The Nova Scotia Legislature

The House resumed on:
September 21, 2017.

Public Accounts -- Wed., Sept. 26, 2001

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HALIFAX, WEDNESDAY, SEPTEMBER 26, 2001

STANDING COMMITTEE ON PUBLIC ACCOUNTS

9:00 A.M.

CHAIRMAN

Mr. William Estabrooks

MR. CHAIRMAN: Good morning, if I could have your attention we could begin on time. I realize that with new responsibilities and it still being September, I am saying to myself, my God, we have a lot of new faces in class today. How are you, Barry? You had an eventful return trip, I hear.

MR. BARRY BARNET: Yes.

MR. CHAIRMAN: Just to continue the teacher thing, we have a couple of replacements for other people. Mr. Epstein, you are representing Graham Steele, who is the new member for the NDP caucus.

MR. HOWARD EPSTEIN: That is correct, yes.

MR. CHAIRMAN: I assume, from what I have heard, that Mr. MacKinnon - I don't want to go any further with this - is in a fog in Cape Breton, is that true?

MR. DONALD DOWNE: Inclement weather, and we are fortunate enough to have Dr. Smith here.

MR. CHAIRMAN: Yes, thank you, Jim, for being here. Where are we on the government side? I see Mr. DeWolfe, Mr. Langille, Mr. Barnet, and welcome, Mr. Chataway. The gentleman at the back here with the growth, you are?

MR. DAVID HENDSBEE: Your worst nightmare.

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MR. CHAIRMAN: Welcome, Mr. Hendsbee, it is nice to see you. I am under the direction, knowing that what we have during the next moments, we are going to review some correspondence of which I have copies and I assume we all have copies. From that, I would like to go from that correspondence to establishing what would be our priorities over the next number of meetings. We have a submission from the Liberal caucus which perhaps we can use as some form of direction on that topic. As I was discussing with Mora ahead of time, we traditionally need three weeks or a month's head-up for some of these groups that we are requesting to appear in front of us. As of this date, our next meeting would be October 3rd, Tourism and Culture is scheduled to appear, if that is the wish, of course, of the committee.

MR. WILLIAM LANGILLE: If I could . . .

MR. CHAIRMAN: Yes, go ahead. I was going to ask for any other matters.

MR. LANGILLE: Tourism and Culture, was that on the agenda from before?

MR. CHAIRMAN: Yes it was.

MR. LANGILLE: I was looking at the Liberals' number one, Aliant - rural phone rates. I understand they are meeting in Hull, CRTC. I was just wondering, maybe it is late notice for October but that possibly, if it is approved, should be put on the front burner. Maybe you could comment.

MR. CHAIRMAN: Well, let's go to that. We can look at the correspondence later. Mr. Downe, on that topic.

MR. DOWNE: Thanks to my colleague for bringing it up. It is one that we feel very strongly that it would be appropriate to bring them in. Not everybody in the Province of Nova Scotia can make it to Hull, Quebec to attend the hearings. It is a matter that they correctly state is a federal matter - CRTC - but it impacts on all Nova Scotians, provincially, as well as governments. I think to properly allow us an opportunity to hear first-hand the situation and to be able to allow Nova Scotians to hear first-hand why the increase in rural Nova Scotia, would be an appropriate move.

They will be making their position known at the CRTC hearings, so it shouldn't be privileged information. They can certainly provide that same privileged information here. If there is information pertaining to confidentiality issues relative to competition, then we can deal with that internally. We have dealt with those matters before, and we can certainly deal with that internally.

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I feel very strongly, our caucus feels very strongly that it would be an appropriate time to bring them in, to hear exactly how these rate increases are going to affect rural Nova Scotia. I just want to compliment and thank my colleagues across the way for bringing this matter because we wanted to discuss it here today.

MR. CHAIRMAN: Any other speakers? Mr. DeWolfe.

MR. JAMES DEWOLFE: On that topic, I am concerned that it is probably not in our mandate to deal with it. In viewing the mandate of the Public Accounts Committee, where it says in Number 3, "Examine and inquire into any other financial matters involving public funds of the Province of Nova Scotia.", I would think, because of that, it doesn't fall under our mandate, that it is not public funds that are going into it from the Province of Nova Scotia. Maybe somebody can clarify that. That is just my thought on it.

MR. CHAIRMAN: Mr. Epstein, then Mr. Downe.

MR. EPSTEIN: I agree with Mr. DeWolfe. It seems to me that if there is a committee of the Legislature that might logically be the committee to look at the proposed increase in rural phone rates it might be the Economic Development Committee. Clearly, that is going to have some impact on how it is that economic life is carried on in the rural parts of the province. This committee does have a different mandate, and I think that is precisely the point, it doesn't really involve government spending unless I am missing some factual background that would lead to it. It is not a question of how the government itself spends its funds, it is not going to impact on the budget of the province in the sense of money that comes in or money that goes out, it is a separate proceeding.

I certainly think that Mr. Downe is right that this is an important issue, there is no doubt about that. It is an important issue, and a controversial one, and one that certainly bears thinking about, but I think Mr. DeWolfe is right about the mandate of this committee.

MR. CHAIRMAN: Don.

MR. DOWNE: Well, you know, there are a number of points here. There is only one taxpayer and the bottom line is that rural Nova Scotians are going to be taxed higher because of this proposal. Secondly, I think the fact that there are provisions within the guidelines that provide different tax regimes for capital for Aliant - whether that is part of the province's provisions - I think it is. I think there are some tax benefits for them in regard to their capital structure.

Government has a very large contract with Aliant. Is that not part of the public domain? Is that not part of what - you know. I mean, you're one of their largest customers, we, the taxpayers. There is a direct linkage between us. You have government offices in rural

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Nova Scotia. So I don't know why everybody is afraid to deal with it here. I mean, I fail to see why you would be so intimidated by Aliant.

MR. CHAIRMAN: Thanks, Don. Mr. Langille.

MR. LANGILLE: It might not come within our scope within Public Accounts. I believe it could be one of those grey areas. However, that does not stop us from making the request to Aliant to appear before Public Accounts. Now, that is up to them what their response would be but I still think that we could go ahead with the request.

