MR. CHAIRMAN: We are debating the estimates of the Honourable Gordon Balser, the Minister of Economic Development, and this morning we will be starting with the NDP caucus. The time is 9:33 a.m.
The honourable member for Sackville-Cobequid.
MR. JOHN HOLM: Mr. Chairman, I am going to be brief on this line of questioning. I understand that the minister, of course, is responsible for the industrial parks owned by the province and the province, of course, owns land in the Bedford Industrial Park, the Duke Street area. I am wondering if the minister could tell us if the government has agreed to a land swap with the Halifax Regional Municipality for part of that land?
MR. CHAIRMAN: The honourable Minister of Economic Development.
HON. GORDON BALSER: We will have to take that particular question under advisement and get the information for you. I don't have that detail at this point.
MR. HOLM: Okay, I would appreciate that. It is my understanding that there is - I have the paper in the other room - a proposal to build a recreation/leisure type of centre on the Duke Street area, just off Highway No. 102, across the road, so to speak, from the Sackville Industrial Park and that the province is agreeing to swap some of the land that they own there with the HRM. You are not aware of that?
MR. BALSER: I am not aware of that. It is not something that has come to my attention. But, as I said, we will certainly look into the situation and get back to you with the information.
MR. HOLM: Okay, that is really want I wanted. I want to find out. I am just wondering when the minister would expect to have that information?
MR. BALSER: Again, subject to the time taken by estimates and so on, we will have people get the information to you in as timely a manner as we can.
MR. HOLM: So I could expect it early next week?
MR. BALSER: Yes, that is reasonable.
MR. HOLM: Thank you. That is the only question I am going to pose right now.
MR. CHAIRMAN: The honourable member for Cape Breton Centre.
MR. FRANK CORBETT: Mr. Chairman, good morning to the minister and his staff. When we last talked, we had some discussions around Nova Scotia Business Inc. and my feelings on what I think Nova Scotia Business Inc. lacks. I want to move a bit away from there, but still in the realm of economic development for sure, and that is the Cape Breton Growth Fund. I know there is a partnership fund with you and with your department and the federal government. It will come as no surprise to the minister on my feelings of how that money should be spent. I know pretty much what the minister's view is and, for the record, I want to put my views down. I suppose, part of the reason for asking you, Mr. Minister, is to get your views on the record.
The growth fund was initiated in reaction to the federal government getting out of the coal industry and it has been my position, since they announced that, that the bulk of that fund should be invested in areas where there is the greatest effect of them retreating from the coal industry. By that, I mean the riding I represent and probably the Glace Bay area and, indeed, the Northside area. They certainly had a committee and went around. At that time, I told the minister that I didn't agree with the provincial appointment to that committee because I believed that they should have had somebody who was from the affected areas and it was somebody from the Strait of Canso area.
So, quite clearly, putting my position on the table and I not going to put words in the minister's mouth, but I know that he feels that it is a mini hub and spoke type development, that if it is good for the Strait of Canso, it may be good for New Waterford. So I guess I want to know, if that is his position, can he explain to me if they are going to invest money in the Strait of Canso, how does that help the Town of New Waterford?
MR. BALSER: Again, it is my belief that one of the issues that has hampered economic development, whether it is in Cape Breton or in mainland Nova Scotia, is a view, particularly at a regional level, that if, and I will use my riding as an illustration, historically
one community in that area might be pitted against another in terms of opportunity because of the view that the economic benefit, whether it be an increased tax base or direct employment opportunities, would be lost. For example, a company locating in Cornwallis Park, and there have been a number of initiatives there. For a time, the Town of Digby might have viewed that as a loss to them but, again, to Annapolis County, again to Cornwallis or, conversely, something locating in Digby County would be viewed as a loss to Annapolis County.
What has happened in my community, and I think it is a dawning awareness provincially, if we have a region and we can focus on economic development, attract something to that area, that all communities benefit directly and indirectly. If you build critical mass, then the opportunities will expand in the same way that if you look at the growth of the Port Hawkesbury-Strait area, because success breeds success, if you will. If you look at the other jurisdictions, many people now see a commute from the Valley to opportunities in Halifax or conversely from Halifax to an opportunity in the Valley. A 45 minute drive is no longer considered something that is not surmountable.
So I would say that rather than chase away economic opportunity, if a company or an opportunity presents itself to locate in the Strait, the fact that the economy provincially is growing, the fact that the economy is growing in the Strait area, will cause a ripple effect into the outer reaches. What we have seen, and again to use a mainland analogy, as a result of the lessening of the unemployment statistics in the metropolitan region, companies now, as a matter of course, are looking out towards Windsor or New Minas. We had an announcement yesterday of an opportunity in Yarmouth. So it is a question of trying to grow critical mass.
I know that you and I have had discussions about this issue. Certainly, having an opportunity come to New Waterford is a more direct benefit than if the opportunity comes to the Strait area or the Inverness area and so on. So I think what we have to do is try to balance and capture opportunities as they present themselves. Certainly, the intention of the growth fund is to apply as much opportunity in terms of financial resources to dealing with the economic climate in industrial Cape Breton because of the closure of Devco and the closure of Sysco.
That certainly has been the hallmark of the fund structure and the committee's view. But, at the same time, I think it would be short-sighted to not look at the opportunities that emerge to support industrial development in all parts of Cape Breton. There is a genuine concern on the part of the committee members, on the part of the province, to ensure that we do focus on industrial Cape Breton. Not to hearken back to the same old, but certainly there has been provincial support in industrial Cape Breton and I can tell you that there is more in the offing in terms of announcements of provincial support to companies that are trying to grow and expand in industrial Cape Breton.
For example, another issue, and we talked about it yesterday in Question Period, was related to the rail line. As I said in response to a question in the House and I have said on a number of occasions, for me helping to ensure that the rail line remains through a transition resulting from the closure of Devco and Sysco because there are a number of companies that rely on that, that would be a good application of the Industrial Development Fund. I would support an initiative in that direction because that transcends geography and keeps a viable piece of infrastructure that will ensure that industrial Cape Breton remains viable, as do all the communities that lie along that rail line.
MR. CORBETT: If you were talking about general revenues coming out of your department, Mr. Minister, I have no problem with that. I have no problem with when you talk about general investment, whether it is Shelburne or Yarmouth or Canso, wherever. I think that is what you should be doing. But part of what you said before, I have to agree with. When you said that that growth fund is a reaction to a major employer, and you lumped in Sysco and I think you are wrong there. That reaction was purely from the Cape Breton Development Corporation retreating from industrial Cape Breton, at that point, unless you knew something I didn't know, that wasn't contemplated around Sysco.
So was that money earmarked above and beyond any other monies that would come from some form of economic renewal money? It was not seen as, here is our pot and we are going to put it in there and this is the regular money. It has always been purported to be over and above what else we are going to do. So the message you are sending out is almost like, once we are through with you, that is it. There is no appreciation, whether it is New Waterford or Dominion or Glace Bay, because once we have used your resource, we are throwing you out.
Again, I appreciate discussions we have had, both officially and unofficially, about areas that are in decline in this province economically. But on the other side of it, it has to be said that for the best part of a century, this province certainly grew from the resource it took from industrial Cape Breton. We, quite literally, fired most of the industry in this province. Yet, once it hits a rock, we are cast aside. As I say, I have problems when we use an overabundance of fossil fuels and what it can do to the environment. I don't say that doesn't have a consequence to this province. But that is not why we have retreated from that. We are burning just as much coal in our generating stations in this province. I see it every day and I am sure anybody who crosses the Canso Causeway sees Venezuelan coal piled up on the side of the road. Yet, for whatever reason, we are not mining coal in Cape Breton.
Yet, we have used the resource, so what we are going to do now, we have cast our eyes on the Strait of Canso and we feel we owe you nothing. Well, I don't think that is at all appropriate. I see across the table, the member for Cape Breton North and we had a discussion the other night about the integral part that the Northside Industrial Park plays over
there. I appreciate that and I think it is reflected in the minutes of that debate. I think there should be investment in there because there is growth there.
On the other side, there has been almost no investment in that other side of industrial Cape Breton, whether it has been in a tangible way of helping with infrastructure, it has been nothing. Again, some of the people you talk to - especially on the federal level - you have no control over this, but this bothers me when people who are involved from the federal side, whether it is ECBC or something like that, who will portray certain sections of industrial Cape Breton and they have a plan for them without even asking anybody. We are going to - I have told you this once before - turn New Waterford into a bedroom community. This is without local input, this is somebody from Ottawa coming down and putting the stamp on and saying, here is what we are going to do.
I guess this is where my worry comes in. If you are involved in that growth fund and you are buying into that top-down mentality of industrial development or economic development for that region, aren't we in trouble? Are you taking your lead from the style of top-down investment that the federal government does? Or, are we really trying to say what is best for the people or are we just going to be satisfied? I disagree with you - it is a big difference going between Cornwallis and Digby than two hours from New Waterford to Port Hawkesbury. And it is two hours because I travel it every week, so, put it this way - you are into a twelve hour day if you are working eight hours in Port Hawkesbury - two hours down and two hours back for an eight hour day. It is not something that is doable. They are not the greatest roads in the world. Maybe you are planning on twinning the road and that will be an announcement from you and the Minister of Transportation which will be great. But, it is not there yet, so it is not a fair comment to say that investment in the Strait area has a direct impact on most of industrial Cape Breton because it doesn't. We are not 45 minutes away, we are two hours away. Your vision, does it include the top-down style of economic development the feds have?
MR. BALSER: Not at all. In terms of the government agenda, if you look back to the blue book that is so often cited, there is certainly a recognition of the role of the RDAs and we can have a discussion about whether or not RDAs are performing to the level of expectation of members seated around a table. Community-driven economic development is the way of the future. If you look at the Cape Breton Growth Fund, our portion has not been drawn down. I know that the committee has been struck and they have heard some submissions about possible applications to access that money. They are taking a long, hard look at what is appropriate. I think if you look - and since we are on the topic of Cape Breton, there has been a history of less than successful endeavours to diversify the economy. It may be a function of lack of opportunity or it may be a function of misapplication of funds.
I can tell you that whether this is a one-time only kind of commitment on the part of the federal-provincial government - which may or may not be the case - it is critically important that the kinds of proposals that come forward and that are funded are those that have some long-term viability. That is where my direction has been to the people who are directly involved in the fund from the provincial perspective. We do have a person who sits at that table and who is directly responsible for the provincial participation in the committee and in the decisions and in the economic development for industrial Cape Breton. The individual, I believe, is well respected in the community and has a long history in that area in terms of his role in economic development.
Back to the issue of direct or indirect, I did not want to create the illusion that I thought a call centre or an opportunity for employment in Port Hawkesbury was a direct benefit for people living in New Waterford or Glace Bay. What I said was, direct or indirect benefit. With a strengthening economy, you do have a greater level of confidence, a greater level of awareness and a greater opportunity to capture opportunity. There is no quick fix to economic renewal, as the member obviously knows. What it takes is a long-term strategy. The funds are there, they are committed over and above the ongoing commitment on the part of the province.
It is important that we work with the federal partners. It is no illusion to anyone that the federal government has a great deal more resources at its disposal than do we as a province. I think if you look at some of the successful initiatives in the last little while, they certainly have captured the involvement of HRDC and of ACOA and of various federal funds. That is the big success component, if we can lever dollars from our federal partners, as has been the case with the EDA agreement or the new proposed funding arrangement that is being made, that we can create opportunity. I think the other thing that has to happen is that the proposals that come forward have to see private sector participation. I don't think the right strategy is simply to put together proposals or draw down from a pool of money. If an entrepreneur comes forward with a plan and a vision and brings into play some private capital and at the same time accesses federal-provincial programs, then that is a win for everyone.
I don't believe the old models work, so in terms of do I subscribe to a top-down philosophy of economic development? Not at all. I believe it has to be a collaborative approach and that the best and most successful initiatives come out of the communities.
Another big funding opportunity that is just beginning to be fully appreciated and understood is the community investment fund. We have a number of communities that come together, put their own money into play, received a tax credit for the purposes of income tax reduction, and at the same time, have bought into the future of their own area. I think - and again, it is not cliche - I believe we have the opportunity to make it work properly. Again, it involves local, provincial and municipal politicians and business people and so on.
MR. CORBETT: I want to change focus a bit. It is probably going in the direction the member for Cape Breton South went yesterday and that is about the film industry.
We have the studio in Sydport and I somewhat disagree with taking a studio like that and drying out and saying - like we did with the Pit Pony and using that as the tenant. What happens sometimes is that you scare off other work because it is just not large enough to do that. I am wondering how active your department is in promoting that studio and seriously looking at the types of fit for that. As someone who has some past connection with that style of work, there is a whole industry out there built around music videos, specialty television type. Whether it is infomercials - I remember before that was built, I was personally involved with a proposal that had no financial gain for me, but it was certainly dismissed out of hand before it got to somebody as lofty as you. (Interruptions) I want to know how often are you involved in marketing that and are you lending any expertise?
MR. BALSER: The quick answer is, yes, I agree. One of the things that has occurred in this province is that we have a significant number of sound stages or production facilities in the province. In some instances, they were built as you suggested, to provide an opportunity for a limited series production or potentially a production that would go on as long as someone was willing to purchase that.
That perhaps was of benefit in the short term, but then once that particular production was cancelled, whether it is Black Harbour in Mill Cove, or it was the Pit Pony in Sydney, it creates a problem and it takes a while to retool from that. So I think you're right, I think perhaps we were not necessarily caught up in the hysteria, but certainly the film industry was one that landed in the Nova Scotian psyche and I think it caused a fair bit of immediate interest in Shelburne. That's an area that's kind of removed from both of us and so there was a desire to have a sound stage there and, again, you have a facility that at this point I think has a production ongoing right now, but it is something that only has a month or two and then it is gone.
So you are right, it is a problem, but from the provincial perspective, what are we doing to grow the industry? We have the Film Development Corporation that is very aggressive in marketing this as a location and growing our indigenous industry. We do have in the province now, as you're well aware because of your previous life, the film crews, the expertise to make it very attractive for come-from-away productions to locate here to shoot and, as we speak, we have a number of big budget Hollywood productions that are occurring in the province.
The ECBC, of course, is interested in the growth of the film industry. We do have, as you are well aware, at Silicon Island, a lot of new media kind of companies that have sprung up and are aggressively looking for opportunities to grow that market. One of the difficulties we have is when come-from-away productions, again something you're well
aware of, come looking for, whether it is a particular location, or a particular kind of building, or whatever, it is not always possible simply to say to these productions, come to Shelburne, come to Digby, come to Sydney, because of the sound stage. A lot of the production is production shot outside on location. You know that. So we are aggressively pursuing that.
The tax credit issue was an issue of yesterday's estimate discussions and the fact that we offer 35 per cent for rural production, I believe, is a significant commitment. There are some who would argue, particularly if you're in the film industry, that it is absolutely critical to maintain that and increase it if at all possible. There are some in the Department of Finance who wonder if the benefit offsets the cost of the tax credit and the other issue, of course, is that we're in constant competition with our adjacent provinces and jurisdictions. You can very easily get on a slippery slope of who can offer the largest tax credit and the most incentive and that's a dangerous road to travel. We believe that 35 per cent for rural, the 30 per cent for the metro film production industry is suitable and is always subject to review. We are looking at that all the time in terms of is it effective, does it encourage production, and I would say that if you look at the numbers and the growth rate in the film industry over the last number of years, significant growth.
You touched on too, the speciality channels, and I believe one of the big factors that will help grow the film production industry in Nova Scotia is the fact that the CRTC awarded Salter Street Films a speciality channel licence and that means that they're going to need a fair bit of production. It does present a tremendous opportunity, I believe, for independent film production and development. It would be my observation that there is a market there for new and creative ideas and perhaps some of the new media initiatives can be along the line of developing new co-productions, if you will.
[10:00 a.m.]
MR. CORBETT: You probably led right into my next question because this always amazes me. Since probably the mid-1980's when we've seen the growth of speciality television in this country, this whole idea of film development in provinces has always revolved around just that film development. The technology has been in this country since about 15 years to 20 years, that we can do broadcasting or narrowcasting from very many regions, but yet the many times I appeared in front of the CRTC and made this request, I have yet to see a province come before the CRTC and say, - I may be wrong because I haven't been involved in the industry for a bit, but as of a couple of years ago there was only one specialty service that was outside of Toronto. It was WTN. It was then owned by Moffats out of Winnipeg.
Yet provinces never come onstream and say, look, you know, if you're going to start granting these licences, why don't you go and start locating us. That facility in Sydport could house a specialty TV licence and, you know, at the rate and size of broadcasting today, or speciality casting, you don't need a huge studio because nobody really does it, it is all tape and whatever. It is just as cheap to buy satellite time in Sydney as it is in Toronto. This is what it is. This is the part that always drives me crazy when we hear of investment about technology and they keep telling us, you can do things in Sheet Harbour today. Well, darn, go do it. Don't tell us you can do it. Go do it. But yet, it's perplexing I guess when you see that it seems to stop here in Halifax and then again in Toronto.
So I guess a couple of things; one is, would you and your department at some point take under advisement to try to see if it is advisable at any point, that if you or the film development agency could get involved with pursuing that angle of it. I am saying why not locate here? I mean we're not doing the Letterman Show. We don't have to. As a matter of fact, with the celebrities in town here today, we could probably do the Letterman Show. (Interruption) It would be like the Nova Scotia war. We just won't get politicians to go.
No, it is a particular passion of mine and I don't want to make light of it because it is extremely annoying when people get telling us about the technologies of today and why we're not doing it. I remember where I worked in Sydney, outside of the actual sound stages that were built in this province, it is probably one of the biggest stages you could use for production. Yet it sits there dormant 98 per cent of the time and I mean, I am sure that if in conjunction with this private company and the government, or whatever, you could say, look, do you want to come in, if you wanted to do an info commercial, you have everything right there. You have everything you need right from table on down.
