The Nova Scotia Legislature

The House adjourned:
June 16, 2017.

Public Accounts -- Wed., Feb. 11, 1998

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HALIFAX, WEDNESDAY, FEBRUARY 11, 1998

STANDING COMMITTEE ON PUBLIC ACCOUNTS

9:00 A.M.

CHAIRMAN

Mr. George Archibald

DEPUTY CHAIRMAN

Mrs. Eleanor Norrie

MR. CHAIRMAN: It is 9:00 a.m. and I would like to call this meeting to order and welcome the Nova Scotia Agricultural College to the Legislative Chamber today. For those of you who are here for the first time, sometimes this building is overwhelming since it's the oldest seat of government in North America that continues to be used as a seat of government. There is a lot of history that has been in this Chamber in the very seats that you are sitting in. So, don't be intimidated by it. Welcome to the Legislature. For our visitors, we have all your names here, but so that everybody will know who the MLAs are, perhaps if we could start in the back and you could go through your names, please, so our guests know who we all are.

[The members introduced themselves.]

MR. CHAIRMAN: We have a list of our witnesses this morning but you are not sitting in the same order that our list is in, so perhaps we could start down at the end and just come along so we all know who our witnesses are.

[The witnesses introduced themselves.]

MR. CHAIRMAN: Well, the meeting is now open and I guess we are in business. The traditional method has been for the witnesses to make an opening remark, and I see that you have some prepared.

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DR. GARTH COFFIN: Mr. Chairman, if I may, I will go to the overhead projector and try to summarize these remarks. I fear that they may a little long if we were to go through them line by line, so I have prepared some overheads to summarize them and leave the document with you to examine more carefully at your leisure.

First of all, I would like to say that we are really pleased to have the opportunity to meet with the committee this morning and to talk about some of the things that have been going on at the college in the context of the current and projected fiscal environment, and also a few thoughts of where we might go in the future. I am doing this under three headings: first of all, Academic Programs; secondly, Financial Situation; and thirdly, Future Directions.

The last decade has been characterized by a very dramatic growth in academic activity at the college. We have had a 90 per cent growth in enrolment since the beginning of the decade and that followed the introduction of a full Bachelor's Degree program in the 1980's and expansion of physical facilities before that in the 1960's and 1970's.

The growth. You can turn to the first chart at the back of your copy and you will see a diagram like this that explains a little bit about where that growth has happened by program. The base of each column is the degree program enrolment, and you can see how that has grown continuously over that period. These are selected years during that time period. The next two blocks above that, the pale green and the blue, are technical programs, and you can see that in the first part of this period, there was quite a dramatic growth in technical programs as well, although that growth has levelled off since the 1994-95 period. The yellow block, which appears in the first column and then just a little bit in the second column, was a category identified as Other, and that was non-specific majors, I guess. I may need some help from my colleagues to explain what was included in all of that in the early part of the decade, but in the last two columns you will see the top slice is graduate programs, and you can see how growth has occurred in the Master of Science program there as well. So, that gives you a sense of where the growth has happened in academic programs.

Now, there are a number of reasons for that growth, but I would underline the efforts of the staff at the college, over the years, to develop and deliver very good quality programs, high quality programs that were well suited to the job market. This is something that our staff takes a great deal of pride in and I think that has been a very big factor here in the growth that has happened during 1990's; recognition of the quality that the academic programs represent and the success in the job market that resulted from that. So that reputation has brought students and I hope that it continues to do so.

There was, of course, some increase in recruitment effort, as well, during that period with more work at the high school level and greater effort in information to get out to the students to let them know what opportunities existed at the college and in the agricultural professional employment career field as well.

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Nonetheless, in spite of those efforts, and in spite of the reputation that the college has built up, we do find ourselves in an increasingly competitive environment, with a shrinking pool of high school graduates and intensifying competition by other universities and colleges to attract students, we find it necessary to work a great deal harder to maintain and grow the enrolment beyond the current levels. It requires a change in emphasis as well because we are finding it necessary to impress upon students that it is possible to get a degree through attendance at the college as well as their traditional technical programs. So, we need to put a little more emphasis on that end of the spectrum.

For example, in spite of the figures of growth that we have seen, we have actually had four years of declining applications for technical programs and we have had to work a lot harder to turn those into enrolments. We have been successful so far in doing that but we want to undertake this year a review of our technical programs so that we can make sure that they are still tuned to the job market and as good as they can be.

There has been a continuing emphasis on program development at NSAC. Just to give you a few examples of the latest developments in that regard, the Bachelor of Technology program which was introduced last year is based on the concept that technical programs can be built onto and converted to a full bachelor's program for those who wish to pursue training to a higher level in those technical fields. Our first major is landscape horticulture and it is just barely getting started so we don't have a great deal of activity in that field yet but we do intend to build on it and that's another reason for reviewing our technical programs at this stage.

The second area I underline is the aquaculture major which was introduced a few years ago and we had our first graduates last year. This is a program which is generating a great deal of interest. It seems that the timing is correct to respond to the growing need for professional expertise in this field as the industry develops in the years ahead. I might add, it is a very good fit with agriculture as well because it is part of the food business and if you think about it, it is really like livestock farming under water. Many of the nutritional considerations, reproductive considerations, that technology, that science is very similar, it is just really the medium that we are dealing with that differs.

We have an agricultural biotech major, which has been developed and is ready to be implemented as soon as we find resources to adequately carry that one. We have an environmental studies program which is currently being developed.

I should add that all of these things, of course, require a substantial investment in overhead, in labs, in livestock facilities, in computer facilities, and there are major needs to maintain that capital stock, which has become an increasing challenge in the past few years and one that we are grappling with right now. We feel that that is very crucial to the type of education that we offer at NSAC. It has always been a hands-on emphasis, the practical side of dealing with livestock and crops and foods and other aspects of agriculture and it requires

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the facilities to be able to do that. So we need to pay attention to that side of the operation as well.

The funding support for the college comes from five major categories. We can see that in the second chart, which you will find at the back of your report. I would just like to point out that this first little paragraph here underlines that we have had roughly equivalent shrinkage in both of the leading sources: the Nova Scotia Department of Agriculture and Marketing and the Maritime Provinces Higher Education Commission, roughly $800,000 each since the early 1990's, which reduced their combined share from 70 per cent to just over half the total funding support for the college.

I don't know if you can see this very clearly from the screen, but you can follow from your copy the red section of the charts is the support from the Nova Scotia Department of Agriculture and Marketing. These are percentages, of course, so we can see where it has declined from almost 40 per cent to about 33 per cent. The MPHEC funding is the green portion and that has gone down from nearly 30 per cent to just over 20 per cent or about 21 per cent.

The other major sources of funding I would point out is the growth in the yellow section, which is tuition fees from students starting here in 1990-91, represented 3.2 per cent of the total funding to the latest year, the current year, where those fees represent 17 per cent of the total funding. That is a response similar to what has happened at other universities as the squeeze has come on financially, it has been necessary to increase those fees. We have tended to follow the general trend although we are not at the top of the list when it comes to tuition fees among Nova Scotia institutions. Nonetheless that has grown from less than $1 million of total revenue in the early 1990's to $2.5 million at this point.

There are two other categories that I would mention here, the blue slice is transfers from the other provinces, under the Atlantic Provinces Agricultural-Technical Training Agreement. This was an agreement signed initially in the 1960's to support technical training at NSAC. It was at one point during this total period in excess of $1 million, this year it is down to about $400,000. So its share of the total has fallen from 4.5 per cent to just under 3 per cent.

The final category is Other. That has remained fairly stable. It combines a whole host of things such as sales of produce from the college farm and rental of facilities such as for conferences. By the way, the college has been very successful at keeping its residences utilized during the summer for various groups and that helps to keep down the overhead and bring in some revenue. It also includes research funding and the college has been fairly success in that category as well, being, now with the merger of Dal Tech, the second largest funding of research activity at educational institutions in Nova Scotia.

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I mentioned the transfers from the other provinces, that has decreased by $700,000 since the beginning of the 1990's. These losses in revenue have been partially offset by the tuition fee increases for students but, nonetheless, we are working with a total amount of $6,000 per student less this year than we were at the beginning of the decade. In spite of those constraints, we have continued with academic program development and we have turned to innovative arrangements to partnerships with industry to attract young scientists. Thanks to the policies of the Nova Scotia Department of Agriculture and Marketing, we have been able to match industry money to attract young scientists in emerging areas of research and exploration needs, which helps us greatly to generate new research activity, bring in new ideas. But it is not a very permanent basis on which to build, so we need to work on that aspect as well.

Now I would like to turn to Future Development. There was a strategic plan developed for the college and finalized in early 1995, and it was as a result of a comprehensive process with external input, a large discussion internally within the college and it set out a number of areas for development in a comprehensive fashion. There are four of those that I would like to underline as being important for the next few years, and my view of where the college needs to go. I would just like to mention those briefly.

The first one is, continuing in distance education. With the technologies available these days, there is a growing opportunity in the distance education field, in particular, and we are working on some agreements with other institutions across the Atlantic Region to be able to deliver credit courses, especially in the early years, to allow students to meet their requirements for the first year in their home area and transfer to NSAC for the completion of their program. That is at least one of the applications, but a well-developed program in distance education has many possibilities, including international work.

That is the second area of development which I would like to underline. The college, for a number of years, has been very successful in partnering with other institutions and in leading development projects. That is continuing; accelerating, indeed. I view this as a very important activity for an educational institution, for a university or a college, these days as we enter a globalized period, that our students and our staff have opportunities to gain experience to interact, to develop their orientation and thinking and skills in those directions. So, that is a continuing area for development.

I have mentioned the growth in graduate studies and the interest in that level of activity. For most of its existence, the college has primarily been a teaching institution and will continue to be so, but as we observe the increasing complexity of the industry, the increasingly international competitiveness, we realize we have to be in the business of producing the technology as well as transferring it, so we are putting emphasis on the research that goes into that activity. One of the real values for that, of course, is the training of the personnel associated with that research, as the industry itself is requiring a higher and higher level of skilled human resource.

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Finally, the fourth area of development has to do with the structure, the governance of the college, its relationship to government and the name of the institution. One of the recommendations of that strategic plan was that the college has reached a stage in its evolution where it is, indeed, appropriate that it have a different relationship with government but one that preserves its connection to agriculture and to the Department of Agriculture and Marketing. This recommendation which came from the strategic plan, was supported and endorsed by the Nova Scotia Council on Higher Education, which recommended, without commenting on the name of the institution, a structure having a board of governors.

