Mr. Chairperson (Ben Sveinson): Good afternoon. 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 for the Department of Consumer and Corporate Affairs. It had been previously agreed questioning for this department will follow in a global manner and with all line items to be passed once the questioning has been completed. The floor is now open for questions.

Mr. Jim Maloway (Elmwood): Mr. Chairman, we left off yesterday talking about forbearance and dealing with the natural gas situation with the PUB. I understand that we will continue on Monday with representation from the PUB. Today we will deal with the Cooperatives and Credit Union Regulation. So I did want to begin asking questions about the government's activity or inactivity over the last decade in the area of co-op development in this province. If the minister could update me as to what great strides this government has made over the last 10 years in the co-op development area, I would be appreciative of that.

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Hon. Shirley Render (Minister of Consumer and Corporate Affairs): Mr. Chair, I would also like to take this moment to introduce–we have a new person here at the table today. It is Ron Pozernick, the director of Trust, Cooperatives and Credit Union Regulation branch. In answer to the member's question, the member asked what things the department has been doing. The department administers the legislation. We do not get involved in the development side, the promotion side of co-ops. That lies with Industry, Trade and Tourism.

Mr. Maloway: I think what I would like to know is how have the number of co-ops increased or decreased over the last 10 years. That will give us some indication of whether or not the I, T and T people are doing much in the way of promotion. I note that during 1997-98 there were 13 new co-ops but 20 were dissolved. If that were to continue over a period of years, you might end up with zero co-ops. I doubt whether that is the case, but I would like to know what the numbers were 10 years ago and what they are now.

Mrs. Render: We do not have those numbers with us, but we can get it for the member.

Mr. Maloway: I do note, though, as of March 31, 1998, there was supposed to be 395 co-ops operating in Manitoba. Is that true or not true?

Mrs. Render: I believe that number is correct.

Mr. Maloway: I note that 65 of the 395 were housing co-ops. I would like to find out what the status of the housing co-op industry or sector is in Manitoba. I know there have been some problems that they faced over the years. I would like to know what the current state of affairs is with housing co-ops in Manitoba.

Mrs. Render: There has not been a huge amount of development in the co-operative housing market. I think that the member has the annual report open in front of him, page 57, and it gives a breakdown of the 395 co-operatives operating in Manitoba.

Just to put on the record, I will give the numbers: housing 65, consumer 60, daycare 49, community service 43, utility 43, marketing 37, farmers market 27, agricultural producer 17, cattle feeders 15, employment 14, fishing 13, and communication and transportation 12.

As the member no doubt has already read, during 1997-1998, 13 new co-operatives were incorporated and 20 co-operatives were dissolved.

Mr. Maloway: The point is if more are being dissolved than being created each year, then over a period of years we will have a decrease in the number of co-ops. Is that correct or not correct?

Mrs. Render: Mr. Chair, I am not too sure that there is a trend, that we can really make any sort of a definitive statement. Perhaps there has not been a huge development in co-operatives because there has not been the same level of subsidization. Having said that, there are new generation co-operatives that are now coming on stream, and that may generate more development. So I do not know that a prediction can be made at this particular moment in time.

Mr. Maloway: Mr. Chairman, well, the new generation co-ops are a new idea that has been around now for, I guess, three or four years or maybe longer, but where do they fit into the breakdown that the minister has got here? I thought there were only three or four that were contemplated at this point and mainly in the agriculture business.

Mrs. Render: The member is correct. It is in the agriculture-producer category, and there are two.

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Mr. Maloway: What has been the experience of the two new gen. co-ops at this point?

Mrs. Render: Again, it is really too soon to give a comment. They are still trying to figure out just in what direction they are going to be going. They are looking at a number of factors to see where they are going to invest, but, as I say, at this point, it is too early.

Mr. Maloway: Well, surely, they have done something in the last year. We were talking about this a year ago, and the co-ops must have moved somewhere from where they were a year ago to where they are now. Just where are they along in their business plans?

Mrs. Render: To our knowledge, they have not made any decisions; they are still developing their business plans. I will just leave it at that for right now.

Mr. Maloway: Let us get back to the housing co-ops here. I am interested in what the state of the housing co-op developments is in Manitoba. I have heard that there are some financial problems that have developed with some of them. I would like to know: what is the present state of the housing co-ops that we have in Manitoba, the 65 of them?

Mrs. Render: I have been advised that the department is aware that some of the co-ops have done some restructuring of their financial arrangements, but the department does not monitor the financial performance of the co-operatives.

Mr. Maloway: So is the minister saying that they do not monitor any of these co-ops on any solvency issues?

Mrs. Render: That is correct.

Mr. Maloway: I have heard that there is some interest or some discussion with the idea of privatizing some of the co-op housing. I am wanting to ask the minister has this government had any representation on that subject, and what would the government's attitude be as far as the effect of privatization of, say, a housing co-op?

