HANSARD
Printed and Published by Nova Scotia Hansard Reporting Services
Ms. Maureen MacDonald (Chair)
Mr. James DeWolfe (Vice-Chairman)
Mr. Mark Parent
Mr. Peter Christie
Mr. Graham Steele
Mr. David Wilson (Sackville-Cobequid)
Mr. Keith Colwell
Mr. Michel Samson
Mr. Wayne Gaudet
[Mr. David Wilson (Sackville-Cobequid) was replaced by Mr. Howard Epstein.]
[Mr. Mark Parent was replaced by Mr. Cecil O'Donnell.]
In Attendance:
Ms. Mora Stevens
Legislative Committee Clerk
Mr. Jacques Lapointe
Auditor General
Mr. Roy Salmon
Former Auditor General
Mr. Gordon Hebb, Q.C.
Chief Legislative Counsel
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HALIFAX, WEDNESDAY, MARCH 29, 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, please. Today we have with us the honourable John Hamm, member for Pictou Centre, concerning Village Developments Limited and S&J Potato Farms. I would like to welcome the honourable member, and thank you for being here today.
Before we begin, I would like to table correspondence of March 24th from Mr. Paul Taylor with the severed business plan for Village Developments Limited. Members will have received a copy of this. I would remind those who are here on the floor to put your cellphones off or in quiet mode, please.
We will proceed in the usual fashion, starting with introductions from the members, followed by a brief opening statement from Dr. Hamm, if he so chooses.
[The committee members introduced themselves.]
MADAM CHAIR: Dr. Hamm, the floor is yours.
DR. JOHN HAMM: Thank you, Madam Chair, members of the committee. I'm pleased to appear before you today as a voluntary witness to assist the committee in its work by speaking to the issues of the S&J Potato Farms and Village Developments loans. I appreciate your invitation and the opportunity to discuss these two files, even though, as I am sure you knew in inviting me, there are areas of Cabinet confidentiality or other privileged areas which I am not able to discuss.
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While I appreciate this is a sensitive issue for the committee, for six years I was proud to serve alongside Cabinet Ministers who conducted themselves with integrity and in the best interests of our province. It should come as no surprise when I tell you I will not breach my personal commitment to them or to the decades-long tradition of deference to absolute Cabinet confidentiality by the Legislative Assembly. I can, however, without any breach of my commitment, assure members of the committee that in the two matters we will discuss today, and in all other matters, I fulfilled my oath, or obligations including conflict of interest guidelines, and have completed my obligations to my colleagues and my province completely.
Your exhaustive investigation into the files of S&J Potato Farms and Village Developments has clearly shown that neither of these transactions were subjected to political interference. While I was absent from the province for much of the testimony, I reviewed the tapes, at least portions of the tapes, of committee meetings, and it seems to me that the committee is now debating the avenues government can and should travel in its economic development activities. That is the very question our government considered in 1999. Back then, not enough Nova Scotians were working. Worse, they were losing hope.
In 2000, my government introduced Opportunities for Prosperity, A New Economic Growth Strategy for Nova Scotians, that represented a new direction for economic development in Nova Scotia, and established two organizations, Nova Scotia Business Inc. and the Nova Scotia Economic Development Agency, to create opportunities for Nova Scotians in all parts of the province. NSBI was designed to, and does, provide a private sector approach to economic development that has proved invaluable to government and to the province.
We recognized then that economic and community development is as varied as the province itself. It is not a one-size-fits-all proposition that concentrates all its efforts in the Halifax Regional Municipality. Today, in a province of almost 1 million persons, approximately 40 per cent are in metro and 60 per cent throughout the rest of the province. The government understands the challenge to grow both economies. It would be a terrible situation if we had 1 million people living and taking advantage of opportunities in Halifax, and no one in the rural areas. It would be worse still if we had 500,000 people living in Halifax, and the other 500,000 living in Toronto and Calgary.
Under Opportunities for Prosperity, Nova Scotia Business Inc. focused on business development functions such as investment attraction, trade, business retention and expansion, lending and finance. Since NSBI's inception in November 2001, and by working with partner agencies, NSBI has been directly involved in projects that are expected to create and maintain close to 17,000 jobs. Over 12,000 of them are new jobs to the province.
NSBI's work includes attracting companies like Research In Motion, CGI, Convergys, Fast Track, and Register.com, to name a few, as well as support to Nova Scotia
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companies like AF Theriault, DynaGen, Magna, and Techlink. NSBI is strongly on track to hit its five-year target of 18,000 jobs created and maintained over its first five-year strategic plan. The close to 17,000 jobs created with help from NSBI have a total annual payroll impact of about $500 million, and a direct tax impact to the province of about $70 million each and every year.
MADAM CHAIR: Could I respectfully ask you to bring it to a close, please? The time of the questioning is almost - we try to make it . . .
DR. HAMM: If you would time me, I'll give the extra time at the end. I didn't realize there was a time constraint on opening statements. I would say I have about three minutes left.
MADAM CHAIR: Okay. Thank you.
DR. HAMM: Thank you, Madam Chair. The Office of Economic Development has a different mandate. It has the flexibility, with tools like the Credit Union Small Business Financing Program, the Industrial Expansion Fund and others, to consider socio-economic and community factors for businesses that may not qualify for financing from a traditional lending institution or from NSBI. This flexibility allowed us to support businesses and enhance prosperity in rural Nova Scotia by assisting organizations such as Michelin, the Cape Breton & Central Nova Scotia Railway, TrentonWorks, the Lunenburg Waterfront, Scotia Slate Products, Apple Valley Foods, Ocean Nutrition Canada, Composites Atlantic, Northumberland Ferries, and many others.
In 2004-05, the Office of Economic Development, through the Industrial Expansion Fund, invested $26.4 million in 16 initiatives which created or maintained 834 jobs. I am extremely proud to say that when it comes to economic development in Nova Scotia, statistics prove that the years between 1999 and 2005 were the most productive and successful in our province's history. This information was provided by staff, here at this committee, during the March 1st meeting. Both the goods-producing and services-producing sectors have seen job growth since 1998.
Total provincial employment was 395,000 at the end of 1998, but increased to 443,000 by the end of 2005. This increase of 48,000 or 12 per cent from the end of 1998 to the end of 2005 was largely driven by the creation of 43,000 full-time jobs - that's almost 90 per cent - with part-time employment increasing by 5,000 jobs. The average weekly wage in Nova Scotia in 1999 was $505, compared to $607 at the end of 2005. That's a significant overall increase of 20 per cent. That's a record of which I am proud, and one that I am very happy to talk about today.
In closing, I wish to reiterate that I am happy to be here today to assist the committee to the extent that I am able.
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MADAM CHAIR: The first round will go to Mr. Steele of the NDP caucus. You have 20 minutes, until 9:30 a.m.
MR. GRAHAM STEELE: I would like to begin by acknowledging, Dr. Hamm, that you're here voluntarily. I think that needs to be acknowledged, and we thank you for that. Your relationship with the owners of Magic Valley Family Fun Park has been described in various ways. They were described in one media report as, friends of the Premier and his wife; Hugh Fraser, at the time your spokesperson, was quoted as saying, The Premier knows the MacNeils but they are not close friends. A report in the New Glasgow Evening News said that you admitted that you have known Bill MacNeil for decades. There have been reports that Bill MacNeil worked on your election campaigns in 1998 and 1999. A piece in Maclean's Magazine, in 1999, noted that you and Bill MacNeil were in grade school together. How would you describe your relationship with the MacNeils?
DR. HAMM: Mr. MacNeil and myself have been friends since our school days. We did not grow up in the same town so we were not attending the same school system. There is a lot of misinformation. But my friendship with Mr. MacNeil is well known locally and has been known for decades. It is not a friendship that I have not disclosed on many occasions, both to colleagues and to others who cared to ask.
Having said that, first of all, I think it's important for the committee to know that in the last 13 years since I've become a politician, we have not spent a lot of time together because, simply put, my duties here in Halifax, particularly since 1995, have precluded me from spending much time at all with friends in the local area. But I do acknowledge a long-standing friendship that is not as active as it once was.
The other thing that I want to clear up, that is the area of my conflict of interest. I have no financial interest in Village Developments.
MR. STEELE: Okay. One of the odd things about this file is that conflicts of interest usually relate either to family members or personal, financial interest. The Members and Public Employees Disclosure Act and the Ministerial Code of Conduct both refer to those things, personal, financial interest or family relationships. Yet, in the case of Magic Valley, there is no indication that you have either. So we need you to clarify for us, what exactly is it about your relationship with the MacNeils that caused you to declare a conflict of interest and remove yourself from discussion at that Cabinet meeting?
DR. HAMM: The situation I found myself in was knowing that I had a friendship and there was a growing body of support for government to support Mr. MacNeil's business. I have been sensitive ever since I came to this place about criticism that had been directed to the previous government, as has been directed to our government, that government somehow advantages friends. That is where I felt I was in a conflict of interest. I wanted to be able to say to the people of Nova Scotia that whatever arrangement was undertaken between the
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Government of Nova Scotia and Village Developments was not as a result of a friendship. That's why I took a very broad approach to the conflict of interest.
I believe, had I submitted myself to the Conflict of Interest Commissioner, he would have, as you have suggested in your question, declared me not to be in a conflict of interest. But I am very sensitive that governments, in general, are always subject to the criticism that we do business with friends and somehow, that being a friend of the government gives you an advantage.
If you would allow me the leeway, Mr. Steele, to enlarge on the answer, the difficulty that I've had in being a Premier from Pictou County is that from time to time, there was a public expression of opinion that somehow that gave advantage to the people of Pictou County in relation to people who lived in other parts of the province. Because of the amount of criticism from time to time that has been directed my way, there is a feeling in the county that, actually, the reverse is true, that because of the close scrutiny that my activities are subjected to - and I don't object to that - is that, in fact, there is reverse discrimination going on and that Pictou County has not received as much as many other areas of the province. I only add that because the dilemma that I face in all of this is, how do I support the people that I represent fairly, at the same time balancing that with my responsibilities to the province and public purse in general?
[9:15 a.m.]
MR. STEELE: One of the good things that could come out of these hearings is a better sense of how the government has been interpreting the code of conduct and how it ought to interpret the code of conduct. But it's hard to know where you draw the line, for example, because to our knowledge, you have not removed yourself from other Cabinet decisions involving people that you know as well as or better than you know Bill MacNeil, like Donald Sobey, for example. So do you believe - is it your interpretation of the Ministerial Code of Conduct that a minister should withdraw from Cabinet decisions that involve a person that they know? Or do they have to know them really well? Or how well, exactly, does a minister have to know the person before they withdraw?
DR. HAMM: There is a judgment call and my judgment, because of the association that has developed between the province and Village Developments, is a relationship that is much different because of the ownership structure of Village Developments, than somebody who happens to be a member of a large corporate entity, whether it be Michelin, because I have friends in Michelin, or whether it be Sobeys, because I have friends in Sobeys, or whether it be any other large corporate entity. That is a much different situation in my mind than my relationship with a small, corporate entity in which there are essentially only two owners.
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MR. STEELE: Now, on February 15th, your spokesperson stated to the media that you had excused yourself from the Cabinet decision about Magic Valley Family Fun Park. Shortly after that, you confirmed to the media that you had excused yourself and you said that you first learned the details of the financial assistance to Magic Valley when you read about it in the newspaper on February 14th. I was wondering if you could tell us when and to whom and how you declared your conflict of interest.
DR. HAMM: Well, first of all, that is not what I said but I will go back to what I said. Let me begin - because I am precluded from taking you in the Cabinet door - but let me talk in general terms before I answer the question, specifically, about my response, in terms of my involvement, my public response.
Over the course of six and a half years, our members of the Executive Council were always aware of the responsibility they undertake, both in the conduct of their duties and their responsibility in adhering to the code of conduct, which I submitted to the House in 1999 or 2000. I think we are only the third province to put that kind of definition to the code of conduct.
