COMMITTEE OF SUPPLY

(Concurrent Sections)

GOVERNMENT SERVICES

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Mr. Deputy Chairperson (Ben Sveinson): Will the Committee of Supply please come to order. This section of the Committee of Supply will be considering the Estimates of the Department of Government Services. Does the honourable Minister of Government Services have an opening statement?

Hon. Brian Pallister (Minister of Government Services): I am pleased to present the 1995-96 spending Estimates for the Department of Government Services. Although I am new, as you know, Mr. Chairman, to this portfolio, my research over the past several weeks has led me to believe that the department takes a great deal of pride in the level and the quality and the cost effectiveness of the services that it provides. My review of the Estimates package compiled under the excellent guidance of my predecessor, the Honourable Gerald Ducharme, confirms that extensive efforts have been made to minimize expenditures and ensure the government attains its goal of a balanced budget.

With the Chair's permission, I would like to highlight some of my department's recent accomplishments and plans for the coming budget year. An Accommodation Cost Recovery system was implemented in 1993-94 and applies occupancy cost to all government programs based on the type and location of space they occupy. In doing so, it ensures departmental program costs are realistic and provides departments with the incentive to minimize their space requirements. In 1995-96, the two-year task of adding institutional premises to the inventory of space will commence.

Property Management is responsible for maintaining all government properties. This includes provision of energy management services, payment of utilities, cleaning, maintenance, security, parking and lease administration.

Efficiency and environmental initiatives for 1995-96 include use of state-of-the-art communication technology to monitor building mechanical and fire alarm systems from remote locations, participation in Manitoba Hydro's PowerSmart program, installation of water-savings fixtures in designated buildings to further reduce water consumption by an estimated 760,000 litres, developing cost-comparison models between government buildings and buildings in the private sector, paper recycling expansion to include boxboard and magazines, reducing landfill requirements by an additional five tonnes. Currently, the program involving standard office paper reduces landfill requirements by 2 percent and produces annual revenue of $10,000.

Expanding the department's composting program by two additional locations to divert an additional 10 tonnes of waste away from landfills. Composters have been in use for the last three years for disposal of biodegradable waste such as kitchen waste from food processing at several government buildings.

This division is very active in TQM, total quality management, encouraging personnel to participate in the decision-making process. In 1995-96, 25 employee work-improvement teams will be created to resolve workplace issues with the aim of improving service and ensuring client health, safety, and satisfaction is maximized.

The Supply Division is responsible for government air services, office equipment, purchasing, materials, telecommunications, mail, land management services and vehicles.

A review of Air Services was completed in 1994-95, and I am happy to report that the organization's fire suppression and air ambulance program was found to be one of the most efficient, effective and safety-conscious in Canada. Some refinements were identified and are currently being implemented.

Office Equipment inventories and maintains all standard government office equipment. Beginning 1994-95 their responsibilities increased to include maintenance of microcomputers. Technician training has been underway and will continue throughout the coming year.

Over the last year, Purchasing participated in joint efforts to eliminate interprovincial trade barriers. In 1995-96, they will be implementing an open-bid electronic tendering system providing access to potential suppliers throughout Canada.

Telecommunications takes pride in keeping us at the leading edge of communication technology. During the last year they were instrumental in introducing a provincial backbone electronic data network. In 1995-96, they will be working with the Department of Education to develop and implement an interactive television education system. This will enable visual and audio instruction in rural centres from one central location, while providing a feedback link between the teacher and the students.

Introduction of special operating agencies in provincial governments was pioneered here. Fleet Vehicles was the first in 1992-93; Material Distribution followed in 1993-94; and land management services will become one in 1995-96. Postal Services has been targeted as a candidate for 1996-97. Special operating agency status enables an organization to conduct its affairs in a businesslike manner. It provides increased management flexibility and ensures financial accountability through application of generally accepted accounting principles.

Charged with provision and control of accommodation for government programs, the Accommodation Development group has been very active in reducing the government's rent bill for leased space. Over the previous two years, through maximum use of owned premises and aggressive negotiations with landlords and property managers, lease costs have fallen by 3.4 million. Plans for '95-96 include further refinement of space inventory and examination of cost savings potential through colocation with other levels of government.

The Disaster Assistance group, composed of an Emergency Measures Organization and Disaster Assistance Board, provides the one-two punch necessary to fight any man-made or natural disaster the province may encounter. Emergency Measures handles the preparedness plans and assists local authorities in combating disasters, which the Disaster Board provides financial relief to municipalities and individuals who suffer uninsurable damage. These two organizations should be congratulated for the way that they have handled the severe flooding we encountered this spring and in the past year, and as well, the situation that they have encountered in recent weeks with the fires in the northern part of our province. Their diligence and their sensitivity to the needs of Manitobans has frequently exceeded expectations.

Mr. Chairman, I believe these Estimates reflect the government's pledge to a balanced budget while providing a high level of service to clients of this department. I would like to thank my employees. I would like to thank my predecessor, the Honourable Gerald Ducharme, for his efforts and wish him the best of luck in his life after politics and after government, and I would like to thank our Premier (Mr. Filmon) for the opportunity to serve in this capacity on behalf of the people of this province. Thank you.

Mr. Deputy Chairperson: We thank the Minister of Government Services for those comments. Does the official opposition critic, the honourable member for Elmwood, have any opening comments?

Mr. Jim Maloway (Elmwood): I would first like to congratulate the minister for his recent appointment. I think that I would prefer to dispense with opening comments, because we have some territory to cover this afternoon and a limited time in which to do it. So perhaps we could head into the Estimates.

Mr. Deputy Chairperson: I thank the critic of the official opposition for those remarks. Under the Manitoba practice, debate of the Minister's Salary is traditionally the last item considered for the Estimates of the department. Accordingly we shall defer consideration of this item and now will proceed with consideration of the next line. At this time we invite the minister's staff to join us at the table, and we ask the minister to introduce his staff.

Mr. Pallister: Mr. Chairman, I would like to introduce our Deputy Minister Hugh Eliasson and welcome him to the discussion. I have enjoyed working with him, and I want to put that on the record, and I look forward to working with him in the future.

Mr. Deputy Chairperson: We are now on item 1.(b) Executive Support (1) Salaries and Employee Benefits $369,200 on page 71 of the Estimates book and on page 17 of the yellow Supplementary book.

Mr. Maloway: On a point of procedure, might I suggest that we deal with the Estimates excluding the Minister's Salary as just one global appropriation and that we simply ask questions within the whole area of the department?

Mr. Deputy Chairperson: Is this the will of the committee?

Some Honourable Members: Agreed.

Mr. Maloway: I would like to begin by referring the minister to page 37 of the Supplementary Information book. That particular section deals with the Accommodation Cost Recovery. I note that there is a reference there that the department maintains a perpetual inventory of all government owned and leased accommodation indexed by occupant. I wonder when we could receive a copy of that inventory.

Mr. Pallister: Just for clarification to the questioner, Mr. Chairman. I just want to be sure we are working off the same page here.

Mr. Maloway: Page 37.

Mr. Pallister: Again for clarification, what was the exact information that the member was requesting once again?

Mr. Maloway: I was referring to the wording on page 37 of the booklet that talked about the fact that the department maintains a perpetual inventory of all government-owned and leased accommodation indexed by occupant. I was asking the minister when I could receive a copy of this inventory.

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Mr. Pallister: I have available right now a space inventory report which contains information, I believe, that would satisfy the member's requirements, including the building type and location as well as the landlord and the annual budgeted cost for the coming year. We can certainly make that information available to the member.

Also, I should at this time introduce Assistant Deputy Minister Bill Kinnear of the Accommodation Development branch of our department and thank him for being available.

Mr. Maloway: The minister made reference in his opening remarks to his department's aggressive, I guess, attempts to cut the lease costs. They have been reduced by I believe he said $3 million over the last year.

Could the minister describe for us the methods by which he is able to reopen the leases and get reductions?

Mr. Pallister: This will not be an exhaustive list for the member, but some of the techniques that have been utilized include maximizing the use of government-owned space where prior to that time it was leased space; consolidating government's operations into making more efficient use of space as a consequence of that; as well, a program whereby we have looked at entering into longer-term leases given the current situation in the market in terms of leased costs. It appears to be at something of a lower cost situation right now. So entering into longer-term leases should result in lower cost to the taxpayers and the government over the years ahead. As well, in certain instances, where appropriate, offering to exchange the terms of the lease prior to the completion of that lease to the landlord, giving them the option to provide a rate reduction in exchange for the preferential rearrangement of the lease to result in lower cost to government and the ratepayers as well.

Mr. Maloway: Mr. Chairman, so is the minister indicating then that his government has been proactive then in approaching as the market dropped on commercial leasing, that his department people went out and approached the private owners of the properties and requested--I am just wondering what the procedure they used to entice the private owner into negotiating, because I would think that if I was a private owner with a long-term lease with the government, I would not return the phone calls.

Mr. Pallister: In short, yes. I think the answer for the member would be yes. This government through this department has been proactive in pursuing more beneficial cost arrangements for properties that we do lease. As well, we have, I am told, been in contact with all major property owners that we lease from in an effort to encourage them to enter into arrangements that would be mutually beneficial, of course, to them and that they would procure longer leases with us and we would procure lower square footage costs for the space that we do occupy with those landlords.

Mr. Maloway: Mr. Chairman, I know that in the material I did see some figures indicating what the government was spending on private leases versus government-owned buildings. Could the minister give me those figures again and indicate whether the ratio between private and government is roughly the same as it was a few years ago, or is it widening? If so, in whose direction?

Mr. Pallister: While we are gathering that information, I will give sort of a preamble for the member, if I can, of the lease budgets, say, commencing back in '90-91 year over year, and we will start with that information for the member. This would be adjusted to constant dollars, 1994 dollars, for the member for Elmwood (Mr. Maloway). The costs '90-91 for leased space were 21.1. If the member wants more specific detail, I would be welcome to share this with him, but just giving him year over year: 21.3 in '91-92, 21.4 in '92-93, 19.7 in '93-94, 18.3 in '94-95. Now that would be your lease budget figures. We will get the other information the member has requested here. We are looking for it right now.

This perhaps would be of interest to the member as well. As for the actual leased accommodations portfolio in total and where in fact we do lease space, in which areas of the city and province, in terms of where the space is actually located physically as a percentage, in the central business district of the city of Winnipeg itself, 28 percent of total leased accommodations lie in that area. In the area of transition--roughly just to clarify, when we refer to the central business district, that roughly takes in the space from the core right to Memorial--and from Memorial Boulevard to St. James and then from St. James out. So the transition area between Memorial and St. James, the percentage of space there, 20.6 percent; and from St. James out to the Perimeter, 18.5 percent;, and, in the rural, the percentage, 32.9 percent.

Mr. Maloway: Mr. Chairman, just so I can get my thinking straight on this. Was the minister saying that the government is paying roughly in the neighbourhood of $20 million to $22 million for leased space. Does that include privately leased space and government-owned space?

Mr. Pallister: Just to answer the member's earlier question, I apologize for the delay in the information, but the percentages have remained roughly the same over the years because there has been the sale of government-owned properties as well. So that column has come down at the same time as total leased square footage has come down, but, in rough terms, the leased space, square-footage-wise, about 1.5 million square feet is leased, about 7.4 is owned. Roughly 20 percent of total space would be leased space.

