The Nova Scotia Legislature

The House resumed on:
September 21, 2017.

HANSARD

NOVA SCOTIA HOUSE OF ASSEMBLY

COMMITTEE

ON

PUBLIC ACCOUNTS

Wednesday, June 2, 2010

LEGISLATIVE CHAMBER

June 2010 Report of the Auditor General

Printed and Published by Nova Scotia Hansard Reporting Services

PUBLIC ACCOUNTS COMMITTEE

Ms. Diana Whalen (Chairman)

Mr. Leonard Preyra (Vice-Chairman)

Mr. Clarrie MacKinnon

Ms. Becky Kent

Mr. Mat Whynott

Mr. Maurice Smith

Hon. Keith Colwell

Hon. Cecil Clarke

Mr. Chuck Porter

[Mr. Brian Skabar replaced Mr. Leonard Preyra]

[Hon. Christopher d'Entremont replaced Hon. Cecil Clarke]

[Mr. Allan MacMaster replaced Mr. Chuck Porter]

WITNESSES

Office of the Auditor General

Mr. Jacques Lapointe, Auditor General

Mr. Alan Horgan, Deputy Auditor General

Mr. Terry Spicer, Assistant Auditor General

Ms. Ann McDonald, Assistant Auditor General

Ms. Evangeline Colman-Sadd, Assistant Auditor General

In Attendance:

Mrs. Darlene Henry

Legislative Committee Clerk

Mr. Gordon Hebb

Chief Legislative Counsel

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HALIFAX, WEDNESDAY, JUNE 2, 2010

STANDING COMMITTEE ON PUBLIC ACCOUNTS

10:00 A.M.

CHAIRMAN

Ms. Diana Whalen

VICE-CHAIRMAN

Mr. Leonard Preyra

MADAM CHAIRMAN: Order, please. I'd like to call the meeting of the Public Accounts Committee to order this morning. Our business today is a look at the report of the Auditor General, his June 2010 report. We have had a chance to look at it briefly this morning, and had an in camera presentation with the Auditor General, and this is our public portion of the review this morning. We have a two-hour meeting following the normal format of our Public Accounts meetings. We will begin with the introduction of our committee members beginning with Mr. Smith.

[The committee members and witnesses introduced themselves.]

MADAM CHAIRMAN: To begin the meeting we will have an opening statement from our Auditor General, Mr. Lapointe.

MR. JACQUES LAPOINTE: Madam Chairman, as you're aware, I have presented my June 2010 report to the Speaker this morning. It can be considered to be tabled with the House of Assembly and it is being distributed now to the members. I am pleased to have the opportunity to discuss it with you here today. I am accompanied today by the members of my senior management team, who have just introduced themselves. They are the ones who plan and manage the audits and they produce the reports.

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This report includes audits completed during the Fall of 2009 and also in the winter of 2010. There are three chapters on performance audits of government programs, these are Financial Assistance to Business through NSBI and IEF; The Management of Contaminated Sites; and Mental Health Services. There is a chapter on follow-up of our 2007 recommendations.

It is my role, as an independent officer of the Legislature, to assist the House to hold the government to account for its management of public funds. In doing so, I work to improve the performance of the public sector by recommending solutions to weaknesses in government programs. My report makes 43 recommendations to improve the operations of government in the different areas that we audited. Madam Chairman, I and my staff will be pleased to answer your questions.

MADAM CHAIRMAN: I will turn the floor over to the Liberal caucus, to Mr. Colwell, for 20 minutes.

HON. KEITH COLWELL: Mr. Lapointe, I'm going to ask some questions I already asked in camera, just to put things on the record to start, if you don't mind. The fact that NSBI and the Department of Economic and Rural Development and the Industrial Expansion Fund refused to provide you information and, indeed, you had to stop your audit on that process, in that department, is that correct?

MR. LAPOINTE: That is correct.

MR. COLWELL: What are the implications of stopping an audit, as far as an Auditor General is concerned?

MR. LAPOINTE: It's a situation which, in a case like that, can be not just difficult but impossible for me to do my work. The extent of the information that was being denied in this particular case - because so much of it had to do with Cabinet or legal issues - was such that an audit simply could not be completed. That means that when we withdrew, we could not reach any audit conclusions, we could not complete the work and so therefore we issue what I term a denial of opinion.

MR. COLWELL: Did you make any effort to get that information from government, to write a letter to the Premier or anything like that and what date might that have been?

MR. LAPOINTE: Certainly we did. We were told that a decision on this would have to be made by Executive Council so, in fact, I did write to the Premier and request the disclosure of all this information. That was passed on to the Clerk of the Executive Council by the Premier, who is also the deputy to the Premier who then wrote me a reply saying that we would not receive any of the information we asked for.

[Page 3]

MR. COLWELL: When did that occur?

MR. LAPOINTE: This was in the Fall and I don't recall off the top of my head the exact date.

MR. COLWELL: The Fall of 2009?

MR. LAPOINTE: The Fall of 2009.

MR. COLWELL: When the present government was in power.

MR. LAPOINTE: Yes.

MR. COLWELL: Thank you. The information that typically the government has refused to give would be held - when it's available to the Auditor General and hopefully it will be - confidential by the Auditor General's office?

MR. LAPOINTE: Certainly. We receive confidential information of all kinds in all the work that we do and all of it is kept confidential by us.

MR. COLWELL: Has there been any jurisdiction in Canada that has refused to provide this type of information to the Auditor General's office, any of the provinces federally?

MR. LAPOINTE: There are variations across the country on what is provided and what isn't, it's something that has developed over time. The refusal at this level to provide any Cabinet information or any legal information is, as far as I know, happening only here.

MR. COLWELL: Was there any justification given by them that you could live with and say, yes, that makes sense to me?

MR. LAPOINTE: No, I'd have to say there isn't. The reasons being given are legal technicalities and I feel that the broader principle is one of public accountability. There is no good reason for denying information to the Auditor General or any auditor trying to provide reports to the House of Assembly. Regardless of technicalities, the basic principle of public accountability is what's being violated here.

MR. COLWELL: In the independent world and business world, I know you were involved in that and I know probably most of your auditors were, would this happen in private industry?

MR. LAPOINTE: It's a little bit different situation. I know that auditors in CA firms, for instance, being hired to conduct financial audits and provide opinions on companies or

[Page 4]

most of the government agencies, in fact, really aren't subject to any limitations in the information they're provided, it never arises. They can't accept, in fact, that kind of restriction and it doesn't happen.

MR. COLWELL: That would be my understanding as well. This really disturbs me because we went through this before on some other files we had. We had to issue subpoenas by this committee for you to get the information and at the end of the day, our committee didn't get all the information. That was fine as long as your department had it and did your review and came back and reported to us, I think that was satisfactory. Can you see this as an ongoing problem?

MR. LAPOINTE: This is now a fairly pervasive problem. This particularly stands out because so many of the documents we were looking at were of the type that were being denied. It can happen on a smaller scale, it certainly had been referred to in one of our other chapters. For instance, in the Mental Health audit there was information we were looking for there, which was also denied. It didn't affect the overall outcome of our audit because what we were looking at was somewhat peripheral, so we were able to refer to it in the chapter but we were still able to complete the work. This occurs now on a fairly routine basis across government.

MR. COLWELL: Would you say in this case with NSBI and with the Department of Economic and Rural Development, that this is a serious issue as far as the Auditor General is concerned?

MR. LAPOINTE: Well I guess it's about as serious as it can get, if it leads to the fact that we literally cannot conduct the audit and have to come here and say that we have no opinion. We must deny an opinion because we can't do the work, that's a pretty serious matter.

MR. COLWELL: Yes, and that could potentially cause serious problems for us, as legislators, trying to make decisions on bills that would go forward or the financial situation of the province or the justification of departments for making particular decisions, would that be correct?

MR. LAPOINTE: It's hard for me to speculate beyond the particular situation that we have. All I can do is report my findings of what happened to us. The basic principle here, the work I am doing is to provide reports to provide to the House of Assembly. That's one of the reasons why basic public accountability is at stake, that in doing my work on behalf of the House, I am not able to do the work properly.

MR. COLWELL: In other words, the House doesn't have the information that they should have to properly do their work as well.

[Page 5]

MR. LAPOINTE: Well it does not. We undertook this audit because we felt that this was something we should look at and there were issues that we should report to the House on. We are not able to report to the House because we can't complete the work.

MR. COLWELL: Yes, that's very unfortunate. There are some other specific questions I would like to ask. Could you just briefly outline, or one of your Assistant Auditors General, what Cabinet submissions or other documents weren't available in the Industrial Expansion Fund?

MR. LAPOINTE: Yes, for the details on that I'll ask Ms. Colman-Sadd to answer that one for you.

MADAM CHAIRMAN: Ms. Colman-Sadd.

MS. COLMAN-SADD: Thank you. The Industrial Expansion Fund, this was more of an issue there, I guess, than it was at NSBI, although ultimately there was an opinion denied in both instances. At NSBI there is a board that has some functions as well. At IEF, essentially all of the decisions are made at Cabinet at the end of the day. So all of the analysis of the risks of a proposition, all of that information that would look at the pros and cons of either offering and extending assistance to a company or not were contained within those R and Rs. We weren't able to see any of those, so we essentially did not see any of the analysis of the risks or pros and cons of any of those loans and assistance through Industrial Expansion Fund.

MR. COLWELL: According to your report, and my numbers may be off here, I just want to, there were 76 Cabinet submissions from 24 files and 32 documents from 11 files that weren't made available, would that be correct, on the IEF?

