Mr. Chairperson (Marcel Laurendeau): Would the Committee of Supply please come to order. This section of the Committee of Supply has been dealing with the Estimates of the Department of Rural Development. Would the minister's staff please enter the Chamber at this time.
Mr. Clif Evans (Interlake): Mr. Chairman, I will pass 13.4.(a).
Mr. Chairperson: Item 13.4.(a) Executive Administration (1) Salaries and Employee Benefits $116,800--pass; (2) Other Expenditures $32,600--pass.
Item 13.4.(b) Assessment Services (1) Salaries and Employee Benefits $5,720,000.
Mr. Clif Evans: On this line, can the minister just indicate--with the Assessment Services, there has been some issues brought to my attention. I would just like to ask on this line what the future development for Assessment Services--where is the Assessment branch for Rural Development going as far as its future assessments? How are we going as far as the cycle goes? Where are we at right now with assessments?
Hon. Leonard Derkach (Minister of Rural Development): Mr. Chairman, as the member knows, we have just gone through a reassessment cycle, and we are on a four-year cycle presently. The Assessment branch will be doing reinspections now that the reassessment cycle has been completed. We are also going to be working on upgrading the programs or the systems with regard to the MACS system, as I understand it. So, basically, we are on track with reassessment. There are reinspections that are going to be taking place.
As the member knows, over the last four years we have spent some time enhancing our client services and ensuring that not only municipalities but indeed individuals who are property owners have an ability to access information more readily from the Assessment branch. We have introduced some methods whereby open houses allow individuals to come in and actually compare their assessment against other properties very easily.
It also allows staff to communicate directly with, not only municipalities but clients. So these are approaches that are new, and they are approaches that we think serve the needs of the clients better. We are going to be continuing to enhance those types of services in the future.
* (1010)
Mr. Clif Evans: If the minister could just enlighten me as to the cycle that we are in, and I have totally forgotten exactly, are we on a '98 for--it is four years, are we '97? What I am asking is, it is a four-year cycle now, so where are we now? Are we due for next year, '98 for '94?
Mr. Derkach: The last assessment that was done was based on '95 values, and it was done in '97 for the 1998 year.
Mr. Clif Evans: Have there been any problems arising with the assessments with municipalities on individual dwellings and assessments in the past two assessments that we have had? I will be questioning the minister as far as appeals. Have there been any major problems in any of the municipalities with the last assessment as far as appeals to the boards in this past cycle?
Mr. Derkach: Mr. Chairman, our appeal rate, at the present time, is about 1.3 percent, and this is the lowest rate that we have experienced since market-value assessment. I believe that the approach that has been taken by the Assessment branch is working. It is working effectively because the number of appeals has dropped significantly. When you are down to a 1.3 percent appeal rate, it does mean that most of the ratepayers, taxpayers who are property owners, are basically satisfied, or have accepted their assessments and are satisfied that they are fair.
Mr. Clif Evans: When the new assessment process was put in place, there seemed to be a certain amount of confusion as to how properties were being assessed. Now, if the minister can inform me, is there a statute of limitation as to any appeals on the initial process when it began? It has come to light that there are some businesses and that, and some communities are feeling that the assessment when it began was evaluated much too high, and now this evaluation, of course, is continuing.
How is the assessment of a property rated as a business, if the minister is understanding my question? A commercial building, how is the assessment done, and how is the tax based on that business come to? What is the formula?
Mr. Derkach: Remember there are, I guess, three basic approaches that are taken with regard to evaluation of property. One is on sales, which would give us the market value of property, of similar types of property. A second approach could be from the income stream of a commercial property, and, in that, I would say that the larger businesses that do not sell very frequently are ones where we would use the income stream. And then the third one, of course, is the cost approach to market value, which means that we are looking at the cost of replacing or building a particular commercial structure to be able to arrive at some fair market value for it.
So those are the three approaches that are taken, and we try to ensure that we examine--on the income side, for example, we make sure that we have some access to records or some such thing to be able to arrive at a fair value for that property.
I guess the system that we are using today is much more understandable than the previous one was. We deal directly with our clients. We make sure that they are involved when it comes to assessing a particular property so that they do not go away misunderstanding anything about how the valuation of the property is going to be done, and in most cases there is agreement between the property owner and the assessor that, yes, indeed, this is what a fair market value is. So it has become a much more user-friendly system, I would say, than we had in the past.
Mr. Clif Evans: If I am understanding correctly then, or if I understood correctly, the new assessment process came into play in 1989, was it not, for '85 values? It is also my understanding, as the minister has indicated, that after that there was the opportunity for businesses to work on one of the three processes that the minister has mentioned and that they were able to, with the income source, have their assessments done on that basis and not on the original '89 assessment. Is that correct or not?
Mr. Derkach: Mr. Chairman, the new assessment act came into effect in 1990. The system that is used is not a choice system. We used one of three approaches to value property, and it depends on the type of property as to the approach that is going to be taken. On some properties there are not enough sales to be able to determine what the value of that particular piece of property is. So in those circumstances we have no choice but to use the income stream. On properties where there are lots of sales, we use the market value or I guess the sales approach to determine what the value of that property is.
Appraisers basically use the income approach on commercial property because that is found to be the most accurate approach for assessing commercial properties.
Mr. Clif Evans: I have a particular case with a business in Riverton. It has been brought to my attention. The owner would like to have his assessment evaluated again. I imagine that is what he is looking for. I am not quite sure what can be done because the argument he has is that since 1990, when a large increase in that particular business went--I think it was about a 40 percent difference between the previous tax year and when the new assessment came in. It was one of the largest increases in the community. He has undertaken to try and have this matter resolved, believes that with the source of income and the sales, it does not warrant the amount of tax that he is paying on a particular piece of property.
* (1020)
Example, a motel unit that generates very little income, generates very little sales and is there, he is paying approximately $3,000 to $5,000, I believe $5,000 for a nine-room motel unit that does not have the income, does not have the sales to really establish the fact that he has to pay the amount of taxes that he is paying on it.
