ORDERS OF THE DAY

Hon. Jim Ernst (Government House Leader): Madam Speaker, would you please call Bills 4, 5, 10, 15, and then the balance of the bills as listed on the Order Paper.

DEBATE ON SECOND READINGS

Bill 4--The Real Property Amendment Act

Madam Speaker: To resume debate on second reading on the proposed motion of the honourable Minister of Consumer and Corporate Affairs (Mr. Ernst), Bill 4, The Real Property Amendment Act (Loi modifiant la Loi sur les biens réels), standing in the name of the honourable member for Transcona.

Mr. Daryl Reid (Transcona): Madam Speaker, it is my pleasure to rise to speak to Bill 4, The Real Property Amendment Act, that was introduced first as a private member's bill and then after that bill had been introduced, the government came forward in the last session prior to the provincial election with Bill 2, and now we have Bill 4 before us which has been amended in some ways from their own Bill 2 which had been introduced prior to the election, as I indicated.

The intent of this piece of legislation, Madam Speaker--I think one which we can support in that we had raised this issue prior to the election, in fact, going back some time ago in the sense of years. We have pressed for this change since around, I believe it was in December around Christmastime in 1993 when this issue first came to our attention, or was it Christmas '92 that this issue came to our attention?

The government, when we raised the matter, did not see fit at that time to come forward with the legislation to make the necessary changes, and that necessitated the introduction of a private member's bill by members of the opposition, in fact, in particular, my colleague the member for Radisson (Ms. Cerilli).

Since that time, after the member for Radisson had introduced her private member's bill, which I had the honour of seconding and supporting at that time, we have found out that there have been numerous other cases that have been drawn to our attention both through the news media and through people contacting our constituency offices.

We have heard it said sometimes that there are not many families that are affected by the problem for which this piece of legislation is intended to correct, but I feel that it is important that, even if there is only one family that is affected by this, we need to take the necessary steps to assist that family or those families that are affected.

I want to put into context, Madam Speaker, the way in which transactions take place when we transfer properties, in particular homes, from one family to another. I want to put it into that context so we have a better understanding and appreciation.

I am sure that many of us in this House have had the opportunity to live in our own homes and to perhaps buy and sell homes maybe more than one time and are familiar with the process involved. I know that there are members of this house who have been involved in real estate in itself and that know the process probably much greater than I do.

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I want to put it into context in the sense of people within my own community, the community of Transcona, because that is where the original case came to our attention from an individual and his family that had moved into the community of Transcona.

The issue itself involves the time when the family home for many of us will be placed on the real estate market. Now, there are all kinds of problems that are involved when a family makes a decision to sell their home.

Of course, the reasons are varied why an individual or a family would proceed with that action and sell their own homes and look for a different housing accommodation. It could be an addition to the family. Perhaps the family is growing and the number of children have increased or members of the family have moved into the home, creating stress on the space that is in the current home, or perhaps individuals in the family may have been fortunate enough to secure a new job or have a raise in pay that would allow them to have a change in their accommodations which they could afford.

Of course at the same time when an individual or family sells their home, it is a time for upheaval as well. There is a time of excitement, because the family senses that they are moving from the home in which they may have resided for quite a number of years and also at the same time they have mixed feelings in that there may be a certain amount of sadness when an individual or family sells their current home.

There is a sadness in leaving the current home, because that home may be filled with memories. Perhaps there were children who were born into the family when the people resided in that home. Perhaps a new couple when they were married decided that this was going to be their first home. They bought this home, and now they are choosing to move on from that home.

There is a happiness at the move. There is more space. They are looking forward to new space. They are going to get a chance to move into a new neighbourhood for which you have high expectations, and you have a chance to meet new neighbours and perhaps make new friendships in addition to the ones that you have already made in your current neighbourhood.

But along with the mixed emotions that go with the selling of your property and the moving to a new home there comes a certain amount of uncertainty or uneasiness in the move that takes place. It is a time when the families have to seek out financing for their new home. They have to go through sometimes complex negotiations for which many of us do not have a complete or full understanding of the process, and this can be unsettling for many of us who do not understand the real estate or the financial markets.

When the families are moving, of course, to the new home, they hope, if there are children in the family already, that they would be moving to a neighbourhood that has good schools. Many people have an opportunity to search out the schools that are in the neighbourhood, the shopping facilities that are available and also the recreational facilities, so much research goes into the move from one home to another.

The uncertainties also include the fact that when you put your home on the market you are going to have real estate agents, that you have in many cases approached, come to you and have discussions and talk about market prices, what is included with the property that you are putting on the market for sale, and also the fact that you are going to have strangers that will be coming through your home and viewing your home, sometimes at a moment's notice, in an effort to try and secure a buyer for the home that you have placed on the market.

When you are moving to your new homes, another uncertainty that is in many people's minds I know, even in south Transcona when people--and this has been an issue that has been before this Legislature now for at least two or three years relating to the flooding of basements. I know when we made our purchase to move into our new family home, it was an issue that was important to our family in the sense that we hoped we were not taking over a piece of property that was susceptible to basement flooding and the resulting damage that can occur and loss of property and the upheaval of the family at that time.

Now, the vending family, the family selling the home, decides to make the plunge, and they put their home on the market in an attempt to sell it in good faith. They trust, Madam Speaker, because they do not have a comprehensive or thorough understanding or knowledge of the real estate industry and the financial industry relating to mortgages. The vending families that are selling their homes put a great deal of trust into the real estate agent or agents and the lawyers representing not only themselves but most likely the families that would be purchasing the home from them. The vender family hopes and trusts that their interests will be taken care of and best represented by the people they have chosen.

The real estate agent then advertises the home on the market, and it is a time when many families do not realize the impact that Bill 4 is going to have on them with respect to their own personal lives. I think this bill is important in that this is the point in time when it will make the most significant impact onto the future lives for those families.

Once the family decides to put their home onto the real estate market, then you have interested parties coming forward with offers to purchase. Perhaps there are times when the counteroffers can take place and the discussion takes place back and forth between the real estate agents, and the real estate agents bring the offers to the owners, the venders, and they make decisions relating to the willingness of the selling party and whether or not the offer meets the needs of the family that is selling.

Then we see that the deal is struck and that there is an agreement between the parties. Of course, the real estate agents draw up the agreements and the conditions respecting possession date, whether or not there are appliances or draperies that are involved. Whether or not the purchaser assumes the mortgage on the existing property is also a factor that is taken into consideration, and this is the purpose of Bill 4, dealing with the assumption of mortgages and the relating and continuing financial obligations and responsibilities of the selling party.

Once the moving date arrives, Madam Speaker, of course the families then go out and rent their moving trucks, and they gather together all their possessions. They gather sometimes in many cases--I know people in my own community get their friends and their relatives, family members together to load the possessions onto the truck and move it to the new location.

That is a time sometimes, I believe, of great sadness to a lot of the families. They do not know that the future can be fraught with all kinds of difficulties for the ongoing and continuing legal and financial obligations that they may have thought that they were disposing of by way of the sale onto the purchasing party.