MR. STEELE: Madam Chair, I'm going to interrupt the witness for a second. I asked a very specific question. We all know that our time is limited here. I would like to bring the witness back to the question that I actually asked. Please tell us, Dr. Hamm, when and to whom and how you declared your conflict of interest on the Magic Valley file?
DR. HAMM: Mr. Steele, I recognize your question but I come here as a member of the House, and following me are the privileges of the House. One of the privileges of the House is to be heard. My answer is directed to your question and I will be brief. I am not trying to prolong this by any stretch.
What I want to describe to members of the committee, and through the committee, to the people of Nova Scotia - because that's really why I'm here, I feel responsible to the people to answer these questions. The way we have dealt with it in the general terms is that around the Cabinet Table, over the last six and a half years, when an issue would arise in which a member was conflicted, it was common practice for that member to acknowledge to colleagues the commitment and to leave the Cabinet Room. Usually, that meant going into one of the side rooms, off of the multi-purpose room where we now hold Cabinet. That was the custom that we had adopted, and I think it's fair for the public to know that.
Having said that, what I said to the public and, through the public to the media, were two things, number one, I did not have any input into the construction of the agreement between the province and Village Developments and, in reviewing the tapes, there is numerous support for that position and that statement in the testimony of the public servants who appeared before you. They were very clear there was no political interference in that file.
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What I said to the public is that I carried out my responsibility to the code of conduct of the province and did not participate in the decision-making process. I will allow you to conclude what that means in terms of the usual function of Cabinet and how we dealt with conflict of interest.
MR. STEELE: Dr. Hamm, when and to whom and how did you declare your conflict of interest?
DR. HAMM: What I can say to you, Mr. Steele, is my colleagues all knew, I declared my conflict of interest, and they knew it for a very long time. For example, the minister who handled the file - do you want me to go there, because I think it's relevant to the conflict of interest?
MR. STEELE: No, what I want you to do, Dr. Hamm, is just answer the question which I've now asked three times.
DR. HAMM: What I can say to you is that what you're asking me is to open the Cabinet door, and I do not believe that it's the convention of this House, ever, to have that happen.
MR. STEELE: Did you physically leave the room when the Magic Valley file was being discussed?
DR. HAMM: I will allow you to think back to my words and my commitment to the conflict of interest and what I said publicly. I think you can draw an assumption.
MR. STEELE: Did you physically leave the room when the Magic Valley file was being discussed?
DR. HAMM: I conducted myself in the usual fashion.
MR. STEELE: Did you physically leave the room when the Magic Valley file was being discussed?
DR. HAMM: I conducted myself in the usual fashion.
MR. STEELE: Well, I'm a bit taken aback, Dr. Hamm, that you're not able to answer that question directly.
DR. HAMM: I submit, Mr. Steele, that I have answered it.
MR. STEELE: You also said to the media something to the effect that you first learned of the details of the financial assistance when you read about it in the newspaper.
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DR. HAMM: Yes.
MR. STEELE: Does that mean that your copy of the briefing books for Cabinet had the report and recommendation removed, and that you had seen none of the paperwork leading up to Cabinet's decision?
DR. HAMM: It probably was there, but I did not review it because of my conflict. I was not prepared to be part of the decision-making process on the file.
MR. STEELE: Was that the only Cabinet meeting at which the Magic Valley file was discussed?
DR. HAMM: You had asked a question before, to the committee, as to whether or not it was the February 7th meeting. I don't think I would be betraying a Cabinet confidence in declaring to the committee that that was the day in which the file was discussed. I don't recall it being in front of Cabinet before that, if that's your question.
MR. STEELE: It was S&J Potato Farms that was discussed on February 7th; Magic Valley was discussed on January 19th. But let me move on to where my real concern is. If, because of your long-term connection with the MacNeils, especially Bill MacNeil, you were in a disqualifying conflict when Cabinet made the final decision on the file in January 2006, presumably you were in exactly the same conflict during the past few years while the file was in progress through OED.
DR. HAMM: Yes.
MR. STEELE: Yet there are numerous documents in the file attesting to your ongoing interest and involvement in Magic Valley. For example, there is correspondence dated September 19, 2003, from Rodney MacDonald, in which he says he is writing on your behalf, about Magic Valley. On November 10th, you personally asked OED for an update on Magic Valley, and you received that update on November 16th. On November 24th, you noted an omission in the briefing note and asked for further information about the outcome of a meeting with ACOA. On April 4, 2005, you met with the Pictou representative of NSBI and discussed a number of development projects, including Magic Valley. And on November 9, 2005, there's a fax from your constituency office saying, "John asked that this . . ." referring to a letter of support ". . . be copied to you . . ."- that is the minister - ". . . for your information."
Now because of the extent to which OED and NSBI files have been censored, we don't know if these were your only involvements with the file, but that's five. If you considered yourself to be in a conflict sufficient to disqualify you in January 2006, why did you not also disqualify yourself in 2003, 2004 and 2005?
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DR. HAMM: Well, there are a number of issues in that question. For example, there's a letter here that I'm prepared to get copied and tabled. The file actually began when I was receiving submissions in July 2003 from PRDC, asking me - and I can provide the letter - as the local MLA to provide a level playing field for amusement parks in the Province of Nova Scotia. I am prepared to table that letter.
That was the beginning of a very strong lobby by the local community to have the Government of Nova Scotia consider Village Developments for some kind of government assistance. Now I watched previous meetings on tape, and the amount of support received from the local community was the largest amount of support that I can recall any government initiative receiving from a community in my days in government. I'll not belabour the committee repeating all of that. What I can say is there are pieces of lobbying information that I'm aware of that aren't in the binders. I'm not sure where they ended up. Anyway, it's even stronger than the committee has been led to believe.
Maybe I can answer your question, because really what your question is asking me is, what did I do differently as the local representative in putting forward a community initiative, bearing that I felt myself to be in a conflict? First of all, allow me to preface my remarks by saying, in my six and a half years in One Government Place, I have taken a very personal interest in many economic development files. Members are aware of some of those, TrentonWorks, Michelin, RIM, and certainly local initiatives, as we all do as local members.
MR. STEELE: Madam Chair, I really must protest. This is not anywhere close to answering the question I actually asked. I'm just . . .
MADAM CHAIR: Dr. Hamm, our time is so limited, on behalf of the committee . . .
DR. HAMM: I'm prepared, Madam Chair, to give extra time, but I'm being asked questions that I'm not being provided adequate time to give the explanation. What I'm attempting to do, Madam Chair, is . . .
MADAM CHAIR: Order, order. Dr. Hamm, we will have to add a considerable chunk of time on to the end, and I have a letter from you where we had asked that you be prepared to be here longer, where you indicated that you weren't prepared to go much beyond the two-hour period. So, really, I think we have to either be very strict in adhering to the time that we have in answering the questions, or we will have to add a considerable period to allow the members to get their questions discussed.
DR. HAMM: I'm agreeable to that. I'm not trying to stymie the committee, but I am exercising my right to answer the questions. Now, if I could pick up . . .
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MR. STEELE: In order to help you, Dr. Hamm, I'm going to repeat the question. If you considered yourself to be in a disqualifying conflict in January 2006, why did you not disqualify yourself in 2003, 2004 and 2005, on the Magic Valley file?
DR. HAMM: Well, the simple answer is there was no file in 2003, what there was was a lobby; in 2004, as you're aware, the committee received the information from staff that Village Developments Limited approached the department to open a file, and a series of negotiations ensued. What I can say in terms of adhering to the code, number one, normally, as the local member with a very important issue - as I did on some other issues like TrentonWorks - I would meet with the local interests on a business proposition with the minister. I did not attend meetings of the minister with Village Developments.
[9:30 a.m.]
Number two, very often, on important files, I would become involved and there would be meetings in my office between officials, ministers and often people who were involved in business negotiations with the province. Those meetings on this file did not occur. If it weren't for my conflict, they would have occurred.
The other point is - and this goes back to my statement, this was verified by staff in front of the committee - at no time did I talk with Mr. Taylor or with any of the officials who were dealing with the file. There were no phone calls. There were no issues in terms of attempting to influence that negotiation.
I have a responsibility as Premier to make sure that the business of the government moves along expeditiously. There was some comment in committee that it could have moved along more quickly, and as a matter of fact, it was suggested that I was not diligent in performing that particular requirement of my office.
Having said that, local people were concerned that this was taking longer. It didn't take that long . . .
MADAM CHAIR: Order. The time has now expired for the NDP caucus. The Liberal caucus . . .
DR. HAMM: In fairness to Mr. Steele, I will carry on with him at the end of the meeting.
MADAM CHAIR: Absolutely. The Liberal caucus has until 9:52 a.m.
MR. MICHEL SAMSON: Thank you, Madam Chair. Dr. Hamm, when's the last time you spoke with Bill MacNeil?
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DR. HAMM: I think we exchanged pre-Christmas greetings on the phone.
MR. MICHEL SAMSON: You haven't spoken to him since then?
DR. HAMM: No.
MR. MICHEL SAMSON: Have you spoken to him at all about your appearance here today?
DR. HAMM: No.
MR. MICHEL SAMSON: There was reference made about Mr. MacNeil working on your campaigns in 1998 and 1999. Could you confirm for us today whether that's correct or incorrect?
DR. HAMM: I think that to be true, yes.
MR. MICHEL SAMSON: Did he make a donation to your campaigns as well?
DR. HAMM: I read in the paper he did.
MR. MICHEL SAMSON: That's as far as you're aware of?
DR. HAMM: Yes.
MR. MICHEL SAMSON: At what point did you know that Mr. MacNeil was going to be making a request to the Government of Nova Scotia for financial assistance?
DR. HAMM: That's difficult to answer. I suppose it would have been in 2004, staff indicated at that point that Village Developments had approached the government to investigate assistance.
MR. MICHEL SAMSON: Okay, now, when you say staff, what do you mean by staff? Your own staff in your office or . . .
DR. HAMM: No, no, I'm talking about - I reviewed the tapes and, actually, they were very enlightening.
MR. MICHEL SAMSON: Okay. Could you bring us back to 2004 and inform us who gave you information to say that Village Developments had asked for government money?
DR. HAMM: I don't recall.
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MR. MICHEL SAMSON: Okay.
DR. HAMM: Well, what may have happened, for example, the minister may have said to me, look, one of your constituents has come forward. You know, we do trade that kind of information.
MR. MICHEL SAMSON: Okay. Prior to your going into government . . .
DR. HAMM: I'm sorry, I shouldn't say constituents because he isn't a constituent. Actually, Village Developments is in Mr. Parker's constituency.
MR. MICHEL SAMSON: But Mr. MacNeil is a constituent of yours?
DR. HAMM: No.
MR. MICHEL SAMSON: Okay, you said he's not a constituent?
DR. HAMM: No.
MR. MICHEL SAMSON: Nor is his business in your riding?
DR. HAMM: No.
MR. MICHEL SAMSON: Okay. Prior to forming government in 1999 - I believe you were elected in 1993 - during that period, from 1993 to 1999, do you recall ever lobbying any minister, civil servant or member of government on behalf of Magic Valley and Mr. Bill MacNeil?
DR. HAMM: I have no recollection of that.
MR. MICHEL SAMSON: Okay. Is it possible that you did?
DR. HAMM: Well, I have no recollection of it. I'm not sure that this was an issue back then but I may be wrong. We're talking about a long period of time. But in fairness to answering your question, if a business opportunity is presented to me, whether I was in Opposition or whether it occurred after I became government, I felt I was obliged to make the government aware that there was that contact.
Very often - and I'm sure when you were in government you had the same experience - people come to you and say, look, how do I access government?
MR. MICHEL SAMSON: Let me submit this to you, Dr. Hamm. It is our belief that you did lobby on behalf of Magic Valley and that you have been lobbying on behalf of Magic
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Valley since you were first elected. Now, you could argue that that was your role as an MLA. I would submit to you that, within government circles, your friendship with Mr. MacNeil and your lobbying for Magic Valley is well known.
