Mr. Chairperson (Marcel Laurendeau): Will the Committee of Supply please come to order. This section of the Committee of Supply has been dealing with the Estimates of the Department of Consumer and Corporate Affairs.
Would the minister's staff please enter the Chamber at this time. We are on Resolution 5.1 Administration and Finance (b) Executive Support (1) Salaries and Employee Benefits.
Mr. Jim Maloway (Elmwood): Mr. Chair, I left off yesterday with the minister defending the oil companies and making suggestions that, at least, he was convinced that there was no price fixing in the retail oil industry, gas industry. I guess, it just demonstrates the effective power of the gas companies' lobbying efforts that they have so easily convinced him of this. Unfortunately, the public, for him anyway, the public certainly do not believe a word of what he is saying. So I do not think that he would want to test his theories too much farther than this House.
I would like to ask the minister to elaborate further on his assertion that there is real and true competition in the retail gasoline business in this province.
Hon. Mike Radcliffe (Minister of Consumer and Corporate Affairs): Mr. Chairman, I would like to advise my honourable colleague that our research department has for some considerable length of time done, not an exhaustive study, but a very thorough and complete study of gasoline prices across Manitoba in the rural centres, in the city of Winnipeg, comparing the gasoline prices with Toronto, with Vancouver, with Grand Forks. I have had these charts explained to me, and I am quite impressed with the assiduity of our researcher in this case. Because, as I stated yesterday, when you take 50 percent of the bulk of the cost out of the price of petrochemical, you are left with one-half, which is what goes to the oil company.
Out of 52 cents a litre you get 26 cents a litre going to the oil company at the pump here in Manitoba. When you analyze that further, you look at the cost of production. Gasoline is just like any other commodity, whether it is soybean or whether it is any sort of fertilizer or any bulk commodity that are bought in bulk from the wellhead, so world price plays a significant role in the price of petrochemical.
On top of that, you get the throughput price which I recounted to my honourable colleague yesterday that there is the cost of the transmission. Then, as I explained yesterday, there is the impact of the market itself so that, say, in the case of Toronto, you can have a lower price per litre cost because there is larger consumption there. So the oil companies can afford to present their product at a lower cost partially because they get distribution by sea, up the St. Lawrence, and partially because they have a larger market. Therefore, they are selling more commodity, and, therefore, they can sell it at a lower per-unit price than they can in someplace like, say, Russell, Manitoba, or Dauphin or even Winnipeg.
So these are some of the criteria that I think one has to consider if one is going to intelligently look at the petrochemical industry. Now my learned friend said that I was not going to get much sympathy for the oil companies. In fact, I am not looking for any sympathy for the oil companies. I am only seeking to rationally understand what the drivers are in this industry, what the drivers are of these prices. I think if one were to review the suggestions of individuals, like Mr. Costas Nicolaou, who is advocating that the government wants more--and how many times do we have to get into this silly experiment? If the government wants more, gets into the commercial fray and starts trying to compete or trying to regulate the price of petrochemical, then the results, I am convinced, will be an unmitigated disaster. Therefore, with the greatest of respect because I think Mr. Nicolaou is a very erudite economist, but on this particular case, I think that he is off base.
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I would suggest that this market is best left to the forces of private enterprise and free market flow. I think that when my honourable colleague sees--and the proof of the pudding is one of the very attributes of his question that he was asking yesterday. When one sees the price wars and sees how quickly retail merchants reduce the price of gasoline when there is a price war--and the human species is a very emotional and very spontaneous creature, so it can take any chance, opportune event, to trigger a price war; perhaps somebody is being ambitious and mischievous, whatever. In any event, when there is a price war, spontaneously, immediately, there is a reduction in price, or an increase in price, in all the pumps up and down any given street. That shows you how the oil companies are all competing for the motoring public and how they are aggressive at seeking the motoring public.
One drives into a retail gasoline outlet, and you look at all the opportunities that one has there. You can go to a self serve. You can go to a full service. You can go and get bottles of Pepsi-Cola or coupons for same. You can go and get added attributes. You can get your car washed. You can get an oil change. These are all the added extras that the oil companies are throwing in in order to compete for business. I do not think my learned friend or my honourable colleague opposite would quarrel that it is a highly competitive industry in that the gas companies are competing each with the other for more toys, more add-ons, and more frills in the marketing of their product.
Have I seen the books of the oil companies? No. Have I done a forensic audit of the oil companies? No. Am I wearing a hair shirt for the oil companies? Absolutely not. What I can tell my honourable colleague, though, is that at the behest of the ministers of Consumer and Corporate Affairs, we charged the oil companies last fall in Regina to launch a communication campaign themselves to explain the intricacies of the pricing in their markets.
An Honourable Member: It worked with you.
Mr. Radcliffe: It worked with me. Well, no, I knew beforehand because, you see, in the course of my practice as a legal practitioner, I have had an opportunity to study such things as hedging, forward averaging, pricing of commodities, because I worked for some fundamentalist farmers in the province of Manitoba who, basically, would often try to average their losses by operating on the futures market.
So I know and I understand how one operates with hog purchasing or selling hog bellies, how one makes future contracts for cocoa or for rape or any of these sort of commodities. It does not matter the commodity. The principles are the same. You have a wholesale world exchange which is the prices are driven by world events, whether there is war in the Middle East, whether there are strikes at the docks, whether there is a mild winter.
Ironically, a mild winter and a decrease in demand can drive up the unit price, because there is not the flow through to the consumer, and the consumer has not the gross need that one would in a colder winter. So, therefore, next winter, if the prognosticators are accurate and we experience an El Nino it could be a very cold winter, and our gross consumption of fuel could rise. But we would then quite conceivably enjoy a smaller per unit price of the commodity in question.
So these are some of the complexities. In effect, once you sit down and rationally, logically study and read about the industry, it is not a complex issue. I must urge my honourable colleague that I think it was one of my colleague ministers from Ontario who was convinced that there was a cartel, there was price fixing, and that there was nefarious activity. He was pushing the federal combines group to research this matter--I think this was Mr. Tsubouchi from Ontario. After thorough research, the unanimous conclusion which this federal tax force came back with was that there was no price fixing, nor cartel, and that it was a market driven by free enterprise.
