HANSARD
Printed and Published by Nova Scotia Hansard Reporting Services
Ms. Maureen MacDonald (Chair)
Mr. Chuck Porter (Vice-Chairman)
Mr. Patrick Dunn
Mr. Keith Bain
Mr. Graham Steele
Mr. David Wilson (Sackville-Cobequid)
Mr. Keith Colwell
Mr. Stephen McNeil
Ms. Diana Whalen
WITNESSES
Department of Environment and Labour
Ms. Nancy MacNeill
Superintendent of Pensions
In Attendance:
Ms. Charlene Rice
Legislative Committee Clerk
Mr. Jacques Lapointe
Auditor General
Mr. Terry Spicer
Assistant Auditor General
[Page 1]
HALIFAX, WEDNESDAY, OCTOBER 31, 2007
STANDING COMMITTEE ON PUBLIC ACCOUNTS
9:00 A.M.
CHAIR
Ms. Maureen MacDonald
VICE-CHAIRMAN
Mr. Chuck Porter
MADAM CHAIR: Order, please. I'd like to call the committee to order. Good morning and welcome to members and our witness and the Auditor General and his staff. Today we have with us Nancy MacNeill Smith and thank you very much for being here today. Ms. MacNeill Smith is the Superintendent of Pensions with the Department of Environment and Labour and I believe it has been some time since we've had an opportunity to speak with the superintendent, as a committee.
Today's focus was somewhat left over from the previous meetings of the Public Accounts Committee and in some ways there may be some additional issues to discuss besides the Nova Scotia Association of Health Organizations pension. I know that members will be interested no doubt in talking about other issues; perhaps Trenton Works, for example, is a real concern and I think as well maybe the other pensions in the province.
Before we start I want to draw the members' attention to a memo that was circulated, Microphone and Camera Tips. Legislative TV has met with our new clerk, Charlene Rice - who I ask you all to join with me in welcoming to our committee - as part of her orientation and they asked that we try our best to work with them to make their job easier in the coverage of our committee meetings. I'm not going to go through these, you can do that and I'm hoping that we will be able to help them out a little more than perhaps we have in the past.
[Page 2]
One tip for me, from Legislative TV, is that members and witnesses should be recognized by the Chair before speaking and I'm going to try to hold to that. So I will recognize you before you speak and recognize the witness so that they're able to make the transition with the microphones and the camera. So without taking any more time, we will start in the usual manner of introductions by the members so that Legislative TV can do their sound check.
[The committee members introduced themselves.]
MADAM CHAIR: Thank you. So our usual method of procedure is to offer to our guest an opportunity to make some opening comments and that will then trigger a round of questioning from members of the committee. With that, I yield the floor to you, Ms. MacNeill Smith.
MS. NANCY MACNEILL SMITH: Thank you. I have reviewed the letter that was submitted to Diana Whalen on February 19, 2007, from the unions representing unionized members in the NSAHO pension plan, the Nova Scotia Association of Health Organizations pension plan.
Before I begin I'd have to speak generally to information that is filed with me. Most of the information is third party information that is filed with me on a confidential basis. However, with respect to this plan there are some public documents that are specific to the plan, so in one sense I can talk in part about the plan and in others I'll step back to more general discussions about the legislation and how it applies to plans generally. I will try to make clear when I'm speaking, which perspective I am speaking from.
In the correspondence the unions indicate they are concerned about the contribution of holidays taken by the employers in the NSAHO pension plan. These contribution of holidays, of course, were partial contribution of holidays in that employers remitted at least equal contributions that the members did and then additional contributions were required. I'll get into that a bit later.
I would like to say that the unions are representatives of the members, of course, and they have the right to approach me directly on any concerns they have with respect to the pension plan. The concerns expressed in the letter to Ms. Whalen were not identified to me by the unions. Through the Pension Benefits Act they have rights with respect to enquiring about any kind of information in respect to their members.
Now additionally the unions are represented on the board of trustees of the pension plan and the board of trustees are the administrator of the pension plans. The unions themselves have direct input into the operation of the plan. I am a bit puzzled as to why the unions would take the approach they have taken with respect to any concerns with the plan in that firstly, they didn't come to me and that they do have access to more information with
[Page 3]
respect to decision making taken by the board of trustees because they have representatives on the board of trustees. Anyway, I'll just leave that aside for the moment and move on to the nub of their issue which relates to the contributions that are required to be made under a pension plan.
I would like to refer you to Section 62 of the Pension Benefits Act and I'll read that to you. Section 62 says, "A pension plan is not eligible for registration unless it provides for funding sufficient to provide the pension benefits, ancillary benefits and other benefits under the pension plan in accordance with this Act and the regulations." An employer required to make contributions must make contributions to the pension fund in the prescribed manner under the regulations and in accordance with the requirements prescribed in the regulations for funding. In essence, the Act states that the employers must contribute to the pension plan. The amount of contributions they must contribute is as determined under the regulations.
If you look at Regulation 5 under the Pension Benefits Act, that talks specifically about funding. Regulation 5 specifies that the funding payments must include employee contributions, balance of the normal cost and any special payments for solvency deficiencies or unfunded liabilities. These contribution requirements are identified in an actuarial evaluation report that is prepared by an independent actuary and that report is filed every three years for my review.
The normal cost is the cost of benefits earned by the members in a year, so that for every year each member of the pension plan earns a benefit in respect of his service for that year. The cost of that service then is paid for by contributions the employee makes and contributions the employer makes, as recommended by the actuary.
I'll flip you back to Section 16 of the Act. Section 16 of the Act talks about the requirements for the plan documents that are filed under the Pension Benefits Act. It goes through and it talks about the method of appointment and details of appointment of the administrator, conditions for membership. It goes through quite a number of different specifics and it also talks about requirement for the pension plan, to establish the treatment of surplus during the continuation of the pension plan and on the windup, so that the plan text itself must address the use of surplus, both while the plan is ongoing and when the plan is wound up.
Now in respect of this plan, I'd like to refer you to Page 27 of the plan text of the NSAHO Pension Plan. It is a public document because it is available on their Web site, and at Section 4.01(3) it states, "If at any time the Actuary certifies that the assets of the Pension Trust Fund exceed the actuarial liabilities of the Plan, the Employers may use the amount of excess assets or any portion of the amount to reduce their contribution obligations under Section 4.01(1), subject to any limitations prescribed by the Pension Benefits Act."
[Page 4]
So the NSAHO pension plan, as registered under the Pension Benefits Act, does address the use of surplus by employers while the plan is ongoing.
Now in the letter to Ms. Whalen, the unions referred to Sections 83 and 84 of the Pension Benefits Act. Those sections relate solely to the withdrawal of surplus from a pension plan to an employer. So that while a plan is ongoing or while it is wound up, it refers to a payment out of the pension plan trust fund to an employer. Contribution holidays do not fit in that category of a surplus refund to an employer, so those references by the union are inappropriate, they don't apply in this situation.
So I think my five minutes are up and I'll leave it at that. That concludes it.
MADAM CHAIR: Thank you. I will now recognize Mr. Steele. You have 20 minutes.
MR. GRAHAM STEELE: Thank you very much. I've seen that letter from the unions to Ms. Whalen but frankly, that's not the reason why I wanted you to be here today so I'm going to address a different topic.
The NSAHO pension plan was in the news fairly recently because, as we all know, a financial crisis has hit American markets, the so-called subprime lending crisis which, of course, is having shock waves in financial markets around the word. It became apparent that one of the very few and perhaps the only Nova Scotia pension plan that would actually suffer a loss as a result of this subprime lending crisis was the NSAHO pension plan because of an unusual, for Nova Scotia, investment strategy that they were pursuing, they had some exposure in these markets that other pension plans simply did not have. So that's really the topic that I wanted to address to you today.
You, Ms. MacNeill Smith, were quoted in at least one media report as saying that you had no complaints and no concerns about the health of the NSAHO pension plan, is that still your position?
MADAM CHAIR: Ms. MacNeill Smith.
MS. MACNEILL SMITH: Yes, the Act is quite specific with respect to the responsibilities of the trustees, with respect to the operation of the pension plan. I'll go through just a quick reference in the legislation to the status of a plan. Section 26 of the Pension Benefits Act, if you look at that, it says, "The administrator of a pension plan shall ensure that the pension plan and the pension fund are administered in accordance with this Act and the regulations."
The Nova Scotia Association of Health Organizations, in Section 12.01, states that the general administration of the pension fund is invested in the trustees, so that the
[Page 5]
administrator of the NSAHO pension plan is the board of trustees. They are required, under Section 69 of the Act - not Section 69, sorry - they are required to invest the fund . . .
MADAM CHAIR: Order. Mr. Steele.
MR. STEELE: My time here is quite limited and I don't really want to use it up with you leading me through the Act because the question I asked you is really just a yes or no question, which was; you were quoted as saying that you have no complaints and no concerns, is that still your position today?
MADAM CHAIR: Ms. MacNeill Smith.
[9:15 a.m.]
MS. MACNEILL SMITH: No one, other than the media, has approached me with respect to the concerns, any concerns, with respect to the investment of the NSAHO pension fund.
MADAM CHAIR: Mr. Steele.
MR. STEELE: Now I'm going to suggest to you that part of the reason for that is that the NSAHO pension plan, which affects many thousands of Nova Scotia pensioners, employees and their families, their investment strategy is so complex and so unusual that nobody understands it except for the pension plan management. Do you believe that plan members of that pension plan understand the investment strategy well enough that they could look at it, evaluate it and then complain to your office if they felt that it was inappropriate?
MADAM CHAIR: Ms. MacNeill Smith.
MS. MACNEILL SMITH: The expertise required in the investment of a pension fund is much greater expertise than could ever be assumed by an individual plan member. So no, I do not believe most plan members would have the ability to understand the complexities of the investment of a pension fund, not only this fund or any fund.
MADAM CHAIR: Mr. Steele.
MR. STEELE: I would suggest to you that the reason there have been no complaints is precisely for the reason you have identified, that the typical plan member cannot understand what is going on.
