Assemblée Législative de la Nouvelle-Écosse

Les travaux de la Chambre ont repris le
21 septembre 2017

Public Accounts Committee -- Wed., June 3, 1998

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9:00 A.M.


Mr. Howard Epstein


Mr. Hyland Fraser

MR. CHAIRMAN: We can get started. Welcome, everyone. This is the organizational and agenda-setting meeting of the Public Accounts Committee. In fact, on the subject of agenda setting, we don't have an agenda for this meeting so perhaps that can be our first order of business for this. It seems to me we have a number of things in front of us. One is we have some organizational and internal administrative questions of our own that we have to deal with as a committee. Secondly, there is the offer of a briefing from the Auditor General's Department. Thirdly, we then have to turn to the question of setting our own agenda for the business of the committee after that. So my suggestion is we can tackle all of those things and maybe also have another category of miscellaneous for anything anyone happens to think of later on. I don't see any reason not to make variations in the agenda as we go along.

If that is acceptable, perhaps we can take that as an outline, but let me tell you what it is that I have in mind by some of the administrative questions that we have to deal with just at the beginning. The first, of course, is we do have requests from members of the press to be present at this meeting and the first question I would like to turn to under that heading is whether this meeting, itself, should be an in camera or an open meeting. The second question under organization that I have is the composition of this committee under the November 1993 guidelines. There is a question of a deputy chairman of the committee. There is a conference coming up in August and there is also a question about televising the proceedings of the committee, so we can deal with that. In any event, these are all under the general heading of organizational matters and if anyone can think of any others, we can certainly deal with those at anyone's suggestion.


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So I would like to turn, first, to this question about whether the meeting should be in camera. At the moment, of course, it isn't because we have at least one member of the press here. The reason the meeting is here and not in the Assembly Chamber is that it was suggested to me by both - if my recollection is correct - the Auditor General's Department and the Committees Office staff, that this was traditional and that what usually happened in the first meeting of the Public Accounts Committee is that it was an in camera briefing and organizational meeting. Now it is not clear to me why or whether it is necessary that it be in camera. As I said, we have had requests from the press to be present so maybe what I can do is ask first, Mora, if you have any advice you can offer us and then I will ask Mr. Carter from the Auditor General's Office.

MS. MORA STEVENS: (Legislative Committee Clerk): For those who don't know, my name is Mora Stevens. I know pretty well all of you except Mr. Fraser. Traditionally we have had this as an in camera briefing session, just because it is easier for the committee members to relax and ask questions and get a little more comfortable with each other. It is not something that has been laid in stone. We did outline it in our operational practices and procedures but those are only guidelines. It is something the committee can vote on to change. It is not a problem at all but it just seemed that it was a little easier so the committee members didn't have to worry about the media.

MR. CHAIRMAN: Just the theory that we can embarrass ourselves by displaying our ignorance in private?

MS. STEVENS: That is right.

MR. CHAIRMAN: Okay, Mr. Carter, do you wish to . . .

MR. CLAUDE CARTER: I am not sure what the history is in terms of the initial organizational agenda-setting meeting but I think it goes back two and one-half or three years ago, we, at the request of the PAC, started when they were going to call a witness to a public meeting, the office would provide, the week before, an informational session, reviewing background information on the entity or area that is going to be a witness and so forth. Again, as Mora said, it was intended as an opportunity for the committee members to collectively get a better appreciation of the area that was going to be in the public meeting.

From the office's point of view, the Auditor General is a servant of the Legislature and the committee, the PAC obviously is a major consideration. If the meeting is in camera or public, it really does not make that much difference to us.

MR. CHAIRMAN: Yes, I certainly understand the point about collectively preparing for the examination of a witness and doing that among ourselves privately. Is there anything particular in your briefing this morning that you feel ought to be exclusively for the committee members?

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MR. CARTER: Not from my point of view, no.

MR. CHAIRMAN: Well, I just throw it open then for general discussion. What are the views of the committee members as to this morning's meeting?

HON. RUSSELL MACKINNON: Mr. Chairman, if I may add, on behalf of our caucus, we have no problem whatsoever with the media being here. We have always been open and candid. I think members of the PAC and certainly the representatives from the Auditor General's Office and I know, myself, having been here before and having worked on setting the terms of reference with Mr. Leefe and some of the other representatives, we worked as the committee representatives when we articulated, I think, that initial set of terms of reference. We wanted it open and accountable and that is our position. So we have no problems.

MR. NEIL LEBLANC: I really do not see it being a contentious issue one way or the other. Most of the work here is very basic and there may be some selection of witnesses. I do not have any problem. As a matter of fact, I think perhaps it would be in the best interests to have the press here too.

MR. CHAIRMAN: Unless I hear any differing views from anyone, we can take it that certainly this meeting will be open and we will proceed generally that the meetings will be open unless we have a particular occasion, perhaps when we want to brief ourselves in anticipation of having a witness, that we might turn to that again, but certainly today . . .

MS. ROSEMARY GODIN: Just to follow along that line, could we have guidelines made up of when we will have in camera meetings and what will justify an in camera meeting?

MR. CHAIRMAN: I think that is a very good idea and perhaps what I will do is, in consultation with Mora, I will try and draft something that we might adopt for our own use, and I will talk with the Clerk of the Legislature as well to see if they have any suggestions. There may well exist such guidelines for other committees, I do not know. I will find out.

MS. GODIN: Thank you. I just want to add that I too am in support of having the Public Accounts Committee meetings as open as possible.

MR. CHAIRMAN: Great, thank you very much. I will take that item as dealt with. We are still in the category of organization of the committee and organization and administrative matters.

The second question I wanted to turn to was the composition of the committee and I am not sure what the current state of play of this is, but probably all members will know, or readily recall, and the document I am going to refer to is in the terms of reference tab of the materials that have been provided to us. It is a document dated Wednesday, November 1st,

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1993, Standing Committee on Public Accounts Meeting Summary, and it reads as follows: "Following is a summary of the initiatives addressed in the Public Accounts Committee meeting on November 3, 1993.".

Sorry, maybe everyone is not aware of this. In that case I had better make this explicit. It is under the first tab called terms of reference. I think it is the last document under that tab and it is dated November 1, 1993. It is two sides of one document there. It is the first paragraph where it says "By consensus, it was agreed that ministers and party leaders would volunteer to withdraw from membership on the committee.". I gather this was agreed to at the time that the composition of the committee would not include Party Leaders or Cabinet Ministers.

In discussing this with our House Leader the other day, I drew this to his attention and he said that when the composition of the committees was being discussed, no one turned their minds to the question of Cabinet Ministers being on the committee. I asked him to raise it with the other House Leaders for further discussion and I don't know whether there has been any discussion internally at the Liberal caucus about this or not. Certainly I take it that the committee is properly constituted pending further instructions from the House Leader. So, I just wondered if there had been any internal discussion yet at your caucus, if you are able to say, or whether you now have a different view?

MR. MACKINNON: Not really, Mr. Chairman. I think the general understanding, and I stand to be corrected and Mora you were here through that process as well, or the intent was to ensure that we would not have a Cabinet Minister in particular on the committee asking questions when it would directly impact, if we were to have, for example, a witness that would directly impact on his or her department. I think that was the general intent, to try to get it as arm's length as possible in that regard for questioning objectively.

MR. CHAIRMAN: I think that is certainly a starting point, meaning that I think that would be a given that that would be the case, and I think that would be a general guideline that would apply in other House committees as well. I think, as I understood the history of that particular provision, it was designed to go a little further and be a blanket exclusion, but I guess all I am saying at this point is I regard the committee as properly constituted, but this question had been raised because it had been previously agreed to before that this would be the structure and I just hope it gets discussed.

MR. MACKINNON: I agree with you, Mr. Chairman, but I think when you look at where we were in 1993 and where we are at today, it's a totally new situation. We have advanced quite substantively through that 1993-94 period with new terms of reference, guidelines, the whole thing and I think we have advanced quite substantively in terms of openness, accountability, the whole series of issues. I think this is probably just one more step.

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I think given the circumstances, realistically, because of the minority situation in the government, and the fact that we are recognizing that any given minister should not be directly questioning his or her own department. I think we are trying to go through the different forms of osmosis here and I think we should move one step at a time. That would be my feeling until we see how it works and if it creates a conflict, anyone who knows me knows that I would only be too quick to want to disassociate myself.

MR. CHAIRMAN: Were you suggesting that if we were in that circumstance, the ministers would just withdraw, or would there be a substitute?

MR. MACKINNON: Have a substitute.

MR. CHAIRMAN: Is that the general rule - as I say, I am not familiar - that anyone can substitute, you can get a substitute at anytime, is that right?

MR. LEBLANC: As long as you notify the Committees Office. Let's say I can't make the meeting today, you can notify the Committees Office that such and such will be taking my place on that day, and then they can attend the meeting. You just can't walk in and say, oh, by the way; there is a protocol to it. I remember one meeting at Public Accounts that we didn't know that. I won't get into those details today, but that is another story for another day, I'll tell you.

