HANSARD

NOVA SCOTIA HOUSE OF ASSEMBLY

COMMITTEE

ON

PUBLIC ACCOUNTS

Wednesday, January 23, 2008

LEGISLATIVE CHAMBER

Department of Economic Development

Provincial Nominee Program

Printed and Published by Nova Scotia Hansard Reporting Services

PUBLIC ACCOUNTS COMMITTEE

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. Leo Glavine

Ms. Diana Whalen

WITNESSES

Department of Economic Development

Mr. Paul Taylor, Deputy Minister

Mr. Chris Bryant, Director of Decision Support

Ms. Carole Lee Reinhardt, Corporate Strategist

Mr. Ron L'Esperance, Former Deputy Minister

In Attendance:

Ms. Charlene Rice

Legislative Committee Clerk

Mr. Jacques Lapointe

Auditor General

Ms. Evangeline Colman-Sadd

Assistant Auditor General

Mr. Gordon Hebb

Chief Legislative Counsel

Mr. John Traves

Director of Legal Services

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HALIFAX, WEDNESDAY, JANUARY 23, 2008

STANDING COMMITTEE ON PUBLIC ACCOUNTS

9:00 A.M.

CHAIR

Ms. Maureen MacDonald

VICE-CHAIRMAN

Mr. Chuck Porter

MADAM CHAIR: Order. Good morning. I'd like to call the committee to order, please. Welcome to everyone who is here today. Today we have with us officials from the Department of Economic Development and a previous official from that department. Welcome and thank you for being here.

We'll proceed in the usual manner in terms of introductions and then we'll have an opening statement from Mr. Taylor, the deputy minister of the department. Before we do that, though, I'd like to just remind us all that the witnesses here this morning had received the Public Accounts Committee Statement to Witness, which is on our Web site. What they have to say here today to us is protected from legal proceedings, unless of course the House of Assembly gives permission otherwise. I'm hoping you have all received that Statement to Witness, and I just wanted to remind us all that is the case.

We'll do introductions first.

[The committee members and witnesses introduced themselves.]

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[Page 2]

MADAM CHAIR: Thank you very much. We will begin now with the first round of questioning. Oh, I'm sorry. Of course, we'll begin with the opening statement from the witness. Mr. Taylor, the floor is yours for opening remarks.

MR. PAUL TAYLOR: Good morning and thank you, Madam Chair, and committee members for the opportunity to appear this morning to discuss the economic stream of the Provincial Nominee Program. The four of us appearing here today were involved with this program, on and off, from its creation to the beginning of 2005 when it was transitioned to the new Office of Immigration.

The program was developed, as a result of our province's economic growth strategy, as but one of the responses to growing concerns over the future availability of a qualified workforce in this province. Conceptual discussions with a number of organizations took place through the year 2000, development was authorized by government in the Spring of 2001 and the program at that time had to be self-supporting, not result in fees to the government or require new government employees.

An agreement was signed with the federal government in August 2002 to allow Nova Scotia to become the eighth province to begin a nominee program. This program allows provinces to nominate individual immigrants to the federal immigration process. It is essentially a way to speed up the federal approval process and at the same time tailor the immigration stream to individual provincial needs.

Cornwallis Financial Corporation was contracted to administer this program on our behalf in December 2002. The program was set up as a three- to five-year pilot to allow for lessons to be learned and adjustments to be made as time went by. The program began operations in June 2003 with the first nominees landing in Nova Scotia in early 2004. The first mentorships followed in October of that year. In all, eight economic stream applicants had arrived in the province by the beginning of 2005.

As a result of the development of the new immigration strategy for the province, the Office of Immigration was set up in early 2005. The Nominee Program was transitioned to that organization during the Spring of 2005 and the Office of Economic Development ceased having direct oversight of the program at that time.

Despite the ongoing debate over this program, it has been successful in at least two respects. In its first five years, it resulted in more than 1,000 new immigrants taking up residence in this province. Successful programs must be responsive to change - as expected, along the way there have been lessons learned on how best to continue to attract people to this province.

Again, that was one of the original purposes of this program, bring new people to the province and learn how to do it more successfully than we had been. The Immigration Office,

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on behalf of the government, continues to be responsive to this change by implementing new, improved programs - programs today, as a result of those lessons learned, ones that help ensure that those coming to our province have the right opportunities to make Nova Scotia their home.

With that, I will conclude and we welcome the committee's questions.

MADAM CHAIR: The opening round of questioning will be 20 minutes per caucus. We will begin with the NDP caucus. Mr. Steele.

MR. GRAHAM STEELE: Thank you very much. We have been given almost 10,000 documents and after reviewing those documents, I've come to the conclusion that the roots of the problems with the government's immigration program lie in the events of 2001, 2002 and 2003, when the program was being set up. Everything that happens after that is just the logical, inexorable conclusions of decisions that were taken at that time, in particular the decision not to have a competition for the contract. So that's what I'm going to spend most of my time on in the first round.

We are fortunate to have with us today the people who were responsible for the program during that period. I'd like to begin with the memorandum to Cabinet from 2001 that started it all. Now this memorandum to Cabinet was not included in the 10,000 documents that we were given. For some reason the government seems to think that this committee shouldn't see that document, that somehow it would shake the foundations of democracy if we saw it. I have, nevertheless, managed to obtain a copy of that memorandum to Cabinet and I'd like to ask the clerk to distribute that to the witnesses now.

The memorandum to Cabinet is dated February 9, 2001. It says it was prepared by Frances Wolfe, who at the time was the only employee of the Economic Development Department dedicated to immigration. The memorandum was initialled by Ron L'Esperance, deputy minister, and signed by Gordon Balser, minister. The memorandum recommends that Cabinet authorize entering into an agreement with Citizenship and Immigration Canada - nothing surprising about that. However, there is a paragraph headed, SELECTION in which only Cornwallis Financial Corporation is discussed as a contender to have that contract. So although the memorandum to Cabinet doesn't recommend selecting Cornwallis, it certainly is weighted heavily in Cornwallis' favour.

So, Mr. L'Esperance, you signed that memorandum to Cabinet as deputy minister; why, at this early stage, is the Department of Economic Development already leaning heavily in favour of just one company?

MADAM CHAIR: Mr. L'Esperance.

[Page 4]

MR. RON L'ESPERANCE: Thank you, Madam Chair. Well, obviously I haven't been able to read that memo and it wasn't in the package of documents that I received. I don't think the memorandum necessarily leans heavily towards Cornwallis. It states in a documentary fashion that the department had received two unsolicited proposals at that point. So I can't explain why only Cornwallis would be referenced but I think it was a matter of informing Cabinet that, in fact, we had received unsolicited proposals.

MR. STEELE: The memorandum, of course, refers to two unsolicited bids, but then only describes one of them. In fact, the third page that has been distributed is, in fact, a summary of only the Cornwallis proposal. I'll let people on the committee read the memorandum to Cabinet and judge for themselves whether it's heavily weighted towards Cornwallis - I would suggest that it is.

The material that we have indicates that staff from Economic Development had made up their minds very early on that Stephen Lockyer and Cornwallis were going to get this contract. In an exchange of e-mails on October 24, 2000, Chris Bryant refers to his "quasi ignorant state" and asks others for their opinion. Within the next two hours he has e-mails back from Andy Hare, Bill Linley and Frances Wolfe. Ms. Wolfe says in Document 610 that Stephen Lockyer ". . .would certainly be my first choice." Mr. Hare says in Document 608, "It would be good to do a project with him." Mr. Linley says in Document 609, that Ron is very supportive of this initiative. Now, Mr. L'Esperance, this is obviously a reference to you. At this point in October 2000, had you already made up your mind that this contract was going to go to Cornwallis?

MR. L'ESPERANCE: I didn't see the Cornwallis proposal. I think your records will show that it was sent to my office on December 7^th. I had no idea at that point in time the date you're mentioning there - October. I think what Mr. Linley was saying was I was supportive of an immigration initiative. It was a point that had been raised in our economic growth strategy. So I think that's what he's referring to. I saw that note in the package of documents that I had.

MR. STEELE: Well, let me read you the whole e-mail, because I don't think there's any doubt about what Mr. Linley was saying. It says, "Interesting. Stephen was in to see me about 2 weeks ago. I, too, was quite impressed with his proposal and have begun to work with Frances and Andy to get a proposal/process in place to support his proposal. Ron is v. supportive of this initiative. Bill." In the context, I don't think there's the slightest doubt that Mr. Linley is saying that you are supporting the Cornwallis proposal.

Now, I could give many other examples demonstrating that Economic Development staff, particularly Frances Wolfe had made up her mind where the contract was to go, but let me give just two of them. In an e-mail to Chris Bryant dated December 5^th - and this is Document 619 - she says, ". . . I think we need to speed through with Mr. Lockyer's program." In a memo to you, Mr. L'Esperance, dated December 7, 2000, Document 622

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which was copied to Mr. Bryant, Ms. Wolfe pitches the Cornwallis proposal and says she could write up a memorandum of understanding very quickly and certainly have it signed early in the new year.

Despite the department's obvious preference for Cornwallis, we had been advised by the Deputy Minister of Immigration, when she appeared before this committee on November 28^th, that Cabinet directed that the contract be put out to tender. Now once again the government has decided not to release that Cabinet directive to us, but once again I have managed to obtain it anyway. So I would like to ask the clerk to distribute that document.

[9:15 a.m.]

The letter is dated April 10, 2001. It is from Alison Scott, who was at the time Secretary to the Executive Council, and it is written to Gordon Balser, the minister. The letter is short so I'm going to read it in its entirety. It says:

"Treasury and Policy Board, at its meeting of April 10, 2001 reviewed and approved the attached Memorandum on the Business Immigration - Provincial Nominee Program on the condition that this pilot project is tendered through the Public Tender's (sic) Office and follows the standard Request For Proposals process."

That's pretty clear. This letter is copied to Ron L'Esperance, Patricia Ripley and Dennis Cochrane. Mr. L'Esperance, do you remember seeing this letter when it arrived?

MR. L'ESPERANCE: I honestly don't, Mr. Steele, and it certainly wasn't included in the package of materials that I had. But the fact that I don't remember it specifically isn't significant because we had a tremendous volume of material back and forth between Cabinet and the department.

MR. STEELE: That surprises me that you could get such a clear directive from Cabinet on what, by any measure, is a major contract and you don't recollect ever having seen it?

MR. L'ESPERANCE: Well, I guess the reason I don't recollect it, Mr. Steele, is the fact that at that point in time, April 10, 2001, we were at the point of thinking through what a program - what a nomination or what an economic stream immigration program - might look like. We were in the process, in the early stages of negotiation with the federal government around an agreement to support such a program. So the fact is, this contract was let well after I left the department, so it wasn't ready. The department simply wasn't ready at that point in time to advance anything at that stage. This would have been a preliminary step that was taken to make sure that we were prepared if and when a federal-provincial agreement had been reached.

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MR. STEELE: Do you remember discussing this topic with the minister at the time?

MR. L'ESPERANCE: I don't specifically remember it in the context of the Cabinet presentation. I certainly remember it in the context of the presentation on the economic growth strategy of which . . .

MR. STEELE: Okay, but I'm talking now specifically about this directive from Cabinet that the contract be put out to tender. Do you remember discussing that with your minister at the time?

MR. L'ESPERANCE: No, I don't.

MR. STEELE: Do you remember discussing it with Chris Bryant?

MR. L'ESPERANCE: No, I don't.

MR. STEELE: Do you remember discussing it with Frances Wolfe?

MR. L'ESPERANCE: I saw Frances Wolfe maybe three times in my tenure in the department. I certainly didn't discuss it with Frances Wolfe.

MR. STEELE: So you were in charge of immigration for several years at least, were you not, and you saw this staffer responsible for immigration maybe three times?

MR. L'ESPERANCE: No, I wasn't responsible for immigration. I think you'll find it was the responsibility of the Department of Education at the time.

There was a point during my tenure that the government transferred the Labour Market Development Agreement to the Department of Economic Development. There was a dimension of that which had to do with immigration and economic stream immigrants. I wasn't responsible generally, but we had representatives - I believe Frances was the representative on the interdepartmental committee relative to immigration.

MR. STEELE: Mr. Bryant, this directive from Cabinet, directing that the contract be put out to tender, do you remember seeing this document at the time?

MR. CHRIS BRYANT: Actually, it was in my files, but my first recollection of seeing it was in January 2003 after we had done an alternative procurement process.