Is there a process in place that he can approach the Municipal Board or the Assessment people to have his property and the taxes and how they have increased revisited? Is there something he can--a process that he can bring back to have this reviewed? He feels that the tax base is unjust. I believe he has contacted someone in Rural Development and has gotten nowhere with it. Is there any statute of limitations?
Mr. Derkach: Mr. Chairman, just before I answer the question, I am sorry, we have with us Mr. Fred Butler. He is the municipal services co-ordinator, who has joined us at the table this morning, and I neglected to introduce him.
With regard to the question the member asks, the property owner has an avenue to appeal his taxes or his assessment, and that is done annually. In fact, he can appeal to the Board of Revision that every municipality has to establish. If the Board of Revision does not satisfy, I guess, his wishes, that individual then can proceed to the Municipal Board with an appeal. He can do that on an annual basis. Now there is a time limit on when his appeal has to be filed both at the Board of Revision and then also at the Municipal Board, but we try to work with the clients of municipalities as much as possible. I could tell the member that in the last reassessment cycle we had over a 180 meetings with people across the province. We do mail drops to households as well to inform individuals what the process is with regard to assessment, with regard to appeals, with regard to the Board of Revision, the Municipal Board, and so forth.
Now, if in fact this is an individual case where this member or this person has not been able to get a satisfactory answer from someone within the Assessment branch or have his case reviewed for some reason by the Board of Revision or the Municipal Board, I would encourage the honourable member to give us the name of the individual, and we would be happy to have staff from the Assessment branch visit this individual and sit down with him across the table and discuss the process and the assessment as well.
Mr. Clif Evans: Yes, I will be doing that, and I apologize. I had the file sitting on my desk this morning to bring to the Estimates this morning and forgot it downstairs. So I do have the documentation available, and I will be presenting it. I might even bring it back this afternoon and share it with the minister, and I will also expand further on this particular issue with the minister in private after Estimates or this afternoon on it. It is a situation that I feel should have been dealt with much sooner, unfortunately, and we could not deal with it then. So I appreciate that.
Mr. Derkach: Mr. Chairman, I do not expect the member to bring it to the Chamber. If he could just either talk to one of my staff or me personally at some point in time over the next day or so, we would be happy to see whether or not we can assist in resolving the issue.
Mr. Clif Evans: Could the minister just expand on Expected Results for Assessment Services: "Public Schools Finance Board requirements will be met annually"? Can the minister just enlighten me on how that operation or that process works?
Mr. Derkach: If I understand the member's question correctly, the total assessments for school divisions is provided to the Public Schools Finance Board annually, and it is done prior to December 1 of every year.
Mr. Clif Evans: Can the minister then indicate on Less: Recoverable from Education and Training of $1,731,800, exactly what does that signify?
Mr. Derkach: Mr. Chairman, the Assessment branch provides the service for assessment, and 75 percent of that service is paid for by the municipalities, 25 percent of that service is recovered from school divisions or from Education and Training, and this is the amount that is recovered from the department for that service.
Mr. Clif Evans: Mr. Chair, if I might, on this line, if the minister will recall--and I think the director of Assessment will recall that at a meeting, I believe it was a UMM meeting, a regional meeting, it was brought to the attention of the department the concerns that the then LGD of Armstrong, now the R.M. of Armstrong, had with respect to some tax bases on some Crown lands that were not being properly valued or properly paid for. I am not quite sure what it was, but I know that the reeve and councillors met with the director, and I am wondering if that is still an outstanding issue, or has it been resolved?
Mr. Derkach: Mr. Chairman, I do recall the meeting with the R.M. of Armstrong, and I believe the issue at that time was the dollars that were supposed to be realized from the wildlife management areas, and since that time the issue has been resolved through the Department of Natural Resources.
Mr. Clif Evans: Mr. Chairman, I thank the minister for that. I have not had an opportunity to talk to the reeve about that particular issue, but I know that we did bring it up. As a matter of fact, we brought it up during Bill 54, during the hearings, so I am glad to see that it has been resolved.
Field staff, professional/technical, these are the people, the assessors and that who travel throughout Manitoba and do the evaluation. Are they also available at any time of the year if someone has a certain concern going through the municipality or going through the department, that they are available to come out and hear the constituent's situation?
Mr. Derkach: I guess I could say that all it takes is a phone call, and they would be happy to address the issue. Yes, they are available all year round. We have 10 regional offices throughout the province where we do have staff. So individuals, all they have to do is call either their regional office or if the phone call comes into the department itself, we would be happy to ensure that an appropriate individual would be sent out to meet with the party.
Mr. Clif Evans: Then on this line the minister is saying that everything is running smoothly and is going to be better with assessment reform, and that the whole process will just make it much easier for all individuals and municipalities and corporations and school boards to function in a better way because the assessment services branch is providing a much better service than previously, and with the computer, I guess, process that there is in place now, services are being provided in a much better way and will continue to improve.
Mr. Derkach: Mr. Chairman, a few years ago we undertook a continuous improvement initiative in the Assessment branch where we continue to improve our services to clients. As I indicated previously in one of my answers, that is exactly what staff are looking at presently, at how we can enhance services to our clients. I would have to say that when we compare our Assessment branch to others across the country that we indeed, on many fronts, are leading the pack, so to speak. Staff from our Assessment branch have been invited to other jurisdictions to make presentations on the approach that was taken here in this province.
I guess when we turned the corner in 1990 with the new assessment act it certainly made many things a lot easier and more understandable for our clients. The member asks the question about problems. There are always issues that arise. I would not say that there are absolutely no issues, but they are manageable. They are certainly not significant in terms of numbers or the scope of the issues. I guess our largest concern at the present time is not the Assessment branch but, related to it, the Municipal Board and the appeals that are before the Municipal Board, not from rural Manitoba but from the city of Winnipeg, which are large in number. That is probably our most significant, and the issue that we have to focus our greatest attention to at this time.
