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HALIFAX, FRIDAY, MAY 6, 2005

SUBCOMMITTEE OF THE WHOLE HOUSE ON SUPPLY

9:19 A.M.

CHAIRMAN

Mr. Mark Parent

MR. CHAIRMAN: Order, please. The time is 9:19 a.m. The Liberal caucus has 10 minutes left before we go to the NDP caucus.

The honourable member for Halifax Citadel.

MR. DANIEL GRAHAM: Mr. Chairman, I want to pick up on some of the lines of questioning that came out of yesterday's discussion and sort of add on to them. I'm not sure whether you had a chance to read the testimony of John LaRocque during the Public Accounts Committee meeting or whether or not you've followed the discussion around the issue of bill acceptors. Last month your government came forward with a plan with respect to the use of VLTs and you did not address the advice that has been given by Mr. LaRocque with respect to bill acceptors, why?

HON. PETER CHRISTIE: We introduced a plan, a schedule of items that we were going to do in terms of making changes as part of the gaming strategy. We introduced four items, and what we indicated we were going to do is additional analysis and review on that, and that's what we're in the process of doing. Bill acceptors weren't included but the items that were there were listed. We believe we're making significant changes in the gaming strategy in this province.

MR. GRAHAM: I'm not sure that answers the question as to why it wasn't included.

MR. CHRISTIE: We took the decision we would do those four and not any others.

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MR. GRAHAM: I appreciate that you did those four but why didn't you do bill acceptors?

MR. CHRISTIE: When we laid out the strategy we looked at the things that we felt would be significant changes. We had talked to people and people had made submissions through the strategy, so we chose those four to implement at this point in time. A large component of this, as I said to you yesterday, is the analysis and the review to see how these are changing. The government has indicated that it will do the review, the analysis and revisit its decision sometime in the future based on the analysis and the reviews.

MR. GRAHAM: I don't think the question has been answered in any respect. The scientific research suggests that bill acceptors make things worse. You say that your government is trying to make things better yet you fail to address the issue of bill acceptors, why?

MR. CHRISTIE: The evidence also indicates that the speed of play and stop buttons have a lot to do with people's involvement and the amount of time they spend on the machines. Bill acceptors are one component but we chose the components of hours, speed of play and stop buttons as significant items as part of our strategy.

MR. GRAHAM: Why would you not accept the advice with respect to bill acceptors?

MR. CHRISTIE: We accept advice from a lot of people. You are specifically talking about one person and are suggesting that their advice takes precedence over all others. I'm saying to you that we did broad base consultation, we took advice from a lot of people and made the decision that we did.

MR. GRAHAM: It's not just one person Mr. Minister, if you knew the background of this it is more than one person who has indicated that and there's also scientific research that suggested that this is a problem.

MR. CHRISTIE: I would also suggest to you that there's research that suggests it's not conclusive that bill acceptors are a major factor, there's research on all aspects of things. When you're setting out a strategy, when you go speak to people, you have to look at what people are saying, you have to look at the evidence, you have to look at the research that's being done and then make a decision. I hope you're not suggesting that one decision on bill acceptors is much more significant than any other because I suggest to you that's not the case.

MR. GRAHAM: There's something called the precautionary principle, it's used in a wide variety of areas and it starts with the principle that you do no harm, that you do all that you can to mitigate any potential dangers. Let me ask this another way, what's the advantage of having a bill acceptor?

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MR. CHRISTIE: There are issues on bill acceptors surrounding security of people not keeping a lot of money around. That was raised a couple of years ago by the owner/operators that it was an issue for them. I guess if you're suggesting that bill acceptors are the only things that will mitigate danger then I suggest to you I don't accept that premise. I believe there are a lot of things that create situations for people with problem gambling and we've addressed a number of those.

MR. GRAHAM: You know that I'm not suggesting that it's the only item that could mitigate danger, that it's actually a much broader spectrum of issues. This is low hanging fruit and has been recommended by the Office of Health Promotion, not just by Mr. LaRocque, it has been found in scientific research and I would suggest the preponderance of scientific research supports this. It's still a challenge to understand why you didn't, at the very least, take the precautionary principle. You say that there are issues of security, could you expand on that?

MR. CHRISTIE: The issues that the owner/operators indicated back some years ago is that without bill acceptors it required them to keep a large amount of cash around and be making change, and indicated that there were security reasons surrounding that. However, that's only one minor part in it. I do want to say to this committee, and certainly I know that you know this, is that the Office of Health Promotion signed off on the strategy, they were part of it and signed off. I presume you are not suggesting to this committee that the Office of Health Promotion doesn't believe that our strategy has value and that it's going to mitigate some of the circumstances that you are talking about.

MR. GRAHAM: Did you have a chance to read the testimony of Mr. LaRocque before the Public Accounts Committee?

MR. CHRISTIE: I haven't completed it all, but I have read most of it and I do have it on my list of things to read over the next while to fully understand his points.

MR. GRAHAM: I think it speaks to the issue that you've just raised, with the greatest respect Mr. Minister. This is a person who has, for almost 30 years, been an addictions expert, a vice-president of one of the most prestigious addictions agencies in the world, has worked for this government for 10 years and is the one person in government that actually has expertise around this area. He said two things that I think you, as a representative of the government, need to respond to.

The first was that he was shut out of the discussions with respect to the development of this final initiative, and the second is that he didn't believe that the Premier was getting the complete picture. What do you say to his assertion that the Premier isn't getting the straight goods?

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MR. CHRISTIE: I guess I would simply say that the Premier and most of the government have had the opportunity to analyze the submissions coming into the strategy. We have had the opportunity to hear from people across the province, the Gaming Corporation and indeed the Office of Health Promotion. My recollection is that Mr. LaRocque was at some of the meetings that I was attending so I can only presume that he made his views known and expressed his opinion at these meetings that were there to develop a strategy. I don't question his testimony but I find it somewhat peculiar that he would say that he didn't have an opportunity to put his input in, when I was at meetings when he was there.

MR. GRAHAM: What do you say to the assertion that he made in the Public Accounts Committee that the overall plan, particularly with respect to the reduction of VLTs, may or may not help?

MR. CHRISTIE: I think there are a lot of opinions around. I've heard from people who say we should get rid of VLTs, from people who say we should get rid of lotto tickets, I've heard from people on a number of issues. On the other side, I've heard from people who say we need to balance this, we need to find ways to do it, so I've been exposed to a broad representation from Nova Scotians and their views on these issues. Indeed, at the end of the day, I have been exposed to quite a number of people who have indicated they see this as a significant first step.

MR. CHAIRMAN: The time for the Liberal caucus has ended.

The honourable member for Halifax Fairview.

MR. GRAHAM STEELE: Again, I'm not going to ask questions about the Gaming Corporation, I'm going to pick up from where I left off the other day so maybe we could get the staff to switch places again.

Mr. Minister, thank you very much for the documents that you've distributed. The one document that the Page didn't distribute was the one that you actually had in your binder yesterday, which was the calculation of the $19 million.

[9:30 a.m.]

MR. CHRISTIE: It's being copied as we speak, you will have it within minutes.

MR. STEELE: Mr. Minister, I'd like to pick up where I left off the other day and that was on internal audit, particularly with reference to the Department of Community Services. One of the pages that was distributed by you is the one that I'm holding up here. I have seen this document before. What you described yesterday was a document that describes the duties

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of the internal audit employees assigned to Community Services. Is this the document that you were referring to?

MR. CHRISTIE: The document I referred to was one that was filed at the Public Accounts Committee and this is the document I referred to.

MR. STEELE: But this doesn't refer to their duties, this simply refers to the organizations on which they've completed an audit which, to me, is not exactly the same thing. Maybe it's just a difference of terminology.

MR. CHRISTIE: What this says is that the internal auditors are doing compliance of third-party services related to the Department of Community Services.

MR. STEELE: And is that what all four of the people assigned to the Department of Community Services are doing?

MR. CHRISTIE: At this point in time, yes, that's correct.

MR. STEELE: Let me go back to the question I was asking when my time was up the other day. What is it about Community Services that justifies the allocation of such a large percentage of the limited resources of internal audit?

MR. CHRISTIE: One obvious thing is that they have a large number of grants and a large number of third-party service providers and you can see some of the list of people here. They are involved with the compliance and the following of those third-party agreements.

MR. STEELE: What about their plan for the current fiscal year? Do you have a list of what they intend to audit this fiscal year?

MR. CHRISTIE: I'm just advised that at this point in time they are working with the management of Community Services to do a risk analysis of areas where they see they need to do some audit work, do some control work. They will continue to do the audits of the third parties, and with the management of Community Services and the auditors, they will develop where they believe the risks and challenges are and they will develop a work plan based on that discussion.

MR. STEELE: In the business plan of the Office of the Auditor General, which I held up yesterday as a model for a business plan and performance report, they actually list all of the organizations that they're going to audit in this fiscal year. I would expect the same sort of thing out of the internal audit unit where we can look to see what it is that they're planning to audit. Are you suggesting there is no such list available at this point?

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MR. CHRISTIE: I'm suggesting that the list that you see is what they're working on. As they move with additional resources and move to look at what their plan is for the year, it's an evolving plan. I would also say to you, in terms of the Auditor General's Report, it also indicates that with additional resources they would be able to do additional things, that's the situation that we have here.

What we don't know at this point in time, until the budget is completed and passed, if those additional resources of internal auditors will be available. Given the fact that the budget does pass and those are available, then a plan has to be developed based on the resources that are available.

MR. STEELE: Are any of these internal auditors assigned to the task of auditing payments made to social assistance recipients?

MR. CHRISTIE: No.

MR. STEELE: So there's no auditing being done of payments, overpayments, or collections, or anything like that?

MR. CHRISTIE: Let me rephrase it for you, I didn't say there wasn't any audits, I said these auditors are not doing that. Obviously, Community Services has people who are reviewing, but specifically, these auditors are not involved in that task.

MR. STEELE: Because, of course, that's what we're talking about today, the internal auditors.

MR. CHRISTIE: Yes.

MR. STEELE: The thing I have difficulty understanding is why, when you have such limited internal audit resources in your department - nine people, you may have 13 positions but there's nine actual people - that four of those resources are assigned to Community Services, when there are other departments spending more money that have just as many third-party agreements. Just to pick one example, the Department of Health has a $2.6 billion budget with dozens and dozens, if not hundreds of third-party service providers, including as just one example, physician billing which amounts to something in the order of $600 million on which this Legislature receives exactly zero information. I'm just wondering why it is with the limited and precious internal audit resources, you would allocate so many of them to the department that deals with poor people?

MR. CHRISTIE: Let's just go back in history for a moment. You, of course, do know the auditors used to be assigned to the department and were under the management of the department. A few years ago all the internal audit functions were brought into one office, if you will. The challenges of meeting the third-party requirements for the Department of

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Community Services were identified back at that time, they needed to have internal audit and it has still been identified. Your question is, why don't we have more resources in the Department of Health? Indeed, we view that as something that is necessary . . .

MR. STEELE: But that's not what I asked. There you go again, you're rephrasing what I actually said. What I actually said was with the nine bodies you have, four of them are assigned to the Department of Community Services when the Department of Health, just as an example, is dealing with a great deal more money on programs in which we have much less information. I'm just wondering, is it the position of the Department of Finance that the money given to third parties through the Department of Community Services represents the highest degree of risk for the misuse of public money across all $6 billion worth of government?

MR. CHRISTIE: No, that's not the opinion of the department.

MR. STEELE: So why do you allocate so many of your resources to that department?

MR. CHRISTIE: Because they have a task to complete and they're still working to complete it. When they complete the task of finishing all these reviews, then they will be allocated to other departments.

MR. STEELE: When are they going to be finished?

MR. CHRISTIE: I suspect they have a lot of them finalized, they're doing some additional reviews, I can answer that question when they've finished doing the plan for the year with senior management of the Department of Community Services. They will then make a request to us to continue to do the audit and we'll have to respond in light of all of the other challenges across government, as you've outlined, as to where we are going to allocate those resources.

MR. STEELE: What it sounds like is that there's a project in Community Services, there's a certain number of third-party dealings that need to be audited through the internal audit program. What I'm looking for, what I'm struggling to draw out of you is that plan, if there is a plan to do a certain number of third-party service providers in a certain period of time? All I'm asking for is to see the plan, who's going to be audited and when?

MR. CHRISTIE: When that plan is completed I am happy to give it to you. We've looked at what they're doing right now. What they're going to be doing in the future is what that plan will develop. Community Services will be looking at their risk areas, they'll be looking at areas where they want to complete the audit, and they'll put a request in to continue on with these or continue with others. At that time we will make the decision as to how we will allocate those resources, based on the needs of Health and other areas.

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MR. STEELE: I understand from your staff that there was a strategic plan developed for the internal audit unit of your department but that that plan has not yet been made public. Is there any reason why that plan couldn't be made public?

MR. CHRISTIE: There's no reason. It is not completed as yet but when the plan is completed there is no reason why it can't be made public. We will make a note to send it to your office and any other person who wants to have it.

MR. STEELE: I think your deputy wants to tell you something.

MR. CHRISTIE: I'm just advised that the report for Governance, Size and Operation is available and if you would like to have a copy of that, we're happy to give it to you.

MR. STEELE: I would love to have a copy. So let me move on then. The other two documents that you distributed at the beginning of business today, Mr. Minister, is an excerpt from the Human Resources Management Manual 4.5 Pay for Performance for Senior Officials, which is sort of the generic guidelines for executive bonuses. Then there's another document that's headed, Mandate Letter from the Treasury and Policy Board. I was wondering if you could explain to me what the mandate letter is and how that connects with the generic guidelines, Pay for Performance for Senior Officials, and how does this all relate to the actual bonus that your deputy minister got?

MR. CHRISTIE: In looking at the two documents, the 4.5 Pay for Performance for Senior Officials, is the overarching document. We spoke about that yesterday when we were talking about, is there a document which guides the process, which lays out some of the criteria and guides the document. Based on that, we submitted this document to the committee to respond to that particular question.

The mandate letter is the template document that is prepared by deputies and by people on the pay for performance. If you go through the document you'll see it talks about the corporate priorities and those are outlined by the deputies in relationship to the department. Then it talks about corporate priorities and the goals and they lay out the goals they have for the year. It moves on then into the goals of how it is going to provide opportunities to learn. It goes into goals of fostering the environment to allow Nova Scotians to raise families and stay in Nova Scotia, it goes through a series of things.

MR. STEELE: But this is a generic mandate letter, it's not one that's specific to your deputy minister.

MR. CHRISTIE: This is specific to the deputy, all deputies use this document and fill it out.

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MR. STEELE: Surely you're not suggesting to me that your deputy's bonus is based on this goal? Listen to this goal, foster an environment that allows and encourages Nova Scotians to work, raise families and stay in Nova Scotia. Is that partly what your deputy's bonus was based on?

MR. CHRISTIE: Based on that criteria, the deputy then lists the specific goals for that department as to how they will achieve all of the items that are listed there. They then list those and set out during the year to cause those goals to happen.

MR. STEELE: But that's so vague, an environment that allows and encourages Nova Scotians to work, raise families and stay in Nova Scotia. How would you know if your deputy hadn't done that?

MR. CHRISTIE: From a corporate point of view, what that suggests is that all of the deputies are going to keep that goal in sight. Let me just relate it to a sales organization. If we, as a sales organization, decided that we were going to build widgets then the question is, how do all the departments create a situation where they can cause those widgets to be made and to be sold. You have to take broad overviews for people to keep the big picture in mind.

MR. STEELE: I know, but sales is actually a good example because you can actually measure sales. If you have a workforce of salespeople, you actually know who has sold the most and so pay for performance is pretty easy. Let me read another one to you.

Apparently, one of the corporate priorities on which your deputy's bonus was based was to reduce personal income taxes in 2003-04, which didn't happen, so did some of her possible bonus get deducted because of that?

MR. CHRISTIE: I beg to differ, that did happen.

MR. STEELE: It's your position that personal income taxes were reduced for Nova Scotians in the last fiscal year?

MR. CHRISTIE: Personal income taxes were changed but for 90 per cent of Nova Scotians at the low-income bracket, that rate did not change.

[9:45 a.m.]

MR. STEELE: Mr. Minister, that's nonsense and you know it. Okay, let me move on. I'm not even going to go down that road because that is so ridiculous, that your deputy minister - see, there I am going down that road. I'm trying to count to 10 because that is so ridiculous what you just said. One, two, three, four, five, six, seven, eight, nine, 10, okay, let

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me move on to another topic before the top of my head blows off. I would like to move back to the business plan.

Yesterday I was complaining about the business plan, about how vague the goals are, how the measures that are offered don't relate to the goals, how the information on the measures often is incomplete, how generally useless it is as a document that purports to lay out for members of the Legislature what your department intends to do with the money in the budget, and whether it has achieved the objectives that your department set the previous year. I want to turn to - if I can just lay my hand on it now - the performance measures that are listed at the back of the business plan.

I'm going to start on Page 13 of the business plan. The outcome target is efficient and prudent management of the province's financial assets and liabilities. The measure is given as the net debt service costs, which isn't bad actually, because at least that's measurable. Then the data is given and the most recent one is for 2003-04, where it was 6.6 per cent. I was wondering if you have even a preliminary figure for 2004-05? What were our net debt service costs for 2004-05?

MR. CHRISTIE: Yes, we can get that figure for you. We are just doing the calculation and will have that for you in just a moment.

MR. STEELE: Thank you. And the target that's listed is comparable to other provinces but no data is given in the business plan about how, in fact, our net debt service costs compare to other provinces. Do you have that?

MR. CHRISTIE: In terms of the net direct debt of other provinces? Basically, we do that calculation in the accountability calculation . . .

MR. STEELE: Wait, don't rephrase what I said. This is your business plan, that is your target. It is the net debt service cost expressed as a percentage of net debt outstanding. The target in your business plan is that it should be comparable to other provinces but what is missing is any information about what that figure is for other provinces. So, do you have that information?

