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. David Wilson (Sackville-Cobequid) was replaced by Mr. Percy Paris.]
[Mr. Stephen McNeil was replaced by Mr. Leo Glavine.]
In Attendance:
Ms. Mora Stevens
Legislative Committee Clerk
Mr. Jaques Lapointe
Auditor General of Nova Scotia
Nova Scotia Gaming Corporation
Ms. Marie Mullally, President and Chief Executive Officer
Mr. C. Sean O'Connor, Chairman of the Board of Directors
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HALIFAX, WEDNESDAY, JANUARY 17, 2007
STANDING COMMITTEE ON PUBLIC ACCOUNTS
9:00 A.M.
CHAIR
Ms. Maureen MacDonald
VICE-CHAIRMAN
Mr. Chuck Porter
MADAM CHAIR: Good morning. I'd like to call the committee to order, please. Welcome, everybody, on this cold January morning. It's finally feeling like winter out there. We have with us today the Nova Scotia Gaming Corporation, and we will proceed in the usual fashion with introductions from the MLAs who are members of this committee or who are substituting in. Then we will proceed to an opening statement from our witnesses, of approximately 10 minutes. We're a wee bit late getting started, so we need to be mindful of the time. That will be followed by a round of questioning. The first round is 20 minutes for each caucus, and then we'll sort of split up the time that's remaining, and there will be an opportunity for closing remarks from our guests here this morning. We will start with introductions.
[The committee members introduced themselves.]
MADAM CHAIR: Good morning. Ms. Mullally, we will begin with you. Perhaps you could introduce yourself and Mr. O'Connor, just so that Hansard knows where you're sitting.
MS. MARIE MULLALLY: Certainly, my name is Marie Mullally. I'm President and CEO of the Nova Scotia Gaming Corporation. This morning, Sean O'Connor, Chairman of the Board of Directors, will be providing the opening remarks on behalf of the corporation. So I'll turn it over to him to do that.
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MADAM CHAIR: Good morning, Mr. O'Connor.
MR. SEAN O'CONNOR: Good morning. Sean O'Connor, Chairman of the Nova Scotia Gaming Corporation. Would you like me to begin now?
MADAM CHAIR: Yes, please.
MR. O'CONNOR: First, I'd like to thank the committee for the invitation to appear. The Nova Scotia Gaming Corporation has never shied away from the principles of accountability and transparency. We recognize and appreciate the important role the committee plays in this regard.
Second, and in advance, I seek the indulgence of the committee - I'm only 10 days away from the end of 10 years on the Board of Directors of the Nova Scotia Gaming Corporation, seven of them as its Chair. As a result, I'm going to take a little time to reflect on that history. I believe this provides an important context for the future challenges and opportunities that exist for the province as it carries out its legal responsibilities to conduct and manage, and its moral responsibilities to provide a safe and regulated environment for its citizens to game in.
The past 10 years have been truly an honour. It is no secret to members of the committee that gambling is a controversial subject. It is, by times, fraught with difficult issues, it is an industry in a state of significant change, and occasionally it gets caught up in the politics of blame. Notwithstanding these realities, the province and its citizens have been blessed with the services of individuals who are passionate, dedicated, intelligent, responsible in their conduct and their charge. There are times when I wonder why people like our CEO and President, Ms. Mullally, stay. I am certain she could make more money elsewhere and have many less headaches in doing so. The answer is that she, and others like her, stay because they are change agents. They know they can, and have made a difference for the better. Together we have worked to lead and manage the Gaming Corporation and an industry in a way that is responsible, progressive and accountable. There is no doubt that within the gaming business, the Nova Scotia Gaming Corporation is recognized as a world leader in responsible play.
Gambling has been around since the early days of civilization and it always will be. It is part of our culture. I truly believe that government has little control over whether it exists or not. It has, however, the capacity to make it happen in an environment where profit stays here and can be used for public good; where the industry is healthy with a focus on entertainment; where players have the confidence of knowing that the house is playing by the rules; and where its citizens are furnished with information that allows them to make responsible decisions.
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Governments got into this business in the first place as part of a public protection mandate and regulating the industry was the only way that governments could control the environment and ensure a standard of care was taken. I encourage members to consider this when you think about the Internet and the 2,000 or more illegal gambling sites that exist there today. Thousands of Nova Scotians play on these sites. They do so for money and they do so in an unregulated environment. The profits leave the province and you can safely assume there are no links to help for those with a problem, no messages reminding players of the odds, and limited tools to encourage informed responsible play.
As a steward of the gaming industry, I can think of many initiative programs and developments that have brought us to where we are today. In the past 10 years we've seen the creation of the Halifax Casino which is truly Atlantic Canada's premier entertainment location, the creation of Canada's first fully integrated Gaming Strategy, a renegotiated agreement with our sister provinces in Atlantic Canada for ALC, resulting in a more equitable share of profits and improved accountability.
We have a new casino operator in Great Canadian Gaming Corporation, which provided us with an opportunity to negotiate a new contract which will provide the province with an additional $48 million over 10 years. Importantly, the new contract also allows the corporation to gain control over the management of casinos in areas like responsible gambling. A prime example of this was the opening of the two responsible gambling resource centres in Halifax and Sydney, the first of their kind on the Eastern Seaboard of North America.
We have brought gaming back to communities by linking it to important good causes like Support 4 Sport and charitable link bingo. Support 4 Sport, launched in August of last year, will provide some $2 million annually to sport in Nova Scotia. What makes this program so powerful is that citizens essentially vote with their money to sport with a purchase - 100 per cent of the profits from these specialty game tickets go to sport. I'm a father of five kids. If there's one place we need to invest more money, sport is it. It is a program I'm particularly proud of, as investing in sport, in my opinion, is investing in the future for Nova Scotia.
We're the first jurisdiction to create and place mandatory responsible gambling features on VLTs, features that almost every jurisdiction in the world now has and ones that have become the industry standard. We are currently completing research on a card basis so that we can provide players with tools to allow them to make an informed choice. We continue to advance the agenda on responsible gambling and through our steadfast commitment to finding and delivering innovative and effective programs, we have become a recognized world leader.
Today, we have over a dozen prevention and education programs whether it's Responsible Gambling Awareness Week; the play for high school students, Caught in
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the Game, promotional educational programs such as Know the Score program and any other firsts. We continue to do research and find better ways to deliver our products and services. It wasn't always this way. In the early days we didn't think much about responsible play. Our concept of responsibility was more narrowly focused on the mathematical side of good business practice.
There are some today who still think we shouldn't do research on responsible gambling, that we shouldn't participate in education, or that we shouldn't initiate programs aimed at those at risk. Somehow this concept must be kept separate from us, whose mandate should be solely about profit maximization and leaving this good work to others with no inherent conflict. This is simply ridiculous. It is like saying that GM shouldn't think about the safety of its customers as it makes cars, or that Nike shouldn't care about the conditions of its workers in third world countries, or that Nova Scotia Power shouldn't care about the environment when it's generating electricity. It is the same as saying that we don't care or, worse still, that we shouldn't. Achieving the right balance between generating revenue while creating a responsible environment is essential to sustaining the industry in the long term. The future world of gaming will look very different from the past or the present, bringing with it a new set of opportunities and challenges.
With the Internet becoming a widely used access point to countless regulated and unregulated gambling products, the ever-changing nature of technology and incredible developments in software, the gaming business has transcended provincial boundaries to become truly global in scope. It is therefore increasingly important that the corporation constantly and proactively be looking for pioneering opportunities, innovative business initiatives, new ways to foster an economically sustainable, responsible and entertaining industry for the benefit of Nova Scotia.
The corporation has come a long way since I joined 10 years ago and it has much further to go. I couldn't be more confident leaving it in the capable hands of the remaining members of our board, the excellent staff at the organization and our President and CEO, Ms. Mullally. Recognized as one of the best in her field, she is regularly invited to share her leadership and insights at conferences and with other jurisdictions around the globe.
As the outgoing Chair of NSGC, I am proud to say that NSGC's role has grown and developed over the years and our responsibility and accountability has become ever more clear. As an expert on gaming for government, we do help shape policy. We successfully help implement political decisions and ultimately build the best possible industry, one that is right for the province. That's our commitment to you, it's our commitment to Nova Scotians. With that, I again thank you for indulging me and I now invite questions to Marie or myself.
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MADAM CHAIR: Thank you very much. We will begin now with the NDP caucus. You have 20 minutes. Mr. Steele.
[9:15 a.m.]
MR. GRAHAM STEELE: Thank you very much. First of all, Mr. O'Connor, I'd like to note that this is, in fact, your last appearance before the Public Accounts Committee as Chair of the Nova Scotia Gaming Corporation. You've served on the board for 10 years, as you say, and you've been Chair for almost seven. It is, as you have also noted, a very controversial industry and you've served with some distinction and I think you should be thanked for that. I know that you have public affairs in your blood and I don't think you'll be leaving public service for very long but I wish you well in your ventures in the private sector but I am sure that in one way or another you'll be back in public affairs very soon.
The most controversial part of a controversial industry is, of course, what in this province is known as video lottery terminals - VLTs - and I want to start on VLTs. The corporation instituted a number of changes to the way VLTs are played within the last couple of years and what is not yet clear is the effects that those changes have had.
Now let me start with the revenue. My understanding, if I am reading the documents correctly, is that revenues from VLTs alone in 2004-05 were over $132.6 million; in 2005-06 it was $117.4 million. What are VLT revenues projected to be in this fiscal year, 2006-07?
MADAM CHAIR: Ms. Mullally.
MS. MULLALLY: We would project that the profits from video lottery terminals will be approximately $95 million in the 2006-07 fiscal year, representing approximately a $40 million reduction since the implementation of the gaming strategy initiatives.
MR. STEELE: What is the Gaming Corporation's analysis of how much of that $40 million drop is due directly to the changes in the way the games are played?
MS. MULLALLY: The analysis that's been conducted would indicate that much of that reduction is related to the changes that were brought forward through the Gaming Strategy. Just to highlight those initiatives that were brought forward, there was a reduction in the number of machines in Nova Scotia, there was a reduction of 800 initially with an additional approximately 140 machines removed since the time of the introduction of the Gaming Strategy.
There was a slowdown in the speed of the games of approximately 30 per cent. There was elimination of the stop button functionality. Those were the key initiatives that
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were brought forward, along with a reduction in the hours of operation. All of those initiatives combined had a significant, expected impact on the revenue and the profits associated with this business line.
MR. STEELE: Now that the projected revenue for this year is down to $95 million, which as you say is a drop of almost $40 million in two years, does the Gaming Corporation expect that VLT revenues tend to level off, or will it continue to drop?
MS. MULLALLY: We expect that the revenues will level off in the 2007-08 fiscal year. We don't expect any significant increase or growth but just natural marginal growth that we would expect from any kind of business and any kind of product that's offered in the marketplace. So no particular growth, just normal incremental growth that you would see typically each fiscal year.
MR. STEELE: Now the Gaming Corporation gives a substantial amount of money to the province every year and by far the largest part of that are VLT revenues, and VLT revenues are dropping $40 million over two years. Is there a corresponding drop in the amount that is going to be given to the province this year, 2006-07 and if so, what amount does the Gaming Corporation project will be given to the province this year?
MS. MULLALLY: To your first question, we expect that there will be a corresponding drop in our profits and we expect that the profits for the fiscal year 2006-07 to be approximately $160 million.
MR. STEELE: So, in short, the revenue that's being lost on VLTs, is not being made up in other forms of gambling, is that correct?