MR. STEELE: Do you remember discussing it at any time with Frances Wolfe?

MR. BRYANT: The directive itself? No, we certainly had a number of discussions about how we would proceed, but not that directive.

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MR. STEELE: Do you remember discussing it with the deputy minister or the minister?

MR. BRYANT: I don't remember those discussions, no.

MR. STEELE: The next batch of documents to which I'm going to refer has also not been released to us by the government. I will ask the clerk to distribute that batch of documents now.

In my view, it is disappointing and very telling that the documents that I believe shed the most light on this topic are documents that have been withheld from us by the government. I think the Minister of Immigration, who promised complete openness on this file, has a lot of explaining to do. But that's a question for another time and place.

These documents have to do with the decision-making process by which the Department of Economic Development handed the contract to Cornwallis in defiance of the clearly-stated directive from the Treasury and Policy Board that the contract be put out to tender. In November 2001, Frances Wolfe writes to Greg Lusk at the procurement branch describing the three possible contenders and explaining why she thinks the contract should be awarded to Cornwallis.

The next documents I have in the package are e-mail exchanges from August 2002, at which point Rick Draper of the procurement branch has taken over the file. Mr. Draper, to his credit, throughout the e-mail exchanges, explains clearly and consistently why the contract should be put out to tender, just on principle. At one point, on August 28^th, he writes to Ms. Wolfe and says, "We should never offer a contract to a firm because it is their turn." He seems to be answering something said to him by Ms. Wolfe.

Mr. Bryant, to your knowledge, did Ms. Wolfe ever suggest the contract should go to Cornwallis because it was their turn?

MR. BRYANT: No, in the discussions we had about both the CICI and the CFC proposals, we looked at the content of the proposals. I never heard the phrase "their turn."

MR. STEELE: What do you believe could have been meant by Mr. Draper saying we can't award the contract to a company just because it is their turn?

MR. BRYANT: I don't know. You'd have to ask Mr. Draper, I really don't know.

MR. STEELE: On August 28, 2002, Mr. Bryant says in an e-mail to Mr. Draper and Ms. Wolfe, "This should only go to a full RFP if it really must do so." RFP, of course, standing for request for proposals - Mr. Bryant, why did you say that?

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MR. BRYANT: We had a very small universe of consultants who could do the work. We'd had three unsolicited proposals, one of which had been withdrawn, the two that were left seemed to me unnecessary to go to an RFP if you could compare those two proposals point by point.

MR. STEELE: On August 29, 2002, Mr. Draper tells Ms. Wolfe that her only other option, if she really wants to avoid tendering, is the so-called alternative procurement method. This is the method that Economic Development then pursues.

On August 30^th, Mr. Bryant, you write to the then Deputy Minister Bob MacKay, who has taken over from Mr. L'Esperance as deputy minister responsible for the Immigration file. You say, Mr. Bryant, among other things, "After discussion, Ron had agreed to taking a sole source approach on this and that was our plan."

Mr. L'Esperance, before you left the department, had you, in fact, decided and authorized that this contract was going to be sole-sourced?

MR. L'ESPERANCE: No, I did not.

MR. STEELE: Mr. Bryant, why did you say that if it wasn't true?

MR. BRYANT: Certainly, my sense was that we'd had discussions about what were then two appropriate, unsolicited proposals and my sense was that sole-source was the route to go. I don't recall the specific conversation with Ron, but . . .

MR. STEELE: Okay, but, Mr. Bryant, you're not saying here sole-source is the route to go, you're trying to persuade the new deputy minister to sole-source and one of the arguments you put forward is that the previous deputy minister had already made that decision. In hindsight, is that statement accurate?

MR. BRYANT: Not completely.

MR. STEELE: Which part of it is not accurate?

MR. BRYANT: Well, we'd had conversations about sole-sourcing and about how we might do it. I'm not sure it would be fair to say that Ron had fully agreed with that. Plus, a lot of time had passed.

MR. STEELE: Your e-mail to the deputy minister, the same e-mail ends by saying you can "go either way", meaning tender or no tender, and you asked Bob MacKay to state his preference.

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On September 15^th, a little over two weeks later, Bob MacKay e-mails back and says, ". . . as far as I'm concerned it is your call." The next document we have is indeed a sole-sourced authorization signed by Bob MacKay - this is the last document in the package - dated October 2, 2002. Obviously, the decision of you, Mr. Bryant, and Ms. Wolfe was indeed to go the sole-source route.

The sole-source authorization is itself very brief. It's one page, it contains a very brief description of the two unsolicited bids that had been received and says the Cornwallis bid ought to be accepted. But the two unsolicited bids are included in the documents given to the committee and I can say, having read both, that the descriptions of the bids in this document are not accurate.

Mr. Bryant, who wrote this document for Bob MacKay to sign?

MR. BRYANT: Frances Wolfe was our immigration expert.

MR. STEELE: Did she write it?

MR. BRYANT: Yes.

MR. STEELE: Do you agree, with the benefit of everything you know now, that the description of the bids contained in this document is not accurate?

MR. BRYANT: I think it was a fair summary of the two documents. When Ms. Wolfe was asked about that on the 28^th, she said there were certain key elements we were looking for from our contract: one of them being that the company was Nova Scotia-based - both these companies were; that it had worldwide connections already established - both those companies did have that; and that there would be exclusivity to the province - one company had made that very clear, the other company was not so clear.

We also looked at their experience and their track record in the immigration business and we looked at the question of cost. One company was going to charge us, one company was not going to.

In the alternative procurement highlights, the better price, dedicated to Nova Scotia, not selling other products, that won the choice for us.

MR. STEELE: Mr. Bryant, you know the province never put out a request for proposals, never specified what criteria it wanted vendors to respond to, so the two unsolicited bids were people who in good faith were trying to pitch a program to the province, but they were guessing. They were in the dark about what the province really wanted. Do you think it's fair to evaluate a bid as not meeting criteria that have never been stated by the province?

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Just a minute, Madam Chair. Mr. Taylor wasn't there at the time, so I want to direct that question to Mr. Bryant.

MADAM CHAIR: Mr. Bryant.

MR. BRYANT: We had received what we considered to be the two best shots at it from each of the companies. We had had further discussions with both companies. There had been some modifications of what they were prepared to do, but I thought these were fair representations of how they wanted to approach the program.

MR. STEELE: Now, Madam Chair, I know that my time is coming to an end. Rather than start another question which can't be answered, I think I'll leave it there and I'll pick it up where I left off at the next round that's available to me.

MADAM CHAIR: Thank you very much. The time has expired.

Ms. Whalen for the Liberal caucus. You have 20 minutes.

MS. DIANA WHALEN: Thank you very much and welcome today. There are a lot of questions that we want to get to. I think I'll just continue on along the lines we've been discussing up to now about the sole-sourcing of this contract, because that has been something very much on our minds and was when we had the people here from the immigration office.

In terms of a Cabinet directive, which would say very clearly - and now we actually have the document before us today - that this project was to go forward as a tendered project, could you tell me if there is a process in place that would flag an order like that - or, I guess, a directive - so that it wouldn't be lost within the department? I guess that would go to one of the deputy ministers.

MADAM CHAIR: Mr. Taylor.

MR. PAUL TAYLOR: The simple answer to that question is the accountability stops at the deputy minister's desk. Every one of those minute letters comes through the deputy minister's office. It's kept on file in the office and in the end it is the deputy minister's responsibility to ensure that those Cabinet directives are followed and they are there for reference in that office every time a document goes through that office.

MADAM CHAIR: Mr. L'Esperance.

MR. L'ESPERANCE: Ms. Whalen, in response to that, relative to this particular letter that arrived in the department on April 26^th, what would be very useful to have to go with that would be the cover - we had a cover procedure. In fact, in some of the documents

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that I received it was clear how particular Cabinet directives had been routed through the department, so I would be awfully surprised if there wasn't that cover document associated with that letter which would show precisely where it went, because everything that came back from Cabinet had really a routing schedule on the front with different division heads, names and a space for the deputy, or on instruction from the deputy's assistant, to direct that document within the department.

[9:30 a.m.]

MS. WHALEN: Would it have been an unusual request to actually be told to go to a tendering process? My understanding is that's our standard approach to procurement.

MR. L'ESPERANCE: Not at all. That would have been expected, from my point of view, in that proposal that came in but, as I said before, we weren't at that stage, during my tenure, ready to put any sort of program forward at that point, simply because we didn't have the federal-provincial agreement and we didn't have clarity on the final direction for the program.

MS. WHALEN: Yes, I understand that it had not yet been signed with the federal government so you wouldn't have had the authority to do that, but the department had been talking to companies bringing unsolicited proposals for over a year at that point. You began in 2000 to talk to companies, and this is now early in 2001. So it had certainly been on the minds of the department that you would be going in that direction and when we finally signed the agreement, as was pointed out today, we were the eighth province to do so, so the trend was clear. It was moving its way across the country and we were going to be introducing one, hopefully, to make immigration a more important issue for Nova Scotia.

So in light of that, I'm just surprised that wouldn't have stayed with the file and been known by everybody who dealt with it as time went on, despite the changes in staff. I mean you keep a briefing book, for example, for your minister. Would that not have gone into the briefing book?

MADAM CHAIR: Mr. Taylor.

MR. PAUL TAYLOR: Not by way of an excuse, I think it would be helpful for the committee to understand the context in which the Cabinet decision is issued and the contract is finally issued. It took almost two years between those two points, 20 months expired between the time the Cabinet minute was issued in April until the time there was a contract signed in December of the following year.

In that period, the department was organized twice, a new minister was appointed who was not there when the minute was issued and there was a new deputy minister; NSBI was formed and hived off; and Economic Development was merged with the Technology and

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Science Secretariat. There were two offices being operated, one in the Trade Centre and one in Maritime Centre. The whole immigration issue in the Fall of September 2001 was completely disrupted by September 11^th and that slowed everything down. So we have a brand new economic strategy which the staff in this Economic Development Department are engaged in trying to implement, this being one piece of that strategy.

So when you look at it in its totality you can understand - if I sat here today and tried to remember a piece of paper that went across my desk 20 months ago, I'd be challenged to do it and I can fully understand why that minute letter could have been missed in the transition between ministers, deputies and everything else that changed in that department during that period.

MS. WHALEN: I appreciate what you're saying, that there was a lot of confusion and change and transition, and that can clearly create an environment where things can be lost. But this is an important directive and I think we all agree that it should have been maintained and somebody should have known. Now during that time, you've referred to Frances Wolfe as the immigration expert in the department, perhaps the only person in Economic Development dealing with immigration. Did she move during that time, from the directive until this went forward?

MR. PAUL TAYLOR: She certainly moved within the department as the reorganizations flowed through Economic Development. She certainly changed in her reporting structure inside the department before she was finally transferred to the Office of Immigration. Yes, she moved several times.

MS. WHALEN: But she was the immigration point person within the department.

MR. PAUL TAYLOR: Yes.

MS. WHALEN: So there should have been continuity within staff, at least in that one regard. You had only one employee dealing with immigration.

MR. PAUL TAYLOR: Well, there was continuity, certainly, in Frances Wolfe maintaining the file within herself but the way she reported it up the line of authority inside the department changed, I think, four or five times in four years.

MS. WHALEN: So you are telling me it was not kept on file. It would not have been part of a briefing book, definitely.

MR. PAUL TAYLOR: Well, there is not, per se, a briefing book - to my knowledge there isn't one today - solely to brief ministers on the contents of minute letters going through Executive Council.

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MS. WHALEN: Following the awarding of the contract in 2003, I guess it was, I'm wondering if you could tell me about the complaint that came forward from the other proponent who was never told - he was in constant contact and we saw, you know periodic contact, he didn't lose contact with the department - he continued to say that they were interested in bidding, that when the tender came forward, they wanted to be seen as proponents for this. Then he learns by way of just the grapevine, essentially, that the contract was awarded and Cornwallis is now working internationally on behalf of Nova Scotia. So he files a complaint about that. Can you tell me why there would not have been a proper notification to another proponent who was that keen and had kept in touch like that, why he would have to hear this by way of a rumour?

MR. PAUL TAYLOR: As I recall, there was a series of e-mails between Frances Wolfe and the second proponent early in January 2003, I believe, concerning the fact that the contract had been let and it was only signed in late December or mid-December 2002. So certainly they were aware shortly thereafter that the contract had been let.