MR. CHRISTIE: We don't have it here but as I . . .

MR. STEELE: You do have it somewhere?

MR. CHRISTIE: Absolutely.

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MR. STEELE: Now, this is a good example of how the business plan could be improved, is that if you're going to list a target you should indicate to your reader where, in fact, they can obtain the information about that target so that the reader knows whether the target has been met or not. I'm sure you'll agree with that?

MR. CHRISTIE: I agree that what we should be doing is improving Nova Scotia's net direct debt ratio . . .

MR. STEELE: No, I'm talking about improving your business plan, I'm talking about information.

MR. CHRISTIE: That's a valid point, I don't argue with that.

MR. STEELE: So, I'll assume that you'll be able to table, either before our conclusion today or sometime relatively soon, the actual data on that target. I take it for granted that if your department has set that as a target that it actually tracks and captures that data?

MR. CHRISTIE: Absolutely, there's no question we have that data and we have undertaken to give it to you.

MR. STEELE: Thank you. Over on the next page, Page 14, Effective Management of the Assets of the Provincial Pension Plans. Yesterday I was pointing out that in last year's business plan the funding targets were listed as 100 per cent and now they're considerably less than that. You also provided the up-to-date funding levels, the most recent information that the department has, which is useful. It says under Strategic Actions, generate a 4.2 per cent real rate of return annually. That doesn't strike me as being a strategic action, that strikes me as a target. Did we meet that target last year, is that the same target this year and how does that compare to other provinces?

MR. CHRISTIE: The answer is yes, that was last year's target and we did exceed that target.

MR. STEELE: By how much?

MR. CHRISTIE: The percentage that we achieved was about 6.25 per cent, real numbers, yes, and the nominal number was 8 per cent.

MR. STEELE: And does that continue to be a reasonable target for this fiscal year?

MR. CHRISTIE: The 4.2 per cent?

MR. STEELE: The 4.25 per cent real rate of return.

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MR. CHRISTIE: That's our long-term rate of return. We know there will be fluctuations over the term, but that's our 10-year goal, is to continue to achieve at least that amount.

MR. STEELE: Over the long run?

MR. CHRISTIE: Yes.

MR. STEELE: But what's your target for this fiscal year?

MR. CHRISTIE: Our target is 4.5 per cent.

MR. STEELE: Is it 4.5 per cent or 4.25 per cent?

MR. CHRISTIE: It's 4.25 per cent.

MR. STEELE: But you just said that's your long-term goal, I'm asking about the target for this fiscal year - 2005-06?

MR. CHRISTIE: This year our goal is 4.25 per cent and it's tied in with our long-term goal to continue to exceed that amount over every year within the long term.

MR. STEELE: But, Mr. Minister, it's not a useful target to have in a business plan a long-term rate that in the long run you intend to meet because that doesn't tell me, as an MLA, anything about what your department is going to be doing this year. What the business plan is supposed to be for is to tell us around this table and in the Legislature what your department is going to do this year. I understand that's your long-term target, but what is your department's target this year. Are conditions better this year than the long term, are they worse than the long term? It's not good enough to say that you hope to, in the long run, meet 4.25 per cent because that doesn't tell me anything about whether I should vote the money to your department because I have no idea what your objective is this year. I don't want to give you money when I don't know what you're going to do with it. So I'll ask you again, what's the target this year in the context in which we currently find ourselves?

MR. CHRISTIE: Let me suggest two things in terms of that question. Obviously what we do each year is we go through an actuarial review of the plan and the plan looks at a variety of assumptions. You will know that we revised some of our assumptions downward in the last year based on the long-term projection. In terms of planning for pensions, you make your plan for the long term and you plan for long-term investments. We don't, for example, in the pension fund, jump into something for six months and come out. Our strategy and the strategy of the managers are to get goals that they have over a period of time and to achieve those goals and we set benchmarks for those. What I'm saying to you is that

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the 4.25 per cent is the benchmark that we set and we expect managers to achieve that or do even better.

Now, in the last year we have achieved better than 4.25 per cent. What we will do this year will remain to be seen, as to what the market does and how the performance goes, but in terms of specifically changing goal each year, we don't do that. We set a long-term goal, we set the benchmarks for long-term investing, and we believe that's the prudent thing to do, to have a plan to be in it for a longer term and to work towards that long-term goal.

MR. STEELE: Of course, I'm not arguing with the idea of having a long-term target, but I'm just saying in terms of the information that your department provides in its business plan, I need to have more than just your long-term target because I'm sure your managers don't, once they achieve the 4.25 per cent, take the rest of the year off.

MR. CHRISTIE: No.

MR. STEELE: That they also have short-term goals based on the particular context in which the market is functioning in that particular fiscal year, but that's not a question, that's just a comment.

I would like to move on to Page 15, please. The Outcome says, a prudent and sustainable fiscal plan. Measure says provincial government debt as a percentage of GDP. The data again ends at 2003-04, of course, because this was prepared before the end of the fiscal year. Do you have a preliminary figure for the end of 2004-05? (Interruption) Is that in the budget documents?

MR. CHRISTIE: It's in the budget documents.

MR. STEELE: Okay, it's in the budget documents, that's fine, so let's not dwell on that because I know it's there, but the target is given as continued downward trends. Do you not have a more specific goal than that, don't you have a target, a place you want to be and a time you want to be there?

MR. CHRISTIE: Yes, and that's why in the long-term plan, in the debt management plan, that's why we showed where we saw ourselves being in the specific years. So that would tie into that, that's the target.

MR. STEELE: This is another example then of how you could improve your department's business plan. In the business plan you have a very vague target, continued downward trend, which could be met if it's decreased 0.1 per cent or 1 per cent, or 2 per cent. Any decrease counts as having met the target and what we should see is a link between this target and any other documents or plans that your department has saying, continued downward trend in accordance with targets in the debt reduction plan.

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Now, I know that this document was drafted before the revised debt management plan, the new one. The old one got thrown out and now we have a new one, but in order for this kind of document to be useful, there has got to be those kind of linkages rather than just these sort of vague outcomes and vague targets. I think the data on the other provinces is in the budget as well, but I'm sure you will agree that despite the downward trend, we still have one of the highest debt to GDP ratios in the country.

MR. CHRISTIE: That's a fact and I think you would agree that to continue the downward trend is something that would be positive for this province.

MR. STEELE: Yes, and what would be more positive is to have a longer term plan and say, okay, let's get it down to, well, just like the government did with foreign exchange, or debt denominated in foreign currencies where the government, many years ago, I think in fact even before the present government was first elected, they said in this number of years we want to get it down to 20 per cent or below and then the Department of Finance worked away at that until that was accomplished. So people could see a long way out where we were headed and then we got there. So that's great, but we need to see the same thing over the reduction of the debt.

I want to move over to Page 17 of the business plan. This is under the Outcome enhanced financial accountability and I notice that there has been some slippage in the rollout of the SAP Program. I wonder if you could explain to us the reason for the slippage and what the consequences are?

MR. CHRISTIE: That's in two areas. There's the eMerge project and there's the SAP HR Program that are going on. So the two areas in that are certainly within government, doing those paycheques and so on, and then there's the school board. You will be aware that your last cheque was on the new system, and the school boards have determined some complexities as to union agreements, getting a number of the deductions, getting a number of the pay calculations done. So the estimated time for that now is probably in the Fall, that's kind of what they're generally working toward.

[10:00 a.m.]

MR. STEELE: Okay. It's difficult for me to understand the data, mainly because the business plan is sort of pitched at such a high level and is written in a very summary kind of way. If I understand this correctly - or do I understand this correctly, that in November of this year, November 2005, every school board in Nova Scotia will be using SAP for human resources and payroll?

MR. CHRISTIE: That is the goal that they're working towards, yes.

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MR. STEELE: That is the goal that they're working towards - is it going to be achieved?

MR. CHRISTIE: I have no reason to believe it will not be. As they're doing the analysis and working towards it, there obviously could be some issues that come along, but at this point in time the goal is still there to have them completed within this year.

MR. STEELE: Under the data line, it says six municipalities, but it's not at all clear to me what that means. What does that mean?

MR. CHRISTIE: These are the municipalities that we are currently providing SAP services to, so there would be enhancements in those services. I think you're aware that the government, over a number of years has been trying to move to the single system, moving towards the SAP system. What that indicates is there are six municipalities presently there that are using the system, the Halifax Water Commission and a number of others. The long-term goal is to move more municipalities and more government agencies into that single system.

MR. STEELE: It would be a lot more helpful, I think, if we had more information on this. Which municipalities, by when? If you and I are sitting here again next year, I would like to be able to look at your performance report - which is something your department doesn't produce now, at least not for external consumption - and see whether in fact the rollout has gone according to schedule. If it's ahead, why it's ahead; if it's behind, why it's behind. Looking at this information here, it's not at all clear to me that if we're sitting here one year from now what it is that I should expect to see.

MR. CHRISTIE: I think what we've indicated is we will get you the names of those six municipalities. One of the things that we have to keep in mind is that it's the municipalities' decision whether they come on this, we don't go to them and say, effective November 1^st we're starting you on this system. They make the decision to come on, and they make the decision whether they see there's advantages to do this.

It could be that there will be some more municipalities that will want to come on that system over the next year, and we will attempt to accommodate them. However, specifically, we will give you the six municipalities that are presently there.

MR. STEELE: My general point, which I'm sure you're tired of hearing, is that that's all very well but that should already be in the business plan, which ones have the system, which ones might want the system. Of course, in your budget this year, one of the biggest single increases is the allocation to the SAP rollout. You're asking for, what is for your department a lot more money.

MR. CHRISTIE: Yes.

[Page 294]

MR. STEELE: This page, which is very hard to understand, is all the information that we have, and it's just not enough. Why is it exactly - maybe you could just tell us - that your department needs not just the same allocation to the SAP rollout that it had last year, but it needs substantially more? What is it that's taking up all the extra money?

MR. CHRISTIE: What happened this year is that the department has assumed responsibility for the SAP system. You'll be aware that the development side has been happening with other projects through Economic Development. We assumed all responsibility for that. So what we're talking about is assuming the responsibility for 60,000 to 70,000 paycheques, we need to have resources in terms of hardware and software, we need people to implement that.

In terms of looking at the goal and looking at the goal of completion of, to date, all seven school boards, financial procurements and business warehouse in six municipalities, requires us to have resources to do it. What we're proposing in the budget is allocating resources to enable us to do that.

MR. STEELE: Is that a permanent increase in your department's budget, or is this something that's only a one time shot, and that in the future it will be wound down again.

MR. CHRISTIE: Once we're live and we're doing the development then, obviously, all of the resources won't be necessary, so it will probably be somewhere between $250,000 and $300,000 to maintain it and additional to go forward.

MR. STEELE: This project is, I think, a bit mysterious to most people. It takes up a lot of money and it has to do with fairly technical - sort of what's going on in the backrooms of financial accounting. How would you describe, in a sentence or two, what is the benefit of this project to Nova Scotians? Why should we want it?

MR. CHRISTIE: The benefits that we view for this is that it brings and consolidates all of the systems into one. It consolidates and updates our payroll system. I think the thing that everybody must keep in mind is that the system we had is some number of years old, so we have to ensure that we're going to be able to respond to the cheques being issued, respond to that number of people, the 60,000 or 70,000 people receiving cheques. We have to have equipment and we have to have systems that are going to enable us to do it.

The other part of that, and you will know that there's certain things that people can do on-line, such as pensions, such as some of the payroll services, and they can involve themselves through more up-to-date communications methods, and that allows us to do that. From an over-arching point of view, we view it as providing systems for the future, reducing data entry and manual processing requirement. We view it as having to prepare ourselves for the future and having the tools that we need to analyze operations and ensure that we're going to provide that service in the future.

[Page 295]

We need to make sure that there's accurate tax deductions, we have to meet the requirements of the CRA, and we have a series of things that we have to meet. I would submit to you that 60,000 or 70,000 paycheques, payroll, that's a fairly large system. You have to have the systems and the resources to do it.

MR. STEELE: Well, I asked for a sentence or two, and that was more than a sentence or two but that's fine. What I was looking for was more how you would describe to the ordinary Nova Scotia citizen whose taxes are paying for this, what it's going to mean for them, but I think we can distill something from what you said.

I'm going to turn it over now to my colleague, the member for Dartmouth North. The member for Dartmouth North, our Gaming Critic, wanted to go back on the issue of the Gaming Corporation, but I understand that Ms. Mallally is out making an announcement of some kind at this point. I assume we should just charge ahead, because that's what my colleague wants to deal with.

MR. CHRISTIE: I understand that Ms. Mallally is doing a technical briefing on the information that was provided to you this morning. She was requested to give some technical information, so that's what I'm told is happening.

MR. STEELE: Yes, so she is doing a technical briefing on that document?

MR. CHRISTIE: That's what I'm led to believe.

MR. STEELE: The one about how it was calculated and $19 million is being lost through the change in the VLT strategy?

MR. CHRISTIE: That is correct, yes.

MR. CHAIRMAN: Thank you very much.

The honourable member for Dartmouth North.

MR. JERRY PYE: Mr. Minister, of course, my questioning will be centred around the Gaming Corporation, once again. When I left off yesterday, there were a number of still unanswered questions. One in particular is that we know there are approximately about 15,000 problem gamblers in Nova Scotia and approximately one-half of those have serious gambling addictions. Out of those serious gambling addictions come about 75 per cent of the revenue that comes through the gate for the province. Of the $133 million, it's a guesstimate anyway, that about 75 per cent of that revenue comes through the gate as a result of persons with serious gambling addictions.

[Page 296]

My question to you is, Mr. Minister, is there a level of risk your government is prepared to accept?

MR. CHRISTIE: What this government did is we accepted input and we accepted response and comments from a lot of Nova Scotians and we came up with a plan that we introduced that would, in our view, do three things. The first was to deal with the issue of treatment for people who are presently addicted and, as I indicated to you yesterday, we view addiction universally, as opposed to specifically. We proposed a plan for treatment for people. The next issue was the treatment. Then we looked at the area of prevention and in the area of prevention, a number of the things that we instituted, we see those as items that will perhaps have the effect of preventing people from becoming problem gamblers and indeed educating them more on the use of machines and work in terms of the prevention.

The other major, key component of this is doing analysis of all of that data, all of the things that happen, and as we spoke yesterday, we talked about the prevalence study, we talked about the social impact study and moving in that direction to get data that would allow us to analyze from where we started from the baseline to where we are and what the changes have done. So the answer is yes, we are concerned. We are concerned and that's why we have moved in these programs of making changes to gambling. That's why we were instrumental and very concerned about having treatment programs for people who had addiction to those machines and that's why we were moving in what we believe is a significant step toward doing some prevention of people who might be at risk, to moving in to being addicted. So the answer is yes, we are concerned about people who might become addicted.

MR. PYE: Mr. Minister, with all respect, that is not the question I asked. There are people who have committed suicide as a result of this form of entertainment called gambling. There are a number of people who have watched their homes and their families be destroyed as a result of this source of entertainment and the question I asked quite clearly was, even after all the studies and the introduction of prevention programs, treatment programs come into play, there is no evidence this has, in fact, addressed the issue. Is there a level of risk your government is prepared to accept to continue to receive the gaming revenues?

[10:15 a.m.]

MR. CHRISTIE: The question you are posing to me is, are there levels of risk now and will they be the same in the future. What we have clearly indicated is that we are going to analyze those. We are going to analyze what the prevalence is, what the social impact study is and so until that is done, the level of risk, I suggest to you, is not measurable. Obviously, that is going to be a component in the decision that the government takes but until we complete that part of it, we won't be able to make a judgment as to whether there is higher risk, lower risk or the risk hasn't changed. Obviously, it will be a factor in the government's future plans on these but it takes us back to looking at the baseline data, to

[Page 297]

looking at what we've done through the strategy and the changes to the Gaming Corporation to make that determination.

MR. PYE: Mr. Minister, the level of risk is measurable. We have already been able to measure the level of risk. The Gaming Corporation, itself, had admitted most recently that, in fact, approximately 10 people have committed suicide as a result of gambling. There are approximately 15,000 problem gamblers in the province and of those 15,000, at least 7,500 of them have serious addiction problems. Those are risks that are measured and I've said in my speak at one time earlier that this is a form of collateral economics. We are prepared to see x number of Nova Scotians suffer as a result of continuing to rake in the dollars that are needed to run this province and when you rake in $133 million then obviously you are prepared to accept a level of risk. My question once again is, what is the level of risk you are prepared to accept to continue to receive the revenue that is coming through gaming?

MR. CHRISTIE: And my answer to you again is that the risks that we have now, the risks that will be in the future, are items that will be measured after we determine what the impacts of the study are, what the impacts of the changes are. Let me just come at it another way. The risks that were there, that were identified over the last year, the risks the government indicated they were not prepared to continue having that increase in funds, they were not prepared to keep that increase in VLTs growing, so we took the steps that we did. Now you might suggest that moving down by $19 million this year and $40 million this year and making those changes is not enough to change the risk but I will still say to you, that risk is the reason that the government put in the strategy to start reducing dependency on gambling revenues. Obviously as the new data comes in, as the causes and effects and what has happened with the new strategy, that's what the government will be measuring and determining what the next steps are.

We spoke yesterday and we talked specifically about some of the possible next steps. I recall discussing the issue of racinos, of whether the racino is the next step. So those next steps have to be based on evidence. Those next steps have to be based on the data of the socio-economic study, they have to be based on the data of the prevalence study and then we will be able to determine the next step. Specifically, that's how I would view the answer to your question.

MR. PYE: Let me put it just another way. Let's assume that prevalence studies have been completed, the socio-economic study has been completed and there is no change in the relation to the number of problem gamblers and people who are addicted to gambling in Nova Scotia with respect to those numbers. The question is, once again, when does the government itself pull the plug and not continue raking in the gaming revenues? At what risk level is your government prepared to accept with respect to those numbers of persons who are in addictions?

