HANSARD
Printed and Published by Nova Scotia Hansard Reporting Services
Ms. Maureen MacDonald (Chair)
Mr. James DeWolfe (Vice-Chairman)
Mr. Mark Parent
Mr. Gary Hines
Mr. Graham Steele
Mr. David Wilson (Sackville-Cobequid)
Mr. Keith Colwell
Mr. Wayne Gaudet
Mr. Michel Samson
[Mr. Wayne Gaudet was replaced by Mr. Gerald Sampson.]
In Attendance:
Ms. Mora Stevens
Legislative Committee Clerk
HALIFAX, WEDNESDAY, FEBRUARY 22, 2006
STANDING COMMITTEE ON PUBLIC ACCOUNTS
9:00 A.M.
CHAIR
Ms. Maureen MacDonald
VICE-CHAIRMAN
Mr. James DeWolfe
MADAM CHAIR: Good morning, I'd like to call the committee to order. Today we have a very full agenda with a large number of witnesses and a very important topic. The usual practice of the committee is to begin with introductions from the members of the Public Accounts Committee as well our witnesses and to offer to the witnesses a brief introduction to the topic at hand. I would ask the witnesses to keep their introductory remarks to approximately three to four minutes, so we have ample opportunity to have a discussion, questions and answers. At the end, there will be an opportunity for a summation.
We have represented here today four departments and I believe Gardner Pinfold Consulting. Gardner Pinfold are here for the purpose of answering questions, so we won't be requesting an introductory statement from them at this point. We have their report. Without any further ado, I will start by asking the member for Halifax Fairview to start the introductions, please.
[The committee members introduced themselves.]
[The witnesses introduced themselves.]
MADAM CHAIR: We'll begin with opening remarks from the Department of Finance.
MS. VICKI HARNISH: Madam Chair, we don't have opening remarks this morning. We had been invited to, I think, talk about motive fuel revenues. We were here in October to talk about that subject. My opening statement at that time is in the book that was prepared by your staff, so I won't repeat it.
MADAM CHAIR: Thank you very much. We'll move now to the Department of Transportation and Public Works.
MR. DAVID DARROW: Thank you, Madam Chair and good morning to you all. We've been invited to address topics of federal-provincial transportation agreements and gas taxes. I will touch briefly on these subjects, as well as some of the challenges facing the department in its efforts to improve the province's transportation infrastructure. The focus of my remarks will indeed be highway infrastructure, given that this has been the primary subject of federal-provincial agreements in the last 20 years.
In fiscal year 2000-01, the province's capital budget for highways stood at just over $61 million. Since that time, government has dramatically increased its spending on road and bridge construction throughout the province. In fiscal year 2005-06, the department will spend more than $160 million on highway improvements. This represents an increase of 250 per cent in the span of five fiscal years.
The new dollars added to our budget during this period have been invested across our entire highway system, including in our 100-Series Highways, our trunk highways and some local roads. We are entering the fourth year of a five-year $50 million steel truss bridge replacement program. Also, we are about to begin the second year of a two-year $60 million program to improve our highway system.
While we're doing much better than we were five years ago, from a highway investment perspective, the reality is that less than adequate highway capital spending over the years has left us with a severe highway infrastructure deficit. In fact, in 2001 it was estimated that upgrading our roads and bridges to generally accepted standards would cost approximately $3.4 billion. Today our highway infrastructure deficit is probably closer to $4 billion.
As I mentioned, Nova Scotia has taken significant strides on its own to address this problem in recent years. The province will collect about $256 million in fuel tax in the current fiscal year. During the same period, the province will spend more than $306 million on Nova Scotia highways. We're spending $50 million more on our highways than we're taking in in fuel taxes in the current fiscal year.
Another reality is, however, that the Province of Nova Scotia does not have the fiscal capacity to resolve this highway infrastructure deficit problem on its own. This brings me to the issue of federal-provincial contribution agreements, and the need for a substantial, stable, long-term national highway improvement funding. In fiscal year 2005-06, the federal government will collect approximately $136 million in motive fuel taxes in Nova Scotia. During the same period, the Government of Canada will contribute less than $5 million towards the cost of highway improvement work in the province. The federal investment in
our provincial highways works out to less than 4 per cent of the total amount collected in motive fuel taxes.
Over the past 20 years, the Government of Canada has contributed towards the cost of highway improvement projects in the province through a variety of programs. You may recognize some of these programs by their acronyms, HIP, SHIP, AFTP, HIPX and C-SIF. C-SIF or the Canada Strategic Infrastructure Fund is the most current program. Last Fall the province and the federal government signed a $61 million agreement for highway funding to continue two projects on Highway No. 101 and Highway No. 104 over the next five years. The problem with these programs is that they take a long time to gestate, the amounts of funding involved have been very limited, and they have been relatively short in duration and narrow in scope.
It is for these reasons that the Province of Nova Scotia has been pressing the Government of Canada for substantial, long-term, predictable highway funding for many years, as have other Canadian provinces and territories. Canada, by the way, is one of only a few industrialized nations that does not have a sustained national transportation infrastructure funding program. The United States and other industrialized nations have focused plans and dedicated funding to improve their transportation networks. Last year, the U.S. renewed its long-term commitment to provide state governments with substantial, sustained funding for highways and transit systems. Under this program, 90 per cent of the money collected in federal motive fuel taxes is returned to the state where they were collected.
Recently, Premiers of the 10 provinces and three territories mounted a collective effort in pursuit of a similar arrangement in Canada. In December 2005, the Council of the Federation released a national transportation strategy, entitled, Looking to the Future: A Plan for Investing in Canada's Transportation System. The development of this strategy was led by the Provinces of Nova Scotia and British Columbia and the Northwest Territories. It calls upon the federal government to establish a national transportation funding program using the proceeds from federal gas taxes as the source of the funding. The Chair of the Council of the Federation has recently requested a meeting with Prime Minister Harper to follow up on this request.
Regardless of the outcome of this particular initiative, we plan to aggressively press the Government of Canada for increased and permanent federal funding that will more fairly reflect the amount of money that Nova Scotians pay to Ottawa in gas taxes. In the meantime, we will continue to try to do the best we can with the limited dollars we have at our disposal to provide a safe and functional provincial highway system. Thank you very much.
MADAM CHAIR: Thank you. I would ask whether Mr. Nathan Gorall, Service Nova Scotia and Municipal Relations, has any opening remarks?
MR. NATHAN GORALL: I don't.
MADAM CHAIR: Thank you very much, that's excellent. We will move right into questioning. The first 20 minutes will go to the NDP caucus.
Mr. Steele.
MR. GRAHAM STEELE: In my several years on this committee, I don't remember an occasion before of having so many witnesses, so this session this morning threatens to become rather unwieldy, especially because the witnesses could address a whole bunch of topics. I hope I don't disappoint many of the witnesses if I say there's one topic in particular that I want to focus on.
Mr. Darrow, I was very intrigued by the comment in your opening statement that there has been "less than adequate highway capital spending over the years" which has left us with a "severe highway infrastructure deficit" which, depending on how you look at it, could be as much as $4 billion. When do you think that that less than adequate highway spending started?
MR. DARROW: Just to address the issue of the number of people here today. As some of you may know, I'm new at the job and don't have the perspective that I felt members should have access to on a lot of issues, so that's why we have brought a number of people with us.
I think the spending on highways - Phil, whether you can address that issue, you are involved in the needs assessment that was done in 2001. I think maybe you can . . .
MR. STEELE: Before we do that. My time is limited and I really want you folks on that side of the aisle to focus on the question that I asked, okay? I have a lot I want to cover in a short period of time. So my question, and the question I want a direct answer to is, when did the less than adequate highway funding start?
MR. PHIL CORKUM: I don't think there is any particular date that we can say it started. This is a phenomenon that happened over many years of not adequately funding highway construction maintenance. It's not something that you can put a finger on and say it happened in such and such a year. So the answer is, no, we really can't say when it happened. We don't know when it happened. It has happened over many years and it's accumulative.
MR. STEELE: For example, when we talk about the poor accounting in the province or the bad financial state the province finds itself in, we don't put our finger on a particular year but we do say it started in the 1980s, when governments were spending far more than they took in.
What I want to get at is the province's claim - which it makes consistently - about how much it's actually spending on roads. The document that I want to focus on is a document that you, Mr. Darrow, provided to the committee to prepare us for this meeting. It's the document that's headed "Spending on Highways and Bridges". It's the fifth document, the fifth page, under the tab "Submissions" in the briefing binder.
The purpose of this document is intended to show, well, look how good the province is, how much we're spending on roads and look how bad the federal government is because it's spending so little on roads. I take it from your opening comments this morning that,
really, the province's focus right now is to point the finger at the federal government and say, if we're going to overcome this deficit, that the federal government better step up to the plate.
I want to focus in my time this morning on the province's claim about how much it's spending. When I look at it, it just doesn't seem to add up. The province claims - and the Minister of Transportation has said publicly - that the province is spending $307 million this year on highways and bridges. That's not really, actually true, is it, because that includes - for example, I'm going to read the list of all the things that this includes: highway, bridge and building maintenance, snow and ice control, ferries and fleet, vehicle compliance, maintenance improvements, and administration, which includes field operations, employee benefits and highway engineering services.
So, for example, the province spends several millions of dollars a year on workers' compensation benefits for its employees and, yet, they count that as spending on roads. Now, would you agree with me that the payments made to the Workers' Compensation Board to the ordinary Nova Scotian shouldn't really count as spending on roads?
MR. DARROW: I would say that all of those things are the cost of doing business, and managing and maintaining our highway system, so I would disagree with you on that.
MR. STEELE: It includes, for example, head office functions. The highway engineering services, I presume, work out of head office here in Halifax, is that correct?
MR. DARROW: There are some highway engineering services here in Halifax, yes.
MR. STEELE: So to the ordinary Nova Scotian, to the guy down in Shelburne County who's got potholes on his road, the idea that turning on the lights in the Department of Transportation and Public Works headquarters in Halifax, that that counts as road spending might seem a little strange. Do you agree that counting head office functions as spending on roads may be a slight exaggeration?
MR. DARROW: No, I don't. I would say that's all a cost of doing business. Those are functions that are essential to the delivery of what I would call the front-line services.
[9:15 a.m.]
MR. STEELE: And to the person in rural Halifax County who's desperate to have their road fixed, the idea that spending on ferries counts as part of roads, do you think that the person might say, well, that's not really what I mean by spending on roads?
MR. DARROW: To those people who rely on those ferries, I would say that they probably consider it to be part of the road system and, certainly, that's why we have included it in the accounting.
MR. STEELE: Do you think that there might be some people who, when they look at this long list of things that the Department of Transportation and Public Works throws in to the mix, that they might say that this number is a little bit exaggerated?
MR. DARROW: I can't speak for others but, as I say, these are all items that are critical to the delivery of this highway program.
MR. STEELE: It's not even, really, the main point that I want to get at today. The main point that I want to get at today is captured on this other document that's just been handed out to you. It's my rewriting of your document. It's also headed, Spending on Highways and Bridges, but the significant difference between your document and my document is that your document accounts for spending in a way that doesn't appear in the provincial budget, that wouldn't be allowed in the province's Public Accounts, namely, that it is what is sometimes referred to as cash spending, whereas, in the audited financial statements of the province, that kind of accounting just isn't allowed. It just doesn't appear because it's not in accordance with Generally Accepted Accounting Principles. So what I've done is restated the figures in accordance with Generally Accepted Accounting Principles and, suddenly, the numbers look quite a bit different.
I draw your attention, in particular to the - well, the first row of numbers, you and I, I think, would agree on this because this is just taken from the Estimates Book - that long list of things that includes employee benefits, turning on lights at headquarters, all that kind of thing. But the main difference between your version and mine is the second row of numbers, which I have listed as amortization for highways, bridges and ferries.
