STANDING COMMITTEE ON PUBLIC ACCOUNTS
Mr. Russell MacKinnon
MR. CHAIRMAN: Ladies and gentlemen, welcome to today's Public Accounts meeting. Today we have, on our agenda, snow and ice control audit review. With us we have from the Department of Transportation and Public Works, the Executive Director of Operations, Mr. Martin Delaney. Mr. Delaney, the form is, generally, we allow our witness to make any opening remarks for 5 or 10 minutes if he or she so wishes and then caucus by caucus we will enter into a question and answer session. Unless any members have any interventions at this point, we will allow Mr. Delaney to proceed.
MR. MARTIN DELANEY: I hadn't really planned any opening remarks. Perhaps if we start with the questioning and if it is appropriate at some time for me to go further into the answers to explain our position, I would certainly be prepared to do that.
MR. CHAIRMAN: Sure. I believe, given the nature of the issues that we have at hand here, that would be most appropriate. Starting off, I will recognize the NDP caucus and, for Mr. Delaney's benefit, I believe Mr. Delaney knows most members of the committee here. To our extreme left we have Mr. Darrell Dexter and Mr. John Holm from the NDP caucus.
The honourable member for Sackville-Cobequid.
MR. JOHN HOLM: Welcome, Mr. Delaney. I just have a few questions, if I might, starting off. Maybe I will have some more later on. I want to touch first of all on the issue of private roads that the department maintains and certainly there have been a number of roads that the department - historically private roads - that it has plowed, not necessarily done the maintenance on in the summertime, or if they did it was minimal, but they would plow them during the summer. That policy, or practice, is coming to an end. I am wondering, first of all, if you could tell us, though, how many kilometres across the province that the department is currently plowing and maintaining that would be classified as private roads?
MR. DELANEY: My understanding is that the number is approximately 92 kilometres. I could give you the exact kilometres at a different date.
MR. HOLM: No, 92 is close enough for me anyway, that is for sure. In terms of those particular roads, are they concentrated in particular areas or are they spread right across the province? Are they like 0.25 kilometre stretch of road here and a 0.25 kilometre stretch somewhere else?
MR. DELANEY: They are spread across the province. They tend to be very short lanes and roadways. Many of them would have qualified under what we used to call the old three-house policy. Indeed, I believe some of them were sort of receiving maintenance as a precursor to takeover and the takeover never actually materialized for one reason or another, either the right of way wasn't available or the final decision wasn't made. They tend to be very short sections of road.
MR. HOLM: Of those 92 kilometres, the number of roads - and I don't know what total number of roads there are - but of those particular roads, are any of them roads that have, let's say since the service exchange, are any of those new roads that have been taken over and started to be serviced by the department.
MR. DELANEY: I would say not, that that list has been around for a good number of years and to the best of my knowledge, private roads haven't been added to that in perhaps 10 years, maybe the last 15 years. There may be exceptions to that but I think by and large the policy has been to continue maintenance to roads that we had historically been providing plowing and generally that maintenance is that they are at the bottom of the plow list so after everything else is cleaned up, they are to be plowed.
As a general rule, we don't do much in the way of summer maintenance with the exception of what minimally we have to do in order to insure that our plows can safely plow them. In other words, if there are rocks sticking out of the road or what have you, then we may have to put a bit of gravel on. Over the years some municipal units, quite frankly, have upgraded some of the roads in terms of supplying a bit of gravel, or residents groups.
MR. HOLM: That certainly is my memory when the department was responsible for the few private roads in my community. Is there a policy of the department with regard to private roads? I understand there may have been a draft policy but is there a firm policy now that lays out what conditions have to be met or spells out quite clearly that no new private roads will be - I shouldn't say taken over because if they bring them up to standards then they could be taken over - be added to the list for plowing and/or maintenance?
MR. DELANEY: I don't believe there is a formal policy document as such. It certainly has been a long-term policy, as I referred to before, not to commence maintenance on any new private roads or to add to the existing historical list. The other general policy, and
it is probably in a written memo somewhere, but I can't refer to it right off, is that the maintenance carried out will be minimal and that the level of service will be at the lower end, if you wish, of the service level. In other words, if you live on a private road that happens to be on our historical list, your service will be after the public roads in the area are taken care of.
MR. HOLM: I have no interest, as I make this comment, to try to undo history and I certainly I am not at this point making any suggestions that those which are private roads and have been historically for many years, that there should be a change with respect to the residents on those particular streets. However, for a variety of reasons, sometimes things have come about and politics is one of those factors that sometimes has had an influence on why things happen. Certainly the Department of Transportation and Public Works hasn't been immune over the years from political interference. Therefore, there could be pressures of one sort or another placed upon a department, now or in the future, to start to maintain another private road. Without any kind of a formalized policy, it makes if more difficult for the department to resist certain kinds of pressures when they can be brought to bear. I guess my question is, why hasn't a formalized policy been adopted and is the department going to - I mean if we have a draft one, what is holding it up from that draft becoming a formal policy?
MR. DELANEY: In answer to that question, I guess perhaps I would refer in the reverse. We have no policy that permits us to take over the maintenance on private roads and as such we have not been doing so. Now obviously that, for one reason or another, didn't always apply in the past but certainly in the last number of years that I have been involved in maintenance and I can perhaps speak to one exception that I personally can recall, but in the past number of years, I can't recall adding private roads to the list of roads receiving maintenance. The one exception that I can recall from my personal experience was some private roads in the Eastern Passage area that the municipality actually had serviced some years earlier, so they had at least water - I believe water and sewer as I recall - but they were not public roads owned and maintained by the Department of Transportation and Communications at the time. There was pressure for some time to provide maintenance to those roads, which was resisted for some period of time.
At one point there was representation from the municipality. I think the municipality essentially, at that time, made the argument that they were allowing development on those roads, although they were private roads they were allowing subdivision on them. People on them were paying utility taxes and what have you, so the municipality asked us to take over maintenance of them, and we - meaning the department - agreed to do that, but it was with an agreement with the municipality relative to what would be required for future listing, who would be responsible to pay for the upgrading costs, which would be the municipality and what have you. That is the only issue that I can recall in my experience.
MR. HOLM: I am just using your own example, before I get off this topic, was that road, or roads, brought up to public road standards and transferred to the Department of Transportation to turn into a public road, or did it remain as a private road?
MR. DELANEY: No, they were not brought up to standard. They were a group of roads that were already covered by an agreement between the province and the municipality that allowed subdivision on them because, at that time, subdivision wasn't permitted on private roads.
MR. HOLM: But subdivisions right now are permitted on some private roads.
MR. DELANEY: On certain private roads.
MR. HOLM: So what would prevent that same kind of situation from happening now in a municipality? Municipalities can, of course, put pressure on the Department of Transportation to start to plow and maintain a road that they themselves have permitted the private development to develop on. Having said that, I go back to the point that you said we don't have a policy that says we don't, but we don't have a policy that says that we do. We know that the fact there hasn't been a policy saying that we will maintain and plow private roads, in the past that hasn't stopped some pressures and in fact some agreement for the department in years gone by to do that.
I don't understand why the department won't go the next logical step and actually formalize the policy. That is not saying excluding totally, but stating quite clearly under what conditions and how that would be done.
MR. DELANEY: I wouldn't argue that our policy could be enlarged on that, Mr. Holm.
MR. HOLM: The next thing I just want to touch on - and it certainly has gotten some attention lately - and that is salt hauling. The department would have, I would suspect, a contract with a supplier for diesel fuel and buys in volume? Do you know the price that the department, give or take a cent or two, would be paying for diesel fuel today?
MR. DELANEY: No, I don't.
MR. HOLM: Is it considerably lower than the regular commercial retail rate that is available?
MR. DELANEY: I would expect it is.
MR. HOLM: You would expect it is, and I don't have the figures on top of my head but I know that if you compare rates that even large municipalities get when they buy furnace oil and these kinds of things, it is substantially less than the commercial rate, maybe close even to half the rate. Certainly independent truckers in this province have been having a very hard time as a result of the increased diesel costs, not all related to the price of crude, as we found out again yesterday.
My question is, has there been any consideration by the department to make available to those who are contracted to deliver salt to them? Is there anything that would preclude the department, if it so chose to sell to those haulers fuel at the rate that they themselves are paying for it? Maybe it could be adjusted slightly to cover any handling costs that the department might have.
