The Acting Chairperson (Mr. Gerry McAlpine): Order, please. Will the Committee of Supply please come to order. This section of the Committee of Supply will be considering the Estimates of the Department of Finance. Does the honourable Minister of Finance have an opening statement?
Hon. Eric Stefanson (Minister of Finance): I have a very brief opening statement. It is my pleasure to present for your consideration and approval the Estimates of Expenditure of the Department of Finance for the 1997-98 fiscal year. I have this very brief opening statement, after which, obviously, I will be pleased to respond to any questions that members opposite might have.
The department proposes to spend $729.5 million in 1997-98. This represents a decrease of 6.8 percent or $53.1 million under the 1996-97 Estimates. A reduction of $55 million in public debt expenditures has been made possible due to lower borrowing requirements as a result of continuing improvement in the province's fiscal position and, as well, a decrease in Canadian and U.S. interest rates.
Notwithstanding the 1997-98 expenditure reduction, public debt remains the single largest component of the department's spending, representing 71.3 percent of the department's budget and 9.7 percent of the entire provincial budget. The magnitude of this cost continues to underscore the importance to Manitobans of balancing our books and reducing the burden of debt.
Expenditures for Manitoba's 1997-98 tax credit program includes $17.3 million for the Manitoba learning tax credit, $5.3 million more than budgeted last year. Other tax credits have increased $2 million for total tax credit program expenditures of $199.9 million. The department's share of this total expenditure is $182.5 million. Manitoba is the first and only province in Canada to provide a refundable learning tax credit to encourage students to invest in their own education and training.
Declines in expenditures related to the department's other appropriations reflect the department's continuing efforts to improve the efficiency of departmental operations. Some activities planned for 1997-98 include, first, the implementation of an integrated treasury management system to provide more efficient cash, investment and debt management and reporting.
Secondly, continued participation in Service First, Better Methods initiative for the Comptroller and Treasury divisions. The Department of Finance has been a key participant in the Better Methods initiative from its inception.
The overall goal of this initiative is the cost-effective reform and replacement of the government's corporate administrative and management systems. This goal supports government's objective of improved efficiency of operations and better value for expenditures made.
Phase 3, which is the final phase of the Better Methods initiative, is expected to start in July 1997, and the department will continue its active involvement.
Another activity planned for '97-98, is the implementation of a corporate correspondence tracing system for the Comptroller's Division. The department's Legislative Building Information Systems branch currently supports a correspondence tracking system that is implemented in over 40 Legislative Building offices. The current year objective is to implement the system throughout government departments to serve as a corporate standard and allow the efficient electronic exchange of information with departmental staff external to the Legislative Building.
Another initiative, the Treasury Board Secretariat, will continue to provide leadership, direction and co-ordination of the special operating agencies reform initiative. SOAs continue to help governments spend smarter, continuously improving the quality of public services and to test innovative management practices. The designation of the Property Registry as a special operating agency commencing April 1, 1997, brings the complement of SOAs to 16. Another activity is the progress of draft legislation presented to Parliament to amend the Canadian Pension Plan will be monitored through our Federal-Provincial Relations and Research Division.
During the past fiscal year, the department facilitated Manitoba's participation in the Canada Pension Plan review. The federal-provincial and territorial governments, including Manitoba, jointly participated in a process which resulted in a reform package for the plan. Draft legislation has been presented to Parliament, and the department will continue to monitor its progress.
Another activity is the department, in conjunction with the federal and other provincial governments, will continue its involvement in determining federal funding allocation formula related to social programs and in addressing related administrative issues. In addition, the department will continue to monitor all aspects of the equalization program.
Some examples of prior year accomplishments include, first, a new Financial Administration Act which was developed, introduced and passed at the last session of the Legislature. It has come into effect as of April 1, 1997. Another accomplishment is the Manitoba Investment Pool Authority which was introduced and passed at the last session. Another area is an electronic funds transfer system has been implemented and has improved the efficiency and security of transactions related to debt servicing and investment activities. In another area, improvements have been made in the timeliness and content of the Public Accounts. The process that produces the Public Accounts has been re-engineered and allows them to be prepared on a much more timely basis.
Mr. Chairman, with these very brief opening comments, I would be pleased to listen to and to respond to any questions that honourable members may have. Thank you.
The Acting Chairperson (Mr. McAlpine): I thank the honourable minister for those comments. Does the honourable member for the opposition critic have an opening statement?
Mr. Leonard Evans (Brandon East): I thank the minister for those opening remarks and the information he has provided us. I realize that we are debating these Estimates under very special conditions, serious flood conditions that have affected many members of the Assembly. We recognize that because of that situation, many members who normally would be present obviously are not able to be with us for those very special reasons.
There is a great deal to discuss and consider in this Department of Finance. I want to begin by saying that I have always said in the past, for some years now, and will repeat that this is a well-run department. I think, historically, it has played a very key role in government administration in this province and it continues to do so. I give credit to all who are involved in the department for providing these services to the people of Manitoba. We are very well served by the staff in the department, and the minister is fortunate to have very experienced people and dedicated people that he does have.
He makes reference to various initiatives and so on that perhaps we will be discussing as we go along in the Estimates process. One area he mentions is special operating agencies. This seems to be a very novel and relatively unique approach in governmental administration in this country. I might point out, however, that I recall discussions of these four or five years ago at attending meetings of the Auditors across the country, along with the Chairs of the various committees--I am sorry, the Public Accounts committees, where this idea was being put forward. I think the federal government was elaborating on it and saying that this was the way to go, so to speak, in terms of getting more efficiency. Obviously, Manitoba is going down that road and is finding that it is providing the flexibility and therefore, hopefully, improved efficiency that this kind of arrangement provides.
I am not suggesting for a moment that it does not from time to time present problems. I think people in the private sector sometimes might wonder what these special operating agencies are doing vis-a-vis the business that they may be in and how they may be impacted by those governmental agencies.
I think we might be interested in knowing too at some point whether the department, whether the minister believes that he and his department will have to make any special measures for flood victims, whether the flood situation will have a bearing on the delivery of some of his programs or in reverse whether the department can do something to assist flood victims. I am not making any specific suggestions, I am just asking that as a general question.
I also note his reference to CPP. I would be interested in knowing just where are we standing in terms of the flows of revenues into Manitoba because I believe historically the provinces have shared CPP-pooled monies and have been able to use those for investments. I am not quite clear where we go from here under these new procedures that have been agreed to by the federal government and the provinces.
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Certainly there are some very important questions on what is happening to equalization and what is happening to the Canadian health transfer and social services transfer. I gather this situation is very fluid now with the federal election. We find that the Prime Minister has announced that on re-election he is prepared to provide some compensation, some--what would we call it--balancing of the cuts that have been made. I do not think what is being proposed so far will make up for the cuts that we have experienced or may be experiencing, but it will go a bit towards alleviating that very, very serious problem.
I guess everyone would be interested in the balanced budget legislation and how it is working. I would comment though that I was opposed to the balanced budget legislation for the very simple reason that governments do not need legislation to balance budgets. If a government wishes to balance a budget or indeed wishes to have a surplus, it can do so without any legislation, assuming of course that they could find the revenues or make the appropriate expenditure cuts. I mean, that is obvious. Either you increase revenues or you cut expenditures or you do both in order to bring you out of a deficit into a balanced or perhaps a surplus situation. In fact, I think the ideal is not just balance because if you want to get out of debt you have to have surpluses as the minister very well knows. Maybe we should be talking about surplus legislation. At any rate the balanced budget legislation, I still maintain, is not necessary. Governments can do what they will without that legislation.
One thing I do regret about it, it seems that what it does do is hamstring governments in terms of taking special initiatives. I believe I read a comment a week or so ago about the inability that the government might have in coping with a major investment that might be required, such as a Duff's Ditch. You know, could we get a Duff's Ditch today with this balanced budget legislation if this was necessary? This is an important question. I think governments have to be prepared to respond to these challenges.
Of course one does not make decisions on another Duff's Ditch or equivalent or whatever right in the middle of a crisis. I mean this decision was made after the 1950 flood, well after, many years after it, and if you do have to go to referenda on some, what might be considered very vital public works, you might find that the public at certain times are not quite as receptive. If you went to a referendum on it, I do not know whether they would agree to simply allowing the government to increase taxes or whatever it had to do to finance a major investment similar to the nature of Duff's Ditch, the floodway.
I recall that many years ago--and the minister probably remembers too--that it was the responsibility of school divisions to raise funds to build schools in their area. The situation was very serious because in many areas new schools were needed, but those schools required approval often from the citizens, and that meant a referendum. On many, many occasions schools that were badly needed were not built because the people voted against them for all kinds of reasons.
I recall too in the construction of the Keystone Centre in Brandon which has played a very critical role over the years. If there was a referendum on that issue back in, it was 1969, '70, '71, around there, that would have been defeated, and I will tell you why. Because at that time we had some problems with the federal government, again. The federal government, we thought, were going to contribute a third of the cost of the Keystone structure. We were going to pay a third at the provincial level and the City of Brandon was to pay a third.
Indeed, we went ahead in good faith and put some money in early, before all the documents were signed, I guess, because we wanted to get some winter works going in that area at that time. We actually put up some steel in place on good faith that everything would be A-okay, but as it turned out the federal government was not prepared to put up a third of the funding, which meant that the City of Brandon and the Province of Manitoba each had to contribute more. In fact, we had to contribute virtually 50-50. Eventually, the feds came in with a little bit of money, but it was basically a challenge to the city and to the province to fund this.
At any rate, the mayor of Brandon at the time, Bill Wilton, said, we do not need a huge investment of this kind in Brandon. The Keystone, I might add, has well over 5,000 seats. The original Keystone that was built had over 5,000 seats, and I can still remember him making statements on the front page of the Brandon Sun: The city does not need this; we will do our own thing; we are not going to put up this extra money that is required; we can have a 2,000-seat arena; that would be quite adequate for our purposes.
At that time, this was a major municipal election, and we had the ward system for the first time; 10 councillors, 10 wards. Bill Wilton had his committee of concerned citizens or whatever they were called, and that was their big platform--vote for us and we will not put any more money into an arena of that kind. They swept into office. Every one of the councillors, every one of his team won their wards. Ten wards were Bill Wilton's team.
So I am just saying that is an indication. It was not a referendum, but if you had a referendum on it, that would not have been approved, but now people look back and say, hey, that is a great thing and it is. It has been and it is continuing to be.
So this is the problem with referenda, and I say with the balanced budget legislation you could run into similar cases where perhaps there should be certain investments made. One has to have long-term vision. One has to have a comprehensive view of things, but the citizens of the day, at that time, may not see fit to approve them.
Incidentally, a week after the election, Bill Wilton wanted to know where to sign, and when I had the privilege of announcing it in this House, I remember Gordon Johnson, the then Liberal member for Portage la Prairie got up and said, when can we have one of these for Portage?