MS. WHALEN: Now when the complaint came in, how was it dealt with, if you have a complaint like that about the process of tendering?

MR. PAUL TAYLOR: I believe the way the process worked in this case, a Canadian filed a complaint through the Procurement Office as part of the procurement process saying that they believed the contract should not have been awarded under a sole-source and the proper procurement had not been followed. That was filed, I think, with the Director of Procurement.

MS. WHALEN: I have a question, if I could, for Mr. Bryant. Given the earlier discussion we had about how the qualities of the two companies were very similar and that you had looked at some of the aspects that might have been different in their unsolicited proposals, could you explain to me why you wouldn't have chosen to go to a public tender? It is clear from the procurement officer that he was willing to fast track that. He said he would go as quickly as possible; time wasn't really an issue. Why would you not have chosen to go and have it be a completely open and public tender so that you could, in fact, have pointed out the pros and cons and chosen what you clearly felt was the best proponent?

MR. BRYANT: Obviously, from 2008 looking backward, I would definitely take it to a full tender process. At the time, we had looked at the two proposals. We had had discussions with each of the proponents. There had seemed to be several clear factors favouring Cornwallis. One of the key elements of that was the rather innovative approach they were taking to deal with an issue that had come up over and over in our discussions of immigration. (Interruption)

In the discussions we had with the immigration working group, we interviewed a number of immigrants who had chosen to stay in Nova Scotia. We interviewed a number of

[Page 14]

immigrants who had chosen to leave Nova Scotia. We looked at a lot of people who had invested here under previous business immigration programs and chosen not to stay. An innovative part of the Cornwallis proposal was that internship, the mentorship that they were offering. The immigrants we talked to who chose to stay in Nova Scotia were routed because they had jobs, their families were happy and so on. So this idea of being able to bring someone in and attach them to a business rather than simply take their investment money and watch them leave seemed to us to be the key factor in favour of the Cornwallis proposal. What CICI was proposing was much more a kind of traditional business investor program.

The other factor that really weighed strongly in our decision was that Cornwallis stated very clearly, from day one, they were going to work exclusively in Nova Scotia. The other company had programs in Prince Edward Island and in Quebec. We did investigate the state of those programs, certainly in Prince Edward Island. In the early discussions - although I think he later changed his approach - the principal of CICI said, look, I'm not prepared to be exclusive.

So, with those two factors, plus the third factor of cost, it seemed to me we had - in a very small universe of potential consultants - a very clear product that was better. As I understood the procurement process at the time, alternate procurement was a legitimate route to go and we went that route.

MS. WHALEN: Are you saying again that you were unaware of the Cabinet directive?

MR. BRYANT: I can remember the first time I saw that Cabinet directive - that was in January 2003. You can imagine how badly I felt at the time because it's very clear. No question.

MS. WHALEN: It is clear and it certainly was more than an oversight that it was lost in the department somewhere. Again, I would say that the staff member that was following this most closely should have informed you and should have informed others as well.

When this procurement was challenged by CICI, there was an internal investigation and it ultimately led to three people - I believe it was three people - being reprimanded. Can you tell me who the three people were? Mr. Taylor.

MR. PAUL TAYLOR: The issue of disclosing the names of those individuals in a public forum like this, to me really is a matter of starting to disclose the personnel files of employees who are currently with the Government of Nova Scotia and are currently respected members of the Government of Nova Scotia. I would rather not do that in a public forum.

[Page 15]

MADAM CHAIR: Order. I would suggest that we have a moment to go in camera at the end of questioning and we can have that discussion in that forum, in that way. If that's agreeable to the member and members?

MS. WHALEN: Yes, that is agreeable. I think it's important to us to know just how this was dealt with and what responsibilities people had in the wake of it and so on.

I'd like to ask you a little bit more about that entire investigation into what went on. The CICI ultimately went to the court and I understand the courts asked them to go back to the department and have an internal review done by the department. That took over two years, I believe it was 2005 that wrapped up and ultimately in the procurement it was found nothing was done wrong. Is that the right way to put it?

MR. PAUL TAYLOR: The conclusion, that was the report I eventually signed, the conclusion of that report was that the alternate procurement process had been followed.

MS. WHALEN: The alternate. But, it didn't go into it any deeper than that? Just to say that you'd followed correctly the alternate procurement process.

MR. PAUL TAYLOR: Understand that was the complaint that was filed, that the alternative procurement process had not been properly followed. That's the conclusion of the report that was filed, it looked at that complaint and decided in that manner.

MS. WHALEN: Mr. Taylor, the procurement office is also part of the Office of Economic Development, is it not?

MR. PAUL TAYLOR: Yes, it is.

MS. WHALEN: So, it would seem to be a bit of a conflict to allow the same department to examine this and investigate yourselves. It's not independent, it's not arm's length.

MR. PAUL TAYLOR: The process though that is set up feeds through the procurement office - that's where, I believe, the complaint is filed. But, as part of that process, the complainant has to sign off on both the process and the people who are going to sit on that appeal panel. In this case, that's exactly what happened. They did sign off on both the process as it was to go forward and the people who were going to be involved.

MS. WHALEN: Is that the normal way that a complaint would be examined within the department?

MR. PAUL TAYLOR: Yes.

[Page 16]

MS. WHALEN: There was absolutely nothing unusual about it?

MR. PAUL TAYLOR: No.

MS. WHALEN: Would the complainant have not called for an independent person to look at this? I can't believe he wouldn't.

MR. PAUL TAYLOR: I didn't hear your question.

MS. WHALEN: Oh, I'm sorry, you didn't hear the question. I was wondering whether there was not a request by the complainant - CICI - that they have an independent person look at this. Somebody not reporting to the same deputy minister who would have perhaps made a mistake earlier on or in the same department.

MR. PAUL TAYLOR: The process that is laid out as part of the procurement policy specifies the one that was used. Obviously, there were other appeal methods for the complainant to take to the court system or someplace else, but the one that is specified as part of the procurement policy is the one that was used. Again, I would re-emphasize that there was never an issue raised by the complainant either to the process or to the people involved. They agreed with it and proceeded through it.

MS. WHALEN: I would just like to go back to the fact that there was some disciplinary action taken. Could you tell me why people were disciplined if the department itself was exonerated?

MR. PAUL TAYLOR: I think you are mixing two different issues here.

MS. WHALEN: Okay. One had just to do with whether you followed the alternative process correctly . . .

MR. PAUL TAYLOR: That is one.

MS. WHALEN: . . . which is a very narrow and bureaucratic issue to look at. So if that is not the same issue that was called into play when three people were spoken to or there was a note put on their file or whatever, could you tell me why they were disciplined?

MR. PAUL TAYLOR: As I said, I think you are talking about the two different issues. Whether the . . .

MS. WHALEN: Let's leave the first one behind. I think we have determined that is narrow and it was covered.

MR. PAUL TAYLOR: The second one, was a directive of Cabinet followed.

[Page 17]

MS. WHALEN: Okay.

MR. PAUL TAYLOR: That is the issue under which the disciplinary action was taken.

MS. WHALEN. What would the nature of that action have been?

MR. PAUL TAYLOR: Disciplinary letters were placed in the personnel files of the people involved. Each individual was called in for a meeting with myself where the nature of the error was dealt with in terms of its severity, why it should not happen, why it should not be repeated and the steps we were going to jointly take to make sure it didn't happen in the future.

[9:45 a.m.]

MS. WHALEN: To go back just one step, who would have initiated the disciplinary action? Would it have come internally from staff or was it Cabinet itself?

MR. PAUL TAYLOR: Staff.

MS. WHALEN: So it was internally that it was recognized. Okay. That is important as well.

I know my time is elapsing here quickly as well but in terms of the details of what would make the contract with Cornwallis, that was clearly within your purview and the department's purview to decide what kind of form it took and who had which responsibilities. I would say, just by way of background, when I checked the earlier business plans and annual accountability reports from the department, immigration wasn't even mentioned in 2000 and 2001. It doesn't even appear in your reports at all and then it crops up, I think one or two mentions in the next year. It clearly wasn't on your radar screen. So to begin with, did you have somebody actually with the title, immigration consultant or person, on staff in the early years when you would have had the first approach by Cornwallis?

MR. PAUL TAYLOR: I think it is fair to say - you are talking about a period here, 2001-02, where indeed the immigration issue certainly began to increase in priority for the government. It was not a high priority in 2000-01. It was part of the province's new economic growth strategy because Opportunities For Prosperity referred to the growing concerns about the human resource supply to the economy of the Province of Nova Scotia. That was referred to as one of the possible solutions to it.

MS. WHALEN: Can I ask you, was Francis Wolfe - did she have a title that included the word immigration in 2000 when she was the person dealing first? I see one e-mail that

[Page 18]

is here to Mr. Bryant, I think it is May 2000, and it is from Frances Wolfe talking about the Cornwallis contract. I am just wondering if that would have been a title that you had within the department. Did you even have somebody named for immigration?

MR. PAUL TAYLOR: Her actual title escapes me but she, at that point, had been involved in the immigration business for 10 years.

MS. WHALEN: She had been involved in the immigration business. Why did you say earlier that it was really an Education Department responsibility?

MR. PAUL TAYLOR: Education had the formal responsibility but Economic Development was also in the - and as we are today, both departments work quite closely on the issue of labour supply, labour market development. One department is often the lead but the other one works directly with them because obviously a supply of a skilled workforce to the economy is a crucial input for us.

MS. WHALEN: Yes, but when did you recognize that? I don't see it as any of your priorities. It is not mentioned at all in the 2001 business plan or accountability plan and not in the 2001-02 business plan and you are already in discussions with unsolicited proposals and proponents.

MR. PAUL TAYLOR: Well the first real recognition would have been the one that showed up in Opportunities For Prosperity, starting to refer to - it's not that long ago in this province we had no discussions whatsoever about labour shortages in this province.

MS. WHALEN: Okay, now the fact is . . .

MADAM CHAIR: Order, order, time has expired.

Mr. Dunn for the PC caucus, you have 20 minutes.

MR. PATRICK DUNN: Thank you, Madam Chair. There are certainly several questions that I had that have been answered. One in particular, I was very interested in knowing what occurred during the 20 months between the Cabinet directive and the signing of the contract but Mr. Taylor had the opportunity to answer that previously.

One question that I do have, and it doesn't really matter who answers it, Mr. Taylor or Mr. Bryant. Was the Nominee Program one of the ways to deal with the incredible backlog that had been created by the federal immigration system?

MADAM CHAIR: Ms. Reinhardt.

[Page 19]

MS. CAROLE LEE REINHARDT: I think that the federal government both loved and hated the nominee programs. It loved them because, first of all, it enabled them to move a lot of people through and be processed quickly. There was a huge backlog of cases and I don't think it has really cleared up much since then but people were taking six and seven years for simple business immigration cases, in addition to the fact that there was a lot of tension between the provinces and the federal government about who to choose. You know, what immigration classes and nominee programs enabled people to choose directly the types of people they thought would be successful and that their provinces wanted, whether they were skilled workers or business people.

So yes, that is exactly the case. It was a great way of being able to move people through the system fairly quickly and also select the types of folks who would be successful in their province and also contribute to the economic growth.

MR. DUNN: It's my understanding that there are not enough businesses coming forward to participate in this program. In your opinion, why was this happening?

MADAM CHAIR: Mr. Taylor.

MR. PAUL TAYLOR: That was probably one of the core lessons that was learned, in that I go back to the fact that because this was a new program in the Province of Nova Scotia and really the numbers would show that in that 1999-2001 period, the province wasn't doing a very good job of not only attracting immigrants but keeping them here.

The Nominee Program was designed to try to get people to show up here but stay here as well. We had a difficult time, we still have a difficult time. I think one of the key lessons learned from the program is you have to focus on getting immigrants to grow roots in this province. Otherwise, like many of the smaller provinces in this country, they flee - once they have landed in Canada, they eventually end up in the larger, nurturing communities of Montreal, Toronto and Vancouver.

Our plan at the time to try to get immigrants to begin to grow roots into the community in Nova Scotia was to provide them with a way of having employment, being able to meet people in that employment sector, being able to establish those social contacts so at the end of the six month period there was a hope that there had been enough of a relationship developed that they would then not simply move to another part of the country, which they had the right to do.