MS. COLMAN-SADD: Yes, that is correct.

MR. COLWELL: And NSBI, how many documents and what is the situation with NSBI?

MS. COLMAN-SADD: So at NSBI, the documents that were removed, there were 143 solicitor-client documents communications removed, or I guess, documents which they claim are solicitor-client communications, from 16 files. There were a further 29, just staff documents, that NSBI staff had written that were not provided or, sorry, that had redacted sections. As well, there were 30 Cabinet submissions which were not provided and sections in three documents that were redacted because they related to Cabinet submissions.

MR. COLWELL: I've already asked the Auditor General so I'll ask you the same question, any idea why this information was being withheld?

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MS. COLMAN-SADD: I don't think I can add anything to that, other than what Jacques said earlier.

MR. COLWELL: Okay. Whose decision would it have been - Cabinet, in fact, the present Cabinet, would it have been their decision or the Premier, whoever it would be, do you know who might have made that decision? Who do you get your direct information from? I think I've already asked that but I would like to hear it again.

MR. LAPOINTE: In terms of the decisions, there were a number of parties. The decision to withhold Cabinet documents came from the Clerk of the Executive Council, and it was that person's decision, as I understand it. I should add that the NSBI board of directors also made a decision. They told me it was their decision to withhold solicitor-client documents, and in fact, I would have to say that it's also a deputy minister issue because deputy ministers also have the right to ownership of their own information. The key would be the NSBI board and the Clerk of the Executive Council as the decision makers in this case.

MR. COLWELL: The Clerk of the Executive Council reports to Cabinet, is that correct?

MR. LAPOINTE: Reports to Cabinet, yes.

[10:15 a.m.]

MR. COLWELL: I know you can't answer this, but my conclusion would be that Cabinet made that directive to the Clerk, I would think.

MR. LAPOINTE: I can't speak to that because I wouldn't know.

MR. COLWELL: Being a former Cabinet Minister, I would think that's the case. Could you outline the particular legislation that would allow you to get this information in the province?

MR. LAPOINTE: I guess there are two. I made the simple case that the Auditor General Act provides me with access to all information within government and there are no exceptions written into it. This is an Act of this Legislature, and if the Legislature had wanted exceptions, I assume that they would have been built in.

Beyond that, the Act also has a reference to the Public Inquiries Act, under which the Auditor General has the authority of a commissioner, and as a commissioner has the power to compel evidence and testimony - under oath, if necessary - and the authority equal to that of a Supreme Court Judge. I believe that gives the Auditor General the right to any information on government.

[Page 7]

MR. COLWELL: Yes, and this committee also has the power to provide subpoenas, as we have done in the past with the immigration inquiry and all this information as well. Is that correct?

MR. LAPOINTE: That is correct.

MR. COLWELL: Do you intend to follow up with trying to get that information this way? I would think that wouldn't or shouldn't have to be necessary, and I would hope that it's not necessary.

MR. LAPOINTE: It's something that I had to consider when it arose, and I decided that while I can and still could - I've made no decision on that, but I decided it was more important that I report to the House, that I take what I found and what occurred and include it in my Report and come to the House with it and just report. That is my primary responsibility and I decided to do that now rather than get into what could be an extended conflict.

MR. COLWELL: Yes, and I think that's a great approach. It's always good to come to the House with this, because it's all of our responsibility to bring things to the House.

There were many other issues in the audit. Would you recommend that the three departments and also NSBI be brought to the Public Accounts Committee for further follow-up information on this? Would that be a recommendation?

MR. LAPOINTE: I would recommend that. It's certainly the committee's decision as to what hearings to hold, but in my advice as your adviser to the committee, in that role, I would suggest that the chapters I have here are definitely worthy of the committee's follow- up.

MR. COLWELL: NSBI was audited in 2004. Did you have any restrictions on access to information at that time or the type of information requested this time?

MR. LAPOINTE: No, we did not. It wasn't as broad an audit as we were attempting this time, but the fact is there was an audit at NSBI. We saw Cabinet submissions and we saw solicitor-client documents. At that time, in 2004, these types of restrictions did not occur.

MR. COLWELL: How long has it been since you've audited the Department of Economic and Rural Development?

MR. LAPOINTE: I'm not sure off the top of my head when the last time we were going to look at this particular program and the IEF was, or if we ever have. I don't recall. If we did, it would have been a long time ago.

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MR. COLWELL: And you're not aware, even though you wouldn't have been in the position of Auditor General, of any restrictions at that particular time with information?

MR. LAPOINTE: As far as I can see, the restrictions on information to my office began in 2005, or thereabouts, and have escalated since then. Prior to that it was simply not an issue.

MR. COLWELL: Is there any precedent - and I think I've already asked this question in another way - of a clear direction why government wouldn't give you this information? Is there any precedent you have in that area? This is very disturbing, this whole thing. We went through this before on some other files.

MR. LAPOINTE: I have no knowledge and I guess I can't speculate on why either the administration of government, or government, would want to restrict this information or to hide any information from the Auditor General. I can only report what I see and what actually occurs; the motivation behind it, I don't know.

MR. COLWELL: Are you satisfied with the response given by the Executive Council or NSBI or Economic Development on these issues?

MR. LAPOINTE: I'd have to say no, the response is not really satisfactory. We made a recommendation that Executive Council instruct all departments and agencies to provide the information that we require and, in effect, the response is a refusal to do so. It lists a number of legal technicalities, some of which I believe are not accurate, and those are not the issue in any case. The issue is one of public accountability.

MR. COLWELL: I know there are several recommendations you've made in the report and many things with Economic Development, NSBI and Environment, but one thing that disturbs me a great deal is the last part of the report on a follow-up with the 2007 recommendations. In that you state that only 22 of 82 - only 27 per cent of the recommendations made in your 2007 report - have been implemented. This the lowest rate in any year since we began tracking implementation. Could you possibly comment on that? It seems like an awfully low percentage of interest, I would say, from government, to pay attention to the financial accountability of the province and program accountability.

MR. LAPOINTE: It is quite low and that's why we refer to it in the report. It's fairly consistent, I suppose it could go up and down over time, but since we've started looking at this, there has been no improvement and in this case, it's actually the lowest result. We've commented on it in the past that we feel if we make recommendations to the House on improvements to government, we do them for a reason, because we see weaknesses that should be corrected. We feel it should be a priority to do so and I guess I'm becoming a little repetitive, because I'm saying it again this year, that we see no improvement and we see insufficient priority being put on making the improvements that we've identified.

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MR. COLWELL: It's particularly disturbing, there are a couple of departments, the Department of Health Long-term Care Program, which has always been a problem, and the Department of Justice Maintenance Enforcement Program, haven't implemented anything from the 2007 recommendations. Have they given you any reasons for that, have they talked to you about that at all when you reviewed it?

MR. LAPOINTE: I can say that's a very disappointing result and, in fact, these are fairly serious matters, the ones in the Maintenance Enforcement Program were ones in which we - if you recall the report - that we issued at the time. We said that these were significant weaknesses and that program needed to be improved. In fact, some of the deficiencies we reported at the time were some that led to an incidence of an alleged fraud that occurred in that department at that time. The recommendations were to effect corrections to make sure it didn't happen again. These have not been put in yet; this is three years later.

In the Department of Health, a large number of the recommendations on the Department of Health audits - there are three there - are not just in progress, they're at the stage of not having been started; we don't even know if they're planning to do anything. There has been no action whatsoever; it's not as if they're close to continuing; so it's quite a marked lack of interest in implementing the recommendations. As to the reasons for it, we really don't know.

MR. COLWELL: That's very disturbing.

MADAM CHAIRMAN: Mr. Colwell, I'm sorry, your time has elapsed but we will be back for a second round. I'm going to turn the floor over to Mr. MacMaster, 20 minutes for the Progressive Conservative caucus.

MR. ALLAN MACMASTER: I'd like to thank the Auditor General and his staff for the opportunity to ask some questions today. I know that the government right now is probably thinking about how they're going to save face with the results of this audit. I know they've had a pattern of blaming others and of going out to say they're going to fix things. In your mind, is legislation necessary to allow you to do your job or is it really the will of government that's required to allow you to do your job appropriately?

MR. LAPOINTE: The Executive Council response to my recommendation on the access issue does, in fact, state that there is a problem with this because there is no - as they call it - limited waiver provision in my Act. I'd have to say that's not the case. There is no change in legislation needed to effect any of this. Legislation certainly would help and, as I say, I have proposed legislation, fairly extensive changes to legislation, that would frankly deal with all these issues but that isn't the issue. The access to information can be provided simply by doing so and, in fact, does happen sometimes. If there are issues around concerns of waiving privilege, all that's needed is to state when you're providing it that you're not waiving privilege and then the issue is dealt with.

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MR. MACMASTER: Thank you for that clarification. I had a chance to ask some questions in camera this morning and just for the record, I'd like to ask them again. Most of my questions today will deal with the NSBI and the Industrial Expansion Fund portion of the audit. My question was out of concern for private companies who may not want their information to become public for competitive reasons. You had indicated that the Auditor General's Office is exempt from the Freedom of Information and Protection of Privacy Act.

MR. LAPOINTE: That's correct.

MR. MACMASTER: So that would allow protection of that information, which is a good thing for private companies in this province. You also indicated, I believe, that there has never been an instance where information has ever been inappropriately released by your office, is that correct?

MR. LAPOINTE: That's correct as well.