* (1030)
Mr. Clif Evans: Can the minister indicate how many of these urban appeals and problems that he indicates that there are out there, how many are there, and how long does the minister feel that the appeal process and the discussions will continue?
Mr. Derkach: Mr. Chairman, in rural Manitoba there are 127 appeals that are being dealt with; in the city of Winnipeg, 1,300. As I indicated, that is our greatest area of concern and attention at the present time through the Municipal Board. As I indicated, when we were under the Municipal Board debate, we are looking at additional resources to try and manage that huge number of appeals that are before the Municipal Board from the city.
Mr. Chairperson: Shall the item pass? The item is accordingly passed.
13.4.(b) Assessment Services (2) Other Expenditures $1,207,200--pass; (3) Less: Recoverable from Education and Training ($1,731,800)--pass.
13.4.(c) Local Government Support Services (1) Salaries and Employee Benefits $859,800.
Mr. Jack Penner, Acting Chairperson, in the Chair
Mr. Clif Evans: The Local Government Support Services, what exactly is this part of the department? I know I can read the Estimates process, but can the minister just enhance me on what role this part of the department plays in municipalities, and in the province, at that?
Mr. Derkach: The responsibility of this branch, Mr. Chairman, is to provide advice to municipalities, to assist municipalities with regard to their structures, to deal with challenges that municipalities may have as they relate to some of our legislative framework or systems. So, basically, it is a support group to local municipalities throughout our province.
Mr. Clif Evans: Does staff from this department make an effort to go out specifically dealing with problems and/or support that come to light, and how many of these staff are available for municipalities to deal with?
Mr. Derkach: Mr. Chairman, in total, there are six people who are dedicated to this function, including management. There are three people who are actually designated to deal with municipalities as field officers: one in Brandon, one in The Pas, one in the City of Winnipeg. Then we have, of course, our two managerial staff and one financial person who deals with municipalities.
I might add that in the past this was the group that was responsible for spearheading the efforts of the revisions to The Municipal Act.
Mr. Clif Evans: This part of the department, and I see that a lot of it is helping the municipalities with their financial books, and keeping things in order, and helping them with their financial situations in each municipality so that the municipalities will be able to deal with the financial end and their spending for their own local constituency.
Can the minister explain what he means by municipalities will begin using the new financial report?
Mr. Derkach: Mr. Chairman, in the past, municipalities were asked to file their budgets with the departments and they had to be approved by the department on an annual basis. As the member recalls, when we passed the new Municipal Act, we allowed municipalities more flexibility in that they are not required to file the annual budget or have it approved by the municipality, but it still has to be there upon request. Basically they have replaced, I guess, the approval process by the department with a public meeting and as required of the municipality. As long as the budget is on file and it can be accessed by the department, that is all we require now. They have much more flexibility, much more autonomy than they had in the past, so basically this is what this particular line refers to.
Mr. Clif Evans: So the minister is saying that since the new Municipal Act has been enacted, the department has been able to provide the municipalities with a different system to be able to put in their annual budgets? Is it a new system or is it just the old system not being scrutinized by the department as much as it was previously?
* (1040)
Mr. Derkach: The process that has changed, Mr. Chairman, is that municipalities do not require approval by the department for their annual budget, but the reporting is still the same in that their books do have to be audited; the auditor does report to the department. So there is some financial accountability in that regard, but they do not have to have their budgets approved by the department any longer.
Mr. Clif Evans: Municipalities have the opportunity under this line to present to the department if they want to go through any type of borrowing process, debentures as such for projects within their communities. Do they have to present that borrowing by-law as such and the proposal itself, financial proposal to the department for approval, or can they just go ahead and submit their proposals and their borrowing by-laws to the department as they do with their report?
Mr. Derkach: That approach has not changed. Staff from the department are available to assist municipalities with by-laws; however, hopefully, in the future we are going to be able to allow more of that to be done by the private sector, people that are in the communities. But at this time, we as a department still assist in the development of a by-law and the presentation of same to the Municipal Board, so that process has not changed from what it was prior to the new Municipal Act.
Mr. Clif Evans: Mr. Chair, but the minister did indicate that they are looking at changing that by allowing the private sector to do--what? How would the private sector, and what does he mean by the private sector? The banks, credit unions as such to get involved with municipal borrowing?
Mr. Derkach: Mr. Chairman, today we have the private sector involved in that they do the year-end audits for the municipalities and, in the same way, private consultants and lawyers can do the work of what is being done by staff at this time as they become more familiar with the new Municipal Act. They are involved anyway and with the limited number of staff that we have, municipalities do have to rely on the private sector to be able to meet all of the needs of municipalities throughout the province.
Mr. Clif Evans: But what did the minister mean by potential changes in the system? He did indicate that there would be changes. What does he mean by that?
Mr. Derkach: The changes would be, Mr .Chairman, that we would be serving more as a supervisory role rather than a hands-on role because we feel that municipalities are mature enough now to be able to go to the private sector and to get their requirements met by them. The department can simply ensure that we are in a role which oversees the process, so that it complies with The Municipal Act, so that the process when it comes before the Municipal Board can go smoothly rather than having it turn back to the municipality to do further work. So those are the changes I am referring to.
The Acting Chairperson (Mr. Penner): Item 13.4.(c) Local Government Support Services (1) Salaries and Employee Benefits $859,800--pass; (2) Other Expenditures $220,400--pass.
Item 13.4.(c)(3) Transit Grants $1,526,000.
Mr. Clif Evans: I think the minister will recall, or may not and will go back in Hansard, that even though it is not a large part of the budget, it is an important part of the budget, the Transit Grants for the mobility disadvantaged people in our province.
I see that there is an increase in the budget. Has there been application from municipalities in the past year to be part of this expenditure and develop handi-transit services for their communities? I specifically ask, of course, for the northern and more remote rural municipalities. Have there been any increases in requests for funding for operations in their areas?
Mr. Derkach: Mr. Chairman, at the present time, there are 55 communities that are participating in the Mobility Disadvantaged Program. This is a program that is very essential for small communities because we have more and more people who are mobility disadvantaged living in small communities, and they do require this service. We have students who find themselves in that situation and require that type of assistance, so it is a very important service for rural Manitoba communities.
