HANSARD
Printed and Published by Nova Scotia Hansard Reporting Services
Ms. Maureen MacDonald (Chair)
Mr.Chuck Porter (Vice-Chairman)
Mr. Alfred MacLeod
Mr. Keith Bain
Mr. Graham Steele
Mr. David Wilson (Sackville-Cobequid)
Mr. Keith Colwell
Mr. Stephen McNeil
Ms. Diana Whalen
[Mr. Harold Theriault replaced Mr. Stephen MacNeil]
WITNESSES
Halifax 2014
Mr. Scott Logan, CEO
Mr. Tony Holding, Senior Director, Bid Marketing
Ms. Dale MacLennan, Senior Director, Finance and Administration
Mr. Patrick Jarvis, Senior Director
Ms. Deborah Hashey, Director of Communications
In Attendance:
Ms. Rhonda Neatt
Legislative Committee Clerk
Mr. Jacques Lapointe
Auditor General
Ms. Elaine Morash
Assistant Auditor General
Mr. Gordon Hebb
Chief Legislative Counsel
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HALIFAX, WEDNESDAY, APRIL 11, 2007
STANDING COMMITTEE ON PUBLIC ACCOUNTS
9:00 A.M.
CHAIR
MS. MAUREEN MACDONALD
VICE -CHAIRMAN
Mr. Chuck Porter
MR. CHUCK PORTER (Chairman): Good morning and welcome. We'll call the meeting to order and we welcome our guests this morning. We'll start as we always do, with introductions.
[ The committee members and witnesses introduced themselves. ]
MR. CHAIRMAN: Welcome here this morning and thank you all for coming. It's a very important topic and we will certainly have some fun here this morning, I'm sure, with some questions. I look forward to your presentation and, Mr. Logan, you are going to make the presentation this morning, right?
MR. SCOTT LOGAN: Thank you, Mr. Chairman, and honourable members of the Nova Scotia Public Accounts Committee. On behalf of the entire Halifax 2014 Commonwealth Games Bid staff, I would like to thank you for the opportunity to be here today. We are eager to ensure members of this committee have whatever information is needed to understand the job we were given by our board of directors and how we went about fulfilling our duties.
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Competing internationally to bring the 2014 Commonwealth Games to our city, to our province and country was a once-in-a- lifetime opportunity for people working at Halifax 2014. It was a job we were all extremely proud to take on. We gave it our all - passion and soul, nights and weekends, and the unfailing support of our families and loved ones. I'm exceptionally proud of the quality of work produced. It was an extraordinary effort by every single member of the Halifax 2014 team.
In the end our job, as staff, was not to make the decision whether to invest in this opportunity; our role was to provide the evidence upon which the decision was to be made. We understood this distinction going in and respected the role of our government partners, the Government of Canada, the Province of Nova Scotia, and the Halifax Regional Municipality, to make that difficult decision. I want to be clear here today, we respect the decision that has been made and are not here to dispute it.
I would like to touch on a few key areas in my remarks today from the point of view of the Halifax 2014 team. These include: number one, what we understood to be the vision and purpose of seeking the Commonwealth Games; number two, the business case for the Games in Halifax; and thirdly, the process that finds us here today.
The Halifax 2014 Commonwealth Games were to be an incredible, inspiring moment in time. The legacy of those Games was to live on both here and around the Commonwealth. In the true spirit of all previous Commonwealth Games, the Games in Halifax were designed to build a legacy for our community, for our youth, and to last for decades to come. The Halifax 2014 team always understood the pursuit of the Games was about so much more than the 10 days of competition - it was a point I made publicly many times over during the past 15 months.
In the most selfish but honourable of objectives it was about securing an opportunity to deliver much-needed infrastructure to Atlantic Canada and producing economic benefits to this city and province. Yes, there would be considerable public funding required, as is the norm, at 85 per cent. No, the revenues that accrue to a Commonwealth Games are not at the level commonly associated with an Olympic Games. The question was whether the business case existed.
Our task was to design a Games that delivered positive net benefit to our city and province and, yes, those Games needed to be rightsized for Halifax. The less tangible and hard-to-measure benefits of the Games were many. Community capacity, confidence and pride would grow with collective achievement, with each additional volunteer, with each new benefit realized as the 2014 Games drew nearer and as the world was welcomed in Halifax. The Games was an opportunity to inspire social responsibility, the pursuit of health and fitness, and the drive for excellence in us all. Unlike the Olympics, this is the essence of the Commonwealth Games movement.
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We absolutely knew that a Games in Halifax would contribute to change in how our society thinks about sport and recreation. Would the Games be a panacea? No. However, considering the infrastructure deficit in our region and the need for change in our society - specifically Atlantic Canada with its dismal chronic health status - we absolutely must pursue healthy, active living and we saw the Games as a catalyst for change and growth. It was our understanding that the Games were being pursued to be such a catalyst.
People who know me won't be surprised to hear me talk about the social impact of sport. It's something I'm very passionate about. However, the idea of the Games being a catalyst was not about me or about the bid team. In April 2006, after Halifax and Nova Scotia were chosen to represent Canada for the right to host the 2014 Commonwealth Games, a group of more than 90 community leaders from all walks of life, business to sport and health to public service, were invited to help all of us, that being the bid team and government partners, to determine what we wanted to get out of this opportunity.
It is this input that helped form the values, the vision and the mission of the Halifax 2014 Bid Society and, ultimately, its strategic plan. We continued to reach out to our community through dozens of advisory groups and stakeholder committees on which more than 50 volunteers served. Staff from all levels of our government partners touched the Halifax 2014 bid - some were consulted for specific issues of expertise, while others sat on committees; some were assigned as full-time liaisons to ensure that every possible benefit and policy link was fully explored; and some had daily contact with Halifax 2014 staff. This was not a task that we could ever have taken on alone, and for that support and involvement we are grateful.
Much has been said about the business case for a Commonwealth Games in Halifax. This was a major part of the mandate assigned to the bid committee, and with respect to all who have appeared before us we believe there was a very strong business case for a Commonwealth Games in Halifax. A business case should determine the financial impact of investing money; it should consider the rate of return on that investment. Simply put, are the net benefits of a project more than the total investment? We often said that it wasn't about the number - the overall cost - it was the net benefit we always felt was the most important thing.
The Games were pursued because it was felt there was evidence to support a positive return on investment. In the domestic bid phase, we used the Sport Tourism Economic Assessment Model to predict the economic impact of the proposed budget at that time. It clearly showed that the net benefits outweighed the investment with a predicted $1.9 billion of overall economic impact, $475 million in salaries and wages, and 15,000 person years of employment. That was at the domestic phase.
During the international bidding phase, the three funding partners - HRM, the province, and ACOA - undertook an independent economic impact analysis as a major input in their decision-making process. This economic impact analysis prepared by a firm called
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Canmac determined that the incremental impact, of hosting the Commonwealth Games, on Nova Scotia would be $2.4 billion in industry output and $1 billion in gross domestic product. They predicted $752 million in wages and salaries and almost 18,000 person years of employment. The report states that a conservative approach was undertaken. It further states that positive economic benefits were significant even when identified risks were considered. So with respect to the business case, on a $1.3 billion investment, without inflation, the return was conservatively predicted to be $2.4 billion in industry output and $1 billion in GDP for Nova Scotia.
In addition, we would have made a monumental step forward in addressing a facilities deficit in Atlantic Canada. Others involved in the bid termed this achievement as a generation jump, with a deficit that can be largely overcome with the help of one major catalyst. The purpose-built Games facilities like the stadium and multi-sport centre would be built to become an asset after the 2014 Games, for future event hosting and long-term social and economic benefit to our community and region - in fact our experts who analyzed the business case for both the stadium and multiplex facility felt very confident that between the operating revenues and the legacy fund we would have covered any operating deficits and ensured those assets were sustainable over the long term. However, business case aside, a funders' ability to afford their investment contribution is a real factor and whether to apportion those dollars within an overall government budget is a challenge that we recognize and fully appreciate.
Much has also been discussed with regard to process - and I'd to take a moment to touch upon that. The drive to determine the true cost of hosting the Commonwealth Games now, not later, was extremely important to me and my entire team. It is nothing I will ever regret in this process. It was the right and responsible thing to do, and the province and city should be complimented on their desire to do the same thing. The process was designed to ensure that all costs were determined, in detail, ahead of time. It was also designed to ensure that if cuts were made, everyone would know exactly what was being cut based on that detailed work, and to ensure people knew exactly what they were getting and what they were not getting - it was about options.
I believe any business person would concur that if the proper work is done upfront on a cost estimate, cutting that cost estimate to fit a budget, while requiring work and effort, is feasible and more reliable. As an example, because of the work on estimating and planning done upfront, we knew in detail the stadium would cost $121 million to construct. So when cuts would inevitably be required, we also knew for example that to remove the roof from the stadium would save $23 million - it was about enabling informed decisions to rightsize the Games to fit Halifax as the process unfolded.