MR. MACMASTER: That's a good thing because that provides security for Nova Scotian companies to know that when they're dealing with government, they don't have to worry about giving up secrets that might affect their competitiveness with respect to companies outside our province.

Just to confirm, this audit that we're learning about today, it's more about the process than it is about the actual numbers or the actual information of private companies that have dealt with this province?

MR. LAPOINTE: The issue isn't with any individual companies or the information on them. The issue is with our ability to examine and form conclusions on the controls and the processes in the program. Quite simply, there exists a program in government that provides large amounts of funding for whatever purpose, it happens to be assistance to businesses. There are processes and controls in place to ensure that it's done properly. Presumably, our job is to look at those processes and the controls and see whether they are, in fact, adequate to protect the public interest and to protect the public purse. That's what we can't do. We should be able to report to the House that those protections are adequate and we can't do it.

MR. MACMASTER: So if there is no risk to Nova Scotian companies, why would the government withhold information from you, in your role, to make sure that the tax dollars of Nova Scotians are being respected and used in an appropriate manner?

MR. LAPOINTE: I guess I can't really speculate as to motivation. I know that information is withheld and aside from the legal technicalities around it, I don't believe there is a rational reason for withholding information from an auditor, especially an auditor

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reporting to the Legislature. I haven't been given any other reasons for it so I can't speculate as to motive.

MR. MACMASTER: And should not a government welcome an auditor because what it provides for the public is some assurance that the government is operating in good faith and that the results of its activities are being done in a way that is responsible?

[10:30 a.m.]

MR. LAPOINTE: Well our role, as you mentioned, is in reporting to the Legislature. We are, in a way, an agent of the Legislature although an independent one. Our role is to assist the Legislature in doing their job. I believe that the role of government is to enable that and to assist it, not to hinder it.

MR. MACMASTER: I noticed in 2004 that in a previous audit of Nova Scotia Business Inc., full and complete access to documents was offered to your office. This time around that wasn't the case. Is this a new approach in association with a new government?

MR. LAPOINTE: No, I definitely wouldn't say that. The change in policies, if you can call it that, started to become evident to us only after 2005. We have been dealing with this issue since then and I perceive no recent change.

MR. MACMASTER: Specific with NSBI though, in the past information had been given to you so that you could do a proper audit.

MR. LAPOINTE: Yes, it was. As we mentioned in the report, we did an audit in that area in 2004 and saw anything we needed to see, so this time in 2009 and 2010, we were not able to.

MR. MACMASTER: Okay, thank you. I think this is really about accountability and respect for the people because it is Nova Scotians' tax dollars that are being used in these programs. If they're being used appropriately, they would probably bring good results for the population of the province. It would bring us employment opportunities because it is about helping companies locate here or expand their business here.

We know that the government wanted to eliminate the Industrial Expansion Fund prior to becoming government but now they have decided to keep it. I guess the question in my mind is why wouldn't they want those programs to be accountable, or that program to be accountable to Nova Scotians?

In your mind, and I recognize that you haven't been able to see a lot of information, but do you see the Industrial Expansion Fund as a good means for government to support the attraction and expansion of business in Nova Scotia?

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MR. LAPOINTE: I don't think I can - it's really outside my purview as to whether a particular program or a particular policy is the right one or not. Really all we were trying to do here was look at a program which is in place. A decision had been made to spend money in this manner. We were simply looking at the process to look at the controls on that spending, to see whether that is appropriate or not. That's really the limit of our objective on it.

MR. MACMASTER: I can appreciate that and hopefully with my next question- I don't want to be repeating the same question- if we look at the Industrial Expansion Fund as a program, perhaps this could be asked of any program of government, if there's accountability to the public, is that really ultimately based on the will of the government? The Industrial Expansion Fund is a little bit different, it is an arm of Cabinet to allow approval for funding of business that wouldn't follow typical programs or guidelines. It gives government some flexibility, perhaps to be responsive to the needs or the opportunities that might present themselves to our province. Do you see that that fund can be accountable if, as it is set up, the will of government is there to provide you with the information to make your assessment of it?

MR. LAPOINTE: Yes, the program certainly can be accountable. There is an issue of decisions being made within Cabinet and that is Cabinet's prerogative. Certainly as an Auditor General, I am not interested in going there or questioning decisions of Cabinet or even looking at their discussions. The issues we have are with all the processes in place, the analysis, the reports, all the information that is provided up to that point - what is the process around that whole program. Most of it is outside and it is actually happening within the department. That part can be accountable and that is the part we are trying to look at.

MR. MACMASTER: Okay. I don't think you've been able to see anything, but I'm curious, in the past, I notice in your recommendations you recommended an application process and, of course, I can see the value in that because it helps government put on the record who is applying for something, is it fair to everybody who is applying, and it's good for the public to know if companies have applied. Have you seen anything in the past, business plans, project specific numbers say for an expansion of a business in the province, has your office ever seen any information like that with respect to the IEF?

MR. LAPOINTE: I'll actually ask Ms. Colman-Sadd to speak to that a little bit, but I can say that what we found to do with IEF is a marked lack of process, lack of forms, lack of procedures, and we commented on the need to document better, to have processes in place and just have more in place around the program. We were not able to see what should be happening, never mind what is happening. I think Ms. Colman-Sadd can probably answer that a little better.

MS. COLMAN-SADD: Can I just ask you to clarify that? I wasn't sure when you asked that if you meant during this audit or at any point prior to this audit.

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MR. MACMASTER: Either way, I would be curious to know going back throughout the history of your office in dealing with the IEF.

MS. COLMAN-SADD: I guess a couple of points, historically, our office did some compliance work at IEF on a regular basis up until probably a decade ago. I can't speak specifically to whether or not, say, R and Rs to Cabinet would have been part of that, but certainly there were no restrictions in place on those audits and no restriction on the information that we would have seen.

On this particular audit there was some documentation in files at IEF once we did receive them, after staff had reviewed them, and Cabinet submissions and solicitor-client communications had been removed, however, it was very limited information. The bulk of the analysis of a company looking for some assistance from government takes place in the document that is submitted with Cabinet and we were not provided with that document.

MR. MACMASTER: We've established, in my earlier questions and your responses today, that there is no risk to companies, or companies shouldn't feel there's any proprietary risk for information to be reviewed by the Auditor General. What does government say back to you? What does the CEO of Nova Scotia Business Inc., in the case of their programs, what do they say back to you when you try to come and look for that information?

MR. LAPOINTE: The answer we received on that was fairly direct in that, with NSBI, for instance, we were told that they have the right of privilege with solicitor-client documents and therefore will not disclose, the other reasons we don't know. With Cabinet submissions, or other documents related to Cabinet, we were told that they can't disclose that, those belong to the Executive Council and it's an Executive Council decision. That is the limit of the reasons for non-disclosure.

MR. MACMASTER: I would think that if Cabinet was making decisions to attract or expand business in Nova Scotia, they wouldn't be afraid to disclose that information, especially if anything that was proprietary would not be placed at risk. Would you think the same way?

MR. LAPOINTE: I don't think I can speculate again on that. Really, I can only talk about what we found and what we can report on.

MR. MACMASTER: I can also appreciate the need of government to be responsive and quick about addressing requests they have. If there's an opportunity for a business to locate here, we often hear from the business community about their challenges with regulations, with applications and trying to get government to be responsive to them to start a project. I can appreciate the Industrial Expansion Fund as a means of, perhaps, fast-tracking through some of those requirements, but if everything is in order, there should be no reason

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why government wouldn't be open to allowing your office to review what has been done, if everything has been done in good faith.

One of the items you mentioned with respect to the Industrial Expansion Fund is loan repayment monitoring mechanisms. Do you see anything that exists right now to track loans and the success rate of loans being paid back to the province?

MR. LAPOINTE: I'll ask Ms. Colman-Sadd to answer you on that one.

MS. COLMAN-SADD: With regard to loan monitoring for IEF, again, the situation is a little bit different. Not all IEF loans would require annual or monthly repayments the way you might typically think of a loan say that a company might obtain from a bank. Some of them may require regular repayment, some may have long terms before any repayment would be necessary, so loan monitoring, there aren't standard terms of each of those loans, it's different from each situation.

With regard to a success rate, I can't speak to what the success rate is of the loans through IEF, but I can just say that, with regard to monitoring of loan repayments, because IEF has different sorts of loans, monitoring is made more difficult. It is more difficult to use standard packages and whatnot. What we found when we looked at IEF was that there was not regular monitoring to ensure that those provisions that are in place are being met.

MR. MACMASTER: What about accounts in arrears? Do we have any idea how much the value of outstanding loans is?

MS. COLMAN-SADD: I don't have the dollar amount with me of the value of outstanding loans, although I expect we likely have it in our files. When we began our audit at IEF, and we asked for information on loans in arrears, there were no current arrears listing. They were eventually able to provide us with one, but it would have been after staff had gone through and looked at the various files and loans and concluded which ones were in arrears and which ones were not.

MR. MACMASTER: If the government displayed a will to allow you to have access to the information, would your office take another crack at this? Would you be willing to look at auditing NSBI and the Industrial Expansion Fund again?

MR. LAPOINTE: I guess that's something we haven't really fully decided. We have now reported to the House, but we'd have to really consider it, even though on our audit plan we've done the audit, taken it as far as we can and reported to the House. If the information was fully available, if the situation changed, we'd have to look at this again and we'd have to seriously consider it.

[Page 15]

MR. MACMASTER: Just keeping in mind that your office is in service of the public and, of course, the public pays for your office, how much money do you think your office would have spent, in terms of time and resources, to try to conduct this audit on behalf of Nova Scotians?

