Mr. Chairperson (Ben Sveinson): Order, please. As was agreed by this House this afternoon, this section of the Committee of Supply will be dealing with the Estimates of the Department of Industry, Trade and Tourism. I believe when we last sat we were on line 10.3. Tourism and Small Business (a) Tourism Services and Special Projects (1) Salaries and Employee Benefits, on page 104 of the Estimates book.

Mr. Tim Sale (Crescentwood): Mr. Chairperson, I believe the minister has a new staffperson with him, and I think we had an agreement that we would go in a slightly different order, so perhaps the minister could inform the committee.

Hon. Mervin Tweed (Minister of Industry, Trade and Tourism): With us today we have Thomas Penner. He is with the Economic Innovation and Technology Council. I think as we wrapped up yesterday, we had agreed that we would do this segment of the budget first.

Mr. Chairperson: Which section was that, if I might just ask?

Mr. Tweed: Economic Innovation and Technology Council. Items 10.4.(b) and (c).

Mr. Chairperson: Very good.

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Mr. Tweed: Also joining at the table is Ms. Loretta Clarke. She is the Assistant Deputy Minister of Tourism and Small Business.

Mr. Chairperson: Item 10.4.(b) then.

Mr. Sale: Mr. Chairperson, I would like to deal with these both together because I think they belong together. So I have questions specifically in regard to the Rescom contract.

Before I ask that, perhaps the minister could tell us what it is in the business plan that has necessitated an increase in the grants from the $10-million fund that was set aside some years ago, now rising this year to $1.5 million from $1 million last year.

Mr. Tweed: Mr. Chairman, I am pleased to advise the honourable member that last year the total allowance of a million dollars was requested and used in the budget, so we have asked for and received an increase of $500,000 to deal with anticipated projects that we see coming forward.

Mr. Sale: Mr. Chairperson, my question was quite specific, and I do not think that answer is as specific as my question was. The note on page 61 of the Estimates supplement is: "Reflects increase for the Fund as per the 1999/2000 Economic Innovation and Technology Council Business Plan."

What is it that is new in the business plan that required an extra $500,000 this year? I am not being critical; I am simply asking the question.

Mr. Tweed: Mr. Chairman, I do apologize for the incomplete or not complete answer. The increase of the $500,000, bringing it to 1.5 represents Science and Technology Awareness $300,000; State of Innovation $100,000; SMART Park research and development activities $500,000; IT sectoral committee $100,000; and new projects $500,000.

Mr. Sale: Mr. Chairperson, I wonder if the minister could just table that list, not necessarily–well, if he has it to table it, that would be helpful.

Let us move then to the issue that troubles us in regard to the Rescom Ventures bankruptcy and contract. I want to lay out for the minister the information that we have been given about this. I do not want to suggest to him that I do not know something about this. We did a lot of work, and the minister probably has a copy of our Freedom of Information request which was responded to on September 30 by the department, well, actually by EITC council quite fully, and we appreciate the fullness of that response.

Essentially, our understanding of this issue is that Rescom Ventures, which was founded in 1983, with a principal backer as Ed Prefontaine, evolved over time into a financial software company which made brokerage and individual investor software for people managing port-folios. It, I think, was reasonably successful. It apparently got to the point of having about 100 employees and annual sales of $10 million. However, in 1997 or late 1996, Rescom had undertaken a major new project for RBC Dominion which is the brokerage arm of the Royal Bank of Canada. They had also in April 1997 bought a small company called Tri-Com from Stephan Segal, a Winnipeg businessman, for cash and shares. They renamed that company Rescom Interactive. It shared office space at 1150 Waverley in Lindenwoods with Rescom Ventures.

In 1996, the contract with the Royal Bank was begun and was being done largely with contract Rescom staff out of Calgary. By the fall of '97, the Royal Bank had advanced over $2 million on this contract and was very uneasy about the apparent lack of progress. They ordered Rescom as its contractor to transfer some staff from Calgary to Toronto so that RBC, Royal, could supervise more directly what was happening.

When they got a look at the work in a direct way in Toronto under their supervision, they cancelled the contract within a month. It came to the conclusion the contract was basically going nowhere. By this time, Rescom had received in the fall of 1997 a fairly large grant from the Business Development Bank of Canada, $1.236 million. Manitoba Capital Fund had put up $2.741 million. The company essentially defaulted on the contract to the Royal Bank and so stopped being paid for any work in progress.

In November 1997, Rescom Interactive, the former company of Stephan Segal, was awarded a contract with EITC to produce the State of Innovation Report. My first question is was this contract tendered?

Mr. Tweed: Mr. Chairman, I am advised that it was.

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Mr. Sale: How many companies responded to the tender?

Mr. Tweed: Without knowing the exact number, it has been suggested a half a dozen.

Mr. Sale: Mr. Chairman, how was the assessment done in terms of the awarding of the tender? What were the assessment procedures or criteria?

Mr. Tweed: I am advised that the committee was comprised of five people, three from the committee on staff and two from the committee of science and technology.

Mr. Sale: Mr. Chairperson, could we have the names of those people, please?

Mr. Tweed: Mr. Chairman, I would be happy to provide them to the member. I do not have them on hand at this particular time, but I will get them for you.

Mr. Sale: Did the committee provide to the department the names of the companies tendering for this work when the department was in the process of doing the tendering?

Mr. Tweed: I honestly cannot answer that. I would suggest it would probably be a decision of the council to have access to those names.

Mr. Sale: Mr. Chairperson, with all respect, the minister has to be able to answer that. It is his department. Was the information concerning the names of the companies tendering for this project supplied to the previous minister, to the department, through whatever channels, the deputy or however?