I think it is important for a variety of reasons. First of all, in the current funding environment and what we see coming down the road for the next few years, the college has to be able to compete with other institutions in attracting private funding. We have had a feasibility study done for the Nova Scotia Agricultural College Foundation which says that it is pretty difficult to do that as long as you are part of a department of government. I think it is important, as we develop into some of those areas, that we are able to seek that private sector support. So, that is one reason.

Probably a more fundamental one is the importance, at this stage of our development, of having industry input into the directions of the college and its programs in the coming years, such as one would have through a properly structured board of governors. The current structure leaves a great deal of responsibility for direction within the hands of a few people, whether it be the principal or the faculty council internally, or the deputy minister or the minister, neither of whom really have much time to devote to the future direction of the college. So, it seems to me that it is appropriate to consider other structures of governance at this point in time.

As I mentioned earlier, we also find it necessary to put emphasis on different aspects of our programs to attract students, and it is increasingly evident that we need to emphasize the university aspect, the degree-granting aspect of the institution, to distinguish ourselves from the purely college, the community college type of program which is strictly non-degree.

For those reasons, we believe that that is the correct direction to go in. So, just to summarize my remarks, and I apologize, Mr. Chairman, for taking so long, but we have observed a very dynamic period of growth in academic programs, and that is continuing through program development and our recruitment efforts. We have managed to do this in spite of a shrinking financial base, and part of that has been through efficiency gains, through the growth in student numbers, but we are really beginning to feel the crunch in a very serious way right now.

In terms of the future, I can only say that I think there are many great opportunities for this college to realize in the years to come, and those include areas in continuing in distance education, in international work, in graduate studies and research, and they are going

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to require a slight change in how we are structured and our relationship with government if we are going to realize on those. Thank you very much.

MR. CHAIRMAN: Thank you. We will now have committee members ask questions. Do you want to go? Go ahead. John Holm.

MR. JOHN HOLM: How much time do we have?

MR. CHAIRMAN: An hour.

MR. HOLM: A few questions if I could, first starting off. You talked about the major rise in the revenue coming in from students in terms of tuitions and the very significant drops in funding from government levels. What is the current tuition for the degree portion in the technical end, and how have they changed, first?

DR. COFFIN: On a per course basis, the degree program is $335 per course; that is a one-semester course. On the basis that students would take 10 such courses in an academic year, that would be $3,350 for a degree. Technical programs per course are currently a little bit less, $230 per course, but technical students take a slightly heavier load; they take six courses per semester. So, when you multiply that number by 12, it comes out to $2,800, something in that vicinity.

[9:30 a.m.]

MR. HOLM: That is up about two and one-half times what it had been seven or eight years ago?

DR. COFFIN: Yes, at least that.

MR. HOLM: One of the things in your presentation you mentioned that you are now starting to feel the squeeze, the challenges, and in your report you also talked about concerns about not being able to hold onto very high calibre, qualified staff. The concern is that they could be enticed elsewhere where they would receive better wages and so on. How do the wages compare at the Agricultural College compared to comparable, and I will jump the gun here and say, universities in other parts of the country?

DR. COFFIN: It depends on where you go. At the starting level, our salaries are fairly competitive. As you move up the scale to more seniority, they become less so. I made reference in my remarks to the danger of losing our best people to other provinces. I was alluding to the Manitoba scale when I said that sometimes the starting salaries are equivalent to what we can pay our more senior people. Now, that's not a universal kind of picture. We haven't really lost anyone yet, but we have had some of our brighter prospects recruited by other institutions. In some cases, it's the United States that is looking to draw them away.

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MR. HOLM: A familiar story. You talked about moving to a self-governing institution as well. One of the reasons certainly put forward, of course, is hopefully the ability then to attract private investment funding into the college. I guess the first question is, when do you anticipate that a decision will be made by government on whether or not that is going to be done, and by what process would it come about?

DR. COFFIN: Well, I am not sure that I can answer that one very well. The decision, if and when it is made, is a government initiative. It would require change in legislation.

MR. HOLM: Have you had an kinds of commitments from government, any indication that they are prepared to move in that direction?

DR. COFFIN: No, in my summary, I didn't outline the process that has been followed but, very briefly, the Honourable Guy Brown as Minister of Agriculture, last year when I arrived here struck a governance committee to follow through on the recommendations that had been made in the strategic plan by gaining some further advice and insight into this. That committee recommended that a change be made, but it didn't get very far down the road, let's say, in specific models. So, I think there is room for discussion, certainly on the exact model or the relationship that would best suit the situation, but it is not one of those things that absolutely has to be done today. I think it is one that needs to be thought out carefully and discussed. So, when adequate discussion and a comfort level has occurred, then that would be the time to move.

MR. HOLM: The funding challenges, of course, are becoming more challenging. Looking at, I think it is down about $1 million since 1995-96 and significantly more than that if we go back to 1990, a major emphasis is to get the self-governing in so that you can attract private money to the college. Obviously, the longer any kind of delay in being able to move is going to increase those challenges unless you have some indication that the college is going to be receiving increased levels of funding from government, or student tuitions get the crank yet again. That, of course, becomes a barrier to accessibility, the higher the tuition rates then the students, of course, not only have fees but they have the living expenses and all of those other things. How much time do you have before it becomes a bit of a crisis, or maybe that's a more extreme way of putting it at this point in time, but a very severe challenge?

DR. COFFIN: I would like to underline that I don't want to oversimplify the prospect of raising money from the private sector. I think that will be a difficult task in any event and, moreover, the type of funding that we would be looking for or expecting to gain in that sense would be more likely the capital funding, the capital replacement, the source that we would count on most heavily for new equipment or refitting of buildings or that sort of thing. We would not be expecting to generate very much revenue from private sources for the day-to-day operating. So, we would still continue to rely heavily on government sources and public sources for those kinds of funds. That being the case, the timing is important but there is a

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little bit of leeway there in terms of when, and I wouldn't attempt to put a deadline on that sort of thing.

MR. HOLM: Continuing on the same kind of a theme, this fall, I believe it is, the aquaculture facility is supposed to open. Am I correct in my times?

DR. COFFIN: Yes.

MR. HOLM: Falling dollars, there will be, of course, costs associated with the centre, are you going to be receiving additional government funding? Have you got commitments of additional funding for that or how are those operating expenses going to be paid for and what kind of impact will it have on the general operation?

DR. COFFIN: Let me just say, we are working on that. We haven't solved all the problems yet at this point for what we consider to be an adequate base of funding for operation of the new facility. So, we are hopeful of finding that support but we don't have it in hand yet.

MR. HOLM: So, as it stands at the present time, it would have to come out of existing budgets unless some additional funding is found?

DR. COFFIN: We are looking for additional funding.

MR. HOLM: But you have no commitment to that?

DR. COFFIN: No, not yet.

MR. CHAIRMAN: Ernest Fage.

MR. ERNEST FAGE: Mr. Chairman, just a couple of remarks before I start. Dr. Coffin, I feel a little bit older this morning. I am proud to be a graduate of the degree course of NSAC and I guess I was just thinking back, that was 1973. So, that is a bit of water under the bridge, but it kind of leads into a few questions that I think are pertinent at this point. I have categorized some categories where I would like to ask some questions.

The first one is, students and the opportunity, because when we look at any educational institution regardless of the product that is produced at the end of the course, their opportunity, from experiences and knowledge they receive, provides them with the opportunity to contribute to society in a meaningful way as an employment and enhancement of knowledge. The students currently graduating from NSAC, two basic categories, how many are going on to more knowledge-based learning in other institutions across North America or Europe versus how many are directly going in your degree course, let's

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concentrate on that one, who would be going for employment in industry when they graduate? Any type of figures on that?

DR. COFFIN: Yes, we do if I can recall the proportions. We have, I might say, a very good, efficient career services office at the college that facilitates the placement of students, facilitates the recruitment by employers looking for students and that, I think, has helped to achieve the kind of results we have. We often cite the figure for the latest year. We don't have the results from the fall of 1997 yet, that is just being tabulated, but based on surveys of our graduating class, for example, from 1996, 93 per cent of our graduating class that year has either gone to employment or to further studies. Now, if memory serves me correctly, the number going on to further studies is in the order of 10 per cent, I might be off by 1 per cent or 2 per cent in that but it is in that vicinity.

MR. FAGE: That being said, to me it seems like a growth area and one of the positive funds as we all know for students. It concerned me a little though when you were saying with those types of numbers that it was becoming harder to find eligible young people with the right aptitude or training or academic accomplishments to go to the institution. In that light, is there a concerted effort made by the administration that this is a growth spot for employment, industry and knowledge and that those numbers may be enhanced over time? In your talk about the future, an institution under 1,000 on a freestanding board of governance would appear to have to be awfully highly specialized to withstand some of the other institutions you are going to compete with in the future.

DR. COFFIN: Yes, that's a very valid point. My reference to the shrinking pool was the demographics of the declining total numbers of high school students at this point in time. We think that our track record of employment and the type of education that we offer with the practical emphasis, gives our graduates a lot more employability and I think that will work to our advantage in the future. In fact, I have been quite surprised, personally, at the numbers of our students that I have met in the year that I have been there who have come to NSAC having already earned a degree at another university and they are coming for a second Bachelor's degree but because they know when they get this one, they have a much better prospect of gaining a job. We are intensifying our recruitment efforts, so far I would say reasonably successfully.

We are looking to increase the number of international students on campus, right now it is quite low. I think that is an important dimension of an undergraduate education or graduate education that students have an opportunity to mix, make acquaintances with people from around the world, with other cultures. We, in fact, had one of our members of the executive in Mexico in collaboration with the local school board in the Truro area last week and they said the interest was quite exciting, quite rewarding. They encountered something like 6,000 people who are keen about sending their students to high school and university here. So there are ways with strategic partnerships, I think, to compensate for the size factor

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and the scope factor of our institution. If we are careful about how we do this, I think we can do it.

MR. FAGE: I guess that would be my comment in raising it as a caution that with these types of numbers, this type of success, one has to be careful in tampering into a new form of governance. If you cannot achieve critical mass and when you examine the age of the facilities where the institution has come from, the transition must, if it occurs, be handled very carefully in that climate. I guess that would be the caution I raise. When you look at the type of success that the college is enjoying, one has to be careful on an adjustment in the future that may put it into a much more severe competition for funds.

