Hon. James McCrae (Government House Leader): Madam Speaker, I have some matters of House business to discuss with you today. If you canvass the House, I believe you will find there is agreement for the following. I do not know if we have given a copy of this to you. Yes, good.
First, that the House adjourn today at six o'clock.
Secondly, that the House not sit on Friday, the 9th day of May.
Thirdly, that on Thursday, the 8th of May, the House sit at 10 a.m. beginning with Prayers and then the consideration of bills, recessing at noon, resuming at 1:30 for Routine Proceedings and to consider Estimates thereafter.
Fourth, that private members' hours be waived for May 5 to May 8 inclusive.
Fifth, that during the week of May 5 to May 8 inclusive, recorded votes requested in the House, Committees of the Whole and standing committees be deferred to a time and date agreed upon by House leaders.
Sixth, that the quorum requirements in the House, Committees of the Whole House and standing committees be waived for the week of May 5 to May 8, inclusive. Seventh, that the number of members required by the rules to request recorded votes in the House, Committees of the Whole, Committee of Supply and standing committees be reduced to one for the week of May 5 to May 8.
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Madam Speaker: Firstly, is there leave that the House adjourn today at 6 p.m? [agreed]
Two, is there unanimous consent that the House not sit on Friday, May 9? [agreed]
Three, that on Thursday, May 8, the House sit at 10 a.m., commencing with the Prayers and then to consider bills, recess at 12 noon and resume at 1:30 p.m. for Routine Proceedings and to consider Estimates thereafter. Is there unanimous consent? [agreed]
Four, that private members' hours be waived May 5 to May 8 inclusive? Agreed? [agreed]
Five, that during the week of May 5 to May 8 inclusive, recorded votes requested in the House, Committees of the Whole and standing committees be deferred to a time and date agreed upon by House leaders? Is there agreement? [agreed]
Six, that the quorum requirements in the House, Committees of the Whole House and standing committees be waived for the week of May 5 to May 8 inclusive? Is there agreement? [agreed]
Seven, that the number of members required by the rules to request recorded votes in the House, Committees of the Whole House, Committee of Supply and standing committees be reduced to one for the week of May 5 to May 8. Is there agreement? [agreed]
Mr. McCrae: On a further matter of House business, Madam Speaker, upon consultation with the members of the Subcommittee of the Standing Committee on Privileges and Elections, I have been advised that the subcommittee intends to hold public hearings in Winnipeg on the following dates in order to receive submissions from persons who have already registered regarding the review of the legislation pertaining to the Office of the Children's Advocate. I am therefore announcing these meetings to the House as a courtesy to all honourable members.
The subcommittee will be meeting in Winnipeg on Monday, May 12 at 7:30 p.m.; Thursday, May 15 at 10 a.m.; Tuesday, May 20 at 3 p.m.; Tuesday, May 20 at 7:30 p.m. and Wednesday, May 21 at 3 p.m., with all of these meetings to take place in Room 254 of the Legislative Building.
Given that all of the meetings, with the exception of the May 15 meeting, are scheduled to take place when the House is sitting, I seek the leave of the House to have the subcommittee meet at the same time as the House while it is in session and while the Committee of Supply is meeting. This will also necessitate that the Committee of Supply sit in two sections only on the evening of May 12 so that Committee Room 254 can be used by the Privileges and Elections subcommittee.
Also as a courtesy to inform honourable members, the subcommittee will also be having hearings with rural presenters. On May 13, between 12 noon and 2 p.m., a video conference meeting will be held at facilities in the Trizec Building with presenters from Dauphin. On May 14, the subcommittee will be travelling to Thompson to hear presenters, and the location of that meeting is the Thompson City Council Chamber. On May 15, a video conference meeting will be held between 1 p.m. and 2 p.m. at facilities in the Trizec Building for a presenter from Brandon.
There was one item in all of that that required some agreement.
Madam Speaker: Is there leave that all of the meetings, with the exception of the May 15 meeting, are scheduled to take place when the House is sitting? Is there leave of the House to have the subcommittee meet at the same time as the House while it is in session and while the Committee of Supply is meeting? [agreed]
Mr. McCrae: Further to the agreements made a little earlier with respect to the arrangements for the Legislature, I seek leave of the House to adjust the Estimates sequence as set out in the document tabled on March 27 and amended subsequently by moving the Estimates for the Department of Finance into the Assembly Chamber to be considered immediately after the Estimates of the Department of Environment.
Madam Speaker: Is there leave of the House to adjust the Estimates sequence as set out in the document tabled on March 27 and amended subsequently by moving the Estimates for the Department of Finance into the Assembly Chamber to be considered immediately after the Estimates of the Environment department? [agreed]
Mr. McCrae: Madam Speaker, I move, seconded by the honourable Minister of Natural Resources (Mr. Cummings), that Madam Speaker do now leave the Chair and the House resolve itself into a committee to consider of the Supply to be granted to Her Majesty.
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Madam Speaker: Due to the unavailability of the Deputy Speaker and the Deputy Chair of Supply, the honourable member for Sturgeon Creek (Mr. McAlpine) will be chairing the Estimates in the Chamber, and the honourable member for Turtle Mountain (Mr. Tweed) will be chairing the Committee of Supply in Room 255.
Motion agreed to.
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The Acting Chairperson (Mr. Jack Penner): Order, please. Will the Committee of Supply please come to order. This afternoon this section of the Committee of Supply meeting in Room 255 will resume consideration of the Estimates of the Department of Consumer and Corporate Affairs.
When the committee last sat, it had been considering item 1. Administration and Finance (d) Research and Planning (1) Salaries and Employee Benefits on page 24 of the Estimates book. Shall that item pass?
An Honourable Member: No.
Mr. Jim Maloway (Elmwood): Mr. Chairman, it has been agreed that we would deal with the Automobile Injury Compensation Appeals Commission and issues relating to that particular section today, and just thinking back to last year now, this is a relatively new Appeals Commission, and as we all know, this no-fault system that has been with Autopac now, it has been around for three years, but it was pretty much a copy of the Quebec plan, and I believe the Appeals Commission has a lot of similarities as well.
The experience in Quebec, however, on the appeals front when it was originally set up under Rene Levesque, in 1976 I believe, or '77, the experience in Quebec was that there were quite a number of appeals, and I think in Manitoba the experience has been quite the opposite. It has been a limited number of appeals, so much so that in fact the Appeals staff, I believe, have been reassigned to other jobs and the Appeals budget was not what had been budgeted for. However, I must say that there have been a number of complaints and there is a consistency to the complaints, and the complaints are made to certain reporters and elected officials regarding qualifications for the income replacement. There seems to be a certain inflexibility, a certain confusion perhaps in the corporation, in the MPIC among the Appeal board people as to what the policy really is and how it should be interpreted and so on.
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You know, it might be fine to say, well, the government has appointed a review which mandated review, three-year review was put in by us as the opposition party when this legislation was in three years ago. We introduced a whole range of, 30-plus I think it was, amendments, and the government was good enough to go along with us on at least three or four of them, and one of them was the three-year automatic review.
Now, as the minister knows, the review chairman has been announced, Mr. Sam Uskiw, and I believe a report is going to be made on this by the fall for changes and so on to the whole scheme, to the whole structure, if any. But my colleague from Wolseley has some specific questions about this appeal procedure, and I would like to turn it over to her to ask as many questions as she wants to ask.
Ms. Jean Friesen (Wolseley): Mr. Chairman, this arises from a series of situations brought to my attention by a private citizen who has dealt with the public insurance commission and also I believe with the Appeal board, but the issue he is raising is one of principle rather than of his own particular case, and, in fact, really the origin of what I am going to talk about is in an appeal that was held--let me get the date right. The hearing date was Thursday, April 18 and Thursday, May 2, 1996, and it was a hearing dealing with the issue of income replacement after an accident.
It stems from the legislation, Section 85(1)(a)of the legislation which says that a nonearner is entitled--and it is all stemming from the nonearner aspects of the new legislation which, of course, is one of the things which the government believed was a great improvement over previous legislation, so it is, I think, an interesting issue for many Manitobans from that perspective. The legislation says that a nonearner is entitled to an income replacement indemnity for any time during the 180 days after an accident that the following occurs as a result of the accident, and here is the significant part: He or she is unable to hold an employment that he or she would have held during that period if the accident had not occurred. Much of the dispute and the confusion stems or comes from that phrase "would have held" and the interpretation of "would have held."
If you look at the briefer materials--not the act itself, I began with the act--I wanted to draw the minister's attention to two types of information that are provided by MPIC. One is a longer brochure--and I only have the xeroxed material from it at the moment--which deals, pages 6 and 7 it is of the brochure given out by MPIC of nonearners. It says, and I can understand what it is trying to do, it is trying to put in colloquial language or everyday language, the language of the act and this is how it does it. I am quoting. If you did not hold a paying job when the accident happened, you do not get income replacement for the first 180 days. That is because you have no employment income to replace. However, if you had been hired for a job that would have started after the accident--and, again, we get to that issue of "would have"--you can qualify for income replacement during the first 180 days, even though you had not started working when the accident happened and will need proof that you were actually hired for a job that was to start after the accident. Now that goes further than the legislation actually says. It is attempting to expand upon the legislation and argues a kind of intent and proof required which is not stated in the legislation, "will need proof" that you were actually hired for a job that was to start after the accident.
A second piece of information--again, the commission trying to put into plain language details of the act--says this, and this is page 48. This is the smaller booklet. The section is called What you Get When you Buy Autopac Coverage. It is a small booklet done in about two or three colours, I think. It says on page 48, people unemployed at the time of the accident who can show they had secured employment which was to have begun after the accident, receive an income replacement indemnity based on that employment. This is actually slightly different from the other piece of information that MPIC is suggesting and does not argue that you have to have proof and does not add to all those kinds of things that the other brochure does. So one issue is the constancy of public information provided by MPIC, (a); and (b) its relationship to the legislation. In going into plain language, they seem to have gone beyond the legislation or to have explained it in ways that may or may not have been intended by the Legislature when they passed that.
