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April 26, 2016
Supply
House Committees
Meeting topics: 
CWH on Supply (Business) - Legislative Chamber (1894)

 

 

 

 

 

 

 

HALIFAX, TUESDAY, APRIL 26, 2016

 

COMMITTEE OF THE WHOLE ON SUPPLY

 

3:25 P.M.

 

CHAIRMAN

Mr. Gordon Wilson

 

            MR. CHAIRMAN: The Committee of the Whole on Supply will come to order.

 

The honourable Government House Leader.

 

            HON. MICHEL SAMSON: Mr. Chairman, would you please call Resolution E2.

 

Resolution E2 - Resolved, that a sum not exceeding $137,450,000 be granted to the Lieutenant Governor to defray expenses in respect of the Department of Business, pursuant to the Estimate.    

 

MR. CHAIRMAN: I now invite the Minister of Business to make some opening comments, if he wishes, and introduce his staff to the members of the committee.

 

            HON. MARK FUREY: Mr. Chairman, I'm pleased to be here today to introduce the 2016-2017 budget for the Department of Business.

 

Before I begin, I do want to acknowledge the extensive support that I've been extended within the Department of Business, within Service Nova Scotia, and within each of the five Crown Corporations that I'm responsible for within the portfolio of Business.

 

            The past year has been nothing short of a transformation. Without the support of the whole team, both departments, it would not be possible to do the work that we do. I want to take time to acknowledge all of the staff who are contributing on a regular basis to the work that's being done on behalf of Nova Scotians.

 

            Joining me here today is Laurie Bennett, the financial subject matter expert for the Department of Business. Laurie will be providing support throughout the day and the time that we are in the Chamber. Also here is Vimy Glass. I call Vimy the general subject matter expert because she has general subject matter expertise in everything.

 

            As subject matters arise that may vary and require more technical support, there is any number of a group of staff, colleagues, and co-workers in the gallery that we would ask permission, Mr. Chairman, to substitute in to ensure that we are providing the most detailed and appropriate response that we can to my colleagues on the opposite side of the floor.

 

I'm always reluctant to introduce individuals by name because I'm always fearful that I will forget somebody. I'm simply going to refer to the representation that is in the gallery - we have representation here today from the Crown Corporation Innovacorp, Nova Scotia Business Inc., and Tourism Nova Scotia, as well as the Trade Centre Ltd., and Waterfront Development. They will substitute as the subject matter requires.

 

            The report of the One Nova Scotia Commission, back in 2014, clearly established for Nova Scotians that we face significant challenges as a province. Our population is in decline and our province's economy continues to struggle as government spent more tax dollars, ran more deficits, and increased our debt. Despite all of this spending, Nova Scotia had the slowest growth and real GDP of any province in Canada between 1990 and 2013. The One Nova Scotia Commission set ambitious goals to help reverse our fortunes and put us on the path to prosperity. They issued a call to action for all Nova Scotians to take ownership of our issues and to do their part.

 

The authors, Mr. Chairman, did not provide solutions. They expected average citizens, community leaders, and private-sector leaders to step up - and we have seen it. They're leading specific initiatives in any number of communities across the province. Government too must do its part, and we believe we are.

 

            The commission was clear - government can't spend its way into economic prosperity. Only the private sector can create jobs and new wealth. Our role as government is to ensure the right conditions for private-sector growth by creating a favourable business climate and reducing barriers to red tape. In short, government's job is to make it easier for business to do business in Nova Scotia.

 

Since forming government, we have taken a fundamentally different approach to economic development. We focused on taking the politics out of economic development. We closed the Cabinet-controlled Jobs Fund, and we created Invest Nova Scotia led by a private-sector board to focus on investments and projects that will benefit broad sectors and regions. We changed legislation and policies to put more decision-making authority into the hands of private-sector-led agencies and Crown Corporations. We passed the Accountability and Economic Development Assistance Act requiring that spending on economic development and our progress be reported to Nova Scotians on our accountability website. This makes us the most open and transparent government in Canada when it comes to how we spend economic development dollars.

 

The creation of the Department of Business and Office of Regulatory Service Affairs and Effectiveness last year was an important step in our process to change how we approach economic development. There are many government departments and agencies with a mandate for economic development. Dozens of reports over the years have told us that we need more focus, better coordination, and greater clarity of roles to deliver better results. The Department of Business was created to help address that. We are a flexible and effective policy shop. The department's role is clear - we are here to help create the right environment for growth, and we are here to ensure the fundamentals are in place so we can capitalize on opportunities for economic growth.

 

We want to improve Nova Scotia's competitive advantage by building our capacity in high-potential clusters. Clusters are broader than sectors or industries; they are geographical concentrations of interconnected companies, concentrations of specialized suppliers, firms in related industries, service providers, university and college research labs, and other associated institutions in particular fields that compete, but also co-operate.

 

Mr. Chairman, I use the phrase of one of my work colleagues in the Department of Business who calls this now "co-opetition", and I think it appropriately identifies those objectives and the work that is actually being done.

 

Our three priority high-potential clusters are ocean industries, agri-food and seafood, and information and communications technology, or ICT. It's important to note that government did not select these three clusters - rather, they emerged. They represented areas where many entrepreneurs are stepping forward and making strong contributions to Nova Scotia's economy. We are building on that work led by the private sector. These three clusters represent areas where Nova Scotia has competitive strengths and comparative advantages. They are large, with significant growth potential and collectively make up more than one fifth of Nova Scotia's GDP. I'll speak first, Mr. Chairman, about the ocean industries cluster.

 

Nova Scotia is shaped by the sea, and this cluster is perhaps the area where we have the most assets, with activity in shipbuilding, defence, energy, traditional fishing, ocean technologies, and marine tourism. We also have a concentration of oceans-related research labs, post-secondary educational programs, industry associations, and public service programs. Ocean activities account for roughly 22,000 jobs with a GDP impact of $1.7 billion. There is a great deal of work happening, including work on the $25 billion shipbuilding strategy, our aquaculture strategy, and the Centre for Ocean Ventures & Entrepreneurship - commonly referred to as COVE - which is an ocean incubator plan for the Dartmouth Coast Guard site on the Dartmouth side of the harbour.

 

            Mr. Chairman, I'll speak briefly to our agri-food and seafood sector. Our second-priority cluster is agri-food and seafood. This sector represents our traditional strengths in fishing, aquaculture, and farming. It supports activities such as direct food production, wholesalers, distributors and retailers, infrastructure, transportation and storage systems, as well as marketing, research, and other consulting services. The agri-food and seafood cluster represents 26,000 jobs and a GDP impact of $1.4 billion. This cluster is a big employer in rural Nova Scotia and has seen significant growth in both traditional industries such as lobster fishing, and newer areas such as wineries, distilleries, and breweries. Seafood exports alone grew by 33 per cent this past year - that's $420 million injected into new business.

 

            Information and communications technology is commonly referred to as ICT. ICT is an enabler that touches a number of key industries and produces technologies and advancements that can contribute to the renewal of our rural resource-based industries. The ICT sector already accounts for 8.2 per cent of Nova Scotia's business sector output compared to the Canadian average of 7.7 per cent. In Nova Scotia, this sector has grown 20 per cent over the last ten years and accounts for the vast majority of high-tech start-ups and venture capital investment.

 

            As I mentioned earlier, these three clusters are very broad, encompassing many sectors and industries in Nova Scotia, and we believe that by coordinating and focusing greater efforts and resources we will achieve growth. Our government is focusing on growing business confidence and on creating the conditions for these critical clusters to grow.

 

            When the One NS report was released just over two years ago, we said we needed transformational change. Following the release of the report, government established the oneNS Coalition to develop a ten-year collaborative development plan, and that plan - entitled We Choose Now or referred to as the playbook - was released this past fall. The playbook has seven key themes: the Early Years: Starting Strong; Our Future is Young; Universities and NSCC as Innovation Hubs; Immigration and Welcoming Communities; Our ICT Momentum; Going Global; and Nova Scotia's Ocean Advantage. The playbook aligns with and complements our directions for private-sector growth, particularly in the areas of innovation, exports, ICT, and oceans.

 

            Mr. Chairman, transformational change takes time and it takes the engagement of all citizens, and it takes patience. Plans such as these are necessary. They lay the foundation needed to put the province on a positive trajectory. Still, people want to see, and expect, action right away, and there is action all around us on the part of many. We are beginning to see the evidence and results of hard work. Through sound fiscal management and careful spending, we have been able to make investments that matter most to Nova Scotians and to make tangible progress towards our shared goals.

 

We're supporting the early years through investment in child care and the Education Action Plan, and we're the first province in the country to introduce coding in schools. We're providing opportunities for young people to build their futures here. The Graduate to Opportunity program helped more than 100 new grads start their careers in Nova Scotia, and we're doubling the program in 2016. We also filled 70 vacant provincial government positions with recent graduates and young Nova Scotians in the Make It Here initiative.

 

In 2015 alone, Nova Scotia netted 1,300 more full-time jobs for young men and women. Our youth unemployment rate is now the lowest it has been since 2008, and it was the lowest in Atlantic Canada for 2015, and we lead the country in the reduction of youth unemployment. These are outcomes as a result of the work of individual departments and the colleagues who work within those departments.

 

            We doubled the number of nominees under the federal immigration program to 1,300 per year, and we fulfilled those targets; in fact, increased immigration was responsible for the population increase we saw in January. Nova Scotia now has the largest population we have ever had. We also created two new immigration streams for business, so now it's easier for entrepreneurs and international students to immigrate to Nova Scotia.

 

The Office of Regulatory Affairs and Service Effectiveness is making it easier for businesses to operate here in Nova Scotia and within the Maritime Region. We know we don't move an economy forward by creating more laws, more regulations, or more red tape. We have a responsibility. Instead we need smart and efficient government, we need fewer needless regulations, and we need to cut red tape. The impact of the new office has already been seen. The culture is being developed across all of government to ensure we work with the Office of Regulatory Affairs and Service Effectiveness when crafting new or updated regulations.

 

We are also taking a sector-by-sector approach to improving how services are delivered to businesses. Through Service Nova Scotia we've created a series of online bundles for the restaurant and accommodations industries and convenience stores to make it easier, faster, and more convenient for businesses to interact with government. All this activity in support of economic and private-sector growth needs to be aligned for maximum impact. We cannot grow our economy if one government department doesn't work with another, or the government doesn't work as effectively as possible with the Crown.

 

Our budget for the Department of Business supports our mandate, and it also reflects some of what we've referred to as legacy work. Our first budget in 2015-16 was approximately $114 million. The year-end forecast shows we are over that amount due primarily to changes in the valuation of the Nova Scotia Jobs Fund and the transfer of the signature resorts from the books of the former ERDT to Tourism Nova Scotia.

 

I would like to take a moment to speak about the Nova Scotia Jobs Fund since this will be an ongoing issue for future budgets. It's also the biggest line item in our budget apart from the grants to Crown Corporations. As I've mentioned, the Jobs Fund closed in 2014, but we continue to manage and administer previous commitments. There are more than 100 investments in the Jobs Fund, and all of these files contribute to the fund's year-end results of being nearly $16 million over the initial estimate of $37.5 million in 2015-2016.

 

Many factors influenced the final budget outcome including incentives being paid earlier or later than planned, bankruptcies or receiverships, investments deemed to be in financial difficulty, or payments being received on investments that were thought to be in financial difficulty. Staff do their very best each year to estimate the total impact of the fund, but the factors mentioned above make it challenging and, sometimes, the fund is over or under estimate as a result. We will deal with this for as long as the fund is active, and that will be for decades yet.

 

As you know, we can only speak to the impact of these changes to the overall Nova Scotia Jobs Fund portfolio and not to the status or transactions of individual businesses. Disclosure could potentially violate written confidentiality agreements that are in place since the contracts were signed or reveal sensitive information that could harm a company's competitive position, and we need to respect both of those components while also being transparent and accountable to taxpayers. We believe we've achieved this balance.

 

            In 2016-17, we estimate the impact of the Jobs Fund to be $35.2 million. In 2015-16, we were underspent in some areas and also had some movement in funds within areas of the Department of Business, as is expected for a new department in the development and ramp-up phase.

 

            In this new fiscal year, we've moved approximately $1.5 million for the Office of Regulatory Affairs and Service Effectiveness out of our budget permanently. While the budget has been transferred, we continue to work closely with that office. Our 2016-2017 budget estimate is approximately $137 million, $23 million more than the last fiscal year. This includes new investments in a number of areas.

 

            We are investing $6 million to bring high-speed Internet to more homes and businesses in Nova Scotia. Lack of access to high-speed Internet is holding too many Nova Scotians back. It hurts small businesses and places an unnecessary burden on potential entrepreneurs. High-speed Internet is the backbone of the new economy; it is essential for business success. We are committed to ensuring more homes and businesses in rural Nova Scotia have access to high-speed Internet, connecting them to opportunities here at home and around the globe.

 

            It won't just benefit businesses, Mr. Chairman; it will create more connected citizens and consumers. It will mean better access to services and more choices; it will mean online learning and education; online health care; and online government services. With more choice and more access, people will be more empowered. That's how we build a connected Nova Scotia, a stronger Nova Scotia.

 

            The budget also includes $5 million for Invest Nova Scotia. This past year, the Invest Nova Scotia board developed guidelines and operating procedures and started taking applications. We expect that they will soon be launching some exciting projects, and we look forward to that. Our budget will also support work in a number of areas, such as planning and development for COVE and the development of a social enterprise strategy.

 

            Some of our additional investments in 2016 and 2017 will be made through our Crown Corporations. We spent considerable time this past year working closely with the Crown Corporations to achieve alignment with our growth priorities. This initial work may have taken more time than expected, but it will set us up for long-term success. I want to thank the CEOs and the staff and employees of each of the Crown Corporations for the work and commitment that they have demonstrated over the past number of months.

