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HALIFAX, MONDAY, OCTOBER 5, 2009
SUBCOMMITTEE OF THE WHOLE HOUSE ON SUPPLY
MR. CHAIRMAN: Good afternoon. We'll call the Subcommittee on Supply to order. We will continue with the Department of Fisheries and Aquaculture.
The honourable member for Preston, you have 10 minutes.
HON. KEITH COLWELL: I will just ask the Minister of Fisheries and Aquaculture, on January 12, 2009, you asked the then Minister of Fisheries and Aquaculture to call, take some leadership, and endorse the establishment of an all-Party task force to address the many issues surrounding the fishing industry and the lobster fishery in particular. Do you intend to set that task force up?
HON. STERLING BELLIVEAU: Mr. Chairman, I was going to ask you if you could reduce the fan there, I'm having a little difficulty hearing, but I'm hearing excellently now.
I asked the previous minister the question about establishing a task force and I recall - I think there was also an emergency debate, if I remember correctly, if I can get my memory cap on here, and I remember that question being asked in the House through an emergency debate. I think I was very forceful because I thought, at the time, that District No. 34 was actually taking the lead as one of the first lobster fisheries to enter the economic crisis that was about to appear on our horizon.
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If I could just back up for the member opposite, back in the summer of 2008, the situation appeared on everybody's radar screen with the lobster fisheries in Maine and because of the economic meltdown at the time, fishermen in the Maine area started suffering low lobster prices and, to me, it was evident that we were going to be the first ones in the Fall of 2008, last Fall, to experience that. The week before our season started, I attended meetings in Wedgeport, and I made a recommendation to the industry then that we were going to be entering the most economically difficult times since the 1991 cod moratorium on the Atlantic Coast. I don't know if very many people took me seriously but I think that the evidence is there that history will prove me somewhat on target.
I also attended a meeting the first week of the lobster season when fishermen took a voluntary withdrawal from the markets and took a two-day wait and see and had somewhat of a large industry meeting in Yarmouth. I attended that meeting also and said there was a crisis amongst us, fishermen were suffering low prices, and this was evident from the previous Fall. Under these conditions - this is when we entered the debate in the House of Assembly last Fall, and I stood in my place in the House and I told the minister at the time that this was an emergency situation, a crisis, the worst since the cod moratorium. I thought that it was highly important that an all-Party committee, including himself and hopefully the Premier, would be included and we would go to Ottawa to express the concerns of this particular situation. That it was important that we have an all-Party committee. We should not be playing politics with this crisis and we should be going very forcefully to address this particular crisis.
If I can just point out to the member opposite, I think I was one of the first elected officials, especially in the meeting in Yarmouth, there's probably some video tapes there, I stood in the large Wesleyan Church, the place was full, and I think I was one of the only elected officials there. I said this is not only about captains in the fishing industry, this is also about the crew members who are part of this particular fleet. We cannot overlook these people who are in it at this particular time. Because if the crew members are not financially well off and don't make a reasonable paycheque, they're gone, they're headed out West, and that any financial package should include crew members.
So that was basically the atmosphere at the time back last November - the first week of our lobster season in District No. 34 and District No. 33 which encompasses from Sambro right around to the Digby Neck area, roughly 1,700 commercial fishing licences. The Minister of Fisheries and Aquaculture provincially at the time declined my invitation to go to Ottawa and I was somewhat disappointed that the Premier did not override him and send a delegation there to bring this forcefully to the federal minister's attention.
If I can just fast-forward to the duration of that lobster season, I think that the evidence will show that we were on the money, we were on target that this was one of the worst economic times since the 1991 cod moratorium. During the election campaign, you're
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referring to, I made a great note that there should be a task force put together to address this issue, not only dealing with lobsters but the overall marketing conditions of a soft market.
We're in the process of putting together this particular lobster council as we speak and the lobster council, to me, is one and the same as a lobster task force. To recognize the economic downturn that we're having and the possibility of creating some better markets the lobster council is making good progress. We'll see where it goes and we'll do an evaluation on it as we see fit. Right now I'm encouraged that this particular working group, or this lobster council, has recognized what we said from day one, that there is a problem there, especially with the soft prices. I hope that it's going to be a stronger reflection and we'll see stronger prices this year.
The indicators aren't there just yet to prove me wrong but I'm concerned we may have the same scenario this year. I hope that I'm wrong and I hope that the economy is recovering and we'll see some stronger prices but this lobster council is being formulated as we speak. There's some money set aside from the federal government and I want to see that created to address this issue. If I can just go on a bit further, the federal minister last week announced that there would be a package for the lobster crisis. Within hours of her releasing that roughly, in order to qualify, first of all you had to be a lobster fisherman, a lobster licence holder, and if that licence stocked over $50,000, you would be ineligible for a $5,000 one-time assistance program. We were in Ottawa about 10 days before that announcement. I brought that to the minister's attention at that time, if it did not include the deck hands per party, we would ultimately be paying the political price. It did not go far enough, it did not address the needs in our communities and it did not address the crew members.
My witness is Mr. Bill Casey, he was very aware of what we were laying out, and the minister went ahead with the announcement. I can assure you, the people I just talked about encompassing from southwestern Nova Scotia, from Sambro around to Digby and also Area 35 up in Digby Neck in the upper Bay of Fundy, I think very few people will be eligible for this one-time assistance. The minister had an opportunity to address this issue and they have failed.
I sent a letter off to Minister Shea outlining that they have failed to address the needs in our community, especially in dealing with the lobster industry and with the crew members. That's kind of a broad answer of where we're at now. I'm cautiously optimistic that this lobster group knows full well where they're at, they have to do some aggressive marketing and hopefully the economic crisis is in our rear-view mirror now and we may see some stronger markets and stronger prices this year. I'm hopeful for that, but we'll have to wait and see.
MR. CHAIRMAN: The time has expired for the Liberal caucus.
The honourable member for Victoria-The Lakes.
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MR. KEITH BAIN: Thank you, minister, for being here this afternoon. I think it's very important that we discuss the state of the fisheries in the Province of Nova Scotia. We know, as you had mentioned earlier, it has certainly sustained communities from Louisbourg to Yarmouth for many years. As a matter of fact, it's one of the reasons the early settlers arrived in Nova Scotia. I think the key, as we all know, is proper management and the sustainability of fish stocks down the road to ensure generations can continue fishing.
[3:15 p.m.]
I have a few questions that I'd like to present to you. The first one is, maybe in late May of this year, the government wanted to put $250,000 to the lobster fishermen to help. I know at that time, as critic, you were saying that was no good, it was too little too late. I'd like to know what has happened to that $250,000 that was pledged.
MR. BELLIVEAU: To the member opposite, the $250,000 that you are talking about is in this budget that we're debating now. I think my concern around that was too little too late - I think I made reference to the amount of money that P.E.I. was putting in it, I can't remember that number right off the top of my head, but I know that P.E.I. has a similar lobster industry as ours. I think Nova Scotia, in comparison, is a number of times larger and I think that was my reference. This is a very big industry in the coastal communities all over Nova Scotia.
I know the importance of it; I know how valuable the jobs are there and $250,000 in a multi-million dollar industry is basically pocket change. That was where I was coming from with this approach. My other suggestion was that the member from your Party needed to get on the plane at the time and take this message to the minister in Ottawa and hopefully the Premier would be included. But they declined my invitation. I felt that it was important, that we needed to bring some attention to this issue.
The issue was to know the seriousness of that at the time and to put a task force together to address it. We have basically missed a full season and I think I have not moved off the page, I stood up a week before the season was opening in Area 34, in a large church in Yarmouth. The place was packed, and I said, we need to have a task force put in place. They called it a lobster council. I will give it the benefit of the doubt, and I hope to see that they will address the importance of this industry.
I think we were the first ones to identify this crisis. To me, if the provincial government at the time had acted in a correct manner, we probably would have prevented a lot of the situation - we missed the full season, is what I'm trying to say here.
Now, this lobster task force is mandated to address these issues about trying to get new markets and trying to get this industry back on its feet again. I was deeply concerned
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about young people not staying in our communities and moving away because ultimately they have to have a paycheque at the end of the day.
Again, I told this to the Minister of Fisheries and Aquaculture, that when there is going to be a negative policy that is going to impact the coastal communities of Nova Scotia, I'm going to be up front and I'm going to be forceful and I'm going to say the reason why it doesn't work. I hope to say that in a very diplomatic way, but also in a forceful way. This is a prime example of where things are not working. I encourage you to go back to your constituencies, go down the wharves, and ask them about this package. It is not going to work for Nova Scotia. I know that and I'm clear on that.
Again, the opportunity here, this industry is the economic engine that drives these coastal communities. When you talk about $250,000, I'm saying that we need to do more, and I think that we need to give this particular task force the opportunity to achieve that. I guess my displeasure was that it should have been in place at the beginning of last November.
MR. BAIN: I understand that $250,000 is, again, in the budget. Is the intent of that $250,000 the same as it was prior to the June 9th election?
MR. BELLIVEAU: Of the $250,000, $200,000 will go toward marketing. $50,000 will go toward this particular new council to get that established, and my understanding is that for every dollar we put in we get four in return from the federal government.
Again, I want to emphasize - and if I can also point out, Mr. Chairman - that there is going to be a provincial Ministers of Fisheries conference in October and I intend to bring these issues forcefully to that committee.
This particular crisis affects all the Atlantic Provinces. It's not just Nova Scotia or southwest Nova Scotia; the lobster industry is the main cog that drives the economy, and I think that this task force - it's my understanding that there are going to be stakeholders from industry, from processors to people who process the product, so there is a big burden on these individuals' shoulders, and I think they understand that. I think my only concern was that, knowing the impact that this was going to have, we basically missed a year, and if you can back up to last November when we had the emergency debate, my position has not changed.
I think that history has proven us right on that, that this is one of the largest crises we've faced and probably worse than the cod moratorium, because when the cod moratorium was introduced, the Atlantic Provinces had a number of other species to fall on. That's exactly what they did. There were no groundfish to look at, so especially Newfoundland and eastern Nova Scotia moved toward the shellfish sector, and there was a great transition, especially in Newfoundland and the eastern part of Nova Scotia, especially the crabs and shrimp and moved into those species.
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Today, when we have a crisis like this collapse in the lobster price, there is no other species to move to. That's the point going into the debate last November. There is no way for these coastal communities to move to another species. So we need to get this one right.
MR. BAIN: Mr. Chairman, you answered one of the questions I was going to ask, about the makeup of the council that you're proposing. You mentioned processors, but I didn't hear anyone from the fishermen on the wharf as being part of that council.
MR. BELLIVEAU: Well, I think I was speaking in haste there, but to me there is a balance that is going to be on this council from all stakeholders, including fishermen. I think there is going to be a representation through their advisory committees. I don't think it is going to be top heavy by any one sector. I would caution against that. But there has to be a balance between fish processors, the buying and the large movers and shakers, if you want to call it that, but there also has to be good, strong representation of lobstermen or lobster fishers, including many women, across Nova Scotia.
There is regional recognition that has to be there, because in some areas you have the canneries, for instance; you would be dealing with inventory questions; there are going to be issues in the winter months; in southwestern Nova Scotia they have a winter fisheries versus the Pictou area. So, I think all those different sectors need to be reflected on this committee and again, the key point is to have a balance there and all these stakeholders are fairly representative on this task force.
MR. BAIN: Mr. Chairman, I appreciate that, too, because I know that when any discussion that had taken place concerning the fishery, and any council or advisory board or something that might be set up, or even monies that might be available, I think the fishers themselves had a grave concern that the bulk of the money might be going to processors and, if there is a council, that the processors would be making the decisions. So, I'm pleased to hear you say that there will be, as best as is possible, equal representation of fishers, processors and others.
I guess, to follow up on that, what about the scientific aspect, is a science person going to be on that council as well?
MR. BELLIVEAU: Mr. Chairman, my understanding is that this is basically to deal with promotion. I'm sure that the committee will have, at their disposal, through DFO, some scientist, if they request that. But to me, the mandate of this council is basically for the promotion of the product.
MR. BAIN: Mr. Chairman, you mentioned numerous times about your request to have the minister of the day, and possibly the Premier and representatives of the other political Parties, meet with the federal minister, and it didn't happen. So I guess my question
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to you at this point is, have you had a meeting with the federal minister since you became minister, or have you made arrangements to meet with him?
MR. BELLIVEAU: Thank you, I appreciate the question. In fact, my very first act within hours of being sworn in, my first phone call was to the minister, Gail Shea, the honourable member for Prince Edward Island. I'm very proud of that because that was actually my first phone call on my first day of the job. I've talked to her several times on the phone and I'm pleased to say that I had the honour of meeting her in Ottawa a couple of weeks ago, I forget now, but it has been several weeks, and we raised a number of these issues that we're talking about today, including this one. We had a very good, frank, discussion. I say, again, I was privileged to have Mr. Bill Casey present and we outlined a number of issues, including the one we're talking about right now.
I pointed out that if she introduced this particular aid package, she had an opportunity to correct it, that was the point that I was trying to make that day, that if she went down the road and she didn't include deck hands, then she was missing an opportunity. It's evidence, and I'm more confident now than I was two weeks ago because I know from speaking to fishermen from across Nova Scotia and I spoke to one from Cape Sable Island about his running expenses from his bait alone. This is big business and this is what the minister fails to understand, that and the regional differences in the lobster industry. The fisherman from Cape Sable Island pointed out to me very clearly that his bait, his running expenses alone, just bait, was over $60,000. Then the minister comes out and says that the fisherman who stocks less than $50,000 to be qualified, doesn't understand the industry. I'm sorry, there is no other way of addressing it.
[3:30 p.m.]
There are crew members out there who put in a lot of hard work, a lot of difficult hours and I'm sorry, you can't sugar-coat this. That's exactly how I explained it to her. Her analysts had an opportunity to re-evaluate that particular program and they got it wrong. They got the numbers wrong on the press release and I will leave that for you to understand the numbers they got wrong. They also got the numbers wrong that went out to the fishermen, especially to crew members.
MR. BAIN: I don't think there is any argument, Mr Minister, in support of the crew members. I know, just in my constituency alone, that a lot of the fishers who might have two as a crew on their boat, the licence holder was willing to take a loss in order to ensure that his two people still have a job. Again, you mentioned, that's throughout the province, throughout Atlantic Canada. I think it is very necessary for the crew members not be overlooked in any discussion that is going on because if they don't have crew members, they can't fish. It's as simple as that.
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You did say, Mr. Minister, that you also discussed numerous issues with Minister Shea over the time that you have become minister. Have you gotten any response on any of those issues from the minister?
MR. BELLIVEAU: Mr. Chairman, first of all I just want to go back. The question was about response but in talking about my displeasure about the aid package, I sent a letter to the minister also, I just wanted to make you aware that I got it on record. Have I had responses from the different topics that we discussed today? We have discussed a number of them. I would say that we're working toward that.
One of my concerns was to address some of these topics and identify how we're going to deal with them. I made reference to the provincial Fisheries Ministers conference in P.E.I. and to get some of those particular topics on that list. I asked her to work with her staff and my first request was to open the lines of communications. So we're in that process of trying to open the lines of communication and how we can break these down into different categories.
I talked about underutilized species, about the red tape that is involved, right from Cape Breton to southwestern Nova Scotia. There are fishermen out there who want to work, they know there are resources out there, whelks, different green crabs, I can name four or five species off the top of my head. What I was trying to lay out is that the fishermen are feeling overwhelmed with the red tape that they have to endure to get a permit and go out and harvest products. They know they are there but yet the federal DFO is saying, first of all, you need to pay for the science, and secondly, none of this exists out there. The fishermen know differently. They want to see an opportunity where they can reduce this red tape. They have potential markets. To me, we need to work together to try to speed up this process to give people an opportunity to find these resources. The fishermen know they are there. They also have processes with identified markets around the world and we need to speed that process up to create jobs.
MR. BAIN: Mr. Chairman, with the lobster industry, and indeed, any particular industry within the fishing industry - any species within the fishing industry - and more particularly the lobster, because it has certainly been a topic of discussion ever since - and it didn't begin last May, either. It has been going on for years, especially the last few years. I guess what we need would be immediate measures to help the fishermen, but we also need long-term measures in place. Mr. Minister, I would be interested in hearing what you see as some of the long-term measures that will be necessary for the fishing industry, especially the lobster industry, to be sustainable.
MR. BELLIVEAU: I think you're raising a very good point. I think you're hitting on the direction that needs to be done by this particular lobster council/task force. I think we need to shake more money from Ottawa to put in the hands of that lobster council to be more aggressive on marketing.
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I really believe that we have not changed our marketing trends since my grandfather was a boy. We continue to put our fish products on the back of a large truck and we take them to a Boston and New York market. It has not changed since grandfather was a child. We live in a global village now where we have the Internet and all these modern technologies. I think the technology is there to learn how to transport our shellfish and our fish products around the world and keep them in a controlled temperature, and we can maintain that temperature from the time it leaves the ocean until it gets to the consumer's plate. Again, to me, that is the vision of having a good, healthy product, which Nova Scotia is noted for.
