Who else? The Premier (Mr. Filmon). I do not believe anything the Premier says about MTS anymore. I do not believe a heck of a lot of what he has to say about anything because he has not been straightforward with the people of Manitoba. It is obvious to my mind that the Premier had a private agenda to privatize MTS. No ifs, no ands or buts. That is your third player.
Who else? The Minister of Finance, the other Mr. Stefanson, very clearly part of the process with Treasury Board. It is interesting that the proceeds of the sale are going to go where--to the Fiscal Stabilization Fund. Interesting, that agenda, because last year when we were dealing with the Fiscal Stabilization Fund, we introduced an amendment that would prevent the proceeds from the sale of a Crown corporation from being dumped into the Fiscal Stabilization Fund. Interesting, is it not?
Now, as for the minister's role in this, I am not sure if he was part of the original core group. In which case, I do not know why he is still the Minister responsible for MTS. I can tell you that he either did not tell me the truth last September or he was not part of the process, one of the two. They interviewed seven investment brokers starting in September and October--those were the minister's own words--they made the contractual decision in November. September 26, he told me that they had no plans to privatize. This, by the way, was one month after this alleged report from the Crown Corporations Council. He likes to quote from a report that came out in April 1996. What even was said by the Crown Corporations Council in August on this particular issue, I do not know if the Minister responsible for MTS was even part of the picture. I do not even know if he was. If he was not, I do not know why he is sitting there. I could not in good conscience sit there as Minister responsible for MTS and accept responsibility for this tainted scandalous process.
You know, I have known the minister for a long time in this House. I am shocked that he has not dealt with this, because I tend to think he was not included in this. But if he was included, then why did he mislead me in that committee? Why did he mislead members of the Chamber? One way or the other, he has a lot of explaining to do. When was he first aware of this? What involvement did he have? Well, it is interesting, Madam Speaker, because the scandalous process did not include very many other people. It is interesting, the Crown Corporations Council, we have heard about that reference. The Premier (Mr. Filmon) says he suddenly was aware in 1995, August 1995, that they were 70 percent competitive. I do not believe that. If he honestly did not believe that, then he is absolutely incompetent. Where has he been since the deregulation in 1992? Where has the Premier been? Does he not see what is going on in the long distance market? I have always said upfront, we have been saying for quite some time, MTS is in a competitive market and they are competing and they are clobbering the competition. Either he was not telling the truth or else the man is completely out of touch with reality in Manitoba. Either way, you have to ask very serious questions about how this person is running the province as Premier.
But you know I run through this. They did not go, even to their own caucus. They announced it to their own caucus. Every time I see one of the government backbenchers--I have sat in government. I have sat in the back bench. There would have been a riot in our caucus if anyone announced they were going to sell off MTS or anything equivalent to breaking a campaign promise. You had said in the election, no plans to sell off MTS. There would have been a riot if the caucus itself had not had a say in that decision. You did not do that. You did not even take it to the MTS Board. You did not even take it to the MTS Board. Why? Why did you not trust your own backbenchers or the MTS Board to deal with it? Why did you not get MTS to do a single study on privatization? Well, it is obvious because you had your mind made up. This is a preconceived agenda. I think it revolves around those four, possibly five people I mentioned--I am not even sure if the minister was part of that--and it was very obvious this was a decision that is far more ideological than it is to deal with the facts.
Well, Madam Speaker, why would I say that? Well, I mentioned about this report from the investment bankers. It is an incomplete report; it has inaccurate information in it. But you know what is particularly amazing is when the government now makes statements in its $400,000-advertising campaign about rates, service, the rest of it. You know what is particularly scandalous, it is not based on anything. Tax liabilities, they have not sought an advanced tax ruling. You know what? They do not even know at what rate MTS as a privatized entity will be able to borrow. It is being done currently. Over the next few weeks the rating agencies are looking at that.
The tax liabilities and the rate of borrowing are some of the two key factors which any objective observer will tell you go into the regulatory process in deciding what rates are charged and indeed will lead to higher rates under a private company but, you know, the government made the decision, a small group based on ideological reasons, and now is only just getting into some of the key components of the decision.