 

            I'll be honest, Mr. Chairman, these were tough discussions. This is a first for Nova Scotia. To the respect and the experience and knowledge of those who make up our boards and our Crown Corporations, they stood strong to challenge government and to find what we believe are solutions that will serve the best interest of all Nova Scotians and, more importantly, led by the private sector. Each of these Crown Corporations plays a critical and unique role in economic development and private sector growth in Nova Scotia.

 

            While the Department of Business is primarily policy-focused, our five Crown Corporations are the delivery agents providing programming and interacting with clients and businesses on a daily basis. This year, our grants to Crown Corporations total approximately $77 million. I'll just touch on a couple of their programs and activities.

 

            Innovacorp is Nova Scotia's early stage venture capital organization that works to find, fund, and foster innovative Nova Scotia start-ups. Early stage investment is at the core of Innovacorp's business model. It also gives entrepreneurs access to world-class incubation facilities, expert advice, and other support to help them accelerate their companies. Target industries include information technology, life sciences, clean technology, and ocean technology. Our grant to Innovacorp is approximately $9.5 million, a slight reduction of less than $100,000 from last year, and those results really found in operational savings.

 

This funding will support Innovacorp's venture capital investment activity for early-stage technology companies. It will also support Innovacorp's three incubation sites -  a technology innovation centre in Dartmouth, the Innovacorp Enterprise Centre on the Dalhousie Campus, and the Innovacorp Demonstration Centre in Brooklyn. These are all premier destinations for early-stage technology companies. These facilities offer much more than just space and infrastructure. They offer an environment, a start-up community, as well as services and programs, emerging companies that need to grow stronger and faster.

 

            In addition to investment and incubation, Innovacorp delivers a number of programs to find and support early-stage Nova Scotia knowledge-based companies and encourage entrepreneur activity right across the province. For example, through its Early Stage Commercialization Fund, Innovacorp helps move university and community college research to market. Through the Productivity and Innovation Voucher Program, it helps small and medium-sized businesses become more productive and innovative while building stronger linkages between Nova Scotia businesses and our universities and colleges. Innovacorp also runs several programs to help high-potential clean technology and life-sciences start-ups across Nova Scotia move closer to being investment ready.

 

Through its annual Spark Cape Breton Innovation Challenge, Innovacorp looks for the best early-stage technology companies in Cape Breton and the Mulgrave area. Winners receive funding and mentoring towards the completion of prototypes or preparation to take their product for service to market. In 2016-17, Innovacorp also plans to introduce a second spark competition in another region of the province, in southwestern Nova Scotia that will encompass the greater Annapolis Valley, the South Shore, and the Tri-County area.

 

Just recently the Canadian Adventure Capital and Private Equity Association, a national body, recognized Innovacorp's Nova Scotia First Fund is one of the four most active government-sponsored venture capital funds in Canada. That is a testament to the hard work that they do on behalf of Nova Scotians. We are proud of the work that Innovacorp continues to do as they find, foster, and fund innovative Nova Scotia start-ups.

 

Nova Scotia Business Inc. - NSBI is a business development agency for the province. Their primary focus is to help businesses across Nova Scotia to grow exports through access to a variety of supports and services and to attract innovative, globally competitive companies to establish a business here in the province. In 2016-17, our grant to NSBI is approximately $37.7 million, $11.5 million more than the previous fiscal year.            

 

This includes $10 million for the Film and Television Production Incentive Fund. As you know, Mr. Chairman, this fund - which encourages the use of Nova Scotia talent - provides an incentive of 25 per cent to 32 per cent on all Nova Scotia expenses for eligible productions.

 

NSBI administers payroll rebates under the Strategic Investment Fund. Payroll rebates are used successfully to attract new companies and increase the number of jobs available in Nova Scotia. Payroll rebates are considered to be an effective and low-risk economic development tool as the private sector must invest first and the rebate is only paid after job targets have been met.

 

NSBI rebates typically run between five and seven years with the rebate ranging from 5 per cent to 10 per cent of payroll. Some rebates can be targeted to new graduates or new Nova Scotians. For example, a recent payroll rebate for Lixar I.T. will encourage the growth of innovative, highly-skilled jobs for new graduates. Lixar is a leader in mobile transportation technology focused on service exports that views Halifax as their gateway to the world. NSBI's budget allocation for payroll rebates for 2016-2017 is $12.3 million.

 

NSBI also administers a $1 million Export Growth Program to support businesses that want to export outside of Nova Scotia with a particular emphasis on growing first-time exporters. The program provides incentives to support travel to market to visit with a client or partner, or a partner to visit Nova Scotia to see Nova Scotia operations, and mitigating trade show or conference costs by funding floor space, conference fees, travel, and accommodation costs. The Small Business Development Program helps those businesses that want to export their capacity by helping to access expertise and research, productivity and competitiveness, or removing barriers.

 

            Tourism Nova Scotia is a new Crown Corporation responsible for leading the growth of the province's tourism industry. In 2016-17, the grant for Tourism Nova Scotia is approximately $21.2 million, $1.5 million lower than the previous year. While this appears to be a reduction, it is a result of some changes to accounting due to becoming a Crown Agency, the sale of Keltic Resort, and operating reductions of approximately $300,000. The overall reduction to the revenues, however, is smaller at $148,000.

 

            Tourism Nova Scotia is working on a strategy to help the industry double tourism revenues to $4 billion by attracting more first-time visitors, investing in markets of highest return, focusing on world-class experiences, and building tourism confidence. The Crown is realigning its operations and corporate structure to maximize growth. New industry partner programs will help leverage private-sector investment and align operator initiatives with the growth strategy.

 

            In fact, the Tourism Nova Scotia team is screening applicants now for the new innovative pilot programs. The World-Class Experience EXCELLerator Program provides operators with customer-tested concepts and expertise to guide the creation of purchasable experiences that will motivate travel to Nova Scotia. The Inspiring Content Program sees Tourism Nova Scotia and operators co-invest in content creation, which will be used by Tourism Nova Scotia and operators in their marketing campaigns. Both these initiatives support private sector growth.

 

            The Trade Centre, or Trade Centre Ltd., is the provincial Crown Corporation focused on attracting and hosting events that create economic and community benefits by bringing people together in Halifax and across Nova Scotia. Trade Centre Ltd. currently operates the World Trade and Convention Centre, Ticket Atlantic, and Scotiabank Centre, which is owned by HRM.

 

            The Trade Centre Ltd. is also responsible for marketing, sales, and operational preparations for the new Halifax Convention Centre. Mr. Chairman, as you are aware, on April 1st the Halifax Convention Centre Corporations Act was proclaimed, and president and CEO Scott Ferguson was appointed. This new centre currently taking shape in the heart of Halifax is part of the largest integrated development project undertaken in Nova Scotia's history. It will become the hub that connects our community, visitors, and businesses to celebrate, innovate, and grow.

 

            The grant for the Trade Centre Ltd. in 2016-17 is $6.2 million, a $5.6 million increase over last year. The additional funding supports increased activities and expenses to ensure a successful transition to the new convention centre. This includes sales and marketing, operational preparations such as employee training, technology improvement, and equipment such as small wares, and the government's transition to a new corporate structure. These costs will be shared 50-50 with our partners in HRM.

 

            The Halifax Convention Centre is on track to open in Spring 2017, with the first conference booked for April. To date, 45 national and international events have been secured, with over 37,000 delegates coming to Nova Scotia.

 

            Waterfront Development is a Crown Corporation that redevelops and revitalizes the waterfronts around Halifax and Lunenburg Harbours, and any other waterfronts designated by the province. It's their job to foster the creation of waterfronts that drive economic opportunity, enhance tourism, provide experiences, and reflect and protect our marine heritage. The waterfronts of Nova Scotia are unique economic assets and a key competitive advantage of our province. By developing waterfront infrastructure that harnesses these advantages, we can achieve the goals of increasing business start-ups, increasing the value of exports, and increasing the number of research and development start-ups.

 

A key example of this work is the emerging COVE project in the marine and ocean sector in which Waterfront Development is playing an instrumental role. The same model is applied to their work in the tourism section. The Halifax and Lunenburg waterfronts are thoughtfully planned and designed to create quality public spaces with access to the water's edge, as well as platforms on which businesses can thrive. They provide private-sector partners with a platform for investment and grown, which is consistent with our goal to have the private sector lead the economic resurgence of our province. Our waterfronts are places that attract people to live here and spur entrepreneurial activity. They are magnets for private investment, for growth, and for population growth as well as economic growth.

 

            The provincial grant for Waterfront Development in 2016-17 is $2.1 million dollars, $1.3 million more than last year. This is due to planning and development work related to major development projects on the Halifax and Lunenburg waterfronts.

 

            Mr. Chairman, those comments conclude the overview of the budget for the Department of Business, but I just want to conclude with a few more comments. Business is what drives our economy forward - that's what will create jobs and a more prosperous future for Nova Scotia. There are many reasons to be optimistic, and I'm not the only one who thinks so. I see it as I travel the province both in job growth and workplace growth, but in the private sector and the language and the terminology and the narrative that Nova Scotians are using.

 

            Recently, the Conference Board of Canada made an optimistic prediction about Nova Scotia. In its provincial outlook, the board said Nova Scotia would grow faster than the national average in 2016, something that has not happened since 2008. According to the Canadian Federation of Independent Business, Nova Scotia has the highest small-business confidence in the country. Major projects like shipbuilding, the Maritime Link project, and offshore oil and gas exploration are driving our manufacturing sector. To quote an executive from the Atlantic Provinces Economic Council on CBC recently, "Exports have been going like gang busters."

 

            There is a lot of work to do. If we're going to build a stronger Nova Scotia, I believe the policies and plans we have put in place are the right ones, and I feel confident we are on the right path. Our department is committed to working with businesses and Nova Scotians to create a stronger province.

           

With those comments, Mr. Chairman, I will take my seat and welcome questions from my colleagues across the floor.

           

MR. CHAIRMAN: Thank you, minister.

 

The honourable member for Kings North.

 

            MR. JOHN LOHR: Mr. Chairman, I guess I would just have a question for you to clarify. (Interruption) That answers my question right there. Okay, thank you.

 

I certainly appreciate those remarks from the minister, and I appreciate him drilling down into all the many aspects of the department in terms of the Crown Corporations. It was very interesting, and I do want to delve into all of those things.

 

            I just couldn't help but notice today, which I think came across all our desks - the Auditor General's Report. I notice in that report that the Department of Business had a 3 per cent complete rate on 11 items not completed from the Auditor General from 2012-2013 recommendations.

 

           I just wonder, before we get into all the numbers, if the minister would just give me a comment on that completion rate and maybe explain to me what's going on - it's kind of disappointing to see the Department of Business to be effectively other than a couple of departments that have only one item and haven't gotten it done yet, which have a zero complete rate, but in reality of the major departments in the province is by far the lowest completion rate, and I'm very disappointed to see that number jump out this morning. I'm just wondering, could he comment on that?

 

            MR. FUREY: I will say that the recommendations that my colleague has referenced are specific to comparing the Jobs Fund to Invest Nova Scotia. I want to acknowledge the work that the Auditor General has done, but I think we have agreed to disagree on this particular area.

 

            The AG's recommendations on the Jobs Fund were acted on, and we believe the recommendations specific to the Jobs Fund have been completed. We closed the Jobs Fund in 2014, as you would know, Mr. Chairman. This was one of many steps to be more open and accountable on how we spend economic development dollars in Nova Scotia.

 

            What I do want to share with my colleague is that the Invest Nova Scotia fund is very different than the Jobs Fund. It's not a replacement for the Jobs Fund, and the same recommendations, we believe, do not apply. Invest Nova Scotia makes investments in sectors and regional opportunities, not individual businesses. We know the Jobs Fund made commitments to individual businesses. Invest Nova Scotia is managed by a private-sector-led board. The Jobs Fund was a Cabinet slush fund.

 

            Mr. Chairman, we respectfully disagree with the recommendations that the Auditor General has advanced in comparing the Jobs Fund with Invest Nova Scotia. But I do want to say that we welcome the AG's assessment and analysis of the new Invest Nova Scotia fund. I believe that opportunity will address the concerns that the Auditor General has advanced, and would address the point of the question that my colleague has presented here today.

 

            MR. LOHR: I'm not sure that I can comment on a conflict that the minister has with the Auditor General, but I will comment on some of the items that were in that Auditor General's Report. It's hard to see where there would be a conflict in doing some of these things - the evaluation for the funding applications.

 

            I think, with all due respect, with Invest Nova Scotia we're also talking about NSBI and payroll rebates. There are many different ways that the government can interact with individual businesses, so just the fact that Invest Nova Scotia is one way, government is certainly still in the business of payroll rebates. Some of these things are still highly pertinent - evaluations of collection of data, evaluations of measurable goals, and objectives for the funding program.

 

            I'm kind of shocked - I think I heard the minister essentially say that he disagrees with the Auditor General and isn't going to comply. I'm just wondering if the minister can tell me: Does he feel that this lack of compliance is adequate in regard to the payroll rebate programs and some of these other programs that have significant investment in Nova Scotia businesses?

 

            MR. FUREY: I think in general terms, what we're applying to the Invest Nova Scotia fund - the strategy, the approach we're applying - is actually learned lessons from previous management of funds. We know we can't continue to do what we did with the Jobs Fund. We're managing a significant portfolio, and we've learned from past mistakes that we can't do that.

 

            The approach in going forward with Invest Nova Scotia, which a number of these recommendations that we're speaking to reference - we believe it is the best practice. As I indicated earlier, we welcome the AG to look at Invest Nova Scotia and how that fund is being managed by a private-sector-led board.