We have one of the best seafood products in the world. To move forward and have different technologies to transport this, I think that is the way of the future, and I believe that we can capitalize on that. We should come out of this - and this is the interesting part - you talked about how we haven't seen this, how this has been ongoing for years about the lobster prices. It hasn't been going on for years. The last time lobster prices were this low was 17 or 19 years ago. So it has been quite a while. We have had quite a successful ride, and it is unfortunate that we have had some serious economic downturn in the marketplace.
I think if we do our homework and go out and explore some of these new markets and the new technology of how to get our product to the consumer in a controlled environment, we're going to come out very strong on the other side of this. We're going to be in a strong position, especially the fishing industry that has the knowledge and knows how to go out and get these species. When that market does rebound, there are going to be some dollars to be made. That's my feeling.
MR. BAIN: Mr. Chairman, I don't think there is any argument about the quality of the seafood in the Province of Nova Scotia. I had the opportunity to attend the Seafood Show in Boston, and I think the remarks from those who were in attendance there certainly bode well for the fishery, as far as what people are seeing, as far as quality goes in our product and everything else.
I guess I want to go to capital - access to capital. I know in your role as the critic in 2008, one of the things that you used, if I can quote: "Actually, it was part of my election platform two years ago and one of the issues that I feel - I've asked this question for decades now and I can date this back to the mid-1980s, is the access to capital and the requirement for the loan board to take this seriously. " I would like you to give me your stand on that.
MR. BELLIVEAU: Mr. Chairman, I'm pleased that the member opposite has asked that question. It is almost as if I wrote the question for you and asked you to ask me, because I appreciate the question. That is one of my pet projects for the 1980s, and I can date that back with the groups that I was on that asked for access to capital for young fishermen. I'm pleased to report, my understanding, just off the top of my head, is that the applications that are coming in to the Loan Board have increased a considerable amount from last year. It's being very well received, especially from young fishermen. I've had fishermen come up to me and
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say, Mr. Belliveau, we never had an opportunity; if it wasn't for this program, we don't have any large investors in our family; we don't have access to fish processors that may be willing to back me. I know the loyalty behind that. They've been given an opportunity to have access to capital and they see a future in this fishery.
I want to put that into context. We're doing this when we have one of the most difficult economic times in our history over the last 25 years. For me that's very encouraging because we're going to ride this economic storm, which fishermen can do very well, and it is going to be a very bright day because there are going to be some very successful fishermen, as soon as we get through this economic crisis.
There have been 52 loans given out just since April of this year, back in April when this program was first introduced, and I can actually get the detailed numbers for you, but there is more activity around requests for these applications. So the fishermen know it is an opportunity, to be very blunt here. Again, I think it is going to be one of the success stories of our provincial government because we introduced this program. I can assure you it has been a long while coming; I campaigned on it; I have not blinked from it; I will continue to fight for access to it and I continue to fight to make the program better.
MR. BAIN: Mr. Chairman, the estimate of $189,000 for the Fisheries Loan Board, that is identical to the one that was presented in the Spring budget. It is up from the overall costs of $748,000. That is only a difference of about $158,000 increase. So maybe I'm not on the right key here but I'm wondering, if all of these applications are coming in, where is the extra money coming from for the Loan Board?
MR. BELLIVEAU: My understanding is that the numbers you're looking at - and I raised that same question last year - what you're looking at is for staff only. The amount of money that was provided to date for the loans is $16 million, since April. They call it revenue neutral. You have money coming in and, naturally, you have money going out from the applications, but you also have people paying it too, so that money, basically, is staying in the pot. I asked that same question the previous year when I was in the critic role. I'm going to make note of this, and if we can't answer your question clearly, we will get more details and get that to you.
MR. BAIN: I just want to follow up a bit more on this. Maybe it is confusion on my part. You say there have been $16 million and 52 loan applications since April, but there has been a decrease in the operating costs of $30,000. Is that $30,000 a body, or a half a body, and if all these applications are coming in, how can the Loan Board process them as quickly as possible for the fishermen who are in need?
MR. BELLIVEAU: Yes, I think the numbers I'm looking at, the Fisheries and Aquaculture Loan Board, is actually increased to $890,000 and we have two new staff - one last year and one this year. I think we can get some clear information if . . .
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MR. BAIN: No, I guess the $890,000 is correct and I think the actual for last year was $748,000 so there is that increase of approximately $158,000 but it does show a decrease in operating costs by $30,000 from the 2008-09 actuals. I guess maybe I wasn't clear enough.
MR. BELLIVEAU: It's my understanding, just looking at this briefly, that the salary has gone up and the employees have gone down - is that fair? It's just general operation costs.
MR. BAIN: I guess I'm looking now at staff numbers for the department. Am I correct in saying there's a staff of 79?
MR. BELLIVEAU: Yes, the number of staff is 79, an increase of two from the previous year.
[3:45 p.m.]
MR. BAIN: The notes that we've been provided, Mr. Minister, is that the funded staff is up by seven from the 2008-09 actual.
MR. BELLIVEAU: My understanding is some of these numbers include vacancies from the previous years, so that may be why some of these numbers are not reflective of that.
MR. BAIN: Could you tell me where these extra two staff people would be used?
MR. BELLIVEAU: One is from the Marine Fisheries Service and the other one, the staff, is for the provincial Loan Board that we talked about, with the success of these applications.
MR. BAIN: I'm going to go into a topic now. I know in your discussions last week in your other portfolio, there's a tie-in- it's the seal hunt, specifically, Hay Island. I'd like to know your opinion, as the Minister of Fisheries and Aquaculture, about the problem with the seals on Hay Island and what you propose to do.
MR. BELLIVEAU: I think I was asked a similar question with my other hat and I welcomed the question. I'm going to try to give the same answer. The seal harvest, or again, I recall going back to 2006, when I first was introduced to the House and I think it was one of my first debates as the Fisheries Critic. We gave our speech at night and I was very proud that we had unanimous consent on a humane seal harvest for Hay Island. I was very proud of that accomplishment and, in fact, I had people call me and say that they never thought they would see that in the House, but I was pleased with that.
I am very familiar with the seal harvest; I support a humane harvest for Hay Island. I understand the issues around that particular issue and I can tell you that Hay Island - again I use that, you'll hear it a number of times from me - it is on my radar screen. If you are
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familiar with the fishing industry, when you have a radar screen, if something is on it, you are paying attention to it. If you're not, it would be your advice to pay attention to it. I see that visibly there and I'm very well aware of the industry and the issues regarding the seal harvest.
I'm very supportive of the seal harvest, I said that from day one, and I'll continue to do that. I'm glad that we have unanimous consent in the House on that particular resolution. So I understand your concern around Hay Island. My grandfather and my father fished in that general area, for swordfish, and we'll just move forward from here regarding that. Thank you.
MR. BAIN: Thank you, Mr. Chairman, and thank you minister. I guess one of the concerns that has been expressed the last two or three years is the lateness for the harvesters to get approval. It has been a concern for, I know the last three years in particular, because I am familiar with that and I know that Robert Courtney is one of the persons who leads the pack, as far as the harvesting of seals goes.
The reason it was always late was because of environmental assessments and approval by the Department of Environment. I would just hope that, as you are changing hats, you'll consider the importance of the seal harvest to the fishermen in the area. We just talked about sustainability of fish and we know how much a seal eats. In August I had the opportunity to take some of my campaign workers out on a boat trip with one of the fishermen from the area and we were at Bird Island and just the number of seals at Bird Island alone was unreal. I'm saying there were literally hundreds of them there.
I know there is a science as to whether or not the seals are the cause of the downturn in the fishery, but I think if you talked to the fishermen, they certainly play a very big role in the decline. So again, minister, I can't stress enough the importance to the people there. I hope that if and when a decision is made, it is made earlier, to provide the opportunity for those harvesters.
MR. BELLIVEAU: Again I thank the member opposite for bringing this up. This is a very important topic and I want to reassure you that I didn't want to highlight all the issues we brought up with Minister Shea a week or so ago when I was in Ottawa, but I can assure the member opposite that this is one of the issues that I requested to be on the agenda for the P.E.I. provincial ministers' conference. So again, when I say it's on my radar screen, I'm very aware of it and I asked that it be on the agenda.
I just want to point out, you talked about going out and doing a tour with your community members or whatever, but to me, the evidence about the destruction that seals have on our groundfish is evident when fishermen bring in a glossy picture; they e-mail the picture of a 200-pound halibut. They set trawls for this and these are longline trawls, they set it in the water in early morning and they go back within six or eight hours and they retrieve it - and hopefully they get a halibut and they get their quotas and everybody is happy - but when you bring the halibut up and it has the resemblance of an apple core, you get the
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message that comes home very loud and clear from the fishing industry that these seals have to be managed. These halibut are high-priced fish and the seals are so heavily populated in that particular general area that they see the resemblance of an apple core and they're stripping the fish on the fishermen's longlines and they're devastating, they're having a very serious effect on them. When you look through the fishermen's lens about how to manage a seal population, it's very different than you get from some of the other groups who are more sensitive to this.
Again, I think that as the Minister of Fisheries you have to understand both sides but you also have to have a balance and you have to know when there is a certain requirement for harvest. Like you say, the population - and the member for Digby-Annapolis can give you the numbers, he can roll them off the top of his head - has basically tripled over the last 25 years, it's evident to every fisherman. Every fishing community sees the visual impact that these creatures have on our traditional fisheries. I can assure you that will be on the agenda for P.E.I. and I intend to bring this up forcefully on behalf of all Nova Scotians.
MR. BAIN: Mr. Chairman, I know in discussions with the federal minister, it's certainly on her radar, I believe. I don't think I was the first one to speak to her about it, nor were you. I think it has been there ever since she became minister.
I know that I'm covering a lot of federal things when I'm bringing up discussion today but it's relating to the crab industry. I know in my constituency there were a lot of concerns brought up just in the past summer and attributable again to the downturn of the lobster industry. We have the traditional licence holders and we have permit holders and the permit holders, my understanding is, there could be 12, 15, 17 owners of one of those permits that is shared and so on and so forth.
In 2005, I believe it was, the federal minister of the day, Geoff Regan, said that once the quota for crab got up to 9,700 tons, then the quota would be distributed 50 per cent to the traditional licence holders, 50 per cent to the permit holders. I'm sure you've heard that and you're probably familiar with it but I'd like to get your opinion on it.
MR. BELLIVEAU: I'm aware of that situation, I think I read the documents somewhere, Mr. Geoff Regan's comments on that. To me, first of all, these formulas are basically allotted by federal DFO. They're very complex and there are a number of flaws that individual groups right across Nova Scotia, right across the Atlantic Provinces, have identified with some serious concerns. Again, another issue that I raise with the federal minister, that these funding formulas are the potential for sectors to have some concerns or raise some concerns about. Under the Fisheries Act, the federal minister's decision is final. To me, there has to be some kind of process put in place, an appeal process or tribunal. I think the new Fisheries Act talks about that and we're still waiting for this new Fisheries Act. I suggested to her and I will suggest in the future that we have an appeal process or a tribunal where sectors or fleet sectors can bring their concerns forward and they can have their day in court.
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I'm well aware of the scenario that you're pointing out and I think they have some strong evidence but until you have a process in place where these individuals can bring their concerns to the federal government, you're basically going to be at the discretion of the federal minister. The provincial government cannot allocate quotas and until we have some kind of mechanism in place that people can appeal that, then we're going to continue on the same path. Right now the federal minister has that discretion of allocating these quotas and this is the reason why you have such turmoil in some of these industries.
MR. BAIN: I think initially when it was done - now, not being involved in the fisheries, I could be wrong - it was to share the wealth. I think now, as a result, what's happening is you have tensions developing between the permanent licence holders and the permit licence holders. I think the quicker a common ground is reached, the better off for the industry. When you have fishers fighting with each other because one has one licence, the other has a permit, I don't think that's healthy. Anything you could do as minister I'm sure to get a resolve - and you're right, I saw Mr. Regan's decision in 2005, I've written the minister about it. If you look at the interpretation, you could read the letter from the minister and get four interpretations from it and I think that's where the problem goes.
MR. BELLIVEAU: I appreciate your comments saying that you're right because it's encouraging to know that you're going down the right path here. I understand there's - I want to be very clear - a number of different sectors out there, there are different fleets, groundfish and I can name the crab fishermen, there's some uneasiness about how quotas are allotted. Again, this is strictly, fully DFO, under their jurisdiction and until you have some kind of appeal process or tribunal where they can voice their concerns, this is something I'll be pushing for to give those particular groups a fair opportunity. I think that's what needs to be done, I think that's one of the things that would be in a new Fisheries Act because we have evolved.
If I can just push the button here and go back to 1968 when our fisheries became a limited entry, it was a free enterprise, everybody made their own decisions and our communities thrived because the decisions were made at the local level. If you go forward 40 years, all the decisions now are basically dictated or brought down from Ottawa. There's your problem and we have to learn how to have an opportunity to have some input into that decision-making process. I think it would benefit our coastal communities if we could get an opportunity to do that.
[4:00 p.m.]
MR. BAIN: I'm going to go back to the Loan Board again and I guess a lot of our discussion is, we talked about the downturn in the industry and everything else. Is there any consideration being given to loan forgiveness or interest forgiveness or anything like that to help the fishermen that are facing trouble today?
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MR. BELLIVEAU: Mr. Chairman, I think if you're asking if people are having difficulty because of this economic crisis, the Loan Board is more than willing to defer or to sit down with that particular applicant. If there needs to be a mechanism to defer that loan for a year or a season, I think the Loan Board will be more than willing to work with that. That's something that we raised in the emergency debate was to have a deferral program and I appreciate the member bringing that up.
My understanding is that the overall applications or the unsuccessful on default is less than 2 per cent so that's the very strong track record. I've had this discussion with some of the fishermen along our coast, if they have problems with making the payments, they need to sit down and talk with the Loan Board and there will be an opportunity to defer these and get these through.
To me, it's the same as the banking institutes. I've also told the people that you need to basically address the issue, just talk with your banker but I'm pleased to say that the Loan Board is open to having a deferral program, knowing that we're in this financial crisis.
MR. BAIN: So there is no program as such, but they're dealt with on an individual basis according to need. I guess, Mr. Chairman, through you to the minister, we've been talking a lot about the short term and we have brought up the scientific discussions that are taking place. I would like to hear, minister, your long-term vision for the fisheries and the overall fisheries in this province. That's a loaded question.
MR. BELLIVEAU: That is a loaded question, but thank you very much, Mr. Chairman. It's a great question if you're sitting in my particular situation here now, because I do have a long-term vision. I think that the fishery in Nova Scotia has been misunderstood for decades and I think that we have an opportunity to address a number of these issues. What I laid out earlier is that, if you back up 40 years, the decision about the fisheries - in order to go fishing, or whatever sector you want to go - was made at the local level. That decision-making process has been taken away from us by a bureaucracy in Ottawa, and I hope to change that, to have more power in some of these decision-making policies.
You talked about having a vision. We have an opportunity to enhance certain species in our communities, and I've talked with my counterparts in P.E.I. You talk about halibut or soft shell white clams; there are opportunities that have an enhancement program to introduce that, and aquaculture can co-exist with our traditional fisheries and enhance some of these species. That is great news if you get all the Atlantic Ministers of Fisheries and Aquaculture on that same page. To me, if you had that support Atlantic-wide - and this is exactly the closing comment I said to Minister Shea as I left - you will not stop the Atlantic Provinces if we are coordinated in working together to bring a vision of how to enhance this fishery.
I think that we can bring this fishery back and I'm looking particularly for that challenge. I think once we ride through this economic crisis, the evidence is right there in
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front of us right now: we've got people coming to the Loan Board, young people, who want to build a future in the fishery. We have an aging population where fishermen have an opportunity to have a retirement package, and we're at that kind of crossroads in our fisheries. The older fisherman wants an opportunity to get out and retire with dignity and have a retirement package, and if you have the right public policies in place where young fishermen can have access to capital, if you go out and identify different species that you can enhance and bring these fisheries back, you are going to have a winning combination.
The other part of it is our global marketing. We are, like I said, doing things in marketing the same way our grandfathers marketed fish, and that needs to change with our modern technology. If we can control the environment, that our shellfish can maintain that temperature from the time that it's harvested to the time the consumer gets it, the opportunities there are unimaginable. So to me, it's one of the great opportunities, and one thing we haven't talked about tonight in your questioning is aquaculture. (Interruption) Well, I'm trying to read your notes here - the mirror is not working for me here - but we haven't talked about aquaculture in Nova Scotia.
