Manitoba Hansard — 10 June 1980 (Sitting 76B, 31st Legislature, 4th Session)

31-4-76b

Manitoba — Debates (Hansard)

ISSN 0542-5492 Fourth Session - Thirty-First Legislature of the Legislative Assembly of Manitoba DEBATES and PROCEEDINGS 29 Elizabeth II Published under the authority of The Honourable Harry E. Graham Speaker VOL. XXVlll No. 768 - 8:00 p.m., TUESDAY, 10 JUNE, 1980 Printed by W. T.Matwichyna, Q""""s Prinlflr. ProYince of Manitoba

MANITOBA LEGISLATIVE ASSEMBLY Thirty -First Legislature Members, Constituencies and Political Affiliation Name ADAM, A. R. (Pete) ANDERSON, Bob BANMAN, Hon. Robert (Bob) BARROW, Tom BLAKE, David BOSTROM, Harvey BOYCE, J. R. (Bud) BROWN, Arnold CHERNIACK, Q.C., Saul CORRIN, Brian COSENS, Hon. Keith A. COWAN, Jay CRAIK, Hon. Donald W. DESJARDINS, Laurent L. DOERN, Russell DOMINO, Len DOWNEY, Hon. Jim DRIEDGER, Albert EINARSON, Henry J. ENNS, Hon. Harry J. EVANS, Leonard S. FERGUSON, James R. FILMON, Gary FOX, Peter GALBRAITH, Jim GOURLAY, Hon. Doug GRAHAM, Hon. Harry E.

GREEN, Q.C., Sidney HANUSCHAK, Ben HYDE, Lloyd G. JENKINS, William JOHNSTON, Hon. J. Frank JORGENSON, Hon. Warner H. KOVNATS, Abe LYON, Hon. Sterling R. MacMASTER,Hon. Ken MALINOWSKI, Donald McBRYDE, Ronald McGILL, Hon. Edward McGREGOR, Morris McKENZIE, J. Wally MERCIER, Q.C., Hon. Gerald W. J. MILLER, Saul A. MINAKER, Hon. George ORCHARD, Hon. Donald PARASIUK, Wilson PAWLEY, Q.C., Howard PRICE, Hon. Norma RANSOM, Hon. Brian SCHROEDER, Vic SHERMAN, Hon. L. R. (Bud) STEEN, Warren URUSKI, Billie USKIW, Samuel WALDING, D. James WESTBURY, June WILSON, Robert G. Constituency Ste.

Rose Springfield La Verendrye Flin Flon Minnedosa Rupertsland Winnipeg Centre Rhineland St. Johns Wellington Gimli Churchill Riel St. Boniface Elmwood St. Matthews Arthur Emerson Rock Lake Lakeside Brandon East Gladstone River Heights Kildonan Dauphin Swan River Birtle-Russell lnkster Burrows Portage la Prairie Logan Sturgeon Creek Morris Radisson Charleswood Thompson Point Douglas The Pas Brandon West Virden Roblin Osborne Seven Oaks St. James Pembina Transcona Selkirk Assiniboia Souris-Killarney Rossmere Fort Garry Crescentwood St. George Lac du Bonnet St.

Vital Fort Rouge Wolseley Party NOP PC PC NOP PC NOP NOP PC NOP NOP PC NOP PC NOP NOP PC PC PC PC PC NOP PC PC NOP PC PC PC Ind NOP PC NOP PC PC PC PC PC NOP NOP PC PC PC PC NOP PC PC NOP NOP PC PC NOP PC PC NOP NOP NOP Lib PC

LEGISLATIVE ASSEMBLY OF MANITOBA Tuesday, 10 June, 1980 CONCURRENT COMMITTEES OF SUPPLY SUPPLY - ENERGY AND MINES Time - 8:00 p.m. MR. CHAIRMAN, Morris McGregor (Virden): I call the Committee to order. We are in Department of Energy and Mines, Resolution 57. I will call on the Minister for his opening remarks. HON. DONALD W. CRAIK (Riel): Mr. Chairman, by way of opening, I want to indicate my own pleasure at being able to open the estimates for the first time for a new depar tment of government, the Department of Energy and Mines.

On Page 43 of the Main Estima tes pf Expen diture, you will find that it is demonstrated the comparative expenditure level for the new Department of Energy and Mines, and a reconciliation demonstrating the source of the base figure for the year ending March 31, 1980. The department was formed in November of 1979, comprised mainly of the Mineral Resources Division, formerly attached to the Department of Mi nes, Na tural Resou rces and Environment, and the Manitoba Energy Council, which had been attached to the Department of Finance.

The purposes and need for creation of a greater emphasis on energy management, allocation and conservation were addressed in the Throne Speech, and after pursuing these estimates, the members will be aware of the progress which has been "lade in establishing administrative and program structures in this important field.

Although the department functions as two distinct di visions, the Energy Division and the Min eral Resources Division, a common adminis tr ativ e structure has been created in order to facilitate fi nancial pla nnin g, space al locat ion and overall direction of the department, to relate directly to a single Minister. The expertise and background of the Mineral Resources Division, and particularly that found in the Petroleum Branch, leads to a strong working relationship between the respective divisions.

Turning fi rst to the overall depart mental adminis tration provi din g for a depart mental executive, central administrative services and funding for ministerial committees and the Manitoba Energy authority, item 1.(

a) provides for Ministerial and Executive Admin istration of both divisions of the department and reflects the departmental status of Energy and the expanded role of the former Manitoba Energy Council. Item 1.(

b) provides for central admin istrativ e functions such as personnel, financial planning and control, and operational support functions which are no longer available to the respective divisions as a result of their transfer from other departments. Item 1.(

c) provides for the total admin istrative component of the Manitoba Energy Council, but excludes program and other costs which may arise as a result of the recommendations of the Council. The Energy Council, comprised of Manitoba citizens, will deal contin uous ly with an advisory board comprising many facets of the Manitoba community who are both kno wledgeable and involved with energy conservation and renewable energy matters.

I'm sure the members present will agree that the restructuring of the Manitoba Energy Council as a public body is a positive step which will allow citizens of Manitoba a vehicle th rough which they can present their concerns and ideas to the government on energy matters. It em 1. (

d) provides for the operat ion of the Manitoba Energy Authority. This group, dealing with energy policy consideration, energy alloca tion, and the export of electrical energy, has been provides with administrative funds and discretionary program funds for carrying out, with the approval of the Minister, studies and projects related to a broad spectrum of energy-related activities. Item 2, the Energy Division, encompasses ongoing activities pertaining to energy supply and demand, energy conservation, research and development into alternative energy sources, and energy conservation techniques. Item 2.(

a) provides for funding related to statistical record keeping, evaluation and presentations of the overall energy supply demand picture in Manitoba. Item 2.(b), Ene rgy Tech no logy, provide s for expenditures related to research and development in energy conservation and renewable energy, energy information centre admin istration, and programs designed to foster energy awareness on the part of Manitobans.

This branch will also be assigned the task of administering and carrying forward the staff and prog ram functions identified un der the Conser vaUon and Renewable Ener gy Prog ram conducted on a cost-shared basis with the federal government.

The Mineral Resources Division, providing for the admin istration and mana gement of min eral resources, disposition of mineral rights, regulation of mining and quarrying operations, oil production, mine engineering safety, the rehabilitation of mining land and the collec tion, compilation and dissemination of information on mi neral resources exhibits only minor changes in the expenditure levels from the year ending March 31, 1980. This results principally from the lapsing of the Gener al Development Agr eemen t, the Mineral Sub Agr eement, and the Non- Renewable Resou rces Evaluation Program.

Some of the initiatives under these programs are being carried on and are eligible for cost-sharing under the Canada-Manitoba Northlands Agreement Mineral In itiatives Program. Under Acquisition, Construction of Physical Assets, some 678,000 has been allotted for the operations of Manitoba Mineral Resources Limited and a further 2.5 million has been provide d for exploration agreements admin istered by Mani toba Mi neral Resources Limited as per Manitoba Regulation 328- 74. 4619

Tuesday, 10 June, 19 80 In addition, funds are also provided for mineral exploration participation agreements and mineral exploration assistance agreements. Mr. Chairm an, with those comments, I look forward to the di scus sion pursuant to these estimates. MR. CHAIRMAN: 1.(a)(2) - the Member for The Pas. MR. RONALD McBRYDE: Mr. Chairman, in regard to the general item here, which covers both Energy and Resources, I have a numb er of detailed, specific questions, when we get to the Mineral Resources Section, but maybe I'll give the Minister notice of a couple of those in case he wants to get the information ready.

One thing I would like, Mr. Chairperson, from the Minister when we get to that section, is the actual production figures; what was the tonnage over the last num ber of years, if the Min ister has those figur es, and he probably does, the y'r e read ily available going back 10 years, so we can actually look at production levels. I am also won dering, Mr . Chai rperson, if the Minister would be able to give us some idea, in terms of the employment in the min ing industry, whether they have figures that are comparable.

I'm not sure whether the figures are kept in such a way that they could be comparable over the years in terms of the number of persons, number of person hours, or however they would calculate those kind of figures. The other figures that the Minister does have is the actual value of prod uction and it would be worthwhile for the Minister to provide that as well, although the value of production isn't a very good figure for comparison because with the changing world mar ket conditions, then the value of production changes according to the existing market at that particular time. Mr.

Chair person , in regard to the Min ister's comments in this general section, I don't think there is any doubt in the Minister's mind and in the minds of the legislators or the people of Manitoba that we, the people of Manitoba, are the owner of the mineral resources of our province, and I don't think there is a dispute on who the mineral resources belong to. Basically, what we have, then, Mr.

Chairperson, is like a landlord situation where we are responsible for administering those resources in the most effective way, the most useful way, the most beneficial way, the most advantageous way for all of the people of Manitoba. So the government is like an interim or a four-year agent on behalf of the people of Manitoba, to make sure that we get the maximum value and the maximum worth out of our resources, so that the people of Manitoba are able to get the maximum value out of our resources. Mr.

Chairperson, the Minister is fond to quote figures that he says reflect the fact that the mining industry is in good shape, that mineral production is in good shape in Manitoba, and I think there are figures to support that things are going reasonably well at this time. However, then the Minister always adds in that the reason for this change, the reason for this imp rovement at this par ticular time is because ot a change in taxation policy.

I think that when the Mini ster makes avai la ble to us the production records, many show that the production in terms of the mining industry has been constant over a number of years and that the relationship exists not between the local authority and the provincial authority's taxation measures, but the relationship that exists as between the world market and the world market conditions. That is where the real reflect ion comes in and that is where the rela tio nship exists in terms of the health and productivity of the mineral resource that belongs to the people of Manitoba, Mr.

Chairperson, and I think that you can look at the statistics a number of ways. One is comparison with other provinces that have a similar type of mineral production that we do, and that their production, their exploration, etc., changes according to world market conditions, the same as it does in the province of Manitoba. You could look at a comparison between the years when there was a different taxation system in terms of production and the present situation in terms of production. So whichever way you cut the pie and whichever way you compare the statistics, the Minister's contention is not correct.

The relationship is between world markets and the relationship is pretty constant between the provinces, regardless of which political party forms the government of those provinces. The production levels are there and the production levels vary in terms of the world market conditions. The situation we have in the province of Manitoba and in Canada generally is that basically the mining industry, the business of mining and those people engaged in the business of mining, have received more government concessions, more government support -m ore incentives is the preferred term, Mr.

Chairperson - than any other business in Canada, and so the other busi nesses haven't been complai ning that much. But being human and wanting to produce the maximum profits for their shareholders, the companies are not anxious and not desirous of giving up any advantage or any incentives or any opportunities that they have, so Mr. Chairperson, we hear them crying long and loud every time there is any discussion of changing the incentive structure and the beneficial structure as it now exists and Mr. Chai rperson, that's to be expected.

If you give someone a special advantage and then you want to reduce that advantage for the benefit of the people that own the resource, and to give more advantage to the people who own the resource as opposed to the developers or harvesters of the resource, then the harvesters are going to be upset because their profits are going to go down. They're going to lose some of the advantages they have. So Mr.

