The Nova Scotia Legislature

The House resumed on:
September 21, 2017.

Public Accounts -- Wed., May 10, 2000

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8:00 A.M.


Mr. John Holm

MR. CHAIRMAN: This morning our presentation is from the Cape Breton County Economic Development Authority, and we have a number of witnesses who are here with us today. I will ask the witnesses to identify themselves individually, as we go through. We do have Mr. Kavanaugh, Ms. Oldford, Mr. Johnston, and Dr. MacLeod and Jo-Lanna Murray. Before we ask our presenters if they would like to make the presentation - I see that they have one to make - I would ask the committee members to introduce themselves for our guests. We will start over here with the PC caucus.

[The committee members introduced themselves.]

MR. CHAIRMAN: I am not sure who wishes to begin. If you would please.

MR. RAY KAVANAUGH: As you have indicated, my name is Ray Kavanaugh, Chair of the Regional Development Authority for Cape Breton County. Also with me today, you had mentioned the names, but in terms of their positions: to my right is Eileen Lannon-Oldford, Executive Director; a little further right is Jo-Lanna Murray, Senior Economic Development Officer; I also have two members of our board, Murray Johnston, Regional Councillor, sits on our board as a municipal appointee; and Dr. Ken MacLeod, Senior Vice President of Knowledge House, and President of Silicon Island, one of our private sector board members.

Mr. Chairman, our understanding is that the Public Accounts Committee often hears from organizations or groups such as ours, who expend public funds to determine if there is any value returned for the dollars invested. On that premise, I can tell you we are very pleased to be here as one of 13 RDAs in Nova Scotia, and to tell you our particular story.


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We would like to begin by having Murray Johnston provide you with some history and background on the Cape Breton County Economic Development Authority. Eileen Lannon-Oldford, our Executive Director, will handle the bulk of the presentation, which will be on the screen. She will outline our mandate, our programs, and also our results. Dr. Ken MacLeod will follow Eileen, and provide you with the private sector view of our economic development activities in Cape Breton County. Then, collectively, we will certainly do our best to answer any and all of the questions that any of the committee members may have.

MR. CHAIRMAN: Thank you, Mr. Kavanaugh. Mr. Johnston.

MR. MURRAY JOHNSTON: Good morning, Mr. Chairman, members of the committee. Thank you for having us here today in Halifax. It is a very important occasion for all of us. If you have the booklet in front of you, gentlemen, that looks like this, I would ask you to go to the first page, so that you can follow along. I will just do the first of seven or eight pages, and then Eileen will take over from there. I trust all of you have that document.

If you take a look at the page indicating the history of the Cape Breton Economic Development Authority, it was created in 1993 by the eight municipal units, at the time, of industrial Cape Breton, which were amalgamated in 1995, to coordinate economic development initiatives within Cape Breton County, with input from the private sector and people in the community. We provide a leadership role in a very strong fashion to coordinate economic development and strategic initiatives in marketing in Cape Breton. There are 14 regional development associations and agencies across Nova Scotia. Of course, one of the things that we do stress at all times in all of our documents and in what you will hear here this morning is one word that starts with the letter p and that is partnership. I am sure you all understand that one. We do it jointly with public, private and community sector organizations, and provide a strong leadership in that particular area.

On Page 2, if you take a look at the board structure, one thing that will impress you immediately, as you look down the page, is the fact that it is a very diverse group. Recently, in the last number of months, we have expanded our board to include more individuals to get a greater cross-section of the community that we represent. I won't read all of them to you, you can do that, but you can take a look at the top, Enterprise Cape Breton Corporation, the Province of Nova Scotia, CBRM, which I represent along with Mr. Kavanaugh, right down to the youth representative, Tourism Cape Breton, and so on.

On Page 3, the names of the board of directors are there for your perusal. They represent some of the agencies that you see to your right, and some of the ones I just mentioned. It is quite a diverse group there as well. An excellent board, by the way. We meet regularly and are well briefed by the executive director, and I am very proud to be the municipal representative. I can tell you that this body is a strong leadership component within the municipality. So much has been done since 1995. If this organization were not there, very little would have been accomplished in our area, without this strong organization.

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The next slide simply shows the staff we have. At the bottom, you will notice, it says 135 students we have employed over the years, and 10 contract positions for a variety of initiatives that we have undertaken, the Retirement Cape Breton Program being just one of them.

The next one, August 12, 1994, was the date on which we undertook the Strategic Economic Action Plan for Cape Breton, which involved mapping out and coordinating the development of growth industries for the region, and creating the right climate for development through infrastructure improvements in the municipality.

As you see on the next slide, there was one thing about this particular report - I can tell you I was part of the Voluntary Planning that started many years ago in Cape Breton - this particular document did not sit on a shelf, it was acted upon almost immediately, and we are extremely proud of the initiatives and the various accomplishments that we have had since amalgamation.

On the next page, the Strategic Economic Action Plan. There was a collective effort within Cape Breton at that time, prior to amalgamation, as I mentioned earlier. The eight municipal units wanted one body. At that time there was a body called JOINTEX , and they wanted one economic body in Cape Breton to coordinate efforts. This was the child that was born. The spirt of cooperation and synergy that gave life to the plan was evident by all the units coming together. It was an excellent spirit of cooperation, and long overdue in that part of Nova Scotia, by the way, with so many diverse communities and opinions, and so on. Thank God it has finally come together. Even within our council, Mr. Chairman, you might like to know, and you can appreciate this, I am sure, after five years, we have finally started to come together as a council, starting to forget about local areas and concentrating on the region as a whole, which I am very glad about. At the bottom of the page there, CBCEDA and its partners respond to the call of action with determination and focus.

The next slide, simply the word partners, once again working together with Enterprise Cape Breton Corporation, Atlantic Canada Opportunities Agency, Human Resources Canada, Nova Scotia Economic Development, UCCB, and of course the municipality. We work very closely with all of those particular agencies and corporations in a very cooperative fashion.

The next slide is an interesting one, if you take a look at it. It is the CBCEDA board memberships on the committees and community alliances. To my left, Mr. MacLeod, who will speak later, Silicon Island Advisory Committee. We are extremely proud of what has been done about that particular organization in Cape Breton. It is the leading edge of technology in that area. Ken will probably touch on that later. You have Tourism Cape Breton, of course. The Sports Industry Committee, a first for Cape Breton, which we created last year, and have been able to attract many sporting events to Cape Breton as a result, provincial and national, which has been a tremendous boost for our area. The Grow Cape Breton Partnership is one of our strong members in the alliance. The mayor, of course, we also have cooperative efforts

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from the mayor and wardens of other areas of Cape Breton as well. You see the other groups there in front of you.

On the next slide, Strategic Economic Action Plan. We have these champions, of course, which were responsible for the 113, I believe, recommendations. Enterprise Cape Breton with 25; Cape Breton Regional Municipality with 31; Nova Scotia Economic Development with 19; HRDC with 8; UCCB with 16; and CBCEDA with 14, undertaking all of those initiatives on behalf of the organization.

Finally, Mr. Chairman, on the next slide, next page, CBCEDA and its partners working together. The result, of course, was the development of a strategic, economic development plan. Look at that number at the bottom of the page there, 101 of the 113 recommendations have been initiated. That is a tremendous achievement for that area. In other words, the document has not sat on a shelf, we have acted on all of these and have been able to bring forth results on 101 of the 113, and we are continuing to work on the others.

Mr. Chairman, I could have given you a much more detailed look at the history of the organization, that is in capsule form. I want to tell you, before I close - and I will answer questions later - that as a municipal representative, I am pleased to be part of this organization. We report to our council regularly, and we are a willing partner and are very proud of the things we have been able to achieve in Cape Breton County thus far. I am going to pass it on now to Ms. Oldford.

MR. CHAIRMAN: Thank you very much, Mr. Johnston. Before we go to Ms. Oldford, I would just point out that we have also been joined by Dr. Jim Smith, the member for Dartmouth East, and I failed to point out earlier that we also have Mr. Claude Carter, who is the Deputy Auditor General, with us this morning. Ms. Oldford, if you would please.

MS. EILEEN LANNON OLDFORD: Good morning, thank you for the invitation to appear this morning, Mr. Chairman and representatives. I am going to take you through the process to demonstrate to you the results that have been involved with CBCEDA over the last five years. I think it is extremely important for you to also have the opportunity to understand that when we were set up, we had a multi-partite agreement with very specific deliverables in that contract and a very specific mandate.

Let me first go to the Strategic Economic Action Plan, the overall assessment of our action plan. There were 113 recommendations, 48 of the recommendations have been completed. The definition of completed is that partners came together or individual agencies that championed the recommendations put a proposal in, accessed the funds, and implemented the project, and the project was completed. Please, if I could just introduce that there were 2 more since the 48 had been reported that have been completed.

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On the second part, substantive action, the definition of substantive is that we would have come together in a partnership or CBCEDA may have championed the recommendation. There is a proposal developed and presented to funding bodies, and a project at this point in time may not have been initiated, it is still in discussion phases, but research, feasibility study, and project proposal would be in place.

Preliminary action is where various community groups or other partners would come to us, as well, with consideration on a recommendation. We would prepare a proposal and that is as far as it has gone, it hasn't been in, perhaps, the envelope of the agencies or government departments we are dealing with.

No action means exactly that. There are 12 recommendations out of the 101 that have had no action taken place. Reasons for that may have been the fact that, number one, there are no resources for that particular recommendation; it may not be in the strategic direction of other partners at this particular time and may evolve over a period of time.

Just to give you some examples, in partnership, the number of recommendations, the twinning of Highway No. 125, our Celtic International Festival, our multi-media industry sector, Waterfront Development, the Bayplex unit in Glace Bay. One of the things you have probably often heard in Cape Breton is that there is never good news coming out from Cape Breton, sometimes there is the challenge in a lot of the information that is reported. CBCEDA met with the editorial board of the Cape Breton Post and put a proposal to them to offer a full page each week in the Cape Breton Post, not where just CBCEDA could report information, but any entity in our community, private sector, community groups, agencies, or whatever. That is done 52 weeks out of the year, a full page.

Also, we had some others, the co-location of the municipal departments. In Louisbourg we have had the partnerships take place in waterfront development, in Glace Bay development as well; of course, a partnership that was formed and supported by the Cape Breton County Economic Development Authority, another entity, Silicon Island.

I want to take a look at our mandate. We have very specific areas that we deal with in our mandate. We are involved in community, private-public projects and initiatives. This would be a combination where CBCEDA actually manages some of those projects directly, or that we have community champions or private sector champions that we may facilitate in getting them together and they carry the project out.