[Page 298]

I've said it and I will say it once again. I believe I called it collateral economics and I said that that is where the government is prepared to see so many Nova Scotians have their lives thoroughly destroyed by being involved in a source of entertainment called gambling, in which it extracts revenue to do its business. The question is, if we see the continuation of the number of suicides, and obviously there is no way of tracking those, but at least there is still the way of tracking the problem gamblers because, of course, we have the gambling addictions line and there are ways of tracking those individuals who have severe addiction problems. Where do you draw the line? That's the final question, where do you draw the line?

MR. CHRISTIE: Obviously, the government drew the line when it developed its strategy to start to make some significant impacts on the gaming habits of this province. One of the other significant parts of all of this, and you will note that there is and there has been some degree of interest and some significant increases in Internet gambling. That's not an issue but let's look at a couple of the situations.

First off, there is not a question there is risk but this province is one of the lower problem gamblers in Canada. That doesn't make it right, that doesn't do anything but that just simply says that's a statistic that we deal with. We know that having the risk is not acceptable and so we took moves to start to introduce it. As I indicated to you yesterday, some of the moves that other provinces are doing, and you referred to racinos, we haven't taken a decision to move in that way, other provinces have. We haven't undertaken decisions to enter into the keno game that other provinces have simply because from our perspective, our goal is to start to reduce government's dependence on gaming revenues but the overall adjustment is to ensure that we start to mitigate that risk, we start to deal with that risk, and that it doesn't move higher.

So really no risk is acceptable, that is why we moved in the direction that we did because in reality, had the government not moved in any direction, as you are quite aware, the revenues from gaming would be significantly higher this year because, as you know, it's a well-known fact that gaming revenues have been increasing over a number of years. Now we also know that the revenues from the casinos, in the projection in the paper that we gave you, you will see that the projection for the casino is going to be a little bit higher this year. So overall, when you look at the risk assessment, we looked at the risk and we said, well the risk is getting too high so therefore we should move it down because we need to start to slow that down and we took the steps that we did to reduce the exposure and the risk factor.

MR. PYE: Mr. Minister, you mentioned the strategy and you and I both know that there are people out there who say that the strategy appears to be very weak on consumer protection. Do you agree with those comments?

[Page 299]

MR. CHRISTIE: I think there are a lot of opinions as to the strategy and how the strategy is working. What I will be able to say is we've taken significant first steps toward moving to educate people. We've made significant first steps to try to do treatment and I suggest to those people that we have taken significant first steps in terms of prevention of people who've been coming on. There is always more work to do and we are very clear on the fact that we want to analyze the results, we want to be able to collect the data and analyze them and see what further steps need to be taken. So I would say to those people, certainly I don't suggest this is perfect, but I would suggest it's a significant first step in starting to indicate this province is moving away from dependency on gambling revenues.

MR. PYE: Those individuals who say that this strategy is very weak on consumer protection look at the possibilities that this province could have introduced machines and what they call safe machines or fair play machines. I'm wondering what your analysis is with respect to what you believe a safe machine would be or a fair play machine and how that would, in fact, help protect consumers? Although I use the term consumer protection, I would also say that it is players of entertainment as well. So how do you perceive the Gaming Corporation moving in the direction of creating safe machines and fair play machines?

MR. CHRISTIE: We are talking about what people would say about consumer protection. Yesterday we had some opportunity to talk about the player cards and the card. That's one opportunity for people who want to determine and preprogram the amount of play they have, so that provides it. If it is determined to be that that's a useful tool, that is certainly consumer protection in that area. In terms of the other machines, as you look at those, I think in terms of some of the steps that we've taken, some of the steps are designed to slow people down and then slow their participation down and move them in that direction. I would still suggest to those people that that is a significant first step that we've made in moving in that direction.

MR. PYE: I think it's a responsibility of government, and I know that, Mr. Minister, it is your responsibility and the responsibility of government, to protect consumers. If government is deriving its money from a source of entertainment, then it's more important that government take the role of protecting the consumer. In this particular case I don't think and I don't believe that your government, or the Gaming Corporation which you are responsible for, has looked very closely at addressing this issue in a serious manner. You would have looked at the possibilities of entertaining fair play machines or safe gaming machines. I'm sure that there are experts in the field, and I don't profess to be an expert, but there ways in which you can do those. You can change the designs of the machines, you can make it less attractive for people to use those machines, there's a whole host of other issues. There's another very important issue that I think that the Gaming Corporation doesn't exercise sufficiently and that's in identifying what the odds are for those players who are playing.

[Page 300]

Although players have some knowledge of what their odds might be, it is not clear, it is not spelled out in a concise way and I believe at least the first five minutes when one starts playing an electronic video machine, that the first five minutes on the machine should indicate, in clear display, once they inserted their coin, what your odds of winning are and they should be told exactly what their odds of winning are in bold letters, in concise language, so that they understand when they put their money in this machine, there is no possible way for them to make a fortune out of it or to make money and that the winner is the government. Because in gambling, they don't have a chance of winning and there needs to be some language spelled out with respect to letting those consumers or those players of entertainment know. I think that this is a good avenue of consumer protection.

I've also said yesterday, another avenue of consumer protection is reducing the maximum prize payout as well as reducing the maximum amount that you can bet. Each of those has significant factors in determining who will play and how people will play. In my opinion, although I'm not an expert and I'm sure there are expert analysts out there, there will be individuals who, in fact, will walk away from the machines, particularly some problem gamblers. Those who are addicted may not but if you do create this kind of an environment into a gaming theatre or into an establishment where electronic video machines are played, then I think you are on the right track, at least partially. So I'm wondering what, Mr. Minister, you think of this approach?

[10:30 a.m.]

MR. CHRISTIE: Well, I think that is part of the education process and you are speaking of education and you are speaking of people getting information. You know that those brochures indicating the odds are in the VLT locations and you specifically said, let's put them right up on the machine after you put the first testing. That's one of the things the Gaming Corporation is looking at with the new machines, it's looking at with part of the Smart Card. So they have heard you in the past and they hear you now and that's one of the things that they have taken under advisement. Those are a lot of the different education techniques and when I talk about what will be the next generation of gaming strategy, those are part of the things that are involved there.

MR. PYE: I'm glad to hear that, Mr. Minister, you are listening and the Gaming Corporation is listening because I think that goes a long way to assisting and addressing some of the problem, not a whole lot of the problems. This morning, I'm sure, that the Gaming Corporation has heard on CBC Radio in Ontario where money has been stolen and then spent in video lottery machines and casinos and at one particular casino, I think, there was some question of some $50,000 that an individual has spent in the casino. I'm wondering, is there any policy by the Gaming Corporation with respect to identifying money that may be stolen and used in their facilities as sources of entertainment by their clients and if, in fact, you have a policy in place and how you address it?

[Page 301]

MR. CHRISTIE: The answer is no, there is no policy. Obviously the Gaming Corporation deals with third parties, whether it is the casino, whether it is people who operate lounges and bars in terms of the VLTs. So the short answer to your question is no, there is no policy.

MR. PYE: The Gaming Corporation works as a third party but the Gaming Corporation can set directive, can it not? Can it not indicate to casinos, to the proprietors of establishments what policies should be in place? Because after all, I believe, the revenue from those video lottery machines comes to the Gaming Corporation and they, in turn, dispense the money to government.

MR. CHRISTIE: The Gaming Corporation can set policies. They set policies such as when the machines are going to close down, they set policies and we all agree on that. Your specific question was do they set policy in terms of money laundering and I don't want to put that word on it but that's how I heard your question. Can they set policies on doing that? I suppose they could set a policy but it's pretty hard to monitor but they don't have a policy at this time.

MR. PYE: It may be hard to monitor and it may be hard to police by the Gaming Corporation but the fact that the Gaming Corporation identifies it as a serious issue and develops policy to the third parties, then they, in fact, can at least take the initiative in developing the policy and making sure that there is at least some adherence by the casino operators and by the proprietors who have electronic video display terminals in their facilities. Also, I'm sure that you can go even to the point of pulling those machines if they don't adhere to the policy.

MR. CHRISTIE: I've asked the CEO to make note of that and to give it the due consideration that it warrants and to respond to myself and to respond to you specifically.

MR. PYE: I thank you and I'm sure that the Executive Director of the Gaming Corporation will, in fact, do that.

I know that this is not a part of the responsibility of the Gaming Corporation because the Gaming Corporation funnels the dollars in to the Department of Health and to Health Promotion but has the Gaming Corporation given any recommendation or offered any advice or assistance to the Department of Health and to Health Promotion with respect to harm reduction strategies?

MR. CHRISTIE: Yes, they have been involved with the Department of Health and the Office of Health Promotion as to the strategies. They have been involved with them in terms of looking at the area of prevention. They have been involved with them in looking at the area of treatment. The answer is yes, they have been working with them in those areas.

[Page 302]

MR. PYE: How extensive is their involvement?

MR. CHRISTIE: In terms of setting strategies? As I say, let's go back to the initial objectives of the strategy, to talk about the area of treatment and the area of prevention. In terms of the area of prevention, the Gaming Corporation was very prominent in that as to what some of the research showed, how the effects of the new strategy would provide that prevention area that we want.

In terms of the treatment area, I come back to what I said to you before. We consider treatment of addictions as being universal so when you consider that, that has got to do with smoking cessation, it has to do with problem drinking, problem gambling, so when the Office of Health Promotion and the Department of Health, start to look at those, they look at ways to universally speak to all of those, not just specifically to problem gamblers.

MR. PYE: Their involvement isn't such that one could construe or extract from their involvement as having a conflict of interest in any way with respect to strategies, with respect to design, with respect to research?

MR. CHRISTIE: Their involvement is people who have a goal of promoting responsible gambling in this province. The goal of the Office of Health Promotion is to achieve healthy living and to address the people who have addictions of any type or form. So the Office of Health Promotion, that's the overall goals the Department of Health set, through their research, how they are going to speak to those issues. The Gaming Corporation plays an advisory role and so on so, no, there is no conflict there. The Office of Health Promotion has their mandate and the Gaming Corporation has their mandate.

MR. PYE: The reason why I say that, Mr. Minister, is that if you have your finger on the pulse and you are very close to the action that is taking place and you may not be receptive to the kind of treatment and recommendation that the Department of Health brings forward or that the Minister of Health Promotion brings forward, because it might have the potential of reducing the revenues that are coming through the gate for the government, then there is that interaction that creates a very serious problem and can be perceived to be a conflict of interest. So I want to know, where does it stop? Where does it stop with respect to the Gaming Corporation's input and can you elaborate on what kind of input the Gaming Corporation would provide to the Department of Health and to Health Promotion. As you know, we have Mr. John LaRocque who is the Director of Addiction Services and if, in fact, there are pressures placed on those programs by the Gaming Corporation, although not visibly seen can be there, then what happens is that the treatment program services around harm reduction may not be what is beneficial to those persons who have serious problems with gambling and addictions. So I guess my question is once again, where do you draw the line?

[Page 303]

MR. CHAIRMAN: The time for the NDP caucus is finished. I will allow the minister to respond to that question and then we will move to the Liberal caucus.

MR. CHRISTIE: I think specifically in terms of the question that was raised, obviously the Office of Health Promotion set their own priorities, they set their programs, they set their challenges in terms of things such as the help lines and various others. Those are set by the Office of Health Promotion. Now in a number of cases, the Gaming Corporation will be involved with the Department of Health and the Office of Health Promotion in talking about different programs but clearly the mandate of the Office of Health Promotion is to fulfill their mandate and the Gaming Corporation is to fulfill their mandate. Sure there are discussions and consultations that go back and forth but at the end of the day it's the Office of Health Promotion that sets their goals and objectives and they seek advice from a variety of places and simply one of those places would be the Gaming Corporation.

MR. CHAIRMAN: The honourable member for Halifax Citadel.

MR. DANIEL GRAHAM: Mr. Chairman, thank you, Ms. Mullally for being here. I'd like to pick up on some of where we left off on the last day. First of all, there was some discussion about how many problem gamblers there were in Nova Scotia and I indicated that the prevalence study that was done in 2003 was the source for that and we were going to confirm the data with respect to that. We have both moderate and severe problem gamblers and just for your information if it helps provide a shortcut, I believe, unless there is some disagreement about this that our source comes from the Canadian Problem Gambling Index, the problem gambling severity network that is part of that Canadian Problem Gambling Index and I would just like to make the assertion again that there may be a compilation about severe and moderate program gamblers, but the total number of problem gamblers on the Government of Nova Scotia documents clearly signals that there are 15,000.

MR. CHRISTIE: We accept that piece of information, it was a part of the prevalence study. It showed moderate and severe problems but the number you are using, taking those two together, is correct.

MR. GRAHAM: Researchers, including GPI Atlantic, have determined that there is a spillover factor where I think it's anywhere up to 17 or so people are secondary victims as a result of this, which would suggest that there are many more than the 15,000 people who are impacted by that in Nova Scotia. Do you accept what GPI Atlantic has suggested about that growth factor, and how many other people are impacted negatively by problem gambling?

MR. CHRISTIE: I would l think the development of our next prevalence study would be the basis of more of the information we make decisions on, but I don't dispute your fact that GPI put out that number and I have no cause to say to you that I disagree with that number.

[Page 304]

MR. GRAHAM: The total gambling revenue in the last quarter was up, I believe, by almost $20 million, or that was the forecast that it was going to be up from VLTs. Is that still the forecast for the last year, 2004-05, in terms of the increase in VLT revenue?

MR. CHRISTIE: Yes, the number that we had forecast initially for this year was that number and so we based the change on the fact that that number was there and when the revised forecast was done based on the implementation of the strategy, it was based on the fact that that would be the number for this year.

MR. GRAHAM: VLT revenue has been rising consistently over the last several years, despite the fact that the number of VLTs has not changed. I know that Ms. Mallally has said that in the past this may relate to the novelty factor of all of this. Apart from a possible novelty factor, what other explanation could you give for the dramatic increase in the amount of VLT revenues?

MR. CHRISTIE: Well, obviously as you indicated some of the increases in VLT numbers, I think we indicated to you we were going to see some increased revenues from the casino. The casino has been attracting people and they're projected to show some increased revenues in this year.

MR. GRAHAM: This is specifically VLT revenue.

MR. CHRISTIE: Well obviously I'm talking gaming universally but in terms of the VLT revenue, the VLT revenue has been projected to grow and the statistics have shown over the last number of years that the VLT revenue has grown across the province in most areas, this year and in the past few years. That's why the government looked at it said, we are going to introduce some programs to deal with a couple of areas and those areas are prevention, treatment, and indeed to introduce some programs to start to reduce those amounts of revenues because the revenues were growing. Specifically why? Because they're having more use, but that generally is a comment that wouldn't apply only to this year but would apply to the last number of years where revenues have been growing. I think to suggest to you based on that data and knowing that that's why we moved to introduce programs to start to curb it and curtail it.

[10:45 a.m.]

MR. GRAHAM: I take it then you really don't have much of an explanation as to why VLT revenues have continued to grow? Specifically, VLT revenues.

MR. CHRISTIE: VLT revenues are growing specifically because there are more people in the province who are using them. Specifically, they are a form of entertainment that some people are choosing to use.

[Page 305]

MR. GRAHAM: I'm going to suggest to you that there may be some specific reasons that are attributable to that. One relates to the stop button, and the existence of the stop button, and that was removed in this last strategy. I'm going to suggest to you that it relates to the speed of the machines and I understand that the speed issues concerning the speed of the machines are going to be addressed in this latest round of attempts to address this problem. There are two other reasons. We spoke about bill acceptors earlier today, I would suggest that that is another reason. I hear the province continuing to refuse to remove the bill acceptors at this stage. I'm astonished about the equivocation on that, but let's leave it where it is because we've spent enough time on the issue of bill acceptors. The practice of moving machines from low-volume locations to high-volume locations. Will you concede to Nova Scotians that in fact that has been happening?

MR. CHRISTIE: There have been machines moved for a variety of reasons. One of the reasons is the one you cited, for high-volume areas. Machines are moved in the Summer to locations where they are closed in the Winter. They're moved to curling clubs in the Winter when it goes from the Summer. The overarching strategy has not been universally to move them to the high-volume areas. You'll know and we all know there are a number of areas where there are machines in those locations which are not the high-volume areas, so the decision has been taken. Yes, there have been machines moved for that reason. I do not want you to misunderstand that I'm suggesting that is the only and the main reason for doing it, but there have been some machines moved for that reason, and I stress some.

MR. GRAHAM: Why?

MR. CHRISTIE: The reason is, that's where the people are, there are higher volumes and it's to provide the people the services that they're looking for.

MR. GRAHAM: It's to increase revenue, isn't it?

MR. CHRISTIE: We don't move machines to locations in the Summer or to curling clubs in the Winter to increase revenue. No, that's a convenience factor.

MR. GRAHAM: That's not what I'm asking Mr. Minister, with the greatest respect. I'm asking whether or not you've moved machines from low-volume locations to high-volume locations to increase revenue to the Province of Nova Scotia?

MR. CHRISTIE: The effect of moving them to high-volume locations does increase the revenue, not in all cases, but in some cases it does increase the revenue.

MR. GRAHAM: It's not just the effect, it is the intention that goes to the heart of this, Mr. Minister. Is it not your intention in moving machines systematically from low-volume to high-volume to increase the revenue for the Province of Nova Scotia?

[Page 306]

MR. CHRISTIE: I will answer you again, as I said, in some cases that is the criteria. In other cases, it's to be able to have facilities and machines in locations where people want them and that might be in Legions, it might be curling clubs, so those are factors too. Part of the factors are moving to locations which will be available for more customers and the effect of that is increased revenue. Your specific question is, do we sit down and say we're going to move every machine this year to a high-volume location, . . .

MR. GRAHAM: Mr. Minister, that's not my question.

MR. CHRISTIE: Well, that's the interpretation I'm taking from it. So I interpret your question to be that and that's the response I'm giving you.