MS. MULLALLY: Not to the extent that - when you're addressing such a significant drop, neither of the casino business line, nor the ticket lottery business line would be able to make up such a significant drop, so there might be marginal changes in those two business lines, but not sufficient to address that type of gap.
MR. STEELE: Okay, let me turn then to the real nub of the question, of course, which is not exactly the revenue stream, although that's an interesting story in itself, but rather the effect on problem gambling. The people who are high-risk gamblers. What impact, if any, have these changes had on the high-risk gamblers, the problem gamblers?
MS. MULLALLY: As part of the Gaming Strategy initiatives, there was research conducted to determine the impact of the changes of the Gaming Strategy initiatives on players. The analysis that was conducted and released in July 2006 indicated that there was an impact on all categories of players. By categories I'm referring to risk categories of the no risk, low risk, moderate risk and the problem gambler categories. These
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categories are brought through the Canadian Problem Gambling Index, which is a standardized model in which to categorize players, in terms of their risk to having some type of problem with gambling.
The research conducted indicated that the high risk or the problem gamblers were impacted by these changes. In particular with regard to how long they were playing in terms of their spending. They were impacted particularly by the reduction in the hours of operation, which we had expected to see because with the removal of the 12:00 midnight to 2:00 a.m., time frame, where we would see a disproportionate amount of problem gamblers, they were certainly directly affected by that change because that time slot was no longer made available.
So the initial research that was conducted showed that there was an impact, but in order to really know if there was a long-term ongoing impact, further research needs to be conducted on a more longitudinal basis and on that we plan to conduct further research in the 2007-08 fiscal year, to follow up on the analysis that was conducted on July 2006, to determine whether the changes that we saw in the initial work that was done, whether it continued in that category of players.
MR. STEELE: Okay, so the categories that I'm going to refer to, and I don't know if these are the ones the expert used, but I'm going to talk about four categories; no risk, low risk, moderate risk and high risk. What percentage of the $95 million in VLT revenue expected in this fiscal year comes from high-risk gamblers?
MS. MULLALLY: That information we don't have. There was previously a study done a number of years ago, by the Office of Health Promotion, around what percentage of revenue was coming from each risk category, and typically that type of information is gathered or gleaned through a broader provincial prevalence study. So information that is not gathered by the Gaming Corporation, but rather through studies that are commissioned by the Nova Scotia Health Promotion and Protection. So that is not information that we have available to us.
MR. STEELE: Okay, because the critics of VLTs will say and have said that the problem with these kinds of revenue reduction is the Gaming Corporation doesn't know exactly why the revenue is going down, all they know is the revenue is going down. Then the Gaming Corporation asserts, they say, that problem gambling is being alleviated, but you don't actually have any objective proof of that. Is that a fair criticism? Or, do you actually have proof in hand that you could share with this committee?
MS. MULLALLY: Yes, I'd be pleased to provide the July 2006 report that was released by the independent research company that assessed the impact of the Gaming Strategy initiatives on the various player categories. In that, it does speak to specific
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reductions and numerical reductions. I don't have those numbers at hand, but I'd be happy to provide that to the committee.
I would suggest that, although the study was done for a short period of time - for those who are not familiar, it was for over a six month period - it did indicate there was a positive impact. My caveat to that, to my earlier comment, was that in order to ensure that impact was going to be ongoing, represents a permanent, positive impact, a further study needs to be done which we expect to do in 2007-08 to see whether the changes that were introduced through the Gaming Strategy continue to show a positive impact on those player groups.
So the report, which I'd be happy to table to the committee, provides a number of very specific targets, or numbers, on what the impact was in terms of spend, length of play and frequency of play.
MR. STEELE: Has that report been made public before?
MS. MULLALLY: Certainly. It was released through a media press release. It's on our Web site, readily available for anyone to access at any time.
MR. STEELE: So the July 2006 is the last study you have of the impact of the changes on problem gamblers?
MS. MULLALLY: The last study we have on the impact of the Gaming Strategy initiatives. That's correct.
MR. STEELE: Now, I'm going to go off on a brief tangent here, speaking of studies, the government put out a tender call last summer or early Fall for a study of the socio-economic impacts of gambling in Nova Scotia. Broader than VLTs, but including VLTs. I know this study is not being led by the Gaming Corporation, but the Gaming Corporation does have a representative on the steering committee.
Unfortunately, the government announced the tendering process had not worked, that they received one bid, which was non-compliant. They had to put it out for re-tender and the deadline for tenders is January 30, 2007, so the re-tender hasn't closed yet. What was the problem with that tender? What was the problem with the bid that was rejected?
MS. MULLALLY: I'm not privy to that information. As you noted, the project was being led by the Department of Environment and Labour. There is a steering committee that plays a very non-partisan role in terms of moving this initiative forward. It's chaired by an independent chair who is not connected in any way with government or any of the agencies involved with the study.
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My understanding is that one of the issues - I'll just speculate what I understand some of the issues were - were around the timing of the issue of the RFP. It was done, I understand, sometime around the summer months and there was some difficulty with proponents being able to prepare a proposal within that time frame. So, I understand that's one issue.
With regard to the contents of the RFP, I can't speak to that. I'm not familiar whether there were any particular issues with it, but I think the idea here was they wanted to give another opportunity to see if some proposal could come forward, in a different time frame and a different timeline in order to ensure the initiative can move forward.
MR. STEELE: Do you know the name of the company that did submit the one bid?
MS. MULLALLY: No, I don't.
MR. STEELE: Do you know what the problem was with their bid so that the only bid was rejected?
MS. MULLALLY: My only understanding about what didn't meet the requirements, I don't know in what specific areas they didn't meet the requirements. The indication was that it would not fulfill the requirements of the RFP.
MR. STEELE: Okay. The disappointing aspect of it is the study is needed. Some would say it should have been done a long time ago and yet, the government can't seem to find a supplier or somebody to bid on it who will actually complete the study.
What's the future of the VLT player card initiative that was piloted in the Windsor area? I guess it was two years ago.
MS. MULLALLY: We have been leading this initiative for almost two years. For members who are not familiar with it, this is an initiative that was field-trialed in the Mount Uniacke-Windsor area to place a card-based system on all VLTs in the area. More importantly, have players have the ability to access responsible gaming features in order to assist them to make more informed choices and decisions about their play.
We've conducted significant research and, to be very clear, it's not our research. It's work that's being done by independent, qualified, credible research companies to assess what the impact of such a system is on players' behaviour. This is a study that, again, looks at the categories of players by high-risk, low-risk categorization. This study and the research associated with it is substantially completed at this time, and we are now working through the details of it and we expect to be in a position to publicly
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communicate the outcome of that research, particularly the next steps with regard to it, sometime within the next month.
MR. STEELE: One more question on VLTs, and then I want to move on to other things. We talked about a drop in the revenue, followed by, essentially, a levelling off. Does the Gaming Corporation have any other initiatives planned, whether dealing with the number of machines, the way the machines operate, licensing conditions, anything at all, are there any other VLT changes in the works, or have we essentially reached a status quo that we're going to stick with for a while?
MS. MULLALLY: I would suggest the latter. We've moved forward fairly significant changes through the Gaming Strategy. We're always looking for opportunities to improve on any of our business lines, so one thing we will always look to is any additional research that tells us more information about the product and the business, but at this juncture we don't have any information that suggests that we would be making changes. However, as part of our 2007-08 business planning process and working with our operators, there are always incremental business changes that will be made, but there's nothing specific that we're moving forward at this time.
[9:30 a.m.]
MADAM CHAIR: Mr. O'Connor wants in on the conversation.
MR. O'CONNOR: The exception to that, of course, being the card-based informed player choice system, which would be a significant initiative to move forward.
MR. STEELE: A few months ago, the Fifth Estate program on CBC did what you might call an exposé of the Ontario Gaming Corporation, dealing with the topic of retailer wins. They were able to show that retailers in Ontario won a greatly disproportionate number of prizes. They were able to show that retailers would engage in deceptive practices, such as telling customers that their ticket had not won when in fact it had, and then the retailer would claim the prize. There were also other practices, one in particular known as "pin-pricking" where there was an opportunity for retailers who knew the system to discover whether a ticket was a winning ticket or not - this was on scratch-and-win tickets - so that they could figure out which tickets were winners and then claim the prizes themselves.
As a result of that, it was my understanding that the Atlantic Lottery Corporation reviewed its own history and practices to determine if something similar was going on here. What was the result of that study?
MS. MULLALLY: The issue at hand was, as you noted, around retailer wins, and at the time of the story and the coverage, Atlantic Lottery Corporation reaffirmed its
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procedures and policies around retailer wins and around prizes in general. In that process of reaffirmation and ensuring that the security policies and procedures were properly in place, I noted that there were a number of checks and balances in place to protect the players. I can refer to some of the specific things that are in place, but there are a number of procedures in place. They have done further enhancement, ensuring that the player is protected, and are continuing to look at that.
They were able to do several things. They were able to reaffirm some of the things they were already doing to make sure that they were working effectively. They were also in a position to add some additional measures to the retail sites and to the process to improve upon it, and they're continuing to look for opportunities to ensure that the integrity and security of the systems are of the highest standard.
MR. STEELE: The CBC program showed, I think fairly conclusively, that the Ontario Gaming Corporation had a problem. Why should Nova Scotians believe that we don't have the same problem here?
MS. MULLALLY: Well, I think, first of all, everyone in the industry, including our operator, Atlantic Lottery Corporation, is absolutely committed, 100 per cent priority, around security and integrity. In fact, it's what is a critical part and cornerstone to ensuring confidence in the products, confidence in what's being offered in a regulated gaming environment. I would suggest that, as part of the story, I think every jurisdiction, not only Nova Scotia but every jurisdiction looked at their procedures to make sure that they were, as much as possible, preventive for this type of event to happen.
That process did occur. I think there are a number of checks and balances, over a dozen of them, to ensure that the player is protected in this instance. Having said that, we need to go even further and one of the things that we're doing in Nova Scotia is we're asking the individual who did the statistical analysis for the Fifth Estate to do a similar analysis - is there a disproportionate number of wins amongst our retailers relative to all the wins and prizes that occur in the marketplace? So that analysis, we have the individual who is now conducting that statistical analysis to determine if there's anything that we should be concerned about. So a similar kind of analysis that was done as part of the Fifth Estate story we're also pursuing here in Nova Scotia to ensure that this is not an issue that we have in Nova Scotia.
MR. STEELE: One of the problems in Ontario was, frankly, secrecy and confidentiality, the Gaming Corporation trying to lean on a particular individual to keep quiet about his concerns. So in that vein, when that study is completed, that statistical study, will the Gaming Corporation or ALC release it publicly so that we can all see what the result of that study is?
MS. MULLALLY: Absolutely.
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MR. STEELE: My last question in the brief time I have available to me, the Nova Scotia Liquor Corporation receives annual directives from the government about how much revenue the government expects to receive from it. Most people don't realize that this is the single most significant factor in pricing at Liquor Corporation outlets. Does the Gaming Corporation receive a letter from the minister each year stipulating how much revenue the government expects to receive in that year?
MADAM CHAIR: Mr. O'Connor.
MR. O'CONNOR: That's pretty easy to answer, no.
MR. STEELE: Has the Gaming Corporation ever received such a letter?
MR. O'CONNOR: No, not to my knowledge.
MS. MULLALLY: No.
MR. STEELE: It just leaves me to wonder why they feel they can do it with the Liquor Corporation, which is something I've always objected to, but clearly they feel that it's not something they can do with the Gaming Corporation.
MADAM CHAIR: The time has expired now for the NDP caucus. Mr. Glavine. You have until 9:56 a.m.
