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The Acting Chairperson (Mr. Gerry McAlpine): Order, please. Will the Committee of Supply please come to order. This afternoon, this section of the Committee of Supply meeting in Room 255 will resume consideration of the Estimates of the Department of Industry, Trade and Tourism.
When the committee last sat it had been considering item 10.2. Business Services (b) Financial Services (1) Salaries and Employee Benefits on page 88 of the Estimates book. Shall that item pass?
Hon. James Downey (Minister of Industry, Trade and Tourism): Mr. Chairman, yesterday I said I would table the sidebar agreements on the labour and the environment. I am doing that at this particular time for the committee, and members of the House will get it through a committee.
The Acting Chairperson (Mr. McAlpine): I thank the honourable minister for the submission that he has made to the committee.
Mr. Tim Sale (Crescentwood): I thank the minister for that commitment and the fulfilling of it so quickly. That is great, and I will appreciate the opportunity to read them. They are much longer than the versions I have, so obviously what I have is not complete. I think that is a good thing that all members will have the opportunity to read those agreements.
When we adjourned, I was raising some concerns that a number of people have about the Isobord project. I want to open by just asking the minister again to catch us up to where we were when we left off about the question of the technology involved in Isobord. It is technology which was patented initially by Bison in Germany, and their process involved the use of formaldehydes, which was a problem with gassing off that I guess everybody is familiar with now because of the urea formaldehyde problem of some years ago with foam insulation.
Isobord did a lot of research and development work, including work in Duluth and the University of Alberta to perfect the use of methyldi-isocyanate as the bonding agent instead of formaldehyde-based resin. That apparently has been proven and is patented now by Isobord, and that is a good intellectual property development on behalf of this company which has spent a lot of money doing that.
The question that I am trying to get some clarification on was first whether this technology, particularly the continuous process with the very high-pressure presses, has been proven on a production basis or whether this will be the first and currently only installation in the world of this process, and what guarantees have been advanced by the supplier of the machinery in terms of the rights and needs of the investors should this process be found to be not so efficient or not so inexpensive as is being claimed by the manufacturer?
Mr. Downey: I am not a technical person as it relates to having full expertise in the whole process that is being carried out; however, I have some confidence in the fact that not only have we seen the potential purchasers of the product be part of the program, we have seen the reviews done by all the investors, including the banks, including the pension fund investors. There are a considerable number of investors that have substantially more monies in the project than we do. Again, I am confident that enough expertise has been brought to the table, and through tests and through work that is being done, that they will be able to proceed and to carry out the project successfully.
Again, where I find considerable comfort again is the fact that two companies that I am aware of that are potential purchasers of the product are very strongly supportive of it. That gives me considerable comfort. One particularly, I met with the company personally. The discussions as to the finished product were quite a bit of that meeting. They were not satisfied with the information that was available at that particular juncture, but there was a follow-up test work done--I think it was by the Alberta Research Council--which, in fact, came back and clearly demonstratedthat the product was what they were looking for. That is not so much related to the actual continuous process that he is talking about and/or the operation of the machinery. That may fall into a little different category. But the end result, as I understand it, is of very top quality and acceptable, not only to those two industries but could well have a greater value to it for further industries.
Again, my answer is that I am satisfied that those other investors and I am satisfied that our departmental people, those people who are responsible for the project from our side, have and are knowledge-based as it relates to the operations of the machinery and the product that will be produced. Goodness knows, there is an abundant supply of raw product. I am sure that they will take some time to commission the plant to make sure that all of the things are done, but I think the principles are solid. The question of whether or not the product can be bound and put to a satisfactory market, those things have all been accomplished. Production runs of the magnitude that they are talking about, I am sure will take some time to make it, as one would expect, fully operational and efficient. I have no reason to think that it can be anything but successful.
If the member has some information that would question that, then he should produce it and provide it. However, I think the time that it has taken to get it to this stage, a lot of that work has been done, and I am satisfied the right people with the right background and with the right objectives have been working on it.
Mr. Sale: Mr. Chairperson, the one plant in North America that is operating that I am aware of is in Wahpeton. Ed Shorma is the owner and he runs a cabinetmaking company associated with the plant. He is basically using probably 75 percent of his output internally to build his products and selling a small amount of it on the market. It is a different process in terms of the production process. It is different machinery. It is a completely different approach to the actual manufacture of the board.
I agree with the minister. I am not an engineer. I have seen the product. It is visually impressive. It looks like it holds screws and it looks like it is machinable. It looks like it has all the qualities that Sauder wants when they agreed to prebuy about 50 million square feet a year, I believe, with ability to move that up, but I think the minister probably knows that Sauder's letter of agreement is on a price-at-the-factory, meets-quality-standards basis. It is not on the basis of taking a risk on the equity side of the operation. Sauder is an enormous company with enormous needs for board, and they will get their board wherever they have to get it to stay in business. So what they are saying to Isobord is, if you can produce a board at our factory price at the gate, meets substantially the specs, we will buy it from you. That is what they are agreeing. They are certainly not taking a risk on the equity, at least not as far as I can see from the funding package.
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So my question to the minister is, Stone-Webster has bonded the fixed price contract, said we will deliver this plant finished for this price. Presumably, they will meet that or they will have to pay. That is fine. That protects investors from cost overruns. Has anyone, has any company bonded the production technology so that there is some protection for investors in terms of the production technology meeting its advertised goals?
Mr. Downey: I do not know that answer to that, Mr. Chairman. They may have. I guess I am of the belief, again, that I said a lot of qualified people have been involved in the process of the development of this plant from the banks through the equity fund investors who have spent a considerable amount of time with their engineering people, with their expertise, determining it. The province has been working with those individuals and, again, has got the comfort from the information that is provided. As far as specific bonding of the process, I do not believe that is in fact in place or probably if it is, I am not aware of it.
Mr. Sale: Mr. Chairperson, but surely that is exactly the biggest risk in the project. Cost overruns are an item that is always important, but they at least have an end. If a process does not work, it does not have any end at all. It is simply a lost, sunk investment that goes down the tubes. I just remind him that the machinery installed in Wahpeton has never reached the advertised 95 percent capacity. It is not much above 75 percent. The all-sell process that Repap was so proud of and attempted to bring in, they wrote off $125 million a few weeks back in the attempt to put that in place in New Brunswick.
The public funds that are at risk here are well in excess of the $27 million advertised because Vision Capital is also one of the investors here and Vision Capital is a provincially supported investment company. So we have a significant amount of money at risk--$30 million, I would say, of public funds at minimum, and I would think that it would be prudent to say who is guaranteeing this process will work or else they take the fall, not us.
We know there is a market. We know it is a superior product. That is not at issue. We know it is environmentally friendly. We know that the isocyanate is a better bonding agent than the formaldehyde based resins. Those things I have no quarrel with. Environmentalists agree. I have asked environmentalists, I have asked the farm people about the need for straw reincorporation, about whether this simply replaces fertilizer or whether this is genuinely surplus straw. They agree it is genuinely surplus straw. We are not going to have to put more fertilizer on the field to replace it. All those things work. I also agree with the minister that it is an industry we should be investing in. It is a good idea.
The question is: Are there prudent measures in place to protect the more than $30 million of taxpayers' money that is going to be or already is invested in this project in terms of the actual production technology?
Mr. Downey: Mr. Chairman, I think it would be foolhardy for me to say that there is not any risk. There is always a risk when we get involved in these kinds of enterprises, and for all the right reasons we are there and we are participating. I believe that we have maximized, where possible, protection to the taxpayers that is available. I am not sure the coverage that the member is looking for would have been available anywhere, if at all.
Mr. Sale: Mr. Chairperson, in light of the fact that the minister may--I do not know--have visited the Wahpeton plant or he may have just had reports of it, but that is the technology that Southwest Strawboard was proposing to use, not necessarily the same supplier but a similar kind of technology. It is a proven technology. They were proposing, I believe, Southwest was proposing a local strawboard co-op. Investors were largely from the Killarney area. The person promoting the project apparently has sufficient expertise in the area that he is often invited to speak at events outside of Canada in the area of strawboard product.
Why would the department choose to put all the marbles in one basket and wage them on one big plant, at Isobord at Elie rather than three reasonable-sized plants, scaled perhaps in the $50-million or $60-million board feet in areas like Roblin, Russell, perhaps in the Virden area and Killarney area where there is surplus straw? Killarney, for example, has the most consistent harvests of any area in Manitoba, has far more surplus straw, does not have the problems of gumbo on the fields in wet years which is a serious problem in the Elie area. That is why the company had to invest a huge amount of money in tracked cats to pull the new square balers which are also very expensive.
We have dry, sustainable and very reliable production of cereal crops in other areas of the province with a great deal of surplus straw and much more reliable supply. Why would we not do scaled plants using proven technology, using local investment, instead of a megaproject that puts all the marbles in the basket of an unproven technology which I hope will work and I am sure the minister hopes will work, but it seems to me that it is not a prudent risk.
Mr. Downey: I find the member's comments a little contradictory, because five minutes ago he said that he supports the project and was pleased to see that we were going ahead with it. Now he is questioning why we are going ahead with it, so I find it a little contradictory.
Mr. Sale: Mr. Chairperson, if I could clarify what I said, I think the minister might want to just go on with his comment after that. What I said was that the process of making strawboard is a very sound idea, and I think we should all support the development of projects that do that. The specific project, I have some concerns about. I hope it works. I hope we do not lose money on it, but given what I have tried to understand from the number of people I talked to, there are serious questions in a number of people's minds about the prudence of risking at the level that is being risked by the public sector in this project when other options were available. That was what I was supporting, strawboard.
Mr. Downey: Mr. Chairman, I will try and deal with it basically dealing with a little more knowledge probably from a side of it coming from the agricultural side of it, and why this and not others. We have not eliminated or said we would not support the other processes if there were proposals to come forward from Killarney. I believe there has been dialogue between the department from that region and our department. We are quite prepared to entertain it. The same whether it be the Swan River, the Russell area. I know that the Melita area where I am from also were interested in a strawboard plant. There were some questions in that area because of lighter soils and again the point of would the area be able to withstand the taking of that kind of straw away and still maintain its tilth and its protection from wind erosion because we are in lighter soils. Excellent potato ground, I will put in on the side, which is hopefully an opportunity that will be developed and enhanced in that area.
There were some questions came out of that area. There was some work done. You get more to the eastern side between Killarney and Melita, for example, the Deloraines, the Boissevains, get into the heavier soils where in fact there is good straw production and that of course would draw to the Killarney area. There is still active work going on there. It is not to say that it is not going to happen.
The other point the member makes, and that is the availability of straw for a plant at Elie. With the type of equipment the member talks about, the big square bales and the equipment, those bales can be transported from very large distances, so it is not a matter of just one region of the province if that area were short of straw, transportability of straw is not impossible and it can in fact be moved into that plant.
The member makes a comment about tracked vehicles. He left it a little bit in the context, I think, that it is not quite understood by him or I would hate people to misunderstand. The tracked vehicle is in fact being used in a lot of farming areas now. It is a machine that is built in Manitoba by the New Holland company. It is under the name of Caterpillar, but it is a Manitoba-manufactured tractor. The track system, yes, works fine on the heavier soils. They work fine in other soils. So it is not a matter that they had to buy tracked vehicles; other tractors would have worked. The good news is that there are 35 tractors being built right here in the province of Manitoba which has a tremendous spin-off. So I do not think we are putting at risk an amount of money that is unreasonable for the size of the project.
