Mr. Chairperson (Marcel Laurendeau): Will the Committee of Supply please come to order. This section of the Committee of Supply will be considering the Estimates of the Department of Rural Development. Does the honourable Minister of Rural Development have an opening statement?

Hon. Leonard Derkach (Minister of Rural Development): Yes, I do. Mr. Chairman and members of the Legislature, it is my privilege today on behalf of Manitoba Rural Development to present the department's Estimates for 1999-2000 fiscal year. I would like to begin my remarks this afternoon by thanking the staff of my department for the continued dedication and hard work of the individuals involved in the department. It is important that people of Manitoba and also the members of this Legislature know the kind of outstanding effort the staff of my department make on a day-to-day basis on behalf of all rural Manitobans. I believe that, together with the shift in the attitude of rural Manitobans throughout the province, our staff have been able to assist in the strengthening and rebuilding of many of our rural communities.

As Minister of Rural Development since January of 1992 I have been extremely fortunate to watch the many accomplishments that have taken place across the province. As the Winnipeg Free Press reported, the rural economy is going crazy, and it continues to do so.

There is new economic development. One only need look at the stacks of straw in Elie where Isobord is turning a waste product into a value-added commodity, or down the road to the new Powell Equipment site, with a new flour mill across from it; and adjacent to Powell, Dyck Forages and Seeds, one of the department's Grow Bonds projects which has been successful in marketing pedigreed seed around the world. Or let us take a trip to Winkler where dozens of industries from sunflower processing to plastic manufacturing. Two other Grow Bonds projects are creating jobs in a buoyant economy. Or in Dauphin, Manitoba, where Westman Plastics, yet another Grow Bonds project, is making an international name for itself for its special mold of plastic pet carriers.

The spin-offs to this success have hit home. For example, in recent years, 36 of 72 Manitoba towns and villages have recorded an increase in their population. The information age is having a significant impact on our growing communities because thanks to the new cyberworld, Internet-based businesses can flourish anywhere. A case in point are Sandy and Robin Dubreuil, two brothers from Miami, Manitoba, who are running a world-class computer animation business. The Dubreuils are showing us the way to the future.

Finally, we will be able to live where we want to because in the information age it is work that will travel instead of people who travel. It is a world where our young men and women do not have to leave home to build a promising future for themselves.

Mr. Chairman, with a new century and a new millennium now only months away, the Dubreuils are symbols of the future. We are living during one of the most exciting periods of time in history. Over the past decade, rural Manitobans have been preparing themselves for the opportunities that lie ahead. The future is filled with promise for all of us. We have already come so far and achieved so much. Now we need to continue to build on the success of the past. We need to provide the kind of climate so that the positive attitudes that rural Manitobans have embraced can continue to flourish. There is indeed a renewed sense of confidence and pride that have come as a result of all of us working together. In the process we have been able to make our communities better, so much so that our youth are coming home to raise families of their own.

We only need to look back a few generations to understand why Manitobans have never backed away from a challenge and why, in fact, time and time again, they have demonstrated the ability to find their solutions and also the opportunities to build our province even stronger. The reason is because we come from a proud heritage where our parents and grandparents faced very significant challenges to pave the way for us. Rural Manitobans have inherited and adapted the wisdom and strength of their ancestors as they continue to build their own dreams.

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Mr. Chairman, once again it all stems from attitude. Attitude is more important than what other people think or say or do. Why is attitude so important? Because it is ours. We control it. We alone have the choice every day regarding the attitude that we will embrace. There is a spirit in the people of this province, steeped with pride and blended with hard work and determination, and it is alive and well in rural Manitoba and in the Department of Rural Development.

I want to take a moment to mention one individual who has had a significant and lasting impact on the community and on our province. I know that he is not only familiar to me, but familiar to all the members of this Legislature, because he indeed has conversed and has had many opportunities to work with members of this Legislature. That individual was one Henry Wiebe, former mayor of Winkler. Henry passed away in mid-February, leaving behind a tremendous legacy. His life serves as a reminder to all of us of what one individual can accomplish when blessed with a positive attitude, a vision, a team spirit, and a strong work ethic. Henry was one of the originators of community loans pool, an initiative that served as a model for Community Development Corporations and for our own province's Community Works Loan Program.

All around the province, we are individuals who exemplify the same attitude and qualities as Henry. For our part, our greatest accomplishment in the department has come from being able to help Manitobans help themselves. This is served as our mission and resulted in the success we see throughout rural Manitoba today. The accomplishments and achievements of the past seven and a half years are indeed many, and I would like to highlight just a few of them.

We have undertaken implementation of a new assessment legislation. We have computerized assessments. We have introduced market value assessments, and we have improved public consultations and access to assessment information. All of these developments have resulted in the lowest rate of property tax appeals in the province's history.

We have increased by 40 percent the VLT grants to municipalities since 1995. Provincial-municipal tax-sharing payments have risen 47 percent over the past five years, with Manitoba remaining the only province in Canada to continue to increase funding to municipalities. We implemented a new municipal act which serves as a basic framework and which we continue to work to improve in order to provide local government with the flexibility it needs to build healthy communities.

In the current legislative session, I have had the pleasure of introducing amendments to both The Municipal Act and the Assessment Act. Proposed amendments to The Municipal Act are designed to accommodate communities that are seeking to restructure.

In addition, we have proposed a number of amendments that will clarify the process leading up to and regarding when and how tax sales proceed. This is an issue that was before us early this spring and last fall. Our intent is to balance the interests of property owners who may be at risk of losing their properties with the interests of municipalities that rely on a timely payment of property taxes to fund the delivery of municipal services to residents and property owners.

Proposed changes to The Municipal Assessment Amendment Act include, among other things, a provision to exempt a group known as the Friends of Elmwood Cemetery in Winnipeg from paying municipal and school taxes. This will allow the group to continue to maintain the cemetery, something they cannot afford to do without the tax exemption.

What is important to note is that these continuous improvements and accomplishments are happening because rural Manitobans are working together to build strong communities and strong economies.

Before I continue I want to mention an important event which took place earlier this year. That is the amalgamation of the UMM, the Union of Manitoba Municipalities, and the MAUM, the Manitoba Association of Urban Municipalities. The Association of Manitoba Municipalities is the name of the new organization, which will provide a strong voice on behalf of all municipalities in both urban and rural communities throughout Manitoba. I look forward to continuing to work with the new association as we explore options for the future.

One of the areas in which the AMM has a significant role to play is in the work in support of both rural and urban issues. The Manitoba government remains committed to sustaining its efforts for all Manitobans. That is why the province has established a five-member panel to study planning and growth in the Capital Region, an area spanning Winnipeg and 15 surrounding municipalities.

As Rural Development minister, I have had the pleasure of meeting and working with Capital Region representatives. After all, a strong Winnipeg is integral to the prosperity of our province. I look forward to working with my cabinet colleagues to ensure a strong and healthy Capital Region.

Mr. Chairman, the department continues to make great strides in helping rural Manitobans pursue economic development opportunities. In total, 24 Grow Bonds have leveraged over $28.6 million in capital investment in rural Manitoba, money that would have otherwise gone outside of rural Manitoba, helping to create and maintain more than 700 full-time jobs. The Rural Economic Development Initiative, REDI, has leveraged over $106 million in capital investment and has created and maintained over 2,700 full-time jobs.

REDI programs like the Community Works Loan Program and the Rural Entrepreneurial Assistance Program have had a hand in the rural economy's resurgence. The Community Works Loan Program offers a means by which communities are able to create loan programs to benefit local small business. The funding we provide is matched by participating community development corporations or, as we call them, CDCs. So it is truly a process that allows for grassroots participation and the setting of local priorities.

Currently we have 49 CDCs and have raised close to $1 million, which we matched with close to $2 million. Throughout this program a total of 184 loans have been approved, valued at $1.4 million. As a result 469 jobs have been created and maintained. Incentives like the Community Works Loan Program are helping to keep the economy moving forward. Through the REA program we guarantee loans, which businesses secure through financial institutions. To date a total of 156 REA projects worth $5.4 million have been approved, creating more than 360 new jobs.