Are there misapprehensions? Absolutely. Do people think that Big Brother drives the market? Absolutely. Do the consumers as a whole think that they are being victimized? Absolutely. Does my honourable colleague opposite think that he is being victimized? Absolutely. But I would urge my honourable colleague to do a thorough, analytical, logical research on the topic and come back and discuss the matter with me further.
I have significant amount of written material in my office which I have gleaned from various sources, be it the federal task force, be it the society of oil companies, be it presentations from different oil companies who have come to Winnipeg to make their case to me. I would be more than delighted to copy and produce and share this information with my honourable colleague so that he can get a very thorough and complete understanding of the market, because, in fact, once you study it, you do gain another perspective.
Now, I am not getting the crying towel out for the oil companies. They do a very handsome job for themselves. Their stocks are well sold on the market, and their employees are well paid. Their executives are well paid, and they produce a product at a very good rate here in Manitoba. So I do not think we need to feel sorry for them; on the other hand, one must address what the real drivers are of the pricing in the market.
Mr. Maloway: Once the Chairman has been able to regain his composure after listening to that speech from the minister, I would like to make a few further comments. I think that, as a strong believer in free enterprise, the minister would understand that the real problem here is the supply of the product. The focus is normally at the retail level. That is where most of the questions are asked by people. The members of the public, our voters, see it at the retail level, and, as long as the supply is constrained and controlled by two or three refineries through pipelines that run east and west essentially, as long as that is in place, then you are not going to have the real competition that he thinks there is out there.
I do not think that it is a great leap for him to understand, I think, that if you were to allow another method of distribution, if you were allowed to allow tankers to bring oil in through the Port of Churchill, you would have a separate source of supply, and that, in fact, would bring the prices down at the wholesale level. That would have a better effect than what we have right now.
So what we have been doing and Costas Nicolaou certainly has--his concentration has been at that level as well. They have simply looked at the existing supply system, the pipelines and the refineries which we do not have here in Manitoba, and they have said: well, how can we bring the price down here? So they looked at it in terms of a retail problem. They have made the retailer squeeze his or her margins, right, and not looked at the supplier. This is what is happening. The suppliers are laughing all the way to the bank. They provide the product. You can go down to the bulk depot here and gas up, and you will see there are Domo trucks in there and there are trucks for each of the oil companies. They are all forced to buy from that one place. They take that product which they pay for; they go back to their little stations; and they beat each other's brains out competing on a very small margin, right? And that is what is driving them.
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But the fundamental problem is the original supply source. That is the fundamental problem, and I am saying the way to attack that is to simply look at alternative forms of supply, alternative ways of getting the product here in the first place. You know, forget concentrating on the refineries that are not here in Manitoba and forget about chasing the retail gasoline operator.
Look at the question of supply. If it were not for that big nest of tanks, the tank farm, up in Churchill and the willingness and the interest that the people have up there to see something being done about it, even if it were nothing more than just supplying gasoline to the North, which, in fact, is happening right now--as I had indicated yesterday to the minister, the tank farm, I believe, is being refurbished right now, but it, in fact, has been used for years, and they do bring gasoline--if this were just a simple matter of the idea being brought forth with no tank farm up in Churchill, with its never having been done, then it could be regarded as an idea that does not have merit.
But we have a tank farm there; we have ships bringing in the product every year. They have been doing it for years. The only difference is they do not bring it south; they bring it north. As a matter of fact, there is some concern that they may, in fact, lose the supply line north, and that is this big area of concern right now, because there is competition further up North that want to cut Churchill out of the mix. Right?
So I do not see why we should not be writing letters, which I have done months ago, to OmniTRAX and asking OmniTRAX. OmniTRAX have been straightforward about this. They have said: We want to bring more products; we are bringing grain up North for shipment, and we want to bring something south. So why can we not have oil cars and have OmniTRAX bringing the oil south? Why can that not be done?
Nobody has given me any reason why it cannot. I have had nobody say this is a bad idea. In fact, Costas Nicolaou thought it was a pretty good idea. So I do not know why we do not work a little bit more on that idea and see whether we can.
We have no vested interest here other than the little bit of lobbying efforts that have convinced the minister. We have no vested interest in promoting high oil prices. I was in Saskatchewan. The Saskatchewan budget came down, and there was a lot of grief and concern about the fact that low oil prices were going to cost the Treasury $36 million. There was great concern in that room, let me tell you, among the elected officials that I was with about how low these prices were and how low could they possibly go. I know there was no concern on my part about how low they would go. The lower they go, the happier I will be and the happier Manitobans will be. So we are all in this together. We have an interest here in promoting as low oil prices as possible, but we are not going to get them by bleeding retailers that may or may not already be on the edge.
The retail industry here, as far as I know, has had to resort to--you know, they talk about cookies and bake sales to raise money. I mean that is evidently the essence of the gas business today. The retailer is forced to sell all sorts of additional services in these little--you know, hot dogs and whatnot that you can buy at the gas station these days, cigarettes and so on. They do that to keep their heads above water. So I think that is probably what we should be looking a little bit more intently at.
I would ask the minister to get that Research department--I am never really sure what that department really does, accomplishes at the end of the year. I keep asking about it. I never really know who it is, what it is, and what it is doing. I know that when Ed Connery was the minister, he claimed they were out monitoring the oil prices. He claimed that he was doing it himself, that he was the Research department. Nothing ever got accomplished when he was the minister.
So I would like the minister to make a commitment right now that he is going to get that Research department up to Churchill; he will go up to Churchill himself and take a look at this tank farm and start seeing why, meeting with OmniTRAX and finding out why this thing cannot start to develop.
Mr. Radcliffe: Mr. Chairman, I would like to respond to the challenge so graciously extended to me by my honourable colleague opposite, because I would concur with him that I have been to Churchill. In fact, it was a very pleasant trip that I took to Churchill a number of years ago in the company with the Natural Resources Institute. There were about 44 of us who drove to Gillam by bus.
Across northern Manitoba, I had occasion to visit Thompson as a guest of Inco. We were, in fact, a mile down into the earth. I can advise my honourable colleague that when you get that far into the earth's crust, it starts to warm up. A number of the miners grow tomatoes at the bottom of the shafts in the mines under grow lamps, winter and summer, with no additional artificial heat, because of the heat that is coming up from the core of the earth.