I would like to say in regard to this point that you brought up, I read the clause before and I am still reading it. It appears that it was passed at that time that the Cabinet Ministers would not serve on it, and I appreciate Russell's comment that it is an involvement. However, if these are the rules then they are the rules and if you want to change them that they can serve, then that is something for other people to do. I would ask that perhaps this be referred for interpretation and let's get it straightened out once and for all.

MR. CHAIRMAN: Well, the reason I suggested that I think we have to take the committee as properly constituted, is because what I think governs the composition of House committees would be the House Rules and, as I understand it, this particular letter or document summarizes an agreement that was worked out at this committee. Although I think it was reported back to the House Leaders and generally was taken as being a guideline as to how they would proceed, I couldn't find anywhere, and nor could the Clerk, that it had ever been formally adopted as one of the Rules of the House. So, therefore, it is a guideline, it has no higher status than a guideline. If the guideline is not followed by the House Leaders when they are striking the committee, as John Holm explained to me, just because they forgot about it, it means we are not in technical violation of anything except our own internal guideline. If we want we can change the guideline, we could leave it, recognizing that there are these circumstances, or leave it for further discussion by the House Leaders which I think is where it stands at the moment. Darrell?

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MR. DARRELL DEXTER: It is clear that it was a consensus decision made by the committee. It is not an Assembly matter that needs to be dealt with by way of a rule. It seems to me that the most you might want to do is to perhaps elaborate on the circumstances to say that we are in a much different situation than it was in November 1993, where there were 40 government members and you were clearly able to make the committee system work and have ministers withdraw.

In this case, the government Party would virtually go unrepresented if ministers were not allowed to serve on committees. Certainly, that doesn't make any sense and wouldn't make for a proper functioning of the committee. I think some thought should be put into building a new consensus document around this particular situation. Other than that, I can't see . . .

MR. MACKINNON: It is obviously complex when a minister is kind of putting a witness in an embarrassing and conflicting situation.

MR. CHAIRMAN: Well, certainly no conflict is going to arise this morning. Mr. Carter, did you know anything about the background of this provision?

MR. CARTER: No, other than the history was - and this goes back prior to 1993 - where the committee was constituted with Opposition Leaders and ministers. It was a very different form than it is today. I think the other thing is, our understanding is that what goes on across the country is similar to what the guidelines say in the sense that since the Public Accounts Committee's major purpose is to help support the Legislature to hold government to account, government being defined as Cabinet, that with ministers you have a committee that includes part of government holding itself to account.

The other thing is and I was just thinking about it when you were talking, in some regards it does put a Minister of the Crown in a fairly difficult situation, even when the topic is not related to the ministry involved, in the sense that the minister sitting on the committee is privy to Cabinet discussions which are confidential. There is a risk there for the minister involved. But again, we are in a unique situation in Nova Scotia right now.

MR. CHAIRMAN: And I suppose when we get around to setting our own agenda we could hear a Cabinet Minister saying, oh no you don't want to look at my department. Well, in any event we will see where we get for now. All we can do is take it that the issue has been flagged. Rosemary?

MS. GODIN: I just wanted to clarify something. This only pertains to this particular committee?

MR. CHAIRMAN: That is correct.

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MS. GODIN: What I heard from Darrell made me think that you were thinking it on all committees where ministers might sit but it is just this one. I guess I will go on record as saying I am a little uncomfortable with it.

MR. CHAIRMAN: Okay. Uncomfortable with not having the rule followed or with the rule?

MS. GODIN: Yes, I am because it just pertains to this committee and there are other members of the government who would be able to sit here and there would be a continuity there, whereas we wouldn't have to have people excusing themselves all the time.

MR. CHAIRMAN: Okay, good point. Ernie?

MR. ERNEST FAGE: I think there are two things that you, as Chairman, need to make very clear here. One of them is that this is a guideline of committee and until the guideline is rescinded it is agreed that that is one of the rules that we will govern this body with. Secondly, the route for making that determination, whether it is the House Leaders or is it a determination from the Speaker. That needs to be clear and settled as soon as possible.

MR. CHAIRMAN: Well, I have referred it to the House Leaders through our own House Leader, Mr. Holm, but beyond that I don't know that there is anything else.

MR. MACKINNON: I think we should look at what the wording says. It says, they would volunteer to withdraw. There is no requirement per se, let's be very clear. I am trying to be as open and as accountable as possible. I think anyone who wants to check the record, for those who were here when we reformed the process back in 1993, quite substantively and I think representatives from the Auditor General's office will agree, we came from the dark ages to a very enlightened situation of accountability. I am trying to say that we are going through this forum and if it creates a problem by any member of the Executive Council being here as we progress, then it is there, let's deal with it. You take one step at a time.

[9:30 p.m.]

MR. CHAIRMAN: I would say that is right. At this point I think we are faced with a choice, we can either continue discussing it now and focus on it and see where we get but I think we have heard a lot of the views we are likely to hear. The other thing is we can just leave it for now, realizing that there is discussion at least going on in the hands of the House Leaders and we can come back to it. We won't meet for another week and people can have a chance to think about it in the meantime. Can we follow that for now? Would that be all right?


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MR. CHAIRMAN: Okay. The next issue on our own organizational agenda is choosing a Vice Chairman. I am told that traditionally the Vice Chairman comes from the government Party and I don't know if you have had a chance to think about this or have a suggestion or want to leave it to next time?

MR. MACKINNON: I wouldn't want a member of the Executive Council, maybe Hyland, if he is interested? He is drafted. (Laughter)

MR. CHAIRMAN: It is up to you to choose to nominate someone.

MR. MACKINNON: Hyland Fraser is now our representative.

MR. CHAIRMAN: Alright, is that okay?

MS. STEVENS: If I may, it does carry a bit of responsibility. If we have a subcommittee, it has been the tradition that the Vice Chairman would Chair the subcommittee. Also, when the Chairman is not in the Chair, the Vice Chairman would step in. Usually as the coordinator for the committee, I would inform the Chairman and the Vice Chairman of major decisions plus the Third Party, a representative there so everyone is informed. So, it does carry a little bit of responsibility for that member to inform their caucus.

MR. CHAIRMAN: The next item is that the Canadian Council of Public Accounts Committees has an annual conference. This is their 18th annual conference and it is being held in Yellowknife in the Northwest Territories. The dates are August 16th through to the 18th. I gather that what normally happens is it is held in conjunction with a meeting of Auditors General from around the country, so Mr. Salmon will be attending a meeting that is going on at the same time in the same place. I gather that the Chairman of the Public Accounts Committee, the Vice Chairman and Mora would all normally attend this meeting. So, I would ask you all just to take note of that. I gather that the Committee's Office has a budget to cover this travel and I would just ask everyone who is involved to turn their minds to trying to make their travel plans as early as possible in order to keep costs down.

MS. STEVENS: We also throw it open to a Third Party representative, that would be one from the Progressive Conservative caucus this time. Before it had just been the two members of the committee but it wasn't because the third member didn't want to travel, it was just due to circumstances. So there is a position open to someone in the Progressive Conservative caucus if they would like to go on the junket.

MR. LEBLANC: Our other member, Mr. Leefe, isn't present here this morning. Perhaps we can have a discussion amongst ourselves.

MR. CHAIRMAN: Absolutely. We don't have to determine this right now.

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MR. LEBLANC: And we can inform the Chairman or . . .

MR. CHAIRMAN: Or Mora, I think would be very useful if you would. Okay.

MR. MACKINNON: Are we getting value for our dollar by going to this?

MS. STEVENS: Actually, very much so.

MR. MACKINNON: It is kind of an expensive trip.

MS. STEVENS: Last year we had a full discussion in Edmonton about public-private partnering that is going on across the country and it was very helpful in our dealings with public-private partnership that we had in Public Accounts in Nova Scotia. It is funny, when you look where we have come, in Nova Scotia we are one of the most advanced Public Accounts Committees in the country and they look up to us as the model because of our meetings and how we have been dealing in our work with the Auditor General, so it is something that members really should be proud of and it is very good to attend. Plus, you get to meet your counterparts from around the country which is helpful.

MR. CHAIRMAN: There is a second part to this which is they are so proud of us they are coming here in the year 2000 so we have to prepare ourselves to take on the burden of organizing this conference when it comes in the year 2000.

MR. FAGE: The millennium conference.

MR. CHAIRMAN: Yes, the millennium conference.

MR. HYLAND FRASER: Are the travel arrangements made by you and your department or do we make our own?

MS. STEVENS: I can make them if the member so wishes or they can do it through their secretaries or their office, whatever the member chooses to do.

MR. CHAIRMAN: So, it may be a little early to ask for volunteers to start organizing the year 2000 conference but I guess we will ask the staff to turn their minds to the preliminaries and keep us informed of what they suggest as we move along.

The last item I have on the internal organizational aspect is the question of televising the committee meetings. Now I gather that what can happen is that when we meet over in the Assembly that, of course, the television facilities are there and the meetings are recorded or can be recorded?

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MS. STEVENS: They are recorded for Hansard at the moment but they are not taped as in videotaped.

