The Acting Chairperson (Mr. David Faurschou): Will the Committee of Supply please come to order. This section of the Committee of Supply meeting in Room 255 will be considering the Estimates of the Department of Finance. Does the honourable minister have an opening statement?

Hon. Harold Gilleshammer (Minister of Finance): Yes, I do.

Thank you very much, Mr. Chairman. I do have an opening statement. First, let me say it is a pleasure to be here to work our way through the Estimates of the Department of Finance for my first opportunity and to have long-standing critics who know the Finance department well, like the member for Brandon East (Mr. L. Evans) and the member for Elmwood (Mr. Maloway). I look forward to their contribution as we get into this.

The department proposes to spend $698.5 million in 1999-2000. This represents a decrease of 4.2 percent, or $30.7 million, under the 1998-99 Estimates. Mr. Chairperson, we have again allocated $75 million for debt repayment. Public debt service costs are expected to fall by $34.2 million. Since 1994-95, debt-servicing costs have been reduced by $116 million annually, or almost 20 percent. Our government is committed to relieving the next generation of the burden of accumulated debt.

Paying down the debt is the only path that allows the redirection of funds spent on debt-servicing to the reduction of tax burdens and enhancement of important public services. Notwithstanding 1999-2000 expenditure reductions, public debt remains the single largest component of the department's spending, representing 69 percent of the department's budget and 7.8 percent of the entire provincial budget. The magnitude of this cost underscores the importance of our government's continuing commitment to Manitobans to balance our books and, over time, to free up these funds to meet the challenges of the future.

Total expenditures for Manitoba's 1999-2000 tax credit programs which include property tax credits, cost-of-living tax credits, pensioners' school tax assistance, political contributions tax credits and the learning tax credit are estimated at $196.8 million. Of this amount, $15 million represents the learning tax credit which is part of the Department of Education and Training's Estimates.

Manitoba continues to be the only province in Canada to provide a refundable learning tax credit to encourage students and their families to invest in education and training. The learning tax credit is an integral part of a comprehensive approach to support and encourage more of our young people to acquire post-secondary education in Manitoba. This approach includes enhanced direct assistance to students and recent graduates through loans and bursaries, interest relief, debt reduction, the scholarship and bursary initiative and increased operating support for post-secondary educational institutions.

The Department of Finance's share of total net Manitoba tax credits for 1999-2000 is $181.8 million.

The department's 1999-2000 Estimates establish the Lower Tax Commission. Our government is committed to reducing the tax burden in Manitoba, and this important initiative will provide the means to consult with Manitobans and identify options for a fairer, more competitive and simpler tax system.

The Office of Information Technology continues to oversee the strategic deployment of information technology resources across government. The extensive renewal of our information systems that began several years ago is continuing on schedule. Some of this renewal is required to meet the year 2000 challenge that lies ahead, but most is in the form of strategic initiatives aimed at improving access to government services, while streamlining procedures and reducing costs.

The year 2000 issue continues to be the top information technology priority of our government. Our degree of readiness is on target. Government systems are 90 percent compliant, and health care is also working towards compliance. We expect to be fully compliant in both government and health care by October 1999 or earlier and remain vigilant in these efforts.

Barring any unforeseen situations, Year 2000 project costs are expected to come in under the original estimate. Our Y2K competitive bidding process which cuts down the traditional bidding process from several months to as little as 24 hours will be emulated in other critical infrastructure deployments.

While the province fully expects to meet its year 2000 challenge, we must be prepared to handle situations should an unlikely failure occur. Our contingency plan is now being developed and will be scrutinized, tested and completed by the end of June 1999. A full dress rehearsal is scheduled for September 1999. Our centralized approach has earned the province nation-wide recognition, and the Y2K office is called upon to share methodologies and give advice to other jurisdictions.

The Better Methods Initiative recently implemented a government-wide integrated financial and human resource system with an initial deployment to over 1,200 users. The first few months of 1999-2000 have been spent resolving implementation issues typical of a large-scale information technology project and fine-tuning system performance. Following this initial deployment, additional modules and users will be added to the system to maximize the value of our investment in this technology. New modules planned for 1999-2000 include accounts receivable.

Special operating agencies and departmental systems will continue to converge to this standard system in the coming year. The Better Systems Initiative is comprised of a multidisciplinary team of employees from several government departments. Over the past year, it has been using state-of-the-art computer simulation tools to redesign and streamline existing business processes across a number of areas including taxation programs in the Department of Finance and programs in Family Services, training in Continuing Education, Consumer and Corporate Affairs and Labour.

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This coming year, efforts will be dedicated to introducing new systems for the following business areas: Personal Property Registry, Land Titles, Companies Office and business inspections, while further design work proceeds with Taxation and with integrated case management on the human services side of the project.

Following a comprehensive network vulnerability analysis that was conducted this past year, the Office of Information Technology will be establishing an information protection centre, the first of its kind in Canada. As a result of these ground-breaking efforts in assuring the protection of government systems and confidential information, Manitoba has been asked to lead a national committee on information security and is attracting worldwide attention.

As our province moves increasingly towards electronic records and the amount of information available to knowledgeable workers increases at astonishing rates, we must find better ways to store and manage this information. To this end, the Office of Information Technology and the Provincial Archives will jointly undertake a pilot project on enterprise-wide document and knowledge management. Information gleaned from this pilot will be used to ensure the best possible application of technology and business practices to this most difficult problem facing all large organizations.

I would like to also mention some additional activities contemplated by the department's 1999-2000 Estimates of Expenditures. These include, No. 1, the implementation of an automated, integrated treasury management system to provide more efficient cash investment and debt management and reporting; secondly, continued participation with other provinces and the fuel industry in a national fuel tax uniformity project to develop uniform standards across Canada which will reduce overall administration costs, provide enhanced service and facilitate electronic payment of taxes; thirdly, upgrading of tax information bulletins to assist businesses in the correct application of provincial taxes and to provide enhanced access to the information through the Internet; fourthly, continued participation with other provinces and law enforcement agencies in the Tobacco Interdiction program. Enforcement strategies are continually reviewed and updated to ensure the ongoing protection of tobacco tax revenues.

Fifthly, continued leadership, direction and co-ordination of the special operating agencies reform initiative through the Treasury Board Secretariat. SOAs continue to help governments spend smarter, continuously improve the quality of public services and test innovative management practices.

Sixthly, the department will continue to work with other provinces to impress on the federal government that increased federal support for health, post-secondary education and other social programs is urgently required. Premiers and Finance ministers across the country have called for the federal government to fully restore the cuts it made to fund health social programs. In addition, they have indicated that this support should be provided through existing intergovernmental financial arrangements, namely, the Canada Health and Social Transfer and the equalization program. Over the past year, provincial and territorial Finance ministers have been working together to develop a common approach to ensuring that financial arrangements are predictable, equitable and adequate. The department is also working with other provincial governments to improve the equalization program and to better co-ordinate federal and provincial tax policies.

Mr. Chairman, with these brief opening comments I would be pleased to respond to any questions that honourable members may have. I thank you.

The Acting Chairperson (Mr. Faurschou): I would like to thank the Minister of Finance for those opening comments on behalf of the committee. Does the official opposition critic have any opening comments?

Mr. Leonard Evans (Brandon East): Mr. Chairman, just a few brief introductory remarks. I thank the minister for his overview of the department and highlighting some of the developments and some of the challenges which we all face, which the department faces, and which therefore the people of Manitoba face in terms of federal transfers and so on.

I think I want to state what I have stated in other years and that is Manitoba is very fortunate in having a very high quality civil service. The people of Manitoba are well served by our public servants, and I believe in particular the Department of Finance has been very well administered over its many years, and the minister is fortunate to have an excellent staff. Many have been around for a long time. I know there are some changes, but they have been around a long time and they are well experienced and they have done a good job, so I want to commend again, through you, Mr. Chairman, the departmental staff for the service it is rendering to the people of Manitoba.

Just a couple of comments by way of overview. I think the government has been very, very fortunate, inasmuch as we are living in a time, the last two or three years, of fairly good prosperity, relatively good prosperity, and therefore when you have prosperity and an expanding economy you have increasing revenues. That is very evident if you look at your budget because budget documents giving you historical information. You look back five or six years when the actual revenue level dropped because of lower economic activity. So more economic activity, whether it benefits us through the retail sales taxes or through income taxes, certainly generates more revenue for the Treasury. This, of course, enables the government to do new things or to make cuts and I make that just as a general observation.

One of the reasons, or there are several reasons why we have had a buoyant economy, one of course is a cheap Canadian dollar. For all kinds of reasons the Canadian dollar is relatively low compared to the American dollar, compared to five or six years ago, certainly, and this low dollar, of course, has enabled us to have expanding exports particularly to the United States but perhaps to some other countries as well. It certainly benefited our commodity industries and it has certainly benefited our manufacturing industries in the province of Manitoba. It is certainly easier for Flyer Industries, for example, to sell its products because of our relatively cheap dollar in the U.S. market.

Another factor has been the relatively low interest rate regime that we have been experiencing. I am not suggesting that it is too low or it is not low enough, it could maybe be a bit lower, but it is lower compared to what it was again back several years ago when I believe it was a restraining factor on business, on the economy generally. The fact that we have, relatively speaking, a lower interest rate climate is good for economic expansion.

Thirdly, I believe the Manitoba economy has certainly benefited from an expanding and growing U.S. economy. It is continually breaking records. All the economists in the United States seem to be on the verge of predicting a downturn, but those who are rather negative on it find that they are wrong. The economy just keeps growing which is great, but nevertheless there has been concern that one of these days we will hit a recession, and, of course, that has been the experience of western economies. We do what is called business cycles with periods of prosperity, then periods of recession and unfortunately, as in the 1930s, a very major depression. But, for whatever reason, the American economy is expanding, and that is providing us with an expanding market for our products and has enabled us to grow therefore.

Then another factor I should mention, sometimes this is not always that positive but it certainly is a factor in our economy and the health of our economy, and that is the state of federal government policies because federal government policies do have an impact on our province. One very clear example is the Crow rate, the abolition of the Crow rate. I am not arguing for or against it. I am simply saying the fact that it was abolished has an impact on our agriculture. Certainly it is going to contribute to value-added food industries, and that is great, but the fact is that we did have a change at the federal level and it had an impact.

Well, I had mixed feelings on that. On the one hand, I agree; on the other hand, I have some problems because those farmers who have to pay out more by way of transport costs are at a disadvantage. On the other hand, it does provide the value-added opportunities, including pork production, and then the whole issue of free trade. Whether I agree or not is immaterial. The fact is the free trade agreement was brought in, and it does have an impact. The point I am making is that we live within a federal system, and we are impacted by federal policies whether we agree with them or not. Certainly, while we oppose the free trade, we believe in fair trade, Mr. Chairman. The minister is baiting me here. He wants me to make a longer opening statement than I am normally going to. At any rate, we believe in fair trade and agreeing with free trade is sort of like agreeing with motherhood or fatherhood. Free trade in itself is fine. It is the matter of how it impacts on various parts of your economy and the various social groups within your economy.

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At any rate, having said that and having agreed that we have done well the last couple of years in terms of economic growth, I still have to point out that we tend to be in the middle of the pack. We do not always tend to be really at or above the Canadian average in most aspects of our economy. The figures that we have from Statistics Canada and also reported by the Manitoba Bureau of Statistics would show that we are not doing that great in some areas. For example, even though our forecast growth of the economy, the growth of the real GDP, gross domestic product, is supposed to be among the highest in western Canada, it is still below the Canadian average forecast. Indeed in 1997, we were below the Canadian average. According to the Conference Board in Canada, we are going to be below the Canadian average, slightly, again in the 1999.