Again, to the credit of our government partners, we understood they did not want to win the Games at any cost and to worry about the financial implications later. The kind of estimating and planning performed by my team, which has been described by others
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previously in this room as exhaustive, realistic and perhaps more detailed than has ever been seen before, would have played a major role in preventing cost overruns in the future.
Withdrawing from the bid was a difficult decision to make, a decision we fully understand was made with the best interests of the citizens of Halifax and Nova Scotia in mind. The Halifax 2014 bid staff has turned its attention to wrapping up the business of the society and ensuring the detailed planning and work to date is put into a form that can be used to grow the city and province in the future. This is our final responsibility.
We fully respect the need to wind up the business of the society in a responsible and efficient way, ensuring the taxpayers' dollars are safeguarded in the process. We spent approximately $7 million of the international bid budget to date and are providing regular updates in this regard to our executive committee of the board. As we've already committed publicly, we will be releasing audited statements of the society and we expect that to happen by mid-summer.
Two weeks ago we provided notice to the staff of Halifax 2014, with the majority receiving immediate working notice to May 29th. A team of ten will continue to June 30th,
when we expect the bulk of the society's business to be complete.
With that, Mr. Chairman, thank you for the opportunity to provide an opening statement. We'd be happy to answer questions from your committee.
MR. CHAIRMAN: Thank you very much, Mr. Logan. Just a couple of quick housekeeping items. One, each day when we're in here, the microphones are pre-set, so whatever position they're in, they're designed so that you don't have to move them. The other is that each question asked of an individual - whomever it is - I'll address you just for the purpose of Hansard and recording. Thank you for that.
Mr. Wilson, you have 20 minutes.
MR. DAVID WILSON (Sackville-Cobequid): I want to welcome the Bid Committee, Mr. Logan and your bid team. I want to begin by thanking you for your hard work. I know that many of you, or all of you, have put your heart and soul into preparing this bid, and unfortunately we find ourselves here today discussing that failed bid.
I want to make it clear that this is not an inquisition, it's an attempt to try to clarify what happened, and maybe some lessons we could learn for potentially the next time our province goes after such a bid. I know many of you have left jobs to come to the Bid Committee, some of you have moved from other countries and I know it's been a long process and I'm sure a bit of a disappointment for you.
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[9:15 a.m.]
I'd like to start this morning talking a bit about the process. I know, Mr. Logan, in your last news conference you stated it was never the job of Halifax 2014 to deal with affordability, that you were to focus on winning the bid and how to host the Games and that the partners - the federal government, the provincial government, the HRM - were to focus on the costing and affordability of putting on the Games.
The Deputy Minister of Health Promotion and Protection was here last week with the CAO of the Halifax Regional Municipality and they also testified that that was the case and your Bid Committee never had a particular number to work to or have over your head. I'd like to ask you, Mr. Logan, was there ever any concern that you didn't have a figure somewhere in your mind while you were preparing this bid?
MR. LOGAN: Mr. Chair, to the member, throughout the process, our work, as you described, was to find the most reliable and accurate numbers possible, and the staff agreed and as were directed by the executive committee of the board that that was our job to provide detailed information so informed choices could be made. So there was a real differentiation between roles and responsibilities within the society, staff, and governance. So staff obviously dealt at the operations level.
The direction that we always had and accepted and saw as a prudent way to proceed was to be as comprehensive as possible to understand the full range of costs so that at a point in time, when the process allowed for it, decisions could be made based on options.
MR. DAVID WILSON (Sackville-Cobequid): Do you think that the process might have gone better had you known the $1 billion mark before inflation was kind of the ballpark that the government partners were willing to fund?
MR. LOGAN: Mr. Chairman, one can look at that in a variety of ways. On one hand, perhaps it may have made the job easier but, on the other hand, perhaps important information would not have been scoped out. Again, it's often important to understand what you would be doing, but also what you would not be doing, and to have the opportunity to go through a process to decide what we should include in the Games budget and what we'd make a conscious decision not to do would be fully documented. You know, in one way, yes, it would make the job easier to have a number to work for, but it may not be the most prudent way to understand fully how to prepare a budget.
MR. DAVID WILSON (Sackville-Cobequid): Mr. Chairman, we know - I think it was the Deputy Minister of Health Promotion and Protection last week advised us, and I've heard it through the media - that the day the committee won the domestic bid I think they used the terminology "the parameters changed" for hosting the bid - and we all know that that doesn't mean, I think some people misunderstood that, you know, we were being forced to put on the Games like the Olympics. It's our understanding that the parameters were the
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requirements that the bid had in it and the detail that the bid had. Was that a concern of yours? Actually my first question was is that how it unfolded - was it the day you won the domestic bid that you found out that the requirements for the bid changed and expanded, needing more input and more work by your committee?
MR. LOGAN: I'm not sure if it was that day, but early on in the process when we transitioned from the domestic to the international process it became quite clear that the requirements for detail were far more comprehensive than we had anticipated. Now I want to be clear though on stating that, that wasn't a huge - how should I say? - concern because in many ways it certainly caused us a lot of hard work and long days to get the information, but at the end of the day that detail allowed us to ascertain more accurate information to make more informed decisions.
What is typical in the bidding process is that incomplete data is used to arrive at costing information in the bidding phase and, as a result, there is a shock after a city or province is successful in being awarded the Games and soon after, when they do a more detailed analysis of costs, find out that the numbers are, in fact, a lot greater than had been anticipated. So the required detail that the Commonwealth Games Federation expected of Halifax 2014 caused us to do a lot more work than would normally have been the case.
As I remarked in my opening comments, you know a lot of people say, oh, the costs go way up later and there's all this shock to come - be it good or bad, the shock was early. The number did go up, but it was because we had incredibly reliable information because we had done more work to get accurate numbers than had ever been done before. So it wasn't that the Games had changed so much, it's just that the expectations to cost things in a very detailed way was a requirement of the Commonwealth Games Federation - and all three bidding cities by the way.
MR. DAVID WILSON (Sackville-Cobequid): Actually that was one of my next questions, was there an added cost? Did you know or could you give us any figure or percentage of how much the bid would have increased because of those changes?
MR. LOGAN: Where the costs were incurred was in the bidding phase, the international bidding phase. So our budget was $14.3 million and a lot of people said, well, that's an incredible increase, that's a lot more than Hamilton for the 2010 process, and yes it was, but the reason was we had to do this increased level of detail and scoping that had not been required in the past. Again, a lot of people say that's a lot of money to have spent on a bid, but I think it was money well invested because it allowed us to make accurate decisions, to look at detail that would not otherwise have been available to make those decisions. We would have gotten bigger numbers later and have been in a position to not be as flexible in terms of opting to stay in the bid or not.
MR. DAVID WILSON (Sackville-Cobequid): Do you think a spending cap would have changed your planning process, and would it have been helpful to the Bid Committee
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knowing that the detailing that was required had somewhat changed, I think, from the beginning of the process until close to when you won the domestic bid?
MR. LOGAN: Mr. Chairman, just to be clear on the question - a cap on the bid budget or a cap on the Games budget?
MR. DAVID WILSON (Sackville-Cobequid): On the Games budget, on what the government partners were willing to put forward for the Games bid.
MR. LOGAN: Well again, just to be clear and to differentiate the roles and responsibilities, that may have been more helpful to the funding partners actually than to us because, ultimately, we were the functionaries in this process to determine the costs so that the decision makers, the elected officials in particular, at the end of the day could make an informed decision. A cap would be something to strategically consider at that end of the process by those parties.
MR. DAVID WILSON (Sackville-Cobequid): On going through some of the documents that you provided - and I appreciate the amount of documents that we received in a timely manner, and we do appreciate it as a committee, because it is useful and we don't always get that quick response from government departments - in the executive minutes from December 21st and board minutes from a January 26th presentation, the presentation now included affordability in the budget consideration, as well as talks of cost-cutting. This marks, I believe, a definite shift in the planning process, given the prior directive to focus on the Games and not to work towards a certain number. So what led to this shift in thinking from the board and the executive, or the executive board?
MR. LOGAN: I can't really speak to the specific changes that would have caused the funding partners in particular to request us to work to a number at that point, but I should say that the work we had done previously allowed us to quite easily start to move to a number. So if you understand what I'm saying, all this work prior to create this detailed costing and the options and so on allowed us to start to make cuts, as was the expected flow in the process. At some point in the process, once we had done all our work, it was expected that we would then receive feedback that we should go in a certain direction, that we shouldn't do this, but we should do that, and that the numbers should start to evolve in a certain direction based on the affordability that the funding partners would assess internally.
Keep in mind that that's a complicated process because you've got an overall number that has to be created that balances the expenses that ultimately creates a budget, and the three funding partners have to determine their individual affordable portions that combine to make up the overall revenue side of the budget.
MR. DAVID WILSON (Sackville-Cobequid): Were you alarmed at this point that your partners might pull out of the process, where all of a sudden now we're talking about affordability in budget considerations and numbers? Were you worried or concerned at that
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point? Were there alarm bells going off that we're not solid here, or our funding partners aren't solid in this process at this point?