Chairperson, that is a natural condition that exists in Canada and a natural condition that exists in Manitoba, and the Minister is quite right when he says the representatives of the industries say the tax structure has a lot to do with it, because of course, they're going to say that. I would say that if it was to my advantage, I would say that the tax structure has a lot to do with it if I was going to be able to incr ease my profits, increase my earnings by a beneficial tax structure. But the figures, the statistics, and the facts don't bear that out, Mr.

Chairperson, so it's a good story that has been developed by the companies and by 4620

Tuesday, 10 June, 1980 the Minister to protect certain interests which are probably not, or may not, be the interests of all of the people of the province of Manitoba. Mr. Chairperson, the Minister, in trying to grab hold of figures to support his contention, on January 25, 1980, issued a press release when he reported on the major inv estments or the major developments, it showed the healthy situation of the mineral industry in Manitobaj. Mr.

Chairperson, he refers to the underground mine development at Ruttan Lake, and he refers to the concentrator in the community of Snow Lake, and there would be no problem with the Minister's mention of those two develo pments, except the implication of the Mini ster's press release, and the Min ister's comments since that ti me, has been that well, because of the new improved climate, we have these two par ticular developments, and that's the impli cation of the Mini ster's rel�ase and the implication of Min ister's comments before. Wel l, Mr.

Chairperson, anyone who wants to check the information would kn ow that both of those developments were planned, the Ruttan one was planned ever since day one, when the building of the operation began that was part of the proposal, the last time I was there it was planned. And, Mr. Chair pers on, in a simi lar situation with the concentrator at Snow Lake, that was in the planning stages and there was an announc ement in the Mining Press of that development before October 1977, before people knew that there was going to be this improved climate in the province of Manitoba. So, Mr .

Chair person, the examples tha t the Minister uses to substantiate his claim are not valid examples in terms of the implication of what he was trying to say to us. Certainly those developments have gone ahead, and certainly they are good for the province of Manitoba, providing that the people of Manitoba get the maximum benefit from the resource tha t belongs to the people of Manitoba. Mr.

Chairperson, that brings us down to the, I think to the two agreements that were signed quite recently by the government, which agreements are Letters of Intent, or Letters of Understanding, the Minister has refused to make available to us in the Legislature, has declined the opportunity - varying somewhat, one day he would say no, and the next day he would say yes, but his last answer was no - to make those agreements available to us. But the Minister does have to operate, because of his government's action, on an incentive system.

He has no leverage, not as much leverage or no real leverage over the mining companies at this time. He is at their beck and call, or they have the power at this stage, because the more the Manitoba Mineral Resources, the more our ability to do our own exploration has been done away with, then the more and more we are forced to do whatever the mining companie s want . And it reminds me, Mr.

Chairperson, of the kind of situation, since we are the landlords, si nce we are the owner of the resources and we are allowing somebody else to harvest our resources for their profit, of a situation where a person who was descri bed was the caretaker of an apartment block, the janitor of an apartment block , inherited the apartment block . Somebody passed away and they left it to the janitor. The janitor wasn't very confident in what he could do with what he owned, so he gave the apartment block away to somebody else, providing they would let him continue to be the janitor. And, Mr.

Chairperson, there is some similarity between that and what we have done within the province of Manitoba with our mineral resources. That is, we are willing to mine, to do the work, to get the production out of the ground, but we are not willing to exercise our authority as owners. We are only willing to let ourselves be the janitors and collect the wages from that, and not to get the maximum benefit on behalf of the people of Manitoba. Mr.

Chairperson, the agreement that was signed with Hudson Bay Mining and Smelting Company in regard to Trout Lake, as my colleague the Member for Flin Flon says, we have not now gained an interest, or a larger share in that mine, we have given up part of our share. Mr. Chairperson, in spite of all the criticism of the government's policy and programs, if it were not for the involvement of the province of Manitoba that mine would have not been discovered, how and when it was discovered.

The role of the department, initially in that development, was there and I just happened to have the privilege and the opportunity to bump into a former Deputy Minister, who was downstairs for lunch one day, and I was asking him about the various things that he was pleased with in terms of his accomplishments in Manitoba, and he told of the young geologist that he sent in to deal with HBM&S and had a new person to go over the old studies and the old files to take a new look at the old informa tion, and Mr.

Chairperson, that was one of the things that led up to another development in the province of Manitoba, on behalf of the people of the province of Manitoba. So Mr. Chairperson, with those few comments, I welcome the opportu nit y to deal with these esti mates.

I would really urge the Mini ster to reconsider his decision not to make available to mem bers of the House, or to members of this committee,. the Letters of Intent or the Letters of Understanding, or whatever written agreement there does exist with the potash development, and with the Trout Lake development, and I would really like him to reconsider withholding that inf ormation from us, and at this time, as we deal with these estimates to make it available to us so that we can give it our full and appropriate consideration. MR.

CH AIRMAN: I wonder if I could just, gentlemen, attract you that we are on 1.(a)(2), and our rules say, in the Minister's Compensation, that discussion on this item is deferred until debate on all items of the department's estimates is concluded. I have been pretty easy over the many departments, if we carry on and go back into replying to the Minister, then we really are not abiding by the rules. So in futu re, if you would ju st think, we are discussing 1.(a)(2)- pass - The Member for Brandon East. MR. EVANS: I wonder if the Minister could give us a breakdown of the Salary items here?

In other words, I presume this is the Deputy Minister's salary, and the Assistant Deputy Min ister, etc. I'll shall repeat it for the record. I wonder if the Minister could give us a breakdown of Item 1.(a)

(2) Salaries, 129 ,600.00? 4621

Tuesday, 10 June, 1980 MR. CRAIK: Mr . Chairman, there's the Deputy Minister, Special Advisor to the Minister, Executive Assistant, and three secretaries. MR. EVANS: Okay, Deputy Min ister, a Special Assistant, an EA, and three secretaries. Is there no Assistant Deputy Minister in the department? MR. CRAIK: Mr. Chairman, it would come in under the provisions of the divisions, and we don't have Assistant Deputy Ministers in the department by that name, but rather they are referred to as Executive Directors. MR.

EVANS: Well, could you advise us, the Deputy Minister, is his background in mining, or is it energy, or can you give us a bit of brief background? I don't believe I know your Deputy Minister or what his background is. MR. CRAIK: His name is Paul Jarvis, he has a background in engineering, his original training was in forestry. MR. GREEN: Mr. Chairman, is the Deputy Minister of Finance, Mr. Curtis, under this item here? MR. CRAIK: No. MR. CHAIRMAN: The Member for Brandon East. MR. EVANS: I am sorry. The Deputy Minister is not an expert in Energy or in Mining, but in Forestry. Is that the answer that I received?

MR. CRAIK: Mr. Chairman, the Deputy Minister of Energy and Mines is a former Deputy of Mines and Natural Resources, and in his background, other than his education background, he has been involved in the Energy field for some years. So from the point of view of his private life he has been involved in the Energy field, and prior to coming in as the Deputy of Energy and Mines he was the Deputy of Mines and Natural Resources. MR.

EVANS: As I understand it, but I am prepared to be corrected because I am not quite sure, it is this department now that will be making many of the decisions that had been previously made by the Man itoba Hydro with regard to perhaps export contracts and western power grid and the like, and therefore the decision-making, as I understand it, in this respect at least, through Manitoba Hydro as it pertains to hydro-electricity, is now centered in this department rather than in Hydro. Is that correct? MR. CRAIK: Mr.

Chairman, the extra-provincial negotiations with regard to Hydro are to some extent involved in this department and through this Deputy. MR. EVANS: Mr. Chairman, where is your electrical engi neering advice, or is that type of advic e necessary for some of these decisions, or do you still rely on Manitoba Hydro for advice? For example, when you discuss the possible sale of power to Alberta via Saskatchewan, so you would sit down at a conference with officials from those provinces.

I am not sure-whether their power utilities are represented or not, but my question is, for a conference such as that or a meeting such as that, where do you obtain your advice in the field of electricity, electric power utility operations? MR. CRAIK: There are a number, Mr. Chairman, who are involved. There are some people in the department, a larger number in Manitoba Hydro, and, of cou rse, with the involvement of the consultants who have been engaged in the study of the Western Power Grid, there are a large number that are invo lved from that source.

The extra provincial negotiations to the south, to the United States primarily, involve the personnel from Manitoba Hydro. MR. EVANS: Well, then as I gather then, your senior adminis trative officer, namely the Deputy Minister, isn't necessarily hired for his expertise in Energy, but more for administrative capacity, and that you rely on outside consultants, people in Hydro, for advice, let us say, in terms of electric utility negotiations. MR. CRAIK: That is partly correct, Mr.

Chairman, but the Deputy Minister is very actively involved in these studies, and, in fact, is the Chairman of the Steering Commi ttee for the Western Power Gr id Study for the three western provinces, and brings to it a background in utility knowledge as well as his other contributions that he brings to the table. MR. EVANS: Mr. Chairman, with regard to the Special Assistant, as opposed to the EA, does the Special Assistant have expertise in Energy or in Mineral Development? MR. CRAIK: The Special Assistant is vacant and the Executive Assistant to the Minister is vacant, and one of the Secretaries is vacant. MR.

EVANS: Is there any hidden meaning in that situation? MR. CRAIK: Mr. Chairman, this is a department that is in the formative stages and the estimates provide for the very likely prospect of that being the requirement and for that purpose they are provided for in the estimates. MR. EVANS: Well, I gather the Minister has an EA in his other department, Finance, anyway. MR. CRAIK: Yes, Mr. Chairman, that is the case.

The Execu tiv e Assistant in the Depa rtment of Finance, as far as the Minister is concerned, is involved in aspects that involve both Finance and Energy, but the provisions in these estimates are for a distinct department that would require normally that kind of a provision for the administration of the department. MR. EVANS: I see. As clarification then, the 129,600 is to cover 6 positions on an annual basis, not an estimate of a few positions that are empty and a few positions that are filled for part of the year sort of thing? MR. CRAIK: Yes, Mr. Chairman, that is for a full year's basis.

We have already had some saving. 4622

Tuesday, 10 June, 1980 MR. CHAIRMAN: 1.(a)(2)-pass; 1.(a)(3)-pass the Member for Brandon East. MR. EVANS: Again could the Minister give us a breakdown of this item? MR. CRAIK: Mr. Chairman, the Other Expenditures 3re estimated at Travel - 20,000; Automobiles - 4,000; Postage, Telephone, Telegraphs - 3,000; Printing of Stati onery - 6,000; Furnitur e and Furnishing - 2,000; and Pr ofes sional Fees - 25,000; for a total of 70,000.00. MR. EVANS: I notice this item has a comparable 1ine for the previous year, 13,000, so you are jumping from 13,000 to 70,000.

I imagine the 13,000 applied to a smaller group of people or there must be some explanation for the large jump. MR. CRAIK: Primarily, Mr. Chairman, I would think the Energy Council's operations of the previous year, I don't have a breakdown of the 13,000, but with the formation of the new department, we are estimating that there would be additional costs on this item. For instance, Mr.

Chairman, I could indicate that the Deputy Minister at the present time is in the United States on an examination of a numb er of the Renewable Energy Programs that are under way in the US, including the methanol-ethanol production facilities that are included in the United States as a result of the announcement in the Budget that we would be moving into the gasohol area in Manitoba, and he is presently involved in looking at those facilities in the United States. MR. CHAIRMAN: 1.(a)(3)-pa ss; 1.(b)(1)-pass - the Member for Brandon East. MR. EVANS: The same question, Mr. Chairman.

In asmuch as this is a new department and we have never had this information before, I wonder if the Minister can give us a breakdown of what personnel are in this item? MR. CRAIK: It provides, Mr. Chairman, for ten staff man years that are antici pated in Admin istrative Services, and tha t will result in a Salar ies requirement of 148,800, and Other Expenditures of 40,000, for a total of 188,800.00.