One of the lessons learned was it is not nearly as easy to attract mentors to the program as it was to attract immigrants to the program. The immigrants showed up more quickly than the business mentor opportunities did. Hence, that was a real challenge for the program - to be able to continue to feed qualified mentorship opportunities to the immigrant stream as they arrived.

[Page 20]

MR. DUNN: Was there a lack of consultation with other provinces that had nominee programs, when this program was trying to be developed?

MS. REINHARDT: I think we probably consulted too much. We spent a considerable amount of time talking to other provinces but many of those provinces were just in the beginning stages of their own immigration programs. So there were a few lessons that we were able to learn. Our particular nominee stream was very unique, it wasn't done in the rest of - many of them had business programs and skilled worker programs, but it was very unique, but we did consult. There are federal-provincial working groups that both Education and Frances Wolfe from Economic and Development sat on and they meet at least twice a year, so there were various opportunities without seeking outside the ability consultant. There was evidence that many discussions were had and New Brunswick was particularly helpful in providing early-on advice because they were ahead of the game a bit.

MR. DUNN: Thank you. A program was developed and then consulting on an immigration strategy occurred - this seems to be a little backward to me. Could you elaborate on that?

MS. REINHARDT: Well, gosh, if we did a strategy for everything I wonder if we'd ever have any programs, but actually, the Nominee Program kind of necessitated the strategy. We started off working with the Nominee Program and we realized there are tons of pieces here that we don't have in place. We need to do some pretty incredible consulting with the business community, with chambers, with immigrants themselves. As a result of that, the strategy process was developed. We needed to decide what it is about Nova Scotia that works for immigrants, what we needed to be able to put in place. It was the Nominee Program that kind of made us realize we need to really look at much wider focus in immigration than just the Nominee Program.

MADAM CHAIR: Mr. Bryant.

MR. BRYANT: In fact, the immigration strategy came as part of a follow up to another strategy. We had put out Opportunities for Prosperity and in Opportunities for Prosperity, we noted problems looming in the labour force. We said in that document, we needed to finalize an agreement with the federal government, there were a number of other provinces that had immigration programs. We had representations in the lead up to the first economic growth strategy, Opportunities for Prosperity, we had a number of discussions with groups like the Chamber of Commerce who were putting out papers on immigration - there was a buzz around immigration at the time. Out of that, an increased emphasis on immigration was part of that Opportunities for Prosperity strategy. As that grew it was pretty clear and I think the work on the immigration strategy showed that we needed to go more deeply into immigration and develop a strategy that covered all aspects of immigration.

[Page 21]

MR. DUNN: There are usually flaws and successes in any program. I'm going to give you the opportunity to talk about the successes this province has had in attracting immigrants to Nova Scotia. I know in your preliminary talk, you mentioned attracting about 1,000 immigrants to Nova Scotia. How successful is this program?

MADAM CHAIR: Ms. Reinhardt.

MS. REINHARDT: We have over 1,000 people that I believe committed to come to Nova Scotia that I don't think would even have looked at Nova Scotia. One of the great things about nominee programs is that all of you may have heard of people who are waiting seven, eight, 10 years to come into this country. I think the longest turnaround time I remember during my responsibility for the program was 18 months. You have people who fill out an application, come and see the province, tour around and six months later they can essentially get a visa and that's a hugely powerful tool. Even if you are looking simply at the time and in an 18-month period you may be able to get 50 or 60 people, where you can't even get one through the federal system, so as far as that goes we have over 1,000 people and their families.

Let's face it, if I look back to what the federal government was doing in the economic class in Nova Scotia, it was very minor. Let's take a look at the stats - economic class, which includes our provincial nominees, are just over 1,000 people in the year 2000. In 2006, it is 1,724, so that's the category within that includes - the only area of growth, I think, you will see are our nominee programs, the federal numbers have remained the same. So nominee programs have been very successful for the province.

Skilled workers - when you go to the hospital chances are if you're talking to a doctor who has been recently here, they've come through the skilled worker stream of the Nova Scotia Nominee Program. All of those high-end skills that everyone is travelling the country trying to find, the Nominee Program enables a very quick way of bringing those qualified folks in to fill those vacancies that we're not able to find, so I would say it has been hugely successful.

MADAM CHAIR: Mr. Taylor.

MR. PAUL TAYLOR: I just want to add that I think the other success that has come from this program and something that keeps getting lost in the debate around this program is, it was deliberately set up as a three-year pilot program because it was new. It was a brand new effort by the Government of Nova Scotia to try - we've talked for years and years about we have to find a way to have more immigrants come here, but also do something about the retention issue, the fact that immigrants show up and leave. Why can't we keep them here? This was a brand new program that we were launching to try to finally do something about that issue. It was set up deliberately as a pilot, so we had the opportunity to learn what worked and what didn't work.

[Page 22]

As time went by it became more and more a priority of government, a strategy was done, a whole department was set up, it has been resourced and that department continues to evolve these programs as a result of the lessons that have been learned as part of the Nominee Program. If you didn't start this program, who knows, we'd be stuck back with the same numbers from the federal government that we've had for so long, watching people come in through the federal programs and ending up somewhere else. The real lesson learned from this program is, indeed, how to do it better than we were.

MR. DUNN: Having the opportunity and the experience from looking back at the launching of this program and some of the pitfalls that occurred and successes and so on, knowing what you do know and if you were to begin this program new today, would Cornwallis be selected?

MR. PAUL TAYLOR: I can tell you some of the lessons, again - I don't know how to put this. I know our judicial system prevents double jeopardy, but this system allows triple jeopardy. We are here talking about this program, we have the Auditor General who's going to decide some months later on the issue and then we have the court system going to weigh in some months after that on what really is the truth of the issues. I do have to be cautious about what I say about individuals, contracts or such things.

I can tell you some of the lessons I would say we have learned is that it is not as easy as we thought to attract business mentors to such programs; for whatever reasons, it's not as easy as we thought. English as a second language continues to be a challenge when immigrants come to the province and they find themselves in an employment situation. English as a second language is a challenge for both themselves and the employer, that we need to put an effort on to make sure that that continues to ease the transition into the workforce of Nova Scotia.

Another lesson learned is the people who responded to this program, some of them don't want to work for anybody else, they're small-business people, they want to open their own businesses, they want to be entrepreneurs. We needed to look at the opportunity to establish an entrepreneur stream for the Nominee Program, to allow people to come in here and invest their monies in their own businesses. I believe that is exactly what the Immigration Office is doing as we speak.

I guess finally I would say the overall lesson I have learned is the immigration business is an awful lot more complicated than it appears on the surface. It is a very complicated industry, a very competitive industry and it's one that, thankfully, the province has properly resourced, to be able to deal with that industry.

MR. DUNN: Dealing with English as a second language, is there a component in the program that assisted or helped prepare potential immigrants to overcome that barrier in the process?

[Page 23]

MR. PAUL TAYLOR: The emphasis on English as a second language, I do believe it is run through the Skills and Learning Branch of the Department of Education, they have quite an extensive program now on English as a second language. Again, tied to the immigration strategy as a way of helping that transition, that welcoming community, that ability to grow roots, English as a second language is a key component of that.

MR. DUNN: Thank you. Those are my questions, Madam Chair.

MADAM CHAIR: Mr. Porter. You have until 10:08 a.m.

MR. CHUCK PORTER: Thank you, Madam Chair and thank you ladies and gentlemen for appearing this morning. Just a couple of quick questions. I just want to pick up where Mr. Dunn left off. He spoke about the Department of Education and their skills division. How long, generally speaking, would that piece be in helping them with their English? Would that be varied or would there be a certain amount of time set within the program itself, to bring someone to what we would call up to speed - for lack of a better term - on adequate English.

MS. REINHARDT: I think first of all, you have to recognize too that the federal government does provide a level of training for immigrants as well. But, I think it really depends on what type of - there are different levels of literacy as you want to call it. If you're talking about just being able to have a conversation is one aspect, but if you're talking about being an engineer and being able to go on the job site and talk the language at the level, then that's a very different type of literacy.

Over the past several years, I think that we're realizing that it's not just good enough to be able to have a conversation, you have to have the right language skills at the right level to speak in your profession. That does certainly take a lot longer and it's a different type of training program. So, I think that Skills and Learning in the Department of Education have been very responsive to that and understanding that is a different type of literacy that you require.

MR. PORTER: So Nova Scotia's skills and literacy is over and above whatever the federal government does?

MS. REINHARDT: I wouldn't say it's over and above. There are some things the federal government doesn't fund and so in a lot of cases you try to make sure that your money goes a long way so you partner with various people to enable you to give the best value for your program dollar.

MR. PORTER: Mr. Taylor, I just want to go back to you for a minute and pick up on one of my colleague's questions earlier with regard to the disciplinary action, if I can. I've been thinking about this, how would working for the government in any disciplinary action

[Page 24]

processes - whether they be progressive or whatever - be different from any other employer in the province or anywhere bound by collective agreements? Would any of those things have an impact?

I know the question has been raised about revealing names of individuals, I just don't see, I guess, the purpose of that in some ways because how would we treat people that work for the government differently? Severities of disciplines are various, as we all know, in a variety of different companies. So, why or how did we treat these people differently?

MR. TAYLOR: I think the disciplinary procedures that you use in government are fairly consistent with what I was familiar with in the private sector, a progressive system of discipline.

What I find different about the public process is there seems to be a different standard applied to public servants that if, for whatever reason, you draw a salary from the taxpayer, you seem to be required to sacrifice a number of privacy issues around your employment relationship that just would never, ever happen in the private sector. Somehow, if someone receives a performance bonus that indicates how well they performed in the previous year, that's public knowledge. You would never see that released, other than the employer-employee relationship, in the private sector.

But the issue of the public's right to know, seems to invade what I see as an employees' right to privacy. That, as someone who is - we're dealing with this immigration issue because we are challenged in finding ways to bring people into the workforce in Nova Scotia. I don't think the Public Service in Nova Scotia needs those kinds of things tied around their ankles when they're out there trying to compete for those scarce resources with the private sector to find the bright, young, capable people that we expect to produce great public policy in the future.

There seems to be a developing double standard around the privacy issues of that employer-employee information. That's my personal opinion.

MR. PORTER: Thank you. I know I'm running out of time, but just a quick follow-up. Have the employees expressed that concern in this case, during your meetings with them, as far as their private lives being publicly put forward here, or is it really not something that's of concern to them?

MR. PAUL TAYLOR: No, I don't recall them discussing that issue specifically with me. I think they would take it more for granted that was something they were entitled to.

MR. PORTER: Thank you.

[Page 25]

MADAM CHAIR: Order. The time has now expired. The next round of questions will be 14 minutes per caucus.

Mr. Steele with the NDP caucus.

MR. STEELE: Madam Chair, I am just a little surprised that it is 14 minutes because I thought we were sitting until noon today.

MADAM CHAIR: No, actually, perhaps I should have clarified that. When we established this time frame, we thought we would have two hours with the Department of Economic Development and the federal government representative, who has declined to come. Now I have, in fact, factored into my calculation in time, that we will run over a bit but not significantly, unless, of course, you want to change that decision. That is the premise that I have been working under for today.

MR. STEELE: Thank you, Madam Chair. I wasn't aware of that change. That is fine, I will just adjust accordingly.

When I left off in the last round of questioning, I was talking about the alternative procurement form and I will just have to leave it by saying to Mr. Bryant that I disagree with you, Mr. Bryant, that the alternative procurement form fairly and accurately describes the two bids that were available. My understanding of the appeal process that was pursued by the other company was simply that since the deputy minister had signed the form, that was the end of the matter, they were not going to look behind that decision as to whether that was based on factually accurate information. That wasn't a question, that is my understanding.

I want to move on to the fact that the next event, chronologically, was the signing of the agreement with the federal government which was signed on August 27, 2002. It was signed for the province by the Honourable Cecil Clarke, who by that time was the Minister of Economic Development. Mr. Clarke also signed the Cornwallis agreement which was signed on December 9, 2002. Mr. Clarke is now the Minister of Justice and when he was questioned about this at the end of November 2007, he said he was not aware, when he signed the Cornwallis contract, that a Cabinet directive had been issued saying that the contract had to go to tender. Mr. L'Esperance or Mr. Bryant, can you explain how the minister could have signed such an important contract without being aware of a Cabinet directive that the contract should have been put out to tender.

MR. L'ESPERANCE: As I said earlier, Mr. Steele, for this letter to have relevance for me, I would have to see the cover routing sheet that went with it. On the matter of Mr. Clarke signing the contract, I was not deputy when that took place. That was many months after I left. I left on March 11, 2002.