As they say goodbye to their neighbours and their friends, and they have signed the legal papers responsible for the transfer of that property, many families that have sold their properties and have had the mortgages assumed by the purchasing party, the selling party thinks in many cases that the properties are transferred and that the selling family has no longer a financial responsibility or obligation to the payments for that mortgage on that particular home they are selling. So, as the family takes one last look around the home for which they have many happy and maybe sometimes occasionally sad memories within the home, and then they turn and they walk out the door and lock it behind them and take that key down to the lawyer's office to be transferred to the purchasing party, it is with mixed emotions that many families make this move. Once the transfer is complete and the key has been passed on to the lawyer representing the vendor party and the lawyer then representing that party couriers over the keys to the purchasing party, the transfer has taken place with the exchange of the properties, possession of the properties by lock and key as well as the financial transfers that take place.

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Now many families think that the transfer is complete at this point--or so they think. I know, having dealt with several of my constituents and constituents within the constituency of Radisson, there is a continuing and ongoing obligation on the part of the vendor, something which many families may not be familiar with. The families, having moved their possessions, quite often in the back of a half-ton truck or a rental truck, to their new homes, settle into their new homes and perhaps they buy new furniture to fill their new homes. They get settled in to their neighbourhood and they meet their neighbours. They get used to the facilities that are there and they make new friends. They become comfortable in their lives all the while never realizing that there is an ongoing financial obligation that could come back to haunt them in a very serious and a very negative way.

After they have met the neighbours and made new friends, they have adjusted to making the payments on the new home thinking that they have now--like many families who live up to the maximum potential of their earnings--they have made those mortgage payments for the first time on their new home, not realizing that they could be responsible for the home which they have left behind.

Things seem to be going smoothly for the family in their new home, all the while not knowing but hoping that the family who purchased their home would be also encountering similar happy circumstances but not knowing, in fact, that in some cases families who have purchased homes and assumed mortgages may be encountering difficult times and may have indeed fallen on some hard times.

Madam Speaker, it can be just a matter of days, in light of our present economic conditions within this province and in this country, that changes can occur for a family in that the families could in fact sustain loss of employment for one or more members of the family causing the family to fall on hard times. Not only the loss of employment could be a problem for the family but also perhaps there could be a death in the family that would seriously impact on the family's conditions, and this Bill 4 has impact on both families, both the purchasing and the selling family. Perhaps there was a family breakup that occurred as a result of strains, the strain of moving into the new home.

Then the family who sold the home originally, Madam Speaker, for which Bill 4 was intended to correct the problems, the payments stop on the assumed mortgage. The family then falls in default or in arrears on their payment, and after a period of time the financial company that had been responsible for the mortgage originally would wait the legal period of time before taking the necessary steps to proceed with action.

Now, quite often in cases like that, Madam Speaker, the home in which the parties have defaulted on the assumed mortgage falls into a state of disrepair. It is very obvious that, as individuals or the families living in the homes for the assumed mortgage cannot make the mortgage payments, it is going to be very difficult for them to also maintain the condition of the home. I would suspect that, in many cases, if not all cases, if you cannot afford to make the payments on the mortgage, the assumed mortgage which the purchasing party made, they would not have money to upkeep the condition of the home itself.

Now the banks, the trust companies, or perhaps, in some cases, even the credit unions--although I am not aware of any credit union circumstances that are occurring, and I am only aware of banks and trust companies being involved in situations like this--that the financial institutions take the necessary time and wade through the legal requirements before sending the necessary letters to the defaulting parties. Of course I would suspect in that period of time that they may have made phone calls to find out if there is some way in which they can assist the persons who have assumed the mortgage on the home, to find out if there is some way that they can assist in the making of those payments.

Perhaps it would be just the interest portion of the payments with no monies going towards the principle to lessen the impact on the families or perhaps some financial institutions may choose to request, or in some cases demand, that the full payment be made. Failing that, of course, the financial institutions then have, as they do in many cases, the step that is available to them, to initiate court action to recover their monies, and, of course, if the defaulting parties are unable to make the payments, to proceed to the courts and have the courts make the necessary conditions so that the financial institutions can recover their monies, which would include the sale of the properties that are involved.

Now this is, of course, a very distressing and very unfortunate time for any families that are involved in this process, but I think it is important that the necessary steps be taken to assist families that are situations like this. Now the defaulting families may have to look at putting the home on the market to lessen their financial obligations, and we hope that their conditions will change in such a way that would seek out and provide employment opportunities for them.

All the while that this is happening--and this is where Bill 4 comes into being that will provide some protection--is that the original selling family, the vendor family, while living probably fairly comfortably in their own home and finding a way to make ends meet with the obviously changed financial obligations that they have, probably living up to their income maximum potential, get a surprise knock on the door one day, or perhaps they receive a registered letter in the mail, probably coming as a complete surprise to them. When they open that letter or they talk to the person who is knocking on the door, they find that they have a continuing financial obligation under the section of a lot of mortgages, the assumed mortgage provisions, dealing with personal covenant responsibility. This is the area that I believe is the most important part of Bill 4 in that it changes the personal covenant responsibility, something that we on this side of the House have been advocating for some time.

Now, when a family would receive this registered letter or this visit to their door, advising them that they are now responsible for not only the mortgage that they have undertaken for the current home which they are occupying, but also they are responsible for the mortgage payments for the home which they sold perhaps as much as four or five years prior. This, in a sense, is a weight which most families cannot bear. The ceiling comes crashing in on them, perhaps their hearts skip a beat; they are not sure what they are going to do, and they did not even know what their options were. They thought they had unloaded or sold their responsibilities for this home to someone else and that those responsibilities were going to be maintained.

Perhaps, like most families, they are probably swimming in an ocean of bills, perhaps dealing with bills relating to the raising of young families in many cases, in addition to the new mortgage payments which they had taken on when they purchased their new homes, and now they have been told that--in addition to their payments probably being up to their top lip, just barely keeping their heads above water--someone tosses them an anchor and attempts to drag them down financially. So the family that thought they were moving into the new home in good faith and that someone else had assumed the responsibility for their previous mortgage, the vending family now finds that they are responsible for two mortgages and the payment on those two mortgages, instead of just the one.

Now in many cases a family would take the step of contacting the people that were involved in the sale. They would contact the real estate agent, I suppose, but the real estate agent has received their money in most cases and has moved onto other sales, and while they may like to provide some assistance there is, I believe, at least from my knowledge of the industry, no continuing obligation on the part of the real estate agent to the selling party.

The real estate agent may provide some good advice to the family that now finds themselves in the unenviable position of having to make two mortgage payments or be responsible for two mortgage payments. So that vending family would, I assume, contact the lawyer that was involved in the part of the sale to start with to find out just exactly what went wrong with this process and why they are now being chased by the financial institutions for the home in which they thought they had sold.

