Assemblée Législative de la Nouvelle-Écosse

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21 septembre 2017

Public Accounts -- Wed., Nov. 4, 1998

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HALIFAX, WEDNESDAY, NOVEMBER 4, 1998

STANDING COMMITTEE ON PUBLIC ACCOUNTS

8:00 A.M.

CHAIRMAN

Mr. Howard Epstein

DEPUTY CHAIRMAN

Mr. Hyland Fraser

MR. CHAIRMAN: Good morning. I will call this meeting of the Standing Committee on Public Accounts to order. As you will know, we have two witnesses today. We have the Premier, the Honourable Russell MacLellan, and we have with him the Minister of Finance, the Honourable Donald Downe. We have both witnesses here together and they are both available, I believe, for the three hours scheduled. As usual, I will swear the witnesses in and then invite them to make opening statements and after that we will proceed to questioning. I will just take a moment to swear in the witnesses and then we will proceed.

Do you, Russell MacLellan, swear that the evidence you shall give to the Standing Committee on Public Accounts, touching on matters pertaining to the Nova Scotia Gaming Corporation shall be the truth, the whole truth and nothing but the truth, so help you God?

HON. RUSSELL MACLELLAN, Q.C. (The Premier): So help me God.

MR. CHAIRMAN: Do you, Donald Downe, swear that the evidence you shall give to the Standing Committee on Public Accounts, touching on matters pertaining to the Nova Scotia Gaming Corporation shall be the truth, the whole truth and nothing but the truth, so help you God?

HON. DONALD DOWNE: So help me God.

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MR. CHAIRMAN: Moving right along, if either of the witnesses, or both of you, have an opening statement to make, you are welcome to do so and please proceed.

THE PREMIER: Mr. Chairman, I will begin with a brief opening statement and then, of course, I will be very pleased to answer any questions any of the members of the committee may have. My staff and my advisers have shared any relevant information with this committee that you have requested. Government officials have waived solicitor-client privilege. My former deputy, David Thompson, testified before you despite the fact that he is personally named in Ralph Fiske's lawsuit. Long before coming here today, my office checked and then recently double-checked, to make sure there was no documentation on file which you should have which would be relevant to the topic at hand. There is none.

My own involvement with the Halifax casino began when I became Premier in July 1997, a little over a year ago. At that time, the Nova Scotia Gaming Corporation had already completed its negotiation with ITT Sheraton and arrived at terms of settlement. That deal nailed down a permanent, stand-alone casino with a country-club design deemed suitable by the corporation and it arrived at the dollar figure of $97 million that would be spent by the private-sector operators on a first-class casino here in the Halifax-Dartmouth area.

On July 29, 1997, I met with then Chairman of the Gaming Corporation, Ralph Fiske, as well as then Finance Minister, Bill Gillis. At that meeting, Mr. Fiske talked about a number of gaming issues. He raised significant concerns regarding the Halifax casino. I took these concerns seriously, as any Premier would. I immediately involved my deputy minister and my staff worked with Mr. Fiske, the Minister of Finance and the Nova Scotia Gaming Corporation to get to the bottom of the matter, and they did. Senior staff at the Priorities and Planning Committee, legal counsel for the Gaming Corporation and the Board of Directors at the Nova Scotia Gaming Corporation, all advised that Ralph Fiske was wrong. In fact, they advised that the deal before the government was a good one for the taxpayers and for the Province of Nova Scotia.

In September 1997, the board of directors recommended that Cabinet approve the terms of settlement reached with Sheraton. Based on all of the advice we had received, Cabinet had no difficulty endorsing the board's recommendation. I thought, at the time, the deal was a good one and I still do.

The deal holds Sheraton accountable to the original memorandum signed years before. It provides for a top-flight, stand-alone casino at significant cost to the casino operator. It accomplishes everything the province had originally aimed for. In fact, it is a much better deal for Nova Scotia than it is for Sheraton.

Now, Mr. Chairman, if there are any questions, I would be very pleased to answer them.

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MR. CHAIRMAN: Thank you very much for that statement. Mr. Downe, do you wish to add anything to this?

MR. DOWNE: Good morning. Like the Premier, I would also like to begin by making a few brief comments. At the outset, I want to emphasize for the members of the committee, the degree to which the staff of the Gaming Corporation has attempted to bring as much clarity as possible to this process by providing access to all relevant documents. I, personally, have been impressed by the efforts of the vice-chairman to comply with the committee requests and with her commitment, both professionally and personally, to honour the intent and the letter of the law in this regard. From my perspective, the materials which have been provided by the Nova Scotia Gaming Corporation and testimony the committee has heard from its 10 previous witnesses, should provide a full measure of insight into this matter at hand.

Since I have only held the portfolio since April 8, 1998, my ability to comment on this matter is certainly limited. However, I believe that I can provide the committee with some measure of clarity on two specific issues: the first being the description of the manner in which the members of the Executive Council discharge their daily responsibilities and secondly, my own personal assessment of the appropriateness in the arrangements which have been made with ITT Sheraton for the construction of the Halifax casino. I hope that this information will help committee members context the information which has been received from so many different and differing sources.

Although my involvement in the casino file has been limited to a period of seven months, I have been a Minister of the Crown for five years and I am, therefore, more than qualified to comment on how ministers approach the discharge of their Cabinet responsibilities. Speaking from my own experience, it has long been my practice to vest responsibilities to the day-to-day operation decisions with senior staff of the appropriate agencies and/or departments. That is their job and they must be held accountable.

As a member of the Executive Council, it is my responsibility to handle the big picture, as it were, issues such as policy and regulations. That does not mean, however, that I do not stay in touch with the day-to-day work of senior staff. I am briefed regularly when I believe it is appropriate. I take the results of those briefings to the Premier and to Cabinet, if necessary.

It is, therefore, my very strong belief, based on the review and the discussions which I have had with staff and advisers, that this file has been handled properly. Allegations to the contrary notwithstanding, in my view the arrangements which were reached with ITT Sheraton represent a very good deal for the people of this province. I can make this assertion based upon some very solid facts. Firstly, not one provincial dollar has been invested in the huge project. All investments have been made by the company both short and long term. The arrangements are highly advantageous to this province and, as a result, the province will have

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a $97 million state-of-the-art casino which can compete internationally and draw tourism dollars to Nova Scotia. Secondly, the province gets 20 cents of every $1.00 in the door, right off the top. Thirdly, the province receives 65 per cent of the profit. Fourthly, the province is guaranteed $100 million for the first four years.

It doesn't matter whether you approve of gaming or not, these arrangements constitute a shrewd business deal by anyone's calculations. In addition, there are other benefits; short term, almost 250 construction jobs and in the long term, the jobs at the casino will more than double. To me, that is impressive and I won't take time to talk about the additional spin-offs with regard to tourism.

In short, this arrangement is a good deal for the taxpayers of this province, underpinned by a piece of legislation which other jurisdictions believe is so strong that they are now copying it. Now I would be prepared and pleased to answer any questions.

MR. CHAIRMAN: Thank you, both, very much. I wonder, are there copies of the statements by any chance? If not, we can certainly arrange to have copies made.

THE PREMIER: You can have my copy.

MR. CHAIRMAN: In the meantime, we do have three hours. Our habit has been to try to fit in two rounds of questioning by each caucus. I will start off with Mr. Dexter. What we will do, I think, is perhaps take a half hour for each of the caucuses and then do a second round that might be a little shorter than that. I am mindful of the fact that I think, particularly, Mr. Downe has another appointment and I am sure you do, Mr. Premier, so we will move along as smartly as we can. Mr. Dexter.

MR. DARRELL DEXTER: Thank you, Mr. Chairman; thank you both for being here this morning. We had a little false start in getting you here but we are certainly pleased to have you. I was interested in your opening statement because it talked in part about the disclosure of documents. I guess I have a contrary view to the one that you expressed about the disclosure.

You may know that even yesterday we received a copy of a document from the Gaming Corporation which had not been previously released. It is one thing for the vice-chairman of the Gaming Corporation to say, well, how are we supposed to know what is relevant and shouldn't you decide that and another thing to not release a document which is about a briefing to the Premier, as he becomes Premier, before the deal was signed. It is clearly identified as such. It was not a mystery that this document was relevant. I have to say, it is hard to understand even on the most cursory view of these documents, why it would not have been released and released earlier.

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Have you had an opportunity to have a look at the briefing note and at the memorandum of Mr. Fiske that were released by the Gaming Corporation yesterday?

THE PREMIER: No, I have not.

MR. DEXTER: In that case, I would like to suggest that perhaps we distribute a copy of it to the Premier because I have questions about it and it is certainly relevant to this proceeding.

MR. CHAIRMAN: We are missing our clerk at the moment but apparently the Premier had been provided with a copy and we will arrange to have an extra copy made for you.

MR. DEXTER: There are really two parts to this. One is entitled Briefing Notes - Advice to Premier-Elect Mr. Russell MacLellan, Nova Scotia Gaming Corporation, July 15, 1997. This one has been edited and understandably so; the information with respect to the Atlantic Lottery Corporation, the VLT problem, gaming fund, Sydney casino information, has been taken out. We are left with the relevant information which has to do with the Halifax interim casino.

The other part of this is the actual memorandum to file that was made by Mr. Fiske and in his documentation that he has given under sworn affidavit he says basically that when he went to see you or met with you on July 29, 1997, he had this memorandum in hand so that he could go through his concerns with you at that time. Do you have any reason to doubt what Mr. Fiske says about that, that he came with this material to talk to you about it?

THE PREMIER: I have no reason to doubt that he came with it in hand but I have no knowledge one way or the other on that.

MR. CHAIRMAN: Excuse me, Mr. Premier, if I can just interrupt, I think we have a point being raised by Mr. Samson.

MR. MICHEL SAMSON: I am just curious about the way Mr. Dexter has just structured that question. He says under sworn testimony that Mr. Fiske claims that he went to visit the Premier with this memo. Now, having reviewed Mr. Fiske's latest information provided to us this week, he makes it quite clear that his memory was suddenly recollected and he recalled suddenly that he had actually drafted this memo and this is a very recent proclamation by Mr. Fiske. We have not heard about these briefing notes before. This is something Mr. Fiske clearly states in his presentation, that he recalls this, and then he asks that the Gaming Corporation release these briefing notes to us. Let's get the facts straight here. This is not under sworn testimony. He has never referred to these briefing notes until his last submission and this is new information from Mr. Fiske.

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MR. CHAIRMAN: Do you want to respond to that?

MR. DEXTER: I am not sure what the purpose of that intervention was unless it is just to disrupt the line of questioning.

MR. SAMSON: No, no, listen, he said it was sworn testimony. It is not sworn testimony.

MR. CHAIRMAN: We have heard your point.

MR. SAMSON: Well, rule on it. Is it sworn testimony or not?

MR. CHAIRMAN: I have not yet. Mr. Dexter wanted to reply.

MR. DEXTER: There is a sworn affidavit that has been submitted at the request of this committee that contains the information that Mr. Fiske put before this committee. He talks, granted, that his recollection was refreshed by the documents that were released. That is what he says. The Premier is a lawyer. He knows that it is very common for people to refresh their memory through the use of documentary evidence. That is not at all an unusual thing to do and, in fact, people would expect that that would happen, I would expect.

MR. CHAIRMAN: Let's be clear. We have the document I think in two ways. One is, Mr. Fiske did choose, subsequent to his actual appearance in front of the committee, to file an affidavit with us but, of course, he has not been cross-examined on that affidavit. On the other hand, we also did receive this document, I believe, directly from Ms. Gordon at the Gaming Corporation, by way of letter yesterday. In any event, I do not think there is any doubt as to the authenticity of the document although context may be brought out in terms of cross-examination. The question, however, is proper. So let's proceed. Do you want to repeat the question?

MR. DEXTER: The question I think was already answered. I asked if he came with this in hand to go over this and I think what the Premier said was that that was his recollection, that the purpose of the meeting was to go through a list of concerns that Mr. Fiske had about this deal.

THE PREMIER: Yes, certainly.

MR. DEXTER: What we are talking about here is July 29, 1997. You have been Premier for two weeks.

THE PREMIER: Yes, approximately.

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MR. DEXTER: I am sure the number of dossiers that you have received at that point in time must be hard to imagine. There is an awful lot of file material that you are going over in the first two weeks of becoming the Premier of the province. When Mr. Fiske pushes himself onto your agenda at that point in the first two weeks and he comes to see you, he tells you that he has severe concerns with the terms of settlement between the Gaming Corporation and ITT Sheraton. He tells you that he believes that this is going to amount to a $20 million loss to the people of Nova Scotia. Is that right?

THE PREMIER: That was more or less included in his comments, yes.

MR. DEXTER: Whether you were aware before this meeting or at this meeting, you were aware that there was a dispute taking place between the Gaming Corporation over the design documents and that this was the subject of the arbitration. There is no question, at least at that point, overtly about the building of a permanent casino. That is not part of the arbitration. It is not on the table. Part of the original contract called for the building of a permanent casino. Is that fair?

THE PREMIER: It is fair.

MR. DEXTER: The problem is that if the Sheraton interest could get away with converting the stand-alone casino concept into the hotel permanent casino, which is what they would prefer and that is what Mr. Fiske tells you, that they would like to convert the hotel into a permanent casino but the Gaming Corporation is against that because it does not live up to the contract that was originally signed by the province and by the Sheraton interests. I am just going through this and trying to get through it in a logical fashion. Is that fair?

THE PREMIER: I am not quite sure, frankly, when I realized that Sheraton's point of view with respect to a stand-alone casino as opposed to the one in the hotel, I cannot honestly say it was at the meeting of July 29th but subsequently over a period of time I have come to learn that Sheraton had differences of opinion.

MR. DEXTER: There was a document that was produced during the course of this set of hearings. We went through lots of different individuals and there is no question that the most controversial, and the person who kicked this off, was Mr. Fiske by his actions, but one of the most interesting individuals that we had a chance to talk to was Mr. Merrick. If you know Mr. Merrick, he represented the Gaming Corporation in the casino arbitration. He produces a letter that is dated August 20, 1997 in which he goes back and kind of reviews the progress of this matter over the term of the arbitration, up until the time that the terms of settlement are concluded. He says, and this is what is interesting, and I guess like most lawyers you are trying to find a theory of the case which allows you to make some sense of it, and I have to say, with the number of documents and the number of witnesses and the time that we have, it is sometimes difficult to see that straight line.