Mrs. Render: If the member is talking about existing co-operatives, if that co-operative has received funding, if it has been subsidized, then it is my understanding that it cannot do that. Are you talking about existing co-ops?

Mr. Maloway: It could be the only type that it could be, because it could not be a new co-op. It would not be a co-op then. We are talking about, for example, a housing co-op in which the members collectively decide to sell the units I guess to themselves and become private owners or perhaps sell units out to people who are not currently owners. I am not sure exactly how it would work. I am just wanting to know what the political position of the minister is and of this government on this issue and whether any discussions are ongoing or contemplated on this topic.

Mrs. Render: I guess just a repeat of what I said earlier, if the co-operative has received financing, if it has been subsidized, it must remain in that format. A co-operative, they cannot sell off. The new legislation will not allow that.

Mr. Maloway: Has the department been approached by anybody with the idea to do that?

Mrs. Render: The department has had one inquiry and that is it.

Mr. Maloway: Can the minister give us the nature of the inquiry and what the resolve has been?

Mrs. Render: The questions that were asked were that, if they had paid off their mortgage, could they then turn the units into condo units.

Mr. Maloway: What did you tell them?

Mrs. Render: That is one of the reasons for the new legislation. There was not legislation in place to deal with that particular issue.

Mr. Maloway: Is the minister saying that once the mortgage is paid off, the subsidized mortgage is paid off over, say, 20 years, 25 years, whatever the mortgage period happens to be, it is conceivable that the co-op could turn itself basically into a condominium development and in that way sell off the units? Each resident who had been subsidized for 20 years potentially could make a big profit on the transaction if they were to sell. In effect, poorer people who have spots in these co-ops would, in fact, be pushed out, would be forced out because they could not to afford to buy these condominiums. Is that a possible scenario?

Mrs. Render: The answer is no. As I said earlier, if the co-operative had been financed, if it had been subsidized, then it must remain a co-operative.

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Mr. Maloway: So the minister is saying that, if it has any subsidization over the years of its mortgage life, it must remain as a co-op in perpetuity? That is what she is saying?

Mrs. Render: That is correct.

Mr. Maloway: There have been a lot of questions about the role of the federal government in co-op housing across the country. I would like to know just where the federal government is right now, where it has positioned itself.

Mrs. Render: That is not an issue that we deal with. The question would be better directed to the Minister responsible for Housing (Mr. Reimer).

Mr. Maloway: I would think that the minister would be interested in the question. It is a question that probably would interest all of us as elected officials as to what role the federal government is taking in the development of co-op housing. My understanding was that they were quite heavily involved at a certain point, but their interest and commitment have waned over the last couple of years. I would just like to know what the current federal position is in this matter.

Mrs. Render: I can only repeat that is a housing issue, and the Minister responsible for Housing would be the better person to answer the question.

Mr. Maloway: I guess I would be concerned if there was a possibility that some of the co-ops could be turned into condos. There are some housing co-ops in some very nice areas of the city. There are some housing co-ops in some less desirable areas of the city, and I do not know that there would be a concern there.

Certainly there might be a concern for the co-ops in the nicer areas that are now providing subsidized spaces and spots for lower income people, where there is quite an advantage to those kinds of co-operatives occurring. I guess I would be concerned that future governments might look at it differently.

A re-elected Conservative government might try to follow in the footsteps of Margaret Thatcher and go on a program of privatizing. That kind of a system would not be something that I would like to see particularly because at the end of the day I guess it would tend to enrich in the long run probably some large, private landlords who probably would like to get their hands on the assets and convert these developments into condominiums, and so on. That is a concern. It is a political concern more than anything else.

I just want to make certain that the department is up on the issue and to know whether there are any movements down there or around for this kind of activity. We have to be vigilant in opposition. We have concerns in a number of areas where we find the potential intrusion of private market forces. I do not blame them for wanting to show an interest in taking over government assets, but the government is constantly being approached by private business people who would like to buy this asset or that asset with the hopes that they could make some improvements and make a profit out of it. Once again, you cannot blame them for that, but I would expect that the department would be receiving representations.

I just want assurance from the minister that the status quo would be maintained and there would be absolutely no initiatives taken to in any way privatize the co-operatives.

Mrs. Render: It was the initiative of this government to bring in the new legislation, so I think that says it all.

Mr. Maloway: I would like to ask the minister some questions about consumer co-ops. I am just wondering what the breakdown is of the 60 consumer co-ops and how well they have been doing. We know that 20 co-operatives were dissolved last year and 13 new ones were started. I do not know what category the 13 new ones are and what the category of the 20 dissolved ones were, but can we deal with the consumer co-ops a bit and get a sense of where they are sitting right now?

Mrs. Render: I have been advised that there appear to be no ripples on the landscape. They are under a federated umbrella. They are mainly in the small towns of Manitoba, in rural Manitoba, and they are doing a good job.

Mr. Maloway: I would like to know whether the numbers have been increasing or decreasing in consumer co-operatives over the last 10 years?