They are probably shocked to learn, as most people are, as constituents that have come to our constituency office and raised this issue with us in 1992--they did not know they had a continuing responsibility under the personal covenant section of the original mortgage agreement. Had they been made aware of this, they might have been able to deal with it at the time.

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But quite often, as has been explained to me by legal counsel within the city of Winnipeg whom I have consulted to find a way in dealing with this matter some time ago, parties forget to exchange this important piece of information, that there is an ongoing financial obligation on the part of the selling family when they sell their properties under the assumed mortgage provisions.

It is unfortunate that someone would forget to raise this important point and have that discussion take place so that people are making informed decisions when they sell their property. Perhaps they might have chosen another opportunity instead of putting their home on the market through the assumed mortgage provisions. They might have opted to pay out that mortgage by taking out a new mortgage, insisting that the purchasing parties take out a new mortgage on that property.

But as we find in so many cases when there is a rising interest rate on the marketplace, many families find that it is easier to sell their homes when they have a low mortgage interest rate on that property, and it is in fact an inducement to sell the property and quite often encourages many families to look at that as one of the serious or important issues when deciding to make the purchase of that home. If they can assume the mortgage at a rate that is somewhat low, below what the ongoing market interest rate is at that time, it is an encouragement for them to purchase the home with that low mortgage rate under the assumed mortgage provisions.

Now the family that has just found out that they have ongoing responsibility for the mortgage for which they thought they had disposed of is in a turmoil. They go to their lawyer and they talk to their lawyer, and the lawyer says to them, yes, unfortunately you are responsible under the personal covenant section of the mortgage.

They contact the real estate agent. The real estate agent probably throws their hands up in the air and says, yes, I would really like to help you but it appears that you should be contacting your legal counsel on this and that you may have a continuing financial obligation.

Perhaps some of the families that are finding themselves responsible under the personal covenant section of a mortgage agreement would contact the Consumers' Bureau or the Housing department or the Justice department to find out what their ongoing responsibilities are, and anybody who will listen and from which they can seek advice will be the people that they contact.

For a long period of time Manitoba has had no law to protect individuals that have sold or disposed of their properties and allowed the purchasing party to assume the mortgage. In investigating this matter back in 1992 and the beginning of 1993, we found that there was one other jurisdiction in Canada that had such legislation in place and that was the Province of British Columbia.

They had brought in provisions that would allow them the opportunity to ensure that there was some protection on the assumed mortgage provision of the contracts between the parties. We found that in looking at the B.C. legislation, there were difficulties and some hollow provisions in their legislation and did not go far enough in protecting the individuals.

That is why my colleague the member for Radisson (Ms. Cerilli) came forward with legislation which we wholeheartedly supported at the time and continue to support, to try and encourage the government to come forward with their own legislation if they did not want to choose to support the private member's bill at the time, that we would be able to improve on the B.C. legislation and in fact provide a more fair and equitable balance between the needs of the financial institution and the needs of the party that now find themselves responsible under the personal covenant provisions of the mortgage agreement.

In 1992, it was just before Christmastime, and this was the part that was most distressing for myself personally because that is a time when many of us in this Chamber have people coming to our constituency offices with problems, real human problems. Being that it is Christmastime, we like to go that extra distance to try and help the families that are involved with their difficulties. This one particular Christmas in December of '92 where Mr. Dan Dram--and I would like to refer to this legislation as the Dram bill or Dram legislation in that Mr. Dram came to the constituency offices for Radisson in Transcona. My colleague the member for Radisson (Ms. Cerilli) and I share constituency offices. We had Mr. Dram pay us a visit in that December just before Christmas.

Mr. Dram, who had just moved to the constituency of Transcona, or into the community of Transcona I should say, Madam Speaker, came to our office for assistance in dealing with a trust company relating to a mortgage on his previous home. I believe that the home that he had sold was on Home Street in Winnipeg here, and that Mr. Dram and his family some four and a half years ago had sold that home.

Now the purchasing party in this case is a real-life situation that I am drawing to the attention of the members of this House as it relates to the examples that I have put on the record a few moments ago. Mr. Dram and his family had sold the house on Home Street four and a half years ago and the purchasing party had assumed the mortgage, the existing four-year term mortgage on the house from Mr. Dram. In the meantime, the Dram family had purchased a new home in Transcona.

Four and a half years later, Mr. Dram and his family got that call, that notification, that registered letter, that knock on the door, that people that are involved in situations like this would fear. Mr. Dram and his family were advised that the purchaser had defaulted on the mortgage and had in fact declared personal bankruptcy. The trust company had then initiated action against the Dram family on the basis of the outstanding personal covenant agreement that most mortgagors sign when applying for a mortgage.

Now Mr. Dram in, I believe, the unusual step was willing to go so far as taking out a second mortgage on his current home, something that I think would be beyond the financial abilities of most families. But Mr. Dram was willing to go that far to meet his legal requirements for which he told us and related to us that he was not aware of when he originally sold that home.

Mr. Dram, when he was going to take out that second mortgage on the current home, was going to do it in an effort to fulfill his legal obligations, the obligations that he had under the laws of the Province of Manitoba.

Now, I am not sure if the Minister of Natural Resources (Mr. Driedger) has situations like this in his own constituency, but what I am relating to him here and to his colleagues are real-life situations that have occurred and that when we raise this issue with the minister and his colleagues that we are doing it in a way to be constructive.

Now, Madam Speaker, when I came to this Legislative Chamber I recognized that in opposition it was going to be difficult from a real-life perspective to be able to accomplish a lot of the things that I needed and wanted to accomplish on behalf of my constituents. But I see that this piece of legislation, whether it is the legislation introduced by way of the private member's resolution by the member for Radisson (Ms. Cerilli), or it is this Bill 4 which is similar to that private member's bill, will go a long way into resolving some of the serious issues that we have, and in fact will be one of the things that we can point to, or at least I can point to as a member of the opposition, in saying that, yes, we have had some effect on the laws and the lives of the people of the province of Manitoba and have gone a long way to making those lives better.

Whether it be for hundreds of thousands of people in the province or whether for a few families, I still think it is important that we try to make the lives better. That is, I believe, the objective and the purpose for members of this House and one for which I personally subscribe to.

Now getting back to the Dram family, the trust company in addition to pursuing the Drams for the mortgage principal and interest was also attempting to collect payments for all of the outstanding utility bills and other associated charges for which the trust company said that the Dram family was responsible under the personal covenant section.

Now I think it was unfair that the trust company would pursue the family for the utility bills since the family had not resided there. That was the responsibility of the parties that were living in the home. But in fact Mr. Dram had told me personally that he was forced to go from his own home that he was living in in the community of Transcona and go back to the home that he had sold and to take plywood with him and to board up the windows and to take the necessary steps to keep those utility bills down because he did not know whether he was legally responsible to make those payments. Until such time as he got legal counsel on it, he rightly, so I believe, assumed that he was going to be held responsible and liable for those costs as well. The property was secured by a trustee in bankruptcy who unfortunately did not see to it that the home had been taken care of and that the necessary steps had been taken to minimize the costs of continuing to have that home heated, since it was already into the last month of the year, into December of 1992.

