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April 25, 2002
House Committees
Meeting topics: 

[Page 621]



2:26 P.M.


Mr. William Dooks

MR. CHAIRMAN: Order, please. I would like to call the committee to order.

The honourable Government House Leader.

HON. RONALD RUSSELL: Mr. Chairman, would you please call the estimates of the Minister of Finance. (Interruption) Sorry, the Minister of Economic Development.

MR. CHAIRMAN: We will continue with the estimates of the Minister of Economic Development and Petroleum Directorate. I would like to recognize the honourable member for Cape Breton South with 24 minutes in turn.

The honourable member for Cape Breton South.

MR. MANNING MACDONALD: Mr. Chairman, maybe the Government House Leader called him the Minister of Finance because when this government first came to power, he was the minister of everything. He's right here now and now he's reduced to being the minister of the department of no development, which has been reduced 45 per cent in funding this year, and also the part-time Minister of the Petroleum Directorate. That's quite a comedown from the lofty heights that that minister occupied when this government first came to power. However, I'm sure there are reasons for that. Anyway, also, notwithstanding the fact that this department is nothing more than a ghost of itself, in the preamble, the statement is that the Department of Economic Development is the lead economic development agency in Nova Scotia. Well, heaven help us, with a total budget of $30 million, including administration. I shudder to think where we're heading in Economic Development with that grand total and that budget.


[Page 622]

I want to, in the remaining time left to me, Mr. Chairman, talk a bit about another responsibility of the minister and that's the ongoing responsibility for Sydney Steel, or what's left of Sydney Steel. There are a couple of points that I would like to make here. I believe, and still believe, that with the right number of people working to ensure that the company formerly known as Sydney Steel could break even would be around 400 people producing rails when the demand was there. I believe that the union and the government of the day were working towards that end.

The steel market, as you know, is very volatile and the fact is, however, that Sydney Steel was the only domestic rail producer left in Canada. Now it's gone. It's gone because of political manoeuvres by the then Tory Party, Third Party, now the government, to close Sydney Steel in order to curry favour with mainland voters. Well, it worked. They got elected on the backs of the steelworkers at Sydney Steel and the economy of industrial Cape Breton. But that's in the past and, Mr. Chairman, I'm leading up to something here with the minister.

I want to tell the minister that perhaps, in terms of part of the steel plant that was involved with making rails, the universal mill and the continuous caster, and the expertise that was there in making head-hardened rails, in particular, all of that is now gone. The place is closed. Padlocks are on the door and promises for steelworkers who weren't eligible for pension were broken and the plant was put up for a fire sale with its equipment. All of that happened at a time when there was an emerging need for rail, particularly head-hardened rail in Europe, which Sydney Steel could produce. Also, the United States was speaking about imposing countervail duties on Asian and European products coming into North America, particularly into the States, and lifting those countervail duties on Canadian products going into the States.

Now I don't know how much this government or how much the steel industry in Canada was lobbying for equalization, I guess, in terms of support for Canadian steel in the United States, but all of this happened at that time when this was going on. Now I'm not sure where that stands right now, but I do know that in Sydney there are two pieces of equipment there, substantial pieces of equipment: electric arc furnace, the universal mill and, of course, the continuous casters are all there. Now the rest of the inventory, equipment at Sydney Steel, was all put to a fire sale and disposed of. But I understand these major components are still there on the grounds of the plant.

[2:30 p.m.]

I guess there are a number of questions coming with this and I would like, Mr. Minister, for you to tell me now - and I don't want to go back in history about why the steel plant is closed. It's closed. It's not going to open up again as we knew it. I'm also a realist. I think we could have made a profit making rails in the future with about 400 people, not 800, the amount that was there before, but with about 400 people. When we didn't have an order, of course, we turned the lights out and went home. But if we kept the order book full

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and made the bottom line break-even or even make a dollar, then I thought it would have been a good road to go down, but that didn't work.

I want to know, Mr. Minister, my first question is, given the fact that these major pieces of equipment are still sitting at Sydney Steel, and you're still the minister responsible, I understand, that may not be so, but if it is, I don't know whether you're the minister responsible or if John Traves is running the whole place, but, I mean, you're still responsible for it as a minister. I would like to ask you, what is going to happen to the electric arc furnace and the other rail-making equipment that's presently on-site?

MR. CHAIRMAN: The honourable Minister of Economic Development.