Mrs. Render: I do not have any numbers in front of us, but likely the numbers have decreased, not because they have been dissolved, but because of amalgamations.

Mr. Maloway: Can the minister give us some examples of the amalgamations and tell us why that would be occurring?

Mrs. Render: We do not have that information here in front of us, but we will obtain it for the member.

Mr. Maloway: I would like to ask the minister a few questions about the daycare co-ops. I note that there are 49 in existence right now, and I would like to know whether daycare co-ops have been increasing or decreasing over the last few years, because there always seems to be some problems with daycare in various areas of the city. So I would like an idea as to what have been the trends as far as daycare co-ops have been concerned.

Mrs. Render: I would say that they have remained constant.

Mr. Maloway: I would like to ask the minister then whether private daycares are increasing as a percentage of the total number of daycares or whether the daycare co-operatives are increasing. Where is the developing trend in the daycare industry or business?

Mrs. Render: This department would not know those particular answers.

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Mr. Maloway: Could the minister then endeavour to find out what the number of daycare co-ops were when this government took office 11 years ago versus what number they are now, because the minister will know that it was the previous NDP government that developed the daycare programs in this province from probably 1986 on, '86, '87.

So I would like to know just whether this government is encouraging daycare co-ops or whether it is just turning basically a blind eye to them and not giving them much in the way of encouragement, which is what I suspect, I would think, is happening.

Mrs. Render: I would just like to remind the member that it was this government that brought in a new co-operatives act, so to suggest that this government is turning a blind eye to co-ops in any shape or form would be erroneous. However, we will get the information that the member has asked for.

Mr. Maloway: Well, the government does have a role in co-ops, and the government can encourage them or discourage them. If the government wants to promote daycare co-ops, then it can do that by providing more resources. If it reduces its resources, then what will happen is you will have a rise in private daycares. So that is basically the fundamental question, is how strong is the commitment of the government to the idea of daycare co-operatives versus private daycare?

Mrs. Render: I am listening to the back-and-forth conversation between the Minister of Finance (Mr. Gilleshammer) and the member for Elmwood (Mr. Maloway) and not concentrating on the question, but I believe the member for Elmwood talked about whether or not this government was encouraging co-operatives.

This particular department regulates and brings in the legislation and the regulations. It is the Department of Industry, Trade and Tourism that goes out to beat the bush in this particular instance, and I would say that I, T and T works with groups that want to develop co-ops. They certainly do not discourage, and I remind the member once more that it was this government that brought in new legislation.

Mr. Maloway: Community service co-ops, what sort of co-ops are we talking about here? Give me some examples and give me any trends that are developing in that type of co-op activity.

Mrs. Render: I have been advised that likely the community service co-ops, the bulk would be recreational centres.

Mr. Maloway: Where might these recreational centres be? I assume they are in rural Manitoba.

Mrs. Render: Mainly in the rural areas.

Mr. Maloway: Let us move on to utility co-ops. Tell me a bit about those.

Mrs. Render: I have been advised that the bulk are likely in, say, the sewage area. A group of citizens get together to provide a central sewage system where there is not a system in place already or it could be citizens who get together to provide a water system.

Mr. Maloway: Let us deal with marketing co-ops then. What sort of co-ops are they? What kind of activities are they involved in?

Mrs. Render: It could be a wide range of products that are marketed, everything from local produce to a group of artists getting together and want to showcase their product, so to speak.

Mr. Maloway: Would it also include gas co-ops?

Mrs. Render: No, the gas co-op would come under consumer.

Mr. Maloway: I did want to ask about the gas co-ops as to how many are operating in Manitoba right now and how successful they are.

Mrs. Render: I believe there are two operating in Manitoba.

Mr. Maloway: Where might they be?

Mrs. Render: Red River Co-op and I think there is one in Thompson, Thompson Gas Bar.

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Mr. Maloway: I am quite familiar with the Thompson gas bar. I fill up there a couple times a year. I know it was operating when I was there a few months ago. My understanding was that there were a number more of gas co-ops in the past. I would like to ask the minister how many were there at the height and what happened to them?

Mrs. Render: We will obtain that information for the member.

Mr. Maloway: I think that we will find that during the previous government there was a lot more activity. Gas co-ops were encouraged. I know there was a drive to set one up in Brandon. There were several up north. Since this government has taken office, I do not think we have seen any real activity or any drive or any push to develop gasoline co-ops in this province. That is just indicative of the general lack of interest of this government in the whole issue of gas prices.

For example, a number of days ago when we dealt with the issue of gas prices, we had the minister say at that time that she did not even have so much as one little sticky note of gas price studying that the former Minister Radcliffe had announced last fall. The former minister, when the pressure was on, said, we are going to study gas prices.

The former minister made pronouncements to the press, made pronouncements elsewhere to get public attention to say he was going to deal with gas prices. He was unceremoniously removed in January, February this year. The new minister comes in. Now the new minister says there was no studying going on at all. So there is your commitment of this government to gas price, action on gas prices, studying of gas prices and commitment to fostering gas co-ops.