I also am aware of the fact--and again the member can question the technology. I go back and say I believe that the right expertise and a lot of the due diligence, everything was done on the product. People did not come to this decision lightly. We did not. A lot of work was done as to its workability. I strongly believe that it will work and if it needs some perfecting, it can be done. There are many resources put in it.
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I, quite frankly, know for a fact that if--I am not going to use the word "if"--when this project demonstrates itself to be what it is expected to be, we probably will see some more of these type of plants being built. Because of the size of them, because of the magnitude of them, they probably will produce competitively with the timber market. Let us remember, there are other competitors that are out there and they are not small operators. They are huge operators that put fibreboard on the market, so I guess it is the economics, the size and the whole business.
Again, I do not believe that we have exposed the taxpayers to anything that is unreasonable. I could use some examples, and I do not need to get into a political harangue with him of where previous governments have spent their money in comparison. That is not what my objective is here today. My objective is to as clearly as possible answer the questions the member brings forward, but I can get into that if he wants to. The point is the plant, the proposal, the due diligence, the expertise that had to be done, I believe, was done. Now there are a few unknowns in this world and we try to eliminate the risks and I think that we, being the government and all those people who are participants, have done their best to maximize the protection.
The member made a comment last night about he did not want to calculate any of the side benefits or the benefits that would be perceived to come back to the province because of whether it is the taxes that are generated, whether it is 35 tractors being manufactured at a plant here creating jobs and expanding or giving economic spin there, he may not want to calculate it into the equation. I, in fairness, think it can be calculated into the equation. At the end of the day when we get the revenues from the expenditures that are put into the plant, we are not exposing the province to any substantial amount at all.
So I am not saying there is not any risk. There is a risk when you get up in the morning. What we have tried to do is to eliminate to the best of our ability the exposure and the risks that would come with that. It is a, I believe, technology that could well revolutionize the environmental industries, the whole business that is out there and the opportunities that will flow from it and the creation of jobs of resources that are grown here and up until this point have been wasted. Mr. Chairman, that is the way I feel about it.
Mr. Sale: Mr. Chairperson, to further clarify my concern about cost-benefit analyses. My concern is when governments treat the direct revenue from taxation from employees who are in the new jobs as though that were a cost benefit for the investment, that is the problem. It is not treating the spin-off revenue or multiplier-effect revenue from the building of tractors or the jobs created in the building of tractors. The notion that the tax revenues from individuals who are employed represents a major new income to the province that is totally chargeable as a benefit, I think fails some basic economic tests, because, presumably, the purpose of the government collecting taxes is to provide services, so on average all of the people who work in that plant will have children, will drive on provincial highways, will use provincial health care services.
So the net new revenue that the province has will not be anything like the gross revenue coming from the taxpayers who work in that plant. So my concern was the crediting of the taxes from that direct operation.
If the investment levers new production of tractors, then there is a whole lot stronger argument for saying that is new wealth, new work, that would not have otherwise been done. So if the minister understood me to be saying there were no benefits, I was not attempting to say that. I was raising the basic question that governments like to take credit for the new jobs that are created, and they tend in their cost-benefit analysis to calculate the taxes on those jobs as though it were new revenue without any costs associated, and there is no such thing as a cost-free citizen. We all generate costs, and, hopefully, we all generate wealth and citizenship as well. But the taxes we pay are not profit to the government. They are in return for services we all consume.
I just raise the minor point of the tractors. I am very glad they are being made in Manitoba, and, to be frank, I did not know that. I thought that they were Caterpillar and therefore were not being made here. I am glad to know they are being made, presumably under licence here, and that is very good news.
I do not believe it would have been possible to use wheel tractors of the size involved in that area according to the farmers who have spoken to people who are very concerned about the wet fall and the damage to their fields that would occur with normal wheeled vehicles, wheel tractors. The tractors, in fact, may not even be the biggest problem. It may be the balers that have to be fitted with some balloon tires, as well, to keep the weight off or to distribute the weight better, so that serious damage is not done to those fields.
That also was a risk concern that was raised to me by a number of people who phoned me about this project, that the conditions in that area are heavy clay with the tendency to wet fall conditions, and there is a short window, perhaps at best three weeks, to get the straw off the fields after harvest in most years. In many of those years, there are wet conditions, and so there is also a fear about the reliability of supply.
I believe Isobord is beginning to stockpile, so that they will have more than a year's supply on hand, and that is probably prudent on their part because I am told at least that the straw production in that area is nowhere near as reliable as the straw production in the southwest is.
But the minister is correct to say the straw production in that area--and he is more of a rural person than I am--is truly surplus, and it is not going to be reincorporated and it is going to be burned. That is what is going to happen to it unless we force people to get rid of it some other way, and this is a good solution from that perspective. But according to the people with whom I have spoken it is also another risk factor because of the soil conditions, the wetness and the shortness of that window to get that straw off.
Mr. Downey: Mr. Chairman, when I was talking about tax benefits, I was not necessarily talking about the taxes that came off of the salaries, because I think that would be a lot smaller than the initial taxes that are taken from the capital investments by the PST, which I am not sure how much of it would qualify. Most of it, I am sure, on that size of a project will yield a considerable amount of money to the Treasury of the Province of Manitoba.
Number two, Mr. Chairman, I believe that we should be clear. He talks about a $30-million investment. The province is in at $15 million, and we are pleased the federal government, through the mechanism they have, came to the table as well. So it is not a matter of us sharing all the risk, that the risk is shared nationally which I believe is the right thing for the national government to do, is to work with us in participatory way to get this project off and running.
The other point I would make is, and that, yes, the track vehicle probably will work better because of what sometimes you can get into are muddying conditions and the heavier lands, but I would say, Mr. Chairman, that I observed for the many years that I have travelled that area and my direct involvement in farming, we have seen very difficult moisture conditions when it comes to combining, when it comes to all kinds of vehicles. I can assure him that in seeing some of the tracks that combines have left to take the grain off that I am sure that they will improvise to make sure that they do not do any greater damage to the fields. They could also, if the mechanics and the engineers were to get together, develop a three-point hitch system which would carry the baler. It would not need to have its own wheels to carry it. That is a potential, a three-point hitch machinery is nothing new to the world, and I am sure there can be adaptations made.
The other point he raises, and that is the narrow window that is available. Again we have a narrow window for taking grain off, and the farmers have not given up. That is why, I think, they have organized the system the way they have with the numbers of tractors, balers and flat decks to put in place a very well organized system which will in fact gather and stockpile the straw. Yes, I would anticipate that it would be important to get a year supply in advance because one never knows from year to year what the conditions would be so it would not be prudent not to take advantage of every year when there is adequate straw and surplus to put that into a stockpile situation.
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Far greater, Mr. Chairman, far greater than the cost to the society when it comes to burning the straw, the loss of that tonnage that goes up in smoke, which causes trouble to the people, whether they have got asthma, whether they have got any kind of a breathing problem or those who do not have a breathing problem, one can sure certainly get one. It is called preventative activities. That again weighs very strongly in my participation in this project. I believe that there can be a tremendous case made on the environmental side for the health of the people of the city of Winnipeg. That happens to be where there are good quantities of straw grown. It happens to be close to the city of Winnipeg. It happens to be where a plant this size has been put together, and I think it is going to demonstrate its worth. Again, that adds a different dimension to it than some of the other communities where, in fact, the burning of straw has not been as prevalent as it is in this Red River Valley.
I have driven back and forth, not only the 20 years that I have been in politics, but I have driven prior to that when I worked in the city of Winnipeg, when I went to university in the city of Winnipeg. I continually had a vision of seeing something had to be done in an economic way with the straw rather than burning it, and what we had to do, we brought in regulations to try and stop it and try and co-ordinate it. You could not burn if the wind was in the west, or you could not burn after five o'clock at night, and it was a regulatory solution.
The best solution, Mr. Chairman, I say this in all my sincerity, was to turn it into an economic development generator of wealth and we all would win. So I see it winning from the health side; I see it winning from the environmental side; I see it winning from the job side; I see it winning from all aspects. Yes, I do not disagree, there is an element of which there is a plant being set up, that we have done our best to make sure all the process, the sales are covered off. Is there room for some things not to go quite right? Yes, because you are dealing with new technology. Can it be corrected? I believe it can. I believe there is enough confidence by those people who are putting the dollars forward, along with our government and those we have discussed with, that it is worth proceeding with, when you put everything into the hopper and say here are the benefits that this will produce. That is why I am pleased to be here speaking in support of the project.
Mr. Sale: Mr. Chairperson, I am not speaking against the project or in support of it. I am speaking about concerns that have been raised to me, and I have attempted to understand and raise for the minister's response. I hope the project works, I hope the employment works. I would be very glad if it does. I simply think it is one of a critic's responsibilities to raise questions that have been raised to her or him by people who have concerns in the field, and I pretend no expertise. I simply say I have tried to do my homework on it. I think that people will be interested in the minister's answers, and I hope he is open to other projects in other parts of Manitoba, because there is surplus straw in lots of places. I think there are people who would rather see Manitoba money and Manitoba investors more at the front of the line than perhaps the particular mix here with more of the investment coming, perhaps because of the size of the capital cost, from other places.
Could the minister tell the committee what Vision's contribution to this project is?
Mr. Downey: Yes, $2,450,000, Mr. Chairman.
Mr. Sale: Is that about the same as Crocus? Are they both about the same level?
Mr. Downey: I will get that detail. I believe that it is, but I am not absolutely sure. I will get that detail. As the member knows, Crocus is under separate management. It does not answer to the government. It has its own management, its own board. We do have representatives on the board, but we are not responsible for the decisions which are made.
Mr. Sale: I was simply trying to determine the Manitoba investment in this from clearly Manitoba capital sources. Federal source we know about. I believe that is in the form of a mortgage to the straw co-op and may have something to do with the actual machinery and sourcing of material. I think they have a second mortgage on some aspect of the operation. I am not sure which component it is. I am just trying to clarify the component part.
Are there any guarantees, co-guarantees, or any form of provincial or federal commitment to guarantee the investment of any of the other partners in this project?
Mr. Downey: I want to go back. I think the federal involvement is for FCC to lend to the local producer co-op money for the building, which is leased back to Isobord. I believe that is their participation, because the federal government was reluctant to get involved in any other way because of the fibre component; they have not been involved in the wood fibre business. It is a national problem that they have, and I believe they entered this project through the FCC program to the building. I think that is how it is.
The member asked the question as it relates to any guarantees by the province to any other participants. To my knowledge, Mr. Chairman, there are not any.
Mr. Sale: Does the province have a person sitting on the board of directors of Isobord as we do in the case of Linnet and, if so, who is that person?
Mr. Downey: Yes. Ian Robertson.
Mr. Sale: Was this a reasonably recent appointment? Having checked the corporate records, I do not see Mr. Robertson's name. I could not see anybody that identified as a provincial rep.
Mr. Downey: In the last two months.
Mr. Sale: Obviously I take the minister's answer. It is not, for some reason, showing up in the corporate search at this point in terms of directors. It may just be that they have not filed their annual return, so the change of directors has not been filed.
