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April 23, 2002
House Committees
Meeting topics: 

[Page 549]



2:23 P.M.


Mr. Jerry Pye

MR. CHAIRMAN: Order, please. We will continue with the estimates for the Minister of Finance.

The honourable Minister of Finance.

HON. NEIL LEBLANC: Mr. Speaker, I could go over my opening remarks again and go over the breakdown of the department and analyze it, but I think that members know that summary. So I believe when we broke yesterday, it was the member for Lunenburg West who was asking questions and if he has any questions, I will try my best to answer them.

MR. CHAIRMAN: The honourable member for Lunenburg West declared that he has completed his questioning. Thank you very much.

Order, please.

The honourable member for Halifax Fairview.

MR. GRAHAM STEELE: Mr. Chairman, I would like to take a very short time today to address certain issues around the Nova Scotia Gaming Corporation which is within the responsibilities of the Minister of Finance. Last day I asked the minister if he was aware if the Minister responsible for the Liquor Corporation had issued a directive to the corporation instructing them that their bottom line had to equal $160 million this year. So my question to the Minister of Finance is, was a directive, written or verbal, given to the Gaming Corporation instructing them to produce a particular bottom line this year?


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MR. CHAIRMAN: Just one moment, the Chair wants to take a moment to be clear here. The Chair recognizes that, in fact, the member for Halifax Fairview was the last speaker with a time remaining of 46 minutes.

MR. LEBLANC: Mr. Chairman, I'm going by recollection, I don't believe that we gave them a written directive. We did have some discussions with the Nova Scotia Gaming Corporation as to whether or not there were some areas that revenues could be examined. My recollection is that there wasn't a directive sent to them, but I will endeavour, I have just asked staff as to whether or not they recall any such directive and they don't, but I will take a look, and I will also ask the staff of the Gaming Corporation if there was one and maybe you could go to the next question. My recollection is that there was not a written communication with them, but I will check with staff and my second answer to the member opposite, I will fill him in.

MR. STEELE: Mr. Chairman, this is an important point because from public statements of the Liquor Corporation, they were told by the minister that the amount they turned over to the government had to equal a certain amount. So the Liquor Corporation said, well, we have two choices - decrease costs or increase prices. So they had an across-the-board price increase as a result of the directive they got from the government. Now, the government is expecting a fairly substantial increase this year, not just from the Liquor Corporation, but from the Gaming Corporation. In fact, the increase is from $175 million to $190 million. I wanted to ask the minister again, did he or did his government instruct the Gaming Corporation that the amount of money turned over to the province in this fiscal year had to equal a certain amount?

MR. LEBLANC: The answer is no.

MR. STEELE: Then, Mr. Chairman, I note that the Gaming Corporation is projecting increases in revenue anyway and, in particular, I want to focus on projected increases in revenue from the Halifax Casino. The forecast for last year is $64.6 million - this is revenue - and the forecast for this year is $68.1 million, an increase of 3.5. What exactly is going to happen that is going to produce for that casino an increase in revenue of 3.5 in this fiscal year? How does the minister expect that increased revenue to be produced?

MR. LEBLANC: Mr. Chairman, staff are informing me that this is a marketing initiative done by the casino to increase play at the casino and that is the 3 per cent increase that is there, from $64 million to $68 million. If you look at the percentage, I don't think it's unreasonable the expectations that are being put forward.

MR. STEELE: Mr. Minister, when I used the figure 3.5, that was million dollars, it wasn't 3 per cent; it's higher than 3 per cent. I haven't done the math in my head, but it's somewhere in the range of 5 per cent or 6 per cent. It's the same at the Sydney casino which is expected to go up from $29.7 million to $32 million in revenue this year. I wonder if the

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minister could elaborate on how it is, what is the Gaming Corporation and/or the casino doing to take more money out of casino gamblers this year? What specifically is going to happen?

MR. LEBLANC: Mr. Chairman, in regard to the casino operations, we don't operate the casinos. The member opposite is very much aware of that because Casino Nova Scotia is the operator of those casinos. They come forward with their business plan and if you look at the Sydney casino, which the member opposite makes reference to, there have been steady, small increments every year in their performance and this year the same is expected and whereby there is an increase, the member opposite made reference to it, those are the numbers that they expect to reach this year.

Obviously, Mr. Chairman, over and above that, how we derive our revenues from casinos is a rather complicated formula, but one of which is 20 per cent off the top. Whatever is gambled there, we would get 20 per cent of that. It doesn't matter whether or not it's the Halifax casino or whether or not it's the Sydney casino and then after that it is a percentage of the net proceeds that we receive of the net profit from the casino - 65 per cent of it would go to the province and 35 per cent to the operator. The member may have some more questions in regard to that formula in his subsequent questions and I will endeavour to answer them.

MR. STEELE: Mr. Chairman, the most significant increase is in VLTs, video lottery terminals: the revenue from video lottery terminals is projected to increase this year; the revenue is projected to increase from $161 million to $190 million. That is an increase, just doing the math quickly in my head, of 15 per cent this year over last year. What is happening in Nova Scotia that the Gaming Corporation can expect a 15 per cent increase in revenue from VLTs? Where is it coming from?

[2:30 p.m.]

MR. LEBLANC: Mr. Chairman, one of the things that is going on is that we have replaced the VLTs with the new modules. They have differences of games on them. They're different than the ones that were there prior. There are also measures that we have put in place, about two or three or four different initiatives, one of which is a clock, how long you play. There are three or four other different initiatives. After a certain amount of time I believe the machine pays out automatically. What other initiatives are there? (Interruption) Yes, there's a pop-up reminder that comes up that tells people how long they've been at the machine and it is also shown in dollars rather than credits. The old VLTs basically had credits, it didn't show the dollar amount. They thought that was important.

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I should point out for the member opposite that the other provinces in the Atlantic Provinces, and actually outside of the Maritimes and the Atlantic Provinces, they're also looking at the measures that we put in place to try to assess them and, obviously, as the Nova Scotia Gaming Corporation, there's going to be some tracking involved in that, but a major part of the increment is the new machines that are there which basically expands the number of people. Some people basically didn't want to play the old machines because of the fact that they were looking for something different. These new VLTs have a variety of new measures.

MR. STEELE: Mr. Chairman, I do want to point out that a significant amount of new revenue being generated by the province this year is coming from a substantial increase in revenue from VLTs and a lower but still significant increase in revenue from the casino. So just like the Liberal Government before it, this government is becoming addicted to gambling revenue. They're becoming addicted to gambling revenue to generate that politically precious but fictional bottom line.

Mr. Chairman, in the budget last year, the government separated the operating costs of the Halifax casino from the payments to the operator and this year they don't do that. They have put them together without saying what the different payments are and, you know, for reasons I raised in Question Period, I can understand why the government would want to change their books so that it's harder to figure out what's going on so let me ask the minister this. In this fiscal year, what is the payment to the operator of the Halifax casino?

MR. LEBLANC: Mr. Speaker, it's a good question the member opposite talks about, which is that in the contract that was entered into by the previous administration with the casino, it was signed in 1995 by the then Finance Minister Bernie Boudreau, and basically if it wasn't Bernie, it may have been his successor who actually signed the contract because if I recall, a lot of the discussions that took place at the Public Accounts Committee when Mr. Fiske was before the Public Accounts Committee, and I served as a member of that committee, if I recall, even after Mr. Boudreau left, there were still some discussions on how to finalize that contract. So I may stand to be corrected as to exactly when it was all signed, but I do know that it was signed during the administration of the previous Liberal Government.

On this new casino when it was built, and it has been built, Mr. Chairman, and we've all seen it down on Water Street next to the Purdy's Wharf Tower, the loan or the investment into it would be repaid over seven years. The fact is that the rate of return, the interest on that that they would be allowed as a casino operator, would be 12 per cent. So in this fiscal year in this business plan that is put forward is an interest expense of $9 million. So the fact is that is a substantial amount, but I should point out that within seven years the loan or the investment will be completely paid back and at that time, obviously, what will happen over and above that is that the province at that time will not have these types of interest payments subsequent to that.

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MR. STEELE: Mr. Chairman, I just want to clarify this from the minister's answer. Last year there was a line item that is called Payments to operator. If that line item were included in this year's budget, would it be $9 million or would it be something else?

MR. LEBLANC: Mr. Chairman, I am looking at this year's Crown Corporation Business Plans. The member is making a reference to a payment to operator. I'm trying, Mr. Chairman, to co-operate with the member opposite and he's referring to a line I don't see in the document that is here. Can you clarify just so I make sure that I give you the right answer and what we're talking about.

MR. STEELE: Certainly, Mr. Chairman, I would be glad to do that. I wonder if I could ask the Page to deliver this directly to the Minister of Finance because the reason he doesn't have it is because it is from last year's Crown Corporation Business Plans.

MR. CHAIRMAN: Excuse me, honourable member, it is appropriate that any papers that go through the Legislature be tabled as well.

MR. STEELE: Perhaps the Minister of Finance will table it as soon as he's done with it, Mr. Chairman. I'm just trying to keep this process moving along.

MR. CHAIRMAN: Thank you.

MR. STEELE: That is the item I'm referring to. There was an item in last year's business plan broken out as Payments to operator. If the business plan of this year were stated in the same way, what would the payment to operator be this year?

MR. LEBLANC: Mr. Chairman, I should point out for the member opposite that in this year the amount of interest that we are paying is 8 - the payment to the operator that he's referring to in last year's was a payment to, I believe it was, Park Place Entertainment, which was the operator at that point in time. The changes that happened within the old casino and the new casino when it was built and how the province would repay the capital to the operator are two of the issues that are changing from last year to this year in how we account for it. The fact of the matter is that there is the repayment schedule which shows seven years that we have to repay the casino to the operator. I should point out that the useful life of the asset is longer than that and there was a difference in how that is accounted for.

This is a question that I would have to sit down and do a reconciliation so the member could get that information. I'm more than prepared to do it, but the fact of the matter is it would take me some time to do it and I'm not sure whether or not I can do it in the time frame that is here. If the member opposite would let me have staff prepare a response to that, I would be more than prepared to do so.

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MR. STEELE: Mr. Chairman, this is another example, and I pointed out others yesterday, where the financial statements for this year are not directly comparable to the financial statements of last year. So as a member of this Legislature, what I'm spending my time doing with the Minister of Finance is just trying to get him to reconcile this year's financial statement with last year's financial statement. Instead of talking about the implications of what's going on, which is what we're elected to do, we're chasing down numbers, just what exactly are the real numbers, because the financial statements are not directly comparable from one year to the next. That is not a good use of the Legislature's time.

I have one more question, Mr. Minister. Last year in the budget, the government forecast revenue from the Halifax Casino of over $69 million, and the actuals are going to be something quite a bit - well, not quite a bit, something just under $65 million. The Halifax Casino fell short of its revenue targets by $5 million or 7 per cent last year, and yet the government has, again, this year set an ambitious revenue target. Why should anyone believe that the casino, this year, is going to earn the revenue when it couldn't meet a similar rosy forecast last year? What's going to be different this year?

MR. LEBLANC: Mr. Chairman, I don't know if the member opposite took note of what happened last September, and the result that many hotels and many business travellers and many individuals refused to travel, especially for the first few months subsequent to the events of September 11th. I know that many of my friends who were very hesitant of travelling whatsoever right after those events, basically guaranteed me they wouldn't be travelling for a few years, come February a lot of them happened to go to Cuba or happened to go to the Dominican Republic. The fact of the matter is last year's numbers would have been impacted by those events. I don't for a second think that the member opposite could dispute that.

The fact is, this year, even the GDP growth that we have in our province, and the fact that our economy here in Nova Scotia is doing well, the fact that people are travelling again, are reasons that I think the numbers that are coming forward are reasonable. We could sit here, obviously, and debate the issue as to whether or not the projection could be a little higher or a little lower. The staff has done its best to put the projections forward that they feel are reasonable. I think when you look at that in that context, it is reasonable.

MR. STEELE: Mr. Chairman, I had told the member for Lunenburg West I was finished, but I can't resist one more comment to that answer from the minister, it's just provoking me again. The minister knows as well as I do that the vast majority of gamblers in the Halifax Casino are Nova Scotians. They come from the local area. I know the minister has the statistics on that because I have seen it. To blame the shortfall in the Halifax Casino on September 11th is just, well, it's just silly. The minister knows it's not true. Anyway, with that comment, I will turn the floor over to my colleague, the member for Lunenburg West.

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MR. CHAIRMAN: Just one moment, member.

MR. STEELE: I just want the minister to note I didn't ask a question.

MR. CHAIRMAN: Order, order. I think it's appropriate for the minister to have the opportunity to respond, so I'm going to allow the minister the opportunity to respond to that question.

MR. LEBLANC: Mr. Chairman, I want to thank you for your observance of the democratic rights of ministers to answer questions, and for that I want to thank you with all my heart. The other thing I wanted to say is that I do want to table that document that I said I would, and I will do so at this time to make sure that I concur with your directives. I just want to point out that the member opposite may oftentimes feel that he has all the answers and that is all local players in his estimation that play at the Halifax Casino. I want to point out that 40 per cent of the players between the months of May and October at the Halifax Casino are tourists.

[2:45 p.m.]

So the situation, if you look at the play that is there, I'm sure that the member opposite will agree that the fact of September 11th would have had an impact on last year, with the months of September and October basically being affected, and the fact that this year, with God's good graces, we won't find ourselves in the same situation that we observed last year. I don't think anybody in this House ever wants to see that again, and hopefully if we keep on our toes as a nation and as a world we won't see that.

Mr. Chairman, with those few comments, I will take questions from my honourable colleague, the member for Lunenburg West.

MR. CHAIRMAN: The honourable member for Lunenburg West.

MR. DONALD DOWNE: Mr. Chairman, maybe one way to make sure that we have more tourists come to use the facility is talk to the Minister of Tourism and Culture, who has declined the tourism numbers in the Province of Nova Scotia since holding that position. He asked me to make sure that you knew that if he had more money in his budget, for every dollar that's invested in tourism, he gets $13 back to the province. He was basically blaming you for the downfall of the tourism industry in Nova Scotia, indirectly, and not September 11th. I just thought I would help the Minister of Tourism and Culture out.

I have a number of questions, Mr. Minister. One is about the Atlantic Lottery Corporation. We've been asking, for two and a half years now, questions on ALC, and the minister has indicated each time that he would get back to us with the detail of the agreement. Just to refresh the minister's memory, back in 1998 I believe the Auditor General

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came out with a report that indicated that Nova Scotia was not getting its fair share, and in fact hadn't gotten it's fair share for quite some time, and indicated that we should renegotiate a better settlement so that at least Nova Scotia, not counting the benefits with regard to the jobs and everything else, just in dollars put in and dollars coming out, that our share was not being calculated properly, and we were not getting our money back. It was around $5 million. He suggested we should do something in those negotiations, whether it's retroactivity issues, because the matter was brought to the attention of ALC.

We tried to negotiate that, and subsequently they did not want to come forward with the appropriate negotiations to deal with what the Auditor General had indicated we needed to have. So we decided to, reluctantly, leave ALC with the direction of the corporation, which is sitting with you here today. Their advice was go, because they're not going to pay us the money. Since then the minister has gone back and negotiated a settlement. Would the minister table the total deal of ALC to myself and to the members of this House with regard to the Atlantic Loto Corporation with the other provinces?

MR. LEBLANC: Mr. Chairman, just so I understand what the member is asking, are you asking what the new deal was, are you asking what the review was? You talk about if I'm prepared to table the deal. I want to understand what the question is, and I will do my best to answer it.

MR. DOWNE: I will try to make it a little more specific, and I will read the question one more time. Would the minister please table for this House the deal that he has struck with ALC?

MR. LEBLANC: Mr. Chairman, to the best of my knowledge all those details are made public. I will do it again. I don't have any problem whatsoever. We went back. The member has given a good history of the problem. The problem was that under the previous agreement with the Atlantic Loto Corporation, of which our province was a signatory and a participant, the situation was that it took unanimity, every province in the Atlantic Loto Corporation would have to agree in order to change any of its components. The member correctly states that the Auditor General did a review, and stated that the Province of Nova Scotia was not receiving its fair share. I think it was more along the lines, not so much the revenues as what proportion of the expenses we were paying. We were paying over and above what was considered to be a fair share.

I should say it was not only the Auditor General who was of that opinion, the other provinces were of the same opinion. The member opposite was my predecessor, and I know that he did his best to resolve the issue. The fact of the matter that you needed unanimity was the dilemma that you had, because you had to have Newfoundland, New Brunswick and P.E.I. agree. The fact is there were probably some people who put their backs against the wall and didn't want to change it. You, as a government, made a decision that you would withdraw from ALC, and you would go on your own with VLTs.

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We did a review, and the review stated that we should stay in and negotiate. We did, and I should point out that many of the players who were at the table when you were there changed. The fact of some new blood coming in may have had some impact on whether or not we were successful. I do want to give a lot of credit to the chairman of that time, who worked tirelessly on this situation to bring it to a successful conclusion.

Finally we got a new deal into place, which I will give to the member. I have no problem. We've already talked about this many times. I will talk about three or four of the components. The first one is that the changes in the way that the expenses were being apportioned amongst the provinces was changed, and in this year we are going to be getting $4.2 million more - $4.2 million more to go towards the priorities of Nova Scotians which are health or education or roads or community services, or whatever you want to talk about.

The other thing is that we also had a commitment from New Brunswick, that we receive $500,000 a year for three years - that was New Brunswick's contribution towards the settlement of trying to resolve this. So that is another one. The other thing that we asked for - that not only Nova Scotia asked for, but other provinces asked for - was an efficiency review of the ALC. I should point out that the minister, especially for Newfoundland and Labrador, was also stating that we should have an efficiency review to make sure that the ALC is running as efficiently as possible. If we're going to have people working, we should make sure the jobs are necessary and they're producing to the efficiency levels that they should.

The last thing, which I think is important, we demanded a dispute resolution process, and there was one established. If we find ourselves, as a province, in the same situation, that we have an impasse which is where you found yourself when you were in government, you had an impasse and you couldn't get by it, the fact of the matter is if you have one person who is entrenched as much as you may be, as strong as your convictions and as tireless in your efforts, you very well may find yourself in a situation that you cannot resolve the issue, and the fact under the ALC is that it took unanimity was the real problem that I think that Nova Scotia had and I know from speaking to the member and also from the Gaming Corporation that you tried to resolve this. You just couldn't come to a point that you could.

So those are all issues. I will give the details again because this is basically a straightforward answer. I should say there is one other thing that we wanted to work on and that was to have a separate agency agreement whereby the Nova Scotia Gaming Corporation could enter into a different arrangement with the Atlantic Lottery Corporation. You may ask why did you want to have that, and the fact of the matter is that Nova Scotia Gaming Corporation, which was established and is headed here by my learned colleague to my right, Marie Mullally, is an institution that was set up basically to ensure that the casino would be dealt with at arm's-length of government. So the issue is that's why the Gaming Corporation was formed and the fact though is that they have also developed considerable expertise. The fact is if we wanted to enter into an agency agreement that some of the things that other provinces aren't interested in doing that we have the capacity to do, that we could do it.

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I should point out that we have not reached an agreement yet on the agency agreement. Part of the problem that we have is the fact that if we wanted to do that, the fact is that we wanted to make sure it would not be HST-applicable because there is no use for us to be entering into an agency agreement whereby the federal government would force us to pay HST. We have not yet resolved that issue and because of that we have not yet entered into an agency agreement, but I think it's important that we note our intent is, if it is possible, to do it, but if the HST problem continues then probably we will not be able to enter into that type of agreement. There may be another alternative to that, but at present I can't tell you of any that are on the table.