In any event, we did have occasion then to fly on to Churchill. I was delighted with what I saw in Churchill. I think it is a vibrant community. I am a strong proponent for the future economic security of Churchill, because I think not only is it a historical space for Manitoba, it represents the outlet for one of the traditional Hudson Bay routes, which goes back to the beginning of the fur trade in Manitoba, was in competition with the St. Lawrence route, where goods were brought in and taken out of Red River.
I think that not much has changed in the competition, whether it is grain we are moving or whether it is, in this case, gasoline we are moving. I would actively encourage oil companies to get into a distribution system out of Churchill. I was instrumental in alerting an associate of mine to travel with a party with the Minister of Rural Development (Mr. Derkach), who went north to talk to the new jurisdiction of Nunavut in order that Manitoba be truly competitive with Montreal, which was, I guess, our major competitor in offering government services to the people of Nunavut.
I am told by my colleague that it was a very successful trip. Very positive results were achieved on that, and I am sure if you were to ask the Minister of Rural Development he would concur with that opinion, that, in fact, his trade mission to Nunavut was a very successful enterprise.
There is nothing wrong with fuel companies or even co-ops, because I can tell my honourable colleague that I had the delight to be the minister responsible for co-ops for individuals in the North to establish a co-op base and a distribution base with the tank farm in Churchill and to be a distribution system. The only way that that will occur, Mr. Chair, is if it becomes economically feasible.
I am delighted to hear my honourable colleague opposite say that the retailers are not the culprits that many folks think they are, and I am delighted to see that he has studied the issue and concurs with me on that opinion.
Just in the ongoing debate, I would point to the independent wholesale jobbers who were functioning in the natural gas market here in Winnipeg in the last number of years. That is a function again of the free market, where individuals would go out and buy I think it is gigajoules of natural gas. It would be transmitted down the same pipe that Centra Gas or any other gas company sends the fuel. There is no monopoly of ownership of gas that comes down the pipe. These entrepreneurs would operate in the differential between what Centra Gas was operating for and what it was wholesaling for at the wellhead in Alberta where the gas was being produced.
So I would suggest to my honourable colleague opposite that there is, in fact, the opportunity and there is the price leveller that does occur right now with free enterprise in the market. These individuals are then able to buy in advance on the futures market with quantities of the petrochemical and any other commodity, and then they offer a rebate at the end of the year according to how they have managed with the purchase and sale of product over the course of the year.
What this does is have the effect of levelling out the price and taking out the spikes and the peaks and valleys on the price. I do concur that there are only two main wholesalers in town in Winnipeg. That is regrettable, because down in centres like Montreal and Toronto and even in New Brunswick there are a number of independent purveyors of gasoline. In fact, I do believe that it is often a more vigorous market where you have other individual suppliers.
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With the cost of infrastructure, with the risk of doing business, individuals have been loath to get into the petrochemical business here in Manitoba because of the thin population. We are only a population of a million-one, Saskatchewan comparable, so that the market, the consumer market is not that vigorous a market out here to justify more than the suppliers we have at the present time. I know that the Canadian west, the framers of postwar Canada anticipated that, when they built a lot of our social infrastructure, we would be a country of 60 million today; but, unfortunately, governments past have limited the amount of immigration to our country so that Canada has not been able to enjoy the rate of growth that we would have had if we had had a more liberal immigration policy. As my honourable colleague knows, today Manitobans are desperate to have skilled immigrants come to our country to fulfill the jobs that are now going unanswered.
So there are a few reflections, but I do concur with my honourable colleague that it is a very reasonable and exciting opportunity for some enterprising entrepreneur to open up a fuel distribution system in the North. I know that the people in Churchill do distribute fuel to points further north, to Rankin, and I am not sure of the new name for Rankin, but the communities up the coast, and there is nothing wrong with them distributing further south down the OmniTRAX line. [interjection] Thank you, Mr. Chairman. I am done.
Mr. Maloway: Well, I really did not get an answer to the question asked, and the question asked was whether he would--he had indicated he was to Churchill some years ago, but if he would endeavour to go back there again, take this phantom research capability of his up there. I mean, whoever this Research department is, take it up there and get them working on it. I would appreciate it if he would. I suspect theRresearch department is himself, but I would suggest that he go up to Churchill, take whatever researcher he wants, meet with the mayor of Churchill, meet with OmniTRAX and seriously show some hands-on management here and some hands-on concern and try to put something together.
Now, if all he is going to do, after his work is done, is to turn this over to these two regular suppliers, right, that simply gives the cat another mouse, and you will still have two suppliers. So what you have to do is you have to get a third option here, and I do not really believe that there is a whole lot of competition among the two wholesalers we have right now. Let us go a little further in this. You talk about the combines. I do not have it here, but I have read some information that indicates that in a technical sense there is no price fixing in the oil industry because of nothing more than the wording of the combines legislation. I mean, what is required is a tightening up perhaps or looking at tightening up the combines legislation to make it a little easier to prove and discover what we already know is happening.
What is, in fact, happening, and the minister may not be aware of this, but in an effort to circumvent the combines legislation, to circumvent its intents, what companies do or have been doing is that they conspire to price-fix in an informal way. Without giving the minister any details as to where he should go at ten o'clock in the morning on Thursdays to find price fixing occurring, there are businesses and industries in this province where the players who are quite aware of what the combines legislation allows and does not allow make certain that they discuss this at one of the old boys' clubs in town, that they will get together at one of the old boys' clubs to play squash and get together and say: well, you know, are you going to increase your rates or fees by 10 percent? If you do that, I will do this.
That is how it is done. It is done in a careful way as to make certain that there are no tape recorders there, that there is no possibility of catching them in the act of doing it, but do not ever think that it is not being done. Do not sit there and think that you are operating in this ideal world where this kind of activity does not take place. It does take place.
Sometimes I can tell you that people are inadvertent about it. I have had people tell me that they have agreed with such and such a competitor to charge the same price for a certain service, and this is by agreement. They know that they are the two players in a certain niche market, and they have agreed not to compete with one another because they have been losing their shirts before on this market and it was not advantageous for them to do it. They tell me this information, and I know that that violates the Combines Act. That is what it does.