 

            I do want to speak just briefly to some of the general areas that my colleague referenced. He made reference to payroll rebates; I'm not aware of those specific circumstances that he's referring to. What I do know from the Auditor General's Report is the five recommendations that were specific to NSBI in the Auditor General's Report are considered to have been completed. So we take great satisfaction in those circumstances.

 

            I'm not sure if that answers my colleague's question. I'll allow him to continue.

 

            MR. LOHR: I'd like to thank the minister for that answer; it does answer some of my questions. Clearly, if the criteria were satisfied, the Auditor General would have put "complete," so I'm not sure.

 

            In terms of the Department of Business, if we set aside the Crown Corporations for a moment, clearly there's a need for some of the things that the Auditor General has mentioned to be adopted even by the Department of Business. We will drill into it, but if I look simply at the Jobs Fund and the variability in the numbers - last year it was predicted it would be a $37-million hit to the provincial coffers, and I understand the difficulties there are in predicting the number; I understand that. But obviously some of these regulatory control recommendations that the Auditor General is providing would help the minister I think have a better handle on what the Jobs Fund is doing.

 

Even if you look at the Auditor General's Report, Page 65 - Recommendation 3.27, ". . . third party corroboration to confirm projects are occurring as intended." If we're having a $44-million bill on our provincial bottom line, albeit I understand totally from the NDP Government's Jobs Fund - no longer the Liberal Government's - but if that's happening, it's incumbent on the Department of Business to be confirming that the money that we're sending out, that $44 million, is going out the right way. Could the minister comment on that?

 

            MR. FUREY: I do want to explain further to my colleague that we're not opposed to the work that the Auditor General has done and the recommendations that he's advanced. The department has obviously taken into consideration all of the work that the Auditor General has done.

 

            What we're saying is applying the expectations that the Auditor General rightly identifies relative to the Jobs Fund and applying that to Invest Nova Scotia are two different discussions. We will continue to apply good fiscal practices in the application and oversight that we would provide to any funding program whether it be in the Department of Business or across government.

 

            The expenditures that my colleague has referenced in the previous year and rightly suggests proper financial oversight, refer to two corporate bankruptcies. That's the reality of it. DSTN and Co-op Atlantic, I believe, were circumstances of the past. We obviously had to manage those to the point that they now presently.

 

            But I don't want my colleague to think that we're not conscious of and, in principle, supportive of the Auditor General and the work that that office does, because we are. We have a consensual disagreement on applying the expectations attached to the Jobs Fund to Invest Nova Scotia when they are two distinctly different funding models. The principles of financial oversight and responsibility remain in place.

 

            MR. LOHR: I'm not sure if I understand where the issue is between one part of the responsibilities of the Minister of Business, Invest Nova Scotia and the other part being the Jobs Fund. We had an opening remark that I think drilled down through five or six different areas of responsibility. I'm just asking the question. For instance, Recommendation 3.27, "The Department of Economic and Rural Development and Tourism" - which now is the Department of Business - "should develop a monitoring framework for all funding programs that utilizes site visits and third party corroboration to confirm projects are occurring as intended. Status - Not Complete."

 

            When does the minister anticipate that that will be completed?

 

            MR. FUREY: The question that my colleague is advancing is applying those expectations to Invest Nova Scotia. As I indicated, in principle we will ensure appropriate oversight, but we're unable to apply any of those principles at this time, because Invest Nova Scotia has not approved any funding or support through the Invest Nova Scotia initiative.

 

            MR. LOHR: I think the question is not in relation to Invest Nova Scotia; it's in relation to the Department of Business. When will these guidelines and these recommendations from the Auditor General be met?

 

            MR. FUREY: I'm a little confused as to which recommendations my colleague is referring to. He's actually referring to the Auditor General's Report itself, and I don't have that available to me. If I can, for the benefit of my colleague, I'll just go through the recommendations from that November report.

 

            There were 18 recommendations on the Jobs Fund; I think I've explained where we stand on that. And we welcome the AG's review of the Invest Nova Scotia initiative as it unfolds. There were nine recommendations on eight programs. We began implementing recommendations, but ERDT was eliminated and the programs were either transferred or closed, and I think reported as work in progress at the time. They are either transferred or in the process of being transferred to other departments.

 

I believe the AG considered those not complete, but relatively understands the position of the Department of Business. There are two recommendations that capture every funding program. Again, implementation began under the former ERDT, and the programs were either transferred or closed. The AG considered those not complete, but again is relatively understanding of the situation. If they are closed or transferred to another department, the Department of Business would have no authority, no further work to do specific to those recommendations.

 

I think I mentioned earlier the five recommendations that were specific to the Nova Scotia Jobs Fund within NSBI; there was 100 per cent compliance in that area.

 

In the May 2013 report, there were four recommendations on travel and other expenses; those were Waterfront Development I believe, and Waterfront Development completed three of those. One is in progress and should be completed this fiscal year, and the completion rate is in the area of 75 per cent, just slightly lower than the AG's expectation of 80 per cent.

 

Innovacorp as well completed seven; two are under progress and will be completed this fiscal year. They are at about 78 per cent compliant, slightly less than the AG's desired 80 per cent. In the November 2012 report, there were 19 recommendations. Trade Centre Limited has completed 16 of those. Two are expected to be completed this fiscal year; one is expected to be completed next fiscal year after the new organization structure is in place. Trade Centre Limited has achieved an 83 per cent progress, which is slightly above the AG's target of 80 per cent.

 

I am hoping that additional information may help my colleague.

 

MR. LOHR: I do want to suggest that these guidelines are relevant to your operation. I know that if you look at the Department of Health and Wellness which also has undergone a significant transformation since 2012-2013, it's largely compliant.

 

I want to reiterate that I'm very disappointed at the level of compliance shown, and if the Auditor General thinks that the Department of Business is not compliant, then I am not one to quibble with the Auditor General. It's one out of 12 recommendations, which is 8.5 per cent non-compliant; in the book it's listed as 3 per cent complete, not counting 17 no longer applicable.

 

So, obviously, despite what you're saying, Mr. Minister, the Auditor General has already decided that 17 recommendations are no longer applicable to the department. Obviously, there were 12 that were applicable; only one of them has been completed. I think it's a serious report card on the management of the department and possibly something that was simply overlooked and, again, I would suggest that I would hope that you're on a plan to have these completed. Some of these are fairly significant and involve measuring the outcomes of goals and objectives for funding.

 

So I would like to suggest, Mr. Minister, that on a morning of preparing for estimates, I am disappointed to have seen this report card. Having said that, I don't know - maybe you want to have one further comment on that.

 

MR. FUREY: I recognize my colleague's persistence and maybe some frustration, but I want to assure him that the Department of Business is certainly focused on appropriate fiscal responsibility and ensuring that the taxpayers' dollars of Nova Scotians are utilized appropriately.

 

I do want to share with my colleague that there's no direct funding to business - and there's a strong distinction there. The sector on regional focus projects, evidence-based - that's the model that I've tried to impart in the three departments that I'm responsible for and we will continue along those lines. But I'll say this, with the utmost respect for the AG's department, there are times when there are differences of opinions with recommendations and the interpretations and the application and the intent of both the AG's Office and government, in this case the Department of Business. We agree to disagree.

 

Most of these recommendations that my colleague is speaking to were from an analysis of the Jobs Fund and the expectation that the same lens is applied to Invest Nova Scotia. I'm simply indicating that they are two different discussions; they are two different funding models. We believe that accounts for the difference in opinion. But, as I said earlier, we welcome at any time the AG's review and analysis of the Invest Nova Scotia fund as it advances and is utilized by sectors within Nova Scotia.

 

            MR. LOHR: I guess I'm just getting a little bit confused. I would like to ask the minister to confirm that it is the Department of Business that is still responsible for managing the NDP-era Jobs Fund and the money outlays from that fund.

 

            MR. FUREY: To my colleague's question, NSBI actually administers the fund. As the Minister of Business, I have oversight responsibility of NSBI as one of the five Crown Corporations in the Department of Business.

 

            MR. LOHR: Okay. I was under the impression, seeing it was in the business section here, that it was the Department of Business. Maybe I should just take a look at NSBI. I don't remember seeing those numbers in NSBI. Maybe if you just bear with me, I'll take a quick look.

 

            I beg to differ with the minister. I don't see those Jobs Fund numbers in NSBI's statement. In fact, we could say that at least in terms of what is in the book, it looks to me like it's the Department of Business that manages the Jobs Fund. Maybe the minister could clarify that.

 

            MR. FUREY: For further clarification, the NSBI Jobs Fund budget line shows up in the Department of Business budget, but the Act gives the minister authority to delegate administration. In this case, NSBI has that administrative responsibility. My colleague won't find it in the NSBI budget lines - it is within the Department of Business budget lines.

 

            MR. LOHR: Again, just to clarify, if it is in fact the responsibility of the Department of Business, then the Auditor General's Report and Recommendation 3.27 would be quite salient and important to the Department of Business to have third party corroboration to confirm that projects are occurring as intended. I understand there's 100 different projects, as the minister has said. He has said, and I appreciate that, that he cannot drill down into each one individually. That's quite a bit of activity across the province. Obviously there's unexpected and unforeseen things happening - as he mentioned, there were two bankruptcies.

 

            I'm just wondering if he will not at least agree with me that that is an important recommendation that it is the responsibility of his department - his responsibility - to have that completed.

 

            MR. FUREY: The discussion we're having is specific to the Jobs Fund, and the five recommendations relative to the Jobs Fund that are managed, administered by NSBI were completed. I know my colleague is referring directly to the AG's Report; I don't have that in front of me, but I am certainly prepared to look further and, to the point my colleague is making, try and provide a more accurate answer to his liking, relative to the point he's drawing on from the AG's Report. I just don't have that in front of me to be clear on the point he is trying to make.

 

            MR. LOHR: I'm not trying to make a point specifically. I've just picked out one of 11 items in the Auditor General's Report that is not complete, and I just picked that one out because it seems to be the most significant to the management of this massive amount of money that we see going out.

 

            As the minister knows and I know, this will continue for another 28 years I believe, unfortunately - up to I believe it was a 30-year commitment in some cases and one that has, clearly, unknown consequences within it. It would seem to me that it would be incumbent upon the Department of Business - with that amount of money at stake and the Auditor General making recommendations about how the Department of Business is to conduct its activity.

 

All of these 11 are important; some of them related to new applications. So, obviously, I take the minister's point on that, but some of these related to evaluation of the results of the funding and I would say if the Auditor General thinks it's important, I think we have to say that it is important.

 

I will reiterate that I am disappointed to hear the minister say that this is a disagreement. He doesn't agree with the Auditor General, and I know that in my own business life when you have jobs that you don't necessarily want to do one of the key factors in getting them done is to say, yes, that's my responsibility to do it. So, I would just like to hear the minister say in regard to these 11 recommendations from the Auditor General that, yes, it is his department's responsibility to get these done, and he will see that they get done.

 

            MR. FUREY: Mr. Chairman, I think my colleague and I are talking about two different components. If my colleague refers to Page 63 in the Auditor General's Report, he will see that all of the recommendations that are relevant to NSBI have been completed.

 

            There's a reference in the Auditor General's Report to aid other funding programs and, as I indicated to my colleague earlier, they are either transferred to another department or they are eliminated. If they are transferred to another department, my department would have no further responsibility, and if they were eliminated in the transition from the former ERDT to the Department of Business, they no longer exist. Inherently, I would have no further responsibility.

 

            I am hoping that clarifies some of my colleague's concerns. If I understand him, he's suggesting that these are specific to NSBI. Those that are incomplete refer to other funds that are either transferred or discontinued.

 

            MR. LOHR: Mr. Chairman, this report is dated April 20, 2016, and, presumably, it reflects the opinion of the Auditor General as of a few days before April 20, 2016. I don't want to belabour this too long, but my final question on the issue of the Auditor General's recommendations is: Does the Minister of Business intend to comply with the Auditor General's recommendations?

 

            MR. FUREY: I think where I have authority and oversight, we have completed some of the Auditor General's recommendations. I know, and I've already acknowledged, that there are 17 that remain incomplete.

 

            We have articulated our position in comparing the Jobs Fund and the Invest Nova Scotia fund. Because of the clear distinction, the difference, between the two funds, we are of the view that those recommendations don't apply to the Invest Nova Scotia fund. As I've indicated on a couple of occasions, relative to the administration of the Invest Nova Scotia initiative, we would welcome the Auditor General at any time, once Invest Nova Scotia has approved funding for any number of applications, to come in and do an audit on Invest Nova Scotia.

 

            I will say, Mr. Chairman, and I think it's found in 1.17 and 1.18 of the Auditor General's Report, the Auditor General himself understands the situation that we are having the discussion on here today.

 

            MR. LOHR: I thought I asked a yes/no question, and I didn't get a yes/no answer. I was hoping for simply yes you intend to comply. I trust, in reality, that is the case. I would just like to hear - do you, yes or no, intend to comply with the Auditor General's report?

 

            MR. FUREY: This is not a yes or no answer. I think I've provided a very clear response, a very clear answer that supports the position we've taken. In Sections 1.17 and 1.18, the AG understands our position. We will continue to apply the appropriate oversight to any funds, whether they be in my department, any other department, or our government. I don't think I can be any clearer than that.

 

            MR. LOHR: All right, I'm sure the minister will be happy when I say we'll leave that subject alone now.

 

            I would like to move on to looking at some of the detail in the budget document. As I understand it, and you can correct me if I'm wrong, when we look at the budget document, there's the 2015-16 estimate, which is what was budgeted last year. And then we see 2015-16 forecast, which we can really consider to be the actual, although the number might change to a very small degree. My first question about the budget, to the minister: The first line on Page 4.2, Senior Management, I'm just curious to know why senior management was underspent by more than half a million dollars. Obviously that's good news when it goes down, but I'm just wondering what happened there.