We have a series of e-mails coming from your office saying, the Premier wants an update on Magic Valley, knowing that a request had been made for government funds. Now, is it your statement today that you don't believe that the civil servants receiving these e-mails, seeing that you're looking for an update on Magic Valley, knowing your long history of lobbying for this company, knowing your friendship with Mr. MacNeil, that the message being sent was, take care of this file and make sure that it's done, the Premier, himself, wants to make sure something is done here.
Do you not see where Nova Scotians are seeing that there is something inappropriate, or the appearance of impropriety about this loan because of your personal involvement in the whole process in giving a $350,000 grant to Magic Valley in light of the objections documented by the hard-working civil servants of this province?
DR. HAMM: First of all - and I saw it on tape - I saw testimony from the people, the officials of Economic Development who worked on the file, who stated, categorically, to this committee, there was no political interference in this file. I suggest you review the tape. That's the information that this committee received from the officials who worked on that file. There was no phone call, there was no contact, there was no political interference.
MR. MICHEL SAMSON: How do you explain . . .
DR. HAMM: I have to be able to carry out my duties and move the agenda of the government along because it's one of the responsibilities I have. If you look at government files, there are numerous e-mails and there have been numerous times when I have driven the agenda. Whatever the decision is going to be, let's get it on. The committee acknowledged that this file took too long.
MR. MICHEL SAMSON: Yes. With all due respect, Dr. Hamm, it took too long because the civil servants in the Office of Economic Development described Mr. MacNeil's business plan as a dream and then they told us that they basically sat around, threw around figures, and came up with $350,000. The impression left was that, again, this business plan was not concrete, it was not reliable, it was one that when the deputy minister was clearly asked, was this good value for dollar for Nova Scotia taxpayers - I'm sure if you reviewed the tape you will note - he refused to answer that question and to give that assurance. That is why this took so long, sir.
I would submit to you that your personal involvement in this file is what moved it along and what allowed the department to approve a $350,000 grant in light of the objections made to the Deputy Minister of Economic Development, in light of the objections made to
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our now Premier, then Minister of Tourism, Rodney MacDonald, and yet, somehow the money still got approved. What Nova Scotians - what this committee is asking is, why? We know it wasn't on the business plan. They made that clear. They called it a dream. And we still can't figure out where they came up with the figure of $350,000, yet, we have e-mails showing that you were continuing to involve yourself.
I ask you, sir, knowing that you were in a potential conflict of interest, why did you not ask another Minister of the Executive Council to follow through on this file and to make the inquiries that were made from your office, knowing that you had conflict, or the appearance of a conflict, and that another minister, whether it be Michael Baker or someone from another area of the province, could clearly have continued to move on this file without the appearance that there was undue pressure? Why did you not do that?
DR. HAMM: Well, first of all, I reviewed the tapes and it was perfectly apparent in the testimony given where the number came from.
MR. MICHEL SAMSON: Where did it come from? You give us your opinion. How do you figure out where that number came from?
DR. HAMM: There were two officials here by the names of Mr. Andy Hare and Mr. Marvyn Robar . . .
MR. MICHEL SAMSON: Yes, I was here.
DR. HAMM: . . . who collectively have almost 50 years experience in putting together arrangements such as this for successive governments. They chose the number. Mr. Hare told you this, that he came up with the number. So the premise to your question does not conform to the information that you received here in committee.
MR. MICHEL SAMSON: That's not true, sir. We have the e-mails from Andy Hare saying this business plan stinks, it truly stinks, I question the long-term viability of Magic Valley, I do not believe this is a proper investment to be made. We have all of those documents. Maybe you didn't see them on tape. You may want to read what this committee was given. The question becomes, how did Magic Valley get $350,000 of taxpayers' money when Andy Hare and others with considerable experience said it was a bad investment, and when your own Deputy Minister of Economic Development refused to say this was good value for dollar. Although he was prepared to say it for S&J, he would not say it for Magic Valley.
Something went wrong here in the process. Somehow they got money when the business plan did not justify it. We're trying to find out, on behalf of Nova Scotians, what took place to allow this money to be approved when the business plan did not justify that type of investment by Nova Scotia taxpayers.
[Page 15]
DR. HAMM: First of all, you did receive information in committee that Magic Valley has continued to exist for over three decades, and Magic Valley, in my estimation as a local person, will continue to exist at its current level. It is acknowledged in the community that there are tremendous benefits to the people who come to Magic Valley, to those involved in tourism. It is the belief of all of those who have lobbied strongly for support for Magic Valley that increasing the activities of Magic Valley will have a spinoff effect for accommodations, shops, stores, and restaurants.
The background of this is, in tourism in Pictou County, and why the lobby was so strong, we have a lot of tourists who pass through. The county has always searched for ways in which we could get the tourists to stop. We have our beaches, we have our museum, we have the waterfront, we have some unique accommodations, but we do not have the infrastructure to allow a decision by many tourists to stop and to build our local tourism industry.
The government is influenced - critics on both sides of the House have indicated that that should be a priority of ours. We don't have a Louisbourg in Pictou County, we don't have a Citadel Hill or a Pier 21. This was designated by the community as the number one economic opportunity in Pictou County, and for that matter for northern Nova Scotia, the number one. Now government cannot afford to disregard that.
From time to time, and if I could remind the member that I supported economic development when I was in Opposition, and I recall very unique approaches to economic development by the previous government, and I supported some of them. For example, I supported the mobile boat launcher in Petit de Grat, which was a very controversial issue, but I'd visited that community, I felt I understood the community, and I felt it was a good thing to do. In Opposition, I supported it. I went back there . . .
MR. MICHEL SAMSON: Let me stop you there, Dr. Hamm. Are you aware that Bill MacNeil and Village Developments owes the taxpayers of Nova Scotia $234,000? Are you aware of that?
DR. HAMM: I am.
MR. MICHEL SAMSON: Are you aware that a payment has not been made by Mr. MacNeil on his debt to the people of Nova Scotia for the past six years?
DR. HAMM: That came out in testimony, yes.
MR. MICHEL SAMSON: Do you believe Magic Valley is a profitable business that makes money each year and has the opportunity to repay its financial obligations to the people of Nova Scotia?
[Page 16]
DR. HAMM: I believe Magic Valley is a significant economic opportunity for Pictou County.
MR. MICHEL SAMSON: Will they pay their debts to Nova Scotia, and when?
DR. HAMM: With the growth that's proposed . . .
MR. MICHEL SAMSON: He's proposing $3.7 million, and you've given $350,000. With all due respect, sir, he's saying it takes $3.7 million to turn his operation around, and you've given him $350,000. You're basically coming with a band-aid for someone who is hemorrhaging. How do you expect that this investment, to further expose the taxpayers of Nova Scotia with this grant that you've offered, is somehow going to turn around a business when he says he needs $3.7 million? Or, is it your position that along with the bureaucrats, Mr. MacNeil's business plan was just a dream, and hoping that your government would give him what he was asking for? Which one is it?
DR. HAMM: Well, I think you've already received testimony from officials who handled the file. You're asking me to get into the file. I wasn't in the file.
MR. MICHEL SAMSON: Well, that's debatable.
DR. HAMM: What the officials said is that was a good place to start. They acknowledged the fact that this can do what the strong lobby was suggesting it would do, it would drive tourism in the local area.
[9:45 a.m.]
MR. MICHEL SAMSON: Let me take you back to a quote from 1999. "It no longer makes sense to try to prop up money-losing industries." Then you went on to say, "We intend to get politics and bureaucracy out of the way . . ." Hamm said, ". . . let businessmen make business decisions and create opportunities for prosperity." Do you recognize making those comments?
DR. HAMM: I do.
MR. MICHEL SAMSON: Why would you not have allowed businessmen, through NSBI, to decide whether the taxpayers of Nova Scotia should be on the hook for more money to Magic Valley if you're convinced, based on all of the support that came from the community, that this was a wise business investment for the government to make using taxpayers' money? You had a choice, sir. Why did you not choose to put this through the independent arm's-length agency for this to be considered, rather than putting it through Cabinet where you, yourself, were a member and you knew that you would be in a conflict?
[Page 17]
Why did you not choose to avoid any appearance of political interference or any sort of other favoritism on this loan when you had that choice?
DR. HAMM: You asked that question to staff, and they indicated very clearly that the instruments that are available to NSBI did not fit the Magic Valley situation. I refer you to couple of other decisions that are parallel to this one. Number one, the government made a choice to provide public funding for Northumberland Ferries to ensure that we would have a ferry run next year from Portland to Yarmouth, not because we wanted to prop up Northumberland Ferries but because by having that ferry run, it provides tremendous benefit to the local tourism industry.
In addition, when the province was in danger of losing the spur from Port Hawkesbury to Sydney, then it was determined by the community that we should preserve that railroad. We made a contribution of public funds, not because we wanted to support the railroad but because we wanted the service that railroad provided to be available to the local economy.
What I fail to understand, other than the fact that this happens to be in my riding, that those initiatives were quite okay with members of the House, but a similar project, and this project is exactly like those, it's not propping up Village Developments, it's what Village Developments does for the local economy. If we can double or triple or quadruple the attendance, there will be marked spinoffs to the local tourism economy.
MR. MICHEL SAMSON: There's no question of that, Dr. Hamm. We have Andy Hare looking at this and saying it doesn't make sense. Bill MacNeil told us years ago he would have 50,000 visitors. He has less than 10,000 now. He said this will not change anything. So we have everything Andy Hare said, questioning it, to Rodney MacDonald, the Minister of Tourism, Culture and Heritage, saying that this was not an appropriate time to put money into this business because of the concerns. Maybe one day Magic Valley did deserve investment, but the business plan as it currently stood didn't warrant it. They asked Mr. MacNeil to make changes to his business plan to make it more attractive and make it more viable. He refused to do so, and said, no, I want money because Upper Clements Park gets money from the government.
Lo and behold, somehow in all of this, it was decided, in the Office of Economic Development, with the e-mails coming from your office looking for updates, let's give Mr. Bill MacNeil $350,000. Can you present to us any sort of a financial report, or any sort of logic, a brief or anything that would say, we had a $3.7 million request and we've approved $350,000? Your staff, which you referred to in saying they supported this, could not give us anything showing where they got the figure of $350,000. Ironically, that seems to be almost the same figure given to Upper Clements Park every year. The message they gave us was, here's $350,000, come back and let's see how you make out.
[Page 18]
Is that the way your government has been giving out hard-earned taxpayers' dollars in the Province of Nova Scotia, try this and then come see us if it works? Is that the approach that has been used for the past six years that obviously we haven't been paying close enough attention to?
DR. HAMM: First of all, I'm not sure, because I listened to the testimony of Mr. Hare, and I did not hear the comments that you just delivered to me. I heard Mr. Hare describe how he went through a process, and he described this as being the exact same process that he and the department undertake for every business proposition.
MR. MICHEL SAMSON: That's not true, sir.
DR. HAMM: The same process.
MR. MICHEL SAMSON: That's not true. He did not say that. You're reading stuff into his testimony. That is not true, sir. I sat here; unlike you, I actually sat here and listened, and I read the documents and I saw his previous correspondence. He did not say that. When asked about where did the $350,000 figure arrive from, he was unclear and basically said it was discussions between himself, Marvyn Robar and the deputy, where they arrived at this figure.
DR. HAMM: That's right.
MR. MICHEL SAMSON: There is no sort of formula, there is no sort of actual agenda that we can follow to figure out how and where it was reached. What was it about the business plan that they did not like, they did not believe this was a good investment, but suddenly, with the e-mails coming from your office, a decision was made that this money should be approved, knowing Mr. MacNeil has not made a payment in the past six years on the $234,000 he already owes to the taxpayers of Nova Scotia? What is it? What prompted them to give this money in light of all their objections? That's what we want to know, and that's what Nova Scotians want to know. Their testimony certainly did not answer that question, and we're now asking you if you could tell us what possibly changed that?
MADAM CHAIR: There's one minute remaining in your time.
