Mr. Deputy Chairperson (Ben Sveinson): Will the Committee of Supply please come to order. This morning this section of the Committee of Supply, meeting in Room 255, will resume consideration of the Estimates of the Department of Industry, Trade and Tourism. When the committee last sat, it had been considering item 4. Economic Development (a) Economic Development Board Secretariat on page 95 of the Estimates book.

4.(a) Economic Development Board Secretariat (1) Salaries and Employee Benefits $531,500.

Mr. Tim Sale (Crescentwood): Mr. Chairperson, we have spent some time on this whole area and I want to ask the minister if he could clarify the intended relationship between the board secretariat and his department and Rural Development and other economic groups?

When we last talked about this, the deputy minister was ill, unfortunately, and I was not entirely satisfied that I was clear on how the government intended to avoid what the minister has called a number of times during our discussion the stovepipe syndrome, so I would be very interested in knowing how this board is going to cut across the turf battles that still plague most governments, including, I believe, this one. It has certainly plagued any I ever worked for.

Hon. James Downey (Minister of Industry, Trade and Tourism): Mr. Chairman, I do not have any trouble repeating what I said the other day, and the deputy is here and has just indicated to me, as we have discussed the other day, that the overall co-ordinating body of all the departments are involved in economic development.

Certainly the whole activities within government, in cross-departmental activities I think there are many successes that are being able to be demonstrated, and that is the development of the Can Agra project, the work that is being done at McCain. Those are all interdepartmental activities that have worked with all the departments through the Economic Development Board system, so those are direct activities which I can refer to. So it is a matter of, there is a direct communication system between the Department of I, T and T, the deputy minister and the secretary of the Treasury Board.

There has also been recently, and he asked me recently, I think earlier in the Estimates process, whether or not there was a structured deputy committee. There now is--

An Honourable Member: Did that just happen this week?

Mr. Downey: No, I was just informed about this. I have just been informed about the actual structured activities of the deputies of which they have a one-monthly meeting which is regularized now and they in fact will be meeting at the call of the chair over and above that if necessary. There is a regularized meeting which I was just informed about as of Monday morning in fact, so there is a structured system now between the deputy ministers and dealing with the economic development activities.

Mr. Sale: Mr. Chairperson, is that structured committee resourced other than as an ad hoc committee or is it an initiative of the deputies and not formally structured as yet?

Mr. Downey: There are no additional resources and it is, as the member has indicated, at the initiative of the deputies, but again it flows from discussions that were held from the Economic Development Board, and that is where it is at at this particular time.

Mr. Sale: Mr. Chairperson, is there consideration of formalizing that into a structure so that it has resources and has authority and is not dependent on simply the good will of the deputies involved but has some mandate?

Mr. Downey: Mr. Chairman, to add additional resources, the answer is no, because they have resources within their own departments of which, if it is a project activity, they are paid their salaries. If there are additional activities needed to be seconded, I would think that would be a joint approach that would come from those deputies. If, for example, there was some consulting activity that may have to be carried out on behalf of that unit it would be a move by the Premier (Mr. Filmon) and by cabinet if that were to be formally structured by Order-in-Council. At this particular point we are doing it on this basis, and I think the most important part of it is that there is the will of the deputies and the will of the departments to come together in this manner without having to write that into a regulation or write it into an edict of government. If that were deemed to be necessary that would be a decision taken by myself as a recommendation and/or my colleagues to go further to formalize it.

Mr. Sale: Mr. Chairperson, I think the deputy and the minister both know that organizational cultures are very powerful. Unless senior management gives a very clear signal about the expectations to cut across the turf and to operate collegially and to transfer resources interdepartmentally when that is appropriate and to measure progress by success and not by the size of one's acquisitions over a given year, unless those signals are very clear and are supported at the highest level, the temptation will always be, as the minister I think said to me at one point, to make one's minister look good at the expense of some other minister. I would suggest to the minister that unless there is a formal mandate for that group with some expectations laid on it and clear signals given, that we will continue to see what unfortunately the Price Waterhouse study noted as the statement that many I, T and T people feel that rather than deal with fundamental barriers, important and high profile activities have been moved outside.

There are many other similar statements. I do not take any pleasure in that situation, but the situation arises from not having clear signals interdepartmentally at the highest levels of government, that this kind of turf war and interdepartmental conflict is not acceptable.

Mr. Downey: I hear what the member is saying, Mr. Chairman, but I think we have moved a long ways, I think, that certainly the deputies and their activities on a formalized meeting on a one monthly basis and every department that connects to those deputies will be fully aware of the opportunity. If there is a project which has to be cross-referenced or worked on jointly, we will certainly be part of those activities. It is endorsed by the ministers who are part of the economic development sector. If we need to jointly pool some resources, the decision makers are part of that. It is our intention to make sure that we see some improvements, so we have, I think, with the Economic Development Board co-ordinating in the past has certainly improved substantially. We have been able to have some decisions made, I think, at the highest level in the most responsible way to help move some projects along the line.

Quite frankly, and he knows and I know that if a company is going to make a fairly major financial decision that what they do not want to do is run into the frustrations of different departments of government not working co-operatively to get a decision made that has to be made. That we can assure him and I would ask him to do a poll of some of the companies like the one that he knows so well, and that is Canadian Agra where in fact we have received nothing but compliments on the manner in which it was done, not short cuts, not doing something that is inappropriate but making sure that the government decision making can come together in one focus and get that done.

* (0910)

I think it again points out what we have been pressing for as a province. The Premier (Mr. Filmon) and my colleague the Minister of Environment (Mr. Cummings), we have called for the same thing through the environmental approval system that where federal government has interest and has some say along with the province that we do not have two panels, that we do not have two systems running parallel, that we have no trouble with the toughest regulations in place but make sure it is done jointly, not two running at the same time, because that is a total frustration to any decision maker, and that harmonization is I think key.

Mr. Sale: Does Mr. Duncan attend the deputies meetings on a regular basis?

Mr. Downey: I do not believe he has been at this point, but it is the intention to be part of that.

Mr. Sale: Mr. Chairperson, do any support staff from Economic Development Board Secretariat attend the meetings?

Mr. Downey: Again, this process has been put in place following some discussion that flowed from our budgetary process under the economic development sector and it is just in the process of getting established, but I think that it will not be a lot different than what we see take place under the Provincial Land Use Committee where there is a structured deputies committee at which a piece of land is to be used for a certain purpose, there is a deputies committee which has certain people come forward to make their presentations to the deputies committee. If there is an impasse there and it cannot be resolved, then it goes to the PLUC committee. I do not see it working a whole lot differently than that process.

Mr. Sale: Mr. Chairperson, I have urged the minister to consider working through cabinet the decision to formalize this interdepartmental group of deputies and to resource it through the Development Board Secretariat and then to look at how you can use that organ to communicate more effectively to the various departments the initiatives that are going on to reward co-operation, support it and to give a single focus to what I agree with the minister was a very successful experience with Can Agra in which a single point of contact was identified for the company and which I have also, as the minister knows, met with that company and they speak very highly of the way in which they were welcomed to Manitoba and facilitated.

Nevertheless, at the very same time and the same period that that was going on, Price Waterhouse was able to write this report and say, you have some serious problems with overall co-ordination. I recognize that refers to a time prior to the arrival of the current deputy minister and in an era in which a different mix of personalities was involved at the senior level. We have a new situation and I am not yet satisfied that I see that the department is capitalizing on that new situation and clearly moving into the kind of overall approach that I think the minister and I both agreed and I am sure the minister knows much more about this than I do, but it needs to be co-ordinated, rewarded and supported at the highest level. Otherwise we will fall back into those proverbial stovepipes we have talked about so often during these Estimates.

Mr. Downey: I will take into consideration more formalization. Again, it is a process, it does take time and I do think that what we are seeing are some very positive moves coming from the senior levels of staff. Certainly, there is not any problem with the ministerial colleagues. I think they all feel that there is a tremendous opportunity out there for all portfolios to be a part of it, whether it is Agriculture, Rural Development, Environment; Industry, Trade and Tourism; Highways. There is a tremendous positive growth mode that is in our province. As I said yesterday, I would call it a quiet revolution that is taking place within the agricultural industry.

Quite frankly, there is a lot of catch-up to do, whether it is in the flour milling business, whether it is in the hog processing business, whether it is in the hog production business, whether it is in the beef industry, whether it is in the special crops industry, whether it is in the nonfood agriculture industry like the PMU and the Wyeth-Ayerst activities at Brandon and surrounding areas, whether it is in the potato sector, we have a tremendous lot of enthusiasm and activity.

It calls me to bring something else to the attention of the member, as I think it opens up a tremendous opportunity for some equity investment for what may be considered nonagricultural-type funding, to look at agriculture as an opportunity to invest. When you look at, for example, the potato industry and the amounts of monies that have to be assembled to support that industry--and let me just use some examples. To irrigate and to put in place the kind of equipment to expand into potato production is highly capital intensive. For example, you are talking in the thousand dollars an acre range for probably each one of those activities. Storage to me would make a good opportunity for an equity investment company to come along and say, you know, we are prepared to put capital into storage in the potato industry, not unlike what happened in the grain industry at one time. There were companies developed that really put in grain storage and are paid for that purpose.

To me, that is the kind of opportunity that this whole thing opens up, so I think that if I were to accomplish anything out of this kind of a committee and what we are doing with our department is to express how interested I think the farm community is to look at all kinds of options to support this activity. It is an exciting time in agriculture, challenging but exciting, and I would hope that members opposite would pick up some of that excitement and get on board, because I think they could play a constructive role, and I mean this seriously, in being objective about the developments that are taking place.

Mr. Sale: Mr. Chairperson, pages 27 and following in the consultant's report provide a section that is titled Creating and Managing I, T and T's Revitalization, and then the following section talks about, in Appendix 1, Emerging Best Practices.

Could the minister indicate the degree to which the department feels that the consultant has given very good guidance in this area and indicate whether in the revitalization process you are being substantially guided by this fifth section in the report?