The next question would relate also back to that year I graduated, I guess, when I look at structural facilities. I have been around the college with my involvement in the agriculture industry through the years, there are a lot of fine new facilities, some of them involving research, but I guess my concern would be when I attended in 1971, the Cox Institute, which is the main lab facility and teaching facility, was the gem of laboratory facilities and equipment and state-of-the-art at that point in time. The academics facilities pertaining to laboratory, pertaining to the classroom, those are starting to age somewhat now. I know they are in reasonably good shape. What about those particular facilities that are the main heart of the teaching?

DR. COFFIN: I would say at the outset that they would still be the envy of a number of educational institutions around the region. They are aging, as you say; the equipment, especially, needs upgrading. Some of the facilities are barely adequate with respect to the number of students that we have had and some growth in staff over the period since the 1970's, for example. So we are pretty tightly squeezed in some areas, we need new equipment but the overall facility itself, along with others on the campus, is still highly regarded.

For example, the Natural Sciences and Engineering Research Council had a site visit last year and rated the college very highly as a research institution in terms of facilities and human resources and so on. So it is still good. It needs some upgrading and expansion at this point in time but I think I would just like to underline the foresight of the Department of Agriculture and Marketing and the Department of Transportation and Public Works that supported those kinds of developments in the 1970's and 1980's that still serve us well today.

MR. FAGE: I guess a lot of those observations would have been mine, but it was awfully nice to hear you articulate them, sir.

Coming to funding research and having industry involvement over the years, the interaction with the college and being fairly realistic if economic times don't improve vastly on funding-driven research, getting primary producers, getting processors, getting marketers involved, obviously has to be a key and a large portion where funding is being driven. Comments in that regard though, when you look at Atlantic Canada agriculture in the greater

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world of research and trying to achieve that balance to have local industry support, so that those associations, those groups, those individual processors or researchers will use the facilities of the NSAC rather than go to Granby and rent the lab from the federal Agriculture Department at $50 an hour with state-of-the-art facilities involved, how do you propose to be able to bridge that gap long term?

DR. COFFIN: Well, it is true that the base of industrial support and the depth of the agricultural industry here is not what it is in other areas. It is a gradual process to bring industry to the kind of involvement you are referring to. But it is happening, we are making progress. I had mentioned in my remarks the partnerships with the research chair, the junior professorship chair positions. To give you an example of that kind of an arrangement, Oxford Frozen Foods, together with the Wild Blueberry Producers Association, have teamed up in providing funding, along with the Department of Agriculture and Marketing, for one of those positions. It is working out very well.

We have other examples, for example, Oxford Frozen Foods, again, with a recently hired position in carrot research. We have just concluded an agreement with McCain's and the Government of Prince Edward Island to jointly sponsor, again with the Nova Scotia department, a position in potato physiology and we are working with other producer groups. It is coming, slowly. It will never be an enormous base, but we think it will gain in importance and be a very key component of our funding in the future.

MR. FAGE: Just in that regard, when you look at some of the protection afforded to plant breeders, the rights that we know legislation has been passed, when we look at the patent law concerning any type of organic drug or insecticides or whatever you have dealing with that, certainly it appears to be an opportunity for a research institution in partnership with governments in this country, on the commitment of those premises of those numbers of years that that was granted, that there is an opportunity to be exploited there and if those are going to be enforced for those lengths of time and governments have agreed that actual research should occur in this country, specifically in the Atlantic region, I feel that that would be only appropriate as a source and, indeed, should be one of the areas where a research institution of government should be supportive.

We are granting these companies that kind of protection for that development. Some of that research and development, obviously, should be occurring here. When you have, specifically, an industry like this that deals with the use of those new products developed, we have a stake in it and we should demand our right.

DR. COFFIN: Yes, I agree.

MR. CHAIRMAN: Mrs. O'Connor.

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MRS. LILA O'CONNOR: Thank you very much. I must say I enjoyed your presentation and found it very helpful. I would like to ask - and you state in your presentation that on the funding formula from the Maritime Provinces Higher Education Commission, you should receive a $1.8 million increase?

DR. COFFIN: Well, $1.2 million is the number that we have seen based on formula calculations if the new base is fully implemented, that is to say, that would require a restoration of funding across the university system in Nova Scotia to the extent of $23 million or $24 million. Our share of that increase would be $1.2 million under those circumstances.

MRS. O'CONNOR: Okay, thank you. I notice by the graph in the back you have approximately 1,000 students?

DR. COFFIN: Yes, 941.

MRS. O'CONNOR: Of the students, how many are from Atlantic Canada and how many are from outside?

DR. COFFIN: The vast majority are from Atlantic Canada; in fact, the majority - more than 600 of those would be from Nova Scotia. New Brunswick would have, roughly, 140; Prince Edward Island has something over 50 - close to 60, I believe, and growing; and Newfoundland has 75 students there this year. Prince Edward Island should have more and we are working on that.

MRS. O'CONNOR: Do you have any part-time students or are those all full-time? Are there any students by correspondence courses, or you don't do that?

DR. COFFIN: We are working on the latter angle through the distance education. So far, we have emphasized the development of the technical capacity for delivering short courses and often in collaboration with the Department of Agriculture and Marketing.

Lately, we are working on the delivery of degree courses that would give students partial credit, or at least give them credit for those courses which they could combine with credit at other institutions to gain an advanced standing on entry at NSAC.

The vast majority of our students are full-time. We do have a few part-time but not very many. As we develop in the distance education area and, hopefully, in the not too distant future are able to offer degree or courses for credit on the Internet, for example, then we would have more that you would consider in the category of part-time students, students who may be just taking a few courses at a time or one or two courses at a time.

MRS. O'CONNOR: I had more questions but you have answered a number of them already.

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You are different from most of the other universities in the province but there are - like, Macdonald College in Montreal, how many agricultural colleges are there across Canada?

DR. COFFIN: We are the only one in the Atlantic Region, although there is a veterinary college in Prince Edward Island. There are two in Quebec and one in each of the other provinces; the two in Quebec being MacDonald College, of course, the English language institution and Laval University being the French language faculty of Agriculture.

MRS. O'CONNOR: Do you find that you are further advanced than they? Are you on par with them or . . .

DR. COFFIN: Well, there are a variety of ways we can answer that. We have certainly enjoyed a lot more growth in the last few years than any of the other institutions in that category. Our students compete nationally, in fact, internationally. Each year the University of Saskatchewan holds a competition for students; they call it the Ag Challenge. It is an invitational competition that includes agricultural colleges or universities from the United States, as well as from other Canadian provinces, and the competition is an intellectual one if you like. It is debate, it is problem-solving, it is project presentation. For the last number of years our students have placed very well in that competition. I know last year they came in second overall, with first in some categories. Beyond that, going back two or three years, they were at least as good; I think they won it the year before. So, they have fared very well in that kind of competition. (Interruption) They won it three years in a row. Just to get it correct here.

MRS. O'CONNOR: Get that in there.

DR. COFFIN: So, I think those indicators suggest that we are doing very well in that regard.

MRS. O'CONNOR: I would say; that is good for morale. I would like to ask Patricia a question. Is this the first university or college that you have gone to since high school?

MS. PATRICIA BISHOP: Yes, it is.

MRS. O'CONNOR: How do you find student life on campus?

MS. BISHOP: Student life is a lot of fun; the students seem to really enjoy AC. There is a lot of stuff that is going on there which is agriculturally oriented for them to be involved in. It is very enjoyable.

MRS. O'CONNOR: Good, thank you very much.

[Page 15]

MR. CHAIRMAN: Mr. Carruthers.

MR. ROBERT CARRUTHERS: The Agricultural College is important to my region; Hants East is predominantly rural and mainly agricultural, so I have some interest in the facility. My father was a rural veterinarian in Nova Scotia, so I have kind of watched the graduates and the changes over the number of years, and I wonder if you could comment on that. It seemed to me that at one time those who attended, especially seeking degrees, were in the fields, perhaps they were going into veterinary medicine in the future or engineering. But it seems to me nowadays that those whose interest it is to just operate a farm, are now more and more attending the university to get the background which is necessary, not to go on to some academia or to become an engineer, but to operate a farm properly. Can you comment on that? Is that true; is that a big growth in the school?

DR. COFFIN: That is a very accurate observation and it has been going on for a little while not only here, but in other provinces as well. The number of graduates with a degree - not just a technical diploma, but a degree - going into farming has really grown quite dramatically. I would say even those who don't necessarily go into farming, there is a general increase in the starting up of new businesses of one kind or another, a great deal more entrepreneurship among the graduates than there used to be, which is partly for the reason that government is not expanding, of course, these days at the rate they once were in hiring graduates from agricultural colleges. So, they do need to look elsewhere and they are responding very nicely in that respect.

I think underlying this is the increasing complexity and technical nature of farming these days that does require a much higher level of understanding of the processes and the management end of things.

MR. CARRUTHERS: Farming is big business now.

DR. COFFIN: That's right.

MR. CARRUTHERS: I really notice that in the rural areas, because the profit margin, just like anything else, is getting smaller and you had better be able to manage it. I think this institution does a great service to Nova Scotia and the Atlantic community in that regard, because it is competitive out there.

DR. COFFIN: Yes.

MR. CARRUTHERS: Looking at the changes that you have suggested, and I understand the comments with regard to the name change, although I suppose to some people that might be somewhat painful, but it may be, indeed, more reflective of what we are trying to do. The whole nature of the educational institution, the board of directors, is in keeping with that. I understand that generally, but like Ernie said, sometimes if it ain't broke, we don't

[Page 16]

want to necessarily try to fix it. I am a little concerned when one says, well, if we go to the board-of-director-type, somewhat more independent institution, we would achieve a greater influx of private funding. Is that true? Do we know that there is a bunch of people out there who would say, gee, if you are part of government, we are not going to give you any money, but as soon as you do this, here, have some bucks. Is there some evidence that this is true?

DR. COFFIN: Well, I think, to be candid, we would have to earn that support; it is not going to automatically flow. But I believe with the kind of track record that the institution has established and if the college is, as you say, providing a valuable service to the region, to the industry, it will be a lot easier to generate that kind of support, that kind of investment, than if we were not going anywhere.

[10:00 a.m.]

Is there evidence that it can be done? We don't have signed contracts, but I think if one looks at the nature of support that we have been able to attract through partnership, even within the current circumstances, that there is certainly an indication that industry is willing to come to the table; how much money they would leave on the table remains to be seen.