MR. DOWNE: The retroactivity issue - it appears that we never got full retroactivity in the negotiations. Obviously we've given up tens of millions of dollars to get a deal. I would ask, when you table the deal itself, the contractual agreement between the provinces, it was first brought to our attention by the Auditor General that the original agreement wasn't as good as it could have been - I believe it was the Buchanan Government that actually got into that agreement in the first place, that signed the first agreement - I think it would only be prudent to have a third party review again, either the AG or an independent auditor to take a look at the new arrangement just to make sure that those other provinces aren't possibly trying to take advantage of the very hard work that you as minister and, of course, your very competent staff are doing with regard to working with ALC. So my question is would you entertain either the AG or an independent auditor to review the new arrangement to make sure that we're getting value for money?

MR. LEBLANC: This is an ongoing question that I get from the member opposite. I will say that we will make the new agreement public, and I think as a matter of fact in my estimation we have made it public. If he wants more information, I have no problem with it because basically all four provinces have signed it. This is a public document - there's no problem whatsoever.

The fact is, the reason that we got the changes is because of the problems that were identified by the Auditor General, and as such we have made the changes which dealt with the fact that we were not being treated fairly. The Auditor General periodically does reviews. If he wants to do reviews, then obviously we will co-operate with him, but I don't see any need for us to be referring this to the Auditor General. I should point out that there is a lot of work being done on that and we try to work with them to try to ensure, as a government, that when he does reviews and there are improvements to be made, that we will concur with them. We try to make improvements - to say a government has everything figured out and we don't have any improvements to make, I don't think I could say that and have anybody concur with those comments.

With regard specifically to the question that has been asked by the member opposite, the deal, when he looks at it, if he hasn't looked at it, I think it's very clearly outlined that we have addressed the failings of the previous agreement. The member is right - I believe it

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was signed during the Conservative Administration of Mr. Buchanan. The fact is, at that time when they signed it they never really thought that a lot of these issues would come up. Gaming is much more complex than it was back then. When they first signed this agreement, it was probably just straight lottery tickets and maybe the 649, so since that time many events have happened. That's probably to a great extent why the discrepancy came that Nova Scotia wasn't being treated fairly.

When I give the information I will make it all public and the members opposite can look at it, and I think that will suffice.

MR. DOWNE: What the minister is really saying is trust me. Trust me, I know better; I know we got a good deal; I know we got the best deal; and I know that we don't need to have anybody else check to make sure we got a good deal. I will look at the report and I will continue to ask the minister to make sure that we have an independent assessment to make sure that the negotiations are in fact fair and just to Nova Scotians.

That's all the Atlantic Loto questions I had, gaming questions, so I do respect Ms. Mullally's circumstances, situation, and I think she should probably have the afternoon off and go home and relax. I will say that I think the members and the individuals who work over there do a great job. Just keeping track of what's happening in Nova Scotia is a huge job and I want to compliment the staff. For the few months that I had a chance to work with them, they were a very dedicated staff and I know Ms. Mullally's leadership is well-respected in the industry and I want to compliment her and to the members. (Applause)

Now, Mr. Minister, back to you. Yesterday in the House I asked about the $15 million that the Minister of Health said you got, and I think you responded that I don't have it in my budget, but it's somewhere. So you've had 24 hours to find where the $15 million is that the Minister of Health was referring to, can you inform us now as to where that $15 million that should have been spent - I understand by the year ended March 2002 - what the status of that is?

MR. LEBLANC: We did finish late last night and we did have Treasury Board this morning, so I'm probably not as up-to-date as I should be on the question. I appreciate that the member put it forward. I do know that with regard to the $15 million of the health investment fund - I think it's along those lines - that in the estimates of the Department of Health there is $2 million towards the amortization of those investments that are made. I will endeavour as quickly as possible to get the information on the other aspect of it, and a more detailed answer to the member opposite with regard specifically to the equipment that he's referring to.

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[3:00 p.m.]

MR. DOWNE: I understood there was some $30.4 million that was confirmed, and this is money that came down to Health, I believe it was for capital, medical equipment, and I believe that was federal money. Fifteen million of it was spent. There's $15 million that's outstanding. It was to be spent in the year 2001-02 and we just can't seem to find where that money is. Maybe you can clarify that. I know there are a number of articles in different newspapers from across the nation. We are trying to clarify if this was just a slush fund established or was this actually money that was supposed to be put into capital equipment, or was this actually money that you used to give back to the DHAs as part of the $22.5 million bailout you recently announced?

MR. LEBLANC: Mr. Chairman, in regard to the $15 million that he's referring to, as I mentioned before, first of all I will give him a more detailed answer in regard to it, but I should point out that under the Department of Health, there will be purchases made for that $15 million within the district health authorities. As for the specifics of it, obviously I don't have that within the Department of Finance. The Department of Health, I'm sure, can produce a list for him, and I will try to work with my colleague, the Minister of Health, to get a listing of where those capital expenditures will be made. I think that the question that he asked is more than reasonable and I will endeavour to do that.

MR. DOWNE: We had to go through a freedom of information request and we learned that the minister had spent the first half of the money. There's the Minister of Health right there, you can just grab him and ask him the question. He doesn't know where the other $15 million is. You don't know where the other $15 million went . . .

AN HON. MEMBER: The Minister of Community Services probably took it.

MR. DOWNE: Well maybe the Minister of Community Services could use the money. I know that the Minister of Tourism could certainly use some of it, $200,000 of it to do something with Tourism and the Arts Council. But, Mr. Minister, this question is not new, this has been brought up with the Minister of Health on a number of occasions. It's been brought up in Question Period; it's been brought to your attention. You were around most of the time when those discussions were carried on. I would think that you would be concerned if there is $15 million floating around - or a senior Cabinet Minister is indicating that he doesn't have it, but somehow or other the Minister of Finance has gotten this $15 million and he's done something with it, but he doesn't know what the Minister of Finance is doing, we better ask him when his turn comes up - that you would have come here prepared for that question.

That's a very serious amount of money - $15 million. So we either have to keep you here until the four hours is up to get an answer, or can we get a commitment that we're going to find out by tomorrow morning, or tomorrow before Question Period, what happened to

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that $15 million? Where did it go? What was it spent on? We know that the total amount of money was $30.4 million by the notes that we have, and we understand the first $15 million has been spent, but the other $15 million has gone into a black hole somewhere. Somebody's got it. Somebody spent it or somebody's hiding it or somebody used it for something else. We want to know the answer to that. Will you commit to provide that information tomorrow morning?

MR. LEBLANC: Mr. Chairman, that funding that we're talking about here is what has been forwarded by the federal government in regard to capital purchases. Now there have been other provinces, supposedly, when we hear about this, that have actually bought lawn mowers with it. We haven't bought lawn mowers in Nova Scotia. The fact of the matter is that we will be supplying a detailed list from the federal government in regard to those purchases. The first $15 million, staff are telling me the listing has already been reported to the federal government. The other $15 million that is there will be supplied also. The fact of the matter is that I don't have a list of what the capital purchases were that were made in regard to that, that will be determined through the Department of Health. Finance doesn't determine which capital purchases are made for Health; I don't think anyone in this House would believe that the Department of Finance will be choosing medical equipment for our hospitals or our health system in Nova Scotia.

The member opposite is asking for the list, and I told him that I would provide that after I had a chance to talk to the Department of Health. Here in my seat as the Minister of Finance, I don't have that information.

MR. DOWNE: Mr. Chairman, the Minister of Health doesn't know where the $15 million went, the Minister of Finance doesn't know where the money went; maybe the fiddler over in the corner knows where the money went. But this place here deserves to know where the $15 million went; Ottawa wants to know where the money went. Now the reality is that this is federal money. I understood it was to be spent by the year ended March 2002. If that's the case, how can that money, if it was spent, not be allocated in regard to specific areas? If it hasn't been spent, then that minister has some sort of a federal cash fund of $15 million that he's sitting on, and it poses the question, has the minister got a trust fund or a slush fund or a capital fund or a health fund of money buried somewhere else that he can use for a rainy day? I don't know. That's the question we are trying to find out.

The Minister of Health doesn't seem to know where it is and the Minister of Finance doesn't know where it is. It's got to be somewhere. Under GAAP, I would think that if he had $15 million extra from Ottawa, he would have to declare it somewhere. I would like to know, where in the books does he show where that $15 million is? If he doesn't know where it's gone, where is it allocated? Where is it in the budget? Show me, Mr. Minister.

[Page 562]

MR. LEBLANC: Mr. Chairman, I've said on three different occasions and I will repeat it a fourth time, this is a trust fund that has been forwarded to us by Ottawa. The fact of the matter is that it is going to be audited. It also has to have a listing provided to Ottawa in regard to the purchases that will be made in regard to this. So the fact of the matter is that I will provide the list for the honourable member opposite, but I shall also say that under the federal guidelines that we receive this money, we have to ensure that it is spent as dictated, and it shall be.

MR. DOWNE: So, Mr. Minister, you admit that you have a trust fund. You have a $30.4 million federal trust fund and $15 million of that has been spent, so there's about $15 million in a trust fund somewhere. Now can you tell me, where is this trust fund located?

MR. LEBLANC: Mr. Chairman, the trust was established with Montreal Trust, that's where it is.

MR. DOWNE: Mr. Chairman, there's a fund established at the Montreal Trust. Now, Mr. Minister, this trust account that you have established over there, why doesn't it show up on the books of the province if it's an asset that you have under your control that will be delegated and administered eventually by the Minister of Health, that was supposed to have been done last year?

MR. LEBLANC: Mr. Chairman, I want to go back to the points that I have made in regard to this. This is a trust fund that was provided to the Province of Nova Scotia. The member opposite says $30 million. It's $30 million, I think, plus the interest that has accrued. I believe it's $30.4 million or whatever, and I think he made reference to it. The first component of it was $15 million and as such the purchases were made and the report went to the federal government and that also was audited. The second component of it was $15 million whereby capital purchases were also going to be provided and, as such, I have committed to the member that I will get the listing in regard to the capital projects that it entails. I made that commitment to the member opposite and I will provide it to him.

MR. DOWNE: I understand, Mr. Minister, there's a substantial wish list of where that $15 million could be spent. You parked this trust fund; you've had that trust fund parked over there for some time, and it's accruing interest, as you said. We've figured it out to $30.4 million and I think that's a reasonably accurate number; $15 million has been spent. The Minister of Health has a wish list of capital items of probably $30 million to $50 million.

AN HON. MEMBER: More than that.

MR. DOWNE: More than that? Well, the minister knows that he has a list over there of an amount of money.

[Page 563]

The bottom line is that the list has not been finalized and this Minister of Finance has been sitting on $15 million of capital that is specifically geared to use to help deliver health care and find out how we can make the health care system run more efficiently. My question to the minister, how can you sit idly by, parking $15 million of federal dollars in a bank account, in a trust account at the Bank of Montreal, and let people wait for equipment to be purchased by the Minister of Health when he has been begging for more money for equipment?

MR. LEBLANC: Mr. Chairman, I'm aware that many institutions that we have in Nova Scotia have demands that probably greatly outstrip the capacity of government to fund them. It doesn't matter whether or not it's in my area or whether or not it's in some other area. I believe I read in The Chronicle-Herald the other day that the demands even from the capital region are immense because you have a lot of the specialities here, and I'm sure your colleague, the member for Dartmouth East, is much more aware of it than I am in his capacity as former Minister of Health and also as a physician.

The fact is, Mr. Chairman, we also have limited resources to do all the things that we want. When the member opposite talks about the demands that we have in Health, I should also point out that we have many demands in many other areas in the capital side of government, one which is roads, another is schools, and the member opposite, I will use the member for Dartmouth-Cole Harbour - I think that's the right terminology - talking about the fact of the schools and all the wish lists that we have - I shouldn't call them wish lists . . .

MR. CHAIRMAN: It's Cole Harbour-Eastern Passage.

MR. LEBLANC: Cole Harbour-Eastern Passage? Thank you very much, Mr. Chairman, and the fact that we have (Interruptions) I believe he said $0.5 billion. Well, I'm sure if I was to speak to my colleague, the Minister of Education, the number of $0.5 billion would be a little low on what the demand is, and the fact of the matter is that we have a lot of sick schools. We have a lot of schools which are becoming older. We have a lot of schools in areas of huge demand, the growth areas, and I know I speak to members around metropolitan HRM that are having areas which are just booming and we're going to have to be building new schools to accommodate that. Those are all challenges that we have as a government. Can we meet every wish that is out there? Not for a second.

The fact of the matter is, Mr. Chairman, that in this budget we have increased capital spending considerably. The fact is though, we also have to be reasonable on how much we go and borrow. The member opposite is the one who is always saying that this year we're actually going to be borrowing more money - one of the reasons that we are is that we have made a very conscious decision to increase our capital spending. Why do we do that? Well we did it for a number of reasons, one of which is, especially in regard to roads, we believe that we couldn't wait anymore. The fact of the matter is that when you look at the situation

[Page 564]

of our roads deteriorating, could we as the Province of Nova Scotia, in all good conscience, wait anymore?

Now, people have said to us the federal government has taken $140 million out of the system here in federal excise tax. That's when Nova Scotians gas up at the pumps, they know that the province is getting some of that money, Mr. Chairman, but I'm not sure that a lot of them understand that Ottawa is getting a lot of money and the fact they get 10 cents of every litre when people go to the pumps. Now, that 10 cents is a lot of money and it equates to, I think the last time we calculated it it was $143 million that we as a province, as Nova Scotians pay to Ottawa, and I believe last year we got $6 million or $7 million, and the year before that I think it was $4 million or $5 million in return.

[3:15 p.m.]

We've been waiting, and I should say that I'm not alone in the fact of this, Mr. Chairman, for the federal government to come back to the table and say that they will partake in a national infrastructure program in regard to roads. We've had a few bits here and there, but the fact is they have not come to the table and even contemplated putting a bit of the money they receive on that federal excise tax back into the road systems of Nova Scotia or other provinces. I'm not alone when I make this comment - my peers, my colleagues across the country are also facing challenges in regard to maintaining infrastructure.

When I hear Mr. Martin talk about the fact of the decisions that they make to generate the economy, I ask - well one of the things that generates a good economy is a good infrastructure, whether or not it be roads, or whether or not it be airports, or ports, but at the same time roads are a major issue and we have made a conscious decision in this budget to increase gas tax 2 cents. Now, 2 cents, a lot of people are saying, why should we do that? We made the determination that we would increase it because we had to put more money into roads and we did it, and the fact is we did that $23 million plus another $10 million. So we put $33 million more new dollars into the capital program for roads and the fact is we had to stand up and be counted for that decision.

Are we prepared to do that? The answer is yes and we have, but the bottom line is for ourselves, and going back to the question of the member opposite, have we met all the demands that are in the medical field for new equipment, I don't think we could. If we put probably all the capital budget of the province, we probably wouldn't meet all the demands of all the hospitals across the province, especially those in the capital region because that's probably where the biggest demands are.

MR. DOWNE: Mr. Minister, I'm not talking about fuel tax; I'm not talking about paving roads; I'm talking about this trust fund, slush fund, that you've got established that Ottawa gave you money for. You talk about not getting enough money from Ottawa. Well, you've gotten money from Ottawa - $30 million - and you parked it and you used $15 million

[Page 565]

over the last three years and you've got another $15-plus million sitting there waiting to be used.

Do you mean to say that you can sit here and tell Nova Scotians about the fact that the federal transfer payments on road fuel tax is more important than the fact that you've got $15 million in an account, from Ottawa, for the purpose of health delivery, and you haven't used it and you are now controlling the Minister of Health's portfolio by not allowing him to have money for MRIs, money for CAT scans - that a CAT scan broke down in Kentville - that we're talking about people's lives, we're talking about a bone densitometer, any kind of capital at all it could have been used for, that Minister of Health could have used it to save lives or help people, and that Minister of Finance stuck it in a trust account, a slush fund in the Bank of Montreal, and it has been there for over a year idly sitting by waiting for the Minister of Finance to okay the list that the Minister of Health has yet to come forward with, who talks about the priorities for where that $15 million goes, and that Minister of Finance has the gall to stand up here and talk about Ottawa and transfer payments?

I'm talking about his slush fund for health care that he is not spending and I ask the question, why is it all of a sudden the Minister of Finance is sitting on $15 million in a trust fund that will not allow the Minister of Health to deliver on the commitment that he made in providing health delivery in Nova Scotia? How can he justify sitting back with that money, unless of course he is saving it for maybe their ideas of privatizing health care and using that $15 million for a private investment in private health care in Nova Scotia?

MR. LEBLANC: Mr. Chairman, I listened to the comments of the member opposite, and as usual he's off-key, but the fact is this is debate and everyone is entitled to their opinion. That's one thing about this House of Assembly, everyone is entitled to speak, and because of that I respect the member's right to express his opinion whether I agree with it or not. The fact of the matter is I did point out that we have challenges in capital. For the member opposite to say that we as a government have no compassion for people receiving health care is not true. The fact is in this budget we put $134 million more in health and we put $23 million more in education. Those are our priorities - and we also put more money in roads.

Now, whether you have a problem with that, I don't. The fact is, Mr. Chairman, we need infrastructure in this province. The fact is that we will make those investments in regard of the medical equipment and I have committed to the member that I will provide the list. The fact is I did point out to the member opposite that the demands that are in that sector probably outstrip the capacity for us to deliver at this time.

That is the same thing in schools, Mr. Chairman; that is the same thing probably in the buildings that we should be building in this province to provide services to Nova Scotia; and it is the same thing as in roads. We have limited capacity to do all the things that we want, and why is that? One of the reasons is that in the past we lived beyond our means. I've

[Page 566]

said to the member opposite that I was part of governments that did that. The fact is we are where we are and we have to move forward. We've made some difficult decisions. He, as a member of a previous administration, made some difficult decisions and I didn't agree with a lot of them. The fact of the matter is that we're making the decisions now and we will make them in order to have a future for this province and, for that, I make no apologies.

MR. DOWNE: I wish the minister would stay to comparing apples and apples here. Nobody's arguing about the need for capital in every area that you want to talk about. My comment to you, Mr. Minister, through you, Mr. Chairman, is that you've got $15 million that was supposed to be spent by the year ended March 31, 2002. It wasn't spent. You had the money for two years. You had $30 million, I believe, for approximately two years. Approximately $15 million has been spent; the other $15 million has not been spent. You stuck that money in a trust account and it was there specifically for capital investments in health care, not for anything else, but for health care. That capital investment in health care was for things like new technologies that would reduce the waiting list for individuals requiring health care. It was there to help make the Health Department more efficient. It was there to help provide better health delivery to Nova Scotians. You have sat back on $30 million for a couple of years for which $15 million has only been spent.

Now there are two issues here. Number one is that you had a year to spend the last $15 million and you didn't do it. That is a question, why you didn't spend that money during that period of time, because the year ended was March 31, 2002. The second issue is are you now telling everybody in Nova Scotia that the Minister of Health isn't responsible for the capital expenditures in his department, it is only when you bless it that it will go forward? Is that what you're doing?

MR. LEBLANC: Mr. Chairman, as a government, we will make decisions and we will live with them. I want to point out that for the member opposite, to say that we will use a trust fund - I think he used the word slush fund - this is a trust fund that has been provided for by the federal government that is going to be audited by the federal government. We have been given parameters and purposes for that trust fund and that's what it shall be spent for.

