NOVA SCOTIA HOUSE OF ASSEMBLY
Wednesday, February 15, 2012
Department of Transportation and Infrastructure Renewal
RIM Budget Financing, Chip Seal and Asphalt Plant
Printed and Published by Nova Scotia Hansard Reporting Services
Public Accounts Committee
Hon. Keith Colwell, Chairman
Mr. Howard Epstein, Vice-Chairman
Mr. Clarrie MacKinnon
Mr. Gary Ramey
Mr. Mat Whynott
Mr. Brian Skabar
Mr. Andrew Younger
Mr. Chuck Porter
Mr. Allan MacMaster
[Mr. Gary Burrill replaced Mr. Clarrie MacKinnon]
[Mr. Jim Boudreau replaced Mr. Gary Ramey]
[Hon. Christopher d’Entremont replaced Mr. Allan MacMaster]
Mrs. Darlene Henry
Legislative Committee Clerk
Mr. Terry Spicer
Assistant Auditor General
Mr. Gordon Hebb
Chief Legislative Counsel
Department of Transportation and Infrastructure Renewal
Ms. Jane Fraser, Acting Deputy Minister
Mr. Bruce Fitzner, Chief Engineer, Highway Programs
Mr. Brent Pero, Acting Executive Director, Finance
HALIFAX, WEDNESDAY, FEBRUARY 15, 2012
STANDING COMMITTEE ON PUBLIC ACCOUNTS
Hon. Keith Colwell
Mr. Howard Epstein
MR. CHAIRMAN: Good morning, I’d like to call the meeting to order. First I’d like to start by having everybody introduce themselves, starting with the NDP caucus.
[The committee members and witnesses introduced themselves.]
MR. CHAIRMAN: First of all, I would like the presenters from the Department of Transportation and Infrastructure Renewal to make their presentation.
MS. JANE FRASER: Good morning everyone. I would like to thank you for the opportunity to speak with you this morning. I hope you’ll find that our time with you is informative. I’ll keep my introductory remarks very brief so that there is ample time for questions today.
Before I start my opening remarks, we have introduced Mr. Bruce Fitzner who is the Chief Highway Engineer and Brent Pero who is the Acting Executive Director of Financial Services for the department. The three of us are very pleased to be here this morning to talk to you about our chip-sealing operation, our mobile asphalt plant as well as the RIM program. We hope that the information package we provided you is helpful and we look forward to your questions today.
I would like to give you a very brief outline of the department before we start to give you a sense of the size of the department. The mission of the Department of Transportation and Infrastructure Renewal is very simple: it’s to deliver quality public infrastructure. The way that we do that is through two main operational divisions. We have the Highways side as well as the Public Works division in the department. We have 2,200 FTEs that work all across the province. Our clients are Nova Scotians, other government departments, as well as agencies of the Crown. We oversee the construction of provincial highways; we maintain and manage the provincial transportation system.
As a service department to government, our department offers a full range of services, including project management of buildings, building operations, environmental remediation, land acquisition and, of course, construction. We’re responsible for 2,400 buildings with an assessed value of about $1.9 billion. We maintain 4,100 bridges and about 23,000 kilometres of provincial roads. We operate and maintain approximately 1,300 pieces of equipment, as well as seven ferries. Both the chip-seal operation and the asphalt plant are new programs that we’ve introduced to help ensure that we’re investing taxpayers’ dollars wisely, while continuing to provide Nova Scotians with safe roads.
The RIM program was introduced in 2000-01 and has been very successful in maintaining our rural and secondary roads. The information we provided to you today include updated versions of the business case for both the chip-seal operation as well as the asphalt plant. When these business cases were originally published in 2010, there was some information that we had to redact under freedom of information. It pertained primarily to such things as privacy concerns for contractors, as well as budget information and contract negotiations that were ongoing with CUPE at the time. Most of that information has been put in the business cases, however, there are some things that have been redacted. I want to point out that those are the only changes that have been made to the business cases.
We look forward today to talk to you about the chip-seal operation and the results to date. I’m pleased to say that so far we’ve saved more than $2 million by introducing the chip-seal operation. We’ve seen tender prices from the private sector go down from $91,000 per kilometre for a double chip seal to about $40,000 per kilometre. Our job is to ensure that we spend taxpayers’ dollars wisely while continuing to provide Nova Scotians with safe roads.
We are moving forward this summer with our mobile asphalt plant. This initiative is another example of steps we’re taking to get as much work done as we can within the budget allocation. We’ve committed to evaluating both of these initiatives and we’ll be pleased to share those results with you.
Our RIM program is another area that we’re here to discuss this morning. As I stated, it was originally established in 2000-01 and is used primarily for the funding and maintenance of local roads and secondary roads. To date, there has been a total of $179 million spent on the RIM program over a 12-year history. That is a significant amount of funding and it speaks to the extent - as well as the expense - of maintaining our road system. Examples of some of the work that is carried out under the RIM program are things like gravel patching, asphalt patching, ditching, guard rails, things of that nature. Projects carried out under RIM tend to be smaller and aren’t usually the type of work that you would see on our capital program.
We look forward to answering your questions and certainly if there are any questions you have for us today that we are unable to answer, we will commit to get that information to you as soon as possible. Thank you.
MR. CHAIRMAN: Thank you very much. We’ll start the questioning with Mr. Younger - 20 minutes.
MR. ANDREW YOUNGER: Thank you, Mr. Chairman. First I wanted to raise an issue. The Acting Deputy Minister mentioned that we were provided with an updated business case but in discussion with my Progressive Conservative colleague, neither one of us has received that. I don’t know if that’s still working its way to us, in committee, or what the case may be.
MR. CHAIRMAN: Maybe I can ask the clerk - did you receive that?
MRS. DARLENE HENRY (Legislative Committee Clerk): Everything was sent out to you.
MR. YOUNGER: My understanding is that it really hasn’t changed much, other than a couple of redactions; we can still obviously proceed with it, but it would be good to receive that. I think we checked with our researchers and they’re not aware of it coming through either.
MR. CHAIRMAN: Perhaps I could ask the deputy minister to ensure that we do have that information in each caucus.
MR. YOUNGER: Or the clerk, whichever place it ended up.
There are a number of issues I want to cover, and no doubt I won’t cover them all in 20 minutes so I’m sure I’ll be back. You said you are investing taxpayers’ dollars wisely and then you talked about saving, the tender price going from $91,000 per kilometre to $40,000 per kilometre and that you saved $2 million. I want to ask you about that because that seems to be far different from other information that’s out there.
Let me just explain that. The tender prices that are being quoted as a before-tender price were abnormally high across Canada, because of the infrastructure money being put in as part of the stimulus plan. That’s fairly widely accepted and widely known. The federal government has actually acknowledged that and the Bank of Canada has acknowledged that, prices for many products that governments tend to buy actually went up during that period. It’s also widely known and accepted, if we look at other provinces, that the tender prices have come down in the past year, for a lot of reasons, where they haven’t built government asphalt plants, by similar margins, largely because of - in the case of Nova Scotia, for example, we have another big competitor in the field that is coming in. As well, we know that there was less work out there, generally, so there wasn’t a capacity issue, so there were more companies going for less work after that stimulus ended.
There were two approaches, and I’m going to simplify this. One was the approach that this government took which was to buy an asphalt plant and start going at it and building, doing its own chip sealing - at least some of it. I realize that you still tender some of it. The second approach, which was done by others in this province - and I’ll use HRM as an example since that would probably be the second-biggest tender of roadwork - was to go to the companies and say listen, your tender prices are too high, what would it take to bring those down? They achieved the same reductions that the Nova Scotia Government did - more, in some cases, than what you’re suggesting. They did that because they had a meeting and said, what’s the problem? Some of it was around tendering times, some of it was around bulk tendering and those same things have been done in New Brunswick and achieved in New Brunswick, to reduce the price there.
I guess what I’d like to know is why that step wasn’t taken first, before deciding to put the province on the line with a significant capital investment and long-term liability, instead of first having those discussions with the industry to see if there were other ways to bring the tender price down.
MS. FRASER: Thank you very much for the question, MLA Younger. The tender prices that we saw for a double chip seal across the province, from 2008 and 2009, are an actual reflection of what we were seeing, so that was $91,000 per kilometre.
The industry - there was limited competitive competition; there are really two contractors that provide double chip seal in the Province of Nova Scotia. When you look at what New Brunswick was receiving for similar work when they tendered it - so not their in-house operation, but the work that they did when they tendered it - it was $37,000 per kilometre. It was really the lack of competition that we were seeing that made the decision to go into chip seal.
The benefits of the chip plant are certainly being able to do more paving, more work with the same amount of money and we’re seeing that in the prices that have been experienced. In 2011 they’ve dropped by more than half so we are seeing that and we believe that is a direct result of the competition of having our own crews in place. There are other benefits from having the province involved in chip seal; one is simply the use of our equipment. A lot of the equipment that we use for the chip-seal operation is equipment that is used primarily for winter work, so it would be idle during the summer, so we can utilize that, which results in savings as well.
Also, by having that competitive tension between the private contractors and the in-house work that we do helps inform us to make sure that we are getting good pricing, so it really does assist in the area of being an informed consumer, if you will.
MR. YOUNGER: Well, Mr. Chairman, there is no competition between the province and the private sector because the province isn’t bidding on the tenders against the private sector, so there is no healthy competition. It would be one thing if the department was submitting a bid on the tender at the same time, but just as they were going to do these 300 kilometres of roads - or whatever number of kilometres - that isn’t a competition.