I had a presentation by the Nova Scotia Aquaculture Association, roughly a $53 million industry that has the potential of doubling within five years. I had a great opportunity to be down at Owls Head, around Sheet Harbour, two weekends ago and I was impressed. I asked one question and we went out and did a tour of the facility there, the salmon-growing operation. There were six or seven people there who were employed there and they were all giving us a tour for about an hour or two. I asked one question - what is the average age of the workers on this site? They all looked around because they didn't think that question was coming. The average age of the traditional fishing industry is 55. The young person there answered the question, the average age on that site was 32.
The young guy there was saying that the average age of 75 per cent of the workers in aquaculture is under 40. He left me with a very strong message that motivated me to want to go on to do what we're talking about here, promoting this industry, because they want to stay in that community. They were born and raised there and feel that it's a great opportunity to be close to nature. They understand the fisheries. They understand aquaculture. That aquaculture site is doing - they're very pleased with the grow-out rates there. This individual had a young family and was very pleased to have a job and to be able to stay in his community and he wanted to continue doing that.
So when you have an industry that says it can double its size in five years, you have an opportunity to take aquaculture and identify several species in Nova Scotia, and you can do that in P.E.I. and Newfoundland and Labrador. There's a combination of enhancing our wild fisheries, marrying that together with aquaculture, and all those jobs are going to be in rural Nova Scotia, our rural coastal communities. To me, there's no better goodwill story because we're all suffering the effects of young people moving away from our coastal communities. They get educated, they move towards the population centre, and aquaculture
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is not going to co-exist in Halifax. They're going to have to be in the coastal communities around our provinces.
So, to me, it's a great opportunity to keep young people in our communities. I think, getting back to your general question, if we hold our federal counterparts accountable - and I'm not saying to go up and just stand there on a soapbox and rattle on - but to have some factual information about how we can manage the fisheries better, make better public policies to encourage and keep young people in our communities. We have the science to enhance our halibut and shellfish, the soft shell clams - the minister of the day cannot stop that momentum. I intend to take that message to our provincial counterparts and achieve that.
MR. BAIN: Mr. Chairman, I realize my time is getting short. Mr. Minister, since you started talking aquaculture, then the mirror must be indeed working, where you saw I was open to that page. I notice that the estimate for aquaculture is up a fair amount from the 2008-09 actual costs. Can you tell me how many fish farms you are now able to help or support in the province? How many fish farms are there in the Province of Nova Scotia?
MR. BELLIVEAU: Mr. Chairman, I'm glad I read my briefing note last week - 330 is the answer to that one.
MR. BAIN: How many more fish farms do you look to establish?
MR. BELLIVEAU: Just a clarification of the 330. One-half of them are active, and to me, the opportunity is - basically there are enough of the sites out there right now. If you can activate them and create this positive attitude in the community, I think Nova Scotia aquaculture would have - their numbers are such that they have an opportunity to double productivity in the next five years. So if you take the people's attitude regarding Owls Head, how enthused they are about the industry, and I think that the opportunity can be achieved if we do some of these marketing initiatives.
MR. BAIN: Mr. Chairman, I guess when we see, you say there are 165 give or take active fish farms out of 330. If these fish farms all got into operation, how would this conflict with the government's environmental goals or would it?
MR. BELLIVEAU: Mr. Chairman, through you to the member opposite, I guess your question is, we're getting into interdepartment here and different departments. (Interruption) As the fisheries, yes, they are tied together but the key here is that all these farms have to be sustainable. They have to make sure that they're going to be well managed and there's an opportunity for a well-managed site. All that is taken into consideration when you establish a site or a grow-out area.
MR. BAIN: How much time do I have?
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MR. CHAIRMAN: About 30 seconds.
MR. BAIN: I have 30 seconds, okay, maybe if I just turn the papers here.
MR. CHAIRMAN: Go ahead.
MR. BAIN: So I guess through you, Mr. Chairman, to the minister, you don't see the possibility that there could be a conflict with the number of farms and the environmental goals that the government has set, am I right in assuming that?
MR. BELLIVEAU: Mr. Chairman, through you to the member opposite, I do not see a conflict. I think that I evaluate, regardless of what hat I wear, that first of all, regardless of any site or any project, it has to be sustainable. I think if you're talking about fish, if you want to have a good healthy fishing industry, you need a good environment and if you want a good environment, you usually will have a good healthy fishery.
MR. CHAIRMAN: The time has expired for the PC caucus. Acknowledging that there are no more questions from the Liberal caucus, I do offer the PC caucus some more time for questions if you would like?
The honourable member for Victoria-The Lakes.
MR. BAIN: Yes, thank you, Mr. Chairman. I do have a few more, Mr. Minister, if you don't mind bearing with me at this time. I'm going to go to the inland fisheries and the numbers that have been presented. The estimated expenses, and correct me again if I'm wrong, $1.911 million for inland fisheries?
[4:15 p.m.]
MR. BELLIVEAU: Yes, $1.911 million, basically that is broken down into the inland resource management, the fish stocking program, the salmon restoration program, and administration. I think the fish stock and the salmon restoration basically are the ones and inland resource management consumes the biggest part of that allotted money.
MR. BAIN: But it does show that there is a decrease in salaries and benefits of approximately $100,000 from the 2008-09 actuals?
MR. BELLIVEAU: My understanding is that these numbers are basically outlining the new salaries dealing with the Margaree Harbour hatchery.
MR. BAIN: That attributes the decrease?
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MR. BELLIVEAU: On Page 13.7, if you look at the estimates 2008-09, $1.195 million and it's exactly the same for 2009-10.
MR. BAIN: Yes, but I guess my question is that I see salaries and employee benefits, the line up above. The actual was $1.338 million, the estimate is $1.196 million. I guess that's my question concerning the difference there. That's a difference of approximately $142,000. Does that mean there will be a lay-off of staff attributed to that decrease?
MR. BELLIVEAU: There will be no lay-offs. This is basically dealing with some overtime and some people dealing with the hatchery or whatever. There will be no lay-offs if that's what your question is referring to.
MR. BAIN: At the same time, when I look at the operating costs, I realize the estimate is very close to the estimate in 2008-09, but it's still substantially higher than the actual of 2008-09, $492,000 as compared to $735,000.
MR. BELLIVEAU: It's basically the numbers are going back and forth of spending the money in different areas regarding the hatchery and some different positions. The member has raised some questions and I'm going to ask our staff to get some detailed clarification on that particular budget line.
MR. BAIN: I think that looks after any questions I had. I want to thank the minister for bearing with me through all this. I was thrown into it at the last minute because our critic was unable to be here on time. Again, thank you.
MR. CHAIRMAN: The honourable Minister of Fisheries and Aquaculture for closing remarks.
MR. BELLIVEAU: Thank you very much. First of all I want to thank the members opposite and all the members for being engaged in this particular process, and I want to thank my staff members. There were some very good questions, and I know that I may not have the answers to all of them, but I assure you that our staff will make notes and will get back to the honourable member for some clarification on some of these points.
The fisheries are very important to our coastal communities and I think that we do have a vision. I'm encouraged with the mandate that we were given by the Nova Scotia voters and I look forward to working with my colleagues. I look forward to working with the staff; they're very professional, and I'm delighted that we're in a certain time and certain place in Nova Scotia. There are certain challenges out there and I'm sure that we will address them and we'll do a reasonable job at that, and I intend to carry that message forward.
Before I close, I just want to thank all the members who were involved in this process.
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MR. CHAIRMAN: Shall Resolution E10 stand?
Resolution E10 stands.
Thank you, minister, and your staff. We'll take a brief break, about 10 minutes, to allow for the Department of Finance to come forward.
[4:24 p.m. The subcommittee recessed]
[4:38 p.m. The subcommittee reconvened.]
MR. CHAIRMAN: I'd like to call the subcommittee to order.
We will now debate the estimates of the Department of Finance.
Resolution E9 - Resolved, that a sum not exceeding $889,076,000 be granted to the Lieutenant Governor to defray expenses in respect of Debt Servicing Costs, Department of Finance, pursuant to the Estimate.
MR. CHAIRMAN: The honourable Minister of Finance.
HON. GRAHAM STEELE: Thank you, Mr. Chairman. It's a pleasure for me to be here, the first time that I've appeared before the Subcommittee on Supply as a Minister of the Crown. I can't tell you how much that means to me.
I actually have not one, not two, but 14 resolutions that fall under my bailiwick, and I will review them later, at the end of my remarks. My staff will be joining me in the course of my opening remarks. I would like to introduce Mr. Greg Beaulieu, who is off to my left, to the members of the committee. Greg is the Corporate Secretary of the Nova Scotia Liquor Corporation, which is one of the responsibilities that I have, so welcome, Greg. I know that if any questions come up about the operations of the Liquor Corporation Greg will take his place to assist me.
What I'd like to do, particularly since it is my first time before the subcommittee as a minister, and in light of the fact that both of the Finance Critics, to my knowledge, are new in their roles, is take some time to do an overview of everything for which I am responsible, in order to give people an idea of the scope and the breadth and the depth of what it is that I deal with on a day-to-day basis, which will go some way to explaining why I have 14 separate budgetary resolutions as part of the estimates process.
Let me start with the most obvious, the central part of my responsibilities. The Department of Finance is a department of just a shade under 200 people, the majority of whom are located in the Provincial Building across from the front door of Province House
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here in Halifax. Interestingly, and this is something not very many people know, there are actually Department of Finance employees in other parts of the province. There is a unit in Sydney and there is a unit in Truro. I will explain a little later why it is that we have Finance officials posted in offices around the province. I think it is a good thing because when people think of the civil service, especially a big, central department like the Department of Finance, they tend to assume that everything takes place in a building in downtown Halifax, and that's not the case.
There's a significant part of the work at the Department of Finance that really could be done from anywhere in Nova Scotia with a strong Internet connection. That's why we do have these units in two other cities here in Nova Scotia.
The Department of Finance has a number of key divisions. I'd like to go over them and describe what each of them does. These are the people with whom I interact on a day-to-day basis. The first one, the one that people are probably most familiar with, is Fiscal and Economic Policy. That branch provides the fiscal and economic analysis, policy development, and strategic advice for the government, so that when any question comes up in the Legislature or otherwise about economic issues - the state of the economy, about tax, and tax questions frequently come up in the Legislature, for example, the member for Digby-Annapolis has submitted a private member's bill dealing with HST on funerals. So the analysis of that kind of proposal is done within the Fiscal and Economic Policy Division of the Department of Finance. They do economic tax and fiscal decision support for myself, the minister, for the Cabinet, and, indeed, for all provincial departments and agencies. Their aim is to maintain an equitable, efficient and effective tax regime that supports public services and sustains economic growth. Because, of course, in order for the government to do what it has to do, there has to be sufficient revenue and it is the people within the Fiscal and Economic Policy Branch who deal with all of those kinds of revenue questions that we're quite familiar with.
That same unit also provides timely economic and revenue forecasts for government budgets, financial reporting and long-term planning. For example, in the budget documents that were recently tabled, there is a forecast out for at least the next four years but in particular for the next year, which is an essential part of the budgeting process. The forecast has to be as accurate and as solid as it can possibly be so government can make a reasonable prediction of revenues and of expenditures. That takes a great deal of work in order to get that forecast as accurate as it can possibly be. Particularly in circumstances that we find ourselves in now where we are in the midst of a global recession, which means that things are not normal. Every sense of normalcy has gone out the window and the people doing the forecasting have to take into account a situation that they haven't faced ever, or at least not for a very long time.
Another thing the Fiscal and Economic Policy branch does is advance Nova Scotia's interest on a wide variety of federal-provincial fiscal arrangements such as, for example,
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equalization, the Canada Health Transfer, the Canada Social Transfer. Because it is simply a fact of our finances that the federal government plays a major role in the revenues of the province each year and maintaining those relations, maximizing those revenues, is a major undertaking in the Fiscal and Economic Policy branch.
The next significant division of the Department of Finance is the Policy and Planning Division. This branch works principally in co-operation with Treasury Board senior management to coordinate the development of the provincial budget. So people like the Executive Director, Frank Dunn, a very capable and experienced person, is one of the core team that develops the budget every year, working, coordinating with other units of government, making sure that all the data is together and helping put the budget documents together. It's a fairly substantial package of documents that are tabled on Budget Day. If you think that, for every page in those documents, it represents four or five times as much work just behind the page in order to gather the information, to ensure consistency, ensure accuracy - there is a tremendous amount of work that goes into preparing the budget documents.
[4:45 p.m.]
I don't think until you've actually been inside the process, as I have for the last few months, that you realize just how much effort goes into making sure that the budget documents are complete and that they are accurate, so that is a major undertaking of the Policy and Planning Division. They develop fiscal plans, they prepare regular forecast updates, they also develop plans, accountability reports and other planning documents, which of course are an essential element of government financial management. They provide policy analysis and advice to the minister's office on the department's corporate policy responsibilities, interdepartmental policy initiatives and on departmental organization operations and policy and they generally manage other corporate projects.
Another division that's not quite as out front, I would say, in the Department of Finance is the division that deals with financial institutions. Maybe one of the reasons why it's not so out front is simply because it's behind-the-scenes work that people don't notice until there's a crisis. The good news is that we have good, solid regulation, we have a good stable system. The major system that we regulate, of course, would be the credit unions, which are not federally regulated, they are regulated by the province. One of the longest and most complex Statutes that we have in our books here in Nova Scotia is, in fact, the Credit Union Act because it is a complete set of laws dealing with that important part of our banking sector. It's the Superintendent of Financial Institutions who does that with remarkably few resources. There are few divisions of the Department of Finance that do more with less. They do a great deal of good work with not very many people.
So they regulate market conduct in the credit union, insurance and trust and loan sector. They do financial monitoring to protect consumers and they look after the administration and collection of premiums and other taxes levied in the insurance sector. So,
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for example, Mr. Chairman and members, if there is a member of the public who has a concern about some aspect of their insurance policy and they want to complain or they want to get advice, they pick up the phone and it is somebody in the Office of the Superintendent that picks up the phone. These are very experienced and knowledgeable people who are able to provide guidance and advice to consumers who are having any difficulties with, for example, insurance.
I'm going to return to insurance a little bit later because I think it's important to let members of the committee know some of the plans of this government in the insurance sector, because among other things, I'm also the Minister responsible for the Insurance Act, but I'm going to return to that later.
Another major division within the Department of Finance is the Liability Management and Treasury Services Division. This is one of the most important in the sense that they're the ones who are actually dealing with the hundreds of millions and billions of dollars of cash flow. They're the ones who are handling the money. When there's a bond issue, it is the people in that division who are doing it. They handle very large sums of money on behalf of the province, in the billions of dollars. So, it's very important in that sense that if they do their job well nobody notices, but it's worth many millions of dollars to the province to have their money managed well. The people would only notice if something went wrong and, fortunately, things don't go wrong. They're very professional, they're very experienced and very expert at what they do.
Here is what I would say about that division, which is known as LMTS, like everything else in the Department of Finance, everything has an acronym and I'm just learning my way around it, around all of the acronyms. In LMTS they are dealing with enormous sums of money but their work is very little understood, because it is complex, it is sophisticated. For example, in the debate that was had inside and outside the Legislature about the paying out of the university memorandum of understanding, the money flows involved would be dealt with by the people in Liability Management and Treasury Services. But the work they did on that file or on any other, was really, I felt, not well understood. So perhaps later on we'll have an opportunity to go into that in some depth, since I'm quite keen to make sure that everyone in the Legislature understands how this stuff works, because a great deal of money is involved but it is also quite complex.
So they manage the province's debt portfolio and borrowing program. They do it and have to do it in a prudent and efficient manner. They manage the Consolidated Funds operational cash flow so when you all get your paycheque in your bank account, somebody has to be sure that the province has enough money available that day and that it gets to where it is supposed to go. You can repeat that for 10,000 civil servants, tens of thousands of contractors. The province has cash needs on a day-to-day basis which go up and down and it is the people there, in LMTS who make sure that the money is available. So they do a great deal of short-term trading, money market borrowing and they also look after the longer term
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bonds. So, as I say, they provide cash management services, they provide all post-trade settlements and accounting functions for the province's debt portfolio.
They manage relationships with external rating agencies, investors and broker dealers. For example, when the credit rating agencies come into town to assess the financial state of the province, it is the people in LMTS who meet them, who talk to them, who arrange for the sharing of information as those bond rating agencies decide what credit rating this province is going to have. And as everybody knows, even if you don't understand exactly how bond rating agencies work, their work has a direct impact on what we do because if our rating goes up, our cost of borrowing goes down; if our rating goes down, our cost of borrowing goes up. So, if the people in LMTS did not do their job and our rating went down because of a lack of information, that in and of itself can cost the province many millions of dollars that we would rather spend on health, on education, on roads, rather than simply in increased borrowing costs.