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Now, the current legislation in Manitoba allows for any lending institution, unless otherwise agreed to in writing, in the case of an assumed mortgage default to pursue the original holder of the mortgage under the personal covenant agreement that was signed at the time the signing of the original mortgage agreement took place. I am advised that nine out of 10 sellers--and I have done some checking on this, Madam Speaker, when this issue first came forward--are unaware of their continuing personal legal and financial obligations that they have when they sell their properties and transfer responsibility for that mortgage to a new party, and I am told that approximately 50 percent of all lawyers handling the mortgage assumptions for the seller apply for a release of liability for their clients.

(Mr. Marcel Laurendeau, Deputy Speaker, in the Chair)

In other words, that leaves another 50 percent of those people who are selling their properties and transferring the assumed mortgage to the purchasing party without having that action take place. This leaves a large number of the mortgage transfers with a continuing liability for the seller. The only way to release the seller from the liability is at the point of sale when the agreement to purchase is signed. Real estate agents may be reluctant to advise their clients, their customers that such a responsibility continues. Perhaps this in some way could jeopardize the sale or risk the sale. I hope this would not be the case, but it may in some cases happen.

The only province, as I said before, that has the ongoing protection for people who are selling their homes is British Columbia, and they enacted their legislation in 1988, but it was unfortunately not without faults. Under Section 20 of the B.C. legislation, which is somewhat similar, Mr. Deputy Speaker, with Bill 4, The Real Property Amendment Act that we have before us today, the B.C. legislation states that a party assuming the mortgage indemnifies the seller of all costs in case of default. I find it difficult to understand how the defaulting party can be chased for any monies that may be outstanding, due, or owing and payable, but nevertheless this is a provision that B.C. has in their legislation and I believe it is a hollow provision, one that cannot be in many cases or in most cases even gone after.

In this legislation that we have before us here by way of Bill 4, we have had, and I know my colleague the member for Radisson (Ms. Cerilli) has raised this issue in this House and even raised some real-life situations that even involve constituents of the Premier's (Mr. Filmon), where people living in the constituency of Tuxedo were involved in that they had transferred their properties and the purchasing party had assumed the mortgages and that the people then who had sold the home found out that they were responsible. So it is not only the people who are living in the community of Transcona or the constituency of Radisson but also are occurring in the Premier's constituency as well. It crosses all financial earnings and blurs all the lines that are there and affects people from all walks of life.

I believe that Bill 4 will go a long way towards assisting those families and giving them the opportunities to minimize the financial impact on them.

I know, Mr. Deputy Speaker, since this is a debate on the principle of the bill itself, we are not allowed to refer to specific sections, but I know that there are sections within this legislation, within Bill 4, and talking about the principle of this bill, that states that the personal covenants section, as the government has laid out in their legislation here today, will minimize that impact for the families who have sold their homes and for the families who are involved in this in that the continuing financial obligation for those families will be for three months.

Now, I think that is both fair for the families who are selling their home, knowing that they will have responsibility for three months under the personal covenants section, and will also be fair for the financial institutions who originally had loaned that money in the beginning. Both parties will be well served by that and a written demand would be the only way that the financial institution will be able to make changes for the parties which had originally signed the mortgage agreements with them.

So this legislation I believe goes a long way in addressing a problem that has been drawn to the attention of the members of this House and to the government since the Dram case first came before us in 1992. This legislation, the Dan Dram family legislation as I like to refer to it, Mr. Deputy Speaker, will solve one of the more serious financial or continuing obligations that families would have under the personal covenants section, and this legislation will solve that for those families and we hope that we will not see other families in the future who would be affected in this negative way.

Mr. Deputy Speaker, I believe that I am the last speaker on our side of the House here to speak to this legislation. We are prepared to see this legislation go through to committee to allow members of the public to come forward and to comment in any way they choose. I look forward to the committee hearings on this important piece of legislation. Thank you.

Mr. Kevin Lamoureux (Inkster): Mr. Deputy Speaker, just very briefly on Bill 4, the current legislation was in fact introduced in the '30s, from what I understand. The amendments will better attune the act to modern realities. The amendments will allow a person who sells property to obtain a release from obligation of the mortgage and, under certain circumstances, the bill allows for the release of an individual from obligations of a mortgage in two different situations: first, where the financial institution approves the assumption of the mortgage by the buyer of the property; and, second, where the lender does not approve the transfer of the mortgage either because the approval of the lender was not sought or the lender refused to approve the transfer. In these instances, the seller of the property can give written notice that the property has been transferred. The seller will then be released of the liability unless the lender serves written notice demanding payment within 90 days.

Mr. Deputy Speaker, I am sure that there are many consumers who are out there that are pleased to see that we have this legislation today and in fact it is quite apparent that it will be going to committee. I believe that it is something that is long overdue. It has come on the legislative agenda in the form of a private member’s bill in the past. It is good to see after seven and a half years or so the government has finally seen fit to rectify or at least attempt to rectify this problem. With that, we would like to see it go to the committee stage.

Mr. Deputy Speaker: Is the House ready for the question? The question before the House is second reading, Bill 4, The Real Property Amendment Act. Is it the will of the House to adopt the motion? Agreed?

Some Honourable Members: Agreed.

Mr. Deputy Speaker: Agreed and so ordered.

Bill 5--The Education Administration Amendment Act

Mr. Deputy Speaker: On the proposed motion of the honourable Minister of Education and Training (Mrs. McIntosh), Bill 5, The Education Administration Amendment Act; Loi modifiant la Loi sur l'administration scolaire, standing in the name of the honourable member for Swan River.

Ms. Rosann Wowchuk (Swan River): Mr. Deputy Speaker, I would like to take an opportunity to put a few comments about Bill 5 on the record. I want to begin by saying that education is a very important part of our life and very important to the future of this province. This bill makes some changes that do cause some concern.

Just as a bit of background, I want to say that I have been involved in the educational field for a short time as a teacher but more when our children were in school. We were always very involved in education, very supportive of our children, wanting them to have the best possible opportunities but also very willing to work along with the school trustees and along with the teachers to see that we could have the best possible opportunities for not only our children but for all children in rural communities. I think that it is through this kind of co-operation that we can have those opportunities, although there is a great discrepancy in what is available for children in rural Manitoba versus what is available for children in urban centres. To have a good education we must have co-operation between all people involved.

With respect to this bill, Mr. Deputy Speaker, there are three areas. Although they do not appear to be very important, there are three issues that are addressed that could have great consequences. The first one allows for the minister to make regulations concerning the establishment of advisory councils. In that one, we wonder why the minister would want to put regulations in place to establish advisory councils when there are advisory councils that have been in place for many years and are working very well.

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The second regulation--part of the bill allows the minister to make regulations concerning the duties of principals, and the third section of the bill authorizes the suspension of students from schools by superintendents and principals, something that is in place and does happen right now, and we wonder why it is in this bill.