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Mr. Merrick, because he proceeds in a very methodical manner, in his letter of August 20th, talks about the progress of this, and he says that he believed, ". . . that there was little probability that the Corporation could lose the arbitration and furthermore that aggressive action should be taken to force the Sheraton to comply with its contractual obligations.". That is his analysis of the file when he is called in. That is the position that he takes on behalf of the Gaming Corporation. He has a meeting with staff from the Premier's Office, and then he changes his mind. He then comes to the conclusion that there is a material risk, and I am sure the Premier understands what a material risk is; this is a real risk that this arbitration can be lost.

Something really significant had to have happened in between those two positions. Mr. Merrick is a well-known and well-respected litigator in this province. Something really specific had to have happened in that intervening period. When I go back and look at this document, it was always here, I just didn't see it. He says that there were communications that took place from the minister to the Sheraton corporation which damaged the negotiations.

What is interesting about this is that in the memorandum that Mr. Fiske made back in July 1997 - and it should be said that this memorandum had nothing to do with the lawsuit, it wasn't part of this investigation - he was simply making a note to himself about the things that he wanted to discuss with you on July 29, 1997. Subsequently, he raises this mysterious question about the commitments of the honourable gentleman. This has been a mystery to this committee and specifically to my colleagues in the government caucus for some time.

In this memorandum, he says that he believed that the position of the Gaming Corporation with respect to a permanent stand-alone casino was always supported by the minister. Then he goes on to say in this memorandum, "'I was told some weeks later by Sheraton Casino Nova Scotia that they had been told by our Minister that they need not build the originally planned casino and that he would approve the plans for the permanent casino to remain in the hotel,". That is the significant event between Mr. Merrick's original opinion and the change. When he appeared to brief you on this, this is part of what he told you. Is that correct?

THE PREMIER: I don't recall that. When I heard of Mr. Fiske's allegation in his recent statement, that is the first mention I have heard of an honourable gentleman taking that kind of position. I wasn't there, as you can appreciate. If he said it, he didn't say it in those words.

MR. DEXTER: You have been briefed on this, Mr. Premier, and I would find it hard to believe that you haven't followed this closely given the amount of attention that it has drawn. You know that Mr. Merrick has testified on a number of occasions that there was this change in his opinion. The question has always been, why is there this change, this sudden dramatic change in his opinion? He has given this information, and he says so in his own

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letter, "I realized in the end that it was the communications from the minister or the department . . .". Here you have the one person who could damage a casino arbitration, somebody who had the authority to bind the government, and that person was the minister at the time. That is why the arbitration fell into peril, was because of commitments, according to Mr. Fiske, that were made by the former minister. Let me ask you this question. Did he refer to this to you as the Boudreau deal?

[8:30 a.m.]

THE PREMIER: He mentioned something about Bernie Boudreau and his involvement. I wasn't quite sure what he meant by the Boudreau deal, because I had only been there in the job for a few days. I talked to him in relation to some of the things you have mentioned, and said to him that I couldn't change what had happened in the past, but that I was committed to making sure that ITT Sheraton adhered to the terms of settlement and to the agreement, and that I appreciated him for the fact that he was diligent on behalf of the province and the province's interests.

MR. DEXTER: Mr. Premier, I have to say, I really appreciate that position, because I have come to conclude, after looking at this for some long time, I jokingly say that I feel like John Holm with gas regulations, I have done so much work on this now that (Interruptions) The reality is that when you sat down and you spent the time to go through all these documents, and I have come to the conclusion that on July 29, 1997, when Mr. Fiske walked in the door with his concerns, you were left in the untenable position of simply having no choice. This was laid on you when you became the Premier, and you had no choice but to complete the deal and to accept the terms of settlement. Is that how you feel?

THE PREMIER: The terms of settlement are good. The terms of settlement that were ratified by Cabinet in September as amendments and changes to the contract are good. It is a good deal for Nova Scotia. I saw no problem then and I see no problem today in that contract, because it is a good deal for Nova Scotia. It gives us a $97 million casino. It gives us everything that we were looking for. You have to remember too that when Mr. Fiske and I got together on July 29th, it wasn't the first time that we had met - the first time on casino business. I have known Mr. Fiske for many years, we are friends. I always regarded him very highly. I want you to know that. I still hope we are friends, and maybe not to the extent that we were, but I have a high regard for him. We go back many years together.

MR. DEXTER: Do you doubt his veracity in all of this material?

THE PREMIER: I took everything he said as being a concern to me and to the province, as I think any Premier should. I had Mr. Thompson and my staff look into the questions he posed, because I was concerned. He made some allegations which needed to be followed up.

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MR. DEXTER: I guess one of the things that I find disturbing, and I realize that for public consumption there is always the need for you to put the best possible face on this, but the reality of what happened in this is that the deal, the terms of settlement, did not offer to the province anything that they weren't entitled to under the original contract.

THE PREMIER: But that is the point. It was a good contract and good terms of settlement. I didn't feel, quite frankly, that I had to endorse it just because it had been done by a previous Liberal Government. I didn't feel that way in the energy situation, so I would not have felt that way on the casino, if I didn't honestly believe it was a good deal for Nova Scotia.

MR. DEXTER: There was nothing in the terms of settlement, and I guess this is the point, there were a number of concessions as a result of these terms of settlement to the Sheraton interest, but nothing was gained by the province. If you went to arbitration and you lost, you were in no worse position than you were here.

THE PREMIER: As I understand it, the arbitration did not relate to the terms of settlement, it related to design of the casino. So they are two different situations.

MR. DEXTER: There are a number of things, there is the whole question of the penalties that were available to the province at the time that were given up, there is the whole question of the deadlines that have to be met. All of these were part and parcel of that arbitration. In the end they walk away not only with everything they want but also, apparently, with a commitment from the Gaming Corporation to lobby the Governor in Council, the Cabinet, for changes to the casino regulations for the things that have come forward, including the high-rollers room and many other things.

THE PREMIER: There was nothing discussed at my meeting with Mr. Fiske concerning the regulations. There was a mention that the province was going to be losing $20 million which, as you can appreciate, was of great concern to me at that particular time. I looked into that and referred that particularly to my former deputy in Priorities and Planning, David Thompson, to look into. It was agreed by Mr. Thompson and my staff that all the province stood to lose, by not pushing on it was $10,000 a day which certainly would not have added up to $20 million.

MR. DEXTER: The problem though, Mr. Premier, is that you were referring it back to exactly the same people who structured the deal in the first place. They could not take an objective view of . . .

THE PREMIER: No, David Thompson only came in service of the province when I became Premier.

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MR. DEXTER: I would like to pursue that a little further because I would like to know what steps you actually took to try to investigate the veracity of the claims that were made by Mr. Fiske at the time?

THE PREMIER: I talked to Mr. Thompson, it was pursued and investigated through Priorities and Planning.

MR. DEXTER: I am not sure what you mean by that, it was pursued by Priorities and Planning?

THE PREMIER: Well, they looked into the allegations and came back to me with their findings.

MR. DEXTER: Who there would have looked into it?

THE PREMIER: Howard Windsor, I believe, was the lead person other than Mr. Thompson himself. Mr. Windsor is now the Deputy Minister of Housing and Municipal Affairs.

MR. DEXTER: Based on that it was concluded that you would approve the terms of settlement that were entered into earlier on?

THE PREMIER: No, we were not concentrating on the terms of settlement, we were concentrating on the allegations of Mr. Fiske, did they hold water, were they right, was there justification in his allegations, what justification was there? They looked into them and I was convinced that there was no justification in what Mr. Fiske was alleging and at the best that the province would stand to lose by not pursuing the $10,000 a day, a maximum of $1.8 million.

MR. DEXTER: That was the loss that you anticipated, that was the cap?

THE PREMIER: That was the most we would have lost if we were to pursue it, if, in fact, we had a case to pursue it. There are a lot of ifs. The fact is what we stood to gain in comparison was a $97 million casino, hundreds of construction jobs, other, I forget, 300-some spin-off jobs, about 785 jobs and a permanent casino which is 350 jobs more than there are in the part-time casino. But there are a lot of benefits from this casino.

MR. DEXTER: Look, I really hate to beat a dead horse here but the reality is that all of those things, all of that, the permanent casino, I mean I have even reviewed the submissions of Sheraton to the arbitration and they have never suggested in those documents at that time that there was going to be a permanent casino, they never suggested that. The question was, given all of the benefits that you have mentioned that were contained in the original agreement, why were these concessions made?

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THE PREMIER: I cannot speak for that. I was not there at that particular time. As you can appreciate, I just became Premier on July 18th and went from there and shortly thereafter had my meeting with Mr. Fiske.

MR. DEXTER: At some point in time you received a letter of resignation from Mr. Fiske and in that letter of resignation he sets out what he considers to be some fairly severe difficulties. Does this further prompt any investigation?

THE PREMIER: No, I was very surprised, quite frankly, to receive the letter of resignation from Mr. Fiske. Two things, I guess, really led me to feel that way. One is that when we talked and I said I appreciated the work he had done for the province as chairman of the Gaming Corporation and that it was my position to hold ITT Sheraton to the contract and to the terms of settlement. I thought that would give him a feeling that we could work together. The other thing is that it was my understanding that he agreed to the terms of settlement. So the contract merely was just amending the original contract to allow for the terms of settlement. When he resigned, I guess it did catch me by surprise.

MR. DEXTER: One of the other kind of troubling aspects of this is that the commitment that is eventually wrung out of the Gaming Corporation is to lobby Cabinet with respect to 24 hour operation and a number of other points that have subsequently become reality. It is odd that the Gaming Corporation undertakes to lobby the Cabinet instead of supporting Sheraton with the Gaming Commission. Does that not strike you as an odd way for a commitment to be made?

THE PREMIER: I am not quite sure I understand what you mean.

MR. DEXTER: The commitment in the terms of settlement says that the Nova Scotia Gaming Corporation will request through the Governor in Council certain changes that are going to be made, instead of the route that I understand is the appropriate one, which is to go through the Gaming Commission. So they are essentially going over the process, or not following the proper process.

THE PREMIER: Well, maybe you would like to ask Mr. Downe because he is the minister to whom the Gaming Corporation reports.

MR. DOWNE: With the reporting mechanism, the Gaming Corporation in turn would report to the minister responsible which today is the Minister of Finance, myself. They have a board of directors and they, in turn, bring recommendations to me that the board would agree to, and then I, in turn, with regard to any policy position, would report to the Premier and to the Cabinet and have a Cabinet decision made. That is the normal process.

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I want to clarify one other point here if I can. The normal process for a minister is that the minister would then, in turn, bring an R & R, a memorandum. It would normally go through Priorities and Planning. They would review that process and then in turn would go to P & P and then to Cabinet. So there is . . .

MR. DEXTER: But if I were just your average casino operator and I wanted a change, I would go to the Gaming Commission, wouldn't I, and make application for changes? That would be the process that would be laid out in law for me. I wouldn't go to the Gaming Corporation which is in charge of the contract negotiations.

MR. DOWNE: The day-to-day running of the operations are fine. Anything to do with the larger picture, as I referred to in my opening statement, a policy decision, that I would consider part of government's responsibility from a government point of view, would then be brought back to the Cabinet to discuss.

MR. DEXTER: I guess that is my time, is it?

MR. CHAIRMAN: Yes, that was 30 minutes. I will move now to Mr. Leefe.

MR. JOHN LEEFE: Thank you, Mr. Chairman. My question is to the Premier. Premier, I note that in this morning's The Daily News there is a statement attributed to you in an article respecting the casino and this is purported to be a direct quote. "I said that I would do everything I could to make documents that we had available,". This was in an interview either with Parker Barss Donham or at least an interview with the media that he picked up. This is purported to have been said by you on Monday of this week. Do you recollect making that statement?

THE PREMIER: I have made that on more than one occasion.

MR. LEEFE: That would seem, then, to be compatible with several statements that I believe you have made respecting your determination to provide full disclosure to the committee in this matter. Is that correct?

THE PREMIER: That is correct.

MR. LEEFE: That being the case, could you advise the committee how many documents and the nature of those documents, that have been disclosed to this committee by your office?

THE PREMIER: There have not been any. We have not found any documents in our files which would relate in any relative way to the casino.

MR. LEEFE: Does that not strike you as being odd?

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THE PREMIER: It surprised me when I first found that. I thought there would at least be something, but there is not. I guess it is natural that the Minister of Finance is the minister responsible for the Gaming Corporation so correspondence would go to him. Also, that information and documentation that would eventually come to my attention would first go to Priorities and Planning to be screened. There was a mention of that. One that I was particularly concerned about was the memorandum of July 14th which was referred to. I checked on that. That had gone to Priorities and Planning and was found not to be pertinent and of a constructive nature and was merely sent back.

MR. LEEFE: So this is not a matter of these being documents in your office which also reside in other government offices which have been provided the committee. There is just absolutely nothing there.

THE PREMIER: Nothing there, but as you know, I did give the instructions to the Gaming Corporation and to all departments to make relative documents available.

MR. LEEFE: Have you provided the same directive to P & P, that is with respect to disclosing these documents?

THE PREMIER: Yes, but, as you can appreciate, P & P quite often do not keep documents. They will send them back.

MR. LEEFE: Send them back to?

THE PREMIER: Send them back to the departments.

MR. LEEFE: I see. So then we might, we should anticipate that any documentation that P & P has had would have been sent back to the Minister of Finance?

THE PREMIER: That is quite possible.

MR. LEEFE: The Minister of Finance is also bound to comply with your directive respecting disclosure to provide any and all of that documentation to the committee which is relevant to this matter.

THE PREMIER: I refer that to the minister of Finance.

MR. LEEFE: But that is your directive to the minister?

THE PREMIER: I will let him answer that for himself, because he is here, and rather than for me to speak for him, he could answer what he feels he should be doing. If it is all right, Mr. Chairman.

[Page 15]

MR. LEEFE: But your directive, you are the Premier.

MR. CHAIRMAN: Yes, before we actually hear from the minister, you were asked, sir, if you had given a directive to the Minister of Finance.

THE PREMIER: Yes. Well, I gave a directive across the board that we were to make documents that were relative to this inquiry public and available to the committee.