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Mr. Maloway: Mr. Chairman, so the $21 million that is spent leasing space then, what percentage of it would go to privately owned leased space?

Mr. Pallister: Just to clarify, I believe the number would be in the area of $18 million, and that cost represents the cost paid for privately owned leased space. Now, in terms of costs paid for government-owned space, we have a cost-recovery program which is an internal self-funding type of concept and is not alluded to in these figures.

Mr. Maloway: Mr. Chairman, the cost per square foot and so on that the minister is able to obtain from a private landlord then is not, I guess, the cost per square foot of the government space, is not in any way reflective of what the minister is able to get the space for on the private market, is it?

Mr. Pallister: In answer to the member's question, I am told, and I believe that this would be accurate, what is done in the area of cost recovery is that a market value is attached to the property itself. Allowance is made for the invested capital in, for example, leasehold improvements in the property, and then the charge transferred to the appropriate department is reflective of those values. So I think it would be reasonable to say that this attempts to duplicate, in some respects at least, the method of procuring property from the private sector and the method of pricing that occurs in a free-market economy.

Mr. Maloway: Mr. Chairman, the minister is telling me then that the procurement of the government-owned space then generally follows what he is able to get on the private market. If the private market drops, then they have to readjust their basis for the public portions of it. Otherwise, it will be out of whack.

Mr. Pallister: The rents that are cost recovered from the appropriate departments for which property is leased are reflective of the market value of a property that is inhabited by those tenants. When accommodation cost recovery was put into place, an analysis was made of those properties involved and a fair charge based on the value of those properties was established.

Now that principally was done approximately three years ago, and, similar to assessments done on a regular basis of properties, that will be reviewed as market values may have changed in the interim periods.

Mr. Maloway: Mr. Chairman, well, I assume the minister has that quote, "perpetual inventory of all government owned and leased accommodations indexed by occupant" with him. Can he give me a copy of that now so that I can take a look at it and maybe come back and ask some questions afterward about it?

Mr. Pallister: Mr. Chairman, we are searching to see what kind of detail we can provide the member on the owned space. I believe, at the very least, we can provide him with a breakdown by department of the square footage by leased and by government-owned buildings. I believe we have that information accessible here and can give him that.

He also has available to him this list, or I can make it available to him. This, again, is all leased properties but does break down by location, office type, the actual landlord. It does have some good detail in it for him as well.

I will just forward this to the member for his perusal.

Ms. Jean Friesen (Wolseley): Mr. Chair, I wanted to ask some questions that I have already raised with the minister earlier in Question Period, in which he said he would investigate. These deal with the School for the Deaf.

I wonder if the minister remembers the questions that I asked him, whether he has been able to provide the information.

Mr. Pallister: Mr. Chairman, would it be possible to just refer to the section. If the member for Wolseley could do that, I will see what kind of information we have at immediate disposal to give her today. I do recall the question and will endeavour to provide what information we can on short notice today.

Ms. Friesen: Mr. Chair, it deals with the issues of the Pan Am Games, and they are moving into the old School for the Deaf.

What I had asked the minister was what the cost of renovations was to the School for the Deaf. There had been, and I think it is repeated in the newspaper again today, the Winnipeg Free Press, that the government had estimated there would be a cost of $4.5 million for the renovations to the School for the Deaf to provide for new needs to the School for the Deaf.

The government has also looked at Alexander Ross School, I understand, and is arguing that the cost of renovations for the deaf to Alexander Ross School will be $2.5 million, and hence it is arguing that there is a saving of around $2 million to the government in using Alexander Ross School in the future rather than the School for the Deaf.

The parents at the School for the Deaf are concerned that they have seen no further information on estimates for renovations at either school. I asked the minister in Question Period if he could provide further information for the Advisory Council on School Leadership on the basis of these estimates. What is included in the estimate of $4.5 million? What is included in the estimate for the Alexander Ross School of $2.5 million?

Mr. Pallister: Just for clarification, please, from the member for Wolseley, the figure $4 million, I am not sure what that was made in reference to.

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Ms. Friesen: Mr. Chair, it is a number that is quoted in the Winnipeg Free Press this morning of an estimate of $4.5 million estimated to be the amount of renovations to the existing School for the Deaf for the purposes of the deaf. That is, had they stayed in that building, the amount required to bring it up to new standards required for new kinds of electronic communication, for example, was $4.5 million.

The government argued that it could do the same kinds of things, I understand--and I may be putting words into your mouth on this--certainly that renovations could be undertaken at Alexander Ross School for $2.5 million. Those were numbers which had been given to the parents, I believe, in the middle of April. They had asked, I believe, for further clarification on this and had been told that it was not possible.

I believe that the parents had also spoken to the officer in your department who dealt with Freedom of Information. It was not a formal Freedom of Information inquiry, but they had spoken to him or her and had been told that this information was not available but were not discouraged from applying for a further formal Freedom of Information inquiry.

I raised it in the House to see if there were some obvious explanations that the minister could provide. The minister undertook to take that under advisement and to look for the answers, so I am asking again, I think it is about a week later now, to see if the minister has been able to discover anything.

Mr. Pallister: Mr. Chairman, as I mentioned in the House to the member, I will undertake to get more detailed information for her. I will try to give some general information to her today and hope that it is satisfactory or at least generally accurate in its reflection of the situation as it exists today.

The issue, of course, around the Manitoba School for the Deaf is an issue that is an emotional one for many. It arouses a great deal of emotion in terms of those who have a lot of memories tied up in that facility, certainly those who benefited by the programs that were there over the years and also certainly because it affects young people with special needs, actually people of all ages with special needs in some respects. It is an issue that can arouse great emotion. Changing sites at any time can.

As far as the issues of the parents that the member alluded to, I understand the Department of Education has initiated some discussion with the families that may be affected by changing sites.

As to the cost, which is, I guess, more along the lines of what the member is wanting to know, I am told that given various scenarios of renovation with that facility, costs to renovate the facility could range in the area of--and I accept the fact that this is a broad range--between $4.5 million and $10 million to renovate the existing facility, which is, as the member knows, a very old building, a beautiful building but very old, to accommodate the needs of those people who require the services provided in that facility.

On the other hand, the cost to renovate in the other location that has been mentioned, Alexander Ross School, in St. James-Assiniboia School Division, has been estimated--again I use the word "estimate"--at around $2 million for those costs.

That is a general answer to a question that I know the member would like more specific information on. I can only say at this stage that there is discussion taking place. There have been proposals presented in the past, I am told. Beyond that, I am sure the member has more questions.

Ms. Friesen: Mr. Chairman, well, the only new piece of information that the minister has offered us is in fact that he is prepared to extend the estimate of the cost of renovating the School for the Deaf to $10 million. I understand we are speaking in generalities there. I also accept the minister's perspective that there is a great deal of emotion around this issue. That is why I am asking the question again and again. I think now I must have asked it about four times.

The parents want, I think, to have a basis for the discussions. They feel at the moment that they do not have a basis for that discussion. What is going to be covered in the renovation that could be estimated anywhere from $4 million to $10 million? What is going to be covered in the renovation that will be possible with $2 million?

I feel and I certainly sympathize with the parents extensively on this. They do not have a basis for discussion. It is no wonder that there is so much emotion surrounding this issue when nobody is dealing from the same book and the same facts.

I try to put it again, Mr. Chairman, on the basis that the parents want some facts, they want to be able to compare apples with apples. They want to feel that they are being dealt with openly and they have some evidence and the same evidence that the government is dealing with on this issue. I would be happy to come back later in the Estimates process to discuss this if the minister is able to have his staff perhaps look at what further detail may be involved. We can come back to this perhaps at the end of this Estimates process.

Mr. Pallister: I believe the member is alluding to questions that the Minister of Education (Mrs. McIntosh) may or may not have--because I have not reviewed the discussions that took place in Education Estimates--undertaken to answer. The relationship question that she alludes to, in terms of the input that the parents she refers to desire, is one that would be best, I think, pursued along those lines and pursue the Ministry of Education.

As far as the costs, per se, of doing renovations, I think the member is aware that, again, in a general sense--I guess I have some personal experience in this because, in my own prior career as a business person, I undertook to renovate an old building in my community because I grew up in an old, two-storey brick farmhouse and kind of had an emotional attachment to those and did not want to see it come down.

I undertook to renovate, with the help of those who are much more skilled in that area than I, of course, an older home built in 1904 in Portage la Prairie and located offices in it. I can tell the member that on that small scale, in a building that just was a 1,500-square-foot building, that was a major undertaking, given the difficulties with the age of the building itself, the mechanical, electrical, plumbing requirements that entailed from that renovation. Just simply the fact that it was an older building resulted in the incurrence of a great amount of cost that might not have been the case had I proceeded, as a business person, with the construction of a new building itself. It is one of very few decisions I have made in my business career that I might revisit had I an opportunity to do that, but I do not, so I will live with the decisions I made.

In that respect, though, I think there is a fairly valid comparison here. This particular building to renovate, generally speaking, would incur a cost for the taxpayer that would be--and I think the member knows this--much higher than would be the case for comparable square footage in another facility, not just in the sense of the structural costs themselves for the renovation but also in the ongoing costs, the operational costs. The operating costs for a facility, for a building of the type that the Manitoba School for the Deaf building is, would be generally, very likely, around double the costs for the Alexander Ross School, so in terms of the actual costs incurred in operating a facility, continuing to operate a facility which is, as the member knows, one that is structurally designed to accommodate many more people than it currently provides service to.

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The current enrollment is, I believe, a little under a hundred. The member for Wolseley may know the exact numbers, and I would appreciate her sharing that with me. Of those students, only 15, I believe, are full-time residents of the facility. So circumstances certainly have changed from the historic operational requirements that building once had. The load that was put on the facility is very different, very lessened from what was the case. The actual setting within the building itself could very likely be described as--despite the emotional attachments that many have, and that is understandable, to the building itself, the memories they have of it, it would be very accurately described as an antiquated and outdated setting for those students.

There are certainly drawbacks any time a change like this is undertaken, and the member alludes to those drawbacks. Her concern for process is understood and accepted. The reality is that we want to concentrate on providing services in this department and certainly in others. The services we want to provide, in this instance, to the students who attend this facility are perhaps better delivered in another facility, and it could be, we hope, very much to their advantage if that could ultimately be the case.

Ms. Friesen: Mr. Chair, the issue of the number of students in the existing school is certainly one that has been raised from time to time, and there are, as the minister indicates, fewer than a hundred students, with a relatively small proportion of those in residence at the time. But what puzzles the parents is that the Alexander Ross School accommodates 700 students, and so the issue of the number of students does not seem to bear on this particular case. That is one of the reasons they are so puzzled by the government's reluctance to put in front of them the very cost of renovating the two buildings to a comparable service level.

I do not think the issue of providing services to deaf students is in question, the government's intent, but the issue is that people are being asked to move, in their minds, at relatively short notice, and I know that the Minister of Education and Training (Mrs. McIntosh) has now agreed to meet with them on Thursday. They do want to have some inkling of, some evidence that the government is prepared to share with them, the information on the renovation of the two schools and what is to be provided for that amount of money, whether it is $2 million or $4 million, and we might as well stay with those two numbers.

I acknowledge also that when you are dealing with an old building, there are indeed always unexpected events. Most architects that I have dealt with--and I have dealt on a number of construction projects in renovation--the architect and the construction company will have a standard formula that they apply to old buildings, whether it is 15 percent or 20 percent of contingencies, for such events. So I do not think the old building argument perhaps is as clear cut as the minister wants to make it.

