VOL

TIME – 5 p.m.

LOCATION – Winnipeg, Manitoba

CHAIRPERSON – Mr. Doug Martindale (Burrows)

VICE-CHAIRPERSON – Ms. Bonnie Korzeniowski ((St. James)

ATTENDANCE – 11 QUORUM – 6

Members of the Committee present:

Hon. Ms. McGifford, Hon. Mr. Selinger

Ms. Blady, Messrs. Borotsik, Cullen, Derkach, Ms. Korzeniowski, Messrs. Maloway, Martindale, Ms. Selby, Mrs. Stefanson

Substitutions:

Mr. McFadyen for Mr. Cullen

APPEARING:

Mr. Kevin Lamoureux, MLA for Inkster

Mr. David Faurschou, MLA for Portage la Prairie

Mrs. Mavis Taillieu, MLA for Morris

Mr. Larry Maguire, MLA for Arthur-Virden

Mr. Ron Schuler, MLA for Springfield

WITNESSES:

Bill 29–The Business Practices Amendment Act (Disclosing Motor Vehicle Information)

Mr. Nick Roberts, Manitoba Used Car Dealers' Association

Bill 25–The Embalmers and Funeral Directors Amendment Act

Mr. Norm Larsen, Private Citizen

Bill 38–The Balanced Budget, Fiscal Management and Taxpayer Accountability Act

~~Mr.~~ ~~Jesse~~ ~~Hamonic~~, ~~Private Citizen~~

Mr. Graham Starmer, Manitoba Chambers of Commerce

Mr. Shannon Martin, Canadian Federation of Independent Business

Mr. Clayton Manness, Private Citizen

Mr. Ken Waddell, Private Citizen

Mrs. Christine Waddell, Private Citizen

Mr. Brian Paterson, Private Citizen

Mr. Glen Cummings, Private Citizen

Mr. Trevor Gates, Private Citizen

Mr. Colin Craig, Canadian Taxpayers Federation

Mr. John Doyle, Manitoba Federation of Labour

Mr. Jim Carr, Business Council of Manitoba

Mr. Chuck Davidson, Winnipeg Chamber of Commerce

Mr. Graham Starmer, Manitoba Chambers of Commerce

WRITTEN SUBMISSIONS:

Bill 38–The Balanced Budget, Fiscal Management and Taxpayer Accountability Act

Joe and Joan Chamberlain, Private Citizens

Candace Bishoff, Private Citizen

John Sushelnitsky, Private Citizen

Jim Reid, Private Citizen

Beverley Ranson, Private Citizen

Iris Nowakowski, Private Citizen

Roméo Lemieux, Faculty of Education, Brandon University

Matt Kawchuk, Private Citizen

Gordon Henderson, Private Citizen

R.M. Swayze, Private Citizen

Graham Starmer, Manitoba Chambers of Commerce

Bill 25–The Embalmers and Funeral Directors Amendment Act

Barrie Webster, Funeral Planning and Memorial Society of Manitoba

Jody Nicholson, Manitoba Funeral Service Association

Norm Larsen, Private Citizen

MATTERS UNDER CONSIDERATION:

Bill 6–The Securities Amendment Act

Bill 25–The Embalmers and Funeral Directors Amendment Act

Bill 29–The Business Practices Amendment Act (Disclosing Motor Vehicle Information)

Bill 38–The Balanced Budget, Fiscal Management and Taxpayer Accountability Act

* * *

Mr. Chairperson: The Standing Committee on Legislative Affairs will please come to order.

We have a number of procedural items to take care of first.

Committee Substitution

Mr. Chairperson: I would like to make the following membership substitution, effective immediately for the Standing Committee on Legislative Affairs, Mr. McFadyen for Mr. Cullen.

* * *

Mr. Chairperson: Our first item of business is the election of a Vice-Chairperson. Are there any nominations?

Ms. Erin Selby (Southdale): I am nominating the Member for St. James (Ms. Korzeniowski).

Mr. Chairperson: Ms. Korzeniowski has been nominated. Are there any further nominations?

Mr. Rick Borotsik (Brandon West): I would nominate the Member for Russell (Mr. Derkach).

Mr. Chairperson: Mr. Derkach has been nominated. Are there any further nominations?

Mr. Borotsik: Mr. Chair, if I may, I wonder if it's possible to hear from the nominated candidates as to the rationale and desire that they would like to put their name forward for Vice-Chair.

As a fact, Mr. Chairman, I come and have experience in another House where, in fact, members of the opposition do sit as vice-chairs so that there is a better non-partisan cross section of the Chair and the Vice-Chair, so that when issues are presented before the committee, that there is, in fact, a member of the opposition and a member of the government who can put forward their own opinions at that time, based on a non-partisanship.

I wonder, Mr. Chair, if we could hear from the nominees as to how it is that they would like to see their names put forward as Vice-Chair and their experience as such and, certainly, their desire to be that particular Vice-Chair.

Mr. Chairperson: Thank you for your advice. We did have a precedent earlier this week where a similar idea was put forward. However, we're dealing with a nomination, not a debatable motion, and so we are not going to debate this. We are going to put the question and have an election.

All those in favour of Ms. Korzeniowski being the Vice-Chair, please indicate.

Clerk Assistant (Ms. Tamara Pomanski): One, two three, four, five, six.

Mr. Chairperson: All those in favour of Mr. Derkach, please indicate.

Clerk Assistant (Ms. Pomanski): One, two, three. [interjection] Four.

Mr. Chairperson: I declare Ms. Korzeniowski the Vice-Chairperson of this committee.

This meeting has been called to consider the following bills: Bill 6, the Securities Amendment Act; Bill 25, The Embalmers and Funeral Directors Amendment Act–I would like to have a little bit of decorum so I can hear myself think–Bill 29, The Business Practices Amendment Act (Disclosing Motor Vehicle Information); Bill 38, The Balanced Budget, Fiscal Management and Taxpayer Accountability Act.

We have a number of presenters registered to speak this evening as follows–please refer to your presenters list. Before we proceed with presentations, we do have a number of other items and points of information to consider. First of all, if there's anyone else in the audience who would like to make a presentation this evening, please register with the staff at the entrance of the room. Also, for the information of all presenters, while written versions of presentations are not required, if you're going to accompany your presentation with written materials, we ask that you provide 20 copies. If you need help with photocopying, please speak with our staff.

As well, I would like to inform presenters that, in accordance with our rules, a time limit of 10 minutes has been allotted for presentations, with another five minutes allowed for questions from committee members. Also, in accordance with our rules, if a presenter is not in attendance when their name is called, they will be dropped to the bottom of the list. If the presenter is not in attendance when their name is called a second time, they will be removed from the presenters list.

Written submissions from the following persons have been received and distributed to committee members: Joe and Joan Chamberlain, private citizens, on Bill 38; Candace Bishoff, private citizen, on Bill 38; John Sushelnitsky, private citizen, on Bill 38; Jim Reid, private citizen, on Bill 38; Beverley Ranson, private citizen, on Bill 38; Iris Nowakowski, private citizen, on Bill 38; Roméo Lemieux, Faculty of Education, Brandon University, on Bill 38; Matt Kawchuk, private citizen, on Bill 38; Gordon Henderson, private citizen, on Bill 38; R.M. Swayze, private citizen, on Bill 38; Barrie Webster, Funeral Planning and Memorial Society of Manitoba on Bill 25; Jody Nicholson, President, The Manitoba Funeral Service Association on Bill 25.

Does the committee agree to have these documents appear in the Hansard transcript of this meeting?

Some Honourable Members: Agreed.

Mr. Chairperson: Agreed–Mr. Derkach?

Mr. Leonard Derkach (Russell): Mr. Chair, I'm wondering, for the benefit of people who may be present as presenters, and also for the individuals who are here as interested parties in the debate and the presentations on these bills, whether it would be appropriate to have these presentations read into the record rather than just having them accepted into the record.

Mr. Chairperson: It has been proposed by Mr. Derkach that these presentations be read into the record rather than received.

Hon. Diane McGifford (Minister of Advanced Education and Literacy): I would disagree with my colleague opposite, Mr. Chair. I think that practice has always been that written submissions are written submissions and we're all quite capable of reading them, so I suggest that we follow tradition and read them.

Mr. Chairperson: Thank you for your advice. I'm advised that it's not the practice and it's not my experience as being the practice.

* (17:10)

Mr. Hugh McFadyen (Leader of the Official Opposition): Thank you, Mr. Chairman. I think it's useful to be clear about the rationale for the motion, and the rationale is that reading these presentations into the record is not for the benefit of committee members, but for the benefit of those who may be in line to make subsequent presentations and others who may be interested parties attending committee so that they may hear what others have to say, as this will often inform subsequent presentations and have an impact on the debate and the knowledge of those who are interested parties in wanting to understand fully what the positions are of the various parties who have taken the time to make submissions to the committee.

I would therefore support the motion.

Mr. Chairperson: I would like to ask if there was agreement to do this or not.

Some Honourable Members: Agreed.

Some Honourable Members: No.

Mr. Chairperson: I hear yes and I hear no.

I'm going to rule that there isn't agreement and, also, based on precedent and practice.

Mr. Derkach: Mr. Chair, seeing the direction that you, as Chair, are taking right now with this particular issue, I'm wondering whether there can be a recorded intention or a vote, if you like, with respect to this issue. Because you heard both yeses and nos, I would request that there be a show of hands to indicate who supports the motion and who does not.

Mr. Chairperson: Thank you for that suggestion, but the normal way of doing business would be to have a written motion which we would then read and then vote on. If you would like to do that it would be in order.

Mr. Kevin Lamoureux (Inkster): Maybe the Member for Russell might be writing up a motion but, Mr. Chairperson, I do have, I guess it would be kind of a question in terms of procedure.

In reading through, it was a fairly lengthy list of individuals, and one of the things that came across my mind is that quite often when we hear presenters there are questions and answers that will follow, and when someone requests that their presentation be recorded into Hansard, one of the things that we do lose is the ability to be able to ask questions of the presenter. The reason why I ask that is that does the Clerk's office have phone numbers so that if, in fact, when we do get the chance to read the reports that we have a phone number that we can ask a presenter.

Can he just maybe provide to the committee, what is it that the Clerk's office actually takes in so that maybe we could be able to communicate with a written presentation?

