The Acting Chairperson (Mr. Faurschou): Good afternoon. Will the Committee of Supply please come to order. This afternoon this section of the Committee of Supply meeting in Room 255 will resume consideration of the Estimates for the Department of Consumer and Corporate Affairs. As had previously been agreed, questioning for this department will follow in a global manner, with all line items to be passed once the questioning has been completed.

I would like now to ask the minister to introduce her staff to the committee. Then, following that, questions from the floor will be entertained.

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Hon. Shirley Render (Minister of Consumer and Corporate Affairs): The only new member we have here today is Hollis Singh, secretary to the Public Utilities Board.

The Acting Chairperson (Mr. Faurschou): Thank you, Madam Minister.

Mr. Jim Maloway (Elmwood): I wanted to begin the day by asking a few questions regarding the composition of the members of the Public Utilities Board. I guess our concern is that it is a politically appointed board and perhaps could be politically motivated. I look at some of the members of the board. I would like to ask the minister as to some of the qualifications of some of the members on the board.

For example, Mr. Ken Collin, who is a government appointee to the board, I would like to know, outside of his being a Conservative candidate in Thompson in the 1988 election, other than being a PC candidate, what were his qualifications for being appointed to this board?

Mrs. Render: I am sorry, Mr. Chair, and to the member. I was just asking a question, and I did not hear.

The Acting Chairperson (Mr. Faurschou): Would the honourable member for Elmwood please repeat his question.

Mr. Maloway: We are concerned about some of the political appointments that this government has made in a number of areas, but, in particular, some of its appointments to the Public Utilities Board appear to have some political overtones to them.

My first question to the minister was: Mr. Ken Collin, other than his qualifications as being a Conservative candidate in Thompson in the 1988 election, other than being a PC candidate, what are his qualifications to be a member of this Public Utilities Board?

Mrs. Render: Ken Collin is a long-time resident of northern Manitoba. He has had a very varied background including that of city councillor and serving two terms as deputy mayor for the City of Thompson. Other endeavours include a very extensive involvement in labour relations, contract negotiations and the owner of a small retail business in the North. That was for more than two decades. So, as you can see, he has a lot of experience in rural and northern Manitoba, and certainly as a city councillor and as a deputy mayor, he has the experience of being able to–as information comes before council, you have to have the ability to look at all sides of an issue. Certainly as deputy mayor, you really have to have the ability to assess and evaluate and look at the good of the community and not just with a partisan kind of viewpoint.

Mr. Maloway: Other than being a Conservative candidate in Crescentwood in the by-election in 1993, what qualifications did Jenny Hillard bring to the board of the PUB?

Mrs. Render: I am not too sure where the question is coming from. That individual is not on the board.

Mr. Maloway: I realize she is not on the board at this time, but she was on the board in the past and she was a Conservative candidate in 1993 in the by-election in Crescentwood. What were her qualifications to be appointed to this board, other than being a loyal Conservative?

Mrs. Render: I am not too sure that she has been a long-time Conservative. My understanding is that that particular individual has been a long-time consumer advocate and has served the community in that capacity I believe far longer than she was a Conservative. Again, as a consumer advocate, she would be able to evaluate and assess issues that would be pertinent to the residents of Manitoba.

Mr. Maloway: I would like to ask the minister then: other than being a contributor to the Conservative Party, what qualifications does David T. Thompson have to sit on this board? In 1988, he contributed $550 to the Conservative Party; in 1990 he contributed $435; in 1993 he contributed $300 to the Conservative Party, and in 1995 he contributed $370. What other qualifications, other than being a loyal Conservative donor, does this man have to be on the board?

Mrs. Render: Again, I am not too sure where the member is coming from. That individual is not on the board.

Mr. Maloway: Mr. Chairman, my information was that he was on the board at some time. Is the minister saying that is not true, that he was never on the board?

Mrs. Render: To our knowledge, I have been advised that we do not recognize that name. Or I have been advised–I do not recognize that name.

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Mr. Maloway: I would refer the minister to page 2 of their 1998 annual report of the Public Utilities Board. Perhaps it is my mistake, but there is a D.T. Anderson listed as being on the board, as a member of the board, so it–

Mrs. Render: You said Thompson. Did you mean Anderson? You said Thompson.

Mr. Maloway: I did?

Mrs. Render: I believe perhaps the member actually meant Anderson and he said Thompson. Maybe he was thinking of the town of Thompson. Is it D.T. Anderson that the member is asking about?

Mr. Maloway: Yes.

Mrs. Render: Again, I realize that the member is trying to make the point that everybody is a political appointee and that their only qualification is that they are Conservatives. I just want to remind the member that the people who have been appointed all come with a variety of skills that bring balance to the board.

This particular member is a professor and a former dean of the University of Manitoba Faculty of Law. He is a former director of education and a bencher of the Law Society of Manitoba. He has also served as a member of the Alberta Law Reform Institute, as well as the Manitoba Law Reform Commission. He is a barrister and solicitor. Again, I would just like to advise the honourable member that this particular individual is bringing another viewpoint and bringing another area of expertise to the Public Utilities Board.

Mr. Maloway: Another member of the board, an M. Rodrigue, donated $300 to the Conservative Party in 1997, $300 to the Conservative Party in 1996, and a Gerard Rodrigue, same address, donated $797 in '96 and $793 in 1995, and coincidentally this member was appointed right around that time in 1995–on April 3, 1996, pardon me. I would like to ask the member: would those donations to the Conservative Party, coincidentally, just around the time that she was appointed, have anything to do with her appointment to this board?

Mrs. Render: I just want to remind the honourable member that it is important that the Public Utilities Board be made up of a group of people that can bring a diverse group, a diverse set of experience and expertise to the board. This particular member is a psychology graduate, currently finishing her Master's of Social Work and Family Studies at the University of Manitoba. She is employed as the assistant to the director and a research associate at the Health, Leisure and Human Performance Research Institute in the Faculty of Physical Education and Recreation Studies at the University of Manitoba, and she has served as a director in numerous not-for-profit organizations and is presently an active director of the board of the St. Boniface General Hospital auxiliary.

Mr. Maloway: I have another board member here, a D.L. Barrett-Hrominchuk, and I would like to ask the minister, other than being the daughter of former PC Manitoba Fund member and lifetime Conservative Party member, Cubby Barrett, what are her qualifications for being on this board for the last 10 years?

Mrs. Render: This particular member, again, brings a wide variety of experience to the board. She has a Bachelor of Arts, a Bachelor of Science. She has a good background in finance, in business management courses.

This is a long-term board member, has been on the board for many years. She has, as I mentioned, held various administrative positions within the business sector and has also been actively involved with the creation and implementation of health service and personal development programs with emphasis on program design and budgeting within the northern Manitoba and Interlake areas, and, once again, this particular individual comes to the position with a great deal of knowledge for the area on the other side of the Perimeter.

Mr. Maloway: Can the minister then explain why it is that of all the candidates, members of the board that I checked, they are either former Conservative candidates, former and current Conservative party donors? I would like to know why that is, why there are no former Liberal candidates, no former NDP candidates, no former donors of either of those two parties on the board at the current time? Could the minister explain to me why that is?

Mrs. Render: The government draws upon members of the community with experience in a wide variety of areas.

Mr. Maloway: It seems to me that the government draws on people of experience, yes, in some cases, but they tend to draw on candidates who are donors to the Conservative party or are ex-candidates. It seems to be a sort of a reward for faithful service to the Conservative party, does it not, when we have got these boards laden with ex-Tory candidates, failed Tory candidates and financial contributors to the Conservative party, in fact, in this case, a daughter of an ex-P.C. Manitoba fund member, one who was very central to the vote-rigging scandal that has embroiled this province for the last year?

Mrs. Render: Again, I take some exception to the member. I look at the chairman of the board, who has served the public for well over 20 years. So to try to cast the chairman of the board in that kind of a light I think is unfair. Once again, I just want to repeat that the board needs people on it who are going to come from a wide variety of backgrounds and have extensive knowledge, as I say, in diverse areas.

Mr. Maloway: I am not denying that there are good appointments to the board, and I am not denying that some of the actual Conservatives that are on the board are not good choices. Perhaps they are, but the point is that this seems to be a board that has had more than its share of political appointees, and I think, after 11 years in government, this government is starting showing signs of age, and I think that there is some evidence of nepotism and cronyism developing in this business of appointments to the board. I think the minister should recognize that there may be some weaknesses in the board, and they may be as a direct result of this party's blind loyalty to their faithful servants, their donors and their ex-candidates.

Mrs. Render: Once again, I will look at another board member that the honourable member opposite has chosen not to ask me a question about. First of all, I drew his attention to the chair of the board who, as I mentioned to the member, has been serving the province I think back to the mid-'60s, so he has a long-time commitment to serving the residents of Winnipeg.

Secondly, the vice-chair of the board, which the member has not referenced, Evelyn Jacks. She is nationally and internationally recognized. This member is the founder and president of the Jacks Institute, a private training institute specializing in tax and business-related courses and the owner/manager of Jacks on Tax services, a private tax consulting firm in Winnipeg, Manitoba. She has served as an appointee on numerous advisory boards or committees, most recently on the Winnipeg Chamber of Commerce executive board council and as the chair of the chamber's education task force. She is also a featured biographee in the International Who's Who of professional and business women and was recently honoured as one of Manitoba's Entrepreneurs of the Year in 1995. Once again this particular individual is recognized on a national and international level. This government has full confidence in the Board of Directors of the Public Utilities Board.

