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10 The Canadian Statesman, Bowmanville, Wednesday, July 27,1994 Section Two Committee Objects to Union President Chairing Commission Studying W.C.B. 50 Years for FBDB The Business Steering Committee (BSC), a broad alliance of major companies and associations, announced announced today it is severing all ties with government in regard to implementing implementing the government's reform of the Workers' Compenstaion system and the process of establishing the Royal Commission on Workers' Compensation. The decision of the BSC not to take part in the process of developing the Royal Commission arises from the fact that a former labour union president is to be appointed to chair the Royal Commission rather than an independent person. "The appointment appointment means an objective and impar-. tial review of the system is impossible, impossible, leaving us no choice but to withdraw from this process," said Stephen Cryne, Executive Director, Employers' Advocacy Council. "The government appears to be catering to the labour community in its re-election bid, and the participation participation of the employer community has been compromised. The Management caucus of the Premier's Labour Management Management Advisory Committee (PLMAC), supported by the BSC and hundreds of business associations and organizations, in good faith invested invested thousands of hours to develop constructive and balanced proposals to restore Ontario's near-bankrupt Workers' Compensation system. Despite Despite our efforts to provide constructive constructive input, however, our reform proposals proposals have been frustrated and any Emergency Crews Issue Challenge at Blood Donor Clinic The Canadian Red Cross Society, Ajax-Pickering and Oshawa Branches Branches are having A COMMUNITY BLOOD CHALLENGE for the summer summer of 94!...and The Durham Regional Regional Police are leading the way by opening up a friendly challenge to all Emergency Services Personnel! Summer is a critical time for blood. Accidents and illness do not take vacation. We urge you to support support one of the three clinics nearest you! Bowmanville - Wednesday, August August 3, Lions Centre - 26 Beech Avenue, Avenue, 12-8 p.m. Oshawa - Thursday, August 4, St. Gregory's Auditorium - 194 Simcoe St. N. 12:30 - 8 p.m. Pickering - Friday, August 5, Metro Metro East Trade Centre - 1899 Brock Road, 2-7 p.m. Be a summer donor and make a difference for the Summer of 94! . trust and confidence regarding a responsible responsible package of reform has evaporated." The BSC will also refrain from participating on the government's Transition Team; a committee set up to implement Bill 165, which is intended intended to reform the Workers' Compensation Compensation Act. "Bill 165 does not reflect reflect the agreement reached by the province's most senior labour leaders and the business community in March under the PLMAC," said David David Hambley, chair of the BSC. "The government has taken that agreement, agreement, altering and interpreting it to suit its own needs. Despite frustration and disappointment with government, government, the business community was initially prepared to try to improve the quality and fairness of the Bill through participation on the Transi- . tion Team." Cryne further commented that Bill 165 does not go far enough in solving the problems of the system and perpetuates perpetuates the precarious financial position position at the Workers' Compensations Board (WCB). Under the proposed legislation, the unfunded liability (the difference between the WCB's assets and its liabilities), currently at $11.6 billion, will increase by more than $2 billion over the next twenty years. Also, new benefits could be awarded without any consideration of the impact impact of costs on the system and its ability to maintain workers' protection protection or the provincial economy. Bill 165 proposed a bipartite structure to govern the WCB, "but our experience is that it simply won't work", says David Hambley. "Events over the past four months have destroyed destroyed any confidence we held for the success of bipartism at the WCB. Government wants the workplace parties (business and labour) to own the system, but this means abdicating a responsibility that rightfully belongs belongs to government." The BSC is calling upon the government government to retract the current Royal Commission appointment, withdraw Bill 165 and implement the changes proposed by business to the Premier last fall which contained a. comprehensive comprehensive package of reform that would virtually eliminate the unfunded liability, liability, secure future benefits for workers, improve vocational rehabilitation rehabilitation and place the system on a secure secure footing for the future while improving improving the climate for business investment in Ontario. Not only is the BSC withdrawing from the implementation process, but it will not appoint any business directors directors to the WCB Board