Mr. Chairperson: I'm advised that normally phone numbers would not be made available to members, but sometimes people do put their contact information on their written briefs and then you would be free to contact them that way.

Mr. McFadyen: The way to deal with the issue raised by the honourable Member for Inkster may be to ask if the Clerk's office would be good enough to contact those who have made written submissions and look for an opportunity, an appropriate opportunity, for them to appear in person to respond to questions. That way the issue of the confidentiality of the telephone numbers is dealt with appropriately.

Mr. Chairperson: Could you clarify that for me, Mr. McFadyen, exactly what you're asking for?

Mr. McFadyen: The Member for Inkster was indicating that it might be valuable to the committee to have those who have made written submissions be contacted to invite them to appear in person or respond to questions arising from the presentations. The objection raised by the members opposite was that this could breach confidentiality in that individuals have given their telephone numbers to the Clerk's office and may not wish to have those telephone numbers distributed to members of the committee.

What I was proposing was that that issue could be dealt with by having the Clerk's office contact those who have made written submissions and invite them to appear at an appropriate time to respond to questions, which would achieve the value that, I think, is being sought by the Member for Inkster in terms of responding to questions arising from the presentations.

Mr. Chairperson: I think what we need to do is to ask the Clerk's office or, in particular, the Clerk, if that is possible and get an answer back to the committee.

Do you have your motion in writing Mr. Derkach?

Mr. Lamoureux: I think it would be of benefit because, you know, we very easily and quite often will say someone that's not able to present, for whatever reasons, and they'll have good content in terms of their presentation. I think that all members would benefit if we were, at the very least, afforded the opportunity to be able to communicate.

I like what it is that the Leader of the Official Opposition is suggesting in terms of having the opportunity to be able to ask a presenter–for example, if I read a presentation that has been submitted and we've accepted it and it's printed in Hansard, to be able to contact the Clerk's office and say that, look, we do have a question or two on it; is it possible for the presenter to come if, in fact, a request of that nature is put forward and failing something of that nature, being afforded the opportunity to have a phone number so that we can make contact.

I think what it does is it legitimizes to a certain degree the fact that we're accepting these reports. At least that's what I would think it does. If someone's prepared to put the time, make the presentation in writing and then we're having Hansard transcribe it, put it into our official documents, that there needs to be some opportunity for two-way communication. I just think that it would be helpful.

So, if you could, through the Clerk's office, get back to me on it, I would very much appreciate it.

Hon. Greg Selinger (Minister of Finance): Just on this question, I think we have to be careful that the instructions to the Clerk are clear. I don't want the members of the public to feel that they're in any way compelled to come back and answer questions. I think it would be important that if the members have read the submissions and they have a question, they should put the question in writing and they should indicate to the Clerk's office that they would like to discuss it with the person that made the presentation in writing, and if that person wishes to just come back and answer questions about it or wishes to reply in writing, they'd have that option so that there could be the dialogue.

But the way, the original suggestion was put, it could be misperceived as some form of compulsion to have to come back and answer questions. I wouldn't want any member of the public to feel that that was the case, so I think this has to be handled very delicately. Members of the public have the right to come and make a verbal presentation as well as a written presentation. It's a completely voluntary citizen duty and I would like to make sure that we keep uppermost in our mind that any follow-up procedures, that this notion of voluntariness and this notion of having a choice is kept at the forefront. [interjection] The option, exactly.

So I would just say that the way we move forward on this should start with members themselves of this committee indicating which written presentations they would like to do follow-up on and do that by way of putting in writing what their questions might be.

Mr. Derkach: Mr. Chair, I move and recommend that written presentations submitted to the committee be read into the record so that other presenters and those Manitobans who are present to hear presentations would have the benefit of hearing all presentations.

Motion presented.

Mr. Chairperson: The motion is in order. The floor is open for questions.

Mr. McFadyen: I put comments on the record earlier, in essence on the same point. I just want to reiterate my support for the motion and the logic of having presentations read into the record, so that those who are waiting in line in person and present here in the committee room have the benefit of hearing those presentations which will often have an impact on the thinking of subsequent presenters.

So I think it's a sensible motion and I would urge all members of the committee to support it.

Mr. Chairperson: Is the committee ready for the question? The question's been called.

It has been moved and recommended that written presentations submitted to the committee be read into the record so that other presenters and those Manitobans who are present to hear presentations would have the benefit of hearing all presentations.

* (17:20)

Voice Vote

Mr. Chairperson: All those in favour of the motion, please say yea.

Some Honourable Members: Yea.

Mr. Chairperson: All those opposed, say nay.

An Honourable Members: Nay.

Mr. Chairperson: In my opinion, the Nays have it.

Formal Vote

Mr. Derkach: A recorded vote, Mr. Chairperson.

Mr. Chairperson: A recorded vote has been requested.

A COUNT-OUT VOTE was taken, the result being as follows: Yeas 4, Nays 6.

The motion is defeated.

* * *

Mr. Derkach: Before we proceed to hearing the presenters, I'm wondering whether there would be leave of the committee to allow Mr. Nick Roberts to make a presentation on Bill 29.

I understand that Mr. Nick Roberts has a time constraint. He is the only presenter on Bill 29. I'm wondering whether the committee would consider giving leave, so that Mr. Roberts could make his presentation in person. Then we could move on to following the bills in order, I think, as we normally do.

Mr. Chairperson: Normally, we do out-of-town presenters, but is there leave of the committee to have this one presenter on the one bill go first? [Agreed]

Now, going back to the documents that were submitted, they will appear in Hansard as a transcript of this meeting.

On the topic of determining the order of public presentations, I will note that we do have out-of-town presenters in attendance, marked with an asterisk on the list.

As well, we have a request from Jesse Hamonic, presenter No. 10 for Bill 38, to make a presentation en français, in French. We do have translation staff on hand to accommodate consecutive translation.

With these considerations in mind then, in what order does the committee wish to hear the presentations? I've heard that we will agree to have one person come first who has to leave and–

Mr. Borotsik: Mr. Chairperson, we've already had leave to hear Mr. Roberts. I wonder if, at that point, we could hear any presenters on the other bills–there are very few presenters on Bills 6 and 25–and then proceed to 38 at which time, if I have leave of the committee, to allow Mr. Hamonic to present first.

I understand there's some translation available. Rather than have the translator stay here for some period of time, perhaps, if the committee would agree, we could have that presenter first and then we can go back to the out-of-town presenters.

Ms. McGifford: I'm a little uncertain as to what's being suggested. I wonder if the member would repeat.

Mr. Borotsik: As has been already agreed to, the committee has said that Mr. Roberts is going to present first on Bill 29, I believe it is, and then go to Bill 6 and Bill 25 for which I believe there are very few presenters. If we could have those put out of the way, even though they are in town.

Then, when we go to Bill 38, the first individual to make presentation, I would ask for leave that it be Mr. Jesse Hamonic. He wants to do it in French and, in order to accommodate him, as I am not fluent as the minister is, we do have translation. Rather than have the translator stay here for an extended period of time, we could then have him first and the translator could leave.

Mr. Chairperson: I'll just repeat that. I think there's agreement that we have Mr. Roberts first and then the presenters on Bill 6, Bill 25, then Mr. Hamonic, and then out-of-town presenters on Bill 38. That's agreed.

As previously agreed to by the House, this committee will sit until 10 p.m. tonight.

Prior to proceeding with public presentations, I would like to advise members of the public regarding the process for speaking in committee. The proceedings of our meetings are recorded in order to provide a verbatim transcript. Each time someone wishes to speak, whether it be a MLA or a presenter, I first have to say the person's name. This is the signal for the Hansard recorder to turn the mikes on and off.

Thank you with your patience. We will now proceed with public presentations.

Bill 29–The Business Practices Amendment Act (Disclosing Motor Vehicle Information)

Mr. Chairperson: I will now call on Mr. Nick Roberts from the Manitoba Used Car Dealers' Association to make his presentation on Bill 29.

Do you have copies of your presentation?

Mr. Nick Roberts (Manitoba Used Car Dealers' Association): Yes, I sent them earlier today.

Mr. Chairperson: Okay, they will be distributed. You can proceed when you're ready.

Mr. Roberts: Thank you, Mr. Chairperson, members of the committee. I'd also like to thank you for allowing me to go first.

I'm speaking today on Bill 29. Lemonade is a fickle drink and, on a hot summer day, you expect it to be cold and refreshing but, sometimes, because it was made hastily and without attention, the result is a sour glass that entirely disappoints.

Bill 29 is a lot like that. We're led to believe that the proposed legislation provides protection to Manitoba car buyers against purchasing lemons, but the reality is that Bill 29 simply does not deliver on that promise.

My name is Nick Roberts and I appear before this committee as my role as the executive director of the Manitoba Used Car Dealers' Association. Our association is an organization that, among other things, promotes the interests of its members who sell used motor vehicles in Manitoba. Our organization is dedicated to the enhancement and improvement of the automobile industry in Manitoba for the benefit of the province's consumers through identifying public-agenda issues affecting the industry and contributing to the decision-making process.

Before I begin, I have one housekeeping task and that is to remind you that, for your convenience, we have collected information about the United States lemon laws and the problems it holds for both consumers and dealers alike, as well as a written copy of my presentation. You should each have a copy of our book of documents before you.

The first problem with Bill 29 is that it relies on other provinces and American states to solve a supposed-Manitoba problem. The proposed legislation would amend The Business Practices Act and introduce the definition of a lemon. Under those changes, a lemon is a motor vehicle that has been returned to the manufacturer under the laws of another jurisdiction.

Like a cool glass of lemonade, the idea is very appealing. If a car has been labelled a lemon anywhere else in North America, then it should not be sold in Manitoba as defect-free.

However, the reality under Bill 29 is very different. In fact, no Canadian province or territory has legislation that would label a car as a lemon. Out of 50 American states, only 19 have laws in place that require the lemon designation on their ownership titles.

Bill 29 does nothing to require disclosure that a lemon in one state ended up being resold in another state without such laws, before that one-time lemon ended up in Manitoba.

In short, Bill 29 works only if most–if not all–of the other jurisdictions in North America agree to implement lemon laws, but almost no Manitobans will know this. Instead, they've heard in the news that Manitoba is introducing a law that requires dealers to disclose whether or not a car is a lemon. What Manitobans do not understand is that Bill 29 plucks only some lemons from the vine, leaving others to linger on the vine.