 

            MR. FUREY: The savings in these circumstances were realized with the start-up of the new Department of Business. There were a number of FTE positions that remained vacant while we ramped up the department and inherently as well some operational savings that account for the $500,000 that my colleague has referenced.

 

            MR. LOHR: Can the minister explain the estimate for 2016-17 being $1 million more for Senior Management than the actual last year?

 

            MR. FUREY: There was an additional expenditure of $1.1 million for the Halifax Convention Centre lease. That really identifies the difference, and we're back to really where we should be in operations as we speak.

 

            MR. LOHR: This wasn't the answer I was expecting. So what you're saying is that part of the Senior Management bill is a $1.1-million Halifax Convention Centre lease. Is that correct - that goes into the Senior Management line on this document?

 

            MR. FUREY: Yes, that's the case. That's the amortization on the Halifax Convention Centre lease.

 

            MR. LOHR: Just to clarify, the Senior Management line here doesn't apply to human resources - it applies to Convention Centre leases?

 

            MR. FUREY: Yes, certainly, there's a balance of approximately $2.5 million, and most of that would be expenditures of FTEs within the department. There were some minor movements of money out for other rent agreements, but the largest percentage of that would be, to my colleague's point, human resources.

 

            MR. LOHR: Maybe we're not talking about the same line - Page 4.2, Senior Management, 2015-16 estimate $3.346 million; forecast 2015-16 $2.676 million; and the estimate for this coming year, $3,610,000. There's a $1.1-million lease figure in that number? I just want to confirm that we're talking about the same line - are we?

 

            MR. FUREY: Yes, we're speaking to the same line on the Senior Management component in the budget document.

 

            MR. LOHR: I guess I'm quite surprised that a lease item would be included in the Senior Management line. I'm very surprised at that. I guess the implication or the tendency is to think that's a human resources line. I'm very surprised that nearly a third of that number would be an actual bricks and mortar lease item - very surprised. I don't quite know what to say; I didn't expect that answer.

 

I don't want to go back to the Auditor General's Report, but I think it sort of begs the question of the accounting issue here in terms of clarity in accounting, if there are lease items that don't really relate, maybe the minister can explain how that lease relates to senior management.

 

            MR. FUREY: Certainly. Within Senior Management there are various components, one of those being corporate services. This particular $1.1 million lease amortization for the Halifax Convention Centre is captured within the Senior Management line, but corporate services is in there. That's where that allotment of money that my colleague is speaking to is disbursed.

 

            MR. LOHR: Just to clarify, this is not the Nova Centre, but the Halifax Convention Centre. Is that an ongoing expense annually, or is that just a one-off? Maybe you could explain where that came from.

 

            MR. FUREY: The $1.1 million that we're referring to is two months of amortization on that capital lease. We don't recognize that capital lease until the project is complete. That period is February 2017, so we're talking about two months, relative to the $1.1 million.

 

            MR. LOHR: On the Nova Centre or on the Halifax Convention Centre? That would be on the Nova Centre then, the new construction. Would that be correct?

 

            MR. FUREY: That's correct.

 

            MR. LOHR: So $1.1 million of that increase represents two months of a lease payment due on the Nova Centre - February and March 2017 - based on the expected date that the Nova Centre will be completed. I realize this is an estimate, but that's the anticipation - you'll be entering that new Nova Centre in February 2017. Would that be correct, Mr. Minister?

 

            MR. FUREY: I just want to clarify for my colleague that this is not a lease payment. It's a lease amortization that we're speaking about, the $1.1 million.

 

            MR. LOHR: I will confess to not being an accountant either, so I'm struggling here, too. I realize you have good advisers.

 

            I guess if we could just drill down into that number further, I would presume that represents $550,000 per month lease amortization. The expectation would be that that lease amortization would go on in the following year as a per-month figure of $550,000 amortization. Would that be correct?

                       

MR. FUREY: The simple answer to my colleague's question is yes, that's correct. I just want to give some context to that discussion. There will be an expenditure next year and every year for the next 25 years of $7 million, the capital lease amortization. So just to put that in perspective and I do for my colleague's clarity, it is the Halifax Convention Centre not the Nova Centre and the lease amortization that I spoke about is a lease agreement in which the leaser agrees to transfer the ownership rights to the lessee after the completion of the lease period, so after that twenty-five-year period then ownership is taken, given.

 

            MR. LOHR: I guess we should just clarify that because I think a few minutes ago I was told it was the Nova Centre, and I think the minister has just clarified that it is the Halifax Convention Centre, so I think I heard both here - can you just confirm which one we are talking about here with this number?

 

            MR. FUREY: It's important for clarity - as my colleague knows, the Nova Centre is the structure including the hotel. The Halifax Convention Centre is that structure excluding the hotel and the focus of this discussion and the monies and amortization that we're talking about.

 

MR. LOHR: So, the minister is right; I am getting confused. So, what I heard him say, and maybe you can correct this, is that the new construction that we see going on not very far away from here has two components to it, the Halifax Convention Centre and the Nova Centre are both part of that big construction; and this is referring to one part of the big construction.

 

MR. FUREY: When the terminology "Nova Centre" is used, it incorporates the convention centre, the hotel, office space, and retail space. When we talk about the Halifax Convention Centre, it is one component of the larger Nova Centre, and it is the focus of this discussion relative to the $1.1 million amortization.

 

            MR. LOHR: I guess I was getting confused, Mr. Minister. In my mind, I was thinking we were talking the World Trade and Convention Centre and the Nova Centre. You had me confused there.

 

So I am still confused possibly by the fact that this number, and maybe you can explain that, I suspect this number shows up if we were to roll ahead into the discussion of that Crown Corporation, the waterfront - and it slips my mind, I believe that there's a Crown Corporation to deal with that, but I think it's Waterfront Development - is that correct? So, with that number, flip ahead into one of these other, into the Crown Corporation that works for the Nova Centre or manages the Nova Centre.

 

MR. FUREY: Waterfront Development doesn't enter into this discussion. That amortization is specific to the capital lease on the Halifax Convention Centre. That's where we are, specific to the amortization.

 

            MR. LOHR: Again, I'm not an accountant - what are we getting for that money? That's my question: What are we buying with that money? Is that an appropriate question to an amortization? I'm not sure.

 

            MR. FUREY: The discussion we're having is really an amortization over the term of the capital lease. I know it's confusing, and it gets confusing for me, too, I must acknowledge. It's that amortization over the period of the capital lease. At the end of that capital lease, the building is paid for.

 

            MR. LOHR: I suspect your assistants there can clarify it, but let me just lay this out. The way I understand amortizations, there's something called EBITA, which is earnings before interest, taxes, and amortization, as I recall. I know that if we were to think about the farm, I would have a line for expenses, and maybe there would be capital costs, interest, and there would be a line somewhere down below normally for amortization, which would recognize the fact that the tractor that I had bought two years ago for whatever amount of money was now only worth this amount of money which had declined in value, so in fact to have an accurate accounting, I have to show an amortization.

 

I guess what loses me here is the fact that in this Senior Management line, which is in fact an expense, and you're showing an amortization item in that. Is that a normal way that these documents would present that information? Am I correct in the way I see that? Furthermore, on the farm, that amortization would simply be listed into my balance sheet because I would recognize that in fact my values had gone down. But there wouldn't actually be any cash put out for that amortization; there would not be a cash draw out from my pocket, so to speak, for that amortization number.

 

 I think I've got my accounting straight. I'm just wondering if that's correct here in terms of this amortization being listed in this line - is there in fact a cash draw out for this amortization, or is it simply a recognition of the decline in the value of the asset that you own?

 

            MR. FUREY: My colleague is quite correct. This is an accounting procedure and there's no cash flow involved.

 

            The front end of his question was relative to finding this under Senior Management. As I indicated earlier, corporate services is rolled up into senior management, and that's where this accounting procedure is applied.

           

MR. LOHR: I'm not sure if there's anything more to be said on the subject. I think I understand what you're saying. I have to express my surprise that there would not be a line item somewhere in here that would show amortization. I can imagine that there are a number of assets of the Department of Business that would be amortized, probably other things depreciated, possibly, too. I'm kind of surprised it would show up there. I believe the minister said this applied to the Halifax Convention Centre. So I guess that's saying that we're the owner of that, and I believe that we are the owner of half of that with HRM, if I'm not mistaken. Presumably, HRM would also be amortizing the Halifax Convention Centre at the same rate.

 

That's my question, would they be doing that? Maybe you're not privy to their books, but they could if they wanted to, presumably.

 

            MR. FUREY: The asset actually shows on our books, not HRM's. My colleague is correct that HRM is a 50-per-cent partner in this project. That's a recoverable from HRM to the province to pay for their portion.

 

            MR. LOHR: I apologize, I didn't intend to spend this long on one line. Can you just explain to me, whose recovery is that, then? The province will recover $3.5 million from HRM, or HRM will recover $3.5 million from the province?

 

            MR. FUREY: The province recovers from HRM. HRM is a 50-per-cent partner in this project. So to my colleague's question, the province recovers from HRM.

 

            MR. LOHR: We established previously that amortization was a non-cash line. The province and HRM are 50-per-cent shareholders in this - and the province is going to recover $3.5 million cash from HRM on this deal? I guess you're losing me there.

 

            MR. FUREY: I guess I'm going to have to ask my colleague a question, Mr. Chairman. I'm not sure where the $3.5 million is coming from, if it's possible to explain that.

 

            MR. LOHR: Sure, Mr. Minister - this is just me doing the math. You said that this was a $7 million annual amortization. I believe if we take $550,000 multiplied by12 that would be $7 million - not quite exactly, I guess I was just doing the math quickly in my head. You said we were partners with HRM on this amortization, so I was just cutting that $7 million in half if they're partners with us. We're amortizing the whole thing; presumably they're entitled as a partner to $3.5 million, entitled to claim that amortization also. That's just where that came from.

 

            MR. CHAIRMAN: Order. The time has expired for the Progressive Conservative Party. We'll now rotate to the NDP.

 

The honourable member for Dartmouth South.

 

            MS. MARIAN MANCINI: Thank you. I think some of my questions may have been addressed in your opening. I want to assure the minister that I can tell you I'm in pretty strange territory here. I haven't done estimates - I even wonder about the use of the word "estimates." It's kind of scary, I think, to Nova Scotians that we use that type of language when we're talking about budgets. But having gone through some of the department budgets, I recognize certainty is pretty challenging in terms of figures, and therefore forecasts and estimates are there.

 

            My first question, and I think we're probably on the same page that we were referring to as Page 4.2 - I wanted to refer you to Operational Leadership, Coordination and Alignment, that particular line. This is showing what appears to be a $5-million increase; $1.3 million went up to $6.7 million. My question to the minister is: Could he explain that line item and why it has risen by $5 million?

 

            MR. FUREY: I thank my colleague for the question, and welcome to estimates. That increase is directly related to the broadband commitment in the budget, with some other minor internal transfers.

 

            MS. MANCINI: Following down, there is a line item for Sectoral Development and Entrepreneurship. There was $9.2 million budgeted for this line item last year, but only $5.3 million was spent. Despite this fact, this line item is budgeted for $13.7 million. My question is: Could you explain what Sectoral Development and Entrepreneurship actually entails and why its budget has increased to $13.7 million despite it being underspent this year?

 

            MR. FUREY: That's a two-part question from my colleague. The Estimate from 2015-16 to Forecast is down about $4 million. There were two components to that. The capital investment fund was underspent, and the commitment to Invest Nova Scotia for that fiscal was underspent as well, basically $2 million each. There was an increase in the budget allotment for Invest Nova Scotia in the amount of $3 million, and about $560,000 for capital investment.

 

            MS. MANCINI: I apologize if the minister has already answered this, but I was just asking a little bit more specific information about what Sectoral Development and Entrepreneurship does entail.

 

            MR. FUREY: I'm getting poked from both sides here, so you'll have to forgive me. Yes, certainly. Sectoral Development and Entrepreneurship support sector development through collaboration with private sector partners and government, they support Invest Nova Scotia in its decisions and making agreements and agreement management, they proactively and collaboratively explore opportunities to maximize the opportunity for industrial technology benefits, and develop social action plans.

 

            MS. MANCINI: I would like to refer the minister to the Regulatory and Service Effectiveness Office line, which I think - if I understand - has been transferred to Public Service. Is the budget still the same after the transfer? I could just add, it appeared that there were eight staff budgeted for last year - did the staff also move to Public Service?

 

MR. FUREY: To my colleague's question, yes, we transferred that estimate from 2015-16 out of the department into the office of Regulatory Affairs and Service Effectiveness. I think my colleague had indicated that it was Public Service. The office of Regulatory Affairs and Service Effectiveness actually reports to the Premier. They would be independent of the Department of Business.

 

            MS. MANCINI: I'm not sure I got that. Would the minister mind explaining to me once again about the staff - is that information you have available to you?

 

            MR. FUREY: Yes, the FTEs that were assigned in the office of Regulatory Affairs and Service Effectiveness have been moved out in their entirety. The FTEs and that budget amount were transferred out of the department.

 

            MS. MANCINI: I guess simply, do we know if those eight individuals would still be employed?

 

            MR. FUREY: As I understand, those eight positions are still staffed within the office of Regulatory Affairs and Service Effectiveness. I am aware that Fred Morley, who was an employee of that office, is presently seconded to Tourism Nova Scotia on a specific project.

 

            MS. MANCINI: That's one of the eight. If I understood you correctly, you're indicating that the other seven staff would still be in the office of Regulatory Affairs and Service Effectiveness office. Is that what you said?

 

            MR. FUREY: As far as I know, yes.

 

            MS. MANCINI: The next line there that I would like the minister to look at is the budget line for Crown Corporations. That has increased by $17 million, and much of this increase is going to NSBI if I'm correct in that. Can you explain why NSBI's budget has been increased by $11 million?