So arising from that, I believe there have been a number of appeals to MPIC and then to the Appeal board. Some have been turned down on the grounds that the appellant had no evidence of a job that he or she had been offered in the period of the illness that resulted from the accident. However, there is one judgment which seems to be quite different from other judgments, and that is the one that I began with and it is the one of the hearing date of April 18 and May 2, 1996. In that judgment, MPIC had refused the appellant income. He was a nonearner at the time of the accident, and as I understand, and all I have is the public account of the Appeal Commission, he did not have evidence of a new job that he had been offered or that he was to undertake or that had been offered to him subsequent to the accident but which he could not have taken up as a result of the accident. Neither of those two situations applied, so MPIC had turned him down.
He appealed, and the Appeal board took some time to look at the definition of the act and to look at what the implication of that would have, that he or she would have held during that period if the accident had not occurred. They came to the conclusion in this particular one--and they quoted Section 12 of The Interpretation Act of Manitoba which provides that every enactment shall be deemed remedial and shall be given such fair, large and liberal construction and interpretation as best ensures the attainment of its objects. They seemed to argue that--and I am quoting from page 9 of it: We find that the appellant has met that onus. We are satisfied that within two months after he commenced his search for suitable employment in Manitoba, he would have found it. So the argument they are making is that he was in such a field and that he had such experience, he would have found work.
Then they go on to estimate that as to the income level at which he would have been employed, we find that a gross annual income of X would have been appropriate, at least as a starting salary. Then they say, while it is probable that his position would initially have been a probationary one, the salary might well have been more, et cetera, but, basically, they are arguing, it seems to me, and the underlying assumption is that here is somebody who is a skilled person in a market which was expanding and that would have offered him a job.
So it is quite different from what is implied and indeed is written in the information sent by Autopac as plain language information, and it is unclear whether indeed that was the intention of the act. So that is that issue, and that is why I think we would have liked to have had somebody from the board here to discuss that with us.
Perhaps the question I should pose then is, Mr. Minister, is that particular decision one that sets the precedent, and is that the one which all subsequent cases should have followed, at least until the law is clarified or whatever is to happen as a result of the inquiry?
The Acting Chairperson (Mr. Penner): I am going to, Minister, ask the honourable member for Wolseley whether she would like to extend her question or ask another question before you answer that, or did you want to answer?
Hon. Mike Radcliffe (Minister of Consumer and Corporate Affairs): No, I can address some of the issues of this question now, and I will make some undertakings for some of the unanswered portions of the question.
Madam member, the pamphlet to which you make reference, I gather, is an MPI pamphlet. We take no responsibility for the publications from MPI because, in fact, it is different from our situation. However, I certainly will pass on your remarks and request that they be made consistent and harmonized with the decisions of the board. I think that you have raised a very good point.
Further, the decisions of the commission are precedent-driven, so therefore what you have described is setting precedent for the commission. I think that when the fact situation appears again, when another case comes up on all fours, that they, I think, undertake that they will be bound by their previous decisions. However, you are sufficiently aware, I am sure, of jurisprudential wisdom. [interjection]
Well, no, I do carry an inactive--yes, I have maintained an inactive status, and I can reflect upon my status before the courts over the years, that you can go into a court with something that you think is on all fours, absolutely and binding, and you can find that a judge will except himself out, or herself out, of that situation. So I would not want to create false expectations, I guess is the point.
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But it certainly appears that what you have described has set a precedent. I will inquire into the department for an interpretation of that further. If something comes up that is different from what you have outlined as a policy, I certainly undertake to advise, but it appears that the policy is that the board is prepared to enter into speculative forecasting as to what a claimant will reasonably expect and does not necessarily rely upon hard, objective documentary evidence, which is I think the point you are making, and that they are willing to look at something that is reasonably objective.
I remember in law--and we have a number of lawyers on this board--that they always looked at what was reasonably foreseeable. That was often one of the tests that you entered into. When we were in school, it was what the person on the Clapham omnibus would anticipate. So I think that if there is a change from this forecasting of precedent, then I will undertake to advise.
Ms. Friesen: Just for the record, what we are considering here is not MPIC's policy. I will certainly be looking at that in another area. What we are looking at is the policy, the role, and the jurisdiction, I guess, of the board. Yes, indeed, at least two of the board on this occasion were lawyers. The third may well have been, I cannot tell.
I am quoting from--the particular area of the decision that I am interested in is on page 9 of the decision. It does, just for the minister's clarification as well, deal with the 180 days, the first 180 days after the accident is how I understand it. I thank the minister for looking into this. We would certainly welcome any further information on this. I understand what he is outlining, the precedent-driven nature of this board.
Could I ask what the other side of that is? What is the situation for people who might have gone before, or who in fact did go before with similar situations but may not have gone to appeal, may have lost, as they saw it, their case at the MPIC level or indeed may have gone to appeal? I do not know, I think there are about a hundred cases that the board has seen. I do not know how many would actually fall into this category. What is the situation for others at the lower level and others who receive their judgments before this precedent?
Mr. Radcliffe: Part of my answer is entering into jurisprudential theory. Part of that is that there is a body of law that is infinite and has always been, and that mankind's journey through the development of law is that we are continually realizing on something which has always existed and known. This is a fiction, of course, this is a legal fiction. But this is the theory upon which the courts continually function. So the Court of Appeal or the Supreme Court of Canada will often develop a branch of law or take an issue in a particular direction. It is assumed that this always has been and that that court decision is just recognizing a status and a new plateau of knowledge.
The difficulty, of course, is that people I believe would be time-barred from going back and reviewing their circumstances. In this particular case, it is prospective development rather than reflective, going backwards. So people who are beyond the time limit of appeal are in fact regrettably--and I say that sincerely--barred from realizing their rights.
An Honourable Member: Shall we adjourn for five minutes?
Ms. Friesen: Yes, I can continue discussing jurisprudence, most interesting, or we could take an adjournment--recess, sorry, for three minutes.
An Honourable Member: Sure.
The Acting Chairperson (Mr. Penner): Let us make it five. It gives me an opportunity to do what I was going to do before. Is that all right--five minutes? [agreed]
The committee recessed at 3:25 p.m.
The committee resumed at 3:33 p.m.
Mr. Radcliffe: Mr. Chairman, for the benefit of the honourable member and the record, I would like to add in further amplification of my answer that as a result of the decision which we have been talking about that the honourable member referred to, there was a revision of the Autopac pamphlet on March 1, '97. On page 48, the pamphlet says as follows: Section (d) Nonearners receive no income replacement indemnity for the first 180 days after the accident unless they can show that they would have held employment. So that is almost reflective of the statute.
Then subsection (f): People unemployed at the time of the accident who can show that they had secured employment which was to have begun after the accident receive an income replacement indemnity based on that employment.
So it would appear that MPI have now, as a result of this decision, made their language more generic and general. I can advise that the decision by the board is determinative of the issue now, that MPI must follow the decision, and that does set the precedent.
Ms. Friesen: I recognize that it is difficult for the minister not having the case in front of him, but, in fact, what he has just read out to me as the revised version of the MPIC pamphlet is, in fact, the original version that I read out to him. It does not deal with the issue that has been raised by this case. You see, what the MPIC pamphlet says is, people unemployed at the time of the accident who can show that they had secured employment. That is the issue.
In the case that we are discussing--and I have not used the person's name in the case we are discussing. We will just refer to it as the case, although it is a matter of public record. In the case we are discussing, there is no evidence of a job in hand. There is no written offer. There is no workplace. There is an assumption that given the ability and skill of this person A, given the marketplace for those particular skills, the Appeal board has made a decision, and, again, I am going to quote: We find that the appellant within two months after he commenced his search for suitable employment in Manitoba would have found it. It goes back to that "would" in the earlier one.
What is happening here is that MPIC in its public information and, indeed, in its own decisions--MPIC it seems to me is consistent--is saying that you have to have this job in hand. You have to have a written version. You have to have hard evidence, however we want to describe it, but when the case was taken to the Appeal board, different assumptions seemed to come into play.
Now, that was over a year ago, and my concern is, has it created a precedent? Is it a precedent? What has happened since? Is MPIC going to be directed to alter its policy?
Mr. Radcliffe: The language, and I stand to be corrected here, but the language that I read is now a much more generic language in the pamphlet. The language in the pamphlet that I cited now echoes the language of the statute, I believe, because the operative clause is, would have held employment, not required to show objective documentary evidence.
I would suggest that MPI have now adapted their documentation to a much more generic test, a test of reasonableness which is a change. I agree with the honourable member that this is a change in direction of the corporation, that the corporation had been following a much more restrictive path before. I agree with the honourable member, that the custom was that you had to show actual proof of a job. Now the test is one of a much more prospective and generic nature, where it gives a wider ambit for the claimant or the appellant and that is binding on the corporation.
I would suggest that the language now in Clause D, "would have held employment," is something that--and then you may have the old wording in front of you there, I do not know, and as I say, I beg to be corrected--but this suggests a wider threshold that you have to prove.
Ms. Friesen: I appreciate what the minister is saying in that D, Section D can be interpreted in the manner that the Appeal Commission has interpreted it. However, Section F, which then goes beyond the 180 days, am I right in assuming that Section F goes beyond the 180 days?
Mr. Radcliffe: The people post-180 days were entitled to compensation at a prescribed level regardless of whether they had employment or a reasonable prospect of employment.
Ms. Friesen: So in the pamphlet that I think we are both reading from, Section F, which reads people unemployed at the time of the accident who can show--again, that requirement to show they had secured employment which was to have begun after the accident--receive an income replacement indemnity based on that employment. Does Section F apply to the 180 days and the period afterwards, or does Section F only apply to people after the 180 days?
So what I am saying is: Does that requirement to show secure employment or new employment only come into play after the 180 days?