Mr. Downey: Mr. Chairman, the member used the word “guided,” and my deputy indicates guided is a fair word, but not exclusively.

Mr. Sale: Mr. Chairperson, could the minister indicate in terms of the Emerging Best Practices section areas in which he feels that the department could learn from, be strengthened by? I am thinking of the examples given of Alberta, Oregon, Quebec, a variety of best practices indicated. Could the minister indicate ones that the department finds particularly useful?

Mr. Downey: Mr. Chairman, we are just starting into the process of developing the cluster strategy which has been developed and is modelled in other areas. It is a little too early to indicate any successes, but I think it will have to fit into the Manitoba model, for example, what I referred to yesterday about how, for example, does the environmental industry fit in with the overall economic development industrial strategy and the shifting of resources within that cluster and that activity.

So we are, I would say, in the early stages, but I think, as I indicated from the comments of my deputy, we are using this as a guide and will develop it to the Manitoba model. Again, without sitting here exclusively saying this is the way it will be, what we have talked about a few minutes ago, if we were to do it in an absolute term then it may disregard what we have set up with the deputies and their working together to try and help mold what we think is the Manitoba model, but, again, I think we will see some positive accomplishments flow from this. Again, it is having the right people doing the right things, and I think the willingness from the people whom I have dealt with in the department and what I see, I think will accomplish it.

Mr. Sale: Mr. Chairperson, the implication of that for me is that there will be realignments of staff and function and appropriations and subappropriations because, again, I just would underline that I am sure the minister knows, and I know the deputy knows because of his senior management experience, that if we do not give the right signals to people, no matter what our words are, behaviours will not be clearly supported because it will not be clear to people whether we are simply talking or whether we mean business in terms of reward, support, structures, et cetera.

I was disappointed yesterday, Mr. Chairperson, when the minister appeared to resist any discussion about the changes in the Environmental Industries area in which there are the same staff resources, in fact, more staff resources aligned in that area which is very, very small and not unimportant, but very small; and, from a strategic point of view, it is probably not nearly as important as the agribusiness. I was disappointed that the minister appeared to resist a discussion about realignment of resources and defend the existing structure rather than talk about change.

* (0920)

Mr. Downey: Mr. Chairman, the last thing in the world I wanted to do yesterday was disappoint my critic, and I am really troubled now that I have done that. If an apology would make him feel better for the weekend, I would do so, because I would hate to have that burden on my shoulders over the next few days.

However, having said that, Mr. Chairman, I think what the member is referring to is whether we are prepared to change, rescope and reshape with a different alignment of resources and people, and the answer is yes. Under a cluster strategy you have to have the flexibility to move your resources and your people to the areas of demand, and that is what will happen.

Mr. Sale: Mr. Chairperson, I would not ever want to burden the minister on the weekend with any responsibility for my mental health, so let me assure him that I will not lose sleep over my disappointment.

I want to ask now some questions about the move to restructure into a special operating agency in the particular area of the ITC, and also in doing that, to ask what has happened and what the rationale for the spin-off of the Ward lab into a new joint venture is based upon.

Let me start with the SOA. There is nothing that I can find in the Price Waterhouse study that suggests that this is a high-priority activity to change the current ITC into a special operating agency. Can the minister indicate why, in the absence of any comment in this regard, what is the rationale for doing this at this time?

Mr. Downey: This had been in the mill and had been talked about by EITC board of directors who have a mandate to look into the future and to be working to help develop policies that will help guide government agencies, such as the ones they were charged with the responsibility: the food lab, the Environmental Industries lab and the ITC activities. This did not necessarily derive or have anything directly to do with the Price Waterhouse study. In fact, I do not think there was any mandate or any discussion because of the work that had already been done as it relates to the development of the special operating agency.

The member asks the questions, why is it done, why did we move in that direction? Basically, it was at the recommendation of EITC and, first of all, to operate what we believe is an agency that will not require, in the longer term, ongoing support from the province, that it does turn itself into more of a commercial entity which generates the income that operates the system. I believe it gives the employees an opportunity to have more of an opportunity to help direct and have more enthusiasm about the outcome of the work that they do, that it just is not part of a government activity, and that there are opportunities in going to special operating agencies like ITC, the food lab and the Environmental Industries, but particularly the environmental industry which has been announced.

The member is aware of it, that we will be able to maintain jobs, that we will be able to grow an environmental industry service and we will be able to add to those jobs as a centre of activity here in the province of Manitoba and, at the end of the day, save the taxpayers a considerable amount of money. At the same time, particularly dealing with the environmental lab, we will be able to, I believe, make sure that the province is provided with the necessary services that we need as when we need them and at a cost that will be probably in the longer term less costly because of the viability and the growth of the industry. It would not be solely operating for government, it would be providing a service for a cross-section of the industry.

So I think it is an extremely objective move that will help our industry grow, help the environmental industry grow probably as much as us with what resources we can provide from the department. It is a whole new thrust. I am quite encouraged, quite frankly, by the positive attitudes that I have heard since this has taken place.

Mr. Sale: Mr. Chairperson, let us start with the word “lab.” What is the status of the civil service jobs that were at the lab and now, with the company Enviro-Test labs, what is the status of the former provincial staff there?

Mr. Downey: He is looking at whether or not they have civil service staff or whether they do not?

Mr. Sale: I am looking broadly at their working conditions, pensions, rights, contract, union representation, if any. What is their overall status?

Mr. Downey: Basically, it would be up to the new entity to deal with the union representatives as to any ongoing agreements that would be established between those two entities, it is my understanding.

Mr. Sale: Is it the minister's understanding that the provincial staff there have successor rights in bargaining or are they essentially no longer protected?

Mr. Downey: I will get the detail. I do not believe they have, but that is the kind of detail, I do not have, I am not sure the exact finalization of some of the components of the agreement, but I am prepared to disclose what I can to the member as soon as I have it. If it has not been signed, it is in the final stages of being done, and that is the kind of detail that, quite frankly, is in the negotiation or has been in the negotiation stage this last short while.

Mr. Sale: I find that quite incredible that the minister can claim that jobs are being protected when in fact our understanding is that there is no protection whatsoever for these jobs in the medium term. The minister does not appear to be aware of whether there is an intention of having successor rights, bargaining unit protection. This is not an acceptable level of understanding or explanation of a major divestiture.

Mr. Downey: Well, Mr. Chairman, I am sorry the member got a little bit excited and anxious about his criticism because I can tell him that in the agreement they must maintain a minimum of 40 full-time staff in each of the first three years, which is down slightly from the current level, an indication that they have to grow to 55 full-time jobs in year three. The company, I understand, if it is correct, will offer a profit-sharing plan with its employees. The plans are to grow the numbers of employees to 75 full time by the year five.

Mr. Sale: My understanding that Enviro-Test labs has no pension plan and very few employee benefits in its current incarnation. Can the minister comment on that information?

Mr. Downey: No, I cannot comment on it.

Mr. Sale: Mr. Chairperson, does the minister have any concern about the quality of working conditions that are being offered to staff in this, I think, very lucrative deal for Enviro-Test labs and a bad deal for the current people of Manitoba?

Mr. Downey: I do not agree with the member's comments and, quite frankly, I have concern for working conditions, but I also live in the real world that the company that will be taking on Enviro-Test labs, I believe have taken this on to grow a business here, as I have indicated, to grow the numbers of jobs, to maintain the number of jobs at what I have indicated and that has been indicated to me by the department. That is something that was considered in the overall agreement, and I am sure that as any other company that they will have to live within the labour legislation that is in the province of Manitoba to make sure that the employees are in fact treated fairly and equitably, and that is a part of what is in the agreement.

Mr. Sale: How many employees were in the Ward Lab prior to this arrangement?

* (0930)

Mr. Downey: I do not want to be absolutely held to this number, but the department has indicated I think 45 is what the number of jobs were, but I will further substantiate that number.

Mr. Sale: Is it the intention of the new entity partnership, I think it is called, to move into a cost recovery fee-for-service style of approach in regard to the many services that the former labs provided to Manitobans?

Mr. Downey: I am not clear of the question, how the question is being asked. Would he repeat it and explain it a little bit more please?

Mr. Sale: The Ward Labs provided tens of thousands of water quality tests. They were involved in groundwater monitoring, water quality monitoring in a number of areas. They did a number of what you would say would be quality of environment types of tests and services basically as a public utility. My understanding of the new arrangement is that government is going to move away from that into a cost recovery fee-for-service model. Am I correct in this understanding?

Mr. Downey: I would expect that to take place. I think society today realize that when they get a service provided that somebody has to pay for it, and if we are going to make sure that the services that we have provided in the past, such as health care and education--without charges and there is not any intention to charge in those areas for services--but there are some areas that quite frankly industry and/or the general public for other reasons would be involved in some cost recovery. I believe it would be the intention in this area to move in that direction.

Mr. Sale: Who pays the costs of somebody who gets giardia poisoning or parasitic infection and winds up in hospital?

Mr. Downey: The health care system would have to pay that.

Mr. Sale: The minister knows there is no such thing as a free lunch. Who pays for the health care system?

Mr. Downey: The taxpayers.

Mr. Sale: It has been a long accepted principle of health planning that it is far cheaper to fund a public health system publicly, because there will always be those restaurant owners, those individuals, those towns or villages or municipalities who for financial reasons or for other reasons, but often just for financial reasons, will not test often enough. If you put enough disincentives into the system in terms of costs, you will start paying large amounts of dollars out the other end, as it were, when we have lowered water quality, when we have people who do not bother getting their wells tested as often as they should and take the chance one time too often and wind up very sick in hospital.

The great advances in health care, the minister may know, did not come from acute care treatment. It did not come from funding hospital beds. The great advances in health care came at the beginning of this century and the end of the last when we got clean water, we dealt with sewers, and we started to understand the spread of disease through public health, aggressive public health measures.

The real pioneers in medicine were not the cardiac surgeons. The real pioneers were the public health nurses and the public health officials around the province.