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Mr. Maloway: I would like to move on to some of the functions of the board and some of its activities over the last year. One of the first areas that I wanted to deal with was the whole area of Elmwood Cemetery. The minister will know that this has been a controversial area now for a number of years. We are edging slowly but surely towards a resolution of the problem. One would hope that procedures can be put in place so as to ensure that we do not have another Elmwood Cemetery on our hands, another similar situation in the future. I am looking for assurances from the minister that this problem has finally been resolved and assurances that there are procedures in place so that we do not have a repeat performance of this very sad situation.

Mrs. Render: I think the honourable member has concerns about perhaps perpetual care funds. I share those concerns and certainly this department will be looking into this area to ensure that we do not have future problems along the lines of one of the cemeteries that ran into some difficulties a couple of years ago.

Mr. Maloway: Well, how much money does the minister think was lost in this whole exercise? We know that the city was out $400,000 or so in property taxes because of this lax system that has been in place for so many years now. I do not think we have any guarantees about how the money was really spent. I want to get into all that area and find out just how much we really do know about what happened here.

Mrs. Render: In answer to the member's question as to how much money was lost, I cannot give him an answer to that. As the member likely knows, the passing of the accounts, it is the Court of Queen's Bench that was responsible for that. Under the current legislation, that did not have to take place more than once every five years. So, as I say, that responsibility for the passing of accounts was the responsibility of the Court of Queen's Bench.

As the member knows, we are bringing in some changes which will transfer that responsibility to the Public Utilities Board and will also make some changes as to how often that will happen. Those changes will ensure greater accountability.

Mr. Maloway: Mr. Chairman, I think that that is an excellent idea to allow the PUB to have a little greater access to the workings of the cemeteries.

I guess the question is why did the department determine that the old method was not successful?

Mrs. Render: Mr. Chair, I am not too sure whether I would put that particular interpretation on it. The Public Utilities Board licenses the cemeteries, so it makes sense to have the Public Utilities Board handle this and allow the Court of Queen's Bench to be doing the kinds of job the Court of Queen's Bench should be doing. Passing of accounts should not necessarily be their particular focus.

Mr. Maloway: Mr. Chairman, well, I have the passing of accounts from–I am not even certain of the year here, but I assume it was the last one–1995. It seems to me that if they are passed only five years and if they are passed by a judge, the chances are that it is not being looked at very closely. That would be my guess. That would be my analysis of why it would be a problem. The fact that it should be looked at more carefully by a body with some ability to analyze the statistics and be done more often should be something that should be looked into.

So the question is what was so wrong with the old system, and what is so right with the new system, the new proposed system?

Mrs. Render: Mr. Chair, I do not know whether we can simply say that there was something very wrong with the old system and the new system is going to be very right or more right, whatever. I guess I will just repeat my previous answer that the Court of Queen's Bench is a busy place, and it just seems slightly, maybe perhaps makes more sense to have the Public Utilities Board handle this, since Public Utilities Board handles the registration of the cemeteries. Perhaps by putting on a more frequent date for the passing of accounts, then there will be a greater accountability.

Mr. Maloway: Mr. Chairman, well, how often then and how detailed will the new procedures be?

Mrs. Render: Mr. Chair, this is something that the board, I believe, will be determining. I do not have the legislation in front of me. I have shared the legislation with the member, and I believe that the board will determine those kinds of detail as to how often. We are fairly confident that PUB will have an accounting, if not every three to four years, it may be even, to begin with, every second year or even more.

As I say, these are details that until the legislation goes through and until PUB and the board members are able to sit down, because this is a serious issue, I am not too sure that I can comment, because it is not up to me to tell PUB how often the passing of accounts should be. It may very well be that, because this is new legislation, or an amendment, I should say, to the legislation, PUB may want to put something in place on a trial basis to see how this works, then oversee it and monitor and then perhaps put something more firmly in the regulations.

Mr. Maloway: It has been my assumption that this new method, letting the PUB vet the process, would change the current rules from having the judge do it every five years to having the PUB do it every year. That has been my understanding. It would make sense to me. Financial problems can develop very quickly in a business. So clearly five years is not sufficient time. Businesses start up and go bankrupt in a shorter time than that in many cases. So five years is too long a time. It seems to me that two years or one year is as long as you would want to go without having a good examination and a passing of accounts by the PUB.

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Mrs. Render: Certainly the chairman of the board will be reviewing the minutes of Estimates. I know that he will be most interested in the member's suggestions about one year. Again I suspect that it may very well be that initially one year will, they may look at it on a one-year basis, but to say at this point that it would be set at one year I think would be premature. There are people on the PUB board who have a good business background and have a good feel for this kind of a thing. I think we need to allow the PUB to study the issue. Certainly they are very aware of the problem. I think that they will tread very carefully in setting this up. Certainly they will heed the member's comments.

Mr. Maloway: When does the minister plan to study The Cemeteries Act with the idea to have a complete revision and overhaul of the act. I understand Saskatchewan did it. It was a two-year process. They have evidently made some substantial changes or proposed substantial changes. I would like to ask the minister whether she is aware of what is going on in Saskatchewan, how far along the line are they, and what is she planning to do along the same lines?

Mrs. Render: Again, I share the member's concern. As a matter of fact, I have already spoken to the chairman of PUB about looking at the act. I guess I am just saying to the member that we are already in the process of considering this. It is not something that will be easily done, but it is not something that is not being considered.

Mr. Maloway: I would like to ask the minister, I had a Free Press article dated May 27 in which it indicated that the city I believe had contributed money to the Friends of Elmwood Cemetery, I believe $128,131, and it indicated that the province was also expected to provide $128,000 grants to the Friends of Elmwood Cemetery.

I would like to ask the minister whether this has now been done, and how did they arrive at the $128,000 for a grant?

Mrs. Render: I believe the member's question was how did we arrive at that figure. It is half of the anticipated deficit. The Friends of the Elmwood Cemetery submitted a business plan, and the business plan requested certain funding in each of three years.

Mr. Maloway: My question also asked whether this money has now been provided, whether the money has flowed.

Mrs. Render: The answer is yes, the money is in the budget from the province.

Mr. Maloway: I would like to ask the minister to give us an update on the status of the perpetual care funds to get an idea as to how far we have to go. This is quite a long road to follow here. I mean, in order to generate the revenues required from investments to run this cemetery properly, I think that about $5 million will be required. I used to think it was around $3 million, but I have read that it is $5 million to provide the–you know, it is dependent on the rate of return that you can get on your money. So I would like to know what the prognosis is for this plan.

Just what is the plan, first of all, and what are its chances to succeed?

Mrs. Render: The member is correct. The Friends will be conducting a fundraising campaign over a three-year period to raise an additional $5 million for the perpetual care fund. The current balance totals approximately $1.3 million.

In answer to the member's question, will it succeed, I do not know that anybody can give an answer one way or the other. Certainly, we are very hopeful that it will succeed. Certainly, the people who are part of the Friends are committed to the project. They all have fairly high profiles, and they are enthusiastic and dedicated and have many ideas already. So I guess I would say, taking the optimistic look, that we are very hopeful that they will be able to raise the money.

Mr. Maloway: I would like a little better explanation than that. We have $1.3 million after the old owner walked away from this problem and left the city in the lurch for $400,000, left a big mess for the community to solve. The fund right now has only $1.3 million, and to be sustainable it has to go to $5 million. I would like to know just how they are going to do it. Are they going to have garage sales? Are we going to have bake sales? Just what is the plan here to get it from $1.3 million to $5 million?

Mrs. Render: The Friends of the Elmwood Cemetery will be hiring a professional fundraiser. I do not think bake sales are necessarily on their agenda. This will be a professionally run campaign.

Mr. Maloway: Could the minister tell us then how much fundraising has been done at this point?

Mrs. Render: The Friends are still in the planning stages. Although I will add that there have been many calls to the Friends already asking questions, so things are in gear.

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Mr. Maloway: I guess that is a really good question. I would like to know who is keeping track of the Friends, like who is overseeing the Friends to see whether their business plan is reasonable and whether it is reasonable to assume that they can achieve this goal?

Mrs. Render: Mr. Chair, I think we have got to where the member needs to remember that these are prominent people, one of them, of course, being the former mayor Winnipeg and another with the Sill Foundation. They will be providing an audited annual statement. They have charitable status with Revenue Canada. Both the province and the city have reviewed their business plan. They have a three-year business plan that has been reviewed. They will also be reporting on a regular basis, on a quarterly basis, so that there will be a monitoring of their activities and the status of their fundraising.

Mr. Maloway: Who are they reporting to?

Mrs. Render: They will be reporting to the province, to this department and to the City of Winnipeg.

Mr. Maloway: The minister said this department; does she mean the Public Utilities Board?

Mrs. Render: No. The former minister met on a regular basis with the Friends, and I intend to maintain that contact.

Mr. Maloway: Can the minister tell us who the fundraising company is that will be doing the fundraising for the Friends?

Mrs. Render: I do not have that information yet.

Mr. Maloway: Can the minister tell us the nature of the fundraising that they will do?

Mrs. Render: I do not think I can answer that because, to my knowledge, they are still in the planning stages.

Mr. Maloway: It is my understanding though that the system of records over there is all on paper, that it would be quite time consuming to go through and come up with a list of people who could be approached, that current addresses for people are just not available. Because it is such an old cemetery, the records, once again, are very old. A lot of the people who could be approached are no longer living in the area. Many are no longer alive. Just how big a well do we have here to draw from?