It’s interesting because your comment about New Brunswick, I think, proved my point. You were saying they were getting a price of $37,000 a kilometre, but when you look at the facts and you talk to the New Brunswick department, they actually tendered them differently. They met with the industry and found out that, okay, well if we give you - we’ll tender them in packages, so there’s a group of roads as opposed to single roads, which will always cost more, but Nova Scotia was largely tendering it by single roads. We know that in New Brunswick, some of the contracts were for multi-year maintenance. That was not being done here, which also brought down the price and we also know that additional competition came into the Nova Scotia market in the exact same year that the provincial asphalt planted started, and so that would have brought down prices anyway.
I guess it really gets back to that question of, why didn’t you look at those options before taking on a liability for the Province of Nova Scotia? Any asset - whether it’s a good asset or bad asset - it’s still a liability of the province; it either has to be replaced or maintained at some point. The winter works equipment, which you talked about, it’s great that it’s being used in the summer; however, now it reduces the lifespan of that equipment, so there is a liability on that side. I guess it really comes back to that question of, why didn’t you have that discussion with the industry first and, if that didn’t work out, then look at the option of a paving plan?
MS. FRASER: On the issue of competition, the two contractors that were bidding on the jobs in 2008 and 2009 at the price that we were receiving at that time are the same two contractors that are bidding on the work that we’re having today. So in this specific area of chip seal, what we’re seeing are the same two contractors.
On the issue of the tendering and the way that New Brunswick puts its tender package out, the benefits of doing multi-year tendering are looking at the size of the job and the location of the job. I think that really is a technical question that I think the chief highway engineer would certainly be able to give a much more fulsome answer to, than I would be able to.
MR. BRUCE FITZNER: I think, to get back to our previous discussions, we have had a long-term working relationship with the road building industry. We meet with them annually on many occasions, discussing everything from tender prices to specifications for the jobs and that type of thing. Prior to us moving towards our own operations for chip seal and asphalt, we had a lot of discussions about how we can reduce tender pricing and that’s almost an ongoing thing. Things like early tendering and the way we put our tenders together and the packaging of the tender are things that we’ve done. We’ve brought in an electronic tendering system in Nova Scotia so that we could get more bids in more easily for the contractors, so we did have that discussion.
I know that at the start of the stimulus program you said that prices went up everywhere in the country. I don’t know what you’re referring to there specifically, I didn’t have that information. I know I meet with my colleagues around the country on an annual basis in other departments of transportation. In that initial year of the stimulus, what they were experiencing and telling me was some of the best pricing they had ever seen, the reason being, I think, the economy at the same time.
The reason for the stimulus was because the economy was moving downward. What they were finding were companies that hadn’t previously been involved necessarily in road building, where the private sector investments were less, were moving into the government road-building types of contracts. So initially, for that first year, they were seeing good pricing and here we were seeing that actually go the other way. So we started to ask ourselves the question, what is going on or what is different here?
Now we always recognize that there are areas of the province that there are not as many bidders. Then we’ve always found that when you get into those areas, you’re going to see higher pricing than more strongly competitive areas. That’s natural, that’s almost a given, right? It was just getting to the point that in those areas of the province we weren’t able to get as much work done for the dollar that we were spending, so we were just trying to find a way.
We had discussions individually, myself and my former chief engineer who was here, talked to people and we told them we were very concerned about what was happening and that they needed to find some ways to deal with that issue within their own association. We weren’t seeing any changes so that’s when we made the decision that we needed to introduce something else into the mix to see if we could achieve that objective.
MR. YOUNGER: It is interesting that your own minister said - and someone can go to Hansard and get the exact quote if it is required - repeatedly in Question Period that he knew the industry could do it cheaper - his concern was that they weren’t - than the province was doing it. He all but admitted in a number of those questions that really those discussions, in a big way, didn’t happen the way that they happened in some of our municipalities, where they did actually achieve getting those lower prices. In fact, the industry has said that, too, so there seem to be lots of people saying that the necessary discussion didn’t happen.
What I would be interested to know is if I had a chip-sealing company - which I don’t, for the record - I would have to factor into my price not only my product but my labour, the overtime, the cost of transportation, the amortization, the overhead costs, all the administrative costs, into that price. What is the government’s price per kilometre to do chip sealing, including all of those costs?
MS. FRASER: Based on the actual experience that we’ve had with double chip sealing, looking at the things that you’ve included, such things as the materials, emulsion and all the various components that go into chip seal – labour, amortization of the equipment, the experience that we saw in 2011-12 is $49,000 per kilometre.
MR. YOUNGER: Does that also include pension liabilities for those employees?
MS. FRASER: That would be the full suite of employee benefits, as well as your labour costs, lodging costs, everything that would be part of the cost of having our employees working, yes.
MR. YOUNGER: So even with that number at $49,000, according to the numbers you gave in your presentation where you said that it has come down to $40,000 per kilometre per tender, you are now $9,000 per kilometre higher than the private sector and you are $12,000 per kilometre higher than New Brunswick, so you really haven’t solved the problem.
MS. FRASER: I would say that we have never said that we can do chip seal cheaper than the private industry. What we have said consistently, and what I believe the minister has said, is that we can do it cheaper than the tender prices that we receive and we’ve experienced that. It was $91,000 per kilometre for double chip seal prior to our crew being up and running in 2011-12. We’ve demonstrated savings of $2.2 million in 2011-12 and that has come from two areas: one is a significant decrease from the private contractors per kilometre, from $91,000 down to around $40,000, which is very encouraging and very good; and the other is the amount of work that our crew is able to do at $49,000 actual cost, based on the experience that we had. So we’ve seen the savings that we hope to get by getting into the chip seal business.
MR. YOUNGER: Mr. Chairman, my argument would be that had you had the appropriate conversations and had you done some of the things that the industry had suggested, when this was announced many in the industry sort of said listen, here’s a whole lot of things that would have reduced that cost to what New Brunswick was paying - or very close - and you’re seeing that that has happened now, as the industry is within $3,000 per kilometre of New Brunswick. Yet instead of taking those options, which also would have resulted in that reduction and would have resulted in that reduction for all kilometres, we are now in a situation where the government now owns plants that are a long-term liability. They’re paying $9,000 a kilometre more than the private sector is bidding now; they’re paying $9,000 more than what the private sector said it could bid if it worked with the province to solve this.
It really gets back to the issue of your own numbers. I mean I could sit here and argue that somebody else says it’s this number and that, but I won’t, I’ll just use your numbers. Your own department’s numbers suggest that had you had the conversation with industry the way the industry suggests that you didn’t, we actually would have been saving more money than we are now and getting just as many roads, if not more - you either would have been saving money in the department or you would have got more roads done because you would have been paying $40,000 a kilometre for it all, instead of $40,000 for some and $49,000 for some in a hybrid.
It comes back to that issue of we know that other jurisdictions, other provinces, municipalities in this very province had those discussions with industry and brought down prices in this province and did not go out and buy plants, it didn’t happen here. So the question is, why didn’t you look at that option and then if that didn’t work say fine, we have to go and do this?
MS. FRASER: Certainly the chief highway engineer explained the process that we went through. We have regular discussions with the Road Builders Association; we have a good relationship with them, they’re very important to us in being able to deliver on the capital program that we want. As well, we are an important client for them so our relationship with the road builders is strong. We do have those discussions with road builders on a fairly regular basis, both myself and certainly Bruce and the staff that work with him. We do have those conversations about how we can improve tendering prices, how we can change our processes to make sure that we’re getting information out there to make it more effective for them to bid. So we do have those discussions on a regular basis and we’re always open to improving the way that we do our business, to get a better price and to strengthen the relationship with the road builders.
Having said that, the price that we were seeing wasn’t reflective of what other areas were seeing. The decision to get into the chip seal business really wasn’t one that was taken lightly or was made overnight. We looked at a lot of information, we had discussions; we looked at options in order to reduce the cost of chip sealing. The decision was made based on the history of what we were seeing, and given the budget resources that we have, what the most effective way was for us to ensure that we can do more kilometres within that budget allocation.
We’re very pleased to see the savings certainly from the private industry and seeing that their tender prices have come down, which has resulted in around almost $600,000 in savings just in 2011-12 alone, and coupled with the work that our crew was able to do, we have seen the savings that we were looking for. There are the other benefits that I’ve spoken about: a more effective use of our equipment, to make sure that’s being utilized as effectively as possible; the knowledge of being able to be an informed consumer, to make sure that the prices we’re getting in the future, we can evaluate that, and just make sure that we are getting good value.
This model of a mix of in-house work and private has been very effective both for the Province of Nova Scotia as well as other jurisdictions. If you look at our central line paint crew, which is a model that we’ve had for a number of years - using both private contractors as well as our own crews - we have the lowest paint prices in the country. That is a result of the competitive tension, so it’s an ability to make sure that we can gauge ourselves against the industry. Those are some of the things. I don’t know if the chief highway engineer has anything to add to that answer.
MR. CHAIRMAN: Order, please. Your time has expired.
HON. CHRISTOPHER D’ENTREMONT: Maybe if it’s a short answer, I’ll allow the time to answer that specific question for the member.