Mr. Tweed: I will attempt to get those names, but I am advised that the decision and the process stayed within the board itself.

Mr. Sale: In the assessment of the five tenders, was the ability of the company to actually complete the contract assessed?

Mr. Tweed: I would have to assume that, yes, it was.

Mr. Sale: Well, Mr. Chairperson, I do not want the minister to assume anything. I want him to ask whether the staff took reasonable steps, due diligence, to assess whether or not the companies tendering had the capacity to actually complete the tender.

Mr. Tweed: Mr. Chairman, again, I would be answering on behalf of the board, but I would say, yes, that they took all considerations when they looked at the tender.

Mr. Sale: Would such steps have included a credit check of the company in question?

Mr. Tweed: Again, Mr. Chairman, I would suspect so, but I would be happy to go back in the records and get that verified.

Mr. Sale: Mr. Chairperson, it is not adequate to say I would suspect so. The company in question had serious cash flow problems at the time that the contract was awarded. Within weeks of the awarding of the contract, the government's own Manitoba Capital Fund had displaced the president, Ed Prefontaine. He had been removed, and an interim manager, Mr. Graham, had been put in place, Mr. Bob Graham, January 7, two months after the awarding of the contract.

Any kind of due diligence, any search of the records of liens or claims, any contact with the government's own funding arm, the Manitoba Capital Fund, would have revealed that this company was in serious cash flow difficulty at the very moment that the EITC branch was contracting with it for $270,000 worth of work.

Can the minister tell us what specific steps were taken to assess the ability of the company to undertake this contract?

Mr. Tweed: Mr. Chairman, I am advised that we can have access or we have access to the original contract that was written up at the time of the tender, and I would certainly be prepared to present the details of that to the honourable member.

Mr. Sale: I thank the minister for that. Could he please give me a date because I do not expect we are going to be in Estimates for a whole lot longer in this, and I am afraid I have had promises of information from previous ministers, which has been a long time or never in coming. By what date would the minister expect to be able to supply that information?

Mr. Tweed: I would be able to provide the details of the tender to the honourable member within a week.

Mr. Sale: I thank the minister very much for that undertaking. In moving on through the time line on this, I want to say in regard to this section that I am told by people who were really in a very good position to know, including the ultimate purchasers of the assets of Rescom Ventures that it was very, very well known in the community that Rescom was in deep trouble in the fall of 1997 when this contract was awarded and that any reasonable questions would have uncovered that this company was in serious difficulty. At the very least, it would have been prudent to hold the resources in some kind of much more careful way, advancing them only against actual work delivered satisfactorily as opposed to any other form of advance.

Be that as it may, the money was certainly advanced. Now, on January 7, 1998, I believe the Manitoba Capital Fund put in an interim manager. It is possible that it was one of the other major creditors, but my sources suggest that it was MCF that put in Bob Graham. Mr. Graham then proceeded to sell, arguably illegally, but nevertheless he did proceed to sell the hard assets of Rescom Interactive, the very company that at that time was under contract to provide the State of Innovation Report for the ITC. He sold computer equipment which, in fact, was used as collateral for other loans, and the sum of this equipment was sold to a company named E.H. Price. Some of the staff that were then working for Interactive went over to E.H. Price. The staff of Interactive were laid off without notice with $55,000 on unpaid wages, and there were other creditors left behind including a company called Ironstone Technologies who had been stiffed for the production of the CDs that were part of the State of Innovation Report.

My information is that Joel Remus, who is the manager, the information is that he has never been paid. He still has an outstanding claim. I have a copy of the claim from last fall, but I cannot say that I know the claim is still unpaid. I believe the government refused to pay it, at least initially, and, of course, Rescom had no assets to pay it with, so Mr. Remus, along with many other Manitoba companies of very solid reputation like OnLine Business and others were left with a total–and the minister, I think, may already know this–a total of over $5 million in claims and, after MCFs $700,000 of security, no assets to pay any of those claims.

So this is January 7, 1998, equipment sold, staff are laid off. Was EITC aware in January that Rescom Interactive was effectively out of business?

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Mr. Tweed: Mr. Chairman, in the correlation of dates I have here effective January 29, 1998, EITC cancelled the contract with Rescom for the completion of the multimedia State of Innovation Report. There were certain portions of the project that had been completed, and the balance of the work, a contract was entered into with another group to finish up the work.

Mr. Sale: Mr. Chairperson, who was EITC dealing with from Rescom at that point in regard to this contract?

Mr. Tweed: Mr. Chairman, just for factual information, I would ask that I could get that person's name and provide it to the member.

Mr. Sale: Thank you, Mr. Chairperson. To whom was the cancellation-of-contract letter written? Presumably, EITC cancelled pursuant to a clause in the agreement. To whom would that letter have gone?

Mr. Tweed: Again, Mr. Chairman, for correctness, I would be happy to provide that name to the honourable member, as quick as I can.

Mr. Sale: At any time during the period of December-January prior to the cancellation, did the president or then president, Mr. Prefontaine, have meetings with members of the department staff or minister to discuss this or other matters in regard to his company?

Mr. Tweed: I am advised from the people at the table that no one was aware of any conversations that had taken place during that period.

Mr. Sale: Mr. Chairperson, sometime during the spring, I cannot give a specific date, but Venture stopped making payroll and effectively shut its doors sometime in the late-April, early-May period, was petitioned into bankruptcy in June, total payroll and benefits unpaid to staff exceeded $250,000. By September, the intellectual property of Venture's good will, et cetera, had been purchased from the Receiver by SLM Software in Toronto, and they have essentially engaged in a rescue operation to try and maintain the little good will that was left.