Our population growth has been very slow. We are now currently ranking six out of 10 as of the latest estimate. That was the January estimate of our population growth, and that has been a continuing problem in this province. I think we have capacity for a greater population, but we do not seem to be growing very fast. The fact is it has been very slow, and one of the reasons for that of course has been the large amount of outmigration that has occurred for some years.

In retail trade, we stand seven out of 10 of the provinces as of the last figures we have from Stats Canada. This is as of March of 1999. We are well below the Canadian average and are seven out of 10. In terms of employment growth, we talk about job creation. Again, we are seven out of 10 provinces. We are near the bottom of the heap, not at the top. And manufacturing shipments, likewise: the Canadian average increase in manufacturing shipments as of March '99 was 6.5 percent; in Manitoba, it was only 1.5 percent. Building permits: the Canadian average increased 1.4 percent as of April '99; Manitoba diminished, declined by 4.6 percent, and we ranked eight out of 10 provinces.

Capital investment: I know we have had some good years of capital investment, but 1999 is a negative year. The forecast is minus 9.3 percent. We rank nine out of 10 provinces in terms of total capital investment. That is both public and private combined. The Canadian average is more or less stable at 0.2 percent, but as I said, we are minus 9.3 percent.

In terms of overall construction work, the Canadian average is 2.2 percent; Manitoba, for 1999, we are at minus 15.4 percent, and we rank nine out of 10 provinces.

At any rate, I guess the point I am making is that, while we are chugging along, we could be doing better in a lot of areas of our economy.

I would just like to make one final remark and that is on the overall–the minister referred to debt and the debt situation. Of course, that gets you back to the whole idea of a budgeted surplus or a deficit or a balanced budget. I want to go on record as reminding everyone again that the budget that this minister and the last couple of ministers have brought in, the last couple of budgets have been at a considerable cost of program reduction or elimination.

One that really has bothered me over the years is the cut in the children's rural dental program. I thought that was a fantastic program. Even the minister, Don Orchard, agreed that it was a great program at that time, but it was totally eliminated.

Pharmacare: The benefits of Pharmacare have been scaled back considerably, thereby making it more expensive for a lot of people to buy prescription drugs and, unfortunately, in some marginal areas may contribute to people not taking the medicines that they are supposed to according to their doctor's recommendations. Then, of course, there have been cuts, real cuts in education when you take inflation into account, and there have been other factors such as the elimination of the property tax rebate and so on.

So I am just saying, yes, balanced budget, but let us remember it has been achieved at a cost. On the one hand, as I said, we have been blessed with buoyant revenues because of a buoyant economy. On the other hand, we have to realize that over some years there have been some major cuts taking place and restraints, as well, to bring us that.

So, Mr. Chairman, with those few remarks, I would conclude my opening remarks, but then I would like to make a suggestion as to the way we proceed.

Mr. Chairperson: We thank the critic from the official opposition for those remarks.

Mr. Gilleshammer: Mr. Chairman, I listened very carefully to the member for Brandon East (Mr. L. Evans) and his comments, and I would like to respond to some of the things that he has put on the record.

Certainly, I thank him for praising the staff of the Department of Finance. I think that is a very nice gesture on his part, and I will be sure that they see that in Hansard and have an opportunity to read it. It is one area where we can agree right off the start that the province of Manitoba and this government have been well served by a very professional civil service.

I recently had an opportunity to discuss our province with the bond-rating agencies and with a number of the banking institutions, and that certainly was a common thread that was part of the discussions that I was involved in. They, too, had high praise for the staff and an acknowledgment that they always brought good information to the table and that they did not make any attempt to hide anything but to lay the cards on the table.

An Honourable Member: What did they say about the government?

Mr. Gilleshammer: I think that part and parcel of that, of course, was that the government had made many, many appropriate decisions, and I will get into that in a few minutes. I would not want my colleague from Arthur-Virden to think that I was not going to acknowledge some of the decision making that had taken place.

But the member for Brandon East (Mr. L. Evans) did acknowledge that we do have a buoyant economy, and I like to think that is part and parcel of decisions that have been made over the last decade in government to diversify our economy. The member mentioned that he was not sure how he felt about the Crow rate, but I think one of the side effects of that is that Manitobans have become more self-reliant on selling our product, and the diversification that has taken place in Manitoba helps us to withstand some of the ups and downs of the economy.

In fact, CIBC just reported yesterday that–pardon me, I think I have it here. Pardon me, it was the TD economists who were reporting on the state of the economy in Canada, and they indicate that Manitoba's economy will lead the western economies this year.

An Honourable Member: But below the Canadian average.

Mr. Gilleshammer: Well, my friend from Brandon East sees a dark cloud in every sunny sky. I listened very patiently to him, and I would hope that maybe he would listen to the other side.

It goes on to talk about Manitoba's economy is the least reliant on resource-based industries among the western provinces and is expected to boast the strongest growth in the West in 1999, which I know the member for Brandon East will see as a good thing.

An Honourable Member: I was Minister of Industry for eight years, and I used to make the same speeches about how nicely balanced it was.

Mr. Gilleshammer: Well, you seem to have forgotten that.

It says: even though Manitoba's agriculture and mining sectors are facing some obstacles, the provincial economy will record growth of close to 3 percent as the province benefits from a strong expansion in its diversified manufacturing sector. Although economic growth in Manitoba will slow slightly, the province will continue to boast the lowest unemployment rate in the country of just around 5 percent.

I think it goes on to discuss the economies of Saskatchewan, Alberta and British Columbia, but this is a very recent forecast from the Toronto Dominion Bank.

The member for Brandon East (Mr. L. Evans) talked about some of the things that have assisted the economy, and, certainly, the lower Canadian dollar is part and parcel of that. It means that we have been able to expand our exports. I think of the buses that are being sold into the United States, furniture, windows and doors and the garment industry. All of those industries have been creating a lot of jobs in Manitoba and have contributed to the fact that we do have a very, very low unemployment rate in Manitoba and, in fact, more people employed than ever before. The low interest rate has also been good for economic expansion, and, hopefully, that interest rate will continue to be low so that members of the business community are prepared to take some risks to expand and to hire more people.

The member talked about the free trade policy. I know the Liberal government in Ottawa changed its mind on it, and I am pleased to see the member for Brandon East now has a more open mind on that and is on the verge of supporting free trade, that this has been very good for Manitoba.

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But he did get into the doom and gloom, and I would like to sort of counteract some of the statistics that he was reading into the record. I mentioned CIBC, and I point out that CIBC economists are urging provincial governments to reduce their debt loads, and the bank observes that the ratio of debt to economic output estimated for the current fiscal year varies markedly from province to province. Alberta has the lowest, and Manitoba has the second lowest at 21.5 percent.

So I think this is something that he should recognize, and I would be pleased to provide him with a copy of this because there are other provinces with debt loads that are much higher. Saskatchewan, for instance, is 28.2 percent, and, of course, Ontario's debt load is 32.7 percent. Most of that can be attributed to that four years of dismal government under Bob Rae.

Mr. L. Evans: Excuse me. I wonder if I can interject there, just for clarification. I am sorry, I did not get it.

Mr. Chairperson: The honourable member for Brandon East, on a point of clarification.

Mr. L. Evans: Yes. What is the percentage of? Is it of total spending or what is it? What is that percentage?

Mr. Gilleshammer: Yes, it is.

Mr. L. Evans: Well, it was not clear, Mr. Chairman. I am not disagreeing; I am just noting these numbers, but I did not know what the percentages pertained to.

Mr. Gilleshammer: You are correct.

Mr. Chairperson: Order, please. I cannot quite go that fast.

Mr. Gilleshammer: Thank you, Mr. Chairman, for restoring order. The CIBC looks at the debt ratio of all the provincial governments and notes that Alberta and Manitoba have the lowest debt ratio to their expenditures.

Mr. L. Evans: Is this interest on the debt? It is interest on the debt, is it not?

Mr. Gilleshammer: Mr. Chairman, you are losing control here.

Mr. Chairperson: I would ask all honourable members that when they wish to speak, if they could raise their hand, I will do my very best to recognize them as soon as I can.

Mr. Gilleshammer: Thank you, Mr. Chairman. He certainly is distracting me, and I want this to be on the record here. This is the debt to GDP ratio, and we are second in the country. Again, I just want to counteract all of the doom and gloom that he put on the record a little while ago because I know many Manitobans will read this and get an incorrect picture of the province of Manitoba.

I just want to know that the Investment Dealers Association in their analysis, Nesbitt Burns in their budget analysis, CIBC Wood Gundy, the Conference Board of Canada, all had high praise for the budget and for the economy in Manitoba. As I indicated publicly not too long ago, we do value third-party endorsements and analysis, if they are independent. You know, most of the ones have indicated that the Manitoba economy is doing very well. I am being encouraged maybe to cut this a little shorter and get into the discussion, but the analysis that has been provided by these independent observers is very positive, and I would endeavour to get my staff to get copies of this for the member for Brandon East so that he can have a closer look at it.

He also talked about the payment on the debt and I think is a supporter now of paying down the debt a little bit every year. We have embarked on a 30-year program, and now we can indicate in 27 years that that debt will be repaid. I think it is a tribute again to our staff and government policies that we have the discipline to continue on this plan.

The member for Brandon East felt that we had made reductions in the budget. I would point out to him that our top priorities are health, education and services to families, and in this last budget–and again, I have not had the opportunity to thank him for supporting it and standing in his place and voting for it along with the member for Elmwood (Mr. Maloway)–we did increase spending in health care by 10 percent, a total of $194 million. I point out to him that, by far and away, the largest part of our budget is devoted to health care, 35.5 percent of our total spending. So there is a tremendous increase there, and the Minister of Health (Mr. Stefanson) has been making some announcements recently on those expenditures. Again, we thank members opposite for their support.

So with those few comments, I am prepared to move on.

Mr. Chairperson: Under the Manitoba practice, debate of Minister's Salary is traditionally the last item considered for the Estimates of a department. Accordingly, we shall defer consideration of this item and now proceed with consideration of the next line.

Before we do that, we invite the minister's staff to join us at the table, and we ask that the minister introduce his staff present.

Mr. Gilleshammer: Joining me at the table is Kal Ruberg, the Chief Information Officer; beside him, Erroll Kavanagh, Director of Administration and Finance; and, Eric Rosenhek, Comptroller. As well, we have at the side, Dorothy Albrecht, Executive Director, Strategic Planning, Office of Information Technology; Cleo Fletcher, Director of Finance, Office of Information Technology; and, Gerry Gaudreau, Director of Disbursements and Accounting.

Mr. Chairperson: We thank the minister. We will now proceed to line 7.1.(b)(1).

Mr. L. Evans: There have been many departments that we have dealt with where we have had a rather global and flexible approach, allowing us to go from one section to another without necessarily going in any specific order. This accommodates certain members of the opposition who have a particular interest in a particular aspect of the department. It simply facilitates it and, having done that, to simply pass the entire budget towards the end. This is meant to expedite and facilitate, not to obstruct.

Mr. Chairperson: Order, please. I understand what the member is saying. If all honourable members would let me get that far, we will deal with this thing very quickly.

Mr. Chairperson: We will now proceed to line 7.1. Administration and Finance (b) Executive Support (1) Salaries and Employee Benefits $387,800 on page 71 of the Main Estimates book.