MR. FITZNER: One of the reasons, I guess, that we were looking at the chip seal was because we were looking at a different strategy to manage the local road deficiencies that we had; everybody is quite aware of those. We were looking to New Brunswick, they used chip seal extensively and we looked at their prices and the model that they use in New Brunswick, in fact, is where they have a mix of in-house chip-seal crews and private sector service providers as well. That was a model that we saw working well, that they were getting better prices and one that we went up and explored a little bit further.
MR. D’ENTREMONT: I want to thank the members for being here today - Acting Deputy Minister Jane Fraser; Bruce, good to see you, chief engineer of course; and Brent, thank you for coming in today to take questions. We know, through all this process as we’re trying to justify the province going out and purchasing an asphalt plant, a chip-seal plant and all those things, I think there are a lot of questions that we have, especially when we believe - from our benches - that you were asked to do something from either the Cabinet or from the Premier’s Office and you’re trying to justify it. I think you’re doing a pretty good job in trying to justify it but I think what we’ve been able to see, over the last number of kilometres that have come forward from this - it has really raised a whole bunch of new questions and, more specifically, from the questions I asked here in the House of Assembly back in December when it revolved around the location of where the chip seal ended up.
We did a FOIPOP and the FOIPOP is, I think, before you now. I want to start sharing it with you because it basically precipitated a whole bunch of other questions as we started going through that FOIPOP. Really what I’m going to do is, I’ll draw your attention to specific pages within it and the questions that I have. I have a number of questions so I’ll just try to ask them as quickly as I can and see if we can get some answers to maybe some of these issues.
I want to draw your attention to Page 105 in the FOIPOP. It is a breakdown of the cost of chip sealing the Monte Vista Road, which is one of the roads that you did get done this time and it was actually to the MLA who lives on the road, John MacDonell. The first question on that, on Page 105, is, who precisely prepared the document and approved it before it going to the minister?
MS. FRASER: When you say, approved the document, are you referring to the pricing that is on the sheet?
MR. D’ENTREMONT: Specifically, yes.
MS. FRASER: You’ll appreciate that I haven’t had a chance to review this. I would expect that this was done in response to a request for pricing. This would be work that we would do in-house with looking at the exact numbers that we would have based on the crew. As far as asking who did it and where it went to the minister, I don’t have the answer to that. I’m not sure if the chief highway engineer does.
MR. FITZNER: This sheet here was prepared after the work was done. We had asked our superintendent of that group to start to put together the final costing for the program for the summer and we asked him to do it as a total package, the total cost and we asked him to also look at individual jobs that were done as well because it can vary from job to job. The minister would never have seen this document; it was just an internal staff document that we were using. What the minister would have received would have been an aggregated package of the total costs.
MR. D’ENTREMONT: From this document we can see the cost of chip sealing the 4.7 kilometres of road, $189,826.44. My question is, why wasn’t the $150,000 gravel cost included in the figure? The $150,000 figure is found on Page 58.
MR. CHAIRMAN: Ms. Fraser.
MS. FRASER: We don’t seem to have Page 58. I have Page 57 and then it goes to Page 59.
MR. D’ENTREMONT: Just hold on a second.
MS. FRASER: It’s out of order.
MR. D’ENTREMONT: It’s on the back side. I can provide that across, if you want.
MR. CHAIRMAN: Ms. Fraser or Mr. Fitzner.
MR. D’ENTREMONT: It’s probably Bruce’s answer.
MR. FITZNER: What that is, when we did a comparison of the chip-seal prices versus the industry’s chip-seal prices, we were isolating it down to the actual cost of applying the chip seal. Most roads we do, before we do the chip seal, we have to prep them. We go out and we can do some ditching, we can do some pipe work, we can add some strengthening for gravel and this type of thing.
That gravel, although it was a total cost of improving the road, was not a cost of doing the chip seal. That was done previously by division staff. When it was completed, the chip-seal crew came in and did the chip-seal work, so that’s why it was not included.
MR. D’ENTREMONT: Salaries and expenses, I think we’re just going back to Page 105, I’m not sure. Salaries and expenses are listed at $20,241.26. How many people and how many days or hours does that figure represent?
MR. FITZNER: I think there are approximately 11 in the chip-seal crew. I’ll have that checked later to make sure that’s clear. So the salaries for those people would be included in the cost of that work, yes.
MR. D’ENTREMONT: So maybe what I can do is ask, as you’re preparing some more of these answers because, of course, there were a few more that go with that. How much do they make, are they hourly salaries; does that include the benefits, is it the usual Nova Scotia Government employee benefits? In each calendar month in 2011, how many days was the crew idle due to weather or other issues? There’s a whole bunch of factors that I think go in this.
While doing the job, and in the days immediately before it and after, how many person-days of downtime occurred and what was the full cost of the salaries and benefits? I mean we’re trying to be really specific on the crew that’s providing the service and what it actually provides, so are the costs of those idle days included in that? If you were a private company, your idle days, of course, would be included in that. Do we send them off to do other work and is that added in? What do crew members do in the off-season and where are they on the idle days - I guess just a continuation of what I’m saying, so maybe just some general answers on that one.
MR. FITZNER: Basically all those questions, the answer to the first ones you had is yes, the costs were all included. On this particular job, they would have just included the costs for the work they did on those particular days that they were on the Grand Lake Road. We had a cost centre set up to capture all costs for the crew, which includes downtime and that type of thing. We had a number of rainy days where the crew isn’t very productive. We’ve captured all those costs and all the benefits they get, and they’re the same benefits that they would normally get under the CUPE collective agreement.
Instead of trying to break them up into all these different jobs, we wanted to make sure that we captured everything so we used a single cost centre. Everything to do with the crew, from the lunch they ate, to the travel costs, to the benefit costs, was put through that cost centre, so we had a total and then it would be subdivided out later to the individual jobs. As far as we’re concerned, all the costs have been captured.
MR. D’ENTREMONT: If you could provide some more of that detail to us because it’s not really clear from the document that we had in the FOIPOP that really explains that at all.
MR. FITZNER: The other part of your question, what do they do? Most of them are seasonal employees and they would go back to their home divisions in the wintertime and be in the snow and ice control program, many of them. There’s one supervisor who stays on as a year-round employee who would do that planning for the next year’s work, and that type of thing, he’d have some administrative duties. The road foreman positions would go back into snow and ice control in the wintertime.
MR. D’ENTREMONT: So really when it comes to the salaries and benefits of these individuals, the people working for the crew, I mean they’re getting paid 100 per cent as they’re doing the work. They’re basically contracted for a six-month period to do the service, so considering we’ve only done about 12 per cent of the roads we were actually booked to do this year, they got paid 100 per cent and we only got 12 per cent. Is that in that actual cost that you provided at the beginning of this, the $49,000?
MR. FITZNER: The $49,000 figure was the cost from the time that the crew began to put chip seal down. There was a prep time for the crew to get up to speed, and we had to carry out training and get the equipment prepped. I think you’ll see in the numbers that we provided that if you include from the time they came on the first day of the summer until they were finished, the actual cost for that would have been $52,710 per kilometre, but those costs would be sort of one-time costs because next year that crew is already trained and they won’t need that extra time to get up to speed.
MR. D’ENTREMONT: So when I do the math it’s just the amounts provided by the department on the summary sheet and not, of course, the numbers that are added here. So $339,836.44 divided by 4.7 kilometres, it cost taxpayers at least $72,305.63 to chip seal the Monte Vista Road if you add all the costs in. So is it fair to say when it comes to this particular road that the cost far exceeded the $50,000 per kilometre the government said it cost the in-house crew to chip seal?
MS. FRASER: The cost that we use per kilometre is based on an average, which is the same as what you would see with the private sector; when we speak about things it’s an average. There are a number of factors that go into the individual project costs.
Certainly we will get the information for you to be able to address that question, but in the business case - and I do appreciate that it may not have been in your package - before moving into this area there were a number of assumptions that were made that would go into determining what the per-kilometre price would be. We did take into account the number of weeks the crew would be working, the hours per day, the downtime due to either equipment not working appropriately or rain days and things of that nature. We did capture a number of those components that you’ve asked for and once again, that would be at an aggregate level and then we would apply that as a per-kilometre rate. That’s the way we would do that.
MR. D’ENTREMONT: Looking through this package, there was a consultant brought in to assess the Monte Vista Road, the Grand Lake Road. Why did that happen?
MR. FITZNER: For many people who have been with the department, the Grand Lake/Monte Vista Road has been a maintenance issue for some time for us. It’s important that if you use a chip-seal surface, which really doesn’t have much intrinsic strength itself, the chip seal, the strength that it gets is from the sub-base that you have. In order to ensure that the chip seal didn’t fail, we brought them in and had them do strength tests on the road to see if it needed some strengthening with gravel before it was chip sealed; that would be similar to some paving jobs. For instance, we tendered a job in Shelburne County this year to one of the contractors and the same process, we did strengthening of that road with gravel before we chip sealed it.
MR. D’ENTREMONT: How much did the consultant cost or is it sort of an across-the-province kind of consultant?
MR. FITZNER: We would have a standing offer for a consultant that we would use for this type of thing. We put out tenders every few years and we bring on a service provider to do that for a number of years. I don’t have the actual figures for that, those can
be provided, the reports they did for us, yes.
MR. D’ENTREMONT: I appreciate that. Also on Page 105 there’s a line for amortization, what was the amortization for? We couldn’t quite figure out whether it was on equipment, whether it was on something else. Which equipment was it? Was it the new chip-sealing equipment or was it more the graders and things that would have been used during that time?