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Mr. Radcliffe: Mr. Chair, I would believe, and again subject to further inquiries, but I would believe that paragraph F is a more selective, exclusive interpretation of the issue, but it is not exclusive. It does not rule out the wider interpretation that has been put on this by this case. So what F is saying, and every clause--now this is only a clause from MPI as well. This is not legislation, so my answer is somewhat speculative, but I think it would be interpreted as saying that if one can show, as the honourable member has raised, the prospect of employment, then you are also entitled to compensation, but the prospect of wording, the wider ambit wording in D also is the threshold test which a claimant must pass, and that has been borne out by the level of this case. I agree that it is confusing as well.
Ms. Friesen: I think what the citizen who brought this to my attention is saying is that as it stands the public information that MPIC is making available--and albeit we understand that they are trying to put things in plain language, but in so doing they may, in fact, be not reflecting the legislation, not reflecting the intent of the legislation, and certainly if this is the revised one, if this is the most recent, it is not in accordance with decisions which have been made. In fact, F should read, people unemployed at the time of the accident who can show that they had prospects of securing employment which would have begun after the accident.
That would make it clear, and it would also make it consistent with D. So that is really one element that the citizen is arguing. I understand we are talking MPI brochures here and not Consumer and Corporate Affairs, but there is other information from MPI which still reads, and this is on page 6 of a larger brochure, which says to nonearners, quote, if you did not hold a paying job when the accident happened, you do not get income replacement for the first 180 days after the accident. That is because you have no employment income to replace.
(Mr. Mervin Tweed, Acting Chairperson, in the Chair)
Now that is misleading if indeed the precedent of the Appeal board is to stand, because in fact if you had the prospect of employment--the commission has decided that this person in the appeal case had prospects and also that they had prospects at a certain level of income. So that would seem to me to need to be changed.
The second part of that nonearners which says, and I quote, however, if you had been hired for a job--the past perfect I guess--that would have started--future conditional--after the accident, you can qualify for income replacement during the first 180 days even though you had not started working when the accident happened. We will need proof that you were actually hired for a job that was to start after the accident.
Now any average citizen reading those two brochures would make assumptions that they must have a job in hand and concrete evidence of it. So I think there are a number--I do not know what other brochures exist, and whereas I compliment MPIC in trying to put things into plain language, they must be consistent with the law, they must be consistent with the appeals, and they certainly should not restrict the opportunities because that is what is happening here. They are restricting the opportunities and information that is available to people.
So I think those are the issues that I wanted to deal with. Is there a process--perhaps I can put this in the form of a question--for transferring from the Appeal Commission information on precedent-setting situations so that such adjustments can be made in MPIC's training for its agents as well as--because there is a personal, there is an individual component to this as well, the information that you receive from your agent--the actual written material that is available to citizens?
Mr. Radcliffe: I would advise the honourable member that at the time a decision comes out from the board, it is sent simultaneously to the appellant and to the corporation. The particular decisions are referred to Mr. McCulloch who is the vice-president and in charge of internal review by the corporation. Mr. McCulloch is a solicitor, and it is our understanding that it is his obligation and duty to communicate this information and these new tests or the development of the law to the adjustors and to train the individuals within the corporation.
I would add that, judging from what the honourable member has raised, I agree with her that the language does seem to be at odds with this decision and while, albeit, the board does not have any binding authority over the operation of the publications from the corporation, I certainly will not waste the opportunity to bring this to Mr. McCulloch's attention.
Mr. Maloway: I believe the member for Wolseley (Ms. Friesen), in the case that she had brought to the committee's attention, indicated that the hearings on this particular appeal were April 18 and May 22, 1996. So that is evidently--that would be the point at which the commission basically changed the policy, correct?
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Mr. Radcliffe: I do not want to beg the issue, but that is when then the hearings were conducted. The policy would have been developed or the precedent would have been set at the time that the decision was rendered, and sometimes those may not be consistent.
Mr. Maloway: That being the case, and I do not want to quibble about a few weeks either way, I mean in that time frame is when the commission evidently made the decisions which, in fact, changed the precedent. We have an internal memo here, written by Kevin McCulloch an MPIC memo, as far back as November 27, 1995, basically outlining--in paragraph 4, he says, and I quote: I also have some doubts about the hard-line position taken by the corporation. It would appear to me that if we are facing a situation where the nonearner has, prior to the accident, applied for employment and subsequently that application is successful, but the victim, due to his injuries is unable to take up the employment, then this should be treated as employment that he or she would have held during that period, 180 days of the accident not occurring. He goes on to say: In effect, that was the approach that he took in the Belcourt matter, claim No. L1264082.
So my interpretation here is that he, Mr. McCulloch, had in fact been implementing a more relaxed approach to this problem six months earlier than the board actually made a ruling on the matter. I guess I would like to ask: How many appeals--now there is a list here of 37 appeals--from the beginning of this commission to current has the board dealt with, and how many of them are in this particular area of adjustment? How many people are we talking about? I guess my question really is: If the precedent has now been changed, is it retroactive? Is there any retroactivity here back to the people who have been actually, I guess, victimized by having their appeal dealt with before the commission set a new precedent?
Mr. Radcliffe: I am advised that there was a case touching on this question that came before the commission in November of 1995. The preliminary threshold was described at that point, and then the May of '96 decision, May 6 of '96 apparently was the date of the second decision and that amplified and made the threshold broader. So there appeared, to our records, to be two decisions touching on this particular area of the statute. We will inquire, and if there are more decisions on this issue, we will advise.
As to retroactivity, as I responded to our honourable colleague earlier, so far as we know there is no retroactivity, and we do not believe that the corporation is going back and increasing the compensation to individuals according to the new test that has now been determined by the board.
An Honourable Member: Paying retroactively because 180 days will have long since passed.
Mr. Radcliffe: That is correct. My honourable colleague has said paying retroactively. We do not believe that the corporation has paid retroactively. Again, we will inquire, and if any information comes to hand on that, albeit MPI is not my responsibility, but in order to complete the ambit of this examination I will advise.
Mr. Maloway: Mr. Chairman, I just wanted to add to the point that we would like to know how many cases the retroactivity, if it did apply, would apply to?
Mr. Radcliffe: I think you are saying how many cases are there in MPI that were ruled on a restrictive nature where individuals did not get the compensation which, had this decision been in place earlier, they would have.
My answer is I have no idea. This is an issue which I think more properly lies within the review of MPI, but I certainly will pass this question on to MPI. If they have any way of giving us that information, if they record these sorts of judgments, I will advise the honourable member.
Mr. Maloway: It should not be too hard to do because there were only 37 cases that the board dealt with last year, I believe, according to your annual report. I mean, how many could you possibly have that are in this specific category?
Mr. Radcliffe: But I believe the question that was posed was how many cases are there at the MPIC level that never surfaced to the appellate level. I think that is the question you asked.
You see, the Appeal board is a completely separate appellate body from the compensation process at the corporation's level, so we have access to a number of cases at the appellate board level. Our information is that there are these two cases that I have described at the appellate board level. We do not believe there have been any subsequent at the appellate board level, because, in fact, the last case in May of '96 has set the threshold standard. I will double-check that with the department, and if there is any more info, I will pass that along.
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The Acting Chairperson (Mr. Tweed): Section 5.1 (d)(1).
Mr. Maloway: I believe when we finished the section on the Automobile Appeals section, we would be going into the Consumers' Bureau section, and that is where we should be right now.
Mr. Chairman, I am sorry, but you are a new chairman to us. What we have been doing is we have not been passing anything really. We have just been wandering from section to section. Because of the flood situation, the minister has been good enough to allow us to leave everything open, and we have just called people in as required, both from our side and the department side of things.
The Acting Chairperson (Mr. Tweed): I have no problem with that. The other day when I chaired this committee, after we were done Residential Tenancies, we passed that section of it, and I see by the record that that was my impression given to me. So whatever is agreeable to all members is certainly fine with me. So you want to move into Consumer Affairs. So we are not going to pass 5.1 (d) Research and Planning, and that would get us right out of that department.
We are now considering 5.2 Consumer Affairs (a) Consumers' Bureau (1) Salaries and Employee Benefits $876,900.
Mr. Maloway: We have a number of questions on the operation of the Consumers' Bureau. I know the member for Wolseley has some questions, so I would invite her to start off the questioning by asking some.
Ms. Friesen: I am interested in the number of inquiries and complaints that I receive as Education critic on private vocational schools. I wonder if the Consumers' Bureau has records or could give me any sense of how many of those kinds of complaints or inquiries--we will not necessarily think of complaints at this stage--are directed to the bureau.
At times when I have raised the issues of private vocational schools in the past, the Minister of Education, not the present one, but earlier ones--in fact, two earlier ones--have put together a brochure which is essentially a consumers' guide to private vocational schools which, I believe, are supposed to be displayed in the private vocational schools, essentially arguing these are the kinds of questions you should be asking; this is the kind of informed consumer you should be when you are looking at this kind of school.
So I wondered if those kinds of brochures are still in place, because my sense is that people I have talked to have never seen those brochures and are not aware of what kind of recourse they might have as a result of either the Department of Education or the Consumers' Bureau.
I noticed that in the annual report, 1994-95, that there are three complaints about schools, and in 1995-96 there were four. Could the minister perhaps tell us what kinds of schools those are? Are they what are called private vocational schools? Are they public schools? Are they private schools? How are these dealt with?
Mr. Radcliffe: I am advised, Mr. Chairman, that, in fact, the line reference on page 19 of the annual report indicating three complaints in '94-95 and four complaints in '95-96 refer to activity with regards to dancing schools and not private vocational schools.
I am told by my director that, in fact, private vocational schools are the exclusive responsibility of the Department of Education, and, in fact, we have no knowledge of the brochures to which the honourable member makes reference.
Ms. Friesen: So the department's response to any inquiry or complaint about a private vocational school would be to direct it to the Education department and not, in fact, to record it in any way, so it just simply gets redirected?
Mr. Radcliffe: That is correct.
Mr. Maloway: Dealing with the Consumers' Bureau, now, I understand that the Consumers' Bureau administers a number of legislative acts. One of interest to me is The Charities Endorsement Act. The member may recall last year, about a year ago, the Premier (Mr. Filmon) was on a cruise, and there were some monies that were supposed to be--it was a charity cruise that he was on.