Retirement Cape Breton. I wish I could sit here this morning and say that was our idea, but it was in the community for quite some time. It was a recommendation, a feasibility study had to be done on the initiative and proper research. CBCEDA did do the research and went to the community and said who would like to champion that. CBCEDA was asked if they would administrate the program, and it has been one very successful initiative I will share with you a little later on.

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As well, the film industry, we have a very specific role, with a number of partners in the film industry, and we will share that.

Business recruitment, again, a very succinct role with a number of partners. Back five to six years ago we did not have a succinct team that was prepared, briefed, knew their role specifically in business recruitment from financing, familiarization towards research. That now does exist in our community.

We play a support role in trade missions; marketing Cape Breton County for business purposes is one of our main drives as well, and of course strategic planning. We do have a responsibility to work with the eight communities within CBRM to help them build community capacity in planning for the future and dovetailing into other strategic directions that are set up.

Let's take a look at the community private-public projects initiatives. What has been the return on that investment? Well, CBCEDA, over a number of years, from its core budget, has invested over $90,000, and working with other people in the community, over 54 projects in its entirety that leveraged $12.169 million to the community. You would have a list of those projects that have been disseminated to you.

Also, the Retirement Cape Breton Program, these are the costs. This is an economic impact analysis that was done by a third party independent economist. On an operational basis for 340 individuals who have returned to our community, it cost $0.5 million, and it covers health costs, drug costs, and the actual administration of the program, which is around $399. We have no education costs, these people don't have children in the school system. The direct annual household expenditures was $2.7 million, based on the 340 that were returned. Annual household income, $1.5 million; GDP, $3.6 million. The revenues to the government, federal, provincial and municipal, as you can see on the screen there.

According to the input-output model of the economic model that the Province of Nova Scotia uses, this particular project generated job creation of 170 full-time jobs. The housing profile alone, these are a very unique market entity, the average age is 52, they are the go-goers in the retirement market. You have three levels, go-goers, go-slows, and no-gos. These individuals very succinctly told us exactly what they wanted if they returned to the area. They would build, purchase or rent accommodations. They have invested $11 million into the community, the 340 on the housing profile.

An incremental return that we weren't really focusing on at that time was that some of these retirees want to become entrepreneurs, and we do quite a bit of tracking on this program; 14 of them have become entrepreneurs and created an additional 32 jobs in the community. When we look at the profile, average age is 52, average retirement income per couple is $34,500 per year, their career background comes from banking, education, the military, the Civil Service, service industry sector, and policing.

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The recognition that this program has received has been on a national level. The Economic Developers Association of Canada, this program won the 1998 marketing award. There were about 324 to 328 entries across Canada for particular projects, and we received that marketing award. In 1999, the Royal Bank of Canada identified it as its program award as well. We are very pleased to share with you, we had a contract by September 2000 to bring back 340 of the retirees. We met our program requirements the year before the contract date.

The economic impact, we feel there is an opportunity. We have a database that we manage as well that has over 13,000 individual names, approximately. We know, because of the breakdown of how we track these individuals, exactly the year that they are deciding to retire. We know exactly what their needs are. So we know over the next few years, there is a probability of 500 of them returning to the community. We had our economists as well do just a projection on that: $3.8 million for household expenditure; household income of $2.2 million; GDP of $5.1 million; the revenue back to the government on the projected 500, federal taxes $282,000, provincial taxes $300,000, municipal taxes $236,000. Now the economic impact of attracting 500 would be 284 full time jobs. On the housing profile, as you can see, the same category exists, $15 million would be injected into the community.

One thing before we go on to the film industry, I just want to mention about the retirement program. Those that have returned to the Island also have formed an Ambassadors Association, and they often work with our staff and come in and speak to those who are potential to come back to the Island, sharing with them information with them that will help them make their decision. There are 38 retirement programs across Canada, and when you look at the competition that is out there, we are selling an Island. Most other people are selling a retirement village, but we are marketing and promoting an Island because that is what these people told us they would be attracted to.

On the film industry, CBCEDA was asked to get involved with this particular area by a number of entities in the community, the cultural sector and government agencies. We said, okay, we would certainly take that on. They wanted us to manage and oversee the project of building the Filmscape Studio. There was $2.150 million invested this project, and I can share with you that the project came in on budget and on time.

Also, through the initiatives of a number of partners, the Pit Pony series was in the community, it was a $12 million project, employing 200, 70 per cent Cape Bretoners, and $2.5 to $5 million expenditures, 50 per cent of that was left in the local community. We have an opportunity collectively with a number of partners with a very strong advisory board made up of producers, private sector individuals from the film industry, as well as representation from the cultural sector, CBCEDA, Nova Scotia Film Development Corporation, to market and promote Cape Breton Island for film and TV production in partnership. A marketing strategy has been developed, and there is a possibility of leveraging $400,000 over the next number of years to promote the industry; from CBCEDA's resources, we have contributed $185,000 to that overall marketing strategy, and that is going to be adopted.

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When we look at some of the productions that had taken place in Cape Breton over the last number of years - there is a list there for you, some of those are probably familiar, I am sure that you have watched some of them. The production statistics from the Nova Scotia Film Development Corporation, it is a $135 million industry. Six years ago it wasn't in the Province of Nova Scotia. Now as of March 31, 1999, 51 per cent of the productions were outside of Halifax, about 17. Eight of those productions took place in Cape Breton, and that is all across the Island, which injected $36.3 million into the economy, and again, on an economic model, 2,200 direct jobs were created in the Province of Nova Scotia.

One thing I should mention, our region, Cape Breton County is a geographic area that we are responsible for, but as a development agency, there are two on the Island. There is the Strait Highland which covers some of the other areas of Cape Breton Island. We partner on a number of initiatives where that is necessary, so we are trying to develop a collective approach for the Island of Cape Breton.

In business recruitment, over the last number of years, these are some of the businesses that we have been involved in. Our specific role is to provide the research information, the statistical information, host the business when it comes into the community, coordinate the businesses that would be applicable to that particular sector, take the individuals to the site, sit down with them and go through a presentation on Cape Breton County. So they really have an understanding, we do a follow-up with them, and we also offer job information fairs for them.

I am sure you are very much aware of the last announcement that was the EDS call centre. We just finished that job information fair. We had over 3,400 enquiries for the job information fair with around 3,100 showing up for the job information fair and dropping resumes off for this company to recruit. We do not do the recruitment. We do not do the interviewing of the individuals. What we do is create the environment a business can come in and do their process succinctly and efficiently, and we get on with business. They really understand the quality of the workforce we have, the loyalty of the workforce we have, and the competitive edge now in dealing with our particular region in the Province of Nova Scotia.

Trade missions. We have been involved in three to four trade missions, and what we do is really play a very distinct support role. One of the areas we are very focused on is Boston, that is mostly where our direction would be, in support with other partners. We would have visited Boston once as a management team, to get the lay of the land and know the procedure and briefing. From that point on we send the private sector, whom specific appointments are made for their benefit. We work in partnership with Nova Scotia Economic Development (ECBC), the Cape Breton Regional Municipality, and the private sector, beneficial to the export-ready business sector of our community. We have to make sure that the businesses are export ready, so we play that on the local end, along with our partners. In 1997, the Boston trade mission, there was $2.950 million in revenue generated from that. In

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February 1999, we had a collective RDA mission to Boston, and there was over $17.5 million in revenue. A local company in our area landed a sizeable contract and has the opportunity of eight other contracts.

Marketing Cape Breton County. As you probably know, concerning Cape Breton, it is a unique asset in the sense that you have an internal audience and you have an external audience, and to market them there are unique marketing techniques, because we have to keep an awareness in our community, we have to keep a support going for the initiatives that will be brought into our community or would be developed by the private sector internally. So, it is a two-prong approach we use. In our business recruitment campaigns, we do ads promoting succeeding Cape Breton, and we use testimonials from very well recognized people nationally or internationally, depending on the sector we are marketing to.

A special supplement through The Globe and Mail. This was a real coup for us. We could never afford to advertise in The Globe and Mail but, through our contacts and network with the Canadian Economic Developers Association, we were able to coat-tail and get a special insert in The Globe and Mail just on Cape Breton, back some time ago, for very little dollars.

Campaigns include testimonials from national and international business representatives. We also did a project. We became aware of the PEMD Project with Industry Canada. We took dollars that matched that with private sector people, individuals, and we accessed $50,000 to do a very succinct marketing to one of the knowledge-based sectors in the market place. We have also developed a business case for investment in a lower piece that also was a National Economic Developers Association of Canada award. It was the private sector that came in and really talked to us the language that is needed from business to business. This is the profile I think they need, Eileen, so they worked very diligently and a lot of the credit goes to their input. We do a one-team approach with partners; that is a very strong requirement with any business you are dealing with. They don't want to meet with 35 and 40 people, they want a point of contact and someone who is coordinating the process through, and CBCEDA provides that.

We also provide job information fairs. In development with HRDC, we are doing very important research at the moment and skills inventory for Cape Breton. If you have ever met with the Americans, who have great respect for and are very entrepreneurial, they find it very interesting when they will sit across the table from us and they will say, we need 500 employees, and we would be very satisfied, Ms. Oldford, if you could bring out 900 people that we could sort of do an analysis on. We tell them because we have a double-digit unemployment rate, that they will probably have 3,000 people come out to choose from, and highly skilled and educated.

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As well, you must recall that many times you have heard, everybody is getting education and trained in Cape Breton, everybody is on a training program over the last 10 years, and I think this is now paying off. When we do this research, you would be very impressed to see the results of the education levels and additional training the employed or underemployed have in Cape Breton, and that is a very great selling tool.

Also, we have developed our own local web site which is very useful in this type of marketing. I think the Cape Breton First Program is one of the projects, and this has a number of partners. This is an island-wide initiative; it is supported by government business and community. It was designed to convince consumers to think before they buy. I don't think you can say to a consumer you should buy in Cape Breton. We are saying to the private sector and the consumer when the quality, price and selection and service are equal, would you consider spending your dollar? This has been really embraced in Cape Breton First Program with the private sector investing well over $180,000 into this process. We encourage the consumers to purchase products at home and, as I mentioned to you the private sector committed to date $237,000.

[8:30 a.m.]

The Good News Project, I mentioned that to you earlier so I won't go on too much about that, but it does have a number of partners. The Sports Industry Sector, this is one we are extremely proud of. The Sports Industry Sector came to us, a committee of about 14 individuals from within Cape Breton County and they said, Eileen, I don't think the sports industry gets the recognition or the appreciation of the economic impact it has on the community, would CBCEDA help us to do some research of how we can approach that process and to promote Cape Breton County as a sport destination? So, when I had the first meeting, the big issue came up, well, we need an Olympic this, we need a national this and the first premise that we started out on is that we would not initiate any new infrastructure.