MS. FRASER: It would have been based on the equipment that we would be purchasing for the chip-sealing crew. I think about $1.5 million was the actual cost. We had estimated that originally in the business case to be about $2.6 million, so we would be using the actual amount. It would be for heavy equipment so we would use the provincial amortization rate as per the tangible capital asset policy, so it would be about 20 per cent. Once again, that would be blended and based on actual costs.
MR. D’ENTREMONT: Specifically on Page 105, it shows $20,241.26. I was just wondering which equipment that was supposed to be. So we would say that’s a fair portion of the paving equipment itself and all the equipment that was being used?
MS. FRASER: Correct.
MR. D’ENTREMONT: Would it be fair to say, then, when we add all this stuff up, that once you add in capital costs, gravel, ditching, crew - including the downtimes - the consultant and the actual cost of the chip sealing, to pay for a fair portion of the machine, the actual cost of chip sealing the minister’s road was over $0.5 million, if we add all this up?
MS. FRASER: The costs we have indicate that the cost of the chip sealing was $189,000. When we calculate this, what we look at are the components that go into the chip seal that we would see reflected in a cost from a private contractor, so the $91,000 per kilometre that we had been seeing from the industry didn’t have things like gravel. My understanding is - and certainly the chief highway engineer can correct me if I’m off base - it didn’t include such things as prep work, which was some of the gravel that you would have seen. So in order to be comparative and to make sure that we are reflecting the costs of both operations, we wouldn’t have those costs in the breakdown that we were asked for in providing the per-kilometre costs or the costs for chip sealing. Do you have anything to add?
MR. FITZNER: I don’t have the math done on your number, but certainly the total cost of the job was much more than just the chip seal costs. If it happened to be $500,000, it was four kilometres so it would be about $125,000 a kilometre for the entire job - if that, in fact, was the figure. I guess that was why we were looking to move to chip sealing. If you paved that road, it would probably be double the cost of that. That was one of the reasons we moved to chip seal, we found it was a much more cost-effective alternative to giving a hard surface to some of these roads.
MR. D’ENTREMONT: The department’s business plan projects 55 kilometres of road will be double chip sealed by the in-house crew and 311 kilometres would be single chip sealed in the first year. The reality is that about 35.9 kilometres of Nova Scotia roads got double chip sealed in total. Would you agree that despite the press releases from the department, the advent of in-house chip sealing resulted in fewer roads being chip sealed, with little or no savings to the taxpayer, especially when the capital costs of the plan are considered?
MS. FRASER: The estimate of the number of kilometres that we hoped to do with chip sealing was based on a fully functioning production year. I mean, it is fair to say we are disappointed that we weren’t able to achieve as much double chip seal this year as we had originally hoped to be able to do.
There are a number of reasons for that. We had bad weather, May and June were very bad so we weren’t able to do chip sealing. There’s a number of other activities that can go on but we couldn’t do chip sealing. We also had to train the crew in the proper application of chip sealing and things of that nature, as well as safety training. So the crew really started to work in August and we were seeing towards the end of the year some days where we were achieving close to the per-day chip sealing totals that we had been looking for.
I think it is very fair to say that the first year was a learning year. The upcoming construction season for 2012-13, we’re certainly looking to definitely improve on that and to benefit from the training and learning that we had.
I do want to point out that even though the total kilometres that we had been hoping to achieve weren’t exactly what we’d anticipated, we did recognize some significant savings. There’s $2.2 million in savings; $600,000 of that is coming from private industry where the per-kilometre prices have decreased significantly, and then as well in the savings that we saw from our crews. While the results weren’t as per the business case, which is really based on a fully functioning year, we still have good result.
MR. CHAIRMAN: Order, please. Your time has expired. Just before we go to the NDP caucus, I would ask Mr. d’Entremont if he could table that information.
MR. D’ENTREMONT: Yes, we have.
MR. CHAIRMAN: Just to ensure that all committee members . . .
MR. D’ENTREMONT: We don’t have the full package. We’ll make sure you have the full package.
MR. CHAIRMAN: Thank you. Mr. Boudreau.
MR. JIM BOUDREAU: Thank you to the folks across the way who have come in to talk about this very important initiative. I come from a riding where there has been very limited work completed for a long period of time. I’m very much aware of the costs and I think I can easily say that what Mr. Fitzner referred to when he spoke about the fact that paving costs were, in some cases, more than double in the area I represent. I know that was an extremely important consideration for me and for the constituents that live in that area. You know, $2.2 million in savings is a significant amount of money. I think one of the things that we have to understand is that we’re spending money that belongs to the taxpayers and it’s incumbent upon us as Members of the Legislative Assembly of the Province of Nova Scotia to ensure that the taxpayers’ money is used wisely.
I believe – and Mr. Fitzner, you can correct me if I’m wrong - that you have already indicated that there were extensive consultations with private industry prior to moving in the direction of purchasing our own chip-seal plant and looking to moving forward in the future. Am I correct in saying that?
MR. FITZNER: I guess the specific issue of, we have to see better tender prices, I probably wouldn’t describe that as extensive discussions. They were sort of ongoing discussions that were held in a number of different venues, some officially and some not officially, just off to the side. What would be extensive was working together to find ways to do the work cost-effectively.
MR. BOUDREAU: That’s my point. This should not have come as a surprise to anyone that we as a government, and you as a department, were trying to reduce costs by bringing tender prices in line with what should have been versus what was, and I think that’s the point that I want to try to make. It’s not something that should have happened, or people shouldn’t have seen coming because of the consultations, discussions and ongoing talks about bringing tender prices down
The question that begs to be asked is, why wasn’t it being done cheaper? It’s sort of a rhetorical question. I’m not asking you for an answer, but the question begs to be asked, why wasn’t it being done cheaper and I think that is a question that a lot of us pondered, thought about and I think it’s a question that the public of Nova Scotia has to look at as well.
Another point that I’d like to make is that there has been a reference here about using our own equipment. If I have a piece of equipment, I think it’s good business practice on my part to use that equipment to the best of its use year-round. I don’t think it makes any business sense to take a piece of equipment, use it for six months and then stick it somewhere and store it. There are all kinds of problems with that when you’re talking about mechanical equipment. I think it is a great initiative to take that equipment and use it year-round and use the personnel year-round, and at the same time save $2.2 million. That to me shows leadership and shows the change that we have long needed in this province.
We have to manage our resources wisely and we have to work with the road builders. It has been said by yourself, and I just attended a road builders conference recently and had many conversations with those folks. I think Nova Scotians, government and your department value them; you’ve said that, I’ve said that, others have said. At the same time, we have to ensure that monies are being expended wisely.
Now, one of my colleagues has sort of compared the road situation in HRM and any associated costs with that to rural areas - or Nova Scotia in general - and I’ll take rural areas like Guysborough-Sheet Harbour and Colchester-Musquodoboit Valley and Cumberland North and so on. In my estimation, that really is like comparing an apple to an orange. The more I sit in this Legislature and the more I listen to folks, I realize that many people on the Opposition side have a hard time distinguishing between an apple and an orange and I would hope that they would, perhaps, spend a little time looking at that.
Today we’re talking about rural roads and we’re talking about roads in the Province of Nova Scotia. My Progressive Conservative colleague has spent a lot of time talking about one particular road. I’m here to talk about roads in general; road conditions and how we can make those roads and those road conditions better and safer and more economical for the citizens of Nova Scotia.
I’m wondering if you would be so kind as to perhaps just give us an overall view of the amount of road work versus the expenditures that have happened, let’s just say, last year in relation to what we would have seen maybe three or four years ago. We know that we have saved $2.2 million. I’m looking for, perhaps, a little more information in that respect and also I’m looking at projected savings down the road as well. If you could just give us a brief overview of that, that would be great.
MS. FRASER: Thank you for the question. The capital spending in the province has been very significant over the last three years; it is almost $900 million that has been invested. When you look at the impact that has, it is very significant. In 2011-12, we’re doing $265 million worth of work. The capital budget that was released by the Minister of Finance, I believe, in December, indicates a further $281 million work of highway work that will be done in the upcoming fiscal year - that’s on the capital side. As I said in my opening remarks, the RIM program has certainly put a lot of money into the maintenance of local and secondary roads, our rural roads primarily, so that has been another $179 million that has been invested.
What we’re doing with the money that we saved from chip-seal programs, from seeing more competition in the bidding is reinvesting that money to allow us to do more work. On the five-year capital plan that was released, you’ll see the order of magnitude of the work that we’re doing, and the schedule that allows us to do a lot of the work, so there has been a very significant investment in the highway system, both on the capital side, as well as the operating side.
MR. BOUDREAU: You just mentioned the five-year road paving plan and certainly that’s something that is a first for the province, in my estimation. Prior to coming to government, this is something that was a real deficiency because you could never see what was going to happen in the future. You couldn’t plan municipal units and so on. They would bring people in transportation before council, to discuss what might be happening because they are looking at perhaps an integrated plan, a municipal planning strategy, what have you. One of the concerns they have is that it was basically year to year, almost month to month in some cases.
As you know right now, I’m very much a supporter of the five-year plan. I came in looking for that kind of leadership and this is something we have now. Can you just talk a little bit about how that improves - I think I know how it improves - how that improves your business and how it improves the way in which contractors can bid which, of course, is important to them because one of the complaints we always hear from contractors is, it’s kind of like a ‘feast and famine’ approach, we can plan. But now, when things go out, I think they can plan.