Of course, this is a bill that we saw before us before the election, a bill, however, that has some changes. If we look back to what we saw in the bill previously, in that particular section to deal with suspension there is a great change. In fact, we recall, Mr. Deputy Speaker, under that bill the individual teachers would have been able to suspend students from the classroom and the school, and that particular part of the bill--Bill 3, I believe it was--caused a lot of concern for teachers and for parents. Teachers that I spoke to said that they did not want that responsibility. That responsibility they felt should stay in the hands of principals. Parents were concerned because there would be no continuity; you could have one teacher in a classroom have a different policy than another teacher.

Of course, that was a proposal that this government was making before the election. Before the last election it sounded good to say that they were going to give this responsibility to teachers--[interjection]

The member across the way mentioned the last election, that it was a good election. I have to tell him that I think it was an excellent election, and I was very pleased to win the Swan River constituency and represent them one more time even though the people across the way threw every bit of garbage that they could at me to try to win that seat. They put all kinds of resources in there and they made all kinds of promises like natural gas and a factory in Duck Bay and artificial ice in Camperville. They made all those promises, Mr. Deputy Speaker, but we were able to win it, and I am able to represent them, and I am very proud of that.

I digress a little bit, Mr. Deputy Speaker, and I want to get back to the bill. We were concerned that the government, under their Bill 3, was shifting the responsibility over to the teachers, and this is not responsibility the teachers wanted, this is not the way parents wanted it to be handled. People wanted it to be in the hands of the principal or the vice-principal, and we are very pleased that the government has amended the bill. This bill will have the principal or vice-principal making the decision on suspension, and it will result in continuity in the classrooms and in the schools.

This bill also gives much more responsibilities to the principals, but it makes the principal responsible to the minister in a much greater degree than to the local school board, and that is a concern, that we have elected local school boards who recognize the different demographics across the province. We have seen this government take away responsibility from school boards when they passed the legislation that restricted the amount of taxes the school boards could raise locally. Under this legislation, making the principal accountable to the minister more so than the local school board causes us some concern.

With respect to the advisory councils, I find it difficult to see why the government finds it necessary to put in place regulations as to how advisory councils should be established. Advisory councils have been in place for many, many years and have worked very well. By putting in these regulations, the government does not seem to recognize that there is a great diversity of people across this province, regions, and what may work for an advisory council in one area may not necessarily work in another area. To have regulations restricting these advisory councils I do not think would be positive.

The first time I came into contact with advisory councils, Mr. Deputy Speaker, was in the community of Camperville and in Winnipegosis under the Duck Mountain School Division, and in those communities--yes, very fine communities--communities were concerned about the education of their children, parents were willing to be involved with the schools and work with them, and they did not have regulations put forward by the minister. They were able to do it on their own, and for that reason it does not seem to make sense that there have to be regulations that will form each advisory council across the province. There should be flexibility and we should allow people to work with what is suitable to them.

I am very pleased to see that this legislation does allow for teacher involvement in the advisory council, which the previous bill did not allow, because certainly if you are going to have a good advisory council and a good education system, it has to involve everybody. It has to involve the parents, and in many cases I think that the students should be involved. I am not too sure if they are, but students should be involved. In many cases there are teachers who are parents, but the previous legislation did not allow those people to be part of the advisory council, so if you are going to have a good, co-operative group, you should not restrict who should have the ability to participate on those councils. That was what the government was proposing in the previous legislation, and we are very pleased that they have seen the light of day and are prepared to make those changes.

The other part of the bill is to deal with suspensions, Mr. Deputy Speaker, and in that case, the suspension of students from schools will be by superintendents and principals, and certainly again, that is a much better plan than having each teacher do their own thing. Again, it is amazing that a government can change their minds, but of course, having gone through as many ministers of Education as they have, it is quite understandable that there would be different views.

Of course, when you are coming into an election, you gauge what might sound great before an election, but we have seen another flip-flop from this government. We have another flip-flop here by the government, who promises one thing before the election and then comes forward with another change, but that is not surprising considering what we have seen in other areas where this government has changed their minds. Under this proposal, the school principal is now directly accountable to the minister as well as continuing to be accountable to the school board.

As I said, Mr. Deputy Speaker, education is a very important part of life in this province, and we see some changes being put forward as far as the responsibilities of the school principals, the role of advisory councils, but I think what we have to look at is a few of the issues that have not been addressed by this government with respect to education.

The classroom, the school--

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Mr. Deputy Speaker: Order, please. Could I ask the honourable members wanting to carry on this conversation to do so in the loge so the honourable member for Swan River (Ms. Wowchuk) could be heard.

Ms. Wowchuk: Thank you, Mr. Deputy Speaker.

Mr. Deputy Speaker, the classroom is the focal point for many children. It is in the classroom--the teachers play a very important role for many children. Unfortunately, many children who come from very poor families, who do not have the supports that they need there, many of them rely on their teachers. Many of them rely on teachers to recognize that there is not proper nutrition in their homes, but we have not seen the government of the day address those concerns. In fact, we have had some very serious cutbacks by this government. I just want to outline a few that have had a very negative impact on children.

An Honourable Member: Compared to Ontario, Saskatchewan and B.C.

Ms. Wowchuk: You know, Mr. Deputy Speaker, these people keep referring to Ontario, Saskatchewan and B.C., but they seem to forget that they are the government of Manitoba.

It is Manitoba children who are the poorest of the poor. Our Manitoba children are suffering the most, and they should be ashamed that they are even trying to compare what is happening. They should be addressing the problems here in this province. It is the actions of the government that have hurt the children of rural Manitoba, in particular, and it is rural children that I want to address. When I think about the cuts that we saw to the rural dental program that brought some equity, a program that was delivered through the schools, we see cutbacks.

Mr. Deputy Speaker, I know that we are talking about Bill 5, but I want to refer to the role that parents play in advisory councils, and these are issues that parents in advisory council have addressed. Parents on advisory councils have addressed the concern that has been raised by this government in cutbacks to programs such as the dental program, cutbacks to clinicians who bring services and enhance the quality of education in our schools.

The advisory councils and parents are also concerned at actions this government has taken in restricting school boards and their ability to raise taxes to provide education, concerned that they have taken the ability away from school boards to make decisions to offer the best possible education for our young people.

Of course, they would also be concerned, particularly those people under the public school system, that this government is quite prepared to raise their funding for private schools at the same time that they are cutting programs in the public schools, and that is a disgrace. I am very ashamed that this would be happening in this province.

Mr. Deputy Speaker, school boards work very closely with principals. I want to commend the Swan Valley School Division and the work that they have done to bring opportunities to the young people of our division, particularly in the area of distance education. Swan Valley School Division is one of the most progressive divisions in the province when it comes to distance education. They have had the support of school boards and the school principals have worked very hard to see that. Mr. Bill Schaffer and Cam Mateika have worked very hard. They have had the vision to see the importance of distance education, and they have worked very hard to get that in place to give opportunities for the children of our region.

