The Acting Chairperson (Mr. Gerry McAlpine): 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 Industry, Trade and Tourism.

When the committee last considered this department, it had been considering item 1.(d) Research and Economic Services on page 86 of the Estimates book. Shall this item pass?

Mr. Tim Sale (Crescentwood): Mr. Chairperson, I had begun to ask some questions about the degree to which this restructured area had been augmented in staff terms, and the minister had undertaken to give us some information about the staff that had been added to the department. I am wondering if he is able to do that.

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Hon. James Downey (Minister of Industry, Trade and Tourism): Yes. Before I do, though, I have a little more information that I will give the member to a previous part if that is all right. He was looking for information that is involved in the 1996-97 figures which are displayed in the 1997-98 printed Estimates in an adjusted vote format.

The objective of an adjusted vote presentation is to present the 1996-97 numbers in a manner consistent with the '97-98 numbers. The reconciliation statement is used to reconcile the '96-97 printed main Estimates of Expenditure to the '96-97 adjusted vote figures which are used for comparison in the '97-98 printed main Estimates.

The '97-98 funding for an extended harness meet, $75,000, was transferred to Community Support Services. The program will be funded in '97-98 by Community Support Services. Consequently, an adjustment is required to put the '96-97 adjusted vote on the same basis as the '97-98 print.

In '96-97, the printed Estimates were reduced by an amount of 120.6, an account of an amount which was included in the Enabling Vote. Since no amount is included in the Enabling Vote in '97-98, in order to make the presentation consistent with the '97-98, an amount of 120.6 must be added to the '96-97 adjusted vote.

In 97-98, financial resources to fund certain costs associated with the operation of tourism information centres was allocated to I, T and T from Government Services, 135.1; Highways 10.5; and Rural Development 15.3. Consequently, the '96-97 printed Estimates must be increased to put the '96-97 adjusted vote on the same basis as the '97-98 numbers.

Now, the other issue as it relates to staff in Research in the department, Research staff, we have added a policy and development consultant. This position has been filled through the transfer of a consultant from the Industry Development area, specifically from the Information and Telecommunications Initiative. This individual brings a broad array of skills to this position, including formal training in economics and marketing, experience in quantitative analysis, accounting, and the information and telecommunications area.

We have also added a project co-ordinator. This position has been filled through the transfer of a former assistant to the deputy minister. The individual brings strong communications-related talents to this position both from past experience in the deputy's office, as well as with departmental initiatives such as Invest Manitoba and National Science and Technology Week. In addition, this individual has completed numerous courses on marketing and communications and is currently enrolled in a certificate program in communications.

As well, the administrative support, with the addition of two professional staff, a full-time administrative support position was staffed through the transfer of an individual from Manitoba Trade prior to this transfer. The administrative support for Research and Economic Services had been provided administrative support through the sharing arrangement with the Industry Development, environment and science industries initiatives.

Mr. Sale: Mr. Chairperson, let me preface this next series of questions with acknowledgment that Manitoba's trade performance has been strong in the last number of years. We all hope that it will continue to be strong and that we will shrink our deficit further, as it has been shrinking in the last few years. We still have a troublingly large deficit with the United States, but an overall surplus with the rest of the world offsets this to a certain degree. I think we all acknowledge that when you have a trade deficit in a provincial economy, basically that means you are shipping dollars out in order to service that deficit, because you cannot have a trade deficit unless you pay for it. So, essentially, this is a drain on our economy still. The numbers have been going in the right direction. We are glad about that, and the minister has made that case.

I want to ask about what is happening in regard to the proposed activity--in fact, it is not really a proposed activity; I believe the province has already undertaken it--that is, the signing of the NAFTA side agreements which is the subject of Bill 3 properly, but the department has a responsibility here.

Can the minister indicate what possible benefits are seen from being a signator to these two NAFTA side agreements given that, first of all, our standards in labour and environment are considerably higher than some of the NAFTA partners? So being subject to those agreements really does not seem to me to add much to our standards. My understanding is that the panels will operate anyway, and the panels already have the ability to do what is contemplated in the side agreements whether the side agreements are signed or not. It does not seem to me to make a whole lot of difference. So what is the benefit here that the province is getting by having signed, I think in January of this year, these two side agreements?

Mr. Downey: A couple of points that I would like to make, Mr. Chairman. One, I think it is important to point out that, as part of the overall agreement, this truly legitimizes us fully as a partner with the federal government or part of the agreement in the federal government. Probably more importantly is the fact that we now, because we are participants--if there are some anomalies or some concerns that we have, we can legitimately raise them as they relate to labour practices and/or environmental practices within either the United States and/or Mexico. Prior to that, we would not be able to legitimately put forward a complaint, because we were not a full signator to the agreement.

Mr. Sale: However, the minister, I think, will acknowledge that the opposite is also true, that we have now opened ourselves to the kinds of complaints that--for example, we may have set an environmental standard higher than the United States might like in regard to emissions that L-P, for example, to take an example that is just meant to be an example and not a fact. We now appear to have given up substantial, at least I would think substantial, sovereignty in regard to issues of provincial jurisdiction under the constitution and turned over that sovereignty to multinational panels who will make binding findings on matters of what they consider to be fact, and this Legislature will no longer have anything to say about that because we have essentially ceded sovereignty in that area, in my understanding.

Mr. Downey: Mr. Chairman, I do not, quite frankly, agree with the member that we have given up any sovereignty or any control over our own destiny. What we have committed to do is make sure that the legislation that we have in place, or put in place, is fully enforced. It is not a matter of going beyond that. It is a matter of making sure that the legislation that we put in, whether it is environmental and/or labour legislation, is enforced to the laws that are written. It does not go beyond that as it relates to giving out jurisdiction to anyone outside.

Mr. Sale: Mr. Chairperson, should Manitoba decide that it needed, let us say, hypothetically, higher standards of water quality in the Assiniboine watershed or the Red River basin or whatever and imposed those higher standards unilaterally and they had costs for a company like Simplot or some other company, would that company then be able, under the NAFTA side agreement, to petition the panel for discriminatory action?

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Mr. Downey: I am told by the department that the answer is no.

Mr. Sale: Mr. Chairperson, what has been achieved that was not already in place by virtue of the federal government having signed these side agreements instead of doing what they said they would do upon election which was to abrogate NAFTA or to renegotiate it, which they of course promised to do as part of their 1993 campaign. Instead they signed two, what I think are widely and correctly acknowledged to be cosmetic, side agreements that really add nothing to the NAFTA agreement. They do not renegotiate anything in the NAFTA agreement, because the United States would not countenance renegotiation of anything that mattered to them. So these are cosmetic.

What have we gained as a matter of real consequence here by going along in January with the federal government to sign these cosmetic agreements?

Mr. Downey: I would not say they are cosmetic, Mr. Chairman. I think, as I have indicated at the outset, it does give us the ability as a partner to the agreement to challenge, if in fact it is taking place. If there appeared to be an abuse of the labour laws or the environmental laws of which product was coming out of, into our marketplace, it gives us the ability to sit as a partner and challenge those and put before the panel our concerns, and actions can be taken.

Yes, he is right. Conversely it can take place back to us, but, again, it does not cause us to lose our sovereignty, but it does in fact give us the ability to sit at the table and put forward our concerns if in fact the environmental or labour laws are not being fully adhered to in those other jurisdictions.

Mr. Sale: Mr. Chairperson, is the minister saying that, under NAFTA, without these side agreements, it was not possible to do the things which are now possible under the side agreements? In other words, is he saying that there could not be provincial participation in a matter of a trade dispute around labour or environmental issues under the general NAFTA agreement as entered into prior to 1993, that something has actually changed here?

My understanding is that that is not the case, Mr. Chairperson. My understanding is that the province could, as a jurisdiction, have standing at a panel hearing on an issue of provincial jurisdiction under the original NAFTA agreement, that there is nothing extra achieved here at all. Essentially, it was an election promise that had to be in some sense honoured by the Americans because there was a cosmetic requirement, and the cosmetic requirement was met, but there is actually no change in the law that allows us to appear as a party to a dispute involving our laws and NAFTA partners.

Mr. Downey: I think there is a little bit of confusion because, quite frankly, the NAFTA agreement is apart and is separate from the side agreements. Let us use labour for an example. Ninety percent of the labour jurisdiction falls outside the federal jurisdiction, that leaving only 10 percent within the federal government's jurisdiction. The side agreement covers off the 90 percent that falls within the provincial jurisdictions.

