Hon. James McCrae (Government House Leader): Mr. Acting Speaker, I would like to announce that the Public Utilities and Natural Resources committee will meet on Tuesday, May 13, 1997, at ten o'clock in the forenoon to consider the Annual Reports of the Manitoba Public Insurance Corporation for the fiscal years ending October 31, 1994, February 29, 1996, and February 28, 1997.
Mr. Acting Speaker, I think that is all before I move, seconded by the honourable Minister of Culture, Heritage and Citizenship (Mrs. Vodrey), that Mr. Acting Speaker do now leave the Chair and the House resolve itself into a committee to consider of the Supply to be granted to Her Majesty.
The Acting Speaker (Mr. McAlpine): I would like to make this announcement, that the Public Utilities and Natural Resources committee will meet on Tuesday, May 13, 1997, at 10 a.m. to consider the Annual Reports of the Manitoba Public Insurance Corporation for the fiscal years ending October 31, 1994, February 29, 1996, and February 28, 1997.
Motion agreed to.
The Acting Chairperson (Mr. Peter Dyck): Order, please. Will the Committee of Supply please come to order.
This afternoon, this section of the Committee of Supply meeting in Room 255 will resume consideration of the Estimates of the Department of Consumer and Corporate Affairs. When the committee last sat, it had been considering item 5.3.(a) Insurance Branch on page 25 of the Estimates book.
Ms. Jean Friesen (Wolseley): Yes, at the end of last time, I think we were exchanging history lessons and getting somewhat from the topic. I certainly apologize for that and hope to move this along a little faster, although I think that what we were saying was not necessarily so irrelevant to the issue.
I want to read, first of all, a letter from a constituent on the issue of insurance. It is a constituent who lives in the area north of Portage not far from the University of Winnipeg, and she wrote this to me last year and said, about six months ago she was told by her insurance company that they would no longer cover the house for theft and fire as there had been a break-in in the last three years. Her house is currently protected by a monitored professional alarm system, and other precautions, the obvious ones of bars, et cetera, have been taken against further break-ins. The family has thus had to turn to another insurance company which would cover them against fire but not theft and has found that their payments have doubled.
My constituent asks and I quote, why do we have insurance if we cannot ever make a claim if we get broken into? Why, after all these years, have we paid all this money to this insurance company if we cannot ever feel any sense of ease knowing we have protection? Why is our government not doing anything about these insurance companies' behaviour? What is going to happen to other people in our area who cannot afford to pay the same amount of insurance that is being asked of us? Why are we, victims of a crime, being persecuted by these companies and when is this going to change?
I think what that does is express very clearly the frustrations that I tried to express to the minister yesterday from many different parts of the riding of people who have established Neighbourhood Watch, who work with each other to create the kinds of institutions that will improve and maintain neighbourhoods. I quote it because the minister--and I believe he is reflecting very accurately the concerns or the beliefs of the insurance companies in this respect--believes that such issues are really symptoms of a broader issue which is poverty and, in part, he is right.
But I want to reiterate my concern that there are also causes here and that the role of the insurance companies and the inability and the difficulties that they are placing in the path of people like my constituents are also partly the cause of the deterioration of inner city neighbourhoods. It is not just a symptom of one aspect of poverty.
I want to make that point clear, and I also want to suggest to the minister that although I am here speaking on behalf of a number of my constituents who have made this point over the last several years to me, that we also have similar issues in Point Douglas. The member for Point Douglas (Mr. Hickes), I believe, has certainly dealt with previous ministers on this issue, as well as the member for St. Johns (Mr. Mackintosh) who also faces many similar issues. Both of them are involved in different aspects of the Legislature today and are unable to be here, so I want to add their names and their constituencies to the range of issues that the minister must consider.
I want to speak directly about redlining. I think we face many difficulties in getting the insurance companies and the insurance industry to admit that they redline districts, and yet to my constituents who are not visited by inspectors, who are not dealt with on the issue of their individual claims or lack of individual claims, it seems very clear that the only alternative that the companies are pursuing is a system of classifying houses and clients by the area in which they live and indeed by a very large area. Postal codes are quite large areas in my constituency because we are a very densely populated area, so the postal code redlining is certainly an issue that I would say the majority of the people in my constituency believe is happening. I understand the insurance industry denies it.
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I do not know what the minister's position is on this, but I know that he has said that he will be meeting with the industry very shortly, and I would like him to give me an assurance that he is going to deal with this issue and to report back to the Legislature or to the opposition in some way and that he is going to give us some assurance that redlining is not condoned by this government and that the insurance companies are aware of that. I do not know what form that would take, whether it is minutes from the meeting, whether it is a letter from the minister to the insurance industry confirming that that discussion took place or whether it is the participation of members of the opposition in a meeting such as that.
I think a final issue that I wanted to raise with the minister was one that he, I think, brought up yesterday, but he brought it up in the context of his own experience with Hutterite colonies. It was the issue of co-op insurance. It seems to me that there may be a possibility there. I know that yesterday we talked about the scale of the Hutterite co-ops and the commonalities that they have which have enabled them to do that. It seems to me one of the roles that government might have, in fact, is to enable some form of co-operative insurance to be possible in the inner city.
Now, in previous years, when this has been brought up to me, the whole issue of redlining, I have tried to deal with the Social Planning Council, and I know that staff of the minister have also been involved with the Social Planning Council in a committee that they established to look at the issue of redlining. At that committee, Mr. Hanson, whom you will be talking with was also involved and certainly understands from the Social Planning Council the impact of this on the whole society of inner city Winnipeg, but also the Social Planning Council did discuss the issue of co-op insurance. They looked at it to the extent of defining the amount that would be required; a minimum of $50,000 bond must be posted and a minimum of $3-million asset base which can be in the form of loan guarantees. This could form a core base for an insurance pool.
It is possible also--and I know that we are being followed by the Department of Industry, Trade and Tourism. You do also deal with co-op development to some extent, and I know that the Social Planning Council in its discussions at which I think your staff have been present--I would have to check whether they were actually present at that particular meeting.
As I check my notes here, I do not think you were present at that particular meeting where the option of co-op insurance was discussed, but you may well have received the minutes as participants. It is the meeting of--if you wanted to look it up--March 19, 1996. At that meeting, it was suggested that some research and feasibility studies for forming such a company for dealing with co-op insurance in the inner city might be formed, and that might be something which governments take on.
