HALIFAX, WEDNESDAY, MAY 19, 2004
STANDING COMMITTEE ON PUBLIC ACCOUNTS
8:00 A.M.
CHAIRMAN
Mr. Graham Steele
VICE-CHAIRMAN
Mr. James DeWolfe
MR. JAMES DEWOLFE (Chairman): Good morning, ladies and gentlemen, on this dreary May 19th Wednesday morning. I would like to call the Public Accounts Committee meeting to order. Today we are going to be investigating federal-provincial transfer payments and equalization agreements. With us today we have Department of Finance and Intergovernmental Affairs representatives. I would like to start off by introducing the committee members, starting with the Chairman of the committee, Graham Steele.
[The committee members introduced themselves.]
MR. CHAIRMAN: I'm Jim DeWolfe, Vice-Chairman of the committee. with us today, of course, as usual, is the Auditor General, Roy Salmon, and Mora Stevens. I'm going to ask Alison Scott, good morning to you and your committee, and I will ask you to introduce your representatives and then I believe you are going to lead off with a presentation.
1
MS. ALISON SCOTT: Thank you, Mr. Chairman. I would like to introduce today myself, Alison Scott. I'm the Deputy Minister of Intergovernmental Affairs of Nova Scotia. With me is Vicki Harnish whom I understand is familiar to you as the Deputy Minister of Finance; Liz Cody, the Assistant Deputy Minister of Finance, Dan Troke who is responsible for equalization agreements with the Department of Finance, Shulamith Medjuck from the Department of Community Services who has the responsibility for the early childhood development file in that department and other intergovernmental files. I am waiting for Dr. Saunders to join me from my department who has a copy of the presentation for you. We had a little technical difficulty in our office this morning and I do apologize for the delay but he is on his way.
MR. CHAIRMAN: Ms. Scott, perhaps in his absence you could start off with a presentation.
MS. ALISON SCOTT: I will.
MR. CHAIRMAN: Also, it would allow sufficient time for members to ask questions.
MS. ALISON SCOTT: With the indulgence of members, perhaps I could ask the Deputy Minister of Finance to lead off with her presentation. I appreciate that it's a little bit out of order. The presentation I was to give you is to describe the role of the Department of Intergovernmental Affairs in intergovernmental relations, basically what we do as a department and I can tell from the expression on some of your faces that you are a bit concerned so maybe I will fly without the paper.
MR. CHAIRMAN: If it is your wish to start off with the other presentation, that would be acceptable, I believe.
MS. ALISON SCOTT: Well, if the members are concerned, I can . . .
MR. CHAIRMAN: It was part of your presentation anyway, was it?
MS. ALISON SCOTT: Yes.
MR. CHAIRMAN: Carry on, please.
MS. ALISON SCOTT: Well, maybe the Deputy Minister of Finance - if you have concerns at all, I will happily go - just from the expression on faces, I detect there is some concern.
Intergovernmental Affairs is the coordinating agency for the Executive Council in the field of intergovernmental affairs. It is our mission to provide leadership in the development
of corporate strategies for Nova Scotia's relations with other governments, that is provincial, federal and international. There are 13 other agencies responsible for intergovernmental affairs across the country. The PCO, the Privy Council Office of Canada, the provinces and the territories all have their own Intergovernmental Affairs offices. The last time we did the count in 2002, the average size of provincial and territorial government offices ranged from 3.5 to 78 full-time positions.
The typical role of Intergovernmental Affairs agencies includes facilitation and coordination of the jurisdiction's relations with other governments. We advise departments on how to deal with specific intergovernmental issues within the context of the general approach and the priorities of the government. We coordinate the development of provincial policy on major federal initiatives which affect a variety of departments and on other issues related to the institutions of federalism, provincial jurisdictional interests and constitutional policy. We haven't had a lot to do with the latter issue, constitutional policy, lately as the federal government has not chosen to engage in that issue. I would point out that the Council of the Federation, the group of Premiers from the 13 jurisdictions, have reawakened some interest in constitutional issues again, and we are working on that file. We also coordinate the preparations for the Premier's meetings with the First Ministers, his colleagues from other jurisdictions in the Council of the Federation, and the regional Premiers meeting, the Council of Atlantic Premiers.
We are responsible for reviewing and negotiating certain federal-provincial-territorial agreements and assisting departments in the development of provincial positions for negotiations and cost-sharing agreements, and advising on the content of agreements. We monitor the federal-provincial-territorial and international governments' approaches to our province and anticipate intergovernmental issues as we see trends evolving, nationally and internationally. It's our responsibility to advance the interests of the province in its relations with other governments in Canada and in the international community. We don't have strong ties - we don't have a huge presence in the international scene, but we do make regular contact with the Boston office, for instance, of the Canadian Consulate offices and Washington, we do manage to attend there, when possible.
In the area of core business of our department, we coordinate the overall intergovernmental strategy for the Nova Scotia Government to ensure corporate approach to other governments is taken and to try to ensure the results of negotiations with the Government of Canada and other governments address Nova Scotia's needs as fully as possible. We build on regional alliances and try to promote issues of fairness for Nova Scotia and Atlantic Canadians, and promote regional programs and services which benefit our citizens. That's not only through the work of the Council of Atlantic Premiers, but also in our work with the Council of the Federation, with the Council of Atlantic Premiers, the membership. We advance Atlantic positions, coordinate Atlantic positions before we approach our federal colleagues with a view to trying to strengthen our position at the table with the other 13 jurisdictions.
It's our responsibility to enhance Nova Scotia's image and diplomatic, cultural and economic ties abroad, with direct responsibilities for managing protocol, trade policy within and outside Canada. Two divisions of our department include, in addition to the federal-provincial-territorial issues, protocol and trade policy. It's our responsibility to increase the awareness and understanding, both in the Nova Scotia Government and in other governments, of the province's position relative to key intergovernmental issues.
The structure of our department, myself as the deputy minister; I have an Executive Director, Alastair Saunders, who has joined us, beside Shulamith Medjuck; we have staff specializing in federal-provincial-territorial relations; staff specializing in provincial and territorial relations, as it relates to economic, social, environmental, regional and legal issues; we have the Provincial Trade Office, some of you may know Greg Bent and the one other staff person who assists Greg; and the Protocol Office, which carries out the protocol functions for the Province of Nova Scotia. We have 16.6 FTEs in total, as of 2004-06.
It's a small office by Canadian standards. It's not the smallest, but it's certainly a long way from the 78-member office that Ontario has and Quebec might have. Since 1995, I can tell you we have negotiated, in the Province of Nova Scotia, over 100 agreements, federal-provincial agreements and interprovincial agreements, but I won't pretend that our offices had full involvement with all of those, because with a staff as small as we have, that would be impossible. I might point out that prior to 2002, the staff was about two and a half or three people, fairly consistently since about 1988 or 1989. We've had some growth in recent months, which has allowed us, I think, to more fully participate in other departments' work, but until that point in time we were quite constricted in our ability to do that.
[8:15 a.m.]
On issues related to the matters that you've asked us to appear about, I understand you have specified: equalization; Canadian Health and Social Transfers; health funding from the First Ministers' arrangements of 2003-04; equalization related to the offshore revenues; and the Early Childhood Development Agreement. Those are the issues that I have prepared for in coming here. I just wanted you to note that of those agreements, so-called, as they relate to the revenues coming to this province, only the Early Childhood Development Agreement and the offshore accord are the actual products of agreement.
The other instruments that you have asked us about are the result of - and I use the word carefully - "unilateral" decisions by the federal government. While there is consultation on equalization, there is no sign-off per se on equalization agreements. With the First Ministers' meetings of 2003-04, there was no signed document. Specifically in 2003, Premiers at the First Ministers' meeting, to a number, refused to sign the document. I suppose you may have questions about that, but in any event that was the result of the 2003 First Ministers' meeting.
The only two that are actually negotiated, in terms of the ones you've asked me to come to speak about, is the offshore accord, which was, of course, signed in 1986, and the Early Childhood Development Agreement, which Ms. Medjuck has primary carriage of. I'm pleased to have with me today the Department of Finance, which is consulted with prior to the federal action with respect to equalization. The experts in that department are the people who meet face to face with the federal government in the consultation process.
I will turn it over to Ms. Harnish for the presentation with respect to the finance arrangements.
MR. CHAIRMAN: Ms. Harnish, a brief comment.
MS. VICKI HARNISH: We're pleased to be here today to speak to you. We understand you want to talk with us about transfer payments, equalization, CHST, and health reform monies. We've already introduced my two colleagues from the Department of Finance. I think you know Liz Cody, who's our Assistant Deputy Minister, and Dan Troke would be new to the committee, he's the Director of Revenue & Fiscal Transfers. Both of these individuals have spent many years, back and forth with Ottawa, talking about and negotiating, or at least discussing, these transfer payments.
As you are aware, Nova Scotia has joined all provinces. We've all expressed our concern to Ottawa over the fiscal imbalance that exists within this country; that is to say the federal government has access to revenue sources that go well beyond their spending responsibilities while, clearly, provincial governments do not have sufficient revenues to meet their spending responsibilities. This concern is publicly recognized and documented most recently by the Conference Board of Canada in their February 2004 report entitled, Fiscal Prospects for the Federal and Provincial/Territorial Governments.
In the second of two reports studying this issue, the Conference Board reported that the balance between revenue and spending is much more uneven for the provinces and territories than it is for the federal government under the current fiscal regimes. While the federal government is set to eliminate its interest-bearing debt through ever-greater surpluses, reaching $78 billion by 2019-20, the provinces and territories will remain in a deficit position throughout the forecast period.
Equalization and the Canadian Health and Social Transfers are the two main vehicles that exist to address the fiscal imbalance, whether it is between the federal government and the provinces, or amongst the provinces. While our own source revenues are continuing to grow in Nova Scotia, which reflects a strong economy, our spending pressures in the critical health services continue to outpace that growth. These federal transfers are therefore critical to our ability to continue to provide comparable levels of programs and services throughout the province.
While Nova Scotia is receiving its fair share of the transfers pursuant to the existing formulas in place today, we have major concerns over those formulas themselves. Under Section 36(2) of the Constitution, "Parliament and the government of Canada are committed to the principle of making equalization payments to ensure that provincial governments have sufficient revenues to provide reasonably comparable levels of public services at reasonably comparable levels of taxation." That quote comes directly out of the Constitution. All provinces, and that would be equalization-receiving provinces and those who do not receive equalization have been lobbying the government for many years for a stronger equalization program.