Now, those are the numbers that actually appear in the province's budget documents. Those are the numbers that actually appear in the Public Accounts. Those are the numbers that are actually in accordance with Generally Accepted Accounting Principles. So, Mr. Darrow, I wonder if you could explain to the committee why we should accept the province's numbers when they wouldn't be acceptable in audited financial statements?
MR. DARROW: Madam Chair, I'm going to refer to Greg Penny, our Director of Finance, on that issue.
MADAM CHAIR: Mr. Penny.
MR. GREG PENNY: What we've presented, as you say, is exactly that. It's cash and it's the cash, I guess, that really translates into effective money on the roads. In the Generally Accepted Accounting Principles, there is an amount there for $44 million for amortization. Obviously, amortization doesn't get you any money in the physical network. There are two views of this, obviously, and we've taken the view of the actual cash outlays on the road which is both operating and capital.
MR. STEELE: But you would agree with me that the department's version of the document wouldn't be acceptable if it were to be included in the province's audited financial statements?
MR. PENNY: There are two different methods. I mean, there's the cash and accrual method. Obviously, the province used the accrual method of accounting. We are just trying to present the actual cash outlay on the road, or the actual direct money that goes into the infrastructure.
MR. STEELE: But these numbers in the table provided by the department would not be included in the province's audited financial statements because they're not in keeping with Generally Accepted Accounting Principles, correct?
MR. PENNY: They're in the audited financial statements but they are in different parts. The TCA, the Tangible Capital Asset, is shown in the audited financial statements of the government. We've just taken components from various parts of the financial statements and converted them to the cash basis.
MR. STEELE: Which numbers are in accordance with Generally Accepted Accounting Principles, my numbers or your numbers?
MADAM CHAIR: Mr. Darrow.
MR. DARROW: What that table is intended to show is the amount of money that's spent on our highways in a given year. It's not a financial statement of any kind, it's addressing the issue of how much money we spend on our highways. In this current fiscal year we spent $142 million in TCA funding on our highways. That's what we're trying to portray. We're not trying to portray anything else in that document.
MR. STEELE: The point of accrual accounting, though, in my layperson's terms is that if you're going go add together operational spending and capital spending, it's got to be done in such a way that for accounting purposes, is comparable. The reason why we don't allow cash accounting in the audited financial statements is because adding it the way you've done is adding apples and oranges, and in order to add apples and apples, it has to be done a certain way.
I guess the point is that if you do it in the way that is done in the province's audited financial statements, the numbers are considerably different than what the province conveys to the public. In fact, one might say that the numbers conveyed by the province to the public are considerably exaggerated, because they're using an accounting method that is not acceptable for purposes of the province's audited financial statements. In fact, let's look at the comparison. For example, as the Minister of Transportation and Public Works likes to say publicly, the province is spending $307 million this year on roads, but if you look at it on the other basis, which is the Generally Accepted Accounting Principles basis, the number is actually $212 million. And if you look at your version of the numbers, the province is spending $50.4 million more on roads than it's taking in in gas revenue, but if you look at it in the GAAP method, it's actually spending $44.8 million less.
MR. DARROW: The number that you refer to, with respect to amortization - what we're trying to portray in that document is the amount of highway construction work that was carried out and the cost of delivering that construction work. So if we were to put to you the amortization figure as opposed to the actual dollars spent, that would be a misrepresentation. We're simply trying to portray what was actually spent on road construction work, and that's exactly the number that you have there.
MR. STEELE: The interesting thing, though, is that the current government that we have actually promised to spend even more than that, because their promise wasn't to spend
fuel tax revenue on roads, their promise was to spend fuel tax revenue plus revenue from the Registry of Motor Vehicles on the roads. That, I noticed, has kind of slipped off the radar screen. It's never mentioned anymore, because it makes the numbers I've presented look even worse.
I don't know if you know, Mr. Darrow or Ms. Harnish or our representative from Service Nova Scotia and Municipal Relations, but what is the revenue this fiscal year, 2005-06, from fees charged by the Registry of Motor Vehicles?
MR. DARROW: I don't have that number, Madam Chair.
MADAM CHAIR: Ms. Harnish.
MS. HARNISH: We're looking right now, so if you would just give us a minute we'll see if we have it with us.
MR. STEELE: Mr. Darrow, I don't know if you know, also, and maybe Ms. Harnish will have this as well, but what is the cost of running the Registry of Motor Vehicles? I wonder if any of our witnesses have that.
MADAM CHAIR: Mr. Darrow.
MR. DARROW: I don't have that number, no.
MADAM CHAIR: Mr. Gorall.
MR. GORALL: No, I don't.
MR. STEELE: Ms. Harnish is looking for it. While they're looking for that, I'm going to explain what I think the significance of that is, and that is that if the original promise or what the people of Nova Scotia want, or say they want, is that all the money they're spending on gas tax and Registry of Motor Vehicles fees should go back into the roads, and by that I would suggest they don't mean paying for dental benefits for employees or paying for workers' compensation or paying for lights in the head office, they mean actually paying for the roads, the stuff that they drive on.
One of the things that's difficult to discover, looking through all the government's budget documents is what exactly is it that the Registry of Motor Vehicles takes in compared to the cost of running the registry. Ms. Harnish, with that intro, I wonder, have you had the opportunity now to find that figure?
MADAM CHAIR: Ms. Harnish.
MS. HARNISH: We're checking the Estimates Book right now, because all of the revenues from each of the departments is within the Estimates Book. So if you just give us a minute, we're trying to isolate it.
MR. STEELE: Maybe while Ms. Cody is looking for that, I have another question for you, Ms. Harnish. Is it correct that, in principle, the government tries to ensure that the cost of running a particular unit of government, or if there is fee revenue from a particular unit of government, that it is offset by the cost?
MS. HARNISH: It depends whether it's a user fee or a tax. Taxes are not reflective of the actual cost, and they don't need to be. User fees are. I believe the RMV one - and I'm trying to think about this - may well be a tax as opposed to a user fee.
MR. STEELE: Revenue from the Registry of Motor Vehicles is considerably higher than the actual cost of running that unit, is that not the case?
MS. HARNISH: I believe that one is a tax, that those specific charges, according to the various permits and so on provided, are in fact taxes and not user fees.
MR. STEELE: You mean that when I go and get my driver's licence or get a licence plate, that the province considers that to be a tax?
MS. HARNISH: I believe that one is a legislated tax. I would have to check to be sure, but it seems to me it was.
MR. STEELE: But in any event you'll agree with me that the revenue from the Registry of Motor Vehicles is considerably higher than the actual cost of running that unit?
MS. HARNISH: I'm hesitant to agree until I actually go back and take a look at it. That was my memory of the RMV.
MR. STEELE: Ms. Cody, have you found something?
MS. LIZ CODY: Actually we don't have it broken down in the Estimates Book. We have a rolled-up number, but we don't have it specifically for the Registry of Motor Vehicles.
MR. STEELE: That's precisely the difficulty that we've been having, that although the government promised that it would take all the Registry of Motor Vehicles revenue and spend it on roads, it's impossible to know whether they're doing that or not. So you see the difficulty we have? Meanwhile, in the last little while the government had stopped talking about that bit of their promise.
Okay, so this is all getting back, Mr. Darrow, to the general point, which is that when the province is trying to set up the scenario of look how good we are, look how much we're spending on roads, and look how little the federal government is spending, if you actually look carefully at the province's number, it's a little bit of an exaggeration, isn't it?
MR. DARROW: No, I would say the number that I've presented in that table is an accurate number and it reflects the amount of funding spent on highway construction and the maintenance of our highway system.
MR. STEELE: Even though you couldn't include that in the province's financial statements, and even though . . .
MR. DARROW: That's correct. It's not a financial statement, it's a statement of what money we spent on road construction and road maintenance in the current fiscal year.
MR. STEELE: In the second round - I'll give you a look ahead to the second round of questioning because I know my time in the first round is almost up - one of the things about roads in Nova Scotia, of course, is how mixed up they are with partisan politics, like love and marriage, a horse and carriage, roads and politics go together in Nova Scotia. When we're talking about getting money from the federal government, one of the things I was struck by as I was reviewing the material for this morning is that the announcement of the federal-provincial road funding deal occurred in April 2003, on the verge of a provincial election, but the actual deal itself wasn't signed until two and a half years later, on the verge of a federal election.
I'm just wondering what on earth caused a two and a half year delay between a public announcement of a road funding deal and the actual signing? It leads one to suppose that there was one reason and only one reason why the deal was announced in April 2003, and that's because the government knew it was just on the verge of heading into an election.
MADAM CHAIR: Mr. Darrow.
MR. DARROW: Madam Chair, I'm going to have Phil address that, but I want to say one thing. The federal announcement of funding for highways was actually made in 2001, so it's a five-year time frame to get this agreement signed. Phil, you can address that.
MADAM CHAIR: Mr. Corkum.
MR. CORKUM: When this agreement was first contemplated, it was really different from past agreements in that it involves two federal departments, not only Transport Canada but also the federal Department of Infrastructure. Any time you enter into an agreement there is a lot of negotiation up front as to a time frame for the agreement, putting together the packages that the various federal ministers have to review, their staff have to review. Also, there's the agreement itself, the agreement template. In that time period, we actually went through two complete revisions of the agreement template itself. Now the agreement template is, I believe, 30 or 40 pages long. That agreement template, every time it's changed, it has to go through each federal department for review by staff.
[9:30 a.m.]
Those changes to that agreement template were not initiated by the province. We were very satisfied to use the old template that we used with the SHIP agreement. So that certainly ate up quite a few months, in trying to get that agreement template finalized so that we could get the agreement signed.
MADAM CHAIR: The time has now expired for the NDP caucus.
Mr. Gerald Sampson, for the Liberal caucus.
MR. GERALD SAMPSON: Welcome. I'll preface my remarks by beginning with saying I like to see the fact that our witnesses are gender neutral this morning, there are six men and three women, and that's just about equal, knowing that the three ladies, I'm sure their pencils are as sharp as the hockey sticks have been for the ladies in this present week. Having said that, and giving you a little bit of a shot, I must also welcome Dave Darrow. My dealings with you, sir, have been very positive in the past, and our meeting, I'm sure, was very fruitful, the one that we had two weeks ago.
Having said that, I'd like to begin by saying that I did ask the outgoing Minister of Transportation and Public Works in the Legislature, and at that time he said $3.1 billion, you said $3.4 billion, that the capital project was behind. He also stated that by 2011 we would be looking at $4.2 billion. You stated that right now we are presently at $4 billion behind in capital construction. Not getting into the figures, keeping things simple, I also stated that when you buy a home and take on a 20- or 25-year mortgage, when the mortgage is paid for you know that you own the home.
Where is the fiscal plan? Never mind the federal government, we have a dilemma here in that this is getting higher and higher all the time and we're playing catch-up. So where's the fiscal plan over a period of whatever number of years it's going to take to neutralize this so that we can catch up and every area can be equal, and we don't have this $3 billion and $4 billion? Going the way it's going, within a year or two we're going to be up to $5 billion and $6 billion behind, and we'll never catch up. So is there a fiscal plan to pay off what we owe and catch up, and give everybody the service that's required?
MADAM CHAIR: Mr. Darrow.
MR. DARROW: As I indicated previously, we have a situation here in the province now where we have such a massive deficit in our highway system that to get ahead of it is going to require an injection of funding that is beyond our means, provincially. It's beyond the fiscal capacity of the province to solve this problem on its own. Do we have a plan? We have a plan. We know where the deficiencies are, we know the work that has to be done. It's a question of having the finances to actually do the work. So we have a plan. The thing that we don't have is the adequate financial resources to support that plan at the present time.
MR. GERALD SAMPSON: Well, the dilemma today, nobody is going to be pointing any fingers. All we can do is prepare for today and plan for the future. That's my idea. I look at the Highway No. 104 twinning, New Glasgow to the Pine Tree Road, and the Highway No. 101 twinning, St. Croix to Three Mile Plains, and Falmouth to Avonport, and the interchange at the Joggin Bridge, and the Hectanooga Road, and the grade separation at the Brooklyn Road, and all that is great. I don't see the Cabot Trail in there, which is an international icon that benefits, for example, the whole province, bringing tourists here and whatnot. That should be part of the mix.