DR. HAMM: What I will do - and I'll carry on - the member opposite is aware that the local RDA did a strategic plan, and that strategic plan for the community identified Magic Valley as being the single biggest economic opportunity.
MR. MICHEL SAMSON: That has nothing to do with the $350,000 question I asked you. Let me put this to you, Paul Taylor refused to say whether it was his office that recommended the $350,000. I ask you today, can you tell us whether it was the Office of Economic Development that arrived at this figure or whether it was through Cabinet
[Page 19]
discussion around the Cabinet Table that the figure of $350,000 was reached? Can you at least answer that for us?
DR. HAMM: The only information that I have to answer your question would be the information I got by reviewing the tapes. I previously had indicated I did not get briefings from officials, I did not - I think it's cogent, too, to this, I gave a specific instruction to the minister responsible when he mentioned the file to me, verbally. I said, minister - these are my exact words - on this file, I cannot tell you what to do. Simply do what you think is right. Now those are my exact words, because I wanted to make it perfectly clear to the minister that unlike my involvement in many other files, there would not be that kind of involvement in this file, that would be the minister's decision as to what should be done with this file.
MADAM CHAIR: Mr. DeWolfe. You have until 10:14 a.m.
MR. JAMES DEWOLFE: Thank you, Dr. Hamm, for appearing here today, volunteering your time to be with us today to straighten this matter out. Dr. Hamm, you've indicated, with the previous speaker, that the local tourism association had conducted a study and identified Magic Valley as the number one economic driver for tourism in that area. In your estimation, Dr. Hamm, what economic impact does Magic Valley indeed have on Pictou County, particularly in that area of Pictou County, as well? It's a major attraction in all of Pictou County, isn't that correct?
DR. HAMM: Yes. It was the PRDC, the RDA, that did the strategic plan and did the survey and the study that allowed them to come to the conclusion that this was the single biggest economic development opportunity in our county and, in fact, they even broadened it to suggest in northern Nova Scotia.
MR. DEWOLFE: So in your estimation, what impact does Magic Valley have on Pictou County?
DR. HAMM: They certainly concluded, even at its level of activities at this point, there is a positive economic benefit. What happens locally is people who are looking for that kind of entertainment have a number of choices. They can go to Prince Edward Island, they can go to Magic Mountain, which is, as you know, in New Brunswick, or they can go to Upper Clements Park. Our area is rather remote from Upper Clements. So the primary competition is really Prince Edward Island and Moncton. We're losing tourism dollars each time people make a decision, well, I'm going to go there rather than the local amusement park.
But even at its current level, there are benefits because the people who come to Magic Valley, some of them do stay overnight, some of them actually spend money in our local businesses. That was the conclusion, not my conclusion, but the conclusion that came from
[Page 20]
the strategic study. This is not something that came out of a vacuum. This came after an extensive study of the local economy.
MR. DEWOLFE: You mentioned Upper Clements Park. They do receive money each year from the government. Don't you think that the Pictou County tourism industry deserves a one-time boost? We're talking about a one-time boost here for this area.
DR. HAMM: The previous government - and there are three representatives in committee today from the previous government - made a determination to sign a 10-year contract with an annual grant to Upper Clements Park. I will remind the members opposite that I spoke in favour of that in Opposition. I can only conclude that at least those three members believe in the value of these kinds of investments in the local community, because they signed off on it.
Our government continues to honour that contract with the belief that our tourism industry needs strategic investments that will attract tourists. You can't isolate the activities of the previous government from this government. If we had the same philosophy, we had the same philosophy. The Government of New Brunswick puts money into Magic Mountain. The Government of Prince Edward Island puts money into their attractions. Are we not going to do the same thing?
What I really am not prepared to accept is that my community is going to be treated any differently in terms of economic development than any other community in this province. I have supported economic development from one end of this province to the other, both in Opposition and in government, and I continue to do that. The only wrinkle, and while the Conflict of Interest Commissioner probably would not have suggested that I was in conflict, I wanted the people of Nova Scotia to know that Mr. MacNeil is a friend of mine, because I am sensitive to the reputation that governments have in dealing with friends. I am also determined that my community will receive the same kind of attention and consideration from government that other communities have asked from us.
MR. DEWOLFE: I've taken my seat around the PRDC table as well, and I know the tourist industry is an important part of the work that PRDC engages in. It has always been my belief that anything we can do to stop that traffic coming from the P.E.I. ferry in Pictou County, because it usually is heading to Halifax, Lunenburg or down to Cape Breton, if we can slow that traffic down and have them spend a night in our area, it's quite a boost to our tourist industry as a whole.
Have you noticed that the fortunes of the businesses in that area have changed much over the last several years? During the period that you've been an MLA, you've probably seen quite a change.
[Page 21]
DR. HAMM: Yes, the local businesses have suffered with the realignment of the highway. Many of those business owners have come to me and said the biggest help to our business is Magic Valley, because it takes people onto what we call the Alma Loop. They are very supportive, from their business perspective - they don't need help themselves, they need Magic Valley to attract more people to the Alma Loop. It's simply economic development being generated at the local level. I don't think that any government should put itself in a position to ignore that kind of initiative from the local communities.
MR. DEWOLFE: I know I'm going to backtrack a little bit, but I just want to be clear. Did Bill or Celeste MacNeil contact you regarding provincial assistance for Magic Valley?
DR. HAMM: Over the course of social conversations over the years, over a long - perhaps beginning at the time when I was in Opposition, when the government agreed to the 10-year contract with Upper Clements, he always was of the view that he should be afforded some kind of similar support. Unfortunately, until 2003-04, there wasn't a community initiative that identified the importance in the local community of Magic Valley.
[10:00 a.m.]
MR. DEWOLFE: The fact is they didn't get the money yet, people are saying that we've given them the money but the money hasn't arrived on their doorstep yet because there are some other commitments that have to be met before that money is cleared. I guess where I'm going with this, Dr. Hamm, is the Opposition has made it clear that, yes, there was some outstanding debt that they haven't paid yet, but if this works, if this plan works, then they're more likely to be able to start paying a loan. Wouldn't that be the case under normal circumstances?
I know that Economic Development really didn't leave a stone unturned, because these files are immense. I was really impressed with the detail of work that goes into a file. It leads me to believe that if I was a business owner and wanted to keep some things confidential, I wouldn't want to go to the government to ask for money, because the entire laundry is exposed for public scrutiny, it appears. At any rate, there is a great deal of work that goes into a file, and I'm really impressed by that.
DR. HAMM: You asked a question, and I know far more about this file now than I knew at the time when it was under consideration. Unfortunately, I've had to spend a lot of time catching up. I was out of the province for most of your testimony, so I've spent a lot of time catching up as to what has been going on with the file. Yes, you're absolutely right. The loan that is outstanding, repayments are based on profit, and as the amusement park grows its activities, the profits will grow, and from those profits will come the repayment of the loan.
[Page 22]
MR. DEWOLFE: I know some of the businesses in that area - it's not my constituency, either - some of the owners do live in my riding, and they've lobbied because they're in fear that their businesses will go under if this one should. And rightly so, they have a great deal to worry about, because of the highway bypass and so on. At any rate, did you handle this file any differently than you would have a request from other constituents or residents of Pictou County or indeed residents of Nova Scotia from other ridings?
DR. HAMM: Actually I did handle it differently. Had I not been sensitive to the perceived conflict, I would have been far more aggressive in promoting the file, far more aggressive.
MR. DEWOLFE: You would have been involved . . .
DR. HAMM: I would have been involved with the minister, I would have been involved, I would have asked for specific updates from the department as to how it was progressing. I have a responsibility to represent the people who sent me, and in general the people of Pictou County, as aggressively as other members do. I acknowledge - it was inferred here that perhaps I wasn't really in a conflict, but I believed the public had a right to know that Mr. MacNeil was a friend of mine.
The difficulty is, and many people sitting opposite live in rural communities, it's almost impossible if you live in those communities all your life not to develop friendships. Those friendships and the people who are involved in those friendships very often are people who are integral in the community. It is something that we have to face on a regular basis as members.
MR. DEWOLFE: You and I both know most of the business owners in Pictou County. It's not that big an area.
DR. HAMM: Exactly. I acknowledge that perhaps I overreacted in declaring I was in a conflict, but I believed the public had a right to know that Mr. MacNeil was a friend of mine, not a relative, I don't have a financial stake in his company, but he is somebody I have known since my schooldays.
MR. DEWOLFE: I've received calls and letters. Have you received letters and calls regarding support from organizations and people in Pictou County, in support of Magic Valley?
DR. HAMM: Yes. It's my understanding that PRDC recently wrote to the Leaders of both Opposition Parties reaffirming their support for the initiative as being part of the sustainable plan for economic development in Pictou County.
[Page 23]
MR. DEWOLFE: Dr. Hamm, how would you characterize the community support for this project?
DR. HAMM: It is mixed. What I have found in general, as I've gone around the province, is there are many people in the province who don't believe that public money should go to business, but our government, and certainly I, campaigned on a strong, aggressive approach to economic development. I believe that if there is a return on investment, if there is a payback, then the government should be in the business of economic development. The reason that I chose some of my words in the opening statement was to really reinforce the value of that to the provincial economy. I believe that we have now developed a case that I could go to Nova Scotians and say that this was the right approach for us to take.
The one thing that you have to be mindful of is in economic development there is no cookie cutter. There are 2,300 to 3,000 files right now before NSBI and Economic Development. We, as government, on all of those files, rely heavily on the analysis that's done by our professionals. They have not done anything but great service in my time in Economic Development. I am quite comfortable in the analysis they do. If they recommend a number, I'm prepared to live with the number.
MR. DEWOLFE: Dr. Hamm, when did you first find out the loan arrangements with Magic Valley?
DR. HAMM: I believe I knew that in Opposition, I'm quite sure I did. I've been aware of that, not the details, but I did know that a number - I think, I didn't go back that far in the file, but does that loan not - I don't know if it precedes the 1993 government or not, I'm not absolutely certain, I think it does. It's a very old loan.
MR. DEWOLFE: When did you first learn about the details of the current Magic Valley loan arrangement? Did you indicate that you first learned about that . . .
DR. HAMM: Oh, you're talking about the forgivable loan.
MR. DEWOLFE: Yes.
DR. HAMM: I learned of those details, the actual details when I read the press releases, because I didn't read the information that was provided to Cabinet, because I wasn't planning to be part of the decision-making process, as I declared publicly.
MR. DEWOLFE: Would it be fair to say that during your time as MLA for Pictou Centre, since 1993, that there has probably never been a file that received the level of community support as the Magic Valley one? I've never seen one since 1998, but would that be fair to say?
[Page 24]
DR. HAMM: It is.
MR. DEWOLFE: Amazing. I think, Madam Chair, I would like to pass my time to my colleague, the member for Shelburne.
MADAM CHAIR: The honourable member for Shelburne. You have until 10:14 a.m.
MR. CECIL O'DONNELL: Thank you, Dr. Hamm, for coming in today. I think it's very important that all members of this committee and the public, the people of Nova Scotia, understand that you stated in the media that you were not present when the loan was considered by Cabinet. Will you explain how the MacNeils came to ask for financing from the province, and what was your role in that meeting?
DR. HAMM: Well, what I exactly said to the media is I did not participate in the decision-making process in Cabinet. Those are very close to my exact words. I played no role in the approach of Village Developments to the government. I know this was covered in testimony, and it wasn't exactly clear but what I took from the testimony is that in the recollection of the officials present, there was a direct representation to the department by Village Developments. That's what I took from testimony, and that's not unusual.
MR. O'DONNELL: A condition of that loan was that a plan acceptable to the Minister of Economic Development of the day was to be presented before March 31st for the use of the funds in a satisfactory manner. Do you know if that plan has been presented to Cabinet?
DR. HAMM: Well, it would go to Economic Development. I'm not aware of whether that plan has arrived or not. I believe the deadline, according to testimony it has to be in by the end of the month, if I remember correctly. But I'm unaware if it has been received.