MR. DELANEY: That is a matter that I haven't specifically reviewed to determine whether it is even possible, in answer to your question.
MR. HOLM: So the department, even as a result of the discussions that were going on yesterday, I don't know what is happening today, but the discussions that have been ongoing, the department hasn't looked at what the cost implications of that would be?
MR. DELANEY: Could you repeat your question?
MR. HOLM: The department hasn't looked at what the cost implications would be if they were making it possible for the independents to purchase their diesel fuel through the department's depot?
MR. DELANEY: No. I would suggest that we have not looked at that matter, certainly in any detail.
MR. HOLM: Do you know if there is any intention to look at that?
MR. DELANEY: Not as we speak. It is a matter that has been raised within the last several days, I guess since the weekend, but it is not something that we have reviewed in any detail at this point.
MR. HOLM: Approximately how many independent truckers are there who would be involved in hauling salt and sand?
MR. DELANEY: I don't know the number. The TANS organization tells me that it would be in the vicinity of 300 truckers. I haven't confirmed that, but I suspect that that is a correct figure.
MR. HOLM: Are you involved in this side? You are over operations generally, does this fall under your area of responsibility?
MR. DELANEY: Yes, it does.
MR. HOLM: The department itself doesn't have records, because you would be paying them all independently, you don't pay TANS do you?
MR. DELANEY: I am not suggesting that we couldn't have access to those numbers, I am just giving you the best information I have to what was related to me by TANS that said there was approximately 300 salt haulers. We could confirm the actual numbers, Mr. Holm.
MR. HOLM: In terms of the vehicles they use, what ton capacity do the majority of them use? Are they single tandem trucks, 15 tons, or do most of them use the larger, what do you call them, being technical I call them the biggies, the trailer-type trucks?
MR. DELANEY: I would suggest that the largest number of trucks would be the trailer combinations, either the double-doubles or the tri-doubles.
MR. HOLM: So most of the independents who are hauling the salt would be using either the double-double or the triple, carrying either 30 tons or 45 tons.
MR. DELANEY: I would expect the average truck is carrying in the vicinity of 30 tons. The tandems tend to haul the shorter distance, so if they are hauling in the Cumberland area, hauling from Pugwash, tandems may participate in that haul, and hauling in the vicinity of Mulgrave as well, tandems would tend to do that. The longer hauls tend to largely be done by the trailer combinations.
MR. HOLM: I understand some independents have started hauling again, but a lot of the roadbuilders started to haul salt as a result of the dispute. How many roadbuilder companies - how much equipment is available to haul that salt?
MR. DELANEY: I don't know those numbers as we speak.
MR. HOLM: The roadbuilders are quite a powerful lobbying group, and if the rates that are being paid, especially given the high fuel costs, are not going to be sufficient for those independents to stay in business and to be able to continue to operate, does that then leave
the department captive to the vehicles owned by the Roadbuilders Association members?
MR. DELANEY: What the department has announced with the break-off of talks with the Truckers Association of Nova Scotia is that for the balance of this year the Nova Scotia Roadbuilders Association will be responsible for delivering salt to our domes. The department has also announced that next year salt hauling in the province will be tendered.
I might just, in terms of responding, note that our review of salt haul rates that the municipalities are paying indicates that the tendered rates are lower than our published existing rates and they are lower by varying amounts depending on the distance hauled and what have you. I think the rate differential is as high as 25 per cent lower in Sydney on a haul from Pugwash and I believe it is more in the range of 16 per cent to 17 per cent from Mulgrave to Sydney. The average differential is about 10 per cent lower for Halifax. The tendered rate is about 10 per cent lower than our rate. I think that is fairly consistent across the province. I think there is an anomaly if I recall in Yarmouth where the rate is slightly higher on the tendered rate, but generally the tendered rates across the province are lower than our published rates.
MR. HOLM: Of course, if a lot of the independents are not able to stay in business and those large organizations, like the Roadbuilders Association, they also, like the province, have the ability to buy their product in large volumes and so they would get a cut in the price that they would pay. If the independents, of course, are forced to stop providing this service because of the high fuel costs, when you have less competition, then the price can go up and we can be captive. Certainly as my colleague pointed out to me, the Prime Minister of this country said that, not completely accurately mind you, but he said that the price of crude oil has gone up and that that has caused the price to increase and the consumers should expect to pay more for the product as a result.
In this particular case the province is the consumer and certainly following that logic then the province should be paying more to offset the higher costs that these truckers are having to pay to buy the fuel which, of course, the province is getting tax from, in order to provide an essential service so our roads will be safe.
MR. CHAIRMAN: Mr. Delaney, you are recognized, did you want to comment on that before we switch over to the PC caucus?
MR. DELANEY: Perhaps I could. I guess in terms of what the province should pay for the supply of any service, I think it is fair to point out that on February 7th of this year we received at the department a letter to our minister. The letter was dated February 5th, which was a Saturday, and was purportedly hand delivered on the weekend. I don't know. I have never confirmed that with our minister, but certainly it was received at the department on Monday, February 7th. The letter was from the president of the Truckers Association of Nova Scotia. He informed the minister that they wanted an answer to a demand that was in the letter for a rate increase. The rate increase was calculated on a per load basis as opposed to a percentage basis, but it was roughly in the 12 per cent to 13 per cent range if you applied the rationale.
[8:30 a.m.]
The letter demanded that that rate be paid by the end of business day on Monday, February 7th, or the TANS truckers would all park their trucks and cease hauling. The department got back to the Truckers Association of Nova Scotia and said, we simply cannot respond that quickly. We are willing to sit down with you at the earliest possible time, and that earliest possible time was Wednesday of that week which was February 9th as I recall. We asked - while we agreed to sit down and to speak - that the truckers continue to deliver salt because, believe me, salt supplies are critical to safety on our roads, and salt supplies are not something you can just bring in overnight. When your inventory starts going down, one storm can use 8,000 tons to 10,000 tons of salt and continuous storms can eat it up pretty quickly. So salt supplies are pretty critical.
We did ask the truckers to continue hauling while we agreed to a meeting on Wednesday. That was refused; the trucks were parked. We had a meeting, Deputy Minister Windsor and myself, with the president of the Truckers Association of Nova Scotia, Mr. Germaine, and Dave Roberts the office manager, on February 9th. After significant discussion - and, quite frankly, we also looked at fuel rates and their effect on trucking - Mr. Windsor made an offer of 8 per cent for the balance of this trucking season, just for the balance of the winter season. He also said that 8 per cent for the balance of this year and, once we are in a position, when we are finished the program review, get our budget numbers and what have you, we will sit down with the Truckers Association of Nova Scotia and discuss your other issues.
That offer was rebuffed; Mr. Germaine said that that simply was not enough. He would not take it. Mr. Windsor asked him to reconsider and, indeed, put the offer in writing to Mr. Germaine and gave him until Friday noon to accept the offer, and clearly explained that come Friday noon - because we happened to have a reasonably good week in the weather department, but we still end up using salt - we told him very clearly that by Friday noon we would have to move to a contingency plan for a supply of salt and that once we moved to a contingency plan we would not be in a position to move back to the Truckers Association of Nova Scotia.
Sometime, I believe it was on Thursday, Mr. Germaine or Mr. Roberts got back to us and asked us to meet again on Friday morning. That meeting was held. Our position remained at 8 per cent; Mr. Germaine was not satisfied with 8 per cent. We essentially said, you still have until noontime, but by noon we have to have an answer. Mr. Germaine went away, and shortly before noon we received a fax at the office that indicated that the offer of 8 per cent was not acceptable. The 8 per cent offer you could argue all sides of it. Certainly fuel prices do fluctuate every winter; they fluctuated more wildly than usual this winter. That is a fact we all know.
The surcharge on fuel that we were proposing to pay, the 8 per cent, was in line with the survey that the Atlantic Provinces Truckers Association had provided on February 7th for the average fuel surcharge on full loads that their members were charging. As I recall, in that February 7th survey from APTA they had indicated a surcharge on full loads of 8.15 per cent and a surcharge on part loads of 4.3 per cent. I think from most objective analysis and, as I said, those things are always open to argument but I believe the 8 per cent was fair. At any rate, shortly before noontime a fax was received at the office to Mr. Windsor telling him that the offer was rejected. In the early afternoon, the deputy minister and the minister approved the contingency plan to go into place, which would mean that Roadbuilders would take over dispatch and be responsible for salt delivery for the balance of the year. That delivery started the following Monday and has continued to this date.