There were a lot of very angry customers for Venture's because of failure to support software that had been installed or purchased. The last contact I had was that they were working hard to try and rescue what was good from that company and keep significant presence in Winnipeg. I want to commend SLM for that and its vice-president, Mel Anderson, formerly of Credit Union Central for his attempts to make the best out of what was a very bad situation.

So, Mr. Chairperson, what we had was a cancellation of a contract by the end of January and yet the final product contained in the booklet–which is the first thing anybody would look at–promotion for Rescom Ventures, a picture of its president, who had not been operating effectively as president since early January, of a bankrupt company in a little red tool kit which whatever you think of the marketing technique, essentially rendered the entire report useless, because it promoted a bankrupt company as an example of Manitoba entrepreneurial spirit, which I do not think the minister would want to do. It also referenced on the same page the minister I think is looking at, for further information see the CD and the video.

Well, the video is edited reasonably professionally, and there is no gap. The CD is interesting. There is an empty frame there on the page where Mr. Prefontaine used to appear. It is pretty obvious that the CD has been edited to remove something. I cannot imagine how the staff of EITC and the minister could possibly allow this to be produced at government expense promoting a bankrupt company.

Can the minister shed some light on what in the world went wrong in regard to this issue?

Mr. Tweed: I appreciate the member's attention to detail. I would like to just I guess refer him to page 5 of the report in the booklet. I think the intention of producing something like this, there is certainly–again, it is entirely up to the member's opinion–question as to what the motive was behind the toolbox idea. I think it is actually a fairly unique marketing tool in the sense that we are talking about innovation and technology. I think the way I interpret it is that the toolbox is the past and what we are moving into is in the future, into the technology side of it, but never forgetting where we came from and that it still is a very valuable part of our economic position and climate in the province.

About the report, page 5 goes on to note that the report is produced annually as part of the council's mission to promote and enhance a climate of innovation, entrepreneurship and technological development that spurs responsible economic development for the benefit of all Manitobans. The book, the disk, all information contained in the toolbox–as it is referred to–was not to highlight one specific company over another, was not to downplay the success or not success of certain companies. The idea was to highlight that if you are interested in a climate of innovation, Manitoba was the place to be.

It would certainly be easy, and I almost hesitate to bring this forward, but whenever we are preparing information packages on a timely basis, some information, even by the time it is produced is incorrect. That is just simply because of the changing numbers. But I think the idea we were trying to present to the people who were picking up and reading this report or listening to the report or zeroing in on their computers, was that Manitoba is open for the technology that is available.

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Manitoba was really trying to focus on two important sectors, the information and telecommunications of which Rescom was a player. I have been in business long enough that I have learned that I should not ever judge another business because I do know that some experience difficult times, and some pull through it and others do not. I have had that experience in the people I have dealt with in the past, so I think what I salute and what I acknowledge is their willingness and eagerness to try.

When we developed–I should not say we–when the EITC council developed this package, I am told that the paper content of it was produced first. It was one of the first parts of the package that was put together. I understand that it was completed sometime toward mid or end of November–pardon me, December–and that the disk and the other parts of the package were developed after the new year.

I guess you can look at it from two ways. I do not see it as anything other than an information package that when we present it to people, what we are telling them is that Manitoba is a great place to come and do business. If you are interested in the technology or the transportation side, which this particularly applies to, come and see us.

I think it is unfortunate that the situation has happened, but, as I mentioned to the member the other day, when you are into risk capital, into venture capital, I think as we move more into the technology side of it, we are going to see higher risk because it is definitely a higher risk. Where we used to secure bricks and mortar as part of the investment side that we were making, now we are taking intellectual properties. If we are not prepared to do that, or if we are not prepared to consider it when we are looking at investment and creating opportunities in our province, unfortunately there are other provinces that are, and we have to be prepared to compete in that same market.

Again, I do not make any apologies for winners and losers because in my mind when you are looking at high risk which creates faster wealth, faster employment, usually higher paying jobs in the province, there are chances and risks that you have to be prepared to take. If you are not as a province in today's world as we move into the next century, we are probably going to fall behind very quickly.

Mr. Sale: Mr. Chairperson, I am disappointed in that answer. It would have been a whole lot better if the minister simply said we screwed up; we made a mistake. We were smart enough to edit it out of the video tape and smart enough to edit it out of the CD, but we did not spend the money or take our scissors and remove the offending pages from the booklet or reprint the last few pages of the booklet and have it rebound.

Essentially what the minister is saying is he has no problem with featuring as one of four companies a bankrupt company that left a string of creditors, including stiffing the people of Manitoba for $2 million in our assorted pension funds. This tool kit, whatever you think of it, I can only imagine trade representatives boxing up a couple hundred of them and traipsing off to somewhere with this enormous carton of little red tool boxes. I was trying to imagine myself at a trade fair wandering around carrying one of these things, trying to be interested in the hundreds of other displays.

So he can debate the merits of the approach, but I hope he is not suggesting that in this year's report we will feature another bankrupt company, perhaps Shamray, as an example of Manitoba entrepreneurial talent of young Manitobans who managed to stiff our province for $45 million. Rescom was only five. Maybe Shamray would be a good choice for this year's kit, so that we can have some balance, which seems to be the minister's point. We will have some winners and some losers in this year's package. In fact, if the minister were being completely forthright with the committee, he would say we screwed up; we wasted $260,000, because, surely to goodness, the minister is not going to tell me that these tool kits were distributed after the fact when Rescom was bankrupt.