That is what the side agreement speaks to and is, as I said at the outset, separate from the general NAFTA agreement. So to include all the labour in the country, it has to be done by provincial agreement, and that is why it is important that the majority of the provinces sign, so that, in fact, becomes in effect.

Mr. Sale: Mr. Chairperson, what does the minister mean by the majority of provinces? Is he talking about the constitutional amendment requirement of 70 percent or 50 percent, seven provinces? What does he mean by that?

Mr. Downey: I probably used the wrong terminology. Rather than the number of provinces, rather than the percentage of employees who fall within the provincial jurisdiction--and the department is looking for the number--I think the number could be 55 percent coverage of the labour that falls within provincial jurisdiction.

Mr. Sale: Mr. Chairperson, is that a trigger? Is that what the minister is saying, that there has to be 55 percent sign on?

Mr. Downey: That is correct. I believe it has to be 55 percent before the sidebar agreement under labour becomes activated.

Mr. Sale: Could the minister tell the committee what other provinces have signed on to date?

Mr. Downey: I think, Mr. Chairman, and we can further substantiate this, but I think Quebec and Alberta have both signed on to the agreement, and if that is not absolutely accurate and if there are any more, I will further add that information, but I think that is accurate.

Mr. Sale: Mr. Chairperson, am I correct in saying that Manitoba has already signed on in January, I believe January 25 or 27, somewhere in that date?

Mr. Downey: The process, Mr. Chairman, is that we have signed an interim agreement with the federal government. After the legislation is passed, then that is forwarded to the federal government and we become registered within the overall agreement.

Mr. Sale: Why did the minister not have the courtesy to table the side agreements? There are four agreements here involved and referenced in the act. I think I have two of them now. It took some difficulty in getting them. One I got through the minister's office; one I got through the library, who did not appear to know what we were talking about even though it is a statute, an agreement of Canada. I managed to get a third one through the Internet. I think I am still missing one. Why did the minister not have the courtesy to table the agreements with the legislation, so that people would know what was in them instead of simply tabling a press release?

Mr. Downey: I guess they were fully disclosed at the time of signing, if I am not incorrect, and it certainly was not intentional although some people could put me down as a miserable, unco-operative sort of person trying to frustrate the opposition. It certainly was not my intent, but I do apologize to the member.

An Honourable Member: It worked.

Mr. Downey: It worked? Okay. Strategies. I will have to recheck that strategy to see if we want to continue to use it. Mr. Chairman, seriously, there was no intent to try and keep information from the member. If an apology would be helpful, I will apologize for not tabling it at the time the legislation was put on the table. But it was in fact made public at the signing which the member refers to. The date might have been in January. We have no problem in providing the information. It was, as he has indicated, fully made public through the library service, no intention to keep it from being fully expressed publicly.

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Mr. Sale: I certainly accept the minister's statement that there was no intent. I tell him quite frankly the library did not have a clue what we were talking about. When we even gave them the titles, they could not find one of them. They found one, they could not find the other. If they were disclosed at the time, they certainly were not included in the press release. They were not handed out at the time, unless they were handed out only to the actual signing participants which would not of course include the members of the Legislature.

Bluntly, I think it is a discourtesy to the Legislature to tell us that we ought to be ratifying components of international treaties and not to provide all members of the Legislature with those components. It is the same process we went through a year ago with the Agreement on Internal Trade in which the AIT itself was never tabled in the Legislature. Even though it was the subject of a provincial act, it was never tabled. I believe ultimately it has found its way into the library, but it is not a tabled sessional paper. It ought to be.

These are important matters. They are with us forever as legislators. We have been put in a position where essentially we are being asked to debate Bill 3 shortly, if not this Thursday. It probably might well come up this Thursday. Yet, while unofficially we have obtained three of the four documents, we have never had them tabled in the House. I believe that is something the minister ought to undertake to do, and in future, when we are increasingly in an era, Mr. Chairperson, where government is becoming government between levels of government. In other words, levels of government are sitting down and making binding agreements which affect all of us and which are not really subject, in the normal course of events, to the same kind of scrutiny that they might have been in the older form of the British Parliamentary system in which everything was laid before the House before it was entered into or agreed upon.

We are kind of in an executive government mode in which federal-provincial arrangements, federal-international arrangements, binding agreements are made, and legislators are left frankly irrelevant irrelevant to the process. I do not think that is a good development for the long haul of democracy. I do not think it is a good development even from the government's perspective of having their actions understood and accepted by the electorate as a whole, so I hope the minister would agree to table this and that in future the government, when it is entering into such agreements, important agreements that they believe are in the interests of Manitobans--I assume they do--that they would then table those agreements publicly and we would not wind up having to chase around through the Internet trying to find them. I invite Mr. Barber to go to the library and ask the library for them. The library does not know what these things are, and did not have them accessible, and the library, of course, as a repository, ought to have.

Mr. Downey: Mr. Chairman, to make two or three points. One is I have to apologize to the committee. I did not introduce Alan Barber, who is head of this section of the department. Although the opposition knows who he is, it is appropriate that I should introduce him. I do apologize, as I said, for not making them available if they were not made readily available. If the member would let me know which one he is not availed of, I will attempt to get him one. I can certainly table them in the Legislature and, I guess, my final comment is that I am not sure, I would have to check this out, but I am not sure whether my legislative assistant in fact recommended I should or should not table them. I will have to check out as to what his advice was.

Mr. Sale: Well, I thank the minister for that. I would prefer that he simply table them formally; then they are available, they are part of the record, they become sessional papers, they are in the legislative framework and can be found in future when people are interested in finding out about them.

Could the minister indicate whether there are other multilateral trade agreements currently under negotiation with members of his staff or with the government at this time?

Mr. Downey: Mr. Chairman, I guess what the member is making reference to is any direct agreements like the NAFTA agreement and/or trade relationship of a formal basis. We are on an ongoing basis in discussion with other jurisdictions, state to province, for example in Mexico with Jalisco. It is a memorandum of understanding but not really a formal trade agreement. It is a comfort agreement between the two jurisdictions to enhance relationships between those two jurisdictions but not a formal trade agreement. There is the ongoing work that is being done with the federal government and the World Trade Organization and that kind of thing we are not actively involved in, although there have been times when we have been invited to observe properly in different situations.

I know I was invited to go to--the most recent one was in--was it Taiwan? Last December I believe, it was a World Trade Organization which I was unable to get to. The critic did not like me travelling too much, so I was denied the trip. I am unfair in that comment. I have to say that did not keep me from doing it. Other activities did.

But, in all seriousness, the other agreement that we are aware of, of course, that Canada has been involved in and that was the agreement between Chile and Canada which we, which I am on the record as supporting. I was in Chile just prior to the President of Chile coming to Canada. I had the opportunity to speak with the Ministry of Agriculture and the leader of the main agricultural organization, and I spoke very positively as to what I could see it doing to help enhance the relationship between our jurisdictions. I think that as NAFTA and the trade agreement that Canada has with Chile and as it advances further into the Mercosur and/or South American trade activities, that we will see a greater involvement by Canadian companies.

So we are strong supporters of the right kind of trade agreements. We think it enhances Manitoba's opportunity to benefit our economy, and, as the member pointed out at the outset, we are improving our trade relationship with the United States. The gap is narrowing.

A lot of the material that is coming in or equipment that is coming in is production equipment. When we see the plant expansions that are taking place, a lot of the product that comes here, a lot of the equipment that is coming here is from the U. S. I think as we continue to expand and grow our international trade activities, and this does not make any secret about it, the first area where companies feel comfortable in doing business, quite frankly, is the United States, and from there they get their feet under them and then move into further international jurisdiction.

I am speaking a little longer to the question than I should maybe, but I think it is important to note that they are very interested in expanding the continued trade arrangements that are taking place. They have to be to our benefit, and that is where a lot of our growth will come from, as the member knows.

We are also, further to his question furthering the discussions on the Internal Trade Agreement as it relates to the additional sectors which have not been totally signed in, the MASH or the MUSH sector of the Internal Trade Agreement, we would hope to be able to conclude that sooner rather than later, although as the member knows, the federal election has probably delayed to some degree any further activities at this particular time. Then, of course, we will see what happens after the June 2 election, and I am sure we will be able to get back to what has to be done, and that is concluding the MASH or MUSH sector.