HON. GORDON BALSER: I will go back a bit in the past in terms of the member opposite's preamble to his actual question. The government set a course and attempted to find a buyer. I agree. There might have been an opportunity for a workforce of 400. Unfortunately, we looked long and hard to find an operator. That failed. The member opposite, when he was responsible, looked long and hard and tried to find a buyer and failed. There might have been a possibility, but we are where we are today and we are going down the road of decommissioning and liquidation. So in terms of the two pieces of infrastructure he's speaking of, we're open for business and we will accept proposals and we will take what we view to be the most appropriate action based on a proposal. So it's on the market to be sold and will be sold.

MR. MANNING MACDONALD: Thank you for that answer, Mr. Minister, which leads me to another point I would like to raise here. It would be really ironic if that equipment that's world-class ends up on another site in Canada, or even in Nova Scotia, making rails in the future because the rail-making equipment is there. It's state of the art, particularly the head-hardening component of it, and it would be somewhat ironic if that equipment ends up somewhere else making rails.

I would like to turn my attention to Ernst & Young. First of all, I would like you to tell me, when I was the minister responsible for Sydney Steel in the dying days of our government, I was besieged with questions about the cost of Sydney Steel from members opposite, including the Premier and yourself. I want to know, since the plant closed, how much is the plant costing Nova Scotia taxpayers with the groups that are working on the plant in Sydney? I would also like to know how much this government has paid Ernst & Young since they took over the initial role as receiver and then assumed many, many other roles and went way beyond what they were supposed to be doing at Sydney Steel. I would like to know how much the taxpayers are on the hook for Ernst & Young and I would like to know how much Sydney Steel has cost the taxpayers of Nova Scotia since there's been nobody working there.

[Page 624]

MR. BALSER: In terms of what it has cost the taxpayers of Nova Scotia since we made the decision to move forward with the decommission and liquidation, in fact, from the time this government came to power, the day-to-day operations and where we are today has not cost the taxpayers of Nova Scotia any additional monies. We've been operating in this process through the dollars that were available in the Sysco operation itself, so there's been no new money in terms of the actual dollar amount of the contract paid to Ernst & Young or to any of the others. I will take that under advisement and provide that information, I don't have it readily available.

MR. MANNING MACDONALD: First of all, surprise, surprise, you didn't come within light years of answering the question. Do you mean to tell me Ernst & Young is working for nothing? Is that what you're telling me? I want to know how much Ernst & Young is being paid. I also want to know - and you can take this under advisement too - how many contractors are working at Sydney Steel that this government, your government, has contracted to do various stages of the decommissioning of that plant, including some remediation work.

I want to know how many people from off-Island, outside of Cape Breton, are working on that plant versus the number of people from Cape Breton. I want to know, if you can provide me with an answer, why local contractors in Cape Breton did not receive the work, remediation, in favour of contractors that came from as far away as Ontario. I want to know how that happened, how that was allowed to happen. And I want to know how much was received for the equipment that was sold off.

You talk about money that was in the Sysco account. When you were in Opposition, the Third Party, you continuously harassed the government about the fact that Sysco was costing money, now you're saying there was money in the pot to pay for all the work that's going on down there. You can't have it both ways, Mr. Minister. Either they were broke then (Interruptions) It was taxpayers money when it was there, now it's not, it was money that was in the account. What creative accounting.

Mr. Minister, you haven't got a clue. That's what the problem is, you haven't got a clue as to what's being spent down there, and neither do the two people to your left and right but it's not their responsibility, it's yours. You are going to take that under advisement. Well, take this under advisement, there are people working down there, making lots of money on Sydney Steel, but that money is not staying in the area, that money is going west. The people down there are getting awfully tired of this continuous harangue about the money that you people are supposed to be booking for the total remediation of Sydney Steel, and it's not being done.

Most of the money is not being pumped into the local economy, it's leaving the local economy. I want to know how much of that money is leaving the local economy. I find it particularly galling that this government would have to go off-Island, through its

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headhunters, Ernst & Young, and the other companies that are there, to bring people in to do the work at Sydney Steel when there are perfectly good contractors, some of them by the way of your political persuasion, down there who are somewhat upset with the fact that they can't get the kind of work that they need regarding that property.

Mr. Minister, you can't get away from the fact that the Government of Nova Scotia still owns Sydney Steel. You can put it out of your mind, but you still own Sydney Steel and you own the remediation work that needs to be done there. That work is substantial, and that work should be ongoing for the next 10 years. I'm saying to you, Mr. Minister, that if you really want to do something for that community down there that you spend the money you booked, that your Finance Minister booked, and you spend it by employing Cape Bretoners to clean up that site over the next decade. I further suggest that you could probably employ 500 people for the next decade, between federal and provincial partnerships, to clean up that site.