Now, is it the will of the committee to have a general discussion, and at the end of that time we will pass all the lines? [agreed]

Mr. Gilleshammer: Perhaps, as we get into this in subsequent days, if you can let me know where you want to go with your discussions, we can have the appropriate staff on hand.

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Mr. Jim Maloway (Elmwood): I appreciate the minister's agreement on that. Actually, that is what we have been doing with Consumer and Corporate Affairs and Government Services for this year and the previous year. It also helps the minister in an effort to not have all the staff here all of the time. Right? We can kind of confine our area of questioning for an afternoon. We do not need everybody here.

I would like to begin, Mr. Chairman, by asking the minister for an outline of what is happening with the Office of Information Technology. He had, in his introductory statement, made comments to the effect that the entire project, that is the way I read his comments, had come in under budget. I was wondering if he could explain to me what the entire project entails, what dates are involved here, and what the figures are to justify the statement that the project is under budget.

Mr. Gilleshammer: Well, Mr. Chairman, the functions and activities that relate to the Office of Information Technology have been part of a number of departments and a number of budgets over the course of the last few years. When you set out the budget, you estimate what the costs are going to be, and these costs are coming in at a lesser amount than was put into previous budgets. We are very pleased about that.

Mr. Maloway: Mr. Chairman, well, can the minister then give me what the original budgeted projection was? You should pick a date, for example, June '97, and tell us what the projection was at that time for the total cost of the project.

Mr. Gilleshammer: I am informed that at last year's Estimates, the budget line that was indicated for the two years was $70 million and that we will be coming in under that amount.

Mr. Maloway: What does the $70 million involve?

Mr. Gilleshammer: The basic make-up of that would be the costs for hardware, software and consulting.

Mr. Maloway: Could the minister then give me the dates which correspond to the expenditure of this $70 million?

Mr. Gilleshammer: I am told that the project will be completed over three years and completed in probably September of the year 2000.

Mr. Maloway: Those figures are at odds with figures that I have from the Government Services department where just yesterday in Hansard, page 3567, Minister Pitura indicated that the original projections done in June of '97–so he is very specific here: "June of 1997 were estimated at $143.1 million, plus applicable taxes over 66 months."

Could the minister confirm that Minister Pitura's figures are correct?

Mr. Gilleshammer: In the discussions that we have been having, I have been talking about the Year 2000 project, and I suspect what the member was investigating in Government Services was the desktop project, so we may, in fact, be comparing apples and oranges here.

Mr. Maloway: That is what I am trying to get to the bottom of here. What I would like to know is what are the costs associated with the whole picture, the whole project, the complete transformation from the old computers to the new computers, the desktop project, and all of the little Y2K projects that have been going on in these various departments?

For example, Family Services was in a situation where they had contracted out some of their IT work, and now I find out yesterday that now they are coming back into the system. They are in here. The questions yesterday and today are simply this: I want to know what the original budgeted amounts were for the whole project, and when the minister answered the question about the $70 million and I asked him specifically what did it involve, he said hardware, software and consulting.

Now, when I get an answer like that, what I read into that is the consulting means the Y2K work, and if it does not, I would like to know. So that is what I am looking for. I am looking for something where you can say, as Minister Pitura said, in 1997, June, specifically June, $143.1 million plus taxes over 66 months. That was the budgeted amount for desktop, and that includes so much for hardware, so much for software, so much for consulting. If you want to build in a separate Y2K component, then go right ahead. In that component should include, here are the Y2K contracts that were issued for Y2K development and testing and here is the period of time they are running, here who is doing them, and what department they are working in.

That is what I am looking for. It is not just a figure from him of $143.1 million and telling me that that is the whole ball of wax; and then 24 hours later I come in here and you tell me it is $70 million and that is the whole ball of wax.

Mr. Gilleshammer: Well, we would certainly like to help the member get a better understanding of this. You know, when you are in the other department, and I appreciate that you were asking questions there about the desktop initiative and those are the answers you got, the expenditures that were made for desktop. Here we are talking about the Year 2000 project, and I am told that these are completely separate.

Mr. Maloway: It was never the intention yesterday to be talking about them in separate totals, but that is fine. I am happy for the clarification.

So let us deal with the individual projects. Let us deal with desktop first, if you want, then we will go to the Y2K and the software breakdowns.

I am looking for the information that would indicate how much money was originally budgeted and how much was actually spent on the desktop rollout, then on the other software expenses of the government and also Y2K projects. I do not care what kind of projects they are, whether they are just Y2K, rewriting lines of code or whether they are testing programs, whatever they are, just consider it required.

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Mr. Gilleshammer: Clearly, the desktop initiative is a Government Services responsibility. If you have questions on desktop, then we are going to have to recall the Government Services department to deal with those. The Department of Finance has been dealing with the Y2K issue, and if you want to pursue some questions along that line, we have the staff here to respond to it.

Mr. Maloway: Well, we are still sitting in Government Services, so I can run back and forth between the two. That is not a problem. Let us deal with Y2K, lots of time. Let us deal with Y2K. How much have you spent? Are you over budget? Are you under budget? How many contracts? Where are they working? Just tell me a little bit about this.

Mr. Gilleshammer: As I had indicated, over the three years, some $70 million had been budgeted. We are expecting to come in under budget in that area. The Y2K group has been working very diligently to meet the targets and to give assurances that the systems that we have in place in Manitoba are compliant. The reports that I receive from the staff have been very favourable, as well, other jurisdictions, including the federal government, have been working with us to use some of the expertise that has been assembled here in Manitoba to test their own knowledge and to see that their own systems are in place.

I know there has been a lot of media attention given to this issue worldwide. I think we should be pleased and proud that we have taken a very strong position on this and put resources in place to deal with Y2K. The so-called Y2K bug is potentially a problem for older computers, that is pre-1997, and programs from working. I know that in all areas of government and business, there is a major concern about this.

We have, I think, taken a very proactive stance and response to this and tried wherever possible to put in place flexible and sustainable long-term technology solutions, so that we will have a good news story and that the province will be well prepared for any of the Y2K problems that surface. We are being recognized by other third parties, the federal government; the DND, for instance, has rated Manitoba as a low risk. I think a few years ago, a lot of people did not take this very seriously, but starting in 1996 Manitoba did. We are committed to putting in place technology that will stand the test.

Within the Y2K office, we have some 65 projects that staff have been working on. We have been working with quite a number of vendors and are feeling very comfortable. I do not think anybody is going to come flat out and say that they are 100 percent sure of what is going to happen. I have read with interest comments made by Manitoba Hydro, for instance, that they have tested their systems, and they have been manually able to restart them, if that is the term. I think it is important that we give all the comfort we can to Manitobans, that we are taking it seriously, and that we are working on this. We want to put in place systems that are going to bode well for us not only as we approach the year 2000 but well into the next decade. I do not know whether the member wants to talk more about the financial outlay that we have made or whether he wants more assurances that we are doing everything in our power to see that the systems are in place, that they are going to work.

I know that I am encouraged by the fact that we are getting status reports that are quite positive, and that we have targets that we are going to meet and that we can meet. We will give that comfort to Manitobans, that as far as the government is concerned we have done our best and done all that we can.

Mr. Maloway: The minister referenced reports. Now the deputy ministers are evidently apprised of progress on Y2K every quarter. The last meeting, I believe, was the end of May with the deputies, and I would like to know what the results were of the meetings with the deputies, whether you can provide me with a copy of the report, the last quarterly report, as to indicate whether there were any problems in any of the other departments that you are working with.

Mr. Gilleshammer: I did not bring any reports with me, Mr. Chairman, but again, the member can be reassured that we feel the projects are coming along well, and that while there is still more testing and evaluation to do, we are pleased with the progress to date. All departments have worked hard at this, and the appropriate staff and resources have been put into this project to be sure that when the year 2000 arrives that our systems will in fact be working.

Mr. Maloway: Yesterday in Government Services, while Minister Pitura did not release me a copy of the report, he did suggest I go to Finance to obtain copies, but he did actually read the contents of the quarterly report so he did not give me a copy. He read for me what the problems were and what they were doing as far as Government Services were concerned. I am here now today looking for a copy of this report. If there is nothing to hide, then give us the report. I do not see what the problem can be. We are trying to work together on this project. If there is a problem, then the public and the members of the Legislature should know that there are problems. If there are no problems, then just simply give us a copy of your quarterly report from the deputies, and we can judge for ourselves whether there are any problems in this subject.

Mr. Gilleshammer: I have indicated to my honourable friend that I did not bring any reports with me that I can share with him, but I certainly would indicate that I have to rely on the expertise of the people who have been hired and seconded and put in place, and the people who are reviewing the evidence are satisfied. I do not intend to become an expert myself in this field but rely on the advice and information that is provided for me. Probably my honourable friend is more conversant than I am in this field, but we will give him the comfort that the people we have put in place to evaluate it are very comfortable with the results they are getting.

Mr. Maloway: If that is the case, then why would not the minister give us the copy of the last quarterly report? When we had the Minister of Government Services (Mr. Pitura) actually read or give a summary of the report that was sitting right in front of him yesterday during Estimates. It is just that for the formal release–and I could actually find you the actual Hansard, exactly what he said if you wish. I have it right here in front of me. He said just in terms of protocol that the Finance department would have to give the okay to release it, but it was certainly not a problem with him. So unless you are hiding something in some of the other departments that are a problem for you right now, clearly Government Services did not have a problem if you were to release their little portion of the report.

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Mr. Gilleshammer: Well, I have clearly indicated that I do not have any documentation here with me today to give to the honourable member. I will provide him with information that I have and give him whatever comfort he needs. This tactic of saying if you do not give me something, you must be afraid, that sounds like a schoolyard bully or something. I do not have anything here to give you. Again, my professional staff have assured me that we are making tremendous progress in putting in place systems and programs that will stand the test, and I would ask him to share the same comfort that I have in this respect. At another meeting I will see if there is some more information I can bring with me to share with my honourable friend.

Mr. Maloway: Mr. Chairman, I do not see why the government would want to hide reports, especially if they were positive.

I do want to ask the minister, though–he mentioned 65 projects. I would like to know whether all of these projects were tendered.

Mr. Gilleshammer: They went through a tendering process that relates to the Y2K initiative that was approved by the Treasury Board. I say you have to appreciate that there were some projects that needed to be addressed in a very short term so that we could not have, for instance, a tendering process that might spread over three or four months when we needed solutions quicker than that. So the answer is, yes, according to the processes that were set up by our Treasury Board.

Mr. Maloway: I appreciate that it was certainly time sensitive, and there is probably a shortage of people out there who are available on such short notice who have the capabilities that you are looking for. Having said that though, I assume the minister is telling me that these projects were all tendered. I would like to know though, I would like a list of the projects and the values associated with each, how much money each of the projects were that were tendered, and I would like a list of who got the projects. Is there one company that got more of these projects than another?

Mr. Gilleshammer: I did not bring that information with me today, but I will see what format some of that information is in and pass that information along to my honourable friend when we next meet.

Mr. Maloway: Well, the head of the department is right here. Of the 65 projects, was there any one company that got more of a share of these than another? Are we talking about individual contracts being given out to just individual people, or are we talking about contracts being given out to large companies?

Mr. Gilleshammer: I had indicated that there were some 65 projects that had been pursued by the Office of Information Technology. I am told that within those 65 projects, there would be over 70 different vendors who were involved in the work that was done.