Unfortunately again, Mr. Deputy Speaker, they have run into difficulties because of decisions made by this government with respect to Manitoba Telephone. The deregulation of the telephone system has made it very difficult for these people to continue to provide those opportunities for the young people of the Swan Valley School Division.

Certainly there are parts of this bill that are positive, particularly in the area where the government has recognized that they made a mistake when they tried to shift the responsibility of suspensions onto the teachers, as they were doing in Bill 3. Now they have changed their mind and put the responsibility back into the hands of the superintendents or vice-principal, where it should be. This brings continuity to the system, and certainly is a move that is positive, but the problem is the fact that--

An Honourable Member: First time I have ever seen a windmill run on water.

Ms. Wowchuk: Considering where that is coming, Mr. Deputy Speaker, it takes one to know one.

The part of the bill that puts more power into the minister's hands rather than into the school board's hands is a problem. Local school boards have been elected, and they should be able to continue in their role to develop discipline policy. It should not fall into the hands of the minister, and that is what this legislation will do. Local people are very aware of the issues, local people are more in tune, and it does not take the involvement of the minister to develop discipline policy.

The other area, as I said, was the advisory councils. Again, there is not a need for the minister to put in regulations and try to have control of the advisory councils. Advisory councils should work along with the minister, along with the school principals, teachers should be involved, always working in the best interest of the students.

Every region is not the same. By bringing in this regulation, you take away the ability for people to adjust to their own local needs, and that is a problem as well.

The other area, as I said, was in the area of the responsibilities of the principals. Under this legislation, the principals are going to be given more responsibilities and more workload on the principal's staff. What is not addressed in this bill, Mr. Deputy Speaker, is how that is going to be paid for. When we see the amount of funding to school divisions cut back and we are seeing the principal required to do more and more, but no resources put in place to address those needs, that will cause some problems. As we see cutbacks in funding, we see, in many cases, principals who were at one time being full-time principal now having to pick up classes, but there are no additional resources put in place to address that, and the responsibility that is shifted onto those staff cannot be fully addressed.

We are very pleased that the government has decided to recognize that Bill 3 was too extreme, and that they have decided to change their mind on this and bring in legislation that is not nearly as dictatorial as the first one was. We would like to see, though, that the government takes steps to treat the people in the public school system more fairly and ensure that there are the resources there for the people in the public school system, the teachers and the principals, who are concerned about the students, have the resources in place to meet the needs of the students, and that they do not shift their attention so much towards the funding of the private schools. That is an unfortunate move that was made by this government, Mr. Deputy Speaker.

Mr. Deputy Speaker, with those few comments, I want to commend the school boards across the province that have always had the concern of students first, even though they have been restricted by actions of this government. I want to commend the school principals and superintendents. As I said, the principals and the superintendents in the division that I have the most contact with are the people in the Swan River division, and certainly they do not need to have their powers extended. They are doing a very good job as it is. If the government would give them the tools to do their job with, give them the necessary staff they need in place, then they would be able to do their job.

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I want to commend also the many parents who give of their time to volunteer in schools and also to work with advisory councils, because it is by working with these councils that parents have a real understanding of how the school system works and they can have input right at the grassroots and have things in the division changed to ensure that their children's needs are met.

With those few comments, I will give the floor to my colleagues because there are other people who want to put comments on the record with regard to this bill. The government has made many changes to this educational bill. Perhaps they will recognize that there are still problems with this bill; and, as we get to committee, we will see that they will--as they amended Bill 3 and introduced Bill 5, we saw changes that they recognized. We hope they will recognize that there are still problems with this and will make the necessary amendments at committee.

Mr. Gregory Dewar (Selkirk): Mr. Deputy Speaker, I move, seconded by the member for Crescentwood (Mr. Sale), that debate be adjourned.

Motion agreed to.

Bill 10--The Development Corporation Amendment Act

Mr. Deputy Speaker: On the proposed motion of the honourable Minister of Industry, Trade and Tourism (Mr. Downey), Bill 10, The Development Corporation Amendment Act; Loi modifiant la Loi sur la Société de développement, standing in the name of the honourable member for Thompson (Mr. Ashton). Stand? Is there leave that this matter remain standing? [agreed]

Mr. Tim Sale (Crescentwood): Mr. Deputy Speaker, I am pleased to rise to address the proposed amendments to the Manitoba Development Corporation, Bill 10.

I would like to, first of all, take a look at the history of the corporation and put in perspective the proposed amendments in terms of the role that this corporation has played in Manitoba's industrial development. Mr. Deputy Speaker, the Manitoba Development Corporation originated more than 25 years ago as an arm's-length corporation of government that was staffed by independent staff and had a board of directors made up of citizens. There was provision originally for a minority of those members to come from civil service, but basically it was a citizen board at arm's length from government appointed to undertake development loans and grants to foster Manitoba's ability to keep and develop its own industrial base.

Mr. Deputy Speaker, the role of the Development Corporation, I would freely admit, has been a checkered one. It has had some great successes in that it preserved for Manitobans the employment at Flyer Industries, for example. It also presided over failures. Nevertheless, there were some very good reasons for the Manitoba Development Corporation Act, Chapter D60 of the continuing consolidation of the Statutes of Manitoba.

Mr. Deputy Speaker, this act is very carefully structured into three parts. Most of the provisions of the act refer to Part I of the act, and I would just make the point that, of the some 45 sections in total, Section 39(3) is the end of Part I, taking up a full 28 pages of a 29-page act. So, clearly, the original intention of the act was to operate under Part I of its mandate.

Under Part I, the board met and considered applications from Manitoba corporations, considered their viability, considered conditions for any loans or grants which the corporation might make, had an active loans committee which met on a regular basis to oversee the loans and to determine whether the conditions and circumstances under which the loans had been made had changed over time and whether any changes were then required in those loans.

Mr. Deputy Speaker, there was provision in the original act for the corporation to meet a minimum of four times a year and to consider at its meetings the entire business of the corporation. Under the sections of the act, Section 12(1) stated that there were to be at least seven and no more than 12 directors, of which one, but not more than one, can be a member of the civil service. There is also, under the early sections of the act, the whole process of the loans committee of this corporation. The loans committee is able to set its own terms of reference subject to the approval of the board, and I quote from the act, to be competent to deal with any matter within the competence of the board, et cetera. There are to be regular loan committee meetings, and the loan committee virtually operated the board in between the quarterly meetings of the board.

Mr. Deputy Speaker, clearly, the intention of the Manitoba Development Corporation Act was to provide a very useful framework within which a citizen board, staffed appropriately by private staff who were not members of the civil service at that time, would provide valuable advice to the corporation, and the corporation, in turn, would provide its advice to its minister, in this case, the Minister of Industry, Trade and Tourism, although, in days gone by, that ministry has taken a wide variety of names.