Mrs. Render: The member is perfectly correct. I do not think the Friends are under any illusions as to the enormity of the task that they have undertaken. The $5 million is a very substantial goal, and many of the families with people in the cemetery are not necessarily right here in Winnipeg. The Friends do anticipate a three-year campaign with approximately the first nine months spent in researching the records, completing the campaign plan and securing significant lead donors.

As I mentioned earlier, they have already received numerous inquiries. They have received offers of assistance, both in kind and by way of cash support. In fact, I believe they have even received phone calls. I just do not remember the country, but they have even received inquiries from either Ireland or Scotland, somewhere in the British Isles, I do not recall now, relatives of somebody who is buried. So this is not just a Winnipeg fundraising kind of an effort. It probably is national, and perhaps by the end of the planning stage it will be an international fundraising concern.

Mr. Maloway: In fact, that is true. I did get a letter from somebody from, I think it was Dublin, Ireland, who was visiting in Winnipeg. At the time I sent out a letter last year to every single household in the Elmwood constituency, and I got quite a positive response from people. At that time we were updating them as to what the current state of affairs were, because at that point in time we really did not know whether all the money–the perpetual care fund was not at that point turned over to the province. There was some concern about whether everything was in order with the perpetual care funds. People were quite concerned in the area. So the letter drew a very good response from the area and, in fact, a letter from Ireland.

I wish them well. It is just that I do not know how reasonable and realistic it is, given the state of the records and what they have to work with, to achieve these ends. But if the minister is assuring me now that they have put the plannings in place, that they have put the capable fundraising effort in place and that they have a reasonable chance to get this $5 million, then I guess I will have to take her at her word and hope that she is right in her assessment.

So I would like the minister to expand on that whole area and assure the people in my constituency that she is on top of this issue and that she has confidence that this goal is going to be met.

Mrs. Render: Mr. Chair, as I said before, nobody can guarantee anything. I think what I stated before, we have prominent people who are heading this up. They came forward on their own. As the member knows, when you have people coming forward on their own and not being coerced into something, they usually bring with them a dedication and an enthusiasm that does not always happen in other circumstances. They have their own reputations that, I am sure, will keep in mind.

So, once again, there is a business plan in place. They have a three-year business plan. There is going to be quarterly reporting to both the city and the province, and there will be an audited annual statement. They have charitable status from Revenue Canada. As I say, we have the former mayor, we have a member of the Sill Foundation, and I think we have to assume that they are going to do their very best–because they are dedicated Winnipeggers–to raise the funds.

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Mr. Maloway: Mr. Chairman, one of the problems here is the question as to whether or not the perpetual care fund has enough money in it and whether or not on presold plans, funeral plans, that perhaps the contribution level should be raised to a higher level by regulation. I understand this would not affect Elmwood Cemetery because there is really no new activity there, but in the other–I believe it is 14 cemeteries. I believe that is the number; maybe it is not that number, but with the other cemeteries, that they are currently active cemeteries selling plots, we may find 10, 15 years from now that not enough money is being put aside. So how can the minister assure us that that, in fact, is the case?

Mrs. Render: Mr. Chair, I guess I would say that we have to remember that the Elmwood Cemetery is probably the exception to the rule. It is unique. It is a very old cemetery. It is landlocked. As the member pointed out, there is not too much activity going on, not that there is too much activity going on in any cemetery. Most of the other cemeteries are more modern. The current cemeteries are more modern. They have less maintenance. The tombstones are flat. It makes a difference as to the care of the cemetery, what kind of monuments that you have. I guess there has been sort of a change in more people are being asked to be cremated, so there is somewhat of a change.

But to get back to the member's concern on the perpetual care costs, the question of the level of perpetual care deposits to trust in order to ensure the long-term viability of cemeteries is something that PUB is concerned about, that I am concerned about. We will be looking at it, but it is again not something that we can make a snap judgment call. There has to be a very comprehensive review with the industry and with the public. It will require a fairly detailed examination.

Mr. Maloway: I have asked this question for several years now. The previous ministers all said they were looking at this whole idea of raising. We are talking about a regulation here. This is not legislation, I do not believe, that is required to be changed. The minister can simply decide that the old level is not enough to be put aside and can increase by regulation. So surely by now with this huge problem on our hands, surely by now the department would have got the ball moving here and jumped into this thing and got in and checked the other cemeteries to find out whether or not they are actuarially sound and that there is enough money being put away into the perpetual care fund.

What we had here in Elmwood was a fundamental trust being broken. We had a cemetery owner that was enriching himself for a number of years and ended up basically walking away from the problem, leaving the city $400,000 of taxes being owed, was absolutely totally irresponsible in the last few years, refused to co-operate with the authorities here in Winnipeg, refused to pay his tax bills. No guarantee that he did not pocket substantial amounts of money. We have no guarantee of that, and nobody here knows what is really going on because every five years he went before the judge and got his accounts passed. We have no idea. Unless you are going to hire a forensic accountant at tremendous expense–it would probably cost more for the forensic accountant than what you could possibly get out of this thing. It is probably a nonstarter.

Clearly, we can accept that we have been bamboozled here in this one and that we failed miserably to solve this problem. Surely we can get in front of the problem and take a look at the other cemeteries that could possibly go down this road. Clearly, we want to establish whether a sufficient percentage is being put aside. Clearly, the minister has a more definite answer than the one that she is trying to sell here today.

Mrs. Render: The Public Utilities Board is not aware of any other similar problems.

Mr. Maloway: What do you mean, you are not aware of any similar problems? You have the Loewen group, one of the largest funeral groups in the world probably gone into receivership in the last month or two. There, I do not know how many cemeteries they have in Manitoba. But clearly there is some turmoil in the industry and your department should be on top of this whole thing so that we do not find ourselves with all sorts of financial mismanagement and financial troubles left for the province and the public to solve.

Mrs. Render: I think we are mixing apples and oranges here. The problems that Loewen is experiencing is the result of merger and take-over, not problems with a perpetual care fund.

Mr. Maloway: Can the minister tell us then if she can assure us that all of the other cemeteries in Manitoba are operating correctly at this point?

Mrs. Render: Yes, as far as PUB knows, all cemeteries are in compliance with the existing rules.

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Mr. Maloway: Is it possible, though, given the proposed new changes in the rules, that the PUB will find that there are some problems that it previously had not noticed under the old system?

Mrs. Render: Mr. Chair, I think the steps that we are taking right now will enable the Public Utilities Board to be more active, to perhaps be a little more proactive.

Mr. Maloway: Is the minister telling us then that, as far as she knows, the effects of the Loewen group receivership have no effect to Manitoba as a result of this receivership?

Mrs. Render: The perpetual care money, those funds are held in trust. They are protected.

Mr. Maloway: I wanted to deal with the issue of the moving of the graves in Elmwood Cemetery. Are there any more anticipated moves of graves in Elmwood Cemetery? The last couple of years, the minister will know, there have been at least, I think on two or more occasions, cases where graves had to be moved because of instability in the riverbank, and that was effected and was done, I believe, cost-shared by the province and the City of Winnipeg. I just wondered what the current status was of that and whether there were, in fact, any more graves that had to be moved.

Mrs. Render: Again, the member is very knowledgeable in this area and as he knows January, before the thaw, before the spring thaw, this will be looked at to review to see whether anything has to be done.

Mr. Maloway: I wanted to deal with a number of other subjects today under the Public Utilities Board, but there is a general problem the government has been dealing with and society has been dealing with that is sort of peculiar to most of the areas of regulation under the board, and that is the Y2K issue, and I know the member for the PUB is here. So I do want to deal with each of MPIC, Hydro separately, but the Y2K issues come up in the chairman's remarks in their annual report. Perhaps we could start dealing with Y2K issues here, and then we could deal with the areas that I miss in the individual corporations and then, of course, in Finance at the end of the day.

Mrs. Render: The board certainly has monitored the developments in this area and has received reports and assurances of readiness as the member, I know, has read in the annual report. Specifically, the board has inquired of Manitoba Hydro, Centra Gas Manitoba, Stittco Utilities, Gladstone Austin Natural Gas Co-op Limited and has received confirmations of Y2K readiness, primarily as it pertains to safe and reliable service. Members may have seen in the Free Press in April that Manitoba Hydro and other electric utilities have performed some dress rehearsals, and things went very well.

Mr. Maloway: I would like to ask the minister, then, whether they have, similar to the government department, quarterly Y2K reports that the board gets from the regulated companies. How are you dealing with the Y2K issue with your regulated companies?

Mrs. Render: Each of the companies does report to PUB. PUB does not conduct a specific technical examination, I guess you could call it, but my understanding is that, as each of the companies reports in, it is able to report that it has passed specific benchmarks. So that gives PUB a sense as to where each of the companies is in its Y2K readiness.

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Mr. Maloway: We know that the government itself has quarterly reports given to the deputy ministers. They evidently meet and discuss the matter, and there is some sort of a written report that comes out of it. We know that the Securities Commission has reports. We were told the other day. I think they are quarterly because, as a matter of fact, the chairman of the Securities Commission could not give us an update as to what was happening with the Y2K issue in Manitoba companies because the deadline for submitting the reports was the 15th of June, and we were asking these questions on the 16th or 17th, so the deadline for reports had just come by. I had asked him at that time for his reports from three months ago, which would be, of course, three months out of date, and he said that he would endeavour to get that information. I think the minister is currently working on that to give us the report from three months ago.