MR. CARRUTHERS: I do agree with you there, that we have to go out and attract it. I guess the difference is the change in the proposed structure vis-à-vis the board-of-director-type management. What is the difference between what you have now, in seeking private industry funding, than what you will have then? You have pointed out why we have to go do it and how we can do it and why we deserve to have it, but what is the change in the structure that is going to make that free-flow of money easier?

DR. COFFIN: The feasibility study that was carried out for the foundation, visited and interviewed a number of major corporations and major potential donors, not only within the region, but in other parts of Canada, and one point was made that we do need to develop our profile a little bit more, especially outside the region, if we are to be successful, and we are working at that. The second point, which was most telling though, was that as long as the college is an integral part of a department of government, there would be great reluctance to provide capital donations on the part of these donors. That is really the essence of that . . .

MR. CARRUTHERS: The bottom line being that people don't like to give a whole bunch of money to government. That makes sense.

DR. COFFIN: You could say that, yes.

MR. CARRUTHERS: I will try to be quick; just a couple quick questions. If we go to this Atlantic structure by way of board of directors, should we anticipate higher contributions from the other members of the Atlantic Provinces? Prince Edward Island, for instance, we should be recruiting, it is an agricultural province, there should be more people

[Page 17]

coming from there. Can we look forward to an increase in funding if we were to make that change from other provinces? The last question is, the Agricultural College is still a pretty good bang for the buck when it comes down to tuition, wouldn't you say?

DR. COFFIN: I will answer that one first and I will say, absolutely. But with regard to the other provinces, the indications that I have had, albeit very informal ones, are to the extent that they would find it a lot easier to contribute if we had a different structure and a slightly different identity.

I think the college has always had an Atlantic mandate in training in agriculture from a very early concept, when it was first introduced, although we haven't had legislation or formal agreements with the other provinces until the 1960's when, certainly, as far as technical education, that concept was endorsed and the other provinces did sign up to support technical training here. The agreement stipulated that the Nova Scotia Agricultural College had that mandate and could, indeed, even offer courses in the other provinces if they chose to do so.

So, the principle, I think, has been established. In these times where identities seem to be increasingly important, I believe if we were to broadcast a broader identity, if you like, that other jurisdictions would find it easier to support. I think it would be desirable to have that in a very tangible form.

MR. CARRUTHERS: A touch more palatable perhaps.

DR. COFFIN: Yes, I think so.

MR. CHAIRMAN: Mrs. Norrie.

MRS. ELEANOR NORRIE: Mr. Chairman, first of all, Bob began his comments by saying how important this institute is to his region. I have to say, it's very important to my region, the fact being that the college is actually in Bible Hill, an area that I represent. I know first-hand the quality and the excellence that we have at the college. I want to congratulate, first off, the staff, the faculty, the students and everybody involved for the profile that the college has in the area, for your excellence of education and for what you bring to the community. It's the gem of the education institutions in the province and I am very proud to represent the area that does include that, and I congratulate each and every one of you who are involved in keeping it to the standard that we enjoy.

I want to move, first of all, to tuition. We all know it's a topic of great discussion right across the country, tuitions, student loans and all the costs of education to students. You say that 17 per cent of the cost of the education is now being covered by tuition. How does that compare with other Nova Scotia institutions? Do you have that number?

[Page 18]

DR. COFFIN: I can't cite you a specific number on that, but I would think that agricultural programs, being by nature a bit more expensive to run because of the cost of maintaining farms and some of the specialized labs and so on required for this field, that the cost per student in these kinds of programs is naturally a bit higher, and that is recognized in funding formulae. So, given that they are higher to begin with at some institutions and the likelihood that cost per student would be a little less at some of the larger institutions, I would expect that tuition fees would cover more than 20 per cent, perhaps as high as 30 per cent, of total costs at some other institutions.

MRS. NORRIE: So, as Bob says, you are getting a pretty good bang for your buck.

DR. COFFIN: It's still a good value.

MRS. NORRIE: Yes, though it would be nice if we could provide it for nothing, but in this day and age we are not exactly able to do that. You mentioned the farms. I know in the past, my husband's family's farm was used as an on-site, hands-on area for the students to work on a farm when they were taking their training at the college. This was back three decades ago. There is quite a wonderful farm on-site right now that is quite a sight to be seen. Do you use other farms in the area for students to visit and use for training?

DR. COFFIN: At least one of our technical programs has placement on farms for farm management. Mr. Chairman, may I refer this question to Professor Gray? He is the Associate Vice-Principal - Academic, responsible for undergraduate and technical programs.

MR. CHAIRMAN: You certainly can.

DR. BRUCE GRAY: I think Dr. Coffin was starting to talk about our agricultural technology program where students are placed on other farms in the region and supervised by farmers and they prepare reports to faculty to try to describe what they had been learning. We use a number of other farms for research projects and, in some cases, it is preferable that the research projects be done on farms. So, that occurs to a large extent both around the Colchester County region; for blueberries more up in the Cumberland County region; and also in the Annapolis Valley and in Cape Breton. So, yes, we do use farm situations quite a bit. Also, in many courses, students travel to farms or to agricultural businesses for day trips so that they can see how things work and what is going on.

MRS. NORRIE: I guess in spite of all that, when we saw your graphs with the funding charts and the changes, you still maintain a high quality institution there and enrolments are growing. Bob asked the question about what proportion of industry is involved in helping pay for that, as well as with the change in governance, if that will continue. I am wondering if the change in governance would also affect the opportunity to use farms across the province at the same time or do you see that maybe enhancing it or not making any difference?

[Page 19]

DR. GRAY: Do you want me to answer that?

MRS. NORRIE: Draw straws.

DR. GRAY: I think the thing that limits us from going to other places in the region is the cost of getting there. We have, in the past, had cooperative research where the research might have been done in other provinces as well as here so we already cooperate with other provinces in that way. I can't see how a change in the governance would change our relationship with local farmers. We have a good relationship with them and I expect that would be still our closest relationship, just because of geography.

MRS. NORRIE: I guess further on the research, we are all aware of the AgriTECH Park. Are there comments that you would like to make on the AgriTECH Park and the development of the park involving research in connection with industry from that point of view?

DR. COFFIN: Yes, I would. Thank you for raising that. I didn't really mention that in my remarks but this is one of the exciting areas of development. The AgriTECH Park is, of course, the old Nova Scotia Youth Training Centre. We are in the process of converting it in partnership with Innovacorp and the Department of Agriculture and Marketing to a research and develop incubation facility which would assist start-up companies in that field with new technologies or new products to develop to bring it along to a commercial stage, assist them in the sense of providing some scientific support, research, some business services support that can be offered within a cluster like that. There appears to be quite a rapidly growing interest in that so I would say that a few months from now we will see quite a lot of activity going on there.

MRS. NORRIE: That is good to hear. The other part on the governance, if it is separated out as it has been suggested in the study that has been provided us, do you see greater opportunities to partner with other institutions? I am thinking, in particular, of the community college, the Truro campus, partnering with them when we look at both institutions tuned to the job market, and other advantages of that. Do you think that under a different type of governance that could be more likely to happen? We know community colleges have now moved out into their own governance.

DR. COFFIN: This is one of the areas that, even under the present arrangement, we have the freedom, under the Act, to do this sort of thing and would have equally, under a different form of governance. I think it is an interesting phenomenon that although, as I said earlier, there is an increase in competition among universities for the student pool, there is also, I think, these days a much greater, much more open interest in various kinds of collaboration, whether it is an academic program or research or whatever. It is sort of like a second strategy of universities to create strategic links with one another to build strength, to build critical mass, to do what needs to be done to have a stronger total package. I think,

[Page 20]

given the nature of the Nova Scotia Agricultural College, whatever the form of governance may be in the future, it is going to be vital to our success to maintain and develop good relations and working relations and partnerships with other institutions.

Of course we do operate, at the moment, in partnership or in association with Dalhousie University. The degrees that we offer are jointly granted by the Nova Scotia Agricultural College and Dalhousie University. Our graduate program is fundamentally linked with their graduate program and jointly administered. So those kinds of things will be important, no matter what. It doesn't have to be restricted to Dalhousie, for example. We can and should be and will be developing stronger links with other institutions as well, I think, no matter what form governance takes in the future.

MRS. NORRIE: I think it is a great opportunity to work with the community college system as well.

I would like to give Trish an opportunity to say something before the time winds down here, as a student and as the spokesperson for the student body. Do you have an assessment you would like to give of the college, as briefly as you want?

MS. BISHOP: Wow, that is big. As a student, an assessment, well, I feel that generally students are quite happy with the quality of their education and the time that they spend at AC, whether it be degree, technical or master's students. You don't hear too many complaints on much of anything. There are little things day to day but overall what we do at AC is great and we are very proud of it, as students. When we graduate it is a good feeling that we have worked in the facilities that are there for us. I think most students are very proud of what they do when they are there. They are small-knit group.

MRS. NORRIE: How is the food? (Laughter)

MS. BISHOP: Well, actually the food is really great.

MRS. NORRIE: We prefer them to come out into the community and buy pizza locally.

I guess just in closing I would like to say again, as I did in the beginning, that I think the college deserves a real high profile. I would encourage all members of the committee to make sure they get up there and have an opportunity to tour the facility. I would encourage the media to do the same. It is a gem, as I said, in the Province of Nova Scotia and I think coming here today will help raise that profile and I congratulate each and every one of you for taking the time to be with us today and thank you for your presentation.

[Page 21]

MR. CHAIRMAN: Just before we go back to John Holm for a very quick question, I want to ask a question. I don't think it has properly been explained today, the importance that NSAC has with regard to research in Nova Scotia. I am just wondering if you can give me a ranking of the Nova Scotia Agricultural College as compared to other colleges and universities throughout Nova Scotia with regard to research dollars?

DR. COFFIN: I would like to say off the top, we are number two. In terms of total research funding, we used to be number three but now with the merger of TUNS with Dalhousie, we are number two. Dalhousie University is number one and we are the second most highly funded. Let me just, if I may, Mr. Chairman, add to that a little bit. One of the sources of support that we are counting on for the future is the federal government initiative, the Canada Foundation for Innovation which will be dispersing I believe it is $800 million over the next few years. Small institutions, such as the Nova Scotia Agricultural College have been listed and rated according to what they qualify for or what they would be eligible for under the emerging programs there. The Nova Scotia Agricultural College, at the moment, has been designated as eligible for a sum of $1.3 million if we come through with a good proposal and meet the criteria, the sum of which remains to be identified yet. That is at least 50 per cent more than most other small universities in this province.