We do not even know what the prospectus is going to say. We do not know exactly what MTS is going to be sold as. All we have is a bill and all we have is a seven-page report from the same three bankers that are going to be benefiting from the sale. You cannot even get a Manitoba firm to do your road show, you know, the Barnes organization in Toronto is going to be doing the road show.
To finish off, and I will be talking a lot more on this issue as we go by, it is obvious what is happening, this government, with a small group, a small clique, family compact, this is like the 19th Century all over again here, is now selling off MTS, the decision made on the recommendation of the Bay Street bankers. It is being implemented by the Bay Street bankers. It is even being run on the road show by a Toronto-based firm.
I want to say to this government, four people, maybe possibly five, do not run this province. You may use every last trick you have to force through this bill. We will fight it all the way, but you will regret for a long time ever selling off the Manitoba Telephone System, because the vast majority of people support it and they do not support the scandalous way you have dealt with our Crown corporation that served us well since 1908.
Hon. Glen Findlay (Minister responsible for the administration of The Manitoba Telephone Act): Madam Speaker, the rhetoric I hear from across the way has not changed one iota. It has not recognized the change that has happened in this industry. It has not recognized the sorry state that they put MTS in, particularly in the years '86 and '87. When we came into this government, they had driven the debt-to-equity ratio up to 91 percent. They had just lost $48 million, a good portion of it in the sands of Saudi Arabia. That is the kind of management that they brought forward. They had the pension fund underfunded to the tune of $134 million.
The member puts a lot of rhetoric on here, but he fails to recognize the reality of the circumstances that he put MTS in. The opposition takes great glee in boasting about the fact that MTS made $100 million since 1990 or made $160 million since 1988, but they always fail to recognize the change of government that happened in 1988. They fail to give credit to this side of the House for having appointed the people that led MTS through that kind of turnaround from losing money to making money in a fairly significant way, fail to recognize that this government has been in power while we funded the pension, so that the security of the retirees today and the future retirees are looked after. We have improved the debt-to-equity ratio, solidified MTS in a good position today, but we look at the competitive challenges in the industry, the technical changes, the need for new capital. That is still not good enough.
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I have watched with great interest as the NDP have done what they have done over the last few months, and people outside of government watch, they pay attention to what is going on. As I look back, it is interesting, when I look at the editorials written in the various newspapers going back to May 3, Winnipeg Sun: A good thing, employees see advantages in selling the Manitoba telephone company.
Brandon Sun: MTS share issue makes good sense.
Then I get to the Free Press, it talks about pragmatic privatization. Looking at the issue as they understand it, as they see it unfolding, and no one questions Chambers of Commerce of past resolutions supporting it because they do not see it right, that in an era of high competition, the private sector has to compete with its own tax dollars. But I think the most succinct analysis of what is really happening came in the Free Press of October 29, and I think, for the good of the members opposite, we should read this because this is the interpretation that observers from the Free Press put onto this issue and the NDP.
Madam Speaker, I have not used it yet, but I think it is time, given the rhetoric I have just heard from the member opposite who does not want to stay and hear the issue; he wants to walk out of the House. Maybe I am not supposed to make mention of a presence, but he just did.
Mr. Tim Sale (Crescentwood): On a point of order, Madam Speaker, the member opposite knows the rules of the House in regard to reflecting on the presence or absence. If one were to read into the record the many members who have been absent and the member himself who is now on his feet, who absented himself at various points from the committee, he ought not to make references to presence or absence. He knows that; he should withdraw.
Madam Speaker: The honourable member for Portage, on the same point of order.
Hon. Brian Pallister (Minister of Government Services): I believe, if you review Hansard, Madam Speaker, you will find the member did not refer to anything other than the fact that the member for Thompson wants to be absent from the House. Those are the words the minister used.
Madam Speaker: The honourable minister, on the same point of order.
Mr. Findlay: Madam Speaker, if there is anything wrong with what I said, I take it back.
Madam Speaker: I thank the honourable minister.
Madam Speaker: The honourable minister, to continue debate.