Fortunately, over the years, and I guess this happened in the Roblin government which brought in--maybe the Minister of Agriculture, the member for Lakeside (Mr. Enns), will remember. I believe it brought in the legislation to set up the Public Schools Finance Board, and that was a great, progressive move, and I congratulate him and his government of that time because it removed that burden in a sense, and no longer do you need a referendum. The Public Schools Finance Board did the research and decided on the demographics and so on, whether a new facility was needed, and it has been that way ever since, and I think that is a far better way of doing it.
So we have those concerns with the balanced budget legislation. Having said that, Mr. Chairman, I guess we can proceed as we usually do and ask detailed questions of the department. I do not mind standing each time. I notice the minister stood, but I notice in other committees they do not necessarily stand. We just sit and talk which we have to do in the committee room, of course. We do not stand there, so whichever way the minister likes. I do not mind the exercise, but I am quite happy just to sit down and ask questions if that is agreeable.
The Acting Chairperson (Mr. McAlpine): I thank the honourable member for those comments. I would also remind the members of the committee that the debate on the Minister's Salary, item 1.(a), is deferred until all items of the Estimates of this department have passed. At this time, I would invite the minister's staff to take their places in the Chamber.
I would invite the honourable Minister of Finance to introduce his staff present in the Chamber this afternoon.
Mr. Stefanson: Mr. Chairman, joining me at this time is the Deputy Minister of Finance, Mr. Pat Gannon; the assistant deputy minister responsible for the Treasury Division, Mr. Neil Benditt; and our director of Management Services, Mr. Erroll Kavanagh. I am pleased to have them with us and look forward to answering any questions.
Mr. Leonard Evans: I seek the Chair's guidance. Precisely, what line are we on? Are we on line under 7.1.(b) Executive Support?
The Acting Chairperson (Mr. McAlpine): Page 57, item 7.1 (b)(1) Salaries and Employee Benefits $332,600.
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Mr. Leonard Evans: I wonder if the minister can advise whether there has been any change in the Executive Support in terms of organization, for instance, or whether there is any change in the type of personnel that you have in your Executive Support.
Mr. Stefanson: It is always a challenge which documents to be working off, and I know that, in terms of the Estimates that we run through, this is our guide for you, Mr. Chairman, in terms of which line we are on, but the detailed Supplementary Information, page 25, lists the specifics of this particular line item. The member for Brandon East (Mr. Leonard Evans) has probably noted that the numbers of staffing positions are shown at seven for both budget years and the overall expenditures in this area are estimated to be $401,800 for '97-98 compared to $406,900 last year, so basically the same functions, the same responsibilities and so on.
Mr. Leonard Evans: The Managerial support would be the deputy minister, would it, or is that beyond the deputy minister's position?
Mr. Stefanson: That is correct, Mr. Chairman. The line that shows as Managerial, the one position is the deputy minister position.
Mr. Leonard Evans: Well, the two SYs Professional/Technical, what kind of professional assistance are we talking about here?
Mr. Stefanson: The glossary, on page 107, gives a description of the functional aspects of those positions. Specifically, the two positions that the member is asking about are the executive assistant position reporting to the minister and the special assistant position reporting to the minister, consistent with again past practices and what would be the case in most departments.
Mr. Leonard Evans: So $82,300 is for two SYs, one is an SA and one is an EA?
Mr. Stefanson: That is correct, Mr. Chairman. It would be the salaries for the executive assistant and special assistant position.
Mr. Leonard Evans: Could the minister break that down? What are we paying EAs these days and SAs?
Mr. Stefanson: In my case, those salaries are almost split equally, close to approximately $40,000 each, but I will undertake to provide for the member the salary range classifications for those positions within government. I think you will probably find that more interesting in terms of the comparison and useful, so I will undertake to provide the range for both of those types of positions. In my particular office, that split is almost 50-50, with the SA being possibly slightly higher, the special assistant position.
Mr. Leonard Evans: What about the EA or support for the deputy minister? Does the deputy minister now have an executive assistant?
Mr. Stefanson: There is no change in the deputy minister's support. There is no EA position for the Deputy Minister of Finance. There is a secretarial position and an administrative officer position in that office, and, of course, the other two positions are in the minister's office.
Mr. Leonard Evans: It sounds like it is lean and mean. I recall as a former minister--mind you of a very large department, but experience in different departments that quite often the deputy did have an executive assistant, but at any rate that is fine.
Under Other Expenditures, Transportation, does that cover the transportation costs of the minister, the deputy and everyone and anyone who is under this category of Executive Support?
Mr. Stefanson: That is basically correct. It covers all travel related to a minister, deputy minister, other than if the travel is related to servicing or issues around public debt.
Mr. Leonard Evans: Why would it not include the latter that the minister referred to?
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Mr. Stefanson: Mr. Chairman, it has been a long-standing practice in Manitoba, going back prior to our time in government, that when it comes to the costs of servicing public debt, they are all inclusive. They include accounting, legal, any commissions, any underwriter fees, any travel relating to that public-debt issue and so on. So that has been an accounting practice that has been in place the entire time under our government, and certainly I would hazard a guess all of the time that the member for Brandon East was a part of government. It goes back many years. When you are looking at the public debt costs, it includes the direct interest cost plus the cost related to ultimately servicing that debt, as I have said, the most common ones being any commissions on the debt and accounting and legal being the most significant costs related to public debt.
Mr. Leonard Evans: I guess it is a matter of how you want to account for expenditures, and I am not disputing it. I just had not thought of it as a separate item in that respect.
Under Transportation, would that include all the minister's travel and deputy minister's travel? For instance, all your air services?
Mr. Stefanson: Yes, it would; it is exactly the same. That Transportation line of $30,600 covers all of the travel related to the minister and deputy minister other than travel directly related to public debt, as I have already mentioned.
Mr. Leonard Evans: Could the minister tell the committee what kind of travelling is the minister, and perhaps the deputy minister, doing now? I realize there are certain critical trips that have to be taken regarding borrowing. It is not unusual for Ministers of Finance and the deputy and perhaps one or two others to go to places, such as New York or London or Tokyo or whatever, but I am just wondering what sort of travelling is anticipated in this coming year that you have provided for.
Mr. Stefanson: Mr. Chairman, this component here would include, in the case of the minister and the deputy minister, mostly travel costs relating to attending ministerial meetings. As the member knows, the ministers of Finance across Canada get together usually at least a couple of times a year and, on occasion, deputies get together as well. I have had occasion and the opportunity to participate in First Ministers' meetings on a national basis sometimes because of the areas that are being dealt with by First Ministers. I have also had occasion to attend at western Premiers' meetings because of the agenda items. So, depending on agendas that unfold in those forums, there might be some travel related to my participation in those forums.
When it comes to our borrowing, we normally try to go to Toronto once a year very shortly after our budget. We have already done that this year, where we go and we meet with the bond rating agencies that are headquartered in Toronto, which are the two Canadian bond rating agencies, Dominion Bond Rating Service and Canadian Bond Rating Services. Standard and Poor's are now functioning primarily out of Toronto in terms of their Canadian clients. So we go and we meet with the bond rating agencies. We also then take the opportunity to meet with the investment dealers to talk about Manitoba's financial position. Usually the investment dealers will help co-ordinate some gatherings to talk to actual investors, people who invest in Manitoba bonds, so we can tell them about our financial position and our economy and so on. So we always try to go to Toronto once a year at least and very shortly after the budget.
We have not been going to New York annually. I would suggest we have probably been going about every second year lately. We did not go last year so at this point in time we are intending to go to New York because that is where Moody's still functions. Out of Moody's is the other large bond rating agency, so we would certainly meet with Moody's. Again, we would meet with our investment dealers who represent us as agents in the U.S. market. We also meet with any investors that they could pull together that invest in Manitoba bonds. So that will also be a trip that we will most likely be doing this year.
We have continued to borrow occasionally in the Japanese market, as the member knows. In fact, we have been in the Japanese market each of the last few years. I will remind the member when we do borrow in the Japanese market, we always swap that borrowing back either to Canadian exposure or U.S. exposure, depending on our needs at that particular point in time. Again, we have sort of looked at, depending on when we are doing an issue in Japan or what our financial needs are, how often we go there. So that, again, traditionally has been on average probably every couple of years. Beyond that, it would be on an as-required basis. If we were doing an issue in the Euro-Canadian market out of London, there might be a reason to have to go to that market, but that would be more usually on an as-required basis depending on how often we are going into that market.
So I guess these other international markets, we are not necessarily into them every year, but we certainly continue to utilize them no more than every couple of years or few years because we do think it is important to continue to maintain access to these various markets that served us well in the past and we think it will serve us well in the future. But at the end of the day I always remind the member that wherever we are borrowing, we always convert our exposure back to either Canadian or U.S. currency. We have no debt in any currency today other than Canadian or U.S. currency that is serviced in any currency other than Canadian or U.S. currency.
Mr. Leonard Evans: Does this include the cost of transportation around Manitoba? In some instances, I know the minister has been to various regional centres to discuss the budget forthcoming, to discuss some of the problems facing the province, the financial problems, and I know there is Manitoba Government Air, like jets available to the minister. Is that sort of cost in here as well, or is that elsewhere because it is a government Manitoba aircraft?
Mr. Stefanson: Mr. Chairman, a good portion of it is in here. There might be an occasion sometimes to do it out of a different department or area, but certainly this would represent a significant amount of the travel related to the prebudget consultation that takes place throughout Manitoba.
Mr. Leonard Evans: In other words, that department--I do not know which it is now--that runs the Government Air Services bills the department for that service, and therefore it would be paid for out of this particular appropriation.
Mr. Stefanson: That is absolutely correct. The government services related to air service and so on are billed to all of the user departments. That would certainly be the case with us utilizing any of those services for prebudget consultations throughout Manitoba.
Mr. Leonard Evans: Perhaps we could pass (b) Executive Support (1) Salaries and Employee Benefits and (2) Other Expenditures, and then go on to Management Services (c), Mr. Chairman.
The Acting Chairperson (Mr. McAlpine): Item 7.1.(b) Executive Support (1) Salaries and Employee Benefits $332,600--pass; (2) Other Expenditures $69,200--pass.
Item 7.1.(c) Management Services (1) Salaries and Employee Benefits.
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Mr. Leonard Evans: Under Management Services, one of the major objectives is to provide departmental comptrollership framework to ensure appropriate management and accountability of the department's resources.
Has there been any change in the approach in this respect? Are there any developments in departmental accounting or financial management activities from the previous year?
Mr. Stefanson: I think the member for Brandon East recalls that this is the department comptrollership function, as opposed to later on we will get into where Finance is providing various services government-wide, so in terms of the department comptrollership function there really are no changes in terms of how we are functioning.
Mr. Leonard Evans: There are no changes anticipated in this forthcoming fiscal year?