Even if there were uniform lemon laws across North America, Bill 29 still has significant problems. For starters, the bill focuses on sales of lemons by businesses, ignoring the fact that a significant number of cars are sold by individuals. So, compounding the fact that some jurisdictions label vehicles as lemons, Bill 29 restricts its application only to business sales to consumers.

This patchwork protection becomes even more problematic when you remember that the existing laws of Manitoba already give a remedy to buyers of lemons. I'm not a lawyer, but I think it is common sense that, if a consumer enters into an agreement for the purchase of a car, contract law will allow that consumer to get out of the deal, if it turns out that there is a fundamental defect in the car. In fact, it's exactly that kind of dispute that the Consumer's Bureau and small claims court already deal with.

I think it's also common sense that there's a fundamental defect in any car that's so unreliable that it has to be labelled as a lemon.

Some might say that, even if the law of contract already takes care of those problems, Bill 29 might serve as a reminder to those who would sell lemons that the law is watching them. Even this rationale ignores the fact that existing laws, relating to misrepresentation and fraud, give rise to civil and even criminal penalties. Yet, despite these existing provisions, some sellers would be undeterred.

Deterrence should be a concern of any proponent of Bill 29 which promises to address the sale of lemons, but offers little help to those who would enforce such laws. The proposed legislation states, in essence, that a business selling a lemon must disclose that fact. However, Bill 29 is silent on how far a seller must go to conduct that due diligence.

* (17:30)

What is the standard by which to test whether or not a seller may decide that a vehicle is not a lemon? Must the seller use best efforts? Must the seller exhaust every possible search? May the seller simply rely upon the honesty of the party from which the seller obtains a car? Both new and used dealers receive vehicles from their sellers, and our goal as an association is to have the dealers pass on to the consuming public any notices or information affecting the cars which they receive.

In fact, it is the dealer who could be the secondary victim of the lack of buy-back notice because the used motor vehicle dealer is very often the entity selling the vehicle to the end user. If the dealer receives no notice from its supplier, then it has no information to pass on to the consumer. It is, therefore, in the best interests of our members to receive as much information as possible in order to be able to pass it to a potential customer and thereby avoid the costs, legal and otherwise, associating with having failed to disclose required information.

This government must also be aware that consumers who trade in a vehicle will often omit to tell the dealer certain critical information about the vehicle. If the consumer or any other entity in the sales history of a vehicle receives a re-acquired vehicle notice and fails to pass on that notice to the dealer, then such dealer should not incur any liability for failing to provide a notice to its purchaser. Conversely, we acknowledge that if a notice in whatever written format is given to the dealer, than the dealer should be obliged to pass on such notice to its purchaser.

Bill 29 is equally silent on any possible conflict between traditional legal standards of what amounts to due diligence and the provision of the proposed legislation. No thought appears to have been given to the effect that Bill 29 could have upon established principles of consumer protection law and contract law as a whole.

Of course, the answer might lie in the regulations that Bill 29 promises. However, at this stage, those provisions are, of course, not made available for review. We are left to wonder and hope that all the details that underlie the aims of Bill 29 will somehow be fleshed out in the regulations.

Now, you've all listened patiently as I outlined these concerns, and some of you likely agree that I have touched upon real problems with Bill 29. But you are undoubtedly wondering why the Manitoba Used Car Dealers Association has waited until this late stage in the birth stages of the bill to raise these issues. In fact, I would like you to know that in March 2008 I met with representatives from the Consumers' Bureau to voice some of the points that I have made today. I was then told that there would be a consultation process during which these concerns could be set out and addressed. It seems, however, that this matter skipped the consultative process and went straight to the Legislature.

And so we are left with what I suggest is a premature crop growing in our lemon grove. Bill 29, as it stands, relies on other jurisdictions to label a vehicle as a lemon. It applies only to some car sales, even though it gives Manitoba consumers the impression that they can let down their guard against lemons. The proposed legislation also duplicates existing remedies and confuses the standard by which to assess the conduct of sellers.

Finally, the bill relies heavily upon regulations to give effect to its legislative aims, but, of course, no one has made available those regulations for our consideration at this stage. I both expect and hope that our association would be invited to join the consultative process that the proposed legislation aims to set up.

For all of these reasons, I worry that Bill 29 will leave Manitobans with a sour taste, and I urge you not to support the proposed legislation in its present form. That concludes my presentation.

Mr. Chairperson: Thank you. Are there any questions?

Hon. Greg Selinger (Minister of Finance): First of all, thank you for your presentation, Mr. Roberts. In order to make a regulation you have to have a law to base it upon, so the law is a prerequisite to getting to the regulations.

I can assure you that your association will be involved in the regulation-making process and will be fully consulted and will have a complete opportunity to comment on the substance of the regulation, and I think through that process many of the concerns that you have raised will be addressed.

Mr. Rick Borotsik (Brandon West): Thank you, Mr. Chair, through you to Mr. Roberts: You'd indicated that there was absolutely no consultation whatsoever to the main sector that was going to be affected by this, which is the car dealers' association. Would you not have thought that even prior to the regulations that the legislation that was going to be the basis of that regulation should have at least been consulted in some way, shape or form, whether it be written consultation or, at the very best, sitting down with the association and asking what your opinion was with respect to the lemon laws?

You've brought some very salient points to this particular table. I think those should have been discussed. I believe they should have been discussed prior to the legislation being put forward. Do you not agree with that comment?

Mr. Roberts: I would agree with that. The last time we were involved in changes to regulations for the way dealers were licensed in the province, we had the dealer licensing standards review committee, which sat for two years and it took another couple of years to come up with all the ins and outs for that. It was our understanding when we had that one preliminary meeting with the Consumers' Bureau that we would do that consultation process first and then go on, you know, to give recommendations to the minister on what should happen when instead it was shoot first and ask questions later.

Mr. David Faurschou (Portage la Prairie): I first want to congratulate and to say how much we appreciate the very-detailed presentation and appendix provided here this evening. I would like to ask you the question as it pertains to complaints. Legislation generally comes forward based upon complaints and a need for legislation, regulation to address those complaints or concerns, I understand, from previously speaking with yourself about the dispensation of complaints as it engaged the used car dealers.

Could you perhaps share that with the committee?

Mr. Roberts: As far–well, I can only speak to complaints in regard to safety-related items. Last year in the province of Manitoba there were 100,000 safety inspections done. Dealers did 80,000 of those. Out of those, there were 200 complaints regarding inspections. A hundred of those were dealer related and out of those 100, all of them were resolved. It begs the question: where's the problem? I don't know who's complaining and we certainly don't get any complaints through our office and we do a lot of mediation given the chance.

Mr. Faurschou: I appreciate that. Perhaps we're chasing ghosts with this legislation and so the question remains. However, also within the legislation as it is before us this evening, it is concentrated on, basically, your association members. Perhaps–are there other venues in which persons acquire vehicles that are not addressed within this legislation that are currently exempt from legislation?

Mr. Roberts: Most definitely the general public. I mean, we know that there's a–and it's something we're working on right now. There's a fairly large what we call a curb-sider issue in Manitoba where there's a lot of people buying and selling cars that are unlicensed. They basically do as they wish. There was legislation introduced that would allow anybody that sold five or more vehicles in a year that would–could be prosecuted for not having a dealer's permit. We've given information to DVL before with one example of a dealer that had–an individual that sold 14 cars in a six-month period. We gave them serial numbers, plate numbers, everything; gave it to them, left it with them for a year and at the end of the year, they said, there's nothing we can do. We don't have enough evidence.

There's definitely a loophole. It's probably a much bigger problem than we know of and we're looking into that.

Mr. Chairperson: I have two people on the speakers' list. You have time for a quick question, Mr. Faurschou, and then Mr. Selinger.

Mr. Faurschou: Thank you, Mr. Chairperson, I appreciate the opportunity.

A lot of cars change ownership through auction here in the province of Manitoba, and every Saturday we see there's a different auction displaying vehicles. They may be repossessions or come to the presence of the auction by other means. Are those sales going to be held to the standard within this legislation as you see it?

Mr. Roberts: I wouldn't think so. If you're speaking about public auctions, there are several public auctions in Manitoba. Somebody that's not a dealer, for example, when they sell a vehicle at a public auction, a non-licensed dealer doesn't have to provide a safety inspection, whereas somebody selling a car privately doesn't have to do that. There's a big loophole there and it continues to go on.

* (17:40)

The dealer auction that most dealers go to is run completely different. It's not open to the public, and it's only dealers that come by there. We have a definite set of rules and regulations and declarations on vehicles so we know what's happening.

Mr. Selinger: Thank you, Mr. Roberts. I just want to clarify that this amendment to The Business Practices Act builds on an existing piece of legislation which already requires–that makes it an unfair business practice for a supplier that is in business to make false claims or to do or say or to fail to do or say anything that might mislead or deceive a consumer. The proposal in front of us is an amendment which will clarify that existing obligation under existing law and in that process of clarification, there will be full consultation with you and your dealers' association in order to ensure that there's complete understanding of what the obligation that already exists is in practical terms.

I want to let you know that also we think that this amendment will also be able to deal with some of the concerns you just raised about individuals that sometimes are called curbers that sell multiple vehicles. They will also be covered under this amendment as well which would, I think, in many ways allow your association to operate in a more level playing field and not have to compete against practices which may be underground and undermine your industry. Thank you.

Mr. Chairperson: Thank you for your presentation.

We will now proceed to Bill 6, The Securities Amendment Act. We have one presenter registered, Judy Eastman, private citizen.

Is Judy Eastman present? Judy Eastman. That name drops to the bottom of the list.

Bill 25–The Embalmers and Funeral Directors Amendment Act

Mr. Chairperson: We will proceed to Bill 25, The Embalmers and Funeral Directors Amendment Act. Mr. Norm Larsen, private citizen. You have written copies?

Mr. Norm Larsen (Private Citizen): I do.

Mr. Chairperson: The page will distribute. Please begin when you're ready.