Clearly, Mr. Deputy Speaker, the purpose of this corporation was to operate outside the normal operations of the departments that it served. It was an arm's-length Crown corporation not unlike the Manitoba Telephone System, the Manitoba Hydro Electric Corporation, the Manitoba Public Insurance Corporation. It was a Crown corporation. So that is the legal context within which, I think, we have to place Bill 10. I would like then to look at Bill 10 and to consider the proposals of the honourable Minister of Industry, Trade and Tourism (Mr. Downey) in his proposed amendments.

First of all, Mr. Deputy Speaker, the spreadsheet for this bill kindly provided by members of the department staff indicated that the corporation now operates primarily under Part II of the act. Part II of the act, as I pointed out, takes up less than one page of the current act. If I could quote from the act, Section 40 is the major section of this particular act for " . . . the corporation concludes that it is feasible to develop an industrial enterprise that is required for the economic development of Manitoba or any region thereof and that private industry is not ready to proceed with the development of such industrial enterprise or that it is deemed advisable to do so the corporation shall, pursuant to the directions given from time to time by the Lieutenant Governor in Council, do all things necessary to establish and carry on or to promote the establishment or carrying on of any such industrial enterprise."

Now, my reading of that clause is that the corporation has the power to essentially cause a new corporation to come into being to carry out some kind of industrial activity. To give an example, if the officers of the Development Corporation deem that it was advisable to carry on the work of Dow Corning in mining silica sand from Black Island, they could establish a corporation for that purpose under Section 40.

There are also powers under Part II of this act in Section 43, Mr. Deputy Speaker. "For the purposes of this Part and subject to the approval of the Lieutenant Governor in Council, the corporation may (a) cause to be incorporated, establish, make loans to and operate corporations; (b) dispose of (i) its interests in any industrial enterprise established under this Part;"--Part II, Mr. Deputy Speaker--or (ii) "the shares, assets or interests in the shares and assets of a corporation established under this Part; and (c) grant options respecting those interests, or shares or assets, as the case may be. . . ."

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Mr. Deputy Speaker, we are told by the department and by the minister, and we are told in the committee considering the annual statements of this corporation the other day, that most of the operations of this corporation now take place under the part of the act to which I just referred in quoting from the Manitoba Development Corporation Act. We are told that in fact none of the things to which I referred are the major activities of this corporation at present. What we were told was that in fact the Manitoba Development Corporation now simply processes and flows loans and grants made under other ministries of government. For example, the Manitoba Industrial Opportunities Program, MIOP, and another series of programs referred to in the statements supplied to the committee in which we discussed the other day the Manitoba Manufacturing Adaptation Program, the Manitoba Industrial Recruitment Initiative, and the Vision Capital Fund.

In other words, Mr. Deputy Speaker, the corporation does not do for the most part what it says under Sections 40, 41, 42 and 43 of Part II that it shall do. It does not, in fact, in Sections 41, 42 or 43 refer to any of the activities of corporation with the exception of Section 41. This is the only section under which I believe the corporation is now operating, and it is to Section 41 that virtually all the amendments that are proposed appear to pertain. Section 41 reads, and I quote: "The Lieutenant Governor in Council may authorize the corporation to act as agent for the government in respect of projects or matters, undertaken or carried out pursuant to an order in council, for the advancement of the industrial or economic development of the province."

Mr. Deputy Speaker, it appears from the annual statements, from the answers given by ministerial staff, and from the minister himself that in fact that is the only section of the act that is continuing to operate. Out of some 29 pages Section 41 is the only section being used by the government, which raises for us the concern about the amendments that have been made. Now, the amendments are quite simple, and they would appear to be routine business amendments for the corporation. Essentially, in a nutshell, the intention of the amendments is to end the citizen board; to make the board entirely a Civil Service Board; to reduce the size of the board sharply, probably to three, but from three to five, according to the amendment; and, in effect, to give those three civil servants all the powers of the board of the Manitoba Development Corporation, that is, all the powers contemplated by the drafters in Section 1, Section 2 and Section 3 of the act, in spite of the fact that the only section that the government contends is now in operation of the entire act is Section 41. There is nothing currently contemplated apparently in Section 40 or Section 43 or anything before Section 39 of the act. We are very concerned--[interjection] I wonder if the Minister of Agriculture (Mr. Enns) has some questions that he would like to ask at some point.

Mr. Deputy Speaker: Order, please. The honourable Minister of Agriculture, on a point of order.

Point of Order

Hon. Harry Enns (Minister of Agriculture): Mr. Deputy Speaker, no, not on a point of order, but accepting of the invitation, I do in fact have a comment to make. It is tradition in this Chamber that in second reading we deal with the broad principles of the bill and not in fact deal with them clause by clause, as the honourable member is. That is usually reserved for committee stage.

Mr. Deputy Speaker: I thank the honourable minister for that information. The honourable member for Crescentwood has been dealing with the principle of the bill. When he has been referring to certain clauses, it is not of the bill. He is referring to the legislation that is already standing before the House.

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Mr. Sale: Mr. Deputy Speaker, our concern is that the intention of this corporation has been now completely eviscerated to the point where it is intended to operate only under Section 40 of its newly amended act. We are deeply concerned that in the process the civil servants are being given responsibility and powers far greater than the intent apparently is of government, the intent being to limit the operations to Section 40. The effect of the amendments is to give a board of civil servants the power, whether or not it is exercised, to operate under any part of the act without restriction. There is, so far as I am aware, nothing in the amendments, nor have I heard the minister speak of anything, which would limit the powers of the civil servants so appointed to the section of the act to which the notes on the bill refer, namely, Section 41.

Our first broad concern in regard to these amendments, Mr. Deputy Speaker, is that the intention of the act is clearly to put in place an arm's-length corporation. The intention of the amendment is to so circumscribe the intention of the act as to bring into question whether the act itself has any continuing validity.

Second level of concern, Mr. Deputy Speaker, is that, in spite of the fact that now the corporation will apparently be operated entirely by civil servants and will be used only to flow funds which have been approved by Order-in-Council from other departments of government, the intention apparently is to allow this corporation to continue to be audited as though it were a separate corporation from government. I have been trying to find some example of an operation of government that is inside the effect of Volume 1 of the Public Accounts, that is inside completely the operation of government departments and yet is not audited by the Provincial Auditor.

We have great concern with putting in place amendments which have the general effect of placing very large amounts of power directly in the hands of civil servants under the direction of a minister without in some cases any requirement for an Order-in-Council and yet having all of those operations not audited by the Provincial Auditor, who is responsible currently for everything else those government departments do but not these particular grants.

In preparing for both this debate and for the committee meeting the other day, Mr. Deputy Speaker, I was referring to the Provincial Auditor's report, and I noticed that when we come to the Department of Industry, Trade and Tourism there is a noticeable gap. She does not audit this corporation, yet according to the minister's own staff the only thing this corporation does is administer programs of government which in the normal course of affairs you would expect she would audit and in fact does audit except for these particular pieces.