Five of the SMYs are transfers, two are voucher accounting personnel from Mineral Resources Division administration, and three SMYs, which are made up of payroll clerk, revenue clerk, and a librarian - they came over from the Department of Natural Resources. The five additional positions are co-ord inator, personne l officer, budget and finance analyst, secretary and voucher clerk, for a total of 10. MR. CHAIRMAN: 1.(b)(1) -p ass; 1.(b)(2)-pass; 1.(c)(1) - the Member for Brandon East. MR. EVANS: On 1.(b )(2) the 40,000, again this is travel, postage, telephones, automobiles usage I guess? MR.

CRAIK: Yes, furniture, furnishings, printing and station ery, postage, computer voucher accounting, automobiles, advertising publications, and travel - 40,000.00. MR. EVANS: Mr. Chairman, I wonder, where does the Minister gets his comparative figures, the 12, 000 in this case? It is a new department, where was he lift the 12,000 from, for example? MR. CRAIK: Of the 12, Mr.

Chai rman, 5 are tran sferred from the Depart ment of Na tu ral Resources and 7 transferred from the Department of Finance which would have been - the 5 from Natural ' Resources would have been the former Energy, Mines and Natural Resources, and the 7 would have been from the former Energy Council. MR. CHAIRMAN: 1.(b)(2)-pa ss; 1.(c)(1)-pass - the Member for Brandon East. MR. EVANS: Mr. Chairman, I would gather this item, 1.(c)( 1), includes the salary of one person, 17,900.00. Could the Minister advise what type of person this is, and what is the function of this postion, if it is one position here? MR.

CRAIK: Mr. Chairman, it is anticipated that there will be a full-time or permanent person as the secretary of the Manitoba Energy Council, and the Energy Council will become a Citizen Advisory Council on energy matters that involve, to a large extent, if I can use the term, the interface with the general public on mainly conservation issues and cons ervat ion projects tha t are unde rtake n, for instance, under the Canadian Manitoba Agreement. The Energy Council will be provided with the services of a person that we feel will be in this salary range.

At the present time the position is vacant and it is intended to be filled. MR. EVANS: Have members been appointed to the Energy Council, citizen members? MR. CRAIK: The Council, Mr. Chairman, at this point has riot been completely formed. I expect that the makeup of the Council will pro babl y be announced within the next couple of weeks.

I would point out to the member that in contrast to the existence of the Council prior to this point as being a Council made up with the Minister as its Chairman and a numb er of senior, either public servants or the Chairman of Hydro and so on that existed in the past, that the Council now will become a completely citizens' group. The Minister will not chair it and the Council will become a completely citizens' group representing the various cross sections of interest from the community. MR.

EVANS: Perhaps the Minister mentioned this in his opening remarks, but I don't know whether I noted it adequately, could he give us the terms of reference of the Manitoba Energy Council, the new Manitoba Energy Council? MR. CRAIK: Mainly to advise the government on areas that involve renewable resource programs and conservation programs, and to represent the public interest in these regards as opposed to the more scientific or technical undertakings that may be undertaken by the department, but to advise the department on the community interest in these 4623

Tuesday, 10 June, 1980 regards and to a degree act as the interpreter for those interests. MR. CHAIRMAN: 1.(c) - the Member for Brandon East. MR. EVANS: It seems to me, and I am not that familiar with the other department, but was there not a Council on· Natural Resources or is that still existing - I am not sure whether I have that right name - Conservation and Resource Council? There was a citizen group for some years, I don't know whether it still exists or not. MR. CRAIK: I am not aware, Mr. Chairman.

There may have been an advisory group in the Natural Resource area, but in conservation in this respect, we are talking about en ergy cons ervat ion as opposed to natural resource conservation. MR. EVANS: Mr. Chairman, does the Minister see any duplication between the two bodies now? MR. CRAIK: No. Mr.

Chairman, in this case we are looking at insulation programs, we are looking at programs that affect people directly in terms of their homes, transportation of renewable resource developments, research projects that have a direct relationship to the community at large, and this body is intended to play an int erpretive role and an advisory role to the department in assessing the programs that are likely to be undertaken by the department, and I would say add to that primarily thr ough the new Cana da-Manitoba Agr eem ent, where referrals will be made to them, to this body, for evaluation on those programs. MR.

EVANS: What about the field of hydro-electric development or pricing policy conditions for oil? You are not seeking such advice from the citizens, I take it, from your remarks. MR. CRAIK: Well, not from this - there would not be an emphasis on that from this council. Pricing policies and allocation policies are more directly the government responsibili ty. MR. EVANS: I was just wondering, the term, the title of the organization therefore is a bit misleading. The Mani toba Energy Council sounds pretty comprehensive,

whereas the terms of reference do limit the field of concern for this council, as I take it. You said they should be concerned about renewable resource development and conservation and it would seem to me that you are really. restricting its area of concern. I'm not really debating the point; the point I am making is that the title is a bit misleading and Mani toba Energy Council sou nds far mo re comprehensive in its jurisdic tion than what the government seems to be prepared to give this advisory body. MR. CRAIK: Mr.

Chairman, I think that there is a fairly large role to be played in the area that I have defined for the council, as opposed to the policy areas that may relate to allocation and to pricing. I don't think allocation and pricing can escape the direct government responsibility, but the role of this council will be mainly the interpretive role to relate to the government the community interest with regard to cons erva tion programs, renewable ene rgy programs, etc.

I would also point out that out of the Canada Manitoba Agreement, one of the first things that will develop is a fairly major undertaking by way of an energy information centre, which will bring together the large body of information that already exists in the public arena with regard to energy programs. They will have an input into the energy information program as well. MR. EVANS: The Mini ster refers to energy information. Is that type of program - obviously it will be paid for other than in this particular vote. I mean surely there is not enough funding here for that.

I would imagine the Other Expenditur es may relate to some honoraria for the council members and very little left for setting up information offices or whatever. MR. CRAIK: Yes, there are a number of other expenditures in the department that are likely to evolve from the Canada-Manitoba Agreement that has been signed about two weeks ago that would not be included in the estimates here. The energy information centre would, to a very large extent, be included in that.

It is intended that the Energy Council would have an overview position to advise the government on the role of the information centre and as to whether or not it was meeting a public requirement and objective. MR. EVANS: Is this the only area, Mr. Chairman, in the department where conservation programs will be considered? Is this where the focus is for conservation or is it to be the consideration of some other area such as the Energy Branch, for example? MR. CRAIK: No, the Council itself will really be an advisory group to government.

The administration of the programs, which will come primarily under the fede ral-provincial agreement, will be within the Department of Ene rgy and Mi nes, which are contained in the estimates further down. MR. EVANS: Mr. Chairman, we could discuss energy conservation programming elsewhere in the estimates. I have a couple of points I wanted to bring up in that respect if this was the only place, but if there is another place such as Energy Management or Energy Authority, I can do it at that time. MR. CHAIRMAN: 1.(c)( 1)- pass; 1.(c)(2)- pass; 1.(d)(1)- pass - the Member for Brandon East. MR.

EVANS: Could the Minister elabor ate on what the function and purpose of the Manitoba Energy Authority is. It seems as though it has little staff but quite a bit of money to spend, 650,000.00. MR. CRAIK: I'm sorry. MR. CHAIRMAN: The Member for Brandon East maybe could repeat the question. MR. EVANS: Very simply, what is the function of the Manitoba Energy Authority? It seems that there 4624

Tuesday, 10 June, 1980 is provision for little staff, but it does have a fair amount of budget to expend, 650,000.00. MR. CHAIRMAN: Well, then we should pass 1.(dX1) -pass; 1.(dX2) is where the question would come in. The Honourable Minister. MR. EVANS: Mr. Chairman, on a point of order, wondered what the salaries - you know, was that one body, two bodies, three secretaries, or one professional? MR. CHAIRMAN: The Honourable Minister. MR. CRAIK: Mr. Chairman, what is provided for here is a provision for a director of the Manitoba Energy Authority.

Now, the purposes of the Authority are really twofold: one is the extra-provincial negotiations with regard to electric�! energy, the second is with regard to energy allocation that comes under The Federal Allocation Act that has been passed in the last year, well, I guess two years, a year-and-a-half, at the federal level, which in other words is rationing potentials or possibilities in the event that they were to be invoked by the federal government. This is the agency, at the provincial level, that would dovetail with the federal Act to administer that energy allocation at the provincial level.

So the role of the Energy Authority is really the responsibility of ensuring or being the watchdog for energy supply into Manitoba, and also the party that advises the government, apart from Manitoba Hydro, with regard to energy export policy with regard to principally, of course, electrical energy. lt would not exclude the possibility, of course, of the energy authority also looking at the allocation of production coming from oils in Manitoba. MR. EVANS: This sounds like a very impression position.

Energy allocation, let's hope we never come to that drastic situation where we do have to allocate and regulate energy supply. That's an emergency situation as I understand it. But the question of extra-provincial negotiations is a current question; it is a current matter. lt would seem to me that this, therefore, is a very senior position. I may be wrong, but if it is a person who is engaged in extra provincial negotiations of electrical energy, it would seem to me that you would be looking at an electrical engineer perhaps, I don't know, in a very senior person.

Perhaps the Min ister could tell us what person is expected to be in this position. Is there a person in this position now and what is that person's qualifications? MR. CRAIK: Mr. Chairman, not formally at this point. At this point in time the Deputy Minister has been acting in that role in the extra-provincial negotiation picture with assistance from the personnel that he has in the department who are also fairly knowledgeable in this area, but in a formal way that position has not been filled. MR. EVANS: What would be the qualif ications you'd be looking for then for this position? And the second question, Mr.

Chairman, before the Minister may like to answer is, are you now in the active process of advertising that position to try to fill it, or are you simply going along for the present time using the Deputy Minister? MR. CRAIK: it's intended, Mr. Chairman, that this position will be filled, with a number of the other things that are now happening in the department with its formation. This is in a formative stage too.

At the present time the legislation for the Manitoba Energy Authority, has not yet been introduced to the Hous e or dealt with in the Legislature. but the intention is that the Energy Authority legislation would provide for the back-up for this person. As far as the person who finally fills it is concerned, that is still to be decided. MR. EVANS: Did I hear the Minister correctly? He said the type of person with his qualifications or her qualifications is yet to be decided for this position? MR. CRAIK: Mr.

Chairman, there is no foregone conclusion. lt wouldn't necessarily be a person of a particular background, any formal background, it would be more the - it would probably be a person that has shown a background in terms of his professional undertakings in this area. Whether it was an engineer or an economist or whatever would still remain to be seen. MR. EVANS: The Mini ster said the legislation hadn't yet been brought into the Legislature. Is it the intention of the government and the Minister to bring in this legislation in this session? MR. CRAIK: Yes, Mr. Chairman. MR. CHAIRMAN: 1.(dX1) -pass; 1.(dX2)- pass.

Be it resolved that there be granted to Her . . . MR. EVANS: Excuse me, 1.(dX2) - what is this item, 650,000.00? MR. CRAIK: This is compris ed mainly, Mr. Chairman, of the ... Manitoba is administering the funding for the studies under the western power grid through this item, and it's a cost-shared item with the three prairie provinces and the amount coming from the province of Manitoba on the funds that have been allocated so far, on the studies that have been allocated so far, amount to 375,000 for the western power grid. We have allocated a total amount for the fiscal year of 650,000.00. MR.

EVANS: What is the cost-sharing proportion with the other two provinces, the percentages, or the shares? MR. CRAIK: This phase of the studies that were involved, Mr. Chairman, are cost shared 50 percent Alberta, 25 Saskatchewan, and 25 Manitoba. MR. EVANS: I'm glad we're not paying the 50 percent, but at any rate my question on this matter was why Alberta would be paying half of the total cost? Is it because - I know it's a recipient. On the other hand we are the seller and stand to gain hopefully from the arrangement as well.

Why not one-third, one-third, one-third, or I can see Saskatchewan perhaps being as more of an area in 4625

Tuesday, 10 June, 19 80 which the electricity is transported, perhaps taking a smaller percentage, but I don' t see Manitoba necessarily. MR. CRAIK: Alberta in this case was prepared to agree that this phase of the studies - I would point out that in the first studies that it was cost shared Alberta one-third, Manitoba one-third, Saskatchewan one-sixth, and British Columbia one-sixth.