MR. CHAIRMAN: Okay, Mr. DeWolfe.

MR. DEWOLFE: I don't want to downplay the importance of it. I live in rural Nova Scotia, myself, and I'm really concerned about this and so are my constituents. But I guess I have to go back to Howard's suggestion that perhaps the best place to deal with this issue is at the Economic Development Committee level. Perhaps, if they deal with it first, then maybe we will look at it and we will see what comes out of that committee.

Therefore, I will make a recommendation that we do refer this to the Economic Development Committee for consideration and see where it goes, see what they do with it and then, perhaps, we will look at it again.

MR. HENDSBEE: With the utmost urgency.

MR. DEWOLFE: With urgency, yes.

MR. CHAIRMAN: Are you saying that you are making a motion, that you would refer Aliant, as a possible witness, to go to Economic Development?

MR. DEWOLFE: Yes, and that Economic Development look at the possibility of bringing in Aliant, with some urgency, as Mr. Hendsbee has suggested.

MR. CHAIRMAN: I have a motion. Do I have a seconder?

MR. HENDSBEE: I second it.

MS. MORA STEVENS (Legislative Committee Coordinator): You don't need one.

MR. CHAIRMAN: I don't need one, okay. See, I have learned something already today.

I have Mr. Epstein and then Dr. Smith.

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MR. EPSTEIN: Just a small point. No one is intimidated by Aliant. That is not the issue. The issue is just, where is the appropriate place to look at it? You know, clearly, we have engaged on this issue, all of us have. We have all made public comments on it, we have all been involved in it and some of us are participating in the hearings that are being held by the CRTC. Some of us have been over to talk to Aliant, Aliant has come to talk to a number of us, criticisms have been exchanged and exchanged publicly. I mean, no one is intimidated on this issue.

Anyway, I am in favour of the motion.

MR. CHAIRMAN: Dr. Smith.

DR. JAMES SMITH: Thank you, Mr. Chairman. I am here as a substitute this morning, although I spent a year or two on the Public Accounts Committee.

I think the business before us today is that of this committee - and we think it is appropriate - for any body to be called - they don't have to come. As we can see in some of our correspondence, they tell us to go do something else, pound sand and they can do that. (Laughter)

I think it is highly appropriate. I want to support the comments of our colleague. While it may not be considered to be a tax, it certainly is an indirect tax. Economic development in rural Nova Scotia is important, no question, but this committee deals with value for dollar and accounting principles, very much so.

In our annual meeting that we had, Jim DeWolfe and others would know what an integral part of accounting procedures and how this company that the government has large contracts with will be determining fees that will impact dramatically in rural Nova Scotia. Certainly, to me, I never for a moment conceived that it wouldn't be part of the mandate of this committee. That is why we are bringing this forward this morning.

It is like seniors having a problem in Nova Scotia, they call up and somebody gives them another phone number. We are going to send this to another committee. I think the responsibility is right here this morning to make the decision for this committee to request, and if they don't come and would rather go somewhere else, fine. But I don't think we should give somebody else another phone number to go somewhere else. This is where it stops.

MR. CHAIRMAN: I like your analogy. Mr. Downe.

MR. DOWNE: Yes, thank you very much. You know, the general public out there look at all of us as government. We are elected representatives. Rural Nova Scotia representatives and, I might say, people in Halifax representatives say, well, I have some questions. Why are they doing this and what is involved with that? Why isn't this committee -

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and we are going to say as a committee, well, technically, it is somebody else's committee. Well, quite frankly, they want to hear what the story is and why it is because it is impacting on them financially, whether it is a direct tax, or not. They feel that it is part of that process.

You know, we brought the Halifax Port Corporation here. We invited OTANS here. I didn't hear anybody jump on the table and say, my gosh, we can't invite OTANS here, all private corporations representing the offshore. I didn't hear individuals here around the table say, well, that should be really somebody else's committee structure.

Or the Port Corporation. That should be somebody else's - that should be Economic Development's portfolio. We should be letting them deal with that. I didn't hear anybody around this table - some of which are the same people - say that. So here we are in the House saying, well, because it's Aliant, we found a technicality here in the guidelines, that we are saying, no, we can't do it.

I just wonder what the average Nova Scotian is saying. Well, there you go. We want to hear, in rural Nova Scotia, what is going on. We can't go to Hull, Quebec. We can't afford to go there to hear what's going on and we are concerned about that.

As a representative of the people of Nova Scotia, this committee can meet immediately and meet with these individuals. These hearings are going to take place very quickly. To bring another committee together that hasn't even had a chance to discuss that matter - I think we have already figured out our agendas for the next period of time.

We are saying, we're going to pass the buck to somebody else, long after the fact. We have a chance to deal with this now and I think we should deal with it now. It is like, you know, why not?

MR. CHAIRMAN: Mr. DeWolfe.

MR. DEWOLFE: Well, I'm just going back to the mandate and it includes accounting for revenues, value for money and expenditures, protection of assets from loss, waste and misappropriations. I honestly don't see where it fits in our mandate, this particular issue, and I will stand by my motion.

MR. CHAIRMAN: Okay, thank you. Any further speakers? Let's be clear on the fact that if you are voting for this motion, you are saying that Aliant should not appear in front of us. I would assume that if the motion is defeated, that someone around this table would make a motion that Aliant be our next witnesses. Do we understand this?

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MR. HENDSBEE: Mr. Chairman, for clarification, my understanding of the motion is that we are referring this matter to the Economic Development Committee. We are not saying they are not to appear before us, we are just referring the topic to another committee where it is more appropriate.

MR. DOWNE: I would like to have that read because as I understood, we are not going to deal with this matter at this committee and that another committee should look into it, even though we have argued the point that it does meet the criteria here. I mean, the goalposts have been moved before for other people. It is just ironic that, for some people, they don't want the goalpost to be bent in any way, shape or form to bring Aliant here. That is an interesting scenario in itself.

The motion is that - this committee is saying, no, we don't want to deal with Aliant. We want to pass the buck to another committee. That is basically the motion.