I appreciate a private owner, if they don't want to do that, you can't come in and tell them what to do, but certainly it would seem like if you could push them in that direction and say, look, there may be some collaborative efforts here. So in that whole hodgepodge of what I just talked about, I guess I am looking for a reaction and saying do you see anything worthwhile in what I threw at you there?
MR. BALSER: It is certainly a zealous and very worthwhile suggestion, but I guess in terms of what we have been doing to encourage the CRTC to look favourably on granting licences outside of Toronto, if you will, we were very involved in Salter Street's licencing application to the degree possible and appropriate. We met with the principals of that company and I know the Premier drafted a letter of support; we did, as a department. The Film Development Corporation was certainly lobbying to the extent they could and, you are absolutely right, there has been a view - and perhaps I guess it is the same kind of view that exists in the United States - in that California is the film industry centre and New York is the theatre centre and never the twain shall meet.
So part of trying to get the CRTC to look beyond the rim of Toronto and region is to have quality applications like the one from Salter Street and certainly in terms of, you talked about a private sector owner, or private company owning a particular facility and it seems to me that it is a natural progression that they want somebody in there doing something rather than have a facility sitting idle. So we are very aggressively pursuing growth in the film industry. It is attractive on a number of fronts. It is attractive certainly as an economic driver, but beyond that I think the very fact that, as we speak, there are a number of Hollywood's mega-stars in residence in the province is nice from a psychological perspective. I think most Nova Scotians were quite pleased to think that Kevin Spacey would mention Nova Scotia by name during the Academy Awards performance and that's the kind of advertising you can't just go buy.
So there are a whole lot of reasons to focus on that industry and certainly in the Opportunities for Prosperity document we have said that those are the kinds of things that we see a significant future in, and again your point is well taken, and certainly something that we would like to see grow and develop. It would be ideal to think of ongoing production in Sydney, and the same is true in Shelburne; both areas have the capability, but they haven't had the opportunity, so we will try to see what we can do over time to address that.
MR. CORBETT: My last question for you today, Mr. Minister. We often speak, when we talk about the IT sector, about Silicon Island and the successes. I appreciate when you say to me that you can't always be negative, you have to be positive and there are some success stories, and by and large I agree with you when we talk about Silicon Island, there are some successes and there are some people who are struggling. That's all part of the reality of business, some succeed and some fail. It is not always pretty. I want to throw out to you an idea. I don't know if it has been approached to your department or not, but if you take the idea of Silicon Island and see it as kind of an incubator, what about that same solid investment for the culture industry, and whether it is set up for music - because that is another thing, I feel a lot of times when we talk about the cultural industry and how it relates to Cape Breton, a lot of times it is a little tap on the top of the head and boy, you guys are good fiddle players.
AN HON. MEMBER: Particularly our Minister of Tourism.
MR. CORBETT: Yes, particularly the Minister of Tourism, but for the record I will say he is nothing without Glen Graham. But the reality of that is it is an industry and it can grow and whether it is the actual straight-ahead musicians, or it is the engineering technicians who record them, should we be looking at making Cape Breton the centre for that? We always hear the platitudes, oh my God, it is so rich and that stuff, but I think it is time that we put our money where our mouth is and start investing in it.
I don't stop at the fiddle because I think of Kirk MacDonald who won a Juno for his modern jazz album, he is an accomplished saxophonist and that's another thing. The idea we've got to move the industry, especially if we're going to grow that industry, and this is no knocking the Minister of Tourism, but we have to go beyond just the fiddle and the piano. I think we've got to start highlighting these people; we've got many people out there. Do you see maybe at some point calling together some people who are movers within that industry in industrial Cape Breton and seeing if the Silicon Island model could work for the music industry and the cultural industry?
MR. BALSER: Again, another very worthwhile suggestion and, you know, I could be cliché and cute and simply say that Tourism is responsible for the culture component but, beyond that, you're right, it is something that makes us uniquely Nova Scotian, and certainly Cape Breton - and this is not a cliché - is a centre of that. We have had in the last few years of course the Baddeck festival which is focused on that kind of talent. It is an area that we don't fully appreciate. We focused on tourism to a degree and have tried to grow that, but you're right, the sector of culture and how it impacts on tourism and impacts on other economic opportunities is a tremendous untapped potential.
I think one of the highlights for me in my role as minister was to be able to go to - we're all fairly familiar with - the tree lighting in Boston and that's a chance to focus on Nova Scotia and so on, but we also have a very significant presence in Washington. We provide a Christmas tree, the Nova Scotia Christmas Tree Growers Association provides a tree to the Canadian Embassy and we participate. We usually mount a trade mission around that activity and part of it is to highlight at the evening regale, A Taste of Nova Scotia, the culture and involvement.
It was really interesting to see the reaction of the people of Washington to that gala, one of the people present told me that it is the most highly sought-after Christmas season event after the presidential tree lighting and, in fact, the venue houses I think something in the neighbourhood of 450 people and they literally have people vying for invitations to that event and at that one moment in time people are immersed in a cultural experience, and it is not just about food.
You're absolutely right with regard to the potential of the cultural sector and we are trying to work closely with Tourism to mount those kinds of strategic initiatives, and I will take under advisement your comments about getting together people in the industry. The other thing, too, I think, is that there's a growing convergence - we talk about the film industry and the music industry and so on, and a lot of the people who are involved in that industry share interests in both sides. So it really is an opportunity to be looked at more carefully.
MR. CORBETT: Well, I will make a comment and then I will hand it over to my colleague. But that's exactly what I am saying. I also wanted to make sure that you hear me correctly. I am just not talking about - you know when we talk about the culture component, I am talking about culture as an industry and that's why I bring it up here. Musicians make money, the people who record it, the people who write music, and this whole thing, if we had a centre, and again we're talking about private industry so it is not always that easy and maybe it just needs some government encouragement, but I certainly would hope that it is something to keep in mind. Sometimes we can cross Party lines and if I could be of any assistance, call collect. Thank you and I am going to hand it over to my colleague, the member for Hants East.
MR. CHAIRMAN: The honourable member for Hants East.
MR. JOHN MACDONELL: Thank you, Mr. Chairman, and thank you, Mr. Minister, and staff. I really only have one observation and by the time I am done it may work its way into a question. I notice in my constituency, which is a fairly large rural constituency, that trying to develop business or industry, or whatever, in rural Nova Scotia is still, for the largest scale, resource-based. Agriculture makes up a big part of the economic base there, forestry makes up the other biggest part I would say, and then there are a lot of people employed in the service sector who work either at the airport or the Aerotech Park, or in the HRM, directly in the city, but for the individuals who are trying to capitalize with other types of businesses so that we can get those spinoffs, say from the resource sector, to stay in the communities, sometimes I find that it is pretty tough sledding for them. They put usually everything they have into a business.
I guess what your department's perspective is when it comes to lending money to businesses - and I can envisage such a scale as different as there are people - probably the needs are different, but I think what I am getting to is whether or not you try to target new businesses of a specific size range, and also whether or not all businesses in your view are created equal in the sense that - I am thinking of one in particular, that the proprietor has put most of his own savings, et cetera, into the business, has been around for over 10 years and would like to be able to get money at a rate that allows him a little more flexibility and it just seems as much as we have an obligation to try to help businesses start, I think that we have an obligation to try to provide enough flexibility for those who have survived a relatively long term and maybe need a little push to get over the hump.
So I am curious as to how your department views - and I am thinking more in terms of small business - those who seem to have stood the test of time but still may need some help. I think the biggest complaint was either the limit of funding is too low or the rate may be fine, but the limit is too low. So, I am just wondering if these have come across your desk?
MR. BALSER: Certainly so. I think the issue of government participation in the form of loans to businesses is a very thorny issue. On one hand you have the argument that government has no place in lending, and on the other hand you have some very compelling arguments about access to financing by companies, as you very articulately said, in rural Nova Scotia. It is a very delicate walk, and causes problems; it is an issue of some concern and analysis in terms of the department. I do believe that there is a role for government in the form of lending and that debate is behind us. We have said clearly that the Province of Nova Scotia will continue to lend money, and the question then becomes, how do you structure those loans so the taxpayers are protected as much as possible and at the same time small companies can access funding.
In many instances small entrepreneurs in rural Nova Scotia who have started their business from scratch and invested significant amounts of their own personal equity into the company constantly fight a cash flow difficulty. So you have, perhaps, a person who hasn't as a matter of course usually been rejected. In order to come to the department, they have usually had to go through the commercial lending institutions and they come to us - not necessarily as a lender of last resort - and I want to clarify that. I do not believe that government's lending function is that of a bank. I believe the lending function is that of a government - so they come and oftentimes because of the economics of their business case they face, to be crass, rejection, which is never pleasant. When you are the lender of last resort, to be rejected at the last stop is extremely demoralizing, so then you have that issue. Within the department the staff apply business case analysis to whether or not the business is viable and then, beyond that, it of course becomes the argument of what does this mean to a small community that may well be a one-industry town, and on it goes.
Again, it is a very delicate walk for government, regardless of political stripe, to balance the need to support the culture and fabric of Nova Scotia and, at the same time, ensure that money is not put unnecessarily at risk. We deal with that every day and I would tell you two or three things that you might not be aware of in terms of the government and lending - 96 per cent of our loans are repaid in full with interest. So, a 4 per cent default rate as a lender of last resort is a pretty good track record. The other thing that we do in terms of the new structure, NSBI, we very much see the lending function carrying over, and we are looking at what we can do to improve the process and monitor it and refine it so that it works for the benefit of all. So, I don't know, that is a kind of roundabout way to answer your question.
MR. JOHN MACDONELL: Well, it is, but I am not sure if you can answer it in another way. I guess the point I want to make is certainly don't avoid the business sense issue and your responsibility to the taxpayer; I am not advocating anything else but that. I am certainly not advocating that people get money they don't have to worry about returning. I think what I am trying to advocate is as much of an advantage on the rate, or even no interest in some cases, but pay the money back, pay the principal back, which may turn out to be a
good investment. That does not mean that all of them would be good investments, I think that is the case you are trying to make.
I only want to make this one other point and that is in terms of those businesses that deal in the resource sector - and I will speak more specifically about forestry, because I see it as renewable and sustainable - I would like to see your department set some criteria around, does this operation ensure some sustainability? I don't necessarily see that, and if somebody goes to the banks, the banks aren't going to worry. They will worry about cash flow and getting their money back. It is something that is a term that was coined throughout the Throne Speech and it is not one that I actually see much by way of policy that really seems to ensure it, and I would think that if we are going to use taxpayers' dollars for taxpayers' resources that there is some element of sustainability tied into the operations that you lend money to.
MR. BALSER: In terms of loans to - and we will talk primarily about the forest industry companies, practitioners - the big issue is around the ability to export product into the U.S. market and I know that from the recent negotiations around the softwood lumber exemption that is enjoyed by Atlantic Canada, and rightly so, the industry is very cognizant of the issue of applying for loans with the department because of the potential impact on their ability to export.
Now, there are a number of smaller producers for whom that is not a particular issue, but I would say, if you are looking at our loan portfolio, the actual number of applications coming out of that industry are small by comparison to some others. I think it may be a factor of that.
So the point you raise around sustainability is a good one to give consideration to. We are in fact as we move to NSBI, looking at, as I said earlier, that whole way in which government assists companies in the forms of loans. We actually have had some people in talking about, are the proper accountability procedures in place, are we in terms of practises espousing what we say in terms of policy and those kinds of things. So, it is a work in progress, and again a kind of roundabout answer to your question, but the fact that you raise about sustainability is a point well taken.
MR. JOHN MACDONELL: As my last point, and I want to thank my colleague for his patience, is the announcement yesterday - at least, when I heard it - around the federal government willing to take a second look at bulk exports of water. Not that that would necessarily come across your desk, but I have a feeling if the federal government were to go that way then people would look at this as a business opportunity. It is something that I hope this government will not endorse and there will be a message sent to the federal government to that regard. I know legislation that went through the House would indicate that the province is not in favour of that, but I certainly hope if the federal government is willing to
take a second look at it, that the government here isn't. I don't know if you can comment, but if you have a comment, I would like to hear it.
MR. BALSER: That is certainly in terms of all those trade-related issues, I am responsible for international trade and I must say, in the department, we have a person in residence who is very aware of the issues and was very intimately involved in the softwood lumber issue and I did about a month ago, I believe it was, participate in an interprovincial, international Trade Minister's meeting to discuss not necessarily the export of bulk water, but a lot of issues related to trade.
The issue of do we export water is one with a lot of perspectives and certainly, as you said, the legislation articulated Nova Scotia's position. Canada actually is a country blessed in many ways in terms of its access to resources. There are many jurisdictions for whom fresh water is just an exception rather than a rule and we have a tremendously abundant supply. There are tremendous concerns, and rightly so, about do we trade away this God-given resource as an economic engine and how will that impact in the long term. So no decision has been taken and it is interesting, as you say, to hear the federal government and our position is certainly enshrined in legislation.
MR. CHAIRMAN: The NDP caucus has approximately eight minutes.
The honourable member for Halifax Chebucto.
MR. HOWARD EPSTEIN: Mr. Chairman, Mr. Minister, I am not sure if in the time remaining we are going to get through the one initial issue that I want to raise with you, so perhaps I will spend some time laying out for you the nature of the concern that I have on this one point and see if there is any time left. You might try and help me out in understanding this issue; if not, we will return to it in the next round. It is this. What I am concerned about is the criteria and measures that your department has used in the past, and proposes to use in the future, when it makes decisions about grants or loans or payroll tax rebates or any of the instruments that are used now to try to stimulate industry here. I will use as an example the one that is current in the newspaper today. This is the Yarmouth example and this is the announcement that a company called Register.com, based in New York, will be opening a facility there and hopes over the next three to four years to employ as many as 300 people and clearly the hope is that it will be doing its business on an ongoing basis. The idea is that with any luck these jobs will be permanent jobs. Register.com is in the business of registering domain names on the Internet. Clearly this is a business that seems to have some potential and I guess we will see what happens.
When I look at it, the announcement is that the federal government is proposing to put in $4 million and the province is also proposing to put in, I think, $4.6 million by way of a payroll tax rebate. I clearly understand that this is not cash up front - unless it is, I am
assuming it isn't. I think you have gone to some pains to say it isn't. On the other hand, it leads me to wonder just how much a job is worth in the view of the department. Simple arithmetic says that if they ultimately do generate 300 jobs for Nova Scotians and you're prepared to forgo, in some measure, or make an investment through some measure that amounts to $4.6 million, then you have valued each job at something over $15,000. What you are saying is that the province is prepared to put in $15,333 per job and the feds are almost doubling that, so it is almost $30,000 per job, but I am just interested in the provincial measure. So if you think each job is worth $15,000, I guess what I want to know, is that the going rate? Is that what you are prepared to do?
Now I understand, of course, it has got to be a little more sophisticated than that. I understand that you have to look at it and you think about economic models and spinoffs and other associated jobs. But you know what? Any company that sets up and has ongoing business in the province and has jobs is going to have economic spinoff for the economy. So I don't see that that becomes particularly relevant, unless you are making distinctions among different sectors of the economy as to the nature of the spinoffs, and if you do make those kinds of distinctions, I would like to hear about them. But I am still left wondering if $15,000 plus is the going rate.
What I want to hear about is what are the screening measures that you use, because on the face of it what you are doing here is you are attracting the company from out of province - in this case from the United States - to come and locate here. Now, from their perspective, clearly it is a good deal. It is an American company. A lot of their business might well be paid for in American dollars. The exchange rate is hugely favourable to an American company. The price of land, as they pointed out, is hugely favourable to an American company. At the same time, this is a foreign-owned company which, by virtue of the nature of the business it is doing, of course it can pick up and go anywhere else at some point if it wants to.
[10:30 a.m.]
It doesn't exactly demonstrate that it is a good corporate citizen if it sort of picked up in its home base and been attracted by financial inducements to come here. Of course it is not the same thing as people who are from here, who are rooted here, who have their businesses here and their lives here and their families here and who want to stay here and make their livings here. These people are rooted here and want to stay here, a company that you induce to come from somewhere else could just as easily be induced after a few years to go somewhere else.
So when I do some more fairly simple arithmetic, I say to myself well, you know, if I don't have to think about the spinoff jobs because they are going to be there for any industry, then I think well, what is the payback to the Province of Nova Scotia? I look at it
and I say well, let's imagine what the pay range might be for the 300 people who are paying income taxes here, and when I think about the level of income tax that they are likely to pay, which is the prime tax - of course they'll pay other level of taxes, they will pay goods and services tax and if they buy homes, they will pay property tax and so on - in terms of the Province of Nova Scotia, maybe it is a couple of thousand dollars of tax per year that each of those persons might end up paying.
So if you get 300 people working and you have paid $15,000 per job, they are going to have to definitely have those jobs for seven years before you break even. Now you may have a different formula and, if so, I would like to hear about it, but as I understand it the $4.6 million is going to be foregone within the first three to four years. If that is wrong, I would like to hear it. But I don't hear it over 11 years, at the end of 11 years, which would be, by the time you ramp up to the full employment, and then have them steady for that period of time. So what I want to hear is something about how you do your arithmetic as to figuring out what amount of money you are prepared to put in to create a job in Nova Scotia?
MR. CHAIRMAN: Mr. Minister, you have one minute before the Liberals . . .
MR. EPSTEIN: We will get back to it the next hour.
MR. CHAIRMAN: I am sure you will, unless you have a one-minute answer.
MR. BALSER: Well, I think it demands slightly more than one minute, so do you want to turn it over?
MR. CHAIRMAN: Would you like to turn it over and have the minister answer when you come back?
MR. EPSTEIN: Sure, that will be just fine.
MR. BALSER: Unless the Liberal members would like me to orate in regard to the merits of that particular question.