In this phase of the studies, with it being the three prairie provinces, it was recognized that there would be more study requirement in the province of Alberta to bring about a distribution mechanism for the power, if it came to pass, into the province of Alberta, to be distributed to a number of utilities that were in the province. And from that point of view the province of Alberta was prepared to agree that there would be a heavier proportion of the study requirement, from that point of view, within the province of Alberta. MR.

EVANS: I wonder if the Minister can now tell us whether this is the full amount that is expected to be expended this year, that we won't go beyond this amount, and when can we expect to get the report of the study group and is there any deadline for decisions in this matter of the western power grid? MR. CRAIK: The engineering studies are expected to be provided to the study group by the end of September of this year, and there is some requirement for the governments involved to make their decision before the end of 1980, before the end of this year. MR.

EVANS: The other question was, is this the limit that will be spent, in the Minister's judgement, on such studies, or is there a possibility that another study, another phase may have to be undertaken requiring additional expenditures? MR. CRAIK: It's anticipated, Mr. Chairman, that this will provide the necessary information upon which the governments can make their decision.

But if that decision is positive, of course, there will be fairly extensive, then detailed requirements for the purposes of construc tion, but there will be not necessarily studies but design undertakings that would follow this but probably would not show up as a provincial expenditure, but would rather be an expenditure by any body set up for the power grid purposes or amongst the utilities that were involved in building it. MR. EVANS: Mr. Chairman, I wonder if the Minister can advise the committee, what are some of the questions that the study group are attempting to answer, I mean the key questions?

I would imagine that one key question is, is it feasible; does it make sense; can we land transport or transmit electric power from the Nelson River to Edmon ton or whereever it's to be sold in Alberta, at a price that's attractive to Al berta? And that's, I imagine, putting it very simply, a very key question. But I am wondering if the Minister can enlighten us as to what are the key questions that are being addressed now by this study group? MR. CRAIK: Mr.

Chairman, first of all, I think that the engi neering studies are at the present time looking at four alternative routings from Manitob a through to Alb erta on the technical side. And then there is the other side of it that is looking at the costs and the benefits side and dealing with the governments, and there are those two phases of the study that are proceeding. It's expected that both of these will be available to the governments by the time deadline that I indicated. MR.

EVANS: That's at the end of September, by the end of September, and the decision is going to be made hopefully before the end of 1980 - this year. What amount of power are we talking about, or is there any answer to that yet? There must be some idea of how much electric power that may be in volved, say per annum, sale per annum, to Alberta? MR. CRAIK: The size of the capacity of the interchange that is being examined and which could be, I suppose, subject to change, but which was the basic undertaking, was 1,000 megawatts of capacity. MR. EVANS: That's the capacity.

Does that give us - I would un derstand that Saskatchewan is prepared to take some power and Alberta the bulk of it, but have we any idea as to how much might be delivered to either province in say the first year of operation, if all goes well? MR. CRAIK: That's what is under examination at the present time. The Alberta agreement that may be entered into would deliver a supply that would rise to 1,000 mega watts by a certain date. There are indications that Saskatchewan may have an earlier requirement for a smaller amount wich would fit in quite well with the overall undertaking.

But all the numb ers on it are still fairly uncertain, although the principle involved is based on the fact that by the year 1987 that Alberta would require approximately 1,000 megawatts of supply. MR. EVANS: I wonder if the Minister could advise the committee as to what technical, what hurdle, what is the challenge that we face in being able to sell this power to Alberta? There is the cost of transmitting the energy. I imagine it's direct current, I'm not sure.

But it seems to me that Alber ta or the utility in Alberta would look at its options, the main option being thermal electricity produced by perhaps coal or natural gas or what have you, or low grade heavy oil, or I don't know what. Is that not the sort of options that the utilities in Alberta would be looking at - taking a look at it from their own rational, commercial point of view? If you are the head of the electric utility in Alberta, and I've forgotten the name of it in Edmo nton -(I nterject ion)- No, it's in Edmonton, I think. It's not Calgary Power. I'm not sure.

I thought it was the Edmonton Utility, Northland Utilities or something like that, but it doesn't matter. But if you are the head of that util ity and ask yourself, well is this a good deal for Manitoba? Can I produce this power as cheaply or more cheaply by getting Alberta coal or natural gas or heavy oil or whatever may be a possible source for a thermal plant operation? Is that the sort of questioning - 4626

Tuesday, 10 June, 1980 are these the sort of questions that are being asked now and answers being sought for? MR. CRAIK: That's very much at the core of it, yes. MR. CHAIRMAN: 1.(dX2)-pass; Resolution No. 58, 2. (a)( 1)-pass; 2.(a)(2)- pass - the Member for Brandon East. MR. EVANS: Mr. Chairman, you're a little quick on the draw. I'd like to ask about 2.(aX 1) Salaries. I'd like to get a breakdown there. MR. CHAIRMAN: 2.(bX 1) - all right go back to that. MR. EVANS: 2.(a)

(1) Salaries. I'd like to get a breakdown again of the type of persons in this, the number of positions and the type of personnel in that section. MR. CRAIK: Mr. Chairman, there are a total of nine SMYs here. There will be an addition over last year of one research assistant and one secretary. This is primarily the group that has been involved in such things as the representation at the National Energy Board and other things that represent pricing and so on on natural gas. To a large extent, this will embody the former staff of the former Manitoba Energy Council. MR.

EVANS: The description here: Energy, consists of activities pertaining to energy supply and deman d, emer gy cons erva tion, research and development into alternative energy sources and energy conservation techniques. We talked about energy management, as di stinct from ene rgy technology, and maybe the distinction will become a little clearer as we go along, but in terms of energy management, is this group concerned at all with electricity as such? MR.

CRAIK: In as much as one of the chief people here has been very intimately involved in the extra provincial negotiations, but generally speaking, they would be more involved in other matters that affect the energy supply in Manitoba, but not primarily on the electric side, although up to date there has been a fair amount of research work done in this group on forecasting of energy supply and demand and pricing in Manitoba. MR. EVANS: Could the Minister now tell us what is happening to energy demand in the province.

I recall some years back there were some reports prepared on energy data for Manitoba by the secretariat of the council. At one point, there didn't seem to be much growth in demand, for various reasons, higher prices, among others, I wonder if the Minister could tell the committee what is now the demand for the various kinds of energy. What has been happening in this field? I wonder perhaps if he could break it down betwen oil, natural gas - well, electricity we get, I guess, out of the Manitoba Hydro, but maybe he would like to comment on that as well. MR. CRAIK: Mr.

Chairman, I think it's probably, in general terms, oil and gas are quite flat in terms of their growth. MR. EVANS: Flat? MR. CRAIK: Yes. But electrical looks, as was ind icated this morning at the Public Utili ties Committee, electrical is looking at a growth rate that Hydro is predicting of somewhere around a 3 percent annual growth rate, perhaps 3 to 4 percent. MR. EVANS: Wha t about the shares, the percentage shares of these sources of energy as a percentage of total energy usage in the province? Is electricity becoming a larger percentage of the total consumption or is it declining?

Just how are these energy sources, energy types rather, now looking as a percentage of the total pie? MR. CRAIK: The electrical, I think, probably is growing a little bit, as I indicated, but at a much slower rate than what was anticipated some years ago. At the present time, the consumption is about 50 percent oil, about 30 percent natural gas, 18 percent electrical and 2 percent coal. MR. EVANS: Where would the coal be used? I guess that would be the thermal plants in Selkirk and Brandon and some in the downtown central heating system, the Amy Street Plant. MR.

CRAIK: In some remote places like Baldur, Manitoba, they are still burning coal, too. MR. EVANS: As a matter of fact, I believe there is a coal station in Brandon as well, apart from the thermal plant. Would the Minister care to comment on this? He said that there is really very little growth for oil or natural gas. Is there any reason for this or would he care to give us any explanation for this particular trend? MR. CRAIK: Mr. Chairman, just in case I offend anyone in Baldur, I meant in Greenway, Manitoba. MR.

EVANS: I guess maybe the Minister missed my last qu estion, and that is, is ther e any explanation for this particular trend in oil and gas consumption? I believe he said that the demand seemed to be rather flat, both for gas and oil products, one major component therefore being automobile gasoline. I can think of one reason and that is the price. It would be interesting to know to what extent, well, in more technical terms, what was the coefficient of the elasticity of the demand curve for gasoline and natural gas? MR. CRAIK: Well, there seems to be, as far as we can determine, Mr .

Chairman, there is some conservation effect in the domestic scene, in the residential scene. There is a reduction, actually, in areas where there have been no new connections on the natural gas side and it appears to be related to gr eater cons erva tion methods. I don 't want to suggest that it's the insulation program because there is still an examination outstanding with regard to whether or not it has been effective or not in 4627

Tuesday, 10 June, 1980 bringing out any reduction in consumption. But there is a reduction, generally, in residential consumption in the natura l gas field. There have been some expansions, with new connections, but in total it has remained fairly flat. With regard to oil, there is some movement to smaller cars and there is perhaps some pricing effect that is taking place but, in general, in both of those, it is open still to a very large amount of speculation but that appears to be the rationale for the flattening out of the demand.

Manitoba, in that regard, is not a stranger with regard to what is happening in the rest of the continent. MR. EVANS: I have a number of questions in this area, because we're getting into the meat of energy policy, Mr. Chairman, so if you will just bear with us. I have tour or five under this item. The Minister said that what was happening in Manitoba wasn't out of line with what is happening in the rest of North America. In other words, there seems to be a trend in North America for a flattening out of gasol ine consumption and natu ral gas consumption.

The Mini ster mentioned that one of the chief functions of this group, which used to be with the Energy Council, was to make representations on behalf of the government to the National Energy Board. I, for one, recognize that when we talk about energy in Manitoba, our main source of energy is Manitoba Hydro, the hydro-electric sources that we have, and there is no question that that's the major policy area.

But in respect to oil, gas, coal, and what other forms of energy that are available - well, it's quite a minor item but nevertheless, particularly with regard to oil and gas - that we are affected very much by national energy policies that are laid down by the National Energy Board and, really, all Manitoba can do is to go in with reasoned arguments persuading, hopefully, the board to bring about policy decisions that are in the interests of this province of ours. In that regard, I wondered what the government's present position is with regard to gas exports to the United States.

Now, the reason that I ask that goes back to a situation in Manitoba about - I stand to be corrected - I think 1975-76, that in the winter, when housing developers in Manitoba could not get natural gas for new home construction and at the same time we had, I think, 40 percent of Canada's natural gas production being exported to the United States and here the federal authority could not deliver, could not assure a deliverance of gas to supply a growing residential demand in Winn ipeg. It was, I thought, a serious situation at that time.

I have been of the view, and our government, the previous administration, has been of the view that (1) we should not as a country expand our exports to the United States. At the present time and for some many months, there has been a lot of pressure on the part of natural gas producers in Alberta to allow the National Energy Board to permit them to export greater amounts of this energy to the United States.

I am wondering if the government has a particular position on this matter and whether that position has been made known to the National Energy Board in the appropriate · hearing, the position with regard to additiona l exports of natural gas to the United States. MR. CRAIK: Mr.

Chairman, the basic position that we have taken at the National Energy Board is if the rest of the country can be provided with the same assurance that the province of Alb erta is provided with for supply, that we would not have opposition to the export; but fur thermore, that it should demonstrate, on a discounted basis, in fact, that it was provi ding, over the long term, a return to Canada that would be greater than the return that would be achieved if it were left in the ground. That's the basic position that we have taken before the NEB and we have provided some background to that.

There is some indication, of course, from the National Energy Board that some export would lead, by way of further exploration, to amounts of natural gas that would exceed any export by some multiple, in which case an argument is entered that can't be answered by the qualifications that were put on by our position.

In that regard, particularly with regard to the Pembina Field in Alberta where there is some recognition of the fact that what is required is the further exploration to discover deposits of natural gas that far exceed what is presently known or proven, that there is an argument that is presented that is forceful and in that regard we have taken the posit ion, if that's the case and the first two requirements can be met, that we have no opposition to export. MR. DEPUTY CHAIRMAN, Henry J. Ei narson (Rock Lake): The Member for Brandon East. MR. EV ANS: On tha t su bject , though, Mr.