MR. O'DONNELL: Just one other question. There has been a lot of discussion concerning the former Minister of Economic Development. How would you characterize Ernie Fage's performance as an MLA and as a member of the Executive Council?
DR. HAMM: I worked with Ernie Fage in the Executive Council capacity for six and a half years. He is honourable; he is accomplished; he is one of the most successful ministers in the government. He excels in everything that he does. A lot of the success recently, since he became minister, has been due to the efforts of Ernie Fage. You also asked how I see him as a representative, he is an extremely hardworking, effective representative for the people of Cumberland North. I've been there, I've listened to people describe to me their appreciation of Ernie Fage and the level of representation that he provides to the local area.
[Page 25]
One should not be surprised, because Mr. Ernie Fage was a success before he got into politics. He was a successful businessman, a successful farmer, a successful entrepreneur in a number of activities. So one should not be surprised at his success in government.
MR. O'DONNELL: Was this file for Magic Valley treated any differently than other files that appeared before Executive Council?
DR. HAMM: Well, I don't prepare the files, but I would presume not. You're talking about the briefing file?
MR. O'DONNELL: Yes.
DR. HAMM: Well, I presume it went through the same process that always occurs when the committee makes a request of government. I presume the same process was followed, but I'm not part of that process.
MR. O'DONNELL: Maybe I'll turn the remainder of my time . . .
MADAM CHAIR: Your time is about to expire. We will now have a second round of 20 minutes for each caucus, given that we got off to a rocky start, the opening statement was a bit lengthy, and there was skirting of some of the questions. I want to speak just briefly before we start, with respect to the time frame and the answering of the questions. I want to say to the honourable member that while it's true that when the Legislature is in session, the debate in the House, it would be the prerogative of any member, basically, to read from the Pictou County telephone book, this committee has a limited period of time. We've been through a lengthy process of attempting to get questions answered, I would really very much appreciate, on behalf of the members, if the questions are put succinctly and the answers to those questions are responded to as succinctly as possible.
Mr. Steele. You have until 10:35 a.m.
MR. STEELE: I would like to open by turning to the issue of S&J Potato Farms. Dr. Hamm, when Mr. Fage was here, he said there is only one copy of his resignation letter, and he does not have it. Do you have it and, if so, will you table it with this committee?
DR. HAMM: I don't have it, but I can obtain it, and yes, I will.
[10:15 a.m.]
MR. STEELE: Thank you. I would ask you to send it to the clerk of the committee, so she can distribute it to the committee. When did you first become aware that Mr. Fage had business dealings with S&J Potato Farms?
[Page 26]
DR. HAMM: I believe the committee heard that in testimony, but I'll repeat it.
MR. STEELE: When did you first become aware?
DR. HAMM: It was on the Monday or Tuesday following I think it was the February 7th Cabinet meeting, if I have my dates right.
MR. STEELE: I'm sorry, my question to you is when did you become aware that Mr. Fage had business dealings with S&J Potato Farms. I think you might have misheard my question, because you're suggesting that it was at the February 7th meeting that you learned . . .
DR. HAMM: No, it was the Monday or Tuesday following the February 7th meeting.
MR. STEELE: Did you ask for Mr. Fage's resignation, or did he offer it without any prompting from you?
DR. HAMM: First of all, Mr. Fage's resignation was voluntary, and I will provide the letter.
MR. STEELE: But I asked you whether you asked for it or whether he offered it without any prompting?
DR. HAMM: When the issue of the conflict of interest arose, needless to say it generated conversations between myself and the minister as he went through the process of deciding what would be in his best interest to do. But if you're asking me, did he submit his resignation to me, yes, he did. If you're asking me, did I ask for his resignation, I did not.
MR. STEELE: Now, I want to make sure one thing is perfectly clear. I also believe that Ernie Fage is an honourable person. I also believe that this government is worse off for not having him at the Cabinet Table. However, I also believe that there is an aspect of this matter that has to be clarified once and for all before Nova Scotians are in a position to judge whether and when he should be returned to Cabinet.
In addition to the undeclared conflict of interest that we know about, Mr. Fage has also said two contradictory things about what happened that day, and they can't both be true. Here's what Brian Flinn reported in the Halifax Daily News on February 14th, "Fage said he is not in a conflict of interest. He dropped his department's case for an interest-free 'forgivable' loan to S&J Potato Farms Inc. on the Tory cabinet table. Then he left the room while his colleagues decided if the company deserved public money."
[Page 27]
On March 8th, in this committee, Mr. Fage was asked whether this version of events was true. He refused to answer. We went in camera and asked him again. Still he refused to answer. At the conclusion of the committee hearing, he went outside and to the assembled reporters said that it was he who had presented the file to Cabinet.
So my question to you, Dr. Hamm, is this, these two versions of events cannot both be true. One version or the other is false. Either he presented the file to Cabinet, or he absented himself. Which of Mr. Fage's versions is the truth?
DR. HAMM: My appreciation of the oath of office in Cabinet is such that I am prevented from answering that question. I am quite prepared to answer any and all questions on activities outside of the Cabinet Room. It is the convention of this House, since I have been here in 1993, that the confidentiality issue of Cabinet is absolute. I'm not prepared to upset that convention. That's a convention of the House.
MR. STEELE: But Dr. Hamm, the problem with this is that on the Magic Valley file, when it was convenient for you, you said you had excused yourself from Cabinet.
DR. HAMM: I did not . . .
MR. STEELE: That you didn't participate in Cabinet discussions.
DR. HAMM: That's right.
MR. STEELE: So we'll take it that you didn't excuse yourself from Cabinet. When it was convenient for Mr. Fage, he said that he absented himself, but when challenged on that, then and only then did he declare that it was a matter of Cabinet confidentiality. So you'll excuse us for thinking that when you and Mr. Fage claim Cabinet confidentiality, you do it when it's convenient. Now the fact of whether a minister was there or not is not a matter of Cabinet confidentiality.
At the meeting of February 7th, your government invited reporters and television cameras into the room. They filmed around the table. We know exactly who was there and who wasn't there, at least at the beginning of the meeting. So, it's really hard to accept that the question about whether Mr. Fage did or did not present the S&J Potato Farms file to Cabinet now becomes a matter of Cabinet confidentiality. So let me ask you again, which of Mr. Fage's versions is true?
DR. HAMM: First of all, I'm not prepared to accept your premise that you or any other person who is not an officer of the Executive Council is privy to this kind of information. I have always taken the oath that I took in 1999 and 2003 to conform what I saw as the convention of the House since I sat here in 1993, that being that affairs in Cabinet are not to be discussed outside the Cabinet Room. I, at no point, indicated to you my activities
[Page 28]
in Cabinet. What I indicated to you was, clearly, that I was not part of a decision-making process. I did not take you into the Cabinet Room.
MR. STEELE: But what that leaves us with, what that leaves this committee with, and Nova Scotians with is that we still don't know exactly what it is that Mr. Fage did wrong. In addition to having an undeclared conflict of interest, he made two statements to reporters that can't both be true. He, apparently, appears to have said something on one occasion or the other that he knew not to be true. So my question to you is, did you accept Mr. Fage's resignation because of the conflict of interest, undeclared, or because he had said something to reporters that was not true, or both?
DR. HAMM: Well, Mr. Fage has openly admitted that he ought to have remembered, I believe are his words in committee, the conflict of interest. I don't think, by any stretch of the imagination, you could suggest he was not in a conflict of interest. I believe he got there quite innocently, but there was a conflict nevertheless. He indicated, clearly, in his statement on the day of his resignation that he was not as forthright as he should have been to Cabinet colleagues on his business relationship with S&J Potato Farms.
I provided you with the general way in which we handle this earlier on, and you objected. I had exactly this in mind. What I wanted to show to you is the responsibility that we shared with each other to declare conflicts in a general sense, and that occurred on many occasions in the course of six and a half years of Cabinet deliberations. That is the method that we used to inform each other, and that is the method that we chose to address the issues of conflict of interest.
MR. STEELE: Now the way this committee deals with matters of conflict - I don't accept for one minute that whether Mr. Fage did or didn't present that file is a matter of Cabinet confidentiality, I don't accept that for one second. But let's suppose that we accept that as our premise, the way this committee deals with that is to go in camera and ask you the question again in camera. If we go in camera, will you answer that question?
DR. HAMM: No. Going in camera does not eliminate my responsibility to my oath. I've read your directive to the Public Accounts Committee that you wrote as chairman, I've done extensive research, as extensive as I could, since undertaking to come to this committee. I believe that in our province - and I have come to this conclusion after sitting in the House since 1993 - Cabinet confidentiality is absolute. The previous government demonstrated that. I sat in Opposition for six years, and they used the absolute confidentiality interpretation. We have done the same thing, and I would be very surprised, although I don't really know, if the new Cabinet sworn in is not of the view that their oath is one of absolute confidentiality.
[Page 29]
MR. STEELE: The advice this committee has received from its lawyer is that Cabinet confidentiality is not absolute. What you're saying is contrary to what this committee's lawyer is advising it.
MR. DEWOLFE: Madam Chair, on a point of order. Dr. Hamm had indicated in a letter that was written to all members of this committee, dated March 1, 2004, where a member of the committee, Graham Steele, had talked about Cabinet confidentiality as being an important principle to adhere to, and I'm just wondering if that could be tabled so that all members could have a copy of that letter?
MADAM CHAIR: Certainly, that can be tabled.
MR. STEELE: I still believe that Cabinet confidentiality is important, what's wrong about it is you and your government are claiming it for matters that it does not cover, and you are demeaning and diminishing an important principle by attempting to cast the web more broadly than it deserves. Now here's the problem with your position, Dr. Hamm, and that is that you have a Ministerial Code of Conduct that your government brought in. When legitimate questions come up about whether that code has been properly interpreted and applied, the answer that we and the media and the public get is it's a secret. Now you can't have a responsible, accountable system of government where whether the code of conduct has been followed or not is a secret.
So I'm going to ask you one more time, Dr. Hamm, this is my question, we have the ability and authority to move in camera to receive your answer in confidence. If we do that, will you answer the question?
DR. HAMM: Mr. Steele, I think you answered that question in your directive to the Public Accounts Committee on March 1, 2004. I'll quote from your letter. "The Public Accounts Committee has certain mechanisms, such as moving in camera, which might assist in achieving the balance. However, receiving information in confidence - information which can never be referred to in a public forum - probably will not assist the PAC in its work." So you're suggesting something that you discounted when you were chairman of the committee.
The point of all of this is you seek legal opinions. This is not a legal forum, this is a political forum, it is a partisan, political forum directed by a partisan, political forum called the House of Assembly. I don't believe seeking legal opinions is really relevant. Now, you have a legal background, I do not. I have come to my conclusions about the oath that I took. I know what I believe to be my oath. I'm very much of the opinion that the current government believes that that oath is very much the way I interpreted it. If that's not the way it's to be, it's not for you or for me to change that. It is an issue for some kind of a total reform. I know you have a profound interest in these things and have, on the legal side, a much deeper understanding than I do, but I have sat around this place, I know what the House seems to have indicated, and I am being driven by that, not by legal opinion.
[Page 30]
MR. STEELE: Of course all this committee can do in the end is report its findings to the House, and if it finds the answers unsatisfactory, we have to seek the guidance of the House. The House is now, to all intents and purposes, the government, is under the control of a different person, and it would be very interesting to see what his government does when this committee reports back to the House that it finds the answers given by you and Mr. Fage to be unsatisfactory. I haven't asked a question yet, Dr. Hamm.
I want to move back to Magic Valley in the few minutes I have remaining to me. In August 2005, the Office of Economic Development said the following, "It was our consensus that there needs to be a proper succession plan in place that would include an equity player that would participate in any go ahead plan including participating financially and in management in any go ahead plan. The impression is that this would not be acceptable to the current owners."
But when the money for Magic Valley was ultimately approved, these very sensible conditions were not included. There was no succession plan, no requirement for an equity partner, no requirement for any equity from the owners themselves. Why, in your view, was this funding approved without any of the conditions that the Office of Economic Development itself thought were sensible?