I asked a question at the time and I am waiting to hear from the minister to find out whether any changes are going to be made to The Charities Endorsement Act to require that real benefit accrue to the charity, because our questions at the time were that we felt that the real benefits here went to the person taking the cruise and that there was really not a huge component here for charity. I guess we do not have a problem with cruising as long as the charity gets a good percentage.
The minister is quite aware of all sorts of examples where some charities return very, very little money to the people that they are supposed to be working on behalf of. There are a lot of examples of charities, some very obscure charities. I believe there is a book out right now by a nationally known author in Canada on this very subject, suggesting somehow that some charities do not eat up too much of their monies in administration and so on. The bottom line in all of this is how much of the money actually sees its way to the people who are in need.
So we wanted to make certain that either the legislation was amended or the regulations were amended to require that whenever charities are operating, that a maximum amount of money and benefit see itself to the people that it is trying to help, and what is the standard; what percentage is acceptable?
I think in some cases it is probably unacceptable. I think the minister would probably agree that in some cases with some charities, virtually nothing gets to the people it is supposed to help. In other cases, there would be much better results shown, and a much higher percentage of the monies would get to the eventual recipient. So I would ask the minister what is being done regarding that whole issue, and when I might receive some sort of response to my question.
Mr. Radcliffe: Mr. Chairman, the attitude of the department has been that the relationship between the charity and any individual promoter of a cruise, scheme or benefit which raises money in the private sector is a private matter which is a relationship which really is determined by the nature of the relationship between the promoter and the charity.
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Where the department gets involved is that if they do receive a complaint, their response is to go to the charity and say, would you please make sure that you make full disclosure to the member of the public as to what level of income received from the public goes to administration and what level of benefit goes to the actual recipient or cestui que trust.
I believe that perhaps is really what my honourable colleague is directing his attention to. The experience of the department has been that if the department is to become more involved and to get its hands more into the relationship between the promoter and the charity, that, in fact, it raises antipathy onto the part of the charity, and basically the department has, therefore, been reluctant because of the attitude of the charities themselves, which are the ultimate recipients, to regulate this field anymore than is to date, which is perhaps one of ensuring that there is honest, complete and adequate disclosure.
Mr. Maloway: Mr. Chairman, well, what sort of rules and regulations are in place right now to govern these arrangements?
Mr. Radcliffe: Mr. Chairman, I am advised that where there is a relationship between a particular promoter and a charity, the financial statement of the promoter has to be filed annually with the department and the participation of the promoter, the actual disclosure of income received by the charity and the amount of income retained or the expense level of the promoter is declared, and that is a regulation which is enforced and complied with. Other than that, the relationship is complaint driven, and I am advised that there have been a minimum of complaints, if not no complaints, currently before the department on this particular issue.
Mr. Maloway: Mr. Chairman, well, then, I have several examples that I would like to ask about for clarification. In the last few months a promoter or a person surfaced and offered to raise money for the Elmwood Cemetery. The minister is aware of this. Would this person even be considered a charity? Just where does this person fit into the scheme of things? You say the system is complaint driven. If a person does not register with you, you have no way of forcing them to, I guess, and it is only if they come into your office and ask you to register, and I imagine they have to get a federal tax number, do they not?
Mr. Radcliffe: I think that my honourable colleague has put his finger right on the issue, that in fact in order to qualify as a charity, an individual has to get the tax number and, therefore, you have to achieve a certain threshold of eleemosynary objects and goals in order to qualify to get the tax relief from your donations. If you do not get that, then, of course, individuals like this fellow who was roaming around the community, I think he was looking to remedy a situation which we have here in the city, but in fact my information is that no money was collected, and there were no complaints from the Elmwood Cemetery proposal.
Mr. Maloway: Because it is complaint-based, I am just wondering--I mean, the department people must read the papers as well, and if they see something like this I would expect that they might be proactive and try to check these things out without waiting for a complaint to be made in a case like this.
Another good example--and it just comes to mind right now--but the minister will recall a couple of years ago that there was a big social at the Convention Centre to save the Jets. I remember writing a cheque for $100 to this social and saw a few elected politicians over there. There were about 5,000 people at the social--certainly the largest one I have ever been at--and each person going there had to pay $100 and pay for their own drinks and so on. So my assumption is that this was quite profitable for the people putting it on. Now the money from the social was supposed to go to saving of the Jets.
As we know, the Jets did not get saved, and I am wondering whatever happened to all that money and whether or not the staff could check this out and track this down. I mean, once again this would not be a registered charity. It was just a couple of--I think a real estate agent and somebody else got together in the emotion of the time and decided to put on a social.
The reason I ask the question, Mr. Chairman, is that I have actually had people ask me these questions as to whatever happened to this money because it was a considerable amount of money, and there was a concern that--there is nothing improper about you or anyone else or me putting on a social. I gather you go to the Liquor Commission, get a permit and you put on wedding socials and put on different socials for political party functions and so on, so what would stop a couple of people from putting on a hundred-dollar social to save something or other that was popular at the time. I do not know. You can do the mathematics on this, but that is a heck of a pile of money, 5,000 people at $100 a pop. So I have been asked a couple of times over the last couple of years, like whatever happened to this money?
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I have said, well, you know, look, I will check it out for you because some of mine is in there too, and I just have not gotten around to doing it, but I think this is probably as an appropriate place as any. With the head of the Consumers' Bureau around, we should be asking these questions.
Mr. Radcliffe: I am advised that if any charity wants to raise money, they have to be endorsed by the Civic Charities board, and the Jets in fact were a registered organization at this point in time in the city of Winnipeg. So I can confirm that in fact that was a legitimate endeavour and there was regulation.
My department tells me that in fact there have been no complaints received from any member of the public with regard to funds that were not returned as a result of this particular social event of which you speak. I can advise that I made, or actually my family, made a contribution and I think the--well, I know the money came back. I think even the actual cheque was returned; it was never cashed. It was held for about 90 days, 45 to 90 days, and then when the actual project or proposal--it was clear that we were not going to go ahead and retain the Jets, that particular money was returned to us, but you are talking of an actual party at the Convention Centre. If you could give us some particulars as to the date or the name of the promoter, this is certainly something that we are prepared to look into. We have no specific knowledge at this time as to whether those funds were returned, and you are obviously saying that you did not receive any refund, so we would certainly be prepared to look into where those funds were directed.
Mr. Maloway: Mr. Chairman, for the minister's information, the social was the only social, I believe, that was put on to save the Jets and it was probably the night of the big rally at The Forks, but you know there were 5,000 people there. It was just huge, and there was some two or three days of publicity surrounding this, some TV interviews and stuff with the people putting it on. I think there were just a couple of sports fans that were promoting this, just Jets fans. I think one was a real estate agent, and they were quite successful.
There was a tremendous amount of donations for the Chinese auction, and so on, around the outside, and for all I know, the Convention Centre may have been given to them for free. I have no idea, but all I know is it was a fair amount of money raised. Even that very night, as I made my rounds at the Convention Centre, people were asking me about it, you know, like, it is a lot of money, and they were doing the mathematics, and where is it going to go and all that kind of stuff. Right. So if you can track that through and find out just what happened to it, I think people would be, you know, fairly satisfied to know that after expenses the money was all turned over to a charity, some sort of a charity anyway.
Mr. Radcliffe: It will be so undertaken.
Mr. Maloway: Mr. Chairman, now, with regard to the disclosure that the minister talked about, and just getting back to the example that I used originally, the Premier's (Mr. Filmon) cruise, just where was the disclosure supposed to be done, and to whom? Because my understanding is when the charity was contacted, the charities were very happy to receive anything. I mean their position was it is found money; if Carlson Wagonlit or any other travel agency wants to donate a piece of the profits or revenue from the cruise to the charity, then that is fine with us because it is money we would not have got normally. So whether it is 1 percent or 10 percent, I mean it means nothing to the charity because they are just basically franchising out their name. They are allowing their name to be used, and their position was, if we were to say no, we would not get any money.
Our argument is no, that is not the way it should be. We should look at the total endeavour and find out who is benefitting by this. If basically by stamping the charity's name on this business venture, it is the glue that kind of keeps it together and drives it all, drives the whole thing to success, then surely the charity should be getting a lot more than just a token amount, even though it is found money. If you understand what my point is, we thought that the charity would say, well, you know, we did not get very much money out of this, and in fact I do not think they did, but their point was that we did not do anything. We just lent our name to this, we did not put any effort into it, and we got a cheque and we are happy with it. The point is where does this all end. A lot of businesses then can operate basically with charities as fronts. I mean the charity just lends its name, and the business goes out to the public and basically deals with the public on the basis that buy this product or that product because it is endorsed by a well-known charity, when in actual fact, the public who is buying the product does not realize that next to nothing is going to the charity. It is kind of basically a business ploy and very little is getting back to its source.
So what I am seeking to find out is what sort of regulations could the minister put in place and maybe--I am trying to think of the author of the book, he was on CJOB six months ago, but he is a very popular author in Canada, well known to all of us here, I just cannot remember his name right now, but he was making allegations about well-known charities and so on not using as much money at the end as they should, which kind of prompted some people to think that maybe we should be looking at this whole area to see if we can streamline things and put in a few regulations to make certain that any charitable events that are put on see the maximum amount of money flow to the final beneficiaries of this or recipients of this and not be kind of used up in management and other things and profit for, say, businesses that are kind of masquerading as a charity.
Mr. Radcliffe: I would probably redirect my honourable colleague's attention to the federal government and, in fact, that if there was any tax accrual or tax benefit coming out of donation to a charity, the whole level of what qualifies to be a charity, not only for the general objects and aims but the percentage of benefit, should be a matter perhaps for the federal government to be commenting on.
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I can tell my honourable colleague that there is no political will by this government at this time to say that in order to qualify under The Charities Endorsements Act that there must be a given percentage of actual benefit accruing to the charity, because my honourable colleague does, quite properly, represent the attitudes of the charities who get involved with these sorts of promotions, that any dollar so found is something more than they had before. So, therefore, the charities themselves are also reluctant to complain or to derogate from this regime.