Mr. Findlay: Madam Speaker, I would hope that all members opposite either are listening now or will read Hansard because it is important, and I rather doubt that they read this whole editorial from the Winnipeg Free Press. I quote: No one should be surprised by the New Democratic Party's position to the privatization of the Manitoba Telephone System. What is surprising, however, is the NDP's inability to muster any kind of coherent argument for keeping the Crown corporation. The best evidence of intellectual feableness can be found in their strategy for attacking the Filmon government's decision to sell MTS. Rather than debate the merits of the issue, the NDP critics have resorted to speculation and inuendo about the government's decision-making process. [interjection]
Madam Speaker, I continue: The fact there is nothing fishy about the Filmon government's decision to sell MTS, the Premier is on record as saying he did not want to sell the corporation, nor did he think it was necessary. He changed his mind when he took a closer look at the future of telecommunications.
Madam Speaker, I continue: There are no secrets here either. The telecommunications industry is becoming as risky and unpredictable as the computer industry was 10 years ago, a point that is made by virtually every independent telecommunications analyst on the continent.
I continue: Some like to wax nostalgic about the days when operating a phone line was just slightly more complicated than stretching a wire from one telephone pole to another. Unfortunately, times have changed and so have risks. The telecommunications industry will undergo rapid change over the next few years. By 1998, competitors will vie for local telephone business, cable companies will offer telephone service, and other wireless forms of communication will compete for consumer attention. Staying on top of that kind of change means decisions on investment worth hundreds of millions of dollars. If MTS were maintained as a Crown corporation, it would mean one bad decision could cost Manitoba taxpayers millions of dollars. Premier Gary Filmon has made it clear that MTS is not about private versus public enterprise. It is about managing risks and reducing public exposure.
This is the concluding paragraph: Perhaps the NDP's inability to muster a good argument for keeping MTS is not so surprising after all.
Madam Speaker, I could read many comments of like nature--
An Honourable Member: Read today's editorial.
Mr. Findlay: Today's editorial. He wants today's editorial. "We can't afford MTS any more," by Fred Cleverley. The member opposite asked for it, so I just happen to have it. I will not read from this, but again it goes through the issue. It looks at the amount of money that is there in the form of debt. It looks at who encountered that form of debt, and the members opposite do not get a lot of credit for keeping the debt down in MTS. They were given credit for raising it substantially over the course of time. But I also remember the member for Brandon East (Mr. Leonard Evans) saying one day, from his seat, well, Crown corporations, we have always funded them with debt. I think he was very honest in that statement, and that is, unfortunately, what probably is the case is that Crown corporations' debt was run up such that when things change, as they have in the telecom industry, you have to service that debt for ever and ever.
We are spending $90 million a year in interest on old debt. That is a lot of money. It is percentage-wise higher than any other telephone company in Canada. It puts a millstone around their neck in terms of being able to have enough revenue to respond to the new challenges. So the issue that we are involved in, the issue that challenged government, that we had to look at was recapitalizing MTS to deal with the existing debt, to deal with new capital that is needed in the future, to deal with the ability to respond where opportunities exist, Madam Speaker. I, for one, have a tremendous belief that the Manitoba Telephone System looks forward to this day when they can be more aggressive in the marketplace, go after those niche markets, serve the customers broadly and continuously.
You know, when I think of the comments I have heard from the member for Crescentwood (Mr. Sale), I think that cable deal was something he mentioned--he likes to mention quite often. If you read the papers of the last few days, you will start to see some of the challenges to somebody who has got buried cable. See the new technology that is out there, the wireless technology, coming at us from every direction. The costs of getting into PCS or MCS technology are high. It is wireless. If you want to ask the value of wire in the future, obviously, it may well decrease.
Madam Speaker, if he reads, I think the last couple of days in the paper, a significant write-up on Skycable. A business in Brandon, Craig communications has made application to CRTC to deliver wireless cable television, not only to farm residents who do not have cable today, but available to all residents, and the statement is that the quality of that transmission system is superior to any cable system that exists today. One would ask, then, what is the value of owning cable? If new technology can give us a better quality of service through the air, obviously you could have that up and running real quick.
