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HALIFAX, MONDAY, APRIL 14, 2003

SUBCOMMITTEE OF THE WHOLE HOUSE ON SUPPLY

2:53 P.M.

CHAIRMAN

Mr. David Hendsbee

MR. CHAIRMAN: Good afternoon. I'd like to call the Subcommittee on Supply to order for Monday, April 14^th. We're on day five on the debate of the Nova Scotia budget estimates for the fiscal year 2003-04. At adjournment we were debating the estimates of the Minister of Environment and Labour with questions from the member for Hants East of the NDP caucus. He used 18 minutes of his time so he still has another 42 minutes remaining in his allotment.

The honourable member for Hants East.

MR. JOHN MACDONELL: Mr. Chairman, I just have a couple of things that I wanted to get some information on. Actually, I was kind of interested to hear on the radio this morning that the honourable member for Richmond had raised the issue around litter - coffee cups and such. It was the last thing on my list the other day when I ran out of time.

I have a fairly large constituency and it doesn't seem to matter which back road you travel you can find debris, or coffee cups in particular - mostly Tim Hortons and a few McDonald's. I think the closest of those outlets in my area would be in Elmsdale. I thought that the government had brought in, I don't know if it was a change in legislation or just policy change to allow Resource Recovery to give a fee back on these cups if somebody turned them in. I'm curious, where did that ever go? Did that actually ever happen? Was that process ever completed and if it was, is there any evidence that it worked? I see it as a real problem and I'd sort of like to see somebody think about dealing with it.

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MR. CHAIRMAN: The honourable Minister of Environment and Labour.

HON. RONALD RUSSELL: There's no doubt it's a problem and one that comes to the fore in the Spring. That's when the snow goes and all the accumulated waste over the winter months comes to light and it looks dreadful. During the summer months when there's probably more stuff tossed out of windows by tourists, and unfortunately our local Nova Scotians as well, it gets picked up or cleaned up as it occurs, at least more rapidly anyway.

With regard to the fast food industry - and that's mainly what creates most of the trash - it's very difficult I would suggest to you to say yes, we're going to put a charge on coffee cups. What do you do about the lids? What do you do about the straws that people toss out? What about the containers that hold hamburgers and french fries and chicken legs and what have you? Quite truthfully, I don't like regulating people. I feel if you can educate people to do the right thing and when they know they're doing the right thing, I think people feel better. I think in the long term, whatever you're trying to do will be carried out.

We have littering fines at the present time and there are signs up along the major highways anyway, advising of a fine - it's up to $150 for littering. You would think that before somebody threw a coffee cup out the window that they would give some thought to the fact that the person driving behind them might just happen to be an officer of the law who might indeed give them a fine of $150.

Having said all that and getting back to education, most of the trash that we see along the side of the highways is generated by Tim Hortons. But that's understandable because they are probably by far the largest purveyor of coffee in the whole world, I would imagine. Having said that, Tim Hortons has been very, very co-operative from the point of view of education, of putting out litter bins and I think generally telling people it's not the right thing to do to get rid of your garbage along the side of the roads. So, I think Tim Hortons has been responsive, but even so, the majority of the trash along the highways that you can identify are Tim Hortons' cups.

There are a lot of fast food outlets, a lot of restaurants, a lot of corner stores that sell coffee in a Styrofoam cup with a lid on it and it doesn't say whether it came from Joe's corner store or the Stardust restaurant or something. I think it would be very difficult to police. I wish we could get rid of all - at least get rid of garbage, but also I wish we could legislate people to be more community-minded and not create the trash in the first place.

The other thing, and I mentioned this the other day - I think it was a member of the Liberal caucus who brought it up - we are expanding the road cleanup programs, the Adopt-A-Highway, the Nova Scotia beautification, the Girl Guides/Boy Scouts and everybody else, the service clubs that voluntarily clean up the sides of the highways. I think that's good and if we can expand that, that will also help.

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MR. MACDONELL: What do you mean by expand it? If it's done by volunteers, are we saying people who want to volunteer right now, we're not letting them? So we're going to let more of them?

MR. RUSSELL: Strangely enough, you're absolutely right. We don't let them on the 100-Series Highways at the present time, simply because of the fact that we believe that there is an inherent danger in picking up garbage alongside a highway where people are travelling up to 110 kilometres an hour, where there's a median to be cleaned as well as the grass verges, et cetera, so we haven't been doing that. This year, we have, however, expanded the programs to permit in some locations where they can clean up around interchanges. Actually, there's more garbage dumped off at the interchanges than there is along the general run of the highway. I guess that's because people slow down, and that's where they toss stuff out the window.

[3:00 p.m.]

MR. MACDONELL: Well, I would like to see you come up with something. I'm a firm believer in education. I spent 15 years as a teacher, so I have to have some regard that the process can work, and I do. My concern is that you have some way to measure that, that you know we're seeing a drop in the amount of debris that's thrown from cars and therefore we think that this is working, because if it doesn't seem to be working, then I think you're going to have to come up with something else, and it may be some way to regulate or impose some stricter fines or whatever on people. It is a real problem. Actually it's one of those things that people in my constituency mention. Once you start to notice it, I'm amazed when I drive along the road and you start counting the number of cups that you see, I think if all roads were treated the same there would be a lot of debris in Nova Scotia.

I guess my last question is around the IRM process that the Department of Natural Resources has initiated, back some time ago now. I'm just wondering what the role of your department would have been in determining environmental sensitivities around particular blocks of Crown land and in terms of resource extraction on those pieces of land.

MR. RUSSELL: We provide some expertise. We have technologists who make recommendations, but it's not our program.

MR. MACDONELL: I realize that. There are other departments that initiate programs, but even with the water strategy you made it clear that there were other departments that gave input into that process. I'm just looking to build my comfort zone on the notion that you initiate input on a wide variety of issues. Environmental issues I would see as involving another department, particularly. Their policy could have impact on the environment, so I would certainly like to think that the department would be involved there.

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I'm curious, is there anything that goes on in this province by way of resource extraction that requires a Class II undertaking?

MR. RUSSELL: Yes.

MR. MACDONELL: What would they be?

MR. RUSSELL: I have to think for a moment. Well, I have just been corrected. We can, in cases, order a Class II, however, the general run of the mill for mines or that kind of extraction of material, we just have a Class I. However, there are occasions when perhaps we could, particularly in co-operation with the federal government, get into a Class II environmental assessment.

MR. MACDONELL: I want to encourage you to do that. I think there are a lot of proposed extraction sites that the public would like to have full environmental hearings and consultation on, and that certainly seems to be the exception rather than the rule. I certainly think about, well, even when it comes to the offshore, the Digby quarry site that has been a contentious issue, the public there has felt that it hasn't had the complete airing that they would like to see, and they worry about the impacts that will have on the community and the surrounding environment.

With those questions, comments, I want to say thank you to you and the department. I appreciate the help of the staff. I am sure that if anything comes up, I don't know how many more days they will keep you here, but . . .

MR. RUSSELL: Weeks, I'm sure. (Interruptions)

MR. MACDONELL: I will find you one way or another. Thank you, Mr. Minister.

MR. RUSSELL: Mr. Chairman, I would just like to add that I think you perhaps left the impression that there was no public consultation with a Class I environmental assessment, and that's not true.

MR. MACDONELL: Thank you, I'm aware of that. I'm going to hand my time over to my colleague, Mr. Chairman.

MR. CHAIRMAN: The honourable member for Cape Breton Centre, you have until 3:35 p.m.

MR. FRANK CORBETT: Mr. Minister, it's good to see you again. I'm going to be all over the board here, but I will try to confine it to blocks of questions. I want to go to insurance first. We've heard recently that many of the fire departments are having trouble getting insurance on their real property, particularly the company Royal & SunAlliance is not

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underwriting that piece of business anymore. I also saw recently that they're getting out of writing business around boys and girls clubs, causing another stress on many of the good volunteers we have in this province.

In relation to questions in the House one day, you said that you had talked to the fire marshal and you came up with . . .

MR. RUSSELL: Another carrier.

MR. CORBETT: Okay, or a plan or something. Could you fill that in for us? What have you done?

MR. RUSSELL: I believe it was an e-mail or a memo, one or the other that I received from the fire marshal, which indicated that he had had a meeting with several fire departments whose insurance had been cancelled by Royal & SunAlliance, who evidently has gotten out of the business entirely, of liability, and that arrangements had been made for other carriers to pick up that insurance. I can get you, perhaps, further details on that. I will have somebody phone down to Mr. Cormier's office . . .

MR. CORBETT: What I'm looking for is, did the department supply any financial aid to those volunteer fire departments?

MR. RUSSELL: No.

MR. CORBETT: Or is it just that he shopped around and got another carrier that was willing to write that business?

MR. RUSSELL: I'm a little hazy on this, Mr. Chairman. The basic details that I have received from the fire marshal was that it had been looked after, it had been taken care of. I don't think that the fire marshal shopped around, as I understand it, other insurance companies came forward and expressed their willingness to carry those particular fire departments.

MR. CORBETT: It was at a considerable extra cost.

MR. RUSSELL: I can't answer that. My understanding was they weren't going on Facility, if that's what you're referring to.

MR. CORBETT: I don't know if you put property like that under Facility, but . . .

MR. RUSSELL: Yes, there is a Facility for property.

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MR. CORBETT: There were some - Port Hastings, for instance, their insurance had doubled. There was no financial inducement by the province, it was just a matter of . . .

MR. RUSSELL: That's right, making sure that they were covered.

MR. CORBETT: The same carrier is now doing basically the same thing - and I know this is not your ministry, but it is inasmuch as you are the minister responsible for insurance - that same carrier is now refusing to write business for boys and girls clubs within this province.

MR. RUSSELL: I heard that as well, yes.

MR. CORBETT: Has your department done anything in the way of contacting Royal & SunAlliance to find out why they're not writing this business anymore?

MR. RUSSELL: I can't answer, Mr. Chairman. I can find out whether or not there has been contact between the department and the principals of SunAlliance to see if they would be re-entering the market in Nova Scotia or if they are getting out completely, in other words, no other insurance.

MR. CORBETT: It's my understanding that while they're still staying in Nova Scotia to write business, they're pretty much cherry-picking, they're refusing to underwrite places like volunteer fire departments and volunteer groups such as the boys and girls club. One in particular, I think in Cole Harbour they have gone from $1,300 a year to $10,000. I say that by way of information to you, Mr. Minister, because I am sure you can appreciate what that would mean to a small volunteer club. Basically that would eat, I would suspect, most of your fundraising for that year, just trying to get insurance underwritten for your club. I think when we speak about it, it says that there's a real problem out there, not only in the automobile industry but in the property side of it, in writing down insurance.

With that said, Mr. Minister, I want you to put your Environment hat on for a few minutes.

MR. RUSSELL: Yes, surely. It's different from insurance. Can I just write a note to myself, about insurance, for a moment. Okay.

MR. CORBETT: Now, as you are probably aware, although this is the environment side of the operation, it's still fairly new to you in some ways, the fact that you've been around governments for quite some time and I think you would have some appreciation for the international coal piers in Whitney Pier. We have great experiences with that - not great, but very bad experiences actually over the history of that site.

MR. RUSSELL: You mean dust.

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MR. CORBETT: When it was under federal jurisdiction - with dust - there was an agreement that there would be a certain amount of tonnage in the lay-down area, and that was it. There was a watering system and so on. Still, from time to time, there were small breaches but, by and large, it was fairly successful. Now since Logistec and Emera have taken over that, there have been, according to residents in that area, quite a few malfunctions that they would say are at the wetting stations and various dust inhibitors, causing a great deal of stress. Have you had reason, since you have been minister or previous to coming here, of your department having to investigate that site?

MR. RUSSELL: I only know of one, I believe - we have actually had a couple of investigations. It is possible that we may be laying charges - we have laid charges.

MR. CORBETT: Can I ask if the charges have been laid against Emera or Logistec or both?

MR. RUSSELL: I don't know what I can say, I have to check on this. I can say that it's against Logistec, but it is before the court so that's about as far as I can go.

MR. CORBETT: I can appreciate that.

MR. RUSSELL: I can keep you apprised if stuff comes along that can be released.

MR. CORBETT: With that in mind, is there an application before your department to expand that lay-down site, to have the ability to lay down more tonnage than what they already have agreed to?

MR. RUSSELL: I'm told no, and my own knowledge is no. I have no knowledge of any expansion to take place.

MR. CORBETT: What about the PEV site, the old Sysco wharves? Have they made application to have a lay-down site? The Provincial Energy Ventures, it's a joint venture between the province and - what do you call it? PEV anyway. Have they made application?

MR. RUSSELL: No.

MR. CORBETT: Logistec and Emera have both said that they wanted to expand the lay-down area at the old international piers, but neither have asked for an expansion of their certificate?

MR. RUSSELL: No. We just renewed their existing approval, just before Christmas, in fact I think it was just last month. We can provide you with a copy of that, if you wish. I think that you may be talking about a subject that could, perhaps, be better addressed by the Minister of Economic Development. There are a lot of discussions, and it's strictly

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discussions, that Emera is having with various parties at the present time, with regard to certain matters.

[3:15 p.m.]

MR. CORBETT: I appreciate that, Mr. Minister.

MR. RUSSELL: I think you aware of them anyway.

MR. CORBETT: I am, some, not all. The fact is I'm asking more from the environmental perspective of it. This has been brought to my attention by some of the residents because of the fear of - not to overplay this too much, but again I go back to your experience around government, you know all of the problems we've had in the last number of years with the coke ovens sites and the tar ponds and bringing all that forward. There is probably a level of environmental sensitivity there that isn't found in a lot of other areas, some could say a degree of knowledge or a degree of ignorance, depending on who you talk to around environmental aspects.

There is a real fear, somewhat founded because I believe that a big drawing card of both PEV and the Emera sites was a larger lay-down area. They wanted to radically up the tonnage they could put on the ground. You say they've just been re-approved. What's the total amount of tonnage they can have on the lay-down area, do you know?

MR. RUSSELL: I have no idea. I'm told that the staff can get it, and we will make sure you get that. When I say that it was renewed, it was for the existing tonnage.

MR. CORBETT: It was not upgraded, it was a renewal not a new certificate, if you will.

MR. RUSSELL: Yes.

MR. CORBETT: In talking to the Logistec people and the Emera people, especially around times when their system for detection has failed, and by that I mean when more than an appropriate amount of dust escapes, there was a real feeling by the residents, as told to me, that they thought the appropriate time of reaction from your department was extremely slow, the residents are saying that. I just don't know if you have any timelines. I know you say you had a couple of complaints between reporting and someone from the department actually being on-site. I asked that in all honesty, because it was just as told to me. I have a very good working relationship with your people in Cape Breton.

MR. RUSSELL: We normally have someone on-site, so there shouldn't be any delay. Was this one that occurred some time ago? There are only two that I know of. One is quite recent, and the other one, the big one, was about two years ago.

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MR. CORBETT: Yes. The more recent one and then maybe a year and a half. Nonetheless that seems to be - and I'm just asking because I don't know the answer myself. If you say there is someone on-site, I will take your word for it and say there is someone on-site. That's what they're telling me.

MR. RUSSELL: We will talk to the manager in Sydney and find out what the current situation is. There is supposed to be somebody on-site, therefore there should be no delay. They have a cell phone.

MR. CORBETT: When they're on-site, are they on-site when a ship arrives and they go there until the cargo is off or until the cargo is off the ground and shipped out?

MR. RUSSELL: The member is absolutely right, Mr. Chairman, that when the ship arrives and they're unloading, that is the more critical time with the coal that is stored there, and, as I said, we would have a person on site. There are two different ways they carry coal. As I understand it, if the coal comes from Poland - now I'm getting into somebody else's territory, I guess - you can't use automatic unloaders because the ships don't have the automatic unloading capacity, and that's when most of the problems occur. Is that correct?

MR. CORBETT: You hear some of that, but it seemed to be more of a case of monitoring than the actual mode of unloading. It seemed to be that the monitoring aspect was low and, if you will, it would overfeed a hopper and someone wouldn't move it along, or the mechanics of it wouldn't move it along. (Interruption)

MR. RUSSELL: I'm told that the company has just recently purchased new monitoring equipment which should provide information to enable a shutdown immediately if something starts going wrong.

MR. CORBETT: I think that's what happened last time, it was supposed to automatically shut down. They did have equipment, and that's what it was supposed to be, but it didn't do that. I think it's little comfort to some of the people in that community.

I thank you, Mr. Minister, for the undertaking to get some of those answers for me and I appreciate your candidness around it. I'm just going to switch gears here a bit now to some items around labour standards and so I don't know if you want to switch anybody in the chairs or anything like that. You made a statement about a week ago about a minimum wage order and that you will be increasing it by 25 cents in October. Can you tell me how you arrived at that, who you met with, who gave you information on it, and why 25 cents? You were chugging along at a dime all along and now you've come up with 25 cents. How did you arrive at that?

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MR. RUSSELL: Well, we took a look for ourselves at what would be reasonable, but, on top of that, we went out through the Web, and by letter, to a large number of stakeholders that are affected by the minimum wage. I think we went out, for instance, to the New Democratic Party and the Liberal Party. We went to the Federation of Labour. We went to the independent business, IBC, and we went to the restaurant owners association and the tavern owners association, a whole raft of different organizations, and we got back a whole raft of opinions, including a very long one, I should tell you, from the Nova Scotia Federation of Labour. In fact, it was a book about that thick, I believe, from the Federation of Labour on what we should be doing with the minimum wage.