What is also missing, and what I see, is people do not mind paying taxes if they get service for their dollar. What I also suggested in the Legislature to the outgoing minister was, and I've always said that, you should know what you're going to do within five years and
definitely know where you intend to be in 10. Could we not make a five-year plan, as was suggested, to take the politics out of paving, so that I can tell somebody, I'm sorry, Mr. MacDonald, but your road is not going to be paved until 2007 and, Mrs. MacEachern, your road is going to be paved in 2008. Guess what, those dates are going to come, and in 2007, that road is done, and in 2008, the next road is done.
What we can have is a solid five-year plan of roads that are going to be paved, and then as we complete the first year of the five-year plan, we then have the sixth year already solidified and we bring that in, so we always have five years of planning ahead. Then the next five years fluctuate, and depending on the severity of the roads or whatever, or any disasters - that's the fluid one - we can always have five years of planning ahead. That adds stability, it adds trust to the people, and you have a plan.
Guess what? Maybe my road is not going to be done until 2010, but sure as heck 2010 is going to come and I don't mind waiting for that, if I know I'm going to get it. I have people who have been waiting since the 1960s and 1970s, as was evident in the piece I put in the paper, because those people did not have their roads plowed. Is there any intent by your department to make that kind of a futuristic plan, so that people can trust you that our road will be done at a certain time?
MADAM CHAIR: Mr. Darrow.
MR. DARROW: I'll just speak to a couple of issues you raised. The Cabot Trail doesn't show up in any of these funding agreements because it's not part of the National Highway System, only segments of the National Highway System are eligible for funding under the federal programs. The issue of us being able to put forward a plan that shows every segment of highway that work will be done on over the next - it would have to be a very long-term plan. As I said, at the present time our capital spending on highways is $142 million, the deficit - we can argue about the precise number - is somewhere between $3.5 billion and $4 billion. To address this issue in a meaningful time frame, say 20 years, would require us spending twice what we're spending now on highway construction. The other fact is that it's not as though our highway system is staying in a stagnant condition, if you will, for a long period of time, things change over that time.
Do we have a plan? What we have is a list of projects that require work, and we look at those projects, we rate those projects. The problem we're facing right now is that we have so many projects in that high-priority category that we can't put together a meaningful schedule to address those issues because we don't know how much funding is going to be available for us. We could do some different scenarios, if we had this much money we could do this much work, but again it's very difficult because the demand far outstrips the supply of funding available.
MR. GERALD SAMPSON: Given the fact that you have a small pie of money, not a large one, a small one, everybody deserves a slice of the pie. I've brought it up in this Legislature, and asked that tenders be called in the Fall so that contractors would know that they have two or three tenders going into the Spring, the families of those people would know they're going back to work as soon as the roads open, and that adds stability to communities and to family life and people will spend some more money.
I understand that tenders are being called in the Fall and early Spring, and I'm glad of that, but what I have in front of me here is a whole list of tenders, I have copies of them all, but, for example, December 5, 2005, 10.9 kilometres for Route 331, Bridgewater to the LaHave River Yacht Club, and - I'll just quote another one here, in the essence of time - 6.4 kilometres of road down in Yarmouth County. What I'm wondering is, with the small pie of money that you have, is there an intent to call tenders on roads that are not held just by present government MLAs? I point to the fairness of this. Everybody deserves to drive on a reasonably good road. It seems that politics is still alive and well in that, in the fact that those tenders that are being called are on the government side of the House.
MADAM CHAIR: Mr. Darrow.
MR. DARROW: The reality is that the need, if you will, in terms of if you look at the condition of our highway system and look at our infrastructure deficit, it's not consistent across the province. There are some areas that are in greater need than in other areas, for a variety of reasons. One would certainly be why is that the case. Road conditions vary from one area of the province to another. As I mentioned before, when we're identifying priorities for consideration, we take into account the road condition, we take into account traffic volumes, and a variety of criteria.
But if you ask the question, why isn't the spending consistent or at the same level across every area of this province, one of the reasons for that is that it hasn't been that way in the past and that in some areas the highways are in better shape than in other areas of the province, consequently, more effort is put into those areas that need the work.
MR. GERALD SAMPSON: I was recently down in Chester and then went into Yarmouth County and heard the same complaints down there, or the same concerns - I shouldn't say complaints, the same concerns - about the rural roads as I hear down in Cape Breton. As I said in this House, I break the law almost every time I travel to and from Halifax, either you drive on the paved shoulder, which is illegal, or you straddle the lanes, and this is the TransCanada that I'm coming on. It's my intent to travel around the province on the rural roads and just see exactly, getting the route numbers.
Rural roads, is there a specific amount of money, out of this small pie that you have, designated for rural roads? People who live on rural roads, it's tough enough, but per capita people in rural areas spend more on fuel than people in the city. If I travel my constituency, it's a tank of gas to go North of Smokey, it's a tank of gas to come back. My riding is four and a half hours from boundary to boundary, yet a tank of gas in Halifax would do me probably two weeks, whereas I go through a tank in a couple of hours when I travel my riding. Is there a specific amount of money earmarked for rural roads?
MADAM CHAIR: Mr. Stewart.
MR. DOUG STEWART: No, the direct answer is there's not a specific amount of money for rural roads in the capital program, there is in the maintenance program. There's the RIM program, which I suspect most of you are aware of. That's dedicated to non-100-Series Highways, which is what I presume you mean by rural roads. In regard to the capital program, there's money taken out of that for the cost-shared agreements with the federal
government for what we call capacity building, which is like Highway No. 101, and some work we do ourselves, like Highway No. 103, which is not on the national highway system, so it's not cost shared. We typically take $20 million to $25 million for repaving and resurfacing on the 100-Series system across the province. Basically the balance goes to what you're referring to as rural roads. The amount of that funding varies depending on the budget we get.
MR. GERALD SAMPSON: I'd like to know what steps the government is taking in regard to innovation. I'll cite just the common old thing that everybody understands, potholes. We're still going around throwing what's called cold patch, which is just tar and gravel mixed together and fired in a hole, which is usually half-full of water and it lasts in the vicinity of anywhere from 15 minutes, if you're lucky, to possibly half an hour. Given the technology that's available out there, and some of this you've heard me mention in our meeting, why can't we come up with some kind of a material, whether it's an epoxy material that's mixed on site, put into a pothole, and would last at least until the Spring comes and it can be redone properly.
Are there are any technological advances or innovative programs that you have in your planning? Given the number of universities and sharp students we have, somebody surely could invent something that we could put in a pothole other than tar and gravel. It's gone by the wayside. It's 40-year-old technology that just doesn't keep up with today. Is there anything that's on the horizon that we can look forward to, rather than weaving in and out of these potholes?
MADAM CHAIR: Mr. Stewart.
MR. STEWART: Perhaps I'll answer that. We use the same techniques as highway departments across the continent do. Typically we use, as you say, cold pitch in the wintertime, the best patching you can get is hot mix asphalt, unfortunately through the Winter season there's typically only one plant in Halifax that produces it, so it's hard to use it in most areas of the province. We have tried a number of different things, we've tried some spray-patching machines, which sprays kind of a chip seal into a hole, we've used automatic patching machines which repair holes fairly quickly, but we had difficulties with Environment and Labour in terms of the signing regime and stuff that we use.
[9:45 a.m.]
So most often what we use is cold mix. If you put cold mix in on a decent day in the Winter, it will stay for a long time. As the member suggested, if you throw it in the water, it doesn't last too long.
MR. GERALD SAMPSON: I'd like to just cite one thing done that was innovative by a certain group of people, you'll probably know the area. They took an old-fashioned cement mixer, put in cold, plain asphalt, added a little bit of tar to it, heated it up with a propane torch, put it in an old-fashioned washtub, and would drive out while it was hot, put it in the hole, roll it with the tire of the vehicles, and it would last. Unfortunately, I think we're going into the fourth or fifth year now, and the Department of Environment and Labour official came along and caught the guys doing this and they came that close to being fired.
Now, what they're hoping for is that you will allow them to shut down a lane with a truck with a flashing light bar and a couple of signs. They tell me that the most dangerous part of shutting down a lane is putting out the barrels and the pylons, and then taking them down. That's where the risk to their lives exists. It takes an hour to shut down a lane and another hour to open it back it up, because they have to have a specific number of barrels and pylons to do a five-minute patch job on a hole. That's what's consuming the money.
We're looking for efficiencies from within - and I understand it becomes a workplace, once they get on-site it's no longer the Department of Transportation and Public Works, it's a workplace site and comes under the Department of Environment and Labour, but my gosh, somebody should be able to make a decision within five years, allowing somebody - if you're coming down a highway and there's a truck with a light bar and a man with a stop sign, surely to God you have to put the onus on some of the drivers to see that flashing light or lights and slow down, and allow these workers, rather than costing two and a half hours in wages to do a five-minute hole, let it cost a half-hour total from beginning to end. Is anybody pushing the Department of Environment and Labour to make a decision on one little paragraph in the booklet that's used for highway safety?
MR. STEWART: It's difficult from this chair to disagree with the member's view on that particular issue. Certainly the change in sign regulations has made it a lot more difficult to repair small and simple problems on the road. We are in discussions with the Department of Environment and Labour about revisions to the traffic control manual with the view to trying to expedite some of those smaller maintenance jobs. The views you got from the staff are correct. I would agree that it's certainly more dangerous to spend an hour standing on the road setting up cones and signs and barrels and then taking them down than to be out there for a couple of minutes to fix the hole. But you have to live within the legislation and the regulations that you work with and, yes, we are dealing with the Department of Environment and Labour on that.
MR. GERALD SAMPSON: That's good to hear. The new broom sweeps clean, hopefully. I would like to focus on the workers and a situation that existed here recently, after the last snowstorm. Thank heavens we only had a couple of snowstorms. But we had two heavy pieces of equipment broken down in my specific area. I've called around other areas where they had snow, around the province, and I heard that out in Hammonds Plains this has been the worst year yet for removing snow, and equipment that's old and ancient and breaking down.
A lady, she edited the first line out - my opening statement was the haywire and the baling twine finally let go. So she eliminated that out of the article. That was an exaggeration, but when these guys - and I call these guys not operators but magicians, because when you can take a 30-, 35-year-old piece of equipment, and sure it works on a sunny day, but when it's pushing heavy, wet snow and it's being strained, this is when the breakdowns occur. I think the transmission went in one of the big plows, because of the age and whatnot. It's time to refurbish some of that equipment.
I'm just wondering - and I'm tying this in with we have a large exodus of part-time operators. These guys cannot make a living hoping that they get a shift every three weeks. You can't provide for your family with that. So what do they do, these are qualified
technicians and operators, they've all gone out West, making large amounts of money and we'll probably never entice them back. Is there some kind of a plan to upgrade the equipment, and also stand by operators? I remember the days, once they were hired on in the Fall, rain or shine, snow or not, they were paid their shift, and if a storm came, out they went. Now, we're asking and coaxing and putting more money out . . .
MADAM CHAIR: Mr. Sampson, I'm sorry, the time for the Liberal caucus has expired. We'll come back for an answer to that question.
The honourable member for Pictou East.
MR. JAMES DEWOLFE: Good morning, gentlemen and ladies. I guess the first thing that I would like to address is the funding agreements with Ottawa. In particular I have a great deal of interest in the twinning project, as you very well know, in Sutherland's River. That project, it's nice to see the stakes in, and I understand the bush cutting and brush cutting is going to take place. Through you, Madam Chairman, to Phil Corkum, I know we've had meetings, public meetings as well, in the area, and the general consensus is that the people in that area are quite happy now with the decision on how we're going to go about that project. I'm wondering, first of all, that should be a cost-shared project, 50/50, is that correct?