So, you see, we have a structure here. The Securities Commission has a structure for receiving Y2K reports from the companies; the government itself has a structure whereby it briefs the deputy ministers every quarter. I want to know what the PUB is doing. Does it expect quarterly reports from its regulated companies? Does it expect monthly reports? Just what is the procedure?

Mrs. Render: Each of the utilities has its own structure. Just as Manitoba government or just as Manitoba Securities Commission has its own structure, so too does each of the utilities have its own structure.

Mr. Maloway: Is the PUB confident that the regulated companies will be Y2K compliant by the end of the year?

Mrs. Render: The PUB has been given assurances that they will be ready.

Mr. Maloway: It does not make sense to me. The government has quarterly reports, quarterly meetings with deputy ministers. The Securities Commission has quarterly reportings from the companies in Manitoba. The TSE has a reporting requirement in its annual reports on the Stock Exchange. There has to be some sort of a procedure set down by the PUB rather than just saying that they just report when they feel like it, because that is what the minister is telling me. Whenever the gas company feels that it wants to report something, it does, and if it does not feel like reporting it, it does not report it.

Surely there must be a set procedure here, a quarterly requirement, a monthly requirement, something more than just, you know, if they feel like doing it, they will do it, and if they do not feel like doing it, they will not do it.

Mrs. Render: I think the member has answered his own question. He referenced the Manitoba Securities Commission, he referenced the Toronto Stock Exchange as having their own structure, and that is exactly what I said. Manitoba Hydro, Centra Gas, each of these companies has its own internal set of guidelines as to when they conduct particular tests, and they report to The Public Utilities Board. So when the member says from time to time on the PUB, that is not to say that each of the companies is not doing things on a very regular deadline kind of a structure.

Mr. Maloway: I want to deal with the MPIC in a number of areas, but one of them, the first one we can deal with, if you like, is the Y2K issue over at MPI. I would like to ask the minister what the status is of the Y2K. I understand that they have a new system that is being brought in for the claims system. I think that is just operational or becoming operational as we speak, but I would like to ask some questions about Y2K.

I understand, and I may be wrong, but they spent a tremendous amount of money refurbishing their old system to make it Y2K compliant, just in case the new system did not work properly. I mean, there may be some solid reasons for doing that, but the question is why would you spend money making your old system Y2K compliant if, in fact, you are buying a brand new system, installing it six months before the year-end?

So perhaps the minister could take some time and get a very thorough answer for this question.

Mrs. Render: As the member, no doubt, has turned to the page in the annual report, page 32, he can see an outline of the Y2K area, but if he has very specific questions, those are questions that should be directed to the Minister responsible for MPI (Mrs. McIntosh).

Mr. Maloway: The PUB regulates MPIC and that, I guess, leads me to another observation. In fact, this government has continued to pride itself over the last 11 years of allowing the PUB to regulate MPIC and thus take it out of the political realm, when, in fact, it is very much in the political realm. It is very much in the political realm because the government appoints the board members.

They are political appointees, very similar to the appointees whom we talked about at the beginning of the session today, that they are Conservatives and Conservative donors, by and large. The government appoints them for their loyalty, not necessarily their expertise, and the government has been able to argue for the last 10 years–

Mrs. Render: I take exception to the fact that the member for Elmwood is implying that the members of PUB do not have the necessary expertise.

Mr. Chairperson: I do not believe that the honourable minister has a point of order. However, I would ask all honourable members of the committee to pick and choose their words carefully.

Mr. Maloway: I was not talking about the PUB lacking the expertise. I was talking about the members of the MPIC board, like the members of the PUB board, being politically appointed. The government's argument over the last 11 years is that they, in fact, have a hands-off approach, that they, in fact, do not direct the operation of the corporation, in the case of MPIC, and that the corporation is run on a purely business basis. If that was the case, of course, we would not see some of the decision making that we have over at the corporation.

I want to ask the minister some questions about the MPIC. Now the MPIC was set up in 1971, 1972 to run as a break-even company. It is a company that does not have to pay shareholders, unlike private insurance companies. By law it cannot divert money into general revenues. So the Minister of Finance cannot get his hands on excess revenue over at the MPIC. That was the basis upon which it was set up, so that it does not need a huge amount of retained earnings.

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So the question is what is an appropriate figure for retained earnings at the MPIC? For many, many years, 15 percent of earned premiums was the generally accepted method for determining what the retained earnings should be. Now, at 15 percent of earned premiums, based on last year's MPIC annual report, the corporation should have around $75 million required to be in the reserves. What it has is $64 million more than that. So what did the corporation do? The corporation simply had a meeting one day and decided to change the formula in an effort to basically hide these extra reserves. So it is currently overreserved by $64 million.

Now, we know the PUB has had a problem with the reserving at the corporation for the last few years. The PUB has admitted that there is a problem there, and they have tried to work out a solution with Autopac. For example, even on page 33 of the annual report, there is a statement that the board found there are deficiencies in the corporation's methodology used in arriving at the new target levels, and that the corporation continued to use the existing 15 percent of premiums written. So that is the point. I am trying to get into this whole area of what is involved with the PUB and the MPIC and their determination of what is an adequate level of retained earnings in the corporation.

Mrs. Render: I am somewhat at sea as to just where the member is coming from. PUB is independent. PUB regulates only the rates. PUB reviews the rates, and it is not up to the minister to tell PUB what to do. So I am not too sure just where the questioning is coming from.

Mr. Maloway: I think the point here is that this government uses the corporation according to the election cycle in Manitoba. I draw the minister's attention to page 37, Figure 11. I would like her to explain that graph to me.

Mrs. Render: Again I am at a loss with the member's question. The graph is clear. One is the target and one is the actual, and I do not know what more I am supposed to say. These are the figures. Again I want to reiterate PUB is independent, and it is not up to the minister to be telling PUB what to do. I just want to remind the member that PUB regulates only the rates.

MPI comes before PUB when it wants to raise or lower the rates, and PUB reviews and then makes a judgment call. That is the purpose for going before PUB. So this is simply a graph which gives the target figure and the actual figure.

Mr. Maloway: Perhaps then I should explain the graph, because the actual is the figure that we should be looking at here. One will see that 1995, 1996, the graph sort of almost hit the bottom of the page. Coincidentally, right in the middle of that, between 1995 and '96, guess what? There was a provincial election. So that is the year in which the government reduced the rates just in time for the provincial election and flushed out their retained earnings and then hit rock bottom in 1996 and now is in the process of building up their reserves. Guess what? Just in time for the next election.

Mrs. Render: I will just simply reiterate: whenever MPI wishes to adjust the rates, it goes before PUB. I do not remember that year. Maybe it was a bad winter, I do not know. But once again it goes before PUB for any changes in rates.

Mr. Maloway: The new method that the Conservative government used was supposed to correct all the perceived problems with the old system. The old argument was that the cabinet set the rates. The old argument was that it was run according to the election cycles. Well, I have news for you, nothing has changed. It is the same, old system. The same, old system is in place. It is just run in a little more sophisticated fashion.

You put it over to the PUB, which is run by Conservative appointments, and the MPIC itself is run by a Conservative-appointed board. Tell me, what is the difference? There is really no difference here. The political operators still run the show. This graph tells the tale. You cannot hide the fact that between elections the retained earnings drive themselves up, and then when the election comes around they flush out the returned elections to buy the public's support and buy the public's votes. That is all I am saying, that you should not put graphs in your little book here that basically tell the true story if you do not want the true story to be told.

You can play around all you want with the accounting at the MPIC, which you have done. You can change the retained earnings and rate reserve formulas if you want to hide your excess reserves for that year, but the bottom line is that you are running this corporation according to the election cycle. Why do you not just admit it?

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Mrs. Render: I was just looking at the line. I have to open my book back up to that page again. You will see that the target line is a fairly flat line. It is the stabilization line. Again, I think the member has maybe answered his own question again. He said that he is suggesting the rates are put in place to coincide with the election year and if we do not want people to know what we are doing we should not put these graphs in. I say to the member that the graphs are there because MPI has absolutely nothing to hide. I will just reiterate one more time that PUB reviews the rates.

Mr. Maloway: The minister makes a mistake going back to this graph, because if you want to look at the target, the target is flat. That is right. The graph is flat. That is supposed to be where we are headed. With all this regulation and all these professionals managing the corporation, managing the PUB and the huge, foot-thick stacks of documents we get every year for the rate process, then why are these two lines not exactly parallel to one another? If this system runs so well, if this corporation runs itself so well, if this PUB runs itself so well, then those lines should be roughly parallel with one another. The RSR target and the RSR actual should be roughly the same, should they not?

I have explained to you why it is not the case. It is not the case because while in 1995 your target was, say, $50 million, what you ended up doing is flushing the reserves down to a minus figure. What in the world were you thinking at that time? I will tell you what you were thinking, you were coming up to an election. That is what you were coming up to. These graphs should be parallel. This graph, the actual, should follow the target. If it is 15 percent of earned premiums that you are looking for, then all you should be able to do is you should be able to hit that target every year. You might drop a little bit, some years you will be over, but your graph over 20 years should be slightly above or slightly below. You increase them slightly, you decrease the rate slightly, but you should not have these spikes.