So when the entity that pays the freight on the other end of the deal, that is, the health care costs of individuals or communities that have health problems, stops investing in the front end, that is, the public health maintenance, then we have a situation where we are going to start paying far too much to deal with problems which were readily avoided. I cannot think of a single economist who would make a case for making routine water testing other than a public utility, because it is so fundamental to public health.

The town of Dauphin is going to pay an awful lot of money for dealing with the giardia infection, infestation rather. You as minister know and the Chairperson knows that a year ago and two years ago the people of Canada paid a huge amount of money because of the outbreak of intense gastroenteritis in Arviat on the western shore of Hudson Bay, what used to be Eskimo Point and now called Arviat. We had four children die in that situation. That was a situation of a water system that was infected.

So I think that we are embarked on the most foolish of public policies when we move into cost recovery for a basic public health issue of environmental testing and, in particular, ground water or well water or municipal water supply testing, because we will put disincentives into the system and people will be asking their officials how infrequently can we test and still get away with it simply because, as the full cost recovery cuts in, we simply transferred costs to other taxpayers, but they are not the taxpayers who are responsible for the outcomes of bad public policy in this area. They are the taxpayers responsible for municipal roads and municipal infrastructure. They do not pay the health costs.

So when the level of government responsible for health costs offloads its cost onto another level of government in an area that could be effectively preventing health costs, it is going to wind up paying unintended bills.

I think this is the most foolish public policy that we could move into.

Mr. Downey: Well, I would not have expected to get full agreement on these Estimates from the member for Crescentwood, Mr. Chairman, but I do not buy his argument. I can tell you that the people who are responsible for the area of water quality, who are running municipal systems, who are running private water systems for private wells or whatever, I do not believe the minimal cost it would take to test water would in fact in any way slow anybody down from prohibiting them from doing so.

I think the other side of the coin is that what we are doing is, we are building and growing an industry here which we would not have done under the current system. There would be no opportunity for someone to come in and test other jurisdictions' water. For example, if we want to develop a prairie water testing system here, it could in fact lower the cost for everyone and a far broader number of people have their water tested. So, I think, he is taking a pretty narrow social-minded view of it. I could make the argument all the way across the board. Why would you charge anybody for their electricity because without electricity your health could, in fact, deteriorate? Your eyes could go bad if you are not reading with electricity at night; candlelight would not, quite frankly, be strong enough to give you. So one can carry it to the extreme, and I am not going to do that. I would make one comment though.

He brings the name of the town of Dauphin to the floor here. Dauphin had the full opportunity of participating in the PAMWI agreement. They were one of the towns listed initially to participate in PAMWI, a $90-million agreement that was offered to the towns of Steinbach, Winkler, Morden, Brandon, Portage la Prairie, and Dauphin was included. Dauphin said, we are not going to pay our third; that is not a fair approach. They, in fact, resisted on putting a third of the money forward--a third from the province, a third from the feds and a third from Dauphin. Mr. Chairman, I cannot say this absolutely, but I would suspect if they had proceeded to do their water upgrade, they may not have had the difficulty that they are having today.

So he does not need to try and tie Dauphin to the fact that we are making a change to the environmental laboratory ownership and that we are going to go in industry to that particular case. I know the history of the water in Dauphin and why they rejected it. They made a political decision at municipal council level they were not going to participate. He can check the record, he can check with his colleague the member for Dauphin (Mr. Struthers), I think he will find that I am right. I do not accept and I do not think the public will buy the argument that because we are making this move to privatization over a period of time, we are not just doing this--there is an agreement that over a period of time, we will phase this into a private lab, making sure, and this is part of it, that we will get the services as we need them and when we need them as a provincial service as well. Service will be guaranteed to the province of Manitoba.

* (0940)

Mr. Sale: Mr. Chairperson, did the arrangement close as expected on May 31?

Mr. Downey: That was the target date, but if it did not do it, it is imminent that it will be closing either as we speak or it is in the process of closing at this particular time.

Mr. Sale: Mr. Chairperson, how much is the government involved in funding the new arrangement? Can the minister indicate the incentives or grants or loans or other amounts contemplated under the ETL agreement?

Mr. Downey: Mr. Chairman, because that final detail will be in the concluded agreement, I will make every effort to get that information for the member so I am correct in the information that I provide. I do not want to put incorrect information on the record, and I will make every effort to make sure he is fully apprised of the deal.

Mr. Sale: Mr. Chairperson, I want to go on now to the Trading Corporation which plays an overall economic role in terms of the development board.

Last year, there was a major--well, at least a significant promise to change the role and scope and appearance and all those other good things of the Manitoba Trading Corporation. I may have missed it, but I have not seen any impact from that announcement last year in terms of single identity and beefing up the corporation to do wonderful things. Could the minister indicate what happened 'twixt cup and lip?

Mr. Downey: Mr. Chairman, I thought we had passed this section.

Mr. Deputy Chairperson: Would the honourable member for Crescentwood identify?

Mr. Downey: But that does not matter, I will deal with it anyway, Mr. Chairman.

An Honourable Member: Where did you think we passed it?

Mr. Downey: I believe we are dealing with the Economic Development Board, not the Manitoba Trading Corporation, but that is fine, I can deal with it at this particular time.

Mr. Sale: On a point of clarification perhaps, if both the Chair and the minister could indicate, on page 4 of the additional information, the note is--and this is one of the reasons I raised this question--Not Reflected On This Chart: The Manitoba Trading Corporation and The Manitoba Development Corporation.

I cannot find any subappropriation for the Trading Corporation, although I may have missed it. It is quite possible I missed it, but I did not see it anywhere else. So, if the minister can indicate where it was in Estimates prior to this point, I would be glad to know, and then maybe we have to ask permission to go back; but I did not see it anywhere.

Mr. Downey: Mr. Chairman, because of some discussions here, would the member repeat his question, please?

Mr. Sale: Mr. Chairperson, the minister indicated that he believed we had passed this. I have not seen any subappropriation that relates to the Manitoba Trading Corporation, so I may have missed it. I indicated I would certainly be glad to be corrected, if I have missed it. If the minister could indicate where it was we passed anything that had to do with that, but I have not been able to find it in the Estimates; whereas, in last year's Supplementary Information, there was an indication that the Manitoba Trading Corporation was going to play a larger role in the department and in the role of economic development in the province. So that is why I am asking the question under the Economic Development Board. I would be very glad to know where it is in the Estimates. I have not been able to find it.

(Mr. Jack Penner, Acting Chairperson, in the Chair)

Mr. Downey: Mr. Chairman, I will speak in a general way about the Manitoba Trading Corporation because we have in fact seen a new thrust in the whole area of Manitoba Trade and the activities that it carries out. As the member knows, we have seen a tremendous increase and are seeing a tremendous increase in the export development of the province of Manitoba, and the Manitoba Trade is playing the lead role in that activity.

Let me, as well, say, Mr. Chairman, I think I can give some fairly good examples of some of the successes that have been derived from Manitoba Trade and some of the related activities. We have as a province, and as I say as a province, either through the direct action of the Premier (Mr. Filmon) or the activities of I, T and T or the activities of Agriculture, I am not sure whether these are all added together. We have seen come into the province over the last year, I believe, in excess of some 30 trade missions from outside of the province, basically, dealing with the need to purchase either product or technology.

We have seen some, again, real examples of that that have taken place in the area under the agreement with the province of Hunan in China, with the development of the work that Agri-Tec are doing, with the work Feed-Rite Mills are doing, as it relates to the expansion of their activities in those international marketplaces. We, I believe, have seen the development of the--I know we have seen the development of the Moscow and Narodny headquarters in Manitoba because of the work that has been carried on through Manitoba Trade and the related activities.

The member asked under what appropriation it comes under? It comes under subappropriation 10.2(a), and, again, I can refer to him that we have established a Memorandum of Understanding with the State of Jalisco in Mexico. The governor of the state of Jalisco is coming at the end of this month. Under that trade activity we did a trade trip to Jalisco and to Nuevo León a few weeks ago.

The University of Brandon signed an agreement with one of the universities down there to exchange activities and to sell some of their educational capabilities to them. I would say it has become a lot more aggressive. One does not want to fall into the trap of saying this is absolutely the only area in which all the trade activities take place. The Premier (Mr. Filmon), as he knows, has been part of the Team Canada approach to both India and to China.

We have done our own special and individual trade missions. The Minister of Agriculture (Mr. Enns), who has also been part of the overall development of trade through the Agriculture department had a very successful trip to Taiwan recently and to the province of Hunan in China. We have been able to accomplish, and I think this was put forward by myself a year ago in New Brunswick when the Canadian Taiwanese business association met. They have an annual meeting. One year they meet in Canada; the next year they meet in Taiwan. The Taiwanese are purchasing a considerable amount of french-fried potatoes from one of the companies that have a major operation in our province.

This coming year, I am pleased to say to the member, we will have that annual meeting held here in Winnipeg--the Taiwanese Canadian business association which brings some of the most important people here from Taiwan as it relates to business decisions. We have had a very aggressive agenda. Manitoba Trade has been involved in the overall development of the trade quarters with the U.S. and Canada and into Mexico. We also have been part of promotional activities as it relates to the arts with the support of the Winnipeg Ballet to a business entertainment activity in Toronto, which we supported and networked a lot of Manitoba businesses with the business community in Toronto.

Recently, we had the same kind of an exercise in Chicago, where we were at the Winnipeg Ballet and again that was co-ordinated with Manitoba Trade and the introduction of many businesses to the business community in Chicago.

* (0950)

I think we have to acknowledge that there has been, and I said earlier, some restructuring and some additional activities in that area. It has actually been broken out from the Department of Industry under a new head person. That we think is extremely important, because the arrangements of which that head person will be employed will be under a contractual arrangement which, after a period of I believe two years, there will be an assessment made as to the performance. Satisfaction has to be there or it is more incentive for activities to be carried out in that area, so I am pretty enthused. It has taken some time.