Mr. Downey: It may not have been formalized yet, but we have been asked and that is the person's name we have been forwarded to the individual. So the process of getting him on there may not have been completed yet, but that is who is going on the board on our behalf.
Mr. Sale: Do the other investors--Vision, Crocus, Sauder--have representatives on the board as well?
Mr. Downey: Vision and Crocus do. We are not sure about the other one that was referred to.
Mr. Sale: I appreciate the minister's answers on that project and look forward to opening day and the first boards rolling off.
In terms of the actual production that comes out of the plant, my understanding is that the press release and backgrounder indicated that, if my memory is correct, something in the order of 70 or 80 percent was precommitted to various places. I believe there are two cabinetmakers in the United States, one in Holstein, Iowa, and Sauder is another--reasonably nearby. I do not remember how far away--Idaho. Are they the only two companies that have precommitted to buying the output?
Mr. Downey: Mr. Chairman, I think 75 percent of the board in fact has been committed, and the countertop company in Holstein, Iowa, is one of them. Sauder Brothers, they are in--I think, Ohio is where they are from. They are major cabinetmakers and furniture makers. In fact, there is a company in Winnipeg that sells their product. I am not aware of any other contract that has taken on product at this particular time, although I know they have talked with some Canadian distributors. I do not know what all the network is that they have set up. I do know though that, because I made this in my earlier comment, the quality of the product that they anticipate coming off could well get into a higher value of market. So it is maybe a good idea that 100 percent of it is not sold or precommitted, because if it in fact is of the quality that is anticipated, it could yield a greater amount of money because of the quality of the product that is coming off.
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Mr. Sale: The reason that I asked the question, Mr. Chairperson, is that on a sort of a face analysis of the costs of this project, the average cost per square foot appears to be in the order of 49 or 50 cents a square foot based on looking what the capital costs are, normal payback and the announced operating costs, input costs, et cetera. The price for the competitive product, f.o.b. Winnipeg, is 32 to 36 cents a square foot so that the premium, just on a straight face-value basis, is very substantial. Given that most of this board is hidden and not visible, given most kinds of modern cabinet construction, the company is obviously asking buyers to pay a fairly substantial premium for a product that may have superior qualities, but it is a fair risk in terms of marketing. Is the minister aware of pricing and price studies that were done by his department?
Mr. Downey: Mr. Chairman, on the due diligence that was carried out, it is my understanding that the capital invested, the product that is produced is competitive and will, in fact, be saleable at the price it is presented at. There are some characteristics which--and again, 75 percent of it is committed. I will give you two examples: One is the Sauder Brothers furniture people. After they had the first view of it, they wanted some more work done on it. After that work was done, they advanced their position to firm up, because of the quality in what they saw in this product.
The countertop people in Holstein, Iowa--I think they are the largest manufacturer of countertops in the United States. One of the features that the product brings to it is that it is something like three or four times greater water resistant than any other competitive product.
The other element, which the member raised himself, is any emissions that would come from the traditional ureaformaldehyde product which, quite frankly, are not conducive to good health in offices and furniture. Wherever you are, nobody likes to be in a room where there is a lot of ureaformaldehyde being emitted from the furniture. This is inert basically. So I guess the best answer I can give is, yes, due diligence was done, the business plan was presented, and to my knowledge, will sell at the price the product is presented.
Mr. Sale: Mr. Chairperson, I believe the price that Sauder agreed to is in the order of 35 or 36 cents a square foot f.o.b. the plant--not f.o.b. Winnipeg, but f.o.b. the plant--which means that basically the company is going to sell product at a fair loss. The indications I was given were that the remaining 25 percent of production was going to be finished in the form of a flooring product or similar high value-added product and that the return from that 25 percent was going to offset the losses on the 75 percent in the hopes that, because of the superior quality of the product and the near saturation of the wood fibre board market, given that there is very little supply left in North America to make wood-based fibre board, that those two factories would combine to allow the price to rise in enough time basically to offset the initial losses, which would be projected at the costs that the company has.
I should say that these are not estimates that I did. I do not have that skill. These are estimates done by people who are actually in the business of producing board and understand the industry and know the input costs.
(Mr. Ben Sveinson, Chairperson, in the Chair)
In fact, the president of the company, Isobord, confirmed the number of 49 or 50 cents a square foot cost in my conversations with him. He indicated that the hope was that the value-added for the remaining uncommitted board would be sufficient to offset the loss on the three-quarter inch board that is being precommitted to the States that is not laminated, in my understanding. It is the laminating of the thinner floor board that he hopes will be able to be marketed but does not have a market for at this point. So it is another element of risk that I wonder if the minister has any comment on.
Mr. Downey: Mr. Chairman, I guess the business plan and all the due diligence that was done and all the information available was all the information that the decision was based on, so getting into the detail and the technical part that he is asking me for, at this particular time I have no further comment.
Mr. Sale: Could the minister, moving on to another company, indicate what the total provincial losses were relating to the closing of Iris? What was the total investment, the total loss, Iris Systems?
Mr. Downey: I understand that the direct involvement, Vision was involved as well, as the member knows, but the direct involvement came through the communications agreement in the department, and I will get that information. The staff do not have that available to them right here.
Mr. Sale: Mr. Chairperson, in 1993-94 the spending under the WEPA communications agreement was $877,000 and in '94-95 $46,000. I believe there were some other commitments from other government programs other than just the WEPA agreement. I thought there were either loans or forgivable loans or repayable loans as well to Iris.
Mr. Downey: Again, Mr. Chairman, I want to be accurate, so I will get that information for the member. We do not have it at our fingertips.
Mr. Sale: When the minister gets that information, could he include in it the total losses which were experienced by Vision in which we are a partner by the teachers' pension fund, which is a partner in Vision and also may have had investments in their own right? We would like to have a sense of that attempt to move into another area, which was potentially a very interesting area; it might well have gone but did not. We would like to have a sense of what the total picture was in the Iris failure.
Mr. Downey: As I said, I would be prepared to get the money that we directly put in. The money that he is talking about through Vision will not be--probably we will not be able to make it available to him because of the fact that the Vision package is looked at as a total investment package which is directed by an independent board.
Again, what I have tried to get across to the member is that in the private-sector efforts the information that they are dealing with is really outside--the global amount of monies put in by the province, the details of the projects that they are involved in, I am not sure that I can provide that information. If I could, I will check out and see if there are any reasons why. I am not making the commitment today that I will provide that to him.
Mr. Sale: This is a company that is belly up. It is not producing anything. It is gone. It is finished. The technology has been sold to an American company. What possible third-party interest is there in revealing what the total losses were for various investors unless they are private individuals? In this case, they are not; they are trusteed pension funds that the province has a interest in and, in fact, has an obligation to, established under provincial statute, and of capital corporation which the province is a partner in. What possible third-party interest is there here?
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Mr. Downey: Again, Mr. Chairman, there could well be private money in the Iris program which the member is referring to. I will not make the commitment today to disclose that. I will check as to the availability of doing that, but I will make no commitment that I will provide it. What we look at is there is a package of money, a parcel of money given to the Vision Capital board, negotiated with the Vision Capital board. It is part of a total package of projects. There are some that have gone like Iris, and I know that one particular. There are many that have been very positive, so the total picture with Vision is one of a positive nature. The projections are that we are in a good position as it relates to the investment made in Vision. When we start getting into individual ones, I am not sure as to how much private or individual investment has been made and the ability to disclose that. I am not trying to be difficult. I am just saying that I want to make sure that, before any disclosure is made, it is done in a way which would not break any confidences or any part of an agreement.
Mr. Sale: In the end stages of Iris, the minister is aware that Faneuil bought the majority control of Iris Systems, invested a very small amount of money in it in total, and then made a whopping great capital gain when they sold the software and the technology to the American buyer who was a competitor company. It may have been a prudent business decision to sell the software and to wind the company up. But Faneuil certainly did well by themselves and did well while taxpayers did badly and lost all of the money they invested. Faneuil not only did not lose any of the money they invested, Faneuil made a significant capital gain on the sale of that company and that company's technology. How does the minister defend that when Faneuil is also a recipient of provincial support? What kind of business ethics is involved in this sort of transaction?
Mr. Downey: Mr. Chairman, the answer that I am giving is that the taxpayers' money the member referred to was done on a block basis, that there were several investments made by Vision which were invested in several ventures. Iris, as the member has referred to, was one that had not succeeded. When one looks at the total package, I am informed that we will be more than paid back for the dollars that we invested in Vision, that we in fact would not lose. If you wanted to pick Iris out and hold it singly, yes, it could be considered a loss. But when you look at the total package of business involvement that Vision is involved in, the taxpayers will not, I am told, lose any of those resources. What we do not get in Iris we will get in the benefits of other companies that we are invested in. So we cannot say that it is a direct write-off to the taxpayers. The package of money was put into Vision on the understanding that it will in fact pay back with dividends more than was invested in it, or the amount invested and dividends as it relates to the companies that were participated in.
Mr. Sale: Mr. Chairperson, what was the gain that Faneuil got as a result of selling the technology to the United States company, and what were their costs for that gain?
Mr. Downey: Mr. Chairman, again what we are doing is, we are singling out one particular company of which there was involvement. I cannot give him an answer directly today. I will check as to whether or not I have the ability to. I am not making a commitment. I am saying, I am not making a commitment to provide that information. I will check out and see if there is an ability to do so.
Mr. Chairman, I am informed, and I think that is understood, that I would have to have Faneuil's agreement to do that.
Mr. Sale: Mr. Chairperson, the province recently just invested another $8.5 million into Vision, or announced the investment. The business--I do not know the exact date, but it appears that it might have been either late last year or the first of this fiscal year. What was the source of that, given that the Estimates show $2 million of expenditure for Vision Capital this year and $8.5 million has been guaranteed or written in? What is the source of those funds? Where do they show up?
Mr. Downey: Mr. Chairman, the member is going from a headline in a press story that was not put out by the province and/or any authority from my office. I can assure the member that there are discussions taking place, but that deal, to my knowledge, has not been finalized or signed. I am telling the member, though, there were discussions and have been discussions and negotiations being carried out, but that story did not come from the province.
Mr. Sale: Mr. Chairperson, whichever one of you is in the Chair--
Mr. Chairperson: Sorry.
Mr. Sale: That is all right. I just did not know who was in the Chair for a moment, but you are.
Mr. Chairperson, the reporter, Martin Cash, who wrote the story indicated that this was not just a supposition but that in fact he had the confirmation that that was in fact the case. So let us assume that it is not in fact the case, that the final agreement has not been signed yet. Where is the money going to come from should it be signed?
Mr. Downey: Mr. Chairman, I put that down as a hypothetical question; but, no, in fairness, I will. I am not trying to play games here. There are discussions. It is basically along the lines of which have been reported. I am not saying that it is inaccurate. The funds that he is referring to would come--just a minute, I will get the--if the project is completed--[interjection] I will put it in this form, I would anticipate that it would come out of The Loan Act authority.