However, what we do say and do do and insist in the Consumers department is that there must be disclosure so that the final arbiter of the merit of any particular contribution and the percentage that devolves to the actual cestui que trust is the member of the public. So that if a particular charity or a particular promotion says 85 percent of your dollar that is raised goes to administration and costs, then I would suggest that quite properly the member of the public who is being solicited would redirect their dollars to another charity. The issue of actual factual and honest disclosure is the key element here and then we leave the responsibility in the hands of the actual person who is making the contribution.
Mr. Maloway: Mr. Chairman, my original question though was: To whom are we disclosing? I mean, back to this case of the cruise again. Where are these disclosures and to whom are these disclosures supposed to be made? Because at the end of the day I think the fact that how much the charity was getting--I do not know whether we ever did find out how much the charity was getting in terms of a percentage. All we know is that they were happy to be involved with it because, while they were not getting much it was better than nothing. Who is the disclosure supposed to be made to, because I hear these ads all the time and the minister does too. I mean, it is football players are going on a cruise and come and cruise with such and such a football player, or such and such a--politicians do not usually get on there because people do not want to cruise with us--but you know sports figures and people in the media are constantly in there.
The minister and the Consumers' Bureau deals with the BPA, right? Under the BPA, there is a big section there dealing with truth in advertising and misleading advertising. We are going to get to those sections in a little while and want to find out just what has been going on with the advertising sections of the BPA. But should it not be a requirement that it be disclosed right in the ads? I do not know where you are required to be disclosing, but I would think that when you turn on CJOB and you hear that such and such a sports figure is going with Carlson Wagonlit on a cruise somewhere next February and would the public just come and sign up, I would think that the ad should have to say that 10 percent of your cruise fee or something is going to whatever the name of the charity is, that people should understand that. The minister did say that there was disclosure, and I want to know who is being disclosed to.
Mr. Radcliffe: Well, I think the answer to my honourable colleague's questions is multilayered. First of all, I have never gone on one of these particular cruises, although I have been on cruises but not any of them that are charity-based. My understanding is if you do any activity which involves a particular benefit to the individual, there is always an attribution to the individual payor.
Something that I am a little bit more familiar with is if you go to a political dinner, the cost of the dinner is always prefigured, and then the amount of money, if you spend $250 for a particular dinner, you get a receipt for $187.50, and the difference, the $53 or whatever it is, is attributed to the benefit that you received for that particular activity.
So I would suggest that, firstly, there is always an attribution to the individual payor in this case. So if you were going to take a cruise, the actual cost of the cruise itself would have to be prefigured, and then the only award which is tax deductible, on which the individual receives any acknowledgement and which has any charitable allusions, would be that aspect that actually goes to the charity. So you cannot write off the cost of a cruise. If it is a $5,000 or an $8,000 cruise, I am sure that probably all but $400 or $500 goes to the cost of the fuel and the staff and the food and the booze and all the built-in costs for that activity.
Nextly, as I understand it, that particular designation of what is charitable and what is self-benefiting is scrutinized pretty carefully by the federal authorities who are the ones who actually issue the tax receipt.
What my department tells me is, their reaction, if somebody were to call them which is hypothetical at this point because I do not believe we are talking from any experience, but if someone were to call them and say, look, I am concerned about, in your case that you mention, Carlson Wagonlit, how much is the charity actually getting here and how much is going to Jocelyn House or to an AIDS benefit or whatever, the recommendation there from the department is to the consumer, to say to them directly, would you please go and call the charity or the promoter and ask them directly, how much is going to cost, how much is going to benefit and how much am I reaping from this directly.
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So, in fact, our position is that there must be full disclosure. We do not want to say because it would be presumptuous of us to say, well, 10 percent or 1 percent or 3 percent of the price you pay for this cruise must go to cancer research, because, in fact, we would then become meddlesome and either deprive the particular charity of the ultimate residual benefit--and I am not quarrelling with the concept that my honourable colleague has advanced, that, in fact, probably only a very, very small percentage of money that flows from the total price of the enterprise goes back to the particular charitable end or object.
We are not aware as a department that there has been any fraudulent or improper business practice in this particular case, nor have we been aware of any reluctance or refusal on the part of a promoter or a charity to disclose actually how much money does fall into their hands.
I think that there must be a clear distinction from what is the personal gain or benefit that somebody would derive from such an occupation or enterprise, what are the costs or commission--and I think it is very clear that there are always these elements of the price that goes into it--and what fraction, and it probably is a very minuscule fraction, actually flows to the charity themselves.
But I think if it were seen that individuals were basically taking cruises or extravagant lifestyles and able to write it off, then I think that the proper source to complain to would be the federal department of revenue.
Mr. Maloway: I think the explanation that the tax credit would only be for the amount that actually went to the charity probably is the catchall there. That probably solves the problem, because that way people will know, when they go to a political party dinner and what not, they get a tax receipt for a certain amount, and they know by virtue of that tax receipt how much money went to the political party, so that would solve that problem.
Another area that comes to mind that you hear a few complaints about, I guess, are these furniture stores which are constantly having going-out-of-business sales. Once again, we get into the BPA, the truth-in-advertising policies of the BPA, whether the furniture stores can legitimately get away with announcing that the liquidator is at the door.
The last one I heard was a liquidator was at the door and the bank was forcing them to sell off everything in two or three days or whatever, and they were going to be out of business. Then, of course, bingo, they are back in business again. They never seem to go out of business. They have been around for years and years and years and years. I do not know whether this is a practice that is peculiar just to the furniture business, but I am sure the minister knows what I am referring to here.
Mr. Radcliffe: I think that my honourable colleague raises a very interesting point. I recall when I was much younger that there used to be an outfit or enterprise in town called "The Man with the Axe." I remember that "The Man with the Axe" was always having going-out-of-business sales. I think that the purchasing public has the ability to discern the advertising puffery really that a lot of these enterprises do indulge in.
If there are national chains that are involved in any misleading advertising, the department will refer them to a national regulatory agency, but as a matter of practice, the department keeps a very sort of loose, supervisory eye on the advertising.
If it is more something that falls into the field of exaggeration or creative marketing and it is not something where there are guarantees made that are not met which would give rise to complaints, but rather matters of colourful advertising, that really the value that is exchanged, the money for the actual goods, really is not affected by some of this peripheral commentary, then the department is inclined to prioritize this particular activity and does not take a very stern attitude to it but rather it falls into the ambit more of just colourful advertising.
Mr. Maloway: Mr. Chairman, I guess the fact of the matter is though that this method of advertising must be successful or they would not keep doing it and people are, in effect, being drawn into these stores through false pretenses if that is the case. I see it as a little more serious than that. I would think that people rush across town to go to the store before it closes when they hear an ad that says it is all going to be over by six o'clock and we are liquidating the whole stock. If that is their motivation for going to the store, then is it true. When they make the statement that the bank is forcing them to liquidate their stock, then I would think that that statement should be true. I would think that if you are going to operate a business and you are going to advertise that is the case, then it had better be true.
A lot of people are legitimately going out of business and people rush over there to get the latest bargains and the store closes and that is the end of it and they feel good about it. But when they rush down to the store and buy something and the next day the guy is operating again and running virtually the same ad a month later saying he is going out of business again, I do not know that that is really truthful. I mean, we have to have some sort of rules and there should be some truth in what they are saying. These are not political ads.
Mr. Radcliffe: Mr. Chairman, I think that my honourable colleague does make a very good point, that if a particular enterprise, commercial entity, is saying that they have a bank liquidation sale or it is a bankruptcy sale and in fact this is not the case, this falls into the ambit then of false advertising and this is against the Criminal Code. The department is aware in the past, although cannot specify at this point, there have been a number of prosecutions of individual entrepreneurs who have falsely held out that there was a state of affairs that did not in fact apply.
In addition, I would add just that I happen to hold a Costco Wholesale card and that trying to be an informed purchaser when one goes to one of these sorts of events, be it a selling-out, going-out-of-business sale or even Costco itself, I am aware of enough pricing. I will look at something that is being offered for sale and either reduce it to a unit cost amount to see whether in fact the advertising is spurious or not and I have found often even say with something like Costco that on items of small quantity I can do just as well at the corner store as I can at Costco, unless I want to buy a large quantity of material.
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(Mr. Jack Penner, Acting Chairperson, in the Chair)
So that leads me to the conclusion that I think the shopper himself or herself must also take some responsibility to inform themselves as to what the going price is for the commodity which they are purchasing. I think that Winnipeggers in fact do have a reputation of being able to search out wholesale bargain levels. I have been told that when people are marketing, that if you can be successful and market something in Winnipeg, you can market it anywhere because of the acuity of the Winnipeg shopper who in fact does have a grasp of the price of the commodities in that particular field. So two things: There have been federal prosecutions under the Criminal Code for false advertising and a little bit of personal responsibility to know what the prices are for a chair or a box of corn flakes or whatever the commodity is that one were buying.
Mr. Maloway: Mr. Chairman, I appreciate the minister's answer, and I still reiterate that it seems to me that advertising like that should have penalties associated with it if it is not truthful, because to me it is in the same category as upselling or bait and switch or any other requirements that the BPA or the federal advertising people have. I mean businesses over the years have lured people into their shops and then they have told people when they come in the door: Sorry, but I just ran out of that product; you will have to buy a more expensive one.
They have rules that say you cannot advertise a travel package when there are only one or two available; there have to be sufficient quantities of it. You cannot advertise Mexico for $200 if it is the only seat on the plane. Now these rules are there, and why are they there? The rules are there because people have been abusing the marketplace over the years by doing exactly that. Okay, so the rules have come in. That is all I am saying is why do you have rules against upselling, against bait and switch, against all these other things, and yet you allow these furniture stores to advertise they are going out of business, and they continually are going out of business. They never go out of business, and to me the BPA or the advertising section of the BPA should be looked at and the next time you hear such an advertising campaign, you should be out there checking it out, because maybe it is an area that we should be looking at.