It is an area in which the measure of success is never easy, although I can tell you that I have given some real examples as to what has taken place. We have done a tremendous amount of work, or the Manitoba Trade has, in putting on trade shows. We have invited some of the major purchasers of some of the component parts, particularly, in the machine manufacturing business. We had Export House, which I can tell him that I will be making more of a statement probably later on today on the success of Export House, which has been under the direction of the Manitoba Trade Organization, some very positive numbers which clearly have demonstrated the effectiveness of it. I am not saying that I am not prepared to tell the member. I do not want to pre-empt my statement that I am planning to give to the House later today, but it is directly involved with the work Manitoba Trade has done in co-operation with Manitoba Industry and the successes.

I have a lot of examples that we have seen a tremendous amount of activity in this area. I have to say to the member, I just think it is going to be absolutely enormous the amount of exposure that we have and what is taking place. I say that on the industry side. We cannot underestimate the same kind of activity that comes in co-operation with the Department of Trade and also with Tourism. There is a joint role to be played I believe, to some degree, co-ordination and co-operation, and that is taking place.

Mr. Sale: I think now I understand why I missed it. I was not understanding that apparently it has a new name. Manitoba Trading Corporation is now called simply Manitoba Trade. Is that its new name?

Mr. Downey: That is correct.

Mr. Sale: So should the subappropriation entirely then be called Manitoba Trade as opposed to Industry Development?

Mr. Downey: That could be. We could make sure that will be there for next year.

Mr. Sale: There does not appear to be any appropriation, unless it is in the area of Grant Transfer Payments, to the Manitoba Trading Corporation per se. Am I correct?

Mr. Downey: My deputy is checking, Mr. Chairman. We will get that information for the member.

Mr. Sale: Thank you, Mr. Chairperson. In the past, as of last year's Estimates, there was an unpaid chairperson of Manitoba Trading Corporation or, at best, very modestly paid, and the corporation was used really for only one particular purpose. I think it was administering a program for the department in the area of shows, seminars and other cost recovery items. That was the old function. It had a small amount of money on deposit with the province and it held the preferred shares of Faneuil ISG on behalf of the province.

So I confess to some confusion here. Has the Manitoba Trading Corporation become, in effect, industry development here or is there still a distinction between Manitoba Trading Corporation and what the minister is calling Manitoba Trade, which he appears to be using more or less synonymously with subappropriation 10(2)(a)?

(Mr. Deputy Chairperson in the Chair)

Mr. Downey: They are synonymous, Mr. Chairman.

Mr. Sale: Mr. Chairperson, Am I understanding, I am not sure I clearly heard the minister. Is he saying that subappropriation 10(2)(a) should really be known as Manitoba Trade now?

Mr. Downey: It is really a subset of the area which we are talking about. It will be split out and be an independent allocated appropriation in next year's Estimates.

Mr. Sale: Maybe the minister can understand my confusion here in that the terms Trade and Trading Corporation and Industry Development did not appear to be very clearly separated out. I acknowledge that we passed an appropriation that has the term Manitoba Trading Corporation in it but I could not find any appropriation for it, so that is why I was asking under this section.

Can the minister indicate what the intention is in regard to the Trading Corporation as opposed to what he is now calling Manitoba Trade which, presumably, is still an internal department of government?

Mr. Downey: Mr. Chairman, just to put away any confusion, this is called our stealth department. The Manitoba Trading Corporation will be a supportive structure or instrument for Manitoba Trade.

Mr. Sale: Thank you, I appreciate that clarification. Will the Manitoba Trading Corporation be purely a corporate vehicle for Manitoba--for example, it holds the Faneuil preferred shares--or is it intended that it will become, as was indicated in last year's Estimates, in its own right a more active organization, or are we really saying that it is Manitoba Trade that is the active organization, and the corporation is merely a vehicle.

Mr. Downey: It is the expectation that it will become more active as it relates to the activities of Manitoba Trade.

Mr. Sale: Mr. Chairperson, the minister has indicated a number of different places where Manitoba might be taking an equity position. The Ward Lab development is a situation where I believe the anticipation is that there would be some equity position in the new development.

Is it the intention that Manitoba Trading Corporation will be the vehicle that will hold Manitoba's shares in a variety of these agreements?

Mr. Downey: No, not that particular case.

Mr. Sale: Does Manitoba Trading hold any other equity than the Faneuil preferred shares?

Mr. Downey: Not that I am aware of, Mr. Chairman, but I will confirm that.

Mr. Sale: One of the confusing things for those of us--and, again, I do not want to burden the minister with responsibility for my mental health here, but one of the confusing things for me as an observer of government in terms of its economic development role is that we have equity held all over the place in government. We have equity positions through the Development Corporation, through the Trading Corporation, through the Stabilization Fund, and, presumably, there is going to be some more coming in the form of this ETL area.

Surely, it does not make a lot of sense to hold equity positions in a variety of related organizations, all under the Trade and Economic Development rubric all over the place in government. Would it not make some sense to decide where you want to held them and hold them there, so that there is one location and presumably one set of expertise needed to administer all of that.

Mr. Downey: Well, I would not agree that it is held all over the place, because there is not that much to deal with. It is all, of course, co-ordinated and acknowledged and approved by the Department of Finance, so it is not a matter of being all over the place and not recorded and tracked, Mr. Chairman.

If it is deemed appropriate that this is the proper place to handle it, it is not a big confusing problem to make sure that it is. It is certainly known and it is reported and recorded as to where it is.

I hear what the member is saying. It does not cause any confusion for the government. If it would be helpful to the member for Crescentwood to get a greater explanation on it, I will attempt to do so.

Mr. Sale: Mr. Chairperson, when does the minister expect to, or approximately when does he expect to make an announcement on Manitoba Trade? It has been more than a year since we talked about heightening the profile and reallocating resources and all that sort of stuff, and we are waiting. When is this coming?

Mr. Downey: Well, Mr. Chairman, if we could just get these Estimates done, I could get on with that job.

Mr. Sale: Mr. Chairperson, do I have two ministerial statements to respond to in the House today or just one?

* (1000)

Mr. Downey: I can tell the member that I like to get lots of positive comments, so it is my intention before too long to have a fairly major announcement and promotion of what Manitoba Trade is all about and what it will be doing, and as soon as we can get that put together, we will do it. I think it is important to do so, and I think the public clearly should have that information provided to them, and I will try to make it with as big a bang as possible.

Mr. Sale: And I will try to respond in the most appropriate and supportive way possible.

Mr. Chairperson, roughly what proportion of resources will shift from Industry Development into the new area?

Mr. Downey: Mr. Chairman, because we are still in the final stages of our cluster activity and Manitoba Trade is part of that. We have a certain overall amount of budget that is available to us. I do not think the number has been finalized, but my deputy has indicated that it could be in the neighbourhood of 50 percent.

Mr. Sale: Mr. Chairperson, I will look forward to that announcement. I am glad we were able to clarify this area for me so that my mental health over the weekend will be good.

I want to ask--[interjection] The member for Emerson (Mr. Penner) should just know that the minister was concerned about my confusion, that this would affect my mental health over the weekend. I am just very concerned that he not worry all weekend about this because I know that otherwise it would be a terrible burden on his mind, so that is the reference. I heard the puzzlement in your voice.

Mr. Jack Penner (Emerson): Well, very quickly, I appreciate the explanation because I was wondering whether we might have to make room at Winkler at Eden for another client, because it is an excellent facility and they do have excellent staff over there to help if and when needed.

Mr. Sale: I thank the member for his offer. It is a beautiful part of the country and I have always wanted to go to Eden--

An Honourable Member: The Garden of--

Mr. Sale: Exactly. We all started out there.

I want to talk about the Faneuil deal with the Manitoba Trading Corporation and ask the minister if he could just refer to the fact that the value placed on the preferred shares in the first year was about $4.1 million. The preferred shares have a book value of $16 million--16,000 shares of $100 each. The Auditor recognized $4.1 million and also set up an account receivable from the Province of Manitoba of $350,000.

Could the minister indicate what the account receivable is and why the preferred shares were only valued at $4.1 million when the agreement with Manitoba Trading and the department is $16 million?

Mr. Downey: I am not sure where the member is getting the reference to the Auditor and what he is referring to as the value placed on them at $4.5 million. I am not aware of the background or where he is coming from on that. I know, in the transaction that initially was put in place, that there was $16 million worth of shares which the province received for Faneuil taking on the responsibility of paying off some $19 million worth of debt on behalf of Manitoba Telephone System.

In addition to that, the arrangement that was made is that there will be over a million dollars in dividends paid annually for the next five years on those $16 million worth of dividends. So, when you conclude it after five years, the numbers would be that we have received on behalf of the transaction something in excess of $21 million of value for the $19 million in debt that will in fact be paid off by the Faneuil transaction.

Mr. Sale: Mr. Chairperson, this is probably the most arcanely complex deal that has ever been signed in the history of Manitoba and maybe in the history of Canada--I cannot imagine anything that requires six feet of legalese that could be any more complex than that.

I think the minister was perhaps slightly in error in his previous comments. The Manitoba Trading Corporation is the entity that is accepting the debt, not Faneuil. Manitoba Trading accepts, over the five-year period, $19 million worth of MTS debt, and the government begins to pay the cost of servicing that debt as it comes onto MTC's books. I think the minister will find that that is correct when he reviews the agreement.

The wash in terms of costs, that is the interest dividends received on $16 million preferred shares, do over the five-year period wash against the costs of servicing the $19 million worth of debt, but that is simply the operating costs, as it were. That is, the current income from the preferred shares over the five years offsets the interest costs on the debentures. But there remains then the difference in the capital value. The preferred shares may or may not be worth $16 million. They might be worth more if they are converted into common shares that happen to have done very well, or they might be worth zero if the company goes belly up. They can be anything from wonderful to awful, as the minister knows. Even if they are worth their face value of $16 million, there is still a $3-million subsidy being paid by Manitoba Trading Corporation because the wash is on the operating, in effect, the operating costs, not on the capital.