MR. GRAHAM: I can see the curling club anomalies between seasons, obviously there are anomalies with respect to this, but I'm suggesting to you that there has been a systemic effort to move machines from low volume to high volume to increase revenue, knowing that that would increase addictions for the people who are using those machines.

MR. CHRISTIE: And I'm suggesting to you, if the premise that you're suggesting was true, then we wouldn't have any machines in Legions, we wouldn't have any machines in small areas in the country, that we wouldn't have them in other areas, that we would just take them to the high-volume areas.

MR. GRAHAM: I'm not suggesting this applies to Legions, I'm suggesting this applies to bars. Now, you can be as evasive as you wish, I'm suggesting that in bars you have been systematically moving machines from low volume to high volume to increase revenue.

MR. CHRISTIE: And I have accepted that as the fact of some of the movement of machines.

MR. GRAHAM: Would you not agree that that would have a tendency to increase people's addictions?

MR. CHRISTIE: No, I don't have any research that would suggest that.

MR. GRAHAM: Well, it seems that we have a problem frankly, and with the greatest respect, you don't accept the notion that by increasing the volume of use of VLTs you're also increasing the rate of addictions within this province, and that may be at the heart of this Cabinet's problem. Do you not accept that as a principle, that as the volume of revenue to your bottom line grows, so does the hurt that happens to Nova Scotia families?

MR. CHRISTIE: I accept the fact that as revenue grows the incidents will increase and that's the fundamental reason that the government made a move to respond to the strategy and to move in the direction that we did.

[Page 307]

MR. GRAHAM: So you have admitted that you've actively engaged in moving machines from low-volume locations to high-volume locations. You've admitted that this would increase addictions. Doesn't this create concerns for you with respect to the class action suit that's against the Province of Nova Scotia right now on whether or not this exposes you to increased assertions, or stronger assertions, that you are in fact increasing addictions and reckless about whether or not it's harming Nova Scotia families?

MR. CHRISTIE: I guess I'll have to get you to direct me to which class action you're talking about. However, I would suggest to you that the information we are working on is that the prevalence of problem gambling didn't change significantly from the first measurement to the second measurement. So I can't draw the conclusion that moving machines from one location to the other, whether you want to talk about the ones in bars or you want to talk about the ones in Legions, is going to give the effect that you're suggesting.

MR. GRAHAM: So you're not prepared to admit that moving machines systemically from low-volume locations to high-volume locations is necessarily going to increase addictions? You don't accept that line of reasoning?

MR. CHRISTIE: I haven't seen correlation to that effect. I haven't seen correlation that indicates because machines are moved that changes the incidence of problem gambling. I haven't seen correlation that shifting machines to one location, be it Summer or Winter, has indicated a correlation between that.

MR. GRAHAM: The only thing that appears to be shifting is the way that you describe the question. I'm not talking about just shifting machines. I'm talking specifically about shifting machines from low-volume to high-volume locations. Where is the interruption in the logic from your perspective?

MR. CHRISTIE: I don't see an interruption in the logic. I understand your question, your question was do you move machines to high-volume areas and I've indicated to you some of the machines that we move. I don't accept the premise that every machine that we move is based on that criteria and that's what I've suggested to you.

MR. GRAHAM: That's the shift of the question again. The question is whether or not you accept that moving machines from low-volume to high-volume locations is going to increase addictions. Surely you have to understand that it will.

MR. CHRISTIE: I understand that the challenge of addiction has many functions, there are many reasons. Perhaps moving them to high-volume areas will attract more people to come there, but I suggest to you that as you look at that data and you look at the strategy that we brought in, it is to address some of those areas, it is to address some of the areas of trying to find treatment. So I accept a little bit of your premise, but I don't accept it all.

[Page 308]

MR. GRAHAM: A little bit, okay. Let's then move on to a related issue. I don't want to, because of the personal nature and the sensitivity of this, spend much time on it and let me preface my remarks that the people who lead the organizations in our province should be appropriately and adequately paid for their services and there's not much that I've seen that would suggest that it's inappropriate in terms of the quantum that somebody receives in their remuneration, including the remuneration that's received by the CEO of the Gaming Corporation. The quantum is not an issue that I take issue with. I know that a number of years ago, however, some of the quantum or the bonus was related in some respects to the size of the revenue that came in to the Gaming Corporation. I hope that that's not still the case, but I ask the question, is it still the case?

MR. CHRISTIE: Well, obviously, it can't be the case because we've indicated to them we're going to move their revenue down in the strategy. I mean that's clear and what we put out.

MR. GRAHAM: So you're saying it's no longer part of the employment package for the CEO?

MR. CHRISTIE: I will clarify just the absolute details, but we've moved them down.

MR. GRAHAM: Okay, thank you.

MR. CHRISTIE: The targets in the past have been based on financial and meeting with financial targets and meeting the targets within the responsible gaming initiatives. The strategy and the goals of the Gaming Corporation are to promote responsible gambling and the measurements that the Gaming Corporation people have is to meet the financial projections and to meet the responsible gaming projections, so it's twofold.

MR. GRAHAM: I take it then that it hasn't changed and that the financial component continues to be part of the package of employment for the CEO?

MR. CHRISTIE: That's correct, those two initiatives are part of our compensation.

MR. GRAHAM: Let me shift gears for a moment and move to the question of the granddaddy of all myths that has been promoted by your government and that is that an underground industry is impossible. We've heard the Premier speak about how he believes that there was an underground industry in Nova Scotia and that it was terribly pervasive and to roll the clock back would create more problems at a later date.

He has not acknowledged the testimony that was explicitly put before the Public Accounts Committee from the province's gambling addictions expert who suggests squarely that the Premier's understanding of the grey machines period is inaccurate. He simply isn't taking the advice of the expert in that regard. He doesn't accept the distinction between a

[Page 309]

grey machine and an illegal machine, a black market machine. He has quoted from a number of sources, including an officer from South Carolina, who has given, I would suggest, dramatically contradictory evidence from that jurisdiction. At one point he gave an estimate of how many machines were being confiscated each month on CBC radio and then he gave an interview with The Daily News where he inflated that number by about five times, but nonetheless the Premier relies on him to suggest that South Carolina didn't work. But you're aware that there was research done in South Carolina by two experts in this area, Professor Bidwell, a law professor, and Frank Quinn, Ph.D. Have you ever spoken to them, or have people in the Gaming Corporation ever spoken to them or gleaned what their position was about the dramatic improvement that happened after 34,000 machines were removed from South Carolina?

MR. CHRISTIE: Yes, I've confirmed with them that they have spoken to them, yes.

[11:00 a.m.]

MR. GRAHAM: And they would agree with me that each of Dr. Quinn and Professor Bidwell have indicated that there was a dramatic decline in addictions in the province as a result of the changes that were made in South Carolina.

MR. CHRISTIE: They don't take your interpretation of the discussions with them, they've seen some changes, in gaming and addiction problems, from one thing to the other, but they don't completely take your interpretation of that.

MR. GRAHAM: The Premier was quoted on CBC Radio as saying that the problems in South Carolina remain alive and well, and I'm paraphrasing here, I'm looking for the actual document that sets that out. There are many documents before me. The response from Professor Bidwell was that that is absolutely not true. Now, are you suggesting that Dr. Bidwell - I'll give you the exact quote - first, from the Premier where he said, they, in South Carolina, are in the midst of a tremendous fight in South Carolina against illegal machines. Last year they confiscated 1,000 machines. VLTs are alive and well in South Carolina, they've just gone underground. Professor Randall Bidwell, a professor of Charleston School of Law in South Carolina, calls Hamm's assessment absolutely not true. Then he goes on to say there were 35,000 machines at one point, and now there are maybe 100 underground, Bidwell said, there's no comparison in the size of the problem.

MR. CHRISTIE: The Gaming Corporation people have, in the last week, spoken to law enforcement people and Dr. Quinn. The information that they have is different from yours, from those particular people.

MR. GRAHAM: Dr. Quinn was also interviewed, as I recall, and Dr. Quinn did research. Are you familiar with the research? Are you familiar with the exact quote that comes from the research? Perhaps I'll provide it to you. This is from Dr. Quinn, if I could,

[Page 310]

Mr. Chairman, if you could just give me a moment. The number of gambling addicts in South Carolina was . . .

MR. CHAIRMAN: Would it be possible to table that document, after you read from it?

MR. GRAHAM: Sure. I'll make sure that I go to a document that is a little cleaner than this. I know that the top line quote from these professors has been often repeated. Perhaps if I could have a copy back, Mr. Chairman. This is taken directly from a report off the Internet, so it's in e-mail form. The quote is, the number of gambling addicts in South Carolina is down sharply since the state outlawed video gambling of chance three years ago, a new study has concluded. I'll provide that to the Chair, if I could just have a copy. That was a report done by Dr. Quinn. Do you accept his assertion that addictions were down sharply?

MR. CHRISTIE: I would have to ask you to provide the date of that report. Was that report just within the last month? Or, was that . . .

MR. GRAHAM: That's the original report that he did some time ago.

MR. CHRISTIE: Back around 2001 or so.

MR. GRAHAM: Yes.

MR. CHRISTIE: Well, the information that I'm providing the committee today is that the chair of the Gaming Corporation spoke to Dr. Quinn. He indicated there was 137 machines confiscated just last month, and that there are 4,000 confiscated and sitting in a warehouse. Law enforcement and Dr. Quinn have indicated that data, so, therefore, we seem to be at odds on some of the numbers that we're working with.

MR. GRAHAM: Again, Mr. Minister, I'd suggest that you're shifting the discussion. I'll deal with your assertions about the numbers. I'm talking about his assertions. The bottom line interest on the part of Nova Scotians is whether or not the problem is going to go away or decline sharply. It has declined sharply in South Carolina, according to the expert that you're now giving some credibility to. Do you agree that it would also drop sharply if we did the same thing as South Carolina?

MR. CHRISTIE: I can't accept that as factual data, that I can make the relationship from one to the other. No, I can't say that.

MR. GRAHAM: I'm not surprised that you at least wouldn't say that. You don't have any reason, I don't expect, to say why you say that.

[Page 311]

MR. CHRISTIE: Well, I have no data to relate that to. You're suggesting data from that area is going to have the same cause and effect in another area. That's what I'm saying to you, I can't accept that.

MR. GRAHAM: Mr. Minister, do you recall what the fine is here in Nova Scotia for possessing an illegal machine, for a first-time offender?

MR. CHRISTIE: I'd have to look it up, I don't recall right off the top.

MR. GRAHAM: It's a minimum of $10,000. Do you know what it is in South Carolina?

MR. CHRISTIE: No, I don't.

MR. GRAHAM: It's a $500 fine, and even in a jurisdiction where there is a $500 fine, the problem has declined sharply. Moving away from South Carolina, let me ask you this, are you familiar with the research out of South Dakota?

MR. CHRISTIE: I haven't read it, no. I know there's a file on research from a number of jurisdictions, and South Dakota is one of the ones in the binder. I haven't read all of their research, from all the jurisdictions.

MR. GRAHAM: In South Dakota, and I'll provide this to the Chair, for a period of time they went without VLTs, and this is a report from a Robert Carr, who is a Doctor of Education, Jerome Buchkoski and Timothy Morgan, that says there was a marked decrease in the number of enquiries, the number of gamblers treated during the time that the machines were turned off. I'm assuming that you're not familiar with that. There have been some quotes that have come from selected people from other jurisdictions. Mr. Minister, are you familiar with what states or what countries have actually outlawed these machines?

MR. CHRISTIE: I've had an opportunity to read the report. We had analysis for different jurisdictions and what they have done as part of the gaming strategy. For some of the jurisdictions, that has been part of the information that has been available as part of the gaming strategy. You mentioned a number of the issues the Premier has mentioned in terms of North Carolina, you've mentioned a number of the situations in terms of Ontario. So there is a great number of jurisdictions and a great deal of information available, which is a challenge to the government, it's a challenge to all Nova Scotians, as they consider the issue. Yes, I'm aware that the information is available from those different jurisdictions.

MR. GRAHAM: The granddaddy of all assertions by the Premier is that an underground market will grow up around these machines, correct?

[Page 312]

MR. CHRISTIE: He has indicated that in the past the grey machines have been there, and the indication from various jurisdictions is that that has happened in a number of jurisdictions. Yes, that's what the Premier has indicated.

MR. GRAHAM: Okay. Let me turn to the document that was released today by the Gaming Corporation. There was a document . . .

MR. CHRISTIE: Just let me be clear, this was asked for by the committee yesterday, and we agreed to release it.

MR. GRAHAM: Let me turn to this document, and let me ask you a few questions. This was done, I understand, yesterday, it was in response to the request from the member for Dartmouth North. Let me ask you, first, with respect to the detailed calculations of gaming strategy initiatives. There is an indication of what they call a migration rate concerning the reduction in hours and the removal of 800 VLTs; 35 per cent is indicted for the removal of 800 VLTs. Can you tell this committee whether or not this was done as a result of an internal analysis, or whether or not this was done as a result of some comprehensive research that really sorted through these questions, and perhaps from an independent source?

MR. CHRISTIE: This was done with the best data that was available, and it was done in conjunction with the ALC, and working with the database that they have and other jurisdictions, as to what has happened in other jurisdictions that some of these things have occurred. It was based on the data that the Gaming Corporation has in conjunction with ALC.

MR. GRAHAM: Was it done through some comprehensive research, or was it done internally?

MR. CHRISTIE: It was done between the Gaming Corporation and the ALC. If you want to define that as internally, I'll accept that, but the ALC and the Gaming Corporation used the data, plus they used data referring to other jurisdictions, but they were the ones who did the calculations.

MR. GRAHAM: Your analysis, particularly with respect to the 800 VLTs, is there a condensed document that sort of crystallizes how you arrived at that 35 per cent figure?

MR. CHRISTIE: Essentially this is the condensed document, there is a lot more number backup to that, but this is the condensed document.

MR. GRAHAM: I'm just looking for the figures that back up that 35 per cent figure.

MR. CHRISTIE: This 35 per cent migration figure?

[Page 313]

MR. GRAHAM: Yes.

MR. CHRISTIE: We will undertake to give you that calculation.

MR. GRAHAM: Is there a document, a single document that speaks to this?

MR. CHRISTIE: There is a calculation within that document, I'll call it a document if you wish. It's a calculation which we will provide you with, so you can see how that 35 per cent was determined.

MR. GRAHAM: Can you provide us with the figures with respect to the 45 per cent figure as well?

MR. CHRISTIE: Sure. Yes.

MR. GRAHAM: Can you provide us with the supporting data, not just the final mathematical conclusions, but what assumptions went into the determination of those numbers?

MR. CHRISTIE: We're going to undertake to give you the calculation of those numbers. Any assumptions that were drawn would be included as part of that calculation. We've undertaken to provide that to you.

MR. GRAHAM: It strikes me, with all of the research that has been done through your department, Mr. Minister, that it would have been possible for your department to determine, quite easily, how efficient your machines were. For example, you know how much money is coming out of certain machines, and it would have been quite easy to determine whether or not the efficiency rate of your machines on average is operating at 50 per cent, 75 per cent or 95 per cent. Can you tell us that answer?

MR. CHRISTIE: The question you're asking is, any particular day, what is the amount of usage of all of the machines in the province?

MR. GRAHAM: No. You would agree with me that you have the capacity to determine whether or not these machines are working to maximum capacity.

MR. CHRISTIE: We know the revenue from each machine, that's correct.

MR. GRAHAM: So you know whether or not - let's imagine that there is a machine that's operating for all of the hours that it could potentially be open for, that's a 100 per cent efficiency rate. Then there would be other machines that take in substantially less revenue. You're able to determine, I would assume, quite easily, whether or not your machines are working on average at a 100 per cent capacity or at a 10 per cent capacity.

[Page 314]

MR. CHRISTIE: What we do know is what revenues are generated from the machines, that's known each day as the machines close down. There is no data that says that machine in that Legion has been operating six hours of this day or 10 hours of a day. Somewhere along the way, if we get into new systems and we get into monitoring, that data will be available. I cannot give you a detailed analysis of each machine in every part of the province and how many hours they operate each day.

MR. GRAHAM: So it's possible that the machines may be operating at 50 per cent efficiency, in other words they would have a capacity to take in 50 per cent more revenue than they presently do?

MR. CHRISTIE: In some cases that would be true.

[11:15 a.m.]

MR. GRAHAM: Well, I'm talking about the overall picture, it's possible that the overall picture is that you would have double the capacity that it is actually being used on the existing machines.

MR. CHRISTIE: I said that would be true, meaning that some would be higher than 50 per cent - you used the word 50 per cent, some would be 70 per cent, some would be 60 per cent, but there is probably growth capacity in a lot of machines, yes.

MR. GRAHAM: Have you done the calculations, or has the Gaming Corporation done calculations to determine the growth capacity in each of these machines?

MR. CHRISTIE: Yes. The growth capacity would be the numbers that they were forecasting for the budget, prior to when we made the change in the strategy. It's common knowledge that we knew the VLT contribution to gaming would probably increase $15 million to $20 million next year, prior to the implementation of the strategy. We knew that. That's part of the reason that you looked at the strategy and said, then we have to start and go into the area of treatment and prevention, and we moved in terms of the strategy.

MR. GRAHAM: I'm asking about whether or not these machines, overall, are operating at 50 per cent? Some would be 30 per cent, some would be 80 per cent, but, overall, whether they're operating at 50 per cent of their capacity or higher?

MR. CHRISTIE: I could give you a number, but I'm advised they will go and generate a number. If your question is on a period of a year, how much was the capacity of those machines a year, or were you looking at a specific day?

MR. GRAHAM: No.

[Page 315]

MR. CHRISTIE: Because the averages are going to change.

MR. GRAHAM: Absolutely. Over the year.

MR. CHRISTIE: So your question is specifically on a given day or over the year?

MR. GRAHAM: Over the year.

MR. CHRISTIE: At this point, I'm advised that utilization rates are not available to provide per machine for the universal utilization rates. We don't have those numbers.