Mrs. Render: I hate to contradict the honourable member for Elmwood, but the deputy just told me that she checked the newspaper articles and could not find anywhere where the minister said that he was going to do a full fledged study. He said that he was going to look into gas prices.

So if media or if the member opposite wants to take something and interpret a different meaning from it, that is up to them, but at no time did the previous minister suggest that there was going to be a huge paper report coming out of the department looking into the gas prices.

I would also like to remind the member that this government does not force people to do anything. If a co-operative movement is what people want to do for housing, for daycare, for farmers market, for fishing, there is nothing stopping them. I will once again remind the member that it was this government that brought in new legislation and regulations to help people with the co-operative movement. So let not the member suggest that this government is not doing anything to help those who wish to do this. Perhaps the former government feels that they have a right to pressure people into doing certain things, but this government believes in allowing people to make their own decisions.

Mr. Maloway: This government has sat around and done absolutely nothing for 11 years in the area of gas price issues, and when it has been under pressure, the minister of the day has simply, going back to former Minister Connery who had his monitoring team out there checking prices, driving around checking prices, to Minister Radcliffe who, when he was under pressure, in an effort to buy time and bamboozle and try to fool the press, these ministers of this government, when pressured, have said they would study the problem. When the spotlight of the press was off them, they did absolutely nothing. Minister Ernst is also in that category. We will talk about him later.

Mrs. Render: I would like to hear from the member what the previous government did in response to gas prices. Since he seems to be saying that this government does nothing, I would like to know exactly what the other government did, other than order a study, which they did not implement.

Mr. Chairperson: Order, please. The honourable minister did not have a point of order. It is a dispute over the facts.

Mr. Maloway: The voters of this province will make a decision over the next few months as to whom they want to lead the province into the new millennium. This government has been in power for 11 years, and it has not taken any concrete action on containing or reducing gasoline prices in this province. I detailed before that Minister Connery paraded himself around the province and monitored gas prices, did absolutely nothing, just went out and did a little bit of activity for show, but no substance. Then Minister Ernst came on board, and he threatened, wrote letters to Ottawa, saying that the retail gasoline business was run on a cartel basis and he was going to get tough. Well, so much for that. Where is he today, and where is the action of this government? There is absolutely none. Then we have Minister Radcliffe. When the spotlight was on him on gas prices last fall, he said: I am going to study the issue.

Once again, study the issue. That bought him some time, got him out of hot water for a couple of times last fall. Now, this spring we asked the new minister: where are the studies? She says: there are no studies. So does that mean that the previous minister misrepresented? Obviously, he did. That is clearly what she is saying because she will not produce, she is unable to produce, the studies that he says he was doing.

Mrs. Render: The member is playing fast and loose with his words. He is suggesting that the previous minister has misrepresented, and I have stated many times quite often in the Estimates process that others have put their own interpretation on what the previous minister said. But I am always very interested in what the member for Elmwood (Mr. Maloway) has to say, and I would very much like to hear what the member for Elmwood would do about gas prices.

Now, he was in government when gas prices went up and down, and the previous NDP government did contract to have a study done by one Professor Costas Nicolaou. When they received that report, they did nothing. So that particular government hid behind a report. Perhaps the member opposite would let me know what he would do.

An Honourable Member: Just one quick question, do you mind?

Mr. Chairperson: Go ahead.

Mr. James Downey (Arthur-Virden): Mr. Chairman, I just have a question for the minister, and I think she is certainly doing an excellent job of replying. I wonder if she could have checked out for me exactly how much the New Democratic Party lost as it relates to oil and gas when they were exploring and trying to run an oil and gas company in southwestern Manitoba. Was it $15 million they cost the taxpayers of Manitoba or $16 million that they lost with their ill-founded gas and oil activities?

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Mr. Maloway: On a point of order, the minister knows full well that this is the wrong department to be asking these questions, and I am simply giving the minister the answer that she should be giving you in about 30 seconds from now.

Mr. Chairperson: Order, please. The honourable member for Elmwood does not have a point of order.

Mr. Downey: The minister can take the question under notice, and I would appreciate an answer.

Mrs. Render: The minister, with pleasure, will undertake to research that question. There is a question on the floor, and I would be most–

Mr. Chairperson: Order, please. If anybody wants to be heard, they have to come through me. Now, who is online now? The honourable member for Elmwood.

Mr. Maloway: Mr. Chairman, I thank the minister for that question. She asked me what the NDP will be doing after we form the government in the next few months in this area of gas prices, and I want to give her a full and complete answer to that.

As I had indicated a few days ago, when we had a longer discussion about gas prices, I suggested at that time that we should look to any studies this government has done as far as the ability to bring gasoline into Manitoba through the Port of Churchill. I pointed out at that time that we have a tank farm there, that currently and for several years gasoline products are brought into Churchill, stored there and routed north to the far North.