Now, let us deal with the loan broker question. I recall a couple of years ago when Mrs. McIntosh was the minister and we brought the loan broker question up as being a really important issue, and the minister sent me a letter across the legislative floor, and I have got the letter somewhere. I really wish I had brought it along today because it was really a priceless artifact, but it says that she had put the staff, her entire department on alert, high alert, I believe, because she wanted us to divulge the name of the person who was making the complaint about being ripped off by this loan broker.
Now, Mr. Chairman, page 11 of your annual report, you specify and prove us right once again when you show that--now I hope I am right here, but it looks to me as though the financial-related complaints increased by 327 percent year over year, and so you had financial-related complaints of 919. They led all complaint categories, and that was an increase of 704, so you only had a couple of hundred the year before and now you are up to 919, and it was caused by an upsurge in complaints received against loan brokers. So were we right or were we right?
So I would expect that we could spend a fair amount of time here with you explaining to us just what actually happened since last we dealt with this issue when--actually two ministers ago, because this was prior to Jim Ernst. This was in Linda McIntosh's reign that all this was starting to happen, and it looks like Jim Ernst cleaned it up.
Mr. Radcliffe: Mr. Chairman, my honourable colleague is correct that, in fact, there must be approbation of the administration of the Honourable Mr. Jim Ernst, who did clean up this situation, and we are told that, in fact, the department issued injunctions against these particular operators. They proceeded to seize bank accounts of these individuals, charges were preferred against the principals of these corporations, and these were all operators who were coming from outside our jurisdiction and operating and preying upon some of our less fortunate consumers here in the province.
I am told that sufficient funds were seized and returned to all the individuals who were involved with two particular loan brokers. The monies were all turned back to them. Apparently, the third individual or third corporation is before the courts as we speak, and there is not a final accounting yet, but the department hopes that substantial payments will be returned to the individuals who were victimized by these operators.
The department tells me that they take a very vigilant attitude to these particular types of individuals, and I am assured that if there is any news or complaints of any of these people again starting up business in Winnipeg or in Manitoba that the department will be on the minister's doorstep to receive direction to proceed most vigorously against them.
I am further told that there was a press release issued last August summarizing the activities of the Consumers' Bureau in order to publicize as a deterrent that the Consumers' Bureau takes a very vigilant attitude to these sorts of people operating in our jurisdiction. So the numbers of complaints do in fact represent a very vigorous attitude that the department has taken over the course of the last year.
Mr. Maloway: Mr. Chairman, these loan brokers, it seems to me that some of them had offices right here in Winnipeg, but is the minister suggesting--I would like to know which ones were located outside of the province and had to be tracked down or were dealing with residents over the telephone and which ones of them were actually operating in Manitoba, and the time frame here?
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I mean it is pretty clear to me that this was happening when Linda McIntosh was the minister and nothing was being done about this issue at the time. So it is heartening to hear that some people did get their money back, but I would like to know how many people were out their money. How many people lost their money and are out of pocket dealing with these loan brokers because of this government's inaction and this minister's inaction, former minister's inaction at that time, through that time period?
Mr. Radcliffe: Mr. Chairman, I would just add as well to my previous answer that one of the other steps that the department does is, they also read the newspaper on a daily basis and follow up on any advertising that they see from an alleged loan broker, and they demand an accounting from those individuals. They actually phone up the ads that they see in the newspaper.
I am told that there were two from out of province that apparently had quite a network that was closed down by the department. Two corporations were Nationwide and Credit Acceptance, and these two prosecutions and reaction from the department resulted in complete compensation to all the individual victims. [interjection] Mr. Chairman, as an estimate, in response to my honourable colleague's question as to how many people were involved in the Nationwide and the Credit Acceptance prosecutions, and this is just off the top of the director's head at this point in time, but he would estimate in the neighbourhood of about 500 individuals who were involved with these particular enterprises.
There is a third corporation, which again is also from out of jurisdiction, called All American, and the prosecution of this particular enterprise is ongoing at this point in time, so we would refrain from making any comment about that one.
There are apparently as well a number of local loan brokers who advertise. The department is aware of who they are, and they watch their activities pretty closely. There are no complaints coming to date from the local people, and so the department assumes that these people, these local loan brokers, are in fact fulfilling their function in a legitimate manner. However, were there any complaints to be coming, this department would be very active and investigate them fully.
Mr. Maloway: So I believe the minister is saying there are three or four major companies here. There are 919 complaints. So we have dealt with 500 of the 919. Where did the other 400 go? Were they split up?
Mr. Radcliffe: I am told, and there may be a few exceptions, but the majority of those 900 complaints arose from the operations of these three corporations. The department tells me that all the Manitoba citizens who were victimized by these corporations have received their money back. The remaining unresolved complaints are from people from beyond the jurisdiction who are still waiting for compensation. The estimate of 500 people on the first two, which was Nationwide and Credit Acceptance, was, in fact, off the top of the director's recollection. The balance of the other 400, roughly, would probably be allocated or could be largely allocated to the surviving corporation.
I am told by the department that these three corporations emanated from the United States. They set up temporary, very transitory offices here in the city of Winnipeg, were soliciting monies from not only Manitobans but people around this area into the northern United States and other provinces, and as soon as the department heard about them, they moved very quickly to shut them down, and, as I have previously discussed, took the steps that I previously discussed.
I would like to correct one of my answers because I may have left a false impression. I am told that of all the 919, these were American consumers, so the M.O., the modus operandi, of these individual corporations was to target American citizens from the Manitoba jurisdiction, which seems rather strange. It does not improve the situation any, but I can tell my honourable colleague that those 919 complaints are all foreign-based complaints, which is a rather unusual approach that these loan brokers are taking.
Mr. Maloway: The case that I was familiar with, and there were several--I do not have the file here so I will have to bring it for tomorrow, but this was a woman from The Pas, I believe it was. She, I believe, was dealing with once again a phone number out of the newspaper, and I think it was a Toronto company. So it is interesting that the three companies that were operating in Manitoba, all of their customers were in the States, and at least the couple that I am aware of who lost money were from outside.
Now, you have had some luck in seizing the assets, closing down the companies and prosecuting the people who were here for these three companies to clear up our 919 problems, but what has the Ontario government done to help our woman from The Pas then? If you could solve the problem here in one swoop, shut down three or four companies and get compensation for 919 people, some of whom may live in Ontario, if you could do that here, then what have they done for us? That is where some of our people are being victimized from. It is not from Manitoba but from outside.
Mr. Radcliffe: Mr. Chairman, I am advised that the Consumers' branch here when they receive information that somebody in Manitoba has been victimized from an individual in another jurisdiction--which seems to be the way these organizations work--the reaction of the department is to immediately contact their counterpart, a consumer bureau counterpart, or a loan broker in this particular case when it is in this particular activity in, for example, Ontario. We know that Ontario does prosecute vigorously, and they are quite active. We cannot give you any specific information as to how many people they prosecute. In fact, the particular individual that you are referring to may not have received redress. We do not know. We do know that we do get enthusiastic response from our counterparts in other provinces, and the method of getting at these particular individuals is to go to their originating or home jurisdiction and attack them where their assets are found, which is the way our law is based.
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Mr. Maloway: So is the minister saying that of these 919 people, all of them live outside of Manitoba. Where do they live? Where do most of them live and did all of them get compensation, because I was unclear about that. I know the minister said that 500 people, I think it was, got compensation, and I asked about what happened to the other 400. Then I was told that all 900 live outside the jurisdiction. So where exactly do these people live, and do they all have their compensation?
Mr. Radcliffe: I am told that the individual victims, and this is a generalization, but for the most part lived in Michigan, in Florida, in California and Nevada. Why those particular areas I cannot comment, I do not know, but that was the information that we received. Five hundred of the 900 have received their money back, 400 claims are still unresolved and I believe the last loan broker who is before the courts is all American, that the individual claims are being adjudicated right now, and that represents the 400 who are yet to be compensated. That is working its way through the court system.
Mr. Maloway: Could the minister tell us how the clients were selected and how much money was involved here? Could you outline for us a typical case of how much money was at stake and how they operated.
Mr. Radcliffe: I am advised, Mr. Chairman--this is quite a reprehensible process--that apparently these loan brokers, in particular those that we are talking about, will advertise in a foreign jurisdiction in newspapers and the local media. They will give a local phone number, say, for example, in California or Nevada. The individual consumer will phone that telephone number, which is a local number to them, and there is an automatic call forwarding that cuts in. That call is then immediately transferred to an office here in Winnipeg where individual people are located, actually found.
An Honourable Member: A call centre.
Mr. Radcliffe: It is a call--well, I refrain from using that because it has other connotations; nonetheless, there is a call-forwarding element to it. The conversation with the individual sitting here in the office in Winnipeg is that the consumer is asked to make an application, and personal details are elicited over the telephone. Then the consumer is told that their application will be considered. The next day, or within a very short span of time, the consumer is then recontacted from the people here in Winnipeg and advised that their loan has been approved and that the consumer is then to forward a fee, which can range anywhere from $250 to $500--that seems to be the common area--U.S. currency to an address here in Winnipeg.
I guess once the cheque has cleared the bank, the consumer is then recontacted again or somehow informed that there has been some sort of technicality by which they did not qualify and that their application fee is nonrefundable. The loan broker, then, just carries on their merry way and leaves these poor people in the dirt. This has been, apparently, a consistent method of operating with the particular corporations that we outlined to you. Obviously, the consumer never receives the services or the loan management that was advertised, and they do not get their money back unless there has been intervention.
The consumers then, in these particular 900 cases, contacted our local Consumers' Bureau, through their originating Consumers' Bureau agencies either in their own jurisdiction or directly to Winnipeg, and the remedial steps were then imposed.
Mr. Maloway: The minister forgot to mention, I ask him how big these loans were supposed to be. In other words, for the $250 U.S. to $500 U.S. there is a range there. How much of a loan was your average amount of loans that were being asked for?
Mr. Radcliffe: The loans that were requested by the consumer ranged anywhere from $3,000 to $10,000, but in fact the application fees bore no connection to the amount of the money that was being requested. I presume that the limit of the loans, the application fee was probably as much as the particular operator felt that the traffic would bear at any given point in time from the particular consumer.