MR. LAPOINTE: It's hard to answer in terms of money. We could probably estimate the number of audit hours. Can we even guess?

MS. COLMAN-SADD: In terms of audit hours we would have had two full-time staff members who would have worked on this for a period of about three months. We would have had myself and another staff member who would have worked on it over that period, not on a full-time basis, but a part-time basis, if you will. Following that, as we prepared to produce our report and whatnot, the four members - myself and the three members of the team - would have had involvement on an ongoing basis. I can say that the hours on the assignment would have been significantly increased by the difficulties that we had accessing information. Just simply in the back and forth, the meetings with various people to try to resolve those issues and whatnot, that would have increased the hours on the audit.

MR. MACMASTER: So this is certainly no fault of your office, you were trying to do your job, but I think this is an example of government wasting time and resources by blocking your attempts to do your job. I just want to put that on the record today and in this day and age I think we need to be working together in government to make sure that we're getting things done efficiently for Nova Scotians. I don't know if you have any comment on that, but I'd give you an opportunity.

MR. LAPOINTE: I'd have to agree that if you look at the lack of results, the denial of opinion on an audit, the waste of our resources on this was fairly high. We certainly could be making better use of our time.

MR. MACMASTER: Thank you very much, I appreciate your comments. Good luck with your future attempts with your audits.

MADAM CHAIRMAN: We will turn the floor over to Mr. MacKinnon and the NDP caucus. You have 20 minutes.

MR. CLARRIE MACKINNON: To the Auditor General, I want to zero in on the 2007 report and the number of recommendations that have, in fact, been looked at and addressed fully. I understand that is 27 per cent, but a very large percentage is in various stages of implementation. Could you comment on that?

MR. LAPOINTE: I think the best one to talk about that would be Ms. McDonald. I'll ask her to get that to you.

[Page 16]

MS. ANN MCDONALD: Page 93 of our report provides a summary of those recommendations that have been completed or implemented and those which have not been completed. Further detail is provided in Exhibit 6.1, which begins on page 94, so in each of these reviews that we conducted with respect to these recommendations, we discussed the progress that had been made with management at each of the departments. We assessed their response as to that implementation status and then we determined whether or not what they provided in terms of the status made sense. We went back to them and said, perhaps the implementation status that you've indicated in most cases is overstated, and consequently we suggest that it should be more at this level, and in all cases they agreed with us.

[10:45 a.m.]

We found that for some of the programs, like the Maintenance Enforcement Program, they were farther along in their implementation status, although had not fully implemented anything then - for example, at the Long-Term Care Program at the Department of Health where the status was not implemented but many were in the planning stage.

MR. MACKINNON: So there has, in fact, been discussion with the various departments on the level and percentage of implementation. We are led to believe that we're dealing with 27 per cent that have been implemented and that 69 per cent are in various stages of implementation. I think progress is being made on that front on those that are in the process of moving forward. Do you have a comment on that?

MR. LAPOINTE: Yes. I would add that when you say "in progress," it varies from almost completed to not started, and I would say that if you look at the different components, for instance, in the audit in the Department of Health, a large number of the ones in the Department of Health are at the so-called planning stage. In other words, nothing has been done but planning. To me, that is equivalent to simply none or marginal progress. That's not the same as almost finished. In other cases, they might be much further along. So you have to look at the different departments in a different way, but it really varies quite a bit within there. Some of them, though, I must say have had almost no action taken at all.

MR. MACKINNON: The information that I have had available to me is that we're looking at 27 per cent and 69 per cent at various stages and 4 per cent with no action, but perhaps we can leave that. I want to get into the Maintenance Enforcement Program, which is something that is of concern to me, and I think to all members, because we do have a number of cases of delinquent parents, delinquent spouses. It's my understanding that there has been an increase in the number or the percentage of compliance and that there have been improvements over the last few years. Could you comment on what you have found?

MR. LAPOINTE: There's not a lot that we can really say on that, because we haven't gone back to redo an audit of the department. All we have done in this case was to have the departments assess their actions on implementing the specific recommendations in the report

[Page 17]

so that we can comment on the individual recommendation, what stage they're at, but that's really as far as we can go.

MR. MACKINNON: I think you did find that there were 3,000 fewer active cases and some other interesting statistics like that. The amount of arrears has gone down from $106 million to something in the order of $82 million or $83 million, did you find that?

MR. LAPOINTE: You are referring to the Maintenance Enforcement Program?

MR. MACKINNON: Yes, maintenance enforcement.

MR. LAPOINTE: Can you give a reference for that? Do you have a reference for that in the report?

MR. MACKINNON: This is what we understood, that there was, in fact, an improvement in compliance and I think you found that, did you not?

MR. LAPOINTE: We didn't go back and audit the program. I'll ask Ann to provide more information on that one.

MS. ANN MCDONALD: We didn't look at any information in the Maintenance Enforcement Program beyond the status of our 2007 recommendations, so we have no information. We didn't obtain any representation from management with respect to the program status at this point in time. We just simply looked at each of these recommendations and looked at what they said with respect to the status and evaluated that. Discussed with them whether or not that status reflected what was actually going on and made changes to which they agreed.

MR. MACKINNON: That's a good point because I would like to talk about the recommendations that were made. There were, in fact, 18 of them and seven of those have been implemented. We are looking at 11 that, as we have already heard, are in various stages of implementation. We are being told that those remaining ones will, in fact, be done in fairly short order.

The follow-up question would be, how complete are the remaining ones?

MS. ANN MCDONALD: Just to clarify, at the time we did our work, as you'll see on Page 97 in the chart, actually no recommendations had been fully implemented; 18 recommendations were not complete, in terms of their status, one recommendation they did not intend to implement. So that is at the time we completed our review work.

Since that time, of course, the department, the program may have fully implemented recommendations but we have not done any work on that. I know from discussions through

[Page 18]

e-mail with the deputy, that they have moved along and wanted us to indicate, which we did in the report, and were able to support that progress was at a certain point. But regardless, no recommendations had been fully implemented at the time we completed our review.

MR. MACKINNON: And how stale is the time frame since you did your review?

MS. ANN MCDONALD: We would have been actively working on this file from December through til February, so subsequent to that, so I'm going to say from March when we were wrapping up preparing the report, getting it ready for print. We haven't done any work on the implementation status for the Maintenance Enforcement Program or any of the other departmental programs since that time.

MR. MACKINNON: So with a lot of these recommendations you are dealing with a stage that was several months old. So I understand that a lot of progress has been made, particularly with the Maintenance Enforcement Program and others as well.

I have to share my time with the member for Antigonish.

MADAM CHAIRMAN: Mr. Smith, please.

MR. MAURICE SMITH: Thank you, Madam Chairman. I just wanted to follow up on some of the questioning that my friend from Inverness put to you. He kept prefacing his remarks by saying any businesses providing information to the government, if that information came on to you people, that it would be secure.

I believe we had talked a little bit in the in camera session and you told us at that time, Mr. Lapointe, that the Auditor General's Office is not subject to FOIPOP applications. But indeed, it is, of course, subject to a court subpoena so that any information that you have actually could be revealed by way of a court subpoena. Is that accurate?

MR. LAPOINTE: I guess my comment was that I can't say what a judge in a court case might decide to require, but we would be at no more of a disadvantage than say Cabinet or any department or anyone else in government. I'm not sure what restrictions judges have in a criminal or a civil case and I guess all I can say is that I really can't comment on that because I don't know what would happen, say, if a judge decided to subpoena Cabinet documents from Cabinet.

MR. SMITH: I'm talking about if a judge decided to subpoena documentation from your office, you'd be subject to that subpoena.

MR. LAPOINTE: What I'm suggesting is, I don't know if a judge would subpoena and require information from us, and I don't know that our situation would be any different from Cabinet or any other body in government. I really can't speak to that and I don't think

[Page 19]

anybody can. What I'm suggesting is, I don't think any information in government is totally secure, at any time, from a judge ruling in a case. They have a tremendous amount, as you know, of autonomy.

MR. SMITH: Yes, I appreciate that and I guess what I'm suggesting is that when my friend says that the information, if it comes to you from Cabinet or that the Cabinet says it's Cabinet information or solicitor-client, if it comes to you, you are subject to subpoena in the normal course of any court action.

MR. LAPOINTE: I would say that the information coming to us is no less secure, if that's what you're suggesting, I'm saying it is no less secure than if it stays residing where it is now.

MR. SMITH: Yes, and I appreciate you're suggesting that the Cabinet might, as well, be subject to subpoena if the determination has been made that this is solicitor-client or Cabinet documentation and they want to hold on to it. I guess that's their fight with the court if it comes to that, but at this stage, if it comes you, I think you told me earlier that you felt that you would be subject to subpoena. Is that fair?

MR. LAPOINTE: No, I did not say that. I'm saying that I don't know whether we would be subject to subpoena. I haven't yet obtained legal counsel on this. I don't know whether a judge would ever consider subpoenaing information from my office and I don't know what my reaction would be if that occurred. I would have to see what the case was, but without having obtained legal counsel on that, I really can't give you an answer to that.

MR. SMITH: Has the Auditor General's Office ever been subject to subpoena?

MR. LAPOINTE: It never happened, that I'm aware of. Well, can I take that back? There was an attempt, I believe, in 2005 to obtain - it wasn't by a court, but it was in a court case, I believe it was by a complainant - information from our office that was subject to privilege because it had been given to us. The court ruled, at that time, that giving it to us did not waive privilege, which gives some indication that, in fact, there is some security to information given to us, but that's all I'm aware of.