Mr. Stefanson: Mr. Chairman, I think I would rather get into that when I get into our comptrollership function government-wide, because I think that will also potentially have some impact on Finance and some of our services. I discussed with the member for Brandon East before my view that we need to be updating some aspects of our system in terms of our financial reporting. I think that, when we get into the comptrollership section of our department, that will be an opportune time to discuss what we are doing government-wide and also relate it back to some of the things we are looking to do in Finance.
Mr. Leonard Evans: It may be rather mundane, but it is pretty basic. I am just wondering if the minister could tell the committee just where the department is housed physically now. Obviously, there are a few key people in the building, but where is Finance physically located in the province now?
Mr. Stefanson: Mr. Chairman, the vast majority are still in the Norquay Building. There are a few functional areas that are outside of the Norquay Building, but certainly the vast majority of the department is in that building. Our Federal-Provincial Division and Treasury Board are in the ManuLife Building just adjacent to the grounds here and so on, but those would be the two main locations with maybe the odd other functional area elsewhere, but that would literally be the vast majority of the department in those two locations, with the majority of it being in the Norquay Building.
Mr. Leonard Evans: Can the minister advise what personnel are outside the city of Winnipeg and where they may be?
Mr. Stefanson: I believe the only offices we have outside of Winnipeg relate to Taxation. Again, when we have that department in here with us, I will confirm the locations. But to the best of my knowledge they have a presence certainly in Brandon, and I believe there are officers in, if I recall correctly, Emerson, Gimli and potentially Beausejour. When we have Taxation here, I am sure we can confirm that.
Mr. Leonard Evans: Among the activities of Management Services is the challenge or function to handle The Freedom of Information Act applications. Can the minister tell us whether he has had many requests under Freedom of Information and what kind of requests do they normally get in this area?
(Mr. Edward Helwer, Acting Chairperson, in the Chair)
Mr. Stefanson: Mr. Chairman, to give the member a sense of the magnitude or number, which was his first question, I have got information for the calendar year 1996 so I think that will give him a perspective. During the calendar year we had 24 requests. We actually had carried forward from '95 three, that brings us up to 27. Out of those, we are carrying one forward to 1997. So that brought us down to dealing with 26 in 1996; two of those were withdrawn to bring us down to 24 that were actually, ultimately processed and have been dealt with in 1996.
They primarily come from political parties or the media, the vast majority, not surprisingly, and they usually relate to various categories of expenditures. They had some requests, I think, around the issue of the payroll in terms of Workforce 2000 and some of those types of things. The source is usually political parties or media, occasionally something outside of them, but that is the vast majority of them. They usually focused on some aspect of expenditures.
Mr. Leonard Evans: Can the minister advise what percentage or what number are refused, for whatever reason, or is he telling us all of the applications--he said they had been dealt with, but does that mean the department has acceded to provide the information or is it refusing some of those?
Mr. Stefanson: Mr. Chairman, so of those 24 that were processed--and that is the word I used, that they were processed--16 of them were either granted in total or partly granted, seven of them were denied and one, the records just did not exist. So that makes a total of 24. Out of these seven that were denied, access was denied primarily on the basis of personal privacy--that was four instances--personal privacy was the issue, a third-party commercial information was one, and cabinet confidences were two, so that makes the seven, and all of those are mandatory exemptions under the legislation.
Mr. Leonard Evans: The matter of third-party confidentiality is a very interesting one. I do not know whether the minister still has in law, or legally, any responsibility for McKenzie Seeds. I realize the Minister of Labour signed the agreement and so on, but I also recall that some time back, for whatever reason, the Minister of Finance always seemed to have some responsibility on the financial side.
So I guess I would ask the minister, first of all, has he any connection with the financial arrangements with McKenzie Seeds? McKenzie Seeds was sold to Regal Greetings and Gifts a year and a half or more ago, and the government still holds a fair amount of equity in it. Is it about $4 million? I am not sure. The reason I am not sure is because we have not been able to see--and this is what I am getting to--the sale agreement that has been signed and which I have been asking for for some time. So I am just asking if the minister has any responsibility in this area either as the Minister of Finance or as a member of the Treasury Board.
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Mr. Stefanson: Mr. Chairman, I think that I would like the member to certainly bring that question forward again when I either have the Comptroller's Division or the Treasury Board staff here with us, if that is okay with him. I am certainly prepared to provide whatever information I can and what relationship there is to Finance, but if we can do it under that section, that would be preferable.
Mr. Leonard Evans: If I could just make a comment on this matter of third-party confidentiality which the minister referred to as a reason for denying requests. In this matter, it seems to me that the previous Minister of Finance, Mr. Clayton Manness, made available to the Assembly a copy of the sale agreement on the sale of Manitoba Data Services with the private company--was it STM? They have changed the name a couple of times, I cannot keep up with it. [interjection] ISM, yes. That was made available to us, quite a thick document which we appreciated, but for whatever reason, we are being denied the same type of a document, the sale agreement that was signed almost two years ago or more with the company. It is important because there are certain sales conditions that are set down in it and, rather, there is some important information on the specifics of the government's continuing investment in that company. From my point of view, it is in the public interest. I do not see why third-party confidentiality can be used in that case when it is not used in a much bigger sale, a far bigger sale of MDS, a far larger operation in terms of employees and the cost and the impact actually on the province.
Mr. Stefanson: I guess, we are sort of melding two issues here. We started on this because we are under the Freedom of Information section. My understanding is the general rule of the requests related to, let us say, McKenzie Seeds, or any other agreement entered into with a third party, is that a request must be denied, unless you get the agreement of the third party to release the entire document, or sometimes there is an opportunity to release parts of a document. But each agreement, as we both know, every agreement can be very different in terms of what elements are in the agreement, what information is provided in the agreement. You often get into issues that can affect competitiveness and trade secrets and a whole range of things, so each one really does have to be assessed on its own individual merit or situation, but that is the process now.
So we were under this section, that is how the member for Brandon East started asking. He then started asking about the relationship between Finance and McKenzie Seeds. I guess, sort of splitting the two issues, I am certainly prepared to talk about Freedom of Information, and when we get to the comptrollership or the Treasury Board section, we can talk about the relationship between Finance and McKenzie Seeds.
Mr. Leonard Evans: He indicated, Mr. Chairman, we do have the precedent of the agreement being tabled by the former Minister of Finance when MDS was sold, and that is a competitive area as well and, as I said, a much bigger operation and more money involved and more staff involved. For the life of me, I cannot see the logic of one being denied and the other being agreed to. I appreciate circumstances could be different, I do not know though in principle how they can be different. At any rate we can ask. I would be interested, under Comptroller then, if the minister would provide that information on the relationship with McKenzie Seeds financing.
Under the Human Resource Services, I find it rather surprising that your Human Resource Services applies to not only the Department of Finance, the Treasury Board Secretariat but also Government Services and Industry, Trade and Tourism. I am just wondering this is with sufficient Human Resource Management and then with Occupational Health and Safety Programs. Does this mean your staff in Human Resource actually is the personnel division, in effect, or section for these other departments?
Mr. Stefanson: Mr. Chairman, this is within our sectoral area, sectoral approach to sharing resources. I think there are some economies of scale and some efficiencies by these departments co-operating. We, I am told, have four personnel officers directly attached to the Department of Finance, but this approach pulls together these departments and functions on a co-ordinated basis. Everything I am told is it is working very well and serving us very well, so the key here is just co-operation amongst departments in terms of dealing with human resource issues.
Mr. Leonard Evans: In effect, is the minister saying then that, let us say, the Department of Industry, Trade and Tourism does not really have a personnel section or office, that it is all handled, the hiring of new employees, transfers, promotions and all that, is done by this staff in your department? Is that what the minister is telling us?
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Mr. Stefanson: You will find the exact same approach in each of these departments. As I said in our case, the Department of Finance, we have four personnel directors assigned to us that are reflected in our Estimates. Industry, Trade and Tourism will have whatever their staffing component is assigned to their department. This entire sectoral group is housed together at the Woodsworth Building, so they function out of one location.
The director, I believe, the overall director is assigned through Government Services. So they physically are located together, operate as a cohesive unit, but then the various components are charged out to the affected departments. So we are charged for our four; I, T and T is charged and so on. So you will see, if you were to look at the Estimates of these departments, you would see a similar category, similar description, and they would be basically charged for the personnel directors assigned directly to that department.
Mr. Leonard Evans: This may be a very excellent--and I am not trying to be critical of it at all. I was not aware of this, but does this mean that the minister and his senior staff have some say, therefore, over the hiring of the personnel in say, the Department of Industry, Trade, and Tourism, or are you just providing the service? I mean, there are all kinds of detailed decisions that have to be made on transfers, promotions and so on. You get the data and you make these sorts of decisions. Often it is your Human Resource people that are directly involved in making these decisions.
Mr. Stefanson: The short answer is no, the Department of Finance has no input into personnel decisions in these other departments. The Human Resource sector, as I have already said, is a co-ordinating body. To give an example, within the Department of Finance, if they were looking to fill a position, the Human Resource element that is responsible for Finance would establish a selection committee. It might include somebody from the Civil Service Commission. They would make the final decision on the successful candidates in various positions within Finance. A similar way of functioning would exist in each of the departments. It is not that Finance is having any input into personnel decisions in I, T and T, Government Services or whatever. It is really just the efficiency of pulling these aspects together, housing them in one location, sharing whatever common information they can and working co-operatively. That just creates more efficiency within that whole field.
Mr. Leonard Evans: This may be a great idea, and I am not really trying to be critical of it, actually, but has the minister some idea or does the staff have some idea of cost savings that have occurred? I am not sure when this procedure was established. Maybe you can tell me. When did you establish this method, and has there been any cost savings from this?
Mr. Stefanson: There have been cost savings as a result of this approach. Some examples of what would help to create cost savings are the need for only one director as opposed to an individual director for each of these departments, the pulling together in one location, probably some savings in terms of the physical space required and so on, so there have been some cost savings. I think I might be able to be more specific for the member when we get to, again, our Comptroller's Division, which provides the payroll services for government and has a direct relationship to this on a more government-wide basis and this sector.
So there have been savings. In terms of providing him a number, I will undertake to see if I can give him either a specific number or a range of what those savings have been.
Mr. Leonard Evans: Will the minister then be able to tell us if there has been a reduction overall then in the number of personnel required for this service? I guess, if you are talking about savings, it means, eventually, reduction of staff.
Mr. Stefanson: I believe at the time that this was originally implemented, yes, there were some savings as a result of overall staff requirements, and I will undertake to provide that information at the same time as I provide the other information.
Mr. Leonard Evans: When was this established, this organization?
Mr. Stefanson: I would rather get a specific date than--I believe it was in around the fiscal year '94-95, but I will get a specific date for the member.
Mr. Leonard Evans: I guess the minister is saying that for about three years this organization has been functioning. That is fine.