These are the kinds of challenges that this industry faces. Broadly speaking, Madam Speaker, government has its role to deliver services, particularly in areas where people do not pay for those services--health, education, social services, roads--but in the area where people pay for services, one has to ask the question: Why cannot the private sector deliver it effectively? If we look across this country, they have done that very well right across the country, except for where two Crowns exist today, Manitoba and Saskatchewan. We clearly have a regulator that uses the same criteria across the country, by and large, regardless of ownership--
An Honourable Member: We still have party lines in this country.
Mr. Findlay: We have gotten rid of party lines for the members opposite here in Manitoba. That is--[interjection]
Madam Speaker, the member opposite makes an interesting point. The member talks about debt, and how did the debt occur? When we came into government, it was around $780 million; today it is around $850 million, $860 million. It has not gone up much, but along the way we have done the Service for the Future program, $620 million. We have made $160 million and almost $300 million has been added to the pension fund. We go from 60 to 350.
Madam Speaker, that money did not drop out of the air. It was earned by the company and invested and turned to the profit line, and every dollar of profit has gone back into the company for its operation. [interjection] There is the point exactly, the member opposite cannot handle any change, cannot handle the challenge that is out there. I would recommend that the members opposite, who often recognize that they do their research in the newspapers, that they go back and look at some of the editorials that have been written, particularly the one written by the Free Press in the last few days. I think they should pay attention to what is being said. People out there are paying close attention to what is going on. They understand the realities, and they give us, as government, credit that we are not afraid to take on a very difficult task, which clearly this is. Given their ideology across the way that they cannot change anything, everything has to stay the way it was, that the world is not going to change. They are locked into a difficult position.
It will be interesting to watch over the next period of time how Saskatchewan handles this particular issue, Madam Speaker. Their president is clearly on record as saying the same realities exist there. Whether they respond or not remains to be seen.
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Madam Speaker, I see my time is just about up. It is unfortunate that the members opposite cannot see reality, cannot accept the fact that governments today must be responsible to the people, responsible to the technology, responsible to the fiscal management and we have done that. This government as a whole has done that. That is why we have been elected three times, and I am very confident that over the next few years it will be seen that the wisdom of what we are doing today will pay big dividends to the province of Manitoba in terms of jobs for people in the telecommunications industry which have grown dramatically in the last four or five years, and my prediction is will continue to grow because we have a very excellent corporation in Manitoba called MTS.
Mr. George Hickes (Point Douglas): Madam Speaker, I move, seconded by the member for St. Johns (Mr. Mackintosh), that the composition of the Standing Committee on Privileges and Elections be amended as follows: Flin Flon (Mr. Jennissen) for Thompson (Mr. Ashton); Kildonan (Mr. Chomiak) for The Pas (Mr. Lathlin) for Tuesday, November 5, 1996, for 10 a.m.
Motion agreed to.
Mr. Leonard Evans (Brandon East): Madam Speaker, I have very few minutes left, and I would like to be brief and to the point and deal with the arguments for the sale of MTS and try to put the emotions aside and just talk about the facts of the matter and the problems that we see and the problems that you have raised in terms of keeping MTS as a publicly owned operation.
You know, I disagree with the minister when he says, well, it is a service that, you know, people can buy. It is not absolutely necessary. It is not like a water supply, a water utility, or whatever which should be in the public domain. Telephones should not necessarily be in the public domain, he argues. But, Madam Speaker, this is a very basic service, and in some parts of Manitoba it is absolutely vital in this day and age to have that. So I would say this is a special kind of service and something that is very basic, and why a lot of people who understand what is happening here are very concerned.
The minister talks about competition and the ability to compete. You know, I read this report that he tabled, and the MTS has done a terrific job of competing. I give the minister credit. I give the board credit. There is no problem. It is doing a great job of competing, and suddenly they are not able to compete into the future. I do not understand that.
Well, they talk about, the president, the CEO talk about meeting the new challenges. He says, the 1996 outlook, we are optimistic. We will deliver a year of solid performance while contending with the evolving developments in competition, regulation, markets and technology that are radically changing industry. They recognized that at that time when they were writing this. They say that they are ready to meet the challenge, so I do not understand suddenly--[interjection] Okay, then the debt situation.