Since the early 1980s, the federal government has taken steps to contain the growth and equalization transfers by lowering the standard from a national average to a five-province standard, imposing a ceiling on the growth and transfers and by reducing the revenues covered within the formula. As a result of all of these measures, Nova Scotia has received $3.1 billion less in transfers under this program than it would have otherwise received over the past two decades. During that time our fiscal capacity has improved from 71.1 per cent to 77.4 per cent of the national average. In contrast, Ontario's fiscal capacity is 104 per cent of the national average, and Alberta's is almost 147 per cent.
The Senate Standing Committee on Finance has also studied this issue and tabled a report which fully supports our concerns over the lack of a 10-province standard, full inclusion of revenue sources and fair and equitable treatment on renewable resources. Simultaneous to the restraints on equalization, the federal government has imposed restraint on their CHST transfers for health, post-secondary education and social service programs. While the cost of health care alone has continued to escalate at an annual average rate of approximately 8 per cent since 1996-97, federal CHST transfers were dramatically reduced in the mid-1990s, and are only now just returning to the early 1990 per capita levels.
In the meantime, the province has had to shoulder an increasing share of these essential program costs. Nova Scotia continues to join all provinces in calling on the federal government to recognize the inadequacy of its funding levels. The province is also concerned that the formula is now based on equal per capita transfers, which has resulted in millions of dollars being redirected away from the least wealthy provinces, into the wealthier Provinces of Ontario, Alberta and British Columbia. The current formula also does not recognize the differences in need arising from the differing health status and the differing demographics of provincial populations.
Nova Scotia continues to work with other provinces and territories to develop where possible, common messages and priorities in dealing with Ottawa. It is critical that we continue to hold the federal government accountable for its shared responsibilities in ensuring adequate and comparable levels of programs and services in this province. We would now be pleased to answer any questions that you have as they relate to these programs.
MR. CHAIRMAN: Thank you, Ms. Harnish. We will start with the NDP and as usual we'll allow 20 minutes for each caucus, starting now, at 8:24 a.m.
Mr. Steele
MR. GRAHAM STEELE: Thank you, Mr. Chairman. This is a very important topic involving really large sums of money. If there's anything that's surprising, it's that you all don't appear before this committee more often because of the importance of the amounts of money involved. Right now I'm very concerned about where things are at with federal-provincial financial relations. On the highest level, on the political level we have a Progressive Conservative Government, whose answer to everything right now is it's Ottawa's fault. There's hardly any issue that comes up in the House these days that doesn't sooner rather than later come around to the government saying it's Ottawa's fault. If only Ottawa came around, everything would be better.
Our Liberal Party, for reasons that are not entirely clear to me, feel that it's their job to defend to the nth degree everything that Ottawa does. Nothing is Ottawa's fault, to them everything is the government's fault, leaving, as usual, the NDP as the only voice of reason in here. We have . . .
MS. HARNISH: Do you want me to comment on that?
AN HON. MEMBER: I'll comment on that.
MR. STEELE: I haven't asked a question yet, so no. But seriously, we're at the stage now where our Premier regularly criticizes Ottawa. We have the Prime Minister, the federal Finance Minister, they come through here, appear not to meet with officials, say things that are harshly critical of our government, like when Ralph Goodale last blew through town, he said some pretty tough things about our current government. My first question is simply this, to Ms. Scott, if you could choose one word to describe the state of relations between the federal government and Nova Scotia, what would it be?
MR. CHAIRMAN: Ms. Scott.
MS. ALISON SCOTT: I don't know if it's capable of description in one word. It's a very complex relationship, and relationships don't lend themselves to one dimension. It's not something I believe that can be captured in one word. At the moment we are involved in a very critical time in federal-provincial relations because of the health care issue. It is affecting our province very seriously as you know perhaps better than most Nova Scotians. It's also a critical time for Nova Scotians as a result of the activity in our offshore and the opportunity to maximize benefits and fully accomplish the intentions of the 1986 Offshore Accord are at play and at stake. If we are to address the critical issues, it is necessary that we pursue them with vigor.
MR. STEELE: If this were a marriage, I would say that we're in big trouble, because we have two Parties that don't seem to be talking to each other and when they do talk to each other, they're blaming each other for everything. Let me go down the list of things that we have tried to achieve and haven't. The Campaign for Fairness went nowhere, achieved nothing. The federal government moved to a per capita CHT and CST against Nova Scotia's wish. The federal government moved to a 10-province standard for measuring equalization, against the province's wish. The federal government moved to 50 per cent inclusion of user fees in equalization, against the province's wish. The government has imposed a census-related overpayment and, as far as I know, has refused to forgive that money. The best they've been willing to do is extend the repayment period even though it represents taking back money that had already been spent.
There's been a unilateral imposition by the federal government of a new five-year equalization formula, very much against the wishes of Nova Scotia. The standard of living in Nova Scotia continues to be lower than 80 per cent of the national average. All of this, according to the province's own figures, has cost the province somewhere in the neighbourhood of $375 million. In return, we have one small bone that's been tossed our way, the reset of the offshore trigger, which is worth $25 million this year and about $7 million next year.
It's very hard for me to look at this list and see successes. Is Ottawa putting the screws to us, or is this just the lot in life of a small province on the periphery of a large country, that we just can't get them to listen? What have we achieved in federal-provincial financial relations?
MR. CHAIRMAN: Ms. Scott.
MS. ALISON SCOTT: In terms of the Campaign for Fairness, I believe we have had success.
MR. STEELE: What is it?
MS. ALISON SCOTT: It's $32 million, reset of the trigger.
MR. STEELE: You attribute that to the Campaign for Fairness?
MS. ALISON SCOTT: Yes, I do.
MR. STEELE: Okay, anything else?
MS. ALISON SCOTT: I believe, as well, there are other accomplishments that the Premier has brought to Nova Scotia since coming to office. It's a little hard to run through them quickly, but most recently. . .
MR. STEELE: Name a couple.
MS. ALISON SCOTT: Most recently, the taxation changes with respect to the treatment of offshore oil and gas rigs. Until the Premier lobbied the Prime Minister and the Minister of Energy, the taxation regime in Canada was such that it was prejudicial to continued exploration in our offshore as offshore vessels were less favorably treated than onshore structures. So it was more cost-effective until this tax change for oil and gas companies to pursue exploration onshore than in our offshore. That's one very concrete example which was accomplished more recently. There are ongoing products of - my friend, Dr. Saunders is whispering to me - oh, yes, $280 million for the tar ponds which happened while I was on vacation so it was not top of mind for me.
[8:30 a.m.]
MR. STEELE: And you would attribute that to the vigorous lobbying of the provincial government as opposed to an impending federal election?
MS. ALISON SCOTT: Absolutely, we have an office set up and dedicated completely to the operation of securing funding from the federal government and to manage the tar ponds operation. So, yes, I believe that that's as a result of very vigorous lobbying, not only of the Prime Minister, but of the local MPs and I do believe that's a fairly significant accomplishment in and of itself.
MR. STEELE: When I look at this paper though that was prepared and dated March 31, 2004, and it was prepared for the Standing Senate Committee on National Finance - now, I have a personal view of the Senate (Interruption) I haven't asked you a question yet.
MS. ALISON SCOTT: But I haven't finished the answer to the first question you asked me. First of all, you went through a list of things you said that we have not had any success with. I have given you a couple of concrete examples where I believe we have had considerable success. In addition to that, you outlined a number of situations that have occurred in this country which were over the objection of Nova Scotia and those were - I have to get my glasses on to read my own handwriting again, forgive me - with respect to the per capita funding of CHST, the 10-province standard, against our wishes, the 50 per cent user fee inclusion in the equalization formula, the census relief that the federal government won't do, the unilateral equalization arrangements imposed upon the provinces.
All I can say to that, Mr. Steele, is that our province was not the only province objecting. In fact, every equalization-receiving province and some not-equalization-receiving provinces objected to the various approaches that the federal government had taken with respect to the issues that we've just run through; Nova Scotia is not alone. You asked me the question as to whether or not this is the product of a small province, a small jurisdiction on the periphery of the country, having little influence with Ottawa. I would point out that we
are 3 per cent of the population, but we don't stand alone. Our positions were supported by other Atlantic Canadians, by Saskatchewan, by Manitoba, by Quebec in some instances, and by Alberta in others. So we're not alone and the federal government still chooses not to listen.
MR. STEELE: Of course, I wasn't suggesting Nova Scotia is alone because the conclusion you come to when you read all this material is that Ottawa is not listening, or they'll listen and then go their own way. What they seem to be doing is calculating how much money they want to spend and then fixing the rules so that that's how much money actually gets spent. What the provinces seem to be doing, including Nova Scotia, is saying there has to be some principle behind this. There has to be some rationale that's sustainable about why the formula is what the formula is and not just because the federal government doesn't want to spend more than an amount they've fixed for some other purpose. I do hear what you're saying and that we've had some successes, although in the big picture they seem relatively minor.
When you read this report to the Standing Senate Committee - now, I personally feel that there is no political institution in the country more useless than the Senate, but that's a personal view and I understand that's not shared by everybody, but exactly the same presentation was made to the Standing Senate Committee three years ago. The Standing Senate Committee agreed with us and nothing changed and there is no reason to think that anything is going to change as a result of yet another presentation, to yet another Senate Committee, you know. A Senate Committee endorsement plus $1.20 will get you a cup of medium coffee at Tim Hortons.
This document is a litany of complaints about how Nova Scotia is not getting what it wants. So I'm having a hard time sitting here today seeing the successes. So if what we've been doing up to now hasn't been working, if we have so many - I won't call them failures because that's not fair, but we have been so singularly unable to get Ottawa to agree with our point of view, what needs to change? What needs to change in the way that we approach Ottawa because it's clear that the existing approach is not working. So what needs to change?