So I think to sum up, three things I am suggesting to the minister: First, that he pursue that which has been suggested by the Social Planning Council; secondly, that he indicate the government's position both in this committee and to the insurance industry on redlining; and that he be aware of and convey to the insurance industry that redlining and the absence of insurance for parts of the inner city are indeed part of the cause of the deterioration of parts of the inner city, not just a symptom of a broader issue.
Hon. Mike Radcliffe (Minister of Consumer and Corporate Affairs): Mr. Chairman, for the purpose of the record, I want the record to show that I have taken some rather detailed notes of my honourable colleague's remarks today, and I thank her for those remarks. I think they are made with some significant degree of insightfulness and obviously compassion and caring.
I can confirm, as we discussed yesterday with my honourable colleague, that I will be meeting with leaders in the insurance industry in Winnipeg in the very near future, and I can undertake to her that I will be bringing to the agenda the issue of redlining as she has defined it here today, redlining by postal code areas of the city and, in fact, by what appears to be to the constituents in her areas the inability of these individuals to obtain appropriate property and liability insurance or fire insurance in areas of the city as designated by their postal code, having nothing to do with the track record that they may have on insurance claims, having nothing to do with all the other components that we discussed yesterday, which I will not take the time to recite at this point in time.
I can tell my honourable colleague that the lack of availability of insurance is a matter of some significant concern to me, and I will also be researching the minutes of the Social Planning Council as she has indicated. I have made note of the date, and I will be causing my departmental people to do some research with regard to the feasibility and following up, which I guess is an outgrowth of the Social Planning Council comment.
I would just add for the record as well, and I do not want to digress too substantially, but in the Hutterian communities, although there is a commonality of theology to a large part, they are as diverse as the outside world in many, many ways. There are rich colonies and there are poor colonies. There are hard-working colonies and there are others that are not so motivated.
When one is able to clear the farm gate inside one of those colonies, one finds a cross-section of society represented just the same as we do in many of our communities in the city, albeit of a similar racial stock, but nonetheless beyond that, I would confirm to my honourable colleague that there are many, many great diversities amongst the Hutterian communities, and to their credit they have been able to overcome many of those sorts of hurdles to come up with some of the infrastructure they have, so that give me support and encouragement that perhaps this is something we might be able to transfer, concepts that we might be able to transfer into some other areas of the community, and I would thank my honourable colleague.
Ms. Friesen: Mr. Chairman, I thank the minister for taking note of all of that and very accurately, but one further aspect is the matter of the minister reporting back on each of these issues. How will that be done? I do not necessarily want to suggest deadlines, but I think it would be very helpful for my constituents to know this summer of this and also the format of the report back.
Mr. Radcliffe: I would propose that I would be replying, in writing at least, to my honourable colleague with the products of the meetings that I will be able to have with the members of the insurance industry.
As support for my presentation, could I ask the honourable colleague if she would be so kind as to supply me with a copy of the correspondence, even if she blocks out the name of the individual constituent because she may not have permission to forward, to publicize that letter. I would appreciate it as a pro forma example, and I would propose to use it as an example of what has been presented to me as the problem. I would leave that question with my honourable colleague and perhaps she might want to consult with her constituent and advise.
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Ms. Friesen: Yes, that is a reasonable request. I will search my records for the original record of the letter from that particular constituent, but I should note for the minister that the section I read, or the quotation, was actually addressed on January 4, 1996, to his department to a previous minister. So he should be able to find it in his files, but I will check for the fuller letter and see whether my constituent would allow that to be forwarded.
Mr. Radcliffe: '96 or '97.
Ms. Friesen: The date on the letter I sent to the Honourable Mr. Ernst, Minister of Consumer and Corporate Affairs, was January 4, 1996.
Mr. Jim Maloway (Elmwood): Mr. Chairman, I have a few questions for the Insurance Branch and, after that, we have to deal with the co-op development section. Then we have to deal with the Public Utilities Board and then we are nearly finished. Okay, just so you have the order there.
I want to begin with the Insurance Branch, by asking the minister about the vanishing premium policies in life insurance, that was, they were widely sold throughout Canada and the United States since 1960. There have been a number of lawsuits, a myriad of lawsuits, resulting because over the years the promises of eventually paying no premiums because the investments would make up what the premiums would have been, did not materialize and so I understand there are lawsuits right across the country. I want to know how many there are in Manitoba and what stage they are at and what companies, which life insurance companies were selling these products here.
Mr. Radcliffe: Mr. Chairman, my director tells me that, in fact, we have had possibly four to six inquiries in Manitoba on this issue of vanishing premium life insurance policies. There are no lawsuits of which we are aware in Manitoba. This is a matter that is being monitored, I am told, quite closely by the Canadian Council of Insurance Regulators. We have a file on this topic in the Insurance office. There were a number of mediated settlements, I am told, between the corporations and the particular individual claimants or people who were interested and involved. I am told that this is in fact a significant problem in the United States of America but has not been anywhere near as large a problem in Canada.
Mr. Maloway: I sent a letter to the former minister on June 17, 1996, asking him about a recent CBC story regarding the failure to turn over insurance premiums to insurance companies. At that time it occurred to us to recommend a bonding system to protect consumers. It is the case in Ontario where the agencies are required by law to carry a bond of $100,000. If it solves the problem there, then why would it not solve the problem here? I asked him to get back to me with any further developments. Of course I think there were more developments in his bailiwick since I wrote the letter, and he is no longer here. This was June 17, 1996, if you want to just take a quick look at it and then just update me on what you are doing.?
Mr. Radcliffe: Mr. Chairman, I can advise my honourable colleague that as a result somewhat of the letter of the honourable colleague Mr. Maloway and also the scrutiny of the department that in fact there was a reaction within the department that the superintendent has been working with the general liability insurance council in Manitoba and that a survey of all the general agents was done. Now I believe that the honourable member for Elmwood was an insurance agent. I do not know if he still is active--
Mr. Maloway: I am as active as you are being a lawyer.
Mr. Radcliffe: --in the business of insurance, although I know that once an insurance agent always an insurance agent and that insurance agents do not have anywhere near the overhead that we poor, starving lawyers do and that they can sell policies in government buildings and out of government buildings and in offices.
Mr. Maloway: That was Gerry Ducharme you are talking about.