 

            MR. FUREY: Of the $11 million that my colleague has referenced, $10 million of that is specifically for the Nova Scotia Film and Television Production Incentive Fund; about $850,000 is for the loan valuation account; and another $800,000 is for the Strategic Investment Fund, which is commonly referred to as the payroll rebate program.

 

            MS. MANCINI: Thank you for that answer. My next question to the minister is referring to the Grants and Contributions line under Departmental Expenses, still on Page 4.2. The budget for Grants and Contributions is $129 million, an increase of $24 million from last year. My question is if you can explain who receives these grants and contributions, and the second part of that question would be, why has it increased by $24 million?

 

            MR. FUREY: The $24 million that my colleague has referenced, $10 million of that is the Nova Scotia Film and Television Production Incentive Fund; about $5.6 million for the start-up of the Halifax Convention Centre; $1.3 million for waterfront development capital projects; $5 million for the broadband initiative as well; and I should say, also, the Invest Nova Scotia fund in the amount of about $3 million.

 

            MS. MANCINI: Thank you for that clarification on that item.

 

            My next question to the minister is, and I'm noting the staff reduction at the bottom of Page 4.2, Funded Staff of the department - there has been a reduction in staffing from 36 to 28. I'm wondering, can the minister explain why this is so?

 

            MR. FUREY: The difference in the two numbers my colleague has referenced is eight positions, eight FTEs. Those are specific to the transfer out of the office of Regulatory Affairs and Service Effectiveness.

 

            MS. MANCINI: I apologize if I misunderstood, but I thought earlier, when I had asked the question about the eight FTEs, the minister had indicated that seven were actually still in the department. Perhaps I'm a little confused about that. I appreciate the response. Thank you.

 

            MR. FUREY: Allow me to apologize - when I referenced those seven, I thought you were speaking to the office of Regulatory Affairs and Service Effectiveness itself. There were eight positions transferred out of the department to the office, and once those eight positions were established in the office, one transferred on secondment to Tourism Nova Scotia. Seven remain in the office of Regulatory Affairs and Service Effectiveness.

 

            MS. MANCINI: I'd like to ask a few questions specifically about NSBI. NSBI has received an increase in their budget of close to $11.5 million. I think you may have addressed this a little bit already, but I'm going to ask the minister: Can he provide me with a detailed analysis of exactly where this money will be spent?

 

            MR. FUREY: There are three areas where that money would be expended. The Nova Scotia Film and Television Production Incentive Fund accounts for $10 million of that, the loan valuation for loan programs accounts for $850,000 of that, and there's an additional $800,000 allocated for the Strategic Investment Fund.

 

            MS. MANCINI: The question I have for the minister again relates to Nova Scotia Business Inc., and my question is about the funds and about how decisions are made to allocate these funds to businesses. So, my question specifically is: How are the decisions made to allocate these funds to businesses?

 

            MR. FUREY: I'll speak to the Strategic Investment Fund. The decisions around disbursement of those monies are made at the board level within NSBI. So there is an expressed interest in accessing those monies, and there's a process that is managed and administered solely within NSBI and their board. Those decisions are made independent of government. We amended legislation last Fall to change the threshold for those monies and approval within the board, so specific to the Strategic Investment Fund managed solely within that environment.

 

            The Nova Scotia Film and Television Production Incentive Fund is an application-based program that is administered by NSBI, and the program itself has criteria laid out. Once the application is complete and the criteria is met, the project is approved, and that is done solely within the program as it's administered within NSBI.

 

            MS. MANCINI: I would ask the minister more specifically in relation to the strategic investment aspect of it. He has confirmed that it appears to be quite arms-length and independent of government, but I'm wondering if the minster can provide me with a regional breakdown of where the businesses are located that would be receiving the funding.

 

            MR. FUREY: I don't have the information available right before me that my colleague is asking for, but we would certainly make efforts to obtain that for her. I would add that as approvals are made specific to the payroll rebates they're posted on the government's accountability website, so that information is public. But we will secure that complete list for my colleague.

 

            MS. MANCINI: I thank the minister for that response, and I'll look forward to receiving that information.

 

            Again, I'm wondering if the minister can indicate a forecast for full-time jobs. Specifically, how many full-time jobs is NSBI forecasting to create in 2016-2017?

 

            MR. FUREY: My colleague is delving into some of the more technical details of the NSBI operations. We have a colleague from NSBI with us in the gallery, and it may be appropriate to switch out one of my colleagues so that we are better able to respond to my colleague's questions.

 

            MR. CHAIRMAN: Certainly. If you'd like a minute or two to do that, I suggest we take a two-minute recess while the appropriate person comes forward.

 

            [17:26 p.m. The committee recessed]

 

            [17:29 p.m. The committee reconvened.]

 

            MR. CHAIRMAN: The honourable member for Dartmouth South.

 

            MS. MANCINI: The last question I had put forward to the minister was, how many full-time jobs is NSBI forecasting to create in 2016-17?

 

            MR. FUREY: To my colleague's question, we don't have an actual number that's identified. There are maximum numbers identified in payroll rebates, and there are minimum numbers identified in payroll rebates. The average of the payroll rebate program is about 42 per cent of the maximum estimated FTEs, but we don't have an actual number that my colleague may be looking for.

 

            MS. MANCINI: I'm going to ask the minister to clarify something for me. I don't think this will be a very difficult question for him. When we're talking about NSBI, the minister outlined I think three areas: the film fund, the loan rebate plan, and also the Strategic Investment Fund. Am I correct that that's essentially what we're talking about here? Okay.

           

When I directed the question to you about NSBI forecasting, the minister referred to the loan rebate aspect. Would it be fair to put the question to you again asking more directly about the Strategic Investment Fund regarding a forecast there? Is my question clear, hopefully?

 

            MR. FUREY: I think we're talking about the same thing. The discussion around the payroll rebate is actually the Strategic Investment Fund.

 

            MS. MANCINI: Sometimes I'm scared to ask too many questions here. One of the rules that they taught us in law school is never ask the question that you don't know the answer to, but I'm clearly not following that rule in this. Thank you, minister, for that answer.

 

            What I would like to ask about, though, in terms of the fields, I guess, that are prioritized. When I say "fields," are areas like agriculture, technology, whatever - are some areas prioritized over other areas when those decisions are being made?

 

            MR. FUREY: The three clusters that I referenced in my opening comments that NSBI focuses on are the information communications technology, the ICT, oceans, and seafood/agri-food. But that doesn't exclude investments in other areas that would be advantageous to the province.

 

            MS. MANCINI: Above the additional $11.5 million provided to NSBI, I believe in total NSBI will receive close to $40 million this year from the government. My question then to the minister is, could he explain how many full-time jobs will this help to create and, specifically I guess, in what regions and in what industries? He may have already addressed some of that.

 

            MR. FUREY: I explained earlier that there are no actual numbers. There are maximum highs and minimum lows with individual rebates, depending on the business model. But there is the target. The average has been about 42 per cent of those numbers, so there's no actual number. My colleague spoke earlier about the locations of the businesses and the geographical locations of businesses. I don't have the information relative to how many jobs within those businesses, but I think that's information that we could source and provide to my colleague. I don't have that information available with me.

 

            MS. MANCINI: Thank you, I will very much appreciate receiving that information. My next question to the minister is, what accountability mechanisms exist in NSBI to oversee the businesses that receive funding?

 

            MR. FUREY: There are a number of components that are intended to provide oversight and accountability. Internally, NSBI has established policies and procedures. There are authority limits on approvals, an independently led audit that takes place, and the AG's Report. Of course as I indicated earlier, approval of projects is posted on the accountability website.

 

            MS. MANCINI: Just as a follow-up to that question, on what grounds would businesses be forced to pay back the money to NSBI?

 

MR. FUREY: With any one payroll rebate - I think that's where my colleague is going with the question - there is independent verification that the numbers have been met. So the terms and conditions of the agreement are met and only then, after those terms and conditions are met, is there an actual payout to anyone of those payroll rebate recipients.

           

            MS. MANCINI: I wonder if I could ask for clarification when the minister just indicated "independent verification."

 

MR. FUREY: That verification is completed by an independent audit report, and any one of those professional services that are available in our community are often used for that purpose.

           

            MS. MANCINI: So with that $37.7 million, what percentage of that goes directly to businesses in Nova Scotia?

 

MR. FUREY: There are two components that go direct to business within that budget allotment of NSBI. The direct to business includes the Strategic Investment Fund and the Nova Scotia Film and Television Production Incentive Fund, for a total of $22.3 million.

 

            MS. MANCINI: I would like to ask the minister, moving on from this particular line of questioning as I think I may be going somewhere else soon - the Nova Scotia Film and Television Production Incentive Fund. I'm sure the minister is very well aware that the PWC analysis of the Nova Scotia film industry recently came out, and I guess what I would like to ask the minister is, what was the reaction from NSBI to the PWC analysis of the Nova Scotia film industry and essentially its evaluation of its economic impact on Nova Scotia?

 

            MR. FUREY: I haven't received any feedback, nor have I had any discussions with NSBI as to their interpretation of the PricewaterhouseCoopers report.

 

            MS. MANCINI: Would the minister anticipate engaging in these discussions with NSBI about the report at some point in the future?

 

            MR. FUREY: I wouldn't anticipate we would have any discussions for purposes of policy or government direction. We may have general discussions around the Film and Television Production Incentive Fund, but from a policy perspective we wouldn't engage a Crown Corporation in those decisions.

 

            MS. MANCINI: There is an impact that was referred to in the report which discussed the GDP of the film industry. Would it be fair to say that the NSBI would analyse the impact to the GDP in Nova Scotia of the film industry?

 

            MR. FUREY: NSBI's role and responsibility relative to the Film and Television Production Incentive Fund is to administer that fund from the point of application through to disbursement. The question my colleague is asking around economic impact would be an analysis that the Department of Finance and Treasury Board would or could apply in support of public policy.

 

            MS. MANCINI: In completing their reports at year-end, would NSBI make recommendations to the government of any sort? That's the question - do they make recommendations?

 

            MR. FUREY: NSBI, in their primary responsibility to administer the fund could or would provide advice to government on the process and how the process could be improved, but it's certainly not their role to provide advice or guidance on public policy. Their role is administrative, and they would and could provide advice on how we could improve the administration of that fund or any fund that they are responsible for within their area of responsibility.

 

            MS. MANCINI: The question I'd like to ask the minister relates to the word that was used, administration, and I understand that that can have a fairly broad definition. This fund receives applications and are dealing solely and completely with the film industry in this regard. I don't think that it's too much of a secret about the fact that the film industry is not particularly happy about the current incentive fund that replaced the tax credit, and I understand as well that the film industry sought fairly actively to present different ideas and proposed changes that they think would assist them in some way. Would that information not form part of the analysis that NSBI would have when they're administering the fund?

           

MR. FUREY: There are certainly areas where feedback from the industry would be relevant in the administration of the fund itself. One of the areas where we have had discussions is around the process and the time that the process takes, and the commitment and objective of NSBI relative to the application process is a turnaround of approximately two weeks. We've heard of, and those from the industry have shared with me, a situation where there was a period of 13 weeks, and that was specific to an application that had not been completed in its entirety. NSBI worked with that applicant to complete it so that it could be considered. It certainly was what we believe an anomaly, but the target is two weeks, and that period of time identified has come from discussions that we've had with industry representatives.

 

            MS. MANCINI: I'm wondering, just again on that issue of what NSBI would report to appropriate departments on finance or whatever - if the fund was not working, surely that would be information that NSBI would be responsible for reporting in their report. Is that correct?

 

MR. FUREY: Certainly, if there were components in the administration of the fund that weren't working, NSBI could make recommendations to my department relative to the administration of the fund. As we speak, for purposes of administration, I think it would be safe to say that the fund in working, that NSBI has processed now 16 applications and I believe for the most part meeting the target of timelines and turnaround to start that application process.

 

But, to my colleague's question, certainly if there are components of the administration that NSBI experiences in their day-to-day work, where they believe the administration of that fund could be improved, I'm comfortable in saying that they certainly would bring those recommendations forward and we would certainly consider them.

                       

            MS. MANCINI: What happens to the money that's not spent from the incentive fund, and perhaps I could also add, is the minster aware of what is remaining in the fund at this time?

 

            MR. FUREY: I believe yesterday there were two more productions just approved. That brings the commitment in the fund for those now 16 productions up to approximately $3.3 million. The balance in the fund would be approximately $6.7 million. Depending on when the production is complete and payout required, it could be in this fiscal year or the payout could be made in the next fiscal year.

 

            MS. MANCINI: That does lead into my next question - what will happen to any unspent money? Is it fair to say the $6.7 million is unspent money in this past fiscal year?

 

            MR. FUREY: There was no unspent money in the 2015-16 fiscal year. The Film and Television Production Incentive Fund was implemented post-budget 2015, and the productions approved would be drawn down on the 2016-17 budget or possibly into the 2017-18 fiscal year.

 

            MS. MANCINI: So when the minister is referring to a $6.7 million balance in the fund, is this the $10 million that's referred to, that the minister has indicated is in the budget for NSBI for this year?

 

            MR. FUREY: Yes, that's correct.

 

            MS. MANCINI: In simple language for myself, I guess, is it fair to say now - and we are just into the first month of the fiscal year - that the total amount available for spending in the incentive fund is $6.7 million?

 

            MR. FUREY: Yes, that's correct. As I indicated earlier, the payout does not happen until the production is completed. That fund would pay out in the existing fiscal year, or the production may not be completed until the next fiscal year, at which time the payout could occur and will likely occur in the next fiscal year.