[Page 26]

MR. STEELE: Does it surprise you that the minister who signed the Cornwallis contract would not have known of a fundamental but clear and important Cabinet directive that was directly related to that contract?

MR. L'ESPERANCE: Well, whether it surprises me or not I don't think is germane. The fact of the matter is I can't speak to that period because I wasn't there.

MR. STEELE: In my view, based on all the documents that I have read - and I understand this is my view which you may not share - this is a textbook case of how not to do procurement. The amount of money that was going to be flowing through this program was upwards of $130 million. Cabinet directed the contract be put out to tender and it wasn't. The Economic Development employee responsible for immigration has been favouring one supplier from the beginning. Her boss does not look too deeply into her analysis and essentially repeats it to the deputy minister who, in turn, washes his hands of the matter and says what happens re tendering is really up to the other employees in Economic Development. No one is asking any tough questions. The deputy minister signs a brief and arguably inaccurate authorization form. The minister is somewhere floating above it all, unaware that a Cabinet directive is being violated.

So why does all of this matter? I think it is important that we address that directly. Why does all of this stuff about sole-source contracting matter? It's because without a tender the government did not have to be disciplined about what it was asking for and the vendor did not have to be disciplined about what it was offering. This lack of discipline in the contractual relationship between the government and Cornwallis led to multiple misunderstandings and differences of opinion that ultimately caused the complete breakdown of the contractual relationship in June 2006.

The government is now mired in litigation that could be worth tens of millions of dollars, the economic Nominee Program is, with respect, a shambles. Most importantly, the government's lack of discipline in its handling of the immigration contract has left a stain on Nova Scotia's reputation in international immigration circles and has led to a web of broken promises and missed opportunities with respect to immigrant nominees and Nova Scotia mentor companies. All of this could have been avoided if the contract had been put out to tender.

We have been advised, as Ms. Whalen pointed out, that three civil servants were disciplined in connection with the matter. I do agree that the names of those three civil servants do not need to be given in a public forum, however, I do think it is important this committee know who those three people are. When we go into in-camera session later, Ms. Whalen or I will put that question to you and we do expect to have an answer because it is important for us to understand the government's own analysis of what went wrong here.

[Page 27]

One of the things that puzzles me about the discipline is that you, Mr. Taylor, want us to believe that it was an innocent oversight - it was complicated, the department was being re-organized, things slip. And, do you know what? In government, things do slip. But, at the same time, three civil servants were disciplined which implies they did something wrong on purpose. We don't punish people for innocent oversights. Now, in your view, was this just an innocent oversight and, if so, how do you reconcile that with the fact that three civil servants were disciplined?

MR. PAUL TAYLOR: I couldn't be clearer that I firmly believe it was an oversight, a mistake, but nonetheless, a mistake and a critical mistake. It's a mistake that warranted someone making sure the people involved knew they had made a mistake and they shouldn't put themselves in the circumstances of doing that again.

MR. STEELE: Why are you punishing people for an innocent oversight?

MR. PAUL TAYLOR: Well, I'm having difficulty with the question, Mr. Steele, because a few minutes ago you characterized it as the critical step that led to the basically undoing of the immigration process of the Province of Nova Scotia. Now, you're referring to it as an innocent oversight.

MR. STEELE: It is the government that wants us all to believe that it's an innocent oversight. If you read the newspaper this morning, there's a spokesperson for Economic Development, for whom you are responsible, who says essentially that the civil servants involved did the best they could with the knowledge they had at the time. If that's the case, why are civil servants being punished?

MR. PAUL TAYLOR: They were disciplined because they made a critical mistake that was not to be repeated, i.e., we cannot be in a position where minute letters of the Executive Council of the Province of Nova Scotia do not find their way to being enforced.

MR. STEELE: The minute letter is copied to Ron L'Esperance, Patricia Ripley and Dennis Cochrane. Are those the three people that were disciplined?

MR. PAUL TAYLOR: I think we will wait for the in camera session.

MR. STEELE: Because I'm sure the answer is no and I'm just wondering why it is that in this whole affair, it is people relatively lower down the hierarchy, not the people responsible, either at the administrative or political level for the program, that are being punished.

MR. PAUL TAYLOR: Could you just give me the list of names again, Mr. Steele?

[Page 28]

MR. STEELE: The names on the minute letter from the Treasury and Policy Board are Ron L'Esperance, Patricia Ripley, Dennis Cochrane - all people at the deputy minister level.

MR. PAUL TAYLOR: I do believe that when the actual mistake was made, not when the minute letter was issued, that was not when the mistake was made, when the minute letter was issued, those are the three people in the chain of command. When the mistake was made, I don't think any three of those people were involved in the program.

MR. STEELE: Are you aware of whether this minute letter was ever issued to the procurement branch?

MR. PAUL TAYLOR: No, I'm not aware. In general, as you referenced earlier, the Executive Council treats these documents confidentially and they, in my experience, are not widely circulated within departments.

MR. STEELE: Now, Mr. Taylor, you are currently, although you were not at the time, Economic Development is currently responsible for the procurement branch. If a minute letter is issued from Cabinet directing that a particular contract be put out for tender, would the procurement branch be notified of that today?

MR. PAUL TAYLOR: If a minute letter was issued to the department to tender a contract, the people involved in actually tendering the contract would be notified of the contents of that minute letter.

MR. STEELE: Because I have to say, I should spare some time today to compliment the people who I think acted appropriately throughout here and a couple of the people that I will mention are Greg Lusk and Rick Draper of the procurement branch, who consistently and forcefully pointed out to Economic Development why this particular contact needed to be put out to tender, but they did it as a matter of principle. Even they were not aware that this Cabinet directive had been issued and if they had been aware, that would have been a conclusive argument as to why the contract should have been put out to tender. That's why it concerns me to think that even today, having seen what happened in this case, it is still not a given that the procurement branch would be informed of the Cabinet directive that a particular contract be put out to tender.

MR. PAUL TAYLOR: Mr. Steele, in this process the procurement division provides advice to the parties doing the contracting. Whether they know the existence of a minute letter would be absolutely irrelevant to the advice they are giving. They are giving the advice on the basis of what is in the procurement policy.

[Page 29]

MR. STEELE: It seems to me that if they had known that Cabinet had directed that the contract be put out to tender, that would have brought the discussion to an immediate conclusion.

At any rate, another topic that I would like to pursue, Mr. Taylor, although perhaps also in camera, is the fact that the Minister of Immigration has said that he has undertaken or asked for an investigation into a conflict of interest involving an employee of the Office of Immigration. What I'm wondering, and I want you to listen carefully to what I'm asking, I'm not asking for the name, what I'm asking is are you aware of the details of the conflict of interest and the person whose conduct is being investigated?

MR. PAUL TAYLOR: No.

MR. STEELE: Okay, in that case we don't need to pursue that any further. If you had said yes, I would have indicated to the Chair that that was another matter that I wanted to pursue in camera.

Now the Minister of Immigration has said that part of the reason for the problems with the Nominee Program is that the program is a low priority of the government; do you agree with that, Mr. Taylor?

MR. PAUL TAYLOR: The program certainly has increased in priority from where it was in the year 2000-01 when we first started talking about doing something about the immigration numbers in Nova Scotia.

MR. STEELE: And is the implication of what you just said that in the early years it was a low priority?

MR. PAUL TAYLOR: It was lower than it is today, yes.

MR. STEELE: Mr. L'Esperance, was it accurate for the Minister of Immigration to say that in the early years immigration was a low priority for the government?

MR. L'ESPERANCE: Well, I wouldn't phrase it quite that way, Mr. Steele. I think what - and it has been referenced here this morning, the policy formation around immigration, the understanding of the criticality related to skills shortages and those sorts of things were really in a nascent state at that point in time. So I think the program has evolved over the years. I think the understanding of the requirements related to economic stream immigrants is better understood today.

I don't think it's a matter of priority, I think it's a matter of an evolution of a program.

[Page 30]

MADAM CHAIR: Thank you. Order, the time has now expired for the NDP caucus.

Ms. Whalen. You have 14 minutes.

MS. WHALEN: Thank you very much. I did have some questions about the contract as well but I wanted to go back to an earlier e-mail that is dated December 5, 2000. It is to Chris Bryant and it is from Frances Wolfe. I'm just going to read a little section so that you understand what I'm asking. The second paragraph says, "I am concerned about Mr. Dexter and whether others will be putting forward something. I know what kind of program he is suggesting and it is not acceptable to the Feds, but he is very politically connected and I think we need to speed through with Mr. Lockyer's program."

The first question is, why would she be speeding through with the program when we're just about two years before you had signed an agreement - well, a year and a half, anyway, before you signed an agreement with the federal government? Why wouldn't the emphasis of the department have been on signing the agreement with the federal government? What was the urgency of this? It's out of sequence.

MADAM CHAIR: Mr. Bryant.

MR. BRYANT: In fact it was out of sequence and if you'll notice that went quite cold while we then began negotiations with the federal government, negotiations which took us much longer than we expected.

MS. WHALEN: Could you comment on the words "politically connected" and what that implication was?

MR. BRYANT: I don't have a comment on that. I don't know what she meant by it.

MS. WHALEN: I imagine it would have raised your interest at the time. So perhaps you didn't ask that. Is that what you're suggesting, you don't know the answer?

MR. BRYANT: I don't know the answer.

MS. WHALEN: Okay. I'm curious myself. I think we should know.

MR. BRYANT: I try to stay out of political stuff and if somebody says stuff like that to me, I just let it slide.

MS. WHALEN: Okay. In terms of these unsolicited proposals that came in, you said there were three initially and then down to two when one dropped out. Was there ever any staff who might have spoken to these companies that were qualified to say we're looking at

[Page 31]

this, it's a trend across the country, we're going to need that expertise? Was there any encouragement to companies to provide an unsolicited proposal?

MR. BRYANT: I'm not exactly sure. We got the two proposals. One came in, in fact, before we released Opportunities for Prosperity. The CFC proposal came in August 2000 and the CICI proposal came in via Andy Hare in December. So they came in when we were in the very, very early stages of even thinking through what our nominee program would look like. Opportunities for Prosperity talked about organizing an agreement with the federal government, and we sat down with Education which, as Paul Taylor said, was the department responsible. We had a series of meetings. We took a couple of people . . .

MS. WHALEN: So, Mr. Bryant, this is going back not internally but externally. You don't know if anybody ever contacted those companies to say there's an opportunity, perhaps you should put in an unsolicited proposal?

MR. BRYANT: Both companies were well aware that we were considering doing a nominee agreement. In fact, in the run-up to Opportunities for Prosperity, we had submissions from various groups about the need to do something about immigration. Those came primarily from urban groups. There wasn't a lot of interest in the rural areas.

MS. WHALEN: But from companies, from anybody who saw a commercial interest?

MR. BRYANT: No, these were from groups like the chamber, the metro chamber and so on.

MS. WHALEN: Oh yes, I know they have been lobbied.

MR. BRYANT: So there was a buzz around immigration. The document talked about finalizing an agreement and then proposals started to appear. Companies were interested.

MS. WHALEN: As you know, I've been a consultant, Mr. Bryant, and we have met before in that capacity, so I do understand that companies will show initiative and follow the trends and jump in when they see an opportunity. But my question specifically is whether or not, to your knowledge, anybody was encouraged to put in a proposal, that's my question. Perhaps Mr. L'Esperance could answer that question, if he has any knowledge of that.

MADAM CHAIR: Mr. L'Esperance.

MR. L'ESPERANCE: We did not, to my knowledge - we were not at that stage, you know, sort of animating any public response around potential immigration consultants. The document that came in from Mr. Lockyer I think arrived in the department on August 22^nd and I didn't see it until December 7^th when it was transmitted to me. So after that I think the labour market secretariat . . .

[Page 32]

MS. WHALEN: Again, to your knowledge, nobody encouraged them to bring it in. That's the real point of my question.

MR. L'ESPERANCE: No, I'm not aware of any encouragement.

MS. WHALEN: And can you say whether or not any politicians were particularly aware of the opportunity that was coming or in fact the need for direction and encouragement to immigration? Was there anybody at that early point who had taken an interest in immigration and recognized the opportunity and the importance of it?

MR. L'ESPERANCE: Certainly we, through the commissioning of the first economic growth strategy for the province in 11 years, identified immigration as a key issue. I know that there was great . . .