In approaching and discussing, with Roadbuilders, the issue of hauling salt, we supplied Roadbuilders with a copy of our published rates, without the 8 per cent increase, asked them if they would arrange to have a secure supply of salt to our domes for the balance of the year. They agreed to do that. They are doing that with their own trucks and trailers and trucks which they probably had laid up for the winter which they have brought back out, perhaps re-registered and re-insured. They are also dispatching private truckers, other companies, some of the private truckers would be current members of the Truckers Association of Nova Scotia. Where truckers are dispatched by the contractor, we are paying the trucker directly so that there is no mark-up, they are getting the actual rate that we have in our policy for the payment of trucks.
That is rather a long-winded answer but I think it is needed to put perspective on where we are today.
MR. CHAIRMAN: Well, actually it only took 9 minutes, that is not too bad considering the detail.
I will now recognize the Progressive Conservative caucus.
Mr. Brooke Taylor.
MR. BROOKE TAYLOR: Mr. Delaney, thank you for coming in this morning. How long have you been with the Department of Transportation and Public Works?
MR. DELANEY: I started with the then Department of Highways in April or May 1970. It is almost 30 years.
MR. TAYLOR: Almost 30 years. What was your position in 1994, when the previous administration decided to cut the salt haulage rate?
MR. DELANEY: In late 1994, early 1995, I was the district director for Central District.
MR. TAYLOR: At that particular time, how much, on average, were the salt hauling rates cut, when compared to gravel and asphalt?
MR. DELANEY: Roughly 20 per cent.
MR. TAYLOR: The truckers allege that because of government rate cuts and, of course, the escalating runaway price of fuel, insurance, and registration, et cetera, that their livelihood and subsistence has quite frankly been threatened. I tend to agree with that position. I have to wonder, I have learned that since the Nova Scotia Roadbuilders have assumed the responsibility regarding looking after the supply to our domes that the Department of Transportation, from time to time, I am not sure on what basis, has been sending single-axle trucks with snowplow attachments, tandem trucks with snowplow attachments up to Pugwash.
Could you tell me, regarding a tandem truck that the province owns and operates internally by the Department of Transportation, what cost, just for the unit with attachments, is applied against the snow and ice control budget?
MR. DELANEY: I am not sure I understand your question, perhaps if you could repeat it.
MR. TAYLOR: A tandem truck with snowplow attachments, what is the cost, the government must have some idea what it costs, to operate that particular unit?
MR. DELANEY: Those units are very expensive units, as you know. The cost for acquiring and completely building one of those units now runs in the range of $165,000, which is much more than for even a conventional tandem that you would use for hauling gravel or whatever. They tend to have heavy frames, to have a lot of electronic equipment on them, they have the automatic salt-spreading equipment, special two-way dumps that are more expensive, so they are rather expensive pieces of equipment. As a general cost of running those pieces of equipment, they are probably in the range of $45 an hour.
MR. TAYLOR: In the range of $45 an hour. What is the average hourly rate that is paid to a full-time snowplow operator?
MR. DELANEY: I don't know the exact rate, but it would be $13-something an hour, I would think, Mr. Taylor.
MR. TAYLOR: Is it true that the Department of Transportation is, in fact, sending the yellow trucks up to pick up salt at the mine in Pugwash, some coming from as far away
as the Annapolis Valley with tandems? I was just curious as to whether or not we are doing that, because there is a shortage perhaps or maybe there is a potential for a shortage of salt at some of the bases.
MR. DELANEY: I don't know that any have been sent as far as the Annapolis Valley. I know that some salt has been hauled by tandems over runs that I wouldn't consider economic. Certainly if we have a tandem, say up in the Oxford area or whatever to haul from Pugwash, it may be economical, but to strip gear off or send them up with gear from the Annapolis Valley or from Hants County, and I am sure that in the first couple of days that was probably done, I trust that that is moving down the line. One of our big concerns, obviously, right at the beginning is security of salt supply. While we move our contingency plan into place, I guess the first objective is to ensure that we have enough salt.
MR. TAYLOR: Yes, I appreciate that, nobody wants to compromise the safety of the travelling public, certainly not the Department of Transportation. When you said $45 an hour - I am not questioning your figures - would that be for the single axle or the tandem, because I have always been under the impression at least that the tandem salt truck, with attachments, the cost at least was much higher to the government on an hourly basis than $45?
MR. DELANEY: I think that is roughly the cost, it is roughly in that range. Certainly if your question relates to whether those vehicles are efficient vehicles for hauling salt long distances, they are not. It is not something that we would want to plan on for a long-term basis. Certainly salt can be hauled much more effectively by conventional haulers than by those vehicles. Those vehicles are designed primarily for plowing and for salting. Their capacity, because of the extra weight of the attachments and the heavier frame, would be less. If that is the line of your questioning, I would be the first to agree that it doesn't make long-term sense to be hauling with our tandems.
MR. TAYLOR: Mr. Chairman, I agree entirely that it doesn't make sense to send up the yellow trucks to haul salt at a cost, of I would say, around $60 an hour, if in fact it is being done that cheaply, that is including the wages for the employee.
Mr. Delaney, in 1994-95, when the rate was cut 20 per cent to 25 per cent, depending on where the salt dome was located, you predicted, or at least the government of the day predicted - and you indicated you were the district director or area manager or whatever for the particular region - and boasted that the government had the potential to realize a savings of $800,000. I, and others, questioned at that particular time and since whether or not, in fact, there were any savings. When you are sending up your own trucks to haul salt on occasion, your own meaning the government's trucks, when at that particular time you retrofitted a few tractors, put the wet-line kits on so they could operate the leased dump trailers, have you any way of confirming or providing the people of this province with some confirmation that actually any savings were realized?
[8:46 a.m. Mr. David Morse took the Chair.]
MR. DELANEY: I don't recall personally making any statements about the amount of money that would be saved in 1994. I don't believe I was that directly involved in either the direct decision or in any announcements forthcoming from that. There is no question that in late 1994, and I believe the actual policy date was early 1995, but I think in late 1994, the truck rates were reduced by 20 per cent. I think that reduction by 20 per cent on an average winter shows a saving in the vicinity of approximately $800,000. That is fairly straight mathematics.
The department hasn't moved to hauling a lot of salt. I believe the number of trailers that we have hauling salt may be in the range of three cases where we have tractors that provide other services during the summer and we haul salt with them in the winter, but I believe it is in the range of three. I think I provided that to you earlier this year. I believe it is three. As far as tandems hauling, and there may be an aberration in the last couple of weeks but with the exception of areas very close to the mine, I don't think there would generally be tandems hauling in salt.
MR. TAYLOR: Mr. Delaney, regarding the present dispute with the truckers, salt hauling and things of that nature, I believe you carry quite a bit of responsibility in terms of doing some of the negotiating and perhaps providing the minister and deputy minister with information. Is that a safe statement to make?
MR. DELANEY: That is correct.
MR. TAYLOR: I am a little bit concerned that as far as I know, Mr. Delaney, regarding the 8 per cent that was offered - and I personally believe that was a reasonable offer, one that TANS members should have accepted - truckers on average are not United Nations diplomats and from time to time I guess we all do things as human beings, if we had our druthers, we would do a little differently.
Now I understand, and I appreciate your assessment of the situation, how it unfolded, a letter was delivered at short notice, et cetera. The whole thing perhaps could have been handled much better. Some of the truckers claim that we have been trying for months and years to get to the table. We don't have a paper trail to confirm that but, nonetheless, the fact of the matter is negotiations broke down. The president, I have been told, took that offer back to the county presidents, the 8 per cent, without recommending that the county presidents were supposed to poll or canvass the members at TANS regarding the 8 per cent. Some truckers in a number of counties claim they were never given the opportunity to say nay or aye to that proposal.
Mr. Delaney, where you have such a big responsibility regarding this matter, and where there may have been some miscommunication, I would think that where these hardworking men and women, not bullies, they are not a bunch of bullies, thugs, and banditos, the majority of them are your neighbours, your friends, your sisters and brothers, fathers and mothers, quite frankly, so it hurts me a little bit and I think it hurts members of the trucking family and their extended family to hear themselves being called a bunch of outlaws and orangutans. That may be the case for a small percentage, but I guess what I am saying is, where negotiations did break down, there was miscommunication clearly, and we all recognize that being human beings that can happen.