MR. CHAIRMAN: The NDP caucus time has expired and it is the Liberal caucus now.
The honourable member for Lunenburg West.
MR. DONALD DOWNE: Mr. Chairman, welcome, Mr. Minister. I appreciate the chance to share some questions with you. I will say that I will be sharing this hour with my colleague, so I will start off.
My first question is in regard to the ports issue. A few years ago, you will recall, we were bidding on a post-Panamax opportunity for Nova Scotia against New York and the Maersk Sealand initiative. During that time there was a great deal of energy put forward by the whole industry and by government. The then Leader of the, I might say Third Party, I can relate to that right now, but the then Leader of the Third Party, who now is Premier, worked very hard on that initiative, as well as the New Democratic Party. There was a commitment that we would try to work together as a non-partisan body to try to find solutions to making our opportunities in the port stronger, and certainly in looking at the post-Panamax opportunities that are happening globally, timing is a key issue here.
Since that time, we had a number of meetings. The industry stakeholders got together. I chaired a session shortly after hearing we weren't successful, but we did have industry meetings to take a look at what our strategy should be for the future. There was some question, I was Minister of Finance at the time, but it really is an economic development initiative. I don't know if it is on your table or if it is on the table of the Minister of Finance, but can you inform us as to what the status is right now, what is happening and do you see any potential of being a little more aggressive on that initiative right now?
MR. BALSER: Actually, we had a bit of discussion yesterday about the Port of Halifax and its future. At that time the honourable member for Dartmouth North sat on your task force as the representative for the NDP, I acknowledged his participation and I would do the same to you. I believe that, in large part, it was as a result of your direct involvement that the initiative was picked up and moved in the way in which it was and certainly focused national and Atlantic Canadian interest in the Port of Halifax. It was very much viewed as a David and Goliath scenario and, to your credit, you certainly were the champion of that cause.
In terms of this particular government, the Port of Halifax and its future is very much a part of our economic agenda. We have, in fact, in the department an individual who is specifically tasked with that particular file. We have had a number of meetings over the last year with the various members of your Port Development Committee and it continues to meet on a regular basis. One of the things that came together in the Maersk Sealand round was that individual agendas were set aside and a collective decision was made that any future development should be focused in the Rockingham area. So that debate, I believe, has been resolved.
The federal government continues to be interested in pursuing port development. They will, I believe, at the end of the day take an equity position in terms of providing funds. The committee, as I said, has met. We have involvement from the current operators of Halterm and Ceres and CN, all of whom are critical to the go forward. While it may, from the outside looking over, and not necessarily even from the outside, we have moved the agenda. We are continuing to move it. One of the things we wanted to do, in terms of how
the province participates as a partner, I don't think it is wise for the province to insert itself in such a way that it is there forever, that what the industry was asking for is someone to champion the cause, to bring the divergent partners together, to get consensus on where we are going and then to step away.
What we have been trying to do through this piece is put together a port development strategy that, at the end of the day, would work, whether it is in Sheet Harbour, Canso, or Sydney. That has been part of not necessarily the delay, but part of what has been going on to this date. I can tell you that we have met and are continuing to meet.
In terms of one of the interesting dynamics in the Port of Halifax development is the issue of labour and skilled labour. We had a meeting not that long ago and the Premier's bequest that involved players from a number of levels: labour, the various competing companies that are here in the port, people who have supply-based opportunities and so on. What was very positive, again, was that they were all talking about the same thing. One of the big issues was the issue of potential labour shortages. If the port grows by leaps and bounds, and it is growing I think at the rate of 8 per cent to 10 per cent a year just naturally, we were able to get a commitment from labour to work with the community college to put together a training program.
One of the issues is heavy-lift cranes. It is pretty hard to learn those kinds of skills on the job. There are computer-generated training modules that will allow people to take training so that when they leave the course they are skilled in heavy-lift crane operation, and those discussions are ongoing. I am reasonably confident that at the end of the day we will have a training program that will be housed with the community college but will have buy- in from the industry and from labour, and position us well to have the kinds of people we need as we move forward.
The other big factor was CN. CN is, of course, the sole rail linkage. At one time it was argued that when they can off-load in Montreal, are they really committed to Halifax as a port and as a shipping site. The answer to that is very clearly yes. I have had a number of meetings with Paul Tellier and principals of CN and they, very definitely, have said that the Port of Halifax figures prominently in their go forward. So what we have now is consensus around that. We have a committee that is working and it is not like tomorrow you will see spade work at Rockingham, but certainly the groundwork is being laid for that to happen over the next number of years.
MR. CHAIRMAN: I will remind all members that from 10:45 a.m. until 11:15 a.m., the quorums have been relaxed so that people can attend the Tartan Ceremony. So other than the minister and the person questioning for that half-hour, there is agreement.
MR. DOWNE: As Paul Tellier would tell you, without the port, there is no CN Rail and without CN Rail, there is no port. You need each other to make it work. My concern specifically with the port is that there was a lot of interest to go further. When we heard that it was going to New York, there was a lot of interest about moving the agenda further. There was an attitude about wanting to secure a position to take a look at the options of a post-Panamax-type of port, whether it should be all in Rockingham, we should co-locate the other ports into one central port, the potential development of the south end in the port that is currently down there with Halterm.
There are all sorts of initiatives that were out there, but there was a willingness. I realize that in the transition of government, things slow down for a period of time to get everybody up to speed, but I do feel that we are missing the boat if we don't - excuse me, we are off track, missing the boat, I guess it doesn't matter what I say - I think the timing of that initiative is now to really get the project going, because really as post-Panamax ships that are currently off the West Coast move more to activities on the East Coast we are going to be asked to be a major player, and New York is still going to have a problem with dredging. They are still going to have to unload here, at some point, to be able to even get in. Even with the current dredging activities that are going on there, with the millions of dollars that are being spent, they still have a problem getting into New York, Baltimore, and up to the New England States.
The competition is going to be there for us if we do not take a look at how we can make it happen. The New England governors had agreed in principle to work with us because they see a transshipment and they see a benefit for them to partner with us in Nova Scotia to leverage economic opportunity, whether it is the advancement of rail or the advancement of cargo activity. So I think the time of that initiative is now. There is a lot of work that needs to be done. We have already done the geotechnicial and all the other work that is needed over there. We have enough of that information to know where we are going to go, but I do think we have to take a look at the time frame of when we want to make this a reality and that is going to take some leadership. I agree with what the industry is saying - they are looking for a champion.
I would hope, Mr. Minister, either through you or through the Premier or through whoever is going to be the champion, somebody will grab hold of that and work hard at it. I would just say, on behalf of our caucus, that whatever we could do to help that process, we would be willing to do that, because it is not a political issue, it is an economic opportunity for our area and for our region, one that needs all Parties to work together with industry and with our players in Ottawa to bring this initiative forward. It is not just a "monkey on your back", it is the opportunity for Nova Scotians that all of us should be grabbing hold of.
I just want to say that, for Heaven's sake, I hope we are not parochial enough that we don't want to reach out as we did - and Mr. Dexter did a brilliant job as part of the team, and the Premier now, Dr. Hamm, did a brilliant job on the team. We all worked together very closely. I think there is opportunity here to send a message to other areas that we want this to happen. I can tell you, one of the more salient aspects of what we were able to do is the fact that there was an all-Party committee. It wasn't adversarially thought of internally. We had captured the imagination of all Nova Scotians on this issue. We had the support of all Nova Scotians and it didn't matter where I travelled in this province, people were saying, my God, that's great what you guys are trying to do, fight for it. We had the municipal governments onside, and we had the provincial governments onside. Ottawa was as impressed as all get-out when we would meet with Manley, or whichever minister, to see all three people saying the same message and we weren't playing games. We were doing a good job. When we went to the United States, the Americans were impressed by the fact that all political Parties were championing on that initiative.
So I think there's an opportunity there, Mr. Minister, and I can't speak on behalf of the New Democratic Party, nor would I, but I can say that I am sure that our caucus would be interested in working to try to find solutions there because it is a win-win for this province. The economy is doing reasonably well in Nova Scotia, but a lot of those initiatives are because a lot of hard work happened a number of years ago. We can't ride that crest without moving the agenda further and moving the bar up further. So I just will leave it at that.
I want to talk a little bit about an area that I feel pretty strongly about and excited about and that is, again, our whole offshore. That's another initiative, it is exciting what the potential can be and sometimes it gets a bad rap and sometimes people want to just kick it around a little bit. I find that this will be without question one of the most important economic planks in the future of this province. What we're seeing out there right now is so small in relationship to what can happen and should happen off our coast.
When you take a look at Atlantic Canada and you draw that circle around where we are and Newfoundland, we are a zone that is one of the richest zones in the world and I think the major multi-nationals are looking at our area as being a new frontier that they want to invest in. We have got to make sure that we get our share, but we also send the signal that we're prepared to say that we want to make things happen and maybe that's something that you can elaborate briefly about, which is what signals are you sending to the industry that we are a province that is open for business, we're going to get our share of the take, but we want to make things happen in this province. If you're going to Houston and I am pleased to be able to be a part of that, I am honoured to be a part of that, so my question to you is, what types of things are you expecting out of Houston and what do you see happening in your crystal ball or naval gazing of the future of Nova Scotia with regard to the offshore? Not too long because I have got two other questions I want to get to.
MR. BALSER: In terms of that, I guess estimates of 20 trillion cubic feet of gas off our coast are now viewed as conservative. If you think that the PanCanadian announcement of a $1 billion projection of funds could bring their project together, you're looking at potentially six to eight of these and with each round of licensing, the level of interest has increased. The take-up now, we have a number of large companies that are involved in deep water exploration. They're here in a big way. Just the commitments alone for drilling over the next five to eight years are significant. You're talking $1 billion at least in terms of just explorations.
The industry is here. It is here in a big way. PanCanadian, in fact, has traditionally been a land-based company that's focused in the sedimentary basin in Alberta. They have divested themselves of a lot of their landholdings there and they have focused on the East Coast in a large way. Last week I met with principals of Marathon, principals of El Paso. The companies know where Nova Scotia is so the quick answer is they're here to stay. What we need to do is encourage them that Nova Scotia is a good place to do business and that we want them here.
Going to Houston I think is a chance to profile Nova Scotia, as has been done by previous Premiers and certainly our Premier last year, and again my understanding is this year he's going to have a significant presence and the fact that, again, all three Parties are going to be there to be able to take part is a message that it is not about politics, it is about opportunity. There is interest now in additional pipelines. The issue that it won't provide a benefit to all Nova Scotians is short-sighted. If you look at the development in the North Sea, it literally grew from a humble beginning to touch pretty well all corners and that's what I see happening here. We have talk now of second pipelines as I say. We have talk of significant exploration. We have talk of fabrication.
The fact that PanCanadian has announced that they're going to be moving forward and they're looking for expressions of interest, tier two now, because the price is moving forward. I think that the quick answer is lots of good things are happening and certainly the message that we convey, as did you yourself in a previous life, is that we want you here. If there are issues about regulatory overlap or issues about the Nova Scotia business climate, we will work with you to solve those and, again, I think part of the success that the industry has had in terms of public acceptance is a result of people like John Brannan, Larry LeBlanc and those who were first in to set the stage. Just in closing, we have the resource. It is ours because of infinite predetermination on the part of a greater being, I guess, but the point for us is to make sure that when Nova Scotian companies are there, they're competitive, that we can't create an unlevel playing field, that it has to be won on the merits of a business case.
MR. DOWNE: One of the areas, it seems like sometimes, even with something as exciting and potentially awesome for the province, we constantly want to be negative about it, we want to shoot a hole in it and I guess, I note with interest, when you were in
Opposition, the royalty regime was no good. It was just a failure and now when you had a chance to maybe take a look at it, it is not maybe as bad as it was and I respect that. I respect the fact that when you had all the facts, you could make a judgment and you felt it was reasonably fair, maybe not perfect, well, there's not too much that's perfect, but I just find that so often we're ready to criticize everything without really realizing what's there in relationship to the rest of the world and that we're not always being taken advantage of, but I am excited about the offshore.
I think we have to be vigilant. We have to work hard. We have to make sure we get our fairness out of this whole thing and we get our benefits, we get our employment. I am concerned about the PanCanadian possibility of doing all their processing offshore. I mean, you know, just because it is sour gas, there's lots of sour gas in Alberta. There are ways of dealing with it, but I noted your comments earlier that there's no plan specifically, but you are watching that part and I am sure that will be a debate that we will be having. We can work with them, but at the same time we want to make sure we get our fair share out of that process and there are some exciting things happening.
I want to just move quickly so I don't take any more time from my colleagues here, but the Nova Scotia Business Inc., you know, there have been all sorts of comments made about Nova Scotia Business Inc., some of which have been, is it more of what's been done in the past, is it a rebirth of another, of a past gone initiative, but whatever it is, I hope it works because I want to see economic opportunity in this province grow because no matter how this Minister of Finance, without a plan and without any clear management ability, no matter how he deals with it, if he doesn't have growth in the revenue side, he isn't going to make it happen unless he shuts down every hospital and school in Nova Scotia. So he has to grow the economy to make it work and you are a vital part of that success or failure because you're the minister responsible. I am concerned about the fact that we open our eyes and work as hard as we can to grow the economy.
Now, Nova Scotia Business Inc., there are a lot of good people on there. I know a number of people who are very credible, highly respected, in my view. I am just telling you my personal view that I have a lot of respect for, but invariably when you set up a committee like this, somebody is going to be saying, well, is there a conflict of interest, are these people conflicted because they are business people and business people are involved in all sorts of businesses. They're going to be dealing with other businesses. So I agree they should know what should work or what shouldn't work, but invariably they could be put in a situation, Mr. Minister, that people will say, well, how can they make a choice or decision on that company when obviously they're a competitor or they're a partner, or they're whatever, and I would hate to see that. I would hate to see us get to that point because that would mean that nobody would ever want to be a part of a committee that's just open for all sorts of abuse.
So has the minister thought of asking these members to have a disclosure, something that doesn't allow them to be criticized and conflicted every time you turn around? The people who are on that group are honest, hardworking, and care about the Province of Nova Scotia people - and I don't know them all - but some of the ones who I do know I will say that. I know where their hearts are and I know what they are going to try to do for the province because I have talked to them about it, but my concern is are they going to be conflicted or are they going to be subject to a lot of personal criticism because, you know, should we have a disclosure. So I guess the question is, do you think there should be disclosure for these people so they don't get themselves in a situation that would be used as a political football?
MR. BALSER: Certainly so, there will definitely be disclosure and I would like to elaborate a bit on that. Again, as was mentioned yesterday on a number of occasions, when you have a finite number of positions and issues related to geography, gender, sector representation, and I would say I was very impressed and pleased with the level of interest by people to serve on this board because if you look at the types of remuneration available, it is not for that purpose. It genuinely is a commitment on the part of these people to do something for Nova Scotia. You're absolutely right. I think we have - I don't think, I know - we have people of a caliber that they would be readily accepted in any boardroom in North America and I have had that comment unsolicited by people who were on the outside looking in and I believe that's one of the reasons why the appointments, once they were announced and after the initial flurry of concern and expression of questions, has died down. The caliber of these people speaks for itself.
So in terms of conflict, we do currently have the Business Development Corporation Board. It is an issue. Some of the people, in fact, who are currently sitting on the BDC will be sitting on the Board of Nova Scotia Business Inc. We have, because we're very cognizant of the issue of conflict and the issue of board governance, one of the first steps that will be taken is to put in place those by-laws that deal with that. We have retained external legal counsel who I believe is one of the most highly-respected private practice lawyers in terms of corporate governance who is working with the department to deal specifically with that.
I don't want the board's ability to function to be limited by undue public scrutiny or a level of suspicion associated with their motives and merits, that can be minimized simply by ensuring that due diligence is done around corporate governance issues. So the answer to your question is very definitely it is a major concern to us as a government and the structuring of the board, absolutely.
MR. DOWNE: Mr. Minister, I think that would probably be a fair approach for all sides to take a look at. These people are basically donating their time really and so I think as long as there is a process there that they will disclose, so that they are not subject to a lot of
abuse that they don't really need to take and, like you say, they could be on a lot of boards and I am glad to hear that you're going to go forward with that.
The issue of the Laurentian Sub-basin, it has probably been kicked around a little bit and I haven't been here. I was back in my riding and somebody said, Don, there's enough potential, listening to what the Premier said on the offshore and the Laurentian channel, that why couldn't the Province of Nova Scotia and Newfoundland simply sit down and say let's just split it up, I mean there's enough to go around for both. We're both going to win. We're both going to get a lot out of it. Instead we're going through this turmoil and I know our government tried that approach and now we're into the process of negotiation and legal debate. It is kind of sad because, you know, at the end of the day we could both be winners out of this and laughing all the way.
[11:00 a.m.]
I guess my concern is, what is the plan, if there is a negative outcome, which I hope there isn't, if there is a negative outcome and I know we've got some of the best people in the world fighting our case, what is your plan to deal with that if there is a negative outcome on that decision?
MR. BALSER: If, in fact, and I believe that will not be the case, if the ruling is that there is no line and a line has to be determined, then we're into a full-blown process to have that line determined. As you said, the resource at stake, the resource potential is significant and, as you would be well aware, the position of Nova Scotia is the line was predetermined, it exists. So for a sister province to arbitrarily say, well, no, we think the line should be moved over here, they have much to gain and nothing to lose and that's one of the rationales for retaining the law firm that was retained because they have recently gone through a process related to Saint-Pierre and Miquelon and I believe it was viewed that they had handled that litigation very effectively.