MR. LEEFE: Just before I go to the Minister of Finance on that, we have heard a great deal and read a great deal of the so-called Boudreau deal that was created by the former Minister of Finance, the gentleman whom you handily defeated to get your current job. I wonder if you could tell the committee, in your view just what was the Boudreau deal all about?

THE PREMIER: I have to be frank with Mr. Leefe, Mr. Chairman, I honestly am not sure to this day exactly what Mr. Fiske means by the Boudreau deal, whether he meant the arbitration, whether he meant the terms of settlement, or whether he meant one of the contract documents. I am not really sure what was meant. This has been mentioned from time to time but I have no reason to believe it is any particular thing.

MR. LEEFE: Mr. Chairman, through you, how soon after being sworn in as Premier, and I am not asking for the specific number of days but as closely as you can recall, was the Premier fully briefed on the relationship between the province and ITT Sheraton and the negotiations which were then under way?

THE PREMIER: The briefing took place over a period of time. As you can imagine there are a lot of ramifications in the arrangement that we have so it took place and perhaps, to some extent is still taking place.

MR. LEEFE: When the Premier took office, what was the status of the proposed agreement between ITT Sheraton, the casino and the government?

THE PREMIER: Well, we had a contract and then there were the terms of settlement. It became a question of, would the terms of settlement be incorporated in a contract and for that to be approved it had to go to Priorities and Planning and then subsequently, to Cabinet for approval.

MR. LEEFE: Mr. Fiske's contention is that you were at least very uncomfortable with the deal that had been tentatively struck by the government of your predecessor. In his view it appeared that you were going to reject that deal but then some time later you made an about-face and approved that deal. Did you in fact express concern over the original deal and were you prepared to reject it and then changed your mind, or from the beginning did you deem it to be the best deal possible?

[Page 16]

THE PREMIER: What I was concerned with were the allegations that Mr. Fiske made that the province was losing $20 million, that we were not enforcing our agreement with Sheraton, that Sheraton was able to get away with things that they should not be allowed to get away with under the agreement. Those were the things that I expressed to Mr. Fiske that I was concerned about and that I would look into and I appreciated him bringing those forward.

MR. LEEFE: After your investigation you were satisfied that the deal that Mr. Boudreau and the Savage Cabinet had tentatively approved was the best deal for Nova Scotia?

THE PREMIER: It was a good deal for Nova Scotia. The terms of settlement and the contract are good for Nova Scotia.

MR. LEEFE: You were and continue to be convinced that Nova Scotians lost no revenue as a consequence of accepting that arrangement?

THE PREMIER: They might have lost some revenues by not enforcing the $10,000 a day penalty but nothing in the order of $20 million.

MR. LEEFE: Well, if it is something less than $20 million tied to that penalty, can you give us a ballpark figure of what it might have cost?

THE PREMIER: I would say about $1.8 million, that would be maximum, if you have to assume that we had a good case for being able to make that charge stick that, in fact, it was Sheraton who caused those delays and that we were not involved or implicated in those delays.

MR. LEEFE: Mr. Premier, have you ever been contacted directly or indirectly by any of the officials or those representing, for example, legal counsel, ITT Sheraton and its interests with respect to this matter?

THE PREMIER: The only time I ever met any officials of Sheraton was Mr. Bill MacInnes brought some of the officials to my office when I was a Member of Parliament for Cape Breton-The Sydneys, to introduce them to me. That was the one and only time that I have ever met any officials of ITT Sheraton.

MR. LEEFE: You have had absolutely no contact with any of them since becoming Premier?

THE PREMIER: No contact whatsoever.

MR. LEEFE: Thank you, Mr. Premier.

[Page 17]

MR. CHAIRMAN: Mr. Fage.

MR. ERNEST FAGE: Mr. Premier, Mr. Finance Minister, great to see you here today. I know you both have very busy schedules and obviously you were aware the committee certainly wanted to hear your testimony and hear from both of you in regard to the allegations made by Mr. Fiske in regard to the casino operation. All Nova Scotians certainly are concerned with this situation, because when we look at what takes place in the press, in public in this province, over the last number of months, it calls into questions, certainly I feel, some grave concerns. Indicative of that is what we have seen in the press in the last month or two months.

We have seen a casino operation that has been virtually mum, has not been publicly acknowledged or at least expressed in the press that they have been having discussions with the Gaming Corporation. We have seen threats by you, Mr. Premier, if the construction did not resume, that the deal would be renegotiated, redone, Sheraton would lose the contract they had, all number of manifestations of concern. Sheraton continued to stay mum in regard to design, in regard to their request for extended hours and high rollers. Then we have seen those offered - perceived by Nova Scotians anyway - by your government as concessions in the press. No response or no request made by Sheraton in the press, but those things offered as, I don't know how you would put it, terms of pleading with the Sheraton, please come to the table and we will continue. Subsequently, we have seen Sheraton announce that they would restart the construction of the $97 million free-standing casino.

Mr. Premier, my first question is, during the leadership race, the casino obviously had to have been part of the discussions, the terms had to be of concern to you as it became more apparent that you in all probability would win the leadership race. Did you have discussions with Mr. Fiske or anyone from the Gaming Corporation in the run-up to winning the leadership?

THE PREMIER: No, I didn't.

MR. FAGE: Subsequent to winning the leadership then, the first briefing and contact occurred in that July meeting with Mr. Fiske?

THE PREMIER: There was a meeting with staff, particularly Mr. Thompson, to more or less give me an idea of what Mr. Fiske would be mentioning, that he had some concerns. I wasn't told exactly what the concerns were, but that he had some concerns, and that he wanted to meet with me to talk about those concerns.

MR. FAGE: When I look at the memorandum supplied by Mr. Fiske, concerning his concerns, the $10,000 a day is mentioned and the $20 million and in some context the $27 million loss. In discussions of what we have seen and what we have seen this fall, it seems to highlight some of the concerns coming out very strongly in my mind, and the four years is

[Page 18]

mentioned as a benefit, the $25 million. To Sheraton, the possibility of extra profit seems very real, if the project is put off, delayed or pushed forward and the time-frame extended past the 25 years.

In the estimates here provided by Mr. Fiske, and I assume from the accounting of Sheila Butler was where it would arise, it is forecasting $2 million extra profit for Sheraton because of the extension overrun per month return to them times seven and one-half months, in his estimates if the casino is not completed until May 15, 1999, is a $15 million windfall for Sheraton and not whether the Province of Nova Scotia was going to receive it in its coffers or that money come directly out of the pockets of Nova Scotians. I think that should be of huge concern, if that is indeed what has taken place.

[9:00 p.m.]

THE PREMIER: My concern is and always has been that we get the best deal we can for Nova Scotia and right now my concern is the continuation of the construction of the casino and that it be finished at the date specified. If it is not, the contract will stay clear on the penalties. As to what the financial situation is or could be, I, quite frankly, have not looked at that. Mr. Downe would be better able to comment on that.

MR. FAGE: There is no question that with the delays in the casino that the proposed date when it was going to be finished, certainly the time-frame has been pushed ahead and the probability of that extra revenue occurring to ITT Sheraton seems certainly, to me, very real, that that would occur. That would be certainly my impression and that would be a large concern, I would feel, to the taxpayers of Nova Scotia and the Government of Nova Scotia. That is where that money is being generated, the figures show it quite clearly, that money is coming out of Nova Scotians' pockets, going directly to Sheraton at no cost to their investment other than being able to protract the negotiations with your government, Mr. Premier.

THE PREMIER: I think that no one in Nova Scotia begrudges Sheraton making a profit. The question is, is the Government of Nova Scotia going to get what it was promised under the contract? The Minister of Finance has stated in his opening statement how the Province of Nova Scotia will benefit financially from the casino. It is a good arrangement but we still have a contract for the construction of the new casino. It has to be finished in September 1999. That date has not been changed. The casino still must be finished on that date or the penalties in the contract will come into effect.

MR. FAGE: On June 17th, Mr. Premier, you stated in the Legislature, ". . . no one in my office has ever dealt with ITT Sheraton.". However, David Thompson testified on September 2nd before this very committee that several phone call conversations with Mr. Larry Hayes and one meeting with Mr. Thomas and his solicitor had occurred. Were you aware of those meetings at that time?

[Page 19]

THE PREMIER: I was not aware of them at the time they took place but then that was Mr. Thompson's job as deputy for Priorities and Planning to get information and to get as much information to be able to judge the documentation that came before him. Mr. Thompson was not in my office. He was with Priorities and Planning which is a different office. It was the job of Priorities and Planning to take the documentation that comes to them from the departments, to give them due diligence before they are forwarded to the Priorities and Planning Committee of Cabinet and then ultimately to Cabinet.

MR. FAGE: Subsequent to learning of that meeting and those several phone calls, are you aware of what was discussed and what pertinent information was relayed?

THE PREMIER: No, I am not.

MR. FAGE: Mr. Chairman, I would like to switch to the Honourable Donald Downe for a few questions. Mr. Downe, in Mr. Fiske's testimony he alleges that you and he spent several hours at McKelvie's Restaurant concerning discussions on the Boudreau deal. Did that indeed take place?

MR. DOWNE: Yes.

MR FAGE: During those discussions, Mr. Fiske claims that you had no understanding of why Cabinet approved the Boudreau deal. Could you explain why he would make a statement like that?

MR. DOWNE: First, I met with Mr. Fiske. I have known Mr. Fiske and his family for a long time through agriculture and involvement with that. So certainly the Fiske family has been one that I have certainly respected and understood and have known for a long time. He requested a meeting to get together to talk about his concerns. Obviously, he was very upset. So I agreed to sit down and hear his concerns and I did that. That is really what happened in that whole situation.

MR. FAGE: He contends that you could not understand why Cabinet, as well as he, passed the Boudreau deal?

MR. DOWNE: What I recall indicating very clearly in the meeting, is there is the issue of Cabinet confidentiality and I was not in a position to be able to discuss the issues that happen within the confines of the Cabinet discussions. I was there as an individual, sympathetic about his concern. I could see he was very distraught and very upset and I did have a meeting with him and for that reason, I am not ashamed of that. I sat down in a very public forum and met with Mr. Fiske to hear his concerns as a friend would have done for anyone.

[Page 20]

MR. FAGE: I am certainly not questioning that meeting in any way, that was not the intent. The intent was to find out whether Mr. Fiske contends that you agreed with his statement that he couldn't understand why Cabinet had passed the Boudreau deal. That is the context of the question and I certainly have no problem with you sitting down with Mr. Fiske at a restaurant or anything like that.

MR. DOWNE: Well, whatever Mr. Fiske brought forward from the meeting from his perspective is his perspective. I sat down with Mr. Fiske in a very compassionate way to hear his concerns, as I have known him and his family for many years. However he wants to interpret that discussion is entirely up to him. What I did indicate to him, from a Cabinet confidentiality aspect, I am not in a position to discuss any of those specific details.

MR. FAGE: But that is not what I am asking. Do you agree with his statement that he says that you agreed with him that you could not understand why Cabinet passed the Boudreau deal? That is the question. He contends that you agreed with him that there was no reason to pass that deal. Do you agree with that statement, yes or no?

MR. DOWNE: Whatever he interprets at a discussion is entirely up to him. I met with him in a compassionate way and however he interpreted that process is up to him. I just indicated to him that obviously in detail of the conversation and as Minister of Transportation I am not even involved with the issue of the file.

MR. FAGE: Yes, but you are missing the point of the question I think, Mr. Minister. The point of the question is, yes or no, do you agree with the statement that he contends that you agreed with him that you could not understand why that deal passed Cabinet? That is a yes or no whether you agree with that statement. It has nothing to do with the confidentiality of Cabinet. He contends that you agreed with his statement that the deal should not be passed or you could not understand why it did pass. That is all the question I am asking, yes or no, do you agree with his statement?

MR. DOWNE: No, I think he interpreted that from a discussion; as far as the specific of that particular question, I do not even recall that question being posed. It was a meeting that I held with Mr. Fiske and he was in turn bringing forward his concerns with regard to what he interpreted was the situation and basically, if an agreement was made or not that is entirely up to him to make his assessment.

MR. FAGE: Mr. Chairman, I wish to pass to my colleague, thank you.

MR. CHAIRMAN: Thank you, Mr. LeBlanc, please proceed.

MR. NEIL LEBLANC: Mr. Chairman, I would like to ask a question to the Premier. In his testimony this morning he said, my position is to hold ITT to the terms of settlement. Could the Premier clarify for us, upon becoming Premier on July 18th we had a parameter of

[Page 21]

a deal signed which had been in a sense delayed by Mr. Fiske and he indicated that to this committee that he did not agree with the deal and he was trying to hold it back hoping that upon the assumption of the leadership by somebody new that perhaps common sense would come and they would re-evaluate that situation? Can you explain to the committee, you made mention of the terms of settlement which came about after so, if I can understand your comments, you are saying that a lot of the points of this deal were agreed to subsequently to you becoming Premier? Can you comment on that?

THE PREMIER: No, not a lot of the points of the deal. The terms of settlement, I think, were agreed to in April or May before I became Premier. Mr. Fiske told me that he was not - among the things he said - in favour of the terms of settlement. I looked into that and was told that the terms of settlement had been approved unanimously by the board of directors of the Gaming Corporation, including Mr. Fiske. My analysis of the terms of settlement did not indicate to me that there was any problem, and upon hearing that Mr. Fiske himself had agreed to the terms of settlement, that more or less erased his comments and concerns on the terms of settlement from my consideration.

MR. LEBLANC: I believe that Mr. Fiske's comments all throughout were that he gave you the briefing on July 29th and where he spoke so vehemently against the deal wouldn't have allowed you to take the position that he was in agreement with the terms of this deal.

The reason I am asking that question is that you had changes of regulations that the Sheraton wanted to bring about, which brought about 24 hour gambling and free drinks for people and limited credit allowed to the members. Mr. Fiske makes the assertion that the terms of the settlement were changed. If you read the agreement that was signed in September by the Cabinet, there are provisions in there that the Sheraton could have an opt-out clause that if the government didn't pass regulations which permitted it to operate in a way that they could be successful in their dealings and be profitable. If you would read that because he makes the assertion that those terms were not in what was agreed to in May. I don't have the document in front of me, it is forthcoming, and I will quote from it perhaps during our second round.