MR. CORKUM: That is a cost-shared project with the federal government, yes, under C-SIF.
MR. DEWOLFE: Is that going to be a 50/50 agreement with the federal government? Was that agreement made?
MR. CORKUM: The agreement, C-SIF 1, was signed. C-SIF 1 is for Phase 1 of that project, which runs from New Glasgow to Pinetree Road. Phase 2 will be in C-SIF 2.
MR. DEWOLFE: That's going to be great, to get that done. We're really looking forward to that.
MR. CORKUM: One thing I'd like to clarify about the cost-sharing, these agreements typically are called 50/50 cost-sharing agreements, and that's not exactly the case.
MR. DEWOLFE: I understand that.
MR. CORKUM: They're federal contribution agreements, because the contribution the federal government makes is to 50 per cent of the eligible cost of the project. The eligible cost, basically, is the construction cost of the project. It's kind of a misnomer to call them 50/50 cost-sharing agreements. I'd just like to clarify that.
MR. DEWOLFE: Right, and I will be going to the deputy. I see you're quite interested in this topic, with regard to the federal-provincial transfer agreements. It is interesting to note that there was an agreement signed with regard to funding for the municipalities. I believe that took place last September - that agreement went into place. That agreement provides some $17.4 million to Nova Scotia municipalities. I guess the major stakeholder in that
would be HRM. I think they're getting around $7 million, and the rest of the municipalities $10 million, at least out of the first year of this agreement. That should be a great help to the municipalities, wouldn't you agree? This is new money, is it not, to the municipalities?
MR. DARROW: Certainly. We're envious, I could say, that they're getting that funding. I understand that the source of that funding is the federal excise tax on fuel.
MR. DEWOLFE: So it's being expanded from the $4 million or $5 million that we used to get up to $17 million, and during the course of this agreement it goes up to somewhere around $58 million in the fifth year.
MR. DARROW: That's correct.
MR. DEWOLFE: Does that then continue or does it die in the fifth year? Is that a five-year agreement? How is that laid out?
MR. DARROW: Madam Chair, I'm going to have to defer to Nathan. I think Nathan would be in the best position to answer that question.
MR. GORALL: It's a five-year funding commitment from Ottawa. It's a 10-year agreement. The anticipation, at the municipal level and certainly from the previous administration in Ottawa, would be that it would continue at about $58 million per year, in Nova Scotia, starting in the year six through year 10.
MR. DEWOLFE: The current federal-provincial agreement to the province - getting $5 million is really not adequate for the amount of money they collect, hopefully we, as a government, will be negotiating with Ottawa now that we have a new transparent government in place in Ottawa that may be more receptive to the concerns of rural Canada. Is that an ongoing negotiation? There should be much more money available that could be utilized in a transportation agreement, considering that this government in Ottawa will not be frittering away taxpayers' money on such things as sponsorship programs to friends of the Party, and also the $1 billion boondoggle that is referred to as the gun registry. Is a transportation agreement with Ottawa a possibility?
MADAM CHAIR: Mr. Darrow.
MR. DARROW: That's a very difficult question to answer. What I can tell you is that we continue to make representation, and I think pretty compelling representation to the federal government. This is not just the Province of Nova Scotia, it's really all provinces and territories in the country. We appreciate any funding we get, I should say that, but it would be very helpful if we could see some substantial funding over a lengthy period of time. Predictability is a big issue when you're planning for highways, because, as I mentioned in my opening remarks, there's such a long gestation period. So being able to predict five, 10 years out gives us a leg up in many areas, in terms of getting maximum return on our investment in the highway system.
MR. DEWOLFE: Is there indeed a transportation agreement with some of the other provinces, like New Brunswick? Do they have a transportation agreement with Ottawa? Do you know if they do?
MADAM CHAIR: Mr. Corkum.
MR. CORKUM: Yes, they do. New Brunswick does, under C-SIF 1 and 2. They also have agreements, and they did in the past under the old SHIP program, as well.
MR. DEWOLFE: In travelling across Newfoundland, I noticed that the main highway system across Newfoundland is more than adequate, I would say, and not highly travelled. They must have also received a great deal of money from Ottawa for that amount of highway structure, they did not?
MR. CORKUM: I'm not sure of the amount of money, but they, too, as well, received money under these federal programs.
MR. DEWOLFE: I'm really looking forward to some fairness in the future, with the co-operation of the federal government and the provincial government in Nova Scotia, because, as was indicated by the deputy, we can't do this alone. Obviously, the only avenue we have is through Ottawa. That is indeed an avenue that we're going to have to pursue vigorously, I would think, particularly in the early stages of this government so that they totally understand the need for an improved highway system in Nova Scotia. Certainly our TransCanada should be twinned from Sydney right to the U.S. border. There's no question, the infrastructure is highly needed. Having said that, I'm going to pass to my colleague, the member for Kings North.
MADAM CHAIR: The honourable member for Kings North.
MR. MARK PARENT: Madam Chair, I'm going to start with questions about Highway No. 101. I've been a passionate advocate for the twinning of Highway No. 101, even prior to getting in office in 1999. I'm delighted to see that our government has been the one that started to do the most work on this. I was a little concerned with the recent agreement, on the slowness of it, of the next staging of Highway No. 101. I went to the agreement signing between Minister Ron Russell and Minister Scott Brison, at the time. Minister Russell made it very clear that the holdup in the agreement, the reason why it took so long to get it signed, was really on the federal side, that there was a delay on the federal side. He wasn't refuted by Mr. Brison, who admitted that that was the case, at the conference, by his silence.
The question I have, then, is that the federal government, through a slowness in getting these agreements signed, why do they not then bear a responsibility for the added costs that come, because if you don't get the agreement signed for two years, for example, you're going to have added costs for buying the material for paving, added costs for labour, there's going to be added costs. Does the federal government bear that added cost? In your comments, you indicated they didn't. Do they have any reason for this, when they're at blame for the delay?
[10:00 a.m.]
MR. CORKUM: No, the federal government has told us, our indication is, that they do not pay for any cost increases. I would just like to point out that regardless of when the agreement was signed, the increasing costs, really, were not tied to the fact that the agreement was signed two years after it was announced. The costs would have increased regardless. Someone would have had to pick up those extra costs. According to the rules the feds work under, they do not fund cost overruns for any provincial-federal cost-shared projects.
MR. PARENT: But that's the very point I'm making, if the agreement had been signed two years earlier and the money had started flowing, you wouldn't have had those extra costs or you wouldn't have had all of those extra costs, at least.
MR. CORKUM: Well, the agreement is a five-year agreement. Certainly the way the projects have to be cash-flowed over five years - once construction does start, it's a fairly slow process, as you can see on Highway No. 101. Over time, the costs are going to increase on an active project by the time the tenders are all called and that project is completed.
MR. PARENT: And there's no factor in the federal government contribution for those extra costs?
MR. CORKUM: No, they simply do not pay for cost overruns on projects, and this is a federal rule for any federal-provincial projects.
MR. PARENT: Even if those overruns are natural inflationary overruns? I think it was said that when they trumpet 50/50, it's not really 50/50 because it's not including other things that need to be costed, plus it's not including the inflationary factors that would come with normal highway maintenance, even if there wasn't the delay which there was on Highway No. 101.
MR. CORKUM: Yes, that's correct. It's a 50/50 cost-sharing on the eligible costs, which are essentially the construction costs . . .
MR. PARENT: At a given point in time.
MR. CORKUM: . . . at the time of signing. That's basically the rules.
MR. PARENT: One of the factors that Minister Russell indicated may have been a factor in the agreement for the second stage of Highway No. 101 not getting signed as quickly as it should is that there are two federal ministers who have some say in highway spending. His argument was that if it went back, at the federal level, to being a responsibility of one minister, it would be easier to get these agreements signed. Would you agree with that?
MR. CORKUM: Well, any time that you have to involve two departments, or more than one department, the staff of each of those departments have to review all the documentation before something is signed. Certainly every time you add a partner - basically, these are three-partner agreements, because they're signed by three ministers - to an agreement, it complicates the agreement and increases the length of time that it takes to put
the agreement together. So, certainly, dealing with one minister probably would expedite things in that respect.
MR. PARENT: Now, I noticed on Highway No. 101, the section that we did twin already, we did a concrete section, a test section. Concrete costs how much more than asphalt? Do you have that figure off the top of your head?
MR. CORKUM: I don't - I don't know, Doug, if you do - off the top of my head.
MADAM CHAIR: Mr. Stewart.
MR. STEWART: Typically the concrete upfront cost is about 30 per cent more than asphalt. If the concrete comes in at 30 per cent or less above the asphalt price, then if you do a life cyle costing on them, the concrete gives you better value, but the upfront cost is always higher for the concrete.
MR. PARENT: There's severe cracking in large parts of that concrete, and I've raised this. I've been informed that there's enough sufficient hold back from the money that was due to the company that did it that we can force them to come fix that, adequately. Is that accurate?
MR. STEWART: That's correct. We have hold back from the contractor, and we're in discussions with them about getting those repairs done this upcoming construction season.
MR. PARENT: So we should be able to see those fixed at their dime, because they're the ones who made the mistake.
MR. STEWART: That's correct.
MR. PARENT: I just wanted to get public assurance of that, because it's something that concerned me.
MR. STEWART: The issue causing those cracks is actually a workmanship issue, not the concrete product itself, which is why that's back on the contractor. They poured it as a seamless slip form thing, and they have to put cut shrinkage cracks in, and they just didn't saw those deep enough. That's why you're getting the cracking, so that's workmanship, so that's their issue.
MR. PARENT: That's their responsibility, and they will fix it. Coming back to the twinning and to the extra costs that come when there's a delay or even when there's a normal construction of highway inflationary costs over five years, I guess I'm passionate about this delay because I want to see - I know it takes time to construct highways, but I get frustrated when we have problems with federal bureaucrats over something that affects the lives of my people. There was another accident just today, on Highway No. 101, that resulted in a death. We said before, when you look at Highway No. 101 versus other 100-Series Highways, the number of accidents are roughly the same on un-twinned highways, that's not a problem, but the severity of the accidents on Highway No. 101 seem to be higher, they result in tragedies like this.
So with the twinning of Highway No. 101 to Coldbrook, passing lanes thereafter, we'll still have driver error, we'll still have accidents with the weather we have in Canada, but hopefully we won't have the deaths. That's why I'll push the provincial government, I'll push the federal government. I get frustrated with the delays. Do you have any insight into why there was a bit of delay on the last section? Was it just dealing with these two departments?
MR. CORKUM: Do you mean the delay in signing?
MR. PARENT: The delay in signing the agreement, yes.
MR. CORKUM: Well, as I explained previously about the administrative stuff around putting an agreement together, such as the agreement wording itself, we've approved two different versions of the agreement, the actual template, the actual wording, and major changes were made to that twice. Of course when you have three parties, it has to go through the staffs of each department to be satisfied before the agreement is finalized. Plus, there were other issues around the projects themselves. We had environmental assessments to complete, and designs to complete. We weren't, at the time of the announcement, ready to go in a month's time with construction. There were project-related issues that we had to get done.
MR. PARENT: Those environmental assessments typically take how long?
MR. CORKUM: They can take up to two years, to do an environmental assessment on a major project. Of course anything that's cost-shared with the federal government has to go through the federal environmental assessment to get approved and also, in certain cases, provincial environmental assessment.
MR. PARENT: I'll come back, because my time is running. Just a sort of closing comment, when you talked, deputy minister, about how in the past things weren't funded perhaps as fairly and so that's why there's certain funding that goes into parts of the province versus others, to try to bring some equity to the situation. In 1993, in the riding I represent, when the Liberals came into power, we received zero capital funding; 1994, zero; 1995, zero; 1996, zero; 1997, zero; 1998, zero; zero in, and then 1999, we started to get not even our fair share, but we started to get some funding. I just wanted to support what you said. I think we're moving in a better direction than we've moved in the past. There is some equity that needs to be brought in to compensate for that in the past, but I think there is far more objective data and far more work being done that will ensure fairness in highways than I have seen when I looked at those figures from 1993.