Mr. Sale: Mr. Chairperson, I asked last year questions to which the minister, I think, decided not to answer and said that third-party problems were the problem here, and I am going to ask again this year. Vision Capital is a legitimate venture capital company focusing on Manitoba investment opportunities. It has had some very good winners. It has had some losers. That is the game of venture capital, and no one would expect it to be different. If they had all winners, then it would not be venture capital. It would just be banks looking for profits. So, of course, there will be losers, and you try to learn from the losers and learn from the winners and increase your odds, but you do not stop taking risks, otherwise, you are not in the venture capital business.
The minister may be familiar with a little venture capital company about the same size as Vision in the $28-million, $30-million region. It is called the Health Care and Biotechnologies Research Fund. It is just a joint stock company. It is listed in the Toronto Stock Exchange as an investment fund, and it is one of the things I have in my RRSP. It is not a big RRSP, but it is my RRSP. It sends out an annual report, and it reports on every company it invests in. Some of them are publicly traded; some of them are not. Some of them are at a preliminary offering stage; some of them are at a very early stage of development. The company has had a good track record. It has had more winners than losers, and I am very pleased to be a shareholder in it.
My point is that here is a company that makes public all of its investments through its annual report. It does not shy away from saying we screwed up on this one, we won on this one, here was the the value of our initial investment, here is its approximate market value today. They are very conservative in their accounting. If they make an investment in a company that does not have a publicly traded security, then they show their investment at either carrying cost or at some lesser cost, but they do not ever inflate the cost from the initial book value.
I fail to see, Mr. Chairperson, why Vision Capital should not be reporting in the same kind of way. It receives public money, and it receives money of teachers that are in many ways public servants; it is their pension fund. Why will the minister not simply, as a matter of course, report here are the investments, here are the amounts, here are the ones we that we have written off, here are the ones that we have got our money back from and done very well on?
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I do not think there is any particular shame in a Venture Capital Fund that has some losses. I think the problem that we have, and I think more and more of the public are having as they call and ask questions, is that there is no accountability here, absolutely no accountability to the public. The public puts money in it, but there is no accountability back to the public for the money that they invest. If the fund is well run, makes prudent investments and loses money, well, so be it. If it loses too much, the public is going to say, well, wait a minute, maybe we should get new fund managers or maybe we should not be in this business. But what is the problem with saying here are the investments, here is what they cost, here is when we made them, here is when we got out of them, here is what we got, we won some, we lost some, but on balance we are doing fine? Why do we not just make the details available?
The little company that I invest in tells me quite a lot of interesting things about the companies that they invest in, in their successes and in their regulatory hurdles, and I feel like I have some sense of accountability from this company. Now it is a private company in the private market. I feel I have got a lot more accountability from it than I do from being a minor shareholder in Vision Capital as taxpayer in Manitoba. I have not a clue what their wins and losses have been except in their PR reports, which I do not think, frankly, give me the whole picture very adequately. So why would the minister not require Vision to report at least in a summary fashion what it has invested in, what has gone well, what has gone badly, where it is going?
Mr. Downey: Mr. Chairman, it is not that I would not like to give the information to the member. I have no reason to say that there is anything that should be. It is a matter of the fact that we are a 24.5 percent owner in Vision. The other percentages are owned by private individuals. I would think we would need the permission of those individuals to make public the involvement and the details that he is asking for. If I am not mistaken, the company he is referring to is a publicly traded company, and they have to disclose the activities which they are involved in. That is the difference and, again, there is no reason why, other than the confidentiality and the private investment portion of it which could in fact be influenced as to the operations of the company and those individuals, and I would think it would take the approval of the other participants, the 75 percent or 75.5 percent, their agreement to disclose the information.
Mr. Sale: At the present time, Mr. Chairperson, who are those other 75.5 percent? We know about the teachers. Who are the others?
Mr. Downey: Mr. Chairman, I cannot say that I would provide those names. I will take under notice the request and see if I am able to provide that information to the member.
Mr. Sale: Mr. Chairperson, surely the minister can see the absurdity of the position that he is taking at this point. As, again, a minor investor in the Crocus Investment Fund I have the right to know what the Crocus Investment Fund is investing in, and one of the things they are investing in is Isobord. So I have the right as a shareholder in Crocus Investment Fund to say, tell me about your investments. Some of them are the same investments that Vision is involved in. Some of them are not, of course. But here is a situation where the minister is trying to give protection that is comparable to the protection of a privately owned company like Eaton's, for example, that does not have to report to its shareholders because its shareholders gather around the family dinner table, does not have to publicly account for what it does until it runs into some difficulty.
Now, surely it would make more sense, as is the case with most public investment vehicles like the labour-sponsored funds, to say, look, put out an annual report. Tell people what you have done. Be accountable. At this point the public of Manitoba, as a 24 percent investor in a venture capital corporation, is told to just shut up, go away, do not ask questions, because we are not going to tell you any answers about where your money has gone in this venture capital corporation. Trust us. It has had more winners than losers. Here are a couple of the winners. Well, that is good. I am glad there have been more winners than losers. If that is the case, what is the down side of publishing an annual statement from this corporation?
Mr. Downey: Mr. Chairman, I personally do not have any problems. The problem that we may have is that we are involved in a legal agreement between a private entity and the Province of Manitoba through Vision Capital. I will not do anything that would break a legal agreement. I have said I would make available if possible some of the information, like who the participants are and involvement, but I will check out the legal obligations that we have, because that has to be honoured as well.
Mr. Sale: Mr. Chairperson, will the minister at least undertake to provide a list of the companies in which Vision has been or currently is an investor so that we might at least know the range of investments that have been made? It does not give us anywhere near the information that public accountability gives us.
Mr. Chairperson, I say again, this is a government that talks about transparency, and yet publicly accountable firms, accountable in the private sector, have far more accountability to their investors than this government apparently wants to have as an investor-envisioned capital. It just does not make a lot of sense that publicly accountable joint-stock companies have to have a higher standard of accountability than publicly entrusted monies invested through a government have to have. It just does not make sense.
Mr. Downey: Mr. Chairman, the member has asked for a list of the projects. I will take this under advisement and give due consideration to that question.
Mr. Sale: Mr. Chairperson, last year I asked a number of questions about telemarketing companies. I asked, specifically, a question about PR Response at that time in regard to a series of questions around Manitoba communications. M--that is not quite right. I cannot remember the acronym of the company that is owned by Cliff Watson and associates, 80 percent; 20 percent, one of the Manitoba telco subsidiaries. The minister responded that they were in negotiations with PR Response, but at that time nothing had been finalized. Can the minister bring us up to date with the discussions with PR?
Mr. Downey: Mr. Chairman, I am not aware that anything was concluded with that company.
Mr. Sale: The minister accused me earlier of playing games and trapping him. The minister has officials here. Is this not a company with which you had substantial discussions around rates and which subsequently located in Manitoba?
Mr. Downey: Yes, Mr. Chairman, I stand corrected if I left an impression on the record that is incorrect. They have changed the name from PR Response West to--and, by the way, Mr. Chairman, he did not trap me on anything. I was just wondering why he did not ask the questions when the individual that could have given us the answers was here rather than do what he did today.
Yes, it is now called TeleSpectrum Worldwide, which had been publicly announced about a month or a month and a half ago, which, I understand, he was not happy with in the agreement that was reached. So, yes, we have concluded a deal with them, and it is TeleSpectrum Worldwide that is now the name of the company.
Mr. Sale: Mr. Chairperson, what is the nature of the provincial commitment to TeleSpectrum?
Mr. Downey: A 60-month, $1.375 million, conditionally forgivable investment under the call-centre investment initiative is the program. There are employment commitments that have to be made, and those commitments will be 506 persons in year one, with anticipation of employment of 708 full-time positions by year three, and it is estimated that the payroll would be something in excess of $12 million by that time.
Mr. Sale: Mr. Chairperson, could I just clarify whether the minister said an additional 700 or growing to 700?
Mr. Downey: Total to 700.
Mr. Sale: Is the minister familiar with a company called Staffmax?
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Mr. Downey: I am not personally. The call-centre people may be familiar with them, but I am not, Mr. Chairperson.
Mr. Sale: Mr. Chairperson, the company--in my understanding, it has been at least represented to me--is a personnel company that hires, on behalf of telemarketing companies, staff to provide telemarketing services to the companies. What that really means is that it is essentially, I suppose, the 21st Century equivalent of the casual labour centres on Main Street. Staffmax retains a large number of people, and call centres call for staff on demand. For example, the AT&T Transtech Centre uses Staffmax as their staffing arm, so that the staff who are employed there, at least on the telephones, are likely not AT&T Transtech employees, they are likely Staffmax employees.
In the case of TeleSpectrum PR, I wanted to ask whether the minister or his staff who do the audits is aware of whether the companies providing the staff are in fact the actual companies whose names are on the door or are the staff provided by temporary labour companies, such as Staffmax?
Mr. Downey: I can tell the member that I now am aware of Staffmax. I have just been informed by the department that Staffmax--but I was honest, I had not been informed previously of it--offers a service to the call-centre industry and that it is a new company in Winnipeg.
Mr. Sale: I do not think it is that new. I think the minister will find that it is at least a couple of years old. It has been around for more than a year certainly according to the people who have talked to me about it, but that is maybe neither here nor there. Does the province have any commitments to or involvements with, in any form, Staffmax?
Mr. Downey: Not to my knowledge.
Mr. Sale: This whole business of staffing your company with temps is increasingly the way the world seems to work, seems to think it is a good idea to outsource everything in sight. Maybe we could outsource government and save all kinds of money. Who knows, but that is certainly the way the world seems to want to go is to outsource everything.
Is the minister concerned that the so-called jobs at, for example, AT&T Transtech are not jobs at AT&T Transtech at all, they are jobs at Staffmax? They are entirely day to day or week to week at best. They are episodic. The benefits Staffmax provides to its staff are simply the statutory benefits under the Manitoba labour codes. There are no benefits of any kind other than the statutory minimums.
Is the minister concerned that when he is auditing AT&T Transtech in terms of their job commitments, he is not auditing AT&T Transtech employees, he is auditing Staffmax employees? They may have worked as individuals, hours, days, weeks, months perhaps but few of them have worked more than that because the turnover at Staffmax is extremely high. So just what is it that we are really auditing when we are looking at places we have those kinds of commitments?
Mr. Downey: Mr. Chairman, I am informed that it is a service carried out by Staffmax, that it is a service provided to AT&T. They provide skill and corporate training. I am not aware of the fact that they would be partied with those employees. The member continually keeps going back making reference to the call-centre jobs as not being real jobs, and they are not good enough paying jobs. I can tell the member that I think that they are providing an excellent opportunity for people to enter the workforce and be part of the workforce and to advance within the call-centre business.
We have over 5,000 currently employed in the call-centre business. The approximate average wage is in the $8 to $10.75 an hour which may not be enough in his mind, but I think where people now are moving from, particularly with the program that Family Services are providing, social assistance or support by the province to a job is important to them and has been said so by those individuals involved. So I am not making any apologies. I think that there are some opportunities that are provided through that call-centre activity in our province that would not be if they were not here, so I will debate the member anytime he wants to. In any audits that we do, we will make sure that the commitments are made by those individuals that are hiring, that there are person years of employment provided through that call-centre activity.
To my knowledge, it has not been brought to my attention by the department or I am sure the department would be aware of it and if they are would have reported it to indicate that they are living up to their commitments on person years of employment.