MR. LOGAN: No, not really, in fact that was the expected next step in the process, that we would begin to get direction to move towards a number that was dictated by affordability.
MR. DAVID WILSON (Sackville-Cobequid): One of the things we heard also last week with the deputy minister was around the timeline, that your Bid Committee was - I don't know the terminology that the deputy minister used, but it was behind the eight ball, you were behind time compared to the other bid cities and countries.
Did this concern you, with the change of the amount of work needed for the bid - I think the deputy minister said Glasgow had a year previous to our Bid Committee being formed - was that a concern, that you were behind in time and that things were pushed together? I think the minister stated that they had discussions with government a year prior to even the domestic bid, so were you concerned on the timeline and did you feel that you were able to meet the requirements and the deadlines that were put forward?
MR. LOGAN: We were concerned throughout. The deputy minister is quite right in that we were incredibly compromised by the available time to put the international bid together. Even at the domestic level, when Canada was determining whether or not it would be in the process, the other two countries had already committed.
So all of the work that we were doing in our short period of time, which I guess based on up to March would have been a 10-month- or- so process, the other countries had years to do. It was a tremendous strain on the organization but, again, one that I'm very proud of my staff for because, regardless of those strains, we felt that we were able to respond.
We produced incredible product and we think that we provided the required information to make the required decisions, but yes indeed it was a very challenging time for us and, like anything, when you have a list of things to do that's this long and so much time, not everything gets done. We spent a lot of time prioritizing and looking back to our strategic plan and seeing the things that were most important to this bid, and those are the things that we focused on. Some things did fall off the bottom, but certainly when it came to providing detailed information for costing that was not one of those things.
MR. DAVID WILSON (Sackville-Cobequid): So turning to the minutes of the executive committee from February 14th, the minutes noted discussions about the cost then and it said that it was noted that there is no appetite to get out of the bid, just the need to get to the right place. So I would like to ask you, were you worried at that point that things might go wrong, might go sour, when you heard those comments at that meeting?
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MR. LOGAN: No, again, I wasn't worried so much. That was the kind of direction that we required. It's almost like a funnelling of the process. You've got all this information and you are essentially working in a very broad context and, as we got more definitive information and definitive feedback, it allowed us to focus our efforts and to move toward a number. But, again, as we moved toward that number, we were able to do it in such a way that it was based on informed decision making, realizing what we would do or would not do as we opted out of certain things. So it was welcome feedback.
MR. DAVID WILSON (Sackville-Cobequid): So I think the obvious question is what went so wrong in just three weeks - can you elaborate on that?
MR. LOGAN: It's very difficult to elaborate on that, because as of January 26th in the process most of our work had been done. We had done our costing, we had provided incredibly detailed information to the funding partners to make an assessment that they were tasked with doing - and I'm sure that's what they did, but that was their process to do. Whether that's amongst staff or departments, committees, what have you, it was a process that all three funding partners really had to look at in a way to determine affordability, and I can't speak to that.
MR. DAVID WILSON (Sackville-Cobequid): I appreciate that. So I guess what I would like to ask now is around March 8th - I know that wasn't a great day for the Bid Committee and the supporters - were you surprised at the decision of the province and HRM to pull out of the Games?
MR. LOGAN: Of course you are always surprised. You put your heart and soul into something like this and you work at it for a period of time, and we wouldn't have been in the position we were in, as a team, if we didn't think that we would be there for the duration and we would be in it to win. So of course it was a surprise, but again we were very aware of the process getting into this.
We, myself, publicly spoke many times to the media and otherwise, trying to explain that process and, of course, many people were quite skeptical that what I was saying was something we meant very clearly - and that was that after we did our work a decision would be made and the people of this province would speak and decide as to whether or not we would go forward, and that happened. We respect that decision. That was a decision that was not ours to make. We feel very good about the work we did but, yeah, it's shocking and surprising but very much the process that we were part of.
[9:30 a.m.]
MR. DAVID WILSON (Sackville-Cobequid): Did you feel it was premature? Do you feel that you weren't given the opportunity to - I believe some of the dates were another week, another two weeks - do you feel that opportunity wasn't given to you and that the
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decision to pull out from the government funding partners was a little bit too soon, not allowing you to look at the bid and come back with some reworking of that bid?
MR. LOGAN: You are asking the wrong person, in a way. What I mean by that, and I don't mean to be flippant at all, but we would have gone to the bitter end. That's the fact of the matter. We would have gone as long as anyone let us to provide as many options as possible, so we're a bit biased. We feel that we could have come back with a variety of options. Decision makers, the governance aspect of this organization, and the funding partners, would have to consider whether or not we compromise what we set out to do in the first place. Again, there could be two days, twenty days, seven days, two months, we were prepared to constantly come back with options, but at some point in time, not us, another body would have to decide how much was enough.
MR. DAVID WILSON (Sackville-Cobequid): I know I have about a minute, so maybe I'll ask a quick question. What would you characterize the response you received from the Commonwealth Games Canada and the international games organization around the withdrawal of our bid for these games?
MR. LOGAN: Commonwealth Games Canada, the domestic rights holder for the Games was obviously shocked - this is very important to their future and it is what they do, so hosting the Games periodically is very important to Commonwealth Games Canada and it's a platform for Canadian athletes which they represent - it is a very obvious reaction. I think the international reaction was similar, and I've said it before, and I'll say it again, I think we were going to win this thing and I think the support we had received internationally for having such a sound, thorough bid that was so athlete-centered and so well designed in a city that people wanted to come and visit, that they were very surprised at the turn of events.
Again, people do understand at the end of the day that you have to be able to afford to do what you propose doing, and if you can't afford it it is certainly something that gives people pause to consider whether or not they will support you or invest in you. But there was every indication early in the process that we could do so, they were very impressed with what they thought we could do, so they were very surprised that we had pulled out.
MR. CHAIRMAN: Order, please. Time has expired.
Mr. Colwell from the Liberal caucus.
MR. KEITH COLWELL: Mr. Chairman, I want to thank you for coming today and all the very informative information you forwarded to us, that is truly appreciated. As indicated by my colleague, that often doesn't happen to our committee, usually we have to go digging pretty deep which is not the proper way to do things.
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I have some general questions. You indicated that you spent approximately $7 million so far on the process - where is the breakdown on the funding on that, who was going to pay the $7 million?
MR. LOGAN: The $7 million - and I'll likely defer to Ms. MacLennan, our Director of Finance and Administration, here in a moment - generally speaking, there was about $10 million of government funding that was making up the $14.3 million budget and then about $3.7 million in corporate dollars. Much of the government money has been received - not all of it, but most of it - and that would be the source of where the $7 million would come from and any additional costs that would be required to close out the society.
MR. CHAIRMAN: Ms. MacLennan.
MS. DALE MACLENNAN: Mr. Chairman, I don't have a lot to add to that. Mr. Logan has outlined the total funding allotment from the three funding partners and the other portion from the private sector. As we move to wind up the society and incur the remainder of the costs, then it will be the funding partners at the executive and board table who will make sure that those total revenues match what the total expenditures at the end of the day are of the society and that will, of course, all be audited and will be made public. We made that commitment months ago and obviously that time frame has just moved up.
MR. COLWELL: Mr. Chairman, I didn't really get an answer to my question. Of the $7 million or $8 million, whatever, at the end of the day that this is going to cost, what share is provincial, federal, municipal and otherwise - just approximately - is it 50 per cent provincial and 20 per cent municipal, what is the breakdown?
MR. LOGAN: Mr. Chairman, it's as you say, approximately $3.5 million from the federal government, $3.5 million from the provincial government, and $3 million from the municipal government.
MR. COLWELL: Mr. Chairman, thank you, that is the answer I wanted. The other thing - how is it possible to get so far into this process before we realized we had a deficit in facilities here? It is pretty obvious we don't have facilities in the HRM to do this and, quite frankly, we can't support the ones we have right now. Why did it take so long to figure this out?
MR. LOGAN: I don't think it took a long time to figure that out, respectfully. In my previous role in sport and with Health Promotion and Protection, there's considerable work having been done here in Nova Scotia, and across Canada for that matter, to indicate that we have an incredible facilities deficit. Most of the recreational facilities built in this country were built in the 1960s, around the Centennial Year in fact, and many arenas particularly were built for 1967. You see it everywhere - Centennial Arena, Centennial Pool and so on. Most of those facilities are in effect falling down, not to exaggerate, but we only have to look to Springhill a few years ago to see the arena there.
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So the point of the matter is that with a population that is inactive, an infrastructure that is deteriorating and a need for a greater physical activity culture, we have a challenge here in Atlantic Canada, in Nova Scotia, and Halifax in particular. So the Games were seen and in particular designed, right from its early vision, right from the early beginnings and strategic planning and so on, to address that facilities deficit. I should point out that that wasn't all about lead athlete training centres and that sort of thing. The practice fields and the facilities that would have been built throughout the municipality were designed in such a way for after use, in particular - and I can't emphasize that enough. So right from the beginning there was a deficit recognized and a deficit planned to be addressed.