What we wanted to do to prove the economic impact of the Sports Industry Sector, we wanted a number of goals. One, to identify sports initiatives that have never taken place before in Cape Breton County or Cape Breton. We also wanted it to be geared to a time where we could build up the tourism season, trying to get that on a year-round operation, and I wanted to know what was the most challenging process the sports industry would have. We found that we have an abundant volunteer base, who are very well educated in this process, but do not have the capacity to do succinct bids and professional bids. We put our heads together and we hired an individual called a sports coordinator and we found that person in Cape Breton and we hired that individual and the total impact of events secured are $2.2 million; one international, two national and three regional and that was in a matter of six months.

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MR. CHAIRMAN: Before you go on to the next section, I wonder if you could indicate how much longer the presentation will be because I know that there are members who are also anxious to ask questions.

MS. OLDFORD: I think this is the last of it. In strategic planning, I mentioned to you about the communities that we work with. We are working with a number now to develop their strategic plan to build into CBCEDA, to build into the provincial and to build into the federal.

Through its programs, mandated roles and in a collective partnership approach, CBCEDA with its partners over the last five years has leveraged $32.5 million for Cape Breton and Cape Breton County.

Quickly, I will go through the evaluation process because you are probably wondering how are we evaluated. Well, we are required to do an independent overall evaluation of our program. We have done an evaluation of our strategic plan, we do a report card, an independent client survey is required, audited financial reports, staff-completed tracking reports weekly. We have a business plan that is required by all our partners on an annual basis, marketing plan and communications plan is in place and the independent audit annually.

What has changed over the last five years? The number of initiatives that have taken place that did not exist before, partnerships leveraging over $32 million for Cape Breton County, also major new businesses in Cape Breton County that were not there six years ago, infrastructure in Cape Breton County, Silicon Island, the expansion at UCCB, Filmscape, the Tech Enterprise Centre, Waterfront Development, twinning of Highway No. 125, all together in a partnership form that didn't exist before; programs, projects and initiatives, various numbers of them. That is what has changed over the last five to six years.

So, I will turn it back to Mr. Raymond Kavanaugh.

MR. CHAIRMAN: Thank you very much, Ms. Oldford.

MR. KAVANAUGH: As I indicated, we would go to Dr. Ken MacLeod and Ken would like to make a couple of remarks as one of the private sector members of our board.

MR. CHAIRMAN: Mr. MacLeod.

MR. KEN MACLEOD: I will keep my comments brief. I would like to look at two things. One is the impact of CBCEDA on Cape Breton Island which I think Eileen has summarized quite well and also as a private sector individual, I always want to look at what I think of as a return on investment for this type of entity and also as a taxpayer, I want to look at the accountability of a government-funded entity.

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First of all on the impact, as I said, Eileen summarized it quite well. You need to keep in mind, everything that Eileen listed there is done by a cadre of perhaps six people, which is quite phenomenal, I think.

If you look at what CBCEDA does, to me there are tangible impacts and intangible impacts. On the tangible side, CBCEDA is an implementer of major projects. As Eileen has pointed out, our major project would be the implementation of the strategic economic development plan and as you have seen, there are 101 of the 113 recommendations that have been initiated to some extent with an impact of $79 million of spending in Cape Breton County over the last five years. Other major projects, such as Filmscape, ITC call centre and Retirement Cape Breton again are examples of major projects where Eileen really has leveraged her staff and provided those projects in a very cost-effective manner.

The other, and I think more important role that CBCEDA has, other than initiating their own major project, is being an enabler or a quarterback, if you will, of other projects. In fact, the KPMG assessment report stated that CBCEDA was formed to provide a leadership role in coordinating economic development for Cape Breton County. I think that is a key statement that CBCEDA doesn't see itself as the enabler or the initiator, it is one piece of a very complex puzzle on Cape Breton Island. We work with our partners, we have leveraged a lot of dollars, as you have seen from what Eileen has there. Most of the projects, if you look at it, CBCEDA has been able to leverage $5.00, $6.00, $7.00 to $1.00 for CBCEDA input.

As part of an enabler, I will give you an example, a company called Helix, an animation company, visited Cape Breton about a year ago doing some prospecting throughout the Maritimes as to where they would establish their businesses. CBCEDA coordinated a reception of private sector and government folks for this business. The next day, they coordinated a tour of Silicon Island, they acted as a liaison between the company and folks in Silicon Island for a few weeks. Eventually, Helix indicated that they not only wanted to come to Cape Breton, but wanted to establish their business in Silicon Island. They have done so, CBCEDA handled the job fair and will be part of the announcement. Just a single example of the many, many times that CBCEDA has facilitated private sector initiatives on Cape Breton Island.

I think it is very important what CBCEDA does, are the intangible results. If you live in Cape Breton where the economy is on its knees, any positive influence that anybody can put out in Cape Breton Island is a wonderful thing. CBCEDA is constantly in the news with a positive message in Cape Breton Island and that is very important to the morale of Cape Bretoners.

With initiatives such as Think Cape Breton First, also constantly focusing on Cape Breton and what Cape Bretoners do. In terms of return on investment, you only have to look at all the projects that Eileen listed there to see that there is a tremendous amount of

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leveraging done by CBCEDA staff and using CBCEDA dollars and partner dollars, Eileen indicated up to $32 million over the last five years, that is a tremendous leverage based on their core funding.

I will also pass out a table that will show you that over the last two years the percentage of direct expenses force CBCEDA's staff in initiating these projects amounts to about 3.5 per cent of their core budget. A minuscule amount considering we are in Cape Breton and most of the decisions are made here in Halifax or in Ottawa so there is a fair amount of travel involved in doing that.

MR. CHAIRMAN: Maybe I could ask if those could be distributed, if you wouldn't mind just taking those and distributing those to members and if you would please, draw your comments, if you could, very quickly to a close so that we may get on to questioning.

MR. MACLEOD: I will close by speaking a little bit about accountability. You have two reports in your package, I think one is from KPMG who did an assessment of CBCEDA. They concluded that CBCEDA completed projects on time, on budget with a significant community impact and they won two national marketing awards along the way.

Another more telling report is that conducted by Icon Communications, which was a client survey. They did a random sample of 700 clients that CBCEDA has had over the years; 99 per cent of those clients rated CBCEDA as either excellent, which was 70 per cent; or good, 29 per cent on factors such as follow-up response time and staff professionalism. Most importantly, 98 per cent said they would recommend CBCEDA to other clients. As Murray indicated, our board is very representative, particularly of key sectors, such as IT and Tourism Cape Breton Island and are, of course, our key funding partners.

I think Eileen and her staff epitomize good communication. CBCEDA is about as accountable and transparent to the public as any organization I have been involved with, constantly producing report cards, talking about what has been accomplished, very open about everything. All tracking and reporting is reported to MLAs and MPs as well as a number of presentations over the years to all public constituencies.

MR. CHAIRMAN: Are you finished with that point because these reports are . . .

MR. MACLEOD: Yes, if I could just summarize that, in my opinion, CBCEDA is good value for taxpayers' dollars. It is run efficiently and effectively. It is very open and accountable. I think Eileen and her staff have done a wonderful job and are very community conscious. In my mind, CBCEDA is a key enabler of economic development on Cape Breton Island.

[Page 14]

MR. CHAIRMAN: Thank you very much, Dr. MacLeod. Now we will turn the floor over to questioning and maybe the first round, 15 or 20 minutes? (Interruption) Fifteen minutes for the first round, and we will start off with the Liberal caucus.

The honourable member for Cape Breton West.

MR. RUSSELL MACKINNON: Mr. Chairman, I would like to thank all the members for coming and for their presentation. I know Ken has done a lot of good work for Silicon Island and it is a real success story. I want to focus on this particular report, What Kind of Economy: Cape Breton County, by the Partnership Alliance. Perhaps if I could direct my questions to the chairman, on Page 17 of that report there is a recommendation to move the Marconi Campus from Grand Lake Road to downtown Sydney. Where would the money for that come from?

MR. KAVANAUGH: From my understanding, I am sort of feeling that the Partnership Alliance takes in a number of different partners and one of them actually is the Marconi Campus itself. My understanding is that the staff at Marconi Campus, which would be local, and the local principal, Mike Kelly, along with the provincial organizations have already opened up negotiations with both the provincial and federal governments with respect to going ahead to get funds for that program.

MR. MACKINNON: Is there any indication where those dollars would come from?

MR. KAVANAUGH: That is something I could not answer for you, Mr. MacKinnon. We are not privy to the negotiations. What you have here is a recommendation of the collective body of the Partnership Alliance saying that they think it would be in the best interests of Cape Breton County if indeed that was developed. Individual groups that have the leadership role to take in terms of trying to get funds go out and try to do that. For example, if it is a UCCB project, UCCB would lead the charge in terms of trying to get money. This one is a Marconi Campus project so they would lead that particular fight.

MR. MACKINNON: I am somewhat perplexed because I am given to understand that the monies for this particular initiative will come from the Devco fund, as it is sometimes referred to, the Devco Transitional Fund. Do any of you have any knowledge to that effect?

MR. KAVANAUGH: I have no idea where that is. As I said, we are not involved in those particular negotiations.

MR. MACKINNON: I am getting conflicting information on that. I am trying to figure out value for dollar because I spoke with provincial officials and they are given to understand the reason for the move of the Marconi Campus to downtown Sydney is because there is not enough space. In fact, I was advised of that less than a week ago. I spoke with education officials at Marconi Campus and they gave me a totally different story. So I am just

[Page 15]

curious as to the rationale for moving an educational institution which is in harmony with the university because it is an integrated process and why that recommendation would even surface and how much consultation really has taken place and what is the participation of the Partnership Alliance and CBCEDA?

MR. KAVANAUGH: From our perspective, I chair the Partnership Alliance. The mayor is actually the spokesman for it and CBCEDA basically acts as the secretariat for the Alliance because we do the day-to-day kind of work of organizing meetings, or doing the minutes, or doing all that kind of stuff. My personal opinion is that . . .

MR. MACKINNON: Wait now. If you chair the Partnership Alliance, you would have some indication at least of what the cost factor would be before such a recommendation would be included in your report, would you not?

MR. KAVANAUGH: The whole focus of this report, Mr. MacKinnon, what we brought together is a number of community entities that are identified in the report.

MR. MACKINNON: I know all that, but that is not my question. My question is, before such a recommendation would be included, would there not be some type of a cost analysis done?