Mr. Larsen: Mr. Chair, based on my understanding, the minister is willing to consider three amendments that I would like to suggest to the bill. I would be content to refer only to the last three pages of my bill which outline my suggested amendments and to file the presentation, the whole of it. If I may then–

Mr. Chairperson: It's agreed that we'll accept the entire presentation, but Mr. Larsen will just speak to part of it. Agreed?

Some Honourable Members: Agreed.

Mr. Larsen: Okay, then go to page 5. The earlier part of the presentation makes a point that consumers need information. Perhaps I should go back a bit and say this. I am here to support this bill. I think it's very good amendments and I noticed the–I have had a chance to look at the written submission of the Manitoba Funeral Services Association, which represents the funeral industry in the province, and that short written presentation of theirs says, in effect, they love the bill and they support it.

I'm in the same situation, but I would like to just nudge it a little bit with respect to information. Consumers need information. This is a very–I was going to say very unique–this is a unique business, the funeral business, and consumers are woefully ignorant of what it's all about. I have over the last five years, just as a private citizen, a retired lawyer, gathered information and been able to make 40–I've made so far about 40 presentations to about 800 people on funeral planning. There is abysmal ignorance about the funeral industry in our society, and too often people go to prepare–if you've ever arranged a funeral, you know how difficult it can be emotionally and it's easy for the cost to escalate.

So people need information and they need information that allows them to make comparisons. Funeral homes advertise. They have pamphlets but the advertising isn't too helpful. For example, in my presentation I ask about 10 questions, basic questions about funerals such as: How many types of funerals are there? If you had to arrange a funeral tomorrow, how many types of funerals are there for you to choose from? Well, going by the ads, you would think two or three. I say there are six.

The advertising doesn't help. There's virtually no information other than my own presentation of the two documents that I've prepared and freely circulate, and I give it away. Other than my own documents, I know of nothing, in fact, in the whole of Canada to allow people to do funeral planning.

At any rate, on page 5 in the rectangle, here is my first proposed amendment. It adds a regulatory power to the act. I'll just read it into the record, if I may: Subsection 8(3) of the bill is amended by adding the following after clause 17 (q. 2): (q. 3) prescribing information to be provided to the public, any person or class of persons, and prescribing the manner of providing the information.

I confess I stole that provision from Ontario's funeral act, but I like it because this is the kind of information we need in a form that allows the consumer to make comparisons.

In this line of consumerism, consumers seldom shop around because of the nature of the funeral transaction. People are not about to go shopping around when they are emotional and trying to do deal with the grief of someone's death. That is one of the reasons.

There is a curious fact in the funeral industry and that is, the more competition is, the higher the prices are. This has been found in the States, in particular. The more competition, the higher the prices; that's because people don't shop around.

So that's one type of information people need. The other type of information consumers need is what's going on in the funeral industry. Over the last five years, when I started tracking these things, I've discovered in the city of Winnipeg five funeral homes have opened, five have closed and one of the two major corporations has been bought out by a multi-national corporation. How many people know that?

Some people prefer to deal with multi-national corporations. They should know which of the 25 funeral homes, which four are owned by a particular multi-national corporation centred in the States.

My amendment is fairly narrow, but it's, I think, an important piece of information that consumers need. I'll read, if I may, page 6 in the rectangle: Subsection 8(3) of the bill is amended by adding the following after the new clause 18(1)(q. 2): (q. 3) the number of complaints received by the board in respect of funeral homes, funeral directors and any person referred to in section 19 (sales persons) and the nature of the complaints.

The annual report of the board of administration is a particularly important document for consumers. It is the one opportunity for consumers to find something about what is going on in the funeral industry.

My third proposed amendment is on page 7; it's a simple one. I'm just suggesting the title of the act be struck out. The act is called, The Embalmers and Funeral Directors Act. Embalming is becoming more and more rare. In Manitoba, the most recent estimates I've heard from funeral directors is that 50 percent of funerals involve cremation and, in Winnipeg, they say it is 60 percent and climbing.

So the use of the word "embalmers" in the title seems to me is archaic and perhaps somewhat ironic, as things have developed since the act was first passed in the 1960s.

Mr. Chairman, that is my submission.

Mr. Chairperson: Questions?

Hon. Greg Selinger (Minister of Finance): First, I would just like to thank you, Mr. Larsen, for your presentation.

I want to tell you, because we received ahead of the public hearing tonight, I've had a chance to discuss it with Legislative Counsel. As you know, Legislative Counsel take their work very seriously, having been a former member of that staff yourself.

We think that, actually, some of your amendments can be accommodated but the specific wording of it, we'll leave up to legislative counsel. They may disagree with you on the specifics for reasons I can't even imagine but, that being said, we think that most of your amendments make good sense for consumer protection and protection of the public more generally to make better-informed decisions.

I think you've made a contribution to this bill, and I want to thank you for that.

Mr. Rick Borotsik (Brandon West): Thank you, Mr. Larsen. It's not a bill that one would, certainly, normally want to get too involved in, but I do appreciate the fact that there are people like you who did.

A couple of simple questions–you wish to change the title. When you made your rationale for that, it was an acceptable rationale. With respect to cremations and funerals, why would you not make the title, The Cremation and Funeral Act, as opposed to just The Funeral Act, because funerals are funerals?

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I do appreciate the fact, even with cremation, you still have a funeral service that you have, but why wouldn't you add cremation in there?

Mr. Larsen: Cremation is dealt with in crematories under a different act. I don't think that quite fits. I think there is some concern too even about even using The Funeral Services Act. I think there's a couple of good reasons to use The Funeral Services Act, and I list them at the bottom of page 7. I say it refers to whatever products and assistance are required for a funeral and it also is used in everyday language to refer to any type of funeral or memorial service.

But I think you asked about cremation. I think it just doesn't fit here.

Mr. Borotsik: Thank you. On your first amendment prescribing information to be provided to the public, this would be information provided to the public by all funeral homes. At the time of the customer, I assume, who's making presentation at that funeral home, you're suggesting that information be provided at that time? Would that information be like a rate chart, or would it be a services-available document that the funeral home would present at that time?

Mr. Larsen: In the United States there is something in the federal law known as, in the industry, the federal rule. It's about 60 pages of requirements of all funeral homes. One of the requirements, for example, is that every funeral home must post its à la carte prices close to the door, inside the funeral home close to the door and must be readily available to any person who comes through that door whether they're a prospective purchaser or a purchaser or somebody just interested in funerals or funeral planning. That's the sort of thing I imagine.

This is entirely up to the board of directors, of course, in terms of making the regulations, but I would hope that they would require that the information be in a prescribed form. Let them charge what they want, but be up front about what it is you're buying and what the cost of it is in an à la carte, individual form so you can compare.

Can I just say the current way of selling funerals is primarily by packages. When you go into a funeral home, they'll offer you a package for $2,000, $3,000 $5,000, and, of course, the price can escalate. That's basic. If you want more, you pay more, the average price being these days $5,000 to $10,000. For every one under $5,000, there's one over $10,000.

Mr. Leonard Derkach (Russell): A bit of a different question, and I don't know, it may be covered in the act already, and that has to do with the money placed in trust once an individual purchases a pre-planned funeral. Is that money held in trust now by the funeral home, or is there a special trust set aside independently of that funeral home and held by the Province or someone else?

Mr. Larsen: I'd have to reread the two pages in my background. I have a 25-page background information and two pages on should you prepay. My own bias is against prepaying, but I could be wrong because 15,000 Manitobans have prepaid, and we know that because the Public Utilities Board keeps track of these things. Under the prepaid funeral act there are various requirements, and one of them is that the information be registered with the Public Utilities Board.

As I said, my bias is against pre-paying because it's just as effective to put the money under your mattress or in a GIC or whatever. The people who are most likely to arrange your funeral know that that money is available and where it is. It can happen that you prepay a funeral and people don't know about it. There's also the problem that when you prepay, you are asked to name a funeral home, and, as I mentioned, five have opened; five have closed. Some people think there's stability in the industry. There isn't. Not much stability, it seems to me, and, at any moment, these multi-nationals, these large corporations could be buying out locally family-owned funeral homes.

Mr. Chairperson: I'm going to allow two more questions, Mr. Derkach, and then Mr. Selinger.

Mr. Derkach: Thank you. I guess I'm a little fixated on this because I don't know what would happen if a funeral home operator decided to leave the country with the prepaid funds. Is there any kind of insurance that is carried by the individuals or is carried by the funeral home, or is there a bond that is put in place so that these funds can, in some way, be protected for the person who pre-buys a funeral?

Mr. Larsen: My understanding is there was a scandal in Winnipeg in the '60s or '70s. Maybe some of you–you're nodding your head. Do you remember who?

Floor Comment: Elmwood Cemetery.

Mr. Larsen: Sorry? No, not Elmwood Cemetery. It was a funeral home that had sold an immense number of prepaid funerals and had spent all the money. That was the inspiration for the prepaid funeral act, and there were scandals all across the country, apparently, of this sort of thing happening.

So there are requirements now in the prepaid funeral act that a certain percentage of the money, that all the money goes–I'm sorry, I've just forgotten the details of it, but I can send you and I will send you a couple of pages I have that describe the process and the arguments that I have found for and against prepaying. I'm sorry that I can't be more specific, but it's been a while since I've looked at that material.

Mr. Selinger: I want to thank Mr. Larsen, again. I just want to point out that this bill before us does not deal with the prepaid funeral services act. That's a separate piece of legislation, which we can, if there's an interest, we can review later on and see if it needs modernization. But it's not actually before us tonight.

Mr. Chairperson: Thank you, Mr. Larsen. It's good to see you here again.

Bill 38–The Balanced Budget, Fiscal Management and Taxpayer Accountability Act

Mr. Chairperson: We're now proceeding to Bill 38, The Balanced Budget, Fiscal Management and Taxpayer Accountability Act, and the committee has agreed that we're going to hear Mr. Hamonic first.

Is Mr. Hamonic here and the translator? Thank you very much.

Do you have a written presentation? The page will distribute.

Please proceed when you're ready.

Bilingual presentation

Mr. Jesse Hamonic (Private Citizen): Monsieur le Président, membres du comité, et spectateurs, j'aimerais premièrement vous remercier de m'avoir donné la chance d'être ici et présenter ma perspective au sujet du Projet de loi 38.

Mr. Chairman, members of the committee and members of the audience, I first would like to thank you for giving me the opportunity to be here to present my point of view on Bill 38.