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Mr. Sale: Mr. Chairperson, I think the minister and his staff probably know that the NDP has supported multilateral trade agreements and has always seen that as a preferred route to the bilateral agreement such as the FTA, so the more we are broadened into the Mercosur, the NAFTA-South America connections, the more those connections are woven together with fair, as you said, appropriate trade, or fair trade.

I think that our analysis continues to be that labour in those countries is extremely badly done by, that the environment is extremely badly done by. The minister has made the case that he and his government have now signed on or the intent after the passage of Bill 3 is to be signed on to enforcing environmental standards and labour standards and raising questions about those standards.

I hope the minister will be vigilant, then, will encourage labour to work with its counterparts in those countries where labour standards include the routine murder of those who try to organize labour unions and secure any kind of justice for workers and routinely include the spraying of pesticides on crops where workers are actually in the fields.

I am sure he can find both through his own resources and through the public resources many organizations, videos, which are chilling in the risks that are run every day by workers in the maquiladoras area, by workers in South America, where the concern for workers and the concern for the environment take a second place to the concern for capital earnings through trade for what may be reasonable goals in the long run, but in the short run and in the medium run both our world and our workers take a terrible pounding in those countries more often than not.

That is well documented particularly in the maquiladoras area but in other parts of the Third World in which the Mercosur, for example, agreements in South America, are involved, with many Chilean farm workers, for example, where conditions are certainly far from optimal.

If these agreements are useful, and I remain to be convinced that these side agreements really add anything that was not there before, I hope the minister will make use of them and will seek opportunities to raise questions about the moving of production, the importing of production, from countries where the product has been manufactured or produced with labour conditions and environmental standards that would not be allowed through the doors of Manitoba.

Mr. Downey: Mr. Chairman, I think it is incumbent upon us to look for all opportunities where feasible that will give those jurisdictions the opportunity to enhance through either trade agreements and/or informal agreements activities that will better the lot for the environment and those workers in those jurisdictions. To ignore them and to not want to do business with them is not doing them any favour and/or our people, because, quite frankly, we have an environmental industries capability in Manitoba that could well enjoy greater employment and greater opportunities, again creating employment for those people in those jurisdictions.

For example, I could use some examples which I have seen, practically seen, in some of those areas where known technology here could be expanded into those communities, helping to strengthen the employment base of those people here but also generating an industry and a business in those other jurisdictions that could hire people who would improve--because, quite frankly, most of the companies that I am familiar with that are in these jurisdictions, you are not in this business unless you have a strong base, and a strong base at home means a good work environment in their factories or their businesses or their systems, which, quite frankly, can help to better spread the positive initiatives that are going on.

So I think there are some win-win situations that can be developed both on the environmental front and the labour front. Again, I do not want to take the time of the committee, but I could give one or two specific examples where I have seen that technology from Canada, from Manitoba, could well be introduced that would enhance environment to a large extent and enhance labour to a large extent in those communities. So I think it can turn into a win-win situation.

Mr. Sale: Mr. Chairperson, I certainly, specifically, was not suggesting the minister ignore it. I was suggesting that, in fact, he take opportunities and seek opportunities to raise those questions and to look for the opportunities of which he was speaking. So I think we are both speaking on the same wavelength.

I want to ask the minister if he would be open to discussing with the labour movement in Manitoba the linkages that they have with the labour movements in the countries covered by the NAFTA agreement, including Chile, where there has been substantial work done to try and help those workers in other countries to be effective in raising the workplace safety and health standards, the environmental standards, the labour standards, to the standards that we hold to be important in our mining industry and in our petrochemical industry, et cetera, in Manitoba.

Would he be willing to talk to the Manitoba Federation of Labour and see what they have to offer in this regard?

Mr. Downey: Yes, Mr. Chairman, and I think the member in talking the way he is, has raised another issue and another opportunity.

I think the committee should be informed of this, that one of the areas--and he mentions Chile and the mining industry--that should be noted is that today I think Canada is the largest foreign investor in Chile as it relates to the outside investors in the country, mainly in the mining sector.

With that Canadian influence, the Canadian influence being they like Canadian geologists, there is a demand for some training from Canadian, Manitoba schools. There are programs or work being developed now so that some of our community colleges can get involved more on the technical side of the training. Housing for those individuals, there is a considerable opportunity for people who develop housing. It seems that Canadian mining firms like to use Canadian technology and like to use Canadian companies to further support their systems.

Again, that is the kind of introduction of what I would think we would consider to be acceptable because we have labour standards and we have environmental standards here that are supported by the Legislature and basically supported by the people of Manitoba which can, in fact, be introduced into those jurisdictions, which, back to the point I made initially, will help.

Of course, I want my colleague the Minister of Labour (Mr. Gilleshammer) to be fully involved, as well, because of his jurisdiction. I would not want to get into any misunderstanding with him, but the point is that I would be more than prepared to discuss with him opportunities that could, in fact, enhance the objective that we are all talking about here.

Mr. Sale: The minister makes a general point that I would not disagree with, but, unfortunately, his examples are ones in which we have virtually no manufacturing capacity. We do not make mining equipment to any great extent in Manitoba at all, and we just delisted our Faculty of Geology and shut it down.

So due to the cutbacks which he can blame on the federal government and we will blame on the provincial government, the cutbacks at the University of Manitoba and the decertification of that faculty led to the closure of the Faculty of Geology in the School of Engineering, and so, unfortunately, we have cut off one of the things that we might well share.

He is right. We are the largest participant in that sector in Chile, and there are many linkages between the affiliated unions of the autoworkers and the steelworkers and the various other unions involved with mines in Chile and Canada, and those working relationships are quite strong and quite effective.

But his general point I accept, and I do not have a need to carry on this particular debate any longer. It is just unfortunate that he chose the example of geology.

Mr. Downey: Mr. Chairman, I am sorry the member is not broader in his thinking. If he had heard what I said, I said technical capabilities of which the Keewatin Community College I know has asked to be involved. There is more than just the University of Manitoba in the province, if he did not know. Brandon University has a geology department from which they put out some tremendously capable people. They are able to carry on with theirs. We have housing products. I talked about housing products which support the industry.

There are a broad number of activities that come from the mining industry other than just geologists. So I do not want to leave this debate with him having thought he won it, Mr. Chairman. I will conclude my comments if he wants to move on to the next section.

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Mr. Sale: If I just conclude with just being clear, there are no other major agreements currently under negotiation in which Manitoba is an observer or partner that involve international trade, treaties or whatever.

Mr. Downey: No, I do not want to leave that impression. I said other memorandums of understanding or agreements of sisterhood or brotherhood are well in the works. There are one or two that are being developed but not with Canada as an official participant and/or that would have the same kind of legal implications that the NAFTA or FTA would have, but there are discussions going on between jurisdictions as it relates to improving relationships.

As I said, we have one between the state of Jalisco. I expect the governor to come to this province very shortly and further discuss the enhancing of that agreement.

The Acting Chairperson (Mr. McAlpine): Item 10.1.(d) Research and Economic Services (1) Salaries and Employee Benefits $523,600--pass; (2) Other Expenditures $156,800.

Mr. Sale: Mr. Chairperson, could the minister just indicate--we have spent all this time on trade--under the information area which I presume would come under communications in this area, are there some things that are of a technical or strategic nature that I have just missed perhaps, and it is quite possible that I have, that are published and made available in general?

I am looking under the heading of co-ordinating efforts to distribute information on departmental initiatives to interested stakeholders; surveys government, Manitoba businesses producing listings of service capabilities and then the issue of strategic information.

I am not aware of what you might call background strategic information publications that have come out of this branch. Perhaps that is something that I just have not seen.

Mr. Downey: Mr. Chairman, there are two examples that I can give. One is that the department had worked co-operatively with EITC dealing with information that would flow from the information technology industry, and those are made public throughout the EITC organization. Another example would be a registry of the companies in the province, high-tech companies, which are made public.

So those are the kinds of things that was referred to. I do not think there is anything done within the department that is generally for the public's information that is not being distributed.

Mr. Sale: Mr. Chairperson, could the minister just give an example of what is meant by an innovation indicator? It is right in here. Its activities include research and infrastructure issues such as skill shortages and training needs, preparing briefing materials and innovation indicators. What is meant by that?