This government had allowed, in my opinion, an opt-out clause for Sheraton whereby if you didn't give those provisions to them, they could walk away from this project. Then you look at what happened this summer, where they held, in essence, a gun to the head of the Province of Nova Scotia in saying that we are not going to continue with this project until such time as you, Mr. Premier and your Cabinet, give us what we want.

So, I would like to know at whose insistence those terms were put into the agreement that the Cabinet signed in September? According to Mr. Fiske, they were not there in the May deal or whatever that was forwarded to Cabinet. According to Mr. Fiske, those were

[Page 22]

subsequently inserted into that deal. By doing so, the province, in a sense, could be held up, in my opinion, to blackmail.

THE PREMIER: I can assure the honourable member that the changes to the regulations were not brought about because of any terms in the contract or in the terms of agreement. They were brought about because we were looking at the possibility of what we would do if Sheraton decided they were going to pull out or if they just didn't abide by the terms of the contract and were forced to relinquish the operation. We talked to some other potential operators, all of whom felt that they needed to have the amendments to the regulations that were subsequently approved by Cabinet.

MR. LEBLANC: If those amendments were so critical to the casino, I ask myself why the Cabinet sat on it for about a year and one-half before they passed them? I go back to the point of the matter, that the Government of Nova Scotia allowed those provisions to be put into the contract, and while you assured the House that you had an ironclad deal for a $97 million casino to be built here, there were clauses in that contract that allowed the Sheraton to walk away, if they would have chosen to do so at that point. I believe that by doing so, you further undermined the position of the government in the sense of dealing with Sheraton in a forceful way.

I think all people in Nova Scotia felt that if you had signed a contract, whether they agreed or disagreed with it, we weren't going to be giving our position away again and again, and this is really what is happening because whether it was the penalties that were waived, the arbitration process that was walked away from, and we felt, according to the witnesses, that we had a strong position, and subsequently the government decided that wasn't the case, and we changed our mind. I would like to know at whose insistence those provisions were put into the terms of settlement?

THE PREMIER: They were approved by the Gaming Corporation, unanimously, and were then sent to the Priorities and Planning Committee, who did it with due diligence and were then subsequently approved by the Priorities and Planning Committee and the Cabinet.

I want to say in response, at no time did Sheraton ever state, certainly not to my knowledge, that the resumption of construction of the casino depended upon changes to the regulations. That was supposition at the time, as was the supposition that they didn't want to finish it because they felt they wanted to change the design or the casino was too large or because Starwood, that had recently bought Caesar's Palace, had owned ITT Sheraton, wanted to get out of gaming and concentrate on hotels. All of these were suppositions that came forward. At no time, to my knowledge, did Sheraton ever say that they wanted the changes to the regulations before they would resume construction.

MR. CHAIRMAN: Thank you. I have to move now to the Liberal caucus. Mr. Samson.

[Page 23]

MR. SAMSON: Just following up on what Mr. LeBlanc just raised, it is interesting when we look at Sheila Butler's testimony and the March 18, 1996 memo that was signed by Mr. Fiske to Minister Boudreau, requesting the exact changes to the regulations which took place recently, and providing quite a stellar defence for those exact changes. This is not something new, and this is something Mr. Fiske advocated himself. It is quite interesting to see in his materials that of all the documents he recalls, for some reason, he just can't understand where this one comes from.

One of the things we have to make clear here, and I don't feel that it is clear at all, the question coming up of why the government decided not to go to arbitration and the government interfered. You know yourself, Mr. Chairman, we have had four honourable members of the Nova Scotia Barristers' Society, namely Mr. Merrick, Mr. MacKeigan, Ms. Gordon and Mr. [Carl] Holm, all experienced in commercial law, solicitors who said that they themselves came to the decision that arbitration was not the best means to go. Now they all had their different reasons, and Mr. Dexter himself knows that reasons were outlined for that change.

I don't think it is fair to keep saying that this was a change that came from the Premier's Office. All of these witnesses clearly testified there was no political interference, and that they came to the conclusion that arbitration wasn't the best route to go. If we look back at Ms. Butler's own testimony, in the end, one of the Gaming Corporation's biggest concerns about going to arbitration was based on the fact, when they subsequently learned of Mr. Fiske's own actions, which were undertaken without the consent of the board, and they feared that once those actions came to light, that the position of the Gaming Corporation would be compromised at this arbitration. I think we have to be clear of what was taking place, right now.

Mr. Chairman, I am quite happy to report to the committee, based on our position the last time we met as to the usefulness of actually having to call these two honourable witnesses, that position has not changed, and from what we have heard today, I am pleased to inform the committee that the government members are waiving our time-frame. We ask that we proceed immediately along the agenda and move to the next round of questioning.

MR. CHAIRMAN: Thank you very much. We will do that. I will go a second round and offer the opportunity to Ms. Godin to ask questions.

MS. ROSEMARY GODIN: Thank you, Mr. Chairman. (Interruption)

MR. CHAIRMAN: Well, the question was just asked, how long we will do this now, given that the government caucus has chosen not to use its time. We do have a fair bit of time. I think at the very least, we should do 20 minute rounds here. (Interruptions) No, I don't think so. You have waived it already and if you don't have questions, you don't have questions; 20 minutes is the right . . .

[Page 24]

MR. SAMSON: We have an established pattern here, Mr. Chairman.

MR. CHAIRMAN: Yes, the established was we do it half an hour . . .

MR. SAMSON: Once again you are changing the pattern. Well, if that is the . . .

MR. CHAIRMAN: . . . I announced before that it would be 20 minutes in the second round.

MR. SAMSON: My waiving was so that the committee could move on to the next round of our base schedule of 10 minutes questioning each, which is left . . .

MR. CHAIRMAN: 10 minutes is a pure invention of your own. I announced at the beginning that it would be half an hour followed by 20 minutes each, which is the pattern we have established before. We are certainly not going to sit here in silence for half an hour.

MR. SAMSON: So it is 20 minutes.

MR. CHAIRMAN: It is 20 minutes, 20 minutes and 20 minutes, if you wish to waive your time, but we certainly won't sit in silence for 20 minutes in the second round. Ms. Godin, please proceed.

MS. GODIN: I hope that didn't cut into my 20 minutes. Mr. Premier, sorry if my questions are going to be a little disjointed, but I am just going to follow up on some things that have already been spoken about this morning. You were running in a leadership campaign to be Leader of the Liberal Party, and thereby to be Premier, and yet you said earlier in questioning today that no one approached you during your leadership campaign to discuss anything about the casino?

THE PREMIER: Well, there were questions during the leadership about the casino. As you know, a lot of people in Nova Scotia do not want casinos. So that is an element you have to understand in dealing with them. There were comments from people who said they did not want casinos and that was part of the discussion during the leadership race.

MS. GODIN: Is it fair to say that in fact discussion of the casino was conspicuously absent during the leadership campaign?

THE PREMIER: It was. It really even surprised me how little there was on the casino question during the leadership race.

MS. GODIN: Was that because there were people in the province who did not want a casino? Strategy-wise, was it considered just not to be a popular subject at the time?

[Page 25]

THE PREMIER: Well, I guess they felt that it really was not going to tell them anything. My position was that I would look into the question afterwards and I really could not say too much about casinos because I mean, I had personal views on casinos, but the fact of the matter was this was a business arrangement with the Province of Nova Scotia, with ITT Sheraton.

MS. GODIN: Okay. But it certainly wasn't, then, that someone had said don't talk about it?

THE PREMIER: No.

MS. GODIN: Okay, it was just the way things happened. All right.

Yesterday in answer to a question that I asked you in the House - actually the question that I asked was if you would disclose documents and there was a lot of noise in the House yesterday, but I think I may have heard you correctly when - you said that you had asked staff to look for the last couple of days.

THE PREMIER: Yes.

MS. GODIN: But you were asked, I believe it was by Dr. Hamm, in the House on June 23rd to do the same thing and at that time you said that you would instruct staff to look for documents. But that was June 23rd. Why are you saying that you just had staff look this week for documents?

THE PREMIER: We did do a complete search in June, so that was correct when I mentioned that to Dr. Hamm, but having been requested to appear before this committee, I felt it was prudent to ask my staff to check at least one more time to make sure there were no documents so I could be even more certain that there weren't any documents that we had released.

MS. GODIN: Okay. So you are saying this was actually a second search this week?

THE PREMIER: Yes.

MS. GODIN: You said earlier, in your opening remarks, that you took Mr. Fiske's concerns very seriously when he first approached you in July 1997. Ralph Fiske is not prone to making frivolous statements and that would be your history with Mr. Fiske?

THE PREMIER: I had known Mr. Fiske for a long time and it had been on more or less a personal basis. We have worked together on certain things and, I mean, he was a friend and he makes allegations like that, they were quite substantial allegations. I felt, certainly not only as a friend but as Premier, that I should look at these very closely.

[Page 26]

MS. GODIN: Okay. Did he tell you at that time that the Sheraton Hotel was charging the casino $1.2 million in rent and that an outside consultant had said that exceeded the $500,000 that it really should be? What did you do about that?

THE PREMIER: Well, there were allegations that we were not more or less keeping Sheraton's feet to the fire, so to speak, that under the contract they were getting away with things they should not be getting away with. The fact that maybe they were charging things because the casino was in the Sheraton Hotel that they would not be able to charge if it were a stand-alone facility was one of the concerns that he had.

MS. GODIN: Okay, so we will talk about that $500,000 that should have been charged in rent and then there was the $5.1 million that was in the Sheraton Casino's benefit. The additional error of $450,000 was double-charged rent for the Sydney casino. Then there was a $1 million cost for the construction of a new hotel restaurant, bar and coffee shop that should not have been picked up by the casino. It should have been the hotel. Were all these things checked out and are these the things that you are saying Mr. Fiske was wrong about?

THE PREMIER: No. Some of the things that he mentioned had already been brought to the attention of the Gaming Corporation and, as you may know, there was a period of time where there were heated negotiations between the Gaming Corporation and ITT Sheraton to resolve some of these disputed areas. Now, I cannot say they were all resolved but a great many of them were.

MS. GODIN: Okay. I had not come here today expecting to even discuss whether the casino was a good deal or not. However, you brought it up in your opening statement and have said so several times this morning that the casino was a good deal. In fact, if I can quote you from this morning, you said, ". . . it is a much better deal for Nova Scotia than it is for Sheraton.". I am assuming you mean financially?

THE PREMIER: Yes.

MS. GODIN: So the money going to the province through the operation of the casino must sound good but I am wondering what studies the government is doing concerning the money that is now needed by, for example, the Community Services Department, or the Health Department, as a direct result of the social costs, such as gambling addiction? Is any study being done on that?

THE PREMIER: Yes. There has been a study done by the Department of Health, which hopefully will be finalized before too long, dealing with problem gamblers. There will be a discussion of problem gamblers, more so with the VLTs, I think, than with the casinos but dealing with problem gamblers in general.

[Page 27]

MS. GODIN: Is it a fact that money is being taken away from alcohol and drug abuse and smoking cessation projects or programs to go towards gambling addiction?

THE PREMIER: No, that is not correct.

MS. GODIN: That is not correct?

THE PREMIER: No.

MS. GODIN: Also earlier you said that revenue might have been lost by not enforcing penalties. I think you mentioned $1.8 million. Are you prepared today to say that you will support enforcing penalties in the future?

THE PREMIER: That has already been waived, the post-penalties, but I will say unequivocally that we will be enforcing penalties in the future.

MS. GODIN: Thank you. Those are all my questions, Mr. Chairman.

MR. CHAIRMAN: I actually have some questions as part of our caucus as well, if I may. Mr. Premier, when Mr. Fiske came to us originally and spoke, he made some suggestions to us at the end of his testimony by way of changes of policy and practice, perhaps even legislative changes for the future. I wonder if you could help us by addressing your mind to a couple of the points that he raised.

I will start first with the question of the vacancy of the position that he formerly held. It is now more than a year since he resigned. I believe he resigned with a letter that was dated September 30, 1997.

THE PREMIER: Yes.

MR. CHAIRMAN: It is more than 13 months and the position is still vacant. I wonder if you can help us understand why there has been no replacement on an ongoing basis, I guess? I think what we have is just an acting chair or perhaps a vice-chair. I am not sure of what Ms. Gordon's exact title is but there has been no replacement.

THE PREMIER: Yes. I can only answer that on a partial basis and maybe Minister Downe can give more information but my information is that, and my feeling personally, is that Dara Gordon is doing an outstanding job as vice-chairman. I do not have any need to put anyone else there or see anyone else there. Whether she is chairman, or vice-chairman, to me, is not very important as long as she is doing the job that she is doing, which she is.

[Page 28]

MR. CHAIRMAN: As I recall her testimony, I think she said that she was somewhat anxious to return to the private practice of law. I am not sure if she meant that as a flat declaration or the pressure of the moment.

THE PREMIER: Yes. I am afraid that if we said you have to become chairman, she may not want to be chairman. I, quite frankly, like the job that she is doing.

[9:30 a.m.]

MR. CHAIRMAN: The second point that he directed our attention to had to do with, I guess, perceptions of conflict of interest, whether actual conflicts or perceptions thereof, and to illustrate that we might consider the position of Mr. Boudreau who had formerly been, as Minister of Finance, the minister responsible, although in his last year in Cabinet he was Minister of Health and not Minister of Finance and, therefore, with no direct responsibility.

However, after his resignation from government, of course, we see him moving to the position as counsel in the law firm that has and I believe continues to represent the casino operator. Whether this is seen as a potential conflict of interest, what I think people are concerned about is that, of course, we do have in Nova Scotia laws that restrict subsequent activities by Cabinet Ministers and also by civil servants but the term within which that operates is a limited term. I think it is six months.

THE PREMIER: Six months.

MR. CHAIRMAN: So what I wonder is whether you find that the statutory provisions that we have in place now in Nova Scotia to deal with this kind of situation are adequate or whether you think they might be changed in any way?

THE PREMIER: I had not given any consideration to that. Certainly it is something that we could look at in the future but I have not given any consideration to it.

MR. CHAIRMAN: Another point that he raised was the question of the role of Cabinet in dealing with the relations between the Gaming Corporation and the casino operator. Under the Statute now it is fairly clear that if Cabinet - and it is clear that it is Cabinet and not one member of Cabinet, even the Premier - wishes to become involved, even apparently at a policy level, it should be by way of directive.