 

            MS. MANCINI: I would like to ask the minister some questions about the Eastlink TV Independent Production Fund, which is separate from the film tax incentive. I'm wondering, could the minister indicate if the Eastlink Fund has been put in place and is up and running?

 

            MR. FUREY: The certification process to administer the Eastlink fund is ongoing as we speak. It's a certification approved by the CRTC. We anticipate that that will be completed by the end of May.

 

            MS. MANCINI: I hesitate to get into too much detail, but I'm sure the minister is aware of one particular production that was attempting to access the Eastlink fund and they were running into very challenging circumstances in that they were unable to access it because the mechanisms for accessing it had not yet been, and you're indicating they were the end of May. My recollection - and I don't have the actual information in front of me now, but I have a recollection of NSBI stating back in the Fall that they would very easily be able to get that fund up and running.

 

I guess my question is, why is it taking so long to get this fund in place? Does the minister know if this particular production has been successful in accessing funds, so that they could carry out their production?

 

MR. FUREY: I'm familiar with the production that my colleague is speaking about. The role, or the process, that NSBI would administer is once certification granted by the CRTC is approved they would do a call for applications - and I want to remind my colleague that this is application based and that there's no guarantee for any production application. There is a process, there is a criteria, and that would be applied. So I wouldn't be able to stand here and say that because a particular production or producer applied that it would be approved. It is application based and, as I indicated earlier, we anticipate that that will be concluded by the end of May.

 

            MS. MANCINI: I'm aware that it's an application process and there was no guarantee. It's just that in this particular situation we had a production that was going into repeat production, with CBC involved and also I think employing 50 African Nova Scotians. The production had proven to be quite successful, because it was being done in a second year. My understanding was that the producers would have been satisfied to even put their application in to NSBI in relation to that fund and that their funders would have been satisfied just to know that they had made their application. I'm just wondering if the minister could comment on that.

 

            MR. FUREY: I think to my colleague's question, one of the things I am most conscious of is transparency and fairness in both the application and disbursement of any fund, and although I understand the intent of my colleague's question that you know we would like to see this production to fruition, I couldn't agree more with my colleague, but I don't think we, as government, or NSBI, as administrators, could accept an application from any producer prior to the call for applications.

 

I think we're walking on very fine ground then of picking winners and losers, and I don't think that's appropriate. We want to get away from that, Mr. Chairman. I think we would be setting a dangerous precedent and really walking a fine line, perceived or real, to advantage one producer or production and, inherently, disadvantage another.

 

            MR. CHAIRMAN: Order. The time has elapsed for the NDP.

 

            We will now rotate to the Progressive Conservative Party.

 

The honourable Leader of the Opposition.

 

            HON. JAMIE BAILLIE: Mr. Chairman, I just want to take a moment to welcome the minister's colleagues from the department who are here. I know they've been sitting there for a while, less so in one case than the other. But on behalf of the PC caucus, I just want to welcome them to the House of Assembly here his evening.

 

            Before I begin my line of questioning, I just want to say, and I hope it's okay, that we just received word a few moments that the Deputy Minister of Finance and Treasury Board, Mr. McLellan, is going to be retiring at the conclusion of this session. I know this is not his department, but if you, Mr. Chairman, and the minister will forgive me, I just want to thank him for his service to our province on behalf of the Official Opposition. I happen to know him personally, and I know he's a Nova Scotian of great integrity and great honour and with a great sense of public service, and I don't want to let tonight pass without recognizing that from our side of the House.

 

            He also has a great sense of humour, and I know he'll appreciate it when I say that no one since Sugar Ray Leonard has attempted to retire more times than George McLellan. I think this is his third or fourth retirement from a significant role, whether it was as the chief administrative officer of HRM or as the CEO of Medavie Blue Cross or, now, as the Deputy Minister of Finance and Treasury Board. I don't even say I hope this is it because I don't hope this is it. I think he's been a big contributor to the public life of the province, and hopefully there will be a new way he can do that - whether it is home outside Baddeck, in his beloved Cape Breton, or whether it's here in the capital, I don't know.

 

            Mr. Chairman, thank you for indulging me while, on behalf of the Official Opposition, I thank Deputy Minister George McLellan for his service to our province on the announcement of his retirement.

 

            Now that all the niceties are behind us, I do have a few questions for the Minister of Business. I actually want to follow up on our NDP colleague's questioning around the Film and Television Production Incentive Fund and NSBI's role, so I think we have the right people down on the floor to do that.

 

Let me just start with very general question. The budget for NSBI on an estimate-to-estimate basis has increased by 44 per cent this year, or a little over $11.5 million. I'm assuming that $10 million of that is the film incentive fund - can the minister just confirm that for me?

 

            MR. FUREY: Yes, my colleague is correct - that includes the $10 million committed to the Film and Television Production Incentive Fund.

 

            MR. BAILLIE: I recognize a Boy Scout troop has just joined us. I just want everyone to keep that in mind as we go through (Interruption) You would like to do an intro? They certainly are worthy of introduction and I'm happy to yield briefly to the minister if she wishes to do that.

 

            MR. CHAIRMAN: The honourable Minister of Labour and Advanced Education.

 

            HON. KELLY REGAN: Thank you to the honourable Leader of the Official Opposition.

 

I wish to draw the members' attention to the west gallery, where we're being visited this evening by members of the First Bedford Scouts. My son was a member of that troop. We're in Budget Estimates, so that our scouts know. I would ask all the members who are here today give them the warm welcome of the House. (Applause)

 

            MR. BAILLIE: I can't help but point out that I'm a graduate of the 16th Truro Boy Scout troop from many years ago. I also want to welcome the troop from Bedford that's here with us. (Interruption) It was certainly a different decade than the ones up in the gallery - I don't normally respond to heckling, but I couldn't let that one go.

            Mr. Chairman, $10 million is the estimate for the film incentive fund for this year. I believe, from the exchange that went on with the Leader in the House of the New Democratic Party, that $3.2 million of it is actually related to productions that were approved in the previous year. Is that correct?

 

            MR. FUREY: Yes, 16 productions totalling $3.3 million has already been identified.

 

            MR. BAILLIE: So it is $3.3 million - I appreciate that answer. Is that why the forecast for 2015-2016 in this area is actually zero, that no productions in the immediate past year were approved and then funded in that year?

 

            MR. FUREY: Yes, to my colleague's question, there were no funds identified in the 2015-2016 fiscal year for the Nova Scotia Film and Television Production Incentive Fund; there were no funds dedicated in the budget.

 

            MR. BAILLIE: I just want to make sure we're clear on this because the minister had previously, outside the Chamber, in pointing to the new fund's effectiveness said that there has been a number of projects totalling $3.3 million that have been approved. The forecast for that year is zero. The answer I believe we had for that is that because the funds haven't been dispersed that they're actually going to come out of the budget year - is that correct?

           

MR. FUREY: These productions are budgeted for the year, the fiscal year in which the productions would be completed. So this would, the $3.3 million worth of productions that have been approved will come out of the 2016-2017 budget.

 

            MR. BAILLIE: When it comes to the consistent accounting for these things, this might be apples and oranges, but it might not be. The now sort of infamous $110 million that was for the Nova Centre that is now for the new VG whenever that is is accounted for this year - it's a commitment that was made even though the money has not been expended. That's one example that's the opposite of how we're handling this fund. And just today, the Minister of Transportation and Infrastructure Renewal was asked why the renovation costs for the new Yarmouth ferry are stuffed into last year even though that money will be expended renovating the ferry this year.

 

            In other words, in both of those cases we were told that that money is actually accounted for in the year where the commitment is made, not the year where the disbursement occurs. Why is this fund different from the accounting rules for everybody else?

 

MR. FUREY: The Nova Scotia Film and Television Production Incentive Fund, as it is administered specific to individual applications the expenses are not recognized until they are earned, and they are earned when the production is completed. And in these circumstances, relative to the 16 productions, none of them were completed in the 2015-16 fiscal year. We anticipate some of them, and maybe all of them, will be completed in the 2016-17 fiscal year.

 

            MR. BAILLIE: I don't intend to dwell on this too long, but it just seems to me that when we're told that the province has to book $110 million in revenue because it's a transfer from another level of government and the commitment was in the current year - or even more relevant when we're told that the province has to record the renovations to the Yarmouth ferry in the previous year because that's when the commitment was made to transfer to a private company. In this case it's the same, although the money has not been expended this is a fund which grants money to private companies once the commitment is made - you would think they would follow the same rule.

 

So, I am going to leave that because I don't want to spend all our time on the arcane accounting, as much as I enjoy arcane accounting personally, but I really sense that we're using one set of accounting rules for this fund and another set, quite honestly when it's in the government's favour to use the other set. So, perhaps, I'll leave it for the minister to perhaps provide us with a written answer or an answer at a later date about why the rules around transfers to third parties don't apply to the Nova Scotia Film and Television Production Incentive Fund, because for those in the film industry who rely on that fund I know it's going to be very disappointing news to hear that when they thought they had $10 million of new money in the fund for the 2016-2017 fiscal year, in fact they only have $6.7. So it's a third less than a reader of the estimates would have thought at the time.

 

            So this brings up a very important issue I want to ask the minister about, which is the idea that there is a cap on the $10 million because now it's not $10 million in projects for 2016-2017, it is $6.7 million. So, is there a cap on the $6.7 million remaining for new projects in the new year?

 

            MR. FUREY: We have communicated on the floor of this Legislature and externally to the public, and I've communicated to the industry, that there is $10 million budgeted in the Nova Scotia Film and Television Production Incentive Fund. We have had discussions and the Premier has said publicly if we see and realize through monitoring and applications to the fund that the fund is being exhausted we'll explore other resources. This is no different than any other budget line that we're seeing in the books this evening. Nova Scotians expect us to be fiscally responsible. There is a due budget process that we follow and we will follow that for the Nova Scotia Film and Television Production Incentive Fund.

           

            MR. BAILLIE: With respect, it is different than other line items in the budget because it says $10 million, and it turns out it's not $10 million. It includes projects from last year that have not yet been disbursed and therefore, it's really $6.7 million. That's a third less than the industry was led to believe they could access in the current year. We've already seen what happens when the Film Tax Credit, the old tax credit was eliminated with very little notice to the industry. It's been devastating, so every dollar that's in the Estimate Book is very, very important if we want to maintain a film industry and, hopefully, grow it.

So, you know what, Mr. Minister? I actually hope that they do exhaust the remainder of the $10 million. I mean, we're here on April 26th and there's only $6.7 million to go, so that cap becomes very important. The whole reason it is important - and I know the minister knows this - is because the film production companies that want to employ Nova Scotians and want to make these new productions, they need to finance them. They need to take them to the bank and they have trouble doing that and getting off the ground when there is so little certainty that they'll end up getting approved, because no one knows when the $10 million gets hit.

 

I know that the industry has asked the minister to get up in a public place and say that every project that qualifies for funding will get funded. Can he do that here tonight?

 

            MR. FUREY: There are a number of components to my colleague's question, and I'll try to answer them. When we look at the 2015-16 fiscal year, film applications qualified under the former Film Tax Credit until July 1st. It was only July 1st that the Nova Scotia Film and Television Production Incentive Fund came into play, so there was money available under the previous program in the last fiscal year.

 

            My colleague also spoke about the $6.7 million balance. We anticipate productions throughout the fiscal year, and there will be productions that come forward later in the fiscal year where that expense earned and completion of the production is actually in the next fiscal year. So there will be money pushed through subsequent fiscal years on an ongoing basis.

 

            My colleague spoke about individual productions. We would encourage producers to apply and through that application process, hopefully, exhaust the fund. If we reach a point where the fund is exhausted, a monitoring process will give us some idea ahead of time where we will be able to say to producers and those who apply to the fund, submit your fund, we'll look at it, and we'll consider additional resources if we reach that point.

           

            MR. BAILLIE: That is actually a really important point for the industry because I believe that answer was actually the best argument yet for why they should be accounting for the commitments that are made in the fund in the year in which the commitment is made, not the year when the cash goes out the door, so to speak. Then those in the industry and the bankers and others that finance them will at least know when it says $10 million that it's $10 million and it's not $6 million or $12 million. It's going to be very difficult under the new rules, and also under the new accounting that the minister is describing, for anyone to know whether their project is going to be approved first of all and, secondly, if it is approved whether there's any money in the fund for this year or next year.

 

Surely it would be more transparent and easier for the industry and their financers if they knew what was in the fund at any given time by looking at the Estimate Book and by the government's quarterly updates, instead of trying to guess as we get closer to the end of the year whether there's any money left or not. I really hope that we don't lose the jobs and productions that could come because of this convoluted accounting, because ultimately what we care about is jobs.

 

            So I do want to return to the cap because this actually makes the cap - if there is a cap - so much more important to clarify. If we are starting the year with less money than we thought then when we get closer to the end of the year for the financers of film productions, the people who pay for those jobs, they need to know what their odds are of qualifying and whether they'll be funded that year. Telling film industry people that they'll think about it is not going to get them where they need to be, so I think the solution here tonight is for the minister to say every project that qualifies, no matter when in the year it comes forward, will be funded.

           

            MR. FUREY: I do want to clarify a couple of points. By the very nature of this discussion, the most recent productions that were approved yesterday - I believe two more - we were able to determine, based on the application, the value of those productions. We've been able to do that for each of the 16, and we know that $3.3 million is committed to those productions and that there's a $6.7 million balance remaining. We will always know a continued balance, and we will be able to communicate that publicly and to the industry.

 

            To my colleague's question around the difference, and he has used examples with the Yarmouth ferry and the VG. I want to share with my colleague that the funding formula and the agreements that we have come to are contained in the guidelines for the Nova Scotia Film and Television Production Incentive Fund. Those guidelines were drafted and compiled and completed in consultation between Department of Finance and Treasury Board representatives and the film industry. So those circumstances are stipulated in the guidelines and stipulated in the contract that that's how the Nova Scotia Film and Television Production Incentive Fund works.