Just proceeding, one of the functions of this area is to co-ordinate and integrate comprehensive and Affirmative Action programs. Can the administer advise us what is happening in terms of Affirmative Action with regard to any objectives the minister might have in assisting people. Is this an active program at the moment, or has it just been in a holding pattern?
Mr. Stefanson: The whole issue of affirmative action certainly continues to be an important part of our hiring process, an objective within our hiring process, so it continues to be, as I say, an important part of it. If the member has any specific questions, I can certainly undertake to provide specific information, but I do want to assure him that it does continue to be a key part of the hiring process.
Mr. Leonard Evans: Then to be more specific, can the minister provide us with data on how many people were hired under the Affirmative Action program in the last fiscal year and by category, if you have such categories? I am not sure what your Affirmative Action categories are, whether there are disabilities, or male versus female, or ethnic groups. I do not know, but for whatever categories you have.
Mr. Stefanson: I believe that information is available, and I do not have it right here with me at this moment, but I will undertake to provide that to the member.
Mr. Leonard Evans: Just off hand, would the minister have any idea, like what percentage of the total departmental staff would be affected by the Affirmative Action program or would he not have that at his fingertips?
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Mr. Stefanson: I think I would rather provide the member with that information, along with the rest that he has requested.
Mr. Leonard Evans: On Occupational Health and Safety programs, can the minister outline what are the major problems in that area for his department? I do not think it is a department of great hazard in terms of being run over by machines or whatever, but there is obviously some area of concern. I wonder if you could outline just what are the problems in this area of Occupational Health and Safety.
Mr. Stefanson: The member is right. This is not an area that normally is of great concern for a department like Finance, but there is a committee within this area that meets occasionally to assess various issues. An example of an issue might well be issues of air ventilation and that type of thing, air circulation, air quality and so on.
Separate from the committee, some other issues that come up occasionally, today, issues like ergonomic chairs for people who are spending a lot of time at a desk or in a chair. That is an issue that has come up occasionally--dealing with one's back and so on. So there are some issues, but the member from Brandon East (Mr. Leonard Evans) is right, that this is not an area that requires anywhere near the kind of attention that many other departments have in this area.
Mr. Leonard Evans: I gather there are no major outstanding problems in Occupational Health and Safety in the department. In so many words, this is what the minister is saying.
Mr. Stefanson: That is absolutely correct.
Mr. Leonard Evans: The other area of responsibility here relates to training of staff, and I am just wondering, what kind of training programs is the department involved in at the present time for its staff?
Mr. Stefanson: I guess the area that we use most of all is the OSD division; Organizational and Staff Development, is what OSD stands for. They offer various courses and opportunities for employees government-wide to participate in, whether it is related to computer utilization or whatever functional area it might be. So we certainly access those in terms of staff training.
We also utilize, occasionally, other conferences or seminars. I know, going back to the Estimates a year ago when we talked about the issue of the Quebec shuffle, there were questions whether or not some of our Taxation staff had the opportunity to participate in various tax courses or tax courses put on by organizations like the Canadian Institute of Chartered Accountants or the Canadian Tax Foundation or so on, so occasionally we have employees participate in some of those as well. Those kinds of things would be the majority of training opportunities and initiatives within our department.
Mr. Leonard Evans: I thank the minister for that information. I would gather that the majority of these miscellaneous courses are courses that do not take a great deal of time, and that the employee may use the evening or take one or two hours during the day for them, as opposed to sort of major training courses. So I guess that is what I am going to ask you next. Are there any major training efforts for personnel in the department for whatever special reason there may be?
Mr. Stefanson: If I understand the question specifically, the member is right that the vast majority are courses of that nature where it might be for a day or an evening or they are not long-term training initiatives; they are shorter-term courses and training. We certainly encourage, if it obviously meets government need, individuals sometimes going back for additional training or education, and we have done that on occasion in the past. I am told we do not currently have anybody in that kind of a program right now, but we are always assessing our situations, and obviously if employees are coming forward indicating that they can add value to the organization by getting a certain type of education or training, it is something that we always look at and certainly encourage. So I am told we do not currently have anybody in the longer-term training or education initiative now. I believe Finance has done some of that in the past. So the short answer is, the vast majority today are in the shorter-term training programs.
Mr. Leonard Evans: Just going onto another topic, Workforce Adjustment Program. Can the minister update us on this program, the extent to which it impacts on the department? How many employees are we talking about, and what sort of success do you have for re-employment?
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Mr. Stefanson: To give the member a sense of the impact on our department for '97-98 of the Workforce Adjustment Program, we had four staff years impacted, and actually as a result, four employees impacted through Workforce Adjustment. Of those four employees, two of them were redeployed prior to layoff. The other two employees were issued layoff notices, but of those two employees, one of them is currently on sick leave and is applying for long-term disability, the other one will be given priority consideration for opportunities within government. So that is the impact within the Department of Finance.
Mr. Leonard Evans: I gather the minister is satisfied with this particular program as it impacts on the department.
Mr. Stefanson: Mr. Chairman, yes, I am satisfied how it has worked in the Department of Finance, as I am government-wide. I know we are just talking Department of Finance, but a combination of the VSIP programs we have offered, the Voluntary Separation Incentive Program, the redeployment initiatives that we have utilized within government, I think have been a very fair and balanced way to deal with adjustments in terms of staffing levels. So it has served our department well, and I would suggest from my perspective, it has served government, in total, quite well.
Mr. Leonard Evans: So in talking about staffing, can the minister advise, of his total staff complement--maybe the numbers are here somewhere, but I am not sure where--how many are in term positions as opposed to regular or permanent positions?
Mr. Stefanson: The total staff years in the department is 417. I am told the number of term positions are only a small portion of those, but I do not have the exact number here right now, and I will certainly provide that to the member. But the vast majority are not term positions.
Mr. Leonard Evans: I know, from past experience, I guess it is the MGEU gets very uptight when they find a lot of term positions that are ongoing term positions, that really, in many respects, may be classified as permanent positions because of the nature of the work involved.
However, what about vacancies? Does the department have many vacancies, or does it have any special policy on vacancies? From time to time governments have tried to cut back on services by deliberately not hiring and raising the vacancy rate. I was wondering if the minister could comment on his department.
Mr. Stefanson: Mr. Chairman, I am told our vacancy rate in the Department of Finance is somewhere between about 4 to 5 percent. I think, government in total, we have an ongoing turnover in employees, a fairly significant turnover with the number of employees that we have. So it is certainly common to have a vacancy rate of some percentage. We obviously fill positions that we absolutely require, but also proper management of vacancy rates can be a way of helping to at least control your expenditures, so we view it from both of those perspectives. If we require positions, we certainly move quickly to fill them, but if we can manage our vacancy rate, still provide the services to the public and thereby keep our expenditures in control, we do that as well. So our rate is today running between 4 and 5 percent.
Mr. Leonard Evans: I would imagine that is more or less in line with other departments, or maybe is even lower, I do not know, but maybe the minister could comment on that.
Also, he mentioned about turnover. I am rather surprised at that. In this day and age people seek good jobs, and when they get them they stick with them. I am just assuming Finance has a lot of good jobs, and people would not want to necessarily be leaving them very easily. So I am surprised when he talks about a fairly high degree of turnover. I do not want to put words in his mouth, but I got the impression that there was a fair turnover.
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Mr. Stefanson: I think, as the member for Brandon East (Mr. Leonard Evans) knows, turnovers are created for a whole range of reasons. Demographics, certainly, has one role to play in terms of the age of employees, the age of our population. Obviously, people move within government, move to other opportunities, create vacancies if other opportunities open up in other departments. Of course, as the member for Brandon East knows, Manitoba's economy these days is performing very well with the number of job opportunities that exist in other parts of the economy, and we do have people occasionally that decide to leave government to pursue other initiatives in the private sector, go into business on their own, or whatever the case might be. Also, family situations sometimes have an impact, if one member of a family is transferred to another location, and those kinds of things. So vacancies can be created for a whole range of reasons, and just the nature of being an employer, and being a large employer, is that you are going to have ongoing vacancies.
Just before I finish my comments, I want to introduce Debra Woodgate, the associate deputy secretary to Treasury Board, who has joined us as well. I welcome Debra to our discussions.
Mr. Leonard Evans: Well, just the last question, has there been much change in the turnover? Has the minister noticed a quicker turnover in the past year, as opposed to the year before or the year before that, or is it pretty well constant?
Mr. Stefanson: The short answer would be that it is fairly constant, and the member in his previous question sort of asked if Finance compared similarly to other departments. I would, off the top of my head, suggest that we are probably pretty comparable to most other departments with our level of vacancy and our vacancy rates.
Mr. Leonard Evans: Perhaps we could then go on to item 7.1.(d) Payments Re: Soldier's Taxation Relief fund.
Mr. Stefanson: Mr. Chairman, I believe we are going to move item 1.(c).
The Acting Chairperson (Mr. Helwer): Item 7.1.(c) Management Services (1) Salaries and Employee Benefits $410,500--pass; (2) Other Expenditures $70,900--pass.
7.1.(d) Payments Re: Soldier's Taxation Relief.
Mr. Leonard Evans: This is a very odd item, and we have discussed it in other years. For the life of me, I do not know why it is even here on a page, not wanting to deny anyone who might be eligible their $50, but one would have thought you could bury it in some miscellaneous item somewhere or other. I mean it is down from $3,000 to $2,000. Could the minister say how many dollars were actually spent in this program, or did you spend anything?
I do not think anyone knows about it out there, or I do not even know if the legions or the Army and Navy people know about it or are very familiar with this extremely modest program, with all kinds of strings attached so that it is rather difficult to qualify for, it seems to me. Has there been much activity? How much have you spent?
Mr. Stefanson: We actually talked about including this in some other category, but then we thought the member for Brandon East might accuse me of trying to hide it, and we might not get an opportunity to discuss it in Estimates. So we have kept it on the same line in our budget. The reason it prints down is very simply utilization of the program. In the calendar year 1995, there was $1,450,000 of claims against the program.
An Honourable Member: One thousand.
Mr. Stefanson: One thousand or one million. Sorry, did I say one thousand? One million, four hundred and fifty thousand dollars. Sorry. [interjection] One thousand. I said one million.
An Honourable Member: It is not a million.
Mr. Stefanson: No, it is a thousand. I said a million the first time, did I, and you were correcting me? I am going to start all over again. The total dollar value of the claims was $1,450. In 1995, there were 29 claims, so, as a result, we reduced the line item from $3,000 to $2,000. In 1996, the total dollar values of the claims was $1,350. In 1996, we had a total of 27 claims and, sort of the geographic distribution for the member from Brandon East (Mr. Leonard Evans), of those 27, 16 were in Winnipeg, five were in the Dauphin area, three in Portage la Prairie area, three in Stonewall area, and that should be the total of 27.