Mr. Downey: I guess probably the most straightforward one would be--the indicators that we would be looking for is how much money is spent on research and development by any company or companies.

The Acting Chairperson (Mr. McAlpine): Item 10.1.(d)(2) Other Expenditures $156,800--pass.

10.1.(e) Manitoba Office in Ottawa (1) Salaries and Employee Benefits $201,700--pass; (2) Other Expenditures $116,600--pass.

10.1.(f) Manitoba Bureau of Statistics (1) Salaries and Employee Benefits.

Mr. Sale: Mr. Chairperson, I had rather hoped Mr. Falk might be here. I do not know whether the intention of the minister was to have him here, but I wanted to have some discussion about the reliability or unreliability of the current labour force survey technology, the changes that took place in January and what implications those had for the quality of the information that we get.

Mr. Falk and I have had some discussions, and the minister probably knows I wrote to the chief statistician last year complaining about the fact that sometimes the federal survey was showing that, for example, the public sector suddenly gained 8,000 jobs one month. I thought that this was just a bit unfair that the government did not tell Manitobans that they had hired 8,000 more people and then laid them all off the next month. It just seemed to be grossly unfair labour practices.

I got a letter back from the chief statistician which was very unhelpful in which he indicated that all was well with the survey and there were no problems, and then a couple of months later they changed it quite radically. I am still troubled by the accuracy, particularly once you break down from the larger sample for Manitoba to the specific areas, and I am wondering whether the minister (a) shares that concern and (b) what he has done to address that with his counterpart in Ottawa.

Mr. Downey: Mr. Chairman, on the point of having Mr. Wilf Falk here, I could see if he is available. However, let us try and deal with it and if there are some areas that--I guess I will make a basic policy statement as far as I am concerned, is if a person is going to collect and assemble data, to make it meaningful it should be as broad and as inclusive as possible so that the end of the work that is done, then it means more than what you get when you deal with smaller samples. But I can put, basically, there will be an increase in the Manitoba sample size in the near future, the results from the reallocation of approximately a third of the national sample of 53,000, which is currently funded by Human Resources Canada and not Statistics Canada.

Human Resources Development Canada requires regional unemployment statistics for employment insurance purposes. An increase of several hundred households is expected to be added to the current 3,800 households, and I would hope this would help the overall problem that is being developed. So it appears as if there are some positive signs as it relates to the gathering of data and the sample size which will come from Human Resources Canada and not Statistics Canada, so the information will be gathered. It is a matter of coming from a different government pot, I guess one would say. So I do not disagree with the member in the fact that the broader the sample, if that is what he is saying, the better we would be. I am indicating to him that it appears there will be some improvement in this whole area.

Mr. Sale: Mr. Chairperson, the sample size is certainly an issue and I agree with the minister in that. I think that there was some concern about the methodology of seasonal adjustment, as to whether the methodology was producing the kind of robust results that you would want to have, and I do not know whether there is now a feeling that they have a better picture. Certainly in the last few months, there still continues to be fairly large month-to-month variations in the actual, and they are larger than you would expect in a province of this size. So I am not yet convinced that the process is stable, and I am not entering into a discussion about the good job results we have had in the last little while. I am pleased by that, the minister is pleased by that, all Manitobans are pleased, but the numbers behind them, I still worry when we have bumps up and down of 6,000 or 7,000 in a month where there is no discernable reason for that. I worry about the underlying numbers. So it is not just a sample size issue, I do not think, but that is what I was hoping we might try and find out from Mr. Falk as to what his technical sense is of what is the problem here and what measures are being taken by the government to try and encourage Statistics Canada to make it a more useful policy tool.

Mr. Downey: I hope the member did not misunderstand me. I anticipate that the sample size will increase. If there are some more issues of a technical nature, I will have no difficulty in asking Mr. Falk to further discuss or relay that information to him as to what concerns or improvements. If the member has some areas that he believes can help the improvement of the collection of the system, I would be prepared to hear him out.

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Mr. Sale: Mr. Chairperson, I claim absolutely no knowledge in the area of statistics. I have a great deal of difficulty interpreting statistics without somebody on hand to help, so I am not suggesting I know what we ought to do. I just think as people charged with the responsibility for trying to figure out policy direction, we need numbers that work better than the numbers we have had over the last several years. I was interested in what measures the government was proposing to Stats Canada, if any, or what measures Stats Canada was proposing that would strengthen the reliability and validity of the numbers that they give us which are very important to all of us. That was the issue I wanted to discuss.

Mr. Downey: I am told by the department that basically the volatility is pretty much directly related to the sample size.

The Acting Chairperson (Mr. McAlpine): Item 10.1. Administration and Finance (f) Manitoba Bureau of Statistics (1) Salaries and Employee Benefits $592,900--pass; (2) Other Expenditures $173,900--pass; (3) Less: Recoverable from other appropriations ($60,000)--pass.

10.1.(g) Grant Assistance - Manitoba Horse Racing Commission $176,100.

Mr. Sale: Mr. Chairperson, what is the rationale for continuing this grant in light of the substantial change in the levy last year, the very generous treatment that is given to the video terminals, the VLTs, which is unprecedented in Manitoba? The Jockey Club has by far the best deal, far better than any hotelier does in Manitoba, and yet we are still directly granting funds as well as granting all of the revenues from the parimutuel levy and continue to be force-feeding this industry. What is the rationale?

Mr. Downey: Basically, Mr. Chairman, I think I could spend considerable time going back over the record of the track and the industry and the difficulties that they have faced and the debt that is still incurred by the track, and the fact that we have a group of--basically a lot of volunteer people who are continuing carrying on the work of the Jockey Club.

Again, I do not disagree with the member. I think there has been a generous proposal put forward under the VLT program with the industry. I think at this particular time that it is appearing to come back to a relatively healthy state. We are also doing some work with the harness people. I do not say that there is not going to be a time when this whole issue has to be reviewed and an assessment made as to what the status is and to the participation by the province and the percentage of the VLTs.

In addition to this is to support the Horse Racing Commission's administrative costs, because they do look after more than the track. They are also charged with the western circuit, the Great Western Circuit and other activities, and it is felt that there is a responsibility for the department to continue to support this. Basically, that is it. As I said, I think as we move down the road--

An Honourable Member: Down the track.

Mr. Downey: Down the track, that is right--have to sharpen up here. As we move around the track, we will--no, I think it is a fair comment and a fair assessment that we will have to take a look at where we are with it.

Mr. Sale: Mr. Chairperson, in our debate last year about the act, which was an act we supported--and I think it is a good measure; it makes sense--we suggested strongly that there would be a specific commitment to a date for that process. We suggested a sunset clause. Is the minister now suggesting that he is agreeing with the principle, that there should be a specific date? Would the minister commit to some date two, three years from now in which there would be some kind of significant review of the costs and benefits of continuing with this arrangement?

Mr. Downey: Mr. Chairman, I think I am a fairly practical person. I think there are enough other people out there that are interested in what is going on that I will do it whenever it is felt to be necessary to discuss it with my colleagues and with the industry to see if there is any ability to change it. I guess the good news is we have seen the industry stabilize. We have also seen the harness people get some additional support to carry out an extended meet, and that, I think, is important. Again, the question comes back to one of fairness, and that is, I think, what the member is raising.

Mr. Sale: Perhaps he can recommend it to the new government at some appropriate point in the future--pass this area.

The Acting Chairperson (Mr. McAlpine): Item 10.1. Administration and Finance (g) Grant Assistance - Manitoba Horse Racing Commission $176,100--pass.

Item 10.2. Business Services (a) Industry Development - Consulting Services (1) Salaries and Employee Benefits $2,113,500.

Mr. Sale: Mr. Chairperson, this is one of the areas where the numbers of staff are very puzzling, and I referred to this in my opening comments. In last year's book for '96-97, on page 25, the staff years are shown as 29, total Salaries and Employment Benefits 29 staff years. In this year, the '96-97 is restated to 35. The new year is 33.2, which would lead a casual reader to think there had been a reduction in staff in this area, whereas it appears in fact that there is a substantial increase in the area. Could the minister shed some light on that, first of all, just that specific issue?

Mr. Downey: Basically what we are trying to do after the reorganization is to reconcile the numbers so that basically we are comparing what we currently have this year with the reorganization as to what it would have been last year with the same kind of organization that we now have this year. I even surprised myself on that one, Mr. Chairman.