We are continuing to work with communities to bring new communities on. At the present time, I think there are two communities that are being considered for the program for this year. We continue to work with communities where the interest and the desire, I guess, to get into the program comes from the community. But it is initiated by the community, not by us as a department.
We only fund a portion of their operations. We fund 37.5 percent of the gross qualifying operating expenses to a maximum of $20,000 per year, and we also assist them with a one-time grant of $6,000 in the establishment of the new service, and also a capital grant of 50 percent of the net actual cost of the capital asset, which is the handivan, to a maximum of $10,000.
As the member knows, in today's world the costs of those handivans has escalated tremendously because they have improved the quality of the handivans. So this is not a significant contribution towards the capital cost because I do believe that the capital cost of these handivans runs in excess of $60,000.
* (1050)
Mr. Clif Evans: Mr. Chair, I certainly appreciate the minister's concern and comment about the cost of the vans. I wonder if the department and the minister and government would be looking at perhaps revising the formula that is in place now, to be able to assist in a more feasible manner. As he says, 50 percent or $10,000 does not go a long way on a new van.
Is there a will to be looking at a new formula for assisting these Handi-Transit services?
Mr. Derkach: We would like to do lots of things, but reality is that our dollars are not that plentiful, and we try to spread the resources as fairly as we possibly can.
We work with communities on phasing in a mobility disadvantaged program as well, because you can start with a fairly simple and small vehicle and then, as communities can afford a higher-quality vehicle, they can move into the higher-quality vehicles. There is communication between communities, and we provide, I guess, that ability to have communities talk to one another. Where one community might be getting rid of a vehicle to buy a larger one, a community that is just coming into the program can always purchase that vehicle which is at less cost.
So we are trying to utilize the resources that we have available to us as efficiently as we can, but I cannot say at this time that we are in a position where we can expand the allocation for capital or for the program significantly.
Mr. Clif Evans: Mr. Chair, just in closing, on this line. Of course, the municipalities or communities that are involved with the Handi-Transit service handle or administer the program itself within their communities, within their own jurisdiction. They deal with the issue through the municipal council, or do they establish a separate entity to deal with--[interjection] Yes.
Mr. Derkach: The responsible body for the program is basically the municipality, but there is usually a separate group or entity that is involved in the operations and management of the program. It is usually run through either a personal care home or a hospital, and, in large measure, the operators are volunteers, to a greater extent, who may be recently retired or who have the time to be able to provide some voluntary services to this program. So it is not like the mobility disadvantaged transit program in the city of Winnipeg. This is done, in large measure, through the contribution of community volunteers in a community who give their time, who give their expertise and provide the service for a minimal return.
Mr. Clif Evans: Mr. Chair, I only make comment on that because of a situation that came to my attention that service was not provided, that it stopped right there kind of thing. The person needing the Handi-Transit was a very short distance away from where the boundary of the Handi-Transit service went. So, in a case like that, it is basically up to the local entity, whoever operates that, to establish their boundaries and where they will go and will not go, and that is why I asked, because it was brought to my attention that it is the fault of the government for not providing enough services and that--or enough support, I mean, to be able to provide that service. As the minister has indicated, and I have concurred with, it is up to the local people that run the service to establish how they are going to provide the service and for whom.
Mr. Derkach: Mr. Chairman, I think, by and large, communities try to be as flexible as they possibly can be with regard to the administration of the program, but there is a point at which they would cut it off. When a community applies to us for a program, we work with that community to establish the geographic boundaries that will be served by that handyman program. I know that there are sometimes issues that come up where people live outside an area that is being served, but that is basically up to the local operators, local municipality, and we simply try to advise, and that is where our capacity is. It is not in determining specifically where the boundary of a service should be.
Mr. Clif Evans: Mr. Chair, I just want to re-establish the fact that I feel that this service and this allocation of funds is a very important one for our rural communities. Hopefully, we will continue to support it, as I mentioned before, hopefully, revisit it as far as resources and providing the resources as the need be for different communities and as they apply for such services and grants to be able to provide for their people in their local municipalities.
The Acting Chairperson (Mr. Penner): Item 13.4.(c)(3) Transit Grants $1,526,000--pass.
Item 13.4.(c)(4) Municipal Support Grants $1,078,800.
Mr. Clif Evans: Mr. Chair, the minister made comment across the way, and now I am going to ask him to put it on record and explain in detail what grants will be provided--$1,078,000 it says provided to approximately 17 municipalities to allow increased flexibility, providing service at the local level. Is he talking about LGDs that were in place or what communities get these unconditional grants, and how do they apply for them? How do they receive them, what amounts, and just exactly what does this line mean?
The Acting Chairperson (Mr. Penner): The honourable minister with an explicitly detailed explanation.
Mr. Derkach: Mr. Chair, the member wants a detailed explanation, and I would be happy to provide that. This is the grant that is paid to municipalities who are forced to pay the payroll tax. It is calculated at 4.5 percent of the 1997 payroll costs in the $750,000 to the $1.5-million range, and 2.25 percent of payroll costs beyond the $1.5-million range. So this is an unconditional grant, and it is tied to the payroll tax that is paid by the municipality.
In 1997, we announced that, effective January 1, 1998, the payroll tax threshold will be raised to $1 million from $750,000 at the 4.5 percent rate. The impact of this change is not going to reflect in the municipal support grant until the 1999 calculations. Then, in our budget this year, Mr. Chairman, it was announced that, effective January 1, 1999, the payroll tax rate beyond the $1.5 million will be cut from 2.25 percent to 2.15 percent, and this will reduce the rate from 4.5 percent to 4.3 percent for payroll costs between $1 million and $1.5 million.