MR. LEO GLAVINE: Thank you, Madam Chair, and thank you for coming in this morning and giving the legislators an opportunity to ask some questions around the Gaming Corporation. I would like to move to the area of advertising for a moment, if I may. Every evening when I watch certainly a portion of Live at 5, which is prime time television here in Nova Scotia, I haven't watched perhaps a full hour so I don't know how many ads are on there promoting the casino in Nova Scotia and, you know, I believe that's probably pretty effective advertising given the time of day.
You know, why don't we have a balance, and maybe this isn't fair to ask the Gaming Corporation, but why wouldn't we have a balance here and the talking about the risk factors once people are into, you know, habit-forming practices around either going to the casino or certainly around VLT play which is a big area of concern, I think, for a growing percentage of Nova Scotians. I'm not speaking here today just as the critic, or just as a representative of the Liberal Party, my voice is becoming much, much more what the vast majority of Nova Scotians want to see, a balance in those things. Why isn't there a balance?
MS. MULLALLY: I fully agree and I think that this issue of balance is something that the Gaming Corporation has been working towards and very focused on over the
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past number of years. So I would like to speak to some of the things that we do try to do to create that balance of information, which I think is absolutely critical, because we firmly believe that an informed player or an informed public is what is in the best interests of this industry. We do not benefit from uninformed players or uninformed public about what this industry is about, what are the risks associated with playing, and if you have problems, where to go for help.
So what we've done in this area is delivered a number of prevention programs around education and information and if I might speak to one which does speak to the medium of TV, the "Friends4friends" campaign that we brought forward in the last year is very focused on the 19- to 29-year-old who, as we all know, has a higher risk of experiencing problems with gambling than any other age group. These advertisements are on TV at prime time, when these individuals are watching TV. They're available in places where they're located, whether it's in licensed establishments, whether it's in university, community colleges or bus shelters. These advertisements are very much focused on and very appropriately present the image of the consequences of someone with a problem with gambling and these ads, I think, present the other side very appropriately.
I should note these advertisements were not developed by the Gaming Corporation, that would be completely inappropriate. These ads were developed by an independent, credible organization called the Responsible Gambling Council of Canada. They created these advertisements for Ontario and allowed us to bring them forward to Nova Scotia, because we felt that they would provide a very tangible presentation of what the issues can be with problem gambling and further, be able to provide information to people about where to get help and as you'll note, the problem gambling help line is referenced there. There is a Web site reference where they can get information on where the Addiction Services offices are. So there are lots of ways in which people can use this information, to be better educated about problem gambling, but also where there is help.
So we've worked very hard and that's one example of over 12 programs that we sponsor in the communities across Nova Scotia as a way to educate the public, as a way to educate players, because our objective is to have the most informed players and to have the most informed public about what this industry is about, and about what can be the issues and potential harm for some people in our population.
MR. GLAVINE: Thank you. Certainly I'm aware of the Gaming Corporation and the Office of Health Promotion and Protection and some of the work they have done, but I still think we - I'd like to go on the record to say that we are still a long way from perhaps having the best balance with this and especially around prime-time television and perhaps with getting good information on-line, as well, that will help the next generation of people who are into gaming.
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So moving on then a little further with the video lottery terminals, and I know in this province it still remains a pretty hot-button issue and again, even though it's getting to be a little bit of an old saying, VLTs are truly the cocaine of gambling, and there is no other form which can see you chase your losses into severe debt and extreme financial hardship, as we see with the VLTs. Really, that we provide individuals with this - I know it's all about a society of choice, but still, I think as legislators we need to be taking greater responsibility in this area.
Now, if I may, you stated on several occasions that the choice to remove VLTs from Nova Scotia is not your call, or that of the board. That's correct, I guess?
MS. MULLALLY: The government in it's role, in many areas, plays a broad policy role on gambling and, as you know, the development of the Gaming Strategy is a great example of where government plays the lead in creating what it believes is the policy direction and the policy decision it wants to bring forward in the gambling sector. And the Gaming Strategy, as you know, is the government's Gaming Strategy. It's the Province of Nova Scotia's Gaming Strategy. It is not the Nova Scotia Gaming Corporation's gaming strategy. So I think the creation of that strategy reflects the broad policy framework that government wishes to move forward on this industry, and as the body that then now takes that policy and ensures it adheres and complies with that policy and delivers on it, we do that in the best possible way, in every way, as stewards of the gaming industry, in delivering those initiatives that the government has asked us to do.
So to answer your question, the broad policy decisions are directed by government, as it should be, as the primary shareholder, as the body that owns this corporation, and our role then is to make sure we implement and execute efficiently, effectively and in the best interests of Nova Scotians.
MR. GLAVINE: So I guess we can look to the Cabinet to hit a little harder then, perhaps in this area. Probably, if I remember conversations, I guess, here in the Chamber before when you were here as a witness, I think perhaps you and I disagree on the possibility of a black market for VLTs if they were prohibited in Nova Scotia. Is that a correct statement and, again, what is your rationale in holding to that position?
MS. MULLALLY: Perhaps, Mr. Glavine, you could reconfirm your position so that Mr. O'Connor can speak to it, just to make sure we're aware of the differences or the view that you have and to assess whether it's different.
MR. GLAVINE: My position, very quickly and clearly, is that, yes, we may see some grey machines and so on in kind of an underground setting. But I think, again, with proper police work and proper monitoring and very heavy fines - I'm noticing two or three areas where legislators have brought in big fines and have really curbed behaviour.
[Page 15]
I'm watching this across Canada in recent months and years and I believe there can be effective rooting out of these if they were to go underground.
I believe we get rid of VLTs and then we look after any movement underground if that is the case.
[9:45 a.m.]
MR. O'CONNOR: Certainly, you know, you may be right. I'm not sure I would agree that banning them is the right way to go anyway, even if that were the case. But having said that, there are two things that strike me that would cause me to have a slightly different point of view. One of the reasons the province got into the business of the VLTs in the first place was proliferation of grey machines, numbers which the RCMP indicated were, I think at that time, in excess of what we have today deployed in the province.
The second comment I will make is, I spent a day a couple of years ago now with the Ontario Provincial Police, their underground unit, and that was certainly an eye-opening experience for me. VLTs are not legal in Ontario; they have, of course, a lot of sites - casinos and so forth, but VLTs are not legal. I witnessed first-hand an awful lot and the officers who accompanied me on that process would, I think, have a different point of view as well. It's just a very difficult thing to control.
MR. GLAVINE: Thank you. I'm just wondering if you have heard here in the province of any play after midnight into the black market segment. I know there are a lot of people who would prefer, especially the problem gamblers, moving their activity well beyond twelve o'clock at night, which is the current shut-off time. I'm just wondering if you have heard of any reports as a result of even that measure.
MS. MULLALLY: We're in regular contact with the RCMP and their illegal gambling enforcement unit. This is an issue, of course, of interest to us because when such significant initiatives are brought to a certain business like the gaming strategy initiatives, there are very material changes. One of the concerns was, are the changes material enough that it would cause the grey market or the black market to re-emerge into the marketplace? So in most recent discussions with the RCMP, there does not appear to be any evidence, not any material evidence, that there has been a re-emergence of that black market as a result of the changes that were introduced through the gaming strategy.
Players after midnight, particularly if we're talking about players who like to play past midnight, can choose other options today, as you know. First of all, if they're close to a First Nations reserve, there's an opportunity to play there. As Sean earlier indicated, there are over 2,000 Internet gambling sites, so people who want to continue to gamble now will go to their computer and play on the Internet.
[Page 16]
After midnight, there are a lot of other forms of supply that allow players to continue to play if they want to continue to play. Really, gambling now and the availability of gambling is very broad and it's as close as a computer to any individual.
MR. GLAVINE: Thank you. Just for a few moments, looking at some of the numbers here - and at this juncture, I'd like to thank you and the corporation for very accurate, very timely and, in my view, transparent information that has always come to our caucus, or to myself when I've requested it. So I do appreciate that and certainly it seems to be at a time and in an era when lots of times we, as well as legislators, fight through bureaucracy and, from some departments, don't always get timely information, in fact, we actually get the runaround.
So back to the VLT numbers that we're dealing with; there are 2,326 VLT machines in Nova Scotia with another 575 in First Nations communities, so they have roughly 20 per cent of the VLTs in the province and if you add them up we are roughly around 3,000. It is safe to say there is a significant amount of VLTs in First Nations communities so if we're going to solve the problem entirely, it must be dealt with entirely.
Now am I correct in saying that you have no jurisdiction with the gaming industry on First Nations communities?
MS. MULLALLY: That's correct.
MR. GLAVINE: So could the Cabinet shut down VLTs on First Nations communities? Have you had that kind of discussion?
MS. MULLALLY: I think that question is best answered by the Office of Aboriginal Affairs because they would be the ones interacting with government on this kind of policy issue. What I understand, and I'll suggest very clearly perhaps limited and uninformed, but my understanding is that there is federal jurisdiction that occurs with the First Nations. That is a very complex issue, one of which involves both the provincial and federal governments and, of course, involves each of the individual bands and the community of bands. So it is an issue that I understand is complex and one that is discussed with Cabinet through the Office of Aboriginal Affairs and they would be most appropriate to answer that question.
MR. GLAVINE: You've gone over with my colleague in the NDP some of the reasons for the reduction in revenues from VLTs. I think we are looking at about a 15 per cent drop, is that roughly the amount from - I think last year they took in $182 million in revenue and this year it is expected to maybe be around $150 million. Is that, give or take a little bit, where we are going to be?
[Page 17]
MS. MULLALLY: The actual percentage is closer to 30 per cent if you look at the beginning of the introduction of the Gaming Strategy in 2005. So cumulatively, and if you annualize the figure, it is estimated to be approximately a 30 per cent reduction in revenue.
MR. GLAVINE: Do you see some perhaps behaviours changing, even with problem gamblers? The best estimates that I can get is that probably around 50 per cent of revenues are again from 5,000 to 6,000 problem gamblers and then another 5,000 to 6,000 who are high-risk and very active players. Is there anything, and even from the very small sample that you did in Windsor, is there anything to indicate that even with problem gamblers, that they can only go on so long as well? Is that part of the reduction in revenues? Is this a likely trend or is there a greater movement to on-line gaming? What are some of those factors there?
MS. MULLALLY: That's an excellent question and I think a challenging one to really understand exactly where the revenue is possibly going, if it is not coming here. So clearly we know what our numbers reflect and it shows a material reduction in our revenue from this particular business line.
When we look at the problem gambler, and again I am not an expert in this field, but there is no question that the problem gambler will spend more than any other category of players. There is no question of that, I don't think anyone would suggest different.
In addition, the belief that the problem gambler comes in and out of play is another factor that impacts on how much of our revenue is coming from this category. So in other words, the problem gambler will continue to play when they believe that it is causing a positive outcome for them but when they run out of resources to play, they have to stop. Then they start again once they have the resources to do so. So there is a behaviour pattern of an in and out of activity of a problem gambler that impacts on what kind of revenue you might be generating from that group.
There is no question that they spend more. There is no question that if you look at this as an addiction, that they're going to continue to spend what resources they have in order to feed that addiction. Really the opportunity and the only way to address the problem gambler is somehow there is some form of intervention with that player, whether it is a self intervention, whether it is an intervention by others that causes them to want to change their behaviour, to access treatment or some kind of recovery program so that they can address their addiction. So the question, I think, clearly is a complex one to know what drives a player to spend, where they spend their money and how much, but at the end of the day it's pretty clear that they're going to spend whatever resources they have available to them until they get to a point that they decide that that's enough.