Mr. Radcliffe: Ah, well. But in any event the consensus of the industry seem to be in comparing the remedy of bonding versus errors and omissions was to rely on errors and omissions policy and to make it a general rule with general insurance agencies that they all carry errors and omissions for fraudulent acts. Of course the reason for that was that the errors and omissions gave a wider scope of coverage to the consumer, better protection for the consumer, and the council is currently working on this as an internal regulatory control to impose upon all general agents in the community.
Mr. Maloway: It seems to me, and I am operating from memory now, but it seems to me last year when we did check into the wording in the malpractice policies to which he refers, that the malpractice policies cover people for errors and omissions but not for fraudulent acts.
So there is an exclusion in there, and therefore bonding which is by its nature fidelity-type coverage to take effect when there is fraudulent activity, not an error or an omission--when you walk away with somebody's money, that is a fraudulent act--is what is required and that is why Ontario has both. Ontario has the malpractice policy requirement, as, by the way, does Manitoba for all intents and purposes, but what Manitoba does not have is the requirement of the bond which Ontario has.
All I ask is that if the malpractice policy will not handle the problem, then the bond should be looked at as a means of redress. It is not all that expensive a solution either to do this. The coverage is available, so it seemed to me that would be something you should look at. I spoke to the previous minister about it, and he seemed to think it was a good idea, but, once again, he is no longer there.
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Mr. Radcliffe: Mr. Chairman, in response to my honourable colleague's remarks upon the issue of E and O versus bonding, I am told that the information is that the general insurance council has replied that the E and O with fraudulent misfeasance is available, but in the event that it is not and that we are mistaken, then we obviously will explore the bonding issue.
Mr. Maloway: A final couple of questions to the Insurance Branch, I would like an update on what is happening with CompCorp and PACIC. By way of background, these were programs that were I do not know if initiated by but certainly participated in by the former NDP government when Al Mackling, I believe, was the minister, and, essentially, it came about because of an insolvency of an insurance company known as Northern Union.
I think the member is vaguely aware of that particular company and the circumstances involved in its demise. Because of that and Strathcona and other insurance companies that went under, the provinces, and who initiated it I do not know, but the provinces got together and basically did what they did with Combap [phonetic], the lemon law equivalent, and set up this national pool. It has been refined a couple of times because I think it did not respond properly, at one time, in sufficient limits, so there were some adjustments made to it, and the same is true with the life insurance. They did the same thing with the life insurance. I know that when the big failure hit, when Confederation Life went under, that was the first big test. I think it was the first big test. There were some other tests, but they were of a smaller dimension.
So could you update us as to what the current requirements, rules, are with regard to both of these programs and just provide us with a little history because we have not actually dealt with this subject in Estimates now for some years because of time constraints.
Mr. Radcliffe: Mr. Chairman, I had not been familiar with the CompCorp background, so I thank my honourable friend for the opportunity to learn about that. CompCorp, for the purposes of the record, is a guarantee or a backstopping on life insurance policies, annuities, disabilities, registered retirement savings plans. The coverage, I am told, for life insurance is limited to $200,000. This is on the failure, as we were discussing, of a registered life insurance corporation. The limit for backstopping loss for failure of a corporation on an RRSP is $60,000 and $2,500 monthly for disability. This is a national scheme, and it is at the corporate level. These limits have been quite stable, consistently stable for some length of time, and I am sure I am just reconfirming knowledge that my honourable colleague already has that this has been in place for some time.
PACIC applies to the general insurance. The limit, I am told, has been raised now to $250,000 as an upper limit for a claim, for an insurable claim, one that is found to be a proper claim; 70 percent of the unearned premium is covered by PACIC up to the cap of $1,000, therefore that would be an upper limit cap of $700 on PACIC. These are new limits apparently on PACIC. Some new innovations on the PACIC scheme, which also is a national policy across the country, is that the contributions by the insurance corporations are premium driven. It is collected immediately at the front end on the payment of the premium, and it is collected annually, so this obviates the necessity of relying on letters of credit or reactive claims after the fact, after there is a claim been made.
So these are two insurance schemes that are like a guarantee which are in place, which are practised in Manitoba and the Superintendent of Insurance looks on them with great favour.
Mr. Maloway: Actually while we are waiting for the people from Co-operative and Credit Union Regulation, I have a number of general questions that could probably be considered under your planning department.
Mr. Radcliffe: Excuse me, Mr. Chairman, could I excuse my Superintendent of Insurance?
Mr. Maloway: Of course. Yes.
The Acting Chairperson (Mr. Dyck): For the honourable member for Elmwood, just to clarify for the record we are looking at 5.1.(d) Research and Planning.
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Mr. Maloway: Let us go back for a moment to the Elmwood Cemetery. I note that there is a Liberal election pamphlet being circulated currently in Thunder Bay by Liberal candidate Joe Commuzzi. In there Joe states that the federal infrastructure program has resulted in the creation of over $100,000 jobs and the completion of several projects in his riding including bridge No. 4 in Red Rock, Paul Lake fire hall renovations, community centres and--get this--cemetery upgrades in Hurkett, Shuniah township road reconstruction and then several other things.
Now, I mean this infrastructure program obviously has a pretty broad base, and we were aware of stories last year where money had gone into I think the canoe museum in Shawinigan and other really interesting uses for this money, so I guess your imagination is the limit. Mind you, if this government could fund ManGlobe as a research development project and use funds under Research and Development, and then end up using them for something totally different, I guess anything is possible.
But back to this issue for a moment here, given that, could the minister endeavour to follow this through and find out how many cemeteries have received money under this infrastructure program, how they managed to do it and see whether we could perhaps do this with Elmwood Cemetery, because I cannot think of a more appropriate example of a case that should fit into this if in fact cemeteries do?
Mr. Radcliffe: The question was how many cemeteries have received support from infrastructure grants, is that correct?
Mr. Maloway: This is right. To further expedite the process, I will endeavour to provide the minister with a copy of this Liberal leaflet because I really have no further use for it. Then perhaps he could copy it and give it back to us.
We dealt at length the other day about renovation contractors and so on. The minister is obviously aware that with the flood conditions of the past few weeks, that this is unprecedented and not unlike the situation that developed three or four years ago in the floods in '93. The insurance companies had to pay a premium to get contractors into Manitoba. Contractors came in, Mr. Chairman, from Alberta and other provinces to do work and I anticipate that that is what will happen here too, that underemployed contractors from other provinces across the country will be coming here in force because, while there is a tremendous amount of work to be done in restoring the province to its preflood conditions and it would be a much better situation if this work could be done over a period of time as far as the economy is concerned, the facts are that that is not what will happen.