MR. CHAIRMAN: Yes, if I may, Bill, I assumed that too, so I am going to ask that the motion be reread, but first I will recognize Mr. Langille.

MR. LANGILLE: Well, at this point in time, I would prefer not to have a motion. We will take this under advisement on this proposal, number one, from the Liberal caucus, and maybe bring it back next meeting of Public Accounts.

MR. CHAIRMAN: Well, if I may, I have a motion on the floor.

MR. DEWOLFE: The motion is to refer it at this point.

MR. LANGILLE: I realize what the motion is but all I am saying is that I would prefer, if it is acceptable, that this Number 1 of the Liberal caucus - Aliant - be put over until our next meeting so we can take it back to our caucuses and discuss it with them, rather than having a motion at this time.

MR. CHAIRMAN: How does the mover feel about that suggestion? Let's put it in your court, Mr. DeWolfe.

MR. DEWOLFE: Well, I think it is an important issue and I would like to see Economic Development deal with it soonest. I don't really want to see any delays in this being dealt with.

MR. HENDSBEE: Mr Chairman, could we have your information available as to when those committees are meeting, the next scheduled meetings?

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MS. STEVENS: Economic Development met yesterday and they meet every three weeks. (Interruptions) Well, that was a tentative schedule drawn up this summer and I am not sure if that holds true. They had a special meeting with the Federation of . . .

MR. EPSTEIN: October 16th and 30th are the next two scheduled meetings of Economic Development.

MR. HENDSBEE: When are the CRTC hearings?

MR. EPSTEIN: They start on October 2nd and run until October 10th or 12th, I think.

MR. CHAIRMAN: Does that answer your question about . . .

MR. DOWNE: October 1st, the CRTC hearings are going on. Our thoughts are to get this as quickly as possible. We have a representative that will be going to the hearings and making a presentation on behalf of our caucus. It would be great to be able to have presentations here and hear what Nova Scotians have to say so that we, in turn, are speaking on behalf of Nova Scotians as well. I mean, we are doing our part to call Nova Scotians and listen to Nova Scotians.

As an all-Party committee of government, who better to be here, to bring here, to know what the heck Nova Scotians will want to say about this matter. We are going to hear what Aliant is going to say and then we are going to hear what Nova Scotians are going to say. I mean, we are elected by the people to represent them and here they are going to have their presentation in Quebec. I mean, a Nova Scotian can't even go to Quebec; how many people can afford to go there?

We can bring in the Port Corporation and there is no problem. We can bring in OTANS and there is no problem, not a question asked, but all of a sudden, because it is Aliant, boy, somebody is scared to death. To turn it to another committee, I just fail to see the double standard.

MR. CHAIRMAN: Okay, I take your point. I want to recognize Mr. Epstein. I am going back to Mr. DeWolfe because it seems to me - you know, there is a motion on the floor. Anyway, Mr. Epstein, then Mr. DeWolfe.

MR. EPSTEIN: Well, thank you. If I understood Mr. Downe's latest comments correctly, this may add an extra complexity to it. If he was really suggesting that the nature of the hearings that he contemplated in front of this committee was one in which the public would be invited to come in, that makes it quite a different kind of proceedings than I think this committee has ever really held before. It makes it akin to duplicating what it is that the CRTC is doing nationally.

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I mean, it is one thing for us to think about some provincial committee, looking at Aliant's proposal, it is another thing to embark upon general public hearings in which you are inviting all comers in. That is not necessarily beyond the mandate of the provincial legislative committees. It takes some thought and usually what you want to do is go out to the affected communities, show up there and make it easy for people to make their presentations. I don't think that was explicit before but if it is what Mr. Downe has in mind, again, I think that is something that would weigh in on how we deal with the motion.

The other part is that the item of urgency that has been urged is in a way a fair point but it also raises a practical problem. If Aliant and its staff are going to be making presentations in Hull from October 1st to October 10th, presumably they are not going to be available to come talk to us next week or maybe even the week after. I am not sure how practical it is to think about this committee or any other committee engaging with this issue in the next week or 10 days. It just seems likely that people are just not plain going to be available to do it.

Then there is this additional complication that, I guess, it is not clear that the Tory members of this committee have decided exactly how they want to proceed. They could either caucus now, or maybe there is some suggestion they can make for us as to how they want to proceed. I'm still happy with the motion.

MR. CHAIRMAN: Before I go to you, Mr. DeWolfe, I feel obliged to recognize Mr. Downe because I know he wants to respond to those comments, if you don't mind.

MR. DOWNE: Thanks very much and to my colleague, Mr. Epstein. I don't know if, in fact, he has made an application for intervener status or to make a presentation to the group in Quebec - in Hull - or if his caucus is planning to do anything about it or just let it ride. I'm not sure if that is part of it.

We have the media here and the media, in turn, is going to hear the discussion. What better way to have it explained to Nova Scotians than through the vehicle of the media, through the vehicle of this committee about what exactly Aliant is doing, the implication, the costs and so on and so forth, it is going to be to rural Nova Scotia. I think that was my interpretation of that, I was not envisioning having x number of people sitting in the galleries here listening. But it is an open process that, certainly, the media can understand what is going on and be able to express those points.

I thought that was what this process was all about. I mean, if they have nothing to hide, they want to share this information, that's great. I mean, obviously some here want some of that information hid, maybe, I don't know. But why not just deal with it here?

MR. CHAIRMAN: Okay, I'm going back to Mr. DeWolfe.

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MR. LANGILLE: What was that last statement you just made?

MR. DOWNE: I said it seems weird that - you know, I agree with you, Bill, why can't we have them here? You know, just deal with it instead of having it go somewhere else to another committee. Unless somebody here doesn't want that information discussed, I don't know why. I doubt if that would be the case. I would hope that would not be so.

MR. DEWOLFE: Of course, that wouldn't be the case. (Interruptions)

MR. CHAIRMAN: Okay, let's have a little order here. Mr. Langille, did you get the answer you needed from Mr. Downe?

MR. LANGILLE: I got the answer, thank you.