Mr. Sale: I think, Mr. Chairperson, that was one of those circles that we just got ourselves around without figuring out why we did it.

I understand the principle of restatement, but in last year's there were notes about an increase of four SYs that reflects a transfer position between operation units to perform new, different functions, et cetera. There are three notes last year which explain some changes. This year, there is absolutely no reference to changes in the staff numbers. I question the appropriateness of restating last year so that it is significantly different. It is different by 10 SYs in fact--sorry, six SYs, a different 10 from the year prior to that--without any explanatory note that would make it clear as to what functions have been transferred in. Surely, there are not just one or two people. There must be a number in this department which were moved in over the last year, but there is no explanation of it.

I would just say to the minister, I think that, if he were reading this in the role of somebody in opposition and he saw something which looked like a decline but, in fact, when he went back and looked at the year before it is a sharp increase, you would begin to wonder whether all the peas were moving under all the pods or just what was going on here. So I accept the explanation that things have been restated, but I think there must be a little more, that the race course must be a little longer than that just particular circle.

What functions have moved away from this department or moved into this department, I guess--and keep my books right--have moved into this department that were not there last year reflecting this change of, well, initially six SYs for last year and now reduced by two for this year? So what functions have moved?

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Mr. Downey: I guess, Mr. Chairman, the concern that we had was to make sure that we are truly reflecting the comparative numbers this year as to what they would have been last year under the same basis. That has not changed. Let us just see if there is any further explanation.

I hope this is helpful. I know you are asking for some specific shifts that have taken place. I can tell you that comparable to last year, if this picture were presented last year, we would be down two employees in this section. So we would be two less in this section if we used the same comparative numbers as we had last year, system, sorry, structure. I guess the question is that there have been certain people moved in different directions to accommodate the reorganization. Some people, for example, may have gone to Administrative Services; others may have gone to--I am just using this as an example--Trade or to other areas. This is what the net result of the changes will be that there will be two less people in this particular area.

There is an example of which we have one individual who is our provincial representative working to develop economic activities for the Pan-American Games, for example. That is one that is gone from, then shifted into that area. Those are the kinds of things that have taken place. Really what it is trying to do, and I said this at the outset in my introductory comments, or if I did not I said it afterwards, is to develop the team approach so that we do not have such a silo or stovepipe approach to the operation of the industrial development section of the department. I think it is a little confusing this year, but next year, given there is not any more reorganizations, and I do not plan on any, that we would be able to judge against a 33.21 staff years that we have. It basically follows on the recommendations of the Price Waterhouse report, individuals that we were dealing within the department and the organizational style that is being developed under the current administration.

Mr. Sale: Let me try and see if I understand this. First of all, my starting point was last year's supplementary information. Is the minister saying that sometime during '96-97 the 29 people who were shown there were actually augmented by some seven people during that year, or six people, bringing it up to 35 staff during that year? So some functions were added, staff were added and then this year you are going to remove two of those to do something else. So this really took place during '96-97 as the reorganization took place.

Mr. Downey: Basically, I will try again, Mr. Chairman. I apologize for the confusion, but the 29 were made up of basically last year--you are talking about last year, the 29 were made up of Manitoba Trade activities and the Industrial Development sector. Manitoba Trade has been broken off of that unit to operate as Manitoba Trade, which we will get to under this year's. What was further done in the reorganization, there were additional positions brought into the Industrial Development sector which took us up to 33.2. They came from the former Strategic Initiatives section, so that took us up to the 33.21.

Mr. Sale: I assume it took you up to the 35.21, and then you are going to lose two this year.

Mr. Downey: I would assume that is correct. Yes.

Mr. Sale: If I could just make the point, I think these are really useful documents. I know that we are one of the few--maybe we are the only one--but I know we are one of the few provinces that do these. They are very good, and they are very useful. I think they are made more so that, if there is a change like that, there is just a note that says--and by the way, as the minister, I am sure, is aware, this same question goes through all of these areas because you changed them all, but when you change a prior year's presentation without a note, it is very confusing because it is unclear what is happening. So maybe in future, if there is a future change which the minister hopes there will not be and probably his staff does too, it would be really helpful if as a matter of sort of protocol, where you are restating previous years, that would be stated.

Mr. Downey: I appreciate the member's comments. I do not want to further confuse the issue. I should just fold and pass it, but on page 27 there is a note that speaks to it. That is under 10-2A, page 27 of the blue supplement book. There is a footnote, and if that is not explanation enough, I will ask the department to make sure they make a more clarifying note the next year.

Mr. Sale: I appreciate the minister's point, but the note is not attached to the staff numbers in the first place, and it does not refer to the restatement of the prior year. All it does is explain the change this year; it does not say 1996-97 numbers were restated from last year of 29 to 35 in order to reflect reorganization that took place during the year: During 1997-98 further changes will take place resulting in . . ., et cetera. I appreciate pointing out the note. I saw the note before. It did not cover the case.

Mr. Downey: Maybe I should have rested my case before.

Mr. Sale: I am still confused by the discussion we had the other day versus the notes that are here. We talked the other day about the five sectoral initiatives of aerospace, health, agri-food, et cetera. Those words are not used in terms of Industry Development - Consulting Services' branches, objectives, identity, in a specific way. Now a couple of them are mentioned. Health research, for example, is mentioned in here, but the notion of the five areas is not mentioned, yet the minister said they were still intact as areas of priority. I am not sure that I see where that is, if indeed they are still intact. It is not clear.

Mr. Downey: Basically, the major initiatives are still there, Mr. Chairman, referred to as the strategic initiatives. They are also broadened, to some degree, to include a little bit more of other industries that we felt should have been at least brought under that umbrella. So it is not a matter of major change. It is a matter of probably broadening the scope to some degree of each and every one of those strategic initiatives. That is basically what we are doing. The whole area is broadened.

We talk about more core manufacturing sectors, including textiles and clothing, furniture, electronics, plastics, metal and machinery manufacturing. So it is a little more inclusive, I guess, as it relates to the detail that we have given in our explanation this year. It is really a broadening of the responsibilities on paper and in practice.

Mr. Sale: Mr. Chairperson, is that not though exactly the concern that Price Waterhouse raised, that if you try to cover the waterfront, you are too thin; on the other hand, if you focus on areas that are not high payoff areas, then you waste your resources? It seems to me that Price Waterhouse was making a strong case for a more strategic use of resources, rather than an industry-specific use of resources. I am puzzled by this.

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Mr. Downey: I do not want to try and figure out the puzzle, but I want to express to the member that basically what the Price Waterhouse report had said is that we had locked our resources too specifically and too focused. The member does not agree with what I am saying.

Mr. Sale: Yes, I do.

Mr. Downey: You agree with what I am saying, okay. You agree with what I am saying, mark that one down, too. What we are doing is making the availability of the resources more flexible, so that we are not tied specifically. We are doing exactly the opposite to what I am being accused of doing.

Each of this industrial development area now has a more flexible way of dealing with other industrial development as it relates to it, that one individual and one staff group are not always--if there are aerospace initiatives to deal with, fine, that is what they are doing--but if there are other transportation issues as it relates to buses or something else, they have expertise in that area, then they are flexible to be used in that area. We do not bring in a whole new team that would run shoulder to shoulder with those individuals dealing with, again, aerospace, truck transportation, Winnport, the whole movement of goods and services. That is basically a broader industry than just aerospace.

There are a lot of relationships in the other area. I use Winnport as an example where you have the coming together of rail, road, aerospace, the whole business. You would not want three separate groups coming out of the Department of Industry, Trade and Tourism. You want a team of people that have the capabilities, and you want to be able to apply the resources in a broader context. I hope that is somewhat more explanatory.

Another example that I will use is in the health care industry and agri-food. There are certain things, particularly as it relates to certain production in agriculture. Whether it is PMU or the egg industry, a lot of it is used or has potential to be used in the medical field, that you have a team of people that is able to deal with these industries in a broader context, rather than just narrowly focused and again walking shoulder to shoulder on individual departmental authorities.

Mr. Sale: I understand the minister's explanation. I think what I found confusing was his initial assertion that the five areas were still intact, but you have added to them. The problem with that statement for me is that the five areas used to have all of the people, or most of the people, currently listed in this branch under those areas. They were fully involved in aerospace, the aerospace team was fully involved. The health team was fully involved under--I still do not know what Mr. Lilley's first name is, or Ms. Lilley's first name is. What is it?