When the flood is over, everybody will want their work done right away. They will all want it done immediately and because of the laws of supply and demand there will be cases where people will be brought in and contractors typically in the previous experiences have been greedy in terms of taking on work they could not finish. In other words, firms that were bigger on promotion than they were on talent for doing their jobs were running around signing up, making quotes on all sorts of projects and then they would start a whole bunch of them, just a little bit here and there, and they would keep dozens of them on the go, eh?
This is what I anticipate will happen again. So the minister should take another look. I know he seems not interested in having some sort of regulations for renovation contractors, but clearly this is something that the department is going to have to put some extra effort into this area. I do know without endorsing this group that was on the radio a couple of weeks ago, and this group, I am assuming it was the same group that spoke so highly about the minister, that he has met with these people.
These people were suggesting that perhaps the city or the local municipality should be enforcing permits. By doing that, by enforcing permits they could somehow enforce who was doing the work and how they were doing the work. Given the flood situation, this is kind of an interesting concept. If you enforced the permit concept it would at least make certain that structures were not being built where they are not supposed to be, because right now if there is no requirement to get a permit living on the river, I can hire somebody to come there and build a structure and there is nobody there to stop me, whereas if there was a requirement that the renovators get a permit, at least they would have to go to the city, sign for the permit, and then they would at least find out what it is that they can or cannot do.
So that was one of the ideas suggested by this person. If you are going to have problems with this, it is going to happen now. That would be my guess. I mean, if there ever was going to be more renovation problems, and there always are over the summer, but if you are going to have renovation problems, typically with driveways and roofs and stuff like that, this is the time when you are going to see it big-time. So you should have your department on high alert on this one.
Mr. Radcliffe: Mr. Chairman, I can advise that in fact the Consumers' Bureau has been very proactive in this field already. They have worked together with MEMO in preparation of a pamphlet called "After Flooding, Procedures for Returning to Your Home. " On page 13 there is a section, step 5, Rebuild and Floodproof. Without reading it into the record, it does outline advice to the consumer to be wary of direct sales people, high-pressure tactics, people who want payment in advance, loan brokers who charge a fee to arrange a guaranteed loan, et cetera.
Then the Consumers' Bureau is also listed on page 15 of the pamphlet with important phone numbers that the public, consumers may wish to consult, and this is, I am told, a 24-hour answering service so that consumers can call at any time, should they run into problems.
So not only have they done the after-flooding package with MEMO, the bureau has also made arrangement with Shaw Cable to produce a number of information ads to warn and educate the public as to the prevalence or the possibility of fraudulent individuals working in the renovation market.
The bureau is also working in close proximity with law enforcement agencies to deal with any fraud issues which may arise, and if they have not, I would certainly recommend that the Consumers' Bureau contact some of their counterparts in Grand Forks and make sure that if there are known and convicted fraudulent artists working in that area of the countryside, that that information be transmitted to us, and we would then share that with the disaster assistance people. I have already talked to the Minister of Government Services (Mr. Pitura), and he is certainly in accord with this suggestion, so that when applications are made for disaster assistance, if, in fact, any individual of a spurious or doubtful nature is identified, that, in fact, the homeowner be alerted at that point in time.
I am pleased to be able to advise my honourable colleague that, in fact, Mr. Robidoux and his department have been proactive in anticipating some of the difficulties which may assault our community. We can only hope that, in fact, our citizens will be vigilant and that we may not suffer the depredations of these individuals.
Mr. Maloway: Further follow-up to the loan broker situation, as the minister knows, the number of loan broker complaints from this activity reached an all-time high back in '95-96 to 919, and that was a 700-person increase over the previous year.
I draw the minister's attention to 1992, I think it was May 31, when I was asking the former Minister McIntosh when she would stop stalling and bring in legislation to regulate these loan brokers. That was in reference to a company called Tower Funding. I do not expect the minister to have the answer to the question right now, but perhaps he could get back to me with what happened.
The person who had complained to me did not want the name used, but she complained--now, here is what the problem eventually boiled down to. The minister at the time put her department on high alert, sent me a memo, said she had the whole department ready to roll here. She had the RCMP, two RCMP members, two members of the Consumers' Bureau waiting to hear from me, and she was threatening to send them after me if I did not release the complainant's name.
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The complainant did not want her name released, so what I did was I contacted the person, the woman in this case, from Flin Flon, and she told me she had filed her complaint with a Ken Bourquin--now, I am not sure who this person is, but his phone number was 956-2040--just after the Free Press article appeared. So that is where it sat and she had been taken for about $4,000.
Now, given this instance with the minister being quite, well, I do not know how you would describe it given what she did, putting these RCMP officers on alert and the members of the Consumers' Bureau, so I just walked away from it at that point in time and hoped the situation would resolve itself. I guess over time it probably has, but if the minister could check into this and get back to me, then I could close this file once and for all and not have to worry about it anymore.
Mr. Radcliffe: Just to recap my honourable colleague's remarks, it is Tower Funding Ltd. is the name of the alleged accused?
Mr. Maloway: Yes, I believe that is the name of the company, and, certainly, if the minister is unable to find a file in his department under Tower Funding, then I will certainly endeavour to share with him the contents of my file so that we can tie it down, but it came about after a number of articles in the Free Press dated May 22, 1993, so it was in that time frame.
Mr. Radcliffe: I will endeavour to look through my files and see what the follow-up has been on that and report back to my honourable colleague.
Mr. Maloway: Mr. Chairman, moving right along here, I sent the minister a letter January 8, 1997, regarding an Internet service that had gone out of business. It was called Infohighway Onramp. The minister should be aware that there are a huge number of these services operating, and over time there will be a number of failures. It is not unlike the situation that developed with the blue box and the recycling companies a couple of years back. There is a danger, and we dealt with this with the suggestion for a deposit legislation on prepaid items that are purchased, about the advisability of businesses spending the money before the service is performed, you know, collecting money in advance. That is what happened, people prepaid their blue box, but a whole lot of them got caught with service only half the year. Well, they did. They prepaid it, and in a lot of cases the people were only out a month or two, but those who had paid just before the demise of the company were out the whole year. That is the same case with this Onramp. As a matter of fact, after I wrote the letter after I had read about this, I ran into a couple of people who--in fact it was a church--were out the money, were out their whole year of subscription fees they paid for this Infohighway Onramp services. So I would ask the minister what he has done since we sent him the letter, and what he might intend to do.