I’m looking for your view on how that has improved your efficiencies and how that has helped contractors in the private sector - and it has, because I’ve talked to contractors. The point that you make and I made is that we value them, they’re very important, they are an integral part of how we fix this province up. I’m looking for your views on that, as it relates to yourselves, the private sector and finally, how it relates to the use of public dollars.
MS. FRASER: Certainly the five-year plan, from a staff and a departmental point of view, is very beneficial. Really what it allows us to do is to plan and prioritize the work we’re going to do over a horizon. It really adds certainty and allows us to start doing some pre-work sooner, so there are some great benefits there.
Certainly one of the things that we’ve heard from the Road Builders Association is they need to understand what the work is going to be sooner. They need to understand the volume, the size of the budgets, when the work is going to come, so that they can schedule their work. We’ve always had conversations with them about that. What this has done is laid out the major capital components that we’re going to be doing over the five years and really has helped them with the sense of where the work is going to be, so they can plan. It allows them to make investments in equipment they need and in the labour forces they need. So from that point of view, it has been very beneficial.
Road builders are a very important part of the province, both from the work that we do but just the amount of money that they inject into the economy. I think in the five-year plan we use a number of $309 million a year in direct payroll. That’s a very significant impact on the province.
The other thing I think it does is it allows people in communities to see where their roads are going to be. People are very passionate about their roads and their communities and they want to know when their issues can be addressed. What this does is lay out the process we use to evaluate roads, so they can see how a road gets chosen, which is very important, but, as well, it allows them to see when they can expect to see work done on their roads.
So from a planning, from a scheduling point of view, from an efficiency point of view, it’s been very beneficial. The specifics about how we develop the capital plan, maybe I’ll ask the chief highway engineer to elaborate on that a bit further.
MR. FITZNER: I guess to answer the question, previously before the five-year plan, we did our planning almost on an annual basis because were never quite sure which projects we were going to have to do. So it was very frustrating for staff because you could be working, designing a bridge that you thought was going this year and it didn’t go this year. So we needed to have a longer term outlook, in order for us to get some of these projects ready. There’s quite extensive pre-engineering that has to happen before they can be delivered. Staff was always lobbying for this type of approach. The road-building industry was, as well, just so they had a bit of stability in what was coming.
Jane covered off most of the points, but I think the big thing here is that it’s a public document and so people now don’t have to sort of guess what’s going or what’s being done. It’s all put out there and people can question us on it, why we pick the projects and this type of thing. I’ve been pleased over the last few years that we’ve had this, I’ve had very few people actually come and say that projects that we have aren’t the proper projects. There are people who may have other projects, as well, there are so many to do. But I’ve been very happy so it makes me feel like we’re on the mark, trying to get out there and look at the needs, listen to people and see what really has to be done and that we’re picking the right projects. That would be all I could add to Jane’s answer.
MR. BOUDREAU: Just a comment, from talking to the road builders, what they see with this type of initiative - and I think it’s very important for road builders that are in specific geographic areas - is like one person said, we can actually look ahead now and we can actually put in better tender prices because we can somehow try to connect various projects together, which enables them to keep their equipment. Because every time these plants have to move, there’s enormous cost and up to this point, it has been a cost that, I believe, the taxpayers have been footing because of the lack of planning and the lack of - and I’m not saying it’s on your part. I’m saying that you were given a mandate to plan for a year and that’s what you did, that’s what you were asked to do. But this type of planning has been of benefit to the road builders, according to some of the spokespeople that I’ve talked to. Certainly the public likes it because now they have an opportunity to see what’s happening.
I think the public in Nova Scotia are, for the most part, patient individuals. If they hadn’t been, they wouldn’t have let the roads deteriorate to the point of 30 years - you know I’ve got roads in my area that haven’t been touched for a 50-year period and the reason, I believe, that they’ve lasted as long as they did is they were done by the Department of Transportation. I think they were done very, very well at that time.
One final point I want to make is, I’ve got a lot of calls, a lot of e-mails from former employees who are so pleased to see what we’re doing because they think it’s going to save the taxpayers money and it’s going to improve the quality and quantity of paving that is going to happen in the province. I think that’s something that I hope the Opposition members don’t lose in their single focus on certain areas. We’ve got to look at the big picture here. We’ve got to look at what we’re doing, how we’re accomplishing it and how we’re moving this province ahead. I’m not for staying behind; I’m all about moving ahead and I think I can speak for my colleagues here on this side, right over here in particular, that that’s what we want to do, we want to move this province ahead. Thank you, Mr. Chairman.
MR. FITZNER: I just want to say I appreciate your opinion about those roads being built by the department forces is why they lasted. I just want to go on record to say that we’re very pleased with the quality of the work that the road builders do and we have high standards there, and as we go forward doing some of that work ourselves, we expect them to build the quality and the same as we will. I can’t speak for what happened 50 years ago or anything like that, but I just wanted to say that now.
MR. BOUDREAU: Just one final comment. I do understand, but I guess what I was trying to put across to you, I think, is the opinion of many of the people out there that this is why these roads have lasted. I understand that the road builders - and I do appreciate what they do, but I think by working together that we can improve what we do. I don’t think we were there. We’re getting there and I appreciate their efforts, I appreciate your efforts and like I said, I want to see us move ahead. I hope that wasn’t conceived as a disparaging remark toward the road builders because that wasn’t really the intent. The intent was - I guess my point is the department did really good quality work and I don’t want that to be left out; they did really good quality work and I’m confident they can do really good quality work in the future. Thank you.
MR. CHAIRMAN: Mr. Fitzner, do you have any comments?
MR. FITZNER: No.
MR. CHAIRMAN: Mr. Boudreau, you have a minute left, is there someone else who would like to take the minute in the NDP caucus? Mr. Burrill.
MR. GARY BURRILL: About the five-year plan, which I agree is a marvellous improvement, there’s just one concern about it. I would say that, in my experience at least in the rural communities I serve, the main roads that people ask about and who are seeking to know “are we on the screen, have we been lost, have we been forgotten about” are not the trunks, the routes and the 100-Series Highways, they are local secondary roads. One area where the five-year plan has not been as complete a step forward as perhaps it could have been is that it hasn’t included roads of that category. I’m wondering is there any thought that we might be able to expand the scope of the five-year plans to include this important category of roads?
MS. FRASER: On an annual basis what we do is - so when we release the 2012-13 . . .
MR. CHAIRMAN: Order, please. Your time has expired, sorry. Maybe you could wrap that up when you make your final comments if you don’t mind?
MS. FRASER: Okay.
MR. CHAIRMAN: The second round is to be 15 minutes apiece and it will be Mr. Younger to start.
MR. YOUNGER: I want to start by very briefly responding to the comment by the member for Guysborough-Sheet Harbour. I certainly wasn’t comparing the roads in HRM; what I compared, if the honourable member had been listening which he clearly wasn’t, was the fact that HRM and a number of rural municipalities, I also pointed out, actually sat down with the road builders associations and had meetings and said, listen, we need to get the price down to here, how are we going to do it and if we don’t we’re going to look at our own options, including many of those municipalities taking it in-house. That specific discussion never happened and even in the comments here, like we had ongoing discussions over it, then the comment was that other jurisdictions did it and achieved those savings without moving to an in-house system. I would point out that I mentioned not only HRM, just because they are obviously the second-biggest road tenderer in the province, but I mentioned a number of other municipalities.
We talk about tendering and I actually find the comment that the province is competing with the private sector in offering competition somewhat offensive because, of course, they’re not competing tender to tender. We now know that, in fact, if the province was competing tender to tender, the province would be doing it for $49,000 and the private sector would be bidding $40,000 and the province would lose all the tenders and wouldn’t be doing any of the work, so they’re not competing. Even if they were, they are competing with the tax dollars of the road builders, so they’re using the road builders’ and other Nova Scotians’ own tax dollars to compete against them.
We know that many of the road builders obviously hire many of their employees in the summer on a part-time basis and I guess full time when they’re doing work, but on a project-by-project basis. We know from a number of them that they have actually reduced employment hours as a result, which is understandable, they’re doing less work and they’re doing less work in the private sector bidding because some work is scaled back. They’re also doing less work for the province because there are 300 kilometres, give or take, that are now being done by the province. We don’t know how many people have fewer hours, so how many people living in rural, or anywhere in Nova Scotia now, have fewer hours and are paying fewer tax dollars because the province has taken that in-house; we don’t know the cost of that.
We know - and this is something I would actually like to get your response to because a number of our members have been contacted by department employees at some of the local shops to say that RIM funding in their areas has been reduced and that there is less work being done in rural communities across Nova Scotia by employees of the department, using RIM funding. I guess I would like to get your response to that because certainly the impression of the departmental employees contacting our members is that this is a not a good thing and will result in issues down the road, in terms of long-term maintenance.
MS. FRASER: The RIM funding - when it was originally established in 2000-01 - was a $9 million program, then it was increased to $10 million. There was a commitment made, I think, in 2004-05 to double the amount of RIM funding from $10 million to $20 million. That was done and there was $20 million worth of work done in RIM over a number of years. So in 2010-11, the budget for RIM was $20 million; the budget number in 2011-12 is $15 million for RIM funding.
There has been a significant investment in capital work in the province over the last number of years, as I’ve said and as has been said a number of times. It’s almost $900 million over three years, so there has been a significant investment in the highway system.