[Page 18]
MR. GLAVINE: I have one final question. In terms of removing the 800 machines plus the 140 that were old and somewhat, I guess by attrition, came out, moving towards the 1,000 which government did commit to, was there a strategy of a design around where they came from and did you take a look at the hours of use of these machines and the kind of revenue they were turning over? I'll bring to the Legislature this morning certainly just one observation from my area.
It comes from an addictions counsellor at 14 Wing Greenwood who, in very clear terms, says that in that population of kind of young spenders and risk takers, you know, 80 to 90 machines within a 10 kilometre radius is simply too many for that area. So I'm just wondering - I mean, did they come from areas, you know, along the South Shore or the northern part of the province where it's more rural and not as high a percentage of use on the machines? Was there a strategy there?
MS. MULLALLY: I'll answer your question in two parts. I believe the first part was around what machines were removed. Just to remind the committee, the removal of the machines was based on an obsolescence issue that we had with one of the machines that was in the marketplace at the time. There were approximately 775 of these machines that would have had to have been replaced and removed due to obsolescence around, not exactly the time of the Gaming Strategy but sometime within a one-year period after the Gaming Strategy came out. So what exact machines were removed were based on the ones that were old and no longer could be supported by the manufacturer. So there was no analysis done on the revenue performance or anything associated with the performance of machines, it was based on purely a business requirement imperative in order to remove these machines from the marketplace. So that was the basis of which machines.
How the machines were removed - they were done on a pro rata basis across the province. It was not done to one particular region. It was based upon how many machines a particular retail site had and, in essence, they were going to lose 30 per cent of those machines. There were some exceptions to those rules around if you had fewer than three, you were exempt from it, or if you were a non-profit retailer. But for profit retailers, it was based upon how many you had, 30 per cent were going to be removed, and that's what you were going to be left with. So it was considered to be perhaps the most fair and equitable way in which to remove the machines based upon what was currently available in each site.
MADAM CHAIR: The time has now expired for the Liberal caucus.
Mr. Bain. You have until 10:17 a.m.
MR. KEITH BAIN: Thank you, Madam Chair, and thank you both for appearing before the committee this morning. I would like to ask you to explain, if you would, the
[Page 19]
Responsible Gambling Resource Centres that are in Sydney and Halifax - what they are, what they do, and probably in summation, the effectiveness of having these centres there?
MS. MULLALLY: The Responsible Gambling Resource Centres, I think, are an important part of increasing the level of information, education and awareness amongst our casino players about responsible gambling and about problem gambling. So the purpose of them is to provide a visible physical place within the casino facility where players interact with qualified individuals who are not our staff. They're individuals who are qualified counsellors who work for an independent contract company that specializes in this area, they are a resource of information, of education, in order to assist players to make an informed choice.
So some of the information that is available in this centre is providing information on how the games work. In fact, there is one specific software tool - a tutorial on slots. It explains exactly how the mechanics work, what the odds of winning are, trying to dispel all the myths associated with things like the hot versus cold machine, that somehow you can determine the outcome of play which, of course, cannot be done.
It really is an information resource. It's a place where people can be educated, be more informed about how the games work, about responsible gambling and what are the types of behaviour that are responsible. It also educates them about what problem gambling looks like and the risks associated with it. Finally, where do you go for help?
The staff that work in the centre have access, of course, to the problem gambling help line. There's a phone there where people can access it any time of the day - 24 hours, 7 days a week. There's also, if needed, if a certain situation escalates and clearly someone is having a problem and they want to access help right away, the staff - again, who are qualified individuals - can arrange to be a conduit to get that person to, let's say, the addiction services staff in their area.
It's really a very effective way of profiling, which I think is a critical part of the job, what responsible gambling is, but it does provide an important information tool to allow players to make an informed choice which is a cornerstone to our strategy.
[10:00 a.m.]
To your last part on how you measure the effectiveness. There are several ways to measure effectiveness. We can look at basic outputs - the number of people that visit and how much information is accessed. But I think also what's important is to look at what are the outcomes? For the people who do use the centre, what impact has the access of this information or the access of this resource done to help them make more informed decisions? Or, for those who are perhaps in a crisis situation, how did it help them to
[Page 20]
address it and deal with in the way that allowed them to do it in a way that they were not harmed? That's a really important outcome measure.
When we look at the effectiveness and we've just recently conducted a one year evaluation of the centre and we're just finalizing it and I'd be happy to share it with the committee once it's available. But we look at these kinds of outlets, we look at how many people are visiting, but we're also saying for those that are interacting, of which the staff keeps some information about, how are we benefitting them? That has to be an important measurement of success for the centres.
MR. BAIN: Would you be satisfied with - I don't know if satisfied would be the right word, but, the number of people that are accessing the resource centres? Are you surprised at the number that are, or aren't?
MS. MULLALLY: For these kinds of centres, the numbers across Canada - you will see these centres in other jurisdictions outside of Atlantic Canada - they have relatively low visitation rates, in terms of what people would expect.
I am not particularly concerned with that. Obviously you want to be able to be accessible, visible and people to use it if they want, but it's about them making that choice to use it. But I also believe that if 20 people visit the centre and all 20 have improved their knowledge about responsible gambling, that they'll make better decisions when they play, or somehow we've helped someone that's in trouble - to me, that's the measurement of success.
So, it's not about the number of people that are going through, but whether we're actually helping those individuals who are interacting with the centre, is a really important measurement.
The centre staff also provide responsible gambling training to the casino staff. One of our goals with the centre is to engage the centre staff more with the casino staff to increase the awareness knowledge information amongst the people who work in the casino facilities. So they're starting to play a more significant role in that education of not only guests, but also ensuring the staff are well educated and keeping informed on responsible gambling.
MR. BAIN: Thank you for that, that's great. I'd like to move now to - part of your program is geared to high school student awareness. You make reference to the cut in the game to play; how was this received by the students and the teachers, administrators within the system?
MS. MULLALLY: Yes. What I'd like to first reference - because it's a very important point, before speaking of the program - when we are involved in programs that
[Page 21]
involve high school and individuals that are below the age of majority, our role is very much in a sponsorship role. We do not have a direct interaction role with those plays when they are being delivered in the high schools. I think that's a very important point.
Our role is to facilitate the delivery of a program that has a proven track record of providing information that can be recalled and remembered by these students. So our job, really, is to sponsor programs that have been developed by independent, credible experts and to bring them to Nova Scotia so that we hope we have a more informed public, we have potentially more informed players than we would have today.
So when we look at the high school program, I can speak first-hand on the experience. I had the opportunity of attending two of the plays of the drama - again, I will be very clear, my role was in the back of the room, like being an administrator or a teacher, watching the process. I have to say that it is probably one of the most effective programs, in terms of engaging students and, by the post-evaluation results, in terms of them remembering and recalling the information that's important for them to recall.
So the experience is very positive. The play is about a 35-minute play. I think it reflects a very dark interpretation of the consequences of problem gambling. It involves a 22-year-old student who gets into gambling, gets in over his head, and then the consequences of him having to give up everything as a result of his addiction. So it presents a very dark and, I think, appropriate image of what the impact can be if you go too far.
So the students, interestingly, are very engaged in watching that play. They are very focused, very interested. The language is very much relevant to them, perhaps not so relevant to us but relevant to them, so they understand the message and they're becoming engaged.
The second part of the session is an interactive process whereby in a loosely competitive process, two teams are created and the actors interact with the students then and ask them questions. They play basically a competition, who can answer the most questions and get them right. They're asked questions like, what are some of the things he did that caused problems, what could he have done differently? What do you think some of the characteristics of problem gambling are? Where could you go for help? It's those messages that we then later, through the company that created this program, survey students and administrative teachers to see if these messages are recalled.
The rate of retention is phenomenal, it's over 90 per cent of the students who, three months later, are actually able to recall those key messages. So it's a reflection of the type of programming we want to bring to Nova Scotia, not in a way to suggest that we're there to promote gambling, because that's the last thing we're trying to do. We're trying to promote information and education as part of our prevention efforts because,
[Page 22]
at the end of the day, the province is going to be stronger if we have more informed people accessing gambling products, that they're able to make better choices and overall can be very effective in preventing a future generation of problem gamblers.
MR. BAIN: So I would assume that - and as you're speaking about this, you seem very passionate about the whole thing - this will be a continual thing that will be going on. Is the corporation looking at any other initiatives that might be geared towards the younger generation?
MS. MULLALLY: Well, the chair of the board is even more passionate about this than I am; that is, the importance of education at an early age. We've seen the importance of education in other topics and the benefit that has provided to society as a whole. So our focus again, in a sponsorship role and as a conduit, we'd like to bring more programs to the high school group and, in fact, we're looking at a high school education program that can actually be delivered in the school so it's part of a curriculum supplement as a way to do it.
We're also speaking to an organization that is broadly-based in Nova Scotia as another place where we can deliver education programs, so it's a place where youth spend time. We're looking at creating a partnership whereby we can sponsor these programs so the information is getting out to the places where students are located.
We also would be very interested in looking below the high school level and the kind of programs that could make a difference in terms of educating. Of course, age-appropriate information, to really start that information dissemination and education at the earliest age that we think people can understand it.
I use my own personal experience of my seven-year-old daughter who fully understands, not because of anything that I'm involved in, but in society she sees gambling products. So my job as a parent is to make sure she's educated, that she's informed, that she understands the risks, that she understands it's not something that she should ever participate in, as someone under 19. That's why we need to make sure that those kinds of programs are available to people across the province.
MR. BAIN: I guess just to follow up with that, I certainly agree with you that the younger you can get to these individuals the more they'll change. I guess it goes to smoking and the smoking cessation or anti-smoking programs that are out there. So as a result of saying, when you talk about smoking, I'm going to ask you if the smoking ban in public places has cut down on the attendances or the spending at casinos, at various VLTs. Has that had any effect?
MS. MULLALLY: Yes, it has had a material effect, but an expected effect. If you look across jurisdictions in North America, any time that a smoking ban has been
[Page 23]
introduced, in both the casino business line and the video lottery business line, you would see somewhere between a 10 per cent to 20 per cent reduction in revenue. There are a couple reasons for that and I'll speak to what that is.
So we are seeing currently, as a result of the December 1st 100 per cent smoking ban, about a 10 per cent impact on our video lottery business line at this juncture, recognizing it's still quite early, and about a 12 per cent reduction in the Halifax casino. Part of the reason we see this is that in the case of the casino we had a designated smoking room and we also had a number of our higher-end players who were playing in that area. It was a highly utilized centre and I want to be clear, I'm not making any policy comment of smoking versus not smoking, I want to be very clear on that, but there's no question that it does have an impact because we have seen in other jurisdictions that there is.
If you profile a gambler, they will tend to smoke. There are smokers amongst that group, and in the case of the casino we saw a fair amount of our higher-end players, the ones who would spend more, playing in the smoking room. So when you remove the smoking room, what can happen until players change their behaviour is they'll either stop playing earlier, or they will leave and come back and not play during that time. So the combination of the two impacts on the business.
The VLTs are very similar because, again, in many cases the VLTs were located in a smoking room and I think the estimate was that 90 per cent of the VLTs, or 90 per cent of the establishments had VLTs in the smoking room. So when you remove the smoking room, clearly, again players' behaviour, they'll either stop playing earlier, you know, they'll go outside to have a cigarette and they'll go home rather than continuing to play, or there's a break in play where you're just not generating revenue. So that's a reality of the business.
Now, what some jurisdictions have seen as a rebound, after about nine to 12, sometimes 15 months after the smoking ban was put in place, where players do modify their behaviour and, in fact, in some cases you bring in players you might not have otherwise brought in when there was a smoking environment. So we won't really know the full impact of the smoking ban until about 12 months from this time and we'll have a better understanding of what its overall impact on the business has been. But at this point it's what we expected, about a 10 per cent to 12 per cent impact.