Chairman, there is the consideration as to the type of gas you are talking about. There is no doubt, if market opportunities exist, there is a stimulous for additional exploration and development. What I am concerned about is that we then end up having to bring forth the more expensive, more remote gas, such as the high Arctic gas, or whatever, and therefore that while we can stimulate exploration, what is happening is that we're placing a greater burden on Manitoba cons umers who will then ultimately, five, ten, fifteen, twenty years down the line, be paying a lot more for that natural gas. MR.

DEPUTY CHAIRMAN: 2.(a)(1)-pass. MR. EVANS: Mr. Chairman, we have a number of questions on this item. I still haven't had the answer to this last question. MR. DEP UTY CHAIRMAN: I'm sorr y, to the Member for Brandon East, thought you were making comments. I didn't hear your question. MR.

EVANS: My question was, to the Minister, is he not concerned that the argument that providing more markets causes exploration and development to be stimulated; is he not concerned that what will happen is that the cheap gas, if I can use that term, the cheap, more available, more accessible natural gas, will be depleted, and that in turn, we will end up, five, ten, fifteen years down the line, as Manitobans, and as Canadians, paying more than we would oth erwise. Is that not a conc ern , and 4628

Tuesday, 10 June, 1980 therefore, isn't that a reason to impose additional natural gas exports? MR. CRAIK: To go back to my previous answer, Mr.· Chairman, the Alberta formula is for proven reserves of 30 years supply for Alberta, and the position that we've taken at the NEB hearings is that the rest of us who are down the line on the system ought to be provi ded with tha t same sort of guarantee. In 1978, the proven reserves were 60 trillion cubic feet; in 1979, the latest figures jumped to 80 tcf, and the annual Canadian consumption is about 1 1/2 at the present time.

So it would appear that the Al berta requirement would have no trouble in being met and it would appear that if that guarantee is given to the rest of us, it would have no difficulty in being met by these figures.

With regard to export of these impoverishing the supplies at a future date that may be. detrimental by way of requiring Arctic supplies at a later date, that argument is offset to some extent by the fact that it's maintained that some export is required to get the flow, to get the exploration work under way for further supply, wherever it may be, and of course, the Pembina field that's in Alberta is regarded as being the largest potential, and it would appear at this time that the Arctic supplies are probably a pretty great distance down the line.

I don't know that present economic projections can deal with the question by the member. MR. EVANS: The 80 trillion cubic feet, which I think the Minister said was the latest estimate of proven reserves, what percentage of that is in the far north? Or is that 80 trillion cubic feet in Alberta? Or is this all of Canada? MR. CRAIK: It's all mainland, Mr. Chairman, and it's pretty well all Alb erta. Ther e's some in Saskatchewan. MR. EVANS: So none of tha t include s the Nor thwest Territories, or ... MR. CRAIK: Mostly Alberta, some Saskatchewan, some British Columbia. MR.

EVANS: On the point, it seems to me, in Canada's national interest, from my point of view at least, and Mani toba's inter est as a consu ming province, to not increase the exports of natural gas, and it seems to me that there's the argument that we should be stimul ating further explora tion and development at this time doesn't hold water, if at 80 trillion cubic feet, using 1 1/2 per year, we have an ample supply, what does that amount to, 40, 50 years worth of supply. And that's relatively cheap gas. So why put a pressure, an upward pressure on the price of gas, the cost of gas, by exporting it.

I know it's in the interests of the producers in Alberta, but I would submit, it's not in the interests of the consu mers in Man itoba, or the net consu min g provinces. It's in our interest to leave that gas in the ground as long as possible and to keep it there and to have it available to us in the quantities that we need at the lowest price possible. On the question then of Polar Gas, which was a company that was very interested in bringing down the gas from the Arctic Islands, presumably through Manitoba, was the Minister indicating in his earlier remarks that that seems now to be a fairly remote possibility?

That is the development of the Polar Gas lines through Manitoba? MR. CRAIK: With the supplies that are evident in Alberta, of course, it has pushed that prospect back, but the most recent proposal by Polar Gas is very encouraging, because what they are proposing now is a line that picks up the McKenzie, the Beaufort Sea area, the McKenzie Delta area, and the Arctic Islands in a Y-shaped line that joins together north of Alberta and then cuts down across and comes into Manitoba at the northwest corner of Manitoba and is almost entirely in Manitoba from there down.

So if and when it goes, it's a very encouraging prospect as far as Manitoba is concerned, but at this point in time, the supplies from Alberta are going to be well under the costs of the supplies from the Arctic Islands and from the McK enzie Delta. I shoul d indicate also, though, that that proposal for this Y shaped line is going before the National Energy Board in the spring of 1981, and they are going to the National Energy Board with a proposal to start construction of the line in 1985. Whether it's realistic or not is open to anyone's guess. But that's their proposal. MR.

EVANS: Just a comment, and then a question, it would seem to me that the possibilities of approval would be rather remote. My colleague, the Member for Kildonan, has done the arithmetic, and it looks like 80 trillion cubi c feet at the present rate of consumption gives you 53.3 years of supply. So on that basis, it would seem to me that the energy board may not be interested in approving it. But on the other hand, I wonder if the Mini ster could indicate whether the province of Manitoba will be appearing before that board on this matter, and what the position will be of the government? MR.

CRAIK: On the Polar Gas line? MR. EVANS: Yes. MR. CRAIK: Yes, I expect it will. We haven't formulated a position. We've indicated to them, to Polar Gas, our support of their route at this point in time. We've indicated our general approval of their route, which makes a lot of sense, not because it passes mostly through Manitoba, but because it would appear on the map, at least, to pick up two main sources of Arctic gas with the least amount of construction. MR. EVANS: I don't know whether I want to pursue that one.

I know there was a lot of talk about the possibility of Polar coming through Manitoba, and the stimulus provided by it and so on, but at any rate, my view is that it's quite a ways down the line and we may not see that development for a long time. At any rate, I'd like to go on to a question of gas pricing. Has the government a policy position on natural gas pricing? As I understand it, the price of natural gas is set at being 85 percent of the change in oil, so if oil goes up by a certain amount, the price of natural gas goes up by 85 percent of that amount. 4629

Tuesday, 10 June, 1980 That may have been changed, but I understood that was the pol icy. Does the government have a particular position on this? Are you advocating that this be abolished or continued, or do you have any comments on that pricing policy? MR. CRAIK: Mr. Chairman, we have exposed our opposition to this principle of pricing it at. 85 percent of oil. MR. EVANS: connection. Totally agains t this very rigid MR. CRAIK: We're opposed to the principle of it being tied in lock-step with the price of oil. MR. EVANS: Has the government proposed some options or alternatives to the National Energy Board? MR.

CRAIK: Primarily, Mr. Chairman, that we would prefer to see it priced by the market. MR. EVANS: Priced by the market. I presume that would result in a much lower price rise than we have at the moment, given the fact that we have ample supplies of natural gas in Canada. Just continuing on the discussion of natural gas for a minute, it seems to me that one very important structural move that can be made in Canada to make us more self-reliant in terms of oil and energy generally, is to subs titute natura l gas for oil consumption, particularly for heating of homes and buildings in Quebec and the Maritimes.

There is some move afoot, I believe, to construct a gas line from western points to provide natu ral gas, particularly for the province of Quebec. I believe the province of Manitoba has investigated this; I believe I read somewhere that a brief was presented and I'm just wondering if the Mini ster could tell the committee what is the position of the government of Manitoba in this particular matter? MR. CRAIK: Mr. Chairman, we have taken the position that we agree with it, providing we don't have to pay for it as upstream customers.

If it's paid for for national purposes, other than direct energy consumption, we don't have any disagreement with paying our proportion on a national basis, but if it's paid for by simply charging the new construction costs to the upstream customers who lie east of the Al berta border, that we would feel an unfair imposition on the ratepayers in Manitoba, and that appears to have been accepted as a valid argument. MR. EVANS: I think that's a logical, rational position to take.

I think it is an excellent move for Canada's national energy security or however you may describe that, but at the same time, let us hope that the costs of the pipeline should be borne by the consumers that are going to benefit from this, rather than consu mers upstream such as those in Manitoba. Regarding the question of oil exports, has the province made any representation to the National Energy Board on the matter of oil exporta tion, exports to the United States? MR. CRAIK: There hasn't been cause for that, Mr. Chairman.

On the oil side it's down to a very very low insignificant figure at the present time anyway. The net exchange is next to nothing. MR. EVANS: I didn't hear the last statement. I'm sorry. I didn't hear the last statement of the Minister. MR. CRAIK: My understanding, Mr. Chairman, is that the net exchange now is very close to nothing. MR. EVANS: Could the Minister interpret for us? What does he mean by that statement? I think I kno w what he means, but if he would n't mind elabora ting. MR. CRAIK: The net flow of oil to the United States now is not a significant amount in the total amount.

It's not in the same league as the question of exports of natural gas. We haven't had cause to deal with it as a position before the National Energy Board. MR. EVANS: I see. So as I understand, there has been no representation to the National Energy Board on the matter of oil exports. MR. CRAIK: I don't think so. MR.

EVANS: I'd like to go on to the question of oil pricing, which is a policy matter that obtai ned considerable attention during the last federal election and I guess continues to receive some considerable public attention, and I am wondering if the Minister could advise now whether the gov ernm ent of Manitoba is still of the view that the pricing of oil should be interrelated somehow to international oil price levels. I believe your position is not to go to world price per se, but perhaps some percentage thereof.

Am I interpr eting the position of the government correctly, or would the Minister like to elaborate what the position of the province is with regard to oil pricing? MR. CRAIK: Mr. Chairman, the government has announced its position on any number of occasions, that it supports a goal of national self-sufficiency, which means that in assuming that position that there will be a price increase. It means that we will have to move up at a rate that can be adapted to by the country, but to a level that will provide self sufficiency in Canada. I suppose the question is, what is self-sufficiency?

It is a moving target, because your conv entional supp li es are fallin g and your no n-conv entional supplies have to rise, so over a longer period of time it has to be a price that makes the non-conventional supplies competitive, and what that may be is going to change as time goes by. It is going to escalate in cost, but it should be well below world price. MR. EVANS: It should be well below world price. But is the Minister prepared to say that it should be - what was the expression, in lock-step, is that the expression, with international price trends? MR. CR AIK: No, Mr.

Chairman, ther e is no necessity to relate it to world price. MR. EVANS: I don't think there is any argument that the price of oil may have to go up in Canada. I 4630

Tuesday, 10 June, 1980 would point out that there is some evidence that the oil companies, the oil organizations, do have profits th at are not nece ssarily being used for oil development, but are being used to acquire other assets, real estate, coal fields, etc., which makes one wonder whether price increases do result or will result in additional exploration and development in Canada, given the fact that there simply may not be that oil availability in the views of the oil companies.

I think the federal Ministry of Energy has gathered some evidence to the effect that the oil companies are not using all of their returns, their retained profits, retained earn ings, for oil exploration development, which makes one wonder therefore whether additional price rises are as necessary as some people would argue.

I have in the Legislature, it has been my impression that this government has been in favour of some price that would be arbitrarily an automatic lock to world price changes, and we have argued, essentially I have argued at least, essentially the same position that the Ontario Government has argued, and I think that is a sensible position for the province of Manitoba. The province of Manitoba is a net consuming province. I think it is utter folly for us to take the position of a producing province, such as Alberta. I think one should listen to Bill Davis rather than Peter Lougheed in this case.

If I could read, Mr. Chairman, a recent statement, March 4th, 1980, by the Honourable Robert Welch, Deputy Premier of Ontario and Minister of Energy in that province, a speech he made at the University of Western Ontario in London, as I said on March 4th, 1980, and I think he puts it very simply and very well, the position that a net consuming province should take. The one que stion which cons umers keep hammering away at is how high will the price of oil go. That has to be one of the most controversial issues in this country today.