The LMTS people also advise myself, the minister, and the Debt Management Committee on current best practices, changing market environment, and risk parameters of the debt portfolio so that we are managing the debt in the best way possible for the benefit of everybody. The amount of money this province pays on the debt is one of the largest items in the provincial budget, after health and education. I believe I'm right in saying this, that debt management is third. The entire Department of Community Services costs less than the amount of money we pay on interest every year, which is kind of a shocking statistic. By the way, we spend far more on interest on the debt than we spend on our roads in any given year.
The amounts of money involved are extremely large and so every decision made by LMTS is important and deals with dollars in the many, many millions. Every time we end up talking about the cost of muffins or the cost of coffee or the cost of this trip or that trip in the Legislature, it's good to remind ourselves that the LMTS people can gain or lose millions of dollars over the course of a day, and sometimes we end up spending a lot of time over an expenditure of $100 or $500. What they do is extremely important and not well understood.
The other thing about the Department of Finance that I think almost nobody knows, because it gets almost no attention, is that a very substantial part of the number of personnel in the Department of Finance are what you would call central agency services. For example, payroll services across government are being consolidated within the Department of Finance. All payroll services will be done through the Department of Finance.
Finance provides a core set of services that support the management of the province's programs and public resources. Members may be familiar with this. It's often referred to as the SAP function. SAP is a German company that sells corporate financial management software, so it's referred to as SAP, but really that's just the vendor, that's who we bought the system from. There are dozens of people within the Department of Finance who provide payroll, human resources, and other computer services to the district health authorities, to the
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school boards, even to some municipalities. This ensures a level of consistency across the province, a level of professionalism, a level of comparability.
So whenever one of these organizations is ready to change from their legacy system, we're able to step in and offer them a chance to come on board this province-wide, very sophisticated, very complex computer system. It is also expensive and has been the focus of attention of a number of Auditor General Reports, but it is a very important part of what the Department of Finance does and receives virtually no attention, even though it's a significant percentage of a number of staff, for example.
It is in this area that we are able to offer services in other parts of the province. It's in this area, in the area of SAP services, that we are able to have an office functioning in Sydney, for example. I visited that office and believe me, those people are very, very happy to be there. They have good work and it's well paid and they're able to work in Cape Breton. Of course, everybody there has a connection, close or more distant, to Cape Breton. It's where they want to be. They don't have to be in downtown Halifax to do that SAP work. They can be, but they don't have to be.
The same with the smaller office that we have in Truro. That SAP work can literally be done anywhere. So I'm very pleased that my department, which most people assume is just in downtown Halifax, has these offices and the employees are happy and motivated and so we can have some of those good high-paid civil service jobs in other centres in the province.
The other central agency function, apart from SAP, is wide; developing and maintaining a statistical infrastructure which may sound dull but believe me, the government needs reliable information to support evidence-based decision making and program planning. The Nova Scotia Community Counts project, for example, a great deal of that work is done in the Department of Finance and it provides value-added audit and consulting services, so that, for example, the internal audit unit is run out of the Department of Finance.
Then there's the government accounting, of course, which is in the same central agency function. One of the things that I learned is that for the people in government accounting, the big day of the year is the day the Public Accounts are released. For them this is very exciting stuff and they put a great deal of effort into it. These are the annual audited, consolidated financial statements which come out - lately they've been coming around the end of August. That date has been moved back and back, it used to be released much later in the year. In order to prepare and release the financial statements for a $9 billion entity, which the provincial government is, it takes a huge amount of work. That is done by the government accounting people in the Department of Finance and for them, that's the biggest, most exciting day of the year.
Now there's a whole other part of the department where Budget Day is the biggest and most exciting day of the year, but I learned also you can't celebrate one in the Department of
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Finance without also celebrating the other. It was a reminder to me that the public profile of the Department of Finance really centres around budget and budget-related things but there's so much more going on at the same time.
Finally there are the advisory services for Crown agencies and corporations in the Department of Finance. That leads me, as a natural segue, I want to touch briefly on the other areas of responsibility that I have under my ministerial portfolio. I am also the Minister for the Nova Scotia Liquor Corporation and for the Liquor Control Act. I have gotten to know that organization. It's a very interesting organization and I would say a well-run organization. It is surprising, over the almost four months that I've been the minister, there have been very few complaints or criticisms coming out of the Liquor Corporation. I think under the leadership of the current Chair, Peter McCreath and the current President and CEO, Bret Mitchell, the organization has been transformed, frankly, over the past number of years. I hear this all the time from people, just the people I see in the constituency and elsewhere.
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I'm sure all the members have noticed a difference as they go into their local liquor store. It's nicer, it's brighter, the displays are better, the staff is more knowledgeable, the staff will approach you and offer to help and they really mean it and if you ask for their help they are very knowledgeable about it. That didn't happen by accident, that is a very conscious decision on the part of the corporation to improve the retail experience in liquor stores throughout Nova Scotia. Let's face it, it is a monopoly, there isn't any real competition for what they do. Any competition is very small and limited, for example, the private wine stores, which exist only here in Halifax.
It would be easy for the Liquor Corporation to sit back, rest on their laurels and just say well, the product sells itself, we don't really have to do much. They haven't done that and that's the good thing about the Liquor Corporation, it's an organization that has been transformed, that offers one of the top retail experiences in Nova Scotia and they measure this. They do surveys about how they compare against other retailers. So all I would say to you is just imagine your experience entering your local liquor store, compared to your experience if you go into other local retailers, like a Home Depot or Costco or a Wal-Mart. These are the people that the Liquor Corporation is measuring itself against about whether your satisfaction in dealing with them is the same or better or lower than those other organizations. They are working very hard at being the premier, the leading retailer in Nova Scotia.
Today, for example, one of the very senior management people let it be known that he was leaving and I'm very sorry about that because he certainly had an excellent reputation, but he was leaving to go to Sobeys, and that, I think, is a mark of the excellence that they've developed at the Liquor Corporation, is that we have our top management people being poached by a big, sophisticated, national, private sector retailer. I think that's a real compliment to the Liquor Corporation, about where they see the talent. We're sorry to lose
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him but if we have to lose him, I guess you can't complain too much about losing him to another great local company like Sobeys.
Some of the changes that have been made over the last number of years by the previous government are ones that we fully intend to leave in place. They're working well and let me mention, in particular, the Agency Store Program. I think it's 55 agency stores. If it's not 55, it's something very close to that, in what were underserved areas around the province and that program has been a real success. Not everybody is completely happy. There are always places that don't have an agency store that would like to have one. All I can say to that is the Liquor Corporation is open to new suggestions, but they will evaluate it, they will put it through a fairly strict evaluation process and make sure that it's right for the community, it's right for the corporation. So the door isn't closed on the number of agency stores but it's not just anybody who asks who's going to get one either.
There are a number of locations that have been approved which no qualifying retailer has been identified. So there may be an expansion of the Agency Store Program if a qualifying retailer is identified. Then there are other communities that haven't been previously approved, where some local people have expressed an interest in having an agency store and the Liquor Corporation is evaluating those, although my understanding is that any approval would have to go through Cabinet first before it was official. I just wanted to let members know, particularly those in rural areas who represent people who are distant from the local outlet, that the Agency Store Program is never finished. It's an ongoing project. We're not looking to expand it hugely but we're not looking to change it either.
I would say the same probably applies to the private wine stores. As I mentioned, there are four. One recently changed ownership. They are all here in metro Halifax. I would never say that the door is closed on any future private wine stores. It may be but it would have to be a good proposal, it would have to be a solid proposal that was right for the community that it proposed to locate in, and so that's what I would say on that. We're not looking to change that. We're not looking to expand it greatly. We're not looking to reduce it. I think probably the balance we have right now is just about right.
I do have to say that I'm very pleased with the management of the Liquor Corporation right now, and I don't think this government is looking to make any major changes with respect to how the Liquor Corporation operates. It's a well-run organization. It produces a substantial amount of revenue for the province, and it does it in a way, I think, Nova Scotians find reasonable and acceptable given the nature of the product and the tremendous history alcohol has had through Nova Scotia politics, through a century. When you read books from a century ago, you realize that the central political issue was prohibition or temperance, I should say temperance. It's amazing what a critical issue that was in politics a century ago. There's a long, long history of the relationship of liquor and politics in Nova Scotia, but I think things have reached a good balance now. So we're not looking to make major changes there.
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Another organization for which I'm responsible is the Nova Scotia Gaming Corporation, and while we've been talking, the CEO, Marie Mullally, has come into the room and I know if any members have gaming related questions, that Marie will join me here at the table to do our best to answer your questions on that. This is the beginning, or yesterday, I suppose, technically yesterday was the beginning of Responsible Gambling Awareness Week and that's taking place under the leadership of the Gaming Corporation because the Gaming Corporation has a very difficult mandate. It has to balance its leadership on the gaming issue which is, and let's be clear on the legal status of this, gambling is illegal in Canada except as run by a provincial government. So it's illegal under the Criminal Code of Canada and that's why all gambling is done under the purview of the Nova Scotia Gaming Corporation, which is the agent of the government. In turn, the Gaming Corporation has two - I don't know the right word, agents or partners - namely the Atlantic Lottery Corporation, where we have entered into an agreement with the other three Atlantic Provinces to manage the gaming on our behalf; and the other partner that we have, of course, is Casino Nova Scotia, which runs the casinos in Halifax and Sydney.
But the difficulty of the Gaming Corporation's work, as I was saying, is balancing the desire of Nova Scotians to have some gaming available but also balancing that with social responsibility. Which is the same dual mandate that the Liquor Corporation has. Some people would advocate that those two roles should be split. But I have to tell you that I'm not one of those people.
I think it's a good thing, it's a healthy thing that every day in those two organizations those two objectives are balanced. They have to be so that every decision on their retail side is being done by the same people who are thinking about social responsibility. Rather than dividing it and saying to the retail people okay, you do whatever you have to do and sell as much product as you can. Then you give to a completely different set of people responsibility for dealing with social responsibility. I think it is a good thing, it's a healthy thing that the same people are dealing with both of those things at the same time.
But it means that the gaming is controversial. It is and I don't think that is going to change. It has been controversial for a while and it will continue to be controversial, because you will never get broad social agreement that their balance has been struck just exactly right.
Gaming is an evolving thing, particularly with technology, particularly with things like poker, with particularly with on-line gambling and the Gaming Corporation and its partner, ALC, have to continually try to keep up with technological developments. They can't stand still, and finding the right balance between having a product that is available and fun and balancing that for those who have no problem with gambling and balancing that with social responsibility with those who are at risk is also a constantly evolving challenge.
I would invite any member, through you, Mr. Chairman, any of the members who have some time this week to take part in the Responsible Gambling Awareness Week Conference
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which is happening at the Lord Nelson Hotel. World class speakers talking about leading edge developments in gaming and it's happening right here in Nova Scotia.
The other thing the members should know is that Nova Scotia was recently awarded the highest level of social responsibility by the World Lottery Association. That's not something that just happens. Nova Scotia is a world leader in socially responsible gambling. Sometimes I think we have to just remind ourselves when we get in the middle of some of these controversial gaming topics that we are world leaders, the only other jurisdiction that has achieved the same level of certification as Nova Scotia is the Province of Quebec. Nobody else in the world has reached the same level of certification as ourselves and Quebec. I think every once in a while it is useful to stop and recognize when our people, when Nova Scotians, are national and international leaders and despite what people may say on the gambling front, we are national and international leaders. We take this stuff extremely seriously.
One of the things we might talk about during this committee meeting is the Informed Player Choice System. There was a pilot project in the Mount Uniacke area, there is now what I would call a, staged roll-out that has started in Sydney, just to make sure that all of the bugs are worked out of the system. Once that is completed, it will be rolled out across the province. That very simply is a system where players use a card to monitor their own spending on gambling, particularly with video lottery terminals. Again, this is a project that has been done in co-operation with a Nova Scotia-based company named Techlink, out of Sydney. So that's the game core.
I could say a lot more, I could talk for hours just on KENO, but I won't. We made a decision that it was time to pull back from KENO. I made a statement in the House about that, about why that was. I don't think I need to repeat that here. I think it's a signal that this government is not content to stay with the status quo on gaming. It is something that we'll be constantly challenging, that we will constantly be working on, and we'll probably never get it exactly right, but we're going to keep trying.
As part of that, I wanted to alert members to the fact that the previous gaming strategy is about to expire. There is a five-year gaming strategy that came into effect, I believe, in April 2005. So if you do the math, you know that it expires next Spring. It is one of those things this government will have to deal with. We will have to look at, do we need a new, formal gaming strategy? If we do, we need to get to work on it. Okay, now that we've worked through the previous five-year plan, and worked through it fairly well, I think members will find that if we look at where we are, where we planned to be five years ago, that it matches pretty closely. The question is now up to be asked and to be answered, where are we going to go over the next five years? So it's time to develop a new gaming strategy.
Another area that I'm responsible for is the Nova Scotia Securities Commission, which is again not something that finds its way into the House very often, mainly because it is very complex but also because we've had some truly superb people running it. I'll mention
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in particular the chair, Leslie O'Brien, who is nationally known - I would even say renowned - for his experience and expertise in the securities area. We've been very fortunate here to have him as our chair for a number of years. He is a long-term professor at Dalhousie Law School.
I wanted to mention it because this is something that will be in the news a bit, particularly for those who follow the business news. There has been a movement towards a national securities regulator. The reason that hasn't been done so far, of course, is that securities are regulated by the province - by the provinces, I should say. So the national government really has no authority except what the provinces give it. Of course, getting the 10 provinces and three territories to agree on anything is difficult. To agree what to have for lunch at ministerial meetings, to get the 13 jurisdictions plus the federal government on board is very difficult.
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This is an idea that has been around for a long time and we've probably gone further with it than any previous federal government has gone. It is something that the current federal government wants to do and we're ready to move forward with them.
Now, bearing in mind that Nova Scotia is not and never will be a major player on the securities scene, we have 51 issuers - that is, 51 companies or entities that issue securities to the public. The most common form of security, of course, would be shares. So these are entities that sell shares and that are based in Nova Scotia. We have 51, compared to several thousand, for example, in Ontario, which is really the centre of the securities industry in Nova Scotia, although there is significant activity in Quebec and in Alberta.
We are not a major player, but if this is going to work, everybody has to be on board, or almost everybody. We have told the federal government that we will participate with them in what they call the transition office. That is the office that is going to look at whether a national system can be implemented. They have asked us to nominate somebody to the committee and we have done that. However, I'm not in a position today to say who the person is, other than it is another very well-known Nova Scotian, or well known in the securities industry anyway, who has a wonderful reputation. The federal government has to confirm the appointment by federal Order in Council, so until that's done, I don't think I should mention the name of the person we're putting forward.
For people in Nova Scotia companies this doesn't mean that we are necessarily going to go all the way. We've laid down five conditions that I think are fairly reasonable conditions before we'll join on to a national securities regulator. One is just to recognize that it is a matter of provincial jurisdiction. Another one is to make sure that there is a continuing presence here in Halifax.
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We have a number of people employed in our Securities Commission. It would be a shame to lose those jobs, not to mention that a Halifax office is a window for the national industry on Nova Scotia, indeed all of Atlantic Canada.
It also represents a revenue stream for the provincial government and we're not in a position right now to give up revenue streams. So if there is a move to a national regulator, we want to make sure that we are compensated fairly for the loss of revenue. We also want to make sure that we protect good, local issuers like CEDIF, the Community Economic Development Investment Funds. We want to make sure that there still is a role for them in any kind of a national securities regulator.
This is something that is going to be in the news, it could be in the news as early as tomorrow. Our understanding is the federal government is going to confirm the provincial nominees some time soon, very soon - it could be today, it could be tomorrow. So it will be in the news and it is important to Nova Scotia businesses. It is important to them because they want to make sure that when they're ready to go to market that there's not any more red tape than there has to be. They want to make sure that their fees are reasonable.
One of the things I did when I came in was ask that a survey be done of all the Nova Scotia issuers, which is not something that had been done before. It just seemed to me that if we were going to decide which way we were going to go in this, we should at least ask the people who are directly affected. The answers that we got back were, I would say, cautiously encouraging of moving forward - cautious because they want to make sure that it doesn't represent just an increase in fees. They want to make sure that it is actually going to make things better for them, not worse, but with a couple of reservations, I think they were encouraging of moving forward.
Let me turn then to insurance because as I mentioned earlier, I am also the Minister responsible for the Insurance Act and there are a couple of major changes coming - not major changes - major reviews coming on insurance. We, the NDP, have for many years expressed dissatisfaction with the minor injury cap and we are committed to changing the minor injury cap. We have informed the industry, we have informed the brokers, we have informed the Atlantic Provinces Trial Lawyers Association that we will be changing the minor injury cap. We do not believe it is fair.
This is the provision brought in in the wake of the 2003 insurance difficulties that limited pain and suffering awards to people with so-called minor injuries to $2,500. The problem is, or at least the way I've always seen the problem, is that minor injury was defined to include injuries that by any reasonable measure were quite serious, indeed, that it didn't apply to what the ordinary person on the street would call a minor injury. As a result, a significant number of people have found themselves receiving significantly less compensation than they would have before the reform. We don't think this is fair and it has to change and it will change.