Why do you have the spikes? I will tell you why they have the spikes. You have the spikes every four years, right along the election time. It is about time the government simply got off the pot and admitted it and quit hiding behind the PUB skirts and saying, well, you know, it is out of our hands, it is the PUB.

It is not the PUB. This thing is run according to the election cycle. So why do you not just admit it?

Mrs. Render: Mr. Chair, I think the member is trying to flog a dead horse here. I do not have a weather forecast or a weather chart in front of me, but it may very well be that there was a year of heavy ice storms. Do not forget rates go up and down depending upon various conditions. Certainly, winter conditions are one aspect. I can remember one summer there was a hailstorm in the summer, and that impacted on the rates. For the member to sit here and lambaste PUB and totally disregard weather factors which have a huge impact on the reserves is foolish.

Mr. Maloway: Mr. Chairman, the minister should know that she is walking on a very thin reed on that one because the reality is, and she knows this very well, that the corporation reinsures. That is the whole key. The crux of the whole insurance business is that insurance companies only save a portion of the premium. They reinsure. They buy reinsurance for exactly what she is talking about: for hailstorms, for windstorms and other catastrophes. That is why the minister will know that the MPIC's books can look pretty good, even if it has gone through a rash of storms because the reality of it is that they only pay a certain percentage. They have limitations as to how much they will pay.

So they can have the biggest hailstorm or biggest snowstorm in the history of the world, and they will still only pay out a certain amount of money. They insure themselves against catastrophic losses. So you cannot hang your hat on bad weather and snowstorms and hailstorms and other kinds of issues to explain this one away. It just will not work.

Mrs. Render: Once again, I know I am sounding like a stuck record, but the PUB is charged with the responsibility of looking at all factors in the setting of rates. So, if the member is calling into question the integrity or the expertise of PUB, then maybe he should say that.

Mr. Maloway: I am simply asking the minister to recognize what is true, and that is that the corporation is run according to the election cycle. The fact of the matter is the minister knows that, in the insurance business, insurance companies work on the basis of predictability and they reinsure everything above a certain amount. So we have a situation that, if there is a huge snowstorm or there is a windstorm or a hailstorm, the corporation is not bankrupting itself because of a storm. What it does is it buys reinsurance.

Now, the minister will know that, before she was elected, back in the late '80s, the corporation did run into trouble with the previous governments because it got into the reinsurance business itself as a reinsurer. So by way of explanation, rather than just buying reinsurance which every insurance does, every insurance company buys reinsurance to reinsure the loss beyond a certain amount of money that it knows it can afford to spend, every company does that. But not every company sells reinsurance. What happened was MPIC started to sell reinsurance.

The result was, when it sold reinsurance, the companies that were buying it were companies, for example, that would be in Florida or other jurisdictions around the world, so that when there was a meltdown in Bhopal, India, or when there was a big storm in Florida, the MPIC had purchased reinsurance so MPIC got stuck with a huge loss, right? And that is why the government got out of the reinsurance business because there were long-tail liability losses that ended up costing the corporation a lot of money.

So it got out of that field. It has not been in the reinsurance business for quite a few years. It has got itself a very predictable pattern, it basically buys reinsurance. It does not sell reinsurance anymore. It had a bad experience with that, so it buys reinsurance. So the claims experience and stuff is a predictable thing, so the minister cannot be talking about hailstorms and so on as being the cause of this fluctuating graph. It is just not true.

Mrs. Render: As I have said quite a few times already, PUB is the body to which MPI goes to when there is a change in the rates. I have full confidence in the Public Utilities Board. If you have specific questions on the operations of MPI, then I would suggest to the member that he ask the Minister responsible for MPI (Mrs. McIntosh).

Mr. Maloway: I am trying to deal with the annual report of the PUB. That is what we are dealing with here today. And the PUB annual report specifically deals and has concerns about the deficiencies in the corporation. It is right here. It is right here in black and white, page 33 of the annual report. What do you mean you cannot answer questions about your annual report? Is it exactly what you are here for.

Mrs. Render: I do not think the member is listening. Yes, I can answer certain questions. On page 33, the annual report does state that PUB found that there were certain deficiencies in the corporation's methodology used in arriving at the new target levels. I could go on. If he has questions on that, then he should speak to the Minister responsible for MPI (Mrs. McIntosh). PUB, which reports to this particular minister, is the body that MPI goes to when it wants to make a change in the rates. If the member has questions about the operation and why certain things are done in a certain fashion, then he should ask the Minister responsible for MPI. PUB looks at all conditions and makes a determination on the rates.

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Mr. Maloway: The PUB has been concerned for a number of years about the rate reserve levels of the MPIC. I would like to ask the minister: is the PUB currently happy with the existing method of establishing the RSR, or is it happy with the old system of establishing RSR?

Mrs. Render: I really cannot add anything more than what is stated here in the annual report. As the member knows, the whole process is open to the public.

Mr. Maloway: Surely the board has had a concern about the RSR levels at MPIC for some time. The board was concerned that the rate reserve was going to exceed its levels of 15 percent of earned premiums, and, in fact, it ordered a reduction last year in the amount collected for the RSR. But the board of the MPIC changed the accounting method, so that, rather than being 15 percent of earned premiums, which would be around $75 million, it changed the formula so that now it can justify holding, say, upwards of $110 million. I want to know: did the board approve of that change in the method of accumulating the RSR?

Mrs. Render: The annual report that the member and I both have in front of us is the last word on that particular issue. MPI, I believe, is going before the board in September. Those kinds of questions, I am sure, will be raised by the board at that particular time.

Mr. Maloway: I do not know why the PUB is under the Consumers Affairs department, then, if we are not allowed to ask any questions about the annual report. What kind of questions do you want to be asked about this report?

Mrs. Render: I think the member is looking for questions on the operations, or the whys and the hows, of MPI, and those questions should be asked of the minister responsible. PUB is responsible for setting the rates. So this particular minister is responsible for PUB, and this minister is not responsible for MPI.

Mr. Maloway: Precisely, Mr. Chairman, that is what I am asking. The PUB has a different view of the issues than the MPIC does. Even though, as I said, they are politically appointed boards, the fact of the matter is that there are some disagreements between them. The MPIC wants to do things a certain way. Whether it is a jurisdiction issue or whether it is an internal method they are dealing with, they want to do it a certain way. The PUB has its own set of ideas. They have to resolve these issues. What I am asking is from the PUB's point of view as to whether or not it feels that the current regime that is in place is the acceptable one or whether the older system is, in fact, the system that is supposed to be used.

Mrs. Render: As I already stated, this is the board's position. When this comes before PUB in September, if someone raises that issue, the board will make a determination. I cannot second-guess.

Mr. Maloway: So does the PUB agree with the current method for determining the RSR at the MPIC?

Mrs. Render: Again, Mr. Chair, I will repeat what is here in the annual report. The board found that there were certain deficiencies in the corporation's methodology. Again, I think the member all along has been trying to suggest that the rates are set in a certain negative fashion. He has a negative twist there, but he himself has admitted that it appears that the board might find certain deficiencies. So I think that answers the question right there that the PUB is not afraid of pointing out that there were certain deficiencies in the corporation's methodology.

Mr. Maloway: Mr. Chairman, the minister, obviously, is not prepared to tell me what the PUB thinks is the acceptable method of determining the RSR. I mean, this is a big issue with these people. They have their own ideas, and MPIC has its own ideas. I would like to know why they cannot accept the fact that 15 percent of earned premiums was good for 20-some years. Why in the dead of night just one year ago did the corporation change its methodology to hide the retained earnings that it has right now? Why did it do that? Surely, there was a reason why the 15 percent, after all these years, was no longer an acceptable target. What was the reason for that? I am just trying to find out. That is just a simple question.

Mrs. Render: Again, I repeat the member should ask the minister responsible for the corporation. I also want to draw the member's attention to the last sentence in that paragraph on page 33, and I am quoting from the annual report: "The Board also directed the Corporation to provide an updated report at the next GRA"–general rate application–"on the appropriateness of the RSR target, including comments on any proposed modifications to the revised target presented at this hearing, as well as options for the eventual removal of the RSR adjustment."

Mr. Maloway: Could the minister provide us with a copy of that report?

Mrs. Render: Again, I just want to draw attention to the words "an updated report at the next GRA." So that report will be available at the next hearing.

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Mr. Maloway: Mr. Chairman, I would like to ask the minister about the PUB's desire, wish, order, if you will, asking the MPIC to cut its costs. I think that is something that most people would agree with, that the corporation should be well run, should not be wasting money. I think all of us, as politicians, would agree, and taxpayers would agree, that it is important to run corporations, whether it is MPIC, Hydro, any other corporation the government runs, as efficiently as possible.

So I would like to ask, with that in mind, how is the corporation fulfilling this order, this rule, this desire to reduce costs when it has given a contract for towing to a company that is a million dollars higher? The highest-bidding company, Dr. Hook, submitted a bid of $3.2 million, a million dollars more than the lowest bidder, Grease Lightning Hookup. How is that in keeping with the board's desire for the MPIC to reduce costs, when the corporation turns around and gives a towing contract to the highest bidder, a highest bidder by a million dollars?

Mrs. Render: Mr. Chair, again, that is a question for the Minister responsible for MPI (Mrs. McIntosh).

Mr. Maloway: It is a question for the Minister responsible for the PUB, because the PUB has the authority to deal with MPIC and has told the MPIC that it wants to see an efficiently run corporation. It wants to see costs contained. Now, I ask you how it is, is this the kind of cost containment that we are looking at with this government when you have a bidding system set up and the winning bidder, Dr. Hook, happens to be the most expensive bidder by a million dollars? Is that your idea of cost containment?