MADAM CHAIR: Mr. Darrow.
MR. DARROW: Can I speak to the issue of federal-provincial agreements? I've been involved in negotiating and administering federal-provincial agreements for 22 or 23 years now, from municipal infrastructure agreements to the Sydney tar ponds project. The highway agreements are not unique, in terms of the time required to get them through the system. I can't answer why that is, certainly having to deal with two ministers at the federal level has
added another layer of burden on the process. Beyond that, I really can't provide a lot of insight into the problem.
MADAM CHAIR: The time has expired. We will now have a 12-minute round for each of the caucuses, starting with Mr. Steele.
MR. STEELE: I'm going to do something I haven't done for a while, and that is I'm going to turn back to the Progressive Conservative platform for the 1999 election. It seems like a good time to do it, because, of course, this was the election that brought John Hamm into the Premier's office and we're a couple of days away from his leaving the Premier's office. I just want to read to you some of the promises made in that book, and we'll see if this has actually happened.
Okay, the first promise, ". . . discontinue the Liberal practice of spending a disproportionate amount of the highways budget in government ridings." Has that been accomplished?
MR. DARROW: I haven't had the numbers; I haven't looked at the numbers.
MR. STEELE: Does your department track spending that way, riding by riding?
MR. DARROW: We are in the process of compiling that information as the result of a request that was made to us by the Economic Development Committee of the Legislature. That information should be available within the next few weeks. We're just waiting for some more accurate forecast information to come in. I don't know what those numbers are at this stage of the game, I can't tell you.
MR. STEELE: So you couldn't say one way or the other whether government ridings get a disproportionate share of paving compared to a non-government riding.
Promise number two, "Establish a comprehensive, non-partisan, multi-year plan for maintenance and upgrading of secondary roads, based on need, rather than on partisan politics." Has that been accomplished?
MADAM CHAIR: Mr. Stewart.
MR. STEWART: The repaving program, which I assume is what you're referring to, is compiled. We have 14 operating areas in the province, and they identify what they see as the roads most in need of work in their areas, and they're funnelled up through four districts. Those district lists go into our technical branch. They run a series of tests, strength tests, roughness tests, things of that nature, and then we apply factors relating to traffic volume, pavement roughness, the degree of maintenance costs associated with upkeeping that road, and come up with a list. That's the basis for generating the repaving list.
MR. STEELE: That's the basis, but the real question is, who makes the decision? Is it the professional staff of the Department of Transportation and Public Works who make the final decision, or is it the politicians?
MR. STEWART: Tenders are brought forward, the minister is obviously the person who signs the tender, not staff.
MR. STEELE: Just work with me here, who makes the final decision, the professional staff of the department or the politicians?
MR. STEWART: Professional staff bring forward recommendations, and the minister signs those or he doesn't.
MR. STEELE: The minister signs it or he doesn't. In other words, the politician has the last word on what gets done.
MR. STEWART: The minister has the last say.
MR. STEELE: Promise number three, "Dedicate all taxes raised through motor vehicle licensing and fuel sales to highway construction and maintenance to provide a solid base for highway spending which may be increased depending on public need and available revenues . . ." In other words, what they're promising is that motor vehicle licencing revenue and taxes on fuel sales will be the floor, and if there's more money available, they'll spend more. Now, in the analysis that I presented earlier, I indicated that that in fact is not happening.
However, let's say for the sake of argument that the analysis that I presented earlier is not one that we should accept, even though it's in accordance with Generally Accepted Accounting Principles, let's just take the department's analysis, which is done on the cash basis. Now even on its own terms, that promise hasn't been kept, has it? Revenue from motor vehicle fees this year, the latest forecast from the provincial government is that it will amount to $87.758 million, which means that even on the terms that the department uses, you're still falling $37 million short of what that promise says. Is that not correct?
MR. DARROW: I'm sorry, I missed the $87 million figure.
MR. STEELE: The revenue from the Registry of Motor Vehicles in 2005-06, in the latest forecast issued by the Department of Finance on December 14, 2005, is $87.758 million which means that even on its own terms, you're falling slightly more than $37 million short of that promise. Is that correct?
[10:15 a.m.]
MR. DARROW: Well, I think, to be fair, you would have to net out the cost of delivering that service. Once you do that and you take into account that - I think you'll find that the numbers on revenues will be down because of consumption being down, of late in any event. I think you'll find that the numbers are pretty close. We'll look at those numbers and provide them to the member once we've had a chance to . . .
MR. STEELE: I do agree with you that you have to net out the cost of the Registry of Motor Vehicles, the problem is, as we found earlier, nobody can actually say what that is, because it doesn't appear anywhere in the Estimates Book. Now, I believe that Service Nova Scotia and Municipal Relations does have that number somewhere. So you can deduct that
amount, but it's only going to be a few million dollars, really, to run the Registry of Motor Vehicles. So even on the department's own analysis, that promise that was made in 1999 hasn't been kept, and in fact the Progressive Conservatives, lately, have dropped any mention of the Registry of Motor Vehicles fees because it doesn't make the numbers look as good as they want them to look.
Let me move on, then, to the federal-provincial highway agreement. The difficulty I have, first of all, is with the idea that something could be announced in April 2003 but the actual agreement isn't signed until two and a half years later. Now that's a responsible way to run a business. I'm not pointing the finger at you and saying you shouldn't do that, I'm just saying the government shouldn't be announcing stuff two and a half years before we actually know what the terms of the deal are. One can only surmise that the reason was because they were on the eve of a provincial election.
Now, Mr. Corkum, you've said, well, the template was changed, the wording was changed substantially, twice, over the course of that two and a half years, but doesn't that mean that the announcement in April 2003 was simply premature, that there was no deal, and therefore it was only partisan considerations that could have led the government to announce the deal when there wasn't even agreement on the wording?
MR. CORKUM: I can't comment on the reason for the announcement being made when it was made.
MR. STEELE: Is that normal business practice, in your experience, of the Department of Transportation and Public Works, to have a two and a half year gap between announcement and signature?
MR. CORKUM: There's really no normalcy to any of these. Every agreement you enter into is unique, and there are circumstances particular to every agreement. As I said before, in this particular instance, when the agreement was announced, we weren't ready to construct anything. We had a lot of work to do in the environmental assessments and design, so even if the agreement would have been signed that year, we still wouldn't have been able to do any construction because we simply weren't ready. There are issues particular to every single agreement that you get into that are unique to that particular situation.
MR. STEELE: Is this normal, though, or is this highly unusual, in fact, to have a two and a half year gap between announcement and signature?
MR. CORKUM: This was really the only - as far as my own experience - agreement that I've been involved in, as far as the signing of the agreement itself. So as far as answering the question, whether it's normal or not, I'm not sure what is normal.
MADAM CHAIR: Mr. Darrow.
MR. DARROW: I'll speak to that, if I could. As I say, I've been involved in the negotiation of municipal infrastructure agreements with the federal government and the Sydney tar ponds agreement. It's not unusual, I would say, and I don't have precise numbers with me, but I think if you look back at the track record, it's not unusual. The other thing I
would like to emphasize is that the $2 billion that was announced for the C-SIF program, that was announced in 2001, so it's more than two and a half years, it's almost five years from the time the funding was announced until the agreement was signed.
MR. STEELE: One of the suggestions that has been made is that one of the delays on the federal side was that the sitting federal Members of Parliament for that area, including the person whose signature ended up on the document, wanted more of the work done in their own constituencies and while they were trying to get that into the agreement, that was one of the reasons for the delay. Can you comment on that? Is there any basis for that or none, in your view?
MR. CORKUM: I can't comment on that at all. I have no knowledge of that whatsoever.
MR. STEELE: Now, is it possible that that was one of the reasons for the delay, that the federal government wouldn't sign the agreement until their local members got more work in their ridings?
MADAM CHAIR: Mr. Darrow.
MR. DARROW: I would say that I don't know that to be precisely the case, but I think it's fair to say that there's a certain amount of give and take that takes place between the federal government and the provincial government. We have our priorities, the federal government has its priorities, and, as I say, there's a bit of give and take that takes place and that does have a tendency to consume time. That's all part of the negotiation process. As I say, I can't say in this particular instance that that was the case.
MR. STEELE: You see, the difficulty that we have here is, we all know that roads and politics are deeply intertwined in Nova Scotia. We all respect the work that the professionals in the Department of Transportation and Public Works does but the practice of mixing up roads and politics is never going to stop until the people sitting in your chairs make it stop, until you come out and actually say, yes, this is happening, this is what happened, we can't sign off on this. We want it to be clear this is not our decision.
As long as civil servants are prepared to come and defend it or try to explain it, or to dance around it by using circumlocutions about what exactly is going on, it's never going to stop. That has the effect of protecting the politicians. Do you see what I mean?
Now, the Progressive Conservatives said in 1999 they were going to take politics out of paving.
MADAM CHAIR: Mr. Steele, your time has expired.
MR. STEELE: I haven't finished my speech yet. (Laughter)
MADAM CHAIR: You'll have to save it for outside. I'd like to recognize Mr. Colwell.
MR. KEITH COLWELL: Thank you very much. I'm going to ask questions of a little different venue here.
The province has entered into an agreement with the municipalities to do subdivision streets on a cost-share basis. Beginning, I believe, in 2001 or 2002, that process started again. I believe you had about $1 million on a project, the funds to do that, is that correct?
MR. STEWART: Yes, that's correct.
MR. COLWELL: What's your plan this year for that funding? Is that going to increase or stay the same? What amounts are proposed for this year?
MR. STEWART: The program you're referring to is the aid to municipalities for paving J-Class streets. It's our intention to run that program the same as we have in the past, at the same level and scale, whereby, we set aside money for counties based on the inventory on J-Class roads. The municipalities submit their priorities and we allocate the money in order of their priorities.
What we are going to add this year, based on feedback from a number of municipalities, because the aid to municipalities program is specific to J-Class roads or subdivision streets, as most of us know them, there are circumstances where you'll have an older road, a G- or an H-Class road that connects to a subdivision and that connector road was not eligible before. So we're going to set some money aside this year, again, on a cost-shared basis, that if the municipalities bring them forward, that will enable those connecting roads to be paved.
MR. COLWELL: How much money did you put into it last year?
MR. STEWART: Aid to municipalities, $1 million, provincial share.
MR. COLWELL: Provincial share, yes, I understand that. Now, that program was discontinued in 1999, 2000 and 2001, is that correct, by the present government?
MR. STEWART: I'm sorry?
MR. COLWELL: There was a program in place in the early 1990s, mid-1990s to late 1990's, but in 1999, 2000, 2001, that program was stopped for a short while by the present government, is that correct?
MR. STEWART: I don't know the specific dates but there is certainly a period of time where there was no aid to municipalities program, yes.
MR. COLWELL: Okay. Has the department done a cost analysis on the savings of maintenance for gravel roads, as compared to a new paved road?
MR. STEWART: In the long run, on a pure maintenance cost, there is no difference. Gravel roads are more expensive to maintain in the Summer. Paved roads, because you salt them and they have a higher level of service, are more expensive to maintain in the Winter.
When you add in the capital cost of repaving the paved roads, typically, they're more expensive than gravel roads.
MR. COLWELL: Even with the 50 per cent cost sharing with the municipality?
MR. STEWART: That would make them, I guess, from the provincial perspective somewhat cheaper in that my analysis is just road to road, not including any cost sharing on capital costs.
MR. COLWELL: The municipality, when I was a regional councillor, did a study and they said that the savings that they have found from a gravel road to a paved road is a seven-year payback, if the municipality paid for 100 per cent of the road. They must have used different criteria than you guys did.
MR. STEWART: I can't comment on their figures. I just know from an analysis of our system, looking at all in-maintenance costs, that the gravel roads are more expensive in the Summer and paved roads more expensive in the Winter but, essentially, it's a saw-off, excluding the repaving cost 20 years down the road.