MS. WHALEN: But did it come from political awareness or did it come from departmental? I want to know if there was a political champion who said this is the direction we should go.

MR. L'ESPERANCE: I wouldn't say there was one specific political champion, but certainly Gordon Balser was keen on immigration. He wasn't specific on how that would get executed, but certainly he was keen on the subject.

MS. WHALEN: Was there any indication at all that any politicians might have encouraged companies to, again, come forward with unsolicited proposals?

MR. L'ESPERANCE: I certainly have no knowledge of that.

MS. WHALEN: You would have no knowledge of that and nobody internally sort of encouraging your department to go in that direction? It sounds like the initiative around immigration was internal from staff recognizing the need and the trends.

MR. L'ESPERANCE: I would say so, yes.

MS. WHALEN: You would say so, I just wanted to see that - would there have been any need during these two or three years this was percolating and coming to fruition with the federal agreement that Premier Hamm would have been directly briefed on these issues?

MR. L'ESPERANCE: I'm certainly not aware of any particular incident where Premier Hamm would have been briefed on the issues. I think Premier Hamm would have been interested in the subject, he played a leadership role in looking at skills and skills development in the province - an important dimension of that, of course, is making sure we deal with skills shortages. But I'm not aware of any specific briefings that would have taken place.

[Page 33]

MS. WHALEN: Okay, thank you. April 2001 is when the directive came forward after the briefing to Cabinet that it should be tendered, then a contract was signed December 9, 2002, so a year and a half or more between there. What I want to know is, in that period of time, were there any further Cabinet briefings?

MR. L'ESPERANCE: I can say during the period of my tenure there, which ended on March 11, 2002, there were no further Cabinet briefings. Certainly, at the time that document was put forward to Cabinet, we were looking for general direction going forward. We weren't looking for specifics.

MS. WHALEN: So in that period of time, while immigration was being recognized as an important thing to move forward with, and while a P&P agreement was being negotiated, you don't know of any further briefings in your tenure, none?

MR. L'ESPERANCE: There simply were not any that I can recall. There may have been some . . .

[10:30 a.m.]

MS. WHALEN: I'm sorry to interrupt, but I wonder if Mr. Taylor could add to that. Do you know of any further briefings in that year-and-a-half period?

MR. PAUL TAYLOR: This is between April and the December contract?

MS. WHALEN: And December 9, 2002.

MR. PAUL TAYLOR: No, I don't have any knowledge.

MS. WHALEN: All right. During that time, would it have been your responsibility or the Department of Economic Development's responsibility to do those briefings? Around the P&P or this effectively Economic Development stream.

MADAM CHAIR: Mr. Bryant.

MR. BRYANT: While we were negotiating the terms of the Provincial Nominee Program with the federal government, we did a couple of briefing notes to explain why things were taking as long as they were taking. We brought things almost to a head when Minister Kaplan was Minister of Citizenship and Immigration. There were plans being made for her coming to the province to sign the agreement and then she was moved out of Immigration and everything went cold again.

So I'm sure we briefed people about what was happening there, but I don't recall ever having a face-to-face meeting with the minister on the issue. We certainly never made any

[Page 34]

briefings to Cabinet. This was all in the nature of okay, we're still negotiating, we're still negotiating and when we did finally get an agreement with Minister Coderre, there were a number of discussions with other departments because Minister Coderre was very interested in getting a French-language component into the program. We were the first province to do that.

MS. WHALEN: We won't go there just yet. I have another question for you.

MR. BRYANT: But this is the kind of thing we were briefing the minister on.

MS. WHALEN: Yes, I have read those notes. I wanted to ask you about the drafting of the contract, because the time is going fast. Who wrote that contract that was ultimately signed by the department?

MR. BRYANT: That contract was done by our Justice adviser.

MS. WHALEN: And would Cornwallis have helped to draft that?

MR. BRYANT: Not having participated in the drafting, I don't know the answer to that.

MS. WHALEN: It was really drafted though around their unsolicited proposal, so it was drafted to coincide with what they had offered to do.

MR. BRYANT: We had chosen to go with them, so, yes, the contract was adapted that way.

MS. WHALEN: Did staff within the department clearly understand the huge value this contract would have to Cornwallis, or to any proponent that would have been successful?

MR. BRYANT: Yes, I think we did. I think, at the time, certainly with 1,000 nominees being our target for the five years, with a number of questions about how many people would come through the economic stream, I think all of us were in the end surprised by how many people came through that stream. I expected, given the enthusiasm in the communities and given the need for skills, that there would have been a more even split in that 1,000 . . .

MS. WHALEN: But you knew the amount was 1,000.

MR. BRYANT: . . . so the likely revenue we expected would be lower and we expected costs would be higher.

[Page 35]

MS. WHALEN: But you did know there would be a lot of money flowing through the program, coming in, once the fee structure was determined.

MR. BRYANT: Absolutely.

MS. WHALEN: So it seems to me that there were certain things not looked at very clearly. Could you tell me whether or not at the end of the day, you said it was drafted by your Justice adviser, did you have another lawyer within either the Department of Justice or your department look at it before it actually went for signature?

MR. BRYANT: By the time that work was being done I was not formally in charge, so I wasn't directly involved. My understanding is that the Justice lawyer did discuss this with people with experience in commercial stuff.

MS. WHALEN: Have you any explanation as to why interest was never discussed and not clearly spelled out within the contract? There is a clause that the company will set up a trust fund and will hold the monies. Why was interest not referred to in that contract?

MR. BRYANT: My colleague behind me says that's an issue that's under litigation, so I probably shouldn't be shooting my mouth off about it.

MS. WHALEN: I guess it's clear that it was another oversight at least, if not something more serious. (Interruption)

MADAM CHAIR: Order.

MS. WHALEN: No, you can't discuss it, I understand. In setting up this program, just one final question for the department and that is, you were looking at 1,000 immigrants, many of whom would be economic ones receiving mentorship. Among those, did you believe that there were 1,000 companies in Nova Scotia that would accept this agreement and mentor these newcomers? To me, that is really one of the key things that has fallen apart in the whole program, that you couldn't get people who were proper matches for the immigrants coming in and we couldn't fulfill our part of the bargain, essentially.

MADAM CHAIR: Ms. Reinhardt.

MS. REINHARDT: I think we hadn't imagined that there would be so many economic categories coming in, so first of all, we didn't assume there would be 1,000 employers that we'd need at the get-go. We believed that we did have a fairly good product

[Page 36]

at the time. We believed that there would be a real interest in the small business community especially in being able to offer these mentorships. We had anticipated . . .

MS. WHALEN: I have one further question for you, I don't have much time. Can you tell me how much time I have?

MADAM CHAIR: You have one minute.

MS. WHALEN: One minute. Can you tell me why in the contract it would have said that publicly traded companies were not allowed to participate in this? It's clear that it had to be a private company, not publicly traded, that's in the contract.

MS. REINHARDT: My understanding, again, is it was developed as a small business development tool and that came out as part of the consultation process for the Opportunities for Prosperity, as well as in the document that the chamber of commerce had produced in 2001-02.

MS. WHALEN: I'd like to just make a comment. It was clear from the start that this was supposed to be a win-win for small business, for capital infusion and for immigration. Would perhaps Mr. L'Esperance, or whichever would like to answer, but I would like to know, do you think that the urge to stimulate our small business sector and provide capital overrode some of the issues around immigration and protecting the immigrants? In terms of the discussion, in terms of the emphasis within the department?

MADAM CHAIR: Mr. Taylor.

MR. PAUL TAYLOR: I wouldn't say it overrode it. The issue of this being an investment for the companies was a secondary issue around how the fees were set and how the payments were made because if we'd set it up in that manner, the path would have taken us directly into conflict with the federal government.

MS. WHALEN: One other thing . . .

MADAM CHAIR: Order, the time has expired.

Mr. Porter for the PC caucus. You have 14 minutes.

MR. PORTER: Just a few questions. How many different government departments are involved in this file? Is it just Economic Development and Education? Are there more or have there been more throughout?

MADAM CHAIR: Mr. Bryant.

[Page 37]

MR. BRYANT: When we set up the immigration working group to try to kind of think through how we were going to implement the element in Opportunities for Prosperity, ourselves and Education led that process. We certainly had other departments that had interests in skilled people come and go, but it was primarily the Departments of Education and Economic Development. When NSBI was set up, they certainly had an interest in the issue as well.

MR. PORTER: One question on the trust fund. Who was managing it and did the nominees have an advocate as to what was going on within it?

MADAM CHAIR: Mr. Taylor.

MR. PAUL TAYLOR: I am advised that it was managed by Cornwallis under the terms of the contract that we signed.

MR. PORTER: Part two of that, then - my question was, did the nominees have an advocate as to what was going on within it or do you know?

MADAM CHAIR: Ms. Reinhardt.

MS. REINHARDT: Our recognition of what was going on with that trust fund was provided in audited financial statements to the department and those came to the minister and down through to staff. It's not my knowledge that the actual folks who contributed actually got copies of those audited financial statements.

MR. PORTER: We talked about the number of people coming through the program earlier, and there was reference made to how many and they tend to leave us and Nova Scotia for bigger centres like Montreal, Toronto and Vancouver. Any idea, of the numbers that have come through, how many still remain here? I think I've probably asked this question to others before, but have never really been able to define how many are here or have stayed here or plan to stay here.

MADAM CHAIR: Mr. Taylor.

MR. PAUL TAYLOR: I've asked that question directly because we're trying to determine what has happened on the retention side in Nova Scotia. Have we moved the ball on that front? I've been told by my legal advisers that I'm never to guess in the Public Accounts Committee, but I'm going to guess. I seem to recall that our retention rate was in the 30 per cent to 40 per cent range, somewhere around there. There is anecdotal evidence - nothing more that I am aware of - that says that retention rate has increased significantly. I was also advised before I came here that we would have to wait, I think, until the 2008 Census to actually be able to verify what the retention rate has done. At best, I can say that

[Page 38]

we have anecdotal evidence that the retention rate has gone up, but I can't tell you exactly how much.

MR. PORTER: Thirty per cent plus for Nova Scotia, you're giving us a ballpark number there, okay. Of the balance, the other 60per cent to 70 per cent, any idea how many are within the country or have returned to their native land of origin?

MADAM CHAIR: Ms. Reinhardt.

MS. REINHARDT: I think the challenge here is the fact that we are limited by what federal data the federal government collects through census and in Citizenship and Immigration Canada. Once someone is here three years, they apply for Canadian citizenship and they are just a regular Canadian citizen, so you have a three-year window. In addition, lots of times people will start out going to one province and they'll end up in another, so whose particular statistic is that? We have a number of immigrants who landed in Montreal and Toronto and who are now living in Nova Scotia, and we're not able to track those anywhere. It is my understanding that Citizenship and Immigration Canada recognizes this, but still it's difficult as people are moving from one province to another, to figure out where they are and where they intended to come and whose stat they really are.

MR. PORTER: Those reasons for moving about would be various I'm assuming, employment, other family or any given reason. Is there anything specific that stands out why they leave us?

MS. REINHARDT: I think one of the reasons that we've recognized through the various consultations is the fact that there are a couple of reasons. One, there are some particular immigrant groups that come in and they really like to have their language spoken and they're quite comforted by having a critical mass and in some cases that critical mass doesn't exist in the province. Another reason as well is, oftentimes, immigrants will come and there are opportunities elsewhere. We know that in some cases our wages and our working conditions may not be as competitive as some other provinces. So they come and they get settled and they've moved from halfway around the globe, another couple of hours in another direction to another province is not really much of move at all to them.

MR. PORTER: I just want to reference an email that was brought forward this morning. It is an email dated 10/07/02 and it is from Frances Wolfe to Rick Draper. In it she says, "We would want a provision that the contact (sic) would be void should there be questionalbe (sic) practices or non-performance." Was that clause ever secured anywhere in the contract or are you allowed to speak to that? Again, it was from Frances Wolfe to Rick Draper dated 10/07/02.

MADAM CHAIR: Mr. Taylor.

[Page 39]

MR. PAUL TAYLOR: I think it would be fair to say there are performance clauses inside the contract that was eventually signed. Of course, some of the issues before the courts as we speak, centre around those clauses.