MR. KAVANAUGH: Yes. My understanding is that the cost analysis was somewhere in the vicinity of $30 million.

MR. MACKINNON: Was there any consideration as to the benefit of moving that from Grand Lake Road to downtown Sydney versus the downside, the cost, either in terms of education, the cause and effect relationship with the university, and/or the financial costs?

MR. KAVANAUGH: It is certainly the view of the Partnership Alliance, obviously by the document, that they indeed think there is a tremendous economic impact, particularly for the downtown business area, if indeed they have the campus downtown. They are also looking at tremendous opportunities for expansion. They are saying that they have more than 800 people who they cannot accommodate who want to get into . . .

MR. MACKINNON: Mr. Kavanaugh, let's get right to the point. Marconi Campus is not there just to create a business entity. It is to educate and yourself, being an educator, would know that. The integrated process between Marconi Campus and the university I think works quite well. So I am somewhat perplexed on that. You say this is a recommendation from Marconi Campus so that would be included. I am just somewhat perplexed as to how such a recommendation - because $30 million is lot of money, and I would think that the downtown core, a revitalization program would be far more effective, you know, value for dollar than just simply spending tens of millions of dollars one year and then x number of years later come along and move that same educational institution to another part of town.

[Page 16]

To me, that is not value for dollar and what you are doing in effect is separating the two educational institutions for strategic business purposes rather than looking at the value for dollar and the value of the education aspect.

MR. KAVANAUGH: All I can tell you, Mr. MacKinnon, in terms of that is both the university and Marconi Campus think that it is to their benefit to be separated and I think you would have to talk to them. Perhaps Eileen or Ken could help out a little more in terms of your question.

MR. MACKINNON: Mr. Kavanaugh, you were chairman of the committee?

MR. KAVANAUGH: That is correct, sir.

MR. MACKINNON: You are sitting in two chairs here. You are sitting as chairman of CBCEDA and you are also sitting as chairman of the Partnership Alliance so there is, I would suggest, perhaps a bit of, I don't know if you would say conflict, but certainly in terms of evaluating from an arm's-length perspective, I would have some concern.

MR. KAVANAUGH: In what manner?

MR. MACKINNON: Well, you are saying that you did not know the cost of it or where the money was going to come from - you did not know where the money was going to come from - but you had no problem costing out $30 million; $30 million, whether it be municipal, provincial or federal, is a lot of money. If we are going to take that out of the Devco fund, which I am given to understand that is the suggestion, then what about the other industries? What about the resource industries in Cape Breton?

MR. KAVANAUGH: But you were not given that understanding by me, Mr. MacKinnon. I have no idea where it is coming from.

MR. MACKINNON: No, that is right, but I, as the Premier would say, had to ferret out the fact that even that type of information was floating around. With regard to the resource industry, I notice that there is no focus on the resource industry in Cape Breton. Is there any particular reason?

MS. OLDFORD: Perhaps I could comment. When the Strategic Economic Action Plan was developed in CBCEDA, their focus was to diversify the economy. In regard to the traditional industries that would be in the community, we certainly would act in any positive manner if there was a resurgence of their markets or things of that nature. Our focus was not to be in those particular areas, it was to diversify the economy and come up with initiatives that had been recommendations that came forward from over 270 individuals and 25 industry sectors in our community when the analysis was done.

[Page 17]

MR. MACKINNON: Thank you. I guess I want to follow on that vein, because in my own backyard, in the Town of Louisbourg, I didn't see anything in the report with regard to the resources, and we went through a rather difficult period, as you well know, closing four fish plants. I will be honest, it seemed like we were on our own, and now we see four fish plants are open again. But the bigger issue is, I think the single largest marketing tool we have in Cape Breton, in industrial Cape Breton from a tourism point of view, is the Fortress of Louisbourg.

MS. OLDFORD: Correct, sir.

MR. MACKINNON: As you probably recall, several weeks back, myself and Councillor Hansen from the regional municipality put forth that particular $14 million proposal. But I don't see anything in your presentation that focuses in any way with regard to the Fortress of Louisbourg. Is there any particular reason for that?

MS. OLDFORD: Yes, in our Strategic Economic Action Plan you will also see stated that the sole responsibility for marketing on tourism, which Fortress of Louisbourg would come under, was the responsibility of Enterprise Cape Breton Corporation. One of the things that CBCEDA and its board and the community very diligently and very strongly echoed to us is that we were not to be in duplication. ECBC and Tourism Cape Breton, in our opinion, market the largest reconstructed historical site in North America very well, so for us to duplicate that process, would really be a lack of attention to using resources properly, in our opinion. We had a very succinct marketing direction, and that was in the business area.

That doesn't preclude the fact that we support initiatives by Louisbourg. As a matter of fact, to give you a more recent example, is that really they will be the highlight to the marketing of the island for the film Input 2000 where there are over 1,200 people registered here now in Halifax to attend that. Really, the introduction to our island is the gates of the Fortress of Louisbourg.

MR. MACKINNON: I appreciate that.

MS. OLDFORD: But we are not specifically and directly involved.

MR. MACKINNON: Your concern about duplication in your presentation, I see a lot of other initiatives that would take place whether CBCEDA was involved or not. That is my analysis of it. Did CBCEDA participate in an economic impact analysis or an impact study with regard to the Donkin Mine?

MS. OLDFORD: Yes, we did.

MR. MACKINNON: How much did they put up for that?

[Page 18]

MR. KAVANAUGH: We were the applicant for funding for Donkin Resources.

MR. MACKINNON: I am given to understand it is $275,000?

MR. KAVANAUGH: I think it is more than that, Mr. MacKinnon, probably $400,000.

MR. MACKINNON: Okay, I guess my concern is why would we spend federal taxpayers dollars on an institution on a private company, that wasn't even in the chute for an offer to be able to buy the Donkin Mine? They were excluded from the process.

MR. KAVANAUGH: I think the funding you are referring to, Mr. MacKinnon, goes back a few years, much before there was any exclusion of Donkin Resources. CBCEDA acts as a proponent in the community on behalf of all kinds of groups. We have gone looking for funds for fisherman. We have gone looking for funds for Donkin Resources. We have gone looking for funds for . . .

MR. MACKINNON: I realize that.

MR. KAVANAUGH: It was just one more application that we assisted them with.

MR. MACKINNON: I would think some analysis, some general understanding that they were a serious contender for this, otherwise you have one wing of the federal government giving you more than let's say $300,000 to allow this company to prepare a proposal, and then the other wing of the federal government, through CBCEDA completely excluding them. To me that is not value for dollar. Given the fact there was an impact study already done on the Donkin Mines several years ago, because I attended the public meeting in Donkin myself.

MR. KAVANAUGH: If you want to be clear on our task, we were approached by Donkin Resources to help put together an application because we are quite good at doing it, and we have done it for all kinds of businesses, private sector and so on. They came and asked us to do that. The private sector was putting up $100,000. They were looking for $300,000 more. We helped them with all the technical aspects of putting together an application. If indeed you disagree that they should have received that money, I guess you have to disagree with the people who gave it to them.

MR. MACKINNON: I disagree with the fact that a study had already been completed, a completed economic analysis of it, and then we turn around and expend another $300,000-plus for a company that wasn't even included in the process.

[Page 19]

MR. KAVANAUGH: This was three years ago, Mr. MacKinnon. This company was not included in the process, it was put out about nine months ago. This particular project was three years old.

MR. MACKINNON: One other question I have. I notice you are involved with the film industry. The biggest complaint I am receiving is that the film industry has been excluded from this, and there is a lack of expertise at CBCEDA. Perhaps Ms. Oldford might be able to help me.

MR. KAVANAUGH: Maybe I can start for a minute and then Ms. Oldford . . .

MR. CHAIRMAN: Maybe we can get the answer briefly in this and come back on the next round, because the time has just about expired for the first round for the Liberal caucus. Give us a brief response.

MR. KAVANAUGH: Basically, what has occurred is that we put in an application for funding for marketing, and there is another group in the community that was looking for funds, and actually received a confirmation of the funding proposal, or an offer, last week. We have yet to even set up an advisory board.

MR. CHAIRMAN: Mr. Dexter.

MR. DARRELL DEXTER: Welcome to the committee this morning. I appreciate having you here. I would like to begin just by saying that I have a particular kind of bias in favour of economic development authorities and these organizations because for a couple years I chaired the Downtown Dartmouth Development Corporation and served on that board for a number of years. I know how difficult it is with small staff resources to do the things you want to do, and there are lots and lots of things that development agencies and boards can do if they have the resources, and often they don't.

But, I have to say that in the entire time that I served on that board and while I was president, I don't think I ever recall in that entire time, ever submitting an expense or requesting reimbursement; something I did as a private sector participant in the board of directors, I felt it was part of my commitment to the organization to pay my own way and bear my own expenses. Just recently you circulated this, the two year actuals for business and travel. By my calculations, over the last two years, you have spent roughly $4,300 a month on combined board and staff expenses. When you roll in the Filmscape expenses and Retirement Cape Breton expenses, it averages almost $6,000 a month. That level of expense, I would suggest, is considerable. I don't know that I have ever seen this anywhere before.

I would like to begin first - and these are just broad numbers, and I acknowledge that, I don't know what is behind them, and I think that is part of the problem - by saying that in this House, when we incur expenses as members, our obligation is to report them fully and

[Page 20]

to open them to public scrutiny. I would think we would demand no less from organizations which we contribute to. So I begin by asking if you would be prepared to submit the detail on these expenses, a detailed breakdown so we can have some understanding over and above the broad brush of just mileage, meals, flights, and accommodations, what those expenses actually are? That is my first question.

MR. KAVANAUGH: My understanding is that you have a document that Ken handed to you, and it talks about mileage, meals, accommodations, all that sort of thing, and it outlines to you what the total board expenditures were over two years in relation to the budgets that they are from and so on.

MR. DEXTER: Do you not have this document in front of you?

MR. KAVANAUGH: Yes, I have it here somewhere. That is what you are referring to, isn't it? So what you have in front of you is a full total of the expenses that have been incurred over the past two years, for example, by board and staff. You are indicating that you think those expenses are high.

[9:00 a.m.]

MR. DEXTER: No. My first question if I may, just to be very clear, what I am asking for is that you file in addition to this the detailed breakdown of these board-staff expenses. That is what we would have to do, and I am just asking you to do the same thing we would do.

MR. KAVANAUGH: I guess one of the things I would do based on your question is take that back to my own board and I think the RDA would have to deal with that provincially.