Mrs. Render: Once again, I cannot direct or tell PUB what to do, what to investigate. If this is an issue that comes up at a hearing, then that is the place.

Mr. Maloway: I would like to ask the minister then for her personal comments. Would she agree that it is not good practice, assuming that you have a tendering system in place, to be accepting a tow truck company operator's bid when it is a million dollars more than the lowest bidder? Is that not a bad practice and an example of inefficiencies that should be dealt with?

Mrs. Render: The member's questions are really not on PUB, so they are simply not relevant.

Mr. Maloway: Another issue that has been brought to my attention is that the MPIC–[interjection]

Mr. Chairperson: Is it the wish of the committee to take a five-minute break? [agreed]

________

Mr. Chairperson: Order, please. Will the Committee of Supply please come to order. We will just go to the honourable member for Elmwood.

Mr. Maloway: Mr. Chairman, I was really asking the minister whether, in light of this towing contract controversy, whether she could refer this to the PUB then to be part of their deliberations and concerns for the next go-around that she is talking about. She indicates that they will be dealing with the hearings of the PUB as far as MPIC is concerned, and I would like her to bring this to the attention of the PUB so that when they draw the MPIC into these hearings, they deal with this issue as an example of where is this cost containment provision that they are interested in.

Is this evidence of how they are trying to successfully contain their costs when they accept a tow truck bid that is a million dollars higher than this other bidder? Would she bring this up to the PUB and make certain we get some answers as to whether this contract question will be investigated to determine whether or not the MPIC may be spending a little more money than they should be on this contract?

Mrs. Render: I do not know that it would be appropriate for me to be telling PUB what to investigate. However, I do suggest that if the member wants this investigated, he is very free to bring this matter up himself.

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Mr. Maloway: On October 14, 1998, Mr. Ron Stenning, who is the co-ordinator of the Manitoba affiliated rental vehicle group, I believe at 104 Pembina Highway, and is the owner of Executive Low Cost Rent-A-Car sent a letter to Mr. McCrae, Minister of MPIC, in which he said–Dear Sir: This letter is to request information regarding a deal that we have heard is being negotiated regarding the payment of monies by MPIC to rental companies.

The information has been received through the grapevine in a few telephone calls to various persons within MPIC. Each call allows us a fragmented piece of information but nothing conclusive. It would appear an exclusive deal is in the process with the seven national u-drive companies that could seriously affect the ability of the local u-drive companies to stay in business and could be construed as a restriction of trade. What is incredible is that we have not been privy to any of the negotiations which will affect our businesses and also the ability of Manitobans to rent vehicles of their choice and financial capabilities. We consider this to be discrimination against local business. It is our request that before negotiations continue that we be part of the process. We would be pleased to meet with you at your convenience.

And he says where he can be reached.

Now, we have another letter March 24, 1999, to Honourable Linda McIntosh who is now the new minister for MPIC, and this is from Rent-A-Wreck which I think members will be familiar with. It is regarding the Manitoba car and truck rental association and their Autopac constraint of trade practices. It is written by a Mr. A.D. Tony Sonsata [phonetic], president and CEO, I guess, and he is from Alberta, but I guess they have franchises or they have a company in Manitoba.

A very short letter, he says: You are no doubt aware of the cosy little club formed by Autopac and the new vehicle rental companies in Manitoba whereby the club members get all of the Autopac business and set the rules of the age of vehicles that can be rented. I instructed our franchisee to join. So these people I guess joined in this little cosy club he is talking about, and after much effort we were able to gain membership only to find out that the other club members were not only trying to restrict the membership but trade as well. To be a member we have to conform to the rules they set operating the vehicles they say and charge the high prices that they charge.

Evidently this little club of seven–by the way, which includes Budget and one Bob Kozminski who, as we know, is a very well-known and famous Conservative fundraiser–is evidently charging more for these car rentals than what some of these little guys have been charging. So, in fact, they are being forced to join a club and charge higher rates than they would normally charge. This is what he is alleging here.

He says: We refuse to comply with what we feel is an illegal activity, and as a consequence of this noncompetitive arrangement, our franchise is suffering irreparable harm. If I do not hear from you promptly upon receipt of the letter that you will take immediate action to level the playing field for all car rental companies, stop illegal activity of the club and Autopac, we will take all legal action available to us. This has gone too far for your government to bury its head in the sand. We demand a level playing field where we can compete fairly with our competitors.

Once again the Public Utilities Board is concerned about cost overruns and cost management at the corporation. Here is an example of where not only it appears as though these seven rental companies are colluding with one another, and I can understand them maybe colluding to reduce the cost to MPIC, but the understanding is they are together in their little group and the cost to MPIC is higher. Now I do not know that this is true or not true. All I am doing is reading letters that I have got on file regarding this issue. Since I cannot seem to get any answers from this for these people anywhere else, I was hoping the PUB could show some interest in this issue and tell us why this is happening and whether they will step in and ask some questions about this.

Mr. Jack Penner (Emerson): Mr. Chairman, I have been sitting listening to the question and the direction of the question. I find it rather interesting considering that the honourable member, who was at committee just less than a week ago when MPIC appeared before committee, could have asked all those questions of the Manitoba Public Insurance Corporation. I think that would be the appropriate place to put these questions, because they would certainly have the answers.

Mr. Chairperson: I believe that the honourable member for Emerson does not have a point of order, but it is more like a point of information.

Mrs. Render: As I have said quite a few times already this afternoon, if the member has these kinds of questions he should direct them to the Minister responsible for MPI (Mrs. McIntosh). If he is suggesting that there is a defective tendering process, then he can bring it before PUB. He has two forums in which he can get the answers to the questions that he has been asking for the last hour, and they are not this forum right here. He can go to the Minister responsible for MPI and he can go and appear at a hearing of MPI when they go to the board.

Mr. Maloway: Certainly that will happen if the government ever calls another meeting of the MPIC.

Mrs. Render: I believe that the member had an opportunity at committee within the last month, so for the member to suggest that the government does not call this particular committee is incorrect.

Mr. Maloway: This issue will be taken up with the committee. I can assure the minister of that, but it is not just enough to bring the issue up in one forum, that being writing letters to the minister. You can write letters to ministers of this government until you are black and blue, and you will not necessarily get any action.

Sometimes it does serve a very valuable purpose to work at a problem through several avenues, and the PUB is certainly an avenue in this case because the PUB is responsible for regulations. This corporation produces huge two-foot-thick binders of information and takes them before the PUB, and they go through a whole process of determining the rates through the PUB process, and as part of that process the PUB asks for an efficiently run corporation and cost containment. There have been references in the past. They have made several references to the desire to reduce this cost and reduce that cost over at the MPIC, and then we turn around and we find out that they issue a towing contract in which the successful bidder bids $1 million higher than another one of the bidders.

I ask: is that an example of good cost containment and efficient running of a corporation? Then we find out the rental car people write us letters, and they say that the corporation has got itself a seven-member group. I could understand if there was a seven-member group with the intention to get lower-priced rental cars, but evidently that is not what is happening. My information is that they have formed a little group, and the price of the rental cars has actually gone up. The people that are not in the group, the four or five guys, executive low cost and the Rent-A-Wreck people and several others here, they are being cut out of business, so these are practices that the minister as Minister of Consumer Affairs should be interested in, the Public Utilities Board as a regulator should be interested in. All I am asking is that they use their good offices to bring this up with the minister, with the corporation, to find out what is going on.

If nothing is going on, well, then we will find that out. If something is going on, then we want to get to the bottom of it and solve it. I think it is in the interests of the member for Emerson (Mr. Penner), as well, to want to get on top of this issue and make certain that the corporation is run as efficiently as possible, and that if, in fact, they are spending a million dollars more than they should in tow truck contracts, then that would want to be addressed. If they are cutting little guys out of the car rental business when they have been doing this for many, many years and they are putting these little guys out of business, I think the member for Emerson would want to see that stopped. I think we all would want to have that looked at.

So there is nothing wrong with the questions being asked.

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Mr. Penner: Mr. Chairman, I appeal to you for the second time on this issue. I have listened very diligently about the questions, and I am not at all convinced that the questions that this member is raising are pertinent to the department at hand and the issues we are dealing with.

I would suggest to you, Mr. Chairman, that you call the member to order and ask him to direct his questions to the pertinent minister.

There is an appropriate place for the questioning of Manitoba Public Insurance Corporation. We do call public hearings and public committee and ask Manitoba Public Insurance Corporation to come before that committee to ask, to allow members opposite and government members, all the questions that they choose to. This Manitoba Public Insurance Corporation has over the last month appeared before the government committee twice, and I think I only saw this member there for a few minutes once. I would suggest to you that you call this member to order and ask him to ask the question that he is asking at the appropriate time and to the appropriate minister and at the appropriate committee.

Mr. Chairperson: I would ask the member for Elmwood to consider redirecting his questions on this part he was talking about as far as the Rent-A-Wreck was concerned. That I do not believe was in the PUB report. Now, the rest of it, as far as his questions were concerned, there is a part of the PUB report that does take up some with the MPIC. He can ask those questions and the minister can answer them if she wishes, if they are relevant, or if she feels they are relevant.

Mr. Maloway: That is really all I was going to suggest, that the minister in the past, when she has not had readily available answers to questions has simply said, and all ministers have, that we will get this information and we will provide it to the members.