So it occurred to me a few years ago, on some trips up there, that, in fact, with OmniTRAX now taking over the line and looking for opportunities around the world that, in fact, they might consider bringing gasoline south. Upon talking to Costas Nicolaou about the subject, he indicated to me that he had thought of that, too, so it was not a new idea even to him.

So, clearly, one of the answers seems to be to come in with a new source of supply, that trying to regulate does not seem to work elsewhere. It may not, in fact, be an answer here. Buying gasoline stations and getting into competition does not seem to be a sensible solution either. So you either have a choice of continuing to pay the high prices or look at alternative-type fuels and try to get off gasoline or look at new sources.

But as long as you have the supply being controlled by two or three refineries outside the province controlling the system, then you are not going to achieve what you are trying to achieve. Bringing it in from the United States will work at certain periods throughout the year, but that is by no means a solid way of doing it either. So we could be in a win-win situation here all around if we were able to use the Port of Churchill because we would be helping develop the Port of Churchill. We would be helping OmniTRAX in their efforts and we would be helping the consumers of northern Manitoba, but in addition helping the consumers in southern Manitoba by attempting to bring in a supply, hopefully an increasing supply, of gasoline into southern Manitoba which should, in effect, drive down the price of gasoline.

So that, in a very short answer to the minister's question, is what the new government, the new NDP government, will be striving to do after the next election. Now, do you have any further questions?

Mrs. Render: Yes, the member and I talked about that. As I mentioned to the member, there is a memorandum of understanding that has been signed to check into the feasibility of that. But let me ask the member: that gas has to come from somewhere and rack price is rack price. Where does the member assume that he is going to be buying the gas? As the member likely knows, Canada is a net importer of the refined product. If there is a shortage, not necessarily bringing it in through Churchill is going to be the answer.

Also, I do not think that the study that Costas Nicolaou did made any reference to the Churchill port. I am sure of that and I stand to be corrected. Certainly when I met with him I do not remember him making that suggestion.

Mr. Maloway: Could the minister provide us with that memorandum of understanding. I would like to see that.

Mrs. Render: Again, I hate to disappoint the member for Elmwood, but you are asking the wrong minister for that information. I believe the question should be directed to the Minister of Highways (Mr. Praznik).

Mr. Maloway: The minister just said a couple minutes ago that she was prepared to get, for the member for Arthur-Virden, information that has nothing to do with her department. She is going to take the department's time to get information for him on an area that she is not responsible for, on oil and gas exploration, and yet two minutes later she is telling me she will not extend the same courtesy and get me this information from the Highways department. Can she explain that inconsistency?

Mrs. Render: What I advised the member for Arthur-Virden that I would look into it, but I did not tell him when I would get back to him with information. We have a lot of other things that the department is doing, and I am not about to ask another department to do my research for me. You may have noticed that I did not say I would get back to him quickly. I did not give him any sort of date at all.

Mr. Maloway: Would the minister endeavour to do this and give me a time frame as to when I will get it? I pointed out the other day that Minister Radcliffe took six months, I think, to get information to me from last year's Estimates. With an election coming, I think it would be important to get this information out a little quicker this time around.

Mrs. Render: I will see what I can do. I am interested myself–[interjection] The member is putting words into my mouth. I am interested in the issue myself.

Mr. Maloway: Well, maybe now that I have answered all these questions on gas prices, we could move on and deal with the farmers markets. Could you give me an update as to what the situation is with farmers markets co-ops?

Mr. Chairperson: Order, please. When the committee is ready to resume, maybe one of you would just raise your hand, and I will acknowledge you.

Mrs. Render: The discussion across the table is more useful.

Mr. Chairperson: Discussion is always healthy. That is why I was allowing it to go on.

Mrs. Render: It is hard to remember some of these questions that occurred 15 minutes ago. I believe the question was on the farmers market. I understand that they are reasonably successful. They are not large operations. They are not big, sophisticated kinds of co-ops, but they serve the purpose.

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Mr. Maloway: Let us deal with credit union regulation now. I am really interested in knowing what the industry is doing in a number of areas, the Y2K issue, which we can spend, we have another 40 minutes, on Y2K.

I would like to know about the Internet banking, as well, as to what sort of moves the credit unions are making in the Internet banking business. I do know that Internet banking certainly is the coming thing. I know the credit unions in other parts of the country are moving in this area. Certainly the financial services sector in many ways are at the forefront of the move into e-commerce and into Internet banking. I would like a pretty thorough, full explanation as to what is happening as far as the credit unions are concerned in Manitoba on that front.

Mrs. Render: As the members knows, the credit union system is a three-tiered system. You have your local level, and then the next level, Credit Union Central of Manitoba. So the department monitors Central and receives monthly reports as to the readiness as far as the Y2K issue goes.

Mr. Maloway: So what we have now is we have the government departments and deputy ministers getting quarterly reports. We have the Securities Commission head getting quarterly reports from companies in Manitoba. We have the PUB. They are not really sure what they are doing over there on Y2K.