I would ask the minister if my understanding is correct--and there are two pieces here. The minister indicated Faneuil was accepting $19 million worth of MTS debt. I do not believe that is correct and I do not think this is a big point. I think that is just a technical detail. MTC is accepting the debt, not Faneuil. Faneuil is paying interest on the preferred shares, roughly equivalent over the five years to the interest on the debt.

Mr. Downey: I may have been technically not just--but what I said is basically correct. What has in fact taken place in the overall initial deal is the--basically in essence what the province has done is made a repayable interest-bearing loan to Faneuil for which there has been some $16 million that has been deferred. But in my way of thinking, there is no subsidy or shortfall when one calculates that the time value of money, that we are not going to end up in any subsidized situation, that we are in fact going to be repaid the amount of money that has been taken on in the transaction. It will be repaid to the province, and there will be a dividend paid on those shares, as well, which will put us in a positive position.

Mr. Sale: Mr. Chairperson, I urge the minister to meet with the Provincial Auditor and verify what I have said, that, in fact, that is the reason for the $350,000 account receivable shown in the Trading Corporation's annual statements. That is the partial recognition of the $3-million subsidy that is implicit in the difference in the capital value of the two amounts, and the Auditor is setting that up annually so that at the end of five years the full subsidy of $3 million will be recognized in the books of the Trading Corporation.

* (1010)

I would urge the minister to meet with the Provincial Auditor and discuss this issue because I believe that the Auditor has been very clear in Public Accounts and very clear in the discussions that we have had that indicate that this is one of the many subsidies this government provided to Faneuil in a fairly nontransparent way, if I might use that phrase. The minister I think is also indicating that the government advanced to Faneuil some $17,250,000 in repayable loans. Is that the amount? Am I correctly recalling the amount?

Mr. Downey: Number one, I will do what the member said; I will have the department check with the Auditor to see the--and I think that I am correct in saying that I do not believe that there has been any subsidy. Secondly, the point I will make is that one cannot discount the fact that there is a commitment to create some 1,000 jobs in the province of Manitoba through the transaction. There are some 365 full-time equivalent jobs that currently have been produced through that transaction--or some 500-and-some, not full-time jobs, but that make up the 365. So, to date, there has been more than the commitment lived up to as it relates to the job creation which, again, was a major part of the transaction for job creation and new industry development. So I do not want the member to leave on the record that the province has, in any way, put a subsidy out that, first of all, I do not agree with and will check as he has recommended further with the Auditor, but also to say that the people of Manitoba I think, are being well served because of the transaction that has been made in the creation of jobs. Plus, Mr. Chairman, when one looks at the revenues that Manitoba Telephone System will generate because of this transaction, I think that adds a tremendous amount of income to that corporation which we would not have otherwise had.

So, when you take all factors into consideration, I think that what we have done is be able to turn debt that was owed to us from the Manitoba Telephone System into an active repayment to the province, developing and growing an industry that we did not have before, creating up to a thousand jobs in the commitment and creating a tremendous amount of revenue for the telephone system. I would hope the member would not be against that initiative as it has accomplished all of those goals.

Mr. Sale: Mr. Chairperson, I am glad that the corporation is meeting its job targets, and I hope that it continues to do so. I asked the minister if the forgivable loan total was approximately $17,250,000. Is that an approximate amount or is there an amount different?

Mr. Downey: Mr. Chairman, I am not going to give the member a number until I absolutely know what it is. I think, as the member himself has indicated, there is a considerable amount of legal work, documents and contracts. To put something on the record that is incorrect would not be appropriate, and I will take that question as notice for the member.

Mr. Sale: Mr. Chairperson, I would think that the minister would be able to confirm that amount. I believe it is in the press release that the province made at the time of the announcement. My concern was whether that amount had changed or not. Is the minister still unable to confirm that amount?

Mr. Downey: Mr. Chairman, I will take as notice and confirm to the member what the amount is, not that I know that it has changed or is any different than what the press release would be, but I will certainly take under advisement that question.

Mr. Sale: Mr. Chairperson, the minister confirmed last year a MIRI loan, I believe it was, of $1.25 million. Is that amount correct?

Mr. Downey: Mr. Chairman, I do not have that information here. I am not informed that there is a MIRI loan, but I will confirm that. Again, I think it is important that the information that I provide is absolutely accurate, and I will again take that question as advisement as well.

Mr. Sale: Mr. Chairperson, I believe at the beginning of Estimates the minister made a press release listing all of the loans, and I thought there was a very clear Order-in-Council, which I do not have with me but certainly could get, that indicated that there is a MIRI loan of that amount.

Mr. Downey: Mr. Chairman, then he has answered his own question if that is the case, and what are we asking the question now for?

Mr. Sale: To see if it has changed and if it is current.

Mr. Downey: He may be confused, Mr. Chairman. I think I referred to MIOP loans, not MIRIs.

I do not have a copy of the individual loans that I referred to, but I can given him a copy of the press release that I tabled at that particular time, and it was MIOP, but not MIRI.

Mr. Sale: Mr. Chairperson, can the minister confirm that in addition to the repayable loans of somewhere in the order of $17 million and the implicit subsidy which I think he will find is the case of $3 million, that the Manitoba Telephone System is also paying to Faneuil corporation a total of $19 million in unspecified fees over the next five years, making the grants to Faneuil that are essentially for no services rendered over $20 million?

Mr. Downey: No, Mr. Chairman, I do not accept those numbers that the member is referring to. I do not have the specific contractual arrangements which Manitoba Telephone System has with Faneuil corporation.

He would have to check with the Manitoba Telephone System or the Minister responsible for the Manitoba Telephone System. I do not believe that is correct. I will not confirm that nor will I confirm the fact that there are any subsidies to the Faneuil corporation through the financing arrangement that was made, Mr. Chairman..

Mr. Sale: Mr. Chairperson, I think that the minister will find that over the next seven year the Manitoba Telephone System is paying for unspecified services a total of $19 million--I am trying to find the reference and I will find it--and that this amount is offset, in effect, against Manitoba Telephone System debt which is being transferred to the Manitoba Trading Corporation; that this is the third leg of this very complex arrangement in which the government ordered the telephone system to make payments to Faneuil of $19 million over the life of the agreement.

The government, in return, undertook to transfer telephone system debt to the Manitoba Trading Corporation. The government enabled Faneuil to buy a database licence for $16 million in convertible preferred shares which may or may not be worth $16 million, but the Auditor does not think they are worth $16 million, at least at the present time.

So the people of Manitoba have bought and paid for those new jobs at a very high cost per job. Does the minister have any comment?

* (1020)

Mr. Downey: No, Mr. Chairman, I do not accept what the member has said. I will repeat again what, in fact, has taken place for the member's benefit.

What has, in fact, taken place is that Faneuil will be paying back to the province some--the number being $16 million which we have in shares, held in shares. The province holds the shares which will be paid back to the province, a dividend on those shares, plus we will continue to hold those shares, which comes to in excess of the amount of money which was initially the $19 million which was the transaction that the member refers to. We have in fact created or will create some 1,000 jobs at no cost to province. We are turning an inactive, or a loan that has been basically inactive, into a productive way of generating jobs and returns to the province.

Mr. Sale: Mr. Chairperson, in year one of the contract, Manitoba Telephone System will pay $6 million, not for telemarketing services, just straight cash. In year two, they will pay $5 million; year three, $4 million; year four, $3 million; year five, $1 million. So they pay six, five, four, three, and one million dollars over the life of the five-year agreement--not for telemarketing.

The telemarketing is another $47 million over the five years and that is at an annual rate far in excess of what the Manitoba Telephone System ever paid for its telemarketing services internally, which were very successfully pursued. They are going to pay $5 million, $5 million, $5.75 million, $6.5 million, $7.25 million, $8.3 million and $9.4 million for telemarketing services in addition to the $19 million over the first five years in fees, in addition to the $3-million subsidy arranged through the Manitoba Trading Corporation.

What does the Manitoba Telephone System get for this? They get to lay off a large number of people. They get to lose a very competent in-house telemarketing service which was, in fact, long before Faneuil came on the scene, retaining a very large proportion of the customers, giving Manitoba Telephone System one of the best, if not the best, customer-retention rates in the country. It is no wonder that Mr. Bessey is going to Harvard for $400,000. This is a deal made in heaven for a company that had no assets, no track record and came here in effect to take advantage of Manitobans.

It had already been pointed out in the House that this corporation proposed to engage in an illegal use of the database. That was the database for which they paid $16 million, and they have been told they cannot use it the way. I am glad they have been told that. I am glad the minister of telephones has been very forthright about that. But there is no question that they intended to take advantage of this opportunity, and that is why they were prepared to pay $16 million in convertible preferred shares for that database. So we are funding the Faneuil corporation very substantially for every job it creates.

They have additionally acknowledged, and the minister responsible for telephones acknowledged, that this company simply ran up a big bill with Manitoba Telephone, and had the member for Inkster (Mr. Lamoureux) not raised that question in the House, that bill would still be unpaid because the company has tremendous political clout and so it can run up bills that it does not bother to pay unless they become a matter of public criticism.

The minister says 1,000 jobs, I hope he is right, but the Manitoba Telephone System will shed far more jobs over the next couple of years and has already shed as many jobs as Faneuil created.

I ask the minister how he can defend this industrial development initiative of his government which has cost the people of Manitoba millions and millions of dollars and enabled us simply to lay off well-paid civil servants and members of the telephone system in return for low-end, low-skill, high-turnover telemarketing jobs, grunt jobs in effect. Now, they may be better than no job at all, but they are not better than the jobs that were lost.

Mr. Downey: Mr. Chairman, I do not accept any of the comments the member put on the record as it relates to the subsidies or the deal. I go back to the other day when we were in Question Period how confused he was in trying to tie the initial arrangements--the initial deal that was what I referred to already in the Estimates of today--to two other arrangements, one to provide service to the Manitoba Telephone System and for the purpose of the Manitoba Telephone System a contractual arrangement which was made between the two parties, and a second arrangement that was made to further provide service which he makes reference to a list of names that were provided to Faneuil which quite frankly were available through the telephone directory to anyone. So he is not doing anything to help clarify what has in fact taken place.