MR. CHAIRMAN: All right, sorry, but it has also been suggested to us by those who are in charge of televising of the proceedings of the House that they are prepared to videotape the proceedings of the committee and will look into having them broadcast after Question Period. I think you are aware that Question Period is usually shown again later in the day. I gather, if I understood correctly what I was told, that this is available at the option of the committee. So the question is, are we prepared to - it is bad enough we have the press here all the time - actually have the cameras turned on us and then broadcast for everyone to see?

MR. MACKINNON: How much is this going to cost?

MR. CHAIRMAN: I don't know. Was this a cost item? I didn't think it was.

MS. STEVENS: It is just a matter of bringing in one person to videotape for that two hour session so it is not . . .

MR. CHAIRMAN: So how bold are we? This is what I want to know.

MS. STEVENS: There are already two people up in the booth who are doing the recordings for Hansard.

MR. MACKINNON: You mean it is not going to cost us 5 cents more?

MS. STEVENS: It would come out of Legislative Television's budget but they are prepared to take that out of their budget.

MR. MACKINNON: So it is going to cost us more.

MR. CHAIRMAN: Let's get this one nailed down. The staff are in place anyway because there is an audiotape being made.

MS. STEVENS: Yes, there are two and they would have to bring out one extra person. So there is a cost to Legislative Television.

MR. CHAIRMAN: All right, so there is a freight on this.

MS. STEVENS: Yes, there is Legislative Television but it is within their budget. It doesn't come out of the Public Accounts Committee budget.

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MR. CHAIRMAN: Well, it is in their budget. That is what we are supposed to be looking at, things like that.

MR. DEXTER: Can this be decided on a meeting by meeting basis?

MS. STEVENS: It can be. We could ask for, actually, details on how much that extra person would cost.

MR. CHAIRMAN: I think that would be useful. Neil, you had your hand up and then Ernie.

MR. LEBLANC: Well, this situation is relatively silly. We have installed in Province House a very expensive television system. It is open to the press. The press can film it. So it isn't something new, or that television is new to the House. I was under the assumption that it was being recorded by television. That brings out a case that I guess I wasn't aware of. We only have probably 10 or 12 meetings a year, and if it is maybe 20 hours of a person's wages to have them properly recorded, then I don't see any reason why we shouldn't. I think the dealings of this committee are extremely important and they should be recorded. I have seen a lot more waste, I can give you a lot more examples of the government wasting money than 20 hours or so of a cameraman's time to record something which involves the future of the province.

MR. CHAIRMAN: There is a man who intends to be tough at the hearings.

MR. FAGE: It seems sensible that when we are in the Chamber that we would be taped. We are not looking to have it carted over here but when we are in the Chamber and the hearing is on, it is a public hearing. It would be sensible to tape it.

MR. CHAIRMAN: Can we still have the information? If you could send us a memo about what this is likely to cost, even though it is not coming out of our budget, it is someone else's.

MS. STEVENS: Certainly.

MR. CHAIRMAN: Okay, we will leave that one for now. I think that is it in terms of organizational and administrative matters that I can think of for right now. If anyone thinks of any as we proceed through, we can return to them.

If you will turn to the second major item on the agenda which is receiving a briefing from the Office of the Auditor General. Mr. Salmon is out of town for most of this week and is not able to be with us. We had the option of deferring the initial meeting for another week but given the pace at which the proceedings are going ahead at the Legislature, it seemed sensible to at least get off immediately to a start with our briefing and he agreed to make

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some of his staff available. I would like to welcome Claude Carter who is the Senior Audit Director in Mr. Salmon's office. Along with him is Elaine Morash who is an Audit Director and Alan Horgan who is an Audit Director as well. So, welcome and we are in your hands.

MR. CARTER: Mr. Chairman, what we have today - and Roy is sorry that he is unable to be here - we have pieced together an overview of the office, the Auditor General, the position, the mandate, the office and finishing with highlights of the 1997 Auditor General's Report. What was left in front of you in addition to the 1997 Auditor General's Report were copies of the slides that are being used today as well as a pamphlet on the office, just for information purposes. I am going to go through this fairly quickly so that we can deal with any specific questions or discussions and if there are areas that people wish more information on, then we can arrange to deal with that at a later time.

In terms of the Auditor General Act, it was passed, I believe, sometime in the early 1970's and amended a couple of times since then but, in essence, it is very similar to the Auditor General Act in other jurisdictions in that the Auditor General reports to the House of Assembly, serves the House of Assembly, the members of the House of Assembly, is a servant of the House and relates or liaises to a great extent with the Public Accounts Committee and, yes, as indicated what we are now doing in this jurisdiction in terms of the Auditor General attending all Public Accounts Committee meetings and providing briefings for the Public Accounts Committee prior to their public witnesses. It is seen by other jurisdictions as quite forward and a model.

The appointment of the Auditor General under the Act is such that the Auditor General is independent of government in the sense that the Auditor General once appointed cannot be removed from office except by a two-thirds vote of the House of Assembly. In terms of audit mandate, the Auditor General Act, Sections 8, 15 and 17, I know we do not have all that with us today but it is in the appendix of the 1997 Auditor General's Report, the sections on the actual audit mandate are there. Section 8 is the general broad mandate as it relates to the accounts of government. Section 15 relates to special assignments and provides the Auditor General with the mandate to go in and do audit work on what is referred to as transfer payment recipients. That would be hospitals, school boards, universities and municipalities, right. (Interruption) That is right. Section 17 gives the Auditor General a mandate to do audit work in any Crown Corporation whether or not the Auditor General was appointed the financial statement auditor of that Crown Corporation. The Act provides a very broad mandate to the Auditor General. There are no real limits to it. Accessed information is open. The only normal or natural restriction there is that Cabinet confidentiality is respected and the Auditor General does not have access to Cabinet documents and discussions.

MR. CHAIRMAN: Excuse me, Mr. Carter. Could you say that last bit about Crown Corporations again?

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MR. CARTER: In those situations where the legislation of the Crown Corporation enabling legislation provides for an external firm to perform the annual financial statement audit work rather than the Auditor General, the Auditor General still has a mandate whereby the Auditor General can go in and do any other audit work that the Auditor General feels appropriate. So it is something like Sydney Steel, Workers' Compensation, and so forth. Where they are audited for financial statement purposes by a public accounting firm, the Auditor General can still go in and do any other audit work that the Auditor General feels necessary.

MR. CHAIRMAN: I see. That is very interesting. It seems to me I have seen Private Members' Bills that talked about explicitly giving to the Auditor General the power to deal with Crown Corporations. You are saying that power is there already?

MR. CARTER: In terms of Crown Corporations, yes. It has been there pretty well right from the initial copy of the Act.

MR. CHAIRMAN: I will remember that. It is very interesting. Thank you.

MR. CARTER: I think in terms of the exercise of that mandate, it is important to recognize that an Auditor General - and this is not unique to Nova Scotia, this is consistent right across the country - does not assess or conclude on public program policy matters in the sense that if there is a policy that government's policy is we will be in the health care business, the Auditor General would never assess the merits of government saying they want to do something like be in the health care area. It is an important threshold.

Later on, when we get into the specifics of the mandate, you will see that we have a mandate that says review due regard for economy and efficiency. Well, people sometimes refer to value for money as the 3-E's: economy, efficiency and effectiveness. Our office, similar to many other Auditors General offices, in fact, most do not review, assess and conclude on effectiveness. That is outside the bounds of our mandate.

The Provincial Finance Act also provides the Auditor General, in Section 65A - and that section, again, is an appendix of the Auditor General's Report for 1997 - provides the Nova Scotia Auditor General with a very unique mandate as it relates to doing a review of the annual revenue estimates that the Minister of Finance includes in the Budget Address. It is unique in the sense that no other jurisdiction has that mandate and it came about in the fall of 1994 and it was first applied, as I related, to the 1994-95 revenue estimates. So we are not doing an audit, per se. We are doing what is referred to as a future-oriented financial information review but we are providing an opinion on the reasonableness of the assumptions behind the revenue estimates and whether or not the assumptions are taken into account in determining the amounts that show up as revenue estimates. That report is published as part of the Budget Address that is tabled in the House each year.

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In addition to the Auditor General Act and the Provincial Finance Act, there is certain other enabling legislation for Crown Corporations and programs that also identify that the Auditor General should, can, must do certain audit or other work, Acts like the Business Development Corporation Act designates the Auditor General as the auditor of that corporation. So we have an enabling piece of legislation saying that the Auditor General is the auditor of a Crown Corporation. In addition to that, we do have, in the Auditor General Act, the ability to go in and do work there as well. The enabling legislation really designates us as the annual financial statement auditors so we would do the test audit on their financial statements and we would do any broader scope work through our own Auditor General Act mandate.

In addition to those, and there is a variety of those and there are all kinds of changes in wording in how it is phrased and it could almost be interpreted, is it just the financial statements or is it more than that? In addition to legislation, there are also some administrative policies within the government that have been put out both at a government level as well as a public service level that identify some responsibilities for the Auditor General. In some cases we have been consulted prior to those being put in place and in some others we haven't been. The examples there in the procurement policy, it calls for the Auditor General to do some work. In the Information Technology Standards of Government, it calls for the Auditor General to do some work. So we have those.

If I am going too fast, please let me know. I think to some extent, to some members this would be not new information and to others it may very well be.