 

            I've said it before and I'll say it again - this is a budgeted item. Nova Scotians expect us to be very frugal and accountable, and we're doing that by identifying the budget line for the Nova Scotia Film and Television Production Incentive Fund.

 

            MR. BAILLIE: That's all very interesting, and the minister talks about consulting with the industry. One of the things that the industry has been very clear on with us, and I believe publicly, is that they need to know that if a project qualifies that it will be funded. That was the question.

 

I can't help but wonder - the minister three Fridays ago called a press conference late in the afternoon to say he was going to announce some clarification to the guidelines around the new fund. Everyone was expecting something new to come out of that announcement. Nothing new did come from it. I think the minister, himself, admitted that he had really nothing new to say. Was the plan that day to announce this very thing, no qualifying project would be turned down?

 

            MR. FUREY: I'll give the short answer, and then I'll explain it - no, that was not the case. There were expectations being circulated that I simply wanted to clarify. Call it a media conference, whatever you want to call it, I recognized that there were expectations being distributed and communicated through the community and particularly the film industry, the sector, and I wanted to provide clarity. I simply indicated that I would make myself available to the media if they had questions, and we did that.

 

It was not to make an announcement, it was simply to provide clarity and manage those expectation that were not part of discussions that I had with film industry representatives.

 

            MR. BAILLIE: I will just say I have the announcement here. It was April 1st - kind of a coincidental timing because if the minister was hoping to provide clarity that day, I don't think that has occurred. Many people are still asking what happens if the fund reaches its estimated maximum later in the year. What happens to qualifying projects - will they be turned down because the fund is near exhausted or even exhausted? I mean, I've tried a couple of times, and I don't think we have clarity on that yet. I welcome the minister to just give us a clear answer on that as we go through the rest of our questioning here today.

 

            Of course we're focused on the cost of the fund, but really that's only half of the equation. Everyone wants to know the benefits that come in exchange for that cost, and there is a report out now from PricewaterhouseCoopers which estimated that there is a $7 growth in our economy for every $1 spent through the old tax credit, but presumably it would be the same with the fund if all goes well.

 

I would just like to ask the minister, when did he and his officials get a draft copy of the PricewaterhouseCoopers report?

 

            MR. FUREY: I am not sure when the first copy was provided to officials, but I received a copy of the report last week.

 

            MR. BAILLIE: I can't help but ask this question, and I don't mean to be flippant. I asked the Premier if he read it and he said no, and he said he has no intention of reading it because there's nothing in it that would make him change his mind about the film industry. I know everyone who saw that news item is wondering how he could know that without reading it.

 

I am just going to ask the minister straight up - have you read the report and, if not, are you going to read the report?

 

            MR. FUREY: Actually I have read the report. My colleague is quoting the Premier's response. I'll say this - I've read the report, and there are components in the report that establish and rationalize why we wouldn't change our position on advancing the Nova Scotia Film and Television Production Incentive Fund.

 

            MR. BAILLIE: I'll return to that, which is probably no surprise to the minister. Before I do, can the minister tell us if there was any direct communication between PricewaterhouseCoopers and his department prior to the public release of the report?

 

MR. FUREY: I'm just thinking to myself here - there has been no communication between PricewaterhouseCoopers and my office that I'm aware of.

 

            MR. BAILLIE: I will summarize the conclusions of the report which was about the old Film Tax Credit and not the new fund, just to be clear. It found not only that there was a $7 economic return for every $1 expended in the old tax credit, it also found that the industry not only pays for itself but it makes money for the government and the direct tax receipt return of the government was greater than the cost of the tax credit. It also found that 3,200 Nova Scotians work in the industry and are supported by this structure. It further found that those 3,200 tend to be younger than the provincial average, they tend to be more entrepreneurial than the provincial average and they include new immigrants to the province.

 

These are all very positive things. How did the minister come up with the conclusion that this report supports his government's decision to cut out the industry?

 

MR. FUREY: What I'm communicating in reviewing the PricewaterhouseCoopers report - there are a number of components to it, but one of the things that is articulated right away on Page 4 is a disclaimer really to the content of the report. It clearly, clearly, indicates that the report is not to be used for public policy discussions going forward with the industry. It is clearly laid out on Page 4, that disclaimer.

 

            My colleague is speaking about numbers. The PricewaterhouseCoopers report was based on feedback from the industry. Our Department of Finance and Treasury Board has done their own analysis using Statistics Canada numbers. We still differ in where the government's position is and the value to the industry, and the numbers the film industry use and the value to the industry.

 

            What I'm saying is in reviewing the report and the disclaimer and the statements made, I see this doesn't change the discussion that we've been having to this point.

 

            MR. BAILLIE: The minister seems to be changing his answer. A minute ago he said that the PricewaterhouseCoopers report supported their decision to cut off the film industry relying on a disclaimer that exists in every consultant's report ever created, which actually doesn't undermine the report at all and doesn't support the government's position at all. It is standard boilerplate disclaimers that every report every written has. Then, in his next, most recent answer to the same question, he says well, no, there's nothing wrong with the PricewaterhouseCoopers report - we have a different report in the Department of Finance and Treasury Board that says something different. Well, that's a very different thing.

 

            The funny part about all this is that the PricewaterhouseCoopers report relied on numbers that came from the Nova Scotia Department of Finance and Treasury Board which itself is sourced from Statistics Canada. Surely the minister doesn't have a problem with the information from Statistics Canada and the Department of Finance and Treasury Board in his own government. But this report showed clearly that the government actually made money on the old system and, now, we find out that the new fund is going to be a fraction of that size and that even when we see a budget that says $10 million it might be actually less than that.

 

I'm going to ask the minister now that he's read the report and his own analysis - will the department reconsider the government's position on the Film Tax Credit?

 

            MR. FUREY: As we speak, there's no consideration to revert to the old Film Tax Credit; there has been no discussion. I've been tasked with administering and delegating that responsibility for the new Nova Scotia Film and Television Production Incentive Fund to NSBI, and we'll continue on that path. We have 16 productions to date and we look forward to more productions. That's the path our government has taken, that's the decision that we've made, that's the decision that Nova Scotia taxpayers can afford, and we'll maintain that course and support the industry through the Nova Scotia Film and Television Production Incentive Fund.

 

            MR. BAILLIE: Well, again, it's been now shown from an outside, independent, brand-name consultant - one of the best in the world - that the industry made money for the government. It more than paid for itself plus health care, plus schools, plus roads. Having said that, it's now been a year since the government cancelled the old program. His department is responsible for economic growth. I hope that they're monitoring what's happened in the industry since that decision was made a year ago.

 

Does the minister have any information on how many jobs have been lost, how much economic activity has been lost, how many people have moved away because of this change? If so, I would like him to share it with us now so we can do a proper evaluation of what's going on.

 

            MR. FUREY: What I do know is that there's certainly value in the film industry, and that's why we've committed the $10 million. We as a government cannot focus solely on one sector. We have a responsibility to multiple sectors and in order to support those sectors, there is a responsibility on government to be fiscally prudent. We've attempted to do that and, with those decisions and our ability to invest in other sections, we are seeing economic growth, and we are seeing our youth unemployment rate decrease leading the country in the reduction of youth unemployment.

 

There are a number of programs that I referenced in my opening comments that are seeing economic growth, that are retaining more Nova Scotians. We believe that broad-sector approach to governance is appropriate, and we're starting to see the outcomes of those public policies. We'll continue on this course to ensure that there is economic growth in Nova Scotia and that our young people are staying and they are employed in multiple sectors.

 

I know there has been a lot of comparison between the Nova Scotia Film and Television Production Incentive Fund and payroll rebates. We're seeing significant growth in the financial sector in HRM. The average employment growth is about 6 per cent. With the payroll rebates, we're seeing a growth of about 24 per cent. These are good-paying, good jobs for young Nova Scotians coming out of both our university campuses and our community colleges. We believe the broad approach to sector development is in the best interest of all Nova Scotians.

 

            MR. BAILLIE: The minister is comparing giving millions of dollars to Butterfield Bank, to TD Insurance, to the Royal Bank of Canada - which was a previous year but it was $23 million, ironically almost the exact same amount as the entire Film Tax Credit cost - and calling that a broad-based development.

 

            One of the great things about the Film Tax Credit system was that it didn't pick out an individual company, that it was a support base for an entire industry that employed 3,200 people. I'm really disappointed that the department has not tracked the effects of the decisions that the government has made. I mean, this is the Department of Business; it's the one that's supposed to know when government makes a good policy decision, or a bad policy decision, what actually happens out there in the real world.

 

            Now, we certainly have seen a dramatic drop in an activity in this important part of our economy. It seems to me it would only be responsible for the Department of Business to actually measure it so that they can know whether they've made a mistake or not, whether the government has or not. In Opposition, we get to come here and complain about it but we can then see a chance for a government to be open-minded and fix it.

 

            The minister was asked if they are tracking job losses in the film business;. I think he said no, but I just want to confirm - is it correct that no one in the Department of Business is actually tracking the job losses that are occurring in the film business?

 

            MR. FUREY: I said before we are aware that this change has had an impact on the film industry; we've never denied that. We recognize that there are individuals who have lost their jobs and have relocated to other provinces to pursue their career aspirations. But we can't lose sight of the fact that our focus on other sectors is allowing us to generate employment opportunities with that very same age group, and we'll continue on that path to drive the reduction of youth unemployment and to create employment opportunities for young Nova Scotians across multiple sectors.

 

            Let's speak very specifically about facts because this is important because the comparison continues to be made between the Nova Scotia Film and Television Production Incentive Fund or, for that matter, the former Film Tax Credit which was a 50 per cent to 65 per cent labour subsidy. Nova Scotians understand that, and they see it as unfair. With the industry we've created the Nova Scotia Film and Television Production Incentive Fund that allows for 25 per cent to 32 per cent all spend. It presents significant opportunities for the film industry. But when they compare it to the payroll rebate program, we're talking about a 5 per cent to 10 per cent, an 8-per cent average of subsidy for wages.

 

There's a significant difference. Nova Scotians understand that a 50 to 65 per cent labour subsidy in one environment, and 8 to 10 or a 5 per cent to 10 per cent wage subsidy in another that's creating good jobs for the same age group, and the work that our departments are doing across multiple departments, across multiple sectors are creating jobs in rural Nova Scotia for the same age group. So, we have a responsibility to be broad in our public policy and our public strategy about economic growth. We believe that the path we're taking is the right path, and we'll continue on that path to ensure that we see economic growth both in our urban and rural communities.

 

            MR. BAILLIE: I think it is important to actually talk about facts because we hear this 50 per cent to 65 per cent number being thrown around and I hope the minister knows that that actually isn't on all labour and it very rarely ever reaches that level. That is an absolute maximum that very few productions hit.

 

            The fact is that it's on qualifying labour, not all labour, and the regulations and the old rules clearly excluded pre-production labour, post-production labour. So it wasn't on all labour. If it was so great or so generous, I don't know why the government then replaced it with a fund that covers 25 per cent of not just labour but every other cost that the film industry incurs. Those are facts.

 

            The other fact of course is that we have 3,200 jobs at risk because this change got made, and I believe most Nova Scotians think it was a big mistake. Yes, we want broad-based employment growth, but that doesn't mean excluding part of the economy, a particularly young and growing part of the economy. And if we're going to throw facts and figures around, we better count them all in because to compare the rebate on payroll taxes to the Film Tax Credit is really apples and oranges.

 

            What the minister is missing is that those 3,200 jobs they're paying the full freight of income tax here in Nova Scotia; they're paying the full freight of the CPP and EI and other payroll taxes here. We're getting that money back in large measure, so those two percentages are not the same thing, and I don't think it helps for the industry, it's trying to recover, or for other Nova Scotians to see the whole picture, when only part of the picture is ever presented from the government side.

 

            One thing that would help is to ask the industry itself, and I can't help but note that in the business plan for the Department of Business they indicate that they are surveying their clients. This is not just the film tax people but for NSBI; they're surveying all of their clients. I'll ask the minister, has that survey been done and if so, can he table the results?

 

            MR. FUREY: Just a couple of components to my colleague's comments and question. He refers to numbers of jobs, and it's common knowledge that some of the numbers that are used, the 3,000 includes jobs for CBC productions that aren't eligible for either fund or subsidy. So this is what I'm saying, that the information is still unclear, and we can't be making public policy decisions on information that is not clear.

 

            Relative to his question around the survey, when those surveys are complete and we've had an opportunity to analyze those surveys internally, I see no reason why we wouldn't share the outcomes and the findings. To me that just makes good common sense, and I would have no objection to sharing the information of those surveys across multiple sectors, not just the film industry.

 

            MR. BAILLIE: I have with me the NSBI Crown Corporation Business Plan. I'd tell you the page number, but for some reason the pages are not numbered in the Crown Corporation Business Plans. I hope somebody takes that suggestion up in the future because it would make this a lot easier.

 

But having said that, the NSBI Business Plan in the section Outcomes and Performance Measures, states: "A client survey is conducted early in the fiscal year to establish benchmarks in each of these three areas"- those being Trade, Investment/payroll, and Nova Scotia's business climate - "As a means of measuring NSBI's impact on the success and growth of our private sector clients, NSBI conducts a follow-up client survey in February/March of the fiscal year to measure client progress . . ."

 

So I just want to be clear that that is the survey that I am referring to. I just want to double-check, has that benchmark survey and the follow-up survey both been done and, if so, will the minister release them publicly?

 

            MR. FUREY: I do commit to my colleague that we'll have the pages numbered next year in the business plan.

 

            My colleague has read specifically from the business plan, and if you continue into the last paragraph of the section he has referenced, and I'll read it as it is: "As 2015-2016 was the first year of the client survey to measure NBSI's efforts, trending data from past years is not available; however, results from the first year of the client survey will be available in April of 2016."