Is the minister telling us that is, in fact, what you did? You distributed these tool kits after the company was bankrupt, and anybody checking on the web or checking anywhere would have found, in fact, that this leading Manitoba company was not only bankrupt but it left government owing 40 percent of the money that was owed at the end of the bankruptcy chain. Is that what the minister is telling us? This is still a great tool, and he is distributing these little red tool kits wherever he can.

Mr. Tweed: I, again, would just like to emphasize to the honourable member that the package was designed to promote the tech-nology, the willingness of the province of Manitoba to seek technology, recognizing the risks involved with it. I might suggest to the honourable member that had we gone to greater expense to satisfy what he would suggest as the wrong thing to do, we might be having a continued argument over the additional expenses that it would take. I think that the council probably made the decision, recognizing again that it is a high-risk industry, and from the time something is imprinted in January, the whole picture, the whole landscape of the projects that are out there, could be changed as early as the next month or within the next 10 or 12 months.

I am advised that the tool boxes actually drew great attention wherever they displayed them, and they were picked up. I think that when you present something to people in a different way than what they are used to it tends to draw the attention that we wanted.

Mr. Chairman, I hate to provoke argument but I guess I referred to yesterday, and I will refer to it again today, that when the former administration were running risk capital ventures, the record shows that nearly 75 percent of the loans that they put out were nonrepaid. They were write-offs to the government of the day. I would suggest, as I did yesterday, that our record is far greater than that. Because we are entering again into a higher-risk industry, we have to be prepared.

I do not think losing is something that we will ever accept, but I think it is something that we have to be aware of constantly, that this can happen in this type of industry, and I would suggest it will continue to happen. I read in the papers daily about technology companies struggling. Do I feel I should criticize them? No. I, personally, and I think this government, feel that those are the companies that have stepped out. They have probably put most of their own personal capital on the line to make this investment. They were definitely in need of risk capital, and that is why it is called risk capital.

If we are going to continue as a province to draw that type of industry to the province of Manitoba, I would only have to think of the film industry in the province as to where it has come from in the last 10 or 11 years. If the province was not willing to offer certain types of things to the investors in these types of companies that are coming to our province, that are here in our province, it probably would not happen.

I certainly do not apologize for the council's decision to go with it. They had made some changes in the electronic side, which they could do, and they could do quite, I would suggest, sensibly and reasonably, with the printed material, which was done up prior to the problems that Rescom had run into. I suggest that it would have just been an additional expense, when really what we are trying to tell people is that Manitoba is willing and looking for people who are willing to come to our province, invest, create jobs in the high-tech industries.

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Mr. Sale: Mr. Chairperson, how many of the tool kits remain in inventory and how many have been distributed?

Mr. Tweed: Just before I get into the exact detail, again, I do not want to seem combative, but I look at a company like Broadband Networks. We took the risk with them and they have turned–the success on the other side is, you know, something that we always have to be aware.

The member asked about the packages. There were approximately 1,500 that have been delivered. There are about 100 more in English still available and, because again we are looking throughout the world with these types of information packages, we have approximately 500 left in the Portuguese, Spanish and French languages.

Mr. Sale: Did the EITC staff take any efforts to provide any information in regard to what happened to Rescom's central products, any attempt to deal with the situation of having a bankrupt company being promoted by the department? Was there any attempt to deal with this, or just hope that nobody noticed?

Mr. Tweed: As I had mentioned earlier, a decision was made on the electronic side because the technology portion of it had not been completed at the time. So I would suggest that would indicate that they made some considerations, but because the printed material had been developed and was completed, they also made that decision to continue with it.

Mr. Sale: Has EITC done anything to change its approach to the production of this report to avoid this embarrassment in the future? Has it changed its tendering processes in terms of oversight or assessment of the ability of the contractor? Has it reserved the right to approve the final product? Has it done anything differently than it did in regard to this one?

Mr. Tweed: I think we are all aware that whenever we get into a tendering process, we learn from previous past experiences. Although I am advised that the council has not tendered anything new as of this date, I will certainly pass on the honourable member's concerns, and I am sure that they will be addressed.

Mr. Sale: This report of which we are speaking was issued last April or May. Who is doing the report for this year?

Mr. Tweed: I am advised that the report has not been tendered for yet for 1999, but I am led to believe that it will be out later this year, just as we noted that this project I believe was started in '97 but brought on to market actually last spring.

Mr. Sale: That does not make a lot of sense given that page 60 of the Supplementary Information says EITC produces a State of Innovation Report, and the minister's listing of what the funds were for included the production of the State of Innovation Report. So, the last report the little red tool box was contracted for in November of '97, one would have expected that sometime in the fall of '98 a similar contract might have been let for this year. So, I am asking to whom that contract was let; what is the state of that report?

Mr. Tweed: I am advised that we have not let out any tenders at this point. I am advised that the council is still conceptualizing the final details of the report.

Mr. Sale: So then, Mr. Chairperson, the statement on page 60 is factually incorrect. There is no report under way for the year just past. We are still in some state of limbo. It looks like it will be a two-year State of Innovation Report instead of a one-year. If the members are looking for the statement, it is on page 60 of the Supplementary Estimates: "Annually EITC produces a State of Innovation Report for the Province." The last annual report was produced by a contract to Rescom Interactive November '97, completed by two subcontractors, Digital Trilogy and Fusion Technologies in the spring of 1998, April 1998. We are now in May of 1999, it sounds to me like we have missed a year.