MR. DOWNE: Mr. Minister, it's being audited and we talk about transparency of the books and everything else, I don't know how many people in Nova Scotia realize that the minister, I don't even know how many front bench members know that the Minister of Finance has $15 million in a trust account - his words - in the Bank of Montreal. That trust account was originally $30 million, for which half of it's been spent for capital and Health. The other half has yet to be spent because we haven't got a list. Now I want to ask the minister, do you have any other trust accounts around the Province of Nova Scotia or outside the boundaries of Nova Scotia that I'm not aware of, or that this House is not aware of, that came from whatever source it might have come from? Have you got other trust accounts or slush accounts somewhere else in the province that we're not aware of?

[Page 567]

MR. LEBLANC: Mr. Chairman, I stand today to talk about the fact of how we reported our statements. We have the most open and transparent financial statements, due in large part to the gentleman to my right, Kevin Malloy, who is the Controller of the Province of Nova Scotia, who's worked tirelessly to make the changes. I should say that many of the changes that we made, to say they were time-consuming is an understatement. The fact that Mr. Malloy endeavoured to do that is a tribute to him and I guess, in sense, we should apologize to his family for the amount of time he put in it. Even last year he continued to work from home after having back surgery. It's like taking "one for the Gipper". I have to thank him very much for that.

The fact is, Mr. Chairman, if that the member is asking me whether or not there are other trust funds that we don't know, the answer, of course, is no. This is not the previous administration's accounting on how we dealt with Sysco, NSRL and a lot of these other things that were basically off book. We've made changes to the statements of the Province of Nova Scotia which brought about the consolidation form. Now for people who forget or don't understand what that is, it means that everything is in, it is all-inclusive. We have even made provisions for the reclamation of the site of Sydney Steel. We have made provisions in our books for the reclamation of the Muggah Creek site. Yesterday I was being asked questions by the NDP Finance Critic about the fact that I'm even showing contingents, liabilities. That is all information that should be shown on the financial statements of the Province of Nova Scotia and that's the type of thing that people should expect from the government, and that's what we deliver.

MR. DOWNE: Mr. Chairman, I too compliment your staff. I think you're very fortunate to have members of your staff who are as competent and capable as they are, both on your right and your left, although the one on your immediate left is a little ailing today. He had a hard soccer game with a child yesterday, I understand. He's got a sore foot, probably. They're family people and they're great people and I think you're very fortunate, but it doesn't answer the question here that you've got $15 million in a trust fund that you didn't spend. Now I want to table for the members of this House a document that shows that Nova Scotia has $15.1 million that was to be spent in the year 2001-02; $15.1 million for capital, a total amount of $30.4 million, plus interest, whatever the interest is that you got from this fund. I ask if you would photocopy a few of those because we all would like to see that.

The bottom line, Mr. Minister, is that you have an account, a trust account, a slush account, a ministerial account, a discretionary account, it's a capital account. I know there are federal guidelines. But do you know what? There's a list of items that you could be using that money on, but instead you let it sit there. Now I want to ask a question, Mr. Minister. Where does it show up in the budget presentation that you have a trust account of federal money gaining interest sitting at the Bank of Montreal to the tune of over $15 million? Where does it show up in your Budget Address or your budget information; where does that $15 million plus interest show up in your books?

[Page 568]

MR. LEBLANC: Mr. Chairman, in regard to the $15 million he's referring to, within the Department of Health there is a provision for amortization on that $15 million in this fiscal year of the purchases that we will make, and that is the line item that is included in the amortization expense within the Department of Health.

MR. DOWNE: Mr. Minister, you had that money last year, where does it show up in your account last year if the minister was supposed to spend the money last year? You are showing that he's spending $15 million in capital this year. We don't have a list of what those capital items are and we don't have a list of where he spent the money - well we know what he spent the last $15 million on - where does it show up that you had this trust account for an extra $15 million?

MR. LEBLANC: Mr. Chairman, with regard to that, can the honourable member opposite repeat the question. I just want to make sure that I have it right, that's all.

[3:30 p.m.]

MR. DOWNE: What were you doing, telling your colleagues a joke back there or something, when I asked you? Here's the book. It has down here, for the estimates for the year 2002-03, on the issue of Medical Equipment Trust Fund. It does not show a cent, yet you're telling me you've got $15 million stuck in this trust account. Did you spend it? If you didn't spend it, why don't you show it? In estimates, under Health, Page 15.18, it shows here your Estimate and Forecast, but you show nothing with regard to what you're going to spend the money on for the year 2002-03. So the question we've been asking is, where is the money? We found out today that it's in a trust account at the Bank of Montreal; you have $15 million plus interest still left over, but there's no allocation of where that money's going. Can you inform the House of where that money's going?

MR. LEBLANC: Mr. Chairman, I refer the member to Page 15.12, the Supplementary Detail. With regard to Provincial Programs at the top level there - this is the top of the page - of the $12.664 million in the estimates here there is approximately $2 million of amortization regarding $15 million of purchases that we will make with regard to the medical equipment. That is what I was referring to a while ago.

I also want to point out in regard to the purchases we will make with regard to this trust fund which was provided to us by Ottawa, I want to re-emphasize one last time for the member that the trust fund is very specific as to how the purchases are to be made. There have been some problems in other provinces that the purchases have supposedly been made and have been questionable. I want to point out to the member opposite that the first purchases that were done that were submitted to Ottawa had no problems with it and we will have no problems with the purchases that we make with regard to the second $15 million of purchases that we will be making.

[Page 569]

MR. DOWNE: Mr. Chairman, to the minister, it still doesn't answer the question. In your estimates for capital for this trust fund for the year 2002-03, it's zero. Under the terms and conditions that I pointed out, in the money that came down from Ottawa - this is the Paul Martin bailout for you that you've had ever since you've been there - it talks about different types of equipment, CT scanners, MRIs, it could also acquire to improve overall quality of health care. Well, you could drive a Mack truck through that. It could cover a lot of different areas - and working conditions for nurses and other health care professionals. So that money could be used for almost anything. My question to you is, where is the $15 million, that trust account money that was originally intended - and it was stated here by the minister that it was going to be used for capital purchases, have you turned it into something else? What did you do with the money, Mr. Minister?

MR. LEBLANC: Mr. Chairman, I go back, I've repeated this many different times. It is a trust fund. It is to be drawn down to the conditions of the trust fund. We've stated that we will do that. The purchases that we made on this will comply with the trust fund. I think Mr. Martin has put in place conditions for those purchases and we will abide by that.

MR. DOWNE: Mr. Chairman, the bottom line is that I'm just trying to ferret out - the term used by your Leader - what happened to the $15 million. I want it to be noted on the record when the Minister of Health was asked in estimates by my colleague, our Health Critic, where did that $15 million go, that Minister of Health, on the record, indicated he didn't know where it was; he didn't even know where the money was. If there was a list going to be prepared of capital, as I understand it, if I recall correctly from the deliberations in this Chamber, now the Minister of Health has yet to come forward with an explanation as to where this trust fund of $15 million has gone. We know where the first $15 million went, but we don't know where the second $15 million went. So, the minister said he's going to report back. We will give him some time to report back as to what that list will be (Interruptions)

It's not complete yet? The Minister of Health has just informed us that the list has not been completed yet. So the bottom line is that we haven't got the list completed, we don't know where the $15 million is going; they don't even have it on the books that they even have $15 million left in a trust fund to be spent for that fiscal year. I will wait to hear with interest. I would like to know the interest on that $30 million as well, by the way, and what the minister is going to do.

I have a couple of other questions. I wasn't planning taking this much time on this issue, but I think it's very clear that for a government that beats on their chest every day that they're open and accountable and everything else, we just found a $15 million trust account sitting over there waiting to be spent on health care and the Minister of Finance is dragging his proverbial feet on allocations of where those dollars are to be spent to provide better health care for which he's had that money, some $30 million, for a couple of years and he's only allocated half of it and he's missed the target deadline of when the other $15 million

[Page 570]

was to be spent; according to this statement here that came with the FOIPOP, that money should have been spent already. I understand it hasn't been, so it's sitting there.

Mr. Chairman, how much time do I have left?

MR. CHAIRMAN: You have approximately six minutes and 10 seconds.

MR. DOWNE: How time flies. Mr. Minister, capital projects, can you explain to this House how capital projects are approved by your department?

MR. LEBLANC: Mr. Chairman, just talking to staff, there's a TCA committee, tangible capital assets committee, that's made up of individuals across government - engineers, senior officials and so forth - which makes recommendations. I should point out that I did mention before to the member opposite that there is limited capacity for government to deal with all the requests that come in. I know that (Interruptions) The member opposite says that he knows that in spades. The fact is, on the capital side we have limited ability to really deal with all the demands that are coming forward. As a rule, oftentimes one of the ones that hits us most is roads. It's one that I guess we all get more phone calls on, looking at this as a rural member versus an urban member. Urban members probably don't get the phone calls about roads because, obviously, most of them are dealt with municipally. When you live in a rural riding you get a lot of phone calls and, obviously, we're all trying to deal with them.

The fact is, in regard to that, that is how it starts. Obviously there's a process that goes forward from that. Cabinet will have to eventually make a determination and sign off on it, but that is how it begins and maybe the member opposite would have some more specifics and, if I can accommodate him, I will do the best I can.

MR. DOWNE: I'm sure the member for Preston, if he gets his wish with regard to the restructuring, he might not even be around to worry about those phone calls, Mr. Minister. Does the Minister of Finance have the final say? It appears that the Minister of Finance has the final say with regard to capital when it comes to health. That's been apparent here today. It's been proven, you've even admitted to it today. My question to you, Mr. Minister, do you, as Minster of Finance, have the final say with regard to capital for other departments; if so, which departments do you have the final say on with regard to capital?

MR. LEBLANC: I'm surprised by that question. As a former Minister of Finance, for him to say that I would even guess to have or to even talk about trying to gather that much influence of power within Cabinet, is wrong. Mr. Chairman, Cabinet is made up of a group of individuals, collectively we will make decisions. I've noted on numerous questions by members opposite that they're saying, didn't you ask the Minister of Finance for more money. I won't get specific as to who asked the question. We're going to make decisions collectively. Any Cabinet that is run properly will do it that way. Our government works on

[Page 571]

a consensus. The fact of the matter is we all have portfolios that we bring forward collectively to the Cabinet Table, we put them on the table and collectively we will make a decision. I don't have the final say on how things work. We do that collectively as Cabinet.

MR. DOWNE: Mr. Minister, ultimately every minister has a responsibility to run their department. I'm talking specifically about capital, and that's a huge issue. I think you understand, above all, what I was referring to, not the day-to-day running of a department. It's clear that you have the last word in the allocation of the $15 million in this trust fund or happy-day fund that you have for Health. My question is, are there any other funds established for capital around the province that I'm not aware of, that aren't obviously written up? Secondly, do you have the final say with regard to the capital allocation in any other department? I'm talking about large capital purchases.

MR. LEBLANC: Mr. Chairman, I thought I had answered the question the first time, I will do it again. (Interruptions) But it's not a yes or no answer. The member opposite talks about the fact as to whether or not I run the Department of Health or whether or not we run any department here in regard to capital, not operating. I don't think the member opposite said that I would run the operating divisions of others, I want to say if you took that inference from my answer, the first one, that wasn't what I was saying.

In regard to the capital, collectively we sat down as a Cabinet. I should point out that the budgeting process has changed somewhat from where we were before, in the sense that the Treasury Board has also become involved. That is a change we've had in government that wasn't there during your time. The fact of the matter is that the Treasury Board's role is also to help us in regard to trying to compile the budget and prepare it, but it's also going to be playing a role in making sure the departments basically conform to the targets that they have, to make sure that they're informed.

If they want to make some changes in their spending, that they come forward and make some rational arguments for changing it, and where they're going to change it somewhere else. Too many times governments or departments go on their own and change it, and I don't think anybody thinks that's a good idea. Do I have the final say? The answer is no.

MR. DOWNE: Mr. Minister, regarding the fact that you have the Treasury Board and yourself, and you know what you're doing with capital and allocations of capital, would the minister table to this House the capital spending and construction plans for the province for the upcoming year? That is the capital construction plan.

MR. CHAIRMAN: Order, please. That concludes the questions from the member for Lunenburg West, if the minister wants to respond to that question.

MR. LEBLANC: Mr. Chairman, I will endeavour to do that for the member.

[Page 572]

MR. CHAIRMAN: Are there any further questions? Then the Minister of Finance would like to have a moment to do a wrap-up. (Interruptions)

[3:45 p.m.]

The honourable member for Lunenburg West.

MR. DOWNE: I don't have a lot of questions left, Mr. Minister, but under Acadian Affairs you had put out an application, there was an employment opportunity. I understand that position has been filled. Can you table to the House the contract for that individual - salary and all the other amenities that will be going with the contract?

MR. LEBLANC: Mr. Chairman, I have no problem doing that. The individual who was hired was Réal Samson. It was an open competition, and he was the successful candidate. He has signed a contract with the Province of Nova Scotia, it is for three years. His duties will commence, I believe, some time in June; June 15th or June 30th. He's presently working with the Southwest Regional School Board. He has to tidy things up before coming on. I should point out that I have a committee in the Acadian community that I deal with.

One of the recommendations they had was, rather than filling the position with a full-time normal-type of employee, it should be for a term of three years. There has been quite a bit of turnover in this post. They felt that it should be an open competition. We complied with that. They stated that it should be a contract for three years. We also complied with that. The member opposite has asked whether we will make it public, and I commit today that I will do so.

MR. DOWNE: So the answer is that you will table the contract. Can you table it this week?

MR. LEBLANC: Mr. Chairman, I am assuming there should be no problem tabling it. I will say publicly here today that whatever I can table in regard to that contract, I will table.

MR. DOWNE: Mr. Minister, two quick snappers here. You talk about growing the economy, the need for more money. You talk about Ottawa not doing its share, in your view, even though we just showed trust funds of millions of dollars that you're sitting on. Recently Mr. Martin floated the idea of establishing a special tax break for Atlantic Canada. Number one, has the minister followed up on Mr. Martin's comments? Have you written the minister with regard to any more detail with regard to that? Secondly, can the minister explain to me why he hasn't taken the opportunity to meet Mr. Martin recently in regard to building alliances with economic opportunities for Nova Scotia?

[Page 573]

MR. LEBLANC: Mr. Chairman, first of all, Mr. Martin was in town last week, to announce that the G-7 and the G-8 would be having their meetings here in Nova Scotia and, as such, he was here to make that announcement. I was asked why I didn't meet with him. He has indicated before that he was coming. There are meetings happening this very same week in Cornerbrook, Newfoundland, that will happen on Thursday and Friday. I anticipate that the vote on the budget will come on Thursday. After having the vote, I will be trying to take a fast boat to China to get there so that I can have the vote.

In regard to the idea that Mr. Martin talked about floating an idea about a different tax rate, that was in regard to a question from a gentleman from Cape Breton who asked whether or not he would consider a different tax rate for that area. I think it was at the chamber of commerce meeting. I remember hearing it. I know the member opposite was present when Mr. Martin made it. He stated that oftentimes it hadn't worked, that he would keep an open mind with regard to it. If I'm wrong about my recollection, maybe the member opposite could say it.

Mr. Chairman, I will be saying, collectively as an area of the Atlantic Provinces, the four ministers have been working closely together to try to work collectively on an approach with Ottawa. Obviously, on a one-to-one basis it hasn't worked, and Mr. Martin has stated repeatedly that we should work as a region, an individual basis is not how he wants to approach the provinces in Atlantic Canada.

MR. DOWNE: Mr. Chairman, Mr. Martin has indicated, as the minister has accurately stated, the willingness to find opportunities for Atlantic Canada, to build self-reliance and to build compliance and to build economic stability. The Minister of Finance has laid out the olive branch to the minister to do something about it. I have written the Minister of Finance. I believe the Minister of Finance has not written Mr. Martin in that regard. I would say that if this government wants to do anything to build economic prosperity for the Province of Nova Scotia, they should be dealing with Ottawa, and they should be writing the minister when he throws out these ideas, whether they are substantive ideas or whether they are floater ideas. The Minister of Finance in this country is saying to Atlantic Canada, come to me, don't bring out these postcards on equalization, but come up with some other ideas, I want to work with you. The question I would ask of the Minister of Finance is, why hasn't the Minister of Finance taken the opportunity to pursue that option?

MR. LEBLANC: Mr. Chairman, I'm a little perplexed to hear the comments from the member opposite. Are we growing the economy in Nova Scotia? The answer is yes. Yesterday you talked about the fact of the exceptional growth that we had here. He also talked about the fact of the very small growth that was there in 1993. Are we doing things right? The answer is yes.

[Page 574]

The fact of the matter, Mr. Chairman, if you want to get into a discussion about how Ottawa treats the Atlantic Provinces, I'm more than willing to debate the issue. If you want to get into the details, I'm more than willing to enter the debate as to whether or not Ottawa is giving the Atlantic Provinces its fair share, any place, any time, because the fact of the matter is that they have basically bailed out on most of the core services that they provide to Nova Scotia. What are they? They're health, higher education, social services, equalization and highways. The fact of the matter is there are a lot of different issues here that we could talk about.

Mr. Chairman, if you want to talk about those types of issues and what's Mr. Martin's role in those things, I'm more than prepared to talk about it. The fact of the matter is the issue that he talked about was an answer to a question from a gentleman from Cape Breton as to whether or not he would give preferential treatment to that area and he stated, if I remember, not verbatim, that usually those things don't work, but he would keep an open mind. Now, I tend to think that that is more an off-the-cuff comment than anything else. If we're going to work collectively with Mr. Martin, it's going to be as a group of Atlantic Provinces. Some of those provinces happen to be represented by Liberal Governments. I'm prepared to work with them as well as I am with the provinces that are Progressive Conservative.

The fact of the matter is, Mr. Chairman, that many of the things I talked about that was Ottawa's role in regard to health education, social services, you know, a lot of people ask the question, what's the role of the federal government? Those are things that they should be partners in in this province. Why are we having problems in health care in this province? We are basically being challenged in the amount of money that we have to put into it and what's Ottawa's role in regard to health care? We could talk on that issue here, let alone for four hours in a day, we could talk forever. I know one thing, it's a lot more than what they're doing now and, member opposite, if you think that Ottawa is funding health care sufficiently, stand on your feet and say it.

AN HON. MEMBER: How would you put money in a system that's breaking down like you're allowing it to break down? That's the issue. You're misrepresenting what you're getting from Ottawa . . .

MR. DOWNE: Thank you, Mr. Chairman . . .

MR. CHAIRMAN: Order, please.

MR. DOWNE: Mr. Chairman, my question was simple to the minister and it wasn't meant to get him off in a rant and a rave about this or that. It was the opportunity for this minister to start fighting for Nova Scotians at the federal table and if he wants to hide behind the more powerful ministers from Newfoundland and New Brunswick, that's fine, but I thought he was a minister representing this province and when the federal minister is in town and when the federal minister is laying out opportunities for Nova Scotia to go forward, I

[Page 575]

thought that minister was strong enough to be able to stand up and fight for Nova Scotia and not hide behind somebody else. So my question to the minister was simple, what has he done to try to pursue opportunities for Nova Scotia.

Anyway, Mr. Chairman, that concludes my questioning to the Minister of Finance. I'm sure we'll have lots of fun over the next month or two in Question Period to pursue some of these other areas of trust funds and so on and so forth. So I thank the minister and his staff.

MR. CHAIRMAN: Are there any more questions for the Minister of Finance? Hearing no more questions for the Minister of Finance, would the Minister of Finance be prepared to wrap up?