Make no mistake about it, you're going to have to clean up the site, whether you clean it up today or whether you clean it up tomorrow. I suggest what you're doing is waiting until your government falls, and then it will become our responsibility again to pick it up and clean it up. That's what will happen. That's what I think. If you can stall long enough, Mr. Minister, you won't have to put any money into it, because you didn't want to put any money into it in the first place. Now, to sit there and tell me that it's not costing the taxpayers any money down at Sydney Steel, that it all just came out of the sky - it was costing the taxpayers millions when we had it, but now the money is falling out of the sky, it's not costing anybody anything to decommission Sydney Steel - Mr. Minister, if that wasn't sad, it would be hilarious to hear that kind of an answer. You are going to get me the figures, and I appreciate that.

The budget this year - I know you're not going to give me the answer now but I can expect to get it from you at some point - for Sydney Steel, I would like to know how much it is for the year. Again, I would like to know how many Cape Bretoners are working at Sydney Steel versus how many people from off-Island are working at Sydney Steel. What is the budget being spent? I would like to know how much is being spent on consultants.

I understand, Mr. Minister, there are no less than four different companies doing various stages of decommissioning on Sydney Steel, but the problem is that the people hear about this decommissioning, they hear about what's going on in remediation, but they can't see any of it. Cape Bretoners are still wondering where they go to apply for these jobs. You can't even find that out. Do you know where you're directed? Go see one of those contractors at the plant. Do you know what the contractors say? Oh, we have all our people. Where are they from? Pictou County or Halifax or Toronto or the United States or Great Britain; they're from everywhere but Sydney.

[Page 626]

I'm saying, Mr. Minister, that the least that should have been done, if you were going to appoint contractors from off-Island in this particular job, then you should have made sure, through Ernst & Young and the guy who's really looking after Sydney Steel, John Traves - he's the minister of everything down there now - who's a very competent individual that along with the contractors that are appointed here, they must employ Cape Bretoners. (Interruptions) Yes, Nova Scotia first. I'm going to tell you that didn't happen. There are people still looking to get work at Sydney Steel, and there are people living in hotels down there who are working at Sydney Steel.

There's something fundamentally wrong with that. You can say, well, we contracted it out, it's somebody else's problem. I suggest to you that you're still the minister for Sydney Steel, John Traves works for you and he works for the Government of Nova Scotia. You can abandon that responsibility, Mr. Minister, all you want, but you and your Premier and the Education Minister are going down in history, no matter whether you like it or not, as the people who put the padlocks on Sydney Steel and the economy of industrial Cape Breton. You can argue until the cows come home whether it's right or wrong, it doesn't make any difference. You people are going to wear this as long as you live and long after that, from the people down in our area.

The least you could do, Mr. Minister, is ensure that as many as possible or as much work as possible goes to as many Cape Bretoners as possible, on that remediation, and that that remediation kicks into high gear. There's a need to do something with that site. There's 100 years of steelmaking there. You have good equipment that has to come off that plant at some point. I will stand in my place here someday and say that I told you that equipment would be working making rails somewhere else, maybe in Pictou County or maybe somewhere else. All I know is that it won't be in Sydney, because it will be gone long before we get a chance to keep it there. I understand there are people looking at taking it and perhaps setting up a rail mill somewhere.

What's left of the plant needs to be cleaned up. We shouldn't have to come here every year and ask the Finance Minister, you booked money for the cleanup of Sydney Steel, what are you doing? Why is the site still looking like it does? Why aren't there 500 people working on a remediation project there? What did you do with the hundreds of millions that you booked to make Sysco look even worse than it already did on the books at that time?

Again, I believe local contractors are upset because they're not getting the kind of work they expected in remediation down there. Also, I know that there are people still walking the streets, who worked at Sydney Steel, because you didn't fulfill the promise you told them you were going to fulfill in the Steelworkers' Hall. You walked in there and told them one thing, and you walked out, shrugged your shoulders and said, I'm out of here. It's very few and far between, the times you've been back there since that announcement was made in Sydney.

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Mr. Minister, I think the taxpayers of this province have a right to know how much you're spending down there. They have a right to know how many non-Nova Scotians are eating up Nova Scotian tax dollars on that plant, how many contractors are lining their pockets as a result of these contracts instead of employing Cape Bretoners, contractors, who could do the job.

[2:45 p.m.]