Au moment où ce projet de loi était publié, comme jeune économiste aborigène, j'étais extrêmement déçu. Alors, je sens un appel moral d'être ici aujourd'hui et communiquer les raisons pourquoi je suis en désaccord avec ce projet de loi.

When this bill was published, as a young Aboriginal economist, I was extremely disappointed. So, I feel a moral obligation to be here today to communicate the reasons why I do not agree with this bill.

En principe, je suis contre quatre articles dans le Projet de loi 38. L'ordre n'a aucune signification: 3(1)–le solde à la fin d'un exercice correspond à la moyenne des résultats nets des exercices compris dans la période de quatre ans se terminant à ce moment-là; 6(2)(a)(i)–La conséquence d'un solde négatif est le traitement du ministre réduit par 40 pour cent du traitement additionnel qui lui serait par ailleurs versé à titre de ministre pour l'exercice; 3(2) l'exclusion du produit de la vente de corporations de la Couronne; et l'entité comptable du gouvernement comprend non seulement le gouvernement, mais également les organismes gouvernementaux et les corporations de la Couronne.

In principle I am against four sections of Bill 38. Here they are in no particular order: 3(1)– the balance as at the end of a fiscal year is the average of the net results for the fiscal years within the four-year period ending at that time; 6(2)(a)(i)–the consequence of a negative balance is the reduction by 40 percent of the additional salary otherwise payable to the minister in that fiscal year; 3(2)–the proceeds from the sale of Crown corporations are not included; and the government reporting entity includes not only core government but also government agencies and Crown corporations.

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Let us imagine the following scenario: your daughter just graduated from high school and is planning to attend university. You agree to assist her with tuition on the stipulation that she provides you her transcript after every academic year. Year one passes by, you look at the transcript, at your disappointment, her grades are F, F, D, D, F, F. You immediately confront her about the performance. She, in rebuttal, tells you it's a four-year program. As such, she has three more years to turn her grades around. You agree and wait for the next transcript. Year two comes and goes. Once again, another transcript containing F's and D's. Yet again, you discuss your daughter's deficient performance with her. As before, she reiterates, she has two more years left to turn it around. After all, her degree is based on four years, not one. Year three and four proceed as year one and two. Now, after four years of university your daughter has nothing but F's and D's on her transcript, no degree and has been academically suspended from future courses. This hypothetical situation is quite similar to 3(1); allowing the government of Manitoba to consider its balance as at the end of fiscal year based on a four-year average and a summary budget. Permitting such an act is nothing less than deceit; 3(1) will allow the government to continue amassing large deficits and debts, while dismissing concerns year over year by explaining the government still has time left to turn it around. The consequence of such a pernicious policy is that at the end of the four-year period, not only will Manitoba's finances be practically irreparable, it would lead the province to a lower bond rating, causing higher interest payments.

Would you allow your daughter to continue failing or would you demand strong performance every year similar to balanced operating budgets based on one single year? Would you allow your daughter to permanently harm her record because of academic suspension; analogous to lowered bond ratings? As an economist I believe the answer to the preceding questions is an overwhelming, no. The government of Manitoba owes a fiduciary duty to its citizens for proper fiscal management. Anything less than a fiscal year being based on a single year as proposed in 3(1) is misleading and a violation of the government's duty to its citizens. It is for the above-mentioned reasons that 3(1) of Bill 38 must be struck down.

Le paragraphe 6(1) nous dit que si le solde à la fin d'un exercice est négatif, le traitement du ministre responsable est réduit de 40 pour cent du traitement additionnel qui lui serait par ailleurs versé à titre de ministre pour l'exercice. Le problème avec cela, c'est que la punition n'est pas suffisante. Comme exemple, si la réduction de traitement était appliquée au rapport financier 2007, le traitement de Monsieur le ministre Selinger serait réduit de seulement 17 534 $. Un salaire de 117 145 $ permet à M. Selinger de collecter proche de 100 000 $ même avec la réduction du traitement. A mon avis, les conséquences d'un solde négatif devraient être plus sévères.

Subsection 6(1) says that if the balance at the end of the fiscal year is negative, the salary of the minister responsible is reduced by 40 percent of the additional salary otherwise payable in that fiscal year to that minister. The problem with that is that the punishment is not enough. For example, if the reduction in salary was applied to the 2007 financial report, the salary of the honourable Mr. Selinger would be reduced by only $17,534. A salary of $117,145 enables Mr. Selinger to still collect close to $100,000 even with the reduction in salary. In my opinion the consequences of a negative balance should be more severe.

Section 3(2), l'exclusion du produit de la vente de corporations de la Couronne est suffisamment ineffective. Si le gouvernement met en vente des actions ou des actifs des corporations de la Couronne au moment d'une privatisation, cela ne compte pas dans le calcul pour déterminer s'il y a un solde positif ou négatif. Le même organisme cité dans la note explicative du Projet de loi 38, l'Institut canadien des comptables agréés, n'est pas d'accord avec ce règlement. En plus, le Projet de loi 38 accumulera les finances du gouvernement propre, des organismes gouvernementaux, et des corporations de la Couronne comme une entité sommaire. Donc, le gouvernement pourrait instruire à l'organisme ou la corporation de la Couronne de vendre ses actifs pour augmenter leur revenu et par logique, le revenu du gouvernement du Manitoba. Alors 3(2) est débile à cause qu'il ne couvre pas les ventes d'actifs des agences ou corporations de la Couronne, ainsi c'est contre les suggestions de l'Institut canadien des comptables agréés.

Section 3(2), the exclusion of proceeds from the sale of Crown corporations, is quite ineffective. If the government sells shares or assets of Crown corporations during a privatization, this is not counted in the calculation to determine whether the balance is positive or negative. The same organization referred to in the explanatory note for Bill 38, The Canadian Institute of Chartered Accountants, does not agree with this rule. In addition, Bill 38 will accumulate the finances of core government, government agencies and Crown corporations as a summary entity. Therefore, the government could instruct a government organization or a Crown corporation to sell its assets to increase its revenue and logically the revenue of the government of Manitoba. So, 3(2) is weak because it does not cover the sale of assets by government agencies or Crown corporations, thus it goes against the suggestion of the Canadian Institute of Chartered Accountants.

Lastly, the concept of publishing an amalgamated financial statement entitled "government reporting entity" including core government, government agencies and other public sector organizations such as Crown corporations is extremely disconcerting. As we've seen with the Manitoba Hydro Bipole III debate, the Government of Manitoba has final decision-making power on Crown corporations and agencies. This authority allows the government to dramatically influence its subsidiaries. In the case that the government would be in a deficit position, what reassurances do we as Manitobans have that the Manitoba Liquor Control Commission or Manitoba Lotteries or Manitoba Public Insurance or Manitoba Hydro or other user fees don't increase because of a government edict directing them to do so in order to cover their shortfalls.

I'm greatly concerned about this horrible incentive that would lead the government to increasing prices and rates. Essentially, under Bill 38, the government will not only take credit for the sound fiscal management of their subsidiaries but may also precipitously increase prices and user fees to allow them to further increase spending. Unless no checks or balances are in place to see that this would not occur, I cannot see how any member, in good judgment, can support such a reckless proposal.

Il faut que nous remarquions la différence entre l'équilibre budgétaire d'opérations et les budgets sommaires. Le premier est le meilleur à décrire les finances du gouvernement du Manitoba et le dernier est supérieur pour masquer les finances sous le couvert des corporations de la Couronne. Il n'y a aucun règlement qui empêche le gouvernement d'appuyer une loi où les budgets sommaires et d'opérations sont en équilibre à la fin de chaque année fiscale, simultanément.

We must take note of the difference between a balanced operating budget and a summary budget. The former is best to describe the finances of the government of Manitoba, and the latter is better for hiding finances under the cover of Crown corporations. There is no rule preventing the government from supporting a law where summary budgets and operating budgets would be in balance at the end of each fiscal year, simultaneously.

If this bill, entitled The Balanced Budget, Fiscal Management and Taxpayer Accountability Act, were really about the spirit of its name, it would not replace the current yearly balanced operating budget requirement, but publish in addition a summary budget to satisfy GAAP requirements. Replacing the current yearly balanced operating budget with a four-year summary budget is a regressive policy bringing Manitobans back to the days of government secrecy and fiscal neglect, where deficits and debts skyrocketed out of control and Manitobans were left guessing as to the true financial position their province faced. I, for one, do not wish to revisit such an era.

I've highlighted the major reasons why I'm ardently opposed to this irresponsible legislation. Bill 38 will allow the government to sink Manitobans' finances into oblivion, increase car insurance premiums, liquor prices, hydro rates and user fees, all with no accountability because the worst thing that can happen is a negligible fine applied to the ministers. I've spoken to many other economists and I'm hard pressed to find anyone who can support this atrocious legislation, Bill 38. As a young Aboriginal Manitoban, I demand better of my government and urge all members to deny the passage of this bill.

Je vous remercie encore une fois de m'avoir écouté et de prendre mes suggestions à coeur.

I would like to thank you one more time for listening to me and for taking my suggestions to heart.

Mr. Chairperson: Thank you for your presentation. Questions?

Mr. Borotsik: Merci beaucoup, M. Hamonic.

Thank you very much, Mr. Hamonic.

That's about as far as I'm going to go. I know the minister can certainly do better than I but that was not bad, Ukrainian accent in the French.

Thank you very much, Mr. Hamonic, for your presentation. Very well thought out by the way. Certainly have identified the areas of concern that have been certainly identified by others when this legislation was presented.

Question. You've identified a number of very serious areas. You mention in your presentation that you, as an individual, do not want to go back into deficit financing and certainly increase debt, probably the most important piece of legislation facing Manitobans right now. Do you believe that we should take a sober second thought and perhaps go and talk to other Manitobans, give them the opportunity outside of this committee room to make their opinion known as you've had the opportunity to make your opinion known?

* (18:10)

Mr. Chairperson: I'm sorry, I have to recognize you first.

Mr. Hamonic: Absolutely. This legislation will have devastating effects to the Province's finances and in certain extent, it's very scary for what it can do. So I think, at the very least, this is a bill that should be well-thought-out and discussed with Manitobans, and the very minimum should be consulted much further and, hopefully, throughout the summer until proper recommendations could be set out. Hopefully the minister and the government will be able to rework this and see the faults that are contained in this bill.