Now the people who do administer the plan are, of course, the board of trustees of the pension plan. Do you believe that the members of the board understand the investment
[Page 6]
strategy being pursued by that plan well enough to evaluate it, raise concerns about it, if they have any?
MADAM CHAIR: Ms. MacNeill Smith.
MS. MACNEILL SMITH: The trustees are required to have that understanding because it is their responsibility to direct the investments of the pension fund.
MADAM CHAIR: Mr. Steele.
MR. STEELE: This is getting awkward, Madam Chair, if you are going to insist that you identify us because it sort of impairs the ability to have a conversation.
MADAM CHAIR: I think we'll have a discussion with Legislative TV about how we can make this work for everybody, after this hearing. Let's just try to soldier on through this.
MR. STEELE: Okay. I understand that they have a legal obligation to understand. What I am asking is whether they do, in fact, understand because I will tell you that I have asked two of the board members directly, do they feel that they have the resources to understand what they're being told by plan management and they've both told me that no, they do not.
Now do you believe that board members have the training and qualifications that they need to understand the complex investment strategy being pursued by that pension plan?
MADAM CHAIR: Ms. MacNeill Smith.
MS. MACNEILL SMITH: It is a requirement under the legislation that they have that knowledge and training and if they don't, the individual trustees certainly have the right to come to me with respect to their concerns and then I will act upon them.
MADAM CHAIR: Mr. Steele.
MR. STEELE: Do you believe that you and your office have the expertise and the knowledge that you need to understand the complex investment strategy being pursued by that particular pension plan?
MADAM CHAIR: Ms. MacNeill Smith.
MS. MACNEILL SMITH: No, I do not believe I have that expertise. However, the investment rules that we have under the Pension Benefits Act are identical to the investment rules under the federal Pension Benefits Standards Act, administered by the Office of the
[Page 7]
Superintendent of Financial Institutions. They were also common to all provinces except for Quebec and New Brunswick.
In issues relating to investments, it is the practice of all jurisdictions to refer to and obtain assistance from the Office of the Superintendent of Financial Institutions and also any issues that come up that require expertise not available within my office, the expertise can be obtained by hiring professionals who can provide professional advice and that is provided for in the Pension Benefits Act.
MADAM CHAIR: Mr. Steele.
MR. STEELE: I would suggest to you that there is a bit of a problem when a particular public sector pension plan - which is what really makes it of the greatest interest to this committee - pursues an unusual and complex investment strategy involving significant investment in so-called hedge funds, which is beyond the capacity of the ordinary plan member to understand, beyond the capacity even of their board members to understand and beyond the resources of the Office of the Superintendent of Pensions to understand, that that may explain why there have been no complaints and no concerns because the only people in the province who understand what they're doing is the management of the plan. Do you see that that might be a bit of a problem?
MADAM CHAIR: Ms. MacNeill Smith.
MS. MACNEILL SMITH: Complexity of an investment strategy does not mean that it contravenes in any way the requirements of the legislation with respect to investments.
MADAM CHAIR: Mr. Steele.
MR. STEELE: No, no, of course not. It doesn't mean that it contravenes it, but what it means is that it may be the case that nobody is in the position to supervise what is going on. If the board members don't feel that they understand, they can't supervise management. If you don't feel that you have the expertise or resources to understand what's going on, you can't supervise management. What happens is that management goes off and does their own thing with nobody in a position to supervise them.
Now they did meet with us, they were concerned enough about the media reports that the CEO of the pension plan, that is the chief manager, met with us and, I believe, the other caucuses to explain what they were doing. The primary explanation they had for what they were doing and why it was okay and why there was really nothing to worry about was explained in terms of a concept called portable alpha. Now I'm wondering if you can explain to the committee what portable alpha is?
MADAM CHAIR: Ms. MacNeill Smith.
[Page 8]
MS. MACNEILL SMITH: No, I cannot explain what portable alpha is.
MADAM CHAIR: Mr. Steele.
MR. STEELE: But when the management met with us, their justification for what they were doing was that when you looked at their portable alpha everything was okay.
MADAM CHAIR: Ms. MacNeill Smith.
MS. MACNEILL SMITH: I have looked at the same material that was presented to you with respect to the use of hedge funds and different investment strategies, but again, I am not an expert in investment.
MADAM CHAIR: Mr. Steele.
MR. STEELE: The NSAHO management were at pains to point out to us that really when you understood everything that was going on there was nothing wrong with what they are doing, it is actually a perfectly reasonable and sensible investment strategy. My concern as a member of Legislature is that I'm not a pension expert and never will be and I am concerned when I hear of any manager of any pension fund saying that he's pursuing a strategy that makes sense, but really, essentially, when you get right down to it he's the only one who understands what it is. The members don't understand it, the members of the board don't understand it, you don't understand it and so how are the members to be reassured that everything is really okay, just because the CEO says so?
MADAM CHAIR: Ms. MacNeill Smith.
MS. MACNEILL SMITH: The trustees of the pension fund have to establish a statement of investment policies and procedures which outlines the investment strategy they want their fund manager to take. Again, if the trustees are uncomfortable with that strategy they can come to me and I will ensure that it is investigated, but at this point I have had no concerns expressed to me from the trustees.
MADAM CHAIR: Mr. Steele.
MR. STEELE: What if I said to you that they're not coming to you because they don't understand the strategy and they're afraid to admit that they don't understand the strategy?
MADAM CHAIR: Ms. MacNeill Smith.
MS. MACNEILL SMITH: Then I would say that they are not fulfilling their duty as trustees of the plan.
[Page 9]
MADAM CHAIR: Mr. Steele.
MR. STEELE: This particular pension fund also has some investment in commodities which from the little I know of commodities markets are notoriously volatile and risky. Now I don't know whether they have these hedged to reduce the risk or what, but do you have any concerns when you hear that a Nova Scotia pension fund is invested in commodities as opposed to bonds, equities, hedge funds, that they're in commodities? Does that concern you at all?
MADAM CHAIR: Ms. MacNeill Smith.
MS. MACNEILL SMITH: Commodities are an investment. A pension fund the size of the NSAHO fund would normally be quite diversified in its investments and it would not be a surprise that commodities were included as one portion of that.
MADAM CHAIR: Mr. Steele.
MR. STEELE: Does this appear to be a fairly standard investment strategy for Nova Scotia investment funds to have a portion of the assets in commodities or is that something unique to the NSAHO?
MADAM CHAIR: Ms. MacNeill Smith.
MS. MACNEILL SMITH: It is utilized primarily by very large pension plans in the country and NSAHO is, of course, the largest pension plan under my supervision.
MADAM CHAIR: Mr. Steele.
MR. STEELE: Ms. MacNeill Smith, when you appeared before the Economic Development Committee in February 2006, I had an opportunity to question you then. I asked you then whether you believed that your office has the resources that you need to properly supervise pensions in Nova Scotia. At that time you said yes, you believed you did, but I'd like to ask you that again. Do you believe you have the resources you need to do your statutory job?
MADAM CHAIR: Ms. MacNeill Smith.
MS. MACNEILL SMITH: Yes, I believe I do. As I had indicated previously, if in fact I believe that I need additional resources I do have the right under the legislation to obtain those resources to assist me.
MADAM CHAIR: Mr. Steele.
[Page 10]
MR. STEELE: Now when you appeared in February 2006, you also pointed out that your office was going to be administering the wind-up of the BF Goodrich plant in Ontario because it so happened that the Michelin pension plan was registered in Nova Scotia and these kind of things are dealt with in the jurisdiction where the plan is registered. You did acknowledge at the time that you foresaw that the wind-up of the BF Goodrich plant in Ontario would consume a great deal of your office's resources. Has that turned out to be the case and given the fact that your office is small and has devoted so much of its effort to the wind-up of an Ontario plant, do you still believe that you have enough resources to oversee pension plans in Nova Scotia?
MADAM CHAIR: Ms. MacNeill Smith
MS. MACNEILL SMITH: I can't speak specifically to the BF Goodrich plant wind-up, that is not public information, but most certainly the operation of my office has been functioning quite well.
MADAM CHAIR: Mr. Steele.
MR. STEELE: Okay and of course, I'm not asking you anything about the wind-up of the BF Goodrich plant. What I'm asking you about is the impact on the resources available to your office. You have a small office and the BF Goodrich wind-up was a great big wind-up involving a lot of detail work. Meanwhile, you're supervising 480 other pension plans. Is it possible that the work required to do the BF Goodrich wind-up took resources away from your office's ability to look at other pension plans?
MADAM CHAIR: Ms. MacNeill Smith.
MS. MACNEILL SMITH: The answer is no. In a wind-up of a large plan or a small plan there are the same requirements under the legislation. The additional time required for any wind-up that is occurring in another jurisdiction is just that you must ensure that the requirements of that legislation are followed. So whether it is a plan with 1,000 members or a plan with 100 members, the same material has to be reviewed.
MADAM CHAIR: Mr. Steele, you have five minutes.
MR. STEELE: Also in that hearing in February 2006, you mentioned that it is quite rare for your office to issue a formal order under the Pension Benefits Act. You indicated that you were on the verge of doing that with respect to a particular pension plan involving the Police Association of Nova Scotia because some of the municipalities involved were refusing to make what you felt were the required contributions to the plan. Subsequently, in May 2006, you did issue an order. Can you tell us whether that order has been complied with?
MADAM CHAIR: Ms. MacNeill Smith.
[Page 11]
MS. MACNEILL SMITH: The order was appealed to the court and we had a hearing before the courts in May of this year. A decision has not yet been rendered by the judge.
MADAM CHAIR: Mr. Steele.
MR. STEELE: So as we sit here today your order is before the courts and has not yet been complied with, is that right?
MADAM CHAIR: Ms. MacNeill Smith.
MS. MACNEILL SMITH: The decision is in the hands of the courts.
MADAM CHAIR: Mr. Steele.
MR. STEELE: But what I'm asking is was your order complied with and then taken to court or are they refusing to comply with it until they have the court decision?
MADAM CHAIR: Ms. MacNeill Smith.