MR. CHAIRMAN: Okay, I'm going to Mr. DeWolfe. What is the status of your motion, Mr. DeWolfe?

MR. DEWOLFE: Can you read the motion, please?

MS. STEVENS: The motion is to refer the matter to Economic Development so they can look into bringing Aliant in with the utmost of urgency.

MR. CHAIRMAN: Okay, we are clear on the motion.

MR. DEWOLFE: And, again, as vice-chairman of this committee, I just feel that we have to follow - I mean, guidelines are set in place for the committee to follow and the mandate is quite clear. It doesn't seem to fit the mandate, in answer to Mr. Downe's concerns. Of course we don't have any reason not to want to hear them but where is the appropriate place to do this? Is it this committee or is it Economic Development? I feel it is Economic Development.

MR. CHAIRMAN: Okay. Instead of going around again, I am under the impression that you want the question called on your motion. Is that correct?

MR. DEWOLFE: Yes.

MR. CHAIRMAN: Are you ready for the question? Would all those in favour of the motion please say Aye. Contrary minded, Nay.

The motion is carried.

MR. DEWOLFE: And I think that we were quite clear, Mr. Chairman, that if we can look at it again, if Economic Development . . .

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DR. SMITH: Next year?

MR. DEWOLFE: No, we don't have to look at it next year. (Laughter)

MR. CHAIRMAN: Well, the motion (Interruptions). Excuse me. The motion doesn't say that. The consequences of Economic Development are - I believe the instructions would be that you are asking me to be in contact with the Chairman of Economic Development, requesting that Aliant appear in front of them at the earliest possible date. Is that your direction?

MR. DEWOLFE: That is it, thank you.

MR. DOWNE: Then that committee would have to decide whether or not they want to do that, that is what Bill is really saying here.

MR. CHAIRMAN: Okay, could we turn to correspondence. First of all, I would like to direct the committee's attention to PanCanadian's response which was sent July 23rd from Mr. LeBlanc, Vice-President of East Coast Operations, sent to Mr. Epstein as the Chairman of Public Accounts at that time. Their response is that they believe there is someone more appropriate to appear in front of us. Responses or comments to this letter, please, or have you had the opportunity to read it?

[9:30 a.m.]

MR. HENDSBEE: Mr. Chairman, just similar to the nature of the discussion we just had in regard to Aliant, there are some quite strong similarities between PanCanadian and Aliant as drawn in the second paragraph of the letter. Perhaps the committee may want to consider the suggestion of the Canadian Association of Petroleum Producers as an alternative, but I wasn't present for the previous committee's discussion so I wasn't sure what the full nature of the inquiry in regard to the topic would be. It is a very constructive suggestion though.

MR. CHAIRMAN: My direction is that there was an attempt for some continuity and that the committee at this time was looking at bringing in a series of witnesses on this particular topic and that was the intent of asking them to come forward at this time.

MR. HENDSBEE: The topic of the provincial divestiture of the offshore?

MR. CHAIRMAN: No, I'm sorry, I'm editorializing too much. The chairman is supposed to run the meeting and be quiet. Mr. Epstein.

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MR. EPSTEIN: Well, it is an interesting point and it does relate to the mandate of the committee and it relates to the point that Mr. Downe brought up before about whether we are applying one standard in one instance and a different standard in another. It is a fair point and it may have been that we got carried away when we first thought we should invite PanCanadian in and it is true, I think we took this decision at a point when they had recently announced their new programs for the offshore and it seemed interesting and it looked like there was a lot of potential economic activity going on and it may well have been that instead of considering inviting them to Public Accounts, maybe we should have made the suggestion to the Economic Development Committee that they look at it.

To the extent that there is a dimension involved in the offshore that would relate to Public Accounts, I suppose if you want to hold it narrowly and directly, it would have to do perhaps with the royalty regime, which is something that is appropriate or what the prospects are for production on the offshore and hence on revenues to the province. Even that might be stretching the mandate just a bit.

Now we had already heard from OTANS and had already begun to explore that a little bit. So I guess if we are going to pursue the question of the offshore, we should really try to decide among ourselves exactly what it is we are looking for, what kind of information we are looking for, because if it is just general information about a particular economic sector and how it is doing and what the prospects are and so on, maybe it is for another committee. If, on the other hand, we wanted to focus a little more directly on what some of the economic arrangements are between the companies and the government, then indeed it may well be that this is something that this committee could look at. I think the letter challenges us to really re-examine our own thinking of what it was we intended and I don't know that we really settled on that when we issued the original invitation.

I suppose the other thing to observe about this is that clearly the company ducked the invitation. For whatever reason, they simply decided that they didn't want to come and appear before the Public Accounts Committee. That may have to do, as they are suggesting, with the stage at which their own plans had reached. There is nothing we can do about that, really, and there it is.

So my suggestion is that before we decide whether we are going to invite the CAPP or anyone else, we might try to decide what it is we are after here because I don't think we actually had that discussion earlier.

MR. CHAIRMAN: Are there any other comments on this letter of July 23rd?

MR. DOWNE: This has been an interesting morning. I thought it would be a Monday morning the way we are talking here.

DR. SMITH: You said it was going to be quiet, that we would be gone in 15 minutes.

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MR. DOWNE: A quiet morning. (Laughter) Well, I think I brought the point up earlier that what Howard is saying, because PanCanadian has a direct impact on the province, maybe there are some criteria or justification, whatever we could pull out of the hat that would justify this committee's purview into PanCanadian, even though it is a private company. I think he alluded to the fact whether it is a royalty regime or whatever else it is. We have Aliant over here who we do business with every single day of our lives, provincially, by the government, all over Nova Scotia. Is that not the same, best interest to make sure that value for money and auditing and everything else, the same purview? I am just saying, gosh, here we are, just one standard one minute and then the next minute we have another standard. I am just saying, Howard, it must be confusing for the media listening to this conversation over here.

MR. EPSTEIN: Can I answer that question?

MR. CHAIRMAN: I am getting into a bit of a dialogue here but I will allow you to go ahead. Short comments.

MR. EPSTEIN: Surely there is a difference. If we were talking about Aliant's direct contracts with the provincial government . . .