MR. DEXTER: But why, Mr. Kavanaugh? It is a very simple thing. You are receiving money from the province, among others.

MR. KAVANAUGH: No question.

MR. DEXTER: You are making expenditures, what appear to be considerable expenditures, in support of your staff and of your board?

MR. KAVANAUGH: That is correct.

MR. DEXTER: What I am asking for is a detailed breakdown of what those expenses are. That seems, to me, like a very reasonable request.

[Page 21]

MR. KAVANAUGH: It is. Of this development authority or of all development authorities in Nova Scotia?

MR. DEXTER: We are dealing with this one now. If we have the opportunity to deal with others, I would suggest it should be done for all development authorities, but you are here and I am asking you specifically.

MR. KAVANAUGH: I indicated to you I would take that back to my board. The practice in terms of all RDAs in Nova Scotia, my understanding is, and I could be wrong if there are some development authorities that do it differently, we turn in our financial statements as you have them, to all of the funding partners on an annual basis. That has been the procedure of every RDA in Nova Scotia.

MR. DEXTER: Mr. Kavanaugh, what we receive, of course, is your audited financial statements which do not provide the kind of breakdown or detail on things like board and staff expenses. I want to be really clear . . .

MR. KAVANAUGH: I have an expense policy here that I would be happy to hand out to you. I don't know if that is helpful to you.

MR. DEXTER: It may be and if you are prepared to distribute it, I would like to see it, but I guess what I am saying is, and I am not trying to be unfair to you, I am just saying these things raise a concern and I would just like to deal with it and put it away. If all the expenses are legitimate, no problem. So I don't see why the development authority would have a problem with filing a detailed breakdown?

MR. KAVANAUGH: I guess I will hand this out and see if this is helpful to you.

MR. DEXTER: I have not seen it, but even a policy document only gives you guidelines and what I want to know is what the detailed breakdown of the expenses are. My next question will be, perhaps you can tell us what it is that you did to incur, for example, almost $57,000 in board expenses over the last two years?

MR. KAVANAUGH: A great deal of our board expenses, for example, are because of travel and promotion. As far as we are concerned, most of the business decisions and government decisions are made both in Halifax and Ottawa. If you sit in Halifax or Dartmouth, you virtually run no expenses to do most of your business here. For example, both Eileen and I are in Halifax probably twice a month. We are in Ottawa probably twice a year. We travel with the province probably once a year at the invitation of the province. That is where the bulk of the expenses would occur and it would be in terms of us chasing money for particular projects, doing promotions that have been authorized by the board. That is where most of the cost would be.

[Page 22]

MR. DEXTER: Under this policy, for example, what it says is that board members receive $90 per day per . . .

MR. KAVANAUGH: You have two documents in front of you?


MR. KAVANAUGH: Do you have a one page or two.

MR. DEXTER: Maybe we can begin with the Note to File, Follow-up to Board Meeting of January 31, 1994.

MR. KAVANAUGH: I guess our board was initially set up in 1994. When the board was established, it was established by JOINTEX. The CBCEDA was comprised of all the mayors of all the municipalities and when CBCEDA was established, the one page you have in front of you outlines that all of the people who are on the CBCEDA Board receive $90 per meeting per business day. So if you had three different meetings on three days in a row, you would get three times $90 for that particular thing.

MR. DEXTER: What if you had three different meetings on the same day?

MR. KAVANAUGH: It would have to be different committees.

MR. DEXTER: Yes. Three different committees meeting the same day, you would get $270?

MR. KAVANAUGH: That was the JOINTEX policy prior to 1994. So if you actually were a JOINTEX member prior to 1994 and you had two meetings on a particular day, you would get $180 in meeting fees.

MR. DEXTER: Is this still the policy?

MR. KAVANAUGH: No. When CBCEDA was set up, it was established by JOINTEX. So what came in, and that is why you have a Note to File, is exactly what you see there. What was paid for every other committee was paid to CBCEDA board members, it was $90 per meeting. It was $80 for board members for meals. Others reps were $60 and then they would pay your accommodation and so on.

The new situation, once CBCEDA was established and signed a contract with government, you can see on the two-page one, we outline the current situation. After the four year multi-partite agreement, the principal statements that you see down below, the meeting per diem stipends were discontinued. So no longer is anybody receiving $90 a day. That is since 1994 when we were established. The meterage cost for less than five kilometres are not

[Page 23]

paid. The authority staff are not reimbursed for travel to and from their homes and so on. Payment of all expenses shall require the approval of two. That is very standard. In the conduct of business or travel all board members and staff shall only be compensated for per diem expenses or receipt of costs.

So I guess the most significant thing on the first page is that the per diem meeting fees were discontinued when we established CBCEDA, formally, about four or five years ago. The meterage rate we pay is 33 cents. You can see the meal rates there are all outlined; $22, $45 and $60, down from the $80 that it was and, again, without the meeting fees. Parking, flights and those kinds of things are all as per receipts. That is the way we operate today and that is the way we have operated since we were established in 1994. We are still operating under this particular policy.

MR. DEXTER: I just want to take a typical board of directors meeting, how many people did you say were on the board?


MR. DEXTER: So if there was a one day meeting held at your offices, then each one of those board members would receive the $45 meal reimbursement?

MR. KAVANAUGH: If you spent a full day and you were there from morning until evening, you would receive $45, that is correct. Sometimes we bring in lunches, as you people do and so on. If you do that, then you are not paid.

MR. DEXTER: So each meeting of your board of directors cost you about $500?

MR. KAVANAUGH: No, I would say the exact opposite, that most of our board of directors' meetings are not days when people are paid $45 because we are normally bringing in lunch and doing those kinds of things.

MR. DEXTER: I think what this underlines is the importance of you actually filing a detailed breakdown of those expenses because right now, as much as I would like to go through each of these lines, without actually knowing what is contained in the breakdown of the various lines, it is virtually impossible. It strikes me that whenever you are paying out some $6,000 a month in expenses, there is incumbent upon your organization a responsibility to account fully to the funding partners for the expenses that are being paid. I intend to pursue it further. I certainly request that you do go back to your board, that you request that this information be forwarded and again, I think it is only a reasonable request.

MR. CHAIRMAN: I believe there is an undertaking to go back to the board. I am wondering if there can be an indication as to when this committee may hear back from you regarding that request.

[Page 24]

MR. KAVANAUGH: Sure. What I would do is that we will be meeting in late May or early June and that will be one of the agenda items; I will ensure it is on the agenda.

MR. DEXTER: I guess the other thing, in just reviewing your audited statements I noticed on your revenue side the contribution from the private sector is listed as $6,937. By my calculations - and I don't know what deferred revenue from the prior year is, and that may include private sector contributions and I don't know that - from your overall budget that is something like a 1.46 per cent contribution from the private sector and I am just wondering what other effort . . .

MR. KAVANAUGH: I wonder if I could just get you to refer us to a page, so we can . . .

MR. DEXTER: It is on Page 4 of your, oh, this is for Retirement Cape Breton, I guess. This is just one sector and I note that there was in fact no line item at all in the overall budget for private sector contributions.

MS. OLDFORD: Perhaps I could respond to that question. As revenue coming in, private sector, if you will look at a project list that was given to you - it looks like this. I don't know how everyone's eyesight might be - it really shows the breakdown of the private sector as far as contribution to individual initiatives. In Cape Breton County, in our opinion, we don't have a private sector that can be comparable to some others across the Province of Nova Scotia. The private sector does not contribute funding to the core budget of CBCEDA. I guess the initiative that we took to include private sector is on individual initiatives. For example, in Retirement Cape Breton the private sector would contribute $50,000 to do a business development directory associated with Retirement Cape Breton; and with Think Cape Breton First over $270,000 would have been an input from the private sector.

I think it has a lot to do with the private sector approach to community economic development, they would like an exact return for their dollar. So when you look at this leverage sheet here, the dollars that they have committed have generated other dollars for projects to be carried out, but they do not make an individual contribution to the core budgets of CBCEDA; only on projects and initiatives on an individual basis. Does that clarify?

MR. CHAIRMAN: You will have to come back to that at the next round, if you wish to do so. We will turn now to the PC caucus and the member for Colchester-Musquodoboit Valley.

MR. BROOKE TAYLOR: I certainly would like to thank the witnesses, members of CBCEDA for coming in this morning. I would also like to commend CBCEDA for the job they are doing promoting and marketing Cape Breton. I know it must be quite difficult at times.

[Page 25]

MR. MACKINNON: Especially with a Tory Government.

MR. TAYLOR: I am getting some help from my friend for Cape Breton West, but it is not all that helpful, Mr. Chairman.

I was just curious. I see rent here - I trust it to be the consolidated statement on Page 3 of the information we have - that you are paying $51,000 per year, and I wonder if the chairman would disclose for the committee as to where your offices are located, approximately how many square feet you have, who you are renting from, and who the arrangement to rent was made with.

MR. KAVANAUGH: I don't know about the square footage, if I can do that for you; we would probably have to send you the square footage. We are at 338 Charlotte Street, and I think we are up to 3,500 square feet. Perhaps that is helpful. Our lease is with ECBC, Enterprise Cape Breton Corporation.

MR. TAYLOR: If I heard Mr. Kavanaugh right, you are with the Charlotte Street properties?

MR. KAVANAUGH: Yes, 338 Charlotte Street. Access Nova Scotia is in the building and . . .

MR. TAYLOR: How long have you been located there and who actually owns that property?

MR. KAVANAUGH: Mr. Friedman owns the property, we have been there for four or five years, I guess. We have been there since 1995, I believe.

MR. TAYLOR: Mr. Kavanaugh, if I might, could you tell the committee how long you have been chairman of that board and how you attained such a high profile position?

MR. KAVANAUGH: I have been chairman, when initially the board was established, I guess I go back to 1993. I was asked to be interim chairman of CBCEDA when JOINTEX set it up, so when the mayors had actually set the thing up I was the interim chair for a period of six months, or that sort of thing. At the end of that, the contract that came down with government, it was the minister responsible for ACOA who would then appoint the chairman. The minister responsible for ACOA at the time, Mr. Dingwall, simply appointed me to continue as the full-time chair and that went on until probably about six months ago because we had a five year contract.

Once the contract was finished, the board had made a determination that it might have been fine to set it up that way because it was a young child at the time, however the board should now take it over themselves. What occurred is that I stepped out of the chairman's

[Page 26]

position and because I was only appointed, when you step out of the position, I also stepped off the board. The membership then on the board was free to put anybody forward that they wanted. The board met and my name was the only name that came forward and I had the unanimous recommendation now to continue as chairman, I guess more as an elected official as opposed to being appointed four or five years ago.