Mr. Maloway: Mr. Chairman, the preponderance of these loans was individual loans, business loans, or were they a combination of both?
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Mr. Radcliffe: Mostly personal loans.
Mr. Maloway: When the people were responding to the ad in Florida and the other states that he mentions, would they not be suspicious that they were dealing with an out-of-state individual, somebody that was in another country? Or would that be done without them being aware that they were talking to somebody in another--I mean, even the accents are different. If you talk to somebody on an 800 number and they are in Texas or somewhere, you can usually pick that up pretty quick.
Mr. Radcliffe: I could not speculate on what was the basis of these individual consumers' minds and what conclusions they arrived at. I would comment, however, that when you are asked to forward your application fee to an address in Winnipeg, it certainly indicates to me that if you are a thinking consumer, you realize at that point at least, if not before, that you are dealing with somebody from out of state.
Mr. Maloway: Was there any provision for the use of credit card facilities, or were these people that would not have any credit card room to be paying this fee in the first place? It seems to me, were these companies operating with credit cards where they take people's credit card information over the phone and run the fee through there?
Mr. Radcliffe: I am told that the cases that we saw were predicated on cash. There was no use of credit cards that we are aware of.
Mr. Maloway: My assumption is that some of these loans would be debt consolidation loans, where they would make an offer to combine the debts of the individual and at a lower interest rate. That was just my assumption that some of that would be going on. It seems like a fair number of people. How long did it take to get these 919 people on the hook here? Over how long a period was this?
Mr. Radcliffe: I am told it only took a few weeks to run up the 919 complaints.
Mr. Maloway: When you research the background of these companies, had the principals of the companies prior records and prior histories in this business? Because dealing with the Consumers' Bureau over the years, it seems like a lot of cases are the same people that just came circling around under different schemes and so on. What was the nature of these companies, these individuals and their backgrounds?
Mr. Radcliffe: I am told that some of these individuals did have criminal records, but we cannot specify at this point in time. Others did not have any criminal records until they obviously were through with the prosecutions in which they were involved here in Manitoba.
Mr. Maloway: Was there any indication that organized crime was involved in this sort of operation?
Mr. Radcliffe: No.
Mr. Maloway: I wanted to, at this point, ask the minister about the Internet and whether or not they are getting complaints. For example, I am told that the government has a very bad experience, to say the least, with Internet shopping malls, so I can appreciate this might be a sensitive issue for this minister at this time. Having said that, I would like to know, Internet commerce is something that is going to develop over the next few years in spite of this government. I am told that there is a problem with collection on submission of PST.
I know this is something that I should be mentioning in the other committee, in Finance at this moment, but you cannot be in two places at once, so I will have to deal with that another day. If people buy things on the Internet, through these Internet malls, I gather there is no mechanism for collecting and submitting the PST. So, if you are a business, you are at a competitive advantage to be in another jurisdiction than the one that you are selling into, if you follow what I mean, because it is on the honour system that the person who is receiving the goods would, in fact, pay the PST.
I will give you an example that has nothing to do with the Internet. I mean, it is common practice for people to buy, through toll-free numbers, all kinds of things in Toronto and places like that. So typically they do not charge the PST. Well, because it is an Ontario company that is selling its product, it is not going to collect PST for Manitoba. It does not have a PST number here. So it sends you the product; then you are on the honour system to go down and pay the tax.
I guess in the same way that if you are bringing cigarettes across the border, and you are allowed to bring so many, you are supposed to go down and remit the tax. It is the honour system. Most people laugh at that. They think that is kind of funny and sort of humorous, but nevertheless it is the law. You are supposed to do these things.
I do not know how many people actually do, but the local businesses in Manitoba are at a disadvantage. If you were to buy a computer out of one of these 1-800 numbers in Toronto, you would be buying a computer without the payment of the PST. So the local computer company is at a 7 percent disadvantage, right or wrong? They are at a 7 percent disadvantage if you do not go and pay the PST, right?
Well, if you follow that through to the Internet, it is the same sort of problem. That is evidently a developing problem right now where--I mean, how are governments to police this thing, and how are they supposed to collect and mandate the collection of a PST on the Internet?
So I would expect that by this time, you have got to have had a complaint or two about this matter. I cannot maybe see the consumers complaining, but certainly the businesses local to Manitoba should be complaining. They are the ones that will be losing out in the sales when anytime a person can buy the same identical product without the PST, the GST, or the tax part. The minister has to admit that that is what people are going to do.
So I would ask you for your comments on this matter and ask you about how you are going to deal with this problem.
Mr. Radcliffe: This is not a complaint that has been forwarded to the Consumers' Bureau to date. In fact, I think my honourable colleague is correct that probably this is a matter that should be referred to Mr. Stefanson. In fact, he may well be much more creative in a solution on this matter.
Mr. Maloway: A number of years back we introduced in the House, in addition to our bills on The Business Practices Act and the franchising act and the many, many, many other acts, legislation on deposits, deposit legislation, so that deposits would be held in trust.
Once again, I have to do this from memory because I do not have the file here, but we had very thick files back in 1989, '88 and so on from people who had, oh, built decks and stuff and they were not completed properly and so on. As a matter of fact, one of the gentlemen, I believe, was one of the officials in one of the government departments who was victimized by this scam. Nevertheless, what happened was that a number of renovators were around collecting deposits and not completing the jobs, so the people were out all the money that they put into these home renovation projects. People lost $5,000 to $7,000. That was only part of the problem.
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There were other examples where people had put down deposits. The business went bankrupt, and they were stuck without the deposits. There are other examples I guess that we could use. Nevertheless, this legislation was something that we thought would make sense, and the minister can look back into the files and will see that there were some amendments made to it, whether it should be 10 percent or 20 percent of the amount, as to how much the deposit should be.
We suggested that the deposit should be maybe 10 percent or 20 percent of the total amount of money, and that business should have to put the deposit in a trust account similar to what a lawyer would have to do or insurance agent would have to do. It is trust money; it has to go into that account. It has to be separate and distinct from the operating funds of the business. It is just a sensible thing to do.
We did make exceptions because before you come back and say, well, what are you going to do with gravestones, what are you going to do with other--there were some good examples where people said, look, I carved a gravestone for a person and then they do not pay me, what am I going to do? So we took care of that. We made exceptions. We took gravestones out of the equation.
We took a number of other examples, because we did have business people come before the committee and say that they deal with this custom-made upholstery or custom-made items all the time. If they were to take a 10 percent or 20 percent deposit and a person changed their mind, what would they do with this gravestone or what would they do with this other product they had? So there were exceptions, and we built them right into the amendments, into the legislation.
I think this is proactive legislation because sooner or later, I mean, I am sure that just in the same way that Linda McIntosh is probably pretty sad today that all this loan broker activity occurred on her watch and the next minister had to clear it up, I am sure this minister would not want to have these sorts of activities occur on his watch, so then the next minister would have to clean it up. So we just thought this was sensible. If it is good enough for lawyers, if it has been good enough for lawyers all these years, and it is good enough for real estate agents and real estate companies, then what would be the problem of the minister making a tentative effort in here?
I do not mean to be onerous on the business. So, if 10 percent is not good, then 20 percent should be looked at; and, if 20 percent is not good, then let us go for 30 percent. But let us find some kind of an equilibrium where at least we have a framework. We have the beginnings of a framework to deal with here for big-ticket items and the guarantee that, through no fault of your own, Mr. Minister, you are not going to find out that you have been disadvantaged and that you are going to lose your money and have no recourse.
Mr. Radcliffe: I want to correct the record, because my honourable colleague has made some allusions to the legal profession, and that is something, of course, which I have some background on. What happens when, say, for example, one is buying a house? One gives funds to a solicitor; the solicitor does put those funds in a trust account; and they are held at arm's length, as my honourable colleague has quite properly said, for the directed and appointed purpose which the client has allocated. If the solicitor uses those funds for anything other than the purchase of that property, then the Law Society will interfere and will obviously lift the--well, does, not obviously, but does, if there has been misappropriation, lift the particular practitioner's licence.
The solicitor does, often at the same time as they are collecting the money in advance for a purchase and for funds that are allocated to the trust account, also outline what the nature and extent of the disbursements and the fees will be for the particular transaction. Then the solicitor is not able to collect and transmit those monies into his or her general account until the service has been completed and a bill has been rendered. If solicitors are caught transferring those monies in advance, then they are chastised and are in jeopardy from the Law Society.
So the issue of giving and taking of deposits, and I am drawing a reference to the legal community, I think does not quite match at this point in time. There are very stringent rules for real estate agents and for solicitors because the funds are given by the client to the particular practitioner, be they the realtor or the solicitor, for very specific purposes, and none of those funds can ever be mixed with the general funds of the solicitor to go to the solicitor's income, and the only time where the solicitor or the agent is entitled to a commission is after the service has been performed and the transaction has been completed.
However, if my honourable colleague is addressing the issue of direct selling where people are soliciting door to door, the Consumers' Bureau does license these individuals, and there is a bond required for them, a performance bond. If there is a deposit required from a regular retailer, say, for example, McDiarmid Lumber or Eaton's or somebody of that ilk, then those are not regulated. My department tells me that there has been no increase in complaints to date from individuals who are by virtue of either fraud or business failures failing to provide the goods and services which are bargained for in a commercial transaction by way of posting a deposit by the consumer to the service provider.
Mr. Maloway: The minister was doing quite well there in explaining it perfectly as far as the real estate agents and the lawyers were concerned, and this is a situation that is basically tantamount to that. I mean, we are talking about people who are doing, I guess, essentially custom type work, I suppose, where the money is paid up front, and what is happening is the renovator or the business is essentially using the money for past jobs, I guess. If you think of the co-mingling of funds and stuff like that, basically what is happening is they are taking the money, putting it into their--you know, a lot of businesses have two accounts. They have a trust account and a general account. A lawyer would have the same thing, a trust and a general account.