The municipalities that receive this--there are 17 in total--are the R.M. of East St. Paul, the R.M. of Portage, the R.M. of St. Andrews, Springfield, the Town of Dauphin, the Town of Morden, the Town of Selkirk, Steinbach, Swan River, The Pas, Winkler, and the LGDs of Churchill and Gillam, the City of Brandon, the City of Flin Flon, the City of Portage and the City of Thompson. So these are the municipalities that receive this grant because their payrolls are beyond the threshold.
The Acting Chairperson (Mr. Penner): Thank you very much. Will that suffice?
Item 13.4. Local Government Services (c) Local Government Support Services (4) Municipal Support Grants $1,078,800--pass; (5) Less: Recoverable from Rural Economic Development Initiatives ($75,000).
* (1100)
Mr. Clif Evans: This line, Recoverable from Rural Economic Development Initiatives, and providing for transits, or for the Handi-Transit service, can the minister explain that? Is that for urban centres, or is that for rural centres. I do not quite understand this line, and I just want an explanation from the minister.
Mr. Derkach: We expanded the Mobility Disadvantaged Program somewhat, and this is the money that was added to the Mobility Disadvantaged Program and is recovered from the Rural Economic Development Initiatives program.
The Acting Chairperson (Mr. Penner): Item 13.4.(c)(5) Less: Recoverable from Rural Economic Development Initiatives ($75,000)--pass.
Subtotal (c) $3,610,000. Shall the item pass? No?
An Honourable Member: Where are you?
The Acting Chairperson (Mr. Penner): I am at item (5) on Local Government Support Services, Subtotal (c), and that is the final total in that section, which is $3,610,000. Shall the item pass. The item is accordingly passed.
13.4. Local Government Services (d) Grants to Municipalities in Lieu of Taxes (1) Grants $13,147,900.
Mr. Clif Evans: Can the minister just give a brief explanation on this line? We are also at Recoverable from other appropriations--if he can explain that line, and just explain the decrease of funds that has occurred in this line.
Mr. Derkach: Mr. Chairman, this area is one where we pay grants in lieu of taxes to municipalities on properties that are owned by government. The recoverable part is one that we recover from other departments who own properties, and those departments would be Government Services, Highways, and Natural Resources. We have, as a department, a small portion of that, and that is the $151,000 that is our portion as a department. The rest is recovered from various departments. At one time that money was paid out of this department, and we have instituted a process where if the particular department owns the property then they are responsible for the grant in lieu of taxes for that property. We simply pass it through, we pay it, and then we recover it from these different departments.
Ms. Jean Friesen (Wolseley): Mr. Chairman, I am interested in the property, buildings, lands that the government still owns that are connected to universities and colleges, and I wonder if the minister has a list of those properties.
Mr. Derkach: Mr. Chairman, when we implemented the process where different departments paid their portion of taxes, the universities' portion and I believe community colleges, if I am not mistaken, was transferred over to the Department of Education, and the grants in lieu paid by those institutions is reflected in the Estimates of the Department of Education and does not show up here.
Ms. Friesen: Mr. Chairman, my question dealt with buildings and properties, land and buildings owned by the government which are still connected to universities and colleges. I understood that that is what that line was about, the actual buildings and property. Are there any buildings? For example, are there any research institutes at universities which the provincial government still has an interest in and where there might be monies paid? Are there any portions of community college buildings, off-campus buildings, for example, that the government still owns and on which these kinds of property taxes might be related?
Mr. Derkach: If I understand the question correctly, Mr. Chairman, any buildings that are owned by government, whether they are adjacent to a campus or whether they are on campus, would be reflected in the Government Services properties held, because that is the department of government that holds all buildings and properties. So if it is not the property of the university or the community college and that of the government, that kind of information probably would be better extracted from that department, because we do not have that listing here. But I could undertake to get those listings for the member if she would like that.
Ms. Friesen: I am trying to understand the purpose of this line. I am looking at Activity Identification, which says: pays grants equivalent to school and municipal taxes on all provincial properties, except for those exempted. Then it gives a list of those exempted, which does not include colleges, universities, research institutes. So essentially then, under this department there are no buildings owned by the government relating to colleges and universities which receive money through this line. I do not understand what this line means if it does not mean that.
Mr. Derkach: Mr. Chairman, those properties, the education properties are in the Department of Education and Training. All other properties, buildings and land, that government owns except for the exempted properties are what we would pay grants in lieu of taxes to municipalities for, but when we come to the specific education buildings, that is reflected in the Department of Education Estimates, and there would be a listing of those kinds of properties within their Estimates.
Ms. Friesen: They are not actually listed in the Estimates, but I certainly will ask for them. This line says it pays grants equivalent to school taxes on all provincial properties except for those exempted. Does the minister have some detailed information on that?
Mr. Derkach: Mr. Chairman, the department pays the equivalent of the municipal tax, education and municipal tax, to the municipality on a property that it owns, but it pays that on all properties except the properties that are exempt, and the types of properties that are exempt are listed here.
Now, if there are specific properties that the member would like to know how much tax is being paid to a particular municipality on a specific property, I could get that information, but I do not have it with me at this time.
Ms. Friesen: I can understand you do not have it with you at this time. What I am interested in obviously is the school portion of that, so does the minister have a list? Is there annually prepared in the department a list of the school taxes that are paid to each municipality?
* (1110)
Mr. Derkach: Mr. Chairman, we do have the list. As a general rule, it is about 50-50. If the total tax bill is $1,000, $500 would probably go to education and $500 to the municipality. Now, that is not the specific rule but that is generally the way it is. If the member would like to have a list of the properties and the breakdown of taxes that are paid for education and for the municipal side, we can provide that, if you would like that.
Ms. Friesen: Yes, that is what I would like, and it is particularly the detailed school portion that I am interested in and seeing a complete list of what the province does in that area.
The Acting Chairperson (Mr. Penner): Item 13.4.(d)(1) Grants $13,147,900--pass; (2) Less: Recoverable from other appropriations ($12,996,900)--pass.
Item 13.4.(e) Information Systems.
Mr. Clif Evans: I would just like to ask the minister exactly what this portion of the department services they do provide. I see that it produces its annual property roll assessments. Is there any other service that the department provides other than the municipal rolls, and what does it provide for municipalities?