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I have asked the Superintendent of Insurance to lead a process of review, to consult with all the key stakeholders. I think he's going to start that process by issuing a discussion paper on the possible options. During the election campaign the Premier, or the now Premier, talked about the possibility of a deductible instead of a cap and that was just one idea. We're not committed to that. Newfoundland and Labrador has a deductible and there are pros and cons to that but we want to make sure that the compensation available to injured accident victims is fair. We also want to make sure that the cost of the insurance product remains stable.
We have felt for a long time that price was given privilege at the expense of fairness. What we want to do is re-balance price and fairness. Given the finances of the insurance industry, we do not believe that it is necessary or appropriate that the changes we envision for the minor injury cap will lead to any general increase in insurance rates. If there are and they are not justified, they will be rolled back at the Utility and Review Board.
The other thing that was promised during the election campaign and on which we will deliver is a review of the automobile insurance product generally, to make sure that it continues to serve Nova Scotians well. It has not been substantially reviewed or revised for many years, going on to decades. It is just time to take a look at the system again. We will find a person who will be respected by all sides, all stakeholders, to review the product so that the person going in isn't going in with a preconceived idea of what the result of the review will be. It's time to review the automobile insurance product again and that process will start probably next Spring and conclude sometime in the following year.
The minor injury cap review, I've asked the Superintendent of Insurance to bring forward recommendations that can be implemented in the Spring 2010 sitting of the House. If statutory amendments aren't required and all the necessary changes can be made by regulation, then we will do it in roughly the same time frame, although, of course, at that point there won't be a direct connection to the sittings of the House.
Let me mention just three other things before I close, three other things for which I'm responsible. I am responsible for the Halifax-Dartmouth Bridge Commission. All I will say about the bridges is that they have a 20-year capital plan which shows that major maintenance work will be required on both bridges in the next 15 years. On the Macdonald bridge, the older of the two bridges, it is required within approximately five years. On the MacKay bridge, which is sometimes referred to as the "new bridge," although it's now almost 40 years old, requires a re-decking sometime in the 10 to 15-year time frame. It's absolutely necessary and it's going to be expensive and so we need to start the work now on how that is going to be paid for.
Another area of my responsibility is the Utility and Review Board. I won't say much about it because, of course, it is a quasi-judicial tribunal. As minister I do not get involved, am not involved in any way and will not get involved in any way in the actual decision
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making of the board. I'm responsible for, what I would call, more the administration of the board. The only thing I would mention there is that I had the opportunity, fairly early on in my time as minister, to make an appointment to the board and I'm pleased to say that without question, we appointed the very best person available and that was Roberta Clarke, a long-time lawyer here in Halifax. I'm very pleased that we were able to put a person of that calibre on the Utility and Review Board because this is Nova Scotia's superboard, this is like the premier economic regulatory tribunal in Nova Scotia.
When I was a young lawyer, lo those many years ago - this past weekend was my law school 20th Anniversary reunion, so that tells you when I graduated from law school - the landscape in Nova Scotia was a whole bunch of small, part-time tribunals that all did one little thing, but it wasn't enough to employ anybody full time. So you got people who did this stuff once in a while and there was no opportunity really to develop expertise. One by one, these little tribunals were abolished and the responsibilities were added to the Utility and Review Board. It started out, of course, as the Utility Board, regulating just - in latter days - just Nova Scotia Power, but in earlier days other things like tram cars and things like that which we don't have anymore.
So now one by one those other boards have been abolished and now we have this superboard that has a great influence and impact on the economic life of the province. It is crucial, it is essential, that nobody gets on that board who is not just simply the best available. So I was pleased to be able to do that as one of my early actions as Minister responsible for the Utility and Review Board.
Finally I will mention that not very long after being sworn in as a minister, the responsibilities for the Police Complaints Commissioner and Police Review Board were transferred to me. I will be continuing with those duties, although, again, I don't have a great deal to say about that. I mention it now because one of the 14 resolutions that fall within my area of responsibility deals with that area of responsibility.
So with that, I'd like to bring to a close my opening comments. I welcome members' questions.
MR. CHAIRMAN: The time is 5:26 p.m. and the Liberal caucus will have one hour.
The honourable member for Kings West.
MR. LEO GLAVINE: Thank you for your opening remarks and overview. I'm sure we will have a number of questions over the next couple of days regarding some of your areas of responsibility.
The first area that I want to go to - because it is an area that is concerning even more of the average Nova Scotian as well as the business community, as well as what our credit
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rating and so forth may be - and that's looking at debt and GDP ratio planning. You outlined this in your opening remarks and put it in the context of a very serious situation as we move it to the third line item in the budget. I think it's third, could be fourth - Community Services budget has grown considerably as well.
The department's business plan puts this budget in context when it says, "Nova Scotia's entry into economic recession follows a number of years where Nova Scotia's economic and financial position strengthened. Provincial debt was reduced to $12.323 billion (as of March 31, 2009). Debt servicing costs have dropped relative to revenues from 19.9 per cent in 2001-02 to 10.2 per cent in 2008-09. Nova Scotia's net direct debt to GDP ratio stood at 35.4 per cent at the end of 2008-09."
Despite what we may say about where the province was on May 4th and what Deloitte has told us so far and what it may tell us in the future, the last 10 years have provided Nova Scotians with a number of accomplishments. Progress was made through that period.
However, this all happened, of course - different government, different economic climate, and it isn't too difficult to take measures toward debt reduction in good times. We know that's on the relatively easy side. This fiscal year the minister has given Nova Scotians a budget deficit of $591 million, reflected in the 2009-10 net direct to GDP ratio target, which is increasing to 38.7 per cent. This is the same level as we had back three to four years ago, and it seems that we should expect the same level for the future. Long-term targeting is projected to maintain at the same ratio.
[5:30 p.m.]
After years of debt reduction, it seems like we are on a maintenance path now. I'm wondering if the minister could say that looks like the scenario for some time to come?
MR. STEELE: I would say yes. The only thing that we would probably then debate would be what exactly is "some time to come." As we know, revenues of the province for the next two years are projected to be flat or falling. The best estimate we can make now is that after those two years are over and the revenues start rising again, they will rise at a slower pace than they've risen over the previous 10 years.
That, in and of itself, indicates that we're going to be in a holding pattern. Really, the thing that is still unknown is what's going to happen on the expenditure side. We can predict reasonably well what's going to happen on the revenue side. The challenge about whether we're able to make progress against the absolute amount of the debt really is going to be on the expenditure side.
What we're determined to do is to not allow the debt to GDP ratio to increase. In broad terms, that's a measure of the ability of an economy to carry a certain level of debt. At
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least for the next couple of years that's the one that we'll be looking at. Yes, I do expect that to be steady. I don't expect it to get worse; I also don't expect it to get any better for at least the next two years.
MR. GLAVINE: So in that regard, being at around 38, 39 or wherever it may level off for two or three years, based on what you've been determining to date and taking a look at our history, do you anticipate that our credit rating could move in a direction that wouldn't be favourable to the province because this, as you stated in your own words, is of concern.
MR. STEELE: It's a very good question. Over the next couple of weeks, a couple of weeks only, not any longer than that, we expect to receive the reports of the three major credit rating agencies. They are Dominion Bond Rating Service, DBCS, Standard & Poor's, known as S&P, and Moody's. Normally we would have been rated in the Spring but with the budget not passed and with an election they have held off on their annual rating until the Fall. Now they've seen the budget, they have been, or will be, talking to staff in the Department of Finance and we expect to see the results of that in a couple of weeks. I have my own ideas about where those are going to go and why. I think it probably wouldn't be helpful for me to try and predict. I'll just note for you that I think you'll have the answer to your question within two or three weeks at the most.
MR. GLAVINE: That does explain then why we haven't seen that for awhile as well. That's the other piece that was obviously close to the surface. We're talking at least about an operating principle of maintaining balanced budgets. I'm just wondering, however, if that will be effective, at least in terms of moving toward future balanced budgets. Is that really too loose or do we need something more direct?
MR. STEELE: I'm not sure that I understand what you mean.
MR. GLAVINE: If we just have it as an operating principle, your government, that you want to move toward maintaining a balanced budget - it was written, of course, into legislation that a deficit budget could not be tabled. Now your government has done away with that with the Financial Measures Act. I'm just wondering if just working from an operating principle that, yes, you'd like to get to balanced budget, is that really strong enough and it may lead your government into continuous deficit budgets?
MR. STEELE: Mr. Chairman, I do think it's strong enough, we don't believe that legislation leads to financial responsibility. What we've seen across the country is that earlier this decade virtually every province in Canada passed some form of balanced budget legislation. There were some variations in the details but they all did it when times were good, when it was easy to keep. As soon as it became too difficult, one by one they all repealed them so I don't think what we're doing is unusual or different. It just goes to show that at the end of the day, it's not the legislation that leads to fiscal responsibility if you pass it when it's easy to keep and then you repeal it when it's no longer easy to keep.
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We believe that financial responsibility is a mindset, it's a commitment and as time goes on people will see by our actions how serious we are about it. Now, with having been in office for less than four months we don't have a track record to point to. We can just say what our commitment is and I can assure you we are firmly committed to living within our means.
MR. GLAVINE: As we move out of these more challenging times in Nova Scotia with revenues going down, forecasts of lower equalization next year, it will be a real challenge, I think, to deal with debt servicing and how that could become the monkey on our backs, in terms of our credit rating and the programs we offer. So is there something a little more specific, as we move forward, that you, as a government, and you, as minister, see that you will at least have to have a focus on, in terms of reducing the debt and the debt servicing cost?
I still find that in each of the years I've been here the most telling and most reality- check moment is that we spend that much money to service a debt and the limitations that it puts on us in all of our programs- so keeping the eye on the ball, in other words, how do you hope to do that, Mr. Minister?
MR. STEELE: Here's the thing, what we have in front of us today is this year's budget, so I guess I would be within my rights to say that I'm not really here to talk about what may or may not happen in future years.
What I would say is this, this government has been in office for less than four months. We commissioned an independent review of the province's finances, which isn't finished yet. It has two phases; we have Phase One, we don't have Phase Two yet.
The Premier appointed an advisory panel of four very eminent, highly-respected economists and economic development experts. They haven't reported yet. The budget process for next year, for 2010-11, starts now, much to my department's chagrin. They've just prepared one, it's not passed yet but normally these things are six months plus in the making and we're going to be tabling another budget within six months. That process is beginning, it hasn't ended. I don't want to try and preview what the result of that is going to be, never mind the year after that. So I think we just need to have a bit of patience and let these processes unfold and then it will all become clear.
MR. GLAVINE: Well, we'll get clarity, as they say. (Interruptions) However, let's then move to the now, minister, where I think the most controversial move in the budget was moving to $341 million payment in this fiscal year. I can see where it's coming at us, politically, and I think more Nova Scotians are and I'll work to educate Nova Scotians that this is something that was very much political.
I'd like for you to tell me how this benefits Nova Scotians. How does this truly help Nova Scotians?
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MR. STEELE: Thank you for the question and I appreciate the opportunity. The situation that we faced when we came into government was this, the previous government had entered into a multi-year agreement to fund universities. Let me stop right there and just say it's not an accident that it was the universities. The government had to find entities receiving a substantial amount of government money who were not part of the government consolidated reporting entity because, if they were, then shuffling money around doesn't matter, the bottom line is still the same. They fixed on the universities because they fit the criteria that they are outside. They are not part of government and yet every year they receive a substantial amount of government money. That's why the previous government picked universities. They did this in order that they could then move money around at will and they did. So when we came into office, we were faced with a situation where the previous government had put the better part of two full years of funding in one fiscal year.
Now why did they do that? Well, I have a view of why they did that. They did that in order to make this year's books look as good as possible, knowing they were on the eve of an election. So they moved as much as they could back. Why didn't they move all of two years? Well, there's a reason for that: as they were finishing up the books for 2008-09, they knew they had a surplus. Now they wouldn't have known precisely how much, but they would have known within $5 million or $10 million, because they always do. That's how good the people in Finance are. They know pretty precisely where things are going to end up. So they put as much of this year's funding on last year's books as they possibly could and still show a surplus.
You have to remember that if they hadn't done this, there would have been a much larger surplus last year. They got it down to $19 million, which when you're dealing with a $9 billion budget is as good as nothing, right? It's just that they shaved it as close as they possibly could without going into deficit because they had to make an educated guess about how much they could move back, so that's exactly what they did.
They changed last year's books - because remember, if there's a surplus - do you know what has to be done to a surplus? It has to go on the debt, but they didn't want to do that because to their way of thinking that would have been lost money, money they could have spent on, and wanted to spend on, other things. So they had to make last year's surplus as small as possible and they did that, meaning that this year there was that big payment out of the way to make it.
Then you get to their second purpose, which was to try and pretend that this year's budget was balanced. If they hadn't moved the money around, they would have been in a big deficit and they couldn't have pretended anything. As it is, they ended up presenting a surplus of $4 million on May 4th - which again, when you're dealing with a budget of $9 billion, $4 million is nothing. It's pocket change. It's not pocket change to you, it's not pocket change to me, but to the government $4 million is as good as nothing because whether it's zero or two or four or one, it doesn't matter. They just needed a number on the plus side of the ledger.
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By moving the stuff around last year, that's exactly what they got. So they achieved the result they wanted last year; they achieved the result they wanted this year, but in order to do that they were distorting the province's books by pretending that this year's payment was really last year's payment. That is a distortion. That is not a fair representation of the province's finances.
Then we come into office and we have a choice to make. We say okay, do we just leave things the way they are or do we take next year's payment and pay it this year? We decided to do the latter because - let me emphasize this, I can't repeat this enough - having no university funding in this year's budget is just as much of a distortion as having two years funding in last year's budget. The Liberal Party is advocating for just a different kind of distortion, saying we should have just left it the way it was and have virtually no university funding, but that, in itself, is not a fair representation of the province's finances either. It's just two years, zero. The only fair representation of the province's finances is one budget, one year's university payment, and that's what we did.
[5:45 p.m.]
So you ask, how is it good for the people of the province? It's good because it's a more accurate representation of the true state of the province's finances, of what the previous government would have presented if they had not started shuffling money around under the MOU, so it is more accurate than the previous government presented.
The other thing that makes it better for the people is we have simply brought to an end a complex and unnecessary arrangement dealing with university funding. We could have carried on with the system put in place by the previous government. We just said no, we're going to bring this to an end, we're going to close it out. It doesn't matter what word you use - close it out, buy it out, unwind it, whatever term you use - what we were trying to achieve was to bring it to an end, and we did that so that we can return to accountable annual payments as quickly as possible. That's why we did it.
MR. GLAVINE: So in terms of the MOU, I guess I just need to have a little bit of clarity, Mr. Minister, and that is whether or not you're saying that the previous government broke the actual contractual arrangement to pay out set amounts in each of the fiscal years. You see it as okay to continue that practice by paying it out now in this fiscal year as opposed to what the MOU clearly stated, defined periods of time during that fiscal year to have paid it out. Is that how you see this current arrangement?
MR. STEELE: Clearly not. Heaven knows I'm the last person to defend the previous government but I want to make sure that we get our terminology accurate. They didn't break the MOU. The universities, I think, by and large, are fairly indifferent. There was a promise of a certain amount of money over a certain amount of time. The government, for reasons having nothing to do with the universities, said to the universities, essentially, we want to pay
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you quicker than we were planning. To which the universities would say, naturally, okay, it's all the same to us, as long as the total amount over the total term of the MOU was agreed to, we, the universities, don't really care.
So, I want to make it clear that the previous government sat down with the universities and said here is what we're planning to do and they reached an agreement and they amended the MOU. So the previous government did not break the MOU any more than we are. But you call it doing the same thing as the previous government, I call it bringing the MOU to an end. I guess at the end of the day we'll just have to describe differently what we're doing. I've told you why we did what we did. I guess it is open to different people to describe that in different ways, but that's how I see it.
MR. GLAVINE: Mr. Chairman, that being said and I think more than anything what you're conveying is that you don't like the concept of the multi-year funding, the three year arrangement. The thing, however, that I guess you need to put into context, and I know you want to end it and so on but the Deloitte Report was very clear regarding prepayments. They stated and the words are: a prudent financial management practice for recurring assistance payments would be to avoid one time for prepayments. This particular repayment then flies in the face of this report that this government commissioned. So, again, we all know there is a lot of credibility as to whether there should ever have been a Deloitte Report. Now, you're not even listening to the Deloitte Report. So, why, indeed, are you not willing to take their advice and do away with these prepayments?
MR. STEELE: Let me start with the first comment you made. I don't disagree in principle with multi-year funding arrangements, because there are times when they are useful. There are certain sectors that need them, that can benefit from them, so I would never rule out from beginning, multi-year arrangements, not ever, because there are times when that is appropriate.