MS. MACNEILL SMITH: The order was not complied with and they are refusing to comply with it until they have the decision of the court.
MADAM CHAIR: Mr. Steele.
MR. STEELE: And finally, Madam Chair - and this is a transition back over to you - when you appeared before the committee in February 2006, I thought you were at pains to reassure the committee that pension plans in Nova Scotia were healthy. Since that appearance, of course, a major employer in Pictou County, namely Trenton Works, has gone out of business, and as a matter of fact it turns out there was a deficiency in that plan. That causes me some concern.
I'm going to pass it over to you, Madam Chair, but just one last comment. The most recent annual report from your office is April 2007, which is for the fiscal year ended March 1, 2006, and the statistics in that document are as of January 1, 2005. So the most recent data that members of the Legislature have to understand the health of pensions in Nova Scotia is almost three years old, and it concerns me that a company like Trenton Works could go out of business and we discover after the fact that there's, in fact, a deficiency in the plan. With that, Madam Chair, I understand you have some questions about Trenton Works.
MADAM CHAIR: Thank you. I'm going to take the last two minutes of the NDP time. The question I have is, how was the Trenton Works plan allowed to fall into this current situation with the unfunded liability? The position that your office has taken with respect to solvency in other plans has been quite rigorous. We've seen issues with the
[Page 12]
Halifax Regional Municipality plan and some flexibility, in fact, out of the government with respect to the solvency rule. How has it been that this plan was allowed to fall into its current situation?
[9:30 a.m.]
MS. MACNEILL SMITH: I can't speak specifically about the Trenton Works plan; that, of course, is third party confidential information. However, the solvency of the plan is determined based on market value conditions that existed at the time the valuation was done. A solvency valuation is done every three years. At a particular point in time, say December 31, 2005, a valuation is done and the fund is valued as of that date. The solvency liabilities are determined based on the long-term bond rates as of that date. The long-term bond rates had been at historical lows for the last three to four years.
Because the solvency is determined at a particular point in time, there are fluctuations in the solvency of a plan. So if six months later the long-term bond rate goes up, where market values go up, the solvency of the plan is at a different position. The employers under the legislation have five years to make payments to bring the solvency position of the plan up to 100 per cent from what it was at the time the valuation was done. There is no requirement that a pension plan be at 100 per cent solvency every particular day of the year or every particular valuation.
MADAM CHAIR: Order, please. The time has expired.
Mr. Colwell. You have 20 minutes.
MR. KEITH COLWELL: Thank you very much. I'm just going to ask some basic questions and I'm going to turn the rest of my time over to Ms. Whalen. Who are you responsible to in government? Who do you report to in government?
MADAM CHAIR: Ms. MacNeill Smith.
MS. MACNEILL SMITH: I report to the Minister of Environment and Labour.
MADAM CHAIR: Mr. Colwell.
MR. COLWELL: Who awards the contracts for management of the different plans within government?
MADAM CHAIR: Ms. MacNeill Smith.
MS. MACNEILL SMITH: That is not in my area of knowledge or responsibility. The Pension Benefits Act applies specifically to private sector pension plans and municipal
[Page 13]
government pension plans. It does not apply to the public sector plans like the teachers, public servants, judges or MLAs, or the Sydney Steel plan.
MADAM CHAIR: Mr. Colwell.
MR. COLWELL: It does apply to the NSAHO pension fund, though?
MADAM CHAIR: Ms. MacNeill Smith.
MS. MACNEILL SMITH: Yes, it does.
MADAM CHAIR: Mr. Colwell.
MR. COLWELL: Under that plan there has been a five-year contract let to Keane Capital. Who was responsible for letting that contract out?
MADAM CHAIR: Ms. MacNeill Smith.
MS. MACNEILL SMITH: The management of the plan, as in accordance with the plan text documents, is according to the board of trustees. So any decisions in relation to the plan would be made by the board of trustees.
MADAM CHAIR: Mr. Colwell.
MR. COLWELL: So in other words a decision was made by - if I'm understanding this properly - the board of trustees to award a five-year tendered contract to Keane Capital?
MADAM CHAIR: Ms. MacNeill Smith.
MS. MACNEILL SMITH: I have no details relating to the awarding of any contract with respect to the investments of the plan. None of those documents would have been filed with me.
MADAM CHAIR: Mr. Colwell.
MR. COLWELL: Who would have those documents?
MADAM CHAIR: Ms. MacNeill Smith.
MS. MACNEILL SMITH: I would assume the administrator of the plan would have those documents.
MADAM CHAIR: Mr. Colwell.
[Page 14]
MR. COLWELL: Who would that be in this case?
MADAM CHAIR: Ms. MacNeill Smith.
MS. MACNEILL SMITH: According to the plan documents the board of trustees administers the pension plan.
MADAM CHAIR: Mr. Colwell.
MR. COLWELL: So the board of trustees, in your knowledge, would have awarded this untendered contract?
MADAM CHAIR: Ms. MacNeill Smith.
MS. MACNEILL SMITH: I have no knowledge with respect to the awarding of any contract. All I can determine is that from the pension plan document the board of trustees administers the plan and is responsible for all actions with respect to the plan.
MADAM CHAIR: Mr. Colwell.
MR. COLWELL: Madam Chair, I propose that I was very disappointed today that we didn't have the deputy minister here, because some of these questions on this very important topic may have been able to be answered. I respect the administrator who is here today outside of her realm, but this is a very important topic. I was very disappointed that I didn't see the deputy minister here today or someone who can answer these questions, because these questions are very important.
As we go through this process we see we have a five-year untendered contract to a firm issued to an individual who had managed a $2 billion fund as executive director for the NSAHO pension fund. The fees in this investment in 2006 alone that this company achieved were $5.7 million. That's a huge pile of money for individuals and that's a huge untendered contract, very unusual within government or anyone who is associated with government, and I'm really disappointed we didn't have the individuals here today who could answer that question. I think it's a question that needs to be asked of government and it's unusual that a brand new company would get to administer this fund, as well, on an untendered basis.
I'm not sure if the Auditor General can look into this, but I would request that he consider that. This is a very serious issue and especially based on the fact that the fund has wiped out $110 million in gains to date - $110 million is a lot of money - while at the same time the company is getting huge fees.
So it's very disappointing for me to see this and it's not appropriate, I don't think, in the way a pension fund should be administered in this province, and especially when it's a
[Page 15]
fund with the Nova Scotia health workers at stake here. We have a hard enough time retaining health workers in the province and the problems that they have with that, and if they see a drop in their pension fund that's going to give us even more problems to maintain people.
I don't know where I want to go with this, but it's even noted by David Dodge, Governor of the Bank of Canada, who went on to say that the loss associated with the drop in the subprime market could have been associated, if there had been more transparency surrounding the risk associated with hedge funds. Yet, we hire someone, an untendered contract, pay them in excess of $5 million a year it appears, the fund loses money and nobody knows who hired them. This is outrageous, this is unbelievably outrageous.
I would ask the Chair of the committee to write to the minister and demand an answer on who hired this individual and what circumstances and terms they were hired on - an untendered contract for a five-year period, which is unheard of. I would ask on behalf of the committee that it be sent and I would turn the rest of my time over to Ms. Whalen.
MADAM CHAIR: Ms. Whalen, you have until 9:52 a.m.
MS. DIANA WHALEN: Thank you very much. I have a number of questions I would like to pursue. First of all, thank you for coming in today, we appreciate your time, and it may mean, I think, as we progress that we need to see other witnesses at other times to get to the bottom, basically, of how this works for government and for the employees. I'm quite concerned about the level of protection that we provide for people through the oversight that we give to pension plans.
I'm going back again, I guess I'd like to explore first the issue that the letter was based on, which was the use of surpluses within the fund for the employer to cover their share of contributions. Just to go back to your opening statements - and I know they were relating to different sections of the Act and of that pension, I guess outline guidelines - it did say, if I understood you correctly, you said that if the assets exceed the liabilities within a fund it is appropriate, or at least allowable, for the employer to use those excess funds. Is that correct, within the NSAHO pension?
MADAM CHAIR: Ms. MacNeill Smith.
MS. MACNEILL SMITH: Yes, the terms of the plan specifically allow the employers to take a full or partial contribution holiday, if there's a surplus in the plan.
MADAM CHAIR: Ms. Whalen.
MS. WHALEN: Given the fact that it created such anger, I guess, from the unions that we saw in our package some of the earlier press releases and stories that in June the
[Page 16]
Nurses' Union was very angry - June 2006 - saying that this was an affront and shouldn't have been allowed, it became an issue for government. As I understand it, government paid $70 million back into that plan, so are those two things related?
MADAM CHAIR: Ms. MacNeill Smith.
MS. MACNEILL SMITH: I would not have any knowledge as to why the unions expressed concerns the way they did and I have no knowledge with respect to any arrangement with respect to government putting $70 million into the pension plan.
MADAM CHAIR: Ms. Whalen.
MS. WHALEN: Could you perhaps outline to me what did happen then? My reading of it is the government did negotiate with the union, step in and put $70 million in when the union said it should have been $90 million, but they came to an agreement. The fund wasn't underfunded, because they had actually been using surpluses, so why was there a $70 million cost to Nova Scotians?
MADAM CHAIR: Ms. MacNeill Smith.
MS. MACNEILL SMITH: I do not know the answer to that question.
MADAM CHAIR: Ms. Whalen.
MS. WHALEN: To me this is a rather important question that we need to have an answer to. I mean $70 million from government coffers to go to a union fund that's managed by a non-profit organization that reports to you every three years, but we don't actually have the capacity within your office to do anything but accept these reports. Is that how I see it, that you don't even have to be current on what the situation is between the various parties?
MADAM CHAIR: Ms. MacNeill Smith.
MS. MACNEILL SMITH: My role is to ensure that there is sufficient money in the fund to provide for the promised benefits or, if there are insufficient funds, to make sure that the contributions are coming in within the requirements of the legislation. If employers have generously put more money in the pension fund, that is not of concern to me. It adds an additional layer of security for the benefits. I don't question the employers on why they would put in additional funds.