But, you see, they are not as sophisticated as the big boys. The big boys have the lawyers, the high-priced lawyers such as the one--one of them sitting opposite me, in a past life. These lawyers are quite aware that they can be retained by the big companies to give advice on the combines rules and requirements, whereas the little companies cannot. So the little companies are doing it more overtly and without knowledge that they are doing it; the bigger companies are a little more subtle. They are doing it in the old boys' clubs. But the fact of the matter is, Mr. Chairman, that it is being done.
So what happens is the combines people do a lengthy investigation, and they come up with the conclusion that in a technical sense there is no price fixing going on because, well, they could not prove it. They were not there. Yet my constituents, when they drive up to the pumps, see the prices changing as they drive up. Then they drive across the street to the other gas station, and, before they can get across the traffic, the other one has moved up. Anybody that has been in the business for any length of time knows these things happen, knows that the phone call comes, and when I talk to the operators, they are not prepared to tell me anything more than what they will tell me privately. They will not put anything in writing. They are very fearful--this is a very fearful industry. They are afraid of what the company will do to them because they are simply operators and they have to rely on the oil company, in many cases, for the supply of their product. In fact, they can, and some do, buy their gasoline from independents.
Mr. Denis Rocan, Acting Chairperson, in the Chair
There was an independent in town here that flourished for a while during the war in Iraq. Today he has gone from one truck to a dozen trucks, and he is not interested in competition anymore. He has got his share of the pie, and he likes it just the way it is. When he was approached within the last year to supply gasoline from the United States to a gas station, he was not prepared anymore. His entrepreneurial spirit had died. He has now got a dozen trucks. He is happy. He is happy not doing the undercutting he was, and he does not want to shake things up in the business, right? I could not even get a gas station to rent, and, as a matter of fact, I was directed to the proposition that, if I wanted to put up a couple hundred thousand dollars, I could buy a little station and simply sign on the gravy train with the rest of them and get into the gas business and compete like everybody else and price-fix like everybody else, and do what I was told.
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Of course, that was not the point of my exercise in the first place. The point of my exercise was to simply sell gas at a much lower price, and I know it is just an exercise that can be done. I know some Tory M.P.s a few years ago did that. The minister will recall when metric was brought into Canada, a few Tory M.P.s got into the gas business outside of Ottawa. I do not know whatever happened to that gas station they set up. I assume they ran it into the ground over time; nevertheless, their reason for it was to fight metric. I believe they were going to sell gasoline in the old gallons, rather than litres. I believe that was their fight as opposed to our fight, which is simply nothing more than to try to sell gas at a low price and see if we can create a gas war.
We found that that was possible to do back during the Gulf War. I was able to get the tanker. I was able to get a gas station that would co-operate, and I was on the verge of buying my first tanker of gas when I found out that the gas station in question had leaky tanks and decided that that probably was not politically a very smart thing, to be trying to sell low-cost gas out of leaky tanks. At that point I was unable to find another gas station that would give me the tanks. That is the problem. They are not prepared to alienate Esso or Shell or whoever it is, the Co-op, whoever they are buying their product from.
So in answer to the question as to do I believe that it is a free market out there, the answer clearly is, no, that there is a certain amount of collusion. Let me tell the minister, and he knows this too, that without proper combines legislation, without proper enforcement of the act, there is just a natural inclination for organizations and people to take the avenue of least resistance. It is just natural. So if you can simply get into a business and make a healthy product and you have only one or two competitors, why would you want to start a big price war and drive down the prices and make less money? You would not want to do it. So you have basically quasi-monopolies operating in a number of businesses where it is sort of almost done by mental telepathy, but there is a general understanding that you do not go beyond certain guidelines.
You know, the oil industry will spend all this effort to chase you around to try to convince you that they are right. As a matter of fact, they came into town, met with the minister, I believe--I think it was Petro Canada--and they met with us. They are still having troubles getting such simple things as their mailing system operating right, because they sent us the kit that was supposed to go to the B.C. MLAs. I do not know whether the minister noticed that, but we ended up getting the wrong information in a couple of their mailings. The wrong kits were sent out, but, nevertheless, their propaganda package is, you know, it is their point of view, and they are trying to get it out and disseminate it wherever they can. But that is still not what I feel is the reality of the situation.
Mr. Chairperson in the Chair
It can be, I think, partly alleviated by doing what I have suggested. That is to look at increasing the supply sources, doing what Costas Nicolaou suggested. Setting up government-run gas stations in Winnipeg and stuff like that is really not going to solve the problem if you cannot get the gas in the first place at any less than the other guy can. You know, if you are buying the gasoline from the same wholesaler and all your competition is at the retail level, you are not going to really prove the point. You have to prove the point by getting down to the supply level.
So I will stop there for a moment. I have a whole bunch more to say about this, but I ask the minister to try to get back to the point about when, when, when he is going to do something about the Churchill situation and bringing gas through there.
Mr. Radcliffe: Mr. Chair, I want to dispel the illusion that may be pervading this Chamber amongst members opposite with regard to the research capacity in our department. Albeit it is very modest, we have two staffers headed by an individual by the name of Mr. Ian Anderson, who is a very capable individual.
I must say on the record, and again I will flaunt his praises far and wide, that Mr. Anderson this year has spent a good part of his time working on the life-leases legislation, which is a bill pending before this Legislature right now. We owe a real debt of gratitude to this individual for the hard work and tireless activity that he has conducted himself with. But Mr. Anderson does do research and contacts various outlets around the province on a regular, weekly basis to determine what their price levels are. So I must tell my honourable colleague opposite that I am very chary as to conducting travel junkets about Manitoba on public money.
In fact, I can tell my honourable colleague that any travel arrangements that are made in my department that are not budgeted for in the original Estimates have to clear my desk. I have asked all my staff if they will tell me why they wish to travel, where they are going, what they are going to learn, and what they are going to do about it when they get back in order to educate their colleagues within their department, so that, in fact, we will be a better department or a better ministry because of the knowledge that they bring home, be it at the securities level because the Securities Commission people do a lot of travelling, or the Consumers' Bureau people who do some travelling as well.
I will go to national conferences because I feel it is important that Manitoba put in an appearance and hold up our end to represent our province, but, as a minister, I am loath to go junketing around the province on a lick and a promise just to be able to say: I have been to Churchill and I have looked at a bunch of cylindrical gas tubes; to say that, yes, I know they are there. I know they are there. I have been to Churchill. I have seen them.