I take it that directive would mean some kind of formal decision of Cabinet, followed up in writing. My question first would be, would that be your understanding of what directive is and do you also think that that is an appropriate way for Cabinet to exercise its powers?

[Page 29]

THE PREMIER: Yes. I am very determined, Mr. Chairman, that anything relating to the casinos not come to me directly, it go first to Priorities and Planning to be vetted and to have due diligence done upon it because I believe very strongly that if it comes to me, then there is going to be an allegation that I am involved in some way with the Gaming Corporation and that is not the case.

MR. CHAIRMAN: One of the concerns that has emerged is that the casino operator may have as a result of the history of its interaction with the Premier's Office taken the lesson that it might be appropriate for it to by-pass the Gaming Corporation from time to time and try to deal directly either with individual members of Cabinet, or the Premier, or members of the Premier's staff. I wonder if you have any suggestions to us as to ways that one might safeguard against this.

THE PREMIER: You have to have really the determination of Cabinet Ministers themselves. There is no policy you can put in place that would completely rule that out but it is a strong directive from me that under no circumstances are ministers to deal directly with ITT Sheraton. Minister Downe is the minister responsible for the Gaming Corporation. They deal with him personally.

MR. CHAIRMAN: If we can take as the time period, say from October 1, 1997, approximately the date of Mr. Fiske's resignation, to now, are you aware of any attempts having been made by the casino operator to deal directly with either you, other Cabinet Ministers, or members of the Premier's Office staff, or of the P & P staff?

THE PREMIER: I am not aware of them having made any attempt to deal with any of the Cabinet Ministers. I can say completely unequivocally that they have made no attempt to deal with me. If they have, they have been intercepted and turned back because no mention has been made to me of anybody from ITT Sheraton calling my office.

MR. CHAIRMAN: Mr. Downe.

MR. DOWNE: I have not met with ITT Sheraton people whatsoever. Any discussions that have gone on have, obviously, been dealt with through the Gaming Corporation and that is the process that should follow. So, I take the direction from them and they in turn brief me on a day-to-day basis but also if there are any other changes I in turn then go through the normal process as the Premier has alluded to. But I have not personally met with ITT Sheraton, as well.

MR. CHAIRMAN: In Mr. Fiske's letter of resignation, he suggests that not just his dissatisfaction with the terms of the settlement of the arbitration and what followed from that but more dissatisfaction than that, fairly strong language in his letter of resignation. Perhaps I am not clear on what steps you took after receiving that letter of resignation to look into

[Page 30]

what he said at that time. Were any steps taken at the time or did you assume that what he was referring to was just his dissatisfaction with the deal?

THE PREMIER: Well, I could not comment on those because they related to the time before I became Premier. All I could really say was that while I am Premier there will be no contact with ITT Sheraton by any member of the government. This whole matter of the casinos has to not only be properly set out but has to be perceived to be properly set out. We feel we have a very good arrangement in Nova Scotia. In fact, we have had enquiries by other jurisdictions as to how they can follow the same arrangement. One particular jurisdiction that will be following ours is British Columbia.

MR. CHAIRMAN: But you did not call him in and meet with him after his letter?

THE PREMIER: No, no I did not. Our reason, Mr. Chairman, was that he had made his decision. I was disappointed and thought honestly that at the time I said that he was obviously trying to - from what I knew at that time - defend the interests of Nova Scotia, I respected that and I applauded that. I was disappointed though that he felt he had to resign.

MR. CHAIRMAN: Mr. Dexter, I am sorry. There is a minute and a half still if you want it.

MR. DEXTER: Very quickly, it is hard to believe that there was a meeting in the Premier's office and that nobody took a note, there wasn't a minute taken, there wasn't a memorandum of follow-up to the file, it is very difficult to understand that. Do you think that a file was removed from the Premier's office?

THE PREMIER: No, I do not. David Thompson came and joined us after the meeting had begun. He wasn't there from the beginning and a large part of the meeting but I believe had came toward the end of the meeting.

MR. DEXTER: I guess I am talking about the meeting with Premier Savage?

THE PREMIER: I am sorry, I am talking about the one with Mr. Fiske.

MR. DEXTER: Well, the file would be in the Premier's office.

THE PREMIER: I don't know. What Dr. Savage did was Dr. Savage's means of proceeding.

MR. DEXTER: But files wouldn't have been removed when he left, or he wouldn't have removed files when he left?

[Page 31]

THE PREMIER: I can't comment, I don't know. All I know is that there is nothing in my office that should be disclosed relating to this matter.

MR. DEXTER: On July 29th, Mr. Fiske meets with you and lays out his concerns. At that time you know among other things that the official agent for the former minister is also the lawyer for the Sheraton Corporation. Did that cause you concern?

THE PREMIER: Do you mean Mr. Hayes?

MR. DEXTER: Yes.

THE PREMIER: No, it didn't.

MR. DEXTER: The exact thing that you tried to avoid is what happened? The perception that the two are linked together inextricably?

THE PREMIER: No, anybody who knows Mr. Hayes will know that there is no conflict.

MR. CHAIRMAN: Mr. Leefe.

MR. LEEFE: Mr. Chairman, through you to the Premier. The Premier has just said in response to a question of Mr. Dexter's that he has no knowledge of whether there were files removed prior to his coming into office either by Premier Savage or people who had been on Premier Savage's staff.

I can certainly understand why he wouldn't know that but at the same time, there is always a continuum as a government goes out and a government comes in, whether they are the same or different political Parties, there is always somebody who has overall responsibility for office files, for the Premier's personal files, who would have knowledge with respect to what was there under the previous government and what is not there when the new government comes in. It may be an executive secretary, it may be a secretary to Cabinet. It could be any one of any number of people. I wonder if the Premier could help us to understand who, insofar as he knows, would have been in a position when he became Premier, to know what files had been in the Premier's office and what files might not have been there when he assumed his responsibilities as Premier?

THE PREMIER: Mr. Chairman, there is only one person who worked in Dr. Savage's office who is working in mine and that is Jeanne Wilson-Clark.

MR. LEEFE: Jeanne Wilson-Clark would be in a position to know whether files that had been in the Premier's file prior to your taking office were not there when you did assume office?

[Page 32]

THE PREMIER: No, I honestly don't think she would. She was not Premier Savage's secretary and she didn't deal in correspondence.

MR. LEEFE: Well, it is normal practice to keep a list of files that are in the filing cabinets of minister's offices. Certainly, I know that. Are we to believe that there is no master list, that the files simply are there and that anybody could come along and lift a file out and nobody would know the difference unless they happened to go looking for that file and it was gone?

THE PREMIER: I can't comment on how Premier Savage conducted his filing system. All I know is that we did a search through the files that we have and did not find any pertinent documentation.

MR. LEEFE: How many days elapsed between the leadership convention and the time that Premier Savage resigned as Premier?

THE PREMIER: It was six days.

MR. LEEFE: Neither you nor any of your staff had any access to the Premier's Office during that six day period?

THE PREMIER: That is correct.

MR. LEEFE: So there may or may not have been files that were in the Premier's Office prior to your arriving there which were not there upon the time of your arrival?

THE PREMIER: I really can't comment because I don't know.

MR. LEEFE: To pursue this matter a little further, Mr. Robert MacKeigan was retained as counsel to the Executive Council. That is correct?

THE PREMIER: I believe so.

MR. LEEFE: That was by Premier Savage's Government. When you were sworn in as Premier, was Mr. MacKeigan still on retainer to the Executive Council?

THE PREMIER: I am not sure. As far as I know, he was still involved but I can't say that unequivocally.

MR. LEEFE: Is he still involved today?

THE PREMIER: I honestly don't know.

[Page 33]

MR. LEEFE: So you are the President of the Executive Council but you can't tell us whether or not Mr. MacKeigan is still on retainer to the Executive Council?

THE PREMIER: We haven't had anything come before Cabinet that would require the advice of legal counsel.

MR. LEEFE: Perhaps you could, upon returning to your office, determine whether or not Mr. MacKeigan is still on retainer to the Executive Council and advise the committee with respect to that.

THE PREMIER: Maybe Mr. Downe has that information, Mr. Chairman.

MR. LEEFE: Now you made it very clear, Mr. Premier, that you were insistent that there be full disclosure on the part of those involved with and on behalf of government respecting this matter. Mr. MacKeigan did appear here and, of course, could not have appeared here without your assistance and the waiver of lawyer/client privilege. I think all of the committee appreciates that, that you did that. In the provision of the documentation to the committee, Mr. MacKeigan has provided some documentation in its original form but he has also provided us with what I would take to be his synopsis of documentation. That is not quite the same as having the documentation itself. In keeping with your original directive to Mr. MacKeigan and your commitment to the House, to the people of Nova Scotia for full disclosure, will you undertake to contact Mr. MacKeigan and advise him that synopses are insufficient and that, in fact, you, as the client, require him to provide the original documentation to which he refers in his synopsis?

THE PREMIER: I have a great deal of respect for Mr. MacKeigan and I feel that he has been as forthcoming as he reasonably felt he could be. We have to remember, Mr. Chairman, that we are faced with litigation and there is some documentation that may be there which would affect the province's case in litigation. He is a solicitor and has been a solicitor for the Executive Council, as Mr. Leefe has mentioned, but Mr. MacKeigan is a very capable lawyer and I respect his opinion as to what he feels he has to retain and what he can make public.

MR. LEEFE: Surely, if he references a document in a synopsis, he must not deem that the document that he has referenced is so sensitive that it should not be made available to the committee. That strikes me as, at the very least, a contradiction, but I will pass on to my colleague.

THE PREMIER: I would like to, just if I may, Mr. Chairman, that before Mr. MacKeigan came, my instructions to him were that he would not have the protection of solicitor/client relationship and that he was to be as forthcoming as he could be to the committee without jeopardizing the case of the province in subsequent litigation.

[Page 34]

MR. CHAIRMAN: It may be that we may have to have some detailed discussions with Mr. MacKeigan just to go through it document by document and see what his problem is and see if we can sort that out. I think we can probably negotiate our way through this one.

THE PREMIER: Exactly.

MR. CHAIRMAN: Sorry, you were about to say you are yielding to Mr. Fage.

MR. FAGE: Thank you very much, Mr. Chairman. Mr. Premier, I would like to bring the comments and the discussion back to why Mr. Fiske originally resigned and his concern over what he felt was a travesty to Nova Scotians and the protection of Nova Scotians' interests that he made this entire issue public. I think it is important for us to have a little look. Mr. Fiske is a man well respected in Nova Scotia, a man of integrity and principle and he also was earning, I believe, in excess of $100,000 for the chairmanship of the Nova Scotia Gaming Corporation. Is that correct, that the salary range would be approximately that?

THE PREMIER: I don't know the exact figure but he was certainly well paid.

MR. FAGE: Certainly, there were comments made by some other witnesses allegedly challenging his reputation or character or his recollection of events somewhat and his motives regarding a civil suit that apparently is on the go subsequent to his resignation. I think it is extremely important to note, and would like to have your comments on, that the man resigned, he was not dismissed and he resigned over what he feels is on a principle point and that principal point being that Nova Scotia's interests or the interests of Nova Scotians were not protected properly in this deal and that the Nova Scotia Gaming Corporation was not in charge of what they were mandated to do. Do you feel that those allegations are correct?

THE PREMIER: No, I don't. I feel that the Nova Scotia Gaming Corporation is doing what it was mandated to do. I think they are doing an excellent job.

MR. FAGE: The terms of settlement, the Boudreau deal, are they synonymous to you? Are they virtually the same thing?

THE PREMIER: Well, as I said earlier, I have never been able to be certain in my own mind what was meant by the Boudreau deal. It is a term that could be used to describe the arbitration; it could be used to describe some negotiations; it could be the contract; it could be the original contract; or it could be the terms of settlement. I was never quite sure what was meant by that.

MR. FAGE: Okay. But the terms of settlement, I think we can all agree, are what happened. Principally they were agreed to in May and were introduced. I would like to refer back to Mr. Fiske's terminology in addressing it when it was passed by the Nova Scotia Gaming Corporation. He claims that the terms of settlement were presented to the Nova

[Page 35]

Scotia Gaming Commission's board of directors by Carl Holm and John Merrick on May 20, 1997. The board approved the settlement as a directive from Cabinet. I think that is extremely key: a directive from Cabinet. If the Nova Scotia Gaming Corporation, which was set up to negotiate and protect Nova Scotia's interests at arm's length from government, why would a directive from Cabinet be telling the board of directors to make that approval of those terms of settlement?

THE PREMIER: Mr. Chair, I was not party to the negotiations or the activities at that time. The only thing I can comment on is the question of political interference, which all witnesses other than Mr. Fiske have discounted.

MR. FAGE: I think the key word or key phrase - I should rephrase it - what I was getting at was his term, a directive from Cabinet, was the reason for the Gaming Corporation board of directors' approval of those terms of settlement.

THE PREMIER: No directive of a Cabinet in which I was involved, Mr. Chairman.

MR. FAGE: Okay, and those comments are fair. I mean, the directive would have come from your former colleagues and, in that regard, I think maybe I would like to direct that question to Mr. Downe. When the terms of settlement were approved by Cabinet, were you present?

MR. DOWNE: The terms of settlement in regard to what the final arrangement was to go ahead with the facility, I don't remember the specific meeting. I mean, we have Cabinet every week basically but, as far as the terms of settlement, in general terms I am aware of it. I was not the minister responsible and so there are a number of items that would be more pertinent to the Minister of Finance at the time.

MR. CHAIRMAN: I wonder, Mr. Fage, if you have mixed up two things here. As I understand it, the reference in Mr. [Carl] Holm's letter at that time was a comment about the whole interaction between the Premier's Office and the Gaming Corporation in May 1997. He is talking about that as having to do with it, is he not, about being a directive from Cabinet. Ultimately, there was a decision of the board of the Gaming Corporation to make a recommendation. That was in May 1997, which went to Cabinet ultimately. I think we have slid into two different things, one being May 1997 and the other being the September 1997 decision.

MR. FAGE: The reference is to the terms of reference for May 1997. What I am actually quoting from is the document, Mr. Chairman, provided to us yesterday, which are the briefing notes of the July 29th meeting supplied by Ralph Fiske. If you read those notes, Mr. Chairman, and go to recap, 8, you will be aware of where the line of questioning is coming from, and I have been phrasing the questions in terms of these are the assertions Mr. Fiske has been making and that is where we presently are.