Ontario's position on pricing has been stated emphatically by Premier William Davis. Basically we believe that it is neither wise nor necessary for Canada to use the OPEC or so-called world price as a benchmark for pricing Canadian crude oil. That cartel-derived price bears no relationship to the cost of production or the real value of the commodity. Although we are not against higher prices per se, we do think any price increases should be closely linked to the cost of production and to achieving self-sufficiency without restricting our quality of life.

Clearly crude oil pricing and supply polic y in Canada should be based on pricing to achieve self sufficiency rather than on pricing to achieve world levels. I am sure that you can appreciate that there is a vast difference between those two approaches. The danger is that this country will get caught up in the rush to world prices and fail to ensure that we have enough domestic crude oil. He goes on to state, Mr. Chairman, that Ontario will continue to make its voice heard across the land on these important issues that are vital to the future of that province and to the country. It would seem to me, Mr.

Chairman, that it makes eminent sense for Manitoba to emulate Ontario, that we should speaking up loudly and clearly in this matter of oil pricing. I might add that when we were in government, when I was a Minister with some responsibility in this area, we did meet with the Ontario Minister of Energy, and we had a common purpose, and we went to the conference table in Ottawa and spoke with a united voice, because we both were in the position of being net consuming provinces. It was in the interests of our people, of our consumers, for us to take the position that we took.

I think that there should be no qu estion whatsoever in the minds of the Minister, in the mind of this government, with respect to Man itoba's position on oil pricing. As I said a moment ago, there is some evidence that the oil corporations are not utilizing the entire amount of revenue that they are obtaining now and there is information as well that in some cases they are getting various tax breaks that makes one wonder whether they are really responding - whether they are using sufficient of their own funds.

I think there is one case where the tax breaks are such that the taxpayers are really subsidizing, very considerably subsidizing the private corporation. Then there is information where the oil companies are not paying taxes. As a matter of fact, I have one note here which shows that Shell Oil paid not one cent for taxes in 1979. At any rate on the matter of oil pricing, I wonder if the Mi nister could elabor ate as to whether the government is going to take a very firm position as a net consuming province. MR. CRAIK: Mr.

Chairman, this is a fairly important point, but ther e are two dif ferent and entir ely separate arguments. One is the oil price argument, the other is the self-sufficiency policy for the country, and Canada cannot avoid, in its own interests, adopting a self-sufficiency policy.

And Ontario's argument and concern that it is tied into a world oil price level does little more than cloud over the fact that Canada has to get on with developing a self sufficiency policy and what has to be done is that we can aim for that without causing undue difficult adjustment for the population of the country, but the conventional supplies are now on the downward trend and the non-conventional supplies have to come on.

Until there is a pricing policy in Canada that brings those non-conven tiona l supplies on, towards the end of the 1980s, we are going to be in diffi cult y, and we are also going to be very vulnerable to supplies from outside of Canada. Unless there is something happens that is now unforeseen, which really doesn't even deserve to be speculated on, because that is all it would be is straight speculation, you have to accept the facts of life as they are, and that is that we are currently dependent for some 22 percent of the supply of Canada from offshore, with conventional supplies decreasing.

If we get all embroiled and bogged down in this business of whether we should be paying world price or not world price, we are not going to get self-sufficiency and that is going to be the net result of the whole argument. So I think there are two entirely different and separate arguments, and if we continue to confuse a self-sufficiency goal with a world oil price goal, we are going to fall between the stools, just like Canada is wont to do periodically and far too often. I think it time we got over it. I don't adopt the Ontario argument of getting embroiled in whether this is oil world price goal or not.

What I'm simply trying to say again, for every 4631

Tuesday, 10 June, 1980 chance we have had to say it for the last 18 months, is that Canada ought to adopt a self-sufficiency policy. And we are not identifying with a polarized position, anti-world price, pro-world price, 85 percent of Chicago, or anything else, but let's just see a self sufficiency policy adopted and achieve it at a rate that Canada can live with. That is our position and that is what it is. MR. EVANS: Mr. Chairman, I am little confused by what the Minister says, but I want to repeat this one sentence that I just read from the Honourable Mr. Welch in Ontario.

Clearly crude oil pricing and supply policy in Canada should be based on pricing to achieve self-sufficiency rather than on pricing to achieve world levels. So he is making that distinction that the Minister I think was trying to make, and I am just wondering whether you really aren't saying the same thing anyway. I appreciate the fact that we unfortunately import a large percentage of the oil that we consume and we pay for it, and it is subsidized right now by the federal government. We have made some argument in the past that we should have what is called a blended price, the new oil and the old oil.

I don't really want to get into all that again, but the point it though that it seemed to me and it seems to our party that it is simply folly for us to rush to world prices without seeing whether we are getting the results from it. It seems to me that there are oth<ir ways of bringing forth oil from non-conventional sources, such as the tar sands, without having to pay world prices for them. There are other techniques that are available. I say pay the price, pay the price that it requires to get the oil out of the tar sands. If we want to get oil out of the tar sands, let us pay that price.

But let's not pay a ripoff price for the old oil, because all that does is give the companies a lot of extra profit that they are not even able to use for oil and exploration development. MR. DEPUTY CHAIRMAN: The Member for lnkster. MR. GREEN: Mr . Chairman, I am somewhat confused with what the Minister is saying with regard to self-sufficiency and I will just wait until he gets through with his civil servant so that perhaps he will hear me.

The Minister has said in this House that the price of oil should be the amount that it is going to cost to produce oil from the next source, which is the tar sands, and I think about a year ago he was talking about 18 a barrel. I think that they are now talking in terms of the world price of over 30 a barrel. I think that I am low, it may be 35 a barrel, and this is the price that is being sought by Alb erta and Saskatchewan - and there is a distinction there - with the acq uiescence of the province of Manitoba.

The province of Manitoba has never, since the change in government, taken an adamant stand agains t the world pric e pol icy of Alb erta and Saskatc hewan on the specious reason, Mr . Chairman, that if we do that we won't be able to sell our hydro-electric power for whatever price we can get, ignoring the fact, Mr.

Chairman, that hydro electric power is sold on a very competitive basis throughout this country, competition not only with other hydl'O"electric power, but with other electrically produced power, fossil fuel power, and that there is absolutely no basis for suggesting that hydro-electric power is being sold at rates which, Mr. Chairman, and I say this advisedly, if it was done by a group of companies in Canada, they would put all of the directors in jail. The price of oil is now being set by an international combine conspiracy against trade, accord ing to the defi nition of our Combines Legislation, and Mr.

Lougheed is very happy with the acqu iesence of his friends in the province of Manitoba, the go vernment of the province of Manitoba, to hop onto that criminal conspiracy, on the basis that he wants that price for oil. Now, Mr. Blakeney has at least taken a somewhat more sensible position. Mr. Blakeney has said - well, you see if it is more sensible - if we go to world pric es, which Mr. Blake ney says that we should, then take everything over the existing price to the world price, take it into the public hands and use that money for finding new oil. Now, is that not more sensible? It is more sensible. Mr.

Lougheed says, take that money and spread it between the oil companies and the province of Albert and the province of Alberta will then give its share to the oil companies. That's the Lougheed position. Or, build up this Heritage Fund, which now stands at something over 7 billion, three times the budget of the province of Manitoba. If they only used their oil revenues, they wouldn't have to collect any taxes whatsoever, not one cent in any other form of taxes in the province of Al berta. The Minister says, we're not talking about the world price, we're talkaing about self-suffiency.

But when he defines self-sufficiency, he says self sufficiency means the cost of getting new oil, and approximately a year ago he talked about 18.00. Mr. Chairman, why doesn't he say the same thing about hydro power? He would be lynched if he did. He would be lynched if he told the people of the province of Manitoba that they have to pay for hydro power what it will cost to buy our next kilowatt. That's what he is saying. He is saying self-sufficiency in oil is a charging at the rate it costs you to buy your most expensive barrel. Mr.

Chairman, that is what he is saying, the most expensive barrel is the barrel we are not now getting, that's the one that has to be produced, he says, from the tar sands, and he wants to charge for every barrel, whether it's the barrel that costs 2.00 a barrel to produce - and there is still oil being sold in this country where the cost of production is the same as it was in 1973 when crude oil was selling at 2.75 a barrel, and that oil is now selling at over 20.00 a barrel and Al berta wants the world price for that oil, not the tar sands oil. Then, Mr. Chairman, what has happened to capitalism?

Capitalism now says that you pay for the barrels now that you are going to find later. When we find them, will they give them to us for nothing since we have already paid for them? T.C. Douglas put it the best. This is a policy of pay now, pay later. Because what happens when they find that new barrel, they're not going to sell it to us at the cost of finding the new barrel, they're going to say, You have to pay the cost of finding the next barrel. You've already paid for that oil. The Minister says we should pay for it now, pay for the 17.00 oil, for the oil that cost 2.75 to produce. Now, at least if 4632

Tuesday, 10 June, 1980 we have already paid for it we shouldn't be charged again, but when they produce it they're not going to sell it to us for the cost of production. They're going to say, as the Minister now says, When we sell you this oil, we have to go out and find another one and therefore you have to pay for the next one. Is that not what the Minister is saying? I would dare him, Mr. Speaker, to sell hydro power, and that really is the difference, that shows the real benefit of the publ ic ownership of our resource, because the public would be lynched.

No government could get away with doing what they are attempting to do with the private price of oil. The government says, we are producing hydro electricity, the cheapest kilo watt is X number of cents per kilowatts, or X mils; the highest is another figure. We take the total cost of paying for it, we divide that cost and we sell it to the people of the province of Manitoba and we deduct from what we sell the amount of revenue that we get in being able to dump hydro electricity. That's what we do.

Why not take the total cost of producing all of the oil that we are now producing, divide it among the number of barrels that we sell, and sell it for that price. And next year when it costs more, sell it for that price next year. No, the Member for River Heights says no. He says the capitalists in sist that he won 't mak e an investment; he will not make an investment. He will not seek a return.

He wants to get paid before he produces it and then when he produces it, he wants to get paid for the next barrel, and that's what is happening in this country and that's the policy that is being supported by the Minister of Finance. I am suggesting that I don't want to pay - I do not want to pay, as the Member for Brandon East says, the price of producing a tar sands barrel. I want to pay on the basis of a public utility as a public utility would charge, that we are going to take the total numb er of barrels produced, we are going to take the cost of producing it and we are going to sell it at those figures.

And next year when it costs us more, we will sell it for the higher figure. That will produce self-sufficiency in oil, not what the Minister is saying. What the Minister is saying will produce affluence for the people of the province of Al berta at the expense of poverty of the people of the province of Manitoba. Since when do I link with the province of Al berta? Sin ce when am I in this sort of west ern cong lome rate? I'm an easterner; I am east of Alberta; I am east of Saskatchewan. I am buying oil from them. I am not sel lin g oil to On tario. Fortunately, Mr.

Speaker, the fact is that the last 10 years has seen the province of Ontario become the most anti-provincial-rights province, and they used to be the strongest provincial-rights province, and the most nationally-minded province in Canada. I say that Bill Davis is saving us from Peter Lougheed and when he does, I become a Bill Davis fan, not a westerner with Peter Lougheed, because being a westerner with Peter Lougheed is too expensive. He is going to improverish me and I love my money more than I love my western alliance and it's as simple as all that.

And when I came back from a federal-provincial conference and people said, Aren't you Mr. Blakeney's friend, I said, Yes, I'm his friend, but I don't want to give him 60 million a year. I mean, friendship goes so far, Mr. Chairman, and I stop at paying them my money when it's not coming to them. The Mini ster in sists that his friends are Mr. Loughe ed and Mr . Blakene y because he's a westerner.

The fact that all of the province of the Man itoba in the last year, I estimated that the increase in the oil prices cost the people of this province, and I will be corrected if I am wrong, but I made the estimate last year, 60 million, which went to those provinces. I know then that there certain things happen, part of it goes into public revenue, part of it goes to the oil companies, part of it goes to the federal government, so a little bit of it is used for my benefit. But 60 million came out of this province, going in the direction of those provinces.