So we had lots of input. Then you make a decision, and the decision that we made was 25 cents and another 25 cents one year hence seemed to be around about what . . .

MR. CORBETT: But there had to be a defining moment, if you will, that says 25 cents, that's where it's at. Did someone put the proverbial quarter in the air and come up with 25 cents?

MR. RUSSELL: No, I just said that's what it will be.

MR. CORBETT: So there's no rationale how you ended up with 25 cents?

MR. RUSSELL: I had recommendations from staff and I said 25 cents is it. I mean somebody has to say yes, that's what we're going to do. I just happened to be the person sitting in the chair. Also, I should tell you, we're not in isolation. As you know, or maybe you don't know, P.E.I. is going to $6.50 by next Spring. In New Brunswick, and I can't tell you about New Brunswick too much because nothing has been said as yet, but however they are looking, let me put it that way, at the minimum wage. Newfoundland is looking at the minimum wage. So we've had a look at ours and we've done something.

MR. CORBETT: Wouldn't you think it would make a lot more sense if we did a percentage increase and tied it to CPI and a few others, rather than say that someone made a suggestion, and at the end of the line, so you said a quarter, or maybe if you were in a bad mood that day you could have said a nickel.

MR. RUSSELL: Well, I would suggest to you that there are a whole bunch of factors beyond the cost of living. We have the general trend in union wages. We have the economy, generally - how is the economy, how is the tourism business. I think all those things have to go in. Now, maybe it would be nice to say yes, you take a factor of four of this figure and a factor of five of that number and you meld them together and you come up with an answer. But it isn't that kind of science, it's judgment, and there are a lot of things in life that you have to do by judgment rather than by formula.

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MR. CORBETT: Well, it has nothing to do with an election and everything to do with the goodwill. The fact of the matter is that if you had a method, if you used the method like CPI plus two or something like that to bring them up to a working wage and to the national average, then it would be much more transparent, wouldn't you agree?

MR. RUSSELL: Well, it might be transparent, but I can tell you that if you want us to knock the legs off small business in this province by taking a salary up to what the average salary is for the population, brother, I think you're moving too fast.

MR. CORBETT: I'm saying you do this over a measured period of time. This way here is that you don't have any real open way of defining of how you decided to come at 25 cents.

MR. RUSSELL: Oh, I can define it for you. I can say that there was a recommendation from such and such a stakeholder and another recommendation from another stakeholder and we sort of came up with a figure from that, but that isn't true. The thing was, there was a whole collection of input that caused us to arrive at a recommendation, to me, of 25 cents in October. We did that because of the fact that it provides a planning time, particularly for the tourism-based enterprises, and also because most of those have their prices fixed in advance for the summer vacation. In other words, people who operate hotels, et cetera, have already sold their rooms for the tourist traffic. Restaurants have printed their menus and what have you.

MR. CORBETT: The debate isn't so much when, it's how. How you set that rate is what I'm getting at. I appreciate and I hear what you're saying that the tourism industry and some of those people basically live by the minimum wage order and they have got fixed costs in there, I understand that, but I still can't get my head around why 25 cents.

MR. RUSSELL: So you would be happier if we had only made it 10 cents I take it?

MR. CORBETT: I would be happier if you made it 50 cents right now. I would be happier if you had accepted my bill last year.

MR. RUSSELL: Well, you may not like the way we do it, but there are some things that you just have to make a decision on, and you could go on forever arguing about whether or not it should be the CPI plus some kind of an increment or whether it should be a percentage of the - I forget what the call the gross domestic wage, whatever it is. (Interruptions) Anyway, there is such a thing as an average domestic wage. As I say, I find this difficult to argue with, because I don't see any sense to changing the way - I mean, the minimum wage has to be established every year. We're required to do that by legislation.

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[3:30 p.m.]

MR. CORBETT: It has to be studied.

MR. RUSSELL: It has to be set, yes. We set it this year at 25 cents, and 25 cents again in the following Spring. It's 50 cents. Some people say that's way too much and others say it's way too small, so therefore it must be exactly right.

MR. CORBETT: Well, if there was an open way to do this it would be much more difficult for anybody to argue with, that's what I'm saying. If you did it, as opposed to what you are telling me, that at the end of the day you're the person at the end of the line and you made the decision, if there was a numerical way to do this, one, through mathematics (Interruption) Yes, like my colleague says, like indexing pensions. These are fairly easy things to do. It's not rocket science. There's nothing to say heaven forbid that you would do this for an election purpose and that it would be frozen, if your Party was returned to government that it would be frozen for the next four years. We don't know that because there's really nothing in there that says this sets the raise off again.

MR. RUSSELL: I wonder, Mr. Chairman, if the honourable member recognizes the fact that we have to remain competitive in this country of ours and that when we get to $6.50 we will be within 6 cents, I think it is, of the average across the country. Maybe that's where we should be.

MR. CORBETT: Maybe we shouldn't . . .

MR. RUSSELL: We're not the richest province and we're not the poorest province.

MR. CORBETT: I think what has to be looked at here is where we're falling. As you said, P.E.I. is coming in with a new one, New Brunswick is certainly looking at some. We're just catching up, and everyone else is going to roll over even further. So we're going to fall further behind.

MR. RUSSELL: I could say au contraire, because that's not true. We have been on a par with New Brunswick, P.E.I., and I am not too sure about Newfoundland, I think we have been ahead of Newfoundland. We're certainly on a par with most of our neighbours out west, incidentally. We're ahead of Alberta. So we're not doing too badly. I think we're where we should be, we're around about the middle.

MR. CORBETT: You talk to the person who is trying to live on that wage and you tell me if that's where they should be. We lag behind and lag behind, and then you say that this is set up in some artificial way, you say you call for input and we don't know what input you accepted.

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MR. RUSSELL: I can get you a list of the people we contacted. I don't think we have it here but I can certainly provide it for you.

MR. CORBETT: People can talk, but who did you listen to, that's the difference.

MR. RUSSELL: I would like to suggest to you that you're not going to be a very successful politician if you don't listen to people.

MR. CORBETT: Yes. The fact of the matter is - I'm out of time.

MR. RUSSELL: I would like to thank the member for Cape Breton Centre.

MR. CHAIRMAN: Time for the NDP caucus has now expired. The time is now 3:35 p.m. Are there any questions from the Liberal caucus at this time for this minister?

The honourable member for Cape Breton West.

Mr. MacKinnon, your time is 3:35 p.m.

MR. RUSSELL MACKINNON: Mr. Chairman, my first question for the minister is with regard to littering in the province. How many people were charged last year for littering?

MR. RUSSELL: I haven't the foggiest notion, Mr. Chairman, but I assume that we would have a record of that through the Department of Justice. We can get it for you and pass it on to you. Are you speaking about the road littering?

MR. MACKINNON: Yes. Do we not have those figures?

MR. RUSSELL: We don't, not in the department.

MR. MACKINNON: I'm a little curious because you're saying education is the way to go and that's the best way to do it, but we don't have statistics to back up your words. I am a little curious why isn't enforcement a little heavier?

MR. RUSSELL: What we will have to do is go back and retrieve, from municipal police forces, the RCMP, and from the Department of Justice, for that matter, the number of charges that were made for littering. We can get those numbers for you. What I was saying was that education is by far, I think, the best way of getting people to co-operate. It may take longer. However, at the end, if people are doing things that they want to do, it's a lot better than having to do it because they're going to be banged on the head because they're not co-operating.

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MR. MACKINNON: I agree. Everybody has their own opinion about how to go about doing things, and I respect that. I think it would be important to have that information. Does the department not keep a record of that information on an annual basis?

MR. RUSSELL: The honourable member I'm sure is aware that the amount charged in fines, et cetera, of course, doesn't come to the Department of Environment and Labour. Perhaps for that reason alone we're not informed of every charge that's laid under the heading of littering.

MR. MACKINNON: How can you say your program is successful if you don't even know how many people are being charged?

MR. RUSSELL: I didn't say it was successful. Unfortunately, it has a long way to go before it's successful.

MR. MACKINNON: So you're saying it's not successful.

MR. RUSSELL: I'm saying that it has a long way to go before we get the program so successful that you can say, yes, we've solved the problem of littering. (Interruptions) As long as we have garbage along our highways that's visible, I think that's an indication that there are a lot of people who yet have to be educated. I explained a little while ago, I think, that this is the season when this questions always arises with the media, because it's so evident that there is garbage laying around the countryside because the snow has covered everything and now the snow is gone and nobody has picked up litter during the winter months. The evidence is certainly there that people are still firing stuff out of their car windows.

MR. MACKINNON: Part of the issue with the RRFB is that that money is to promote recycling, reusing - I forget what the third R is, but now the department is clawing back 10 per cent of that, am I correct?

MR. RUSSELL: Yes.

MR. MACKINNON: For general revenue.

MR. RUSSELL: Yes.

MR. MACKINNON: So what's the department doing to encourage that, rather than just putting it into general revenues? You're saying your program is not successful at this point.

[Page 303]

MR. RUSSELL: We can get you the numbers, I am being told. That's not difficult. With regard to what we are doing insofar as education is concerned, we're working with the industry itself. I explained a little while ago that I don't want to pick on any one company but the majority of the paper cups that we find along the side of the highway come from Tim Hortons. That just makes sense because they are by far the largest purveyor of cups of coffee in this province and in this land, I guess.

However, having said that, I have to say that Tim Hortons has been most co-operative with the department. They recognize that there's a problem and they're working with the department, with the people of Nova Scotia to try to educate them to do better things with their used coffee cups than litter up the sidewalks around stores and also litter up the sides of highways. They are working on that. They are doing things. I would suggest to you that in the long run, I think that's going to be the way we're going to have success in alleviating most of the litter.

MR. MACKINNON: Can you tell members of the committee as to which areas of the province littering is the biggest problem?

MR. RUSSELL: Yes, it's around the interchanges.

MR. MACKINNON: Throughout the province?

MR. RUSSELL: On 100-Series Highways. The only other area I think even comes close is when you drive to your local landfill. If you have a landfill that shuts the gates at 7:00 at night, people unfortunately toss their garbage out at the side of the highway running out to the garbage dump.

MR. MACKINNON: I agree, I do believe that Tim Hortons do their best in that regard.

MR. RUSSELL: They do.

MR. MACKINNON: There's a total of what, 30 million coffee cups. I believe that's the estimate that RRFB gave us a little more than a year ago when they came before the Public Accounts Committee. That would easily explain the large number that we may see along the road. My question is, what's the government doing? We know what Tim Hortons is doing. You've said that you don't know how many people are being charged, you don't know the full details of that, which is a critical component to assessing whether or not your program is successful, and you said your program is not successful. So I would like to know what is your department doing to address this problem?

MR. RUSSELL: We are working with the industry as a whole, Tim Hortons is only one component of that, that being the large one.

[Page 304]

MR. MACKINNON: I realize that.

MR. RUSSELL: We're working with industry as a whole, we're working with the public to educate them. We may not have the statistics to show that the number of violations of the littering Act is decreasing year over year. I rather suspect that it's probably not, because at the present time I don't notice too much difference between what happened beside the highways I travel on 10 years ago and today. I think part of that is also that there's greater affluence today, people spend more money stopping in at the local Tim Hortons, there are more Tim Hortons around, there are more fast food outlets around the province, and I think that goes with our increase in prosperity. Unfortunately, with the increase in prosperity, we generate more garbage. What I don't want to see is that increase in garbage accumulating along the sides of the public highways of this province.

MR. MACKINNON: That's true, because if we started with the cups the next thing you know it will be bubblegum. All you have to do is walk down the sidewalks here in the city and the amount of gum that's there. I hear security complaining about the gum that's stuck to the carpets in Province House because of people coming in with it on their shoes. You open up that door. I agree with you, but on the other hand, I would ask the government and yourself in particular as minister, to demonstrate, through those figures, in a demonstrable fashion, how you're dealing with it. I understand about Tim Hortons, I understand about McDonalds and so on and so forth. That's great.

As you know, Mr. Minister, the Canadian retailers association is very unhappy with that hidden tax on the paint products for that fee that's going to the RRFB. The government, from what I can understand - I don't want to rehash Friday's comments - they're very upset with the fact that the government reneged on the fact that they were going to be allowed to show that environmental fee on their cans, at the cash register. They were let down on that point.

Now, that having been said, another issue is with regard to insurance. How much does the government anticipate it will collect from tax on insurance fees this year?

MR. RUSSELL: I will come to that just momentarily. Getting back to the coffee cup business again, I will warrant, Mr. Chairman, to provide to the member, the number of violations. I said that a moment ago, but I will also let you know about the programs and the contacts that we're making with the industry to try to alleviate the program. I have no compunction at all in saying that if somebody ahead of me throws something out of the car window, I am going to get their licence number. I just think it's terrible in this day and age for people to toss stuff out of the car. It's just not on.

Now, getting back to insurance, how much do we expect to make? You will probably have to talk to the Department of Finance. Tax on fire insurance premiums are $1,800,000; tax on insurance premiums is $44,500,000.

[Page 305]

[3:45 p.m.]

MR. MACKINNON: With regard to the fire departments - I believe my colleague in the NDP caucus may have raised it, I wasn't here Friday, I was over in the main Chamber - that have been notified, I believe the minister indicated in the House that action was taken to ensure that these fire departments did receive coverage.

MR. RUSSELL: Yes, that question was asked earlier. I'm going to get the . . .

MR. MACKINNON: I can just take that on notice, that part, since it's already been asked, I believe, in general form. Has there been any consideration given to working out a program between government and industry, in particular, the insurance industry, because of the amount of money that's collected in taxes? Between the two components it's $46.3 million. Volunteer fire departments, they save lives, they save personal property, they save businesses and if one were to translate the savings, I'm sure it would go into the hundreds of millions if not close to $1 billion a year that would be saved. Is there anything contemplated that would do some funding for these volunteer fire departments that would assist them? I guess I'm focusing on all of them but more in particular with the number of fire departments - well, it would be well over 100 or so - that don't have the ability to provide workers' compensation premiums. As you indicated on Friday, we have over 3,000 that will be left out in the cold . . .

MR. RUSSELL: Approximately, yes.

MR. MACKINNON: . . . by this particular piece of legislation. Is there not something that can be done for them through this process? Insurance companies seem to be getting off a little easy here, as well as the government collecting lots of money through a hidden tax on insurance premiums which, by the way, it would be absolutely amazing to know how many people in Nova Scotia don't know that they pay a provincial tax on their home insurance, their auto insurance and so on, just about any insurance going, the government collects that and it's a hidden tax. People don't even know they're paying it. I think there is an onus on government to go that extra distance for volunteer fire departments that are putting their health and safety at risk to do this on a volunteer basis.

MR. RUSSELL: I can get you the numbers, but I wouldn't want the honourable member to think it's $46 million in auto and liability insurance. A large percentage of this is life insurance, as I understand it.

MR. MACKINNON: Yes. Insurance is insurance.

MR. RUSSELL: Insurance is insurance, but there's insurance and then there's insurance.

[Page 306]

MR. MACKINNON: Today, when they offer life insurance, they're like most professionals, as I understand, they look at it in terms of the whole package, how much life insurance. It's not like years ago where they would go and say, okay, I'm going to try to sell you $100,000 premium or a $50,000 premium, they look at it in the context of your total assets, your capital, your income and so on. It's a little more holistic than that and it ties in to your home insurance and the value of your personal assets. It's not quite as segregated or separated.

MR. RUSSELL: It is segregated to a certain extent. If your average broker downtown doesn't sell life insurance as part of their stock in trade and their primary driver for selling insurance on your house and insurance on your automobile, normally those latter two are poked together, but life insurance is on the banks and . . .

MR. MACKINNON: But you do agree that there is an opportunity here to do something for volunteer firefighters, the ones who are left out in the cold. It seems to me there is a lot of money being saved and made at their expense. To offer a benefit to one group and not the other, by virtue of the fact that they're lucky enough to have an employer who will allow them to go and do this type of work or a municipality that can fund that through the tax system, it's a double standard. That's my concern. If the minister would be willing to explore that possibility, you're not talking a lot of money. I would suggest for these 3,000, you may be only talking about maybe $300,000. When you take that out of $46.3 million, that's not a lot of money. It wouldn't have to be exclusively for that, there are other stakeholders; there's the workers' compensation system, there's also industry that are making a lot of money, saving a lot of money as well as making it because it shows up on their bottom line.

MR. RUSSELL: I'm sure, Mr. Chairman, the honourable member would agree that if you started picking it up for one that you would be expected to pick it up for all.

MR. MACKINNON: That's true, but . . .

MR. RUSSELL: It's very hard to cherry-pick. As we know, on many other things that we do in government, once you . . .

MR. MACKINNON: But that's essentially what the government is doing now with this particular piece of legislation, cherry-picking.

MR. RUSSELL: No, it's open to everybody who wants to become involved.

MR. MACKINNON: So those who would go out and save a dozen homes in a particular town or village or saves somebody's business and they're one of those small rural volunteer fire departments that can't afford premiums, tough tickle is really what you're saying.

[Page 307]

MR. RUSSELL: No.

MR. MACKINNON: Well, what is the government doing for them?