Mr. Borotsik: Thank you, I appreciate your comments.

When you say there's a danger of using the summary budget, using the Crown corporations included in that, there's a danger of over-expending on the operating side. You're an economist. Do you as an economist believe it's important that the operating side of a budget on any corporation that may have other subsidiaries who bring together a consolidated or summary station, it's important that each of those subsidiaries or each of those core budgets be balanced at the end of the year?

Mr. Hamonic: Absolutely. The current common private practice is simply just that. As I've recommended in my speech, the proper way to proceed would be to provide the summary budget as well as the operations budget because it's important to look at each integral piece and see how they're performing. So, with that being said, if you think one should be balanced every year, well, then, the core layer would be that every operation would be balanced at every fiscal year. And so, with that being said, I think it's necessary and important that we look at the operating budget as well as the summary budget and look at each subsidiary individually.

Mr. Borotsik: Thank you. I was waiting to be acknowledged because I sometimes get in trouble if don't.

The minister continually says two things: One is that this legislation is absolutely necessary because it has to be GAAP-compliant. That's the first thing he says.

The second one is there's no longer a desire or need because of the GAAP-compliancy to have two sets of books. This is two sets of books and, as you are well aware, the normal understanding of keeping two sets of books is trying to show one set of numbers on one set of books and one set of numbers on the other set of books. That's not quite the case here. When you're doing a consolidated statement or a summary statement and an operating statement, that's not really keeping two sets of books, is it, Mr. Hamonic?

Mr. Hamonic: You're absolutely right. It's not. All it is is simply separating one component to the other and making sure that all the components within it are balanced. And with respect to the GAAP comment that you had made, one of the disappointing parts is in this act, nowhere does it contain at all discussion about GAAP. If the idea was simply about GAAP, all there simply would be is a separate rule to make sure the summary budget is balanced and to make sure that the operating budget is balanced as well. So I think it's somewhat disingenuous for the government to suggest that this is all about GAAP, because they don't even discuss it in the bill.

Mrs. Taillieu: Merci, Jesse. Cette présentation est très extraordinaire.

Thank you, Jesse. Your presentation is very extraordinary.

I got it right. Jesse, I just want to say it was an extremely good presentation, and you make me very proud.

As a young person, you must be very concerned about the future of the province. I mean, you are the younger generation. You are going to inherit a lot of these pieces of legislation that are being brought forward. How do you feel about the future for you and your age group?

Mr. Hamonic: Well, I'm glad you brought that up because I think that's a big concern to many youth my age. As you most all know, Manitoba has the eighth place for average weekly earnings in the country. We have one of the lowest GDP per capitas, and so there's an extremely high out-migration of my age group. I think it's simply that students my age are starting to realize that this government and this Province are not taking seriously the future and our future, and it's very short-term viewed. And so I think in order for me to have, for us to have a future, my generation, I think the Province needs to take their finances seriously, such as tax reform, but at the heart of it is this legislation right here. This sends a big signal to youth my age that the government is not here for youth. They're here for a short term and they don't mind if deficits rack up so that me and my generation have to pay for it. That is very disconcerting, because I do not want to pick up the messes of past generations. I believe that every generation should have sound fiscal policy, balanced policies on every fiscal year to make sure that all of us have prosperous futures and prosperous present times.

Mr. Chairperson: Mr. Borotsik, for one short question.

Mr. Borotsik: One very short question. I've just found out that you're a student, I take it, of taking economics at the University of Manitoba? Correct? Are you considering taking any post-graduate studies at all?

Mr. Hamonic: I will be taking post-graduate studies and, actually, unfortunately, I'm going to be going to the University of Calgary. One of the biggest reasons for that is simply this province, I feel, has very limited growth opportunities. Unless you want to get into the construction industry, unfortunately, people like myself who want to work, perhaps in the finance or capital markets, have to leave.

Mr. Chairperson: Mr. Borotsik, for a very short comment.

Mr. Borotsik: Will you say hello to my two sons when you're out in Calgary, Jesse? Thank you very much.

Mr. Chairperson: Thank you, Mr. Hamonic, for your presentation.

Are there any other presenters requiring French translation in the audience? Seeing none, is it okay with the committee members to have our staff from Translation Services leave? [Agreed]

Thank you for your service.

We will now, as agreed to previously, begin our list of out-of-town presenters, beginning with Mr. Graham Starmer, Manitoba Chambers of Commerce. Mr. Starmer.

Do you have written copies of your brief? Please proceed when you're ready.

Mr. Graham Starmer (Manitoba Chambers of Commerce): Mr. Chairperson, Minister, we ask that the entire written submission be entered into the record. I will cover and focus on selected areas due to the time restraints of this comprehensive and well-documented response to the bill.

Please enter into record.

Mr. Chairperson: Is it agreed that we enter the entire presentation into the Hansard record? [Agreed]

Mr. Starmer: The Manitoba Chambers of Commerce appreciates the opportunity to present its views in relation to Bill 38. The government is to be commended for its continuing efforts to enhance fiscal transparency and accountability and, in particular, in responding to the concerns of Manitoba's Auditor General. As well, the government deserves high praise for embarking on a process that includes commissioning reports, making them public and then inviting Manitobans to provide their views. This whole area of discussion is quite complex, but first let me start by providing to the chamber recommendations, and then I'll provide some background as to their reasoning.

It is the Chamber of Commerce's position that the government should embrace the genius of and, by adopting a balanced budget requirement of a four-year average for a summary statement and a traditional one-year requirement to balance the operating fund or it's called the core government at the moment, or it is known the core government itemization.

We take this position for a number of reasons, including the traditional balanced budget requirement has served Manitoba well from a fiscal management perspective. The issue of how the balanced budget is defined is a policy matter that is outside of the scope of GAAP and the office of the Auditor General.

This government committed, and I quote, to developing an appropriate test that imposes the same level of fiscal responsibility and discipline as the present balanced budget legislation.

The government is essentially maintaining the operating fund and reporting on its itemization of the core government. The only thing apparently missing is the political will to commit to balancing that itemization every year.

The bottom line on the summary account will largely turn on the levels of precipitation that in turn fuels Hydro's coffers. As such, and in of itself, the summary account is not a sufficient barometer of our government's commitment to live within its means. Quite simply, no real policy justification has been offered that would justify removing the requirement to balance the core government itemization.

The balanced budget legislation involves a spending choice, a fiscal management commitment by the government to live within its means. As such, it involves aspects that are outside the purview of the Auditor General and, by and large, even GAAP. In the words of Deloitte, who produced the recommendations, Manitoba's balanced budget legislation is intended to enhance the accountability of the government to Manitobans for its fiscal management practices. Therefore, information contained in GAAP-compliant reports will be used to make this assessment. However, GAAP itself does not contain or dictate particular measure as to the to the preferred or primary means of assessing fiscal management performance.

* (18:20)

Introduced in 1995, Manitoba's balanced budget legislation was hailed by Canada West Foundation and the International Centre for Study of Public Debt as the best balanced budget law in Canada. At the time, servicing the public debt cost $592 million, consuming 11.7 percent of all government spending. This was good enough to make debt servicing the government's fourth biggest department behind only Health, Education and Family Services.

According to the 2008 budget, public debt costs now consume only 2.7 of spending or $263 million. Granted, the improvements in the economy since '95 and increased federal funding have helped matters, but make no mistake, the balanced budget legislation played a key role in help lower these debt costs. The role of the balanced budget legislation in this regard was acknowledged in the Deloitte report. We believe that the most important element of the existing BBL is that it imposes a level of fiscal discipline upon the government. This discipline is achieved through legislated constraints on spending and the requirements to provide funding for the debt repayment and pension payment contributions.

Indeed, the high regard for the value of the BBL was such that preserving it was one of the five key commitments when the current government was elected to its first term. The question then becomes, will Bill 38, in particular the move to a four-year average for balancing the budget, adequately maintain fiscal discipline and the need for transparency, accountability, consistency and some simplicity in relation to the government's fiscal reporting.

The Chamber of Commerce does not believe that this in itself will provide the public with the transparency it requires. The reason for the four-year window is due to the volatility in the summary financial statements, which, in of itself, could dampen the public concerns over deficits. This will be made all the worse when the public learns that these swings often have nothing to do with the quality of government's fiscal management. Indeed, conveying how little control the government has over its finances, was one of the reasons the Auditor General recommended expansion to the summary statements.

The misconception over control does not stop here. The summary financial statements can convey a misleading impression about the funds under control of the government of Manitoba. While the bottom line on the summary statement may imply the government has sufficient fiscal flexibility, all of that money may be due to the surplus within entities like Hydro and MPI. In such a situation, the government may have difficulty, actually, or the public perception point of view, assessing those funds. Consider the circumstances and add a crisis made worse by the lack of government spending, imagine the government trying to explain to the public why it did not spend more even though there is an annual surplus of $175 million.

This misapprehension has already started. If anybody read the papers today, they would have seen the article related to the Canadian Centre for Policy Alternatives, and I quote a section: The CCPA is hopeful that Bill 38 will allow this government to invest greater in areas that it has neglected, and which are in dire need of upgrading, like social housing and strategies to prepare a growing Aboriginal youth population for tomorrow's government.

While continuing in the list of core government itemization, he'd go a long way of preserving the transparency, it does not address the fiscal management obligation that the government live within its means. The importance of this additional obligation was acknowledged by the government when it listed the following of key challenges in moving to GAAP. I quote, developing an appropriate test that imposes the same level of fiscal responsibility and discipline as the present balanced budget legislation, Mr. Selinger.

That is not explained is if the policy considerations deem it necessary to maintain the fiscal transparency of the core government itemization. Why do they not warrant the continuation of the fiscal restraint requirement regarding that fund? It is akin to being told the horse is still important, but removing the barn door.

There is a push and pull between GAAP approaches which emphasizes fiscal accounting, but has challenges regarding fiscal management; the current BBL operating fund, which emphasizes fiscal management but has challenges regarding fiscal accounting. Perhaps the real mistake is picking one over the other.

The key to effective accountability is having a level of responsibility commensurate with the level of control. Would it not make more sense to have different BBL time frames that reflect different levels of control, specifically utilizing a wider time frame to determine whether the budget is balanced? For an example, a four-year average for the entire government entity over which government lacks control and/or a more limited time frame, for example a single year, for the revenue and expense streams over which government has more direct control.