MR. GRAHAM: Surely you would have thought, as you do the calculation about migration rates, and this 35 per cent figure that you've issued earlier today, surely it would have been easy for the corporation to determine the existing utilization rate and factor that in substantially to the question of what the migration rates would be?

MR. CHRISTIE: They took all the information that was available in calculating those migration rates and the assumptions, and the various other calculations are what we've indicated we will provide the background detail for that.

MR. GRAHAM: Because the point that I'm going to make, Mr. Minister, is that the reduction of 800 VLTs may turn out to be meaningless if the capacity of the machines are only operating at, say, a 50 per cent rate now, and if you don't know that figure, you can't meaningfully put in the 35 per cent figure. There is significant capacity still in these machines that would absorb all - especially for the problem gamblers who have a bigger appetite and aren't deterred by the fact that they've lost their car, their home, their job, their family. The fact that they may have to wait a little longer for the machine isn't going to change their appetite to use these machines.

MR. CHRISTIE: The utilization rates will be part of the analysis, but I would suggest to you that you have to expand the focus of that discussion and the fact that there's more than just 800 machines coming out, there's the issue of slowing the machines down, there's the issue of changing the hours, there's the issue of taking off the stop button. So that's going to have utilization issues, also, because it's going to increase the length of play, it's going to increase the reduction of hours. A number of factors in utilization are going to change on this, apart from the 800 machines.

MR. GRAHAM: I appreciate that, Mr. Minister, but we have a figure here that you and your officials have put before this committee that says that there's a 35 per cent projected migration rate. It has nothing to do with the stop button, which has other issues, it's just the removal of the 800 VLTs in itself is a 35 per cent figure that must be directly connected to the utilization rate that exists right now, and you're not able to tell us what that utilization

[Page 316]

rate would be. So, it raises enormous questions about whether or not that 35 per cent is a real figure.

MR. CHRISTIE: When you started to do this, and the question that you have is on the 35 per cent, you looked at the issues surrounding the removal of the 800 VLTs, you looked at the migration rate, however, you couldn't accept the other factors that were going to be part of the strategy. There are other factors that are going to be part of the strategy, and that's going to move in. The indications, we've had this discussion with the Auditor General, the Auditor General looked at revenues and looked at where we were going. There were some of the same questions.

Initially, as you do with estimating the gross domestic product, as you do in estimating what the Canadian dollar is going to be, relative to the U.S. dollar, you have to make certain assumptions in the calculations. Fundamentally, that's why part of our whole process is the review of the data, the analysis and then to take all that information in to look at what has happened from the baseline as we have introduced the strategy.

MR. GRAHAM: I feel that those are going to be your continued responses, I'd like to move on to a separate subject that's related to yesterday's discussion about the Windsor groceries for gambling scenario. Let me start by asking this question, in the past when your government has done research with respect to gambling addictions, you have employed gambling expert consultants, is that correct?

MR. CHRISTIE: We have employed consultants who have the criteria and background to do some of that analysis and the discussions. Whether they are universally called "experts" or not, whether you accept they are experts, they have to have abilities within that field to be able to provide that analysis.

MR. GRAHAM: Let's be specific. Most of the work that has been done has been by the addictions specialists known as Focal Research who are out of Halifax and have an international reputation, is that correct?

MR. CHRISTIE: I'll just confirm that. I'm advised that the answer to your question is, yes they have done work before and there have been other researchers that have done work before. They are not exclusively the ones who do all the research.

MR. GRAHAM: When it comes to the collection of significant data, I'm going to suggest that when you are determining the mindset and ways to address problem gambling, you have employed experts who have a background in this area and expertise, is that fair to say? Essentially, people with a scientific research background.

MR. CHRISTIE: Yes, that's fair to say.

[Page 317]

MR. GRAHAM: Focal Research is one example of that?

MR. CHRISTIE: Yes.

MR. GRAHAM: You would agree with me that this work that you're doing in Windsor is in the nature of scientific research, trying to determine what it is that motivates people, it's not just about opinions, it is scientific research that you're looking to do?

MR. CHRISTIE: There are scientific components to it. Your comment as to what motivates people - it's getting people's reaction, it's having people respond to certain suggestions and it's part of the focus groups to get people's opinions. I don't classify it as fully scientific, I classify it as more of a socio-economic survey.

MR. GRAHAM: A socio-economic one. It is intended to get to the heart of whether or not you get a fix to this addiction problem and you have employed, as I understand it, Omnifacts-Bristol, best known as an opinion polling company, to steer your work for this, is that correct?

MR. CHRISTIE: That's correct.

MR. GRAHAM: I asked for a copy of that contract yesterday. I don't know whether you have it with you now, the Omnifacts-Bristol's contract that was referenced yesterday. I'm assuming that they have a contract for the work they are doing in Windsor?

MR. CHRISTIE: Yes.

MR. GRAHAM: Was that work tendered?

MR. CHRISTIE: Yes.

MR. GRAHAM: How many bids did you get on that work?

MR. CHRISTIE: We would have to check that, we don't have that with us.

MR. GRAHAM: Did the work go to the lowest bidder?

MR. CHRISTIE: We will have to get that from the Procurement Office, it went through that office to gather that. We will obtain that information for you.

MR. GRAHAM: Can you provide us with the background to that request as well?

MR. CHRISTIE: To the request for proposals?

[Page 318]

MR. GRAHAM: Yes.

MR. CHRISTIE: Certainly, we will give you a copy of the request for proposals.

MR. GRAHAM: In the proposal that was requested, is there a component that addresses the health concerns associated with doing this?

MR. CHRISTIE: I don't have it here, I can't answer that. We will provide that for you and then you'll be able to answer that question.

MR. GRAHAM: Just on the issue of the role that Bristol has played, we know that Bristol was the party that did the extensive survey for government on gambling. They were seeing people's opinions back in late January, early February this year and I assume that was a contract done through the Gaming Corporation, is that correct?

MR. CHRISTIE: No, that was done through the steering committee on the gaming strategy which would have been headed up through the Office of Health Promotion.

MR. GRAHAM: Do you have a sense of how much that cost?

MR. CHRISTIE: I would have to get that information, I don't know.

MR. GRAHAM: Bristol does communication work, I understand, with the government generally in supporting messages that the government has. Brand Nova Scotia is one example of that sort of work that they do.

MR. CHRISTIE: Yes, that's correct.

MR. GRAHAM: Do you have a concern about the prospect that you have, at least with respect to the optics, Mr. Minister? You have the company who is doing your polling also now engaged in scientific research, also doing the work in terms of communicating out a message for and on behalf of government in some areas and perhaps in this specific area?

MR. CHRISTIE: I expect Bristol or any other corporation who receives a tender to meet the criteria we laid out for them, I don't expect anything less. I don't consider what somebody has done in the past or has not done to be a detriment to their ability to do things in the future. I expect Bristol to carry out the terms of this mandate, regardless of whether they have done this or that in the past.

MR. GRAHAM: Is Bristol doing communications work specifically for the Gaming Corporation? Communications work as opposed to research work.

[Page 319]

MR. CHRISTIE: Well, they have in the past, they're not at the present time. They have in the past been involved with the Gaming Corporation, as have other people, too.

MR. GRAHAM: I understand there was a contract to be signed in Windsor by the people who participated in the Windsor study, is that correct?

MR. CHRISTIE: The people were going to sign something to say they wanted to participate in this. As I recall, there was an initial payment to them at the start of the focus groups and so on, so they would indicate their intent, yes. When they indicated they were going to take part in the group if they chose not to later on, it wasn't a binding contract saying we would sue them if they didn't. They were giving an indication of their desire to participate.

MR. GRAHAM: Are you able to provide this committee with a copy of that contract?

MR. CHRISTIE: We will certainly take that under advisement. I can't speak for Bristol, we've hired them to undertake this but I will inform them that you raised the question of wanting to see that and I'll pass on their contract or their response.

MR. GRAHAM: They are your client, I would assume that they would respond to your direction about something this specific. I'm asking whether or not you will ask them to disclose that?

MR. CHRISTIE: We didn't specify in the contract that we want you to do these services and want you to provide this for public information or provide that. I'm going to ask them to do something that's not within the terms and guidelines of the contract. If they are amenable to it, then we're happy to do that. However, anything we give you will not have specific names of people on it, it will just be a generic form. We're not going to release information of specific people who have been involved.

MR. GRAHAM: In terms of who the target for this group in Windsor is, are you targeting problem gamblers or are you targeting anyone and randomly?

[11:30 a.m.]

MR. CHRISTIE: Anyone and randomly.

MR. GRAHAM: So it's somebody who may have never used the machines before?

MR. CHRISTIE: The people who are going to be involved, somebody who have, at some point in time, played a machine. So it wasn't just generally random but people would have had to have some association with machines before, whatever limited amount.

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MR. GRAHAM: If you've used the machine just once before you're eligible for this program?

MR. CHRISTIE: One of the determinants of determining the people to approach was people that were playing a machine at the time. Whether it was the first time they played the machine or they had played, wasn't a criteria. It was people that were involved with machines at the time, that's how they were identified through the random process of being on a machine.

MR. GRAHAM: So if somebody simply used the machine once, they could now be part of this program?

MR. CHRISTIE: If the researcher walked up to person X on the machine, the question wasn't how many times have you played it, the question was were they on the machine at that time. The number of times they have played was not a determinant.

MR. GRAHAM: Are you familiar with the research that was tabled at the International Gaming Conference in October by Saint Mary's University professors that said that gambling disproportionately targets people from low-income areas?

MR. CHRISTIE: I've seen that research from a variety of places. I've seen the research from Saint Mary's University, I've seen some of the research from Quebec in terms of the salary levels and the economic strata of people that play machines, yes I have seen a number of those studies.

MR. GRAHAM: Given what you know then about the fact that people from low-income brackets are more susceptible to problem gambling, did you not have reservations or were reservations raised about the groceries for gambling that may draw people in who are perhaps on social assistance, perhaps more destitute?

MR. CHRISTIE: I think the prevalence study that was completed here last year indicated that people with addictions or with possible addictions came from all economic stratas, it wasn't solely to low-income.

MR. GRAHAM: Then you don't accept that? Obviously people who have addictions come from all areas, Mr. Minister, what I was suggesting was that disproportionately seniors and people from low-income areas, for example, are disproportionately vulnerable.

MR. CHRISTIE: I haven't seen that research to verify what you have said. Research that I have seen indicates that it comes from a variety of things. When people were approached to be part of this they weren't asked their economic status, they weren't asked how much they made, so I wouldn't be able to indicate to you that a greater majority of people there were going to be from low end. I have no data to indicate that.

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MR. GRAHAM: Then I'll refer you to the paper that was prepared by Dr. Perrier and I'm not sure if it was Dr. McMullan as well, it was tabled before the international conference in October, it was also tabled in the Legislature on the same day that it appeared before this group and I do recommend it for your reading in this area. Again on the topic of the Windsor approach, is it entirely within the discretion of the person who is using the so called Smart Card to set the limit for themselves?

MR. CHRISTIE: Yes, that is correct.

MR. GRAHAM: So someone on social assistance who's bringing in $15,000 per year could set their limit on this Smart Card at $20,000 per year, is that correct?

MR. CHRISTIE: Yeah, that's a possibility.

MR. GRAHAM: So what's the point of the card?

MR. CHRISTIE: The point of the research effort is to look at the card to see if it has benefits, to see if it has use to people, in general. It's to provide another mechanism and another tool for people who want to limit their gambling, who want to be aware of how much they are using, how much they've played. There is a whole variety of reasons. The purpose of the card is not simply to block people, it's to provide a whole series of data and that brings us back to the whole reason for doing the test. In doing the test, does it have those values? Does it have the significance in the use that we want to see it for? Is it providing what we hope it will provide? That's the reason for doing the test.

MR. GRAHAM: Is it possible for somebody to simply cross the county line and use a machine that isn't part of the Smart Card exercise?

MR. CHRISTIE: It's absolutely possible. The purpose of this card is to help people who want to help themselves. It was never designed to say that if you have that card, that that card has to follow you. What the attempt of all of this is to do, is to help as part of our prevention and our education. These are tools, tools that we're attempting to put there for people to use and if your question is if you're going to force people to use them, no, that's not the intent, the intent is to provide tools and information for people to educate themselves and have these tools available to them.

MR. GRAHAM: So it's possible with the Smart Card experiment that you could have somebody who has only used the machine once, a year ago but who's desperate for groceries coming to receive the Smart Card so that they could use it, set their limit at an unreasonably high level, start to use the machines and not be protected.

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MR. CHRISTIE: The only thing that I'll disagree with what you've said is that they couldn't have used the machine a year ago. I have indicated to you that they were at the machine when they were identified in the random selection to be part of the process, obviously they had used the machine that night. As I indicated the question then wasn't to them, what is your socio-economic status? How often have you used machines? The determinant was that they were using a machine that particular day.

MR. GRAHAM: So it's your evidence here today, that the only people who were targeted, the only people who were given a Smart Card, were people who were found in front of a VLT machine that night.

MR. CHRISTIE: That's exactly what we're saying and I'll just correct you a bit, you said people that were in front of a machine were given a Smart Card, well there was more than a Smart Card, they were asked to be involved in the focal groups and asked to be involved in the other things. The determinant of how those people were selected is that they were in front of a machine on that given night.

MR. GRAHAM: So if there was anyone who received a Smart Card who was not before that machine then, it would throw the findings off and it wouldn't be consistent with the model that set this research up in the first place, is that fair to say?

MR. CHRISTIE: It wouldn't be following the model that we had been made aware of. The model that we were indicated with was that the determinant would be people would be in front of a machine, not that they would just go one day and find people in front of a machine and then some days later. That was the model that was established.

MR. GRAHAM: Thank you, those are my questions.

MR. CHAIRMAN: The honourable member for Dartmouth North.

MR. JERRY PYE: Yesterday I asked the Minister of Finance if he could provide me with information that would justify the government statement that, in fact, through the financial impact of the gaming strategy, they would lose approximately some $19 million in the first year of implementing this strategy and some $40 million dollars in the last year of implementing this strategy.

Yesterday, Mr. Minister, you had indicated that there were a number of factors involved in coming to this number. Some of those factors were the reduction of hours of operation, the removal of 800 VLTs, the removal of the stop button and the reduction of speed play. I didn't realize that it would warrant a press conference this morning by the Gaming Corporation to justify or clarify its position with respect to this issue. I had believed that, in fact, the Gaming Corporation had already done tremendous research. As a matter of

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fact, yesterday I had expressed my skepticism with respect to the numbers that were arrived at by the Gaming Corporation and, Mr. Minister, by you.

I had indicated that some of these areas just simply could not have been measured. One in particular was the stop button and the stop button in my opinion is not an area that can be measured although you had indicated there had been research done around this. The fact is that a person going out for a source of entertainment and has x numbers of dollars in their pockets and want to play a video lottery machine, will spend the money whether the stop button is removed or not. The stop button is a feature that progresses a time or an event of a play. When you use the stop button, it just simply indicates, it may speed up the progress of time but in the end result, those people who are going to gamble are going to continue to gamble regardless of the stop button being there or not.

So my question to you, particularly on these two issues, one with the reduction in the speed of play and what researchers you've used and also with respect to the stop button, what researchers you've used and the indication that led you to believe that the number of dollars would be the result of reductions in revenue.

MR. CHRISTIE: Let's go back a minute. You mentioned a couple of things. First I will deal with the press conference. As we indicated to you yesterday, we would provide this document to you and we did provide the document. At the request of people of the media, based on this document that was there, the Gaming Corporation agreed to have a technical briefing for them and to provide answers to questions that they were seeking.

Now on the issue of the stop button, the stop button issue has been one that the Gaming Corporation has been looking at for a while. In reality, the stop button wasn't changing the rotation numbers. What it was doing was allowing people to play every three and a half to four seconds. The research, in looking at that, was if you started to look in our area of treatment and prevention, if we started to look in the area of prevention, the discussion with the Gaming Corporation was centred around the fact of slowing the machines down and, in fact, two of the items that you see there have to do with the stop button and slowing the speed down.

Now if specifically you are suggesting, the question was is the research, in terms of those two analyses, the Gaming Corporation and the Atlantic Lottery Corporation had looked at those and as they looked at those they saw those as items and things that cause people to put more money in the machines and therefore to speed it up. So that was the internal analysis that they were looking at it and as they looked at it with the Office of Health Promotion and they looked at some of the ways we were moving toward the strategies, they made determinations as to some of the causes and effects we would have, how it would help us in terms of the prevention of people on the machines. So those were the types of research done there.

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MR. PYE: Who did the research?

MR. CHRISTIE: Essentially, the research was done between the Gaming Corporation and the ALC along with discussions with other jurisdictions and with manufacturers and so on. So the essential research on these were done by the Gaming Corporation and the ALC.

MR. PYE: So the two entities that had a vested interest here were the entities that actually did the research. So it was basically internal.

MR. CHRISTIE: It was internal. Let me suggest to you that the ALC and the Gaming Corporation aren't entities that want to see these things happen and slow down. Their corporate goal is to develop and move the gaming strategy. However, the other part of their goal is to implement and develop responsible gaming practices and techniques. So they view this as part of their responsible gaming strategy.

[11:45 a.m.]

MR. PYE: What I would say to you, Mr. Minister, is that they are also interested in continuing to make sure that their revenue base continues to exist. There is a vested interest in continuing, although there is the avenue to want to say that these are systems or mechanisms put into play that will reduce or have the potential to reduce problem gambling. It is not solid research, it doesn't hold a base with respect to research.

My question would be that since we were preparing a report called A Better Balance - Nova Scotia's First Gaming Strategy, we wanted to make sure that it was based upon the best possible research, because we had been involved in gambling as a legalized form of gambling through electronic video gambling in this province since 1991. Now this was the very first gaming strategy that was developed, Mr. Minister, by you through the corporation. I would say to you that it warranted the best possible research to be a part of that strategy.