MS. ALISON SCOTT: From a provincial point of view, the acceptance of the Constitution's guarantee of the right to equal level of services on a basis of equal level of taxation would be a good start. That's the principle that guides our discussions with Ottawa as a province. It's the principle, I believe, that many provinces adopt and in terms of what's changing, since 1995 when most of the cuts that Ms. Harnish described, or many of the cuts Ms. Harnish described, took effect. The Premiers, as a collective, have taken a much more concerted approach to Ottawa as a collective and with the forming of the Council of the Federation last summer and solidified in Prince Edward Island in the Fall of 2002, there is agreement that there has to be a different approach to Ottawa.
It has to be a much more allied position. It has to be a much more concerted, well-studied, structured approach to Ottawa and that's what the Council of the Federation is intending to do. So we're taking steps on the national stage as a province to bring our issues to that forum and see them advanced. We have allies there, we have other provinces that see eye to eye with us on these various issues.
MR. STEELE: I do want to turn the floor over to my colleague, Mr. Epstein, who I think is going to focus some questions on the offshore, but before I do that I have one short snapper that I want to put to you. In addition to having - well, let me put it this way. One of our allies in the Campaign for Fairness, which you've said has been a success and I'm a little more doubtful about that . . .
MS. ALISON SCOTT: We've had success. I'm not finished with that project yet.
MR. STEELE: One of our allies was John Crosbie. Am I right in thinking that we paid for his endorsement? Did we pay John Crosbie?
MS. ALISON SCOTT: I certainly have no knowledge of that, Mr. Steele.
MR. STEELE: He endorsed us.
MS. ALISON SCOTT: I know that, yes.
MR. STEELE: And I believe that he was paid for that endorsement. Is that a fact or am I mistaken?
MS. ALISON SCOTT: It's something I have no knowledge of, absolutely none.
MR. STEELE: Ms. Harnish, do you know?
MS. HARNISH: No, I have no knowledge of that either.
MR. CHAIRMAN: Mr. Epstein.
MR. HOWARD EPSTEIN: I do have some questions about the offshore. Perhaps you could just help us understand a bit about how the offset with respect to equalization works? I'm seeking really some factual information here and the reason I'm asking it is that the statement is frequently made in the Legislative Chamber by members, I think of all Parties and I think I've heard it frequently said outside, that for all the royalty revenues that flow to the province based on developments on the offshore, that we really gain very little on each of the dollars because of the offset that's built into equalization.
It's usually said that there is a reduction and the reduction, I've never heard anyone refer to the offshore accord number before, that is that we're protected for 90 per cent of the revenues. Usually it's said that we lose 70 cents on each dollar and so it seems to me that there has been perhaps a mix-up in the minds of the public, and perhaps of the members of the Legislature, about how this works. As I understand it now from what you're telling us, Nova Scotia has an option as to which formula it can use. It can either use the 30 per cent reduction that's built into the equalization legislation and formula or it can trigger the offshore accord. So it's not clear to me which has actually been at work for which years because I read now that the offshore accord was actually triggered originally in 1993. So was that actually used during some of those original years? Can you tell us?
MS. ALISON SCOTT: I would certainly be pleased to. I will outline a bit of the history of it and perhaps some of the sources of the confusion and then I will ask Ms. Harnish's staff to take you through the technical application of it. In the 1986 accord the Province of Nova Scotia accomplished the right to be principal beneficiary, the right to Crown share and the right to an offset. The offset mechanism operates according to a legislative structure set out in the Statute. It was triggered, according to the Statute, on the basis of volume production of gas. That was triggered in 1992 . . .
MR. EPSTEIN: Cohasset/Panuke triggered it.
MS. ALISON SCOTT: That's right. It was a very small production. In 1986 when the deal was struck, the expectation was the oil and gas flowing from these projects would be huge. So it was recognized not only by us but by Canada that this was somehow an unfairness to Nova Scotia - we didn't get to keep any big chunks of change to help us on the road to becoming a have province. So they entered into a bilateral arrangement with Nova Scotia on something that is called the generic solution, which operates outside equalization that allows us to keep 30 per cent of what otherwise would have been clawed back at higher rates.
You seem to be somewhat familiar with the offset mechanism in the accord and you recognized that there was a sliding scale. We soon got into the area where it made more sense to move from the offshore offset to the generic solution, which is a bilateral arrangement with Canada. Now, I'll turn it over to Ms. Cody to take you through the various steps of how, when and where.
MR. EPSTEIN: And Nova Scotia can choose each year which it's going to use, is that right?
MS. LIZ CODY: We're in a position where we could choose, but as Ms. Scott said, back in the early 1990s when this was first agreed upon, we had a sliding scale that if it got triggered, we'd go 90 per cent, 80 per cent, 70 percent, right down. We renegotiated the fiscal
arrangements in the late 1990s because we were concerned that scale was soon going to run out and we were going to go back to a dollar-for-dollar loss.
So when we were at the negotiating table, we were lobbying for at least the 70 per cent generic solution so at the very most, we'd only lose 70 cents on the dollar, not dollar-for-dollar.
MR. EPSTEIN: I think most of us are familiar with some of this background. What we really need to know is starting in 1993, when there first would have been a real number to play with, what percentage under which arrangement was actually used? I don't need an oral answer to that now. I'm wondering if you could file that for me. I'm wondering, as well, could you tell us today whether the reset of the trigger that I heard referred to now commences a whole new 10-year round? Is that the case or not?
MS. CODY: Basically, when . . .
MR. EPSTEIN: You're saying yes and I see someone saying no.
MS. CODY: When it started to roll down in the 1990s, it got to 30 per cent by 2000-01. Then it didn't make any sense for us to choose between generic and the other . . .
MR. EPSTEIN: Absolutely, yes, very clear.
MS. CODY: . . . so we switched to the generic. That kept us at 30 per cent. With the resetting of the trigger, it's been restarted for 2000, so you're starting again at 90 per cent, 80 per cent, 70 per cent, and by 2006-07 then we'll be back to the 30 per cent again.
MR. EPSTEIN: So it is another 10-year round, except of course, the 30 per cent number will overlap it at some point.
MS. CODY: In 2006-07. Until you get to that point, you obviously would opt to take the . . .
MR. EPSTEIN: And the figures of $25 million and $7 million that were referred to - that's compensation because we weren't using that trigger, but the trigger's been backdated? Has that money flowed to Nova Scotia?
MS. CODY: It is flowing to Nova Scotia, yes.
MR. EPSTEIN: Because that only came up in the federal budget this year, which was introduced in March. I must have missed it - was that included in Nova Scotia's provincial budget that was filed a month or so later?
MS. CODY: Yes, it was.
MR. EPSTEIN: It was, so it's shown as revenue already for that period?
MS. CODY: Yes, $21 million of that $29 million is in respect of the catching up for the years throughout the 1990s.
MR. CHAIRMAN: Order, please. I'm sorry, the time has expired. I'll let you finish those comments very quickly.
MS. CODY: Those dollars are in our provincial budget. Some of them are capturing historical years and then bringing us up to speed for the current year.
MR. CHAIRMAN: Thank you. We'll turn to the Liberal caucus.
The Leader of the Liberal Party - sorry, the former Leader.
MR. DANIEL GRAHAM: Thank you. I can't pass up the opportunity to at least in part respond to my colleague, the member for Halifax Fairview, and his earlier remarks. Unfortunately, I don't see him present in the Chamber.
First, thank you for coming and speaking about this important subject. I've said for some time that there's no more important relationship that this province has than the one that it has with the federal government. It's trite to say, although important perhaps this morning to repeat, that there is at the end of the day only one taxpayer. That one taxpayer expects both levels of government to work efficiently and effectively.
[8:45 a.m.]
To put the matter back on the record again, I would also commend you for your efforts with respect to the fiscal imbalance that exists between the federal government and the provinces generally, not just the so-called have-not provinces. I think anyone who studied the increased demands at a social level and the rigid constitutional chains that we find ourselves in would recognize that there needs to be some level of change in the tax bases for the federal and provincial governments.
I would agree with that and I want to repeat what I'm already on record for saying and that is that there is indeed fiscal imbalance and that whoever is in government in Ottawa - and this has been an historical thing - needs to come to recognize that the challenges of the last decades, perhaps generations, have been growing in the areas of health, most particularly, and education as well. Those are provincial responsibilities and unless the federal government of whatever stripe is prepared to respond to that, the taxpayers of Canada are going to continue to feel frustrated. They're going to continue to have a level of service that
is not in keeping with the level of taxes that they pay. They're going to continue to see their federal and provincial governments squabbling.
On the issue of squabbling, I will not be an apologist for whoever's in power at the federal level. Having received the confidence of our Party at the provincial and federal levels, we don't have the comfortable pew of being able to criticize something that everyone else is doing. But we do and we have taken clear positions on the offshore. Ms. Scott, you'll be familiar with the position that our Party has taken, that is quite vigorous about the need for Ottawa to respond. I don't think that the response - perhaps you would agree with this - to date, although a movement is satisfactory enough, I think the ball continues to need to move and I'm happy in whatever small way I can do it to continue to make those messages as clear as I could in Ottawa.
Recognizing that, I agree that there is a fiscal imbalance, that something needs to be done - still however, go back to some of the statements and some of the things that have been put on the record over the last little while. We just saw what I've described as a commendable move on the government's part in reversing its position concerning a tax decrease in the last provincial budget. It, however, came at a time that was rather late in the day. I'd like to review something of the timing of those issues.
First, I'd like to begin by talking about the census issues. Ms. Cody is familiar with my interest in the census issues, we've spoken publicly and privately about this in the past. My first question is, given that we now clearly recognize that we've had to make an adjustment as a result of the census figures changing, what is that adjustment in the 2004-05 budget? What's the size of it?
MS. CODY: It's $60 million.
MR. GRAHAM: Thank you. What was it for the 2003-04 budget?
MS. CODY: It was $60 million.
MR. GRAHAM: And what will be your projection for the 2005-06 budget?
MS. CODY: We're carrying it forward in our medium-term plan at $60 million per year until the next census comes.
MR. GRAHAM: Okay, thank you. Now, back in July 2002, the Atlantic Ministers of Finance recognized that there was going to be an equalization problem. This is recorded - I don't mean to trot out every document that was brought forward; hopefully this will be generally familiar in terms of the time frames, Ms. Cody.