So we are prepared for a negative outcome. It would be in everyone's best interests were that not the case, were the tribunal to make a ruling and let us move on with our lives. I think, and not to speak ill of former Premiers, but I think some of what has happened was a direct result of a former Premier in Newfoundland taking a position that probably was short-sighted and the fact is that for the oil companies that are here on the East Coast, they very much want to see an East Coast-Atlantic Canadian perspective on oil exploration. We have issues of jurisdictional disputes between the provinces in terms of permitting and regulatory overlaps and so on. So I think at the end of the day and, again, it is an industry in its infancy and part of it is growing, but we don't need this issue around the Laurentian Sub-basin and I certainly am optimistic that it will be resolved in the short term, but to answer your question directly, we are preparing Plan B.
MR. DOWNE: So you're preparing it, but I mean, can you tell us what's in Plan B?
MR. BALSER: It is . . .
MR. DOWNE: Excuse me, but at the end of the day, if the worst-case scenario happens and you're preparing a position, are you saying the position is that we would appeal? I didn't think this was something you could appeal.
MR. BALSER: The process at this point was that the arbitration panel could make a ruling that the line is a line. If they, in fact, determine that there is no line, then we move to a process of litigation where it becomes a question for the courts to decide and the law being applied will be international law and it will involve, again, the law firm that's currently retained moving through that process. So it will become a much more detailed and much more involved legal process than if the arbitration panel simply determines that the submissions made are sufficient for them to make a determination. At this point, because of the potential involvement of lawyers on a lengthy and involved process, it would be premature to talk about what our detailed strategy is at this juncture, but I can tell you that certainly time, energy and resources have been devoted to the what-if scenario and we are prepared for that.
Again, we hope we don't have to go down that trail, but in terms of the province, as I say, what's at stake is significant in terms of loss of potential royalties, and in terms of access to development opportunities. So from Newfoundland's perspective, to be crass, I think it may be to some degree a nuisance lawsuit if you will. I know back some time ago when this process was underway in Fredericton, the comment was Newfoundland had spent something in the neighbourhood of $300,000 and Nova Scotia had spent something in the neighbourhood of $900,000 and the difference of the perspective is that the stakes for Nova Scotia are significantly higher than they are for Newfoundland.
MR. DOWNE: One of the things that bothers me is that Saint-Pierre and Miquelon could very well be the capital of offshore in the future if we don't do something to get this thing resolved as soon as possible. I am not saying caving in, but I am saying fight as hard a battle that we should win. At the same time, part of that scenario you are talking about in Plan B, we have to make sure that Saint-Pierre and Miquelon doesn't become the capital of offshore in Atlantic Canada, when that is the new frontier that we should be embellishing, supporting and having here in Nova Scotia. Observation.
MR. BALSER: For the record, I would say that if you remember back to the beginnings of this process, it was Nova Scotia who said to the then-Premier Tobin, why don't we set aside this dispute in the near term so that we can take advantage of the opportunities. It was the Newfoundland Government who had no interest in pursing that. I would say that Nova Scotia has been, throughout this piece, most conciliatory in trying to ensure that we
don't miss opportunities because of an inter-provincial jurisdictional dispute. Again, to some degree, the wheels are moving and it is beyond my scope to redirect at this point.
MR. DOWNE: I will turn it over to my colleague to conclude the hour. Thank you, Mr. Minister, and to your staff, thank you for your input as well.
MR. CHAIRMAN: We have approximately 28 minutes.
The honourable member for Cape Breton The Lakes.
MR. BRIAN BOUDREAU: Mr. Chairman, in the Supplement to the Public Accounts, Page 42, Accounts under $3,500, is listed $141,775.86. Is that a correct figure?
MR. BALSER: Could you say that again?
MR. BOUDREAU: The Accounts under $3,500, the fifth line down.
MR. BALSER: Yes, and you are asking if the $141,000 is the correct amount?
MR. BOUDREAU: Yes, is that a correct amount of money?
MR. BALSER: Yes.
MR. BOUDREAU: Could you indicate what type of accounts these are, please?
MR. BALSER: It is a consolidation of a number of small items, travel expenses and those kinds of things.
MR. BOUDREAU: Could you give an indication of how many accounts there are?
MR. BALSER: About 157 staff and various board members would be drawing from that account.
MR. BOUDREAU: So, they are not community group . . .
MR. BALSER: No.
MR. BOUDREAU: That is staffing . . .
MR. BALSER: That is correct.
MR. BOUDREAU: Could you provide a list of those accounts?
MR. BALSER: I suppose that would be possible. It is not something we would have at our fingertips, it is something that could be provided over the next while. I can't say by the end of estimates today or even a week from now, but we will take it under advisement and make that information available to you as soon as it can be done.
MR. BOUDREAU: I can appreciate your staff will take some time to put this together. Are you agreeing to provide that information, and could you please put a time frame on it, just so we are not waiting for two years?
MR. BALSER: I did indicate that in the near term, depending on how much time is spent in estimates and so on. You are talking about 157 staff people and a number of board people. If there was some specific question you had, it might narrow down the amount of research that would be required. If it is just a general ask, we can get that together.
MR. BOUDREAU: Okay.
MR. BALSER: Staff have indicated it quite possibly could be provided towards the end of next week.
MR. BOUDREAU: That would be fine, thank you.
On the same page, Mr. Minister, the Halifax Club, $5,415.23. Could you please indicate what that was for?
MR. BALSER: Funding for a reception and dinner for the Nordic NAFTA mission. It was with regard to NAFTA negotiations. NAFTA and the Foreign Trade Commission.
MR. BOUDREAU: I want to move on to Student Employment Programs. Your budget for this year has decreased, is that correct?
MR. BALSER: No, it isn't. The budget allocation for this year is $4,675,000. It is the same amount that was allocated in last year's budget. It is down from the 1999-2000 budget estimates, but again when I made the announcement of the funding for the PEP program this year, I indicated that there would be a reduction of some, I believe, 74 jobs, approximately. The reason for that is because the minimum wage has increased, and also because of the types of, not necessarily jobs but the proposals. The whole intention of the PEP program is to provide students with summer employment and at the same time give them skill sets that would make them more attractive to potential employers. On one hand, we have an increase in the level of minimum wage, and at the same time a desire to try to look to jobs that really bring additional skill sets into play in terms of the students.
There will be about 74 less jobs. The program is targeted to areas of higher unemployment. What we attempted to do last year, and I believe successfully, was to redirect the reduced funding in areas where it would do the most good. I think in the former Premier's riding, under our program last year, there were more jobs allocated in that particular area than had been the case in previous years. We have tried to do a delicate balance. We also, in terms of the way in which the proposals are approved, they are done by a committee involving representatives from HRDC, from the local RDAs and from our department. There is a fairly rigorous screening. The fact is there are going to be applications that are not approved, and that is just the unfortunate reality.
MR. BOUDREAU: It is obvious by your comments that you would agree that student employment is a very important program, particularly for university students throughout the province. If I understand your answer correctly, you have basically absorbed the increases in this program into your budget instead of increasing your budget. As a result, we have 74 jobs less for students in this province. I would like some kind of explanation as to why your budget was not increased to continue with these 74 vital jobs for the students? Why did you take the measure that you did take, by decreasing your budget - well, you didn't decrease your budget but obviously you did when you look at the increased costs? Why wasn't the budget maintained to include these 74 jobs?
MR. BALSER: Again, from a corporate perspective, if you will, the government continues to face the issue of reducing the deficit. Departments were asked to look at areas where either expenditures could be maintained at the level of the previous year or where reductions could occur. In some instances, there was a view towards reallocating scarce dollars to strategic areas.
Within the PEP program, we viewed that the economy is doing reasonably well. There are areas that have problems, no question. By balancing the allocation of the jobs to areas with higher unemployment, we were, to some degree, looking out for that. The other factor is that we now, as a matter of course, sit down with our federal partners so that, in fact, some programs that might be eligible for federal support, historically, might have been drawing down provincial dollars. What we have attempted to do with this strategy is when we look at a proposal, if it qualifies under an existing federal program, they would access their funding through that; if it is only eligible for provincial, then it would be in that pool.
Again, each of the proposals is screened, rigorously, there are weighting factors that come into play. What I said in response to a question about PEP yesterday was that one of the best things a potential applicant could do to ensure the success of their application is focus very strongly on what kinds of skills the person would be acquiring if they were to be employed in this particular endeavour. I know from my own personal experience that some of the proposals that were rejected in my riding were proposals that hadn't given a lot of thought to what kinds of skills these students would be gaining as a result of the work. In the
other instance, where they were successful, it was because a fair bit of time had been devoted to it. For example, a lot of these go to support students who would be at the end of their education, looking for work in the tourism industry. So, if you have a strong component there and the applicant wants to hire somebody who has taken tourism training in the community college or wherever, that would be a good fit, whereas someone else who might have had a proposal that lacked that sort of match, might not be as successful.
It is a decision to make the best of a difficult situation and that is we valued PEP to the point where we kept the funding the same, we have engaged very closely with federal government partners to make sure that we can access that funding. At the end of the day when you think of a program that creates approximately 2,000 jobs in the province and you had an increase in the minimum wage, at the end of it all, you are looking at approximately 70 jobs. And, 70 jobs are important, but that is not a bad downside when you look at the overall issue of the deficit that we face in this province.
MR. BOUDREAU: I thank the minister for the answer. I think it is fair to say I know government is experiencing a very difficult situation with the deficit and the increased costs. But, so are students. Individual students in this province, some of them, after obtaining their education, are unable to find employment here in this province because of the economic situation here. Economically, we are in a crucial stage throughout the province, they are experiencing difficulties. So, wouldn't you suggest that your resources to absorb this increased funding is much greater than those of individual students?
MR. BALSER: The fact is that at the end of the day, the money has to come from somewhere. If the decision was to increase funding to the PEP program or to some other program, then it will come at the expense of some other program. What we felt in terms of the Department of Economic Development, was by maintaining the level of funding in the PEP program, we were doing justice to the intent of the program by tailoring the numbers of dollars available to particular areas to link it very closely to unemployment levels. We were doing justice to the issue of some regions where young people are looking for summer employment. If there were not a whole lot of alternative, there would be more of these programs available. Is it ever enough? Probably not. But was it the right decision to make? I believe so.
MR. BOUDREAU: I want to move on to the Winter Works Program, a program that was maintained by the previous government and eliminated. Is it correct that it is eliminated entirely?
MR. BALSER: It was eliminated in the previous year's budget. It was the subject of some conversation. I think, if memory serves me, it had historically always been lumped into some general pool of funds for job creation. In the year prior to our becoming government in 1998, it was carried as a line item in that budget. It was our decision to eliminate the
funding for the Winter Works Program, so, in answer to your question, it was eliminated in the previous year and it was not reinstated in the current year's budget.
MR. BOUDREAU: Thank you for that reply. The direction of you, in particular, and your government, you are always seeming to grasp on to federal programs. Training programs are a very important part of our future, I would suggest. In order to be eligible for these federal programs at HRDC, it is obvious that you have to be in receipt of EI benefits. Wouldn't you see this Winter Works Program or another similar program, as a bridge gap to provide an avenue for residents of Nova Scotia to qualify for the federal programs that are available?
MR. BALSER: What you are saying is not quite correct. In terms of the federal programs we would be accessing, they are not linked directly to someone being in receipt of EI. What we are saying is that there are student employment programs funded federally that would allow university students or community college students or high school students who are eligible to access those programs.
In terms of the comments I make around accessing federal monies for either employment opportunities around job creation, what we have said is that the federal government has pools of capital either in ACOA or in the old EDA agreement or the new AIP agreement. What that allows us to do is leverage provincial contributions. For example, in the EDA agreement, we can, for 30 cents get 70 cents from the federal government. So, it is not linked to EI, these are other programs that are available that allow the province to put, let's arbitrarily say, a figure of $15 million into a pool that will allow, if leveraged properly, to draw down some $60-odd million in federal government contributions.
It is what we are doing with the CIF program, the investment in research and development from the federal government. As you are aware, the federal government has put together $700 million in monies for initiative projects here in Atlantic Canada. It is not entirely linked to someone being in receipt of EI. There are programs available for job training and so on that are linked to EI, but what we are talking about here is not that.
MR. BOUDREAU: People on social services are eligible for those programs. To my knowledge, people who enter HRDC offices have to be in receipt of employment insurance - at least in the past three years.
I represent an area and I can assure you, Cape Breton is not the only area in this province experiencing the same difficulties - where people cannot find employment from year to year. In fact, many individuals that I speak to have not for six or seven years been able to find suitable employment in this province. Since your government is always promoting the fact that federal programs are available, particularly for training, then I don't understand why you would not be in support of a bridge program to ensure people are eligible for HRDC
so that they can take advantage at a savings, I would suggest, to your government at HRDC offices. So I guess my question is, it is obvious you do not support that type of a program.
MR. BALSER: What I support is trying to create long-term, sustainable employment opportunities and there are federal dollars available. There is $76 million allocated in a federal program dealing specifically with people in transition from employment insurance or social assistance to employment opportunities. That money is allocated for literacy training, for upgrading and those kinds of initiatives.
If we want to talk specifically about the Winter Works Program, as I said when it was raised as an issue a year and one-half ago, the decision wasn't made arbitrarily to stop funding Winter Works Programs. It was looked at in some detail. The fact was that those jobs didn't really transition people from the Winter Works Program to sustainable long-term employment. They simply became a stop gap measure to allow people to maintain a subsistence living on employment insurance benefits. The Winter Works Program carried them forward until they had the adequate number of work hours to qualify for employment insurance and then to potentially be retaken into the Winter Works Program and then continue that cycle. That, in the long term, is not a viable Economic Development strategy. It is not about abandonment of people, it is about trying to make programs work to get them off the system for the future and not for just a period of time.
MR. BOUDREAU: If you don't qualify for these training programs, the federal funding that you are obviously trying to put to good use, I guess is the proper word, what do you plan on doing for those individuals who don't qualify for that training? What is the direction you are going to take to assist Nova Scotians in those types of situations?
MR. BALSER: For people who have not been able to access employment and people for whom their employment insurance benefits have run out, there is a very intricate and elaborate and good social safety net through the Department of Community Services. For many people who find themselves in that position, that they require the support of the Department of Community Services, they then enter into those retraining programs of the $76 million that I indicated was available.
There are obviously going to be people who have difficulty winding their way through the system. There is no simple answer, it has been a problem that has plagued governments whether it is this government or previous governments for a number of years. Certainly, the whole restructuring of Community Services is designed to help people get out of the social assistance web.
MR. BOUDREAU: How much does it cost the province when a Nova Scotian enters these programs through Community Services? Isn't it true that then there is a cost associated to Community Services?
MR. BALSER: Obviously.
MR. BOUDREAU: It becomes a cost-shared program then? Isn't that correct?
MR. BALSER: If the question is, does it cost the province to have people on social assistance, certainly it does. Are there hidden costs in terms of self-esteem and those kinds of issues? Absolutely. That is the whole point of the programs we have in place. If someone finds themself in a position where one requires accessing Community Services support, then what comes into play are all those mechanisms we talked about earlier on, which will hopefully give these people the opportunity to move back into the workforce. I think - the number escapes me now, but I think a significant number of people last year left the social assistance roll to enter the workforce. As the economy grows and new opportunities are created, more and more of these people may find that successful avenue back into the workforce.
MR. BOUDREAU: If an individual on EI benefits walks into an HRDC office today, they are eligible for federal funding of training programs. What I am asking you is if an individual is forced because they are not in receipt of EI benefits, and they enter the training program through Community Services, how much does this cost this provincial government? Isn't it correct that there is a cost associated with an individual Nova Scotian entering through Community Services, whereas, if they enter through HRDC there is no cost to the province?
MR. BALSER: Again, I guess, the question that you are asking about is what it costs in terms of a person being on the Community Services rolls which would be a question better addressed by them than by the Minister of Economic Development. Is there a cost? I am sure there is. Perhaps when the estimates for Community Services come up, you might direct that question to Minister Christie and he could give you a much more detailed answer.
MR. BOUDREAU: Okay. That is fair. I will be sure to ask him that question.
With regard to the Winter Works Program, in Cape Breton North for instance, there is a senior citizens' complex there now where for approximately one year seniors have had buckets alongside their beds because the roofs are leaking. The previous government utilized the Winter Works Program for this type of maintenance on these facilities, particularly, I would suggest, at a cost to the taxpayer. Wouldn't you agree that these types of projects have much more benefit than just associated to cost?
[11:30 p.m.]
MR. BALSER: It is not to say that worthwhile work was not completed by the Winter Works Program people. What we are saying is, if the view of these programs is to provide the opportunity for people to acquire the skills that they need to get out of a vicious cycle, if you will, they weren't doing the job. What was determined by the department and by government was that if we have very limited dollars to work with, perhaps we should try to invest those dollars where we would have the most opportunity to get a positive rate of return in the long term. For example, the Summer Employment Program, we were able to create opportunities there. It is not simply a matter of saying good work wasn't done or we were abandoning those people who were living in senior citizens' complexes - it is simply a question of where do you put money so that it will have the most benefit.
MR. BOUDREAU: In regard to the railroad and particularly from Truro to Sydney, it is fair to say that I have met with several businesses that are very concerned about this line because this is a viable transportation link to the rest of the province and the country, I might add. What are you prepared to do to recognize the railroad as a vital link to economic development in rural areas in Nova Scotia?
MR. BALSER: Again, this was a question that was raised by the member for Cape Breton South the other day in Question Period. At that time, I told him when I was responsible for both the Department of Transportation and Economic Development, I met with the principals of RailTex about the potential impact of the closure of Devco, at that point in time. We were, of course, talking about what might happen around Sysco. They were questioning whether or not the railroad would be viable if those two big customers were no longer there. What I suggested to them and what I said in answer to the question the other day in the House and what I have said to my deputy minister is that here, in my mind's eye, is a perfect application of the Cape Breton Growth Fund. That if, in fact, Cape Breton's economy is an economy in transition, if the railway were to make application to access some of that funding to deal with some of the immediate problems for a finite period of time, what I suggested to them when I met was perhaps maintenance of the rail bed. As a government we could look at that, analyze it at various junctures to see if the support was needed with the view that at some point, that assistance would no longer be required.