[Page 36]

MR. CHAIRMAN: Yes, the time-frame then would be May 1997 that you are talking about.

MR. LEEFE: May 20th.

MR. DOWNE: I don't know if I am more confused now than I was before. It is interesting how the Chair is trying to straighten out the question.

MR. FAGE: I think the Chair is confused, Mr. Minister.

MR. DOWNE: Yes, that is what I find interesting but, anyway, the long and the short of this is obviously whatever decision was made or perceived as decisions made and given, perceived directives, I wouldn't be pertinent to any of that information anyway. I was not the minister responsible and those are all questions I would assume that this committee would have asked the appropriate ministers responsible during those times when they held those positions.

MR. FAGE: Thank you, but, Mr. Downe, you are a Minister of the Crown and the statement here that I am asking clarification for is the board approved the settlement as a directive from Cabinet, and I asked were you present when that directive was issued.

MR. DOWNE: The directive being the R & R or a directive that the . . .

MR. FAGE: The approval of the proposal of terms of settlement?

MR. DOWNE: Obviously, whatever the Cabinet decision would have been at that time, if there is a Cabinet directive and decision made from an R & R requisition or a memorandum then, if I was there, I would have agreed to the principle. I can't get into detail of that.

MR. FAGE: So you don't remember specifically if this item came before Cabinet for approval, is what you are saying?

MR. DOWNE: I wouldn't remember the detail of that. I know that I was not the minister responsible for it and there are a number of issues that are discussed every day in Cabinet.

MR. FAGE: A directive issued from Cabinet is not unusual? I mean, that is the context of what Mr. Fiske is saying here, that Cabinet would issue a directive and he said the directive was issued to the Nova Scotia Gaming Corporation in his statement here and, if that is not true, I would assume you would tell me it is not true. If it is true, it is true.

[Page 37]

MR. DOWNE: I am sure those questions were more pertinent to the ministers responsible of the day that would have had any comment with regard to that and I am assuming that would have been discussed. I am not aware of directives, that Cabinet gives directives for specific issues like that, but I just wouldn't be aware of that. It is highly unlikely or highly unusual that Cabinet gives a directive without having a specific piece of documentation that would be going forward asking Cabinet to either approve or reject. It goes through that normal process, as I indicated before. If it made it through Priorities and Planning and made it to Cabinet, Cabinet would have the right to either reject it or have it sent back for further clarification or better information or whatever. That is the normal process within Cabinet.

MR. FAGE: And the obvious question here, do you agree with what Mr. Fiske has said or do you disagree?

MR. DOWNE: No, . . .

MR. FAGE: I am not asking for an explanation of procedure. I am asking if you agree with his remarks here that a directive was passed by Cabinet and that directive informed the Nova Scotia Gaming Corporation, as he alleges here - you are a member of Cabinet and it doesn't say anything about the minister here - it says the board approved the settlement as a "directive from Cabinet". His exact words.

MR. DOWNE: I can't agree or disagree with that statement. I was not the minister responsible back in 1997. I wouldn't recall any of the specifics of that issue and so I really can't disagree or agree with his allegations one way or the other.

MR. FAGE: Thank you. I would like to pass to my colleague.

MR. CHAIRMAN: Mr. LeBlanc, you have a minute and one-half.

MR. LEBLANC: A minute and one-half, well, are we having another round, Mr. Chairman, or what is the situation?

MR. CHAIRMAN: I think there will be time for another round, yes.

MR. LEBLANC: In that case, rather than starting my questioning, I am just going to pick up on what he was saying. My recollection from Premier Savage's testimony here that subsequent to the meeting that he had in his office - and also Mr. Gillis's testimony - that it went to Cabinet, my recollection is that Cabinet approved it, the direction that the Premier was pushing forward to the Gaming Corporation and as such, there was a directive coming from Cabinet, but I am going by recollection myself. The documents are coming so close to the meetings that it is difficult for us to do the proper research that we would like to do.

[Page 38]

I just want to pick up on what Mr. Fage has said, that Cabinet did give a directive in that regard. I don't disagree that there is latitude for government to give direction to the Gaming Corporation because, by legislation, they have to do it. What we are arguing about is the process, and the process that was done at this time is that there was a procedure for an arbitration to go forward, there were disagreements on both sides and the Premier of this province - Premier Savage at the time - intervened, using the excuse that he used in his testimony it was because of the fact that the permanent casino project was in peril and that totally disagrees with the testimony of the lawyer, which is Mr. Merrick, that that was never a question. Mr. Savage never gave us an answer as to why the province had an about-face. I am making a statement rather than a question in this regard because my time has expired and I appreciate the committee giving me the time. When I come back, I will go to my other question.

[10:00 a.m.]

MR. CHAIRMAN: Yes, we will be back to you. Back to the Liberal caucus again. I offer 20 minutes. Is it going to be used? Okay, thank you. Mr. Fraser.

MR. HYLAND FRASER: Mr. Chairman, first of all I would like clarification on the time allocation from now until the end of the day.

MR. CHAIRMAN: This is a 20 minute round. Let me just see, this is the end of the second round. At 10:20 a.m. we will still have 40 minutes and it will be divided evenly.

MR. FRASER: If it is our choice not to use our full 20 minutes or whatever, do you pass it on to the Opposition or do you erase it off the clock?

MR. CHAIRMAN: Well, I am going to do a full round each time and each time you will get the opportunity to decide whether you use it or waive it.

MR. FRASER: Mr. Chairman, my first question, I guess, is to the Premier. Mr. Premier, I would like to ask you just to tell the committee, in the transition of Leader and Premier, what kind of a process is that? Could you kind of, in general, explain what happened from the day you were elected to lead the Liberal Party?

THE PREMIER: Well, during the days that I was elected, of course, the first thing, the most important thing, is selecting Cabinet and then to find out what the particular issues are, what is current, what has to be dealt with soon. For me it was particularly important because I had come from another Liberal Government, I had come from the federal government to the provincial government. In this case, there was a lot of discussion on energy issues because as the honourable member and the committee will know, the tribunal on the offshore was sitting. Their last day, their last morning, was my first day on the job. We had

[Page 39]

to make a presentation, albeit at the last, a 59 minute, 59 second presentation. So that caused a lot of consideration.

MR. FRASER: Who would have arranged your meetings for briefing? Did you have staff in place immediately after to . . .

THE PREMIER: Yes, there was also the question of selecting staff, of bringing staff into the office. That is not an easy thing to do and it takes time but the selection of briefings would have been then done by the Chief of Staff, Susan Trenholm.

MR. FRASER: Were you surprised that Mr. Fiske wanted to meet with you personally as an incoming Premier, or, I guess, as the Premier on that day?

THE PREMIER: I was a little surprised but I was also pleased, too. It was a chance to get an update from his point of view and also to have a chance to talk to him because, as I mentioned, I have known Mr. Fiske for some time and I looked forward to having a chance to speak to him.

MR. FRASER: Mr. Chairman, my other questions are for the Minister of Finance. I understand he stepped out for a brief reprieve, so I will pass on to the honourable member beside me and then I will take it back.

MR. CHAIRMAN: That is fine.

MR. SAMSON: Mr. Premier, I guess going back to the period of transition, if you could just, I guess, give us a better understanding - certainly Mr. Fiske made it clear that he felt that this issue was essential and everything - that when you entered as Premier, what was the scenario? I can only imagine how much information was coming in all at once but I guess if you could just give us an idea of what was going on around this time, the month of July especially, for yourself as the incoming Premier?

THE PREMIER: Well, there were a lot of issues, particularly ones that came up during the leadership. Mr. Fage will understand, one of the most pressing was the toll highway at that time because this was a concern in Colchester and Cumberland Counties and (Interruption) I haven't checked this morning but last I heard, it was still there.

MR. DOWNE: It is subsidized.

THE PREMIER: I did give my undertaking to look into this and do what I could to ease the burden. So I felt a particular obligation to deal with that. My colleague, the now Minister of Finance who was then the Minister of Transportation and Public Works, was the minister involved, so we did come down with our statement by September 1st but it was important to get as much information on that.

[Page 40]

It was very important to get as much information as possible on the energy issues. I had some briefings but they were very cursory and I appreciate the fact that the officials had to be very careful in what they told me because I had no standing. I was just a candidate during the leadership so it was important then to find out where we were going and where we had to discuss this and prepare a presentation for Monday.

There was only so much that I could do before that and, of course, I couldn't make any presentation. I couldn't even talk to the lawyers that we had retained until I had talked to John Savage because I didn't feel that I had any right to do that. So before I talked to the lawyers, I went to Dr. Savage to get his permission to talk to them, which he gave, and I will always be very appreciative to him for that. If he had said no, you can't talk to them, that would have put us in a pickle but he was very understanding and very cooperative.

MR. SAMSON: After Dr. Savage officially resigned the post as Premier, I guess during that stage and the setting up of P & P and trying to come up to speed with the different issues at hand, I am just wondering what kind of different things, I guess, at that time that you were undergoing and how the process was working for feeding that information, I guess, to you and your new staff?

THE PREMIER: That is the key, I think, new staff and not only new staff but a new Deputy Minister of Priorities and Planning. We were just trying to hit the floor running, so to speak. We knew that we would be questioned on all the issues to the same extent that we would be if we had been in administration for months or years, that we couldn't hide behind the fact that we were just new and give answers in that fashion. We had to be able to comment on an informative basis on the issues that were of concern to the press and to the people of Nova Scotia. So we had to concentrate on things that particularly were urgent at that time.

MR. SAMSON: I will just turn to my colleague, Mr. Fraser.

MR. CHAIRMAN: Mr. Fraser, back to you.

MR. FRASER: Mr. Downe, I am just wondering if you could tell the committee, briefly, when a minister is appointed to a new portfolio, what sort of briefing goes on?

MR. DOWNE: Assuming a new portfolio, the first issue is dealing with the deputy and his senior staff in regard to what the current issues are, what the major concerns might be and also dealing with everything from budgetary issues to policy issues. That is a fairly long process but you need to get up to speed very quickly with the portfolio, especially if you have two or three. So the process is very straightforward. It is really an educational issue for the first couple of weeks. At the same time, the overall running of the department has to continue on so you are dealing with the day-to-day issues that might come up with regard to any specific concerns.

[Page 41]

They normally give you briefing books that would basically break the back of an elephant to read and so you go through that. You then, in turn try to spend some time with not only the senior staff, but you try to get around and meet with the other staff. Departments are really a part of a family, a family of government. There are a lot of people working the Civil Service, certainly within Halifax and beyond, who are very dedicated Nova Scotians, caring and committed to the purpose of the department that you represent or the department that you are involved with.

For me personally, I find it very enjoyable getting out, especially in the field, or even in the departments in Halifax, to meet one on one. I know right now that I haven't had the time to deal with that as I previously did. I know when I first became Minister of Natural Resources, one of the big issues was getting out in the field and meeting all the 30 or 40 offices that we have throughout the province. Meeting with the staff, hearing their concerns, hearing their issues, talking about the vision and the direction and the focus that government has, talking about where we need to go as a department, and what our priorities are. We also have an opportunity to hear feedback about specific concerns that they might have and, from a minister's point of view, I find that very important.

One of the very first things that I also try to do with a deputy and point out to the deputy is that the day-to-day running of an operation is their responsibility; they are paid to run the day-to-day activity. As minister, my job is to deal with the overall general policy issues of government, to deal with the broader issues as to direction and, of course, as a member of Cabinet, the responsibility and role that I would play with regard to bringing initiatives forward.

Becoming a minister is certainly a baptism by fire to some degree, but it is also phenomenally interesting. It is a great challenge, it is a great honour to hold those positions. I also find it an extremely educational process as well, and just having the honour and the opportunity to meet great Nova Scotians working within the Civil Service, and moving forward with an agenda that is hopefully building a strong sense of self-reliance and prosperity for the province and, at the same time, having compassion for those who need help.

MR. CHAIRMAN: Mr. Fraser, I am certainly prepared to allow a lot of latitude, but is there any chance you could ask some questions that could help the process along?

MR. FRASER: That is exactly what I am doing, because I wanted to know about the responsibilities and what type of briefing. The next question I am asking - I hope you will allow me to get an answer to it - I want to know what the acting chairman of the Gaming Corporation, what sort of reporting, responsibilities and briefings you would have received from that individual?

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MR. DOWNE: With regard to the Vice-Chairman, Ms. Gordon, who, in my view, is doing an excellent job; she is a very professional person. She deals with the day-to-day activity of the Gaming Corporation. They, in turn, look after the normal correspondence, the normal activities, the day-to-day issues that come forward and are doing a very good job. Not only her, but the overall staff there. With regard to the major issues, we try to meet at least once a week to be briefed on a number of issues, whether it has to do with ALC or dealing with VLTs or dealing with the casino or dealing with whatever aspect of gaming that we are involved with. We normally try to have a meeting every week for at least an hour to bring forward issues that are currently being discussed, and developing long-term policies.

Whenever we run into anything that I consider being important from a policy point of view, from a government point of view, my responsibility at that point is to bring that issue forward to the Premier, to Cabinet, to P & P and, normally, we do that on a regular basis. That way, the government is very much aware of the activities and some of the broader issues that the corporation is involved with and, secondly, the ability for the corporation to get some direction is important, so having a minister responsible is very important, that is also dealing directly with Cabinet. I would say it is a very positive relationship, from a professional point of view, it is very specific and we deal with the current issues of the day.

MR. FRASER: If the acting chairman of the Gaming Corporation had a problem, would you expect that she would report that to you, or would she run off to the Premier and bypass you?

MR. DOWNE: Ms. Gordon is not acting chairman, she is Vice-Chairman. Ms. Gordon would deal directly with me, and that is the process that we have. I am her minister and that is the way we deal with it.

MR. FRASER: I would like to move in a little bit of a different direction. The casino that is under construction now and the benefits to the province down the road. I am wondering if you could kind of review those for the committee.

MR. DOWNE: Thank you very much. There are tremendous benefits to this casino. Sometimes the issue doesn't get out there. The fact that we now have a $97 million facility being constructed, creating jobs for the construction industry within this community, creating jobs and paycheques for people in Nova Scotia is clearly a benefit. Not only is it on the construction side, whether it is engineering or whether you drive a cement truck or you work in the concrete side or whatever aspect of the construction, I understand there are about 250 jobs on the construction side, there is the engineering and so on and so forth.