MR. CHAIRMAN: Excuse me, Mr. Epstein, . . .

MR. EPSTEIN: . . . then that would make sense.

MR. CHAIRMAN: . . . I think that you are reinventing the wheel on Aliant. I don't mean to cut you off, maybe I should have cut the previous speaker off, but could you deal with this particular issue?

MR. EPSTEIN: It is the issue of what comes within the mandate of this committee, I think, is when a private sector company has direct dealings with the government, then that would be pretty clearly within the mandate of this committee. It would affect our revenues or our expenditures. Otherwise, it gets into a grey area and very quickly shades into something that is outside the mandate of this committee completely and ends up in the mandate somewhere else. I think that is the point we have to focus on when we are thinking about the offshore: how does it affect either the revenues or the expenditures of the provincial government? That would come pretty directly within the mandate of the committee. I am simply saying, let's look at that part of it. If there is a part of it that we can tie to revenues or expenditures of the province, let's see what that is and then maybe it will make sense to invite somebody.

MR. CHAIRMAN: Okay, other comments on what direction we are to take in response to PanCanadian's response. Mr. Barnet.

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MR. BARNET: It is simple. They said they won't come. We can't make them come so . . .

MS. STEVENS: Yes, we can.

MR. CHAIRMAN: Well, we can.

MR. BARNET: . . . I find myself in a difficult situation here.

MR. CHAIRMAN: Go ahead.

MR. BARNET: I am agreeing with the last three, four or five comments of Mr. Epstein . . .

MR. CHAIRMAN: Scary, isn't it? (Laughter) How are things on the HRM council, Barry?

MR. BARNET: I have woken up in the wrong body or something like this. This is bizarre. (Interruptions)

MR. CHAIRMAN: Go ahead, I am sorry.

MR. BARNET: That is it. That is all I have to say.

MR. CHAIRMAN: That's it?

MR. BARNET: Yes. I am not going to re-say what he said.

MR. CHAIRMAN: Just excuse me. Well, how do you feel about us pursuing and having the CAPP appear?

MR. BARNET: Again, I think it falls in the same category as Aliant. Really, it is outside of our mandate. But I see that the Liberal caucus has suggested the Petroleum Directorate to talk about value for dollar and state of the industry. Although we would want to bring that back to our caucus to discuss that before we decide, I think that is the more appropriate way to deal with this particular issue and the dealings with these kinds of companies rather than bring in private companies and industry associations. I think we were absolutely wrong in the past to bring the other association in and frankly I agree with what the people at PanCanadian have said.

MR. CHAIRMAN: Mr. Chataway and then Mr. Hendsbee.

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MR. JOHN CHATAWAY: Mr. Chairman, I certainly agree with Howard and Barry's comments. Why get one company in explaining this when you can get an association of petroleum producers so this person could explain not only what is going on with one specific company, but across the whole petroleum industry and not only off the East Coast, but everywhere, and give us more information. Then we can assess what could be improved or helped out, things like that. The other thing is, I do not think this is a number one priority, by any stretch of the imagination, but it certainly would be very interesting to have these people come in and talk to us.

MR. HENDSBEE: Mr. Chairman, I don't know what the procedure is so first of all, do you need a motion to just accept receipt of the letter or has it just been received because it has been sent? The second thing, I have no problem in regard to having associations brought forward if it is to the privy and the benefit of the committee. For instance, OTANS has been an association of the offshore and onshore technologies and stuff. In regard to the offshore development, we have significant investments that we have had in the past and I think it was appropriate, perhaps, but to have a private company versus the association, I think there is quite a difference.

I think if there is an opportunity, perhaps, like Barry said, the Petroleum Directorate, the state of the industry, perhaps that should be a discussion for this committee, first and foremost, and if we wish to expand beyond that, perhaps it might be an opportunity for an association, if they could shed any further light in regard to the industry.

In regard to sharing that information, the associations have similar goals and objectives, they are a combination of companies, in trying to promote the offshore or their industry, but they are not going to give us their trade secrets. That is one thing, they want to make sure they have privacy, as proprietary secrets, in regard to their doing business on the open market. The association is one thing but a private company is another, and I don't think it would be appropriate to have PanCanadian here, but I think it might be appropriate, perhaps, to have the association after the directorate has been discussed.

MR. CHAIRMAN: I would like to bring some closure, not to cut this off, but I am under the impression the previous committee requested PanCanadian to appear. That decision was made by this group. In light of your comments, the so-called horse is out of the barn in asking them to appear. They have declined (Interruptions)

MR. HENDSBEE: Do you require a motion to rescind that, or just accept this and move on?

MR. CHAIRMAN: I believe, if the committee would concur, that a motion would be in order, of whatever nature you wish, to accept the letter and move on. (Interruptions) Yes, I will accept a motion. If there is any other speaker before I turn it back. Mr. Downe.

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MR. DOWNE: To clarify Howard's comments, originally I believe Howard said, with regard to PanCanadian - I think you were in the Chair at the time we thought they should be here, and you concurred at that point - the original comment was that we should look into the issue and discuss it further about PanCanadian as it affects revenue and expenses of the province. Am I correct at that point?

MR. EPSTEIN: Mr. Chairman, I think what . . .

MR. DOWNE: I am just trying to clarify if that is what you said, to justify having PanCanadian.

MR. EPSTEIN: I don't remember all that was said when we made the original decision to get them here. A minute ago, what my view is that I think we originally got carried away and if now we were wanting to invite anybody we should consider how their information relates to either the revenues or the expenditures of the province.

MR. CHAIRMAN: Thank you, both of you. Mr. Hendsbee, are you prepared to make a motion?

MR. HENDSBEE: Could I ask, is it appropriate for the committee to have a motion to accept the letter from PanCanadian and rescind the request of having PanCanadian appear before the committee?

MR. CHAIRMAN: We have to bring it to some kind of conclusion.

MR. HENDSBEE: So moved.

MR. CHAIRMAN: Do we understand the motion?

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

The motion is carried.