The rail lines are a critical infrastructure and if you look at some of the situations that have emerged as a result of the abandonment of rail lines in mainland Nova Scotia, once the lines are gone, they never come back. There have been a number of small spur lines that have been acquired by private sector operators that are working at a profit. It would be very short-sighted I believe if RailTex were no longer to run that line. If it were simply removed from service, the beds and tracks were taken up, they would never be reinstated.
To answer your question, do I think the rail linkages are critical to economic growth in Cape Breton? Yes, I do. Would I entertain positively a proposal that would allow some of the Cape Breton Growth Fund to be diverted to helping that railway line remain in place throughout a period of transition? Yes, I would. Would I support a program that said let's fund the rail line to Cape Breton forever? No, I wouldn't.
MR. CHAIRMAN: The time for the Liberal caucus has now expired. I understand there may be a comment from someone in the PC caucus for clarification?
The honourable member for Cape Breton North.
MR. CECIL CLARKE: Mr. Chairman, on a point of clarification. For the record, on an item brought up by the member for Cape Breton The Lakes. There are no buildings requiring buckets in seniors' units in Cape Breton North. I think that needs to be clarified for the record.
MR. BOUDREAU: Perhaps the honourable member could check the King Street senior citizens' facility in Florence to see the buckets the next time it rains. Have a great day. I could also provide the names of the residents to the honourable member.
MR. CLARKE: Mr. Chairman, my point still stands.
MR. CHAIRMAN: Thank you. I think this is a disagreement between two members. We will leave it at that. Are there any more comments or questions from the PC caucus? Hearing none, it is time for the NDP.
The honourable member for Halifax Chebucto.
MR. HOWARD EPSTEIN: Thank you, Mr. Chairman. Just some additional information with respect to that rail line. You will perhaps recall that the rail line would have an anchor customer if it had been required of the new gypsum mine in Melford that it use rail instead of trucks. The decision to allow the proponent of that mine to use trucks instead of rail, I think, was made and approved when the member for Richmond was the Minister of Environment. They missed an opportunity. Just to help you out a little bit on this, you ought not to overlook the fact that the absence of an anchor tenant is directly attributable to a decision made by the member for Richmond when he was the Minister of Environment. So I hope that is of assistance to you in dealing with that point on future occasions.
In any event, when we left off about an hour ago, I was inviting you to explain the screening process or philosophy or views or assessment that goes on in your department when you decide just where you are going to allocate the subsidies that you are able to place. I have drawn your attention to the question, in part, of what in the view of the department the
job is worth, which I think I now have to ask for an explanation of what exactly is a payroll tax rebate? So I am sure you will recall the point where we left off and your general comments will be very welcome.
MR. BALSER: I guess, when you began your question, you talked about the recent announcement in Yarmouth with Register.com. I hazard to guess that that particular announcement would be greeted very favourably by the people of that community, that the addition of some 300-plus jobs would be well received in terms of the direct and indirect benefit of having, first of all, the facility that will be required to house Register.com located there and the payroll that would be available to the retail community and the multiplier effect that happens when that occurs.
So the fact that we have chosen to assist a company of the calibre of Register.com to choose a Nova Scotia location over some other jurisdiction, I believe, is a good strategic investment. We can argue about the relative merits and so on but, generally speaking, it is somewhat misunderstood and poorly portrayed that Nova Scotia is in competition with other jurisdictions. Register.com came to Yarmouth, Nova Scotia, because it didn't go to Saint John, New Brunswick, or to Toronto or to Fredericton or to Moncton or to, pick any other place you want. There are 3,000 jurisdictions in North America, all of whom offer incentive programs to attract business. If we had not come to the table to invest taxpayers' dollars to induce that company to look favourably on Yarmouth, they would be somewhere else. I believe that if we, as a government, were to abandon our willingness to participate, we would lose tremendous direct and indirect and economic benefit.
Having said all that, we were able to induce or entice Register.com, a company whose corporate headquarters is in downtown Manhattan, to dig out a map and figure out where Yarmouth, Nova Scotia, actually is. I think that is a kudos to the aggressiveness with which the communities in Yarmouth and Argyle and Shelburne pursued this opportunity. Those jobs that are being created, I believe the level of remuneration is something in the neighbourhood of $34,000 annually. That is a reasonably well-paying job in Yarmouth or in Halifax. We have been fairly successful in the call centre business and I will point to one that is located in an Opposition member's riding and that is Staples. Staples has met and exceeded their employment targets.
So the benefits there remain long after the payroll rebate. I know the member, in terms of his question, talked about the analysis that goes into whether or not a particular payroll rebate is going to be worth the cost. Again, if part of the overall socio-economic agenda of government is to try to level the economic opportunities, we can manipulate to some degree the payroll rebates to allow a company that might not initially be interested in Yarmouth to take a little more interest in that location. I can tell you that a company coming to look at, let's say an opportunity in metropolitan Halifax, would not be provided with the
same level of support as a company that were to look to some place in Yarmouth or New Waterford or Glace Bay.
You referenced the cost of this, of a job in Nova Scotia, as $15,000. If you are looking at that particular situation in relation to Register.com, and I will trust you to have done the math appropriately, in this instance, perhaps, would that same job be worth slightly more if it were to locate in New Waterford, given the current economic climate? Maybe so. Would that same job be worth $15,000 some dollars in metropolitan Halifax? Probably not. So it is an obligation on the part of government to balance those issues that I have touched on briefly and try to ensure that the jobs that are created do, at the end of the day, create long-term sustainable economic benefit.
The payroll rebate is structured for a finite period of time. The percentage that will be available to a particular company is clearly denoted. Generally speaking, the rollout is over five years and because we know the expense going in, because there is no front-end cost to the government, that the money is only due and payable after the jobs have been created and after the audited payroll statements have been verified. So it is dollars expended after the facts. The interesting part is not only do we pay after the fact, we get the multiplier effect of the payroll being reinjected into the local economy initially.
Every one of these proposals now, as a matter of course, is vetted through the Department of Finance using an input-output model that attempts to weigh the direct and indirect benefit. It is not an exact science, but I do believe that if you look to some of the growth areas, we have been fairly successful in applying this and that, by and large, the companies have met and exceeded their payroll targets. EDS is a perfect example. They came to Nova Scotia kind of on a speculative basis. They were induced, if you will, to look at Sydney. It wasn't their first choice. They were so impressed with the calibre of the workforce, the way in which they were treated, the way in which the project ramped-up, that when they had a second opportunity, they, very aggressively, sought out an opportunity to expand in Nova Scotia and because of the Cape Breton experience, they sought a site in Cape Breton.
Now the difficulty is, of course, you have only a finite number of people who are going to be interested in that type of employment, so they were not necessarily forced, but they saw wisdom in moving out of the industrial Cape Breton core to the Port Hawkesbury area. I think that was a wise corporate decision on their part. It was because of their experience. I think if we can do those kinds of strategic investments, it is going to be good in the long haul. Again, I don't think we want to put all of our eggs in the call centre basket and we want to also look to the kinds of companies that we attract. Register.com is a company that provides service for inbound phone messages and the solicitations come into the call centre, as opposed to being directed outward. EDS is very much like that.
You talked, too, about pilfering other areas that have call centres, particularly as an entity that will very quickly fold up their tents and fade into the sunset when the incentives are run down. We are very cognizant of that in terms of making sure that companies have a commitment. The other thing is that a lot of the call centre companies that are coming and looking to Nova Scotia are companies that, because of the employment rates in the Carolinas, for instance, when the call centre industry and other industries located in the Carolinas, there was significant unemployment. Now that hasn't been a problem. In fact, the opposite has been the problem. They no longer have the kinds of labour force resources they need. Those people are moving on to other jobs. So, in fact, the strategy of using call centres to create economic growth worked. They have a labour problem. They are looking to other areas and, certainly, the Nova Scotia workforce is such that they have a natural mix and I think that is a good thing for us.
Into the future, I see us pursuing, perhaps, a different type of technology-based industry and the call centre industry itself is changing. They are looking now not so much to e-commerce as they are to m-commerce. So there are lots of dynamics in play and the trick for us is to ensure that we get the companies, as you say Register.com certainly is a company with a future I would say.
MR. EPSTEIN: That was an interesting answer. I don't know that it was entirely responsive or helps me understand exactly the kind of process that the department has always gone through, or has gone through recently, or intends to go through. One of the problems with the answer is that it almost suggested that we're not supportive of the idea of areas in need of economic development getting it. Of course that isn't remotely the case and isn't what I intended by my question. Of course people in Yarmouth are going to be happy to have the jobs. I mean who can disagree and who can fail to be happy for them to have an opportunity and, as you pointed out, if it went to an area of even higher unemployment there would be a greater measure of benefit for us all the way around. The jobs are welcome, and of course it is equally the case that there is competition among different jurisdictions to attract businesses and the incentives that have to be offered in those circumstances will vary. Everyone recognizes that.
What always puzzles me about this, or part of what puzzles me about this is that I have heard successive Ministers of Economic Development speak of this competition to offer incentives with joy. They seem to speak - you and your predecessors in other Parties - as if this was a good thing, as if they were happy when the population here is essentially blackmailed into paying taxpayers' money in order to offer these kinds of incentives. Surely this is not an attractive position to be in. I guess I would feel a little more comfort if I actually heard you or other Ministers of Economic Development say this is a terrible game that governments have allowed themselves to be sucked into all over North America, but unfortunately that's the game we're playing and we're sort of stuck. If that's your view, I guess I would be happy to hear you say that; otherwise it is clearly a game of beggar-thy-
neighbour, or it is a game of trying to compete against other jurisdictions in terms of the extent of the incentives, which becomes very difficult after awhile.
So, you know, that's one part of it. I worry when there's an atmosphere around these kinds of incentives that suggests that it is a very good thing that Nova Scotia is investing taxpayers' dollars this way. I think it is kind of dubious and it would be wonderful if we didn't have to do that. I wonder if the minister agrees with that?
MR. BALSER: Certainly so.
MR. EPSTEIN: Great, good.
MR. BALSER: As you say, and I will expand upon that, it is unfortunate that we live in that particular world, but to pretend that we do not is naive and short-sighted, and I believe that as long as we want to grow and develop the economy in Nova Scotia, we are going to be in that game. The duty for us, as a government and as members serving the public, is to ensure that we don't put taxpayers' dollars at excess risk and we don't do more than we have to; it is a delicate balance. So in response to your question, I don't think it makes anyone happy to be in a world where you have to, as you said, "beggar-thy-neighbour" in order to be able to be successful but, by the same token, in the absence of that we will be abandoning economic development and I can cite a specific example.
In Prince Edward Island a newly elected Premier indicated they were no longer going to be in the incentive game, that it was a game they would not play. They were at that point in time in negotiations with a company and that company, once that announcement was made, abandoned those activities and relocated in an adjacent province, taking with them, or at least not creating in P.E.I. something in the neighbourhood of 130 jobs. Now, did the Premier rethink his strategy? I believe so, and you know while everyone will espouse that we should not be involved in this non-pure game of incentives to attract business, the reality is we are and we will be and we will continue to be. So for me, as minister, as long as I am minister, recognizing that those are the rules of engagement, I am going to try to refine the process by which we become engaged to ensure that we get the best value for our dollar.
MR. EPSTEIN: Nor did I propose that we get out of the game. Let's be clear, I didn't propose that. What I did say was that there are difficulties with it. It is not a cause for rejoicing; it is a very unfortunate situation to have prevail. It is difficult and, indeed, a lot of the local business community is very unhappy with it. It is not unusual to hear comments from the CFIB saying that they don't believe these kinds of incentives ought to be offered and, in particular, of course they are concerned when there are existing competitors in the province and one particular company might be favoured over another for no obvious reason.
So what this gets me to is the other part of what I was concerned about, which is the process by which a decision is made. You see, I didn't hear you say, for example, that a company would have to show that it is not able to self finance. I am thinking here, for example, about expansions of existing businesses. This doesn't seem to be one of the screens. I didn't hear you say it and certainly if we judge by looking at some of the companies that have received incentives, it doesn't seem that that could possibly be one of the screens. It doesn't seem to be one of the requirements that they have been turned down by private lenders and yet I heard you talk earlier about the government being a lender of last resort, but what can that possibly mean. Are you saying that, indeed, a company has to show that it can't self finance and that it has been turned down by private lenders before your department will consider it?
MR. BALSER: It depends on the program that we are talking about.
MR. EPSTEIN: It depends how?
MR. BALSER: If we're talking about the payroll rebate program, that has a set of criteria which would be applied to a particular company's request or a proposal. If we're talking about a loan in terms of capital expansion or working capital and so on, that's a different set of criteria. The payroll rebate historically has been used to support businesses that would be creating, at a minimum, 50 jobs simply because the level of due diligence and the running of the models and so on, the analysis that's required to see whether or not the proposal is viable, is cost-prohibitive at numbers less than that. There have been suggestions that perhaps a payroll rebate could be applied to a company that was expanding incrementally by jobs of one person or two people and the fact is that the administration costs associated with that make it non-economical.
So on one hand, when we look at a company that comes forward with a proposal or they're looking to maybe locate in the province, we do have people in the department who are aggressively out there pursuing these, if you will, and to some degree we've been fairly effective. The metaphor they like to use is filling up the funnel. So we have a fair bit of company interest in the province growing because of the oil and gas and just the awareness of Nova Scotia. So when those companies come forward, the question then becomes engaged around what kind of business, what are they looking for in terms of skill sets, what are they looking for in terms of infrastructure. Then we begin the discussions about areas of the province where they may be interested in locating and then when those kinds of analyses are done, we look at the quality of jobs. I did talk about inbound call centres versus outbound call centres, and this is not about call centres per se, that's an illustration only. Beyond that, the level of remuneration associated with a particular job is a factor, the kinds of supports that would be available either from our federal partners or from municipal units and so on.
So there's a lot that goes into the mix. We don't necessarily drag home everything we find. There's a fair bit of due diligence around the long-term commitment, the corporate history of the company, what they bring to bear in terms of their own equity in the game. It is not simply they walk in and we are so glad to have them that we simply say how much are you looking for and we will write the cheque. There is a great deal of due diligence before any decisions are made and, again, that's around the payroll rebate model and I can go into that in more detail if you like, but around the lending function, we have historically acted as the lender of last resort. Not always, but certainly in most instances if there's financing available from other sources we would like to see them pursue that, because in fact it frees up more money within the province to help companies that may not have alternative sources of funding.
Again, there is a business case mounted for each of these proposals. People in the department meet with the principals of the company, look at their financials, look at their marketing, how much their sales are, how much they can potentially grow them through the expansion and then at the end of the day make some kind of determination. For loans of up to $1 million, if we're speaking specifically of loans, those recommendations and analyses are taken to the board of the Nova Scotia Business Inc. - or excuse me, at the present time to the Business Development Corporation Board; ultimately it will be taken to the Board of the Nova Scotia Business Inc. when restructured - they make a recommendation based on their analysis and the recommendation of the staff.
It can be approved; it may be rejected; or it may be sent back for refinement or readjustments in terms of perhaps finding other equity partners. So what we have in terms of a monitoring and a processing mechanism is similar to the commercial-lending institutions, but there is always a compelling argument around the socio-economic implications. In fact, I often have submissions, if you will, from members of all sides of the House who say what can you do for this company located in my riding that is a big employer and would like to expand, can't you help? Then invariably we send it back to the department and the process begins again. So it is a work in progress. We are reviewing criteria for lending and for payroll rebates constantly. I believe that over the last year and a half we have refined the process to a large degree and we will continue to do that as we move to Nova Scotia Business Inc.
MR. EPSTEIN: The minister said that the department had a set criteria that it applies when it comes to questions of loans or payroll rebates. Are these sets of criteria lists or screening instruments that you have, are you prepared to make public?
MR. BALSER: We have them available: debt to equity, those kinds of relationships, existing debt loads, ability to repay, all those kinds of criteria. I can take that under advisement.
MR. EPSTEIN: I would be happy if the minister would make sure we get copies of them. That would be wonderful and very interesting.
MR. BALSER: If you're looking for some secret documents of some sort, no, in fact, many of the people who are handling these files have had historic employment in the commercial-lending institutions.
I should talk a bit about the whole issue of the investment framework that we're working towards. One of the things that we've been spending a fair bit of time on is the whole issue of what kind of climate do we need to have here in Nova Scotia that will cause companies to choose to invest here. The member opposite is well aware of the commitment to a personal income tax reduction of 10 per cent in year four of the mandate. I think if you look at Alberta, some of the very vibrant economic models have predicated their success around reducing personal income tax and corporate tax and so on. Certainly the economic growth in the United States was in large part fuelled by the Reagan Administration's view to tax reduction; and we can argue about that, whether it was a function of that or not, but certainly there is a fair bit of support for that view. In fact, it may well be that some of the issues in the American economy at this point are predicated around the run-up to the presidential election.
So having said all that, we know that we need to have a climate and we need to obviously invest heavily in the infrastructure, whether it is the 360s network fibre optic cable link to Europe, or voting scarce dollars to training of our young people through the Nova Scotia Community College or the universities and those are strategic investments. When you have people like Larry LeBlanc saying that one of the issues he sees on the horizon is a skilled labour shortage, and I don't think it is something that he dreamed up on his own, his expertise in the industry is renowned and when he and other industry proponents say we have a problem, it is not lack of people, it is lack of people with the skills we need. If you want to be prepared to take advantage - and we all talk about Nova Scotia benefits - do something today in anticipation of what will be.
[12:00 noon]
I think, and not to digress entirely, one of the kind of community college strategies in the past was to react to opportunity after it appeared. So rather than have skilled welders trained in anticipation of a pipeline, we scrambled madly to train them as the pipeline moved through the province. That's an unfortunate strategy and certainly I believe Ray Ivany and the team at the Nova Scotia Community College have become much more forward-thinking in that manner. The community college is a young and vibrant enterprise now - not that it wasn't before - it is just that the current administration is taking it in new directions and I think that is appropriate. So there are things that we can do to position Nova Scotia well for the future and it is not just tied to lending money or making payroll rebates available.