Mr. Maloway: Mr. Chairman, the minister mentioned that the $70 million includes hardware, software and consulting. How much of that $70 million would be spent on hardware? Given that we have already spent $162 million on the desktop program, albeit that is hardware and software, what sort of hardware was required here, and how much was spent on it specific to the Y2K?

Mr. Gilleshammer: Within government, a very small percentage of that would be spent on hardware; but in the hospital sector, there was a much higher percentage that would be spent on technology.

Mr. Maloway: Mr. Chairman, now that brings up another interesting question. Yesterday, Minister Pitura in Government Services indicated that the $162 million that has been spent for the government is the amount for the desktop project, hardware and software, but that includes only the 17, I believe, departments of the government. It does not include the hospital authority and other Crown corporations and so on. Your Y2K totals evidently now include the WHA and the hospitals. I know that last year, I think, the head of WHA at a meeting that I was at where he was making a presentation had indicated $20 million, or some very high number, being the figure that the hospitals were going to have to spend converting themselves over to make themselves compliant. I am trying to get a handle on that. The Government Services figure does not include the hospitals, but you are including hospitals in your Y2K totals.

Mr. Gilleshammer: That is correct.

Mr. Maloway: Mr. Chairman, so this $70 million then includes the entire government, the hospital authorities. Is that it, or does it include some more Crown corporations and other organizations?

Mr. Gilleshammer: Yes, it includes government and the hospital authorities and the WCA, as well as, a component of contingency planning that involves other levels of government, the Crown corporations and others who would have an involvement and a concern over the Y2K issue. The contingency planning is a component that involves groups outside of government, but the Y2K work that was done is mostly within government and certainly with the RHAs and the WCA. My honourable friend can appreciate that there has been some interaction in terms of contingency planning with the Crowns, with other levels of government, with the RCMP, with DND, to offer sort of an overall picture of where we are.

Mr. Maloway: Mr. Chairman, and I assume you are looking beyond just the government here. We have the Securities Commission requiring the companies to file. As a matter of fact, just around June 16, we were in Consumer and Corporate Affairs Estimates and I believe the head of the Securities Commission at that time indicated that the quarterly filings required by the companies had just been, you know, with the 15th of June, it had just come in the day before. We have the PUB asking for Y2K reportings; we have the Stock Exchange in Toronto asking as a requirement of the companies that they provide reportings, so the question is: is your department in any way involved with these other bodies as far as their Y2K activities are concerned?

Mr. Gilleshammer: Yes.

Mr. Maloway: Yes, what? Are you requiring them to report to you on a quarterly basis, is it a monthly basis? Is it a verbal report? Is it a written report? Just what is the nature of the involvement?

Mr. Gilleshammer: I am told there is some substantial interaction going on and that they indicate their status on a quarterly basis.

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Mr. Maloway: Have there been meetings with the federal Y2K co-ordinator? He was in town here last year and seeking to meet with people in the government, government ministers or anybody who wanted to meet with him.

Mr. Gilleshammer: Yes.

Mr. Maloway: Yes, what? Are they monthly meetings? Are they over the phone? Are they video conference? Just what is the nature of these contacts with the federal Y2K people?

Mr. Gilleshammer: Yes, it is a combination of all of the things that my honourable friend has mentioned and a number of these meetings occur in Ottawa. [interjection] I am sorry. I can repeat that for my honourable friend, that all of the manners of interaction that the member mentioned are part and parcel of the relationship from the national level. There is frequent interaction and a lot of the meetings occur in Ottawa, as the federal government requires and is interested in knowing how all the jurisdictions are doing.

I am told by a number of my staff that Manitoba has been used as a very positive example of some of the activities that are going on here, and I know that staff have been doing a lot of travelling to other jurisdictions, as my honourable friend can appreciate it has become a very, very important issue as we move into the second half of 1999. I think there has been a good deal of co-operation and sharing of information, not only nationally but also internationally and that a number of the staff from the CIO's office have been recognized for their contribution and sharing of information that we have the benefit of here in Manitoba.

Mr. Maloway: Has the department had any contact with the municipalities to try to determine the extent of possible exposure as far as municipalities are concerned? There has been speculation in some parts of the United States that perhaps traffic lights may not work well, sewage plants, pumps and so on and the like may not work well and that there could be a major exposure in this area, especially in the area of the imbedded chips. I would like to know whether any meetings and activities are going on with the municipalities of Manitoba.

Mr. Gilleshammer: I am told that there have been meetings with the City of Winnipeg, also other councils who have an interest in this. My honourable friend can appreciate that there is a wide difference between the levels of services that are provided by municipalities. We have some municipalities with 400 and 500 citizens in them that do not have traffic lights to worry about or sewage lagoons. On the other hand, we do have major centres where they too have been taking this issue seriously and who have been part of ongoing discussions around this issue, and wherever possible they have been included in discussions with those who are involved with the Year 2000 project.

Maybe I will also take the opportunity to invite the assistant deputy minister for this Y2K project, Colin McMichael, to the front here and have him have the opportunity to make a contribution as well, as we are weathering this barrage of questions from my honourable friend.

Mr. Maloway: Before we go on to more questions, I would like to though confirm the costs then of the entire effort here. We have $70 million in Y2K efforts dealing with the government and the hospitals; we have $162 million in Government Services for the desktop initiative, and I must point out that the desktop initiative is $18.9 million over budget. So what we have in total is $232 million being put out so far in this effort. Those are the figures that I am working with right now.

Mr. Gilleshammer: Well, I am pleased that my honourable friend is able to attend so many committees. I know I was in here the other day when Consumer and Corporate Affairs was on, and I hear that he was in Government Services the other day, so if he wants to pursue those efforts in Government Services on the desktop initiative that is fine and good. We, in our department, are responsible for the Y2K, and that is the issue that we are dealing with and indicated that over I believe a period of three years, three budgets, there was upwards of $70 million designated for this project, and at the present time it appears that we are going to be able to live within that budget. If there are questions he wants to pursue on the desktop, I would urge him to do that with Minister Pitura, and we will try and concentrate here on the Y2K issue.

I know that, as a government, we have taken it very seriously, and our staff have, and I suspect the member for Elmwood also sees this as important work.

Mr. Maloway: Well, you know, over the last couple of years I find it quite interesting that when I get into Minister Pitura's department, the same people who are involved in this whole exercise say, well, do not ask me the questions, go see the Finance department. You go to the Finance department, they say: oh, no, go back to see Minister Pitura. I know what it is. It is just the peas and under the shell. The government sees an election coming up in the next couple of months, and it is concerned about its political hide at this point.

I do not think the minister would appreciate the fact that this government is $18.9 million over on the desktop project. The minister, as the Minister of Finance for the Province of Manitoba, is responsible for the direction of this government. So for him to say, well, I should go back to ask the Government Services minister about his overexpenditure here of $18.9 million when I have already asked him about it is ridiculous. We are in the Finance Estimates right now, and I am asking the minister to explain why it is that that project would be $18.9 million over budget.

Mr. Gilleshammer: Well, in the government Estimates that are brought forth as part of the budget, which my honourable friend was good enough to support this year, they are Estimates of Expenditure. It does trouble me when we have overexpenditures because we do have balanced budget legislation that we try to live within. I know my honourable friend has not been a supporter of balanced budgets. At least he was not when he made his speech on that in the House. I know his party historically has talked about the great advantages of running deficits because deficits stimulate the economy. So his positions are often confusing.

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Having said that, we do try to live within our balanced budget and the budget that is tabled at the beginning of the year. During the course of the year, sometimes there are expenditures that come forward that we approve that are over and above the budget, but fortunately, as the member for Brandon East (Mr. L. Evans) and I were talking about before, we have had a very buoyant economy where the government revenues have exceeded our estimates, and we have been able to accommodate those expenditures from within, because we know that members opposite do not like us to run too big a surplus or have a stabilization fund which is too large because they have opposed that as well.

Again, I stress that the Estimates are brought forward at the beginning of the year. We do encourage departments to stay within those budget lines. From time to time in every department there are overexpenditures that may be because of the flood of the century, or it may this year be because of the serious water conditions in the western portion of the province.

I recall when we first came to government, we had a serious forest fire situation in the North. We had to spend money we did not have at that time simply to do our best to put out those fires. In health care this last year, we had to provide, I think it was, close to $110 million to that department to accommodate expenditures in health care but still live within our balanced budget. We were able to do that.

If the member wants to get into other departments–I know he has made a valiant effort at this over the last number of weeks to make a contribution in as many places as he can, but, you know, we agreed at the beginning to not go line by line but to have a more wide-ranging discussion so that the member could ask questions on our budget.

I have to say that I am not prepared to get into dealing with questions, the answers which are contained within the budgets of other departments. I would encourage him to go there for those answers and just deal with the expenditures that we are responsible for here.

Mr. Maloway: Mr. Chairman, well, I can appreciate that the minister would like to pass the buck. I mean, $18.9 million may not be a lot for him, but I think the people of Manitoba would be very concerned if the government estimates $143.1 million in June of '97 and all of a sudden they find out they are $18.9 million over budget. I would expect the minister to come clean and recognize the fact and promise to do better in the future, but I guess that is not to be the case.

In terms of his allegations about balanced budget legislation, I want the minister to know at the outset that I favour surplus budgets and always have favoured them I can tell you over the years. I am not a big fan of financial mismanagement, and whether I find it in this government or any other government, I think it is important to point it out.

As a matter of fact, a number of years ago we looked at whistle-blower legislation, and perhaps, had we had that kind of legislation in effect many years ago, we might not have been in the same position that we find ourselves today. So maybe the government should take our advice and pass some whistle-blower legislation. I am trying to help the minister out here. Just because the department overspends $18.9 million, there is no reason to get really defensive and try to hide under the table and pass it back to say, oh, well, you know it is Frank's problem, right. He is the one who lost all the money and overspent. I would have expected the minister to take responsibility for it.

But let us get and deal with some of the micro questions in this department then, because the expertise is all here at the table today, and I want to get some of these questions done. I would like a list or some sort of indication as to how thorough you have been and what classifications of equipment you have been looking at. I know you have been looking at elevators and you have been looking at VCRs, and I think you are looking at the security system here at the Legislature.

I would like basically an update as to how many classifications of equipment you have looked at, what is your opinion of where we are in terms of the state of readiness. I do not imagine you have been down any mine shafts lately looking at the mining equipment and stuff like that, but if you have been tell me. It would be nice to know.

Mr. Gilleshammer: Well, I am very interested in my honourable friend's comments. He must have been either a total outcast in the 1980s compared to the rest of his colleagues or a shining light in that dismal crew. I do not want to have to read back to him his comments on the balanced budget legislation, which I recall were anything but positive, but it is probably the remake of today's NDP that they are changing.

We have looked at equipment used across government, and we have made every effort to deal with all of the issues that would have some relevance to the Y2K project. It started with an inventory of all of the functions and equipment within government, and there were efforts put forth to classify the level of importance and then to determine how to remedy any of the systems that had some shortcomings. I think we are well on our way to completing the work and will be able to say with some degree of confidence that the responsibilities we have for Y2K in government have been taken care of.

Mr. Maloway: I do not think the minister is providing us a whole lot of information here. Just basically, he is asking us to believe him that the system is not going to collapse next January 1, but I do not know that that gives us a lot of comfort. We want to know specifically what sort of equipment have you been looking at. You have looked at the card system here at the Legislature; you are replacing that, yes or no? I believe you are. I am assuming you have looked at the inventory, the government's elevator system, its electronic equipment. You have gone beyond, I believe–up until a year ago, there was not a big concern about embedded chips. All of a sudden the intelligencia of this business found out that the embedded chips were a big issue, and all of a sudden there was a rush there.