So I will conclude by saying, I do not accept any of his comments, that the province will in fact be repaid the monies that have been forwarded to Faneuil through the Manitoba Telephone System arrangement. There is no subsidy of $3 million; in fact, when one considers the fact that we will, I believe, accomplish back to the Province of Manitoba, including the value of the shares and the payment on those shares some $21 million versus the $19 million that was the loan which was provided to the corporation, when one takes into consideration the 1,000 jobs that will be created, when one takes into consideration the numbers of revenue that the telephone system will obtain through this transaction.

He is incorrect when he says there will be any job layoffs in Manitoba Telephone System because of the Faneuil activity. Let us look totally at what has happened in the telemarketing system across the whole industry in Manitoba of which the Faneuil, I believe, activities created a whole new look as it related to the operations of the telemarketing systems in Manitoba. With the growth that we have now seen, that I believe was a start to get a lot of other activities taking place. That is happening, not at the expense of Manitobans, not at the expense of the Manitoba Telephone System but to the benefit of the people of Manitoba through the returns, as I said, in jobs that we are going to get in the province of Manitoba, through the fact that there is not a $3 million subsidy. He has referred to the fact they should discuss this with the Auditor. I am quite prepared to discuss it with the Auditor, that we will in fact be in a net benefit situation both in cash, in jobs, in revenues which the telephone system will accomplish.

Mr. Sale: I will be happy to hear from the minister when he has had a discussion with the Auditor about the $3 million difference between $16 million and $19 million. I would remind him that the minister responsible for Telephones said in the House the other day that we had it backwards. It was really $19 million in preferred shares and $16 million in debt, so that is a $3 million profit. Well, the Minister of Industry, Trade and Tourism knows that the minister for Telephones is the one who had it backwards and has already acknowledged that today. It is very clear in the statements of Manitoba Trading and in the Faneuil agreement that it is $19 million in debt and $16 million in preferred shares, so by the logic of the minister responsible for Telephones there is a $3 million loss. He was quite prepared to turn the numbers around and make it a profit. When he turns them the correct way around, they clearly are a loss.

He talks about jobs not being lost. The entire telemarketing section of Manitoba Telephones was either laid off, transferred to other places and the man responsible for it was given the option of a gangplank or early retirement. He took early retirement. There were, in fact, direct job losses in the corporation in response to the Faneuil initiative. More important the internal cost to the Manitoba Telephone System of running its own in-house telemarketing, which was very successful, had already maintained and recovered quite a high proportion of the competitive client base that all telecos are facing pressure on.

* (1030)

It was costing the telephone system less than $1 million internally. Now they are paying Faneuil $5 million for the same privilege. Faneuil may well be doing the job except that Manitoba Telephone has retained and attracted if not the highest, certainly close to the highest of all Stentor companies, and I think in fact it is the highest. That is a good thing, but we are paying a very, very large dollar to do so, directly to Faneuil from the telephone system, and in addition we are providing large payments for no services. Would the minister acknowledge that all of Faneuil's equipment, every last piece of equipment was provided by the Manitoba Telephone System, that there is no charge for this equipment, it is simply provided?

So Faneuil, in effect, came here, got its offices renovated, got its equipment installed, got a guaranteed base of service, got grants. Yes, they are in business, and that is a good thing because if they were not in business with all that largesse, God knows they certainly would not be in business without it. There was enough largesse provided in this deal to buy an awful lot of jobs. I do not begrudge the people who have them those jobs, and I do not suggest that Faneuil is not providing creditable telemarketing services, but we subsidized that company very, very deeply in order to get it to do what it is now doing.

Mr. Downey: Again, Mr. Chairman, I do not accept that. I cannot confirm the deal as it relates to equipment and what is in the contractual arrangements between Faneuil and the Manitoba Telephone System. But I can assure the member again that--he talks about MTS staff being laid off. That, I do not believe, is correct. I believe that Faneuil has accommodated, to the best ability possible, to re-employ any MTS staff that were not working. I can assure him; I say, the best effort--it may not be absolutely totally all those employees.

I can also tell the member that the rapid growth and demand for the employees of that nature has been demonstrated--the need for those people has been demonstrated by the growth of AT&T Transtech and their call centre, which now has increased their employment to well over 1,000 people. The member, I think, is putting a lot of accusations on the record which are absolutely unfounded and undemonstrated.

I would hope that he would take the time to get a better understanding of the agreement because I believe that the people of Manitoba, the arrangements that have been made, will be better served, that there are jobs that would not have been here without this transaction, and it is not at a cost to the people of Manitoba. In fact, what I have referred to all the way through the Estimates and what my colleague the Minister of Telephones has referred to is that the province has not provided a subsidy to Faneuil, that we do hold shares, that we will be collecting a dividend on those shares and will be repaid.

Mr. Sale: Mr. Chairperson, section 13.2 of the agreement: MTS shall provide all capital equipment required to perform telemarketing services. Does the minister suggest that this is an incorrect reading of English?

Mr. Downey: I do not have a copy of the agreement before me. The member apparently has, and I am not so sure why he is asking the question if he has the information.

Mr. Sale: I am asking the question simply because the people of Manitoba expect and understand that when industry is being developed there will be some costs to government. That is the case in the real world the minister says he lives in, and I am not immune to that real world.

The AT&T Transtech development got some initial support from government of a fairly modest kind. This one had its hands so deeply in government's pockets that it was awash with government money and remains awash with government money. The minister indicates AT&T Transtech has 1,000 employees in Manitoba at this point. Was that the number that I understood him to be putting on the record?

Mr. Downey: I understand, the department has indicated, that is the range there is. I would just like to further add that really the fundamental question is--and the member is totally off the mark when he says that, as regards the Faneuil deal, they are awash with government money. Totally unsubstantiated by the member. Totally incorrect. I think the fundamental question, though, from an overall system perspective, is the province of Manitoba better off with the transaction and the project that has been carrying out with the commitment to go to a thousand jobs, with the increased revenues that the telephone system will be getting because of the activity, Mr. Chairman, the fact that we will not be subsidizing this project as the member has said. The overall fundamental question, will we be better off in the telemarketing system and with the telco the way in which we have entered into this agreement, I would yes. The member is disagreeing, but I cannot help that. All I can say is that I believe the province is better off with this proposal.

Mr. Sale: Mr. Chairperson, this agreement was entered into with an American businessman who had a vision of a company that would develop proprietary software that was based on what he has called precision integrated marketing. The basis of that database was to have been the utilities customer database. That was the original proposal put forward by the founder of this company to the Premier (Mr. Filmon) in 1994, early 1994, in Toronto. Certainly that was the proposal put forward in the initial agreement because Faneuil corporation was prepared to pay $16 million for the corporate database of Manitoba Telephone System, not the White Pages and Yellow Pages, but the entire corporate database. That is what they were buying.

I used in the House and I use again here the analogy that if you are simply into a telemarketing agreement for Manitoba Telephone System, why in the world would you charge $16 million for the database that you would give to the company that was going to do your telemarketing? When you hire a painter to paint your living room, you do not charge him for a key to get into your house. It makes no sense whatsoever to be paying $16 million for a database that is available for less than $100,000 from Tele-Direct or from any of the listing companies that will provide you with up-to-date computerized telephone records, the White Pages and Yellow Pages.

In fact, Bell Canada and the Stentor companies have a utility called Tele-Direct, which takes all of the phone companies in Canada and all of their listings, puts them on disk and maintains them in machine readable updated form so that they are accurate and up to date, adds additional census information and postal code information to those lists and sells them for quite a good profit, and Manitoba Telephone System is part of that consortium. If that is all that was being proposed, why in the world would Faneuil offer to spend $16 million to acquire that database?

The fact of the matter is, as was shown in the document released in the House by our party a few days ago, that the initial proposal that Faneuil made was found to be illegal, simply not doable under CRTC regulations or MTS regulations or any regulations. You cannot use information that is part of the Manitoba Telephone System internal data for any other purpose than telephone service provision. You cannot use it for marketing. You cannot sell it. You cannot even massage it into some other form and then sell it. You simply cannot use it. CRTC has said there has to be a firewall between consumer information and any other purpose.

So it is very clear that Faneuil came here not because it was a whizbang telemarketing company. It was an average telemarketing company and a small one by any kind of American standards. It came here because its founder sold Michael Bessey and Mr. Filmon on a vision and may well have sold this minister and Mr. Findlay, the Minister responsible for Telephones, on the same vision, that he could develop a very lucrative precision data marketing base, develop the software and the technology to sell that and make Manitoba a leader in this field.

He found, we found, you found, that eight months later when a few people sat down and did what they should have done a year earlier and looked at the regulatory implications of his proposal that it was not doable but, by then, the cat was well out of the bag and an agreement of incredible complexity, virtually unbreakable, was entered into with Faneuil, and we are paying at least $19 million from the telephone system in straight payments. We are subsidizing to the tune of $3 million, which I am asking the minister to confirm with the Auditor. In addition, we are paying many times what we would have paid for the same telemarketing services internally, all because you believed, your government believed, in Mr. O'Brien's vision of a precision data management and marketing system that could be built on the platform of the utility corporation's database. That much is beyond question.

The minister cannot deny that was the initial intention because the memo from the legal department of MTS to its most senior staff, including the president, Mr. Fraser, indicates that was indeed the intention of the Faneuil proposal, and I am very pleased that they said it cannot be done. It is illegal. But, if that is in fact the case, and if they are just using White Pages, why did they pay $16 million for it? Why are we still in this deal to that extent? And why are we still shovelling the $19 million in subsidies from the telephone system into Faneuil's coffers when the initial raison d'être for the deal was found to be a no-go?