I have the information, and this is what I guess my honourable colleague must acknowledge is the fundamental difference between the NDP and the Conservatives, that what we want to do is create a dynamic environment, economic environment, where people are prepared to come to Manitoba to risk their capital themselves to do business, to involve themselves in these enterprises, be they wholesale jobbers of fuel, be they independent retailers, be they integrated gas companies like Esso and Shell who want to come here because it is prosperous and they are making a buck. That is the difference.
The NDP, I perceive--and I look to my honourable colleague for correction, if, in fact, I had misapprehended his economic perspective, but they want to become involved themselves, integrate themselves as the hand of government, the violence of the Crown, to compete with their own citizens. Albeit, they think they may do it well meaningly, but, in fact, it ends up that it becomes bureaucratized; it becomes inefficient; it becomes unmotivated; it becomes aimless. When we took over, when the Filmon government took over the administration of this province, they found that we were beset with innumerable numbers of, caches of individuals who were inefficient, who were not directed.
There is a role for government. A government does a regulatory role. Government provides fundamental services that the private sector cannot. But one must not compete with one's citizens with their tax dollars, and this I believe is the fundamental philosophical difference.
So am I prepared to go to Churchill? Well, I want to know why I would want to go to Churchill first. I mean I think it is a wonderful exciting adventure to go to Churchill. But on public dollars, I would want to have a case proven to me first that my government was going to be better off, that I was going to have more knowledge I could not get sitting upstairs on the third floor from my employees who were in constant communication with people across the province.
Yes, I enjoy a junket just the same as somebody else, but if I am going to have it paid for by the public purse, I want it justified to me first. I guess I can tell my honourable colleague that the hardest threshold that my employees--and I try to apply the same rules to myself. The hardest contest that any of my department have is the contest where they have to come to me and justify to me why there should be a trip taken. And I would apply that to Mr. Anderson as well, that I cannot justify sending him across the country.
I can assure my honourable colleague that last year when the deputy and Mr. Anderson and I went to Regina to the ministers' conference, instead of travelling by airplane, we chose to drive. We had a leisurely drive to Regina. We saved the good people of Manitoba, I believe, over $4,000, which would have been the accumulated air fare. We were able to obtain the knowledge, the information. But there is a more practical way of getting about and not flinging about public money.
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So am I going to rush off to Churchill? No, I do not think so. Would I study the market further? Absolutely. Am I questing for information and knowledge about the matter, because I do not believe that I have the definitive total body of information to commend the subject? Absolutely not. I believe there is always more to learn, but do I want to fling public money about establishing a Crown enterprise to compete with our citizens who are struggling with a small profit margin? Absolutely not. Have I seen where other government enterprises have tried to get into the marketplace and compete? I have.
My conclusion to date has been that these have been abysmal failures. We look at the economic experiments that are going on right now with the CN Railway. The CN Railway was plagued with debt. Now that they are being sold off and becoming a private enterprise, it is a brand new world. It is an exciting new world. So rather than going back to the old days of centralized control, government-dominated enterprise, government entering into the marketplace, I say government should tax, government should regulate, government should provide fundamental services that the private enterprise cannot, but I am not about to commit the Province of Manitoba to running a tank farm in Churchill or a distribution system up the shores of Churchill or down into the southland, into the hinterland of northern Manitoba.
Mr. Maloway: Well, I will take that as a no, that neither this minister nor this government plan to do anything about trying to reduce gas prices for people in Manitoba by looking at alternative forms of supplying the product through Churchill because clearly, to me anyway, that is something that he is not prepared to look at.
Earlier on, the minister talked about the cost of production. Let me make some comments about that. The minister is aware that when you develop an oil well or any type of mining operation, there is a certain cost associated with developing the mine or the oil well, but the oil coming from a well that was drilled 20 years ago, you know that well has totally been paid for already. So, certainly, the cost of production is not the same for oil coming from Alberta as it would be from other places in the world.
The price of oil coming from Hibernia, there would be a different cost of production there than there would be in Alberta, but it levels out when you go to the world oil prices. I mean, that is what we are dealing with. So we have this arbitrary figure that we are dealing with, world pricing, which I guess can be hurtful in some instances. If your cost of production is too high and you have a relatively new well and oil prices plummet, you could be in serious trouble. If the oil prices are high and you have oil wells that have been long since paid for, then you are in the gravy. So, I mean, cost of production is really not a good justification here in Manitoba because the gas that we are getting right now, the oil we are getting right now, is from Alberta. It is refined in Saskatchewan, and it is refined I think in Alberta, but this oil is not coming from the Middle East, it is not coming from Hibernia.
I mean, when the price of gasoline went up last summer, you know, I looked but I did not see any war in Alberta. I do not see any insurrection in Alberta, but yet the price shoots up with the world market. So the minister can apologize for the oil companies only once, but at the end of the day there is a certain point at which competition gives way to monopoly.
You know, I thought that he, as a Conservative, was supposed to believe in competition, but instead he simply sits with the status quo and happens to favour monopoly situations. That is what he is really saying by not being an activist on the issue and trying to bust up the truss, bust up the monopoly.
He has indicated which side of the fence he is on. He is with the establishment, the people who have been paying the bills all these years, and he does not want to upset the status quo. Manitoba does not have a huge interest in the status quo. That is what is so interesting about this whole question. It is not as if we are sitting on a pile of oil wells here in Manitoba. We are not. The control of the issue and the pricing really has nothing to do with Manitoba. It has to do with world oil prices; it has to do with oil wells in Alberta.
Here you have a compliant minister and a compliant government simply going with the flow and defending the status quo, defending monopolies, defending monopoly situations and not interested in breaking that monopoly, so I kind of feel bad for this government and this minister, because another year or so down the line we are going to have to come in there and replace this government and develop a more activist approach.
By the way, we will be taking trips to Churchill when that happens. We will go up there and we will meet with OmniTRAX. We will go up there because we believe in developing business in this province and we want to see more business in this province, not just two suppliers of gasoline. We want to have more than two and we will have to work with OmniTRAX to see that something is done in that regard, because there is certainly a future and I think it is a rosy future, a good future in dealing with that option.