Whereas I am convinced that the Nova Scotia Roadbuilders are not making any profit, it is generous, you know, we appreciate the fact that they are hauling the salt and commend them for doing that because we have to have a supply, but I just think that if we go back down memory lane a little bit and look at winter after winter, TANS members put their life, limb, vehicle and everything else on the line to supply the salt to the domes.
Yes, they may be, at present, the author of their own misfortune, and I know that you carry a lot of responsibility in regard to this matter, you have been requested to put the 8 per cent back on the table and essentially you played hardball, and I personally think that you and Mr. Germaine, I know there has not been, what shall we call, a very amicable relationship there over the years. I think it has been quite acrimonious, quite frankly. So I hope that the hardball you are playing with these hardworking men and women is not a consequence of some personal relationship that you have with their president, Earle Germaine, and I say that with all respect, Mr. Delaney.
MR. RUSSELL MACKINNON: Mr. Chairman, on a point of order. I think it has been generally noted we don't enter into personal discussions and imputing motives. Unless the honourable member has something substantive to offer, I think we are kind of entering into some inappropriate waters here.
MR. CHAIRMAN: Perhaps getting back to the numbers, maybe Mr. Taylor could go back a little in that line of questioning.
MR. TAYLOR: Thank you, Mr. Chairman, and I thank the honourable member for his intervention, but I think when we are looking at this situation, we have to consider all the factors. Maybe I am imputing motives. I apologize for that, Mr. Delaney, but I also do know that the relationship, with all respect, has not been one that has been all that friendly and I will leave it at that.
If I could perhaps, again, get back to this business about TANS members providing that very valuable service to Nova Scotia for several years. Mr. Delaney, is the position today that TANS members can only haul if they are dispatched by the Nova Scotia Roadbuilders, who have come onto the scene within the last couple of weeks?
MR. DELANEY: I would like to answer that question and I would like to, just for the record, indicate that certainly over the years I have met a great number of truckers; most of them are gentlemen. They are small businessmen and they are providing a service and expecting to make a living. So I do know a lot of them and most of them I consider to be honourable gentlemen and I don't have an axe to grind with truckers in general, nor does the department.
Your question related to how truckers can now access work with the department and you are correct that the Nova Scotia Roadbuilders Association are now responsible for supplying salt to our domes. So any trucker who wishes to work has to access work through the Nova Scotia Roadbuilders Association. The Roadbuilders Association has been encouraged, if truckers want to work, to indeed dispatch.
MR. TAYLOR: Mr. Chairman, I have a couple of minutes. I would think that some of the Nova Scotia Roadbuilders, or some who I know, would probably be very pleased if they were told that TANS and the government had reached some agreement and they did not have to continue with this responsibility that they have because I could assure you they are probably not even making ends meet, but anyway it is nice that they are good Samaritans and I am very pleased that the supply will not be threatened. We cannot, I realize, get into this too deeply at this particular time, but the Department of Transportation recently, I would say within the last two or three years, has started buying these very expensive excavators. Some of them probably cost around $0.25 million and because our maintenance budget is not what it should be these things are sitting more than they are working.
I just have to question the wisdom of the Department of Transportation in this province spending so much capital - and it does impact the capital side of our budget - when our roads are falling apart, our bridges are in deplorable condition in this province. You and the Department of Transportation continue to buy equipment like it is going out of style. I can remember not too many years ago, perhaps when you started in 1970, the Department of Transportation had a few single axles, maybe one or two at each base, a number of employees and I am certainly not speaking about job displacement here, I am talking about equipment purchases that require the machinery to sit most of the time because we cannot afford to put it to work because we have nothing in our maintenance budget.
I think Nova Scotians would more highly value and prioritize roads being paved or repaved than you going out and continuing to purchase this very expensive equipment that is sitting. What are those excavators doing today and what have they done for the last two months? They sit, Mr. Delaney.
MR. CHAIRMAN: Would you like Mr. Delaney to have a chance to answer that because the time is up for the PCs. Mr. Delaney, did you want to respond to those suggestions?
MR. DELANEY: I certainly can. Certainly over the last few years we have purchased a number of excavators. We primarily purchased excavators for our ditching operations. As Mr. Taylor would know, crucial to roads is drainage and certainly we have fallen behind and continue to fall behind in road maintenance and drainage. Most of our ditching was traditionally done by backhoes. Backhoes simply are not as cost-effective as excavators in terms of the amount of ditching they can accomplish in a day; indeed the unit costs of ditching with an excavator versus a backhoe is in the range of half.
So the production is greater. We get more work for the piece of equipment. It is a piece of equipment that is much better matched to a ditching operation than a backhoe. Whether we always have the right equipment mix, Mr. Taylor, or whether we have the right number of excavators and backhoes, is something we constantly question, but whether we have it right all the time, I cannot tell you that, but certainly moving with excavators has improved the efficiency of our ditching operation.
MR. CHAIRMAN: Thank you, Mr. Delaney. I would like to now pass it over to the Liberals.
Mr. MacKinnon.
MR. RUSSELL MACKINNON: Mr. Chairman, I certainly don't want to get as exercised as my trucking friend to the right on this particular issue. Sometimes I am wondering which hat he is wearing, as the member for Colchester-Musquodoboit Valley or as a trucker?
I guess one of the reasons, Mr. Delaney, that we have invited you here, among a series of issues, is what is known as the 80/20 rule that was raised in the Auditor General's Report and that was, according to the Auditor General's Report, considered to be a subsidy to the small private truckers in this province. I would ask, given the fact that it was the Department of Transportation and Public Works that provided the figures for the Auditor General's office to come to that conclusion, would you care to make any comment on that, noting the fact that there has been generally some considerable concern as to the validity of those figures?
MR. DELANEY: I believe in our response to the Auditor General's Report our department suggested that the word subsidy was perhaps inappropriate in our view. Quite frankly, the figures that the Auditor General had to work with were figures that we provided. We feel that the prices that we pay under the 80/20 rule are premium prices and I guess that was perhaps the wording that we had suggested to the Auditor General, rather than subsidy, when we reviewed the final document that the Auditor General provided.
[9:00 a.m.]
Wording aside, there are some issues that support the Auditor General's Report, and I suppose some may question certain conclusions. Certainly the 80/20 rule and our published rates are not an entirely Nova Scotia phenomenon. Across Canada, we have spent a fair amount of time discussing salt haul, for example, to the best of my knowledge Nova Scotia is the only province in the country that does not tender its winter salt haul, so we are rather unique in terms of winter salt haul. We are the only province that doesn't tender winter salt haul.
For hauling for governments across the country, I believe there are four or five provinces that still have published rates. My recollection off the top of my head is that those would be Nova Scotia, New Brunswick, Prince Edward Island, and I believe Manitoba and Saskatchewan still have published rates. Interestingly, as an aside, we have reviewed those rates, without exception, Nova Scotia's rates are higher than any of the aforementioned provinces. So in comparison with other provinces, in other provinces that even use this type of a system, the rates are premium rates. The Auditor General refers to them as subsidy, but either way the rates certainly appear to be premium rates based on that benchmark.
In areas where work has been tendered such as salt hauling, and we already talked about that at some length, it appears that the market will serve up rates from 10 per cent to 25 per cent less than our rates, I suspect perhaps on average 10 per cent to 15 per cent less than the current rates that we have published. Anecdotal information from work that is done by contractors and others would suggest that the market rate for gravel haul or asphalt haul is anywhere in the range of 55 per cent to 85 per cent of our published rates, dependent on the length of haul, the amount of material being hauled and what have you. On that basis, it certainly would appear that our rates are a premium rate, the Auditor General refers to them as a subsidized rate.
MR. CHAIRMAN: I am just going to give the Auditor General a chance to comment, since we are quoting him, if he has a comment.
MR. MACKINNON: That is highly irregular given the process, but I will certainly not question it.
MR. CHAIRMAN: That is if he so wishes.
MR. ROY SALMON: I don't think there is any disagreement between myself and the Department of Transportation other than the issue of semantics. The dictionary definition of the word subsidy is financial aid. Whether you describe it as a subsidy or a premium rate, what is being provided to the truckers is financial aid in that there is not a competitive process so market rates are not being applied. The department chooses to describe them as premium rates, we choose to describe them as a subsidy, either way it constitutes financial aid to the truckers.