Could I turn then, if I may, to the correspondence I thought we were going to get through here. We have a September 20th letter to Mr. Epstein from the Education Minister. Have we had the opportunity to look at that letter? Mr. Hendsbee.

MR. HENDSBEE: Mr. Chairman, I believe the minister is making an invitation to this committee to have the Knowledge House contract or the discussion with the Department of Education come forward, and I also see it as an item on the suggested list from the Liberal caucus. I think it might be highly appropriate that we make a motion that we accept the minister's invitation and that we have that department come forward on that topic.

[Page 17]

MR. CHAIRMAN: Other comments on the correspondence from the Minister of Education?

MR. LANGILLE: Mr. Chairman, I have a concern. My concern is with the NDP. After this letter was sent out by the Minister of Education saying she would like to have Knowledge House brought before the Public Accounts Committee your caucus made statements in the paper as if it was their idea to bring them before the Public Accounts Committee, and would have, at that time, received this letter. It was after that that you people - sorry, that the NDP caucus came out and made those statements, as if they wanted to bring it in when we already knew that Miss Purves had sent the letter. I just wanted to clarify that. (Interruption) Yes, it was a good news story, I guess.

MR. CHAIRMAN: Excuse me, Mr. Epstein, I have Mr. Chataway as my next speaker. (Laughter)

MR. CHATAWAY: Basically I just seconded the motion.

MR. CHAIRMAN: Oh, I'm sorry, John. (Laughter) I don't need a seconder to motions.

Mr. Epstein, would you like to reply to this? You were going to reply anyway.

MR. EPSTEIN: I just thought it was pretty basic in politics that if you see a parade you get in front of it. (Laughter) I don't know what the problem is.

MR. CHAIRMAN: Do you want to leave it at that? Thank you. (Interruptions) Mr. Downe, not on parades but on this letter.

MR. DOWNE: As long as he doesn't rain on everybody's parade, we don't mind. The issue about having the group together is important, and I compliment the minister for agreeing. I would compliment the minister on having Dan Potter as part of that proceeding to be brought forward. I think it would only be appropriate that he would be asked to be here in regard to the discussions. I would move that.

MR. HENDSBEE: There's already a motion on the floor. I believe I made a motion accepting the letter and accepting the invitation to have the department come forward.

MR. CHAIRMAN: Yes, and I am aware of the fact - I checked with Mora on this - that Mr. Downe requested that a particular person be present during that. I don't know if that is an amendment or whatever, in terms of your request. Yes, we do have Mr. Hendsbee's motion on the floor. Other comments on Mr. Hendsbee's motion?

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MR. HENDSBEE: Could I ask for clarification from the Chair then, is he taking my motion as to be the one to be voted on first . . .

MR. CHAIRMAN: Yes.

MR. HENDSBEE: . . . or asking for a friendly amendment that Mr. Potter be added to the motion? The question that Mr. Epstein just whispered to me is, would Mr. Potter be asked to be a witness to this committee or just be present for the discussions? The problem is, does the department come forward to discuss its contractual arrangements and obligations, whatever the case may be, with Knowledge House, but I don't know if Mr. Potter, in his capacity as President and CEO of Knowledge House, would be required to come forward or not, I don't know if the department has that in their preparation for their presentation, I don't know.

MR. CHAIRMAN: That's a good point. Mr. Epstein, then Mr. Downe.

MR. EPSTEIN: If the idea is that officials from Knowledge House should have the opportunity to hear what gets said, then clearly that is appropriate and I think our sessions are going to be open in the public anyway, so, of course, they will have that opportunity. Indeed, where the subject matter might be of particular concern to them, giving them specific notice that this is happening would be a good idea. If it goes beyond that and if the suggestion is that officials from Knowledge House be invited as witnesses to come to this committee, then I think we are looking at a different question. This is something that has a practical dimension.

Our sessions are usually only two hours long, and I think our experience has been that two hours to look at any kind of complex issue tends not to be enough. If we want to go beyond the two hours and start looking at something in a lot more detail and hearing different sides of issues and bringing the whole variety of witnesses in, then we are going to either have a longer session than two hours when we sit down to deal with it on one day or we are going to have deal with it over two or three different sessions and hear different people.

I hesitate to think about inviting more witnesses in an initial session. Certainly, what we could keep open is the possibility of a further session, but as a starting point why don't we start with the Department of Education officials and see what they have to see, and if we feel we have to go beyond that, then we can decide after that. I would hesitate at this point, I think we are simply missing information to allow us to make a decision whether we want to move on to this in terms of multiple sessions. That's all.

MR. DOWNE: I understand what Mr. Epstein is saying in regard to the time element. I would hope that if we had two concurrent sessions, it could be fairly quickly put together. They don't necessarily have to be large periods of time apart. I would be wanting to have Dan Potter and Ms. MacNutt there as representatives of the company, as witnesses, the CEO of

[Page 19]

Knowledge House. I think it would only be appropriate to have them come, as they have been part and parcel of this process. Those are the two names that I would recommend to be brought forward, unless someone else has a problem with it. It shouldn't be a problem for the minister, I don't think she would disagree with that.

MR. CHAIRMAN: I have a couple of points of clarification, but I think I am obliged to go back to the mover. To answer your question, Mr. Hendsbee, I believe that I will vote on your motion, and subsequent suggestions from Mr. Downe would take a second motion. How do you feel about that?

MR. HENDSBEE: That probably would be a more appropriate procedure.

MR. CHAIRMAN: I am sorry to interfere, but I saw some hands there. Mr. Langille, did you have a comment?

MR. LANGILLE: No.

MR. CHAIRMAN: Mr. DeWolfe.

MR. DEWOLFE: No, if you want to deal with that motion first, then we'll . . .

MR. CHAIRMAN: Are we ready for the question on the motion as proposed by Mr. Hendsbee? Mora, do you have it there?

MS. STEVENS: The motion was to accept the letter and bring in the witnesses concerning Knowledge House Inc., the witnesses being the Department of Education, as outlined in the letter.

MR. CHAIRMAN: Are we clear? Would all those in favour of the motion please say Aye. Contrary minded, Nay.