Besides that, when the facility is completed, we currently employ, I believe, about 350 Nova Scotians in the casinos now, that will be ramped up to some 785 people working on a regular basis, full-time job in the casino. Those are 785 jobs that are important to those people to have a paycheque to be able to spend money in Nova Scotia. Those are Nova Scotian jobs.

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Thirdly, the province itself gets, right off the top, 20 cents out of every dollar that goes through the door. Every dollar that is put on a bet in one form or another, 20 cents of that goes back to the province. On top of that, 65 per cent of the profits come back to the province, 65 per cent come back to the general revenue of the Province of Nova Scotia. And thirdly, $100 million committed over four years.

Those are all dollars that are used in the general revenue, that are used whether to do with health care, whether to do with Education or Community Services or any other portfolio in this government. Those dollars are generated and brought back into general revenue and displaced and put back out into the general public through different department activities.

Notwithstanding all of that, the issue of this construction is being built without one cent of government money. This is private sector money. This is Sheraton's money. This is their corporate paycheque that is putting into this process, and it is not the government of the day that is putting money into making it work. This is private sector money going in, creating jobs, creating economic benefit for the Province of Nova Scotia, and in turn revenue to the province which in turn goes back out into other benefits for Nova Scotians, whether it is health care, Education, Community Services, roads or whatever other portfolio it requires.

MR. FRASER: I guess the decision or the approach made some years ago that Nova Scotia would have a casino or two casinos, to finally obtain that goal, there were roadblocks put up, and I guess in normal government negotiations and you, yourself, being in business, when you decide to do things which require decisions to be made, it is not always easy, but decisions have to be made and you have to proceed to the goal. In this case, that is what happened. It wasn't an easy process to get from a decision back some years ago to a casino operating full-time down the road.

MR. DOWNE: This was a very serious issue for everybody in government. We are moving into an area that I believe for me as a minister was one that I had some concerns, whether you agree with gaming or not, but this is a very big issue. I know that we tried to be extremely cautious as a government moving forward on this particular issue of the casino. It is one that I am sure the Province of Ontario thought through greatly; I am sure it is one that the Province of Quebec thought through in a very sensitive way; I am sure the Province of Manitoba did the same thing. It is a new initiative, it is a new industry as such.

The government of the day, and I, as a minister of the day, a member of the Cabinet of the day, took that responsibility very seriously. It was one very tough decision and one that took a lot of soul-searching and thinking and moving forward with it. A decision has been made and now I am happy to say that we have taken it. One of the interesting points is that in listening to presentations being made by H Division and others, gaming in the Province of Nova Scotia is alive and well. Because it is behind a closed door, we think that there is nothing going on. The reality is that there is a lot of gaming going on in the Province of Nova

[Page 44]

Scotia. There were a lot of private gambling houses. I was not aware of it, so it is, like, out of sight, out of mind. The reality is that it was going on.

What we have done as a government is brought in, I believe, the most regulated system anywhere that we have in the country. We have the Alcohol and Gaming Corporation that in previous questions was talked about. They do studies on a yearly basis. They are probably, and they are at arm's length of government, they are without question in my view probably the most knowledgeable body anywhere in this country with regard to gaming. They are the regulatory, or they are the quasi-judicial body, that deals with that side of it. We also have now brought into play guidelines that are saying that if we are going to have gaming, there is no point in closing our eyes and saying that because it is behind a door it does not exist. It is now out front. Now we regulate it and now we control it. Now we have clearly the ability to manage it in a way that it was never managed before.

As the Premier indicated earlier, the Province of British Columbia clearly realizes the importance of a solid foundation of regulatory control is, in fact, it is imperative. They looked everywhere to find the best system and guess where they came? They came to Nova Scotia because they believe the programs that we have in place in this province are by far world-class, leading edge, by far the most disciplined and controlled mechanisms that they have been able to find. For that, the Province of British Columbia wants to embellish those particular guidelines within their own framework of dealing with the issue of gaming and gambling in the Province of British Columbia.

So for that, I think the Province of Nova Scotia has said, if this is happening, we had better regulate it, we had better discipline it, we had better legislate it and we had better control it. That is exactly what this administration has been able to do and for that, I believe Nova Scotia is better off because without that, the back-room situations, behind the closed doors gambling houses, you know, you think of the Prohibition Era, this was like a Prohibition Era of gambling where there were gambling houses in the Province of Nova Scotia where people were going and illegally dealing with the issue of gambling. I think for that the Province of Nova Scotia has moved very strongly in a very proactive way of saying, let's turn this stone of problems over and deal with it, instead of hiding it under the carpet. That is why this province, I think, has done an excellent job and I compliment the people involved in the organizations that are dealing with the legislation.

MR. FRASER: The Province of B.C. could learn a lot from us, Mr. Chairman.

MR. CHAIRMAN: Thank you. We are into a third round, 12 minutes each.

Mr. Dexter.

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MR. DEXTER: Thank you. I just want to continue with the minister for a second because it is interesting. As you know, the gaming industry is one that makes a profit for everyone except the person who uses the facility. The manufacturers of the machinery make a profit. The gaming operator makes a profit, in this case the province makes a profit and the person who pays for it, of course, is the person who is the player.

In Ontario, as an example, some of the casinos have patrols in their parking lots where they go around from car to car to look out for children who have been left in the cars while their parents are in gambling. What we are into with gaming is a real two-headed coin. It may be income, but it has the potential to create tremendous difficulties for people in the province and I . . .

MR. DOWNE: If I may comment on that, I do not think anybody in this room would disagree with the statement that there are issues of problem gamblers in this province, with or without a casino, with or without the regulatory system we have in place today, there are people that have problems with gambling. We have people that have problems with drinking and I am sure that if people wanted to patrol lounges and beverage rooms to see if children were in those cars, I am sure they would be a little surprised maybe in what they find there.

What we have tried to do, Darrell, is accept that. That is without question, I agree with you that there are people that have really serious problems with addiction. It is a very serious issue to society and for that we are working on studies and determinations as to how things can be changed to make it better, you know, what causes that addiction and what can we do help mitigate that problem of addiction.

I will give you an example of that, the issue of the VLTs for an example. The status quo of VLTs is not acceptable anymore. We need to move to new types of VLTs that are less addictive, that are less repetitive, and the new generation of machines that becomes more in line with the issue of enjoyment. I mean it becomes a recreational activity vis-à-vis the core of those that want to deal with it.

Notwithstanding the issue that when you think of addiction and gambling, you think of automatically either a VLT or the casino. I mean we have bingo. People go to bingo day in and day out. There is phenomenal amount of money in the Province of Nova Scotia that is derived from bingos. That goes on and on and on. So there is an issue there that we have to deal with as a society, as government, as elected officials, and this government is trying to deal with that issue through programs, through involvements of community organizations, as well as through the issue of studies and determinations of how to mitigate those problems.

MR. DEXTER: Mr. Premier, what the Minister of Finance has been talking about and what you talked about earlier is really public policy with respect to how you approach the gaming industry. In this case, in what we have examined over these last number of weeks, this is, I think, over and above maybe the practicality of what the province actually lost as a result

[Page 46]

of the deal. It is the public policy question that is the most troubling because in this case what appears to have happened, when we put together these documents, is that a Minister of the Crown is alleged to have made commitments to a casino operator which has affected, materially, a case that was in arbitration. That is what arises out of all of these documents. My understanding was, that is exactly what was supposed to be avoided by setting up a Gaming Corporation so that politicians are taken out of the loop in these kinds of matters. I would just like to hear your comment on that.

THE PREMIER: Mr. Chairman, as Mr. Dexter said, it is an allegation and that is all it is. I think it is quite a serious one, quite frankly, and my experience is that politicians have acted very responsibly. Certainly in my experience as Premier of Nova Scotia, all members of the Cabinet have treated this very seriously and very responsibly.

MR. DEXTER: There is a small item I would like to deal with. Mr. Fiske in one of his lists of documents, or submissions, says that Sheila Butler keeps detailed daily diaries of the meetings she has. These were never offered and they were never produced; copies of them were never produced. (Interruption) Well, we did not know they existed.

What I would like to see, and this is to kind of finish off this stuff, I would like to see the originals of those diaries, not copies, but the originals which, of course, would be returned to her. Can we see to it that those are forwarded for examination?

[10:30 a.m.]

THE PREMIER: I think that Ms. Gordon in her letter has opened the door to working with the committee on documentation that they feel is pertinent to their inquiry. So I would take Ms. Gordon up on her offer and discuss it with her.

MR. DEXTER: I will and, in fact, I am going to draft some correspondence with her and ask specifically. I will go to the Gaming Corporation, if necessary, but I would like to have an opportunity to review the diaries because if they were made at a time-frame that is consistent to when these negotiations were taking place, then we will have an opportunity to view what Ms. Butler was thinking at that time.

I have to say of all the people who came before the committee, Ms. Butler I found to be the most hard to understand. She made a point at the end to, I think, to try to undermine Mr. Fiske's credibility by talking about him making a call to her and asking for documents after he was gone. She made the point that he called and she said, I refused, I cannot do that. It would appear from Mr. Fiske's submission, he says, "She failed to advise that, for the most part, the few Gaming Corporation documents which I have retained in my possession were delivered to me, by her, at her insistence.".

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The government members here have made great hay about a former employee of the Gaming Corporation keeping confidential documents of the Gaming Corporation. Do you have concerns about a present employee of the Gaming Corporation who would, first, give apparently confidential documents to a person who is going to be proceeding in a lawsuit and apparently in contemplation of that litigation and, secondly, that she would then appear before a Legislative Committee and try to turn that on its head, to question the integrity of a witness?

THE PREMIER: Mr. Chairman, I have nothing but the highest regard for Ms. Butler. She has done an outstanding job. She has conducted herself extremely well. I cannot find any reason to criticize her activities.

MR. DEXTER: Do you understand what I have asked? She has (Interruption) Well, then I guess the question would be, Mr. Premier, have you taken any steps to find out whether or not Ms. Butler, in fact, did release documents to Mr. Fiske?

THE PREMIER: Mr. Chairman, Ms. Butler was here. I would ask the committee to refer to her testimony.

MR. DEXTER: But that is the point, she does not say that.

THE PREMIER: She was here to speak for herself and I cannot speak for her.

MR. DEXTER: But at the end of her testimony she goes out of her way to make this point, to say this guy phoned me up, knew I was still an employee of the Gaming Corporation, and asked me for confidential documents. She does it in a way which is clearly designed to attack his integrity but yet at the same time she does not say, apparently, that she took the time to call him, to prepare documents which belonged to the Gaming Corporation, and to deliver them to him.

THE PREMIER: Mr. Chairman, I think that Ms. Butler in her testimony did everything she possibly could to be forthcoming with information before the committee and I think she is to be commended. Now, what the result of what she has said is, I cannot say. She was asked questions, she gave information and that is what she was asked to do while she was here.

MR. CHAIRMAN: We will pass now to Mr. LeBlanc.

MR. LEBLANC: Mr. Chairman, I want to ask a few questions of the Premier. What I want to understand is, on July 29th Mr. Fiske came forward to you and made representations that the deal was flawed and gave a long litany of the reasons why he felt that the Gaming Corporation had been compromised. That is a point of record on here that he has said that. Who did you instruct to investigate this situation because obviously, as Premier,

[Page 48]

when someone comes forward with those types of accusations and they were accusations, then you would have wanted to review it, so who reviewed it for you?

THE PREMIER: David Thompson who was then the Deputy Minister of Priorities and Planning.

MR. LEBLANC: So who would David Thompson have asked for advice when he was doing this?

THE PREMIER: Well, he talked to legal counsel, he talked to the staff in Priorities and Planning, he talked to the . . .

MR. LEBLANC: So legal counsel was whom? Was that Mr. MacKeigan?

THE PREMIER: It could have been, I didn't enquire as to who the legal counsel was but the Gaming Corporation and whomsoever he felt could add information to what Mr. Fiske said.

MR. LEBLANC: Did he have extensive discussions with Mr. MacKay?

THE PREMIER: Yes, he spoke to Mr. MacKay.

MR. LEBLANC: Mr. Spurr, also?

THE PREMIER: I don't know if he spoke to Mr. Spurr.

MR. LEBLANC: From all of the testimony that we have had before this committee the three people that were the biggest movers and shakers in the so-called intervention by government into the Gaming Corporation were specifically Mr. MacKay, Mr. Spurr and also, Mr. MacKeigan. It concerns me in a sense that if Mr. Thompson did his research and his so-called investigation, he would have started with those three individuals because I think Mr. MacKay would have been - what capacity was Mr. MacKay in at that time, can you explain that to me?

THE PREMIER: Mr. MacKay at that time was the Deputy Minister of the Technology and Science Secretariat.

MR. LEBLANC: But if he had asked those three individuals for direction, those three individuals themselves had been given considerable direction by Cabinet that they felt the deal shouldn't go to arbitration, it should be signed and . . .

[Page 49]

THE PREMIER: Mr. Chairman, just on that, the only one I can say he did speak to of the ones that Mr. LeBlanc mentioned was Mr. MacKay. I do not know if he spoke to the others.

MR. LEBLANC: Okay, the other ones you surmise that he . . .

THE PREMIER: No, I don't even surmise, I honestly don't know.

MR. LEBLANC: Okay. My point in the matter is that if he had referred to the major players in this thing, those three people who I think I could safely say were the movers and shakers in trying to change the deal, their impression, before he started the process, if he was going to depend on their testimony the chances of him coming out with an impression that would be different than what the deal was at that time would be very minimal. Do you agree with that?

THE PREMIER: Well, no. This was an important step for us because our administration was new. We wanted to get off on the right foot. We didn't want something that would blow up in our faces so for that reason we took and I, particularly, took the allegations of Mr. Fiske very seriously. As I have said, I have known Mr. Fiske for a long time. He came forward with allegations which were quite serious so we took them very seriously, I certainly did and we investigated them thoroughly.

MR. LEBLANC: What I want to understand is that as of July 29th, was the deal completed? I know that there was an intent and you had your staff investigate but I want to know if you, as Premier, on July 30th had said, I am not comfortable with this deal, could you have initiated steps to change it?