I repeat, I am looking for information on this. I am looking for information that the government already has and that I hope it is willing to share with a parents committee which is extremely concerned about the changes that they are being asked to make. So I leave it with the minister for now. We can come back at the end of the Estimates period, and we can see perhaps in half an hour or an hour what material is available on this that we can share with the parents.

Mr. Pallister: I thank the member for her comments, and I am pleased to hear her accept the basic premise of this discussion, which is that we are trying to provide better learning opportunities for the students at this school and that we are trying to do that in a more cost-effective way. Certainly, that is the case. I am told that the actual space that would be utilized in the Alexander Ross School is less than half the total square footage of the current facility.

Costs would be for operation alone, and I am not here alluding to the actual pedagogical costs associated with the school, but the actual operating costs--that would be the salaries for maintenance personnel, utilities costs, grants in lieu of taxes and so on--would be less than half of the current costs, recognizing that we can therefore reduce the cost to the taxpayer in specific terms, in specific reference to these operational facilities, by half at the least. There certainly is the cost benefit.

I think the larger concern that the member and I share is that the services on the pedagogical side, that the services that are being offered to these people are of the utmost quality and effectiveness. That, I am confident, will be the case when such a move occurs. The facility being certainly a more modern facility, the member alludes to the fact that there may be excess space. I am told, in general terms at least, that in terms of the facilities that would be available when such a move occurs, those facilities would not be certainly out of line with similar facilities in other provinces in terms of the space and the quality of space that is provided for the provision of the service. We would not be excessively using the taxpayers' dollars to provide for unnecessary quality learning environment for those people who are using the services of the school, but I thank the member for her interest in the issue.

I would say that certainly our department would be pleased to work with the Department of Education and with the member and others who have concerns. In consulting with them, we will be pleased to participate in any consultations that are deemed appropriate and necessary to achieve the improvements that everyone wants.

Ms. Friesen: What I sense is an answer, no, that you are not going to share any information with me or with the parents, through me, on the renovations proposed to either building. Now, am I being too harsh in that? Did I not hear that, or did I hear that?

Mr. Pallister: The member is being far too harsh, and it is unfortunately out of character, at least as far as my knowledge of the member's personality, is concerned. I very seldom have heard her be harsh like she has just been. I certain have tried to share what information I could today with the member, admittedly in a general sense. I think the member knows that. I hope the member knows that it has been an honest attempt to answer her questions as best as is possible in today's circumstances.

I would suggest that the discussion that we have had, if she would share the information that I have shared with her today with the parents, rather than taking that back as a negative message, as a no, to the parents she has been in contact with, I would hope she would communicate it in a somewhat more positive fashion to those parents.

Ms. Friesen: Mr. Chair, what I will communicate to the parents is that the minister has shared some new information, which indeed he has, that the operating costs of the Alexander Ross School will be 50 percent less than the operating costs of the existing deaf school. I appreciate that as new information. I will certainly pass that on.

However, my questions on behalf of the parents have been related very specifically to the basis for the estimates for renovations to the School for the Deaf and to the Alexander Ross School.

As I said a couple of times now, I am prepared to come back at the end of Estimates. The minister has quite a number of staff here. Is it possible for the minister to provide further information on those estimates during the Estimates process. I have, as I said, tried to raise it in Question Period. Estimates is the alternative avenue that I have. I am now here again raising a very specific question, and I am looking, I guess, for a very specific answer. Will you be sharing further information or not?

Mr. Pallister: Well, certainly, the member should be aware that the function of our department essentially is to be the provider of space to government agencies of whatever type and to assist them in the appropriate design and maximum utilization of that space. That is our function.

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We are given information by the departments as to their needs, and the specifications of their needs, in this instance, are many and varied. We work with those departments to provide a space that is appropriate to the provision of the services those departments wish to provide, that maximizes the dollar that we invest, certainly, on behalf of the taxpayer and is cognizant of the need to deliver effectively the services of those departments.

In reality, in this instance and in many, the specifications that are provided to our department, because of the detailed nature of providing this service and many others, are largely in the hands of those departments as to design, as to layout and so on. Those are consultative areas, but as far as certain specifics--and I am not one who is knowledgeable, although I had the pleasure of working with a hearing-impaired student and a blind student, as well, which is not relevant to this conversation, but I certainly enjoyed the experience.

I am not an expert in those areas as far as the very specific and technical requirements that may exist around providing this type of service. That is not to say, certainly, that our department is not sympathetic to those things. We very much are, but we do work in consultation and take direction from others who have much more specialized and technical knowledge in those areas than we do.

Ms. Friesen: Mr. Chair, when the department looked at the School for the Deaf, it had in hand a package of specifications arrived at in conjunction with the Department of Education. On those specifications, specialists in a variety of areas from the Department of Government Services must have reached an estimate of that $4 million or $4.5 million. It was for A, B, C, D, X, Y and Z. That is what the parents want to know.

When the department looks at Alexander Ross School with a list of specifications from the Department of Education and the Department of Government Services, it is looking at the renovation of Alexander Ross School, X proportion of Alexander Ross School and achieving a final result of A, B, C, D, E and F. Where are the materials that would enable the parents to judge the comparison that has been made? Is it possible for the minister to provide those materials?

Mr. Pallister: Let us address the issue of service provision, because I think that is what the member is really alluding to. I assume, and I hope I am correct in this, that the first concern that the parents have is for a quality educational opportunity for their children. I would assume that they would want to know that this was not jeopardized by any change in site. Provision of the services would be assured in this respect. I am told, and I can assure the member, that there would not be, given the general specifications as I am aware of them at this point, any threat to the quality of service being provided to the students, that is to say that any services provided at the School for the Deaf would continue to be provided at the new site.

As far as the cost of doing that, if that is the area of concern that the parents have--and I am not sure if that is what the member is alluding to--I am told and I have said earlier that the costs of providing the services as it relates to the structure of the building itself, the renovations, the ongoing operating costs for that facility, would in fact be less.

Mr. Maloway: Mr. Chairman, I would like to thank the minister for providing me with a list of the leased spaces. I would like to ask him whether this list represents 100 percent of the private leased spaces.

Mr. Pallister: Yes.

Mr. Maloway: Mr. Chairman, could the minister provide us--I do thank him for the list, but it only provides us with part of the information that I was looking for. Can he look at his records here and see whether he has the information on the square footage of each lease and the terms of the lease and what they are used for, what departments are associated with each lease? [interjection]

I am looking for more information to flesh out this list that I have. I think it would be more informative if I had the square footage of each one of the leases and the terms of the lease and the addresses of the property or, alternatively, what department is using the space and what the space is being used for, the purpose of the space. Right now what we have is just a list of landlords--and I thank the minister for being so quick to provide the information. We just have a list of landlords here and annual budgeted cost, but we do not have the square footage, the terms, what department is using the space or the location in fact of the space.

Mr. Pallister: The member for Elmwood, for your benefit, we can provide you with a more detailed use of the space, that is, what service or function is being performed in each given area of space. I believe we have that information and can provide that to the member. This list that he has does represent 1.4 million square feet of leased space, so the member needs to recognize that some of the information that he asks for is--I do not question the member's desire for more information, but I guess I would ask the member to balance his desire for more information with the knowledge that it will take some time to compile some of the information that he has asked for.

(Mr. Mike Radcliffe, Acting Chairperson, in the Chair)

Secondly, certainly in the case of specifics as to the terms of the lease that the member for Elmwood mentions, I hope he does understand that that type of information, I would say, is commercially sensitive at the very least, that is to say that a given specific piece of space comes available subject to the terms and provisions of a previous lease being available to the general public's knowledge, that would be a disadvantage potentially to Government Services, in our department, in arriving at an arrangement which would be most beneficial to the taxpayers of this province.

So we do not want to create a situation, in other words, where we provide an unjustified, an unfair prejudice against the ability of our department to procure space at lowest possible cost for the taxpayers of this province.

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Mr. Maloway: Mr. Chairman, I specifically was not asking the minister for terms of each lease. If I was asking for that, I would ask you for a copy of each lease. I am not asking for that. By term, I meant whether it was a 5-year, 10-year, 20-year term.

Mr. Pallister: We will procure more specific information for the member as I give him the prologue--I do not know; I hear that a lot in the House lately--the prelude to the more detailed information.

I can tell him in a general sense that the average length of the terms of the leases has certainly increased in recent months as leases have been renewed. In fact, I believe, in the last two years, if I am not mistaken, we have undertaken to lengthen the terms of the leases and, again, in a general sense, with a view to lengthening terms and obligations of the taxpayer to hold and maintain that space at a time when market prices have been somewhat depressed, according to historical knowledge anyway.

This, of course, is always, as the member knows full well, a guess at the best of times, but, based on historical evidence, we believe that this will result in a more cost-effective holding of lease space on behalf of the taxpayer. If I have any more information here, I will share it with the member as it becomes available.

Mr. Maloway: Mr. Chairman, this list of leases, I assume, does not include any leases entered into by any of the Crown corporations such as the Liquor Commission or the Motor Vehicles.

Mr. Pallister: The member is correct in his assumption.

Mr. Maloway: I wanted to skip back a couple of pages to deal with subappropriation 8.2(c) Leased Properties. In that particular section, there is reference to the documentation of all leases and that the department administers the financial transactions and the payments and so on for the leases. I would like to know, when the department is deciding on the length of a lease, and this is in reference to the special operating agencies that this government is spinning out in increasing ferocity here, is the government limiting its signing of long-term leases because of plans to further privatize bigger elements of the provincial service?

Mr. Pallister: No.

Mr. Maloway: Mr. Chairman, would the minister give us an idea as to the average length of these leases that are listed in this list that he has provided me with?

Mr. Pallister: Again, in a general sense for the member, but I believe this is what he is alluding to, the average length of leases that we are now in is five to seven years, whereas perhaps three years ago it was in the range of three to five. The increase in the length of the terms of the leases has occurred as a consequence of the fact that we are entering into a higher percentage of leases now which are of a 10-year duration, which naturally, as a consequence, would pull these averages up.

Mr. Maloway: Mr. Chairman, I would like to ask the minister some questions as they relate to purchasing in the department.

There is reference that the purchase contracts represent fair and reasonable cost to the taxpayers, and there is reference to extending the competitive opportunity to all interested suppliers. I have a catalogue here that provides a list of all of the items, I gather, that Government Services provides to, quote, its customers in the government.

I would like to ask the minister whether he could relate to us how the government is approaching the procurement of the items for the government and how the tendering process, I guess, is working or works for the procurement of these products.

Mr. Pallister: Mr. Chairman, I would just like to introduce the ADM of Supply and Services, Mr. Gerry Berezuk, and thank him for being available today as well.

As to the tendering process, I will share with the member that we have commenced using an electronic tendering process, a one bid system, OBS, as of April 1 of this year. As of that date, the primary source of opportunities for getting tender information has been through electronic means rather than the traditional means of mailing out hard copy tenders.

This OBS system has been in use at the federal level since July of 1992. In order to do business with Public Works and Government Services Canada, suppliers must subscribe to the OBS system. The federal government has been actively promoting this with the objective of providing a single source of service to suppliers. That will also, we believe, facilitate the implementation of the internal trade agreements that were signed in July of last year by First Ministers which will reduce interprovincial trade barriers in that respect.