In terms of reporting, as we all know, the Auditor General Act calls for the Auditor General to release an annual report and the way the Act is worded, it says the Act, as described in Section 9 of the Auditor General Act, is to be released on a day after the release of the Public Accounts of the province. So the Provincial Finance Act now requires that the Public Accounts of the province be released publicly by December 31st, which is within nine months of the fiscal year-end of March 31st, and the Auditor General Act, under the current legislation, is to be released on a day following that - not the day.

What we are working towards, and generally our report has been released within a month of the Public Accounts being released, is to be in a position where we get our report out within two weeks of the Public Accounts being released, so that if the Public Accounts were released earlier, assuming that we are aware of when the release date is going to be, then we would be working to have our report available shortly thereafter.

The Auditor General Act also provides for, and it's not explicitly or clearly worded there, but we have legal opinion that was received about a year ago that indicates that the Auditor General is able to release special reports, reports other than the Annual Report of the Auditor General, and those reports can be released under Section 15, and to date we have

[Page 15]

only used that provision once and that was in August 1997 when we released a special report on the province's March 31, 1997 financial statements.

In addition to those special reports, there is a provision again in Section 15 where the Governor in Council can ask the Auditor General to do work, and that has happened on a number of occasions in the past, not a large number but certainly a few times, and the reports in those cases are released when the work is completed. There was work we did on Teachers' Pension Board, there was work we did on labour, was it?

MR. ALAN HORGAN: Nova Scotia Resources.

MR. CARTER: Nova Scotia Resources, that's right, and Atlantic Lottery Corporation as well. So, there are those provisions. (Interruption) Yes, that's right.

Now, moving to the office itself, and this is consistent with the pamphlet that you have and also it is Chapter 21 of the 1997 Auditor General's Report, a summary report on the office itself. So, a lot of what you see is in Chapter 21 of the 1997 report.

Looking at the mandate and considering it, and this goes back to when Mr. Salmon first became Auditor General in 1992, we did a review of ourselves at his request, and developed our mission statement flowing from the legislation to serve and support the members of the House to hold government accountable, and we do that by providing information and opinions on the credibility of the financial statements, in those cases where we do the financial statement audit, and other representations made by government or Public Service entities.

We also do compliance work, compliance with statutory provisions, whether they are Acts or regulations and compliance work with government policy. We do also review and evaluate systems with controls within government and within entities that we audit, as I referred to earlier, our value for money mandate, if you like, in terms of due regard for economy and efficiency, and this mandate is very similar to any other legislative auditor in Canada.

Our vision, sort of bottom line from our point of view, is that we are striving to support the achievement of excellence in the public sector management and the value for money in the use of public funds. We all recognize that that is a goal that ultimately is really that the target just keeps moving in front of us and we will continue to strive towards that and support government and the legislators and the Public Service towards that.

If you look at the office as a service entity, we see our primary client being the members of the Legislative Assembly and obviously this committee is a major consideration there. That is not to say that we don't see government and the Public Service management as clients, but we see them as, I hate to use the word, secondary, but just say, they are our

[Page 16]

other clients. You will see this in the pamphlet where we talk about providing advice to government. We do provide advice and recommendations to the government and public sector management in terms of improvements and controls and where we think there may be opportunities to consider achieving economies and efficiencies in their operations.

We have put a statement of values out there in terms of quality of service, fairness and equity, and professional standards. The words are not magical in the sense that there is nothing really unique or new about them but we do focus on them periodically and say, let's not forget who we are, what we are trying to accomplish, and how we are supposed to deal with ourselves, the legislators, the government, and the Public Service management. We operate in an open, no-surprises environment. We are not going out and doing audits and finding problems and saying, well, we'll tuck that away and then we will report it publicly and surprise everybody. You know, sort of I got you type thing. We are very interested in supporting people's efforts to make positive change as they relate to accountability and controls in the use of public funds.

In our business plan for the office's longer term and this, again, flows to some extent from our mandate and our interpretation of our mandate, we do want to support positive change and accountability in management of public funds. We do want to provide assurance on the financial statements and other representations that the House receives from government and public sector management in order to help the legislators do their job in terms of holding government to account.

The last two are really more internal in terms of how we want to operate. It is not a cliche but we are interested in quality and excellence. We do want to be state of the art. We are not. It is a continuing challenge for everybody, not just us. We are continually trying to find ways to economically improve the skill set that we have available, both for people on staff and people that we can contract with, to make sure that we have got the right skills to do the work that we have to do. We are professional accountants and we do basically live and die by the professional standards put out by the CICA and the Public Sector Accounting and Auditing Board, but that is not the only source of where we look for professional standards. We do look to other professional accounting bodies. We use material from what used to be called the Canadian Conference of Auditing Foundation and is now referred to as the CCAF, another acronym. In more detail we do look to the Information Systems Auditing Control Association and the Institute of Internal Auditors, both of which are international organizations that have put out standards and guidance in their particular area of specialty.

As I indicated, we do use contract audit staff and we do use contract specialists where necessary. In the past we have used specialists in insurance and risk management. We have used them in Treasury debt management areas and some others. We may possibly have to get one in Workers' Compensation. Pardon me?

[Page 17]

MR. LEBLANC: For contract work, how do you approach that? Do you approach some of the CA firms, do you rotate your work or do you contract it out?

MR. CARTER: In terms of procuring those services, in terms of general audit staff, we follow the government's procurement policies and actually we follow the government's procurement policy for even the specialist work. So we would go out to get RFPs and so forth.

MR. LEBLANC: A lot of that would not be specific in price. It would be quoted. If I recall, chartered accountant firms cannot give a specific price for work done on something like that because of the fact that they do not know to what extent the work will take. Is that correct?

MR. CARTER: We have not run into that. We have usually gone out, and certainly in the debt management one, we took the upper limit and what we were interested in is how much service, professional advice can we get for this amount of money. So then, it was really a matter of looking at how much effort and the quality of the effort we can get for the funds that we are prepared to pay. We went out and contracted for the Teachers' Pension Board assignment, that would have been a public tender call. So actually, you raise a good point, that's the next one I was going to make. In terms of the office, the Auditor General could, under the Act, decide to administratively operate and function in a way quite different from general government departments and agencies.

[10:00 a.m.]

The office continues to take the view that it is best for us to comply with and follow the administrative policies and practices the departments and agencies use, I guess for at least two reasons. One is that it gives us a perspective on what departments and agencies have to live with in terms of procurement practices, hiring and budgeting and so forth and not that it has ever really come up, I think it also puts us in a position where people say, you people are special, you get to do things your own way, and we have to deal with these much more bureaucratic processes.

MR. LEBLANC: I don't disagree with you, contracting out for specialists. I think that's the way to go because I think expanding staff, to have them for the times that you want to do the audits, and maybe having them idle the rest of the year wouldn't be efficient. I was just asking the question, specific to how it worked for professional services for chartered accountants, that's all.

MR. CARTER: Just as an aside, we don't, and you'll see this in the numbers, have any staff idle. Staff organization, in terms of the office organization, we're a staff of 24 and that's down from, I think, a peak of about 33 or 34 back in the early 1990's. We are living consistently with the expenditure control guidelines that other departments and agencies have

[Page 18]

to meet and so forth. The 24 is currently made up of 19 professionals, accountants; two administrative staff; and three students and technicians. We do train professional accountants, we have had students in both the chartered accountants' program, the CMA and CGA programs. We currently have three chartered accountant students on staff and in the last few years, we have been very successful in terms of getting people through that program and getting their CA designation. We're quite pleased with that.

MR. MACKINNON: Are you still getting the job done?

MR. CARTER: We feel we are still getting the job done. Like everyone else in the Public Service, there's more that can be done.

MR. MACKINNON: I guess what I'm implying is, has the integrity of the process been compromised by your reduction in staff?

MR. CARTER: No it hasn't. It doesn't mean that it has made it any easier, it is challenging, scheduling is a problem and we do a number of the Crown Agencies and Corporations, their annual financial statement work. April, May, June is a very busy time for that, so it's a peak in terms of financial statement work and we do and we have for the last three years, I guess, contracted audit staff from firms to come in and work with our people on these audits, again, rather than having these people on staff full time.

We have three teams, each of them is headed by a member of senior management and the three are sitting here. We're each responsible for a portfolio of departments and this goes back to, I guess, probably 1993 or 1994. We decided to organize ourselves such that one of us would be the senior management representative responsible for contact with a department, rather than having us each doing work where we might bump into each other in the same department. It has worked out quite well, and our beginning point, frankly, was to make sure that we allocated our annual financial statement audits so that we had some sort of a balance there.

In terms of contacts in the office for questions and information, there are the names for the particular departments and I think, as I indicated to the Chairman, we are more than willing to provide information that we can and if we feel that it is a question that should more appropriately be dealt with by the Auditor General, then we would refer you to the Auditor General, but in terms of direction and helping you get an appreciation of what information is there and what you have to look at to really understand something, we should be able to help you to some degree.