MR. RUSSELL: I'm saying that if you have other forms of insurance, if you don't want to be covered, you don't have to be. Those who are presently covered under workers' compensation at the present time will be in the program, others may choose to change their carrier to workers' compensation rather than some other insurance scheme, such as through Maritime Life or Great-West Life or what have you. Any individual firefighter . . .

MR. MACKINNON: With all due respect, I think the minister is in denial here. Much of what you say is covered in this bill because no retroactivity can effectively be done by regulation under the present Workers' Compensation Act. Is that not correct?

MR. RUSSELL: Yes, but . . .

MR. MACKINNON: So what's the purpose of the bill?

MR. RUSSELL: . . . there is no presumption.

MR. MACKINNON: But that could be done by regulation.

MR. RUSSELL: That's what we're doing here. We're doing it by regulation . . .

MR. MACKINNON: No, you're bringing in an Act.

MR. RUSSELL: . . . for firefighters, that's why we have a firefighter's Act.

MR. MACKINNON: Okay, we can keep on going in circles. The fact of matter is at least 40 per cent of the volunteer fire departments will receive no benefit from this particular piece of legislation.

MR. RUSSELL: I have the numbers, but I don't have them here with me. I have the numbers in my desk because I'm going to address the bill this afternoon.

MR. MACKINNON: Okay. One other question is with regard to Kyoto. As we know, we can turn this entire environmental issue into a positive, I believe. Does the Department of Environment and Labour have a specific plan to deal with the effects of the Kyoto Protocol? Does it have a document? Does it have anything that we can . . .

MR. RUSSELL: The lead department is the Department of Energy.

[Page 308]

MR. MACKINNON: Why would Energy be in charge of environmental issues? Why not the Department of Environment and Labour? The Minister of Energy said he had a plan too, but he can't produce it.

MR. RUSSELL: Well, I've got it right here.

MR. MACKINNON: Would you table it?

MR. RUSSELL: Sure. I will read it out to you if you like. We went through this the other day, however.

MR. MACKINNON: Does it break it down in terms of the different sectors of the . . .

MR. RUSSELL: Can I just read an excerpt?

MR. MACKINNON: Oh, sure.

MR. RUSSELL: The Department of Energy is the lead with regard to Nova Scotia's response to climate change through the implementation of the energy strategy and the New England Government, Eastern Canadian Premiers Climate Change Action Plan. DEL has and will continue to play a supporting role.

Now, you go to the plan. This is the Department of Environment and Labour. "Actions to Achieve Objectives. Continue to participate in the national climate change process and contribute to the National Implementation Strategy (NIS). Continue to negotiate with federal and other provincial governments to ensure that impacts of national actions with respect to climate change are shared fairly by all jurisdictions. Launch a provincial program to reduce GHG emissions in government operations. Support the creation of public education programs on global climate change. Maintain a regulatory framework that encourages the use of clean fuels such as natural gas. Work with the Union of Nova Scotia Municipalities . . ." - do you want me to keep on going?

MR. MACKINNON: No, you can just table the document.

MR. RUSSELL: I can table that for you.

MR. MACKINNON: That outlines your co-operative efforts with other stakeholders, it doesn't tell us what your plan is.

MR. RUSSELL: The overall plan is within the framework of the Department of Energy, which is the lead department, and the Department of Environment and Labour has a section of that plan which is our responsibility.

[Page 309]

MR. MACKINNON: I guess that's my concern. It would appear to me there's an inherent conflict. The Department of Energy has a particular mandate with regard to offshore, gas and oil, coal resources, all those types of issues. The Department of Environment and Labour is supposed to be the lead agent and the guardian protecting the environment for the Province of Nova Scotia.

MR. RUSSELL: That's true.

MR. MACKINNON: So why isn't it the lead agent?

MR. RUSSELL: The plan, as I said, is a government plan. The Department of Environment and Labour is not acting of itself because of the fact that there are so many different aspects of Kyoto that have to be first of all negotiated with the federal government, who sets the overall plan, and then our energy plan is part of that overall plan and, within that energy plan, the Department of Environment and Labour has a responsibility. That's what our plan is.

MR. MACKINNON: So what you're saying is there's a plan to have a plan.

MR. RUSSELL: Well, I'm saying to you that the provincial plan is within the federal plan, and within the provincial plan, which is the responsibility of the Department of Environment and Labour overall, we have our section of that plan, which is if you want the plan of the Department of Environment and Labour . . .

MR. MACKINNON: That's what I would like to know. What is your plan?

MR. RUSSELL: As I said, we will table that section for you.

MR. MACKINNON: I have just a couple of other housekeeping matters. On several occasions, the Department of Environment and Labour, I believe Mr. Spurr - does he work on behalf of the Department of Environment and Labour or is he with Transportation and Public Works? No, I'm sorry, he was the spokesperson at JAG for the provincial government.

MR. RUSSELL: Oh, you're talking about Peter Spurway.

MR. MACKINNON: Sorry, I was mixing him up with a former employee of the department. Peter Spurway advised me at that particular moment in time that he would provide me with the results of the groundwater studies that were to test underneath the soils at the Sydney tar ponds and coke ovens. That was a commitment that was reaffirmed from a commitment that I was given by a previous deputy minister a year and a half earlier than that. I'm still waiting. Would the minister give an undertaking that we can get those results?

[Page 310]

MR. RUSSELL: Maybe you're not speaking about Peter Spurway, are you speaking about Parker Barss-Donham?

MR. MACKINNON: No, Mr. Spurway.

[4:00 p.m.]

MR. RUSSELL: Peter Spurway is the chap who did that. Well, I'm surprised, but anyway . . .

MR. MACKINNON: I'm just wondering why I can't get those groundwater results.

MR. RUSSELL: Well, I don't know why you can't get them either. These are at the tar ponds . . .

MR. MACKINNON: Yes. I wanted to know if in fact there was groundwater . . .

MR. RUSSELL: And at the coke ovens site?

MR. MACKINNON: Essentially, what I was trying to do, because of the depth of the contamination there, I wanted to know if it had permeated into the groundwater table. Once you get outside the Pier area and you go down into South Bar, that general area, New Victoria, they're on wells, they're not on central water. So I wanted to essentially follow the path of the water to see if . . .

MR. RUSSELL: Actually, you're addressing the wrong person. In reality, you should be addressing Michael Baker, who looks after the tar ponds.

MR. MACKINNON: But the Department of Environment and Labour carried out the test.

MR. RUSSELL: Okay, it's still with the Department of Transportation and Public Works and that's the agency you'd have to check with now.

MR. MACKINNON: But, who's responsible for doing the water test?

MR. RUSSELL: The Department of Transportation and Public Works.

MR. MACKINNON: So your department does not have that information?

[Page 311]

MR. RUSSELL: Remember, we went through this last year? Our department, that is the Department of Environment and Labour, is only connected to the regulatory apparatus that set up for the tar ponds for their clean up and for their day-to-day operation. We do not get involved in their day-to-day operation.

MR. MACKINNON: Does the department have copies of those test results?

MR. RUSSELL: Well, I don't believe it's the department.

MR. MACKINNON: Yes or no?

MR. RUSSELL: Pardon?

MR. MACKINNON: Yes or no?

MR. RUSSELL: Does the Department of Environment and Labour have them?

MR. MACKINNON: Yes.

MR. RUSSELL: I don't believe so. Hang on a second. I'm told that it would be the Department of Transportation and Public Works that would have actually gotten those results, whether or not they ended up in the Department of Environment and Labour eventually, I can't answer. But we can check that out.

MR. MACKINNON: I have to be honest, I'm just absolutely amazed that the Department of Environment and Labour is trying to wash its hands of one of the most critical components of its long-term water strategy, and that is knowing where the safe drinking water is in this province. These tests were carried out almost two years ago now and nobody seems to be able to access them. So we don't even know if that groundwater under the coke ovens and the tar ponds is contaminated or not. People could very well be drinking it and not knowing it. I think we, and yourself as a minister in the government, have an obligation to make those results available.

MR. RUSSELL: As I said, if you check with the Department of Transportation and Public Works, I'm sure you'll get the answer. But you're looking at the wrong department.

MR. MACKINNON: Well, I would say we're looking at a department, a toothless department by the sounds of this. But, we may differ on that.

One final question. Back on Harrietsfield - I raised it the other day - I understand that you gave an undertaking to the residents of Harrietsfield that you would get back to them or meet with them or contact them on Friday past.

[Page 312]

MR. RUSSELL: I was going to get a letter sent to them on Friday, yes.

MR. MACKINNON: They haven't heard anything back.

MR. RUSSELL: Well, the letter wouldn't have gone to you, it would have gone to the lady out in Harrietsfield. However, I can tell you offhand that the letter has not gone because my deputy minister is in Victoria, unfortunately. Before he left, he instructed somebody to prepare a letter for my signature, however, between the House and him going to Victoria, it didn't get done. It's being done today.

MR. MACKINNON: Okay, thank you.

MR. RUSSELL: You're welcome.

MR. MACKINNON: That's it for me.

MR. CHAIRMAN: The time is now 4:05 p.m. The Liberals have finished with their time. Are there any questions from the government caucus before I go back to the NDP? Hearing none, the time is 4:05 p.m.

The honourable member for Halifax Atlantic.

MR. ROBERT CHISHOLM: Thank you, Mr. Chairman. I just wanted to ask a few questions. I want to follow up on what the previous member was talking about with respect to Harrietsfield and the RDM construction and demolition debris recycling and disposal facility. The minister probably knows by now that this has been quite a story over the past number of years, where RDM applied to the regional municipality for a zoning change to not only expand its site but also to change the use of that site to a disposal site.

Frankly, it's been quite a frustrating process for many of the residents. They've had a series of meetings over the past three years and I think it's been quite clear that the vast majority of the population out there has been opposed to this application.

Nonetheless, it went through the municipal zoning and rezoning process. The decision was made to approve it in the face of recommendations from the staff at the regional municipality, the last part, which was the disposal, not to allow that. A couple of things that I wanted to mention to you here today that I raised with the previous minister, in particular, is that throughout the process there were concerns about water quality. Primarily because of the way the whole system works out there, people were concerned about the quality of the well water, the drinking water, as well as the water in the lakes and the rivers and so on. It appears, from information that I received, that the tests, the kinds of base line tests weren't actually done by the Department of Environment, they were done by the consultants of the proponent for this chain. Let me just make sure that is in fact the case.

[Page 313]

MR. RUSSELL: That is the case, yes. However, I would point out, Mr. Chairman, that the tests were not actually done by the company, they were done for the company by a private consulting company.

MR. ROBERT CHISHOLM: They were done by a consultant retained by RDM to get this proposal through. The distinction between whether it was the company or whether it was the consultant I think is . . .

MR. RUSSELL: I would take it that you're suggesting that the consulting company fudged the numbers . . .

MR. ROBERT CHISHOLM: No, I'm not. I'm not saying that at all. I haven't seen them so I can't say that. Nobody has seen them out there, the residents haven't anyway. I guess the difficulty is, here you have a group of residents in this community who are concerned about water quality, and there's a real history there, as officials in your department know, dating back 25, 30, 40, 50 years of water quality, auto salvage yards there. There were complaints when I was first elected back in 1991 about what wasn't being dumped and disposed of out there and so on. There have been concerns over the years and there have been tests done over the years about the quality of water, so there's a history.

Anyway, the residents are concerned. Now, all of a sudden, you're bringing in this new construction and demolition debris disposal site in the area, and they're concerned about what it might do to the watercourse and to the wells and so on. The Department of Environment and Labour can't do anything for them, can't give them any assurances, no testing was done, you don't have access to any of the tests.

MR. RUSSELL: Yes, we do.

MR. ROBERT CHISHOLM: Well, you wouldn't give them to me, or you didn't give them to the residents, right?

MR. RUSSELL: Mr. Chairman, if I may, so we don't stray off the straight and narrow, the testing was done but the test results belong to RDM because they paid for the study. However, they provided, I forget what you call it, on the level of a confidential, I'm at a loss for words - if I get something done and I pay for it, it's mine, and if I tell somebody else about what those results are, I do it on a confidential basis, where they don't use that knowledge for any other purpose than simply to make sure that the testing has been done. Having said all that, we're back on track again.

MR. ROBERT CHISHOLM: What you say, and I appreciate you clarifying it, that is also my understanding, but the end result is still the same, that when I try to get access to those results or the residents try to get access to those results, they're not available.

[Page 314]

MR. RUSSELL: So you want to know what we're doing. When I met with them the other day, Friday or Thursday, whatever it was, last week, the lady, I think her name was Shelley or Shirley or Shannon, a very nice polite lady, I said to her that what we would do is we would get test results and we would have our own hydrogeologist from the Bedford office get those figures. If we get the figures, I believe we can release them. We can give them a report, I am told. That will be done, and that should have gone out in a letter on Friday, unfortunately, due to the fact that I was in here and my deputy was leaving to go to Victoria sometime over the weekend, it didn't get done. However, there was a note left. I checked with the secretary this morning, there was a note left that it was moving.

MR. ROBERT CHISHOLM: Thank you. I guess where this all sits is, when I was in touch with your predecessor and officials from your department, they were waiting for the municipality to make its decision on the zoning application. Once that was done, then your officials would step in and go through their approval process, whatever it is they had to do. What I tried to explain to your predecessor was that residents were very frustrated with the way the zoning application process had gone. They didn't feel that they had been given sufficient hearing, they didn't feel they were given the kind of information they needed. It was just them and the consultants of RDM. I was asking the minister of the day if he would ensure that these residents would get an opportunity to be consulted and to participate with the Department of Environment and Labour to have their say.

MR. RUSSELL: I believe that was done.

MR. ROBERT CHISHOLM: Well, what happened was that a notice appeared in the paper that they could register their concerns with the applicant, with RDM. Right?

MR. RUSSELL: Yes.

MR. ROBERT CHISHOLM: They've already done that. They didn't feel they got much satisfaction from that. They don't feel that's a particularly objective process to then be subjected to that again. What they want is an opportunity to have a supposed third-party arbitrator or an independent authority, such as the Department of Environment and Labour, to participate with, to ask questions, to get expert results that isn't necessarily biased in favour of the applicant.

[4:15 p.m.]

MR. RUSSELL: We are, through this present process, receiving concerns and suggestions of where there are shortcomings in the application of RDM. That process just finished last week. We will be reviewing those, and we will be taking up these concerns with the company, and we will be looking at what we can do as a department to alleviate some of the concerns. Also, we're establishing a community liaison committee, which will be ongoing. We will be monitoring the site on a regular basis to determine that the company will

[Page 315]

be operating within the parameters that have been set out for them. We have not as yet approved the application, we're still reviewing it. At the end of that process, we will provide to those who have contacted us during this review process exactly what we intend to do.

MR. ROBERT CHISHOLM: Let me try to cut through this and be clear. The residents, it's fair to say, don't feel that they've been given an opportunity to sit down with independent experts - let's say officials from your department - and engage in a dialogue whereby they ask questions and they get answers. They ask, we're concerned about water quality, have you done the baseline test, can you tell us that this has been taken into consideration, that's been taken into consideration. These people have done a fair bit of work. They've done their homework. They know a fair bit about what they speak. They want to feel that they've been listened to, not patted on the head. They want to actually ask technical questions and get technical answers, rather than have the Department of Environment and Labour, like the HRM tended to do, stay in the backrooms, make their decision independent and then come out and tell the residents what it was and that their concerns didn't matter.

Mr. Chairman, if I may, to the minister, we need an opportunity for these people to have some kind of a dialogue with your officials whereby they can ask questions about testing, about the environment out there, technical things about the proposals because it has been examined, and get the answers before the decision is made. If that's done, and then in the final analysis the decision is made to go forward, they may disagree with the decision but at least they've had the opportunity to participate in a process.

Initially, I asked for a full environmental assessment, that's what that would provide, is that kind of opportunity, that kind of input, some substantial opportunity to have dialogue and to participate in a technical way on whether or not this is a good idea. Failing that, and your predecessor wouldn't agree to that, I was asking him to do this, and I ask you, don't send them off to RDM to register their concerns again, because there's history there, there's a problem in terms of how the residents and RDM are relating. There is no trust. So what can you do to help deal with this situation on behalf of these residents?

MR. RUSSELL: Mr. Chairman, I understand that HRM had 63 meetings and that's a lot of meetings.

MR. ROBERT CHISHOLM: Yes. They didn't have 63 meetings in Harrietsfield.

MR. RUSSELL: I don't know, but they had 63 meetings on the business of disposal of construction and demolition debris, and I think as a result of that they came up with three - was it? - sites in HRM for disposal, and that was a fair way back in the process. So they had a number of meetings after that when people, I would suggest from Harrietsfield and other areas, had a chance to approach though their councillors and through HRM to bring their

[Page 316]

views forward. I don't know, to be quite truthful, if we want to start the whole process all over again.

MR. ROBERT CHISHOLM: Well, let me just give you a little bit of added information to that. The residents in Harrietsfield participated actively in these meetings to the point where, the final decision day at council, staff recommended against approving this part of the zoning change, against the disposal site. Staff recommended against it, but the political decision was - in other words the residents did participate to the point where they finally convinced staff not to do this and staff said you're right and they recommended it to council, but the council decided in their wisdom - or lack thereof - to ignore that, and so residents are now going to the next level of government and asking what can we do here.