MR. SMITH: Thank you for that. I wanted to ask you some questions about the Mental Health Services issue. You were telling us that, I understand, the standards that are in place are Nova Scotia standards, is that fair?

MR. LAPOINTE: Yes they are, they were developed by Nova Scotia and put in place seven years ago.

MR. SMITH: Do any other provinces in Canada have standards?

[Page 20]

MR. LAPOINTE: They do not.

MR. SMITH: They do not?

MR. LAPOINTE: No, we were leading the way in the case.

MR. SMITH: So when you're comparing our success with the standards, these are standards that we've put in place for ourselves, is that fair?

MR. LAPOINTE: That's correct.

MR. SMITH: Those standards would have been determined by consultation with the Department of Health, district health authorities, all of what we commonly call, I guess, the stakeholders, that kind of thing.

MR. LAPOINTE: It was an extensive process at the time.

MR. SMITH: In connection with the recommendations that were put forward by your report, I think there were 19, is that correct?

MR. LAPOINTE: In the full report?

MR. SMITH: Yes, in that dealing with the Department of Health.

MR. LAPOINTE: I can't recall the exact number, but that's about right, yes it was.

MR. SMITH: Is the department working with your office to get those recommendations in place, do you have co-operation there?

MR. LAPOINTE: The stage that we're at now, having just issued the report, is that we obtained the response from the department and also from the particular DHAs involved on their recommendations, as to whether they agreed with the recommendations and intended to do anything about it.

The response that we received from the department is that they fully accept all the recommendations and will take action to implement them all.

MR. SMITH: Of course, you're aware that there is a mental health strategy being developed in Nova Scotia, and it's . . .

MR. LAPOINTE: We are aware that work is underway.

[Page 21]

MR. SMITH: Wasn't it yesterday that a couple of persons were appointed to get that going?

MR. LAPOINTE: I believe I saw something on that, yes.

MR. SMITH: Do you think your report will help the department with the development of a mental health strategy for Nova Scotia?

[11:00 a.m.]

MR. LAPOINTE: I would hope that it could, because we've made a lot of recommendations that were developed after a lot of work in the area. We've run them by the district health authorities and the department. I think there's a lot in there that we hope should be extremely useful to the department in improving the situation. That, of course, is why we issue recommendations.

MR. SMITH: Right. A number of programs are already sort of in place. I'm thinking of things like the Lighthouse Program that helps youth at risk, after school, those sorts of things. They are the kinds of things you want to see happening.

MR. LAPOINTE: Pardon me?

MR. SMITH: I said I'm suggesting that some of the things that we have put in place - I'm thinking of the Lighthouse Program, and I'm familiar with that one because my own constituency received some funding for that - where youth at risk are helped with their after school activities, that sort of thing, keeping them occupied after school. Those are the kinds of things that you are wanting to assist, to see go forward here.

MR. LAPOINTE: We are somewhat more limited in what we recommended on and we simply looked at the particular processes that we were auditing, but I don't know if we'd look at every policy in place.

MR. SMITH: I'm also on the Community Services Committee, and yesterday, just coincidentally, we had the youth mental health issues before the committee. One of the things that was reported today in the press was that mental health issues for youth in Nova Scotia are considered to be in a crisis situation. It came down not so much to just money - it was part of the problem, obviously - but the professionals are just not available. Even if there was an unlimited supply of money, we don't have the resources, in terms of the staff, the manpower, to deal with these issues.

We're trying to work on a plan. We're trying to get things going forward. Do you see any sort of - I guess what I'm trying to suggest is that with the best will, if you don't have the resources and they just aren't there, how do we deal with these kinds of issues?

[Page 22]

Recommendations have to be made - we look at them, we're putting a plan forward, that kind of thing - but there are going to be natural delays because the resources just aren't available. Do you see that as any kind of a . . .

MR. LAPOINTE: I understand there are more issues than just the ones that we looked at. I know it's a big problem, but the areas in which we recommended improvements, in the areas of looking at compliance with the standards, improving monitoring by the department, I believe that these can be put in place with limited resources. It's partly a question of switching your emphasis and changing your priorities.

There is an issue of funding that we reported on, and certainly seven years ago there was an identified shortfall which everyone tells us was identified at the time as $20 million needed to take this forward to achieve compliance. So yes, we understand that if funding shortfalls were identified then perhaps they need to be dealt with or you shortchange your ability to achieve your own goals.

MR. SMITH: Would you agree that we're making steps in that direction, that we're going towards that goal with the new strategy we're trying to put in place and those kinds of things? Is there some additional direction that you would want to give on that? I know that the new strategy is coming forward and your input will be there through your recommendations, but do you see, we're trying to make this thing work and we're taking the steps that we can. I'm just wondering if there . . .

MADAM CHAIRMAN: Excuse me, Mr. Smith. The time has elapsed. Your 20 minutes is up. There will be another round of questions, and I would welcome you to pick up that at that time. I'm going to turn the floor over to Mr. Colwell. Our final round of questions will be about 16 minutes each, and that will allow a little bit of time at the end for closing statements. Mr. Colwell.

MR. COLWELL: Mr. Lapointe, with regard to the Industrial Expansion Fund and Nova Scotia Business Inc. audit, you state that the audit criteria were specifically developed for this assignment. Who was consulted to develop this audit criteria?

MR. LAPOINTE: I would add that is a fairly typical way in which we develop criteria, because they don't always exist specifically for the types of audits we do. For more detail on that, I'll ask Ms. Colman-Sadd to talk to you about it.

MS. COLMAN-SADD: As Jacques mentioned, that would be a fairly typical approach for our audits. Often there are not external sources readily available for criteria, so in this instance we would have looked to, as an example, any legislation or regulations that would be in place. We would have looked to just general financial-type controls, program controls that you would expect to see if you were dealing with issuing loans and whatnot. We would put together an audit plan based on that. It would have gone through the internal

[Page 23]

quality assurance steps that we have in our office for review and challenge of an audit plan, as well as a discussion with management at the auditee, which is also a typical part of our process. As part of that process, they make representation that the objectives of the assignment have been conveyed to them, as well as the criteria, and that they agree that they are appropriate for that assignment.

MR. COLWELL: I'll just quote Page 13, Paragraph 2.10: "These criteria were discussed with and accepted . . . by senior management of the Department and NSBI." Is that correct?

MS. COLMAN-SADD: That is correct.

MR. COLWELL: So in fact, the senior officials were originally on the same page as the Auditor General's Office. Is that correct?

MS. COLMAN-SADD: They would have discussed and agreed with the criteria and the objectives of the assignment.

MR. COLWELL: And it was only directly after that that the new government came in and started to withhold information. Would that be correct?

MR. LAPOINTE: I don't think the timing is - we were looking at doing this in the Fall, so I'm not sure exactly what time we would have been discussing with management, but we were looking at a Fall audit. It was quite a bit after any change of government.

MR. COLWELL: But earlier we discussed that when you sent a letter to the present Premier, the Executive Council came back and said no, we're not going to provide that information. Is that still correct? Am I understanding that correctly?

MR. LAPOINTE: Yes, and the letter I wrote was to the Premier and so it was directed to Executive Council for a decision on this by the department and NSBI. That was forwarded to the Clerk of the Executive Council and Deputy to the Premier - in other words, back to staff. The response I received was from the Clerk of the Executive Council.

MR. COLWELL: Yes, and to be very clear, that's the present government, the NDP Government that is in today?

MR. LAPOINTE: Yes, it was.

MR. COLWELL: Some documents, as you've indicated earlier, were eventually released. I'll quote Page 15, Paragraph 2.14: "On reflection, it is our view that some documents are not subject to solicitor-client privilege." and that was by the Department of Justice, I believe. Is that correct?

[Page 24]

MR. LAPOINTE: That's correct.

MR. COLWELL: How confident does this make you feel about the ability to look at documents? First they tell you no and then they tell you yes, you can have some, but not enough that you can do your audit?

MR. LAPOINTE: There's a basic audit problem that you face when files are combed through and documents removed, in that we have no way of knowing what was removed. We have no idea to what extent they would affect the audit. In this case, for instance, we were told that what was removed was what they considered to be privileged documents. Well, we have no way of knowing that they were in fact privileged documents. In this case it turned out that many of them were not, so it simply points out the fact that when documents are removed from a file, and when they're hidden from us, we know nothing about them and we have no way to judge, ourselves, whether, even if we agreed with the removal, that what was removed was actually appropriate.

MR. COLWELL: Under the existing legislation, who is supposed to be the final authority on what is to be provided to your office for an audit?

MR. LAPOINTE: Well the legislation is stated quite clearly that notwithstanding any other legislation, the decision on what is to be provided to the Auditor General is the Auditor General's, and all information I request must be provided to me, that's how the Act is stated.

MR. COLWELL: How would you explain then that the Minister of Finance, Mr. Steele, said today in a press release that, "Clearly, the government and the auditor general both want the same thing, . . . This is a complex issue that will take time to resolve. Discussions with the auditor general will continue this summer with the goal of introducing legislation in the fall. That legislation will allow the auditor general to access the documents he requires to complete his audits." Don't you have that right already?

MR. LAPOINTE: Yes, in fact, I do. I haven't seen this press release.

MR. COLWELL: I can table it when I finish here.