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All we are saying is that if you are taking advances from the public for customized work, if you are taking those things, then you have this one account that you do not use all the time. A store would not use the trust account at all except for just those kinds of sales, and if a person is coming in and putting down a deposit of a couple of thousand dollars, then I do not think it is fair that the business should be using that guy's $2,000 deposit to finish the other guy's job. That is in effect what was happening here.
The business was clearly underfunded, improperly financed, and what it was doing was going out and signing up another patio contract or whatever kind of a contract it was and taking deposits from Peter to build Paul's pool or whatever he was building, an addition, sunrooms. I believe they were sunrooms. Now, that hits it about right. I believe it was a sunroom seller who was doing this. He would come out and measure your place and give you a quote for--I mean, we are not talking about little amounts of money here. We are talking about $5,000, $10,000, $20,000, up to $20,000 maybe for these sunrooms, and what he was doing was taking big deposits. If you were giving that kind of money to a lawyer or to the real estate agent, you know that by law that money has to go right into the trust account. Now, I mean if an unscrupulous real estate agent or lawyer wants to use the money, then you know, it happens every once in a while and there are sanctions to deal with those kind of situations.
That is all we are saying, the same thing should apply here, that where you are taking advances from the public in large amounts and signing contracts for work to be completed in the future, you have no right to be using those monies on somebody else's job. You do not, it is not your money yet. The customer has given you the money. It is not really part of your general revenue yet, because you have not performed the contract. Essentially, you sign a contract, and these people all signed contracts. You sign a contract.
Another thing was that the deposit varied with the deal. We had about 20 of these things, and in each case, the deposit was different. It was like the franchise stuff we were talking about the other day. They changed the contract at will to suit the company, and if they could only get 500 from you, then that is what they took. If they could get 2,000 from you, that is what they took; if they could 5,000 from you, that is what they took. They took all these deposits and they started using them once again for last week's projects, you see, so what it was, they never got ahead of the game. They were always bringing in new customers, but those customers were completing the sunrooms for the previous guys, you see. Ultimately, at the end of the day, you were going to have even more people out of pocket in this situation. So a deposit, holding that money, treating it as trust money is the answer to it. The business's argument that, well, it was going to increase their bookkeeping and stuff like that, well, I mean, I do not really see where that would be an overwhelming problem. As I had indicated to you, we certainly had the exemptions in there for the obvious cases, and we are prepared to make more if necessary.
I just ask the minister to look into this. Maybe, you know, a different minister, a different time, there might be some hope for something to develop in this area.
Mr. Radcliffe: Mr. Chairman, when my honourable colleague started talking about sunrooms, I can recall that I used to act for a manufacturer of windows, who actually was in the business of providing sunrooms, building sunrooms. These were built to individual specifications and these were basically, as I recall them, glorified, glazed lean-tos on somebody's individual freestanding home.
In fact, what my client was in the custom of doing was taking a significant deposit to show good will and intent on the part of the purchaser, so that the individual purchaser would not, in the euphoria of the moment of signing up the contract, then turn around and back out of the contract. The manufacturer, the window manufacturer in this particular case, would then use that money as a downstroke on the purchase of materials, and then there would be progress payments through the course of the product, so that the initial deposit would be taken and that would be used for acquiring the product itself. There was the glass itself, which was an obvious, and then there was a sort of a rubberized, I think, frame which was what made this particular manufacturer unique, and it was a product that came out of Germany. Then throughout the course of the building contract, there would be progress payments made and then the final payment, of course, made upon completion and satisfaction to the consumer home owner.
In many cases, there would be disputes that would arise over quality management, the nature and quality of the sunroom. As I am sure my honourable colleague knows, when you look at a photograph in a sample book or a magazine, it always looks much more intriguing and glorious than the actual reality when you see it as a barnacle on the backside of your home. What I have described of taking a deposit and then making progress payments is, in fact, a common practice in the building trades and in the contracting business, and the examples that my honourable colleague was referring to seemed to be directed to that stage. The department tells me that they do not receive any appreciable number of complaints with regard to consumers who feel they have been gypped or deprived of anything because of this practice, and so I cannot say that I am in a position to comment at this point in time, because it has not been demonstrated to us that there is a need.
I understand, hypothetically, what my honourable colleague is referring to, and certainly there is the opportunity for an unscrupulous contractor to solicit funds up front, and in fact this is perhaps something that in the next weeks to come, with the advent of the cleanup after this flood, we are going to have to be vigilant that there are not siding people and basement people and all sorts of service people going out into the communities and offering to provide renovation services and taking money up front for this and then failing to fulfill the commitments that they have undertaken. So I am aware of the fact that this is a potential for unscrupulous individuals to act, but to date the department has not been made aware that this has been an unsatisfactory environment. So we would be watchful of any individuals in the months to come and take remedial action very quickly if in fact somebody was found to be taking advantage of individuals.
Mr. Maloway: Mr. Chairman, the minister or the department will know that this certainly was a problem with the sunroom people. Again, I do not think they would have had any problem with the contractor buying the materials for their sunroom, but they objected to the contractor buying the materials for somebody else's sunroom that he could not get done. I think that, if you are looking at a legal case or if you are looking at a real estate case, the money is held in trust for the completion of that particular deal. You cannot use somebody's deposit on house number A--you cannot say, well, I think I want to complete this deal now, I think I will just take a couple of thousand out of Jack's account here and go and use it on Albert's. You know, Jack would not be too happy about that. Well, that is what is happening That is what happens with these guys all the time, and then they get behind and the rest is history. So I think it is a bigger problem than you think, and it was a problem back then no matter what your department tells you. It was a problem. I can get you the files if you want, and I do not think you want it to happen again. So we want to take a look at that now.
We are going to run out of time here, but I wanted to ask a bunch of questions about the renovators and so on, but one thing, a note that I have got here--I do not think I asked you about it before, and I should really deal with it--and that is that requirement sticker prices be put on cars, on new cars. It is a requirement, I believe, in Ontario, but in Manitoba what happens is that, if you go down to any car lot in town here, you will see that they send somebody out from the dealership--and the Chairman is a bit of an expert in this because he has some previous experience in this field. We have discussed it in previous times.
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The point is that the car dealers will send somebody out to take the sticker. There is a sticker that comes on the car, and it has got the MSRP, the manufacturer's suggested retail price, on it and it gives all the details of the options. It might surprise you to know that what these car dealerships do at their expense is, when they take them off the railway cars here, they send a person out and they scratch the stickers off. I have even seen them on the cars while they are awaiting dealer prep at the dealership, and then they have typed up one of their own stickers, right, and then they put it on there.
You see, now, in Ontario you cannot do that. In Ontario you have to leave--no I am not suggesting he did--you have to leave the sticker on there, okay, because that gives the person a reference point at which to, you know what the MSRP price is and then you can figure out with I guess the Lemon-Aid book or whatever what the dealer mark-up is on a certain type of car, and then you can work your way down.
But what typically they have been doing in Manitoba, at least a few years ago, is, they would change those stickers and they would typically mark them up even a couple of thousand more on top of the MSRP and then the customer can dicker them down by a couple of thousand, signs the contract, walks away happy as a clam, but really he has paid the full sticker price.
Even people in the Motor Dealers Association, and I hate to go back to this old story that I have told the minister several times now about the good old days when Lefty Hendrickson was the president of the Motor Dealers Association and his friend Jenny Hillard was the president of the Consumers' Association, so I will not get into that story again, but it was at that time when they were operating here together on these issues that they were opposing the sticker prices on the cars.
There is a new group in power over there now and I would ask the minister if he would take it up with the Motor Dealers Association, because I will tell you how close we got to actually almost getting this legislation in. In the minority government, I think it was the minority government situation, we were approached by the House leaders at the time that if you do this, we will do that, and we want sticker prices on cars so that the Motor Dealers Association will probably go along with it and you will at least have a piece of what you want here. So there is room for movement here. In Ontario, you can drive to Kenora and you will see all the Kenora dealerships will have the sticker prices on there unless the governments in the intervening years have changed the rules, but at least that is what it was in '88 or '89.
So I would ask the minister if he would take this up with the Motor Dealers Association and check it out with Ontario and see if it might not be something they can put on there. I know that some of the dealers have gotten rid of their sales staff now and there is a move to this no-dicker pricing where you just pay what is on the sticker, and that has been kind of a move now throughout the States.
So if the minister would sort of do some work and research, get that Planning Department fired up here on this issue and then maybe I could hear back from where you guys are headed with it now.
Mr. Radcliffe: Mr. Chairman, I am aware of the fact that apparently there are some dealers in Manitoba who do remove the manufacturer's retail price recommendation. I think that what the manufacturers must be very, very cautious of as well is not to get into price fixing, which is the ultimate extension of what my honourable colleague might be recommending. I would also respond by saying that it is awfully hard to cheat an honest man. If somebody does their due diligence, and I am told even by the Chairman that, if one goes to Altona, which is a rural location just outside of Winnipeg, one can view and deal with car dealers that do not remove the sticker price, but I think that at the present time I am certainly prepared to make some inquiries amongst individuals who are in the car dealerships and see what they are up to.
If they were replacing the recommended sticker price with another price which purported to be the car dealership price, the manufacturer's retail price, then I think we are talking about fraud, and that is actionable. They would be subject to admonition from the Consumers' Bureau or in fact even the Crown under the Criminal Code, but the Manitoba government, I think, must be very cautious not to unduly interfere with free and open competition. As a result, we would be very cautious about interfering with the prices that individual retailers can display their goods for. I think that there is always a certain charm as well or a certain invigoration of being able to go and bargain for a particular commodity.
If buying a car were the same as going to Eaton's and buying a pair of socks, then I think that we would take the charm out of the whole aspect of buying a car, but I think that there is a real challenge to shopping around, going to Steinbach, going to different car dealers in Winnipeg, looking at all the different offers that are being made. If we were to take that benefit away from the citizens of Winnipeg, then we perhaps would be becoming meddlesome and interfering too much with the give-and-take of free enterprise.
The Acting Chairperson (Mr. Penner): The hour being 6 p.m., committee rise.