of Directors, or provide nominees to the Royal Commission. The BSC is advising the business community to refrain from becoming involved until gov- INDEPENDENT FINANCIAL ADVICE! MYTH - All Mutual Funds invest in the stock market. WRONG - Stocks, Bonds, T-Bills, Mortgages, Foreign Equities, etc. With over 700 Mutual Funds on the market where would you to go find the one that suits you? REGAL CAPITAL PLANNERS LTD. Call Steve Scatterty Financial Advisor, Bowmanville 623-1936 © eminent is willing to address the very serious financial and operational problems that exist in the system. The BSC is an alliance of several major business organizations involved involved with the reform of Workers' Compensation in Ontario including senior representatives from the Canadian Canadian Manufacturers' Association, the Canadian Federation of Independent Business, the Canadian Chemical Producers Association, the Employers' Employers' Advocacy Council, the Employers' Employers' Council on Workers' Compensation, Compensation, the Federally Regulated Employers Transportation and Communication Communication Organization, the Ontario Chamber of Commerce, and the Retail Retail Council of Canada. Many large Canadian corporations are also represented represented on the BSC. F.B.D.B. Figures Show Lending Increases 11.6% The Federal Business Development Development Bank (FBDB) just released its. results for the 1994 fiscal year - April I, 1993 to March 31, 1994 - which demonstrate that the Crown corporation corporation continues to be a cost-effective instrument for helping small and medium-sized medium-sized businesses. Financial Services Highlights "Despite a slow economic recovery recovery which affected business activity, FBDB increased its volume of lending lending while enhancing its role as an innovative innovative provider of financial and management services," says Francois Beaudoin, President and Chief Executive Executive Officer. FBDB lending increased by II. 6% in fiscal 1994, representing a gross amount of $714.7 million. This followed a 9% increase recorded for the previous year. The value of client projects benefitting from FBDB financing financing totalled $1.2 billion - underscoring underscoring the "leveraging" effect of the Bank's lending operations. The total amount outstanding or committed to the Bank's loan and guarantee customers customers as at March 31, 1994 was $2.97 billion, up from $2.85 billion last year. As a complementary lender, FBDB fills a gap in the financial services services spectrum by providing term loans, venture loans and venture capital capital to commercially-viable small and medium-sized businesses unable to obtain adequate financing from conventional conventional sources on reasonable terms and conditions. Overall, the net income from FBDB's Financial Services (including (including the Venture Capital Division) amounted to $4.9 million for fiscal 1994, enabling the Bank to meet its financial mandate to cover all costs of Financial Services without government government funding. "It should be emphasized that FBDB's financial mandate is not to maximize profits but instead, to cover cover all costs while providing financing that complements what is available from the private sector," adds Beaudoin. Beaudoin. "Any suipluses are added to the Bank's capital base, to support expansion expansion of its portfolio." Over the past five years, FBDB has provided $3.4 billion in loans to small and mediumsized mediumsized businesses without any government government funding. Trent University at Durham College Fall 1994 Complete a degree, part-time or full-time, in any of the following subjects: Anthropology, Cultural Studies, Economics, English, History, Political Studies, Psychology,' Sociology This year marks a half-century milestone in the history of the Federal Federal Business Development Bank. In 1944, when FBDB's forerunner, the Industrial Development Bank was established, established, its primary role was to help restructure the Canadian economy after after the Second World War. At that time, the Bank financed the transition of many small manufacturers from war-time to peace-time production. "Today, as the Bank prepares to mark its 50th anniversary, Canada is again at an economic juncture - making making the transition from a resource- based to a knowledge-based economy economy that is now more open to international international competition. Maintaining a dynamic dynamic small business sector which can respond quickly to changing markets markets will be cmcial to Canada's competitiveness competitiveness and its ability to continue creating long-lasting jobs," says Beaudoin. The Federal Business Development Development Bank's mission to help creàte and develop Canadian small and medium-sized medium-sized businesses by offering a wide variety of timely and relevant financial services such as loans, guarantees, guarantees, venture loans and venture capital as well as extensive management management counselling, training and business business