MR. LAPOINTE: I'm glad to see that there have been discussions on this. The legislation changes that I have been working on with staff and with government are pretty comprehensive and deal particularly with not changing the right of access to documents, but in building a lot of comfort around the production of those documents and putting, in fact, more restrictions on my office and what we would do and not disclose with them. So we try to build in protections within the legislation to ensure that, regardless of what may occur, that information is necessarily as secure as it can be made in law.

[Page 25]

MR. COLWELL: But in reality today, you should already have the ability to get this information without changing the legislation, is that correct?

MR. LAPOINTE: In my opinion, we have that ability now.

MR. COLWELL: I will table this as soon as I'm done with this because there is only one copy I have, unfortunately. He goes on to say that, "the government wants to provide the access sought by the auditor general while, at the same time, putting in place protections that ensure the auditor general cannot be compelled to release cabinet documents and information protected by the solicitor-client privilege to outside parties." If I'm correct, don't you already have that in place?

MR. LAPOINTE: Yes, but it can always be strengthened. It is true that some of the protections around the waiver of privilege and so on are dealt with now. Sometimes information is provided to us and government or the department, whoever is providing it, states in a letter to me that we give this to you on the understanding we're not waiving privilege, and that covers the issue, but you can always strengthen it. That cannot be, in fact, questioned by anybody if it exists in legislation. Other provinces have moved to put those kinds of issues within the legislation so that there is no doubt, and it is as strong as it can get, that's what we're attempting to do with the proposals that are there now.

MR. COLWELL: The clerk will copy this to all the members as soon as possible. When Mr. Steele was in Opposition, he was quite concerned about the fact that information was provided, and one - and this is public information already, this was in a Public Accounts Committee, I believe, at the time. These were comments on withholding documents when in Opposition. When the Cornwallis Financial Corporation was turned down, that program had really serious implications. At that time he said it was ultimately the responsibility of the Premier's desk and, indeed, it appears that's the case this time because he wrote to the Premier, the Premier then put it off to the Executive Council, who in turn sent him information back and said, indeed, we're not going to provide that information. Would that be your impression of what the Act is now and who is responsible?

MR. LAPOINTE: The ownership of all documents within the government ultimately rests, not necessarily with the administration of the government, but with government itself so I'd say the ultimate ownership of these is with government and Executive Council.

MR. COLWELL: That's what I understood. He goes on to state that all-Party Public Accounts Committees, we tried to get this affirmed, that the Auditor General, Jacques Lapointe's right to access to any information he needs to do his job and it is sending the opinion of the Premier and Finance Minister and the heads of Treasury Board, that again this wasn't available at that time. I'm just making some information here available, that's all.

[Page 26]

"The auditor general," - and this is again from Mr. Steele, and it is a quote - "The auditor general is the eyes and ears of the public," the New Democratic Finance Critic Graham Steele said. "They're the people who are trying to make sure that things are going right, on behalf of the public." Now the government is arguing with them about the information they have. It is not a good sign. "A government that's running well doesn't get into fights with its auditor general."

[11:15 a.m.]

Now isn't that ironic. Here's the gentleman who is now Finance Minister, saying these things about your department, and now, in government, is doing just the exact opposite. I don't want a comment from you on that, but it just makes me really disturbed to think that has transpired. It just shows that it doesn't appear that the present government is going in the right direction.

Here's another one. Mr. Steele - and we're talking about the Industrial Expansion Fund, and again, this is in The ChronicleHerald, November 17, 2005: "When it comes to the IEF, it seems like anything goes." That's a quote from one of the key ministers in government today.

I want to ask you this question again. You've already answered, but I've got to ask this again, after this quote. This government refused to give you the information on the Industrial Expansion Fund. Is that correct?

MR. LAPOINTE: That's correct. It is stated that in effect, all information or 90 per cent of the information related to that fund is, in fact, secret.

MR. COLWELL: Well, he goes on to make some more statements here, that the problem here is that the government can allot itself a very large amount of money, in this case $50 million. This was in 2005, and I know since then the fund has gone up substantially. That raises some very serious concerns for me as an elected representative in the Legislature, because now someone who was very concerned about this - now Finance Minister, now part of Executive Council - is refusing to give up this information to the Auditor General, who said previously this information should be given to the Auditor General.

That makes me think; that makes me believe that there is information in there that he doesn't want you to see, doesn't want the public to see. No one will know until you get the right to do this. I would really encourage my colleagues here in the NDP caucus to pressure their government to provide that information. I'd like to table that as well, if I could.

Then he goes on to say - and this is on February 19, 2009 - 2009, that is very recent: the government knows that the only fund with virtually no controls - this was Mr. Steele's opinion - and when they want to spend a lot of money quickly, it is the Industrial Expansion

[Page 27]

Fund they turn to. That was in The ChronicleHerald of February 19, 2009. It is very worrisome to see the roof being blown off spending limits. It doesn't bode well for provincial finances. That is today's Finance Minister. At the same time, again, I've got to ask you the question, did they refuse to give you the information on the Industrial Expansion Fund?

MR. LAPOINTE: Yes, the information was refused and, as I said, it was refused by different parties, the NSBI board, and solicitors at Justice, and the Executive Council Office.

MR. COLWELL: Yes, and Mr. Steele is a member of the Executive Council.

MR. LAPOINTE: If I could clarify, when I say "Executive Council Office" I'm referring to the staff under the Deputy to the Premier. The letter denying information came from the staff level, and I don't know what discussions went on behind it.

MR. COLWELL: Well, I can tell you from past experience of being in Cabinet, no instruction goes out from the Executive Council Clerk without it being discussed with the Executive Council. You wouldn't be aware of that, unfortunately, or shouldn't necessarily have to be aware but I can tell you from personal experience that is the case.

It goes on to talk about some very large projects that are around a $175 million budget and I believe that budget has been bumped up by the present government this year again. Here he goes on to say in this February 19th article again, under the New Democratic Government the expansion fund would be transformed. Now, it indeed has been transformed, it's an even bigger fund now and again, that the Auditor General's Office - I'm going to ask this question one more time, I want to be very clear on this - has been refused the information on the Industrial Expansion Fund.

MR. LAPOINTE: I understand, Mr. Colwell, I have answered that question. I have been refused that information, yes.

MR. COLWELL: Thank you. I just want to be very clear about this. It just worries me because here we are with the government, one of the very senior members of Cabinet that made all these statements and many more, I'm sure. Because, I can recall, from being on these committees for a long time that indeed this whole thing needs to be straightened out. I'm not too sure that there's anything wrong. I'm not saying there's anything wrong with the loans that they've given, I'm not saying that. But it's reassuring to know that the Auditor General had looked at it, your office had looked at it, gone through it thoroughly from not only expansion - I know you don't state whether it was a good deal or not for the province because that's not your job. It's whether the rules are made properly, whether the rules are followed properly and the proper accounting practices are in place. Usually when those things are in place you uncover things that typically may not have been appropriate, as we've seen in the past, and I really appreciate the efforts that you put on in that regard. How much time do I have left?

[Page 28]

MADAM CHAIRMAN: That's actually it, you're right on target. Thank you very much, Mr. Colwell and I'll turn the floor over to Mr. d'Entremont.

HON. CHRISTOPHER D'ENTREMONT: It's my pleasure to ask a few questions around the Auditor General's Report. I thank the Auditor General and his staff for being here today. Of course, I think the member previous did have us on a very interesting line of questioning and I'll continue that for just a couple of moments before going on to the Mental Health Services issue.

This is sort of a statement of, boy, times have changed in this committee where we have the senior minister, the Minister of Finance, who used to be sitting on this committee, the member for Halifax Fairview, being absolutely indignant in this committee. Absolutely indignant outside of this committee, with his questions, with scrums outside, of the withholding of certain documents in this committee to your purview, the Auditor General. Here we are, maybe a couple of years later, a number of months later and we're seeing this interference coming from this government. I know the member for Pictou East was trying to deflect and look back at the 2007 numbers and try to bring the good news within this. There are some good things that are talked about within this document and things that need to be improved but things that are well on their way.

My question to the Auditor General, it seems that release upstages the issue of legislation and I was just wondering, have you had discussions with the Minister of Finance about new legislation or changes to legislation to allow you - and I'm just going by what this press release says - to give you more access to documents protected by Cabinet and solicitor-client privilege?

MR. LAPOINTE: I have had discussions. I made proposals to the Legislature, to the government, and have had discussions on it over the last year perhaps, trying to build a stronger Auditor General's Office and deal with issues like to strengthen those protections. To make them quite clear, to make clear what are the powers of the Auditor General, what are the limitations and what are the protections and immunities in place. I think we're very close to being agreed on a lot of the details of this, as far as I know. The specific issue of whether or not we would have, through this legislation or anywhere else, been given access to privileged documents has not really been an area of discussion. We discussed everything else, but as to what information we'd have access to, we've had no agreement on that.

MR. D'ENTREMONT: Thank you for the answer, but if you read further down into this press release, it really, in my mind, doesn't open up your access to these documents. As a matter of fact, by the look of it, it does restrict, even further, your access to documents within the departments that you will be auditing. If I'm to read this paragraph, "Mr. Steele said the government wants to provide the access sought by the auditor general while, at the same time, putting in place protections to ensure the auditor general cannot be compelled to release cabinet documents and information protected by solicitor-client privilege to outside

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parties." I'm just wondering, what difference is that compared to any other legal action that would be taken against the province? I know we talked about this one a little bit, but what would you be compelled to release? This seems a little arbitrary here.