The RIM program when it was initially brought in - really, the focus is to be on those smaller projects that aren’t large enough to be part of the capital plan. When we look at it, it’s a mixture of projects that we put out to tender, in an attempt to keep private contractors working all across the province, as well as in-house. There are some things that our crews, it’s simply more efficient and more effective for the in-house crews to do work and some things it’s more effective to put out to private contractors - things like timber guard rail. Things of that nature, we can’t compete with the price of a private contractor. That’s really the way that the decision gets made on what work goes to private, as well as what work gets done in-house.
MR. YOUNGER: Well I appreciate your candidness that you can’t compete with the private sector on things like guard rails and that. It’s pretty apparent that you can’t compete with them on double chip sealing either, since you are $9,000 a kilometre higher, by your own numbers. I appreciate you saying so.
In 2010-11 there were $20 million in RIM funding. It went down last year to $15 million. I’m going to table this document and I’m just wondering whether it’s accurate. I have a document which I’ll table actually for the 2010 - well, it says 2010 but I think that funding was expended in 2011-12, which does say about $15 million, so I think that’s the one you are referring to.
I have one for the coming year, which would suggest that there’s only $3.3 million being expended and I’m just wondering whether that is accurate or what that number is expected to be. I’ll table that one as well because if it’s accurate, that would be $20 million, $15 million, down to $3.3 million and change. I’m wondering whether that’s accurate, whether that’s just because we don’t have a complete list at that point?
MS. FRASER: There’s no decision to change the RIM funding down to $3.3 million. I’ll have a look at the document. The RIM funding, as I said, went from $20 million in 2010-11 down to $15 million in 2011-12, so that’s where that decrease was.
It’s no secret that this government is very committed to getting back to balance by 2013-14 and every department has been asked to make reductions in their budget, as a way to meet that target. The reduction in RIM in the current fiscal year was one area, based on the investments that had been made and the capital program and other work that was done, where we felt it would have a minimal impact on services for Nova Scotians. That’s the rationale for the reduction.
MR. YOUNGER: Thank you. I appreciate - I know you probably can’t respond to that right now so we can always get a response in writing at some other time. You just mentioned about having to reduce costs in the department. Obviously you mentioned RIM was reduced slightly - it’s not slightly, it’s by 25 per cent, from $20 million to $15 million. What other things are you looking at to reduce in the department or to cut back on?
MS. FRASER: In the 2011 budget that was tabled in April of the previous year, the department’s budget actually increased. Our operating budget all across the department is $420 million, which is a significant amount of money. I don’t have the Estimates Book in front of me so I’m going to go by memory, but there were some areas that were decreased in highways and bridges. The snow and ice budget stayed the same as the previous year so there was no decrease in that area. We focus, as all departments do, on administrative areas: are there places that we can look across the department to make sure that we can reduce savings in the areas that aren’t critical to the delivery of services to Nova Scotians?
MR. YOUNGER: I appreciate that. I only asked that because you had raised the issue of cost savings and I just wanted to see if there was something different that was on the horizon and we weren’t aware of, understanding that you’re not going to tell us what might be coming in the upcoming budget.
I want to get back to this chip-sealing plant. There are things that have been said that sound terribly contradictory to me. We wanted to reduce the costs, but now the private sector costs - nobody reduced it down to what they were paying in New Brunswick, which was sort of that, look at the prices they’re getting in New Brunswick. If they were $37,000 and the province is doing it for $49,000 and the private sector is doing it for $40,000, we’re still not at $37,000. Since the department went down this path in an effort to reduce costs, because the private sector, they felt, was too high and now the government cost is almost 25 per cent higher than the private sector per kilometre, what is your department doing to reduce your costs down to what the private sector is delivering it for?
MS. FRASER: That’s a good question. We’ve already discussed the fact that this was a learning year so obviously the per-kilometre cost is going to be higher. Our objective is to obviously always work more efficiently and more effectively so it’s going to be to look at the way that the crews are working. There’s a lot of work in being trained in the application of chip seal, so can we improve the time - less downtime, things of that nature - as we move forward? Certainly that would be a question that we would be asking our crews and it’s a question that we ask all the time. I’ve spoken about the centre-line paint, which is the same sort of mix of private and public. That competitive tension works both ways so it’s good for private industry to understand our price point and how we can deliver a service and at what cost, but it’s also very good for our crews to see what the private industry is doing and try to be as competitive as they can be.
Our crews, the people who work for the department, take great pride in the work that they do. They work very hard for Nova Scotians; they do have a good eye on the taxpayers’ dollars, so I think there will be some positive competitive tension for us as well. Who knows, maybe we can reduce those prices even further so that we can reinvest more savings into more roadwork.
MR. YOUNGER: Mr. Chairman, I know I only have a couple of minutes so I’m a little bit all over the place just to get the last couple of things in. You had mentioned - and the member for Guysborough-Sheet Harbour had mentioned - using the winter equipment in the summer. I had also addressed the fact that obviously, I think we all recognize that reduces the lifespan of the equipment or increases the maintenance, one side or the other, because it gets higher use. It’s no different than driving a car more kilometres. Have you calculated what the reduced lifespan or increased costs for that equipment are going to be?
MR. FITZNER: As we mentioned before, we have to gear up our equipment to handle the winter season and so the amount of gear that we need in the winter is much more than what we actually can use in the summertime, so we do have a bit of a surplus. What we find, in actual fact, is the type of work that is done in the winter - plowing, with salt and that type of thing - that is the activity that really reduces the lifespan of the equipment and that hauling gravel and that type of thing in the summer is much less damaging to the equipment. Grant you, there will be use and parts start to wear out and that type of thing, but it’s not as significant. Actually, it’s sometimes better to have the trucks working than to have them sit because when they sit, parts start to seize up; it’s out in the yard for a month and you go to use it and then all of a sudden you have problems with the brakes and that type of thing.
It’s good practice to keep the equipment moving as much as you can as part of our maintenance, but we haven’t actually calculated the additional costs for the summer season alone. We capture all our costs year-round. Each piece of equipment has its own account and anything that is done to the equipment is charged to that account and so we’re able to come up with an hourly rate for the equipment. The more work you do, the more you can spread those costs over and the lower your hourly rates go. I don’t know if that has answered your question correctly or not.
MR. YOUNGER: Well I don’t dispute that winter would be harder with the salt and everything else; I don’t doubt that at all. But I think, as you pointed out, there are - I also don’t dispute that your per-hour costs may go down, but your total cost - and I think the lifespan on average will probably be shortened because you’re getting higher kilometres. As you said, you’re wearing out the belts - listen, I’m not a mechanic . . .
MR. CHAIRMAN: Order, please. Sorry, your time has expired.
MR. D’ENTREMONT: Just a couple of comments on some things that I heard, especially from the member for Guysborough-Sheet Harbour. We do understand the difference between apples and oranges. The oranges happen to be either members of a caucus or the members of Cabinet. The apples are, of course, everybody else that doesn’t agree with this government. I can also say that I think the member for Guysborough-Sheet Harbour should feel himself lucky that he didn’t get his road chip sealed, but he did get it paved. I just wonder how that all worked.
Back to my questioning - and this revolves a little bit around Monte Vista Road, which is one of the very few roads that this chip-seal crew was able to get done, so it’s the example, of course, that we had and it brought more light to the political side of things. My questions are revolving around how often did Mr. MacDonell himself, his EA, his CA e-mail, write, phone, text or otherwise communicate with the department on the project?
MS. FRASER: One of the factors that go into the decision on which roads to do is around information that we get from the public, and information that we receive from MLAs throughout the province. MLAs are very close to their constituents, they know the condition of the roads, they understand what the issues are. It’s not uncommon for an MLA to meet with our area managers to discuss the condition of roads and often what we find is that the list that the area manager has for roads that need to be upgraded or repairs often match what the MLA has. Input from the public is one factor that is part of the decision-making framework, as well as the volume of traffic on the roads - how many people live there, density, and obviously the condition of the road. Input from the public and MLAs is certainly just one factor that goes into the decision matrix, in deciding which roads get done.
MR. D’ENTREMONT: Being an MLA for almost nine years now, I appreciate the frank discussions that I can have with the department about roads that are in my constituency or near my constituency, but I can tell you, I’ve never actually talked about the road that goes across in front of my house. As a matter of fact, I have actually talked counter to that, making sure that my road is the last road to get paved in the whole constituency so I know the job got done; that my road is the last road to get graded because I know the rest of the constituency got done. That’s what I think as MLAs we should be doing. This problem that we see here in this Monte Vista Road issue is that there was a lot of go-between on this specific road. How much did Mr. MacDonell’s phone calls and other pressure tactics influence your decision to spend more money on Monte Vista Road?
MS. FRASER: As I said, the decision to what roads get done include a number of factors. The information that we have and the decision-making factor on volume density and things of that nature results in a prioritization of the roads. So that is how a road gets on the list and gets prioritized.
With the chip-seal crew, what we were doing because of the cost of mobilizing and demobilizing the plant and the learning curve, we went to a central area and tended to work around that area. The decision on what projects get done are put forward based on information from area managers and from district directors and then that decision is the way it gets done, based on a number of factors that I’ve said. I don’t know if the chief highway engineer has anything to add to the specific process that we follow on a consistent basis in the determining of the prioritization of roads.