MR. COLWELL: Yes, I couldn't agree more we need more facilities here in HRM in particular, where the population is growing. The more physical activity we can get, especially among our youth, typically fewer difficulties we have with other things - and that has been proven over and over again. It goes back to the facilities again. I mean we're basically starting at zero with facilities. When I say facilities, specifically the facilities that we would use hopefully in the future, and there are some items in there I see wouldn't have been used, would have been torn up again which would have been - I won't go into that, but I'm sure there are good reasons why that would have happened.
Also the housing facilities that were initially planned were inadequate. How did that get passed, you know, really what I'm getting at here is we had all these deficits that were known about quite early, how did the cost go from here to here almost overnight and that's what it appears to anyone on the outside, not knowing exactly what you've been working on and struggling with and trying to get co-operation from your funding partners, how did that happen?
MR. LOGAN: It's a very comprehensive answer to a comprehensive question, but let me try to go down the path. First of all, there has always been a lot of talk about the initial budget estimates for the domestic phase - and I could talk at length about that - but the high level on that is that we had about eight weeks to put a domestic bid budget together, whereas we had 10 months to put our international bid budget together and would have liked to have had more, as was discussed earlier, but essentially those were the constraints.
But with that time, and the due diligence that that time offered, we were able to determine more and expose more of the risks and identify how we would address the risks, plan to overcome possible shortcomings and so on. So many things happened. We determined that the basic infrastructure to develop the lands of the current Shannon Park area, and just the investment in water and sewage, roads, and things that would service that site, which are typical in any development, were all things that typically aren't part of the budget, in effect, weren't in the domestic, but we put them into the costs for our final number.
That, again, isn't typically known by people. When we talk about ferry terminals, bus terminals, roads, and water and sewage, those are things that if you look at Vancouver and
[Page 14]
all the debate about their sea to sky highway, well, that's off their books. We put everything in so that everything was known in terms of all the possible costs for detail. So, yes, that made the number bigger, but it was a more accurate number and the taxpayer would certainly have known every possible detailed expenditure that the government partners would have invested in. So that's why the number was big.
So was it so much about surprise? We really knew that there were many surprises to come in the process - and really that's not the right word, because the procedures and the process and the domestic phase were very short. We could not have been comprehensive enough, and we knew when we began the international bidding phase that that was exactly how we staffed our team to understand those challenges and to develop a plan to deliver on them.
MR. COLWELL: I can appreciate, with eight weeks to put this together initially, it is very, very difficult to come up with something that would be long term, close to where you would be.
Who would you say was the individual or individuals who really started this process? Who was the driving force behind it to start?
MR. LOGAN: Well, I think that Fred MacGillivray, the chair of our society in particular, of course, who has a long history of bringing events to this town, was the person who had the vision for these Games in many ways. He, as many of you would know through Trade Centre Limited, has a sub-organization called Events Halifax which has a mandate to bring major events here, to see this city and province grow.
I should declare, I guess, that I was a board member of that group for probably the last 10 years, but over many, many years we'd always looked at what events were appropriate to Halifax, based on its size and capacity, that would have the desired impacts that we all know major events have on a society and a particular area. So it was through Events Halifax and through Fred's leadership that we pursued the Commonwealth Games - and keep in mind that that body also was connected to government and so collectively this vision grew and the decision was made at a point in time to pursue the Games.
MR. COLWELL: I can recall - I'm older than most of the people in here, I guess - when the Metro Centre was first built and all the skepticism about it and how it would never work and how horrible it was going to be and what a waste of money and what a location for it. Well I guess I'd have to give Mr. MacGillivray and the board the credit for the work he has done and they have done in the past several years, and the people prior to that as well who have proven that what you're saying is absolutely true.
The only concern I have, and had with the Games from the start, was just the overall cost. I think it would have been fantastic if we could have showcased Nova Scotia. If we were prepared better, if we had some facilities in place, that would have meant you could
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have spent the money actually getting ready for the Games rather than worrying about every venue, every sport venue that you were going to have to put on, to work at those things.
So basically I'm going to go back again to some of the topics my colleague talked about. Tell me if I'm wrong with this, and correct my statement here if I am because I really want to find out what the problem was. So you went for eight weeks to get ready for the domestic bid and then you had 10 months to get ready for the international bid, so the real problem would be that criteria hadn't changed in the meantime, it just meant that it was a different sort of bid process - you have to convince everyone in Canada that yes, this is the thing for Nova Scotia and Halifax to do and once you have done that process, then you have to go to the world stage and say now we have to convince them that this is the place to come.
The criteria hadn't changed in that time, would that be correct? It is just a matter of the next phase in what you're doing - would that be correct, or is that inaccurate?
[9:45 a.m.]
MR. LOGAN: That is a very accurate statement, and let me give you a few perspectives. In effect, I may pass to one of my colleagues, Pat Jarvis, who has actually been on the Evaluation Commission for the Olympic Games and has been part of that process to select an Olympic city, in fact the London 2012 selection process.
Generally, to start, yes, you're correct. The process was one that was - the changes were really one of increased demand for detail, so where one may have been more visionary or conceptual or this is where we want to go kind of thing, we had to fit to a very prescribed response process - in other words 200-some- odd questions, maximum number of pages, all the, I think, 16 themes that we had to address that are very much like the Olympic process but were rewritten in a way that was relevant to the Commonwealth Games process.
So probably for the first time ever, this kind of detail was required in the response, which would - well, to put it another way - which was designed to allow the Evaluation Commission that Patrick has been part of, for the Commonwealth Games, to make a very informed decision as to which city should be selected for the 2014 Games.
So more work, more detail, but I want to be clear that the Olympic Games and the Commonwealth Games are very different - different sizes of stadiums and different requirements, far different number of sports and so on. They are very different events, very different revenue stream potential, very different, but a similar process to gather information to make an informed decision by their evaluation commission. So if you wish, perhaps Mr. Jarvis can add some comments.
MR. CHAIRMAN: Mr. Jarvis.
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MR. PATRICK JARVIS: Mr. Chairman, to perhaps add some clarity in terms of the bid process, as you were questioning. During the domestic phase it was very much a question of which Canadian city would be the best to represent the Commonwealth Games Canada to go forward on an international bid. During that process, Commonwealth Games Canada had a very prescriptive process about what was required for the domestic phase, which allowed them to compare the four different cities - originally five - the four Canadian cities. During that time the international rights holder, Commonwealth Games Federation, took a look at it and came up with a process, which Scott has spoken to, that said we need to compare cities in the most thorough process possible.
They came up with the 16 themes which allows each of the evaluation commission members to judge the city on all of those 16 themes. That didn't change the terms of what the Games would look like, but it did specify very much the difference between a domestic bid and the international bid.
MR. COLWELL: It's nice to talk to people who have been involved in this. We asked the same of some of the witnesses who came earlier and we got all kinds of different answers. I appreciate your direct answers. I want to make sure I'm very clear on this. So the criteria for the Games hadn't changed between the beginning to the day you decided, or the funding partners decided they were not going to go ahead with the Games - is that correct?
MR. LOGAN: Yes.
MR. COLWELL: That's not what our funding partners told us here the other day, and I was very skeptical of that. I wouldn't imagine that the organizers would change the rules in midstream - I found that very hard to believe.
The process of doing all this is very difficult and I understand where you came from. If you would have had a year earlier to start this, would it have made a difference in the process? Would it have given you more time to put the bid together, so you could have come up with a more detailed bid sooner? Would it have helped - let's put it that way - and how would it have helped?
MR. LOGAN: Yes, it would have helped. My colleague, Deborah Hashey, Director of Communications, has had the incredibly difficult task of trying to help us communicate internationally, domestically across Canada, and locally here in this market, and at the same time deal with all the issues regarding budget and design and all the work that we have been doing as a bid, and starting so late it was quite challenging to develop the base of support, the understanding - as I think the honourable member has mentioned already today, it's a very complex body of knowledge around hosting and what the Games are all about and the benefits and so on.
We were very challenged in that time frame to do essentially all this costing information, go out and sell our bid internationally to the voting delegates who ultimately
[Page 17]
would determine our fate, and run an operation that has all you would expect in any operation internally - IT, legal, HR, finance, et cetera. So we were incredibly tasked with a high volume of work to do in a very short period of time. If we had more time we could have broadened our base of understanding, our base of even potential approaches to funding the Games - who knows? But time was not our friend throughout this whole process and, as a result, we had to compress everything. I would still say that we did incredible work in that period of time and the product of what speaks to what our Games would be all about and what the international community would have to judge us on, the costing detail, et cetera, was incredible. But more time would have allowed us to broaden our base and communicate that more widely.
MR. COLWELL: Also, I'd like to know, particularly on the provincial level, how involved the senior members of government - the people from the Premier's office and people from different departments on that level, how were they involved with your committee? Were they working with you every day? Were they at all the meetings? How did that unfold as you went through the process?
MR. LOGAN: Both levels of government were very involved in the bid and so let me sort of walk you through that. At our board of directors' level, there were two positions on the board for both the municipality and the province; our executive committee had one position for both the municipality and the province. Each body assigned a full-time staff person to the bid and those individuals joined us at directors' meetings on a weekly basis.