In the meantime, we continue to look for new ways to further assist rural Manitobans. For example, we are entering into the third year of delivering marketing seminars to help small businesses and community organizations improve their marketing techniques. Close to 900 rural Manitobans have participated in marketing initiatives since 1997.

The department's emphasis on assisting our young people is also netting positive results. The Green Team and Partners With Youth programs have created over 5,400 part-time positions for rural youth. The Rural Junior Achievement Program has now been delivered to over 30,000 rural students in over 170 schools in 120 communities since 1993. Meanwhile, volunteers have provided more than 16,000 hours of personal time to deliver more than 1,000 business programs.

I cannot help but think back to when the program first began. We had about a hundred students in a half a dozen or so communities and schools throughout rural Manitoba. We have indeed come a long way.

As I said earlier, you can see in all of these accomplishments that what we really are doing is helping rural Manitobans to help themselves. It is rural Manitobans who are really getting the job done. The proof of the commitment is in the Community Choices program. Throughout this program introduced in 1991 residents form community round tables to examine their communities and decide how to best manage their resources for the future. This program has worked beyond anyone's expectation. Today Manitoba has 98 round tables. I might say that since these briefing notes, we have I think been able to up that to 99. We are looking at the 100th round table in the very near future.

So we are pleased to welcome the community of Darlingford, which is new to the round table process, which has just formed the newest round table in Manitoba. Round table participants come from all walks of life, banding together to plan a vision for their towns and villages. Their successes are all around them. It is evident in the stories of communities enriching their economic, social, and recreational options a situation that is commonplace in our province. It is the kind of community dedication and spirit that will ensure our rural communities remain strong and prosperous for the future.

A showcase for much of what has been accomplished over the past years has come as a result of many partners and sponsors and hundreds of volunteers working together. Here I speak of the annual Rural Forum which this year took place April 29 to May 1 at Brandon. Total attendance at this year's forum was about 9,000, bringing the total for the seven-year history to 42,000 people.

It all began with 350 people who came together in Neepawa to help create the first sustainable economic renewal strategy for rural Manitoba. The economic strategy has been in place for five years resulting in increased diversification and value-added products, creating jobs, increasing investments and exports.

Rural businesses and community leaders came together at Rural Forum '99 to renew that strategy in order to carry rural Manitobans into the new millennium and beyond. Some of the new areas that have been identified which we will focus on for the future are information technology, youth entrepreneurship, expansion of trade and export tourism, tourism development and the role of government in the economic framework. In the meantime, the forum has come to symbolize the success that rural Manitobans have achieved. The Rural Forum is just another example of what we have been saying all along, that rural Manitobans have a lot of which to be proud.

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In other areas, our accomplishments include sewer and water projects which in the past year have generated more than $30 million worth of construction and up to 1,500 jobs. As many as 400 new rural households have been connected to piped water systems. The Conservation District Program continues to expand with Manitoba now having a total of 11 districts. The newest additions are the Kelsey and Little Saskatchewan River Conservation Districts which were formed in January of this year.

Our continued involvement with Ukraine and with the new territory of Nunavut are just two more examples of the department's efforts to build opportunities for Manitobans that extend well beyond our borders. Over the past year, we arranged two highly successful trade missions to Nunavut and hosted a trade delegation of business and community leaders from the Kivalliq region of Nunavut. In April, I had the pleasure of joining Premier Filmon to open the Manitoba-Ukrainian secretariat and to announce the formation of an advisory committee to further business relations between Manitoba and Ukraine.

Another major initiative in which we assisted was to announce the Manitoba Marketplace. The Manitoba Marketplace is a comprehensive website offering information on what Manitobans buy, sell and make. In addition, it provides access to business information and service information about Manitoba's communities and linkages to a variety of other websites. The Manitoba Marketplace is just one of the ways we are helping rural Manitobans to get online.

The whole issue of how computers will affect us as we approach the year 2000 has been top of mind for the province and for Manitoba's 201 municipalities. The year 2000 is significant because many automated systems store only the last two digits of the year and will not be able to make the transition from 1999 to 2000. The biggest exposure for municipalities has been around the traditional computing environment. Financial systems relate to the handling of accounts and tax assessments and all other internal financial matters. If municipal financial systems were not operating come January 1, 2000, municipalities would not be able to produce financial statements, pay bills or process monies they receive. Therefore the department has been working with the municipal offices and municipal staff to ensure that computer systems in all municipalities are Y2K compliant before the year 2000 arrives.

Following are some of the actions that we have taken. Since the fall of 1997, rural development has participated in a special information technology committee to work through a strategy to prepare municipalities for Y2K. The department produced a checklist to help municipalities identify potential year 2000 requirements. The department also has been actively working to inform municipalities about the year 2000 issues by participating in presentations, workshops and conferences. In addition, through a province-wide year 2000 committee, the department and municipalities have been working with the major players involved in the delivery of essential services.

As a follow-up, municipalities will have been surveyed to assess their year 2000 readiness so that appropriate strategies can be developed to rectify any concerns. A year ago, only about a quarter of Manitoba municipal financial systems were Y2K compliant. Because of activities to date, 95 percent of our municipalities have been issued Y2K-compliant software. The remaining 5 percent will be Y2K compliant within the next three months.

Mr. Chairman, I now want to address the implications of the budget for our department for the coming fiscal year. I am pleased to announce that funding appropriations for the department have been increased by 3.6 percent from $50.4 million to $52.3 million. Of the total, funding for Local Government Services Division will increase 4.5 percent to $11.4 million. Increases have been also provided for a number of program areas within the division. Most notably are support services such as municipal support grants, assessment services and help with the Y2K compliance issue. Funding increases of 5.6 percent to $7.4 million will also be provided for the economic development services division. Increases will allow staff to extend service delivery into a greater number of northern communities. For example, the appointment of a new business development officer for the territory of Nunavut will help to foster an increase in activity for Manitoba businesses. We are also pleased to announce that funding levels for rural economic programs will remain the same as last year.

In closing, I want to again congratulate rural Manitobans for the determination to help themselves. Manitoba Rural Development will strive to maintain the building blocks to allow rural Manitobans to continue to prosper. We need to uphold the cornerstones of strong local government and community and business development if we hope to maintain our strong and vibrant economy. I seek your support, Mr. Chairman, and that of the members of the Legislature for our departmental Estimates so that we may continue to help rural Manitobans with the task ahead of them. Thank you very much.

Mr. Chairperson: I thank the honourable minister for his remarks. Does the critic for the official opposition, the member for Interlake, have an opening comment?

Mr. Clif Evans (Interlake): Yes, thank you, Mr. Chairman, and I want to thank the minister for his opening comments. This being the sixth or seventh year that we have faced each other here in the Chamber as part of the Department of Rural Development, mine of course being the opposition and the minister's in his part, it is almost like we never go away anywhere. We always seem to be together. The minister made comments today where, of course, he started with congratulating his staff, which I want to add to and put on record that I, too, want to say, instead of saying this at the end of the Estimates, that it has been a great six, seven years. The minister's staff has been very co-operative with me when it comes to dealing with some of the issues that have come to my office as far as rural development goes, and there are issues right now that are outstanding that we are going to be dealing with in these Estimates, some issues that do concern rural Manitobans.

The minister's comments, of course, revert to the Free Press. I went back to last year's Estimates, and if I might, I cannot remember exactly what the minister said. Going crazy. This time he said: Going crazy. In Manitoba, the Winnipeg Free Press will tell you that it ain't so until it is so. In other words, if it is not in the Free Press, it is simply not happening. I refer you to the article of Sunday, March 15, in which the paper finally conceded in its headline that there was an economic boom taking place in rural Manitoba. Now the paper went on to say that nobody quite knew where the boom started, but in fact there was one currently taking place. I accept that the Free Press is just waking up to the success that it is taking place in rural Manitoba. Of course, this time around he said that the Free Press is saying everything is going crazy. I do not know if it should be going crazy or should be just booming.