So it was really a utilization of the program that led to the downward adjustment. I have information on the eligibility and the application process, but I think we have gone through all that before and that as the member for Brandon East knows, the total exemption is up to $50 for qualifying individuals.
(Mr. Gerry McAlpine, Acting Chairperson, in the Chair)
Mr. Leonard Evans: Obviously, this is a very modest program and one that seems to be almost a secret, although, obviously, a few people have found out about it and have applied. One would wonder why it could not have been transferred, say, to the Department of Family Services, for example, where they handle a lot of social payments, social assistance and other kinds of subsidies to people in need.
At any rate, it is not a big item, and it is almost not worth taking time about. One could make the argument that if you really wanted to help people in this category, why not improve the program? In other words, why not loosen up on the qualifications and why not provide a little more meaningful help? I doubt if this $50 changed ever since the program started. Correct me if I am wrong, but obviously, therefore, if I am correct, then this program has become much, much less meaningful to anyone who does qualify for assistance.
At any rate, it is a very strange item indeed. But my argument would be not to necessarily deprive taxation relief to people who are in need and are in these categories or in this category but rather to be a bit more generous and to make it more broadly known to the various veterans' organizations such as the Army, Navy or the Canadian Legion. At any rate, this is the way it is and I doubt if it is going to change. I made some suggestions for this and I guess we will just leave it at that. So, if we could pass that item.
The Acting Chairperson (Mr. McAlpine): 7.1 (d) Payments Re: Soldier's Taxation Relief $2,000--pass.
1.(e) Tax Appeal Commission $20,000.
Mr. Leonard Evans: On this, can the minister enlighten us as to the outcome of any appeals? Just what activity has there been by way of appeals of tax assessments and what kind of appeals are they and what has been the resolution? How many have been approved? How many have been denied?
Mr. Stefanson: For the last fiscal year, '96-97, there were 11 appeals outstanding at the start of the year, and we received 18 appeals during the year, for a total of 29 appeals to be dealt with during '96-97. Of those appeals, 12 were denied, one was partially denied, two of them were referred to Taxation because they were determined not be in appeal issue. One was upheld, one was withdrawn, so those elements total 17, and the remaining 12 are outstanding at the end of 1997 and will be carried forward to 1997-98.
Mr. Leonard Evans: Mr. Chairman, the Appeals Commission, this is one person I gather that is outside of government that has been retained to hear these appeals. Am I correct?
Mr. Stefanson: The member is right, it is one person. We have discussed this before. But just, I guess, for all of us as a reminder, under the act, taxpayers who disagree with a tax assessment that they have received are allowed 90 days to file an objection with a commissioner appointed by the Minister of Finance. The current commissioner is Mr. Glenn Russell, a chartered accountant. The notice of objection process is similar to, but is less formal than, the federal income tax procedures. The commissioner, upon considering the matter appealed, either affirms, rescinds, or amends the assessment and notifies the appellant, the director and the minister. If the taxpayer or the director disagrees with the commissioner's decision, either party may appeal to the minister; and, beyond that, the taxpayer, of course, has recourse ultimately to the courts if they decide that is necessary. So that is the process and how it works.
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Mr. Leonard Evans: I thank the minister for that information. You retain the services of Mr. Glenn Russell, yet there is no item here for payment to him unless it is covered under Supplies and Services, which I thought would be rather strange.
Mr. Stefanson: As the member can tell from the level of appeals, it is not an overly onerous position. It is done on a contract basis, so there is no need for a staff position. A contract is entered into with Mr. Russell and that would be basically--I believe it is the entire amount, or if not, the vast majority of the $20,000 is a contract with Mr. Russell to provide these services.
Mr. Leonard Evans: That covers the contract. How many dollars are we talking about being appealed? You have given us a description of the types. Are these big-ticket items, if I can use that expression, or are they a lot of miscellaneous?
Mr. Stefanson: It is probably better if we can hold that question till we get into Taxation Division in terms of the nature of appeals, the numbers of appeals and so on, when I have Taxation staff at the table here.
Mr. Leonard Evans: Okay, fine, Mr. Chairman, we can pass this item at that point.
The Acting Chairperson (Mr. McAlpine): Item 7.1.(e) Tax Appeal Commission $20,000--pass.
7.2 . Treasury (a) Administration (1) Salaries and Employee Benefits $130,300.
Mr. Leonard Evans: I wonder if the minister can give us some update on the status of markets affecting Manitoba. He touched upon this a bit earlier on, but maybe he can elaborate. This is the major area of responsibility of the Treasury Division to obtain information and to maintain close contact. So I wonder at this point if the minister could advise the committee as to recent activities and what the status of markets are as they affect Manitoba at the present time.
Mr. Stefanson: I am sure we are going to get into some specific questions, but to give the member a sense of our borrowing requirements in '97-98, I believe we require about $1.5 billion. Virtually all of that is refinancing, other than a small amount for Manitoba Hydro, I think, that is a new requirement, but almost all of the $1.5 billion is just a refinancing. It just happens to be the bonds that are coming due in 1997-98.
What would we have to pay in the market today? If we were to borrow for 10 years, the rate would be approximately 6.9. If we were to borrow for five years, it would be approximately 6.3, and if we were to float, just a floating, not a fixed term, just a 90-day issue or whatever, would be about 3.25 percent. So that gives the member a sense of what interest rates are like today.
Our total portfolio is 1.5. He knows all of our exposure today is in Canadian or U.S. The breakdown as a percentage on an overall basis is we are at about on the Canada-U.S. ratios--
That one is on our, basically, tax-supported debt. The currency exposure, about 76 percent is Canadian and 24 percent is U.S. dollars. So that gives the member a sense of where we are at today. That has improved significantly. If you go back to--when I say today, March 31 of '97. If you go back to March 31 of '96, we were at about 68 percent Canadian, 32 percent U.S. If you go back to March 31 of '95, we were 67 percent Canadian, 33 percent U.S. So we have made significant improvement, as we have discussed in the past, in terms of shifting more of our tax-related debt to Canadian exposure, which is in keeping with our government-wide policy.
I guess the other thing we have tried to do with our tax-supported debt is to keep a reasonable percentage in fixed debt, as opposed to being exposed to floating debt in terms of interest rate fluctuations. At March 31, '97 we had about 80 percent of our tax-supported debt in fixed debt with about 20 percent in floating. Again, that is fairly consistent with the previous year, and it is somewhat better than it was back on March 31, '95. March 31, '95 we had 73 percent in fixed and 27 percent in floating.
So in the areas of locking in more of our debt, in the areas of what we can borrow at today, in the areas of our exposure to foreign currency, everything is continuing to improve in terms of our debt situation.
Mr. Leonard Evans: I thank the minister for that information. Could he give the committee some idea of who is holding our debt, say, in Canada--well, he may not have that information, I do not know--like pension funds, banks, other financial institutions, individuals. Who is holding Manitoba bonds, the debt that we were just talking about?
Mr. Stefanson: I think as the member knows, the majority of our debt would be held by larger institutions or organizations like pension funds or insurance companies. They would hold, again, the majority of Manitoba's debt. I do not have the breakdown nor do I believe we can readily access the breakdown of who holds it at any given point in time, but certainly organizations like the Civil Service Superannuation Fund here in Manitoba, I am sure, holds some Manitoba debt and have always held some Manitoba debt. Insurance companies like Sun Life, Great-West Life and so on have traditionally been holders of Manitoba debt and so on, so that is the vast majority.
I think as the member knows, we have had a successful local borrowing program, our Builder Bond program and our HydroBond program, which creates the opportunity for individual Manitobans to acquire our debt directly, or through, I guess, our RRSP funds, they could invest in HydroBonds or Builder Bonds. So that has been an excellent vehicle to create the opportunity for Manitobans to invest directly in our province.
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Mr. Leonard Evans: Obviously, the ideal would be for Manitobans to hold the entire amount of the debt inasmuch as all the interest payments will be going back to Manitoba households, and we would be in a much better financial position on that account. We do not live in that kind of a world, but I would say this that I am satisfied that Manitobans have a lot of savings. I think we are a net exporter of savings, if that is the right expression. I think we save a lot and for whatever reason, there do not seem to be the opportunities for people to put those savings to work in Manitoba. So you see a lot of Manitobans putting money through, and usually it is through financial institutions, into other parts of Canada or, indeed, abroad.
At any rate, there does not seem to be any--I do not think there is any shortage of savings around. It would be very nice if all those bonds are being held by Manitobans and if they would see fit--I guess they have to make a rational decision though. How do our interests rates that we are offering on our new bonds compare with the other provinces? How are we rating? I know that depends on the rating of the bond rating agencies, but how are we comparing now? Are we in the middle somewhere, which is often the case for Manitoba? Are we in the upper echelons, or where are we?
Mr. Stefanson: The member mentioned that it would be nice if all of our bonds were held by Manitobans. Some of us would argue that it would be nice if we had no need to be issuing bonds whatsoever, had no debt and did not have to be paying $520 million in debt servicing costs. That might be even a little better than having all of our debt held by Manitobans.
(Mr. Peter Dyck, Acting Chairperson, in the Chair)
But if we are going to have debt, and we are refinancing, it is nice if a significant amount of that can be held by Manitobans. That is why programs like the Builder Bonds and the HydroBonds have allowed that interest to go back to Manitobans and stay right here in our province.
The whole issue the member touched on--and we will get other opportunities to talk to the issues about access to capital for businesses--but there have been significant improvements I think as the member knows in terms of accessing capital with various funds that have been established, some of the changes the Winnipeg Stock Exchange is looking at and so on.
To move to his very specific question, the good news in Manitoba is that today we borrow money, as I think I have told the member before, of all of the provinces, at the second-lowest interest rates. Only Alberta is borrowing money at a lower rate than us today. We are actually trading through British Columbia and trading through Ontario, even though they have a higher credit rating. They are AA credit ratings, and we are A; but we are actually trading like an AA province.
In fact, there was an article that the member may have seen not all that long ago in The Globe and Mail on March 31, 1997. The headline was B.C. now paying more to borrow. This particular article--and this was just on March 31, 1997--goes on to say, goes on to talk about, but by last month Manitoba could borrow at two basis points lower than British Columbia while Alberta was borrowing at five points less. So it gives the member a sense of how close we even are to what Alberta has been borrowing at.
The really good news is that we are well recognized within the financial community and the investment community. As a result, I think of the recognition of our financial performance and our economic performance, people who are buying Manitoba bonds are prepared to take a lower return on our paper. So that is very good news for us as a government, good news for Manitobans.
This has been the pattern now in terms of us trading through British Columbia for the last several months. On an overall basis, I think that is very good news for our province.
Mr. Leonard Evans: Certainly, if you can come in just behind Alberta, it does show that we are in a relatively good position.
How do we compare with the federal borrowing rate, if I can use that term? I know there are so many kinds. I know there are various lengths of borrowing, and I know there is a big mix out there but just in general terms. I would imagine the federal government can demand a much better interest rate simply because it is the large national government, and, of course, it controls the banking system through the Bank of Canada.