In the late Fall, early Winter of 2002, the then Minister of Finance in Nova Scotia was also indicating that we were going to have a problem with equalization payments as a result of decisions that were happening in Ottawa. As recently as April 2003, in Supply debate discussions - and I'm happy to provide you with this - the then Minister of Finance for Nova Scotia, Mr. LeBlanc, pointed to the issue of census adjustments that had been complained about in March by the Province of Quebec, noted and/or adjusted for by the Provinces of Prince Edward Island and Saskatchewan in 2003, and it turned out to be a $60 million problem for Nova Scotia.
Now this was an issue that appears to have arisen in 2002 and wasn't adjusted for or even noted - which is a separate exercise, as you would know - in our budget nor in our first quarterly report but turned out to be a $60 million problem for the Province of Nova Scotia, and it would appear, given its size, contributed significantly to the decision to revoke the tax decrease. I'm wondering, why did we not pick this up sooner? Why was this not something that was higher on the radar screen, given that in 2002 we were talking about this problem, and it's not until 2004 that we reversed the tax cut, some time later?
MS. CODY: As we had explained earlier, what we knew about in 2002 was the raw census data that came out. What we also knew, though, was Statistics Canada was engaging in about an 18-month process of revisiting the net coverage error associated with that raw data. History has told us that that, significantly, can alter the raw data, and that ultimately is the data that gets fed into the transfers. When we prepare our revenue forecast, we're the only province in the country that has the Auditor General scrutinizing all of our data and all of our assumptions.
We didn't have the luxury of being able to plug a number in there, we had to be able to justify, in our revenue-review process some rationale for any number that we would quantify. Without having the undercoverage material available to us until after we had produced the budget in the Spring of 2003, we did not feel that we were in a position to be able to adjust our numbers to reflect the census, until that was known.
MR. GRAHAM: May I assume that the practice in these circumstances is to keep internal, matters that are speculative, and not sort of float them publicly?
MS. CODY: In the revenue preparation?
MR. GRAHAM: Yes.
MS. CODY: Matters that are speculative?
MR. GRAHAM: Yes.
MS. CODY: Yes, we usually only book, in our revenue numbers, matters that we have justification and numbers for.
MR. GRAHAM: And it's only when the matter becomes more likely that one would make public comments about them.
MS. CODY: If you're talking about what ministers might say, I really can't answer at what point they feel they can speak publicly on an issue, that they're comfortable . . .
MR. GRAHAM: I'm just going to suggest that if we have ministers in July 2002 publicly commenting on these matters, in November 2002 publicly commenting on it, in December 2002 publicly commenting on it, in April 2003 in this Chamber, in this Legislature, publicly commenting specifically about the census figures, surely, at that point, it was of significant concern to the Department of Finance that it should have been prudently adjusted for in the budget of 2003-04.
MS. CODY: We would dearly have been able to do that in 2003-04, had we had the necessary information. Given that we were still working with raw data at the time the budget numbers were being put to bed, we just didn't have the adjusted census information. Yes, I know there are some jurisdictions, particularly Quebec, that were quite vocal on concerns. That would have been reflected as a result of probably the only data available at the time, which would have been the raw data.
As I said a few minutes ago, we have to have more than that if we're booking an adjustment in our revenue numbers. Given the scrutiny that goes on, we have to have solid justification for any number that we're booking. Frankly, at that point in time, we didn't have it. We didn't get it until just shortly around the time we were releasing our budget, and then we were told, a few weeks after that, it's wrong, don't use it, by the federal government. So it really wasn't until September 2003 that they finally released the adjusted census data.
MR. GRAHAM: By that time the Province of Quebec had, at least publicly, mused about a number, in fact they did that as far back as March. The Province of Saskatchewan, which is about in our circumstances, had put something in the books concerning the size of that problem. The Province of Prince Edward Island also noted it. But we continued to remain silent. Surely, if we pride ourselves on any precautionary principle, and I hear this from auditing and Finance officials on a regular basis, something should have at least been noted in last year's budget, that we were facing this census problem and that while we can't quantify it, it is going to be a problem. It had already been about nine months that we had been talking about it publicly.
MS. CODY: Actually, I believe the last time we were here and we talked about this issue, we agreed that perhaps we could have at least noted it. We certainly didn't have the data to book a number. At that point in time, it's a matter of there are so many variables
affecting equalization, is this one that much more certain than any other one, so it was a decision at that time.
MR. GRAHAM: The reason I say it, Ms. Cody, and it's not in any way intended to be critical of you, because I don't know the ins and outs of specifically what it is that you do, it is, frankly, however, to respond publicly in part to the continued assertions on the part of the Minister of Finance that we've been surprised and, practically, that we've been duped by Ottawa with very little notice. Indeed, tracing back the records, it would suggest that while there have been unexpected events, the whole notion of blaming Ottawa has become, I would say - and I don't expect you to respond to it because mine is a political comment - has been a political campaign that has been started recently because the number crunch is really there. This $60 million worth of problem that the government was rather quiet about a year ago is now a great big problem that turns into a surprise from Ottawa as a result of things that weren't ultimately planned.
I would, if I could, shift to another aspect of the notion of again blaming Ottawa. It would seem to me, based on the submissions of the Minister of Finance to the Senate Committee and similar comments made by the Deputy Minister of Finance today, that if ever there was a time for the Province of Nova Scotia to be critical of cutbacks from Ottawa, and really to exercise a campaign where we've been shortchanged, it was in the 1990s, because that's when the cutbacks were most dramatic. If anything, over the last couple of years, it appears that at least some effort - and I would concede, as I said at the outset - not sufficient effort has been made to put the money back in, because we need structural changes in order to make all of that happen.
But, surely, we need to recognize that, for example, in the area of health, nationally, billions of dollars have been put in, and perhaps you have a sense of what these figures are, I'm working on recollection, that it was in the Fall of 2001 that outside of the usual federal-provincial funding agreements, there was about an $18 billion fix, maybe a $21 billion fix, it didn't turn out to be a fix per se, but it was new money that wasn't expected. Just last year, with respect to health, which is the biggest pressure point, I believe that the 'fix' was in the range of $36 billion, and then we had the $2 billion amount that seems to have trailed in.
So, to suggest that there has been no response with respect to some of these pressure areas, I think, is clearly an overstatement. The question is whether or not it is a sufficient response, and what are the circumstances around the timing of that response. You would be more familiar than I would about the federal response in saying that we will move forward, provided we have assurances that the provinces have a clear plan and that it's not just going to go into the same old and salaries and that sort of thing.
[9:00 a.m.]
Would you agree with me that at least with respect to health since 2001, there have been significant injections of new money outside the normal arrangements?
MR. CHAIRMAN: Ms. Scott.
MS. ALISON SCOTT: One of the things you have to recognize when you're dealing with federal releases about how much money they're spending on health care, for example, the $37 million that they talked about last year, that was not $37 million in new money. They included in that, previous years back to about 2002, it was a cumulative figure, going back to about 2000, I believe. Liz would have that more at her fingertips. When they spoke of the money in 2003 that they injected, it was closer to $17 million, which is significant, but as the Premiers at the time said, it brought them nowhere near the 25 per cent level that the Romanow Inquiry suggested we needed in health care. So it's important to bear that in mind, when you deal with the federal releases on spending in health care, it's not always new money.
MR. GRAHAM: There are other arrangements, we're all familiar with the $36 million agreement with respect to housing that has been signed, cost-shared 50/50 between the province and the federal government to take place over five years. We're about halfway through the program and the Nova Scotia's contribution of its $18 million or so, has only been $3.7 million, I note. There is an offer from the federal government to fund, essentially about 100 per cent of the cost of a therapeutic court for justice for people who have drug addiction challenges. We appear to have been slow in taking up that offer. The Minister of Finance recently sent a letter to the federal Minister of Finance on February 26, 2004, saying, essentially, we can't afford to participate, even if you give us 50 per cent of the dollars toward programs that we have a constitutional requirement for running, we can't even afford to run those. I'm wonder whether or not this appears to be posturing or are we completely out of money where we can't even accept 50 cent dollars to give us the opportunity to work on good programs?
MR. CHAIRMAN: Ms. Harnish.
MS. HARNISH: What that February letter said, and what was prepared in anticipation of the federal budget coming down the end of March, was that, at this point in time, we were budgeting very carefully and very tightly around what the elected officials had determined to be the priorities of Nova Scotians, which was to maximize the amount of money we were able to put into health care. We were budgeting for all of those programs, fed.-prov., that we currently had in place, our share, to enable ourselves to cover that. We were serving notice on the federal government at that point that we were budgeting very tightly. We did not have new monies to put into new programs that would be serving the priorities of the federal government as opposed to the priorities of our citizens and the priorities that our elected officials had determined would be funded under the Nova Scotia budget this year.
MS. ALISON SCOTT: If I could have one follow-up to that. One of the areas we always have to be concerned with on 50/50 deals from the federal government is the afterlife. Often times if a program is available to us and it involves infrastructures or something but not long-term operational funding, it's a problem, because we have no new money in our budget to carry on those types of programs, and that's of particular concern to us in terms of delivering services.
MR. GRAHAM: I'm familiar with that having worked at both levels. I'd like to finish with sort of a quick collection of questions. One of them relates to the staffing issue. I have no complaints about the staffing sizes given the importance of Intergovernmental Affairs, even with the increase frankly that you have, and I'm left wondering whether or not - at one time we had a physical presence in Ottawa. I don't believe we do now. I suspect that some or most of the other provinces do. There's nothing like being on the ground in a place like that in order to get the results that you need - whether that's part of your consideration?
Secondly, whether or not in the course of our discussions with Ottawa about doing the needs-based testing given the demographics, the universities, et cetera, whether we are at least talking to them about on the next occasion, doing their census at a time when our university students are in, which is worth I believe tens of millions of dollars to us if they would actually conduct the census during that period of time, something that innocuous, appears to be that significant to our bottom line.
MR. CHAIRMAN: Time has expired for the Liberal caucus. Perhaps we can get a brief answer or go back to it later?
MS. ALISON SCOTT: With respect to provincial offices most have closed with the exception of Quebec. Alberta doesn't even have one at this point in time. The Territories have an office because of their geographical situation. It's something we'd like to have obviously, but again, it's a question of funding. Other provinces like ours have decided in terms of cost-effectiveness, it's not the place to spend their money, but we'd like to do it.
MR. CHAIRMAN: Thank you. Mr. Chataway.