MR. TAYLOR: That is fine, Mr. Kavanaugh, you were appointed by Mr. Dingwall. You were on an interim basis initially and then . . .

MR. KAVANAUGH: Appointed by JOINTEX, I guess, interim and then reconfirmed by Mr. Dingwall and then, now I am elected by the board itself.

MR. TAYLOR: Mr. Kavanaugh, I am curious about the composition of your board. Mr. Johnston, I understand is the municipal representative on the board. Are you not also, are you a Cape Breton County councillor?


MR. TAYLOR: When I look through the consolidated statement of operations I see under expenditures, salaries of $123,717 and basically, there are expenditures here for travel, boarding, et cetera. What portion of expenditures would be attributed to you as chairman of the board?

MR. KAVANAUGH: Are you in the salary column?

MR. TAYLOR: Actually, I am under expenditures and the salaries are represented first.

MR. KAVANAUGH: As I indicated a little bit earlier there had been a $90 per diem when JOINTEX was running CBCEDA or had established it, but that has been eliminated. No boards are paid anything.

MR. TAYLOR: I understand that Mr. Kavanaugh, but I am wondering what - do you receive a salary or do you claim expenses with the board?

MR. KAVANAUGH: I claim expenses, absolutely. I don't receive any salary or any honorarium or any fee, no. I receive expenses according to the documents that you would have there. I would say in terms of meals and meterage, I am somewhere in the vicinity of probably $10,000 a year.

MR. TAYLOR: You indicated to one of the committee members that you are also an educator. Is that your full-time job?

[Page 27]

MR. KAVANAUGH: That is my full-time job, yes.

MR. TAYLOR: If I might, Mr. Chairman, could I ask Mr. Kavanaugh where he teaches and what type of arrangement he has with the school board?

MR. KAVANAUGH: Yes, I teach at Breton Education Centre and when CBCEDA came together, the board had approached the school board to see if they would cooperate in terms of being a partner with us and if the chairman was one of their employees, they would cooperate in terms of giving time to help out with economic development. That is exactly the way it works.

MR. TAYLOR: So you are actually with the Cape Breton-Victoria Regional School Board system?


MR. TAYLOR: How much of your time can you be away from your job as a teacher to serve on the board?

MR. KAVANAUGH: I could be away up to 50 per cent, and the school board has come on as one of the partners and has indicated that is their contribution to help out in terms of economic development in Cape Breton County.

MR. TAYLOR: So you can be away from your full-time teaching job 50 per cent of the time and obviously it doesn't impact your salary in any way, shape or form? You continue to be paid by the school board?

MR. KAVANAUGH: That is correct.

MR. TAYLOR: I am not sure, Mr. Chairman, how many arrangements we have like that across the province, but it certainly, if I might, seems to be different from many I am aware of, Mr. Kavanaugh. I say that with all respect. Who is the superintendent of the school board? What I am trying to find out is, who actually were the partners that helped formulate such an agreement? Who were the people behind that? You say the school board agreed, but somebody had to sit down and make up that type of agreement.

MR. KAVANAUGH: Yes, as I said, the primary proponent was the board itself and they had requested that I try to put something in that I would be available to serve as chair. I looked for cooperation from the board, and they were more than helpful.

MR. TAYLOR: So, you took this to a full board. Were the elected board members present or was it just staff, or the superintendent?

[Page 28]

MR. KAVANAUGH: I dealt with the Minister of Education at the time. Then I dealt with the superintendent and they had no difficulty whatsoever. In fact, my board was very pleased that the school board would become a partner in terms of economic development and help out in that manner.

MR. TAYLOR: I can appreciate that they would. So you dealt with the Minister of Education at that time and the superintendent. Who was the Minister of Education at the time and the superintendent of the board?

MR. KAVANAUGH: I would have to see if it was the Minister of Education or the Minister of Municipal Affairs. I would have to go back and actually look at it. I am sorry, I think we might have had two agreements with the school board. The last agreement was an agreement between the Minister of Economic Development, who at the time was Manning MacDonald, and the school board and our board.

MR. TAYLOR: Again, Mr. Chairman, and I don't mean to be picky, but I would like to be a little bit specific and try to get an understanding. Was it the full board? Were the elected board members present? Was staff? Was the executive of the school board? Was it the superintendent? Who actually authorized such an agreement on behalf of the Cape Breton-Victoria Regional School Board?

MR. KAVANAUGH: My understanding is that the assistant superintendent and the superintendent are the people I met with. This is not unusual. For example, they have people off helping out at the university. They have people doing a number of different secondments across various sectors. We approached them to see if they would help out in terms of economic development. It was simply one more situation, I think, where they were partnering with a number of different entities in the community, and we were one of them.

MR. TAYLOR: Mr. Chairman, I guess I am led to believe, and perhaps the committee, that Mr. Kavanaugh is permitted to be away from his full-time teaching job 50 per cent of the time. That has been authorized by people within the school board. We are not sure exactly who, but it was authorized by the Economic Development Minister of the day, Manning MacDonald. I, quite frankly, and with all respect, would have to question as to how many similar arrangements we have across this province with school boards because, Mr. Kavanaugh, I am certain you do an excellent job with the board, but I guess what I would question is, while you are away up to 50 per cent of the time - we are talking about value for dollar - the Province of Nova Scotia would have to pay a substitute teacher. I think that would be the case would it not?

MR. KAVANAUGH: The school board is paying the substitute teacher and has the right to request that the substitute costs could be picked up by CBCEDA. If that was the case, we would actually put it in as an administrative charge.

[Page 29]

MR. TAYLOR: I find that very interesting, Mr. Chairman. Perhaps when we are going through the summation and wrap-up, I might be prepared to ask this committee to consider a recommendation, if its the feeling of the committee.

Just a couple other questions here regarding the consolidated Statements of Operations. Under Expenditures on Page 3, Salaries, $123,717; under that Travel, Conference, and Seminars shows for the fiscal year 1998-99, $24,670; right under that Board, $30,000. When we look at the Statement of Operations for the retirement project and for the filmscape project, if you do the rough math, Salaries and Benefits for the retirement project add up to $113,237; and on the Filmscape Sound Stage relative to Travel, it is $4,662. I am just wondering, a few thousand dollars, after you do the math, are missing. Is most of the travel attributed to those two particular activities that the board carries out?

MR. KAVANAUGH: I think Ms. Oldford would be able to give you a little more detail than me.

MS. OLDFORD: On Page 3, Salaries, or core staff, are three of the salaries. There are six core staff with CBCEDA, three are applicable to CBCEDA where you see the $123,717. Also included would be our contribution for employment for students. If we do a project throughout the year with students and as well if there would be any temporary employment, we would have to call somebody in every now and then when we are doing other functions. When we come down to Travel, Conference, and Seminars, $24,670 under 1998-99, that is applicable to the staff - that is their travel conferences they would attend, or seminars - and Board is expenses incurred by the entire board that is applicable to the board of CBCEDA.

MR. TAYLOR: Excuse me. Is there any breakdown of those expenses to the board that could be made available for committee members?

MS. OLDFORD: I think that would be the same request that Mr. Dexter made.

MR. TAYLOR: Oh, yes, that's right.

MS. OLDFORD: Would you like me to continue in the other area as well?

MR. TAYLOR: Is there time, Mr. Chairman?

MR. CHAIRMAN: You have about 50 seconds.

MS. OLDFORD: In reference to the Statement of Operations for Retirement Cape Breton, when we refer to Salaries and Benefits, that again is core staff. There are three specific staff. Sometimes we hire students with research for Retirement Cape Breton or temporary staff to cover some initiatives. I believe that was your question on that particular

[Page 30]

issue. Then on Filmscape Sound Stage, the Wages is for one individual we have employed by the Sound Stage, and the Travel is applicable between myself and that individual. Usually in our process when we do an analysis with our auditors, it is usually, one-third/one-third/one-third if we are dealing with travelling, because we are travelling on a lot of these core issues.

MR. CHAIRMAN: Thank you. Your time has expired. You can come back to that on your next round. The Liberal caucus.

MR. MACKINNON: Mr. Chairman, I don't want to get into some of the questions that followed my initial questions, but the one question I do have is, who does CBCEDA report to?

MS. OLDFORD: Perhaps I can respond to that question, Mr. MacKinnon. First of all, the core staff respond to the board and the chair. The entire organization is . . .

MR. MACKINNON: Who does the board report to?

MS. OLDFORD: The Province of Nova Scotia does the administration for regional development agencies, but we are also accountable to our other funding agencies, which are ECBC and CBRM community services. We would do over the run of a year probably two formal presentations to those bodies.

MR. MACKINNON: So, do you report on a regular basis? CBRM has an economic development committee, I believe.

MS. OLDFORD: That is correct.

MR. MACKINNON: Does CBCEDA report to the economic development committee, or does it report to the two representatives on the board from CBRM?

MS. OLDFORD: Full council.

MR. MACKINNON: I am rather perplexed because I would say about five weeks ago - and I have a copy of it on file here - I made a request to CBRM for some information regarding CEDA. They advised me in writing that CBCEDA does not report to the CBRM. I raise that so that our municipal representative here on the committee will take notice that I received that in writing from Mr. White, employee of the CBRM, who is responsible for that. I want to leave that, because obviously there is a lack of communication somewhere when we request basic information and we are denied that line of accountability. I really think there is a problem there.

[Page 31]

[9:30 a.m.]

I want to go back to this partnership alliance. To Mr. Kavanaugh, what was the purpose of carrying this out? In a nutshell, without getting into a long dissertation, what essentially was the incentive to form this partnership and prepare this study?

MR. KAVANAUGH: The partnership alliance came as a result of, from our view, both the provincial and federal governments saying there are too many voices speaking for Cape Breton County. We were advised by Premier Hamm and also advised by Senator Boudreau that if we wanted to have a better response from government, in terms of doing something with the economy, they shouldn't be hearing five or six or eight or ten different messages. From that particular type of commentary, the partnership alliance was established. On Page 1, it indicates who is on it, but I am sure you know, everybody from HRDC to the Industrial Board of Trade and so on.

MR. MACKINNON: Was it in any way connected with the fact that the coal industry was in a downturn, the privatization, and the federal and provincial governments were working in partnership to create a fund, and they didn't want to just disburse those dollars out of hand on a first-come-first-served basis but rather in a coordinated and logical fashion that would have maximum impact, economically and socially?

MR. KAVANAUGH: I guess my personal view of that is that certainly was part of it, no question about it. As you know, Mr. MacKinnon, not just the traditional industries but the whole economy is in trouble. We basically responded that we should indeed have a collective voice, and this is the most collective voice, I think, to come out of Cape Breton County in many years, at least we hope it is.