MR. CHAIRMAN: Thank you. I am a graduate of NSAC, having graduated many years even before my cousin, Ernie Fage. Things have changed a great deal. I was President of the Student Council when I was there and it is kind of a change. When I was there, there were five female students in the whole institution and I know the ratio is changed a great deal now. When I was there a year or so ago at the awards night, most of the scholarships were going to young women who were studying at the college. It certainly has changed a great deal. It is just the evolution of agriculture, I guess. It's a great institution and I hate to hear the discussion of a change. I think the college is doing very well the way it is.

John Holm, you have one question.

MR. HOLM: Yes, I will pose it this way with a couple of little parts. I will briefly put it this way, going back to the proposed self-governance role, if the college becomes a university, and I know that a lot of programs in technical and others that are not currently degree programs, if that self-governance changes, I'm interested to know how that will, or it is planned that that may or may not affect the full range of excellent programs that are offered, and if there are any kinds of assurances that those kinds of programs will be continued to be offered by the university, whatever it may be called?

Part b, have there been any discussions about mergers with other universities? I note that in your earlier response that the government has not been too quick to respond in terms of the direction that they are going in, the DalTech merger, of course, occurred. So, is that under active consideration?

[Page 22]

Finally, could you agree to provide, not today, but to the committee, a list of the capital projects with basically the costs of each of those projects that have been undertaken over the past couple of years? It's an a, b, c of one question.

DR. COFFIN: I think we can, Mr. Chairman, provide that information. I would have to defer to Bernie MacDonald and what information we may be able to provide on the spot, but we could follow it up certainly.

If I may open with a remark on the nature of the programs, I do not believe that there is any suggestion that the nature of programs would change with a change in governance. The strength of the college has always been the combination of technical and degree programs, and as long as there is a demand and a need for those programs, then I think we will still be in that business. A designation that has been proposed in the strategic plan was, university college. We are never likely to be a full-fledged university in terms of having a full range of disciplines. So, even though we are degree granting, it is in a limited area, but it is degree granting so that is where university comes in, but it is also partly college and that is a designation that we might try to preserve in that sense.

If I may, Mr. Chairman, I would prefer to defer other parts of this question to Dr. Haley who has been associated with this process.

DR. LES HALEY: Perhaps having been around a little longer and aware of the history, you will recall the Nova Scotia Council on Higher Education was doing a broad study of rationalization of universities. Clearly, there were models in there where they examined whether TUNS, NSCAD, Agricultural College and the various ones should be combined, whether there should be faculties. They examined that in some detail. What they were convinced in the end is that the Agricultural College has such a unique relationship with government and with industry that that unique relationship should be preserved.

If we look at other examples in Canada, Garth came from Macdonald College and, I, as an outside observer - and, pardon me, Mr. Chairman, for hitting your alma mater - but I don't think Macdonald College has benefited from being a part of McGill University. So, I think we successfully pointed out that we do have such a unique relationship here that benefits agriculture.

We can go through most highly educated farmers, all the benefits that we have, and that the rationalization would not save money by combining it, say, with Dalhousie or another university, because of the unique rational approach we have between a government department, a college and the industry. So, that was the recommendation then that came from the Nova Scotia Council on Higher Education, that the college needed some arm's length but it needed also to preserve that unique connection to the Department of Agriculture.

MR. HOLM: And government accepted that?

[Page 23]

DR. HALEY: Yes.

MR. HOLM: Can you provide the list of . . .

MR. CHAIRMAN: John, will you stop that.

MR. HOLM: Oh, it is just Part c.

MR. CHAIRMAN: You have no more Part c's.

Ernie, if you can ask a question in less than 30 seconds, go ahead.

MR. FAGE: I certainly can, I would like to direct this question to Dr. Les Haley. The Agricultural College in Nova Scotia means more to the social fabric and has been the social and economic fabric of this province more than any other institution. It concerns me greatly when we talk about the future and look at the decrease in government funding that we witnessed by these documents and the commitment of the Government of Nova Scotia to this institution, regardless if we are talking transition or change, and you have articulated in your previous answer how important it is and it is a unique relationship, this is the one institution that looks after a lot of the uniqueness of the rural economic and social fabric in Nova Scotia. I am very disturbed during this period of time and would like to see some commitment and no more reduction in funding.

DR. HALEY: Let me say that I appreciate that and I agree with you that it is such an important institution. I have studied, again, the Council on Higher Education funding formula and clearly they recognize that the college is underfunded by about $1 million to $1.5 million or something. Clearly, in looking at programs that are coming on stream - aquaculture and those sorts of things - that is precisely the amount of money that is missing. I appreciate it. We do what we can. It is a little difficult, I have a bit of a conflict of interest that I do want to support the college all I can and try to within the limits of what we have to work with.

MR. CHAIRMAN: I want to apologize to the other members of the committee; there are several who indicated they had questions they wanted to ask. Our time has expired. I want to thank the members of the Nova Scotia Agricultural College, the Department of Agriculture and Marketing and the president of the student union for coming down today. You can see from the interest and the questions that the Agricultural College in Truro has a very special place in the hearts of each member of this Legislature. We wish we had more time, however, perhaps another time. Thank you very much.

Now, the meeting will adjourn for two minutes and we will begin again.

[The committee adjourned at 10:30 a.m.]

[Page 24]

MR. CHAIRMAN: This morning we have the Nova Scotia Auditor General, Mr. Roy Salmon, and his support staff whom I sure he will introduce momentarily.

This meeting in the past has been a briefing without media present. Is it all right if the media stays in this morning or is it the feeling of the committee you want the media to stand outside?

MR. JOHN HOLM: Mr. Chairman, the report is already public and if it is public I don't see why the briefing shouldn't be also.

MR. CHAIRMAN: Thank you, Mr. Holm. Any other comments.

MRS. ELEANOR NORRIE: Is there a reason why it was changed this time around? Why in the past, you have stated it was in camera, it was in camera in the past.

MR. CHAIRMAN: I didn't change anything, it is up to the committee.

MRS. NORRIE: No, I am asking in the past.

MR. CHAIRMAN: I am asking the committee, do you want this meeting in camera or do you not want it in camera?

MRS. NORRIE: My question is that you have stated that in the past it has been in camera.

MR. CHAIRMAN: Perhaps, you weren't here a few minutes ago. When we had another part of this meeting, the media were here covering the Nova Scotia Agricultural College and the media just didn't leave. Now, do you want me to ask them to leave?

MR. ROBERT CARRUTHERS: Mr. Chairman, actually I think my friend is posing a question and it is not the question you answered. The question that I and other committee members would like to know is, and that I have been here for nearly five years and in those five years all briefing sessions have automatically been in camera and they were not held the same day as other matters were proceeded and the report was not tabled in the House before the committee was briefed.

I understand what Mr. Holm is saying, Mr. Holm is saying that now the report is out, it really doesn't matter, so we don't get briefed before the public. I mean I am a member of the Public Accounts Committee and I just found out now.

So, I guess, to me it doesn't matter now but I wonder why after all these years that we have had it done differently that suddenly the report was released before the committee was alerted, the meeting to brief us on this report took place at the end of another business

[Page 25]

meeting in the House when this never happened before? That's the question my friend was posing. If no one has the answer, we will proceed, but that's the question my friend was posing.

MR. CHAIRMAN: Well, part of it I can answer. The report was tabled today and I knew we had a meeting today and I said, well, do you want a briefing today or not, if you would rather, we could have waited until next week and had a briefing when it would have been history.

MRS. LILA O'CONNOR: I would like to ask the Auditor General why the report was released at 10:00 a.m. and couldn't have waited until 12:00 p.m.? Normally, we always have a briefing before the report is released, why had it to be done differently today?

MR. ROY SALMON: It is different for a number of reasons. The timetable changed. changed. When the Provincial Finance Act was amended in the spring, it advanced the date for tabling of the Public Accounts from March 31st to December 31st. That allowed me to table earlier than I have in the past because my Act requires me to table my report on the day following the day that the Public Accounts are tabled.

My objective was to get my report out as quickly as possible following the release of the Public Accounts. We received the report from the printer Monday of this week. I knew that was when I would receive it. The House is not in session. In the past, the report has been tabled in the House when it opens, generally on a Wednesday at 2:00 p.m. and the briefings that were arranged over the last several years were in camera to the Public Accounts Committee, in advance of the House opening, to allow members of the Public Accounts Committee to come into the House with some knowledge of what was in the report.

Because the House is not in session, I delivered my report at about 8:50 a.m. this morning to the Clerk and it was deemed tabled at that point. I held the release of the press release until 10:00 o'clock knowing that this meeting had been scheduled and that I would be briefing you at 10:30 a.m., so that others would not have advanced knowledge prior to this briefing. The choice of whether or not it is in camera or public is this committee's choice, not mine and I made that clear to the chairman in our discussion approximately 10 days ago when we agreed on the date for the tabling and for the briefing. That is the background. The choice is yours.

MR. CARRUTHERS: Mr. Chairman, having heard that, we are prepared to proceed with the matter in public.

MR. CHAIRMAN: Okay. The Vice-Chairman.

MRS. NORRIE: Mr. Chairman, my initial question has now been answered, so thank you very much.

[Page 26]

MR. CHAIRMAN: Mr. Salmon, perhaps you could introduce your staff.

MR. SALMON: Yes, certainly, Mr. Chairman. On my immediate right is Mr. Claude Carter, Senior Audit Director. I think most members of the committee have had contact with my staff. Next to Mr. Carter is Mr. Allan Horgan, an Audit Director in my office and Ms. Elaine Morash, the third Audit Director in my office. The way my office is organized is that each of these three have responsibility for a portfolio of departments and agencies and I just come along and tell the funny stories. They will answer all the detail questions.

I appreciate this opportunity to brief you this morning. What I would like to do, having explained the process that we have gone through and the scheduling, is to simply run through with you on a very summary basis the contents of the report. Then I have a few slides of some of the significant issues and I will then come back to those. I will touch on the chapter titles with regard to those and then come back to them. I forgot to mention one other member of my staff, a relatively new member here who is going to handle the slides for us, Mr. Scott Messervey, who has come along to assist us.

There are three chapters that deal with government-wide issues. I'll come back to all three of them with additional slides. We've commented annually on the government's efforts to provide accountability information and its reporting mechanisms. I'll come back to that. We did an annual follow-up on procurement and we did an initial review of the issue of management of information technology and the year 2000 readiness issue, which I am sure you have read about in the press. It is a worldwide issue.