[10:30 a.m.]
DR. HAMM: What is the date of that first observation?
MR. STEELE: August 2005.
DR. HAMM: Not being a participant in the decision, I can't answer that question.
MR. STEELE: The assistance that was finally approved is in the form of a loan, but it's on very favourable terms. There is no interest, there are no payments required during the term of the loan, the loan is forgiven at $70,000 per year as long as Magic Valley opens its doors. There is no security for the loan except a promissory note, which is the weakest form of security, and there is no provision for repayment, even in part, of the existing outstanding loan that Magic Valley had from the province.
Now a newspaper editorial stated, somewhat indelicately, that "It's a grant tarted up as a loan." In fact the only reason why the government would go to such lengths to pretend that this was a loan is because you had promised that there would be no more outright grants. Do you continue to maintain that the financial assistance offered to Magic Valley is a loan and not a grant?
DR. HAMM: Yes, it is a loan with certain requirements, not the least of which is that the business has to stay operational. It is very much in the public interest in Pictou County
[Page 31]
and northern Nova Scotia that that business stay open. It is the single biggest economic opportunity that we have.
MR. STEELE: But, see, here's the problem, the business plan that Mr. MacNeil had developed was for $3.7 million, and when the $350,000 was offered to Magic Valley, a key player in this whole episode said this was not going to do too much. Who was that key player? It was Bill MacNeil himself who said to Andy Hare, $350,000 will not do too much for him. Even the PRDA, when they wrote their letter of support, their second letter of support, said that what they support is the business plan. They didn't say they supported giving Mr. MacNeil $350,000, which not even Bill MacNeil thinks is going to do very much for him.
Do you still maintain that giving $350,000 of public funds, with no business plan for that amount and with no prospect that that will turn around Magic Valley's fortunes and with no prospect for repayment, is a good use of the public's money?
DR. HAMM: I think you're being rather liberal in your interpretation of what is being said. I go back to my original statements. Community economic development is not a cookie cutter kind of endeavour. Are you suggesting that the government should not have made an investment in Northumberland Ferries to reinitiate the ferry from Portland to Yarmouth? Are you suggesting that the government should not have provided a five-year support program to allow the railroad in Cape Breton and the spur from Sydney to Port Hawkesbury to continue, because of the benefit . . .
MR. STEELE: Dr. Hamm.
MADAM CHAIR: Order, order.
MR. STEELE: I understand that when I ask a question about Magic Valley you want to change the subject, but I'm going to bring us right back to Magic Valley. The conclusion to which we are driven after reviewing all the documents and hearing all the witnesses is that this loan was not about economic development, it was not about rural Nova Scotia. This amount of public money was given to Magic Valley because of guilt and friendship. Guilt because of Bill MacNeil's bitterness about the effect government policy had had on his life's work, and friendship because Bill MacNeil had known you since you were in school together. Guilt and friendship. Why should Nova Scotians not conclude that that is what was behind this loan?
MR. DEWOLFE: Madam Chair, on a point of order. The Opposition members are engaging, I believe, in a shameful exercise in an attempt to sully Dr. Hamm's stellar, sterling legacy that he has had over the past years. I think it's shameful. Dr. Hamm is here as a volunteer.
[Page 32]
MADAM CHAIR: Mr. DeWolfe, that's not a point of order. I will allow the question to be repeated and the witness to answer the question.
DR. HAMM: First of all, if the member opposite wishes to pursue that, he should pursue it with the local RDA, because the support that they provided really is something that I can't speak to. I do know that they developed a strategic plan. They came to conclusions that make this initiative very supportable. If you have questions about that background, you should not direct them to me, you should direct them to the local RDA. You have that capability. You can ask the PRDC to come down here and provide you with the kind of information you're seeking. It's quite within the mandate of the committee. You know, it's not for me to defend their actions. I think their actions are defensible, but I think it's incumbent on them to provide you with that kind of information.
MADAM CHAIRMAN: Order. The time has now expired for the NDP caucus.
Mr. Samson. You have until 10:56 a.m.
MR. MICHEL SAMSON: Dr. Hamm, could you tell us why the $350,000 grant to Magic Valley was approved at either your last or second-last Cabinet meeting?
DR. HAMM: I think the urgency was that - and this is after the fact. I know a lot more about it now than I did. There was a business plan developed by the park and presented on or about June 2005. Obviously, that business plan arrived too late to have any impact on the current year's activities. Magic Valley is essentially a July-August operation. If approval was delayed - and I believe this came out in testimony - then it would be too late to impact this year's tourist season and, in fact, you would be delaying it, not a matter of a few weeks, but you would be delaying the impact for an entire year. I think it's based on the business cycle of Magic Valley.
MR. MICHEL SAMSON: If you were aware that you were possibly in a conflict and you excused yourself from the discussion, why wouldn't you have simply indicated to your Cabinet colleagues, why don't you delay this for another week, once I'm gone, and then there won't be an appearance of any possible favouritism for this loan or that this was some sort of parting gift on my way out the door. Just wait another week. So are you saying that seven extra days would have made or broke Magic Valley's chance for a successful season? Why wouldn't you have taken the extra step to avoid the appearance, rather than just excusing yourself?
DR. HAMM: There are two answers. Number one, the new Cabinet wouldn't be up and running in a week. The transition didn't occur until February 24th.
MR. MICHEL SAMSON: You'd be out of it though.
[Page 33]
DR. HAMM: But the point is - like, the dilemma I was in is, I knew from the get-go that this would be a very difficult file for me, personally. But I have a responsibility to my community when they come forward with something to make sure that my community receives the exact level of consideration that other communities have received from government.
Now, either I would put my personal interest - and I knew that this would be somewhat controversial, I will put it that way. I also had to balance that with my responsibility to my community. My community said to me, this is our number one economic development opportunity. So do I go with personal benefit, or do I go with supporting the community that I'm there to support? I made the choice. I would not, on a personal basis, hold up that only because it might enhance me politically. My responsibility to my community is greater than the responsibility I have to myself.
I considered this on many occasions because I knew down the road that this would be a difficult file because politics being what it is, everything we do is suspect. But the legitimacy of all of this is, this was handled as any other loan. We have done similar things in other communities. We have invested in local infrastructure that benefits the community, in general. And I was not going to be a lame duck representative and for personal benefit - which it would have been - delay what my community was telling me was an important economic development initiative.
MR. MICHEL SAMSON: First of all, let me tell you . . .
DR. HAMM: And I had that power, I agree.
MR. MICHEL SAMSON: Yes, and let me tell you about another power you had. In 2000, you said, "We intend to get politics and bureaucracy out of the way", Hamm said. "Let businessmen make business decisions and create opportunities for prosperity."
DR. HAMM: Yes.
MR. MICHEL SAMSON: Six years later, you were still sitting around a Cabinet Table, in secrecy, doling out taxpayers' money at whim for who you wanted to on a business plan that your bureaucrats told you stunk. It didn't make sense. They asked for revisions. They were told no by Mr. MacNeil. Yet, you were still six years after that comment, doling out taxpayers' money to someone who owed $234,000, that your government had refinanced his loan to make it interest-free.
I can tell you there are a lot of people in Community Services with overpayments that wish they were all interest-free and they had the same generosity from your government for the money they owe, but they're certainly better off than Mr. MacNeil and the way your government is treating them. Then you turn around and you give a $350,000 grant. Now,
[Page 34]
anywhere else, other than in your own mind, Dr. Hamm, it's a grant, a non-repayable loan without any interest is a grant. That's what it is. You're still doing that in the back room of Cabinet. What failed in the six years after you made the comment of taking politics and bureaucracy out of the way and letting businessmen make decisions? Why did you not demand that NSBI deal with Magic Valley to remove any appearance of the politics that you have just mentioned?
DR. HAMM: Well, first of all, yes, we have changed the way economic development is done. Yes, we did introduce NSBI and, yes, we've had the best record in economic development compared to any other six-year period in the history of the province.
That's what people look at, is the government initiative working for the people? If it's growing the economy and if it is providing a return on investment, then I think it's justifiable. Yes, we have much better access to information through NSBI but there is a political side to all of this. We have to make decisions based on things other than the mandate of NSBI. Before our government came in . . .
MR. MICHEL SAMSON: What did you mean when you said, take politics and bureaucracy out of the way? What did you mean back then if you're saying here today, well, we can put NSBI - because that's the facade that politics isn't involved, but we still need politics and we still need the Industrial Expansion Fund. Why didn't you say that in 2000? Why did you go with the charade of setting up NSBI if your whole intention was to still allow Cabinet, where the business plan might not have made sense, but because there was lobbying from an RDA and lobbying from a community, you could still go give out a grant of taxpayers' dollars. Everything you said you would not do in 1999. Were you being honest in 2000 when you made that statement, when you said you would take the politics and bureaucracy out of business decisions and let businessmen decide? Your answer today seems to say, this was one statement, but you forgot to also mention that you still intended to allow politics to remain in giving out taxpayers' money in Nova Scotia.
DR. HAMM: I am responsible for every single dollar the government has spent since 1999. The only reason I have agreed to come to this committee is, I believe that the people of Nova Scotia deserve an explanation. If I was still sitting in the House, I wouldn't be sitting here. I had the option not to come to this committee. I didn't come, really, to answer to partisan observations. I came because I felt this was a vehicle for me to explain myself about the actions of government on two particular loans.
I do not believe that these loans are out of the ordinary and you heard that from the testimony of the witnesses from the Office of Economic Development and NSBI. They said, these loans, these transactions, were handled exactly as all other initiatives that have come before government. They made that statement.
[Page 35]
MR. MICHEL SAMSON: Why would Paul Taylor, as Deputy Minister of Economic Development - if you're so concerned that you're responsible for every taxpayers' dollar - not tell Nova Scotians, as the deputy minister of that office, that this loan to Magic Valley, this grant of $350,000 was good value for dollar based on sound business advice and would bring a return to the people of Nova Scotia? Why would he not give that commitment? And are you prepared to give that commitment to Nova Scotians today that that is why this money was given out?
DR. HAMM: I believe in the strategic plan developed by the RDA. Do you have a copy? I could provide it.
MR. MICHEL SAMSON: You made the decision, not the RDA, to give hard-earned taxpayers' dollars - $350,000 - to a company that hasn't paid its debts in six years. When Andy Hare was asked, when can we expect Magic Valley to make payments, he had no answer. Well, why would they need to make payments? Your government gave him a grant so why would he even have to meet his debts to Nova Scotians when your government has allowed them the grant?
[10:45 a.m.]
The point is, Dr. Hamm, what you said in 1999 was that you would get rid of this way of giving out government money. Today, sir, your answers are that you have failed to maintain that commitment to Nova Scotians and you still believe that Cabinet has a role to play and politics has a role to play in giving out taxpayers' dollars which flies completely in the face of what you've told Nova Scotians all along. Yes, there is something wrong with these loans and there's something wrong with the other loans you've done, is that you've broken your commitment to Nova Scotians to take the politics and bureaucracy out of the way and let businessmen decide. What we're wondering is, at what point, since you were Premier, did you decide to break that commitment to Nova Scotians? What changed to make you break that commitment?
DR. HAMM: We have changed the way, honourable member, in which economic development is done. It has provided excellent value for the people of the province. I am conscious that the money that we spend is not our money, it's the province's money. Therein lies the amount of time and effort that we have spent on each and every file that comes before Cabinet in economic development.
Our results speak for themselves, Mr. Samson. The best record in economic development in any six-year period in the province's history. And we have taken a lot of the politics out of . . .
MR. MICHEL SAMSON: But not all. You said you would take all, and yet, you have still left it. Why don't you just say, I kept politics in giving out taxpayers' dollars even when
[Page 36]
I told Nova Scotians, vote for me and I will get rid of it. We have your statements. We have your comments. You have acknowledged that they're yours, that you have made them.
DR. HAMM: You'll have to reread them. I didn't follow it exactly.