The governments of Alberta and Ontario are also using the OBS system; Saskatchewan and Quebec will be joining it this summer; British Columbia and New Brunswick are currently discussing contract details. This system will include all goods over the threshold value of $2,500--in western Canada that is our threshold--and nationally $25,000, and all services over $100,000.

There will be no cost to government to subscribe to the system. Information Systems Management Corporation, Ottawa will finance the system through suppliers' subscriptions. It should be noted that some hard-copy tenders will continue to be distributed, but these will be primarily for goods below that threshold of $2,500.

Mr. Maloway: How then does this new system affect, say, a supplier in Portage la Prairie who perhaps had been supplying goods to the government in the past when he is now confronted with this OBS system that I assume requires him to become somewhat computer literate and compete with the big operators?

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I am just wondering whether this new system would tend to put small suppliers in smaller towns at a disadvantage because the minister is talking here about linking into the big centres in Toronto, and so on, and basically opening up to procurement policy to what essentially will be, you know, perhaps even a tyranny of the big suppliers.

A big operator in Toronto will be able to provide, with the breakdown of the free trade among provinces, goods at a much lower cost per unit than somebody sitting in Gimli or Selkirk or Portage la Prairie will be able to so how is he going to adjust for, and are there any people in these smaller centres who are now at a disadvantage because of this OBS system?

Mr. Pallister: I believe the member need not quiver in fear with the anticipated demise of small business in our rural communities as a consequence of the OBS system. First of all, the cost to be on the system is $130 a year. Secondly, there, of course, will continue for smaller suppliers under the $2,500 threshold, the same system in place as was in place. So, if the member is suggesting status quo once again, that would be the case in regard to the smaller suppliers.

There would be no change so no reason to fear change there. However, I would think that one could be justifiably optimistic that rather than being limited to that particular service that one provided on the basis of being on a list and being notified when a tender in that category came up, rather than being confined to that subcategory of awareness, one would think, as is the case generally with the increasing information technology that is available to us in society, that this removes potentially some of the inhibitors to development in the small business sector in respect to the fact that small businesses would now in rural Manitoba and throughout Manitoba have access to the knowledge of other situations where they might be able to compete and provide service at a competitive rate and, therefore, have the opportunity at least to expand their market shares beyond those limitations that were at place in the past.

There is no doubt as well from the perspective of using the taxpayers' dollars, as we all do in government, that this is a far more cost-effective way for us to procure goods and services for the benefit of the taxpayer, by far more cost-effective in the sense that the traditional methods were at best piecemeal in some respects and at worst cost-ineffective.

Of course, there is a cost to be incurred on this user-pay basis, this $130 to be online, but as any small business person knows, some things do not cost, they pay. This would certainly be one that I would expect any competitive small business person would put in that category.

This is a new way of doing business with the government because we recognized in our department that this was a change. Our department wanted to address the awareness issue aggressively and did so by having discussions initially and on an ongoing basis with trades associations, with chambers of commerce and so on, to promote the idea and promote the awareness of the idea and to make the small business community aware of the potential of the idea for furthering their own small business objectives.

I believe that the member will find, if he consults with business groups, that they are not only onside on this issue, but they are in fact unanimous in their praise and support of the issue and of the bidding system that we have as a jurisdiction introduced.

Certainly the member knows full well that there is a tendency among all of us to be afraid of change. The member also should know that those who are successful in the small business sector tend to be less afraid of change than the general public might be aware and that is the very reason for their success in many cases, that they are willing to accept the need to change and accept the challenges that go along with that change and have done that in Manitoba in increasing numbers. I guess this is why we see so many of the good things that are happening in small business sectors in this province, a credit to the attitudes of these people in small business.

Mr. Maloway: If one of the departments wants to order some products, are they required to order all of their products out of this little catalogue that you send to them or can they purchase the products if they can get them cheaper? Can they purchase them locally or can they purchase them from another source or must they deal with your little catalogue here?

Mr. Pallister: The short answer to the member's question is yes. The long answer, however, is what I will have to give him for clarification, I guess. The member is referring to our Materials Distribution order book, for lack of the correct phrase, which outlines in some detail the goods solely that can be ordered through Materials Distribution.

Of course what we are trying to do here as a department is pass on the savings that accrue from intelligent purchasing in bulk and a great awareness of the marketplace and a great focus of our efforts on procuring the most cost-effective services. We are trying to pass those savings onto the government departments that utilize the service, and, by so doing, pass on those savings to the taxpayers of Manitoba. That, it could be argued, has been the effective performance of this department to this date in time and that is why we have found that prices are generally lower, sometimes significantly lower, on a per order basis when we bring together various departments of government and consolidate our purchasing rather than do it on a piecemeal basis.

There are also, Mr. Chairman, significant savings to be derived by improvements in administrating the procurement of the goods, invoicing and doing payments and so on in a central manner, but I guess our aim is to be the supplier of services by choice not by dictum. We will endeavour in our department to be cognizant of the individual needs and collective needs of all government departments in arranging for these services to be provided and do so with a view to being competitive in every respect in the services we provide.

There are opportunities where departments can, if they wish, order on a direct purchase basis where it is--the examples here would be where items are, for example, urgently required or--an example has been given to me which I am hesitant to put on the record but which involves--no, we will not allude to that, just suffice to say that if there is an urgent requirement for, say, a given paper product the member can be content in knowing that that particular office would be able to go out and procure that product. There are other examples I am sure that are better ones.

Mr. Maloway: I guess what I am trying to ascertain is whether or not it is a requirement that the people in the departments purchase out of this little catalogue that they are given, or do we see departments shopping these products around in an attempt to get perhaps a better price somewhere else?

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Mr. Pallister: Mr. Chairman, generally, the answer would be yes. Departments will utilize the services of this particular agency. Again, the goal is that they would be doing that, certainly, by choice.

The member asked the question if departments can shop around. I am not sure if the member is suggesting that we go to a system which I believe was in place historically, where, essentially, each department did its own purchasing. If he is, I would suggest that that advice would not be heeded by this government or any other which was concerned about efficiency and effective purchasing practices in government. The simple fact is that would cost the taxpayer considerably more money.

But the reality is that departments do on occasion come across opportunities to make purchases which are beneficial and which are not--no department is expected to, I think, be on top of every single available product at every single time. For example, in the area of uniforms, we used to, through this agency purchasing, provide uniforms to certain of our departments, and it was found that the costs outweighed the benefits. We were maintaining stock which was far in excess of normal requirements due to the great disparities in sizing and so on and so forth.

It was not a cost-effective area for us to be in. There are companies that could provide that service more cost effectively. That was brought to our attention, and, as a consequence, we made the improvement in our service delivery that is common to, again, successful small business enterprises which is, we got out of something we were not doing well and stayed with what we do well.

Mr. Maloway: Mr. Chairman, well, can the minister tell us then, whether the department or the central purchasing agency then, what sort of a markup they provide on these products to the departments?

The point that I am getting at here is that if I am in a department, and I am given this little book to order from, how do I know that this is a reasonable price for the product? For example, toothpaste is listed here. Now, I am not certain why the government is buying toothpaste in the first place, but I am sure there are good reasons for all of these hundreds of pages of products that are here. I am sure there is a good reason why the government is buying these things, but how do we know that $8.93 for this type of toothpaste is a good price?

How do we know that perhaps the government is not buying quantities of this product at a very good price and, in fact, is just artificially marking up the price substantially, so that at the end of the year, the department shows a big profit, but all it has done is it has overcharged for the product that it is providing to the department. That is what I am trying to get at with the minister.

Mr. Pallister: Mr. Chairman, first of all, I believe what the member is addressing is something near and dear to all of us in this government, and that is the cost-effective delivery of service. The issue of administration will enter into this. To start with, suppliers issue one invoice on a monthly basis where appropriate, and most of the time that is appropriate, and we issue one cheque on a monthly basis. So, first of all, from an administrative standpoint, the efficiency of the system should be self-evident to the member.

Secondly, on the issue of whether the good is being procured at a beneficial price relative to the marketplace generally, there are routine price comparisons done with the marketplace on a basket basis; that is, where we will take a sampling of products and compare on that basis overall to ascertain if we are competitive. These price comparisons to date, I am told, have shown significant savings to government through the mechanism of centralized purchasing that this part of the department provides. [interjection]

It would vary. The member asks what is the markup on the product. In answer to that, I would have to say it depends. It depends on the specific product and the specific time when the specific question is asked.

I am not sure if it would be wise, I am pretty sure it would not be wise to have a system in place that could evaluate what the member is suggesting we evaluate, which is cost-effectiveness of every product purchased on a daily basis. I do not believe we have the resources to do that, but we do have the resources to determine on a regular basis that the goods that are purchased are purchased with a consequential tax savings to the people of this province. That is what we will continue to endeavour to do.

(Mr. Deputy Chairperson in the Chair)

Once again to the member, if on evaluation--and again, our goal here is to be the purchaser of choice. If a product comes to our attention in a routine price comparison or, of course, if it is raised by a specific department, and upon further examination cannot be purchased with resultant savings for the department, therefore for the taxpayer, then we will again, as do small businesses, focus our resources on the areas where we can be of greatest benefit to the taxpayer in providing the service in a cost-effective manner.

We will allow that service to be provided by others who can do it in a more cost-effective manner and that will assure us that long term we have a system in place which is deserving of the respect and admiration of other government departments and of other provinces who observe the way that we manage purchasing in this province.

Mr. Maloway: What is the level of profit that the minister projects then, based on this system?

Mr. Pallister: I will share some numbers for the edification of the member for Elmwood for our past fiscal year. Financial results in terms of total revenue generated, $6,169,900; cost of goods sold, $4,714,000; salaries, $805,000; operating expenses, $308,300; administrative, $135,200; interest on long-term debt, $60,400; and total income from operations, $147,000.

In that particular year we had an inventory write-down because of the uniforms that I mentioned earlier to the member of $111,800, so our net income in the past fiscal year, $35,200.

Mr. Maloway: Mr. Chairman, I believe the member for Wolseley would like to ask a few questions.

Ms. Friesen: Could the minister tell us when the renovations to Alexander Ross School will begin?

Mr. Pallister: As soon as possible would be, I guess, the short answer for the member for Wolseley. The negotiations, I am told, are moving along well between St. James-Assiniboia School Division officials and members of our department, and as soon as those negotiations can be finalized, then without delay we will proceed with the renovations necessary to bring the facility up to its functioning level.

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Ms. Friesen: Could the minister tell us, are the negotiations with the St. James School Division, which I understand from examining their records have not been concluded yet, for a lease or for a purchase?

Mr. Pallister: For a purchase.

Ms. Friesen: Mr. Chair, and is the purchase price included in that $2.5 million that was made reference to in the Free Press this morning?

Mr. Pallister: I am at a disadvantage to the member not having viewed the Free Press this morning, and I just share with the member that I used to, but I do not anymore. I found my research efforts better directed in other ways. Nevertheless, the information that she alludes to, the amounts that we referred to earlier should be--I believe it was $2.5 million she referred to--more than adequate to allow for the procurement and renovation of the school.

Ms. Friesen: Mr. Chair, I have just asked one of the staff to bring the Free Press so we will both be dealing with the same set of information. Could the minister indicate--he did indicate in an earlier answer that less than 50 percent of the space at Alexander Ross school would be used. Could the minister tell us approximately how much of the space is going to be used? Is it 30 percent, 40 percent?