MR. CHRISTIE: Let me speak to one of the statements you made and I think the statement you made was, it's in the interest of the Gaming Corporation and ALC to achieve the highest amount of revenue possible. Now that is obviously one of the goals that they have, to maintain revenue but one of their other major goals is to promote responsible gambling. As you started to look at this and you started to say how are we going to introduce, how are we going to implement the strategy and how are we going to introduce, to start, obviously, the government's reduction on dependence on the revenue and to reduce that. You have to use the people who have the ability and the background data to do that.

I'm going to further say to you that in developing the strategy, it wasn't only the Gaming Corporation, it was the Office of Health Promotion. As I indicated before, the strategy was to do treatment and to do prevention and do analysis. So there were two parts to the strategy. What we are talking about here is a part of the strategy which determined the

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amount of dollars that was going to come off this year's revenue. So clearly if you believe the Gaming Corporation strategy is to maximize the amount of money, then you obviously would see this as directly in competition to that because we are saying we are going to introduce a new strategy. We are going to find techniques that are going to reduce the dollars that are coming in. We are going to put more money into treatment.

I suggest once you had philosophically decided how you were going to go, then the Gaming Corporation didn't have a conflict because we knew we were going to move in directions to reduce the amount of revenue and indeed to find efforts of prevention in terms of additional people becoming problem gamblers and that the Gaming Corporation at that point in time was providing information to give us the details of how that strategy was going to move forward.

MR. PYE: Well, Mr. Minister, I guess that's where you and I differ. I guess that's the reason why I asked the question yesterday was that I am no expert. I'm a layperson. I don't perceive to have any expertise with respect to identifying the numbers of the net income impact of the gaming strategy's initiative. I don't profess to be an expert in that but I'm skeptical. I'm skeptical that these numbers are not real numbers. I'm skeptical that at the end of the day we won't see the kind of revenue losses that have been anticipated. I do know that there have been other colleagues before your estimates, Mr. Minister, who are skeptical as well and who don't believe the numbers that have been arrived at. That's my concern. My concern is that if we are going to develop a very first gaming strategy, then we need to know and make sure that the expertise that is required to assist in developing our very first gaming strategy is expertise that we can rely on. There has been the conversation with respect to the reduction of the number of hours of operation.

If, in fact, there isn't 100 per cent use of the video lottery terminals at present and the reduction of number of hours just means that there will be a fuller utilization of the existing machines, then there throws the theory out the window that in fact there is a loss of revenue. That's a thought but it has very high impacts with respect to the reduction of 800 machines. Again, if in fact there is a surplus of hours of potential use of the video lottery machines, then in fact there may very well be no decline in revenue and with respect to the removal of the 200 machines, that's through attrition and there will only be a certain number of machines each year based on the number of closures of operations where existing video lottery machines are now.

The reduction of the speed, all of those culminated do not signal to me that there is going to be the reduction of $19 million. The only way that I guess, Mr. Minister, that you can say see I told you I was correct and I can say, I apologize to you I'm wrong, will be next year. I guess that's the only way that I can but how can I tell you (Interruption) Excuse me just a minute but how can I say or how can we defend these numbers if the numbers were worked and researched by ALC and the Gaming Corporation rather than a legitimate research body?

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MR. CHRISTIE: I think in two ways, and your question is how can you have confidence in these numbers. Well, I guess initially, as we have indicated, the numbers are based on the best information we have available, based on the Atlantic Lottery Corporation and the Gaming Corporation but I think one of the other things, obviously we've had the same discussion with the Auditor General and the Auditor General, as you know, signs off on our revenue estimates and the Auditor General did so again this year. Essentially, the discussion that we are having this year is the discussion that the Auditor General had with our people and I can say to you that the Auditor General felt our estimates and felt that our number projections fell within the limits of tolerance for him to give us a letter based on his best estimates that our revenue estimates were as accurate as could be, based on the assumption of the estimate. So we followed that practice again this year so it wasn't that the ALC and the Gaming Corporation did these numbers and they were not tested by anybody. The point I make to you is that the Auditor General has reviewed these numbers and has indicated their level of comfort with them.

MR. PYE: Yes, but that's a wide scope. The Auditor General has a wide scope of the level of tolerance, particularly with respect to your budget, Mr. Minister, and the overall budget. I don't know if he has looked at this budget piece by piece in a separate entity to the Gaming Corporation. Nonetheless, even if the Auditor General were to say to you they were within the acceptable level of tolerance, doesn't lend credence to the fact that these numbers are not and can not be considered scientifically researched numbers because they can't. Do you agree?

MR. CHRISTIE: I agree that they were not externally researched. They were done internally by the Gaming Corporation and the Atlantic Lottery Corporation. Yes, I agree.

MR. PYE: Well, that's exactly what I wanted to know because the bottom line is this; both of these entities, the Gaming Corporation and the Atlantic Lottery Corporation, again, have a vested interest in protecting the revenue source. Rather you can say they have worked in conjunction with the Department of Health because they want to be responsible, your department and the Gaming Corporation wants to ensure that responsible gaming occurs in the Province of Nova Scotia. Even if we do use that argument, the bottom line is, all of the research that was done for our very first gaming strategy should have been able to stand the test of time. In my opinion, Mr. Minister, this part of it did not stand the test because it was not scientifically researched.

MR. CHRISTIE: Well, I take your point. However, let me submit to you that in terms of revenues from departments, in terms of revenues from corporate income tax, revenues from personal income tax, those are done within the department. They are done within our department. They are the best estimates that we have at the time. You factor in a whole variety of factors and you come up to the end result. That is the end result of the people giving it their best efforts and then, as I said, testing those theories with the Auditor General.

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MR. PYE: So, Mr. Minister, I say to you that since we have agreed that this was not a scientific research with respect to the financial impact on the gaming strategy and what it will have to the bottom line of the Gaming Corporation of the Province of Nova Scotia that in future we will make sure when we are planning strategies around gambling in the Province of Nova Scotia or around gaming in the Province of Nova Scotia, we will ensure that every aspect of that that is possible will be researched in a manner which is conducive to proper analysis.

MR. CHRISTIE: In terms of the strategy, obviously two things will happen; we will have the discussion of whether these estimates were close or not close in terms of how the impacts are going to be and they will form the estimates that we have here and the cause and effect it has on the revenues and how they react. We will know that information in future years. So that will give us a start-off point. I think you are suggesting that as you make other model changes in the strategy that it should be researched by an external, outside force and that is something that we will give due consideration to.

MR. PYE: A force that has some credentials is what I'm saying.

MR. CHRISTIE: Yes.

MR. PYE: Sometimes that can be internal as long as the credentials . . .

MR. CHRISTIE: It could be but you are looking for, what I took from your suggestion that you were looking for more an elaborate, extensive research than what we have been talking about here.

MR. PYE: Since the Gaming Corporation had been looking at continuing with this form of entertainment in the province, yet attempting to be a responsible corporation and making sure that they were there to protect the interests of those Nova Scotians who would participate - not only Nova Scotians but those participants - in this form of entertainment and they would make sure that they have pursued every avenue. I'm wondering if the corporation has costed and researched other steps that could have been taken to be responsible to those persons who are using this as a source of entertainment.

MR. CHRISTIE: We talked earlier about setting a sense of direction for the Gaming Corporation and setting a sense of direction for how they were going to go and how this was going to happen. The Office of Health Promotion was involved, and the Department of Health and so on in looking at some of the issues that we would deal with. Obviously, the Gaming Corporation has looked at some of these issues and done some costing on them but specifically, they were given the task to look at these directions that Health Promotion was suggesting and come up with the costing. Obviously, they have looked at other areas and done some costing but they wouldn't be as extensive as this. They looked at a variety of options and some other options.

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For example, we were talking about the easy-play machines this morning. They would have some data on those and they would have some analysis on that. In this round, as we set out with the strategy, we asked them, tasked them to determine if we did these what would be the cause and effect, and you have that in front of you now.

[12:00 noon]

MR. PYE: Mr. Minister, you had indicated that the Gaming Corporation looked at a variety of options. I'm wondering, do you have those options in your possession and is it possible to table to this committee the number of different options that the Gaming Corporation has actually looked at before it came forward with its gaming strategy.

MR. CHRISTIE: The gaming strategy discussions looked at a number of areas. For example, what was the impact of 400 machines, or what was the impact of 800 machines. So at the end of the day as you looked at those different things, you zeroed in. The Gaming Corporation wasn't the determinant that said these are the items that we pick. It was the gaming strategy committee and the gambling strategy committee and the Office of Health Promotion that kind of picked the criteria and then said go out and do the costing of those. I think at the end of the day that those were the determinants and that was the major work that the Gaming Corporation did in doing calculations of what factors and what effect it would have.

MR. PYE: So, Mr. Minister, is it possible to have you provide me with some of the options that were afforded to the Gaming Corporation to reach its decision, or the body that was going to finalize the report of the strategy?

MR. CHRISTIE: We can get you some information on some of the issues that were looked at, some of the issues that were possible to discuss. Now I'm not going to suggest to you that there is going to be extensive costing with it, because the gaming strategy committee selected to zero in on these committees. If you are specifically wondering what some of the other options were that were discussed during this, then I'm able to get those for you.

MR. PYE: Yes, because particularly today, I discussed some options that may have been beneficial, the option of identifying rather than through a brochure, once the insertion of a slotted token or a card is put in, I've identified that as a way of letting the consumer know the consequences of his or her form of entertainment here. That was one of the options. Another option was the reduction in the prize that one could receive, also the reduction in the number of dollars wagered or the number of coins wagered was another one. Now I don't know if that was part of the options that were put forward to the Gaming Corporation or the strategy committee to look at, and if it were those options for them to look at, why they didn't look at them and why it wasn't something they could implement today rather than four or five years down the road or when they go through the next socio-economic study or impact, which would be another couple of years at least.

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MR. CHRISTIE: Well, as I say, we can undertake to get you a list of those items that were reviewed and what was looked at. There have kind of been many options over a period of time, and the things that we have moved forward on are significant steps here.

MR. PYE: Last Fall, I think it was, there was a Responsible Gaming Awareness Week that was held at the Westin hotel. I think it was actually put on by the Nova Scotia Gaming Foundation. I do believe that there was input by the gaming strategy and the gaming strategy had involvement with respect to being a participant in Responsible Gaming Awareness Week. I ask you, Mr. Minister, how much involvement had been played by the Gaming Corporation with respect to establishing, setting out the agenda and/or the programs for Responsible Gaming Awareness Week?

MR. CHRISTIE: Are you looking for administrative services or dollar figures?

MR. PYE: Well, administrative services, as well.

MR. CHRISTIE: Well, the Gaming Corporation led the whole thing. They put on the event, they led the whole thing. So there was getting it organized administratively, and they were the funding agency.

MR. PYE: So the Gaming Corporation, I'm to believe, paid the total cost of the funding. Did they pay the total cost of the funding?

MR. CHRISTIE: No, I'm advised there was some contribution by some operators.

MR. PYE: Some operators.

MR. CHRISTIE: Yes, that's correct.

MR. PYE: The majority of the revenue was . . .

MR. CHRISTIE: From the Gaming Corporation.

MR. PYE: The finances came from the Gaming Corporation.

MR. CHRISTIE: That is correct.

MR. PYE: The Gaming Corporation, how involved was it in setting up the theme for Responsible Gaming Awareness Week. I think this theme is one that you could say was one of those themes that could very well be stated as encouraging gambling in this province, because I believe the theme slogan said that everybody needs a game plan. I think that was the theme slogan.

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MR. CHRISTIE: Everyone should have a game plan.

MR. PYE: No, I think it said everyone needs a game plan, not should have. I think it said everyone needs a game plan, and there is the question that if, in fact - I want to know if the Gaming Corporation had any involvement in setting that theme plan and, if they didn't have any involvement, who was involved in devising that theme?

MR. CHRISTIE: As I indicated before, the Gaming Corporation led the whole initiative in terms of developing it, in terms of getting it organized and bringing people together. It was an initiative that they initiated and carried out.

MR. PYE: Would you agree that that type of a slogan could be seen to be as encouraging gambling in the Province of Nova Scotia? Who signs off on such a slogan? Does the Gaming Corporation sign off on this?

MR. CHRISTIE: Yes.

MR. PYE: Oh, the Gaming Corporation signs off.

MR. CHRISTIE: Yes.

MR. PYE: Do you believe that such a slogan would have had the potential to encourage gambling in this province?

MR. CHRISTIE: The slogan of everybody needs a plan.

MR. PYE: A game plan.

MR. CHRISTIE: Putting this in context, I recall that there was that initiative but you recall the initiatives were going to be part of the education process at universities and at other areas. The intent, and as I indicated, if you start with the strategy, the strategy was in terms of treatment and in terms of prevention. In terms of prevention I think that has a remarkably good resonance. Your question is, do I think it would encourage people to gamble? It might, a couple of people, but universally, I don't think it would. I think the target of it was to do prevention for people at risk, and people with gambling addictions to tell them that they needed to move into this, to think about it and to get a plan.

MR. PYE: So again you said it might, a couple of people.

MR. CHRISTIE: It's very possible.

MR. PYE: A couple of people may very well be affected by this and that is possible. Do you see this as a conflict? Do you see this as a conflict of interest when the Gaming

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Corporation is responsible for funding a gaming awareness week, and shouldn't this be something that is divorced from the Gaming Corporation and more in the domain of the Gaming Foundation's responsibility and/or the Department of Health and/or the Office of Health Promotion.

MR. CHRISTIE: That could be. I will say to you that part of the mandate of the Gaming Corporation that we set, as I indicated earlier, part of the mandate of the Chief Administrative Officer is to promote responsible gaming. That's one of the goals of the department, that's one of the goals of the Gaming Corporation. Simply, the purpose of that is so that they will be looking at two things from a two-pronged attack, not just in terms of revenues but in terms of socially balancing that.

Now, obviously the Department of Health Promotion is becoming involved in that. If, at some point in time we should move that over to the Office of Health Promotion, that could be. I don't view it any differently than the Nova Scotia Liquor Corporation selling product and also taking us to one of their major goals, safe driving and being responsible for consumption of liquor. I don't see a conflict in there. I think those people who are involved in setting the strategy and setting out the gaming plans for the province have to have that area and a focus on responsible gambling and responsible drinking, whatever the case might be, as part of their mandate. I would prefer to see it that way than just have them not focus on that side of it at all.

MR. PYE: Mr. Minister, there are an awful lot of people in this province and persons with expertise far better than mine who would say to you that it is a portrayal of a conflict of interest and, in fact, the agency should go about its business of generating revenue, and the government departments responsible for making sure that gaming activities in this province are responsible and that should be conducted by other departments of government, namely the Department of Health, namely the Office of Health Promotion or the ministry of Health Promotion and the ministry of Health and the gaming foundations because those are the very entities which would in fact have the expertise available to provide the awareness of gaming. I think that you and I both agree that the day has come when we need to make sure that governments and government Crown Corporations, the perception of conflict is totally erased.

MR. CHRISTIE: I take your argument as a valid one. That is certainly something to consider in the future. I will just once again say to you that from a government's point of view, that addiction is viewed universally. So the submission that you made that it should be with another department to focus on responsible gambling and responsibility and addiction service is true, and certainly the Office of Health Promotion is looking at being involved in programs and doing that.

So I guess, in response to your question, we are starting to move in that direction but, philosophically, we haven't arrived at that point that you've argued at this point in time. We

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are moving in that direction but, at some point in time, we might determine that it should be over in the Office of Health Promotion. I still would say to you that my concern would say to people that the Gaming Corporation, their only objective is to sell. It would be the same as saying to somebody, look, we are going to make widgets and you go sell them but really don't concern yourself about if the widgets are good, bad or indifferent. They have to have their eye focused on that somewhat. Yes, it can be in conjunction with another department and we can move in that way but, essentially, philosophically, we haven't arrived at what you are suggesting to us right now.

MR. PYE: Well, thank you, Mr. Minister, and I certainly hope that you will move in that direction, and you have indicated that there might be the possibility of moving in that direction. You have also stated that addictions are universal. Yesterday, I asked you about the revenues from gaming. Now my understanding is that the revenues come in to the Gaming Corporation and 1 per cent of those revenues from the Gaming Corporation go to the Gaming Foundation and the other per cent or 0.5 per cent, at least last year it was $500,000, I believe, from the Gaming Corporation and an additional $500,000 from the proprietors as a percentage of their revenue that came in, for a total of $1 million, that money goes into the Gaming Foundation which, in turn, is channelled into the Ministry of Health and the Ministry of Health Promotion. Am I correct?

MR. CHRISTIE: The determination of where it goes is made in conjunction with the Office of Health Promotion, yes.

[12:15 p.m.]

MR. PYE: Yes, and this is for addictions treatment. Now you said that you didn't distinguish between the types of addictions, that the money was put into that pot and it was to address all addictions, whether it was drug addictions, alcohol addictions or gambling addictions. Correct?

Now, it was my understanding that when we first got into the gambling business in this province that the revenue from the Gaming Corporation would be singly earmarked for a particular use, and that single earmark use was to treat gambling addictions in the Province of Nova Scotia. Now, apparently, there is a shift that the money that is going to be funnelled in to the Office of Health Promotion now will be spread over a whole blanket of addiction needs, that of drugs, that of alcohol, and that diminishes the money that can be extensively used to treat the serious problem of gambling addiction. Now I want to know, Mr. Minister, if my assumption of this is correct?

MR. CHRISTIE: Well, it is partly correct. You are correct in the fact that 1 per cent of VLT revenues goes to the Gaming Foundation along with matched revenues from retailers. What has happened this year is that an additional $3.1 million from gaming has gone to the Office of Health Promotion in addition to what had happened before. In addition

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to that, now the Office of Health Promotion is going to expand its addiction program. It's not diminishing the VLT addiction. It will be expanding those programs. So we have moved from having the $1 million to the Gaming Corporation to having that plus the $3.1 million to the Office of Health Promotion to use in a variety ways, and problem gaming is a major factor here.