I certainly want to add some comments. As far as Rural Development, it has been, indeed, a pleasure being opposition critic. Perhaps we may see this same time next year a reversal of roles, but just in comment. I want to also say that in some of the issues pertaining to Rural Development, we must maintain the services that the department has been providing. I believe that we have worked alongside with the minister and his department in being able to, hopefully, present some issues and present some points. I certainly do not believe, and my colleague from Swan River can concur with me, that we have not been negative in too many ways, not about rural Manitoba. Certainly not about rural Manitoba. Come the government, that is a different story, but, as far as rural Manitoba, we can certainly say that we are pleased with the way some of the areas in rural Manitoba are progressing

The minister mentioned the services that are needed in rural Manitoba and the services that are being provided. Now, we see services that are more computerized, as the minister referred to with the year 2000 coming up. Everything being on the Internet has made a difference for a lot of rural Manitobans and a lot of rural communities. One of the points that I find very interesting is the fact that the communities can put themselves on the Internet, and many communities have, advertising themselves throughout the world. I have had the first chance of seeing some of the communities that have done that. I think that is a tremendously progressive way of letting others know just where Birtle is and what it does, and where Russell and Riverton is, et cetera.

You know, Mr. Chairman, a lot of that, too, is with our young people being able to stay at home. I was at the opening of the personal care home in Fisher Branch on Thursday, and my comments were that we were able to keep our elderly at home, those that need that service, and keep them with their families. I think that what we do have to strive for, and I agree with the minister on this, for our young people to either be able to stay at home in one aspect, whether it be through entrepreneurship or further education in and around their areas or certainly having the opportunity to come back and be a part of their communities so that we do not have a depopulation.

He did mention that 36 of 72 communities have increased in population, but during Estimates I will raise that because I will want to know where the majority of this increase is. I might be worried about the fact that most of it is in the southern half of Manitoba. If that is the case, then this government and this department and the other departments within the government of Manitoba, whoever it may be, would have to certainly be working towards providing the opportunity for increases of populations in our northern and other rural areas.

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One of the things that I want to refer to, in the last Estimates in my opening remarks, and I remember because I read through them and the minister did not make any comment, but I made mention to some of the little faces he was making and what he was looking at and raising his eyebrows about it. But I believe, and still and always will, coming from rural Manitoba, that the infrastructure is so important to be a part of an economic boost for our rural Manitoba: services, health care services, education services, roads, transportation, those certain aspects.

I ask the minister to be diligent. In some of my debates with the minister on The Municipal Act and in others, I have said to him and to his department to encourage the Minister of Highways (Mr. Praznik) and to encourage the Minister of Education (Mr. McCrae) and the Minister of Health (Mr. Stefanson) to be able to look at providing that level. So everything that he said, the Department of Rural Development is there and available to help with, can be done a lot easier.

A lot of people that I talk to are pleased with way the department has implemented certain parts of the program, but they also come to me and they also say to me, even the AMM people will say, you know, it is wonderful that this is happening and this can happen, but you know, there are no doctors; but you cannot get there by road; but their young people have to leave; there is no availability in some of the communities for the computer and the modern age, et cetera. So it is these essential services. I say essential services because I believe that a community is going to thrive, young people are going to thrive, entrepreneurship is going to thrive if there is the infrastructure, proper services, that can be and should be provided.

I go back to the task force meetings, April '96, that the government had. I would like to go over a summary part that what I am referring to: need co-ordinated approach to infrastructure spending. Now, I believe that that is part of rural development, part of developing the rural areas. Infrastructure plan for Manitoba needs to assure a long-term level playing field; again, related to rural Manitoba, related to infrastructure. You cannot have one without the other. You need a little bit of everything to be able to have that larger theme and that larger theme being able to grow within the community and the community being able to grow within itself.

Water supply, which we will discuss during Estimates, as far as the Water Services Board, and improved communications required, for example, improved Internet and cellular telephone service, the minister in his comments has indicated that the department has implemented such programs for rural Manitobans, and I am glad to see that there is a start. This goes back to '96, and we see that this workbook that was provided to the Legislature in '96 actually was telling us, the legislators, that there was a need for these things.

So by my comments, saying it is wonderful to have this available and that available and the Internet available for rural Manitoba, I will always support that, but the bottom line also is that it is the infrastructure for rural Manitobans who need to be able to provide a future for their visions and their communities that needs to be made available. This government has lacked that in the last 10 years. You cannot put the cart before the horse, Mr. Chairman.

I am pleased to see that the department has provided an assessment appeal process, has computerized the assessment. I have not had any real complaints about the system itself from the people that I talked to. I am pleased to see that the VLT monies are being provided to the communities. I know only too well, unfortunately, how much of that money does leave our rural economy, and I would always argue the fact that more should go back, and more should go back towards the infrastructure end of some of the communities. Maybe put a program together that more VLT money can be used in a co-operative basis with communities to do something for their infrastructure within their own setting.

The input from the different areas in discussing the Rural Development department and, of course, just meeting with the new board of AMM delegates a few weeks ago, what I heard from them was that they were pleased with the role that this department was playing. However, they said as long as the grassroots is maintained, and when that grassroots needs that help, and it is in this book too, when the grassroots needs assistance, that they can have somebody in government to go to, to be able to envision what they may want to do, whether it is worth it, whether it is feasible, or whatever. But they talked about helping themselves as much as possible, but having the grassroots have that availability from this government, from this minister and other ministers, when the help is needed, whether it be in the marketing end of it, whether it be in the promotional end of it, whether it be in whatever. That is what I heard.

I remember making some comments at one time, and the minister will probably dig it up, or staff, about a comment I made about the department at one time when he raised the issue about the round tables. At that time when I got up and made my comments, I can tell you that I was not getting any positive response to these round tables, so, I, of course, was not too positive about it myself with my comments.

But I can say, and I do not know if my rural colleagues have anything else that they can add to this, but I can say that in the process over the last few years, I guess the process has developed and become better educated and grown up a bit, so that the round tables in the communities are definitely serving–I feel in a lot of the communities, they are serving a positive, positive note to what should, could maybe happen in their communities. I put on record now, it would be very nice to have the hundredth round table being announced yet before the end of this session. I look forward for that.

Rural Forum, I think, at first perhaps was not what we were looking for but, again, I believe through the department people and through the ideas coming from other groups that the Rural Forum this year in my mind and people that I talked to, I spent time there, and I enjoyed it as always. I found it to be personally more informative than the previous Rural Forums. I found more positive comments from the majority of the people participating. I found this year very, very few negative things said about the forum itself. I thought it was a very good Rural Forum. I will compliment this minister and his department on this year's Rural Forum.

I am not sure whether 9,000 people was a good number. I would have hoped that there would be more people come through the doors. [interjection] That is true. That is right. Don’t fool with Mother Nature is that old saying, you know. But I do want to say that it was a good three days that I saw, a positive three days. I think a lot of people came out of that feeling better about some of the things that were available.

But again I want to go back. You can feel good, but if you cannot drive the road back to Riverton, Manitoba, because it needs some repair, by the time you are halfway home, you do not feel good anymore. And you know what? If you get sick by the time you hit Riverton, there is no doctor to go see, you totally do not feel good about yourself. You have left Brandon feeling great from the Rural Forum and then you feel lousy and need a doctor by the time you get home. [interjection]

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The minister says not to go home. But it would also be nice, Mr. Chairman, if we could have the Rural Forum, unfortunately, we could have it in another venue too. Just like the AMM people, change. Whether it would be the size, yes, if we could find a community that could take that amount of people into the venue. I know it would be difficult because it has grown so much and needs a larger space, but I say again to the minister, that was a good Rural Forum and hopefully we will grow with it.

When he talks about at the beginning about some of the companies that have grown and have developed, I look at the names and the companies and they are only in southern or southwestern or southeastern Manitoba. I heard no mention of any companies that were growing or have become new north of the perimeter. If there is, the minister can certainly respond in questions during Estimates on that. I have got marked down here when he talked about the Grow Bond issue and how successful–he used the word "successful." We do not want to forget some of the unsuccessful ones that have been and we do not want to really necessarily raise them.