MR. RUSSELL: Unfortunately, I can't say well, you know, those damn feds, but in all seriousness this is just going up the food chain, but . . .

MR. ROBERT CHISHOLM: But at the same time you've always had - I mean the buck has always stopped with you, with your department. They've always said to me this will not be, you know we have to approve this, we have to wait for HRM, but we have to approve it and we're going to go through all this evidence and we're going to give serious consideration to that . . .

MR. RUSSELL: And we will. We will, I can assure you of that.

MR. ROBERT CHISHOLM: And you assured us that there would be consultation with - or the previous minister did, both of you - the residents, there would be an opportunity for some participation, and sending them to RDM, Mr. Minister, through the Chair, you recognize as well as I do that that's not good enough.

MR. RUSSELL: You say that's not good enough. Well, maybe it's not, but I will tell you something, we are getting a lot of information, and we are getting a lot of communication from the citizens within the area, and they're not wasting their time and they're not wasting my time or the time of the department. We're taking all those things seriously and, based on the information, as I say we're going to take a look at the water situation out there, we have to come to a resolution sooner or later and, to be quite honest, I think it will be a very hard sell to convince everybody in that area that we're doing the right thing, but however if we turn it down we will also have those who say well, now you've just given it back to the HRM to find another site and another battle, but, look, leave it with me and . . .

MR. ROBERT CHISHOLM: This isn't a bad idea, some place that isn't in the middle of a residential area, right? Even though it's in Harrietsfield and Harrietsfield has a bad reputation in terms of the environment, with respect to HRM, I mean surely there's enough land out there somewhere that some other site could be found - but that's for another day.

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MR. RUSSELL: For another day. If the honourable member will leave it with me, Mr. Chairman, I won't lead him down the garden path, we will go on with the process and we'll make a decision based on the best evidence and the best advice that we can get.

MR. ROBERT CHISHOLM: Mr. Chairman, to the minister, I appreciate that assurance and I don't take it lightly, although I do ask that if you are going to get a report, you are going to get the data and that you're going to provide a report to the residents on what that data says . . .

MR. RUSSELL: Our own data we can provide; we cannot provide the data that somebody else has paid for.

MR. ROBERT CHISHOLM: But you told me initially that you were going to get the test results, your officials were going to review them and then you were going to give the residents a report on the basis of that information?

MR. RUSSELL: Yes, that's true.

MR. ROBERT CHISHOLM: So will you give that report to the residents with some opportunity for them to give you some feedback?

MR. RUSSELL: Yes.

MR. ROBERT CHISHOLM: Before a decision is made?

MR. RUSSELL: Yes. What more could you want?

MR. ROBERT CHISHOLM: We're in this for the long run and not expecting the immediate results, but inch by inch I guess is . . .

MR. RUSSELL: Of course, these things will take time. I think HRM was involved in this for about three years, weren't they? Two or three years anyway.

MR. ROBERT CHISHOLM: Yes, yes.

MR. RUSSELL: Yes, you know it's like establishing a dump, or anything at all, you're going to have a NIMBY reaction and . . .

MR. ROBERT CHISHOLM: But I mean the reality is in this case - and you know I'm pretty clear-headed when it comes to these kind of things - I got to tell you that this area has not been well-treated. When it was the former county, an awful lot of stuff got dumped out there and there weren't any controls and it was a problem, and these people, the residents

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want to clean this place up. They want to make sure that the water in their wells and in their children's wells and so on is not allowed to deteriorate, and you can't blame them for that.

MR. RUSSELL: And I can understand, you know there has been Junky Jims and all these other people around . . .

MR. ROBERT CHISHOLM: That's further out, that's in Estabrooks' riding, but you're right. Anyway, I appreciate it, I take the minister at his word, Mr. Chairman, and I will share that with the residents, and we can expect a letter either today or tomorrow?

MR. RUSSELL: The letter should be going out hopefully today, but I will no longer guarantee it will go out today.

MR. ROBERT CHISHOLM: No, but you did that to the residents in front of the cameras, and you've been in this business long enough to know you shouldn't have done that.

MR. RUSSELL: I know I should not have, but that's what happens when . . .

MR. ROBERT CHISHOLM: That's why people come down and stand outside there and catch you.

MR. RUSSELL: Lead you astray . . .

MR. ROBERT CHISHOLM: Okay, thank you.

MR. RUSSELL: . . . but it will be done.

MR. ROBERT CHISHOLM: Mr. Chairman, I refer the remainder of the time to the member for Halifax Chebucto.

MR. CHAIRMAN: The time now is 4:28 p.m., just to remind you that you have until 5:05 p.m. I believe the Liberal caucus has no further questions for this minister, so if you wish to go beyond the 5:05 p.m. time, it's your prerogative, sir.

MR. HOWARD EPSTEIN: I think my colleague, the member for Cape Breton Centre, will probably continue after I finish.

Mr. Minister, I wonder if you could help me in a matter about government organization with respect to the environment, and I have in mind internal organization and internal reporting, and what I'm wondering is whether there is a government-wide environmental management system and what, if anything, can you tell me about that?

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MR. RUSSELL: In reality I suppose, Mr. Chairman, there is no organization as such. As the member may be aware, the deputy ministers have a committee that meets on a weekly basis and they share their knowledge and their messages between departments. We are involved if the department is doing something that will have an environmental impact, it does come from department to department, normally through the deputy ministers rather than through the ministers.

[4:30 p.m.]

MR. EPSTEIN: I have to say I find this a little disconcerting and I'm going to explain why. In 1998, in the Auditor General's Report, one of the issues he took up with respect to government-wide issues - this is early in his report in the category when he looks at government-wide issues - was the whole problem of environmental management internally at the provincial government in our province, and he starts by pointing out that a whole variety of departments, not the Department of Environment, but many other online departments engage in a whole variety of activities that have an environmental dimension.

He mentioned Agriculture and its involvement for example with land use and pesticides and he mentioned the Department of Natural Resources, and of course we could add a department like Energy. It's clear that a whole variety of government departments have activities that have a strong environmental dimension. He went on to point out - now this was 1998 so it was relatively new - he was pointing out that there was a new Environment Act in 1995 and that the Act binds the Crown, and that it's therefore a positive obligation on the part of the Crown to take part in environmental matters and to turn its mind to these issues.

He pointed out that if charges were ever brought the only defense that any entity, including the Crown, could put forward was due diligence. He goes on to explain that an effective way of showing that you've engaged in due diligence - and I'm quoting now from the report - "is to establish and maintain an environmental management system wherever significant impacts on the environment are a possibility". He further elaborates about what that might entail, and he makes it clear that at the moment - this is five years ago in the 1998 Auditor General's Report - there is no government-wide policy framework for environmental management at this time.

He goes on to explain - and at this time he picked five departments at random, Agriculture, Fisheries, Natural Resources, Transportation and Public Works, and also the Department of Environment and Labour, and he looked at those departments to see what they had in place - he described a system that was not only decentralized, but quite clearly was lacking, and he was quite clearly encouraging and taking a mild tone with the government in the report that year and praising what he found that was good, but at the same time pointing out that something had to occur. In terms of this question of due diligence, the government had a long way to go.

[Page 320]

I will pause just to observe that the way the Auditor General put it with respect to due diligence is clearly in the context of a charge being brought - and I don't think we have to contemplate charges being brought because I think the same standard is probably the political standard meaning due diligence should be shown for auditing purposes and for accountability purposes, but one of the things that he pointed to as a valuable part of an environmental management system would be risk identification, which indeed I think was one of the points that showed up in your own departmental objectives, that it should be a risk management system.

But it's far from clear that this has become province-wide and let me quote to you what he said at that time. "From our interviews we determined that none of the five departments have performed a formal department-wide environmental risk analysis." In other words it wasn't being done - and this was five years ago - by any of those five departments and I would be curious to know whether this has advanced in the last five years, and particularly whether there's some kind of government-wide system. It doesn't sound to me as if there's a government-wide system that has really built on this observation of the Auditor General. Indeed, it was a fairly detailed observation and, I think, an important criticism that was made of our own way of going about doing business. I think it was clear that the Auditor General had something more in mind than simply submitting projects for environmental assessment when individual projects came forward.

I think that the Auditor General was talking about a proactive form of thinking on the parts of individual government departments about what their responsibilities were towards stewardship of our resources, and it was meant as a nudge in the direction. I haven't seen the Auditor General turn to this again in his reports, but I would think it's probably high time that it was revisited. I would be surprised that much advance could be shown in terms of a government-wide uniform system, but I'm certainly inviting your comments if there's something that could be pointed to in terms of risk management or something else that's going on in all these departments. Can you help me understand, has there been any significant events in the last five years?

MR. RUSSELL: Well, I don't think any department, or any minister or deputy minister, works in isolation from his or her colleagues. The awareness of departments where their activities may impact upon the environment is evident, I think in that all departments bring to their respective tables the impacts that could be adverse to the environment or in some cases, conversely, could be advantageous. We have a paper before Treasury Board at the present time - I'm not too sure when it went there, it was some considerable time ago, it's almost a year ago - it is being reviewed, I will put it that way, it hasn't moved forward, but having said that, the process is in place. As I say, at the deputy minister level and at the Cabinet level, there are regular discussions on the matters that would be construed as environmental concerns by the Department of Transportation and Public Works or the Department of Natural Resources, or the Department of Agriculture and Fisheries, because

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government is so intertwined today that no department can do anything without impacting on another department.

MR. EPSTEIN: Just before you proceed, Mr. Minister, can you help me? Is the document that you referred to that had gone to Treasury Board, was that the green plan that you referred to the other day or is it something different?

MR. RUSSELL: No.

MR. EPSTEIN: It was something different?

MR. RUSSELL: It is different, yes. But, as I say, it's sitting there at the moment as advice to Treasury Board to go on to Cabinet, but it's still a document that requires some considerable work before it actually gets to the Treasury Board or to Cabinet before decisions are made, et cetera.

I can think about things, for instance in the Department of Transportation, with regard to risk management with our salt domes which was worked out with the department and actually led by the Department of Environment to have the actions that have been taken with regard to contamination by salt; I can think of - within the Department of Agriculture and Fisheries - activities that have taken place with regard to the water strategy that are combined with activities of the Department of Environment; and within DNR, of course, there's a host of environmental activities that are taking place with regard to mining and to ATVs, et cetera. These things are all across departmental lines, so we are at the present time very much aware, I think in every department, of the fact that we must conform to the environmental requirements put forward by the Department of Environment and Labour.

MR. EPSTEIN: I'm glad to hear it. I would have hoped that the government-wide system that the Auditor General spoke of might have been put in place more formally, given that it's been five years - three and a half, almost four of them under your Party's stewardship - but it doesn't sound as if a formal system has been put in place. The reason I focused on this was only in part because the Auditor General had flagged it, sensibly I think, back in 1998. I focused on it because of some of your own remarks in the last couple of days.

You will recall that when we started out I expressed the hope that you personally would take seriously the importance of the mandate that your department implies. Your comment on that was that I might not be so happy at some point. Indeed, I subsequently heard you say, I think, that you weren't much in favour of regulation as an effective tool. You seemed to imply that education and relying on the good sense and goodwill of the various actors involved would be sufficient.

MR. RUSSELL: I have a lot of faith in my fellow citizens . . .

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MR. EPSTEIN: I have lots of faith in my fellow citizens as well, but I tend to think that at the same time we need police and we need laws and we need a variety of enforcement officials - that's what we have them for. If it's a question of relying on goodwill and self-actualization it doesn't seem to be working, with respect to the government itself, I think is the point about the absence of the government-wide system that was flagged for us by the Auditor General five years ago. In fact, it rather seemed to me, reading the shuffling back and forth at the time I asked the first question that maybe the Auditor General's comments hadn't registered with the department, perhaps they weren't known, but they're right there in the 1998 report, so I'm a little worried about complete reliance on self-policing.

Can I ask you about a couple of things? I'm curious about environmental assessments. I would like to move generally to the topic of environmental assessments. Under the Act, Section 42 and the immediately following sections, there should be an Environmental Assessment Board that is set up for work whenever a Class II environmental assessment hearing takes place, and I'm wondering if, in fact, there are any members of the Environmental Assessment Board at the moment, what's the state of play?

MR. RUSSELL: There are no members at the present time. They are appointed when the need for an assessment arises.

MR. EPSTEIN: Your answer seems to suggest that they're appointed on an ad hoc basis, and I have to say that wasn't my recollection. I thought, for example, Prof. Bill Charles from the law school was an ongoing member - is that incorrect?

MR. RUSSELL: That was under the old system that has gone by the board, and now we're working on the premise that we will appoint the board when we need them rather than having a standing board.

MR. EPSTEIN: Can you tell me, when was the last time we had any Class II environmental assessments?

MR. RUSSELL: We will have to get that date back to you . . .

MR. EPSTEIN: I think I know the answer, and I think the answer is there haven't been any since maybe 1997. I think that there are some projects that are highways projects that probably have to be treated as Class II, or should be treated as Class II environmental assessments, and I think they're going through the process, but I'm not aware that there have been any hearings or any boards appointed yet. In terms of actual hearings, I don't think there have been any Class II hearings for about five years, and this amazes me, constantly.

The context is, of course, that the Class I and Class II environmental assessments are listed in the regulations and tell us what kinds of undertakings require those hearings to be held, but of course it's always within the "discretion" of the minister to order hearings, either

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a Class I environmental assessment for something that might not otherwise be within the regulations, or a Class II hearing for something he decides is sufficiently serious. I'm not aware of you or your predecessors exercising discretion to decide to order anything as Class II environmental assessments. Can I ask if I've missed any, have you or your immediate predecessors ordered any Class II environmental assessments?

[4:45 p.m.]

MR. RUSSELL: I don't know . . .

MR. EPSTEIN: I mean as a discretionary matter . . .

MR. RUSSELL: I certainly haven't while I've been here. But I would just like to go back to what you were saying with regard to public hearings, et cetera. There have been a number of occasions, under Class I, where we've held public hearings.

MR. EPSTEIN: We may not be using the term the same way - I'm essentially talking about a public hearing in front of a panel of the Environmental Assessment Board, essentially treating what might come under the Class I requirements being moved up to class two. Are you saying that there have been some of those in the last four years?

MR. RUSSELL: Yes, perhaps I am misinterpreting. The advice I'm getting is that we haven't done that, but we have held public meetings, because . . .

MR. EPSTEIN: If it's public meetings, I am sure there have been public meetings, of course there have been public meetings. I'm talking about something quite different. I'm talking about an independent, arm's-length board, the Environmental Assessment Board being triggered and having hearings and rendering advice to the department after hearing the evidence; that's really what I'm talking about. As I said, I don't think there have been any in the last five years.

MR. RUSSELL: You're correct.

MR. EPSTEIN: What I'm really wondering is - why not? I want to suggest to you some items that might have been candidates for this. I wonder if you can help me understand why it is that maybe Class II hearings haven't been ordered, or whether these are the kinds of projects that you're perfectly satisfied to see treated otherwise, and let me start with something that we've had a troubled history with in Nova Scotia, which is coal mining. Of course there have been no new proposals for underground coal mines recently, but there have been surface coal mine proposals, Pioneer, for example, has a surface mine. Can I ask, Mr. Minister, if you have views on whether it's not appropriate to use the Environmental Assessment Board for mining? Should it not be automatic that mines should undergo a Class II environmental assessment, or should it not be looked at very seriously?

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MR. RUSSELL: Our regulations, at the present time, for opening a mine require a Class I assessment.

MR. EPSTEIN: Any major undertaking has to be registered with the department and undergo some form of environmental assessment, but the problem is of course that there are different levels of scrutiny. There's essentially a licensing level of approach to environment assessment, and then you have Class I and Class II. What I'm saying is that the important fact about the Act is that the minister has "discretion" with respect to any undertaking to assign it to a category, to move it up the hierarchy and require a higher level of scrutiny, and what I'm concerned about is that mines are potentially very dangerous, but also they have a lot of potential to be nuisances and to have negative environmental impacts, and I'm wondering why it is that mines are not treated virtually automatically, that is that the presumption would normally be that they should go to a Class II environmental assessment and I'm wondering why not?

MR. RUSSELL: Well, I'm wondering why for? There are parameters in place and requirements that are required to be met by the proponent. I'm just wondering - why go to a Class II when Class I covers all the necessary requirements?

MR. EPSTEIN: I think it's a question of, indeed, whether Class I does cover all the necessary requirements. The difference, of course, is that there is a body at arm's-length from the department that can include a variety of experts, and that includes a public hearing process. I think you heard my colleague for Halifax Atlantic just mention, for example, this whole question of a proposed construction and demolition waste site and how concerned the public was and how much they desired the opportunity to have input. Anyone who has served at municipal councils know what a huge desire there is on the part of the public to be heard and to know that their opinions have been taken seriously.

Any time in this Chamber that we've dealt with controversial legislation, and we've gone through the Law Amendments stage, it's been clear that many members of the public have come forward and wanted to express their opinions and have been insulted if they felt that they weren't being listened to. For example, if members of the committee got up to leave the room in the middle of a presentation, it was a sore point with some of the presenters. It's clear that there's a huge desire on the part of the public. So that's the difference, that there's this public hearing element.