As well, many, many departments in government provided individuals to sit on committees to determine everything from the tourism impact, the economic impact, the impacts on healthy lifestyles to future investment in the province. Every possible policy consideration that the province might consider the Games as being a catalyst to impact required individuals to liaise with people from the community and the bid, so there was very, very significant interaction.
MR. CHAIRMAN: Mr. Colwell, you have just one minute left.
MR. COLWELL: I have just one minute, so I'm going to ask you one quick question. The fact that we pulled out of the Games, which was very disappointing, what effect will that have on future bids for Canada and particularly Nova Scotia - have we lost credibility?
MR. LOGAN: On the short term, I think that certainly it will give people something to consider whether or not we are capable and have the capacity to bid on certain things, but at the end of the day there's a process for any event that will look at capacity, guarantees in particular. If those things are in place, and we can offer Halifax or Nova Scotia, or any city in this province for that matter, up as a viable hosting opportunity, I think with time we'll be just fine.
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It's really a short-term issue. At the end of the day it's about fit, and the Commonwealth Games, in this case, didn't fit and there were issues with affordability. I think people will understand that. I think in the future it will be contingent upon us to find the right fit and put the right guarantees in place - and if those are there I think people will look favourably upon Nova Scotia.
MR. CHAIRMAN: Order, please. Time has expired for the Liberal caucus.
Mr. MacLeod.
MR. ALFRED MACLEOD: I want to welcome the bid committee here today and thank you very much for your time and your presentation this morning. Also, I want you to take back to the rest of your staff, our thanks for their enthusiasm and the professionalism that you've shown in putting together the bid and getting us to the stage we did get to.
When you did win the bid in the domestic process, what instructions did you get from your funding partners at that point?
MR. LOGAN: Mr. Chairman, honourable member, at that point in time, there was a lot of excitement, a lot of enthusiasm, and obviously we took a little time to think about where, in fact, we were. Sometimes you think okay, now what - right? But, obviously, we did take some time to think about strategically what was required. A number of steps were required and in fact those steps were required to occur in partnership with Commonwealth Games Canada.
CGC is the rights holder for the Games in this country obviously, so with them there was what is called a bid city agreement, and the bid city agreement dictates various steps that have to be taken, one of which is to form a society and put various people in place and a hiring plan and so on. That was very helpful early on - we used that information to sort of construct the society and determine its direction. I must admit, though, that very soon after sort of consolidating information required to make those next steps, we went to Melbourne, Australia, for the 2006 Games that were held there.
So it wasn't until April that we really sat down and brought all the various players together, government in particular, amongst others represented by the community - the sport community, obviously, would be first and foremost - to determine a strategic plan. Through that process, it was possible to understand people's interest and what each party could get out of the Games. As that became articulated, we formed a plan, I think, that was representative of that, and one that we think at the end of day was based purely on benefits to Halifax, to Nova Scotia, to Canadians, and the Commonwealth movement. It was well-balanced. It was one that we thought would see tremendous benefit here, but also would be something that would resonate well internationally, so that we could actually receive the Games to avail ourselves of those benefits.
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MR. MACLEOD: Thank you. During these discussions, were you made aware by your funding partners as to the total commitment that they were prepared to put forward for the Games?
MR. LOGAN: Mr. Chairman, no, not specifically. What I would come back to though is that in that process and in the direction that our eventual board provided through the executive committee of that board, was that we should go out and get the most accurate and detailed costing possible, so that informed decisions could be made later in the process. So no one wanted to presume anything. We wanted to have accurate information, evidence, to make evidence-based decisioning. So no one created any parameters, or put us in a box so to speak, so that we had to work to a number as an example. I think everyone believed this, and I can't really speak for the governance body but as an ex-officio member I think it was pretty clear that we were required to start with what it could be in its entirety, and then we would know what we couldn't or shouldn't do as we moved toward rightsizing the Games to what Halifax could afford and was appropriate for this market.
MR. MACLEOD: Halifax is the smallest city, I think, if I understand correctly, to have ever been this far along in the process - is that correct?
MR. LOGAN: Well, Mr. Chairman, the Commonwealth Games and I may not have my populations exact, but there have been fairly small countries like Jamaica, there have been small cities like Christchurch, that have hosted the Games in the past - and even to use an Olympic example, Calgary, I think, was around 800,000 when they hosted the Olympics. Now, again, that's putting it in the Olympic context, a bigger event. So the point is that size doesn't necessarily matter in this case. The point is that there's a capacity issue, and that there is a precedent for other smaller entities, other smaller cities in the past who have done this.
But if you look at New Zealand, they have Auckland as a city with two million people, but their country's only four million. So you've to put it in context. These were Canada's games, so as a country of 33 million people, in a province of a million, and a city which is projected to grow to about 400,000 by the year 2014, it would be that overall capacity that one needs to look at, and in many cases an event like the Games could be a stimulus for the growth to actually fill in around the Games to support it. But again, there have been other cities in the past that have been relatively small.
MR. MACLEOD: My understanding is, the history of the Commonwealth Games is that they've been getting costly and more and more costly all the time - as everything is, no doubt about it - what steps did the Bid Committee take to make sure that Halifax could afford the type of games that the Commonwealth wanted to have, and at the same time not put the province and the people of Nova Scotia into any kind of jeopardy?
[Page 20]
[10:00 a.m.]
MR. LOGAN: Mr. Chairman, that's a really good question, thank you for that. When we did this comprehensive costing of what the operations might be, as an example - and let's keep capital over here, for a moment - we had information from Victoria '94, Manchester, and Melbourne, the most recent Games, in March 2006. So we had an understanding of what their costs were and those of course were based on how many athletes, how many sports, what the venue requirements were and so on. So you could look at that information, but in addition we could also look at having that information to determine what we didn't want to do. So, as an example - and Tony Holding can speak to this certainly if you'd like more detail - if we look at the opening ceremonies in Melbourne, they were a huge extravaganza that we clearly said, if they're at this level we can't do that. We're going to be at this level and costed and budgeted accordingly.
So in the end our operations' budget actually was less than Melbourne. Now, our capital budget, on the other hand, was greater, but that was because, as I stated from my opening comments, the reason we got into this in the first place was because of the incredible infrastructure deficit that we face in the municipality, in this province - in this country, for that matter. So we understood that those costs were different but, to be frank, the Commonwealth Games Federation really doesn't care about one's capital requirements, it's the operations which relate to the time of the Games and the service that the athletes are afforded at that point in time. The fact that we had less facilities was really our problem, but at the same time it was also our opportunity.
MR. MACLEOD: Mr. Speaker, I think I'm a little bit confused - and for those who know me it's not surprising - the change in the criteria, I thought you told Mr. Wilson that once you had won the domestic bid, the criteria for the international bid changed and it required much more detail, and then I thought I heard you say something different in your answers to Mr. Colwell. Could you please clarify?
MR. LOGAN: Mr. Chairman, it is confusing; it really is confusing. The point is that we had to do more detailed work, but the standards for the Games had not changed. As an example, for the Olympics, the minimum requirement for a stadium is, I believe, in the vicinity of 80,000 seats; for the Commonwealth Games, the minimum seating requirement for the stadium is 40,000 seats, that's the same. The number of sports in the Olympics is 28; I believe it's 17 for the Commonwealth Games, that standard is different. Obviously the Olympic Games are bigger, we did not have to meet that standard.
Actually, I should point out that some of the seating requirements for some of the sports actually had decreased - netball, as an example. That may be a good thing for this market, but for the Games in general the netball requirement was being reduced. So the number of athletes, the number of sports, the number of seats, the expectations for transportation, accommodation and so on were very different, very different events and that did not change.
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What we were asked to do, based on the Olympic evaluation process, was to give more specific information on the parameters of our event. So if it was accommodation, we actually had to talk about how long the beds would be, how many sinks per athlete or how many athletes per sink. These are quite boring details, but that is the kind of detail that we actually had to determine - and that's on the operation side. But let me give you another example - transportation. The buses have to come in so many minutes, and so many buses per minute and you have to do all that.
We've gone to the detail that I can tell you - well not off the top of my head, but I could find for you very quickly - down to the second what it takes a Metro Transit bus to get from Shannon Park to every venue in our proposed Games, because that's the sort of detail that is required at the Olympic level, and for our Games we would also have to be able to articulate so we could be evaluated versus the other cities.
As an example, if you are looking at Glasgow and Abuja, it might be something that gets us more points in the evaluation if our venues are closer to the athletes' village than it would be the case in the other cities. If that occurs, that's a benefit because that is less stress on the athlete - care and comfort of the athletes is a high priority for the Games selection process. So it is that kind of detail - and you can take that into the capital as well.
Obviously, when you talk about your facilities you have to be very clear on the standards required by the international sport federations and you have to ensure that the athletes' needs are clearly detailed and guaranteed. Guarantees are another thing - we would have to guarantee hotel rates, we would have to guarantee a whole list of things that would give the selectors the confidence that we could do what we would say we would do.