I do not want the minister to be patting himself on the back or his department about the success of the Grow Bond issue, because we can dig up a few of those that have not been so successful and had some things not positive around it. Fortunately, but unfortunately, in Arborg the quiche plant is operating on its own. The Grow Bond issue has been repaid by the government and is now going on its own. Two shifts. I wonder why. Maybe I will have the opportunity about Grow Bonds and issues and about that particular corporation. Why the failure when the Grow Bond issue was in place and why this sort of semisuccess that it has now?

We have supported the Grow Bond issue. We think it is a positive avenue to have people investing in their own communities. I believe that a community, not only the community within itself works together and has a good attitude, but a community should, especially when there are other communities that are close in population, close to them within an area. Since I was mayor in '89, I have been an advocate of having communities working together more. Instead of just having the round table for this community, that community, that community, work for the fact of trying to get the whole area on the community round table. Each community may be unique in what it wants or what it needs and what type of infrastructure it has, what type of availability for economic development it may have, and communities can work together on that.

I believe that, with working together, with the grassroots working together and with the Department of Rural Development having available the programs in place and maintaining the programs in place, maintaining the people in place that will be able to assist when the call is made, when the letter is written, this department respond not only with the resources that are made available through the department financially but also with manpower or person power.

I am pleased to see that we have become partners, if you want to call it, in trade initiatives that we have through the Department of Rural Development with the Ukrainian people and Nunavut that the minister did not invite me to. I am very disappointed, you know. How can you support something that you cannot go to? I mean it just–[interjection] No, you did not, as usual. Maybe the day before I could not go or maybe the day after it was over with. Anyhow, I am pleased to see that that is progressing, and if there is a change of government, that the change of government will, indeed–[interjection] No, but continue to go on with this initiative.

I look forward to further involvement with this minister until the next election when there is anything that involves these two communities, along with our province, that I be made aware of and certainly would support and publicly support it. I can say that I am also very pleased with the development of the conservation districts that the minister has mentioned. We will ask some questions with respect to that.

Mr. Chairman, in closing, without repeating myself, I do want to say that we have had a good relationship with this department. The rural members, my rural caucus and fellow rural members have not raised any serious issues. The one thing, I believe, is that I think that the minister has made himself available. If the member for Swan River (Ms. Wowchuk) or the member for Dauphin (Mr. Struthers) has an issue, there is no need to go through me with it, they can go directly to the minister's office and deal with it. We appreciate that, but there is nothing that we have to be discussing as far as anything negative right now during the process. Well, my colleague from Swan River has raised her eyebrows, and I guess I wonder what is in store for us. Maybe I spoke too soon.

Mr. Chairman, my closing remarks, because of the way we are dealing with this Estimates process at this time, my colleague from Swan River will begin the questioning as far as Estimates to give her a chance to do a little discussion with the minister.

I just want to also, in closing, say to the minister and to his lovely wife a happy 25th anniversary today, and we hope that the day goes well for you for the rest of the day and evening and certainly bring back some–[interjection]–and perhaps bring some cake back for the critic. Thank you very much.

Mr. Chairperson: We thank the critic from the official opposition for those remarks. I would like to remind members of the committee that the debate on the Minister's Salary item 1.(a) is deferred until all other items in the Estimates of the department are passed. At this time, we invite the minister's staff to take their place in the Chamber.

Is the minister prepared to introduce his staff present at this time?

Mr. Derkach: I would like to introduce the staff at the table at this time. I am sure they are familiar to my critic. First of all, Ms. Marie Elliott, who is the assistant deputy minister of the Local Government Services Division; Ms. Denise Carlyle, who is the executive director of the Finance and Administration Division; Ms. Marilyn Robinson, who is the director of Human Resources Sector, and Mr. Ed Sawatzky, who is the manager of land development area.

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Ms. Rosann Wowchuk (Swan River): I want to thank my colleague the member for the Interlake (Mr. C. Evans) for giving me this opportunity to raise a few issues that I would like to discuss with the minister at this time. I think my questions might jump over a few areas, so if there are questions that I am asking that may not fall in with the staff that is here now, if you let me know, I would ask those at another time.

I would like to begin with the whole situation that we have been talking about for some time now, and that is the difficulty the people that are in the southwest part of the province are feeling with the unprecedented amount of rain. As a result, many municipalities have declared a state of emergency, but it seems that there is a real problem with the managing of the water, something that they are not used to. We met with some people the other day who talked about water being drained out of one area onto another and certainly causing a lot of hard feelings amongst people. I can understand why it is happening, because everybody is fighting for their own survival, but it is not solving the problem.

So I would like to ask the minister whether the Department of Rural Development plays any role in co-ordinating activities such as this, or does it all fall under Natural Resources, or is there a role for the department to ensure that there is proper management of water, while one person has a disaster now, it ends up being just continuing on to somebody else's property? Surely there must be a way to co-ordinate this, although it may not happen with the situation that we have in place today, but we have changing weather patterns in this part of the province, but it can be in another part of the province where we could have a similar situation. So what is the department's role to ensure that there is a proper management, and what is the department's role when there is a disaster such as we have in the southwest part of the province right now?

Mr. Derkach: First of all, regarding the issue of drainage in municipalities, that matter falls under the jurisdiction of Water Resources Branch from the Department of Natural Resources, but I must say that we have worked closely with the Department of Natural Resources and Agriculture along with municipalities to try and co-ordinate an approach to drainage issues that is going to be one of water management rather than simply drainage. As the member knows, under The Municipal Act there is a provision that speaks to this whole issue of responsibility for managing water drains on municipal property. The municipalities approached our department a couple of years ago requesting permission to go on private lands to block drains and that sort of thing. However, that matter once again is in the area of responsibility of the Department of Natural Resources who have been working with municipalities in that regard.

This is not a new issue. As the member knows, it is one that has been around for many, many years, but with the change in climatic conditions where we are in a wetter cycle, this certainly is causing more concern to municipalities and as more and more land is improved in the west side of the province. In years past we did not pay a great deal of attention to that because land was being improved in the southern part of the province and because of the river systems there was not that kind of concern. Now I think there are some river systems and streams in western Manitoba that are filling up to capacity, and as the member points out, a person solving his or her own problem on his own property only causes an exacerbated problem to others downstream.

So through our conservation districts we are working with municipalities and with individual landowners to try and put some sense into all of this, so that not only do we allow for landowners to improve and enhance their properties, but at the same time we put a plan in place which is through the conservation district and allow them to have a greater say in how water issues can be managed. That is why our conservation districts are established on a watershed basis because that is basically how the issues come together, especially water-related issues as on a watershed basis.

So we are promoting the establishment of more conservation districts because we see where they operate there seems to be less of a problem than in areas where there are no conservation districts. So that is why I said in my opening response that we work with Natural Resources, and this is the way that we do it.

Ms. Wowchuk: I thank you for the answer, but when there is an emergency crisis situation such as this, there is no real role for the Department of Rural Development. It is Natural Resources in this case that would be taking over to co-ordinate any activity that would be taking place to assist in the flow of water off this land. The department does not play any role in getting the municipalities together, any co-ordinating role at all in this.

Mr. Derkach: Well, that is not something that is very clear because the lead responsibility for water drainage issues would be with the Department of Natural Resources. Our role would be more of a liaison making sure that we work with municipalities and with the Department of Natural Resources or with the Department of Government Services who have responsibility for issues as they relate to disasters. We will also work with the Department of Agriculture. So we are more of a liaison kind of body that would work with the organizations, such as conservation districts and with municipalities and with our sister departments.

Ms. Wowchuk: The minister mentioned conservation districts. It is certainly a concept that has been working quite well, and, certainly, we have to look at managing water better. Can the minister indicate how many conservation districts there are now and whether there are any new ones that came on this year?