No, that was pretty clear yesterday that they do not have a quarterly or a monthly reporting system. They have a reporting system that says, whenever they feel like reporting something, they report something. Well, that is what was said yesterday. Now we have the credit unions, their Y2K requirements are monthly. Is that what the minister is saying?

Mrs. Render: Just to correct the record. PUB does know exactly what it is doing. What I said to the member yesterday, or perhaps it was two days ago, or maybe it was last week, that PUB does not tell Hydro or the various organizations which it regulates how often to report. They have their own internal system, and PUB is satisfied that the regular reporting that goes on within each individual corporation is more than satisfactory.

In this instance, the member mentioned, or at least I said to the member, that it was on a monthly basis, and the member referenced that time back to me. Yes, he is correct. The Central reports back to the department on a monthly basis.

Mr. Maloway: Can the minister give us an update then as to what the latest monthly reports indicate?

Mrs. Render: I have with me a small pamphlet. It says: "Working for our members today and into the next century," and it is put out by Manitoba's Credit Unions, Year 2000 Initiative. It is called Y2K and your Credit Union.

So I will just read into the record, for the member's information. The first heading is called "What is the Year 2000 Problem?" "The year 2000 problem or 'Y2K Millennium Bug' goes back to the earliest days of computers, when dates were stored in 2-digit format to save scarce and expensive disc space. The Y2K problem is that computers and other date-sensitive equipment could read 00 as '1900', not '2000'. This error may result in incorrect information, miscalculations, or failure of all or parts of some systems."

The next heading in this little pamphlet is called "What is my credit union doing about Y2K?" I am quoting: "While each credit union is responsible for its own systems, we are all part of the system-wide Manitoba Credit Union Year 2000 Project Team. The team is making a concerted effort to ensure that members' account information remains accurate and secure in 2000 and beyond, and that access to funds is uninterrupted through the transition into the next millennium. Our goal is to be Y2K-ready by mid-1999.

"Our definition of Y2K readiness refers to everything credit unions use to provide products and services to members. The list includes core banking systems and shared banking networks like those used for Interac Direct Payment and ATM transactions; hardware and software used for Internet and telephone banking; and credit unions' vault systems, security systems and fax machines."

Now, I find it very interesting that the middle panel of this little pamphlet says: "Your peace of mind is our top priority." Under that particular heading we have two other headings; one: "Is my money safe in my credit union?" and the answer is: "Yes. This is our top priority. Members have entrusted us with their accounts and we have taken this responsibility very seriously. As a precaution, credit unions have back-up records that will verify your accounts. "Also, Manitoba's Credit Union Deposit Guarantee Corporation provides an unlimited guarantee on all member deposits."

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Okay, the next question is an important one, and I know that the member for Elmwood would like to hear the answer: "Are Manitoba credit unions Y2K ready?"

"The core banking system in use by your credit union is inherently the Year 2000 ready. What that means is that the Y2K bug is not an issue: the system has always read 1999 as 1999, (not '99), 2000 as 2000, and so on. You may see '99' or '00' or '01' on your monthly statement, but the banking system sees those same numbers as 1999, 2000 and 2001.

"Credit unions have been writing mortgages and loans and providing deposit products to members with terms that expire in 2000 and beyond for a number of years. The banking system has had no trouble with calculations that extend into the next century."

Then they go on to talk about the ATMs and whether they will work and whether people will be able to make Interac direct payment purchases, and here is the answer: "The credit union system is working at the national level to satisfy itself that the Canadian Payments System network (for cheques) and the Interac network (for Direct Payment purchases and ATMs transactions) will be Y2K ready. We have examined and tested the Manitoba credit union computer connection to these shared systems and are satisfied with what we've seen.

"Testing of all systems will continue throughout 1999 as work on other vital components is completed. The Manitoba credit union system will conduct a full-blown integration test of all systems early in the summer of 1999."

In answer to the question whether member cards will be valid next January, the answer is: "Yes. Your card is linked to your accounts in the banking system. "MemberCards are issued for periods of five years, and many of them already have expiry dates anywhere from 2000 to 2004." I think, in answer to the member's question, that the credit unions are certainly working to be ready, and they are assuring their customers that they will be ready for the change.

Mr. Maloway: I thank the minister for reading that into the record. I have read that pamphlet, but it does not say at what stage they are right now, whether they are fully compliant or not. Are they into the testing stage yet? Are they past the testing stage? Just where are they? You are getting monthly reports. Clearly some have to be ahead of others. You cannot have them all at the same stage. Have they all gone through? Have they all passed at this point? Are they all Y2K compliant and they are just in the testing stage? Where are they now?

Mrs. Render: Once again, I will just say that it is Central which does this particular monitoring of the individual credit union systems. Yes, some testing has been done, more testing will be done, and it is the main banking system that has been reporting to the department.