What happened here was that you had a government who entered into a multi-year arrangement and then started shifting money around within that arrangement for their own purposes. So, I don't agree with your characterization of the Deloitte Report at all, because what they were doing was they were examining the past. Remember they were assessing the situation, saying what happened in the past is not ideal, it is considerably less than ideal. When we walked into office, we were faced with a situation of continuing the distortion or ending it and Deloitte is not addressing that at all. So I characterize what we did as bringing the agreement to an end. You characterize it as a prepayment. I don't believe that that is what Deloitte was addressing at all. So, you'll excuse me if I don't share your characterization of what we did as a prepayment.
MR. GLAVINE: Deloitte went a little bit further and they said this procedure would "simplify the Government's budgeting process in this area and avoid volatility in grant payments . . . improve year over year expense comparisons; and prevent potential cash flow/
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expense management issues for recipient institutions of receiving large sums of money in one lump sum payment."
So, the report recommends that grants be paid in the year that expenses are incurred. However, in this budget we see it as a prepayment. So, I don't see Deloitte being followed here. Yet, when it came out, your government said this is shedding some light on the state of the provincial finances and pointing the direction forward.
So, I see an inconsistency here, Mr. Minister, and maybe you can explain it a little bit further. I know what you want it to intend but it goes against certainly some pieces of advice that were in the Deloitte Report.
MR. STEELE: The bit that you quoted from is directed to why the previous government should not have done it in the first place. When we came into office we had an existing situation that we couldn't change, we couldn't undo - I asked if we could undo it and we were told, no, it's done. That's because, and the other reason I was told was because the government accounting people were just good at what they do and so once they did it, it could not be undone. So we were faced with a situation of a year with virtually no university payment. Because they couldn't put it all on the previous year, because that would have taken them into deficit, even on the GAAP basis. There was some money left in this year, okay. So we had very little university payment this year.
But as I said to you before, leaving it like that is just as much a distortion - having no payment is just as much a distortion as having two payments. So, I fail to see what the virtue is in leaving things as they were. I mean, what is it that you propose that we should have done instead that is not just as much of a distortion as the previous government did?
MR. GLAVINE: Thank you for asking the question. We've turned the context around here today. (Laughter) No, I guess as I read the MOU, and I was involved some with that as the Education Critic and I saw it as- and I know the previous government did move monies around and they did put it in a different way of payment and so on. But I guess I saw when you came to office and Deloitte had said to do away with prepayments and one large lump sum payments, that you would move from the political benefit to actually carrying this out - what is, perhaps, a better way for the province. To put it out over a year, not just one big payment on March 31st or April 1st or whatever may suit the purpose. So that if they are receiving monthly instalments, then that perhaps is where Deloitte was going rather than the one large prepayment.
So I still don't know why, if you gave so much credence, and I know you're talking about the past, but they are also pointing to a future direction for your government and we saw a different course of action. So, I guess that leaves me a little bit bewildered and we can leave it at that.
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However, the other part is that the payment will be made March 31st, it won't be long and you will be into discussions with the universities and I'm dwelling on this is because it is a significant amount of money. The percentage increase over the past 15 years has been around 9 per cent. I'm sure that's a question now that, oh, we'll get you out of the way now with a $341 million payment, there's a lot of wonderment about where you will go in terms of funding universities. So you may dispense with multi-year but not necessarily. Do you see sustainability for universities in Nova Scotia getting 9 per cent increases, fiscal year over year?
MR. STEELE: That asks me to preview something that is just too far out in the future. First of all, let me say that this was a firm commitment of the previous government. At no time did we ever consider paying less than the full amount of the commitment. Frankly, when we did this, I think the universities were relieved because I think they were a bit afraid that there would be cuts. When we announced that they were going to get the full amount that had been committed to them under the MOU, the reaction, as I understand it, was one of great relief. So, it was a commitment made by the previous government and we kept it.
What's going to happen when the funding arrangements are up for renewal starting April 1, 2012, I wouldn't hazard a guess, it is too far into the future for me to even hazard a guess as to where it will end up.
MR. GLAVINE: I guess there will be another time, we will be in the House longer, so I can ask some questions in Question Period to get at this. So we'll leave that.
The fiscal projections presented in the budget, Schedule 1B in the Assumptions and Schedules, show total expenses for 2010-11 to be $8.5 billion. This is a decrease of 6 per cent from the expenditures in this budget. So, in order to achieve this 6 per cent contraction, what are a few of the early directions you may be going in order to have this realized?
MR. STEELE: Again, I want to caution you, member and everybody that what is before us is the 2009-10 budget and I don't want anything I say here today to imply that I already know the answer, the outcome of processes that haven't started yet, namely, the building of the budget for 2010-11. Having said that, it will be obvious to anybody in government or around government that the major cost in government is wages, salary. In some units of government, wages can be getting very close to 100 per cent of the total cost. In some units, depending on what it is they do, it can be 70, 80, 50, 60, but no matter what unit of government, it is almost always the case that your single major cost, by far, is wages. So if there is going to be any expenditure management, it has to focus, among other things, on the wages paid to public sector workers.
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[6:00 p.m.]
MR. GLAVINE: Mr. Chairman, that leads to the next area that I would like to go to and that is the Major Program Expenses variances from the May 4th budget. One of them is the restructuring fund. It has an increase for H1N1, wage reclassifications, casual conversion and wage negotiations. That's quite an open ended, I guess, collection of areas that you do need, I feel, to put some budget figures to. So, is there even an outside figure around the H1N1, if there is a worse case scenario? Have you now fixed in your government's ministerial mind that these will only be the wage increases that are going to be offered a whole litany, and I think I'll wait, perhaps, to my next hour to go through some of those. But I'm just wondering why this collection here for the restructuring fund?
MR. STEELE: Well, there were some media reports - and I just want to say right off the top - that were just flat out wrong about what happened here so I appreciate the opportunity to clarify. There is an increase over the May 4th budget in the restructuring line of $54.1 million. There was at least one media report that said that was entirely destined for wage settlements. That's wrong. I don't know how anybody ever got that idea. I'm not going to give you a specific breakdown. When I was the Finance Critic I used to say, year after year, that restructuring, they just put everything in that they don't want to reveal and now that I'm on this side of the table, I kind of understand why that has to be that way. I always did understand. (Laughter)
We had our disagreements, but never over the restructuring fund. I do understand that there are always things that have to be negotiated and there are things that are contingencies that for very solid reasons you can't talk about in advance. Of course, when the year is over, you will know exactly how much we spent and what we spent it on.
So I can't give you a precise number, but I will give you some pretty strong hints. Let me start - since I said this on Andrew Krystal's call-in show, I don't think it is a great big secret for me to say here in a committee of the Legislature that the substantial majority of that one is directed at H1N1. Like I say, I said that one on the airwaves, it is not a secret. The substantial majority of that $54.1 million is directed at H1N1.
We do not want to stipulate the precise number for a couple of reasons. One is that it is a contingency. It is an uncertain event. We do not know how much, if any, of this money will be needed. What we do know is that the previous government's allocation for H1N1 was grossly inadequate for any substantial pandemic. Their funding for it was what I would characterize as business-as-usual spending. There is some H1N1 money allocated, but not for anything approaching a real pandemic. So that's one reason. It is a contingency that may never occur. The restructuring line item is designed precisely for things like that.
The other thing for you to know is that it is in the nature of this pandemic that there is going to be substantial competition for scarce resources if it is at all serious. We did not
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think it was wise to reveal to suppliers and everybody that we might be competing with precisely how much money we had available.
For those two reasons together we have chosen to put the H1N1 funding in the restructuring line item, but I told you that the substantial majority of that $54 million is for H1N1, and I will also say to you that the allocation that is there is commensurate on a per capita basis with allocations made by other provinces. With those hints, you should be able to work out within a fairly small margin of error how much is allocated to H1N1.
MR. GLAVINE: Mr. Chairman, I thank the minister for that direct answer. As you know, it is a question that I had asked earlier in my rebuttal to the budget, that perhaps not having a general picture was not that comforting to Nova Scotians. When you put it into context of what is happening nationally and that we're on a par with other provinces, that's good to hear. So I thank you for that.
A few of the other variances that I wanted to look at from the May 4th budget, the Labour and Workforce Development area. I know that this is a change - in dealing with the department on some constituency issues relating to the change from federal administration to provincial, is this entire amount federal dollars? How is it calculated, year over year, in terms of dealing with a very fluid work force that does need a lot of training? Is the $26.9 million totally federal, does it seem to be meeting the needs of that program, or is there any amount that also comes from the province, especially now, since we're moving federal into a provincial department? If you can give me a little sense of where this is in terms of this variance amount?
MR. STEELE: The short answer to your question is yes, the increase is entirely federal money. It looks like a very substantial increase in the budget, but really it is what is in finance parlance referred to as money in, money out. There is an increased transfer of responsibility from the federal government to the provincial government and a precisely corresponding amount of money to pay for those increased responsibilities. So, it doesn't represent a net change, really, to the province.
MR. GLAVINE: That, I figured, was pretty straightforward but I just wanted to know if, indeed, where it is now under provincial jurisdiction, whether or not it changed. From the budget of May 4th, however, the increase in IEF funding is a considerable amount of money. You were speaking in terms of M&P investment credit offset by a transfer of funding from the community development trust fund.
Is this going to be an indication of one of the directions that your government will be going, that considerably more money will be shifted into Economic and Rural Development and perhaps a de-emphasizing of Nova Scotia Business Inc.?
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MR. STEELE: I'm going to respectfully decline to answer that question, any questions of substance about the IEF or Economic Development spending really should be directed to the responsible minister. I know, as Minister of Finance, I deliver the budget but that doesn't mean that I can or should answer questions on any aspect of the budget in any department. So I think that that is better directed to the minister, who I understand is up next in the main Chamber after the Minister of Education.
MR. GLAVINE: Thank you, Mr. Chairman, also as I go through this, the variances, the increase in EnerGuide related programs, an $8.2 million, is this simply reflecting a very successful program and maybe I will have to ask the minister there as well about future directions and where this program will go, but at least for this year, that's a considerable increase and I'm wondering if you can give a little bit of an explanation to that?
MR. STEELE: I can address the first part of your question but not the second; the second part being the future direction of the program, that's something that should be directed to the minister, he will be up in the main Chamber last I think, because that is also the Minister of Transportation and Infrastructure Renewal.
What happened when we came into office was essentially leaving out insignificant detail as we were told that there was a bill for the EnerGuide program that had not been provided for in the May 4th budget. Some would characterize it as a very successful program. That the subscription to the program was a great deal higher than had been budgeted for, which meant that when we came into office we were told, you have no choice, this money is basically spent already but it is not in the May 4th budget and that was the amount of $8.2 million.
Now, I want to pause there because some would characterize it as an enormously successful program but there is another way of looking at it. That is - and this is something that we struggle with in Finance all the time with any kind of subsidy, rebate, credit - ideally what you want to do is provide an incentive to people to do something that they wouldn't otherwise have done, rather than giving them a bonus. So it is the constant debate between bonuses, to giving people money for things they were going to do anyway, an incentive to get them to change their behaviour. So, for example, my favourite example of a wasted incentive was the federal government's rebate for energy efficient vehicles. I had already bought a vehicle, it was something that I was going to do anyway, in fact, before the program was announced, I had already bought it. Yet, I got a bonus from the federal government which was supposed to be an incentive but it was for an action that I had already done.
So, I fail to see in what way that was an incentive. In fact, the federal government backed away from that program fairly quickly. That was another one where it was so oversubscribed and costing the federal government so much more than they had anticipated without yet achieving the policy goals that were set out for the incentive that they backed away from it fairly quickly.
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So I think the open question around the EnerGuide is, is this so greatly oversubscribed because people found it to be a bonus for something they were going to do anyway? Or did it truly represent an incentive that changed behaviour? Because if the former, the program I would say was not a success; if the latter, the program was a runaway success; and I think the jury is still out on which one it is.
MR. GLAVINE: Mr. Chairman, a little bit of a departure from where I was going here but I couldn't help but think, would the home building program that you introduced be in much the same category? Because when I look at the statistics from the biggest supplier in the Valley who came and picked up forms, there are no new homes, they're already underway or have been built. So is it in the same category?
MR. STEELE: I'm glad you raised that. In fact, I thought you would because that's something, another one of those criticisms of the Liberal Party that has gone largely unaddressed and I just don't think there's any substance to it. I mean, look, here's the situation we were faced with. We wanted to keep people working. We wanted homes to be built. We wanted buyers to buy. So we had this program, we set it up, and the builders came to us and said, look, based on the reality of the situation that we're in, there are a number of builders who have what's referred to in the business as an inventory - a home has been built but hasn't been sold.
They pointed out to us several reasons why it wouldn't be unfair to have a program that was just from a start date forward because what you're doing, first of all, is you're penalizing those builders who kept people working over the course of a difficult winter because they wanted to keep their people working. One of the biggest challenges in the home construction business is getting good qualified labour and they will leave to go to other provinces, other places, because they can be paid more and there's more work. Some of the local builders kept their people working in order to keep them in Nova Scotia, to keep them on the payroll so that when things got better, the workers would still be there. These builders were facing the potential of a program that would actually penalize them for being good employers and rewarding people who had laid off all their people.
[6:15 p.m.]
So we had some sympathy for that. So you learn when you're in government that things are just a little more complicated than they seem, that when you talk to people who work in an industry, they're able to give you some nuance that you don't know when you're in Opposition and that's what happened with that home rebate program.
So we made it for any home for which a building permit had been issued, I believe it was back to January 1st. There were people who wanted it to cover any unsold inventory and we said, no, that's going too far. So we made it back to January 1st and it was a good decision and it was the right decision to make. Because otherwise, this is completely unlike the
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EnerGuide program in the sense that what you don't want to do is penalize people who have been building and who have an inventory on hand, by giving their competitors a leg-up, a government sponsored leg-up, in the sale of a home. In theory, if a buyer is looking at two otherwise identical houses, one built before the cut-off date and one after and they get a rebate for one and not the other, they're going to pick the new one. But that's not necessarily, in the context of the building industry, a fair result. So that's why we did what we did and there's no analogous situation in the EnerGuide situation.
MR. CHAIRMAN: Before recognizing the member for Kings West, a reminder that you have approximately 10 minutes left for the Liberal caucus.
The honourable member for Kings West.
MR. GLAVINE: Thank you, Mr. Chairman. Well, I guess I see that a little bit different than the minister here because I now know people who are only into August and the likelihood of them getting any benefit from starting a new home was exactly zero. So we're only talking about something that was available after June 9th and we know roughly how many homes are built in Nova Scotia each year. So it was a very limited number and, therefore, again, it came across as, if I start a home this Fall, the chances of getting a rebate are very good, when we know that they won't be for that group of people. It was designed for the building industry as opposed to Mr. and Mrs. Smith, who want to get the benefits of building a new home this Fall. Is that the case?
MR. STEELE: Well, let's be clear, we did this as a stimulus measure. We did it to keep people working and on that measure it has been a great success. I would just mention that in terms of the numbers - I mean, I talked earlier about the work that the people in the Fiscal and Economic Policy Division of the Department of Finance do. They had just the best statistical information available and the program was matched to very solid statistical information about how many homes are typically built, how many homes were likely to be built, so that the period the program was open, the amount of the rebate and so on and so on, were all carefully matched to the data available.
The analogy that I always use of being in Opposition versus being in government is that being in Opposition is like being in the shallow end. It's like you don't have a lot of resources to get the information and analysis that you need. When you're in government, you're in the deep end. You've got an enormous number of professional, expert, experienced people to give you all the information and analysis that you need. So naturally when you're in government, you capture some nuances that you're not able to capture when you're in Opposition.
That's what I found with the New Home Construction Program: we first talked about it when in Opposition. When we're in government, we simply had more and better
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information, and I think if we're sitting here a year from now and talking about this program, you will join me in agreeing this program will have been a great success.
MR. GLAVINE: Not to be impolite, Mr. Minister - as you know, I keep away from that area - but I would say you're treading water in the deep end, because I've got great information from the major construction companies in the Valley. It's nothing going forward - it's all about dealing with the past and nothing going forward, and that's where again - you know, it was a great line. It was an absolutely perfect election line, but it's not meeting the needs. We are still in the recession, which you have said, but it's not going to help anybody going forward. (Interruption)
So therefore, again, I'm wondering if it was more about pre-election as opposed to the actual stimulus and benefits that it will bring to Nova Scotians, and we're only talking now a few months beyond June 9th.
MR. STEELE: Do you want to ask me a question so I can answer?
MR. GLAVINE: I want to know how significant a program this will be for the entire fiscal year of just 2009-10.