Then in terms of departmental audits, we did a follow-up to our 1995 audit in Community Services, with very positive findings. There is significant change going on in delivery of community services, legislation review and so on, but for the most part our recommendations from our previous audit are being acted upon.

We did an initial Phase 1 of a very extensive review of Homes for Special Care with relatively positive findings in that area. But the major issue in Community Services in Homes for Special Care is the lack of standardization across this province. Because in the past it has primarily been delivered through municipalities and on a regional basis, we don't have consistent standards and people across this province are not all receiving the same level of service. That really needs to be addressed.

We have done an initial review of Tourism Nova Scotia. Mainly fact finding in terms of how it is managed. It is a major industry in Nova Scotia and industry is becoming more involved in the management of it. The department is moving to involve industry in the management of tourism to a more significant extent.

[Page 27]

In Education and Culture, Public-Private Partnerships for School Construction, I would like to come back to that one in more detail. As well, I would like to come back to the issues of accountability and amalgamation with regard to school boards.

With regard to Student Assistance, again, a relatively well managed program. The major issue there is that the province is managing the federal loan program as well as the provincial loan program and is not recovering the cost of administration from the federal government to the extent required. The shortfall is almost $500,000 on an annual basis.

In terms of the Teachers' Group Insurance Plans, we did a follow-up there. You may recall that was a major issue last year. The province has recovered approximately $4.5 million from the union, representing surpluses that had been accumulated. There is a remaining issue with regard to the salary continuation plan for teachers, which is really a long-term disability plan. There was a surplus there, there is a question as to whether that surplus still remains. We are doing a follow-up audit this coming year to get at that issue.

In Finance, the Corporate Financial Management System, I would like to come back to.

In Finance, Debt Management, we have done an update review of previous audits in that area. The province continues to make progress in the way it manages its debt and particularly in its management of risk related to the use of derivatives. Certainly, one of the issues identified in the past audit was the question of the adequacy of resources within the Department of Finance to manage debt. That issue has been addressed.

In terms of Crown Agencies and Corporations, a follow-up of our audit of Atlantic Lottery of last year, again, a significant number of our recommendations have been addressed but there is one major outstanding issue there and that is the inter-provincial agreement between the four provinces, particularly as it relates to the way costs and profits are allocated among the provinces. We believe that Nova Scotia has a shortfall of $5 million a year, those negotiations are ongoing seeking a change in the allocation of profits so that Nova Scotia gets its fair share.

The Queen Elizabeth II Health Sciences Centre, and this was not an audit this was review of the work done by the external auditor of the hospital and I would like to come back to that one.

The Resource Recovery Fund Board Incorporated. Generally, a well-managed program, producing funds for use as intended, however, there is an issue with regard to the way this organization has been set up. It has been set up as a private corporation. As a result, it is required to pay the sales tax. So, 15 per cent of every nickel from the deposits is being paid in sales tax. So, the province is suffering a shortfall, in my opinion, and there is a question, if this program was managed as a normal government program as opposed to being

[Page 28]

an outside entity, whether that sales tax would be paid. But there are significant funds that could be going to environmental issues that instead are being paid in sales tax.

Those are the major elements of the report, the standard Review of Financial Statements and Management Letters and Other Audit Observations are there as well. But let me now turn to the major ones in our opinion.

First, Accountability Information and Reporting. Nova Scotia continues to lead the way in terms of accountability reporting, with the document Government By Design. What we understand will be released some time soon, we thought it would have been already, is a performance report entitled Nova Scotia Counts, that reports on the achievement of government objectives as they are outlined in Government By Design. Nova Scotia has received international recognition for this initiative and for these documents. The government should be commended for those.

As well, improvements continue to be made in the financial statements. There are still outstanding issues, the primary one being that we don't have as the primary financial statements a consolidated financial statement, so we don't have the total picture as the primary financial statements. But other issues have been addressed and are being addressed and certainly there are plans to move towards consolidation.

As you will recall, there was an issue in terms of an inappropriate accounting policy in the last two years' financial statements, that is to be addressed this year in a move back to appropriate accounting policies.

Let me now turn to Procurement. Again, the application of the procurement policy has resulted in much more competitive processes; controls over procurement continue to be improved and previous recommendations we have made have been acted upon. One outstanding issue that we feel is important and that is that government should report to this House annually on procurement activities and on any exceptions to the application of the policy. We understand that that reporting process is to be in place by March 31st of this year.

We will come back to this one again but as part of the procurement process, steps have been taken to deal with public-private partnership initiatives within government from a policy point of view. Those steps are ongoing and become more important as the government moves towards more of these initiatives. We will deal with the school construction one in a few minutes.

Next is Information Technology Management - Year 2000 Readiness. I don't want to overstate this one but as you have read in the press, it is a major issue across the world in terms of computer systems. Nova Scotia has taken steps, there is a Project Office in place to oversee the government's initiatives in ensuring that systems will cope with that issue but

[Page 29]

much remains to be done and we are now down to 22 months and it is a fixed deadline, it can't be postponed.

There is a question of whether or not there are adequate resources across the system to deal with the issue but everybody is at risk with this one and we simply believe that it is important that this House of Assembly pay attention to the issue and receive some sort of progress reports periodically to ensure that all of the necessary steps are taken.

Public-Private Partnerships for School Construction. This is a very complex issue and we have eight schools that are either finished and occupied or well underway and for none of them do we have any kind of formal agreements, no leases, no operating agreements, yet the schools are occupied. We are concerned that we were unable to determine whether these are good deals because we don't have any agreements to assess. Certainly, this problem is well known within government and is being addressed for the future but we have had a year now of activities without any kind of formal agreements.

As well, on a broader basis, the whole issue of leasing versus standard traditional construction has not been analysed so we don't know the cost or benefits of one versus the other. We were not able to make those kinds of comparisons. We believe that the government should do that kind of analysis in advance before making decisions as to lease versus buy. I think we have to recognize that in terms of committing taxpayers' funds for the future, entering into a lease has the same long-term financing consequences as borrowing the money to build a school.

MR. CHAIRMAN: Would you answer a question now or do you want to wait until it is over?

MR. SALMON: I don't have much longer to go, Mr. Chairman, if you don't mind.

School Boards - Accountability and Amalgamation. One of the issues for us going into this was whether or not planned efficiencies, planned savings, would be achieved because the initial estimate was that savings of something like $11 million would be realized. We obtained information from the school boards as to their calculations of savings. Those are considerably less than $11 million.

The other specific concern we had related to severance payments that were made to former district school board staff. There were something just under $2 million in severance payments made. There were three that we found to be unusual, two in which the employees were paid severance and immediately hired back into other positions and a third in which it was understood that there was an employment contract that had to be honoured. It was said to be a 10 year employment contract with three and one-half years remaining. We could not be provided with an employment contract and our understanding at the moment is that it was a verbal agreement and therefore there really wasn't a legal obligation to pay the severance.

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As well, it was not paid as severance although it was identified as severance, the employee was retained on a part-time basis for the remaining three and one-half years and is being paid as a salary.

[11:00 a.m.]

Corporate Financial Management System. This is a very complex computerized system that was developed for the government. It was scheduled for implementation on April 1, 1997. The decision was made to implement it on that date. We had concerns of control deficiencies within the system because of the haste in which it was implemented. So does the Department of Finance. The system is operational but there are control concerns. There are risks. We have agreed with the Department of Finance to undertake a joint audit on a contract basis and a contract has been entered into and the audit will be completed by March 31st and will be reported upon at that time. But this was a significant concern on both our parts and, therefore, we have taken that step.

Queen Elizabeth II Health Sciences Centre. As I indicated, we did not do an audit there. We reviewed what the external audit firm had done, including their management letter. The centre had an operating loss last year of $12.5 million and an accumulated operating deficiency or deficit of $21.9 million. Losses of $11.9 million are anticipated for this year. These losses are planned to be recovered through savings over the next number of years up to the year 2000. There is doubt as to whether or not those savings will be achieved. There are concerns as to whether or not those savings will be achieved and, therefore, there is concern as to whether the hospital is viable as a going concern. These are the words of the auditors. The only other source of funding for that hospital is the province. Therefore, that has implications for the province's efforts to balance its budget. So there are significant financial implications here for this hospital.

Over and above those amounts, the hospital has significant amounts of money recorded as accounts receivable from both the Workers' Compensation Board and the Department of Health. There seem to be disputes over those amounts and if those aren't recovered, that adds to the deficit. We have had the hospital on our list of potential future audits. We have moved it up to this coming year and we will be doing an extensive audit of the hospital in the coming year.

Mr. Chairman, those are my opening comments. I am quite prepared, along with my staff, to answer any questions. Thank you very much for your attention.

MR. CHAIRMAN: Thank you, Mr. Salmon. We will open the floor for questions now. Mr. Carruthers has his hand up.

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MR. CARRUTHERS: Thank you, Mr. Salmon. It was a very interesting and encompassing report. I noted a couple of things. I take it generally you feel the province's fiscal controls are proceeding and improving. Am I right?

MR. SALMON: That is a fair statement.

MR. CARRUTHERS: There were a couple of points you made that stuck me. The sales tax issue on the recovery fund, I find that very interesting. It seems to me what really would be happening there then, if the 15 per cent is being charged on the nickel and 7 per cent of it is going to the feds, we are losing 7 per cent of it ultimately. Am I right there?

MR. SALMON: That is correct.

MR. CARRUTHERS: What do you think is a way of getting around that? What do we do to stop that?

MR. SALMON: It is an organizational issue. As I understand it, the Resource Recovery Fund Board Incorporated was established as a private sector entity because it was felt that industry would be more supportive of it if it was outside government. The implication of that was that they have to pay sales tax.

MR. CARRUTHERS: Can we get it both ways? Is there any way of doing it both ways?

MR. SALMON: Good question. Negotiations are continuing by the board with the two governments, as I understand it.

MR. CARRUTHERS: I don't want to take up much time because I know other people have questions, but I also found the lotto issue interesting and I know this has been going on. There is a shortfall coming to us by our calculations. Now, negotiations are going on, is there any recommendation that you can make to us, is there something more we can do to get that fairness in the division of funds? Is there a hammer we have?

MR. SALMON: I think what we have to recognize here is that a renegotiation for the benefit of Nova Scotia comes out of the pockets of the other provinces and that is the problem. For me, though, the issue is fairness. The way costs are allocated now is not fair to Nova Scotia, at least, and maybe another province. I think we really just have to leave it in the hands of our representatives on the board of the Atlantic Lottery Corporation to continue negotiations with the other shareholder provinces.