Now, we have some oil and I suppose to the extent that we have it, we have some benefit, but we are far greater the purchaser, Mr. Chairman, than we are the vendor. And the Minister's policy is not one of self-sufficiency, it is one of self-depravation, self im proverishment insofar as the people of the province of Manitoba are concerned. MR. CH AIRMAN: 2. (a)( 1) - the Honour able Minister. MR. CRAIK: Mr. Chairman, the arguments that the Member for lnkster presents would be valid if you had in both cases a renewable resour ce. Mr.

Chairman, if you were dealing with a replenishable resource, you can use the principal that is used by Manitoba Hydro in blending in their new cost with their old cost to arrive at an average cost for their system. But in the case of oil, you are dealing with a conventional supply that is now on the decrease and by the end of this decade, in the national interest and in Manitoba's interest and the interest of every other province in this country, it is going to have to be more and more replaced by the non-conventional supply. And from that point of view the arguments, Mr. Chairman, do not apply one to the other.

The pricing of Manitoba Hydro at the present time is based on self-suf ficiency, a conti nu ing self sufficiency. We have not reached that self-sufficiency in Canada in oil; it is a different argument and you cannot apply the two. The goal is the same, the self-sufficiency goal. The same goal for oil as for hydro. We have demonstrated what we are prepared to do in the case of hydro; we are prepared to do the same thing in oil.

We are prepared to admit that we can't hoodwink the public into thinking that it can't be achieved without some cost, and that's the difference in the position of the government and the Member for lnkster. MR. GREEN: Mr. Chairman, I am very happy to have the distinction clearly made between the position of this government and myself, because there is a clear distinction. If the Minister who is now speaking said this 100 years ago, he would be talking about coal in those terms.

He would be talking about a source of energy that was available, in those terms, which said that you have to do these things that you are now doing. The fact is, Mr. Chairman, there is no kno wledge as to how much oil there is left in the world. There may be far more oil 4633

Tuesday, 10 June, 1980 left than what we have taken and as a matter of fact, for my authority I look to the oil companies. When they were wanting the Canadian government to get rid of oil and transport it to the United States, they said that there were surpluses for years and years and years and that there was absolutely no necessity to cons erve oil. Now that they want to get 30 a barrel for oil that cost them 2.00 to produce, there is no oil. Mr. Chairman, I am willing to say that the oil companies will get the price that it cost them to produce. What could be more a policy of self sufficienc y?

Ne xt year it costs 18 .00 (Int erject ion)- Well, you kn ow, many New Democrats wanted to do that but the Conservatives would not have it. Absolutely, Mr. Chairman. Are we going to go back to that? The CCF wanted to guarantee parity prices for the price of grain and the Conservatives said, We want the free market. Yes, that happened in 1957 and in 1958, and Diefenbaker came in and said, Parity, not charity, and when he was elected, he said, 200 an acre. That's what he said. -(I nterjection)- Well, he sold . . . So they wanted the free market; they did not want parity in prices.

They did not want a guaranteed price for their product. I am not suggesting, Mr. Chairman, and I don't have to get back or be led away in that direction - I am sugges ting that you can provide for self sufficiency if the public undertakes to be the vehicle that will find, look for and discover the resource, and that the people of Canada will have to pay for that resource in accordance with the cost of producing it. That's not what we are doing now. We are saying, Mr. Chairman, pay now, pay later, and when you pay later, it will again be pay now and pay later.

We are always ahead of the price, substantially ahead of the price. -(I nterjection)- Yes, let it be clearly said that the policy of the Conservative Government is to pay the world price regardless of the price of production. My policy is to determine the cost of production on a total basis, charge the people of Canada that price, and when you do it again, Mr. Chairman, charge the people of Canada that price. That's what they do. You do not have the people of Kuwait paying 30 a barrel or 45 a barrel for oil. They don't pay that figure because they produce it there and they charge their people a reasonable price.

They charge us a gouged price. They have gotten together; they have a cartel. It is a cartel, the leaders of which, if they all resided iii this country, would be put in jail. And we are saying, Go odie, goodie, let's hop onto the crimina l price. The Minis ter says that's the Conservative policy, fine. I'm glad the distinction has been clearly made. MR. CHAIRMAN: The Honourable Minister. MR. CRAIK: On a point of privilege, Mr. Chairman. The Minister has never said that and the member knows that. MR. GREEN: The Minister has said that we have to pay the price of them finding the next barrel. Mr.

Lougheed says the price of finding the next barrel is the world price. I· will concede that the Minister has left himself that gap. MR. CRAIK: Mr. Chairman, on that same point of privilege, the Minister has never said that and that is not the case. MR. GREEN: Mr. Chairman, I heard the Minister say that we should pay the cost of bringing in the tar sands because that's the next oil that we have to produce and that is the basis upon which he has said it. MR. CRAIK: Mr. Chairman, I'm not going to debate it further with the member, except to repeat that has never been stated by this government. MR.

GREEN: It's stated in the House on Hansard. MR. CRAIK: It's never been stated in the House on Hansard. MR. GREEN: It's there. I' ll find it. MR. CHAIRMAN: The Member for Ste. Rose. MR. A. R. (Pete) ADAM: Mr.

Chairman, I would like to ask the Minister, in view of the fact that the pol icy of this government and the Con servative policy at the federal level when it was in office was that the conventional oil prices should escalate as fast as possible to the world price, or at least 15 percent below the world price, I would ask the Minister if he has any assurance, has he seen any documentation, or has any oil company in Canada given assurance that given these increases in prices, and if we accept that as citizens of this country that we will be assured of self-sufficiency in oil? MR.

GREEN: They won't even guarantee to use the money to find oil. MR. ADAM: Except, Mr. Chairman, that we price people, price consumers off the market. Can the Minister advise this committee whether there is an oil company in Canada today that has given assurance that if we provide this kind of money for oil that we will become self-sufficient? Can the Minister give this assurance to this committee? MR. CRAIK: No, Mr. Chairman, I can't give the member any assurances with regard to specific prices as he's requested in that regard. MR.

ADAM: Has a Mini ster ever received assurance from any oil company or the entire group together, that if we provide the world price for oil tha t we will become self-suf ficient, except by reducing demand, rather than increasing supply? Has the Minister ever received that assurance from any oil company in Canada? MR. CRAIK: There seems to be evidence in that regard, Mr. Chairman. MR.

ADAM: But the Minister is saying there seems to be evidence, but the Minister then is indicating that no oil company has ever given assurance that if we are willing to pay the world price for oil that we will suddenly be self-sufficient. Is that correct? Is that what they're saying? 4634

Tuesday, 10 June, 1980 MR. CRAIK: I would remind the member that it probably doesn't under the present circumstances require an assurance from an oil company. MR. ADAM: require? Is the Minister saying that it does MR. CRAIK: No, I'm saying the opposite. MR. ADAM: All right, okay then, that's fine. Now can the Minister advise whether or not, if we transfer this wealth, these billions of dollars over to the oil industry, can the Min ister assure us that those billions of dollars will be spent in exploration in Canada and not in some other country? Can the Minister give us that assurance? MR.

CRAIK: I can give the member the assurance that I don't believe that is the problem. The problem is to get together a national policy and recognize the fact that there are two separate and entirely different arg uments th at con tinua lly are clouded by the political arguments of whether someone believes in world price or doesn't believe in it. In the meantime we're throwing the baby out with the bath water, and we have the potential of being self-sufficient.

We have a potential in Canada that no other country in the world has in the western world and we're throwing it away while we pour out all this smoke and nonsense about whether or not we believe in a world price or not. The plain fact of the matter is we're not going to become self-sufficient until we reach a price in Canada where that can be achieved. MR. ADAM: Mr. Chairman, could the Minister explain why multinationals last year, oil companies, have spent 300 million, Canadian corporations have spent 300 million on oil exploration in the United States? Why are we paying this kind of price for oil?

Why do we have to pay this kind of money for oil if we're going to be undertaking explorations in other countries and then we're going to have to buy it back from foreign sources or it will provide other countries with better self-sufficiency than they are at the prese nt time, because that's what the multinationals did last year. They took 300 million of our doll ars, paid through the gas pumps, to do exploration down in the States to the tune of 300 million. Can the Minister give us the assurance that we can stop that and compel this money to remain in Canada and be used here to find oil?

Can the Minister give us that assurance? MR. CRAIK: Mr. Chairman, PetroCan as well invested outside of Canada. So there is no assurance that somebody is not going to invest Canadian dollars outside of Canada. I can't give the member assurances of anything with regard to the national oil companies. The federal government, I am sure, has it within their powers to do so and perhaps if he wants to go straight to the horse's mouth he can go to one of the directors of Husky Oil and ask Mr. Tommy Douglas what his policy is. MR. ADAM: Mr.

Chairman, this is the Minister that talks and speaks and meets with his federal counterparts, and this is the Minister that meets with other energy Ministers in Saskatchewan and Alberta and wher ever, this is the Minister that has to determine the policy at the national level along with his counterparts.

Can the Minister assure us that the money that we are going to put into find self sufficiency on fuel oil, on conventional oil or heavy oil or non-conventional oil, can he assure us that that money will not be used to by up uranium properties and coal properties and the next set of resources rather than being spent on findin g oil ? Will the Minister give us that assurance? Can he give us that assurance, Mr. Chairman? MR. CRAIK: Mr. Chairman, I've already answered that.

There is one government that can undertake those sorts of considerations and that is the national government, but I repeat again that is within their power if they so decide to exercise it or to move on it. If they feel that it's required in the national interest, I'm sur e th at they'll undertake that consideration, but in the meantime I have to tell the member that I don't consider the oil companies, in the present equation, any more than the strawman for the likes of the Member for Ste. Rose to thrash away it.

That's not the root of the problem; the problem is to get on with a national policy that zeros-in on what we have to do to reach self sufficiency rather than preoccupying itself with the political arguments of whether you are for or against world price. In the meantime we all go down the drain. Ten years ago we were self-sufficient, this year we are 22 percent dependent on imports and it's getting worse all the time as we preoccupy ourselves with all the thermal plausible arguments, all heat and no light, with regard to whether or not we should reach world price or not. It isn't even the argument.

The argument is whether or not Canada is going to undertake a policy to reach self-sufficiency. MR. ADAM: Mr. Ch airman, that is not the argument at this table. The argument is whether or not this money that we are going to hand over to the multinationals, in advance of finding the oil, whether they will use that money to find oil or whether they'll use it to buy up, invest in surpluses in the United States such as they did last year or whatever, buy up other resources and be ready for the next set of resources so that we will have to buy them back and pay twice for it.

Pay what the world price will be ten years down the road when we no longer have any oil here, and pay the world price and give them the money to but it, give these guys the money to buy these resources with. This is the argument. Because the Minister can't give us that assurance that paying these world prices will give us self-sufficiency and neither will the oil companies because they're not trying to find oil. They are buying up coal reserves; they are buying up uranium reserves; that's what they are doing and they're investing these Petro dollars that they are receiving, in other countries.

This is what they're doing, Mr. Chairman, and the Minister and his colleagues in Ottawa are trying to tell us that is the solution. That is the result of what is going to happen if we are prepared to submit to the oil companies. Mr. Chairman, since 1974, and by 1985 oil prices will have gone up 1,000 percent. And we are talking about oil that has been onstream for 30 years which we were selling for 3 a barrel in 1969, which we are 4635

Tuesday, 10 June, 1980 now getting 15.75 and going up to 19 this year; oil that we used to sell for 3 a barrel and pay all the royalties and the profits and the dividends to the oil companies, to the shareholders and so on. What is going to happen, Mr. Chairman, and I would like to put in the record remarks made by Mr. John Helliwell, the University of British Columbia, in a recent speech that he made to the Tax Foundation, and he suggests that by 1985 oil industry profits will have risen by a staggering 1,000 percent since 1974. And he warns, Mr.

Chairman, that the transfer of such large volumes of profits to the oil industry is even more disturbing because the industry is 80 percent foreign owned and 90 percent forei gn controlled. And this means, Mr. Helliwell comments, that by mid-1980s foreign-owned firms producing oil and gas in Canada will be either repatriating large dividend flows or acquir ing large new Canad ian investments outside of the non-conventional oil and gas producing sectors.