Mr. Sale: Mr. Chairperson, the minister indicated yesterday that Mr. Kilgour would be the person responsible for the audits to ensure compliance with Manitoba's agreements with the various partners where there have been subsidies or whatever we call them, grants, support. When Mr. Kilgour does his compliance audits, does he become aware of who the actual employing authority is? Does he review their records insofar as the actual employing authority is concerned. In this case it would be Staffmax. AT&T Transtech is not the only company they provide services for.
Mr. Downey: I am informed by department that they have to be employed by the company which we have provided the support to, and the T4s are checked by the audit that is done by Mr. Kilgour.
Mr. Sale: Mr. Chairperson, is the minister saying that the cheques the employees receive who are in the AT&T Transtech Centre, for example, are from AT&T Transtech?
Mr. Downey: Mr. Chairman, I am not going to put on the record something if it is not. I will double-check that. The point is that the employment has to be carried out by the company. How the payment arrangements are made, I will get that detail. The point is they are creating the jobs that they are committed to, and we will check as to the specific detail that the member wants. If they are not, we will have an explanation as to why they are not, but the point is, they have to meet the job targets that are established through their activity.
Mr. Sale: Mr. Chairperson, the minister and his government have defended these jobs which I think are essentially as the minister actually has said himself, these are job entry kinds of jobs. They are not career jobs for a lifetime, because no one could live on $7.35 an hour and raise a family and buy a house and make any kind of commitment to the community. It just is not possible, nor could they make a commitment to a family on the insecurity that is involved in call-centre work.
This is not true of all call centres. Call centres that are doing outbound support work are much more secure, usually better trained, usually more job satisfaction and usually lower turnover, and so Purolator, for example, CN, those kinds of call centres that are providing service to customers who want the service, who have had some kind of relationship with the company and are seeking service, are very different than calling at six o'clock to have your rugs cleaned. So outbound calling versus inbound calling is an important distinction. I accept that the inbound calling centres or customer centres can be very good employment.
Will the minister undertake in the next year to see that there is an evaluation carried out that would gather information in a completely unbiased way about wage levels, turnover rates, retention rates, the overall satisfaction, training levels, advancement, in other words, to take a look at this new industry which the minister is happy we have, the 5,000 jobs that we have, and take a look at it in a thorough way and say, what are the ways in which this could be even a better industry, a better, stronger industry?
I am given to believe that turnover rates in the outbound call centres often exceed 300 and 400 percent a year. In other words, the people are staying two, three, four months and they give up. They just cannot take the abuse, the pressure to meet quotas. I am told by an employee of TeleSpectrum, for example, that the company policy is that if you are a minute late from a break, your chair is taken away from you and you have to stand for a minimum of an hour at your station. Then you get your chair back.
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I am told there are two washrooms for a staff of largely women; a staff that now is over 400 in that centre--two available washrooms. I am told that people are fired on the spot when they are not meeting their quota for that day. In other words, it does not matter what you did yesterday or what you did last week. You are behind quota, your name goes up on the board, you are publicly humiliated in front of your co-workers and you may well be terminated right on the spot.
The same people who spoke with me about TeleSpectrum told the story of someone coming in who was quite a good telemarketer, thought he had been called in. There had been a miscommunication; he really was not needed that day, but the supervisor said, well, she has not made any sales yet. You can go and do not come back. There is a chair for you; get at it. These are the kinds of personnel practices that are worthy of Third World nations. They are the kind of practices the minister was saying yesterday, in relation to the side agreements on labour with NAFTA, would be things that we would be really concerned about as a province.
I am asking him to be concerned about those kinds of practices which I tell him from members of my own family's experience, members of very senior Conservative Party officers family's experience, are not very job satisfying kinds of experiences. These are outbound call-centre jobs, not inbound. So would the minister undertake, through his department's resources, to do a thorough objective evaluation of these jobs and of the career opportunities involved in them, of the turnover rates and so forth and present that finding to the people of Manitoba in the form of a report?
Mr. Downey: Mr. Chairman, I am certainly not going to question the member as to the authenticity of the stories that he brings to this committee. I would however question that it has not been brought to the attention of other members of the Legislature or to our office. The call-centre team continues to keep a very close relationship with the call-centre activities. Some of the situations that he refers to, I do not think, would be acceptable to anyone.
I will endeavour to try to either substantiate or do some form of a review if the call-centre team have already not got that kind of information; they may well have some--important to have the information and the other would be to encourage something to be done about it. I go back to the comment he made about not being able to buy a house or to be involved in certain things on $7.35. It is my information that people do not stay at that level very long, that there is tremendous opportunity for advancement into management, to get into a greater income.
Everybody does not necessarily want to buy a house. They may want to rent a facility. Everybody may not want to have a full-time job. They may want a part-time job and so there are many categories that--just talking about the member for Elmwood or Elmhurst--Elmwood--grabbing his telephone as if it was a hot potato. So I will endeavour to try to satisfy myself and to satisfy the government and the public whether or not there are some practices that are not acceptable and will determine how best that could be carried out.
Mr. Sale: Mr. Chairperson, I appreciate that commitment on the part of the minister that he would at least investigate the kind of concerns that have been raised very often with us about these particular call centres.
I am very concerned about the TeleSpectrum one because of the implication that the company is going to be taking people on social assistance and that the government will pay, I believe, seven weeks' wages, seven weeks' training, and that the company will then take over the wage. I just say to the minister that the company's claims about training are not substantiated by those who have worked in it. I am told that training consisted of a manual, a paper binder, that says: here is the company, here is what you say, here is how you say it. If they had never been on a telemarketing screen before, they were given at best a half day, and they were expected then to start making sales. In other words, the training was perfunctory at best. It certainly was not weeks. I can tell the minister that I have a close relationship with a person in my family who was trained by AT&T Transtech. The training was four days. That was the total training. Not seven weeks.
The person responsible for TeleSpectrum in the press release--I do not want to interrupt the minister. The person responsible for the company here in a press release about its starting up--which, by the way, it did not just start up when the press release came out. It started up as PR Response and metamorphosed into TeleSpectrum at a little later date. He indicated that at least seven weeks was required, that that was not an unreasonable time. My understanding is that in fact in seven weeks many of the people who started are gone, that the turnover rate is that high. So here we have a situation where--and I would ask the minister to investigate with his colleague the Minister of Family Services (Mrs. Mitchelson) whether the province is not simply providing cheap labour to TeleSpectrum in the form of the 30 or 40 social allowance folks who are being guaranteed slots at TeleSpectrum at public expense. There is no commitment, according to TeleSpectrum management, again quoted in the paper in response to questions; there is no commitment to hire these people on an ongoing basis.
The minister refers to $7.35 or $7.50 being the starting wage. In the case of some companies, it is not that. It is $6.80 and $6.40 an hour. It is lower than that, and very often people are promised that after one month, two months or three months their wage will go up. The trouble is that after one month, two months or three months they are not there anymore. So the number of people who can stick it out to get $8 or $8.50 an hour are somewhat fewer than the number who went to work at $6.40 an hour, let us put it that way. Yes, there are opportunities to advance into the kind of on-floor management. There is roughly one manager for every 10 telemarketers, and the managers may make somewhat more money. No doubt they do. They also, at least in some cases, have to drive people in the same way that the foreman used to have to drive people on looms. The only difference is that these are telephone systems and not looms.
So I really encourage the minister to take a look at this industry that we are building. It may be that it is a very good industry and can be made profitable and humane, but from the number of people who have talked to me and to other members of our caucus who had bad experiences and would not be a telemarketer again, even if it meant staying on welfare, because, first of all, the wages were lower than welfare anyway, and the harassment and costs were at an unacceptable level. So I hope the minister will seriously do the examination he has spoken of and will ask the questions and begin to raise with the companies who are doing outbound telemarketing the standards that they have for labour and training and quotas, and whether or not we really want to encourage a huge growth in this industry as a result of that study.
Mr. Downey: Mr. Chairman, the $7.35 is the number that he used himself. I picked up on that $7.35. It was not anything different than that. He made reference to $7.35. I responded to that $7.35. That is how that was put on the table. Secondly, I think it is important to note that it is strange the member opposite and the opposition are getting all these calls and complaints when I, to my knowledge, have not received any to my office, and other members of our party have not received them, the same complaint which he is referring to. That, I think, is important to put on the record as well.
As well, I think it is important to point out that the report he may have read in the newspaper may have been his own comments, as it relates to how he feels about whether or not people should or should not come from social assistance to a job which is paid for by the province, and that it is, in fact, providing low-cost labour or subsidizing a company. That question was asked of the management of TeleSpectrum and it was denied. I do not have any reason to not believe that individual.
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I do know of individuals who have come from social assistance support programs and are working in companies that have spoken exactly the opposite of the member, that they believed that they were to play a meaningful role. It was a good opportunity for them to get an experience and carry on in a meaningful way, that they were not just trapped in some way on social assistance and could find no way out.
I do not believe that it is only temporary or job entry. There are some lifetime careers that have been developed in the call-centre business. I do not degrade them in any way, shape, or form. I think it is a tremendous opportunity for job opportunities for students for part-time, for permanent work, and for people who want to get into the industry. I think it is a relatively new industry.
Yes, there are some things that can be looked at and reviewed, and some assurances given. Nobody wants people taken advantage of, that is for sure. On the other hand, I think it is imperative and important that government continue to work to try and get people employed in all categories. It is not a matter of saying these jobs are not important, we want everybody to become university professors. Certainly, we do not want too many more politicians. I do not think the public would swallow that. [interjection] Auctioneers, they could handle quite a few more of, but the auctioneers who are out there do not want to see any more. They want to make sure it is a closed shop; that is, the ones that are in. Those that are trying to get in would, of course, like to advance the opportunities.
In a serious way, Mr. Chairman, I do not take lightly the question that the member asks, because we do want to make sure that it is an industry that has solid base; training is adequate; the work conditions are satisfactory and that the industry grows. The worst thing in the world that can happen is for some of the things to come about that the member is bringing to the table and give the industry a name that is not conducive to good growth and development. That, I do not want. But I can tell you, the assurances I have had from management, from people who are involved in the companies have, to my knowledge, been very open and straightforward with us, and none of them have spoken any differently than what I am putting on the record as to the things they are doing.
I think it is important that we all work to try to give opportunities for people who are involved in social assistance. There will be some who will always have to have social assistance. It is the public's responsibility to provide them with that kind of support. But it is also our responsibility as government and public representatives to try to maximize the opportunities for people to add to their lives by being gainfully employed and involved. I hope the member would agree with that. We would all like more money, I am sure. The bottom line is what can the system produce for those individuals.
Again, I have nothing further to add unless there are some specific questions as it relates to this project.
Mr. Sale: Mr. Chairperson, my comment in regard to social assistance was not the inappropriateness of social assistance paying a training wage. That is a well-accepted strategy in getting people back to work. The problem with that is that if you do not then require the employer to retain people for some reasonable period of time, you are simply providing subsidized wages to employers.
My comment to the reporter who wrote that story was, if there is no provincial requirement that people be hired at the end of a training period, then this is not a good program. I did not suggest that it was inappropriate that people on social assistance be given some preferential opportunities, and it is not inappropriate to provide public subsidies for wages.