It's no good to go through freedom of information on this. That's impossible now. This particular situation at Sydney Steel is so confusing now with the contractors that are there, they're tripping over each other. They come from everywhere. They're down there with equipment that's been brought in, instead of using local equipment, maximizing their profits, taking those profits out of the area and the work is all too slow. I want to know, at some point we will be able to find out - I guess in about a year's time when we get a more in-depth look at the books of this province - how much money was spent in the last couple of years on Sydney Steel and who reaped the benefit of that spending. I can tell you this, it's not the labour people in industrial Cape Breton who are reaping the benefits. It's not the local contractors who were used to getting work at Sydney Steel and are not getting it anymore.

People are wondering about the equipment down there, where that equipment is going, how long it's going to be before the remediation program advances to the point where people can actually see something happening. Or is the government just ragging the puck here until the next election and if you happen to pull off a miracle and win the next election, then you will worry about it then. If you don't win the next election, it's our problem again. The government will have said, we achieved two goals here: we got rid of Sydney Steel - and they're going to erect a monument to the Minister of Education for that someday down in Sydney, list of well-known traitors to industrial Cape Breton; and the second thing you've achieved is you've ragged the puck long enough where you won't have to spend the kind of money on remediation you should be spending and you will leave that to somebody else. My point is, this government couldn't care less about the remediation or Sydney Steel or the properties surrounding it. It never did and still doesn't.

The percentage of Cape Bretoners working on the remediation - there are people in the Cape Breton District Labour Council who are wondering why they're not getting jobs, the tradespeople are wondering why there are tradesmen coming in there. As I mentioned to you the other day, there are Cape Breton electricians who worked down there wondering why they can't get on the Eirik Raude here in favour of people coming from Great Britain and Newfoundland. You sat there and started talking about the numbers of Nova Scotians working over there. I'm telling you, Mr. Minister, that there are Cape Breton electricians with the proper credentials and qualifications who can't get work there, but people from Great Britain, Newfoundland and Toronto can; people from Sydney can't. The least you can do is take a minute and ring up the contractor over there and say, by the way, why aren't you

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hiring Nova Scotian electricians? That wouldn't be too much to ask, surely it wouldn't be too much to ask.

I would also request - and I know that your very qualified people there are marking down all this information I'm looking for, they're taking notes, yes. I would like to remind the minister he still has time. This minister still has time to redeem himself with the people of Sydney. You still have time, Mr. Minister, to be exonerated. You still have time to save your reputation by going down and asking the contractors there to please hire Cape Breton labour on that remediation instead of allowing imports to come in from everywhere west of the Canso Causeway. There's enough people in industrial Cape Breton to do that work without going outside looking for them, so you still have a chance. I'm giving you a last chance to redeem yourself in the eyes of the people of Cape Breton. And I would be happy to walk down the street with you in Sydney - I wouldn't right now, it would be too dangerous right now, but I would be happy to walk down the street - and introduce you to some fine people if only you would repent and come on-board and come onside with appointing Cape Bretoners at every chance you get in the remediation of Sydney Steel.

I understand my time is drawing to a close.

MR. CHAIRMAN: The honourable member has about half a minute.

MR. MANNING MACDONALD: I guess it's too late to ask any questions of the minister at this juncture. But you know, I find when addressing this particular minister that it's better to talk because you don't get any answers anyway. Thank you very much.

MR. CHAIRMAN: Next is the NDP caucus and I believe when the NDP puts in 26 minutes, the time for Supply will have been expended.

The honourable member for Halifax Chebucto.

MR. HOWARD EPSTEIN: Mr. Chairman, it's been several days now since we heard the minister's introductory remarks when he described for us the activities of his department. It was a memorable speech the minister gave us, it certainly sticks with me and it sticks with me for the following reason. It's been a long time since I have heard an address that was so riddled with clichés. They were, to give the minister his due, at least, business clichés.

Did we hear from the minister that he was going to go forward? Yes, we heard from the minister that he was going to go forward. Did we hear from the minister that he was going to lead the way? Yes, we certainly heard that from the minister. Did we hear from the minister that it's a competitive world? Well, we certainly heard that phrase from the minister. Did we hear him make reference to the business climate? Yes, we certainly heard from the minister about the business climate. Did we hear from the minister that he was aware of such things as critical mass? Yes, we certainly heard from the minister that he was aware of such

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things as critical mass and that we ought to be aware of such things. And on and on it went for quite a long time to no particular point.