So I would like to ask some questions. I asked the minister yesterday as to when we should expect to receive the new annual report which he is currently sitting on. I have the report for '96-97 here, but I am wondering just when this is going to happen. I do not think I can delay Estimates long enough to get this new annual report.
Mr. Radcliffe: Mr. Chairman, I will not dignify with an answer the aspersions to my philosophical basis coming from my honourable colleague opposite, but, in fact, I would only invite him to look at the administration that is being conducted right now in our neighbour province to the west, which I believe is as like-minded philosophical comrades to himself. I do not see anybody riding around with torches and bed sheets on white horses inciting the public to attack gas companies in Saskatchewan, nor in British Columbia.
With the greatest of respect, it is perhaps a little bit of wind and water, which is really what the issue is, and I think that one must address oneself to the real verities of what are the drivers of a commodity market.
I would leave this topic with my last remark, I guess, which is that probably, if you were to analyze the books of the oil companies, one would probably find that they are no different from any other human enterprise in our country and that 80 percent or more of the costs of doing business today are payroll and payment of wages to their employees, be they the muckers that stand at the top of the wellhead or be they people that calibrate the force of the fuel going through the pipelines or the people that work in the offices. I think that is the same the world around. I do not think there is any magic to that, that the majority of the overhead of any corporation is consumed by the wage levels to their employees that they pay. So I would invite my honourable colleague if he has not already, analyze the financial statements, the annual statements that are published by the oil companies.
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That leaves me, of course, to his last question, which was: when is the annual report for Consumer and Corporate Affairs going to be published for the current year? I am advised that we can look forward to such a publication in and during either the month of August or September of this year. I believe that it has to be six months after the year-end, and staff are very busy right now. They have some drafts. I had the opportunity to sit and discuss some of these issues with staff to date, but, because Consumer and Corporate Affairs is such a multifaceted department and it touches the people of Manitoba in so many different fashions. It is a reasonably complex and sophisticated department. While there is not a lot of staff involved, and we do not get much headlines, that is because everybody is doing their job and doing their job very, very well.
Nonetheless, the annual report is not something that we just dash off unadvisedly and carelessly. Great care goes into it. When my honourable colleague did ask me yesterday, I inquired of my deputy, and the best advice we have is it is coming soon. We can look forward to it probably in August or September.
Mr. Maloway: I wanted to go back to the whole year 2000, Y2K area and ask the minister a few more questions in that regard.
The estimate, at least in the Royal Bank promotion material that they have sent out on the Y2K problem, indicates that the nationwide cost could be upwards of $45 billion. Now, I am not sure of the methodology that they use to arrive at that level, especially when they themselves indicate, at least the task force indicates that as certain percentages of businesses are not even aware, 9 percent or 10 percent are not even aware that there is a problem with Y2K. So I am not sure how you can come up with that.
I simply use that figure that they used, quote that figure just to indicate how enormous an amount of money that is. I mean the Manitoba budget is $5 billion a year. That is nine times, it is the equivalent of nine years of Manitoba government spending that this country is going to spend just in the next year and a half on getting ready for this Y2K problem.
I got the impression that the minister is getting more understanding and more up to date of this problem, but I just get the impression that he is not taking it as seriously as the literature out there would want us to take it. I would like to see something more concrete in terms of his plans on this matter. I know he said he would talk to the Premier (Mr. Filmon) about it. The Premier is rushed and so on. I am sure he is not spending a whole lot of time thinking about this either. But they go on in the article to indicate that the problem is so large that it will consume 25 percent of the IT, the information technology budgets of large corporations from now up to the deadline. Obviously, there is a major concern. This is the Royal Bank now. This is the Royal Bank who is saying this, but clearly we have a huge other area of the Manitoba economy that is not being dealt with, not only profit-making enterprises, but nonprofit enterprises throughout the entire system.
So I would like the minister to just make any further comments he has about those figures as to whether he disputes them, or whether he agrees with them.
Mr. Radcliffe: I want to assure my honourable colleague that I have no means of measuring the statements, and I too join him in saying I do not know the methodology involved. I do acknowledge and accept the seriousness and the extent of the problem.
In fact, I want to share with my honourable colleague that last night I had the occasion to go to dinner with the Consumers' Association of Canada, Manitoba Division. This was a group of about 30 people who are activists, active researchers, advocates for consumers here in Manitoba. They have links right across the country. I brought up this very point with them at the dinner table last night, and, in fact, there was significant interest and uptake around the table. I think that is how this message is to be shared and to be passed on. It is at meeting to meeting, face to face. It is sensitive groups, representative groups, that then can fan out across the province and bring this information to their own groups within which they operate, to advise and mitigate or to advocate with manufacturers and producers as to the nature and extent of the problem, and invite them, challenge them to upgrade the equipment. We can only look at the extent of the computerization of our society to date.
I acknowledge that it is pervasive. I just sort of reflect a little bit on some of the intrusions into our world. Would it be so terrible if we all had to climb a few stairs instead of taking an elevator? I can share with my honourable colleague that both the deputy and I, although our offices are on the third floor of this building, try to avoid taking the elevators in this building just because we want to challenge our physical systems and have a little bit of aerobic activity every morning of climbing to the top of the building. Oh, yes, we are huffing and puffing by the time we get there, or at least I am speaking for myself. I work up a bit of a sweat, but you know that is good for us because the human species is built for hard manual labour. Too much we are sitting in the lap of luxury these days, albeit working for the good of the public of Manitoba. I think if we were to reflect on how our life could be made a little simpler, that we do not really need a lot of the gadgetry that we enjoy so that we could go back to basics, that, in fact, might be a beneficial exercise that many of us could profit from.
I can only look back to the days of my upbringing, and I am not that much older, I would not think, than honourable member opposite, and I can remember in my parents' household that very little ever got thrown out. The used socks, the castoff socks and underwear were thrown into a bag, and they were taken up to Selkirk every fall to the Fairfield knitting mills. We would turn in the washed and used wool and pick up a blanket in exchange. My mother, when the bed sheets would wear out in the middle of the sheet, she would turn the sheets and you slept on a ridge, but you got used to it. Then those same sheets got turned into pillowcases, and then they got turned into dusters. Then the lint got thrown out the door.