Mr. Radcliffe: I believe that I did send a reply to my honourable colleague, but I do not have that documentation in front of me here. I will check the files and respond accordingly.
Mr. Maloway: I wanted to ask the minister what the situation was regarding odometer tampering. Minister McIntosh, some years ago, made an outrageous statement that this was not a problem with odometer tampering, and in the same newsclip the news outlet had a clip of RCMP Sergeant Sangster, of the day, saying it was in fact a very serious problem. That is when the problems really became public because certain dealerships in town--it was a known fact that you could walk through the car lot and when they found that 99 percent of all the cars in the dealership odometers all were just below the 80,000 mark that was kind of the tipoff that there was something wrong with this particular dealership or that particular dealership. I do not anticipate that this problem has gotten any worse because we have situations where people have taken--they take odometers, complete odometers out of junked cars.
There are all sorts of situations where odometer tampering has gone on. We had one of the most bizarre stories that I have ever heard where a dealership was supposedly--had a little drill operating under the front of the car. You can roll back the odometer with a drill. They got so good at it after a period of time and so brazen that one Saturday morning they forgot, the salesman forgot to turn the drill off. There were customers in the showroom wanting to see this car and this guy refused to open the hood because the drill was whirring underneath it, and he did not want to--this was the manager of the place who after having left was under a gag order, as happens with a lot of situations. He had a settlement and part of his settlement was, he was not supposed to talk about this.
In any event, that was one of the more bizarre cases. I will not get into anymore details about that one. That one had a lot of interesting aspects. So odometer tampering is a very major problem out there, and I would like to know what the minister knows about the current state of odometer tampering and what he is doing about it.
Mr. Radcliffe: Mr. Chairman, my deputy tells me that she has been in the department since February of '96, and as my honourable colleague knows I have been in the department since January of '97, so we look to him and admire and respect his longevity in this sort of endeavour, but, in fact, we have had no complaints given to us in those time intervals with regard to odometer tampering.
My only other response would be that I would imagine that this would also be a matter for the criminal courts, that if there were a case where odometer tampering was something other than something innocent, that criminal charges would be laid against the individual perpetrators. So this might be something as well that my honourable colleague may wish to ask of the Minister of Justice (Mr. Toews).
Mr. Maloway: Mr. Chairman, I would just ask him then that since he is not that familiar with it, would he check back on the old files and compile an answer for us as to what the current state of affairs is and maybe check with the Justice department yourselves and then get back so that will save me chasing down two different sources.
I would like to ask the minister in the area of pipelines, we are aware now that--well, I guess, the Public Utilities Board people are out of town still. They will not be back till Monday, but we can get them in concurrence though, so they have another opportunity in this process. After the Estimates are done, we could probably call them to talk to them at concurrent stage, but in the meantime we probably should ask you a couple of questions.
The minister is probably aware that there is a huge pipeline contract being let. I first became aware of it in February, I guess it was, when the president was on CJOB. I did not think they asked probing enough questions, because it was clear to me that a contract of this size--and, by the way, this is for the export of gas to the United States--so we are not, we are talking about Alberta gas first of all. I know that we are all one country and it is our gas too, but it originates in Alberta, and the royalties, I guess, would find their way there.
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The gas is for export, I believe, almost a hundred percent to the United States, but they are going through Winnipeg and then down south to the border. This is an enormous cost. I do not have the transcript here with me, but it is a billion-dollar project. Then just yesterday the Free Press carried a front-page story, and I am assuming it can only be the same project.
So what I am concerned about is how this is going to pass its way back to the consumers of Manitoba. In other words, how much more in natural gas rates will we be paying to pay off this pipeline which is--other than the constructions jobs that will be here for a short period of time and any ongoing maintenance-type of jobs that this pipeline will involve, most of the benefit though is for the gas producers in Alberta and of course the export picture for the country as a whole. But how much are Manitoba consumers paying for this? Maybe you want to take it as notice.
Mr. Radcliffe: As my honourable colleague probably well knows, the components of the natural gas fuel bill that one receives on a monthly basis to heat one's home or commercial building have two parts to them. There is the price of the acquisition of the commodity, which is proportionately spread out by the seller or purveyor of the commodity, and then there is the cost of transmission. The acquisition of the cost has become deregulated, as my honourable colleague knows, by the National Energy Board. That has given rise to the area of activity with the individual gas brokers where if they can see a spread in the supply and market for the price of the commodity, not the total package-end price, but the actual acquisition cost of the commodity, then that is where these people would enter into the market.
That ultimately, it is almost like the operation of hedging or futures, tends to have an averaging effect on the cost of the commodity, and the cost of the transmission is the actual cost that is regulated and will be proposed to continue to be regulated by the Public Utilities Board. There is much more of a free market enterprise in the actual acquisition at the wellhead of blocks of the fuel.
I guess my honourable colleague's question sort of almost borders on macroeconomics and the viability of the national oil companies who are producing product. I can tell my honourable colleague that there are reserves of product that are built up in the United States that are owned by the oil companies of petroleum substances, and unless a case is made to me that the Public Utilities Board has granted increases in rates to accommodate the capital building of this pipeline, I am not aware in any recent judgments that there has been provision made for this expense.
The pipeline is obviously not doing this for its health. It is doing it because it sees a profit, that it has gone out and made the appropriate arrangements for financing on its own, and that it sees that it has made a business plan to the lenders and to the financiers, and it may very well be financing this out of its own savings and profits.
So there is nothing that I am aware at the present time in any of the judgments, and I receive the judgments from the Public Utilities Board on rates on a regular basis, of any reference to the increase in cost for the transmission of the commodity through the existing pipelines to Manitoba consumers referencing the Emerson line.
Mr. Maloway: Perhaps we could deal with this when we get into concurrence and when the Public Utilities Board people are available themselves to answer direct questions. That might be a better opportunity for us to do it.