MADAM CHAIR: Ms. Whalen.
MS. WHALEN: From your knowledge of this fund in the first instance, you saw nothing wrong with the use of employer contributions coming from the surplus of the fund?
[Page 17]
MADAM CHAIR: Ms. MacNeill Smith.
MS. MACNEILL SMITH: It is quite a common practice for employers to utilize some portion of the surplus that has been built up in the plan to pay for all or part of the contributions that are required to pay for the current benefits being earned under the plan. So it is not unusual.
MADAM CHAIR: Ms. Whalen.
MS. WHALEN: Might that lead employers to adopt more risky investment strategies in order to look for those surpluses?
MADAM CHAIR: Ms. MacNeill Smith.
MS. MACNEILL SMITH: The employers must always ensure that the investments of the plan are done in a prudent manner, in accordance with the requirements of the legislation.
MADAM CHAIR: Ms. Whalen.
MS. WHALEN: A prudent manner is what you're saying, and yet within our Office of Pensions we don't make any comment about investment strategies. Is that right, we don't have a say in that?
MADAM CHAIR: Ms. MacNeill Smith.
MS. MACNEILL SMITH: My role with respect to monitoring investments is to make sure that the procedures outlined in the Act relating to the investment of a pension plan have been followed. I do not make decisions on what particular investments a pension plan should make, that is not my role.
MADAM CHAIR: Ms. Whalen.
MS. WHALEN: Does our Act specify that any pension plan should be run prudently? Is the word "prudent" anywhere in our Act?
MADAM CHAIR: Ms. MacNeill Smith.
MS. MACNEILL SMITH: Yes, it is. I'll refer you to Section 29 of the Act, "The administrator of a pension plan shall exercise the care, diligence and skill in the administration and investment of the pension fund that a person of ordinary prudence would exercise in dealing with the property of another person."
[Page 18]
MADAM CHAIR: Ms. Whalen.
MS. WHALEN: So if you knew of a plan that didn't exercise that ordinary prudence that you refer to in Section 29 of the Act, would you be in a position then to step in and perhaps order or recommend that a change be made to the way that fund is being managed?
[9:45 a.m.]
MADAM CHAIR: Ms. MacNeill Smith.
MS. MACNEILL SMITH: Yes, I would.
MS. WHALEN: That's good news. What I would like to point out is a little bit more around the hedge funds that the NSAHO pension was utilizing. I hadn't heard the term that was used by my colleague, Mr. Steele, when he talked about their alpha, but we know that this is a fund that had up to 50 per cent of its fund - how did I have it here now? - 50 per cent exposure in the plan to hedge funds; 50 per cent, half of the fund exposed in a market that would be volatile because when you're hedging against something, it usually has to do with some speculation into the future and where either commodities or currency are going to go.
I'm not an expert in investments either but I know that when you talk about hedging, you're talking about a greater level of risk and speculation. So I wonder if you could comment upon that level of exposure, 50 per cent exposure.
MADAM CHAIR: Ms. MacNeill Smith.
MS. MACNEILL SMITH: A hedge fund is basically a pool of funds using different investment strategies. It is not all in currency exchange or that type of investment. Just let me find the proper term here - it's not a derivative type of investment. With respect to hedge funds, there are underlying assets, underlying securities, so it's not in margins on the Canadian dollar, that type of thing.
MADAM CHAIR: Ms. Whalen.
MS. WHALEN: I do understand that a hedge fund has a similarity to a mutual fund in that it's a mixed bag of investments, but I think by the very nature of its term it is an unusual strategy and a more high-risk strategy. Can you name any other or think of any other plans that report to you that would have 50 per cent exposure, like the NSAHO fund does?
MADAM CHAIR: Ms. MacNeill Smith.
MS. MACNEILL SMITH: I don't know of any.
[Page 19]
MADAM CHAIR: Ms. Whalen.
MS. WHALEN: Thank you, Madam Chair. Does it suggest to you that a fund that has 50 per cent exposure like this in a volatile market, after what we've seen in the summertime with really the crisis in the American market around this subprime, did it suggest to you that it might require more investigation, that this might be an example where you step in, get the expertise we need within the office, contracted or otherwise, so that we could look at this?
MADAM CHAIR: Ms. MacNeill Smith.
MS. MACNEILL SMITH: I did have a conversation with respect to the CEO of the plan and it's my understanding that the trustees are currently reviewing their statement of investment, policies and procedures, which is what is required under the legislation. So they are following the requirements of the legislation with respect to the investment of the funds.
MADAM CHAIR: Ms. Whalen, you have four minutes.
MS. WHALEN: Thank you very much. So in your role as Superintendent of Pensions who might have an oversight role, would you ever be included in those discussions? Would you be able to attend those meetings?
MADAM CHAIR: Ms. MacNeill Smith.
MS. MACNEILL SMITH: I would not be included in those discussions. As I've indicated, it's not my role to determine what the investment strategy for a particular plan should be.
MADAM CHAIR: Ms. Whalen.
MS. WHALEN: Ms. MacNeill Smith, I'm curious about our role as legislators and government, and your role as a civil servant, about how much responsibility your office would have to simply ensure the protection of workers' pensions, the monies that they're putting aside for their retirement. That's a very important oversight role.
It's true to say that most people don't understand the intricacies of the market. Many people do not invest individually or have that experience, and therefore they rely on - again the word - prudence, caution and just good management to take care of the money that they're paying in on a regular basis. I would have thought your role would be more of a protection role as well, not just ensuring that the letter of the Act is being maintained or that regular reports are coming in, but actually looking for and flagging problems, trying to ensure that problems don't occur.
MADAM CHAIR: Ms. MacNeill Smith.
[Page 20]
MS. MACNEILL SMITH: Yes, you're right, that is my role with respect to making sure that if there are problems they are investigated and addressed.
I refer you to the requirements under the regulations with respect to the statement of investment policies and procedures that the trustees of the NSAHO plan must consider and they must indicate specifically the statement, ". . . in respect of the pension plan's portfolio of investments and loans, having regard to all factors that may affect the funding and solvency of the pension plan and the ability of the pension plan to meet its financial obligations, including . . . categories of investments and loans . . . diversification of the investment portfolio . . . asset mix and rate of return expectations . . . liquidity of investments . . . the lending of cash or securities . . . the retention or delegation of voting rights . . .", and the method of valuing investments and so on.
MADAM CHAIR: Ms. Whalen, you have one minute.
MS. WHALEN: I think what I would just like to close this minute on is a quick question around your office, when was it established, when was it last reviewed in terms of your mandate and the scope of your activities?
MADAM CHAIR: Ms. MacNeill Smith.
MS. MACNEILL SMITH: The Act was established in 1977. There was a fairly broad review of the Pension Benefits Act that was started by a consultation in November 1998, with resulting changes in the legislation in January 1, 2003.
MADAM CHAIR: Ms. Whalen, you have 15 seconds.
MS. WHALEN: Would it be fair to say that in the ensuing years since 1977, the investment world has become increasingly complex and the types of investments have become much more difficult to understand?
MADAM CHAIR: Ms. MacNeill Smith.
MS. MACNEILL SMITH: I would say yes, that is the nature of the investment world we're in.
MADAM CHAIR: Order.
Mr. Dunn from the PC caucus. You have 20 minutes.
MR. PATRICK DUNN: Thank you, Madam Chair, and thank you for being available to answer questions this morning. A couple of questions before I pass it on to my colleagues. You already touched briefly on underfunded pensions and I'm referring to the Greenbrier-
[Page 21]
Trenton railcar facility which closed its doors and their pension was underfunded. Again, my question is, I would like you to elaborate on why pension funds find themselves in this particular predicament. What are the options for correcting underfunded pensions, in particular when the plant is closed? You mentioned a five-year window. Before the five-year window closes when the pension should be fully funded, if people are aware that it's not going to reach their mandate, what should happen or what could happen and so on?
MADAM CHAIR: Ms. MacNeill Smith.
MS. MACNEILL SMITH: A pension plan is required to prepare an actuarial valuation report every three years and that report is a snapshot at a particular point in time of the financial health of the plan. It's done on two bases. The first assumes long-term assumptions with respect to when people are going to retire, how long they're going to live and what the investment returns are going to be on the fund. They tend to be conservative assumptions, but they're not generally reflective of the marketplace at a particular point in time. So if interest rates are low and you wanted to buy a pension for a pensioner in your plan from an insurance company, the insurance company is saying interest rates are low, you're going to have to give us more money up front to pay that promised benefit for that person's lifetime.
If the interest rates are high at the time that you're going to purchase the annuity for the individual, the insurance company is saying, well, we'll need less money because we're going to manage our investments such that we can cover that annuity payable for that individual, assuming that the interest rates are going to be at a higher level.
So a pension plan is subject to risks relating to the investments of the particular pension plan and how well they do. There are risks as to how long the people are going to live, and risk as to what the market rate is going to be if the plan is wound up and the benefits have to be secured by purchasing annuities.
So the second valuation that has to be done at the same time as the first - the ongoing valuation - is a solvency valuation. That assumes market conditions at that particular point in time - market conditions with respect to the value of the fund and also market conditions with respect to the cost of securing those benefits in an insured vehicle or a product through a life annuity.
So because the market fluctuates - the bond rates fluctuate - a pension plan may vary from being funded or underfunded at any particular point in time. It is a very high and onerous requirement if we were to require employers to fully fund a pension plan at any particular point in time. Hence, the requirement under our legislation for the employer to fully fund a pension plan on a market basis, over a five-year period. So of a plan winds up before those five years are completed, the funding is not completed and then the plan is only funded to the extent that the contributions were made in that, say, three-year period.
[Page 22]
Now that would be just to address the deficiency that existed at the time of the valuation. If something happened to the pension plan assets subsequent to that valuation, that would not be reflected in those costs. So you could have the solvency deficiency wiped out in that five year period because the investments did really well, or you could have a new deficiency created because the investments did poorly. So the difficulty is in determining the right mix for a particular plan at any point in time.
MADAM CHAIR: Mr. Dunn.