In terms of professional standards for the office, as I indicated, the Canadian Institute of Chartered Accountants, and its Public Sector Accounting and Auditing Board, provides the standards by which we must adhere. We follow those. We also have supplemented those with information from other jurisdictions. We do use a modified audit manual that was first

[Page 19]

developed by the federal Auditor General's Office. We have a great knack, frankly, as an office, we do not invent wheels. We like to take other people's wheels and put a little bit of our own air in them and make them work for us. Frankly, with 24 staff we do not have the resources to do that.

In terms of, again going back to the question the honourable member had about going from 33 down to 24, one of the ways that we have been able to, we feel, accomplish that and still not impair our office's performance is through the investment in technology and we are consistently continuing to improve, enhance and expand the extent to which we use technology in our audits and for our office's audit activities.

The earlier discussion about the conference in Yellowknife, I want to add, the office obviously is a provincial Auditor General's Office but we do have a professional affiliation and network across the country with all of the other legislative audit offices. We do that formally through the Conference of Legislative Auditors which is meeting with the PAC representatives in August jointly, but that COLA group, as it is referred to, does meet on other bases and do dialogue on a regular basis. In addition, the COLA group does and has constituted certain standing in ad hoc committees to deal with common issues. So while we are an office of 24, we see that we have a facilitated, if you like, an affiliated network of professionals across the country that is well beyond the number of 24.

In your material there is some additional information on the office's specific goals and priorities. I would refer you to Chapter 21 in the 1997 Auditor General's Report for some additional information in that regard. Just wrapping up, in terms of the office if you like, before moving into the 1997 AG Report, I just wanted to emphasize that we do a number of types of assignments. People can use the word audit for a number of things and we use the word audit very carefully. There are different levels of assignments. There are different levels of assurance that our work arrives at. An audit, if you like, is up here. There is also the review, assurance level which is less than audit in a sense that you would have done less testing but you have done enough review that you can comment on matters but your conclusions are not of the same level of assurance or certainty as they would be if it was to an audit extent.

In addition, there is what is referred to in the practice as compilation reviews. We look at them as, where we are gathering information and compiling it in a way and presenting it in a way that we believe would be of service to the members of the House of Assembly. So we do a number of annual financial statement audits. We do an annual review of the revenue estimates. We do annual work on federal-provincial claims. That annual work represents approximately 25 per cent to 30 per cent of our audit resources utilization during a year. Those assignments, that 30 per cent, result in fairly limited information being reported in the annual report. The other 70 per cent are focused on what we refer to as broad scope and certain other assignments. The broad scope are what some people would know as value for money, or 3-E audits, and there we would look at a program or an entity compliance,

[Page 20]

adequacy assistance and due regard for economy and efficiency, and those would result in chapters in the Auditor General's Report themselves.

In addition to that we do, as a result of our mandate under the Auditor General Act and what it calls for the Auditor General to report upon, review the additional appropriations and special warrants each year and provide a compilation report on those, and we do review and provide a compilation report on cash and other losses reported to us by government departments and agencies.

So, Mr. Chairman, that is the end of the presentation on the office. I don't know if you want me to just continue on with a quick overview of the 1997 report.

MR. CHAIRMAN: Does anyone have any immediate questions they want to deal with? Yes, go ahead.

MR. MACKINNON: Mr. Chairman, I guess my question is in terms of auditing, and I believe it is a question I asked once before, what you look for, what you measure. You indicated you don't measure the impact of a particular government action on social policy? You don't measure impact of social policy, whether it be on health, education or whatever. So, when somebody looks at your audit, it's basically a clinical view that they are seeing.

MR. CARTER: To use that example, if government were to come out and say, this program or this decision that we took in the past has resulted in this, we would not have done that ourselves. We might look at that information and audit the information and the system behind it to be able to say that the information that is used to report on the performance of that program has integrity, there are adequate controls and that it is presented fairly and so forth.

MR. DEXTER: You wouldn't test the results?

MR. CARTER: No, we wouldn't assess whether or not a program was effective.

MR. MACKINNON: Right, exactly. I guess more specifically it's in my mind, because it has been raised, legitimate questions with regards to the P3 and the final analysis in terms of education, educational value, social value. You don't measure that, it's like a cut and concentrate.

MR. CARTER: Well, again, and we have had this discussion.

MR. MACKINNON: Yes, the finance, measuring the real educational and social value of it that you are doing with two components.

[Page 21]

MR. CARTER: Here's one that's a little bit easier, and there are some members of my profession that would have some difficulty with it. If a government decides that it wants to run a surplus, or a government decides that it wants to run a deficit, is it the Auditor General's role to provide a conclusion on that policy? That's a government policy, that's a public policy. What is the Auditor General's role with respect to that? It's a very complex issue and it is one that we encounter on a periodic basis and sometimes it's obvious that it is clearly a public policy, other areas it's in a grey area and Auditors General tend to bump into that, not on a frequent basis, but on a regular basis because the issues are significant.

MR. CHAIRMAN: This issue of effectiveness and policy, I think must be a very complicated area, as you said. Are there follow-up questions on that?

MR. MACKINNON: If I could just ask one, Mr. Chairman. That goes to the heart of where a lot of frustration and concern comes in from all members of the Legislature, I believe, as well as the general public, because when they hear the Auditor General make a statement on a particular issue, the government has been spending its money wisely or unwisely or whatever, but they are only looking at that and they don't focus on other aspects, and perception becomes reality. So, you could be weak on one aspect, the other side of the equation could be very strong and that is not what we are measuring. I guess that's just the P3, it could be just about any matter of public policy.

MR. CHAIRMAN: I think we flagged this issue. It is a little abstract at the moment. Ernie?

MR. FAGE: Just in that regard, it is very important, I guess, in terms of my understanding, that the Auditor General's Department is the financial analysis of benefit use for money, the policy decision is up to the politicians and the people of Nova Scotia to decide whether a policy aspect is good. The role here is strictly value for dollar or the analysis of money spent - where was it spent, how was it spent - not so much the determination if it is good money or bad money.

MR. CARTER: You know you have the back end of once the decision is made, how is it implemented. That is where we begin to get involved, at the front end. Again, it is not straightforward. If government makes a decision and we are looking at the information systems that fed that decision, do we comment if we feel that there is a lack of credibility to the information. In other words, the decision is made without a full consideration of the information. That, from our point of view, again, is a difficult line but the tendency is to provide those types of comments without getting into the actual decision, without criticizing the decision that says this is what we are going to do in this program area.

MR. DEXTER: Just so there is no confusion in this because it seems there is a distinct difference between the question that was asked by the honourable minister and the discussion that Mr. Fage then went into because the question of a policy of the government is an aspect

[Page 22]

of governance. The question of the effectiveness of that policy, what comes out the other end, is a much different question and you don't comment on policy and you don't test the effectiveness of the policy on the other end. You only look at the question of the financing arrangements or the structure that is put in place in order to facilitate . . .

MR. CARTER: And the controls.

MR. DEXTER: . . . the movement of the program and the controls. Is that right?

MR. CARTER: That is right and to the extent that the government provides the information, performance reports on the effectiveness of programs, we could and would, and there is a move toward this in other jurisdictions, provide assurance reports on whether or not the information being provided on effectiveness is credible, has integrity. If government says a program is performing to this level, we could provide an audit report that people could say that . . .

MR. DEXTER: So if the government says that we have put in place a policy that is going to deliver 100 new doctors to the Province of Nova Scotia, you could then go - and they have done that - and look at whether or not that is, in fact, what happened. You could test the credibility of that report.

MR. CARTER: Yes. It is a very complex . . .

MR. CHAIRMAN: How do you treat alternative methods?

MR. CARTER: We would look at it in terms, again, what has been the rigour of the alternative analysis that was done going into the decision.

MR. CHAIRMAN: Meaning before choosing a particular policy, instrument?

MR. FRASER: Mr. Chairman, I just want to ask the question, does the Auditor General or the office get audited as well or is that above you? (Laughter)

MR. CARTER: That is a very good question, actually. From a financial point of view, we are audited as part of the province's financial statements in terms of the expenditures. We are subject to review, Practice Standards Review by the Institute of Chartered Accountants of Nova Scotia, although they have not reviewed us. That would look at our financial statement and other assurance-based engagements. We have, in the past, had external firms come in and provide a review of our financial statement work. The reason, from our point of view, is we want to find ways to improve what we do and realize some economies and efficiencies so that we can get that annual stuff - that doesn't result in big chapters in the Auditor General's Report - done more quickly.

[Page 23]

On the broader scope work, and you will see it in Chapter 21, one of our priorities is to get somebody from one of the other legislative audit offices to come in and do a review of our broader scope work and our methodologies and so forth. That is part of my answer. The other part of the answer is that there is a committee of COLA, Conference of Legislative Auditors, a study group of that committee that was struck a year and one-half ago dealing with performance management and reporting via the legislative audit offices. I am participating in that committee and the goal is to see whether or not we can develop indicators that can be used to measure and ultimately, report on the performance of the legislative audit function.