MR. CARRUTHERS: Well, that's great. Just one quick final one, Debt Management. Of course, that's a big thing, I guess the biggest thing, in a sense, that we faced over the last few years. If you were trying to summate how we are doing in debt management, what could

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you tell me? I suppose we can always do better but are we doing pretty good in debt management here?

MR. SALMON: Certainly far better than we were doing three or four years ago.

MR. CARRUTHERS: Thank you.

MR. CHAIRMAN: Mr. Holm.

MR. HOLM: A number of questions and once I read the report, I am sure I will have many more. I just want to touch on the last point in the whole idea of debt management and something that is not covered here. About one-half of our long-term or unmatured debt is in U.S. funds. As the Canadian dollar has taken a significant hit on the money markets, of course, and if we are paying back our dollars in U.S. funds, I know that there are some things with derivatives, I don't claim to fully understand how that all works, but to try to balance that a little bit, has our risk increased? Has our repayment debt ratio deteriorated as a consequence of the dropping Canadian dollar and our commitments in U.S. funds?

MR. SALMON: The recent drop?

MR. HOLM: Does it have long-term implications for the budget?

MR. SALMON: It depends on what happens to the dollar, but the province has become much more sophisticated over the last couple of years in the use of derivatives, swaps, and so on. So, the risks are, could we say substantially less?

MR. CARTER: I am not sure I would use the word, substantially. I think that clearly if the dollar were to stay at the level that it is at today, then there would be a significant longer term impact. Our understanding is, Finance has taken steps in terms of use of derivative products in terms of buying currency at fixed prices and so forth that would mitigate some of the risk but, yes, if the dollar were to stay at its current level, it would have an impact on the province.

MR. HOLM: Now that was something, and I don't know how you quantify it and we can't predict exactly what it will be, but there are risks obviously if the dollar stays at its current rate?

MR. SALMON: Yes, I think we also need to recognize though that we have a significant portion of our debt in foreign currency, it is not all U.S. dollars and a significant portion in Japanese yen as well.

MR. HOLM: No, I appreciate that. I want to go to the issue of, well, there are a lot of them but if I can, the P3 schools. I remember back in the mid-1980's the then Auditor

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General made pretty strong recommendations with respect to government leasing of offices versus the agreement owning the actual buildings. He concluded that the cost of the leasing was significantly greater than had they owned them and, in fact, made the recommendation that the government move towards owning more of their buildings rather than leasing them.

Now, we seem to be going back to the future in the schools. We aren't going to own them, we are going to be paying the interest rates, we are going to be paying the profits and so on. You have pointed out that they didn't do any of the long-term cost-benefit analyses before they proceeded on these. We still don't have leases, we still don't know the details about what is going to be happening. So, my question really is, is it good business practice for a government to be proceeding with these partnerships before they have done the kind of detailed cost-benefit analysis as basic homework in the first place?

MR. SALMON: Well, I am concerned about it. I think it is recognized that risks were taken and that negotiations have become much more difficult because we are that far down the line in terms of having constructed the schools and occupying them, and not having formal agreements. We strongly recommend to the officials that the kinds of analyses that you are suggesting should be done in advance. It certainly was not done on the eight that are in progress.

MR. CHAIRMAN: Mr. Fage.

MR. ERNEST FAGE: Mr. Chairman, just a couple of quick questions. The first one deals with problems with accounting as I noted on the overhead there. It says that the government has made a commitment to proper accounting policy, I think is what I denoted from the overhead there, that they will use the standard in this coming year for deficit or surplus?

MR. SALMON: Yes, some accounting policies will change this year. It appears that we are not moving to full consolidation this year, however, the one particular policy referred to was the issue of recording, as capital expenditures, commitments on future projects. Last year was the last year for that policy. So, it will change this year.

MR. FAGE: So, we can look for a more accurate bottom line in the coming year that will concur with proper accounting principles?

MR. SALMON: Depending on how the change back is implemented. If it's done on a retroactive basis, it would be a more accurate surplus or deficit number. If it's not done on a retroactive basis, the $10 million that was recorded last year, that I believe belongs in this year, would still be an issue.

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MR. FAGE: Okay, thank you. The second one deals with the public-private partnershipping with the schools. Personally, I am extremely concerned that the future of schools in communities in Nova Scotia is endangered under policy which appears to have no analysis of whether there is a cost-benefit to building school structures in this manner, and no documentation. I received a request from a department last week where they had sent officials to other provinces to a conference denoting the benefits of public-private partnership when it appears actually no cost-analysis had ever been done, or there doesn't seem to be here that type of in-depth comparison of whether we should build to own, or we should be leasing. My question is, is there any sign out there, regardless of what we have heard in the short term since December, that anything is in place to ensure that accountability is returned to that process?

MR. SALMON: There are commitments and actions being taken to correct the deficiencies that existed last year in the process. There is a commitment to do that which we will be monitoring.

MR. FAGE: But the deficiencies still exist. There is no concrete proposal in place, or anything that clearly delineates the terms in which public-private partnership takes place that will ensure that this process is valid?

MR. SALMON: I would say that the problems have been identified, actions are under way to address them for the future. Elaine, do you want to expand on that at all?

MS. ELAINE MORASH: There has been a commitment on the part of the government to ensure that signed leases are in place before they start construction on future schools, and I think that is going a long way towards resolving some of the problems that were in place for these initial schools.

MR. FAGE: That begs the question for this year's accounting, and I am not an accountant, but for the amount of money that was loaned by the province to build these schools since there were no leases in place to borrow the money from the private sector, should that show up on this year's books?

MR. SALMON: Well, in the case of two schools, funds were advanced last year and charged as a capital expenditure with the objective of recovering those funds this year when leases were signed. Since leases are not signed, there is some question of what the accounting treatment should be for this year with regard to those funds. I am not in a position to answer that question in terms of what is going to be done.

MR. CHAIRMAN: Mrs. Norrie.

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MRS. NORRIE: I guess, just to clarify, Nova Scotia continues to lead the way in its accounting practices and it has been internationally recognized for the changes that have happened, is that what you are stating?

MR. SALMON: In terms of the document, Government By Design, in terms of reporting on performance, establishing program objectives and reporting on performance in terms of those objectives and the programs, yes, Nova Scotia is leading the way. Nova Scotia is not leading the way in terms of its accounting practices, from a financial point of view.

MRS. NORRIE: Do you think that has improved with the combining of the operating budget and the capital budget? Is that going a step in the direction of improving that?

MR. SALMON: That is one step in the right direction. Other steps have been taken to improve the financial statements and be more complete in terms of reporting the surplus or deficit but there are still issues outstanding, additional steps that need to be taken and additional changes that need to be made.

MRS. NORRIE: In reporting earlier in the year, do you think, is that an improvement in the process as well?

MR. SALMON: It certainly is, yes.

MRS. NORRIE: I want to speak, just briefly, on the Homes for Special Care issue. There is a commitment from Community Services to move toward the standards so that they are more consistent across-the-province with the changes that have taken place there?

MR. SALMON: Yes, that is my understanding. Either Alan or Elaine could address that in more detail.

MS. MORASH: That's correct. There is a committee that has been formed now that is looking at standardization and they hope to have across-the-board standards in place by April 1, 1998.

MRS. NORRIE: Thank you. I guess on all the issues that you have raised pretty well throughout your report you have pointed out some areas that need improvement but you have also stated that there are processes in place and commitments in place that those improvements will happen. You are just there to ensure that they do?

MR. SALMON: Yes, Mrs. Norrie, we attempt to be fair. Where positive actions are being taken, we report those. Where there are problems, we report those as well.

MRS. NORRIE: Well, I think it is a very good report. Thank you very much. I will look forward to absorbing it more than in just the last half hour.

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MR. CHAIRMAN: Thank you. May I ask a question? Just one. One of the reasons that the province entered into these public-private partnerings was so that Standard and Poor's and Moody's in New York would not consider this debt when they were talking about the ratings for Nova Scotia. They have said it was off-book accounting or they had some catchy phrase - I forget right now.

Now, are you indicating that, in fact, all these lease agreements, where the province is obligated to pay the lease, they are going to be treated just as though the province has gone out and borrowed the money and it is going to affect the credit rating for the province?

MR. SALMON: The issue for the government - and you are correct - as I understand, one of the primary drivers in entering into these P3 arrangements is to arrange what is called off-balance sheet financing.

MR. ARCHIBALD: That is what their phrase was.

MR. SALMON: There are a set of guidelines issued by the Canadian Institute of Chartered Accountants that are to be followed in determining whether a lease is an operating lease or a capital lease. If it is a capital lease, then it is a debt that goes on the balance sheet. If it is an operating lease, it does not go on the balance sheet. The government is attempting in all of these situations to negotiate operating leases.

MR. CHAIRMAN: John Holm, you had one question and it has to be a short question.

MR. HOLM: We have got an extra 20 minutes, I think, haven't we? What I would like to get at, first of all, whether it would be Standard and Poor's or Moody's, when they are looking at the obligations of the province and the ability to meet its debts and so on for the rating, if the province has entered into a 20 year lease arrangement that is going to require provincial payments at least as high as they would be if they were to own the facility outright and probably have been able to build it at a lower interest rate, because they get it, would they not take that into consideration really almost the same as if it is an on-the-book debt? Are they not sophisticated enough to look at what the total obligations are?

MR. SALMON: I can only make assumptions here, Mr. Holm. I don't deal with bond rating agencies, I don't know what kind of analysis they do. I would presume that they would take such things into account. Normally, these kinds of contractual obligations are disclosed on the financial statements by way of note and therefore they would have access to that information.

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MR. HOLM: Okay, just with that, we talked about the cost-benefit analysis, is that standard practice that a government should know that that kind of process needs to be done or is it rocket science that it should come out of the blue that government wouldn't be aware that this kind of procedure should be done before they enter into them?

MR. SALMON: I would suggest that it is standard practice to do that kind of analysis first.

MR. CLIFFORD HUSKILSON: Mr. Salmon, you noted that the province is making progress in the debt management. Could you put a figure to that, give us an idea of a dollar figure?

MR. SALMON: No, it is not possible to quantify the improvements in process. All you can do is make an assessment as to whether or not risks are being better managed and therefore the exposure to loss has been reduced and we have concluded that that is the case.