So we have come a long way from that, but these were Depression-minded people who knew how to make things last and how to get the best possible use out of everything. I think that too often we are consumed in our secular quest for wealth and materiality, that we could be benefited by looking at things more simply and perhaps not being dominated by the computer culture.
Mr. Maloway: I have news for the minister. I mean, if he is planing to drive his car to Selkirk, he might not be able to get it out of the driveway, because the embedded chips in the vehicle might make the car not work. He may not be able to reuse the VCRs and all the other equipment he has in the house, because it is just not going to work. Simple as that. His credit cards may not work. Hospital equipment may not work properly. Airplanes may not fly properly. We are talking about an enormous problem here. You know, I appreciate that since we were here 24 hours ago he at least went out and met with the Consumers' Association, and at least made a pitch to them and informed them as to what is going on so they can start spending that $45,000 grant that he gives them--44,600--more wisely, and not buy noncompliant products with it. So maybe there is some hope here for the minister. If he could just get a focus and a desire to spread this message, maybe he will be able to accomplish something in this area.
I did say that the reason I am appealing to him is because of the hopelessness of dealing with the Minister of Industry, Trade and commerce. You know, the Minister of I, T and T should be doing something about this issue, but you know he was in Geneva last week, and he is probably going somewhere else next week. You know, it is kind of hopeless to try to explain this to him.
What I wanted to ask the minister now is--as further questions on the Y2K problem. For example, the Royal Bank--I have had people that I know as late as last year tell me that their system would be compliant, and I asked them: well, how do you know they will be compliant? And they said: well, you know, we simply took the date 2000 and we put it in the computer program, and it seemed to run okay. It did not crash yet; therefore, my system should be compliant. They have forgotten about the issue and walked away from it. It was not until January of this year when I saw three- and four-page regimes that have to be gone through, testing regimes that have to be gone through, that I realized that it was not as simple as simply plugging in the date and finding the computer not crashing and thinking that you are okay.
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In the Royal Bank promotion, they say right clearly in here, they say: the bad news is that even some new computers may have hardware that is not Y2K ready, and this is a brand-new publication by the Royal Bank. The main problem, they say, is the real time clock, which is programmed into the computer's basic input-output system, the bias. The RTC, which is the real time clock, resides on a chip and is part of the computer's hardware. Unlike the computer clock which you can set on your screen, the RTC cannot be reprogrammed. This means that advancing the date beyond January 1, 2000, to test your software will not properly test the RTC, that is to say, the real time clock or the bias. In order for your computer hardware to be year 2000 ready, both the real time clock and the bias must also be ready. So, in other words, it is not just enough to move the time ahead on the computer.
So, then, Mr. Chairman, I received today a copy of--and I am sure other manufacturers had this. I had mentioned to the minister yesterday that a lot of the computer companies, while they will tell you verbally that their computer is Y2K compliant, in reality they will not put it in writing. Even when you ask them directly for it and they say yes, they manage to omit it in the final statement. In fact, I had to write it in myself last year on a computer purchase, because they just would not do it. I wrote it on the invoice, and I assume that from their acceptance of my money that they were accepting what I had written on it, but the minister rolls his eyes at that one.
But Gateway Computers, one of the top five, I believe, manufacturers in the world, and Dell is up there, of course, as well, but I happen to have Gateway's Gateway 2000 statement on the issue of the year 2000 date change, and this is the page that they faxed this morning. But among other things, in this statement they say: because there is not an established standard as to what "being compliant" means, Gateway presently defines that term through the use of the Microsoft test suite. However, even after testing, there could still be an issue caused by non-Gateway or Gateway recommend products that you could add to our system.
So these are the manufacturers, folks. These are the guys who know. These are the guys who stand to make all the money out of the year 2000 problem. They stand to cash in big time on this $45 billion that consumers are going to have to pay through products that they buy, because the companies are going to have to spend that kind of money, this huge $45 billion. These are the people who are in charge of the solution who understand the problem, and even they are saying, well, you know, maybe, maybe it is not going to be a hundred percent.
So I tell the minister, when things start falling out of the sky, you know, when planes start falling out of the sky and satellites come crashing down and elevators drop 30 storeys and all sorts of other cataclysmic things happen January 1, then even people like Gateway 2000 are going to not admit responsibility for it. Even they are saying, well, we can never be sure, because it is a seamless web, evidently. It involves all the computers. You could have the most up-to-date computer system, but if you hook up with somebody who is not compliant or somebody who puts an old program on your computer, it can bring the whole thing down. That is the scary part.
The minister is suggesting that somehow legislation is just too onerous. That is the heavy hand of government, he is suggesting he would not want to do that. Requirements from the government as far as obtaining government grants and loans, well, those are too onerous too. But yet this year 2000 committee is, in fact, suggesting that the governments be interventionists. I know that kind of gets in the craw of the member opposite and is maybe contrary to Tory philosophy, whatever it happens to be today, but certainly a more activist approach rather than just a defensive approach has to be taken. I would like to see the Minister of Industry, Trade and commerce, and I know we have checked on this minister. We know he is not doing a whole lot of travelling. We know that. We have asked those questions before, and we know who is doing the travelling though. Maybe he could take it up with more than just the Premier. Maybe he could talk to the Minister of Industry, Trade and commerce when he is on one of his next junkets, if he can stop long enough in one place, if he can take it up with people.
The task force people tell me that the problem is more pronounced in other areas of the world, places where neither myself nor the minister opposite are going, have been going or are going to, but certainly in all probability a place where the Industry, Trade and Tourism minister will be going very soon, I am sure. So maybe we could educate him on this whole issue and he might be able to carry the ball a little more, but what we need is more promotion in this area. I would like the minister to expand a little more on just what he sees the problem being and what he sees as some solutions to it. I am looking for more concrete solutions.
I am looking for him to tell me that, you know, by the end of August he is going to go and talk to 10 more consumer groups; he is going to write to all the nonprofits; he is going to start putting conditions on government grants; he is going to start looking at ways to bring in some legislation to effect some of these changes; and he is going to meet with the task force. He is going to do all these things to help solve the problem, be part of the solution, you know, not part of the problem.