MR. MACKINNON: I am somewhat interested in that response, because if that is the case, then certainly the issue of going back with the Marconi Campus, then obviously there must have been some discussion or at least there must have been some tacit knowledge that the individuals who sat on this committee would be able to access this $80 million fund. Am I not correct on that?

MR. KAVANAUGH: I don't think anybody on the partnership alliance at all thinks that we have any inside track in terms of that fund, I certainly don't think so. I would think that they probably think they have a crack at it if they can make a good business case, the same as any other business or whatever. That is the only response I can give you.

MR. MACKINNON: I will be honest, that just doesn't seem to gel with the whole thought process. I really appreciate the power point presentation, it is good, there were a lot of good things done in Cape Breton, but I am just not getting a comfort level as to what is going on behind the scenes, if that is the case, with regard to this particular report, and how this $80 million is going to be disbursed. I am going to leave it at that for now, because I

[Page 32]

wouldn't think that moving educational institutions around for the purpose of economic development is good value for dollar. When I am told that, provincially, the reason for moving is because there is not enough space, and then I go to the facility and I find out that that is not the rationale at all, things are just not adding up. Nobody seems to be able to focus on what is happening with this $80 million. There is a lot of power talk going around the issue.

I will be honest, I had a pretty good comfort level after listening to the presentation, but then after listening to the questions, when you get down to basic information about expenses, and you can't even provide that information, it raises concern. One of the final recommendations is maybe not with the process but the actual partners that would be recommended as being the chief lead agents for this type of economic renewal process. We have had studies upon studies in Cape Breton, the last thing we need is any more.

I want to focus on the industrial parks, marketing and promotion, and that particular section of your item. There is $400,000 set aside. CBRM raised objection to the privatization of Sydport Industrial Park. You are Chairman of CBCEDA, and I am just wondering, at any point in time did CBCEDA raise any concerns about that particular issue?

MR. KAVANAUGH: All I can indicate to you on that is, no, CBCEDA did not. Myself as an individual councillor, I thought the privatization was the best option in terms of getting the parks going. In the early stages, I was obviously outvoted because the council thought that the privatization was not a good thing, however, now that privatization has gone ahead, council, as matter of fact, has publicly indicated to the Laurentian Group they would do everything they could to help them.

MR. MACKINNON: CBCEDA didn't take a position on it at all?

MR. KAVANAUGH: We weren't asked to take a position as such.

MR. MACKINNON: You only participate if you are asked?

MR. KAVANAUGH: Yes. Nobody asked us if we were in favour or not in favour of privatization of the parks. CBCEDA had no part in that at all.

MR. MACKINNON: Is that the purpose of CBCEDA, to try to consolidate its mandate into being the lead economic agency in Cape Breton so that issues such as the Sydport Industrial Park would have to be vetted through CBCEDA before it would become . . .

MR. KAVANAUGH: It wouldn't have to be vetted through us at all, we are not attempting to try to consolidate. We are the RDA for Cape Breton County; we are indeed the economic development instrument, and the provincial government recognizes that.

[Page 33]

MR. MACKINNON: On this partnership alliance, assuming that $30 million would go to the Marconi Campus, if that was the intent, was there any other consideration given in the preparation of this report as to what dollar value would be attached out of this $80 million fund?

MR. KAVANAUGH: I indicated to you earlier, Mr. MacKinnon, there was no discussion, to my knowledge, in the partnership alliance as to who was going to get any money out of the $80 million. I was certainly not a party to that discussion. What has been recommended in this document is going to come out of the $80 million; I think what is recommended in this document is going to take a heck of a lot more than $80 million, in order to implement.

MR. CHAIRMAN: Your time has expired. Mr. Dexter.

MR. DEXTER: I am going to jump around a little bit. There has been some discussion on the rent of your premises. My question is, was the contract for your office space tendered?

MS. OLDFORD: I will answer to that process. We were only an individual with a number of probably four other processes who would have been asked to relocate, because this was a recommendation in the Strategic Economic Action Plan that a number of agencies co-locate together, a recommendation that was supported by the community, by the number of signature partners to the strategic plan, and by the industry sectors. That was led, to my understanding, between the province and ECBC.

MR. DEXTER: Whose recommendation was it?

MS. OLDFORD: It would have come out of the Strategic Economic Action Plan - which had a number of focus groups, probably over 20-some focus groups which compose probably over 200-some people in the community, plus the 25 industry sectors - when we were looking at the bigger picture in the community that economic development entities, the Canada-Nova Scotia Service Centre, provincial representation, NECB representation, come together in a one-stop shop area.

MR. DEXTER: How was that site selected?

MS. OLDFORD: I was not involved in that process, sir.

MR. DEXTER: Do you know what you are paying per square foot?

MS. OLDFORD: I believe the last calculation that we did, because there are two areas - there is the rent and there is operational costs - I would say it would be in the vicinity approximately between $9.00 and $12 a square foot for our section, but I will verify that for you.

[Page 34]

MR. DEXTER: Would you?


MR. DEXTER: That is an undertaking I understand.

Mr. Kavanaugh, you pointed out the policy with respect to the travelling expense stipend has changed. When was JOINTEX originally set up?

MR. KAVANAUGH: JOINTEX existed for many years before I got into municipal politics and I am in it 10 years, so I am not sure how far back it goes.

MR. DEXTER: Okay. When did you become the chair of the board?

MR. KAVANAUGH: That would be, in 1993 I think is when the JOINTEX established an interim CBCEDA Board and all the mayors of the different communities were on the board. I was a mayor at the time, so that is how I ended up on the board; then I was asked if I would become the interim chair as I indicated earlier.

MR. DEXTER: Again, who asked you to become the interim chair?

MR. KAVANAUGH: The eight mayors, or the other seven I guess.

MR. DEXTER: So for a couple of years you would have received expense reimbursement under this schedule?

MR. KAVANAUGH: I don't think it was a year. I would have to go back, but I mean . . .

MR. DEXTER: This change took place, as I understand it, in June 1995?

[9:42 a.m. Mr. David Morse took the Chair.]

MR. KAVANAUGH: Yes, if that is the date that is on it, yes, that is when the thing would have . . .

MR. DEXTER: So you went in in 1993. Then the balance of 1993, 1994, and one-half of 1995, you would have received compensation under this schedule?

MR. KAVANAUGH: I don't think it would be anything like that time period, but we can go back and find that out for you, too.

[Page 35]

MR. DEXTER: I notice that one of the things that is indicated here is hospitality costs that have to be pre-authorized, and I was wondering if you could give me some examples of actual hospitality costs that would have been incurred and reimbursed.

MR. KAVANAUGH: The primary use of those types of funds is when we would have somebody in from one of the companies. We very often, for example, will host dinners, take them around here or there, do anything like that if the EDS people were in town. We have a very succinct type of process; for example, if the province is bringing somebody into the community, they contact us, and what we do is already laid out. We do everything from picking them up at the airport to taking them everywhere they are going to go, putting on a dinner for business people and bringing local business people in to meet them, that sort of thing, yes.

MR. DEXTER: This is a completely different subject now. As I said, I am jumping around. The interaction between ACOA and CBCEDA, I assume, is pretty close.

MR. KAVANAUGH: The interaction between ACOA and CBCEDA?

MR. DEXTER: Yes. Ross Kennedy and other economic development people are on, is Mr. Kennedy . . .

MR. KAVANAUGH: He is on that board.

MR. DEXTER: Is he provincial or federal?

MR. KAVANAUGH: He is provincial.

MR. DEXTER: Provincial, okay. Is there an ACOA representative?

MR. KAVANAUGH: Enterprise Cape Breton.

MS. OLDFORD: Enterprise Cape Breton delivers ACOA programs in Cape Breton and Mulgrave, so they would be the ACOA representation in the area on our board but we also, because we report on a provincial basis to the Province of Nova Scotia, have a lot of involvement with Mr. Malcolm, who is a representative of ACOA out of Halifax, here as well.

MR. DEXTER: The MacNeil's Cove project, which has come up time and time again as an example of an economic development project in Cape Breton, are you aware of the project?

MS. OLDFORD: No, I am not.

[Page 36]

MR. DEXTER: As you may know, MacNeil's Cove was before this committee some weeks ago. I don't know if you . . .

MS. OLDFORD: Is that Cape Breton County?

MR. DEXTER: The boardwalk project.

MS. OLDFORD: Bras d'Or?


MS. OLDFORD: Yes, now I know the project you are referring to, yes. We were not involved in that project.

MR. DEXTER: Okay, would you have been told about it and asked your advice on it or anything?

MS. OLDFORD: I don't think we had any involvement in that particular project, if it is the one that has been receiving some interest in the newspapers for a while. We have done projects in that area, but not the waterfront development one I believe you are referring to, but I will clarify that if you could give me a specific contact, just to be sure.

MR. DEXTER: I was just interested to see what kind of a vetting process was in place for projects like that one. Apparently it did not come to you for your advice?

MS. OLDFORD: It did not come to ours, no.

MR. DEXTER: The other question I had, and very briefly, is on the retirement project. Do you know how many of those people you are attracting come from outside of Nova Scotia and how many come from other parts of Nova Scotia?

MS. OLDFORD: Yes, I do have a breakdown of that for you. The majority of our market is from southern Ontario. About 63 per cent to 67 per cent of our market has been identified in that area. To date we reported on 340. That was the contract requirement. Since that time 410 have returned and I will give you an example: 236 of those have come from Ontario; 21 from Quebec; 5 from P.E.I.; 30 from Alberta; 13 from New Brunswick; 16 from British Columbia; Newfoundland, 9; Saskatchewan, 2; Elliot Lake, 4; Annapolis Valley, 8; the United States, 21; Halifax and area, 45.

MR. DEXTER: I think my colleague has a question.

MR. CHAIRMAN: It is going to pass over to the member for Sackville-Cobequid for the NDP.

[Page 37]

MR. JOHN HOLM: Mr. Chairman, just briefly because Dr. MacLeod has not had an opportunity to answer any questions, and you are a member of the board, private sector, I wonder if you could tell us what business or businesses you, yourself, are involved in?

MR. MACLEOD: I have been involved in three main businesses in Cape Breton: MacKenzie College which is a multi-media training firm, the Centre for Distance Education, Silicon Island, and over the past year and one-half we have merged Silicon Island Inc. and the Centre for Distance Education with Knowledge House Inc. which is based here in Halifax.

MR. HOLM: How were you chosen or selected to be the representative on the board?