Mr. Pallister: The member is in error or I was in the statement if she is correct in referring to it. I was alluding, with the 50 percent, to the actual reduction in costs for the space and the actual space itself is less than half as well. The utilization of the space will not be half. It will be utilizing the vast majority of the space for the school itself.

Ms. Friesen: Mr. Chair, then I did misunderstand. I thought the minister had said less than 50 percent in reference to my argument that this was a school built for 700 students and there would be fewer than 100 students moving in. So we do have a school then, Alexander Ross School, built for about 700 students, which the department is purchasing and renovating for the use of the existing population of the School for the Deaf.

Mr. Pallister: That is my understanding, and as I alluded to the member earlier, I do not have the specific knowledge as to why greater square footage per student would be required, but I am sure that it would be fair to say, and I hope the member would agree with me, that if we were comparing the needs of the students of the School for the Deaf to the needs of the general school population, we might be accused of comparing apples to oranges in some respects. There are dissimilar needs, I believe.

Ms. Friesen: Yes, I think that is possible, and I think it is one of the reasons that the parents at the School for the Deaf and the advisory council that was formed were very concerned that there be what they call "deaf eyes." Look at the Alexander Ross School, and they do not believe that has happened, and their concern is, amongst other things, that this estimate has been developed without the use of deaf eyes, that the deaf community itself has not examined in detail the requirements for Alexander Ross School to be made appropriate for deaf education.

That is something I draw to the minister's attention. I hope he will have the opportunity to meet with the advisory council to understand what their concerns are about this renovation.

I wanted to ask the minister further, I understand that the negotiation with the St. James School Division is going ahead for purchase and that the renovation will begin as soon as feasible after that. Is there an amount in this particular Estimates for that purchase and renovation, and which line would I find it on?

Mr. Pallister: Yes, there is, for the member for Wolseley, and you would find it in the Capital budget section 8.7, which details that project among many others. If the member likes, I could go through individually each separate Capital budget. I do not think the member would care to have me do that.

Ms. Friesen: No, that was not what I had in mind, but I am passing the minister at the moment the newspaper report, which he has not yet had the chance to see.

Could the minister tell me--I understand that the government owns the existing School for the Deaf, and, first of all, I wanted some confirmation of that. Secondly, the Pan Am Games staff has already begun to move into the School for the Deaf. I believe they are using part of the third floor for storage and that the staff room has already begun to be used for some office space.

So I am wondering what kind of renovations the government is going to undertake for the accommodation of the Pan Am Games and where we would find that in this particular set of Estimates. What is the cost and nature of those renovations?

Mr. Pallister: The member is correct in her assumption that the government owns the School for the Deaf. That is true. The people of Manitoba do own the School for the Deaf. The Pan Am Games Committee is utilizing the space currently, some of the space at the existing site, though that space, I am told, will have access by a separate door other than the main entrance, but the Pan American Games operation, I am assured, will not impact on the ongoing operations of the School for the Deaf at this time, as most of their activities will take place after school hours.

The Pan Am Games Committee, being in their infancy, their space requirements are at a minimum level at this point in time, and I think it would be important--the member knows, that this is not a long-term tenant we are talking about for the site. Nevertheless, it is an important project, as we know, that they are working on, and they have up until now worked out of their homes or have utilized some small space at the Sports Directorate in lease premises at 155 Carlton.

In terms of the cost of any renovations, the Pan Am Games Committee itself would be responsible for offsetting any costs or for assuming the cost that it incurs as a consequence of any renovations that it may take on.

Ms. Friesen: So there is no money coming from Government Services for any renovations to the School for the Deaf during the period that the Pan Am Games Committee is occupying that site?

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Mr. Pallister: Not quite. Any renovations specifically undertaken for the purposes of making space improvements for the use of the Pan Am Games Committee would be their cost, but with any building, and certainly with a building of this age, there may be ongoing costs incurred as a consequence of maintaining the building itself, and those would still be the responsibility of the people of Manitoba, just to clarify that point for the member.

Ms. Friesen: How does that operate then? I assume that grounds maintenance then, external maintenance, would still be the responsibility of the government of Manitoba. So, first of all, I guess, I would be looking for a clarification on that, is that the case, and then, secondly, the issue would be heating, lighting, the general upkeep and maintenance of a building. Is that the responsibility of Manitoba or is that the Pan Am Games?

Mr. Pallister: For the member, Mr. Chairman, the Pan Am Games Committee will be responsible for covering the operating costs of the space which they occupy, that is, utilities costs as well as cleaning costs. Their total operation is, I am told, seven people. We are giving them a deal while they are there in return for simply their offsetting some of the costs of holding the space.

Ms. Friesen: I guess there are seven people there at the moment. I assume that certainly, at least in the year of the games, there are going to be considerably more people, and that it will be used for other purposes in the sense of greeting, hosting, those kinds of ceremonial occasions as well. I am also looking for the price of that deal. How much rent is being paid this year, and how is that accounted for in the Estimates?

Mr. Pallister: In the year of the Pan Am Games, the approximate staff complement that will occupy the space would be around 150 persons. The benefits to the province, of course, are, and the member is not addressing this, but it is worth observing, that hosting the Pan Am Games are considerable in many respects. We, on behalf of the taxpayers of the province, want to encourage that event to take place, and certainly to take place in this province.

So what the Pan Am Games Committee will do is cover all operating costs for the space which they occupy, which may be in excess of 75 percent of the actual space of the facility at its peak. Our staff will be regularly monitoring the utilization of space and ascertaining what a fair compensation amount would be for the committee to share in the operating cost. Certainly one should not, I suppose, be hypothetical, but in the absence of the Pan Am Games Committee in that site, we would be responsible for those costs, in any case, or largely for all of those costs. So that is the arrangement that has been made with the Pan Am Games Committee.

Ms. Friesen: In this fiscal year, the Estimates which we are examining, with seven people onsite, on and off, I imagine, the use of the third floor for storage, and the use of the staff dining room for office space, what rent is being paid for that? What is being recovered by the department?

Mr. Pallister: The Pan Am Games Committee is not paying rent. They are paying their own costs for items such as telecommunications equipment and phone, and so on. They are expected to, and will, pay their fair share of the overhead costs of the building on the basis of the percentage of the building which they occupy.

Ms. Friesen: I understand that the same principle then is to be observed in the ultimate year of the Pan Am Games when they are at 150 and it is being used for a much broader range of purposes. So is this essentially--this then is a contribution, part of the contribution of the government of Manitoba to the Pan Am Games, and is this accounted for anywhere in the records of this department, or will it be accounted for?

Mr. Pallister: For this fiscal year, in answer to the question from the member for Wolseley, no. In future years, yes, but not specifically in terms of this department's Estimates, rather in general revenue. The funds will be procured from the Pan Am Games Committee, and they will be placed in general revenue.

Ms. Friesen: What is the department's, this department, which is responsible for the building of the School for the Deaf, what is the long-term plan for that when the School for the Deaf has gone, and when the Pan Am Games is over?

Mr. Pallister: The intention is to manage the resource and the facility itself in such a manner that it reflects the best interest of the taxpayers of this province, short-, mid- and long-term. That being said, we would try to entertain, certainly encourage, offers to lease or to purchase the facility. We would look to maximize the potential benefits that would accrue to this province through perhaps entertaining offers for portions of the property, perhaps on a subdivision basis. This is speculative. We have shown several interested buyers through the facility. Beyond that, I think perhaps it would not be wise to discuss specific details as to potential purchasers at this time, but suffice to say, that is being pursued.

Ms. Friesen: What are the annual upkeep costs for the school? Where would I find them in the Estimates?

Mr. Pallister: Mr. Deputy Chairperson, $740,000.

Ms. Friesen: Does that include external upkeep as well? Does that include the grounds and the exterior of the building?

Mr. Pallister: Yes, indeed.

Ms. Friesen: Does the department have an estimate yet on the annual upkeep of the Alexander Ross School?

Mr. Pallister: Yes, we do.

Ms. Friesen: What is that estimate?

Mr. Pallister: Somewhat less than half.

Ms. Friesen: Can the minister tell us whether those numbers come from the department's own evaluation of the Alexander Ross School, or does it come from numbers provided by the St. James School Division?

Mr. Pallister: These numbers come from our own evaluation.

Ms. Friesen: Has the minister inquired of the St. James School Division what the annual costs of that building were at a time when it was occupied?

Mr. Pallister: Yes.

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Ms. Friesen: Can the minister tell us what that is?

Mr. Pallister: The information the member is referring to was the cost of maintenance and overhead on the facility. That information was recently, I understand, supplied to the department because we did not have the go-ahead to proceed with the procurement historic lease.

Ms. Friesen: Is there a difference between the estimates of the St. James School Division and the government's own estimates of the cost of maintenance of Alexander Ross School?

Mr. Pallister: I am sorry, would the member--sorry about that, I guess this happens, does it?

Ms. Friesen: Yes, I think it does. My question was following up on the two earlier questions. Is there a difference between the estimates provided by the St. James School Division and those estimates conducted by the department itself for the annual upkeep and maintenance of the Alexander Ross School?

Mr. Pallister: I would assume there would be differences based on the fact that--I am told, not substantial differences--but certainly there would be differences based on different heating requirements from year to year and the like.

Ms. Friesen: In its estimates for the Alexander Ross School, did the government include a residential component?

Mr. Pallister: Yes.

Ms. Friesen: Does the government intend to proceed with that residential component in the Alexander Ross School?

Mr. Pallister: Yes, subject to zoning changes.

Mr. Maloway: I wanted to ask a few more questions before leaving the Purchasing area of the department. I would like the minister to put himself in a position, again, of that little supplier up in Gimli or Selkirk or Portage la Prairie, who has been faithfully supplying the government for the last number of years and now he is faced with this new OB system that the minister has just brought in. The minister indicated that this little supplier is going to need $130 a year, membership fees. What else is this little supplier going to need to get on the system and compete with these big operators out of Toronto, New York and other places like that?

Mr. Pallister: I believe the member is expressing concern on behalf of Manitoba small business people, that there is a concern not shared by the business organizations which they belong to, where the Manitoba Chamber and, of course, the Winnipeg Chamber have expressed support for the system. We are given to believe, that these groups are in touch with their membership and able to represent their views with reasonable accuracy in most issues, most of the time.

Certainly, this might be one where I would take your word for it, that their members are not only receptive to the available service, but also excited by the prospects of having access to other markets. We have anecdotal evidence that tells us that certainly in Manitoba not a few small businesses have expressed excitement at the fact that they are able to now bid on government supply contracts in other jurisdictions, whereas before, that was less the case or not the case. So, for example, businesses may be availing themselves of the opportunities that exist in Saskatchewan or Alberta--not Saskatchewan, I am sorry, because Saskatchewan is just looking at this, but certainly Ontario and Alberta, to provide services or goods in other jurisdictions where they are competitive and able to do that.

The threshold the member refers to, the $130 threshold, is a real one. Of course, there are other thresholds put in the way of small businesses. Certainly, I know when I was starting my business back in 1980, I remember starting out of my car essentially, and there were a lot of thresholds there, not least of which was traffic laws. One of the things that was a real threshold for me to overcome was the idea of hiring staff, and I was able, after three years of being in business, to go out and actually hire a person to be an assistant for me.