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Last year, when I was before this committee, I asked you what you were going to do with the old computers, and you said you were going to send them to the schools, and I thought that was a wonderful idea. Before you were going to send them to the schools, you were going to use them for the Pan Am Games, and I thought that was an even more wonderful idea. Then, what happens when I asked the question yesterday: what happened? They said, well, surprise, surprise, when we tried to give the equipment to the Pan Am Games, we found out that they had an internal requirement that the equipment be consistent throughout, so that idea did not go through. So then what did we do? Well, we found out that we were going to have equipment that was set aside for Family Services, and we did not need that until November, so we were going to use that for the Pan Am Games.

It sounds to me like this is kind of a hit-and-miss sort of approach here, that you guys have one plan on Monday, and then that does not work out so well, so you go to Plan B on Tuesday and then Plan C on Wednesday. I mean I am sure there are reasons why you are doing what you are doing, but at least try to explain it a little bit.

Mr. Gilleshammer: The member wanted some more specific answers, and I am, of course, pleased to provide him with that. With the elevators that are being used within government buildings, I am told that there are no issues. With security systems, which include the Legislative Building and our other locked institutions, there were some minor fixes, and these have been taken care of. With highway traffic signals, I am told there is no issue and with railway crossings, I am told that there was no issue. So these are some examples of some of the systems and some of the hardware that has been evaluated by folks working within this unit.

Mr. Maloway: Could the minister make a comment about the issue of the medical equipment?

Mr. Gilleshammer: Mr. Chairman, the member asked a very, I think, important question about medical equipment and medical devices, and certainly this is an area that would be on the minds of many Manitobans as we see the tremendous growth of technology in the medical field. A lot of that appears to be very high tech. I am told that there were in excess of 33,000 pieces of equipment that would be inventoried and with just over a thousand of those that there were some issues. Over half of them have been fixed. The ones with issues were about 3 percent of the total number of appliances that were inventoried. All are being tested and all will be remedied by the end of July.

Mr. Maloway: Mr. Chairman, one of the most interesting Y2K solutions that I encountered, and I may have read it in the last couple of months or it may have been on the radio, but the government of China, who are concerned about Y2K with regard to their airline industry, passed some regulations that, effective January 1, all of the CEOs and board of directors and so on of the airlines have to be in the air. So the Chinese government is pretty sure that those airplanes are going to be Y2K compliant on January 1. Does the minister have any plans for January 1 personally that would guarantee that this is going to–I asked one of the chairmen of one of the Crown corporations last year whether he would promise to resign if the system fell apart January 1. That is certainly putting yourself on the line, I know.

Mr. Gilleshammer: Well, you know, Christmas and New Year is a time we like to get together with family and friends. We try to do that every year. We have not made any plans as yet, but that family gathering may be in Manitoba, but it may be elsewhere as well. I would be pleased to share that with my honourable friend when we make those final arrangements.

Mr. Maloway: In the throne speech, I believe the government promised to reduce the size of the government or the size of the civil service by I believe 10 percent over the next five years. I am just from memory now. I believe those were the figures that were used. Just how does he plan to achieve that?

Mr. Gilleshammer: The throne speech did reference that government may become smaller in the future, and I believe 10 percent was the figure that was used. I am also told that over the next five years probably upwards of a quarter of the government staff will be eligible for retirement, so there are possibilities that government going into the future will become smaller. Part of the reason for that, I suppose, is that there has been a lot of technological change occurring over the last decade. If things can be done better and more efficiently, there are possibilities there, but I share the view of the member for Brandon East (Mr. L. Evans) that we have a very highly skilled, trained staff and that any downsizing of government has to be done, I think, with a lot of planning and a lot of consideration for the institutional knowledge that is encompassed within staff and be done in an appropriate way.

The member referenced some of his thoughts and experiences when he served in government in the 1980s. Governments all over the world, I think, have become smaller since those days. Some of it is due to technology, and maybe some of the changes are done because society sees more efficiency and competitiveness as being important in terms of the economy. But government is no longer viewed as the place that should be there to provide employment for people but rather that there is efficient and effective use of the people that are there.

Mr. Maloway: I thank the minister for that comment. I would like to ask him: what role does he see e-commerce playing in this reduction of the government?

Mr. Gilleshammer: Well, certainly government, I think, is changing with the technology that is available, and it is incumbent on government to make, I think, an investment in technology that will provide better services to our citizens and provide better programs that departments were created to perform.

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Mr. Maloway: The department's Office of Information Technology, I suspect, has got studies on e-commerce possibilities. I would like to know just what studies you have at this point.

Mr. Gilleshammer: I am told that this unit of our government has looked at the Gartner Group studies, work done by, I am told, the Giga Group, as well as the Hackett Benchmarking. I suppose if the member wants some further information on that, we could perhaps send that along at a subsequent date.

Mr. Maloway: I have to quit referencing one of my ex-ministers of Consumer and Corporate Affairs who I thought did a very good job while he was there, by the way. I give him lots of praise, but the one area where he fell down was certainly in providing information.

Last year in Estimates, in June, he promised a pile of information, and I got it January 6, six months later. So I am a little leery about promises from this government about future delivery of information, because there is an election coming, and I would expect it would be very easy for the minister to tell me he is going to provide information, then I will get it year 2000 or later.

Having said that, I would ask the minister if it is possible that I could get copies of these three studies that he referenced.

Mr. Gilleshammer: I hate to see my honourable friend bad-mouthing somebody that is not here. If he has had an unfortunate experience in the past, that is too bad. But I will endeavour to see what information we have that we can provide for the member.

Mr. Maloway: Mr. Chairman, it is good to see that the government is studying the area, but I would like to know specifically what ideas, what areas is the government looking at in terms of e-commerce? Feel free to take some time and kind of explain this a little more fully than you have with some of the other answers.

Mr. Gilleshammer: Well, I always want to help my honourable friend understand things better. I balance that with having to do his research for him, but I have indicated that, in terms of technology and future directions, it is difficult to be too explicit at this time exactly where we are going to be five and 10 years down the road because technology is changing very rapidly. I think it is incumbent upon government to keep current. I think we have shown, with the investments we have made across government, that we are prepared to do that.

Mr. Maloway: I would like to know what stage we are at right now. I would expect that the government, if it is not doing so right now, will soon be doing a form of e-commerce as between one department and another. For example, Government Services may provide products to certain parts of the government. The ordering process comes through Government Services. I would expect that procedure probably right now is done on an e-commerce basis. If it is not, then let me know that it is not.

Mr. Gilleshammer: I am told that the Y2K tendering, for instance, was done on the Web, and that Natural Resources is currently working on a proposal that they will be further developing in the near future. So there is some work being done in that area that I think we all need a little time to put in place and to evaluate. But if you are saying that government is going to, more and more, use the technology that is out there that is used by business and industry, I think you are right. Are we going to be a leader? That is difficult to say.

I think, at the present time, we, in this particular unit, have been concerned with any of the remediation that has to be done to systems and technology within the Y2K project. After we get past this period of time, I think government will have the opportunity to explore where it wants to go next in the whole area of technology.

Mr. Maloway: Mr. Chairman, so is the minister saying that outside of those two examples that he has referenced, there is no e-commerce currently going on in the government as between one department and another?

Mr. Gilleshammer: Mr. Chairman, those were two examples that came to mind. I think we are sort of at the front end of some developments and discussions that are going on across government, which maybe it is a little too early to talk about in terms of their status and their potential.

Mr. Maloway: Surely the minister can tell me what the general area or areas are that we are looking at. I mean specifically, what is the department looking at doing in the e-commerce area as between one department and another? He has referenced some areas that they are looking at, but he has not given us the list of what they are.

Mr. Gilleshammer: Well, there is a limited amount of ability between departments, I think, to develop systems on an e-commerce basis, but I think the potential, for instance, within our SOAs is there. Again, if you have an opportunity at the committee stage to have a discussion with some of them, you can pursue some information from the SOAs, but these were the two that came to mind. Again, there is a limited opportunity, I think, for departments to interact on an e-commerce basis.

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Mr. Maloway: Well, you know, Finance deals with the special operating agency's financing authority, so which SOAs is he referring to here that are exploring e-commerce opportunities?

Mr. Gilleshammer: I think some of the SOAs report to other departments, but the potential is there for them when they interact, not only within government, but also within the public domain. Again, there is a very limited ability between departments to use that technology.

Mr. Maloway: Well, then let us take that one step further then. Let us deal with the public. What sort of activity and which SOAs could transact business on an e-commerce basis with the public? Which ones is he looking at right now? What exactly will they be selling?

Mr. Gilleshammer: Probably the best example that I could give you, and I tell you that a lot of this is in the formative stage and has not been fully developed yet, but there is an initiative within Natural Resources dealing with providing maps to the general public. Again, it is in the very early stages of development. So if the member is really saying are we going to be in a position to take advantage of technology going into the future, I would say, yes. Are there a lot of hard examples today of this happening? There are not, but I think staff within government, and particularly those who work with technology, it is going to be incumbent upon them to be as conversant as possible with the opportunities that may exist there.

Mr. Maloway: Can the minister then tell us what company is involved with the Natural Resources' possibility of selling maps over the net?

Mr. Gilleshammer: I do not have that information at my fingertips, but I can get it for him. There are opportunities there to provide some information for Manitobans, and I will get that information for him.

Mr. Maloway: I would expect that after you have spent $162 million on a desktop computer system, that would be a logical step. I do not think I am leading you anywhere. I think you are already there and you are moving ahead; you are just not telling me how far you are. My guess is that there are a lot of proposals on the table. My guess is there are a lot of long-range plans, some of which may work out, some of which may not work out. [interjection] The member for the Gladstone constituency has pointed out there is an election coming and this government does not want to come up with too many new ideas. They want to save them for election time. They would not want the opposition stealing any good ideas that they might have, and I would say after 11 years, they have pretty well run out of ideas. At this point they are looking pretty old and tired these days. I think they are looking for a rest.

Anyway, I do want to get to the bottom of this. I want to know just exactly where are we headed with e-commerce. You know, the minister prides himself on saying that this province has been at the forefront of Y2K. I sort of recognize that. I am not 100 percent sure of that, but I think if you are not at the forefront, you are very close to being at the forefront.

It is just logical that if you are spending this $162 million on computers, it is only just a step from there to be looking at e-commerce. People are looking at Amazon.com and all these other companies that have become highfliers. I am sure the minister and his government are looking to move there as well.

They have a throne speech. They announced a 10 percent reduction in the government. It is not a huge surprise that. You know, how are you going to reduce the civil service by 10 percent over five years if you are not replacing some of those functions with e-commerce? For example, the minister referenced SOAs, but if you have, in the Department of Consumer and Corporate Affairs, people renewing their licence–you name the type of licence–I am sure it is technologically possible for somebody to go on the Net and give their credit card, and they do not have to drive downtown to Land Titles registry or whatever and get their registration done. Then you look federally, and you see that Minister Manley has brought in legislation on the electronic signature, and there you go. Once you have the potential for giving electronic signatures, then you can give your credit card, and you can do a lot of business just directly on the Net.

I know these people are over there. These are high-priced staff you have got here. They are working on these ideas. I just want you to tell me what they are working on.