MR. PORTER: Just a follow-up, Ms. Wolfe seems frustrated in her e-mails that Mr. Draper consistently favours the RFP process. If Cornwallis was truly the best company, I would assume that they would prevail in the RFP process. Was there a rush to get this project done?

MR. PAUL TAYLOR: Sorry, I didn't get the last . . .

MR. PORTER: Was there a rush to have the process complete, versus going with the RFP process?

MR. PAUL TAYLOR: There was certainly an imperative at the time to begin to do something strategic and positive about the immigration numbers. There was certainly the sense that I've got from the documentation and talking to people on the ground that - it's not so long ago in this province that we were talking double-digit unemployment, huge budget deficits. It was a different world than the one we're in now.

This has changed within a decade and certainly the need to start focusing on moving from a world of many people and few jobs into a world of many jobs and few people was really foreign to this province. We've been living in a world now for a long time with double-digit unemployment and the constant drive to find ways to deal with ways to bring that number down and get people into the workforce.

[10:45 a.m.]

This world of moving into the one of many jobs and few people swept across, I guess, the western world fairly quickly and it's certainly in this period of this 2000, 2001, 2002 where that imperative starts to become better known. Hence, people begin to look at the immigration as a way to increase the numbers of the workforce in Nova Scotia. So I would say yes, there was a policy imperative that developed that we should be focusing on immigration.

MADAM CHAIR: Mr. Bryant.

MR. BRYANT: When we did the consultations around Opportunities for Prosperity, we did hear pressure for more attention to immigration in Halifax. Halifax was at that time starting to see the implications of needing more workers. Rural Nova Scotia wasn't on that wavelength at all.

[Page 40]

In 2005, when we did the consultations for Opportunities for Sustainable Prosperity, we heard concerns about worker availability in Antigonish, in Pictou, in places where that wasn't an issue just five years before. So there was a growing urgency around the whole question of getting workers.

I think, though, the other issue with respect to urgency - we signed a five-year agreement with the federal government on a Nominee Program in August 2002. The clock was ticking on the five years, so the pressure was really on to get something underway. We'd been talking about a nominee program with people who knew about those kinds of things for over a year; people wanted to see some action. So yes, I certainly felt a sense of urgency to get a program up and running.

MR. PORTER: Was there a fear that the federal government wouldn't extend the time, if need be? You spoke to it a bit, with some concerns, but did we ever go back to ask, we're not quite there yet or we need a little more time?

MR. BRYANT: Perhaps, but again the five years seemed to be the norm for a kind of first cut in a nominee program. Other provinces and we ourselves have had a continuation, turning it into a longer-term program but we were not certain what the rules might be.

Our experience with the federal government over the months of negotiating the agreement weren't really encouraging. By the time they came to Nova Scotia, the eighth province, this really should have been boiler plate and we went through all kinds of discussions. It led to the point where it was going to be signed and then that faded away, went through a whole bunch of new discussions. It was a frustrating process, which I think added to the sense on our side that we really needed to move this thing ahead quickly.

MR. PORTER: In another e-mail, Mr. Draper lays out conditions for choosing a private sector partner. Why was Mr. Draper so concerned about this process?

MADAM CHAIR: Mr. Taylor.

MR. PAUL TAYLOR: As a member of the procurement office at the time, the procurement process requires departments to seek the advice of the procurement office on the proper route to follow on how to interpret what can be a very complicated procurement policy. He would be consulted, in that case, to provide that advice to the department on how the procurement process worked, what are the circumstances around the purchase or the service that wants to be procured by the department, and what route the department, under the policy, should follow.

MR. PORTER: Would there be any reason to think there was a bias at that time toward Cornwallis?

[Page 41]

MR. PAUL TAYLOR: I think, as Mr. Bryant pointed out, when you combine the fact that there would have been an air of it's time to stop talking about this subject and it is time to start actually doing something about this subject, with the fact that staff in the department having been in the immigration community, if you will, for going on a decade at the time, and saying to themselves, this program requires somebody who has to be here in Nova Scotia and has to work exclusively on behalf of Nova Scotia. That really did seriously limit the number of companies in existence in Nova Scotia at that time - who had the contacts, who had the network, who had the ability to deliver on this contract - to a very small number that they were confident they knew who they were and they knew, having dealt with the detailed, written proposals and had discussed these with these companies, had called them in, met with them, had the to and fro over what they could and could not do, they believed that they knew who the best choice was to deliver on this contract.

So when you put that knowledge together with the fact that there was the desire to get something going, you can see how people would say why would we now turn around and waste another X number of months going through a public tender process when we think we have the answer in front of us right now.

MR. PORTER: Thank you very much. That's it for now.

MADAM CHAIR: Thank you. The time has now expired for questioning in this venue. I am going to ask that we take a five minute recess to allow for the recording folks to prepare for a brief in camera. When we come back, we will have an opportunity for, I think, five minutes of questions per caucus, if need be. So we will adjourn for five minutes and we will be back in camera, at which time the gallery will have to be cleared. This will be for members and witnesses and the AG's office only. Thank you.

[10:51 a.m. The committee recessed.]

[11:13 a.m. The committee reconvened.]

MADAM CHAIR: This concludes the portion of the questioning of witnesses. I now would invite the deputy minister, if he would like to make some closing comments.

MR. PAUL TAYLOR: Thank you, Madam Chair. I would just reiterate that, from the Civil Service's point of view, the establishment of this program was a deliberate attempt to try to move that immigration ball that hadn't moved for so long. It would have been the safer, easier way to proceed to simply do nothing.

In this case, a pilot program was put in place with some fairly severe restrictions, at least from a program development point of view, around the resources that were available to establish it. Nevertheless, every program manager in government that I know of would

[Page 42]

always want more resources. The program was put in place with what we had to work with, and the program was launched.

[11:15 a.m.]

I think I would repeat the main values of the program to date have been that it has been successful in bringing new citizens to this province. I think more importantly, it has taught the Government of Nova Scotia some pretty good lessons on what works and perhaps what doesn't work in what I think we would all easily admit is a more complicated industry than the one we launched into this program in the first place.

I think the lessons learned will serve us well. The Office of Immigration has those lessons available to them and I certainly wish them luck with their programs as they continue to evolve them in the future. With that, I'll conclude and thank the committee for their questions.

MADAM CHAIR: Thank you. On behalf of the committee, I would like to thank you all and in particular Mr. L'Esperance, as a private citizen today, for being here to answer our questions - it's very much appreciated. Mr. Steele.

MR. STEELE: Madam Chair, thank you very much. In light of the information that has been shared with the committee during the in camera session, I'd like to make the following motion: I move that the Public Accounts Committee affirms that the information obtained by the committee during its in camera session today will remain confidential and will not be released to the public.

MADAM CHAIR: Mr. Colwell.

MR. KEITH COLWELL: Yes, I would second that motion.

MADAM CHAIR: Is there any further discussion? Would all those in favour of the motion please say Aye. Contrary minded, Nay.

The motion is carried.

Ms. Whalen.

MS. WHALEN: Thank you, Madam Chair. I had a motion relating to immigration and just by way of context I wanted to reference the recent reports that a number of immigrants to the mentorship program have proved that their mentorships are void and the Office of Immigration has said so, that they are voided. But the office has refused to release their funds to them, less the amount of money they've been paid, and they're being caught

[Page 43]

up in the same program delay that's waiting for the review of the Office of the Auditor General.

I would like to make a motion as follows: That where a void mentorship has occurred, the Public Accounts Committee declare their support for a full refund of the monies paid to the mentor companies, less the salary received by the nominees. To date, there are only two reported. I just believe that it is unfair to hold those in the same program.

MADAM CHAIR: The motion is in order. Is there any discussion? Mr. Steele.

MR. STEELE: Madam Chair, in view of the fact that we have not had advance notice of the motion, I would like to have an opportunity to consult with my colleagues, including yourself and Mr. Wilson about it. In light of the fact that in a couple of weeks we will be hearing from a panel of nominees and mentors, it seems to me best to defer voting on the motion until a future day. We may support it, we may not. I just think it is a bit early in the process to vote on it today. I don't know if that means that I should move deferral but I would suggest that it be tabled pending consideration on a future day.

MADAM CHAIR: Mr. Colwell.

MR. COLWELL: I don't agree with Mr. Steele's motion. He regularly brings issues here to the committee without notice to any of the members. I don't think it is appropriate. (Interruption) Do I have the floor?

MADAM CHAIR: Mr. Colwell.

MR. COLWELL: Thank you. So I don't agree with his motion or to defer this. This is a very important topic to the individuals who are there. I don't think anything we are going to hear past this time is going to change that situation unless all of a sudden, a lot of people are properly treated under the program which they haven't been, and the program has been flawed, as we all know. So I think it is in order. I think it is something we should move on now and put on the record.

MADAM CHAIR: Okay. There are a couple of things I would say. The motion is in order. However, you run the risk of forcing a vote on it and having it defeated, rather than putting it aside with the real possibility of having it pass at a future date maybe not that far away. So that seems to be the situation we are in.

Mr. Porter.

MR. PORTER: Madam Chair, I will agree with Mr. Steele. I think we would be passing judgment without all the facts. We have a lot to do yet, I think, and we have discussed that in subcommittee. I know for certain, with regard to nominees who may come

[Page 44]

before us and tell their stories, regardless of what those stories are, I think we are premature. Again, I would not say we would not support that motion at a future date, but we certainly are not prepared to do that today.

MADAM CHAIR: Ms. Whalen, it is your motion. Do you have a further point of view on this?

MS. WHALEN: Thank you, Madam Chair. In fact, I think we have the information we need to make this supportive motion. The key thing is that the Office of Immigration themselves have reviewed those contracts, have said that they were not successful and not working as they were supposed to and have voided the contracts and agreements. Therefore, I think that the homework has been done by the Office of Immigration. We know they take great care in this and that it is under a lot of scrutiny so they would not have been doing this unless they had properly investigated. So the question is, do we think that the few cases like this - and I believe there will only be a handful - should be held up and that individuals should have their funds held up for a significant length of time because if they get caught into the full Auditor General's investigation of the program, it could be quite a length of time and I think that is unfair to the individuals who are impacted.

Given that the Office of Immigration has supported the claim of the mentors that it was not a successful match, I think their funds should be released to them, less the amount of money they have been paid. Given what I am hearing from the other Parties here today, it would appear that my motion will not pass today, but I really feel it is the right thing to do. I think we could have the vote on it today. I guess it can be brought back in future if it doesn't succeed but I believe we should vote today based on the knowledge we have as a committee. People have sat here, all our members have sat here and we know that we have gone through tons of information about this program and we had the opportunity to speak to many mentors individually and informally prior to being here. I just believe the members of this committee have the information necessary and that we could move this today and vote on it. So I would like to leave the motion on the table and have a vote.

MADAM CHAIR: Mr. Steele.

MR. STEELE: Thank you, Madam Chair. It's a bit beyond me why I shouldn't have the opportunity to consult with our Party's Immigration Critic, with my other colleagues on the committee. If the Liberals force it to a vote, I am going to vote against it but let it be clear it is simply because I think it is premature. Next week, two weeks, three weeks, we will be in a position to vote on it but if they want to force it to a vote, I will vote against it.

MADAM CHAIR: Thank you. Is there any further discussion? Ms. Whalen.

MS. WHALEN: Madam Chair, I believe that our committee should be responsive to issues that come up and that we shouldn't be hide bound when it comes to procedure and

[Page 45]

notification and so on. It's not uncommon for any of our legislative committees to have motions brought forward at the end of meetings and I think it's quite appropriate that I've done so. I see no reason why my honourable member to the left would not be supporting this motion, so again, I would like to see us vote. Thank you.

MADAM CHAIR: As I've said, the motion is in order and we will have a vote on this. Would all those in favour of the motion, please say Aye. Contrary minded, Nay.

The motion is defeated.

At this time, I would draw the attention of the members to the subcommittee report that you have in front of you. The subcommittee has met and are recommending for future witnesses. The Department of Justice and the Public Prosecution Service have been scheduled for February 6^th. The Provincial Nominee Program, nominees and business mentors have been confirmed for Feb. 13^th.

The other two topics for your consideration are the Department of Environment and Labour, e-waste regulations and air quality monitoring, time to be scheduled; and the Department of Health, health human resources - the time of that meeting to be scheduled, the clerk will schedule it.

The Nova Scotia Association of Health Organizations, the issue around health human resources is being referred to the Human Resources Committee. Essential services legislation appears on this in error, that will not be referred to the Committee on Human Resources because that matter is a bill before the House of Assembly. I would ask that a member of the subcommittee move this report.