Mr. Derkach: Mr. Chairman, this is the technology Information Systems group whose responsibility is mainly centred around data processing and system analysis, system development and implementation, upgrading, and so forth, with regard to the Assessment branch and the department, as well. The responsibility of this branch is basically in the information technology area.
The Acting Chairperson (Mr. Penner): Item 13.4.(e) Information Systems (1) Salaries and Employee Benefits $714,300.
Mr. Clif Evans: I would like to ask: is the department getting on stream with enhancing the computer system in this department, and who are they joining as far as a computer contract within this department?
Mr. Derkach: Mr. Chairman, this is a system that was implemented when--actually, it was begun before the re-assessment, or pardon me, our assessment legislation was changed. It is a very current and very up-to-date system. We do continuous upgrades of the system. We just went through a fairly major upgrade of it. Some of the work is done in-house. Some of the work is contracted with the private sector. The way we contract it is through a tender, so basically it is whoever comes in with the best and the lowest tender, but we also do have to consider the capability of a company to be able to meet the needs of the department.
The work that we have done recently has been also done by Online Business Systems, and it is a private company that won a tender. I guess I should add, Mr. Chairman, if I might, we also do some contract work with ISM.
Mr. Clif Evans: It is my understanding that the government as a whole, in all the departments, have initiated or have a contract with IBM. My understanding is that Energy and Mines has already been involved in the--I am sorry, it is Labour that is already involved, and Government Services. Can the minister indicate if and when the Department of Rural Development is joining in with IBM, and the government as a whole with this contract?
Mr. Derkach: Mr. Chairman, I think what the member is referring to is the desktop management system that is different from the MACS system that is in place for the Assessment branch. That is a different system altogether. The desktop management system that is being implemented is government-wide. Our department does not manage that although we participate in it, as many other departments do. We do not manage that component of it. That is done through the Department of Finance, I believe.
Ms. Friesen: I am interested the department's Assessment is on MACS and the government is using, moving as a general principle, to IBM. Does the minister foresee a problem in that, if the whole government and its internal arrangements and its desktop initiative is going to be working on a very different system from the one you are using?
Mr. Derkach: Mr. Chairman, I do not see a problem right now in government moving on the desktop management system with IBM and the department having their MACS system for assessment as a different stand-alone system and a separate system. However, I cannot answer the question whether or not the MACS system will be upgraded at some point in time to, I guess, conform with the system that is put in government-wide. But there was a significant amount of money that was invested to develop the system for the Assessment branch. It is a very special and separate kind of system and one which is being upgraded continuously because of changing needs. We have gone away from the mainframe as well so, although it is evolving, I cannot really answer the question whether or not desktop management, once it is completed, is then going to have an impact on how our MACS system works.
Ms. Friesen: Could the minister tell us when this department will be involved in the desktop initiative?
Mr. Derkach: We will be moving into the desktop management in our department in early 1999. I might add, I do not want to leave any misconceptions here because, although I said we were moving away from the mainframe in the MACS system and we are moving to a PC system that will be run by IBM, we will have IBM computers, but I guess the body of the system will still remain as it is.
* (1120)
Ms. Friesen: Could the minister tell us whether, is this the line where we would find the appropriation for the desktop initiative cost to the department?
Mr. Derkach: Mr. Chairman, for 1998-99, the amount of money that has been budgeted is very small for moving to desktop management because of the timing of when it is going to be put into our department. The major cost will be in the 1999-2000 budget this year. I do not want to be misquoting, but we are probably going to be spending somewhere in the range of $30,000 in this fiscal year on desktop management, but the bulk of the cost will come in the next fiscal year.
Ms. Friesen: Could the minister tell us whether that $30,000 is in this line or not? Could the minister tell us how he has classified it? Which line is it? Is it under Supply? Is it Other Operating? Is it Capital? Is it Administrative?
Mr. Derkach: I can have staff research that, but we think it is in the Supplies and Services line, but I can find that out specifically.
Ms. Friesen: The reason I am asking obviously is because I am looking for some consistency for next year and where we should be looking for this in '99. In some departments, for example, it is not just Supplies. It also deals with personnel and with rental. So I would like to know specifically which line it is on and where specifically next year it will be included.
Mr. Derkach: Mr. Chairman, we will get that information probably in the next couple of hours for the member. I will make sure that in our next sitting, I will share that information with the member.
Mr. Clif Evans: Just further on that, Mr. Chair, if the minister thinks that it is under Supplies and Services, further to my honourable colleague's question on those specifics on the computers, then the minister can perhaps provide me with supplies and services. At $473,000, what type of supplies and services is he talking about besides any computers? I would also wonder, seeing that we are just, you know, around the corner from the 1999-2000 budget, the minister has indicated $30,000 has been allocated for '98-99. I am sure that the department would be diligent in preparing the 1999-2000 budget with respect to joining IBM and what the costs will be. I am sure there is a projection dealing with this specific issue, and the minister should have some knowledge or indication as to how much the Department of Rural Development--that it will cost this department for the changeover for 1999-2000. That should be in place already, I would imagine. It should be an item. It is for the next fiscal year, and I would think it should be an item that the minister and the department would have.
Mr. Derkach: Mr. Chairman, we are debating the Estimates for this fiscal year. When we get to the next fiscal year, you will have the figure in for that particular initiative, and then we can debate the Estimates for that particular line in that fiscal year. We are not debating anything in this fiscal year that is not going to cost us any money this year. So that is in the future plans.
The member also asked the question about Supplies and Services and what kinds of items it includes.
Mr. Clif Evans: Besides the pencils and pens.
Mr. Derkach: Well, it is printing, stationery supplies used for assessment rolls, notices, tax statements, sales reports, repairs and maintenance, the cost of maintaining the computer equipment throughout the department. So, basically, those are the kinds of things that are included in this particular line.