When I did that, I took someone who was a single mom with two children off the social rolls and exchanged a dollar that I hoped to earn with her in exchange for her good skills. It was a good trade and it worked very successfully. I am pleased to tell the member that this young woman worked for me for seven years and was gainfully employed in that time and is still gainfully employed as a consequence, at least in part, of the skills that she enhanced while working with me.

So there were thresholds that I had to overcome as a small business person, not uncommon with other small business people, great risks when small businesses hire people on, for example, in the hopes that they can increase their productivity and profitability.

One of the thresholds, I guess, that I had to overcome was this, that about two months after hiring that woman to work with me, I got a letter from the Finance minister of day. I believe his name was Kostyra, and I thought it was perhaps because I had created a job. I thought that perhaps it was a letter of congratulations for creating the job, but it turned out to be a bill that I was asked to pay the government of the day.

I believe it was the government of the political persuasion of the member for Elmwood (Mr. Maloway). It was a bill for employing people. I think it was called a payroll tax. It was a wee bit of a threshold, I must tell you. It was quite a bill and quite a discouragement to me. Of course, that tax did not result in any extra opportunities for my business. Rather what it did was that it simply leeched away part of my hard-earned gains, our hard-earned gains, in fact, because I had actually added a staff person.

It was kind of a discouraging thing at the time. I remember it very, very clearly as something that, initially, at least, dissuaded me or would have dissuaded most people from hiring again and creating more employment, a very unfortunate and poorly thought-out plan for gaining revenue by that government and one that I am sure that the member for Elmwood is not particularly proud of in retrospect, though we are all capable of great wisdom in retrospect, I suppose.

The threshold, however, that the member refers to here of $130 does have coming with it opportunities for additional profit and additional service provision. It might be deemed to be, rather than a cost or a waste, as would be the payroll tax in the minds of virtually every small business person I have ever talked to, this might be viewed rather as opening the door to further opportunities for small business people in this province, and I would think it would be something that the member, I would hope, would encourage, as do the various business and trade associations in this province, encourage their membership to be aware of this and to avail themselves of the opportunities that it presents.

Certainly, we have had now about 1000 small businesses in this province register for the OBS system, and that uptake alone would be indicative of the attitude that Manitoba small businesses have, that this is an opportunity that they want to avail themselves of.

Mr. Maloway: I really do not know what that lengthy monologue had to do with my initial question, but I will ask the minister again.

I would like to know just what a supplier, a little supplier in Selkirk or Gimli, needs to get on this system other than his $130. Does he need a computer? That was my question. What does he need to get on the system, and has this system been advertised? Clearly the minister is evading that question.

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I do not think this program has been advertised at all, and far be it for me to encourage this government to waste any more taxpayers' money on these photo-op advertising programs that they ran over the last year, but it seems to me that there has to be some sort of a method by which the minister could communicate to all the potential suppliers in Manitoba that he has gone on this OBS system, and not simply rely on the activity or nonactivity of business organizations. There are lot of small business people in this province who are not members of these business organizations that he is alluding to, and how would they know about these programs?

As I said, my overriding concern here was that in the long term, the small suppliers in the little towns throughout Manitoba and throughout the rest of Canada are going to be beat out by the big operators operating out of the large cities in the East, such as Toronto and New York. We are going to be procuring goods from these big centres at lower costs, and we are going to leave ghost towns in our wake. We are seeing that with the small car dealers right now. That is happening because the big car companies are forcing the little guys out of the way.

Now, I assume the minister now has the answer to my question.

Mr. Pallister: The member purporting to represent small business and rural communities is incorrect in a couple of his assumptions, but I will get to that. First of all, yes, small businesses who wish to be part of the OBS system would require a computer, a PC and a modem.

In terms of the threat to the small businesses of rural Manitoba of this threshold, once again, the member should be aware that approximately one in four of the dollars that we expend in purchasing, even with the introduction of the OBS system, is still done by the old method because the amounts are below the thresholds that the member and I discussed earlier.

As far as a number of the other vicious, politically motivated swipes that the member took at me and at this government, these are pretty much like water off a duck's back to me, having heard them before.

I will tell the member that, certainly, in terms of promotion or creating awareness there have been great efforts made by the department in that regard. Presentations were made. I know a presentation was made to my hometown's chamber by a representative from the department, and certainly by others, to other chambers of commerce. A letter has been distributed by the Manitoba chambers, through their organization, to all members. There are in place right now--this includes again Portage la Prairie, which the member referred to as an example--17 rural chambers who have centrally housed the modem and PC for the benefit of their members so that in fact those members do not have to necessarily purchase that equipment. They can utilize the services of their local chamber. Now that is in place, by the information I have here today, in 17 rural chambers currently.

We have been in the process of working with these business organizations and with the rural communities to increase the awareness of the opportunities that this presents to them and to encourage, of course, their participation. As we believe, and I am sure the member would accept this, there are opportunities out there for small businesses to avail themselves of these exciting bid opportunities in providing services to governments, not just in this province but outside of this province and federally.

Mr. Maloway: Mr. Chairman, could the minister provide us with a list of suppliers then who are currently supplying the department?

Mr. Pallister: The member has asked for a list of suppliers, and, just for clarification, I believe he is wanting to know specifically which suppliers Purchasing has in the past used to supply the government with goods, services. Consulting, as well, I expect, would be on that list, or is that a separate--

Mr. Maloway: Yes.

Mr. Pallister: On a limited basis because it is done by other departments as well, but, in terms of goods and services, we have a list of 6,000 suppliers which we can make available to the member in large print and make that opportunity available to him to peruse that list in great detail and encourage him that if there are any businesses that he is aware of that are not there on that list that he thinks might be able to supply us with a good or service that would benefit the taxpayer through a competitive price, naturally with consistent quality, we would encourage him to (a) make that business aware of the opportunities available to it by participating in the OBS system and (b) encourage that business to notify our staff and our department of the type of work or service that they do and get them involved in the business of doing business for the taxpayers of this province.

Mr. Maloway: Mr. Chairman, has the minister considered then the possibility of sending a letter to registered businesses in Manitoba advising them of this OBS system? You know, I appreciate that the minister has told us that the chambers of commerce are informing their members. I just point out to the minister that the chambers of commerce by no means represent huge sections of the business community, and, in fact, that the minister should make some attempt, I think, without resorting to expensive television advertising campaigns--I do not want to give him any ideas there--but perhaps suffice to say that a letter directly to businesses who might be interested in the OBS system would be appropriate. I just ask the minister whether he would consider that.

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Mr. Pallister: I remind the member that as it is in business so it is in government and in politics, that when one advertises, for example, in the political realm, the advertising will only be successful if there is a quality product to be advertised. This is why advertising done by the opposition party in the election was less than fruitful for them.

The reality is that the vendors we have that provide service to us, that participate in the tender process with our government have been notified. Anyone who has participated in the traditional hard-copy tenders is aware of the OBS system, notices are still being included with the hard-copy tenders to remind vendors of that fact. The member, I believe, made reference to the business groups, I think specifically the Manitoba and Winnipeg Chambers of Commerce as not being representative of business--

Mr. Maloway: Of all of the businesses.

Mr. Pallister: That is an unfortunate reference that I have not found to be accurate in my experience in dealing with those organizations, but perhaps the member would like to specifically allude to examples where those groups have taken a position that was contrary to their memberships' view.

Mr. Maloway: Mr. Chairman, the minister is misrepresenting what I said. All I said was there are a tremendous amount of businesses who are not members of chambers of commerce, and if they are not members, then presumably they would not know about this OBS system if in fact he is advertising directly through the chambers of commerce. That is all I am saying. If he wants to get to all the businesses then he should just simply send a letter out to all of them letting them know about this. But, suffice to say, I do not gather that he is going to do this, so people will have to find out as best they can.

Now, Mr. Chairman, I would like to ask the minister about the board of directors that is in charge of the special operating agency. Could he tell me whether this particular special operating agency has a board of directors at this point?

Mr. Pallister: The member asks if Purchasing has a board of directors and Purchasing is not a special operating agency, just for clarification for the member for Elmwood. Materials Distribution as a special operating agency has an advisory board, and if the member wishes I could read through the list of the members of that advisory board.

The advisory board members include the deputy minister seated to my left, Hugh Eliasson, and Norm Fiske, Raymond West, John Hosang, Tannis Mindell, Robert Nicholls, Gerry Beresuk, Tracey Danowski. The last two are ex-officio members.

Mr. Maloway: Mr. Chairman, I wanted to ask the minister about the Land Acquisition Special Operating Agency, and could he tell us the situation with regard to their board of directors?

Mr. Pallister: At the present time, with regard to the recently created Land Management SOA, we are utilizing the same board of directors as is the case with Materials Distribution SOA, but there are plans, I am told, to develop an advisory board specific to the Land Management Services SOA in the not too distant future.

Mr. Maloway: Mr. Chairman, could the minister give us an indication of the Land Acquisition SOA's activities over the past year?

Mr. Pallister: During the 1994-95 fiscal year the branch undertook 45 acquisition projects, negotiated and processed 211 acquisitions by mutual agreement and 16 properties by expropriation on nine different projects. This comprised approximately 393.5 hectares of land obtained at a cost of over $2.3 million. Of the 211 total acquisitions, 201 were for the Department of Highways and Transportation. The remainder were spread among five other clients.

As well, the department carried out 69 real estate appraisals that were not part of the acquisition process. There are numerous projects that, as the member is aware, are being undertaken this year. Of course, given that our principal client historically has been the Department of Highways and given this government's enviable record for maintaining investment in infrastructure and capital investment, particularly in the area of highways, the member would recognize that there will be a lot of work to be done in the coming year on behalf of that department by this special operating agency.

As well, the branch closed over 2,000 backlog files affecting 269 registered survey plans during the past fiscal year. That gives the member an overview of the activities, I believe.

Mr. Maloway: Could the minister tell us how many cases of disposal were recorded over the last year?

Mr. Pallister: In response to the member, approximately 28 parcels were disposed of. The total price paid for those parcels $2.95 million plus approximately 180 parcels of abandoned railroad property which gets into a different area that I do not think the member wants more detail on.

Mr. Maloway: Could the minister provide us then a list of the acquisitions and disposals over the last, say, two years?

Mr. Pallister: Given the understanding of the member that it would take a little time to get that information, we can provide that information to the member.

Mr. Maloway: I would like to ask a few questions about the Fleet Vehicles Agency, which is, I believe, the first special operating agency of the government and one that they constantly refer to, at least the previous minister used to, as being an example of one that was successful. Could the minister give us a rundown of the great successes of this special operating agency over the last 12 months, including its board of directors and a list of them?

Mr. Pallister: The board of directors is the same.

Mr. Maloway: Same as who?

Mr. Pallister: Same as for the earlier referred to for the Materials Distribution. That is the way it is the same. However, the ex officio staff reps are different, but we could allude to that. We can get into more detail if the member wishes on that.

The Fleet Vehicles Agency began operation on April 1, 1992, and it was the first provincial SOA in Manitoba and in Canada. It has endeavoured to streamline operations, develop system strategies, open lines of communications, train staff, connect with customers. After completing its second year of operation, it realized a net income of 1.9 million versus the .5 million estimated in business plan projections.