Well, as far as I can see, yes, the debt increased, but when our utility increases debt normally--incidentally, a public utility owned by the public uses a loan capital to finance itself. It does not use the share approach. So it is a different approach. So any public utility anywhere in the world owned publicly by the government or the people will have a large debt because that is the way it is financed, but the debt did grow, as I understand it, you mentioned the last few years we were in office, largely because of improving rural services. I understood that was the reason we put a lot of money into trying to bring about private lines and to improve the quality of service. [interjection]
My understanding was--okay, well, where is the source of the debt, the rise of the debt? Is it because they had deficits year after year? Is that why? I do not see why that had to be because, ultimately, it had a monopoly. The customers, the people of Manitoba, paid for it. [interjection] Well, then, if they lost it, the rates had to be adjusted because, I mean, the rates are guaranteed by the Public Utilities Board, at least there was at that time. So I do not understand that. Furthermore, as the minister himself said, the debt ratio has come down considerably.
The raising of capital is another issue. There is nothing--I mean, you can sell shares. A privatized company will sell shares, but those shareholders want to get a return on there, and I do not blame them, of course. They want to get a return. Just as we have to pay for loans, the MTS will have to pay interest on the loans, but a privatized one will have to pay dividends to the shareholders.
I submit, Madam Speaker, that a publicly owned operation has as its objective, its mission, to provide service at cost. A private company must, by the nature of the system, provide profits to its shareholders. So its first objective is to be a profitable operation. I do not fault any private company for that. I am not criticizing, but that is the system. If the intent then is to maximize profits, that to me is contrary to providing service at cost.
So, obviously, in my reasoning, the rates would have to go up to provide that, to pay for the cost of service, but then to give that additional amount for the shareholders. The Premier (Mr. Filmon) and others have said, the minister has said, well, we have the CRTC that will hold down the rates, but the CRTC, we know, builds into their rate-making the consideration of profits for the shareholders. They are virtually accommodating the profits, so you cannot rely on the CRTC.
So what you are going to have, you are going to have rates escalating quicker than they would with the publicly owned operation, but then the argument comes back, a private company will be more efficient.
Where will that efficiency come from essentially? They could lay off a few employees. It is going to come about because of a relatively reduced service in the long run or, let us say, in rural and northern Manitoba, or at least the improved service will not be experienced in rural and northern Manitoba to the extent it will be in urban Manitoba, which is basically Winnipeg and maybe Brandon, or one or two centres. That is the fact, and no wonder the people of rural and northern Manitoba are concerned.
It just stands to reason, and this goes for any profit making, they are going to go where the money is, and the money is not in Russell or Hartney or Melita, where the figures will show that the cost of providing that service is way in excess of the rates.
MTS has done a great job of cross subsidization. I do not know whether a privatized MTS will do the same. There will be some cross subsidization, but I do not think it will be the same and therefore in a relative way, relatively speaking, rural and northern rates will go up.
We mentioned federal income taxes. That is another factor; it is only one, but it is another factor they are throwing to the hopper that the publicly owned operation does not have to contend with.
The other matter is about control. There is no question that the control will slip out of Manitoba, and in two or three years the main shareholders will be in New York, Toronto, wherever. The head office is strictly nominal, guarantee the head office is to guarantee nothing, and I made that point a couple of weeks ago, like Wawanesa's head office is in Wawanesa. It does not mean anything, so the control will slip out of Manitoba, and I believe that is why the people of Manitoba are generally against it.
The member for Thompson (Mr. Ashton) referred to a poll that was done. You may not like the poll, but I can tell you, I put a one--
Madam Speaker: Order, please. When this matter is again before the House, the honourable member for Brandon East (Mr. Leonard Evans) will have eight minutes remaining. The hour being 5:30 p.m., is there a will of the House not to see the clock?
Some Honourable Members: No, it is not 5:30 yet.
Madam Speaker: No, it is 5:30. The hour being--
An Honourable Member: We have a vote on it.
Hon. Jim Ernst (Government House Leader): We have a committee at 6:30. It is not going to be voted on anyway?
Madam Speaker: Leave has been denied. The hour being 5:30 p.m., this House is adjourned and stands adjourned until 1:30 p.m. tomorrow (Tuesday).