Mr. Downey: Nigel.

Mr. Sale: Nigel. Thank you. Okay, they were involved under Nigel Lilley's direction.

Now you have got the same staff trying to get into a new organizational culture, and you do not want to lose the stuff you had but you have got to change, so this is a hard process. What resources have been used this year to give the staff, who were formerly, as you said--the minister's word has been silos, steel silos, narrow-focus areas. What training and support has been given to help staff to become more adept at a broader range of consulting and bringing resources to bear on the broader range of opportunities? This is not an easy job, as the minister, I am sure, knows. You are trying to change a culture of a major branch and change the human resources and skills of that branch. So what has been done to make that happen?

Mr. Downey: I appreciate the issues that are raised, and it is true. I think there has been a culture that has to be changed. I will be the first one to admit that, that there have been--

Mr. Sale: This year.

Mr. Downey: Did I not admit it last year? Well, we were working on it.

Mr. Sale: I am sure it was an oversight.

Mr. Downey: It could have been. The point is that what we are doing, and I say that and I said it earlier in my Estimates, the team approach of which people are working in a little broader area than they would have normally, and I will not repeat the transportation example, but to me that is a good one. Yes, there are people that need a little more training or maybe need some more training, but I can tell you under the leadership and the administrative staff we have now, that is recognized. If there is more staff training that is required, more counselling needed to be done, then we are prepared to do that. You are going to say, well, where is the money to do it? Well, it does not take a lot of money. I think it takes a little time in working with them.

I can also tell you that the management team system, I think, is being reasonably well--and I am saying this from my own observation and from my discussions with my senior people, that the observation is that there is a cohesiveness within the Department of Industry, Trade and Tourism, and people who have consulting capabilities in one area certainly are transferrable to other jurisdictions. They just do not have to sit with one, again, narrow focus as to what their responsibilities are. So I am comfortable that the system is working. It is improving, and the morale within the department, I would say, is considerably better than when we went through the discussions a year ago, and I am comfortable.

Again, let us measure this, let us look at the results, let us look at the unemployment numbers, let us look at the new businesses and the activities that are coming into the province, let us look at all the expansions of companies. The department, I am not going to stand up and say the department, we did it all. I am going to say, though, we have been very supportive. When we look at Manitoba Trade, we look at the activities that are ongoing there, they are very, very busy. We look at the Industry Development sector. We look at the expansion of the Flyer bus company. We look at Motor Coach Industries. We look at all of those areas.

We have had departmental people who have been fully involved in discussions and working with them. Aerospace, the same thing, we have got people who are involved in the aerospace industry and Winnport industry. So transportation is a very big part of the overall initiatives of the department. The manufacturing sector, whether it is in farm machinery, furniture, windows, there have been a lot of activities going on. So I will go back and say to the member the results of what we are getting within the province, I am not tying it totally to standing up and pounding on my chest that it was I, T and T did it. I like to be a little modest the odd time, but my legislative assistant likes to take credit once in a while, too. He does a fine job and as long as he is the Chairman of this committee, he cannot comment back, you see. I have got his hands tied, but he does not have to recognize me if I get too out of line. But the bottom line is, Mr. Chairman, I think that it is working.

Mr. Sale: Well, I think that the minister makes a hopeful case that the department is on a good trajectory, and I hope it is too. I am glad if that is what is happening, and I am certainly glad to hear that he feels that it is better than it was last year. I know there was great concern among many of his staff last year, and I am glad that is being addressed.

I want to ask some questions about Manitoba Trade, particularly the Manitoba Trading Corporation. I do not mind much where I ask it. I am not entirely clear the way the restructuring has gone on. Manitoba Trade is under Rod Sprange. Industry Development is under Mr. Cormack, but Industry Development has a responsibility for trade and global markets. So give me some guidance, Mr. Chairperson, where should we be discussing Manitoba Trade? I cannot see where else to do it. My first question is exactly that. I am not clear where else it would have been discussed, and yet it is a major branch of the department with an assistant deputy minister. So is there another place in the Estimates?

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Mr. Downey: I have Mr. Jim Kilgour, who is here and if we were to move to Financial Services, then I can get Mr. Sprange, who will be here to deal with Manitoba Trade. So if we could go to Financial Services, then we could deal with that at this particular time, if the critic is in agreement.

Mr. Sale: Sure, that is fine.

The Acting Chairperson (Mr. McAlpine): Item 10.2.(a) Industry Development - Consulting Services (1) Salaries and Employee Benefits $2,113,500.

Mr. Sale: Where are you now, sorry, 2.(b)?

The Acting Chairperson (Mr. McAlpine): No, 10.2. (a) Industry Development - Consulting Services (1) Salaries and Employee Benefits $2,113,500. That is where we--

Mr. Downey: Financial Services come in the preamble prior to that.

I did not necessarily say pass on to it. It actually comes, if you go to the book, the Estimates book that has been tabled, page 87, in the line-up of activities. We are now at Financial Services, and then we go to Manitoba Trade, then Telecommunications Marketing and Industrial Technology Centre. So that is where Financial Services come within the tabled Estimates book.

Mr. Sale: Which is 10.2 (b).

Mr. Downey: That is correct.

Mr. Sale: Mr. Chairperson, I may be in a momentary low here, but I have a great number of questions under 10.2.(b) under MIOP, Pine Falls, Vision Capital, et cetera. So I am prepared to move on 10.2.(a) if we can agree that we will talk about trade later. Is that what the minister is saying? Maybe my brain is--

Mr. Downey: Yes, we can deal with trade at that time, Mr. Chairman. I could deal with it now, but I will have staff here in a few minutes.

The Acting Chairperson (Mr. McAlpine): So is there agreement of the committee to move on from passing 10.2.(a) Industry Development - Consulting Services (1) Salaries and Employee Benefits $2,113,500--pass; (2) Other Expenditures $808,300--pass; (3) Health Research Infrastructure Initiative $500,000.

Mr. Sale: Whoa. I am having trouble following the (2)--

An Honourable Member: It is under the same page.

The Acting Chairperson (Mr. McAlpine): With the committee's agreement, we will proceed.

10.2.(a) Industry Development - Consulting Services (3) Health Research Infrastructure Initiative $500,000.

Mr. Sale: This gets us back into the question which we have not entirely left, and that is: Could the minister indicate what are the current initiatives, what is the staff, what are the resources associated with this initiative at the present time, given the restructuring?

Mr. Downey: Mr. Chairman, the number we are talking about here is the Health Research Infrastructure Initiative. We have, for some time, been in discussion with the St. Boniface Research Centre as to how we could be more supportive in the overall growth and development of the research activities. The member is aware that about six weeks ago the federal government and the province announced an initiative where we talked about $110-million initiative, the federal government and provincial government. We included in that our portion of the announcement, the $500,000 that will be made available to the St. Boniface General Hospital Research Centre to help pay for some of the administrative costs while they are out working to encourage research monies to come to the province in the pharmaceutical industry, from the overall health care field, to advance their centre for greater research activities.

It is a pilot project at this particular time and will be looked at by other jurisdictions, but basically it is a commitment from the Province of Manitoba to further enhance the health research that is taking place at the St. Boniface Hospital, and that is what the $500,000 grant is for.

Mr. Sale: So, Mr. Chairperson, in this case, infrastructure does not really refer to imaging equipment or lab equipment. It is the administrative costs of trying to promote the gaining of more research expertise grants, funding, et cetera.

Mr. Downey: That is correct, Mr. Chair.

Mr. Sale: Okay, thank you.

The Acting Chairperson (Mr. McAlpine): 10.2.(a)(3) Health Research Infrastructure Initiative $500,000--pass; (4) Manitoba Centres of Excellence Fund $367,000--pass; (5) Grants $16,900--pass.

10.2.(b) Financial Services (1) Salaries and Employee Benefits $749,100.

Mr. Sale: Mr. Chairperson, could the minister just detail for the committee the process. I think he has wound together MIOP and MIRI at this point. Could he indicate the rationale for that, the effect of that, just give us some background.