MR. EPSTEIN: I certainly look forward to seeing the criteria that you use and I do agree that a fit with the overall Nova Scotia economic strategy would make a lot of sense as part of the screening criteria. One of the things that I did wonder though was when Nova Scotia Business Inc. is up and running, as it will be fairly soon, just how there will be interaction of these various programs as between the ones that seem to be residual to the department and those that will be within the mandate of Nova Scotia Business Inc. For example, will someone who is interested in the possibility of some kind of incentive from the department be required first to have gone through Nova Scotia Business Inc., or will it be the other way around, that is if someone goes to Nova Scotia Business Inc., it is only after they go to the department? Are they separate entirely as to criteria? What are we looking at here?
MR. BALSER: That was a point of some discussion as we went through these pieces, you know, what is the role of the department versus Nova Scotia Business Inc., and I think by and large you will see the same kinds of patterns exist as has been historic. Will a company that wants to locate in your riding make contact with the MLA? Quite possibly. Will they make contact with the Premier's Office of the minister's office? In all likelihood.
Just to illustrate how it happens now and I don't see a great deal of difference in the future, I, on a regular basis, meet with proponents of business, whether it is an existing business looking for expansion or looking for opportunities to export, they will contact me or they will contact the deputy, or maybe the contact comes through an MLA directed to me as the minister responsible. At the end of the day a meeting will be convened and at that meeting, generally speaking, there will be representatives of the department responsible: if it is a loan file, lending; if it is a trade file, trade. Then, obviously what happens is that at the end of the meeting some decision is made about it going forward, but invariably the work of actually moving the wheel occurs because someone in government tasked with that responsibility makes it happen.
So what I would see happening is that if there is a request to meet with the Premier, let us say that some company was coming to Nova Scotia, probably the Premier's call would be to the minister's office - and obviously the linkage between the agency and Nova Scotia Business Inc. will be the deputy - there would be some meeting convened and obviously the appropriate people would be brought in. It is not like we have created two houses as such. I think what we have done is we have taken the day-to-day functions of the department, moved them to Nova Scotia Business Inc., put them under the direction of a CEO and the board with the linkage back and forth being the deputy minister. So I don't think at the end of the day you're going to see a radical departure in terms of structure.
What I am hoping you will see is a radical departure in terms of process, and that is that the arm's-length structure of Nova Scotia Business Inc. will be making those decisions unencumbered to some degree by the sort of political swirl which was one of the issues of
concern through the consultation piece. People were saying well, you know, the decision-making process as it exists is politicized. If we had more of an arm's-length, private-sector kind of structure and process it would be more palatable, if you will. So in terms of whether or not there will be conversations with politicians about economic opportunity in their riding, I hazard a guess that will continue.
MR. EPSTEIN: I think inevitably here's what we are looking at. Because the department retains fairly substantial funds for allocation on its own and Nova Scotia Business Inc. - which is supposed to be the entity to depoliticize the process of making these kinds of decisions - does not have complete control over all of the funding allocations of what was previously just part of the department, then the only conclusion that I think can be reached is that the funds that are residual to the department remain what could only be called a slush fund. Otherwise, the process would have been turned over entirely to Nova Scotia Business Inc., and the department would be pretty well a rump of a department, I suppose.
I want to turn to another topic.
MR. BALSER: If I might though, if you don't mind, I would like to comment on that.
MR. EPSTEIN: If you can limit yourself. It is my hour you are trespassing on here. If you have a minute, I will give it to you. (Interruptions)
MR. CHAIRMAN: I thought we were asking questions.
MR. EPSTEIN: I didn't ask a question. I made a comment. I was preparing to ask another question.
Here is the other topic I want to turn to. When the member for Cape Breton South was your predecessor, I had interesting - at least to me - conversations with him back in 1998 and again in 1999. The conversation I had with him in 1998 I think focused on the necessity of the province coming up with a comprehensive economic development strategy. I think the conversation in 1999 was on the necessity of the province coming up with a comprehensive energy strategy. I am happy to see, with the change in government, that we actually have had documents issued that fall within the bailiwick of being both energy strategies and overall economic development strategies. I certainly wouldn't want to be understood as being entirely satisfied with either document. I think a huge amount of work needs to be done on both of them, and having just freshly read the brand new energy strategy, I want to go on record immediately as saying that this seems to me to be a kind of very weak document and profoundly in need of change.
That said, it was certainly a step forward to try to come to grips with the needs of the province to think about the overall economic direction of the province in an organized way and to have something on record that tries to set some direction for what the province is thinking about doing and given, as well, the overwhelming importance of the energy sector here now, not just in terms of the economy but in terms of sustainability and environmental impact, this is very important that there be a good energy strategy in place. So I have to say that this kind of engagement with these issues is entirely appropriate.
So having had some success, as I interpret it, with at least your government in having some of my concerns translate into policies, I now want to raise another topic to see whether a year or two from now we might actually have made some progress on this other topic which I regard as equally of importance to the economic thinking of the province. It has to do with the international trade agreements, particularly the FTAA and the GATS. Indeed, it may well be that we don't have two or three years in which to engage with these issues. I will tell you where I am going to go with this. In the end, my question to you will be - but not before I put a few things on the record - is your department engaged in thinking about these issues? Do you share any of the concerns that I am about to outline, and what are you doing about them? That is going to be the bottom line. But let me tell you what it is that I am concerned about and how I see this process unfolding and why it is that I am concerned about it in terms of the impact on our province.
The difficulty, of course, is that these are international agreements that are being negotiated on behalf of all Canadians by the federal government. Of course, the treaty-making power is a federal power; it's not something a province can do directly. At the same time, what I worry about is that when we look at the kinds of international agreements that the federal government has signed on behalf of the nation in the past, they have the impact of reducing severely what is already limited manoeuvring room in terms of development of the economy that is available to sub-national governments. Provincial governments already don't have control over the main economic levers of the country. We don't control the money supply; we don't control the rate of interest; we don't control the rules that affect banking; we don't have major control over the Income Tax Act although, now, the province has decided to strike out on its own somewhat, but certainly the major direction of that.
So these main economic levers and tariffs and trade and so on are really federal levers constitutionally. So already we were within a constrained position. Every province was in a constrained position to start with. As the federal government began to enter into first, the free trade agreement and then NAFTA and even before that, of course, the General Agreement on Tariffs and Trade, 50 years ago, there began to emerge an international trading system that had profound implications for all levels of government, including sub-national levels of government. The initiatives now are going to move into areas, at least on their face, which are areas over which provinces have traditionally had jurisdiction. As soon as they begin to
move into services, health and education and municipal decisions are very much on the table and this virtually erodes any kind of economic manoeuvring room that we might have had.
I am very worried about this because it seems to me that it is far from clear that the public services that have traditionally been essential public services, and here I have in mind particularly health and education, are going to be protected in that process. I think I just have to take a minute to explain why I think that it is possible to protect them and it's a small piece of constitutional law. Forgive me for doing this, I will try not to make it a very painful excursion, but this question came up in Canada in the 1930's. This was actually litigated in the 1930's when the federal government, at that time, entered into international agreements that had to do with hours and wages for employment. This was part of a reaction to post World War I economic conditions and also to Depression conditions.
The federal government entered into international agreements that would have entrenched on provincial areas of jurisdiction, and provinces objected. There was litigation that ended up in front of the Judicial Committee of the Privy Council, the highest appeal court pre-1949, and they ruled that in Canada the federal government does not have the power, although it has the power to sign international treaties, they ruled that the federal government doesn't have the power by signing international treaties to invade provincial areas of jurisdiction. So, for example, the federal government couldn't sign an international treaty on schools and suddenly take over responsibility for setting the curriculum and deciding on where schools go and so on. It can't happen. This is, in fact, the opposite of the way the jurisprudence evolved in the United States, where the courts there ruled that, indeed, the American national government could do that, but that's the prevailing law in Canada.
What I am concerned about is that unless we assert our sovereignty and unless all the provinces assert our sovereignty over the areas that we have jurisdiction over, the federal government is thinking about the possibility of signing agreements that will extend to giving national treatment, so-called, to foreign companies with respect to services. This is hugely problematic, and I want to illustrate this for you in a couple of ways. Mr. Minister, let me just give you one document here. I don't know if you have actually seen this. This is a letter dated February 20th that came from an American company to, I think, all municipalities in Nova Scotia. It had to do with offering services with respect to assessment. Here is what happened. As you know, your government decided that it was going to charge municipalities for the assessment services. Some municipalities responded by saying, we would rather do it ourselves and so on. So this American company has come along and said, well, wait a minute, we are in the business of assessing property, if you, municipal levels, are thinking of getting into the assessment business, why don't you hire us? We will do the services. This is a company from Dayton, Ohio.
So here we are seeing this kind of opportunity in which an American company is swooping in and saying transfer your jobs to Dayton, Ohio, or to a company headquartered in Dayton, Ohio, for something that, at the moment, is done by civil servants here in Nova Scotia, even if it were to be taken over by the municipal levels, presumably done by local people and maybe some of the same people or whatever. This is just an offer, of course. This is them fishing for business and good luck to them and it is perfectly fair for them to do.
My point is that if the GATS goes forward in the model according to which we understand it may well be going forward, then international trade and services is being offered as something for which municipalities or, indeed, provincial governments or anyone won't be able to resist. You would have to give open treatment to foreign companies who, if they felt weren't getting fair and equal treatment, could then turn around and sue for damages. This has happened already under NAFTA. Let me remind you of some of the cases that have gone on.
You will recall that the Ethol Corporation sued the Canadian Government, naming more than $200 million in damages because MMT was banned as an additive to gasoline in Canada. Now, ultimately, the Canadian Government agreed to an out-of-court settlement and paid more than $19 million to Ethol, and this came up under NAFTA. They were able to do this under NAFTA. The federal government paid up because of the nature of the international agreements that they had signed. There are pending cases. The Canadian Government is being sued by something called the Sunbelt Corporation in the United States for a named figure of more than $10 billion because of British Columbia's ban on bulk water exports.
In the United States, the U.S.A. Government is being sued by Methanex Corporation, which is an interesting turnaround because I think this is a B.C. corporation that is taking advantage of it, but it is going the other way because California banned a different kind of gasoline additive, which they banned on the basis that it polluted their groundwater. In the meantime, the Canadian Government is being sued by UPS, the courier company, for a named $230 million because Canada Post gets some government financial support, but doesn't give it equally to UPS. All of this becomes very problematic for us if this is going to be the nature of it.
I am not making it up that our education and health sectors are at risk. A number of American corporations and their chief trading officers, that is the U.S. Government chief trade officials, have gone on record as saying that the trade and services is, from their perspective, intended to go into health and education. Now I will give you a quotation here from a man named Dean O'Hare, who is President and Chief Executive Officer of the Chubb Corporation and also Chairman of the Coalition of Service Industries, that's the U.S. coalition which is the main corporate lobby in the United States on services and it includes very large U.S. health corporations. This is from his testimony before the U.S. House
Committee on Ways and Means hearings on the United States Negotiating Objectives for the World Trade Organization. This is in August 1999, and here is what he said:
"We believe we can make much progress in the negotiations to allow the opportunity for U.S. businesses to expand into foreign health care markets. In the U.S. competition has provided reductions in the cost of health care as well as increased quality in the care that is being provided . . . The entire spectrum of geriatric services, both community and institutionalization, for senior citizens, should be explored . . . Three general objectives are to encourage more privatization . . ." that means privatization in our country ". . . to promote pro-competitive regulatory reform, and to obtain liberalization."
Now the same statements are made with respect to schooling, and the objective is to try to move into as much of what has been core essential public services in our nation. Now, what I worry about is that all of this negotiation is going on without enough public debate in Canada. You know the fuss made recently about the public not being able to see the draft agreements for the FTAA or the GATS. This is hugely problematic. There is limited circulation of these documents. I gather that provincial governments have been provided with them. I know that when requests have been made to the Premier's Office here and to other Premiers around the country, that they have not been prepared to release the documents, and that is understandable because they were given to them in confidence by the federal government with instructions not to release them publicly but, at the same time, they have been circulated to certain members of the private sector who are interested in the way the negotiations are going. These are important negotiations that have effect on all citizens and are likely to have effect on our essential public services, including the municipal sector here.
I will give you another piece of paper. Perhaps your deputy minister will pass this over. This is an article from the National Post, last October 7th. It is written by Murray Dobbin and is called, "Who will tell Canada's mayors?: WTO negotiations threaten municipal government." Dobbin goes through a scenario that would affect municipal governments under the GATS if it goes through. Essentially, what he is saying is that foreign corporations will have the status of residents in local communities for planning decisions. I am sure you are aware how planning decisions are made right now. If the municipality is thinking of changing the zoning or doing something with its by-law, it has to advertise in the local papers and give notice to people who live in the immediate area and so on.
Well, one of the implications here is that municipalities will have to give notice to companies that exist in other countries that we might be partners with if zoning changes are going to be made that might somehow adversely affect their businesses. This is nuts. I cannot see that this is desirable. What I am worried about is that this whole range of negotiations is going on with huge impact, without the text available, without the adequate basis for public debate and with no comment that I am aware of about protecting important public sector
interests that if lost would erode our economy here. It would erode employment here. It would erode our economy here if we lost control over them.
I have heard nothing from the provincial level, and I don't just mean in this province. I mean I have heard virtually nothing around the country from any Premiers or Ministers of Economic Development to tell us what their view is and whether they, as I said, are aware of these issues; are they worried about these issues; are they engaged in these issues? What is happening about it? So, Mr. Minister, this is my concern and I heard you mention, I think in response to a question from one of the other members of the committee that some money had been spent on something to do with the FTAA, presumably a reception or a meeting or a discussion of some sort. I think I heard you also mention that there is an international trade specialist within your department. So, clearly, someone must be following these issues and I guess what I think it is crucial to hear from you about is what the stance of the provincial government is on this. Are we working on these issues? You heard the questions that I wanted to work up to so I ask them now. Are you and your government engaged on this? Are you worried about it? What are you doing?
MR. BALSER: I guess I would like to start by going back to some of the issues and comments you raised not specifically related to trade, but rather to the role of NSBI in terms of funding and the application of the Industrial Expansion Fund. I did take exception to the reference that we have created a slush fund, if you will. On one hand I heard a number of comments, not particularly by yourself, but about the issue . . .
MR. EPSTEIN: I didn't say created. I said failed to eliminate.
MR. BALSER: Again, this is my turn. The issue was around the way in which those funds would be administered. On the one hand I hear people talking about this board that's being put in place to oversee the operation of NSBI as being a return to days of yore when there was question about whether or not the decisions being made were made from political motivation or being made from the basis of sound business judgment. So what we are attempting to do in this instance is to create a situation where by and large the Board of Nova Scotia Business Inc. will be tasked with analyzing the business merits of the initiative using staff and from time to time there may be situations that merit the application of some socio-economic factors in determining whether or not a particular proposal merits considering the extra risk.
I cite a number of successes, and I am sure members in the Opposition ranks would be happy to point to failures, but if we look at the resurgence of the Town of Canso, it was predicated around the application I believe, judiciously, of the Industrial Expansion Fund or the decision to support Trenton Works when that company was going through a very difficult time, had the business case been reviewed and being the sole source of the decision-making initiative, it probably would not be present today. Again, and we can obviously discuss the
relative merits of whether or not Michelin in the Province of Nova Scotia is a good thing or a bad thing, but that did come about as a result of the application of the Industrial Expansion Fund. So what we have attempted to do in this situation is to try to ensure that the fund would be available to allow for those kinds of factors to be weighted and determined appropriately.
Again, the way we have structured this is to try to ensure that the board of Nova Scotia Business Inc., at least in its initial stages, is free from any kind of taint of perhaps politicizing their decision-making process. So I feel very comfortable that we will be able to do that and I would compare our government's application of the Industrial Expansion Fund, over the last 20-some months, with that of the previous administration and say that we stack up very favourably. As long as there is economic disparity in the province there will be a need for the ability of government to apply some of those criteria to the decision making.
The other thing that you referenced was the creation and development and the bringing forward of an economic development strategy for the Province of Nova Scotia. I thank you for your comments that it was an initiative that came to fruition under this government. I do believe it is an extensive document in terms of its research and its scope and I believe it very effectively sets the stage for where we want to go into the future; a lot of the precursory work making the move from what was to what will be possible.
You also referenced the energy policy strategy discussion paper, if you will. It is not the final document. The intention of the document, no matter how weak you may perceive it to be, is generated for the purposes of engaging in the discussion about what ultimately our policy will look like. So I think you have to look at the document that was provided in light of what its intention would be and that is to provide a framework for engaging in those discussions about what the energy policy for the Province of Nova Scotia will ultimately look like and in the absence of that framework, people will be to some degree shooting in the dark. So we very clearly laid out the goals and the backdrop by which the energy discussion should be undertaken. I think it is a fine piece of work that more than adequately does what it was intended to do. I look forward to hearing the responses that will be generated as we embark on those public consultation processes and look to the written submissions and at the end of the day I think, as you said, having an energy policy and strategy concurrent with an economic development strategy is going to set the stage very admirably for where we will be taking this province over the next few decades.
[12:30 p.m.]
In terms of the issue of free trade, I certainly bow to your knowledge of that issue. I know it is something that is of some interest to you and that you spend a fair bit of time looking at the implications and analyzing where we're going as a nation in terms of
globalization of trade. So having said that up front, from a governmental perspective we do have, as I said earlier in a question response, people, a particular person I guess you would say, in the province's administration who is tasked with trade initiatives.