Unfortunately this seems to characterize pretty exactly what it is that we're getting from the minister and his department so I want to point out why it is and what it is that is the difficulty that we have. We all know that in politics it's difficult enough to get agreement on where we would like to go. But even if we could agree on where we would like to go, we have to get some agreement on the path we're going to use to get there. It doesn't seem to me that we have any agreement in this Chamber among the various Parties of where we would like to go, the path that we ought to follow or even where we are at the moment. But at least I might start by making some comments on where I think we are with respect to the minister's department.

We just heard comments from the former minister who held that portfolio in a previous government that he seems to lament the much diminished budget of that department. I heard him mention that several times. In fact, of course, although there's been some reduction in the total amount of dollars, really the chief feature under this minister's tenure has been a splitting off, virtually a division into two equal parts of the way the budget inside that department is administered. That is to say, of course, with the creation of Nova Scotia Business Inc., half the budget of what was the former department was given to a so-called independent entity.

We now see, although it's something less than half - about $25 million or $26 million given over to NSBI, with a residual of approximately $30 million to be administered by the department itself. So, although of course the total amount is a bit diminished, you have to put them together in order to do a reasonable comparison.

That seems to be where we are at the moment in terms of the perspective that the government has put together in order to try to - in the minister's words - go forward with its economic development plan.

If you're going to go forward, in the minister's memorable words, then you have to have some kind of solid business plan to follow. I'm a little concerned and I want to put on the record with the minister my concern about what it is that Nova Scotia Business Inc. is supposed to be doing. If we look at the documents that were tabled with the House along with the budget, part were the business plans for the different Crown Corporations. But when you look at what NSBI is supposed to be doing under its business plan, all we find is an absence of information. If you turn to the section that has to do with outcomes and outcome measures, the section that really ought to tell us the nitty-gritty, the information is missing. It's indeed outcomes and outcome measures that in the budget estimates where we look at the details that we're interested in, we would like to know crucial things like what sectors exactly will be developed, how many jobs, what revenues to the province, but when you look

[Page 630]

at it, when you look at what it is that actually appears in this document, what you find are blanks.

They have put in three letters when it comes to the targets for this fiscal year 2002-03, capitalized TBD, to be determined. In other words, we haven't the remotest idea of what our targets and outcomes and outcome measures might be and it goes on page after page for the business plan of a Crown Corporation. Is this a business plan that someone could take to the bank? I don't think so. If this company had to go to the bank and try to borrow money based on this as a business plan, any lender in the private sector would look at it and say what on earth are you talking about - to be determined? Don't tell me that your target, in terms of jobs, income and revenue, are to be determined and ask for money. If you're coming to me as a private sector lender and asking for $25 million or $30 million, they would say don't come to me and say my targets are yet to be determined, but that's what the minister is doing here.

That's what budget estimates are all about. He is coming to the people of Nova Scotia through this Legislature and saying give me $25 million for my entity so that we can spend them and here's our business plan. We will convince you by our business plan and here is our target. Look at this, for Core Business Area 1, Business Attraction in the category of Expansion of business activity, Incremental growth in jobs and wages, target for 2002-03, TBD. In that same core business area, Business Attraction, Incremental increase in tax revenues, the target for 2002-03, TBD. That's Core Business Area 1, Business Attraction.

What about Core Business Area 2, Business Retention and Expansion. Same thing, target for 2002-03, TBD. Core Business Area 3, Trade and Export Development, the target for 2002-03, TBD. TBD, I remind you, Mr. Chairman, means nothing. It's a blank, to be determined, we'll let you know later, mañana. Core Business Area 4, the last one on the list, Business Finance, target for 2002-03, same thing in those categories, Incremental growth in jobs and wages, Incremental increase in tax revenues, TBD. Thank you very much. Any private sector lender would show the door pretty darn quick to some entity that came forward asking for $26 million based on those two or three pages. That's exactly what it is that this Chamber, representing the public of Nova Scotia who are being asked for their hard-earned dollars to invest in the activities of Nova Scotia Business Inc., should likewise say to the minister and to this government - show them the door pretty darn quick based on this kind of documentation.

Do we know from any other sources, we have to ask ourselves, what it is that the minister and Nova Scotia Business Inc. might be planning on doing? Unfortunately, the little that we do know so far is that they've been spending one heck of a lot of money with not much to show for it in terms of any solid returns for the people of Nova Scotia. I made reference in the House the other day to the kind of expenditures that we have seen so far, $20,000 right off the bat in order to pay the board of NSBI although I should note in passing that apparently to the credit of at least two members of the board, their zero fees show on the

[Page 631]

detailed listing. Perhaps at some point the minister can explain to us if it's just because they haven't attended the board meetings yet, or the cheques haven't been issued, or they're in fact serving pro bono, at no charge. I hope the last category, the last reason, is in fact the explanation and perhaps the minister will enlighten us on that small point but, nonetheless, it's still $20,000 right up front for the board in order to give some advice.