MR. BAIN: I guess you could pretty well gauge that on the Sydney casino, because Cape Breton had the non-smoking bylaw?
MS. MULLALLY: Right, we saw that impact several years ago when the . . .
[Page 24]
MR. BAIN: And that was the norm, just like that decrease of maybe 10 per cent to 12 per cent?
MS. MULLALLY: Exactly the same, yes, and there was some level of rebound, not completely, but there were other economic factors that played into that. So there is some level of rebound. The question is how much, and you'll know that in that 12- to 15-month period.
MR. BAIN: One other question. I noticed in one report provided in the binders that retailers get bonuses for meeting sales targets on lottery tickets. Am I right in saying that?
MS. MULLALLY: No. There was previously a bonus commission provided on the first level of sales reached, but that bonus commission has been eliminated at this juncture, over the last few years was eliminated or phased out. So at this point there's a standard, straight commission rate that's provided on lottery ticket sales.
MR. BAIN: Okay, I guess I must have misunderstood. When the province unplugged 300, or a quarter of the VLTs, the reduction in gambling monies was very - well, we were down $40 million, I believe, in that period. I guess my question is, what about the social impact, was that measured over that three-year period, the impact on, you know, the social behaviour of the individuals? Was there measurement or would that be your responsibility?
MS. MULLALLY: Just if I might clarify, what do you mean by social behaviour? Just so I'm clear.
MR. BAIN: Addictions, people spotting addictions.
MS. MULLALLY: I've referenced there was a study conducted, released July 2006, that actually measured the impact of the reduction in machines and other gaming strategy initiatives - what impact did it have on the players in terms of their spend and how long they played. So that report I will table with the committee, but it did note there was an impact on all categories of players, whether they were a no risk or a problem gambler, and that there was a reduction in the spend as a result of the changes.
MR. BAIN: Okay. On-line gambling in Nova Scotia, does the corporation have on-line gambling operations?
MS. MULLALLY: Do you mean like the casino-style gambling?
MR. BAIN: Yes.
[Page 25]
MS. MULLALLY: No, we don't at this juncture.
[10:15 a.m.]
MR. BAIN: Do you have any plans to look at a venture like that?
MS. MULLALLY: I want to make sure I defer to the chair if he'd like to speak as appropriate, even though he has 10 days left. No, at this juncture, obviously we're watching Internet gambling very closely. As the chairman indicated, there are over 2,000 sites across the world. Nova Scotians, like every jurisdiction, have people playing on the Internet. We also, in a recent study, have seen that youth, people under 19, and particularly in the 14- to 17-age group, are playing on the Internet, initially for fun and not for money, but eventually for money. The reality is that Internet gambling is occurring across the world. Nova Scotians are playing. In some cases, underage Nova Scotians are playing with potential risks because they're not informed and educated to understand the risks associated with gambling.
MR. BAIN: I guess that was my question, because it wouldn't be promoting responsible gambling if indeed participation was there.
MS. MULLALLY: My view is we need to look at Internet gambling at some point, because the reality is it's happening and they're unregulated sites and people are playing in Nova Scotia. So the question that needs to be addressed by government is, are we better off having unregulated Internet gambling in Nova Scotia, whereby the benefits are not accruing here but the costs are in terms of social impact? Or are we better off to have regulated gaming where the benefits do accrue here, we have the ability to control it, put in the responsible gambling measures that perhaps we didn't have the knowledge to do 10 or 15 years ago when gambling was really introduced to Nova Scotia? Then if there are costs associated, you have the ability to manage it, track it, be able to help people who need help.
So it's a policy question that does need to be addressed. I think sooner versus later, because it is growing and it's one of those technologies in games that I think is going to grow slow and then eventually it's going to flourish. It's going to reach a certain level of acceptability like other technology, and at that point it's going to be difficult to be able to manage it.
MADAM CHAIR: Thank you. The time has expired. I now recognize Mr. Paris from the NDP caucus. You have 10 minutes in this round, until 10:27 a.m.
MR. PERCY PARIS: Thank you, Madam Chair, and I will say at the onset that this may be time-shared with my colleague to the left. I'd like to, I guess, revisit a little bit the numbers with respect to addiction gambling. I read somewhere in a report that
[Page 26]
there are 7,500 people addicted to VLTs and another 7,500 who are addicted to other means of gambling, for a total of 15,000.
I guess my first question would be, is that an actual number and could you elaborate a little bit as to how you arrived at that number? The reason I've asked that is because there has been some debate over the last number of years from those groups and organizations that are on the other side of gambling, who advocate against gambling, that the figure is more like 30,000.
[10:18 a.m. Mr. Chuck Porter took the Chair.]
MS. MULLALLY: Thank you. First, I should note that the lead in determining the prevalence of gambling activity and the rate of problem gambling resides with Nova Scotia Health Promotion and Protection. It's not a role that we played, but within government there is a body that looks at measuring the rate of problem gambling.
So, as I speak here, I want to be clear that if you wish further information or wish to confirm it, please feel free to contact them as they're the experts in this area. But what I can tell you is that in the most recent prevalence study, which took place in 2003, it indicated there were approximately 7,000 problem gamblers in the province. It didn't designate or segment it by product, it was just a total aggregate of approximately 7,000.
Another 8,000 were deemed to be in what they call the moderate risk, so those individuals who are showing certain characteristics that might suggest they have a problem and they are categorized into this group. That's where, I believe, the total 15,000 number is coming from.
So this work is commissioned by Nova Scotia Health Promotion and Protection. It's done by an independent researcher who basically at a point in time measures the rate of problem gambling or the rate of gambling in the province. The last one was in 2003 and those are the figures that I'm familiar with from that report.
MR. PARIS: Do you know, with respect to that figure you just gave me, that 15,000 - or is it Health Promotion and Protection? - do you know what cost per individual that is to gaming revenues - or to the province, I should say?
MS. MULLALLY: Yes, the costs, and to Mr. Steele's reference to the socio-economic impact study, I believe that's one of the elements that's going to be included in that study, is to try to determine the costs versus the benefits, or the costs and the benefits associated with gambling activity. I believe that study is going to be segmented by product.
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At this juncture, that information is not available, but my understanding is that study and that initiative is intended to glean information about the costs and the benefits associated with gambling activity in the province.
MR. PARIS: So in doing that analysis, it would also include things that are related to problem gambling such as community services, health-related issues, et cetera.
MS. MULLALLY: Yes. I mean, typically, socio-economic studies have been attempted in many jurisdictions and it's sometimes challenging to try to put numbers or quantify the impact. However, I do know that they will look at a broad array of costs and would look at things like the areas you suggested. That is my understanding.
MR. PARIS: There's no yearly tracking then of the increase or the decrease of problem gambling in Nova Scotia? If 2003 was the last time this analysis was done, but there's - how often prior to 2003 did we have statistics around problem gambling?
MS. MULLALLY: I believe the best body to answer the question of what the appropriate time frame or time between studies would be best answered by Nova Scotia Health Promotion and Protection. They determine, as experts, what is the appropriate time frame in which studies occur. I know they can vary from jurisdiction to jurisdiction, but generally they are normally around a five-year period of time.
But I can't tell you on what basis or what rationale is behind that five-year time frame. I'm quite confident that Health Promotion and Protection would be able to answer that question.
MR. PARIS: Can you tell me what amount of money is set aside on a yearly basis, just solely directed at problem gambling?
MS. MULLALLY: That would be coming from a combination of sources. Again, problem gambling, as you know, is not - programs associated with problem gambling treatment are not done through the Nova Scotia Gaming Corporation, they are done in concert with the Department of Health and Nova Scotia Health Promotion and Protection. They would have a budgetary allocation to fund problem gambling treatment programs. That information would be available from them.
We also, through the Nova Scotia Gaming Corporation, fund a number of areas. We provide $1 million via our casino operator to Addiction Services to fund problem gambling treatment. We also provide approximately $700,000 to the Nova Scotia Gaming Foundation, which is responsible for funding research and education on problem gambling. We also deliver a number of prevention programming ourselves, programs we referred to earlier, that are offered. So there are a number of sources of monies that are allocated to problem gambling and problem gambling treatment.
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There isn't one single pocket of source. Therefore, it would have to be aggregated. We know we contribute a certain number to support Addiction Services, to support problem gambling education and research. In addition to the $1 million to Addiction Services, there is another $3 million that we provide to Nova Scotia Health Promotion and Protection in order for them to deliver their prevention and treatment programs.
[10:24 a.m. Ms. Maureen MacDonald resumed the Chair.]
MR. PARIS: Does that go up yearly or does that remain constant?
MS. MULLALLY: The $3 million is constant at this juncture and it was pursuant to the gaming strategy, so it was introduced in 2005. That number remains constant. The $1 million I referred to from the casino to Addiction Services, that goes up by the consumer price index, so it increases each year based upon increases in costs. The Nova Scotia Gaming Foundation money that comes from us is determined as a percentage of VLT revenue.
MR. PARIS: Do you know that with the resources the Department of Health has now, just particularly with counselling for those with addictions, is it overloaded, is it sufficient? Do they need more money, do they have enough resources? Do you know that?
MS. MULLALLY: I would have no information on that and would not be able to answer that. The Department of Health would be the body that is responsible for its own resources and its own programs. Those are not programs that are delivered by the Gaming Corporation.
MR. PARIS: Okay. Madam Chair, I would like to turn the floor back to Mr. Steele.
MADAM CHAIR: You have one minute.
MR. STEELE: Thank you. Mr. O'Connor, I forgot to ask you, who is going to succeed you as Chair of the Gaming Corporation?
MR. O'CONNOR: That's a good question. I don't have the answer to that, it's one though that is of concern to us; both Marie and I are formally trained in corporate governance and we spend a fair bit of time talking about this stuff. At this time I'm not certain yet whether the government has named a chair. That's a good question for them.
MR. STEELE: Have you or Ms. Mullally been asked for your input about who the new chair should be?
[Page 29]
MR. O'CONNOR: I have not, no, but I have provided it. (Laughter)
MR. STEELE: Thank you. One last question on VLTs. One of the ways to cut down on VLTs, it is thought, is to make them less accessible, not to have them available in every neighbourhood. There was a thought at one time of putting VLTs in larger so-called gambling centres, of which there would be relatively few. Is that idea dead, or is it still a possibility?
MS. MULLALLY: I think it's something we need to look at. Centralization is a model that experts in responsible gambling and problem gambling say could have a positive impact on the rate of problem gambling in this province. I think we need to continue to monitor the VLT situation, we need to understand its impacts. I think the idea of centralizing and creating a more controlled, regulated environment is something that always should be on the table. We need to be constantly looking at our business ways so that we can improve it from a social perspective as well. I think that option should be evaluated and considered as we look to the future of gaming in this province.
MR. STEELE: Thank you.
MADAM CHAIR: Thank you, the time has now expired. I recognize Mr. Whalen.
MS. DIANA WHALEN: Thank you very much and welcome today. I just would like to ask one more question around the governance of the Gaming Corporation. You have only five directors, including the chair on this board, are there any other members whose appointments are about to expire at this time? Often they come up in a group.
MR. O'CONNOR: Yes, Peter Fardy, his term expires I believe at the end of February. Is that correct? Yes.
MS. WHALEN: Then that would indicate there's some urgency for the government to appoint new directors for the board, because you'll be down to only three. Even though it's a quorum, it's a small number. Would you agree that's a concern?
MR. O'CONNOR: Yes, it is.