Let me see if I can ask my question a different way. Under the Act, the minister has a discretion to order any level of environmental assessment, or can increase the level of environmental assessment. You asked a moment ago why should mines be subject to a stricter level of environmental assessment. What I'm wondering is whether you have criteria according to which you do exercise your discretion when a project comes forward and is registered as an undertaking with the department - presumably, you must ask yourself, should

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this be moved up the line? Should I order a Class II environmental assessment as a matter of the discretion I have under the Act? On what basis would you exercise your discretion?

MR. RUSSELL: I would base it on the recommendation of the department and their expert advice.

MR. EPSTEIN: Well, my experience with your federal counterpart is that they do have some guidelines, and their guidelines essentially focus on two things: one is the extent of public concern that's expressed and the reason they think about that is that the added dimension of a public hearing is an opportunity for the public to express their concern; and the other main factor that they look at is how serious the potential impacts. You asked that, by implication, about mining. Mining indeed is one of those things where there are potentially very serious impacts - acid mine drainage, is one example; dust is another example. These are things that are fairly serious potential environmental impacts on an ongoing long-term basis, which is why there are bonds for remediation and so on. It's because it's recognized that in mining there is a huge potential for harm. Coal mining is another example where the dust is a real factor that's problematic, so that's why.

Is it possible that your department will issue some principles of guidelines for you, or are you telling me that some of them exist already?

MR. RUSSELL: Well, we have in place, as I said, guidelines and we have policies and we have regulations and we have the criteria that a proponent must abide by if that person wishes to open a mine. I don't think that we should be setting ourselves up and saying we're not going to have any mines in Nova Scotia. I don't know . . .

MR. EPSTEIN: I don't think anyone is saying that at all.

MR. RUSSELL: . . . if that's what the honourable member is suggesting. I can provide for the honourable member if he would like to have them, the guidelines that we presently have. I think that they are sufficient to protect the environment.

MR. EPSTEIN: If, by guidelines, you mean the regulations under the Environment Act, it's not necessary, I have them. Is there something else?

MR. RUSSELL: We're speaking about guidelines, which are not the regulations.

MR. EPSTEIN: Guidelines for the minister in deciding how to exercise his discretion?

MR. RUSSELL: No, as to how different projects are reviewed within the department.

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MR. EPSTEIN: Perhaps that is a document I haven't seen. Then yes, I would appreciate seeing that, thank you.

Can I ask then about aquaculture projects? How are they treated in the view of the department?

MR. RUSSELL: Aquaculture projects are treated, of course, primarily by the Department of Agriculture and Fisheries. There are a number of cases whereby the Department of Environment has to step in when there are obvious violations - I shouldn't say obvious violations - when there are suspected violations of the environment regulations.

MR. EPSTEIN: I think I wasn't making my question clear - I apologize. I was on the theme of environmental assessments still. I was really asking what approach the department takes with respect to aquaculture proposals.

MR. RUSSELL: They are dealt with by the Department of Fisheries and Oceans, federally, and our provincial Department of Fisheries. Unless they're on land, and if they're on land I presume they're all our Department of Fisheries.

MR. EPSTEIN: Except, of course, Nova Scotia has aquaculture legislation. I understand that most of the ones we have now - well probably all the ones we have now are not on land, they're in a marine environment. I'm not aware of any that are on land, although that would be a very good idea.

MR. RUSSELL: Well, there are, there are several now.

MR. EPSTEIN: Well, I'm glad to hear that because it's a much better idea than having them in the marine environment. What I was asking though, is that even though most of them are in the marine environment - normally I would think that they would be regulated federally - there is provincial legislation that seems to have to do with governing aquaculture. So I'm wondering if that wouldn't likewise trigger provincial environmental assessment, or is there some reason why not?

MR. RUSSELL: I am advised that what I was saying is correct, that is totally within DFO and the Department of Fisheries.

MR. EPSTEIN: So the view of the province is that any marine aquaculture undertaking is purely federal jurisdiction and there's no provincial jurisdiction?

MR. RUSSELL: We - the provincial department - would be providing the lease of the location of the aquaculture project. For instance, if you wanted to open one down in St. Margarets Bay or somewhere, that the province owned part of the seabed and if they want to establish on that particular piece of territory that would come under provincial jurisdiction.

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MR. EPSTEIN: Okay, good. Then we're back at the point where there might be some provincial jurisdiction, depending on where exactly the project is.

MR. RUSSELL: The approvals on the environmental side would be done by DFO for the establishment, and then there would be local agreements between the proponent for the aquaculture project and our local Department of Fisheries.

[5:00 p.m.]

MR. EPSTEIN: I have to say this seems to me an excessively modest view of professional jurisdiction. I would have thought that if there is provincial legal jurisdiction over some part of the seabed, then probably the project should be registered both federally and provincially as an undertaking and there would have been the opportunity for provincial environmental assessment, perhaps held jointly with the federal government. Have we abandoned jurisdiction to the federal government in some fashion?

MR. RUSSELL: I'm sorry, I didn't get your first . . .

MR. EPSTEIN: I was saying that if the province owns the seabed in question, or that part of the seabed in question, that provincial environmental assessment laws really would be triggered and I was asking if we have formally abandoned jurisdiction to the federal government with respect to environmental assessments?

MR. RUSSELL: I'm told that if it isn't listed as an undertaking provincially, therefore it comes under the feds.

MR. EPSTEIN: I missed that.

MR. RUSSELL: The environmental requirements are federal requirements for the assessment and the approval. If it's on seabed that lies within the provincial jurisdiction, then the approval for the company would come from the province. What I'm saying is, our Department of Environment is not involved in the process of the establishment or licensing of agriculture industries unless they're on land.

MR. EPSTEIN: Perhaps we will get to the ones on land in a moment, but I think my point was that, indeed, that was my impression that your department is not involved and I was suggesting that it could be involved and probably should be involved and it wasn't clear to me why it wasn't involved.

MR. RUSSELL: Are you suggesting that we expand our territory?

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MR. EPSTEIN: Just like in oil and gas. Could you help me, Minister, with respect to aquaculture establishments on land, then what does the province do about those, again in terms of environment assessment?

MR. RUSSELL: They would have to get water withdrawals from the department and as far as the effluent that comes from the plant itself, it would have to meet provincial standards, for . . .

MR. EPSTEIN: So essentially you seem to be telling me it's treated as a permitting process. Is it not treated as an environmental assessment process, that is, are they not required to register the undertaking and submit reports?

MR. RUSSELL: No, no.

MR. EPSTEIN: And why is that?

MR. RUSSELL: I can't answer why . . .

MR. EPSTEIN: Well, let me ask a question that I think gets at the heart of it because this may clarify it. Is it the view of the department that for projects that the department licenses, that they do not have to undergo environmental assessment? Is that the view?

MR. RUSSELL: For aquaculture they just need an approval, they do not need an assessment from the Department of Environment. As to why that is, I would have to go back into history and discover why because it's . . .

MR. EPSTEIN: And I guess what I'm saying is, I'm not convinced that's an accurate understanding of the Act, but I'm going to yield now, I think my time is up, and my colleague, the member for Cape Breton Centre, I think would be interested, Mr. Chairman.

MR. CHAIRMAN: Just for the record, the time is now 5:05 p.m. The first round of the NDP questions has now expired. The Liberal caucus has no further questions for this minister so we will revert back to the NDP caucus for further questioning.

The honourable member for Cape Breton Centre.

MR. FRANK CORBETT: I want to talk to you about some questions around labour standards. We talked earlier today, without much result I might say, about how we arrived at our minimum wage. It has been quite some time since this province has looked in any real way at amendments to the Labour Standards Code and I'm wondering why that has been? You talked to me earlier today about doing the right thing and bringing wages in line with other jurisdictions. Yet your government has never really seen any need to update labour standards.

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MR. RUSSELL: Well, as a matter of fact we do have within the works at the present time, I believe, some amendments to the Labour Standards Code. It won't be coming up in this session, but (Interruption) The only one that we will be addressing this session possibly will be the compassionate leave, but we can't do that either until such time as the federal government puts their bill out because ours has to mirror their legislation, but we think that they may have their legislation in place before we vacate this House.

MR. CORBETT: Just so we're clear, you're talking about compassionate leave as it relates to EI?

MR. RUSSELL: Yes, with EI.

MR. CORBETT: Yes.

MR. RUSSELL: And we have some other amendments to the Labour Standards Code which we are working on at the present time, but not for this session.

MR. CORBETT: Then I'm going to ask you a question, why are we still working on a 48-hour week and not a 40-hour week and under Labour Standards, do you think that's acceptable in today's . . .

MR. RUSSELL: Probably not but, again, it hasn't been amended. Those standards don't apply at the present time to the majority, I would say, of the workforce.

MR. CORBETT: Well, anybody who's not covered under the Trade Union Act is covered by the Labour Standards Code so I would say it's a large chunk.

MR. RUSSELL: I don't know what the numbers would be, Mr. Chairman, but I would suggest to the honourable member that, first of all, it only applies to those who are not working under collective agreements and, secondly, it's applicability, even among the workforce that is not unionized, is that component of the workforce is essentially working on the 40-hour week.

MR. CORBETT: Well, I would disagree with you and I would also say that the way that the legislation is written if, for instance, all it speaks to, even if they go into overtime, is it reverts back to time and a half of the minimum wage. It does not speak if they worked into overtime and they were making $7 an hour, it wouldn't necessarily be time and a half of $7. It would not be $10.50. It could revert back to the minimum wage of the day. So I mean these are fairly major gaps, again back, I think, to what we talked about earlier today and trying to bring the workforce forward, trying to bring the employers forward. So, it baffles me that your government and previous governments have not looked at any considerable changes in this area since, I would say, about 1976, 1975, in that area. Don't

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you think that the workers of this province deserve better protection than what they're getting?

MR. RUSSELL: I would suggest to you that there are a number of pieces of legislation that we have that hearken back maybe even 100 years. Certainly the Highways Act is one, as I think the honourable member is well aware, where a person is required, as a property owner, to appear with a shovel out on the highway in the morning at 8:00 a.m. prepared to clear off a piece of road in front of his particular landholding. Those things are still in the legislation in a variety of Acts. Certainly the Labour Standards Code does have to be brought up to speed, so do a lot of other Acts.

Until such time as we get into our House here, some arrangement with regard to possessing legislation and amending legislation with a fair degree of repetition, such as they have in every other Legislature across this country, I don't think any government in their right mind is going to start introducing really major pieces of housekeeping legislation that is going to require the House to spend hour after hour after hour debating. Admittedly, we have a committee, as you know, at the present time looking at legislation, and if indeed those changes to the rules of the House are forthcoming, well then governments will be more willing, I would suggest, to take on those huge rewrites that are necessary to a lot of our legislation.

MR. CORBETT: I hear what you're saying, but I don't think you're answering the question or coming within a mile of it. What we're talking about, as you say, it's a big difference to have a piece of legislation on the books that says I must clear the highway in front of my home, compared to when people are going to work every day and trying to add to the economy of this province and yet they're working under almost Third World labour laws. That's where I'm going. This isn't about whether we have enough snowplows and therefore we grab a pan shovel and get to it. We're talking about democracy in the workplace. We're talking about people being able to be a part of the economy of this province in a meaningful way. For you to say, Mr. Minister, that it's minutia or it's housekeeping (Interruptions) Well, that's the implication I'm getting from you. That 40 hours, 48 hours, what's the difference, it's only housekeeping. I would assert to you, Mr. Minister, to a lot of people in this province that's a major change in their lives. There are a lot of people out there working under those conditions and they have absolutely no say in the matter. For you to say it's merely housekeeping, I couldn't be more critical.

MR. RUSSELL: I didn't say it was housekeeping, I said there were a large number of bills that require extensive changes that are housekeeping and to bring those changes into the House at the present time, we're going to get bogged down in debate in this place, in the Red Chamber and in the House for hour after hour to make essentially housekeeping changes in bills. We have other legislation which takes the majority of our time at the present moment simply because of the rules that we have in our House for handling legislation.

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MR. CORBETT: All that being equal, you're still putting it in the category of housekeeping. I couldn't disagree more with you. This is a major piece in the economic puzzle in this province, of people having some rights in the workplace. We can go in on the Order Paper and see bills with 20, 30 amendments in them and others just a tweak, if you will. If there was a meaningful process put forward, you could change any bill. It's as simple as that. To merely say that because there's housekeeping in it, I couldn't disagree with you more. I think it's the will of government.

MR. RUSSELL: Mr. Chairman, if I may. I had a meeting fairly recently with Rick Clarke, and I was telling him that one of my particular favourites is the Trade Union Act. I would just love to open up the Trade Union Act and amend it and bring it up to speed. He was saying, well, why don't you? I said, well, perhaps after we get things straightened away as far as the rules are concerned we can do that. Every department has major pieces of legislation that have to be completely torn apart and put together again. We can do all kinds of things if we can get legislation through the House.

[5:15 p.m.]

MR. CORBETT: Again, I know what you're saying, but I don't think you're on the point here. We can change the rules all we want, but if you're not forthcoming with the legislation it doesn't matter what the rules are. Let's look at another aspect of labour standards and look at, you talked about the EI rules around compassionate leave, encompassing something in labour standards around allowing people, as they would in collective agreements, one or two sick days a year they could use for family emergencies. These are all things that I believe that if you want to talk about bringing Nova Scotia in as a competitive workplace, these are things that you need. Later I will get into questions on the Trade Union Act. We are just so woefully inadequate in supporting workers in the workplace.

Mr. Minister, I get the feeling that you're hiding behind the fact that the rules of the House are somewhat cumbersome for government. Well, I would tell you that the work rules on employer/employees is much more cumbersome than the House rules are on you. If you're not willing to act, a few changes in the House rules aren't going to help unorganized workers in this province. It is until you show some leadership and say, look, we want to do something, we're serious about supporting you people. There are other things, would you consider, as basic principles or tenets of the Labour Standards Code, two consecutive days off? If you had the right rules to get it through the House, would they be principles that you would buy into?

MR. RUSSELL: You could certainly bring to my attention those particular things that you would like to see changed, but I'm not prepared around this table to come forward with a policy statement.

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MR. CORBETT: So I guess it's not so much a matter of what's in the House rules, it's where you're at philosophically; you feel there's no problem in this province today with the 48-hour work week, that's fine.

MR. RUSSELL: I didn't say that. It is not our intention at this time to bring forth an amendment to change that.

MR. CORBETT: Because of the House rules?

MR. RUSSELL: I'm saying that House rules are an impediment to any changes in legislation.

MR. CORBETT: Mr. Minister, there are bills in front of us on the Order Paper and we will be debating some, I would think, later on tonight. If that's the case, I don't know why everything is not just stopped. You're the government, you can choose to bring what legislation you want to bring forward. You can bring forward the bill on municipalities or whatever, or you could bring one forward on the Labour Standards Code, either one. You choose not to bring one forward on the Labour Standards Code. Is that correct?

MR. RUSSELL: We choose to bring forward the legislation that we want for this date, for this particular House, yes.

MR. CORBETT: Okay, that's not a priority then. You brought up the fact of the Trade Union Act. Another piece of legislation that really hasn't had anything dusted off it in any major way in a quarter of a century. Is that the same rationale? Is that the rules of the House, you don't want to bring anything forward?

MR. RUSSELL: Changing the rules of the House will affect every piece of legislation that requires major revamping, yes.

MR. CORBETT: That's preventing you from bringing forward legislation on say, collective agreements, which would go a long way to solving a lot of our labour strife in this province from time to time. You don't figure that's important enough to bring forward?

MR. RUSSELL: I think it is important. As a matter of fact, I have spoken to Mr. Clarke about that very subject.

MR. CORBETT: But you just talked about it, you didn't bring it forward. It's not important enough to bring forward, it's important enough to have a coffee chat but not to bring it forward. What about automatic certification?

MR. RUSSELL: I beg your pardon?

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MR. CORBETT: What about automatic certification? Is that something else that's not worth bringing forward?

MR. RUSSELL: The labour side of the equation has a whole raft of various changes that they would like to see in legislation to benefit the workforce. I am sure, on the other side, that employers have a whole raft of pieces of legislation that they would like to see enacted for the benefit of the employers.

MR. CORBETT: Well, the reality any time you bring in any type of legislation, one would hope that, as you told me earlier, is you have to listen to people or you don't stay elected. The reality is, and this is why I'm bringing up the two ideas around labour standards and the Trade Union Act, we're pretty much in the dark ages when it comes to both. We see people picketing out in front of these doors today, and one of the reasons they're out there is that this province allows replacement workers. I'm sure if the employer wasn't allowed to use replacement workers and had to deal fairly and negotiate fairly with their employees that you would see a lot less people on the streets. You don't feel that anti-scab legislation is one that should be brought forward either? Do you feel that's not necessary?

MR. RUSSELL: I'm telling you that all these things that you are rehashing today . . .

MR. CORBETT: I am not rehashing.

MR. RUSSELL: . . . last year and the year before, et cetera, government is well aware of them and, in time, government will be making amendments to, as I say, the Trade Union Act, the Labour Standards Code, a number of pieces of legislation. But it's not going to be done in isolation, it's going to be done with a revamping of the Acts.

MR. CORBETT: You have no timeline on them?

MR. RUSSELL: No, I don't think I have any timeline. That's something we will be looking at, but not at this sitting.