* (1040)

Even more fundamentally, why did we not find out before we even signed the deal what the regulatory implications of what was being proposed might be so that some flags might be raised to say, this cannot be done? We are being asked to do something that is illegal in Canada; not just improper, but illegal. Yet we went ahead and did it anyway.

And now we have Mr. Bessey at Harvard, $400,000 worth of support from a person who sits on Faneuil's board and just happens to have a management contract with Faneuil to the extent of probably $100,000, $150,000 a year, 800 hours a year at a senior management level. You tell me what half a year's worth of senior management consulting time is worth from KPMG? That is what Mr. Browne is earning from the Faneuil corporation, and Mr. Browne is providing Mr. Bessey with very serious support to attend Harvard.

It seems to me that there was an awful lot of untested, unchecked assumptions that were made because there were some very powerful political interests in making this deal go forward. And it has not gone forward. Faneuil is a telemarketing company doing nothing different than AT&T Transtech. It cannot do what the province thought it could do, and the province never even checked out the legality of what Faneuil was proposing. When they did eight months later, they were into an iron-clad agreement that commits us to deep subsidies for years to come. I think the minister should be ashamed of that performance.

Mr. Downey: I guess I am equally as disappointed at the member for Crescentwood and the level at which he wants to get into the debate on this particular matter and revisit personal accusations and demean individuals who have worked on behalf of the province, revisit a whole series of activities that have been brought forward by Mr. Scurfield in the report that he put on the table which clearly cleared anyone from any wrongdoing or any conflict of interest as it related to the activities.

I am extremely disappointed and cannot accept any of what the member said. I think that is where he takes himself in this debate, where he totally discredits himself. and to again pull personalities into this debate of individuals who, quite frankly, do not have the ability to respond as he has a chance to put such material on the public record. Those individuals do not have the ability to come back and protect themselves.

The defence has already been there as far as I am concerned in the work that has been done by the Scurfield report as it relates to the accusations he made, and I think he owes those individuals an apology for again bringing forward accusations which, quite frankly, have been clearly cleared up and, without any foundation, are again being put on the record. Quite frankly, I find it most distasteful, and I am surprised that the member would, in fact, lower himself to get into that kind of situation.

I do not accept what the member has said. First of all, he keeps referring to an agreement which did not proceed. He clearly knows that, clearly knows that the document which he tabled the other day was not in any way proceeded with. He is now revisiting it as if it is, in fact, fact and part of the deal--not correct at all.

He makes reference to the fact that there is a subsidy of some $3 million, Mr. Chairman. That is not correct. The loan which has been advanced to Faneuil through the Manitoba Telephone System arrangement will, in fact--the province holds the shares as it relates to that, of which there has been a value determined on those shares, which when the returns, the dividends which are part of the agreement, are paid back for what we have put into the deal of some $19 million, there is going to be over $21 million returned to the province.

Mr. Chairman, that is not a subsidy; that is not a loss. That is, in fact, a positive position which we will end up with. I will repeat for the member again, he is opposed to the creation of some 1,000 jobs in this transaction. He has to be opposed to it. He is opposed to the additional revenues which have been generated by the Manitoba Telephone System. He is opposed to the assurance of jobs for those Manitoba Telephone System employees who have been rehired or part of that activity or jobs that have been created as it relates to the development of that industry. I think that this has something to do with the overall development of the telemarketing system in the province of Manitoba, demonstrated our capability, shows that we, in fact, have the capability of doing that.

So, Mr. Chairman, I cannot accept first of all--and I could get extremely excited about this, but I do not want to rise to the bait which the member has put on the table as it relates to the personal attack that he has put on individuals again in this debate. I do not accept that because there has been a process which the Premier (Mr. Filmon) put forward, which is available, which was put forward and available to look into the whole transaction as to Mr. Bessey and the involvement that he had and to his whole proceeding on to further his education. I do not have the report in front of me, but it may have made reference to, possibly, bad judgment as it relates to--I am not going to quote it. I do not have it here, but I think if he would go back and read the Scurfield report, it would be of some help to this overall debate.

I will just conclude this comment, Mr. Chairman, of how distasteful it is for the member to, again, personally attack individuals. If he has something further to add or new information that should be put on the record, then let him do it, but let us not rehash the kind of information he is putting on here simply for mischief and personal attack and degradation. That is not acceptable, and that is why I totally disregard what the member has to say and will continue to do so.

Mr. Sale: Mr. Chairperson, I wonder if the minister could tell me what the total losses on two Manitoba initiatives have been, ARCOR and the Manitoba Hazardous Waste Management Corporation. What are the total provincial losses to the final wind-up of those two corporations?

Mr. Downey: Mr. Chairman, he will have to ask the Minister of Environment (Mr. Cummings) as it relates to the Hazardous Waste Corporation, because that is the jurisdiction which the Hazardous Waste Corporation answers to. I will ask my deputy for the information as to the losses that were incurred under the ARCOR initiative.

Again, Mr. Chairperson, I will speak to the ARCOR initiative briefly if we can get the numbers. I can say, first of all, it was a federal-provincial agreement which was jointly put together to develop the whole health care initiative, and I can say that there were some successes. It was not all a situation of loss. There may have been some financial loss, but in looking at some of the successes, for which we have royalties, too, the ARCOR rail is one which was an extremely good success story.

On the numbers, I do not think we can give him a definite figure at this particular time because we still have some property which has to be sold.

Mr. Chairman, I am told by my department that basically--and again this is not an absolute number and it should get smaller--the operational cost at this particular point to two levels of government was approximately $5.4 million, but let me add to that. I understand there is still a building to be sold, plus we do have a royalty in at least one product which is the ARCOR rail. We have other product development that I am not sure whether we still have a royalty on it or not but could have, so there could still be some benefits flowing that would diminish this number by somewhat. I could not say it would be totally wiped up, but let us not be overly hasty to be too critical. I believe, it did develop and create a considerable amount of product that made a lot of peoples' lives a lot easier.

* (1050)

I will make reference to the ARCOR rail. I will make reference to another product and that was the motor that goes in the front wheel of the disabled carriers which was developed by ARCOR, was sold to I believe a U.K. company for the development. My biggest disappointment was that there was not a Canadian or Manitoba company that took that product forward and developed it here but that was not doable apparently. I am not sure whether there will be royalties coming from that, but it is an extremely helpful instrument or tool for those people who are disabled, so those are the, as I have it, numbers to date. Again, I think it is 5.4 which is shared by the federal-provincial. We still have the property and we still have some royalties that well may come from the activities.

Mr. Sale: Pass.

Mr. Deputy Chairperson: 4. Economic Development (a) Economic Development Board Secretariat (1) Salaries and Employee Benefits $531,500--pass; 4.(a)(2) Other Expenditures $361,700--pass; 4.(b) Grant Assistance - Economic Innovation and Technology Council $1,526,600--pass.

4.(c) Economic Innovation and Technology Fund $1,000,000.

Mr. Sale: Mr. Chairperson, is Mr. Silver still the chairperson of this?

Mr. Downey: The answer is affirmative, Mr. Chairman.

Mr. Sale: Mr. Chairperson, has there been any attempt to recruit a broader spectrum of people to sit on this council? I believe Labour is notoriously underrepresented and the area of concern is that if we are working in partnership and there is any kind of meaning to that word, then Labour should have a significant representation, not a token representation on this council.

Mr. Downey: Mr. Chairman, just to revisit history, there was an attempt and I believe a successful attempt at the beginning to have a broad cross-section representation and still remains a relatively fair broad cross section. It was Labour who I believe walked or decided not to participate on the council. There is an attempt or has been an ongoing attempt to have them become part of it again, and I think it would be helpful if they would see fit to join the council.

Mr. Deputy Chairperson: 4.(c) Economic Innovation and Technology Fund $1,000,000--pass.

Resolution 10.4: RESOLVED that there be granted to Her Majesty a sum not exceeding $3,419,800 for Industry, Trade and Tourism, Economic Development, for the fiscal year ending the 31st day of March, 1997.

The last item to be considered for the Estimates of the Department of Industry, Trade and Tourism is item 1. Administration and Finance (a) Minister's Salary. At this point we request the minister's staff leave the table for the consideration of this item.

Mr. Sale: Mr. Chairperson, I would like to take the opportunity to thank Mr. Stevenson--

An Honourable Member: Sutherland.

Mr. Sale: --Sutherland, Fred Sutherland for his work in the department. I recognize it has been a difficult as well as exciting year and that his leadership and his work in revitalizing the department is appreciated. I wanted to put that on the record.

Mr. Lamoureux: Mr. Chairperson, I did have a number of questions in which I have decided ultimately, or a number of areas in which I decided ultimately I will leave for another point in time to be able to get some detailed information on the Department of Industry. Suffice to say that it is--I have a great deal of interest, especially most recent, with respect to trade outside of the province of Manitoba. I was recently approached by a couple of individuals regarding Manitoba products and the types of industries which I believed had great potential for export. I like to believe that it is virtually unlimited in terms of the potential from within the province of Manitoba given Manitoban's entrepreneurial skills. But I am wondering if the minister can give some sort of indication, do we have some sort of listings of manufacturers that actually export abroad, and if we have something of that nature, would he be prepared to share it with me?

Mr. Downey: Yes, Mr. Chairman, we have, and I would be prepared to share it as long as it is not private information which the company would not want to have disclosed. But I would be more than pleased to provide that kind of information to the member.

Mr. Lamoureux: Yes, Mr. Chairperson, I appreciate that, and if the minister could attempt to get it to me sometime prior to the end of the month, it would be again appreciated.

The other area that I did want to comment on was more so, last year we had some discussions with reference to a couple of industries, the garment and the transportation industry. You will have to excuse me if the minister has already commented to any degree on that during this Estimates. But, Mr. Chairperson, I am wondering if the minister can give some sort of an update, if you like, on those two particular industries, because there was considerable discussion last year on them.