MR. COLWELL: Now, are there going to be any special programs, like in HRM or any other place, that would pave any more subdivision streets in the upcoming year, requests for that or anything like that, that have been put forward?
MR. STEWART: The letters would have gone out to the municipalities for the aid to municipalities program a week before last, I think.
MR. COLWELL: Would it still be the same basis of distribution between the different municipalities?
MR. STEWART: Yes, that's correct.
MR. COLWELL: So, really, no change in the program this year coming?
MR. STEWART: On the basic J-Class paving, that's correct.
MR. COLWELL: When you say the G- and H-Classes, is that still going to be covered under the $1 million total?
MR. STEWART: No, that would be a separate $1 million.
MR. COLWELL: That's a separate million, so it's actually another million into the G and H?
MR. STEWART: They're two separate programs but they're both $1 million, yes.
MR. COLWELL: Under the G- and H-Class roads, is that going to be 50 per cent cost sharing with the municipality or 100 per cent by the province?
MR. STEWART: It'll be 50/50.
MR. COLWELL: Is there any plan to increase the spending on this to get these roads cleaned up in the future?
MR. STEWART: Not that I'm aware of.
MR. COLWELL: I turn the rest of my time over to my colleague, Mr. Sampson.
MADAM CHAIR: Mr. Sampson.
MR. GERALD SAMPSON: Thank you. In the interest of time, I would like to just recognize some Department of Transportation and Public Works employees. I apologize to any names I miss, but off the top of my head - and these are employees in my local area: Gerard Jessome, Steve MacDonald, Louis Ferguson, Danny Laffin, Angus MacIntyre, Bill Youden, Bill Swain and Jamie Chisholm. These are people that I deal with in my local area, and some others that I haven't mentioned.
I don't have a complaint with any one of those guys. To me, that is indicative of Department of Transportation and Public Works employees throughout the province. So, therefore, I got this group of good people that are willing to help. The reason I mention that is because 15 years ago, there was approximately 2,600 staff in the Department of Transportation and Public Works and now there's less than half of that. I finished before by talking about the exodus of qualified technicians or operators that have gone out West. That's one question.
The second question, again in the interest of time, is the privatization issue and using local contractors, which are okay. But at the same time, a lot of times there's a lack of familiarization with the roads that they're doing or with the communities. Contracting out alleviates some snow-removal problems but, at the same time, it seems to contribute to the lack of maintenance time that's allotted for the Department of Transportation and Public Works.
So we have two issues there. Maybe you could explain if there's any plan to curb the exodus of part-time operators; the second one is dealing with privatization.
MADAM CHAIR: Mr. Stewart.
MR. STEWART: I'll speak to that, I guess. In regards to operators, we've always had regular Winter operators on the guarantee and we've had casual, or spare operators. Spare, I guess, is the best term. That system has been unchanged for decades at this point in time. Certainly, as we've moved to one-person plows and as we put wings on trucks so we don't need a second vehicle to follow along behind, we've reduced the overall number of staff. But the actual staffing mechanisms are the same as they've always been.
In regard to staff retention, our issue is not so much staff retention as it is in getting new people. That's not an issue that's exclusive to the Department of Transportation and Public Works, but it's throughout the construction industry. You mentioned in your earlier
remarks that lots of people go out West to Alberta because they certainly pay well and there's lots of work out there. But particularly in the rural areas of the province, where the population is aging and the younger people are leaving, it's a challenge to get operators, for us and for the private sector.
[10:30 a.m.]
MR. GERALD SAMPSON: Could you explain to us today just exactly what the process would be to remove the HST from gas, or out of the gas tax? Is that possible? Can you explain the process and maybe give a probable timeline of what would be involved? We hear, well, take the HST off furnace oil, take the HST off gasoline tax. Can you explain the possibility of that coming about, what the process is, or how long it would entail, please?
MADAM CHAIR: Ms. Harnish.
MS. HARNISH: I can address that. We are a signatory to an agreement called the Comprehensive Integrated Tax Coordination Agreement, that would be the three harmonized provinces, as well as the federal government. One of the provisions within that agreement is that the tax base be constant for all of the parties involved. The tax base itself - it's called the Canadian value-added tax base - is determined by the federal government, and it was set at the time that we signed the agreement in 1997. We would be unable, unilaterally - it would require, in fact, unanimous approval of all of the parties to make a change to the tax base, so long as we remain a signatory to that particular agreement.
In other words, our process for bringing forward an initiative to change the actual tax base would be through a committee that meets regularly. In fact our representative on that committee is Nancy, who is sitting behind me. She would have to bring that forward to the taxation committee as a suggestion, and we would require unanimous agreement of all of the parties. Failing that, it could be referred to the Ministers of Finance, that would be the three provincial and the federal minister. Failing unanimous agreement there, they would have the ability to refer it to a third party. So it would not be an easy amendment, so long as we remain within that agreement.
MR. GERALD SAMPSON: What about if you didn't remain within that agreement, if you chose not to be a signatory to that agreement and divorced yourself from that and went on your own as a province?
MS. HARNISH: The agreement provides that we would give 18 months' notice from the end of any quarter in the year, to remove ourselves from the agreement. If we did that, we would then be back on our own in terms of administering a provincial sales tax system.
MR. GERALD SAMPSON: Would that be a larger cost? Would that be detrimental to the province, or would that be a positive step?
MS. HARNISH: Well, we administered our own sales tax years ago, as you're aware. That unit, of course, has been discontinued as CRA took over the provision of that service to us. So we would have to reinstate our own sales tax unit, reinstate our own sales tax legislation, set our own tax base, and so on.
MR. GERALD SAMPSON: How long of a process do you think that would be given the fact that you did get permission from your government to divorce yourself of that agreement, and then start the process, eventually with the intent of removing the HST off fuel?
MS. HARNISH: Well, certainly we've not looked at it - we've not done an analysis of what it would take to set up a new unit, because we have no policy decision that we're going to go that way. We would have to give an 18-month notice period, so we'd start working immediately to reinstate what would be required to put in place our own sales tax collection mechanisms again.
MADAM CHAIR: The time has now expired for the Liberal caucus.
Mr. Parent, from the PC caucus.
MR. PARENT: Two very quick questions before I pass it off to my colleague, the member for Waverley-Fall River-Beaver Bank. You've made the point, quite well, that to overcome this infrastructure deficit we have in our roads we need some federal funding, we need a federal plan. How many countries have that? You mentioned that most of the industrialized countries have that. In the United States that is now the plan, and 90 per cent of the taxes are going from the federal government back to the state governments. Is that the case also with Great Britain, with other countries like that? What are the good models out there?
MR. DARROW: I'm sorry, I don't have details that I can give you. I can have our research people compile that information. I'm certainly aware of the U.S. situation, and have been advised that, indeed, that's common practice among industrialized nations. I don't have specific information I can share with you today.
MR. PARENT: The concern I have with the infrastructure deficit is that you indicated that when the report was done it was $3.4 billion and now it's about $4 billion, we're falling behind. I've always been preaching and been somewhat pleased that the rural infrastructure maintenance program came in that we need adequate ditching, we need adequate brush cutting, that if we can get those in place first, we could forestall having to repave certain roads. How much are we putting into the RIM program right now?
MR. DARROW: We are now entering the third year of the RIM program. The commitment was made three years ago that the budget for the program would be increased from $10 million to $20 million over a four-year period. This coming fiscal year, our budget for the program will be $17.5 million.
MR. PARENT: What feedback are you getting on it? In my district, it's well received.
MR. DARROW: I've gotten very positive feedback on that from anybody who has raised the issue with me. Doug, you may want to speak to that, as well.
MADAM CHAIR: Mr. Stewart.
MR. STEWART: The feedback that we get, certainly at the staff level in the various districts, is very positive on the RIM funding. It's given us the ability, particularly, to address gravel roads and things of that nature. The other thing that we do on a regular basis is we do road condition surveys internally. The RIM program came in probably in 1999, somewhere around there, 1999 or 2000, and as you track those road condition surveys, you see a gradually improving trend on things like bush cutting, guardrail and that type of thing. That's largely due to the RIM program and allowing us to do major-type maintenance work on those local roads.
MR. PARENT: Now we have a sand re-seal program, I understand, but not a chip re-seal program. Is that true?
MR. STEWART: Not exactly. We do have a sand re-seal program, we also do chip seal. We do double-chip seals and we do single-chip seals.
MR. PARENT: As part of the general budget, or is this sort of a stand-alone program?
MR. STEWART: This is part of the capital budget, it's just surface treatments, and there's money set aside for those programs. We do slurry seals on the 100-Series Highways, we do chips on non-100-Series paved roads for pavement preservation, and we do double chips or sometimes a single-chip overlay on double-chip local roads to expand or enhance the lifespan of those roads.
MR. PARENT: My last question, how much money would we have to put in for upkeep, maintenance and repaving in order not to slip further behind in the infrastructure deficit? Are we almost there? Not overcome it, just not to slip further behind.
MR. STEWART: We have about 16,000 kilometres of paved roads, so if you assume that a road lasts 20 years, we would have to repave about 800 kilometres a year. We did 500 last year, so I guess we're about 60 per cent of the way there.
MR. PARENT: Thank you. I'll pass it over to my colleague.
MADAM CHAIR: Mr. Hines.
MR. GARY HINES: Madam Chair, my question today is for Mr. Gardner. I know he's sitting there very patiently, waiting for participation in the debate. In your preparation of the Economics of the Nova Scotia Gasoline Market report, there was some variation between what your report determined regarding some issues and what the Nova Scotia Retail Gasoline Dealers Association may have stated previous to that time. One of the ones was market margins, because their concerns certainly were their own livelihood in the small community stations. Can you tell me what the market margin was at that time, and what it would be today, the sharing of it between wholesale and retail? Lastly on that issue, why would this be so important to the rural Nova Scotia areas with the small stations?
MADAM CHAIR: Mr. Gardner.
MR. MICHAEL GARDNER: I'll see if I can keep all of that in mind. First of all, thank you very much for inviting me along. It's been a fascinating morning so far. (Interruptions) It's good to be educated in the ways of democracy, I can assure you I'm enjoying it.
On to your questions, at the time we began this study, our understanding from the Retail Gasoline Dealers Association, from their public statements, was that retail dealers were earning in the range of 2 cents to 3 cents per litre, as a gross margin on their sales. The study determined, on the basis of information provided by as many dealers as we could extract information from, and as well, from the suppliers of gasoline to those dealers, that the margins were probably, on average, a little bit higher than the two to three cents, more in the order of four to five cents per litre. That was an average.
Now, I think that the position put forward by the Gasoline Dealers Association - and I don't want to be seen speaking for them - but I believe that their representations probably covered some of the industry but didn't necessarily represent an industry average, but I will leave it to the association to comment on that.
We sent out a questionnaire to 250 independent dealers across the province. We interviewed, face to face, 40 dealers across the province, mainly in rural areas but every county and every supplier was represented in proportion to population or number of stations, depending.We asked them for a whole range of information, including financial support for the statement that their margins were in the order of two to three cents, or whatever the number might have been.
One of the things that emerged from this is that the dealers, themselves, keep very poor track of what their margins actually are. They may know it within a week or two, or in some cases a few months, but tracking information over a period of years is something the dealers simply don't do. They're in business to try to stay in business, selling gasoline day to day.
The long and the short of it is that as a source of information, very few are able to provide us with the kind of data that could support a position that it's three to five cents, two to four cents, whatever it might have been. Only about 10 or so were able to provide that level of detail. Those numbers are in the report and they wander around the range a little bit, depending on the supplier, depending on the location of the dealer, but they tended to be a little bit higher than the two to three cents.
The other information we received was from the suppliers, themselves. We asked them for the kind of information that will allow us to separate what is called a marketing margin, the difference between what the supplier buys the gasoline from Esso for and what the retailer sells it for. On the basis of that information we were able to divide the margin between the wholesalers and the retailers. That's where this four to five cent range came along.