MR. MACKINNON: Mr. Delaney, obviously this is a policy that was established. I notice the rates that are in your departments report refer back to the date of 1994, but when was this policy first established?
MR. DELANEY: The 80/20 rule?
MR. MACKINNON: Rather than go to a tender. No, not the 80/20 rule, but rather when was this table of published rates first established? When did the department adopt that type of policy?
MR. DELANEY: I don't know what year.
MR. MACKINNON: Was it in place before you came to the department?
MR. DELANEY: There is a very long history of published rates in the department that goes back quite a long number of years.
MR. MACKINNON: Before your time?
MR. DELANEY: My memory isn't quite what it used to be, but certainly well into the 1970's. I told you before that I started working with this department in 1970.
MR. MACKINNON: In essence because we are here for value for dollar, this committee, does the department feel that it has received value for dollar over the years by adhering to that particular policy?
MR. DELANEY: I think our calculations would show that we have spent more than market rate on the delivery of gravel, asphalt and salt. I think the argument in support of the policy over the years has been that the policy is sort of multifaceted in that it is a premium rate but the so-called 80/20 rule requires that contractors who are working on our behalf on capital projects will use 80 per cent local trucks. It requires contractors to: (a) use 80 per cent local trucks; and (b) to pay them the government rate.
The argument in support of that over the years has been that this policy supported the local trucking industry so that if there was work in Pictou County and Guysborough County that we were carrying out then the local truckers would benefit from that particular work and would get what I think even the local truckers would agree is a premium rate for it. In return the truckers will indicate that they have either become accustomed to or learned to anticipate that rate on government work and that it is a part of their overall business plan to haul gravel and asphalt at a higher rate and it is important to their overall business.
I think in general that has been the argument in support of it over the years, that it supports the local economies and the local trucking industry. The argument contrary to it is that it costs government more money than normal market force.
MR. MACKINNON: Does the department still support the 80/20 rule?
MR. DELANEY: The 80/20 rule has come generically to describe all trucking, but the 80/20 rule, as strictly the summer component, is another part of just one of our many programs that is now under review under this program review initiative. At the end of that process, we will have to see what happens.
MR. MACKINNON: Mr. Chairman, it was raised a little earlier about the department now entering into an agreement with the Roadbuilders organizations to supply the salt for the rest of the season at the various depots, domes I believe is the word you used, Mr. Delaney. Obviously the indication, as I understand, was that you are getting this delivery at a cheaper rate, but given the fact that the Roadbuilders that I suspect you would be dealing with, large corporations such as Dexter's, Nova Construction and so on, if you draw the analogy it is like the Super Values and Sobeys compared to the small mom and pop corner stores and family grocery stores, the bigger ones can afford to do things and wholesale things a lot cheaper than the small rural community-type organizations, certainly in terms of buying bulk, because they are bigger they can buy their fuel cheaper and so on.
I seem to be detecting a bit of a contradiction in terms here from the Conservative caucus when, on one hand, they are beating up on the department for trying to support the small private truckers and, on the other hand, saying that we are not doing enough for them because 8 per cent was fair. Yet they are condemning and criticizing the government quite heavily for inefficiency because they are trying to help the small rural community organizations get value for the taxpayers' dollars. I am somewhere in between. Obviously I don't have a working knowledge of all the mechanics, the technical knowledge and the administrative and financing knowledge within the department. I am trying to understand from a layman's perspective how this all shapes up in terms of public policy and value for dollar from your perspective.
I realize we don't have a tendering policy. Obviously that is a policy that was adopted by administrations over the years seen as helping Nova Scotians and small truckers whose costs are higher and find it tougher to compete. My colleague, the member for Colchester-Musquodoboit Valley, being a trucker, would understand that his trucking costs would certainly be a lot higher than, let's say, one of the large provincial or interprovincial operations.
MR. DELANEY: I guess in responding to that question or group of questions, Mr. MacKinnon, I don't think that the 80/20 rule or trucking in general will be treated much differently than all the other programs that government currently provides. As you know, this program review policy is looking at each and every service that government currently provides, determining whether or not it is a core service to government, determining whether or not it is provided in a cost-effective way. I dare say, looking at any possible impact from service delivery by current methods or by other methods, I think the issue of 80/20 or of trucking or of anything else will be reviewed under that process in the same manner as any other program that we now offer.
MR. MACKINNON: I would like to shift the focus just slightly to service exchange and the cost per kilometre. I was looking at your report and I see that for some of the outlying regions, let's say the Cape Breton Regional Municipality, the cost per kilometre servicing by the department is a few hundred dollars more expensive than in the Halifax Regional Municipality. I could certainly appreciate some of the rationale for that.
As I understand, the cost of maintenance for a 100-Series Highway is significantly different than for a feeder street or what may have been referred to as a J-Class highway. The charge that is being issued to any of the municipalities under the service exchange, is that the actual cost of the department or is there a benefit to the department in the final analysis, dollar-wise?
MR. DELANEY: It is not the actual cost to the department.
MR. MACKINNON: Is the cost higher or lower?
MR. DELANEY: I would suggest that the way we capture information for our costs makes it extremely difficult on the street-by-street basis to make that comparison. I can tell you how that cost was arrived at and that may be somewhat helpful.
[9:15 a.m.]
MR. MACKINNON: Well, maybe, if we could keep it at least general, your sense of what the numbers are now. The rate that we are charging the municipalities, is the cost to the province higher or lower?
MR. DELANEY: I would suggest that it is probably pretty close to . . .
MR. MACKINNON: No, no. Is it higher or lower?
MR. DELANEY: I really can't tell you that, Mr. MacKinnon, because I don't have enough information to support a higher or lower. The cost I think is probably relatively close in terms of our local road network, and we have a lot of very little-used roads that we spend very little on, that we spend less than $3,740 on, for example. I think it is $3,740 that the amount is now.
MR. MACKINNON: Okay, let's be fair, if we could, Mr. Chairman. If that is the case, let's say it is revenue-neutral, then why has the department issued a new rate for new J-Class roads, or municipal roads, that is about 45 per cent or 50 per cent higher than when the exchange of services rate was initially established? I think the new rate, according to the Auditor General's Report, shows the cost per kilometre somewhere in the vicinity of $6,000 per kilometre as opposed to the original rate of around $3,700. I am just wondering why the significant change. Is the province trying to generate a profit on the backs of the municipal taxpayers?
MR. DELANEY: Could you refer me to a particular page in the Auditor General's Report?
MR. MACKINNON: I don't have the book right here in front of me but I believe it is noted. The Auditor General is here, he can certainly confirm.
MR. DELANEY: Perhaps while I attempt to find the number I can tell you that the service exchange obviously still gives the municipal units the opportunity to take over roads as opposed to paying the price. So any municipal unit that currently is paying the $3,740 has the option of taking over maintenance on the roads and discontinuing the payment.
I have just been referred to Page 168 of the report.
MR. MACKINNON: But in the final analysis, Mr. Delaney - I am going to refer to the Cape Breton Regional Municipality - the service exchange, and the I know there are other factors besides Transportation and Public Works, I see in here there is a fee charge of $2.2 million to the regional municipality. But many of those roads, all those in the old municipality of the County of Cape Breton were maintained by the province, and all of a sudden they are dumped on the backs of the municipal taxpayer. We have a regional municipality seeing a shortfall of about $5 million this year projected - and maybe more - and over the next three years an estimated shortfall of $25 million. Obviously, they are on the verge of bankruptcy. Any which way you look at it, that is what is happening and a lot of it is because, as I predicted back in 1994, of the service exchange. If the Department of Transportation and Public Works are generating revenues, a profit if you want to be so brutal in the terminology,
on the backs of municipal taxpayers in a way to alleviate some of its own financial difficulties, then I think we have a public policy conflict here.
MR. DELANEY: Let me just briefly suggest that, first of all, the service exchange and the intricate calculations that were involved therein I personally was not a party to nor was my department the prime player, roads were tied up in it as well as many other services. If you recall, initially, the concept was that approximately - and I am going to say - 1,200 or 1,500 kilometres of roads province-wide were to be transferred to the municipal units and the municipal units were to take over responsibility for maintenance of those as part of the service exchange. Some months later when the municipal units didn't wish to take over those roads, it was agreed that they would have a choice of paying, at that time, $3,500 or taking over the road. They, I think without exception, agreed that they should pay the $3,500 and that has now escalated up to $3,740.