In the past you could say what you were going to do and then change it later - that was the difference, it all had to be known upfront. Does that help?
MR. MACLEOD: So would it be fair to say then that, because of the detail, the cost of process and the cost of capital certainly would be on the rise - is that a fair statement?
MR. LOGAN: The costs were in the international bid phase, so that $14.3 million - Hamilton for 2010 was in the area of $5 million, or $6 million, in that area, so they had gone up considerably, but it was to get all that detail that back in 2010 you didn't have to do, you could just talk conceptually - we had to actually show the information and have all the graphs and tables that would indicate that the athletes would be serviced to a certain standard.
Again, a stadium costs what a stadium costs, and if you build a 50,000- or 40,000- seat stadium, which would be the standard for the Commonwealth Games, that has a cost and it is what it is - an 80,000-seat stadium for the Olympic Games, which is the minimum standard, costs what it costs. They would be different, they would be more expensive for the Olympics, largely because there would be more seats - but keep in mind that Melbourne chose to have a 100,000-seat stadium. They chose to do that; they didn't have to do that. The
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minimum standard is 40,000 and we were looking at something above that, probably in the vicinity of 50,000 temporary and 25,000 permanent because that is what our market could sustain and that was appropriate for our Games.
MR. MACLEOD: When you were going about the process and getting to the point of doing all the detail and finding out price, you must have realized that the price was growing significantly and you reached a point that must have set off an alarm somewhere in your mind and you must have said we should be talking more about the cost with our funding partners - did that point come to you?
MR. LOGAN: Mr. Chairman, through you to the member, we always knew that the domestic estimate was purely that, an estimate. That's the term we always used. We knew that there was not nearly enough due diligence put into that number to be accurate and we knew that it would change significantly. We didn't know how much it would change, but we knew it was going to change. So as the process went along, we provided opportunities for the funding partners to get a sense of the scale and the scope and the growth in that number. Again, that was for those parties to do what they had to do in their particular decision-making process. As you would expect, the funding partners, which would represent their own particular governments, municipal, provincial and federal, as information would become made aware, that would provide information for discussion privately among those parties and ultimately whatever that might cause in terms of thoughts around the bid and where it's going would be brought to the executive table.
MR. MACLEOD: When the decision was made to not go forward with the Games, is it true that the Bid Committee asked for a week to pare down their costs?
MR. LOGAN: Yes, specifically Commonwealth Games Canada, as a member of the bid society, requested that an additional week to 10 days be given to crunch the numbers, if you will, and fit to the available funding revenue. So at that point in time it looked like there was approximately $1 billion on the table from the various funding partners, based on the projection for commercial revenues as well, so it was requested that indeed we be given time to go and look at our work, our costing that was there and what we could cut to come back with a proposal.
MR. MACLEOD: Is it reasonable to believe that you could cut down in seven days what it took eight to ten months to put together? I mean it took you that long to put your bid together, and then you are going to tell me that in seven days you can tear that apart? Now I realize you said you went into a lot of detail, but when you start crunching numbers of that magnitude, seven days just doesn't seem realistic to me.
MR. LOGAN: Well, yes we could go away and do re-costing based on the work that had been done in the ten months prior. So in other words we have all this information, we have options, we have choices; however, once you do that reprioritization, selecting of certain options, deleting of others, you start to change the Games significantly. So there
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comes a point that if the governance body of the society wished us to go in that direction, we could definitely come back with a different style of Games.
It would have been very, very different - and come back to why we got into this in the first place. We were looking at legacy, we had to obviously fit to the Commonwealth Games Federation standards, and we had to, and we wanted to, look at how the Games would profile Halifax and Nova Scotia and various other things. Well, through that process, would we still be able to retain those things? Maybe, maybe not, we don't know. I can tell you it would be very, very different. Could we make changes? Yes. But it would have looked very different, and again, at the end of the day, would it achieve those objectives? I'm not sure.
MR. MACLEOD: You mentioned netball before and I think the 17 or so sports that were going to be done in the Commonwealth Games, a lot of them aren't games or sports that we see a lot of Canadians or Nova Scotians playing. Would that have an effect, overall, in the number of people who would come, the amount of revenue you could draw from sponsorships and different things like that? I don't even know what netball is, I should be ashamed of myself but I don't know what netball is.
MR. LOGAN: Mr. Chairman, excuse me, I'm thinking of my Australian colleague here who is a big netball fan, but that's his problem.( Laughter)
It is a very valid question, but when we designed the Games and we looked at the revenue potential and we projected our marketing abilities, we looked at sports that would play well here, realizing that some wouldn't, that's the fact of the matter.
If the Olympic Games were held in Halifax, how many people know a lot about handball? There are sports that are not high profile, however there are sports that are. Despite what one might read in the local media, some of the best sprinters in the world, Olympic champions and otherwise, are from Commonwealth countries; track and field in particular is a tremendous event. Some of the best swimmers in the world, Australians in particular - I throw that over to my colleague - it is world-class.
We designed a Games that certainly had a mix of sports that would engage the public, would certainly have an impact on television audiences, which is an important revenue stream, and sports like basketball - I mean, what bigger sport in Nova Scotia than basketball, in Canada, and certainly Steve Nash wouldn't be available, but athletes like that would have been competing for Canada in basketball here in Halifax. That would certainly have an impact on people, spectators who would pay for tickets, and it would have an impact on television.
So it's all in balance and we made a very balanced and strategic decision as to what sports would be part, and netball and some others are required sports. So despite its national profile in Canada it was a sport that we would have on the program because we were
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required to, but we would also put it in venues that would be appropriate to the spectator appeal. So again, all in balance.
MR. CHAIRMAN: Order, please. The time for the PC caucus has expired. I will now recognize for the second round, 10 minutes, Mr. Wilson.
MR. DAVID WILSON (Sackville-Cobequid): Thank you, Mr. Chairman. I have a few areas I want to cover. I guess I'll start with probably the one that I think was the most controversial in the province in trying to get the support for these Games and that was around the communication strategy and what many felt - and I've heard from many of them, one of the biggest opposers to the Games actually lives in my riding - was around what they call the secrecy of the Games, especially around the bid and how much it was going to cost. I believe it had an effect on the government's reaction to the high cost, in the end, of the budget, so do you feel that the communication strategy could have been better?
Mr. Logan stated earlier that part of the process was to sell the Games internationally but I think what is most important was to sell the Games provincially and get the full support - I mean you're never going to get the full support of the province - but get the majority of the support from the people of this province. Do you feel that that communication strategy had some influence on the government partners, the funding partners, to pull this bid?
[10:15 a.m.]
MR. LOGAN: Mr. Chairman, I can't really speak to the funding partners' decisions regarding pulling the bid and how that would be related to communications. The communications strategy was a good strategy, one that I backed fully. I think what's important is to understand that the timelines that were discussed earlier by various members of the committee didn't allow us to communicate certain things, didn't allow us to understand the costs early, didn't allow us to get information that was important to get into the public domain soon enough, okay? We couldn't get it in the public domain until it was actually determined - so we had the classic Catch-22 scenario here where everybody wanted to know how much and we really didn't know how much yet. So until we could fully determine the costs and the details of the bid, we couldn't go out and speak to it.
So imagine starting in December 2005 with an estimate of $785 million based on eight weeks of data collection and then ultimately coming up to, at the end of the process on January 26th which is when we said we would lock down the number, $1.3 billion - imagine how that number changed almost daily throughout that time period. So as the architects, as the operations people, as the transportation expert, and as the Games expert on villages and so on and so forth created their information and brought it to the 2014 table, we would accumulate more and more information that saw the number change.
For us to speak to a number in particular, amongst other things, but even the sport program before it had been determined, before it had been fully costed, would have
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constantly seen us in a very negative light. So it was a very difficult situation. It was almost a no-win situation unfortunately, that we couldn't speak to things that the public had every right to hear us speak to until we actually had the number. So it was really an issue of patience, and people weren't patient enough to let us do our work and to then have the number in the decision-makers' realm, and then as the decision was made to in fact make it public to whatever extent the funders wanted to make it public.
I should be very clear the communication strategy by design and as approved by our executive committee was to pass all the costing information - it wasn't a budget - over to them and their staff on January 26th after approved by the board of directors, and as the affordability of a portion of the revenue stream to offset the finally agreed upon cost stream, a budget would evolve. So until that had happened amongst the three funding partners, there wasn't really a number to speak to with any sense of accuracy.
So, again, Scotland was able to do that a year prior to us. So they had the number out there early. They could go out and talk to the number and what it meant in terms of benefits to the community. They could talk to the business case and essentially get through that process, that public turmoil almost, create that comfort and then get on with the business of winning the Games - we didn't have that luxury.
MR. DAVID WILSON (Sackville-Cobequid): One of the things, of course, after the bid becoming public and, again, definitely it being higher than most Nova Scotians would even think of being able to support and go through because of the size of our province - I mean that should have been, I think, one of the main goals knowing that here we are, we're a small province in this country, with limited funding, both federally and municipally. It has always been an issue here, not only just for games but, you know, dealing with the federal government, and one of the things that Nova Scotians try to do is live within their means. I know you used the terminology the "rightsize" - one thing I can't understand, and I think many Nova Scotians can't understand, is why there was no ceiling, there was no budget put out there saying this is the limit. We're a certain size province, we can only spend so much money.