Now, since the study was done - and I've looked at the data and it suggests that the margins have actually increased. That is, the marketing margin. That's the margin that's split between the wholesaler and the retailer. It has actually increased over the last several months. How that's divided between the two isn't clear from the data but I think the long and short of it is that the study suggests that the margins were actually a little bit higher than the Retail
Gasoline Dealers Association suggested they were during the period. I hope I've captured all your questions there.
MR. HINES: That's fine. Thank you for that. Madam Chair, I would pass now to Mr. DeWolfe.
MADAM CHAIR: Mr. DeWolfe.
MR. JAMES DEWOLFE: I also thank you, Mr. Gardner, for your comments, it's most appreciated, having travelled under the Petroleum Products Pricing Committee. I did note that it was indicated by the association that there would probably be a great many more service stations closed over 18 months than actually has taken place since the report came out.
I would like to go to Mr. Steele's comments regarding his rant - I guess he referred to it as a speech - on roads and politics. This urban MLA who doesn't have any government roads in his riding has become a self-appointed authority on road work in rural Nova Scotia. But when he talks about government ridings getting more road work, I would ask him to check with his colleague, John MacDonell for Hants East and, indeed, Charlie Parker for Pictou West, and perhaps compare that road work with Brooke Taylor in Colchester-Musquodoboit Valley, myself in Pictou East and then come back with his apology.
[10:45 a.m.]
Mr. Sampson, on the other hand, had made a comment regarding increasing taxes in support of rural highway improvements in Nova Scotia. As indicated by the deputy minister, we cannot do this alone. Nova Scotians cannot handle this added burden alone. We must have federal assistance if we're going to improve the roads in Nova Scotia to where they should be. We, as a government in Nova Scotia, are not willing to go to the people, go to the taxpayers with an increase in taxes for roads. Ottawa must pay their fair share.
I realize my time is up, Madam Chair, and I want to thank you, ladies and gentlemen, for coming here today.
MADAM CHAIR: Thank you very much. There's actually 45 seconds left in your time. We will now have summations from our guests and I would start with Mr. Darrow. Do you have any closing remarks?
MR. DARROW: No, other than to say, thank you for the opportunity to address your questions. I've been here for a short period of time and, certainly, agree with the members' observations about staff in the department. I found the staff to be very committed, highly motivated and I'm excited about working with them over the next while.
I would also make the observation that I have had occasion to talk to MLAs from across the province and the observation you made is not unique to your area. It covers the whole province. So I want to thank you for that and I will certainly pass that on to staff. Thank you very much.
MADAM CHAIR: Thank you. Ms. Harnish?
MS. HARNISH: No, I have no closing remarks, Madam Chair.
MADAM CHAIR: Thank you very much. Mr. Gorall?
MR. GORALL: No, I don't.
MADAM CHAIR: Okay. Well, I would like to, on behalf of the committee, thank the witnesses for appearing here today. This is African Heritage month and I was struck by some of the questions that - when we talk about politics and roads in Nova Scotia, George Elliott Clarke, who we all know and love, who has represented us well, has a wonderful poem on politics in Nova Scotia. In it there is a line that says, "The road to hell is paved just before an election." (Laughter)
So on that note, I would say that we have more items on our agenda but I would like to take a five-minute adjournment so that we can allow our guests to leave and then we will resume.
[10:40 a.m. The committee recessed.]
[10:53 a.m. The committee reconvened.]
MADAM CHAIR: I'll call the committee to order.
We have two items under committee business, and I'm going to deal with the second item first, because it's really a housekeeping item. Mora has been attempting to get us on the same page in terms of signing off on the annual report. This was sent to all of the members. There has been feedback indicating that there are no changes. So we need to get our signatures on that report, and Mora will circulate the report for that purpose. That's going to occur right now. (Interruptions)
We have a motion for approval of the annual report by Mr. Colwell, seconded by Mr. DeWolfe.
Would all those in favour of the motion please say Aye. Contrary minded, Nay.
The motion is carried.
Now we will move to the other item of business, the emergency meeting discussion. As the members will be aware, there is a letter from Mr. Samson, of the Liberal caucus, requesting an emergency meeting. I apologize, I have a letter that I've misplaced, but I'm sure I'll find again, from Mr. Steele, requesting a meeting but not an emergency meeting. Nevertheless, these letters deal with essentially the same issues, that the Public Accounts Committee place on our agenda an examination of the loans to S & J Potato Farms and to Magic Valley Family Fun Park.
Following receipt of these requests, I had brief phone conversations, individually, with Mr. Colwell and Mr. DeWolfe, who are members of the subcommittee. As members will know, the subcommittee generally is the committee that meets to establish agenda items, and then comes to this committee and makes recommendation. It was my feeling after speaking with the clerk of the committee, who had an opportunity to speak, as well, with Legislative Counsel, that the subcommittee does not have the authority to set up the agenda or alter the agenda as already approved, unilaterally. This is a process that has to come through the full committee.
Having spoken with Mr. DeWolfe and Mr. Colwell, there was agreement, there was consensus among the representatives of the three caucuses that we need to either alter our agenda to bring the matter of these loans in front of this committee for our next regular meeting or to hold an emergency meeting to examine this, that we did not want to put this off and we wanted to, therefore, in some manner, alter the agenda that had been approved.
With that, the way I would like to proceed is that, first of all, we have a motion that will formalize that agreement between the subcommittee members in our discussions, and then how we proceed, who we ask and the time frames, and this kind of discussion, we will follow that up with subsequent motions. First, I would like to ask for a motion that we alter our agenda as already having been decided on, so that we bring forward a meeting to deal with these two loans.
Mr. Colwell.
MR. COLWELL: So moved.
MADAM CHAIR: Would all those in favour of the motion please say Aye. Contrary minded, Nay.
The motion is carried.
MR. DEWOLFE: This is to alter the agenda, right?
MADAM CHAIR: This is to alter the agenda, that's right.
Now what we need to do is make a decision on how we will proceed, having set aside the agenda that we had previously established.
Mr. Steele.
MR. STEELE: Madam Chair, I have a motion in writing . . .
MR. MICHEL SAMSON: Madam Chair, on a point of order. Prior to the meeting, we had discussions with you, both Mr. Colwell and I, and you indicated that you would recognize Mr. Colwell first, on that first motion, which you have done. Then you indicated you would subsequently recognize myself, based on the letter sent to you, to introduce the next motion. I'm curious, having signalled to you my intention to introduce a motion, why
you would recognize Mr. Steele and not myself, based on the discussions we had prior to this meeting.
MADAM CHAIR: I think there must have been a misunderstanding with respect to that. I don't believe there was an agreement. I saw Mr. Steele with his hand up. So, I will recognize Mr. Steele, and we will proceed. You will have an opportunity to make any other motions.
MR. MICHEL SAMSON: Madam Chair, on a point of order. I'm not sure what's confusing about, I'll recognize Keith and then I'll recognize you. This was not a conversation long ago, and I tend to still have quite a good memory. Considering we don't even have the letter from Mr. Steele that you made reference to, you do have mine, committee members have been given that letter, I'm not quite sure why you would not recognize me after the agreement we had coming into this.
[11:00 a.m.]
MADAM CHAIR: Mr. Samson, I'm not going to get into a big argument over who I'm going to recognize. I saw Mr. Steele with his hand up. I have recognized him. This is not a point of order.
Mr. Steele.
MR. STEELE: I have written a motion that I've asked the clerk to distribute now in order for the members to have it in front of them while we're debating it. I do want to read it for the purposes of Hansard, however. It reads as follows:
Whereas the Public Accounts Committee wishes to inquire into the circumstances surrounding two economic development loans announced on February 13, 2006, concerning S&J Potato Farms Inc. and Magic Valley Family Fun Park;
Be it resolved that:
1. The committee directs the clerk to arrange for senior officials of the Office of Economic Development to appear before the committee no later than March 1, 2006;
2. The committee directs the clerk to inform the Office of Economic Development that it wishes to receive, no later than noon on February 27, 2006, a copy of the office's complete files on S&J Potato Farms and Magic Valley Family Fun Park;
3. If the Office of Economic Development fails to comply with the committee's wishes as expressed in paragraphs 1 and 2, the Public Accounts Committee authorizes the Chair to issue a subpoena to compel the production of the files and to compel the attendance of the witnesses;
4. The committee directs the clerk to request of Mr. Ernest Fage, MLA for Cumberland North, that he appear before the committee on March 8, 2006;
5. The committee directs the Chair to request from the Office of the Legislative Counsel, prior to March 1, 2006, a written opinion on whether the doctrine of Cabinet confidentiality poses any limits on the committee's powers of inquiry and, if so, what those limits are.
Madam Chair, I make that motion for the purposes of framing the ensuing discussion.
MADAM CHAIR: The motion has been made. Is there any discussion?
Mr. DeWolfe.
MR. DEWOLFE: First of all, I want to clarify my position on Mr. Fage's appearance. I have no intention to try to block Mr. Fage's appearance at this committee. I would, however, like to put his appearance off beyond the March 1st deadline, because there's a new committee structure likely to take place. There are some changes at our senior level of administration coming up on Friday. Also, I guess it should be said that this committee has an agenda set out with some very interesting and important topics and we want to ensure that the important work that this committee conducts is not overshadowed or set aside.
In light of these changes that are taking place, I just feel that we are rushing into this without giving it serious thought for, obviously, political reasons, and that's not the way this committee should operate. I would like to speak against the date of March 1st.
MADAM CHAIR: Mr. Parent.
MR. PARENT: I think these are very important things that the committee should look into, and we've agreed with that, with the motion beforehand, when you split it into two motions. I supported that first motion. I just want to speak to the timing of it, on March 1st and March 8th.
I guess I have the same sort of concern as my colleague. There will be changes to the committee structures with the new government coming into place. I would think that with issues of this importance, actually it would be helpful if the committee members who will be on this committee when these are looked at, if they could be the ones who could have some sort of input into the timing of it. I feel really uncomfortable, because I have no idea whether I'll be on this committee or not, making a decision on timing of something that I may not be in a position to be part of.
So I'm just wondering if my colleagues in the Liberal and the NDP caucuses would be willing to consider that we should have those new committees in place fairly soon - the Cabinet will be sworn in on Friday, and at that stage the committee members would be in place - and if they would just put this motion off until perhaps even March 1st or March 8th, just so that the Progressive Conservative members would have the continuity. I just feel uncomfortable because I have no idea whether I'll be sitting here or not. I'd like to be able to vote on this. So I'm wondering if I could ask Mr. Steele, who made the motion, if perhaps
maybe this could be decided on once the new committee members are in place for our caucus.
MADAM CHAIR: Mr. Colwell, and then we'll go to Mr. Steele on that point.
MR. COLWELL: The honourable members of the Progressive Conservative caucus are indicating they want to delay this. I think this is a very serious matter. A minister of the government has resigned over an issue of allegations of misappropriation of funds, and this is something that shouldn't be put off. It's something that should happen immediately. The taxpayers of the Province of Nova Scotia need to understand what happened in this situation. Is there more of this happening? It really brings into question the government and the dealings of government in this province and how they spend the money that the taxpayers put forward.
I think it's better to do this earlier than later, even the March 1st date is a bit late. We should actually be looking at this even sooner to get the people in place. Ideally, this should be addressed immediately. Not only that, the minister was aware of this situation. It's something that has happened. It's not something that should be held up by who is on the committee from the Progressive Conservative caucus. I feel it's very important we move with this as quickly as possible for the interest and well-being of the Province of Nova Scotia.
MADAM CHAIR: Mr. Steele.
MR. STEELE: What I would suggest to the member for Kings North is that if he feels the time frame is too tight, the appropriate thing to do would be to vote against the motion. If the motion is defeated, then there could be a new motion on the floor. However, we have considered very carefully the implications of this. So, having consulted with my colleague, that's not something that we would support. We think the time frame is appropriate.