I tell the minister, although it is not his department, that Quebec is probably famous in Canada for these programs of short-term wage subsidies to people to work in marginal industries. The churning that went on in those industries was phenomenal. As soon as the wage subsidy ran out, son of a gun, the employee was not suitable, and another welfare recipient came in the front door at a subsidized wage. Quebec did that for years in a number of different areas using federal-provincial cost-sharing wage subsidy programs. They were universally evaluated as fundamentally useless programs. All they were was cheap wages for employers, essentially nothing more than workfare.
So my comment was not, stop helping welfare recipients to get off social assistance and into the workforce, but do not do it in such a way that you simply use these people as fodder for employers who are providing a less than attractive work opportunity.
I just add for the minister that according to people who talk to me from TeleSpectrum, the pay cheques that they receive do not have a company name on them, which is very interesting. They have a magnetic identification so that they go through the right account, but there is no name on the pay cheque, so they are not sure whether they are being paid by TeleSpectrum, PR Staffmax, AT&T. They do not know who is the actual payer because it is an encoded magnetic ID, not a printed name on the cheque. I have never seen a cheque like that, by the way. I thought it was kind of unique. Most companies like to advertise their names, but in this case, no name at all.
Mr. Downey: Mr. Chairman, two points. One is that it cannot be substantiated, the concern brought forward that they are using this as a wage subsidy at TeleSpectrum. The manager said that was not the case and would not be the case, so it cannot be substantiated what he is bringing to the table. It may have happened in some jurisdictions. To my knowledge, it is not happening here--one of the things that I will further check.
The second point is, TeleSpectrum has not been in business long enough and have not been going long enough for us to do an audit to know exactly the issues that he has raised, but now that it is raised, it will be part of what we look at.
Mr. Sale: Well, just so we are clear, Mr. Chairperson, what I am understanding the minister would ask his staff to do is to assess the length of time after a wage subsidy runs out that that particular staffperson stays with the company so that there is some job retention verification that in fact we are not just churning wage subsidies through this company, but that people stay and have whatever their abilities entitle them to in terms of longer term employment.
Mr. Downey: Yes, Mr. Chairman, that will be noted. As well, of course, it does not pertain totally to this kind of a situation where there is a subsidy, but in most cases, I have always taken the position, if the cheque is signed and it will be cashed, I have never seen too many of them turned down.
Mr. Sale: No, I quite agree with the minister that most people are happy to cash the cheque, but it is kind of interesting that the name does not appear. At least, it did not on the cheque that I saw.
Two other concerns in this regard. The minister wonders why he has not heard any concerns. Let me just ask him to understand how vulnerable the people involved in this situation feel. For many of them, this is the first job they have had in a long time. For many of them, they are the victims of the downsizing in retail industries that has taken place. They are not highly skilled people. They do not have a resume. They are often older and have the added discrimination that often is attached to older workers who are not sought first as employees. They often are sole support. They feel that if they raise questions about this, they will be discriminated against by their welfare worker or by their social assistance worker.
The minister may say that would never happen. The experience of people in the field is that it does happen, that people do get harassed. So I would tell him that I think when people come forward, they come forward almost always very fearful, very concerned about keeping their names confidential because they fear reprisal. They fear being fired, because they have seen people fired on the spot for much less than they are doing, which is to raise some fundamental questions about employment standards.
So I understand why the minister has not had concerns raised to him, and I understand why opposition does. I suspect that when he was in opposition similar concerns were raised sometimes to him. So I am not at all surprised by that, nor am I surprised that the supervisors and owners of the company will tell him that all is well in Georgia. Of course, what else would they say? Would they tell you that cheques sometimes are short as much as a hundred bucks and that it gets made up over a series of weeks, and often the people are not there to have it made up so, son of a gun, they are short wages. They are not going to tell you that, but that is what staff will tell you.
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So that is why I am saying, do an evaluation that is a fair and honest evaluation that protects people, people's identity and protects their employment and really finds out what is going on in this industry.
Mr. Downey: Mr. Chairman, again, I think it is important to note that we have the Department of Family Services and the Department of Education very much involved, working directly with these people, on a direct involvement, probably very much a first-name basis, and I think there is a relationship that develops, so government is very present as it relates to what is going on. I think if there are problems, they would be identified and identified quickly.
So it is not that we just make an agreement with the company and say, carry on, this is a subsidy; we are going to pay these salaries. I know the people who are involved are very qualified and are very anxious to help make this work. So it is not that government is not involved; we are involved. There can always be people who fall between the stools. Things happen and, again, I will try to determine a system that would allow that to be identified. Thank you, Mr. Chairman.
Mr. Sale: Pass. Reasonably shortly, I guess, we go through this whole (b) appropriation, but I have a couple of questions on the Capital Fund and the TD Manitoba Fund. These two funds have been folded together into the Manitoba Business Expansion--not the Capital Fund, sorry. The Business Expansion Fund and the Venture Loan Program have been folded together into the Manitoba Business Expansion Fund. Is that correct?
Mr. Downey: No, it is not correct, Mr. Chairman. Because of lack of participation, the TD Manitoba Fund has, in fact, been wound up.
Mr. Sale: Mr. Chairperson, were guarantees made under that fund or did the program simply not ever extend any guarantees?
Mr. Downey: Mr. Chairman, it was a one-year pilot project. There were a few loans made but not enough to be of substantive use, and so it has been wound up. I will check as to the status of the loans that were made, but the terms would have to be fulfilled as it relates to this program.
Mr. Sale: Mr. Chairperson, could the minister provide the committee with a list of the companies whose loans were guaranteed by the province under that program?
Mr. Downey: Mr. Chairman, basically those were directly given by the bank, I think, and so we have a loan guarantee program under the Small Business Development Program. This was a separate program in which the bank carried out the actual loans. There were very few. Again, I do not know whether I am able to do so, but I will take as notice, and if I am, provide that information.
Mr. Sale: Mr. Chairperson, it says it is a loan guarantee program, and presumably what that means is the province guaranteed the loans. If the province guaranteed a loan, what would be the difference between the many companies that are listed in the annual report for which loans have been guaranteed or committed or partially forgiven or whatever and this? Again, this is public money. What companies were guaranteed?
Mr. Downey: Mr. Chairman, I will take it under notice, and if I am able to provide the information, I will.
Mr. Sale: The Manitoba Capital Fund, Mr. Chairperson, same questions here. We have CIBC involved, a number of pension funds including, I think, the teachers', and I am not sure whether the Superannuation Fund is in there, but could the minister tell us who are the partners in Manitoba Capital Fund?
Mr. Downey: Mr. Chairman, CIBC is involved. The teachers are not involved in this. I guess my biggest disappointment is that we did not have any of the public funds available.
Yes, Mr. Chairman, here it is. I can give it to him. It is the province for $5 million, Canadian Imperial Bank, Civil Service Superannuation Fund, Workers Compensation Board, and MPIC fund.
Mr. Sale: Mr. Chairperson, can the minister provide a list or an outline of the activities of this fund and a list of the companies that the fund has been involved with?
Mr. Downey: Again, Mr. Chairman, I will check the agreement. If it allows us to do it and I am able to do so, I will.
Mr. Sale: Mr. Chairperson, surely the minister's staff knows whether the agreement provides for release of the simplest of information. I ask the minister again, will he undertake to provide information about the activities of this fund?
Mr. Downey: Mr. Chairman, as the member knows, we are in for $5 million. There are other partners in the agreement. We would want to make absolutely sure that they were comfortable with any disclosure of that information, because what we do not want to do is either break an agreement and/or, in setting up a capital fund, deter anybody from getting involved because of the fact the province discloses information that could well be a problem for them. So that is the best I can do for him at this time.
Mr. Sale: Mr. Chairperson, give us a break. The Civil Service Superannuation Fund is the civil service employees of Manitoba, government-directed. Yes, it has some arm's-length investment activities, but it is essentially a public-sector pension fund. Workers Comp is, depending on your view of the world, either forgone wages or forgone profits on the part of companies. It is provincially administered, entirely within the public sector in terms of its statute. MPIC is a provincial Crown. How can we defend to Manitobans that we are investing in venture capital and we have a lower standard of accountability than the private sector does when it invests in venture capital? It does not make sense.
It says here in this Supplementary Information: "This $25 million Fund is expected to support the creation of over 1,000 jobs during its 7-year term which began in 1996/97"--last year. "Approximately $15 million of its $25 million total capital has been placed in Manitoba businesses . . ." Which businesses? What is the need for secrecy?
Mr. Downey: It is not a matter of secrecy, Mr. Chairman. There are people who are involved in an agreement of which we are a $5-million participant. The Canadian Imperial Bank of Commerce, it is not a public pension fund. The member may get impatient all he likes. I will make absolutely sure that I am at liberty to provide information to this committee. It is not a matter of secrecy. I am pretty proud of the fact we were able to set up a Manitoba Capital Fund with $25 million invested by the province and other people.
My disappointment is that we did not get more pension funds from the Province of Manitoba, the City of Winnipeg, the teachers involved in this fund. That is what my difficulty is. I have no difficulty with accountability and the questions that he is raising. I have every reason to support being as accountable as possible. On the other hand, there are reasons that may present themselves that may cause a caution.
Three minutes ago, if I can remind the member, he was bringing the attention to this committee that there were individuals who, having difficulties at the workplace, would not want to disclose it because of some ongoing problems. I can appreciate what he said about those individuals who would have those concerns. Equally, there may be some concern as it relates to this situation, not exactly the same, but we are still dealing with people and the disclosure. I have no trouble with as much disclosure as possible. In fact, I believe very strongly in as much information as possible. On the other hand, I do believe that one has to live up to an agreement. Staff are going to double-check whether or not we have the ability to do so.
Mr. Sale: I would like the minister to respond as quickly as possible on the question of whether or not it is possible to let this information be made public according to the agreement. If it turns out that it is not, will the minister investigate whether the agreement should be amended so that public accountability is possible? I am not talking about seeing the private tax returns of companies that are private companies that are not required to publish their tax returns under Canadian law. I am simply saying, where did the public of Manitoba put its money? Where did the public, who pays for the Workers Comp Board by a variety of mechanisms, put their money? Which companies, which 1,000 jobs are due to this public investment or at least partly due to this public investment?
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Put it another way. If a company is the recipient of capital investment from such conservative "organizations" as the Civil Service Superannuation Fund investment body, the CIBC, MPIC, which is not known for making high-risk investments, if a company has got that kind of investments, surely that would be a plus for that company and it would want people to know, in fact, that it was seen as a worthy recipient of capital funds from the citizens of Manitoba in a variety of ways.
The only possible reason for hiding this information is that there is something to hide. Assuming that the minister has nothing to hide, then why would this not be public like the great long list that the minister puts in every year that goes to pages and pages and pages of companies that have got anywhere from a million dollars to a couple thousand dollars? There does not seem to be any problem with all of these companies. What is the difference?
Mr. Downey: He answered his question. I am not secretive. I am more than prepared to provide all the information where I am able to do so. Following his argument through, he feels as a member of the Legislature he should be privy to all the investments made by these companies in whatever they are doing. That is really what he is saying, that he should have information as to investments made by the Canadian Imperial Bank of Commerce, Civil Service Superannuation, Workers Compensation Board and MPIC. He may have. I am not sure that he does not have. Extend his argument right through, he thinks he should know about all of these things and about the investments they are making.