[3:00 p.m.]

Now, the whole point, the whole idea about NSBI, was that it was supposed to somehow make this business of the government taking public dollars and lending them out to try to stimulate growth in different sectors of the economy beyond political interference. The idea is that it was to be at arm's length, we were told, from the government and we hoped that it would be a good idea. We hoped that if, in fact, this activity, this dubious activity was going to be engaged in, that it might be done in at least some kind of rational, detailed, explainable and understandable fashion. Not based on that business plan, no business plan, nothing there, shouldn't be spending money at all based on that business plan if that's the current state of play and I remind the minister that that business plan was tabled in this House just a couple of weeks ago which means it should be pretty current and yet in the absence of having developed any targets, any detailed knowledge, any detailed business plan by NSBI, they've been spending money hand over fist, including $17,000 of expenses by the president right off the bat.

How is it that they've managed to spend $17,000 just by the president right off the bat in terms of his travel and entertainment expenses if they don't have a business plan, if they don't know what it is that their targets are, if they don't know what they're after, if they haven't an idea of exactly where it is they're going. It seems they know they're going to Atlanta. We know that, that's fine, but I think that when it comes to Nova Scotia Business Inc. going somewhere, what we're interested in is where they're going in terms of creating jobs and revenue here in Nova Scotia for our benefit.

We know, because at long last it has been released to us under an FOI request, that the president himself has a very comfortable contract for the next five years, an interesting point, quite a bit of security of tenure, good terms, certainly one well-paying job has been created as a result of this and we know from looking at the salaries of the top 20 people at NSBI that $1.4 million is going to be spent for them. Well, they're doing quite well, but 20 well-paying jobs at NSBI is not I think what it is that Nova Scotians had in mind or want to have in mind if the minister comes and says give us $26 million for NSBI and have faith based on this two- or three-page vacuous business plan that has come forward. What they want to know is results and what they want to know is whether this, in fact, is really going to do something for people in Nova Scotia.

[Page 632]

So far the evidence is missing and we have to ask ourselves a previous question, whether we ought to be in this line of work at all. Should the government, in fact, be engaged in this kind of activity? Now, I think about this in the following way. I'm guided in my thinking by what I thought were some trenchant remarks of the former deputy of that department when he came to the Economic Development Committee just a few months ago in December and spoke to us about what it is that the government's role in economic development could be and you know what he emphasized? He emphasized that it's not the responsibility of the government to be engaged really in job creation in a direct way.

He said that what it is that the government can do is be a facilitator and an enabler, that the emphasis ought to be on things like tax policy, a climate that will attract investment, perhaps to invest in infrastructure by which he meant such things as transportation and so on, perhaps ports work. Do you know what? He didn't list, unfortunately, education, but education, of course, is a wonderful investment as this government should recall when it first looked to Voluntary Planning six months after it was first elected to advise it on ways to cut back on government expenditures and they asked for the advice of Voluntary Planning; they were told by that special committee that there were a variety of fiscal and managerial steps that they could take, but the one thing they ought not to do is to cut back on their expenditures in education, they ought to increase them. Education was an investment they said.

So I was a little disappointed that the deputy I don't think actually included a well- educated population on his list as one of the things that the government could best do and it would probably be the best investment of dollars in terms of increasing economic development, both in the short and long term in this province. But, nonetheless, the deputy's analysis was quite right. It's not so clear what it is that the government can do in order to directly create jobs. They can certainly create a climate and they can invest in ways that promote the growth in the private sector of a variety of activities. Yet, the bulk of the money that NSBI has is apparently targeted to try to give investment loans, tax rebates, stimulus to individual companies in different sectors.

We have to ask ourselves, whenever someone comes, some private sector enterprise, to the government and asks for a loan, a payroll rebate, some kind of investment, no matter what form it may take, the basic question you ask is, why can't you get this money from a private sector lender? Why is it that a bank or a credit union or a trust company will not put its money into your venture? You have to ask, why is it that you can't issue shares and get investors, either on the stock market or with respect to attraction of investor capital? That threshold question is one which should always be asked. Interestingly, it is actually in the regulations that have now been adopted for NSBI that, at least in some form, that question has to be asked. But just to say that you asked that question doesn't mean that you're thorough or that you give hard scrutiny of the answers. Because one would think that, generally, if hard scrutiny were given to the answers, then there wouldn't be loan guarantees and the various kinds of subsidies that NSBI is encouraged to indulge in.