We are concerned, however, that in order for this committee to be as effective as possible, we believe it is very important that the committee see the Economic Development files, that we have the paperwork before we have the witnesses, otherwise all we're doing is fishing. That's why it's laid out the way it is, get the documents first, get the opinion from Legislative Counsel, then have the Economic Development witnesses, then have the member for Cumberland North.
Madam Chair, the Liberal Party had suggested outside the Chamber that the member for Pictou Centre should be summoned as well, and I want to hasten to say that we're very open to that. This motion that's on the floor is not intended in any way to foreclose that, however, we do believe that we need to see the evidence first and hear from the Economic Development witnesses. But, we want to be very clear, my colleague here and I, if the trail leads to the door of the member for Pictou Centre, we won't hesitate to call him before this committee. We're just not sure at this early stage that in fact that's where the trail leads.
MADAM CHAIR: Mr. Parent, Mr. Michel Samson and then Mr. DeWolfe.
MR. PARENT: I just wanted to clarify that I was simply asking if it would be possible to wait until we have the new committee members. In support of the first motion, I think these are important items that need to be discussed, and I agree that the procedure that was set out by the member for Halifax Fairview is a good one, having the office in first and then later the member for Cumberland North. But anyway, I've made my plea, that perhaps we allow the new members to have a chance to speak to this, and it wasn't received, so I'll be supporting it.
MADAM CHAIR: Mr. Michel Samson.
MR. MICHEL SAMSON: Basically, our motion, which I would like to read at the end of my comments so that we can see if there are some means of possibly merging the two together, because they are similar in certain respects, our concern is - when I was first on this committee back in 1998, we used to meet for three hours, and we used to think that that wasn't long enough to get everything out. I can certainly tell you that going down to two hours has not made that any easier.
We have two complicated loans here that have a significant amount of history and information to both of them, and I would suggest to committee members that dealing with both of them on one day is going to be insufficient, which is why our motion, basically, would have called for two meetings of the Public Accounts Committee to be able to deal with each one individually. At this point, Madam Chair, I would like to read the motion we have, and then we can see if there is some means of merging the two.
MR. PARENT: Madam Chair, on a point of order. I'm going to ask for some clarification here. We have a motion on the floor. Is Mr. Samson putting another motion on the floor?
MADAM CHAIR: No, Mr. Samson hasn't asked to move nor has he been asked to move a motion. He is merely reading what he has. That's fine. He's not moving anything at this stage. If he were to do so, it would be out of order. But he is certainly free to read what he has.
Mr. Samson.
MR. MICHEL SAMSON: Concerning the most recent events and findings regarding two Orders in Council, OIC No. 2006-99 and OIC No. 2006-101. With the approval of Executive Council, pursuant to Chapter 222 of the Revised Statutes of Nova Scotia, 1989, the Industrial Development Act, financial assistance was approved to S&J Potato Farms of Amherst of an amount not to exceed $250,000 and to Village Developments Limited of Pictou County of an amount not to exceed $350,000.
We recommend the Public Accounts Committee set the date of March 1, 2006 for the purpose of meeting with respect to the matter of financial assistance from the Government of Nova Scotia to S&J Potato Farms of Amherst. We also recommend that the Public Accounts Committee set a date for the following week, preferably March 8, 2006, for the purpose of meeting with respect to the matter of financial assistance from the Government of Nova Scotia to Village Developments Limited of Pictou County.
Witnesses to be called with regard to the matter of S&J Potato Farms are to include:
Mr. Ernest Fage, former Minister of Economic Development;
Mr. Paul Taylor, CEO for the Office of Economic Development;
Mr. Stephen Lund, President and CEO of Nova Scotia Business Inc.;
Mr. Marvyn Robar, Director of Development Initiatives for the Office of Economic Development; and
Mr. Chris Bryant, Director for Decision Support for the Office of Economic Development.
Witnesses to be called with regard to the matter of Village Developments Limited are to include:
Hon. John Hamm, Premier of Nova Scotia;
Mr. Paul Taylor, CEO for the Office of Economic Development;
Mr. Stephen Lund, President and CEO of Nova Scotia Business Inc.;
Mr. Marvyn Robar, Director of Development Initiatives for the Office of Economic Development; and
Mr. Chris Bryant, Director for Decision Support for the Office of Economic Development.
Basically, the difference in our motions is that ours is a bit more specific as to who we believe would be the relevant individuals who could best provide the committee with information regarding both of these loans and, more specifically, we believe that based on some of the public comments and information that has been received about the loan to Village Developments Limited, better known as Magic Valley, we believe it is imperative to give the Premier an opportunity to explain any role he may have had in this matter. So rather than waiting, as Mr. Steele has recommended, to see if the trail leads there, we believe he should be given the opportunity to explain what, if any, role he had in regard to this specific matter.
The basic differences are that ours is a bit more specific about who we are recommending, with the dates, and it also includes the opportunity for the Premier to appear before the committee on that specific matter. I'm not sure if Mr. Steele sees any sort of common ground here, where we could merge, maybe, both of the motions. We're more than open to that.
MADAM CHAIR: Mr. Steele.
MR. STEELE: I know this may be slightly unusual, but clearly there is a lot of common ground and it seems to me that probably the most efficient way of dealing with this - what I would like to request is a 10-minute recess, so that we can sit down with Mr. Samson and actually come up with a motion that deals with both of our concerns. I don't anticipate a lot of difficulty.
MR. PARENT: Madam Chair, on a point of order. Did we not just, in our first motion that we voted for, move that the agenda item would be S&J Potato Farms? Can we reread that first motion that we all agreed to?
MADAM CHAIR: The first motion was just a motion to alter our agenda so that we will now move to examine these two loans, to S&J Potato Farms and Magic Valley Family Fun Park. That was the first motion. The specifics of when, who, all of that kind of stuff is what we are now dealing with. That's the difference. There was a motion.
Mr. DeWolfe.
MR. DEWOLFE: Madam Chair, I want to reiterate that the PC members of this committee have no intention of trying to block any open dialogue on these matters. I do, however, have a concern with the drawing of Premier Hamm - who is still the Premier of this province - into this discussion, to appear before this committee, as Mr. Steele had indicated and, again, as Mr. Samson had indicated.
[11:15 a.m.]
Magic Valley Family Fun Park - contrary to what some of the press have been saying in the media down my way, in Pictou County - is in Pictou West, not in Pictou Centre, not part of the member for Pictou Centre's riding. It is, indeed, in the riding of NDP MLA Charles Parker, Pictou West. Having said that, why would the member from the NDP not include Mr. Charles Parker in this discussion and have him appear before this committee, considering the fact that Mr. Parker was a great supporter of this project by way of letters, by way of the work he conducted on behalf of Magic Valley Family Fun Park, for his riding, in support of funding for this with the chairman of PRDC, the Pictou Regional Development Corporation, Mr. Jim MacConnell?
Having said that, I think it certainly looks like a witch hunt to me. If we want to unfold this, then unfold it and have Mr. Parker appear here, because he is, as I said, a great supporter of this project, has indicated that on the radio back home and in the press, and has indicated by way of letters of support. I'd leave that up to the committee, before any break takes place, to consider.
MADAM CHAIR: I want to caution the members. I understand this is really an important issue, and we all really have strong views about it, but we in this committee are still functioning under the rules of the House of Assembly and we should govern ourselves in that way. I think that terminology like "witch hunt" is not parliamentary, it impugns motive, and it's entirely out of order. Let's remember that as we proceed.
There has been a request for a recess. I think that's a good idea. We'll take a 10-minute recess, and see if we can find some clarity around these few points.
[11:18: a.m. The committee recessed.]
[11:37 a.m. The committee reconvened.]
MADAM CHAIR: I would ask the members to take their seats. The committee will now reconvene.
We have a motion on the floor, and we had the text of a second motion, not put on the floor, read into the record, and there were some differences but certainly some common elements.
Mr. Steele.
MR. STEELE: We have agreed on an amended version of my motion that's on the floor that incorporates all of the elements of the Liberal motion and all of the elements of the NDP motion. I'd like to invite the member for Richmond to read the motion as amended.
MADAM CHAIR: Mr. Michel Samson.
MR. MICHEL SAMSON: Madam Chair, the new motion will read:
Whereas the Public Accounts Committee wishes to inquire into the circumstances surrounding two economic development loans announced on February 13, 2006, concerning S&J Potato Farms Inc. and Magic Valley Family Fun Park;
Be it resolved that:
1. The committee directs the clerk to arrange for senior officials, including Stephen Lund of Nova Scotia Business Inc., and Paul Taylor, Chris Bryant and Marvyn Robar of the Office of Economic Development, to appear before the committee no later than March 1, 2006, concerning financial assistance to S&J Potato Farms Inc. via OIC 2006-99, and again on March 22, 2006, concerning financial assistance to Village Developments via OIC 2006-101;
2. The committee directs the clerk to inform the Office of Economic Development that it wishes to receive, no later than noon on February 27, 2006, a copy of the office's complete files on S&J Potato Farms and Magic Valley Family Fun Park;
3. If the Office of Economic Development fails to comply with the committee's wishes as expressed in Paragraphs 1 and 2, the Public Accounts Committee authorizes the Chair to issue a subpoena to compel the production of the files and to compel the attendance of the witnesses;
4. The committee directs the clerk to request of Mr. Ernest Fage, MLA for Cumberland North, that he appear before the committee on March 8, 2006; and the committee further directs the clerk to request of Mr. John Hamm, MLA for Pictou Centre, that he appear before the committee on March 29, 2006;
5. The committee directs the Chair to request from the Office of the Legislative Counsel, prior to March 1, 2006, a written opinion on whether the doctrine of Cabinet confidentiality poses any limits on the committee's powers of inquiry and, if so, what those limits are.
Madam Chair, I would move the amended motion.
MADAM CHAIR: We have an amended motion on the floor. The floor is now open for discussion.
Hearing no discussion, would all those in favour of the amended motion please say Aye. Contrary minded, Nay.
The motion is carried.
Well, I think that's probably it. The one thing I want to raise before we adjourn is the time frame and whether or not the committee would be prepared to empower the subcommittee to meet in the event that the witnesses, particularly for the March 1st meeting, are not available. My thinking here is that, for example, if some of the people identified from the Office of Economic Development aren't available on March 1st, this would give the subcommittee the power to work with the clerk to set up a special meeting, perhaps on March 2nd, perhaps on February 29th. All I'm asking for is the flexibility to carry out the intent of this and not get tied into the absolute date, just in case some of the witnesses aren't available.
Mr. Steele.
MR. STEELE: So moved.
MADAM CHAIR: Is there any further discussion? Would all those in favour of the motion please say Aye. Contrary minded, Nay.
The motion is carried.
Thank you very much.
One more item of business. Mr. DeWolfe.
MR. DEWOLFE: I know that I'm out of line, at this point, with my concern about requesting John Hamm to be here, but I guess we all know what my position would be on that. I think it shows a lack of respect for someone who has done so much for this province, at this point in time when he's retiring. Having said that, is it my understanding that we could subpoena Charlie Parker, as I had indicated, later on at a future meeting, that we could still include Charlie Parker in this because it's his riding and he was a strong proponent of this project?
MADAM CHAIR: First of all, let's get some clarity around the power of subpoena. This committee does not have the power to subpoena any member of the Legislature. So that's the first thing. What we can do is we can request, we can invite a member. That's the advice that I've received from Legislative Counsel. That's the first thing.
The second thing is, as I understand the resolution and the discussions that have gone on, we will be proceeding in a step-by-step process. If, during that process, there is
information that is brought forward that would cause the committee or members of the committee to want to revise the witness list in any way, then certainly there will be ample opportunity to add new witnesses or in fact not call people who have been identified, including Premier Hamm. As I understand it, that's the process that we have agreed to embark on at this stage.
Is it agreed?
It is agreed.
The committee is now adjourned.
[The committee adjourned at 11:44 a.m.]