MR. JOHN CHATAWAY: Thank you very much, Mr. Chairman, and certainly I find the Public Accounts Committee is very informative, especially for this person anyway, and we very much appreciate having this opportunity to ask you various questions. Ms. Scott, you mentioned in your preamble that it is a somewhat complex issue and arrangements on how the provincial government works with the federal government. I'm sure that many members on our side of the House, especially the Minister of Human Resources would be very complimentary. We have six senior management people in here explaining their situations in various forms of the government and I'm sure the Minister of Human Resources would be very complimentary on the way we are going here. Women take a good idea and run things wisely and stuff like this, so whatever.
Of course I think it is very important, because the federal election is coming up, and I think everybody has heard the dates, supposedly, I'm not announcing it because I don't know it for sure. But at any rate, I think it's very important for all Nova Scotians to sit and think about exactly what person in Ottawa is going to represent their riding in Nova Scotia. We only have 11 of 308, or something, so we have to have people that are very knowledgeable about what's going on.
The sponsorship crisis has not eased up on the idea that money is wisely and cleverly spent in Ottawa to help out all of the smaller parts of Canada. We should certainly make sure that we can do as properly as we can. I think it has been pointed out in the various questions and responses that all provinces, including Nova Scotia, deserve a far better deal from Ottawa. As I say, the sponsorship crisis, or whatever you want to call that, certainly was not a benefit to people.
Certainly program costs are rising in areas like health care, highways, universities and affordable housing, but the federal government's funding is roughly the same as it was a decade ago. I'd like to give more information in that regard. It's flat-lining. Of course costs are going up and basically the federal government is spending the very same as it did about a decade ago, in fact, it just came back. I'll have a specific question on that in a minute. Also, we pay almost 85 cents of every dollar of health care costs, while we lose about 80 cents of every dollar recovered from offshore resources. We certainly have some challenges. Good luck, keep up the good work, because certainly we have to bring this forward, and were not unique in Nova Scotia.
Questions per se, I'm not going to call them short snappers but here's one. It seems as though the gap between the total federal transfers and rising health costs is widening. Some suggest that health care spending is almost 50 per cent more than it was a decade ago, while federal transfers to the province have risen only in the last year or so to the 1993 level. Is this true?
MS. ALISON SCOTT: I would defer to Ms. Cody on that.
MS. CODY: Our numbers are showing that federal support in relationship to our program spending is about where they were in 1992-93.
MR. CHATAWAY: It's been a long 10 years, hasn't it? By what percentages have health care costs risen in Canada since 1993?
MS. CODY: As Ms. Harnish said in her opening remarks, they're growing at an annual average rate of about 8 per cent.
MR. CHATAWAY: It's quite noticeably up. What are the annual increases or decreases in percentage from federal transfers or equalization block funding since 1993? Increases or decreases in federal funding.
MS. CODY: Could I hear the question again?
MR. CHATAWAY: What annual increases or decreases in percentage have federal transfers or equalization and/or block funding cash undergone since 1993?
MR. DAN TROKE: The program that would go towards provincial funding of the social programs now is the Canada Health Transfer and Canada Social Transfer, formerly the CHST. Maybe in terms of per capita, it's a little easier to think about it. Since 1992-93, per capita, to pay for these costs, it has gone up $1,000 per person in this province yet, per capita, the federal contribution has just gone back - I think it's $23 higher per person than what we had in 1992-93. The social program, the year-over-year increases, are zero, and the health care cost, as I said, is about $1,000 per capita.
MR. CHATAWAY: Well, we certainly can't call Ottawa a rich uncle, can we? Another question, how much federal funding for health care and other programs is compromised by one-time spending, when it is important to have long-term stable funding, like multi-year funding we offered to the district health authorities? I think we are rather unique, we give our health care, hospitals and stuff, three-year funding and the raise of 7 per cent per year. So in three years, they've at least 21 per cent more in revenue.
Federal funding, they have helped out in health care and other programs, but then, inevitably, they're just one-time, and it's not long-term or multi-year funding. Does that affect our programs?
MR. CHAIRMAN: Who would like to answer that? Ms. Scott.
MS. ALISON SCOTT: This year there was a $2 billion top-up on payments from the federal government for health care - that was a one-time promise as a result of the arrangement struck in 2003 by the Premiers. In the prior year there was a similar $2 billion top-up. At that time the federal government proposed a plan which, again, was not signed by the Premiers but which was delivered to them by the Prime Minister, which had a series of payments over about five years, but beyond that there are limited commitments for funding.
In terms of the $2 billion, it was necessary in 2003 and again necessary in 2004 - that's not a part of the base funding by the federal government for the provinces. The CHST, which addresses, at the moment, social transfers and health transfers, is population-based. At this point in time, it appears long term, but it has with it, its own difficulties. It is population-based, which means that as Nova Scotia's percentage of the population in Canada
decreases, our CHST transfers decrease, and it's not responsive to the needs of Nova Scotians.
The Canada Health and Social Transfer is the same for every citizen on a per capita basis, as I mentioned, and doesn't address the burden of illness. In this province, we have a significantly higher burden of illness than other jurisdictions. I've heard figures and I wouldn't want to be quoted on it, but that it costs four times as much to provide health care to a senior as it does to other components of the population. So if you're doing population-based per capita funding, you're seriously impairing our province's ability to deliver meaningful health care to people who need it. In the Province of Newfoundland, yesterday, I heard a figure, that by 2010, 55 per cent of the population will be 55 and over. The prospect of per capita funding for that province in particular is particularly critical.
[9:15 a.m.]
So in answer to your question, there's a mixed bag of funding arrangements by the federal government with the province, both one-offs, as the billion dollar infusions without commitment to long-term funding, but there are other programs which aren't necessarily to our satisfaction, but do exist for longer periods of time. We would maintain they don't permit us the ability to do appropriate planning for health care delivery to Nova Scotians.
MR. CHATAWAY: Basically, one-time spending is very nice in instances, but, however, for long-term health care you certainly need more than short, one-term or two-year programs. It's very difficult to give that service. What you just related to, I'm sure we're not unique in Nova Scotia, saying the federal government should put more money into health care?
MS. ALISON SCOTT: That's right. Our position is that it ought to be needs-based funding arrangements that if we are to observe the constitutional principle that it's to be equal services to Nova Scotia based on equal levels of taxation, or relatively equal levels of taxation, fundamentally, the funding arrangements have to change.
MR. CHATAWAY: Overall, the percentage of health care costs funded by the federal government has declined from a 50/50 share in 1967 to about 16 per cent - basically the federal government pays 16 cents and the provinces are coming up with 84 cents. The federal government is estimated, by some, of course, to be contributing as low as 16 per cent to health care. The Romanow report says the federal government should go in the direction of paying at least 25 per cent. How do federal funding estimates affect the health care policy decisions faced by the provinces, with the lack of federal funding?
MS. ALISON SCOTT: What's been happening in many jurisdictions is that as health care occupies more of the field, in terms of provincial budgets, governments struggle to deliver the priority of Canadians to them, health care services, but it does mean an
encroachment into their ability, particularly in the smaller provinces, to deliver services in other areas, other social areas and other economic areas, which are critical to our continued success as an economic unit, contributing to the federation.
MR. CHATAWAY: I think many have come to the conclusion that the federal government has cut out $2 billion to $3 billion a year or more for several years in the mid-1990s, and yet the federal government can find several million dollars to waste on federal mismanagement of a gun registry - that was over $1 billion, minimum cost - or human resources programs or sponsorship scandals. It certainly begs the question of whether the federal government is being a good steward of the federal public purse. I think many people have that opinion, I don't think we're unique in Nova Scotia, feeling that.
Just one more question, then I will turn it over to my friend. We have recently seen that in the federal government budget there is a new commitment to discuss how equalization funding might be changed to allow Nova Scotia to keep a larger portion of its offshore oil and gas revenues. This is very good news for our province. Premier Hamm's Campaign for Fairness is clearly working, and I very much appreciate the successes so far. What is the current status of the discussion on equalization changes that would allow Nova Scotia to keep a larger portion of its offshore oil and gas revenue?
MS. ALISON SCOTT: After the announced changes to the fiscal arrangements Act in February - I don't believe there have been ongoing discussions. Perhaps I'll defer to the Department of Finance on that, but I'm not aware that they have pursued that objective at the table with the provinces. But with current federal circumstances, we expect that there would be a delay before we re-enter those discussions.
MR. CHAIRMAN: Would the Department of Finance like to respond?
MS. HARNISH: We've had no discussions subsequent to the latest arrangements as set out in the current Act.
MR. CHAIRMAN: The member for Waverley-Fall River-Beaver Bank.
MR. GARY HINES: Thank you for being here with us this morning. I'm going to move to the area of transportation because with gas prices climbing such as they are and so on, I think that the cost of transportation is going to be one of those issues that is going to be paramount in all government bodies across the country.
Nova Scotia deserves significant, stable, long-term cost-shared funding programs for our highways. Is there a set policy that Nova Scotia has regarding cost-sharing agreements and transportation funding? Is there a standard policy in place?
MS. ALISON SCOTT: In the Spring budget of 2003, the federal government announced a new Canada Strategic Infrastructure Fund which was to allow significant infrastructure projects in various provinces. In the Summer of 2003, we were visited by the federal officials to provide some detail of that program and it's my understanding there are funds available to the province for future highway construction if the province chooses to follow that route.
MR. HINES: How much does the federal government collect each year in federal motive fuel taxes?
MS. ALISON SCOTT: I'll defer to the Department of Finance on that. I'm not sure. They might not even have that number.
MS. HARNISH: We don't have that.
MR. HINES: It was suggested in conversation recently that it is somewhere in the vicinity of $140 million. In fact, it was in a committee this week with Transportation. Presently, since 1999 they've been returning about $5.4 million a year to the province. I think it's very, very unfair that this should happen. I also think that agreements should be long-standing in terms of funding for transportation.
There's been a constant struggle to obtain funding to twin Highway No. 101 from Mount Uniacke to Coldbrook as well as other areas where safety is of significance. In your negotiations, is safety taken into consideration by the federal government when they're responding to your needs for projects such as the twinning of Highway No. 101?
MS. ALISON SCOTT: My understanding, I'm not directly involved in the hammering out of the deals, but in discussions I've had with our own Transportation officials and reviewing their proposals, I am of the understanding that indeed they score the projects on the basis of a number of various criteria. A significant portion of that is safety. So they do consider safety as a part of their project allocation.