The Acting Chairperson (Mr. Faurschou): Before I recognize the honourable minister, I just want to remind members of the committee that relevancy of the commentary to which we are discussing at this point in time. Remarks should be pertinent to the questions that are relevant to the committee.

Mr. Gilleshammer: Thank you, Mr. Chairman, for bringing him to order because I did think he was wandering all over the place.

The member is really drawing a long bow and drawing conclusions that he should not. We are here at the request of the opposition to talk about the Y2K unit within government. Yes, I do believe I have spoken well about their efforts and indicated that I am comfortable with the direction we have gone. I really think that is where we should be concentrating. If the member is saying government should not be technologically up to date, I think he is wrong. We have to use the technology that is out there. He is suggesting that government is going to compete with private business. I do not believe that that is the case.

Government in my mind has a very limited role in terms of its activities. Certainly as a government we believe in smaller government, more efficient government. My honourable friend represents a party that believes that government should be doing all things for all people. All I have said is that, as we move forward, we should explore whatever abilities we have to use technology to do what government does for the people of Manitoba. His great leap that government is going to take on new responsibilities and new directions is simply wrong.

Mr. Maloway: I mean, if the minister simply reads the description of his Office of Information Technology and what they are supposed to be doing, it is not a great leap to conclude that they are involved. They make a lot of vague statements about what it is they do over there. You do not really have to read between the lines. They say they work with business owners to maximize the business value of IT and all sorts of other statements as to what they are doing. It is no secret that probably governments all over the place are looking at various forms of e-commerce, and my guess is that they will work within the various departments initially.

As I indicated earlier, they will look at, say, Government Services, and if Government Services is providing products to other departments, it is only logical that with the $162-million, $18.9-million-over-budget, brand-new computer system, that one will want, the government will want to get maximum usage out of that equipment. So it is logical that department A will be ordering its supplies from department B over the Internet. What is so complicated about that? That is probably something you would be doing already. You can argue that you want to wait until the year 2000 to start doing that. I can understand that. You have got other things to chase down right now on the Y2K issue. I can understand that. Surely that is what you will be doing. A step from that will be providing services to the public as a form of e-commerce.

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As soon as the legislation is in place allowing for the electronic signature, the legality of the electronic signature, legislation may be passed right now, as far as I know. It know it was introduced this spring in Ottawa. Once that happens and the critical mass is in place, then what you are going to see is governments and businesses right across the country, as they have been moving over the last couple of years to an e-commerce environment, are going to be overcoming the problems associated with it and moving ahead.

The government invested $1.2 million a couple of years ago in an ill-fated Internet shopping mall. It turned out to be a disaster for other reasons, not because the idea was not good. The ManGlobe project, the minister will recall how that disaster unfolded, was a brain-child of his government and some others in the business.

But the fact of the matter is that there was an independent, private company right here in Winnipeg that was operating a private Internet mall without a cent of government money. It is just that the one they got mixed up in was run by political friends and acquaintances and cost the public a bunch of money. But right in that exercise, the minister will know that while that project was a failure, there were other successful projects going on at that time, and he knows that that is basically where things are moving at this point.

So clearly with all this great fanfare of this Office of Information Technology, surely there would be some information, some more concrete information that the minister can provide us as to what this government is planning to do in the area of e-commerce. There have got to be more concrete examples than what he is telling us here with a little project in Natural Resources, especially since the government is touting all its new websites and the fact that it is moving ahead with technology. So there has got to be more to this.

Would the minister give us a better explanation of how he sees e-commerce developing over the next year as between the government and the public?

Mr. Gilleshammer: The member is saying: can you look into the future and indicate what technology it is going to be doing in five or ten years from now? I find that very difficult to do. The government does involve itself with the public and always has.

I know last night I was at a meeting in Brandon where the Department of Agriculture was there to talk about agricultural conditions in the Westman area. Historically, farmers, producers have relied on government for information and technology. There have been staff right across the province who have assisted producers in helping them to examine their herd, make decisions on whether they should expand or not, giving them advice on what to plant, what chemicals to use. I think that is going to continue, although certainly chemical companies, fertilizer companies are developing their own expertise and giving that same advice. Now, there is that competition which has existed for the last two decades whether producers out there access that information from one source or another, but government has historically been there for those people and provided the best historical advice that they possibly can. So, you know, the member is asking: what does the future hold? It is difficult to say in terms of technology. In fact, there are old stories about producers waiting for some government rep to tell them what to plant. Then they would do the opposite and they were right more often. The reliance on government has been there by members of the public for a long time.

You have a Department of Natural Resources which has been in the business of selling camping spots and hunting licences and that for a long time. If the member is suggesting that should be done by other sources, I am not sure where he is going with this. Other departments like Highways have been responsible for selling registrations and driver's licences and that sort of things. If technology is going to change that for the better, then so be it. I am not sure where the member is coming from, but maybe he wants to remain in the past where technology is not used and you can have scores of people doing that work that technology can do much faster. He might be like his colleague from Transcona (Mr. Reid) and long for the steam engine to come back because it provided so many jobs on the railway, but that is probably not where technology is going. It is incumbent on government, I think, to look at opportunities to use technology to provide the traditional services that they had for the public.

Mr. Maloway: Since desktop computers, small computers, have come in since about '82, '83, around there, people have been talking about paperless offices, right? What a joke. We have more paper than we ever had before. We have computers coming out our ears and we have more paper. Page 50 of the Finance department annual report talks about reduced paperwork. By now, with all the equipment we are buying and so on, we really should be.

Some of the companies, I think insurance companies, claim to be paper-free at this point. I think Dell Computer, with their new on-line buying system for computers, claims to be a virtual company or they claim to be paper-free. The entire company, right, is like that. I do not know whether the minister has read up on some of the books on this area, but that is certainly what is happening in business. Some companies are basically turning themselves into virtual companies, are getting rid of the bricks and the mortar element of the buildings involved in the company, and they basically just exist on the Internet. They are becoming, well, supposedly they are paper-free.

I would like to ask the minister just what this government is doing to cut the carnage of killing the trees and so on and getting to a paperless government.

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Mr. Gilleshammer: Well, that is certainly a change that is happening. When I go to the bank, I still like to talk to a real person, you know, just visit with them.

An Honourable Member: That is the steam-engine approach.

Mr. Gilleshammer: No, no. I do recognize that things are changing there and that you can access your bank account from foreign lands and that sort of thing. But we have a saying in government that it takes time, and it is going to take time for us to probably use less paper. But I expect that when we are in our next mandate and the one following that, probably we will use less and less paper as time goes on, but, you know, old habits die hard and we still produce a lot of paper.

Of course, the technology of the machines we have now, they just keep on producing it, but in our lifetime, I think you will see a reduction in paper. It is not something that I think governments can mandate.

Mr. Maloway: But the fact of the matter is the government is using more paper. Companies are using more paper than before, so what steps is this IT department taking to reduce the amount of paper? Let me give you an idea here. I mean, it is an old idea. The companies have been looking at storing documents, you know, scanning in your documents and storing them on the hard drive of the computers. What have you been doing in that area?

You bought a bunch of equipment last year and a bunch of servers. Presumably, you are looking into this idea of not producing so many documents and being able to transfer the documents electronically between one desk and another and not having to print out hard copies every time you turn around.

So, presumably, you can point to some significant reduction in the use of paper, say, 10 percent, 20 percent, and if you cannot, then you should have some kind of plans to reduce the amount of paper you buy and use.

Mr. Gilleshammer: I wonder if my honourable friend could table his research on the use of paper. He has made the comment that we are using more and more paper. I am not sure he is right, but I know that he has a huge research arm within caucus there and that he would not come here saying those things if it was not true. I wondered if there is more than one study or it is something he could share with us and I could maybe share with my colleagues.

Mr. Maloway: Well, first of all, I am supposed to be asking the questions, and I am asking the minister. If he does not have any plans, then he is in worse shape than I thought. Clearly, this department, this Office of Information Technology, must have some kind of an idea.

Look, the government has overspent by $18.9 million bringing in these desktop computers, these 7,000-plus computers. Now, clearly, there has to be some savings. They had to do it because of Y2K concerns. I understand that. It is nice to have nice, new computers, but, you know, these computers have to do something, right?

Now, he says they are not doing Internet commerce, right, so they are not doing that. So the question is what are they doing? Are they at least saving us some paper?

Mr. Gilleshammer: Had I known the member was going to go in this direction, I could have brought–

An Honourable Member: We can do it tomorrow.

Mr. Gilleshammer: We can do it tomorrow, okay. We have the ManDocs initiative, which is an initiative to have documents available by computer, and I would be pleased to bring some more information for the member at our next sitting.

Mr. Maloway: Does the minister have any ideas as to how much of a reduction in paper this ManDocs project will accomplish?

Mr. Gilleshammer: The thing that we are going to measure as we get into this initiative is the savings on the process side, and that is the area that we are primarily concerned with.

Mr. Maloway: Let us deal with voice recognition. Last year the minister will recall that I believe the judges of Manitoba, or maybe it was Saskatchewan–I read it in Lawyers Weekly anyway, and I thought it was Manitoba judges, but it may have been Saskatchewan judges and certainly Dave Primmer was there when I asked the question. I asked whether a similar investigation or program might be developed in Manitoba using the various voice recognition programs that were currently on the market, and of course, it is one year later and there are even better programs out.

VIA Voice is one, and Dragon Systems has had a system out that is pretty good for a couple of years now. They have several versions. I know when I was in Las Vegas last November at the Comdex show, there were a couple more programs out that were giving them a run for their money, so this is certainly a developing area. Certainly you think of the judges, that is a fairly good use of voice recognition because they do a lot of letters and stuff like that. There would certainly be a use for that kind of system there, but certainly in government there have to be a lot of applications for voice recognition applications. I would like to know just what has happened in the 12 months since we were last talking about that subject.

Mr. Gilleshammer: I know it is a subject that I have not had the pleasure of discussing with the honourable member in the past, but I am informed that this is reasonably new technology which is being tried in some jurisdictions. The judgment made by staff in Manitoba at this point is that it is not reliable enough in terms of security to be used at this particular time.

Mr. Maloway: Is the minister saying at this point that including the judges that there are no voice recognition packages in the possession of the Manitoba government?

Mr. Gilleshammer: Our people that work with this technology are reviewing it and working with it, but, as I indicated, the judgment at this time is that it is not reliable enough to be widely used.

Mr. Maloway: That is what you said last year too, so I do not know when–

Mr. Gilleshammer: I indicated before I started my answer that you and I have never had this discussion before, and I would ask the member to withdraw that.

Mr. Maloway: We dealt with this matter last year with the government in Government Services. I presume that the departments do communicate, although maybe I presume too much here. I know that all roads go back to this department here, the Information Technology unit. You are pretending you do not know what is going on, but that is not true. Everyone else turns you in. Every department I go to, they say: oh, we know nothing; you have to go to Finance because they are the organ grinder. They tell us what to do and when to do it. We do not do anything without their say-so. Then I come here and you pretend you do not know what is going on. It is not us, you have got to go see Consumer and Corporate Affairs, they are the Mr. Big in the outfit now. Give me a break. I know that this department runs the show and you guys have the answers. I can go to all the other 17 departments I want and they are going to tell me the same thing: go back to Finance.

Mr. Chairperson: Order, please. I think I have to make a ruling on this. The minister does not have a point of order. It is a dispute over the facts. But I do have to say that I do recollect that the minister did in fact say that–anyway, it is not a point of order.

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Mr. Chairperson: I would offer it now to the member for Elmwood.