MS. WHALEN: Have you any idea how this process is going? I know a number of us sit on the Human Resources Committee and we're never aware of how long it takes for these names to come to us.
MR. O'CONNOR: I'm not sure where the process is, but I know there was an advertisement soliciting individuals who would come forward and put their names forward. I don't believe - well, you would know, you're on the Human Resources
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Committee - that it has gone to the committee yet. So when my term expires, I think they'll be down one member anyway. So there is some urgency to deal with that matter, I would agree.
MS. WHALEN: Nobody else is imminent other than Mr. Fardy?
MR. O'CONNOR: No.
MS. WHALEN: Okay, that gives us an idea, thank you. Do you think the board is large enough?
MR. O'CONNOR: That's a great question. I would say that I don't think the nature of the organization is one that requires a huge board. I think that a five-person board has functioned very well. You could certainly have six or seven members; I don't think you want to go much smaller than five. Just the logistics of meetings and occasionally there's somebody who can't make it, so you have to have enough that you can always have a quorum. Yes, I think the board is reasonably sized. It could be a little bit bigger, but you wouldn't want to make it too much larger.
MS. WHALEN: I have a couple of questions around the financial statements. One question is about the Other Revenues in Schedule 4. They've gone up between 2005 and 2006 by about three times - just a little short of three times the amount - and I'm just wondering, what is included in Other Revenues? It has just gone from $210,000 to $621,000, but there is no breakdown on what that is.
[10:30 a.m.]
MADAM CHAIR: Ms. Mullally.
MS. MULLALLY: Thank you. That is largely as a result of increased expenditure in the responsible gambling program area. So it also includes that particular item and it's one that we have spent considerable time and attention to over the last number of years.
MS. WHALEN: Would that be Other Expenses you're talking about? That should be a cost to the organization for responsible gambling - I'm wondering about revenue.
MS. MULLALLY: Oh, my apologies. You're referring to Schedule 4?
MS. WHALEN: Yes, the last page in the report.
MS. MULLALLY: I don't have the specifics of what's causing the Other Revenue. I can tell you some of the categories that are in it. It would include the interest income on whatever excess cash surplus we might have in our account. I can certainly
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table that information to the committee to specifically indicate what caused that increase between 2005 and 2006.
MS. WHALEN: Okay. I'd like to see it, just because it's not in line. The two years are quite different, so I would like to know what that is exactly.
Can you tell me, in terms of the responsible gambling initiatives, what dollar amounts have you associated with that, or what percentage of your revenue? However you want to define it. You were looking at a different schedule, I think, when you talked about that.
MS. MULLALLY: Yes, my apologies. I was looking at a different schedule. So on the responsible gambling, if that's what this question relates to, we have approximately $2.5 million that's allocated by programming that NSGC delivers. There are approximately 12 programs of public education and information, some of which are broadly focused on educating the public and some are more targeted to certain categories of the public. So we deliver those programs and the funding associated with those programs is through the responsible gambling program.
MS. WHALEN: But $2.5 million is the figure that we would be looking for. That's helpful, thank you.
I wanted to ask you about, I'm not sure, maybe a year ago, there was an RFP for a university research centre for gambling. Has that gone through and been awarded, or where is it in terms of this? We certainly know we have great universities in the province and a good asset there for you to work with, but I'm just curious about that.
MS. MULLALLY: One of our objectives is to build the research capacity specifically around responsible gambling research, and we entered into that process in order to identify some institutions that would be willing to build some research capacity in an independent, objective way that we could ensure the kind of research that we need to make before business decisions were being made. So we have entered into an agreement with two of the institutions to deliver specific research on our behalf . . .
MS. WHALEN: Can you tell us them today?
MS. MULLALLY: Certainly, I'd be happy to. Firstly, Saint Mary's University, under the auspices of Dr. John McMullen, who is becoming an expert in the area of research on problem gambling and responsible gambling, we now have him. And to a question that was asked earlier and I didn't get an opportunity to reference it, he's undergoing a research project on advertising - to Mr. Glavine's question - because we're interested too. We want to understand what the impact is of advertising on our players
[Page 32]
and are we following the right standards. The other one is Mount Saint Vincent University . . .
MS. WHALEN: Sorry, my time is short.
MS. MULLALLY: Sorry, my apology. Mount Saint Vincent University has also put forward an excellent proposal and they're doing, very independently, research particularly focused on the youth and have a better understanding of gambling activity within that group of players.
MS. WHALEN: That's very interesting, thank you. Following up on the idea of youth, I know there's quite a bit of information that has been provided, but I would like to know something about the gambling habits of seniors. I understand that seniors are a large part of the people who do come to the casinos and look for social interaction, I believe, in terms of seeking out gambling places. So is there research showing that our seniors are at great risk?
MS. MULLALLY: The 2003 prevalence study did not indicate that. It noted that age demographic was at no greater risk of experiencing problem than the other demographics.
MS. WHALEN: My worry would be that there is a lot of isolation among our seniors and not enough programs and activities that are provided, and I believe they're somewhat drawn to places like the casino, especially with special promotions and special days where seniors are encouraged to come. So I just flag that as a concern. I think that you would want to keep cutting edge, so you'll be looking at that.
I wanted to ask you about the training in the casinos, and it follows a report that the Ombudsman had written a letter on behalf of a problem gambler who had complained about not being barred from the Sydney casino. I'm just wondering, that news story that I have is November 29, 2006, so my question would be, have you addressed it or examined it, and are there any improvements that have been made?
MS. MULLALLY: Well, I obviously can't speak to that letter and, as you know, the information around it. The actual investigation or evaluation, or whatever they are conducting, has not yet been completed, so I'm not privy to any information. What I can tell you is that responsible gambling is a high priority at the casino. To your point, we have to ensure responsible gambling messages and information are readily available for all players regardless of age and demographic. So since 1995, Casino Nova Scotia, our casino operator, has been constantly updating its responsible gambling training and to reflect industry best practices. I think they've clearly demonstrated a commitment to responsible gambling by expanding their training program, but also with the creation of the Responsible Gambling Resource Centres.
[Page 33]
MS. WHALEN: Could I interrupt you with that. If you wouldn't mind, I'm going to go to something else, because you haven't really got the answer on this letter right now, today, as you said, it's premature.
MS. MULLALLY: Well, obviously not, because I don't have access to that.
MS. WHALEN: I just have other questions, so I'll go to another one, thank you. Again, if I could, I wanted to know with this increased research capacity and with the initial statements that we are a leader in responsible gambling in the world, it would seem, is there any revenue to be made by our province and by the Gaming Corporation by sharing this information worldwide?
MS. MULLALLY: I think we should look at that. I mean, we want to benefit Nova Scotians as much as possible. One of the things is our Internet gambling blocking software pilot that we introduced in the Fall. We're offering that product to families with children under 18. We're testing it to see what impact it is helping to block Internet gambling sites as well as any information associated with them, and that is something that, if successful, maybe there's an opportunity to market that product to other jurisdictions so that we do create a greater benefit to Nova Scotians and, plus, get the benefit of this concept here.
MS. WHALEN: I think we should do that and any other of your ideas and processes that we can commercialize because, in fact, we're a very small jurisdiction to be leading the way. It's great, I love to see us at the top of the list instead of the bottom and the followers but, at the same time, we should be capitalizing on it. I wanted to know about the ownership of the VLTs that are used throughout the province. At one time we did own all the machines. Do we continue to own them or are we leasing them?
MS. MULLALLY: We own them.
MS. WHALEN: We have never looked at leasing those machines?
MS. MULLALLY: They are not in the form of a lease. If they are a lease, they are a capital lease. So it reflects basically full ownership by the Gaming Corporation. We have looked at - there are options in some American states whereby they've done leasing arrangements with a revenue provision, a revenue sharing provision. We've looked at that, but at this juncture it hasn't proven to be something that's probably in the best interest of the province in terms of ensuring what the costs will be and ensuring what is coming back to the province. So a more stable model, to date, has been the leasing model, capital lease, but we're always looking for opportunities to improve that.
MADAM CHAIR: Order, please. The time has expired now for the Liberal caucus.
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I recognize Mr. Porter for the PC caucus. You have until 10:49 a.m.
MR. CHUCK PORTER: Thank you, Madam Chair, just a couple of questions. I saw on the news recently that six people have launched a complaint with the federal Competition Bureau saying that VLTs are designed to entice gamblers to spend, not to gamble responsibly. In a recent article here, Debbie Langille, a Halifax resident, describing gambling claims: One example of an unfair trade practice is that software in the machines often produce near-misses, enticing a gambler to try just one more time. Can you comment on that?
MS. MULLALLY: Certainly. The concept of near-misses is something we have looked at and is part of the gaming strategy development. It was an area that I was particularly interested in, because the last thing we want to do is leave a perception with a player that they can do something to control the outcome of the play.
We went to our manufacturers, our operator, and said, is there a way to modify it so that's a provision? A lot of analyses were conducted at the time and the conclusion was that removing the near-miss basically removes the randomness of the game. So the risk is that you're creating something that causes a non-random activity.
Having said all that, I think we always need to be looking for ways to improve the business line, ways to improve our responsible gambling. Is there a way we can dispel that myth associated with the chance of winning being somehow higher when this occurs on the screen? So we're constantly looking for that. Our goal here is to make sure people are educated about how the games work.
So as I note in the Responsible Gambling Resource Centre, we have a slot tutorial that tells players how the games work, but tell the odds of winning and dispel some of the myths that this near-miss is somehow going to cause you to win the next time. This information is also provided in a number of brochures that we have at all our VLT sites, which we call the play-by-play program. Again, a place where we're trying to dispel myths.
In addition, all our machines and the games are rigorously tested by our operator, Atlantic Lottery Corporation, as well as by independent testers to ensure the randomness of the games, to ensure they're meeting the regulatory standards and product specifications that are required.
Our job and our goal is always to have the highest standard of security and integrity of our games and products. We're constantly monitoring it, that's part of our job to do that. We are interested in looking at any new information that's available that we should consider as we look at our products.
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MR. PORTER: Do we know of all the studies, analyses and so on that have been done, what percentage of players may play these machines mentally thinking, I'm going to win today? Like, they keep seeing this coming and they're pulling the button or whatever it is they do. I'm not a player, as you can tell, but pushing the right buttons and the wheels roll, or whatever it does. Do we have any idea what the percentage is? Is it the majority of people who walk into a casino, for example, who say, I think I'm going to win today, the machine's hot, et cetera?
MS. MULLALLY: What we do know is the majority of players play responsibly. Over 90 per cent of the people who play - ticket lottery, video lottery or casino - play responsibly and they have no problem with it. There are certainly myths out there about the ability to control the hot versus the cold machine is another common myth. Our job, although I can quantify exactly how many players who come in have that view, our job is to really educate and dispel those myths. We use every means available to us to communicate messages that we can create more informed players.
That's what our public education and awareness programs are all about, that's what our player programs, education programs are about - it's about getting good, relevant information to them so they make better decisions, so they're not going to believe they can somehow control the outcome of the game. We believe that's one of our responsibilities to help improve and dispel that belief that somehow today's going to be my lucky day. Well, if it is, it is a lucky day, it has nothing to do with what you did.
MR. PORTER: Okay. Do we know what the average player spends? If they come into the Halifax Casino today, just as an example, what's the average dollar that's dropped?
MS. MULLALLY: I don't have those specific figures here with me, but I would be happy to provide them. We do those kinds of analyses. I can tell you - oh, sorry, on the casino player, I do have that information. It's approximately $50 per visit that is spent at the casino. The other products are different and I have that information available if you're interested.