Mr. Radcliffe: Mr. Chairman, I guess, I would like to respond firstly by saying that I really am enthused and bucked up by the fact that my honourable colleague opposite, who usually is the champion of big government and intrusive behaviour and the mortmain of the state, is actually looking to private enterprise for scholarship, for rectitude, for the answers to this problem. I do not denigrate for a moment the extent and nature and seriousness of the problem, but of whom is he quoting? What authority does he resort to at this point in time? Well, the Royal Bank. In fact, the Royal Bank is one of our premier institutions in this country and they--[interjection] I am sorry?
An Honourable Member: I am quoting Denise.
Mr. Radcliffe: Ah, Denise. My honourable colleague opposite is quoting a very prominent member of our community, Mrs. Denise Leahey, who is the current, I guess, western Canadian vice-president of the Royal Bank here in Winnipeg. A very competent and thorough and outstanding member of our community and somebody who is personally known to me and, matter of fact, a constituent of River Heights. I cannot say enough nice things about Mrs. Leahey.
Nonetheless, I think it is a sign of the times that even our NDP comrades in this House are turning for leadership and direction and learning and solutions to some of the bastions of private enterprise, the enterprises that have made this country the great place it is. The fact that the United Nations acknowledges on a regular basis that Canada is a great place, a wonderful place, and I think the second in the world in their grading system of superior places to live.
So I think that is something that we must congratulate members opposite on, because they are probably slowly, at long last, by dint of good, hard advocacy on the part of members on this side of the House, beginning to realize the benefit and attributes of some of the major private corporations, or publicly held corporations perhaps in our country, such as the Royal Bank and other members of this task force that my honourable colleague has very kindly presented me with: Canadian Tire, Domtar, Petro-Canada, Canadian Federation of Independent Business, Cargill, et cetera. These are leading intellectual authorities in our country.
More specifically, I guess, my honourable colleague is saying: Well, Radcliffe, what are you specifically going to do? In fact, I guess that leads me to another level of address which is: what is the role of the minister in a ministry? What does the minister do?
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The minister is not the deputy minister. The deputy minister is the operational officer, the person to whom the directors liaise. The deputy minister does not herself run around and answer the telephone or open the doors or press the buttons, although sometimes this deputy minister does because we are quite short-staffed at times, and she is a very competent and obliging member of the bureaucracy. Nonetheless, on a conceptual basis, I guess what a minister does is provide overall policy direction.
I liken the cabinet to a board of directors of a corporation. The board of directors on a private corporation or a public corporation provides policy. They provide the outer rim of activity, the limits of activity of the particular operation, the direction that we should be going.
But do the ministers and members of cabinet get involved on a day-to-day operational basis? Absolutely not. In fact, I could imagine nothing worse than the mayhem I would cause if I showed up at Vital Statistics some morning and insisted that I be allowed to turn on the computers or to greet customers at the front desk--[interjection] I think that I would be a butt of significant opprobrium from my director. It is not appropriate. It is just not appropriate.
So do I motivate? Yes. Am I going to ask questions? Absolutely. Is this the matter of which I am concerned? Absolutely. I do not want to leave my honourable colleague opposite with the idea that I am brushing him off or disregarding this or treating this lightly, because I am not. I will use every opportunity I have. I must inform and share with my honourable colleague that I meet with my deputy on almost practically a daily basis. I meet with members of different departments on a weekly basis. I make it a point to travel about all the different departments--14 different departments in Consumer and Corporate Affairs--on an annual basis to make sure that I have touched everybody in every department at least once during the course of a year.
When I am going out into the field per se, it is not to tell them how to do their job better, but rather to set direction, to set goals, to set standards for them, to share their mission, to implement government policy in the broad picture.
So can I say specifically that I am going to have 22 meetings before September 13? No, I am not prepared to say that. Am I going to talk about it? Yes. Am I going to go out and proselytize about the problem? Absolutely. Am I going to ask for an accounting from the different department heads as to their assessment from their experts? Absolutely.
Now, I can assure my honourable colleague that I do not have the technical knowledge and, in fact, I only learned from him a couple of days ago what an embedded chip was. One of my colleagues asked me if this was a new brand of cookie--[interjection] That is right, we can talk about cookies. In fact, I make no pretence that I have any technical ability. I know how to turn a computer on. I know how to browse the Internet. I know how to draft a memo, answer my e-mail, and to transmit jokes on the Internet. But much beyond that, I am a rank novice. Probably my children, who do their university reports and papers, are far more equipped and adept at working computerese than I am.
Nonetheless, am I going to ask my department people whether they have done the appropriate consulting and in their opinion, in their professional opinion, in their expert opinion, are they satisfied that they have done all that is reasonable to ensure that government records, government database are secure? Absolutely. For sure. Am I going to consult with our Better Systems people, our Manitoba Measures people, our desktop publishing people? Absolutely. These are things--
Mr. Gerry McAlpine (Chairperson of the section of the Committee of Supply meeting in Room 254): Mr. Chairman, a motion has been moved in the section of Committee of Supply meeting in Room 254 by the member for St. Johns (Mr. Mackintosh), and the motion reads that the alleged matter be referred, reported to the House. This motion was defeated on a voice vote, and subsequently two members requested that a formal vote on the matter be taken.
Mr. Chairperson: A formal vote has been requested. Call in the members.
All sections in Chamber for formal vote.
Mr. Chairperson: One hour having expired, I am requesting that the Sergeant-at-Arms shut off the bells in accordance with the rules.
In the section of Committee of Supply meeting in Room 254 considering the Estimates of the Department of Justice, a motion was moved by the honourable member for St. Johns (Mr. Mackintosh). The motion reads that the alleged matter be reported to the House. This motion was defeated on a voice vote, and subsequently two members requested that a formal vote on this matter be taken.
The question before the committee is the motion of the honourable member for St. Johns.
A COUNT-OUT VOTE was taken, the result being as follows: Yeas 16, Nays 29.
Mr. Chairperson: The motion is accordingly defeated.
Mr. Chairperson: This section of Committee of Supply will now continue with consideration of the departmental Estimates.
Hon. James McCrae (Government House Leader): There might be agreement to call in the Speaker and call it five o'clock.
Mr. Chairperson: Is it the will of the committee to call it five o'clock? [agreed]
The hour now being five o'clock, time for private members' hour. Call in the Speaker.
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