The agency manages a fleet of approximately 2,200 motor vehicles and leases these vehicles to government departments and to certain boards, Crown corporations, commissions and agencies on a permanent, seasonal and pool basis. The agency provides a full maintenance lease service, including the payment of all fuel, repair and insurance expenses.

A new rate structure based on a combined, fixed and variable method commonly used in the vehicle industry was introduced in '93-94. The fixed component covers all capital, financing, overhead and insurance costs. The variable component covers fuel and repair expenditures. Previously, the agency just recovered on a per kilometre basis.

The agency has developed a mission statement which alludes to the overall objectives and goals of the operation itself. By most counts, the Fleet Vehicles Agency has been most successful in working towards the achievement of those goals. In the past year--well, overall, over the three years since the inception of the Fleet Vehicles Agency, it has worked with client departments to assist them in more effectively managing their resources. It has reduced the fleet size by approximately 500 vehicles--no small accomplishment.

It has obtained positive operating results in each of the first two years of its operation despite this major reduction in the fleet size. It has prepaid $1.7 million of additional loan principal to help reduce future annual interest costs. It has reduced its '94-95 fixed rate charges on existing vehicles by 12 percent. It has reduced these rates by a further 6 percent for the coming fiscal year.

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It has initiated a program to provide monetary credits and sales recognition to rural dealers for the sale of government vehicles destined to operate in their locales. It has installed an environmentally safe, above-ground fuel and lubricant storage system. It has installed an integrated fleet and financial system employing off-the-shelf products and trained all staff in its use. This system will allow the agency and its client departments to better manage the vehicles under their control.

It has developed a service centre agreement that promotes a partnership with the private repair facilities the agency utilizes throughout Manitoba in the repair and maintenance of government vehicles.

The Fleet Vehicles Agency is progressing, as I mentioned earlier, in addressing its critical success factors, and there is no doubt, as well, that during these first years, there has been something of a change in the attitude of those who provide that service. There has been a somewhat more entrepreneurial behaviour exhibited. I had the privilege and pleasure of touring the site recently, and I can attest to the good attitude that was present in that workplace, certainly on that day, and I would say there is a certain amount of deserved enthusiasm present there, as well.

There seems to be a greater emphasis on customer service, the bottom line, marketing and, particularly, doing the things that the Fleet Vehicles Agency has done since 1934 when it was created, doing those things better, doing them faster, doing them more cheaply.

Mr. Maloway: Could the minister explain then how it is that the special operating agency made $1.9 million when it was only projecting a half-million dollars? What did it do, win a lottery? How did it get such phenomenal results when it was budgeting only a half-million dollars?

Mr. Pallister: Good management, and I am not sure what the member is alluding to. If the member would prefer that the agency did not achieve its goals, is that what the member is saying? Is the member alluding to this as an accomplishment? I hope he is.

Mr. Maloway: I mean, since profit is a measure of efficiency, I would say it is a fairly efficient company or efficient operation, considering that they budgeted to make a half-million dollars, and they made $1.9 million. I am simply asking the minister an innocent question, and that is, how are they able to achieve such great results?

Mr. Pallister: Again, I would suggest that perhaps we can make available to the member, if he has not already reviewed it, the statement of goals for this SOA. I would say, in a general sense, that what is happening here is that the SOA Fleet Vehicles Agency is pursuing a mission very aggressively and creatively. It is building a team approach within its operations that is resulting in it being very effective in the delivery of the services that it provides, and it is succeeding beyond expectation.

As far as the specific reasons for profit, apart from good management, some of the specific revenue areas where there has been somewhat more favourable results achieved than what was projected initially would be in the area of the disposal of vehicles where we--in the case of vehicle operating costs, it is a good example because vehicle operating costs are 11 percent lower than budgeted because of the fact, with the reduction of fleet size, amortization is under budget by about 15 percent.

There are fewer new vehicles being purchased, and so there is another reason for the increased profitability of this SOA. Total fuel costs, because of distance driven having decreased, is down by about 7 percent. Repair costs, again because of the reduced size of the fleet, are down about 18 percent. With all these costs down, the end result is increased profit. Administrative expenses, as well, are down below budget, about 19 percent. There are numerous reasons for that.

So those, in short, I guess, are the answers, some elaboration on the answers the member requests.

Mr. Maloway: I would like to ask the minister then. The minister makes reference to the replacement of some 348 vehicles in the fourth quarter of '95-96 at a cost of $6.2 million, and I would just like to know how this system for replacement works. I assume it is a tendering system?

Could the minister walk us and talk us through this system as to how the system would work?

Mr. Pallister: In terms of the process, the member asks how is it that we purchase vehicles. There is consultation done with each department to determine what their needs are. The consultation is done with Fleet Vehicles SOA, and Dennis Ducharme is with us who heads up this SOA. There is then a follow-up joint development specification done. A formal issue of tender documents is done to the manufacturers, and an assessment of each of those manufacturers' responses is done in terms of its relationship to the specifications, and the lowest price gets the order.

It should be noted that we do break up the orders, and I can give you more elaborate detail on that if you like, but it is not a single order that is placed. The orders are divided up, depending on the specific circumstances, to obtain the most competitive price on a single-case basis on occasion as well as for larger orders. Following the purchase, a program has been established whereby the base location where the mileage would be accrued is determined and then we have a program where we can give credit to local dealers in that region and have the decals--we have decals from most of the rural dealers that we can affix to the vehicles so that the auto dealer in that area gets a little bit of recognition for having the vehicle purchased through them.

The auto dealers, as the member may know, like to see their stickers on vehicles. So, we run that program as well and that is, I believe, run with all three of the major auto manufacturers, with their co-operation.

Mr. Maloway: Just so I can understand the process, I take it that the department asks the three major manufacturers for quotations, and the dealers are by-passed in that process. Is that not correct?

Mr. Pallister: In most cases, the manufacturers are dealt with directly by the SOA, but the local dealers are given the opportunity to get recognition and some credit for the sale, following the deal being conducted with the manufacturers.

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Mr. Maloway: Could the minister then tell us what sort of credit the local dealers get from the manufacturer?

Mr. Pallister: GM is $150, Ford is $100, Chrysler is no dollars. It is paid not by the government of Manitoba; it is paid by the manufacturer to the dealer.

Mr. Maloway: How does the auto manufacturer decide which dealer is to get credit? Do they take the number of GM cars and prorate them as to the number of dealers, or as to the size of the dealers? This is a little confusing to me. I am not sure just how this system can operate.

Mr. Pallister: Basically, when we do the order, we advise the manufacturer as to where we will be running the vehicles, then the manufacturer will determine which of the dealers is given credit for the resulting sale, if it occurs, which would be dependent, of course, on the response to the tender.

Mr. Maloway: Let us say, for example, it is the City of Winnipeg. How will they then determine which one of the four dealers gets $100 a car or $150 a car that the minister has just related to us?

Mr. Pallister: The auto manufacturers would divide credits up based on their own arrangements, satisfactory to their own dealers within the city of Winnipeg. That would be their arrangement.

(Mr. David Newman, Acting Chairperson, in the Chair)

Mr. Maloway: Can the minister provide us with a copy of how this system works?

Mr. Pallister: Mr. Chairman, I think that is how the system works and, you know, hopefully that would give sufficient clarity to the member. It is not rocket science, as they say. We offer an opportunity for auto dealers to be given recognition. This is particularly important, as the member knows, in rural locations, and is an opportunity that is available to the manufacturers, but beyond that we cannot mandate to the auto manufacturers that they avail themselves of this opportunity. It is one that is available. We do encourage it. It does provide some residual benefits to auto dealers throughout the province if the manufacturers choose to avail themselves of the program, and we encourage them to do that.

Mr. Maloway: Could the minister tell us then who does the repairs on these cars, the warranty work and so on that would be associated with the purchase of the cars?

Mr. Pallister: The member has asked, who does the warranty work? The dealerships designated as being responsible and accredited dealerships by the auto manufacturers are responsible for doing the warranty work at those dealerships.

Mr. Maloway: Right. I am not sure just which manufacturer's dealer was to be in receipt of the 150 and the 100. I know Chrysler was zero, but which one was the $150 a car?

Mr. Pallister: General Motors. For clarification, regardless of the credit paid the manufacturer, and I could be corrected on this, but the manufacturer still designates a warranty obligation will be assumed by a certain dealer. If it is a Chrysler vehicle, it is a Chrysler dealer that assumes the responsibility for doing that work subject to their own arrangements with Chrysler manufacturing.

Mr. Maloway: Mr. Chairman, so let me get this straight then. A GM dealer in a designated area would get $150 per new car plus would be assigned the warranty work associated with this new car for whatever time the warranty lasted. Is that not correct?

Mr. Pallister: That is correct if the work is covered by warranty, yes.

Mr. Maloway: Mr. Chairman, well, then, what has the local dealer done for this remuneration? I am trying to figure out what is the role of the local dealer. You are dealing directly with the manufacturer to purchase these vehicles. Now, what has the local dealer done to get this money?

Mr. Pallister: Nothing. The local dealers who are paid $150 by General Motors have done nothing to earn it other than the fact that they have a General Motors dealership and that General Motors has made the decision to pay them $150. I suppose, in compensation for selling direct outside of the dealership, to encourage a better relationship with their own dealers, General Motors has elected to pay that compensation to those local dealers.

Mr. Maloway: Mr. Chairman, if I were a GM dealer, I would be quite pleased with a situation like this.

I would like to ask the minister, when did the rebate program start?

Mr. Pallister: Perhaps it is not fair, but if the member were a GM dealer, I would buy Chrysler, I think. In any case, the actual program began with the 1995 model year.

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Mr. Maloway: So the minister, then, is telling me that this particular program took effect September of last year, September of 1994?

Mr. Pallister: Roughly.

Mr. Maloway: Could the minister then tell us how much money has been paid out under this program, given that it has been in operation nearly a year? The calculation should be easy enough, just base it on how many new cars you have taken possession of.

Mr. Pallister: Just to clarify, it is not a payment per se. It is a service credit allowance. As I understand it, the dealers have an ongoing relationship with the auto manufacturers whereby they are given credits in the amounts we discussed earlier. This is not again an issue of concern to us from a fiscal standpoint in this government; it is a relationship issue between auto manufacturers and their dealer networks.

It is also true that, regardless which of the big three auto manufacturers, they each provide credit for the sale having taken place at the dealership which they so designate for the purposes of obtaining quotas or production requirements that may be necessitated by their relationship with the auto manufacturing company.

Mr. Maloway: My question is, how many new GM vehicles would this program apply to, and how many new Ford vehicles would this apply to? Chrysler, we are not interested in, because there is no rebate or credit attached to it.

Mr. Pallister: I am not quite sure I understand the member's direction here or interest in why we would not be interested in Chrysler but would be in GM and Ford on a relationship issue.

Mr. Maloway: Because you said it was zero, there was nothing given on it.

Mr. Pallister: The fact is that this is the public's money we are talking about. This is money paid in the form of a credit by General Motors to their dealers and has very little, if anything, to do with the individual taxpayer. It has something to do, certainly, with the auto dealers and something to do with the auto manufacturers in terms of their relationship with one another but is certainly outside of the purview of this committee or of the members of this House.

In terms of giving the member information on the number of vehicles purchased and from whom they were purchased, I can do that. In terms of dollar value, I will do it for the member from Elmwood rather than in terms of specific numbers of vehicles purchased, though I believe we could obtain more detail if he should so desire.