MR. HINES: Thank you. Sometime ago, the Mayor of the Halifax Regional Municipality, Mr. Kelly, was in Alberta for a municipal conference of mayors and on that occasion Paul Martin addressed them. At that time he came home quite excited and it was reported in the paper that Mr. Martin had made a significant promise to the municipalities and to those present that there would be money coming back from gas taxes.
In those terms, I suppose he will take credit for boosting the monies going to municipal units and perhaps suggest that may be tax-back money, but is there competition between the municipalities and the province in competing for gas tax dollars? Was that a discussion that came on board that may create new programs that would help generate funding to municipalities? Do you know anything about that?
MS. ALISON SCOTT: I am aware that Mr. Russell has made representations with respect to gas tax. I understand it was a part of the Progressive Conservative platform of 1999 and Mr. Russell has pursued it. Beyond that, I am not aware of competition as I would describe it, no.
MR. HINES: Money that's spent by the province on roads presently, the amount that we spend on roads exceeds the amount that we collect in fuel taxes in the Province of Nova Scotia, does it not?
MS. ALISON SCOTT: It's my understanding, yes.
MR. HINES: I guess perhaps we could invite our Liberal cousins to lobby their federal counterparts to lower the federal fuel tax, or at least send some of that money to us and help us in our efforts as we go forward to maintain the roads.
I'm going to read you a transcript from Hansard regarding the offshore resources and the agreement that was signed. I want you to tell me when I'm finished where the train fell off the tracks. "The legislation ensures that Nova Scotia will receive the lion's share of offshore petroleum revenues. In fact, in the early years of the agreement, the province will receive substantially more revenues than if it owned the resource on land. There will be wider sharing of revenues only if the province's relative fiscal capacity . . . exceeds that of almost all other provinces. Until Nova Scotia's per capita fiscal capacity reaches 110 per cent of the national average . . . the province will receive all offshore revenue, . . ."
This is an excerpt from a speech by Mr. Leonard Hopkins, the MP Parliamentary Secretary, the Honourable Jean Chrétien, and when they were signing Bill C 43, the Canada-Nova Scotia Oil and Gas Agreement, and this was recorded in Hansard on June 28, 1984. Where did the train fall off the tracks?
MS. ALISON SCOTT: That particular speech was made with respect to the first Nova Scotia accord which was superseded by the 1986 accord. However, the 1986 accord was intended to accomplish the objectives of that first accord so Mr. Hopkins' comments are appropriate insofar as the intention to allow Nova Scotia to become a have province, but perhaps the 110 per cent of fiscal capacity is somewhat misleading.
MR. CHAIRMAN: We're going to have to cut it off there. I'm sorry, we're going to extend the time for a few minutes. We'll move to the NDP.
The member for Dartmouth South-Portland Valley.
MS. MARILYN MORE: Thank you. I wanted to ask a few questions around the Early Childhood Development Agreement. The perception seems to be that a significant amount of that money is being used to replace provincial funds for the priority areas that have been
chosen. I'm just wondering what reporting and evaluation has been done to reassure us that is not taking place, that the federal dollars are being added to similar amounts from the province to increase the funding opportunities for those issues?
MS. ALISON SCOTT: I'll ask Ms. Medjuck to take that question.
MR. CHAIRMAN: Thank you. I want to remind the members that we're going to extend the time to 11 minutes per session. Go ahead, please.
MS. SHULAMITH MEDJUCK: Let me go back to the report and then I'll work my way through it. There are two sets of reporting that happen every year: there's a baseline reporting that happens every Fall, and there's an annual reporting on the expenditures to the federal government which will happen late this Spring.
With regard to the monies, the federal contributions with the accelerated monies of $2.2 million in the recent budget will now come close to equalling what the province has been spending on childcare. That has not decreased - in fact, it has increased since the introduction of the Early Childhood Development Agreement. That has increased by over $2 million, so the province has not reduced its expenditures. There has been incremental spending.
MS. MORE: Thank you. I understand that part of the agreement was the commitment to make the annual reporting not only on the programs and services and the expenditures, but also on societal indicators of child well-being. Have all of those been adhered to each year of the agreement?
MS. MEDJUCK: The societal indicators report is a long-term project because, obviously, what you have initially is the report on the expenditures and the report on the number of spaces you are creating. It is anticipated there is a federal-provincial committee looking at outcome measures, looking at what are the best approaches to childcare. It is anticipated that they have been reporting annually, but there hasn't been a comprehensive report as yet. We would anticipate they will be reporting this coming Fall.
[9:30 a.m.]
MS. MORE: So how are you measuring the impact of that infusion of money in the different priority areas that have been chosen in Nova Scotia?
MS. MEDJUCK: We're measuring it ourselves, we're doing an evaluation of the investment of the dollars, and we're measuring what would best accommodate Nova Scotians' needs. What the ECD does is it allows provinces to do a little bit of flexibility in how they design their program and what we're trying to do is start to address the needs of
Nova Scotians and we're doing that by sort of going back and we have invested monies in research as part of the ECD in order to determine what is the best approach.
MS. MORE: The last report that I've been able to find has been the 2003 annual report for that funding program. Has there been a more recent report?
MS. MEDJUCK: There should be a report out literally, it is at the Queen's Printer now, it's a Spring report, and it should be out within the month.
MS. MORE: Because I must say, as someone with a particular interest in this multi-lateral agreement, I'm finding it very difficult to get the up-to-date financial and performance results to be able to evaluate it and analyze it in terms of what benefits it's actually creating in Nova Scotia and I'm sure that other people interested in this issue are struggling with finding up-to-date information as well. Do you have any plans to make more timely reporting a part of the accounting process?
MS. MEDJUCK: We are hoping to basically refine our reporting so that this report - which is coming out within the month, it is about six weeks late - should have been out during the Winter. There's a major process improvement in the system of how we collect data on childcare and that has taken some time for us to work through. We have IT issues, we're basically moving into a whole brand new computer program to collect the child data.
MS. MORE: I'm just wondering, when the agreement was signed, were there any commitments or conditions to the funding coming from the federal government in terms of priority areas? We've already talked about the reporting commitments, but I'm just wondering in terms of priority areas where the money should be spent, how it's to be recognized as actual federal money, anything like that?
MS. MEDJUCK: There are two aspects to your question. One is the issue of communication and in all communication we have indicated that we would acknowledge the federal contribution. On the second issue, I don't know if people are aware, there really are two agreements as such. One is the initial Early Childhood Development Agreement and that relates to a broader spectrum so it would include things like childcare, but it would also include things like Healthy Beginnings. So the Healthy Beginnings program is funded under that. The second instalment, which is the early learning portion, is restricted to childcare only. So there are two agreements in essence here.
MS. MORE: I'm glad you mentioned the Healthy Beginnings because in the report I mentioned to you, the annual report for 2003, there's no indication of how much money the province put into Healthy Beginnings. It just gives an amount for the multilateral or the federal contribution and under the part where the provincial money should be indicated it says that Department of Health funding is unknown due to the multi-faceted role of the Public Health staff. So are you actually able to now track how much provincial monies are
going into the health side of the expenditures or are we going to see sort of, you know, that generic fuzzy accounting for the provincial contributions?
MS. MEDJUCK: I think the difficulty with trying to calculate the base costs, let me just back up and sort of talk about this for a second. I mean basically what we have is an enriched Healthy Beginnings program so that the costs that existed continue on. What the $3.5 million will do is provide a universal program and will increase the age that children will be seen up to possibly age three. The difficulty is that some of the visitings are multi- functional, and that's the problem with trying to pull out the figures. We will be doing that in the base year report for 2004-05, the November report.
MS. MORE: My last question and then I'll pass it along to my colleagues. Has there been any concern or indication from the federal government that they're not satisfied with the level of reporting from our province to them in terms of this agreement?
MS. MEDJUCK: No, there's been no indication whatsoever. In all meetings they've indicated they are satisfied.
MS. MORE: Thank you.
MR. CHAIRMAN: The honourable member for Halifax Fairview.
MR. STEELE: Thank you, I'd like to go back to this question of shared-cost programs. There was a letter tabled in the Legislature last week that I think needs some clarification. First of all I wonder if, I'm not sure Ms. Scott or Ms. Harnish, which one of you is better to answer, I wonder if you could list very briefly what are the major shared-cost programs available to the province?
MS. ALISON SCOTT: I don't believe we have a list with us. There are over 100 agreements and not all of them, as we've indicated, are cost-shared.
MR. STEELE: There's housing, there's roads.
MS. ALISON SCOTT: Actually, Ms. Medjuck probably has more information on this than either of us, as most of those agreements do exist in the Department of Community Services. There are also labour market agreements and some other education ones.
MR. STEELE: What are the major shared-cost programs available to the province?
MR. CHAIRMAN: Ms. Medjuck.
MS. MEDJUCK: There's a wide variety. I mean I'm sure . . .
MR. STEELE: Look, it's a simple question. What are the major ones? What are the big ones? There's roads, there's housing - I'm not looking for a complicated answer or a complete list. What are the major ones?
MR. CHAIRMAN: Thirty seconds remaining.
MR. STEELE: Okay, look, forget it. That's not really what I wanted to get at anyway. I just wanted - I know this is a complicated topic, but sometimes there are simple answers to simple questions. The real question I want to ask is simply this, are we saying to the federal government this year that we are not in a position to participate in any more shared-cost programs, and if not, what is the true position of the province?
MS. HARNISH: What we were saying was that we did not want to be surprised in the federal budget that came down on March 23rd, with new programs that we were not anticipating and not budgeting for at that point in time. If the federal government were to come down with new programs at this point, you've seen our surplus, there's no room to spend more money. We would have to take a look and assess what the program was. We would have to see if in fact it was a priority. If it was a priority we would have to see where we would reduce spending in other areas in order to accomplish . . .
MR. CHAIRMAN: We'll have to leave it at that. The Liberal caucus, the former Leader.
MS. ALISON SCOTT: I have a correction I would like to make to a question Mr. Graham asked me about other provincial offices. It came to mind that New Brunswick and Manitoba have co-located a procurement office in Ottawa. Not a full-service IGA office but a procurement office.