That original calculation was based and - it wasn't rocket science - as we said, we don't calculate them necessarily by road class but there was a calculation done for the average cost of maintaining local roads in various parts of the province and a figure of $3,500 was arrived at. That figure was for our maintenance budget as such. It didn't include any amount for capital. So for major road improvements on the local road class, that figure of $3,500 did not include a capital allotment as such and yet the department has still over the years occasionally spent some capital money on those roads, not a great deal but that is why I would suggest . . .
MR. MACKINNON: But that is with federal assistance.
MR. DELANEY: I suggest the figures are probably reasonable but I really can't tell you whether they are exact or not.
MR. CHAIRMAN: Thank you. Time to go back to the NDP caucus.
Mr. Holm.
MR. HOLM: A few brief questions. As Executive Director of Operations, you would be involved in the budget processes under way right now in terms of making recommendations and looking at requirements, correct?
MR. DELANEY: That's correct.
MR. HOLM: I just want to follow up on the points that were just being raised by the previous questioner. When the department is preparing its budget, you looked at anticipated expenditures and you would also be looking at recoverables, right, what level is recoverable?
MR. DELANEY: That's correct.
MR. HOLM: In looking at that, could you tell me the recoverables that you would be receiving from municipalities, is it the experience and the anticipation, based on last year that the recoveries will cover the expenditures of those roads that the department is maintaining for municipalities? In other words, in your budget analysis, do you believe, because you have to have done that for last year in order to be preparing your next year's budget, do you anticipate that the recoveries will be sufficient to cover the expenditures?
MR. DELANEY: Interestingly, and again it may be semantics, but we don't look upon those roads as roads that we maintain for the municipalities.
MR. HOLM: But you are not . . .
MR. DELANEY: Let me get to the statement. All the roads that we maintain under that agreement are roads that are owned and maintained by the province. When municipal service exchange happened in 1995 our Transportation budget was not affected by it. In other words, our budget never changed by $3,500 a kilometre, it was a paper transfer, was out and in.
We would expect, in answer to your question, we would expect that the $3,740 would come close to covering our costs for the roads.
MR. HOLM: You are saying that we would expect. Under the service exchange, of course, the ownerships of a lot of roads were transferred to the municipalities and in return the province picked up certain kinds of other costs or services, correct?
MR. DELANEY: Under the service exchange that happened in 1995, no roads were transferred to the municipalities.
MR. HOLM: The ownership was not?
MR. DELANEY: The ownership was not.
MR. HOLM: So you are saying that the roads that exist, for example, within my community of Sackville, which used to be the property of the department, the department still owns those roads and not the municipality?
MR. DELANEY: The municipal service exchange that we have been taking about happened in 1995 and there were no roads transferred under that.
MR. HOLM: So the department still owns the roads, the street that I am on?
MR. DELANEY: No. Let me finish up. In 1996, in the Halifax Regional Municipality only, there was a different agreement that was carried out between the Halifax Regional Municipality and the province in which a number of roads were indeed transferred from the province to the municipality.
MR. HOLM: Okay. So whoever carries the deed, that is in a sense semantics, it is not really relevant. I mean, the reality is, the municipalities are responsible for the maintenance and clearing of the roads within their municipalities, except for the 100-Series Highways and so on.
MR. DELANEY: No, that is not correct. The only place that a road transfer has taken place is in the Halifax Regional Municipality and the so-called core area.
MR. HOLM: Yes, but whether we talk about the Cape Breton Regional Municipality or other municipalities across the province, are not many municipalities now responsible for maintaining roads that the department was, prior to, responsible for maintaining?
MR. DELANEY: The municipalities, as part of the service exchange, became responsible for taking over any new roads after 1995, so any new road listings, whether a subdivider is building a new road, after, and I am going to say, April 1995, I am not sure of the exact date, then the municipality lists those and then it is responsible for those. But for any pre-existing roads prior to that date, in the province, with the exception of HRM, the province remains responsible for them and still owns them.
MR. HOLM: But the municipalities are supposed to be paying for the cost to maintain them?
MR. DELANEY: They are paying a set levy of $3,740 to Municipal Affairs.
MR. HOLM: Okay, and that goes back to my original question, has the department done an analysis to determine if the expenditures that are required to maintain those roads is higher or lower than what they are to receive in receivables?
MR. DELANEY: No, we have not done a detailed analysis.
MR. HOLM: The next question, . . .
MR. CHAIRMAN: I am sorry, Mr. Holm, . . .
MR. HOLM: The seven minutes are up already?
MR. CHAIRMAN: Yes, I kept trying to signal to you. Actually, we have been very fair to the NDP caucus. You were three minutes over the last time. I will turn it over to the PC caucus. Mr. Taylor.
MR. TAYLOR: Mr. Delaney, I would like to once again go back to the fact, that under your guidance, I suggest, the Department of Transportation has purchased and continues to purchase machinery like it is going out of style. These $0.25 million excavators, I have no number of how many the Department of Transportation has purchased over the last few years. The government just recently got into that business. It didn't mean an increase in the number of employees at the Department of Transportation and Public Works but it sure meant a big capital investment on the side of the taxpayers in this province.
I know in my own constituency, and I think it is spread right across the province, there are a number of excavators owned and operated by the private sector. Again, I hope, and I have expressed this to you before, that you will initiate some type of a machinery audit to see if some of these expenditures are justified. The department talks about subsidies and the Auditor General talks about subsidies and we hear about studies, but I haven't seen a study anywhere that shows the departmental costs or the internal costs to the Department of Transportation for some of these machines: trucks; tandems with snowplow attachments; single axles; graders; rollers; excavators; and I will try not to get too emotional, but, Mr. Delaney, I think the purchases relative to the machinery have been most disproportionate, and as a consequence, we have cut the private sector out almost completely.
The private sector used to be able to provide those excavators, used to be able to provide those trucks. The trucking rate is around $40 an hour. That is the rate, but yet, we learned this morning it is costing over $60 an hour for the government to do the same thing. So I guess what I am submitting, Mr. Delaney, to you, is please give me an undertaking and the taxpayers of Nova Scotia a pledge, that at the very least something will be done or there will be an audit taken relative to these runaway machinery purchases.
[9:30 a.m.]
MR. DELANEY: I would certainly respond to that by suggesting that, yes, we should, and will, review our equipment complement and the way we are doing business. As I mentioned before, under program review that is very much what we ought to be doing as well, looking to see whether we have moved too far in one direction or the other, and I take your point on that.
Just by way of background, I will say that in 1992-93, the department had commissioned an audit of our fleet. That was carried out by Deloitte & Touche consultants. The recommendations of that consultant was indeed the department was spending too much money on repairing fleet as opposed to just keeping it running. They recommended a number of things, if I can just zero in on the fleet as such, including right sizing and right aging of the
fleet, we have no doubt spent a significant amount of money in doing so, but it has allowed us to reduce our costs of doing business.
I will give you an example of that. If you were to roll back the clock 10 years, we were spending an average of $45 million a year on winter snow and ice control. We now spend around $30 million a year and there is probably about another $4 million a year that is involved in terms of different accounting methods. So it is probably more like $34 million as opposed to $45 million. A lot of that has been a result of moving from multiple unit heavy plow gear to a truck fleet. Some of it is the result of moving to one person plows as opposed to multiple operator plows, but certainly that procedure has been a lot of capital cost. It has shown to reduce our costs. We, this year, have asked our internal audit section to review that process and see where we are in it, and as part of program review I will give you the undertaking that, yes, we ought to be on a yearly basis, reviewing that and looking closely to make sure that we have not moved too far in the figure.
MR. CHAIRMAN: The honourable member for Colchester North.
MR. WILLIAM LANGILLE:Mr. Delaney, yesterday I had a constituent in my office for an hour. He is a member of TANS and he hauls salt; did. This gentleman could not make a living hauling salt at the rate. Now there are line-ups at the compound and the bullpen in Pugwash. There was also a 20 per cent decrease in 1994, of the rates. They were offered 8 per cent now. Even though the cost of fuel has risen dramatically we went from $10 a barrel in May to capped at $30 a barrel now. The costs are increasing.