Mr. Derkach: Mr. Chairman, to the member for Swan River, we have established 11 conservation districts in total. I should say we have 11 conservation districts existing today, but some of them have had additions to them. In some of the conservation districts, we have had municipalities who have joined recently to expand the conservation districts, so there has been some of that taking place. The new conservation districts, I guess, would be the Intermountain Conservation District is one; the Kelsey Conservation District and the Little Saskatchewan Conservation District as well.

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Ms. Wowchuk: The number of conservation districts continue to increase and more and more work is being done at the local level, but we see very little increase in budget for the number of conservation districts. I know that the Intermountain Conservation District just expanded, taking in more territory, and with two new ones coming on board, that is a very little increase. This is an issue that has been brought to our attention where the numbers of conservation districts are improving and more and more responsibility is going on to them, but the funding is not corresponding with it to ensure that they have the adequate funds to take on the responsibility that is being passed off onto them.

So I wonder if the minister recognizes that as an issue and what steps he is taking to ensure that those conservation districts that are being established do have adequate funds to do the work that is very important in the areas.

Mr. Derkach: I can appreciate what the member is saying. However, when we establish a conservation district, it takes some time for that conservation district to get its policies and procedures in place. So they have not got the capacity to spend a full allocation, if you like, of dollars in their first or second year. So if the member were to take as an example the Intermountain one, which is probably the most familiar to her, in the first year of operations the Intermountain Conservation District would have received from the department $97,500. That was to get their preliminary work done, and, of course, the municipalities in that conservation district had to make their contribution as well.

So they set a budget in terms of what they can spend. In the following year, we sit down with them and we talk about what it is that they will require for allocation, because the allocation has to be matched, and what they think their budget should be on a reasonable basis because they are still in the formative stages. So in Intermountain, the budget for 1999-2000 was established at $121,000. So it went from $97,000 to $121,000.

Now, at some point in time in the future when they are developed completely in terms of their policies and are ready to go ahead with their regular work on an annual basis, the funding will level off. So it may mean that on the basis of what municipalities in the area contribute, let us speak hypothetically, in the Intermountain case it may be something like $200,000 or $300,000 where it would level off at. Then, on an annual basis, municipalities would contribute their share and we contribute our share. Unless there were special projects, because sometimes that happens too, where special funds may be injected because of special needs or special projects, the administrative and the regular funding would stay basically at that level with minor increases for adjustments on an annual basis.

Ms. Wowchuk: So I take it, then, from those comments the minister feels that the amount of funding that is there now is adequate for the 11 conservation districts to meet the projects and the administration that they have for the upcoming year.

Mr. Derkach: Well, there is always more need, but our funding is based on a 75-25 percent basis where the government puts in 75 percent and municipalities put in 25 percent. So in many instances this is also limited by the amount of available funds that are there for municipalities as well. So it is on that basis that we approach the amount of money that is funded. I am very happy to say that, over the course of time that I have been here, I think when I came into this department we had five conservation districts and we are now up to 11. I am sure that, in the course of this year, we are looking at one or two more. So we have had increased funding allocated to this appropriation on an annual basis because of the growth that has taken place. It is something that we support wholeheartedly because I think local people often do a better job in managing, whether it is water resource issues or other issues, better than somebody from Winnipeg or a department can. So that is why we support empowering the local organizations and conservation districts to do a lot of this kind of work, and our funding simply is there to try and ensure that this goes on.

Having said that, the member should know that there are conservation districts in the province that have responsibility for crossings. I think there are the Whitemud, the Alonsa, Cooks Creek and Turtle River that have responsibility for crossings. In 1998, we allocated a million dollars to those four conservation districts to undertake the improvement of the crossings, and we did this by asking them to do an inventory of the crossings and then to repair them because many of them were, I guess, under spec according to the Department of Highways when they inspected them. So we allocated a million dollars. Cooks Creek received a fair amount of that money because they were prepared to do the work. Whitemud, Alonsa and Turtle Mountain received less money because they did not have the funds to do what was required, their share of funds, and they wanted it spread over a longer period of time. So we are working with them to ensure that all of these crossings are brought up to standard.

Mr. C. Evans: Mr. Chairman, further on the Cooks Creek district, has the minister received and the office received any complaints in the last, I would say, six months from individuals around the Cooks Creek area that there was some dispute as to some of the work that was being done there? I am wondering if this has to do with these crossings. Can he enlighten me on that if he has, and if he is not aware, can he get back to me with it?

Mr. Derkach: Mr. Chairman, I am sorry to say that I cannot provide an answer right now to the member. I have not heard personally of any issues in the Cooks Creek area as a result of work that was done on crossings. I mean, there are constantly small issues that we hear about, for example, drainage ditches being constructed and perhaps not taking into consideration some of the needs of people where the ditches are being constructed. Those are usually ones that are resolved at that level and our staff. I will inquire of the staff to see whether there are any major issues, and I will be happy to report back to the member.

Mr. C. Evans: Just another question on these crossings, can the minister explain, these crossings that you are providing these resources for, are they crossings across large drainage for market roads? Why are we providing all this money for the crossings?

Mr. Derkach: When the conservation districts were established, especially those four, those were areas where there were very many crossings across drains either to access properties or access yards or for transportation of market products. These were all taken over by the conservation districts. So the money that was formally in the Department of Natural Resources or Water Resources was transferred over to the conservation districts for them to manage.

Now, what has happened over time is some of these structures have outlived their longevity and they require replacement. So the government has decided to help the conservation districts to replace some of these crossings. Now, what we have found is that as the demographics of rural Manitoba change, sometimes some of these crossings are not required to the extent that they were built in the beginning. So you have them being replaced, and again this is a management issue within the conservation districts, by low-level crossings, whether they might be a weir or a low-level crossing for equipment but not necessarily for school buses and public transportation. So that is happening as well.

What conservation districts have done is they have gone around and looked at the crossings, examined the need for them, and determined what kind of crossing would be required to replace it and then have come forward with proposals. It is on this basis that we have funded the replacement of some of this infrastructure.

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Ms. Wowchuk: I am pleased to hear that the government continues to move to establish more conservation districts. One of the areas that I am very interested in is in the Swan River area. There has been talk about a conservation district back when I was a councillor, which is about 10 or 11 years ago, and it has been very, very difficult to get all the municipalities to co-operate to establish that district.

What role does the department play or what services can the department provide or information to those municipalities that are hesitant? Is there any encouragement that the government can offer to help promote that particular conservation district? I know that it would involve three municipalities, and there is one municipality that hesitates. As a result, we do not have a conservation district there, and we continue to have many water problems.

One of the issues is, as we have more logging, there is more water coming off the mountain at a faster rate. The people at the bottom end of the area are the ones that end up having very serious water problems. In this particular case, it is down in the Lenswood area around the Swan Lake area, the Woody River, the Swan River, where I was out this spring and saw areas that just cannot take the kind of water that is coming out of them. I was not aware, but as you look at the map we have water coming out of Saskatchewan that drains into Manitoba.

So the one question is: what incentives or encouragement can the government offer through Rural Development to promote a conservation district? The second one is: are there any conservation districts that cross borders between Manitoba and Saskatchewan? Because in this particular area there are three municipalities I believe that are out of Saskatchewan, like right across the border, that the water is draining into Manitoba, ends up in Swan Lake and then in Lake Winnipegosis. It is this very fertile area of land that is taking the brunt of it, but we cannot seem to co-ordinate any management of the area.

Mr. Derkach: Mr. Chairman, to the member, I have to say that I would be extremely pleased if we could establish a conservation district in the Swan River area. We would be happy to do what we can to assist in that regard. What we do as a department is we will go out and encourage municipalities to look at the concept of a conservation district. We provide them with some examples of what conservation districts in other parts of the province do and what successes they have had. We make available to the municipalities people from conservation districts in either neighbouring jurisdictions or other jurisdictions to talk to them to display and explain the benefits of conservation districts.