MR. DUNN: Thank you. I am going to pass over the following questions to my colleague, Mr. Porter.
MADAM CHAIR: Mr. Porter, you have until 10:12 a.m.
MR. CHUCK PORTER: Thank you, Madam Chair, and thank you as well, Ms. MacNeill Smith. I have a number of questions and I guess the first one I'll ask is, how many superintendents are there of this pension? Is there just yourself or are there more?
MADAM CHAIR: Ms. MacNeill Smith.
MS. MACNEILL SMITH: There is one Superintendent of Pensions and across Canada there is only one Superintendent of Pensions in each jurisdiction.
MADAM CHAIR: Mr. Porter.
MR. PORTER: Thank you. So just in clarification of jurisdiction, you're talking provinces.
MADAM CHAIR: Ms. MacNeill Smith.
MS. MACNEILL SMITH: Nine provinces - Prince Edward Island does not have pension legislation proclaimed, so it does not have a Superintendent of Pensions. There is also a Superintendent of Pensions with respect to the federal government, in the office of the Superintendent of Financial Institutions. They regulate interprovincial transportation and communication enterprises, like the railways, the airlines - those types of industries.
MADAM CHAIR: Mr. Porter.
MR. PORTER: Thank you. I was looking through the reports as well and you referred to it a few minutes ago with regard to this three-year snapshot. I don't know an awful lot about pensions, unfortunately. In my previous field, we didn't have a pension plan until just a very few short years ago, so we've been learning as you go, I guess, is probably the best way of putting it, and we're learning more and more. It is somewhat volatile, from what I can
[Page 23]
understand and from what I can tell. But a three-year snapshot seems like an awfully long period of time.
In your opinion as a superintendent, someone helping to oversee and manage this process - I guess I struggle with this process, why wouldn't there be an annual one at least? I know that on my own, you make investments and generally you'll get an annual statement or something telling you how you're doing and giving you an opportunity for some input. So in your opinion, as someone who has a lot to do with this plan, and as a superintendent, is a three-year window too big a window? Should it be an annual, biannual - two years?
MADAM CHAIR: Ms. MacNeill Smith.
MS. MACNEILL SMITH: If I was administrator of a pension plan, and of course most pension plans are established by a single employer, you want to ensure that your liabilities are known at any particular time. You certainly don't want a surprise to come up at the end of a three-year period that all of a sudden, you have a deficiency in the plan. So it would be an important tool for management to actually do annual valuations.
[10:00 a.m.]
I know that in some cases annual valuations are done but currently there is no requirement under the pension legislation that they be filed any more than every three years. So the requirement currently under our legislation is for one valuation every three years. If, in fact, benefits are improved during that period, then another valuation may be required. Or, if there is something that happens to the assets of the plan where they drop significantly, then I could order that a valuation be prepared and filed.
Some jurisdictions do require annual valuations for plans that are underfunded and that requirement exists as long as the plan is underfunded. Once it reaches full funding, then it can go back to the tri-annual filing.
MADAM CHAIR: Mr. Porter.
MR. PORTER: Thank you, and just a follow-up to that; so you're saying, if I'm hearing correctly, the employer has the ability, the employee has the ability to somehow track how their investment is doing? Can I go on-line or can I pick up a 1-800 line and call and say, how is my investment doing, or are we that narrowed down to the actual person who is paying the money out of their pocket - the investor himself?
MADAM CHAIR: Ms. MacNeill Smith.
MS. MACNEILL SMITH: Currently it's the employer who has that ability to determine whether a valuation is done or monitoring the investments. There is a requirement
[Page 24]
under the Pension Benefits Act that the employees can establish a pension committee and that committee does have rights to information with respect to the pension plan, but it's not a decision-making authority.
MADAM CHAIR: Mr. Porter.
MR. PORTER: Thank you. I find the whole thing personally very confusing, even my own I find very confusing. I go into the bank or into our own pension investment and we have the ability to pick and choose, I guess if you will, whether you want to go into something a little more high risk, low risk or whatever it might be. So again, I'll say that this whole thing is a little bit unusual for me or of some difficulty.
The unions - how much of an input do they actually have? So you administrate or you supervise this program, how with this three-year window again, it's all relative I guess but what I'm trying to ask is how much input do the unions have - and it doesn't matter which one - with regard to the investment in this program, choosing what it is they are actually investing in?
MADAM CHAIR: Ms. MacNeill Smith.
MS. MACNEILL SMITH: A union would generally only have input if they were on the board of trustees that were administering the pension plan and directing the pension plan investments. Most pension plans do not have union representatives making the decisions of a single-employer pension plan.
MADAM CHAIR: Mr. Porter.
MR. PORTER: Thank you. So okay, I guess that brings me back to my next question; that would mean that the employee has pretty much no ability, then, to be involved. All they're really doing is, they're paying their contribution every payday or monthly or however it goes in. So the employee doesn't have it and their union representative, unless they're on the board of trustees, really doesn't oversee or have any real input as to what is invested in. Is that accurate?
MADAM CHAIR: Ms. MacNeill Smith.
MS. MACNEILL SMITH: With respect to defined benefit pension plans, generally the members do not have any selection with respect to the investments of the pension fund. The type of plan that you are in, that sounds like a defined contribution plan. Many of those plans are employee-directed as to the type of investments that are chosen.
[Page 25]
We are working nationally to ensure that the information provided to plan members in those defined contribution plans is easily understood and sufficient that employees can make appropriate decisions with respect to the investment of their pension funds.
MADAM CHAIR: Mr. Porter.
MR. PORTER: So obviously in the past, as we've seen some different literature and so on, people have been unhappy at some point or other. What's the process for resolving the complaints, then, under the Pension Benefits Act?
MADAM CHAIR: Ms. MacNeill Smith
MS. MACNEILL SMITH: Yes, any plan member or union representative or anyone with an interest in the pension plan can contact my office and then we work to obtain the details surrounding the issue and would contact the plan administrator or the other parties involved, to obtain a resolution to the issue.
MADAM CHAIR: Mr. Porter.
MR. PORTER: So that's great. Again, just so I'm clear, the only opportunity - would it be that snapshot, then, every three years that I would get a glimpse of how things are doing? Given that I can't actually go in and look to see, am I making money, am I losing money, how are we doing with pensions, just in general, if I wanted to do that? That's sort of where I was going with that because it doesn't appear as though I have that ability and my union representative doesn't really have that ability either, I have to go quite a bit deeper to find out information.
MADAM CHAIR: Ms. MacNeill Smith
MS. MACNEILL SMITH: Yes, I'm on a committee, a national committee of superintendents, and we're looking at changes or developing what we would consider a model pension law for Canada for each of the jurisdictions to consider. In that consideration, we're looking at what additional information should be provided to employees on their annual statement. Certainly with respect to the funding status of the plan, whether there's a solvency deficiency and what changes there might be since the previous year, we are looking at adding that as a requirement to the information that must be given to members. It doesn't currently exist in Nova Scotia.
MADAM CHAIR: Mr. Porter.
MR. PORTER: Are there any restrictions on the types of investments that can be made within the pension fund?
[Page 26]
MADAM CHAIR: Ms. MacNeill Smith
MS. MACNEILL SMITH: Yes, the Act is quite specific with respect to the investments that can be made and there's a schedule of investment restrictions and criteria. The schedule is identical to that used by the federal government in the monitoring of the plans registered under the Pension Benefits Standards Act. Again, in each of the provinces, except for New Brunswick - their legislation with respect to investments is similar to what we used to have - and Quebec which has not adopted the federal standard. Quebec has gone to primarily fully prudent investments and have no quantitative restrictions with respect to the type of investments that can be made.
MADAM CHAIR: Mr. Porter.
MR. PORTER: What's the difference between a defined benefit pension plan and a defined contribution pension plan?
MADAM CHAIR: Ms. MacNeill Smith
MS. MACNEILL SMITH: This relates back to the discussions we've been having. The NSAHO pension plan and their other pension plans - the Public Service Pension Plan is one example - where the promise to an employee under a defined benefit pension plan is for a particular pension paid at retirement for their lifetime. So the individual knows when they retire that they are going to get so many dollars per month, based on their salary and in accordance with their length of service. It is going to be paid to them for their lifetime and there are guarantees with respect to any benefits paid to their spouse or partner.
A defined contribution plan operates very much like an RRSP where the individual only knows the amount of contributions going in, you don't know what the fund value is going to be at retirement and you don't know what the payments are going to be or what you should take out because you don't know how long you're going to live. So you're assuming the risk of outliving your money and you're also assuming the risk of what the investments are going to be. So they're quite very different types of pension promises.
MADAM CHAIR: Mr. Porter.
MR. PORTER: Thank you. The NSAHO and what it represents and how it works and so on; if I were, and it doesn't matter, just a sector or part of a group that is now with this organization and you are doing the investment for me, do I have an option at some point here to opt out of this program and say, go into my own thing and my staff and my employees we are all going to do our own thing now and opt out, no matter how big or how small that sector might be?
MADAM CHAIR: Ms. MacNeill Smith
[Page 27]
MS. MACNEILL SMITH: The NSAHO plan - according to the plan documents as spelled out in there, each of the participating organizations elects to join or to participate. There are certain restrictions but they certainly have the right to opt out of participation in that plan.
It is my belief that this plan, as with other plans, that all employees, new employees, are required to participate in the pension plan. In many cases that's not only a term of the plan, it's a term of the contract of employment, that if you are employed with a particular organization you are required to make contributions to the Canada Pension Plan, you are required to make EI contributions and you are required to participate in the employer's pension plan.
MADAM CHAIR: Mr. Porter.
MR. PORTER: Thanks, I understand that piece, not that I am suggesting that anyone do it but I guess I was wondering if it's an option. Okay, that's fine, I understand all of that but does it have to be managed by the NSAHO? That's sort of what I was getting at in my question - I don't know, one of the unions, the NSGEU, just pick any one of them or a group, at some point could we say okay, thanks very much, you've done this great service but I think we're going to go down a different road and try something else with investments and try to secure futures for our staff. That is where I was going, is that an option?