(Mr. Gerry McAlpine, Acting Chairperson, in the Chair)
Mr. Stefanson: I gave the member some examples of what we would borrow at today. I gave him the example of a 10-year at 6.9. The spread between us and the federal government is 0.17 of a percent, so it is just under one-fifth of a percent is the difference. That is how much lower they could borrow than we could borrow on a 10-year issue.
On a five-year issue I gave the member the example that we could borrow at 6.3. The spread actually narrows there where the federal government borrows at 0.1 lower than us, which is one-tenth of 1 percent. So on a 10-year issue we are within just under one-fifth of a percent of the federal government. On a five-year issue we are within one-tenth of 1 percent; so relatively tight to the federal borrowing rates, as I have already said, and I like to repeat time and time again, the second best spread of all the provinces in Canada.
Mr. Leonard Evans: That is very good news, Mr. Chairman, especially as the minister described it, and I am surprised that we are so close to the federal borrowing rate. I say that too because the federal government ultimately should never have any trouble borrowing money because, by law, by the Constitution of this country, the federal government controls the banking system. The Bank of Canada belongs to the federal government and, as it shows, particularly in times of emergency such as World War II, the federal government has no problem whatsoever in selling its bonds to the Bank of Canada if that is the policy direction that it wishes to go and which was the case during World War II to fight Adolf Hitler.
We raised our national debt pretty significantly, but the federal government had and would have even today, obviously, no difficulty in selling its bonds to the Bank of Canada if that was the direction in which it wished to go. The advantage, of course, in selling your bonds to the Bank of Canada is that it is interest-free money, because the Bank of Canada turns all profits, all dividends back to the central treasury at the end of the year. So it is interest-free money virtually.
At any rate, that is good news that the minister has given us in terms of the borrowing rates for the province. [interjection] Do you want me to stand up as well?
Okay, we are talking about interest rates, so I wonder if we can just carry on a little bit and talk about the interest rates for Crown corporations and government agencies and school boards. I know the department takes a lead role in that respect. What about the borrowing costs that are facing our municipalities or other public bodies such as school boards or hospitals and so on? I believe the department is involved in this. Could the minister give us some idea of what kind of interest rates these agencies are paying today for any borrowing that they may have to incur?
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Mr. Stefanson: Schools, hospitals, those kinds of organizations would basically pay the same debt servicing rate, interest rate, that we would, except we do charge them a service fee, a service charge of one-eighth of 1 percent. So for school boards, Public Schools Finance Board, health care facilities, it is our borrowing rate plus one-eighth of 1 percent. The rate for Hydro is one-half of 1 percent, because it is a combination of a service charge and a debt guarantee fee similar to what was in place when MTS was a Crown as well. So Hydro pays one-half of 1 percent, the school boards, the health care facilities and so on are paying one-eighth of 1 percent.
Mr. Leonard Evans: This is because, therefore, the government of Manitoba guarantees the bonds then of the municipalities, let us say. If the rate is the same, and you are charging them a service cost of whatever, basically, the Manitoba government has cosigned the note. In fact, you are guaranteeing the loans to those agencies in order to bring the rate down to the borrowing rate of province.
Mr. Stefanson: Mr. Chairman, I think, as I have already indicated, the service fee is charged to those organizations for the public schools and for the health care facilities. We are not guaranteeing the debt, but we are servicing the debt; we are providing the money. As the member knows, we basically provide the money to the health care facilities or the Public Schools Finance Board to pay their debt. So we charge them one-eighth of 1 percent basically as a service fee because to do the issue, we cover all of the legal, the accounting, all of the costs associated with it as well.
Mr. Leonard Evans: What about the municipalities, though, Mr. Chairman?
Mr. Stefanson: Mr. Chairman, each of these are a little different, as we are going through them. We talked about agencies, schools and hospitals, service fee one-eighth of 1 percent because of all the services we provide; hydro, a separate fee, which is one-half of 1 percent because of the combination of a service fee and the guarantee that is provided by the province.
Municipalities, where we lend money to municipalities, we charge them the one-eighth of 1 percent service fee for the accounting and legal, and we also charge them one-half of 1 percent because of the risk relative to lending them the money. That still would be better than they could borrow going into any other market situation. So the fees for municipalities is the one-eighth of 1 percent service fee and one-half of 1 percent, whatever you want to call it, risk charge, risk fee, as a result of lending the money to them.
So there are really the three different categories, so to speak, in terms of what the charges are on top of what we borrow money at as a provincial government.
Mr. Leonard Evans: I thank the minister for that information. It is a lot clearer, but what I am a little bit puzzled about is the municipal borrowing per se. I thought that the minister is describing a situation where the province loans the money to the municipalities, but what about municipalities floating their bonds on their own? I thought there was a category there. The government could cosign the note, as they say, or guarantee the loan and then charge the municipality a fee or a percentage rate for that guarantee.
Mr. Stefanson: I have already outlined what the charge is if a municipality borrows from the government of Manitoba. There is nothing stopping an individual municipality from going out and borrowing direct, but they would not have the guarantee of the Province of Manitoba. They would go and borrow on their own credit worthiness and so on. The City of Winnipeg does do that. Brandon has done it on occasion, I am told. Portage la Prairie has done it on occasion, but the vast majority obtain their financing through the Province of Manitoba. I think for several reasons. Obviously, they can still borrow at more competitive rates by tagging on to our borrowing capabilities and our credit rating and how the market treats us.
I think the other issue is, for so many of them the requirements are so small that to go into the market just would not make any sense in terms of accessing the market and what you might pay if you go to the market. The system to date, I think, works very well. We do not get any complaints that I am aware of from municipalities or any of those kinds of organizations. I think they appreciate the opportunity to do it directly through the government of Manitoba, so it is, I would suggest, serving them very well.
Mr. Leonard Evans: I can appreciate what the minister is talking about, what he has described. Did I hear him properly, though? He said, basically it is the City of Winnipeg that tends to go out and borrow on its own. If it does so, it is assuming the risk itself or it is assuming full responsibility. The province is not involved in City of Winnipeg borrowing normally, is that correct?
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Mr. Stefanson: The member is correct. If the City of Winnipeg requires money, traditionally they have been borrowing directly on their own. They have their own credit rating, and they go out and borrow without any guarantee from the Province of Manitoba. I know when the bond rating agencies assess the City of Winnipeg, they certainly look at funding levels from the province and those kinds of things, look at their total revenue sources and what revenue they derive from the province. I mean, they certainly assess the relationship between the province and the city, but at the end of the day, the City of Winnipeg goes out and borrows money on their own credit rating and on their own risk, with no guarantees from the Province of Manitoba.
Mr. Leonard Evans: Normally, Mr. Chairman, what would be the difference between the rate that the City of Winnipeg would be borrowing today, say, compared to the Province of Manitoba. Again, I appreciate there are different kinds of issues and there are different periods of time within the year, and so on, different lengths of, well, the bonds and so on, but could you give us some idea how much more Winnipeg pays for borrowing a given amount of money compared to the province?
Mr. Stefanson: Mr. Chairman, the member for Brandon East is right; the City of Winnipeg does pay more to borrow at whatever term they are borrowing on. Rather than give him just an approximate range, I would prefer us to do a little current work on some recent city borrowings, compare them to our borrowing rates, and then provide him as specific information as I can to give him a sense of just what that spread is, between what Winnipeg sort of traditionally would borrow at compared to the Province of Manitoba. They are fortunate their spreads are fairly tight, I think, to Manitoba, because they do represent close to two-thirds of our population, and sort of when bond raters are assessing our economy and all of the various factors, obviously, Winnipeg is a significant part of that. So they are able to get reasonably tight to provincial borrowings, but I will get him some specific numbers on the various, the 10 year, the five year and so on.
Mr. Leonard Evans: Mr. Chairman, the minister, a few moments ago, referred to the successful provincial savings bond program, and I was wondering why the province did not attempt to borrow more from Manitobans, as opposed to people out of the province. In other words, why have you limited the targets for the provincial savings bond program? I mean, assuming, you know, you have a target that you want to achieve, you would think you are going to be able to sell X millions of dollars of bonds under this provincial savings program.
Now I may be wrong in my approach, but I assume you have some sort of target. I guess it is based on what you think is acceptable out there, you know, how many millions you can raise in this way, but it seems to me that governments should make greater efforts to sell bonds to Manitobans. It just makes great economic sense.
Mr. Stefanson: Mr. Chairman, it is a good question, but I think there are some important responses that we should be aware of. I guess, first of all, our program to date for HydroBonds and Builder Bonds has allowed individuals to redeem their bonds every six months. So you would not want to be in a position where you had a significant portion of your debt that current and that volatile that all of a sudden you could have all of this debt being converted and then having to go out and borrow billions of dollars to pay it back. So that is one reason that we set certain limits in terms of how much to do out of the Builder Bonds and the HydroBonds.
The second issue is the whole issue of market access which plays into that. I think having various sources of market access has served Manitoba very well over the years, that we are never sort of restricted to any market, that we can go into the Canadian market or the Manitoba market or the U.S. or the Japanese or the Euro-Canadian and different markets. We always want to have market access to meet any capital needs that we might have.
We also talked about the whole issue of floating rates, trying to lock in as much as we can, again, because these are redeemed every six months and the interest rate is adjusted--the interest rate can be adjusted every six months. That starts to move us in the opposite direction in terms of trying to lock in a significant amount of our debt both at reasonable interest rates and to have certainty in terms of what our debt service and costs are going to be over fixed periods of time.
The last point is our local borrowing, our HydroBonds or Builder Bonds program, can also be more expensive, because to attract that money you sometimes have to offer a slightly higher interest rate than we might be able to borrow elsewhere in Canada or elsewhere in the world. So we have to strike that balance if we want to keep our debt servicing costs as low as possible. Manitobans, like every investor, want to maximize the return on their investment; as much as they are parochial and supportive of our province, they still want to get as good a return as they can get on their savings for obvious reasons, because they need a certain return often for their own lifestyles or whatever is required. So, if you look at all of those factors you come to the conclusion, yes, the Manitoba market is a great market for us. Yes, we want to be in it, but we should only be in it within certain limitations and parameters on an annual basis for all of the reasons that I have already outlined. I am sure there are more.
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Mr. Leonard Evans: Well, life is not simple. The Bank of Canada has been attempting to pursue a relatively lower rate of interest policy. Some would still argue, given the spread between the bank rate and the rate of inflation, it is still relatively high, relatively. But, nevertheless, historically or at least compared to a few years back, the nominal rate of interest has been down and the bank seems to be holding the lid on it. I do not know for how long. At any rate, how long does it take for this change in policy of the Bank of Canada to impact on Manitoba borrowing? It would seem to me it is not an immediate impact. I mean, there would have to be a period of time because it takes, you know--it obviously depends on what you need in a market, how much you have to go to the market for and that sort of thing, and the market would be impacted by the lower bank rate, by the lower rate of interest presumably being pursued by the central bank. So I guess I am asking you, maybe it is impossible to answer, but there must be some impact, but the impact would be with the lag effect. So what is the impact, and is there much of a lag effect?