MR. PORTER: So the people who come in today will drop $50, on average, to play, or this evening, for example. Do we know what the percentage of winners are? If 1,000 people came into the casinos between Halifax and Sydney today, is there something out there that says maybe 25 per cent of them will walk away - call it winners, call it break-even, call it come out ahead, at least not losers?
MS. MULLALLY: The information is not tracked by individuals, nor is it in any of the jurisdictions. We do know what the payout percentage is on our machines, something that is, again, rigorously tested and assessed by the regulator of the province, the Alcohol and Gaming Division. The slots basically pay out at 92 per cent, so if you're
[Page 36]
not familiar with the games, if people wager, 92 per cent of the wagering amount is won in prizes.
Table games are slightly lower - they are somewhere in the 80 per cent range, depending on the nature of the game it can vary. So we don't know specifically how many are winning and how many are leaving having spent all their entertainment dollar, but what we do know is that the payout percentages and the fairness associated with them are very strongly evaluated and tested regularly by the regulator.
[10:45 a.m.]
MR. PORTER: I just want to make sure that I have it right - 92 per cent, I'm not sure I really understood, sorry for that, a 92 per cent win?
MS. MULLALLY: No, it's not by individuals. If someone wagers or decides to bet a certain amount on a machine, so the total amount that people wager or bet, it's a percentage of that total amount they bet that reflects the payout percentage.
MR. PORTER: Okay, thank you for that clarification. I do know, in the casinos at least that I have visited, there is a - I don't want to call it a special area, a special room, but there are higher stakes tables available, or whatever kind of game you have. What is the percentage of players who actually come into the casinos and play on the higher stakes as opposed to the average quarter or dollar or whatever the machines hold?
MS. MULLALLY: It varies, depending on the time of year. In the peak season, which is in the summer months and the early part of the Fall, we can average approximately 20 per cent of the players are playing in that room. In the off-season, which is generally in the later Fall, winter, early Spring, you might see approximately 10 per cent of the players playing in that room.
MR. PORTER: Any reason for that?
MS. MULLALLY: It just depends on what type of product people want to play. As you noted in the high-limit room - as it is referred to - there are largely higher-denomination slot machines, so they might be $5, $10, and then on the floor you'll find quarter slot machines. So it just depends on the interests and type of product that the players want to play - it also depends on what kind of experience they're looking for. If people are there for entertainment and they just want to enjoy playing the products for a couple of hours, enjoy the amenities, the restaurants and the shows and the entertainment, then it's a different experience - so it depends on what the player is looking for when they come to the facility.
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MR. PORTER: Have you any idea how many return visitors - that may be a good way to put it - compared to maybe a guy like myself who might walk in once a year or once every two or three years just for a visit and to look around at the amazement of it all? Is there a number of what you consider to be regular players?
MS. MULLALLY: Yes, the casino operator, Casino Nova Scotia, would track an aggregate level and categorize players into your more infrequent players, your regular local players to your tourist players. I don't have those specific numbers available, but I would be happy to get them from the casino operator who does do that type of analysis on a regular basis.
MR. PORTER: You talked about a variety of information that is provided through many avenues for the players, has there ever been a thought that we should put a sign on this slot machine that says your chances of winning are - not to deter, but information right on the machine - for more information on this game, press one, or press this button or something, and the other information you're talking about is readily available right at the machine?
MS. MULLALLY: Well, absolutely, and you know we're always looking for the ability, from a technology or physical space ability, to get as much information as you can without creating so much information that they can't see anything. So one of the things we focus on with the slot machines is ensuring that the Problem Gambling Help Line is readily available. So that information is there.
The odds of winning, we try to provide through different means so that people have that information. We have brochures that are available and they are on the floor, that has that kind of information, as well as it being available in the Responsible Gambling Resource Centre. So I agree completely in your principle of ensuring as much good information is provided the players so they can make informed decisions, and those odds, I think, are an important piece of information. So we always look for the opportunity to do that in a way that's going to be useful and help the player.
MADAM CHAIR: Thank you very much. The time for questioning has now expired. I'd like to thank the witnesses who are here and give you an opportunity to make some concluding remarks, if you wish. Mr. O'Connor.
MR. O'CONNOR: I'd just like to comment on one item, which is the Internet, because I wouldn't want members of the committee to have an impression that we think the Internet is bad or anything like that. It certainly isn't. It's an incredibly effective delivery tool for products and we sell lottery tickets on the Internet today, through PlaySphere. The problem is the proliferation of poker, casino games and sports betting, which is huge and growing exponentially. That causes a variety of problems for the province. The fact that it is illegal is one, but the issue is leakage of revenue, which is
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certainly not significant today but is growing, and I think anybody who understands technology would appreciate it is going to grow more.
The second problem is, none of those sites have responsible gaming messages. None of them have linkages to help lines. I would suspect that very few have programs to stop, effectively, underage play. So that's the issue that we have on the Internet, and I just wanted to make sure we clarified that we don't think the Internet is a bad thing, it's just some of the play that's occurring today is something that we have a concern over. So I wanted to make that clarification. Marie, did you want to add anything?
MADAM CHAIR: Ms. Mullally.
MS. MULLALLY: Thank you. I just would like to answer one question that was asked by Ms. Whalen and then my concluding remarks. To the question on the Other Revenue, I do have that information. The Other Revenue in 2005-06 included the revenue associated with a charity-linked bingo game that is now being offered in charity bingo halls across the province, and the chair referenced it in his opening remarks. There was approximately $300,000 in the 2005-06 figure that wouldn't have been in the 2004-05, because the game didn't exist until the 2005-06 fiscal year. So that explains the variance between the two fiscal years and the Other Revenue.
I don't have any particular comments other than to thank the committee very much for this opportunity and for the very insightful and thoughtful questions and the comments that you bring forward about the gaming industry. I want you to know that we listened very carefully. We appreciate your comments very much and you can be assured that we consider those very carefully as we continue to play a steward role for the province in the gaming industry. So I want to thank you very much again and I look forward to a future opportunity to speak with you.
MADAM CHAIR: Thank you very much and on behalf of the committee, I would like to thank both of you, of course, but in particular, Mr. O'Connor, thank you for being here today and in the past and for your public service to the Province of Nova Scotia. I'm sure we all wish you well in your future endeavors. Thank you.
We now have another item of business on our agenda, which is the report of the subcommittee, which you have in front of you. The subcommittee met at 8:30 a.m. and discussed future witnesses. You will see in the report that we are asking for your approval to proceed with witnesses from Service Nova Scotia and Municipal Relations with respect to petroleum pricing, the Department of Finance on the fiscal imbalance, and the Office of OED and the Department of Transportation and Public Works with respect to the leasing of vehicles. In addition, there was the motion with respect to asking Heather Foley Melvin to return to the committee to answer questions that had not been answered previously.
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So the report is here. I would ask a member of the subcommittee to move this report.
MR. KEITH COLWELL: I so move.
MADAM CHAIR: Thank you. The floor is now open for discussion on the report. Mr. Steele.
MR. STEELE: Thank you, Madam Chair. I wonder if we could do something which we've done before and that is to divide this up into pieces. The recommendation of the subcommittee regarding potential witnesses, I think, is uncontroversial; the other motion is. I wonder if we could vote on those two items separately.
MADAM CHAIR: I agree. I was thinking that probably we should do this in two steps. So first of all, can we vote on the recommendations for future witnesses? Is there further discussion on that?
Would all those in favour of the motion please say Aye. Contrary minded, Nay.
The motion is carried.
The witnesses have been approved. Now, with respect to the motion as amended in front of us. Is there any discussion on this?
MR. STEELE: Madam Chair, the Public Accounts Committees have a long history in the parliamentary form of governments. It's one of the few formal methods by which the Legislature can hold the government to account not for what it's about to do, but what it has done. I believe very firmly that this committee should jealously guard its powers and authorities, rely on the good sense of members, and this motion before us today, rather than doing that, imposes restrictions in advance on what members can do if Ms. Foley Melvin should agree to appear before us again.
The motion says that Ms. Foley Melvin will be invited to appear, but no member of the committee will be permitted to put a question to her. I'm flabbergasted that members of the committee would actually impose such a restriction, not only on themselves, but on all members of the committee.
I can understand, I think, why the members of the Progressive Conservative caucus want to propose this. What I do not understand is why the members of the Liberal caucus would support it. I cannot support any motion that puts that kind of restriction on members of the committee.
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What we should do is bring Ms. Foley Melvin in again, put the questions to her, and then decide what to do with those questions. But to say in advance not only is no member permitted to ask her a question, but we will allow Mazda Canada to decide what information we receive, I think, is the depths of absurdity.
MADAM CHAIR: Thank you. In fairness to our colleague, Mr. Colwell, I think perhaps this was what you were trying to get at, and I wasn't, as the Chair, understanding what it was you were saying. This is an opportunity for you to clarify that.
MR. COLWELL: Yes, in the amendment that I moved, it's difficult to impose upon a private company what we would like to hear, from the committee. We had a long discussion on another topic with the Chair in our subcommittee meeting. I think it's important that Ms. Foley Melvin disclose her salary, with her former employer. Whether that's made public or not I think would be dependent upon what arrangements she had with the company that she worked for before.
There may be reasons - I wouldn't know what they would be, of course, the company has some issues with that, maybe some internal issues within the company. Whatever the case may be, I don't know. I would like to see that documentation, and if she can't provide that kind of documentation, I think this would totally be made public. I would like to see the whole thing made public, but in respect for private business in the province, which we definitely don't want to harm in any way, this is in no way to protect Ms. Foley Melvin on this issue, but really just to have some consideration for the company.
I haven't seen - I don't know if there's any document like that. It just may be that she can't provide something that was in place at the time - I stress, in place at the time when she left the employment, not some letter she's going to come up with today or tomorrow, but some document that may be in place. If there's no document in place, I'll be insisting, as our caucus will be insisting, that the whole thing be made public and the meeting be public.
MADAM CHAIR: Thank you. I think this motion has three components. It has the question about salary with her previous employer being dealt with in camera or in the public domain. It has the question with respect to no questions being put, no additional questions or no questions at all being put when she appears in front of us. It also has the piece about this appearance will be the last time. I know, Mr. Colwell, that's what you were also discussing in the subcommittee, does this mean that if in the event that Ms. Foley Melvin didn't answer questions to the satisfaction of members of the committee, this is the end of the line for the committee? It was my thinking that it wouldn't be, but this motion, as I see it here in front of us, contradicts that understanding, I think. So we need to get some clarification around what members of the committee want with respect to Ms. Foley Melvin coming in front of us again.
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Mr. Colwell and then Mr. Porter.
MR. COLWELL: Yes, thank you, Madam Chair. Again, as I said in the subcommittee, we can't restrict ourselves. If Ms. Foley Melvin comes here and doesn't answer the questions, we definitely want recourse. We want to be able to move forward and maybe at that time move Mr. Steele's initial motion forward again to make sure that this doesn't restrict what the committee can get.
[11:00 a.m.]
I think I understand the interpretation of Mr. Porter when he moved this - I would like to hear from him in more detail on this - but I don't want to see this motion in any way restrict what the committee is going to get now or in the future from Ms. Foley Melvin or anyone else, because I believe that as committee members we have the right to have this information, as does the public of Nova Scotia.
MADAM CHAIR: Mr. Porter.
MR. PORTER: Thank you, Madam Chair, and just to clarify a couple points, one Mr. Steele raised where he was very adamant in previous discussions within this committee and outside of this committee that there were two issues and he focused on these two issues, hence the reason I brought these two issues into this motion. They seem to be sticking points and needed some clarification, and I'm suggesting that clarification comes forward by way of inviting Ms. Foley Melvin back to this committee and that is simply that. I hope that she will come back and do exactly that and that will answer the questions, and that should alleviate perhaps the motion that Mr. Steele previously put forward.