Mr. Tweed: I am advised that the annual report does indeed come out late June-July. The State of Innovation Report for the province will be available or be out sometime later in the fall.

Mr. Sale: If I heard the minister correctly, you are saying that the annual report of EITC which is a regular late spring, early, well, June, will be out on time but the State of Innovation Report will not be out until the late fall? Is that the information?

Mr. Tweed: That is my understanding.

Mr. Sale: Whatever face the minister wants to put on this, I think he needs to sit down with Mr. Silver and the EITC board and lay out some very clear expectations which maybe he has done and maybe he has not, I do not know.

It seems to me in the first place, when you award a contract, especially to somebody like Mr. Prefontaine who has been a major donor to the party, some $6,000 over the last few years to the Conservative Party, a company that had an association with a spouse of a sitting member in the form of a share warrant, worthless now, but potentially it might have been worth quite a lot, and sat on that board for a long time as a director, it seems to me that when you are contracting for a service, especially when you are contracting for a service with a company that has such close ties to the governing party in power, you ought to at least exact some very clear due diligence, so that this kind of thing does not come back to haunt you. That should include a credit check of the company in question, a careful credit check, a check of the ability of the company to actually undertake the work.

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I think that Stephan Segal's company was a very good little company, but it was bought for a very high price, and that probably was the beginning of the problem, that Rescom Interactive had capital structure it just could not support. Secondly, it seems to me that what is required is that the board of EITC have some clearer oversight of anything it contracts for.

I simply cannot believe that somebody of Mr. Silver's business acumen, which I respect greatly, would be happy to have a product being shipped around the world promoting a bankrupt company–featuring a bankrupt company. I should not say promoting. The minister has made it clear that just because the company was featured, it does not mean that the report was promoting it.

I think to a reader it would be hard to make that distinction, but, yes, I agree, the report says we are not promoting any of these companies. They are just examples. I cannot imagine any jurisdiction saying: well, gee, shucks, yes, the company is bankrupt but hopefully nobody will notice, and it is a good story anyway.

So I think that the minister should have a conversation with the EITC board about this. I am simply astounded that they would continue to feel that these were useful products. Broadband is a very interesting company. I hope that it continues to thrive under Nortel's ownership. Frankly, there are some problems there which the minister may or may not be aware of, but he might want to become aware of.

I am just astounded that the minister would say: this is a good product. We think it is useful and we are going to continue to hand it out, more than a year after one of the four companies featured in it, in the print version, is long gone. Not just long gone and lamented, but long gone with creditors who were very angry about how they were treated, and customers who were very angry about how they were treated. This was not a success story.

There may have been some technological success in Rescom, in its early products, but if the minister would take the trouble to speak to those who had to deal with the fallout of the company's decline, I think he will find that this was not a company that even by January 1998 anybody wanted to be associated with promoting as a model, because its customers were very, very, very unhappy. If you doubt that, speak to the current vice-president responsible for trying to still service the product suite that was purchased out of bankruptcy. You will find that this was not a happy story, and this was not something that just started after the company went belly up in June.

So the minister can put whatever face he wants on it. I have never suggested the risk capital was risk free. I know something about risk capital funds. I have had some involvement with risk capital funds, and I know that you lose money and you make money and you have successes and you have failures. I have no problem with that. That is not the issue here.

The issue here was the letting of a contract and the production of a report which the minister continues to say, in his view, is something that he would proudly hand out as something that would well represent his province. I think he would be much better served simply to say: it was unfortunate. We should have changed the print section, but we did not. We will not make that mistake again, and, no, I do not think this should be distributed and handed out as an example of the state of innovation in Manitoba, because it will not serve us very well.

Though I think he made an error in trying to defend really an indefensible situation, and I emphasize again, it is not indefensible to go bankrupt. Lots of very good managers and very good technologies wind up unfortunately in bankruptcy. In some ways good things can come out of that, because assets that were overvalued can become recapitalized and become effective. So I am not suggesting risk capital does not have a very big place in the development of a modern economy, it does.

But this process reeked of incompetence and it reeks of the kind of insensitivity to what message was being given out on behalf of all of us here in Manitoba in terms of the state of innovation in our province. So I hope that the minister will reconsider how he is dealing with this issue and will not be distributing any more of these regardless of what language they are in. Pass.

Mr. Chairperson: 10.4.(b) Grant Assistance - Economic Innovation and Technology Council $1,023,900–pass; 10.4.(c) Economic Innovation and Technology Fund $1,500,000–pass.

10.3.(a)(1) Salaries and Employee Benefits $708,100.

Mr. Sale: I think that what we could do in this one would be to treat this appropriation all as one unit. I have a very few questions, and then we will just deal with the whole section as one unit, if that is all right with the minister and the staff.

Mr. Chairperson: Is it agreed? The honour-able minister?

Mr. Tweed: Agreed.

Mr. Sale: Mr. Chairperson, could the minister first indicate whether there are any expenditures in this area–I think in the $10,149,500? Are there any expenditures for the Pan Am Games in this area?

Mr. Tweed: Yes, Mr. Chairman, there is. It is $400,000 for marketing and promotion.

Mr. Sale: Mr. Chairperson, is that amount part of the overall government budget in support of the Pan Am or is it an additional appropriation for this particular activity?

Mr. Tweed: I am advised that it is above and beyond, and part of the thinking is the legacy factor that the benefits far outweigh the costs over time.

Mr. Sale: Mr. Chairperson, I am sorry I have had trouble. The minister has a very soft voice and it is a big Chamber. I did not hear his answer.