MR. GRAHAM: Thank you. I would like to pick up and I don't know if this is going to give my friend from Halifax Fairview comfort to finish his question, perhaps with Ms. Medjuck because I'd like to pursue some questions in this area. What are the major cost- sharing agreements between the federal and provincial government?
MS. MEDJUCK: I can speak to the cost-sharing agreements that are within our department.
MR. GRAHAM: Just the major ones.
MS. ALISON SCOTT: We have the Housing agreement, we have this Early Childhood Development Agreement. We have a labour market agreement for persons with disabilities. We have agreements with HRSC on employment supports. Those are the big ones in our department.
MS. ALISON SCOTT: As well there are infrastructure ones from the Department of Service Nova Scotia and Municipal Relations and the CCIF arrangements that I talked about earlier.
MR. GRAHAM: There are Justice ones, the Justice Act would involve one, I referenced in my earlier comments the offer from the federal government to spend not just 50 cent dollars but perhaps 90 cent-plus dollars on a therapeutic court that the provincial government has not - I know that's just a Justice-related matter that I raised in estimates earlier - yet taken up.
I guess, Ms. Harnish this takes me back to the letter, and you've qualified the letter now on a couple of occasions, but the letter - and I appreciate it was pre-budget, and that may be code for it's a political letter to a certain extent, I'm not sure. But the letter is rather clear in its language, and the critical paragraph on the top of the second page, from Mr. Christie to Mr. Goodale. You should also note that while we're struggling to balance our budget, we cannot afford to participate in any more federal initiatives proposing a 50/50 federal-provincial cost-sharing effort, so any new investment, while welcome, must be unconstrained by demand for provincial cost-sharing.
It's been suggested there are hundreds of these types of agreements, some of which are still unfolding, many of which are rolled out on a year-to-year basis. For our government to be saying to Ottawa that we can't take even programs that you will fund, you will offer us 50 cent dollars on, is a stark admission of the fiscal constraints particularly given the crisis that we face with respect to the health of our population - I'll touch on that - and housing for example. Are things so bad that we can't even accept - that we are saying that under no circumstances will we accept any more 50/50 arrangements?
MS. HARNISH: I would suggest that what we didn't want at that point in time were arrangements thrust upon us that we had not been consulted on, which often happens during federal budget time. We had had this discussion in Ottawa in February, all of the provinces shared the same opinion and had pretty much said the same thing when we met with the federal Finance Minister of the day. What we could not sustain, and are not prepared to sustain are new federal programs that were put in the budget without our knowledge and without our agreement.
MR. GRAHAM: Many would say that there is a housing crisis in Nova Scotia right now. It's estimated that there are 300 people who are living on the streets. The federal government, back in 2002 entered into a 50/50 cost-sharing arrangement for the construction or repair of up to 1,500 units. Halfway through that agreement, it's a five-year agreement, there have been 15 completed units and a promise, I believe, of 36 additional units either being repaired or built. It is not a promising sign that for a program that has the potential to influence up to 1,500 units that we have only attended to - even if those promised are completed - 51 units halfway through the program.
It leaves me questioning whether or not this letter may in fact relate to programs that were agreed to in the past, for which funding has not yet been expended. If only $3.6 million of our potential $18 million has been spent, then we are not going to come close to meeting the objectives of that program and it's because of the fiscal constraints that the government finds itself in, even when we are given 50 cent dollars.
MS. HARNISH: I believe it is clear from the letter that we were referring to new programs that we had not anticipated.
MR. GRAHAM: So in your estimation, the paragraph that I have just referred to, does not refer to existing commitments even though money hasn't been spent nor allocated? In some circumstances you have a situation, of course, where the money is allocated and it's not spent. In this situation with respect to housing we don't even have the money specifically allocated for particular programs. The concern that one might have is that we've got a crisis, and our record of response has been slow to this point. Now we have the Minister of Finance saying that we don't like these, and anything new we are not going to participate in.
MS. HARNISH: When you reviewed the estimates over the last number of months you would have had an opportunity to see that there were many dollars allocated to the various cost-shared programs within the departments themselves. So in no way was that letter meant to address that we were not going to live up to our obligation for existing agreements.
MR. GRAHAM: I'd like to touch on the issue of Healthy Beginnings. A subject that has been near and dear to me, and Ms. Medjuck I know has been overseeing this for some time, and the need for us to get more actively involved in those types of programs.
[9:45 a.m.]
My understanding, Ms. Medjuck, is that when the program was initially announced, it had a total value two or three years ago of about $10 million and about $9 million of that was federal money. I may be incorrect in my assumptions about that. I understand the provincial government has committed more money to that in the subsequent years and going back to the questions of Ms. More, I'm wondering whether or not, if we were able to generally determine how much federal versus provincial money was in the program two or three years ago, surely we must have a general sense of how much of our Healthy Beginnings is federal and provincial?
MS. MEDJUCK: I can tell you in 2004-05 the federal contribution for early childhood development will be approximately $19.5 million. That will equal or come close to equalling what the province is spending now for early childhood development-type services. So for daycare, for Healthy Beginnings, for adjustments for children with special
needs, a wide variety of those types of programs, they're about equal now, you know, in 2004-05.
MR. GRAHAM: I would like to speak specifically about the Healthy Beginnings initiative. Could you provide us with a breakdown with respect to Healthy Beginnings?
MS. MEDJUCK: The Healthy Beginnings is a portion of the Early Childhood Development Program and I would assume by Healthy Beginnings you're talking about the monies that are being spent on the home visiting, the enriched home visiting and that is $3.5 million which is currently being spent out of the ECD monies.
MR. GRAHAM: $3.5 million of that is from the federal government?
MS. MEDJUCK: Yes.
MR. GRAHAM: And how much is out of the provincial budget?
MS. MEDJUCK: That was the difficulty. The money is approximately the same. The difficulty with that is that the program is run by the Department of Health and a lot of their staff are multi-functional people. So it's difficult to do it, but there is at least as equal an amount of money being spent by the province, if not a lot more. All that happened with that program is you had the core program, what the enriched meant was we made the program (a) universal and (b) we extended the time that children can be visited up to three years, but the basic program is still a provincial expenditure.
MR. CHAIRMAN: You have one minute left, Mr. Graham.
MR. GRAHAM: When you say that the program is universal, it is not identifying and having home visits for all young people and providing the follow-up treatment for all young people at risk in Nova Scotia?
MS. MEDJUCK: It is a program of, there is a visit to every mother with a newborn child.
MR. GRAHAM: But the follow-up is the big part of a Healthy Beginnings Program?
MS. MEDJUCK: That's right, but you have people who do not want to be followed-up. I mean you have to have a certain degree of voluntary participation or you have to identify the infant as a child at risk.
MR. GRAHAM: I would just state for the record that a $3.5 million investment for a real Healthy Beginnings Program is not nearly adequate, frankly, to address the fundamental needs that begin from a prenatal period to somebody going into Primary and
that, in order to be serious about the program, there needs to be a comprehensive mechanism, and more funding is part of that, that we can identify and track to ensure that we have home visits that are comprehensive and become part of the culture of making sure people don't slip between the cracks before they come, for example, youth justice problems later on. It's an editorial.
MR. CHAIRMAN: The remainder of the time will be in the hands of Mr. Hines, the member for Waverley-Fall River-Beaver Bank, and I will just remind the members that I have notified Legislative TV that we'll continue to the hour of 10:00 a.m. at which time we'll adjourn and say goodbye to our guests and then start the business portion of our meeting.
MR. HINES: Mr. Chairman, I think I'll go back to the 1984 quote and I will outline again, until Nova Scotia's per capita fiscal capacity reaches 110 per cent of the national average, the province will receive all offshore revenue. You started to answer me that the new agreement was signed in 1986. Now, I've got a quote that goes with the new agreement of 1986, "to recognize the right of Nova Scotia to be the principal beneficiary of the petroleum resources in the offshore area" which would suggest to me that Nova Scotia is not getting its fair share. So can you explain why that's not happening?
MS. ALISON SCOTT: The offshore accord signed in 1986 had three components to it. One was the right of Nova Scotia to become the principal beneficiary of the offshore; the second was the offset mechanism that we discussed with Mr. Epstein; and the third thing was Nova Scotia's right to Crown share adjustment payments. We would maintain that none of the three elements have been completely satisfied by the federal government.
First, on principal beneficiaries, particularly in relation to the operation of the offset mechanism, even with the adjustment for the trigger accomplished this year in the budget we don't think that brings us anywhere near making Nova Scotians the principal beneficiary of the offshore. It's still too much of a slide to the federal coffers, with respect to a clawbacks on royalty payments.
With respect to Crown share adjustment payments, we have received none. Crown share adjustment payments were intended to replace Crown share, which Nova Scotia got in the 1984 agreement. The value of that Crown share adjustment was, we believe, significant, or is to be significant.
MR. HINES: Under those three agreements, if they were interpreted in the way it would be beneficial to the Province of Nova Scotia, what kind of dollars would be owing us presently regarding our fair share of the offshore dollars? Or are there any that have been accepted and agreed upon that we haven't received yet?
MS. ALISON SCOTT: It's difficult to speak to the future with respect to Crown share, as the regulations have not been passed. We believe the federal Crown will honour its
obligations, and that it will have regard for its own honour and pass the regulations. However, the precise terms of the regulations will determine the amount of the offshore. I will say this, Crown share adjustment payments were intended to replace a working interest in offshore projects. It was intended to approximate the value of the offshore projects and give Nova Scotia a percentage of each project. It's our position that Crown share ought to approximate that value - with today's projects, the adjustment payments are to approximate that.
If you consider the sale value of Nova Scotia Resources Limited in 2001, it was approximately $422 million, representing I believe an 8.4 per cent interest in SOEP. Our 25 per cent interest in Crown share adjustment should be worth that much more. We believe it's significant - there are other factors that you have to take into account, but we believe it's significant, that it's worth fighting for, that it's important to Nova Scotia, and we intend to press our case with vigor with the federal government to accomplish those regulations.
MR. HINES: God forbid it will become necessary, but would there be opportunity for it to end up in court?
MS. ALISON SCOTT: Certainly that's always a possibility where you have rights defined in legislation and one party believing that those obligations - Nova Scotia in this case - not having been fulfilled.
MR. HINES: Hopefully diplomatic negotiations will prevail.