As a matter of fact, this not a shining example of responsibility, but the previous minister, who was quite forthright in many ways, and I certainly made reference of that in the past, but I did see him the other day and did remind him that he was not exactly perfect, that he provided information to me that he promised last year. I happen to have it with me right now. I asked him in committee about this time last year and I got all the information. Here it is. But I got it January 7, 1999. I would not call it exactly timely, but certainly it was very, very thorough. I expect this minister to if she does not have the information.

I appreciate that the PUB is a very involved process and that they have areas of specialty over there. There may be one member that is a little more up on the MPIC and there would be another member that is a little more up on the gas company and another member may be a little more up on Hydro. I know we do not want to take three days and bring the specialist in Autopac over here for one day and then the next day we could bring the Hydro specialist and the next day we could bring the gas company specialist. We can do that. It is not a problem. We can do that.

I recognize that we are not necessarily going to have the specialist here who can give us all the detailed answers all the time. When that happens, I expect that the minister will give the best answer she can and that she can endeavour to get back to me with the answer and hopefully it will not be January 7 like the last minister, right?

I know there is a pattern here, and I have seen it over the years, that ministers take these questions as notice. They make certain that when there is no possibility of any, you know, when the election is over, I will get the information in 2003 or 2005. So if we want to do things that way, I can make half-hour questions and use up the time, but that is not what I am intending or wanting to do here. I am aware that the MPIC had its hearing. I was at the hearing, I asked questions there, and I will go to the next hearing and I will ask questions there, too.

But I am certainly going to ask questions, some of the same questions here, because there certainly is a tie-in. I want to find some commitment here that there is a recognition of a problem, there is going to be a desire to ask some questions. That is all I am asking is: are you prepared to ask some questions of the PUB to get to the bottom of this possible travesty here with these car companies and with this towing company?

Mrs. Render: Mr. Chair, as I said earlier, it is not up to the minister responsible for PUB to tell PUB what to investigate. The hearings are a public process. The member opposite has the ability to take forward any of his concerns. I know that the chairman of PUB will read the written record of Hansard, and he will be aware of some of the member's comments. But I do not believe it is appropriate for me to be telling PUB what to investigate.

So I suggest to the member that if this is important to him, that he bring it up. If he has questions, if he thinks that there is an incorrect tendering system in place, then he has a duty to bring that forward. But I will remind him again, for probably the 10th time this afternoon, that he has two other forums that he can be bringing these questions to, and it is not this particular one.

Mr. Maloway: Mr. Chairman, I would like to ask the minister a question or two about the CLEAR system. Given that the chairman or the chief executive officer of the corporation last year sometime had the first meeting ever I think with the car companies–and it was definitely a good idea–but the CLEAR system is designed to I think anyway, one of the reasons for it is to force car manufacturers to build in better safety methods into automobile production. I do not think anybody here would disagree with that.

I would like to ask whether or not this CLEAR system has produced any evidence of improved car safety since its imposition.

Mrs. Render: Mr. Chair, again, this is not a question to be asked at this particular time. If you want to ask whether or not particular systems, in this instance whether or not the cost–well, I am not even going to get into the CLEAR system. This is a question that you should be asking the Minister responsible for MPI (Mrs. McIntosh). PUB sets the rates. I want to remind the member that that is the role of PUB. It is not the role of this particular minister to comment on whether or not certain operations of MPI are working or not. That is up to PUB to make a determination.

But if you have specific questions, those questions should be directed either to the minister or at a hearing if you feel that there are faults.

Mr. Maloway: Mr. Chairman, I fail to see what the role of the PUB is in doing the regulating, other than getting the government off the hook on the question of the rates if, in fact, they are not in a position to ask any questions about systems such as CLEAR, which is a system which, by the way, was a first in North America I believe to be tried here in Manitoba, right here in Manitoba. It is a system that is being phased in. I think it is probably in year three of a five-year phase-in program, and the design is that it is tied to the accidents or the theft costs associated with automobile losses so that they can determine that a certain type of vehicle, if it is subject or prone to theft or subject or prone to excessive damage in a collision, that, in fact, the owners of those vehicles will pay higher rates.

The long-term purpose, I think, and gain to the public in this process is that the car companies will have pressure put on them, that if they keep building vehicles that cost excessive amounts to repair and if they keep building vehicles that are very easy to steal, then the insurance rates will go through the roof, and people will not be able to afford to drive these vehicles, and they will stop buying them. And as a result, the car companies will stop producing them.

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So there is a pressure and a desire there on the part of this system to force the car companies to produce cars that cannot be stolen, or cannot be stolen that easily, to reduce theft claims and cars that do not have large claims costs when they get into accidents. As a result of that, if you buy a car that does not have large repair costs and is not easily stolen, then you should thereby benefit by a much reduced premium for your insurance.

Now, that is what CLEAR is all about. We are in the middle of that, and it is the crux of the entire system. This is the crux of the entire Autopac system as we see it right now. So all I am asking is: where is the evidence that this system has fostered any sort of acceptance in the market out there? In other words, is there anybody other than Manitoba who is in on the system? Right? Are we the only people, are we still the pioneers, or is there, as I have read, some evidence that this system is catching on, that other jurisdictions are, in fact, adopting the system and that the system is, in fact, putting pressure on car companies to build safer cars? Now, do you have any evidence of this, or are you just simply blindly going along, expecting or hoping that in fact this new system produces results?

I mean, it should. It is designed to produce results. But is there any evidence that it is, in fact, reducing any?

Mr. Penner: Listening to this, I am actually now quite convinced, Mr. Chairman, that the honourable member opposite is confused. I think he does not realize the committee that he is sitting in. If he does realize the committee that he is sitting in, I would suggest to you that you call him to order and ask him again to direct his questions to the correct organization, the correct minister and at a correct committee hearing.

Mr. Chairperson: The honourable member for Elmwood, on the same point of order.

Mr. Maloway: On the same point of order, I would expect, given the member's performance in the last half hour, that when we go through other sections of this report, when we get into the gas company, when we get into the Hydro company, as we go through the report, we are going to have the same frivolous points of order about it not being within the scope of the minister or the PUB or it can be dealt with somewhere else or not dealt with at all, right?

If the member wants to just simply slow down the proceedings and cause more acrimony, that is fine. I am quite willing to rev things up a little bit, and we can have a more exciting time and we will have a longer time. If you want to do that, I am certainly willing to do it.

Mr. Chairperson: I want to read for the committee. It states here: Activity Identification. It has–being the PUB–regulatory authority under The Crown Corporations Public Review and Accountability Act of Manitoba Hydro and Manitoba Public Insurance Corporation.

I ask the member for Elmwood (Mr. Maloway), because I am ruling that the member for Emerson (Mr. Penner) does have a point of order, to direct his questions, the last questions that he was asking, to the committee or the Minister responsible for MPIC (Mrs. McIntosh).

Mrs. Render: Let me try once more. I see that the member for Elmwood is becoming frustrated. I think what the member for Elmwood must remember is that you are asking questions of this particular minister that you want explanations of various practices of MPI. Those questions should not be directed to this minister. I cannot answer for MPI. Those questions are questions that must go before the minister of MPI. Well, they can go either before the minister of MPI or they can go to the PUB at a PUB hearing. The process is public, and the member has full opportunity of appearing and asking those questions.

I am not the Minister responsible for MPI. I cannot give explanations of MPI's programs of whether something is good or something is bad. So the member should realize that his questions are out of scope of this particular committee, of this particular set of Estimates.

Mr. Maloway: The annual report that is produced by the Public Utilities Board deals with MPIC as one section. It deals with Manitoba Hydro as another section. Are you telling me that if we switch–which we can do–from MPIC right now and start dealing with Manitoba Hydro that we are going to have the same rules of order that say I cannot ask about Hydro because there is a Minister responsible for Hydro, and it is out of scope. Are you saying that when I get into the section on this report dealing with the gas company, that I cannot ask questions about the gas company because there is not jurisdiction? Then what the hell is this report all about? Why are we having a report then?

Let me go further. Let me start at the beginning and take you through nice and slow. Are you telling me that we cannot ask any questions–well, we did ask questions about the board, about all the political appointments, all of the old Conservative donors–

Mrs. Render: And I answered every one of them.

Mr. Maloway: –and ex-Conservative candidates running, and you did.

Mrs. Render: A point of order, Mr. Chair, the member just said what I have been trying to say. That particular question was what I can answer, the appointments to the Public Utilities Board. I am responsible for PUB. I am not responsible for Manitoba Hydro. I am not responsible for MPI. I am not responsible for any of the other utilities that PUB is regulating. PUB regulates. It sets the rates, and the questions that the member is attempting to try to ask me are to do with the practices of a particular corporation, and those questions should be asked of the minister responsible for the corporation.

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Mr. Chairperson: On the honourable minister's point of order, I would rule that the minister did not have a point of order but I want to thank her for her explanation.

Mr. Maloway: To follow on here, I have questions regarding the Centra Gas Manitoba Inc. So I anticipate that when we get to there, we are going to have the same silly interventions about this is not under the jurisdiction of the minister. Then when we get over to dealing with Centra Gas orders, I expect that that will be the response. When we get to the Gladstone Austin Natural Gas Co-Op, clearly I think an area that I could ask questions about, are we going to be allowed to ask questions about the PUB report in that area? Are we going to be prevented from asking questions about the gas brokers? I mean, the gas brokers–

Mr. Chairperson: Order, please. I want to try to clear this up as best I can, and then we will proceed from there. I would suggest to the honourable member for Elmwood that it is appropriate to be asking questions about regulatory functions of the PUB with relation to MPIC, but the questions of the day-to-day operations of the corporation are probably best left to the minister responsible or to the corporation responsible. Are we clear now?