Mr. Tweed: I just commented that it is considered legacy funding in the sense that the benefits far outweigh the immediate cost spread over a period of time in the areas of trade and tourism.

Mr. Sale: Which line is the $400,000 contained in?

Mr. Tweed: It is under line 10.3.(b).

Mr. Chairperson: 10.3.(b).

Mr. Tweed: Yes. Tourism Marketing and Promotions.

Mr. Sale: Other Expenditures, I presume?

Mr. Tweed: That is correct.

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Mr. Sale: Are there any other lines in the minister's Estimates that contain expenditures related to the Pan Am process?

An Honourable Member: No.

Mr. Chairperson: I believe the answer was no, but I do not think it was on the record.

Mr. Sale: Who represents the department on the Pan Am process?

Mr. Tweed: When I am asking my staff for advice, I am finding that my mike is on, and I would prefer it not be on when I am seeking advice.

Mr. Chairperson: The mike is not to be on when the minister is consulting but, at the same time, when I acknowledge anybody in the Assembly, the mike goes on.

Mr. Tweed: That person's name would be Hubert Mesman.

Mr. Sale: Will Mr. Mesman be returning to the department when he finishes his assignment at the Pan Am?

Mr. Tweed: I understand that he has been seconded to this position and his staff here remains.

Mr. Sale: The Pan Am process we all hope goes very well and that the minister can somehow intervene and get the weather sorted out so that we are not flooded out in the middle of this hosting of all the Pan American countries that are coming here. I certainly, on behalf of our caucus, will hope and pray that the Pan Am Games go well and positively. What is Mr. Mesman's particular role in regard to the Pan Am?

Mr. Tweed: I am advised that his role is to serve as a liaison between government and government departments with the ongoing activities of the Pan Am Games.

Mr. Sale: We have had a number of concerns about regional tourism. My colleague, the member for Dauphin (Mr. Struthers), has raised questions about the tourism board in his region which is concerned about the deterrent effect of fees on tourists in his area, the parks fees in particular. I know the Minister of Natural Resources (Mr. Cummings) is responsible for the actual operation of the parks, but has the minister received other concerns from regional tourism organizations of a similar nature in regard to the costs that are facing tourists?

Mr. Tweed: I am advised that we do not have any complaints as such in writing. There is certainly lots of dialogue between the regional directors and the department over certain issues that they face from time to time. I think just in response to the letter that I think the member might be referring to, it actually came from a working group or a group of people within the region. It was not actually the region itself. That is my understanding of it.

Mr. Sale: I am glad to know that he has not got numbers of other concerns being raised. I am not certain of the actual identity. The minister may well be correct that it is a subgroup.

I have met with some regional tourist people. I am thinking particularly of the very capable person who is in charge of the Brandon area. She indicates the continued struggle that regional groups have to be able to package a kind of destination package for American tourists, in particular, in a region of Manitoba. We tend to think of Churchill or of Winnipeg, perhaps Hecla, specific destinations that are a high visibility–Elkhorn in Riding Mountain, to name another one.

The regional groups that I have talked to are trying hard to put together packages that would make their region a destination for people that might have a particular theme. Whether it is farming and agricultural interests or whether it is historic, small museums, cultural festivals, so that the area, for example, of southwestern Manitoba–Brandon, Virden, Wawanesa, Souris, Melita–areas like that could work together to market an integrated package that would give a family or an individual tourist, but, in particular, a family, a three- or four-day or even a week of a kind of integrated experience of that part of our province. They were having difficulty getting support to do that kind of marketing either through the Internet or through publications that people could write for and not simply be promoting the province as a whole, drawing attention to the unique aspects of the many regions but in a way that pulled it together for people so that tourists who are increasingly looking for education, interaction, cultural immersion or involvement in their tourist activities will have a sense that they can go to a region and actually really get into that region and experience it with–particularly, I am talking about tourist families who want to in their vacation not simply have a passive kind of tourism but have a much more active kind of tourism.

I know that the assistant deputy minister is aware of that development, but I was still hearing as late as this past fall that regions were not getting the kind of support that they were hoping they might get to move down this particular road. Can the minister comment?

Mr. Tweed: I think coming from a rural background I can certainly attest to the issues that are facing a lot of rural and northern communities. I am sure that although the problems may vary somewhat, in the end they are very similar. My particular area has worked diligently the last few years to develop working plans. One of the issues that we have in that particular area is the lack of a destination point. It is something that the communities are working together to try and develop a plan but, as you know, when that happens the argument tends to break down to who should get what and who should get the most benefit.

What we have tried to do with our regionalization plan, the idea was to try and get each region to sit down together and discuss a strategy where they can identify and prioritize the needs of each region. We have some new initiatives that are currently out there, and we are hoping that this will encourage that development. Certainly when you come to tourism, I think each region has a uniqueness about it, and then each community within that region has another uniqueness. It is often difficult with budgets that are limited to some degree to do it and meet the needs and concerns of the regions and the communities within that region with that type of funding.

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Currently on the table is a support package that we offer for new development or modernization of tourism facilities. I think that a lot of communities are at a point where they develop their tourism and, because of different circumstances, they are in need now of upgrading. What we have done is, we have offered support to these types of projects for 30 percent of the project up to a maximum of $30,000. We have allowed for them to do it with the idea that they could leverage some private sector funding or funding from other agencies.

We have tried to make it as convenient as possible in the sense of spreading the funding over a two-year period. A lot of times some of the problems that may occur may not happen until midseason in the tourism industry side. I am speaking specifically of summer right now. They start the development or they start the plan and because of the conditions they are unable to complete them. We have tried to accommodate them in that area. Again, we do that through supporting partnerships that they can find within the region.