MR. LEBLANC: Mr. Chairman, I have a lot of resolutions. I don't know whether you want me to read them all off. (Interruption) No, if you don't, okay, I'm not going to read them off. Whether or not you want me to list the resolutions, however, because most of them only have one - I have about 12. I'm not reading them all, but at least if I could list them all and leave the last one to stand, if that's agreeable, I will ask the members opposite.

MR. CHAIRMAN: Is that agreed?

The honourable member for Halifax Fairview.

MR. GRAHAM STEELE: Mr. Chairman, I would like to make one very brief remark in response to what the minister has said. No, Mr. Minister, you don't have to read them all, just listing them off is fine. We all have them in writing, I don't think you need to do that, but I do want to make one point.

In the questioning of you, Mr. Minister, we made the point that we believe that there has been an error in the appropriations vote for this year, that there should be a separate appropriation for the funding of hospitals. That appropriation does not appear anywhere and the best information that we have is that is an error and there should be a separate appropriation to fund the three hospital projects that the minister and I talked about, Mr. Chairman, and that does not appear anywhere in the appropriation votes that the minister is talking about. So, Mr. Minister, I mention that. We can go through these votes if you want, but we are saying very specifically the government has made a mistake and it would now be, if these budget votes pass, illegal for the government to allocate money to those hospital projects until they correct that mistake.

MR. LEBLANC: Mr. Chairman, I hear the comments of the member opposite. We've gone through these discussions during my estimates, but I will list the resolutions that I have here, but I want to go through them if I could.

[Page 576]

Resolution E8 - Resolved, that a sum not exceeding $1,009,881,000 be granted to the Lieutenant Governor to defray expenses in respect of Debt Servicing Costs, Department of Finance, pursuant to the Estimate.

Resolution E14 - Resolved, that a sum not exceeding $13,324,000 be granted to the Lieutenant Governor to defray expenses in respect of the Executive Council, pursuant to the Estimate.

Resolution E16 - Resolved, that a sum not exceeding $7,200,000 be granted to the Lieutenant Governor to defray expenses in respect of Government Contributions to Benefit Plans, pursuant to the Estimate.

Resolution E34 - Resolved, that a sum not exceeding $218,956,000 be granted to the Lieutenant Governor to defray expenses in respect of Capital Purchase Requirements, pursuant to the Estimate.

Resolution E35 - Resolved, that a sum not exceeding $16,114,000 be granted to the Lieutenant Governor to defray expenses in respect of Restructuring Costs, pursuant to the Estimate.

Resolution E36 - Resolved, that a sum not exceeding $294,545,000 be granted to the Lieutenant Governor to defray expenses in respect of Sinking Fund Instalments and Serial Retirements, pursuant to the Estimate.

Resolution E37 - Resolved, that the business plans of the Bedford Waterfront Development Corporation Limited, the Nova Scotia Film Development Corporation, the Nova Scotia Innovation Corporation, the Trade Centre Limited and the Waterfront Development Corporation be approved.

Resolution E38 - Resolved, that the business plan of the Halifax-Dartmouth Bridge Commission be approved.

Resolution E39 - Resolved, that the business plan of the Nova Scotia Gaming Corporation be approved.

Resolution E42 - Resolved, that the business plan of Nova Scotia Resources Ltd. be approved.

Resolution E43 - Resolved, that the business plan of Rockingham Terminal Inc. be approved.

[Page 577]

MR. CHAIRMAN: The House has heard the resolutions.

Shall the resolutions stand?

The resolutions are stood.

The honourable Deputy Government House Leader.

MR. WILLIAM DOOKS: Mr. Chairman, I call for the estimates of the Department of Economic Development.

Resolution E3 - Resolved, that a sum not exceeding $30,785,000 be granted to the Lieutenant Governor to defray expenses in respect of the Department of Economic Development, pursuant to the Estimate and the business plan of the Sydney Steel Corporation be approved.

MR. CHAIRMAN: The honourable Minister of Economic Development.

HON. GORDON BALSER: Mr. Chairman, I would like a few moments so staff can come down.

MR. CHAIRMAN: Certainly we will have one minute.

[3:58 p.m. The House recessed.]

[3:59 p.m. The House reconvened.]

MR. CHAIRMAN: The honourable Minister of Economic Development.

HON. GORDON BALSER: Mr. Chairman, on behalf of the number of departments and directorates for which I'm responsible, I welcome the chance to rise today and talk a bit about the estimates for which I'm responsible and before I begin I would like to introduce the two people on the floor and I would also indicate to the members opposite that from time to time there may well be line changes as the questions move from one area of responsibility to another. On my left is Sandy MacMullin with the Petroleum Directorate responsible for royalties and benefits. On my right is Paul Taylor. I imagine both these gentlemen are familiar to you.

I would like to take a bit of time in my opening remarks to lay out some of the things that have been happening in the areas for which I'm responsible over the last year and a bit. I can tell you that since September 11th, even though there was a slowdown in the economy worldwide, it's safe to say that many of the areas of this province's economy remained very strong and, in fact, that's a clear indication that the direction that we had established some

[Page 578]

years ago when we came to power were the right sectors to focus on. In fact, yesterday our strategic direction was corroborated by the Statistics Canada announcement that Nova Scotia was number two in GDP growth, second only to Alberta. That's $23.4 billion over 2000. In fact, we're only one of two provinces that showed that kind of growth.

[4:00 p.m.]

As I said last year, when I was talking about the Department of Economic Development at that time and the areas for which I'm responsible, I talked about the work that had been done in order to generate the strategic plan for economic development for this province. That was no easy task, Mr. Chairman, and we spent a great deal of time and effort and energy in making sure that we got that right. In fact, much of the work in the last year has been dedicated to putting that framework in place. A big part of that framework is linked to Nova Scotia Business Inc., which is a new Crown Corporation designed to manage and coordinate the province's front-line business development functions. Core business lines of that corporation are consistent with what . . .

MR. CHAIRMAN: Order, please. Could I ask the members to be quiet in the Chamber while the minister is doing his estimates.

MR. BALSER: Thank you, Mr. Chairman, I appreciate that greatly. As I said, the core business lines of NSBI are reflective of what we heard through the consultation piece and what we put forward in our growth strategy. The core areas for NSBI focus on business attraction, trade promotion, lending and finance, business retention and expansion. As I said, NSBI is the vehicle charged with carrying out that part of economic growth. I'm pleased to say that NSBI very recently announced their five-year strategic plan, New Business Thinking.

I can tell you that there are already very tangible examples that their work is bearing fruit.

In March, the corporation announced a $500,000 investment in a convertible debenture position in Diaphonics. Diaphonics is a Halifax IT company involved in research to bring forward speech recognition and voice security technologies. Investing in Diaphonics is the kind of strategic investment that this government saw as the future in terms of economic growth. Just a few weeks ago, NSBI announced with Service Zone the creation of 700 new jobs to be shared between Queens, Annapolis and Digby Counties. We expect those jobs to be up and running by year end. Those are the kinds of investments that NSBI is making on behalf of the people of Nova Scotia.

Now, in keeping with what we established in our strategy, we recently announced additional changes to the Department of Economic Development. In fact, we now have merged the former Department of Economic Development with the Technology and Science Secretariat; they have become the Office of Economic Development . That brings together two organizations that we believe complement one another very well and also complement the work of the Petroleum Directorate, which will evolve into a new department of energy.

[Page 579]

We're also confident that the work undertaken by NSBI and the merger of Technology and Science Secretariat with the Department of Economic Development works very nicely with our other organizations for which I'm directly responsible: the Nova Scotia Film Development Corporation, the Waterfront Development Corporation, InNOVAcorp, and the World Trade and Convention Centre. Also, as I said already, we view this as working very well with the formation of the new energy department.

Mr. Chairman, this restructuring has taken a great deal of time. It's one that has been completed with a great deal of focus on the future and the possible implications. But, again, I want to comment a bit on some of the other things that have been going on through the good work of NSBI and the new Office of Economic Development . In July, Convergys, one of the most successful new-economy companies announced that it was expanding its presence here in Nova Scotia. They have created a state-of-the-art customer care centre in New Glasgow. Within three years, that facility will employ 265 more Nova Scotians. In fact, Convergys has a workforce of well over 2,000 in this province today. In September, Xerox Canada and I announced a new facility in Dartmouth. Just a few weeks ago, Xerox moved forward with the initial hirings. They've created a temporary location to begin the training that will see that workforce reach 600 by 2006.

All of our efforts are not related simply to the call centre industry. In fact, Able Clothing, a producer of active sportswear, announced they're going to create a payroll of $1 million annually in the Town of Yarmouth. That's going to be 60 jobs. Today, there are 20 people employed by that company in Yarmouth. In fact, that company is ahead of its job targets. The Town of Glace Bay welcomed Stream not that long ago. A global company, Stream has established a customer interaction centre in Glace Bay that I believe they acknowledge as being the best in class in their entire corporate enterprise.

Mr. Chairman, tracking new business is only part of what the Office of Economic Development working with NSBI has been doing. Again, in Cape Breton, last April, Tesma Precision Finished Components unveiled a $45 million expansion project in North Sydney. That will add 100 new jobs and bring the workforce at Tesma to 215-plus. Co-op Atlantic, also in Sydney, recently announced a meat processing and distribution centre in that area. This will create 60 new jobs.

Mr. Chairman, I can tell you that this government is focused on job creation. The expanding economy is also more than just creating new employment opportunities. It's about focusing on our skills and strengths. In fact, the export market is a big part of our future. Exports lead to growth in jobs, growth in revenues for the province and increase our tax base. Increasing the export base is why the province works with local companies to develop trade opportunities. In 2001-02, 210 Nova Scotian companies participated in 25 trade events to promote the products and services that Nova Scotia has to offer the world. To date, those companies estimate that their sales will be in the neighbourhood of $33.5 million.

[Page 580]

We attract new business in this province, but we also work to retain existing businesses and to help those businesses expand. In order to do that, we must continue to grow our market share. Last year, we set out to do just exactly that and it worked. This year, the business of attracting new business and expanding existing firms is being led by NSBI. I'm sure, based on my relationship with NSBI over the last year, they will continue to be successful.

Mr. Chairman, while NSBI is now the government's delivery arm on investment matters, the Office of Economic Development continues to be responsible for working to generate the kind of business climate that companies recognize as being supportive for growing their opportunities. During a consultation that led to the creation of NSBI, we heard very clearly small businesses in Nova Scotia sometimes find it difficult to run their business and as a result of those comments, we've made a commitment to work with them to make Nova Scotia a more attractive place to do business. Our aim, as a result, is not only to keep pace with other jurisdictions, but in fact to lead the way because, make no mistake about it, as good as we are, it's a very competitive world and if we take our eye off the opportunity for even a moment, we will lose it.

It is important that all Nova Scotians understand clearly how Nova Scotia's business climate impacts on the local business community. It requires that these firms and these Nova Scotia entrepreneurs keep NSBI and the Office of Economic Development informed as to their issues, concerns and progress. In fact, a great deal of time last year was spent by staff members doing exactly that. We've worked with businesses and with other governments to identify key business climate issues because you need to benchmark where you are in order to make improvements and these meetings gave us a true in-depth understanding of what the issues are that impact Nova Scotia's business climate and we are committed to working with them to make a difference. Nurturing a healthy business climate means ensuring that Nova Scotians have the skills necessary to be employed in this province.

The transfer of the Labour Market Development Secretariat to the Department of Education was completed this year. This relationship established between the two organizations is critical to the go-forward of economic growth in this province. Our Industrial Benefits office has invested a great deal of effort in strengthening Nova Scotia's network of influential partners; effort, I will add, that has met with a good deal of success. There are Nova Scotians who are successful in every corner of the world. Part of our strategy is to ensure that those expatriate Nova Scotians are aware of their roots and, believe me, they are.

Not that long ago, I was talking about the Team Atlanta mission and whether or not that mission was successful. It was successful in that we strengthened those ties with our trading partners and we can then look to a future opportunity. So part of going forward is recognizing that we already have a tremendous network of people who are more than willing to assist Nova Scotia in the global market. But it doesn't stop with expatriate entrepreneurs who will lobby on behalf of Nova Scotia. It means that we have to be more effective in our

[Page 581]

relationships with Ottawa and more effective in our relationships with our sister provinces. Again, it's very important that we focus on Atlantic Canadian opportunities. I can tell you that industry is focused on us.

Just recently, Lockheed Martin signed an MOU with the Membertou Band that will create a critical mass to capture opportunity in the aerospace sector. I'm very confident in my discussions with Lockheed Martin that they would like to be for Nova Scotia and for Atlantic Canada what Boeing has been to the West and what Bombardier has been to Quebec. It's up to us to work with partners who want to work with us to capture opportunities. These are tremendous opportunities, Mr. Chairman.

There are accomplishments, but it doesn't stop there. The regional development authorities and the support program that we have in place with our small rural communities has worked well. The recent announcement of a five-year funding commitment is important. It gives them some sense of certainty and the ability to plan for the future. We will be making our announcement in the coming weeks.

The RDAs are a big part of community-based economic development. Mr. Chairman, I can also tell you that in co-operation with the Co-operative Council, we brought in amendments to the co-operatives Act, which were long overdue and which were very, very well-received by the co-operatives in this province. That's a step in the direction of making this business climate the best in Atlantic Canada; in fact, the best in Canada. In order to be successful, you have to be the best in class.

Targeted planning and implementation efforts are underway in several communities that have had significant challenges placed before them because we recognize the work is never done in communities like Canso, in eastern Guysborough County, in communities along the Eastern Shore - a place I know you hold near and dear, Mr. Chairman - on Cape Breton Island, on the Fundy shore, in the Annapolis Valley. There are small communities that are facing tremendous challenges and the only way to address those challenges is to work co-operatively at the community level, at the municipal level, at the provincial level, at the federal level and with the companies that ultimately will create the employment opportunities.

A number of times in this House, Mr. Chairman, I've been called in Question Period to answer to concerns expressed by members opposite about payroll rebates or loan programs or assistance to companies in small communities. I'm pleased that just last week we were able to talk about the fact that Seagull Pewter will continue to be a big part of economic growth in Pugwash. That was no easy accomplishment because that business, that industry and those communities were facing tremendous challenge. So it's about working together.

[Page 582]

As a direct result of the efforts that we have in working co-operatively within government, within jurisdictions, I can tell you that there is the opportunity for a marble quarry in Inverness County. We hope that that will be open by June 2003. There's an opportunity for a barite development in Richmond County. In fact barite is critical to the oil industry because it's used in the drilling muds. That's a tremendous opportunity and we have the natural resources, we have the opportunity; it's a matter of moving forward. It's not limited just to that, Mr. Chairman. We have pottery for clay production. We have limestone. We have graphite and we have marble deposits. So it's a matter of working together to create a business model that works.

[4:15 p.m.]

It doesn't stop there. It reaches into the communities, working with community groups that are focused on grassroots economic development. Whether it's Nova Scotia's Black, Acadian or Aboriginal communities, we work closely with them. Efforts are underway to sign formal MOUs with various community economic development groups that will leverage federal-provincial dollars and municipal interest to make these things happen. I can tell you that we will, in the very near future, be renewing our commitment to the Black Business Initiative because that's a tremendous vehicle for promoting economic development in a community that faces significant challenges. In fact, they were part of the Team Atlanta mission and I'm pleased to say that they were very, very pleased with the results.

Mr. Chairman, over the years, the office has also increased its effort to profile trade policy and in the Fall we took a lead role in organizing and participation and delivering a presentation in Ottawa on the proposed elimination of the 25 per cent tariffs on ships and floating structures that stemmed out of a European free trade agreement. That was a clear example of all parties - business, government, communities and labour - all working together with a common goal. When you harness those kinds of powers, it's a tremendous voice when you bring it to bear on our federal partners.

We worked closely with industry and other governments to bring our concerns forward at the very highest of levels and I'm pleased to say they heard us. The fight is not over, it's not complete, but clearly the federal government recognized the issues and concerns. Not that long ago, only a couple of weeks ago, across the harbour at Secunda Marine, we had a follow-up meeting where, clearly, representatives from the federal government were informed as to the common voice and common concern. So we're working closely to make sure this happens.

Mr. Chairman, I can also tell you the Office of Economic Development has been very focused on the softwood lumber issue. I was pleased the other day to see the Maritime Lumber Bureau in a letter recognize the contributions of staff of OED on those negotiations. Again, a situation that has not been resolved entirely, but certainly from an Atlantic Canadian, from a Nova Scotian perspective, our people were on the ground when they

[Page 583]

needed to be there and they carried the message long and loud and clear. The support that we gave as a government to industry was clearly recognized. So we are making a difference.

Mr. Chairman, as I said when I began my remarks, there have been a number of changes over the last year and I want to take a few moments to talk about the Technology and Science Secretariat and the role that they have played in the past and will play in the future in terms of the Office of Economic Development. Over the past year, TSS, as it was referred to, has worked to move government to a common goal in terms of how it uses technology, technology right straight across government departments, but more importantly beyond government departments into the larger community, because it's all about using technology to improve the provision of service and to make sure that we capture opportunity. The private sector has clearly said that the opportunities presented around technology must be grasped by this government, that Nova Scotia must be a leader in ensuring that government is driven by technology; not just from the perspective of economic development, but by the way in which we deliver government.

Mr. Chairman, Nova Scotia is at the front of the pack, but I think it's important that we move to a leadership role there. One of the primary reasons behind the decision to merge TSS with the Department of Economic Development was that these two responsibilities have a natural synergy. The IT sector, in spite of the difficulties it faced some number of months ago, will remain and continue to grow as a large part of the economic opportunities, promoting economic and social growth across this province.

Technology empowers small communities. Let me elaborate on that just a bit. Broadband technology is linking our educational system and that's a tremendous place to start. Our youth need to be technologically literate. They will very quickly gravitate to the use of technology and technology is tremendously empowering. There is that old cliché that knowledge is power, and certainly access to technology and the knowledge of how to use it and apply it effectively is tremendously empowering.

We have a knowledge economy right here in Nova Scotia. One of the things that many of the companies, who come here looking at Nova Scotia as a place to do business, very quickly gravitate to is the fact that we have the highest number of post-secondary educated people in the workforce per capita in Canada, but there are issues related to that because we also have significant challenges in rural Nova Scotia with minimal levels of literacy, but I believe TSS, working with and through the Office of Economic Development, has the power to change that.

Mr. Chairman, the federal government has also recognized that technology, research and development are tremendously important. The Information Economy Initiative that partnered private sector with government has put a tremendous high-speed network in place. The partnership also upgraded Internet connections in more than 600 EDnet sites. When we were in Atlanta, I can tell you that that state was very impressed with the fact that Nova

[Page 584]

Scotia, with a population of under 1 million people, could boast technology that links every community. That's a tremendous accomplishment. It's a recognition that the people responsible for making the decisions - and certainly to give credit to a previous government, they were instrumental in moving this forward, too, they saw that technology can empower Nova Scotians.

EDnet is a computer network linking public schools, libraries, community college campuses in Nova Scotia. It works well. Broadband technology means we can do it faster and more efficient. It's about moving ahead, Mr. Chairman. All the students can use higher band with the pickup journals anywhere in the world. You can live in Lockeport, Middle Musquodoboit or Cape Breton and do it right from this very room if you have the technology, because technology does break down barriers. The new connections mean that students in small schools, no matter how small, can converse with anyone anywhere in the world. It is a way of levelling the playing field.