When TANS could not reach an agreement on the 8 per cent, which is actually 12 per cent less than what they were making in 1994, even though the costs are spiralling, all of a sudden the Roadbuilders take their equipment, their trucks, out of mothballs, they insure them, put them back on the road, and they haul at that rate. I don't know if I commend them for that or not. I guess I am suspicious by nature and what I am saying is I hope that there is not an underlying current here with the Roadbuilders Association. You brought up that the 80/20 rule is under review. I think it is a known fact that the Roadbuilders Association do not like that 80/20 rule. Is that correct?
MR. DELANEY: That would be correct.
MR. LANGILLE: That arouses my suspicion, I guess. With this under review I would like to question why the 80/20 rule is under review?
MR. DELANEY: I guess what I would suggest is that everything we are doing, and quite frankly, every service we provide in government is currently under review and 80/20 is no different than that. By way of a little history on Roadbuilders, Roadbuilders over the years, I would suggest it would be true that some Roadbuilders would probably be supportive of the
80/20 rule; some would be opposed to it. My sense would be that the majority of them oppose the 80/20 rule because of some of the effect on their operation.
MR. LANGILLE: Just one last in winding this up, the Roadbuilders, I realize, can purchase fuel at a discount because of their size, as compared to the independent truckers in TANS, but I don't think that this would still offset the cost that it cost them to haul from Pugwash to the salt sheds. I guess that is where my suspicion lies. Why did they jump in so fast?
MR. DELANEY: I cannot answer on their behalf, but I can tell you to the best of my knowledge what transpired if that is fine. First of all, while I don't think it is any secret that Roadbuilders in general have not been supportive of the 80/20 rule, there have been some exceptions to that and I think we would know who those are, or would recognize those over the years; I don't recall ever having a conversation with Roadbuilders about hauling salt as such. I don't recall ever having that discussion.
After we received the letter from the president of TANS and the threat to remove salt, I took a copy of our rates and I provided that to the president of the Nova Scotia Roadbuilders Association and asked them if we were found without salt, would they provide it at that rate? He said he would get back to me. He did and he said he would. How that factors in, how they arrived at that decision, I cannot tell you.
MR. LANGILLE: One last question, do you think at that rate that the Roadbuilders are making a profit?
MR. DELANEY: I would not suggest they are making a lot of money. I have had some discussions with individual truckers since this matter has come up and I guess what individual trucking associations have pointed out and, quite frankly, the discussion we had was relative to how truckers could participate next year in a tendered salt haul and indeed I believe in a tendered salt haul what individual truckers tell me, and Mr. Taylor would relate to this probably better than most of us, is that, yes, in a tendered truck haul, if there was a small group, they could haul salt at a cheaper rate providing they are hauling volume.
In terms of working through the association and responding to a tender for a particular base, or whatever, if they are dividing the work among a larger membership, then they are not hauling steady every day so they feel they need a higher rate to pay their costs because they are not indeed dumping one load, going back to the mine the next day, going back for another load, and so from that point of view I suspect the tender, whether it was two or three truckers got together for a particular base, and that has happened I think in Sydney, for example, I believe the supplier there is indeed a member of the Truckers Association, but it is not being spread through the whole association. I don't know how many trucks, maybe it is half a dozen trucks, but the simple answer is if it is set up on a competitive basis and you
have trucks that continue hauling, then they can haul at a cheaper rate than if you are spreading it among a larger membership.
[9:40 a.m. Mr. David Morse took the Chair.]
MR. CHAIRMAN: Mr. MacKinnon.
MR. MACKINNON: Mr. Chairman, my question is going back to the 80/20 rule and the increasing cost of diesel fuel to the truckers. Obviously a lot of their frustration is because of the increasing fuel cost and the fact that they feel they need a higher rate, this 8 per cent figure that was negotiated back and forth, whether it will resolve itself or not, the powers that be will know that. My sense, looking from the outside in, through you, Mr. Chairman, to Mr. Delaney, is that if we were to eliminate the 80/20 rule at this point, that would have a catastrophic effect on members of TANS. Would that not be a correct assessment, given the escalating fuel cost? It would certainly put increased pressure as to whether they would be viable or not. Is that not correct?
MR. DELANEY: I expect there are two factors that could affect TANS membership next summer. One of them would be eliminating the 80/20 rule, the other would be a very slim capital budget.
MR. MACKINNON: I am completely perplexed because members of the Conservative caucus are pleading the case for TANS, and I think rightfully so, but on the other hand their colleague, the Minister of Transportation and Public Works doesn't seem to want to talk about it, and yet is issuing court injunctions against TANS. I am really perplexed.
MR. TAYLOR: Mr. Chairman, on a point of order. Just for clarification for the honourable member, he has made a statement that is absolutely erroneous. What we have advocated is that TANS members be treated fairly and that there seems to have been a breakdown in communication from the president to the county presidents to the membership; that is what we have said. I think it is very out of order for that member to say something that we didn't say or imply.
MR. HOLM: On the point of order, what we have is a disagreement between two members but no point of order.
MR. CHAIRMAN: I concur with Mr. Holm.
MR. MACKINNON: I guess I can interpret from my colleague, the member for Colchester-Musquodoboit Valley, that they are back-pedalling on TANS because they don't want to get too closely connected with this organization in fear that the government may be making a decision to eliminate the 80/20 rule and thereby essentially hanging TANS members out to dry, because if the increasing fuel costs persist and the government is reticent on doing
anything to either alleviate the frustrations that are being expressed by members of TANS, as we have witnessed in Sydney River, as we have witnessed at the Nova Scotia-New Brunswick Government, certainly the New Brunswick Government, the Minister of Transportation in that province had no problem taking a proactive role, they didn't resort to the type of (Interruptions)
MR. CHAIRMAN: Order, please. Mr. MacKinnon has the floor.
MR. MACKINNON: Mr. Chairman, we will sooner or later define the position of the Minister of Transportation and Public Works in the province, but I am really concerned with the fact that we are getting conflicting positions from the government benches. On one hand they are saying, support the 80/20 rule, support this increase of haulage rates, and on the other hand from, in particular, the Department of Transportation and Public Works, the minister and staff, including yourself, Mr. Delaney, are taking a different view. What direction is the department going?
Obviously the department has some knowledge of where they are going with this particular issue, they are playing hardball with the small family-type trucking businesses in the province. All figures seem to indicate that if this 80/20 rule is eliminated without some adjustment on the fuel rates, some type of alleviation or support from the government, these people are destined to go out of business. Am I correct in that assessment?
MR. DELANEY: I am not sure what your specific question is, Mr. MacKinnon. I trust you don't want me to . . .
MR. MACKINNON: In short, we have the gasoline fuel tax, that was raised so feverishly in the House over the last several years, that the government was collecting all this tax and not putting it back into the system, what is going to be done for TANS in terms of the fuel costs going up and up? If the rate being paid to them isn't going up, then their costs are going to eventually exceed their revenues. That is the bottom line.
Some of the ones that are telling me if they are hauling from Pugwash to Sydney River - what is a round trip, approximately $600, give or take?
MR. DELANEY: I don't have that amount.
MR. MACKINNON: That is the figure that was tossed to myself. When you work all your costs out between your fuel, your trucker, the licence, the insurance, depreciation, tires, you name it, you are down to, approximately, $75. You spread that over 16 hours, you are making less than minimum wage for a significant investment of $150,000 and the liability attached to it. It doesn't seem to me like a rather fair rate of return.
My question, Mr. Delaney, is, what is the department going to do for the members of TANS?
MR. DELANEY: The department's position at this time is that, for salt hauling for the balance of this season, the dispatch will be carried out by the Nova Scotia Roadbuilders Association. Next year, salt delivery for provincial use will be tendered. That is the department's position at this time.
MR. MACKINNON: Okay. So what we are saying is, there is no deal for TANS. The 80/20 rule, obviously, if it is considered to be a premium, all indications are that will be eliminated under present trends. There will be no alleviation unless there is a change of public policy. There is going to be no commitment on providing relief for the increasing fuel costs. Am I interpreting your comments correctly?
MR. DELANEY: The comments relative to winter have stood on their own. Relative to the 80/20 rule and what happens in the summer, I am not prepared to comment on that. It is tied up in program review and I can't enlighten you further on that. I don't know the answer to that question.