I know we dealt with this a little earlier, the Videon Cable TV rate hike requests which were substantial increases and actually higher than what they are even allowed to request, and I asked the minister why he was not prepared to make representation to the authorities on this issue. He should be aware that we have already gotten some results, because they are not getting the increases that they were requesting. I would suggest that he rethink his position of not wishing to make representations and whenever another request like this comes before the CRTC that he, on behalf of the people of Manitoba, also send representation in. In this case, they were asking for something that they were not even entitled to ask for. Well, I guess they were entitled to ask for it but it was beyond the guidelines that they were allowed to have accepted.
Mr. Radcliffe: I have my honourable colleague's representations on that and I will take it under advisement.
Mr. Maloway: Perhaps we could move on to the Co-op Development sections because we have a few questions for the Co-op Development people and then I think we are almost ready to start another department. Well, we are not ready but we are going to have to because of time.
Mr. Radcliffe: If my honourable colleague could let me know which department he would like to interview next after Trust and Co-op, I can make arrangements for the appropriate director to be summoned to the building.
Mr. Maloway: Well, Mr. Chairman, in fact, we are going to be finishing the whole department in a very few minutes and moving on to Industry, Trade and Tourism. I had indicated earlier, I know that is a very big disappointment to you and your staff and I did point out that we will be going into concurrence. We had an option of just stopping the department midterm, the Estimates midterm, and taking and going to Monday, starting a new department now and then going back to Monday when the PUB people are going to be back in town and getting them in here to get answers on a number of issues.
We solved the problem by simply passing all the department Estimates now and then when concurrence comes up we will bring them in and that way they will have a lot of notice, so they will know that they cannot go on a trip, wherever they are now, they will know they would not be able to go on a trip for those particular days or they could avoid going on a trip maybe, unless it is of course absolutely necessary and in the interests of the public of Manitoba.
Mr. Radcliffe: I would like to advise my honourable colleague that no travelling is done in this department without the scrutiny, the vigorous scrutiny of the minister of this department. I am assured, in writing, that every trip that is undergone in this department and every expense that is incurred on the public purse is vital to the governance of the people of Manitoba and, furthermore, I do ask for an accounting. I want to be able to tell my honourable colleague what benefits the people of Manitoba receive by virtue of the spending of their dollars. So I want to allay any scintilla of suspicion that my honourable colleague might have, or anxiety, that any of this travelling might be spurious or ill advised.
Mr. Maloway: Mr. Chairman, the minister does not even know where these people are at this point. [interjection] He knows where they are. Then where are they and what are they doing on behalf of the province? It seems to me that you have a whole department here and there is not one person that can come before the legislative committee. Why are they all gone at the same time?
Mr. Radcliffe: I would advise my honourable colleague that I am without the information before me. I believe these individuals are in Banff, Alberta, at this point in time, and they are studying matters of vital interest to all regulatory boards across Canada. They conference on a regular basis in order that they keep abreast of what the trends are in the regulatory world in other provinces. [interjection] However, I would not want my honourable colleague to allude that there were any excessive gas on the subject, so therefore perhaps we could move on to the Co-op and Trust issue.
The Acting Chairperson (Mr. Dyck): The honourable member for Elmwood, before I recognize him, is there a will to pass 1.(d)(1) Salaries?
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Mr. Maloway: Research, no, we will pass it all at the very end. I think we have an agreement that we will pass the whole thing when we are done. We are nearly there.
Mr. Chairman, before we get into the Minister's Salary, I would like to ask the Co-op Development people about the Repap and Abitibi operations as to whether or not there has been any effort there for community takeovers and community involvement in those projects?
Mr. Radcliffe: Mr. Chairman, I am advised by my director that any development planning or acquisition is done, has been transferred to the I, T and T department. Therefore, I would perhaps suggest that my honourable colleague contact the "I" team.
Mr. Maloway: Well, then, under Co-op Development, could the minister tell us what is happening in that area? How many co-ops are still functioning and what is the status?
Mr. Radcliffe: Mr. Chairman, I am advised that there are approximately 430 viable co-ops incorporated and operating in the province of Manitoba at this time.
Mr. Maloway: Mr. Chairman, is that an increase or a decrease over the last, say, eight years, nine years?
Mr. Radcliffe: I have, and I am willing to share with my honourable colleague, a spreadsheet which shows the number of co-operatives incorporated from '92 through '97 and the number of co-operatives that have been dissolved. In fact, there has been a total decrease from 88 incorporated to 133 dissolved.
Mr. Maloway: Mr. Chairman, I would like to ask the minister--there was a story in the paper yesterday regarding the Steinbach Credit Union, and I would like an update as to what is happening out there.
Mr. Radcliffe: I can only repeat what has been set out in the newspaper because the department does not get into the minutiae of the management of the credit unions. It would appear that the board of Steinbach Credit Union, which is one of the premier credit unions in the province, had decided to seek management and administration at another source. So, therefore, as the article in the newspaper said, they had dismissed their GM and would be, I suppose, doing a scout for new administration.
Mr. Maloway: Mr. Chairman, a number of years ago, there were a number of co-op gas stations that were started in northern Manitoba, as a matter of fact, I think there was one even in Brandon, in an effort to combat high gas prices, which we dealt with considerably a few days ago, and gas prices dropped considerably when these co-ops were started. I would like to know how many of those co-ops are still operating, and where are they?
Mr. Radcliffe: Mr. Chairman, we do not have that documentation in front of us, but we would be pleased to supply my honourable colleague with that information. We have that information in the office.
Mr. Maloway: Mr. Chairman, a final question to the minister, and this would be, I guess, under the Minister's Salary. I would like to know how much travel, or what were the travel costs--
The Acting Chairperson (Mr. Dyck): Pardon me. I think we should discuss that later on when we discuss the Minister's Salary.
Mr. Maloway: That is what I suggested, yes.
The Acting Chairperson (Mr. Dyck): Okay, we need to pass the other items first.
Mr. Maloway: Pass all of these, sure. Fine.
The Acting Chairperson (Mr. Dyck): Is it the will of the committee then to proceed with the passing of the other items? [agreed]
5.1. Administration and Finance (d) Research and Planning (1) Salaries and Employee Benefits $153,100. Shall the item pass?
Mr. Maloway: Now is that Minister's Salary? No?
The Acting Chairperson (Mr. Dyck): No.
Mr. Maloway: Go, pass, yes. Just go right up to the Minister's Salary.
The Acting Chairperson (Mr. Dyck): The item then is accordingly passed. 5.1.(d)(2) Other Expenditures $25,900--pass.