There is no question that the whole issue of trade is large on a number of fronts. Certainly from the economic growth strategy we see one of the best ways to grow the economy in Nova Scotia is to trade outside of our immediate jurisdiction, that that in fact brings new dollars, and so we do have an Investment and Trade Division. We have a person who is very definitely tasked with looking at trade policy issues. It would be our view, as we move to Nova Scotia Business Inc., that when we restructure we strengthen those areas, because there's no question that trade is and will continue to be a big part of the economics of Canada and, in particular, Nova Scotia.
I believe, if you look at our historic roots, we are by and large traders by nature and there are advantages to engaging in trade, not within the boundaries of Canada, but outside of those boundaries. What has tended to happen of late in terms of trade initiative issues such as the Softwood Lumber Agreement, the exploration of that has caused government to focus its attention to that specific issue. Again, by virtue of the size of the province, by virtue of the manpower available to it to deal with trade issues, we do spend a fair bit of time reacting to particular issues and at the same time attempting to monitor the global trading issues as they emerge. I agree with your comments that trade and NAFTA and various GATS agreements are going to be issues that will need to be monitored closely, and I give you my assurance that we are doing that and we are continuing to be aware of and looking to what's happening on the world stage.
I believe though, as I said earlier, the real long-term economic sustainability for this province is going to be predicated around exports, the whole issue of gas and oil and where it will return the most investment. Certainly it is our view that Nova Scotia, if we can keep the gas here and perhaps turn molecules into electrons and transport them into the energy-hungry New England grid, that would be a much better value add than simply sending molecules down a straw to be burned elsewhere. So that certainly has a trade component to it and we're watching that very carefully and attempting to ensure that we can capture whatever advantages accrue there. Again, with globalization, it remains that Nova Scotia is competing with other jurisdictions, particularly with regard to natural gas and opportunities to present themselves.
Aluminum smelting is a tremendous potential opportunity for Nova Scotia in terms of how we can bring value added to our resource. By the same token those opportunities present themselves equally well in areas where there is stranded gas, whether it is in South America, Australia or Asia, and companies are looking very carefully and weighing the cost benefits of where best they can locate. It comes back to your whole issue of globalization and the trading regime in which we exist.
From a GATS perspective, you clearly indicated that to some degree the Province of Nova Scotia is subject to the whims and directions of the federal government. We saw that most clearly with the issue related to softwood lumber and that you had, within Canada, conflicting positions around what was the most appropriate course of action. You have British Columbia that has captured the bulk of the export market in terms of softwood lumber, and their agenda very clearly was focused on what was best for British Columbia. By the same token, and I found it very rewarding that the Atlantic Region came together with one voice to address a common concern, and that is that Nova Scotia and the other Atlantic Provinces continue to maintain their exemption status. It was certainly my view, supported by my fellow ministers, that Nova Scotia is not a subsidized softwood industry, that the bulk of our export comes from privately-owned woodlands and that the continuation of the exemptions would be the most appropriate course of action.
At the end of the day, I would like to think that we will be successful in that area and that we will be able to continue to go down that road and export lumber into the American markets unrestricted by the agreement that's in place subject to B.C., and any absence of that I think will have a significant impact on the softwood lumber industry in Atlantic Canada. So we do have in the province people who, in fact, monitor GATS and the other free trade initiatives, NAFTA and so on. Our resources are somewhat limited.
One of the big issues for government, and this is a digression to a degree but I think it is a very salient point, with people who have garnered significant expertise over time as a result of the position they occupy, if you have one person who is sort of like the last person who can read what maintains the ability, you have to transfer that on. So, in this instance, a person who is there who has the expertise in free trade, if he were to find or she were to find an opportunity outside of government, we would lose a fair bit of historic corporate history, if you will. So we are very clearly going to address that as we move to Nova Scotia Business Inc.
As I said earlier, trade is a significant issue for us. We are going to be expanding the Investment and Trade Division to some degree, focusing our interest there but, at the same time on the policy side, we need to have a greater allocation of resources dealing with that because, as you have said, it is going to be an issue into the future, certainly one that is going to be the backdrop over the next number of years in terms of a Nova Scotia-New England trading relationships and, from a national perspective, Canada-American relationships, then beyond that to other markets globally. I am aware, as I said earlier on, you are particularly interested in world trade issues and the World Trade Organization and the various agreements that are in place around those initiatives. So, within the department, we are watching it carefully.
MR. CHAIRMAN: The time for the NDP's hour for questioning has expired. The time is now 12:38 p.m. Are there any questions from the P.C. caucus before I should go back to the Liberal caucus? No questions.
The time is now 12:39 p.m. I would just like to remind the members of the committee we have 54 minutes remaining in our time allotment for today.
The honourable member for Cape Breton West.
MR. RUSSELL MACKINNON: Mr. Chairman, my first question to the minister is with regard to capital expenditures out of his department in the past fiscal year. What percentage of the total capital expenditure was expended in industrial Cape Breton?
MR. BALSER: That would be a level of detail that we wouldn't have at our fingertips but certainly . . .
MR. MACKINNON: I could take that on notice that the minister will provide that.
MR. BALSER: Yes. Just so we're completely clear on this, you want to know in terms of the overall budget of the department how much of it would be proportionately spent in Cape Breton, or specifically related to business attraction retention, or capital only?
MR. MACKINNON: Capital only, the total dollar value, the total number of industries that would have been attracted or affected by that capital expenditure, and the total number of jobs that would have been created as a result of that, to the best of your ability.
MR. BALSER: Just so I can sort of fully understand, you're saying, let's pick for instance the provincial dollars allocated to support the attraction of let's say the EDS call centre and the number of jobs created and, for example, Port Hawkesbury, the number of jobs created, that's the level of detail you're looking for?
MR. MACKINNON: Sure. What's the total capital budget? Is it around $60 million, or it's down a bit I guess.
MR. BALSER: It is $18,300,000. (Interruption) That's the grand total . . .
MR. MACKINNON: I noticed that the province has what they call the Office of Nova Scotia in New England. Obviously, that's to help attract business and promote Nova Scotia interest on the international stage. The total budgetary figure for that line item was approximately $524,000. What exactly did the Office of Nova Scotia do for us in the last fiscal year that would warrant that expenditure? What businesses did we attract through that
particular institution? I am sure it's a very worthwhile investment, but it would be nice to know how it affects us at the local level, particularly industrial Cape Breton.
MR. BALSER: Certainly so and, in fact, I believe there was at least one trade mission that I am aware of into the New England market that focused primarily on Cape Breton companies. What happened, the presence from Nova Scotia in the Boston market has been in place for a number of years, it is one that the previous administration supported and we, as a government, see a strategic advantage to having that office open in the New England area. It is not primarily focused on Massachusetts, if you will, and in fact has expanded its scope outward.
One of the things that happened when we became involved in previous questions and discussions about free trade, we recognized that if we were going to grow the economy here in Nova Scotia, we were going to have to reforge those north/south trading links, and that there was a natural affinity between New England and Nova Scotia, or historic ties of cross-border visitations and so on.
As a result of that, the conscious decision was made to open an office, and we put a person on the ground with staff there to, first of all, heighten that region's awareness of Nova Scotia. Certainly one of the highlights at the time is the tree lighting, and that has contributed greatly to the presence we have in Massachusetts and in New England. The person on the ground began to do preliminary work and continues to do work around what companies in that market are looking for in terms of product or in terms of expansion, in terms of opportunity. It primarily functions as a trading centre, if you will, and we have and do mount trade missions in New England. They are coordinated through that office. It is not co-located, but it is located adjacent to the Canadian Consulate office presence there. So we can access support from our federal partners in terms of trade missions. When companies from Nova Scotia go down, and they go down individually or on organized trade missions, they can set up in the Nova Scotia office, access their support staff on the ground and, at the same time, tie into the federal people who are there available to assist them.
So what they've done in the last few years is mount a number of trade missions, coordinate them through that office, do follow-ups from that office, chase down opportunities. I will use an example from my riding. A company located in the Middleton area was interested in exporting hay into the New England market, and that's not a product one would readily associate with export opportunity. What they did was talk and work through the office in Boston and also the office here in Halifax to set up discussions. A group of individuals went down, had meetings established and set up, and out of that came some opportunity to export hay into that market. So I believe it is a worthwhile presence. In fact, I will tell you, when I was in Boston at Christmas, I raised that very issue with the federal representative. I asked him, in light of Nova Scotia's presence, is it something that we should look to continuing to have an office or have we grown to the point where it is self-sustaining.
His response was that of all the provinces engaged in trade with New England, he would characterize our presence as the most visible and most effective and he linked it back to the fact that we do have an office there, that we have forged those links and strengthened them over time.
So I think when you look at the dollar expenditure to have that office, it is worthwhile. Are we looking at ways to improve that and are we looking at ways to recover some of the costs? Yes, we have actually had some discussions with perhaps co-locating that facility with some of our sister provinces, but the question then becomes what is at risk in doing that? If Nova Scotia is a visible and recognizable icon of its own worth, are we losing something if it becomes the office of Atlantic Canada there? So it is a significant amount of money. It was made and continues to be made as a strategic investment. I think if you analyze and talk to companies that have used its services, they would say that it is working well.
MR. MACKINNON: Mr. Minister, through you, Mr. Chairman, perhaps you can take this on notice as well, if the minister would be kind enough to give a detailed breakdown of what that expenditure is. I believe it comes in under two line items, one is $515,617.16 and the other one is $9,161.88. They are located on Page 43 and Page 45 of the Supplement to the Public Accounts, respectively. So there is no great panic. I do agree. I think the optics certainly are that it is a very worthwhile investment.
I notice on Page 46 of the Supplement to the Public Accounts, there is a $1 million expenditure there for the Black Business Initiative Society. I guess, looking at value for dollar, will there be an additional $1 million committed to that initiative this fiscal year and, if not, why not and what type of value do we get for our dollar on that $1 million expenditure?
MR. BALSER: Actually, that is a joint federal-provincial initiative and it has been, historically, a good strategic investment. The simple fact is that the minority community has been disadvantaged, historically, in terms of opportunity for economic development. If you look at the unemployment rates in that particular community, it is significantly higher, proportionately, than others. The question was, how best do we empower a community to take charge of their own destiny, if you will? A number of years ago, the Black Business Initiative Society was formed with a view towards consolidating and capturing that entrepreneurial zeal and focusing energy specifically to address this very real issue.
So, over the five years, there was an agreement to participate to the tune of $1 million. Part of the issue was its link to historic federal-provincial agreements, the EDA Agreement, and those are, of course, set to expire. There has been an extension. There was actually a review. One of the undertakings about a year ago was an independent analysis of the success of the Black Business Initiative and whether or not it was a good investment for the dollar. That, by and large, came back as a positive. I know that there has been some
discussion about how effectively that group was able to reach out into rural Nova Scotia, and certainly I can think of my riding as an example, and I am aware of a number of companies that started up and received support.
So to answer your question, I think a $1 million investment to that particular organization has proven itself historically and subject to the extension or renewal of various funding opportunities, we would look favourable on continuing that.
MR. MACKINNON: How many jobs were created to date as a result of that program?
MR. BALSER: The Black Business Initiative produces an annual report that has all those salient details and I would be happy to provide you with a copy of the most recent.
MR. MACKINNON: Okay, that is fine, that is great. I notice that on Page 47 of the Supplement to the Public Accounts, under Omnifacts Research, there was an expenditure of slightly more than $11,000. What was that expenditure for?
MR. BALSER: Omnifacts did interviews with trade mission participants. One of the issues about going . . .
MR. MACKINNON: In a poll or just interviews?
MR. BALSER: No, not a poll, as such. What it would be is, I believe, follow-up interviews. When a company looks to go trading, there is a fair bit of work that has to be done in anticipation of the mission expectations and actually are they ready to do this. Oftentimes, a number of the companies that come forward to participate in trade missions, it may be their first time. So what we have attempted to do is sensitize these companies to the opportunity and let them do some internal analysis themselves to see whether or not they are ready to make that step. Assistance is provided during the trade mission with people from the department on the ground and then there is usually follow-up to monitor the success.
I know oftentimes the comment will be, there was a trade mission, how many contracts did you sign as a result? In the best of all possible worlds, someone will come home with a contract or an agreement in their pocket, but sometimes it requires two or three trips. So this is a matter of course when we do trade missions. You may not be aware, but we are gearing up for a Team Canada trade mission into Atlanta, which is not necessarily a new market, but it is certainly a young market for us. So a great deal of work is being done in determining that we get the best possible fit in terms of companies.
If you take a company that has a product that is not in high demand in a particular market or you take a company who doesn't have the ability to deliver on a contract, I remember the story of a Nova Scotian company who went into the New England market and were fortunate enough to get an agreement to provide product but, unfortunately, did not have the capabilities back here to deliver. So it was kind of a disappointment for him and for the American side, as well.
MR. MACKINNON: Very good. Was there a script? Was there a certain type of questionnaire that was provided? If so, perhaps if the minister would be kind enough, I can take it on notice, to provide it. It would allow someone like myself to better understand the process because, certainly, when business people come to my office and say that they want to do certain things, I believe that, as legislators, the better we are educated on this process, the more effective we can be, much the same as a similar undertaking I took in Port Morien with the offshore. I thought that was very productive and I certainly appreciate the minister's co-operation and assistance on that. I found that it enlightened people; it didn't build barriers, it broke them down and I thought it was very productive. So that is the rationale. So if the minister takes a comfort level or not, looking for something just to embarrass the minister, there is lots of time for that. (Laughter)
MR. BALSER: There might be your motive but not this time.
MR. MACKINNON: Yes, we will save that for other questions. With regard to our natural resources and one of them that I believe has been far too long undervalued and underestimated and taken for granted and that is with regard to water and the potential for exporting water. My own personal view is I am a little reticent because I think, with all the factors and global warming and pollution and so on, it is going to be a very scarce commodity in the not too distant future. What is the government's policy in terms of export of the water resource?
MR. BALSER: Again, this was an issue that was raised earlier.
MR. MACKINNON: That is fine. I don't want to belabour the committee if it has already been addressed. I can take that on notice.
MR. BALSER: No, that is fine. I don't mind responding again. Obviously, there is concern. The federal government has recently said they are looking at that again and our position was enshrined in legislation last year. If you remember, we had legislation introduced that said that we value the resource that we have and are not, at this juncture, looking at it becoming an export commodity. That is where we stand today.
MR. MACKINNON: We could certainly put the legislation in place, but do the terms of the agreement in NAFTA override that particular piece of legislation? I know that was an issue back when the Minister of Industry at that time, the Honourable Donald Cameron, was full bore ahead on this particular issue of NAFTA and free trade. There were a lot of concerns raised, particularly with regard to environmental concerns. He accused anyone who raised the question or the spectre on this issue as being scare mongering. As we see with time passing, it is becoming a very real possibility. So, has your department received a legal opinion or does the government feel it is on solid legal ground, that the provincial legislation will hold up against any position that may be contrary to the terms of reference to the agreement of NAFTA? We, as a province, signed on to that with the other jurisdictions and we are bound by that regardless of what legislation we bring in afterwards that would contradict that.
MR. BALSER: In terms of legal interpretation specific to the export of water, there has been none requested. That has not been an issue with the department of late and I have had no queries or questions regarding the potential export of water, that is specifically where you started this questioning. At this point we have had no reason to ask and at the point where it becomes an issue, as to those trade issues as I said earlier in response to another question, because of the scarcity of manpower, if you will, our dealing with trade issues - particularly international trade issues - have been by and large, limited to specific issues. I would cite the recent softwood lumber issue as one in particular, but we are aware of the concern around exporting our water or other scarce resources. We are monitoring that.
MR. MACKINNON: Am I to understand from that that it is an unresolved issue?
MR. BALSER: Not necessarily unresolved as one that hasn't been brought forward as a significant issue. The issue of whether or not the free trade agreement would supersede the provincial legislation around the exporting of water hasn't been an item of discussion. As a result, it has not been one on which we have sought legal opinions.
MR. MACKINNON: Okay. Just a smaller, more local issue. When you look at the overall size of your department and budget, it would be considered more of a housekeeping matter. Recently I had representation from a group called the Full Time Fishers' Association, Area 23. They submitted a request to the honourable Herb Dhaliwal, Minister of Fisheries and Oceans. These individuals are essentially all those fishers who worked on the fishing boats but didn't have ownership or didn't have the licences per se. There is a large group of these individuals across the province, but in this particular case in Area 23 that are affected. They are trying to pick up some type of a fishing licence, a core licence of some sort, that would enable them to do much the same as what they did in Canso, the Canso co-operative there. With the downturn in the fishing industry, they wanted to take control of their own destiny.
In preparation for a proper business plan, because in many cases they are unemployed, they have put forth a fairly detailed presentation to a number of local government agencies - the provincial Department of Economic Development in Sydney and Enterprise Cape Breton, the ACOA office and so on. They haven't received any definitive response in terms of giving them some financial support, some seed money, to get kicking. I think they were looking at anywhere between $10,000-$15,000. I raise this, perhaps if the minister would be kind enough again to take it on notice. They represent approximately 25 or 30 fishing families in and around the Louisbourg, Main-à-Dieu, Catalone area and they are very proud people and they don't like anyone to say that they have to depend on the system, so to speak. They want to be self-sustaining and having gone through a very difficult period with the closing of the fish plant and cutbacks in quotas and now with a lot of transitions which I really don't have to belabour.
[1:00 p.m.]
Would the minister give some consideration, speak with the local staff, who I believe, have this information on file and look at it? It is not out of line. I realize it is more in terms of the Department of Fisheries and Oceans, but I notice in the supplement on Page 42, the Canso Trawlermen's Co-operative received $150,000, the East Coast Offshore Alliance received almost $79,000, the Meat Cove Fishermen's Association received $5,000, and Digby East Fish and Game Association, $7,500. I can go on and on, there are others there as well. I think it would be all within the same confines. If the minister would be kind enough, if there was anything - I think he would be quite impressed. I think again, Mr. Chairman, the minister knows my small business background. I don't usually support something unless I see some value at the end. It is certainly one that I would strongly recommend.