Mr. Clif Evans: I thank the minister for that. I know he says we are not here to debate next year's budget, but part of a problem when you are preparing something for the future, it should be within a department's information to be able to have some knowledge as to what the potential cost is to the Department of Rural Development. So if the minister does not want to talk about what is going to happen next year, I mean, it could be a very formidable cost.
An Honourable Member: It could be.
Mr. Clif Evans: It could be and it might be, and I would like to just put the minister on notice that that information would be more than helpful in setting up for the budget for next year, but also in how it is going to affect the Department of Rural Development in costs.
Mr. Derkach: Mr. Chairman, the member could argue that about any line in the department. He would probably want to know the numbers for the next five years. Well, we do not have them. This is done on an annual basis. [interjection] We are not debating a five-year plan. We are debating the Estimates for this year.
The Acting Chairperson (Mr. Penner): Order, please. I am having a difficult time understanding what we are saying, so I would ask that one person speak at a time so that I can make heads or tails out of the discussion. We will then enter into the debate, but we will do it in an orderly manner. The honourable minister to finish his comments.
Mr. Derkach: Mr. Chairman, thank you, and if I might just continue. We are not debating Estimates for two years or five years. We are debating the Estimates for this next fiscal year, which are included in the budget. As the plans are put together for the next fiscal year, we will have those specific numbers for the member when we debate our next Estimates.
Ms. Friesen: Mr. Chair, I wanted to ask about the problem of the year 2000. This is a heavily computerized section of the department, and it also deals with many outside agencies which may or may not have the capacity to deal with 2000.
Could the minister tell us what plans he has in these sections of the department to deal with that?
Mr. Derkach: Mr. Chairman, there is always great planning in this department, and when the MACS system was designed, the year 2000 was contemplated. The problem of the year 2000 on computers was recognized, and therefore it will not be an issue for the MACS system when the year 2000 rolls around.
* (1130)
Ms. Friesen: Mr. Chairman, what evidence could the minister give us that that is the case? Does he have a report within the department that shows how each line in his computers has been changed and when they were changed? What will happen in this department as midnight is turned? So what evidence could the minister provide us?
The second part of my question was, I am interested, obviously, in looking at what the department has been able to do, because it is a difficult problem for everyone. If you have conquered this problem, then I think surely it would be a very good idea to share that information with others. But secondly, the minister's department does deal with many outside agencies, municipalities, many of whom may or may not have conquered this problem, and so how is the department's plan dealing with those outside agencies?
Mr. Derkach: Mr. Chairman, with regard to municipalities, I am informed that there is a meeting today at which the issue of the year 2000 is going to be addressed, but certainly I cannot give the members what the solution to that is going to be with regard to municipalities.
With regard to the MACS system, the year 2000 will be no different than the year 1999. It is just a four-digit year that appears on the computer screens, if you like, and basically it will just automatically roll over into the new calendar year. So there is no report on how we are going to manage that because there is not an issue with that system. Now, that does not talk about the desktop system or the PCs that we have in the department. But with regard to the MACS system, when it was developed, it was built in so that it would just simply roll over into the next year.
The question is an important one because this system does carry a lot of very important information on it, and so I understand why the member would want to be assured that in fact the system is capable of rolling over into the new millennium. The advice that I am getting from the department is that it is really not an issue, because that component was built into the system when it was developed.
Ms. Friesen: I am interested just from a general perspective of when that system was developed. I mean, if we have such a system that has been able to plan for that, I think it has interesting instructions for other departments as well as for private agencies and schools, et cetera, so that is just a minor point, a footnote. I would be interested to know when you began that kind of planning.
Secondly, I am interested in the meeting that is going to be this afternoon, you said, or today with municipalities on the year 2000. Could the minister give us a general sense of how many meetings there have been between the department and municipalities dealing with that issue, and perhaps what the municipalities' planning process has been for that issue over the previous--well, two years, three years?
Mr. Derkach: I should correct myself. The meeting that is being held today is an internal meeting. It is not with municipalities, but there have been a number of meetings that have been held with administrators of municipalities. Some of the municipalities have just recently moved onto the computer systems. We have a few that are still not on and are just moving, so those municipalities will probably have the least amount of difficulty. But there have been several meetings now that have taken place with municipal administrators to try and address the problem or the situation.
I cannot report right now as to the status of that, whether or not half of the municipalities have a problem or all of them, I am not sure. I cannot report on that, but we do have an individual who, from government, from the information technology area, a Mr. Larry Phillips, I believe, who is meeting with administrators and is addressing that issue.
The MACS system that we have for the Assessment branch, the development of that was started in 1988, and the system was developed over a period of three years, and the completion of that was in 1991. Since that time we have made revisions and improvements to the system, but the development of the body of the system was in that period of time.
Ms. Friesen: Could the minister tell us how many staff and how many dollar resources are being devoted within the department to the issue of the year 2000, both internally within the department and perhaps in dealing with municipalities or other agencies which the department might need to deal with?
Mr. Derkach: Mr. Chairman, in this area, we have a total of 15 staff who are working on the MACS system, but the dollar resources that have been devoted to the year 2000 are not something that I can identify specifically. But, certainly, where there is assistance required by staff, that is made available. Mr. Phillips, from I, T and T--or information technology resources, is the one who is working with municipal administrators, and this is a problem that as far as the municipalities are concerned has to be addressed by municipalities. We will provide a co-ordination role in terms of making sure that what information is available to one municipality is also available to another.
But in terms of addressing the year 2000 in municipalities, it really has to be dealt with by those municipalities. We sort of are a partner, a catalyst or a facilitator in the process, and we will assist in any way we can to ensure that the process goes smoothly.
* (1140)
Ms. Friesen: I can understand what the minister is saying in terms of whose responsibility it is, but has the minister considered what the impact will be on the department if some of those municipalities are not able to do it?
Mr. Derkach: Mr. Chairman, prior to a few years ago, a very few years ago, many of the municipalities were not computerized at all, and so they provided their reports and their information to us in a different way.