The Information Economy Initiative put about $90 million in federal-provincial and leveraged private-sector monies into Nova Scotia. The IEI boosted Internet speeds in schools and trained hundreds of teachers in technology and put thousands of computers in schools. We backed centres in IT excellence at the universities - Dal, Acadia and UCCB. We've helped our communities put together a network through the CAP sites so that there are over 50 community access and CAP sites that means that anyone any age can be linked to anyone anywhere in the world. The government's efforts to build IT and other innovation technologies will help create a stronger economy and a greater stability in our social fabric. We intend to use the very best in technology to create the very best in innovation infrastructure and the very best economic climate in the world.

A major initiative that's underway in this province will again place Nova Scotia ahead of our competition in terms of the application of technology. The government's SAP financial program is a massive undertaking. This undertaking will soon see government, municipalities, hospitals and schools all talking the same language, through a standardized information system. They will all be working co-operatively together to make sound decisions to use money more effectively and more wisely, and to make services more readily available to citizens through the Internet. Integrated information systems will make it possible for patients to move more quickly and smoothly through the health care system, whether it's from the ambulance to the hospital, or transferring data related to their particular concerns from one hospital to another or from one doctor to another. In fact, the technology is being used to ensure that the trunk mobile rail system is available for police, fire department and other emergency services.

Mr. Speaker, Nova Scotians have had a long and proud history of innovating. We do it through perseverance, creativity and the recognition of opportunity. I, for one, believe that the information age has created the same kind of synergy for Nova Scotia and Nova Scotians that the golden age of sail and trade created some 150 years ago. There's no reason why

[Page 585]

Nova Scotia cannot have the same kind of pride in their efforts that we had when our sailing ships were known in every port of call on the globe.

Before I leave my comments on economic development, I would like to talk about how our growth strategy is clearly linked to the energy strategy because, Mr. Chairman, you have to have a common thread and a common goal and a common vision. We started with the Toward Prosperity document early on in our mandate which clearly laid the groundwork for where we want to go over the next, not just the current mandate, but on into the future, well beyond this government, the next government and into the future. We see that in order to build a future you have to start with a firm foundation. The growth strategy, in fact, identified energy as an area of tremendous potential opportunity, and our energy strategy is focused on exactly that; in fact, it's called Seizing the Opportunity.

In fact, the budget estimates that we will be talking about, or are talking about now and will be answering questions on very shortly, is a clear indication that this government is focused on the energy sector as being tremendously important. In a time of very little discretionary financial decision-making capability we have clearly added additional monies to the creation of the energy department and these initiatives.

Seizing the Opportunity, Nova Scotia's energy strategy, is again the result of a tremendous amount of consultation. We received over 100 submissions, Mr. Chairman, including submissions from members in this very House. Our team met with literally hundreds of Nova Scotians over hundreds of hours to make sure that the stakeholders could see themselves in this document. We held seven workshops, workshops in Yarmouth, Middleton, Bridgewater, Halifax, Truro, Port Hawkesbury and Sydney. We had an energy forum at Saint Mary's and received the advice of a broad cross-section of people from Nova Scotia and elsewhere on just how to capture these opportunities.

I can tell you, Mr. Chairman, that that meeting at Saint Mary's was a cause for a great deal of pride in Nova Scotians and for Nova Scotians because leaders from around the world were assembled there to talk about the energy opportunities, and they were very impressed with Nova Scotia and they were very impressed with the vision and the work that had gone into creating the meeting and where we were trying to take the energy strategy.

The final document that came forward was a result of a great deal of hard work on the part of staff at the Petroleum Directorate, Natural Resources, but also it required outside help. The areas that were covered and the issues that arose and had to be dealt with required a tremendous amount of research and discussion. In fact, the strategy evolved into an entire energy strategy. Initially, when we first started the discussions, we were focused predominantly on the oil and gas sector, but we recognized very early on that that wasn't sufficient, that in order to do justice we had to evolve it into a discussion of all aspects of energy; we talk about natural gas; we talk about electricity; we talk about renewables; we talk

[Page 586]

about environmental concerns and the impact of the energy sector on the economy and, more broadly, on society itself.

Getting the policy focus right was a challenge, Mr. Chairman. We had a great deal of expertise inside of government, but I can tell the people in this room and the people in the department across the way and the people at OED have a number of responsibilities and, on more than one occasion, I have heard members opposite talk about the fact that in order to capture all of the opportunities you have to put in place the resources to do it justice. They said how can people in Nova Scotia hope to effectively discuss oil and gas or energy-related issues with companies who have global scope and, in fact, budgets that are much larger than the provincial budget of this province. So we recognized that in order to do this thing properly we would have to go outside of government for assistance.

This was particularly true in the area of electricity. We were in the midst of some significant challenges in the electrical industry in the United States - most of you can remember what happened in California and in many parts of the United States - and we recognized that was an issue that had to be addressed and understood. In order to move forward with a comprehensive energy strategy we had to understand what had caused the problems in California and what problems potential regulatory changes could have and how we might, as a province, avoid those problems.

[4:30 p.m.]

I'm happy to say that we are proceeding cautiously on this front. We're able to do that because of the work that was put into developing our energy strategy. I'm proud to say that the energy strategy has been recognized as world-class. Our Premier had a chance in Washington to have a meeting one on one with the vice president to discuss Nova Scotia's energy strategy. He was the only Premier to be afforded that opportunity.

I can tell you that British Columbia is facing challenges similar to Nova Scotia's, and they have asked about the energy strategy. I can tell you that a premiere organization like the American energy council have been here and, in fact, provided input in our energy strategy and they recognize it as being world-class.

The energy market governance committee is being established right now. This budget provides funding that will be required for them to do their work. The focus will be on encouraging the development of renewable energy sources, but it will also recognize that there are issues related to that. Our strategy's approach to electricity and other areas is the result of, as I said earlier, hundreds of hours of work; the work, the people in this room and in the department, but also of our outside help. I can tell you, and I make no apologies, that one of the people who was instrumental in putting together the energy strategy is a gentleman whose name was mentioned on the floor of this House - Roland Martin.

[Page 587]

Now, to set the record straight, because there seems to be a bit of misinformation out there, Mr. Martin is a former deputy of finance in Newfoundland, he's a former chair of Newfoundland Hydro, he's an extremely successful Nova Scotian entrepreneur and public policy advisor. Since the issue of Mr. Martin's work in the province has come up in another context, as I just alluded to, I'm going to take just a few moments to set the record straight.

Mr. Martin put well over 2,000 hours into helping us develop our energy strategy. Mr. Martin provided the expertise, the organization and the focus that was required to develop the energy strategy in less than one year. Mr. Chairman, I can tell you that a number of people that I've already mentioned, whether it's the American energy council representatives, or industry itself, have said they were very, very impressed with the quality of the work and the document and, in fact, impressed with the timeline in which that was generated.

At the same time Mr. Martin was also researching the energy strategy, he was also advising the government on royalty and equalization matters. I can tell you, Mr. Chairman, that there are very, very few people in this country who have the level of knowledge and appreciation of the issues related to equalization, royalty and electrical energy and energy, in general, that Mr. Martin has. As I said earlier on, jurisdictions such as British Columbia have been asking about our energy strategy and they have requested the opportunity to discuss with Mr. Martin how the strategy evolved and how it worked.

I can also tell you that that level of expertise and support is in very high demand and it is expensive. I can tell you that an energy consultant in the United States charges somewhere between $400 and $800 per hour U.S. In fact, Emera had one such consultant at one of the discussion groups related to their industry and they indicated that's the kind of remuneration required to get world-class people engaged in discussions. Here at home, in Nova Scotia, those same kind of energy consultants charge $200 to $300 per hour, and beyond the $200 to $300 per hour required to have home-grown consultants, you then have the issue of hiring American consultants to deal with the cross-border issues that come out of energy discussions.

So I can tell you, Mr. Chairman, good help requires reasonable remuneration. Mr. Martin's year's work, 2,000-plus hours, was billed to the government at a rate of about $117 per hour. Being the minister responsible, that money was well spent. The total fees for Mr. Martin's efforts on the energy strategy were $199,000 for one year's work in excess of 2,000 hours, providing expertise on a number of fronts, liaising and calling into support a number of his contacts built up over his many, many years as a public servant and as a representative of Nova Scotia as a successful entrepreneur. His company billed through that process and, in fact, in that $199,000 are a number of costs associated with various parts of the energy strategy development.

[Page 588]

Prior to his involvement in the energy strategy, Mr. Martin also worked for the province as a consultant on matters related to industrial competitiveness on our offshore; another issue that members across the way have raised in this House and in the media on any number of occasions, they want to talk about that issue, and we felt it appropriate to bring someone in with the level of expertise and experience and the focus and the opportunity and the time to bring the knowledge forward.

This research and analysis was done in the previous fiscal year and the fees for that work and which set the stage and the level of comfort for this province to go forward with Mr. Martin on a contract to develop the energy strategy was something in the neighbourhood of $44,775. I can tell you that this work set the stage for the energy strategy.

Before I leave this matter I do want to reference the very, very hard work of the people in the Department of Natural Resources and in the Petroleum Directorate in putting together this energy strategy. Their work and the work of Mr. Martin enabled us to create a strategy and, in addition to the strategy, some 300 pages of supporting background analysis that clearly establishes the framework for the future.

I believe the province has received tremendous value for the dollars spent. This document sets in motion the way to the future. It establishes the rules, if you will, for the energy industry in this province. It clearly denotes where various parts of the energy industry come down. It deals specifically, as I said already, with renewables, with greenhouse gas emissions, with a number of facets that are very, very tremendously important. So in order for this province to clearly have an energy strategy in place, you have to spend money. I make no apologies for the cost associated with this because it had to be done. I can tell you, Mr. Chairman, a number of other jurisdictions are looking at expending similar amounts and even greater amounts as they go forward.

This leads very nicely into a discussion of the new energy department. The new energy department will be up and running in the near future and it will be tagged with providing the leadership for the energy industry. As we look to the energy industry, we're going to determine exactly how all of these parts will be integrated by bringing the responsibilities all under one roof. Under a department of energy, we can concentrate our resources, we can focus our energies and we can look to the future.

Planning of the new department is well underway. A search for a new deputy has been launched, it was started earlier this month, and the broad outlines are clear, Mr. Chairman. The department will handle a broad range of the energy file, including oil, gas, electricity, renewable energy, climate change, energy conservation and efficiency. It will also focus on offshore development. It will work with the other departments, as I mentioned earlier, ensuring that we harness scarce resources in a most strategic manner. We will focus on training and development, we will focus on research, those areas that provide opportunities.

[Page 589]

Our new approach can already be seen in the area of training, Mr. Chairman. We see significant opportunities in the coming year to offer new programs to respond directly to the offshore. As we speak, there are 1,100 people working across the way in Dartmouth on the Eirik Raude. That's a tremendous economic generator. We see an announcement there will be an additional exploration. We're working with the Department of Education to ensure that programs are in place to have the skilled people available when the work opportunities are generated. We've also broadened the scope of the co-op training program, and applications are being sought by students in the oil and gas sector. I can tell you just last week I met four young men who are headed off to Houston to work for the summer on co-op work programs in the oil and gas sector.

We also are working to address national and international issues related to climate change. We're working on improving the regulatory process, Mr. Chairman, whether that's with the National Energy Board on pipelines or with the CNSOPB. We know that in order to create a climate that works well . . .

MR. CHAIRMAN: Order, please. Just one second, folks, it's getting very loud in here and I would ask for the Chamber to quiet down while the minister finishes his comments. Mr. Minister, you have the floor.

MR. BALSER: Thank you, Mr. Chairman. I only have another . . .

MR. CHAIRMAN: It is very interesting, Mr. Minister, and we would like to hear that. The floor is yours.

MR. BALSER: It's good stuff, yes. Nova Scotia is already receiving benefits from the offshore. New training and employment opportunities exist, new research and development programs, and those benefits will help us today, but they also mean more to the future. New business and opportunities for permanent jobs will evolve as our capacity expands and new projects come onstream.

Mr. Chairman, in order to move from project to project to industry we have to focus on creating an environment that supports exploration, but beyond the long-term benefits we receive direct financial benefits today. I would like to touch on the revenue side of the energy file. A profitable oil and gas sector means more corporate income tax. More people working means more sales tax, it means more personal income tax. More discoveries and more projects mean more royalties. The royalty side is not very well understood by Nova Scotians. Right now we have one project and a specific royalty arrangement signed by a previous government. It established a 1 per cent royalty rate for the first three years to enable the project developers to recover their initial investment as quickly as possible. It's very expensive to be involved in the oil and gas industry in the offshore, whether it's offshore Nova Scotia or offshore in the Gulf of Mexico, or offshore in the North Sea.

[Page 590]

On January 1, 2003, the royalties will rise from 1 per cent of revenues and move to a minimum of 2 per cent. The actual rate, however, will depend on how much investment and operating costs have been recovered by the Sable partners. Here's where we are right now today in relation to royalties. As of December 31, 2001, $2.69 billion has been directly spent by SOEP - that's operating capital - plus $600 million in pre-development costs to recognize their exploration efforts, in total $3.29 billion. I can tell you if you look back over the last 10 years, the three years of most significant growth in GDP in this province were the three years that coincided with the development of the Sable project. The Sable project and the oil and gas industry is and has and will make a difference to economic growth.

Additional capital spending is underway for the second phase. That's going to be in the range of several hundred million dollars, Mr. Chairman. With respect to royalties, the project will have paid approximately $30 million in royalties this time next year. Most of that will be at the rate of 1 per cent. So it's pretty easy to see that we're well on our way to recovering the investment and should be there by 2003, 2004, and once that investment has been recovered, we move to what is known as the return allowance.

Now, this is not a return on investment, it is simply a benchmark that shows how the project crosses and then moves along the royalty path. The first benchmark has a return allowance of 5 per cent plus a long-term Government of Canada bond rate which is about 6 per cent, for a total of approximately 11 per cent. In other words, once the investment is recovered plus a simple 11 per cent more, then the project moves to 5 per cent gross royalties and will remain there for the rest of the project's life. So within a few years we can expect to be at a minimum of 5 per cent of gross revenues and then the 1 per cent that we see today.

Once the project moves another step forward, we move to net royalties, Mr. Chairman. Now, that move from 5 per cent of gross to 30 per cent of net will happen fairly quickly and will be a function of gas prices, generally. It depends on where they are and how much additional capital cash and operating costs are incurred that triggers another 7.5 per cent on the capital and operating costs. With those costs in the order of $3.5 billion to $4 billion, another 7.5 per cent is likely something less than an additional $300 million in revenues. Before I leave royalties I would like to point out the net rate of 30 per cent to 35 per cent is applied in net cash flow, these non-cash expenditure deductions, and this is not like the tax system where there is a depreciation on non-project related expenses that can be applied, this is a royalty formula that asks what there is in operating cash and additional cash investments for that year. It then says 30 per cent or 35 per cent of the balance of the cash flow is paid on the royalties.

I would also like to point out that if the Sable partners have any profits on the project, which I most certainly expect they will, they will pay corporate income tax to the province and to Ottawa. So by the time the project is going along, we will be well off financially. The government has been taking a very significant share by then, something in the neighbourhood of 50 per cent. That is the way the royalty system has been designed. Once the investment

[Page 591]

is recovered, if they do well, then we will do well also. We would estimate the royalties being in the range of $50 million by the middle of the decade based on gross royalties and reaching a peak of $300 million towards the end of the decade based on net royalties.

[4:45 p.m.]

On a final note, the province receives all of that money. The offshore accord ensures that dollars are paid to the province. The impact on equalization is another matter entirely, Mr. Chairman. I see you have had the opportunity to discuss that with the Minister of Finance, who was here just awhile ago and who is the person most conversant in that very complex arrangement.

Again, going back to Mr. Martin's involvement on behalf of the province, he is one of the leading experts in the area of that agreement and understands very well the implications, not just to Nova Scotia, because this isn't just a Nova Scotia problem - in fact, yesterday at a luncheon put on by the oil and gas industry, an MLA from the Northwest Territories, in conversation with me, referenced the fact that they are facing similar challenges in relation to their dealings with Ottawa. So what Nova Scotia is doing with regard to this issue is something that is gaining, in spite of what the members opposite might say, recognition and acceptance far and wide, and we must keep the momentum up if we truly want Ottawa to engage in meaningful conversations about this particular issue. Suffice it to say there is some reduction in equalization payments as we grow the economy, but, in general, we will be better off.

I hope these comments have been helpful to the members opposite and I look forward to the opportunity to discuss in some detail the issues that we have brought up in my opening remarks and through the next few hours. Thank you, Mr. Chairman.

MR. CHAIRMAN: Thank you, Mr. Minister, for your comments, 50 minutes in turn.

The honourable member for Sackville-Cobequid.

MR. JOHN HOLM: Mr. Chairman, I really want to thank the minister for his very edifying remarks. I have to say that the minister has a very creative department working for him, because I'm sure the minister didn't write his speech by himself. (Interruption) And he's got a lovely tie. Mr. Chairman, you pointed out the tie and I wasn't going to say this, but I was noticing and, of course, the minister is noted for his ties and I see that on his tie he has, it looks like from over here, a few American eagles. (Interruptions)

Or buzzards, he's saying they're buzzards. Well, from here they look like eagles, and I'm just hoping, Mr. Chairman, that his tie isn't symbolic of the continued direction of the minister and this government's policies, and that is to cave in to big American oil companies,

[Page 592]

as they've been doing consistently over the past. Mr. Chairman, I wasn't going to raise that, but you did draw my attention . . .

MR. CHAIRMAN: You felt you should.

MR. HOLM: I felt I should as a result of your helpful intervention.

MR. CHAIRMAN: Thank you, member.

MR. HOLM: As I was starting to say, the minister certainly did have the assistance, obviously, of somebody or people who were very creative writers. I notice in the minister's remarks that he did make the reference, for example, towards the end when he was talking about the amount of royalty dollars, of course, if there is an offset, there is some impact on the equalization payments. Of course, he doesn't want to point out the fact that 70 per cent of that money that comes in in the way of royalties really gets lost off of equalization. So when he's talking about what the royalties will be when it's $50 million, really what he's saying, Mr. Chairman, is that Nova Scotia will be seeing about $15 million; and when he's talking $300 million, he's talking $90 million. That's for a product that comes out of the ground that today, very conservatively, the amount that's coming out today, the net value of that gas would probably be something in the range between $1.2 billion and $1.5 billion. When we spread that over the number of years, obviously Nova Scotia is not getting huge amounts.

I didn't really want to start off on that. A simple question for the minister, if I could, to begin with. The Sable fund, does the minister know how much money is left in the Sable fund?

MR. BALSER: The total amount of that fund would be in the neighbourhood of $34 million. It's broken into two parts, $20 million of which I think $7 million plus interest is available and the $14 million which has not started to flow as yet.

MR. HOLM: Okay, so we have, give or take, about $34 million, so to speak, in the bank in that Sable fund. Could the minister tell us exactly how that fund can be drawn, for what purposes can it be spent?

MR. BALSER: The $20 million is designed to help develop gas markets as we go forward, and it can be drawn through the department through a proposal there. The $14 million is flowing in $2 million annually over seven years. The first $2 million is available, and that hasn't been expended yet. The specific purpose has not been fully developed, but it's obviously there to support the oil and gas industry as we go forward.

[Page 593]

MR. HOLM: I guess my point is, we were talking about gas distribution systems in the province, that's one of the things, and I'm not really going to get into that as a major topic right now, but the funds that are available in that Sable fund, my question is can that money be used by the province to assist in the development, the gas markets, of a natural gas distribution system in the Province of Nova Scotia?