Mr. Stefanson: The member is right; there is no easy answer for that question.
I think a few points are worth making. Right now, because most of our debt is refinancing, of course we are on a schedule that is somewhat related to when all of that debt comes due, so we are dealing with time frames that revolve more or less around the various issues coming due. Having said that, I think it is important to remember that we have sort of had a policy, certainly over the last few years, where we have never let ourselves get caught where we absolutely have to go to a market, so that the market, we have no control. Whatever the market is charging at that particular point in time, you have to pay. We have been fortunate that we have not been faced with that situation. We have done a little bit of preborrowing and we have always been in good financial position over the last several years.
I guess the other point related to his question is picking the right time when to lock in, suggesting that interest rates, that there might be some pressure for some upward movement on interest rates. That has also been one of the reasons that we have been locking in more of our debt to take advantage of these lower interest rates, and as well the policy that we want to get into more fixed debt, so we have more predictability in certainly moving forward. So that is sort of the best of both worlds. If you can lock in, lock in at low rates, have that predictability over the next several years.
So those are some of the answers to his questions in terms of how we try to deal with managing our debt.
Mr. Leonard Evans: I thank the minister for that information.
He did make reference earlier on to Manitobans' response to a provincial savings bond campaign, or rather the government's role in here in terms of to what extent we would be willing to sell bonds at a particular rate of interest. In other words, you should always try to get the best rate of interest obviously, but it may turn out that for local consumers, for Manitobans, they may not be satisfied with that. They may want a higher rate of interest, and you as Minister of Finance may not wish to pay that rate of interest given the fact that you might be able to borrow elsewhere for a much cheaper rate and therefore save a lot of interest.
I just want to remind the minister, that is why the previous government borrowed considerably abroad, extensively abroad, because of the interest rate differential, I do not remember the numbers, but it seemed to me, my impression was, there was a real good deal out there in the big, wide world outside of Canada, and there is a great temptation. In fact, this is the advice we had, let us borrow abroad because there is such a differential.
Admittedly, there is always a higher risk factor, because there is the changing value of the Canadian dollar vis-a-vis whatever foreign currency you are talking about. But still that was obviously the motivation, to minimize the interest payments.
I personally, as a sort of a Canadian nationalist, am quite happy to borrow strictly within Canada. To me, I would be inclined that way, but on the other hand, when you have to pay out a lot of interest, if there is such a spread between interest payments to outside of Canada versus Canadians, then one is very much tempted to go offshore, as they say. So I just make that as an observation. I did not think there was some big conspiracy to want to engage in more risk or anything like that. You always want to minimize risk, but you also want to minimize your interest payments.
Mr. Stefanson: Without getting into a debate, the member is certainly right that the challenge for governments is to borrow as efficiently at as low rates as you can to minimize how much money is going for interest costs that could be going into other areas required. So that always is a challenge. I guess what has changed in the marketplace, and it has really changed very much in the last five or 10 years in a very significant way, is this ability to do swaps. I guess the ability to do swaps gives us the best of both worlds. It allows us to access the international marketplace--Japan, Europe or other parts of the world--and not be exposed to the currency fluctuations because that, from my perspective, was the huge risk and the huge vulnerability of borrowing in those international markets.
Now, through the ability of swapping into either Canadian or U.S. currencies, you can eliminate that currency risk and still end up, at various points in time, being able to borrow money at lower rates than you might be able to borrow in your own domestic market within Canada or within the Manitoba market at a given point in time.
That utilization of the swap market has really served us very well over the last several years. It has also allowed us to get out of all that international exposure that we had for a period of time.
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Mr. Leonard Evans: That is very good news. In other words, there have been institutional changes that have given us a much better situation like, as the minister I think said, having the best of both worlds. That is very good.
Just while we are talking about borrowing abroad or wherever we are borrowing, I notice that you have got a rather new borrowing program that you launched last year or '95-96; the Euro Medium-Term Note Programme was launched. This is supposed to reduce costs and give us more flexibility in our capital funding. I wonder if the minister could elaborate on this. I am not very familiar, I am not familiar at all about this particular program.
Mr. Stefanson: Mr. Chairman, I think you have seen more jurisdictions move into this area of what is called medium-term notes, and what they really are is, they are a formal program and a legal agreement that simplifies the process. You do not need to be doing all of the legal work on every small issue. It establishes the parameters for us to go into either the Euro-Canadian market, or we now have a United States medium-term note program. We also have a Canadian medium-term note program. It provides the legal work, the framework that allows us to go in and borrow money, usually smaller amounts, from any financial institution that meets our needs at a given point in time at reasonable rates. So really it streamlines the process in terms of getting all of that in place in advance as opposed to, as the member knows, the other system is, every time you do a specific issue, you go through all of the legal work and all of the agreements and so on. This establishes a framework that allows us to go and borrow within that framework.
Mr. Leonard Evans: I appreciate what the minister said, but like actually, who makes it available? I mean, when you say, you streamline legalities and so on, is there some agency out there that you are working with, or have you done it yourself somehow by making administrative arrangements with various agencies?
Mr. Stefanson: Mr. Chairman, who we would normally be working with under the medium-term note program would be the investment dealers that represent Manitoba. We have a syndicate in Canada, we have a syndicate in the United States, we have a syndicate in the Euro-Canadian market of different financial institutions. So that would usually be who we are dealing with. In the case of the United States, the document is filed with the Securities and Exchange Commission in the United States. So it establishes, as I say, the framework, the legal agreement that then you can go to an individual financial institution and conclude a transaction without going through all of the legal work that has to be done for a separate issue.
Mr. Leonard Evans: So I guess this is a program that is available to all provinces then, I would gather. It is not a special Manitoba deal.
Mr. Stefanson: That is correct, and many provinces now have similar programs.
Mr. Leonard Evans: Mr. Chairman, can the minister give us some idea of how many, you know, what is the size of the borrowing under this program? I mean, how many dollars are we talking about, or what percentage of borrowing is now being handled in this way as compared to the total borrowing program? Just to put it into perspective, you know.
Mr. Stefanson: Mr. Chairman, I will provide the member for Brandon East with a detailed breakdown of how much we have done under that program.
Mr. Leonard Evans: The other area I was concerned about is the financing of hospitals. You have a Manitoba Hospital Capital Financing Authority, which I am not sure whether it is right within the department or whether the department simply advises it, but I am just wondering if the minister could indicate to what extent is this program this year. You know, how many dollars are we investing in new hospitals or hospital renovations? Would that type of information be coming forward from this Capital Financing Authority?
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Mr. Stefanson: The Manitoba Hospital Capital Financing Authority is really three people. It is myself, the Minister of Health, and Deputy Minister of Finance, but the services are really performed on our behalf through the Treasury Division. We have not used The Loan Act authority that is granted here to do any borrowing on behalf of health care facilities. They have been doing all of their own borrowing direct over the last several years. So we are not borrowing money on their behalf. They are borrowing money direct.
The role our Treasury Division plays is just to co-ordinate when they are going to the market to be sure that you do not have a conflict with a couple of facilities going together at the same time, provide advice on borrowing and those kinds of things. They really are providing a co-ordinating advisory role through our Treasury Division.
Mr. Leonard Evans: Does the authority on which the minister is a member make decisions with regard to the extent of financing hospital construction or is that made by the Minister of Health (Mr. Praznik) in his department, with approval of cabinet, and then the authority just administers the decision of cabinet or as I said earlier, are those decisions made by the authority itself? I do not mean the branch servicing, but I mean the authority in which the minister is a member.
Mr. Stefanson: It is the latter. It is the way the member described that the minister is responsible for the Health capital program, goes through the Estimates process, goes through the Treasury Board budget process ratified by cabinet and so on. So that is the process in terms of establishing a program and borrowing.
This authority is really on the financing side. As I have indicated, there is some loan authority in place, but it has not been utilized. We are not borrowing direct. The facilities are borrowing themselves, and our Treasury Division just provides expertise and assistance to them in terms of the timing and rates and various issues around their borrowing.
Mr. Leonard Evans: I am just wondering whether the establishment of regional health authorities will have any bearing on the way the department has to service this area. I am not clear to what extent the new regional health authorities which are just being established or just have been established are responsible for capital. I am not clear on that or whether it is still strictly within the Ministry of Health and, therefore, it is business as per usual or whether there is some change caused by this new legislation.
Mr. Stefanson: Changes to that structure with regional health authorities, whether or not they are doing borrowing for facilities or individual facilities, will not in any way change how this side of the entire equation functions. This part of Finance will continue to function in the same way same kinds of services are provided, whether or not they are provided to an authority or to an individual facility or organization.
Mr. Leonard Evans: I do not want to belabour this, but I gather it is strictly a servicing agency and does not play any role in limiting the amount of borrowing that may be required for this purpose. Or do you have some say there? Not with regard to the individual structure or individual project with regard to, say, the total supply of capital that may be involved.
Mr. Stefanson: No, as I said earlier, I think it is important we clearly understand the decisions around the capital program. The borrowing program against that capital program are all decisions made by Treasury Board and cabinet based on recommendations coming out of the Department of Health. The member is right that this is just a service to the individual organization's facilities in terms of helping them meet their needs in terms of the borrowing.
Mr. Leonard Evans: A couple of other items under this area. I was wondering whether there was any change in your sinking funds strategy, strategies for the investment of sinking funds. Are there any changes in this area or is it the same strategy that has been used for some years?
Mr. Stefanson: Essentially no changes to our management of the sinking funds and its operations other than the fact that now, essentially, we have two funds that will be utilized to retire our debt. We have our sinking funds that has been established, and we have a Debt Retirement Fund that the member is aware of in our balanced budget legislation with our first payment being made to the Debt Retirement Fund in this budget, 1997-98.
So both of those funds will be administered, obviously, in terms of the return on investment of the money that is set aside and then the timing of paying down the debt in terms of maturities and so on. So essentially, other than the combination now of these two funds, the approach taken by the Treasury Division and the department really will not be any different in terms of its objectives of, obviously, obtaining the best returns on the investment and then tying the retirement of debt to when it is in our best interest in terms of paying off debts of various levels.
Mr. Leonard Evans: I thank the minister for that information. There is some reference as to another activity of the Treasury Division that is protecting the financial assets of the province. The description is that it ensures that safeguards are in place to protect the financial assets of the province. I wonder if the minister can explain just what safeguards are we talking about. I would not think that this is anything new, but just how do we safeguard the financial assets?