[Page 633]

Now there may be some residual area for the government to be involved in this kind of activity. But at the very least, I don't think we should say that we're engaged in it with glee and, so far, about the only examples that the government has come up with to show us what it is that it is doing to create jobs through its agency, through its crafted agency, has been an array of call centres in different parts of the province. Now the minister knows that there is one positive thing to be said for call centres. It's that it's a quick and easy infusion of jobs and in areas of the province where the circumstances of the economy are so difficult that they are needed, that is immediate jobs are needed, it makes sense, but it makes sense only as a transition to something else, because to try to build our future on something like call centres is a great mistake and it's a great mistake for a variety of reasons and the minister well knows it.

Here's the main problem. Call centres are extremely mobile. They can locate anywhere. They can locate here. They can locate in Quebec, in New Brunswick, in any other Canadian province. They can locate anywhere in North America. They can locate anywhere. It doesn't take much in terms of physical infrastructure for them to pick up from one jurisdiction and move to another. The difficulty for us is to know whether call centres are going to stay here longer than the five to seven years of payroll rebates that we are offering them. That's the key issue. So the best we can do is look at those kinds of jobs, which are not often high-paying jobs. In many instances, they're part-time. There's a lot of turnover. The problem is, will we keep them for a long time? It doesn't matter that we have a talented workforce - that's great. If the company's happy with a talented workforce, that's good, but it doesn't prevent them moving on to the next jurisdiction that gets engaged in the bidding war in order to offer subsidies to those companies. So we can't build our future on that; no area of the province can build its future on that.

I heard the minister talking, and I heard the Minister of Finance talking just today again about economic growth in Nova Scotia and how wonderful it was, but you know, in the Economic Development Committee we hear from members of the minister's own Party who not infrequently point out that in their areas of the province there are serious difficulties. We hear from the member for Eastern Shore that the Eastern Shore is having a lot of trouble in terms of economic development and he's made that point articulately on behalf of his constituents that there is a problem there. We hear frequently from the members who represent various parts of Cape Breton that there are serious economic problems there. We heard from the member for Yarmouth that there are economic problems in his part of the province.

Now, when you look at it, it may be that there's a lot of economic activity and it may be that there's been some growth in our GDP, and it may be that it's second to Alberta's in terms of percentage, but we still start at a low GDP in any event. However, even given that there's activity, you know where it is. It's right here in metro. It's in my constituency; that's where it is. It's in the constituency of the member for Halifax Needham. It's in the constituencies that are here which is a well-known phenomenon that it's the urban areas that

[Page 634]

have been the engines of economic growth, which is why 8,500 moved out of Cape Breton Island in the last five years, according to the census that was done; 8,500 people left Cape Breton Island in the last five years. Now they didn't leave because they don't like it there. Anyone who's fortunate enough to be able to live in Cape Breton would want to stay there if there was a job, if there was a way of making a living, they would want to stay there. They were squeezed out because of the absence of economic opportunity for them. So there's a serious regional problem, a serious regional dimension that has to be understood when it comes to thinking about economic development in this province.

So I understand why it is that the minister might say that in those areas that are in tough economic circumstances, it may be that call centres are a useful activity, it may be a good investment, but let's be clear that it's only a short-term investment, it's not the kind of thing that is going to produce long-term jobs, or if they do we can be very thankful, we can be happy, but it sure isn't the kind of thing that anyone should be building their area's future on.

I know from going around talking to the people who are in charge of the regional development agencies in the various parts of this province that they have worries. I'm talking about the RDAs in the rural areas. I've been out there and I've talked with them and they are concerned. However happy they might be in their area of the province to have a call centre coming up, they know that they cannot assume that those jobs will be there forever. They regard them as transition. They regard them as a step to the next thing. They know they have to diversify their economies. They know that they have to get as much value-added out of what are often industries based on our natural resources in those areas. I'm thinking here about counties like Lunenburg or like the minister's own home county of Digby, that those kinds of anchor jobs have to be present in those communities.

So I think that the minister has lots of work ahead of him if he's going to do what he describes as lead the way and go forward and take care of Nova Scotia in a competitive world, and improve the business climate and build some kind of critical mass, just to pick out a few of the phrases that were so memorable in his original introductory statement to us. That's on one side of the departmental estimates, the whole question of NSBI.