And tha t is what I am suggesting to the Minister, that all this wealth, this large volume of wealth that we're going to transfer over to the oil companies, in large part, only a very small percentage will ever be used to find oil, but rather they will be branching out into other endeavours, other areas and they'll be doing it with our money and ten years down the road, when we will need coal - we will be obliged to move to that whether we want to or not - we will have to move to uranium whether we want to or not and we'll find out that these fellows have bought it right under our noses and they bought it with our money and we'll have to buy it back from them and pay twice, three times, four times, what it's worth.

That is exactly what is going to happen and I suggest to you that even the balance of payments, this large flow of dividends that will be going, repatriating out of the country, will be an em barr assment to the oil companies, and it will throw our balance of payments completely out of balance, as if they're not bad enough already. And, Mr. Chairman, five years from now, people will be dema nding from their government of the day, and I don't care what stripe it is, but they will be demanding the federal government to nationalize the oil companies. There is no other way to solve this problem.

I say to you, Sir, that there is already a surplus of oil, according to March 26th -(I nterjection)- Mr. Chairman, the Globe & Mail on Wednesday, March 26th of 1980 had this article, Glut of Heavy Oils Mean Residual Fuel Prices Start to Tumble. They have already got a surplus in some of the residual oils, Mr. Chairman, so the oil prices have to tumble. Mr. Chairman, we are being held up for ransom. We are being held up for ransom by the multinational oil companies and there is absolutely no reason to proceed with this kind of a policy.

And the argument is not whether oil should be the world price, it's whether, if we pay the world price, whether we will get the oil. That is the question. We will get it, but we will get it on the world market. That's the only place we'll get it. Mr. Chairman, I have already mentioned to the Minister yesterday that in a recent report that I received from an oil company, a junior oil company, they suggest that within a very few short years, they have set a value on the reserves that they will have down the road, at over 60 a barrel. Over 60 a barrel.

They already know that that oil - because there will not be any oil, and they know that they will be getting 60 a barrel for that oil. There's no way that we will become self-sufficient by increasing oil. You have no assurance, the Minister is unable to give us that assurance, the federal Minister is unable to give us that assurance, and the oil companies will not give us that assurance. I say that people of Canada are stupid if they fall for that cruel hoax. Mr. Chairman, I suggest the people will be very stupid if they accept that argument from the multinational oil companies. No matter where you look, Mr.

Chairman, Gulf shares, which were 35 or 39 a share, 30 a share last year, jumped up to 193.00. Canadian Pacific is the same. No matter where you look. Mr. Chairman, Canadian Pacific owes 900 million in deferred taxes. And the whole combined lot of them, probably all put together, I'm not saying just the oil companies, but a lot of them together, they probably have about 15 billion in deferred taxes. And it's time that they start paying their taxes, the same as you and I and everybody else. -(Int erjection)- Well, I'm reading from the Financial Post, which is the gospel for the oil companies, Mr.

Chairman, and it's too bad that the Member for Rock Lake doesn't read a little bit, maybe he would be abreast of what's happening, Mr. Chairman. I suggest, and I will continue to suggest, that the Minister - there isn't a Minister in Canada, that will assure the people of Canada that they will become self-sufficient by increasing the price of oil. MR. EVANS: Thank you, Mr. Chairman. I think the Member for Ste. Rose spoke very eloquently on the reality of the problem, and that is paying ransom prices, paying world prices, held up for ransom is not going to provide us with oil self-sufficiency. There's no question.

And I don't know what the province of Manitoba can do about it. We're a small province of about a million people, I don't know how much clout, if any, we have at the tables in Ottawa or wherever conferences are held, but I say we would be doing the people of Manitoba a favour if we stood behind - and I say this with some hesitation, alongside of Bill Davis rather than Peter Lougheed. I'm not subscribing to all the policies of the Conservative government of Ontario, but in this one area it makes eminent sense for Manitoba to side with Ontario, as we did when we were government.

There are a number of things that we can do, Mr. Chairman, to obtain energy self-sufficiency besides paying ridiculous, outrageous prices for oil. You know, the Minister has said, he seemed to be rather nonchalant about prices of oil going up. But the fact is, when the price of oil goes up, not only does it contribute to inflation, but according to the studies, again released by the Ontario government, they've calculated the number of jobs that are lost because of increased oil prices.

And there's one thing too that we should remember, that our lower oil prices that we've been able to achieve thus far in Canada have enabled our industry to be more competitive with other countries than it would have been otherwise. But at any rate, Mr. Chairman, there are other ways and means that we can pursue to achieve security and self-sufficiency of oil. I mentioned one item earlier, and I would go back to that, and that is, 4636

Tuesday, 10 June, 1980 a great deal of the oil that we imported to Canada is imported, not into western Canada, or even Ontario. it's imported into the Quebec region and to the Maritimes, and there is no question that we have to get on with the job as a country in providing Quebec and the Maritimes with an oil pipeline system that enables them to switch out of oil and to go into natural gas. I think if this is done, you'd see the statistics, the dependency by Canada on world oil supplies being reduced substantially. You may say this is a long term measure, I don't think it is that long term.

Also, there has to be greater effort made on the part of provinces to utilize coal where it makes sense. it's ridiculous for the province of Nova Scotia to be burning oil to produce thermal electricity, to produce electricity by importing oil. The job of converting the thermal plants of Nova Scotia has to be got on with very rapidly. They have ample supplies of coal in that province, I would submit, and that's something that has to be done also to achieve self-sufficiency in Canada. Further, Mr. Chairman, there are many many ways that we can become more careful in the use of oil.

There are many many programs of conservation that we can promote. We could promote other alternative sources of energy such as electricity, and certainly we have abundent supplies of electricity in this part of Canada. Indeed, as part of conservation, we could be promoting more public transportation, a greater utilization of railways, for example, as a way and a means of utilizing, of being less dependent on oil products. The use of electric vehicles, I see where Gulf Oil has now announced a major breakthrough in battery powered electric vehicles, and I think there may be more to come.

I'm not suggesting for this part of the world where it's very cold, but in other parts of the country, there seems to be greater possibilities of electric vehicles, of battery powered vehicles. So there's no question in my mind that governments collectively have to engage in incentive programs to substitute, to encourage the substitution of the more plentiful forms of energy that we have in Canada, the natural gas, electricity, the propane, and so on, for crude oil.

And part of that effort to become less dependent on offshore oil is to encourage greater conservation, greater use of insulation, greater use of public transportation and so on. At any rate, I would also say, Mr. Chairman, in conclusion on this point, that I would hope that in the future the government and the Minister will take a very firm stand at the conference tables and supporting a national viewpoint rather than an Alberta viewpoint, because it is certainly in the interests of the people of Manitoba to do so. MR. CHAIRMAN: 2.(a)(1)- pass - the Member for Winnip eg Centre. MR. J. R. (Bud) BOYCE: Mr.

Chairman, in listening to the response of the Minister to the Member for lnkster and the Member for Ste. Rose and some of the comments made down at this end of the table, I wish it was on the record of the province of Manitoba a comment by Premier Lougheed in the opening of the session in Alberta this spring. 1t will stick in my mind, of course, the difference between the philosophy of this government and the philosophy of the Conservative government, the Progressive Conservative Government in Alberta. To paraphrase what Mr.

Lougheed said, he said, Bring your capital, bring your risk capital, don't bring your debt capital, because we want investment in the province of Alberta, and we expect you to re-invest a goodly part of that in the province of Alberta, and if you don't, we will look at our tax structure. An entirely different attitude between that of the government of Alberta. Of course, they buy airlines and they get into business if it is to the advantage of the people of Alberta. But I really am dismayed at some of the responses, because it was right on the nose, the question from the Member for Ste.

Rose, what guarantee have the people of the province of Manitoba that the attitude of the government who is representing us is going to give us self-sufficiency. There's no guarantee at all. But Mr. Chairman, the record will speak for itself. I'm going to get a copy of the - I took it out of context, it's very easy for the Premier of a province to stand up when they have 2 billion to spend on their budget without the necessity of sales tax and the rest of it.

But nevertheless, the fact that here's one government who looks to the private sector for investment in the province, but gives them fair warning that they expect them to re invest it in the province of Alberta. When the Minister was asked, what guarantees we could elicit from the oil companies, that the moneys that we were going to advance them, as pointed out by the Member for Ste. Rose, that this would be invested in oil exploration towards self-sufficiency, the Minister couldn't give us any guarantees, and I might be misinterpreting his statement. If I am misinterpreting it, I wish he would correct me.

But he has not even asked them for any guarantees. He hasn't even used this as an approach to the problem. And that's the way the record stands, that this government, on our behalf, is not representing the people of the province of Manitoba to move toward self-sufficiency. The Member for lnkster pointed it out, that we as Canadians have to pay for oil, the cost of exploration, the cost of production, we have to pay that. And we expect that. And I don't think any responsible person would argue with that.

But nevertheless, I think it's - well, I was so shocked to listen to the by-play that was going on around this table when the serious questions were being raised about the horrendous price which is being charged for oil by a cartel and we are following right along into it, and this government hasn't given me, as one citizen of the province, any inkling that they are protecting the people that I represent as far as seeing that the moneys which are being prepaid to the oil companies are being reinvested, not for future profits - and I'm not against profits, I don't like to see any corporation in the dilemma that Chrysler Corporation is at the moment - but nevertheless this money should be reinvested in that which we are prepaying it for.

And the government has given no indication whatsoever that they are acting on our behalf in this regard. MR. CHAIRMAN: 2.(a(1)-p ass; 2.(a)(2)- pass; 2.(b)(1)-p ass - the Member for Brandon East. 4637

Tuesday, 10 June, 19 80 MR. EVANS: wonder if the Min ister could elabor ate on the people under Salaries in this section, please. MR. CHAIRMAN: The Energy Technology Branch, the amounts, four staff man years, Salaries 89,700, and Other Expenditu res 180,000.00. The SMY allocation is for branch director, three co-ordinators for energy information section, renewable energy section, and energy conservation section. The rest of the expenditure will be req uired for the general expenses.

The Conservation Programs and Alternative Energy Programs, and others will fall in under this area and that is their primary undertaking and responsibility. MR. EVANS: In the area of technology and energy conservation, can the Minister advise whether there is any effort being made in the area of - well, I'l l use one example - to bring in equipment to help spot energy loss in residential buildings, for example, or commercial buildings. The Ontario Government has recently announced a five-year program called Heat Save for 60 Ontario centres.

It is a 4.9 million program of thermography which will cover 60 communities by 1985, and it could result in a saving of energy of 20 million gallons of fuel oil annually, according to the Energy Minister of Ontario. They have had six pilot projects in the past three years. What thermography is, or a thermogram is, is an aerial heat picture. Dark shades indicate areas in which homes are adequately insulated, while the lighter shades show where heat is escaping.

The Ministry of Energy has combined thermography with the use of computerized home energy audits to assist homeowners in makin g their homes more energy efficient. My question is, is there anything along these lines that the Minister or the department is considering? They have even got some pictures here of their thermographs. This is a home with good insulation, because of the dark area; this is a home showing a lot of heat loss. Is there anything along these lines in these funds or are there any programs being developed along these lines? MR. CRAIK: Yes, Mr.

Chairman, there is the Aerial Thermography Prog ram and the Retrofits on buildings and houses, the use of wastes, solar energy utilization, use of waste heat, bioma ss, and the energy bus prog ram all come under this appropriation here, it's on the appropriation. MR. EVANS: Well, the y come under the appropriation, but what is going to be done in terms of thermography? Is there anything that is outlined at the moment? MR. CRAIK: There is already a program under way in the Brandon area by Manitoba Hydro in that regard. They have been proceeding on it in that area. MR.

EVANS: When you say there is a program in the Brandon area, you mean a thermography program? MR. CRAIK: Yes. MR

Document details

Collection	Manitoba — Debates (Hansard)
Citation	31-4-76b
Type	hansard
Volume / chapter	31st 4th hansardpdf 76b.pdf
Language	en
Format	pdf
Source	PROVINCIAL
Identifier	180882a125fd57e20d3189f9d7b6f542fad75769

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