MR. MACLEOD: Good question. I believe I was invited to be a member. That was three years ago or so.

MS. OLDFORD: Perhaps I could clarify the background. The strategic plan had been divided into particular sectors in the strategic direction, knowledge-based industries, the tourism sector, aquaculture sector and so on. It was required in our contract to have a representation from that particular area, but there are five positions on the board that are publicly advertised for by application in the Cape Breton Post, but it was necessary to have . . .

MR. HOLM: But who actually makes the appointment?

MS. OLDFORD: The board.

MR. HOLM: Okay, just one last question, you know, I have no idea how the policies are set up, but business persons, whether yourself, or any individual member of the board, if they are involved in business, may wish to make applications to get financial assistance and so on and that is what the board does to try to assist. What terms of reference, what policies are in place to prevent possible conflicts?

MR. CHAIRMAN: Very quickly, please.

MR. KAVANAUGH: Mr. Chairman, if indeed that occurs, nobody who is putting that sort of proposal forward would be able to vote on that particular issue. That would not be possible. So if somebody on the board, for example, was involved in a business and that business was seeking funds and coming through CBCEDA, that would not occur. The other thing is that normally CBCEDA does not - we are not a lender. Some of the RDAs I think are more into business development than we are. We are heavily into marketing and promotions. So it does not have the same application that it might have in some areas.

[Mr. John Holm resumed the Chair.]

[Page 38]

MR. CHAIRMAN: Thank you very much. We will turn it over to the PC caucus. Mr. Taylor.

MR. TAYLOR: Mr. Chairman, again I want to preface my comments by saying that I am certainly impressed with the work that the CBCEDA group does. If you look at the two year actuals, the statement that was passed out, we understand that the authority receives through core funding a total of over $4 million and, again, I don't want to be picky, but I have to go back to this agreement that Mr. Kavanaugh has with the Cape Breton-Victoria Regional School Board. The board itself realizes, based on their own figures, over $4 million. I believe that the school board, in this case the Cape Breton-Victoria Regional School Board shouldn't have entered into an arrangement whereby, Mr. Kavanaugh, quite frankly, would take 50 per cent, half of your teaching time away from the classroom to serve on the board. Again, I am sure that arrangement was perhaps made with the interests of the board at the forefront, but as I understand it from Mr. Kavanaugh this morning, that deal was arranged and consummated by the former Minister of Economic Development and Tourism, Manning MacDonald, and perhaps the superintendent or the assistant superintendent of the Cape Breton-Victoria Regional School Board. I, for one . . .

MR. KAVANAUGH: I wouldn't say that statement is correct. The former Minister of Economic Development in his capacity as Minister of Economic Development made that request from conversations I had with him. I don't think the Minister of Economic Development could consummate such a deal. The deal was agreed to or consummated between myself and the senior management of the board.

MR. TAYLOR: Well, perhaps then, Mr. Chairman, in that context, because I firmly believe such an agreement is outside of the Cape Breton-Victoria Regional School Board's or any school board's jurisdiction. I don't know if such a practice is widespread, this may be one of a kind. Again, in that context, I would ask that you as chairman of this committee write and ask the Minister of Education to look into this matter because it does seem to be highly inappropriate and probably outside the school board's mandate. I certainly know it would have been outside of Manning MacDonald's mandate. Mr. Chairman, I don't know if you require that in the form of a motion?

MR. CHAIRMAN: I think before I, as Chairman, would act on anything like that, I would want to be acting only in accordance with the wishes of the committee as a whole. So if a motion is put forward, I am at the discretion of the committee and will follow the committee's instructions. So, if you are making a motion and that is voted upon by the majority of members, then it will be acted upon.

MR. TAYLOR: Mr. Chairman, I would make a motion that you write and ask the Minister of Education to look into this matter. The matter is the agreement that Mr. Kavanaugh, Chairman of the Cape Breton County Economic Development Authority has with

[Page 39]

the Cape Breton-Victoria Regional School Board, and I would like you to do that at your earliest convenience.

MR. CHAIRMAN: Is the request understood by all members of the committee? Mr. Hendsbee.

MR. DAVID HENDSBEE: I just want to make sure it is also understood to review not just this situation, but if there are other matters or other similar arrangements across the province in other RDAs. I don't think it should be looked at in isolation, see if it is a broad provincial policy, or is this an exception to the rule.

MR. CHAIRMAN: Okay, so not only to ask the Minister of Education to report on the appropriateness of the arrangement with Mr. Kavanaugh, but find out if there is a provincial policy that deals with that. It may also be that the local school boards do have certain powers to make agreements. If that is understood by the committee members, I will call for a vote.

Would all those in favour of the motion please say Aye. Contrary minded, Nay.

The motion is carried.

A letter will be drafted and a copy provided to all committee members, and out of courtesy, certainly to Mr. Kavanaugh as well.

Are there any other questions? Mr. Hendsbee.

MR. HENDSBEE: I also have the unique situation of being an RDA chairman so I know what the CBCEDA is going through with regard to a lot of the things and initiatives they are trying to do in the Cape Breton region. In regard to the impending provincial evaluation process that is going down for all the RDAs, how do you anticipate this to be done in regard to the RDAs across the province? Also I would like your opinion on what the province should be doing in devolutioning of certain authorities from the Economic Development Department to the RDAs?

MR. KAVANAUGH: That probably could best be answered by Eileen. I am doing some work with ACOA in terms of board training for other boards in the province, but Eileen is actually the chair of the RDA Association of Nova Scotia.

MS. OLDFORD: One of the requirements is accountability of the regional development agencies. About three years ago, CBCEDA put a request in to the province and its partners, that an evaluation should take place on the entire regional development agency programs for the province of Nova Scotia. CBCEDA acted as the proponent working with representatives across the province, and there is an evaluation program done on the 13 RDAs.

[Page 40]

One of the RDAs is not a member of our association, and that is the Greater Halifax Partnership. On the process of evaluation, there are very stringent rules required by all our partners. We have to have an annual business plan, marketing plan, communications plan. Those have been all done by the 13 RDAs for 2000-01. As well, there has to be audited statements each year presented to the minister by July 1st. There is also to be conducted independent third-party client evaluations and the overall individual RDA entity itself in the community. We also do tracking reports and are required to do quarterly reports to the province who acts as the administrator on behalf of the other partners involved.

I believe the second part of your question, and please clarify for me if I haven't interpreted correctly, is you are asking me what else the province can do? I think the province as one of our partners certainly should have major contracts, multi-partied agreements looked into for each of the RDAs. I think out of respect for the regional development authorities, they are very reflective and their processes are applicable to the geographic and economic environment they represent. For instance, in Cape Breton, we do not do financing of projects. We don't do loans and things of that nature because there are an adequate number of entities in our community addressing that.

I know there is an overview going on now within Economic Development: what should be transferred to RDAs in that process. I will only speak for our own RDA. I do not wish to administer government programs for loans and things of that nature. That, I believe, is not what is needed in our community because we have representation doing that. However, I would qualify the statement by saying that RDAs with feasible ideas, demonstrated economic impact, should have an opportunity to access those dollars to generate economic impact in the community. That would be our interest.

MR. HENDSBEE: My last question would be, in regard to board representation, do you think there will be any movement afoot from the RDAs across the province - I know we did it here in Halifax - to remove the municipal politicians from the boards and have more community representation from grass-roots organizations?

MS. OLDFORD: I think that would be applicable to the contract requirements that we engage in signing, representation of the funding partners. I think we need a balance of representation in our boards because the resources and experience is very important for guidance to the staff to know what they can access, what is on people's agendas or strategic directions, so I would probably support a balance of representation. I am okay with political entities and their representation, as long as there are proper guidelines for that.

MR. CHAIRMAN: Thank you very much. On behalf of the committee, I would certainly like to extend our appreciation to all of our guests today. Today certainly has been very informative and lively. There have been a number of undertakings for information to be provided and also be going back to the board to seek some information. We look forward to

[Page 41]

hearing back hopefully by early in June at the latest is good. Before we adjourn, there are a few other matters that the committee really needs to address briefly.

MR. DEXTER: Mr. Chairman, inasmuch as we have heard today and had the undertakings made with respect to this RDA, I don't think from a governmental perspective, we have to accept the position that we are dependent on the boards of RDAs to decide whether or not they are going to present certain information. Therefore, I would like to make a motion which will be in the form of a recommendation from the Public Accounts Committee and it goes as follows:

The Public Accounts Committee recommends to the Department of Economic Development that the Department of Economic Development require a complete breakdown of expenditures made by development authorities in receipt of provincial funding, and it would apply to all RDAs. Since we are investing money in these organizations across the province, I think we have the right to receive that information, and although we don't have any control over this particular organization, I think that is a reasonable recommendation for this committee to make to the Department of Economic Development. It is certainly within the scope of the mandate of this committee, so I would so move that recommendation.

[10:00 a.m.]

MR. CHAIRMAN: Okay, has everybody heard and understood? Are you ready for the question?

Would all those in favour of the motion please say Aye. Contrary minded, Nay.

The motion is carried.

The letter will also be drafted and a copy provided to all members. Would it be the wish of the committee members that a copy of that also be sent to all of the RDAs across the province? That will be done. I understand that can also be tabled in the House as a recommendation from the committee.

Just before we adjourn for the day, unless other committee members have other business, our witnesses for next week, the Nova Scotia Liquor Commission, they are unable to be present next week, but they are able to be present on the following week, on May 24th. So suggesting that next week would be an agenda setting or we could have some brief discussions. The other thing that may be appropriate for us to do is have a bit of an update regarding the subcommittee or where arrangements sit for the conference that is being held this fall. It might be appropriate for us to get an update on that.

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MR. DEXTER: Just very briefly, Mr. Chairman. I note there was an undertaking made on behalf of the member for Cape Breton The Lakes, when he appeared before this committee, to provide the file, and I don't think the committee has received it yet.

MR. CHAIRMAN: I am going by memory, but I thought he had said by this meeting; he said the information was forthcoming. Maybe I could ask Mora to prepare a brief note just to make it official and I will sign it on behalf of the committee; just a brief note to remind him of the commitment he made.

MR. MACKINNON: Mr. Chairman, I am sure Mora could just call over to the caucus office. I do know he had intended to bring his file up from Cape Breton with him and I believe he has done that, so probably just a call over to the caucus office would suffice.

MR. CHAIRMAN: The phone call can of course easily be followed up, just for the formality of it all. Is there any other business members would like to bring up before we adjourn? We stand adjourned until next week at 8:00 a.m. and it will be in the Dennis Building. Thank you again to our witnesses.

[The committee adjourned at 10:04 a.m.]