MR. BALSER: You talked a bit about the Canso co-operative and that truly is a success story, so you have the documents with you, perhaps you could provide them to the deputy and then we could follow up on that. Yes, it is certainly something that is worth looking into.
MR. MACKINNON: Thank you. One of the biggest things in industrial Cape Breton and I believe my colleague, the member for Cape Breton North, is present and I think he would readily agree that in industrial Cape Breton we are going through a transitional period. As I have said in the House and I will say again, the industrial revolution is over in Cape Breton. We have to face reality and move on. Although it would be nice to keep traditional industries, that is not the reality.
That having been said, over the past 10 years I have noticed significant provincial and federal contributions to the economy. Whether it be through the Department of Economic Development, the Department of Tourism, or what have you - that has been reduced overall. When you look at the big picture, the total financial commitment - maybe it is because we
are being more effective in the way we expend our dollars so we don't have to expend more, maybe it is because certain agencies such as ACOA, Enterprise Cape Breton, the Cape Breton Economic Development Authority has picked up and reshaped and refocused the way we do business. Maybe we are doing a lot better than sometimes we even think we are. I like to take the optimistic view, but the reality is, we are losing a lot of our young people.
I believe if not last year, maybe in 1999 or 2000 - I stand to be corrected on the exact year - I spoke with representatives of one moving company that had moved out 112 families and only moved in 10 for that particular year. That is not the big picture, but it is representative of what is happening. Most of them were young families and that is reflective here in metro where approximately 40 or 45 per cent of the income generated and taxes is through the economies. The employment is around 35 or 40 per cent and the total revenues would be closer to 50 per cent coming out of one municipality. That is just the way things are shifting. If you break down the population shift from all of rural Nova Scotia, not just Cape Breton, add them all together and you essentially get the same shift of what would be the equivalent increase in the Halifax Regional Municipality.
What strategic policy initiatives is the Department of Economic Development undertaking to address that? Before the minister would answer, to help clarify and perhaps understand where I am coming from, recently the government put this proposal out on the equalization plan for property taxes. While I don't agree with the philosophy, if it is the only deal in town, I guess one would be rather naive to turn it down. But, I see a much better challenge and opportunity for all stakeholders - rather than shifting the tax burden from the provincial taxpayer down to the municipal taxpayer and having one municipality pitted against the other, why not look at the possibility of reshaping our economic development policies and financial commitments to the areas of the province that need the most help? For example, we could do it on a sliding scale. In areas of high unemployment - I know even down in your area, minister, there are pockets of high unemployment, even higher than industrial Cape Breton, as surprising as it may seem. It seems as though Cape Breton does get a lot of attention and that is because we have very effective voices.
If you look at the big picture, I think reshaping our commitment so that the dollars from Economic Development for new and upcoming industries and ways to attract industry would help to stabilize our economic base, thereby allowing the native sons and daughters to stay in their respective communities. That is actually a plus for metro. In metro, the economic engine is running pretty high. We have approximately 93 or 94 per cent employment and with all the activity taking place because of the offshore, it will continue to do so, whether there is government intervention or not, for at least the next 10 to 20 years. It would have to take a rather large stick to be put in the spoke of the wheel to stop that. But it is an opportunity for a government department such as the Department of Economic Development to look at the areas that were adversely affected in a negative fashion over the last 15 to 20 years or so.
The allotment of the capital budgets or any other budgetary line items, dollars, that could be allotted on a sliding scale. There are a lot of facets that could be put into the equation. That, I believe, would help to address the inequity and it would help to allay some of the concerns about the have and the have-not parts of the province. One day we are saying if we live in Cape Breton, Halifax gets everything and we get nothing - as of late the Halifax taxpayers are saying, why should we subsidize other parts of the province? It is back and forth and this very divisive type of approach is very counter-productive for everybody, not just for the provincial and municipal governments, but for the people who are directly affected. I think there is an opportunity for your department to play a key role in reshaping that type of economic and social policy. It is a long question.
MR. BALSER: I will try to keep my answer reasonably brief. The issue of . . .
MR. CHAIRMAN: I would advise that we have about 23 minutes remaining in our time for today. I was just wondering if the caucuses were expecting to have the minister back on Monday or do you wish to have the department conclude today?
MR. MACKINNON: Well, we were hoping for today, but we will see what the answers are.
MR. CHAIRMAN: Okay. If we do wrap up today, I would like to have about three minutes before the end of the day to do the resolutions.
MR. MACKINNON: You just want to stand up and show off your kilt.
MR. CHAIRMAN: When we adjourn perhaps. It is just that I would like to have about three minutes to do the resolutions if we are concluding the department's estimates for today and also have an opportunity for the minister to do any closing remarks if he wishes. I will allow the minister now to answer the question.
MR. BALSER: Everyone is very aware of the issue of Cape Breton's economic crisis. It was referenced in the Opportunities for Prosperity document that has been a focus of a great deal of federal attention, the creation of the growth fund and we have talked about that on a number of occasions. In the creation of that, we clearly indicated as part of our monetary contribution that we wanted to have a person within the department specifically tasked to champion the cause of economic development in Cape Breton. We do have that person in place.
It is not possible to simply prescribe a solution, whether it is at a provincial or federal level - everyone has grappled with this issue for 30, 40 years in terms of how do we make sure that Cape Breton doesn't suffer unduly for whatever reasons. I would like to think that the department has focused its energies in the area of Cape Breton in terms of contributing
extra dollars and manpower. I think things are, as you said yourself, things do look brighter if we look out over the edge into the future. But, the question is how do we get to the point where young people are not forced to leave Cape Breton, whether it is industrial Cape Breton or the central region or wherever, to find economic opportunity.
I think what we have to do is try not to keep doing things the same old way. That there were causes for concern historically in a way that some programs were applied in Cape Breton, that they weren't always done with the view towards long-term viability and sustainability, I think we have learned lessons from the past. As far as an overarching policy, we clearly have indicated that the strategy we brought forward has to be applied across the province, with some level of concern focused specifically on Cape Breton. Our federal partners have been very willing to participate in that area, whether it was through HRDC or through the ACOA funding.
I think one of the things that disappointed me most at the federal level was when the Human Resources Development Canada department came under such a scathing attack from Opposition critics around the application of those funding programs. If you look at Nova Scotia's participation in those programs, there were very few examples of excess. In fact, the ability for Human Resources Development Canada to have a little latitude in the way they interpreted their regulations and their mandate was of benefit, not just to industrial Cape Breton, but to certainly my riding. I work closely with the people in HRDC and they would, as I said, take a liberal interpretation of the document so that they could help create economic opportunities.
I think UCCB Silicon Island is a way to the future. You talked about the out-migration of young people, that is a concern and it is true, but at the same time within Cape Breton, there is a whole new view of things from the young people that are either in virtual media or multi-media things, the Silicon Island, the growth of the IT sector around Silicon Island and UCCB. What we need to do is work with the funding programs that the federal government has brought forward for IT initiatives and the research and development. Those are going to be opportunities to put into play some provincial money, with a view to leverage significant federal dollars.
So we are working as we move from the current structure of the department to the new structure of Nova Scotia Business Inc. and the residual agency to make sure that we focus on Cape Breton and make sure that the policies that are working are continued and enhanced. Again, it is not simply a matter of my sitting here saying here is the solution, all we have to do is go and do it, it is going to be a work in progress. As you said, one of the advantages of working together is that you can make good things happen.
I would like to take a moment to compliment you on your involvement in that community group initiative to have the oil and gas industry profiled. A lot of the future in Cape Breton and all of Nova Scotia is going to be linked to that, and the more we can do to help people come to an understanding of what the gas and oil industry looks like, the better it is for all of us. You are right, if we can make available information about programs to help MLAs to do good things for their constituencies, that is a great thing all around.
MR. MACKINNON: Mr. Minister, you touched on a rather important point, although in a somewhat salient perspective. I believe, indirectly, you referred to the Cape Breton Economic Development Fund. I believe, if we go back several months, I guess it would be a little over a year now, when we had representatives from the Cape Breton Economic Development Authority before the Public Accounts Committee, I was a little concerned about the fact that the Cape Breton Economic Development Authority and this Cape Breton Alliance, I am not sure, it is some organization that was set up by the local municipality in concert with a couple of other stakeholders. My interpretation of what was being proposed was that considerable dollars would be secured from that particular fund to assist the expansion and further development at Silicon Island, in downtown Sydney.
What I found a little concerning was with regard to the Marconi Campus. The impact of that refocusing on the Marconi Campus, that coupled with the recent proposed policy position on designation of universities and community colleges, one only has to sit back and put the whole thing together, and it is only a matter of time before the Marconi Campus is phased down to only a fraction of what it is now, and a considerable loss, I believe, in Cape Breton will occur. That to me is a concern.
What is the plan of the provincial government - because one of the issues I have noted here is with regard to the offshore training programs for students, Marconi Campus receives a very minuscule percentage of opportunity in that educational component for training individuals for the offshore activity - in this particular issue? Are dollars going to be allocated from the Economic Development Fund for this proposed expansion at Silicon Island?
MR. BALSER: That decision hasn't been made. There have been discussions about what should happen with Silicon Island, if you will, where it should be located. One of the big issues for us, and we have touched on it a number of times, is that it should be a made-in-Cape Breton solution. At this point, while the province has heard positions all around that particular issue, there has been no final determination of what should happen at the end of the day. In reference to your concern about opportunities for training, it is true that there has been money allocated. Historically, there was the gas fitters training program here; there have been training programs instituted down in the Strait area at a community college campus for offshore training as the needs emerge. I was in Sydney for an announcement of the technician
training program that the previous administration had begun but which had finally come to fruition under this government's mandate.
As the industry evolves, in terms of oil and gas, and as needs become more apparent, then there will be opportunities for community college campuses to put together programs to train people for particular aspects of the offshore. There is no one-size-fits-all solution at this juncture. It is going to be a question of where the industry highlights a need for training and how quickly the community college can put together a training package. It may well be that that training package is best suited for the Marconi Campus, it may be that that training program is suited for another campus. Certainly, I believe the community college has been very proactive in trying to work with industry and with the Department of Education and with Economic Development.
What has happened is that whole issue - is training an Education need, should it fall under the domain of Education or is it, to some degree, a Community Services initiative or it is an Economic Development initiative. What we have now with the labour market strategy is a coming together of all those various departments with that particular view in mind, to look to how we co-operate and consolidate our efforts to get the best results at the end of the day.
MR. MACKINNON: Mr. Chairman, two questions. One, discussions are taking place with Marconi Campus on the possibility of an expansion using some of the dollars from the fund; and two, there is no commitment for any new training programs at the Marconi Campus at this point?
MR. BALSER: That would be my understanding but, again, there are discussions that occur without my intimate knowledge. I believe there are always discussions ongoing about possible opportunities for training. Am I aware of them? No. I think that is the way I answered it.
MR. MACKINNON: It is certainly a collaborative effort between yourself and the Minister of Education and the Minister of Environment and Labour, particularly with regard to the safety component of training programs. I think it would be very helpful, because if one were to look at the number of students who entered into these training programs involved with the offshore and to look at the number of individuals from industrial Cape Breton who have to travel to, for example, the I. W. Akerley Campus or some of the other technical institutes here to receive that training, I think it would only be appropriate and it would be cost saving for the government and for the taxpayers if in fact that training was provided, and some of that training was spread around.
It goes back to my point, as well, of trying to eliminate some of the regional inequities, whether it be in Cape Breton or whether it be in the Valley campus in Middleton. I would raise that as a concern to the minister. One other aspect of having this made-at-home solution, and it goes back, again, to the policy positions put forth by this Cape Breton Alliance and Cape Breton in response to how to spend this Cape Breton Economic Development Fund, the concern, one of the issues, one of the recommendations was the twinning of the Trans Canada from Leitches Creek to Grand Lake Road. I think the cost was somewhere in the vicinity of $13 million or $14 million. To me, I didn't see that as a priority. I thought that money would be better spent with dealing the upgrading of Highway No. 4 or a lot of the secondary roads around industrial Cape Breton where infrastructure is so important for the stakeholders, that being the taxpayers, when dollars are pretty scarce.
I raise that again, because I would ask the minister, in his capacity, not just to accept at face value what is coming up, because during those deliberations of the Public Accounts Committee, I believe concern was raised that perhaps the broad interests of the communities weren't necessarily represented. I will leave it at that. I believe both the minister and the deputy minister know how I feel on some of these issues. My concern is that we have precious few tax dollars, make sure they are strategically expended in a way that we will get maximum benefit. I am not so sure the recommendations that were put by that alliance report were appropriate. If the minister wishes to comment . . .
MR. BALSER: In terms of that, I guess I have a couple of comments. One, there seems to be a large number of groups that come together to discuss economic development opportunities, whether it is in Cape Breton or any other part of the province. There are all kinds of good ideas and bodies corporate and public that want to promote their ideas. We are certainly aware of that and cognizant that the same old isn't going to work, it hasn't historically. You are right about being careful of how to get the biggest bang for scarce dollars.
I do know that the committee that has met is pretty cross-sectional in terms of the way it is structured, in terms of its representation, that they are very aware of the level of concern about how this money will be distributed. Of course, there are many who see opportunities to access funds, and there are others who approach it from a more holistic approach in terms of getting the most benefit. It comes back to, just to link it back to something that was questioned earlier on, the question of, is it a strategic investment to twin a highway or do we take some of that money and allocate it to sustain a railroad.
I think those are very critical questions that really require community participation to make the right decision. I know where my view lies and that would be that if you have only a certain amount of money for infrastructure, perhaps devoting it to the maintenance of a rail line would be a better investment than, perhaps, constructing a new road or twinning an existing highway.
MR. MACKINNON: Mr. Minister, one final question. I know we have other departments and it is important to give everybody a chance. The single, largest economic development tool that I have in my constituency is, in fact, the Fortress of Louisbourg. Although it is a federal project, for lack of a better phrase, we all have a responsibility. To access that particular institution, we have Route 22, the main highway between Sydney and Louisbourg, better known as the Parkway. That hasn't been upgraded in nearly 30 years.
I realize that comes under the purview of the Department of Transportation and Public Works, but as Minister of Economic Development, I would ask, perhaps, given the fact that it hasn't been upgraded in 30 years, since it was reconstructed, if we could secure a letter of support from you, encouraging both the federal and provincial ministries to take a look at this as a priority. It is not something that has been raised in the past, because generally speaking the local residents and tourists haven't complained. I think it became a bit of an issue when Her Majesty The Queen came to visit Louisbourg. She was somewhat taken back by the dismal state of the highway.
It really has come to the point, 30 years is a long time to get service out of any highway, particularly for an institution that is the single largest economic development tool that we have there. I know there is a major federal responsibility there, I have written to my federal counterparts, but certainly a letter of support from you to both your federal and provincial colleagues, as the Minister of Economic Development, I think, would be quite helpful, and I think it would give a comfort level to the people of industrial Cape Breton that, in fact, we recognize tourism as a major economic development component.
MR. BALSER: Certainly, it comes back to the overlap of various departmental responsibilities. Back to when we first formed government, the view was that I was in fact responsible for Transportation and Public Works as well as Economic Development, that was a clear result of the view that both those departments needed to work hand in glove. In terms of the economic benefit of having a good highway linkage to Fortress Louisbourg, that is a given. I certainly will raise the issue with the Minister of Transportation and Public Works. Again, he has a limited amount of money to work with, too.
MR. MACKINNON: The letter of support?
[1:30 p.m.]
MR. BALSER: To be perfectly frank, I want to think through that piece. I certainly will raise the issue. With regard to a letter of support, the issue then becomes, there are literally hundreds and hundreds of roads that have a direct link to economic initiatives and . . .
MR. MACKINNON: But not to Louisbourg.
MR. BALSER: Not to Louisbourg, but to saw mills, to communities that rely on tourism. I am going to think through the piece. As I said to you, I will certainly raise it as an issue with the minister. I haven't said no to a letter of support, what I have said is I will need to think through the implications of coming out with written support, does that set a precedent that will impact on the department's position as it goes forward. I understand what you are saying, I appreciate what you are saying, but it has a bigger scope than simply a letter of support to the Fortress Louisbourg, which is certainly a laudable undertaking.
MR. MACKINNON: I certainly respect that. Perhaps, it is because I have a stronger perspective on it than the minister does at this point because of my greater knowledge on it and detail, not that the minister isn't capable of that. I will take that on notice, and I certainly appreciate the minister's comments.
Mr. Chairman, with that, a rather anxious Mr. Chairman, we will certainly conclude our budgetary deliberations from the Liberal caucus.
MR. CHAIRMAN: I would like to thank both caucuses for their co-operation in regard to the questioning. I believe that will conclude the questioning for the Economic Development Minister.
I would like to call forward the resolutions now.
Shall Resolution E3 stand?
Resolution E3 stands.
Resolution E20 - Resolved, that a sum not exceeding $29,406,000 be granted to the Lieutenant Governor to defray expenses in respect of the Nova Scotia Business Inc., pursuant to the Estimate.
Resolution E21 - Resolved, that a sum not exceeding $4,958,000 be granted to the Lieutenant Governor to defray expenses in respect of the Nova Scotia Petroleum Directorate, pursuant to the Estimate.
Resolution E36 - Resolved, that the business plans of the Bedford Waterfront Development Corporation Limited, the Nova Scotia Film Development Corporation, the Nova Scotia Innovation Corporation, the Trade Centre Limited and the Waterfront Development Corporation be approved.
MR. CHAIRMAN: The resolutions are carried.
The next estimates for debate will be on Monday, April 9, 2001, the Department of Finance.
I see by the clock that our time has now expired, I would like thank everyone for their co-operation. Our four hours for the day has been met.
[1:33 p.m. The subcommittee rose.]