MR. HUSKILSON: Also I would just like to hear more comments about the year 2000 with the problems with the computer systems. Would you like to expand on that?

MR. SALMON: From what perspective? You understand what the problem is? If a computer isn't properly programmed to recognize the switch-over to the two 00's, that it is 2000 and not 1900, then all sorts of things could happen within the systems. You could have people not receiving pensions because they haven't been born yet. You could have the system crashing and not operating at all. Any number of things may happen. I understand that two airlines have already made the decision that on January 1, 2000, they will not fly because they don't know what is going to happen within their computer systems, onboard or traffic control. (Interruption)

In the case of the Province of Nova Scotia, they have established a Project Office within the Technology and Science Secretariat that is overseeing efforts across departments to fix their systems or at least review their systems to ensure that they are compatible with the issue. But we have all of these other agencies, Crown Corporations, hospitals, schools, presumably, that are on their own. This has a significant resource cost to fix these systems. Skilled resources are in short supply in terms of people with the technical expertise to identify and correct the problems. This is worldwide.

I don't want to wave the flag too high or too hard here but I think we have to be aware of the problem and monitor what goes on and make sure that we don't find ourselves on January 1, 2000 with nothing operating.

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MR. RICHARD HUBBARD: Mr. Chairman, I want to thank Mr. Salmon for what looks like an excellent report. Just a very quick question on the Department of Education and Culture. I was looking at the Teachers' Pension Fund, do you have any figures on where we were in 1993 and where we are now with that?

MR. CLAUDE CARTER: Sorry, I don't have those figures with me.

MR. HUBBARD: Ballpark?

MR. CARTER: From 1993 to 1997 year-end, certainly since 1993, a number of things have happened in terms of an agreement with respect to the unfunded liability for their pension fund. Certainly, the position of that pension fund has improved considerably.

MR. HUBBARD: Do you remember from what number to what the number is . . .

MR. CARTER: No, I don't, I am sorry. I can get them for you, if you want?

MR. HUBBARD: Sure.

MR. FAGE: Mr. Salmon, I still have a concern concerning the P3 and the operating and capital lease. In the abbreviated form of your document here, "Operating leases will result in the ownership of the schools resting with the private sector at the end of the lease term and the costs and benefits of such leases merit thorough consideration.". That disturbs me greatly, that observation, in that, say, by some type of imaginative bookkeeping, the P3's are not a capital lease and are not included on the short-term lists of the books. If long-term operating leases were the norm, if indeed, say, the average span is 20 years, we have seriously impaled the education system, as in the capital structure, if at that point the retrofit, new schools, or everything which was once an asset of the Province of Nova Scotia, and normal schools in Nova Scotia or the ones that I visit are the average age of older than 20 years, where does that leave us with that statement?

MR. SALMON: Well, the first comparison is that over the 20 years we are paying rent, if we had built the school we would be paying debt. Those have to be compared. As I understand the intentions in terms of negotiating the leases, the province would have the option of buying the school at the termination of the lease at something approaching fair market value. We haven't seen any leases yet, so I can't tell you whether or not that is going to be achieved or what the implications are.

Certainly, as I understand it, the average life of a school in Nova Scotia is something over 30 years. This does provide some flexibility to the province in terms of demographic shifts; in a situation where you leased a school in a particular region and no longer needed if, you have the option of getting out of it. Perhaps at less cost than you would have incurred if you had built it and owned it. There are a lot of factors to be taken into consideration here,

[Page 39]

but certainly there is a necessity, I think, to do appropriate analysis in the beginning to weigh the costs and benefits and the options, and that hasn't been done to date but is intended to be done in the future.

MR. FAGE: It is rather ironic that eight schools would be on the list, completed and a cost analysis of that type of magnitude and what it means to the future of money management, education in this province has been undertaken, and there is a commitment to have a look at it in the future.

MR. SALMON: Well, speaking personally, I certainly understand the need for new schools and moving to a high-tech type of school. Certainly we had the opportunity to visit the new one in Sydney last summer and it is an excellent facility. I would love to have gone through that kind of a school myself. So it is not the program objective or the need for schools, it is the process we are concerned . . .

MR. FAGE: That is absolutely what I am pointing out. We all agree on the need for the schools, that is not even in question. The process of fundamental finances, the cheapest and most efficient way to provide those physical structures is what is under question here, certainly not the process.

[11:30 a.m.]

MR. CHAIRMAN: Mrs. Norrie.

MRS. NORRIE: There are nine more minutes, are there? I don't know if there are any other questions or not. This is my second question. I just want to make sure everyone has had an opportunity. About student assistance; we just had the Nova Scotia Agricultural College representatives in and they gave us a good briefing on the situation there and their student body and talked about tuitions. Maybe you could elaborate a bit on the Student Loan Program and your comments there because I haven't had a chance to read them directly. I do see there that the processing time is 21 days. Do you know how that compares to other years and would you like to expand more on the Student Loan Program?

MR. SALMON: Elaine, can you deal with that.

MS. MORASH: In terms of the processing time, we haven't compared it to other years but it is close to the targets that they have set for themselves. I guess in looking at that figure the one thing, though, to keep in mind is that it doesn't include days that would be in addition to those 21 days where the student has failed to provide the necessary information and the application has to go back to the student so that in individual cases if, for example, your constituents are telling you that it takes in excess of that, that is very possible. This figure is based on a complete application coming into student assistance and being processed so it is very close to their targets.

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I guess our major concern with the student assistance program is the potential, because of programs that are in place, like Loan Remission and Interest Relief, for there to be a larger impact on the financial position of the province in the future, that it is a relatively new program and because it just started in 1993, not many students have graduated under this program yet. We don't know exactly what their employment opportunities in the future will be and how long the province will have to pay interest relief related to those students. So there is certainly a possibility for the program to have an impact on the financial position of the province in the future and that is the major point that we are trying to make.

MRS. NORRIE: Thank you very much.

MR. CHAIRMAN: Mrs. O'Connor.

MRS. O'CONNOR: I appreciate the report. I am just sorry I haven't had time to absorb it deeper than I have, trying to listen to what you are saying and read at the same time. I would like to go to the Department of Community Services on the overpayment of benefits. I guess I wonder, and I haven't been able to find the answer and it may be here, as to why the $35 million or $25 million hasn't been written off on the overpayments. I know the overpayment has increased by $11 million but I am just wondering about the reason Community Services gives for it having not been written off the books?

MR. SALMON: Alan, could you deal with that?

MR. ALAN HORGAN: I can address that. It is the policy of the Department of Community Services never to - or at least to this point - write off any overpayments they record in their system. The primary reason is that they want any overpayments to be maintained on record. In situations where a recipient of benefits may leave the system and come back at a later point, be eligible to receive benefits sometime down the road; they want to be aware of whether or not the person applying for benefits had received an overpayment in the past. If they had, they would apply those overpayments against any benefits that were calculated for the current time.

MRS. O'CONNOR: Okay, I can understand and I am not trying to encourage that the recipient has to pay it back but you have on here from 1952, if I remember correctly. I guess I feel that from 1952 maybe to 1960 or 1970, some of those should be written off. I just wondered what the reason was. I can agree or not agree with your answer but that is not your problem. Thank you.

MR. CHAIRMAN: Mr. Holm.

MR. HOLM: I know our time is short and there are a lot of questions and I am just going to pose one. It has to do with the school board amalgamations and the fact that the savings and so on, as projected, haven't occurred. Under Section 8.4, you said that, "The

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Department has no specific plans to follow up and report on amalgamation efficiencies realized and redirection of savings.". It strikes me that that would be a fundamental thing that should be done, that you have to evaluate what the implications are in terms of efficiencies, savings and also more importantly on the implications or impact upon the quality of education in the classroom. Does your department, since the government, I guess, or the department's view is "no news is good news", since they aren't planning to do any kind of evaluation, would your department be looking at that to try to do a follow-up evaluation on that?

MR. SALMON: We would generally not undertake to do those kinds of evaluations ourselves. That is the responsibility of management. I think it is our responsibility to tell you people whether or not they are doing what we consider to be appropriate.

MR. HOLM: And you think that that should be done?

MR. SALMON: Yes.

MR. CHAIRMAN: Thank you. With regard to the QE II, you were indicating that the renovations were overbudget by 50 per cent. That was the renovations in the new hospital before they even had a chance to . . .

MR. SALMON: Do you want to address that, Elaine?

MS. MORASH: That was the construction of the new hospital.

MR. CHAIRMAN: Now, you also indicate in your press release that you are concerned about the deficit that the QE II has run up, that the province is going to have to fund it. If the province didn't fund it, who would fund it? Was this a surprise to you that the province would have to fund the deficit from the QE II?

MR. SALMON: No, it is not a surprise to me. I simply wanted to point it out because of the implications for the province's financial position, because these funds are substantial.

MR. CHAIRMAN: Oh, I see what you mean. How many millions of dollars was that?

MR. SALMON: An accumulated deficit of $21.9 million and an additional loss this year of $11.9 million, so you are talking $30-some million plus disputed accounts receivable that would have to be funded.

MR. CHAIRMAN: That will have to go on this year's . . .

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MR. SALMON: Probably not on this year's. Again, we have a business plan that has been established for the hospital that is intended to achieve savings that would fund the deficits. What I am pointing out is that if that business plan does not achieve those objectives, then those deficits will have to be funded, but we are talking a couple of years down the line.

MR. CHAIRMAN: Thank you. We agreed to meet for an hour and the hour has expired. (Interruption) All right, should we plan to meet next week?

MS. MORA STEVENS (Legislative Committee Coordinator): You have to set an agenda for that.

MR. CHAIRMAN: I have an agenda. (Interruption)

MR. HOLM: The standard is that the first weeks are to have the Auditor General come in so that you can ask; that is the normal procedure in the committee and we haven't sat to plot out a plan for the year. But something is probably going to intervene before the year is out, so we can't plan that far ahead, but we can plan to have the Auditor General back to ask more detailed questions on the basis of having read the report.

MR. CARRUTHERS: All right. I suggest we have a meeting in a couple of weeks from now to do just that.

MR. HOLM: I suggest next week, Mr. Chairman.

MR. CHAIRMAN: Okay, we have had two dates. One for next Wednesday. Would all those in favour of next Wednesday. How about the Wednesday two weeks from now?

MR. CARRUTHERS: I would vote Aye to that.

MR. CHAIRMAN: Thank you, two weeks from today.

We are adjourned.

[The committee adjourned at 11:39 a.m.]