MR. FITZNER: I would say, as you know, we get the lists of suggested road priorities from all across the province from all members on an annual basis. I guess what we tell them is that we thank them for their input and that we will have those roads rated, prioritized and considered for potential work. In this particular case, that’s the process that was followed, that was one of a number of projects that would have been on a list that was submitted and we had rated it - and as Jane mentioned, we were planning to do our work initially centrally. It turned out to be a good candidate for the chip-seal project, so the decision was simply made by staff. We then would put together a program for the summer based on that type of rationale.
We don’t consider or even want to know who lives on the roads, we just look at the road itself. We would put together a package and then we would bring that package to the minister to sign off, but the minister wouldn’t sign off on individual projects, he would sign off on the program, so that’s what happened in this case. That was among the projects that were in the program.
MR. D’ENTREMONT: One of the many e-mails that we have in our package - I want to go to Page 76. On September 19th, Peter Hackett e-mailed Gerard Joseph Lee asking for an update on chip sealing on the Monte Vista Road, he was “Getting calls from the mla.” My quick question on this one is, who is Mr. Lee?
MR. FITZNER: Gerard Lee, and he’s our manager of maintenance operations.
MR. D’ENTREMONT: On September 19th in the e-mail exchange between Mr. Hackett, Mr. Lee and Paul Maillet, Mr. Hackett explains that he has some concerns about the weather and getting the work done a bit late in the year. He says, “If the weather does not co-operate will we carry over until the spring? The reason I am asking is the MLA for the area will be looking for some answers.” Who is Mr. Maillet?
MR. FITZNER: He would be the supervisor of the chip-seal crew.
MR. D’ENTREMONT: In a September 26th exchange between Mr. Hackett and Mr. Lee, Page 78, Mr. Lee says he is getting calls about Monte Vista and asked for an update. Later he asked, “Any way we can do monte vista first?” It appears in these e-mails that Mr. MacDonell, the local MLA exerted some considerable pressure on the department staff to get Monte Vista, Renfrew Road, Grand Lake Road - whatever you want to call it, the road on which he lives - finished. It appears from the e-mails that, of course, his tactics worked because he did get it done. In fact, in a recent media article he indicated that now this his Party is in government he had more influence saying “. . . it hasn’t been easy since he had been in opposition until the NDP was elected in 2009, and now he is trying to play catch up to get his constituents’ roads paved.”
Again, to my first question, is it usual for department staff to rearrange work schedules in order to appease a particularly vocal MLA, who’s determined to use his position to play catch-up?
MR. FITZNER: We often get requests from members of all Parties about a particular project and whether it’s going to be done this year, or when it’s going to be done, or when it’s going to be tendered, so it wouldn’t be uncommon for those kinds of conversations to be held, but . . .
MR. BRIAN SKABAR: A point of order, Mr. Chairman. The member is making reference to a document that has not been tabled, that we don’t have any access to. I believe that is out of order.
MR. CHAIRMAN: Yes, it is, and I would ask the member to table the document right away. (Interruptions)
MR. SKABAR: The whole document.
MR. D’ENTREMONT: I only have to do the pages I’m talking about.
MR. SKABAR: Would that not be taken out of context?
MR. CHAIRMAN: No, if he quotes from the document, it should just be the actual documents that he quotes from. Thank you.
I was going to talk about this after we wrapped up the meeting today. In the future, if anyone is going to quote from any document in here, you have to bring copies for every single member of the committee, the chairman, the guests, as well as the clerk. If anyone doesn’t do that in the future, I’ll rule them out of order. Mr. d’Entremont.
MR. D’ENTREMONT: Thank you so much, Mr. Chairman. I apologize for that, I thought I had packages when I came in here and I didn’t, so I’ll be tabling it as I go along, and for the next time I’ll make sure that happens.
I’m just going to keep going here. By September 27th the deputy minister was involved, sending an e-mail to Mr. Lee asking for an update on the Monte Vista chip-seal project. In fact, it was one of several e-mails in which the deputy minister seemed to take a special interest in the project. For instance, on October 7th, he’s saying he must go out and lend a hand.
That same day, in an e-mail to the minister’s secretary, with the minister’s EA and Mr. Fitzner copied, the deputy says he wants to take the minister out to look at chip-sealing operations while on the Monte Vista Road.
My question is, Monte Vista Road was not the first road chip sealed by the in-house crew, by far. Why do you suppose the deputy took a special interest in this project and wanted the minister to see it, as well, if it wasn’t because Mr. MacDonell was pressuring the minister?
MS. FRASER: Certainly. It’s not uncommon for the minister to do site visits across the province. He’s very engaged in going to the bases to see the work that our crews do and he’s very supportive of departmental staff, so it certainly isn’t uncommon for the minister to go out and look at the operations, if you will. The former deputy was also very interested and very supportive of staff. So that’s in answer to your first question. Monte Vista Road, I can assume, is probably because it was a short drive and would probably be very close to the area in which they were going.
The process used to evaluate roads and to determine which ones get done is a decision-making matrix; it is based on evidence and it’s based on a number of factors, as I’ve said. Input from the community is certainly very, very important. One of the vehicles that we use to do that is often through MLAs, it’s not uncommon for MLAs to come in. As well, it’s certainly not uncommon for an MLA to ask about a specific project.
As far as staff being aware of who lives on what roads, we don’t have that information and it wouldn’t really factor into the decisions that we would be making. It would be based on prioritization. Then, once again, depending on where the crew is, often it makes more sense to do a road that, because of where it’s located geographically, to do that road maybe a little bit ahead of schedule as opposed to moving the crew and the equipment outside of the area in order to do a perfect list. Those are some of the factors that go into that.
MR. D’ENTREMONT: I know I’m going to run out of time here for my questions so I’m just wondering, once I’m done, I’ve got a whole bunch of questions that I’d like to have tabled and maybe answered by the department. Would it be okay to table those once I’m done?
MR. CHAIRMAN: Yes, it would be.
MR. D’ENTREMONT: Thank you. Bruce, I’m going to have to pick on you just a little bit here, because I know the deputy is just acting and she probably wasn’t around when this was happening. We talked about the famous barbeque that happened on the Monte Vista Road. I’m just wondering, Mr. Fitzner, if you attended the barbeque on Monte Vista Road that day.
MR. FITZNER: No, I didn’t attend. Actually, prior to that, they had mentioned to me that the residents out there wanted to have a barbecue. What I actually told them at the time is, tell them no, that we certainly appreciate their support for the crew but that I didn’t feel it was really appropriate for them to have a barbecue. It was on a weekend when they finished up and it happened and that was it. But no, I certainly wasn’t there and that’s what happened there. It wouldn’t be our normal course for that to happen.
MR. D’ENTREMONT: Well, it’s just the sort of issue that on October 27th, Minister Estabrooks, at the time, told reporters: I was on it last week and it was located out in Hants County at the time - well-received project, the community was hosting a barbecue for the workers because of the great job they had done. I’m just wondering if it was a regular occurrence to have barbecues and I think you’ve answered that one.
Again, I have a lot. How much more time do I have here?
MR. CHAIRMAN: You have less than one minute.
MR. D’ENTREMONT: Okay, less than one minute, I’ll just table what I have left here. The ultimate part that we have here is that we look at this as being, I think, a colossal failure, that we didn’t get the mileage out of the chip-sealing plant that anyone expected, how it was sold to the public, how the department came and tried to sell it to the caucus offices. I hope that next year, as we continue around this experiment, that it does have a much better result than it does and I hope that maybe government - more particularly, the leaders - have realized that the politics of paving are still very, very alive and well within this government.
MR. CHAIRMAN: Order, please. Mr. d’Entremont, your time has expired.
MR. BURRILL: I’m still thinking about the double chip-seal program. I would say that the program has been received in a very welcome way in the communities I serve but that the program would have a natural challenge, given that it has to confront a kind of great, pent-up demand. There are so many years of good-candidate roads for double chip sealing or surfacing of some kind when this demand hasn’t been addressed, that the list of qualifiable roads would far exceed the first pass that the department would be able to make. So a great deal would depend on the quality of the criteria for making these decisions.
You’ve spoken about a decision-making matrix and about the role of community input, political input and so on, but I wonder if you could just characterize some of the other main elements in the decision-making matrix that got us to the decision of the dozens of roads that were brought forward in each part of the province, to get us down to the four or five in each region that are on the “to be proceeded with” list.
MR. FITZNER: Okay, when we developed the low-volume road stabilization program, we wanted to make sure that we had some sort of criteria that we can do it objectively. In the past, when you get to low-volume roads, we tended to use traffic volumes as the proxy for the use of the road.
What people have told us over the years is that doesn’t capture the total story of that road. There could be a community centre on that road, a baseball field, a cemetery, a church, a small business and this type of thing. So they felt that you needed to factor that in, as well, so we came up with what we called sort of a density factor. First of all, we would take a traffic count because that is a relevant factor, but we would also go out, we counted every home on the road, any businesses, any sports facilities - anything, basically. There’s a weighted factor for each of those things: a business with two employees would have less weight than one with 20 employees, et cetera.
We then balance the traffic volume at 50 per cent weighting, the roadside development density at 50 per cent weighting, and came up with a combined factor that would basically be between zero and 100. So we determined that if a road fell below 50, it should basically be a gravel road, that it doesn’t have enough traffic or development to sort of get a higher-level surface. If it was between 50 and 70 or 80, we could start to look at black gravel treatments, chip-seal treatments and this type of thing. If it ever made it up to 100 per cent, it could actually be triggered to have it paved, so it would meet paving thresholds.