What I indicated to you yesterday is that the Office of Health Promotion, which was getting this money, will continue with their treatment and work on VLTs. They are also introducing, as you know, smoking programs and other programs, so it will be an addition. Let me assure you, it will not diminish anything in terms of VLT addiction.

MR. PYE: Well, Mr. Minister, I hope that I can rely upon your assurance. Once again I want to say to you that the revenues that were to be set aside from sources of gambling in this province were specifically set out to treat persons with gambling addictions. That was the initial intent of the revenue that was derived. Now you are telling me, although you have put an additional $3 million in through Health and Health Promotion and on top of that the additional percentage that will come from the proprietors and from the Gaming Corporation, through to the Gaming Foundation, will be additional dollars that will be going in, and will be going into the Office of Health Promotion. All of those additional dollars set aside were normally dollars that were earmarked for one specific use, that was the use to address gambling additions.

Now you are saying that money is going to be spread over all of the addictions in this province. That includes smoking, that includes alcohol, that includes drugs and so on, and you have given me assurances that it will not affect the treatment process with respect to gambling addictions. I say to you, Mr. Minister, when in fact there are not enough beds in this province for people who ring up that gambling hotline, and that gambling hotline is like a 911 number to them, it's an emergency number, they have reached the final point. They have reached a point in their life where they are calling, and when they call, they have said to you, me and the Gaming Corporation that they need help. When they are told that they may have to wait two weeks for a bed - and I have residents who tell me that they have to wait two weeks for a bed - the question is, is there enough money going in now for the treatment of persons with gambling addictions, and will that reduce, Mr. Minister, the potential for persons with gambling addictions to have that bed when they need it or that time of counselling when they need it.

Are we going to have assurances that that will be the effect? Are we going to have the assurances at my office and other constituency offices across this province, including the member for Halifax Citadel, will not be faced with a caller who says that I called the gambling number and I was unable to get help? That's the bottom line. Will they be able to have assurances that once those dollars are put in there after this budget, that they will not have to wait?

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MR. CHRISTIE: Well, what I can say to you is that we are increasing funding. We talked about the $1 million going to the Gaming Foundation. Now let me be clear. The $3 million that's coming from the Gaming Corporation is going to the Office of Health Promotion. The money that went into gaming was for, as you indicated, VLTs for research and for helping with treatment. We are putting an additional $3.1 million from gaming to the Office of Health Promotion to develop programs and a lot of that program is geared to people with VLT addictions and those issues. Now at the same time, as I indicated to you yesterday, the Department of Health is indicating convalescent beds. As part of its budget, you will see there are 25 convalescent beds to provide an ability to help people such as people you have been just talking about. Now obviously there will be other people but to provide help in that. So if your question to me, is 25 beds enough to do it all the time, I don't know the answer to that. I do know it's 25 more than it used to be. So it's going to help in a lot of cases. I do know there are is an additional $3.1 million going in the Office of Health Promotion to look at the VLT products. I do know they are moving in other programs in terms of smoking cessation, they are continuing on with that program. But what I am saying to you now is that there is no deterioration in monies for VLT addictions, for VLT research going into the Gaming Foundation of the Office of Health Promotion.

MR. PYE: See, therein lies my concern with the comfort level. Mr. Minister, you are right and I commend the government for putting the additional $3 million into the Office of Health Promotion. We have been in this business for a long time, since 1991, and we have been advocating, as Opposition members and as citizens of this province, to place more additional dollars in to address the issue of addictions. I think that we have made some strides. My concern is that it has always been my concern that we utilize the dollars that come out of those video lottery machines and go into the public purse for the very entity that it needs to serve and that is the persons with gambling addictions or problem gambling in this province. My fear and my concern is that these additional dollars are going to be spread over a department's needs of all addictions and hopefully we generate enough revenue, or we should be generating enough revenue with respect to the increased cost in tobacco, to have enough revenue to come in to address those individuals with smoking addictions and to introduce the programs and prevention treatments that are necessary.

The same can be said for alcohol, that in fact you generate revenues through alcohol that will provide for those prevention programs and treatment programs. Drug addiction is a different issue. I don't know if the Department of Justice, through fines and penalties, generate enough dollars to create a treatment there. So there is a problem but nonetheless, let's assume that we need to continue to think of where these dollars were originally intended to go and that it will continue to be the intent that any revenues received from gambling, that is needed to treat gambling addiction, will solely go to addressing gambling addiction problems.

MR. CHRISTIE: And that's the indication we are giving you. The monies that we are talking about is directed toward gambling addictions, yes.

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MR. PYE: I just want to go back to yesterday and we talked about the 800 video lottery machines and approximately 200 machines being removed later. I just want to make this statement to you. It seems to be an assumption that removing the 800 VLTs in the near future, followed by the removal of an additional 200 machines later, will reduce problem VLT gambling, reduce VLT revenues and thereby reducing reliance on VLTs. For many, this proposition may well be subject to debate on the basis of research, logic and simply common sense. I'm wondering, through you, Mr. Minister, if you can tell me if you have some feelings and concerns with respect to these assumptions?

MR. CHRISTIE: The assumption that it will reduce revenue for the province and reduce the province's dependency on VLTs, I don't have any concern with that. I know we've talked about the numbers and you expressed some concern about the research. However, I think that is going to start and indicate the province's dependency.

In terms of the other aspect of this whole initiative, in terms of the monitoring, we will continue to monitor that to see how the reaction is. I don't recall the other assumption that you read there. The other assumption is what?

MR. PYE: I guess it will reduce the reliance on VLTs as a source of revenue.

MR. CHRISTIE: I think that assumption is fair but, as I say, we will monitor that and you said when we are sitting here in six months or a year and we are talking about this, we will be able to determine whether those assumptions were right. In terms of making up the budget, we had to look at what was the best evidence in front of us. We had to take it to the Auditor General and do those numbers but obviously we will continue to monitor that. So I think the assumption shows a direction. It shows the intent of where we want to go and at the time you had to make some assumptions to start moving forward. Whether they will be 100 per cent complete in terms of the revenue, we will determine that and see but I clearly think it will be moving in that direction.

MR. PYE: So I guess what you're saying to me then is that there is hope someday that there will be a government that will not rely upon the revenues of gambling to provide its bottom line and to provide services such as health, education and so on.

MR. CHRISTIE: It think clearly what it's saying to you is this government is reducing it's dependency on VLT revenues, whether we argue it's 19, 18 and whatever figure you like for this year. It indicates there are steps being taken which are going to reduce the amount of revenue, the amount going into VLTs and the amount the government is going to get. I suggest to you it's a dramatic step forward and a significant step forward. What the future will hold will depend on the evaluations and the reviews and the considerations we have as we move forward here. Then future governments will base their analysis on that data and that research.

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MR. PYE: Again, Mr. Minister, yesterday I had talked to you about video lottery machines on First Nations reserves and I had asked you if, in fact, there had been any talks going on with respect to the First Nations community on how they might be a participating partner in helping reduce gambling addictions in this province by committing to the reduction of the number of hours of operation, committing to those suggested entities that you have requested the other proprietors of Nova Scotia to commit to. You did indicate to me yesterday that this was something that was being done through the Office of Aboriginal Affairs, I believe.

MR. CHRISTIE: That is correct.

[12:30 p.m.]

MR. PYE: My question to you, although this will be done through the Ministry of Aboriginal Affairs, will there be input from the Gaming Corporation and what role will the Gaming Corporation play in any of this, with talks with respect to the First Nations community?

MR. CHRISTIE: You're correct. I indicated to you yesterday the lead on the discussions is the Office of Aboriginal Affairs. They will consult with a variety of people. I'm sure they will consult with the Department of Health and the Office of Health Promotion. I'm sure at some point in time, as part of the discussions, there will be discussions with the Gaming Corporation, but the fundamental contracts with the First Nations are administered and monitored and delivered by the Office of Aboriginal Affairs and they will continue to be the lead on that.

MR. PYE: What role will the Gaming Corporation play because obviously, it affects the Gaming Corporation's bottom line. So what role will the Gaming Corporation play with respect to . . .

MR. CHRISTIE: Let me clarify, the Gaming Corporation, the revenues are different coming off the First Nations. They go right back to the bands with the exception of a monthly fee that they pay per machine. So it's significantly different on the reserve.

MR. PYE: But the monthly fee?

MR. CHRISTIE: The monthly fee is there. So essentially it's a cost recovery fee that they get back. So it's not significant. However, the question that you have is what role will they play. The role they'll play is a consultation role that the Office of Aboriginal Affairs asks them to do. They will not be involved in discussions, but as Office of Aboriginal Affairs decides they need information or they want to get some background data from them, then they'll be involved, but that would be the extent.

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MR. PYE: You say there's a cost recovery fee?

MR. CHRISTIE: Yes.

MR. PYE: And obviously the cost recovery is what? It's an administrative fee for administering what and give me some details about the cost recovery fee and how much revenue does that involve?

MR. CHRISTIE: The range, for example, would be between $56 and $120-odd a week depending on the agreement with the band.

MR. PYE: Would you say that again, I apologize.

MR. CHRISTIE: Between $56 and $130 a week depending on the agreement with the band and that covers the . . .

MR. PYE: Is that per machine?

MR. CHRISTIE: Yes.

MR. PYE: Per machine.

MR. CHRISTIE: And that covers the technical support and the various other things that they're required to do, the cost of the machine and the technical support and the different things that they're proposed to do.

MR. PYE: How much is that annually?

MR. CHRISTIE: We'll verify the accuracy, but just for purposes of a number right now to say to you, in the range of $2 million.

MR. PYE: I just want to get clarity with respect to how this works. What are you providing, I shouldn't say you, Mr. Minister, but what is the Gaming Corporation providing that warrants this cost recovery fee?

MR. CHAIRMAN: The time for the NDP caucus is over, so if you could answer that question, and we'll move to the member for Halifax Citadel.

MR. DANIEL GRAHAM: I'm just wondering, Mr. Chairman, I think we're five minutes early on that, was it 12:39 p.m. or 12:34 p.m.?

MR. CHAIRMAN: Five minutes early, thank you.

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MR. PYE: But we do have five minutes?

MR. CHAIRMAN: You have five more minutes.

MR. PYE: So I do have five minutes, well, that's very good, Mr. Chairman.

MR. CHRISTIE: In terms of the process, the Office of Aboriginal Affairs sets up the contracts with the First Nations and then the ALC provides them with the machines. The ALC along with the Gaming Corporation provide the support for those, the technical support for setting them up, for maintaining and operating and for that, that fee that I mentioned, the fee is a sliding scale depending on how they were negotiated and what the contract says, and that fee is paid in and it ends up with the Gaming Corporation here.

So when I said to you yesterday, in terms of the agreement, in terms of the number of hours, and in terms of the removal of machines, those would not affect the First Nations because based on the agreements that are there. The stop button and the reduction in speed are technical things which will affect the First Nations and will be part of this whole technical service agreement that we're talking about here.

MR. PYE: So when this comes into play, there is no exemption for the reserves with respect to the speed of play and the removal of the stop button?

MR. CHRISTIE: That's correct.

MR. PYE: Because this is done by ALC?

MR. CHRISTIE: As part of the agreement that you and I are talking about, yes, that's correct.

MR. PYE: That's right, and that can be managed outside the realm?

MR. CHRISTIE: Yes.

MR. PYE: Time goes by so fast, but I do want to ask you another question, I think I have time and I just want to reflect upon it. All thoughtful strategies, and the gaming strategies are no different, they have strengths and weaknesses. The government's new strategy is no exception. It would be interesting for me if you could just identify one or two of the fundamental strengths and weaknesses of this strategy?

MR. CHRISTIE: I think in terms of the fundamental strength, the fundamental strength of this is that we are taking a significant step towards changing the process of gaming in this province. Whether you agree that it goes far enough or disagree that it doesn't go far enough, it's a significant step to send the message out that the government is going to

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stop, is slowing down its dependency on gaming revenue and that we are taking significant steps towards moving towards supporting people through treatment and through prevention.

The weaknesses that you, being the first step, you don't know just what all the causes and effects are going to be and that's why the monitoring and the re-evaluating has to be such a significant part of it because you start with your base line. You start with some of the studies and things that you know, and you move forward on that. Perhaps one of the weaknesses is how quickly the 200 machines in attrition will come into effect and that will remain to be seen, but one of the other parts of this is that there will be no additional machines deployed until that 1,000 is achieved.

So we will never go back up over the 2,434 because until we get to the 1,000 reduction, plus some, there will be no additional machines deployed. So I think that's one of the strengths of this plan too, is stop that whole growth of people saying I'm going to open up a facility so, therefore, I go and get some machines. What we have in this strategy at this point in time is there will be no new machines so you can't make the assumption that you're going to open a bar or whatever and get the machines because this strategy has said, no, we're not going to go do that and I think that's one of the strengths of it.

MR. CHAIRMAN: Do you have one last quick question?

MR. PYE: Mr. Minister, I just want to say is there some policy with respect to those machines not going into service because I don't believe there's any agreement on the First Nations reserve with respect to the reduction of machines there?

MR. CHRISTIE: That's correct.

MR. PYE: And that in fact there is a surplus of needs within the Native community, the First Nations community, into their theatres of entertainment whereby they can extract or request more from government. Are you telling me, today, that that will not happen?

MR. CHRISTIE: No, I'm telling you the agreements will be fulfilled with the First Nations and those agreements have numbers of machines and times that they can request them. What I am indicating to you is that there will be no further allocation of machines off the First Nations lands in terms of the Gaming Corporation.

MR. PYE: And that includes Legions and charitable organizations?

MR. CHRISTIE: That includes everything.

MR. CHAIRMAN: We'll turn now to the Liberal caucus and we'll go until 1:19 p.m.

[Page 340]

The honourable member for Halifax Citadel.

MR. DANIEL GRAHAM: Mr. Chairman, I was just going through my research and I have extra copies. It would lighten my load if I were walking back to the office if I were to leave these with the minister and others, if necessary. This is a copy of the report I referenced earlier that was presented at the International Problem Gambling Conference from Saint Mary's University. I draw your attention first to the bottom of Page 4, starting with the sentence, "Lower income households were over-represented in . . . the top gambling expenditure groups and they spent a larger proportion of their income on gambling products than did other household income groups."

You might recall having expressed your unawareness that low-income people disproportionally have a disproportionate problem, and I apologize because on Page 9, my memory was bringing me back to some problems with respect to seniors who were pointed out in this document, and let me say before I make this comment that I do recall research recently that pointed out that seniors were disproportionally targeted, but in this particular document again, the top of Page 9, what it pointed out was that there is a tendency for people to use up their RRSPs, which obviously has significant implications for seniors as a result of this. If and when I provide the information concerning the seniors, I'll get that for you. I know that it was, as I think about the other reference that I saw for it, I didn't see the base document. I was looking for a reference from another document that cited the seniors thing. But I will nonetheless try to locate that and provide it to you.

Mr. Minister, in correspondence between Ms. Mullally and me and my colleague, Ms. Whalen, she indicates that in our estimate that there are approximately 40,000 VLTs in Canada, in bars and lounges, is a generally accurate one and with the proposed reductions to take effect in October, that still leaves us with at least twice as many VLTs as the national average, and I appreciate that that may be that we're more in line with the Atlantic Provinces and that Ontario and British Columbia don't have VLTs. Nonetheless, isn't clear that we could have gone further than the reductions that you have proposed here already?

MR. CHRISTIE: It was clear that a variety of things could have happened. Obviously you could have gone from doing nothing to complete change, anywhere in between, and that's obvious, that you could make those decisions. We looked at some of the features and we chose moving the 800 as being a substantially significant step in the right direction and then moving in the direction of reducing dependency and moving in the direction of substantive prevention measures. We took that decision as a significant first step, knowing that the steps that we were taking had to be monitored and evaluated as the results and how things happened as you went on in the future. So could we have done something different? Well, obviously the answer is, yes. Ranging from doing nothing to complete removal and complete banning of all gambling in Nova Scotia. We chose to make this significant first step.

[Page 341]

MR. GRAHAM: I don't want to read too much into your comments that this is a first step but I would like to at least determine your interest in this being just a first step. Do you foresee a further reduction in the number of VLTs in the province?

MR. CHRISTIE: I anticipate that after we've had the appropriate time to do the social economic study and the prevalent studies, we've had time to determine what the impact and the results are that that data will be further analyzed and I expect there will be some changes. Conclusions will be drawn. I can't draw the conclusion now that it will be a reduction in VLTs. I can draw the conclusion that there will probably be some other steps taken, whether that is in a reduction of VLTs, changing some of the locations, doing a variety of other things. I can envision in the future the whole operation of gaming, whether it's bingos or whether it's other things, will be evolving and changing in the future. However, I'm not able to predict to you right now what those changes will be. I think the evaluations that we do, the evidence that we get and particularly the evaluations of what's happened here will be the significant determinacy in the direction.

MR. GRAHAM: Does that suggest then that you are open to the possibility of further reductions in the number of VLTs?

[12:45 p.m.]

MR. CHRISTIE: That suggests that we're open to a variety of options of looking at different things. As we said in the strategy, as the strategy came out, this was the significant first step. This was moving us forward. This was going to set a pattern for Nova Scotia. It was setting the pattern of indicating that the revenues are not a growth revenue factor for the province. It was indicating that we were going to start moving in terms of more treatment for people and we were going to move in controlling the atmosphere of the VLTs and indeed some other gaming. So, I don't specifically interpret any directions that might happen in the future but as you observed, this is the first step and there will be changes in terms of how gambling and gaming is done in Nova Scotia. The determination of those will be done in the future after you evaluated the results.

MR. GRAHAM: Okay, then I take from what you're saying that this could also be the final step with respect to the possibility of reducing the number of VLTs in the province?

MR. CHRISTIE: I don't think the word first step suggests final step. I think that suggests a first step in a road that will have many steps. I would suggest to you that this is a step that's looking at where we are and where we're going and I would suggest to you that there will be future steps that will have changes in some way, shape or form.