Mr. Maloway: I would like the minister to give us an update as to what is happening. Has he had any requests from departments interested in the voice recognition software? Just exactly what is going on with that area right now? It is not sufficient to just say, well, we will take a look at it, because they will say that every year.

Mr. Gilleshammer: As I have indicated, there was some interest in the voice recognition technology. It has been examined and evaluated by the Office of Information Technology. The judgment at this time has been that it is not reliable enough to pursue. Not to say that in the future the technology will be developed and changed to the extent that it could be used. Our judgment at this time is it is not appropriate and we are not pursuing it.

Mr. Maloway: I wanted to deal with the whole area of the Y2K compliance warranties that are provided. For example, a couple of years ago I talked to Gateway Computer, about June of two years ago now, and they assured me over the phone that they had spent millions retooling their plant and their products were Y2K compliant. When I asked them for a guarantee, they went out of their way to avoid the guarantee. They would not provide it, right?

At the end of the day I think I had to write it myself on the invoice and fax it off to them and have them initial it or do something like that, but they just would not put anything in writing. I recognize that that is a problem out there, that people do not want to warranty that. So I would like to know what warranties, what guarantees do you have in these 65 Y2K contracts that you have out right now? What guarantees? If the thing does not work, then what financial guarantees have you exacted out of the people providing the services?

Mr. Gilleshammer: My honourable friend can appreciate this is an area that I expect there is some uncertainty. We do have a warranty on equipment to March of the year 2000, and we do have a guarantee of compliance to our definition. It is the same as the federal government and other provinces have. I gather that the guarantees and warranties that we are able to acquire are industry norms that other levels of government and other governments have also been able to acquire, but I do say it is an area of some degree of uncertainty where everybody wants to say: can you give me 100 percent guarantee that this is right or that this is not going to fail?

I do not think it is there, but we have engaged, I think, the best people to overview our systems. I am certainly convinced that we are as well positioned as any government in Canada to deal with the issues.

Mr. Maloway: I wonder if the minister could read me the wording of his warranty? He says it is a standard warranty. It is in his 65 contracts. Could you read me a copy? I assume you have a copy there.

Mr. Gilleshammer: We do not have anything with us today, but I will endeavour to get that information for my honourable friend.

Mr. Maloway: So the minister is getting a copy of the wording of the warranty. I would appreciate that, because there is some wording out there I imagine that are better than others. What I would like also is to know what penalties you built into these 65 contracts. First of all, was it a standard contract did you have for the 65, or did you have different types of contracts and different sorts of penalties?

Mr. Gilleshammer: I am told that the information my honourable friend is looking for is on the web at www.y2k.gov.mb.ca/. You would be able to access all of that information the next time you sit down and check the website.

Mr. Maloway: That wording that one could obtain at that website, is he saying that is wording that is in all 65 contracts?

Mr. Gilleshammer: Yes.

Mr. Maloway: I would like to know what the penalties are in each of these contracts?

Mr. Gilleshammer: I am told that the warranty is in place till March 31, the year 2000, to fix or replace at their cost.

Mr. Maloway: At least there was a penalty clause put in each? A consistent penalty clause, or did it vary with the contract?

Mr. Gilleshammer: I am told that it is a standard contract.

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Mr. Maloway: Without seeing the warranty I cannot really make a judgment, but I have a copy of a warranty here that was indicated in an article, and the warranty was criticized by the author. Essentially, the problem with the standard–I guess this was a standard warranty, but they were suggesting that the warranty only covered or basically indicated that that one appliance was Y2K compatible, but that it would not have any warranty in effect for how it interacted with other pieces of machinery. That is what I am wondering about, is whether that warranty they included in the contract deals with how the device interacts with others along the chain.

Mr. Gilleshammer: I am told we have both. That some have a warranty that is for that piece of equipment, and others are of a nature that they are systemwide.

Mr. Maloway: I guess I could judge it better I suppose if I saw it. I would like to ask the minister whether he has any concerns about the time and date instabilities bug or the TD bug.

Mr. Gilleshammer: Mr. Chairman, I know that my honourable friend would like the very technical answer. With the agreement of the committee, I would let Mr. Ruberg answer that.

Mr. Chairperson: Is it the will of the committee to have Mr. Ruberg answer this particular question?

Mr. Kalev Ruberg (Chief Information Officer, Office of Information Technology, Department of Finance): The member refers to the time dilution or the Crouch-Echlin effect and that was discovered by Crouch and then verified by Echlin, and is due to a latency in the 146818 chip I believe, and that is real time clock RTCC mouse chip. That latency causes an algorithm after the year 2000, to actually at random literally provide a wrong date to the machine. Most BIOSes have corrected this effect by putting in a buffer cache before the real time clock. At that point, then, you do not really care which algorithm you use, whether you are in the 1900 algorithm or the 2000 algorithm. Because of this particular effect, we have reviewed all the BIOSes in our desktop arrangement with IBM, and they are under review. The initial indication is that there are no such errors.

Mr. Maloway: That is the initial indication, that there are no such errors. If you find after the year 2000 that there are such errors, then are there any penalties in the contracts or anything in the contracts that would allow you to get compensation for any damages?

I am thinking here more of the banking business. It would be a much more severe problem with the TD bug, right? So I do not know what applications you have in the government that would be sensitive to this. I imagine payroll would be a pretty big deal if this were to have an effect, but you would be more familiar with the applications or how serious a matter it could be with the government as to how big a claim you could possibly have. But the question is: do you have any provisions in the contract for penalties should this effect happen?

Mr. Gilleshammer: I am told that we have a guarantee of compliance to our definition which is similar to what other federal government and other provincial governments have.

Mr. Maloway: Mr. Chairman, but we are talking about not the compliance on the Y2K issues. I am talking about the TD bug that would take effect after. The problems will surface after the year 2000, yes?

Mr. Gilleshammer: I will let Mr. Ruberg answer again on that.

Mr. Ruberg: On the Crouch-Echlin effect, we are actually testing the BIOSes in our limited number of BIOSes in the desktop so that we can actually put forward the date on those BIOSes and see now what the effect is or whether we have that effect or not. Once we determine that–and that is a very quick determination, that is within the next month time frame–we can take the appropriate step to rectify it.

Mr. Maloway: Mr. Chairman, at what point or when did you start working on this problem of the TD?

Mr. Ruberg: The TD effect was known actually a couple of months ago. We have not really looked at all of that particular issue. We have different issues that we approach on the desktop at different times. On Crouch-Echlin, this is sort of a recent phenomenon, not a phenomenon but a recent priority.

Mr. Maloway: So, Mr. Chairman, then the question is that when you signed those contracts, those 65 contracts for Y2K work, when you signed the original desktop contract, this was long before you heard about the TD bug. So how would that be covered, any losses directly attributable to the TD bug? How would they be covered in terms of a penalty by the suppliers of this equipment?

Mr. Ruberg: I guess I am not a lawyer, but the issue here is we are constantly discovering new issues that come up in Y2K. Some are technical in nature and some are less technical in nature. This one here happens to be rather very technical. The issue of complying or compliancy to Y2K issues is a general one, and it does cover all aspects.

Mr. Maloway: So what you are saying is that the Crouch-Echlin effect then falls under the legal definition of Y2K issues under the contract, so any penalties coming out of the contract then would be covered, whether it was Crouch-Echlin or whether it was Y2K itself.

Mr. Ruberg: I believe so. Again, we would have to seek opinion at that time.

Mr. Maloway: Mr. Chairman, are there any other issues other than–and I am thinking back now to a couple of years ago when Y2K was thought to be only peculiar to computers, and then all of a sudden, a couple of years ago, we discovered embedded chips were a huge problem. Now it is Crouch-Echlin. How many more Crouch-Echlins do we have out there that are sort of hidden under the surface, because you mentioned other issues so presumably you know of some others?

Mr. Gilleshammer: I think it is difficult to predict what other issues will come forward to do with technology, but our commitment would be to stay abreast of them and to deal with them as we become knowledgeable in them.

Mr. Maloway: Well, it is that very reference that Mr. Ruberg made that caused me to ask the question. He said "other issues." I am just aware of the Y2K issues and the Crouch-Echlin effect, but he is the one who mentioned "other issues." So I am just asking right now just what are these other issues that I am not aware of.

Mr. Gilleshammer: I am informed at this time there are no other issues but there is the possibility, as the member has indicated himself, that there are other things that may pop up from time to time, and we will have to deal with them, as will other jurisdictions.

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Mr. Maloway: GISMO was incorporated a couple of years ago, and the chief officer there was Julian Benson. We all know that Julian Benson is no longer working for the government. So I am just wondering what the state of affairs is over at GISMO now and who the new chief executive officer is. I believe also that GISMO was to be a temporary structure and that perhaps GISMO is no more, I am not sure. I just wanted to get the update as to what has happened with GISMO since Julian Benson has resigned. Who is the replacement, and what is he or she doing?

Mr. Gilleshammer: My honourable friend is referring to the Government Information Systems Management Organization, and this was formed in 1997. At the present time, staff from the Department of Finance are managing the affairs. I can name the staff, if you like: Pat Gannon, who is the deputy minister of Finance; Eric Rosenhek, who is here today; Don Delisle; and Gerry Gaudreau, who is here today. They are all employees of the Department of Finance.

This was a funding vehicle for the government's technology systems, and it allowed us to transition into new accounting policies for capital assets. So the staff that I have referenced are currently the ones who are most involved with this initiative.

Mr. Maloway: Is it determined that GISMO will continue in its current form, or is there a plan to change the nature of it or change the structure itself?

Mr. Gilleshammer: It will be wound down.

Mr. Maloway: When will it be wound down?

Mr. Gilleshammer: This year.

Mr. Maloway: Last year I asked some questions about the government's policy, if it has one and I doubt that it does, or had, on the use of the Internet by government employees. I asked several times last year. Well, I say clearly, it did not have a policy. It did not, because it really did not know what was going on. The bottom line is that each department had its own group of computers it had bought from its supplier, a lot of local suppliers, and to be fair, I mean the government did not. I think it took some cases in another province, in B.C. or another province, where they discovered that people were using the Internet improperly while at work and the governments of that jurisdiction formulated an Internet policy that basically said you cannot use the Internet except for this circumstance and that circumstance. I do not know whether it is called Net Nanny or whatever it is. They may have installed some of these Net Nannys in there to make certain that people could not get into the sites that they should not be in on government time. I got a lot of silence from this government on that whole issue, and I think perhaps just an admission that they were looking at working out some kind of a new policy on the Internet. So I would like to know just what has happened over the last year in this use of the Internet by government employees. What is the current policy?

Mr. Gilleshammer: There is an Internet policy and it is available at GWWIPC.gov.mb.ca.

Mr. Maloway: Mr. Chairman, could the minister briefly outline the policy then for the members of the committee? The member for Gladstone (Mr. Rocan), it is news to him, too, and he has been here as long as I have been. He is busily writing down the Internet site, and I am doing the same. The minister could save us both a lot of time and effort here by just simply explaining what this policy is all about.

Mr. Gilleshammer: Mr. Chairman, we do not have a copy of it here, but I could bring it the next time we meet. When I was informed at 2:30 today that you wanted to have the Department of Finance in Estimates, I assumed that we would be dealing with the Department of Finance on a line-by-line basis and that we would have the traditional scrutiny of the dean of the NDP party going through the budget in a clear-cut, patient, methodical way, but instead the member for Elmwood came bursting into the room and wanted to talk solely about technology. So I would commit to bringing a copy of that policy with me when we next meet and share it with the member for Elmwood and anyone else who is interested.