Mr. Downey: Yes, I would, Mr. Chairman. I think that I am still extremely optimistic about what is happening in the garment industry, and I will say and acknowledge the work that the member for Inkster did in helping to assist with the federal government in developing an agreement that could allow us to go above and beyond the quota that falls out of the formula that was traditionally in place. I think there were some frustrations with the bureaucratic approach that came initially, but I think eventually there was an agreement signed between our Minister of Culture, Heritage and Citizenship (Mr. Gilleshammer) and the federal government which would accommodate the addition of some 200 employees of which will add to the overall pool of people.

I also want to say, and I think it is important to point out, that we are working aggressively to make sure there are training programs available for Manitobans or other Canadians that are in fact in place, that there is a training program in place to give them fully maximum opportunities to participate in the jobs that are available in the garment industry. Again, I think it is clearly evident that what can take place is that we can get policies in place that are too inflexible to say that, you know, we have to use Manitobans or Canadians.

At the same time the industry is saying, well, fine, I am prepared to use them. Number 1, they need to be trained and they need to become part of the culture of that industry. They just do not fit into the culture of the sewing industry. Whereas there are identifiable people in the international marketplace that can come immediately and start into the industry, or once they go through the screening process in their own country are all ready to move into the industry, and with some language training can in fact become very much a part of that industry. When you hire that person, it creates a job in transportation or supplying the industry, supplying the sector, so it is not a matter of just replacing one Canadian job with one immigrant job. It is a whole lot of other jobs because that one individual activates the sewing of a product or the development of a product that generates other needs, so you can be so narrowly focused to say, well, a job coming in replaces a job that a Canadian would have. A job coming in creates a considerable number of more jobs.

I am positive about this. I really am. I think the garment industry of Manitoba--I guess it has its ups and its downs, but in general in a sense it has had a fantastic growth pattern. It is our job to make sure that there are trained people, I believe, and immigrant workers available in a balanced way so that the industry can grow and do all of those things that I have suggested.

Yes, we have seen the garment industry move out of Winnipeg into some areas where some have been successful, some have not. I know my colleague from Steinbach has a very successful operation in his community which he is very pleased with, again, creating employment for his constituents. That, I think, is a very positive piece of news. The member made reference to the transportation industry on long-haul driving. Again, as the economy has grown and the movement of goods and products has been essential, I think there is still a demand for the transportation sector, although the industry has worked very successfully with Workforce 2000. That is the program; Workforce 2000 is a training program. The industry has developed a program with the Department of Highways and Transportation and has some very successful training programs in place in developing people for the long-haul industry.

* (1100)

Again, I think that with the modern technology and with some of the support systems that are in place, yes, it is still a long and tedious job for a long-haul trucker. It can be strenuous and tedious, but when one--I often think this as one looks at the farm community, the amount of hours that a farm person puts in a field going up and down the field. Quite frankly, the miles they put in and the hours they put in very often are comparable to what happens with an individual driving a long-haul truck. The only difference is the scenery does not change to the same extent, and the challenge, quite frankly, may be not as great as when you are in a city driving or traffic activities.

The strains and the stresses of individuals carrying out a manual or person-kind of work like that, man or woman, can be strenuous. I think the training that is available is very successful. As I understand it, there is still a major demand for those kinds of individuals. Again, there is an overall demand there that fluctuates as well, and I would say that probably has been met to a greater degree than what it was a year ago. At this particular time indications are that it is probably as close to being fulfilled as possible, but I would think, and, again, let me go back to some of the economic developments with the garment industry. Let us look at the potato industry and the growth of that sector. Let us look at the processing of our canola oils and our activities in the agricultural sector. The need for long-haul truckers, I do not believe, will totally be filled, but I think you will come to times when it is close to being numbers of people there for the numbers of jobs. I would anticipate that over the longer term, as a responsible thing to do, it is to make sure there is a pool of people available to satisfy that industry.

Mr. Lamoureux: I would concur with most of what the Deputy Premier has actually said, but I do believe that ultimately government does have some role in monitoring these different industries. In some industries we see more activity in which government needs to have some sort of input, whether it is for training purposes, whether it is for immigration purposes, whatever it might be, and that is the reason why it is critical that there has to be some sort of a monitoring process. Hopefully, next year we will have a little bit more time to go into some of the details on specifics within the industries because I made reference to a couple of them.

The other area that I just wanted to briefly touch upon was the Winnipeg International Airport with the idea of having the potential for cargo, and particularly fresh cargo, agricultural. I am thinking in terms of the hog industry in particular where there is great potential in terms of export. You know, I recall a couple of months back watching a documentary where they were shipping--I think it was a 747 leaving one of the Atlantic provinces every day full of lobster. Well, Mr. Chairperson, I think that there is great potential in terms of providing some of that type of exporting in the province of Manitoba which would enhance considerable activity not only in the city of Winnipeg but also in rural Manitoba, and demonstrates very clearly how both economies in the rural and city benefit when we see a project. I would ask the minister to what degree his department is involved with respect to the development of the--is it Winnport project? If he can maybe just make a brief comment on that, then we would be prepared to pass the Minister's Salary.

Mr. Downey: Mr. Chairman, I appreciate the member's comments because I think it indicates that he is clearly abreast of what is in fact taking place on the transportation side which is an integral part of the development, the future economic development, of the province. Infrastructure has to be there for the growth in the global world that we are doing business in. That has been said many times, and it is certainly not original that we have to think globally and act locally is pretty apropos. That is exactly what we are talking about. You think globally, and how do you tie yourself into the global marketplace and get the actions going locally that will accommodate that? That is really what we are talking about.

Winnport, of course, you first of all have to acknowledge those people who have been driving Winnport. There have been a lot of actors, a lot of players. Hubert Kleysen is one of those individuals who has been spearheading it with a group of people around him. I have to say again, this is one of those areas where we have a cross-jurisdiction, where we have Municipal Affairs or Rural Development with the planning activities within their department to make sure that the lands are clearly identified and the whole futuristic approach is taken, that the land assembly has taken place so that the road and the rail services and all those things are put together. It is a matter of developing a capital or corporate entity that is actually going to go out and be and do the actual work.

I think the one point I would make is, to the member, and that is time is not on our side. I mean, we have to move aggressively, and I know there has been some little hiccups. I think the work that was done with Air Canada has fallen by the wayside to develop a couple of their aeroplanes to carry cargo, has not proceeded the way in which it was initially planned. So they have now changed their plans to try to work to--I believe and I am just giving my perception--get into business through the leasing of aircraft and tieing up with certain export-importers. There is also the need to have the federal government, and the member may be helpful in this area. He could call Hubert Kleysen and find out specifically some of the supports that are needed in dealing with the federal government in view of the fact this member has a lot of clout with the federal government. He could probably help substantially to help accommodate some of the regulatory things that have to be done.

I think everybody has to pull together in this. This is one of those things that is a nonpartisan thing. It is a fact that all political parties and all municipal and provincial, federal politicians should get onside, because we are all going to benefit. The province will benefit. The communities will benefit and the whole country will benefit with Winnport here. The trucking industry is key to it, to the success of it. The establishment of a tax-free zone to make sure that there can be some assemblies without picking up taxes can be part of it. The whole refuelling and the whole servicing of transcontinental aircraft moving cargo.

The member makes probably some of the best comment that has been made. I know our colleague the Minister of Agriculture (Mr. Enns), as many rural members have been indicating, members that are sitting here with us today, those individuals, how important it is to the develop a linkage with the sale of agricultural commodities to the international marketplace.

For example, let me just put some very simplistic numbers on the record. I know that pork in Japan, chilled pork is probably selling equivalent to $30 to $35 a pound. What does it cost when you go to the store here? Probably $3 to $4 a pound when you buy it off the supermarket shelf. I have not been there to buy product for a while, but I think I am probably high. But, you know, it is probably 10 times higher in Japan. A 747 can probably pack 250,000 pounds of chilled pork. Again, I do not have the numbers exactly, but I think that would be in the quantity.

The difference is a tremendous amount of money that can be used to buy freight with, and I would think your freight would probably be in the $1-and-something to $2 a pound. To me that just makes a whole lot of sense right today if you could load plane loads of chilled pork, deliver them to the Japanese market. Now you have got tariffs, Japanese import tariffs, and you have got all the regulatory things you have to go through, but just the bare economics that you are dealing with make it look fairly attractive.

Taking it to that simplistic approach makes the member's comment very, very valid. It is doable. It is very doable to deal with the agriculture commodities, and as we see more value added to our industries and agricultural processing--you do not ship the raw product--you have got the jobs to process, you have got the jobs to package, you have got the jobs to move to the air terminal, you have got the jobs to load them on the air terminal, you have got the servicing of the aircraft, and you fly the product to your customer just the same as if you were delivering it to your local supermarket down the street. They get top-quality product, just like you and I get, and I am sure, over and above that, would pay a premium price for the kind of product they would get. So the logistics are here. It is doable.

It is a matter of everybody getting their act together, but there is one thing I would like to suggest to the member. He should give the chairman, he should give Mr. Hubert Kleysen a call to see what he can do to help, if there is anything he can to help, with the federal counterparts. We are working as a team. I would hope that the members, the official opposition, would be on board as well. I have not heard them speak negatively about that, and I would hope that they would want to be on board as well. It will be probably the most positive overall economic infrastructure development that can make Manitoba excel ahead of everyone else into the 21st Century.

* (1110)

Mr. Deputy Chairperson: 1. Administration and Finance (a) Minister's Salary $25,200--pass.

Resolution 10.1: RESOLVED that there be granted to Her Majesty a sum not exceeding the sum of $3,236,000 for Industry, Trade and Tourism, Administration and Finance for the fiscal year ending the 31st day of March, 1997.

This completes the Estimates of the Department of Industry, Trade and Tourism, and we will recess briefly. We will move on to the Estimates of Decentralization, Legislative Assembly and Sport, and we will do it in that order or whatever order the committee determines. You have those three, then you will--

Order, please. We will recess briefly and see if we can get things together.

The committee recessed at 11:12 a.m.

________

After Recess

The committee resumed at 11:21 a.m.