Mr. Maloway: Mr. Chairman, let us deal with page 18 of the report. Let us deal with the natural gas brokers then and see how far we can take that. Let us find out about the natural gas brokers. There is a reference to inquiries and complaints and the whole issue of the natural gas brokers, and I would like to know from the PUB just what is happening with the whole area of the natural gas broker business.

Mrs. Render: Mr. Chair, I have been advised that there is a hearing scheduled for September to deal with further changes between Centra Gas and the brokers and customers.

Mr. Maloway: Mr. Chairman, what sorts of complaints has the PUB received as far as the gas brokers are concerned?

Mrs. Render: Mr. Chair, I have been advised that there have been complaints about how some of the brokers are presenting themselves, how they are marketing their product, I guess you could say, door to door or by mail.

Mr. Maloway: Mr. Chairman, do we have a breakdown of how many complaints there are? Are they broken down by the types of complaints?

Mrs. Render: We do not have a number available at our fingertips, but when calls come in, when complaints come in, PUB does try to solve the problem and put the customer and the broker together to resolve things.

Mr. Maloway: Are we talking about dozens of complaints here or hundreds of complaints?

Mrs. Render: I have been advised that over the last number of years, it has probably been more than a couple of hundred.

Mr. Maloway: Is there some indication that, say, one or two companies have the majority of these complaints and others have been complaint free over that period of time?

Mrs. Render: Yes, there have been more complaints against some companies than others.

Mr. Maloway: Mr. Chairman, I am waiting for an answer. I am looking for the percentage of successful resolution of these complaints. Are we looking at 90 percent resolution? Are we looking at 50-50 resolution? What is the level of resolution of these complaints regarding the gas brokers?

Mrs. Render: There is a high level of resolution, as the member I am sure can understand. It is in the company's best interests to resolve problems. Quite often it is a misunderstanding. So again, once broker and customer are put together, it is usually that the problem is resolved.

Mr. Maloway: The door-to-door salespeople for the brokers, are they registered at all?

Mrs. Render: The brokers themselves apply and are registered with PUB.

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Mr. Maloway: Are each of the salespeople that are hired by the brokers individually registered?

Mrs. Render: The specific agents themselves are not registered.

Mr. Maloway: I do not know whether it is still continuing at the level it was before, but three or four years ago there was a lot of activity in this area with people going door to door. There were suggestions of deceptive selling practices on the part of the brokers or the people who were going door to door in that people were led to believe that there was going to be a substantial reduction in their price of gas. In fact, at the end of the year a lot of them found that they were getting a dollar a month or some minimum, minuscule amount of a reduction.

I am just wondering whether that was an accurate sense and whether or not that has, in fact, abated at this time.

Mrs. Render: I think the question is probably best answered by saying that sometimes customers have maybe a too-high expectation, or there is a misunderstanding of what their particular contract is, of what their contract actually says, so the rebate really depends upon the contract. Whether there was misrepresentation or whether there was a misunderstanding, or whether the customer thought that he or she was entitled to something really depended upon the particular contract. In other words, one customer might get back X percentage and another customer might think that they should get back the same but it would depend upon the specific contract, what the rebate would be.

Mr. Maloway: Would these transactions not come under The Business Practices Act?

Mrs. Render: At the time of the registration of the broker, the brokers submit the format of the contract to PUB, so then if there is a dispute at some later point then PUB would step in.

Mr. Maloway: I am thinking of the deceptive practices that have been alleged against some of the salesmen. I am not talking about the brokers here. I am talking about the salesmen out on the streets. There have been press reports since 1991, I think, when this system started of some people being a little overzealous and using trickery to convince older people to join up with the broker and the promises of big reductions when, in fact, the reductions were a dollar a month and not what the homeowner thought it was going to be.

We have read several news reports about it. We have had several complaints about it. It is basically unfulfilled expectations; that is what it boils down to. It is a case of a homeowner not getting as much money as they were promised by what they see as the overzealous salesperson that is there to trick them into joining the scheme. Beauty is in the eye of the beholder. I am sure in some cases it is not that case at all. I can see that, if you are doing door-to-door sales, you do not have the unlimited amount of time to explain things. I am sure some of these people are not the most highly trained individuals in town. So I can see them grabbing a homeowner and maybe not knowing all the facts but certainly not giving all the facts to conclude the deal as quickly as possible and get on to the next home.

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These people have been going door to door for several years now. The question is whether the BPA has any application in the case where there is more than one of the broker's salespeople are consistently receiving complaints. Does it have any application? If not, how are you dealing with the complaints?

Mrs. Render: I think the question was: what happens with perhaps a little old lady who has signed a contract and then found that it is not quite what she wants essentially? If a complaint comes in, PUB contacts the broker. The broker would know who is on that particular route, would call that particular salesman in, take a look at the contract to see what the contract says.

The member probably knows that there is a 10-day cancellation clause, but certainly there are instances where 10 days or more–if the broker feels that perhaps the salesman has taken advantage of the customer, will allow the customer to break the contract.

So there is recourse for the customer who feels that they have not been treated properly. Perhaps the member has another question.

Mr. Maloway: Well, because it has been I believe 1991 that we started this program, I would like to know whether it has been a successful program, how much money it has saved consumers, just basically what your observations are on the success of this program, whether it was a good program to be getting involved in in the first place and where it is headed.

Mrs. Render: Mr. Chair, we do not have numbers, so it is hard to give a specific answer to your question. I guess it comes down to the basis of whether the broker can buy the gas cheaper from Alberta and undercut Centra Gas and, of course, pass that saving on to the customer.

Mr. Maloway: Mr. Chairman, page 5 of the annual report indicates clearly that "As a result of such deregulation the price of natural gas decreased substantially, and savings were passed on to consumers in Manitoba." So I was just trying to find out what the quantum of the savings were and whether any calculations had been done to see what the savings were.

Mrs. Render: Mr. Chair, again I am advised that I just cannot give you a figure right now, but we can check back and bring back an approximation, you know, give the member some sense.

Mr. Maloway: I would like to ask then, on balance, was it a good move to proceed with this in spite of the rough and rocky road it had at certain points? Was it a good initiative to take and did it achieve the desired results?

Mrs. Render: Usually competition means better rates for the customer. It appears that this is good, but I think it is too soon to say one way or the other whether things will continue in the way they have.

There have been no difficulties so far, so as I say it is a little too early to make a judgment call yet.

Mr. Maloway: Does the minister see an increase then in the number of direct purchase accounts or a decrease over the next, say, five years?

Mrs. Render: I guess it is like any commodity. It depends how competitive the broker wants to be, how active the broker wants to be.

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Mr. Maloway: I believe the brokers are being forced now to return–I may be wrong here. I think it was $7 million, and it is currently being discussed. I wonder what the status of that whole proposition is at right now.

Mrs. Render: Mr. Chair, yes, the brokers had to make the refund to Centra.

Mr. Maloway: The question is has that been done?

Mrs. Render: The decision was just last week.

Mr. Maloway: Mr. Chairman, has the $7 million been recovered?

Mrs. Render: I have been advised that Centra will send its bill to the brokers and the brokers will–it is a court decision; the brokers must comply. PUB does not know the status. As I say, it is very recent. The decision was just last week.

Mr. Maloway: I understood the brokers were fighting it but I wondered how they could do that.

Mrs. Render: Yes, the member is correct. The brokers did fight it, but they lost it in the Court of Appeal, and that was the decision that came down just last week. That is why we cannot tell you whether the money has actually been returned because the decision just came down, so I suspect it is too soon.

Mr. Maloway: Evidently, there are approximately 62,000 accounts under direct purchase. I was just interested in knowing what the total number of accounts there are to give us an idea of what the potential is for the brokers. If there are 62,484, according to the report, that is out of a total of how many accounts in the province? I guess it would be fluctuating too because there are new pipelines being built and accounts being set up as the gas distribution system is furthered.

Mrs. Render: There are about 240,000 Centra Gas customers in a combination of residential and large commercial customers, Simplot, the university.

Mr. Maloway: So that is 240,000 for Centra and then another 62 through the brokers?

Mrs. Render: No, that is the whole picture. The 62,000-odd are the brokers.

Mr. Maloway: I would like to ask the minister some questions about forbearance, and the government made the move in, I guess it was what, 1995, 1996, when the legislation was passed. I would just like to know what is happening in that area. What was the end result of us passing that legislation?

Mrs. Render: It remains a tool in the hands of the board to determine when it wants to, to use the word "forbear," from being a regulator. If there is sufficient competition to make the market work to the good of the customer, then it does not have to.

I has just been drawn to my attention that on page 5, there is an explanatory paragraph: "The Board stated in its Order that by identifying areas where the competitive market can establish itself successfully, there should be a withdrawal regulation coupled with established guidelines and policies set in place to facilitate the transition to a competitive market place. The Board also stated that any structural or regulatory changes in the natural gas industry in Manitoba must advance the interests of the consumers and not be exclusively for the individual economic interest of market participants."

Mr. Chairperson: Order, please. The time being six o'clock, committee rise.