Our challenge, in terms of measuring our performance, in terms of are we doing a good job or the best job is no more easier than any other program. We certainly appreciate how difficult it is to measure Health and Education outcomes. How do you measure the performance of an Auditor General's office? Do you count the pages in the Auditor General's Report? Do you count the number of times that the Auditor General is referred to in the paper? I wouldn't want to live and die by those things. Do we feel good about the fact that there have been improvements in the accountability and that the financial statements of the province are better now than they were five years ago? Yes, we do. But can we see a direct link between what we did and those things happening? On some days we can see it but the fact of the matter is you cannot be guaranteed that there is a cause and effect there. We think we have influenced some of those things in a positive way.

If I am prepared to take those things as part of our assessment of ourselves, what about when things go differently?

MR. CHAIRMAN: Let me note it is 10:20 a.m. and we had originally contemplated this meeting would go until about 11:00 a.m. I can easily anticipate that we are going to go well beyond that if members have the patience for it but let's see if we can get through this as expeditiously as possible. Darrell?

MR. DEXTER: Just specifically on a question that was raised earlier with respect to the P3 leases, my understanding is with respect to the various portfolio responsibilities, that is something that would fall to Ms. Morash, is that correct?

MS. ELAINE MORASH: That is correct.

MR. DEXTER: Have any of the P3 leases been referred to you?

MS. MORASH: We performed an audit of the P3 situation which was reported in the 1997 report. There is a chapter in there on P3 schools. At that point there had been no leases signed. In terms of ongoing work now we are awaiting a letter from the Minister of Education that is going to be asking us to do an audit, I think, of the O'Connell Drive lease. That letter

[Page 24]

has not come in yet, I checked just before I left the office this morning and there is nothing that has come in from Mr. Harrison yet.

MR. DEXTER: Could you do that on your own? I mean, you don't have to wait for a letter.

MS. MORASH: We would be doing it on our own anyway, except that it wouldn't be reported until the next report is released which would be early next year. I think there is a question of timeliness with respect to the results of that audit and that is why we are awaiting the request from Mr. Harrison, to prepare something.

MR. DEXTER: What time-frame would be required in order for you to complete that?

MS. MORASH: Depending on what exactly is in that request and we have some outstanding questions. We have asked people for information and we are still awaiting some of that information. We have certain meetings scheduled later this week but what we have said is that once we get all of the information that we have asked for, it would probably only take us a couple of weeks, maybe one month at the outset to put together that report and release it. I don't see it as being a time-consuming process. We have been collecting information and have most of what we are looking for at this point.

MR. DEXTER: That is on the Porters Lake school?

MS. MORASH: Yes, the O'Connell Drive.

MR. DEXTER: If the request is for beyond Porters Lake then at the end of the month there might be a different consideration.

MS. MORASH: We haven't collected any information on leases for the other schools. We have seen drafts but there has been nothing that has been signed for the other schools. The only one that we have a signed document on is the O'Connell Drive and that is the one that we have done our work on to date.

MR. DEXTER: Do you just look at the bare lease or do you look at the process as to how the lease actually comes about and is drafted and what technical input goes into that?

MS. MORASH: We have been following the P3 issue for quite a while because we had to prepare the evidence for this report, the 1997 report. So yes, we have been involved with it on an ongoing basis for a very long time and have been following the process.

MR. DEXTER: There will be no consultation with your office though before the lease is signed, in terms of an opinion of . . .

[Page 25]

MS. MORASH: There has been some discussion. I am not sure if it could be described as consultation or not. In terms of us giving a seal of approval to it, that hasn't happened. Our report will be issued in, you know, a month's time or whenever we finish the audit and get the request from Mr. Harrison. Basically, we have not given it the seal of approval, if that is what an auditor does. What we are trying to do is to just fulfil the requirements of the request that we are awaiting from Mr. Harrison. So we will see what that request says in terms of what we report.

MS. GODIN: If the Auditor General's Office does not check effectiveness or if that is not in your mandate, as Mr. Carter said in talking about the three E's, and effectiveness was 30 per cent and you do not necessarily do that, I am just wondering who does?

MS. MORASH: There are some departments that have program evaluations staff. For example, the Department of Health would have a group that does program evaluations and that is part of their mandate.

MS. GODIN: But then Mr. Carter also said later on this morning that, I think what you said was that it is up to the government to release performance reports?

MR. CARTER: Certainly in terms of providing performance information, it would be management's responsibility to release performance information.

MS. GODIN: Do you know if we have had performance reports released on things like the Porters Lake school, is there one being worked on?

MR. CHAIRMAN: On that one, I would guess that it would be much too early to have such a report. If you are tying it to educational outcomes, it is going to be a little hard to get any information about that at this stage.

MR. CARTER: Again as information, each year, over the last number of years, when the Minister of Finance reads the Budget Address, he has also tabled a document called Government By Design which is a summary of the departmental business plans, their goals, objectives and indicators that they are going to use to measure their performance, which would include outcome measures. There has been a great deal of effort within the Public Service in Nova Scotia, and Nova Scotia is leading nationally and internationally in this area in terms of getting to a point where legislators, through Government By Design and a companion document - which I will refer to in a minute - will be able to see. This is what the government's stated goals and objectives were and the outcomes that they were working towards, and this is how they performed against those plans.

The performance report on Government By Design is now, as I understand, to be called Nova Scotia Counts. That is our understanding based on the information we have gotten just in the last few weeks, and it is supposed to be released sometime this summer. So

[Page 26]

that would provide performance information, again, against the planned outcomes, versus actuals, on the 1997-98 year. That is our understanding. In terms of providing outcome measures information in terms of what is to be accomplished and how did we do against those goals, that is government/management responsibility.

Then the question becomes, from an audit point of view, when the users of that information look at it, if there is a problem with credibility, some jurisdictions - Alberta being the best example - have moved towards having their legislative auditor provide an assurance report on those performance reports, that the information is supported, credible and reasonable. In other words, not just made up. It is interesting, there is a COLA study group that is dealing with that very issue - how does a legislative audit office deal with performance information in terms of what level of audit assurance should we provide legislators? - because all jurisdictions are moving towards providing performance planning information and performance results information. That is a long answer. Does that help?

MS. GODIN: I just wanted to say that maybe at a later date we could discuss how to get effectiveness into this because, obviously, the Auditor General's Office will not be able to give us the whole picture of, as Mr. MacKinnon was saying, the social aspects and things like that. So how do we gauge that?

MR. CHAIRMAN: It is a very difficult question and we should discuss it. I agree it is a difficult question. Ernie, and then back to Mora.

MR. FAGE: Mr. Chairman, a comment and then a question. For the benefit of new members in the parameters we have been dealing with, I think it is important to realize that when the Auditor General's Office does an assessment, there are parameters, and sometimes those parameters by way of questioning a report will show up in a form such as this, in the annual report from last year.

I will just read to you in regard to P3. "The government did not prepare a formal analysis of the advantages of P3 arrangements in comparison to the traditional approach prior to making the decision to enter into P3 arrangements for school construction.". In that case, then they go on to make a recommendation, "We recommend that government prepare a detailed analysis of risks and rewards prior to entering into any future public-private partnership arrangement.". The government now has signed a lease, or have committed to, by policy, now to sign leases before schools are built. That's some of the effectiveness of the parameters of a report.

[10:30 a.m.]

I think it's also important, to me anyway, and when I look at the guidelines of this committee, it is the financial aspect that is evaluated here, and if we go into too many parameters, nothing is ever evaluated and auditing is auditing. I think it's very important that

[Page 27]

we keep that a bit in mind here. Because, if we delve too much into the political parameters, in my view, the House of Assembly is for that, if we get into the parameters of the policy, there are hundreds of yardsticks to measure efficiency and that makes it extremely difficult to have anything more than bantering back and forth here, and then we don't evaluate anything for useful efficiency of the taxpayers' dollars in that regard.

MR. CHAIRMAN: Fair point. Clearly we have to come to grips with this, we'll sort it out among ourselves, we don't have to decide it all today. Mora, you wanted to help us on this?

MS. STEVENS: I just wanted to say that when we're dealing with individual witnesses, all of the members will be provided with briefing books which put together all of the documentation that is out there on the subject they are dealing with. We try very hard as a staff. We work with the Auditor General's Office plus the department that is coming in to gather the information for the members so they have it. There'll be binders like this delivered to your office. We kill a lot of trees here, but it does work. We take excerpts from the Auditor General's Report, submissions the department gives us, the Budget Address, the progress report, Government By Design, anything that's been said in the House, newspaper clippings. We put this all together for you to give you the advantage of having all of the information in one place.

There's a briefing session that's held. If you go through these packages, there are so many questions that will come to you that you can ask the Auditor General before they come in, and you can sort of form in your mind what questions you want to effectively ask the witnesses. So these are packages that we've put together to help you ask those questions, to see is their report on effect of this? Has one been asked for? Then you can ask the witnesses if there has been any progress on that. So, we do try to give you as much information as possible there.

As for effectiveness, I'd ask you to look in the green packages that I sent out. There is a subcommittee report that this committee worked very diligently with the Office of the Auditor General to try to put some things on paper, what this committee would like to see, and I would suggest that all of the members read that subcommittee report thoroughly. I think it will answer a lot of your questions. We worked very hard, and the Auditor General's Office was instrumental in helping us put our thoughts down, so it's something that you should give a look to.