 

I repeat what I said earlier. When we have had an opportunity to analyze those numbers internally, I see no reason and have no objection to sharing the results of those surveys.

 

            MR. BAILLIE: I want to thank the minister first of all for agreeing to number the business plan pages in future years and, secondly, for committing to release the survey results when they've had a chance to review them. Of course, this is April 26th today, so that's not too far into the future. I do appreciate both answers; and I just want you to know that.

 

            I will now ask the minister, can he tell us whether the film industry clients were included in the client survey that we are speaking of?

 

            MR. FUREY: The film industry was not included in this year's survey simply because the fund is just up and running as of July 1st.

 

            MR. BAILLIE: I will say that is disappointing since this was the point of major debate in this House, a major controversy throughout the province, and the government did make a pretty significant change to the way industry works with all kinds of at least anecdotal data that it was devastating to the industry.

 

I asked if they had been tracking the job losses, and the answer is no. I asked if they would read the PricewaterhouseCoopers report and the Premier said no, but the minister said yes. Now they're not included in the client survey of NSBI. So, that's for the year that we just completed, which was the first year of the new fund. I'm going to ask the minister: Will the film industry be included in the client satisfaction survey of the upcoming year?

 

            MR. FUREY: I want to refer back again to the business plan and the paragraph that I just previously read, and I want to reread a piece of that. "As 2015-2016 was the first year of the client survey to measure NSBI's efforts, trending data from past years is not available . . ."

 

I think it's important that if we're going to do surveys, that we look at not partial years but full years, and we will be able to do surveys with what I believe would be more detailed information. In these circumstances, whether it's the film industry or any other sector, if we're completing surveys, once the department has had an opportunity to analyze those surveys, I see no reason why we wouldn't make the content of those surveys public. I certainly would have no objection.

 

            MR. BAILLIE: Well, 2016-2017 will be a full year with the new Nova Scotia Film and Television Production Incentive Fund in place. Members of the film industry are all in a way clients of NSBI because this is a part of how they finance their operations. Will the minister commit that the film industry will be included in this year's client satisfaction survey from NSBI?

 

            MR. FUREY: Any future survey that would be done in the film industry would be specific to NSBI clients, would be clients through the Nova Scotia Film and Television Production Incentive Fund and those that have partaken, so I don't see why we wouldn't include those clients of NSBI. But it would not be NSBI's responsibility or intent of the survey process to survey a sector or an industry that they don't deal with directly.

 

            MR. BAILLIE: Will film companies that apply to the fund be included in the survey this coming year?

 

            MR. FUREY: I think it would be only reasonable that we would include those clients of NSBI, in this case applicants to the Nova Scotia Film and Television Production Incentive Fund and any other client base that NSBI deals with as clients.

                       

MR. BAILLIE: I believe the minister is a reasonable person, so I'll take that as a yes and we'll take this up again next year, I'm sure.

 

In my remaining time, I do want to ask about a few other things. I may return to the film business, but for now we want to ask about a few other things. Tourism is certainly one of them because tourism is a very important industry to the province. It's a big one; it's an Ivany goal to double our tourism. I haven't seen a lot of mention of the Ivany report in any of the Crown Corporation Business Plans. It's mentioned in a footnote of the Department of Business' estimates. It's a shame because the Ivany report remains something that I think most Nova Scotians still some day want to see some action on from the government.

 

In the area of tourism specifically, the government made a decision last year to outsource our advertising efforts to a Toronto agency. I know they have a local affiliate, so I'll spare the minister from pointing that out, but nevertheless the creative around our tourism TV ads is all going to be done out of Toronto instead of in the local industry here. I will ask the Minister of Business: Did he or his department have any input into the decision to outsource the tourism contract to Toronto, when we have an industry that's worthy of doing the work here at home?

 

            MR. FUREY: Once again there are a couple of components to my colleague's questions, so I'll attempt to answer both of them. I'm just wondering at this time if we've transitioned from NSBI, is it possible to relieve my NSBI colleague and bring my department representative back to the Legislature?

 

            MR. CHAIRMAN: Certainly, we will take two minutes.

 

            MR. FUREY: And then I'll respond.

 

            MR. CHAIRMAN: We'll recess for two minutes.

 

            [7:01 p.m. The committee recessed.]

           

[7:04 p.m. The committee reconvened.]

 

            MR. CHAIRMAN: Order. The honourable Minister of Business.

 

            MR. FUREY: Thank you, Mr. Chairman, and I appreciate the time for the nature break - very much valued. My colleague was asking about the marketing contract. There are a number of things here that I think are important to the broader discussion: procurement, transparency, fairness, and opportunities for Nova Scotia.

 

            If we were to restrict procurement policies within the provincial boundaries of Nova Scotia, we could expect other provinces to implement similar strategies, which would be a disadvantage to Nova Scotia. I think that's first and foremost a discussion about procurement that we have to be conscious of, and our desire, our opportunity is not to restrict Nova Scotians, to compete only in the geographical boundaries of the province but to give Nova Scotians the opportunity to compete across the country, across the nation, and around the world. So, to restrict our procurement strategies, to me it would be counterproductive to our objective of economic growth.

 

            Specific to DDB and the contract that has been extended to them, DDB has partnered with Trampoline in Halifax; my colleague has referenced that. That's an important component that demonstrates Nova Scotia content and Nova Scotia input. DDB is recognized around the world for their marketing expertise, and they actually are contracted by the federal government to promote our country around the world; that's another important component of DDB. With that $6 million dollar contract, the reality is whether it's a Nova Scotia company or an Ontario company or a Vancouver company, or any other company that would choose to bid on growth opportunities in Nova Scotia - we welcome that input from those afar, we welcome their participation in our economy. That is vital for Nova Scotia.

 

            More importantly, the content and the makeup of that contract, the $6 million dollar contract, the largest percentage, and in the area of $5 million plus, is going to be spent out of province anyway. Tourism has done their work; they know the areas of highest potential travel to the province and our marketing strategy focuses on those locations: Ontario, Quebec, the northeastern US. We believe that through the work of Tourism Nova Scotia they have been able to secure the best opportunity for Nova Scotia to grow our tourism, to promote our province, to bring first-time visitors, to have them spend more money and stay longer and enjoy the experience, and when they leave and go back to their homes and their provinces and other countries that they speak about the experience they had in Nova Scotia. That's critical in our ability for Nova Scotia to double our tourism revenues over the course of the next, now, nine years, eight years.

 

            Specific to my colleague's question around what input or role the Department of Business had, I want to remind my colleague and all my colleagues of the role of Crown Agencies. They are an independent Crown Corporation of government where they are delegated those responsibilities and, in these circumstances relative to the marketing contract, those decisions were made solely within Tourism Nova Scotia and approved by the board of Tourism Nova Scotia. There was no decision making relative to that marketing contract within the Department of Business.

 

            MR. BAILLIE: I just want to remind the minister that the purpose of his own department, as listed in the Estimate Book, is to provide strategic direction and leadership to all government departments, agencies, and Crown Corporations. It's actually an important question because this sends a pretty big message to the country about whether the government has faith in our own businesses so . . .

 

            MR. CHAIRMAN: Order. The time has expired. We will now revert to the New Democratic Party and I would ask at this time, would you like to question along the lines of NSBI? We will swap those staff people and not start your time until then.

 

The honourable member for Dartmouth South.

           

MS. MARIAN MANCINI: Well, I did have some further questions of NSBI, but I also have questions on tourism, so maybe I could carry on with those and then we could perhaps - it doesn't matter to me, whatever works best for the individuals who are here.

 

In relation to tourism then, the provincial operating grant for this year is $21.16 million My question to the minister is, what return on investment provisions are attached to the in excess of $21 million provided to Tourism Nova Scotia by the province?

 

            MR. FUREY: I don't have specific numbers relative to the $21 million dollar investment and what return we're seeing on that investment. We know our objective of doubling tourism revenues over the next, now, eight years. We saw a 6 per cent increase last year relative to the tourism sector.

 

            One of the things we're doing within all of our Crown Corporations is consistent with the guidance through the One Nova Scotia Now or Never report - our outcomes and alignment agreement - so in the case of Crown Corporations, outcome agreements. As we advance our objective, we want to be able to track that objective from year to year to ensure that we are meeting our targets and that we will meet our targets in out years.

 

            As numbers recall, our industry has been generating about $2 billion annually; we want to double that to $4 billion. The figures that I've seen as a result of the last tourist season are in the area of $2.5 billion. So we know we had a robust tourist season, and we know we generated more revenues consistent with our objective. The number I'm seeing is a 6 per cent increase. We believe we have to achieve 5 per cent each year to reach that target, and I'm comfortable in saying as we speak that we're on track. A number of factors contribute to that, but we know there's more work to do. I don't have a specific number that my colleague may be looking for, what is the actual return on that $21 million investment? We could make attempts certainly to access that for my colleague.

 

            MS. MANCINI: I thank the minister for agreeing to provide that information to me if it's there.

 

            I would like to direct your attention to expenses - CEO and Board Administration, those expenses. Why are forecasted CEO and board administration costs higher than in 2015-2016? You have those numbers there, and I have them here if you need them.

 

MR. FUREY: Mr. Chairman, I think this is where we're going to start playing musical chairs. I don't have the financial breakdown here with me on the floor, but I'm looking to the COO of Tourism, and if we're in a position that we can exchange again, I may be able to provide the response to my colleague.

 

            [7:16 p.m. The committee recessed.]

           

[7:18 p.m. The committee reconvened.]

 

            MR. CHAIRMAN: The honourable Minister of Business.

 

MR. FUREY: In response to my colleague's question specific to the CEO and board administration, the difference in Estimate and Forecast from 2015-16 to 2016-17 really is about ramping up. A part time, or I should say a full-time CEO in the 2016-2017 fiscal, and in these circumstances addition of a full-time admin support to the CEO (Interruption) and I should say the CEO and the board. Those would account for the differences in the two fiscal years.

 

MS. MANCINI: Just while we're on that issue, can you tell us how much is the CEO being compensated for in 2016, and perhaps compare it to the previous year?

 

            MR. FUREY: The compensation for the CEO for this year is $154,000 plus expenses and benefits, which brings it up to about $184,000, and the compensation in the previous fiscal year for the CEO - I should say, the 2016-2017 compensation is a contract. The compensation for the previous fiscal year was $184,000.

 

            MS. MANCINI: Thank you for that. I would like to direct the minister back to a question before. I had asked about return on investment provisions and the minister indicated that that's not information that is available or that they are tracking or can't provide the specific number. I'm wondering, can you provide a breakdown of the $21 million that is allotted to the department?

 

            MR. FUREY: I think my colleague is familiar with the CEO and board administration expenditures of $352,400, corporate services just over $7 million, marketing $11.6 million, and sector development $3.26 million. Those are estimates for the 2016-2017 fiscal year.

 

            MS. MANCINI: Thank you. Also, I would like to refer back that the minister had suggested potential revenue increases that they were aiming for. Can the minister answer: How does the department know that their strategies will produce that tourism revenue?

 

            MR. FUREY: I referenced earlier the partnerships and pilot projects that we were advancing, and those are the things that we will monitor to see the outcomes of those initiatives, and I can indicate at this time that very early, the preliminary feedback and outcomes are very good. But that's part of the measurement process that I referenced earlier, and I spoke about outcome agreements with our Crown Corporations and our ability to track that progress. It's a measure that we will see and continue to implement so that if we're not meeting the objectives and targets, how do we re-strategize and what do we have to do to ensure that we continue to meet those annual targets over the period that we've identified.

 

            MS. MANCINI: I'd like to refer the minister to the marketing line in the budget. Can you provide me with a breakdown of the $10.5 million that is spent on marketing in 2015-2016? Just specifically, I'm wondering about how much money was spent on radio ads, TV ads, print ad, online ads, billboards, et cetera.

 

            MR. FUREY: Mr. Chairman, I can break down the areas for my colleague. There are four areas within that marketing budget: marketing, itself, in the amount of $7.6 million; literature, in the amount of $937,000; sales, in the amount just over $1 million; and then media buys, in the area of 140,000, which comes to that 10.9 million. Now, within each of those four categories, there are subcategories - and I can go through them all or I can provide a copy of that to my colleague.

           

            MS. MANCINI: Yes, that would be great if that information could be provided, as I'm getting close to my time here.

 

            I do want to ask a question just about these ads. What provinces do they run in, what states and countries - is it an international component?

 

            MR. FUREY: As I mentioned earlier, there are areas that our research shows us there's a high interest of travel to Nova Scotia, and those areas typically have been Ontario, Quebec, and the northeastern U.S. That's where those national specialty TV buys, marketing pieces, are most prevalent.

 

            MS. MANCINI: Can the minister tell us how many tourists actually come to Nova Scotia as a result of the marketing by Tourism Nova Scotia?

 

            MR. FUREY: Mr. Chairman, the outcomes of the tourism marketing campaign, as we speak, really are demonstrating significant uptake to our website. We're seeing about a 20 per cent increase in access to our website over the same period last year, and there are contributing factors to that - the Trump Bump for Cape Breton Island, where many aspire to travel and some of us are most fortunate; it's simply a couple of hours away. But there are a number of initiatives that are really drawing attention to Nova Scotia and the Good Cheer Trail and the winery . . .

 

            MR. CHAIRMAN: Order. The time allotted for consideration of Supply today has expired.

 

            The honourable Deputy Government House Leader.

 

            MR. TERRY FARRELL: Mr. Chairman, I move that the committee do now rise and report progress.

 

            MR. CHAIRMAN: The motion is carried.

 

The committee will now rise and report its business to the House.

 

            [The committee adjourned at 7:31 p.m.]