MR. LAPOINTE: I would actually agree with the words that are there in that it's a question of what I was saying a minute ago of strengthening the protections that are there. So if you are going to be exempt from the provisions of Freedom of Information and Protection of Privacy, it's best to put it in legislation and say so in simple language in the Act, and then there is no question. If we can't be compelled to provide information in a civil case, or whatever else you want to do, the simple thing to deal with it is to put it in the Act and to say it in plain language so that there is no question, and so we can't be challenged and have to defend ourselves in a court, or whatever might happen.

What we tried to do is to provide some wording on this that would think of every conceivable case in which information might be asked for, and write those protections in so that there is no question. That is, I think, what needs to be done in there. I don't believe it adds anything new, but strengthens it and makes it very clear so that it can't be questioned by anyone, and is understood by everyone, so it's not an issue of debate. If it's written simply, everyone knows precisely what the situation is.

MR. D'ENTREMONT: I would take it as well that your interpretation of your Act is that there is nothing that would restrict you from having those documents and there is nothing that would compel you to release any of this information, just like any other department.

MR. LAPOINTE: Yes, that's my interpretation of it as it is now, but I understand that part of the difficulty is that it's an old Act. It hasn't been updated in many respects, it uses antiquated language and it doesn't specifically address all issues. The case I referred to, for instance, about the powers of a commissioner is through a reference in the Act to another Act, the Public Inquiries Act, so it's not clear-cut and simple. What we need to do is to put all those issues in one spot so that if you want to see, well what are the powers of the Auditor General in terms of information, there it is. What are the protections to that information? There it is, written down. I think that's the benefit to be had by putting it all there.

MR. D'ENTREMONT: Ultimately, since there really is no restriction within that Act, yes, I would agree that there needs to be a piece of legislation to simplify the interpretation of this so that everyone can understand where your responsibility lies, I can understand that, but today's Act allows you access to these documents, correct?

MR. LAPOINTE: That is correct and that's why we, in fact, have asked for the information in terms of this audit, and other audits, and why we've reported that it was denied and we thought that was inappropriate.

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MR. D'ENTREMONT: When you reviewed IEF and NSBI, you were denied access to certain documents or at least the documents that you did receive were substantially redacted. Also within your review of the Mental Health Services, there were a number of documents and information that you were not allowed to see. Could you give a rundown of the documents that were withheld from the Department of Health?

MR. LAPOINTE: Certainly, I'll ask Ms. Colman-Sadd to talk about that.

[11:30 a.m.]

MS. COLMAN-SADD: In the Mental Health Services audit we had requested some information from the Department of Health related to budget requests for funding to increase compliance with standards or for various other areas of mental health. We also had a comment from a senior member of Department of Health management that dealt with some sort of accountability system for DHAs that was going to be put in place. We were informed that it was before Cabinet and we were told that because it was with Cabinet we could not be provided with any documentation on that accountability system. We were also told we could not be provided with the documentation on the budget requests that were made over the years since the Mental Health Standards were introduced.

MR. D'ENTREMONT: Can you give us an idea of the Mental Health Standards that you were scoring the files against? I did do a quick scan and I came up, I believe on Page 61, with a bit of a matrix here. Could you give us a quicker understanding of what the standard is and how you scored those files?

MS. COLMAN-SADD: We would have tested a number of standards and we would have selected what you're referring to on Page 61, is a table of some of the selected ones. The Mental Health Standards document is a large document so to start with we wouldn't have tested every standard in there for a variety of reasons. Some of them are very clinical and would have required clinical expertise and other reasons so we selected standards for testing and then from what we tested we would have pulled a sample for this.

We would have been looking at things like whether or not it was clear that somebody met the eligibility criteria for the program that they were in; if an initial assessment was completed within a time frame; if there was a documented care plan for how this person's care was to proceed on file. We would have looked at the mental health patient file in whatever form it came in, sometimes paper, sometimes electronic, sometimes both. When we look for that we don't look for something that sort of says, care plan, on the top. If it says, care plan, great; if it doesn't but it clearly contains what a care plan talks about how this person's care is to proceed, then we would consider that a care plan and that would get, if you will, something in the tick column as having complied.

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MR. D'ENTREMONT: A lot of this information too would sort of fall upon the wait times project or wait time information that has always been difficult for the department and the province to actually ascertain. I'm just wondering in here, as this wait time project rolls out, will some of this information be clearer? Data really only has been - clear data anyway or maybe that's the question I should ask. How has that data changed since implementation of some wait time monitoring?

MS. COLMAN-SADD: At the time we started our audit in the Fall of 2009, the Department of Health had no province-wide wait time information for Mental Health Services. There is an initiative called community-wide scheduling in place. The different district health authorities are at very different places in terms of the availability of information. Some of them have better information systems because they've had them for longer. Some have introduced some of their new information systems more recently so their information might not be as robust.

The community-wide scheduling initiative is now up and running, is my understanding. There's information going into it from all districts with the exception of Capital. Capital has a different information system than what community-wide scheduling runs on. Capital management said it was just too cost-prohibitive for them to completely switch their entire system just to be able to take advantage of community-wide scheduling. Capital does have their own wait time data and so the Department of Health informed us they plan to manually add that in to the community-wide scheduling initiative.

My understanding is that around the time we were completing our audit work there is some data now available. I think they will have to work to make sure that that data is accurate and reliable because it's just starting to be available at this point.

MR. D'ENTREMONT: What kind of concern would you have with having two separate systems in this case between Capital Health because ultimately a lot of the tertiary care happens here in HRM, whether it be Mental Health Services, whether it be at Abbie Lane, whether it be in Dartmouth and such. Does that not create a bit of a problem on following the standards, if you don't have a centralized system?

MS. COLMAN-SADD: One of the concerns that we noted in the report is that because Capital won't be part of that community-wide scheduling initiative, the department intends to add Capital's data in manually, and whenever you do things manually and start adding into a computer system, you're introducing the risk of human errors in those calculations. I mean, certainly it's possible to put checks and balances in place to try and ensure that your data is as accurate as possible, but it does introduce those risks.

MR. D'ENTREMONT: Maybe going to a question of funding, I mean, knowing Mental Health, knowing the dollars that have been provided to the program over the years,

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is there an accounting that can be done on exactly what all your recommendations might be worth to the system? I'll just throw that one out.

MR. LAPOINTE: You're thinking of the potential cost of implementing the recommendations?

MR. D'ENTREMONT: Yes.

MR. LAPOINTE: I think it would be very difficult to cost what we're talking about. I don't think we have, but I don't think it's substantially a cost issue, it's more a question of - aside from the shortfall of funding that they identified themselves, taking that out of it - I think it's more a question of addressing the issues and prioritization than significant cost.

MR. D'ENTREMONT: Finally, this is the last comment because I know my time is coming to a quick end, ultimately, this is a difficult day for democracy, I think, by suppressing this kind of information from you, again. I'm hoping that we can go forward and support any changes in legislation that would come forward to ensure that you can do your job. I think the job that you provide - and to take a comment from the member for Halifax Fairview when he sat on this side of the House - is to make sure that you are there as a watchdog for the public. It's very disheartening and difficult to understand why this new government, that had all the answers, could be so crass. Thank you very much for being here today.

MADAM CHAIRMAN: Thank you very much and I'll turn the floor over to Ms. Kent for the NDP caucus, you have 16 minutes.

MS. BECKY KENT: I guess I want to start by noting that we understand that everyone on the committee here, and everyone here who is playing a role today in the discussions that are happening, has a job to do. While I recognize that the members of the Opposition, members of committees, are doing what they feel is necessary, tabling, for instance the press release that came out from our Minister of Finance, I would remind everyone that it was, in fact, released by our minister, that this information is coming forward. This is a recognition that we are taking this very seriously, we do see the issue as important and there are activities, there are discussions, there is planning going forward. In fact, it's a clear statement that we're hearing your concerns and are willing to work with you.

You noted in your response to the members of the Opposition, committee members, that you made some recommendations around proposals, and proposals around legislative changes, and that you've had these discussions; you've come to almost a full agreement on some of the discussions and the details that will be moving forward. Certainly, from my view, these discussions are going on. It has been implied that maybe some of the discussions are not happening but, in fact, it does seem very clear to me that they are. It's an indication

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of collaboration and moving forward on the concerns that you have raised, and Nova Scotians have a right to see that. I think it's important that we note that today.

You noted that it's a simple thing to do and we're saying the same thing, that it is, and working together is the way to get it done. There are great things happening; there are good next steps happening. Our government is doing that in a very difficult situation that we all know that we're facing, and it's going to be a better day for Nova Scotians in that regard.

I think it's important, as well, to note that we appreciate the perspective of the Auditor General regarding, for instance, the mental health concerns that we have, but my government right now is making good decisions for Nova Scotians. We are moving forward with the mental health strategy. We recognize, before the reports have come out, and certainly on information that came before this that there were gaps, there are challenges, there are improvements to be made. Yesterday, for example, we announced the new Chairs of the Mental Health Strategy. We'll be targeting acute and chronic illness and certainly mental health is included in that. I think that we all look forward to seeing some of the recommendations being addressed in whatever form they might take but those actions are being moved forward with. The Lighthouse Program, for example, is an example of good things happening.

We'll be implementing the Every Kid Counts Program, targeting adolescent mental health. I had the pleasure of standing in for a member of our caucus on the Department of Community Services Standing Committee yesterday. We had a presentation by the Department of Health on youth mental health so it became abundantly clear and very enlightening for those members of that committee about the issues that we're facing. It was encouraging to see that announcement yesterday. It was encouraging to hear that there is a perspective of great collaboration with the district health authorities, with the department, with the stakeholders that are involved to make the lives better for Nova Scotians, whatever health issues that they face.