MR. MICHEL SAMSON: "We intend to get politics and bureaucracy out of the way . . . Let businessmen make business decisions and create opportunities for prosperity." Why don't you just tell Nova Scotians today you did not keep your word and politics is still alive and well in the decision making of taxpayers' dollars going to organizations and businesses in the Province of Nova Scotia.
DR. HAMM: Would you read that again? I'm not sure it's relevant.
MADAM CHAIR: Order, order. Would the member table a copy of that?
MR. MICHEL SAMSON: Oh, yes.
DR. HAMM: I don't know what he's reading from.
MR. MICHEL SAMSON: We've got lots of copies. I would be more than happy to. That's from The Daily News, October 19, 2000. You don't recall making that statement now?
DR. HAMM: I'm not saying I didn't but I do know that it was our intention to get a business input into the decisions of economic development.
MR. MICHEL SAMSON: One final comment before I pass over to my colleague. Dr. Hamm, we're here today because of your actions. You've brought us here. Your actions and the statements of your government are what brought us here. You had a Minister of the Crown resign by not claiming that he had a conflict. We have what we know is your involvement. You've told us that you did not want to know anything about Magic Valley but on November 16, 2004, there is a briefing note, "Advice to Premier Hamm" on Magic Valley, which you said you didn't want to know about but suddenly you've got briefing notes that are keeping you informed on this.
DR. HAMM: What's the date on that?
MR. MICHEL SAMSON: The date is November 16, 2004. So we've got conflicting testimony from you. Let me end by saying this. The bureaucrats who came here, they were very uncomfortable and they were very clear that the money requested by Mr. MacNeil is what they called a dream. A decision somehow was reached to give $350,000, although no sort of justification could be given for it or to say, why that specific amount? Why not $500,000, why not $200,000, why not $700,000? No answer.
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Nova Scotians expected, sir, after your comments and your commitments, that they would be able to know exactly why taxpayers' dollars were given out to someone without any interest and that it would be forgivable. That has failed on this. You, sir, today, cannot give us those answers, your bureaucrats could not give us those answers, because something went wrong here in the way this loan was given.
For you, sir, to say that Nova Scotians don't think there's anything wrong with these loans, I know you were out of the country, but my understanding is you're in the country now. You might want to talk to Nova Scotians because you would be hard-pressed to find any who don't believe something went wrong with the system here and your quotes, sir, make it clear that your commitments to Nova Scotians, your comments, were fine for the day. Six years later, it's quite clear a different path was chosen and that's why we're here today. So with all due respect, you have no one to blame for being in front of this committee here today than yourself and your government's own actions in the way that they spent hard-earned taxpayers' dollars here in Nova Scotia.
I move my time to Mr. Colwell.
DR. HAMM: Was there a question there, Madam Chair?
MADAM CHAIR: I don't believe there was and I would ask Mr. Samson to table that briefing note as well. Thank you.
Mr. Colwell. You have the floor until 10:56 a.m.
MR. KEITH COLWELL: Okay, thank you very much. Well, Dr. Hamm, I've been sitting here very intently, listening to your answers and going through the process. I just want to remind you of some of the things you've said here this morning. You said that sensitivities to perceived conflict of interest would not have been - you would not have contacted the Minister of Economic Development on this file. You said that here this morning in response to one of your own member's questions.
DR. HAMM: Repeat that again?
MR. COLWELL: You said sensitivity to the perceived conflict of interest, you would not have contacted the Minister of Economic Development on the Magic Valley file. You said that and it's on the record. Number two . . .
DR. HAMM: I . . .
MR. COLWELL: Let me finish. Number two, in 2004, you also said that you became aware of Village Developments, actually, looking for financial assistance - and you just stated that - in 2004. You went on to further say that the minister verbally brought you the
[Page 38]
file and your comment at the time, today, here, was that you told him to do what he figured was right. You said that today.
DR. HAMM: I did.
MR. COLWELL: The fourth thing you said here today - and this is the most important one - no meeting on this file in your office, as Premier, was conducted on Magic Valley and Village Developments. That's what you've said, exactly what you've said here today. Well, Dr. Hamm, you've either got a very poor memory or you're trying to cover up something. I don't know which it is.
On April 4, 2005, at your request - and it's in the documents, it was forwarded from the department - Lynn Coffin had a meeting with you, personally, regarding Magic Valley and Village Developments, and other businesses in Pictou County. Your comment to her - which is on the record - was, you told her that you planned to discuss these issues with Mr. Fage to see what may be able to be worked out for Pictou County. Can you recall that meeting? Because evidently, prior to that, you had absolutely no contact - you said in this testimony here today - no contact whatsoever with anybody on this file and, indeed, it's in the record.
DR. HAMM: Thank you. I appreciate the member opposite reminding me of the meeting with Lynn Coffin. I invited Lynn Coffin to my office as the local representative for Economic Development, or NSBI, to go over all of the files that they were working on, relative to economic development activities in Pictou County. It had nothing to do, specifically, with any one file. I wanted to know all of the files that they were working on.
You will also remember that that file had actually been referred out of that office months before that meeting occurred and you received that meeting in testimony. This file was no longer in that office. What I asked Ms. Coffin to bring to my attention were all of the economic development activities that were occurring locally. As I had said in previous testimony, that was a particular interest of mine and one that continues to this day. That's why that meeting occurred. It had nothing to do with Magic Valley, it was simply to get from Ms. Coffin all of the activities of NSBI in our area.
MR. COLWELL: Well, it further goes on in another document we have there, on August 27, 2004, at a meeting regarding Magic Valley, prior to the meeting with you in 2005, that Lynn Coffin was assigned by Economic Development - even though she works for NSBI - was assigned by the province to work on this very particular file, prior to your meeting with her at that time. So she was actually working for Economic Development at that time, or assigned to Economic Development. So she was there on behalf of Economic Development, not NSBI.
[Page 39]
Dr. Hamm, you really have got to get your act together here on the answers because we're not getting the answers here that we should be getting today with straightforward answers on this.
You talk about this whole business plan that was put together. I mean, it's a carbon copy of one that was put together 20 years prior to that, that didn't work, wasn't going to work, and it's almost exactly the same. Then, when they went through this whole process, when suggested by Economic Development that a deal be struck for community financing or equity investment, Mr. MacNeil just flatly said, no, I'm not interested, I am not interested in any kind of input from the community, financially or any equity investment. So it just tells you the system wasn't there to work.
When you go through this whole thing in the area, you said earlier you've got 2,200 to 3,000 files that are now pending with NSBI or OED. Is that number correct?
DR. HAMM: That was the information the committee received.
MR. COLWELL: I'm sure that some of these 2,300 businesses would sure love to have a $350,000 grant to make their business really prosper, and probably employ a whole lot more people than this does. I've got a question that I'd like to ask you on a more personal basis. This was told to me by a very close relative of mine, that in discussions with Mr. Bill MacNeil, evidently he told this relative of mine, without prompting, without asking, that he personally drove you around. Is that correct, that Bill MacNeil drove you around?
DR. HAMM: Maybe years ago. I've declared to the committee that we have been friends for 50 years, although our friendship in recent years since I became a politician has not been nearly as close, as have been my relationships with all my friends. My observation, you should not be surprised that if there is a local file that the local officer would not be involved in that file. I wasn't aware of that information, but I don't see that that should come as a surprise. What you heard in testimony is the entire file was carried out by officials. Ms. Coffin is an official of NSBI, and I suppose rather than sending somebody up from Economic Development, if on-the-ground work had to be done on the local file, that they would engage Ms. Coffin to do it, that just seems sensible.
MADAM CHAIR: Order. The time has expired for the Liberal caucus.
Mr. Christie. You have until 11:17 a.m.
MR. PETER CHRISTIE: Good morning, Dr. Hamm. There are a couple of things I want to go back to, in your testimony, as you started the discussion, particularly regarding Mr. Steele and his last questioning. He was talking about the question of the decision for this loan was based on guilt and friendship. Earlier in your testimony you indicated that this was not in your riding. Whose riding is it in?
[Page 40]
DR. HAMM: It's in Charlie Parker's riding.
MR. CHRISTIE: Was Mr. Parker involved in any of this process? Did he encourage you, or was he involved in this file at all?
DR. HAMM: I know he wrote to the department, encouraging financial assistance for Magic Valley. I think the documentation that members have received contains that letter.
MR. CHRISTIE: So it would be fair to say he was supportive of this initiative going forward and carrying on?
DR. HAMM: Yes.
MR. CHRISTIE: I'd just like to come back to - you indicated earlier in your comments what you perceived your role as MLA to be, even though you were Premier. Could you just clarify that again for the committee?
DR. HAMM: My role as a local representative is to provide a number of services to local residents, including making sure that if they feel they are entitled to some access to government that that access is described to them. Under the normal course of events . . .
MADAM CHAIR: Order. I would ask the members to bring themselves to order.
DR. HAMM: Under the normal course of events, if I felt that it was a particularly good initiative, I would be part of the initiative. I have no hesitancy in promoting my area and to make sure that my area is treated as fairly as other areas in the province. I can say to you there is a distinct impression in my area that the area has actually been excluded from the kinds of consideration, only because I'm Premier and the amount of, shall I say, observation that I'm under.
What my position is, Mr. Christie, I believe that our area should receive the same level of representation and the same level of consideration as all other areas of the province, none more, none less.
[11:00 a.m.]
MR. CHRISTIE: In your testimony, you mentioned a number of initiatives that you had supported in Opposition and indeed in government, things such as the boat launch in Petit-de-Grat, the Northumberland Ferries, the rail spur off of Port Hawkesbury. At the time, as you were doing it, what was your logic for wanting to support those?
DR. HAMM: Those were initiatives that required a direct investment, a grant if you like, of public money. I will describe, briefly, the three. When I was in Opposition,
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governments of the day provided direct money to the community of Petit-de-Grat. The area was suffering economically because of a downturn in the fishery, and there was a proposal by a local group, supported by a number of local entrepreneurs, to purchase a mobile boat launcher. At that time I was Leader of the Opposition and had visited, on more than one occasion, Isle Madame, and I actually got the details of what was proposed. While it was a direct investment of public money, it was an unusual initiative, I felt it had a chance to succeed.
There was a lot of political innuendo at the time around relatives and so on. I did not believe that was relevant at the time. I believed that it was a community backbencher who had a reasonable chance of succeeding. I publicly supported that initiative, and the issue went away in 24 hours because it didn't become a political issue.
Northumberland Ferries. I've subsequently visited the community to check to make sure it was working, because I felt a little bit on the hook on that particular support. Northumberland Ferries, we were all dismayed when the Scotia Prince, on the eve of last year's tourist season, discontinued service. The issue is not the ferry service itself, the issue is what that ferry service means to the local tourism industry, both along the South Shore and the Annapolis Valley.
We committed public funding to support Northumberland Ferries to initiate the service from Portland to Yarmouth, not because we wanted to support Northumberland Ferries but because of what that support and that service would mean to the local area and the local tourism industry.
Somewhat different but similar, when the railroad had applied to the URB to discontinue service from Sydney to Port Hawkesbury, we were, as government, lobbied - and successfully - to provide a support, a direct infusion of public money into the railroad, not because we wanted to support the Cape Breton & Central Nova Scotia Railway, but because of what that service does for the community in general. It is, by itself, an economic driver.
So the benefit is not measured in terms of the employment at Northumberland Ferries or at the Cape Breton railroad, it's what that service means to all of the other business infrastructure in the area. Therefore, we made that kind of an investment. You might want to look at another one, the Lunenburg waterfront. A very unusual activity of government, so we would not lose that waterfront, which is of huge importance to the tourism industry in the Province of Nova Scotia. I only bring up some of these, and I could go on and on. For example - this has metro implications - in 2000 and 2004, we provided large amounts of grant money for Tall Ships, which was endorsed locally, because they knew it would have a huge impact on tourism. It was not widely supported in other parts of the province, who for that period of time had a downturn in their tourism.