MR. MACKINNON: The laws of the jungle will prevail. (Laughter) May the strong survive and the weak not survive. You made reference, Mr. Delaney, to the fact that, because of the overall snow budget, reduced because of efficiencies, from $40 million down to around $34 million, would it not be fair to say that part of that is because we have less snow?
MR. DELANEY: That could be part of the equation. I think we have had a couple of rather decent winters. The most part of it is due to some of the organizational changes we have made.
MR. MACKINNON: My colleague, the member for Colchester-Musquodoboit Valley made reference to the excessive purchasing of equipment and, well, basically implying there is a lot of waste in that department over there.
I noticed one thing - and I have to compliment yourself, Mr. Delaney, and members in the department, people I don't even know - but I see it, just from my travels through our general community. That is the fact that on the weekends now, I noticed departmental staff working. The more effective use - utilizing the equipment and manpower - that has never been the case before.
I can't speak for other jurisdictions but I notice that is not an uncommon sight to see staff working on Saturdays in our general area. That, to me, from my conversation, is an effective utilization of all this additional equipment. Am I correct?
MR. DELANEY: It certainly may be in a particular case. It becomes sort of site specific and case specific.
MR. MACKINNON: Okay, thank you.
MR. CHAIRMAN: Okay. We have had a request to give each caucus an additional three minutes. I would pass it to Mr. Holm for the NDP.
MR. HOLM: A couple of brief questions and hopefully the same kind of answers. The department should have or would have some kind of analysis in terms of what it is paying for fuel costs compared to the regular public posted rates. My question to Mr. Delaney is, will you provide that cost analysis or comparison to this committee by next week?
MR. DELANEY: We can certainly provide you with the cost information of what we pay for fuel, yes.
MR. HOLM: Showing how much more or less, how much savings on a percentage type of basis compared to the going rate?
MR. DELANEY: Mr. Holm, perhaps if I could just get a clarification on that, do you want a comparison to the going tank rate, in other words, the pump rate that you fill up at or . . .
MR. HOLM: That is what most of the independent truckers are paying. The larger members of the Roadbuilders Association would be getting a reduced rate, as would the department, but I would like a comparison between what the department is paying and what the independents are paying because there may be a way there to solve two problems and to have a system of tendering that would actually be based on the cost of labour and equipment, excluding fuel costs, that could be beneficial to the taxpayers and to the independent truckers.
The next question I would like to know is, has the department done an analysis; could you tell us how many kilometres of roadway in this province, secondary roads, are at the critical stage that if they are not repaired immediately that they will deteriorate to the stage where, in effect, they will have to be completely rebuilt and what the anticipated cost, ballpark-type of figure for doing all of that secondary road upgrading would be? Would you provide that information to this committee as well as the analysis by hopefully next week?
MR. DELANEY: Yes, Mr. Holm. That will be a ballpark figure, as you understand.
MR. HOLM: Yes, I appreciate that. I guess the last question is, what does the department see is the biggest challenge that it faces this coming year?
MR. DELANEY: I can answer the final one. The biggest challenge is funding. That has been a problem for quite a number of years.
MR. HOLM: Thank you.
MR. CHAIRMAN: Mr. Dooks.
MR. WILLIAM DOOKS: Mr. Chairman, just a couple of quick questions. The tendering process next year that it is the intent of the government to put through, will the government be tendering individual depots or will it be across Nova Scotia or by district? How do you intend to approach that?
MR. DELANEY: I don't know the answer to that. As a matter of fact it is something that you can understand that this decision was made fairly recently. What my plan was, quite frankly, when we announced and determined that we are going to tender is to consult with various people in the industry as to how to best tender that. I have had some discussions from some TANS members who have called, for example, and there would be some who would prefer it be tendered on an individual base basis but we are going to get input on how best to do that.
MR. DOOKS: Mr. Chairman, I certainly hope that will actually go out into the industry and talk to the independent truckers and ask for them to have some input because I am very much afraid if we go to tender province-wide, it will cut out the local boys in our community. Also, getting back to that, maybe not necessarily listening to their president on this issue, because I have to agree with Mr. Taylor that I have also been contacted by many members of TANS and they shared with me that they would have gladly accepted the 8 per cent.
Another question on private roads. Earlier we discussed private roads. I would like you to clarify for me the intent of the department concerning traditional roads that are receiving winter maintenance now. Is it the intent to carry that on? Not new private roads but the ones that have traditionally been maintained.
MR. DELANEY: As you know, this is something that keeps coming back every couple of years as to whether or not we will continue to maintain the private roads that we have historically provided maintenance with. At this point we don't have any plan to discontinue what we are doing. Everything is under review. The cost of what we spend on those private roads isn't a great cost to the province but it is probably in the range of $100,000
MR. DOOKS: That is correct and I am happy to hear you say that at least it is going to continue for the next number of years. It is very important, as we review different departments, that we understand the importance of this issue to many of the people who live
on private roads and that we understand clearly that any new private roads will be the responsibility of the municipality or the developer or whatever, whichever way you want to take it.
I also come back to the point that in many of the older communities where the private roads are there, indeed many people are situated and live on fixed incomes and so on and wouldn't be able to afford maintenance on their own road because we know that it costs approximately $3,500 per kilometre. I don't know how they would even be able to afford that type of maintenance and because of the responsibility of the fires, I could go on, Mr. Chairman, but I guess I have to take my seat. I think it is very important for us to understand that it is not only the dollar but the safety of the community as well.
MR. CHAIRMAN: Maybe we could conclude that as a statement instead of a question.
MR. DELANEY: Could I just make one statement? What I wasn't able to and am not able to assure you is that it will continue for the next number of years. At the moment, I am not aware of any plan to change our policy.
MR. CHAIRMAN: I would like to recognize Mr. MacKinnon for the Liberals to wrap up.
MR. MACKINNON: I want to follow up on a comment that was made by my colleague, the member for Colchester-Musquodoboit Valley. He referred to the fact that TANS with respect to the 8 per cent proposed increase, it was something that they should have accepted. I want to draw to the attention of all members of the committee and certainly to Mr. Delaney, who I am sure is aware of these figures, the cost of fuel per litre last year was approximately 39 cents, this year it is 61 cents, so we are looking at a rather substantive increase. Last year that would have been around 24 per cent of the revenue, this year that cost would be 37 per cent.
If you have a rather substantive increase like that, does the department not have some obligation to assist TANS? Their fuel costs have increased by almost 40 per cent, 45 per cent and yet you are only offering them 8 per cent. The department knows that it is only a matter of time before these truckers are put out of business.
The Roadbuilders, contractors that have now taken over, they are able to compensate. It has been generally recognized by yourself, Mr. Delaney, that there wouldn't be a recognition that they would be making much money, if any, but they have the benefit of the fact that they can charge a rather substantial fee on the cost per kilometre, they make it up with their other equipment, their, D8s, D12s, and everything else. They can transfer their losses and their benefits back and forth.
Mr. Delaney, are you telling us here today that despite the protest in Sydney River, despite the evidence that the costs have increased substantially, the department is not going to move above the 8 per cent?
MR. CHAIRMAN: Mr. Delaney, if you could just answer that, perhaps briefly if possible, then we will wrap it up.
MR. DELANEY: Quite frankly, as we sit here this morning, the department's position is that the rate has not even been increased 8 per cent and will stay at current rates for the balance of this year. (Interruptions)
MR. CHAIRMAN: Perhaps we could bring that up at another session, Mr. Taylor. I want to thank Mr. Delaney for coming in and answering our questions this morning. I think in view of the time, perhaps we should deal with that agenda item at next week's meeting, which is next Wednesday at the Dennis Building where we are going to be briefed by the Auditor General on Real Property Management, the audit by Transportation and Public Works.
MR. MACKINNON: Mr. Chairman, I guess it is fair to acknowledge that this week is the last week I will be serving as Chairman of the Public Accounts Committee. My colleague, Mr. Holm, will take the second semester. I appreciate the cooperation and assistance of all members of the committee. Also at this time, I would like to thank Mr. Delaney for coming with his forthright answers. I know he feels perhaps that he has been bombarded from all sides but we do appreciate all of his assistance and cooperation today. Thank you.
MR. CHAIRMAN: I want to say I have enjoyed working with you, Mr. MacKinnon, over the last six months. Thank you. The meeting is adjourned.
[The meeting adjourned at 10:01 a.m.]