MR. CORBETT: It's frustrating, to say the least, to say that these are items that you and your government don't feel are of importance to Nova Scotians to put them at the front end, they have to be way back here somewhere with some kind of maybe-we-will-do-it, maybe-we-won't-do-it attitude.

MR. RUSSELL: That's your opinion.

MR. CORBETT: Well, I'm not getting any straight answers from you. You're not giving out timelines, you're saying that we're, to use your words, rehashing. I don't know what you mean by that. When we ask questions on this, you have no definite answer on them. You don't feel that's an important part of representing all Nova Scotians and protecting them

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in the workplace. You feel that those things will come along some other day now that they're almost 30 years old.

MR. RUSSELL: It could be.

MR. CORBETT: It could be. Well, I think a government that lived through Westray should be a bit more sensitive to a lot of this, Mr. Minister, and be more cognizant that when workers have the right to representation in a fair and open way that things happen for the better of everybody, but obviously you want to put that off and feel that at some point in time, whenever the largesse fits your government, you may or may not do something for them. I think that's a pretty sad statement.

Where is your government in regard to its obligations with the Canadian and Nova Scotia Offshore Petroleum Board and its labour regulations? Back at least a year and a half ago, maybe two years, the ministers were to get together to come up with a definite set of rules, especially around the safety aspect of it. Can I ask you where they're at today?

MR. RUSSELL: Well, we were hoping to get that legislation in this sitting, but unfortunately it looks as though the feds have still not finalized their legislation. Our legislation, as the member is well aware, I would imagine, is mirror legislation of the federal government. The last I heard was that it was supposed to be ready about two weeks ago. It still hasn't surfaced. That's the best that I can answer. We have been insistent, we have been in co-operation particularly with the Government of Newfoundland, we have been harassing, I guess is the right word, the federal government to get on with it but it just hasn't happened.

MR. CORBETT: Are they just making these rules with you folks away from the table, or are you at the table?

MR. RUSSELL: We're at the table. Well, we were at the table and the major work was done, then the feds went back to draft a bill. There has been a little bit of tinkering around the edges during that process, but the bill just hasn't come forward from their table.

MR. CORBETT: They seem to put as much importance on that as you do on the Trade Union Act, it's to the detriment of workers again.

MR. RUSSELL: I'm informed that there was some request for more consultation from the stakeholders, and they're still resolving that. It is still the expectation that their legislation will be forthcoming this year. Unfortunately, it may not come forth until after our House has risen. I should tell the honourable member that we have had a draft bill for three years.

MR. CORBETT: I am going to change the line of questioning, Mr. Minister, over to the WCB. How many appeals are in the appeals process now, do you know?

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MR. RUSSELL: Do you mean the backlog?

MR. CORBETT: Yes.

MR. RUSSELL: About 600, I believe.

MR. CORBETT: Is that all at WCAT or is that a mix of WCAT and internal appeals?

MR. RUSSELL: That backlog, I am told, is a mix, there is about 300 and some at WCAT, which is about normal.

MR. CORBETT: So some is internal and some is at WCAT.

MR. RUSSELL: Yes.

MR. CORBETT: Would you know, is there a primary incident that's keeping them over there, like chronic pain, or is it a mix of many injuries and all-around just waiting for decisions on a whole group of injuries?

MR. RUSSELL: It's a whole group.

MR. CORBETT: Has there been any talk of reviving ADR.

MR. CHAIRMAN: Could you, just for the record, for Hansard, say what the acronym ADR stands for.

MR. CORBETT: ADR stands for alternative dispute resolution.

MR. RUSSELL: No. ADR is still in the process, but early intervention is what we're looking at the present time to achieve the same aim of speeding up the claims.

[5:30 p.m.]

MR. CORBETT: My two cents, for what it's worth - I know it's only worth two cents - I couldn't disagree more. The other day I was in here and the member for Cape Breton West was espousing the virtues of ADR and he couldn't have talked to too many people who went through it, because it has been my experience in talking to injured workers who went through it, while the general idea of an accelerated dispute resolution was good, the overall results weren't, because, at that time it was implemented around clearing the backlog up on chronic pain. People got into it, it was resolved at that level, and then came Bill No. 90, and there's a group of people out there today who said had I known I would never have signed off on ADR and would have taken my chances with Bill No. 90, therefore, it didn't work. It worked inasmuch as helping to get rid of some of the backlog, but I don't think it really helped the

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injured worker because I think a lot of people, quite honestly, Mr. Minister, were up against it and they saw this as getting some money quick, pay off some bills, and get everything behind them to try to start anew. Quite a few people who I've talked to are pretty upset about the whole deal.

MR. RUSSELL: Mr. Chairman, I would agree with the honourable member that it wasn't the ideal solution, but was probably a solution of the day, if you will, to get those numbers down because it was just going out of sight. I think at that time we had something in the order of 2,300 or something.

MR. CORBETT: Well, the numbers were high, but I think if you step back in the batter's box for a minute and think of what was going on, that's why I asked you about today's backlog, was it a myriad of injuries or was it one. By and large, at that point, the backlog had all centred around chronic pain, or the vast majority around chronic pain, and it was working towards a solution for that, and I think a lot of people came out of that with a bad taste in their mouth over it because they thought they had been sold a bill of goods. Like I said to you earlier, had they waited for Bill No. 90, they felt they would have at least gotten something with a PMI and been allowed some sort of small pension anyway.

I've spent my time around collective bargaining, so I've always been interested in any kind of nuances around anything that could accelerate getting an agreement as long as all parties know what they're getting involved with. I think there was a real problem around ADR. The chronic pain situation, as you are no doubt aware, that's before the federal court now and a decision could be any time now, I'm not sure, I'm just wondering is there a contingency plan because, as you said, with all those people who were there before with chronic pain, if the Workers' Compensation Board loses the appeal it's going to be a mad dash for cash over there. What's the contingency plan that the board has?

MR. RUSSELL: I don't think there is a plan per se at the present moment, however, after the decision is reached there will be a time based on what the decision is as to the plan that will be put in place. There's no doubt about it that the decision could be one that would have a big impact, to put it mildly, on the unfunded liability.

MR. CORBETT: Well, I know what it would do to the unfunded liability. Obviously, it would have an impact on it, but it would throw Bill No. 90 somewhat out the window. What I'm saying is that I can't believe that with something of that magnitude that there's not a plan B in effect. Well, not to be supporting one side against the other or whatever, but I'm just saying I would think it would make good management to go in and say, okay, if we win, it's business as usual, but if we lose, here's what we've got to do, and do you think it's prudent that if you lose, then they start scrambling for plan B?

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MR. RUSSELL: No, no, no, no, there is a plan, if you like, if they win, and there's a plan if they lose, but the actual mechanics of what has to be done if they lose is going to entail (Interruption) I was just advised that, of course, the court will provide time, but whatever they do is going to have some impact insofar as the government is concerned, I would suggest, and there will be discussions.

MR. CORBETT: Well, I think there's a part of it that they bear themselves because of the accident fund. Sometimes I mean to be hostile and other times I don't, I don't mean to be hostile this time, I'm just trying to find out. What you're saying then is that if there is an A and a B plan and that is just that - but it has to see, if the judgment was to go against the board, then that would depend on how the B plan was implemented, is that what I'm hearing?

MR. RUSSELL: That's exactly what I'm telling you, and the board is a very good board, and I mean that sincerely. I'm not just saying that because of the fact that I'm sitting here. The board is good. I mean, they have to make some incredibly difficult decisions at times, and making it in the context of their political composition it becomes very, very difficult, but I can tell you that they are aware that things have to happen based on the decision from the Supreme Court.

MR. CORBETT: You're probably also aware that the widows' group that were involved and they had, if memory serves me correctly, asked for leave to appeal to the federal court but it was denied and since then they have contacted the Premier, and the Premier has told them to take their case up with the chairman of the board. To the best of my knowledge, they have done so. Do you know if there's anything further on that, or is it just in the letter-writing stages between that group and the chairman?

MR. RUSSELL: The chairman has been incapacitated for a little while, as you know, but I think he's up to speed now, he's back at work. I expect that he will be reporting to me on those discussions that he's having with the widows.

MR. CORBETT: I will let you go with some questions about the Dorsey report. These are feel-good questions, Mr. Minister. Where is the state of play of the Dorsey report, where is it at now? I know they've done focus groups and they've done . . .

MR. RUSSELL: We were talking about legislation just a few minutes ago and major pieces of legislation that have to be opened up and one of them is the Workers' Compensation Act, and that will be opened up in the Fall and we will be implementing, I won't tell you what parts. I have a blue page here which may tell me something. (Interruption) Workers continuing on the strategic plan with completion scheduled for June 2003 and, from that, there will be legislation forthcoming for the Fall for implementation of whatever.

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MR. CORBETT: In the thoughts around legislation, and I heard before about getting it through the House and so on, I happen to have a constituency for some reason that has a high volume of WCB cases and that the frustration that a lot of people in my area who are dealing with the board have is in some ways you're almost dealing with three Acts - dealing somewhat with Bill No. 90, you're dealing with the legislation that went into wage loss, Bill No. 196, and then previous, has there ever been a thought, and I know all these dates and I know the reason for them as far as court dates and so on that legislation can't change, but has there ever been a thought when putting together, whether it's implementing Dorsey or whatever, trying to bring a focus to one. Invariably, when someone calls my office about a WCB problem, are you a pre-Hayden, are you a window period, or are you a post-Bill No. 90. Is there any thought, when the board is talking about redoing legislation, of bringing, if at all possible - and this may be Herculean - some kind of sanity to that when people look at it, that we can start trying to follow your way through there that we would basically, as you said earlier, about being able to get the rules right and getting stuff in, that we would be able to start looking at a bill where there aren't so many doors in it?

MR. RUSSELL: I am getting a nod, so that's fine. Yes, you're absolutely right, the Workers' Compensation Act doesn't need any more tinkering. It's an Act that has to be virtually rewritten, and you're quite right that we have pre-Hayden, post-Hayden and we have Bill No. 90 and we had Bill No. 100 before that and we had all kinds of bits and pieces that have gone into make an Act that's very, very difficult to comprehend for those of the non-legal community. I sometimes think that by virture of the Act and its attendant bits and pieces that we have created a complete industry for the legal profession.

MR. CORBETT: I don't know if we did that, but I will tell you something, Mr. Minister, in all sincerity, it's something that's extremely frustrating for injured workers out there. I tell you, if it's making lawyers rich or accountants rich or whatever, it isn't doing that for injured workers. I appreciate your candour in talking about it and I know that you're being as forthcoming as you can in these circumstances. These questions, again, aren't being asked to you in an adversarial way, it's just that I want to get on the record that it is one that I deal with almost on a daily basis and I suppose probably at the next meeting that my good friend from Cape Breton Nova will bend your ear quite a bit on WCB stuff.

MR. RUSSELL: I think, Mr. Chairman, what the member is saying is absolutely true, that every member of the Legislature certainly gets their fair share of WCB claimants who are upset or worried, or concerned, or believe that they have been denied benefits when they should have received benefits, et cetera, and I think it behooves the Workers' Compensation Board and the government to do something about the Workers' Compensation Board and particularly the Act.

[Page 339]

MR. CORBETT: Mr. Minister, I could say as they say, rag the puck, burn up an hour but that is just silly. I'm finished my questions. I appreciated your answers. They weren't always what I wanted, but nonetheless you answered them the best you could and I thank you for your time and thanks a lot.

MR. CHAIRMAN: Are there any further questions by the NDP caucus? Any questions from the government caucus? Hearing none, Mr. Minister, the time is now 5:44 p.m. Do you have any closing remarks and comments?

MR. RUSSELL: Just a very short wrap-up and I would like to read it, Mr. Chairman, because estimates, I think, are a very important part of our process because, indeed, it provides the opportunity to question, in depth, the actual estimates. However, we don't really get into estimates, we get into philosophical conversations about everything but the numbers.

So I want to thank you, Mr. Chairman, and committee members, for your time and attention. I appreciate the thoughtful questions that were brought forward through this process. I was pleased to have the opportunity of explaining the budget for the Department of Environment and Labour. I was also pleased to have had the chance to explain some of the priorities of my department over the next fiscal year. Particularly, for the member for Cape Breton Centre, I can tell you that we do intend to go in depth into the major pieces of legislation that we have. It's not going to be all give, there is going to be some take as well, but I think that we're moving in the right direction with the plan that we have, particularly for labour legislation.

The budget for Environment and Labour invests in issues that affect the health, safety and rights of our citizens and the protection of our environment. As you know, our mandate is broad and our challenges are many. Because of the nature of our work, it is common to have our best laid plans interrupted by a number of issues. It is difficult, if not impossible, to predict when our focus will have to shift to deal with issues like workplace accidents, labour disputes or fires and flood. But this department, Mr. Chairman, does handle each of those surprises efficiently, professionally and without compromise to our business plan priorities. Our policies, procedures and training allow staff to be well prepared when emergencies arise. The work that we will do this year to strengthen our regulatory management system will improve the services we deliver, planned or otherwise.

Mr. Chairman, again, I thank you and the committee for your attention, and I look forward to leading the Department of Environment and Labour as it delivers on its commitments for 2003-04. Thank you.

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[5:45 p.m.]

MR. CHAIRMAN: Shall Resolution E6 stand?

The resolution stands.

Resolution E22 - Resolved, that a sum not exceeding $1,220,000 be granted to the Lieutenant Governor to defray expenses in respect of the Nova Scotia Securities Commission, pursuant to the Estimate.

Resolution E23 - Resolved, that a sum not exceeding $2,632,000 be granted to the Lieutenant Governor to defray expenses in respect of the Nova Scotia Utility and Review Board, pursuant to the Estimate.

Resolution E40 - Resolved, that the business plan of the Nova Scotia Liquor Corporation be approved.

MR. CHAIRMAN: Shall Resolutions E22, E23 and E40 carry?

The resolutions are carried.

Thank you very much, Mr. Minister, for your time.

MR. RUSSELL: Mr. Chairman, before I'm dismissed from this committee, I have the contract for services from Mr. Jordan, which I said I would table. Can I table it with you?

MR. CHAIRMAN: Yes, please.

MR. RUSSELL: I would like to turn around and thank my staff and all others who are present for their attention and their assistance, thank you.

MR. CHAIRMAN: I will have those photocopied and circulated to the members of the caucuses.

At this time, I would like to call forward the honourable Minister of Energy. I shall read into the record the resolutions before us for debate here today:

Resolution E5 - Resolved, that a sum not exceeding $7,614,000 be granted to the Lieutenant Governor to defray expenses in respect of the Department of Energy, pursuant to the Estimate.

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MR. CHAIRMAN: I ask Energy Minister Ernest Fage to come forward with the senior staff and make opening remarks at this present time. I wish to do it impromptu, sir, so we will keep the time rolling. So, Mr. Fage, if you would come forward now and start introducing some of your senior staff and do your opening remarks, it would be greatly appreciated.

Good afternoon, Mr. Minister. Your time is now 5:49. We read Resolution E5. It is time now for your opening remarks and introductions before we start with any questions for your estimates.

The honourable Minister of Energy.

HON. ERNEST FAGE: Mr. Chairman, before I begin my remarks I would first like to introduce, on my left, Sandy MacMullin from the Department of Energy and, on my right, Paul Taylor from the Department of Energy who will be joining me here this afternoon as we begin our debate of the estimates for the Department of Energy for the year 2003.

Mr. Chairman, I want to thank the committee for this opportunity to speak to the work of the Department of Energy and how it's building a strong, vibrant energy sector here in Nova Scotia, the progress we have made in implementing Nova Scotia's energy strategy and the priorities for the department in the year ahead, it's the first full year of operation for the Department of Energy here in the Province of Nova Scotia.

In 2002, the government fulfilled its commitment in the energy strategy to create a new Department of Energy and appoint a deputy minister for that department. The department, a combination of the former Petroleum Directorate, the energy utilization division of the Department of Natural Resources, has 42 employees and an operating budget of $7.614 million, equal to the budgets of both entities joined to create the department itself.

Mr. Chairman, over the past few months, there has been a great deal of speculation about Nova Scotia's offshore. News of EnCana's decision to find more gas reserves and examining ways of making Deep Panuke a more economic project has led to questions about the development of our resources and the future of the oil and gas industry here in Nova Scotia. Throughout these challenges, we have remained consistent in our message to Nova Scotians. If we keep the exploration momentum going, then development and production will follow.

That response has not been without its critics. Some feel we're placing too much emphasis on the exploration activity, that we are too optimistic. Well, Mr. Chairman, I may be relatively new to the Energy portfolio but I can't see any other way to develop this industry, to create jobs and to build our economy than by actually looking for and finding oil and gas offshore Nova Scotia. Nova Scotia has the potential of much more than 40 trillion cubic feet of natural gas. We have the drive and we have some of the world's best in

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engineering, fabrication, offshore supply and services to build a world-class industry right here at home in Nova Scotia.

The members of this committee certainly don't need to take my word for it. They only have to look at the operator's commitment of $1.56 billion in exploration work in our offshore; companies who drill 8 to 10 exploratory wells over the next 12 to 18 months, companies investing millions of dollars in our offshore. An offshore with less than 200 wells drilled is still in its infancy in terms of exploration and development, especially when you compare that to the tens of thousands of wells drilled in an area, such as the Gulf of Mexico alone.