MR. BALSER: The money is available to develop gas markets in the province. In terms of subsidy, this government has been very clear that we're not going to be supporting the development of an industry through subsidies.

MR. HOLM: The government has said that it's clear in its policy, that's not what I asked, but that's a policy decision. If the government so chose, however, it could use that money to assist in that. If it's not planning to use that money to assist in the development of gas markets in Nova Scotia by helping develop a distribution system, what are your intended goals for that money? Surely it's not going to be to subsidize Emera further so that they get a better cut rate on the gas that they're buying.

MR. BALSER: The intention of the fund was, obviously, to provide gas to Nova Scotians at a lower price to help grow the industry. But, as I said, clearly from a policy perspective, this province has been clear that it does not see subsidies as being a strategic use of those funds.

MR. HOLM: So Nova Scotians can get gas at a cheaper rate. Is the minister saying that he is going to use that money or the government is going to be using that money to, if not develop distribution systems, is that money then going to be used to help homeowners or industry to convert for the use of that natural gas?

MR. BALSER: It could be used for those things, the operative word being "could". At this point in time there has been no determination as the most strategic application of those funds. Clearly intent, as I said earlier on in my response to your earlier question, the object is to support the development of that particular sector. How it unfolds has not been fully determined.

MR. HOLM: Maybe that will wait until we have a full department that will make those decisions. One of the ways that money may be spent would be to convert some of the government buildings to be able to burn natural gas. Is that under consideration anywhere deep in the bowels of the government?

MR. BALSER: We recognize that the province has to lead the way but, obviously, it has to be a decision that's based on economics, that makes sense. Certainly the province is engaged in those discussions about how we as a leader can in fact look to conversion of some of our buildings to burn natural gas or other alternative energy sources, so that's a possibility.

[Page 594]

MR. HOLM: I'm going to leave that fund for a moment. I want to go back to another thing that the minister - it sounded like he might have thought there could possibly be a question coming about Roland Martin. I don't want to disappoint the minister, since he's obviously been boning up on this. He talked about Roland Martin and all of his involvement in helping to develop the energy strategy. I'm wondering, Mr. Chairman, could the minister tell us what Bob Fournier did?

MR. BALSER: Bob Fournier chaired the public consultation process. He also provided expertise as we move forward on the energy file. He was involved on a number of fronts.

MR. HOLM: He consulted with the public. I seem to remember even going to some of those sessions. Maybe the minister could tell us, what was Mr. Fournier paid for his work as the head of this major public consultation?

MR. BALSER: If you would bear with us for a moment or two, we will find that dollar amount. I will undertake to provide that information.

MR. HOLM: When he says he's going to undertake to provide that information, does that mean within the next minute or two, or does that mean in the fullness of time? Is the information available here?

MR. BALSER: It's not readily available.

MR. HOLM: I would be very interested. Do you have any kind of ballpark figure? Mr. Fournier, he's a pretty credible fellow. He certainly has a lot of expertise. He has led a number of projects. He's been involved with the Halifax Harbour cleanup, he's a noted academic, somebody who this and other governments, certainly in the public, have had tremendous confidence in. Would his salary have been somewhere in the range of $200,000? Would he have been paid anything close to that?

MR. BALSER: I would remind the member opposite, in my remarks I said the entire strategy development, if that's where he's going, was something in the neighbourhood of $400,000 plus a bit. In terms of Mr. Fournier's involvement, he was not involved in the entire process. Again, I said I would undertake to provide the dollar amount paid to Mr. Fournier. It would be significantly less than $200,000, based on the amount of time that he provided to the Petroleum Directorate in support of our initiative, but I would hazard a guess that his remuneration on a per hour basis would be something in the neighbourhood that was reflected in my comments around Rollie Martin.

MR. HOLM: Mr. Fournier, of course, and the public consultation - John Q. Citizen, like you and me, Mr. Chairman, and small business and all these other people who were very committed to try to come up with an energy strategy that would be sustainable in this

[Page 595]

province and responsible and environmentally friendly and all that kind of thing, they went around and did all this. Could you tell me, through you, Mr. Chairman, to the minister, was Roland Martin involved in that stage? I don't remember him being introduced at those public forums?

MR. BALSER: I believe he was in attendance as part of the support staff in some of the process.

MR. HOLM: Since he was part of the support staff, certainly he would have been reading the documents anyway. Correct me if I'm wrong, Roland Martin was paid out of the minister's departments, the Petroleum Directorate, the total of $199,000 for 2,000 hours of work. Is that correct?

[5:00 p.m.]

MR. BALSER: Up until the end of January that was the total.

MR. HOLM: Up until the end of January. Does Mr. Martin still work as a consultant for the minister in any capacity?

MR. BALSER: Not at this point.

MR. HOLM: Mr. Chairman, I believe he's still listed under GroupWise as having an address there. I wonder if the minister has a contract that was signed with Mr. Martin?

MR. BALSER: Yes, we do. I was just informed that that had been FOIPOPed.

MR. HOLM: Mr. Chairman, yes, it is being FOIPOPed, but we're told often that all you need to do is ask. It can save a whole lot of work for the department staff, to save the minister's staff, Bruce is very busy over there and so on, always trying to be co-operative, but maybe I could just ask the minister. Would the minister agree to provide us, table in this House Mr. Martin's contract? We have the other one that he signed.

MR. BALSER: We can see what we can do with that.

MR. HOLM: "We will see what we can do" wasn't a firm yes. I wonder if the minister could interpret what "we will see what we can do" means; I wonder, could he tell us does that mean yes or does that mean maybe?

MR. CHAIRMAN: That was a yes, member. (Interruptions) Just trying to help you out, member.

[Page 596]

MR. HOLM: Sometimes you get somewhere. We're going to get the contract. Could you tell me, Mr. Minister, Mr. Martin, of course, was working on the Campaign for Fairness, was he working for the minister at the same time under a separate contract?

MR. BALSER: Yes, he was.

MR. HOLM: Boy, Mr. Chairman, not too bad. I wonder, does the minister know, did he have any other clients at the same time?

MR. BALSER: Mr. Martin did not disclose if he had other clients at that point in time, but I can tell you that during the time he was working for the government he was working for us full-time.

MR. HOLM: When did he start working for the minister?

MR. BALSER: September 2000.

MR. HOLM: From September 2000 to the end of December 2001; is that the period that the sum of $199,000 covers? That's a period of about 16 months.

MR. BALSER: From September to March 2001, it was $44,000, and then from March 2001 to January it was $199,000.

MR. HOLM: So, quickly, off the top of my head, that sounds like about $243,000 for about 16 months of work. At the same time he was working for the Premier on the Campaign for Fairness - I can't remember the figure, but it was over $100,000. That guy has not done too badly. I can understand why the minister says he is a very successful Nova Scotia entrepreneur.

Mr. Chairman, certainly when one takes a look at the Campaign for Fairness, which isn't under the minister's direct responsibility, and we see how successful that has been, we see that it doesn't appear as if Nova Scotia has gotten very much in the way of bang for it's buck for the numerous dollars that were spent there. Now we have Mr. Martin drafting the province's energy strategy.

Mr. Martin, I might point out, Mr. Chairman, is listed as well with AIMS. AIMS is that right-wing business think-tank group run by Brian Crowley that is largely funded by large corporations. I didn't print it off, but if you want to go on the AIMS Web site you will see a list all of the directors and so on for AIMS. AIMS was the same body which is funded - and I would love to know who funded their particular study dealing with royalties and benefits, because they're saying Nova Scotia is doing great on the royalty regime, and the minister has used that report by this particular gentleman, not by Mr. Martin but used reports written for them before as a justification that we're doing well.

[Page 597]

Mr. Chairman, I'm wondering why it was necessary, because when you look at the biography for Mr. Martin, which is also available on the AIMS Web site, yes, indeed, he did work as a deputy minister in Newfoundland, Department of Finance, and he did work for the Newfoundland Power Corporation, but I don't know that there was a great deal of information on that Web site that talked about him as being any kind of an energy expert. My curiosity is, why did the government feel that it was necessary to spend $243,000 to pay him to write the report when supposedly the report was being based on the information that was being done through the public consultation process led by Mr. Fournier?

MR. BALSER: The member opposite is confusing two things, in that I am responsible for the development of the energy strategy and our relationship with Mr. Martin, the $199,000 was tied to the development of the energy strategy. I would also comment that the document from AIMS that the member opposite cites was not written by Mr. Martin. Mr. Martin is involved with AIMS and is involved in AIMS, I believe, because of the credibility and expertise and knowledge that he brings into play in the crafting of documents. Mr. Martin was engaged by the Petroleum Directorate, initially, to work specifically around issues of increasing benefits to Nova Scotians, a concern that has been raised by that member on a number of occasions.

Clearly we realized early on that we did not have, within the Petroleum Directorate, sufficient staff to do justice to the issue. So initially Mr. Martin came in to work on that; because we were pleased with the way in which he dealt with that particular problem, his work evolved into becoming responsible for coordinating the efforts related to the development of the energy strategy.

I can tell you, Mr. Chairman, I can tell Nova Scotians, I make no apology for that. When you look at the cost of bringing in expertise from the United States, as I said in my opening remarks, it is sometimes in excess of $400 an hour American, if you look at 2,000 hours to put together the energy strategy, to coordinate and to ensure that the government did not lose focus on that particular issue because it was one of grave concern. When you look at 2,000 hours and do the math, it's something in the neighbourhood of $117 per hour, which is well within reason for a person who brings the kinds of skill sets to the project that Mr. Martin brought to that project.

We should not be making apologies for developing what I believe is a world-class document, one that I said earlier on is being requested not just by Nova Scotians but by energy representatives in the State Department, by provinces like British Columbia, by jurisdictions like the Northwest Territories. They recognize the quality of the document. In fact, our energy strategy was cited by Emera in their annual general report as being reflective of how this province is approaching energy problems and their solutions.

[Page 598]

I don't believe Nova Scotians were poorly served by hiring someone of the stature, credibility and skill sets of Rollie Martin, somebody who's recognized not just within the Province of Nova Scotia but the Province of Newfoundland, and at the federal government Cabinet Table in terms of the skill sets they bring. So, for $117 an hour, we were well served.

MR. HOLM: Mr. Chairman, I have to point this out first of all. You know this, because you're very astute, and you listen. It couldn't get by you, being as astute as you are. He didn't come within a county mile of answering the question that I asked, but for him to say that Emera praises this, well, this government is in love with Emera and Emera with this government, so what would you expect? You didn't get back to the question.

AN HON. MEMBER: I bet you it's a million dollar man.

MR. HOLM: The million dollar man, no, that's a family, so I won't touch that right now. I want to ask this question, if I can, Mr. Chairman, because the minister talked about the fact that originally Mr. Martin was brought on to try to increase the benefits for Nova Scotia, something that I - and I don't make any apologies for - have been hammering away at for a long time. My question, first of all, to the minister, through you, Mr. Chairman, the figures that you have used, the $199,000 and the $44,000 plus change before that, does that include the amount of money that he was paid while he was working to try to increase the benefits for Nova Scotia, or was that a separate kitty that he got from?

MR. BALSER: The $199,000 was related, as I said earlier on, to the energy strategy. Prior to that, I think something in the neighbourhood of $44,000, which was in a previous fiscal year, was related to his work on benefits and for helping Nova Scotia understand, or certainly myself and the government understand, where opportunities to increase benefits actually exist. The whole discussion around benefits is a bit of a difficult concept because we often lump everything together and it's clear that the Deep Panuke project has very different dynamics from the Sable project and, potentially, very different dynamics from if Marathon is fortunate enough to make a gas discovery of some significance in what will evolve from their project, or if we want to talk about our sister province, the Hibernia project or the White Rose project. Everything involved is different so it's very hard to compare apples and oranges, as is often said in this House.

MR. HOLM: Mr. Chairman, so what the minister is telling us basically is that the first $44,000 was what Mr. Martin was paid to be a tutor. He was a tutor helping the minister understand certain things because certainly, based on what I've seen so far, we haven't seen much in the way of results in terms of increased amounts of benefits flowing from that $44,000. I would probably, like most Nova Scotians, we're just waiting for whatever is supposedly hidden out there that is just going to be unveiled, because they have a hard time persuading me and most other Nova Scotians that we got our money's worth.

[Page 599]

However, Mr. Chairman, if I could continue on, because the minister touched on benefits. The minister used to sit over here and when he sat over here he and his boss, now Premier, were very critical of the Sable project signed by the former government. They said that there were not enough benefits flowing to Nova Scotia, and Nova Scotians, wherever they happen to live - maybe down in Guysborough or in Yarmouth, whatever - that there was not a sufficient amount flowing to Nova Scotians. I wonder, could the minister tell us if he stands by the position that they held when they were in Opposition; in other words, that we weren't getting it, that we didn't get enough in the development agreements for Nova Scotia benefits from the Sable project?

MR. BALSER: What I would stand by is the fact that we need to constantly focus on growing the opportunities. The member opposite talks about how little has accrued to this province. When you look at the $3 billion-plus invested in Sable Tier 1, when you look across the harbour at the Eirik Raude and know that there are 1,100 Nova Scotians working there today, when you look at the Irving Shipyard and know that two new supply vessels will be constructed there and that two supply vessels were constructed previously in that yard, I think it's safe to say that Nova Scotians are receiving benefits. Do we need to work to focus on how we improve the benefits accruing to Nova Scotia? Yes, we do, but we also have to realize that until there are additional discoveries offshore in Nova Scotia, we don't have the critical mass to boast that we have an industry as large as it could be with the benefits that could accrue.

So what I would suggest to the members opposite is that any government of the day will constantly be trying to balance creating an environment that encourages investment and exploration and, at the same time, ensure that where opportunities present themselves, Nova Scotian companies capture those opportunities. Clearly, the discussion around capture versus capacity is one that needs to be held and is one that I believe industry is bringing to the forefront. If we focus on percentages, it doesn't necessarily reflect the true nature of the opportunity. For example, the issues that will be presented as PanCanadian brings forward the Deep Panuke project will perhaps present a scenario where in order for the project to move forward to create valuable infrastructure, there will be a need to discuss what kinds of benefits accrue in the near term and on out into the future.

[5:15 p.m.]

Clearly, though, the fact that PanCanadian is here, is committed to exploration and is involved in the offshore speaks well to the future. Certainly, Kerr McGee, Chevron and the announcement by Canadian Superior, all those things speak to the interest of the industry in being here, but make no mistake, industry has opportunities in other jurisdictions, whether it's the offshore of the Gulf of Mexico, the offshore in the North Sea, off of West Africa or off of Brazil. I can tell you that, and we will use PanCanadian, since they are currently dealing with the Deep Panuke project, they have had three unsuccessful wells in the last little while and those wells are very, very expensive.

[Page 600]

I hazard to guess that the creation of EnCana has caused some of their board and some of their shareholders to say, if we have a high-risk opportunity off the coast of Nova Scotia which may or may not evolve into greater discoveries and, we have in the North Sea, Buzzard, which is a very well-known reserve, or we have in the Gulf of Mexico a tremendously large known reserve of natural gas, perhaps our shareholders will want to look at balancing the risk side of their investment. So we do have to work with industry. We may not necessarily like sometimes the relationship that exists, but make no mistake, we have to work with industry. We have to work with communities.

Do I believe that companies like Marathon, like PanCanadian, to some degree, ExxonMobil and other companies are committed to being here in the offshore of Nova Scotia and working with Nova Scotians? As Larry LeBlanc has said on any number of occasions, it makes sense to hire Nova Scotians to do the work when they are capable of doing that work because it's a good investment.

MR. HOLM: I'm going to come back to that in a minute, Mr. Chairman. I'm going to leave it for a second. Before I do, that topic (Interruptions) I won't forget to come back, Mr. Chairman. I just have to say that when I listen to the minister and his soft-spoken tone, he almost had my heart starting to bleed for these oil companies. Look, I was starting to really feel sorry for them and then, all of a sudden, a flash came and I remembered one of those e-mails that I was looking at just a few minutes ago before we started this lovely conversation and Exxon was talking about what their anticipated return is for their first quarter. I was very saddened. It was just a little over, I think, $2.1 billion or $2.9 billion, but who cares about a decimal. So I was feeling sorry for them.

Anyway, I just have to ask, on a previous topic, if I could, Mr. Chairman . . .

AN HON. MEMBER: What was our return, John? What was our return on the royalties?

MR. HOLM: That would make me cry. I don't want to talk about that. Mr. Chairman, I have to ask this. Back to Roland Martin, could you tell me, Mr. Minister, did he actually pen the energy strategy, or did he type it or was he the one who wrote it?

MR. BALSER: As I said earlier on, the document was a result of a great deal of collaboration and team work. I believe there was a team of about five individuals who were tasked with the crafting and writing of that document. Could you see Mr. Martin's words reflected in the words of the document? I think it's safe to say, yes, you could. Did he take part in the editorializing of that document? Yes, he did. Was he part of the revisions of that document? Yes, he was. Did he take part in the presentation of the document to various stakeholders? Yes, he did. So is that document very much a document that Mr. Martin can take pride and ownership in? Yes, he, along with the entire team that crafted the document.

[Page 601]

MR. HOLM: That was a very long way of saying, no, he didn't write it, Mr. Chairman. He was paid $199,000 to be the tutor for those who wrote it, like he was paid $44,000 to tutor the minister on benefits. He was paid $199,000 to be involved in the crafting. I wonder, because there was a group of people who were involved in the consultations, were the others consultants, or were the others who were involved in the drafting of the report members of the minister's very, very capable staff, and he does have - like the gentlemen who are at the table with him - very capable individuals working in his staff.

MR. BALSER: The others were staff but, as I said earlier on, the intention of retaining Mr. Martin was to bring someone to coordinate the efforts to ensure that the project moved forward in a timely manner and, in fact, back to the previous question asked by the member opposite, Mr. Martin did not write the first word through to the last word in the document, but as I said he had a part in writing parts of it. He was certainly intimately involved in the design of the document and the editorializing of the document and the refining of the document. So, again, in response to the question is Mr. Martin a part of that document and that energy strategy, there's absolutely no question in my mind that Mr. Martin was instrumental in the creation of that document and should have no discomfort in saying that in any forum.

MR. HOLM: Mr. Chairman, quite obviously, and I know that there is an application out for a deputy minister for the new energy department, and of course Mr. Martin has experience being a deputy minister, but I doubt if he would apply, at least I would be surprised because even though the government - and I would argue that deputies and ministers, people who are involved in very important jobs need to be well-paid for certain kinds of positions, like a deputy, I mean no criticism intended towards anybody who has worked in the minister's department, you do have to have very capable people but, Mr. Chairman, we can't afford a deputy minister's salary and the kind of rate that he's getting paid here.

My guess is that he made more money for his consultations where he was involved in proofreading and tutoring. He didn't write. He was one of a team of about five and he probably made more money than all the other staff, the very capable staff of the minister's department who were working on a project with him, Mr. Chairman - and we still haven't found out what Mr. Fournier was paid - but the minister is going to have some way to go to sell it, you know, you would expect me to be cynical, but I suggest, Mr. Minister, maybe not to his friends in AIMS, but the minister will have a way to go to persuade Nova Scotians that we got bang for the buck on that one.

Going back though to the benefits, you know, Mr. Chairman, the minister in his answer went a long way around, giving me a response when asked about the Sable project, to say either he doesn't know or he's waffling or backing off. Tories were very critical and, do you know, even when the platform and the jobs that are going to be shipped off to the

[Page 602]

United States, down to Louisiana where the new platform is going to be built, when we have Nova Scotians who are capable, the government was even critical of that, but they said there was nothing - and I defended the government on this because the reality is that was part of a development agreement that was signed by the former government.