In '94-95 the summary of awards was as follows: Ford, $1.468598 million; GM, $3.226880 million; Chrysler, $2.67222; and various others in varying amounts. I think to give a longer-term perspective would be fairer, so I will give you also the summary of awards for '93-94, lest I leave the mistaken impression that an inordinately large amount of our purchasing is done through General Motors, based on one year's statistics.

In the '93-94 fiscal year, the actual General Motors purchases were $1.3 million, roughly, while Chrysler was $1.4 million and Ford was $1.8 million, so I think the member can see we do not depend on one provider of vehicles specifically and solely.

(Mr. Deputy Chairperson in the Chair)

Mr. Maloway: I would still like to know the number of cars for 1995 that this program would be applicable to for GM and for Ford. As the member said, it would not be applicable to Chrysler.

Mr. Pallister: We can get that information for the member. We do not have the information here, but I think it would not be unreasonable to tell him the average cost of vehicles that we procure in Fleet Vehicles is, if I am not mistaken, in the area of $17,500. If he were to just simply do the division, he would ascertain fairly closely the actual number of vehicles that were purchased from each of those suppliers. For his edification, if he would be satisfied with that, that would be fine. If not, we will certainly be able to get him the more detailed numbers, though they will bear very close resemblance to the numbers that he himself on his pocket calculator will determine fairly accurately I think.

Mr. Maloway: Now for the vehicles for the city of Winnipeg. Let us take the GM vehicles, for example, in the city of Winnipeg. How would those be divided up? How would the rebates, the $150-a-car rebates, be divided up among the dealers of Winnipeg, as divided by the number of GM dealers in Winnipeg or by the market share of those GM dealers in Winnipeg or by the section of the city where the car was being driven? What criteria do they use to decide the proportion of these $100 rebates to these dealers?

Mr. Pallister: That would be up to the manufacturers and their relationship with the auto dealers to determine how that was distributed.

Mr. Maloway: Has the minister had any complaints from any of the local car dealers regarding this program?

Mr. Pallister: No, we have not. To the contrary, as the member has mentioned in his own comments, if anything, I would think that this is found money for the auto dealers specifically in terms of the $150 and $100 fee. It is found money for auto dealers with GM and Ford respectively. As well, in terms of the credits, giving the credits to the dealers, I believe that also would have some type of monetary value in the overall scheme of things, though not having operated or owned an auto sales outlet, I cannot testify to that with certainty. I would assume there would be certain monetary benefits to being credited with sales by the dealers, as has recently become the case with the companies that we deal with here.

Mr. Maloway: The minister has indicated that the dealership that services the car gets the credit, so could he not tell us which GM or Ford dealerships in Winnipeg got the credit by simply determining who is designated as the service outlet?

Mr. Pallister: I have undertaken to the member to provide him with more detailed information and we will do that. The information that he requested, I believe, was which of the dealerships got credit from GM and Ford for sales. The same data we will prepare for him will tell him who has the obligation, of course, to supply warranty work, which was the question he just asked.

So I have undertaken and I will provide that information. Our department will put that together for him, and that will answer both those questions, I believe.

Mr. Maloway: That is right, Mr. Chairman, because, potentially, we could see Ford or GM in Toronto divvying up the credits, I guess, based on just who they want to give the credits and warranty work to, and so you could have a situation where people, civil servants in a certain department that maybe had a hundred cars, would find that they would be driving across the city because they would be assigned a dealership on the opposite side of the city to get their warranty work done.

Now, is that what is done, or does the person simply go to the nearest dealership to get the warranty work done?

Mr. Pallister: Yes, certainly, the member raises a good point. The proximity to the dealerships and the anticipated locale where the vehicle would be driven are taken into account when the arrangements are entered into with the auto manufacturer, so that is a factor that we do deal with.

There is further detail we could get into, I suppose, with regard to the warranties themselves, but I want to assure the member that that is a factor that is, indeed, taken into consideration when vehicles are purchased.

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Mr. Maloway: So what the minister is saying then is if the vehicles are located in the south end of the city, then they would all be assigned to the nearest Ford dealer in that area and that it would not be apportioned equally then based on (a) the number of dealers or (b) the volume produced by each of these dealers. It would be just a simple factor of going to the nearest dealer closest to where the civil servants work.

Mr. Pallister: I think the member may be confusing two different issues. It is probably as much my fault as his.

The two issues are the issue of credits and the issue of warranty work. On the issue of the crediting of the sale, that, indeed, can be separate from the warranty work.

The warranty work, itself, will be done by any dealer, and the dealer in closest proximity to the individual driving the vehicle, or if it is the case of a breakdown I would assume in the closest proximity to the breakdown, would be obligated by the nature of their relationship with the auto manufacturer to provide the warranty work to the government on behalf of the taxpayers of the province.

Mr. Maloway: So are you saying then that there is no assignment of warranty work, that the warranty work is done by whoever the driver of the vehicle wants to deal with?

Mr. Pallister: The process would be that, for example, if the member for Elmwood were, heaven forbid, a government employee and driving a vehicle and that member was to have damage occur or breakdown occur to a vehicle, he would contact the SOA, and he would advise the SOA of his location.

The SOA, in turn, would advise him of the garage capable of doing the warranty work that was the most convenient and most effectively able to deliver that warranty work to the driver of the vehicle.

Mr. Maloway: I understand that if it is warranty work that has to be done as a result of an accident or some situation that requires immediate attention then that is the proper procedure. But if it is normal warranty work, where does it get done? Does the driver of the vehicle go to his or her favourite dealer, or does someone in the special operating agency tell, direct, where this work is to be done?

Mr. Pallister: I am not entirely sure I am clear on what the member is wanting to do here, but I think the reality is that we do allow, certainly for assist, government employees who are in operation of government vehicles, in determining where the most convenient, most suitable and appropriate repairs would be available, and that is done as part of the services that the SOA offers.

Mr. Maloway: So now the minister is saying that it is the option of the driver of the vehicle, not the special operating agency. I am trying to figure out who is directing traffic here. Now the minister is saying it is the person who has control of the vehicle. Is that what he is saying?

Mr. Pallister: The member says that I said something, and then asked me what I said. I did not say what he said I said, so now, perhaps, he would like to ask me another question.

Mr. Maloway: Is the warranty work, the decision that is made on the warranty, the normal warranty work, as to which dealership to deal with in the city of Winnipeg--is that decision made by the person who is driving the car, who is assigned the car, or is that decision being made by the special operating agency?

Mr. Pallister: The decision is the SOA's decision to make, but in keeping with the customer service orientation of this Fleet Vehicles SOA, it is done in conjunction and recognition of the wishes of the individual operating the vehicle because we recognize, as any small business does, and we have adopted a mentality that is common among successful small businesses, that the customer comes first. So it is our call, but we do it not in isolation from the individual wishes and needs of the person operating the vehicle.

Mr. Maloway: Now back to this found money that the dealers are getting per car, $150 for every GM car, new GM car, and $100 for every Ford car, this particular money. Why is the government not attempting to get this money given back to the government in the form of a reduced price for the vehicle? I just do not understand what the reason is for this $150 and $100 found money that these dealers are getting for no other reason than that they happen to be in existence.

Mr. Pallister: The member expresses an inordinately large amount of concern around this $150 that General Motors chooses to pay to their dealers for the government having purchased vehicles from General Motors. The only way that we would purchase vehicles from General Motors would be if they were successful in responding to a tender, if they were offered a more competitive price for a product that was suitable to specifications that we had outlined in conjunction with our department's needs, with various government departments' needs, in co-operation with the SOA.

In other words, it is none of our business if GM pays $150 to their dealers, because our business is to procure the lowest possible price and have a suitable vehicle. That is our business, and that is what this SOA is doing very effectively. If, in other words, General Motors lands the tender, and then subsequent to landing the tender, makes the decision that it will pay $150 to its local dealers in a manner that develops and improves its relationship with its local dealers, that would be General Motors' decision, and not the government of Manitoba's decision.

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Mr. Maloway: Are there any other similar arrangements with other manufacturers in which the government procures goods, services?

Mr. Pallister: If the member is referring to other similar arrangements that our SOA and the government of Manitoba have with auto manufacturers, the answer would be no. As far as other jurisdictions, none that we are aware of, but that does not mean to say such arrangements do not exist outside of this province.

Mr. Maloway: I am asking the minister whether a similar type of situation might be enforced for the purchase of computers, or computer equipment, or gasoline, or other products similar to this.

Mr. Pallister: We are not aware of any similar arrangements with other products at this time.

Mr. Maloway: The minister makes reference to conducting a provincial tour of private repair facilities throughout Manitoba to discuss service centre partnership agreements. I would like to know what this refers to and whether he could provide us with all of the relevant details.

Mr. Pallister: All?

Mr. Maloway: All of them. As long as it is not more than eight.

Mr. Pallister: I think, just to clarify generally, what we are after here is a better understanding of one another's needs and one another's requirements and one another's capabilities, so that there is that clear understanding of the expectations that our SOA has of the dealer and vice versa. For example, from our perspective, it is that the dealer understands the quality that we expect in terms of repair, that the dealer understands issues relevant to the access to certain parts; and, from the standpoint of the dealers, it is that they are clear and we are clear with them on the types of capabilities that they do have.

A basic example would be so that we do not send a repair to a certain dealer that is not capable of doing the work, wasting his time, wasting the time of the operator of the vehicle. You know, we are trying to establish a more informed relationship with our repair people across the province so that we manage the time of all concerned more effectively and are more efficient in our operations.

Mr. Maloway: The reference here, though, is to discuss service centre partnership agreements. What are these all about?

Mr. Pallister: The agreement that the member alludes to is simply, as I have stated, to outline in more detail the expectations of the government to the dealer and the dealer of the government. It simply enunciates--it is an understanding of the terms of the relationship, more than, I suppose, a formal legal document. It is one that just is descriptive of the relationship so that both parties are more understanding of the nature of service provision and the nature of the services required.

Mr. Maloway: Mr. Chairman, are there any partnership agreements in force right now at the present time?

Mr. Pallister: Not at this time.

Mr. Maloway: The minister also makes reference to potential service to new public-sector markets. What does he mean by these new markets? Where are they, what are they and who are they?

Mr. Pallister: I think this Premier (Mr. Filmon) and others have certainly made efforts to increase the efficiency with which governments provide certain services and to reduce the likelihood of inefficiencies through such things as overlapping services being provided.

So the general thrust here would be that we are looking to do things very effectively, for example, with the Fleet Vehicles Agency. We are endeavouring to provide effective service at a very low cost to the taxpayer. We have had some success in doing that, I think, by most accounts, and so rather than having other levels of government attempt to duplicate the service that we provide most effectively here in Manitoba, in our jurisdiction, it would make some sense to have those services provided to other levels of government, rather than having them duplicated by other levels of government.

The simple fact of the matter is there are not really, when it comes down to your tax return, there are not multiple levels of government really. There is only one taxpayer. So we recognize that and that there is a single payer for these services. We will try to effectively combine those services in such a manner, and this is in the ideal sense, to provide that service in the most effective way that we can to the taxpayer.

So it is a sensible approach to trying to do things co-operatively in government and among governments at different levels, and also it may be relevant to Crown corporations and their requirements, as well.

Mr. Deputy Chairperson: The hour being 6 p.m., I am interrupting proceedings. The Committee of Supply will resume sitting at 8 p.m. this evening.