MR. STEELE: What you have, member, is anecdotal information, and when you're in Opposition - I've been in Opposition for eight years. I know what it's like. Anecdotal information is typically all you've got, and anecdotes are just that: they are anecdotes. The Department of Finance studied this very precisely. They knew precisely how many units were in inventory. So if you say that all the 1,500 are being taken up with inventory, I will politely and respectfully disagree with you. You are incorrect. There were not enough units in inventory back to January 1st to cover the 1,500 rebates available. So if anybody is telling you that's what's happening, they are incorrect.
MR. GLAVINE: You must realize, I didn't say that it was going to look after the inventory 100 per cent. I think most Nova Scotians thought that after June 9th they would have a considerable period of time in which they would get the benefits of this program. That's not the reality, and that's the part that I was alluding to here, that it was a better-sounding program than how it will in fact help Nova Scotians and the building industry to keep going through even the remainder of fiscal year 2009-10. I think we will have the stats to verify and to back that up. Already the builders are realizing that it won't be available for some of the homes they'll build this Fall.
MR. CHAIRMAN: Honourable member for Kings West, do you have a question? That was a statement.
MR. GLAVINE: Yes, that was a statement. I think I only have a couple of minutes.
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MR. CHAIRMAN: About four and a half.
MR. GLAVINE: One of the areas in which you were able to use monies that had been projected in the May 4th budget was capital expenditures in Health. You were able to pull back $32.5 million in Health and a good part of that with the Colchester Regional Hospital. Is it primarily construction and delays on the ground, or is this the start of what we can see down the road? That delays will be a way of keeping dollars out of the budget year.
MR. STEELE: I think that's a question better directed to the Minister of Health. I know she was in estimates in the main Chamber for four days plus. I guess I know an answer to the question in a very general way just because as Minister of Finance I know a little bit about a lot of things in the budget. I don't think it would be useful or appropriate for me to offer an answer on a subject that's so clearly within the jurisdiction of the Minister of Health.
MR. GLAVINE: Then I would say, perhaps, the delays in the long-term care facilities probably fit into the same category. That is a huge concern for Nova Scotians, that those monies flow in a timely way and that we get a number of new facilities up and running.
I guess, perhaps, I will need to take that to the Minister of Health as opposed to the Minister of Finance and ask her some details. I didn't get to ask questions of the Minister of Health unfortunately, because I knew a couple of the delay areas.
With that, I think my time is pretty well up.
MR. CHAIRMAN: You have time for one more question. You have a couple of more minutes.
MR. GLAVINE: No, I had a big, long preamble for the next one so I think I'll end right there. Thank you very much.
MR. CHAIRMAN: Thank you. The time is 6:24 p.m. and the PC caucus will have until 7:17 p.m. and we'll resume with the remaining time tomorrow.
The honourable member for Cape Breton North.
HON. CECIL CLARKE: Thank you. I welcome the opportunity to ask some questions and dialogue with my colleague over the next little bit as we finish out today's deliberations here for the estimates.
Starting off, as we go forward and looking at where we are, you talk about the early days of a young government. Quite frankly, most governments, whether it has been 100 days of change, really identify themselves, where they're going, and what they're about within that first 100 days of office, to set the tone and pace. That hasn't been the case here in Nova
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Scotia. However, I do admit people are spending lots of money on consultants so maybe we'll start there and look at where we were.
You've had the first phase of your Deloitte audit and with Phase 2, when will that be underway, and for what period, and have you identified the scope of a detailed area of where you're going to go or build on in the next steps?
MR. STEELE: Yes, the two phases of the Deloitte report were laid out in the request for proposals and of course is well underway. The work on it essentially started right from the beginning but became the whole focus after the Phase 1 report. Deloitte has continued working and if they meet their deadlines, that Phase 2 report should be available to the public sometime around the end of October.
MR. CLARKE: How much have you spent to date on Phase 1?
MR. STEELE: The total bid that was accepted from Deloitte for both phases was $99,100. I don't believe that they've divided up their bills between Phase 1 and Phase 2, it's just two parts of one project worth $99,000.
MR. CLARKE: In that process, what dialogue would you have had with the Auditor General in setting this up? I'm assuming you discussed this with the Auditor General in terms of the terms of reference and how you were going to go about it and what it would mean in terms of the direction you'd want to take and how it would be a template. I'm assuming through these recommendations - and there's already some dispute over how they're being interpreted and your taking of that advice, what did the Auditor General have to say and any advice or discussions with him or his office?
MR. STEELE: There is a steering committee leading the project and I'm the chairman of that committee and the Auditor General is a member. The Auditor General has been part of the development of the Deloitte report from the beginning and continues to be a member. I don't think it would be useful or appropriate for me to say, well the Auditor General said this or that in the course of a committee meeting. I'm sure that's not what you're asking for but I think any questions about his views on that process should be directed to him. I just want to reassure you and all members, the Auditor General has been an integral part of the project from the beginning.
MR. CLARKE: In detailing that, can you advise me then, in that process, what the role of the staff is and the Department of Finance or Treasury Board or any other government supports that would sit on the steering committee?
MR. STEELE: The membership of the steering committee also includes the provincial controller and the Deputy Minister of Finance - I don't recall whether she's a formal member of the steering committee or not, she's not - has been involved every step of the way.
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[6:30 p.m.]
MR. CLARKE: As we go forward, and of course one of the processes, we at a committee level at some point will look at these findings and actions of government and then look at it through the Public Accounts process. Which, I know, the minister is more than familiar with and probably can anticipate a thorough analysis and review of any outcomes once they're detailed. Can you tell me, until the committee, what lack of professional capacity or support did you have or lacking thereof that would cause you to have to go to an outside body to do that work?
MR. STEELE: I think the question really misconceives the nature of the report. I mean, the impetus or the objective in commissioning this report was simply that it be independent and by definition an independent report has to be done by people outside government. It's the nature of these things that every once in a while it's good to stop and listen to an outside voice, which essentially is what an audit is and that's what the Auditor General is. He's an outsider who comes into government and says, just thought we'd check and see how you're doing, and so that's what we commissioned Deloitte to do. It is not in any way, shape or form a comment of the professionalism or expertise of the Department of Finance. It simply is independent and that's why it was done by an outside group.
MR. CLARKE: I'm assuming as we've all known that the Office of the Auditor General is an independent body so why was the Office of the Auditor General not competent enough or deemed appropriate to undertake a review, if you wanted an audit, as we would normally have of that process?
MR. STEELE: Because what we commissioned was not an audit. An audit is a term of art in the accounting profession that calls for a certain procedure following certain protocols, and that's not what we commissioned. So the Auditor General's Office wouldn't have been the appropriate office to go to, and if we had approached them I'm sure they would have said to us, we're not the right people to do what you're looking for.
MR. CLARKE: So obviously, from other lenses we could put on this, is trying to set up a process to give yourself as minister and/or Cabinet an exit strategy to want to look at what you deem to be the ills, faults, or flaws of a previous government and try to re-trigger some of the decisions you would make as a new government, and to have that as their baseline rather than taking the legitimacy of the numbers that would be presented and/or through the department's numbers or the checks and balances that the Auditor General does.
What is it of the audit - really you're saying it's not an audit, but it's been called an audit, and it's costing Nova Scotians about $100,000. Of that, where do you see the follow-up to this process? So you'll have the second phase come in, and where to from there?
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MR. STEELE: The purpose of the Deloitte review is to assess the financial circumstances of the province in an independent way. Phase 2 will deal with some more technical accounting issues. When that project is done, the work will be integrated, incorporated, into the work of the Department of Finance.
It's like any assessment. The professionals who do the work day to day will incorporate that and move on. Just as when the Premier's Economic Advisory Council reports, that advice too will be incorporated into the work of government and then we'll move on.
MR. CLARKE: I'm assuming as well, given your rather detailed history with the Public Accounts process, that all of this is something that you would see as being a follow-up at that committee, and being able to bring Deloitte in - you would welcome that opportunity, I assume.
MR. CHAIRMAN: Is that a question?
MR. CLARKE: Yes.
MR. STEELE: Of course, my first answer has to be I'm not on the Public Accounts Committee anymore, so I can't suggest to them in any way what they should or shouldn't do. If I were on the Public Accounts Committee, if I were still in Opposition, I would say, absolutely, this is something that ought to be looked at. I hope the committee does, because it's material that the Public Accounts Committee doesn't often delve into, and I think it would be very useful. The RFP was public, the report has been public, and what I said when the report was released back in August is that now the public has exactly the same information that the government has. They will also have the Phase 2 report.
There is no other report that we have from Deloitte that we're not releasing to the public. We commissioned it, it will be public, and I would certainly encourage the Public Accounts Committee to delve into it. I think it would be a good thing to do.
MR. CLARKE: Just to that point, that's where I was really going to - your willingness and openness to have that two-way process that is clearly transparent and welcoming an offering of your co-operation to the committee should it so request of the government to have the auditor's report and any of the findings or follow-up or methodology or opinions that have been garnered and provided. I think that's consistent with your previous opinion.
MR. STEELE: I wouldn't presume to tell the Public Accounts Committee how to do its work. If I were still on the committee, I would probably want to have the Deloitte people in for a working session, more by way of background explanation of what's behind the report, as the Public Accounts Committee often does, rather than the formal questioning with formal rotation between the caucus. I'm not sure if that's the best way for the members of the committee to get their head around some fairly intricate and technical accounting stuff that
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certainly will be in Phase 2 of the report, but how the Public Accounts Committee approaches it is really entirely up to them.
MR. CLARKE: I do appreciate that as their prerogative, but more importantly, from my perspective, just the willingness and the openness of the minister and the department to co-operate with the committee on the follow-up to what the final reporting of Deloitte will be and to allow for that, whether that's a working session or whatever else the committee deems appropriate to request.
As you know, requests do come forward from committee that are either accepted or not, and I just think, since this was a major aspect of where the government was going, with a lot of fanfare around these audits, so just before we leave the audits, is there anything of the audit process that has stood out substantially for you, or findings to date, or any other undertakings you've assigned to the second phase?
MR. STEELE: I don't think I understand your question.
MR. CLARKE: Of any of the reporting you have to date - and obviously if you have your working committee and you're looking at the second phase of work - have you assigned that work completely? What rapport is your steering committee having with the auditors themselves, what relationship is there? Who deals with the auditors, you or your staff?
MR. STEELE: The steering committee meets regularly with the people from Deloitte. I'm not going to call them auditors because they're not doing an audit, and they're very firm on this. One of the very first things in the Phase 1 report is, this is not an audit, because you have to remember, to an accountant, an audit is a very specific procedure following specific professional protocols. You're right, the word audit has been used probably a little too freely by everybody including us. Certainly in the early days it was referred to as an audit but Deloitte wants it to be clear to everybody this is not an audit, so I'm not going to call them auditors.
They meet with us, they report at least weekly to the person who is the top civil servant in this process, namely Greg Keefe, the Deputy Minister of the Treasury Board. They meet from time to time, as needed, with the steering committee where the principals from Deloitte will come and talk about progress and how things are going so far. We check in to see if they're still going to meet their timelines, if there are any challenges meeting their timelines, how can we take any obstacles out of their way, and so on, to make sure that the report is what we asked for, at the time we asked for it.
MR. CLARKE: Thank you, Mr. Chairman, the minister does talk about, which is really where I'm going, deviation. It was very clear to the public and all the statements that were being made, we're going to audit the books of the province. It was going to be a very comprehensive audit, we're going to look at the state of the finances. All of the language that
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was used publicly - and we could pull a lot of clips forward and look at that, and maybe by tomorrow we'll come back with some of those statements that were made.
My next question to the minister is, at what point did you deviate from this very comprehensive audit to now an opinion piece?
MR. STEELE: I'm not sure that I really know how to approach that. I mean, the word audit was used in the early days loosely just like you yourself have used it loosely today. There is no point in commissioning a comprehensive audit of the province's books because that's done every year already by the Auditor General, so nobody was ever talking about what in technical terms accountants call an audit. That was never in anybody's frame of reference because we have an audit already. Because I've been the Finance Critic for seven years, I know that an audit is a term of art that you use to refer only to things that meet the technical criteria for audit. I never misused the word audit, but lay people do and nothing is to be read into the fact that in the early days people talked about audit when really what they were talking about all along was a financial review.
This really is a very technical point about what an audit means to the ears of an accountant whereas what the word audit means to a non-accountant. We're doing exactly what we promised to do from the beginning, and if you say that somebody in our Party misused the word audit, I would just say, yes, the same way you've just misused audit tonight.
MR. CLARKE: Mr. Chairman, I'm not misusing it, I'm trying to get clarity over what your understanding is of a process that you were very adamant, very public, not only as a politician, now a minister . . .
MR. STEELE: Are you talking about me, personally?
MR. CHAIRMAN: Sorry, the honourable member for Cape Breton North has the floor.
MR. STEELE: Mr. Chairman, I'm just looking for some clarification. When he says, you, does he mean you, the Party, or are you meaning me personally?
MR. CHAIRMAN: Well, I'll give him an opportunity to expand on what he means, but he has the floor.
MR. CLARKE: Thank you, Mr. Chairman. I don't think we're in a rush, there's all kinds of time over the remainder tonight and days to come to look at these things. But, you, as a member of the New Democratic Party, your Premier was very clear, statements have been made with regard to what the expectation was. So if we're going to talk about the use of language, well we can have a great debate.
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What I'm saying is, your government - it's now your government - what your government put out to the public that it was on this mission, that you're bringing the outside auditors in to audit the books of the province, to give the new government a clear picture of where the state of the books really are. They came in and very clearly you didn't know where things were, you wanted to have that clarity, you're going to go outside for independent counsel to make that assessment to give you a view of where things are so you could start.
I guess what I'm saying and I'm not trying to be - we can talk about the use of language, but where you started as a government and your intent on an audit-type process to where you are now, you're saying it's now consultancy. That's a very large shift from where the New Democratic Party started, their public statements to where you are now.
MR. CHAIRMAN: Member, what is your question?
MR. CLARKE: Thank you, Mr. Chairman. My question is, at what point did this separate from what was in the public's understanding from the New Democratic Party of a comprehensive audit of the books, that you're going to go in and get the numbers and what was said was you were going to look at the numbers. Very clearly, in auditing terms, that you were going to look - as a government, when I say you, I mean you, the New Democratic Government - at the books to find out the numbers, to see where things go.
I guess my question to the minister is, at what part of the way of the last 100 days has it gone from an audit to consultants now that have a steering committee and where we're going. There has been a change in the 100 days, I don't know where on the road to Damascus the conversion occurred, but something changed. The minister started as part of a government that said they were going in one direction and is now saying they are getting a consulting opinion, which is much different from where he was on what he was going to do - to scour the books - that the New Democratic Government scouring the books of Nova Scotia. Where did it change to a consultant report?
[6:45 p.m.]
MR. STEELE: You're putting an awful lot of freight on a word that is widely misused and misunderstood among lay people. I understand what you're saying. In the early days during the campaign, the now Premier used the word audit. I know that. But what he was looking for was not an audit, we already have auditors. There's no point in doing it again. The Auditor General does a comprehensive audit of the province's books each and every year. There's absolutely no point in doing it again.
The Premier was never using the word audit in that technical accounting sense. He said there needs to be a review of the books. When the RFP went out, it was for a financial review. We got back from Deloitte precisely what we asked for, precisely what we intended all along. I guess I'm having trouble understanding why it is that you would put so much
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freight on the fact that the Premier did, at one point, use the word audit in a sense other than the sense in which accountants use it technically when you yourself have misused it the same way tonight.
All I would say to you is, as I've said to you tonight, no, it's not an audit. We don't talk about auditors because they're not doing auditing. Why can't you give the Premier the same break and say that occasionally he used the word audit when he wasn't using it in the precisely correct technical sense?
We got exactly what we asked for and we did exactly what we promised all along.
MR. CLARKE: Mr. Chairman, with all due respect to the minister, you know, you can't just say why can't you get past it, oh, it was just a fleeting moment of maybe lack of clarity by a Premier and what it was, the New Democratic Party was very clear that they were going after the numbers. That was very clear and if you can provide me with, and maybe the minister can, provide this committee with all the things contrary to that and I will over the course of today and tomorrow's deliberations look at all the language that was very public, very clear. So this is not getting hung up on some semantic. This is not dealing with something insignificant.
We had, Mr. Chairman, a Party then, as government, that put out a direction that told Nova Scotians they were going to get the books scoured to look at where the state of the province's finances were in taking office. Many of us would understand, well, of course, if they're coming in, they're going to want to be able to find out what areas they'll go in terms of what they blame or try to take credit for, in terms of the assessment. I mean we all know that's part of any process but it is not a small point.
It isn't getting caught up in minutia when the minister says that a major policy plank of an incoming Premier who took office in telling Nova Scotians the audit would be undertaken and now we're going to a consultancy report. I'm thinking it's rather convenient for someone to say that I'm twisting words when I can't get the clarity. It's very simple. At some point - well, maybe Mr. Minister - at what point did the Premier tell you, well, minister, really I didn't mean to say that publicly, I just kind of undertook a massive province-wide statement around that. So at what point then did the Premier tell you as minister, no, I didn't mean audit - go get some consulting advice?