Mr. Chairman, I see that unfortunately there's a limited amount of time left. I really did want to go through, with the minister, some details of his own core department spending, but I'll just point out to the minister yet again that it did not escape our attention that in his provision for losses on doubtful accounts that he indulged himself in some amazingly creative accounting in writing in the virtually imaginary number $500,000 in provision for losses on doubtful accounts. It's a sorry story, but the truth is that over the years it's been in the range of $10 million to $20 million every year. So I'm sorry the minister has actually tried to sell us a small bill of goods with respect to that. It's unfortunate and, as the minister knows, no one was fooled by it. I can see the minister is itching to actually answer a specific question, so I wonder if he can help us out when it comes to . . .

[Page 635]

MR. CHAIRMAN: Order, please.

MR. EPSTEIN: Oh, say it isn't so, say it isn't so.

MR. CHAIRMAN: Order, please. I must inform all honourable members in the House that the time allocated for estimates in committee has expired.

Shall Resolution E3 stand?

Resolution E3 is stood.

Resolution E20 - Resolved, that a sum not exceeding $25,600,000 be granted to the Lieutenant Governor to defray the expenses in respect of Nova Scotia Business Inc., pursuant to the Estimate.

Resolution E21 - Resolved, that a sum not exceeding $7,069,000 be granted to the Lieutenant Governor to defray expenses in respect of the Nova Scotia Petroleum Directorate, pursuant to the Estimate.

MR. CHAIRMAN: Before I recognize the chairman of the subcommittee, the honourable member for Cape Breton West wishes to make an introduction.

The honourable member for Cape Breton West.

[3:15 p.m.]

MR. RUSSELL MACKINNON: Mr. Chairman, I would like to introduce to you and through you to all members of the committee two very distinguished Nova Scotians from my riding. They come from the wonderful community of Marion Bridge. They're seated in the west gallery. I would ask if all members of the committee would extend a warm welcome to D'Auvergne and Marlene MacDonald from Marion Bridge. (Applause)

MR. CHAIRMAN: Yes, indeed. Welcome to our guests from Marion Bridge, the MacDonalds. We are very pleased you're in the House this afternoon. I hope you enjoy taking in the proceedings. Also, welcome to all our guests in the gallery.

The honourable Chairman of the Subcommittee on Supply.

MR. DAVID HENDSBEE: Mr. Chairman, I would like to advise the House that the Subcommittee on Supply has met and dealt with the resolutions and the estimates that were given before it. We met from April 9th to April 25th and concluded our business. We have reached our 40 hours of debate, and the estimates have been discussed and carried, I shall

[Page 636]

report to the House. I would like to file with the House the estimates that we have dealt with, as well as the information that was received during that committee's deliberations.

MR. CHAIRMAN: The report is received. Shall all remaining resolutions carry?

Order, please. A recorded vote has been called for. The bells can ring, of course, up until 4:17 p.m., or until the Whips are satisfied.

Ring the bells. Call in the members.

[3:18 p.m.]

[The Division bells were rung.]

MR. CHAIRMAN: Order, please. I would like to bring the Committee of the Whole House on Supply back to order. The question before the committee members is shall all remaining resolutions relative to the estimates carry. A recorded vote has been requested. I would ask the Clerk to conduct the roll call.

[The Clerk calls the roll.]

[4:17 p.m.]


Mr. Rodney MacDonald Mr. Corbett

Mr. Christie Mr. Deveaux

Mr. Baker Ms. Maureen MacDonald

Mr. Russell Mr. Holm

Dr. Hamm Mr. Manning MacDonald

Mr. LeBlanc Mr. Downe

Mr. Muir Mr. Gaudet

Miss Purves Dr. Smith

Mr. Fage Mr. MacAskill

Mr. Balser Mr. Wilson

Mr. Parent Mr. Boudreau

Ms. McGrath Mr. Samson

Mr. Ronald Chisholm Mr. MacKinnon

Mr. Olive Mr. MacEwan

Mr. Morse Mr. Steele

Mr. MacIsaac Mr. Robert Chisholm

Mr. DeWolfe Mr. Estabrooks

Mr. Dooks Mr. Epstein

[Page 637]

Mr. Langille Mr. Pye

Mr. Chataway

Mr. Clarke

Mr. Hendsbee

Mrs. Baillie

Mr. Carey

Mr. Morash

Mr. Chipman

Mr. Barnet

Mr. O'Donnell

Mr. Hurlburt

THE CLERK: For, 29. Against, 19.

MR. CHAIRMAN: The motion is carried.

[4:21 p.m. The committee adjourned.]