While the balanced budget legislation has helped shrink the debt of a number of Canadian jurisdictions, the need for government to live within its means is as important as ever, as you've seen from the last presenter. If Manitobans do not get this issue right, it's our future generations that will pay, generations we are working so hard to retain with promises of an engaging and rewarding future, generations that will be saddled with demographic crunch where less workers will support an aging population with growing medical needs and therefore ill afford a growing amount of government revenues towards spiralling debt costs.

We must choose carefully. The greatest mistake we could make is to be lulled into believing we must pick either GAAP or the current BBL, or blur the distinctions between the two. Instead, we should focus on preserving both together, as they provide an optimal level of fiscal accounting and fiscal management Manitobans need and deserve. Thank you, Mr. Chair.

Mr. Chairperson: Thank you very much.

Mr. Hugh McFadyen (Leader of the Official Opposition): Thank you very much, Mr. Starmer, for the presentation and all of the work that has evidently gone into the written brief as well. It's quite a detailed document. I had a chance to leaf through it to some extent and there's a lot of great content there and analysis, so thank you for that as well as the summary that you provided through your comments. In particular, I want to thank you for making a clear distinction between the idea of accounting transparency on the one hand and financial management on the other, which are entirely separate concepts.

You could have outstanding financial transparency and disastrous financial management, and all that the accounting transparency will tell you is give you an honest picture of a bad situation. What we want to avoid is the bad situation, and I think that's what you've directed your comments to.

On that point, one of the initiatives under way currently by this government is the extension of WCB coverage to businesses and industries, some of whom, I suspect, are members of the Manitoba Chamber, who have a very low risk of injuries or low-cost injuries and workplace accidents and risks associated with them with a view, in our view, toward enabling WCB to derive revenues from those businesses with a relatively low risk of having to pay out benefits on the other side. The impact, of course, on the companies involved will be an added cost to the companies and on the employees, in most cases, worse coverage than what they're currently getting under their private insurance plans. Our worry is that this is a reasonably transparent move toward increasing revenue at WCB as a way of allowing the government to present that revenue added into the balanced budget calculation in order to mask operating deficits.

I'm wondering if you've had any comments from your membership on that move on WCB and whether any linkage has been made between this piece of legislation and that very regressive policy move.

Mr. Starmer: I'm just wondering whether to proceed on that. Yes, we've not looked at the connection between this legislation and the WCB. Our belief that the expansion of WCB is partly related to, as you indicated, increasing revenues, but also providing the government the opportunity to have an improved accident rate percentage. By enlarging the pool, you decrease your percentage of injuries, you know, the percentage per population.

* (18:30)

So we believe that that's the process, and, yes, our members are seriously concerned related to that discussion at the present time. We haven't connected it with this legislation particularly.

Mr. McFadyen: My other question is: As you know the existing balanced budget legislation contains a requirement that there be a referendum in the event that the government proposes to increase taxes, the main own source revenues to the provincial core consolidated fund. I wonder if you can comment on the apparent objective of this legislation, which is to not want to remove the referendum requirement on tax increases, but to instead use Crown corporation revenue as a way to get around any problems that they may have on balancing the budget, and what analysis and comments you might be able to provide in terms of who that most impacts. Our sense is that those at the lower end of the income scale who are most sensitive to rate hikes, in particular at Hydro but also at Autopac and other areas, are going to see their rates go up or there would certainly be upward pressure on their rates while tax levels may be capped because of the referendum requirement. Have you looked at that issue and can you offer any comment on that?

Mr. Starmer: We've looked at the issue from every way which way and, basically, we believe that with an accountability such as the balanced budget legislation on the core government plus the responsibility to balance that, the summary statement and the balance on that would not be as pervasive as having the balance to their revenues. If you just have the four year plus the balanced budget legislation on that, together with the Crowns and the exemptions that are being provided, we find that the balanced budget legislation that exists on the summary probably will not have any controls or fiscal management on the government whatsoever.

Mr. Chairperson: I'll allow Mr. Borotsik a quick question and then Mr. Selinger.

Mr. Borotsik: Okay, two very quick questions. You speak for the chamber and I appreciate that and I know–how many members do you have in your organization?

Mr. Starmer: Ten thousand.

Mr. Borotsik: I know that you could not possibly canvass all 10,000 members, but have you had any feedback at all from any of the membership? I know you're in contact with them on a fairly regular basis. Have you had any feedback from them based on your very extensive presentation, I might add? What's the general tone of the chamber members right now with respect to not balancing the core budget?

Mr. Starmer: Yes, we have regional vice-chairs that are in contact with most regions of Manitoba, and they have fed back into a policy committee and the chamber related to their opinions on this, and the way the bill is suggesting, they're not very much or they're not in favour of that process.

Hon. Greg Selinger (Minister of Finance): I'll defer to him for one quick question.

Mr. Borotsik: Just a very quick question. Thank you, Mr. Minister. Is it your opinion that the government could comply with GAAP? We recognize that that's the reason for this whole charade, if you will, it's the GAAP compliance. Could they comply with GAAP with the summary statement and the operating statement simply with an amendment to the existing legislation?

Mr. Starmer: We believe that they could ask for a special purpose audit on the core balanced budget legislation, and we're led to understand from our specialty accountants that that is quite possible. We believe, as you know, the Auditor General has said that the balanced budget legislation is a political tool and, if required, she will audit what she is required to do under the balanced budget legislation.

So we don't have any problems with that. I think the fear that we receive from our membership is around the loss of control over spending. Spending has been pretty consistent over the last number of years, and we want to see that there are certain controls on that.

Mr. Selinger: First of all, Mr. Starmer, I'd like to thank you for your presentation. I've scanned it and read most of it now while listening to your presentation. It's pretty obvious that you folks really wrestled with the financial management accounting conflict that sometimes emerges under existing BBL and, even perhaps under the new legislation as proposed. I thank you for taking those issues seriously.

Madam Vice-Chairperson in the Chair

I just want to be sure that you're aware of the fact that, in the new legislation, we require a financial management strategy to be developed, put forward in the budget, and accounted for and measured against every year. Are you aware of that?

Mr. Starmer: Yes, we are.

Mr. Selinger: Thank you, Madam Vice-Chair. Just one final question.

As I think you'll be aware, the growth in core government revenue over the last eight years or so has been quite dramatic, started from about $6.3 billion eight years ago and is now in the range of $10 billion, an increase of close to $4 billion on core government revenues in a very short period of time, much of which is coming from Ottawa in the form of both equalization and other transfer payments, in excess of $300 million added to the budget this year in new transfer payments alone.

What is your view on the value-for-money question with all of this increased spending, and now a desire on the part of government to be able to run deficits on the Consolidated Fund?

Obviously, there's a view within government that they need to spend even more than what they're currently spending. Looking back from where we stand today, do you think that we've seen the dramatic improvements in health care, public safety, environmental protection and education that one might expect from the dramatic increase in spending that's occurred?

Mr. Starmer: Yes, we have been monitoring, although it's been extremely difficult due to the diversity of the government portfolio. It's difficult to do a value-for-money audit on that process.

We monitor, as you know, the Auditor General's activities as far as the individual areas. The amount of money that's increased should provide the government a wide range of options. That's why we cannot see any need to stay purely with the summary budget without some controls on the government's spending itself, because we think that that's probably one of the most important areas to oversight and review and control.

Madam Vice-Chairperson: Time for questions has expired. Thank you for your presentation, Mr. Starmer.

For information of the committee, Darlene Dziewit is registered to speak to Bill 38, No. 3 on the presenters list. Is there leave of the committee to hear presentation from her colleague, John Doyle, instead as she won't be able to make it? Is there leave?

Some Honourable Members: Leave.

Madam Vice-Chairperson: Leave has been granted.

Also, please note that Mr. Doyle is not an out-of-town presenter, so we will proceed to Shannon Martin. Shannon Martin here? Do you have copies, Mr. Martin?

Mr. Shannon Martin (Canadian Federation of Independent Business): No, I don't.

Madam Vice-Chairperson: Please proceed.

Mr. Martin: Thank you, Madam Vice-Chair. Good evening.

My name is Shannon Martin. I'm the director of provincial affairs for the Canadian Federation of Independent Business. On behalf of CFIB and our Manitoba-based members, I'm here this evening regarding Bill 38, The Balanced Budget, Fiscal Management and Taxpayer Accountability Act.

CFIB is a non-partisan organization, exclusively representing the interests of 105,000 small and medium-sized, Canadian-owned, independent businesses. In Manitoba, we have approximately 4,800 members. We are funded entirely by our members to take direction from them regularly through surveys on various issues.

* (18:40)

To fully appreciate CFIB's concerns related to Bill 38, one needs to understand the general attitude towards a policy of balanced budgets by those same elected officials who, today, seek to end it. These comments are from Hansard during the debate on the original Balanced Budget Act, Bill 2, and range from the now-First Minister to his Cabinet minister, including colleagues that sit around this table.

The original concept of balanced budget legislation was referred to as a cynical pre-election ploy, a public relations exercise, a political gimmick. Balanced budget legislation is trendy. Balancing a budget every year cannot be defended on any economic grounds. This bill will not work. This legislation does not correspond with any economical theory known to person kind, either historical theory or current economic theory.

One of the most odious parts of this bill is that it hamstrings future governments. An election gimmick to bind themselves into an irresponsible fiscal straitjacket. Window dressing. A sham. No government needs balanced budget legislation. It is one of the most unthinking pieces of legislation. This silly bill and this silly public relations stunt. One of the most dangerous pieces of legislation we've had to deal with. Bill 2 is an ideological crusade, a bill that is destined to make Manitoba the laughing stock of the financial management world. We warn the government we do not think it is going to work. An unrealistic piece of legislation this government is going to have an enormously difficult time living with. A very mean-spirited and regressive measure. Undemocratic.

This legislation takes away the ability of democratically elected governments. The principle of balanced budgets, the principle of debt repayment, the principle of taxpayer protection, they are like three enticing bottles of perfume which give Manitobans pleasure to behold and to smell but if they swallow it, it will be deadly for them. It will not mean that the province will be more economically viable. It will have a deadening impact on Manitoba. This bill will endanger the economy. Its real purpose is an abdication of responsibility.