Well, that is about as far as we can go. We really cannot twist the arm and say, you must. The carrot of course is the 75 percent of funding that goes to conservation districts. I keep saying that the dollars that we provide should be a great incentive for municipalities to form a conservation district. I cannot for the life of me understand why municipalities who have an opportunity to spend 25 cents out of a dollar to do conservation works in their areas would not jump at that opportunity. Nevertheless, we have to respect local autonomy, and we do. I have to say to the member also I am a very strong proponent of conservation districts, yet my own municipalities where I live do not have a conservation district. So sometimes it is most difficult to sell in your home territory; however, there is work proceeding.

With regard to the cross-border conservation districts, we believe that it is a good idea. We would support it, because water does not know a political boundary. It knows a geographic boundary; it does not know a political boundary. So we think that in areas where it does make sense, we could support the establishment of a conservation district which goes across the Manitoba-Saskatchewan border. There is no reason why we should not be able to support that, especially, when we see some of the problems that are occurring as a result of cross-border waters in the member's area and in mine as well. So if there were a will to do that, we would certainly support that.

At the present time, I have to say there is some renewed work being done in the Shellmouth, Bolton, Russell, Silver Creek area, regarding a conservation district wanting to join with some Saskatchewan areas. I think Shell River is part of that. Hillsburg has not decided to join that exploratory work at this time.

Ms. Wowchuk: Can the minister indicate: has he had any discussion with his counterparts in Saskatchewan to discuss this possibility? Is there willingness on their part to look at these kinds of conservation districts? Our water does not flow into Saskatchewan. It is their water that comes this way. Has there been any discussion, and is there any willingness to pursue this?

Mr. Derkach: No. I am afraid I have not discussed this specific issue with anybody from Saskatchewan. I can say to the member that I have discussed the water issues, the drainage issues along the border with ministers from Saskatchewan, but not the establishment of a conservation district as such. Their conservation district concept is a little different than what ours is. They are reviewing their issues right now.

I think we are a little premature right now. I want to see whether or not there is going to be a willingness for at least this one area to look seriously at a conservation district. Then, if they say, yes, we are serious about it, or, if it happened to be in Swan River and they said, yes, we are serious about it, then I would initiate some discussions with the appropriate minister in Saskatchewan.

Ms. Wowchuk: I want to, at this point, recognize a group of students who were doing an excellent project and they are in the Swan Valley Regional School under the direction of Rick Wowchuk who just led the team in the environment, Environthon, but anyway these students got some funding from the federal government. They are doing a project of the area where they are building, they are actually building the area out of Styrofoam and it shows all the terrain in the area. It is quite amazing to see, when it is not on a map, the elevations and the water flows. I think that this project will help people of the area understand why it is necessary to form a conservation district, and why it is we have some of the water problems when you look at the terrain and the large area that ends up draining into the Swan River Valley.

I would encourage the minister if he is ever up in the Swan River Valley to let me know and I will make arrangements for him to see that particular project. It is going to be on display. It is quite a big display, probably about the size of the table in the middle of the room, so we have not very many places that we can display it, but it probably will be displayed in the co-op. It is going to be in the school all summer and maybe set up at the fair, but it is an excellent project to show what the land terrain is like, and where the water is going, and perhaps will help us in our pursuit to form a conservation district in that area.

I am going to move on to another area that is important to the people of the Swan River Valley. I would like to ask the minister if he could tell us what the status of natural gas is for the Swan River Valley. We have long talked about this. We have talked about natural gas coming to the Swan River Valley in the 1995 election. There was the Centra Gas deal that fell through and now we are in negotiations with bringing gas in from Saskatchewan. I have to tell the minister there is serious concern on the part of many people in the Swan River Valley who feel that it was the government's fault that that first project did not go through because of the way they negotiated and the government's decision that L-P had to be a partner in it. That is what really stalled the project and then resulted in it falling apart.

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The minister is well aware. He talks about all of the development that we have in Manitoba and how great things are, about value-added jobs. He knows in most of those places where there are value-added jobs or growth, it is the areas where they have a secondary source of energy, they have infrastructure, they have the opportunity to access cheaper energy source. You know, he talked about the plant at Elie, and I am really pleased that the plant at Elie is doing well, but when Isobord hooked up to natural gas, they did not have to pay any hookup fee, but when Louisiana-Pacific wanted natural gas in their plant, they have to be a partner in it and put all of this money out to get the natural gas there. So if the minister is committed to seeing growth in other parts of the province and having some other industries come to the area, he would be pursuing on our behalf and ensuring that we do get natural gas into the area.

I am very disappointed in how it was handled and I am disappointed that we do not have natural gas in the Swan River area. I want to commend the people who have worked very hard to try to get it here because there is a very strong local committee that is working on it, but it is not happening. So I would like to ask the minister what role his department is playing in this. In particular, is the money that was announced through the infrastructure program still available? Is natural gas going to come to the Swan River Valley, or are we going to be waiting for another election promise?

Mr. Derkach: Well, that last comment was not fair, but, Mr. Chairman, I have to tell the member for Swan River that when we started the program of natural gas expansion into rural Manitoba, Swan River was identified as being the community that would probably be the first recipient of natural gas services of all of the communities that were applying because they had done a lot of homework to that point in time and appeared to be in a position where they were ready to move. During the negotiations between Louisiana-Pacific and the province, I happened to be at the meeting where Louisiana-Pacific committed themselves to a significant contribution towards natural gas to the Swan River Valley. It was on that basis that a formula was arrived at for the funding of natural gas in the Swan River Valley because the funding formula included ourselves as a province, the municipality, the federal government and Louisiana-Pacific.

So it was not at all similar to any other project that had been agreed to because in this case the offer by Louisiana-Pacific was put on the table by them regarding their contribution to natural gas. So the committee then began its work on the basis of that formula and on the basis of the funding that was identified for the project and the shortfall that existed which they had to raise locally. The member probably knows the history of it. It just seemed to go on and on, because locally the committee seemed to want to work with Centra Gas, and then there was a desire to do it in another way. Then it was back to Centra Gas, and then most recently they have decided to go their own way again.

Through all of this we as a department and government tried to provide the most current information based on their needs. If they said they were going with Centra, then we crunched the numbers to show what the shortfalls might be and what would be required to be raised locally if they went with Centra. Of course, Centra's access to gas was in Roblin, so therefore the costs were based on providing service from Roblin. There was some, I guess, lack of agreement in the committee which thought that they should be bringing in gas from Saskatchewan, and so they went to Saskatchewan and negotiated an agreement there. However, the costs were so high at the time that the Saskatchewan route just seemed to be an impractical way to go, nonaffordable. So then we were back to Centra, and when Centra's offers were put on the table, I think the agreement was close but it never did culminate in any kind of a signing or anything of that nature. Then it went back to getting gas from Saskatchewan again.

My understanding is that as of last week Louisiana-Pacific has indicated that they will not participate at any level in the expansion of natural gas, so therefore I am not sure where the committee is at from Swan River. But I wrote to the committee, I guess it is about a month ago–I could provide the member with a copy of the letter–indicating that the province's commitment was still there and continues to be there for expansion of natural gas in Swan River. That is basically all we can do. We cannot drive the issue to the point where we do the work for the community. It is between the proponent, who in this case could be the community, and the supplier, whoever that may be, to work out the details on how they are going to do it and to determine the sizes of lines and the distribution systems that they are going to have in place for the service. So they will provide us with their requests, and we try to guesstimate or try to project the numbers as closely as we possibly can and then just indicate to them that our money is on the table and if they decide to proceed that that amount of money that was set aside for the project is still there.

Ms. Wowchuk: Can the minister indicate how much money is on the table?

Mr. Derkach: As of February, I think it was, or March, when I wrote the letter, our contribution level to the Swan River Valley was still at $1.8 million. That was the same level as the federal government's commitment and the same as the local government's commitment.

An Honourable Member: It was one-third, one-third, one-third?

Mr. Derkach: Well, it is not one-third, one-third, one-third. Our commitments were at that level. Louisiana-Pacific's commitment, I think, was at that time $700,000. Now, I have to say to the member, I do not have the appropriate staff here. If these numbers have changed since then, I would bring the corrected numbers back to the Chamber.