Then let us move to 5.3.(a) Insurance Branch (1) Salaries and Employee Benefits $276,000--pass; (2) Other Expenditures $99,700--pass.
5.3.(c) Public Utilities Board (1) Salaries and Employee Benefits $661,300--pass; (2) Other Expenditures $1,225,700--pass.
5.3.(d) Trust and Loan Corporations Branch (1) Salaries and Employee Benefits $108,100--pass; (2) Other Expenditures $15,000--pass.
5.3.(e) Cooperative and Credit Union Regulation (1) Salaries and Employee Benefits $295,100--pass; (2) Other Expenditures $52,300--pass.
5.3.(f) Land Titles Office (1) Salaries and Employee Benefits, no expenditure--pass; (2) Other Expenditures, no expenditure--pass; (3) Less: Recoverable from other appropriations--pardon me.
5.3.(g) Personal Property Registry (1) Salaries and Employee Benefits, no expenditure--pass; (2) Other Expenditures, no expenditure--pass.
5.3.(h) Companies Office, no expenditure--pass.
Resolution 5.3: RESOLVED that there be granted to Her Majesty a sum not exceeding $4,406,600 for Consumer and Corporate Affairs, Corporate Affairs, for the fiscal year ending the 31st day of March, 1998.
The last item to be considered for the Estimates of the Department of Consumer and Corporate Affairs is item 1.(a) Minister's Salary $25,700.
Mr. Maloway: Could the minister provide us with an amount and a list of all travel, all trips taken over the past year of the minister and his staff?
Mr. Radcliffe: I do not have that with me, but I certainly have no problem with supplying that to my honourable colleague. I am aware that the previous incumbent in this office did do some travelling. I think he went to Toronto, and I am not so sure that he did not even go to England on departmental business. I have access to those figures, and I can supply them to my honourable colleague.
Mr. Maloway: I wanted to go even further than that. I would like to have travel figures as far back as the minister has got them for, back eight years, 1988, if you can provide them. That will give us an idea of how active or inactive in terms of travel each of the ministers have been.
Mr. Radcliffe: Certainly, I have no problem doing that.
Mr. Maloway: Unless any other critics have questions--I think the member for Inkster (Mr. Lamoureux) has some questions.
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Mr. Kevin Lamoureux (Inkster): I did have just a couple, somewhat brief questions, and it is with respect to franchises and franchisees. I had a meeting, I guess it was about a week, 10 days ago, with a constituent of mine who expressed a great deal of concern regarding how franchisees and contracts work and if in fact there is any other protection. I will give the minister somewhat of a hypothetical--well, it is not really hypothetical--it is something that actually did happen, where here is an individual who had accumulated some dollars and felt that by acquiring a franchise he would, in fact, be having a job, making a job for himself. Unfortunately, for this particular individual, the franchisee, or the franchisor--
Mr. Radcliffe: The franchisee is the consumer. The person granting the authority, the turf, or the service is the franchisor. The "or" is the active ending to the verb, and "ee" is the passive recipient of the verb.
Mr. Lamoureux: I appreciate the interruption from the minister. The franchisees and their rights are something in which I am very much interested. In this particular discussion, the individual had indicated there are other jurisdictions where, in particular in the States, there are certain legislative rights that franchisees have that protect their interests. To use, again, another type of an example, a multinational or a national corporation that has hundreds of franchisees scattered throughout its area of responsibility if you like, the primary concern is that of profit. One cannot necessarily blame them for trying to maximize on profit. Here, in this particular case, it seems as if the franchisee was, to a certain degree, taken advantage of.
Here is what we can provide for you as a franchisee, is what he was told, painted a wonderful, brilliant picture. It looked good, and then, all of a sudden, another franchisee comes into the area, and he is somewhat left holding the bag. The market is actually going down, because there is another franchisee that is obviously selling the same product. He felt that, even though there are contracts that are entered into--and we are all familiar with the verbiage of consumer beware that would, to a certain degree, apply with a franchisor, a franchisee and their contracts--the concern still is, what, if anything, does the minister believe could be done in a situation such as this where a franchisee feels that there was inappropriate action taken from the franchisor? Is the minister aware of any other legislation in other jurisdictions that protect the franchisee?
Mr. Maloway: We spent hours on this. He does not believe in it; that is unfortunate.
Mr. Radcliffe: As the honourable member for Elmwood (Mr. Maloway) has indicated, we did discuss this during the course of the Estimates, I think in Research and Planning. If there has been a fraudulent breach of the law, misrepresentation, criminal acts, then, of course, there is the Crown to rely upon there and the Criminal Code. If there is a matter of two willing parties bargaining and somebody making a bad bargain or an inappropriate bargain, then that is something that the Crown is loath to become involved with, so long as there has been full disclosure, there has been no deceit involved, and that the individual has been educated.
Although I do not have a complete grasp of the particulars of your example, I would urge, obviously, as I did to my honourable colleague, that all individuals who are putting up significant stakes of money and considering complex, sophisticated documents, do consult the services and engage the services of a good solicitor who understands this sort of work in order that the franchisee be protected. Often there is an area when, and this is again a very generalized remark, that in a franchise operation one does obtain an exclusive occupancy of a particular turf or territory for a particular period of time.
That is often one of the things that a franchisee purchases when they enter into these sort of arrangements. Again, without looking at the specifics of the contract that your constituent was talking about, I am at a loss to comment any further than that. I guess the areas of major concern which I would address myself to would be, has there been adequate and full disclosure, has there been deceit or fraud? If there were willing parties entering into an agreement, equally informed or appropriately informed, then I believe the government must step back and let commerce take its course.
Mr. Lamoureux: If I am approached by a franchisor and the franchisor says to me, because I am looking to start my own business, that here is the turf that you are going to be provided, here is what we are going to provide. I look at the numbers and so forth. Even if I pay the best lawyer in the city of Winnipeg dollars to go over the contract and the details of the contract, I would ultimately argue a vast majority of the franchisees would not have the complex understanding of every aspect of the marketplace.
In other words, if you say, look, you have a mile and half radius as a franchisee and all of a sudden you look at it, it makes sense to you as a franchisee, other franchisees in the area have similar things, here are the projections that you are given, and then shortly after signing a contract, you were not lied to, but were you misled? Were you painted a picture that the company or the franchisor knew really was not that accurate?