Despite these dire warnings from the Minister of Finance's colleagues when they formed Her Majesty's Official Opposition, his government has been able to live within the parameters as defined under the original balanced budget law for almost 10 years. In fact, if one was fully to embrace the economic picture of nirvana painted by this government, including phrases like historic investment, return of the building crane and firing on all cylinders, one could only conclude that the annual balancing of the province's operating budget under Bill 2 did not hamstring this current government, and it has not had an enormously difficult time living with it.

With new spending of almost $9 for every $1 in new tax relief in the most recent provincial budget, all under the current balanced budget legislation, I would respectfully suggest that this government is hardly in a fiscal straitjacket as prophesized by the minister's colleagues.

Now we fast-forward to today, and I can assure members of this committee that CFIB's members are not as enamoured by the province's fiscal picture as they are. In a recent survey asking how effective is your provincial government at value for money in providing those services used by your business, Manitoba ranked No. 1 among those provinces in terms of being described as ineffective.

When asked how effective is your provincial government in creating a system of fair taxation, again Manitoba ranked No. 1 in terms of being described as ineffective.

So today Manitobans are left with a question of who's laughing now. As previously noted, the Premier (Mr. Doer) as Opposition Leader in 1995 described Manitoba's balanced budget legislation as destined to make Manitoba the laughing stock of the financial management world. Despite the mountain of ridicule, as noted earlier, that they heaped on Manitoba's balanced budget legislation, the government of the NDP recognized that the taxpayers were in favour. As a result, they made retention of balanced budget legislation one of their five key commitments to you and your family during the 1999 provincial election.

Fast-forward nearly 10 years and we find ourselves with a government which with passage of Bill 38 is preparing to gut any semblance of fiscal responsibility from existing balanced budget legislation. The new legislation creates a fiscal accountability hole so big that you can literally drive a truck through it. The key issue is this government's unwillingness to be financially responsible for balancing core government operations including health, justice, education and transportation. Instead, income from Crown corporations will be now included to help balance government spending.

To understand how problematic this is, consider the most recent provincial budget. In theory, under this legislation, the government could have increased spending by a whopping $665 million and still called it a balanced budget. This excess balanced spending is then added to taxpayer-supported debt, increasing interest payments in future budgets and burying future generations.

Another problem with the legislation is that it moves us away from balancing the budget every four years and substitutes a provision that budgets must be balanced on a four-year average. In theory, this might sound reasonable. In practice, it opens the door for political manipulation. Yearly accounting is straightforward and easy for people to understand. Four-year rolling averages are not, and that is what this government is counting on.

Moving to a four-year average and blending income from Crown corporations into the government's bottom line makes the odds of any provincial government running a deficit about as likely as it is to end hallway medicine. Bill 38 opens the door for this government to return to the days of deficit financing. Manitoba's Crown corporations can be consistently counted on to post income in the hundreds of millions of dollars, providing a huge but fictional cushion to overspend. What should send a chill through every taxpayer's wallet is the fact that under the proposed legislation, this government could, using the proposed four-year summary budget average, overspend its core budget by as much as $3 billion during its current mandate and still legitimately claim a balanced budget. Overspending on this scale will only add to Manitoba's growing provincial debt of almost $11 billion, diverting hard-earned tax dollars from funding health, highways and higher education to paying off interest charges.

With annual revenues of almost $4 billion, or 63 percent in 2008 compared to 1999, one would think that living within one's means should be easy, but apparently it is not. New provincial spending has more than kept pace with no end in sight. After the NDP's campaigning on and living since 1999 within the confines of existing balanced budget legislation, Manitobans need to ask two questions.

First: why now? After almost 10 years in office, why is there a need to move away from annual balanced budgets?

Secondly, what is driving this legislation? What is the government not telling us in terms of planned spending sprees or looming financial crises?

While the government will attribute the proposed changes to new generally accepted accounting principles, there's absolutely nothing within GAAP that remotely suggests the government should not or cannot balance its operating budget on an annualized basis. New accounting methods should not become an excuse to void accountability. Bill 38 crosses the line from bad public policy to awful and Manitobans deserve better. Who's laughing now? This government is, and the joke is on the taxpayer. With legislation like this, is it any wonder that Manitoba remains a have-not province?

Mr. Borotsik: I appreciate that. Thank you, Mr. Martin, for your presentation. I guess, it doesn't take, I mean, long to figure out which side of this particular legislation you're on. I do appreciate it.

There're a couple of things that you had indicated. This Finance Minister and this government takes great pride in standing before us and saying this is their ninth balanced budget, balanced on an operating budget with increased revenues and increased expenses, all the rest of it, but it is balanced. You asked the question, I'm going to ask you the question.

Why now? If they can balance the budget for nine years and take such great pride in that, why do you feel now they would deviate away from that balanced core budget and go to this wonderful summary statement as well as a four-year balanced budget?

Mr. Martin: Well, you know, while I'm a big X‑Files fan and I'd like to allude to some sort of vast government conspiracy, I have a lot of respect for the Finance Minister. I can't attribute his motives for the change, but I'm here to suggest that the change is simply unwarranted, unnecessary and unwanted.

Mr. Borotsik: The Canadian Centre for Policy Alternatives had a really interesting article in the paper today which suggested that balanced budgets are not necessary. I ask the government the question as to whether they embrace that particular philosophy. They haven't in the past nine years, and I don't know whether this is an attempt to embrace that particular philosophy, but in your opinion, based on the legislation, based on the accounting and based on the information that would be provided to Manitobans in the Legislature, they could in effect have a deficit in the next four years very easily and not make up for it in the fourth year. They could deficit finance for the next three years and not make up for it in the fourth year. Is that fair to say?

* (18:50)

Mr. Martin: Under this legislation, any future government, be it NDP, Liberal or Conservative, can deficit-finance. They can run a deficit within their operating budget and use Crown revenues to amass that deficit. As I said earlier, I mean, this government has noted publicly that they have abided by every single year under their three consecutive mandates living under Bill 2. It has not hamstrung them, as some of their colleagues suggested in 1995. It has not put them in a fiscal straitjacket. It has not in any way ended, you know, the fountain of spending that has occurred.

Mr. Borotsik: I asked the same question of Mr. Starmer: could or do you believe with an amendment to the existing legislation this government could, in fact, comply with GAAP as being asked for by the Auditor General? Could there be a compliance with GAAP and still maintain the core operating budget with a simple amendment to the existing legislation?

Mr. Martin: Absolutely. It would not be difficult for this government to amend this legislation in such a way to require any government–be it this government or future governments–to balance that core operating budget while still reporting to the public of Manitoba the summary financial statements of the province as required under GAAP. It is not a difficult thing to do. I mean, it's important to remember the government is just that: it is a government. They are the body that makes the rules. Case in point, when the dividend was taken of Manitoba Hydro, legislation had to be passed for that to occur. Governments can do that. Governments can make the rules.

Mr. Larry Maguire (Arthur-Virden): I was just going to allude to that, Mr. Martin. Thank you very much for your presentation. You know, I might differ. I might be one around the table, as a former Finance critic, to disagree with those who are saying that the last nine budgets have been balanced in this province because I don't believe they have, but even if you stretch that, they had to take five–basically, $203 million. What government would pass its own legislation to require to take three-quarters of the profits of the Crown corporation called Manitoba Hydro out to use in operations of its budget, as this government did in '03, '02, '04, I believe it was, for those three years?

Do you believe that this type of legislation is now coming forward to make it more formal opportunity to, as you say, use the smoke and mirrors of balancing the books by utilizing the profits of the Crown corporations that you indicated are some close to a billion dollars on an annual basis? And, at a time when the transfer payments and equalization are already some $600-700 million higher than they were in 1995, that the public wouldn't accept a government to put a bill in place to take three-quarters of the profits out of Hydro anymore so they're doing this instead?

Madam Vice-Chairperson: Mr. McFadyen.

Mr. Martin: Sorry, Madam Vice-Chairperson, can I respond?

Madam Vice-Chairperson: I'm sorry.

Mr. Martin: I would never attribute motives to the Minister of Finance (Mr. Selinger) but I would suggest that under the legislation, it definitely does muddy the picture.

I mean, let's be frank here. Manitobans, generally speaking, don't pay a lot of attention to the Province's finances. It can be a complicated process. A lot of people get their taxes done, either, you know, they'll go out and buy a you-file program and punch in the numbers and bing, bada boom it's done, or they'll hire an accountant to do it. People, generally speaking, can get overwhelmed by these things. We shouldn't, as a government, go out of our way to make it more confusing than it should be. At the end of the day there is absolutely no reason why this government or any future government cannot balance its operational budget on an annualized basis.

I mean, the previous government did. This current government has, year over year over year, and despite those confines of Bill 2, I continually hear or read news releases talking about the phenomenal growth in our economy, the investments, you know, the re-announcements of various projects and that. All things told, from this government, things are going pretty well, all within the confines of Bill 2, so it hasn't been the fiscal straitjacket prophesied in 1995 and it can be done and it should be done.

Madam Vice-Chairperson: Mr. McFadyen, very quickly, please.

Mr. McFadyen: Thank you, Madam Vice-Chairperson, for your latitude.

With every piece of legislation that impacts finances, underlying it is a reflection of the values of the government. There are winners and losers when these sorts of broad policy decisions are made. What this bill appears to do is put upward pressure on rates at Autopac and on hydro, rates which are paid by people. The people who are most sensitive to those rates are people at the lower of the income scale and rural and northern residents who require vehicles as well as city dwellers who can't get around any way other than by driving vehicles. That's where the issue comes in with Autopac. Everybody pays hydro bills. That's where the pressure is going to come.

In addition to that, to the extent that this is going to lead to increases in a general purpose debt of the province, it's the next generation of Manitobans who will receive that mortgage that we'll be passing on to them.

So I want to ask you to just comment on your view on the ethics of distributing the burden to those who are too young to be able to stand up for themselves and vote today, those who are at the lower end of the income scale and rural and northern residents who are going to be most sensitive to hydro rate and Autopac increases. What does that, in your view, say about the values of the government when those short-term people on the receiving end are going to benefit at the expense of those who are unable to vote today and those who are at the lowest end of the income scale?