At this point, I'd like to just draw a bit of attention back to the Department of Environment. I had noted it earlier in my few comments and questions during the in-camera session. The Department of Environment has been working very hard to address the issues of contaminated sites in Nova Scotia. Among other things stated in the report, they've established the Environmental Goals and Sustainability Prosperity Act, requesting that the Law Reform Commission undertake research and provide recommendations, undertaken stakeholder consultation and research over the past two years and issued a discussion paper. I'm wondering if the Auditor General, through you, Madam Chairman, can tell us more about what your audit found about initiatives like these?

MR. LAPOINTE: Well we found, generally speaking, in this area there were weaknesses in the programs certainly and those are the ones that we were attempting to identify and make recommendations on. It tends to be the nature of our job to sound pretty

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negative. We also reported on work that's being done to improve the program and in some areas in which good work is being done. The response to complaints is pretty effective and also we noted improvements being put in in terms of information systems. Actually, Terry has a lot more information on this stuff and can go on more at length. I'd say that it's a two-sided sort of a balanced reporting that we're doing on this one.

MR. TERRY SPICER: Jacques summed it up pretty good. As he said, we noted some areas of improvement and we acknowledge in the report that they have been doing and making operational changes that I think will address some of our issues that we've identified. As far as what's going on with the Law Reform Commission - and we've noted it in the report - that to acknowledge that there is important work going on there but we haven't really audited what impact that might have on the audit and the issues that we found. We recognize that there's a lot happening with the contaminated sites area. Hopefully that the recommendations that we have here may be partly addressed by the Law Reform Commission or maybe partly addressed through the operational initiatives that the department may have going on.

MS. KENT: On that note, it was good to see - as you have said very clearly here - that you are encouraged. You noted that in the report and it's good to see some of the department's initiatives such as the Activity Tracking System and Quality Assurance Procedures. Can you explain a little bit about these initiatives and how they are going to positively affect the safety of Nova Scotians?

MR. SPICER: With the Activity Tracking System particularly, one of the findings that we had during our work this time and also on our audit a couple of years ago, was the lack of management information that seemed to be available. One of the things that we noted is that the new information system will allow them to better track staff workloads, knowing which inspectors have which work to do and that the work is divided evenly, as an example. It also will allow them to better track what reports have been coming in from site professionals and contractors, knowing which ones are supposed to be in, when they're in, when they've been looked at, what things need to be followed up as a result of those things. Those, I think, are probably some of the more critical aspects of the activity tracking system that will be, I think, a big improvement for them in going ahead and we know that is in place and they're starting to build that information within the system.

They are also in the process, or I believe maybe technically have now implemented a quality assurance program where they look at various files within the many programs that they operate, one of which would be the contaminated sites. What they are going to be doing there would be similar to what we've done, looking through the files to make sure that the inspectors have done the processes and procedures that they are supposed to have done. So it is an internal quality control procedure to basically let them know that things are operating as they should.

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[11:45 a.m.]

MS. KENT: Thank you very much. Recommendation 3.11, "The Department of Environment should implement time standards for the inspection of a compliant or notification by inspectors and for district manager review of closed files." Can you give me a little better sense of when you say time standards, what do you have in mind?

MR. SPICER: Okay, sure. One of the things that we noted throughout the audit was - I mean contaminated sites, there's a broad array of the types of contaminated sites that are out there. They can be somewhat less severe and there are others that pose some serious risks. One of the things that we noted was, as reports and as sites come up, there is no way to - they didn't prioritize or develop any sort of timeline as to when inspectors need to be looking for certain information, so one of the things that we recommended was that they look at the sites they have and begin to prioritize those which pose the biggest risk, versus those which don't, and those that pose the biggest risk, to make sure that those reports that come in get dealt with first. Then around that, establish some timelines as to when, generally, things, reports should be received.

Now again, we understand that it's difficult to do, to some degree, but there should be some general timelines and guidelines around which inspectors can expect reports from site professionals and contractors, so they'll know that yes, the cleanup is happening and yes, they're addressing the issues that they need to address.

MS. KENT: Just so that I understand what it is you are saying with reference to sites, are you referencing sites that we now know to be contaminated, they are open files and cases, and/or is that new cases - like a homeowner next door in a community discovers something and they call in and they want a site inspected - are we referencing the time frame on the larger, broader spectrum or specifically?

MR. SPICER: Well, more specifically, the ones that are being monitored now. What you were referring to earlier really talks about the complaints and notification process. When we looked at that, although, again, they don't have general timelines as to what they're supposed to get out, but by reviewing the files, it looks like those things are being done fairly timely. So they get out and they make their assessment and then when they determine whether it is a contaminated site or not, and if it is, a contaminated site file is created and that gets monitored by staff. Those others, if there's no contamination or there's no site, then they close that file.

MS. KENT: Thank you. Recommendation 3.15, training on the use of the Development Accountability Model, can you tell me what that is?

MR. SPICER: Sure. That's a model that they've recently developed, or are in the process of implementing - a development training model for different inspectors. It looks at

[Page 36]

inspectors in different stages of their development and what training they would need specifically during those different stages of the development. So that's a fairly new initiative that's being implemented now. Again, we had concerns about the training that inspectors were receiving, based on our interviews with inspectors, but this model should address those issues that we had.

MS. KENT: It has been suggested in this session that a lot of recommendations have not been addressed, and there's a certain percentage that have, but it appears to be that the Department of Environment is making great efforts and making some progress, certainly, through the notes that are here. In fact, I think the last statement - no, not quite, nearly - the third paragraph from the bottom, "The department will consider recommendations . . . as it continues to develop regulatory management tool in accordance with the direction provided in the Environmental Goals and Sustainability Prosperity Act. Public consultation is currently underway, and the department will incorporate this feedback into development of an integrated package of regulatory and non-regulatory tools in late 2010."

To me, again, that's a clear message to Nova Scotians that we are on the ball, we are on task, and that recommendations and discussions with your department are effective and the Department of Environment is taking that seriously. Again, I just want to note that there are very positive, encouraging changes happening in Nova Scotia on these issues, and the Department of Environment is one - of course, Mental Health and many others. I think it is important for Nova Scotians to understand that the effective tools of an Auditor General's Report, the effective use of it for a government, is still intact, is still a democratic process.

As it would be implied that it's a sad day for democracy by another colleague in the committee, I would argue that. It's important that the information is shared with Nova Scotians, as our minister did today, that we are moving forward with considerations and discussions with your office, and it's a good day for Nova Scotia. Changes are underway, changes have been made, clearly, from the information that we have had, and changes are coming forward. So I'll leave it at that, and I thank you very much for allowing us the time today. Thank you, Madam Chairman.

MADAM CHAIRMAN: Thank you very much. I'm assuming there's no further questions from the NDP caucus, and that's actually good timing because we do have some committee business to attend to as well.

Before we move to that, I would like to pass the floor back to Mr. Lapointe to make any closing statements. I wonder as well, Mr. Lapointe, if you could just answer the question in your closing statement about whether or not this denial of information and inability for you to render a decision or really write a report on this department - I'm thinking of the business programs you were looking at - whether this has happened here in Nova Scotia or in any other province in the past that you know of. Just if you would, in your closing statement. Thank you.

[Page 37]

MR. LAPOINTE: Thank you, Madam Chairman. In answer to that question, it is hard to be that specific about precisely what has occurred in all other provinces, in terms of gathering this kind of information. The extent of the denial of information here, to my understanding, actually has no precedent, and is something that is a much higher level than problems that might have been encountered in other provinces. I'm certainly hoping for a change on that in the future, but that is the situation today.

I would like to thank the committee for this opportunity to discuss my report with you. I hope the session was an informative one for the committee. I hope we've answered your questions. My office, I should say, and myself, do appreciate the committee's support for our work and for public accountability and also for effective oversight of public spending. Thank you again.

MADAM CHAIRMAN: Thank you very much. I think it's important that we let you know that the Public Accounts Committee understands the role that we play in furthering the work of the Auditor General's Office. That really frames our work here in the Legislature as a committee and we will certainly be taking this very seriously.

I did hear your recommendation to the committee that we look at scheduling all three of the audit areas and departments that were looked at today for future witness times, and we will look at that. We already have Mental Health scheduled for June 23rd, if I'm not mistaken, and we will look at that as a priority in scheduling upcoming meetings. I certainly wanted to thank you for that.

I heard one request for information, I think from Mr. MacMaster, looking for the outstanding loans or the loans that are in arrears from NSBI. I think that you did want to receive that later; it wasn't available today. If I could ask that, if it's available, if Ms. Colman-Sadd could make that available to the committee that would be great.

Again, we do understand that our role is to see that recommendations are acted upon and that there is greater accountability in government. I know I heard that from all three Parties today in the Legislature as well, so we will move on that. With that, I thank you for your time today.

Just for our committee business, if I could, we have our next meeting scheduled, but what I'd like to ask is that we include, next week, an agenda-setting time afterwards, after the 11:00 a.m. meeting, so that we can put a couple more items on our agenda for September. We're fully booked now for the rest of June, but I would like us to move on adding some more for September, especially in the wake of the Auditor General's Report today.

With everyone's permission, we will plan on that please for next week, to stay after 11:00 o'clock. There is no further committee business, so with a motion, we can be adjourned.

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MR. COLWELL: So moved.

MADAM CHAIRMAN: Thank you very much, we are adjourned.

[The committee adjourned at 11:55 a.m.]