MADAM CHAIR: Ms. MacNeill Smith.
MS. MACNEILL SMITH: Again it depends upon the organization and where the decision-making powers of that organization lie. Most generally, they do not lie with the membership, the structure of an organization will outline who can make decisions with respect to the plan itself.
MADAM CHAIR: Mr. Porter, you have one minute.
MR. PORTER: Thank you, Madam Chair. If a pension plan is underfunded, is there any assurance that contributors will get the amount of pension that they were promised?
MADAM CHAIR: Ms. MacNeill Smith.
MS. MACNEILL SMITH: If a pension plan is terminated before solvency funding is completed, then benefits would be reduced if the plan was wound up, so there is no certainty under the pension legislation currently that employees will get full value of their pension benefits if the plan is wound up.
MADAM CHAIR: Mr. Porter, you have 10 seconds.
[Page 28]
MR. PORTER: And I will have - are we going around again, Madam Chair?
MADAM CHAIR: Yes.
MR. PORTER: Thank you, I'll leave it until the next and thank you very much.
MADAM CHAIR: Okay, thank you very much.
The second round of questioning will be much shorter, it will be 10 minutes per caucus. We have a bit of business to do at the end so I have reserved a bit of time. I am going to take the next 10 minutes for the NDP caucus.
I want to go back to the Trenton Works pension. I understand the concept that the performance . . .
MR. COLWELL: Madam Chair, wouldn't it be appropriate for the vice-chairman to take the Chair when you're asking questions, if you don't mind?
MADAM CHAIR: In the past, we've had agreement that I can ask questions from the Chair as long as I stick to the time allotted for my caucus. So unless people want to change that agreement we've had, it's up to you. I'd be happy to sit.
MR. PORTER: I'm just also thinking about Hansard's request to identify the speaker versus the witness as well. Perhaps we should, if that's appropriate.
MADAM CHAIR: Certainly, if that's what you wish. Thank you.
[10:13 a.m. Mr. Chuck Porter took the Chair.]
MR. CHAIRMAN: Ms. MacDonald.
MS. MAUREEN MACDONALD: Thank you, Mr. Chair. I understand the concept around the performance of investments and the contributions, if investments aren't performing at a rate that was anticipated, this can have quite a dramatic impact on a plan. I have to say around the Trenton Works pension plan I'm very concerned. I think we are all very concerned that the workers in this particular industry are being left in a terrible situation and we would really like to find a way to address that. So I want to ask if in our current legislation, there are any provisions around the winding up of a plan that would place an onus on the employer with respect to the assets that exist in a plant, for example? That the use of those assets be required to fully fund any shortfall in a plan that had been negotiated, promised, understood to be there for the benefit of the workers. In addition to that, I'm wondering if those provisions exist in other provinces if we don't have those provisions in our Pension Benefits Act here in Nova Scotia?
[Page 29]
[10:15 a.m.]
MR. CHAIRMAN: Ms. MacNeill Smith.
MS. MACNEILL SMITH: Our current Act requires an employer to fund only up to the date of wind-up, so that if there was a deficiency identified in a previous valuation, if they had five years to fund that deficiency and the plan was wound up in year three, the employer is not required to make those additional two years of payments - there is no requirement under our legislation for that. I have seen employers voluntarily fund a deficiency on wind-up - that is a quite common occurrence - but there is no lien on any assets of the employer with respect to funding a deficiency.
With respect to what exists in other jurisdictions, in the last number of years - and most specifically New Brunswick just this summer - introduced legislation that would require an employer to fully fund a plan on wind-up to the extent there were assets of the employer to fund that deficiency. Currently, New Brunswick has not yet proclaimed their legislation, they are just working on the regulations now. Currently it is only the federal government, Nova Scotia, Newfoundland and Labrador and Saskatchewan that do not require full funding of a plan when an employer winds up the plan.
MR. CHAIRMAN: Ms. MacDonald.
MS. MAUREEN MACDONALD: Does your office take any kind of an active role in working with an employer, such as Greenbrier in this case, around looking at what can be done to ensure that that pension fund is fully funded? Is it a more passive role, I guess, that you play?
MR. CHAIRMAN: Ms. MacNeill Smith.
MS. MACNEILL SMITH: I can only require an employer to do what is established under this Statute in the regulations and I do not have any authority or ability to go beyond that Statute.
MR. CHAIRMAN: Ms. MacDonald.
MS. MAUREEN MACDONALD: So essentially it will be left to the government and members of the Legislature to play that role then, I would suggest to you, and possibly look at amending the legislation to give greater authority to your office. Would that be the case?
MR. CHAIRMAN: Ms. MacNeill Smith.
[Page 30]
MS. MACNEILL SMITH: Yes, certainly. If there are changes to be made to the legislation that would address deficiencies in a plan wind-up, then that would have to be made by the government.
MR. CHAIRMAN: Ms. MacDonald.
MS. MAUREEN MACDONALD: I know I don't have a great deal of time - there are so many issues that we could talk about around pensions. I'm going to change gears a little bit. The government introduced legislation to eliminate mandatory retirement back earlier this year. I'm wondering what, if any, role your office had in doing an analysis with respect to the impact of those changes on, for example, university pension plans in Nova Scotia? As I understand it, the plans are negotiated based on certain assumptions and one of those assumptions being that people will be retiring at 65 and eligible for a particular defined benefit. If, in fact, those circumstances were to change, then that could have a significant impact on the stability in some cases of plans. So was your office acting as an advisor - were you asked for any advice with respect to the implications of that rather significant policy shift?
MR. CHAIRMAN: Ms. MacNeill Smith.
MS. MACNEILL SMITH: Yes, I did work with other members of my department on the changes with respect to mandatory retirement. The implications for a pension plan are a bit different than one might expect on the surface. A pension plan is required under the legislation to provide an employee an unreduced pension at normal retirement date and that pension starts at normal retirement date and goes until an employee dies. When an employee works beyond normal retirement date, the current legislation says that if you are continuing to be employed past normal retirement date and you're not receiving a pension, that you have the right to continue to accrue additional benefits.
There is a cost to the employee of not retiring in that they are certainly entitled to receive benefits at age 65 and they are delaying receipt of those benefits, so for every year of delay, in fact, the plan gains because they have not paid out those promised benefits. The plan loses in the sense that each year of additional benefit earned by the employee is maybe costlier than for a younger employee at a lower pay scale. It should not have a significant impact on the pension plan funding.
MR. CHAIRMAN: Ms. MacDonald with about one and a half minutes remaining.
MS. MAUREEN MACDONALD: The last question I have is about multi-employer plans. I've recently attended a conference on retirement policy in the country and one of the things that struck me was the size of pension plans in other provinces relative to the size of plans here. The principle, of course, is that the greater the number of participants in a plan
[Page 31]
the less the risk is because it is spread out, it's shared a bit more. In some ways, that's sort of a crude summary of what people were saying.
Some provinces, for example, Ontario, all municipal employers and therefore all municipal employees are in one plan, yet I think in Nova Scotia we have very few multi-employer plans. The Nova Scotia Association of Health Organizations is one of the few notable plans that we have. Is there not an advantage to having more multiple employer plans for people in the province and wouldn't that increase the potential for people to have pensions, particularly people who are employed in small businesses that have no ability, really, to offer a pension plan to their employees unless they have access to a multiple employer plan?
MR. CHAIRMAN: Order, please. Time has expired. Mr. Glavine for 10 minutes.
MR. LEO GLAVINE: Just one question to start with and then I'll just look at procedure here for a little bit. At the beginning when you introduced yourself, you said you would speak from two different perspectives, two different hats. Maybe there is a third one and that is as a citizen of Nova Scotia who was part of, like us, paying $70 million into the fund last year. In 2006, in an NSAHO release they said that the fund was not only doing well, but, in fact, was running a surplus. You also stated, according to the Act, that it's fine for an employer to use the surplus for contributions, but yet we paid in $70 million. What explanation can you provide for that action to be taken by government?
MR. CHAIRMAN: Ms. MacNeill Smith.
MS. MACNEILL SMITH: I was not party to any decision making with respect to making additional contributions into the pension plan, so I have no knowledge of the rationale used for that decision.
MR. CHAIRMAN: Mr. Glavine.
[10:25 a.m. Ms. Maureen MacDonald resumed the Chair.]
MR. GLAVINE: Certainly, it is now coming to light that the 50 per cent exposure of the NSAHO pension plan to hedge funds is of a major concern to the employees. I have a few questions around the procedure there. I was wondering how often companies have to report to you on their investments?
MADAM CHAIR: Ms. MacNeill Smith.
MS. MACNEILL SMITH: The actuarial valuation report that is required to be filed every three years includes a summary of the assets of the pension plan in more detail. Also, on the annual information return that must be filed every year, the employer must identify
[Page 32]
the asset value at the beginning of the year, any changes to that asset value and it must also reveal the closing value. We do analyze the assets of a particular plan on a snapshot basis every year.
MADAM CHAIR: Mr. Glavine.
MR. GLAVINE: Thank you, Madam Chair - we'll get used to this. Do you ever comment to them on the appropriateness of those investments?
MADAM CHAIR: Ms. MacNeill Smith.
MS. MACNEILL SMITH: I have in the past. In reviewing valuation reports, if we've identified that the rates of return of the fund are not sufficient to sustain the benefits, we have asked that the employer specifically look at the investment strategy and the statement of investment policy and goals it has for that particular plan, and make some changes.
MADAM CHAIR: Mr. Glavine.
MR. GLAVINE: Going a little further, do you have the authority to refuse any investments?
MADAM CHAIR: Ms. MacNeill Smith.
MS. MACNEILL SMITH: The Act is not specific with respect to refusal of investments. I do have the authority under the Act to make orders with respect to the administration of a pension plan and pension fund, and that would extend, I believe, to orders relating to investments.
MADAM CHAIR: Mr. Glavine.
MR. GLAVINE: Do you know the current level of valuation of the pension fund in this NSAHO pension fund?
MADAM CHAIR: Ms. MacNeill Smith.