While the oil and gas companies continue to show their confidence in both the offshore and the onshore potential, that potential alone isn't enough for success, we need to work with government, industry, local businesses to coordinate our effort in natural gas exploration, production and distribution. We have had some successes growing our own engineering, fabrication and supply capacity. To name a few, Irving Shipbuilding, Secunda Marine, Cougar Helicopters, Survival Systems are a few of these names and the list goes on and on.

Just last Fall, we saw a list of about 1,500 Nova Scotia companies that have done business with the Sable project alone. These are great successes and we must continue to develop our expertise and our ability to serve the offshore here in Nova Scotia and in the international markets. Our government will continue to encourage exploration. We will work to attract new investment and we will continue to promote our potential in gas and oil. That is a role, Mr. Chairman, it is a role Nova Scotians want us to take. They do not want their government to be in the oil and gas business. Our key function must be to bring together the industry operators, regulators and local businesses to ensure that we are creating an environment that attracts new exploration, new investment and new development.

This government is committed to creating a world-class energy strategy here in Nova Scotia. We made that commitment in the energy strategy and we'll continue to honour that commitment today. It was only 14 months ago, as Natural Resources Minister, that I co-authored the strategy along with the Minister responsible for the former Petroleum Directorate, the Honourable Gordon Balser, and launched what was by all accounts an ambitious plan designed to give new focus to Nova Scotia's growing energy sector.

The strategy was created with Nova Scotians and for Nova Scotians through an extensive consultation process. When we launched the strategy in December 2001, we heard from a number of stakeholders on the merits of the strategic approach to building a dynamic energy industry and a more prosperous Nova Scotia into the future.

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We were also urged to keep in touch through the implementation of the strategy, to report back on our progress and highlight issues that affected our energy production and our energy use. In February of this year, we reported to Nova Scotians on our efforts in a progress report highlighting what we've accomplished so far.

Mr. Chairman, I've said it before and I'll say it again, if we are to be successful in building an oil and gas industry, we must continue the momentum in exploration. With that in mind, improving the regulatory process is our number one priority. Our participation in the Atlantic Energy Roundtable, a summit of federal and provincial government representatives, industry operators and local businesses and our continued participation in the working group is bringing industry and government at all levels together to address how to make our regulations more effective and more efficient. We're also working closely with federal and joint regulatory agencies to ensure changes to the environmental approval process are both effective and efficient as well.

Sustaining the momentum on approving the regulatory system is critical to future growth. The Department of Energy is committed to doing what is necessary to ensure that our regulatory regime is not an impediment to investment or development. Our amendments to the Gas Distribution Act, the new Underground Hydrocarbons Storage Act, regulations and code of practice and our work with other provincial departments to create one-window access for onshore approvals are streamlining our processes and providing clear direction to the industry.

Our work with the federal government and the Province of Newfoundland and Labrador on offshore occupational health and safety regulations will see offshore workers receive the same kind of protection as those working onshore. If we're going to maintain our exploration activity, however, we need to do more than streamline our regulations.

The department is actively promoting Nova Scotia's resources, its workforce and our competitive edge at trade shows and conferences both here and around the globe. We're showcasing the opportunities available in Nova Scotia's oil and gas industry through our attendance in partnership with the Offshore-Onshore Technologies Association of Nova Scotia and Nova Scotia businesses at shows like the Offshore Technology Conference in Houston, the deepwater technology conference in Louisiana and the CORE conference right here in Halifax. Our staff are frequently requested to present papers at technical conferences around the world highlighting our growing expertise in international oil and gas industry as well as the investment opportunities provided here in Nova Scotia's offshore.

In November, Nova Scotia became an international member and an affiliate of the Energy Council, joining Alberta and Newfoundland. This organization comprises 10 American states producing gas and oil, along with the Country of Venezuela, giving us another opportunity to promote our resources as well as learn from others on their production and development. Members of the Energy Council will be visiting Nova Scotia in May to

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learn more about our industry and our province. Just a few years ago, natural gas development and production was a hotly debated subject. Today, it's a reality, a reality that brought billions of dollars into Nova Scotia's growing economy.

The energy strategy identifies a number of ways to help Nova Scotia get the most out of our resources, build our capacity to participate and become more competitive. Industrial benefits was another topic at the Atlantic Energy Roundtable. The department is actively working on the follow-up and will participate in the final report expected at a second roundtable later this year. We're working with businesses to help increase our capacity in fabrication, and we're working with OTANS, regional development authorities and local operators on contracting strategies in joint ventures to help promote Nova Scotia products and the services that Nova Scotians can and will supply.

[6:00 p.m.]

We're helping to prepare Nova Scotians as well. Our Energy Training Program for students is bringing together post-secondary students with local employers to provide on-the-job experience in the oil and gas industry. This program was developed to encourage private sector employers to hire Nova Scotia's post-secondary students for career-related work terms in all sectors of the energy industry. Employers benefit by gaining access to students and recent graduates in a wide range of disciplines from 11 universities and 13 community college campuses throughout Nova Scotia.

Last year, more than 70 students were matched with 40 employers, giving the students hands-on work experience that will enable them to become part of a highly-skilled energy-sector work force. We're supporting training programs at the Nova Scotia Community College and the University College of Cape Breton. They're building our capacity to export our training expertise around the world.

The Department of Energy and Marathon Canada were corporate sponsors for an energy session called Skills Energy Youth Quest. This event, facilitated by Skills Canada - Nova Scotia introduces secondary students to skilled trades careers in the energy sector through hands-on information sessions at the Nova Scotia community colleges. We're partnering with EnCana and Enterprise Cape Breton to bring quality assurance and quality-controlled information to Cape Breton businesses looking to supply the oil and gas industry.

We're working together with governments at all levels, industry and local businesses to realize the economic benefits from the energy sector. These economic benefits are significant, Mr. Chairman. A recent study on the oil and gas industry, prepared for the Department of Finance, confirms that more than $5 billion was spent in Nova Scotia between 1990 and 2001. We're working hard to build on that success in a number of ways: by working with the industry to build on this study and provide regular reports on the economic impact of the offshore exploration, development and production by continuing to report

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regularly on royalties from the Sable Offshore Energy Project and other projects as they come on stream; and by implementing a royalty regime that has been confirmed in a study to balance a fair return to Nova Scotians while encouraging critical investment so that growth continues to occur in this sector.

But the economic impacts don't end with offshore production. The government recently approved the Nova Scotia Utility and Review Board's decision toward a gas franchise for Heritage Gas and a conditional franchise for Strait Area Gas, bringing us one step closer to having access to our own natural gas here in Nova Scotia. Nova Scotians are being helped in making the transition to natural gas by the allocation of $14 million from the industry-financed Gas Market Development Fund to help individuals, small businesses and institutions with the conversion to natural gas.

As we develop our offshore resources we're building on partnerships with the fishing industry and coastal communities to ensure that we carefully manage our activities to avoid negative impacts on our marine ecosystems. We've worked with the Cape Breton Ad Hoc Working Group on potential exploration and its impact on the local area. We're active on the CNSOPB fisheries environmental advisory committee as well.

Understanding marine habitat and the overall offshore environment is key to the responsible development of our industry. We provided financial support for an independent scientific study of the potential impact of oil and gas activity off the coast of Cape Breton Island. In addition, we're working with the federal government and other private sector partners to extend scientific understanding of the behaviour of marine mammals. A research project is proposed for later this year, in conjunction with exploration activity on the Scotian Shelf in this regard.

We're working with Nova Scotians to develop our resources in a responsible manner and with a common goal - to contribute to both the social and economic development of our province and of our communities. Yet, all these opportunities, we still have potential for more growth and development outside of the oil and gas industry.

Our Electricity Marketplace Governance Committee is studying how competition can be gradually introduced into Nova Scotia's electrical marketplace. The committee has released its first interim report and a second is expected very soon. We're continuing to take the lead in federal, provincial and territorial negotiations on climate change to ensure that we are all working together to reduce greenhouse gas emissions. Our position has always been that no one region bear an unreasonable burden for what must be a national approach to this global issue.

This is important, Mr. Chairman, because we must have a national agreement on how the impact of actions on climate change will be shared if we are to achieve lasting reductions in greenhouse gas emissions throughout the country and remain competitive as a province

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and a region and a country. Nova Scotians understand that climate change is a serious problem for the entire planet and are committed to doing our part in reducing greenhouse gas emissions. This government has been, and continues to be, committed to taking action on climate change.

Our energy strategy lays out 10 commitments that we have made on addressing climate change. They include: continuing to participate in the national climate change process itself; negotiations with other governments to ensure that the impact of actions on climate change is shared fairly by all jurisdictions; launching a provincial program to reduce greenhouse gas emissions in government operations, supporting the creation of public education programs on global climate change; maintaining a regulatory framework that encourages the use of clean fuels, such as natural gas; working with the Union of Nova Scotia Municipalities to promote greater awareness of the need to reduce emissions and adapt to climate changes in key areas; promoting the development of innovative technologies and practices to reduce the emissions themselves; making climate change a part of government decision making, working with government to establish a system that ensures credit to businesses and industry for early action on climate change; and, finally, encouraging climate change research itself. That is an exhaustive list and a challenging commitment, but it's a commitment that is crucial to the future of our province and of our planet.

There's a great deal of work to be done on climate change, but there is also a great deal of progress that has been made to date. In August 2001, the Premier joined with other Eastern Canadian Premiers and New England governors in signing a joint climate action plan that established regional goals for greenhouse gas emission. We continue to participate in climate change action projects throughout the province. As well, our support to Clean Nova Scotia helps to educate Nova Scotians through awareness, material and a number of programs to this vital issue. One example is the Home Tune-Up Program in the Halifax Regional Municipality in which energy assessors visit homes and make recommendations on energy and water consumption as well as waste management concerns.

Our government's Waste Management Strategy has been instrumental in reducing methane emissions by banning organic waste from municipal land sites. The Light Better For Less Program, a partnership between the government and Nova Scotia Power, the Illuminating Engineering Society of North America, and the EcoAction 2000 Program encourages businesses to use energy efficient lighting systems that reduce greenhouse gas emissions as well.

Nova Scotia's first wind turbines have begun producing electricity in Little Brook and Grand Etang. Combined, these turbines have the capacity to deliver enough energy to power close to 4,000 homes while displacing 3,200 tons of carbon dioxide. To put it in perspective, that is equal to not driving 545 automobiles for one year. These are just a few of the many projects happening throughout the province to address climate change, projects that are being organized by government, industry, community organizations and non-profit organizations.

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They demonstrate, Mr. Chairman, the sincerity of Nova Scotians in working together to reduce our emissions and to protect our environment. It is a commitment that this government shares because it was developed with Nova Scotians, it is a commitment we have made to Nova Scotians, and it is a commitment we have kept and will continue to keep. In the meantime, we will continue to push for a more collaborative approach to the national response on climate change. We will continue to work on bringing together the federal, provincial and territorial governments in order to roll up our sleeves and get beyond the positioning and the rhetoric that has been wrapped around this issue of ratification for far too long.

The Kyoto protocol is an issue that Nova Scotians and Canadians do care about, Mr. Chairman, reducing our emissions and protecting our environment because we know we must balance the development of new resources with the protection of our environment. That means conservation and the responsible use of those resources that we currently have.

As the Department of Energy continues to implement Nova Scotia's energy strategy, a number of key priorities have been identified for the coming year of 2003-04. As I said earlier, the first will be to continue to encourage exploration. The Department of Energy will continue to play a lead role in the working groups established in November 2002 as part of the Atlantic Energy Roundtable on regulatory efficiency and industrial benefits. In cooperation with the Canada-Nova Scotia Offshore Petroleum Board, the National Energy Board, the Government of Newfoundland and Labrador, and Natural Resources Canada, we will continue to consult with petroleum producers and support industries in order to set priorities in this vital area.

In addition, we will continue to improve our regulations through offshore occupational health and safety legislation and a new energy action in 2003-04. We will continue to develop our economic opportunities as well. As a follow-up to the Atlantic Energy Roundtable, the Department of Energy will be working and is working with the federal government, the Province of Newfoundland and Labrador, and the private sector to improve our offshore fabrication and supply capacity. We will work to match business opportunities with Nova Scotia companies and promote Nova Scotia's fabrication and supply companies at trade shows and industry organizations where the opportunity provides itself. The Department of Energy will present technical papers on Nova Scotia's oil and gas potential at conferences and prospect exchanges, and lead provincial delegations to major offshore trade shows in Aberdeen, Houston, and Calgary to promote the province as an oil and gas investment opportunity.

Exploration in Nova Scotia's offshore is moving into the deeper water, Mr. Chairman. The technology required to explore and develop oil and gas resources in this environment is significantly different than employed in the more shallow water of the Scotian Shelf. The Department of Energy will be undertaking an assessment of the opportunities presented by this technology in the area of research, development, fabrication,

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construction and employment, and will continue to work with Nova Scotians on their training and development prospects and opportunities.

We must be ready to take advantage of the employment opportunities from offshore activities as it occurs. In order to ensure Nova Scotians have the tools they need to participate in the employment opportunities in this segment of the oil and gas industry, the Department of Energy will study relevant labour marketing information, provide energy sector information to secondary schools, and leverage private sector energy co-op or summer work terms for our post-secondary students. We will work closely with the industry and post-secondary educational institutions to help students receive the skills and training necessary for employment, and will hold a private sector energy skills forum to identify solutions to major labor issues projected for the sector in the next five to 10-year time frame.

We will continue to support gas distribution in Nova Scotia as well. Now that the Utility and Review Board has issued a gas distribution franchise to Heritage Gas and the conditional approval to Strait Area Gas, natural gas will soon be a reality for Nova Scotians in franchise areas as they develop. The Department of Energy will be active in the URB proceedings in order to help ensure the early development of a distribution system in a manner which meets the goals of our energy strategy. The department will also continue to help coordinate the various approvals by other government departments at both the federal and provincial levels to continue the progress, and we will work with Nova Scotians to ensure they have the information they need about the development and conservation of our energy resources.

[6:15 p.m.]

Energy touches the lives of every Nova Scotian, Mr. Chairman, and we will develop public information programs to create a much higher level of public understanding of issues such as climate change, the exploration and development of oil and natural gas, electricity and renewable energy. Our initiatives will focus on schools, businesses and communities, providing Nova Scotians with information that is relevant, timely and easy to understand as well as access. We will continue to be active, as part of the national process, to determine burden sharing and provincial obligations following the recent ratification of the Kyoto Protocol. It is important to maintain competitiveness for Nova Scotian industries and to recognize the actions that have already been taken by our industries and government to reduce emissions. In the meantime, the Department of Energy will continue to implement its climate change strategy in order to meet those national obligations.

Mr. Chairman, it is evident that our energy sector provides us with more than energy resources. It provides us with an opportunity to prosper and grow, to build a better life for future generations of Nova Scotians. The Department of Energy will work with other departments to ensure that our taxation and our royalty regime remains competitive, and we

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will represent Nova Scotians' interests with the federal government and industry in our efforts to make sure we are competitive.

In speaking about competitiveness, our focus on research and development will be crucial to our ability to compete both now and in the future prospects for all Nova Scotians. Through innovation, research and development, we can use the lessons we've learned from our harsh and remote offshore environment to create new technology, new products, new services and markets and then have the opportunity to market them around the world.

Mr. Chairman, as Minister of Energy, I'm proud of the dedicated team of public servants working for and with Nova Scotians to build a world-class energy industry, a more prosperous province and a secure future for all our families in this province. I know that working together we can continue to encourage exploration in our offshore, reap the benefits of a growing energy industry, and strike that crucial balance between the development of our resources and the protection of our environment; 2003-04 promises to be an exciting first year for the Department of Energy and for Nova Scotians. I thank you for your time and I welcome questions on the estimates of the Department of Energy for the year 2003-04.

MR. CHAIRMAN: Thank you very much, Mr. Minister. I would just advise you that if there are any requests for information that is asked by the caucuses I would ask you to send copies of it to the chairperson as well as to each of the caucuses, regardless of which caucus asked for the information, so we share all the information collectively.

MR. FAGE: We certainly are pleased to do that and I will ensure that takes place.

MR. CHAIRMAN: The time is now 6:19 p.m. It is time for the NDP caucus to start questioning this minister. I will just remind members we're here for the four-hour duration until 6:52 p.m. and the time is now 6:19 p.m.

The honourable member for Sackville-Cobequid.

MR. JOHN HOLM: Mr. Chairman, I look forward to the opportunity to continue this tomorrow as well. A few things, if I could. First of all, the minister read his speech very well, and even though having a text copy of it doesn't have the same deliverance as the minister's reading of it, I'm wondering if the minister would provide us with a copy of his remarks so that we could have that rather than having to wait for Hansard, which I'm not sure when we get that - six or eight months down the road.

MR. FAGE: It would be my pleasure to provide it.

MR. HOLM: I appreciate that. Something might have happened in that period of time. I can't help but noting, Mr. Chairman, that the minister also ended on a very positive note saying how the year 2003-04 promises to be a very promising year for the offshore oil

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and gas industry. I find that most encouraging because it certainly goes against much of what you've been hearing in the media. The positive message that the minister is spinning is one, of course, that you would like all Nova Scotians to believe as we head into whatever that event which is expected to be happening this coming year and, of course, I'm sure the government would like to have a positive message put out there to imply that the government has handled this file well.