Now, you are into a situation where you have invested considerable money. In this particular incident the individual is getting paid far less than minimum wage and is forced to work virtually seven days a week. It has been an absolute disaster. I do not necessarily believe that he is alone, in fact had met with other franchisees, and they share some of the concerns that this particular individual has brought up.
The discussion that I ended up having with him was, is there not some sort of an onus of responsibility on these franchisors to be straightforward with the franchisees with respect to the potential revenues, both on the positive side, the negative or, more so, their plans, what their actual plans are in the future? If they are looking at, in the next three or four years, having two or three more franchisees located right around your area, should there not have been some sort of responsibility?
I realize it is a very difficult issue to address, and that is why I am more interested whether or not the minister is familiar with any other legislation in any other jurisdictions that might be more franchisee-friendly, if you like. As you say, it is not as much concerned about the local, like the Chicken Chef in rural Manitoba, which is a rural franchisee, because they have a vested interest in the province of Manitoba, a very strong vested interest in the province of Manitoba. A large, multinational franchisor who does not necessarily have as much at stake other than to try to increase profit, the best way you increase profit is through saturation in many cases and that might not necessarily be in the best interests of the local entrepreneur or the local franchisee. I would suggest that maybe these, at times, local franchisees can be led down the garden path in terms of how wonderful it could be to be your own boss.
So I would again emphasize to the minister: Is he aware of any form of legislation stateside or any of our sister provinces that address the whole franchisee-franchisor in their relationship?
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Mr. Maloway: We dealt with this for several hours the other day, but just by way of background to the member for Inkster (Mr. Lamoureux), Alberta is the only jurisdiction that we are aware of anyway that had a really good bill, a really good franchise legislation. The advantages of that particular legislation will become apparent when I explain them to you, because the circumstances you are describing are exactly what I hear over and over again from franchisees.
The Alberta legislation required that a prospectus be filed every time you sell franchises in Alberta. It also provided for the up-front fees to be held in trust until any and all promises made were carried out. So, therefore, if you were not going to keep your promises, you do not make them in the first place, right? If you go in and make no promises, then your fees will come to you much quicker. They will not be held in the trust as long.
Typically what you find is that franchise operations by-pass Alberta. If you are talking to a franchise operator, just ask them if they do business in Alberta. If you find they have franchises right up to the Alberta border and then they jump over to B.C., then you will know, you know, it is a tipoff that there is something wrong, because typically it would cost a franchise operator maybe $30,000 or so to get a prospectus in order to deal in Alberta. The franchise companies did not like the Alberta legislation.
So that was, in a nutshell, what some of the base requirements are of the Alberta legislation. Because what happens is franchisees that are operating, say, successfully in Ontario in an area, work on an expansion basis; they get out to, say, Manitoba and they promise they will spend a million dollars in advertising in the first year. Then they find out, through no fault of their own, they are unsuccessful in signing up enough people, right, so maybe they only sign up one person. Now how can you justify spending a million dollars on one little franchisee?
So what happens is they sacrifice him. They told him verbally they were going to spend a million dollars, but at the end of the day--or they run short of money. They expand too quickly, they run short of money, and then it is the little guys who pumped in their life savings, the retired school teachers, the retired firefighters and so on, who are looking for a new career in life, throw their entire life savings into these things. Retired politicians, yes, we talked about all the retired politicians who would need this legislation--Tory politicians--in the next couple of years.
So, yes, it is a big issue and a very important issue. Typically the franchise agreements are very complicated, you know, 50-page documents and there are a lot of rules in there. So what happens is these franchisees, either through embarrassment or through requirements that they do not talk to the public, are really reluctant to give you the details about these kinds of things.
So there is a big need for franchise legislation, but to satisfy the free market ideology of neo-Cons across the country, the Alberta government has basically collapsed its legislation. Three or four years ago it made some changes to it which, in my view, gutted its effectiveness, but it was really good while it lasted.
Once again, it might surprise you that it would happen. Why Alberta? There was--and I forget the circumstances--a major happening in Alberta that prompted this legislation to come in. Certainly, if you were going to be a franchisee, that was the place to buy the franchise would be Alberta, because you were protected. You knew that if they made promises, they were not going to get their money unless those promises were kept. If you were a franchisor you stayed away from Alberta, and they did in droves. They lobbied very heavily to get rid of that legislation, but that is an emerging area. Just stay tuned, because there is just more activity in that area than the public actually believes. So I will just leave it at that.
Mr. Lamoureux: Just, I guess, to add, I appreciate the comments from the member for Elmwood (Mr. Maloway). I guess I would follow it by commenting that given some of the circumstances that the member for Elmwood talks about and some of the things I made reference to, if the minister sees any benefit whatsoever in at least ensuring that there is some sort of a dialogue between his department and some of the franchisees that are out there to see if in fact it is necessary, and also if in fact there is legislation that might be out there somewhere that could be positive and contribute in a positive way here in the province.
Mr. Radcliffe: Certainly if there are consumers in the province of Manitoba who do feel aggrieved through some sort of inequity of commercial relations or the inappropriateness of regulatory bodies or departments for which this office is responsible, I have encouraged them to feel very free to contact my office. We do, I can tell the honourable member, have a number of phone calls on a daily basis that we handle. We have a steady stream of correspondence, some of it laudatory and some of it critical of the different departments. Likewise, I would extend a similar offer to my honourable colleagues, and through them to the people of Manitoba, that if there are situations which they feel are going unaddressed and unanswered, to feel free to contact me either in writing or by person, and I would make every attempt to meet with them, review and absorb the particular issues that they are speaking about.
The Acting Chairperson (Mr. Dyck): Item 5.1.(a) Minister's Salary $25,700--pass.
Resolution 5.1: RESOLVED that there be granted to Her Majesty a sum not exceeding $1,217,800 for Consumer and Corporate Affairs, Administration and Finance, for the fiscal year ending the 31st day of March, 1998.
This completes the Estimates of the Department of Consumer and Corporate Affairs. The next set of Estimates that will be considered by this section of the Committee of Supply are the Estimates of the Department of Industry, Trade and Tourism.
Is there the will to have a brief recess in order to be able to get the next department in place? I would suggest we have a five-minute break in order to do that. [agreed]
The committee recessed at 4:07 p.m.
The committee resumed at 4:15 p.m.