You know I would be naive to think that I could spend money for two weeks and then go to the bank to find out what my paycheque was for those two weeks. So my question is are you, is the committee, was the committee naive to think that without having a limit, without having a ceiling, that you could come within what the province would be able to afford for a bid and for a budget for these Games?
MR. LOGAN: It's a complex answer. Keep in mind that there's this great big scary number and people aren't used to a number that big with all those zeros, but at the end of the day there are a number of things that have to be looked at. Is that big scary number going to create an even bigger number in benefit at the end of the day? So no matter how many zeros, is there a net gain? Okay, so that's one factor, and one of the benefits of having that big scary
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number out early is that we could explain, if everyone agreed there was a business case and it was affordable, that context.
The second thing is to keep in mind that there was a negotiation process ongoing that was a major factor in the decision to pull out, as I understand it, that looked at the partnership of the three funders, the three levels of government. So if - and I'm just wildly creating a scenario here - but if the province's portion was $50 million or $100 million and for whatever reason the federal government was going to come in with $1 billion or something and just make it easier for everybody, and I know that's a wild sort of example to use, but I'm trying to make it wild so I'm not quoted on it, the point is that no one really knew what their portion would be.
So (a) you have to find out the number; (b) you have to look at whether you can bring the number down; and (c) you have to determine your piece of the number. And if you can afford your piece of the number, then you are in business - but it's your piece that is really the one that is important to look at, not that big scary number that everybody is contributing to. I think that's the process that had to occur and I expect did occur, and at the end of the day the decision wasn't - well maybe it was about this big scary number, but perhaps more specifically was about the portion of the number that was affordable by the individual funding partners. That was a discussion, obviously, that would take place amongst them. Again, I just want to put it in context.
If I can continue, Mr. Chairman, there is great relevance to the size of the number and the size of the province, but at the end of the day it shouldn't be about the number per se, it should be about the evidence that suggests the apportioning and the contribution and the ability for the economy to grow, and all sorts of factors that are not my expertise.
I want to be very clear that I would expect the Department of Finance would have looked at and would have determined whether or not, over the duration of the Games and all the time period involved, it would have created an affordability. Based on that information, a decision would be made - but it's those things the decision should have been made on. Would services have been impacted? Would the province be able to balance the budget? Those are the most important things and if that was compromised, no, we should not have done the Games. But it's not about how big the number is, it's about the net gain, it's about other factors and it's about whether or not the standard of living we expect in this province can be maintained.
MR. CHAIRMAN: Order, please. Time has expired. Ten minutes goes by quickly, Mr. Wilson, thank you.
Mr. Colwell, you have 10 minutes.
MR. COLWELL: Just a couple of things. I was very disappointed with the federal government because Halifax, Nova Scotia, would have represented Canada in this bid and
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they were chosen to do that. When they capped their funding, I thought that their funding should have been well over 50 per cent of this whole process. We have 33 million people paying into a pot, it's a whole lot better than just under 1 million people paying into a pot and the same part of the same part from the regional municipality, 300,000 or 400,000 adding again to that pot. So I thought that the federal government was very short-sighted in that. It doesn't matter if it's here or any city that would have won it, I think that they should have funded it, where they have more resources than we could possibly ever have here in Nova Scotia. That put restraints on the whole process.
I want to really thank your team for the answers today and the accurate work you did to come up with a number because, if not, I don't think that the Province of Nova Scotia, after hearing the witnesses last week, really understood what they were into. I don't think they had any idea. They had no concept of what this was, even though they might have been sitting on your committees and listening, they weren't doing the day-to-day work that you were seeing and doing the detail that you had. I was really disappointed in their understanding of it and if you had a chance to review the transcripts from last week when they blamed the whole price increase on a whole new set of rules. It was very clearly and definitely put by yourselves that that wasn't the case. The rules stayed the same but you just needed more detail on those rules to really come up with it. I can understand that eight weeks to put over a $1 billion bid together is a very daunting and almost impossible task.
As I talked to Nova Scotians all over, there was no complaint about the Games coming here. They all thought it was a good idea, but at $700 million or $800 million they were scared to death. They didn't think we could afford it and probably couldn't, even at that, in reality, even with the offset that you talked about and I understand all those things. But that was the only issue - it wasn't about the Games, it wasn't about the capability of your team. That was never an issue, it was just the dollars and cents when we see the property taxes going through the roof, the income taxes go up, see the gas prices up, all those things that the people have to live with every day. I was very disappointed. If the federal government had come through with, I would say, adequate funding, it would have been a whole different story and you would have been able to move forward and showcase our beautiful province.
You indicated before that there were some representatives from the municipal, federal and provincial governments on your executive meetings and they appointed some staff to help you. Do you really believe that the province - and I'm going to just narrow it down to the province because that's what we represent here today - truly understood at that time what was going on here, and exactly the magnitude of what they were talking about? Do you think they had a concept of that? I know you did because you've got experts here from other places who have worked on this before - but do you think they really understood this, because I get the impression they didn't understand what was really the concept of this thing from day one.
MR. LOGAN: It was a very complex process for everybody and I think that there was a considerable learning curve for everyone, including staff, including myself. So the
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government representatives on the committee, on the subcommittees throughout the organization, everybody was part of that learning curve. So I think with due course, like us all, they became aware of the ramifications, the scope and scale of the Games and learned very much as we did that this was a huge undertaking.
Some of the specificity of that information would be very difficult for board members, executive committee members to know all of it. In fairness that was largely our job to know the detail, provide them the evidence, allow them to make decisions. It was a tough job to know all that information, but in the end, when it came down to the most important information and costing information, I'm very confident that they were aware of what the costs were and were able to take that information into their own area - the province in this case - and do that assessment for affordability.
MR. COLWELL: That really wasn't what I was going after here, and I understand the process you went through and it was a process that came up with, I think, an accurate number at the end of the day - but I'm talking about senior government officials, elected officials, who may not have been aware of what this was all about when they started. They were very busy of course and I realize that it has been very difficult for them, they couldn't attend the meetings, they just simply couldn't do that, but at the same time they should have had an idea of what this was about, because if they don't have an idea they can't help sell it to the people of Nova Scotia, and without selling it to the people of Nova Scotia, I think in rural Nova Scotia - and correct me if I'm wrong here - there was 70 per cent of people who didn't want the Games because they didn't understand what it was all about. So that tells me that people didn't understand what this is about - they didn't understand the offsets that you talked about which always come with things like this, and more employment and more help.
Could you tell me if I'm accurate in that regard or if I'm way out of line with this sort of thought process?
MR. LOGAN: It's very difficult for me to say to what extent representatives on our executive, or board for that matter, comprehended the detail. I really can't. I can only speak to the fact that staff spent considerable time preparing detailed presentations, detailed documentation, so that the ramifications of decisions would be well understood. The detail of the bid would be well communicated. You've probably seen in many of the minutes some of the presentations that we would have provided to them to help with that understanding. I guess from my perspective, I can only speak to the fact that we feel we briefed thoroughly. I can't speak to how that briefing would then go further into government, as an example. We were not briefing Cabinet - well we may have once back in May 2006, but really senior officials would then do that briefing throughout government for elected officials.
[10:30 a.m.]
We did though, and some of you may have been part of that, we invited all three Party caucuses to be briefed by us at any time that they wanted to be briefed, and I know we did
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that. Again, I apologize, it's a bit of a tough question. It would be very subjective of me to try to determine what that understanding was.
MR. COLWELL: The only reason, and I can guess it can be answered, but we had a letter from the former Premier of the Province of Nova Scotia committing $300-some million, if I remember correctly, that wasn't properly accounted for, but that's not your problem. It didn't really seem to sink in as to what the possible cost of this would be. I mean, we have zero facilities, we haven't hosted this here before, so you're going to start off with zero facilities, if you just take those things and put them aside, probably your initial budget of $700-some million wouldn't have built them, now that you see the numbers.
In reality, if you look at a building of a certain size, it costs so much per square foot to build it - it's that simple. I don't really think they had an understanding, because if they had they would have come forward with a whole different approach, I would think. You didn't have the benefit of sitting here listening to last week's conversation, which is unfortunate. It just didn't seem to me that they fully understood the scope of what was coming, and because of that they didn't help you sell it to Nova Scotians as it maybe should have been sold, or saying way before January, way before the bid went in, we simply can't afford this, so you didn't have to go through this whole process and spend over $7 million on the process.
Are there things you would have done differently? If you were able to start this all over again, where would you change it to make this successful?
MR. LOGAN: I've been asked that question before and I'll say today as I've said before, I have no regrets in the process. The only thing I regret that is not related to the process is the lack of time. What we achieved with the time available to us was incredible and my staff really deserve the credit - I give all the orders and they do all the hard work.