If you give your word, if you've signed a contract, then you really have to honour your word on that contract. You can try to get around it in whatever legal ways, but that was signed by the former government, so you couldn't put the hammer on them, but they were still critical. Politically it was nice to say, oh, we don't like it, but there's nothing we can do about it because those bad Liberals entered into that Sable (Interruptions)

Mr. Chairman, that's one. The next one is the PanCanadian. Now I heard the minister talking about how we have to work with the oil companies, that they can go here or they can go there, or they can spend their money, there are opportunities. I will remind the minister of something he and the Premier knew when they were over here, and that was that we have a resource and it's there. You know it's there. It has to be all discovered but, do you know, Marathon didn't take very long to get out there drilling again after they had to shut that last well down. Why? Because they hit gas. It's there, but also we've got location. If they want to serve the New England market, it's one heck of a pipeline to be shipping the gas by pipe over from the west coast of Africa. We've got location and they are going to want to get it.

Now the minister talks about PanCanadian and Larry LeBlanc is a great guy, I have nothing against him personally. He's a proud Maritimer and I'm sure that he personally wants to see every benefit that's possible come to Nova Scotia. I don't dispute that. That's what he would personally like to see, but his master is not Nova Scotia; his first loyalty is to the shareholders of his company. That's who he reports to; he doesn't have to be accountable to the voters in Nova Scotia.

Now the proposal that is put forward for the development of Deep Panuke would see 18 per cent of the total benefits coming to Nova Scotia, and they say that's a majority, about 80-some-odd per cent, 85 per cent, 86 per cent of what is obtainable. So 85 per cent works out to really about 18 per cent for Nova Scotia, and now of course the Canada-Nova Scotia Offshore Petroleum Board, this great body that does such wonderful things - a touch of sarcasm in my voice there, Mr. Chairman, because I haven't been overly impressed with some of their successes or failures - they're now reviewing this so-called development agreement, but at the end of the day when they review it the buck is going to stop at this minister's desk and the federal minister's desk, and either minister, if they so chose, can say not good enough, we won't sign on.

If the Sable project at 29 per cent wasn't good enough, I respectfully suggest, Mr. Chairman, 18 per cent damn well is not good enough. You know, on military contracts and government, national government awards contracts to companies all the time to build military equipment, airplanes and so on, and sometimes those contracts are awarded to

[Page 603]

purchase planes that are not bought or made specifically in Canada, but they put in industrial offset clauses so that the companies that are building them have to acquire certain percentages of the product here. If the minister and the government do not feel that 18 per cent is good enough, you've got a responsibility, you've got an obligation I suggest, to say that to PanCanadian up front here and now - no. If that is going to be the maximum benefit coming to Nova Scotia, at the end of the day we're going to say no.

Mr. Chairman, you can say to those companies that if you're not able to get a higher level of it here, what you need, you can factor in industrial offset benefits so that if you're working on a project, if you say that only for Deep Panuke this is all you can get here, and we want more we can say to them we'll accept 18 per cent here if you agree for other projects that you are working on and developing around the world - and remember now that PanCanadian is part of a much bigger player, EnCan, they have projects designed and planned all around the world. You get another x percentage equivalent to some of those others out of Nova Scotia; that would give jobs to Nova Scotians and business opportunities for Nova Scotians. If you lay down the rules that you have to get it then PanCanadian has the opportunity to say to companies who want to bid, well if you want to bid on this work you better partner-up with a Nova Scotia company. Find a way to partner, give them the incentive; partner with Nova Scotia businesses to provide an increased level of benefit.

[5:30 p.m.]

You know, when I heard the minister speaking before, quite honestly he sounded like the PR flack you hear from the oil companies. It's the same line. Some of the minister's former employees where do they go to work? They go to oil companies. I don't blame them, as some have from the Canada-Nova Scotia Offshore Petroleum Board. Mr. Chairman, oil companies have committed to spend, I think the total amount is around $1.5 billion in offshore development work. I would be interested, from the minister, to know how much of that money has already been spent because if those companies do not live up to their obligations, the minister knows that they have posted bonds equal to 50 per cent. So if a company in parcel x or parcel y have said that they will do a work expenditure of $50 million, they had to post a bond worth $25 million, and if it's $100 million, it's $50 million - and if they don't fulfill their obligations in that time frame they forfeit it.

They've got motivation to go ahead. They made financial commitments and, Mr. Chairman, we've got resource; we've got location. If they want to walk away from the table with their money somebody else will step up to the plate. I want to ask the minister, are you prepared to say to PanCanadian and to anybody else who was going to be developing offshore that we expect truly, in Nova Scotia, to be the primary benefactor? Because we're not getting huge amounts in royalties - yes, we will get money when people spend, as the minister earlier talked about, we will get revenues from HST that is spent in this province, and we will get money from income tax from Nova Scotia employees making money here in this province working in that industry. We will make that. We're not getting it in the

[Page 604]

benefits in terms of the royalties, not the kind of figures that we were led to believe we would get. Are you prepared to say that at the end of the day, when development agreements or plans are put forward, that if they do not meet certain minimum standards that Nova Scotia expects that you will not put your John Henry on that, you will not allow it to proceed? Are you prepared to stand up and say that?

MR. BALSER: Mr. Chairman, certainly, in getting to the question, the member opposite covered a fair bit of ground so I feel it's only appropriate that I touch on some of the things that he raised in getting to his question, but certainly the quick answer to his question is that in the energy strategy we clearly indicate that the expectation of this government is that Nova Scotian companies will capture 100 per cent of the opportunities for which they are capable, and that the oil and gas industry will work with Nova Scotian industries and the Nova Scotia Government to increase our capability to capture those opportunities. But I would also say that if you look back to why we in fact are even talking about PanCanadian's Deep Panuke project, if there was not the existing infrastructure that project would not be moving ahead. There would be no discussion about whether or not the DPA plan for PanCanadian is sufficient, because they would not be undertaking to make that investment, it would just be cost-prohibitive.

The reason that we have an oil and gas industry evolving offshore Nova Scotia is because the Sable project moved forward because Maritimes & Northeast put a pipeline to sell gas into the New England market. It is our resource, but if we were totally reliant on a Nova Scotia/Atlantic Canadian market to sustain that infrastructure it would not be happening, Mr. Chairman. So you have to make incremental investments. The member opposite talks about we have geography on our side, and we clearly do, but the Gulf of Mexico, he mentioned the fact that West Africa is a long way away and it would take some pipeline. Well the fact is that the Gulf of Mexico is not that far away and the Western Sedimentary Basin is not that far way. So while we do have tremendous geographical advantage, we do have to be competitive.

I would also say that in terms of what kind of monies are being invested in the work commitments, that clearly the blocks that have been bid in the last little while have established records on the East Coast. In fact, $1.56 billion of work commitments on the blocks that are currently under lease and something in the neighbourhood of $200 million of work commitments. The West Navion that is currently working for Marathon is something in excess of $500,000 - $0.5 million a day it cost to have that rig in place; Chevron is looking at how they're going to drill their deep block; the discussions that I mentioned earlier on, Canadian Superior talking about their block; and we do have a jack-up rig in the harbour that's looking for work. So these are tremendously expensive undertakings.

Part of the scenario for PanCanadian is they're proposing to build a pipe with extra capacity; obviously they're doing that design with the view that there is more gas out there to be discovered. The member opposite said we know it's out there. Well, we certainly hope

[Page 605]

it's out there. The geology is very, very similar to the geology in the Gulf and West Africa and off the coast of Brazil. There are reasons to be confident and optimistic, but when you think of the cost associated with drilling wells in the offshore, it's an extremely high-risk venture. Shareholders like to minimize their risk, and to some degree are risk aversive and, if they have alternative choices to make that mitigate some of the risk, they are going to make those choices.

Does the industry believe there's gas out there to be discovered? Yes, they do. I hope, as I'm sure every Nova Scotian hopes, that when Marathon shifted their rig over to continue drilling on the block they currently hold it's because they see tremendous opportunity to be discovered. If that's the case, more power to them. The member opposite often talks about the Norwegian experience and the way in which the Shetland Islands dealt with their oil and gas industry and they held the industry's feet to the fire. Well, the tremendous difference is that we have 6 trillion cubic feet of gas - and that's a tremendous amount of gas to start an industry, but it's not enough gas to sustain an industry and to talk about the kinds of long-term expectations that all Nova Scotians have and which I believe will bear fruit, but again it comes back to balancing, creating an environment that supports exploration and risk against the needs of the province.

He also talked about the CNSOPB and the way in which the federal government and the provincial government and the ministers responsible in each of those jurisdictions have the ability to unilaterally shut down a project going forward and, in fact, that's not the case. I'm the minister who has the veto power, if you will, and it's not a veto power related specifically to benefits. So based on benefits, I, as minister, cannot deny a go-forward. That's why the energy strategy talks about OSEAs. OSEAs are designed to allow government to work with PanCanadian, ExxonMobil, Canadian Superior, El Paso, Duke, and Williams, to help them deal with the issue specific to their individual project in a way that clearly allows the province to recognize its concerns around growing the industry, capturing benefits, and their issues around how do you deal with sour gas, how do you deal with the issues related to bringing a project from a discovery of significance to actually gas flowing through a pipeline?

The member opposite would simply say do this and everything will be as it should be. Well, it's not that simple. If it were that simple, the previous government would have solved all these problems and he might well be talking to a different minister. There are always challenges related to trying to improve the economic position of the province. Are we working with industry to try to bridge those distances? Yes, we are. Will we continue to do that? Yes, we will. Down the road will future governments do the same thing? Absolutely. Now, I do hazard a guess - to be political for about a moment - that that member opposite may never have the opportunity to bring his specific direction to this portfolio, but stranger things have happened, Mr. Chairman.

[Page 606]

MR. HOLM: Mr. Chairman, the minister may be right. That's only for time to tell, but I have to say to the minister who just spoke, I don't know what his mind is in terms of what strategy he's bringing forward, or what visions because it seems like it's exactly the same as the one that was held by the former government, and that is cave in, cave in, cave in. I mean, so help me, if the script for the minister was being written by big oil, it would be exactly the same as what the minister is saying and the short answer to all of the questions that I asked before, about whether the government was going to stand up, whether it was going to get any backbone, whether it was going to stand up for not only the constituents in my riding and the minister's riding, but in Yarmouth, in Shelburne, in Digby, all across this province, the short answer was no, we have already decided that what big oil tells us we can do, we will do, and we might hire some high-priced consultant who will then turn around and tell us oh, yes, we're getting a good deal. Nova Scotians don't buy that.

I want to ask the minister about royalties. The former government had tabled, back in 1997, a list of what were projected royalties. I wonder if the minister could tell us - that was by Eleanor Norrie - were those royalty projections in any way, shape or form, accurate or were they just pulled out of the hat?

MR. BALSER: The royalties that were generated by that minister in that time are very similar to the way in which the royalties were generated for this government and the previous government.

MR. CHAIRMAN: The member for Sackville-Cobequid, with five minutes.

MR. HOLM: Perceived in the same way, so are those royalty projections still accurate?

MR. BALSER: Obviously there are a number of variables related to what the royalties look like at any given point in time. Just last year there was a significant spike in the price of gas and that for a period of time indicated that the Province of Nova Scotia would move more rapidly into a higher royalty rate, and so we are to some degree caught in a function of price and a function of how large the resource discovery is. So you make best estimates based on best information and continue to refine those and reflect the changes that happen as they happen.

MR. HOLM: Of course, there are all kinds of variables, spikes up and down, you know, and you see the price of gas goes up and down, all kinds of things happen. My question to the minister, does your department have projections - recognizing they are only projections and you can have spikes, you can have variables, you can have all kinds of things - do you have them, and if you do have them will you explain to the people of Nova Scotia, not just me, why you and your department will not release your projected revenues from royalties? Mr. Chairman, I would like to know from the minister why it is your department is refusing to release what should be public information, especially coming from a minister

[Page 607]

and a government that promises openness and accountability. I'm even sure your members, particularly those on the backbenches, would like to have that information. Tell us, will you release that information?

MR. BALSER: The member opposite is going into an area that could potentially result in the release of information as particularly sensitive to everyone involved. (Laughter) From a government perspective, but also from an industry perspective; they are in competition. It is a competitive world and what we have done, and undertaken to do in the past and will do in the future, is release information as it's appropriate and prudent to do that. He also talks about what kind of royalties will be accruing, and in the budget document we clearly speak to that and lay out what we see as the total royalty benefit accruing to the province over the life of the SOEP project and, again, this is but one project.

[5:45 p.m.]

If PanCanadian comes onstream, that will add to the mix; if Marathon is successful, that will add to the mix; if Kerr McGee, Chevron, and Canadian Superior and any of the other companies that are out there taking a gamble in our offshore are successful, it means more money, more opportunities. Again, it's a function of where we are with 6 trillion cubic feet of gas. Hopefully two years from now we will be able to talk about 40, 60 or 80 trillion cubic feet of gas. If we were in that realm, the dynamics related to benefits and opportunities in royalties would be vastly different, Mr. Chairman.

MR. HOLM: Mr. Chairman, I'm only talking about the projected royalties from SOEP. Will the minister agree to table what his department's projected royalty revenues are from the SOEP project? So far he has said no. Will you agree to table that or are you going to continue to hide that from Nova Scotians?

MR. BALSER: Again in response to the question, Mr. Chairman, there are a number of partners involved in the Sable project and those partners, while they are working collaboratively on the Sable project, do in fact compete on a number of fronts with one another for opportunities and, as a result of that and the concern that some of the information contained in the request that is being made, or prior to being made, sure it could in fact have detrimental impacts on the partners as they go forward in other opportunities, it's not appropriate. We said clearly that we would make that information available when it's reasonable to do so, but to release unilaterally all of the information that the member opposite is asking for would probably not help the future growth of the industry offshore Nova Scotia.

MR. CHAIRMAN: You have 30 seconds.

[Page 608]

MR. HOLM: Mr. Chairman, I haven't got time to ask a question. All I have to say to the minister is that's the biggest pile of baloney that I have ever heard. The minister is just trying to hide this. I don't know for what reason, but that is contempt for Nova Scotians and, quite honestly, this minister should be held accountable for that because it is absolutely contemptible.

MR. CHAIRMAN: Order, please. The time has expired for the NDP caucus. I would like to recognize the member from the Liberal caucus. I recognize the honourable member for Cape Breton South. You have the floor, your time is 5:48 p.m. Understanding that we will pause at 6 o'clock for the moment of interruption and then call the committee back to order.

The honourable member for Cape Breton South.

MR. MANNING MACDONALD: I guess unfortunately for me and fortunate for the minister, my time here is going to be broken up by the six o'clock interruption and then by the fact that four hours are up around 6:50 p.m. Then I have to wait until Thursday and then there's very limited time left as the debate winds down on this annual rite of Spring in the Nova Scotia Legislature here; you know, that we go on on these estimates. I might say at the start, I might want to ask a question.

There's something that caught my attention earlier when the minister was speaking, and he mentioned the fact that 1,100 people were working on the Eirik Raude as we speak today. (Interruption) I would like to find out, first of all, if that number is correct and, if it's correct, where are they from and where are they over there? You know, 1,100 people, that's a lot of people and they're all working on the Eirik Raude today? Because that's what the minister said in his preamble and I would like to know how many of those are Nova Scotians, how many are Canadians, and how many are foreign?

MR. BALSER: Given that the work on the Eirik Raude is proceeding 24 hours a day, seven days a week, and there are in fact shift changes, at this particular moment in time are there 1,100 people standing on that structure? Probably not, but through the course of the 24-hour-shift-change cycle, do they in fact reference that there are 1,100 people employed as a result of that? Yes, I've heard that number used on a number of occasions. As to the breakdown, I will get the level of detail the member has asked for, but certainly there are a significant number of Nova Scotians who are employed. In fact, I know of people from my area who are employed on that operation and it has been good for the economy here, but I understand there are some people who have come from away.

The timeline for the refit of that particular structure was so tight that I believe in some instances they had to bring in people who were electricians familiar with working on rigs in terms of how the wiring is done and so on, and I know that some of the engineering support staff have come from away as well because part of what we're doing with this opportunity

[Page 609]

is proving to the world that you can do semi-submersible deepwater work in Halifax, Nova Scotia, and can be competitive with any other jurisdiction. So there are people from away, but a significant number are Nova Scotians.

MR. MANNING MACDONALD: While I respect the answer that there is a significant number, I would like to know the number; I think the minister can make that available. The reason I'm asking for that is I've had some calls from electricians in Cape Breton who have been trying to get on the project up here and can't get on, yet those electricians inform me that the people who are in charge of that project are hiring electricians from Newfoundland and they're bringing in electricians from England, and there are people in Cape Breton waiting to get jobs as electricians.

I, for one, would hope that the minister would investigate that; also, as part of his role as Petroleum Directorate Minister, that he would talk to the company and find out whether or not these electricians who are looking for work in Cape Breton and in mainland Nova Scotia as well I understand, who are looking for work on the Eirik Raude and on similar projects here, and have been set aside for other workers who are coming from away. I don't want to deny anybody a job, but I believe that it should be Nova Scotia first here.

I think you can see where I'm coming from, that it should be a Nova Scotia-first policy. If there are qualified electricians here in Nova Scotia, they should be hired. I would ask perhaps, Mr. Minister, at some point, that you would indicate to me how many of the people working there are indeed Nova Scotians, and whether or not at some point you would be prepared to talk to the proponents of that project about increasing the volume of Nova Scotians. I don't have any other questions for the petroleum people today, anyway.

MR. BALSER: . . . indicates that there are currently 2,000 people directly and indirectly employed on the Eirik Raude, and that there are 500 people employed on the supply-vessel side of things, and that of the 3,911 people employed in those two opportunities, in excess of 80 per cent of them are in fact Nova Scotians. You can see clearly that a significant number of Nova Scotians are working on that opportunity. I know the member opposite, his comments and concerns he raised about Nova Scotians who feel they have not been able to find employment, it's a real issue, and I've had conversations with representatives of a number of collective bargaining units about how to deal with that problem, but Nova Scotia is nothing less than interesting when it comes to who's responsible for what particular collective bargaining unit in a particular work site. Certainly it's in everybody's best interests for Nova Scotia to tell the world that you can work here effectively and don't have to worry about labour-related issues. It is a concern, and I would certainly be happy to meet with proponents.

[Page 610]

MR. MANNING MACDONALD: I will be satisfied with that answer, Mr. Minister, when every single electrician or tradesman in Nova Scotia who is qualified is working. Then they can take all the people they want from points west or across the pond, but it's a Nova Scotia-first policy with me as far as the workforce goes.

I just want to talk about - in the few minutes that I have right now, before the break - in looking at the estimates, I'm looking at a book that's quite thick here. When you come to Economic Development, it's only a ghost of what it once was in terms of an economic generator in Nova Scotia. It was a powerful engine for economic development, and now it's reduced to a budget of $30 million, and it's reduced to about eight pages in this whole document.

Mr. Chairman, we have the minister, who is the Minister of Economic Development, who started out in this government as the minister of just about everything when the first Cabinet was announced. Now he finds himself in the position where he's the Minister of Economic Development, which is fast heading towards its demise; every year it's down 30 per cent or 40 per cent. He was the minister for Sydney Steel, that industry is gone. He presided over that and some of the workers down there are still waiting for him to fulfill a promise that he made to them about pensions. He's now the part-time Minister of Economic Development, still the part-time minister and no full-time minister has been appointed.