I have no difficulty personally in providing him as much information as possible. They may not have any problem. I would think it is a courtesy to double-check, No. 1, the agreement and, No. 2, make sure that they have not got any discomfort with this. If they have and I were to disclose it, at least allow me the opportunity to have expressed it and discussed it with them. They did not know we were going to be in Estimates today discussing this. I did not know we would be discussing this today, although I had an idea we might be. As it relates to when will he get this information and the response, he will get it probably tomorrow afternoon when we start committee, or whatever time we go into committee. I will attempt to provide that information so that he has it as we are still in committee, unless by chance we finish it tonight. If we do, I can proceed to give it to him in writing within a day or two.
Mr. Sale: Pass (b) then.
Mr. Chairperson: 10.2(b)(1) Salaries and Employee Benefits $749,100--pass; (2) Other Expenditures $235,400--pass.
10.3 Programs (a) Manitoba Industrial Opportunities $11,893,700.
Mr. Sale: Pine Falls, the company has repaid, I think, some of its loan--it may have repaid all of it by now--but it certainly repaid some of it. Is the de-inking plant commissioned there yet?
Mr. Downey: Let me just take a minute here, because I think it is important we do this. My understanding from the department is that it has been commissioned. Here is an example of where the province--and the member was berating me some time ago about overexposure, whether it was in, I guess it was in Isobord he was concerned about. Here is an example, Mr. Chairman, where the Province of Manitoba extended to a community with very limited resources, very limited resources, to take over a project that had been--yes, the technology had been proven, the long-term, old-time technology had been proven, but new developments were coming to the table, environmental works, the de-inking, relatively new technology.
Again, confidence was placed in the community of Pine Falls. I want to compliment the management, the workers and all of those people who took upon themselves the risk and the responsibility, yes, backed up by the Province of Manitoba, by a commitment of a $30-million loan guarantee, but it was a partnership between the community, the banking industry, and the Province of Manitoba. Mr. Chairman, I am pleased--
Mr. Sale: There were some labour unions involved.
Mr. Downey: I said labour.
Mr. Sale: Did you?
Mr. Downey: Yes. I am sorry the member thinks I am trying to exclude anyone. I will include everyone. I said the workers, the labour unions, everybody--I do not want to exclude anybody--the people who had confidence, the outside capital that came to the table, all those people who made that project go. It is important to note, and I congratulate them for the hard work, effort, the foresight and confidence they had.
I will report that yesterday the loan was completely paid off. They did not use the maximum amount of money, but they used some of the money, and it has been paid off. In honour of that, I will put it on the record right here, and I hope the member does not disagree and try to vote it out of my Estimates, I am planning to put on a reception and tell the whole world how successful that enterprise has been.
I am not so sure whether they would want the member opposite to be invited, but I would do my best to try and see if they would allow that to happen. Mr. Chairman, I am just trying to be smart. Mr. Chairman certainly will be invited.
But, no, I think it is a time when you see these successes, and there are times when governments have to extend a commitment to make some things happen. If one were to look at it as I know he has to do as a critic, you go through everything with a fine-toothed comb. The member for Elmwood (Mr. Maloway), certainly of the mind to try and extract something that he thinks he has going for him--[interjection] The point is that you have to, at some point, have confidence that things are going to happen and happen positively. Here is a real example of that happening, and I am extremely proud to have been part of it, as all my colleagues are in the Legislature. I have to give special remarks to the chairman, who was very much involved, and also the member for Lac du Bonnet (Mr. Praznik) was very much involved.
But it is a success story, and we will have a little event over this. I hope the member does not object.
Mr. Sale: I had the opportunity to talk with a number of the senior officers of the company about ten days ago, or two weeks ago I guess. They indicated that the loan was in the process of being paid off, and I am really glad that that has happened. If the minister wishes to include others in his invitation, I am sure some of us would be glad to respond and enjoy his hors d'oeuvres, assuming that there would be some hors d'oeuvres. Well, crackers and cheese.
One of the issues around Pine Falls for years has been treatment of effluent and concerns of the First Nations community that is adjacent to Pine Falls. Can the minister indicate what the levels of work that are or need to be done or will be done in terms of effluent treatment and discharge into the Winnipeg River system?
Mr. Downey: It is my understanding, Mr. Chairman, that the Department of Environment is fully involved in any measuring or any activities that are going on there. I can report, I have not had anybody report to me that they are unacceptable, that they are outside these standards, but, again, that would be an appropriate question for the Minister of Environment (Mr. McCrae). That is whose jurisdiction it falls under. I guess the opportunity that I see coming out of the by-product is a fibre product that could well be further manufactured into a garden mulch or something like that that comes off of the waste system. I think it is another industry not unlike the straw industry. Although you would not build a building block out of it, you may make an enriched mulch for gardens or something like that. I do not know whether they are doing that, but I would hope that they would look at something that would further add value to what appeared to me to be a product that had some potential value.
On the emissions, Mr. Chairman, we can check with the Department of Environment, but I have nothing reported to me that they are not meeting the standards.
Mr. Sale: Mr. Chairperson, are there any discussions underway with the department for further or other assistance in terms of capital developments, particularly around environment or discharge or use of wastes, recycling of wastes?
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Mr. Downey: Mr. Chairman, I am not aware of any directly that are currently going on, but I do know that the principals of the company are looking at opportunities that they may be able--this is not in the waste treatment that I know of or in the by-products, but in how they could expand the mill operations and add more activity to that mill. I think it is a growth opportunity that they are looking for.
I had some very preliminary discussions with them at an event that was out there a year or a year and a half, two years ago maybe. So I would hope that they would look at what opportunities there are to grow and expand the industry, because I had some previous involvement as it relates to Northern and Native Affairs with Channel Area Loggers that, when you get into the northern communities, they depend very heavily on that mill to provide jobs, not only for the provision of wood but in the replanting of the forestry. You get all the way up the east side of Lake Winnipeg where there is a good source of product for the mill so that it is an opportunity to enhance jobs.
So, if the mill itself were to grow and expand, it means a job opportunity for, particularly, our native communities on the east side of Lake Winnipeg. So enhancing the mill, all the work they are doing, can in fact be beneficial to that whole region. Again, Mr. Chairman, I know there were some preliminary discussions. I cannot say today whether there are with the department, but I am not aware of any.
Mr. Sale: Mr. Chairperson, in the Manitoba Small Business Expansion Fund, the trouble with this Estimate is that we have got capital in various places. So I apologize for going back and forth a bit, but capital comes up in a number of places interrupted by Pine Falls Paper as a particular company. The expansion fund appears to be $500,000 this year, and the capital loans are up to $150,000 now. Obviously, that is the maximum. But that would seem like a very small fund. Could the minister comment on the scale? It just seems to be a very, very small fund.
Mr. Downey: Mr. Chairman, the amount that is being listed here is only 7.5 percent of the amount of money that is put into the portfolio, and that each financial institution would be putting in 5 percent, I guess, is how this reads. So over a five-year period we would be involved at $2.5 million, and it is anticipated that it could lever in excess of $43 million in loans. So this is a small percentage participation by the Province of Manitoba.
Mr. Sale: Mr. Chairperson, then the $500,000 is actually the loan loss reserve? It is not the program itself.
Mr. Downey: That is correct.
Mr. Sale: Mr. Chairperson, again, a general comment that has come to me through a number of people who have raised interesting possibilities. I am sure the minister's staff probably go nuts with inventors who have the greatest thing since sliced bread or the newest mousetrap on the market, and I am really glad there are people like that around in Manitoba, because sometimes they do. We have had enough experience in Manitoba with people who have designed some products which at first seemed very strange but, son of a gun, we are awfully glad that fellow built a sandbagging machine this year and now is selling to various places after he saw the problem of filling a lot of sandbags by hand and decided that he would build a better mousetrap and he did.
But I get a lot of calls--that is not true, not a lot of calls--I get perhaps 10 or 15 calls a year from inventors who have a product that they believe is useful and has a market. They do not have any money usually, and it is maybe the nature of inventors that they are not very good business people often, but I have always had trouble finding the right place to send these people. It always seems that when I send them to one or other of the government, federal or provincial, offices, they are met with a very bureaucratic kind of response that says, can you not fit through our bureaucratic hoops and, of course, the answer almost always is no, of course not.
I use the example of one man who is on social assistance, but somehow over the last few years he has managed to prototype a grabbing device which would be used by somebody with a handicap, for example, to lift a box of crackers down from a shelf. It will also pick up a coin as thin as a dime off the floor. This fellow has managed somehow to engineer this product with lightweight aluminum--very good leverage. It does not take much strength so someone with arthritis could probably use it. Neat as a pin. He has little head adapters that you can put on it to do different things, and he somewhat shyly told me that with these little scoops on the end that it was great for picking up the remains of doggy doo-doo in the backyard. He said this thing will do all kinds of grabbing and picking. I was impressed. I thought this is an amazing guy. He is on social assistance, he lives alone, and somehow he has put this together. Where do I send him?
Every program wants the inventor to have some percent equity. Well, his equity is already there on the table. He has prototyped this thing. He actually even has a business plan. He got himself through a federal business development course business plan, and he has quite a decent business plan with all the costs of the moulds and how many there would have to be produced and how many would have to be sold, but he does not have a nickel. Here we have a variety of funds and programs, but it seems when you send somebody to one of these centres there is almost like a cookie-cutter format that they get processed through.
I wonder what the minister could suggest or how he could respond. I am sure he has met these people, and I just have this feeling that out there, there are in Manitoba probably a couple dozen really good products, but not that investor capital to get past first base. Is there anything that the minister can suggest that we could do about these kind of folk?
Mr. Downey: Mr. Chairman, the first thing he brings to the attention and he has been involved in the bureaucracy pretty much and knows what it is, but the answer that most people get, you get the thousand reasons why they cannot help you rather than the one reason why they can help you. It is a legitimate question, it is a legitimate concern, and I raise that from my position as a minister. I guess coming at it from where the member was talking earlier, the responsibility of the taxpayers making sure that everything is open and public and that there is a request in most programs for some type of participation. I guess the question is, if somebody is so absolutely down and strapped that they have been able to put all their time and effort into this project and it is such a good plan, why do they not have some resources to help?
We do have a program. It is called the industrial commercialization program, but it does require some participation by the individual to take a product, to take a project that has been invented and take it to the commercial market. So I think we have gone partway in helping to do that, so that if you have a legitimate invention, it looks good, somewhat reasonable--and I know we have been involved in a few that, quite frankly, he made a comment about the handicapped. I know there is one project that came to mind, and it came out right at me as if, you know, what are we doing here?--but it was a product to help disabled persons curl. It was an apparatus to do that. He is maybe aware of the product.
To me, you know, initially you say, well, but I think it makes a whole lot of sense because there is a considerable opportunity for marketing the product, but it needed some help to get it from the invention stage to the commercialization. We can help, but it is a cost-sharing agreement. I do not know of anywhere in government you walk in and say you have a better mousetrap, here is $20,000 of our money for you to get that better mousetrap into the marketplace.