mentoring services. FBDB's services services are made available across Canada through a broad network of 78 branch offices. For information or a brochure call: (905) 723-9747 or (705) 740-1229 by Brian Costello MUTUAL FUND REDEMPTIONS LARGE Has Canadians' love affair with mutual funds come to an end? That's what some are asking after seeing the most recent mutual fund numbers. They show that more mutual funds were unloaded in the last three months than were purchased. In industry language it's called being in "net redemptions". It's worthwhile looking a little deeper before arriving at any conclusions. The first point is that while assets under administration by Canada's mutual fund companies fell by about $5 billion in total to about $126 billion they are still 46% higher than they were only a year ago. Some of this escapage can be accounted for by Canadians using mutual funds to provide an income to supplement their, retirement. After all that's why they bought them in the first place. The systematic withdrawal plan that we talk about so often is rapidly growing in popularity as more people learn of its advantages. There will always be deaths, job losses, marital breakup, mortgage paydowns and all the other reasons why people would sell mutual funds. But, they are usually offset by the new money coming in. In the last three months though, there has been real selling. And even though there are people who are wisely buying at today's bargain prices those purchases fell about $400 million short last month of the sellers' volume. Most of the selling is in the money market and mortgage funds. Now, I can understand the selloff in money market funds. They are basically a savings account, a short term holding pattern. Well, with interest rates higher and stock prices lower it makes sense to dump your short term cash into other investments that will pay off better for a long period of time. Some of that money has been locked into five year term deposits and GICs at today's higher yields. Some has been invested in mortgages and mortgage backed securities and a fair amount has been used to pay down loans where the interest cost had escalated. However, I have a major problem with the liquidation of mortgage funds. I know why it's happening, but I think it's a terrible mistake. Millions of dollars worth of mortgage funds were sold to Canadians in the fall and early months of this year when they balked at the low rates they would earn on term deposits and GICs. The financial institutions didn't want the money to drain away so they sold many of their depositors on the merits of mortgage funds. However, they neglected to show them the downside. That's one of the merits of dealing with an independent financial planner. As they are not captive agents with only one company's product at their disposal they can diversify amongst other companies and other products. Now that many of these newcomers to the mutual fund industry, that were not sold on the long term benefits, are seeing that their first reports show losses they are 'Taking their lumps" and switching back to GICs and term deposits with the same institutions. The institution isn't hurt, only the client. One of the things that bothers me most about this situation is that the chief economist of many of these institutions was warning that interest rates were going to rise at the same time as the local branches were selling mortgage funds which most of the financial community knows will fall in value when rates rise. The other side of this story is that some sectors saw substantial positive numbers. For example, foreign stock funds. They showed net sales of almost $250 million. Some Canadians were trying to protect themselves from a weak Canadian dollar and higher than necessary Canadian interest rates. However, most of these buyers had professional help. Mutual funds are a long term gain. Consumers who were cashing in five year term deposits and GICs to buy mutual funds should not be bailing out on them. Give them the same five years you would have given a new term deposit. Don't give them a few months because you will kick yourself sooner or later. Here's what's going to happen. You are going to continue to earn the yield the fund is producing. If interest rates rise the fund will lose some more of its value. However, in the long run two things are bound to happen. Number one, the mortgages inside it will be renewed at higher interest rates. Your yield could rise then. Number two. Sooner or later interest rates are going to fall. When that happens all the mortgages inside your fund will rise in value. The fund will start to look a lot more attractive at that time. In fact, when that happens you'll see a lot of investors buying mortgage funds to take advantage of potential capital gains. This is the wrong time to sell mortgage funds. It may even be the right time to buy them. This is a good time to unload money market funds. Use the proceeds to buy other depressed investments and .jaay off high cost debts. ■ ■