I'm going to ask you, Mr. Chairman, and Nova Scotians might want to know, what does this minister do? Everything is pretty well farmed out to somebody, either a consultant here or a consultant there or Nova Scotia Business Development Inc. and other such groups and agencies. So the minister has gone from the most powerful minister in government, when this government took over, to a couple of part-time status operations in the front benches, and a budget in Economic Development which must be the joke of Canadian governments. It must be the joke of all the provinces, and Nova Scotia, not the least of which is our neighbour, New Brunswick, that has gone in a different direction with their Economic Development Department and are still out there very actively attracting business - I'm going to get into that a little bit later.

I do want to ask some specific questions. Perhaps I will start by asking the minister (Interruptions) Yes, what do you do in the run of a day? Really, here we have the Department of Tourism and Culture over there with a budget of $60 million, and we have the Department of Economic Development down to a budget of $30 million and plummeting in terms of its importance to the economy of Nova Scotia. The minister keeps talking about letting the private sector do it, let the marketplace control where we're heading in the future, government get out of the way.

Well, that's all right, perhaps, for the fast-growing area of metro Halifax, where some businesses are very successful, and in some cases would like government to get out of the way and stop taxing them out of business and stop interfering with their day-to-day routine,

[Page 611]

in how they go about making money for their shareholders and employing people. Unfortunately, there are still two economies in Nova Scotia, one is the economy of the 20-mile radius of where we're standing here in this place today, and the other one is the rest of Nova Scotia. It's the rest of Nova Scotia that we should be concerned with and, unfortunately, government simply can't get out of the way in the rest of Nova Scotia.

Mr. Chairman, I'm going to pick up on this when you ask for us to adjourn at 6:00 p.m. I understand that following the late show, which will go until 6:30 p.m., that I have how long tonight?

MR. CHAIRMAN: You have 32 minutes.

MR. MANNING MACDONALD: Well, I certainly would . . .

AN HON. MEMBER: We want to know what he does all day.

MR. MANNING MACDONALD: Maybe we could end up by asking what my friend to the right, but really to the left, wants to know what you do all day, so maybe we can go to the 6:00 p.m. break by you giving a short answer to that.

MR. CHAIRMAN: The hour of interruption is at 6:00 p.m., and it's only a few seconds, so I will adjourn and we will recess, we will call the committee back to order at 6:30 p.m.

[5:59 p.m. The committee recessed.]

[6:30 p.m. The committee reconvened.]

MR. CHAIRMAN: I would like to call the committee to order. We are doing the Estimates of the Department of Economic Development and Petroleum Directorate.

The honourable member for Cape Breton South.

MR. MANNING MACDONALD: Mr. Chairman, I am glad to be back here with the discussion of the estimates of the Department of Economic Development, the Petroleum Directorate, what's left of Sydney Steel, and various and sundry other responsibilities that the part-time minister of everything has, so I will get right to it with a couple of questions that are important to me and to my area of the province. Just a few moments ago the member for Cape Breton North talked about his government, in partnership with other people, doing something for Cape Breton. What I would like to ask the minister is, what do you plan on doing with the Economic Development office in Sydney?

[Page 612]

MR. CHAIRMAN: The honourable Minister of Economic Development.

HON. GORDON BALSER: Mr. Chairman, certainly economic development in Cape Breton is tremendously important to this government. I would remind the member opposite that we've put significant numbers on the board in terms of new job creation; I talked about that in my opening comments. My understanding is that NSBI is currently in the process of recruiting a representative to work specifically in Cape Breton on issues related to economic development, growth, expansion of existing business and so on, so we're committed not only in word but in deed. There is going to be staff there from NSBI. We currently have staff from the office of Economic Development there as well.

MR. MANNING MACDONALD: I might remind the minister that when we left office in 1999 there were eight people working at the Economic Development office in Sydney, and there were also people there who had the ability to deal with local entrepreneurs and people who are looking for government direction or assistance. Today all they do is pass out applications and send them up here to see your people at NSBI. I want to follow up with that by saying that NSBI has been set up with an arm's-length responsibility to this Legislature, to the House of the people of Nova Scotia, who this development organization should be responsible to, as was the previous Nova Scotia Business Development Corporation that was attached to the Department of Economic Development. In other words, the business objectives of any corporation of government, when it involves public funds, should be open to the scrutiny of this House. I understand that is not the case with NSBI; as a matter of fact it is responsible to the minister, but not to the people of Nova Scotia through the House of Assembly.

Mr. Chairman, the setting up of this corporation, or this arm's-length corporation that's going to have responsibility for $30 million of public money, it's made up of, I understand, 12 individuals, and I want to ask the minister how were they appointed and why the minister felt it necessary to only have one of those 12 people from an area of Nova Scotia that has one of the highest unemployment rates in the country, and also that the people who applied from Cape Breton, including a gentleman I understand who was eulogized in this House by the member for Cape Breton North, and that was Father Greg MacLeod, whom I would have thought the government would have sought out, or the member for Cape Breton North would have sought out to sit on this board, given the fact that he's regularly eulogized and congratulated for his business acumen in trying to do something in Cape Breton. That gentleman is not on that board.

As a matter of fact, nobody who applied from Cape Breton is on this board. The government went out and sought an individual, Alastair MacLeod, who is President of the Board of Trade, to be your token representative from Cape Breton. The other 11 are not from the Island and I want to know why, Mr. Minister.

[Page 613]

MR. BALSER: Mr. Chairman, the member opposite, in his comments leading up to his question, talked about the commitment to Cape Breton. Again, EDS, Stream, Tesma, the Co-op Atlantic . . .

MR. MANNING MACDONALD: I asked you about the board, Mr. Minister.

MR. BALSER: So we have honoured our commitment there. In terms of the board, we do have, at this point, 11 members. There were 12 people on the board when it was originally structured. The process saw applications and screening panels and recommendations taken forward from that. What we attempted to do in the board process was balance sector representation and geography and I believe we've done that successfully. There is somebody from Cape Breton on the board. I see that board evolving over time. Again, as we move forward and as vacancies occur, will there be opportunities for new people to come forward? Absolutely.

MR. MANNING MACDONALD: Well that's very interesting, Mr. Chairman. He says balanced by geography. One out of 12 are from Cape Breton. There are four counties in Cape Breton and one out of 12 is from all that area. One is from industrial Cape Breton, none from Richmond County, none from Inverness County, none from Port Hawkesbury that I'm aware of, and that's a balance?

Also, the minister started to talk about some of the projects in Cape Breton, and I want to touch a moment on the Cape Breton Growth Fund, which is largely federally driven. Most of the money is federally driven. There is supposed to be $2 million a year put into the growth fund by this government, and I have two questions connected with that. One is concerning the - and I will put the two of them and then you can react - $2 million that the province has allocated for the growth fund. Would the minister point out in the budget where that is and whether or not there is any other financial commitment directly to Cape Breton?

Also, Mr. Minister, I want to know why your government keeps taking credit for federal initiatives in Cape Breton when you have a minimal amount of money going into new development in Cape Breton. As a matter of fact the amount of money that the provincial government has right now going into new economic development initiatives in Cape Breton is laughable, yet this government continues to take credit for economic development initiatives in Cape Breton.

I want to know, also, Mr. Minister - and I will come back to this perhaps at another time, maybe in Question Period - why the payroll rebate system was used for Convergys in Pictou County, which was originally supposed to go to Cape Breton with their expansion, but somehow got "decked" into Pictou County after the government changed. I would hope that the member for Cape Breton North is listening to this because Convergys was supposed to come to Cape Breton with part two of their operation, their expansion. Instead,

[Page 614]

conveniently, it just slipped into Pictou County instead of Cape Breton, with a payroll rebate system for its operation.

Now Stream came to Glace Bay. Would the minister tell me why Stream was not offered a payroll rebate system? First of all I would like to know if they looked for it and, secondly, I would like to know whether or not, for some reason, they weren't awarded that and why this government found it necessary to put a $1 million loan guarantee into a building in Glace Bay for a friend of the government, Mr. Martin Chernin, for renovations of that building when, indeed, Mr. Chernin has a 10-year contract in any case, from Stream. Why did the government find it necessary to put $1 million in his hands as a loan guarantee when indeed his investment was protected anyway? In other words, the only people the provincial government helped out in the Stream operation was their friend who owned the building. They didn't help the company out at all; it was the federal government that helped the company out. I wonder, would the minister explain that?

MR. BALSER: The member opposite covered a fair bit of ground. I will start out by saying that it's not $2 million annually in terms of the province's contribution to the growth fund, it's $3 million over four years. We're in year three and that brings to our commitment $9 million, Mr. Chairman, so there's that. The member opposite also talks about the province speaking to it's contribution.

MR. MANNING MACDONALD: Where's that in the budget?

MR. BALSER: Certainly, oh, yes, in terms of where it is in the budget, if you look at Page 7.11, there is $16.228 million contained in Operating Costs. So it's included in that $16 million. So in terms of our commitment, we are honouring that obligation. In terms of how this government approaches partnering to create economic opportunities, it is no different than the previous government, and that is the federal government has programs available and, to be blunt, have more money available to assist economic development opportunities so we work in concert with them.

Again pointing out the recent leadership campaign, a former provincial employee involved in Economic Development used very much as his campaign the fact that he, when he was an employee of the province, was involved in a number of the business initiatives that were announced. So you can't really have it both ways. You can't have a former provincial employee who's seeking the Liberal leadership talk about how great it was when he was involved with the province in business recruitment and retention in Cape Breton, and then on the other hand say the province had no involvement. So it's one or the other.

I believe we've been very effective; in fact the employment numbers in Cape Breton are the best now they have been in some time. Yesterday I read a resolution that talked about the GDP growth in Nova Scotia being second only to Alberta. So we are moving forward, and in terms of the Stream announcement and why some of the facilities in Cape Breton were

[Page 615]

not supported with a payroll rebate, because a number of those proposals came forward and accessed growth fund monies and there is no payroll rebate structure available through the growth fund, we couldn't use that mechanism. What we did do was put together a package that allowed those projects to move forward, specifically related to Stream. I hazard a guess the people in that community are quite happy to have 1,000 jobs.

The fact that we used a loan guarantee to create the critical mass to allow that building to be retrofitted, one can criticize that, but in the absence of that building being made available there would have been no Stream announcement in Glace Bay; they would have had to go to another site because there was no building. That building and the way in which it was made available allowed that project to move forward. In fact, they have well exceeded their targets - they recently announced 1,000 jobs. So, again, what we did as a government is put together a package that worked. Certainly in the time when the member opposite, who is doing the questioning at this point in time for the Liberal caucus, was the minister of the day they had some very interesting and creative arrangements made to help develop the economy and I believe that's because the member opposite was very committed to economic growth in Cape Breton and wanted to make opportunity occur, and we're no different, Mr. Chairman.

MR. MANNING MACDONALD: First of all, Mr. Chairman, let me react to a few of the statements of the minister. One is, yes, the people of Glace Bay, the people of industrial Cape Breton are happy to have Stream. They don't all live in Glace Bay; they live in the Cape Breton area. It wouldn't make any difference, anywhere in industrial Cape Breton where the building was the people would go to work there, as Glace Bay people work at EDS in Sydney, or ITC, or Ron Webber, or whatever. Anyway, the point that I was making is that the people who work at Stream make less than the people who work at Convergys in Pictou County because of the fact the government has a payroll rebate in the Convergys operation. They don't have one in the Stream operation and I asked the question why.

He mentions Francis MacKenzie. Francis MacKenzie was the gentleman who worked for Economic Development who ran for the leadership. He was one of the gentlemen who introduced the payroll rebate system to Nova Scotia which resulted in a number of firms coming here, particularly call centres, but for some strange reason the latest call centre, the only one that the provincial government said they were directly involved in, was not offered a payroll rebate for their 1,000 employees who are working there, which could have had the result of those employees making more money.

Now I still don't understand why the government saw fit to reward one of its chief political hacks in the area by giving him a $1 million loan guarantee on a building when he had a contract already from Stream - and by the way, Mr. Chairman, that same gentleman had some other partners and he conveniently bought all the other partners out prior to doing this deal with the government and prior to Stream coming, so he was the only operative of that building at the end of the day. I believe there might have been one other, but there were a

[Page 616]

number of partners there and that building was certainly hurting, but he had a contract. So the government saw fit to reward him rather than reward the employees who are working at Stream by providing the Stream operation with more funding so they could pay their employees more money - political largesse at its finest, Mr. Chairman.

But I want to go back again and remind the minister that geography in Nova Scotia doesn't mean one out of 12 for the Nova Scotia Business Inc. board that was appointed by the government. The government set a procedure in place that would have people apply to be on that board, and people from Cape Breton applied to be on the board and were all summarily rejected, all of them, including some very good business people and labour people from my area of the province. And what did the province say? Well, we have to have a token Cape Bretoner here so what we will do is we will pick one, somebody who is friendly to us, somebody who will tell the world what wonderful things are happening in Cape Breton, and he does it regularly. We have to be positive he states.

[6:45 p.m.]

Well, tell that to the 16 per cent down there who aren't working right now but, more importantly, there are some developmental dollars in the hands of this new-found arm's- length authority that's now running the Economic Development Department, and I want to know at some point, Mr. Minister, if you could - I don't expect you to have this information - I would like to know how much those board members are being paid in terms of their expenses. I don't think there are any stipends involved with it, but if there are I think the people of Nova Scotia should know how much the chairman is being paid and also what their mandate is, as we move towards the next election, this arm's-length organization that is not responsible to this House of Assembly, this place that we sit in and represent people of our areas, not responsible to this place, responsible to the minister and the people on the front benches and the bunker - that's who they are responsible to.

Nova Scotians will never know what deals are taking place here unless - using a coin of phrase of the Premier - they're ferreted out. In other words, nobody is going to tell us what deals are being done here and where they're being done and this group has $30 million. Well, I hope some of it finds its way into Cape Breton; I hope some of it finds its way into the Valley; I hope some of it finds its way to Guysborough. There are some areas of the province that don't need it perhaps right now, not making any direct comment on where, but I'm looking at one minister over there who had a helpful intervention a few minutes ago.

So maybe if you could take those questions and I will just take my seat in a moment, but I just want to say before I do, Mr. Minister, I believe there has to be something called equality and fairness here. The people I represent get the feeling that this government is pitting one part of the province against the other, realizing that their political chances on Cape Breton Island are next to nothing, and so they say because of that that they shouldn't spend any money down there, but it really bothers me that this government continues to

[Page 617]

piggyback on federal initiatives in Cape Breton and make statements and attend functions and cut ribbons when you don't have a dime in these projects. I really get upset about that when the federal government is trying to do what they can through the efforts of MPs Rodger Cuzner and Mark Eyking, and the efforts of the municipality with limited resources. The province, Mr. Minister, has not come to the table in Cape Breton - and if you want to answer, I know there are a number of questions there.

MR. CHAIRMAN: The Minister of Economic Development with six minutes left in the Cape Breton South member's turn.

MR. BALSER: We did have a shift change that I alluded to earlier on, and in fact the member opposite talked about the concern that perhaps NSBI would not be accountable before the House. The gentleman on my left is Chris Smith, who is the Vice-President of Finance for NSBI, and on my right is Shirley Carras who comes from the Office of Economic Development. So they are perfectly willing to come down here and sit on the floor of the House and answer direct questions. In terms of our commitment to . . .

MR. MANNING MACDONALD: I'm talking about accountability . . .

MR. BALSER: I'm talking about in terms of the client base that NSBI has; I understand that 26 per cent of the client base for NSBI is in fact from Cape Breton. It's the highest over six regions. In terms of the board itself, I can tell you that the board, representing some of the most powerful business people in the Province of Nova Scotia, basically does not take a significant amount of remuneration, and in some instances they have refused any level of compensation for their efforts, and in many instances it is simply to cover the costs associated with getting to the meetings, and obviously the representative from Cape Breton has the greatest distance to travel and so, therefore, has the most significant expenses - even at that the entire cost is in the neighbourhood of $20,000. That's for the entire board operation, so I would say we're being well-remunerated.

In terms of structure, I know the member is very concerned about Cape Breton, but there are people on that board whose business acumen, interest and expertise transcend geography. I can say with clear fact that when he talks of Cape Breton, certain parts not having representation, Digby County has no one on that board, and there are a number of other jurisdictions. Obviously when you have a John Risley speaking about issues, he speaks from an entire Atlantic Canadian perspective; when you have people like Larry LeBlanc, who is there because of his strength in the oil and gas sector, he speaks about oil and gas; Grace White brings her export knowledge to the table. It's about trying, in a board of 12 people, to capture as much expertise as is humanly possible.

[Page 618]

As I said earlier on, as we go forward, will those people change? Yes, and they should. In fact, I would go so far as to say one of the limiting factors of IEL towards its end was the fact that there was no rejuvenation of the board membership, they became very staid. I do not want to see that happen. I do not think it's good for Nova Scotia.

We are focused on Cape Breton. We are trying to balance the needs and, believe me, there are needs right straight across the province, from one end to the other. We will work with business opportunities in Cape Breton to make sure that where they make sense, they work. Cape Bretoners will get their share.

I must take exception to the fact that the member speaks about the lack of provincial participation. We have been at the table throughout this piece with as much money, in terms of the growth fund, as we could put in play. I can think of any region in the Province of Nova Scotia, if they had access to $3 million annually - I can see the chairman, and he speaks most eloquently and from the heart about the issues facing the Eastern Shore, and I can tell you if we had $3 million to put in the Eastern Shore, or $3 million to put in Lockeport, Shelburne County - it would make a difference. We are putting dollars to work in Cape Breton, and we will continue to do that. We will do it to the degree possible. We will do it through NSBI and through joint ventures and partnership with the federal government.

MR. CHAIRMAN: Good minister, always thinking of the Eastern Shore. Thank you. (Laughter)

MR. MANNING MACDONALD: Not much chance here when you have a "homer" chairman. (Laughter) That's what you get with a majority government.

You made two references, one to the client base, 26 per cent based in Cape Breton. I would like to find out who they are at some point. I would also like to acknowledge the fact that some of the people I know, I'm sure all of the people on NSBI are probably good people. I know they are. I've met Steve Lund, he's a great guy. I've talked to him about the problems. I don't have a problem with that. I have a problem with why this government decided not to put more people who were living in Cape Breton on this board to represent the interests of this high-unemployment area. That's my point. Maybe you will correct that, Mr. Minister, in the future, as they move on.

I had a great meeting with the NSBI people. I don't have a problem with them. I have a problem with the direction this government is going regarding its spending. I have a problem when you say accountability. The problem I have here is that NSBI can spend money, taxpayers' money, and probably, for the most part, will spend it wisely, but the difficulty is that I, as a critic, will not be able to ask you on the floor of this House about those business deals before they're done or while they're being done because there is no mechanism to do that. The board is responsible not to this Legislature in terms of its annual accounting, but it's responsible to the minister. I believe it's five years or something that it

[Page 619]

has to report. To me, I just don't think that's the proper way to go here, but I will reserve any future comment on that until Thursday.

MR. CHAIRMAN: Order, please. The time for the estimates today has expired. Honourable member for Cape Breton South, you have 24 minutes in turn on Thursday to complete your time.

The honourable Government House Leader.

HON. RONALD RUSSELL: Mr. Chairman, I move the committee do now rise, report considerable progress and beg leave to sit again on a future day.

MR. CHAIRMAN: The motion is carried.

[6:54 p.m. The committee rose.]