MR. GRAHAM: I'm just talking about the reduction in the number of VLTs.

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MR. CHRISTIE: Okay and I'm indicating to you, I can't draw the conclusion of what the evidence and the evaluation is going to give us sometime in the future.

MR. GRAHAM: So it could be a first step or it could be a final step, theoretically?

MR. CHRISTIE: It could be in terms of VLTs. I have no reason to see that as to try to prejudge as an indication. I think when we do the evaluations and then the next step will be determined by the government as to where it should go.

MR. GRAHAM: I want to get a sense of what the starting point for this was? When you engaged in this exercise, what was your goal?

MR. CHRISTIE: When we engaged in the exercise of the gaming strategy. The goal was to look at the views of Nova Scotians, to look at what people saw was happening, what people's concerns were, what people saw the future was, and to bring those together to give us a sense of where we should move, in what direction. After that happened - the goal was to hear from those people and we heard from those people - the plan that you saw us introduce was our interpretation and reaction to those opinions, concerns and suggestions that we had from people in Nova Scotia. We put it together in this package, the first steps document, and moved forward on it.

MR. GRAHAM: Some of that included opinion polling that I referenced earlier?

MR. CHRISTIE: That would be a small part of it. People's submissions, the e-mails, letters we received, input from people would be a large part of it, obviously indications from the Gaming Corporation, their direction, and input from the Office of Health Promotion. We brought those all together, so there were a variety of components - some polling numbers and analysis would be a minor part of that.

MR. GRAHAM: If you are listening to Nova Scotians - you don't know whether you've heard from more than just a couple of problem gamblers, you're not holding public meetings, you do have these public opinion surveys that suggest a marked, greater number of people want these things gone from the province than want to keep them, and surely that must have had some persuasive value for you?

MR. CHRISTIE: Obviously, as we moved in the direction of removing 800 machines it was a step in responding to concerns that people had, and trying to respond to the prevention side of things. Hearing from people had a part in the establishment of the direction we took because, as I indicated to you, one of the options we had was to simply do nothing. We viewed that option as not an option. We were hearing from people and heard what they wanted, so we took a significant first step.

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MR. GRAHAM: Given what you said and given what the options were, surely an eventual elimination of these machines was one of the options you considered?

MR. CHRISTIE: That has been one of the options that people had been espousing for a while and that was an option that clearly was available to people. As I indicated, the spectrum went from doing absolutely nothing to eliminating all forms of gambling in the province. Those options were there and there were people who argued in favour of both of those extremes. Indeed, after analyzing and bringing it all together, we chose the path that was laid out in front of people.

MR. GRAHAM: In the way government works there is obviously a wide spectrum of possibilities that are out there, and the overriding question is, what are the active options? I assume that you had active options. Was the option of an eventual elimination of VLTs ever considered as an active option?

MR. CHRISTIE: By active option, do you mean we said let's start to cost this and bring it on? That was never a significant active option, no. Neither was doing nothing ever a significant active option.

MR. GRAHAM: How many options did you consider?

MR. CHRISTIE: We considered a number of options. We considered options of the numbers of machines; we considered the options that you looked on the list there of whether it would be machines or whether it would be those features; we considered the option of whether we would leave machines in non-profit organizations; and we considered options such as whether you would deploy new machines or not - so there was a series of options that were looked at.

MR. GRAHAM: A half-dozen or so?

MR. CHRISTIE: I would say eight is a fair number.

MR. GRAHAM: Is there a specific document that sets out eight options?

MR. CHRISTIE: No, those were items that were looked at. One would be looked at here, one would be looked at there and, at the end of the day, we said these are the ones we want to zero in on, we'll go off and cost these and do some research on these. As you went through the Office of Health Promotion and you went through the decision-making process, you zeroed in on the significant options you wanted to move on, and essentially they're outlined in that document.

[Page 344]

MR. GRAHAM: I think this answers some of the questions that I have. To a certain extent I feel like a light just went on over my head. That may have been a wish that you've had on some respects, on other matters, but when we talk about our various options we know that there are other states and jurisdictions that don't have video lottery terminals. I understand that the Gaming Corporation people have spoken with Dr. Quinn - I don't know whether they have spoken with Professor Bidwell out of South Carolina - can you tell me what other jurisdictions, that have gone without VLTs, have you done some type of a comprehensive review of?

MR. CHRISTIE: Two predominant ones are Ontario and B.C., those are areas where we have done some research and consultation.

MR. GRAHAM: I heard the Premier's comments with respect to Ontario and B.C. I have brought to the attention of government in significant places our findings with respect to Ontario and British Columbia. I'm not sure if you are aware of those or if those were passed along to you. I'm familiar with the $4,000 to $5,000 figure quoted from the Ontario study from 2000, 2001, I'm not sure which year that was, and I have to say the $4,000 to $5,000 figure - well, let me back up - if you do it on a pro rata basis it would mean that we would have a problem in Nova Scotia in the range of 400 to 500 VLTs, or approximately an 85 per cent reduction as opposed to the 20 per cent reduction that has been proposed by roughly 20 per cent that you have.

I guess when you approach this from the perspective of trying to help people, if the issue and the perspective is trying to ensure people are healthier, even the Ontario model with figures that have been quoted by the government - that I have to say I don't accept, and I'll comment on that in a moment - that would have put Nova Scotia families who are being destroyed by this in a much better position than the approach you chose to take. Wouldn't you agree?

MR. CHRISTIE: It would have made less machines available if we had taken that approach. Your comment to me was that would have destroyed less families, and I can't draw that conclusion. I can draw the conclusion that it would make less machines available.

MR. GRAHAM: Yes, this is another light going on. Less machines for you doesn't necessarily equate to less harm to families?

MR. CHRISTIE: I have no research to show me that, no.

MR. GRAHAM: This is the global number, we were talking about potential underground machines and above-ground machines. Less machines don't necessarily equal less harm to families?

[Page 345]

MR. CHRISTIE: I haven't seen that research. You have said that on a number of occasions and I've indicated to you that I accept what you're saying, but I haven't seen the research on that that would confirm to me that 10 machines mean X number of addicts, and 20 machines mean X number more.

MR. GRAHAM: That's not what I'm referring to, though. I'm referring to the global number of fewer machines and instead of having, in Nova Scotia, 3,800 VLT machines we would have 400 or 500. You don't think that would help families?

[1:00 p.m.]

MR. CHRISTIE: Well, I'm just reminded of the instance of B.C. - whether you accept the data or not - the data that we have is that B.C. has the lowest number of VLTs and their percentage of problem gamblers is higher than ours. When I say I can't accept all of your data and your logic, that is some of the data that I'm referring to.

MR. GRAHAM: Well, let me give you perhaps some indication of the challenges there. VLTs come from a family of continuous electronic gaming problems. In British Columbia they've introduced something that I understand your government may have been considering, called keno, and at the introduction of keno the problem gambling rates rose pretty dramatically in British Columbia. Do you not think that in fact is an explanation for a very significant problem that they have in British Columbia?

MR. CHRISTIE: I'm advised that keno has been introduced in British Columbia and that that has created some, as you say, additional responses. As you know, there are other provinces in the area that are going to be introducing keno. We have made the decision not to enter into that game.

MR. GRAHAM: Okay, so I guess your answer is, yes, perhaps that could explain the British Columbia changes?

MR. CHRISTIE: I think we'll take that as a possibility - keno is relatively new - until the prevalent studies come along, then we need to get that data hardened up, but accepting the fact that any particular thing has some problem gamblers associated with it, then the conclusion would be that because if you introduced keno there would perhaps be a few more.

MR. GRAHAM: For whatever it's worth - and I hesitate to do this because it's important committee time - I would refer you, since you mentioned British Columbia, to discussions that I had in April with one of the members of the integrated illegal gaming enforcement team, and I know that you had someone who was there. This was in a conversation that I had with them, and this was somebody who was involved in this activity across the province. This is a person without any axe to grind, providing, I assume, the best information that he could, and he indicated specifically that in northern British Columbia

[Page 346]

they seized 100 machines recently, and the problem relates, any problem that they have is only connected to political will to prosecute but to the extent that there is a problem in British Columbia his estimates were that they had 200 to 300 illegal machines.

MR. CHRISTIE: I don't argue with what you're suggesting. I'm sure that's what the gentleman said. I take that at face value.

MR. GRAHAM: I just want to share with you two experiences that I had in Ontario. Sometimes you get the skinny better when you're speaking to officers who speak to officers, and in one respect I was able to find that doesn't reduce the credibility of it, but in these circumstances I happen to find having been in the criminal justice system that you'll get the straight goods more if you're talking to one of your counterparts in the system, and through that discussion we learned that in an area with a population greater than Nova Scotia, that the estimate by the officer responsible for enforcement was that there was less than a dozen machines that were illegal in a population area the size of Nova Scotia.

MR. CHRISTIE: I'm advised that the Gaming Corporation's discussion with law enforcement doesn't substantiate that information you just read.

MR. GRAHAM: Well, he wasn't the only person I spoke with. I also spoke with a detective inspector about this matter, who spoke about this particular problem, and at that time I was advised that the problem in Ontario is more in the nature of high hundreds, low thousands, which starts to creep closer to the figures that have been quoted - even with the pro-rated figures that I've described they are still not near 4,000 to 5,000. Then I spoke with somebody at the Alcohol and Gaming Commission about this particular matter - again, I may be just wasting my air by providing you with this information - and they indicated that the number was more likely in the hundreds than in the thousands, with respect to the nature of the problem that they have in Ontario.

You can appreciate, Mr. Minister, where I come from when I start to blow a gasket and frankly when I hear the Premier spout what he does about the numbers in Ontario being as they are, and the even greater frustration that I feel when the invitation is put out to do something objective and independent to determine whether or not it's possible. I'm wondering, why wouldn't you do something that's objective and independent to sort this central question out, the thing that I call the granddaddy of all myths that's being perpetuated by the government? Nova Scotians, I don't think, are accepting this assertion and it's the only leg that your VLT plan stands on right now.

MR. CHRISTIE: I'm going to clarify, the myth is that if you ban all machines . . .

MR. GRAHAM: There's going to be an underground . . .

MR. CHRISTIE: . . . an underground.

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MR. GRAHAM: That's pervasive. Look, I accept that there will be perhaps dozens of VLTs in an underground market in Nova Scotia no matter what you do, no matter what the penalties are, that's obvious. The question is whether or not it's a pervasive social problem.

MR. CHRISTIE: Obviously as you look at the data - and you've indicated speaking with people, the Gaming Corporation has spoken with people, the Premier's Office has spoken with people - the number of people who are involved, the different jurisdictions are involved in terms of what's the experience there if they don't have VLTs, if they do have VLTs, and what their experience is seems to be relatively numerous and you've cited specific ones, you've cited some data that you have attained.

One of your comments was, why wouldn't we engage in a full debate and the full research mode as to looking at these and what is happening. Well, I kind of suggest to you that with the Gaming Corporation and what they're looking at with the strategy, we are in the process of undertaking some of that data collection. You asked me, would you not agree? I guess I would ask you a question, would you not agree that moving in this direction is a significant step? The determinant of all the consequences and all the outflow from these directions has to be analyzed, has to be determined as you determine to make full steps, and in the process of all of that you're going to be getting additional data from other jurisdictions. You're going to be seeing reactions from other jurisdictions and indeed it could be that you're going to be encouraging other jurisdictions to start to reduce the number of VLTs and start to enter into a strategy.

I guess your question was, do you see that you need to gather data from other jurisdictions? I'm going to respond that, yes, that has to be part of the process and the evaluation, but I guess I would pose the question to you, don't you view this as a significant first step and a step that's going to require us to evaluate and determine where we're going prior to making other further decisions?

MR. GRAHAM: I appreciate the question. I would not at all call it a significant first step. I think it's flawed for some of the reasons that became more apparent today with you not having a handle on the utilization rates with the machines right now. I'm not government, but the underpinning of the Premier's central argument is that it can't work. The question I just asked you was whether or not you did a thorough examination, or whether you were willing to go in on a go-forward basis to do a thorough examination of why and how it has or has not worked in jurisdictions that have tried this. I put this invitation out in Question Period with no uptake now. I don't hear any uptake now. My question is, what's the harm in finding out the real truth about this?

I've just said to you that we've done research where I've spoken to people in British Columbia, part of the integrated task force, who said there were just 200 to 300 machines. I've spoken to people in the Gaming Commission in Ontario who say that the number of

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machines are more in the range of the high 100s. Even if they were at the figures that you suggest, that still would result in a 90 per cent reduction in Nova Scotia. I've spoken to two police people in Ontario, one of whom says that a population area the size bigger than Nova Scotia has only about a dozen underground machines. I've told you that another person with the law enforcement in Ontario told us that the numbers were more in the high 100s, low 1,000s.

There's an enormous discrepancy between what the Premier has been saying and you've been saying in those figures. It's the central argument that's being put forward by your government that it can't be done, that there will be an underground illegal industry. Not to mention that your gaming expert has said that the Premier misinformed him. Knowing all of that, Mr. Minister, what's the harm in actually doing something more objective and independent that would really get to the bottom of this, instead of us having to rely on what sounds to Nova Scotians like bad spin coming from an organization, with the greatest respect Ms. Mullally, whose credibility has been eroded over, I would suggest, certainly, the last several months, and as more information comes out, increasingly.

MR. CHRISTIE: You have indicated in Question Period and raised the question today, what is the harm of doing that? I've indicated to you that I don't think there's any harm in doing some of that research. What I am saying to you is that research is going to be done in conjunction with the analysis of where we are going. I think the information as to what other jurisdictions are doing, what the reactions are of other jurisdictions is certainly important and somewhat central to the issue. The issue is how do we react to how our strategy is working, it's a part and parcel of how it is happening in other jurisdictions. I guess what I'm saying to you is that I don't see any harm in having some of that analysis, some of that research done. I think it has to be part of the overall evaluation, the overall research that's being done and, essentially, at the end of the day, we in Nova Scotia have to determine what it is we're going to do and how it is we're going to do it.

That's the challenge the government has, to look at all the data. That's a significant part of the data; the analysis of what's happened with the changes that we have in the machines is another significant part of the data, so it all has to come together. I'm not making light of anything you're saying in terms of getting that data, I'm saying that's very important, but I think it's only a part of what we need to analyze.

MR. GRAHAM: We have in Nova Scotia an estimated 7,500 VLT problem gamblers. Their lives have been deeply affected by this. This has resulted in bankruptcy, crime, depression, family breakdown, loss of homes and, in some cases, suicide. More and more people, Mr. Minister, are breaking the silence. I don't think now that the ice is broken, any government, yours or the one that succeeds you, likely has a problem on their hands with respect to people who are finally showing the courage to speak out where they didn't before.

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Given the extent of this problem, that's becoming more apparent all the time, given the obvious discrepancy around what is or is not possible to do - and that's the only argument the Premier presently expresses for not going the full distance - given the importance of getting the best information possible, would you be prepared to fund, if you're as open-minded as you suggest, an independent study of the pros and cons and possibilities of an eventual elimination in other jurisdictions?

[1:15 p.m.]

MR. CHRISTIE: The question is would we be prepared to fund a study that looks at what's happened in other jurisdictions, those that have VLTs, those that have eliminated them and those that are in between to analyze all the different reactions and responses? I guess in reaction to that question I would say to you that I think we have to determine a plan of action. What we've indicated is that we're going to continue to fund the strategy and the requirements and the need for analyzing and the need for evaluating all of that strategy. Do I think there needs to be an independent side to that which says no we just deliberately go and do other jurisdictions? I guess I would have to give that some thought but, overall, I would say that I see the evaluation as a single path where you're evaluating all of the details together. So, initially, I would suggest to you that I see the value of that is being included in the evaluation of all of the determinants that we have in the province, that would be a significant factor. What the reactions are and what the evaluation is of the path that we've started on is another significant part of it. As opposed to a stand-alone, I would suggest to you, in my view, it would be best built in to the strategy review that we're going to do.

MR. GRAHAM: It can be part of a strategy of broader context in a strategy review, but surely, given all this controversy, you're prepared to get the best information, given the allegations that have been made not just by me, but by members of the New Democratic Party, by people in government, that you're sticking your head in the sand, that you're not listening to the best information that's available; surely, in the interest of bright light and cool air, this is in the best interest of everyone. Do you know what? If an independent comprehensive study came back that actually showed that what the Premier is saying is true, then I think that you guys are in a very different place.

Right now, and not to provide advice to government, I don't think many people are swallowing the line that has been put forward by you and the Gaming Corporation that this would lead to a significant underground market. I don't think that people believe that the law enforcement agencies of this province are so ineffectual that they can't get the job done given the proper resources. They think that you're stringing us a of line of bull, pardon my French, and they have some substance to rely on when they consider that. So my question again is whether or not, as part of the larger context, the larger issue that you look to perhaps review, are you prepared to actively support and initiate the possibility of an independent study that examines the question of whether or not it's possible, what the obstacles are to go into a full elimination of VLTs? I didn't hear you commit to that in the first answer.

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MR. CHRISTIE: What we have committed to do in the strategy is a number of things. You know that we've committed to moving on the socio-economic strategy. We've committed to moving on the prevalence study and to have that determined. In terms of moving on the other jurisdictions and moving in that direction, I would say to you that I view that as being involved in the evaluation of all of the data and all of the information. I am prepared to have a look at that and see, but I am not prepared to indicate that we're going to move in that direction as opposed to saying, in terms of our commitment, our commitment is to do the studies, the prevalence study and to do the evaluation. I don't disagree with you, that's a significant portion and a significant piece of the challenges in the information that we need. I think that needs to be built into it.

MR. CHAIRMAN: Would the minister wrap up quickly because we've gone overtime.

MR. CHRISTIE: Well I'm required, Mr. Chairman, to read my resolutions for funding . . .

MR. CHAIRMAN: I think we are going to be coming back on Monday, aren't we?

The meeting is adjourned, we've reached our four hours. Thank you.

[The subcommittee adjourned at 1:20 p.m.]