We have offered support on new tourism market development initiatives. Individual tourism operators or regional groups or consortiums of tourism operators can have access up to 30 percent of their projected costs up to a maximum of $10,000 to support these new market development initiatives. That is something that we are really finding there is a need for in the regions to do that. I think it is probably relevant to small business. I think it is probably relevant to any of the activities that go on in rural and northern Manitoba. They have the idea, they have the access to entice people, and what they really need is the support in how to market themselves and how to get themselves to the marketplace.

Another project, a program that we are working with is support on projects for the development of communities strategic tourism plans which also include the implementation strategies and the costs surrounding that and the commitments to the implementation. It is a 50 percent funded project up to a maximum of $15,000, and again trying to support the regions and the communities within the regions by offering them these types of assistance in consultation and discussing with the tourism people. I know in my particular community or market in the southwest, we have certain things that we know we have access to, we know that they are good for people to come, but how do we get them to that position where we can market it, where we can bring them in and support it?

I think the member for Crescentwood (Mr. Sale) is correct. I think one of the ways and one of the ways we have identified or has been identified to our department is in the area of the family. I am hearing constantly from travellers, not only Manitoba travellers but from around North America, from people who are telling us we are looking for outdoor activity, we are looking for some adventure, we want to do it with our children. I think the operators in rural and northern Manitoba, in particular, have identified this and are developing those plans. I think that these types of programs will encourage and help in that development.

Mr. Sale: I want to just wrap this up with some positive comments. I want to commend the department in reaching an agreement with the Prairie Dog Central people, the Vintage Locomotive Society. The deputy and the assistant deputy for the area will know that we have been very involved in trying to be supportive of that initiative over the last three or four years. I have raised it every year in Estimates, and I am very glad I do not have to raise it again this year. I am looking forward to, hopefully, an invitation to go on the first run. I do not know whether the minister would like to extend that or not. I was on the first run that the train took, I think it was '71 that it started, '70 or '71, out of the elevators east of Winnipeg. There was a grain elevator there and we used to run out that line. Prior to that I used to take my cubs down to Shoal Lake when the train was still going down there on the City of Winnipeg waterline. I had a lot of good fishing trips with the kids down to Shoal Lake, and we actually even caught some fish sometimes which is always great excitement for eight-year-olds who probably had not been out of the city at that point very much. So I am very pleased with that, and I think all of us wanted to support that. I am glad the department founds ways of making that work.

The other thing I think that should be said in a positive vein is that the publications this year I think showed a marked improvement over previous years. I think the advertising strategy and the quality of that work is stronger than in the past, and I think that is really positive. I think that also the department, along with others, I am not claiming any particular wisdom here–but I think the department is recognizing destination tourism and niche tourism is increasingly the way families and individuals want to travel. It is no longer simply to go some place and go to the bar. It is a much different kind of tourism today.

I just wanted to end with a suggestion. I have not done much travel in southern countries. I have done some travel in Europe and been in some of the northern countries of the world but not much in southern countries. It struck me this winter when I was able to go to Costa Rica for a couple of weeks which was just wonderful, it is a fabulous country to visit, the thing that made it worthwhile was that we had superb guides. I thought at first, you know, this is because of the language, but it really is not because of the language. It seems to me that the guide was not just interpreting and translating. Anybody could have done that. The guide was linking us to the culture, the wildlife, the botany, the biology, the ecosystems, the history, linked us into the crafts community. They were astoundingly knowledgeable people. These are people mostly with graduate degrees in biology, Masters of Science, some Ph.D.s, some of them completing their dissertation and working as guides.

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It struck me that this would be very relevant for ordinary families and ordinary tourism. We somehow expect that because we all speak English, most of our visitors at least that drive here from the United States which is the bulk of our visitors, that because they speak English, they do not need a guide. I may be a slow learner but it dawned on me this winter that I probably need a guide in lots of other places that I visit where I do not have a language barrier, but I do not have a way to hook into the cultural biological or any other community there. I simply do not have any way of actually knowing what it is I am seeing or driving by.

I just wondered whether we should not be thinking about summer programs to use our university and college students not just to be guides and interpreters for people who have to have language support or have language barrier but for a much broader cross section of people who could hook up with a couple of families and take them around the Brandon, Killarney, Souris, you know, it is a lovely region of the province, Turtle Mountain, great place, and help them actually get hooked into that and go home with an experience where they have made some friends, made some contacts and will say, boy, did we ever have a unique experience in Manitoba.

So I wonder if the staff or the minister have ever given any thought to not just thinking about guides where we are hosting Japanese or German or Central American visitors who have a language issue, but thinking about the potential of our young people, in particular, to act as in-depth interpreters of our culture and our ecosystems and provide people with the kind of linkage that will stay with them always. As, certainly, my partner and my trip to Costa Rica will stay with us always not just because of the pretty country we saw, but because we got hooked into the real people who live there and will go back there at some point with some phone numbers and some people that we will want to visit.

Mr. Tweed: Mr. Chairman, I would like to be able to offer the member the invitation on the Prairie Dog Central. I do not know if I have been invited yet, but I do know, when it first opened in 1971, I would have been but a mere child attending school.

I appreciate your comments. I think that they are relevant. I have often said the publications have had more comments this year. Maybe because I am new and the department people are recognizing it, but I have had a tremendous amount of compliments about the publication, the presentation. I will certainly pass that on.