Mr. Stefanson: As the member pointed out, it is the protection of the financial assets of the province. There are several things that this division does in terms of dealing with any securities that we might own, being sure that they are in a secure place wherever they might be in the world, depending what securities we are holding, whether it is in Canada or in the U.S. or in other parts of the world, the various securities that we have invested in.
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Another area is the whole area of our transfer of money in terms of the utilization of armoured car services, the utilization of the banking services with the electronic transfer of money to our accounts to be sure of the integrity, and the relationship with the financial institutions on the timely transferring of money and so on.
Another area is just the establishment of bank accounts and having reasonable access and utilization of bank accounts right throughout Manitoba, a series of bank accounts at various financial institutions around Manitoba that make it easy and accessible for Manitobans who have to conduct any business with government to do that through the financial institutions and so on. So those are some examples of the kinds of things that this division does in terms of the protection of financial assets.
Mr. Leonard Evans: I am wondering if it is appropriate, and if not, where would it be appropriate to discuss the capital infrastructure program? I notice the minister has a separate item, a separate report on this, supplementary information of the Canada-Manitoba Infrastructure Works Program. Is this responsibility in this area of the department?
Mr. Stefanson: Mr. Chairman, no, it is not. There is the separate document the member for Brandon East refers to, and I think even on our schedule of Estimates review, I think we show the Canada-Manitoba Infrastructure Program as a separate item. There are several elements of the Estimates that we have responsibility for that we will deal with, I think, later in the Estimates process, whether it is areas like the Canada-Manitoba Infrastructure Program, I think we list separately emergency expenditures and Urban Economic Development Initiatives, Allowance for Losses and Expenditures. Those are categories that I think show up separately on our listing of expenditure review and basically have separate reports prepared.
So I am the minister responsible for those. We will get to those, but I think they are scheduled to come right after the Department of Finance.
Mr. Leonard Evans: I see. So apart from the specific items shown as Department of Finance, the minister is saying that it is then appropriate for us to go on and discuss these miscellaneous appropriations including this program, the infrastructure program. What about special operating agencies? I do not know what you have on your list. It is in the book, I am sure, but I am not sure exactly all the items on the list.
Mr. Stefanson: The member is right. In terms of the individual other areas we will be dealing with, there are separate reports. They show up separately on the summary of Estimates review that our House leaders have exchanged, and we certainly will have the opportunity to get to those reports on the infrastructure and on emergency expenditures, Internal Reform and different areas that effectively fall under Finance.
The issue of SOAs, special operating agencies, we now have 16 of them, so each individual SOA shows up as a line item under the department that is responsible for it. So individual members will have a chance within those departments to talk about the SOA for Fleet Vehicles under Government Services and so on, but the concept of SOA and so on we can certainly discuss here once we get to Treasury Board, because there is a co-ordinating function within Treasury Board for SOAs in general. We obviously review business plans and the establishment of SOAs and so on. So the concept of SOAs, the merit, the pros and cons, how they function we can discuss under Treasury Board. Individual questions on individual SOAs should be dealt with in the departments that have the direct responsibility.
Mr. Leonard Evans: That clarifies the matter, and it sounds reasonable.
Just in this area then, to sort of wind up this area, I guess we are really into Capital Finance and have been. The capital funding of Crown corporations, how does the minister get involved in that? I guess I thought the Crown Corporations Council, which I think the minister may be responsible for, would have that responsibility rather than the Treasury as such. But perhaps they are more concerned about the policies of the different Crown agencies as opposed to the pure capital funding of them.
I wonder if the minister could clear that up. To what extent does his department control the capital funding of, say, Hydro or whatever other Crown corporation there is, MPI, or there are other miscellaneous ones. I guess even the Workers Compensation Board is a Crown agency, is it not? I am not sure, but there are various Crown companies out there that are lesser known.
At any rate, apparently you are charged with controlling this capital funding of these agencies, of these Crowns.
Mr. Stefanson: Mr. Chairman, I think we are melding two or three different functional areas, and I will try to make it clear. All we have here before us in this section is again, like a similar discussion earlier, just the financing side. Treasury Division performs a function for our Crowns in terms of their borrowing, borrowing on behalf of Manitoba Hydro, and performing that function. So having discussions with them, their requirements, the timing of their requirements and so on, this division then performs that borrowing function for Manitoba Hydro. Here we are talking just about getting the financing. Once the decision has already been made, what is required, this division goes out and gets it at the right time at the best rates we possibly can.
In terms of the capital programs themselves, there is a detailed process where all of the capital programs and the borrowing required against those capital programs comes through government, comes through the Treasury Board process, goes through cabinet and is ultimately ratified by the Legislature through The Loan Act, because The Loan Act authority gives various Crowns and organizations the ability to borrow the money to then meet those capital requirements.
Through all of that, the Crown Corporation Council performs many functions. They, on an ongoing basis, do a mandate and strategy review of the Crowns in terms of that they are meeting their objectives, and they also do an analysis of their capital borrowing requirements and come forward through the process with their analysis and their recommendations on the capital program. So they provide an operational review on an ongoing basis, and they also provide their opinion and advice on the capital program. I hope that clarifies the distinction in terms of the process.
Mr. Leonard Evans: Mr. Chairman, that is fine. Perhaps, we could then go on to get into (c). I guess we are more or less dealing under 2. anyway.
The Acting Chairperson (Mr. McAlpine): 7.2. Treasury (a) Administration (1) Salaries and Employee Benefits $130,300--pass; (2) Other Expenditures $118,100--pass.
7.2.(b) Capital Finance (1) Salaries and Employee Benefits $299,500--pass; (2) Other Expenditures $37,300--pass.
7.2.(c) Money Management and Banking (1) Salaries and Employee Benefits.
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Mr. Leonard Evans: Mr. Chairman, I think we perhaps raised this question in past years, but I gather the department, the government, relies primarily on the Royal Bank as its banker of choice, or whatever the term is. Does the government not review the situation from year to year as to whether it is appropriate to continue to operate with the one bank?
I guess one of the reasons to deal with the Royal, and I have nothing against the Royal or indeed any bank, they all provide pretty well the same service, but I guess the one advantage the Royal has is that it is big, and it has probably more branches around the province, and therefore makes it more efficient, allows for greater efficiency in terms of receiving monies and paying monies perhaps than utilizing other banks.
Having said that, I imagine people from CIBC might question that observation because they are a pretty big operation as well.
Mr. Stefanson: The member will recall, we discussed this last year, that we occasionally go back to the market to give the financial institutions a chance to bid on our work and obviously to be sure that we are getting the best service and the best price, and we did that a little over a year ago--a very comprehensive process. I believe all of the five major banks submitted proposals, if I recall correctly, and at the end of that whole process and our analysis, the Royal Bank was determined to be the best suited to meet our needs in terms of the quality of service, the number of branches the member refers to, but they also were the lowest cost as well.
So again, on the basis of an open process and merit, the Royal Bank was successful. Having said that, so they do the majority of our day-to-day banking. We do attempt, wherever possible, to give some other financial institutions an opportunity to do some work for government. All of the banks participate in our money market in terms of our investments and so on, our short-term investments and other opportunities.
The Bank of Montreal, I believe, has some areas. I think they are involved with some collections on behalf of Taxation Collections for the Department of Finance. I think they might be involved with payroll or they were at one point. CIBC is involved with some of our purchasing and so on. So in other areas we are using some of the services of some of the other banks, but the day-to-day banking, the overall banking of the government of Manitoba, the Royal Bank was successful again after going through a comprehensive process.
As we have discussed before, it is the kind of thing that you cannot do every year from just a practical reality perspective and a cost perspective. It is certainly something that we will do periodically to always be sure that we are getting the best price and the best service.
Mr. Leonard Evans: Well, could the minister tell us: How long has the Royal Bank been the preferred bank of the government of Manitoba? Does anyone know?
Mr. Stefanson: I will try to get the date when the Royal Bank first started for the government of Manitoba, but it has been a long time. Mr. Benditt says it is as long as he can remember and that is about 36 years. The Royal Bank has been the lead banker for the government of Manitoba for a long time. I can certainly try to obtain a date when they first started acting on behalf of the government.
Mr. Leonard Evans: I was not sure. Did the minister refer to me being here 36 years or we dealt with the Royal maybe 36 years?
Mr. Stefanson: I know the member for Brandon East has been here a long time, but I was referring to Mr. Benditt, the head or the assistant deputy in charge of Treasury Division. He said his memory is 36 years and it has been the Royal Bank all of that time.
Mr. Leonard Evans: There are some very exciting things happening in banking the way monies are transferred, obviously the telecommunications revolution that we are now experiencing and so on. Can the minister advise if there is anything--I am sure the department is trying to keep up with various suggestions being made by the banking system with regard to payments and receipts and so on--special or anything emerging that the minister would like to tell the committee of with regard to the banking process as it is affected by changing telecommunication technology?
Mr. Stefanson: The member is correct, and I think of one sector that has been changing significantly over the years. We have moved in many areas in terms of direct payroll deposits and so on, and I guess another area that Treasury Division has just acted on is they have recently installed electronic funds transfer system which is used for issuing instructions to our bank to transfer funds to the various Crown corporations and government agencies that have deposited money with the province. In the future it will be expanded to include payments to banks, swap counter parties and others as required to meet our debt servicing and other obligations. So, again, that is just another area that is changing and making it easier to interact with these financial institutions more timely, more efficient, more effective. So it is just one example, I think, of an area that is changing dramatically.
Mr. Leonard Evans: Another detailed question. We are just about running out of time. I know you are expanding the use of credit cards for the receipt of revenues owing to the government, but is there not a cost involved there? I believe the average business gives up a certain percentage of their receipt to the bank which has issued the credit card, like a Visa, for example. So is there not a cost in the government utilizing credit cards for receipts of government revenues?
Mr. Stefanson: Mr. Chairman, the member is right that we have expanded the utilization of credit cards in various areas, and I think for good and justifiable reasons. I mean, one, it is a convenience in many cases for customers nowadays who carry less cash and have a credit card. There is also a security issue. It means we require less cash around, less transfer of cash. It means that we get the money, literally, right away in some cases and so on. So there are those advantages. I can certainly get some information as to what our arrangements are with various credit companies in terms of what the other side of it is in terms of costs.
The Acting Chairperson (Mr. McAlpine): Order, please. The hour being 6 p.m., committee rise. Call in the Speaker. [interjection]
Is it the will of the committee, we wish to pass section (c) of 7.2. [agreed]
7.2.(c) Money Management and Banking (1) Salaries and Employee Benefits $390,300--pass; (2) Other Expenditures $258,900--pass.
7.2. (d) Treasury Services (1) Salaries and Employee Benefits $441,900--leave it at that. Okay.
The hour being 6 p.m., committee rise. Call in the Speaker.
The Acting Speaker (Mr. McAlpine): The hour being after 6 p.m., this House is adjourned and stands adjourned until 10 a.m. tomorrow (Thursday).