MR. STEELE: I just completely reject the foundation of the questions. You are putting thoughts in the Premier's head that he never had and then are asking me when did he tell me that he was changing those thoughts. I just completely reject the whole line of questioning.
MR. CLARKE: Mr. Chairman, you may want to reject it but, more importantly, you may want to forget what the New Democratic Party said it was going to do, but you can't take those words away. You may not like the question I'm asking, and that's fair enough. You are
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no stranger to wanting to dig and mine into where government is, you may not like it but rejecting at what point that your government said clearly, said succinctly, and said often enough, that it was going to audit the books. You're saying it is categorically not an audit but you started down the road as a government to undertake an audit and you went out to hire auditors and get the term of reference for auditors.
Now, if you're going to have a consultant report which happens to be an auditing firm, Deloitte, which they do consult, we all know that, but my point and the question really is, at some point you changed the terms of reference of what you committed to do publicly versus what you're now doing as a government. At what point, Mr. Chairman, to the minister, I'm just trying to find out at what point did this change, can he produce, and maybe this is what he can bring tomorrow, Mr. Minister, can you bring material to show how this went from an audit to a consultant's report?
MR. STEELE: We're probably not getting anywhere because you're just repeating your point and I'll just repeat my answer which is I completely reject the factual foundation of your question. All I've said is that the now Premier used the word audit once or twice on the campaign trail. Just like you've done tonight, he wasn't meaning or never did mean it to be in a technical sense. Why would we commission an audit when an audit is done every year? I'm just waiting until you listen. Why would we commission an audit when we have an audit done every single year? We received the audit when the Public Accounts were released. Why would we promise to do another one when we knew that was going to happen? The answer is because if the word audit was used, it was never used in that technical accounting sense. I think you feel that somehow you've caught the Premier out because he used a word and meant it in a way that accountants don't use it, just like you've misused it tonight. I'll give you a break and say, okay, you don't understand what an audit is, but we as a Party and as a government delivered precisely what we promised.
I'll say this for sure: one of the very first actions of the new Cabinet was to commission this Deloitte report. The RFP does not call for an audit, and so all I can speak to here in this budget process is the action of the government. Within days of being sworn in we commissioned that report. It was one of the very, very first things we did, and I guarantee you that in that RFP it doesn't call for an audit. You've dreamed up something based on the use or misuse of a word on the campaign trail, and if you think you've got a winner with that, you go ahead.
MR. CLARKE: Mr. Chairman, it isn't about winners in terms of where we're going. It's about the very fundamentals of the credibility of a new government coming in, trying to ride into town on this white horse. We all know that it's about the political optics, that this whole audit/report was all about politics. Fair enough. This was a political maneuvre by the new government to come in, that called it an audit and was very clear to Nova Scotians in how they communicated that they were going to get the books scoured. I know the minister is going to vehemently disagree and that's his choice. However, part of this whole process is,
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it is very important and it's not just a passing word - they were not passing words in a campaign.
I respect the fact of the matter that the campaign is over, we're sitting here now as a result of the choice of Nova Scotians, but the accountability is a two-way process when you set up an expectation and you identify to people very clearly you're going in one direction, and then you change that direction because, oh, we're now in office, we've now seen something and we're going to have to change our tack. The issue is about what it was that you were going to do and the process. The reason I had that line of questioning is, as you go forward and as you will look to interpret and then want to spin your understanding, your new understanding of whatever the current language is, that is going to come around to the point of where does this take us after spending $100,000 to honour a political commitment of an audit that was made by the Premier of the Province of Nova Scotia, and in having that, where it goes next.
It's not trivial, it's not insignificant, it's not appropriate. You can dismiss it - I mean, that's your prerogative, not to answer a question, and you can say that I'm just trying to put rabbit tracks out someplace, but it is very important because it speaks to the very integrity of where you as a government and you as a minister are coming in to set a new standard, to embark on a new process of review here in Nova Scotia. You were very clear that you thought there was a different picture and Nova Scotians need to have clarity of what the past government was up to and that this would potentially expose and make, I guess, a baseline for other decisions you may want or have been looking at taking.
You're down that process and you're down that road, so you've established a committee to do that, and that's all fine and well. I'm not saying anything about any of the individuals doing the work, but you really have to question a process when you start to go down - in a very public manner - an audit trail or down to an audit process and then quickly want to re-brand it as not being an audit. You can do that. You can change all the cover in your documents and your terms of reference and you can sit as a committee and say, well, we need to get other information, we need to get other feedback, but it doesn't change the fact that you're not doing something your Premier said you were going to do.
You've changed it for obvious matters or reasons of convenience for you politically because, oh my gosh, from my perspective, oh heavens, could the civil service of Nova Scotia actually be giving good advice to the previous government? Could the Auditor General actually be competent and capable enough of doing the audit process of scouring the books if that's what a new government wanted to have done in any particular area?
As you know, it's independent, he can do that. But you can also ask if there's an area of concern where that could have been undertaken, that you do have the Treasury Board, and all these civil servants actually weren't misleading a previous government and that some of the baseline information actually was factual, so therefore we have to go in a different
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direction. But it doesn't change the fact that a signature commitment the NDP had made, that the Premier of this province was committed to, and that the language was very clear, has changed - and it's not insignificant.
I think you want to trivialize it, to put it aside, because you now want to move on, but it doesn't change the fact that I know in my area, down in Cape Breton, they're waiting for the findings of the audit that was committed to, and they're waiting to see where this audit will be taken and thus who was involved and what are you going to do as a result of doing this, because if all you're looking for is an opinion, well you had those opinions already from what likely would be dozens of capable, competent civil servants with an ability to draw and give you the opinions, the very same ones you're now trying to get terms of reference for an outside group to do through Deloitte.
I don't dispute Deloitte's ability and capacity to do that work, but it is a process that you started, it is a process that was very clear - it was going on a hunt, and now we're just going looking for assumptions. So, again, at some point someone had to say we're no longer doing an audit - was it the Premier, or under your direction or that of Cabinet, that it changed from what you publicly started?
MR. STEELE: Let me just review a few bits from the report. So the cover page calls it "Financial Review," and, in the Introduction, let me read what it says - this is Deloitte's understanding of what it was they were doing. It says:
"The people of Nova Scotia elected a new Government on 9th June 2009, and the newly appointed Executive Council was sworn in on 19th June, 2009. During the election campaign the new Government committed to an immediate review of the Province's finances upon entering office.
Deloitte & Touche LLP ("Deloitte") has been contracted to assist the new Government of Nova Scotia with an independent review and analysis of the Province of Nova Scotia's current and future financial position. The review will provide financial information for Government to use in making decisions about the overall management of Government programs. This will assist the Government in meeting its program and fiscal objectives."
[7:00 p.m.]
Then, in detail, it lays out the objectives of the report - and then there's the disclaimer:
"Consistent with expectations of the Government, Deloitte conducted a financial review, not an audit, of certain specified aspects of the Province of Nova Scotia's financial situation. The Auditor General of Nova Scotia is responsible for auditing the financial statements of the Province of Nova Scotia and the review of the revenue estimates in the budget."
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That is Deloitte's understanding of the task they were given - that accurately reflects the request for proposals that they won. Just the idea that at some point we intended to commission an audit knowing, as we would have known, that an audit was already underway in the technical sense of the term and we would have promised to do another one and not to do a financial review just completely misunderstands what it was that we promised to do and why.
So your question, when did it change? I don't know. You've asked it three times - I don't know what else I can say that would be different than what I've said already. It's just a complete misunderstanding of what it was we committed to do; it's a complete misunderstanding of what we asked for; and it's a complete misunderstanding of what Deloitte understood themselves to have been commissioned to do. But if you think that what really, at the end of the day is a semantic debate over the word "audit" is something that you can use to criticize the government, there's nothing I can do to stop you.
MR. CLARKE: Mr. Chairman, what we have is the language that is presented after the undertaking that was publicly stated. So you can call it a review - what I'm saying is that it is not where the new government started, what they communicated they were going to do.
Now I'm sure that when they got all of the advice from the professionals it was very clear that they had to go in a different direction than where your political motivations were and where your political intent was for Nova Scotians. Because we are looking at these numbers, we are looking at a review that started down a road and between when that document was printed for you to read from, and "review" on several occasions, there were the expectations and what was being communicated as to the undertaking of the government, and out of that review will be whatever it is from a steering committee as well as the Deloitte consultants in providing that opinion and, again, while you say it is not an audit, what your government said was that you were going to audit, clearly you were going to scour the books to get a true financial picture.
But you actually had that picture from your staff, from the very entities that you refer to that support, and thus why Deloitte would indicate why the Auditor General has that function to do - at the cost with upwards of a $9 billion budget, $99,100 doesn't even give you the 30,000- foot-level assessment if you're going to get into that, because Nova Scotians were expecting a very comprehensive review, audit or otherwise, so we'll agree to disagree on the term.
However, minister, as we go forward, it is forming the basis of where you, as a government, and thus the Minister of Finance, will be formulating and putting forward your positions and, in some way, yes, the review will be helpful because the review will not only provide you but also the other Parties within the Legislature the opportunity to do any measuring or whatever yardsticks are put out there to look at measurables from - so, thus, as
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you say, the role of the Public Accounts Committee and those who sit on it can choose to engage and undertake where they go.
But fundamentally there is this issue on a number of occasions - and we will get to the actual budget process itself - which really is quickly moving off a position that the New Democratic Party had, quickly trying to find a new way to get out of a situation where you made very clear public commitments, promises through a campaign, through a government assuming and taking office and thus the Premier and the Cabinet being sworn in and then starting to move in other directions from where you said you would be.
As we go forward in the dialogue, we will be able to look at where your new government has gone, what decisions it has or hasn't taken over the last 100 days, which is not insignificant and is not young, especially when we're in the middle of an economic downturn, and the basis of a Spring budget that you voted against and now have incorporated many of the very components you voted against and you, yourself, minister, were very vocally against measures of the government and what the government was trying to do.
So I'm going down a road, minister, of as we look at these various components, where you're shifting off your base as a government, where you are moving clearly from where you stood on a very solid ground and how we got from oh, that was just election talk, we'd better forget about that, really, let's talk about where we are today. Well we don't forget about election talk on this aspect of life in politics. So, as we go forward, you, obviously, are incorporating - so let's get into some of those budget questions, you probably want to focus on a few more on those.
So, you have now brought forward a Financial Measures Act that seeks to go against something that you said we should not and could not do. Can you explain to the committee your thought processes as you had to, minister, in fairness, look where we were as a previous government to the decisions that you made and for those areas where you were absolutely against, why those decisions are now okay to make?
MR. CHAIRMAN: Just before calling on the minister I would like to point out that there is approximately 10 minutes left for the four hours for today and, when that transpires, certainly we will recognize the member for Cape Breton North tomorrow.
MR. STEELE: The first thing I would like to point out is that the budget on May 4th didn't come to a vote, so I think it is incorrect to say that we voted against the budget. It never came to a vote. The only thing that came to a vote was a bill that proposed to amend the Provincial Finance Act. I think it is a bit of a stretch to say that the government voted against the budget and reintroduced substantially the same budget - the fact is the election was triggered the same evening the budget was introduced, so there was no debate on that budget, much less a vote.
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The second thing that I would point out is that I'm here today to talk about the Budget Estimates for the Department of Finance, and that doesn't include a debate over the Financial Measures Act. That's a debate for the House, so I don't think I want to start a debate on a bill here in the Supply committee.
MR. CLARKE: That's fair enough; I will give the minister his due there. But they did vote against - which again there is a lot of latitude being used by the minister here to explain where they currently are - yes you did vote against the measure. Can you explain, minister - then we'll go back, not to the debate - why did you vote? Again, just a little bit of a précis of your public position before, about the vote against the government's measure that was introduced and you voted down in the Spring, thus triggering an election.
MR. STEELE: Because I felt the previous government was inept, not up to the challenges facing the province, and I lacked confidence in the government. So at the earliest opportunity, the first opportunity that I had in a year, I took the opportunity to express a lack of confidence in the government. Then we fought an election campaign over that and I think the people agreed with us.
MR. CLARKE: So you thought the government inept - fair enough, Mr. Chairman, that's politics. Your other words were we were incompetent and we're dishonest - we could go through a litany of that language, and the only thing I can say is be careful of what words you use because they could come back to haunt you another day.
So, other than having your Michael Ignatieff moment, where you felt that the government just didn't deserve to govern anymore, that wasn't the basis upon the rationale of what you stood up in the House and what you said was wrong with the bill you voted against - so could you just clarify again what you said in the House about what was wrong with the bill and the reason to vote against it?
MR. STEELE: You and I could talk for hours about the previous government, the election, what people voted on, but you know, Mr. Chairman, it's not part of the estimates for this year, so let's reserve that debate for a bar somewhere, over a beer. It is just not the place for that kind of discussion.
MR. CLARKE: Mr. Chairman, we probably won't have to worry about the bar or having the beer.
However, I think it is convenient and what we're seeing over the course of the last little while is a minister who, when it comes to talking about the credibility, I guess is where I'm going, the credibility of what you and your now government would say versus what you now are doing and your interpretation of the numbers that are being presented to Nova Scotians, and I will just go as an example of that back to my colleague's comment when we talked about the EnerGuide and the housing rebate program, and how on one side you,
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yourself, said it is foolish for me to get a rebate for my smart, or fuel-efficient or energy-efficient vehicle when you're going to buy one anyway, and then would refute the argument that was made by my colleague when he presented the very same argument - why would you do that for houses that were built, because you were going to do that anyway. They were built; the decision to build those homes were made.
Again, we can go back and forth and try to spin and twist on what was said and your interpretation of it, but what I clearly have seen is the inability to see any consistency of where the new government is going with conviction. So, if you can say that you thought the previous government was inept, yes, you can say it - I obviously know that you feel that way.
The other thing that comes out as a result of these proceedings and as we go through estimates is that Nova Scotians get to see and understand clearly, and get clarity through these deliberations that there is a level of expectation of which, admittedly, and I respect, they can vote and they did vote on, is not being lived up to today, and with a majority government, as you and I know, there is practically little that will stop you from trying to jam through the House, if you so deem it to be appropriate, as is the mandate given to you by the people, but we are seeing already as we go through and look at some of these very numbers the deviation away from the very principled statements that were being made, promises that were being made that you're now either imitating or trying to say it isn't what we said it was, it is now something else.
So, as we do go forward and I'm conscious of the fact - Mr. Chairman, what time is it?
MR. CHAIRMAN: You have about three and a half minutes remaining.
MR. CLARKE: I did have a list of many questions, and we kind of got off on an aside - and I thought rather interesting on how we got off there, and when it's not convenient we find ourselves saying that somehow it's the holier than thou approach and while we didn't mean it before but now we do, so it is just election talk. Well it's not just election talk, minister, it is the estimates, it about people understanding the principles from which you come and are bringing forward, and it is about something that we are now facing as part of the estimates, and again we won't get into the FMA, I agree, but there are a number of other things.
[7:15 p.m.]
Can you explain, and I will ask, since the election, in the Department of Finance, have there been specific policy changes or policy directives that you have overseen or implemented other than the financial review?
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MR. STEELE: Before I answer the question, I would just like to go back to something that the member said earlier and that was about credibility. Look, I know, I've been in the Legislature for almost nine years now and I understand what it is the Opposition does and what it is they try to do, and I understand the line that they are pursuing is we did one thing before and another thing after, but frankly, Mr. Chairman, credibility is something that should be judged by the people - it is not to be judged by me, not by that member or by anybody else.
When we go back to the polls, I will hold my head up and I will be accountable for the record. I think considering that we have been in office for just slightly under four months, we've done pretty well so far. But we have a long way to go and the previous government was in power for 10 years. Okay, you don't snap your fingers and, overnight, change everything. Nobody wants that, even if it were possible.
First, it is not possible, nor is it desirable to take the province and vigorously shake it and change everything. It took 10 years for the previous government to do what it did. We will work in a careful, pragmatic, step-wise way to do the right thing, to make sure that the decisions that we take are the right ones for the people, the right ones for the province. We will not rush into things, even though the Opposition will criticize us for that. They're saying we should always move faster, we should always do more, but when we take the steps we take, they will have been carefully considered and they will be the right thing for the people in the province. When the next election rolls around, I'll be very happy to go to the doorsteps in my constituency with that record.
In response to the specific question that the member asked - I'm not really sure what it is he is referring to. The member has been a minister and the member will know that I, like him, every day make decisions, big policies, little policies, looking into the future, trying to fix the problems of the past and, of course, policies have changed. I'm just wondering what specific thing he might be referring to when he asked if the policies have changed, because the answer is, of course.
MR. CHAIRMAN: The time has expired for today. We thank all participants.
[ The subcommittee adjourned at 7:18 p.m.]