MR. FAGE: Mora said that much better than I did. The question I did want to ask, Mr. Chairman, before we move on to Elaine was, in regard to the request coming from the minister on the P3, if that request had been made a month ago, or the O'Connell Drive School, under those terms that you've just described to Mr. Dexter, then we would have had a report by now.

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MS. MORASH: There are still questions that are outstanding and we are awaiting pieces of information, and I wouldn't have had those pieces of information a month ago, still don't have them.

MR. FAGE: Okay, even if the request had been made so that you could have sourced that information. Because, what I believe that I was hearing was, when you answered Mr. Dexter's question was that you were waiting for the official request so that you can acquire that information. If the official request had been made sooner then that request for the information that is outstanding certainly could have been made sooner.

MS. MORASH: The request for the information was made sooner. Those information requests have been kind of ongoing since we saw the lease and have been working on the audit. So I'm not sure that we would have reported any sooner, had we had the request. It just takes a certain amount of time to put the information together and get everything that we are looking for. So, we are wrapping it up now, there are just a few outstanding issues that we are pursuing. Then, like I said, after we get the request for the audit, it should take us a couple of weeks, maybe a month to put something together.

MR. CHAIRMAN: Okay, let's press on, Mr. Carter, although I warn the committee members, we are not going to leave here this morning until we have settled our own agenda for future meetings. Go ahead.

MR. CARTER: Mr. Chairman, in the package is a repeat of a presentation that Mr. Salmon made in the lock-up briefing to the previous Public Accounts Committee with respect to the 1997 report. The practice has been that just prior to the Auditor General's Report being tabled in the House of Assembly, that the Auditor General come to the committee, in camera, a lock-up, to review and provide the committee members with a highlight of the report. So that is the material that is in the handout. In the interest of time, do you wish that I go through that?

MR. CHAIRMAN: Well, we could probably do this again on an other occasion. This is information that was just given, I guess, in February. Is that correct?

MR. CARTER: February, yes.

MR. CHAIRMAN: I can't remember who was on the committee at the time. So have other people heard this?

MS. STEVENS: No one that is here.

MR. CHAIRMAN: Ernie was, I guess.

MS. STEVENS: Oh, yes, Ernie was here.

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MR. CARTER: I am at your pleasure.

MR. CHAIRMAN: All right. Why don't we do this. I think it is quite important that we try to settle our own agenda for future meetings before we leave here today. Why don't we perhaps interrupt your presentation at this point, turn to that next agenda item, see how far we get and it may well be the case that we will have to continue with your briefing on the 1997 report next time. Why don't we just interrupt there?

At this point, let's see where we are with respect to our own possible agenda. This is the question of what areas of inquiry we would like to pursue. I have had no written suggestions from anyone yet as to topics that the committee might wish to look at. As I understand it, the usual approach would be that the committee would focus on one topic at each of the committee meetings by way of calling in front of it one or more witnesses who might have some expertise in the particular area and proceed by way of questions and answers. We could also call upon the Auditor General's Office for assistance in looking at the particular topic that we wanted to look at.

Although I have had no written suggestions made by members of the Legislature, we have received one letter and I have had some members of the Legislature also talk to me about some items that they are interested in seeing pursued. The one letter that has been received, I think, has been distributed to all members of the committee. It was a letter from Mr. David Peters, President of the Nova Scotia Government Employees Union, in which he was suggesting the use of public-private partnerships for new school construction and possible alternatives to this method of financing and asked the committee to think about that as a possible focus as well as the overall tool of public-private partnering. So if I read his letter correctly, he is asking us to look at both P3 generally and P3 as it applies to schools.

In any event, I should say that the suggestions I have heard so far from members of the Legislature are on the following topics. First, the Gaming Commission, that is to continue the inquiries that I think the committee made earlier into the operation of the Gaming Commission and to consider the possibility of calling in front of the committee, Mr. Ralph Fiske.

The second topic I have heard suggested is the Sable Gas Royalty Agreement and there has been a suggestion of a variety of possible witnesses from local people who might be knowledgeable. Bob MacKay's name was mentioned to people from further away, to people in Calgary, Jim Livingston and Ian Doig. Both those names have been mentioned as possibilities. The third topic that has been raised as a possible area for investigation indeed is the P3 schools. This came prior to the letter from the NSGEU, from members of the Legislature. Again, there are possible witnesses who might range from the Auditor General's Department to various people in the Department of Transportation and Public Works and the Department of Education. Other possible topics include having a look at the QE II and its financial problems this past year, the Public Service Superannuation Plan and a variety of

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others. With that brief introduction, I now turn it over to the committee to see if any of the committee members have any comments to make about any of those topics as to what kind of list we should consider and as well, as to what order we ought to approach with.

MR. MACKINNON: Mr. Chairman, I am just looking at your list there and I believe this QE II would be a good one to start with. With the P3, the fact that the Minister of Education will be sending a letter off to the Auditor General's Office, I am just wondering in terms of continuity and making sure we have all our facts on the table at the time, maybe for the sake of a couple of weeks wouldn't we be better off waiting for that report to come in first? I am open on that. Those are my own thoughts.

The Sable Offshore Agreement, sure. The Public Superannuation Plan, yes. Ralph Fiske with the Gaming Commission, I have mixed emotions about that personally, myself at this point because there is a litigation before the courts. I am not sure if having someone like Mr. Fiske come before this committee would actually do Mr. Fiske more harm than good.

MR. CHAIRMAN: I guess that is a decision that he would have to make.

MR. MACKINNON: Well, that is right but at the same time we don't want to force an individual into a very compromising position. I am not a lawyer so a legal mind here could probably give you some guidance on that. That would be my only personal concern but in terms of a batting line-up, the QE II sounds like one that obviously there have been a lot of concerns over the last little while. I would certainly be in favour of that, I am open.

Looking at the letter from the NSGEU is basically pretty much in line with my comment with the Auditor General's Report pending. From my personal point of view, I wouldn't want the committee to start going in and doing double-tracking at this point, for the sake of a week or two.

MR. CHAIRMAN: Okay. So, of the five topics your observation is you are dubious about the Gaming Commission and your suggestion is we might lead off with the QE II?

MR. MACKINNON: Well, not the Gaming Commission itself but . . .

MR. CHAIRMAN: About Mr. Fiske . . .

MR. MACKINNON: Yes, given the fact that there is a litigation before the courts. I think there are some guidelines on that legislative . . .

MR. CHAIRMAN: Well, I think we can turn back to that. I think there are several things about it and one is, of course, we are not prohibited from doing that just because there is civil litigation in front of the courts.

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MR. MACKINNON: See, I didn't know all of the details.

MR. CHAIRMAN: No, there is no prohibition. It might be a question of the litigants' own strategy and in any event, referring back to the opening question about when we have in camera meetings, I gather that it is at least a possible avenue open to us under the existing rules to hold an in camera meeting for a witness that is involved in litigation but it is not clear whether it is even necessary in this case. We can think about that. Rosemary?

MS. GODIN: I just wanted to comment that I am a big believer in finishing unfinished business and I do believe that the Gaming Commission and Mr. Fiske was unfinished business that left the perception that there was something to hide and I would like to get over that. It seemed to me that Mr. Fiske wanted to come before this committee, as I recall and I think he should once again be given the opportunity.

MR. CHAIRMAN: Any other comments? Neil?

MR. LEBLANC: I agree. I think most people have been waiting for Mr. Fiske to appear before the committee. I think he has indicated publicly that he wants to. It isn't, as you mentioned, Mr. Chairman, it is a civil action and not a . . .

MR. CHAIRMAN: It is not criminal.

MR. MACKINNON: I am sorry, I wasn't sure of the particulars.

MR. LEBLANC: I think from our perspective that he would be the one we would want to start off with. I am not sure how many witnesses we want to line up today because I think as the House goes on, a lot of times you sometimes have a repriorization on how you want to do it but I would like to get at least two or three witnesses lined up so that at least the committee staff people can start lining these things up because people might not be available.

MR. CHAIRMAN: I agree, the mechanics of it are important, no doubt about that. Well, what we are looking to now really is what our agenda would be for next Wednesday but also longer term. We are dealing really with both of those questions. I suppose what we could do in terms of next Wednesday is, if we can agree on two possible topics for looking at, it might depend on who's available. The committee staff might be able to find out. What I hear emerging from this is a suggestion that we might look at bringing Mr. Fiske to continue the earlier discussion of a previously constituted committee and look at the Gaming Commission, and we might also look at the QE II. I haven't heard, are there any comments about the QE II?

MR. FAGE: Just in that regard on witnesses, would Elwin MacNeil be a possible witness that should be concerned with the Gaming Corporation, along with Mr. Fiske?

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MR. CHAIRMAN: Well, I confess my ignorance. Who's Mr. MacNeil?

MR. FAGE: Mr. MacNeil is the gentleman in charge of the Nova Scotia - what is the proper name of that? - gaming authority for the province.

MR. MACKINNON: Is he legal counsel?

MR. FAGE: No, he's the chairman, he runs it.

MR. CARTER: He's in charge of the regulatory body. Mr. Fiske was Chairman and CEO of the Nova Scotia Gaming Corporation, which is the operating.