The motion is carried.

Now, Mr. Downe, are you prepared to bring a subsequent motion?

MR. DOWNE: Yes, that we would have the second session as quickly as possible from the first one with two representatives, Cathy MacNutt and Dan Potter, to be brought forward with regard to Knowledge Solutions and to be able to explain to us what is going on with Knowledge House Incorporated.

MR. CHAIRMAN: On the motion, Mr. Langille.

[Page 20]

MR. LANGILLE: On the motion, there is nothing compelling Mr. Potter to appear and to make a motion to have a concurrent meeting, if we are going to slot time for it without seeing first of all if they are going to appear.

MR. CHAIRMAN: I don't get your point, actually.

MR. LANGILLE: Well, if we are going to set two hours aside for the witnesses in the Minister of Education's letter and now you are saying that you don't have enough time so you are requesting another concurrent . . .

MR. CHAIRMAN: Subsequent.

MR. LANGILLE: . . . subsequent meeting for Mr. Potter but they don't necessarily have to appear, do they? I mean it is up to them if they want to appear . . .

MR. CHAIRMAN: If I may, although you have experience, you can certainly answer and I don't mind deferring to your experience . . .

MR. DOWNE: We can request that and the formal letter would be going out to them. How they want to respond to that is up to them. We can't predetermine that but I think it is prudent for us, that is what we would like to have and to put it on a schedule. In the event that we get a "Dear John/pound sand" letter or whatever, well then we will deal with that accordingly. That is how I would see it.

MR. LANGILLE: Okay, but we are not going to set the subsequent meeting a slotted time before we know if we are going to have it or not.

MR. DOWNE: I would suggest, if I may, that we do set the time in anticipation that they would want to be here to clarify these points.

MR. CHAIRMAN: Just a point of clarification, Mr. Barnet - although Mr. Hendsbee and then Mr. Barnet - I am under the impression the motion requests that we follow up the offer from the Minister of Education with a subsequent meeting with the particular officials that Mr. Downe has mentioned as soon as possible in tandem with the original meeting from the Minister of Education so that that it is a lock-step effect, one after the other. If I can look at this way and if it is possible that on October 10th there would be one group and on October 17th the next, if that is possible.

Okay, now, I'm sorry, Mr. Hendsbee, Mr. Barnet, then Dr. Smith.

MR. HENDSBEE: Mr. Chairman, in regard to the first meeting with the Department of Education, I would think it might be appropriate to advise representatives from Knowledge House that the discussion will be held at the Public Accounts Committee and perhaps they

[Page 21]

should have representatives present to hear what has been said by the department and also the questions by members of the House. Subsequent to that, I think the invitation should be given to them if they wish to appear before the committee either to refute any of the things that were said or to perhaps provide further clarification. I think that is the decision that Knowledge House would have to do in regard to the thing with the "Dear John/pound sand" letter or not or, thank you very much and we will see you next week.

We don't know but the question would be that they should first of all be given the invitation to attend the meeting - not to be a witness - but to attend the first meeting of the department to hear first-hand the discussions and they would have an opportunity to have that information available to them to perhaps respond at a future meeting. My only concern would be, though, is would the media treat them with kid gloves or would they scrum them outside if they are up in the gallery. That is the discretion that Knowledge House will have to decide is will they come forward to hear what is being said about them but then again be challenged as soon as they walk down the stairs, is another issue.

MR. CHAIRMAN: Whatever. Mr. Barnet.

MR. BARNET: A couple of things, one is that I see, particularly the officials from Knowledge House, as no different than PanCanadian or Aliant. They were a private company . . .

DR. SMITH: Go on, Barry, you don't believe that.

MR. BARNET: I don't believe that they are a great deal different. The other thing is and I want to ask (Interruption) Excuse me. I want to ask through you, Mr. Chairman, to Mr. Downe, is it his intention if they were to agree and this committee were to invite them to discuss with Knowledge House other agreements and arrangements that the province may have including Silicon Island and other things that Knowledge House deals with the province?

MR. CHAIRMAN: Well, not to get back into the old Question Period thing when he was a minister and you were in the House, he was pretty good at answering questions, let me tell you. I have another speaker, though, who wishes to speak but out of courtesy, I think you should answer that, Don.

MR. DOWNE: My comment is simply this. In all fairness to Mr. Potter and in all fairness to Ms. Cathy MacNutt, whatever the department says, it is only appropriate that they have a chance to say their side of the story. It is not meant to be in any other shape or form than that and I think that would only be prudent and fair. That is what I understood this committee's mandate is to be that way, not to be any other than that. To sidestep, if one is making comments one way, I would think that they would want to have a chance to say their piece. I don't see what they have to hide. They have contracts, some of which were untendered and so on and so forth. That is one issue but I think it is appropriate, if the

[Page 22]

department is going to make comments with regard to their companies, it is only appropriate for them to make sure that what is being said, their reputations are felt that they are intact. That is where I am coming from, Barry. I don't know where you are coming from on the issue but that is . . .

MR. BARNET: I was just asking about Silicon Island. I mean are we going to open up to more than just the . . .

MR. DOWNE: No, I think this issue is a fair comment of what I am imposing. I think a sidestep, if the minister's department staff is going to say they will need two hours, we can do two hours in the morning and maybe two hours in the afternoon and we can get the thing done with, as soon as possible. Maybe we could do it all in two hours. I don't know, I don't know how long it would take. Time goes when you are having discussions.

MR. CHAIRMAN: Fun? (Laughter)

MR. DOWNE: Yes. You are doing a great job, Mr. Chairman, I want to tell you this, you really are.

MR. CHAIRMAN: Get on with it, Mr. Downe.

MR. DOWNE: That is where I am coming from and I thank the speaker. I just had to clarify that one point.

MR. CHAIRMAN: Okay, I apologize. Dr. Smith.

DR. SMITH: Originally, Mr. Chairman, I was just more or less supporting the direction that I thought Mr. Hendsbee was going, to try to involve the principals of this company. We have before us, contracts that haven't been tendered. We have allegations by members of Parties of this committee about regulatory violations, securities, that have far-reaching impact, whether debt has been relieved from a private and moving on to a splitting of the company, all those types of things. Not to have those principals party to a discussion, to me, would not be a miscarriage of justice but maybe it would impair the function of this committee. How they would be involved in that first, initial meeting, you could debate.