THE PREMIER: Yes, at that point because it hadn't been passed by Cabinet.

MR. LEBLANC: That is right. So you still had the latitude to change the deal?

THE PREMIER: Yes.

MR. LEBLANC: The last question I wanted to ask - because my colleague, the member for Queens, would also like to ask some questions and we have limited time - is that the Minister of Finance has indicated that Dara Gordon is the Vice-Chairman but she is not the acting chairman. Can you tell the committee as to whether or not the appointment of the chairman is something that is being contemplated by government at this present time?

THE PREMIER: Not at the present time. Dara Gordon is doing an outstanding job, in my opinion.

[Page 50]

MR. LEBLANC: Can I ask you a question as to whether or not her appointment would have to go through the Human Resources Committee?

THE PREMIER: As I say, we are not contemplating appointments, so we haven't . . .

MR. LEBLANC: I asked the question that if you were going to make a change would the appointment go through the Human Resources Committee?

THE PREMIER: As I say, I haven't looked at that yet and we may not make an appointment. I would have to look at that when the time comes.

MR. LEBLANC: I am not trying to be difficult, I am just trying to understand something here. I think the fact of the matter that we discussed Dara Gordon as Vice-Chairman and not acting chairman is important because I want to know if - and you are saying you are not going to make an appointment. You are not considering one at this present time.

MR. PREMIER: We are not considering one.

MR. LEBLANC: I am asking, if you as government and you as Premier were to bring about, to decide that you want to fill that position, whether or not you will commit to putting that appointment through the Human Resources Committee, whether or not it has to go through that committee by legislation? There are some appointments which are exempt from the Human Resources Committee, and I would like to know if you would commit, no matter what happens? You have to consider the problems or the perceived problems or whatever you want to call them that this whole process has brought about. The fact of the matter is that we have had 12 meetings of this committee specifically on this one issue as to whether or not you would commit as Premier to ensuring that if you do make an appointment to that, that it would go through the Human Resources Committee?

THE PREMIER: Well, Mr. Chair, it is certainly not my intention to sidestep Human Resources. The process has been set down and it is my feeling that we should respect the process and cooperate with other Parties and other committees.

MR. LEBLANC: I am just trying to understand.

THE PREMIER: The only thing I am saying . . .

MR. LEBLANC: I am saying, being here on the floor today, and I do not have the exact Act in front of me, I want to know. This position may be exempt from having to go through the Human Resources Committee so I am asking you if and when, if you so choose to make that appointment, whether you will commit, even if it is not required by legislation to go through the Human Resources Committee, that you would commit to doing so? That is what I am asking.

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THE PREMIER: I don't want to be difficult, Mr. Chairman. I mean, I am quite satisfied with Dara Gordon in the position she is in. I don't want to give any indication that we are going to make a change because, quite frankly, if this situation would continue for another five years, I would be very happy. My concern is that we are going to lose Dara Gordon in the position that she has and I don't want to do anything that would encourage . . .

MR. LEBLANC: Well, she has indicated that she has no intention of staying.

THE PREMIER: That is what I am concerned about. I feel that I would like to have her stay as long as we possibly can retain her.

MR. LEBLANC: I think I got my answer, Mr. Chairman.

MR. CHAIRMAN: Are there any other questions from the PC caucus?

Mr. Leefe.

MR. LEEFE: Mr. Chairman, back to the matter of files and whether in fact there were files that were moved in advance of the current Premier taking office. Mr. McKeigan was retained by whom, Mr. Premier?

THE PREMIER: I can't say. I was not there when Mr. McKeigan was retained.

MR. LEEFE: Would it be fair to assume that probably it was by Mr. MacKay who was the Premier's deputy minister?

THE PREMIER: I honestly couldn't say. One could assume, but I really do not feel I should.

MR. LEEFE: Well, Mr. MacKay did, in fact, advise the committee that he, on behalf of the Premier, had retained Mr. McKeigan, so that is a note that you might want to set aside.

Mr. MacKay has a reputation for being a copious note taker. I would have to believe that Mr. MacKay would have made copious notes respecting this particular matter. Mr. MacKay, as the Premier's deputy, would have created files associated with his responsibilities, which one would have to assume would have included those notes, unless they were in a personal diary. Mr. MacKay may or may not keep a personal diary, we do not know that, and I wish I had asked that question when he was here. On the assumption that Mr. MacKay did keep notes of meetings and did make observations by way of notation, would it be your assumption that those notes would normally be kept in his files as the Deputy Minister to the Premier?

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THE PREMIER: I couldn't say exactly how Mr. MacKay conducted his affairs. He was not Deputy Minister of Priorities and Planning during the time that I have been Premier.

MR. LEEFE: He was not.

THE PREMIER: No.

MR. LEEFE: But he was prior to that time?

THE PREMIER: Yes.

MR. LEEFE: So those notes if, in fact, they are extant would be in the files of Priorities and Planning not in the Premier's office?

THE PREMIER: If they are anywhere, that is where they would be or Mr. MacKay may have taken them with him, I don't know.

MR. LEEFE: Would you undertake to have the current Deputy Minister of Priorities and Planning undertake a thorough review of the files to ensure that any documentation in those files relative to the Gaming Corporation and Mr. MacKay, would be made available to the committee?

THE PREMIER: Well, I would be prepared once again to repeat my directive where people can have information if they could make it available. That is my policy.

MR. LEEFE: The current Deputy Minister at Priorities and Planning is?

THE PREMIER: Is Patricia Ripley.

MR. LEEFE: So will you undertake to specifically address that matter to Dr. Ripley?

THE PREMIER: That directive is in application where it fits right now. As the member knows, Mr. Chairman, we have litigation and I don't know what would be available and what would not be available. I would suggest that if there is a concern and if the committee wants information or wants a particular accounting of information, that they can make that request. I don't want to target any one particular department. I am just assuming that when I give a directive that people will abide by it. If the committee wishes to follow this up then we will cooperate.

MR. LEEFE: Thank you.

MR. FAGE: Thank you, just one . . .

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MR. CHAIRMAN: Actually, Mr. Fage, if I can just interrupt. We actually are finished the 12 minutes for your caucus but my guess is we might get a short minute at the end. Mr. Samson.

MR. SAMSON: Mr. Chairman, just going back to the Minister of Finance and speaking about the permanent casino. I am just wondering what this means for downtown Halifax and what the reaction has been from the surrounding businesses with regard to the building of a permanent casino?

MR. DOWNE: My understanding is that organizations such as TIANS, the Hotel Association, some private restaurateurs, and other local businesses realize that the Sheraton certainly has been a benefit with regard to activity in the Province of Nova Scotia, certainly in the area here in HRM. I understand that they see the benefit with regard to increased sales of dinners, even local bars are saying there is a fair amount of activity. So overall, from a tourism point of view, I guess the assessment has been that there have been some benefit within the area and bringing people here to be involved. From an economic point of view, I guess there has been some very positive initiatives, notwithstanding the $97 million facility and the hundreds of jobs that are going with it.

MR. SAMSON: I am just wondering also, Mr. Minister, based on the regulatory changes that were recently made, how does that impact your average Nova Scotian and also, how does it compare to the rest of the gaming industry both in Canada and the United States?

MR. DOWNE: Really, the changes here when we talk about, I think that comments were made earlier about extra hours, it is Tuesday, Wednesday, and Thursday going from 16 hours a day to 24 hours a day; Tuesday, Wednesday, and Thursday, an extra eight hours each day that the facility is open. Secondly, they provided for those who are not Nova Scotians, not from here, the ability to be able to access credit and so they have established that for high rollers, principally, the ability to establish a line of credit. Thirdly, they have the high-roller room, and I guess principally that is for people who gamble $500 to $1,000 or $10,000 or $20,000 at a time. I guess the only gambling I am really into is farming, that is a big enough gamble for me, but nevertheless people will do that. For those people, they are providing free alcohol. That is open to anybody, whether you are Nova Scotian or not.

The other issue I think we should realize is that the Alcohol and Gaming Authority monitors this facility as long as it is open, as well as the RCMP. Of course, they are trained in the issue of watching for people who are under substance abuse. If somebody is drunk, they shouldn't be there, absolutely. So they monitor that, to make sure that there is not an abusive situation happening.

The other changes that the Gaming Corporation has recommended to me that was unanimously agreed to, is some new games. I am not familiar with the games, I can't remember the names of the games, but there are a few extra table games, and I am not really

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all that clear about the specific names and how they are played. I just don't get involved with that. But they are regular changes.

The question is, how does this interact with the rest of the country? Whether it is Ontario, whether it is Quebec, whether it is the Eastern Seaboard, or Manitoba, any area or jurisdiction that has casinos, basically have the same level playing field with regard to how they are operated. The Province of Nova Scotia simply has harmonized to the other jurisdictions, whether in Manitoba or Ontario or Quebec or other areas where there are casinos. For that, what we have done is brought in a level playing field; a level playing field that basically says that all jurisdictions are treated the same.

Before that decision was made, I understand that TIANS had supported the changes that were being recommended. I understand that the hotel industry here had supported it. I understand that there are some other people in the community who have supported those from a tourism point of view, from a level playing field point of view, realizing that there is a major benefit, especially bringing in these high rollers, whoever they are, to come to the Province of Nova Scotia to play the games. Those people not only spend money at the table, they also spend money in other activities, whether they go out for dinner or supper and shopping and things of that nature. They see this as a win. There is a win to the community in regard to tourism.

The regulatory side is basically extending hours of operation for Tuesday, Wednesday and Thursday from 16 hours a day to 24 hours a day; providing credit for out-of-province gamblers; access to booze in the high-roller room, but highly regulated by the Alcohol and Gaming Authority as well as the RCMP; and some games that are changed, the new games that are brought into it. So those are basically the changes that harmonize now to the rest of North America.

MR. SAMSON: Again, on the question of the impact on Nova Scotians, you have clearly stated your understanding, as the Premier has and as I am sure we all will, on the problems of gambling. There has been a lot said about these regulatory changes and the impact on Nova Scotians. I guess going back on that issue, how this affects your average Nova Scotian. You have made mention of these high rollers, I am just curious, from your information - I don't expect specifics from you, but I guess I am just curious - are these high rollers from Yarmouth or Meat Cove or are they from up in Cumberland (Interruption) No, not Richmond. What are we talking about here, just to the point of clarifying how these changes affect Nova Scotians?

MR. DOWNE: I really don't have a clear definition of a high roller, other than what has been indicated about the high-roller room, which is where people bet between $500, $1,000, $2,000, $10,000, $20,000. If you are able to do that, I guess then you are a high roller. If you are doing that on a regular basis, then you are a high roller. I assume that would be the definition that would be referred to. Who does it apply to in Nova Scotia? It would

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apply to anybody who is prepared to risk their money at $500, $1,000, $2,000, $5,000 a time. That would be the criterion, I guess.

MR. SAMSON: With the changes in credit and that, how does that affect the outcomes?

MR. DOWNE: There is no effect whatsoever in Nova Scotia. This credit rating issue is simply for people who are non-Nova Scotians. These are out-of-province visitors to the area, the high-roller level. The same benefit is given to those who travel to Ontario, to Manitoba, to Quebec. So we are providing the same benefit for those. It is not a matter of providing credit to Nova Scotians and that is not the issue, that is not what we are saying. It is only to provide credit for out-of-province gamblers, high-roller gamblers.

MR. SAMSON: I guess one of the serious issues that surrounded this whole drawn-out inquiry has been the issue of process and involvement and that. I am just wondering, in your experience as a Minister of the Crown, what your approach has been in dealing with other departments, different, maybe, secretariats under your control, and as minister, what you see as your role as to receiving information or involvement, I guess, in your different departments that you have held and the approach that you would take?

MR. DOWNE: We have a very professional staff and people involved in government across the board, in my view, in Nova Scotia. We should be very thankful for the professionalism that we have within the system. When I have information presented to me by staff, I take it seriously. I try to deal with it from a recommendation point of view, if it is a departmental activity. If it is a broader issue of government policy, those recommendations then would be drafted up in R & R in a memorandum, then in turn be presented to P & P to be reviewed and analyzed and then to Cabinet, if it is a major policy initiative or change.

MR. SAMSON: I guess since your time as Minister of Finance and in light of all the allegations that we have heard, what do you see your role as it relates to the Gaming Corporation and its operation and how the Premier's Office plays into this, I guess, if any role at all?

MR. DOWNE: Since assuming the portfolio back in April 1998 my involvement has simply been to work with the Gaming Corporation. We meet on a regular basis. I try to meet at least once a week for at least an hour or two and to go over the current issues. If there is a concern or an issue that could be, in my view, an issue of policy change or affecting in a large way the province, then I would obviously, in turn, present those issues to the Premier or P & P or Cabinet, involving my colleagues, as would other Cabinet colleagues inform the Premier, P & P and Cabinet about any major issue that would be affecting their portfolios. That is part of our due diligence and our fiduciary responsibility as ministers.

[Page 56]

MR. CHAIR: We are down to one last minute. I don't know if there are any very quick questions that we can get in here. (Interruption)

Your time is over. There is one minute left.

If not, I will thank the Premier and the minister for appearing here today. Very interesting.

MR. DOWNE: Just in closing I want to thank you for the professionalism that we have seen here today and the questions that were posed and appreciated; hopefully, we have been able to enlighten the process.

MR. CHAIRMAN: I remind members of the committee that we do not meet next week, which is Remembrance Day. We do meet on November 18th to deal with the Resource Recovery Fund. In the meantime, I would ask members of the committee if they might think and perhaps talk informally among themselves about how we might proceed with this present matter and, particularly, on the question of documentation, some of which we discussed today.

Mr. Leefe.

[11:00 a.m.]

MR. LEEFE: Mr. Chairman, with respect to that, I believe that we have to have a meeting here in the Chamber to make a decision about where we are going to go with this matter, if we choose to go further or if we are determined that this is as far as this committee can go. Everything has been done in a public forum to date. I think that meeting, even though it is a procedural meeting, should occur in this forum. It is probably a meeting which will not take a great deal of time but I would urge that the committee deal with that as the next agenda item after the meeting two weeks from today, so probably three weeks from today.

MR. CHAIRMAN: That seems very reasonable. Thank you.

We stand adjourned.

[The committee adjourned at 11:01 a.m.]