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Those are the kinds of things that we, as government, have to make decisions about from time to time. I think that all of those investments, going right back to Magic Valley, S&J, Northumberland Ferries, Cape Breton & Central Nova Scotia Railway, investments in Tall Ships, investments in the Lunenburg waterfront, they return value to the people of the province. By their very nature, you can't make a program to address initiatives that are as varied and as unique as all of those were.
MR. CHRISTIE: Dr. Hamm, would it be fair to say that all of those initiatives you've talked about, along with Magic Valley and some of those other initiatives, one of the other things that's similar about them is they all received fairly unanimous community and area support? Is that a fair statement?
DR. HAMM: Yes, that is a fair statement.
MR. CHRISTIE: I did have the opportunity to look through the information that came in from Pictou County regional development and, indeed, the Mayor of New Glasgow and a variety of other people supporting Magic Valley.
One thing else I would like to go to, there was some discussion in terms of some e-mails that were on the file of Magic Valley. Can you tell me, is the only thing that you ever e-mailed in your time in the Premier's Office, was on the Magic Valley file or was that a fairly common practice for you to have e-mails on different things?
DR. HAMM: Government departments are full of e-mails in which I was exercising my responsibility to move the agenda of the government along. Committee made reference to the fact that I probably wasn't diligent enough on that particular file. David Wilson, a member of the committee, indicated it should have happened sooner and the support should have been greater. So, obviously, there was a lot of judgment that went into the file.
Many, many times, I would say to ministers, look, this has to happen by such and such a date, it is taking too long. I think that the government for six and a half years has been very busy. I took it upon myself, as Premier, to drive the agenda of the government. Whatever the decision is, let's make the decision, get it off the board. Let's not just leave it dangling out there. I took it upon myself to do that very thing. If I was Premier again - which I won't be - I would continue in the same vein.
MR. CHRISTIE: So what you've just indicated, you followed a number of files, whether they were in health care, highways, all the different files. So to suggest that there were e-mails on the Magic Valley file is simply sort of over-stating the obvious, I would suggest.
DR. HAMM: Well, I think, those who are familiar with the way I did business in the Premier's Office, in terms of driving the government's agenda, would be surprised if I didn't
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drive that agenda. It was simply a case of saying to government, regardless of what the decision is, let's get the decision in front of Cabinet, let's get it dealt with so we can move on to something else.
MR. CHRISTIE: Dr. Hamm, I guess one of the other things that we had testimony before when the people of Economic Development were here was the issue of government loans and the banks. Over the period of time when you were Premier, had you noticed anything change in the relationship of the banks and a lot of companies that required some action, or simply, there were changes made in the relationship of a number of companies?
DR. HAMM: One of the reasons why we have to continue, as government, to be in financing, in the province, partly in metro, but certainly in rural Nova Scotia, the banks are changing their policy. For example, I remember visiting a boat yard, and a very profitable boat yard, a huge employer in the local area that was served a 30-day notice by the bank that an account that had existed for three decades was being closed out only because the bank had made a decision they weren't going to be in that business. I had the same experience on a large farm in which a major bank said, we've had your account for 30 years, you've never missed a payment but we're out of that business now.
I go back to my opening remarks. If we're going to have a Nova Scotia with a rural population and a rural economy, we have to do some unique things. Unfortunately, some of that involves a form of banking. Now, you may say it's wrong but I think the objectives are right and I think there is reasonable suggestion that we will be successful.
One of the initiatives that I can make mention of is the Small Business Loan Program that we initiated with the credit unions, because credit unions are more small-community-friendly than banks. As you know, a large part of the liability for those loans is being borne by the taxpayer but if you can't provide financing in the rural area you're not going to have an economy. Again, the member for Richmond may argue that those kinds of decisions are wrong but I would argue, equally strenuously, that they're right.
MR. CHRISTIE: Let me just come back to some of the quotes that have been attributed to you and the questions you've been asked. I guess you've indicated in your opening comments, some of the statistics, where the province has gone over the last six years in terms of development. Would you characterize a government of the day, be it in Nova Scotia or across Canada, as one that has to be adaptable to changing times and has to be adaptable to changing conditions? Is that a fair assessment of what governments have to be in this country?
DR. HAMM: Yes, I think that's a fair observation. We are living in changing times. I made mention of the changes in the banking industry. I make mention of the changing demographics in the country, the changing rural-urban split. Something that isn't as widely understood in our province as, perhaps, it should be, the change in the urban-rural ratio in
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Nova Scotia is among the smallest in the country. We have been more successful than most other areas of the country in sustaining the rural part of our population.
I understand that it's controversial. When we make an investment in Tall Ships in Halifax, it's greeted with open arms in Halifax. When we invest in the Tattoo - something that I certainly support - or Pier 21, things that drive the economy here, it's lauded. But we also have to look for opportunities, and we're not going to build a Pier 21 in Pictou County and we're not going to have a Tattoo in Isle Madame. We are going to have to find unique solutions.
The only justification that I can provide you is, our track record has been good. Don't criticize what we're doing until it can be proven to fail. Thus far, the government has a good track record, a track record that it will stand on. That's where I am. I'm human. I get annoyed when people take a narrow view. We don't want the rural side of Nova Scotia to go away. I made a commitment in politics when I ran that we would find ways to sustain the rural economy and I believe that we have proven.
It takes unique initiatives. If somebody tells me, in Pictou County, after an extensive, strategic plan is put in place, that the number one economic development initiative and part of the infrastructure is Magic Valley, then I take that seriously and the department takes it seriously. If somebody tells me in Isle Madame that we need a mobile boat launcher to build that local economy, I'm prepared to look at it. If it makes sense to me, I'll say that.
If somebody says to me that we've got to sustain that railroad from Sydney to Port Hawkesbury, then I take it seriously. Or if somebody says to me, we've got to have the ferry from Portland to Yarmouth next summer, I take it seriously. If somebody says to me that we've got to preserve that Lunenburg Waterfront and the Tourism Association supported it, then we will find a way to do it.
What I object to is condemning things before they've been given a chance to work, particularly if they're based on strong information which all of those initiatives were.
MR. CHRISTIE: Thank you, Dr. Hamm. I will pass my time off.
DR. HAMM: I apologize, Madam Chair. I know I get a little emotional in speaking about rural Nova Scotia but I can't help myself.
MR. CHRISTIE: It was my time and I enjoyed it.
MADAM CHAIR: Mr. DeWolfe. You have the floor until 11:17 a.m.
MR. DEWOLFE: Thank you, Madam Chair, and thank you, Dr. Hamm, because I certainly represent rural Nova Scotia and that's where my heart is. I know that in much of
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our work, we have to look at the big picture and what's good for one area may be good for another as well. Rural Nova Scotia is very important. It can't be overlooked. I recall, when we first came to Halifax, there always seemed to be two economies going, the one in Halifax and the one in the rest of the province and we're moving, at least, towards the rural Nova Scotia.
Just in summarizing, the remaining couple of minutes, when you were Premier you indicated that you didn't interfere with the staff at Economic Development when they were considering the loan request for Bill and Celeste MacNeil. The staff have confirmed that very clearly. I don't believe that our government should be apologizing for providing support for businesses in rural Nova Scotia.
It seems, for all purposes, that the Opposition are turning their backs on rural businesses and rural jobs. There are certain businesses and situations that, yes, the banks can't look after, but that doesn't mean that there are not jobs and spinoff jobs and opportunities that deserve support. Those are things that government has to look at, the big picture.
[11:15 a.m.]
Under your leadership the past six and a half years, there have been more jobs than ever before in the history of Nova Scotia, and that's supported by Statistics Canada. Despite having all the facts, Opposition members have engaged in what I had indicated earlier I feel is a shameful exercise. I believe that all Nova Scotians appreciate your honesty, your integrity and your judgment. I would suggest to you, Dr. Hamm, that you walk away from this meeting holding your head high. I thank you for your leadership and your honesty on behalf of all Nova Scotians. You deserve a great deal of credit for the jobs that we have in Nova Scotia and the economic development initiatives that we have throughout the province. I'll close my remarks at that. I believe my time has expired.
MADAM CHAIR: Your time has expired. There's no final question for the member?
MR. DEWOLFE: Dr. Hamm, with regard to the jobs in rural Nova Scotia, is it your plan to continue supporting rural Nova Scotia, as a member of the Legislature?
DR. HAMM: As long as I sit here.
MR. DEWOLFE: Absolutely. Thank you.
MADAM CHAIR: The time has expired. I would now offer an opportunity to Dr. Hamm to make some closing remarks.
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DR. HAMM: Madam Chair, I do recognize the indulgence of the committee. I have appeared here for one reason and one reason only and that's my accountability to the people. Since you couldn't have me in Question Period, that's why I agreed to come. Mr. Steele and I have a disagreement on Cabinet confidentiality, but I believe that is an issue for the House, not for the committee. As members of the House, we all have an interest in that particular area. I respect your view, and there are parts of it with which I'm quite sympathetic, but I do know what appeared to be what we signed on to as the oath. Until that is changed, I think we have to respect what ministers believe they have signed on to.
I'm very pleased that you have allowed policy to be discussed, because that is something that, obviously, you couldn't discuss with staff. I do appreciate the opportunity to talk policy. I think it's very important, and while we may disagree on details, I know there are people here who don't disagree - even those who don't sit in our caucus - that we have to do something about economic development, both metro and rural. I think, particularly, the three members of the committee who sat in a previous government know that economic development is not necessarily an exact science, but the outcomes are really perhaps the best measure of whether it's done right.
I think one of the things I would point out, since we became government, despite a very significant increase in the workforce, the unemployment rate in every single area of this province is lower, very significantly lower right across the province. While a government can't take all of the credit for that, it can certainly take part of the credit for that. I simply would ask committee members to be mindful that what the public is really concerned about in economic development is, is there a return on investment and is there going to be a job out there for people who don't have jobs? It's very difficult to deal with a population that is under- or unemployed.
I don't if you saw on television the other night the Boys of Harbour Breton. It was the heart-wrenching story of the men from Harbour Breton leaving Cape Breton to go to work in Alberta. It had a profound effect on me, because I don't want a Harbour Breton in Nova Scotia. I want Nova Scotians, from one end of this province to the other, to be employed, and I will continue to be an advocate for sensible investments to allow that to happen. Thank you.
I apologize for my voice, I've got a terrible cold, but I'm no longer infective so you won't be getting it.
MADAM CHAIR: Thank you, that's good to know. On behalf of the Public Accounts Committee, I would like to thank you, Dr. Hamm, for being here this morning. I also want to acknowledge that this is Mr. Salmon's last meeting here with the Public Accounts Committee, after attending probably hundreds of these meetings. Once again, on behalf of members of the committee, we wish you all the best in your retirement, and thank you for your many years of service.
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MR. MICHEL SAMSON: Madam Chair, just before we adjourn, I would recommend that the subcommittee meet following this meeting to discuss where we go next as far as witnesses. I would ask that the subcommittee take into consideration the fact that we now have more information regarding the recent approval by Cabinet to give the Industrial Expansion Fund an additional $50 million in funding, a mere month before the House of Assembly is set to resume and with a budget to come forward, something which our previous Auditor General has lamented in the past, and while not illegal is certainly an activity which should be frowned upon.
We have more information regarding the decision to give $50 million, something that is of great concern to all Nova Scotians, considering the potholes we have today, the lack of nursing home beds for seniors in our communities, issues around our education system and school closures, to see that $50 million could be put in what some media have declared a slush fund.
I would move that the subcommittee consider bringing in the appropriate representatives to answer questions regarding the approval structure of the $50 million to the Industrial Expansion Fund.
MADAM CHAIR: Is there any further discussion on the motion?
MR. STEELE: Just for the sake of clarity, the motion is to refer that issue to the subcommittee, correct? Yes.
MADAM CHAIR: Would all those in favour of the motion please say Aye. [Contrary minded, Nay.]
The motion is carried.
A motion to adjourn.
MR. CHRISTIE: So moved.
MADAM CHAIR: The committee is now adjourned.
[The committee adjourned at 11:23 a.m.]