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Mr. Downey: Mr. Chairman, I guess one of the reasons was to try to reduce some of what could be seen as confusion in the public's mind or in companies that were in fact interested in programs within the department. We sometimes get too broad a spectrum of numbers of programs that people can see within government and apply for. I guess it also has something to do with not a total policy shift, but more of a shift towards--the MIRI program pretty much was an interest or forgivable loan program which in a lot of cases one can see what has taken place in other jurisdictions where they are starting to reduce or eliminate them, maybe more perceived than real in some cases. But the Internal Trade Agreement had some influence on it as to how we applied a program such as MIRI.

But the short answer probably is to lessen the confusion within the industries that were coming to the province for support. At the same time though, Mr. Chairman, I can indicate to the member that within the Manitoba Industrial Opportunity Program a little more flexibility as it relates to the application of that program so that it is not strictly a loan program without any ability to adjust interest or to make it flexible.

So really in the amalgamation of the two programs we now have one MIOP program, Manitoba Industrial Opportunity Program, that is in fact a little more flexible than previous programs. So the amalgamation of the two I think is helpful for the departmental people when they are going out, that you are talking basically one program. It is important for people who are talking to us that it is one program, and although there are the terms that can be a little more flexible, they are not, to put it very bluntly, quite as generous.

There are some areas though, and I think this is important to put on the record as well, that a lot of the decisions are made particularly in some industries that we are seeing developed, particularly when it comes to, I am going to use this as an example, the call centre industries where we have a quick ramp-up of jobs and a payback to the province, if there is a forgivable loan as part of it, in less than two years. That is through taxes. We have looked at it fairly pragmatically, that if there is an investment made by government, certain industries, and I say the call centre industry particularly--the member may criticize the type of jobs they are. I think they are good jobs and they ramp up very quickly. So you get a lot of people on the payroll quickly, and the payback to the province in general terms as far as taxes is very good. So that is really the reasoning behind it, and the member may have some further questions on it. If he does I will try to explain them.

Mr. Sale: I thank the minister for the explanation. My understanding is that basically now the province more or less customizes each grant or loan or forgivable loan or partially forgivable loan. The two programs are one, and so there is more flexibility, which can be a good thing. It can also be something that can be abused, but my understanding is that is the point, to have one program. You determine in each case what the terms are, how forgivable, what the interest rate is, if it is over prime or whatever. I understand that.

Has the minister a list that he could table with the committee of the current MIRI, MIOP loans agreements and their current status in terms of whether they are on target, above, below, forgiven, not forgiven?

Mr. Downey: Mr. Chairman, I think I have done that in previous years. Again, the only question that I have as it relates to the confidentiality of a business and how it may impact on them in a competitive way, I would have to take a few minutes to determine whether or not there is any reason why I could not provide the information.

It is a good point that some of them may not have been formally announced, to which it would be premature to disclose them at this particular time, but I have no difficulty in disclosing the loans and who they are made to as far as the province is concerned. So that information I will undertake to get, and I can--I know one, I can go through a couple of them I know have been announced.

One of them is Isobord, which the member is familiar with, a $15-million repayable MIOP loan.

Mr. Sale: Mr. Chairperson, I do not want to stop the minister, but if they could simply--all we are asking for, we are not asking for anything that would hurt a company. Certainly, that is not our intent. We would simply like to see what the loan is, what its terms are, and whether the company has performed according to the agreement.

Previous years, for example, the minister tabled Palliser, one, two, and three. It was the amount, the number of jobs that were to be created, the number that were actually created. In most cases, I think they over created in terms of jobs. It was simply a list, and I have always been puzzled why that list is not in the annual report when there are four pages of grants to organizations, large and small grants. Yet MIOP and MIRI do not seem to be in here, and maybe I am just missing them again, but there is no ongoing list in each case.

Mr. Downey: Two points, Mr. Chairman. He mentioned the company Palliser. For example, the last Palliser loan, even though it was approved, they did not take advantage of it. There are some that go through the process, are approved, and for one reason or another do not proceed. They decide to do other arrangements or change their plans. That is why it is a little unfair to just table them. I think what it would be important to do is give the information to the member as to the ones that we know are absolutely tabled and are proceeding with, and all the information that he has asked for as it relates to those loans. I do not think we have any in trouble that I am aware of, but I will further confirm that.

Another point that I wanted to make was the information I think is also available in the Manitoba Development Corporation annual report, which may be helpful to the member as well, so I am not trying to say the information is not available. He realizes the sensitivity, and I am prepared to accommodate him.

Mr. Sale: I thank the minister. Just so that I am clear, we are asking for the current outstanding agreements. Some may have been entered into this year; some may still be running because they are longer term. For example, the Faneuil agreement, I think, goes to 2000 or 1999. I am not sure which it is--2000, I think. If that is clear, that is what we are asking for.

Mr. Downey: I will do what I can to get him the information, Mr. Chairman.

Mr. Sale: Mr. Chairperson, I wanted to talk about or to ask questions about the Faneuil issue in relation to Manitoba. Now I am not sure, it relates to the Manitoba Trading Corporation, but it also, I am sure, is mostly administered by Mr. Kilgour. So I do not mind where we do this. We can wait for Mr. Sprange or--

Mr. Downey: Do it right now.

Mr. Sale: Okay. Mr. Chairperson, when the government privatized the phone system--we will not have that debate again, but clearly we differed on our views of the wisdom of doing that--the company took with it the agreements with Manitoba Trade and the Faneuil corporation.

The rationale for entering into the Manitoba Trading Corporation role, as I understood it when the minister explained it in the first place, was to shield Manitoba ratepayers from the potential risk of failure of the enterprise which would, if Manitoba Trading were not there, fall entirely on Manitoba Telephone System, so the rationale that was given at the time for Manitoba Trading's role was to lessen the risk to Manitoba Telephone System by having the province essentially accept the $16-million subordinated debenture from Faneuil.

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If Faneuil failed for any reason, then the cost would fall on government shoulders, not on MTS's shoulders. I think there are probably some other reasons too, but that was the reason that it was advanced. Given that we have now said that we do not think we should be in the telecommunication business, why are we still in the business of accepting a risk on behalf of a private telecommunication company? Why did we not restructure the Faneuil agreement at the same time that we sold the company by simply removing trading, transferring the debenture to MTS and transferring the obligations of MTS that were being channelled through trading just in a direct relationship with Faneuil?

It is a business deal. If it is a good business deal, it will succeed. If it is a bad business deal, it will not, but we have somehow seemed to say it is a business deal now for Manitoba Telephone System--Manitoba Telecom rather--to be in the telephone business, but we are still shielding and accepting, on behalf of Manitoba taxpayers, a $3-million capital subsidy to the Faneuil corporation, plus any risk of failure in relation to that debenture, which has two and a half more years to run. So why do not we get rid of the role for Manitoba Trading in this deal?

Mr. Downey: I guess the member's advancing a position which probably is somewhat more philosophical as to where we should--

Mr. Sale: Not at all.

Mr. Downey: He says, not at all. Basically, the province entered into an agreement to make certain things happen which Faneuil, I think, has done. I do not think there is any problem with the activities. In fact, I think it is doing a reasonably good job--in fact, probably a good job--of meeting the objectives of what it was to meet. We put certain conditions in place so that it had to meet certain job criteria.

I guess if one were to back away from any responsibility, then we could well be backing away from any enforced commitments that were made as it relates to the creation of jobs. So, now, if you were to totally negotiate backing away on one part of an agreement, then it would cause for changes in the other part of the agreement. I guess it is deemed that we are still interested in the overall development of that particular industry and do not see that it is an absolute must to transfer that risk or that responsibility to the new Manitoba Telecom company.

Mr. Sale: Mr. Chairperson, what are the current job guarantee requirements on the part of Faneuil for the current year and where are they in terms of meeting those requirements?

Mr. Downey: The other comment I would make as it relates to why did we not shift the province out of the position of any guarantee is, that was entered into some time before the privatization of MTS and it was considered that we were there for the extent of the agreement, as I said, and also getting commitments made by Faneuil as it relates to jobs. If you were to back out of one part of an agreement, then it would certainly have implications on the assurance of employment levels.

Mr. Chairman, I am told by the department that last August they were to have had 200 employees and they exceeded that. They had something like 250 employees. They are to have 400 by this August, and it is my understanding they currently are in excess of that, in the range of 500 positions hired by the Faneuil group.