We went out in the last year and did the traffic counts, the density counts, the residences and put them all into this matrix and it then would spit out a list in relative priority and some of them would just be no, this is just going to be a gravel road, it’s not going to get a different surface than that. The ones that were in the higher range, we then sent staff out to look at each of the roads and say okay, on paper it looks good, what does it look like in the field. They would go out and look at that road and say, maybe there’s too much truck traffic on this road, the chip seal wouldn’t be a good option here or there are some other issues - there’s not enough strength in the road, it’s going to all break up. So after that process was complete we would come back again, go back down the list and say okay, this one and this one - basically pick them, start from the top down and rule out ones that weren’t good candidates. So that’s the process.
MR. CHAIRMAN: Mr. Burrill.
MR. BURRILL: I’m thinking about because of the huge, pent-up demand, the volume of nominated roads, the number of roads that would have scored over 50 which were not on the list of things to be proceeded with last year and this, I’m wondering what you can say looking into the medium term for this program about what those communities, the residents of those roads might be able to expect? How long down the road would it be before another process of prioritizing and going through this decision-making matrix and so on, that we might look to having it brought forward?
MR. FITZNER: I guess it’s always a factor of available funding, right. We have 9,000 kilometres of gravel roads in the province, we did 40 last year and that wasn’t a great year, but at least 40 got done. We have about 15,000 to 16,000 kilometres of paved roads and we may have done 650 with some of the biggest budgets that we’ve ever seen for capital in the department, so I guess the scale of the need is still far in excess of the ability to fund it. I guess the only thing we can do is ask people to be patient and we’ll continue to try to maintain the road to a good, usable surface in the interim and we’ll try to do it on a fair and objective basis, the ones that we do pick. We hope to see more than 40, obviously, this year.
One thing I just wanted to mention was when this crew started this year I told them the productivity is very important, but for the first year I want you to focus on the quality. You’re a new crew, you’re new at this, I don’t expect you to do miracles the first year. Make sure you’re doing the work right and when we’re doing it right then we’ll work on the speed and I’m sure we’ll see this year much more productivity than we had last year.
MR. BURRILL: Could we go back to where we left off about the five-year plan. I was wondering what plans the department might have that residents with local, secondary roads might be able to see themselves reflected in this kind of planning in a way that they haven’t been in the first iteration of the five-year plan?
MS. FRASER: In the five-year capital plan, what we do is when the plan for 2012-13 comes out we will have a list of the local roads that we’re planning to do in that year, so there will be a number of those roads that are in and scheduled for the upcoming construction year and we plan to do that every year as it gets released. So those would be the larger projects that would be capital in nature and residents in communities can expect to see their roads indicated there.
On the projects that are a bit smaller, that aren’t always capital in nature, there are a number of those projects so we don’t tend to put those out because they tend to be much smaller and we do a number of them, so it’s very difficult to put that list out. We have talked about, does it make sense to put local roads out longer in the five-year capital plan? The reason why we don’t is for a number of factors. One is the volume of the roads that we would be doing; there are a number of them. As well, conditions on local roads change quite rapidly over a five-year period. We could identify a road that is targeted to be double chip sealed or paved or something in year four for a local road, but the situation or the condition deteriorates so that it would have to be brought forward or other ones would drop off, so it’s just not seen as an effective way to manage the road system, but we will do it on an annual basis.
MR. BURRILL: It would seem to be a great improvement because I’m sure many MLAs would have had conversations with unhappy people after the publication of the first report, not seeing the road there and needed to explain your category of road is neither on nor not on. So are you saying that henceforward, the five-year plan will include one-year plans for this category?
MS. FRASER: For the current year. I think one of the benefits, as well, of the five-year plan is that it lays out the decision-making framework and the criteria that are used so people can understand how a road gets on the list and all the factors that go into determining that. It’s very much a process; it’s very much driven on evidence, on the conditions and the needs.
MR. CHAIRMAN: Mr. Skabar.
MR. SKABAR: Just kind of moving back to the barbecue for a second. The people of Northport are going to have a festival on August 11th to celebrate their bridge, and you guys are going to be invited along with the minister on that one. It took a little longer than we’d hoped, but it’s done now and we’re happy with that.
I understand from earlier conversations - getting back to the chip seal part - that other jurisdictions of the provinces have their own capacity to do that as well. Which ones? Is New Brunswick one of them?
MS. FRASER: Yes, New Brunswick is really the model that we looked at because they’re very close to us. As it has been pointed out, often on the larger capital projects, we see competition travelling back and forth across the borders so we look to New Brunswick as a model to see what the prices were that they were receiving, as well as the way that they do their business. So we had quite a discussion and a dialogue with the Province of New Brunswick.
MR. SKABAR: So, in fact, you looked around and found the best practice, which included capacity within your department for this function, chip sealing, and as a consequence, took this action to do that with all due diligence, talking to all concerned and that’s what happened?
MS. FRASER: Yes, it was a very deliberate approach. It was based on the experience that we had been seeing in 2008 and 2009 with limited competition, with only two contractors bidding. The price per kilometre that we were seeing, we felt that we could certainly do it for less than that amount and that has been proven. It was to get a sense of the types of things that we should factor in, some of the experiences that New Brunswick had. Certainly, the chief highway engineer can go into the specifics of the actions that we took in leading up to that decision, if you think it would be helpful.
MR. SKABAR: I understand that in the first year, it cost roughly $49,000 per kilometre double chip seal, and we are kind of at least thinking that this is going to be brought down by a fair measure now that the crew is trained and the plant is operational. Do you have any idea how much closer we might get to the private-sector cost?
MS. FRASER: It certainly would be our objective to close that gap as much as possible. We’ve been very fortunate in seeing the reduction in tender price. As we’ve discussed today, there was a learning curve involved in this. Weather does play a factor in the amount of work that we get done. Our objective would be - as the chief highway engineer pointed out - our focus issue was on quality, as it always will be, but we’re hoping now that the crews understand how the equipment works, we have a good process to lay the double chip seal and we’re getting good quality. Our focus now is going to be on improving the efficiency of the crews and on the productivity. We’re working to close that gap and I’m sure the employees in the department - there’s nothing wrong with a little competition, they’re very motivated to deliver a quality service for Nova Scotians.
MR. SKABAR: I’m sure that they are and I’m sure that they will. In reference to the asphalt, what does it cost for a kilometre of paving of asphalt?
MS. FRASER: Currently to do it, depending on whether it’s a 100-Series Highway, it’s costing about $300,000 per kilometre to lay asphalt.
MR. SKABAR: Is that similar to the cost in New Brunswick? Are we expecting any kind of mitigation of that cost once we have our asphalt plant in operation?
MS. FRASER: What we were seeing with the asphalt placement and the reason why we purchased the asphalt plant is in certain pockets in the province there’s limited competition and so those areas tend to be higher than what we’re seeing in the rest of the province. There are about 12 contractors that can bid on asphalt work, and in certain areas we’re getting good competition and we’re seeing competitive pricing. There are pockets - I think it’s from Kings down around to Queens, some areas of Guysborough, as well as Richmond and Inverness - where it’s not as competitive, and that’s where the asphalt plant will be. Some of the things that we’re . . .
MR. CHAIRMAN: Order, please. Unfortunately time has expired for questioning today. I would ask the department if they have any comments that they want to make to wrap up before you go and before we get on with other committee business. Ms. Fraser.
MS. FRASER: I would like to thank the MLAs for their questions and the interest that they have shown in the initiatives that the department is undertaking. There is some information that we’ve committed to get back to you with and we’ll certainly do that as soon as possible. Thank you.
MR. CHAIRMAN: Yes, in regard to the information - and if I leave anything out I’d ask the clerk to correct me on this - Mr. d’Entremont requested the number of people on the chip-seal crew and a detailed costing of what they make, and a breakdown of all the costs around that. Also, I asked for detailed costs on preparation work that was needed for the chip-seal plant, all the labour and all the materials and everything that went into that, and the cost of the consultant and a copy of the standing offer - the consultant that you use in these matters. You also spoke about an identity factor when deciding what roads would be paved and I wonder if you could supply a copy of those criteria as well.
Mr. d’Entremont has tabled questions here which I will make available to the department and to all members of the committee. Yes, what’s the other one? Mr. Younger.
MR. YOUNGER: Mr. Chairman, I tabled the RIM funding chart and we’re just going to get a response because I think the deputy indicated that it’s probably not accurate.
MR. CHAIRMAN: That’s correct. So if you could give us a written response on that, as well, I would appreciate it.
Now it’s down to committee business. We’re going to meet at 11:30 a.m. for the subcommittee today to set an agenda. Also you’ll notice that your caucus has received the information requested from the Department of Health and Wellness way back on October 26, 2011, regarding the Colchester Regional Hospital; that has been sent to each caucus.
Just a couple of comments I’d like to make. I’d like to thank the department for coming today and for your straightforward answers to some interesting questions. Thank you very much for coming.
Also, I want to state that in the future if somebody doesn’t table the items that they’re quoting from, the complete document, I will rule them out of order; that has to be tabled with every member. You have to have a copy for every member of each caucus that’s here, the chairman, the clerk, and also the guests.
With that, our next meeting is February 22nd and it’s going to be the Office of Immigration. I would entertain a motion to adjourn.
MR. D’ENTREMONT: I so move.
MR. CHAIRMAN: The meeting is adjourned.
[The committee adjourned at 11:25 a.m.]