MR. PORTER: I so move.

MADAM CHAIR: Mr. Porter, thank you. Seconded by Mr. Colwell. Would all those in favour of the motion, please say Aye. Contrary minded.

The motion is carried.

The final item of business at this stage will be that the subcommittee has been grappling - Mr. Colwell.

MR. COLWELL: It's probably not necessary for our guests to stay here through all this if they want to leave.

MADAM CHAIR: This will only take a second, really. The subcommittee have been grappling with the management of the large number of documents that we have with respect to the Nominee Program. When we met last week, we arrived at agreement that members of

[Page 46]

the committee would submit to the clerk in advance of today documents that they would be referring to. You all have a small package of documents. Our idea was that these would be the documents that we would release but that the subcommittee, with your agreement that these would be the documents that we would release, would instruct the clerk what personal information or private proprietary business information should be removed from this package, prior to the release of this.

What I'm asking members of the Public Accounts Committee is to agree that we are able to release these documents, but when the subcommittee has a chance to look through them and advise the clerk on what personal information contained in these documents and these documents alone will be removed. Is that agreeable? I would like a motion, actually, to that effect.

MR. COLWELL: Madam Chair, I so move.

MADAM CHAIR: Mr. Colwell, seconded by Mr. Porter. Mr. Porter.

MR. PORTER: It seems that we sort of did have a plan, there's no question, but Given today, though, we see three documents appear before us that have not been presented - and they are now in the public domain. It seems like the plan to release documentation into the public has, in and of itself, gone its own way. I don't know that we're going to be able to control what gets out and what doesn't. As far as saying we're going to stick to these documents only, that appears to be out the window as well, in my opinion, given today's documents presented at this meeting and not prior to. I'm confused as to where we're going with all this, Madam Chair, I have to be honest with you.

MADAM CHAIR: Well, let me say first that the documents that were released that we did not have in our package were documents that are outside of the purview of the Public Accounts Committee, in terms of documents that we've been sifting through. Any member of this committee is free to do their own research, to bring in their own documentation and to make decisions about how they use that documentation.

So what we, as a Public Accounts Committee, have been grappling with, is how to deal with the documents that are coming to us, provided by the Office of Immigration and specifically the documents that they've asked us to embargo, in terms of use in public because they contain personal information or business and proprietary information or information with respect to the relations between the federal and the provincial governments.

There are a lot of documents we haven't received and, in fact, that continues to be an issue. We were supposed to receive an updated version of the documents that are being withheld because of client-solicitor privilege, or Cabinet confidentiality or whatever. That's a matter that I will follow up on.

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What I'm asking is that we have some direction about the release of these documents in an edited form because they were referred to here during the debate today or the discussion today. Mr. Colwell and then Mr. Steele.

[11:30 a.m.]

MR. COLWELL: There are two issues here and I want to address the first one and the second one I want to discuss after we make a decision on this. The first issue is, as the chair has indicated, whether we release the documents and the process they're going to go. I agree with that process. I had some hesitation about it first but I agree with process now and it's one that I think is good.

On the second issue of documents coming here, I want to discuss this after this motion is looked after because we did get some documents here today that were very helpful, but I would like to discuss that after this first motion has been dealt with.

MADAM CHAIR: Okay, any further discussion on the motion? The motion is that the package of documents be released, the subcommittee will advise the clerk on what specific items need to be removed from that package. Any further discussion? Hearing none, I'll call the question.

Would all those in favour of the motion please say Aye. Contrary minded, Nay.

The motion is carried.

I will be circulating to the members the legal opinion I've received from Legislative Counsel with respect to the point of order that was raised about how information is released and who has the authority to release information - the Public Accounts Committee or the subcommittee. We will have that discussion at a further date.

Mr. Colwell, you have a matter.

MR. COLWELL: Yes, Mr. Porter alluded to it. We were presented with some documentation today by Mr. Steele that was very helpful indeed, and documentation that wasn't available through the department. They refused to give us that documentation. I don't know how Mr. Steele got that information; I really don't care how he got it. What I would like to know is why the committee can't get it and an individual member of this committee can get it. Now there's something wrong with our process, if that's the case - either we're going to get the documents or we're not going to get them. I prefer to get them and then make a decision on whether or not they should be made public.

I think it's not appropriate that one member of the committee gets which is concluded by - I don't agree with, but it's concluded by - government that these are confidential

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documents and if they're confidential documents and if they are confidential documents, the government's got a big problem on their hands because these documents appeared here today in the public domain without any preference at all as to how they got there.

I commend Mr. Steele for getting them, quite frankly, but I think if I were sitting across the table here, I would ask some very serious questions of my staff about where they came from, how they got there and make very strong disciplinary action if, indeed, you can find out who released them.

At the same point, if those are available, I'd like to hear from Mr. Steele how we could go about getting these documents now.

MADAM CHAIR: Mr. Porter and then Mr. Steele. I think we will adjourn our guests because this is turning into a longer discussion than I thought it would be. Thank you very much.

[The witnesses left the Chamber.]

MADAM CHAIR: I now call the committee back to order. Mr. Porter.

MR. PORTER: I agree with Mr. Colwell with regard to the documentation and his comments. What I'm concerned about, though, and this is an example of that, I may have not been clear on it before, here we are, the subcommittee has met, we've gone through processes by which we've agreed or disagreed, whatever, to release information publicly. Yet, today's example has superseded the entire process and gone totally around that. I think someone stated that anyone has the opportunity to go and seek out with research any documentation and you so choose to bring that forward.

If that is, in fact, the case, why do we have in place the process for what we're doing with release of documents? Because there's nothing saying - today is a prime example of that. Mr. Steele brought forward three documents that would not appear and never appeared before the subcommittee for any kind of discussion as to whether those documents will be released or not in the public forum. I see some differences of opinion as to how things are unveiling here.

MADAM CHAIR: I think the traditions of this Legislature are such that members of the Legislature have the privileges to do research and receive information. Other members of the Legislature do not have the authority to limit the activities of a member in terms of carrying out their responsibilities as elected officials. That's kind of a crude way to say, the scope - I think that if we were dealing with matters of national security or violating the privacy or the privilege of individual people in the province. We have immunity when the House is in session in terms of things we say on the floor of the Legislature. We have a

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tremendous amount of privilege that goes with being an elected member in terms of doing our job. Another member can't say you can't do such and such.

The documents that were presented here today by Mr. Steele were never in the package of documents that the government has released to us. To me, there is no rule that prohibits a member receiving those documents and working with those documents. What the subcommittee and the Public Accounts Committee have been working our way through are the documents that have been released to us and we have also been attempting to find out what documents haven't been released to us and why they haven't been released to us. That process is still ongoing, so this is really all I can say.

I see nothing improper in any member of the committee bringing forward information that they obtain in the course of doing their own research or people who contact them and say, I want to provide you with additional information. It's not in the realm of a chair of a committee to limit the activities of a member in that way, that's my view. Mr. Colwell.

MR. COLWELL: I would agree with the Chair on that. I believe if a member has the ability to get information, as long as it doesn't compromise any individual or the rules we have set out in this committee, that is fine, that's fair ball. I'm pleased to see this has happened and I'd like to put a motion forward regarding this.

I would like to put a motion forward that states that in light of confidential Cabinet documents becoming available to the committee through a member - which I commend the member, and I want that in the motion, for getting those documents - then I feel that the government should release what they have before indicated as confidential documents to the subcommittee to review and determine whether indeed they are confidential. There was definitely nothing confidential in those two documents that were here today.

MADAM CHAIR: I think that the motion should be to the Public Accounts Committee rather than to the subcommittee, that the government should release to the Public Accounts Committee. In a way we have been attempting to do that. Mr. Porter.

MR. PORTER: I was just going to say the same thing, have we not already made the request in some way, shape or form that we want to see all of the documentation that exists? I don't know whether we motioned that or what that previous language has been, but I think that is already duly noted and understood.

MADAM CHAIR: Mr. Colwell:

MR. COLWELL: I think the motion is very appropriate in light of the information we had presented to us today. We actually have documents that were given to us today that were identified by government as being confidential documents and, indeed, they are not confidential documents in any terms that we had looked at as being confidential. I think this

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is very relevant and I think it has to be pushed forward because I think it's important we get those documents to review them and to see if indeed there is information in there that would help us explain what happened in this catastrophe in the province and it has really been a catastrophe.

MADAM CHAIR: The one thing I would say about your motion is this, we are still trying to ascertain exactly what it is that is being withheld. We asked the department to provide us with a detailed list of the documents they are withholding and we received a list, but then we received a letter from Ms. Penfound indicating that there was misinformation given to us about what was withheld and that they were going to compile a new list because there were errors in what was provided. Do you remember at our last meeting I was asked to look into that, when they were going to get that to us. The clerk has been talking to that office every day and we thought we would have that updated list last evening, yesterday afternoon. They said that because we hadn't put an actual deadline but the clerk said, look this is going to come up tomorrow so I need that information and they said, we will get it to you and it didn't arrive.

My hesitation about your motion is this. There is a lot of client-solicitor privileged documentation that is being held back and we have agreed that we are not interested in the client-solicitor documentation in a way. Legitimate client-solicitor claims we accept but we don't even know what documents are being claimed for client-solicitor privilege. So I guess what I am saying is I think, again, that until we get that list and we have a factually correct list from them, a detailed list of what is being withheld, it is hard for us then to say that we are going to go after this bunch of information because some things we will legitimately say, okay, we are not going to look for that.

So your motion is very broad in terms of it should provide to the Public Accounts Committee the information that is being withheld but we still don't really have an accurate list of what is being withheld.

Mr. Steele.

MR. STEELE: Thank you, Madam Chair. I just wanted to make sure that there is no misunderstanding, particularly on Mr. Porter's part of what happened here. The Office of Immigration has given roughly 10,000 documents to the Public Accounts Committee on condition and the condition is that those documents will not be released to the public until they are at least vetted by the committee in order to take out any information that would be confidential or private, essentially following the same rules as the Freedom of Information and Protection of Privacy Act. I agree with that, I support that, I followed that. In fact, on Monday, I notified the clerk of this committee of the documents from among the 10,000 that I intended to refer to today, just like other members have.

[Page 51]

However, I also obtained other documents that are relevant to this committee's inquiries. They are not among the 10,000 given to us and at all times, I, like any other member, reserve the right to do my own research, to collect my own documents and to use those documents in any way that I see fit and at any time that I see fit. Now I want to make sure that there is no misunderstanding that our commitment to vet the documents applies only to the 10,000 that the Office of Immigration has disclosed to us and not anything else. So, as you say, Madam Chair, as a privilege of a member, I reserve the right at any time to go out, get other documents and do what I want with them.

[11:45 a.m.]

I would also add that in supporting the gist of what Mr. Colwell was saying, although maybe not the exact words, is that once you actually get your hands on these documents that the government is claiming as confidential, you realize how little reason there actually is for them to be confidential. So certainly we have evidence that there are probably other documents that they ought to be disclosing to us and haven't. I would suggest that Mr. Colwell's motion be referred to the subcommittee for further discussion, perhaps to refine it because while I do understand and support the gist of what he is saying, I agree with you, Madam Chair, that I think it needs to be refined.

MADAM CHAIR: Mr. Porter.

MR. PORTER: Thank you and I will certainly thank Mr. Steele for his clarification and I am happy to hear that. Thank you very much.

MADAM CHAIR: Mr. Colwell, would you be okay with having your motion referred to the subcommittee just to reword it a little bit?

MR. COLWELL: Yes, I don't have a problem with that. The point I am trying to make with the whole thing, we were given a memorandum to Cabinet today and I thank Mr. Steele for getting it, quite frankly. When I read through this document, there is really nothing in here that is confidential, absolutely nothing, and as far as government is concerned, everything to Cabinet, everything that is associated with Cabinet, everything is confidential according to them. I think it is really restricting this committee and their work and what they can do to get to the bottom of this fiasco and it has been a fiasco in the province and a very expensive one for individuals and very difficult for them in their lives.

So I think that we really have to get to this so we can refer it to the subcommittee and we will refine the motion and bring it back to the committee for approval. I just want to get all the documents available.

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MADAM CHAIR: Thank you. Okay, that's agreeable.

At this stage we stand adjourned.

[The committee adjourned at 11:47 a.m.]