Mr. Chairman, the two hours, if each caucus comes prepared with questions and their research done, and uses two hours, then I would see that that would be adequate to at least bring some light onto some serious allegations floating around the media regarding this company that the government has close relationships with, untendered contracts. I think we should move swiftly to try to bring this forward. I thought maybe that is what Mr. Hendsbee was trying to do, to have them involved with the Education Department. These are the people who have done the work, these two principals, Ms. MacNutt and Mr. Potter and the Department of Education. Get them together and see what they have to say and do it as

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quickly as we can and get it over with because otherwise you are just fighting this battle in the media.

[10:00 a.m.]

The NDP Party has made some serious allegations that they have information that things have happened that are concerns of the Securities Commission and that should be of interest to this committee. That is why, I guess, I reacted strongly to Mr. Barnet. Once again we are dealing with PanCanadian. I don't see it. I disagree with PanCanadian. I think for years we have waited for offshore oil to come into this province and to say that that is not significant . . .

MR. CHAIRMAN: Excuse me, Jim, I am going to cut you off. (Interruption) Excuse me, please.

DR. SMITH: Get on with it and make the two hours work for us. I think if the caucuses come prepared that we can do that.

MR. CHAIRMAN: I am going to call for a vote on the motion made by Mr. Downe. Are you ready for the question?

MR. HENDSBEE: Will you clarify the motion?

MR. CHAIRMAN: I will.

MS. STEVENS: The motion is that a second session, after Knowledge House, be set up as quickly as possible with two representatives, Ms. Cathy MacNutt and Mr. Dan Potter, to be brought forward to deal with the Knowledge House situation.

MR. CHAIRMAN: Mr. Downe.

MR. DOWNE: Well, we don't know what all is going to be coming out of the discussions with the Department of Education, so I don't want to limit it to that particular thing, I want to limit it to the discussions that were being made and obviously my colleague has made. When I talked about sidestep, what you referred to as sidestep, I haven't been on the committee as long as my colleague, Dr. Smith, has but . . .

DR. SMITH: You haven't been on the earth as long as I have.

MR. DOWNE: I haven't been on the earth as long as he has either, that is right, and probably won't be. (Laughter) I would assume that we are talking about a two hour meeting in the morning and a meeting in the afternoon to deal with that. Is that how it is run?

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MS. STEVENS: It is usually a week later because it takes about a week to get the transcript. That is how it has been. Now we have had extended meetings in situations. We have never done a morning/afternoon per se, but that would be up to the committee.

MR. DOWNE: For the committee to extend it and get it over with in one day, I think would be the most appropriate way of dealing with it. That is what I would prefer. That is what I was intending in my recommendation.

MR. CHAIRMAN: Okay, well let's deal with the motion as opposed to that intention.

MR. HENDSBEE: Mr. Chairman, in the tone and the language of the motion, I would prefer that it read more that they would be advised of the first meeting and to be present to hear the discussion; and second, that they be invited to come before the committee on a second, subsequent session. The language would be a lot more appropriate instead of just being called forward.

MR. CHAIRMAN: If I may, I have talked to Ms. Stevens for a moment. We intend to inform these officials that the Department of Education officials will be in front of the Public Accounts Committee at whatever the appropriate date is and they are certainly encouraged to be present. Subsequent to that, we would ask if they could appear at the next meeting.

MR. HENDSBEE: Yes, because the only thing I am worried about is that these allegations about improprieties with the Securities Commission, they may have to decline on the offer until the investigations are forthwith and stuff like that so I am not sure in regard to the timing if it would be an advantage or not.

MR. CHAIRMAN: Thank you. Are there any other comments on the motion? Are you comfortable with this, David?

MR. HENDSBEE: If that is the intent of the motion, yes.

MR. CHAIRMAN: It is, I am sure it is. Would all those in favour of the motion please say Aye. Contrary minded, Nay.

The motion is carried.

Now if I can bring some focus to this, as we finish our first hour, you told me this was going to be short, right? The senior citizens' group in Timberlea better hold on then. If I have followed this correctly, we have, at this date, one definite witness group that on October 3rd, our next meeting, Tourism is going to appear. Correct. That is confirmed. We are going to ask Education officials to be here on October 10th and Knowledge House on October 17th. Now from the list that we brought forward, do we have any or should I just allow it at that -

[Page 25]

I am ready for the direction of the committee - should we perhaps pursue some subsequent witnesses based upon the list? Do we have any consensus, I guess, on that topic?

MR. BARNET: I just wonder if maybe it would be more appropriate if we could just simply take the list under advisement to our caucuses and come back and maybe there is at least one other that is a duplicate and come back at the next meeting and bring forward our caucuses' positions.

MR. CHAIRMAN: Was that your intent, Jim?

MR. DEWOLFE: That was exactly my intent and I just want to mention, I did pass around a paper with two topics on it that we are prepared to go ahead with at your convenience. I didn't mark it from the PC caucus. If you would scribble that on the top, I would appreciate it, so you will know where it came from.

MR. CHAIRMAN: Okay, we have a suggestion - I don't think it is necessary, we have unanimity on it - from Mr. Barnet that we, at our next meeting, on October 3rd, firm up a witness list based upon the suggestions that we have. Are we comfortable with that suggestion?

MR. DEWOLFE: Mr. Chairman, does the NDP have a new list coming out with some . . .

MR. EPSTEIN: As you know, Mr. Chairman, there has been a change in membership on the committee so we will do our best to have a (Interruption)

MR. HENDSBEE: They were waiting for more letters. (Interruptions)

MR. CHAIRMAN: Could I have some order please, Mr. Hendsbee. Dare I ask, is there any other business? Okay, motion for adjournment, please.

MR. HENDSBEE: So moved.

MR. CHAIRMAN: The meeting is adjourned.

[The committee adjourned at 10:07 a.m.]