The point is that they are expected to have some resources of their own. It is a problem I think we will always have. It does not make an excuse though for a person, and I am pretty straightforward on this. If a person cannot help them, they should tell him so at the outset that there is not a government program that will help you. Here is a potential angel investor or here is somebody else and take them to that individual. But do not say, well, you know, it takes six months to go around and around the mulberry bush, and then say no. That is not fair and that is not the way in which I would want to see it carried out. Maybe it is that way, but I am a believer that "no" is also a word in the dictionary that some people will accept; some will not.
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Mr. Sale: Mr. Chairperson, that is exactly the experience that a number of these folks who have talked to me have had, that officials are reluctant to say no because maybe they even see the merit in what is being presented, but they do not want to discourage the person and that is valid. I mean here is a guy on social assistance. He has a slight handicap, not a huge handicap, but it is significant enough that it would be a problem for employment. He is a bright person, intellectually very capable, but life has not dealt him a very fair hand and he is up against it, and yet he is trying desperately. He is a very responsible person. His suite is immaculate, very poor but immaculate. He is the kind of guy that you would love to have working for you. So, I guess, what I was coming to was this question of these two funds, the Business Development Fund and the Business Expansion Fund.
I just wonder if there is not room for some member of the minister's business staff to have some discretion in some situations to say, look, we will recognize--here is a prototype product, here is the business plan, here are the costs for putting it together, it works, we will recognize that as sweat equity. I think we recognize sweat equity in the housing field and we recognize it in some other fields, but we do not recognize it very well when it comes to inventions. I know it is a tough world. I also know that probably going through the minister's head is if we spent $20,000 on this thing and it did not go anywhere, here would be the member for Crescentwood out criticizing, and the minister would be trying to defend himself. I accept responsibility for that, for my suggestion. I guess I am also really sympathetic to the people who are doing their darndest to better themselves and to better their life circumstances, but they do not have any equity. They have brains. They have skills, but they do not have a sou, and I just wonder if there is not room for some small program flexibility that could recognize opportunities and see if they could not be brought to the next stage.
Mr. Downey: Two points, Mr. Chairman. There is some discretion. If the case is brought directly to me--and the department quite often does--if it is a questionable situation, I will do my best to either take it to a Treasury Board decision or make it myself if I feel comfortable with it. There is always a little bit of room to try, a little bit of discretion, not a whole wide range, but I hope I present myself as that kind of person that if it does have a bit of a chance--I will be criticized later on by the member for Elmwood (Mr. Maloway)--but again everything in a responsible way, and that is what the political people are supposed to do, I believe, is to listen to extreme cases. The staff, quite frankly, have their directions and their regulatory regimes which they have to live within.
The second point I would like to make--and I think it is important to put it on the record-- that we have a developing activity here in Manitoba, and I hope the member would not be overly critical if I were to advance it. We have the international centre for disabled people in Manitoba under the directorship of Dr. Henry Enns who, by the way, works tirelessly to try to advance the cause of disabled people. We have the Centre on Disabled Studies now at the University of Manitoba being developed. It really is an opportunity for us to, I think, demonstrate for the world, but for the people of Manitoba, that there is a tremendously important community there that can offer a lot through the industrial development section, and because he has indicated himself and he has an example of a person who has an idea, an invention, that needs a little bit of support.
I am considering looking at how I can enhance and develop--and there are quite a few people in Winnipeg, but there are quite a few people throughout rural Manitoba who are sitting there that, quite frankly, with modern technology, with the Internet systems, are we serving the needs, are we able to do something a little bit better to dedicate a few resources, to try and get a picture of what really is happening, and how we can add to the teaching that will take place at the university as it relates to people who are going to go out and teach people how to deal with disabled people, because you have to deal with people who have had an experience before. It would be difficult for me to go into the university and teach somebody about a disability. I can observe and everything else, but until a person has been involved, how do you really know.
Certain people have teaching skills--it does not matter what it is--they can teach other people even though they have not experienced it, but in this particular situation, there may be an opportunity to enhance the opportunities that could be developed for people with disabilities, tying it into the university studies, tying it into industry. I think industry certainly through Workers Compensation, hopefully, would want to be involved. I know that Dr. Enns is looking for support, for financial support, to further enhance that. They have had tremendous recognition from people from Russia who have been here. There are great associations developing.
I have a little bit of humanitarian feelings in me at times, though the member would never recognize it, and some of the travels that I have made--and he does not like me travelling either--but, Mr. Chairman, I have recognized in certain places throughout the world one thing you would not wish on anybody is to be disabled in some of these Third World countries. It is absolutely the worst situation that people could be in.
So I think that there is a real opportunity to develop with industry here, to further enhance it with our rural and our city and the international centre to do some more work and put some more effort in it. I talked to him about a little bit of an ambition that I have in this particular area, because I think that there can be more done, not with a lot of money, but I think there are people with time and effort who would certainly want to be part of contributing to it. I rest my case.
Mr. Sale: Mr. Chairperson, I appreciate the minister's position on that. I have spent many years, prior to being an MLA, in work with the disabled community of advocates--Henry Enns, Al Simpson and John Lane and a host of others, Jim Doerksen. There are all kinds of people at the national and local levels and Manitoba, for whatever reason, probably chiefly Henry Enns, Jim Doerksen and Al Simpson, as three remarkable individuals, and John Lane a little later on, although John is in Vancouver now, just seem to be a collection of people who are prepared to advocate and form Disabled Peoples' International. I absolutely echo what the minister said. This is sort of remarkable that we have become the kind of centre that we have, and I hope the minister is successful in doing what he is talking about.
In fact, he probably might guess that I finally referred this chap that I was speaking about with the reaching device to Al Simpson at ILRC, and Al agreed to meet with him and see if there was any merit in the invention, which I was not in a position to assess, and I believe he has done so and I have not heard back from him. But I am still left with the other question as to, where do we send those Manitobans who come to us with what look like on the face pretty good ideas, but they just do not have the capital to move them any further along? Often they have spent all their capital getting to the point of having a prototype, and some of them get quite obsessive about that and they may unwisely spend all their capital, but they feel that they have really got something here and they have spent maybe thousands of dollars getting to the prototype stage but now they are out of luck. What is the minister's advice?
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Mr. Downey: On the individual that he has referred to, I would not mind looking at what he is talking about in the individual situation, have the department look at it, but we are bringing together the Industrial Resource Centre with the province and the federal government in the city at the Winnipeg Library, where all three levels of government have the resources in one place so people at least do not have to go to all a different bunch of offices in the city and do the runaround. They can do one-stop shopping as it relates to an opportunity, and that would be the place I would refer them to, and if they do not get results, then I would certainly want to know why they did not or a justification as to why they did not. That would be where I would refer them to.
I do not want to mislead the member. It is in the process of being set up collectively at the Winnipeg Library, and that is the three levels of government, the city, the province, and the federal government, as it relates to business development supports.
Mr. Sale: Mr. Chairperson, I will pass the gentleman's name on to Mr. Cormack. He did contact Mr. Sutherland and I believe a Mr. Doug Pearson, whom I do not know, but I believe Doug Pearson may work for the ministers either in the department or on the staff, I am not sure which. They had the same problem and I do not dispute that it is a real problem. This man has no capital. So I will pass his name on and would hope that he would get a fair hearing and an honest and speedy response and not get dragged around the mulberry bushes again, because he has been around a lot of them.
Yes, we can pass down to the end of subtotal (b).
Mr. Chairperson: 10.2.(b)(3) Programs (a) Manitoba Industrial Opportunities $11,893,700--pass; (b) Vision Capital $2,063,000--pass; (c) Pine Falls Paper Company $54,200--pass; (d) Manitoba Business Development Fund $1,539,300--pass; (e) Small Business Expansion Fund $500,000--pass; (f) Manitoba Capital Fund $385,000--pass; (g) TD Manitoba Fund--pass; (h) Less: Interest Recovery ($1,100,000)--pass.
Mr. Sale: Mr. Chairperson, is the interest recovery from loans of the department, et cetera. What is the interest recovery item?
Mr. Downey: The answer is positive.
Mr. Sale: Mr. Chairperson, I noticed a similar item last year. It is somewhat smaller, but that is fine. Is it now the practice generally that revenues from activities of the department flow to the department in government, or is revenue still flowing to general revenue?
Mr. Downey: The Manitoba Development Corporation acts as the agent, so the funds flow to the Manitoba Development Corporation directly.
Mr. Chairperson: Item 10.2. Business Services (b) Financial Services (3) Programs (h) Less: Interest Recovery ($1,100,000)--pass; (j) Less: Recoverable from Rural and Urban Economic Development Initiatives ($500,000)--pass.
Item 10.2.(c) Manitoba Trade (1) Salaries and Employee Benefits $1,080,800.
Mr. Sale: I think the same comments probably are true here about the staffing. I think that we had the same problem of staff numbers being adjusted to reflect reorganization. Is the explanation the same as it was for the other department?
Mr. Downey: That is correct.
Mr. Sale: This branch has been substantially changed, and I guess you would say upgraded. Two years ago when I first did Estimates in this department the minister indicated that Manitoba Trade corporation was going to be reactivated and become--I suppose that the idea was that it would become a single entity that would be the symbol of Manitoba's trade involvement and that things would be funnelled through this area. It would be expanded, strengthened, and Manitoba Trading Corporation would be the vehicle. I assume that is what we are seeing here is the results of that process.
Mr. Downey: That is correct, Mr. Chairman. As we indicated, we believed we needed the tools and the people to go and further promote Manitoba in the international marketplace. Manitoba Trade was established as Manitoba Trade and staffed accordingly. I can assure the member that the work that is taking place with Manitoba Trade is, I believe, yielding considerable benefits to the province of Manitoba. Our relationships are developing and growing, and I am quite prepared to deal with any particular areas.
Again, I guess when one looks at the success of what is taking place on our trade and our export, while we do not consider we would want to take a lot of the credit for it, to some degree, particularly the smaller companies and corporations that are unable to enter the international marketplace on their own, it is an excellent support for them and some good relationships developing. I can get into some detail as we proceed.
Mr. Sale: I was just going to ask that question, and the minister has anticipated. Could the minister review the results of the trade mission of last year, which was the subject of some comment in the House, in South America and the results of that trade mission, and if he would like to review any others that he would like to identify for us where there have been some results that are useful?
Mr. Chairperson: The honourable minister has about two and a half minutes.
Mr. Downey: Well, Mr. Chairman, I can take two and a half minutes to get warmed up and then get into full flight tomorrow. Pardon the pun full flight, you see.
Mr. Sale: Where are you going this week?
Mr. Downey: It gives me an opportunity to disclose that I had the unfortunate situation at lunchtime today to--I should not say "unfortunate"--I had the fortunate situation at lunchtime today to be at the announcement of Air Canada and their joining with four other international airlines. They happened to have a door prize draw where they drew my name for airplane tickets for two. With the permission of the member opposite, I am able to take my wife, but I am checking with the conflict-of-interest guidelines to make sure that I am able to accept them. So I have publicly disclosed it, Mr. Chairman, and that is how I have used my two and a half minutes up, but I feel that it is a lucky day. I thought I would finish my Estimates, as well, but I am not quite that lucky.
I will talk about some of the missions that we have had and some of the successes that have flown from it. Again, some of it will be private information, but I can give as much information as possible, because I am proud of the work that Manitoba Trade has done.
Mr. Chairperson: The time being five o'clock, committee rise.