We will get to some of those issues a little bit later, but I do want to say to the minister, as I begin, that I think that he has a very capable staff and even though sometimes I might torment them and harass them from time to time in a good-natured way, I think that the minister and the province is very well served by the capable people you have around you. They do the best to make the ministers even sound good sometimes, and I have to say that. Mr. Chairman, indeed, they do work very hard and I'm sure that they could use even more assistance and more help in trying to deal with these very, very complicated issues.

As I begin, one of the things in terms of looking at the estimates, it's rather difficult in the sense that you had the old Petroleum Directorate and now you have the Department of Energy and, of course, numbers don't correlate and match up and you have a few pages this year in the book, and last year the Petroleum Directorate and your predecessor had one. Numbers, by quick guesstimate, show about $7.6 million this year versus about $6.6 million last year for the Petroleum Directorate. What I'm wondering is if the minister has, or his staff has, apples-to-apples comparisons. Do you have the numbers that show what was where last year which is now pulled together into the Department of Energy so you can actually compare apples to apples, numbers and also staff?

MR. FAGE: First of all, I couldn't agree with you more, honourable member. The staff at the Department of Energy is an excellent staff with a high degree of technical skill to not only offer advice to myself, but offer advice to all members of the Legislature and all Nova Scotians. I couldn't agree with your comments more in that regard. As I had indicated in my opening remarks, this year's budget, which is the budget for the new Energy Department, you can compare them apples to apples by taking the old Petroleum Directorate's budget and combining the renewable or energy section from the Department of Natural Resources. Those two numbers in last year's budget will give you the $7.61 million number for this Department of Energy. So it is easy to get the apples to apples, they're transparent. It is the Energy Division under the Department of Natural Resources from last year, and it's the sum of the Petroleum Directorate from last year.

MR. HOLM: I will move on, if I could, to a few things that I wanted to get into, first of all, the total number of offshore exploration licences.

MR. FAGE: The number of active ones at the current time is 57.

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MR. HOLM: Well, that's the number that are active but, okay, there are also licences that are not necessarily active any more, but they're still licences that may have another designation on them, like significant discovery.

MR. FAGE: In checking with staff, there are 57 active, significant discovery licences would total 22; and four licences in production.

MR. HOLM: I understood from another source at the Canada-Nova Scotia Offshore Board, I believe the number that I've been told was that there were 33 significant discovery licences, two in the gully and 31 others.

MR. FAGE: There certainly are a number of ways to account for a licence or licences on top of current licences, but I can undertake to check with the Canada-Nova Scotia Offshore Board for you, but my staff are saying that there are 57 exploration licences, active ones, 22 significant, and four production licences out there. There may be some other subcategories at the Petroleum Board that would list it maybe in another manner, but that's what I'm being informed.

MR. HOLM: I would be interested in getting that because, truthfully, they don't jibe in terms of the numbers and there may be different ways of categorizing them. I'm going to come back to the significant discovery licences in a few minutes, and I know about the production ones. A number of licences have been turned back. I don't know the total number. I think in the last six months there have been two turned back by EnCana, I believe. Could you tell me how many licences in total have been given up or turned back?

MR. FAGE: My understanding is that two have been turned back.

MR. HOLM: When those licences are turned back, and these weren't the big buck ones, the ones where the companies have bid millions of dollars, but there was still, not to me anyway, it's not penny change, there would be a requirement that they forfeit, I think it's 25 per cent. If I'm correct, for those licences, it would probably work out to around $250,000, because one of them, it certainly started and so there were some costs and then another one, but I understand it's in the range of about $250,000 that would have been the penalty.

MR. FAGE: My understanding is the same as yours, 25 per cent is the cost penalty for turning back. On one block anyway there were some done, but we would have to check the exact numbers, but your calculation sounds appropriate.

MR. HOLM: I think I'm off maybe within $5,000 or $10,000 in terms of the two of them from the numbers, and I'm going by recall here, but I'm pretty sure I'm very close to that. When those licences are turned back, the cheque is cut to Revenue Canada or to the feds, what cut of that does Nova Scotia get?

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MR. FAGE: My understanding on it is that the entire amount minus the net of equalization is what would be the final cheque covered to Nova Scotia from the federal government.

MR. HOLM: So, in other words, we would get 30 per cent of it?

MR. FAGE: It would end up, the deduction would be a proportion of the equalization payment, not necessarily that it would track exactly to 70/30, but probably somewhere very close to that vicinity.

MR. HOLM: Where does that revenue show up for the province?

MR. FAGE: It's included in the royalties, on the revenue line for the department.

[6:30 p.m.]

MR. HOLM: Okay, so this year, forecasting $27 million in royalties. That $27 million includes the monies of companies that haven't fulfilled their obligations under the licencing agreement have had to pay. Now, that $27 million, of course, that's the total royalty pre the equalization part. In other words, of that $27 million, we will get about 30 per cent or about $7.1 million?

MR. FAGE: My understanding is the same as yours, that the $27 million is the gross royalties, and then the number that we talked about, the approximation of $250,000, give or take a little, would be part of that total number of $27 million including those two blocks.

MR. HOLM: This year, and we're into the higher rate of royalty now . . .

MR. FAGE: We are just crossing the threshold.

MR. HOLM: Into the 2 per cent.

MR. FAGE: That's correct.

MR. HOLM: So that higher amount which is forecasted to be $27 million from $14 million is in large part a result of that jump into the 2 per cent.

MR. FAGE: That's correct.

MR. HOLM: Now, so that means that out of that $27 million, 30 per cent of that would be about $8.1 million. The government is anticipating that we should be getting just about enough money, actually, net to Nova Scotia, to pay for the Department of Energy now.

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MR. FAGE: I guess if you look at it in those terms, I think it would highlight why I think every member of the Legislature should be behind the government in the campaign for fairness on the royalty issue. I think you've highlighted it perfectly, because it is Nova Scotia's resource and we should be principal beneficiary of it.

MR. HOLM: You're singing a song sheet that I was singing a long time ago.

MR. FAGE: I agree.

MR. HOLM: The government was too, when they were in Opposition; of course, haven't progressed very far. I don't know where things are going, obviously nothing is budgeted in this year's estimates as a result of the discovery. It just boggles my mind that after so many years we've discovered that there was a provision in the original agreements which said that Nova Scotia was supposed to be receiving all of this money back from the feds in lieu of a lot of this. Anyway, I will get into that at another time, or maybe we should get into that with the Department of Finance.

MR. FAGE: I think you're referring to the Crown share asset.

MR. HOLM: Yes. Would that fall with you or the Department of Finance?

MR. FAGE: I believe that it would fit with Intergovernmental Affairs, Department of Finance.

MR. HOLM: That's what I thought. I would like to see us get something out of that in return. Going back to the significant discovery licence, Marathon, which struck it, they haven't applied for a significant discovery licence yet, have they?

MR. FAGE: Marathon drilled a well on the Annapolis block last year, and currently are assessing the well and have not applied, to my knowledge, to the board . . .

MR. HOLM: But they don't have to yet, because their seven years aren't up yet, so they still have more time in which to apply.

MR. FAGE: If I understand what you're saying, the process is basically the five years and you can validate for a maximum up to another four. They have used up two, so they have approximately seven years in which they could exercise that right.

MR. HOLM: I didn't realize there was an extra four years, I thought it was just two. They have discovered something. We haven't gotten the details yet. Of course, they don't even have to provide the details yet to the Canada-Nova Scotia Offshore Petroleum Board because they have all these numbers of years to do this, complete - initially they would have the five years, then the validation period, so they have up to nine years. Then, of course, if

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they do what we know they will do, if they aren't going into production anyway, they will apply for significant discovery, because we do know that they hit something rather significant, based on all the reports that we've heard.

We also know, depending whether it is a 22 or the 30 - and I'm excluding the significant discovery licences in the Gulf, because I am certainly one who hopes that nothing is done in that area because of the sensitive environment nature. We have between 22 and 33 significant discovery licences, in order to get a significant discovery licence you have to provide information which actually indicates that there is a significant discovery of natural gas in that well. Correct? Putting it in the very simplest of layman's terms.

MR. FAGE: My understanding, to get the definition of a significant discovery and have it parked in that category with the Canada-Nova Scotia Offshore Petroleum Board is that you have to be able to do a flow test on it. My understanding is, on this particular one, that has not yet occurred.

MR. HOLM: You're talking about Marathon.

MR. FAGE: Yes.

MR. HOLM: But on the others they have. If they have a significant discovery licence, then they will have had to have done those flow tests.

MR. FAGE: That is correct. They would have done a flow test. Keeping in mind that that is proprietary information for two years and that they would have to at least have found something there to get under that significant - there is no volume definition but they have found something.

MR. HOLM: Yes, something that is significant. They have to provide some information to the Canada-Nova Scotia Offshore Petroleum Board to indicate that they did find something. I understand the whole proprietary thing and so on, but they have to provide information. You can't just come in and say, yes, I struck something and so I want a significant discovery licence. They have to show that they've actually found it.

MR. FAGE: Right, I agree 100 per cent with you. That's why the flow test. All I'm saying is there is no way to know the volume of the flow test, how far the needle went or those types of things. So it's a bit subjective when you call it significant, it can be a small significant or it can be a large significant, is the only distinction I was making. They have found something.

MR. HOLM: Yes, they found something.

MR. FAGE: That's the important thing.

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MR. HOLM: They know that it wasn't zinc or lead or something, this is something that flows, it can be used to heat homes and so on, all kinds of different things.

MR. FAGE: It can be measured.

MR. HOLM: It can be measured, and it's not water. Where I am coming from on this is, we have companies that are sitting on significant discovery licences, they have those in perpetuity. You have no idea what significant means if you don't know what kind of volumes are involved, what protection does Nova Scotia have against those companies inventorying us? Just discovering that gas, sitting on it for some day way down into the future when they might conceivably decide that they want to go ahead with that production, what do we have to ensure that there will be some kind of businesslike, orderly development of those resources for the benefit of Nova Scotia?

MR. FAGE: Could you repeat that?

MR. HOLM: You have these companies, they have these significant discoveries, they can be inventorying us, they're sitting on that gas, they hold it in perpetuity. How can Nova Scotia protect our interests if those companies can just sit on it for whenever it is that they feel that they might be able to browbeat - I won't be unkind to the minister, with the Conservative Government in power, the colleague in the back, he's not at the table, so I will say you might get another Liberal Government in 10 years, after a period of time, might pick on them again - hold off until they think that they can browbeat or pressure the government into giving even more concessions than they've already been getting? How is the government planning to ensure that those resources are developed in a timely manner for the province?

MR. FAGE: First of all, that's an extremely good question.

MR. HOLM: I'm looking for an extremely good answer.

MR. FAGE: Obviously, the resource belongs to Nova Scotians. Maximizing the benefits to Nova Scotians through royalties and through the development phase of those projects are extremely important to us. The reality of the high-risk business to continue what is important to establish an industry is more exploration and development. We've seen the history - certainly I don't have to go through it, you would understand it well - of the SOEP project and the trials and tribulations of bringing the first project ashore in Nova Scotia. These companies, although we own the resource, obviously we want to see them develop to the maximum benefit of Nova Scotia, but the investment in exploration development, the investment in transmission, bringing it to market and developing it as a project and an industry is private development money.

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When you look at the kinds of dollars involved in the SOEP project, the time frame and the cost in comparison to the actual Nova Scotia budget, I think it becomes quite clear that Nova Scotians do not have the kind of dollars to be involved in funding high-risk development. These are capital projects by capital companies, and we work very hard with them. We have the board as a regulatory side. On the development side, obviously we're in contact with them, encouraging them and working with them for market opportunities. They, ultimately, with their investment, will decide when that significant discovery becomes part of a project, a stand-alone project is developed and coming ashore.

MR. HOLM: I appreciate the minister's lengthy answer or lengthy response, I can't say it's an answer because he really didn't give me one. Going back to the minister, I ask if the minister and his federal colleagues have ever had any discussions about redefining or changing licences so that a company, for example, if they get a significant discovery licence, that they may maintain that for a certain period of time, but that if they don't wish to do anything within a reasonable period of time, then that licence becomes available for somebody else to bid on? Possibly the requirements in the bidding would be to pay a sufficient amount to pay the company back for the amounts they spent in the development up to that stage, but so that the companies won't just be sitting on it in perpetuity?

MR. FAGE: It's very easy to talk about the "what ifs". I think the industry and certainly the government and the province deal in the reality. When you look at projects, if it's Deep Panuke where, yes, there is a significant volume there but the company involved is reworking the economics plus doing more exploration to try to find enough volume to ensure that it can be a stand-alone project or that it has to be linked with other projects, after investments of hundreds of millions of dollars, I think it's to their advantage to get a return on their money. Those are huge amounts of money they've invested over a long period of time, and getting a return on that money, if it was you as an individual, if you expended a large portion of your income on a project, it would be to your economic benefit and health to get a return on that money. These companies are no different. There are huge sums of money, when you look at the cost to bring a SEOP project to shore and the transmission line, billions of dollars have been expended to do that and develop it and to do the exploration seismic. Getting a return on that investment for their shareholders is the number one priority, not holding it back.

[6:45 p.m.]

MR. HOLM: I want to congratulate the minister. The minister has not lost his knack, he can still respond to questions very well and quite lengthy without coming within a country mile of really answering what was asked. I say this to the minister in all honesty, yes, indeed, I do appreciate where the company is coming from, and their primary concern is to protect the interests of their shareholders, maximize, make as many dollars as they can for the shareholders. Your job, and the job for the rest of us here in Nova Scotia is to make sure that Nova Scotia, as you said yourself, you repeated what we've all been saying, is the primary

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benefactors in it. I just flowed the question out there to see if government was looking at some other area to try to do that, to try to not just sing the song for big oil, and you spin back their lines to us, but actually talk about what Nova Scotia is doing to actually be a little bit tough to try to force companies to be a little bit more inclined to develop rather than sit on something.

You talked about pipelines and EnCana, so I will just throw this one at you. The question is, the government had been - when EnCana announced their delay in going forward or wished to delay in going forward in the regulatory process, have the discussions about the back-in provisions of the pipeline from Deep Panuke also been put on hold?

MR. FAGE: Certainly, at this phase, EnCana is concerned about the reserves of gas, the supply, and would like to see more gas there as a stand-alone project. Secondly, they're reworking their economic model during this time period to see if there isn't a lower-cost model that can develop that particular project and bring it ashore. The question was, in that same time frame are we having discussions on the back-in rights at the same time, and the answer, until they bring their model back, no.

MR. HOLM: The government had said and your predecessor had said on the floor of the House that the back-in provision had value, and was very critical of the former government, as I have been, for giving away, for nothing, the back-in provisions on the SOEP pipeline, the Sable pipeline. My question to you is, is it the government's view that those back-in provisions - I'm not asking you to quantify - have value, monetary value for the government?

MR. FAGE: Emphatically yes, absolutely.

MR. HOLM: Correct me if I'm wrong on this but I believe that basically the rates, the toll rates and so on that are charged, as approved by the National Energy Board, the rates that are approved are rates that are sufficient to pay for the capital costs, the carrying costs and so on, the debt charges, the operating costs plus a rate of profit, guaranteeing a rate of profit based on a certain kind of flow rates.

MR. FAGE: If I understand your question properly, it isn't the developer that charges the toll, in this case it is Maritimes & Northeast, and that would be established project by project.

MR. HOLM: I appreciate that they're established project by project. Maritimes & Northeast doesn't own the offshore pipeline?

MR. FAGE: That's correct.

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MR. HOLM: The offshore pipeline pays for that pipe by the rate that they get for the gas that is transported through that pipe. Correct?

MR. FAGE: My understanding is that there is no toll rate paid or derived. The pipe is treated in the offshore in that particular project, the same as the wellhead cost or any of that infrastructure cost. That toll rate would develop once Maritimes & Northeast - but in the offshore portion - it's part of the infrastructure, treated the same as the wellhead or any of those other . . .

MR. HOLM: When Nova Scotia could have bought into 50 per cent of it, that would have been just 50 per cent of the pipeline, though, not 50 per cent of the wellhead costs and so on. Am I not correct in that? Or did I miss something there?

MR. FAGE: My understanding, I believe, is the same as yours. Nova Scotia would have been, if they had exercised the option at that time, 50 per cent owner of the pipeline and not the other facilities. This one, if it had been exercised, then you would have had a non-producer participant and then obviously there would have been a fee charge for the use of that pipeline.

MR. HOLM: Yes, but had Nova Scotia exercised the Sable project, the pipeline, then there would have been a fee for using that pipeline the same as it would be for EnCana, Deep Panuke.

MR. FAGE: It would have been a fee, and there's no project yet with EnCana, but because they were . . .

MR. HOLM: No, but the process would have been the same for Sable as it would be for EnCana if there is a project and we take the back-in provision.

MR. FAGE: That's right.

MR. HOLM: Okay. I think I'm going to have to resume - you know what my first line of question would be . . .

MR. FAGE: Oh, Mr. Chairman, can we go a little longer?

MR. CHAIRMAN: Excuse me, I have called the committee to order. Time for debate has expired, the time is 6:52 p.m. We'll adjourn debate and we'll be back here tomorrow after Question Period to resume debate on Resolution E5, the Department of Energy. We stand adjourned until that time.

[6:53 p.m. The committee rose.]