To Mr. Colwell's point, I agree, if at that time the committee is not happy, perhaps then we need to move in a different direction. I'm not suggesting that we don't do that if we're not happy, that's totally up to this committee and the opinion of this committee. This motion is simply meant to speak to those two points that Mr. Steele made very clear on many opportunities that he has had to do that and nothing more and that once these two are done, she has come in, and just to add to that I guess, to close it, she has come in, she has appeared before this committee and questions were asked.
There were a couple of questions that perhaps in the thought of some were not answered fully. This is an opportunity for Ms. Foley Melvin to come back, complete the answers to those questions, to what will hopefully be satisfactory to this committee, and that should be as far as I'm concerned no different than any other witnesses who come forward, from what I've seen so far - we thank them very much, we move on, and that's what I'm proposing in this motion.
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MADAM CHAIR: Is there any further discussion?
MR. STEELE: Yes. The difficulty I have is this idea that members will not be permitted to put questions to her, because Mr. Porter is referring to specific questions that she didn't answer. However, if she had answered those questions on the day she was here, then I would have pursued that line of questioning, but because she put up the brick wall I wasn't able to pursue it. So to say now we're going to look at the transcript and simply put to her the two very precise questions that she refused to answer that day, it kind of misses the point about a line of questioning and essentially, if members aren't allowed to put questions to her and Ms. Foley Melvin comes here, she makes a statement really and then she leaves because we're not allowed to delve into ambiguity, anything she leaves untouched, any issues that arise from what she says - nor would I be permitted to pursue the line of questioning.
I still think that's absurd, and not only that, but for the motion to say that this is the last time we're going to hear from her, she's going to come here, make a statement and walk out and that's it, I just think why would a Public Accounts Committee of the Legislature impose those kinds of restrictions on itself? Therefore, I would like to move an amendment to the motion on the floor. I would like to move that the last sentence be struck out - that is the sentence making the statement, "Having already made a lengthy appearance before this committee, Ms. Heather Foley Melvin will not take questions and her appearance would be the last time the committee hears from Heather Foley Melvin on this matter." I propose that that be struck out.
MADAM CHAIR: There's an amendment to the motion. Is there discussion on that?
MR. COLWELL: It was my personal interpretation, when we were talking about this earlier today, that we would be able to ask questions of Ms. Foley Melvin around those questions she didn't answer. That was my interpretation of what was put forward. Now if that was incorrect, I apologize for that. It wouldn't make any sense, as Mr. Steele has said, if she comes in and makes a statement and disappears. That's not the intent of this committee. I'll be supporting, and our caucus will be supporting, Mr. Steele's amendment.
MADAM CHAIR: Further discussion on the amendment? Hearing none. The question has been called on the amendment, which is to strike that last sentence on the main motion, "Having already made a lengthy appearance before this committee, Ms. Heather Foley Melvin will not take questions and her appearance would be the last time the committee hears from Heather Foley Melvin on this matter." So, those two sentences would be struck from the amendment.
Mr. Porter.
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MR. PORTER: I did have a comment, before you move on that, with regard to this amendment. This motion says, on this matter. That is clearly on this matter. We all had our share of time during that period when she appeared. How does that make her different than another witness who comes in? Perhaps, if you're suggesting that she's requested to come back on another matter - I'm not suggesting that Ms. Foley Melvin would not appear in front of this committee ever again and address questions on whatever the topic may be, I'm suggesting on this matter, this is finalizing that matter.
I don't see Mr. Steele's point. He had ample opportunity, as did the Liberal caucus, as did this caucus to ask questions when she was here on that visit, as a witness. So I don't see the relevance in scratching the last sentence. This is trying to finalize the issue brought forward.
MADAM CHAIR: Mr. Glavine.
MR. GLAVINE: Madam Chair, I certainly want to go on the record, and, as well, take the position with my colleague, Mr. McNeil. Both of us were involved with the questioning when Ms. Foley Melvin was here. There is no question that we could have made much more progress, asked many more questions, and got the kind of detail that Nova Scotians want clarity on, on this issue. We cannot have her come back without the freedom to ask a full number of questions, with all the kind of detail that should be the expectation of this House. I think it's very important to say that. We were stymied by her first appearance, and never made the progress that this committee should be making on a matter as serious and as sensitive to Nova Scotians as this is.
MADAM CHAIR: We have an amendment being proposed. There's a motion amending this motion. The question actually had been called, but we had additional interventions.
Would all those in favour of the amendment please say Aye. Contrary minded, Nay.
The amendment is carried.
Now we will vote on the motion as amended, and the additional amendment, which is here, with respect to the salary issue. Is there further discussion with respect to this motion?
Mr. Steele.
MR. STEELE: Very briefly, Madam Chair, I want to make it clear that if this motion passes that it does not mean and should not be interpreted to mean that members of the committee are entitled to ask Ms. Foley Melvin only two questions. I want to make
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it clear that, as I understand this motion, it may restrict members to two topics, namely the meeting with the Premier and her private sector salary, but I certainly wouldn't want to show up that day and be told that I'm only entitled to ask her two questions.
I do think it is appropriate that Ms. Foley Melvin be invited to appear again before the committee. It is a significant thing to have someone cited for contempt of the House, and we should do everything we can to avoid that. If one of the ways of avoiding that is to invite her to appear again, then so be it, but without any restrictions on pursuing a particular line of questioning.
I also have to say that I just don't agree with the idea that Mazda Canada can dictate to us what should or should not be determined in camera. This committee should decide what information it needs and then make its own decision about whether to hold that in confidence or not. The idea of allowing Mazda Canada to tell us whether to hold a meeting in camera or not I think is just a little silly.
MADAM CHAIR: Mr. Colwell.
MR. COLWELL: I disagree with Mr. Steele on the issue of Mazda Canada, because we are, by this amendment that I put forward earlier, going to make that determination at that time, depending on the documentation that is brought to the full committee, and I would assume that that information would be brought in camera and the committee could make a decision at that point by the amendment that I did make whether or not that information will be made public.
So I think that we are saying the same thing, but I think we owe it to anybody, any company in this province, as we did when we were looking at the issues with Magic Valley and S&J Potato Farms, we did the same thing. We had the opportunity of giving the companies a heads-up on what we were going to ask and what the process was, and I think we have to follow that through, as has been a policy of this committee, and this amendment clearly lays it out. If Mr. Steele thinks anything else, I think he should reconsider. I think we are going after exactly the same thing in a different way.
MADAM CHAIR: I would like to say, I think members would acknowledge that as Chair, I try to be fairly flexible, as flexible as I can in allowing questioning to be determined by the members and in what their roles are and what they see as appropriate. I would say that I would give very broad scope to the questioning and in the spirit of what it is that we are doing, and not be bound by the literal interpretation of certain words in a motion. So that is the first thing I would say.
The other thing is that I think that I am clear that what we are looking for in terms of documentation respecting the salary issue is documentation that exists prior for non-disclosure, prior to Ms. Foley Melvin's employment with the Province of Nova Scotia,
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or a prior concern that was raised - documentation. We will be very specific, the clerk in making the arrangements will be very specific in terms of what it is we are looking for, and then we'll have to see what we get back. If it meets that test, then we will proceed accordingly, but if it doesn't meet that test, then we will also proceed accordingly, if you understand what I'm saying. So if there is a prior non-disclosure agreement, then we'll have to discuss that and decide whether or not we are prepared to breach that in some way, or not. That will be up to the members of the committee to decide.
So we have a motion on the floor. We've had some discussion. I don't know if there's any further discussion or not. This is an opportunity for that if there are people who do want to speak. Hearing none, I'm going to put the question:
Would all those in favour of the motion and the amendment please say Aye. Contrary minded, Nay.
The motion is carried.
Mr. Steele.
MR. STEELE: Yes, Madam Chair, one last item. My motion was deferred last week by the full committee, to this meeting ,and personally I think it is still a live item. We know, we have been advised by Legislative Counsel that really the only effective way of having the House deal with this issue is by raising a point of privilege in the House, which is no longer possible because the House has risen, but nevertheless, I believe my motion should continue on track. The fact that we're going to invite Ms. Foley Melvin again should not derail that particular motion. After her appearance, we can perhaps withdraw the motion. My motion was deferred for one week, and I would like it to be voted on again today, please.
MADAM CHAIR: Voted on today. I think we have that motion; it has been circulated with the letter. So I would ask members to look at the motion - Mr. Steele's document. It was circulated with the letter from Ms. Foley Melvin. Is there discussion on the motion?
Mr. Colwell.
MR. COLWELL: I just want to be clear, I don't disagree with keeping this very active, and I did bring this up in the subcommittee, as you're well aware. But, is it relevant to vote on it today? After we hear from Ms. Foley Melvin, it will still be active. It can't go to the Legislature until the Legislature reconvenes. I don't want this to die, unless the committee decides it's going to die because they have enough information from Ms. Foley Melvin. It's sort of - what are we voting on today? Until we know what answers she gives us, if we're happy with the answers or the process, the answers we
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may not be happy with, needless to say, but the process, as it goes forward, what are we doing with voting on this today?
I want to make that clear, because if she does come in and answers all the questions that the committee members have, which, hopefully, she will do - and who knows? - then, is this a moot point at that point, and if she doesn't answer it, this definitely has to move forward. There's no question about that. What are we voting on today?
MR. STEELE: We're voting on the motion as it's worded. Right now, as we sit here today, we have a member who has refused to answer the committee's questions. All we've done today is agree to ask Ms. Foley Melvin if she'll appear again. We don't know if she'll agree. We don't know, if she does agree, when she'll appear; if she does appear, we don't know what she's going to say. In no sense should this motion be treated as an alternative to the other motion from today. They can run on parallel tracks, and in my view they should run on parallel tracks until Ms. Foley Melvin actually, in fact, does something to cause us to withdraw it.
Right now, it's pure speculation about what she may or may not do or say in the future. So we have to continue on with this motion. That's why I want to make sure it's dealt with in one way or another today.
MADAM CHAIR: Is there further discussion on the motion?
Ms. Whalen.
MS. WHALEN: If I could, I do feel - I've sort of reviewed the letter, as well, that has come from Heather Foley Melvin, last week. I think if she agrees to come here and answer our questions that we have a choice: we can pass the motion that Mr. Steele has put on the table, which is a very threatening motion to her, and do that in advance of asking her to come back and please speak to us, or we can keep it alive, keep it there, ready to move on it if she disappoints us in her being frank and transparent and open in her answers. I would prefer to try to go forward in a less threatening manner, not to say that we weren't disappointed in the original appearance before this committee, because we were.
To me, it accomplishes the same thing. She knows the motion is alive and before the committee, it simply hasn't been passed. I think we're trying to ask her to come here and be accountable and talk to us about her role and the work of Conserve Nova Scotia. I think we accomplish the same thing either way, and I would prefer to ask her back with a less confrontational approach.
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MADAM CHAIR: The Chair is open to a motion to defer this motion until a future date, if somebody would like to make that.
Mr. Porter, you're making that motion?
MR. PORTER: I move that this motion be deferred until a future date, when we see whether or not Ms. Foley Melvin, as requested by the previous motion, appears before this committee.
MADAM CHAIR: I'm not sure if that requires a vote. Yes, it does.
Would all those in favour of the motion to defer, please say Aye. Contrary minded, Nay.
The motion is carried.
We will defer this. The motion is still alive, but we will see if we need it.
The committee now stands adjourned.
[The committee adjourned at 11:18 a.m.]