My latest information is that Canada was at $1.814 million; Manitoba was at the same level; so was the local government; and the customers, which would include Louisiana-Pacific, were at $700,000.

Ms. Wowchuk: I apologize, I did not realize that this comes under a different part of the staff. But can the minister tell us now, given that Louisiana-Pacific has indicated that they are not prepared to participate in the project, is the province, are we now going to go back to a four-way split where it is the province, federal government, municipality, and the users? Is the provincial share then going to go up to cover the costs so that we can see this project continue?

Mr. Derkach: Well, as of this moment I believe the way it stands is that the shortfall that is the result of Louisiana-Pacific's inability to participate would have to be picked up by the local area, the municipality and the local customers. I do not think that there is any chance of our being able to, and I say this perhaps prematurely, but there would have to be an application put in to the Canada-Manitoba Infrastructure Program for an additional amount of money. I am not sure that there is any additional money in that program anymore. So I think we would probably be obliged to live with the numbers that are before us right now, because that is the money that was set aside under that program. I do not think there is an opportunity very easily to increase the amount of support through that mechanism.

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Ms. Wowchuk: I would ask the minister to really consider what is happening here. The formula on other projects does not involve industry being a partner. There is no other project in Manitoba, as I understand it, where industry has been requested to contribute to the initial project, as Louisiana-Pacific was. In those cases, it is the governments and the municipalities and then the user that contributes to it. The user portion of it increased because Louisiana-Pacific was in the picture. If they are not in the picture, then I think that the government should reconsider this and treat the people of the Swan River Valley the way they treat people in other parts of the province. I have asked in other areas, and industry in other areas has not been required to make a contribution. There is an unfairness in it. So I think that the minister has to really look at this.

There was a commitment to get natural gas to the Swan River Valley. The reason it came off the rails, and this is the belief of the people on the committee, is because the government started to fool around with getting another partner in it. Now, the minister says Louisiana-Pacific offered to put the money in. Louisiana-Pacific staff tell us that that is not the case, they did not offer, they were encouraged to put money on the table in order that the project should go ahead. Whatever the situation was, the Swan River Valley should not be treated differently than other areas in the province where there is a split between the levels of government not with industry.

Somehow, we have to come to a solution to this and not bicker back and forth any longer about who is going to be paying for the project and ensure that we have the opportunity to have natural gas come to the area, because there are lots of ideas where people are looking for an alternate energy source. We have people who are proposing to build hog barns in the area and are looking at having natural gas for it. What is happening right now is unfair. There is the opportunity for development in other parts of the province. We have been waiting for this for a long, long time. It was an election promise. The government has to find some way to resolve it. I would ask the minister to look at ways that we could change that formula to ensure that this actually does happen.

Mr. Derkach: Well, Mr. Chairman, I say to the member that I would be extremely pleased to see the project finally given the green light to proceed. I was not a part of the negotiations when Louisiana-Pacific made its proposal to the province before its construction in Swan River. So I am not privy to any of the information that was made available and the negotiations that took place in terms of the contribution that was made by the province to Louisiana-Pacific in whatever ways and what commitments were made by Louisiana-Pacific at the time.

All that I know is that when we talked about the natural gas expansion–and at that time Louisiana-Pacific said that they required that service, and I believe it was a year from the point of signing the agreement that they required the service. We agreed that we would move as quickly as possible in that direction. So to say that the province scuttled it is not accurate, because all we were doing was living within the framework of the agreement that was established and I was not part of that. However, there is still a desire on our part to see natural gas service come to Swan River. How I am going to do that or how we are going to do that, I think, right now is a bit of a dilemma. I have not received a formal letter as I recall from Swan River indicating what Louisiana-Pacific's final decision is except that I did read it, or a copy of the letter that was sent from the mayor to I think it was Louisiana-Pacific, regarding their statement about not participating.

I would be happy once again to meet with Swan River and see whether or not there is a way for us to find our way through the quagmire, if you like, right now or to cross this hurdle because this has been such an outstanding issue for so long. Quite frankly, I think that if we do not do something in a positive sense, this money will then escape and be used for other projects because of the constant delays. So if the community or the gas committee would like to come in and approach us again, I would be more than happy to sit down with them.

Ms. Wowchuk: Can the minister indicate, you are talking about time frames, what length of time we have? What framework are we working in before that money does disappear off the table?

Mr. Derkach: Mr. Chairman, I do not know that answer. I can consult with the Minister of Finance (Mr. Gilleshammer), but as of this moment, I cannot tell the member how long that money is available for. If, in fact, the money is going to be terminated, say, a year from now, we should let the committee know that, so they know they have got a time frame in which to work. As of this moment, I do not know. I am not sure there is a time frame, but there has to be a sunset somewhere down the road no matter what kind of a project we are working on.

One of the reasons why back in the early days when natural gas was being explored and the feasibility work was done, the feasibility for natural gas to Swan River was on the basis of a contribution from Louisiana-Pacific. It was not the same as it would be in some of the southern communities, because they had to bring gas such a long way, whether it was from Saskatchewan or from Roblin for that matter. It was such a long distance that to make it viable they needed that injection of money from a source, and that source was Louisiana-Pacific. Louisiana-Pacific knew that, and I think they agreed to make that contribution.

If the project is going to be viable and sustainable for the long term, it needs a participant of some kind like Louisiana. I would be prepared to sit down with Swan River again, take a look at the latest numbers that they have put together, see where they are with regard to their shortfall and explore options as to how we can get the project done.

Ms. Wowchuk: The minister talks about the viability of the project depending on contributions from industry. I can see the viability of the project depending on use by the industry, because if there is no large consumer of the gas, then it makes it more difficult, and that is true. The project became more viable when Louisiana-Pacific came on-line and were going to be the large purchaser of gas that came to the area, and I can understand that. I think there is a responsibility on the part of the province and the federal government. If the government is really committed to having jobs develop outside the No. 1 Highway or outside the Perimeter, then there also has to be a commitment from government, and I thought that that commitment was there.

It was never our understanding that when we heard the announcement of the money coming from infrastructure that it was based on funds from Louisiana-Pacific coming into it. That was not the message that came out. The message was we were going to get an expansion of natural gas into the Swan River area. I think that it is a change in government's position and I think it is wrong. I think the government has to have vision, just as there was a vision to expand hydro throughout northern Manitoba, just as there was a vision started under the New Democrats to expand larger calling areas and continued on by the Conservative government when they came into power, to expand that service, so that people in rural Manitoba and the North would have equal opportunity, but that vision does not seem to be there.

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We hear the lip service that rural Manitoba is growing, but when we ask for services that will allow for the growth in other parts of the province and have infrastructure improved, we do not seem to see that. I would encourage the minister or ask the minister to look at that proposal again, find out some way to fulfill that promise that was made in '94 or '95 to have natural gas come to the area. If we do not have the contribution from industry, then the government find the money someplace and fulfill that promise. I would ask the minister to look at that, find some way so that we can start to have some of the growth because every time we hear people talking about how good it is at Steinbach and how good the people are there, that they have the ideas, and they are prepared to invest and in Portage la Prairie we have got growth, and in Winkler we have growth.

Well, give the people the tools and this is one of the tools that they are asking for. And you have made the commitment, give them that tool and let us look at what kind of growth we can have outside the area of southern Manitoba.

Mr. Derkach: Mr. Chairman, the member is not accurate when she says that it is the government who has fumbled the ball here, because in every case where we have done expansion of natural gas, there is a formula that is applied where governments, both federal and provincial, will only participate to a certain level and that is to make up the shortfall of the viability of the project, but it cannot exceed a number or a percentage. I think it is about 20 percent, if I am not mistaken or in that range–

An Honourable Member: Twenty percent of it can be made up.

Mr. Derkach: Pardon me? No, no. That is what our contribution would be of the total project, or the viability of the project.

Now, having said that, I guess my numbers are subject to change because I do not have the appropriate staff here, so I would like to get those specific numbers. Having said that, I believe it is important to understand that the contribution that was offered by Louisiana-Pacific was something that came to us before we even entered any numbers into the records or made any announcements, so that was an original kind of plan.