Mr. Maloway: So the minister says that there is testing going on. Just where? What is the schedule for the testing? How far are we into the testing? Are we 60 percent completed the testing, 80 percent completed the testing? Are we just starting the testing? Are we going to be testing right up to midnight, year 2000?

Mrs. Render: As I read earlier, the testing will continue throughout 1999. The Manitoba credit union system will conduct a full-blown integration test of all systems early in the summer of 1999. It is our understanding that the testing will be finished by the end of the summer.

Mr. Maloway: That is exactly what I wanted to know. When will all of the systems be Y2K compliant and then when will the final testing be done for the final credit union? The minister has said that all systems are presumably compliant by now and that they are in the testing phases now and that all the testing itself will be done by September 1. That is what she is saying? No exceptions?

Mrs. Render: Again, as I have said in a number of answers, when the member presses me to try to give a very definitive answer, that is the plan. The testing is to be completed by the end of the summer. We have no reason to think that it would be otherwise, but for me to sit here and say definitely 100 percent that that will happen, I cannot. That is the plan. We assume that it will be completed. I cannot say anything more than that.

Mr. Maloway: I would like to ask the minister then whether there will be any problems with the TD bug as regards the credit union Y2K efforts. The TD bug, sort of like Internet cookies from last year.

Mrs. Render: I would look to the member for explanation. We are not aware of the issue.

Mr. Maloway: The TD bug is something that is–

Mrs. Render: Toronto Dominion?

Mr. Maloway: Well, I think it is relatively new. I do not know how old it is. But it is basically a time and date instabilities bug. I see it as having a particular application to perhaps the banks and the credit unions because, basically, the TD bug results in the computer or the imbedded system, whichever you are dealing with, having difficulty calculating or retaining the correct time or date. In the banking business and in the financial institution business, I can see that as kind of important.

Originally when the discussion started about the whole Y2K question, it was thought of as peculiar to computers. So people were running around up until just a year ago, year and a half ago, were dealing with a computer problem. That is what they thought. Then all of a sudden out of nowhere came the idea that imbedded chips were a problem. All of a sudden it spewed beyond computers to elevators, VCRs, toasters, and all sorts of areas that had imbedded chips that to people it would not come to mind automatically that they had imbedded chips. Imbedded chips are just all over the place.

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Now, we are looking for not just computers when we are talking about Y2K. We are talking about mining shafts and people being stuck down mines. We are talking about elevators. We are talking about traffic lights and airplanes and hospital equipment. Just everywhere you go we are looking at things like this imbedded chip. So now we have another potential problem with the TD bug. I want to know what you have done about investigating this TD bug. Are you on top of this?

Mrs. Render: This is not a term that we are familiar with. I think in the information I read into the record it appears, and again I stand to be corrected, that Manitoba credit unions have dealt with that issue in the sense that their core banking system, which is in use, the Y2K bug is not in issue because the system has always read the four numbers 1999 as 1999. It has not read it as the two-digit number 99. So they feel that they will not have that particular problem.

Mr. Maloway: The minister can solve the problem by just offering to check for me on this matter and to ask the relevant authorities whether this Crouch-Echlin effect, the TD bug, has any effect or could possibly have an effect, because it has to do with the bias of the computer and the fact that it may have difficulty calculating or retaining the correct time or date, whether any of the systems that they have purchased may, in fact, be impacted adversely because of this possible TD bug. I mean, surely we do not want to find ourselves with two months to go and nobody knows what the TD bug is or whether it has any effect in there.

So all I am doing is trying to be pre-emptive here and just ask for assurances that this TD bug is not going to be a problem as regards the credit union system and the financial records of citizens of Manitoba. In fact, it may have applications to other industries as well, but it seems to me that certainly there should be a question raised about it when you are dealing with banking, financial institutions, and credit unions. So that is why I am bringing it up right now.

Mrs. Render: Yes, we will ask the question.

Mr. Maloway: When might I expect a response about this? Would this be Monday, or would it be many moons from Monday? When would this happen?

Mrs. Render: A short moon away. We will do it as quickly as we can.

Mr. Maloway: I would like to deal with, in the time we have remaining, the whole area of Internet banking and e-commerce. It does not necessarily have to relate totally to co-ops and credit unions. We could talk about Internet commerce as it relates to her government's department, too, because I have a copy of what is on her web page. You know, essentially what we are dealing with is in its infancy. I mean, this is just what, a couple of pages and a picture of the minister. I did not print it out in colour; maybe I should have. [interjection] Well, I cannot. There may be some confidential notes written on it, so I cannot let the minister see it right now. Maybe when we are finished with the committee, I might.

Anyway, the point is has the minister conducted any studies as to whether or not her department will, in the future, be offering services on the Net in the area of e-commerce? For example, her department offers services in consumer affairs whereby direct sellers have to renew their licences. You have this whole area of government services, and I do not mean the department, but I am talking about services provided by the government where it is possible for somebody–you know, you project ahead here 20 years–well, it would not be 20 years, maybe three or four years at the rate of change–that people will be able to renew their licences directly from their computer, right? It is just basically, it is e-commerce is what it is.