When he talks about the province, I always lament to my children and to their friends that as eager as they are to move from Manitoba to experience the world, to travel, one of the greatest opportunities I have had being an MLA is to get to see the province of Manitoba. We have a wonderful province. As much as we invest through government, through private, through many other sources, we probably do not do enough because there are so many wonderful things here to see.

I think probably what we have just discovered, and again when we talk about diversity and opportunity, is that what we used to see as a section of land that produced grain, it also produces a wonderful variety of wildlife, and in some cases, fishing. I think of a friend of mine who is offering some rides down the Souris River. Again, 10 years ago probably anybody who thought of that thought, well, who the heck would come and ride down the river, in the Souris River. At that particular time, there was only about four inches of water in it because of a drought situation, but he has developed it into a small business. He has brought foreign travellers, and again, family visitors who want to see this, willing to pay for it. I think the awareness that is happening in Manitoba right now about what we have and what we can offer is really just starting to surface, and I think the future looks very bright for those types of opportunities.

Recently, I had the opportunity to visit with some of our lodge operators in northern Manitoba. Unfortunately, I suggest that I have not had an opportunity in my lifetime to travel the North. I will make that time available because these people are doing wonderful jobs. They are attracting new visitors to our province. It is a business, but it is also exposing the country and our part of the country to the rest of the world.

I recently travelled to Minneapolis to partake in our Angler Program that we developed a few years ago. I could not believe the number of American people who came up to me and complimented the province of Manitoba on their northern lodges. I think there was 20 lodge representations there, and I met about 15 or 16 of them. I will be very honest with you, a year ago I did not even know they existed. I am guilty of not knowing enough about my province, but I have made a commitment and will continue to promote the benefits of what we have and what we are doing, the good things that we are doing.

The member for Crescentwood (Mr. Sale) mentioned guides and staff; again, just another opportunity for our young people. Again, it is a culture that we may have to develop a little bit to get people used to the idea that they are going to pay for this service, and then if they are going to pay it has to be top-rated service, something that they will go home and tell their families and friends about who will come back and take part in it.

One of the things that we have done at the tourism information booth at the Customs entrances along the border between the United States and Canada is last year as the MLA for the Peace Gardens, I had probably a half a dozen people compliment me on the knowledge of the staff, the willingness of them to take the extra step to help the person entering our country, our province, to understand where they might want to go to find the things that they are looking for. It made me feel good, and I would again suggest that 10 or 15 years ago that may have not happened. They may have received a brochure and a direction to the next town.

But these young people–I met with about 40 of them, the new students that are going to run these tourism information booths. They are fired up. They are young people. They are just full of energy, and I encouraged them to find out as much about the province as they could to help anybody, because these are the first people in a lot of cases that tourists to our communities meet, and it has to be positive. I agree with the member opposite that developing that to a further state is something that we have to do.

I thank the member for his compliments. I want to thank my staff, because they certainly have provided me with a lot of knowledge in a very short period of time. I think not only do they work for me as the Minister of Industry, Trade and Tourism but they work for all Manitobans. They work for all members in the House, and we are all trying to do the right things for the right reasons to promote the province.

So with that, I will close.

Mr. Chairperson: Item 10.3. Tourism and Small Business (a) Tourism Services and Special Projects (1) Salaries and Employee Benefits $708,100–pass; (2) Other Expenditures $1,150,600–pass.

Item 10.3.(b) Tourism Marketing and Promotions (1) Salaries and Employee Benefits $660,900–pass; (2) Other Expenditures $4,184,100–pass; (3) Grants $75,000–pass.

Item 10.3.(c) Tourism Development (1) Salaries and Employee Benefits $331,300–pass; (2) Other Expenditures $254,500–pass; (3) Grants $688,600–pass; (4) Less: Recoverable from Rural and Urban Economic Development Initiatives, nil–pass.

Item 10.3.(d) Capital Grants - Canada-Manitoba Partnership Agreement in Tourism, nil–pass.

Item 10.3 (e) Small Business and Entrepreneurial Development (1) Salaries and Employee Benefits $1,274,500–pass; (2) Other Expenditures $791,900–pass; (3) Grants $30,000 –pass.

Resolution 10.3: RESOLVED that there be granted to Her Majesty a sum not exceeding $10,149,500 for Industry, Trade and Tourism, Tourism and Small Business, for the fiscal year ending the 31st day of March, 2000.

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Item 10.4. Economic Development (a) Economic Development Board Secretariat (1) Salaries and Employee Benefits $568,100–pass; (2) Other Expenditures $377,300–pass.

Resolution 10.4: RESOLVED that there be granted to Her Majesty a sum not exceeding $3,469,300 for Industry, Trade and Tourism, Economic Development, for the fiscal year ending the 31st day of March, 2000.

Item 10.5. Amortization of Capital Assets $357,100–pass.

Resolution 10.5: RESOLVED that there be granted to Her Majesty a sum not exceeding $357,100 for Industry, Trade and Tourism, Amortization of Capital Assets, for the fiscal year ending the 31st day of March, 2000.

We now come back to 10.1. Administration and Finance (a) Minister's Salary. Would the staff now please leave the Chamber.

Item 10.1. Administration and Finance (a) Minister's Salary $27,000–pass.

Resolution 10.1: RESOLVED that there be granted to Her Majesty a sum not exceeding $3,781,300 for Industry, Trade and Tourism, Administration and Finance, for the fiscal year ending the 31st day of March, 2000.

This completes the Estimates for the Department of Industry, Trade and Tourism. Thank you. Attention, please. I am suspending the Committee of Supply. Call in the Speaker.