So the problem is not so much in the department as it is in the municipality. However, we are concerned because in today's world it is important to get information in and out quickly, and so we will certainly be watching whether or not municipalities, in fact, are addressing the issue, and I would say that because they are all associated with their parent organization, MAUM or UMM, that from that sort of function all of them are aware of the importance of the year 2000, and there is a co-ordinating role being played, I would believe, by MAUM and UMM.
If we see a problem arising as we proceed down the road towards the year 2000, we would certainly have to invest more resources in that area to ensure that all municipalities, in fact, did come on stream appropriately in the year 2000. We do not see a problem right now in that some are not addressing it. I am sure that if there were that kind of an issue out there, Mr. Phillips would be advising us of that quite directly.
Mr. Clif Evans: I find it suspect that the minister has indicated that they, the department, is ready for the year 2000, as a department, under the MACS system. Now, you said that there has been consultation. They have a Mr. Larry Phillips who is available to assist municipalities in getting ready for the year 2000. He says that there are meetings and discussions with administrators.
What I am sensing, though, is that he is also saying that it is the responsibility of the municipalities themselves to get in line with the year 2000 and have their system ready to go, and be there and available. Has the UMM brought this to the minister's attention and the government's attention to look for some assistance and look for some resources where there is a Larry Phillips, as an example, to go out and make sure? Has the department and the minister made everyone aware of what the consequences could be?
Mr. Derkach: Well, Mr. Chairman, that is precisely why Mr. Phillips has met with all the administrators, is to ensure that everyone understands the issue. Secondly, the purpose of those meetings is to ensure that municipalities understand that there is support available if they require it, but I have to indicate that under the new Municipal Act, we provided greater autonomy, which was asked for by the municipalities, to the municipalities. This is an issue that has to be dealt with by those municipalities. They are incorporated, separate entities who have the responsibility to ensure that their systems are current and can function. We cannot dictate to municipalities that they have to do one thing or another. If they have to buy a new system, that is up to them, but we are providing resources, making them available if in fact the municipalities wish to take advantage of it, and the communication to them has been quite direct from Mr. Phillips in terms of what is available from government and at least making them aware of the fact that they could be facing a problem in the year 2000 if they do not address it.
Mr. Clif Evans: Can the minister indicate whether Mr. Phillips, through his meetings with administrators, has there been a cost factor provided to the administrators in the municipalities that if there are problems in a new computer system, of any kind of extra costs. Why are the municipalities not being forewarned of this? The minister says that the municipality is an entity of its own now, a corporation, but everybody needs some help in some way to be able to deal with a situation as serious as the year 2000, especially for those municipalities that do not have the capabilities of expanding their system or having the system made available to them.
There has to be some better resource available, I would think, from the department. Mr. Phillips can only--the minister may think it is not a problem yet, but it is like the planning for the IBM computer in the year 1999-2000. I think that this is an issue that is important enough that the minister and the department should be dealing with it in a more serious way as far as making, through UMM, making through MAUM the system that will be needed and how it will have to be put together. I would encourage the minister and his department to become more proactive in providing that information and that resource.
Mr. Derkach: Maybe the member does not understand, but let me indicate to him that we have--[interjection] Offloading? The member says we are offloading. It is not our system. We are not offloading anything. We do not have it to offload, Mr. Chairman.
Every municipality has its own system and I would say that the larger municipalities like Brandon would have a system that is probably just as sophisticated as our own system is. They would probably have their own resources available to deal with their system to ensure that it in fact is on track for the year 2000.
We have a variation of municipalities in this province. Some are not on computer systems today, so we are prepared to deal with the municipalities whether they are on a system or not. In terms of our tax rolls and our assessment rolls, municipalities could still operate without a computer system if they required, because we have both the paper copies and of course the MACS system. The computerized system is in place as well, so it is not an issue of a municipality simply collapsing because they have not prepared themselves for the year 2000. I firmly believe that municipalities are alert, they understand the issue, their administrators understand it, and they will certainly take whatever steps are required to ensure that their systems are current and can operate after the year 2000.
Mr. Clif Evans: I encourage the minister and his department to be an advocate of making sure that the municipalities are well in place. I did not mention Brandon, and I did not mention large urban centres that I am sure have all the necessary toys and resources available to be able to make sure that they are ready. My concern of course is for the smaller municipalities, especially those that are not on computer yet. So I encourage the minister to have his department and people ready for the year 2000 in a more proactive way. I would just like to pass this line.
Ms. Friesen: The minister mentioned earlier a contract with ISM. Could the minister tell us how much that contract is for, and what the task is?
Mr. Derkach: Mr. Chairman, the ISM contract is centrally negotiated through the Department of Finance, and then we are allocated a portion of that depending on the usage of it. I do not have that specific number for the member. I can get it, though, in terms of what our portion of that is, but basically, we do not get involved in the negotiations of that. It is done centrally, and then we are just apportioned our allocation.
* (1150)
Ms. Friesen: I would appreciate that information. Could the minister tell us on which line the portioning that you are allocated by the Department of Finance occurs, and could the minister also tell me what the portion that the department uses accomplishes for the department?
Mr. Derkach: Mr. Chairman, to the member, it is included in the Other Operating in your line, and the money is spent for data processing for the department. So I do not have the specific number but I can get it for the member, and I will.
Mr. Clif Evans: Just to the minister, we can pass this line and call it twelve o'clock before we go on to the other section this afternoon, instead of starting a new section at this time, if that is convenient.
The Acting Chairperson (Mr. Penner): Item 13.4.(e) Information Systems (1) Salaries and Employee Benefits $714,300--pass; (2) Other Expenditures $1,471,400--pass; (3) Less: Recoverable from Education and Training ($420,200)--pass.
Resolution 13.4.: RESOLVED that there be granted to Her Majesty a sum not exceeding $10,871,300 for Rural Development, Local Government Services, for the fiscal year ending the 31st day of March, 1999.
Is it the will of the committee to call it twelve o'clock? [agreed]
It is then my understanding that the committee will resume right after Routine Proceedings, and I am leaving the Chair. The hour being twelve o'clock, committee rise.