I'm going to move now to post-secondary education. We learned a few weeks ago in this committee that Nova Scotia's importing more students than we are exporting. Lost revenue to the Province of Nova Scotia as a result of the large number of out-of-province students attending school here, is estimated to be approximately $25 million. What can be done to get the federal government to amend their funding formula and contribute their fair share in terms of post-secondary education?
MS. ALISON SCOTT: I believe Ms. Cody has dealt with this issue in the past.
MS. CODY: We have raised this issue quite frequently with the federal government, with federal Finance, and with Statistics Canada and this is a follow-up to a question that Mr. Graham was raising. We raised this issue on the census and how it's capturing the students and their place of residence - we've raised that with our statistical colleagues in Ottawa, and there's obviously a hesitancy about shifting census dates around this. Historically the census has always been tabulated around a certain time of the year. So there's been a resistance on that front, and we have spoken to federal Finance about this issue and there is a reluctance on their part to intervene and adjust the census from the outside in. So, it's been the message that we've received back, that we really do need to focus on the census itself and where the data is gathered.
MR. HINES: Mr. Chairman, I will pass to my colleague.
MR. CHAIRMAN: The honourable member for Chester-St. Margaret's.
MR. CHATAWAY: Mr. Chairman, just a few more questions. An independent report by the Toronto-Dominion Bank of last March gave a message that was not unique, but anyway it was entitled Surprising Drop in Federal Equalization a Major Blow to the Provincial Budget. That reaffirms the truth that many provinces feel exists. Just out of curiosity, how much did Ottawa cut our transfer payments last year, or this year, whatever?
MS. HARNISH: It's shown in the Estimates Book, actually in the Budget Address, in 2003-04, our payments were about $148 million less than we had anticipated when we did the budget the previous March.
MR. CHATAWAY: It's hard to get balanced books without everybody sharing as much as they can. Another thing you hear every so often is what part of transfer payments, cash that is, either from CHST or EPF, do the provinces spend, on average, on health care? Basically the federal government says, okay, you provinces, you're not spending it all on health care and things like this, and I don't think that's a problem with us in Nova Scotia, but, on average, how much of the transfer payments goes directly into health care?
MS. HARNISH: The federal government estimates that 62 per cent of the CHST total transfer is expended on health care in provinces, with the remaining 38 per cent spent on other social programs. We spend almost 44 per cent of our total spending on health care in this province alone, over $2.3 billion in this coming year. I would suggest that we could spend everything they provide and more. The demand for health care dollars appears to be insatiable.
MR. CHATAWAY: Exactly. We are not unique in that circumstance, are we?
MS. HARNISH: We are not unique in that, it's a problem that's being faced by all of the provincial jurisdictions. When we meet with our colleagues as Finance deputies, I'm afraid that we commiserate with each other on the ever-growing requirements just to feed the health care system, often at the expense of other legitimate program needs.
MR. CHATAWAY: Even ex-Premier Romanow came up with that. He went across Canada, at the federal expense, and all that stuff, and he came back with a very clear message, and that seems to be gathering a lot of dust in Ottawa. Have they committed to Romanow's report at all, the recommendations for financial, whatever, to the provinces?
MS. HARNISH: Well, you've heard the Prime Minister indicate that it would be his intent to meet with the provinces later this Summer to start to talk about a long-term funding
arrangement. We certainly are hopeful that the federal government does come through and provide what we would consider to be a fair sharing of health care costs.
MR. CHATAWAY: He may not be the Prime Minister, but whatever, we can't get into that. My, my, that's after the election. Canadians want to know that now, before the election. Anyway, my last question, what part of equalization do provinces pay, on average, on health care? We talked about transfer payments but now we're talking about equalization payments.
MS. HARNISH: I would suggest that equalization is provided to us to support spending in a wide variety of programs and services. I don't think that we've ever taken a look and allocated a specific source of revenue to a specific type of spending, but when you're bringing in a third of your revenue from the federal government and you're spending 44 per cent of your budget on health care alone, it would be quite easy to see that we're spending everything plus more.
[10:00 a.m.]
MR. CHAIRMAN: The time has expired. I will now call on the deputy ministers, either Ms. Harnish or Ms. Scott, if you would like to make any closing comments before we bid farewell.
MS. ALISON SCOTT: I would just like to thank the committee for the opportunity to explain some of what we do in Intergovernmental Affairs. I'm not sure if it's any clearer, but we were pleased for the opportunity, and I apologize again for our delay in attending this morning.
MR. CHAIRMAN: Thank you very much on behalf of our group, we certainly appreciated your attendance. We will now adjourn the formal part and Mr. Steele will take the Chairman for a few minutes and we will take a three-minute break to say farewell to our guests.
[10:01 a.m. The committee recessed.]
[10:03 a.m. The committee reconvened.]
MR. GRAHAM STEELE (Chairman): Okay, folks. Thank you very much for coming back on time. We have a few items of business that do need to be dealt with. The first item is just to review, briefly, how much longer this committee is going to meet before we break for the Summer. In very quick, private discussions with the other Parties, I actually think we have an agreement that we'll meet next week, which is the Department of Health on health information systems; we'll meet the following week on InNOVAcorp, particularly in relation to the issues raised by the company known as Optinova; and then we will break for the Summer.
Could I have a motion to that effect? Mr. DeWolfe, and seconded by Mr. Wilson. Is there any discussion of that plan? Mr. Salmon.
MR. ROY SALMON: Mr. Chairman, as you are aware, it is my intention to table an additional report shortly after June 11th. So, the question comes up as to whether or not you want to have a session on that report. It will contain nine chapters, two of them governmentwide issues, and the other seven on specific audits that we've conducted since December, up until the beginning of May.
MR. CHAIRMAN: Mr. Salmon, I had, in fact, forgotten that, because I believe this is the first time that you're carrying through on your stated intention to issue a mid-year report, is that correct?
MR. SALMON: That is correct.
MR. CHAIRMAN: The honourable member for Halifax Citadel.
MR. GRAHAM: I hadn't known, Mr. Chairman, that this was a possibility. In light of the significance of the Auditor General's Reports, I think it's agreed by all Parties - I know members of the Progressive Conservative Party frequently reference the importance of the Auditor General's Report and the focus on it. I would suggest that, clearly, we need to meet in the wake of the issuance of that report. (Interruptions)
MR. EPSTEIN: Well, I agree completely, but I'm wondering about the scheduling of it, and I suspect it would be a lot easier to schedule if we turned our minds to it a few weeks hence. By that time, members of the committee and all caucuses will probably know better what other obligations they have. For example, we may well be in the middle of a federal election. I know, in addition, of course, that the special committee on gas prices may be up and running. Of course there are regular seasonal obligations that people are going to have. My suggestion is that instead of passing a motion right now that says we break for the Summer, we omit that from the motion and substitute for that the understanding that we would turn our minds to scheduling an additional meeting, but turn our minds to it after we receive the Auditor General's Report.
MR. CHAIRMAN: Okay, it's agreed by the mover and the seconder that the motion is as rephrased by Mr. Epstein.
Mr. Graham.
MR. GRAHAM: Mr. Chairman, I just wanted to be clear. If the report comes out on June 11th, is it Mr. Epstein's suggestion that we wait until June 11th to schedule that next date? I'm conscious of summer schedules as well and if we were trying to pull something together in just a few weeks before, for example, the end of June, that could represent a challenge for some as well.
MR. EPSTEIN: My suggestion was that it's up to the subcommittee really to decide. If the subcommittee can usefully turn their minds to it anytime after today, that would be fine. I had thought that probably we would know a bit more a week or two from now about other obligations and other schedules so it would clarify things. Also when we actually see what's in the Auditor General's Report, it will be easier to judge how pressing and urgent it might be for this committee to come together. Anyway, it's up to the subcommittee.
MR. GRAHAM: May I suggest that we then put the matter over for two weeks to our last meeting and at that time we set aside some time. Or, if it's your wish, for the subcommittee to meet at the end of that meeting and we could make some determinations after we get a sense of what the various caucuses are thinking.
MR. CHAIRMAN: I think that's entirely reasonable. What I would anticipate would happen is that on the day of the release of the report, the members of the committee who are available would receive the usual in camera briefing from the Auditor General and at some time shortly thereafter, probably the following week, depending on scheduling, we would probably have one public session with the Auditor General to discuss the matter in public. That would be the normal course, but I think the suggestion that we reconsider this two weeks hence when we're all much clearer on the scheduling obligations for summer and the items mentioned by Mr. Epstein, I think that's the way to go.
So, with that caveat, all those in favour of the motion, please say Aye. Contrary minded, Nay.
The motion is carried.
Okay. With the exception of what we've just discussed about the Auditor General's Report that would complete our schedule for the 2003-04 season, if I can call it that.
The second item; we have a letter from the Canada Customs and Revenue Agency - actually, specifically from the Minister of National Revenue, which has been distributed. At this point, it is (Interruption). I'm sorry, I thought it had been distributed, it is being distributed now. This is being distributed for your information at this point. It's not a discussion item at this point, certainly not until people have had a chance to read it and consider it. If any member wishes to raise anything arising from the contents at next week's meeting or in two weeks, they are certainly welcome to do that.
The third item is, we've received a little bit more information about the Canadian Council of Public Accounts Committees conference. I believe I'm correct in saying it's August 29th - 31st in Fredericton. The reason that I wanted to raise it today is that I've been informed by the Clerk that in the normal course, this kind of conference would be attended by the Chairman and the Vice-Chairman. If the Third Party wishes to send a delegate, as they have in the past, there has to be a formal request from this committee to the Speaker requesting funding for that. Certainly that's been the practice on this particular committee for as long as I can remember and I don't see why that would change. Nevertheless, we do need a formal motion to that effect. Would somebody like to move that the request go to the Speaker?
Moved by Mr. DeWolfe, seconded - in the spirit of true nonpartisanship - by Ms. More, the member for Dartmouth South-Portland Valley, all to enable the Liberals to attend.
Would all those in favour of the motion please say Aye. Contrary minded Nay.
The motion is carried.
Is there any other item requiring the attention of the full committee before we adjourn? If not, is there a motion to adjourn?
MR. DEWOLFE: I so move.
MR. CHAIRMAN: This meeting is adjourned.
[The committee adjourned at 10:11 a.m.]