MR. MACKINNON: We would have to have two separate sessions then, one for Mr. MacNeil and one for Mr. Fiske.

MR. CHAIRMAN: I guess that depends on how long it takes.

MR. LEBLANC: How long does it usually go, is it two hours?

MR. CHAIRMAN: Yes, usually two hours, and I think given that we anticipate being in extended hours next week - will that be correct? - we are probably going to be meeting at 8:00 a.m. on June 10th.

MS. STEVENS: If I may, taking on more than one subject at a time is not something that I would suggest. If you want to get any depth into one, if you give the witness an opening statement, which takes 15 minutes and if each member wants to ask a few questions, you've blown two hours in the blink of an eye, and it's not something you would really want to do. I would also suggest staying with the tradition of having a briefing before you bring anyone in, because it really does bring everyone up to speed on the situation. Now, we have dealt with the Gaming Corporation before, and there's information there to do that, but especially since it's a new committee, I would really suggest it's a great way to get your head around it and you can ask much more informed questions.

MR. CHAIRMAN: The briefing in this case, if we were to start off with the Gaming Commission, is this a briefing by way of circulation of written materials or do you mean sitting and assembling as a committee to talk?

MS. STEVENS: It would be sitting here and going over the briefing materials and usually bringing in people from the Auditor General's Office and having them brief us. We could probably kill two birds with one stone and do the 1997 briefing of the Auditor General's Report plus going on to . . .

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MR. CHAIRMAN: So is your suggestion that we not look to have witnesses for June 10th and continue with a briefing from the Auditor General as to the Auditor General's last report plus a briefing in advance of the Gaming Commission?

MS. STEVENS: That would be my suggestion.

MR. CHAIRMAN: I mean for June 17th as the first day for hearing from witnesses . . .

MR. LEBLANC: Are we going to have a meeting only every second week, if this is the case? I am just trying to understand.

MR. CHAIRMAN: That's right, that seems awkward, doesn't it?

MS. STEVENS: That's the way it's been done and it really seems to have been effective. I wish John Leefe was here because he could certainly go into the history of it. No, it has been very effective, it might have slowed down the process but we meet all year round, we don't just meet when the House is in session.

MR. CHAIRMAN: A very thorough examination of any witness or witnesses.

MS. STEVENS: It certainly has been.

MR. MACKINNON: It's very productive.

MR. CHAIRMAN: So every Wednesday morning between now and next year, I guess?

MS. STEVENS: That's how it works.

MR. CHAIRMAN: Permanently. Has the committee really met every week, all year?

MS. STEVENS: Oh, yes. We took a break in December, and sometimes we'll take a summer recess, but yes, we pretty well meet each week and it usually rains, for some reason. But it's a very heavy committee, it really is.

MR. MACKINNON: So, we're at your pleasure. Which of the two from the Gaming Commission do you want first, Mr. Fiske or Mr. MacNeil?

MR. CARTER: Just to be of service to the committee, and to make you aware of the fact, the Auditor General is the financial statement auditor of the Nova Scotia Gaming Corporation under the Gaming Control Act, and we've done that work for the last number of years, we have not yet done any broad scope audit work in that entity. So what we would

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be, in terms of briefing on the Nova Scotia Gaming Corporation, providing the committee members, is an overview of gaming from an operational and regulatory point of view in Nova Scotia and a perspective on the corporation itself.

We do have an audit currently in process with respect to the Alcohol and Gaming Authority. The Gaming Authority used to be called the Nova Scotia Gaming Commission. Mr. Elwin MacNeil is Chairman of the Commission now called the Alcohol and Gaming Authority. Mr. Fiske was the Chairman of the corporation. With the Gaming Control Act in 1994-95 the province segregated regulatory and operations in the gaming field.

The other thing, with respect to the QE II, I think it is important to note that we would be of limited service to the committee in that regard. We are currently planning an audit, engaged in an audit of the QE II, but early stages, so we would not be in a position to provide much comments on that other than the information that we had supporting the chapter in last year's Auditor General's Report.

MR. CHAIRMAN: Yes. Nothing to tell us about a $60 million deficit?

MR. CARTER: We can tell you what we have got behind what was in the report.

MR. CHAIRMAN: I think, here is where we are. I think we have realized now we have a much more extended workload than perhaps we had all thought beforehand. We have an agenda for next week's meeting which would be to continue with the briefing from the Auditor General's Office as to last year's report and the other part of next week's agenda would be to get a specific briefing in anticipation of witnesses from the Gaming Corporation and our objective is to meet on June 17th with Mr. Fiske as our witness to focus on his experience at the Gaming Corporation. Is that right? Neil.

MR. LEBLANC: I agree. The only thing is we talked about QE II and we did not get specific as to the QE II. Do we want a senior management there or whether we want Dr. Schurman. Those are questions that we may want to address. I am not really sure what the committee wants and I am opening up the discussion because we didn't get specific . . .

MR. CHAIRMAN: I think what we will have to do is also continue our discussion as to what our longer range plans are, both as to an overall list of topics and potential witnesses and focuses within those specific topics. Darrell?

MR. DEXTER: I was just going to point out that one of the difficulties with conducting examinations, you know, as you start to go through witnesses, additional witnesses may come to the notice of the committee that we may want to examine. It may be that additional names are coming forward. In a general way, if we know that we are headed down the road to QE II at some point in time in the future, it would be a good exercise to go

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through now just in terms of thinking about who those people are and understanding that likely what will happen is additional names will come forward as we begin the examination.

MR. CHAIRMAN: All right. As I said, we have not settled our long-range agenda for the year and there is no necessity to settle our long-range agenda for the year. We have embarked upon the first topic, which is just fine, but I would ask the members of the committee to think on their own and to consult with their caucuses as to topics that they would like to see explored by the committee. Ernie?

MR. FAGE: I just wanted to add another one for future consideration at another day, as a witness, Elwood Dillman from the Resource Recovery Fund.

MR. CHAIRMAN: All right, there is another possibility, yes, very good, thank you. I think perhaps since it is 10:55 a.m., we are almost ready to wrap up today's session. I would like, however, to revert to the overall topic that we started out with which was our own administrative matters. There is one matter that I did not raise at the time but I want to flag for members of the committee just now and it arises from the Speech from the Throne. Members of the committee will have noted that on Page 16 under the heading, Accountability: Public Finances, there was a specific reference to the Public Accounts Committee. The issue that was discussed in these paragraphs of the Speech from the Throne was the issue of the role of an external auditor under the Auditor General Act. What the Speech from the Throne passage in question said was, "Accordingly, my government will ask the Public Accounts Committee of this House to draw up a process by which that committee may select the public accounting firm to do the audit and receive the report.".

I note that, so far as I am aware, the committee has not been asked yet by the government to do anything. I would also note that I believe this committee really reports and is itself accountable to the House and that the House acts by resolution so if I do receive a letter from the government asking the committee to take up this particular piece of business, as announced in the Speech from the Throne, what I would propose to do would be to write back and essentially ask that a resolution come from the House asking the committee to do this. I guess unless I hear differently from the committee, that would seem to me to be the right procedure. I don't know if the committee members have any comments on that.

MS. STEVENS: If I may, that is dealt with in the subcommittee report if members want to refer to that. The past committee put their feelings forward of what they would like so they might want to refer to that just to get an idea what the Public Accounts Committee has thought of doing beforehand, just for a reference sake.

MR. CHAIRMAN: Do you want to give us a hint, what does it say?

MS. STEVENS: It says the Auditor General basically should do it.

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MR. CHAIRMAN: No, no, that is on the topic of who should do this kind of auditing.

MS. STEVENS: Oh, sorry.

MR. CHAIRMAN: No, I understand the problem. I was addressing something slightly different which was if a question is going to come in front of this committee of this nature, I think the route would be a resolution of the House.

MS. STEVENS: Or a letter.

MR. MACKINNON: If it is fair with all members of the committee, why don't the government members here just take it on notice and get the exact wording from the Premier as to what the detailed analysis of his observation is. I don't want to appear to be evasive or avoiding the issue but at the same time to make sure the proper process, we are dealing with this candidly and perhaps have an answer for next week.

MR. CHAIRMAN: I have no such intention . . .

MR. MACKINNON: Or anytime in between to the Chairman. It seems like a housekeeping measure.


MR. LEBLANC: Mr. Chairman, this is a major decision and I tend to agree with your comments that the committee is an instrument of the House, it isn't an instrument of government and as such if anything was to happen it should be done by resolution in the House. I appreciate Russell's comments in regard to maybe getting back to us but I think that would be the appropriate way to go and I concur with your decision on something like this.

MR. CHAIRMAN: Yes, this might not be the case on all possible topics that come. For example, in terms of our overall agenda, we just did a canvass of the committee members for their suggestions and it was very informal, didn't require resolutions of the House. But this particular item has a history and because of that I thought it would be appropriate and probably fairly easily dealt with that way. In any event, I think we have pretty well wrapped up.

I take the undertaking of the government members that they will take it back to their government. Good, thank you very much for your attendance. We stand adjourned.

[The committee adjourned at 10:59 a.m.]