But, with that lack of time, there was an inability to do certain things. As I characterized earlier, certain things come off the bottom after you set your priorities. The ability to do more things over more time perhaps would have made a difference, who knows? But we stand by the process that we were able to accomplish given the time, and we feel very good about the fact that we were able to create detailed costing information, detailed bidding information; in fact information that will be usable in the future in other ways. The product that came out of the staff, I feel very, very good about and I think it allowed for decision making that will be useful in the future.
Regrets are really things that I can't control, so in terms of - and I sort of put my old coach hat on - to be successful in sport, you have to look at the things that you can control and do the best possible job with those things you can control. It's really not worth thinking about the things you can't control. So that's the way we operated. We worked 100 per cent with great vigour and a very positive attitude on developing the best possible information for
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the decision makers who were responsible at the end of the day for very important decisions. Those are tough decisions and I don't envy those who had to make them.
In terms of what we did, we were able to focus very much on a product and we feel extremely proud of that product.
MR. CHAIRMAN: Order, please. The time has expired for the Liberal caucus.
Mr. Bain.
MR. KEITH BAIN: I, too, want to thank you for appearing here this morning. I understand there was an equation from the funding partners from the outset - and I'm thinking back to when Minister Van Loan announced the federal contribution - can you outline for us what that equation was?
MR. LOGAN: The equation, if I'm understanding the question correctly, is the contribution equation from the various funding partners. The federal government, in its hosting policy, dictates they will not fund more than 50 per cent of the overall public contribution and that their own contribution needs to be 35 per cent - that's out of the federal posting policy, if you will. It's my understanding that policy has never been ratified, but it has been pretty much the guideline from which the federal government works - although there are many exceptions to it in the past, but again that's the past, so they've been working toward this hosting policy and that formula.
MR. BAIN: Shouldn't the equation have provided the committee with a bit of a spending target, you know, this is as far as we can go - would that be fair in asking?
MR. LOGAN: Not so much the staff committee if you will, but the funding partners, it would give them guidance in terms of what to expect their portion to be, or at least from the municipal and provincial perspective when you take away that 35 per cent of the federal government, what they would then be required to make up. Then that ratio becomes something that the remaining - if you took approximately 15 per cent out which is the norm for commercial revenue and you have now essentially 50 per cent remaining, it is how will that 50 per cent be divvied between those two partners. That is the discussion that is typical of what we call the multi-party agreement and that determines what each partner will contribute.
However, having said that, there have been exceptions - and these are only historical observations - where the federal government in particular has looked at various aspects of a budget and taken them off the budget, like security, and covered them. In our discussions that was something that we couldn't confirm, but was something that we thought may have been a possibility as the budget process evolved. Where you can do that, it changes the dynamic of the contributions and it is a very complex dynamic.
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MR. BAIN: Mr. Chairman, I believe you said that the committee has spent a little over $7 million to date, with a projection of $10 million by the time it is finished - I'm wondering whether or not there have been any corporate sponsors to this date?
MR. LOGAN: Mr. Chairman, the $10 million isn't a projection so much, because we are having to change course obviously now and will be providing projections as to where the budget will take us with the things we need to do and the obligations we have in closing out the society. As we said, there is approximately $10 million of federal, provincial, and municipal funding and we've spent $7 million, so there is a portion remaining.
From a corporate perspective, which was approximately $3.7 million of that $14.3 million initial budget, we have received none of that money. That money is in effect not collectible, if you will, because we were not able to deliver on our obligations for the sponsorship.
In many cases where - and I guess my last statement would be not 100 per cent true, certainly there were benefits accrued by some of the early sponsors, but those sponsors also encountered costs to produce marketing materials and other things that they would have used this summer, as an example, during the inbound visits, so in general instead of talking about what we might owe them for some of their expenditures and what they might owe us for the sponsorship, sponsorship in general has been a wash and it has been a very difficult thing to certainly pursue at this point in time because of our inability to deliver on our side of the equation.
MR. BAIN: Mr. Chairman, I ask that because if there had been money received, what would happen to it, but I guess actually no money has transpired.
It is my understanding that the Bid Committee was able to choose several of the sports to be included - am I correct in that?
MR. LOGAN: Yes.
MR. BAIN: And some of them are not unique to Nova Scotia - am I right in that? But at the same time there are sports that weren't included like paddling, stuff like that. Was a decision made with an eye to getting other countries to support us in the bid, or was it with an eye to leaving a legacy within the province?
MR. LOGAN: Mr. Chairman, thank you for that question. The question is a great one because it was a very hard decision to actually land on the 17 sports that we were required to name in this process. At the end of the day what we looked at was a balance between legacy and a balance between "win-ability". We felt that regardless of the 17 sports in our program that every sport in this province would benefit. The facilities were designed in such a way that athletes of any sport would have been able to use those facilities for training.
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When you think of a field house, as an example, any court sport can use that facility, and when you look at conditioning space, any athlete from any sport can use that space.
We designed things in such a way that, post-Games, all sports would benefit - and canoeing is a great example and I'm an old canoer, and of course I have taken a lot of heat for my sport not being included, but the improvements to the Lake Banook area, as an example, for the triathlon would have made for an improved venue for canoeing, rowing, triathlon, and many other events.
So people don't often see that, but every time we designed a facility, and when we sat down with the architects and we described all the assumptions, the requirements, the International Sport Federation criteria and so on, we were always very clear that it wasn't about the 10 days so much as the decades after. We wanted our venues to be much like the Canada Games venues from 1969 that we still continue to use. We wanted them to be designed in such a way that this community, this province, this region for that matter, and in fact all of Canada, from a summer sport perspective, would have an opportunity to use these facilities regardless of what sport an athlete came from. So that was inherent in the design.
MR. BAIN: So did you ever have a fear that the facilities that were being built would become expensive white elephants in the future? Did you ever have that fear?
MR. LOGAN: Mr. Chairman, actually, no. Again, they were designed in such a way - I will give you an example. The stadium I mentioned earlier, we were looking at 50,000 seats for the actual Games, but post-Games, the permanent seating in that was designed to be 25,000 seats and, in fact, when we came back with the changes required by the executive committee in December for January, we even looked at how we might make those permanent seats even less. We looked at ways to make the stadium what we call a cold stadium instead of a warm stadium - these are all things that ensured that we could afford the facilities into the future.
I should also say - and this hasn't been spoken to in the past, and I would like to mention it - that we did feasibility studies for both the multiplex and the stadium to understanding, on an ongoing basis, what a potential deficit might be and then designed our legacy fund in such a way that the interest from that fund, $75 million overall, $40 million specifically for infrastructure sustainability, would actually pay for any deficit. So, again, all designed upfront so that the stadium, the multiplex, et cetera, would be sustainable in such a way that the taxpayers wouldn't be burdened with paying specifically for those facilities into the future.
MR. CHAIRMAN: Order, please. The time for questions has actually expired. I would invite Mr. Logan to bring any closing comments. Take a few minutes, if you would like.
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MR. LOGAN: Thank you, Mr. Chairman, and honourable members of the Nova Scotia Public Accounts Committee, for the opportunity to address your questions today. Hosting the Commonwealth Games was about building a legacy for our city, province, and country, not at any cost but at the right size and scope for our city and province. It was about addressing a significant facilities' deficit in our region; it was about driving positive economic benefits for our city and province; it was about creating a catalyst for social change.
I would like to take the opportunity to recognize the contributions of so many people within our communities and beyond who are working collectively toward such an exciting and promising goal. It was a strong goal, one I believe that was worth pursuing. The vision to make our community a healthier and wealthier place to live is one that needs to be rekindled in time. The Commonwealth Games will not be that catalyst for change, but something else will come along that we will all need to evaluate objectively and pursue with vigour, if viable. To not do so is to stand still as a community. If we stand still, others will pass us by and, in effect, we will indeed move backwards. In closing, may I observe then, that I don't believe we can afford to let this happen. Respectfully, I feel that the future of our province depends upon it. Thank you very much for your time today.
[10:45 a.m.]
MR. CHAIRMAN: Thank you very much, all five of you, for coming in. We really appreciate the time you have taken. The answers you provided have been very direct and we appreciate that, on behalf of the committee.
We have just a couple of things, moments to wrap up, if you would like to stay seated. We have received, just in other business, a letter from Mr. MacKay's office stating that they are, in fact, in session at least for the next while, so we will have that on record and on file. Is there any other business today for the committee?
Ms. McDonald.
MS. MAUREEN MACDONALD: Mr. Chairman, just around the response from Mr. MacKay, the letter that I sent to him had asked for dates when he might be available, if he wasn't available on April 18th. So I would recommend we follow up, again looking for some possible dates that might be available.
MR. CHAIRMAN: Perhaps we'll leave that to you, as chair of the committee, for a follow-up letter.
MS. MAUREEN MACDONALD: If that's agreeable with the members, yes.
MR. CHAIRMAN: Agreed.
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Any other business?
Hearing none, we stand adjourned.
Again, thank you very much.
[ The committee adjourned at 10:47 a.m.]