Now, I would like to know if the department has done any studies about that, whether it has been approached by anybody in the IT business to start doing its business on-line with the public and whether or not there would be, because I can see the public renewing some of their licences, getting some of their information. For example, perhaps land titles information or, if people wanted, they could access it through their computer and they would pay with their credit card.

I am just using that as an example, but services right now where somebody has to physically get in their vehicle, drive down to a government office, and spend a considerable amount of time and effort, those services can be provided right over the Internet. It is basically known as Internet commerce, e-commerce. It has applications to the credit union system, too, so I am looking for what is happening with the credit unions, but I also want to deal with the department.

Now, maybe today we should just deal with the credit unions so that when we finish we can say that we are finished with the credit unions for the year and that we can deal with the minister and e-commerce another day. Perhaps we should do it that way.

Mrs. Render: I have just been given a piece of information which I would be surprised if the member does not have, but he is probably aware of it already. Just for the record I will read in some of the information on this. It is called See You At Home. There are 10 credit unions who are on this Internet service. They are Communicators, Hy-Line, Civic, Buffalo, Rosenort, Adanac, Minnedosa, Erickson, Cypress River, and Flin Flon. It was introduced three months ago.

I will just maybe read the paragraph here: It has been three months since See You At Home, the Internet banking product for profile credit unions, was introduced. We have continued to make product changes in response to credit union and member requests and encourage you and your members to keep the comments and suggestions flowing. There are now over 3500 members signed up. We processed over 21,000 Internet banking transactions in May. Transaction volume has almost doubled every month since implementation. Our support team is available to provide assistance to credit unions and their members for all Internet banking inquiries.

Then it gives the number to phone. The line is manned Monday to Friday from 8 a.m. till 6 p.m. They also advise that members can also obtain help through an e-mail address.

I am not too certain just exactly what all you can do. I believe you can transfer funds between accounts. You can pay bills. You can obtain account information. I do not believe you can withdraw using this method. Of course, there is certain software that somebody must have to be able to access this.

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Mr. Maloway: How is this going to work out with e-routes, the big fight between Canada Post and E-Route? Do the credit unions feel they have a chance to compete against these two, you know, much larger competitors?

Mrs. Render: I guess the answer would be that the credit union would not have introduced this if they did not feel they could compete in this area. Certainly the credit unions are very aware of the changing times and that they have to keep up with what is happening across the country.

Mr. Maloway: So is the minister telling us then that the credit unions will be competing with E-Route and Canada Post in this electronic billing?

Mrs. Render: I am not too sure that I understand the question. Obviously, the credit union has introduced this because it is a service that their members are asking for. As I stated, the credit unions, like any financial institutions, have to keep up with the times. So they are providing services that their members are asking for.

Mr. Maloway: I am asking about an electronic billing system. I am asking about e-routes. E-Route will be operating I think nine months from now. Canada Post has a bit of an advantage because it is starting this summer. Now, where are the credit unions in all of this? Where is their electronic billing function and their ability to compete against these guys? What you have with E-Route, you have I believe it is Royal Bank Visa, Bell Canada, you have big institutions getting together and nine months from now they will be introducing this e-bill system. The post office is going to be introducing a similar system this summer. Where are the credit unions in all of this? Are they going to be into this too? Are they in the ballgame?

Mrs. Render: I do not think we can answer that question, Mr. Chair, because the credit union, as I mentioned, just introduced this particular aspect just three months ago. They are still developing things, and obviously they are going to be developing measures that are going to keep their customers, that are going to encourage more customers. So I think this is just sort of an ongoing kind of thing. They are going to keep advancing.

Mr. Maloway: Maybe the minister could take the following questions as notice and get back to me with the answers, because we are running out of time.

What I wanted to know is could she endeavour to contact the credit unions and find out how they plan to compete, how they plan to answer the challenge issued by e-routes, which is basically all the huge banks and the challenge issued by Canada Post Corporation this summer to basically do electronic bill payment. That is what it is. And that is evidently half of all the banking transactions in Canada. If the credit unions are not in on the ground floor of that area, of that initiative, then they are going to find themselves playing catch-up if they are not on top of it right now.

Now, I also would ask the minister if she could check out, there is a reference here about the capital adequacy standards, or the capital for the credit unions, and I would like to know from where to where are the reserves. It is on page 56 of the annual report and there is reference there to the adequacy of the capital and the standards, and I would like to know where you have moved the standards, I guess.

Mrs. Render: We will endeavour to the get the information on the questions on the e-commerce and the capital adequacy of the credit unions.

The Acting Chairperson (Mr. Rocan): As was previously agreed, the Department of Consumer and Corporate Affairs, we are simply going to halt it because we are now going to bring in the section to consider of the Supply that is to be granted to Seniors Directorate.