MS. MACNEILL SMITH: Yes, the NSAHO pension fund valuation report is actually on their Web site and it was filed with me, so I know the status as of December 31, 2005.
MADAM CHAIR: Mr. Glavine.
MR. GLAVINE: Not exactly a timely snapshot, I would say, especially since many employers would like to know how much was lost over the last six months and there
[Page 33]
certainly seems to be an indication that that is the case. Would you have any idea of the last six months?
MADAM CHAIR: Ms. MacNeill Smith.
MS. MACNEILL SMITH: We would only have fund data prepared as of the December 31, 2006. We don't get monthly reporting on fund values and with respect to the investments of a pension plan, how a plan does in a particular month is not as relevant as how a particular plan's investments do over the long term. It is the long-term promise of pension benefits which must be supported by the investment strategy of the plan.
MADAM CHAIR: Ms. Whalen, you have until 10:34 a.m.
MS. WHALEN: I have just a few quick questions, I think the answers may be fast as well. I'd like to ask that you provide the job description for yourself and for the key people in your office to the committee and also anything that defines roles and responsibilities. I think that would help to clarify in our minds just how far our reach goes in terms of protecting the members of pension plans across the province. I think we need to look at that in light of the fact that it has been some time since the office was reviewed and really, the investment world has changed dramatically - it is extremely complex. There are new products being offered all the time that even people who are active in the industry have a hard time keeping up with. With that in mind, I would like to ask you if you have a training budget within your office and if you could comment on professional development?
MADAM CHAIR: Ms. MacNeill Smith.
MS. MACNEILL SMITH: Yes, I do have a training budget within my office for my staff and myself. Most recently, one of my pension analysts went to Vancouver to attend a national conference for compliance officers to assist them in developing procedures.
[10:30 a.m.]
MADAM CHAIR: Ms. Whalen.
MS. WHALEN: Rather than going into where they've been, I wonder if you could tell me the size of your training budget in relation to your overall budget? Just give me the two figures, training budget-overall budget.
MADAM CHAIR: Ms. MacNeill Smith.
MS. MACNEILL SMITH: My training budget is probably about $3,000 and the overall budget, I just revised it, we had a new program put in. I think it is about $400,000.
[Page 34]
MADAM CHAIR: Ms. Whalen.
MS. WHALEN: Thank you very much. I would say $3,000 is not very sufficient, really, to allow you to send people to conferences and for yourself to attend as well. That might take you to one conference a year for one employee, especially when you're talking about Vancouver, but we'll go on from that, I appreciate the relative picture of it.
I wanted to know about the trustees of the NSAHO fund, if you can tell me who appoints them - how many and where do they come from? Are they appointed by a minister, by their union members, who decides?
MADAM CHAIR: Ms. MacNeill Smith.
MS. MACNEILL SMITH: The trust document relating to the NSAHO plan is not a public document, it's not available on their Web site, so I can't speak to the specifics of that trust agreement.
MADAM CHAIR: Ms. Whalen.
MS. WHALEN: You did indicate what responsibilities they have and what they were asked to sit down and do in light of the volatile and perhaps damaging effects of the recent markets, but you don't know who they are, how many there are and who appoints them?
MADAM CHAIR: Ms. MacNeill Smith.
MS. MACNEILL SMITH: I spoke in respect of the requirements under the legislation for trustees of pension funds. I do have information on the specifics of the trust agreement and the trust document is in my office and that is filed with me and it is confidential information.
MADAM CHAIR: Ms. Whalen.
MS. WHALEN: Would it be fair to say that it is apt to be the board that appoints them then, the board of NSAHO? Who would appoint them? I'm in the dark here.
MADAM CHAIR: Ms. MacNeill Smith.
MS. MACNEILL SMITH: That would be specified in the trust document.
MADAM CHAIR: Ms. Whalen.
[Page 35]
MS. WHALEN: And you're telling us the trust document is not available. I have one final question, would a union member know, a person who is contributing to those funds? Would they be able to find who they are and how they are appointed?
MADAM CHAIR: Ms. MacNeill Smith.
MS. MACNEILL SMITH: Yes, a union member has the right to request copies of documents that are on file with me and they can come to the office to look at them.
MADAM CHAIR: Ms. Whalen.
MS. WHALEN: For final clarification, you are saying that the information is on file with you, but you're not at liberty to share it with us. Is that correct?
MADAM CHAIR: Ms. MacNeill Smith.
MS. MACNEILL SMITH: That is correct.
MS. WHALEN; That is a little bit different than what I first understood, that you simply didn't know. If there was anything untoward in the way that those were appointed or you felt it wasn't a good balance of expertise, are you free to say so and get them to change it?
MADAM CHAIR: Ms. MacNeill Smith.
MS. MACNEILL SMITH: Yes, if I had any concerns with respect to the operation of a board of trustees I would be able to act under the legislation.
MADAM CHAIR: Ms. Whalen.
MS. WHALEN: I have one final question. I'm just going to change tack for a quick moment and ask you about the new legislation for unlocking some funds out of your RRSPs, the locked in RRSPs, the new legislation. Could you tell me how many applications you have received to date relating to that?
MADAM CHAIR: Ms. MacNeill Smith.
MS. MACNEILL SMITH: Since July 1st we have received roughly 70 applications.
MADAM CHAIR: Ms. Whalen.
MS. WHALEN: And have they been dealt with quickly or are there any difficulties that are coming to light?
[Page 36]
MADAM CHAIR: Ms. MacNeill Smith.
MS. MACNEILL SMITH: We have processed them quite rapidly. Some of the applications are insufficient in that the required documentation has not been submitted, so there are some that have not been approved pending filing of additional information.
MADAM CHAIR: Order, please. The time has expired. I will now recognize Mr. Porter for the PC caucus. You have 10 minutes until 10:44 a.m.
MR. PORTER: I want to pick back up where we sort of left off, Ms. MacNeill Smith. The question was about underfunding and is there any insurance type thing and how are they promised along that deal and through the years and the answer was depending on how long and I understand that. I guess the question when I think about the long term, 25, 30, 35 years of investing, is it fair to say there are really no guarantees at the end of the day of what will be there?
MADAM CHAIR: Ms. MacNeill Smith.
MS. MACNEILL SMITH: The guarantees lie in the requirements with respect to prudent investment of the funds and consideration of the liabilities of the plan, but there is no absolute guarantee that there is going to be sufficient funds at the time a plan is wound up to pay for a benefit, you're correct.
MADAM CHAIR: Mr. Porter.
MR. PORTER: Just as a follow-up to that I would ask, why invest? Why wouldn't I put my money in the bank and hope that the 2 per cent or 3 per cent or whatever I'm making, if I have a couple of good years like we had back in the 1980s, 1970s or whatever - the rates were quite high in those days, you could make some money? As an employee in this province working in any field the question has been asked and I will ask, I probably asked myself why do I bother investing? Tell me where the benefit is on that investment? It seems like an awful lot of risk there, that's why I toss that to you.
MADAM CHAIR: Ms. MacNeill Smith
MS. MACNEILL SMITH: The assets of the pension fund are held separate and apart from the employer. The employer is required to invest the funds prudently and they're invested by experts in the field of investment. Speaking personally, I would be more satisfied to give my money to any employer in the province and have them direct the money than for me to do the investment myself because I am not an expert with respect to choosing particular investments.
MADAM CHAIR: Mr. Porter.
[Page 37]
MR. PORTER: So very simply, the short answer is knowledge in the expertise, that's fine, I'll just move on. You mentioned just a few minutes ago when Ms. Whalen asked you about your training budget, you mentioned around $3,000. With regard to that, a very quick question on it - with the world being so small and the worldwide Web these days, is there any in-house training like on-line types of things? I realize they have a cost associated with them as well, but they would be considerably less expensive I would think than maybe a trip to Vancouver for example. Is there any of that being done or considered?
MADAM CHAIR: Ms. MacNeill Smith.
MS. MACNEILL SMITH: The government offers a large number of training courses for its employees at considerably reduced costs than what you would find in the private sector. This new program that is developed nationally for compliance officers, the meetings are held in different locations each year so the next meeting, for example, could be in Nova Scotia at a very minimal cost to Nova Scotia. This year it just happened to be in Vancouver, but it won't be back in Vancouver for another nine years.
We do have a lot of in-house training in government with respect to training for employees. Also, there is a lot of direct training on particular pension issues that are done internally, both by myself and through education with respect to the national organizations.
MADAM CHAIR: Mr. Porter.
MR. PORTER: I guess this whole issue began back a year or so ago now with some question about the NSAHO and investment and how they are managing and a lot of things. I want to ask you, how has the NSAHO plan performed in relation to other plans?
MADAM CHAIR: Ms. MacNeill Smith.
MS. MACNEILL SMITH: I would say that historically the NSAHO plan has been very well managed and very well run. They never assumed high rates of interest for the valuation of their plan, they did not take the same steps taken by other plans in the late 1990s - prior to 2001 - with respect to improving benefits to the point where they later became unaffordable. So I have had very little concern with respect to the operation of that plan and it has always been managed very conservatively in respect of its benefits and the plan itself.
MADAM CHAIR: Mr. Porter.
MR. PORTER: Okay, I guess for more clarity on that question then, dollars and cents, has this plan - you used the terms "well managed, well run", that's all well and good but as an employee who pays into it, I guess what I'm wondering is bang for buck, am I doing all right? Am I doing better than I would be in some other plan? So that question about relative to other plans, are we ahead, are we on average with regard to dollars and cents?
[Page 38]
MADAM CHAIR: Ms. MacNeill Smith.
MS. MACNEILL SMITH: It's my understanding that the plan itself has done that analysis and it has provided it to the plan membership most recently, so that information is available to them.
MADAM CHAIR: Mr. Porter.
MR. PORTER: And that's part of the three-year snapshot or is that something annually then from employer to employee?
MADAM CHAIR: Ms. MacNeill Smith.
MS. MACNEILL SMITH: That's not a requirement of the legislation, that's something over and above what the legislation requires that the employers provided.
MADAM CHAIR: Mr. Porter, you have four minutes.