Mr. Sale: Mr. Chairperson, not necessarily specifically in Faneuil, but let us use Faneuil as an example, how does the government monitor the actual performance? In the telemarketing area this is quite difficult because few of the telemarketing jobs, other than the management jobs, are full time. They are part time and they are episodic and there is a very high turnover by comparison with other industries. So what is it, is it a wage payout? Are the books reviewed? Is it a head count? What is the mechanism?

Mr. Downey: First, the member used Faneuil as an example. Well, I will use Faneuil as an example too. We have outside auditors who give us an audited statement as to the numbers of employees that they have. So it is not the province that is doing it, it is an outside audit. A lot of the other companies, some of the other companies that have to have job commitments, we as a department, Industry, Trade and Tourism, do the audit as to the number of employees they have per their commitments.

Mr. Sale: Mr. Chairperson, the number of employees, presumably, that is not quite what the minister means. Presumably he means something about full-time equivalence or payroll levels, because the number of employees is not jobs in the telemarketing industry. We are talking about turnover. We are talking about, many of those shops are part-time shops. People get called in today, they do not get called in tomorrow. Are we saying a job is simply a name on the payroll?

Mr. Downey: No, Mr. Chairman. We are saying a job is a full-time equivalent, is what they have to meet. They have to meet full-time equivalence. If there are three people that would not mean three jobs. It would mean three part-time jobs. We mean full-time equivalents.

Mr. Sale: Mr. Chairperson, what constitutes a full-time equivalent for the department?

Mr. Downey: Depending on the individual agreements, Mr. Chairman, they range from 1,800 to 2,200 hours.

Mr. Sale: Mr. Chairperson, the minister indicated that in some cases there is an external audit and in the other cases this is done by the department staff directly by going in and reviewing payroll records. What is the actual mechanism here?

Mr. Downey: The audit is done by the Manitoba Development Corporation. It is by payroll records.

Mr. Sale: Are the payroll records examined directly, or are the companies simply supplying the information to the government on request, filling in a form or whatever? Is there actually an attest function?

Mr. Downey: Yes, there is an examination done directly on a test basis, and they have copies of the T-4 slips, payroll summaries.

Mr. Sale: The way these are structured, we could move to 3B Vision Capital, if the minister wishes to do that, but we do not want to move past the overall appropriation. No, I am not correct. I beg your pardon. I am not correct because the structure of these is kind of mixed up, and we do have other questions that would fall under the MIRI-MIOP area.

Could we talk about the Isobord loan in this situation? Just to give the minister a bit of background, I have met with Mr. Gall. I appreciated his taking the chance to meet with me. I know how busy he must be and what a demanding project this has been, but I very much appreciated the briefing that he gave me. I have done some reading about strawboard business in the back, in the whole sort of area of the different kinds of resins that are used and the different processes and what the benefits and opportunities are, and so I, generally speaking, think this is a useful, from an environmental and from also obviously just a value-added perspective, a very useful initiative.

I have some concerns about the Isobord loan. First of all, could the minister indicate the exact terms of the $15-million MIRI loan here?

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Mr. Downey: It is a $15-million loan in total but split into two stages. Stage one involves $10 million with forgivable interest for 30 months, and stage two involves a MIOP loan of $5 million with interest at Crown borrowing rate plus two. So the initial $10 million is a forgivable interest over 30 months, principal repayable, and the $5 million is Crown plus two.

Mr. Sale: The interest is forgivable for 30 months. When does the principal begin to have to be paid back?

Mr. Downey: I am informed by the department that I think it is three years from the first disbursement, but I will get that for absolute sure, but that is the information the department has provided me with.

Mr. Sale: Has the first disbursement been made?

Mr. Downey: No, Mr. Chairman.

Mr. Sale: Has the overall financial agreement actually been signed at this date?

Mr. Downey: I believe it has. I guess further clarification, when he talks about the overall financial agreement, that is with all the participants that are going to be part of the funding. I understand that it has been, but again we will get confirmation of that. I know that they are proceeding to build the plant, and I understand all the financial partners have agreed. I will double-check as to whether or not everyone has signed on, but I believe that has taken place.

Mr. Sale: Mr. Chairperson, the minister has probably anticipated my concern. My understanding was that construction actually began before the agreement was signed off, and this is not generally an auspicious way to start a project of this scale. So I was concerned that that agreement might not be in place.

Mr. Downey: I am informed by the department that the actual loan agreements, I believe, may have been signed before they started to participate. It was the security agreements that were probably not concluded that the member is referring to.

Mr. Sale: The contracting firm--Stone & Webster, is it--has bonded the project in some form. Is it a fixed-price contract, and is that the nature of the bond? They are not bonding the process; it is my understanding, they are bonding the building of the plant itself, but not the machinery. Am I correct?

Mr. Downey: I am told by the department that that is correct. That is a fixed-price project that they are entered into completing.

Mr. Sale: Mr. Chairperson, could the minister share with the committee where else this product is being produced, strawboard is being produced, using the approach that is being used here? Where is this technology in use in the world?

Mr. Downey: First of all, this has an interesting history to it, and I guess I am not aware of an exact same project anywhere. However, I do know that there is a strawboard plant at Wahpeton, North Dakota, that is producing product, that is now fully operational. I am not aware of anyone of the magnitude, of the size of this plant anywhere else. I do know that there has been considerable research done on the product that will be produced, in the isocyanides that are used as the binding agent. I know that the environmental work has been done on the product. I know that the finished product that is going to be produced is--I have had some experience in talking to some of the potential takers, in fact, some of the people who have invested, and I think, quite frankly, it is certainly a very top quality product and accomplishes several goals, the first one being that it creates a new product, a tremendous number of jobs and a product in the world where the environment is--continually people are concerned about the environment where we are continually using up our forests and our fibre from our valuable forested lands. That is a replacement product.

Secondly, the member has lived in the Winnipeg area long enough to have suffered the consequences of the tremendous amount of the cereal straw burning in the fall of the year after the farmers have harvested their cereal crops where that burning has caused a tremendous amount of difficulty for the people of the city of Winnipeg and surrounding area who are affected by that straw. Virtually it has been a burning of a raw resource that can in fact and should be turned into a finished product.

So there are a tremendous number of benefits that flow from this project. I can assure the member as well that I am confident that the money that we are investing, when one does a cost-benefit analysis of it, as to what the payback will be in taxes directly without any major return coming back from the business side of it, it is very favourable to the province of Manitoba. So we have some tremendous benefits.

What is the risk factor? I am sure the member would want to ask that, and I think the risk factor is like any business, there is always a risk factor. One cannot deny that there is not. I think it will be minimal because I think once a plant of that size, that magnitude, and the work that has gone into it is in place, it will be made to work. Profitably, yes, I think the numbers crunched and the work that has been done has well demonstrated that it is a good project. So I think--back to the question--are there other plants. Not of that size, I do not believe, but I do know of one that is smaller and I made reference to the one at Wahpeton, North Dakota, that I am familiar with. There may be others. [interjection] That is correct. I should also indicate that I have been told that there is a patent on the process by the Isobord company.

Mr. Sale: Mr. Chairperson, the plant at Wahpeton essentially uses large baking pans. It is not a continuous process. It is a process of producing individual sheets which are then trimmed to the size out of what is essentially a laminating type of approach. They have had several fires there; one of them reasonably serious; the other two reasonably minor. The plant is running at about 75 percent of designed capacity right now and has never approached 90 percent which was the guarantee of the people supplying the technology to the owner of the Wahpeton plant.

The Wahpeton plant uses a completely different technological approach to straw breaking and the process of the presses that are designed by Bison which, as the minister knows, was in bankruptcy until about a year ago when it was bought out by a German company that has put it back on its feet. This process has never been installed anywhere in the world, to my knowledge, and it has certainly never been shown to work on a continuous process basis. That is not to say it will not work, but I think the risks are much larger than the minister is indicating.

I guess I would ask if when we next convene if we could find out what protection there is for Canada and Manitoba and the $27 million that we have invested in this project. Where do we stand in the line-up, and what kind of securities do we have for this project? I would also just say that I am never convinced by cost-benefit analyses that say that taxes coming back to government pay for something. That makes that rest on the assumption that the people who pay those taxes have no other needs. They are not customers of the health system. They are not customers of the education system. They do not use our roads. So I think that is not a sound basis on which to do any kind of analysis of value.

The Acting Chairperson (Mr. McAlpine): Order, please. The hour being 5 p.m., time for private members' hour. Committee rise.