Mr. Maloway: The fact that the minister is not really even aware of the policy or what is in it would indicate that we are certainly lacking in having an active policy. I mean, what do you expect from the government employees if they do not know what the policy is? The minister does not know what the policy is. I assume that there are some basic tenets that the minister can tell us. My guess is, No. 1, that employees are not supposed to be going onto the Internet into pornography sites. They are not supposed to be going into Internet gambling sites. They are not supposed to be playing video games on the Internet. I mean, there are three quick ones for you. We can probably, if we all sat around here together over five minutes, come up with a whole lot more things that probably would not be allowed. So I just want an assurance from the minister that the government has recognized there was a problem that they let slide for 10 years, they did nothing to solve it, and that they have taken the bull by the horns here and got control of the situation.

Mr. Gilleshammer: Mr. Chairman, I did commit to the member I would get him a copy of the policy. It is a very succinct one that we think is appropriate.

I am surprised that he has such a negative view of the civil service that he would reference activities that are totally inappropriate. This policy is being put in place across government. It is available to staff of government. It has been brought to their attention by the managers within government, and I can assure you that I have a higher regard for government employees than the member for Elmwood who would suggest such inappropriate activity would be condoned in the workplace or practised in the workplace.

I have committed to bringing it to him, but if he wants to talk about appropriate use of Internet policy, we can certainly do that.

Mr. Maloway: I simply brought it up as an issue last year because there had been a problem in another jurisdiction, and I asked at that time whether the minister could tell me what the policy of the government was. I found out at that time that there was no policy of the government, and they said that they would develop one or they were developing one. Actually, you know, to tell you the truth, I think it probably came with the expenditure of this $162 million, that it came as part of the new system. That is what I would guess their Internet policy is.

Before, you see, there was no way of–the member for Gladstone (Mr. Rocan) will understand this. I mean, before you had individual departments buying their own computers. Some hooked them up to the Internet, some did not, and they were basically on their own. They did what they could with the Internet. But now you have a central control. That is the difference. You have a central control now.

So by virtue of the fact that you brought that new system in, you essentially control how people are getting onto the Internet and stuff like that. So tell me that that is not the case. I mean, that is the case, right?

Mr. Gilleshammer: Well, I can assure the member that we do have an Internet policy, and government employees have been made aware of it by their managers. It automatically comes up on their screen for employees to see and accept, and we think it is a policy that will work and be accepted by the staff. I have indicated that I would bring him a hard copy of that at our next meeting, and we can deal with it in more detail then.

So he does not have to dwell on the past. The policy is in place. It exists and employees are aware of it.

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Mr. Maloway: I do not want to dwell on the past either. I will dwell on the current situation right now. I would like to know just how the current system monitors the use of the Internet.

Mr. Gilleshammer: I am informed that we have a detection system which can monitor site visits and indicate if there is inappropriate use of the technology.

Mr. Maloway: That is the answer I was looking for. Now, I would like to know the name of the detection system.

Mr. Gilleshammer: I am told that staff do not have that here, but we will provide that when we meet at the next opportunity.

Mr. Maloway: So is there a concern? Has there been a concern raised about privacy issues and stuff like that with people who are using the Internet, that they can be traced?

For example, we have had an issue recently with the snitch lines, the gang hotline, and others, that it was discovered through the Question Period process that, in fact, unbeknownst to the people of the province who were promised that people who phoned the gang line could not be traced, in fact there was a tracing system in place so that anybody who phoned through a 9-4-5 number, or a government number internally, was, in fact, being traced.

So, I guess, the question is, I would just like to know how intrusive this is and whether there have been complaints from public servants. For example, the MLAs, if they were to use the Internet under the current system, or anybody who is on this current system, their activities through the Net are being monitored. That is what you just told me, right? So if you could just explain that a little more, that would be helpful.

Mr. Gilleshammer: The staff have told me that they have been very aware and conscious of privacy issues. What this system does is identify illegal site visits.

Mr. Maloway: How many incidents then have you had over the last year since the implementation of this system where people have gone into sites they are not supposed to, and what has happened? Have there been any situations where people have been reprimanded or laid off or transferred or had action taken against them?

Mr. Gilleshammer: I am told it has been extremely minimal.

Mr. Maloway: So there has been a case or two in the system then of somebody reading the policy and signing onto the policy and then violating the policy?

Mr. Gilleshammer: I am afraid I cannot give you any detailed information. It is something that is currently under review.

Mr. Maloway: Mr. Chairman, the minister knows that in the Y2K business, testing is a really important element, probably the most vital element. I am told that you cannot test these things enough. Some people have tested their systems by simply taking their computer and moving the clock ahead to 2000, and it worked for a couple of seconds, so they say, well, this thing is compliant. But I am told that you are never really going to be sure, because it is possible that people will have a system, the system could be brought down by, you know, your kid bringing an old DOS game in and putting it into your supercomputer and, all of a sudden, your supercomputer just collapses. So much for your supercomputer.

That is a big issue with the business community. I think one down east went and cancelled its long distance telephone service. Their prices were a lot lower than Bell, but they went with Bell because Bell could guarantee they were going to be in business. So there is an interest among businesses out there right now to be chasing down their suppliers to make certain that their suppliers are Y2K compliant. When you think about it, you have spent $232 million already on this whole effort so that you could have a situation, we would not want to see this, where the government is perfectly operational on January 1, but the rest of the province is shut down because you cannot operate. You have the best computers in town, but some business that you are doing business with out there has some noncompliant system, and they bring your system down. So the question is: how are you protecting yourself against that happening? I mean, that is kind of in addition to the question about the testing, so take your time and explain how you are testing the system out because you are talking about a full dress rehearsal here, where you say you are 90 percent compliant right now, but I have no idea what that means. I do not know what that means. Does that mean your testing phase? You have testing going on all over the place.

Some systems are further along than others, and then you are going to have a full dress rehearsal in September, but you are not even going to have your systems in, back from the Pan Am Games and hooked up into Family Services by that point in time, so you are going to be doing a dress rehearsal in September without those 600, 800 or 1,800, the minister cannot make up his mind. At various points yesterday he said there were 600 seats and the next page he said there were 800 seats and then he says there are 1,800 seats in Family Services, so that is my point. Can you flesh this out a little bit and give me a better idea of how this testing is going, and what kind of guarantees do you have that you are not going to be impacted by noncompliant systems on the outside? So they are kind of two separate questions, but, man, they kind of fit together.

Mr. Gilleshammer: Well, I can understand with the rambling my honourable friend does, that he gets answers that he does not understand, but what we have done is, I think, employed extremely capable and competent people who are reviewing our technology and our systems, who are in constant communication with other jurisdictions. We believe and others believe that Manitoba is doing exceedingly well in terms of evaluating our systems.

I sense that my honourable friend is one of those people who, in the last months and weeks and days before the year 2000, is going to be out there telling everybody the sky is falling. I really caution him against that because, as a man of some importance, there is apt to be somebody who listens to him, and I think he would do a tremendous disservice to the public by doing that. But I guess all I can do is assure you that we ask the questions of the people who have been employed, who come to us with exceedingly strong credentials, nationwide, in fact, international recognition for the work they are doing, and we are being assured that the appropriate testing has been done, is being done, and we are comfortable with the results.

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Mr. Maloway: Mr. Chairman, before I forget I would like to ask the minister once again whether he would release the latest quarterly reports. He has not released any up until now, but as I told him yesterday the Minister of Government Services (Mr. Pitura) actually read his report into the record, or at least a summary of his report. I would like to ask him now if he would endeavour to release that quarterly report to me.

Mr. Gilleshammer: This is the same question the member asked two and a half hours ago, and I said that we did not have any of that information with us. I did commit to reviewing the information and providing the member with whatever information I am able to give him.

Mr. Maloway: I want to go back to the question I asked before about noncompliant systems and how they will interact or how they deal with the government's supersystem here. What plans do you have to be dealing with, or what is the potential for problems dealing with noncompliant systems after the year 2000?

Mr. Gilleshammer: Well, I have been reassured that we are testing other systems that we interact with and seeing that they are fully compliant.

Mr. Maloway: Mr. Chairman, does the minister recognize that as a problem, a high-risk problem or a low-risk problem? Obviously, if he is testing the systems, he thinks that there is some concern there. How serious a problem is it?

Mr. Gilleshammer: My staff have indicated that it is regarded as a low-risk problem.

Mr. Maloway: Mr. Chairman, now the minister referred to September '99 as his full dress rehearsal. Now is the minister saying that he will proceed with this full dress rehearsal without having the 600, 800 or 1,800 units from Family Services onboard, because they will not be on-line until I think the end of October sometime? If that were the case, it would not give them too much time for testing, right.

Mr. Gilleshammer: I am informed that they will be tested before delivery.

Mr. Maloway: Mr. Chairman, well, before delivery where? These units are going to Pan Am Games first, and then they are being taken from the Pan Am Games sometime into August. They are supposed to be hooked up into the system in Family Services, but they are not supposed to be hooked up until the end of October. If he is talking about a full dress rehearsal, presumably, that is an entire system check, right, but it is going to be done without these Family Services units. Is that true or not true?

Mr. Gilleshammer: I believe the member is wrong. They are tested before delivery, and they will be tested again when they are brought back. The dress rehearsal–and I use the member's words–is a national one, and it deals primarily with essential services such as hydro and others that are deemed to be essential and our ability to deal with contingencies. So the questions that the member is asking about, equipment that will be used by the Pan Am Games, I have already said that these will be tested before delivery and tested when they are brought back and hooked up within our system. There is not a great deal of concern about those machines.

Mr. Maloway: Mr. Chairman, I would like to ask the minister about viruses in the new environment. It seems that people are developing new viruses. Every time you turn around there is a more powerful one, and I guess it is probably a continuous problem. But I would like to know over the past year what sort of experience the government has had with different types of viruses and whether they are coming from the outside or whether they can be introduced from within–I do not know how it works exactly, but whether it can be introduced from within the system and what the method is for determining what the–see before under the old system when you had that mish-mash of computers, they were not hooked up to one another, right. So if you had a virus, it could only infect so many units and you would limit your exposure that way. But today, now you do have a fire-walled system, but you have a lot of machines hooked up together here, going to be 9,000 and something when Family Services gets on board. So the question then becomes: what is your exposure to a virus? How far can it go before it is stopped? Does a fire wall stop it? I do not know what the answer is to the questions, but you guys are the experts, so what is the answer to this?

Mr. Gilleshammer: The concern to be vigilant and aware of this is a constant concern. I am told that we have an information protection system which is nationally recognized, and there have been a number of instances. The one I recall getting some play in the media was the Melissa virus, which was a number of weeks ago. There were three incidents within the government systems where somebody accessed–whatever–this virus, but our system reacts very appropriately and limits the threat to the system.

Mr. Maloway: Mr. Chairman, are these viruses, now this Melissa virus and others, is the exposure from external sources, or is there an exposure from internal sources like the people who actually work on the system?

Mr. Gilleshammer: I am told it is all external.

Mr. Maloway: So what prevents somebody who is mad at the government or been not happy with their job from introducing a virus into the computer? I mean, presumably they could do it from a different station or there might be ways of doing it. Is that not possible under this new system?

Mr. Gilleshammer: I am told the information protection system will readily identify the virus whether it is internal or external and react appropriately.

Mr. Chairperson: The time being six o'clock, committee rise.