MR. PORTER: Thank you, and I have maybe only a question or two left. Just on that then, so there are options along the way when it comes right down to it, for me if I were that employee, to make suggestions with regard to how I may like to invest here or invest there?
MADAM CHAIR: Ms. MacNeill Smith.
MS. MACNEILL SMITH: With respect to defined benefit pension plans, the individual employees do not direct the investments. It is the board of trustees responsible for the investment of the pension plan. Now they may have input through one of the trustees but the individual employees themselves do not make investment decisions. It would be impossible for a plan the size of the NSAHO to have all of its membership making suggestions with respect to investments.
MADAM CHAIR: Mr. Porter.
MR. PORTER; Okay, thank you. As I said, I find the whole pension thing with regard to the defined benefit somewhat confusing and I guess it is something that we'll need to look at into the future with regard to how that all works.
Madam Chair, I would say thank you very much at this point in time, that will wrap it up for me.
MADAM CHAIR: There are two minutes remaining. Are there any further questions from your caucus?
[Page 39]
Hearing none, I would invite Ms. MacNeill Smith to make some closing comments.
MS. MACNEILL SMITH: The point I would like to make generally is that the Act and the regulations do set out basically a procedure for the administration of pension plans and that any concerns any employee has with respect to the operation of that plan may be brought to my attention and we can look at it. That is our role. I appreciate the time that you've taken to question me on the application of the legislation, thank you.
MADAM CHAIR: Thank you very much for being here today. At this time, we have a few administrative matters that we need to deal with. The first is, I'd ask maybe a member of the subcommittee to move the adoption or the approval of the subcommittee report which essentially is just a schedule of witnesses who will be here this Fall. The clerk will circulate to you a copy of that subcommittee report and perhaps Mr. Porter or Mr. Colwell would like to make a motion for approval. Mr. Porter.
MR. PORTER: Thank you, Madam Chair, just a quick look. I would move that this subcommittee report be moved for discussion.
MADAM CHAIR: Is there any discussion? Mr. Colwell.
MR. COLWELL: Yes, I'd like to see maybe the Department of Health and the Department of Justice move down a little bit to leave some more time for the provincial Office of Immigration, in case there are some other topics that come along with that. It seems to have finally come to a head even though we've all been complaining about it for some time. I'd like to make that amendment to the motion.
[10:45 a.m.]
MADAM CHAIR: We certainly can do that, or it was my intention to adopt this and then have a specific discussion around the Office of Immigration, in terms of how we want to proceed. So if you would agree that we'll do it as part of that, we'll just adopt the subcommittee report with the understanding it can be further altered as we have a discussion about that particular item. Agreed? Okay, thank you.
Would all those in favour of adopting the report please say Aye. Contrary minded, Nay.
The motion is carried.
Okay, now I think we need to have a further discussion about the provincial Office of Immigration. There's one thing I would like to just say before we have that discussion; we heard from the Office of Immigration with respect to this request and they are preparing to come on November 21st but they've asked the committee to be aware of the fact that they do
[Page 40]
not deal with skill shortages - that is in the Department of Education. That's just a point of information for the members.
Mr. Steele.
MR. STEELE: Thank you, Madam Chair. I had indicated to you before the meeting that I would be presenting three related motions this morning. I have given you a copy, I'd like to invite the clerk of the committee now to hand out a copy of my motions. I'd like to read them for the record and presumably you'd like to deal with them one at a time, so if I may, Madam Chair, I'll proceed to read the first motion.
MADAM CHAIR: Please.
MR. STEELE: Moved that the Public Accounts Committee further investigate the Provincial Nominee Program of the Office of Immigration beyond the meeting scheduled for November 21st and that the matter be referred to the Subcommittee on Agenda and Procedure for a recommendation as to the date, time and format of future meetings and the identity of witnesses.
MADAM CHAIR: Thank you. The motion is in order. Any discussion on the motion? Hearing no further discussion, are you ready for the question?
Would all those in favour of the motion please say Aye. Contrary minded, Nay.
The motion is carried.
Okay, Mr. Steele.
MR. STEELE: The second motion, Madam Chair, is: Moved that the Public Accounts Committee direct its Chair to write to the Office of Immigration to require the production of all documents relevant to the Provincial Nominee Program, including but not limited to all documents listed in the list of documents filed by the province on September 28, 2007, in the Nova Scotia Supreme Court.
Madam Chair, I would like to add something to that by way of explanation.
MADAM CHAIR: The motion is in order. Any discussion? Mr. Steele.
MR. STEELE: I do believe, Madam Chair, that for this committee to do its work effectively, we do need to have full documentary disclosure from the office. We are in a fortunate position in this case that the Office of Immigration has filed with the court a complete list of documents which they have sworn is every document relevant to a particular legal proceeding and that certainly will help the committee know whether the government
[Page 41]
has given it all relevant documents because we simply have to look to see what they've given us and match it against this list and we'll know we have everything.
The further benefit of doing it this way is that these documents are already complied by the province. To produce them will be a very simple matter of simply running them through the photocopier. There is no reason for there to be any delay in the production of these documents to the committee because they have already been prepared for the court case. So that's why it is phrased the way that it is.
MADAM CHAIR: Thank you. Is there further discussion on this motion? Hearing none, I will call the question.
Would all those in favour of the motion please say Aye. Contrary minded, Nay.
The motion is carried.
Ms. Whalen.
MS. WHALEN: I wanted to make a comment on the third motion, so maybe he wants to make the motion first.
MADAM CHAIR: Yes, okay. Mr. Steele.
MR. STEELE: Thank you, Madam Chair. The third motion is: Moved that the Public Accounts Committee request the Auditor General to perform an audit of the Provincial Nominee Program.
MADAM CHAIR: The motion is in order. Ms. Whalen.
MS. WHALEN: Yes, thank you very much, Madam Chair. I just wanted to add an amendment to that, if I could. I have written last week a letter to the Auditor General asking that they look at this program, but I would like the motion to say with particular attention to the $75 million trust account because I think that's very important that we have a good sense of the management of the funds that were given in trust to the Government of Nova Scotia.
So I would simply like to add a little addition at the end of the motion that would say; with particular attention to the $75 million trust account held by the Immigration Office.
MADAM CHAIR: I believe the amendment is in order. Shall we vote on the amendment first? Discussion? Mr. Steele.
MR. STEELE: My only comment is a minor one, that the account happens to sit at $75 million but at different times it has been more and in the future it will be less. I'm not
[Page 42]
sure that I understand why we would specify a dollar amount, but certainly to look at the trust account where the money collected from immigrants has been gathered would certainly be an appropriate and necessary part of the audit.
MADAM CHAIR: A friendly amendment to the amendment? Ms. Whalen.
MS. WHALEN: Thank you. The important thing is that we see whether or not the funds have had the oversight necessary to ensure that they've been looked after properly, whereas we know that the program itself, by the office's own admission, did not receive oversight. I just want to ensure that the funds have been looked after.
MADAM CHAIR: Mr. Steele.
MR. STEELE: One final comment for the benefit of all members. Of course it is not within the power of this committee to order the Auditor General to do any particular thing - that is by virtue of the independence of his office. However, I think it will send a good signal, a clear signal, if this committee requests that his office look at this particular program.
MADAM CHAIR: Absolutely, thank you.
So the amendment says the motion is that the Public Accounts Committee request the Auditor General to perform an audit of the Provincial Nominee Program and the amendment is with particular attention to the trust account. Can we vote first on the amendment?
Would all those in favour of the amendment please say Aye. Contrary minded, Nay.
The motion is carried.
Now we will vote on the motion, as amended. Any discussion? Mr. Porter.
MR. PORTER: Thank you, Madam Chair. Only one comment on it. As I look at all of these we've been through as a subcommittee, taking the time, doing the work and now these are all confirmed, we continually seem to be going - I don't want to say backwards - but backwards and continually moving people - we've actually got all these people confirmed. Again, we're always behind and I understand the importance of the issue. There's always an issue, though, that comes up that's important along the way. Because these people are confirmed in, I really would like to see us not bump anyone at this time.
MADAM CHAIR: We've passed a motion that indicates that the subcommittee will sort that all out and, in doing that, we certainly will take into consideration the fact that we may be inconveniencing other people. We'll try to look at how we might accommodate that. I'm sure that will be something we'll take into account. Mr. Colwell.
[Page 43]
MR. COLWELL: Yes, Madam Chair, with those comments from you I have no objection to that but I think that this topic is very, very important to Nova Scotians. It has been an ongoing problem and I think we have to move someone else to make sure the Office of Immigration is properly investigated. I think that's absolutely essential.
MADAM CHAIR: Okay, there is a motion on the floor that has been amended. Is there any further discussion? Would all those in favour of the motion, as amended, please say Aye. Contrary minded, Nay.
The motion is carried.
There's one final bit of business that I want to raise with the committee. The Atlantic Lottery Corporation is scheduled to appear in front of the committee on November 14th and we have requested documents and we've received some documents. However, the clerk has brought it to my attention that they appeared in front of us in January 2006. The timing is very important on this because that was prior to the election of 2006. At that time, there was a request for certain documents, including a copy of conflict of interest forms, for example, that had been filed and some other documents - shareholder agreements and what have you.
Those documents were never produced and because that session more or less was prorogued, I'm asking the committee if you want to approve the request of these documents again so we'll have them prior to their appearance here on November 17th? Mr. Colwell.
MR. COLWELL: Yes, Madam Chair, I totally agree with that. I think that regardless of whether the House had been prorogued or not, they should have provided the information to whoever the committee was going to be, after the election.
MADAM CHAIR: Thank you. So I guess I would ask for a motion that we request documents that had been requested formally in January 2006. Mr. Colwell.
MR. COLWELL: I make that motion.
MADAM CHAIR: Thank you. Is there any further discussion? Would all those in favour of the motion please say Aye. Contrary minded, Nay.
The motion is carried.
I think that just about does it. Thank you very much and we stand adjourned until next Wednesday, when we will have the Resource Recovery Fund Board before us. Thank you.
[The committee adjourned at 10:56 a.m.]