When the federal government and the provincial government sat down to consider the Swan River project, it was on the basis that there was going to be a contribution by the residents of Swan River and valley. I think Benito and Minitonas were involved in that and also the contributions from Louisiana-Pacific because of the size of line–and it all was technical–but it was the size of line that was required to bring gas into the communities so that you could service right to Minitonas.

I regret that we were not able to arrive at an agreement in the first instance, because I think we were probably closer then than it has been since. I have to tell the member also, I personally took the time and the initiative to fly to Swan River on two occasions to meet with the people from Louisiana-Pacific. At that time, they told me their $2-million commitment or their $1.8 million or whatever that was had been scaled back to less than a million. We were asking at that time, well, what we really required was a million. It ended up that there was again an agreement that they would contribute the $700,000 to the project. I guess the difference in the project was under Centra there was an expected amount of money that would have to be put in by the local consumer. Centra Gas would invest a chunk of money as well, because they in the end would be making a profit out of the line, so they were investing some money. It was all to do with how much money could be invested by Centra on the basis of the Public Utilities Board ruling.

However, when the community decided to go another route other than Centra, what it meant was the contributor of that money that was coming from Centra had to come from somewhere else. It has basically been in the hands of the community regarding how they want to construct this, because the money that has been committed by the federal and provincial government is solid. We are not going to change that.

We understand that Louisiana-Pacific's contribution should have been in good faith and should be there. The difference now has to be made up by the communities of Benito, Swan River and Minitonas, and whether they go with Centra or whether they go with another supplier does not matter. What we have to do is ensure that the project is one that is going to make sense and it is going to be viable. We are willing to flow our money tomorrow if, in fact, they can arrive at a figure that they can sustain and one that they can support.

I guess I am kind of at a crossroads here. I do not know who is moving it now. I think it is the communities. They have to come back to us and indicate what homework they have done, what stage they are at. Then if more work is required from our department, I am prepared to once again release the resources to be able to go and work with them, to crunch the numbers or to do whatever may be required in order to get the project on its feet again. I am prepared to do that.

Ms. Wowchuk: The minister partly answered my next question, I guess. Is there staff that is available that the people in Swan River can contact to ensure that this project goes on? Is it the committee that has to do the work, or is the government doing any work to contact the people in Saskatchewan? It is TransGas that they are working with. Is there any work being done by the government to help move this project along or is it completely up to the committee now to say, okay, this is where we are at and call on you for help when they need it? What can the government do?

Mr. Derkach: Actually, my assistant deputy minister of the Economic Development division, Mr. Larry Martin, has been in touch with them, but under his direction we have also had other staff from the department. I think at one point in time, a member who is at the table right now, Paul Staats, has worked with the community. We have from the Economic Development board secretary, Jonathon Lyon and Ted Wilton who have been with the project from day one, I would say, and who continue to take an interest in working with the community.

I understand that the gas committee now has changed, too. That has not helped matters either because it is difficult for us or anyone else who is working with them, because the direction seems to change as the committees change. I am not going to condemn the community for that. I mean, that is a community responsibility. I have had the same staff on this project from day one, and certainly I am prepared to do whatever I can to make staff available to the committee. If they want to come into Winnipeg to meet with me, I would certainly be prepared to meet with them. If the MLA for the area wants to sit down and have a discussion with them and myself, I am prepared to do that as well. I am eager to get this thing going, but I am a little frustrated with where we are right now.

Ms. Wowchuk: I appreciate that offer from the minister. I will go back to the committee and see what we can arrange, and I hope that in the very near future we can have something set up to see this project proceed. I just want to ask the minister: given that Manitoba Hydro has now purchased Centra Gas, does this offer any other opportunities? Has his department explored that or should we be asking this question when we get into committee on Hydro? Is the minister aware of anything that this purchase could make a difference? Is that one of the tools that we could be using to move this project along?

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Mr. Derkach: First of all, before I go on to answer the member's question, I think maybe I should go back and indicate the level of contribution that was requested from Louisiana-Pacific was 5 percent. I think at 700,000, it is down to 4.8 percent. Now that is constant or consistent with other requests that were made from other communities. The local customers, if you like, had to come up with the 5 percent. Now, if Louisiana-Pacific is not in, that means that the local customers other than Louisiana-Pacific would have to make up that 5 percent. That would be consistent with our policy as it relates to expansion and natural gas.

On the question of the sale of Centra to Manitoba Hydro, I would say that they are again a provider of the service, and certainly if I were the gas committee, I would be embarking on some discussions with the new utility to make sure that perhaps there are other things that can be provided for by the new owners of Centra that were not available before. So, sure, I encourage that because they are the provider of the service. Now, they may have new approaches which could be beneficial to the community. Certainly our role in it is to be a co-ordinator or a catalyst and a partner to help the project happen. Who provides the service to us is not that important, rather than simply seeing it delivered. I think the most cost-effective service provider is the one that the community should probably be going with.

Now, from a provincial perspective, I hope it is, as a matter of fact, the new owners of the utility.

Ms. Wowchuk: I know I have taken a lot of liberty in asking questions. Probably the appropriate staff is not here to answer, but I appreciate the minister's answers. I know my colleague, who is the critic, also has some questions on this, and I wonder if the minister might tell us where the appropriate area is that we should be actually asking this stuff.

Mr. Derkach: The appropriate place would probably be under infrastructure, but we can pursue more specific discussion at that time if there are more detailed questions that the member would like to ask.

Ms. Wowchuk: We will leave more specifics to that point. I thank the minister for the information that he has been able to provide. I will very soon look at getting a meeting arranged in Swan River where we might be able to have the minister and his staff come up to help us work through this issue so it can move along.

I just want to ask: is the staff here that I can ask a couple of questions about REDI, or is that as well something that I should wait for another point? [interjection] That is another area, okay, then we will leave it.

The Acting Chairperson (Mr. Faurschou): The honourable member for Swan River has concluded her remarks?

Ms. Wowchuk: Since there is the staff for Local Government, I wonder, there is a new community that has come under the Rural Development administration in the North. Is it Lynn Lake that is now out of Northern Affairs and comes under the administration of Rural Development? There have been changes under community structure there. Would that shift it over to Rural Development?

Mr. Derkach: No. Lynn Lake and Leaf Rapids were always under our jurisdiction as a department because they are municipalities. Leaf Rapids is under the jurisdiction of Rural Development because we administer the town properties of Leaf Rapids, but Lynn Lake has been a municipality of its own. They come under our responsibility. However, I think the member is referring to the new community of South Indian Lake, but that transition has not taken place yet. So it still falls under the jurisdiction of Northern Affairs until such time that a decision is made to have them come under the same jurisdiction as other municipalities are.

Ms. Wowchuk: It is South Indian Lake that I was going to ask about. I got my communities mixed up, but would it now be that South Indian Lake falls under a Northern Affairs community and will now, as it takes over more responsibility, fall under Rural Development? If it does, what is the extra responsibility that will fall on to this department to administer that community? Will there be extra responsibilities?

Mr. Derkach: The community, Mr. Chairman, is still under the Department of Northern Affairs because they as a department still have responsibility for the funding of many of the aspects of running that community, so it does not matter that they are a self-sustaining community, if you like, or someone who is self-governing. Because there is such an intervention by the Department of Northern and Native Affairs in their operations in terms of the funding and so forth, there is no change in status at this time, in terms of whose responsibility or what department they fall under.

Mr. C. Evans: If by leave we may, as agreed previously, conclude with this afternoon's debates on the Estimates for Rural Development and continue at another scheduled time.

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The Acting Chairperson (Mr. Faurschou): Is that the unanimous agreement of the committee that at this time the committee rise? [agreed]

I will say for one moment here, if you will just bear with me, we may have to do one other item in the House prior to rising.

Mr. Deputy Speaker (Marcel Laurendeau): The hour now being six o'clock, this House now stands adjourned until 1:30 p.m. tomorrow (Wednesday). Thank you.