We are very concerned with amendments that appear to vastly increase the ability of a government department to hold within itself, secret from the public, the operations of major programs of government, and yet to have those operations audited not by the auditor responsible for everything else that government does in its normal operations but by a privately appointed auditor, in this case, Deloitte & Touche.

We are also concerned, Mr. Deputy Speaker, that there is here a principle of putting beyond the normal reach of the departments various program grants which are being flowed. We see no particular gain in having, for example, the Manitoba industrial adaptation program--I will get the proper name of it in a moment here--the Manufacturing Adaptation Program be placed beyond the reach of the Department of Industry, Trade and Tourism in terms of its audit and operation. Why is it not simply dispersed in the normal way as any department would disperse grant or program loans? I would say to further this concern, what special expertise do the members of the civil service who are in this particular situation, what specific special expertise do they bring to the question of the risk associated with any particular loans?

When I asked in the committee, Mr. Deputy Speaker, how this process took place, the answer I received was not terribly reassuring. It was simply that there was discussion among senior staff and sometimes discussion with the Auditor about the risk associated with some of the loans and accordingly some kind of loss provision was created, in the case of the 1993 statements, a loss provision of $4.7 million out of a total loan portfolio of about $20 million. So in this situation we are also concerned that the effect of these amendments in general terms is to place a good amount of the corporation's activities beyond the normal processes of the Provincial Auditor reviewing government loans and reviewing the status of those loans.

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(Madam Speaker in the Chair)

I would just note, Madam Speaker, that in the audited statements for the corporation, which have been considered and approved now by committee, there are no notes whatsoever about the nature of the doubtful accounts, about the risk assigned to them, about the sector from which they come, absolutely no information that would allow any reader, whether they be a member of the public or a member of the Legislative Assembly, to have any sense of how these doubtful accounts were created. There is no footnote that shows whether the doubtful accounts in previous years were in fact taken off their doubtful status, or whether they were confirmed or whether in fact some of the write-offs came from those doubtful accounts.

So I have some great concern that by placing the corporation beyond the audit of the Provincial Auditor, we are putting at risk some of the monies that Manitobans have loaned to a variety of these corporations and we are not going to get the kind of audit to which I think we are entitled.

A further intention of this amendment is to substantially loosen up the way in which the corporation functions, for example, the proposed amendments allow the corporation to meet only annually instead of quarterly, which was the minimum requirement previously. We see no merit in this kind of an amendment, Madam Speaker. If civil servants are being paid to be in charge of this corporation and to make decisions, they need to be under a much more rigorous duty than simply to meet annually to review the loans and the outstanding obligations of the corporation, so I am very concerned that that is part of the amendment as well. [interjection] You are going to give on that one?

An Honourable Member: I may consider giving on that one.

Mr. Sale: The minister indicates there may be further amendments coming forward, and we would be glad to examine those, Madam Speaker. I would--

Point of Order

Hon. James Downey (Minister of Industry, Trade and Tourism): Madam Speaker, as much as he may want to leave on the record that I am considering further amendments, I did not indicate that, and I would ask the member to correct his statement.

Madam Speaker: The honourable member does not have a point of order. It is clearly a dispute over the facts.

Mr. Sale: Madam Speaker, on the same point of order, which I did not get a chance to speak on before you ruled, the minister clearly said from his seat that he may consider further amendments, and I simply put that on the record.

Madam Speaker, we would be glad to see further amendments on this particular--

Mr. Downey: I just want to correct the record. I did not say from my seat that I would be prepared to present further amendments to the bill.

Madam Speaker: The honourable Minister of Industry, Trade and Tourism does not have a point of order.

I think I indicated that quite clearly previously, and the honourable member for Crescentwood need make no further reference to it because the point of order indeed has been dealt with.

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Mr. Sale: Thank you for that clarification, Madam Speaker. I was simply in my remarks welcoming the minister's apparent intention to place amendments before the House, and I was glad to hear that.

We would be very pleased to consider additional amendments to this bill if indeed they do come forward. The major concern, I would simply point out, is that the intention of the act as framed and as still part of our continuing consolidation of Manitoba is clearly to provide for the operation of a citizen directed arm's length corporation. All of the provisions, Madam Speaker, in this act which the amendment speaks to intend to provide a framework for an arm's length corporation to function. The provisions of the loan section, the provision of the board, the provisions for staff all are clearly intended to put in place an arms's length corporation.

It is very clear that Parts II and III were added to this main act to allow the corporation to do other things in addition to its primary function. We are now at a position, Madam Speaker, where the entire function of the corporation is subsumed in one little section of this act and that is simply to carry out the will of government in regard to existing programs and act as a conduit for government to flow monies to operations which it may wish to support through grants or loans.

There is, in itself, Madam Speaker, nothing wrong with so doing. The problem is that they do not need a corporation. They certainly do not need the expenses of a corporation in order to administer departmental programs which are in themselves granting programs. We see in giving to three civil servants the extraordinary power to oversee all of these grants without reference in many cases to the minister. We see undue secrecy, we see the potential for unaccountability, and the fact that this corporation is to be audited by someone other than the Provincial Auditor we find particularly difficult to accept. The corporation used to have, and in the case of den Oudsten and Flyer showed that it could still have a very valuable function under its original terms of reference.

We are pleased that that corporation survived some very difficult years under both Conservative and New Democratic Party administrations, Madam Speaker. We see that kind of function as still useful in the light of the kind of vision that we have and we believe that honourable members opposite have for Manitoba, where sometimes it is important to take a long-term view, to invest over the long haul, so that employment, industrial development, opportunities for Manitobans can be sustained until they become fully effective, fully efficient and can be carried in the private sector without any form of public subsidy.

So, Madam Speaker, in conclusion, I would like to just underline our concern that these amendments in principle take this corporation a great distance from its intended function. They allow civil servants to have power which I do not believe is consistent with full accountability. They allow departments to flow grants and loans for which the department ought to be responsible and to flow them through a corporation of civil servants whom they can direct as they will in terms of the accountability.

Finally, Madam Speaker, the function of an audit is to make plain to all readers what the functions of the corporation have been during the year. The audits of this corporation are far from plain, and I believe it is not appropriate to hold the audits of major government programs involving many millions of dollars outside the scope and responsibility of the Provincial Auditor whose duty it is to report on all operations of government that are contained within the normal Estimates of government spending through its budgetary processes.

So I indicate that we are opposed to this legislation, and we consider that the government ought to be clearer and more forthright about its intentions to use the various programs of government simply as a conduit into this corporation. They should be operating those programs more transparently and directly. They do not need the Manitoba Development Corporation for the purposes for which they are now using it, Madam Speaker. I am wondering--

Madam Speaker: Order, please. The hour being 4 p.m., when this matter is again before the House, the honourable member for Crescentwood will have 12 minutes remaining. As previously agreed, this bill remains standing in the name of the honourable member for Thompson (Mr. Ashton).

As previously agreed, the hour being 4 p.m., it is time for private members' hour.

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